8.2. HRSR 12-06-2021 �J
etyof
ElkRequest for Action
River
To Item Number
Housing and Redevelopment Authority =8.2
Agenda Section Meeting Date Prepared by
Work Session December 6, 2021 Brent O'Neil, Economic Development Director
Item Description Reviewed by
Tax Increment Financing—Jackson Hills II Cal Portner, City Administrator
Reviewed by
Action Requested
Item presented for information and discussion purposes.
Background/Discussion
The city received an application for Tax Increment Financing (TIF) to support the development of Jackson
Hills II, a 44-unit apartment building on Jackson Ave. The application was presented to the Joint Finance
Committee UFC) at its November meeting,which recommended advancing the request to the HRA. The JFC
supported utilizing TIF up to $850,000 to cover the remediation of unbuildable soils.
This work session is to discuss the application with the HRA ahead of finalizing the TIF plan and agreements,
which will be presented to the HRA and City Council for consideration in January.
Financial Impact
N/A
Mission/Policy/Goal
The HRA is the recommending body to the City Council on the consideration of Housing TIF Districts.
Attachments
■ Handouts to be distributed at the meeting
The Elk River Vision
A Y�elcoming community nvith revolutionary and spirited resourcefulness, exceptional P U W E H E o s r
service, and community engagement that encourages and inspires prosperity ,g /` UR
Baker Tilly Municipal Advisors, LLC is a registered municipal advisor and wholly-owned subsidiary of Baker Tilly US, LLP, an
accounting firm. Baker Tilly US, LLP trading as Baker Tilly is a member of the global network of Baker Tilly International Ltd., the
members of which are separate and independent legal entities.
Tax Increment Financing Plan
for
Tax Increment Financing
(Housing) District No. 28
(Jackson Hills Apartments Phase II
Housing Project)
City of Elk River, Minnesota
Prepared by
Baker Tilly Municipal Advisors, LLC
Draft Dated: December 2, 2021
Anticipated Review by HRA Board: January 3, 2022
Anticipated Approval by City Council: January 18, 2022
Baker Tilly Municipal Advisors, LLC is a registered municipal advisor and wholly-owned subsidiary of Baker Tilly US, LLP, an
accounting firm. Baker Tilly US, LLP trading as Baker Tilly is a member of the global network of Baker Tilly International Ltd., the
members of which are separate and independent legal entities.
TABLE OF CONTENTS
SECTION I – MODIFICATION TO THE DEVELOPMENT PROGRAM
FOR DEVELOPMENT DISTRICT NO. 1
Foreword ...................................................................................................... 1
SECTION II –TAX INCREMENT FINANCING PLAN
FOR TAX INCREMENT FINANCING (HOUSING) DISTRICT NO. 28
Section Page(s)
A. Definitions .............................................................................................. 1
B. Statutory Authorization ........................................................................... 2
C. Statement of Need and Public Purpose ................................................. 2
D. Statement of Objectives ......................................................................... 2
E. Designation of the TIF District as a Housing District .............................. 2
F. Duration of the TIF District ..................................................................... 3
G. Property to be Included in the TIF District .............................................. 3
H. Property to be Acquired in the TIF District ............................................. 3
I. Specific Development Expected to Occur Within the TIF District .......... 3
J. Findings and Need for Tax Increment Financing ................................... 4
K. Estimated Public Costs .......................................................................... 5
L. Estimated Sources of Revenue .............................................................. 5
M. Estimated Amount of Bonded Indebtedness .......................................... 6
N. Original Net Tax Capacity ...................................................................... 6
O. Original Tax Capacity Rate .................................................................... 6
P. Projected Retained Captured Net Tax Capacity and Projected Tax Increment 7
Q. Use of Tax Increment ............................................................................. 7
R. Excess Tax Increment ............................................................................ 8
S. Tax Increment Pooling and the Five Year Rule ..................................... 8
T. Limitation on Administrative Expenses .................................................. 9
U. Limitation on Property Not Subject to Improvements - Four Year Rule . 9
V. Estimated Impact on Other Taxing Jurisdictions .................................... 9
W. Prior Planned Improvements .................................................................. 10
X. Development Agreements ...................................................................... 10
Y. Assessment Agreements ....................................................................... 11
Z. Modifications of the Tax Increment Financing Plan ............................... 11
AA. Administration of the Tax Increment Financing Plan ............................. 11
AB.Filing Financial Reporting and Disclosure Requirements ...................... 12
Map of the Tax Increment Financing District and Project Area ............................... EXHIBIT I
TIF District Assumptions Report ............................................................................. EXHIBIT II
Projected Tax Increment Report ............................................................................. EXHIBIT III
Estimated Impact on Other Taxing Jurisdictions Report ......................................... EXHIBIT IV
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SECTION I – MODIFICATION TO THE DEVELOPMENT PROGRAM
FOR DEVELOPMENT DISTRICT NO. 1
Foreword
The following text represents a Modification to the Development Program for Development
District No. 1. This modification represents a continuation of the goals and objectives set forth
in the Development Program for Development District No. 1. The changes generally include the
establishment of Tax Increment Financing (Housing) District No. 28.
