No preview available
HomeMy WebLinkAbout#4 TIF District No. 5 - NapaMemo To: Planning Commissioners From: John Hinzman, Community Development Director Date: July 12, 2010 SubjectAdopt Resolution: :Conformance to the General Plan - Amendment to Modify the Vermillion Street Redevelopment Plan and Establishment of TIF District No. 5 (Napa). REQUEST The Planning Commission is asked to adopt the attached resolution finding that the proposed amendment to the Vermillion Street Redevelopment Plan to establish TIF District No. 5 (Napa) are in conformance to the City’s “general plan for development” as outlined in Minnesota State Statutes Chapter 469.028. The Planning Commission’s role is limited to determining conformance with the “general plan for development”. The Hastings Economic Development and Redevelopment Authority (HEDRA) is scheduled to review the plans in detail at their July 8, 2010 meeting. th The City Council will hold a public hearing on July 19 to review the plans and consider establishment of the District. BACKGROUND INFORMATION Vermillion Street Redevelopment Plan Redevelopment Plans identify a neighborhood or corridor where the City wishes to encourage private redevelopment. A project area must be established before the City can provide loans to improve property, or use financial assistance such as tax increment. The Vermillion Street Redevelopment Plan was established in 2008 and encompasses most commercial properties along Vermillion Street from TH 55 to TH 316. The designation is consistent with the Vermillion Street Development Guidelines adopted by the City Council in January, 2008. On September 22, 2008 the Planning Commission adopted a resolution finding that the Vermillion Street Redevelopment Project Area was in conformance with the general plan of development. Please see the attached Redevelopment Project Area for further information. Tax Increment Financing (TIF) Tax increment financing (TIF) is a tool used to spur private development. The first step is to place a property into a TIF District.After the new building is completed, the City will take a portion of the new taxes generated by the new project and use them to pay for redevelopment costs. The taxes the parcel is currently paying continue to be distributed to the city, county, state, and school district. Importantly, the NAPA Auto Parts store will pay the same amount of taxes it would if it were not in a tax increment district; TIF is not a tax rebate. TIF District No. 5 (Napa) The Hastings Economic Development and Redevelopment Authority (HEDRA) proposes to establish TIF District No. 5 within the Vermillion Street Redevelopment Plan. The TIF th District would encompass the proposed Napa Site at 15 and Vermillion Street only. Please see the attached TIF Plan. GENERAL PLAN ANAYLSIS The Comprehensive Plan and Vermillion Street Redevelopment Guidelines are determined to be “General Plans” for City development and were reviewed to determine conformance with the creation of TIF District No. 5. City staff has determined that the modification to the Vermillion Street Redevelopment Project Area to create TIF District No. 5 is in conformance with the General Plans of the City. The following excerpts from the plans identify specific areas. Vermillion Street Redevelopment Guidelines (2006) 1) ATTACHMENTS Resolution Vermillion Street Redevelopment Project Area Plan TIF District No. 5 Plan PLANNING COMMISSION CITY OF HASTINGS, MINNESOTA RESOLUTION NO. PC 2010-01 RESOLUTION OF THE CITY OF HASTINGS PLANNING COMMISSION FINDING THAT A MODIFICATION TO THE REDEVELOPMENT PLAN FOR THE VERMILLION STREET REDEVELOPMENT AREA AND A TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO. 5 CONFORMS TO THE GENERAL PLANS FOR THE DEVELOPMENT AND REDEVELOPMENT OF THE CITY. WHEREAS, the Hastings Economic Development and Redevelopment Authority (the "HEDRA") and the City of Hastings (the "City") have proposed to adopt a Modification to the Redevelopment Plan for the Vermillion Street Redevelopment Area (the "Redevelopment Plan Modification") and a Tax Increment Financing Plan for Tax Increment Financing District No. 5 (the "TIF Plan") therefor (the Redevelopment Plan Modification and the TIF Plan are referred to collectively herein as the "Plans") and have submitted the Plans to the City Planning Commission (the "Commission") pursuant to Minnesota Statutes, Section 469.175, Subd. 3, and WHEREAS, the Commission has reviewed the Plans to determine their conformity with the general plans for the development and redevelopment of the City as described in the comprehensive plan for the City. NOW, THEREFORE, BE IT RESOLVED by the Commission that the Plans conforms to the general plans for the development and redevelopment of the City as a whole. Dated: July 12, 2010 _______________________________________ Steven Zeyen, Chair ATTEST: ___________________________________ John Hinzman, Secretary As of June 15, 2010 Draft for Fiscal Implications Redevelopment Plan for the Vermillion Street Redevelopment Area Hastings Economic Development and Redevelopment Authority City of Hastings Dakota and Washington Counties State of Minnesota Establishment Public Hearing:October 6, 2008 Adopted:October 6, 2008 Modification Public Hearing:July 19, 2010 Modification Adopted: This document is in draft form for distribution to the County and the School District. The City and HEDRA may make minor changes to this draft document prior to the public hearing. Prepared by: EHLERS & ASSOCIATES, INC. 3060 Centre Pointe Drive, Roseville, Minnesota 55113-1105 (651) 697-8500 fax: (651) 697-8555 www.ehlers-inc.com TABLE OF CONTENTS (for reference purposes only) Municipal Action Taken.......................................................i Section 1 - Redevelopment Plan for the Vermillion Street Redevelopment Area....................................1-1 Subsection 1-1.Definitions..............................................1-1 Subsection 1-2.Statutory Authority........................................1-2 Subsection 1-3.Statement of and Finding of Public Purpose....................1-2 Subsection 1-4.Statement of Objectives...................................1-3 Subsection 1-5.Statement of ............................................1-4 Subsection 1-6.Funding of Developments and Redevelopments................1-5 Subsection 1-7.Environmental Controls....................................1-5 Subsection 1-8.Proposed Reuse of Property................................1-5 Subsection 1-9.Open Space to Be Created.................................1-5 Subsection 1-10.Administration and Maintenance of the Vermillion Street Redevelopment Area.....................................1-6 Subsection 1-11.Rehabilitation...........................................1-6 Subsection 1-12.Relocation..............................................1-6 Subsection 1-13.Property Acquisition......................................1-6 Subsection 1-14.Modification of the Redevelopment Plan and/or Vermillion Street Redevelopment Area................................1-6 Subsection 1-15.Description of Boundaries of the Vermillion Street Redevelopment Area.....................................1-7 APPENDIX A BOUNDARY MAPS OF THE VERMILLION STREET REDEVELOPMENT AREA.....A-1 Municipal Action Taken (This Municipal Action is only for convenience of reference.) Based upon the statutory authority described in the Redevelopment Plan attached hereto, the public purpose findings by the City Council and for the purpose of fulfilling the City's development objectives as set forth in the Redevelopment Plan, the City Council has created, established and designated the Vermillion Street Redevelopment Area pursuant to and in accordance with the requirements of the Enabling Act and the TIF Act as defined in the definitions of this document. The following municipal action was taken in connection therewith: Vermillion Street Redevelopment Area: January 22, 2008: The Vermillion Street Corridor Development Guidelines were adopted by City of Hastings. September 11, 2008: The Redevelopment Plan for the Vermillion Street Redevelopment Area was adopted by the Housing and Redevelopment Authority in and for the City of Hastings. September 22, 2008: The Redevelopment Plan for the Vermillion Street Redevelopment Area was reviewed by the Hastings Planning Commission. October 6, 2008: The Redevelopment Plan for the Vermillion Street Redevelopment Area was adopted by the City of Hastings. January 1, 2009: The Hastings Economic Development and Redevelopment Authority (HEDRA) replaced the Housing and Redevelopment Authority and the Economic Development Commission. The HEDRA operates with the powers of both a Housing and Redevelopment Authority and an Economic Development Authority. i Section 1 - Redevelopment Plan for the Vermillion Street Redevelopment Area Subsection 1-1.Definitions The terms defined below shall, for purposes of this Redevelopment Plan, have the meanings herein specified, unless the context otherwise specifically requires. "City" means the City of Hastings. "City Council" means the City Council of the City of Hastings. "County" means the County of Dakota County, Minnesota. "Enabling Act" means Minnesota Statues, 469.001 to 469.047, as amended and supplemented from time to time. "HEDRA" means the Hastings Economic Development and Redevelopment Authority of the City of Hastings. "EDA Act" means Minnesota Statutes, Section 469.090 through 469.1082. "Land Use Regulations" means all federal, state and local laws, rules, regulations, ordinances, and plans relating to or governing the use of development of land in the City, including but not limited to environmental, zoning and building code laws and regulations. "Municipal Development District Act" means Minnesota Statutes, 469.124 to 469.134, inclusive, as amended. "Project Area" means the real property within the City constituting the Redevelopment Project. "Public Costs" means the costs of the Redevelopment Project funded under the TIF Act, EDA Act, Enabling Act or