RES 2005-35 - 00013455RESOLUTION NO. 2005 -35
A RESOLUTION MODIFYING THE REDEVELOPMENT PLAN FOR
REDEVELOPMENT PROJECT NO. 1 AND THE TAX INCREMENT FINANCING
PLANS FOR TAX INCREMENT FINANCING DISTRICTS NOS. 1-3,6-7, AND 9 -17 TO
REFLECT INCREASED PROJECT COSTS AND INCREASED BONDING
AUTHORITY WITHIN REDEVELOPMENT PROJECT NO. 1, CREATING TAX
INCREMENT FINANCING DISTRICT NO. 18 AND ADOPTING A TAX INCREMENT
FINANCING PLAN RELATING THERETO
BE IT RESOLVED by the City Council (the "Council ") of the City of Fridley, Minnesota (the
"City "), as follows:
Section 1. Recitals.
1.01. It has been proposed by the Housing and Redevelopment Authority (the "Authority ") that
the Council approve and adopt the proposed modifications to its Redevelopment Plan for
Redevelopment Project No. 1 (the "Project Area ") reflecting increased project costs and
increased bonding authority, pursuant to and in accordance with Minnesota Statutes Sections
469.001 to 469.047, inclusive, as amended and supplemented from time to time.
1.02. It has been further proposed by the Authority that the Council approve and adopt the
proposed modifications to the Tax Increment Financing Plans (the "Existing TIF Plans ") for Tax
Increment Financing Districts Nos. 1 -3, 6 -7, and 9 -17 (the "Existing TIF Districts ") reflecting
increased project costs and increased bonding authority within the Project Area, pursuant to
Minnesota Statutes Section 469.174 through 469.1791, inclusive, as amended and supplemented
from time to time.
1.03. It has been further proposed by the Authority that the Council approve the creating of
proposed Tax Increment Financing District No. 18 (the "Proposed TIF District ") and adopt a
proposed Tax Increment Financing Plan (the "Proposed TIF Plan ") relating thereto, pursuant to
and in accordance with Minnesota Statutes Section 469.174 to 469.1791, inclusive, as amended
and supplemented from time to time.
1.04. The Authority has caused to be prepared, and this Council has investigated the facts with
respect thereto, a modified Redevelopment Plan for the Project Area and modified Existing TIF
Plans for the Existing TIF Districts reflecting increased project costs and increased bonding
authority within the Project Area and a Proposed TIF Plan for the Proposed TIF District, defining
more precisely the property to be included, the public costs to be incurred, and other matters
relating thereto.
1.05. The Council has performed all actions required by law to be performed prior to the
approval and adoption of the modifications to the Redevelopment Plan and Existing TIF Plans
and the approval and adoption of the Proposed TIF Plan.
Resolution No. 2005 -35 Page 2
1.06. The Council hereby determines that it is necessary and in the best interests of the City
and the Authority at this time to approve and adopt the modifications to the Redevelopment Plan
and Existing TIF Plans reflecting increased project costs and increased bonding authority within
the Project Area, to create the Proposed TIF District and to approve and adopt the Proposed TIF
Plan relating thereto.
Section 2. Findings.
2.01. The Council hereby finds, determines and declares that the assistance to be provided
through the adoption and implementation of the modified Redevelopment Plan, modified
Existing TIF Plans and Proposed TIF Plan (collectively, the "Plans ") are necessary to assure the
development and redevelopment of the Project Area.
2.02. The Council hereby finds, determines and declares that the Plans conform to the general
plan for the development and redevelopment of the City as a whole in that they are consistent
with the City's comprehensive plan.
2.03. The Council hereby finds, determines and declares that the Plans afford maximum
opportunity consistent with the sound needs of the City as a whole for the development and
redevelopment of the Project Area by private enterprise and it is contemplated that the
development and redevelopment thereof will be carried out pursuant to redevelopment contracts
with private developers.
2.04. The Council hereby finds, determines and declares that the modification, approval and
adoption of the Plans is intended and, in the judgment of this Council, its effect will be to
promote the purposes and objectives specified in this Section 2 and otherwise promote certain
public purposes and accomplish certain objectives as specified in the Plans.
2.05. The Council hereby finds, determines and declares that the Proposed TIF District
constitutes a "tax increment district" as defined by Minnesota Statutes Section 469.174,
Subdivision 9, and further constitutes a type of "redevelopment district" as defined in Minnesota
Statutes Section 469.174, Subdivision 10.