For further information, a review of the Development Program for Development District No. 1 is
recommended. It is available from the City Administrator at the City of Elk River. Other relevant
information is contained in the Tax Increment Financing Plans for the Tax Increment Financing
Districts located within Development District No. 1.
SECTION II –TAX INCREMENT FINANCING PLAN
FOR TAX INCREMENT FINANCING (HOUSING) DISTRICT NO. 28
Introduction
The following text represents the Tax Increment Financing Plan for Tax Increment Financing
District No. 28.
Section A Definitions
The terms defined in this section have the meanings given herein, unless the context in which
they are used indicates a different meaning:
"City" means the City of Elk River, Minnesota; also referred to as a "Municipality".
"City Council" means the City Council of the City; also referred to as the "Governing Body".
"County" means Sherburne County, Minnesota
"Development District" means Development District No. 1 in the City, which is described in the
corresponding Development Program.
"Development Program" means the Development Program for the Development District.
"Project Area" means the geographic area of the Development District.
"School District" means Independent School District No. 728, Minnesota.
"State" means the State of Minnesota.
"TIF Act" means Minnesota Statutes, Sections 469.174 through 469.1794, both inclusive.
"TIF District" means Tax Increment Financing (Housing) District No. 28.
"TIF Plan" means the tax increment financing plan for the TIF District (this document).
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Section B Statutory Authorization
See the Development Program for the Development District.
Section C Statement of Need and Public Purpose
See the Development Program for the Development District.
Section D Statement of Objectives
See the Development Program for the Development District.
Section E Designation of the TIF District as a Housing District
Pursuant to the TIF Act, the City seeks to create Tax Increment Financing (Housing) District No.
28 and adopt a TIF Plan for the TIF District. The City will review this TIF Plan prior to City
adoption. The TIF District is a housing district.
Housing districts are a type of tax increment financing district that consist of a project intended
for occupancy, in part, by persons or families of low and moderate income. Low and moderate
income is defined in federal, state, and municipal legislation. A project does not qualify if more
than 20% of the square footage of buildings that receive assistance from tax increments consist
of commercial, retail or other nonresidential use.
In addition, housing districts are subject to various income limitations and requirements for
residential property. For owner occupied residential property, 95% of the housing units must be
initially purchased and occupied by individuals whose family income is less than or equal to the
income requirements for qualified mortgage bond projects under section 143(f) of the Internal
Revenue Code. For residential rental property, the property must satisfy the income
requirements for a qualified residential rental project as defined in section 142(d) of the Internal
Revenue Code.
The TIF District meets the above qualifications for these reasons:
1. The planned improvements consist of the following:
a. Approximately 44 total units, for which one of the following will apply:
o at least 20% of the dwelling units shall be available for rent by persons whose
incomes do not exceed 50% of areawide median family income, as adjusted for
family size or
o at least 40% of the dwelling units shall be available for rent by persons whose
incomes do not exceed 60% of areawide median family income, as adjusted for
family size.
2. No improvements are planned other than housing and therefore no more than 20% of
the square footage of buildings included in the TIF District will consist of commercial,
retail, or other nonresidential uses.
3. The City will require in the development agreement that the income limitations for the
rental units in the apartment buildings will apply for the duration of the TIF District.
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Tax increments derived from a housing district must be used solely to finance the cost of
housing projects as defined in section 469.174, subd. 11 and 469.176, subd. 4d of the TIF Act.
The cost of public improvements directly related to the housing projects and the allocated
administrative expenses of the City may be included in the cost of a housing project. The City
anticipates using tax increment revenues to finance the costs of TIF eligible and development
costs related to construction of the new multifamily housing units within the TIF District.
Section F Duration of the TIF District
Housing districts may remain in existence 25 years from the date of receipt of the first tax
increment. Modifications of this TIF Plan (see Section AB) shall not extend beyond these
limitations.
Pursuant to Minnesota Statutes section 469.175, subd. 1(b), the City specifies 2024 as the first
year in which it elects to receive tax increment from the TIF District, which is no later than four
years following the year of approval of the TIF District. Thus, the City may collect increment
from the TIF District through December 31, 2050 but anticipates the TIF District being
decertified following December 31, 2039 (see Section R) (up to 15 years of collection to meet
the City’s Tax Increment Policy). All tax increments from taxes payable in the year the TIF
District is decertified shall be paid to the City.