the Municipal Development District Act. "Public Improvements" means the public improvements described in the Redevelopment Plan and any future Tax Increment Financing Plan. "Redevelopment Plan" means this Redevelopment Plan for the Vermillion Street Redevelopment Area, as initially proposed, and as it shall be modified. "Redevelopment Project" means the Vermillion Street Redevelopment Area, "State" means the State of Minnesota. City of Hastings Redevelopment Plan for the Vermillion Street Redevelopment Area1-1 "Tax Increment Bonds" means any tax increment bonds or notes issued by the City to finance the Public Costs as stated in the Redevelopment Plan for the Vermillion Street Redevelopment Area and in the Tax Increment Financing Plans, and any obligations issued to refund such bonds. "TIF Act" means Minnesota Statutes, Sections 479.174 through 479.179, inclusive, as amended. "Tax Increment Financing District" means any tax increment financing district to be established in the future in the Vermillion Street Redevelopment Area. "Tax Increment Financing Plan" or "Plan" means the plans adopted by the HEDRA or City for any Tax Increment Financing District. "Vermillion Street Development Guidelines" means the report and recommendations adopted by the City in January, 2008 to assist with economic development, land use, and transportation decisions along Vermillion Street in the Redevelopment Area. Subsection 1-2.Statutory Authority The Enabling Act authorizes the HEDRA, upon certain public purpose findings by the HEDRA and City, to establish and designate redevelopment projects within the City and to establish, develop and the administer redevelopment plans therefor to meet the needs and accomplish the public purposes specified in Statement of and Finding of Public Purpose. In accordance with the purposes set forth in the Enabling Act, the HEDRA and City have established the Redevelopment Project comprising the parcels described on the attached Exhibit A and have adopted this Redevelopment Plan therefor. The Enabling Act and the approval of this Redevelopment Plan by the City of Hastings authorizes the HEDRA to undertake redevelopment activities within the Project Area and, at a date subsequent to the adoption of this Redevelopment Plan and with future City Council approval, to establish and designate tax increment financing districts within the Project Area and to adopt and implement tax increment financing plans to accomplish the objective of this Redevelopment Plan. Subsection 1-3.Statement of and Finding of Public Purpose The HEDRA has determined that there is a need to take certain actions designed to encourage, ensure and facilitate development and redevelopment of underutilized and unused land located within the corporate limits of the City. These actions will provide additional employment opportunities for residents of the City and the surrounding area, and improve the tax base, thereby enabling better utilization of existing public facilities and provide needed public services, and improve the general economy of the City, the County, and the State. Specifically, the HEDRA has determined that the property within the Project Area is either underutilized or unused due to a variety of factors, including inadequate public parking to serve the property, small parcels, non-conforming uses, vacant or underutilized property, possible environmental conditions, obsolete building design and site layout, poor access and parking, and lack of streetscaping and visual appeal that is needed to make this a viable business district. These factors have resulted in a lack of private investment. As a result, the property is not providing adequate employment opportunities, and is not contributing, to its full potential, City of Hastings Redevelopment Plan for the Vermillion Street Redevelopment Area1-2 to the tax base and general economy of the City, the School District, the County and the State. Therefore, it is necessary for the City to exercise its authority under the Enabling Act to develop and implement a program designed to encourage, ensure and facilitate the commercial and mixed use development and redevelopment of the property located in the Project Area, to further and accomplish the public purposes specified in this paragraph. The land in the Project Area would not be developed or redeveloped solely through private investment in the foreseeable future. The welfare of the City, County and the State of Minnesota requires active promotion, attraction, encouragement and development of economically sound commerce by the HEDRA. Subsection 1-4.Statement of Objectives The establishment of the Project Area in the City pursuant to the Enabling Act is necessary and in the best interests of the City and its residents and is necessary to give the HEDRA the ability to meet certain public purpose objectives that would not be obtainable in the foreseeable future without intervention by the City in the normal development process. The HEDRA intends, to the extent permitted by law, to accomplish the following objectives through the implementation of the Redevelopment Plan: 1.Promoting and securing the development and redevelopment of property in the Project Area in a manner consistent with the City's planning, the Vermillion Street Development Guidelines, and with a minimal adverse impact on the environment, which property is less productive because of the lack of proper utilization and lack of investment, and thereby promoting and securing the development of other land in the City; 2.Promoting and securing additional employment opportunities within the Project Area and the City for residents of the City and the surrounding area, thereby improving living standards and preventing unemployment and the loss of skilled and unskilled labor and other human resources in the City; 3.Securing the increase in value of property subject to taxation by the City, School District, County and any other taxing jurisdictions in order to better enable such entities to pay for public improvements and governmental services and programs required to be provided by them; 4.Securing the construction and providing moneys for the payment of the cost of public improvements in the Project Area, which are necessary for the completion of the Redevelopment Project and the orderly and beneficial development of the Project Area. 5.Promoting a compatible mix of commercial, institutional, and residential land uses. 6.Encouraging the expansion and improvement of local business, and enhancing the economic vitality of existing and new businesses. City of Hastings Redevelopment Plan for the Vermillion Street Redevelopment Area1-3 7. Eliminating blighting influences that impede development in the area. 8.The provision of adequate streets, utilities, and other public improvements and facilities to enhance the area for both new and existing development. 9.Creating a desirable and unique character within the Project Area through quality land use alternatives and design quality in new buildings that create a safe environment for pedestrians, can be maintained for the long run, and celebrates the historic role of Vermillion Street as the main artery within the City of Hastings. 10.Supporting the physical connection to local trails, open space, and other community institutions. 11.Enhancing the integrity of residential neighborhoods adjacent to the Project Area. Providing and securing the development of increased opportunities for families to reside in quality owner-occupied housing , for senior citizens to choose from housing options which offer a wide array of services without regard to income, and for residents looking for a wide range of multi-family units. 12.Enhancing the long term viability of the Project Area by facilitating: ‡/DQGXVHVWKDWFRPSOHPHQWDQGVXSSRUWH[LVWLQJEXVLQHVVHV ‡1HZEXVLQHVVHVWKDWHQKDQFHWKHFRPPHUFLDOPDUNHW ‡9LVXDOTXDOLW\RIWKHVWUHHWVFDSHODQGVFDSHVLWH plan and building types of new developments; ‡0L[HGXVHKRXVLQJGHYHORSPHQWZKHUHDSSURSULDWHDQG ‡6DIHDFFHVVDQGFRQYHQLHQWSDUNLQJ Subsection 1-5.Statement of Redevelopment Project Activities The HEDRA will perform or cause to be performed, to the extent permitted by law, all project activities pursuant to the Enabling Act, the Tax Increment Financing Act and other applicable state laws, and in doing so anticipates that the following may, but are not required, to be undertaking by the HEDRA: (a)The making of studies, planning, and other formal and informal activities relating to the Redevelopment Plan. (b)The implementation and administration of the Redevelopment Plan. (c)The re-zoning of land within the City. (d)The acquisition of property, or interests in property, when acquisition is consistent with the objectives of the Redevelopment Plan. (e)The assembly of redevelopment sites of such size and character to assure development and redevelopment that meets the objectives of this Redevelopment Plan. (f)The preparation of property for use and development in accordance with applicable Land Use Regulations and any development agreements, including demolition of structures, clearance of sites, placement of fill and grading. (g)The resale or lease of property to private parties. City of Hastings Redevelopment Plan for the Vermillion Street Redevelopment Area1-4 (h)The construction, reconstruction ,or rehabilitation of facilities to own and lease as described in the Tax Increment Financing Plans. (i)The installation, construction, or reconstruction of streets, utilities, sidewalks, lighting, retaining walls, or other site improvements. (j)The implementation of a rehabilitation loan or grant program for properties within the Project Area. Subsection 1-6.Funding of Developments and Redevelopments It is anticipated that the Public Costs of the Redevelopment Plan will be paid from available sources of revenue, including but not limited to: ‡VSHFLDODVVHVVPHQWVDQGXVHUFKDUJHV ‡SURSHUW\WD[OHY\FROOHFWHGE\WKHHEDRA ‡ODQGVDOHSURFHHGV ‡OHDVHRUUHQWDOUHYHQXHV ‡JUDQWDQGORDQSURFHHGV ‡WD[LQFUHPHQWRUSURFHHGVIURPWD[LQFUHPHQWERQGV ‡FRQWULEXWLRQVIURPWKH&LW\ ‡RWKHUIXQGLQJVRXUFHVGHVLJQDWHGE\WKH&LW\RUHEDRA which the HEDRA may apply to pay a portion of the Public Costs. Subsection 1-7.Environmental Controls All municipal actions, public improvements and private development shall be carried out in a manner consistent with existing environmental controls and all applicable Land Use regulations. Subsection 1-8.Proposed Reuse of Property The Redevelopment Plan contemplates that the HEDRA or City may acquire property and reconvey the same to another entity. Prior to formal consideration of the acquisition of any property, the HEDRA or City will require the execution of a binding development agreement with respect thereto and evidence that funds will be available to repay the Public Costs associated with the proposed acquisition. It is the intent of the HEDRA and City to negotiate the acquisition of property whenever possible. Appropriate restrictions regarding the reuse and redevelopment of property shall be incorporated into any development agreement to which the HEDRA is a party. Subsection 1-9.Open Space to Be Created Any open space within the Redevelopment Project will be created in accordance with the zoning and planning ordinances of the City and the Vermillion Street Development Guidelines. City of Hastings Redevelopment Plan for the Vermillion Street Redevelopment Area1-5 Subsection 1-10.Administration and Maintenance of the Vermillion Street Redevelopment Area Maintenance and operation of the Redevelopment Project will be the responsibility of the HEDRA Director. Each year, the administrator of the Redevelopment Project will submit to the HEDRA Board of Commissioners the maintenance and operation budget for the following year. The administrator of the Redevelopment Project will administer the Redevelopment Project pursuant to the provision of the Enabling Act; provided, however, that such powers may only be exercised at the direction of the HEDRA. No action taken by the administrator of the Redevelopment Project pursuant to the above- mentioned powers shall be effective without authorization by the HEDRA. Subsection 1-11.Rehabilitation Owners of properties within the Project Area may be encouraged to rehabilitate their properties to conform with the applicable state and local codes and ordinances, as well as any design standards. Persons who purchase property within the Project Area from the HEDRA or City may be required to rehabilitate their properties as a condition of sale of land. The HEDRA or City may provide such rehabilitation assistance as may be available from federal, state or local sources. Subsection 1-12.Relocation Any person or business that is displaced as a result of the Redevelopment Plan will be relocated in accordance with Minnesota Statutes, Section 117.50 to 117.56. The HEDRA accepts its responsibility for providing for relocation assistance pursuant to the Enabling Act. Subsection 1-13.Property Acquisition The HEDRA or City intends to acquire such property, or appropriate interest therein, within the Project Area as the Authority may deem to be necessary or desirable to assist in the implementation of the Redevelopment Plan. Subsection 1-14.Modification of the Redevelopment Plan and/or Vermillion Street Redevelopment Area The HEDRA reserves the right to alter and amend the Redevelopment Plan, subject to the provisions of state law regulating such action. The HEDRA specifically reserves the right to enlarge or reduce the size of the Project Area. City of Hastings Redevelopment Plan for the Vermillion Street Redevelopment Area1-6 Subsection 1-15.Description of Boundaries of the Vermillion Street Redevelopment Area The Redevelopment Project shall include the following parcels 193215004080197730008005194470017007192775001202191630002001 193215001080197730021204195845001001190380001020198170001004 193215006079197730009005190370001105190380001021198170012201 193215008080197730010205194470019007190370001008198170003004 193215004088197730019104194470020007190370001009198170019004 193215006088197730010105194470021007190370001510198170018004 193215006188197730011005190370008105190370001510198170014001 193215003089197730012005194470022007190340001050198170017104 193215004089197730013005194470023007198170001101198170004004 193215006089197730016004190370008205197755001004198170005004 193215005089197730014005194470024007197755001104190340001055 193215006198197730010007194470002018197755001005191955101001 191320003006197730005106194470002218197755003005191955102001 191320014006197730009007194470002318198170002101198170025105 191320005106197730008007194470003018198170001001191955103001 191320007006197730005107194470004018198170003002198170023001 191320010006197730005007194470007118198170005302198170004005 191320006206197730007107194470008018197755006004198170005005 191320009106197730007007194470010018198170004001198170002006 193215006079194470002306194470011018198170002001198170030006 191320007006194470002406194470012018197755005004198170010106 191320009106194470016106194470015018198170002103197730004005 197730002004194470003107194470016018198170006001197730026004 197730028004194470012206194470001018198170013003197730003004 197730003005194470005207190370001407198170003003193215002189 197730027004194470008207190380008101191630001001193215002089 197730026104194470010207190380013101198170008101193215007089 197730025204194470013007190380001007198170005003 197730025004190380001007198815001002191630004001 197730006005198815004001198815004002198170009001 197730022004194470015107192775001101191630003001 197730007005194470016007192775001001198170012101 City of Hastings Redevelopment Plan for the Vermillion Street Redevelopment Area1-7 APPENDIX A BOUNDARY MAPS OF THE VERMILLION STREET REDEVELOPMENT AREA City of Hastings Redevelopment Plan for the Vermillion Street Redevelopment AreaA-1 As of June 15, 2010 Draft for Fiscal Implications Tax Increment Financing Plan for the establishment of Tax Increment Financing District No. 5 (a renewal and renovation district located within Dakota County) within the Vermillion Street Redevelopment Area Hastings Economic Development and Redevelopment Authority City of Hastings Dakota and Washington Counties State of Minnesota Public Hearing: July 19, 2010 Adopted: This document is in draft form for distribution to the County and the School District. The TIF Plan contains the estimated fiscal and economic implications of the proposed TIF District. The City and the HEDRA may make minor changes to this draft document prior to the public hearing. Prepared by: EHLERS & ASSOCIATES, INC. 3060 Centre Pointe Drive, Roseville, Minnesota 55113-1105 651-697-8500 fax: 651-697-8555 www.ehlers-inc.com Table of Contents (for reference purposes only) Section 1 - Tax Increment Financing Plan for Tax Increment Financing District No. 5....................................1-1 Subsection 1-1.Foreword...............................................1-1 Subsection 1-2.Statutory Authority........................................1-1 Subsection 1-3.Statement of Objectives...................................1-1 Subsection 1-4.Redevelopment Plan Overview..............................1-1 Subsection 1-5.Description of Property in the District and Property To Be Acquired .1-2 Subsection 1-6.Classification of the District.................................1-2 Subsection 1-7.Duration and First Year of Tax Increment of the District...........1-3 Subsection 1-8.Original Tax Capacity, Tax Rate and Estimated Captured Net Tax Capacity Value/Increment and Notification of Prior Planned Improvements....................................1-3 Subsection 1-9.Sources of Revenue/Bonds to be Issued......................1-4 Subsection 1-10.Uses of Funds...........................................1-5 Subsection 1-11.Fiscal Disparities Election..................................1-6 Subsection 1-12.Business Subsidies.......................................1-6 Subsection 1-13.County Road Costs.......................................1-7 Subsection 1-14.Estimated Impact on Other Taxing Jurisdictions.................1-8 Subsection 1-15.Supporting Documentation.................................1-9 Subsection 1-16.Definition of Tax Increment Revenues.......................1-10 Subsection 1-17.Modifications to the District................................1-10 Subsection 1-18.Administrative Expenses..................................1-11 Subsection 1-19.Limitation of Increment...................................1-11 Subsection 1-20.Use of Tax Increment....................................1-12 Subsection 1-21.Excess Increments......................................1-13 Subsection 1-22.Requirements for Agreements with the Developer..............1-13 Subsection 1-23.Assessment Agreements.................................1-13 Subsection 1-24.Administration of the District...............................1-14 Subsection 1-25.Annual Disclosure Requirements...........................1-14 Subsection 1-26.Reasonable Expectations.................................1-14 Subsection 1-27.Other Limitations on the Use of Tax Increment.................1-14 Subsection 1-28.Summary..............................................1-15 Appendix A Project Description......................................................A-1 Appendix B Map of the Vermillion Street Redevelopment Area and the District.................B-1 Appendix C Description of Property to be Included in the District............................C-1 Appendix D Estimated Cash Flow for the District........................................D-1 Appendix E Minnesota Business Assistance Form.......................................E-1 Appendix F Redevelopment Qualifications for the District..................................F-1 Appendix G Findings Including But/For Qualifications.....................................G-1 Section 1 - Tax Increment Financing Plan for Tax Increment Financing District No. 5 Subsection 1-1.Foreword The Hastings Economic Development and