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5.10 PCSR 05-24-1994 r-L ) J\j AGENDA ITEM 5. 10 \;. 4 y of � MEMORANDUM flkRi' ver TO: ELK RIVER PLANNING COMMISSION FROM: WILLIAM RUBIN, ECONOMIC DEVELOPMENT COORDINAT `t DATE: MAY 16, 1994 SUBJECT: PROPOSED MODIFICATION TO TAX INCREMENT FINANCING PLANS NO. 1 AND NO. 3 (PROPOSED MODIFICATION SUPERSEDES CITY COUNCIL ACTION OF AUGUST 2, 1993) INTRODUCTION On Monday, June 20, 1994, 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. This proposed modification supersedes City Council action of August 2, 1993, and Planning Commission action of July 27, 1993, respectively. BACKGROUND In July and August 1993, the Elk River Planning Commission and City Council considered a modification to TIF Plans No. 1 and No. 3. The proposed modification resulted in the allocation of up to $177,000 in tax increment funds to underwrite a portion of the proposed $560,000 public library expansion. Although this amendment was subsequently approved, the City's bond counsel has advised the City Finance Director that the amendment should be further revised to reflect a 20 percent TIF debt service pledge -- a fundamental requirement when bonds are issued in conjunction with a TIF contribution. Adding additional language to an adopted TIF Plan triggers a new public hearing and a new administrative review cycle - including Planning Commission review of the proposed revisions. Hence, this item is • before you again and the Plan incorporates the 20 percent TIF debt service pledge. P.O. Box 490 • 13065 Orono Parkway • Elk River, MN 55330 • (612) 441-7420 • Fax: (612) 441-7425 • The sole function of the Planning Commission in reviewing the TIF amendment is to determine whether or not the proposed project is consistent with the City's Comprehensive Land Use Plan. ACTION REQUESTED The Elk River Planning Commission is asked to find that the proposed modification to TIF Plans No. 1 and No. 3 is consistent with the City's Comprehensive Plan. This action would be consistent with the Planning Commission's action of July 27, 1993. The Planning Commission's recommendation and findings will then be forwarded to the City Council for consideration at the June 20th public hearing. • • • MODIFICATION OF TAX INCREMENT FINANCING PLANS TAX INCREMENT FINANCING DISTRICT NO. 1 AND NO. 3 • NOTE: This modification supersedes City Council action of August 2, 1993 City of Elk River June 20, 1994 • • 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. • 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 in consistent with the TIF Statute, which permits such an expenditure on a facility used for social, recreational, or conference purposes. III 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 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). In addition, $51,000 of future tax increment will be pledged to pay debt service on the $255,000 G.O. Tax Increment bond to be issued for this project. • • 4.) Financial Analysis of the TIF Districts - Cost of the Public Development Activities to be Financed: Elk River Public Library Expansion $562,000 Administrative -0- Interest -0- Contingency -0- Total Costs $562,000 Sources of Funds: Library Fund $130,000 Tax Increment 177,000 Amount of Bonded Indebtedness to be Incurred 255,000 Total Project Financing $562,000 III 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 related to Districts No. 1 and No. 3. As a result, the required 20 percent TIF increment will be pledged to debt payment. Therefore, $51,000 in future TIF funds will be reserved for this purpose in addition to the $177,000 cash on hand contribution. 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 III service. • 6.) Estimated Impact on the TIF Districts on Other Taxing Jurisdictions - Because the proposed public development activities will be paid for with tax increment currently retained or to be received by the City under the TIF Plans, the estimated impact on other taxing jurisdictions as described in the TIF Plans will be minimal. 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 Total Debt Dec. 31 Year TIF No. 1 TIF No. 3 Tax Inc. Service Expenditures Cash Balance 1993 $567,789 1994 $175,556 $218,732 $394,288 $177,000 (1) 1993 Tax Receivable $112,270 $120,591 $25,000 (2) $751,756 1995 $215,000 $215,000 $109,323 $51,000 (3) $806,433 1996 $130,810 $675,623 1997 $121,585 $554,038 1998 $112,200 $441,838 (1) Library expansion cash contribution (2) Chuba Office Building (3) Library expansion TIF Bond debt service pledge Notes: Projections do not include interest income TIF District No. 1 terminates in 1995 TIF District No. 3 terminates in 1996 1994 Tax increment from Sherburne County 1994 Property Tax Book � ' H a. {. / 2 "� ' RVQ ..,:i;.II1,heEP, ,;.,2..PC), STRI 9 jI • HJLK I qu ,� . AillI c TION ;�P�' 0 IF 0 Q Grit* 44*ft PRS �' • `(/ 11,,,. P j i9o� .0 � ...,c t��� it J \ = 4 ovrior . ,0 '4-4\ Z �, ze lu •° 4�ow, •�o� �F9 A — 1p1 .41ip '4F .c7 �.�EIT� 4111 �® RO °'�÷ ,L x EWM.School ei 14 �P'�tl j 1�,� low�� — SC 100L ST. -� - Ill Q Mil rit -' . -- ui --g-— -: aL LJ A�pltop i Rs i0N F. : �• ODI �a o o r B 66- 111 Lo < cc AI• fit 1 . LLl n• t.. � Wu IRA A , was, ...J . 8 ...r. • , ._ \\ E ,— ! H u �L I STH S . _ Zt. G� A S . v0 ••RQNQ \� .© • ,iri — ri.T.f5 -LI 11 ! Ij1T � /r ! 7T04 • ty•.1 111411 Ell ''. i tafitiliff� air E \ : , ' . ),iiii,....,,._, W.' /1-'11--\ 1! *pip EH alm . -,___ -- iijsts la - \ ' \\ a mpil PIM driai i4.81/ rg J • �� �� la ' 'R-43 �;w' /iii "t.: --we Aor r `�Q,7��►ia 05i IP —lk -.Rr , • MOOR ValL. q�`2_���� �__ lit I(III r , ,in 7 PUBLIC LIBRARY SITEI il /I411I1 Il • i 11 /�/ �\\ �i� / �� \\ EXHIBIT B /, ��_i // I \I PROPOSED SITE AREA UTILIZATION 0 Parking Property Lines ' i c 0 ; > ; o II_I Existing Building _ IiI Potential � I .—-- Expansion > -II Area j __I I Building Setback Lines • • • l 4th Street EXHIBIT C