HomeMy WebLinkAboutIV.A - TIF District 8 - Schoolhouse Square Senior Apartments
HEDRA Memorandum
To: HEDRA Board of Commissioners
From: Rusty Fifield, Economic Development Coordinator
Date: February 5, 2020
Subject: Tax Increment Financing District #8
Action Requested
1. Adopt the attached resolution approving the modification of the Vermillion Street
Redevelopment Area, the establishment of Tax Increment Financing District No. 8, the
adoption of the modified Redevelopment Plan, and the adoption of the Tax Increment
Financing Plan.
2. Adopt attached resolution approving an interfund loan related to administrative expense for
TIF District No. 8.
Background
In December, HEDRA requested that the City Council undertake the process to establish a tax
increment financing (TIF) District for a proposed affordable senior housing project at
Schoolhouse Square. A proposed TIF Plan has been prepared and notifications have been
provided in accordance with State Law. The City Council will hold a public hearing on the
establishment of the TIF District on February 18.
Jessica Green from Northland Securities will attend the February 13 meeting to explain the
proposed TIF District and your answer your questions. The resolutions are attached to this
memo. A summary of the TIF plan and the complete modified Redevelopment Plan and TIF
Plan accompanies this memo in your packet.
Recommendation
1. Adopt Resolution No. 2020-03 related to the Vermillion Street Redevelopment Area and TIF
District No. 8.
2. Adopt Resolution No. 2020-04 related to interfund loan for TIF District No. 8.
Documents Accompanying This Memo
1. Summary of modified Redevelopment Plan and proposed TIF Plan.
2. Complete modified Redevelopment Plan and TIF Plan.
HASTINGS ECONOMIC DEVELOPMENT AND REDEVELOPMENT AUTHORITY
RESOLUTION NO. 2020-03
RESOLUTION APPROVING MODIFICATION OF VERMILLION
STREET REDEVELOPMENT AREA (THE “PROJECT AREA”),
THE ESTABLISHMENT OF TAX INCREMENT FINANCING
DISTRICT NO. 8 (THE “TIF DISTRICT”) WITHIN THE
PROJECT AREA, THE ADOPTION OF THE MODIFIED
REDEVELOPMENT PLAN FOR THE PROJECT AREA, AND THE
ADOPTION OF TAX INCREMENT FINANCING PLAN
RELATING TO THE TIF DISTRICT
BE IT RESOLVED By the Board of Commissioners of the Hastings Economic
Development and Redevelopment Authority, Minnesota (“HEDRA"), as follows:
Section 1. Recitals.
1.01. The HEDRA proposes to approve modification of Vermillion Street
Redevelopment Area (the “Project Area”), the establishment of Tax Increment Financing District
No. 8 (the “TIF District”) within the Project Area, the adoption of the Modified Redevelopment
Plan for the Project Area, and the adoption of Tax Increment Financing Plan relating to the TIF
District (the “TIF Plan”), all pursuant to and in accordance with Minnesota Statutes, Sections
469.001 through 469.047, both inclusive, as amended, Minnesota Statutes Sections 469.090
through 469.1081, both inclusive, as amended, and Minnesota Statutes, Sections 469.174 through
469.1794, both inclusive, as amended (collectively, the “Act”).
1.02. The HEDRA staff and consultants have prepared the TIF Plan for consideration by
the Board and by the City of Hastings (the “City”).
1.03. The HEDRA and the City have and will perform all actions required by law to be
performed prior to the establishment of the TIF District and the adoption and approval of the
proposed TIF Plan, including, but not limited to, notification of Dakota County and Independent
School District No. 200, approval of the Plans by the EDA on the date hereof, and the holding by
the City Council of a public hearing upon published notice as required by law.
Section 2. Approval of the Project Area and Redevelopment Plan.
2.01 The HEDRA hereby finds, determines and declares that with respect to the
Modified Redevelopment Plan:
(a) That the land in the Project Area would not be made available for
redevelopment without the financial aid to be sought.
(b) That the Modified Redevelopment Plan will afford maximum opportunity,
consistent with the needs of the City as a whole, for the redevelopment of the
Project Area and adjacent areas by private enterprise;
(c) That the Modified Redevelopment Plan conforms to the general plan for
the development or redevelopment of the City as a whole, and the anticipated
development is in furtherance of long-range plans of the City for that area; and
(d) That the Modified Redevelopment Plan is intended and, in the judgment of
the HEDRA, its effect will be, to promote the public purposes and accomplish the
objectives specified in the Redevelopment Plan for the Redevelopment Project.
2.02 There is hereby established Vermillion Street Redevelopment Area, the modified
boundaries of which are fixed and determined as described in the Redevelopment Plan.
2.03 The Modified Redevelopment Plan for Vermillion Street Redevelopment Area is
adopted.
Section 3. Approval of the TIF District and TIF Plan; Further Actions.
3.01. The HEDRA hereby finds, declares, and determines that the TIF District is in the
public interest and is a housing district as described in Section 469.174, Subd. 11 of the Act and
finds that the TIF Plan conforms in all respects to the requirements of the Act and that the
establishment of the TIF District and adoption of the TIF Plan will help provide increased housing
opportunities in the City, and thereby serves a public purpose.
3.02. The HEDRA further finds that the TIF Plan will afford maximum opportunity,
consistent with the sound needs for the City as a whole, for the redevelopment of the Project by
private enterprise in that the intent is to provide only that public assistance necessary to make the
private development financially feasible.
2.03. The HEDRA hereby approves the TIF Plan for the TIF District, subject to approval
thereof by the City Council following its public hearing thereon.
2.04. Subject to approval of the TIF Plan and establishment of the TIF District by the
City Council, Authority staff and consultants are authorized and directed to proceed with the
implementation of the TIF Plan and for this purpose to negotiate, draft, prepare and present to
this Board for its consideration all further plans, resolutions, documents and contracts necessary
for this purpose. Approval of the TIF Plan does not constitute approval of any project or a
development agreement with any developer.
Adopted by the Board of Commissioners of the Hastings Economic Development and
Redevelopment Authority this 13th day of February, 2020.
_________________________________
Martha Sullivan, President
ATTEST:
Rusty Fifield, Secretary
HASTINGS ECONOMIC DEVELOPMENT AND REDEVELOPMENT AUTHORITY
RESOLUTION NO. 2020-04
RESOLUTION APPROVING INTERFUND LOAN FOR ADVANCE OF CERTAIN
COSTS IN CONNECTION WITH TAX INCREMENT FINANCING (HOUSING)
DISTRICT NO. 8
BE IT RESOLVED by the Board of Commissioners of the Hastings Economic
Development and Redevelopment Authority, Minnesota (“HEDRA"), as follows:
Section 1. Background.
1.02. The HEDRA has adopted Resolution No. 2020-03 approving the
establishment of Tax Increment Financing District No. 8 (the “TIF District”) and the adoption of
Tax Increment Financing Plan relating to the TIF District, among other approvals, all pursuant to
and in accordance with Minnesota Statutes, Sections 469.001 through 469.047, both inclusive, as
amended, Minnesota Statutes Sections 469.090 through 469.1081, both inclusive, as amended,
and Minnesota Statutes, Sections 469.174 through 469.1794, both inclusive, as amended
(collectively, the “Act”).
1.02. The HEDRA plans to incur certain costs related to the TIF District, which costs
may be financed on a temporary basis from legally available HEDRA funds.
1.03. Under Section 469.178, Subdivision 7 of the TIF Act, the HEDRA is authorized to
advance or loan money from any fund from which such advances may be legally made in order to
finance expenditures that are eligible to be paid with tax increments under the TIF Act.
1.04. The HEDRA has determined that it may be necessary to finance up to $83,892 in
administrative costs associated with the TIF District (the “Administrative Costs”) using HEDRA
funds legally authorized for such purpose, and to reimburse such funds from tax increments from
the TIF District when received.
1.06. The HEDRA intends to designate such advances as an interfund loan in accordance
with the terms of this resolution and the TIF Act.
Section 2. Repayment of Interfund Loan.
