HomeMy WebLinkAbout5 - TIF District 9 Conformance
Memorandum
To: Planning Commission From: John Hinzman, Community Development Director Date: January 24, 2022 Subject: Resolution: TIF District 9 - Conformance with General Plan
Action Requested
Adopt the attached resolution finding that the modified development program for Development District
No. 1 (Hastings Downtown Redevelopment Area) and Tax Increment Finance (TIF) District No. 9 is
consistent with the plans for development of the City of Hastings.
Background
The Hastings Economic Development and Redevelopment Authority (HEDRA) and the City Council are
undertaking the process to establish a tax increment financing (TIF) District for development of an
apartment building containing approximately 87 units to be developed by NJS Development (Stencil) at
the northwest corner of 4th and Bailey Streets. The site is currently owned by HEDRA and is subject to a
purchase agreement with NJS for redevelopment. The property was purchased by the Housing and
Redevelopment Authority (predecessor to HEDRA in 2006 in order to redevelop the former UBC Lumber
site.
The TIF District includes the NJS Site along with the Red Rock Commuter Parking Lot to the North and
the Block 1 containing Artspace and vacant HEDRA land located along the Mississippi River. Areas
outside of the NJS site are not subject to any development agreements at this time.
The City Council will hold the public hearing on the TIF District on February 22nd. In establishing the
TIF District, the State Law requires the City Council to make the finding that it “conforms with the
general plan for the development of the city as a whole”. The Planning Commission is asked to adopt the
attached resolution as the basis for this finding.
Hastings Downtown Redevelopment Area 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 TIF. Development District No. 1, the Downtown Redevelopment Plan
encompasses various properties within the downtown, generally located between Spring Street and Bailly
Street, south to 5th Street.
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.
General Plan Analysis
The Zoning Code, 2040 Hastings Comprehensive Plan, and Heart of Hastings Redevelopment Plan are
determined to be “General Plans” for City development and were reviewed to determine conformance
with the creation of TIF District No. 9.
City staff has determined that the modification to the Project Area to create TIF District No. 9 is in
conformance with the General Plans of the City as follows:
• Zoning. The property is proposed to be rezoned to DC – Downtown Core. The proposed use and
density are permitted under the DC Zoning District. Special Use Permits would be required to
both the Shoreland Ordinance and Zoning Code to construct the building. The Planning
Commission will consider requests for land use entitlements at the February 14th meeting.
• Comprehensive Plan. The proposal is consistent with the 2040 Comprehensive Plan. The site is
designated as Mixed Use High Residential within the land use plan and conforms to the
residential density limits of the district. The Plan cites the Hastings Downtown Redevelopment
District as a tool to encourage redevelopment within the downtown neighborhood. Future land
use objectives include encouraging growth by investing in established areas by promoting
development of vacant and under utilized land within the City. Within the downtown growth
should be compact and link to existing development and expand housing options to improve
linkages.
• Heart of Hastings Plan. The 2003 Heart of Hastings Plan provides more specific development
objectives within the Downtown Area. The Plan encourages the use of financial incentives
promote reinvestment. Development of Bailey Street into a Parkway with enhanced trail
improvements and to serve as a catalyst for redevelopment of the former UBC Site were also
objectives.
• Downtown Property Use Study. The 2020 Downtown Property Use Study reviewed
development options for HEDRA owned properties within the Downtown Area. The NJS site
was identified as Site 5 within the Study. Development of townhome housing was contemplated
for the site. While the proposed development contains apartment units of greater quantity than
identified specifically for the site, the proposed development is consistent with the overall goal of
providing additional apartment units within the downtown. The Study acknowledges that market
forces will be a driver in determining specific development types.
Further information on the above Plans and Studies can be found at https://www.hastingsmn.gov/city-
government/city-departments/planning-zoning/planning-documents.