Redevelopment Authority (the "HEDRA"), the City of Hastings (the "City"), staff and consultants have prepared the following information to expedite the establishment of Tax Increment Financing District No. 5 (the "District"), a renewal and renovation tax increment financing district, located in the Vermillion Street Redevelopment Area. Subsection 1-2.Statutory Authority Within the City, there exist areas where public involvement is necessary to cause development or redevelopment to occur. To this end, the HEDRA and City have certain statutory powers pursuant to Minnesota Statutes ("M.S."), Sections 469.001 to 469.047 and Sections 469.090 to 469.1082, inclusive, as amended, and M.S., Sections 469.174 to 469.1799, inclusive, as amended (the "Tax Increment Financing Act" or "TIF Act"), to assist in financing public costs related to this project. Section 1 contains the Tax Increment Financing Plan (the "TIF Plan") for the District. Other relevant information is contained in the Modification to the Redevelopment Plan for the Vermillion Street Redevelopment Area. Subsection 1-3.Statement of Objectives The District currently consists of one parcel of land and adjacent and internal rights-of-way. (Three parcels were recently replatted into a single parcel and assigned a new property identification number, which is listed in Appendix C.) The District is being created to facilitate the redevelopment of an old gas station and two adjacent properties in the City. Please see Appendix A for further District information. The HEDRA has not entered into an agreement, but it has designated the Linn Investment Properties as the developer at the time of preparation of this TIF Plan. Construction is likely to begin in August, 2010. This TIF Plan is expected to achieve many of the objectives outlined in the Redevelopment Plan for the Vermillion Street Redevelopment Area. The activities contemplated in the Modification to the Redevelopment Plan and the TIF Plan do not preclude the undertaking of other qualified development or redevelopment activities. These activities are anticipated to occur over the life of the Vermillion Street Redevelopment Area and the District. Subsection 1-4.Redevelopment Plan Overview 1.Property to be Acquired - Selected property located within the District may be acquired by the HEDRA or City and is further described in this TIF Plan. 2.Relocation - Relocation services, to the extent required by law, are available pursuant to M.S., Chapter 117 and other relevant state and federal laws. 3.Upon approval of a developer's plan relating to the project and completion of the necessary legal requirements, the HEDRA or City may sell to a developer selected properties that it may acquire within the District or may lease land or facilities to a developer. 4.The HEDRA or City may perform or provide for some or all necessary acquisition, construction, relocation, demolition, and required utilities and public street work within the Hastings Economic Development and Redevelopment Authority 1-1 Tax Increment Financing Plan for Tax Increment Financing District No. 5 District. Subsection 1-5.Description of Property in the District and Property To Be Acquired The District encompasses all property and adjacent rights-of-way and abutting roadways identified by the parcel listed in Appendix C of this TIF Plan. Please also see the map in Appendix B for further information on the location of the District. The HEDRA or City may acquire any parcel within the District including interior and adjacent street rights of way. Any properties identified for acquisition will be acquired by the HEDRA or City only in order to accomplish one or more of the following: storm sewer improvements; provide land for needed public streets, utilities and facilities; carry out land acquisition, site improvements, clearance and/or development to accomplish the uses and objectives set forth in this plan. The HEDRA or City may acquire property by gift, dedication, condemnation or direct purchase from willing sellers in order to achieve the objectives of this TIF Plan. Such acquisitions will be undertaken only when there is assurance of funding to finance the acquisition and related costs. Subsection 1-6.Classification of the District The City, in determining the need to create a tax increment financing district in accordance with M.S., Sections 469.174 to 469.1799, as amended, inclusive, find that the District, to be established, is a renewal and renovation district pursuant to M.S., Section 469.174, Subd. 10a. as defined below: (a)"Renewal and renovation district" means a type of tax increment financing district consisting of a project, or portions of a project, within which the City finds by resolution that: (1)(i) parcels consisting of 70 percent of the area of the district are occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures; (ii) 20 percent of the buildings are structurally substandard; and (iii) 30 percent of the other buildings require substantial renovation or clearance to remove existing conditions such as: inadequate street layout, incompatible uses or land use relationships, overcrowding of buildings on the land, excessive dwelling unit density, obsolete buildings not suitable for improvement or conversion, or other identified hazards to the health, safety, and general well-being of the community; and (2)the conditions described in clause (1) are reasonable distributed throughout the geographic area of the district. (b)For purposes of determining whether a building is structurally substandard, whether parcels are occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures, or whether noncontiguous areas qualify, the provisions of subdivision 10, paragraphs (b) through (f) apply. In meeting the statutory criteria the City relies on the following facts and findings: ‡7KH'LVWULFWLVDUHQHZDODQGUHQRYDWLon district consisting of one parcel. ‡$QLQYHQWRU\VKRZVWKDWSDUFHOVFRQVLVWLQJRIPRUHWKDQSHUFHQWRIWKHDUHDLQWKH'LVWULFWDUH occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures. ‡$QLQVSHFWLRQRIWKHEXLOGLQJVORFDWHGZLWKLQWKH'LVWrict finds that more than 20 percent of the buildings Hastings Economic Development and Redevelopment Authority 1-2 Tax Increment Financing Plan for Tax Increment Financing District No. 5 are structurally substandard as defined in the TIF Act. (See Appendix F). ‡$QLQVSHFWLRQRIWKHEXLOGLQJVORFDWHGZLWKLQWKH'LVWrict finds that more than 30 percent of the buildings require substantial renovation or clearance to remove existing conditions such as defined in the TIF Act. (See Appendix F). Pursuant to M.S., Section 469.176, Subd. 7, the District does not contain any parcel or part of a parcel that qualified under the provisions of M.S., Sections 273.111 or 273.112 or Chapter 473H for taxes payable in any of the five calendar years before the filing of the request for certification of the District. Subsection 1-7.Duration and First Year of Tax Increment of the District Pursuant to M.S., Section 469.175, Subd. 1, and Section 469.176, Subd. 1, the duration and first year of tax increment of the District must be indicated within the TIF Plan. Pursuant to M.S., Section 469.176, Subd. 1b., the duration of the District will be 15 years after receipt of the first increment by the HEDRA or City (a total of 16 years of tax increment). The HEDRA or City elects to receive the first tax increment in 2013, which is no later than four years following the year of approval of the District. Thus, it is estimated that the District, including any modifications of the TIF Plan for subsequent phases or other changes, would terminate after 2028, or when the TIF Plan is satisfied. The HEDRA or City reserves the right to decertify the District prior to the legally required date. Subsection 1-8.Original Tax Capacity, Tax Rate and Estimated Captured Net Tax Capacity Value/Increment and Notification of Prior Planned Improvements Pursuant to M.S., Section 469.174, Subd. 7 and M.S., Section 469.177, Subd. 1, the Original Net Tax Capacity (ONTC) as certified for the District will be based on the market values placed on the property by the assessor in 2010 for taxes payable 2011. Pursuant to M.S., Section 469.177, Subds. 1 and 2, the County Auditor shall certify in each year (beginning in the payment year 2013) the amount by which the original value has increased or decreased as a result of: 1.Change in tax exempt status of property; 2.Reduction or enlargement of the geographic boundaries of the district; 3.Change due to adjustments, negotiated or court-ordered abatements; 4.Change in the use of the property and classification; 5.Change in state law governing class rates; or 6.Change in previously issued building permits. In any year in which the current Net Tax Capacity (NTC) value of the District declines below the ONTC, no value will be captured and no tax increment will be payable to the HEDRA or City. The original local tax rate for the District will be the local tax rate for taxes payable 2011, assuming the request for certification is made before June 30, 2011. The ONTC and the Original Local Tax Rate for the District appear in the table on the following page. Pursuant to M.S., Section 469.174 Subd. 4 and M.S., Section 469.177, Subd. 1, 2, and 4, the estimated Captured Net Tax Capacity (CTC) of the District, within the Vermillion Street Redevelopment Area, upon completion of the projects within the District, will annually approximate tax increment revenues as shown in the table on the following page. The HEDRA and City request 100 percent of the available increase in tax capacity for repayment of its obligations and current expenditures, beginning in the tax year payable 2013. The Project Tax Capacity (PTC) listed is an estimate of values when the projects within the District are completed. Hastings Economic Development and Redevelopment Authority 1-3 Tax Increment Financing Plan for Tax Increment Financing District No. 5 Project Estimated Tax Capacity upon Completion (PTC)$31,266 Original Estimated