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11-10551r RESOLUTION NO. 10551 RESOLUTION ADOPTING A MODIFICATION TO THE REDEVELOPMENT PLAN FOR RICHFIELD REDEVELOPMENT PROJECT AREA; AND ESTABLISHING THE LYNDALE GARDENS TAX INCREMENT FINANCING DISTRICTS 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 Richfield Housing and Redevelopment Authority (the "HRA") has heretofore established the Richfield Redevelopment Project Area and adopted the 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 Lyndale Gardens Tax Increment Financing District (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 469.1799, 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 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 having taxing jurisdiction over the property to be included in the District, a review of and written comment on the Plans by the City Planning Commission on July 25, 2011, approval of the Plans by the HRA on July 25, 2011, 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/or made a part of the City files and proceedings on the Plans. The Reports, including the redevelopment qualifications reports and planning documents, 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. 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 Lyndale Garden Center Site Tax Increment Financing District 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) of the Act. 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. 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 and remediate blight in an area of the City, to provide employment opportunities, to improve the tax base and to improve the general economy of the State 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 development 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 9th day of August, 2011. r f Debbie Goettel, Mayor ATTEST: Y\')`i6dtil knitit Nancy Gibbs ity Clerk 11 EXHIBIT A RESOLUTION NO. 10551 The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan (TIF Plan) for the Lyndale Gardens Tax Increment Financing District (District) as required pursuant to M.S., Section 469.175, Subd. 3 are as follows: 1. Finding that the District is a redevelopment district as defined in M.S., Section 469.174, Subd. 10(a)(1). The District consists of 4 parcels and it is proposed that these parcels be redeveloped for housing and commercial purposes. All parcels within the District are occupied by buildings, streets, utilities, paved or gravel parking lots or other similar structures, and the occupied parcels make up more than 70% of the area of the District. More than 50% of the buildings within the District (2 of 2 buildings), not including outbuildings, are structurally substandard to a degree of requiring substantial renovation or clearance. The substandard buildings are reasonably distributed throughout the District. The Council has specifically relied on a study conducted by LHB, Inc., dated July 22, 2011, and entitled "Report of Inspections and Results for Determining Qualifications of a Tax Increment Financing District as a Redevelopment District (Lyndale Gardens TIF District, Richfield, Minnesota)," which is included in the TIF Plan at Appendix F, to make these determinations. 2. 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. The anticipated development consists of three phases. The first phase will include the acquisition of property and the substantial rehabilitation of the Lyndale Garden Center in order to make it suitable for commercial use, including possible restaurant, retail, office, and community space. The second phase will include construction of approximately 100 units of rental housing, some of which will be affordable housing. The third phase will include another 80 units of rental housing. The redevelopment project requires acquisition of several parcels of property, demolition of one building, environmental remediation, site improvements, and substantial rehabilitation of the Lyndale Garden Center building. Current estimates of redevelopment costs are more than $30,000,000. The cost and scope of the proposed redevelopment make it unlikely to occur solely through private investment. The developer has submitted a pro forma to the City demonstrating that the costs of acquiring the land for all phases of the redevelopment project, demolition costs, environmental remediation costs, site improvements, and construction of certain public improvements are economically infeasible without the assistance provided in the TIF Plan. The developer has certified to the City that it would not acquire the property and construct the housing and commercial development without the requested assistance. In order to make the redevelopment of this blighted area feasible, and provide affordable housing to persons of moderate income within the City, TIF assistance is required to reduce the price of redevelopment costs. 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. The City believes that the comprehensive nature of the proposed commercial and housing development, which requires significant time and expense to acquire parcels necessary for the development and the substantial renovation of a structurally substandard building, would not occur without the requested TIF assistance. Specifically, the proposed combination of housing and commercial development in the District is necessary in order to make the redevelopment of the Lyndale Garden Center economically feasible for the developer. The Lyndale Garden Center is currently vacant and in very poor condition, has been cited for numerous code violations, and has attracted trespassers. The property has remained vacant for many years without any successful proposals to redevelop the site. Providing assistance to the developer for all three phases of the proposed development will ensure that the Lyndale Garden Center is rehabilitated and the site is incorporated into the surrounding development. Therefore, the City reasonably determines that no other development of similar scope is anticipated on this site without substantially similar assistance being provided for the development. To summarize the basis for the City's findings, the City makes the following determinations: a. The City's estimate of the amount by which the market value of the site will increase without the use of tax increment financing is $0 (for the reasons described above), except some unknown amount of appreciation. b. If the proposed development to be assisted with tax increment occurs in the District, the total increase in market value would be approximately $21,765,885. The increase in market value would be due primarily to substantial building rehabilitation and new construction within the District. (See Appendix D of TIF Plan and the table below.) 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 no more than $6,302,782. (See Appendix D of TIF Plan and the table below.) 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 $15,463,103 (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 of the Lyndale Garden Center project by private enterprise. The commercial and housing projects to be developed within the District and assisted with tax increment financing from the District will result in the redevelopment of blighted and underutilized land which currently has obsolete land use and substandard buildings, promotion of the development of affordable housing, promotion of commercial development, and preservation and enhancement of the tax base of the City.