8.2. SR 05-15-2017
Request for Action
To Item Number
Mayor and City Council 8.2
Agenda Section Meeting Date Prepared by
General BusinessMay 15, 2017Amanda Othoudt, Economic Development
Director
Item Description Reviewed by
Beaudry Redevelopment Project Cal Portner, City Administrator
Reviewed by
Action Requested
Adopt, by motion, a resolution calling for a public hearing on a modification to the development program
for Development District No. 1, the establishment of a Tax Increment Financing District No. 24 and the
adoption of a tax increment financing plan authorizing advance of funds to be reimbursed with future tax
increment.
Background/Discussion
Staff has been working with Beaudry Oil Company in the development of a new truck shop facility along
Proctor Avenue. As part of the project, the city is pursuing a redevelopment plan for the area. At their
April 3, 2017, meeting, the City Council directed staff to move forward with the steps necessary to create
a redevelopment plan. To determine the boundary of this redevelopment plan, it was necessary to inspect
each of the properties within the proposed development district to determine if the area qualifies for a
Redevelopment TIF district.
Within the district, there are 11 total buildings. In order to meet the criteria for the establishment of a
redevelopment TIF district, over 50% of the structures, or six of the properties would need to be deemed
substandard. The city’s consultant, LHB, performed the inspection of the properties within the proposed
district. They inspected both the interior and exterior of the buildings and evaluate the coverage of each
parcel. LHB was able to inspect most of the properties on Friday, May 5, 2017. Staff is working with the
developer in attempt to gain access to the remaining properties in the proposed district. The final report
will be generated once LHB has accessed all properties.
Approval of the resolution will enable staff to establish a Redevelopment TIF District and adopt a Tax
Increment Financing plan so that the city can advance funds for land and building acquisition, demolition
and site preparation costs and infrastructure needed to complete this project.
Financial Impact
N/A
Attachments
Call for Public Hearing and Interfund Loan Resolution
Exhibit A
City of Elk River
City Council
Resolution 17-____
A Resolution of the City Council of the City of Elk River calling for a public
hearing on a modification to the development program for Development
District No. 1, the establishment of a Tax Increment Financing District No.
24, and the adoption of a Tax Increment Financing Plan therefor
WHEREAS, the City of Elk River, Minnesota (the “City”) has received a request to
provide tax increment financing assistance for certain public costs of a redevelopment
project to be acquired, renovated and constructed in the City.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Elk
River, Minnesota, as follows:
1. Public Hearing. This Council shall meet on July 3, 2017, at approximately 6:30 p.m.,
or as soon thereafter as notice may be given in accordance with Minnesota Statutes, Sections
469.174 to 469.1794, as amended (the “TIF Act”), as determined by the City’s Economic
Development Director, to hold a public hearing on a proposed modification to the
Development Program for Development District No. 1 (the “Modification”), proposed
establishment of a proposed Tax Increment Financing (Redevelopment) District No. 24
(Beaudry Redevelopment Project) (the “TIF District”), and the proposed adoption of a Tax
Increment Financing Plan for the TIF District (the “TIF Plan”), pursuant to Minnesota
Statutes, Sections 469.090 to 469.1082, as amended, and the TIF Act.
2. Notice of Public Hearing, Filing of Plans. City staff and consultants are directed and
authorized to prepare the Modification and TIF Plan and to forward such documents to the
appropriate taxing jurisdictions, including Sherburne County and Independent School
District No. 728 (Elk River). The City Clerk is authorized, at the direction of the City’s
Economic Development Director, to cause notice of the hearing in substantially the form
attached as Exhibit A hereto, together with an appropriate map as required by law, to be
published at least once in the official newspaper of the City not less than 10, nor more than
30, days prior to the public hearing, and to place a copy of the Modification and TIF Plan on
file in the City Clerk’s office at City Hall and to make such copy available for inspection by
the public.
