8.2. SR 06-20-1994
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ITEM 8.2.
MEMORANDUM
TO:
MAYOR AND CITY COUNCIL
FROM:
WILLIAM RUBIN, ECONOMIC
DEVEWPMENT COORDINATOAi 11--
JUNE 14, 1994
DATE:
SUBJECT:
PROPOSED MODIFICATION TO TAX
INCREMENT FINANCING PLANS NO.1 &
NO.3 (LIBRARY EXPANSION PROJECT)
INTRODUCTION
At its May 2, 1994 meeting, the Elk River City Council authorized a public hearing for
June 20, to consider a modification to Tax Increment Financing Plans No.1 and No.3.
The propose modification will amend the respective Plans to authorize additional tax
increment expenditures that are not currently referenced in the Plans.
BACKGROUND
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The proposed modification to Plans No.1 and Plans No.3 supersedes City Council action
of August 2, 1993 which resulted in the allocation of up to $177,000 in tax increment
funds to underwrite a portion of the proposed $562,000 public h"brary expansion.
Although this amendment was subsequently approved, the City's bond council advised
Finance Director Lori Johnson that the amendment should be further revised to reflect a
20 percent TIF. debt service pledge--a fundamental requirement when bonds are used in
conjunction with a TIF. contribution.
Adding additional language to an adopted T.IF. plan triggers a new public hearing and a
new administrative review cycle such as Planning commission review, School Board
review, and County Board review.
The current TIF. plan amendment incorporates the suggestions of bond counsel. That is,
an additional $51,000 in T.IF. funds is referenced as a 20 percent debt service pledge
(bond issue of$255,000 times 20 percent equals $51,000).
ACTION REQUESTED
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The Elk River City Council is asked to approve the modification to Tax Increment
Financing Plans No.1 and No.3. This modification supersedes City Council action of
August 2, 1993.
P.O. Box 490 · 13065 Orono Parkway · Elk River, MN 55330 · (612) 441-7420 · Fax: (612) 441-7425
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MODIFICATION OF
TAX INCREMENT FINANCING PLANS
TAX INCREMENT FINANCING DISTRICT NO.1 AND NO.3
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NOTE: This modification supersedes City Council action of August 2, 1993
City of Elk River
June 20, 1994
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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.
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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.
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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.
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2.) Property to be Acauired. 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 Activitv . 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.
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4.)
Financial Analvsis of the TIF Districts -
Cost of the Public Development Activities to be Financed:
Elk River Public Library Expansion
$562,000
Administrative
Interest
Contingency
-0-
-0-
~o-
Total Costs
$562,000
Sources of Funds:
Library Fund
Tax Increment
Amount of Bonded Indebtedness to be Incurred
$130,000
177,000
255,000
Total Project Financing $562,000
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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 Analvsis - 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.
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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 Reauirements - 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.
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EXHIBIT B
17
PROPOSED SITE AREA UTILIZATION
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EXHIBIT C