Net Tax Capacity (ONTC)$4,048 Estimated Captured Tax Capacity (CTC)$27,218 Pay 2010 Original Local Tax Rate1.05483 Estimated Annual Tax Increment (CTC x Local Tax Rate)$28,710 Percent Retained by the HEDRA100% Tax capacity includes a 1.50% inflation factor for the duration of the District. The tax capacity included in this chart is the estimated tax capacity of the District in year 15. The tax capacity of the District in year one is estimated to be $25,008. Pursuant to M.S., Section 469.177, Subd. 4, the HEDRA shall, after a due and diligent search, accompany its request for certification to the County Auditor or its notice of the District enlargement pursuant to M.S., Section 469.175, Subd. 4, with a listing of all properties within the District or area of enlargement for which building permits have been issued during the eighteen (18) months immediately preceding approval of the TIF Plan by the municipality pursuant to M.S., Section 469.175, Subd. 3. The County Auditor shall increase the original net tax capacity of the District by the net tax capacity of improvements for which a building permit was issued. The City has reviewed the area to be included in the District and determined that no building permits have been issued during the 18 months immediately preceding approval of the TIF Plan by the City. Subsection 1-9.Sources of Revenue/Bonds to be Issued The costs outlined in the Uses of Funds will be financed primarily through the annual collection of tax increments. The HEDRA or City reserves the right to incur bonds or other indebtedness as a result of the TIF Plan. As presently proposed, the projects within the District will be financed by a pay-as-you-go note. Additional indebtedness may be required to finance other authorized activities. The total principal amount of notes to be issued, or other indebtedness related to the use of tax increment financing, will not exceed $245,569 without a modification to the TIF Plan pursuant to applicable statutory requirements. It is estimated that up to $40,327 in interfund loans will be financed with tax increment revenues. It is estimated that up to $205,242 in loan proceeds will be financed with tax increment revenues. Any refunding amounts will be deemed a budgeted cost without a formal TIF Plan Modification. This provision does not obligate the HEDRA or City to incur debt. The HEDRA or City will issue bonds or incur other debt only upon the determination that such action is in the best interest of the City. The HEDRA or City may also finance the activities to be undertaken pursuant to the TIF Plan through loans from funds of the HEDRA or City or to reimburse the developer on a "pay-as-you-go" basis for eligible costs paid for by a developer. The total estimated tax increment revenues for the District are expected to be approximately $403,265, as shown in the table below: TOTAL SOURCES OF FUNDS Tax Increment$403,265 Hastings Economic Development and Redevelopment Authority 1-4 Tax Increment Financing Plan for Tax Increment Financing District No. 5 The HEDRA or City may issue bonds (as defined in the TIF Act) secured in whole or in part with tax increments from the District in a maximum principal amount of up to $245,569. Such bonds may be in the form of pay-as-you-go notes, revenue bonds or notes, general obligation bonds, or interfund loans. This estimate of total bonded indebtedness is a cumulative statement of authority under this TIF Plan as of the date of approval. Subsection 1-10.Uses of Funds Currently under consideration for the District is a proposal to facilitate the redevelopment of an old gas station and adjacent properties. The HEDRA and City have determined that it will be necessary to provide assistance to the project(s) for certain District costs, as described. The HEDRA has studied the feasibility of the development or redevelopment of property in and around the District. To facilitate the establishment and development or redevelopment of the District, this TIF Plan authorizes the use of tax increment financing to pay for the cost of certain eligible expenses. The estimate of public costs and uses of funds associated with the District is outlined in the following table. TOTAL USES OF TAX INCREMENT FUNDS Land/Building Acquisition$100,242 Site Improvements/Preparation$70,000 Public Utilities$15,000 Public Parking Facilities$0 Streets and Sidewalks$20,000 Administrative Costs (up to 10%)$40,327 PROJECT COST TOTAL$245,569 Interest$157,696 PROJECT AND INTEREST COSTS TOTAL$403,265 For purposes of OSA reporting forms, uses of funds include interfund loans, bond principal, TIF Note principal, and transfers, all in the principal amount of $245,569. These amounts are not cumulative, but represent the various forms of "bonds" included within the concept of bonded indebtedness under the TIF Act. The total project cost, including financing costs (interest) listed in the table above does not exceed the total projected tax increments for the District as shown in Appendix D. Estimated costs associated with the District are subject to change among categories without a modification to this TIF Plan. The cost of all activities to be considered for tax increment financing will not exceed, without formal modification, the budget above pursuant to the applicable statutory requirements. Pursuant to M.S., Section 469.1763, Subd. 2, no more than 25 percent of the tax increment paid by property within the District will be spent on activities related to development or redevelopment outside of the District but within the boundaries of the Vermillion Street Redevelopment Area, (including administrative costs, which are considered to be spent outside of the District) subject to the limitations as described in this TIF Plan. Hastings Economic Development and Redevelopment Authority 1-5 Tax Increment Financing Plan for Tax Increment Financing District No. 5 Subsection 1-11.Fiscal Disparities Election Pursuant to M.S., Section 469.177, Subd. 3, the HEDRA or City may elect one of two methods to calculate fiscal disparities. If the calculations pursuant to M.S., Section 469.177, Subd. 3, clause a, (outside the District) are followed, the following method of computation shall apply: (1)The original net tax capacity and the current net tax capacity shall be determined before the application of the fiscal disparity provisions of Chapter 276A or 473F. Where the original net tax capacity is equal to or greater than the current net tax capacity, there is no captured net tax capacity and no tax increment determination. Where the original net tax capacity is less than the current net tax capacity, the difference between the original net tax capacity and the current net tax capacity is the captured net tax capacity. This amount less any portion thereof which the authority has designated, in its tax increment financing plan, to share with the local taxing districts is the retained captured net tax capacity of the authority. (2)The county auditor shall exclude the retained captured net tax capacity of the authority from the net tax capacity of the local taxing districts in determining local taxing district tax rates. The local tax rates so determined are to be extended against the retained captured net tax capacity of the authority as well as the net tax capacity of the local taxing districts. The tax generated by the extension of the lesser of (A) the local taxing district tax rates or (B) the original local tax rate to the retained captured net tax capacity of the authority is the tax increment of the authority. The City and HEDRA choose to calculate fiscal disparities by clause a. According to M.S., Section 469.177, Subd. 3: (c)The method of computation of tax increment applied to a district pursuant to paragraph (a) or (b) shall remain the same for the duration of the district, except that the governing body may elect to change its election from the method of computation in paragraph (a) to the method in paragraph (b). Subsection 1-12.Business Subsidies Pursuant to M.S., Section 116J.993, Subd. 3, the following forms of financial assistance are not considered a business subsidy: (1) A business subsidy of less than $150,000; (2)Assistance that is generally available to all businesses or to a general class of similar businesses, such as a line of business, size, location, or similar general criteria; (3) Public improvements to buildings or lands owned by the state or local government that serve a public purpose and do not principally benefit a single business or defined group of businesses at the time the improvements are made; (4) Redevelopment property polluted by contaminants as defined in M.S., Section 116J.552, Subd. 3; (5) Assistance provided for the sole purpose of renovating old or decaying building stock or bringing it up to code and assistance provided for designated historic preservation districts, provided that the assistance is equal to or less than 50% of the total cost; Hastings Economic Development and Redevelopment Authority 1-6 Tax Increment Financing Plan for Tax Increment Financing District No. 5 (6) Assistance to provide job readiness and training services if the sole purpose of the assistance is to provide those services; (7) Assistance for housing; (8) Assistance for pollution control or abatement, including assistance for a tax increment financing hazardous substance subdistrict as defined under M.S., Section 469.174, Subd. 23; (9) Assistance for energy conservation; (10) Tax reductions resulting from conformity with federal tax law; (11) Workers' compensation and unemployment compensation; (12) Benefits derived from regulation; (13) Indirect benefits derived from assistance to educational institutions; (14) Funds from bonds allocated under chapter 474A, bonds issued to refund outstanding bonds, and bonds issued for the benefit of an organization described in section 501 (c) (3) of the Internal Revenue Code of 1986, as amended through December 31, 1999; (15) Assistance for a collaboration between a