Section G Property to be Included in the TIF District
The TIF District comprises of one parcel that is approximately 6.64 acres and anticipated to be
split with a portion within the boundaries. A map showing the location of the TIF District is
shown in Exhibit I. The boundaries and area encompassed by the TIF District are described
below:
Parcel Number Legal Description
75-134-2305
PARCEL D-N. THAT PT OF THE FOLLOWING DESC
PARCEL D LYING N OF WLY EXTENSION OF THE CTR
LINE OF 6TH ST (FORMERLY PLATTED AS 8TH ST)
The area encompassed by the TIF District shall also include all street or utility right-of-ways
located upon or adjacent to the property described above, as illustrated in the boundary map
included in Exhibit I.
Section H Property to be Acquired in the TIF District
The City may acquire and sell any or all of the property located within the TIF District; however,
the City does not anticipate acquiring property.
Section I Specific Development Expected to Occur Within the TIF District
The project as proposed by The Briggs Company is anticipated to include the construction of
approximately 44 rental housing units comprising studio, 1, 2- and 3-bedroom units with
supporting garages. In order to qualify as a housing district, at least 20% of the units will be
occupied by persons or families at 50% of area median or 40% of the units will be occupied by
persons or families at 60% of area median income. As proposed, the project is expected to
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include 20% of the units not to exceed 50% of the area median income. The City anticipates
using tax increment revenues to finance eligible costs associated with development of the
housing project site including primarily soils correction and site development costs, as deemed
a barrier to development of the property, as well as related administrative expenses.
The project is expected to start construction in 2022 and continue construction through 2023
and be 100% complete as of January 2, 2024 for taxes payable 2025.
Section J Findings and Need for Tax Increment Financing
In establishing the TIF District, the City makes the following findings:
(1) The TIF District qualifies as a housing district.
See Section G of this TIF Plan for the reasons and facts supporting this
finding.
(2) The proposed development, in the opinion of the City, would not reasonably be
expected to occur solely through private investment within the reasonably
foreseeable future.
The proposed development is expected to consist of approximately 44
newly constructed housing units. The City’s finding that the proposed
development would be unlikely to occur solely through private investment
within the reasonably foreseeable future is based on an analysis of the
project pro forma and other materials submitted to the City by the
developer. These documents have indicated that the costs of constructing
the new project, in addition to the significant soils corrections and site
improvement costs will result in debt service coverage and returns that
are not sufficient to support development, thereby making this housing
development infeasible without public assistance. Therefore, the
developer has indicated in communications with the City and submitted
financial data that the development as proposed would not move forward
without tax increment assistance.
(3) The TIF Plan conforms to the general plan for development or redevelopment of
the City as a whole.
The reasons and facts supporting this finding are that the Planning
Commission of the City has found this TIF Plan consistent with the
general plan for development of the City as a whole and will generally
complement and serve to implement policies adopted in the City's
comprehensive plan.
(4) The TIF Plan will afford maximum opportunity, consistent with the sound needs
of the City as a whole, for the development or redevelopment of the Project Area
by private enterprise.
Through the implementation of this TIF Plan, the City will provide an
impetus for the construction of an apartment project, of which all or a
portion of the units will be affordable for occupants at or less than 50%
median income. The project will complement the overall housing needs of
the City and helps support other private types of development by
providing a range of housing opportunities for residents and workers
within the City.
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Section K Estimated Public Costs
The estimated public costs of the TIF District are listed below. Such costs are eligible for
reimbursement from tax increments of the TIF District.
Estimated Project Costs
Land/Building acquisition $0
Site Improvements/Preparation costs $850,000
Utilities $0
Other public improvements $579,256
Construction of Affordable Housing $0
Administrative expenses $158,806
Estimated Tax Increment Project Costs $1,588,062
Estimated Financing Costs
Interest Payments $0
Total Estimated Project/Financing Costs to be Paid
from Tax Increment $1,588,062
The City anticipates using tax increment revenues to finance eligible costs associated with
development of the housing project site including primarily site development, soil remediation,
and other extraordinary affordable housing costs, as well as related administrative expenses.
The City reserves the right to administratively adjust the amount of any of the items listed above
or to incorporate additional eligible items, so long as the total estimated public cost ($1,588,062)
is not increased. The City also reserves the right to fund any of the identified costs with any
other legally available revenues, such as grants and/or loans, but anticipates that such costs will
be primarily financed with tax increments.
Section L Estimated Sources of Revenue
Tax Increment revenue $1,588,062
Interest on invested funds
Land Sale Proceeds
Other
Total $1,588,062
The City anticipates providing financial assistance through the terms of a pay-as-you go note in
which the developer will finance costs upfront. As tax increments are collected from the TIF
District in future years, a portion of these taxes will be used by the City to reimburse itself for
public costs incurred (see Section M).
The City reserves the right to finance any or all public costs of the TIF District using pay-as-you-
go assistance, internal funding, general obligation or revenue debt, or any other financing
mechanism authorized by law. The City also reserves the right to use other sources of revenue
legally applicable to the Project Area to pay for such costs including, but not limited to, special
assessments, utility revenues, federal or state funds, and investment income.
