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HomeMy WebLinkAboutResolution - HRA 2006-03 - Establish Redevelopment Project Area No. 6 & TIF District 6 - 09/05/2006 CITY OF EDEN PRAIRIE HENNEPIN COUNTY,MINNESOTA HOUSING AND REDEVELOPMENT AUTHORITY H.R.A.RESOLUTION NO. 2006-03 RESOLUTION ESTABLISHING REDEVELOPMENT PROJECT AREA NO. 6 AND ADOPTING A PROJECT PLAN THEREFOR, AND ESTABLISHING TAX INCREMENT FINANCING DISTRICT NO. 20 THEREIN AND ADOPTING A TAX INCREMENT FINANCING PLAN THEREFOR; AND APPROVING A DEVELOPMENT AGREEMENT RELATING THERETO BE IT RESOLVED by the Board of Commissioners (the "Board") of the Housing and Redevelopment Authority in and for the City of Eden Prairie, Minnesota (the "Authority"), as follows: Section 1. Recitals. 1.01. It has been proposed that the Authority establish Redevelopment Project Area No. 6 and adopt a Project Plan (the "Project Plan") therefor pursuant to and in conformity with applicable law, including Minnesota Statutes, Sections 469.001 through 469.047, all inclusive, as amended, all as reflected in the Project Plan, and presented for the Authority's consideration. 1.02. Further, it has been proposed that the Authority establish Tax Increment Financing District No. 20 (the "TIF District") and adopt a Tax Increment Plan (the "TIF Plan") therefor (the Project Plan 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 469.174 to 469.1799, all inclusive, as amended, all as reflected in the TIF Plan, and presented for the Authority's consideration. 1.03. The Authority has investigated the facts relating to the Plans and has caused the Plans to be prepared. 1.04. The Authority has performed all actions required by law to be performed prior to adoption and approval of the proposed Plans, including, but not limited to, notification to Hennepin County and Independent School District No. 272, and the holding of a public hearing upon published notice as required by law. 1.05. 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 Authority and/or made a part of the Authority or 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. The Authority 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. Section 2. Findings for the Adoption and Approval of the Plans. 2.01. The Authority hereby finds that the Plans, are intended and, in the judgment of this Board, the effect of such actions will be, to provide an impetus for development in the public 1 purpose and accomplish certain objectives as specified in the Plans, which are hereby incorporated herein. Section 3. Findings for the Establishment of Tax Increment Financing District No 20 3.01. The TIF District, based on the information in the TIF Plan, representations of the developer, and other information presented to the Authority, contains the following conditions, which are reasonably distributed throughout the TIF District: Parcels comprising at least 70% of the area of the District are occupied by buildings, streets, utilities, or other improvements, and more than 50% of the buildings (not including outbuildings) are structurally substandard requiring substantial renovation or clearance. The Authority finds that the foregoing conditions exist in the TIF District as a whole. Therefore, the Authority hereby finds that the TIF District qualifies as a "redevelopment district' within the meaning of Minnesota Statutes, Section 469.174, Subdivision 10. 3.02. In addition, the Authority has been advised that the Project includes the redevelopment of a portion of the former Physical Electronics building in the City, including demolition thereof and asbestos abatement with respect thereto, and construction of a new 91,000 square-foot, one-story office building. 3.03. The Authority further finds that the intended development of the property involved, the proposed development would not 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 TIF District permitted by the TIF 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 redevelopment or development of the TIF District by private enterprise. 3.04. The Authority further finds, declares and determines that the Authority 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. Section 4. Public Purpose 4.01. The adoption of the Plans conforms in all respects to the requirements of Minnesota state law and will help encourage, ensure and facilitate development by the private sector of projects used or useful for producing or processing products of agriculture, to provide employment opportunities, to improve the tax base and to improve the general economy of the State and thereby serves a public purpose. Section 5. Approval and Adoption of the Plans and Development Agreement; Filing. 5.01. The Plans, as presented to the Authority 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 Hennepin County Administrator. 2 5.02. The staff of the Authority, the Authority'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 Authority for its consideration all further plans,resolutions, documents and contracts necessary for this purpose. 