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98-8579r RESOLUTION NO. 8579 37 RESOLUTION MODIFYING THE RICHFIELD REDEVELOPMENT PROJECT AREA AND ADOPTING THE MODIFICATION TO THE REDEVELOPMENT PLAN THERETO; AND ESTABLISHING WITHIN REDEVELOPMENT PROJECT AREA THE GRAMERCY TAX INCREMENT FINANCING DISTRICT AND ADOPTING THE RELATED TAX INCREMENT FINANCING PLAN THERETO 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 Richfield Housing and Redevelopment Authority (the "Authority") has heretofore established the Richfield Redevelopment Project Area (the "Redevelopment Project") and adopted the Redevelopment Plan with respect thereto and it has been proposed that the Authority establish within the Redevelopment Project the Gramercy Tax Increment Financing District and approve and adopt the related Tax Increment Financing Plan therefor (the "TIF Plan") and the modification to the existing Redevelopment Plan therefor (the "Modification"); all pursuant to and in conformity with applicable law, including Minnesota Statutes, Sections 469.001 through 469.047 and 469.174 through 469.179, inclusive, as amended; all as reflected in the TIF Plan, and presented for the Council's consideration. 1.02. The Council has investigated the facts relating to the TIF Plan. 1.03. The City has performed all actions required by law to be performed prior to the establishment of the Gramercy Tax Increment Financing District and the adoption and approval of the proposed Modification and TIF Plan relating thereto, including, but not limited to, notification of Hennepin County and School District No. 280 having taxing jurisdiction over the property to be included in the Gramercy Tax Increment Financing District, a review of and written comment on the TIF Plan by the City Planning Commission, and the holding of a public hearing upon published notice as required by law. 1.04. Certain written reports (the "Reports") relating to the TIF Plan and to the activities contemplated therein have heretofore been prepared by staff and submitted to the Council and/or made a part of the City or Authority files and proceedings on the TIF Plan. The Reports include data, information and/or substantiation constituting or relating to (1) the "studies and analyses" on why the new Tax Increment District meets 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. Section 2. FindinQs for the Approval of the Modification and the TIF Plan. 2.01. The Council hereby finds that the Modification and the establishment of the Gramercy Tax Increment Financing District and the TIF Plan, are intended and, in the judgment of this Council, the effect of such actions will be, to provide an impetus for redevelopment in the public purpose and accomplish certain objectives as specified in the TIF Plan, which are hereby incorporated herein. Resolution No. 8'579 -2- Section 3. Findings for the Establishment of the Gramercy Tax Increment Financing District. 3.01. The Council hereby finds that the Gramercy Tax Increment Financing District is a redevelopment district under Minnesota Statutes, Section 469.174, subd. 10 (a)(1). 3.02. The Council further finds that the proposed redevelopment, in the opinion of the Council, would not occur solely through private investment within the reasonably foreseeable future and that the increased market value on 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, that the TIF Plan conforms to the general plan for the development or redevelopment of the City as a whole; and that the TIF Plan will afford maximum opportunity consistent with the sound needs of the City as a whole, for the development of the Gramercy Tax Increment Financing District by private enterprise. 3.03. The City elects to make a qualifying local contribution in accordance with Minnesota Statutes, Section 273.1399, subd. 6(d), in order to qualify the Gramercy Tax Increment Financing District for exemption from state aid losses set forth in Section 273.1399. 3.04. 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. 3.05. The City of Richfield elects to calculate fiscal disparities for this District in accordance with Minnesota Statutes, Section 469.177, subdivision 3, clause b, which means the fiscal disparities contribution will be taken from within the District. Section 4. Approval of the Modification and TIF Plan. 4.01. The Modification and the TIF Plan, as presented to the Council on this date, including without limitation the findings and statements of objectives contained therein, is hereby approved, ratified, established, and adopted and shall be placed on file in the office of the City Clerk. 4.02. The staff of the City, the City's advisors and legal counsel are authorized and directed to proceed with the implementation of the TIF 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. 