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RES 21-44CITY OF ELK RIVER COUNTY OF SHERBURNE STATE OF MINNESOTA RESOLUTION NO. 21-44 RESOLUTION APPROVING THE MODIFICATION OF THE DEVELOPMENT PROGRAM FOR A DEVELOPMENT DISTRICT NO. 1, ESTABLISHING A TAX INCREMENT FINANCING DISTRICT, APPROVING A TAX INCREMENT FINANCING PLAN THEREFOR BE IT RESOLVED by the City Council (the "Council") 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. 27 (Riverwalk Apartments 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 "Tax Increment Financing Plan for Tax Increment Financing (Redevelopment) District No. 27 Within Municipal Development District No. 1 (Riverwalk Apartments)", and presented for the Council's consideration. 1.02. The City has performed all actions required by law to be performed prior to the adoption 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 Sherbume 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, which was held on the date hereof.. 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, which are incorporated herein by reference, include data, information and/or substantiation constituting or relating to (1) the "studies and analyses" on why the new TIF 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 March 31, 2015, prepared by LHB, Inc., Minneapolis, Minnesota, (2) why the new Tax Increment District meets the so-called "but for" test, including an analysis of the proforma and other materials submitted by a private developer; and (3) the bases for the other findings and determinations made in this resolution. The Council EL1851501714796.v 1 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. 1.04. The TIF District is being established to facilitate the demolition of the existing substandard building, facilitate the construction of a multifamily housing complex in the TIF District and all related amenities and improvements, to be constructed, owned and operated by the Developer on property within the TIF District, together with any necessary and directly related infrastructure (collectively, the "Development"). Section 2. Findings for the Adoption and Approval of the Prq&ram 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. The Development District is not being expanded and the only modification of the Program relates to the incorporation by reference of the proposed TIF District and the terms of the TIF Plan therefor. 2.02. The Council finds that the TIF 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 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 1 parcel, and the parcel is "occupied" as defined in Minnesota Statutes, Section 469.174, Subd. 10(e), in that at least 15% of the area of the parcel is occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures. In addition, the building in the TIF District (which is more than 50% of the buildings) are structurally substandard to a degree requiring substantial renovation 2 ELI U501714796A or clearance. In addition, the costs of bringing the structurally substandard building into compliance with building codes applicable to new buildings would exceed 15% of the cost of constructing a new structure of the same size and type on the site. The Materials, including without limitation the report of LHB, Inc. and 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 parcel or building since the date of the report. 2.05. The Council hereby makes the following additional findings: (a) The Council further finds that the proposed development under the TIF Plan, in the opinion of 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 property within the TIF District has been vacant for a number of years. The City has identified significant and extraordinary costs including site development, demolition, public improvements and other redevelopment costs associated with redevelopment of the project site in conjunction with new development. The estimated total redevelopment costs for this property make the total cost of this effort significantly higher than costs reasonably incurred for similar developments on a clean site. (b) The 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 City has determined that the development proposed in the TIF Plan conforms to the City comprehensive plan. (c) The 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 anticipated redevelopment of the project site and any subsequent demolition, reconstruction, or renovation related to the project will remain consistent with the City's design goals. The Development proposed to occur within the TIF District will afford maximum opportunity for the development of the applicable parcel consistent with the needs of the City and the removal of substandard buildings. The Development will increase the taxable market valuation of the City and provide additional housing options in the City. EL1851501714796.v1 (d) For purposes of compliance with Minnesota Statutes, Section 469.175, Subdivision 3(b)(2), the 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 probably $0 (other than amounts due to inflation), which is less than the market value estimated to result from the proposed development ($21,211,000 approximately), after subtracting the present value of the projected tax increments for the maximum duration of the TIF District (i.e., $4,448,621 approximately), which is approximately $16,762,379. In making these findings, the Council has noted that the existing building on the Development Property' is blighted and has been vacant and unused for an extended period of time and would likely remain in its current condition if tax increment financing were 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. 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. 2.10. In accordance with Minnesota Statutes, Section 469.175, Subd. 1(b), the City elects to delay the receipt of the first increment until tax payable year 2023. 2.11. The Council hereby approves a policy on interfund loans or advances ("Loans") for this TIF District, as follows: (a) The authorized tax increment eligible costs (including without limitation out-of- pocket administrative expenses incurred prior to or after the date hereof in an amount up to $736,988 and other public improvement costs in an amount up to $6,632,848) payable from the TIF District, as its TIF Plan is originally adopted or may be amended, may need to be financed on a short-term and/or long-term basis via one or more Loans, as may be determined by the Finance Director from time to time. (b) The Loans may be advanced if and as needed from available monies in the City's 4 EL185\50\714796A U general fund or other City fund designated by the Finance Director. (c) Neither the maximum principal amount of any one Loan nor the aggregate principal amount of all Loans may exceed $7,369,836 outstanding at any time. (d) All Loans shall mature not later than February 1, 2049 or such earlier date as the Finance- Director may specify in writing. All Loans may be pre -paid, in whole or in part, whether from tax increment revenue, tax increment revenue bond proceeds or other eligible sources. (e) The outstanding and unpaid principal amount of each Loan shall bear interest at the rate prescribed by the statute (Minnesota Statutes, Section 469.178, Subdivision 7), which is the greater of the rates specified under Minnesota Statutes, Sections 270C.40 or 549.09 at the time a Loan, or any part of it,'is first made, subject to the right of the Finance Director to specify a lower rate (but not less than the City's then -current average investment return for similar amount and term). (f) Such Loans within the above guidelines are pre -approved. The Loans need not take. any particular form and may be undocumented, except that the Finance Director shall specify the principal amount and interest rate and maintain all necessary or applicable data on the Loans. Adopted this 31 day of May, 2021. ATTEST: r City Clerk EL185150M4796 1 5