2.06. The Council hereby finds, determines and declares that the proposed development or
redevelopment in the Proposed TIF District, in the opinion of this Council, would not occur
solely through private investment within the reasonably foreseeable future and, therefore, the use
of tax increment financing is deemed necessary.
2.07. The council hereby finds, determines and declares that the City made the above findings
stated in this Section 2 and has set forth the reasons and supporting facts for each determination
in the Plans and Exhibit A of this Resolution.
Resolution No. 2005 -35 Page 3
Section 3. Annrovals and Adobtions.
3.01. The modifications to the Redevelopment Plan reflecting increased project costs and
increased bonding authority within the Project Area are hereby approved and adopted by the
Council of the City.
3.02. The modifications to the Existing TIF Plans reflecting increased project costs and
increased bonding authority within the Project Area are hereby approved and adopted by the City
Council of the City.
3.03. The creation of the Proposed TIF District within the Project Area and the adoption of the
Proposed TIF Plan relating thereto are hereby approved and adopted by the Council of the City.
Section 4. Filing of Plans.
4.01. Upon approval and adoption of the Plans, the Council shall cause said Plans to be filed
with the Minnesota Department of Revenue and the Office of the State Auditor. The
Council shall also cause said Plans to be provided to Anoka County along with a request
for certification of the original tax capacity of the Proposed TIF District and of the
original local tax rate applicable to the proposed TIF District.
PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF FRIDLEY THIS 8TH
DAY OF AUGUST, 2005.
ATTEST:
"dA*o�?
Debra A. Skogen, Cit7 Clerk
CERTIFICATION
Scott J. Lund, Mayor
I 1 the duly qualified Clerk of the city of Fridley, County of Anoka,
Minnesota, hereby certify that the foregoing is a true and correct copy of Resolution No. 2005 -35
passed by the City Council on the 8th day of August 2005.
City Clerk
Resolution No. 2005 -35 Page 4
EXHBIT A
The reasons and facts supporting the findings for the Proposed TIF Plan for the Proposed TIF
District as required pursuant to Minnesota Statutes Section 469.175, subdivision 3, are as
follows:
1. Finding that the assistance to be provided through the adoption and implementation
of the Plans is necessary to assure the development and redevelopment of the Project Area.
The tax increment assistance that will result due to the implement of the Plans is
necessary for the proposed project to proceed. Please refer to Exhibit XIX -D of the proposed
TIF Plan.
2. Finding that the Proposed TIF Plan conforms to the general plan for the
development or redevelopment of the municipality as a whole.
The Authority and Council have reviewed the Proposed TIF Plan and determined that it
conforms to the comprehensive plan of the City.
3. Finding that the Plans afford maximum opportunity, consistent with the sound
needs of the City as a whole, for the development and redevelopment of the Project Area by
private enterprise, and it is contemplated that the development or redevelopment thereof
will be carried out pursuant to development contracts with private developers.
Please refer to Exhibit XIX -D of the Proposed TIF Plan for specific information relating
to the Proposed TIF District.
4. Finding that the approval and adoption of the Plans is intended and, in the
judgment of the Council, its effect will be to promote the public purposes and accomplish
the objectives specified in the modified Redevelopment Plan and Proposed TIF Plan.
The tax increment that will be generated due to the approval and adoption of the modified
Redevelopment Plan and Proposed TIF Plan and the approval and creation of the proposed TIF
District will assist in financing the public improvements and eligible expenses as detailed in the
modified Redevelopment Plan and Proposed TIF Plan.
5. Finding the proposed TIF District is a "redevelopment district" as defined in
Minnesota Statutes.
The Proposed TIF District consists of two separate, but adjacent sites referred to as the
North Site and the South Site. The North Site consists of seven parcels totaling approximately
56,712 square feet. It has been determined that five of the seven parcels totaling approximately
41,232 square feet are occupied by buildings, streets, utilities, paved or gravel parking lots or
similar structures. This 72.7% area coverage exceeds the 70% coverage test required by
Minnesota Statutes Section 469.174, subdivision 10(1). Additionally, all five of the existing
buildings have been determined to be "structurally substandard" because they contain defects in
Resolution No. 2005 -35 Exhibit A 5
structural elements or a combination of deficiencies in essential utilities and facilities, light and
ventilation, fire protection including adequate egress, layout and condition of interior partitions,
or similar factors, which defects or deficiencies are of sufficient total significance to justify
substantial renovation or clearance. This 100% satisfies the requirements of Minnesota Statutes
Section 469.174, subdivision 10(1) which requires that over 50% of buildings, not including
outbuildings, must be found "structurally substandard." It has further been determined that these
conditions are reasonably distributed throughout the North site.