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Section M Estimated Amount of Bonded Indebtedness
The maximum principal amount of bonds (as defined in the TIF Act) secured in whole or part
with tax increment from the TIF District is $1,588,062. The City plans to finance the project
through pay-as-you-go financing to finance housing development and other eligible costs
associated with providing long-term affordable workforce housing within the TIF District. The
City reserves the right to issue bonds in any form, including without limitation any interfund loan
with interest not to exceed the maximum permitted under Section 469.178, subd. 7 of the TIF
Act.
Section N Original Net Tax Capacity
The County Auditor shall certify the original net tax capacity of the TIF District. This value will
be equal to the total net tax capacity of all property in the TIF District as certified by the State
Commissioner of Revenue. For districts certified between January 1 and June 30, inclusive,
this value is based on the previous assessment year. For districts certified between July 1 and
December 31, inclusive, this value is based on the current assessment year.
The Estimated Market Value of all property within the TIF District as of January 2, 2021, for
taxes payable in 2022, is $233,700. Upon establishment of the TIF District and subsequent
reclassification of property, the estimated original net tax capacity of the TIF District is expected
to be $2,921. This assumes the property is classified as residential rental.
Each year the County Auditor shall certify the amount that the original net tax capacity has
increased or decreased as a result of:
(1) changes in the tax-exempt status of property;
(2) reductions or enlargements of the geographic area of the TIF District;
(3) changes due to stipulation agreements or abatements; or
(4) changes in property classification rates.
Section O Original Tax Capacity Rate
The County Auditor shall also certify the original tax capacity rate of the TIF District. This rate
shall be the sum of all local tax rates that apply to property in the TIF District. This rate shall be
for the same taxes payable year as the original net tax capacity.
In future years, the amount of tax increment generated by the TIF District will be calculated
using the lesser of (a) the sum of the current local tax rates at that time or (b) the original tax
capacity rate of the TIF District.
The County Auditor shall certify the sum of all local tax rates that apply to property in the TIF
District for taxes levied in 2021 and payable in 2022 as the original tax capacity rate of the TIF
District. Because those rates are not available at the time of drafting of the plan, the sum of the
local tax rates for taxes levied in 2020 and payable in 2021 of 124.436% have been used and
shown below.
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2020/2021
Taxing Jurisdiction Local Tax Rate
City of Elk River 44.556%
Sherburne County 45.835%
ISD #728 31.717%
Other 2.328%
Total 124.436%
Section P Projected Retained Captured Net Tax Capacity and
Projected Tax Increment
Each year the County Auditor shall determine the current net tax capacity of all property in the
TIF District. To the extent that this total exceeds the original net tax capacity, the difference
shall be known as the captured net tax capacity of the TIF District.
The estimates shown in this TIF plan assume that residential rental class rates remain at 1.25%
of the estimated taxable value and assume 1% annual increases in market values.
The County Auditor shall certify to the City the amount of captured net tax capacity each year.
The City may choose to retain any or all of this amount. It is the City's intention to retain 100%
of the captured net tax capacity of the TIF District. Such amount shall be known as the retained
captured net tax capacity of the TIF District.
Exhibit II gives a listing of the various information and assumptions used in preparing a number
of the exhibits contained in this TIF Plan, including Exhibit III which shows the projected tax
increment generated over the anticipated life of the TIF District.
Section Q Use of Tax Increment
Each year the County Treasurer shall deduct 0.36% of the annual tax increment generated by
the TIF District and pay such amount to the State's General Fund. Such amounts will be
appropriated to the State Auditor for the cost of financial reporting and auditing of tax increment
financing information throughout the State. Exhibit III shows the projected deduction for this
purpose over the anticipated life of the TIF District.
The City has determined that it will use 100% of the remaining tax increment generated by the
TIF District for any of the following purposes:
(1) Pay for the estimated public costs of the TIF District (see Section M) and County
administrative costs associated with the TIF District (see Section V);
(2) pay principal and interest on one or more pay-as-you-go notes, tax increment
bonds or other bonds issued to finance the estimated public costs of the TIF
District;
(3) accumulate a reserve securing the payment of tax increment bonds or other
bonds issued to finance the estimated public costs of the TIF District;
(4) pay all or a portion of the county road costs as may be required by the County
Board under Minnesota Statutes section 469.175, Subd.1a; or
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(5) return excess tax increments to the County Auditor for redistribution to the City,
County and School District.
Tax increment from property located in one county must be expended for the direct and primary
benefit of a project located within that county, unless the county board involved waives this
requirement. Tax increment shall not be used to circumvent levy limitations applicable to the
City.
Tax increment derived from the TIF District must be used solely to finance the cost of housing
projects (including administrative expenses and public improvement costs) as defined in Section
469.174, Subdivision 11 of the TIF Act and subject to the requirements set forth in Section
469.1761 of the TIF Act.