Minnesota higher education institution and a business; (16) Assistance for a tax increment financing soils condition district as defined under M.S., Section 469.174, Subd. 19; (17) Redevelopment when the recipient's investment in the purchase of the site and in site preparation is 70 percent or more of the assessor's current year's estimated market value; (18) General changes in tax increment financing law and other general tax law changes of a principally technical nature. (19) Federal assistance until the assistance has been repaid to, and reinvested by, the state or local government agency; (20) Funds from dock and wharf bonds issued by a seaway port authority; (21) Business loans and loan guarantees of $150,000 or less; and (22) Federal loan funds provided through the United States Department of Commerce, Economic Development Administration. The HEDRA will comply with M.S., Sections 116J.993 to 116J.995 to the extent the tax increment assistance under this TIF Plan does not fall under any of the above exemptions. Subsection 1-13.County Road Costs Pursuant to M.S., Section 469.175, Subd. 1a, the county board may require the HEDRA or City to pay for all or part of the cost of county road improvements if the proposed development to be assisted by tax increment will, in the judgment of the county, substantially increase the use of county roads requiring construction of road improvements or other road costs and if the road improvements are not scheduled within the next five years under a capital improvement plan or within five years under another county plan. If the county elects to use increments to improve county roads, it must notify the HEDRA or City within forty-five days of receipt of this TIF Plan. In the opinion of the HEDRA and City and consultants, the proposed development outlined in this TIF Plan will have little or no impact upon county roads, however the TIF Plan was not forwarded to the county 45 days prior to the public hearing. The HEDRA and City are aware that the county could claim that tax increment should be used for county roads, even after the public hearing. Hastings Economic Development and Redevelopment Authority 1-7 Tax Increment Financing Plan for Tax Increment Financing District No. 5 Subsection 1-14.Estimated Impact on Other Taxing Jurisdictions The estimated impact on other taxing jurisdictions assumes that the redevelopment contemplated by the TIF Plan would occur without the creation of the District. However, the HEDRA or City has determined that such development or redevelopment would not occur "but for" tax increment financing and that, therefore, the fiscal impact on other taxing jurisdictions is $0. The estimated fiscal impact of the District would be as follows if the "but for" test was not met: IMPACT ON TAX BASE 2009/Pay 2010Estimated Captured Total NetTax Capacity (CTC)Percent of CTC Tax CapacityUpon Completionto Entity Total Dakota County 410,126,74527,218 0.0066% City of Hastings18,005,39127,218 0.1512% Hastings ISD No. 20028,050,33227,218 0.0970% IMPACT ON TAX RATES PercentPotential Pay 2010 Extension Ratesof TotalCTCTaxes Dakota County 0.27269025.85%27,218 7,422 City of Hastings0.52677049.94%27,218 14,338 Hastings ISD No. 2000.20206019.16%27,218 5,500 Other0.0533105.05%27,218 1,451 1.054830100.00% Total28,710 The estimates listed above display the captured tax capacity when all construction is completed. The tax rate used for calculations is the actual Pay 2010 rate. The total net capacity for the entities listed above are based on actual Pay 2010 figures. The District will be certified under the actual Pay 2011 rates, which were unavailable at the time this TIF Plan was prepared. Pursuant to M.S. Section 469.175 Subd. 2(b): (1) Estimate of total tax increment. It is estimated that the total amount of tax increment that will be generated over the life of the District is $403,265; (2) Probable impact of the District on city provided services and ability to issue debt. Any impact of the District on police protection is expected to be minimal. The property that is being redeveloped has been vacant for several years, and vacant property can create public safety challenges. A new business on the site will increase public perceptions of security and safety, and will not, in and of itself, necessitate new capital investment in vehicles or facilities or increase staffing requirements. The probable impact of the District on fire protection is expected to be negligible. The City currently has the equipment necessary to provide fire protection to the proposed project. Prior to demolition, Hastings Economic Development and Redevelopment Authority 1-8 Tax Increment Financing Plan for Tax Increment Financing District No. 5 the site contained a wood-frame house and an old gas station with a small unsprinklered building and underground storage tanks. The new development will eliminate those specific risks, and the new building will be fully sprinklered. The financial impact to the fire department will be limited, if any. The impact of the District on public infrastructure is expected to be minimal. The development is not expected to significantly impact any traffic movements in the area. The infrastructure for sanitary sewer, storm sewer and water are in place and will be able to handle the slightly increased volume generated from the proposed development. Based on the development plans, there are no additional costs associated with street maintenance, sweeping, plowing, lighting and sidewalks. The development in the District is expected to contribute an estimated $11,430 in sanitary sewer (SAC) and water (WAC) connection fees. The probable impact of any District general obligation tax increment bonds on the ability to issue debt for general fund purposes is expected to be minimal. It is not anticipated that there will be any general obligation debt issued in relation to this project, therefore there will be no impact on the City's ability to issue future debt or on the City's debt limit. (3) Estimated amount of tax increment attributable to school district levies. It is estimated that the amount of tax increments over the life of the District that would be attributable to school district levies, assuming the school district's share of the total local tax rate for all taxing jurisdictions remained the same, is $88,000; (4) Estimated amount of tax increment attributable to county levies. It is estimated that the amount of tax increments over the life of the District that would be attributable to county levies, assuming the county's share of the total local tax rate for all taxing jurisdictions remained the same, is $118,752; (5) Additional information requested by the county or school district. The City is not aware of any standard questions in a county or school district written policy regarding tax increment districts and impact on county or school district services. The county or school district must request additional information pursuant to M.S. Section 469.175 Subd. 2(b) within 15 days after receipt of the tax increment financing plan. No requests for additional information from the county or school district regarding the proposed development for the District have been received. Subsection 1-15.Supporting Documentation Pursuant to M.S. Section 469.175, Subd. 1 (a), clause 7 the TIF Plan must contain identification and description of studies and analyses used to make the determination set forth in M.S. Section 469.175, Subd. 3, clause (b)(2) and the findings are required in the resolution approving the District. Following is a list of reports and studies on file at the City that support the HEDRA and City's findings: ‡9HUPLOOLRQ6WUHHW&RUULGRU'HYHORSPHQW*XLGHOLQHV-DQXDU\ ‡3URSRVDOWR&RPSOHWH3KDVH,,(QYLURQPHQWDO6ite Assessment Report for Former Jiffy Station Property Located at 1501 Vermillion Street, Hastings, MN 55033, Thatcher Engineering, Inc., April 11, 2008 ‡/LPLWHG3KDVH,,(6$5HSRUWIRU)RUPHU-LII\6WDWLRQ9HUPLOOLRQ6WUHHW+DVWLQJV01 Thatcher Engineering, Inc., May 2008 ‡$VEHVWRV'HPROLWLRQ6XUYH\5HSRUW7KDWFKHU(QJLQHHULQJ,QF0D\ ‡$GGHQGXPWR0D\$VEHVWRV'HPROLWLRQ6XUYH\5HSRUW7KDWFKHU(QJLQHHULQJ,QF-XO\ 2008 Hastings Economic Development and Redevelopment Authority 1-9 Tax Increment Financing Plan for Tax Increment Financing District No. 5 ‡3URSRVHG5HQHZDODQGRenovation TIF Eligibility Assessment, Hastings, MN, SEH No, HASTI- 103412, Short Elliott Hendrickson (SEH) Inc., August 25, 2008 ‡$VEHVWRV5HSRUW$SSOLHG(QYLURQPHQtal Sciences, Inc., September 19, 2008 ‡7DQN5HPRYDO$VVHVVPHQWIRU)RUPHU-LII\*DV6WDWLRQ/RFDWHGDW9HUPLOOLRQ6WUHHW +LJKZD\ 61), Hastings, MN 55033Thatcher Engineering, Inc., November 2008 , ‡5HSRUWRI6XEVXUIDFH([SORUDWLRQDQG*HRWHFKQLFDO Review, American Engineering Testing, Inc., May 27, 2010 Subsection 1-16.Definition of Tax Increment Revenues Pursuant to M.S., Section 469.174, Subd. 25, tax increment revenues derived from a tax increment financing district include all of the following potential revenue sources: 1.Taxes paid by the captured net tax capacity, but excluding any excess taxes, as computed under M.S., Section 469.177; 2.The proceeds from the sale or lease of property, tangible or intangible, to the extent the property was purchased by the Authority with tax increments; 3.Principal and interest received on loans or other advances made by the Authority with tax increments; 4.Interest or other investment earnings on or from tax increments; 5.Repayments or return of tax increments made to the Authority under agreements for districts for which the request for certification was made after August 1, 1993; and 6.The market value homestead credit paid to the Authority under M.S., Section 273.1384. Subsection 1-17.Modifications to the District In accordance with M.S., Section 469.175, Subd. 4, any: 1.Reduction or enlargement of the geographic area of the District, if the reduction does not meet the requirements of M.S., Section 469.175, Subd. 4(e); 2.Increase in amount of bonded indebtedness to be incurred; 3.A determination