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00-075 RESCITY OF ELK RIVER COUNTY OF SHERBURNE STATE OF MINNESOTA RESOLUTION NO. 00-75 RESOLUTION APPROVING DEVELOPMENT DISTRICT AND TAX INCREMENT FINANCING DISTRICT PLANS 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 amend the Development Program for its Development District No. 1 (the "Development District") to reflect additional goals, activities and costs for that project; establish within the Development District Tax Increment Financing District No. 21 (the "TIF District") and adopt the related Tax Increment Financing Plan therefor (collectively, the "Plans"); all pursuant to and in conformity with applicable law, including Minnesota Statutes, Sections 469.124 through 469.134 and 469.174 through 469.179; all as reflected in that certain document of the City entitled in part "Modifications to the Development Program for Development District No. 1," dated August 28, 2000, and presented for the Council's consideration. 1.02. the Plans. The Council has investigated the facts relating to 1.03. The City has performed all actions required by law to be performed prior to the adoption and approval of the Plans, including but not limited to 30 days prior notification of the County Auditor and School District Clerk, a review of and comment on the Plans by the Elk River Planning Commission, and the Council's holding (on August 21, 2000) of a public hearing thereon following notice thereof published in the City's official newspaper at least 10 but not more than 30 days prior to the public hearing. 1.04. Certain written reports and other documentation (collectively, the "Reports") relating to the Plans, including the tax increment application made and other information supplied by or on behalf of SoftPac and/or Opus Northwest, L.L.C. (collectively, the "Company") and to the activities and project contemplated within the TIF District, and including the Plans themselves, have heretofore been assembled or prepared by staff or others and submitted to the Council and/or made a part of the City files and proceedings on the Plans. The Reports include 1198600.2 data, information and/or substantiation constituting or relating to (1) the "studies and analyses" on why the new TIF District meets the so-called "but for" test and (2) the bases for the other findings and determinations made in this resolution. The Council hereby confirms, ratifies and adopts the Reports, which are hereby incorporated into and made as fully a part o£ this resolution to the same extent as if set forth in full herein. Section 2. Plans. Findinqs for the Adoption and Approval of the 2.01. The Council hereby finds that the proposed TIF District is in the public interest and is an "economic development district," within the meaning of Minnesota Statutes, Section 469.174, Subdivision 12, because it will result in increased employment opportunities in the State of Minnesota and in the preservation and enhancement of the tax base of the City and the State of Minnesota and because it will discourage commerce or industry from moving their operations to another state or municipality. In addition, the Council has been advised that the facility to be constructed within the TIF District is an approximately 73,000 square foot facility (the "SoftPac Development") to be used by SoftPac, Inc., in its packaging, manufacturing, warehouse and distribution operations; and not less than 85% of those facilities, in accordance with the applicable provisions of Minnesota Statutes, Section 469.176, Subdivision 4c, is expected to be used for the manufacturing, production, warehousing, storage, and distribution (including processing which results in the change in condition of the raw materials) of tangible personal property (but not retail sales thereof) and for uses necessary for and related to those activities. One of the reasons for the above findings and for the "but for" finding below is the fact that SoftPac had several other options, including an out-of-state option, for its project, and accordingly, the Council believes that the SoftPac Development would not be located in the City of Elk River without the tax increment assistance. 2.02. The Council further finds that, based in part upon the nature and location of the subject properties and the intended developments thereof involved, and based upon representations made by the Company, the proposed SoftPac Development would not occur solely through private investment within the reasonably foreseeable future and, therefore, the use of tax increment financing is deemed necessary; that the Plans conform to the general plan for the development or redevelopment of the City as a whole because the subject area is properly zoned for the intended uses, and the anticipated SoftPac Development is in furtherance of long range plans of the City and the investments heretofore made by the City for that area; and that the Plans will afford maximum opportunity consistent with the sound needs of the City as a whole, for the development of the 1198600.2 2 Development District and the TIF District by private enterprise because they will enable the City to provide and finance suitable and necessary public inducements. 2.03. The Council further finds that the Plans are intended and in the judgment of the Council their effect will be to promote the public purposes and accomplish the objectives specified in the Tax Increment Financing Plan for the TIF District and the Development Program for Development District No. 1. 2.04. For purposes of compliance with Minnesota Statutes, Section 469.175, Subdivision 3(2), the Council hereby finds that the increased market value of the TIF District that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in market value estimated to result from the SoftPac Development after subtracting the present value of the projected tax increments for the maximum duration of the TIF District permitted by the Tax Increment Plan, which for these purposes is an assumed period of 9 years of increment. In this regard, reference is hereby made to Section Y.2. of the Plans. In making these findings, it is noted that the subject property is currently undeveloped and that it would be unlikely or at least uncertain that an alternate project would appear for the subject site. Thus, the Council cannot reasonably assume or determine that there would be an increase in the market value of the site without the aid of tax increment financing and the completion of the new development. In addition, based on current estimates, it appears that the market value for property tax purposes upon completion of the development would be approximately $3,869,000; subtracting from that number $763,000 (the current market value of the property) yields a net increase in the market value of $3,106,000. The present value of the tax increment is estimated to be $843,511, using a present valuing factor of 8.00%, which is substantially less than the projected $3,106,000 net increase in market value. Thus, the SoftPac Development on these analyses 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. 2.05. Pursuant to the Tax Increment Plan for the TIF District, a 10% "qualifying local contribution" will be made respecting the TIF District, and the LGA/HACA offsets will not apply. The qualifying contributions are expected to come from generally available, non-TIF funds of the County, State, and/or City, including payment of eligible costs of the Development Program for the Development District. 1198600.2 3 Section 3. Approval and Adoption of the Plans. 3.01. The Plans, 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 make written request of the Sherburne County Auditor to certify the new TIF District. Adopted on August 28, 2000, by the Elk River City Council. Councilmember Motin moved the adoption of the foregoing resolution, which motion was duly seconded by Councilmember Farber , and upon vote being taken thereon, the following Councilmembers voted in favor thereof: Mayor Klinzing, Council Members Motin, Farber, Dietz and Thompson and the following Councilmembers voted against the same: None whereupon said resolution was declared duly passed on adopted. 1198600.2 CITY CLERK'S CERTIFICATE I, the undersigned, being the duly qualified and acting City Clerk of the City of Elk River, Minnesota, DO HEREBY CERTIFY that I have carefully compared the attached and foregoing extract of minutes of a duly called and regularly held meeting of the City Council of said City held on August 28, 2000, with the original minutes thereof on file in my office and I further certify that the same is a full, true, and correct transcript thereof insofar as said minutes relate to the tax increment and related actions referenced therein with respect to the City's Development District No. 1 and Tax Increment Financing District No. 21 therein. WITNESS My hand officially and the official seal of the City this ~/~day of~l~ , 2000. ~ity Clerk Elk River, Minnesota (SEAL) 1198600.2 5