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4.4. SR 12-21-1995ar Y tylk R i MEMORANDUM ver TO: Mayor & City Council Introduction ITEM 4.4. FROM: William Rubin, ED Coordinatp ' DATE: December 21, 1995 SUBJECT: Public Hearing on Modification to Tax Increment Financing Plan No. 2 At its November 20 meeting, the Elk River City Council authorized a public hearing for December 21, 1995, to consider a modification to Tax Increment Financing Plan No. 2. The proposed modification will amend TIF Plan No. 2 to authorize tax increment expenditures that are currently referenced in the Plan. Back - 'round • Tax Increment Financing District No. 2 is considered a housing district that was created in 1985 by City Council action. The geographic boundaries of District No. 2 reflect the area of Guardian Angels of Elk River, Inc., campus attributable to the 36 -unit project known as Evans Park Apartments. Although bonds for the Evans Park TIF grant will not be retired until early 1998, the TIF Plan currently indicates that this district will be decertified in 1996. However, a review of the Evans Park TIF debt service account allows the city to decertify this district one year earlier - or prior to the end of 1995. As a result, property taxes paid by the Evans Park Apartments in 1996 will go to the county for redistribution pursuant to the respective levies of the local taxing jurisdictions. C7 Although debt service obligations still exist on the Evans Park TIF bonds, it is estimated that approximately $80,000 will be available from District No. 2 for other projects. As a result, a modification to Plan No. 2 was initiated. The proposed modification identifies numerous eligible expenditures that are authorized by the Tax Increment Statute. The following activities /expenditures are proposed as modifications to TIF Plan No. 2: 13065 Orono Parkway • P.O. Box 490 • Elk River, MN 55330 • (612) 441 -7420 • Fax: (612) 441 -7425 • Business Park and Industrial Park Activities Including, but not limited to, off -site and on -site infrastructure extensions, site development and site preparation costs, land acquisition, and certain municipal water and sanitary sewer system improvements, etc. $ 50,000 Urban Renewal and Redevelopment Activities Including, but not limited to, off -site and on -site infrastructure extensions, site development and site preparation costs, land acquisition, rehabilitation, demolition, and Mississippi Riverfront Pathway development, etc. $ 75,000 Infrastructure Improvements Including, but not limited to, certain municipal water and sanitary sewer system improvements, etc. 50.000 9 $175,000 The above - referenced expenditures have been overstated as in all likelihood, $80,000 in available funds are attributable to District No. 2. However, overstating proposed expenditures gives the city certain flexibility as future projects present themselves. Although no projects are presently contemplated, the specific areas that the TIF funds would be expended are highlighted in Exhibits B -1 through B -5 of the TIF Plan modification. Business Park and Industrial Park opportunities will be limited to the business park area in the western part of the community and the emerging light industrial and business park opportunities in the eastern part of the community. Urban renewal and redevelopment activities will be limited to the central commercial area and the office district area in downtown Elk River and along Main Street and Jackson Avenue. The potential exists for certain expenditures to be made for surface water management opportunities along the Main Street area, too. Since the November 20 City Council action, the following activities have occurred: • Preparation and distribution of proposed TIF Plan No. 2 modification. • Public hearing notice published in the December 6 Star News. • Presentation to Sherburne County Board of Commissioners on December 12. • Presentation to District 728 School Board on December 12. • Planning Commission review of proposed modification to ensure consistency with Comp Plan on December 19. Action Requested At the conclusion of the public hearing on this matter, the Elk River City Council is asked to approve the modification to Tax Increment Financing Plan No. 2. Attachments: - Modification to TIF Plan No. 2 - Draft of Planning Commission Resolution • 0 w MODIFICATION OF TAX INCREMENT FINANCING PLAN NO. 2 TAX INCREMENT FINANCING DISTRICT NO. 2 City of Elk River December 21, 1995 • • MODIFICATION OF TAX INCREMENT FINANCING NO. 2 TAX INCREMENT FINANCING DISTRICT NO.2 Purpose The sole purpose of this modification (the Modification) of the existing Tax Increment Financing Plan No. 2 (the TIF Plan) for Tax Increment Financing District No. 2 (the TIF District) is to provide supplemental information relating to the increase in total estimated tax increment expenditures authorized by the Plan. The City of Elk River proposes to provide a means for financing certain public infrastructure improvements, redevelopment and urban