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HomeMy WebLinkAboutResolution No. 090-17 - EconomicDevelopDistrict#54&TIF#54-1.RequestbyUrbanOnFirst,LLC RESOLUTION NO. 17-______ CITY OF ROCHESTER COUNTY OF OLMSTED STATE OF MINNESOTA RESOLUTION APPROVING AN ECONOMIC DEVELOPMENT DISTRICT AND ECONOMIC DEVELOPMENT PLAN THEREFOR AND APPROVING A REDEVELOPMENT 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. 54 (the “Development District”), adopt the Economic Development Plan for the Development District (the “Development Plan”), establish Redevelopment Tax Increment Financing District No. 54-1 (Urban on First, LLC Project) 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. 54 of the Rochester Economic Development Authority and Tax Increment Financing Plan for DMC Redevelopment Tax Increment Financing District No. 54-1 (Urban on First, LLC Project),” dated February 22, 2017, 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 TIF District is being established to facilitate the construction of a mixed use redevelopment project consisting of an approximately 6 story building to include approximately 156 market rate rental apartments, approximately 9,000 square feet of commercial area and approximately 156 structured parking stalls to be located south of 4th Street SW, between South Broadway and 1st Avenue SW, adjacent to the U.S. Bank property in the City to be owned by the Developer (the “Development”). 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 Urban on First, LLC, a Minnesota limited liability company (the “Developer”) as to the activities contemplated therein 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 494848v1 RC110-79 the Plans. The Reports include data, information and/or substantiation constituting or relating to (1) why the assistance satisfies the so-called “but for” test and (2) 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 located within the boundaries of the Destination Medical Center Development District as defined in Minnesota Statutes, Section 469.40, Subdivision 5, as amended (the “DMC District”) as adopted in the Destination Medical Center Development Plan as defined in Minnesota Statutes, Section 469.40, Subdivision 6, as amended (the “DMC Development Plan”). The DMCC approved the Development on February 8, 2017. 1.06. The EDA or the City 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. 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 tax increment financing district within the area of the destination medical center development district to fund public infrastructure projects” within the meaning of Minnesota Statutes, Section 469.45, Subd. 4. Pursuant to the DMC Act, the EDA may establish a redevelopment tax increment financing district within the DMC District without meeting the requirements for redevelopment districts created pursuant to the general TIF Act, specifically, Minnesota Statutes, Sections 469.174, subdivision 10. 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 foreseeable future and, therefore, the use of tax increment financing is deemed necessary. The specific basis for such finding being: The Development would not be developed in the reasonably foreseeable future at the density of housing units and commercial space currently proposed. The costs of structured parking necessary to enable higher density are higher than for surface parking typically used in private developments in this area of the City. The Developer has represented that 2 494848v1 RC110-79 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 uses contemplated on the property are in accordance with the existing or approved incentive zoning for the property. The Development is consistent with the DMC Development Plan. (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 proposed to occur within the TIF District to be completed, owned and operated by the Developer 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 Council 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 $19,874,448 which is the increase in the market value estimated to result from the proposed development (approximately $25,146,400, assuming no annual inflation) after subtracting the present value of the projected tax increments for the maximum duration of the TIF District (approximately $5,271,952). 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 and the Development District. 2.05. The provisions of this Section 2 are hereby incorporated by reference into and made a part of the TIF Plan. 2.06. 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. The City also intends that the EDA shall have and enjoy, with respect to the DMC Development District, the full range of powers and duties conferred upon the EDA pursuant to the Development Plan, the TIF Act, the DMC Act and such other legal authority as the EDA may have or enjoy from time to time. 3 494848v1 RC110-79 2.07. The Development District and the TIF District are hereby established and 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. 2.08. The Council finds that the Development is a public infrastructure project within the meaning of Minnesota Statutes, Section 469.40, subdivision 11, which provides for: acquiring real property and other assets associated with the real property; demolishing, repairing or rehabilitating buildings; installing, constructing or reconstructing elements of public infrastructure required to support the overall development of the DMC Development District; acquiring, constructing or reconstructing, or equipping parking facilities and other facilities to encourage intermodal transportation and public transit; making related site improvements; and preparing land for private development; and that the City approves the Development as consistent with the DMC Development Plan. Section 3. Interfund Loans. 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 in an amount up to $529,591, interest in an amount up to $4,010,237 and other project costs in an amount up to $6,052,000) 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 $10,591,828 outstanding at any time. (d) All Loans shall mature not later than February 1, 2045 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 Finance Director to specify a lower rate (but not less than the City’s then-current average investment return for similar amount and term). 4 494848v1 RC110-79 (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 22ND DAY OF FEBRUARY, 2017. _______________________________________ PRESIDENT OF SAID COMMON COUNCIL ATTEST: _________________________ CITY CLERK Approved this ____ day of February, 2017. _______________________________________ MAYOR OF SAID CITY (Seal of the City of Rochester, Minnesota) 5 494848v1 RC110-79 Councilmember _______________________ moved the adoption of the foregoing resolution, which motion was duly seconded by Councilmember _______________________, and upon vote being taken thereon, the following Councilmembers voted in favor thereof: and the following Councilmembers voted against the same: whereupon said resolution was declared duly passed on adopted. 6 494848v1 RC110-79 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 February 22, 2017, 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 Economic Development District No. 54 and Redevelopment Tax Increment Financing District No. 54-1 therein. WITNESS My hand this ____ day of February, 2017. _______________________________________ City Clerk Rochester, Minnesota 7 494848v1 RC110-79