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HomeMy WebLinkAboutResolution - 20006-149 - Modification to Redevelopment Project Area No. 5 and establishing Town Center Phase One Tax Increment Financing District and Adopting a Tax Increment Financing Plan - 12/19/2006 CITY OF EDEN PRAIRIE HENNEPIN COUNTY,MINNESOTA RESOLUTION NO.2006-149 RESOLUTION ADOPTING A MODIFICATION TO THE REDEVELOPMENT PLAN FOR REDEVELOPMENT PROJECT AREA NO. 5; AND ESTABLISHING TOWN CENTER PHASE ONE TAX INCREMENT FINANCING DISTRICT THEREIN AND ADOPTING A TAX INCREMENT FINANCING PLAN THEREFOR BE IT RESOLVED by the City Council (the "Council") of the City of Eden Prairie,Minnesota(the "City"), as follows: Section 1. Recitals 1.01. The Board of Commissioners(the "Board")of the Eden Prairie Housing and Redevelopment Authority(the "HRA")has heretofore established Redevelopment Project Area No. 5 and adopted the Redevelopment Plan therefor. It has been proposed by the HRA that the City adopt a Modification to the Redevelopment Plan for Redevelopment Project Area No. 5 (the "Redevelopment Plan Modification")and establish Town Center Phase One Tax Increment Financing District(the "District")therein and adopt a Tax Increment Financing Plan(the "TIF Plan")therefor(the Redevelopment Plan Modification and the TIF Plan are referred to collectively herein as the "Plans"); all pursuant to and in conformity with applicable law,including Minnesota Statutes, Sections 469.001 to 469.047 and Sections 469.174 to 469.1799, all inclusive, as amended, (the "Act") all as reflected in the Plans, and presented for the Council's consideration. 1.02. The HRA and City have investigated the facts relating to the Plans and have caused the Plans to be prepared. 1.03. The HRA and City have performed all actions required by law to be performed prior to the establishment of the District and the adoption and approval of the proposed Plans,including,but not limited to, notification of Hennepin and Independent School District No. 272 having taxing jurisdiction over the property to be included in the District, a review of and written comment on the Plans by the City Planning Commission, approval of the Plans by the HRA on December 19,2006, and the holding of a public hearing upon published notice as required by law. 1.04. Certain written reports(the"Reports")relating to the Plans and to the activities contemplated therein have heretofore been prepared by staff and consultants and submitted to the Council and/or made a part of the City files and proceedings on the Plans. The Reports include data,information and/or substantiation constituting or relating to the basis for the other findings and determinations made in this resolution including the City's Major Center Area Plan,; a staff reports to the HRA and City; submission by Barsness Consulting Services on behalf of the developer, Solomon Real Estate Group; a letter and financial review of the need for tax increment by Ehlers &Associates on behalf the City; and a inspection of the buildings and site by LHB Architects. The Council hereby confirms,ratifies and adopts the Reports,which are hereby incorporated into and made as fully a part of this resolution to the same extent as if set forth in full herein. 1.05 The City is not modifying the boundaries of Redevelopment Project Area No. 5,but is however, modifying the Redevelopment Plan therefor. Section 2. Findings for the Adoption and Approval of the Plans 2.01. The Council hereby finds that the Plans are intended and, in the judgment of this Council,the effect of such actions will be, to provide an impetus for development in the public interest and accomplish herein. certain objectives as specified in the Plans which are hereby incorporated e J p Y � Section 3. Findings for the Establishment of Town Center Phase One Tax Increment Financing District 3.01. The Council hereby finds that the District is in the public interest and is a "redevelopment district" under Minnesota Statutes, Section 469.174, Subd. 10 (a)(1). redevelopment would not occur solely through 3.02. The Council further finds that the proposed redevelo e p p p Y g private investment within the reasonably foreseeable future and that the increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the District permitted by the Tax Increment Financing Plan,that the Plans conform to the general plan for the development or redevelopment of the City as a whole; and that the Plans will afford maximum opportunity consistent with the sound needs of the City as a whole, for the development or redevelopment of the District by private enterprise. 3.03. The Council further finds, declares and determines that the City made the above findings stated in this Section and has set forth the reasons and supporting facts for each determination in writing, attached hereto as Exhibit A. 3.04. The Eden Prairie Housing and Redevelopment Authority elects to calculate fiscal disparities for the District in accordance with Minnesota Statutes, Section 469.177, Subd. 3, clause b,which means the fiscal disparities contribution would be taken from inside the District. Section 4. Public Purpose 4.01. The Plans and the adoption thereof conform in all respects to the requirements of the Act and will help fulfill a need to develop an area of the City which is already built up,to provide employment opportunities,to improve the tax base and to improve the general economy of the State and thereby serves a public purpose. For the reasons described in Exhibit A,the City believes these benefits directly derive from the tax increment assistance provided under the Plan. The developer will receive only the assistance needed to make this development financially feasible. As such, any private benefits received by the developer are incidental and do not outweigh the primary public benefits. Section 5. Approval and Adoption of the Plans 5.01. The Plans, as presented to the Council on this date, including without limitation the findings and statements of objectives contained therein, are hereby approved,ratified, established, and adopted and shall be placed on file in the office of the Finance Manager. 