The South Site consists of eight parcels totaling approximately 78,992 square feet. It has
been determined that five of the eight parcels totaling approximately 53,447 square feet are
occupied by buildings, streets, utilities, paved or gravel parking lots or similar structures. This
78.99% area coverage exceeds the 70% coverage test required by Minnesota Statutes Section
469.174, subdivision 10(1). Additionally, all three of the existing buildings have been
determined to be "structurally substandard" because they contain defects in structural elements
or a combination of deficiencies in essential utilities and facilities, light and ventilation, fire
protection including adequate egress, layout and condition of interior partitions, or similar
factors, which defects or deficiencies are of sufficient total significance to justify substantial
renovation or clearance. This 100% satisfies the requirements of Minnesota Statutes Section
469.174, subdivision 10(1) which requires that over 50% of buildings, not including
outbuildings, must be found "structurally substandard." It has further been determined that these
conditions are reasonably distributed throughout the South Site.
These findings and conclusions that the North Site and South Site independently qualify under
the statutory criteria and formulas for a redevelopment tax increment financing district are
further described in a Redevelopment Eligibility Assessment dated January 6, 2005, and a
Redevelopment Eligibility Assessment Supplemental Report dated July 12, 2005, both prepared
by Short Elliot Hendrickson, Inc. (collectively, the "SHE Report").
6. Finding that the proposed development within the Proposed TIF District, in the
opinion of the Council, would not occur solely through private investment within the
reasonably foreseeable future and, therefore, the use of tax increment financing is deemed
necessary.
Redevelopment activities proposed to occur in the Proposed TIF District include the
construction of approximately 16 owner - occupied, residential housing units in 2005 and 2006.
Upon completion of this redevelopment, the City's tax base will increase by approximately
$2,624,500.
City staff has reviewed the estimated redevelopment costs including land and building
acquisition, relocation of existing property owners and tenants, demolition of existing structures,
site preparation and installation of public improvements as well as the available methods of
financing. The estimated redevelopment costs are approximately $2.1 million and the market
value of the land for the proposed project is approximately $800,000. It has been determined
that this difference of approximately $1.3 million requires tax increment assistance as well as
assistance from any available grants.
Resolution No. 2005 -35 Exhibit A 6
7. Finding that the increased market value of the site that could reasonably be
expected to occur without the use of tax increment financing would be less than the
increase in the market value estimated to result from the proposed development after
subtracting the present value of the projected tax increments for the maximum duration of
the district permitted by the Proposed TIF Plan.
The original market value of the Proposed TIF District is $1,295,500. City staff has
determined that without tax increment assistance it may be possible for three single family
homes to be constructed, one on the North Site and two on the South Site. It is estimated that the
market value of each home would be $225,000 for a total of $675,000 for the three additional
single family homes. This increase added to the original market value would provide an
estimated market value for the Proposed TIF District of $1,970,500.
After deducting the original market value of $1,295,500 from this estimated market value
of $1,970,500, City staff has determined that the increased market value that could reasonably be
expected to occur from a project receiving no tax increment assistance would approximate
$675,000.
City staff has further determined that with tax increment assistance the redevelopment
activities described in Item 6 above could be achieved with an estimated market value of
approximately $3,920,000. After deducting the original market value of $1,295,500 from this
estimated market value of $3,920,000, City staff has further determined that the increased market
value that could reasonably be expected to occur from a project receiving tax increment
assistance would approximate $2,624,500.
City staff has also determined that the total amount of tax increment generated from the
project using tax increment assistance over the 25 year term of the Proposed TIF District
approximates $1,919,781. Assuming the same 25 year term and a present value rate of 5.0 %,
which for financial analysis is assumed to be the bond rate, the present value of $1,919,781
approximates $800,389. After deducting the present value of the tax increment ($800,389) from
the increase in estimated market value occurring as a result of utilizing tax increment assistance
($2,624,500), the net increase in estimated market values approximates $1,824,111.
City staff has further determined that the increased market value of the site that could reasonably
be expected to occur without the use of tax increment financing ($675,000) is less than the
increase in the market value estimated to result from the proposed development after subtracting
the present value of the projected tax increments for the maximum duration of the district
permitted by the TIF Plan ($2,624,500 - $800,389 = $1,824,111). Further information
supporting this Finding is attached as Exhibit 1.
