Res 2016-48 Creating TIF District No. 23
RESOLUTION NO. 2016 - 48
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, 9, 11-13 AND 17-22 TO
REFLECT INCREASED PROJECT COSTS AND INCREASED
BONDING AUTHORITY WITHIN REDEVELOPMENT
PROJECT NO. 1, CREATING TAX INCREMENT FINANCING
DISTRICT NO. 23 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 Plans”) for Tax Increment Financing
Districts Nos. 6, 9, 11-13 and 17-22(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 of proposed
Tax Increment Financing District No. 23 (the “Proposed District”) and adopt the proposed Tax Increment
Financing Plan (the “Proposed Plan”) 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 the Proposed Plan for the Proposed 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 Plans and the approval and
adoption of the Proposed Plan.
Resolution No. 2016- 48 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
Plans reflecting increased project costs and increased bonding authority within the Project Area, to
create the Proposed District and to approve and adopt the Proposed Plan 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
the Proposed 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 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 Proposed District.
3.01. The Council hereby finds, determines and declares that the Proposed 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 Proposed 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.
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
Resolution No. 2016- 48 Page 3
receiving tax increment assistance after deducting the present value of projected tax increments for
the maximum duration of the Proposed District.
3.04. The Council hereby finds, determines and declares that the expenditure of tax increment
within the Proposed 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. Approvals and Adoptions.
4.01. 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.
4.02. 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.
4.03. The creation of the Proposed District within the Project Area and the adoption of the
Proposed Plan relating thereto are hereby approved by the Council of the City.
Section 5. Filing of Plans.
5.01. Upon its approval and adoption of the Plans, the City shall request the Authority to cause said
Plans to be filed with the Minnesota Department of Revenue, the Office of the State Auditor and
Anoka County.
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PASSED AND ADOPTED BY THE COUNCIL OF THE CITY THIS 12 DAY OF
SEPTEMBER, 2016.
SCOTT LUND - MAYOR
ATTEST:
DEBRA SKOGEN - CITY CLERK
Resolution No. 2016- 48 Page 4
CERTIFICATION
I, Debra Skogen, 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. 2016-48 passed by the City Council
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on the 12 day of September, 2016.
DEBRA SKOGEN - CITY CLERK
Resolution No. 2016- 48 Page 5
EXHIBIT A
GENERAL FINDINGS
The reasons and facts supporting the findings for the modification of the Plans for the
Project Area, Existing Districts and Proposed District 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 XXV-D of the Proposed 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 for specific information relating to the Proposed
District.
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. 2016- 48 Page 6
EXHIBIT B
SPECIFIC FINDINGS FOR THE PROPOSED DISTRICT
In addition to the findings included in Exhibit A, the reasons and facts supporting the additional
findings for the Proposed District pursuant to Minnesota Statutes, Section 469.175, Subdivision
3, are as follows:
1. Finding that the Proposed District is a “redevelopment district” as defined in
Minnesota Statutes.
The Proposed District consists of three parcels totaling approximately 30.25 acres. Of
this acreage, it has been determined that parcels comprising 100% of the Proposed District are
occupied by buildings, streets, utilities, paved or gravel parking lots or similar structures. This
100% area coverage exceeds the 70% coverage test required by Minnesota Statutes, Section
469.174, Subdivision 10(1). Three of the three buildings located on two of the parcels 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. These three buildings satisfy the requirements of
Minnesota Statutes, Section 469.174, Subdivision 10(a) which requires that over 50% of
buildings, not including outbuildings, must be found “structurally substandard.” Additionally,
these buildings would require expenditures of greater than 15% (of the cost of a new structure
of similar size and type) to bring them into compliance with current building codes. It has
further been determined that these conditions are reasonably distributed through the Proposed
District. Information supporting these findings are on file at City Hall and are contained in a
Report prepared for the City by LHB, Inc., dated July 28, 2016.
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 Proposed District include land acquisition,
demolition of buildings, remediation of the Site and construction of approximately 15,000
square feet of commercial retail/office space, 284 market-rate rental housing units, 360
senior rental housing units, and 45 owner-occupied housing units. Upon completion of the
proposed redevelopment it is anticipated that the City’s tax base will increase by
approximately $69.9 million.
City and HRA staff have reviewed the estimated development costs and the available
methods of financing and have determined that tax increment assistance is necessary to
make the redevelopment project economically feasible and to allow redevelopment to proceed
at this time and in the foreseeable future.
Resolution No. 2016- 48 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 Proposed
District.
The original market value of the Proposed District is approximately $6,000,000. City staff
has determined that without tax increment assistance these parcels could be developed to
include 175 senior rental units and 60 patio homes for an increase in market value of
approximately $28.0 million.
City staff has further determined that with tax increment assistance it is possible to construct
approximately 15,000 square feet of retail, 284 units of multi-family market rate rental units, 360
senior rental units, 30 townhomes and 15 patio homes with an estimated market value of
approximately $75.9 million. After deducting the original market value of $6.0 million from the
estimated market value of $75.9 million, 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 $69.9 million.
City staff has further determined that the total amount of tax increment generated over the 26
year term of the Proposed District approximates $27.6 million. Assuming the same term and a
present value rate of 4.0%, the present value of $27.6 million approximates $15.1 million.
After deducting the present value of the tax increment ($15.1 million) from the increase in
estimated market value occurring as a result of utilizing tax increment assistance ($69.9
million), the net increase in estimated market values approximates $54.8 million.
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 ($28.0 million) 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 Proposed District ($54.8 million). 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 structures, and (iv) remediation of contaminated property.
Resolution No. 2016- 48 Page 8
SCHEDULE 1 TO EXHIBIT B – NUMERICAL “BUT FOR”
ESTIMATED MARKET VALUE INCREASE FOR A DEVELOPMENT PROJECT
WITHOUT TIF ASSISTANCE
Without tax increment assistance the parcels could be developed to include 175 senior
rental units and 60 patio homes.
Estimated Market Value ................................................................ $ 34.0 million
Original Market Value ................................................................... $ 6.0 million
Increased Market Value ................................................................ $ 28.0 million
ESTIMATED MARKET VALUE INCREASE FOR A DEVELOPMENT PROJECT
WITH TIF ASSISTANCE
With tax increment assistance it is proposed that approximately 15,000 square feet of
retail, 284 units of multi-family market rate rental units, 360 senior rental units, 30
townhomes and 15 patio homes will be constructed in at least five phases over five years.
Estimated Market Value ................................................................ $ 75.9 million
Original Market Value ................................................................... $ 6.0 million
Increased Market Value ................................................................ $ 69.9 million
Less: Present Value of the Tax Increment
generated at 4.0% for the duration
of the Proposed Proposed District ..................................... $ 15.1 million
Net Increased Market Value .......................................................... $ 54.8 million
MMB: 4848-5078-6357, v. 1