5.02. The staff of the City, the City's advisors and legal counsel are authorized and directed to proceed with the implementation of the Plans and to negotiate, draft,prepare and present to this Council for its consideration all further plans,resolutions,documents and contracts necessary for this purpose. 5.03 The Auditor of Hennepin County is requested to certify the original net tax capacity of the District, as described in the Plans, and to certify in each year thereafter the amount by which the original net tax capacity has increased or decreased; and the Eden Prairie Housing and Redevelopment Authority is authorized and directed to forthwith transmit this request to the County Auditor in such form and content as the Auditor may specify,together with a list of all properties within the District, for which building permits have been issued during the 18 months immediately preceding the adoption of this resolution. 5.04. The Finance Manager is further authorized and directed to file a copy of the Plans with the Commissioner of the Minnesota Department of Revenue and the Office of the State Auditor pursuant to Minnesota Statutes 469.175, Subd. 4a. ADOPTED by the Eden Prairie City Council on December 19, 2006. Nan yr u en a ATTEST: SEAL K leen Porta, City Clerk EXHIBIT A RESOLUTION NO. 2006-149 The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan (TIF Plan) for Town Center Phase One Tax Increment Financing District (District), as required pursuant to Minnesota Statutes, Section 469.175, Subdivision 3 are as follows: 1. Finding that Town Center Phase One Tax Increment Financing District is a redevelopment district as defined in M.S., Section 469.174, Subd. 10(a)(1). The District consists of 6 parcels, with plans to redevelop the area for office and retail purposes. At least 70 percent of the area of the parcels in the District are occupied by buildings, streets, utilities, paved or gravel parking lots or other similar structures and more than 50 percent of the buildings in the District, not including outbuildings, are structurally substandard to a degree requiring substantial renovation or clearance. (See Appendix F of the TIF Plan.) 2. Finding that the proposed development, in the opinion of the City Council, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future and that the increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the District permitted by the TIF Plan. The proposed development, in the opinion of the City, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future: This finding is supported by the fact that the redevelopment proposed in the TIF Plan meets the City's objectives for redevelopment. The City has previously undertaken a Major Center Area Plan which targets the area in and around the District for redevelopment into higher density and mixed-use development. The City also adopted planning principles dated January 2006 which emphasized relocation of lower-density properties, anticipated more intense landuse with multi-story buildings and concentrated public improvements, including the use of structured and shared parking. The development in the District is one of the first steps in the implementation of the Major Center Area Plan. The three major extraordinary costs associated with the development in the District are the high cost of acquisition from voluntary sellers on the parcels currently occupied by substandard and non-substandard buildings, redevelopment costs including demolition and remediation, and the costs of structured parking on the site. TIF will pay for a portion of each of these cost categories. The developer was asked for and provided a letter and a proforma as justification that the developer would not have gone forward without tax increment assistance. The increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the District permitted by the TIF Plan: The costs of acquisition are extremely high in this area. The City may see limited redevelopment of individual parcels over the next 25 years without the use of TIF. The limited redevelopment, in the experience of the City, would not include mixed-use or higher density development. The land use would be low intensity uses with surface parking and low floor to area ratios. The type of coordinated effort on the part of a developer to assemble parcels and construct commercial and retail facilities of the proposed size and scope requires public assistance for the land acquisition and part of the structured parking costs. Therefore, the City reasonably determines that no other redevelopment of similar scope is anticipated on this site without substantially similar assistance being provided to the development. A comparative analysis of estimated market values both with and without establishment of the District and the use of tax increments has been performed as described above. If all development which is proposed to be assisted with tax increment were to occur in the District, the total increase in market value would be up to $24,807,400. The present value of tax increments from the District is estimated to be $4,745,498. It is the Council's finding that no development with a market value of greater than $20,061,902 would occur without tax increment assistance in this district within 25 years. This finding is based upon evidence from general past experience with the high cost of acquisition and public improvements in the general area of the District. (See Cashflow in Appendix D of the TIF Plan.) 3. Finding that the TIF Plan for the District conforms to the general plan for the development or redevelopment of the municipality as a whole. The Planning Commission reviewed the TIF Plan on December 11, 2006, and found that the TIF Plan conforms to the general development plan of the City. 4. Finding that the TIF Plan for the District will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development or redevelopment of Redevelopment Project Area No. 5 by private enterprise. The project to be assisted by the District will result in increased employment in the City and the State of Minnesota, the redevelopment of substandard properties, increased tax base of the State and add a high quality development to the City.