8. Finding that the expenditure tax increment serves as a primarily public purpose.
The expenditure of tax increment is not intended as a private benefit, and any such benefit is
incidental. The principal intent for the tax increment expenditures includes the removal of
impediments to the development described in the Redevelopment Plan and Proposed TIF Plan.
These activities included the (i) elimination of blight as described in Item 1 of this Exhibit and
Resolution No. 2005 -35 Exhibit A 7
further described in the SHE Report on file at the City; (ii) demolition and removal of existing
structures; (iii) relocation of existing tenants; and (iv) replacement of substandard or insufficient
infrastructure. Among the public benefits are (i) the elimination of blight; (ii) the development
of new housing units for the City; (iii) the utilization of existing infrastructure including sanitary
sewer, water and roads; (iv) the utilization of existing capital improvements including schools,
parks, and the community center; and (v) the approximate 3 times increase in the Proposed TIF
District's tax base.
Resolution No. 2005 -35
I.
SCHEDULE 1 TO EXHBIT A
RESOLUTION NO. 2005 -35
REDEVELOPMENT WITHOUT TIF ASSISTANCE
Page 8
It is possible that without TIF assistance, three single family homes could be constructed
on vacant property located within the Proposed TIF District
Estimated Market Value $1,970,500
Original Market Value $1,295,500
Increased Market Value $ 675,000
II. REDEVELOPMENT WITH TIF ASSISTANCE
It is anticipated that with TIF assistance, redevelopment activities within the Proposed
TIF District would include the construction of approximately 16 owner - occupied,
residential housing units in 2005 and 2006.
Estimated Market Value
$3,920,000
Original Market Value
$1,295,500
Increased Market Value
$2,624,500
Less the present value of the tax
increment generated at 5.0% for the
term of the Proposed TIF District (see
attached Exhibit 1) $800,389
Net Increased Market Value $1,824,111
,�.
West (TIF #1
CASH FLOW AND PRESENT VALUE ANALYSIS
Gateway West 04 -TIF PLAN.xIs Prepared by Krass Monroe, P.A. 8/1/2005
<---- --- - - - - --
ANNUAL -------- - - - - ->
<-------- - - - - --
------ - - - - --
- SEMI - ANNUAL -
-- ----------- - - - - --
----------- - - - - -> :.
(a)
(b)
(c) (d)
(e)
(f)
(9)
(h)
(i)
�)
Original
Estimated Captured
Est. T. 1.
Less:
Available
Cumulative
< - - - - -- Present Value --- - - - >'.
Tax
Tax Tax
(d) x
Admin
Tax
Avail. Tax
Semi Annual
Cumulative
Date
Capacity
Capacity Capacity
0.96386
Fees
Increment
Increment
Balance
Balance
(see assumptions) (c) - (b)
St. Aud. Fe
(e) x
(e) - (f)
Total of (g)
P.V. of (g)
Total of (i)
7.5%
Inflation (prev. year)
0.000%
0.00%
5.00%
12/01/05
0&01104
12,955
12,955
0
0
0
0
0
0
12/01/04
12,955
12,955
0
0
0
0
0
0 s
06/01/05
12,955
12,955 0
0
0
0
0
0
O s
12/01/05
12,955
12,955 0
0
0
0
0
0
0
06/01/06
12,955
14;700 0
0
0
0
0
0
0
12/01 /06
12,955
14,700 0
0
0
0
0
0
O s
1
06/01/07
12/01/07
12,955
12,955
391200 1,745
39,200 1,745
841
841
0
0
841
841
841
1,682
781
762
781 's
1,543
2
06/01/08
12,955
39.200 26,245
12,648
0
12,648
14,330
11,179
12,722:
12/01/08
12,955
39,200 26,245
12,648
0
12,648
26,978
10,907
23,629
3
06/01/09
12,955
39,200 26,245
12,648
0
12,648
39,627
10,641
34,269
12/01/09
12,955
39,200 26,245
12,648
0
12,648
52,275
10,381
44,650
4
06/01/10
12,955
42,140 26,245
12,648
0
12,648
64,923
10,128
