RES 2012-28 - 14989City of Fridley
Anoka County, Minnesota
RESOLUTION NO. 2012 - 28
A RESOLUTION MODIFYING THE REDEVELOPMENT PLAN FOR
REDEVELOPMENT PROJECT NO. 1 AND THE TAX INCREMENT FINANCING PLANS
FOR TAX INCREMENT FINANCING DISTRICTS NOS. NOS. 6-7,9,11-13 AND 16 -19 TO
REFL ECT INCREASED PROJECT COSTS AND INCREASED BONDING AUTHORITY
WITHIN REDEVELOPMENT PROJECT NO. 1, CREATING TAX INCREMENT
FINANCING DISTRICT NO. 20 AND ADOPTING A TAX INCREMENT FINANCING
PLAN RELATING THERETO AND CREATING HAZARDOUS SUBSTANCE
SUBDISTRICT NO. 20A AND THE ADOPTION OF A TAX INCREMENT FINANCING
PLAN 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 Plans ") for Tax Increment Financing
Districts Nos. 6 -7, 9, 11 -13 and 16 -19 (the "Existing Districts ") reflecting increased project costs and
increased bonding authority within the Project Area, pursuant to Minnesota Statutes, Section 469.174
through 469.1799, inclusive, as amended and supplemented from time to time.
1.03. It has been further proposed by the Authority that the Council approve the creation ofproposed
Tax Increment Financing District No. 20 (the "Redevelopment District ") and Hazardous Substance
Subdistrict No. 20A (the "Subdistrict ") (collectively the "Proposed Districts ") and adopt proposed Tax
Increment Financing Plans (the "Proposed Plans ") relating thereto, pursuant to and in accordance with
Minnesota Statutes. Section 469.174 to 469.1799, 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 Plans for
the Existing Districts reflecting increased project costs and increased bonding authority within the
Project Area and Proposed Plans for the Proposed Districts, defining more precisely the property to
be included, the public costs to be incurred, and other matters relating thereto.
Resolution No. 2012 - 28 Page 2
1.05. The Council has performed all actions required bylaw to be performed prior to the approval
and adoption of the modifications to the Redevelopment Plan and Existing Plans and the approval and
adoption of the Proposed Plans.
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
Plans reflecting increased project costs and increased bonding authority within the Project Area, to
create the Proposed Districts and to approve and adopt the Proposed Plans relating thereto.
Section 2. General 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 Plans and
Proposed Plans (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 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 to this Resolution.
Section 3. Specific Findings for the Redevelopment District
3.01. The Council hereby finds, determines and declares that the Redevelopment District constitutes
a "tax increment financing district" as defined in Minnesota Statutes, Section 469.174, Subd. 9, and
further constitutes a "redevelopment district" as defined in Minnesota Statutes, Section 469.174,
Subd. 10.
3.02. The Council hereby finds, determines and declares that the proposed development or
redevelopment in the Redevelopment District, in the opinion of this Council, would not reasonably be
expected to occur solely through private investment within the reasonably foreseeable future and,
therefore, the use of tax increment financing is deemed necessary.
Resolution No. 2012 - 28 Page 3
3.03. The Council hereby finds, determines and declares that the increased market value of a project
not receiving tax increment assistance would be less than the increased market value of a project
receiving tax increment assistance after deducting the present value of projected tax increments for
the maximum duration of the Redevelopment District.
3.04. The Council hereby finds, determines and declares that the expenditure of tax increment
within the Redevelopment District serves primarily a public purpose.
3.05. 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 B to this Resolution.
Section 4. Specific Findings for the Subdistrict.
4.01. The Council hereby finds, determines and declares that the Subdistrict constitutes a hazardous
substance subdistrict as defined in Minnesota Statutes, Section 469.174, Subdivision 23.
4.02. The Council hereby finds, determines and declares that the proposed development or
redevelopment in the Subdistrict, 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.
4.03. The Council hereby finds, determines and declares that the Subdistrict is not larger than, and the
period of time during which tax increments are elected to be received is not longer than, that which is
necessary, in the opinion of the Council, to provide for the additional costs due to the designated hazardous
substance site.
4.04. The Council hereby finds, determines and declares that the expenditure of tax increment within the
Subdistrict serves a primarily public purpose.
4.05. The Council hereby finds, determines and declares that the City made the above findings stated in
this Section 4 and has set forth the reasons and supporting facts for each determination in the Subdistrict
Plan and Exhibit C of this Resolution.
Section 5. Approvals and Adoptions.
5.01. 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.
5.02. The modifications to the Existing Plans reflecting increased project costs and increased
bonding authority within the Project Area are hereby approved and adopted by the Council of the
City.
Resolution No. 2012 - 28
Page 4
5.03. The creation of the Proposed Districts within the Project Area and the adoption of the
Proposed Plans relating thereto are hereby approved by the Council of the City.
Section 6. Filing of Plans.
