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HomeMy WebLinkAboutCity Council - 03/30/1982'SPECIAL EDEN PRAIRIE CITY COUNCIL MEETING TUESDAY, MARCH 30, 1982 6:30 PM, CITY HALL COUNCIL MEMBERS: COUNCIL STAFF: ROLL CALL Mayor Wolfgang Penzel, George Bentley, Dean Edstrom, Paul Redpath and George Tangen City Manager Carl Jullie and Finance Director John Frane I. APPROVAL OF AGENDA II. PUBLIC HEARING A. AMENDING TAX INCREMENT FINANCING DISTRICT NO. I AND ESTABLISHING TAX INCREMENT DISTRICT NO. 2 (Resolution No. 82-58, providing for modification of the development program for Development District No. I and the Tax Increment Financing Plan for the Economic Development Tax Increment District therein and for the establishment of proposed Tax Increment District No. 2 and the adoption of a Tax Increment Financing Plan related thereto) III. ADJOURNMENT. CJJ:jp MEMORANDUM TO: Mayor and City Council FROM: City Manager Carl Jullie SUBJECT: Public Hearing for amending T.I.F. District No. 1 and creating T.I.F. District No. 2 DATE: March 26, 1982 Attached for your reference for the public hearing on Tuesday evening (6:30 PM), please find the following: 1. Copy of Resolution No. 82-56 calling for the hearing which the Council adopted on March 16th. 2. Amended Development District No. 1 Program and Tax Increment Financing Plans for the City of Eden Prairie, Mn., dated March 30, 1982. The purpose of the plan modification and creation of District No. 2 is to split out the undeveloped portions of the Hartford, Castle Ridge, and Lake Ridge Office Park sites so that we will have the opportunity to capture eight years of maximum tax increments. These sites were single, large parcels under the original T.I.F. plan, but recent subdivisions allow us the opportunity to preserve the undeveloped parcels for District No. 2 and future districts. We are not proposing to change in any way the scope of the road improvement projects or the methods of financing therefore. On Tuesday evening, O'Connor & Hannan will deliver copies of Resolution No. 82-$8, which the Council must adopt in order to make the changes effective. The Planning Commission will be meeting on Monday evening to review and make recommendations to the Council as to conformance of the plan modifications with the City's comprehensive plan. Because the bond sale prospectus shows reliance on T.I.F. District No. 2 in the financial projections, O'Connor & Hannan has advised that it is necessary that the Council approve the plan modifications prior to closing of the bond sale which is scheduled for Wednesday, March 31st. CITY OF EDEN PRAIRIE COUNTY OF HENNEPIN STATE OF MINNESOTA RESOLUTION NO. P -31 RESOLUTION CALLING PUBLIC HEARING FOR MODIFICATION OF THE DEVELOPMENT PROGRAM FOR DEVELOPMENT DISTRICT NO. 1 AND THE TAX INCREMENT FINANCING PLAN FOR THE ECONOMIC DEVELOPMENT TAX INCREMENT DISTRICT THEREIN AND FOR THE ESTABLISHMENT OF PROPOSED TAX INCREMENT DISTRICT NO. 2 AND THE ADOPTION OF A TAX INCREMENT FINANCING PLAN RELATING THERETO BE IT RESOLVED by the City Council (the "Council") of the City of Eden Prairie, Minnesota (the "City"), as fol- lows: Section 1. Public Hearing. This Council shall meet on Tuesday, March 30, 1982, at 1:30 p.m., to hold a public hearing on the following matters: (a) the modification of Development District No. 1 (the "Development District") and Economic Development Tax Increment District therein, (b) the establishment of a proposed Tax Increment District No. 2 and (c) the adoption and approval of a proposed Tax Increment Financing Plan for Tax Increment District No. 2, all pur- suant to and in accordance with Minnesota Statutes, Chapter 472A, as amended, and Minnesota Statutes, Sections 273.71 to 273.78, inclusive, as amended. Section 2. Notice of Hearing; Filing of Plans. The City Manager is authorized and directed to cause notice of the hearing, substantially in the form attached hereto as Exhibit A, to be given as required by law, to place a copy of the modification of the Development Program for Develop- ment District No. 1 and the Economic Development District therein and the Tax Increment Financing Plan for proposed Tax Increment District No. 2 on file at the City Hall and to make such plans available for inspection by the public, commencing March 19, 