Tax increment shall not be used to finance the acquisition, construction, renovation, operation,
or maintenance of a building to be used primarily and regularly for conducting the business of a
municipality, county, school district, or any other local unit of government or the State or federal
government. Further, tax increment may not be used to finance: a commons area used as a
public park; facilities used for social or recreational purposes (whether public or private); or
publicly-owned facilities used for conference purposes; provided that tax increment may be
used for a privately owned conference facility, and for parking structures whether public or
privately owned and whether or not they are ancillary to one of the otherwise prohibited uses
described above.
If there exists any type of agreement or arrangement providing for the developer, or other
beneficiary of assistance, to repay all or a portion of the assistance that was paid or financed
with tax increments, such payments shall be subject to all of the restrictions imposed on the use
of tax increments. Assistance includes sale of property at less than the cost of acquisition or fair
market value, grants, ground or other leases at less then fair market rent, interest rate
subsidies, utility service connections, roads, or other similar assistance that would otherwise be
paid for by the developer or beneficiary.
Section R Excess Tax Increment
Beginning with the sixth year after certification of the TIF District, any year in which the tax
increments from the TIF District exceed the amount necessary to pay the estimated public costs
authorized by the TIF Plan, the City shall use the excess tax increments to:
(1) prepay any outstanding tax increment bonds;
(2) discharge the pledge of tax increments thereof;
(3) pay amounts into an escrow account dedicated to the payment of the tax
increment bonds; or
(4) return excess tax increments to the County Auditor for redistribution to the City,
County and School District. The County Auditor must report to the
Commissioner of Education the amount of any excess tax increment redistributed
to the School District within 30 days of such redistribution.
Section S Tax Increment Pooling and the Five-Year Rule
As permitted under Minnesota Statutes section 469.1763, subd. 2(b) and subd. 3(a)(5), any
expenditures of increment from the TIF District to pay the cost of a “housing project” as defined
in Minnesota Statutes section 469.174, subd. 11 will be treated as an expenditure within the
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district for the purposes of the “pooling rules” and the “five-year rule”. The City anticipates that
tax increments will be spent outside the TIF District (including allowable administrative
expenses), and such expenditures are expressly authorized in this TIF Plan.
The City does not anticipate that allowable pooling expenditures will be made outside of the TIF
District, but such expenditures are expressly authorized in this TIF Plan.
Section T Limitation on Administrative Expenses
Administrative expenses are defined as all costs of the City other than:
(1) amounts paid for the purchase of land;
(2) amounts paid for materials and services, including architectural and engineering
services directly connected with the proposed development within the TIF
District;
(3) relocation benefits paid to, or services provided for, persons or businesses
residing or located within the TIF District; or
(4) amounts used to pay interest on, fund a reserve for, or sell at a discount, tax
increment bonds.
Administrative expenses include amounts paid for services provided by bond and other legal
counsel, fiscal consultants, planning or economic development consultants, and actual costs
incurred by the County in administering the TIF District. Tax increment may be used to pay
administrative expenses of the TIF District up to the lesser of (a) 10% of the total tax increment
expenditures authorized by the TIF Plan or (b) 10% of the total tax increments received by the
TIF District.
Section U Limitation on Property Not Subject to Improvements - Four Year Rule
If after four years from certification of the TIF District no demolition, rehabilitation, renovation, or
qualified improvement of an adjacent street has commenced on a parcel located within the TIF
District, then that parcel shall be excluded from the TIF District and the original net tax capacity
shall be adjusted accordingly. Qualified improvements of a street are limited to construction or
opening of a new street, relocation of a street, or substantial reconstruction or rebuilding of an
existing street. The City must submit to the County Auditor, by February 1 of the fifth year,
evidence that the required activity has taken place for each parcel in the TIF District.
If a parcel is excluded from the TIF District and the City or owner of the parcel subsequently
commences any of the above activities, the City shall certify to the County Auditor that such
activity has commenced and the parcel shall once again be included in the TIF District. The
County Auditor shall certify the net tax capacity of the parcel, as most recently certified by the
Commissioner of Revenue, and add such amount to the original net tax capacity of the TIF
District.
Section V Estimated Impact on Other Taxing Jurisdictions
Exhibit IV shows the estimated impact on other taxing jurisdictions if the maximum projected
retained captured net tax capacity of the TIF District was hypothetically available to the other
taxing jurisdictions. The City believes that there will be no adverse impact on other taxing
jurisdictions during the life of the TIF District, since the proposed development would not have
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occurred without the establishment of the TIF District and the provision of public assistance. A
positive impact on other taxing jurisdictions will occur when the TIF District is decertified and the
development therein becomes part of the general tax base.
The fiscal and economic implications of the proposed tax increment financing district, as
pursuant to Minnesota Statutes section 469.175, subd. 2, are listed below.
