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HomeMy WebLinkAbout06-081 - ADMIN Resolution - City Council - 2006/05/15CITY OF ST. LOUIS PARK HENNEPIN COUNTY STATE OF MINNESOTA RESOLUTION NO. 06-081 RESOLUTION ADOPTING A MODIFICATION TO THE REDEVELOPMENT PLAN FOR REDEVELOPMENT PROJECT NO. 1, A MODIFICATION TO THE TAX INCREMENT FINANCING PLAN FOR THE TRUNK HIGHWAY 7 TAX INCREMENT FINANCING DISTRICT, ESTABLISHING THE HIGHWAY 7 CORPORATE CENTER TAX INCREMENT FINANCING DISTRICT AND ESTABLISHING THE HIG WAY 7 HAZARDOUS SUBSTANCE SUBDISTRICT THEREIN AND ADOPTING A TAX INCREMENT FINANCING PLAN THEREFOR. BE IT RESOLVED by the City Council (the "Council") of the City of St. Louis Park, Minnesota (the "City"), as follows. Section 1. Recitals 1.01. The Board of Commissioners (the "Board") of the St. Louis Park Economic Development Authority (the "EDA") has heretofore' established Redevelopment Project No. 1 and adopted the Redevelopment Plan therefor. It has been proposed by the EDA and the City that the City adopt a modification to the Redevelopment Plan for Redevelopment Project No. 1 (the "Redevelopment Plan Modification"), a modification to the Tax Increment Financing Plan for the Trunk Highway 7 Tax Increment Financing District (the "TIF Plan Modification"), establish the Highway 7 Corporate Center Tax Increment Financing Distnct (the "District") and establish the Highway 7 Hazardous Substance Subdistnct (the "Subdistrict") therein and adopt a Tax Increment Financing Plan (the "TIF Plan") therefor (referred to collectively herein as the "Plans"); all pursuant to and in conformity with applicable law, including Minnesota Statutes,, Sections 469.001 to 469.047, Sections 469.090 to 469.1082 and Sections 469.174 to 469.1799, all inclusive, as amended, (the "Act") all as reflected in the Plans, and presented for the Council's consideration. 1.02. The EDA and City have investigated the facts relating to the Plans and have caused the Plans to be prepared. 1.03. The EDA and City have performed all actions required by law to be performed pnor to the establishment of the District and the Subdistrict and the adoption and approval of the proposed Plans, including, but not limited to, notification of Hennepin County and Independent School District No. 283 having taxing junsdiction over the property to be included in the Distnct, a review of and wntten comment on the Plans by the City Planning Commission, approval of the Plans by the EDA on May 15, 2006, and the holding of a public hearing upon published notice as required by law. Resolution No. 06-081 -2- 1.04. Certain written reports, including the MPCA report/remediation plan, Response Action Plan and the Project Budget (the "Reports") relating to the Plans and to the activities contemplated therein have heretofore been prepared by staff and consultants and submitted to the Council and/or made a part of the City files and proceedings on the Plans. The Reports include data, information and/or substantiation constituting or relating to the basis for the other findings and determinations made in this resolution. The Council hereby confirms, ratifies and adopts the Reports, which are hereby incorporated into and made as fully a part of this resolution to the same extent as if set forth in full herein. 1.05 The City is not modifying the boundaries of Redevelopment Project No. 1, but is, however, modifying the Redevelopment Plan therefor. Section 2. Findings for the Adoption and Approval of the TIF Plan Modification 2.01. The Council hereby finds that parcel number 17-117-21-44-0065 (the "parcel") should be and is eliminated from the Trunk Highway 7 Tax Increment Financing District and included in the Highway 7 Corporate Center Tax Increment Financing District. 2.02. The elimination of the above -referenced parcel constitutes the TIF Plan Modification for the Trunk Highway 7 Tax Increment Financing District, and staff is directed to maintain a copy of this resolution with the records for the Trunk Highway 7 Tax Increment Financing District. 2.03. The Council hereby reaffirms the original findings for the Trunk Highway 7 Tax Increment Financing District. Section 3. Findings for the Adoption of the Redevelopment Plan Modification. 3.01 The Council hereby finds that the Modification to the Redevelopment Plan for Redevelopment Project No. 1 consists of the Modifications to the TIF Plan for the Trunk Highway 7 TIF District, the establishment of the Highway 7 Corporate Center TIF District and the establishment of the Highway 7 Hazardous Substance Subdistrict. 3.02. The Council hereby finds that the modification to the Redevelopment Plan for Redevelopment Project No. 1 conforms to the general plan for the development of the City as a whole and represents a continuation of the goals and objectives set forth in the Redevelopment Plan for Redevelopment Plan for Redevelopment Project No. 1. Section 4. Findings for the Establishment of the Highway 7 Corporate Center Tax Increment Financing District 4.01 The Council hereby finds that the Distnct is in the public interest and meets the requirements for a "redevelopment district" under Minnesota Statutes, Section 469.174, Subd. 10 (a)(1). o Resolution No. 06-081 -3- 4.02. The Council further finds that in its opinion the proposed redevelopment would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future and that the increased 'market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the District permitted by the Tax Increment Financing Plan, that the Plans conform to the general plan for the development or redevelopment of the City as a whole; and that the Plans will afford maximum opportunity consistent with the sound needs of the City as a whole, for the development or redevelopment of the District and Redevelopment Project No. 1 by private enterprise. 