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14-10921r CITY OF RICHFIELD HENNEPIN COUNTY STATE OF MINNESOTA RESOLUTION NO. 10921 RESOLUTION ADOPTING A MODIFICATION TO THE REDEVELOPMENT PLAN FOR THE RICHFIELD REDEVELOPMENT PROJECT AREA AND ESTABLISHING THE 2014-1 TAX INCREMENT FINANCING DISTRICT (CITY GARAGE SITE) THEREIN AND ADOPTING A TAX INCREMENT FINANCING PLAN THEREFOR. BE IT RESOLVED by the City Council(the "Council")of the City of Richfield,Minnesota(the "City"), as follows: Section 1. Recitals 1.01. The Board of Commissioners of the Housing and Redevelopment Authority in and for the City of Richfield(the "HRA")has heretofore established the Richfield Redevelopment Project Area and adopted a Redevelopment Plan therefor. It has been proposed by the HRA and the City that the City adopt a Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area(the "Redevelopment Plan Modification") and establish the 2014-1 Tax Increment Financing District(City Garage Site)(the "District")therein and adopt a Tax Increment Financing Plan(the "TIF Plan")therefor (the Redevelopment Plan Modification and the TIF Plan are referred to collectively herein as the "Plans"); all pursuant to and in conformity with applicable law, including Minnesota Statutes, Sections 469.001 to 469.047 and Sections 469.174 to 469.1794, all inclusive, as amended, (the "Act")all as reflected in the Plans, and presented for the Council's consideration. 1.02. The HRA and City have investigated the facts relating to the Plans and have caused the Plans to be prepared. 1.03. The HRA and City have performed all actions required by law to be performed prior to the modification of the Redevelopment Plan and the establishment of the District and the adoption and approval of the proposed Plans, including, but not limited to, notification of Hennepin County and Independent School District No. 280, a review of and written comment on the Plans by the City Planning Commission, approval of the Plans by the HRA on February 18, and the holding of a public hearing upon published notice as required by law. 1.04. Certain written reports(the"Reports")relating to the Plans and to the activities contemplated therein have heretofore been prepared by staff and consultants and submitted to the Council and made a part of the City files and proceedings on the Plans. The Reports, including the redevelopment qualifications report, include data, information and/or substantiation constituting or relating to the basis 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 not modifying the boundaries of Richfield Redevelopment Project Area, but is however, modifying the Redevelopment Plan therefor. 1.06. On the date hereof,the City Council held a duly-noticed public hearing regarding the creation of the District and the adoption of the Plans. Section 2. Findings for the Adoption and Approval of the Redevelopment Plan Modification. 2.01. The Council approves the Redevelopment Plan Modification, and specifically finds that: (a)the land within the Project area would not be available for redevelopment without the financial aid to be sought under this Redevelopment Plan; (b)the Redevelopment Plan, as modified,will afford maximum opportunity, consistent with the needs of the City as a whole, for the development of the Project by private enterprise; and(c)that the Redevelopment Plan, as modified, conforms to the general plan for the development of the City as a whole. Section 3. Findings for the Establishment of the 2014-1 Tax Increment Financing District(City Garage Site) 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 of the Act, based on the Reports and the findings set forth in the TIF Plan. 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 Plans conform to the general plan for the development or redevelopment of the City as a whole; and that the Plans will afford maximum opportunity consistent with the sound needs of the City as a whole, for the development or redevelopment of the District 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 reasons and supporting facts for each determination in writing, attached hereto as Exhibit A. 3.04. The Richfield Housing and Redevelopment Authority elects to calculate fiscal disparities for the District in accordance with Minnesota Statutes, Section 469.177, Subd. 3, clause b,which means the fiscal disparities contribution would be taken from inside the District. 3.5. The reasons and facts supporting the findings set forth in this resolution are further stated in the Plans, which are incorporated herein by reference. Section 4. Public Purpose 4.01. The adoption of the Plans conforms in all respects to the requirements of the Act and will help fulfill a need to redevelop an area of the City which is already built up,to improve the tax base and to improve the general economy of the State and the City, and thereby serves a public purpose. For the reasons described in Exhibit A,the City believes these benefits directly derive from the tax increment assistance provided under the TIF Plan. A private developer will receive only the assistance needed to make this redevelopment financially feasible. As such, any private benefits received by a developer are incidental and do not outweigh the primary public benefits. Section 5. Approval and Adoption of the Plans 5.01. 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 Community Development Director. 