2.01. The HEDRA hereby authorizes the advance of legally available City funds up to
$83,892 to reimburse the HEDRA for Administrative Costs, together with interest at the rate of
5.0% per annum (the “Interfund Loan”). Interest accrues on the principal amount from the date
of the final draw for the Administrative Costs (hereafter, the “Closing Date”). The interest rate is
no more than the greatest of the rate specified under Minnesota Statutes, Section 270C.40 and
Section 549.09, both in effect for calendar year 2019, and will not be adjusted.
2.02. Principal and interest ("Payments") on the Interfund Loan shall be paid semi-
annually on each August 1 and February 1 (each a “Payment Date”), commencing on the first
Payment Date on which the City has Available Tax Increment (defined below), or on any other
dates determined by the City Administrator, through the date of last receipt of tax increment from
the TIF District.
2.03. Payments on the Interfund Loan will be made solely from Available Tax Increment,
which means up to 2.5% of the amounts received as tax increment from collections of ad valorem
taxes from the TIF District from Dakota County, Minnesota, in each year, which may be retained
by the City until it has received $83,892 to reimburse it for the Administrative Costs. Payments
shall be applied first to accrued interest, and then to unpaid principal. Simple interest will accrue
from the Closing Date, unless otherwise specified by the City Administrator.
2.04. The principal sum and all accrued interest payable under this resolution is pre-
payable in whole or in part at any time by the HEDRA without premium or penalty.
2.05. This resolution is evidence of an internal borrowing by the HEDRA in accordance
with Section 469.178, subdivision 7 of the TIF Act, and is a limited obligation payable solely from
Available Tax Increment pledged to the payment hereof under this resolution. The Interfund Loan
shall not be deemed to constitute a general obligation of the State of Minnesota or any political
subdivision thereof, including, without limitation, the City. Neither the State of Minnesota, nor
any political subdivision thereof shall be obligated to pay the principal of or interest on the
Interfund Loan or other costs incident hereto except out of Available Tax Increment. The HEDRA
shall have no obligation to pay any principal amount of the Interfund Loan or accrued interest
thereon, which may remain unpaid after the final Payment Date.
2.06. The HEDRA may at any time make a determination to forgive the outstanding
principal amount and accrued interest on the Interfund Loan to the extent permissible under law.
2.07. The HEDRA may from time to time amend the terms of this Resolution to the
extent permitted by law, including without limitation amendment to the payment schedule and
the interest rate; provided that the interest rate may not be increased above the maximum
specified in Section 469.178. subd. 7 of the TIF Act.
Section 3. Effective Date. This resolution is effective upon approval.
Adopted by the Board of Commissioners of the Hastings Economic Development and
Redevelopment Authority this 13th day of February, 2020.
________________________________
Martha Sullivan, President
ATTEST:
Rusty Fifield, Secretary
Northland Securities, Inc.
150 South Fifth Street, Suite 3300, Minneapolis, MN 55402
Toll Free 1-200-851-2920, Main 612-851-5900,www.northlandsecurities.com
Member FINRA and SIPC | Registered with SEC and MSRB
MEMORANDUM
To:Hastings Economic and Redevelopment Authority(HEDRA)
From:Tammy Omdal, Managing Director
Jessica Green, Managing Director
Date:February 13,2020
Re:Overview of Tax Increment Financing DistrictNo.8
This memorandum provides an overview of the proposed establishment of Tax Increment
Financing (TIF) District No. 8 (the “TIF District”). This matter will be considered by the HEDRA
on February 13, 2020. The City Council will conduct a public hearing and consider approval of
the TIF District on February 18.
Proposed Development
The City of Hastings and HERA received an Application for Tax Increment Financing
Assistance from Real Estate Equities, LLC (the “Developer”). The Developer is requesting tax
increment financing (TIF) assistance to assist with the financing of a 90-unit apartment building
consisting of both one and two-bedroom units located at 101 10
th Street East (the “Project”). All
apartment units will be affordable to households at or below 60% of the area median income
(AMI). The parcel is a 2.07-acre site located with access to Highway 61.
The request by the Developer is for the establishment of an affordable housing TIF district to
capture the increase in property taxes from the development for a maximum period of 25 years
to assist with the financing of the affordable housing units. An affordable housing TIF district
for rental property requires that a minimum of either 20% of the units be leased to persons at or
below 50% of AMI, or 40% of the units leased to persons at or below 60% of AMI. The 2019 AMI
for Dakota County, as calculated by the U.S. Department of Housing and Urban Development,
is $100,000.
City of Hastings
Overview of TIF District No. 8
Page 2
Northland has reviewed the information submitted by the Developer, including pro forma,
based on general industry standards for land acquisition, construction costs, developer fees,
operating expenses and rental rates, among other items. Based on our review, we find the
information provided to be complete and within general industry standards.
It is Northland’s opinion that the Project, as proposed, is feasible only through assistance, in
part from TIF. Financing affordable housing projects typically takes multiple sources to achieve
rents at affordable levels in today’s market. The Developer’s team has indicated to the City that
they have applied to the Dakota County Community Development Agency (the “CDA”) for an
allocation of tax-exempt bonds and 4% Low-income Housing Tax Credits (LIHTC). Subject to
further details of the Developer’s proposed source of funds and based on the information
available to date, we find that the Project, as proposed, would not be reasonably expected to
occur solely through private investment within the reasonably near future.
The CDA review and approval process has not been completed. The negotiation of a
development agreement between HEDRA and the Developer will occur after the CDA decision
on bonds and LIHTC. The development agreement will define the actual terms for the use of
TIF, including the amount and terms for assistance. The proposed Tax Increment Financing
Plan for the TIF District (the “TIF Plan”) defines the parameters and authority for the use of TIF.
Process for Approval
The City must hold a public hearing prior to consideration of a resolution of approval of the TIF
District and the TIF Plan. The TIF Plan provides information about the Project and authorizes
the use of TIF to pay for land acquisition, construction of affordable housing, and
administrative costs (the “Project Costs”).
A tax increment financing district administered by the HEDRA (after approval by the City)
must be located within the boundaries of a specified redevelopment project. The HEDRA has
previously established the Vermillion Street Redevelopment Area (the “Project Area”). It is
proposed that the Project Area be modified to include the two parcels within the TIF District
plus the surrounding property (see map in Exhibit V of the TIF Plan).
The Modified Redevelopment Plan for the Project Area has been incorporated into a common
document with the TIF Plan. The Redevelopment Plan currently exists as a standalone
document.
Once the TIF District is approved by the City, the HEDRA may consider further actions,
including entering into a contract with the Developer for TIF.
City of Hastings
Overview of TIF District No. 8
Page 3
Notice to County and School District
Before the public hearing and the establishment of a TIF district, the City must provide certain
notices to the county and the school district, including providing a copy of a draft TIF plan. The
county and school district may comment on the proposed TIF district but cannot prevent the
creation of the TIF district. On behalf of the City, Northland submitted a letter and a draft copy
of the TIF Plan for the TIF District to Dakota County and Independent School District No. 200
on January 2, 2020, asking to receive written comments. No written or oral comments were
received by Northland or the City.
Adoption of TIF Plan
Following the public hearing, the City Council may consider a resolution of approval.
TIF Plan Summary
TIF plans can be confusing, as the plans tend to contain technical language that is required by
the statutes that govern tax increment. The summary that follows is provided to highlight the
key elements of the TIF Plan. A complete copy of the draft TIF Plan is available and included in
the packet for the HEDRA and the City Council meetings.
Item Plan Section Comments
Introduction 1.01 Section 1.01 summarizes prior and proposed actions taken
in connection with the Project Area and Redevelopment
Plan.
Statement of
Public Purpose,
Statement of
Objectives
2.02
3.01
Section 2.02 describes how the Project Area and Modified
Redevelopment Plan will facilitate desired outcomes for
public benefit; Section 3.01 provides details related to the
objectives of the Redevelopment Plan.
Boundaries of
TIF District;
Type of TIF
District
4.03.02
4.03.03
The TIF District will consist of two (2) parcels, as well as
adjacent roads and right-of-way.
The TIF District will be a Housing District and will meet the
statutory criteria for this type of district.
