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HomeMy WebLinkAbout13-068 - ADMIN Resolution - City Council - 2013/05/06RESOLUTION NO. 13-068 RESOLUTION ADOPTING A MODIFICATION TO THE REDEVELOPMENT PLAN FOR REDEVELOPMENT PROJECT NO. 1, ESTABLISHING THE ELIOT PARK 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 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 Eliot Park Tax Increment Financing Distnct (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 City has investigated the facts relating to the Plans and has caused the Plans to be prepared. 1.03. The City has 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 wntten comment on the Plans by the City Planning Commission on Apnl 17, 2013, approval of the Plans by the EDA on May 6, 2013, 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, including the redevelopment qualifications reports and planning documents, 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 boundanes of Redevelopment Project No. 1, but is modifying the Redevelopment Plan therefor. Section 2. Findings for the Adoption and Approval of the Redevelopment Plan Modification. 2.01. The Council approves the Redevelopment Plan Modification, and specifically finds that: (a) the land within the Project area would not be available for redevelopment without the financial aid to be sought under the Redevelopment Plan Modification; (b) the Redevelopment Plan, as modified, will afford maximum opportunity, consistent with the needs of the City as a whole, for the development of the Project by private enterprise; and (c) that the Resolution No. 13-068 -2- Redevelopment Plan, as modified, conforms to the general plan for the development of the City as a whole. Section 3. Findings for the Establishment of Eliot Park Tax Increment Financing Distnct 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) of the Act. 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 conforms 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 Distnct 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 wnting, attached hereto as Exhibit A. 3.04. The Council further finds that the EDA has elected to calculate fiscal disparities for the District in accordance with Minnesota Statutes, Section 469.177, Subd. 3, clause b, which means any 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 TIF Plan. A private developer will receive only the assistance needed to make this development financially feasible. As such, any private benefits received by a 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 Economic Development Director. 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 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 -Resolution'No. 13-068 ; 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 Economic Development Director is further authorized and directed to file ,a copy of the Plans with the Commissioner` of the ,Minnesota Department of Revenue and the Office . :State Auditor pursuant to Minnesota Statutes 469.175, Subd. 4a. Reviewe, fo s ministration Adopter y the City Council May 6, 2013 City M Attest: City Clerk Clerk Mayor Resolution No. 13-068 -4- EXHIBIT A RESOLUTION NO. 13-068 The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan (TIF Plan) for the Eliot Park Tax Increment Financing Distnct (District), as required pursuant to Minnesota Statutes, Section 469.175, Subdivision 3, are as follows: 1. Finding that the District is a redevelopment district as defined in M.S., Section 469.174, Subd. 10(a)(1). The District consists of 2 parcels, with plans to redevelop the area for residential purposes. At least 70 percent of the area of the parcels in the District is occupied by buildings, streets, utilities, paved or gravel parking lots or other similar structures, and more than 50 percent of the buildings in the District, not including outbuildings, are structurally substandard to a degree requiring substantial renovation or clearance. (See 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 site is occupied by a former school building. The proposed development -138 units of apartments—will require demolition and clearance of the site, including costly hazardous waste abatement within the school building. Further, based on analysis of the developer's pro forma, the City has determined that a gap needs to be filled through tax increment in order to make the proposed development financially feasible. The City therefore does not believe the proposed housing facility is likely to occur without the assistance described in this TIF Plan. While the property could be sold to another developer for some other use, other development scenarios are not feasible in the market due to various constraints. First, adaptive reuse of the building would produce far less market value than the proposed 138 - unit housing facility. Second, commercial development is not feasible due to inadequate market location and it is unlikely that spot zoning would be supported (changing the zoning to commercial for only one parcel) due to the surrounding land use, which is predominately residential and consists of single-family homes. The City has required the developer to abide by a "look back" provision, which measures the actual development costs versus the project revenues and costs. If the developer achieves a higher than market rate return, the amount of TIF assistance will be reduced. 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: This • Resolution No. 13-068 -5- finding is justified on the grounds that the cost of site and public improvements add to the total redevelopment cost. It should be noted that any alternative redevelopment scenario faces the same high land cost, demolition/clearance costs and structured parking costs faced by the proposed developer, and in the City's experience, properties with challenges similar to those posed by this property have not been redeveloped in St. Louis Park without significant public assistance. 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. b. If the proposed development occurs, the total increase in market value will be $15,650,420 (see Appendix D and G of the TIF Plan) c. The present value of tax increments from the District for the maximum duration of the district permitted by the TIF Plan is estimated to be $4,931,183 (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 $10,719,237 (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 increased and diversified housing stock in the City and the State of Minnesota, the renovation of substandard properties, increased tax base of the City and State, and the addition of a high-quality development in the City. Through the implementation of the TIF Plan, the EDA or City will increase the availability of safe and decent life -cycle housing in the City.