to capitalize interest on debt if that determination was not a part of the original TIF Plan; 4.Increase in the portion of the captured net tax capacity to be retained by the HEDRA or City; 5.Increase in the estimate of the cost of the District, including administrative expenses, that will be paid or financed with tax increment from the District; or 6.Designation of additional property to be acquired by the HEDRA or City, shall be approved upon the notice and after the discussion, public hearing and findings required for approval of the original TIF Plan. Pursuant to M.S. Section 469.175 Subd. 4(f), the geographic area of the District may be reduced, but shall not be enlarged after five years following the date of certification of the original net tax capacity by the county auditor. If a redevelopment district is enlarged, the reasons and supporting facts for the determination that the addition to the district meets the criteria of M.S., Section 469.174, Subd. 10, paragraph (a), clauses (1) to (5), must be documented in writing and retained. The requirements of this paragraph do not apply if (1) the only modification is elimination of parcel(s) from the District and (2) (A) the current net tax capacity of the parcel(s) eliminated from the District equals or exceeds the net tax capacity of those parcel(s) in the District's original net tax capacity or (B) the HEDRA agrees that, notwithstanding M.S., Section 469.177, Subd. 1, the original net tax capacity will be reduced by no more than the current net tax capacity of the parcel(s) eliminated from the District. Hastings Economic Development and Redevelopment Authority 1-10 Tax Increment Financing Plan for Tax Increment Financing District No. 5 The HEDRA or City must notify the County Auditor of any modification to the District. Modifications to the District in the form of a budget modification or an expansion of the boundaries will be recorded in the TIF Plan. Subsection 1-18.Administrative Expenses In accordance with M.S., Section 469.174, Subd. 14, administrative expenses means all expenditures of the HEDRA or City, other than: 1.Amounts paid for the purchase of land; 2.Amounts paid to contractors or others providing materials and services, including architectural and engineering services, directly connected with the physical development of the real property in the District; 3.Relocation benefits paid to or services provided for persons residing or businesses located in the District; or 4.Amounts used to pay principal or interest on, fund a reserve for, or sell at a discount bonds issued pursuant to M.S., Section 469.178; or 5.Amounts used to pay other financial obligations to the extent those obligations were used to finance costs described in clauses (1) to (3). For districts for which the request for certification were made before August 1, 1979, or after June 30, 1982, and before August 1, 2001, administrative expenses also include amounts paid for services provided by bond counsel, fiscal consultants, and planning or economic development consultants. Pursuant to M.S., Section 469.176, Subd. 3, tax increment may be used to pay any authorized and documented administrative expenses for the District up to but not to exceed 10 percent of the total estimated tax increment expenditures authorized by the TIF Plan or the total tax increments, as defined by M.S., Section 469.174, Subd. 25, clause (1), from the District, whichever is less. For districts for which certification was requested after July 31, 2001, no tax increment may be used to pay any administrative expenses for District costs which exceed ten percent of total estimated tax increment expenditures authorized by the TIF Plan or the total tax increments, as defined in M.S., Section 469.174, Subd. 25, clause (1), from the District, whichever is less. Pursuant to M.S., Section 469.176, Subd. 4h, tax increments may be used to pay for the County's actual administrative expenses incurred in connection with the District and are not subject to the percentage limits of M.S., Section 469.176, Subd. 3. The county may require payment of those expenses by February 15 of the year following the year the expenses were incurred. Pursuant to M.S., Section 469. 177, Subd. 11, the County Treasurer shall deduct an amount (currently .36 percent) of any increment distributed to the HEDRA or City and the County Treasurer shall pay the amount deducted to the State Treasurer for deposit in the state general fund to be appropriated to the State Auditor for the cost of financial reporting of tax increment financing information and the cost of examining and auditing authorities' use of tax increment financing. This amount may be adjusted annually by the Commissioner of Revenue. Subsection 1-19.Limitation of Increment The tax increment pledged to the payment of bonds and interest thereon may be discharged and the District may be terminated if sufficient funds have been irrevocably deposited in the debt service fund or other escrow account held in trust for all outstanding bonds to provide for the payment of the bonds at maturity or redemption date. Hastings Economic Development and Redevelopment Authority 1-11 Tax Increment Financing Plan for Tax Increment Financing District No. 5 Pursuant to M.S., Section 469.176, Subd. 6: if, after four years from the date of certification of the original net tax capacity of the tax increment financing district pursuant to M.S., Section 469.177, no demolition, rehabilitation or renovation of property or other site preparation, including qualified improvement of a street adjacent to a parcel but not installation of utility service including sewer or water systems, has been commenced on a parcel located within a tax increment financing district by the authority or by the owner of the parcel in accordance with the tax increment financing plan, no additional tax increment may be taken from that parcel and the original net tax capacity of that parcel shall be excluded from the original net tax capacity of the tax increment financing district. If the authority or the owner of the parcel subsequently commences demolition, rehabilitation or renovation or other site preparation on that parcel including qualified improvement of a street adjacent to that parcel, in accordance with the tax increment financing plan, the authority shall certify to the county auditor that the activity has commenced and the county auditor shall certify the net tax capacity thereof as most recently certified by the commissioner of revenue and add it to the original net tax capacity of the tax increment financing district. The county auditor must enforce the provisions of this subdivision. The authority must submit to the county auditor evidence that the required activity has taken place for each parcel in the district. The evidence for a parcel must be submitted by February 1 of the fifth year following the year in which the parcel was certified as included in the district. For purposes of this subdivision, qualified improvements of a street are limited to (1) construction or opening of a new street, (2) relocation of a street, and (3) substantial reconstruction or rebuilding of an existing street. The HEDRA or City or a property owner must improve parcels within the District by approximately July 2014 and report such actions to the County Auditor. Subsection 1-20.Use of Tax Increment The HEDRA or City hereby determines that it will use 100 percent of the captured net tax capacity of taxable property located in the District for the following purposes: 1.To pay the principal of and interest on bonds issued to finance a project; 2.To finance, or otherwise pay public redevelopment costs of the Vermillion Street Redevelopment Area pursuant to M.S., Sections 469.001 to 469.047 and Sections 469.090 to 469.1082; 3.To pay for project costs as identified in the budget set forth in the TIF Plan; 4.To finance, or otherwise pay for other purposes as provided in M.S., Section 469.176, Subd. 4; 5.To pay principal and interest on any loans, advances or other payments made to or on behalf of the HEDRA or City or for the benefit of the Vermillion Street Redevelopment Area by a developer; 6.To finance or otherwise pay premiums and other costs for insurance or other security guaranteeing the payment when due of principal of and interest on bonds pursuant to the TIF Plan or pursuant to M.S., Chapter 462C. M.S., Sections 469.152 through 469.165, and/or M.S., Sections 469.178; and 7.To accumulate or maintain a reserve securing the payment when due of the principal and interest on the tax increment bonds or bonds issued pursuant to M.S., Chapter 462C, M.S., Sections 469.152 through 469.165, and/or M.S., Sections 469.178. These revenues shall not be used to circumvent any levy limitations applicable to the City nor for other purposes prohibited by M.S., Section 469.176, Subd. 4. Tax increments generated in the District will be paid by Dakota County to the HEDRA for the Tax Increment Fund of said District. The HEDRA or City will pay to the developer(s) annually an amount not to exceed Hastings Economic Development and Redevelopment Authority 1-12 Tax Increment Financing Plan for Tax Increment Financing District No. 5 an amount as specified in a developer's agreement to reimburse the costs of land acquisition, public improvements, demolition and relocation, site preparation, and administration. Remaining increment funds will be used for HEDRA or City administration (up to 10 percent) and the costs of public improvement activities outside the District. Subsection 1-21.Excess Increments Excess increments, as defined in M.S., Section 469.176, Subd. 2, shall be used only to do one or more of the following: 1.Prepay any outstanding bonds; 2.Discharge the pledge of tax increment for any outstanding bonds; 3.Pay into an escrow account dedicated to the payment of any outstanding bonds; or 4.Return the excess to the County Auditor for redistribution to the respective taxing jurisdictions in proportion to