Estimated Tax
Increment
4.04 The projected development is estimated to create annual tax
increment revenue of $117,065 in the first year of the TIF
District or upon completion of the project. This amount is
based on the following factors:
City of Hastings
Overview of TIF District No. 8
Page 4
Item Plan Section Comments
Total estimated taxable market value of the Project of
$14,544,000 million after completion of construction.
Classification of the Project as Apartments, under the 4d
Affordable Housing Program.
The original net tax capacity value of the TIF District
will be based on the current market value of the Project
for taxes payable in 2020.
The estimated local tax rate of 108.51% in the TIF Plan is
based on tax rates for taxes payable in 2019, includes the
city, county, school, and other local taxing jurisdictions
tax rates pursuant to the provisions in the TIF Act. The
local tax rate is used to estimate the future tax
increments. Upon request to the County Auditor to
certify the TIF District, and the anticipated timing of the
request, it is anticipated the final certified tax rate for
the TIF District will be based on the local tax rate for
taxes payable in 2020.
The actual estimated market value of the Project will be set
by the Assessor after completion of construction. Changes
in property values and tax rates will alter the amount of TIF
revenue from year-to-year.
Project Costs,
Estimated
Source and Uses
of Funds,
Administrative
Expense
4.04.2
4.04.3
4.04.4
TIF will be used to pay Project Costs related to the Project.
The TIF Plan provides for the reimbursement of up to
$1,739,310 of estimated Project Costs. The Project Costs
include $1,655,418 for land acquisition and construction of
affordable housing, and $83,892 for administrative costs.
The HEDRA in negotiation with the Developer will
determine the amount of TIF assistance that may be
provided to the Project. The amount of assistance and
duration for assistance may be, and is anticipated to be, less
than the total available tax increments in the TIF Plan and
the maximum duration provided in the TIF Plan.
Reimbursement of Project Costs to the Developer will be on
a pay-go basis. As tax increment is collected by the HEDRA
City of Hastings
Overview of TIF District No. 8
Page 5
Item Plan Section Comments
upon distribution of taxes from the County, the HEDRA
may use the net available tax increments to reimburse for
actual costs incurred and evidenced by the Developer,
along with interest payments on the balances outstanding.
Bonded
Indebtedness
4.04.6 Use of tax increments by the HEDRA will be on a “pay-go”
basis payable solely from available tax increments and will
not be a general obligation of the City. The statute
governing TIF describes amounts due to a developer under
a pay-go contract, and interfund loans, as a bonded
indebtedness. The TIF Plan does not provide for issuance of
general obligation indebtedness.
Duration 4.04.7 The TIF Plan elects a duration of twenty-five (25) years after
the date of receipt of the first tax increments. The HEDRA
may negotiate a term of assistance to the Developer that is
less than the maximum duration of the TIF District in the
TIF Plan.
DRAFT
MODIFIED REDEVELOPMENT PLAN FOR
VERMILLION STREET REDEVELOPMENT AREA
AND
TAX INCREMENT FINANCING PLAN FOR
TAX INCREMENT FINANCING (HOUSING)DISTRICT NO. 8
(SCHOOLHOUSE SQUARE)
WITHIN
VERMILLION STREET REDEVELOPMENT AREA
ADOPTED BY
CITY OF HASTINGS, MINNESOTA
AND
HASTINGS ECONOMIC DEVELOPMENTAND REDEVELOPMENTAUTHORITY
PUBLIC HEARING DATE: FEBRUARY 18, 2020
PLAN APPROVED BY HEDRA DATE: _________,2020
PLAN APPROVED BY CITY COUNCIL DATE: __________, 2020
PLAN CERTIFICATION REQUEST DATE: _____________, 2020
PLAN CERTIFIED DATE: _______, 2020
Northland Securities, Inc.
150 South Fifth Street, Suite 3300
Minneapolis, MN 55402
(800) 851-2920
Member NASD and SIPC
Registered with SEC and MSRB
TAX INCREMENT FINANCING (HOUSING)DISTRICT NO. 8
DRAFT FOR PUBLIC HEARING, FEBRUARY 18, 2020 I
TABLE OF CONTENTS
ȃ .........................................................1
Section 1.01 Introduction ......................................................................................1
Section 1.02 Defi nitions .........................................................................................2
Section 1.03 Plan Preparation...............................................................................3
ǧ ..........................4
Section 2.01 Enabling Act; Statutory Authority.................................................4
Section 2.02 Statement and Finding of Public Purpose....................................4
Section 2.03 Boundaries of Project Area..............................................................4
ǧ.........................................................................6
Section 3.01 Statement of Objectives...................................................................6
Section 3.02 Development Activities...................................................................7
Section 3.03 Payment of Public Costs..................................................................7Section 3.04 Environmental Controls; Land Use Regulations.........................7Section 3.05 Park and Open Space to be Created..............................................8
Section 3.06 Proposed Reuse of Property...........................................................8
Section 3.07 Administration and Maintenance of Project Area.......................8
Section 3.08 Relocation..........................................................................................8Section 3.09 Amendments.....................................................................................8Section 3.10 Findings and Declaration................................................................8
ǧ
......................................................9Section 4.01 Statutory Authority..........................................................................9
Section 4.02 Planned Development .....................................................................9
4.02.1 Project Description......................................................................................9
4.02.2 City Plans and Development Program ....................................................9
4.02.3 Land Acquisition.........................................................................................9
4.02.4 Development Activities..............................................................................9
4.02.5 Need for Tax Increment Financing...........................................................9
Section 4.03 Tax Increment Financing District.................................................10
4.03.1 Designation................................................................................................10
4.03.2 Boundaries of TIF District........................................................................10
4.03.3 Type of District..........................................................................................10
Section 4.04 Plan for Use of Tax Increment ......................................................104.04.1 Estimated Tax Increment..........................................................................104.04.2 Project Costs...............................................................................................114.04.3 Estimated Sources and Uses of Funds...................................................12Figure 4.1....................................................................................................124.04.4 Administrative Expense...........................................................................134.04.5 County Road Costs...................................................................................134.04.6 Bonded Indebtedness...............................................................................134.04.7 Duration of TIF District............................................................................144.04.8 Estimated Impact on Other Taxing Jurisdictions .................................144.04.9 Prior Planned Improvements..................................................................14
TAX INCREMENT FINANCING (HOUSING)DISTRICT NO. 8
DRAFT FOR PUBLIC HEARING, FEBRUARY 18, 2020 II
ȃ
......................................................15Section 5.01 Filing and Certifi cation..................................................................15
Section 5.02 Modifi cations of the Tax Increment Financing Plan..................15
Section 5.03 4-Year Knockdown Rule................................................................15
Section 5.04 Pooling/5-Year Rule........................................................................16
Section 5.05 Financial Reporting and Disclosure Requirements...................16Section 5.06 Business Subsidy Compliance......................................................16
EXHIBITS..........................................................................................................................17Exhibit I Present Value Analysis ..................................................................17
Exhibit II Projected Tax Increment................................................................18
Exhibit III Impact on Other Taxing Jurisdictions..........................................19
Exhibit IV Estimated Tax Increment Over Life of District ..........................20
Exhibit V Maps of Project Area and TIF District.........................................21Exhibit VI Parcels within Project Area...........................................................23
TAX INCREMENT FINANCING (HOUSING)DISTRICT NO. 8
DRAFT FOR PUBLIC HEARING, FEBRUARY 18, 2020 1
ARTICLE I –INTRODUCTION AND DEFINITIONS
SECTION 1.01 INTRODUCTION
This Redevelopment Plan for the Vermillion Street Redevelopment Area of the HastingsEconomic Development and Redevelopment Authority of the City of Hastings is intended tosupersede and alter the activities described in the Redevelopment Plan for the Vermillion StreetRedevelopment Area as originally adopted on October 6, 2008 and modifi ed on July 19, 2010.
Tax Increment Financing District No. 5 and the Tax Increment Financing Plan relating thereto,within the Vermillion Street Redevelopment Area, remains in full force and eff ect and is not modifi ed.