1. The total amount of tax increment that will be generated over the life of the TIF district is
estimated to be $1,593,798.
2. To the extent the project in the TIF District generates any public cost impacts on City-
provided services such as police and fire protection, public infrastructure, and the impact
of any general obligation tax increment bonds attributable to the TIF District upon the
ability to issue other debt for general fund purposes, such costs will be levied upon the
taxable net tax capacity of the City, excluding that portion captured by the TIF District.
The City anticipates financing the project through the issuance of a tax increment
financing note supported by future tax increments. The City also reserves the right to
use internal financing or bonding, as necessary, to finance a portion of the project costs
attributable to the TIF District. Tax increment project revenues from the TIF District and
project will repay any issued obligations.
3. The amount of tax increment over the life of the TIF District that would be attributable to
school district levies, assuming the School District’s share of the total local tax rate for all
taxing jurisdictions remained the same, is estimated to be $406,327.
4. The amount of tax increment over the life of the TIF District that would be attributable to
county levies, assuming the County’s share of the total local tax rate for all taxing
jurisdictions remained the same is estimated to be $587,062.
5. No additional information has been requested by the County or School District that
would enable it to determine additional costs that will accrue to it due to the development
proposed for the TIF District.
Section W Prior Planned Improvements
The City shall accompany its request for certification to the County Auditor (or notice of district
enlargement), with a listing of all properties within the TIF District for which building permits
have been issued during the 18 months immediately preceding approval of the TIF Plan. The
County Auditor shall increase the original net tax capacity of the TIF District by the net tax
capacity of each improvement for which a building permit was issued.
There have been no building permits issued in the last 18 months in conjunction with any of the
properties within the TIF District.
Section X Development Agreements
If within a project containing a housing district, more than 10% of the acreage of the property to
be acquired by the City is purchased with tax increment bonds proceeds (to which tax increment
from the property is pledged), then prior to such acquisition, the City must enter into an
agreement for the development of the property. Such agreement must provide recourse for the
City should the development not be completed.
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The City anticipates entering into an agreement for development.
Section Y Assessment Agreements
The City may, upon entering into a development agreement, also enter into an assessment
agreement with any person, which establishes a minimum market value of the land and
improvements for each year during the life of the TIF District.
The assessment agreement shall be presented to the County or City Assessor who shall review
the plans and specifications for the improvements to be constructed, review the market value
previously assigned to the land and so long as the minimum market value contained in the
assessment agreement appears to be an accurate estimate, shall certify the assessment
agreement as reasonable. The assessment agreement shall be filed for record in the office of
the County Recorder and/or Registrar of Titles of each county where the property is located.
Any modification or premature termination of this agreement must first be approved by the City,
County and School District.
The City does not anticipate entering into an assessment agreement with the developer.
Section Z Modifications of the Tax Increment Financing Plan
Any reduction or enlargement in the geographic area of the Project Area or the TIF District;
increase in the amount of bonded indebtedness to be incurred; increase in the amount of
capitalized interest; increase in that portion of the captured net tax capacity to be retained by the
City; increase in the total estimated capital and administrative costs; or designation of additional
property to be acquired by the City shall be approved only after satisfying all the necessary
requirements for approval of the original TIF Plan. This paragraph does not apply if:
(1) the only modification is elimination of parcels from the TIF District; and
(2) the current net tax capacity of the parcels eliminated equals or exceeds the net
tax capacity of those parcels in the TIF District's original net tax capacity, or the
City agrees that the TIF District's original net tax capacity will be reduced by no
more than the current net tax capacity of the parcels eliminated.
The City must notify the County Auditor of any modification that reduces or enlarges the
geographic area of the TIF District. The geographic area of the TIF District may be reduced but
not enlarged after five years following the date of certification.
Section AA Administration of the Tax Increment Financing Plan
Upon adoption of the TIF Plan, the City shall submit a copy of such plan to the Minnesota
Department of Revenue and the Office of the State Auditor. The City shall also request that the
County Auditor certify the original net tax capacity and net tax capacity rate of the TIF District.
To assist the County Auditor in this process, the City shall submit copies of the TIF Plan, the
resolution establishing the TIF District and adopting the TIF Plan, and a listing of any prior
planned improvements. The City shall also send the County or City Assessor any assessment
agreement establishing the minimum market value of land and improvements in the TIF District
and shall request that the County or City Assessor review and certify this assessment
agreement as reasonable.
The County shall distribute to the City the amount of tax increment as it becomes available. The
amount of tax increment in any year represents the applicable property taxes generated by the
City of Elk River, Minnesota
Baker Tilly Municipal Advisors, LLC Page 12
retained captured net tax capacity of the TIF District. The amount of tax increment may change
due to development anticipated by the TIF Plan, other development, inflation of property values,
or changes in property classification rates or formulas. In administering and implementing this
TIF Plan, the following actions should occur on an annual basis:
(1) prior to July 1, the City shall notify the County Assessor of any new development
that has occurred in the TIF District during the past year to ensure that the new
value will be recorded in a timely manner.