Attachments
• Resolution
• TIF Plan
427143v1 MNI AL141-59
CITY OF HASTINGS PLANNING COMMISSION RESOLUTION NO. PC 2022-01
RESOLUTION FINDING MODIFIED DEVELOPMENT PROGRAM FOR DEVELOPMENT DISTRICT NO. 1 (HASTINGS DOWNTOWN REDEVELOPMENT AREA) AND THE TAX INCREMENT FINANCING PLAN FOR TAX
INCREMENT FINANCING DISTRICT NO. 9 CONSISTENT
WITH THE PLANS FOR DEVELOPMENT OF THE CITY OF HASTINGS
WHEREAS, the City Council of the City of Hastings has authorized preparation of a
modified Development Program for Development District No. 1 (Hastings Downtown Redevelopment Area) (the “Development Program”) and a Tax Increment Financing Plan (the “TIF Plan”) for Tax Increment Financing District No. 9 (the “TIF District”) within that Development District, and the modified Development Program and the TIF Plan have been submitted to the
Planning Commission for comment; and
WHEREAS, the Planning Commission has reviewed the modified Development Program and the TIF Plan and have compared them with the plans for development of the City as a whole.
NOW, THEREFORE, BE IT RESOLVED By the Planning Commission of the City of Hastings, Minnesota as follows: 1. The modified Program for Development District No. 1 and the TIF Plan for the TIF District are found to be consistent with the City comprehensive plan.
2. It is recommended that the City Council of the City of Hastings hold the public hearing required by law and adopt the modified Program and the proposed TIF Plan. Approved this 24th day of January 2022, by the Planning Commission of the City of
Hastings, Minnesota. ______________________________
Chairperson
ATTEST:
_______________________________ Secretary
DRAFT
MODIFIED REDEVELOPMENT PLAN FOR
DEVELOPMENT DISTRICT NO. 1
(HASTINGS DOWNTOWN REDEVELOPMENT AREA)
AND
TAX INCREMENT FINANCING PLAN FOR
TAX INCREMENT FINANCING (REDEVELOPMENT)DISTRICT NO. 9
(FLATS ON 3RD)
WITHIN
DEVELOPMENT DISTRICT NO. 1
(HASTINGS DOWNTOWN REDEVELOPMENT AREA)
PUBLIC HEARING DATE: FEBRUARY 22, 2022
PLAN APPROVED BY HEDRA DATE: ___________
PLAN APPROVED BY CITY COUNCIL DATE: __________
Northland Securities, Inc.
150 South Fifth Street, Suite 3300
Minneapolis, MN 55402
(800) 851-2920
Member NASD and SIPC
Registered with SEC and MSRB
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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 Project 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 Amendments.....................................................................................8Section 3.09 Findings and Declaration................................................................8
ǧ
......................................................9Section 4.01 Statutory Authority..........................................................................9Section 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 ......................................................11
4.04.1 Estimated Tax Increment..........................................................................11
4.04.2 Project Costs...............................................................................................11
4.04.3 Estimated Sources and Uses of Funds...................................................12
Figure 4.1....................................................................................................12
4.04.4 Administrative Expense...........................................................................12
4.04.5 County Road Costs...................................................................................13
4.04.6 Bonded Indebtedness...............................................................................13
4.04.7 Election of First Year of Increment, Duration of TIF District..............13
4.04.8 Estimated Impact on Other Taxing Jurisdictions .................................13
4.04.9 Prior Planned Improvements..................................................................14
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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........................................................................16Section 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 ..........................20Exhibit V Maps of Project Area and TIF District.........................................21Exhibit VI Parcels within Project Area...........................................................22
Exhibit VII LHB, Inc. Report for Redevelopment Findings..........................23
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ARTICLE I –INTRODUCTION AND DEFINITIONS
SECTION 1.01 INTRODUCTION
This Redevelopment Plan for Development District No. 1 (Hastings Downtown RedevelopmentArea) of the Hastings Economic Development and Redevelopment Authority of the City ofHastings is intended to supersede and restate the activities described in the RedevelopmentPlan for Development District No. 1 (Hastings Downtown Redevelopment Area) as originallyadopted on December 3, 1974 and last modifi ed on October 5, 2015.
Tax Increment Financing District No. 3 and Tax Increment Financing District No. 7 and the TaxIncrement Financing Plans related thereto, within Development District No. 1, remain in fullforce and eff ect and are 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 (Redevelopment) District No. 9 within the Development District No.1 to assist with the fi nancing of certain project costs for the construction of an approximate 87-unit rental housing facility, an apartment building, by a private developer, among otherdevelopment that is anticipated to occur in the future.
The Development District serves as the “project area” for tax increment fi nancing districts established within its boundaries. The Redevelopment Plan describes the City’s objectives forthe development of the area within the Development District and the use of tax incrementfi nancing. This document contains the Modifi ed Redevelopment Plan for achieving the objectives of Development District No. 1 through the establishment of a Tax IncrementFinancing Plan and use of Tax Increment Financing (Redevelopment) District No. 9.