The City of Hastings and the Hastings Economic Development and Redevelopment Authority(HEDRA) propose to provide tax increment fi nancing assistance through the establishment of Tax Increment Financing (Housing) District No. 8 within the Vermillion Street RedevelopmentArea to assist with the fi nancing of certain project costs for the construction of an approximate 90 unit aff ordable rental housing facility, an apartment building, by a private developer.
This document contains the Modifi ed Redevelopment Plan for achieving the objectives of the Vermillion Street Redevelopment Area through the establishment of a Tax Increment FinancingPlan and use of Tax Increment Financing (Redevelopment) District No. 8.
Below is a summary of the municipal action that has been taken in connection with theVermillion Street Redevelopment Area to date and as proposed:
Vermillion Street Redevelopment Area:
January 22, 2008: The Vermillion Street Corridor Development Guidelines were adopted byCity.
September 11, 2008: The Redevelopment Plan for the Project Area was adopted.
September 22, 2008: The Redevelopment Plan for the Project Area was reviewed by the Cityof Hastings Planning Commission.
October 6, 2008: The Redevelopment Plan for the Project Area was adopted by the City.
January 1, 2009: The HEDRA replaced the Housing and Redevelopment Authority andthe Economic Development Commission. The HEDRA operates with the powers of both aHousing and Redevelopment Authority and an Economic Development Authority.
July 12, 2010: The Modifi ed Redevelopment Plan for the Project Area was reviewed by the Planning Commission.
July 15, 2010: The Modifi ed Redevelopment Plan for the Project Area was adopted by the HEDRA. The HEDRA approved the Tax Increment Financing Plan for Tax IncrementFinancing District No. 5.
July 19, 2010: The Modifi ed Redevelopment Plan for the Project Area was adopted by the City. The City Council approved the Tax Increment Financing Plan for Tax IncrementFinancing District No. 5.
February 10, 2020: The Planning Commission is proposed to fi nd that the Modifi ed Redevelopment Plan and the proposed Tax Increment Financing Plan for Tax IncrementFinancing District No. 8 confi rm to the general plan for the development or redevelopment of the City as a whole.
February 13, 2020: The Modifi ed Redevelopment Plan for the Project Area is proposed to be adopted by the HEDRA. It is proposed the HEDRA will approve the Tax IncrementFinancing Plan for Tax Increment Financing District No. 8, subject to City approval.
TAX INCREMENT FINANCING (HOUSING)DISTRICT NO. 8
DRAFT FOR PUBLIC HEARING, FEBRUARY 18, 2020 2
February 18, 2020:The Modifi ed Redevelopment Plan for the Project Area is proposed to be adopted by the City. It is proposed the City will approve the Tax Increment Financing Planfor Tax Increment Financing District No. 8.
SECTION 1.02 DEFINITIONS
For the purposes of this document, the terms below have the meanings given in this section,unless the context in which they are used indicates a diff erent meaning:
1. “Authority” means the Hastings Economic Development and Redevelopment Authority ofthe City.
2. “City” means the City of Hastings, Minnesota.
3. “City Council” means the City Council of the City.
4. “County” means Dakota County, Minnesota.
5. “Developer” means the private party undertaking construction within the TIF District.
6. “EDA Act” means Minnesota Statutes, Section 469.090 through 469.1082, as amended andsupplemented from time to time.
7. “Enabling Act” means Minnesota Statutes, Sections 469.001 through 469.047, as amendedand supplemented from time to time.
8. “HEDRA” means the Hastings Economic Development and Redevelopment Authority of theCity of Hastings.
9. “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.
10.“Project Costs” means the cost of qualifi ed development activities that will occur within the TIF District that may be paid from tax increment revenue.
11. “Public Costs” means the costs of the Redevelopment Project funded under the TIF Act,EDA Act, or the Enabling Act.
12. “Public Improvements” means the public improvements described in the RedevelopmentPlan and any future plans for Tax Increment Financing Districts within the Project Area.
13. “Redevelopment Plan” means the Redevelopment Plan for the Redevelopment Project, asthe same may, from time to time, be amended or supplemented.
14. “Redevelopment Project” means Vermillion Street Redevelopment Area of the Authority, asthe same may, from time to time, be amended or supplemented.
15. “School District” means Independent School District No. 200 (Hastings Public Schools).
16. “State” means the State of Minnesota.
17. “Tax Increment Bonds” means any tax increment bonds or notes issued by the City tofi nance the Public Costs as stated in the Redevelopment Plan for the Project Area and in the Tax Increment Financing plans for Tax Increment Financing Districts within the ProjectArea, and any obligations issued to refund such bonds.
18.“Tax Increment Financing District” means any tax increment fi nancing district to be established in the future within the Project Area.
19. “Tax Increment Financing Plan” or “Plan” means the plans adopted by the HEDRA or theCity for any Tax Increment Financing District.
TAX INCREMENT FINANCING (HOUSING)DISTRICT NO. 8
DRAFT FOR PUBLIC HEARING, FEBRUARY 18, 2020 3
20. “TIF Act” means Minnesota Statutes, Sections 469.174 through 469.1794, as amended, bothinclusive.
21. “TIF District” means Tax Increment Financing (Housing) District No. 8 (SchoolhouseSquare).
22.“TIF Plan” means the tax increment fi nancing plan for the TIF District (this document).
SECTION 1.03 PLAN PREPARATION
The document was prepared for the City and the Authority by Northland Securities, Inc.
TAX INCREMENT FINANCING (HOUSING)DISTRICT NO. 8
DRAFT FOR PUBLIC HEARING, FEBRUARY 18, 2020 4
ARTICLE II –STATEMENT OF PUBLIC PURPOSE AND AUTHORITY
SECTION 2.01 ENABLING ACT; STATUTORY AUTHORITY
The Enabling Act authorizes the Authority, upon certain public purpose fi ndings by the Authority and the City, to establish and designate redevelopment projects within the City andto establish, develop and the administer redevelopment plans therefor to meet the needs andaccomplish the public purposes specifi ed in Statement and Finding of Public Purpose.
In accordance with the purposes set forth in the Enabling Act, the Authority and the City haveestablished the Redevelopment Project comprised of the parcels listed in Exhibit VI and haveadopted the Modifi ed Redevelopment Plan therefor.
The Enabling Act and the approval of the Redevelopment Plan by the City of Hastingsauthorizes the Authority to undertake redevelopment activities within the Project Area and, at adate subsequent to the adoption of the Modifi ed Redevelopment Plan and with the City Council approval, to establish and designate Tax Increment Financing Districts within the Project Areaand to adopt and implement Tax Increment Financing Plans to accomplish the objective of theRedevelopment Plan.
SECTION 2.02 STATEMENT AND FINDING OF PUBLIC PURPOSE
The Authority has determined that there is a need to take certain actions designed toencourage, ensure and facilitate development and redevelopment of under-utilized and unusedland located within the corporate limits of the City. These actions will provide additionalemployment opportunities for residents of the City and the surrounding area, and improveȱ¡ȱǰȱ¢ȱȱĴȱȱ£ȱȱ¡ȱȱȱȱȱȱpublic services, and improve the general economy of the City, the County, and the State.
The Authority has determined that the property within the Project Area is either under-utilized or unused due to a variety of factors, including inadequate public parking to servethe property, small parcels, non-conforming uses, vacant or under-utilized property, possibleenvironmental 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 within theProject Area is not providing adequate employment opportunities, and is not contributing, toits full potential. Therefore, it is necessary for the Authority to exercise its authority under theEnabling Act to develop and implement a program designed to encourage, ensure and facilitatethe commercial and mixed use development and redevelopment of the property located inthe Project Area, to further and accomplish the desired public purposes for the Project Area asspecifi ed within the Redevelopment Plan for the Project Area.
The land in the Project Area would not be developed or redeveloped solely through privateinvestment in the foreseeable future.
The welfare of the City, County, and the State of Minnesota requires active promotion,Ĵȱǰȱȱȱȱȱ¢ȱȱȱ¢ȱȱ
ǯ
SECTION 2.03 BOUNDARIES OF PROJECT AREA
The area within the Project Area is described in Exhibit V. The parcels included in the ProjectArea are listed in Exhibit VI.
