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HomeMy WebLinkAboutResolution No. 187-15 - TIF - 501 on 1st187-15 F9 CITY OF ROCHESTER COUNTY OF OLMSTED STATE OF MINNESOTA RESOLUTION APPROVING AN ECONOMIC DEVELOPMENT DISTRICT AND ECONOMIC DEVELOPMENT PLAN THEREFOR AND APPROVING A TAX INCREMENT FINANCING DISTRICT AND A TAX INCREMENT FINANCING PLAN THEREFOR BE IT RESOLVED by the Common Council (the "Council") of the City of Rochester, Minnesota (the "City"), as follows: Section 1. Recitals. 1.01. It has been proposed that the Rochester Economic Development Authority (the "EDA") establish Economic Development District No. 46 (the "Development District"), adopt the Economic Development Plan for the Development District (the "Development Plan"), establish Tax Increment Financing District No. 46-1 within the Development District (the "TIF District") and adopt a Tax Increment Financing Plan therefor (the "TIF Plan" and, together with the Development Plan, the "Plans"), all pursuant to and in conformity with applicable law, including Minnesota Statutes, Sections 469.001 through 469.047, Sections 469.090 through 469.1082, Sections 469.174 through 469.1794 (the "TIF Act"), and Minnesota Statutes, Sections 469.40 to 469.47 (the "DMC Act"), all as amended (collectively, the "Act"); all as reflected in that certain document entitled in part "Economic Development Plan for Economic Development District No. 46 of the Rochester Economic Development Authority and Tax Increment Financing Plan for Tax Increment Financing District No. 46-1," dated April 20, 2015, and presented for the Council's consideration. 1.02. The Council has investigated the facts relating to the establishment of the Development District, the adoption of the Development Plan, the establishment of the TIF District and the adoption of the TIF Plan. 1.03. The City or the EDA has performed all actions required by law to be performed prior to the adoption and approval of the TIF Plan, including but not limited to notice to the County Commissioner representing the area of the County to be included in the TIF District, delivery of the TIF Plan to the County and School Board and the holding of a public hearing thereon by the City 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 501 on 1st, LLC, a Minnesota limited liability company (the "Company") as to the activities contemplated therein and the Redevelopment TIF District Assessment dated August 22, 2014, prepared by CRW Architecture & Design Group, Inc., in Rochester, Minnesota, (the "Redevelopment TIF Assessment") have heretofore been assembled or prepared by staff or others and submitted to the Council and/or made a part of the City and EDA files and proceedings on the Plans. The Reports include data, information and/or substantiation 459774v1 RC110-48 constituting or relating to (1) the "studies and analyses" on why the TIF District meets the requirements to be a redevelopment tax increment financing district, (2) why the assistance satisfies the so-called "but for" test and (3) 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 of this resolution to the same extent as if set forth in full herein. 1.05. The TIF District is being established to facilitate the acquisition, construction and equipping within the TIF District by the Company of an approximately 5-story, mixed -use development consisting of approximately 21,000 square feet of commercial and retail space on the street level, an approximately 84-unit market -rate rental housing facility, and related parking, to be owned and operated by the Company (the "Development"). Section 2. Findings for the Adoption and Approval of the Plans. 2.01. The Council hereby finds that the Development District is proper and desirable to establish in the City and the Development Plan will afford maximum opportunity, consistent with the needs of the City as a whole, for the development of the Development District by private enterprise. 2.02. The Council hereby finds that the TIF District is in the public interest and is a "redevelopment district" within the meaning of Minnesota Statutes, Section 469.174, Subdivision 10, because the TIF District consists of a project or portions of a project within which the following conditions, reasonably distributed throughout the TIF District, exist: (1) parcels consisting of at least 70% of the area of the TIF District are occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures; and (2) more than 50% of the buildings located within the TIF District are deemed "structurally substandard" (within the meaning of Minnesota Statutes, Section 469.174, Subdivision 10(b)) to a degree requiring substantial renovation or clearance. The TIF District consists of 4 parcels and all of the parcels are "occupied" as defined in Minnesota Statutes, Section 469.174, Subd. 10(a)(1) in that at least 15% of the area of the parcel is occupied by buildings, streets, utilities, paved or gravel parking lots or similar structures. Based on the Redevelopment TIF Assessment, the only building in the TIF District (100%, which is more than 50% of the buildings within the TIF District), is found to be structurally substandard, is not in compliance with applicable building codes, and could not be brought into such compliance at a cost of less than 15% of the cost of constructing new structures of the same size and type on the subject site. These findings are based in part upon on - site examination and written reports substantiating the structurally substandard nature of the building. The reasons and supporting facts for the determination that the TIF District is a redevelopment district under the statute are set forth in the Redevelopment TIF Assessment, which is incorporated herein by reference, and a copy of which is on file with the City Administrator. 