renewal activities, and Business Park and Industrial Park activities as authorized by Minnesota Statutes. This Modification ratifies and incorporates by reference, all of those terms of the TIF Plan and its attachments in their entirety, subject only to the Modification and additional provisions provided herein. Modification The TIF Plan and Minnesota Statutes, Section 469.175, subd. 4, require modification of a TIF Plan in the event additional property is designated to be acquired by the city or in the event there is an increase in total estimated tax increment expenditures. Therefore, the TIF Plan is modified and supplemented as follows: 1.) Development Program - The goals and objectives of the TIF District and the City of Elk River Development District No. 1 (the Development District) are set forth in the TIF Plan and in the Development Program for the Development District. These goals and objectives include: a.) To provide impetus for business and industrial development by constructing public facilities. b.) To increase employment opportunities in the city by encouraging additional business and industrial development. c.) Provide adequately serviced business and industrial areas of the city to accommodate desirable users. d.) Remedy a deficiency in the storage capacity of the existing water system, which is restricting development in areas the city planned and designated for business and industrial use. e.) Preserve and enhance the tax base of the city. £) Provide maximum opportunity, consistent with the needs of the city, for development by private enterprise. The TIF Plan states that tax increment generated by the TIF District will be used for public improvements determined by the City Council to be necessary and appropriate to meet the purposes of the TIF Plan and the Development Program. The City Council has determined that paying for certain public infrastructure improvements, redevelopment and urban development activities, and business park and industrial park initiatives identified in this Modification is necessary and appropriate to meet the purposes of the Development District because it will: i) Preserve and enhance the tax base of the city, ii) Encourage additional business and commercial development through the elimination of blight in residential, central commercial, office, highway commercial, and business park and industrial park areas, iii) Increase employment opportunities in the city. These goals are consistent with the goals and purposes of the Development Program and the TIF Plan. 2.) Property to be Acquired - In order to achieve the goals and objectives of the Development Program, it is hereby deemed necessary and appropriate for the City of Elk River or the Economic Development Authority for the City of Elk River (the EDA) or the Housing and Redevelopment Authority for the City of Elk River (the HRA) to acquire certain property located throughout the Development District. The acquisition of property in support of private development activity will be done in conjunction with other public development activities more thoroughly outlined in 3.b. of this Modification. 3.) Development Activities - a.) Private Development Activity - Development activity within Development District No. 1 includes, but is not limited to those activities within the residential, central commercial, office, highway commercial, and business park and industrial park districts that will help achieve the goals and objectives of the Development Program for the Development District. b.) Public Development Activity - To support the private development activity, the City Council has determined that it is necessary and appropriate to provide assistance through the use of tax increment expenditures authorized by the TIF Plan and Minnesota Statutes. Such assistance includes, but is not limited to, infrastructure improvements, including off -site and on -site infrastructure extensions, acquisition of blighted property, rehabilitation of buildings, demolition of blighted property, site development and site preparation costs, Mississippi Riverfront trail development in the central commercial district, and business park and industrial park initiatives such as infrastructure improvements, site development and site preparation costs, and land acquisition in support of private development activity. The locations of these development activities are indicated on maps attached as Exhibit B -1 through B -5 of this Modification. 