1982. Section 3. Referral to Planning Commission. The City Manager is authorized and directed to transmit a copy of the documents cited in Section 2. above to the City's Planning Commission and to request the Planning Commission to consi- der and comment on whether the said documents are in accor- dance with the City's comprehensive plan. Adopted by the City Council of the City of Eden Prairie, Minnesota, on Much 16 1982. ATTESAI IF vT- e Director/Clerk NOTICE OF PUBLIC NEARING CITY OF EDEN PRAIRIE COUNTY OF HENNEPIN STATE OF MINNESOTA NOTICE IS HEREBY GIVEN that the City Council (the "Coun- cil") of the City of Eden Prairie, County of Hennepin, State of Minnesota, will hold a public hearing on Tuesday, March - 30, 1982 at a:30 p.m., at the City Council Chambers, at 8950 Eden Prairie Road, Eden Prairie, Minnesota, relating to the modification by the Council of Development District No.1 (the "Development District") and the Tax Increment Financing Plan for an Economic Development District within the Development District pursuant to Minnesota Statutes, Chapter 472A, as amended, and Minnesota Statutes, Sections 273.71 to 273.78, inclusive, as amended. The hearing is also relative to the establishment of Tax Increment District No. 2 and a proposed Tax Increment Financing Plan for Tax Increment District No. 2, copies of which will be on file and avail- able for public inspection at the City Hall not later than March 19, 1982. The Development Program for Development District No. 1 and Tax Increment Financing Plan for an Economic Development District, adopted by the City Council on nIr7teNifit /92149.84-(the "Original Plan") is hereby modified to reflect the following changes: 1. The tax increment financing district identified as the Economic Development District in the Origi- nal Plan shall be renamed and identified herein- after as Tax Increment District No. 1; 2. The geographic area of Tax Increment District No. 1 shall be reduced by the deletion from the district of the following parcels due to the plat- ting of certain properties contained within the district subsequent to the adoption of the Original Plan: (a) 14-116-22-32-002 UNPLATTED 14 116 22 BEG AT NW COR OF SW 1/4 TB E ALONG N LINE THOF TO WLY LINE OF THE PRESERVE COMM PARK NORTH TH SLY ALONG SAID WLY LINE TO NWLY LINE OF FLYING CLOUD DR TH SWLY ALONG SAID NWLY LINE TO S LINE OF N 1/2 OF SW 1/4 TB W TO SW COR THOF TB N TO BEG as identified in the Original Plan has been platted and the forlowing parcels deleted: PLAT PIN OWNER 01313 14-116-22-31-0019 Castle Ridge 01313 14-116-22-32-0004 Castle Ridge The following parcel shall be deleted from Tax Increment District No. 1 and included in Tax Incre- ment District No. 2: PLAT PIN OWNER 01313 14-116-22-31-0020 Castle Ridge (b) 13-116-22-32-0002 REGISTERED LAND SURVEY NO. 1509 TRACT H EXCEPT THAT PART LYING IN THE SE 1/4 OF SE 1/4 OF SEC 14 T 116 R 22, as identified in the Original Plan has been plat- ted and the following parcels deleted: PLAT PIN OWNER 01393 13-116-22-23-0006 Hartford Real Estate Co 01393 13-116-22-32-0004 Hartford Real Estate Co 01393 13-116-22-32-0005 Hartford Real Estate Co 01393 13-116-22-33-0052 Hartford Real Estate Co 01393 13-116-22-33-0053 Hartford Real Estate Co 01393 13-116-22-34-0031 Hartford Real Estate Co 01393 14-116-22-41-0005 Hartford Real Estate Co 01393 14-116-22-41-0006 Hartford Real Estate Co 01393 14-116-22-41-0007 Hartford Real Estate Co The following parcel shall be delted from Tax In- crement District No. 1 and included in Tax Incre- ment District No. 2: PLAT PIN OWNER 01392 13-116-22-34-0030 Hartford Real Estate Co (c) 14-116-22-44-0030 REGISTERED LAND SURVEY NO. 1509 THAT PART OF TRACT H LYING IN THE SE 1/4 OF SE 1/4, as identified in the Original Plan has been platted and the following par- cels deleted: PIN 11-116-22-42-0006 11-116-22-42-0007 11-116-22-42-0010 11-116-22-42-0012 11-116-22-42-0014 OWNER Bryant Lake Center Bryant Lake Center Bryant Lake Center Bryant Lake Center Bryant Lake Center PLAT 01217 01217 012,17 01217 01217 01217 01217 01217 01217 01217 11-116-22-42-0015 11-116-22-42-0017 11-116-22-42-0018 11-116-22-42-0020 11-116-22-42-0021 Bryant Lake Centex Bryant Lake Center Bryant Lake Center Bryant Lake Center Bryant Lake Center The parcels proposed to be