4.03. The Council further finds, declares and determines that the City made the above findings stated in this Section and has set forth the reasons and supporting facts for each determination in wnting, attached hereto as Exhibit A. 4.04. The Council elects to calculate fiscal dispanties for the Distnct in accordance with Minnesota Statutes, Section 469.177, Subd. 3, clause b, which means the fiscal disparities contribution would be taken from inside the District. Section 5. Findings for the Establishment of the Highway 7 Corporate Center Tax Increment Financing Subdistrict 5.01. The Council hereby finds that the Subdistrict is in the public interest and meets the requirements for a "hazardous substance subdistrict" under Minnesota Statutes, Section 469 174, Subd. 16 and Section 469.175, Subd. 7, because: (a) All five parcels in the Subdistnct are designated hazardous substance sites. (b) Redevelopment of the Subdistnct, in the opinion of the Council, would not reasonably be expected to occur solely through private investment and tax increment otherwise available, and therefore the Subdistrict is deemed necessary. (c) There are no parcels in the Subdistrict that are not designated hazardous substance sites. (d) The Subdistrict is not larger than, and the penod of time during which increments are elected to be received is not longer than, that which is necessary in the opinion of the authority to provide for the additional costs due to the designated hazardous substance site. Section 6. Public Purpose 6.01. The adoption of the Plans conforms in all respects to the requirements of the Act and will help fulfill a need to redevelop an area of the City which is occupied by substandard buildings, clean up a contaminated site, improve the tax base and improve the general economy of the State More specifically, the Plans will facilitate the development of a multi -tenant industrial building and associated parking on severely contaminated land. The Council expressly finds that any private benefit to be received by the developers is incidental, as the assistance is provided only to enable the developers to Resolution No. 06-081 -4- clean up a severely contaminated site in accordance with a state -approved VRAP and to offset relocation costs, and only in the amount necessary to carry out that purpose. That is, the tax increment assistance is necessary to provide the public benefits descnbed above. Therefore, the Council finds that the public benefits of the Plans exceed any private benefits. Section 7. Approval and Adoption of the Plans 7.01. The Plans, as presented to the Council on this date, including without limitation the findings and statements of objectives contained therein, are hereby approved, ratified, established, and adopted and shall be placed on file in the office of the City Clerk. 7.02. The staff of the City, the City's advisors and legal counsel are authonzed and directed to proceed with the implementation of the Plans and to negotiate, draft, prepare and present to this Council for its consideration all further plans, resolutions, documents and contracts necessary for this purpose. 7.03 The Auditor of Hennepin County is requested to certify the original net tax capacity of the District, as described in the Plans, and to certify in each year thereafter the amount by which the original net tax capacity has increased or decreased; and the St. Louis Park Economic Development Authority is authonzed and directed to forthwith transmit this request to the County Auditor in such form and content as the Auditor may specify, together with a list of all properties within the District, for which building permits have been issued during the 18 months immediately preceding the adoption of this resolution. 7.04. The City Clerk is further authorized and directed to file a copy of the Plans ith t e Commissioner of the Minnesota Department of Revenue and the Office of the tate A ditor pursuant to Minnesota Statutes 469.175, Subd. 4a. Review for Administration: City Attest: ager City Clerk Adopted by the City Council May 15, 2006 Resolution No. 06-081 -5- EXHIBIT A RESOLUTION NO. 06-081 The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan (TIF Plan) for the Highway 7 Corporate Center Tax Increment Financing District (Distnct) and the Highway 7 Hazardous Substance Subdistrict, as required pursuant to Minnesota Statutes, Section 469.175, Subdivision 3 are as follows. 1 Finding that the Highway 7 Corporate Center Tax Increment Financing District is a redevelopment district as defined in MS, Section 469 174, Subd. 10(a)(1) The Distnct consists of 5 parcel(s), with plans to redevelop the area for commercial purposes. Parcels that make up at least 70 percent of the area of the Distnct are occupied by buildings, streets, utilities, paved or gravel parking lots or other similar structures and more than 50 percent of the buildings in the Distnct, not including outbuildings, are structurally substandard to a degree requinng substantial renovation or clearance. (See Appendix F of the TIF Plan ) 2. Finding that the Highway 7 Hazardous Substance Tax Increment Financing District is a hazardous substance subdistrict as defined in M S , Section 469.174, Subd 16 and M S Section 469175, Subd 7 A All five parcels in the Subdistrict are designated hazardous substance sites The developer prepared a response action plan ("RAP") which includes all Parcels in the Distnct and was approved by the Commissioner of the Minnesota Pollution Control Agency (MPCA) on Apnl 28, 2005 The EDA is negotiating to enter into a Development Agreement with the developer in conjunction with creation of this redevelopment TIF distnct and subdistnct to be approved in May 2006 The Development Agreement requires the developer to carry out remediation in accordance with the RAP on all 5 parcels in the Distnct, financed in part with grant funds obtained by the City or EDA and in part with tax increment. B Redevelopment of the Subdistrict, in the opinion of the Council, would not reasonably be expected to occur solely through private investment and tax increment otherwise available, and therefore the Subdistrict is deemed necessary As explained in Finding 3 below, tax increment is required to pay approximately $2.4 million of TIF -eligible costs Of that amount, approximately $2 1 million is designated