The URL can be used to link to this page

14 PCSR 07-27-1993 ( l \ ITEM 14 \14 Oiy of / TO: PLANNING COMMISSION Elk FROM: WILLIAM RUBIN, ED COORDINATO V. River � DATE: JULY 19, 1993 SUBJECT: PROPOSED MODIFICATION TO TAX INCREMENT PLANS NO. 1 AND NO. 3 INTRODUCTION On Monday, August 16 , 1993, the Elk River City Council will conduct a public hearing to consider an amendment 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 The August 16 public hearing relates to a request for Tax Increment Financing (TIF) assistance from Mr. Dennis Chuba, The Chuba Company. If approved, the TIF funds would assist Mr. Chuba with a second office townhouse/condo at East Main Street • and Freeport Avenue. This project is a continuation of an initial office building that was constructed by Mr. Chuba at East Main Street and Evans Avenue in 1992 . Mr. Chuba is proposing the construction of a phased, 10, 000 square foot office building that will take up the balance of the property west of the 1992 office building and ending at Freeport Avenue. This activity will result in the demolition of two single family homes at 317 and 323 Main Street respectively. TIF funds would be used by Mr. Chuba to pay for certain public redevelopment costs (that iso demolition, site preparation, foundation compaction, etc. ) associated with the project. All of these costs are eligible for tax increment reimbursement under Minnesota Statutes . Mr. Chuba has requested $60, 000 in TIF assistance. In 1992, Mr. Chuba received $20,000 for his redevelopment project at East Main Street and Evans Avenue. That project consisted of a 6,400 square foot, 3 suite office with a finished market value of $440,000 . As with the 1992 request, the creation of a new TIF District is not being proposed. 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 amendment is consistent with the City' s Comprehensive Plan. The Planning Commission' s recommendation and findings will be forwarded to the City Council for consideration at the August 16 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. 3 111 City of Elk River August 16, 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 increase in total estimated Tax Increment expenditures authorized by the Plan. The City proposes to assist with a redevelopment project by paying for certain public redevelopment costs authorized 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. 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 paying for certain public redevelopment costs identified in this Modification is necessary and appropriate to meet the purposes of the Development District, because: p a. ) With respect to the redevelopment project proposed a Main Street and Freeport Avenue, the City Council has determined that its assistance will : 1) preserve and enhance the tax base of the City, 2) encourage additional business and commercial development through the elimination of the blighting influence in that area, and 3) increase employment opportunities in the City. These purposes are consistent with the goals and purposes of the Development Program and the TIF Plans . 2 . ) Property to be Acquired - No property is proposed to be acquired by the City in the TIF Districts . 3 . ) Development Activities - a. ) Private Development Activity - Development activity within Development District No. 1 will include the construction of an office condominium containing approximately 10, 000 square feet at 317 and 323 Main Street. The site is currently zoned C-2, Office District. Permitted uses in this District include governmental, • business and professional offices, outpatient health care facilities, personal service establishments, and public parks . Currently, two single family home exist on this site. One home has been converted into an office building. To accommodate the construction of the office building, the residences would be demolished or moved. A potential re-use of the existing office building is that of office space for the Elk River Area Chamber of Commerce. The demolition, site preparation, soil analysis, and other public redevelopment costs are eligible Tax Increment expenditures under Minnesota Statutes . Because TIF Funds are used to assist with the office project, the City will enter into a Redevelopment Agreement prior to the development activities occurring. The property affected by the Redevelopment project is described below: 317 Main Street - Legal Description: Lot 3, Block 21, Village of Elk River, Sherburne • County, Minnesota PID #75-405-2120 . 