The Project Area is inclusive of all immediate adjacent roadways, rights-of-way and other areaswherein will be installed or upgraded the various public improvements necessary for and partof the overall project.
TAX INCREMENT FINANCING (HOUSING)DISTRICT NO. 8
DRAFT FOR PUBLIC HEARING, FEBRUARY 18, 2020 5
The Authority and the City fi nds that the Project Area, together with the objectives which the Authority and the City seek to accomplish or encourage with respect to such property,constitutes a “redevelopment project” and a “redevelopment plan” within the meaning ofMinnesota Statutes, Section 469.002, Subdivisions 14 and 16.
TAX INCREMENT FINANCING (HOUSING)DISTRICT NO. 8
DRAFT FOR PUBLIC HEARING, FEBRUARY 18, 2020 6
ARTICLE III -REDEVELOPMENT PLAN
SECTION 3.01 STATEMENT OF OBJECTIVES
The modifi cation of the established 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 theAuthority and the City the ability to meet certain public purpose objectives that would notbe obtainable in the foreseeable future without intervention by the Authority in the normaldevelopment process.
ȱ¢ȱǰȱȱȱ¡ȱĴȱȱ¢ȱ ǰȱȱȱȱ ȱȱthrough the implementation of the Redevelopment Plan:
1. Promote and secure the development and redevelopment of property in the Project Areain a manner consistent with the City’s planning, the Vermillion Street DevelopmentGuidelines, and with a minimal adverse impact on the environment, which property is lessproductive because of the lack of proper utilization and lack of investment, and therebypromoting and securing the development of other land in the City;
2. Promote and secure additional employment opportunities within the Project Area and theCity for residents of the City and the surrounding area, thereby improving living standardsand preventing unemployment and the loss of skilled and unskilled labor and other humanresources in the City;
3. Secure the increase in value of property subject to taxation by the City, School District,¢ǰȱȱ¢ȱȱ¡ȱȱȱȱȱĴȱȱȱȱȱȱ¢ȱȱpublic improvements and governmental services and programs required to be provided bythem;
4. Secure the construction and providing moneys for the payment of the cost of publicimprovements in the Project Area, which are necessary for the completion of theRedevelopment Project and the orderly and benefi cial development of the Project Area.
5. Promote a compatible mix of commercial, institutional, and residential land uses.
6. Encourage the expansion and improvement of local business, and enhancing the economicvitality of existing and new businesses.
7.Eliminate blighting infl uences that impede development in the area.
8. Provide for adequate streets, utilities, and other public improvements and facilities toenhance the area for both new and existing development.
9. Create a desirable and unique character within the Project Area through quality landuse alternatives and design quality in new buildings that create a safe environmentfor pedestrians, can be maintained for the long run, and celebrates the historic role ofVermillion Street as the main artery within the City.
10. Support the physical connection to local trails, open space, and other communityinstitutions.
11. Enhance the integrity of residential neighborhoods adjacent to the Project Area.
12. Provide and secure the development of increased opportunities for families to reside inquality owner-occupied housing, for senior citizens to choose from housing options whichoff er a wide array of services without regard to income, and for residents looking for a wide range of multi-family units.
13. Enhance the long term viability of the Project Area by facilitating:
• Land uses that complement and support existing businesses;
TAX INCREMENT FINANCING (HOUSING)DISTRICT NO. 8
DRAFT FOR PUBLIC HEARING, FEBRUARY 18, 2020 7
• New businesses that enhance the commercial market;
• Visual quality of the streetscape, landscape, site plan and building types of newdevelopments;
• Mixed use housing development where appropriate; and
• Safe access and convenient parking.
SECTION 3.02 DEVELOPMENT ACTIVITIES
ȱ¢ȱ ȱȱȱȱȱȱǰȱȱȱ¡ȱĴȱȱ¢ȱ ǰȱȱȱactivities pursuant to the Enabling Act, the TIF Act and other applicable state laws, and in doingso anticipates that the following may, but are not required, to be undertaken by the Authority:
(a) The making of studies, planning, and other formal and informal activities relating to theRedevelopment Plan.
(b) The implementation and administration of the Redevelopment Plan.
(c) The rezoning of land within the Project Area.
(d) The acquisition of property, or interests in property, by purchase or condemnation,which acquisition is consistent with the objectives of the Redevelopment Plan,
(e) The preparation of property for use and development in accordance with applicableLand Use Regulations and any development agreements, including demolition of structures,clearance of sites, placement of fi ll and grading.
(f) The resale of property to private parties.
(g) The construction or reconstruction of improvements as described in the Tax IncrementFinancing Plans for the Tax Increment Financing Districts within the Project Area.
(h) The issuance of Tax Increment Financing Bonds to fi nance the Public Costs of the Redevelopment Plan, and the use of tax increments or other funds available to the City andthe Authority to pay or fi nance the Public Costs of the Redevelopment Plan incurred or to be incurred by it.
(i) The use of tax increments to pay debt service on the Tax Increment Financing Bonds orotherwise pay or reimburse with interest the Public Costs of the Redevelopment Plan.
SECTION 3.03 PAYMENT OF PUBLIC COSTS
It is anticipated that the Public Costs of the Redevelopment Plan will be paid primarily fromproceeds of Tax Increment Financing Bonds or from tax increments from the Tax IncrementFinancing Districts with the Project Area. The Authority reserves the right to utilize otheravailable sources of revenue, including but not limited to lease payments, special assessmentsand user charges, which the Authority may apply to pay a portion of the Public Costs.
SECTION 3.04 ENVIRONMENTAL CONTROLS; LAND USE REGULATIONS
All municipal actions, public improvements and private development shall be carried outin a manner consistent with existing environmental controls and all applicable Land UseRegulations.
TAX INCREMENT FINANCING (HOUSING)DISTRICT NO. 8
DRAFT FOR PUBLIC HEARING, FEBRUARY 18, 2020 8
SECTION 3.05 PARK AND OPEN SPACE TO BE CREATED
Park and open space within the Project Area, if created, will be created in accordance with the£ȱȱĴȱȱȱȱȱ¢ǯ
SECTION 3.06 PROPOSED REUSE OF PROPERTY
The Redevelopment Plan contemplates that the Authority may acquire property and reconveythe same to another entity. Prior to formal consideration of the acquisition of any property,the Authority will require the execution of a binding development agreement with respectthereto and evidence that tax increments or other funds will be available to repay the PublicCosts associated with the proposed acquisition. It is the intent of the Authority to negotiate theacquisition of property whenever possible. Appropriate restrictions regarding the reuse andredevelopment of property shall be incorporated into any development agreement to which theAuthority is a party.
SECTION 3.07 ADMINISTRATION AND MAINTENANCE OF PROJECT AREA
Maintenance and operation of the Project Area will be the responsibility of the Director of theAuthority, who shall serve as administrator of the Project Area. Each year the administratorof the Project Area will submit to the Authority the maintenance and operation budget for thefollowing year.
The administrator will administer the Project Area pursuant to the Enabling Act; provided,however, that such powers may only be exercised at the direction of the Authority. No actiontaken by the administrator pursuant to the above-mentioned powers shall be eff ective without authorization by the Authority.
SECTION 3.08 RELOCATION
Any person or business that is displaced as a result of the Redevelopment Plan will be relocatedin accordance with Minnesota Statutes, Section 117.50 to 117.56. The Authority accepts itsresponsibility for providing for relocation assistance pursuant to the Enabling Act.
SECTION 3.09 AMENDMENTS
The Authority reserves the right to alter and amend the Redevelopment Plan, subject to theprovisions of state law regulating such action. The Authority specifi cally reserves the right to enlarge or reduce the size of the Project Area.
SECTION 3.10 FINDINGS AND DECLARATION
The Authority makes the following fi ndings:
(a) The land in the Project Area would not be made available for redevelopment without thefi nancial aid sought.
(b) The Redevelopment Plan for the Project Area in the City will aff ord maximum opportunity consistent with the needs of the locality as a whole, for the redevelopment of thearea by private enterprise.