Below is a summary of the municipal action that has been taken in connection withDevelopment District No. 1 to date and as proposed:
Development District No. 1 (Hastings Downtown Redevelopment Area):
December 3, 1974: The Hastings Downtown Area Redevelopment Plan for the HastingsDowntown Redevelopment Area was adopted by the City Council in and for the City ofHastings. The document is dated December 3, 1974.
February 4,1985: The Hastings Downtown Area Redevelopment Plan for the HastingsDowntown Redevelopment Area was modifi ed by the City Council in and for the City of Hastings. The document is dated February 4,1985.
June 15, 1987: The Hastings Downtown Area Redevelopment Plan for the HastingsDowntown Redevelopment Area was modifi ed by the City Council in and for the City of Hastings. The document is dated June 15, 1987.
October 21, 1996: The Hastings Downtown Area Redevelopment Plan for the HastingsDowntown Redevelopment Area was modifi ed by the City Council in and for the City of Hastings. The document is dated October 21, 1996. A formal Tax Increment Plan for theHasting Downtown Area Redevelopment Area was also adopted.
November 20, 2000: The Hastings Downtown Area Redevelopment Plan for the HastingsDowntown Redevelopment Area was modifi ed by the City Council in and for the City of Hastings. The document is dated November 20, 2000. A formal Tax Increment Plan for TIFDistrict No. 3 was also adopted.
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October 5, 2015: The Hastings Downtown Area Redevelopment Plan for the HastingsDowntown Redevelopment Area was modifi ed by the City Council in and for the City of Hastings. The document is dated October 5, 2015. A formal Tax Increment Plan for TIFDistrict No. 7 was also adopted.
January 24, 2022: 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. 9 confi rm to the general plan for the development or redevelopment of the City as a whole.
February 10, 2022: 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. 9, subject to City approval.
February 22, 2022: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. 9.
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 a private party undertaking construction within the TIF District.
6. “Enabling Act” means Minnesota Statutes, Sections 469.001 through 469.047, as amendedand supplemented from time to time.
7. “HEDRA” means the Hastings Economic Development and Redevelopment Authority of theCity of Hastings.
8. “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.
9. “Project Costs” means the public development cost of the development activities that will orare expected to occur within the Project Area or TIF District
10. “Redevelopment Plan” means the Redevelopment Plan for the Redevelopment Project, asthe same may, from time to time, be amended or supplemented.
11. “Redevelopment Project” means Development District No. 1 (Hastings DowntownRedevelopment Area) of the Authority, as the same may, from time to time, be amended orsupplemented.
12. “School District” means Independent School District No. 200 (Hastings Public Schools).
13. “State” means the State of Minnesota.
14.“Tax Increment Financing Bonds” means general obligation tax increment fi nancing bonds; and other tax increment fi nancing bonds, including pay-as-you-go contracts, interfund loans, and notes.
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15.“Tax Increment Financing District” means any tax increment fi nancing district to be established in the future within the Project Area.
16. “Tax Increment Financing Plan” or “Plan” means the plans adopted by the HEDRA or theCity for any Tax Increment Financing District.
17. “TIF Act” means Minnesota Statutes, Sections 469.174 through 469.1794, as amended, bothinclusive.
18. “TIF District” means Tax Increment Financing (Redevelopment) District No. 9 (Flats on 3rd).
19.“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.
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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 authorizes theAuthority to undertake redevelopment activities within the Project Area and, at a datesubsequent 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,Ĵȱǰȱ ȱȱ ȱȱ ¢ȱȱ ȱ¢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 of the Development District is generallydescribed as follows:
• Development District No. 1 (Hastings Downtown Redevelopment Area) is the areagenerally described as those properties which are located south of the Mississippi River,
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east of Spring Street, north of 5th Street, and west of Baily Street and also including thoseproperties which are generally east of Baily Street, north of 2nd Street E, west of Lea St, andsouth of the Mississippi River.
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.
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 ofSection 469.002, Subd. 14 and 16 of the Enabling Act.
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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¡ ȱ Ĵȱȱ¢ȱ ǰȱȱ ȱȱ 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, and with a minimal adverse impact on theenvironment, which property is less productive because of the lack of proper utilization andlack of investment, and thereby promoting and securing the development of other land inthe 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 environment forpedestrians, that can be maintained for the long run.
