RES 17-36City of Elk River
City Council
Resolution 17-36
Resolution Approving The Modification Of The Development Program
For A Development District No. I, Establishing A Tax Increment
Financing District, Approving A Tax Increment Financing Plan
Therefor And Authorizing The Execution Of Related Agreements
BE IT RESOLVED by the City Council (the "Council's of the City of Elk River, Minnesota (the
"City"), as follows:
Section 1. Recitals.
1.01. It has been proposed that the City modify the Development Program (the "Program
Modification") for Development District No. 1 (the "Development District"), establish Tax
Increment Financing (Redevelopment) District No. 24 (The Truck Shop Project) within the
Development District (the "TIF District") and adopt the related Tax Increment Financing Plan
therefor (the "TIF Plan") all pursuant to and in conformity with applicable law, including Minnesota
Statutes, Sections 469.124 through 469.133 and Sections 469.174 through 469.1794, as amended (the
"TIF Act"), all as reflected in that certain document entitled "Modification to the Development
Program for Development District No. 1 and the Tax Increment Financing Plan for Tax Increment
Financing (Redevelopment) District No. 24 Within Municipal Development District No. 1 (The
Truck Shop Project)", and presented for the Council's consideration.
1.02. The City has performed all actions required by law to be performed prior to the
modification and approval of the Program Modification and the TIF Plan, including without
limitation, delivery of the Program Modification and the TIF Plan to the Board of Sherburne
County (the "County") and the Board of Independent School District No. 728 (the "School
District"), and the holding of a public hearing by the City thereon on date hereof following notice
thereof published in the City's official newspaper at least 10 but not more than 30 days prior to the
public hearing.
1.03. Certain information and material (collectively, the "Materials") relating to the TIF
Plan and to the activities contemplated therein have heretofore been prepared and submitted to the
Council and/or made a part of the City files and proceedings on the TIF Plan. The Materials
include information and/or substantiation constituting or relating to (1) the "studies and analyses"
on why the new Tax Increment District meets the requirements to be a redevelopment tax
increment financing district, including a "Report of Inspection Procedures and Results for
Determining Qualifications of a Tax Increment Financing District as a Redevelopment District",
dated June 15, 2017, prepared by LHB, Inc., Minneapolis, Minnesota, (2) why the new Tax
Increment District meets the so-called "but for" test; and (3) the bases for the other findings and
determinations made in this resolution. The Council hereby confirms, ratifies and adopts the
Materials, 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.
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1.04. The TIF District is being established to facilitate the demolition of existing blighted
buildings, facilitate the construction of an approximately 7,216 square foot facility to operate a light
maintenance facility for the Beaudry Oil existing fleet, provide necessary public infrastructure and
facilitate future development in the TIF District (collectively, the "Development").
Section 2. Findings for the Adoption and Approval of the Program Modification and
TIF Plan.
2.01. The Council hereby finds that: (a) the land within the Development District would
not be available for redevelopment without the financial aid to be sought under the Program
Modification; (b) the Program Modification will afford maximum opportunity, consistent with the
needs of the City as a whole, for the development of the Development District by private enterprise;
and (c) the Program Modification conforms to the general plan for the development of the City as a
whole.
2.02. The Council finds that the Development District constitutes a "blighted area" as well
as, in part, an area that is underused or inappropriately used, within the meaning of Minnesota
Statues, Section 469.002, subd. 11 and Section 469.028, subd. 4.
2.03. The Council further finds that the demolition, clearance, and related activities to
redevelop the Development District, all in accordance with the Program Modification, constitute a
"redevelopment project" within the meaning of Minnesota Statues, Sections 469.002, subd. 14 and
Section 469.028, subd. 4.
2.04. The City Council hereby finds that the TIF District is in the public interest and is a
redevelopment district, as defined in Minnesota Statutes, Section 469.174, Subdivision 10 for the
following reasons:
The TIF District is, pursuant to Minnesota Statutes, Section 469.174, Subdivision 10, a
"redevelopment district" because it consists of a project or portions of a project within
which the following conditions, reasonably distributed throughout the District, exist: (1)
parcels consisting of at least 70% of the area of the TIF District are occupied by buildings,
streets, utilities, paved or gravel parking lots, or other similar structures and (2) more than
50% of the buildings located within the TIF District are deemed "structurally substandard"
(within the meaning of Minnesota Statutes, Section 469.174, Subdivision 10(b) and (c)) to a
degree requiring substantial renovation or clearance.