(c) The Redevelopment Plan conforms to the general plan for development of the City as awhole.
TAX INCREMENT FINANCING (HOUSING)DISTRICT NO. 8
DRAFT FOR PUBLIC HEARING, FEBRUARY 18, 2020 9
ARTICLE IV -TAX INCREMENT FINANCING PLAN
SECTION 4.01 STATUTORY AUTHORITY
The TIF District and the TIF Plan are established under the authority of the TIF Act.
SECTION 4.02 PLANNED DEVELOPMENT
4.02.1 Project Description
The Developer proposes to build an approximate 90 unit rental housing facility, an apartmentbuilding, consisting of both one and two-bedroom units located at 101 10th Street East. Allapartment units would be aff ordable to households at or below 60% of the area median income (AMI). The parcel is an approximate 2-acre site located with access to Highway 61.
4.02.2 City Plans and Development Program
In addition to achieving the objectives of the Redevelopment Plan, the development is consistentwith and works to achieve the development objectives of the Authority and the City. The TIFPlan for the TIF District conforms to the general plan for development or redevelopment of theCity as a whole.
The proposed development plan for the project in the TIF District has been reviewed by thePlanning Commission and the City Council.
4.02.3 Land Acquisition
The Authority or the City do not plan to acquire property within the TIF District.
4.02.4 Development Activities
As of the date of approval of the TIF Plan, there are no development activities proposed in thisTIF Plan that are subject to contracts.
4.02.5 Need for Tax Increment Financing
In various materials the Developer has demonstrated that the proposed use of tax incrementfi nancing is needed to off set the high construction costs of high-quality low- to moderate-income housing and associated infrastructure required to support the facility. Without theproposed assistance, these initial up-front costs would make it infeasible for the Developer tobe able to charge the aff ordable rents required for low-to moderate-income residents. Thus, it is the opinion of the City and the Authority that the proposed development would not reasonablybe expected to occur solely through private investment within the foreseeable future and thatthe increased market value of the site that could reasonably be expected to occur without theuse of tax increment fi nancing 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 taxȱȱȱ¡ȱȱȱȱ ȱȱĴȱȱ¢ȱȱ ȱǯ
A comparative analysis of estimated market values both with and without establishment ofthe TIF District and the use of tax increments has been performed as described above and isshown in Exhibit I. This analysis, which is not required by the TIF Act for approval of a housingdistrict, indicates that the increase in estimated market value of the proposed development (lessȱȱȱȱȱȱ¡ȱȱȱȱ¡ȱȱĴȱȱ¢ȱȱTIF Plan) exceeds the estimated market value of the site prior to the establishment of the TIFDistrict.
TAX INCREMENT FINANCING (HOUSING)DISTRICT NO. 8
DRAFT FOR PUBLIC HEARING, FEBRUARY 18, 2020 10
SECTION 4.03 TAX INCREMENT FINANCING DISTRICT
4.03.1 Designation
This TIF District is designated Tax Increment Financing (Housing) District No. 8 (SchoolhouseSquare).
4.03.2 Boundaries of TIF District
The boundaries of the TIF District are depicted in Exhibit V.
The TIF District includes the following two parcels and the adjacent roads and right-of-way:
• 19-66902-00-010 (Outlot A, Schoolhouse Square 3rd Addition, Plat of Hastings, DakotaCounty, Minnesota); and
• 19-66902-00-020 (Outlot B, Schoolhouse Square 3rd Addition, Plat of Hastings, DakotaCounty, Minnesota)
4.03.3 Type of District
The TIF District is designated as a “housing” district pursuant to Section 469.174, Subd. 11 of theTIF Act. For the designation, of a tax increment fi nancing housing district, the Developer of the Project will need to commit to the following:
1.Satisfy the income requirements for a qualifi ed residential rental project as defi ned in section 142(d) of the Internal Revenue Code. This requirement applies for the duration ofthe tax increment fi nancing district. The applicable Fiscal Year 2019 Area Median Income for the County is $100,000. The Developer plans to commit to provide 40% or more ofunits for occupancy by persons at 60% or less of area median gross income. These incomethresholds may change over the life of the TIF District.
2. No more than 20% of the square footage of the building to receive assistance from taxincrements will consist of commercial, retail, or other nonresidential uses. Revenue derivedfrom tax increment from the TIF District shall be used solely to fi nance the cost of the housing project as defi ned in Section 469.174, subdivision 11 of the TIF Act. The cost of public improvements directly related to the housing project and the allocated administrativeexpenses of the Authority may be included in the cost of the housing project.
3. Failure to comply with these income limitations is subject to the enforcement provisions ofSection 469.1771 of the TIF Act.
SECTION 4.04 PLAN FOR USE OF TAX INCREMENT
4.04.1 Estimated Tax Increment
The original net tax capacity of value of the TIF District will be set by the County upon requestfor certifi cation. For the purposes of this Plan, the estimated original net tax capacity is $1,199. This amount is estimated based on the most recent published estimated market valueof $159,800 for property within the TIF District; with net tax capacity value calculated forapartments, under the 4d aff ordable housing program.
The estimated net tax capacity of the property after completion of the project (for taxes payablein 2023, or year two of the TIF District) is $109,080. This amount is based on a total estimatedmarket value of $14,544,000 with property classifi ed as apartment, under the 4d aff ordable housing program. The diff erence between the net tax capacity and the original net tax capacity is $107,882 (for taxes payable in 2023), which is the captured tax capacity for the creation of taxincrement.
The total local tax rate for taxes payable in 2019 is 108.51%. The TIF Plan assumes that thisrate will be set as the original local tax rate for the TIF District. At the time of the certifi cation
TAX INCREMENT FINANCING (HOUSING)DISTRICT NO. 8
DRAFT FOR PUBLIC HEARING, FEBRUARY 18, 2020 11
of the original net tax capacity for the TIF District, the county auditor will certify the originallocal tax rate that applies to the TIF District. The original local tax rate is the sum of all the local¡ȱǰȱ¡ȱȱȱȱȱȱȱĴȱȱȱȱȱȱ¢ȱunder Minnesota Statutes section 126C.13, that apply to a property in the TIF District. The localtax rate to be certifi ed is the rate in eff ect for the same taxes payable year applicable to the tax capacity values certifi ed as the TIF District’s original tax capacity. The resulting tax capacity rate is the original local tax rate for the life of the TIF District.
Under these assumptions, the estimated annual tax increment is $117,065 after developmentcompletion (for taxes payable 2023). The actual tax increment will vary according to thecertifi ed original net tax capacity and original tax rate, the actual property value produced by the proposed development and the changes in property value and state tax policy over the lifeof the TIF District.
The City and the Authority elect to retain 100% of the captured tax capacity value for theduration of the TIF district. Exhibit II contains the projected tax increment over the life of theTIF District, including present value of the future tax increments.
4.04.2 Project Costs
The Authority will use tax increment to pay Project Costs. The Authority anticipates the useof tax increment to pay administrative expenses for the TIF District and to reimburse theDeveloper on a pay-go basis for certain Project Costs to provide the aff ordable housing. A contract between the Authority and the Developer will defi ne the means for verifying Developer costs eligible for reimbursement and the means of disbursing tax increments collected by theAuthority to the Developer, including terms for payment.
The Authority may also use tax increments to pay fi nancing costs. The interest rate payable on bonds, the defi nition of bonds includes tax increment fi nancing revenue notes, to be issued will be set pursuant to a contract with the Developer. The Authority reserves the right to useany other legally available revenues to fi nance or pay for Project Costs associated with the development in the TIF District.
The City and the Authority reserve the right to modify the TIF Plan to provide authority toexpend tax increment from the TIF District on other housing projects that meet the criteria forestablishing a housing TIF district. Section 469.174, Subd. 11 of the TIF Act defi nes a housing districts consisting of a project, or a portion of a project, intended for occupancy, in part, bypersons or families of low and moderate income. The requirements for the establishment of ahousing TIF district are contained in Section 469.1761 of the TIF Act. The primary criteria areincome related. The criteria are diff erent for owned and rental housing.