(2) if the County Auditor receives the request for certification of a new TIF District, or
for modification of an existing TIF District, before July 1, the request shall be
recognized in determining local tax rates for the current and subsequent levy
years. Requests received on or after July 1 shall be used to determine local tax
rates in subsequent years.
(3) each year the County Auditor shall certify the amount of the original net tax
capacity of the TIF District. The amount certified shall reflect any changes that
occur as a result of the following:
(a) the value of property that changes from tax-exempt to taxable shall be
added to the original net tax capacity of the TIF District. The reverse shall
also apply;
(b) the original net tax capacity may be modified by any approved
enlargement or reduction of the TIF District;
(c) if the TIF District is classified as an economic development district, then
the original net tax capacity shall be increased by the amount of the
annual adjustment factor; and
(d) if laws governing the classification of real property cause changes to the
percentage of estimated market value to be applied for property tax
purposes, then the resulting increase or decrease in net tax capacity shall
be applied proportionately to the original net tax capacity and the retained
captured net tax capacity of the TIF District.
The County Auditor shall notify the City of all changes made to the original net tax capacity of
the TIF District.
Section AB Filing TIF Plan, Financial Reporting and Disclosure Requirements
The City will comply with all reporting requirements for the TIF District under Minnesota Statutes
section 469.175, subds. 5 and 6.
Exhibit I
Baker Tilly Municipal Advisors, LLC Page 13
MAP OF PROPOSED
TAX INCREMENT FINANCING (HOUSING) DISTRICT NO. 28
Exhibit II
Baker Tilly Municipal Advisors, LLC Page 14
Assumptions Report
City of Elk River, Minnesota
Tax Increment Financing (Housing) District No. 28
Jackson Hills Phase 2 Housing
Draft TIF Plan Exhibits: Based on 44 Units Valued at $6.3M
Type of Tax Increment Financing District Housing
Maximum Duration of TIF District 25 years from 1st increment
Assume 1st Increment is 2024
Projected Certification Request Date 06/30/22
Decertification Date 12/31/39 (16 Years of Increment)
2022/2023
Base Estimated Market Value* 233,700
Parcel ID: 75-134-2305
* Values provided by County
Original Net Tax Capacity 2,921
Assessment/Collection Year
2022/2023 2023/2024 2024/2025 2025/2026
Base Estimated Market Value $233,700 $233,700 $233,700 $233,700
Estimated Increase in Value - New Construction 0 3,546,300 6,129,300 6,192,930
Total Estimated Market Value 233,700 3,780,000 6,363,000 6,426,630
Total Net Tax Capacity $2,921 $47,250 $79,538 $80,333
Payable 2021
City of Elk River 44.556%
Sherburne County 45.835%
ISD 728 31.717%
Other - 2.328%
Local Tax Capacity Rate 124.436%
Estimated Frozen Tax Capacity Rate 124.436%
Fiscal Disparities Contribution From TIF District NA
Administrative Retainage Percent (maximum = 10%) 10.00%
Pooling Percent 0.00%
Bonds Projected PayGO Note
Bonds Dated TBD Loan Dated 08/01/22
Bond Issue @ 0.00% (NIC) TBD Loan Rate 4.00%
Eligible Project Costs TBD Loan Amount $850,000
Present Value Date & Rate 08/01/22 4.00% PV Amount $968,279
Notes
No adjustments made to future class rates or tax rates
Includes 1% annual market value inflator to allow for future growth
Total taxable value based on $143,182/unit for new construction
Exhibit III Baker Tilly Municipal Advisors, LLC Page 15 Projected Tax Increment ReportCity of Elk River, MinnesotaTax Increment Financing (Housing) District No. 28Jackson Hills Phase 2 HousingDraft TIF Plan Exhibits: Based on 44 Units Valued at $6.3M Less: Retained Times: Less: Less: P.V. EstimatedAnnual Total Total Original Captured Tax Annual State Aud. Subtotal Admin. Annual Annual Total TaxesPeriod Market Net Tax Net Tax Net Tax Capacity Gross Tax Deduction Net Tax Retainage Net Net Rev. To Property Ending Value (1)Capacity (2)Capacity (3)Capacity Rate (4)Increment 0.360% Increment 10.00% Revenue 08/01/22 and SD MVR(1) (2) (3) (4) (6) (7) (8) (9) (10) (11) (12) 4.00%12/31/22233,7002,9212,9210124.436%0000 0 0 