The TIF District consists of 12 parcels, and the parcels are "occupied" as defined in
Minnesota Statutes, Section 469.174, Subd. 10(e), in that at least 15% of the area of the
parcels are occupied by buildings, streets, utilities, paved or gravel parking lots, or other
similar structures. In addition, 8 of 12 buildings in the TIF District (which is more than 50%
of the buildings) are structurally substandard to a degree requiring substantial renovation or
clearance. In addition, the costs of bringing the structurally substandard buildings into
compliance with building codes applicable to new buildings would exceed 15% of the cost of
constructing new structures of the same size and type on the site.
The Materials, including without limitation the supporting facts for these determinations, is
on file with the staff of the City. There have been no building permits issued or
improvements made to the buildings since the date of the report.
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2.05. The City Council hereby makes the following additional findings:
(a) The City Council further finds that the proposed Program Modification, in the
opinion of City Council, would not occur solely through private investment within the
reasonably foreseeable future and, therefore, the use of tax increment financing is deemed
necessary. The specific basis for such finding being:
The property on which the proposed Development will occur would not be
developed in the reasonably foreseeable future. The demolition and
redevelopment costs are higher than for new development and the costs of
the public necessary to enable development in this area would make
development infeasible.
(b) The City Council further finds that the TIF Plan conforms to the general plan for
the development or redevelopment of the City as a whole. The specific basis for such
finding being:
The TIF Plan will generally complement and serve to implement policies
adopted in the City's comprehensive plan. The construction of the
Development contemplated is or will be in substantial accordance with the
existing zoning or any permitted exception for the property and is consistent
with other uses in the area.
(c) The City Council further finds that the TIF Plan will afford maximum
opportunity consistent with the sound needs of the City as a whole for the development of
the Development District by private enterprise. The specific basis for such finding being:
The Development proposed to occur within the TIF District will afford
maximum opportunity for the development of the applicable parcels
consistent with the needs of the City and the removal of blighted buildings
will increase the potential for future redevelopment. The Development will
increase the taxable market valuation of the City.
(d) For purposes of compliance with Minnesota Statutes, Section 469.175,
Subdivision 3(b)(2), the City Council hereby finds that the increased market value of the
property to be developed within the TIF District that could reasonably be expected to occur
without the use of tax increment financing is $0 (other than amounts due to inflation), which
is less than the market value estimated to result from the proposed development ($2,829,727
approximately), after subtracting the present value of the projected tax increments for the
maximum duration of the TIF District (i.e., $731,388 approximately), which is approximately
$2,098,339. In making these findings, the City Council has noted that the property has been
declining for several years and would likely continue to do so if tax increment financing is
not available. Thus, the use of tax increment financing will be a positive net gain to the City,
the School District, and the County, and the tax increment assistance does not exceed the
benefit which will be derived therefrom.
2.06. The City elects to retain all of the captured tax capacity to finance the costs of the
TIF District and the Development District.
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2.07. The provisions of this Section 2 are hereby incorporated by reference into and made
a part of the TIF Plan.
2.08. The Council further finds that the Program Modification and TIF Plan are intended
and in the judgment of the Council its effect will be to promote the public purposes and accomplish
the objectives specified therein.
2.09. The TIF District is hereby established and the Program Modification and TIF Plan,
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. City staff shall, in writing, request the Sherburne
County Auditor to certify the new TIF District and file the Program Modification and TIF Plan with
the Commissioner of Revenue and the Office of the State Auditor.
Section 3. Approval of Related Agreements.
3.01. The City Council hereby authorizes City staff and consultants to negotiate the terms
of a development agreement with a developer in connection with the Development of the TIF
District (the "Development Agreement") and the Mayor and City Clerk are authorized to execute
the Development Agreement on behalf of the City, and to carry out, on behalf of the City, the City's
obligations thereunder, together with any related documents necessary in connection therewith
(collectively, the "Documents").
3.02. The approval hereby given to the Documents includes approval of such additional
details therein as may be necessary and appropriate and such modifications thereof, deletions
therefrom and additions thereto as may be necessary and appropriate and approved by legal counsel
to the City and by the officers authorized herein to execute said documents prior to their execution;
and said officers are hereby authorized to approve said changes on behalf of the City. The
execution of any instrument by the appropriate officers of the City herein authorized shall be
conclusive evidence of the approval of such document in accordance with the terms hereof. In the
event of absence or disability of the officers, any of the Documents authorized by this Resolution to
be executed may be executed without further act or authorization of the City Council by any duly
designated acting official, or by such other officer or officers of the City Council as, in the opinion
of the City Attorney, may act in their behalf.
Adopted this 3rd day of July, 2017.
ATTEST:
Tina Allard, City Clerk
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