included in Tax Increment District No. 2 are within the Development District and are more specifically described in the proposed Tax Increment Financing Plan for Tax Increment istrict No. 2. All interested persons may appear at the hearing and present their views orally or in writing. BY ORDER OF THE CITY COUNCIL ChAL J. Ju AL 4 /kr City Manager Finance Director/Clerk STATE OF MINNESOTA ) CITY CLERK'S AFFIDAVIT COUNTY OF HENNEPIN ) OF MAILING NOTICE I, John D. Frane, being the duly qualified and acting City Clerk of the City of Eden Prairie, County of Hennepin, State of Minnesota, do hereby certify as follows: I deposited in the United States mail, with postage fully prepaid, the attached notice of public hearing ad- dressed to the following public bodies: (1) The County Board of Commissioners (2) The Members of The School Board of Independent School District No. 272 (3) The Members of The Metropolitan Council (4) The Members of the Metropolitan Transit Com- mission (5) The Members of The School Board of Independent School District No. 287 (AVTI) not less than seven (7) days prior to the date of the hear- ing specified in said notice. Dated: , 19 . MEMORANDUM TO: FROM: SUBJECT: DATE: Mayor and City Council City Manager Carl J. Jullie e! Levy Limits - MSA 275.11 T.I.F. Levy March 26, 1982 As the Council is aware, there are several different levy limit laws which restrict the total amount of general tax that cities may levy each year. The most restrictive limit in our case is found in MSA 275.11. During the preparatory stages of the $18,000,000 T.I.F. bond issue we asked O'Connor & Hannan if the 2 mil tax levy under the T.I.F. program would be outside the levy limits. We understood their answer to be "yes". However, when the bond issue prospectus was published, it stated that such levy was inside the limits, rather than outside. To clarify this we asked O'Connor & Hannan to give us a written opinion which has come to us in the form of the attached letter of March 15. Their conclusion is summarized in the last paragraph on p-3 wherein they state " a supportable agreement could be made that all taxes levied for such obligation would be exempt." They go on (p-4) to Suggest that they seek a clarification for the City through the legislative process. The following tables summarize the effect on the City with the T.I.F. tax levies added to the other debt service levies and anticipated general fund tax levies for the budget years 1983 through 1988. The general fund levies are estimated at increases of 10%, 15% and 18% per year. Our budget increases in the last 4 years averaged 18%. Budget Year Estimated Levy Limit MSA 275.11 Total Tax Required 10% Inc. Total Tax Required 15% Inc. Total Tax Required 18% Inc. 1983 4170 4015 4123 4189 1984 4883 4438 4682 4834 1985 5657 4734 5145 5412 1986 6533 4961 5579 5993 1987 7529 5281 6151 6754 1988 8658 5683 6858 7702 Dollar amounts shown in thousands The purpose of this memo then is to advise the Council that it is possible, unless clarified in the next legislative session, that the T.I.F. 2-mill levy will put us very close to our levy limits, especially for the next three years. Also, we recommend that O'Connor & Hannan be authorized to seek the legislative clarification. CJJ:jp Enc. PATNIci• J 0 .CONNos 3 etrat ENC. W THOMAS FOE • WALTERS TN064•11 • KELLER • mtcH•E1 E. MEOW.. wog's/ CLIENSINAN•ON, _pm CH•IIILES • 'AE0E/IL wALE J•NES • 0010•E• •NDLIEw J SIL EA WILLIAM A ILMOM•INN WAL ,CA C PALLONIMIS ACM , IL RICMC• AAAAA OTOP NAILER J•LTES • SSSSSS .1% J ERE,. NEARNE • wILL EN E. AAA vL1ET THONAS •NEPAN J ONN • •NPITON. FP LASSER, MONIER, A •PNNIC E•EDEITICE w NORM,' *mown E. FLYNN OCUOLAs J. EPANZIEN WILLIAM 0 Hu, DAVID w KELLIE• STEVEN J TIMMER DAV., vANTOP LINDA C •CMWARTS OLIALIM21 WACO'. WILIAAM C AC", IBIS '15701 March 15, 1982 O'CONNOR 6. HANNAN ATTORNEYS AT LAW 721i/41-I-EIGHTH FLOOR 1 OS TOWER so sour. EIGHTH STREET MINNEAPOLIS, MINNESOTA 55402 (612)3.1-3600 TELEX 29.058• TELEcoRIER 612 3.1 •3600 (256 1 VELAZQUEZ. 