4.03 The Auditor of Hennepin County is requested to certify the original net tax capacity of the Gramercy Tax Increment Financing District, as described in the TIF 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 Richfield 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 Gramercy Tax Increment Financing District, for which building permits have been issued during the 18 months immediately preceding the adoption of this resolution. Resolution No. 8579 -3- 4.04. The City is further authorized to file the Modifications to the Redevelopment Plan for the Richfield Redevelopment .... Project Area and the Tax Increment Financing Plan for the Gramercy Tax Increment Financing District with the Commission of Revenue. Adopted by the City Council of the City of Richfield, Minnesota this 22nd day of June, 1998. h~~ )W Martin J. Kirsc ayor ATTEST: ~WWJPr;;lu- Thomas P. Ferber, City Clerk Resolution No. 8579 EXHIBIT A RESOLUTION #8579 The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan for the Gramercy Tax Increment Financing District as required pursuant to Minnesota Statutes, Section 469.175, Subdivision 3 are as follows: 1. Finding that the Gramercy District is a redevelopment district as defined in M.S., Section 469.174, Subd. 10(a)(1). The Gramercy District consists of 9 parcels, with plans to redevelop the area for residential and commercial/retail purposes. At least 70 percent of the area in the parcels in the Gramercy District are occupied by buildings, streets, utilities, or other improvements and more than 50 percent of the buildings in the Gramercy District, not including outbuildings, are structurally substandard to a degree requiring substantial renovation or clearance (See Appendix E). 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 Gramercy District 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 development proposed in this plan is a senior housing cooperative that meets the City's objectives for redevelopment. The HRA currently owns certain property within the VFW facility and the mixed-use commercial/retail and housing component site area, but the cost of site and public improvements and acquisition of the other properties in the district by the developer makes the proposed development infeasible without City assistance. The developer of the senior housing cooperative and VFW facility has submitted a pro forma on file in City Hall demonstrating the need for the assistance, and the developer has certified to the City that financing for the project would not be available but for the tax increment assistance to be provided under this plan. The increased market value of the site that could reasonable 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 T1F District permitted by the Plan: The City supported this finding on the grounds that the cost of site and public improvements and acquiring the property adds to the total redevelopment cost. Since the late 1970's/early 1980's the HRA has intended to redevelop the subject site area. The majority of the area south of 66th Street and west of Lyndale Avenue has been identified for redevelopment since 1975. In the late 1970's the HRA purchased property which subsequently provided a site for the Lake Shore Condominiums. Since that time various proposals have been advanced for other portions of the area but none have moved beyond the conceptual stage. Resolution No. 8579 Historically, site development costs in this area have made development infeasible without tax increment assistance. Therefore, the City reasonably determines that no other development of any kind is anticipated on this site without substantially similar assistance being provided to the housing development. Accordingly, the increased market value anticipated without tax increment assistance is $0. A comparative analysis of estimated market values both with and without establishment of the Gramercy Redevelopment Tax Increment Financing 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 Gramercy District, the total increased market value would be up to $50,335,744. The present value of the tax increment from the Gramercy District is estimated to be $12,110,673. It is the Council's finding that no development with a market value of greater than $38,225,071 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 and site improvements in the general area of the Gramercy District (see the but/for analysis in the cashflow in Appendix C). 3. Finding that the Tax Increment Financing Plan for the Gramercy District conforms to the general plan for the redevelopment of the municipality as a whole. The Planning Commission found that the Plan conforms to the general development plan of the City and approved the Plan on May 26, 1998. 4. Finding that the Tax Increment Financing Plan for the Gramercy District will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development or redevelopment of the Richfield Redevelopment Project Area by private enterprise. The project to be assisted by the Gramercy District will result in the renovation of substandard properties, increased tax base of the State, the addition of a high quality development to the City and provide certain housing components to the City which do not exist.