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 citizens to choose from housing options which off er a wide array of services without regard to income, and for residents looking for a wide rangeof multi-family units.
13. Enhance the long term viability of the Project Area by facilitating:
• Land uses that complement and support existing businesses;
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• 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 ȱ ȱȱȱȱȱ ǰȱȱȱ¡ ȱ Ĵȱȱ¢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 Project 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 Project 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 Project Costs of the Redevelopment Plan.
SECTION 3.03 PAYMENT OF PROJECT COSTS
It is anticipated that the Project 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 Project 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.
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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 ProjectCosts 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 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 3.09 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.
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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 Authority anticipates development of multiple projects within the TIF District. The fi rst project to be built is proposed by a Developer to include an approximate 87-unit market-raterental housing facility, an apartment building, consisting of studio, one and two-bedroom unitslocated at 404 3rd Street East. The project intends to off er fi tness rooms, underground climate-controlled parking, a dog park and a sky lounge.
The Authority anticipates redevelopment to occur on other parcels within the TIF Districtthat will not be included as part of the fi rst project. Future redevelopment of other property within the TIF District may include a mix of housing units and commercial development.The Authority may consider a modifi cation to the TIF Plan at a future date to incorporate any changes that may be needed related to future development within the TIF District.
For the purpose of Estimated Tax Increment in Section 4.04.1, the TIF Plan includes estimated
market value for the fi rst project only.
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 the opinion of the City, the Development would not reasonably be expected to occur solelythrough private investment within the foreseeable future and the increased market value ofthe site that could reasonably be expected to occur without the use of tax increment fi nancing would be less than the increase in the market value estimated to result from the Developmentafter subtracting the present value of the projected tax increments for the maximum duration ofȱ ȱ ȱ Ĵȱȱ¢ȱȱ ȱǯ
The reasons and facts supporting this fi nding include the following:
- The Development requires public fi nancial assistance to off set land and building acquisition and site improvement and preparation costs to allow for the Developer to proceed withconstruction of the Development.
- A comparative analysis of estimated market values both with and without establishmentof the TIF District and the use of tax increments has been performed as described above and
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is shown in Exhibit I. This analysis indicates that the increase in estimated market value ofthe Development (less the present value of the projected tax increments for the maximumȱ Ĵȱȱ¢ȱȱ ȱǼȱ¡ ȱȱ ȱ ȱȱȱȱȱȱȱȱestablishment of the TIF District.
SECTION 4.03 TAX INCREMENT FINANCING DISTRICT
4.03.1 Designation
This TIF District is designated Tax Increment Financing (Redevelopment) District No. 9 (Flats on3rd).
4.03.2 Boundaries of TIF District
The boundaries of the TIF District are depicted in Exhibit V. The TIF District is generallybordered north to south between East 1st Street and East 4th Street and east to west between thetrain tracks and Tyler Street.
The legal description of the property within the TIF District is as follows:
• Outlot A and B, RIVERFRONT ADDITION, Dakota County, Minnesota; except thatȱȱȱ ȱȱĴȱȱȱ ȱŘ ȱ Dzȱ ȱȱŗǰȱȱŗǰȱRIVERFRONT 2ND ADDITION, Dakota County, Minnesota; AND Lots 1 through 8, Block16, TOWN OF HASTINGS, Dakota County, Minnesota; AND Lots 1,2,3,7, and 8, Block17, TOWN OF HASTINGS, Dakota County, Minnesota; AND The 20.00 foot wide alleydedicated in Block 17, TOWN OF HASTINGS, Dakota County, Minnesota, lying east of thenortherly extension of the west line of Lot 7, said Block 17 and west of a line drawn from thesoutheast corner of Lot 1 to the northeast corner of Lot 8, said Block 17.
The boundaries of the TIF District include the following ten (10) parcels listed below, inaddition to three (3) right of way parcels, along with the adjacent roads and right of way.
1. 19-63950-00-010
2. 19-63950-00-021
3. 19-63951-01-010
4. 19-32150-16-011
5. 19-32150-16-010
6. 19-32150-16-012
7. 19-32150-17-030
8. 19-32150-17-021
9. 19-32150-17-020
10. 19-32150-17-080
4.03.3 Type of District
The TIF District is established as a “redevelopment” district pursuant to Section 469.174,Subd. 10 of the TIF Act. The property within the TIF District meets the statutory criteria forestablishing a redevelopment tax increment fi nancing district.
