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HomeMy WebLinkAbout07-142 - ADMIN Resolution - City Council - 2007/11/19CITY OF ST. LOUIS PARK HENNEPIN COUNTY STATE OF MINNESOTA RESOLUTION NO. 07-142 RESOLUTION ADOPTING A MODIFICATION TO THE REDEVELOPMENT PLAN FOR REDEVELOPMENT PROJECT NO. 1; AND ESTABLISHING THE WEST END TAX INCREMENT FINANCING DISTRICT 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") and establish The West End Tax Increment Financing District (the "District") therein and adopt a Tax Increment Financing Plan (the "TIF Plan") therefor (the Redevelopment Plan Modification and the TIF Plan are referred to collectively herein as the "Plans"); all pursuant to and in conformity with applicable law, including Minnesota Statutes, Sections 469.090 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 prior to the establishment of the District 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 jurisdiction over the property to be included in the District, a review of and written comment on the Plans by the City Planning Commission, approval of the Plans by the EDA on November 19, 2007, and the holding of a public hearing upon published notice as required by law. 1.04. Certain written reports (the "Reports") relating to the Plans and to the activities contemplated therein have heretofore been prepared by staff and consultants and submitted to the 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. Resolution No. 07-142 -2- Section 2. Findings for the Adoption and Approval of the Plans 2.01. The Council hereby finds that the Plans, are intended and, in the judgment of this Council, the effect of such actions will be, to provide an impetus for development in the public interest and accomplish certain objectives as specified in the Plans, which are hereby incorporated herein. Section 3. Findings for the Establishment of the West End Tax Increment Financing District 3.01. The Council hereby finds that the District is in the public interest and is a "redevelopment district" under Minnesota Statutes, Section 469.174, Subd. 10 (a)(1). 3.02. The Council further finds that the proposed redevelopment would not occur solely through private investment within the reasonably foreseeable future and that the increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the 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 by private enterprise. 3.03. 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 writing, attached hereto as Exhibit A. 3.04. The St. Louis Park Economic Development Authority elects to calculate fiscal disparities for the District 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 4. Public Purpose 4.01. The adoption of the Plans conforms in all respects to the requirements of the Act and will help fulfill a need to develop an area of the City which is already built up, to provide employment opportunities, to improve the tax base and to improve the general economy of the State and thereby serves a public purpose. For the reasons described in Exhibit A, the City believes these benefits directly derive from the tax increment assistance provided under the Plan. The developer will receive only the assistance needed to make this development financially feasible. As such, any private benefits received by the developer are incidental and do not outweigh the primary public benefits. Section 5. Approval and Adoption of the Plans 5.01. 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. 5.02. The staff of the City, the City's advisors and legal counsel are authorized and directed to proceed with the implementation of the Plans and to negotiate, draft, prepare and Resolution No. 07-142 -3- present to this Council for its consideration all further plans, resolutions, documents and contracts necessary for this purpose. 5.03 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 authorized and directed to forthwith transmit this request to the County Auditor in such form and content as the Auditor may specify, together with a list of all properties within the District, for which building permits have been issued during the 18 months immediately preceding the adoption of this resolution. 5.04. The City Clerk is further authorized and directed to file a copy of the Plans with the Commissioner of the Minnesota Department of Revenue and the Office of the State Auditor pursuant to Minnesota Statutes 469.175, Subd. 4a. A d by the City Council of the City of St. Louis Park this 19th day of November, 2007. Revi: for Administration: , 111111111111111, .Cit .' Attest: • Adopted by the City Council November 19, 2007 7 Mayor 0 0 Resolution No. 07-142 -4- EXHIBIT A RESOLUTION NO. 07-142 The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan (TIF Plan) for The West End Tax Increment Financing District (District), as required pursuant to Minnesota Statutes, Section 469.175, Subdivision 3 are as follows: 1 Finding that The West End Tax Increment Financing District is a redevelopment district as defined in M.S., Section 469.174, Subd. 10(a)(1). The District consists of 6 parcels, containing 8 buildings. Parcels that make up 100 percent of the area of the parcels in 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 (5 out of 8) in the District, not including outbuildings, are structurally substandard to a degree requiring substantial renovation or clearance. (See Appendix F of the TIF Plan.). The substandard buildings are reasonably distributed throughout the Distnct, as shown in Appendix F of the TIF Plan. 2. 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 District permitted by the TIF Plan. The proposed development, in the opinion of the City, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future: The proposed development consists of mixed-use facilities including approximately 1.1 million sq/ft of office, 400,000 sq/ft of retail and nearly 300 hotel units (including hotel units expected to constructed by a separate entity from the primary developer, but which hotel would not be feasible without the infrastructure and other improvements to be constructed by the pnmary developer receiving tax increment assistance). The redevelopment requires acquisition, relocation of existing businesses and demolition of most of the existing buildings. Current estimates of redevelopment costs include $2 million for demolition, $5 million for soil correction, $8 million for road and traffic improvements, and more than $20 million for structured parking related to the retail component alone. It is not likely that any new development on this site is feasible without significant traffic improvements, and development at the proposed level of density is not feasible without the structured parking and related roadway improvements. Due to the high cost of fmancing all these extraordinary redevelopment costs, the proposed development is feasible only through assistance, in part, from tax increment financing. The developer was asked for and provided a letter and a proforma as justification that the developer would not have gone forward without tax increment assistance. (See attachment in Appendix G of the TIF Plan, and detailed background materials on file in City Hall.) 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 primary basis for this finding is that the entire area of the TIF District is fully developed with commercial uses. As a practical matter, any new development that would create new market value would require redevelopment, and any such redevelopment on a significant scale (comparable to the proposed development) would encounter the same type of extraordinary costs described above. Histoncally, redevelopment of similar fully -developed areas in St. Louis Park has been infeasible without tax increment assistance. In addition, while the property could be sold to another developer for some other use, these scenarios are not feasible m the market due to various constraints. First Resolution No. 07-142 -5- housing development is not feasible due to inadequate market location (adjacent to a freeway) and the decline or stagnation of the current housing market (both condo and single-family). Second, the proposed office development generates significantly more value than any other land use due to its multiple stories and the fact that it is considered Class A office commanding a high market value; lesser density and quality office development might be feasible, but that alternative would create lower market value than proposed under this plan. Therefore, the City reasonably determines that no other redevelopment of similar scope is anticipated on this site without substantially similar assistance being provided to the development. Therefore, the City concludes as follows: a. The City's estimate of the amount by which the market value of the entire District will increase without the use of tax increment financing is $0 (except for the potential for appreciation of existing value, which is expected to be small in light of the substandard conditions m 5 of the 8 buildings). b. If the proposed development occurs, the total increase in market value will be $259,791,325 (see Appendix D and G of the TIF Plan) c. The present value of tax increments from the Distnct for the maximum duration of the district permitted by the TIF Plan is estimated to be $49,352,955 (see Appendix D and G of the TIF Plan). d. Even if some development other than the proposed development were to occur, the Council finds that no alternative would occur that would produce a market value increase greater than $210,438,370 (the amount in clause b less the amount in clause c) without tax increment assistance. 3 Finding that the TIF Plan for the 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. 4. Finding that the TIF Plan for the 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 District will result in the removal of substandard properties, and construction of a dense large-scale private development that maximizes uses of this key site adjacent to two freeways, thereby implementing important redevelopment goals for the City as a whole.