4.) Financial Analysis of the TIF District - Cost of the Public Development Activities to be Financed: Business Park and Industrial Park Activities Including, but not limited to, off -site and on -site infrastructure extensions, site development and site preparation costs, land acquisition, and certain municipal water and sanitary sewer system improvements, etc. $ 50,000 Urban Renewal and Redevelopment Activities Including, but not limited to, off -site and on -site infrastructure extensions, site development and site preparation costs, land acquisition, rehabilitation, demolition, and Mississippi Riverfront Pathway development, etc. $ 75,000 Infrastructure Improvements - Including, but not limited to, certain municipal water and sanitary sewer system improvements, etc. $175,000 0 Sources of Funds: Tax Increment $175,000 Amount of Bonded Indebtedness to be Incurred: $ -0- As noted in the TIF Plan, the city has elected to retain the full captured assessed value of TIF District No. 2 and to use all of the tax increment generated by the TIF District for purposes identified in the TIF Plan. The TIF District will generate more than enough revenue to fund the proposed public development activities. Therefore, it will not be necessary to extend the duration of TIF District No. 2 beyond the period described in the TIF Plan, or, to increase the amount of tax increment to be received in order to fund the proposed public development activities. 5.) Cash Flow Analysis - Attached as Exhibit A to this Modification is a revised cash flow analysis for the TIF District which sets forth the impact of the proposed public development activities. The cost of these activities will be paid from tax increment . generated by TIF District No. 2 in excess of those funds necessary to pay existing debt service. 6.) Estimated Impact of the TIF District on Other Taxing Jurisdictions - Because the proposed public development activities will be paid for with tax increment currently retained by the city under the TIF Plan, the estimated impact on other taxing jurisdictions, as described in the TIF Plan, will remain. unaffected. In addition, many private development activities undertaken without the creation of new Tax Increment Districts, will go directly to the local taxing jurisdictions, thereby creating a positive impact. 7.) Administrative Procedures and Requirements - This Modification is being made pursuant to the Modification Procedure explained in the TIF Plan and Minnesota Statutes, Section 469.175, subd. 4, solely for the purpose of funding public development activities as authorized by the TIF Plan and Minnesota Statutes. • • • TIF DISTRICT NO.2 i CASH FLOW PROJECTION Tax Debt Cash Increment Service Balance 1994 123, 332.35 1995 59, 945.38 - 22,190.00 161, 087.73 A. 1996 - 16,625.00 144,462.73 1997 - 16,085.00 128,377.73 1998 - 20,400.00 107,977.73 1995 59,945.38 - 22,190.00 161,087.73 B. 1996 59,900.00 - 16,625.00 204,362.73 1997 - 16,085.00 188,277.73 1998 - 20,400.00 167,877.73 Comments: Illustration A shows tax increment collected through 1995 and District No. 2 decertified by December 31, 1995. Illustration B shows tax increment collected through 1996 and District No. 2 decertified by December 31, 1996. The Elk River City Council will decertify District No. 2 by December 31, 1995. • EXHIBIT A TI FCASH.XLS 11/21/95 ••III +I -•••,i PARK OUTLOT 8 �3Q I W , I i V Future •, .� Park '�' wig i [f� •ice tug �� �i� . MIN ���► � �+� 'mot � �© �� � e�r��� � '���►® ._ \ Emerging Light Manufacturing (I -1) and Business Park (B -P) Opportunities a ->'1 I 1 R-/4 —+ S d RESOLUTION 95 - A RESOLUTION OF THE ELK RIVER PLANNING COMMISSION A RESOLUTION FINDING THE CITY OF ELK RIVER'S PROPOSED MODIFICATIONS TO TAX INCREMENT FINANCING PLAN NO. 2 AND NO. 3 LOCATED WITHIN DEVELOPMENT DISTRICT NO. 1 AS BEING CONSISTENT WITH THE COMPREHENSIVE PLAN FOR THE CITY OF ELK RIVER WHEREAS, the City of Elk River's proposed modifications to Tax Increment Financing Plan No. 2 and No. 3 (the Plans), located within Development District No. 1, have been submitted to the Elk River Planning Commission; and, WHEREAS, the Planning Commission has reviewed the proposed modifications to the Plans to determine the consistency of the modifications to the Comprehensive Plan of the City of Elk River. NOW, THEREFORE, BE IT RESOLVED by the Elk River Planning Commission that the modifications to Tax Increment Financing Plan No. 2 and No. 3 are consistent with the Elk River Comprehensive Plan, based on the following findings: 1. Business Park and Industrial Park expenditures, as authorized by Minnesota Statutes, are proposed within the B -P, Business Park zoning district or the I -1, Light Industrial zoning district in the western part of the community or in the • eastern part of the community, and have an underlying land use of light industrial. 2. Urban renewal and redevelopment expenditures, as authorized by Minnesota Statutes, are proposed within the C -1, Central Commercial zoning district and the C -2, Office District zoning district, and have an underlying land use of central business. • 3. Infrastructure expenditures, as authorized by Minnesota Statutes, are proposed within the B -P, Business Park zoning district, the I -1, Light Industrial zoning district, the C -1, Central Commercial zoning district, or the C -2, Office District zoning district and have an underlying land use of light industrial, or central business respectively. Adopted this 19th day of December, 1995. ATTEST: Steven B. Ach, City Planner Louise Kuester, Chair