LHB, Inc. was hired by the City to inspect and evaluate the properties within the TIF District.As summarized in the table below, the TIF District has a coverage calculation of 100%, whichis above the 70% requirement as defi ned in Section 469.174, Subd. 10 of the TIF Act. More than 50% of the buildings, not including outbuildings, are structurally substandard, pursuant tothe defi nition of structurally substandard in Section 469.174, Subd. 10(b) of the TIF Act. The substandard buildings are reasonably distributed.
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Exhibit VII includes the “The Report of Inspection Procedures and Results for DeterminingQualifi cation of a Tax Increment Financing District as a Redevelopment District” prepared by LHB, Inc. The fi ndings in the Report are summarized as follows:
Number of Parcels...........................................................................................................10
Site Area Included (square feet)...........................................................................289,664
Area of Improved Parcels (square feet)..............................................................289,664
Percent of Area Improved........................................................................................100%
Number of Parcels with Buildings .................................................................................3
Number of Buildings found Substandard.....................................................................2
Percent of Buildings found Substandard..............................................................66.7%
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 $97,210. This amount is estimated based on the most recent published estimated market value of$7,776,800 for property within the TIF District.
The estimated net tax capacity of the property after completion of the project (for taxes payablein 2025, or year one of the TIF District) is $308,910. This amount is based on a total estimatedmarket value of $24,468,100 for the project as described in section 4.02.1. The diff erence between the net tax capacity and the original net tax capacity is $211,700 (for taxes payable in 2025),which is the captured tax capacity for the creation of tax increment.
The total local tax rate for taxes payable in 2021 is 101.06%. 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 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 $191,856 after developmentcompletion (for taxes payable 2025). 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. A contract between the Authority and theDeveloper will defi ne the means for verifying Developer costs eligible for reimbursement and the means of disbursing tax increments collected by the Authority to the Developer, includingterms for payment.
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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.
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
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 may use these monies to pay for and reimburse the Authority for costs ofadministering the TIF district as allowed by the TIF Act.
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The maximum amount of tax increment revenue planned to pay administrative expense isshown in Figure 4.1. Anticipated administrative expenses of the TIF District include annualaudit of the fund for TIF District, preparation of annual reporting, legal publication of annualreport, and administration 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, Subd. 4 of the TIF Act, from the general funds of the City or the Authority or any otherfund 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 Ĵȱȱ ȱȱȱ ¢ȱȱȱ¢ȱ ǰȱȱ ȱǰȱȱȱ ǰȱȱȱ ǰȱȱȱǰȱȱ ¡ ȱ ǯȱ Ĵȱȱ ȱ ¢ȱȱ ęȱȱor 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 ¡ ȱȱȱȱ Ĵȱȱȱȱȱȱ ȱȱȱȱȱȱȱspecifi ed under Minnesota Statutes, Section 270C.40 or 549.09 as of the date the loan or ȱȱ£ǰȱȱȱ Ĵȱȱ ȱȱȱȱ ¡ 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¢ȱȱȱȱȱȱȱ ĴȱȱȱȱŚŜşǯŗŝśǰȱSubd. 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.
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 Authority and City elect the fi rst year of tax increment collection to be year 2025. Based on the elected fi rst year of tax increment, the estimated decertifi cation date is 12/31/2050.
4.04.8 Estimated Impact on Other Taxing Jurisdictions
Exhibits III and IV show the estimated impact on other taxing jurisdictions if the maximum
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projected 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.
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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
The 4-Year Knockdown Rule requires that if after 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 District and the original net tax capacity shall beadjusted accordingly. Qualifi ed improvements of a street are limited to construction or opening of a new street, relocation of a street, or substantial reconstruction or rebuilding of an existingstreet. The Authority must submit to the County Auditor, by February 1 of the fi fth year, evidence that the required activity has taken place for each parcel in the TIF District.
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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
It is not anticipated that tax increments will be spent outside the TIF District (except allowableadministrative 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 Authority will comply with the business subsidy requirements specifi ed in Minnesota Statutes, Sections 116J.993 to 116J.995, as amended.
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EXHIBIT V
Boundaries of Tax Increment Financing District No. 9
within Development District No. 1
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EXHIBIT VI
Parcels within ProjectArea