The practical application of this authority includes:
•The use of tax increment is not limited by pooling restrictions or the fi ve-year rule.
• The tax increment can be spent on activities outside of the TIF district, but within the ProjectArea.
• This authority does not extend the maximum statutory duration of the TIF district.
•The tax increment must be used solely to fi nance the cost of the “housing project” as defi ned by the TIF Act. The cost of public improvements directly related to the housing project andthe allocated administrative expenses of the Authority may be included in the cost of thehousing project.
• No more than 20% of the square footage of buildings that receive TIF assistance may consistof commercial, retail, or other nonresidential uses.
Potential applications of this authority include:
• Assistance to other housing projects avoiding the need for a new TIF district.
TAX INCREMENT FINANCING (HOUSING)DISTRICT NO. 8
DRAFT FOR PUBLIC HEARING, FEBRUARY 18, 2020 12
• Supplementing the revenues of another housing TIF district.
• Assistance for the renovation of existing housing.
• Acquisition of land for housing.
•Assistance to make public improvements, that directly benefi t aff ordable housing, more aff ordable.
4.04.3 Estimated Sources and Uses of Funds
The estimated sources of revenue, along with the estimated Project Costs of the TIF District, areitemized in Figure 4.1.
The City and the Authority reserve the right to administratively adjust the amount of any of theProject Cost items listed in Figure 4.1, so long as the total Project costs amount, not includingfi nancing costs, is not increased.
FIGURE 4.1ESTIMATED SOURCES AND USES OF FUNDS
TAX INCREMENT FINANCING (HOUSING)DISTRICT NO. 8
DRAFT FOR PUBLIC HEARING, FEBRUARY 18, 2020 13
4.04.4 Administrative Expense
The Authority reserves the right to retain up to ten percent (10%) of annual tax incrementrevenues distributed from the County, net of any required fees paid to the State and County.The Authority will use these monies to pay for and reimburse the Authority for costs ofadministering the TIF district as allowed by the TIF Act.
The amount of tax increment revenue planned to pay administrative expense is shown inFigure 4.1. Anticipated administrative expenses of the TIF District include annual audit of thefund for TIF District, preparation of annual reporting, legal publication of annual report, andadministration of the development agreement.
4.04.5 County Road Costs
The proposed development will not substantially increase the use of county roads andnecessitate the need to use tax increments to pay for county road improvements.
4.04.6 Bonded Indebtedness
The total amount of bonds estimated to be issued is shown in Figure 4.1. The City will not issueany general obligation bonded indebtedness as a result of the TIF Plan.
The Authority intends to use tax increment fi nancing to reimburse the Developer on a pay-as-you-go basis for certain Project Costs pursuant to a contract with the Developer.
The City or the Authority may advance or loan money to fi nance expenditures under Section 469.176, subdivision 4 of the TIF Act, from the general funds of the City or the Authority or anyother fund under which there is legal authority to do so, subject to the following provisions:
(a) Not later than 60 days after money is transferred, advanced, or spent, whicheveris earliest, the loan or advance must be authorized by resolution of the City or of theAuthority, whichever has jurisdiction over the fund from which the advance or loan isauthorized.
(b) The resolution may generally grant to the City or the Authority the power to makeinterfund loans under one or more tax increment fi nancing plans or for one or more districts. The resolution may be adopted before or after the adoption of the tax incrementfi nancing plan or the creation of the tax increment fi nancing district from which the advance or loan is to be repaid.
(c) The terms and conditions for repayment of the loan must be provided in writing. The Ĵȱȱȱȱȱ¢ȱȱȱ¢ȱǰȱȱȱǰȱȱȱǰȱȱȱǰȱȱȱǰȱȱ¡ȱǯȱĴȱȱȱ¢ȱȱęȱȱor amended in writing by the City or the Authority before the latest decertifi cation of any tax increment fi nancing district from which the interfund loan is to be repaid. The ¡ȱȱȱȱĴȱȱȱȱȱȱȱȱȱȱȱȱȱspecifi ed under Minnesota Statutes, Section 270C.40 or 549.09 as of the date the loan or ȱȱ£ǰȱȱȱ Ĵȱȱȱȱȱȱ¡ȱȱȱwill fl uctuate as the interest rates specifi ed under Minnesota Statutes, Section 270C.40 or 549.09 are from time to time adjusted. Loans or advances may be structured as draw-down or line-of-credit obligations of the lending fund.
ǻǼȱȱ¢ȱȱȱȱȱȱȱĴȱȱȱȱŚŜşǯŗŝśǰȱsubdivision 6 of the TIF Act:
(1) the amount of any interfund loan or advance made in a calendar year; and
(2) any amendment of an interfund loan or advance made in a calendar year.
TAX INCREMENT FINANCING (HOUSING)DISTRICT NO. 8
DRAFT FOR PUBLIC HEARING, FEBRUARY 18, 2020 14
4.04.7 Duration of TIF District
The duration to collect and spend tax increments on eligible purposes is set at the duration of25 years after the date of receipt of the fi rst tax increment for a total of 26 years of tax increment collection. The estimated decertifi cation date is 12/31/2047.
4.04.8 Estimated Impact on Other Taxing Jurisdictions
Exhibits III and IV show the estimated impact on other taxing jurisdictions if the maximumprojected retained captured net tax capacity of the TIF District was hypothetically available tothe other taxing jurisdictions.
The City and the Authority believe that there will be no adverse impact on other taxingjurisdictions during the life of the TIF District, since the proposed development would not haveoccurred without the establishment of the TIF District and the provision of public assistance. Apositive impact on other taxing jurisdictions will occur when the TIF District is decertifi ed and the development therein becomes part of the general tax base.
The City and the Authority anticipate minimal impact of the proposed development on city-provided services. There will be no borrowing costs to the City or the Authority for the Project.A manageable increase in water and sewer usage is expected. It is anticipated that there may bea slight but manageable increase in police and fi re protection duties due to the development.
4.04.9 Prior Planned Improvements
There have been no building permits issued in the last 18 months in conjunction with any of theproperties within the TIF District. The Authority will include this statement with the request forcertifi cation to the County Auditor.
TAX INCREMENT FINANCING (HOUSING)DISTRICT NO. 8
DRAFT FOR PUBLIC HEARING, FEBRUARY 18, 2020 15
ARTICLE V –ADMINISTERING THE TIF DISTRICT
SECTION 5.01 FILING AND CERTIFICATION
The fi ling and certifi cation of the TIF Plan consists of the following steps:
1. Upon adoption of the TIF Plan by the City and the Authority, the Authority, or its designee,shall submit a copy of the TIF Plan to the Minnesota Department of Revenue and the Offi ce of the State Auditor.
2. The Authority, or its designee, shall request that the County Auditor certify the original nettax capacity and net tax capacity rate of the TIF District. To assist the County Auditor in thisprocess, the Authority, or its designee, shall submit copies of the TIF Plan, the resolutionsof the City and the Authority establishing the TIF District and adopting the TIF Plan, and alisting of any prior planned improvements.
SECTION 5.02 MODIFICATIONS OF THE TAX INCREMENT FINANCING PLAN
The City and the Authority reserve the right to modify the TIF District and the TIF Plan. Underthe TIF Act, the following actions can only be approved after satisfying all the necessaryrequirements for approval of the original TIF Plan (including notifi cations and public hearing):
§Reduction or enlargement in the geographic area of the Development District or the TIFDistrict.
§Increase in the amount of bonded indebtedness to be incurred.
§Increase in the amount of capitalized interest.
§Increase in that portion of the captured net tax capacity to be retained by the Authority.
§Increase in the total estimated Project Costs, not including cost of fi nancing.
§Designation of additional property to be acquired by the City or the Authority.
Other modifi cations can be made by resolution of the Authority. In addition, the original approval process does not apply if (1) the only modifi cation is elimination of parcels from the TIF District and (2) the current net tax capacity of the parcels eliminated equals or exceeds thenet tax capacity of those parcels in the TIF District’s original net tax capacity, or the City and theAuthority agree that the TIF District’s original net tax capacity will be reduced by no more thanthe current net tax capacity of the parcels eliminated.