for remediation Of this remediation amount, if the assumptions of Appendix D of the TIF Plan are correct, $1.1 million is expected to denve from the Distnct, leaving a gap of approximately $1 million to be paid from the Subdistnct (all as shown in Appendix D of the TIF Plan) C There are no parcels in the Subdistrict that are not designated hazardous substance sites: As explained in Finding 2A above, the developer's RAP includes, and requires remediation of, all Parcels in the Subdistnct. Resolution No. 06-081 -6- D The Subdistrict is not larger than, and the period of time during which increments are elected to be received is not longer than, that which is necessary in the opinion of the authority to provide for the additional costs due to the designated hazardous substance site' The Subdistrict is coterminous with the Distnct, and the EDA will collect increments from the Subdistnct only as long as needed to pay the additional costs of the RAP that cannot be financed with grants and tax increment from the Distnct, as explained in Finding 2B above The EDA plans to decertify the Subdistnct once sufficient increment has been collected to pay the $1 million gap in remediation costs. 3 Finding that the proposed development, in the opinion of the City Council, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future and that the increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the Highway 7 Corporate Center Tax Increment Financing District permitted by the TIF Plan The proposed development, i17 the opinion of the City, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future The site is occupied by the former National Lead/Golden Auto facility which formulated lead smelting Due to this manufactunng process, the site is severely contaminated The predominant contamination is lead slag with some petroleum hydrocarbons, cisterns, and old foundations and construction debris. Due to the extensive contamination, redevelopment of the site will require demolition of existing structures (three of which are also structurally substandard) and clean up in accordance with an MPCA approved Environmental Response Action Plan (RAP) The RAP calls for excavation and treatment of the most heavily contaminated soils (hot spots) with a stabilization agent and then capping those soils on site with the new building and parking lots Total costs to clean up the property in accordance with the RAP exceeds $18 million, which precludes anyone from redeveloping the site without public assistance in the form of various grants and tax increment. After applying all grant resources, the City has determined that a gap of approximately $2 4 million exists and needs to be filled through tax increment from both the District and the Subdistnct in order to make the proposed development financially feasible. The City therefore does not believe the proposed redevelopment is not likely to occur without the assistance descnbed in this TIF Plan. The increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the District permitted by the TIF Plan The only way to increase the market value would be to redevelop the site for a higher intensity use such as housing However, this scenano is infeasible since the level of clean up required for housing or other uses is much more extensive than the $18 million already required for an industnal use and would be cost prohibitive. In addition, due to the type of contamination, different types of uses may be generally precluded from developing on the site by other agencies. • 0 0 0 Resolution No 06-081 -7- Moreover, a large portion of the site is encumbered by a lease to Methodist Hospital for remote parking, which will remain in place at least until the hospital can construct additional parking on its campus. Any alternative development would need to accommodate such needs, which limits the potential for more intensive development than that proposed under this Plan. A comparative analysis of estimated market values both with and without establishment of the Distnct and Subdistnct and the use of tax increments has been performed as described above If all development which is proposed to be assisted with tax increment were to occur in the Distnct and Subdistrict, the total increase in market value would be up to $4,354,628 The present value of tax increments from the Distnct is estimated to be $3,619,121. For the reasons descnbed above, it is the Council's finding that no development with any significant market value is expected to occur in the foreseeable future without tax increment and other assistance; and that even if some development could occur, it would not create new market value of greater than $735,507. (See Cashflow in Appendix D of the TIF Plan ) 4 Finding that the Tax Increment Financing Plan for the Highway 7 Corporate Center Tax Increment Financing District conforms to the general plan for the development or redevelopment of the municipality as a whole. The Planning Commission reviewed the TIF Plan and found that the TIF Plan conforms to the general development plan of the City (the "Comprehensive Plan"), both as the Comprehensive Plan currently exists and as proposed to be modified by a proposed amendment (the "Proposed Amendment"). The Proposed Amendment would change the designation of the TIF Distnct area from Commercial to Industrial. The Comprehensive Plan, both as it currently exists and as modified by the Proposed Amendment, allows for the clean-up and redevelopment of contaminated land and construction of a multi -tenant commercial/industnal building in the area of the TIF Distnct. 5 Finding that the Tax Increment Financing Plan for the Highway 7 Corporate Center Tax Increment Financing District will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development or redevelopment of Redevelopment Project No 1 by private enterprise The project to be assisted by the TIF Distnct will result in clean up of a contaminated site, increased employment in the City and the State of Minnesota, increased tax base of the State and add a high quality development to the City.