6.01. Upon its approval and adoption ofthe modified Redevelopment Plan for the Project Area, the City
shall cause said Redevelopment Plan to be filed with the Minnesota Department of Revenue, the Office of
the State Auditor, and Anoka County.
6.02. Upon its approval and adoption of the Redevelopment Plan for the Redevelopment District, the
City shall cause said Redevelopment District Plan to be filed with the Minnesota Department of Revenue,
the Office of the State Auditor, and Anoka County.
6.03. Upon its approval and adoption of the Subdistrict Plan for the Subdistrict and the approval of the
Development Action Response Plan by the Pollution Control Agency, the City shall cause said Subdistrict
Plan to be filed with the Minnesota Department of Revenue, the Office of the State Auditor, and Anoka
County.
PASSED AND ADOPTED BY THE COUNCIL OF THE CITY THIS 9TH DAY OF APRIL, 2012.
ATTEST:
4-4vnn�
DEBRA SKOGEN OCITY CLERK
Resolution No. 2012 - 28
GENERAL FINDINGS
Page 5
RXHTBTT A
The reasons and facts supporting the findings for the modification of the Plans for the Project Area,
Existing Districts and Proposed Districts 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 resulting from the implementation of the Plans is necessary for the
proposed project to proceed. Please refer to Exhibit XXI -D of the Redevelopment Plan and XXII-D
of the Subdistrict Plan.
2. Finding 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.
The Council has reviewed the Plans and has determined that they are consistent with the City's
comprehensive plan.
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 the attached Exhibit B and C respectively for specific information relating to the
Proposed Districts.
4. Finding that the approval and adoption of the Plans is intended and, in the judgment of
this Council, its effect will be to promote the public purposes and accomplish the objectives
specified in the Plans.
The tax increment that will be generated due to the approval and adoption of the Plans will assist
in financing the public improvements and eligible expenses as detailed in the Plans.
Resolution No. 2012 - 28 Page 6
FXNTRTT R
SPECIFIC FINDINGS FOR THE REDEVELOPMENT DISTRICT
In addition to the findings included in Exhibit A, the reasons and facts supporting the additional findings for
the Redevelopment Plan for the Redevelopment District pursuant to Minnesota Statutes, Section 469.175,
Subdivision 3, are as follows:
1. Finding that the Redevelopment District is a "redevelopment district" as defined in
Minnesota Statutes.
The Redevelopment District consists of 3 parcels totaling approximately 136 acres. Of this
acreage, it has been determined that parcels comprising approximately 122 acres are occupied by buildings,
streets, utilities, paved or gravel parking lots or similar structures. This 90% area coverage exceeds the
70% coverage test required by Minnesota Statutes, Section 469.174, Subdivision 10(1). Additionally, the
building which is approximately 2,000,000 square feet and is located on two parcels has been determined
to be "structurally substandard" because it contains 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 building which by itself is 100% ofthe
improvements 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 through the Redevelopment
District. These findings and the conclusion that the Redevelopment District qualifies under the statutory
criteria and formulas for a redevelopment tax increment financing district are further described in a report
prepared by LHB dated January 31, 2012 (the "LHB Report").
2. Finding that the proposed development or redevelopment, in the opinion of the Council,
would not reasonably be expected to occur solely through private investment within the
reasonably foreseeable future and, therefore, the use of tax increment financing is deemed
necessary.
Development activities proposed to occur in the Redevelopment District includes land acquisition,
demolition of the building, remediation of the Site and construction of approximately 1,500,000
square feet of office, showroom, warehouse and bulk warehouse facilities in approximately 12
buildings. Upon completion of the development, it is anticipated that the City's tax base will increase
by approximately $60,000,000.
City staff has reviewed the estimated development costs and the available methods of financing and
has determined that tax increment assistance is necessary to make the redevelopment project
economically feasible and to allow the Redeveloper to proceed at this time.
Resolution No. 2012 - 28 Page 7
3. Finding that the increased market value of a project not receiving tax increment
financing assistance would be less than the increased market value of a project receiving tax
increment financing assistance after deducting the present value of the projected tax
increments for the maximum duration of the Redevelopment District.
The original market value of the Redevelopment District is approximately $15,000,000. City staffhas
determined that without tax increment assistance these parcels would not be developed within the
foreseeable future and that only minimal remodeling would probably occur. Therefore, if there was an
increase in market value it would be minimal.
City staff has further determined that with tax increment assistance it is possible to construct almost
1,500,000 square foot office showroom, office /warehouse and bulk warehouse development with an
estimated market value of approximately $75,000,000 After deducting the original market value of
$15,000,000 from the estimated market value of $75,000,000, 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 be approximately $60,000,000.
City staff has further determined that the total amount of tax increment generated over the 25 year term of
the Redevelopment District approximates $48,500,000. Assuming the same term and a present value rate
of 6.0 %, the present value of $48,500,000 approximates $17,000,000. After deducting the present value
of the tax increment ($17,000,000) from the increase in estimated market value occurring as a result of
utilizing tax increment assistance ($60,000,000), the net increase in estimated market values approximates
$43,000,000.