Upon approval by the City, the Authority must notify the County Auditor of any modifi cation that reduces or enlarges the geographic area of the TIF District. The geographic area of the TIFDistrict may be reduced but not enlarged after fi ve years following the date of certifi cation of the TIF District.
SECTION 5.03 4-YEAR KNOCKDOWN RULE
Since the TIF District consists of a single parcel, development of the project as planned preventsany loss of value from the 4-Year Knockdown Rule. The 4-Year Knockdown Rule requires that ifafter four years from certifi cation of the TIF District no demolition, rehabilitation, renovation or site improvement, including a qualifi ed improvement of an adjacent street, has commenced on a parcel located within the TIF District, then that parcel shall be excluded from the TIF Districtand the original net tax capacity shall be adjusted accordingly. Qualifi ed improvements of a street are limited to construction or opening of a new street, relocation of a street, or substantialreconstruction or rebuilding of an existing street. The Authority must submit to the County
TAX INCREMENT FINANCING (HOUSING)DISTRICT NO. 8
DRAFT FOR PUBLIC HEARING, FEBRUARY 18, 2020 16
Auditor, by February 1 of the fi fth year, evidence that the required activity has taken place for each parcel in the TIF District.
If a parcel is excluded from the TIF District and the City, Authority, or owner of the parcelsubsequently commences any of the above activities, the Authority shall certify to the CountyAuditor that such activity has commenced and the parcel shall once again be included in theTIF District. The County Auditor shall certify the net tax capacity of the parcel, as most recentlycertifi ed by the Commissioner of Revenue, and add such amount to the original net tax capacity of the TIF District.
SECTION 5.04 POOLING/5-YEAR RULE
ȱĴȱȱȱȱŚŜşǯŗŝŜřǰȱȱŘǻǼȱȱȱřǻǼǻśǼȱȱȱ ȱǰȱany expenditures of increment from the TIF District to pay the cost of a “housing project” asdefi ned in Section 469.174, subd. 11 of the TIF Act will be treated as an expenditure within the district for the purposes of the “pooling rules” and the “fi ve year rule”. It is not anticipated that tax increments will be spent outside the TIF District (except allowable administrative expenses),but such expenditures are expressly authorized in the TIF Plan.
SECTION 5.05 FINANCIAL REPORTING AND DISCLOSURE REQUIREMENTS
The Authority will comply with the annual reporting requirements of State Law pursuant to theguidelines of the Offi ce of the State Auditor. Under current law, the Authority must prepare and submit a report on the TIF district on or before August 1 of each year. The Authority mustalso annually publish in a newspaper of general circulation in the City an annual statement foreach tax increment fi nancing district.
The reporting and disclosure requirements outlined in this section begin with the year thedistrict was certifi ed, and shall end in the year in which both the district has been decertifi ed and all tax increments have been spent or returned to the county for redistribution. Failure tomeet these requirements, as determined by the State Auditors Offi ce, may result in suspension of distribution of tax increment.
SECTION 5.06 BUSINESS SUBSIDY COMPLIANCE
The Project is exempt from the business subsidies requirements specifi ed in Minnesota Statutes, Sections 116J.993 to 116J.995 because the assistance for the Project specifi ed in this document, the TIF Plan for the TIF District, will be 100% for housing assistance.
TAX INCREMENT FINANCING (HOUSING)DISTRICT NO. 8
DRAFT FOR PUBLIC HEARING, FEBRUARY 18, 2020 17
TAX INCREMENT FINANCING (HOUSING)DISTRICT NO. 8
DRAFT FOR PUBLIC HEARING, FEBRUARY 18, 2020 18
TAX INCREMENT FINANCING (HOUSING)DISTRICT NO. 8
DRAFT FOR PUBLIC HEARING, FEBRUARY 18, 2020 19
TAX INCREMENT FINANCING (HOUSING)DISTRICT NO. 8
DRAFT FOR PUBLIC HEARING, FEBRUARY 18, 2020 20
TAX INCREMENT FINANCING (HOUSING)DISTRICT NO. 8
DRAFT FOR PUBLIC HEARING, FEBRUARY 18, 2020 21
EXHIBIT V
Boundaries of Tax Increment Financing District No. 8
within Vermillion Street Redevelopment ProjectArea
TAX INCREMENT FINANCING (HOUSING)DISTRICT NO. 8
DRAFT FOR PUBLIC HEARING, FEBRUARY 18, 2020 22
EXHIBIT V - CONTINUED
Boundaries of Tax Increment Financing District No. 8
within Vermillion Street Redevelopment ProjectArea
TAX INCREMENT FINANCING (HOUSING)DISTRICT NO. 8
DRAFT FOR PUBLIC HEARING, FEBRUARY 18, 2020 23
EXHIBIT VI
Parcels within ProjectArea
COUNT PARCEL ID COUNT PARCEL ID COUNT PARCEL ID
1 037-190340050010 51 037-194470007190 101 037-198170001011
2 037-190340055010 52 037-194470007200 102 037-198170001020
3 037-190370005011 53 037-194470007210 103 037-198170001021
4 037-190370005081 54 037-194470007220 104 037-198170001040
5 037-190370005082 55 037-194470007230 105 037-198170001060
6 037-190370007014 56 037-194470007240 106 037-198170001081
7 037-190370008010 57 037-194470018010 107 037-198170001090
8 037-190370009010 58 037-194470018020 108 037-198170001121
9 037-190370010015 59 037-194470018022 109 037-198170001122
10 037-190380001081 60 037-194470018030 110 037-198170001140
11 037-190380001131 61 037-194470018040 111 037-198170001230
12 037-190380006011 62 037-194470018071 112 037-198170002030
13 037-190380007011 63 037-194470018080 113 037-198170002053
14 037-190380020010 64 037-194470018100 114 037-198170003031
15 037-190380021010 65 037-194470018110 115 037-198170003050
16 037-191320006013 66 037-194470018120 116 037-198170003130
17 037-191320006051 67 037-194470018150 117 037-198170004010
18 037-191320006062 68 037-194470018160 118 037-198170004030
19 037-191320006081 69 037-195845001010 119 037-198170004040
20 037-191630001010 70 037-197730004020 120 037-198170004050
21 037-191630001020 71 037-197730004160 121 037-198170004171
22 037-191630001030 72 037-197730004191 122 037-198170004180
23 037-191630001040 73 037-197730004212 123 037-198170004190
24 037-191955101010 74 037-197730004220 124 037-198170005040
25 037-191955101020 75 037-197730004250 125 037-198170005050
26 037-191955101030 76 037-197730004252 126 037-198170005251
27 037-192775001010 77 037-197730004253 127 037-198170006020
28 037-192775001011 78 037-197730004260 128 037-198170006101
29 037-192775002012 79 037-197730004261 129 037-198170006300
30 037-193215079060 80 037-197730004270 130 037-198815001040
31 037-193215080010 81 037-197730004280 131 037-198815002010
32 037-193215080040 82 037-197730005030 132 037-198815002040
33 037-193215080080 83 037-197730005040 133 037-198170002052
34 037-193215088040 84 037-197730005060 134 037-190370007013
35 037-193215088060 85 037-197730005070 135 037-190370007012
36 037-193215088061 86 037-197730005080 136 037-196690001120
37 037-193215089041 87 037-197730005090 137 037-196690001110
38 037-193215089050 88 037-197730005103 138 037-196690001100
39 037-193215089060 89 037-197730005121 139 037-196690001090
40 037-193215098061 90 037-197730005130 140 037-196690001080
41 037-194470006023 91 037-197730005140 141 037-196690001070
42 037-194470006024 92 037-197730006053 142 037-196690001060
43 037-194470006122 93 037-197730101012 143 037-196690001050
44 037-194470006163 94 037-197755004010 144 037-196690001040
45 037-194470007033 95 037-197755004011 145 037-196690001030
46 037-194470007052 96 037-197755004050 146 037-196690001020
47 037-194470007082 97 037-197755004060 147 037-196690001010
48 037-194470007102 98 037-197755005010
49 037-194470007130 99 037-197755005030
50 037-194470007171 100 037-198170001010