2.03. The Council hereby makes the following additional findings in connection with the TIF District: (a) The Council further finds that the proposed development, in the opinion of the Council, would not occur solely through private investment within the reasonably 2 459774v1 RC110-48 foreseeable future and, therefore, the use of tax increment financing is deemed necessary. The specific basis for such finding being: The property on which the Development will occur would not be developed in the reasonably foreseeable future. The demolition, renovation and redevelopment costs are higher than for new development. The Company has represented that it could not proceed with the Development without tax increment assistance. (b) The Council further finds that the TIF Plan conforms to the general plan for the development or redevelopment of the City as a whole. The specific basis for such finding being: The TIF Plan will generally complement and serve to implement policies adopted in the City's comprehensive plan. The mixed -use commercial, retail and rental housing facility contemplated on the property is in accordance with the existing zoning for the property. (c) The Council further finds that the TIF Plan will afford maximum opportunity consistent with the sound needs of the City as a whole for the development of the TIF District by private enterprise. The specific basis for such finding being: The Development to proposed occur within the TIF District to be completed, owned and operated by the Company and will afford maximum opportunity for the development of the applicable parcels consistent with the needs of the City. The Development will increase the taxable market valuation of the City, and the available housing and commercial facilities in the City. (d) For purposes of compliance with Minnesota Statutes, Section 469.175, Subdivision 3(b)(2)(ii), the Board hereby finds that the increased market value of the site that could reasonably be expected to occur without the use of tax increment financing is approximately $0, which is less than $8,266,099 which is the increase in the market value estimated to result from the proposed development (approximately $11,638,900, assuming no annual inflation) after subtracting the present value of the projected tax increments for the maximum duration of the Tax Increment District, (approximately $3,372,801). Thus, the use of tax increment financing 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. 2.04. The City elects to retain all of the captured tax capacity to finance the costs of the TIF District. 2.05. In accordance with Minnesota Statutes, Section 469.47, Subdivision 4, the City and the EDA propose to provide funding for a public infrastructure project within the area that will be in the Destination Medical Center Development District as defined in Minnesota Statutes, Section 469.40, Subdivision 5, as amended after the effective date of the DMC Act but before the Destination Medical Center Development Plan as defined in Minnesota Statutes, Section 3 459774v1 RC110-48 469.40, Subdivision 6, as amended (the "DMC Plan") in anticipation that the TIF Plan and the Development will be approved by the Destination Medical Center Corporation as defined in Minnesota Statutes, Section 469.40, Subdivision 4, as amended. 2.06. The provisions of this Section 2 are hereby incorporated by reference into and made a part of the TIF Plan. 2.07. The Council further finds that the Plans are intended and in the judgment of the Council its effect will be to promote the public purposes and accomplish the objectives specified therein and in the DMC Plan. 2.08. 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. Upon approval by the EDA, City staff shall, in writing, request the Olmsted County Auditor to certify the new TIF District and file the Plans with the Commissioner of Revenue and the Office of the State Auditor. Section 3. Policy on Interfund Loans and Advances. 3.01. The Council hereby approves a policy on interfund loans or advances ("Loans") for the TIF District, as follows: (a) The authorized tax increment eligible costs (including without limitation out-of-pocket administrative expenses) payable from the TIF District, as its TIF Plan is originally adopted or may be amended, may need to be financed on a short-term and/or long-term basis via one or more Loans, as may be determined by the City Finance Director from time to time. (b) The Loans may be advanced if and as needed from available monies in the City's general fund or other City fund designated by the City Finance Director. Loans may be structured as draw -down or "line of credit" obligations of the lending fund(s). (c) Neither the maximum principal amount of any one Loan nor the aggregate principal amount of all Loans may exceed the adopted and, if applicable, amended TIF Plan budget for the TIF District. (d) The maximum term of any Loan shall not exceed the lesser of the statutory duration limit of the TIF District or such earlier date as the City Finance Director may specify in writing. All Loans may be pre -paid, in whole or in part, whether from tax increment revenue, tax increment revenue bond proceeds or other eligible sources. (e) The outstanding and unpaid principal amount of each Loan shall bear interest at the rate prescribed by the statute (Minnesota Statutes, Section 469.178, Subdivision 7), which is the greater of the rates specified under Sections 270C.40 or 549.09 at the time a Loan, or any part of it, is first made, subject to the right of the City 4 459774v1 RC110-48 Finance Director to specify a lower rate (but not less than the City's then -current average investment return for similar amount and term). (f) Such Loans within the above guidelines are pre -approved. The Loans need not take any particular form and may be undocumented, except that the City Finance Director shall specify the principal amount and interest rate and maintain all necessary or applicable data on the Loans. PASSED AND ADOPTED BY THE COMMON COUNCIL OF THE CITY OF ROCHESTER, MINNESOTA, THIS 20TH DAY OF APRIL, 2015. ,Z444A:�� )RESIDENT SAID COMMON COUNCIL ATTEST: CITY CLERK Approved this [29 day of April 2015. 0C OV 'ro 4: QD 0 5 459774v1 RCI 10-48 Councilmember Wojcik moved the adoption of the foregoing resolution, which motion was duly seconded by Councilmember Campion, and upon vote being taken thereon, the following Councilmembers voted in favor thereof: All and the following Councilmembers voted against the same: None whereupon said resolution was declared duly passed on adopted. 6 459796v1 RC110-48 CITY CLERK'S CERTIFICATE I, the undersigned, being the duly qualified and acting City Clerk of the City of Rochester, 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 Common Council of said City held on April 20, 2015, 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 actions referenced therein with respect to the EDA's Development District No. 46 and Tax Increment Financing District No. 46-1 therein. WITNESS My hand this 21" day of April, 2015. City Clerk Rochester, Minnesota