their local tax rates. The HEDRA or City must spend or return the excess increments under paragraph (c) within nine months after the end of the year. In addition, the HEDRA or City may, subject to the limitations set forth herein, choose to modify the TIF Plan in order to finance additional public costs in the Vermillion Street Redevelopment Area or the District. Subsection 1-22.Requirements for Agreements with the Developer The HEDRA or City will review any proposal for private development to determine its conformance with the Redevelopment Plan and with applicable municipal ordinances and codes. To facilitate this effort, the following documents may be requested for review and approval: site plan, construction, mechanical, and electrical system drawings, landscaping plan, grading and storm drainage plan, signage system plan, and any other drawings or narrative deemed necessary by the HEDRA or City to demonstrate the conformance of the development with City plans and ordinances. The HEDRA or City may also use the Agreements to address other issues related to the development. Pursuant to M.S., Section 469.176, Subd. 5, no more than 25 percent, by acreage, of the property to be acquired in the District as set forth in the TIF Plan shall at any time be owned by the HEDRA or City as a result of acquisition with the proceeds of bonds issued pursuant to M.S., Section 469.178 to which tax increments from property acquired is pledged, unless prior to acquisition in excess of 25 percent of the acreage, the HEDRA or City concluded an agreement for the development or redevelopment of the property acquired and which provides recourse for the HEDRA or City should the development or redevelopment not be completed. Subsection 1-23.Assessment Agreements Pursuant to M.S., Section 469.177, Subd. 8, the HEDRA or City may enter into a written assessment agreement in recordable form with the developer of property within the District which establishes a minimum market value of the land and completed improvements for the duration of the District. The assessment agreement shall be presented to the County Assessor who shall review the plans and specifications for the improvements to be constructed, review the market value previously assigned to the land upon which the improvements are to be constructed and, so long as the minimum market value contained in the assessment agreement appears, in the judgment of the assessor, to be a reasonable estimate, the County Assessor shall also certify the minimum market value agreement. Hastings Economic Development and Redevelopment Authority 1-13 Tax Increment Financing Plan for Tax Increment Financing District No. 5 Subsection 1-24.Administration of the District Administration of the District will be handled by the HEDRA Director. Subsection 1-25.Annual Disclosure Requirements Pursuant to M.S., Section 469.175, Subds. 5, 6, and 6b the HEDRA or City must undertake financial reporting for all tax increment financing districts to the Office of the State Auditor, County Board and County Auditor on or before August 1 of each year. M.S., Section 469.175, Subd. 5 also provides that an annual statement shall be published in a newspaper of general circulation in the City on or before August 15. If the City fails to make a disclosure or submit a report containing the information required by M.S., Section 469.175 Subd. 5 and Subd. 6, the OSA will direct the County Auditor to withhold the distribution of tax increment from the District. Subsection 1-26.Reasonable Expectations As required by the TIF Act, in establishing the District, the determination has been made that the anticipated development 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. In making said determination, reliance has been placed upon written representation made by the developer to such effects and upon HEDRA and City staff awareness of the feasibility of developing the project site(s) within the District. 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. Such analysis is included with the cashflow in Appendix D, and indicates that the increase in estimated market value of the proposed development (less the indicated subtractions) exceeds the estimated market value of the site absent the establishment of the District and the use of tax increments. Subsection 1-27.Other Limitations on the Use of Tax Increment 1.General Limitations. All revenue derived from tax increment shall be used in accordance with the TIF Plan. The revenues shall be used To finance, or otherwise pay the capital and administration costs of the Vermillion Street Redevelopment Area pursuant to the M.S., Sections 469.001 to 469.047 and Sections 469.090 to 469.1082. Tax increments may not be used to circumvent existing levy limit law. No tax increment may be used for the acquisition, construction, renovation, operation, or maintenance of a building to be used primarily and regularly for conducting the business of a municipality, county, school district, or any other local unit of government or the state or federal government. This provision does not prohibit the use of revenues derived from tax increments for the construction or renovation of a parking structure. 2.Pooling Limitations. At least 80 percent of tax increments from the District must be expended on activities in the District or to pay bonds, to the extent that the proceeds of the bonds were used to finance activities within said district or to pay, or secure payment of, debt service on credit enhanced bonds. Not more than 20 percent of said tax increments may be expended, through a development fund or otherwise, on activities outside of the District except to pay, or secure payment of, debt service on credit enhanced bonds. For purposes of applying this restriction, all administrative expenses must be treated as if they were solely for activities outside of the District. Hastings Economic Development and Redevelopment Authority 1-14 Tax Increment Financing Plan for Tax Increment Financing District No. 5 3.Five Year Limitation on Commitment of Tax Increments. Tax increments derived from the District shall be deemed to have satisfied the 80 percent test set forth in paragraph (2) above only if the five year rule set forth in M.S., Section 469.1763, Subd. 3, has been satisfied; and beginning with the sixth year following certification of the District, 80 percent of said tax increments that remain after expenditures permitted under said five year rule must be used only to pay previously committed expenditures or credit enhanced bonds as more fully set forth in M.S., Section 469.1763, Subd. 5. 4.Renewal and Renovation District. At least 90 percent of the revenues derived from tax increment from a renewal and renovation district must be used to finance the cost of correcting conditions that allow designation of renewal and renovation districts under M.S., Section 469.176 Subd. 4j. These costs include, but are not limited to, acquiring properties containing structurally substandard buildings or improvements or hazardous substances, pollution, or contaminants, acquiring adjacent parcels necessary to provide a site of sufficient size to permit development, demolition and rehabilitation of structures, clearing of the land, the removal of hazardous substances or remediation necessary for development of the land, and installation of utilities, roads, sidewalks, and parking facilities for the site. The allocated administrative expenses of the City, including the cost of preparation of the development action response plan, may be included in the qualifying costs. Subsection 1-28.Summary The Hastings Economic Development and Redevelopment Authority is establishing the District to preserve and enhance the tax base, redevelop substandard areas, and provide employment opportunities in the City. The TIF Plan for the District was prepared by Ehlers & Associates, Inc., 3060 Centre Pointe Drive, Roseville, Minnesota 55113, telephone (651) 697-8500. Hastings Economic Development and Redevelopment Authority 1-15 Tax Increment Financing Plan for Tax Increment Financing District No. 5 Appendix A Project Description Prior to the proposed redevelopment, the project site contained an abandoned gas station and an old residential structure. The structures were demolished pursuant to a resolution and adopted by the HEDRA (see Appendix F). Special steps were taken to dispose of the asbestos. The gas tanks have been removed. Remaining on the site is four feet of old fill and unstable soils that must be excavated. After completing the soil work, the developer intends to construct an 8,600 sq. ft. retail facility that will contain a NAPA Auto Parts store. AppendixA-1 Appendix B Map of the Vermillion Street Redevelopment Area and the District AppendixB-1 Appendix C Description of Property to be Included in the District The District encompasses all property and adjacent rights-of-way and abutting roadways identified by the parcel listed below. Parcel Numbers 19-44700-161-06 Address 1501 Vermillion Street Owner Linn Investment Properties, LLC. AppendixC-1 Appendix D Estimated Cash Flow for the District AppendixD-1 Appendix E Minnesota Business Assistance Form (Minnesota Department of Employment and Economic Development) A Minnesota Business Assistance Form (MBAF) should be used to report and/or update each calendar year's activity by April 1 of the following year. Please see the Minnesota Department of Employment and Economic Development (DEED) website at http://www.deed.state.mn.us/Community/subsidies/MBAFForm.htm for information and forms. AppendixE-1 Appendix F Redevelopment Qualifications for the District AppendixF-1 Appendix G Findings Including But/For Qualifications More information to be added to prior to the public hearing MARKET VALUE BUT / FOR ANALYSIS Current Market Value - Est.239,900 New Market Value - Est.1,287,900 Difference1,048,000 Present Value of Tax Increment246,457 Difference801,543 Value likely to occur without Tax Increment is less than:801,543 AppendixG-1