2 , DAVID BURL I MOAN E • MADRID 4, SPAIN MARTINS. BERLINER • 431• 31-00 GREG OPT A. MIC•17 n4 S • ',ELEA 23S•3 ANN WOOD ROBERTS • PATRICK J. CANTY • SUITE 3100 Stet/Ray LIFE •LJILOINC fli•Nn wiRGA • Isle OLD HARM PLACE DENVER, COLORADO 60202 13031 573 • 7737 CW.,•CL CHRIsTOPHEP M. MUNCH • SUITE 1100 ISIS PENNSYLVANIA AVENUE • W WASHINGTON, D. C. 20006 (502) •117 .1400 PATTNCA J. O 'CONNO/T WILLIAM T. MANNA.. • EDwARD W. •MOOKE • JOHN J. Flv•IN • •01•••• HELPER • JOSEPH C. OILLON THom•• H. Com!. • HowAND a. FELom•N • O•vtO NELiNcorr • D itANCE• w. DAvI• • A.EN•010 D. MOROAN TMEIM•• v. 1C• • $4•LE• •04•1•0•E • DOVOLAS M. CARN•v•L TEPENCE P. •OYLE • H ope •. •0•TEN • !BRIAN P. PHELAN • THOMAS R. JOLLY • CUTLER • MICHAEL .1. CONLON • DONAL° S. •141101.11. • PETEP C. PIS .SEL • PATIOICK L. 0 DONNELL • .0. WILLIAM w. HARSCH • CA•OL N. PAN. • JOSICAN C. PATTI•ON • CNAPLES W. G•1101SON 000100N s. 0•TE• • S OPEPTJ. • CMAISTIMA W. • micHAEL • vEVE • m•RTH• •PIODY rATTEPSON • J•NE• H. HOLT • 04•14, EINSAN PHI, • OLIANT L. m01••••..11T.• F. 00•00. LEE • DONNA A. IITS PATRICE • OMAN DLINN • LAL/PENCE MOSCHER • •ITENCIA A. JACO • TIMOTHT O'NEILL Mr. Carl Jullie City Manager " 8950 Eden Prairie Road •NOT MMMMMM or Lompt•OVE •AK Eden Prairie, Minnesota 55344 Re: $54 Per Capita Levy Limitation Question Dear Carl: This letter is in response to our discussion of February 26 at Eden Prairie City Hall involving the question of what portion of the Eden Prairie $18,000,000 General Obligation Tax Increment Bond Issue of 1982 is exempt from the levy limitations contained in Minnesota Statutes, S275.11. In order to understand the answer to that question, it is necessary to view the Minn. Stat., S275.11 limitation within the context of the three levy liMTE —laws that impact on Minnesota statutory cities. Although enacted at widely different times, the latter two of these three limitations impact on each other. The relationship and application of these laws may be clearer if they are viewed in their historical perspective. The first of these three laws to be enacted was Minn. Stat., S411.251, commonly referred to as the Mill Levy Limit, adopted in 1874 and amended in 1957 to reflect inflationary increases. It presently limits the general tax levy of statutory cities to 10 mills for those with an assessed valuation of more that $1,500,000 or 11.67 mills for all other statutory cities. Levies authorized by statute for special purposes are outside this limitation. Bonded debt is considered to be a special purpose and therefor outside Minn. Stat., S411.251. Page two Mr. Carl Jullie March 15, 1982 The second of the levy limitations, and the only limitation that includes bonded debt, is Minn. Stat., S275.11, commonly referred to as the $54 Per CapiEi —timit. It was enacted into law in 1921 and originally applied only to Iron Range communities. In 1951, the per capita amount was indexed to the Consumer Price Index (CPI). Legislation was passed in 1957 changing the basic per capita figure to its present $54 and making the limitation apply to all cities in the State. The law was further amended in 1980 to clarify that the indexing of the $54 Per Capita Levy Limit to the CPI applied to all general and special purpose levies, exclusive of taxes levied for local improvement special assessments. The last of the levy limitations was enacted in 1971, is administered by the Department of Revenue, and is known as the Over-all Levy Limit. Bonded debt is considered as a special levy under Minn. Stat. 275.50, Subd. 5 (e), and is therefore allowed outside the Over-all Limit. Key to this levy limit is the fact that it is calculated as a levy limit base certified in dollar amounts, with the total dollar levy limit base including both Local Government Aid (LGA) moneys and local taxing effort. It is this concept that creates the interrelationship between the $54 Per Capita Limit and the Over-all Limit. As the amount of Local Government Aid a city receives is reduced, the amount of local taxing effort allowed to compensate for the reduction is increased. If the current year's levy limit base is increased by 108% over the prior year's levy limit base, a sharp reduction in LGA such as is presently occurring could cause the local taxing effort to increase at a substantially greater percentage to maintain the same level of general fund services. This increase in local taxing effort has the effect of accelerating the dollar amount per capita that the City is levying. If the City has both an increased general fund service cost and increased