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HomeMy WebLinkAbout2014-094 CITY OF STILLWATER COUNTY OF WASHINGTON STATE OF MINNESOTA Council member Menikheim introduced the following resolution and moved its adoption: RESOLUTION NO. 2014-094 RESOLUTION ADOPTING A MODIFICATION TO THE DEVELOPMENT PROGRAM FOR DEVELOPMENT DISTRICT NO. 1, THE ESTABLISHMENT OF TAX INCREMENT FINANCING DISTRICT NO. 11 (A REDEVELOPMENT DISTRICT) AND ADOPTING A TAX INCREMENT FINANCING PLAN THEREFOR; THE TERMINATION OF TAX INCREMENT FINANCING, PURSUANT TO AND IN ACCORDANCE WITH MINNESOTA STATUTES SECTIONS 469.124 TO 469.134 AND 469.174 TO 469.179 BE IT RESOLVED by the City Council (the "Council") of the City of Stillwater, Minnesota(the "City"), as follows: Section 1. Recitals. 1.01 The City Council (the "Council") of the City of Stillwater (the "City") has heretofore established Development District No. 1 and adopted the Development Program therefor. It has been proposed by the City that it adopt a modification to the Development Program for Development District No. 1, the establishment of Tax Increment Financing District No. 11 (a "Redevelopment District"), and adopt a Tax Increment Financing Plan (the "Plan") therefor, pursuant to and in accordance with Minnesota Statutes Sections 469.124 TO 469.134 and 469.174 to 469.179. 1.02 The City has investigated the facts relating to this action and has caused the documents needed to take this action to be prepared. 1.03 The City has performed all actions required by law to be performed prior to the establishment of the District and the adoption and approval of the proposed Plan, including, but not limited to, notification of Washington County and Independent School District No. 834 having taxing jurisdiction over the property to be included in the District, notification of the County Commissioner in whose district the City is located, and the holding of a public hearing upon published notice as required by law. 1.04 Certain written reports (the "Reports") relating to the Plan and to the activities contemplated therein have heretofore been prepared by staff and submitted to the Council and are made a part of the City files and proceedings on the Plan. The Reports include data, information and substantiation constituting or relating to 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 City is amending the Development Program for Development District No. 1, to accommodate the establishment of Tax Increment Financing District No. 11, but is not altering the boundaries of Development District No. 1. Section 2. Findings for the Adoption and Approval of the Plan. 2.01 The Council hereby finds that the Plans are intended and, in the judgment of this Council, the effect of such actions will be, to provide an impetus for development, having a public purpose and will accomplish the objectives as set forth in the Plan, which are hereby incorporated herein. Section 3. Findings for the Establishment of Tax Increment Financing District No. 11. 3.01 The Council hereby finds that the District is in the public interest and is a "redevelopment district" under Minnesota Statutes, Section 469.174, Subd. 10(a)(1). 3.02 The Council further finds that the proposed redevelopment would not occur solely through private investment within the reasonably foreseeable future and that the increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the District permitted by the Tax Increment Financing Plan, that the Plan conforms to the general plan for the development or redevelopment of the City as a whole; and that the Plan will afford maximum opportunity consistent with the sound needs of the City as a whole, for the development or redevelopment of the project by private enterprise. 3.03 The Council further finds, declares and determines that the City made the above findings stated in this Section and has set forth the reason and supporting facts for each determination in writing, attached hereby as Exhibit A. Section 4. Public Purpose. 4.01. The adoption of the Plan conforms in all respects to the requirements of the Act and will help fulfill a need to develop an area of the City which is already built up, to provide employment opportunities, to improve the tax base and to improve the general economy of the State and thereby serves a public purpose. Section 5. Approval and Adoption of the Plan: Establishment of Tax Increment Financing District No. 1. 5.01 The Plan, 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 Administrator. There is established in the City within Development District No. 1, Tax Increment Financing District No. 11, the initial boundaries which are fixed and determined in the Plan. 5.02 The staff of the City, the City's advisors and legal counsel are authorized and directed to proceed with the implementation of the Plan and to negotiate, draft, prepare and present to this Council for its consideration all further plans, resolutions, documents and contracts necessary for this purpose. 5.03 The Auditor of Washington County is requested to certify the original net tax capacity of the District, as described in the Plan, and to certify in each year thereafter the amount by which the original net tax capacity has increased or decreased; and the City of Stillwater City Council is authorized and directed to forthwith transmit this request to the County Auditor in such form and content as the Auditor may specify, together with a list of all properties within the District, for which building permits have been issued during the 18 months immediately preceding the adoption of this resolution. 