323 Main Street - Legal Description: Lots 1 and 2, Block 21, Village of Elk River, Sherburne County, Minnesota PID #75-405-2110 The location of these properties are shown on the map attached as Exhibit B to this modification. 4 . ) Financial Analysis of the TIF Districts - Cost of the Public Development Activities to be Financed: Main Street-Freeport Avenue Redevelopment $60, 000 Total $60, 000 Administrative _0_ Interest -0- Contingency _0_ Total Costs $60, 000 Sources of Funds : • Tax Increment $60, 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 Districts 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 redevelopment costs . Therefore, it will not be necessary to extend the duration of the TIF Districts 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 redevelopment activities . 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 redevelopment expenditures . As shown on the cash flow analysis, the cost of these activities will be paid from tax increment generated by the TIF Districts No. 1 and No. 3 in excess of that necessary to pay existing debt service. 6 . ) Estimated Impact on the TIF Districts on Other Taxing • Jurisdictions - Because the proposed public redevelopment 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. In addition, the office redevelopment at Main Street and Freeport Avenue will not require the creation of a new Tax Increment District. Therefore, the new property taxes generated by the office will go directly to the local taxing jurisdictions . 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 funding public redevelopment costs at Main Street and Freeport Avenue. • • • • • 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 $200,000 $109,323 $732,826 1996 $ 89,323 $822,149 1997 $130,810 ($130,810) 1998 $121,585 $691,339 $112,200 ($121,585) $569,754 ($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 i— Ri-,/ ^' I 0 `J .AVE+oI IW \®° +� ir 4 ' 193RD AVE ®� (fI ;9u ,. ��- R 1 AVS . /. ., . ,,,i, ..,, i.91,1g .cT ,,,z,i , % Int W PGRK ,i,, f =. ,.., i ,,,,_ _ I __�• •�,l t511 J___ I W O`c� imp f INIZI ,J. K I Ili Mk 00`iiink .Ø*. iiif� ��•''o.�Srs. rg— /'4 \�T �,l I I'i sf,1 AV 4 W . ° 16111,12111 111 Mg. 7 411P 41t% 10"•*$1 MIMI __E,1 _,__. . /"..„ 41„,*4 30 H .st • 19. .I ` Allitit I-•r \ - •.� 141 ' „ . 'Pats I0 . OwE- 0 I$: • .VB n ze 47.1Militte oELK WSW _- -- u� •Ilelipqa i ei.mSchoolSchoolL vim ei.m.Schoolooi 1 �� i \\5 \� w 0 • ' • P0 . - ------' maIMI ingE E,7,I, ASIR lani v, ;arm z ME eta P 1.�p sail . ;Q J J !MI-4 •• 5 z i ihimminummici pi- a 3 4, � HTh e�$p �Q 2. 0,-'•s rrn-sr d k r ki s _q: 01/ 'cc 111,1010 • I'D- , .. iailagl 6,, C'-w 410 rillw— —N —v,-4� �� ZIP...." ?`�Omc u R`veR o QeW a0 U — �_� y 'LAZAV __ Ile o�� G cy0 Ywak ES )1111 I _ NOU3 D' MMI MIM111111111111111,tio '� Q 5p ST a • 4•••;...., I L_ �4 �I ��a�� 'I I 1 I ill X1111 r _ ..4. wr*"Will . / 21 imi DITOR'S UBOI /,•N L. X11 0 F F,// LaillitC1 1111�� a II im all m ii,„., 0'I/ / fie pia; �L MIilN �n,11 I iiiIi;i111;,:App . ,, ...• -17 rift 3-Z & '-is.ea \ \tit'C, 1 .1• litlidir,'91.Y1 .,,_____. ,,-,... ........ , _______ _ ,..... ...,N, ..... 11111 ��' ,,, % �� uuuuuv .P ,�y i,,,. Tilil I ' MAIN STREET b , i,,,• \ ° FREEPORT AVENUE REDEVELOPMENT -_—I 4.10 __ \\ \ CO. RD. NO. \‘ '� ) ' 1 y l• I 9 A 0 r \ r 0 — x '$. \ 0. wX N • • \� rII O O �r 1) 0 13 1 sv 1 ' / I\ , / 11 `\ � I /�/, // I78TH 1 i`` EXHIBIT B ��// ISI\. \\ • • • 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 $490,934 1993 $164,850 $209,274 $374,124(1) $119,601 $85,040(2) $169,483 $660,417 1994 1995 $370,000 $120,591 $177,000(3) $ 72,409 $732,826 $200,000 $109,323 $ 90,677 $823, 503 1996 1997 $130,810 ($130,810) $692,693 1998 $121,585 ($121,585) $571, 108 $112,200 ($112,200) $458,908 (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