54,778
12/01/10
12,955
42,140 26,245
12,648
0
12,648
77,571
9,881
64,659
5
06/01/11
12,955
45,301 29,185
14,065
0
14,065
91,637
10,720
75,378:
12/01 /11
12,955
45,301 29,185
14,065
0
14,065
105,702
10,458
85,837
6
06/01/12
12,955
48,698 32,346
15,588
0
15,588
121,290
11,308
97,145:
12/01 /12
12,955
48,698 32,346
15,588
0
15,588
136,878
11,032
108,177:
7
06/01/13
12,955
52,350 35,743
17,226
0
17,226
154,104
11,894
120,071
12/01/13
12,955
52,350 35,743
17,226
0
17,226
171,330
11,604
131,674:
€ 8
06/01/14
12,955
56,277 39,395
18,986
0
18,986
190,315
12,477
144,152:
12/01/14
12,955
56,277 39,395
18,986
0
18,986
209,301
12,173
156,325:
9
06/01/15
12,955
60,497 43,322
20,878
0
20,878
230,179
13,060
169,384:
12/01/15
12,955
60,497 43,322
20,878
0
20,878
251,057
12,741
182,126
10
06/01/16
12,955
65,035 47,542
22,912
0
22,912
273,969
13,642
195,767:
12/01/16
12,955
65,035 47,542
22,912
0 1
22,912
296,881
13,309
209,076:'
11
06/01/17
12,955
69,912 52,080
25,099
0
25,099
321,980
14,223
223,299:
12/01/17
12,955
69,912 52,080
25,099
0
25,099
347,079
13,876
237,176:
€ 12
06/01/18
12,955
75,156 56,957
27,449
0
27,449
374,528
14,806
251,982
12/01/18
12,955
75,156 56,957
27,449
0
27,449
401,978
14,445
266,427:
13
06/01/19
12,955
80,792 62,201
29,976
0
29,976
431,954
15,390
281,817:
12/01/19
12,955
80,792 62,201
29,976
0
29,976
461,931
15,015
296,831 `.
14
06/01/20
12,955
86,852 67,837
32,693
0
32,693
494,624
15,976
312,807
12/01 /20
12,955
86,852 67,837
32,693
0
32,693
527,316
15,586
328,393
15
06/01/21
12,955
93,366 73,897
35,613
0
35,613
562,930
16,564
344,957
12/01/21
12,955
93,366 73,897
35,613
0
35,613
598,543
16,160
361,117:
16
06/01/22
12,955
100,368 80,411
38,752
0
38,752
637,295
17,156
378,273:
12/01/22
12,955
100,368 80,411
38,752
0
38,752
676,047
16,737
395,011
17
06/01/23
12,955
107,896 87,413
42,127
0
42,127
718,174
17,751
412,762
12/01/23
12,955
107,896 87,413
42,127
0
42,127
760,302
17,318
430,080:
18
06/01/24
12,955
115,988 94,941
45,755
0
45,755
806,056
18,351
448,431
12/01/24
12,955
115,988 94,941
45,755
0
45,755
851,811
17,903
466,334:
19
06/01/25
12,955
124,687 103,033
49,655
0
49,655
901,466
18,955
485,289 .
12/01/25
12,955
124,687 103,033
49,655
0
49,655
951,121
18,493
503,782:
20
06/01/26
12,955
134,039 111,732
53,847
0
53,847
1,004,968
19,565
523,347::
12/01/26
12,955
134,039 111,732
53,847
0
53,847
1,058,815
19,088
542,435
21
06/01/27
12,955
144,092 121,084
58,354
0
58,354
1,117,168
20,181
562,616
12/01/27
12,955
144,092 121,084
58,354
0
58,354
1,175,522
19,689
582,305:
22
06/01/28
12,955
154,898 131,137
63,199
0
63,199
1,238,721
20,803
603,108
12/01/28
12,955
154,898 131,137
63,199
0
63,199
1,301,920
20,296
623,404
23
06/01/29
12,955
166,516 141,943
68,407
0
68,407
1,370,326
21,433
644,837
12/01129
12,955
166,516 141,943
68,407
0
68,407
1,438,733
20,910
665,747:
24
06/01/30
12,955
179,004 153,561
74,006
0
74,006
1,512,739
22,070
687,817:
12/01/30
12,955
179,004 153,561
74,006
0
74,006
1,586,744
21,531
709,348
25
06/01/31
12,955
192,430 166,049
80,024
0
80,024
1,666,768
22,715
732,062
12/01/31
12,955
192,430 166,049
80,024
0
80,024
1,746,793
22,161
754,223
26
06/01/32
12,955
206,862 179,475
86,494
0
86,494
1,833,287
23,368
777,591
12/01/32
12,955
206,862 179,475 1
86,494
0
86,494
1,919,781
22,798
800,389
1 919 781
0 1
1,919,781
1 919 781
800,389
800,38 9 i.
Gateway West 04 -TIF PLAN.xIs Prepared by Krass Monroe, P.A. 8/1/2005