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13 PCSR 07-27-1993 A..? ITEM 13 t4y of TO: PLANNING COMMISSION 1k ,�River FROM: WILLIAM RUBIN, ED COORDINATO DATE: JULY 19, 1993 SUBJECT: PROPOSED MODIFICATION TO TAX INCREMENT PLANS NO. 1 & NO. 3 INTRODUCTION On Monday, August 2 , 1993, the Elk River City Council will conduct a public hearing to consider a modification to Tax Increment Financing Plans No. 1 and No. 3 . The proposed modification will amend the respective Plans to authorize additional tax increment expenditures that are not currently referenced in the Plans . BACKGROUND At an early June Capital Improvement Program (CIP) worksession, the Elk River City Council considered financing options regarding the proposed expansion of the Elk River Public Library. A favored option to underwrite a portion of the 411 expansion costs is that of amending Tax Increment Financing (TIF) Plans No. 1 and No. 3 . This proposed tax increment expenditure is an eligible cost under Minnesota Statutes . If a approved, the modification to the TIF Plans would enable the City Council authorize up to $177 ,000 in tax increment funds to underwrite a portion of the proposed $550, 000 Library expansion. The proposed expansion includes a 4 ,400 square foot addition and limited remodeling of the existing building. TIF funds would be used only for the proposed addition. ACTION REQUESTED Following its review of the proposed modification to TIF Plans No. 1 and No. 3, the Elk River Planning Commission is asked to find that the modification is consistent with the City' s Comprehensive Plan. The Planning Commission' s recommendation and findings will then be forwarded to the City Council for consideration at the August 2 public hearing. • P.O. Box 490 • 13065 Orono Parkway • Elk River, MN 55330 • (612) 441-7420 • Fax: (612) 441-7425 • MODIFICATION OF TAX INCREMENT FINANCING PLANS TAX INCREMENT FINANCING DISTRICT NO. 1 AND NO. 3 410 City of Elk River August 2, 1993 • • MODIFICATION OF TAX INCREMENT FINANCING PLANS TAX INCREMENT FINANCING DISTRICT NO. 1 AND NO. 3 PURPOSE The sole purpose for this modification (the Modification) of the existing Tax Increment Financing Plans (the TIF Plans) for Tax Increment Financing District No. 1 and No. 3 (the TIF Districts) is to provide supplemental information relating to: A) the financing by the City of Elk River (the City) of the proposed expansion of the Elk River Public Library, 413 Proctor Avenue NW within Development District No. 1; and, B) the increase in total estimated Tax Increment expenditures authorized by the Plan. The City proposes to assist with the Public Library expansion by expending tax increments from Districts No. 1 and No. 3 to underwrite a portion of the expansion costs as permitted by Minnesota Statutes . This Modification ratifies and incorporates by reference all those terms of the TIF Plans and their attachments in their entirety, subject only to the Modification and additional provisions provided herein. 111 MODIFICATION The TIF Plans and Minnesota Statutes, Section 469 . 175, subd. 4 require Modification of the TIF Plans 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 Plans are modified and supplemented as follows : 1 . ) Development Program - The goals and objectives of the TIF Districts and City of Elk River Development District No. 1 (the Development District) are set forth in the TIF Plans 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. ) To preserve and enhance the tax base of the City. d. ) To provide financing for public improvements within the Development District as found by the City Council to be • necessary or appropriate to meet the purposes of the Development District. • The TIF Plans state that tax increment generated by the TIF Districts will be used for public improvements and facilities determined by the City Council to be necessary and appropriate to meet the purposes of the Development Program. The City Council has determined that financing a portion of the Public Library expansion with tax increment funds identified in this Modification is necessary and appropriate to meet the purposes of the Development District, because: a. ) The provision of adequate public facilities, including a library facility, is a necessary and appropriate element in the overall development of the City. b. ) The financing of a public facility (such as a public library) with tax increment funds is consistent with the TIF Statute which permits such an expenditure on a facility used for social, recreational, or conference purposes . 