5.04 The City Administrator is further authorized and directed to file a copy of the Plan with the Commissioner of Revenue. The Motion duly seconded by Council Member Weidner, and upon a vote being taken thereon, the following voted in favor thereof: Councilmembers Menikheim, Kozlowski, Weidner, Polehna and Mayor Harycki and the following voted against the same: None. Dated: June 3rd, 2014. CITY OF STILLWATER Ken;,0411.ai, Mayor ATTEST: AaliLe 2/62?2, Diane F. Ward, City Clerk EXHIBIT A The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan for Tax Increment Financing District No. 11, as required pursuant to Minnesota Statutes, Section 469.175, Subdivision 3, are as follows: 1. Finding that Tax Increment Financing District No. 11 is a redevelopment district as defined in Minnesota Statutes. Section 469.174, Subd. 10(a)(1). The District consists of 14 parcels. Each parcel is at least 70 percent occupied by buildings, streets, utilities, paved or gravel parking lots, or vacant, unused, inappropriately used rail yards, railroad right—of—way and excessive or abandoned railroad right—of—way. A parcel was not considered occupied unless it was at least 15% covered by buildings or paved parking lots. The total percentage of all qualifying property parcels was compared to the total area of all parcels to determine if the 70% requirement was met. The area occupied by public right-of-way has not been considered in the coverage test calculations. The study revealed that the total area of the District is 25, 369 square feet and 24,321 square feet are covered. Therefore, 96% of the area is covered well in excess of the required 70%. Further—Evaluation of each building was made by reviewing available information from city records and making interior and/or exterior evaluations. The evaluators noted deficiencies in structural elements, essential utilities and facilities, light and ventilation, fire protection including adequate egress, layout and condition of interior partitions, or similar factors. The inspection revealed substantial structural deficiencies in 100% of the structures. If action is not taken soon the structures are in significant danger of collapse and, in order to correct existing deficiencies in existing structures it would cost 36.6% of the cost of constructing new structures of the same square footage and type on the site. The above information is contained in the Redevelopment Eligibility Report prepared by the Community Development Department dated May 13, 2014, which report is on file in the Office of the City Clerk and which report is adopted by reference in these findings. 2. Finding that the proposed development, in the opinion of the City Council, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future and that the increased market value of the site that could reasonably be expected to occur within the use of tax increment financing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of tax Increment Financing District No. 11 permitted by the Plan. The proposed development, in the opinion of the City, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future: This finding is supported by the fact that the redevelopment proposed in this Plan meets the City's objectives for redevelopment. Due to the high cost of redevelopment on the parcels currently occupied by substandard buildings, and the cost of financing proposed improvements, development is feasible only through assistance, in part, from tax increment financing. The parcels in this site have remained undeveloped because of the high costs associated with building code compliance and the correction of deficiencies. This information is also contained in the Redevelopment Eligibility Reports. The increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the TIF District permitted by the Plan: The City supports this finding on the grounds that the cost of site and public improvements and utilities add unreasonably to the total redevelopment cost. Historically, site and public improvement costs in the plan area have made redevelopment unfeasible without tax increment assistance. Therefore, the City reasonably determines that no other redevelopment of similar scope is anticipated in the plan area without substantially similar assistance being provided to the development. The City finds that no development would occur in the plan area without the assistance that can be provided with tax increment. A comparative analysis of estimated market values both with and without establishment of the District and the use of tax increments has been performed as described above. If all development which is proposed to be assisted with tax increment were to occur in the District, the total increase in market value would be up to $9,333,702. The present value of tax increments from the District is estimated to be $3,556,544. It is the Council's finding that no development with a market value greater than $9,333,702 would occur without tax increment assistance in this district within 25 years. This finding is based upon evidence from general past experience with the high cost of acquisition and public improvements in the general area of the District (see Cash flow analysis in Exhibit B of the TIF Plan). 3. Finding that the Tax Increment Financing Plan for Tax Increment Financing District No. 11 conforms to the general plan for the development or redevelopment of the municipality as a whole. 4. Finding that the Tax Increment Financing Plan for Tax Increment Financing District No. 11 will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development or redevelopment of Development District No. 1 by private enterprise. The site contains remnants of old foundations, and dilapidated stone buildings, and ground water seepage have made development and redevelopment unfeasible. Redevelopment will require significant dewatering because of ground water seepage from the outcropping of limestone in the area. Redevelopment of Area with mixed uses that will provide maximum opportunity for the citizens of the City, consistent with the sound needs of the City for redevelopment of Area by private enterprise. 5. The project to be assisted by the District will result in increased employment in the City and the State of Minnesota, the renovation of substandard properties, increased tax base of the State and add a high quality development to the City.