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 ($0) is less than the increased market value of
the site occurring with the use of tax increment financing after subtracting the present value of the
projected tax increments for the maximum duration of the Redevelopment District ($60,000,000). Further
information supporting this Finding is attached as Schedule 1.
4. Finding that expenditure of tax increment serves a primarily public purpose.
The expenditure of tax increment is not intended as a private benefit and any such benefit is incidental.
Public benefits resulting from the proposed project include (i) an increase in the State and City tax
bases, (ii) the acquisition and redevelopment of property which is not now in its highest or best use,
(iii) demolition and removal of an existing substandard and blighted structure, and (iv) remediation of
contaminated property.
Resolution No. 2012 - 28 Page 8
EXHIBIT C
SPECIFIC FINDINGS FOR THE SUBDISTRICT
In addition to the findings included in Exhibit A, the reasons and facts supporting the additional findings for
the Subdistrict Plan for the Subdistrict pursuant to Minnesota Statutes, Section 469.175, Subdivisions 3
and 7, are as follows:
1. Finding that the Subdistrict is a "hazardous substance subdistrict" as defined in Minnesota
Statutes.
The Subdistrict consists of 3 parcels which the Council reasonably expects will be designated as a
hazardous substance site as defined in Minnesota Statutes, Section 469.174, Subdivision 16 and will be
included in a Development Action Response Plan. The Council will certify to the County Auditor that it
will enter into an agreement(s) providing for the removal or remedial actions as specified in its
Development Action Response Plan. The Council acknowledges that the parcels to be included in the
Subdistrict will not be certified until the Development Action Response Plan has been approved.
2. Finding that the proposed development within the Subdistrict, 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.
The activities expected to occur within the Subdistrict include the removal and /or remedial actions
necessary to be undertaken and completed in order to facilitate the construction of the housing units, office
space, retail and restaurant space as described in Item 2 of Exhibit B and in the Proposed Plans.
City staff has received a preliminary overview of the estimated costs for the necessary removal
and /or remedial actions and the available methods of financing these activities. Although some of the tax
increment generated from the Redevelopment District may assist with the remediation and removal efforts,
additional assistance is required for these extensive costs. Without the additional tax increment generated
by the Subdistrict, the redevelopment of the Redevelopment District is economically unfeasible and cannot
proceed. Additional background supporting this Finding are included in Exhibit D of the Subdistrict Plan.
3. Finding that other parcels not designated as hazardous substance sites are expected to
be developed together with the designated hazardous substance site.
All parcels are to be included in the Subdistrict and it is anticipated that they will all be designated
as a hazardous substance site. In the event a parcel(s) is not designated a hazardous substance site, it will
be developed with the adjacent parcels within the Subdistrict as allowed by Minnesota Statutes, Section
469.175, Subdivision 7.
4. Finding that the Subdistrict is not larger than, and the period of time during which tax
increments are elected to be received is not longer than, that which is necessary, in the opinion
of the Council, to provide for the additional costs due to the designated hazardous substance
site.
Resolution No. 2012 - 28
Page 9
The Council has determined that the parcels located within the Subdistrict require remediation and
removal actions in order for the redevelopment of the District to proceed as proposed. The Council has
also determined that the duration of the Subdistrict will extend only as long as is required to finance the
remediation, removal and related activities.
5. Finding that the expenditure of tax increment serves 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 and remediation
actions needed, and associated costs, for the parcels included in the Subdistrict. See also Exhibit B, Item 4.
Resolution No. 2012 - 28
NUMERICAL "BUT FOR"
Page 10
SCHEDULE 1 TO EXHIBIT B
ESTIMATED MARKET VALUE INCREASE FOR A DEVELOPMENT PROJECT
WITHOUT TIF ASSISTANCE
Without tax increment assistance the parcels would not be developed within the foreseeable future
and only minimal remodeling may occur
Estimated Market Value ......................................... ............................... $ -0-
Original Market Value ............................................ ............................... $ 15,000,000
Increased Market Value .......................................... ............................... $ -0-
ESTIMATED MARKET VALUE INCREASE FOR A DEVELOPMENT PROJECT
WITH TIF ASSISTANCE
With tax increment assistance it is proposed that approximately 1,500,000 square feet office
showroom, office /warehouse and bulk warehouse development in 12 buildings be constructed in at
least four phases over 10 years.
Estimated Market Value ......................................... ............................... $ 75,000,000
Original Market Value ............................................ ............................... $ 15,000,000
Increased Market Value .......................................... ............................... $ 60,000,000
Less: Present Value of the Tax Increment
generated at 6.0% for the duration
of the Proposed Redevelopment District .... ............................... $ 17,000,000
Net Increased Market Value ................................... ............................... $ 43,000,000
MMB: 4823 - 2570 -7023, v. 1