012/31/23233,7002,9212,9210124.436%0000 0 04,35012/31/24 3,780,000 47,250 2,921 44,329 124.436% 55,161 199 54,962 5,496 49,466 44,993 70,36212/31/25 6,363,000 79,538 2,921 76,616 124.436% 95,338 343 94,995 9,500 85,495 74,773 118,44312/31/26 6,426,630 80,333 2,921 77,412 124.436% 96,328 347 95,981 9,598 86,383 * 72,644 119,62712/31/27 6,490,896 81,136 2,921 78,215 124.436% 97,328 350 96,978 9,698 87,280 70,575 120,82312/31/28 6,555,805 81,948 2,921 79,026 124.436% 98,337 354 97,983 9,798 88,185 68,564 122,03212/31/29 6,621,363 82,767 2,921 79,846 124.436% 99,357 358 98,999 9,900 89,099 66,610 123,25212/31/30 6,687,577 83,595 2,921 80,673 124.436% 100,387 361 100,026 10,003 90,023 64,713 124,48512/31/31 6,754,453 84,431 2,921 81,509 124.436% 101,427 365 101,062 10,106 90,956 62,869 125,72912/31/32 6,821,997 85,275 2,921 82,354 124.436% 102,478 369 102,109 10,211 91,898 61,077 126,98712/31/33 6,890,217 86,128 2,921 83,206 124.436% 103,539 373 103,166 10,317 92,849 59,335 128,25712/31/34 6,959,119 86,989 2,921 84,068 124.436% 104,611 377 104,234 10,423 93,811 57,644 129,53912/31/35 7,028,711 87,859 2,921 84,938 124.436% 105,693 380 105,313 10,531 94,782 56,001 130,83512/31/36 7,098,998 88,737 2,921 85,816 124.436% 106,786 384 106,402 10,640 95,762 54,404 132,14312/31/37 7,169,988 89,625 2,921 86,704 124.436% 107,890 388 107,502 10,750 96,752 52,852 133,46412/31/38 7,241,688 90,521 2,921 87,600 124.436% 109,006 392 108,614 10,861 97,753 51,345 134,79912/31/39 7,314,104 91,426 2,921 88,505 124.436% 110,132 396 109,736 10,974 98,762 49,880 136,147$1,593,798 $5,736 $1,588,062 $158,806 $1,429,256 $968,279 $1,981,273* election to delay receipt of first increment until 2026 (up to 4 years from approval date)(1) Total estimated market value based on information provided by County Assessor ($143,182/unit) very preliminary and subject to further review. Includes 1% annual market value inflator(2) Total net tax capacity based on residential rental market rate class rate of 1.25%(3) Original net tax capacity based on existing land & building value(4) Total local combined tax rate available for taxes payable 2021 rates
Exhibit IV Baker Tilly Municipal Advisors, LLC Page 16 Estimated Impact on Other Taxing Jurisdictions ReportCity of Elk River, MinnesotaTax Increment Financing (Housing) District No. 28Jackson Hills Phase 2 HousingDraft TIF Plan Exhibits: Based on 44 Units Valued at $6.3M WithoutProject or TIF District With Project and TIF DistrictProjected Hypothetical2020/2021 2020/2021 Retained New Hypothetical Hypothetical Tax GeneratedTaxable 2020/2021 Taxable Captured Taxable Adjusted Decrease In by RetainedTaxing Net Tax Local Net Tax Net Tax Net Tax Local Local CapturedJurisdiction Capacity (1) Tax Rate Capacity (1) + Capacity = Capacity Tax Rate (*) Tax Rate (*) N.T.C. (*)City of Elk River 29,409,713 44.556% 29,409,713 $88,505 29,498,218 44.422% 0.134% 39,316Sherburne County 114,209,977 45.835% 114,209,977 88,505 114,298,482 45.800% 0.035% 40,535ISD 728 44,486,959 31.717% 44,486,959 88,505 44,575,464 31.654% 0.063%28,015Other (2) --- 2.328% --- 88,505 --- 2.328% --- --- Totals 124.436% 124.204% 0.232% * Statement 1: If the projected Retained Captured Net Tax Capacity of the TIF District was hypothetically available to each ofthe taxing jurisdictions above, the result would be a lower local tax rate (see Hypothetical Adjusted Tax Rate above)which would produce the same amount of taxes for each taxing jurisdiction. In such a case, the total local tax ratewould decrease by 0.232% (see Hypothetical Decrease in Local Tax Rate above). The hypothetical tax that theRetained Captured Net Tax Capacity of the TIF District would generate is also shown above.Statement 2: Since the projected Retained Captured Net Tax Capacity of the TIF District is not available to the taxing jurisdictions,then there is no impact on taxes levied or local tax rates. (1) Taxable net tax capacity = total net tax capacity - captured TIF - fiscal disparity contribution, if applicable. (2) The impact on these taxing jurisdictions has not been calculated. They represent 1.87% of the total tax rate.
Exhibit IV Baker Tilly Municipal Advisors, LLC Page 17