3. Repayment of Interfund Loan.
3.01. Under Section 469.178, Subdivision 7 of the TIF Act, the City is authorized to
advance or loan money from any fund from which such advances may be legally made in order
to finance expenditures that are eligible to be paid with tax increments under the TIF Act.
3.02. The City has determined that it may pay for administrative costs associated with
the establishment of the TIF District and certain other costs incurred in connection with the
proposed redevelopment of the TIF District, including but not limited to land acquisition,
demolition and site preparation costs (the “Costs Advances”) on a temporary basis from the
General Fund, or any other fund from which such advances, from time to time, may be legally
made (the “Fund”) as an interfund loan pursuant to Minnesota Statutes, Section 469.178, Subd.
7.
3.03 The City will, subject to a determination by the City Finance Director,
reimburse itself for the Costs Advances (including without limitation (i) out-of-pocket
administrative costs incurred prior to the establishment of the TIF District in an amount not to
exceed $80,000, subject to the limitations of the TIF Act, and (ii) certain costs incurred in
connection with land and building acquisition, demolition and site preparation costs in an
amount not to exceed $800,000) in an aggregate amount not to exceed the adopted and, if
applicable, amended Tax Increment Financing Plan budget for the TIF District (the “Interfund
Loan”), together with interest at the rate prescribed by the statute (Minnesota Statutes, Section
469.178, Subdivision 7), which is the greater of the rates specified under Sections 270C.40 or
549.09 at the time an Interfund Loan, or any part of it, is first made, subject to the right of the
City Finance Director to specify a lower rate.
3.04. Principal and interest (“Payments”) on the Interfund Loan shall be paid semi-
annually on each February 1 and August 1 (each a “Payment Date”), commencing on the first
Payment Date on which the City has Available Tax Increment (defined below), or on any other
dates determined by the City Finance Director, through the date of last receipt of tax increment
from the TIF District.
3.05. Payments on the Interfund Loan will be made solely from the tax increment
from the TIF District received by the City from Sherburne County in the 6-month period
before any Payment Date, net of the amount paid under any agreement with a private developer
or otherwise pledge to the payment of any obligation (the “Available Tax Increment”).
Payments shall be applied first to accrued interest, and then to unpaid principal, unless
otherwise specified by the City Finance Director. Interest accruing from the Loan Date will be
compounded semiannually on February 1 and August 1 of each year and added to principal,
unless otherwise specified by the City Finance Director. Payments on this Interfund Loan may
be subordinated to any outstanding or future bonds, notes, or contracts secured in whole or in
part with available tax increment, and are on a parity with any other outstanding or future
interfund loans secured in whole or in part with available tax increment.
3.06. The principal sum and all accrued interest payable under this resolution is pre-
payable in whole or in part at any time by the City without premium or penalty.
3.07. This resolution is evidence of an internal borrowing by the City in accordance
with Section 469.178, subdivision 7 of the TIF Act, and is a limited obligation payable solely
from Available Tax Increment pledged to the payment hereof under this resolution. The
Interfund Loan shall not be deemed to constitute a general obligation of the State of Minnesota
or any political subdivision thereof, including, without limitation, the City. Neither the State of
Minnesota, nor any political subdivision thereof shall be obligated to pay the principal of or
interest on the Interfund Loan or other costs incident hereto except out of Available Tax
Increment. The City shall have no obligation to pay any principal amount of the Interfund
Loan or accrued interest thereon, which may remain unpaid after the final Payment Date.
3.08. The City may at any time make a determination to forgive the outstanding
principal amount and accrued interest on the Interfund Loan, in whole or in part, on any date
from time to time, to the extent permissible under law.
3.09. The City may from time to time amend the terms of this Resolution to the
extent permitted by law, including without limitation amendment to the payment schedule and
the interest rate; provided that the interest rate may not be increased above the maximum
specified in Section 469.178. subd. 7 of the TIF Act.
th
Passed and adopted this 15 day of May, 2017.
John J. Dietz, Mayor
ATTEST:
Tina Allard, City Clerk
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