2 . ) Property to be Acquired - No property is proposed to be acquired by the City in the TIF Districts or within Development District No. 1 as a result of this Modification. 3 . ) Development Activities - a. ) Private Development Activity - No private development III activities within Development District No. 1 will occur as a result of this Modification. b. ) Public Development Activities - Public development activities will include the construction of an approximately 4,400 square foot expansion to the Elk River Public Library, 413 Proctor Avenue NW. The cost of the expansion and limited remodeling of the existing building is estimated at $550, 000, of which approximately $177, 000 will be paid by tax increment funds (expansion expenses only) . 4 . ) Financial Analysis of the TIF Districts - Cost of the Public Development Activities to be Financed: Elk River Public Library Expansion (portion) $177, 000 Total $177 ,000 Administrative -0- Interest -0- Contingency -0- Total Costs $177, 000 111 • Sources of Funds : Tax Increment $177, 000 Amount of Bonded Indebtedness to be Incurred: -0- As noted in the TIF Plans, the City has elected to retain the full captured assessed value of the TIF District No. 1 and No. 3 and to use all of the tax increment generated by the TIF Districts for the purposes identified in the TIF Plans . As indicated on the attached Exhibit A, the TIF Districts will generate more than enough revenue to fund the proposed public development activity costs . Therefore, it will not be necessary to extend the duration of the TIF District No. 1 and No. 3 beyond the period described in the TIF Plans or to increase the amount of tax increment to be received, in order to fund the proposed activities . The City of Elk River proposes to sell bonds to finance the remaining costs of the Public Library expansion. This bond issue is separate from, and not related to, Districts No. 1 and No. 3 . 5 . ) Cash Flow Analysis - Attached as Exhibit A to this • Modification is a revised cash flow analysis for the TIF Districts which sets forth the impact of the proposed public development expenditures . As shown on the cash flow analysis, the cost of this activity will be paid from tax increment generated by the TIF Districts in excess of that necessary to pay existing debt service. 6 . ) Estimated Impact on the TIF Districts on Other Ta:-,ing Jurisdictions - Because the proposed public development activities will be paid for with tax increment currently retained by the City under the TIF Plans, the estimated impact on other taxing jurisdictions as described in the TIF Plans will remain unaffected. 7 . ) Administrative Procedures and Requirements - This Modification is being made pursuant to the Modification procedure explained in the TIF Plans and Minnesota Statutes, Section 469 . 175, subd. 4, solely for the purpose of providing for the partial financing of the Elk River Public Library expansion project. TIF funds would be used to underwrite the expansion costs of this public development activity. • • • EXHIBIT A Tax Increment Financing Districts No. 1 and No. 3 Cash Flow Projections TIF TIF TAX DEBT PARK ANNUAL 12/31 CASH No. 1 No. 3 COMBINED INCREMENT SERVICE PURCHASE OTHER SURPLUS BALANCE 12/31/92 Cash Balance $ 99,417 Debt Service $391,517 TIF Reserve $490,934 1992 1993 $164,850 $209,274 $490,934 1994 $374,124(1) $119,601 $85,040(2) $169,483 $660,417 1995 $370,000 $120,591 $177,000(3) $ 72,409 $732,826 $200,000 $109,323 $ 89,323 $822,149 1996 1997 $130,810 ($130,810) $691,339 1998 $121,585 ($121,585) $569,754 $112,200 ($112,200) $457,554 (1) From Sherburne County 1993 Property Tax Book Assumptions (2) Woodland Trails Park Acquisition *Assumes a Tax Rate of 103.025 (3) Public Library Expansion *Projections do not Include Interest Income *TIF District No. 1 Terminates in 1995 *TIF District No. 3 Terminates in 1996 2 c4,01.1 , SHV •I/ R 1 ?;I,�E o7se{2pov Z /D •• ST RI• ''Av �u, U 1�I�i our o* e BLVD. -6. �N`!o�a �� ASE LION FPL � � 0 c •' p a 'ie • •. 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'‘4\ • PUBLIC LIBRARY SITE I 1I I I( 11 of �j iI '' \ - - / 1 — I v �1 0 , 1) //7 \ �k /��� / �\���� EXHIBIT B /, 1� ,_-�/j/1 i 1� PROPOSED SITE AREA UTILIZATION 0 . _________..F . _ _______ • • . • • ; . Parking Property • Lines I I . [ I _ 1 I • 1 r 1 1---) v 1i ^ , 8 • , o I I Existing • I Building ...1 1 I Potential . 1 I 4- Expansion - > I 1 Area I \ I t I . . 1(. I `--Building Setback Lines • j 4th Street EXHIBIT C