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Res 2020-47 Mod TIF Dist for Holly CenterRESOLUTION NO. 2020 - 47 A RESOLUTION MODIFYING THE REDEVELOPMENT PLAN FOR REDEVELOPMENT PROJECT NO. 1 AND THE TAX INCREMENT FINANCING PLANS FOR TAX INCREMENT FINANCING DISTRICTS NOS. 6, 11-13 and 17-24 TO REFLECT INCREASED PROJECT COSTS AND INCREASED BONDING AUTHORITY WITHIN REDEVELOPMENT PROJECT NO. 1, CREATING TAX INCREMENT FINANCING DISTRICT NO. 25 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, 11-13 and 17-24 (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. 25 ((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. 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 Resolution No. 2020 – 47 Page 2 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 receiving tax increment assistance after deducting the present value of projected tax increments for the maximum duration of the Proposed District. Resolution No. 2020 – 47 Page 3 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 is 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. TH PASSED AND ADOPTED BY THE COUNCIL OF THE CITY THIS 14 DAY OF SEPTEMBER, 2020. ____________________________________ SCOTT J. LUND - MAYOR ATTEST: __________________________________ DANIEL TIENTER - CITY CLERK CERTIFICATION I, Daniel Tienter, 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. 2020 - 47 passed by th the City Council on the 14 day of September, 2020. _____________________________________ DANIEL TIENTER - CITY CLERK Resolution No. 2020 – 47 Page 4 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 XXVII-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. 2020 – 47 Page 5 EXHIBIT B – 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 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 8.42 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 one 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 June 25, 2020. 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 10,000 square feet of commercial retail/office space and 261 market-rate workforce rental housing units. Upon completion of the proposed redevelopment it is anticipated that the City’s tax base will increase by approximately $31.5 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. 2020 – 47 Page 6 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 $5,000,000. City staff has 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 approximately 10,000 square feet of retail and 261 multi-family market rate workforce rental units with an estimated market value of approximately $36.5 million. After deducting the original market value of $5.0 million from the estimated market value of $36.5 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 $31.5 million. City staff has further determined that the total amount of tax increment generated over the 26 year term of the Proposed District approximates $18.4 million. Assuming the same term and a present value rate of 4.0%, the present value of $18.4 million approximates $9.75 million. After deducting the present value of the tax increment ($9.75 million) from the increase in estimated market value occurring as a result of utilizing tax increment assistance ($31.5 million), the net increase in estimated market values approximates $21.75 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 ($0.0 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 ($21.75 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. 2020 – 47 Page 7 SCHEDULE 1 TO EXHIBIT B – NUMERICAL “BUT FOR” ESTIMATED MARKET VALUE INCREASE FOR A DEVELOPMENT PROJECT WITHOUT TIF ASSISTANCE Without tax increment assistance there would be minimal, if any, increase in market value. Estimated Market Value ................................................................ $ 0.00 million Original Market Value .................................................................... $ 5.00 million Increased Market Value ................................................................ $ 0.00 million ESTIMATED MARKET VALUE INCREASE FOR A DEVELOPMENT PROJECT WITH TIF ASSISTANCE With tax increment assistance it is proposed that approximately 10,000 square feet of retail and 261 units of multi-family market rate workforce rental units will be constructed over three years. Estimated Market Value ................................................................ $ 36.50 million Original Market Value .................................................................... $ 5.00 million Increased Market Value ................................................................ $ 31.50 million Less: Present Value of the Tax Increment generated at 4.0% for the duration of the Proposed Proposed District ..................................... $ 9.75 million Net Increased Market Value .......................................................... $ 21.75 million