5.03 The staff of the Authority is authorized and directed to request that the County Auditor of Hennepin County certify the original net tax capacity of the TIF 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 City 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 TIF District, for which building permits have been issued during the 18 months immediately preceding the adoption of this resolution. 5.04. The Authority is further authorized and directed to file a copy of the Plans with the Commissioner of Revenue and the Office of the State Auditor pursuant to Minnesota Statutes 469.175, Subd. 4a. 5.05. The Authority hereby approves the Development Agreement between the Authority and Superior Eden Prairie Investment, LLC as contemplated by the TIF Plan in substantially the form presented to and on file with the Authority. Adopted by the Housing and Redevelopment Authority in and for the City of Eden Prairie, Minnesota, this 5th day of September, 2006. N cy T1,Yra Lu ns, hierson ATTEST: SEAL Scott H. Neal,"Executive42R� 3 EXHIBIT A RESOLUTION NO. 2006-03 The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan for Tax Increment Financing District No. 20 as required pursuant to M.S., Section 469.175, Subd. 3 are as follows: 1. Finding that the Tax Increment Financing District No. 20 is a redevelopment district as defined in M.S., Section 469.174, Subd. 10. Tax Increment Financing District No. 20 is a contiguous geographic area within Redevelopment Project Area No. 6, delineated in the TIF Plan, for the purpose of financing redevelopment and economic development in the City through the use of tax increment. The TIF District consists of a property in Redevelopment Project Area No. 6, which is in the public interest because it will facilitate the redevelopment of the site, including asbestos abatement, and construction of a 91,000 square-foot, one- story office building, which will increase employment in the state, and preserve and enhance the tax base of the state. The factual basis for this finding is also set forth in the LHB, Inc. Report of Inspection Procedures and Results for Determining Qualifications of a Tax Increment Financing District as a Redevelopment District dated September 28, 2005, the Springsted Incorporated Memoradum United Properties Request for Financial Assistance—Final Internal Rate of Return Analysis dated July 25, 2006, and the Springsted Incorporated Memoradum United Properties Financing and Development Agreement dated July 25, 2006 attached hereto. 2. Finding that the development, in the opinion of the Authority, 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 Tax Increment Financing District No. 20 permitted by the TIF Plan. The proposed development, in the opinion of the Authority, 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 and development proposed in this TIF Plan contemplates extraordinary costs associated with the redevelopment of the site including asbestos abatement. The costs of site improvements and utilities makes development of this site infeasible without financial 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 TIF District permitted by the TIF Plan: The Authority supported this finding on the grounds that the costs of site improvements and utilities add to the total redevelopment cost. Historically, site development costs in this area have made development infeasible without tax increment assistance. Further, United Properties, Inc., the developer, has stated that the Project is not feasible without this assistance. Therefore, the Authority reasonably determines that no other development of similar scope is anticipated on this site without substantially similar assistance being provided to the development. The factual basis for this finding is also set forth in the Springsted Incorporated Memoradum United Properties Request for Financial Assistance—Final Internal Rate of Return Analysis dated July 25, 2006 and in the United Properties, Inc. letter to Springsted Incorporated dated June 29, 2006 attached hereto. 4 A comparative analysis of estimated market values both with and without establishment of the TIF 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 TIF District, the total increase in market value would be up to $12,160,768. The present value of tax increments from the TIF District is estimated to be $1,161,369. It is the Authority's finding that no development with a market value of greater than $10,999,399 would occur without tax increment assistance in this TIF District within fifteen (15) years. This finding is based upon evidence from general past experience with the high costs of site improvements in the general area of the TIF District. See the Springsted Incorporated Memoradum United Properties Request for Financial Assistance—Final Internal Rate of Return Analysis dated July 25, 2006 attached hereto and Page 5 Section J of the TIF Plan. 3. Finding that the Tax Increment Financing Plan for Tax Increment Financing District No. 20 will afford maximum opportunity, consistent with the sound needs of the City as a whole,for the development of Redevelopment Project Area No. 6 by private enterprise. The project to be assisted by the TIF District will result in increased employment in the City of between 350-400 jobs, and increased tax base of the City and the State of a minimum of$10.6 million, and add a high-quality development to the area. 5