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 Plans 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 Hennepin County is requested to certify the original net tax capacity of the District, as described in the Plans, and to certify in each year thereafter the amount by which the original net tax capacity has increased or decreased; and the Richfield Housing and Redevelopment Authority 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 Community Development Director is further authorized and directed to file a copy of the Plans with the Commissioner of the Minnesota Department of Revenue and the Office of the State Auditor pursuant to Minnesota Statutes 469.175, Subd. 4a. Adopted by the City Council of the City of Richfield, Minnesota this 25th day of February, 2014. Debbie Goettel, Mayor ATTEST: Nancy Gibbs, Clerk EXHIBIT A RESOLUTION NO. 10921 The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan (TIF Plan)for 2014-1 Tax Increment Financing District(City Garage Site) (District), as required by Minnesota Statutes, Section 469.175, Subdivision 3 are as follows: I. Finding that 2014-1 Tax Increment Financing District(City Garage Site) is a redevelopment district as defined in M.S., Section 469.174, Subd. 10. The District consists of five parcels, with plans to redevelop the area for rental housing purposes. At least 70 percent of the area of the parcels in the District are occupied by buildings, streets, utilities, paved or gravel parking lots or other similar structures and more than 50 percent of the buildings in the District, not including outbuildings, are structurally substandard to a degree requiring substantial renovation or clearance. (See Appendix F of the TIF Plan for a report supporting 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 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 TIF 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 the TIF Plan meets the City's objectives for redevelopment. Due to the high cost of redevelopment on the parcels currently occupied by substandard buildings,the limited amount of property for development and expansion adjacent to the existing project,the incompatible land uses at close proximity, and the cost of financing the proposed improvements, this project is feasible only through assistance, in part, from tax increment financing. The City and HRA will use a portion of the tax increment to pay for demolition and clean-up costs on the site. A developer for the site has not been selected; however, prior to providing assistance the developer will be required to provide a letter and a proforma as justification that the developer needs tax increment assistance to be able to redevelop the site. 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 District permitted by the TIF Plan: This finding is justified on the grounds that the cost of a clean and developable site adds significant costs to the cost of redeveloping the property within the District. Demolition of existing substandard buildings and environmental clean- up costs are estimated at $300,000. The City anticipates expenses related to clean-up of contaminated soils and asbestos abatement, based on the previous use of the site and the petroleum products stored on the site. In addition,the City anticipates the area to be developed as multi-family housing, and based on previous development analysis, the projected rents will be too low to support market rate rents. Historically, site costs in this area have made redevelopment infeasible without tax increment assistance. This site has been marketed for over nine years and been considered by several potential developers, but has not been able to be redeveloped. The City and HRA will use tax increment to demolish the substandard buildings and clean-up the site. The City reasonably determines that no other redevelopment is anticipated on this site without assistance being provided to the development. Therefore,the City concludes as follows: a. The City's estimate of the amount by which the market value of the entire District will increase without the use of tax increment financing is $0. b. If the proposed development occurs, the total increase in market value will be $13,727,747 (see Appendix D and G of the TIF Plan) c. The present value of tax increments from the District for the maximum duration of the district permitted by the TIF Plan is estimated to be $4,549,031 (see Appendix D and G of the TIF Plan). d. Even if some development other than the proposed development were to occur, the Council finds that no alternative would occur that would produce a market value increase greater than $9,178,716 (the amount in clause b less the amount in clause c) without tax increment assistance. 3. Finding that the TIF Plan for the District conforms to the general plan for the development or redevelopment of the municipality as a whole. The Planning Commission reviewed the TIF Plan and found that the TIF Plan conforms to the general development plan of the City. 4. Finding that the TIF Plan for the District will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development or redevelopment of Richfield Redevelopment Project Area by private enterprise. The project to be assisted with Tax Increment from the District will result in the renovation of substandard properties and increased tax base of the State and City. In addition, through the implementation of the TIF Plan, the HRA or City will increase the availability of safe and decent multi-family housing in the City.