bonded debt, accelerating at a rate above the rate of the CPI and population of the City, the $54 Per Capita Limit may not provide a suffient cushion. This historical digression was necessary for two reasons: (1) to show that, historically, the limitations were enacted into law for reasons quite different from those reasons applicable today and (2) to show the interrelationship between present trend toward reduction in LGA and its effect on the $54 Per Capita Limit. This background is meant to put into perspective the financial concerns separate and apart from the literal interpretation of State law. Page three Mr. Carl Jullie March 15, 1982 Minn. Stat., §273.77 (a) provides that "A municipality may issue general obligation bonds to finance any expenditure by the municipality.. .pursuant to section 273.75, subd. 4 in the same manner and subject only to the same conditions as those provided in chapter 475 for bonds financing improvement costs reimbursable from special assessments." This section goes on further to state that "When tax increment, assessments and other revenues are pledged, the estimated collections of said tax increment, assessments and any other revenues so pledged may be deducted from the taxes other- wise required to be levied before the issuance of the bonds under section 475.61, subd. 1...". This language would indicate that tax increment bonds are subject to the same conditions as special assessment bonds to the extent that they are reimbursable from pledges of tax increments, assessments or other revenues. We know, further, that the Minn. Stat., S275.11 levy limitation is "...exclusive of taxes levied for local improvement special assessments." It is unclear from this language whether this ex- clusion applies to all taxes levied for such obligation or only that portion pledged and reimbursable from special assessments. Minn. Stat., 475.58, Subd. 1 (3) provides that "...an election shall not be required to authorize obligations issued: (3) for an improvement, which obligation is payable wholly or partly from the proceeds of special assessments levied upon property specially benefited by the improvement, or of taxes levied upon the increased value of property within a district for the development of which the improvement is undertaken, including obligations which are general obligations of the municipality, if the municipality is entitled to reimbursement in whole or in part from the proceeds of such special assessments or taxes and not less than 20 percent of the cost of the improvement is to be assessed against benefited property or is estimated to be received from such taxes within the district...". If the obligation is reimbursable for at least 20 percent of the cost by assessments against benefited property, the remaining remaining 80 percent general tax levy is treated for purposes of elections to be a local improvement special assessment obligation. It could arguably be determined that for purposes of Minn. Stat., S275.11 that all taxes levied for a local improvement special assessment obligation would be exempt from the limitation. The historical background on the rationale for the three levy limitations, the lack of clarity as to the conditions in chapter 475 for bonds financing improvement costs reimbursable from special assessments which are applicable to tax increment bonds leaves some question. In our opinion, all tax increments, assessments, or other revenues pledged to the payment of the bonds are exempt from the Minn. Stat., S275.11 limitation and a supportable argument could be made that all taxes levied for such obligation would be exempt. Page four Mr. Carl Jullie March 15, 1982 However, in light of the present economic conditions and the manner in which Congress and the State have continually changed the financing of cities to reflect these economic conditions, it is desirable that a clarification of the Minnesota levy limit laws, particularly as it applies to Minn. Stat., 5275.11, be made. We would recommend that this be done through the legislative process and would agree to seek this clarification for the City. I hope that this information will-be of assistance to you. If you wish further clarification, please feel free to contact us. Sincerely, 42.44-d. X1444.'"C"a•...4"")