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HomeMy WebLinkAbout2023-061 CCRMember Butler introduced the following resolution and moved its adoption: CITY OF BROOKLYN CENTER, MINNESOTA RESOLUTION NO.2023-61 RESOLUTION REMOVING CERTAIN PARCELS FROM TAX INCREMENT FINANCING DISTRICT NO. 6, APPROVING A MODIFICATION TO THE REDEVELOPMENT PLAN FOR HOUSING DEVELOPMENT AND REDEVELOPMENT PROJECT NO. I. ESTABLISHING TAX INCREMENT FINANCING DISTRICT NO. 10: WANGSTAD COMMONS (A HOUSING DISTRICT) THEREIN AND APPROVING A TAX INCREMENT FINANCING PLAN THEREFOR WHEREAS, the City of Brooklyn Center, Minnesota (the "City") and the Brooklyn Center Economic Development Authority, a public body corporate and politic (the "EDA"), have undertaken a program to promote economic development and job opportunities, promote the development and redevelopment of land which is underutilized within the City and have created a redevelopment project known as Housing Development and Redevelopment Project No. 1 (the "Redevelopment Project") in the City, pursuant to Minnesota Statutes, Sections 469.001 to 469.047 and Sections 469.090 to 469.1081, all inclusive, as amended, (collectively, the "Redevelopment Project Act"), administered by the EDA; and WHEREAS, the City and the EDA have heretofore established Tax Increment Financing District No. 6, a housing tax increment financing district ("TIF District No. 6"), within the Redevelopment Project and approved a tax increment financing plan therefor (the "TIF No. 6 Plan"), all pursuant to and in conformity with applicable law, including Minnesota Statutes, Sections 469.174 through 469.1794, as amended (the "TIF Act" and, together with the TIF Act and the Redevelopment Project Act, the "Act") and the Redevelopment Project Act; and WHEREAS, among others, the parcels currently identified as follows (the "Parcels") were included in TIF District No. 6: 34-119-21-43-0049, 34-119-21-43-0050, 34-119-21-43-0051, and 34-119-21-43-0052; and WHEREAS, the City desires by this resolution to amend the TIF No. 6 Plan to remove the Parcels from TIF District No. 6 and include them in TIF District No. 10 (as hereinafter defined), thereby reducing the size of TIF District No. 6 (the "TIF No. 6 Plan Modification"); and WHEREAS, the Parcels being removed from the TIF District No. 6 are exempt from property taxation because they are owned by the EDA and have a current net tax capacity below the net tax capacity of those Parcels in the original net tax capacity thereof; therefore, the City Council held a public hearing on the date hereof on the removal of the Parcels from TIF District No. 6 pursuant to Section 469.175, Subdivision 4 of the TIF Act; and BR291-422-864841.v2 RESOLUTION NO.2023-61 WHEREAS, it has been proposed that the EDA modify the redevelopment plan for the Redevelopment Project (the "Redevelopment Plan"); establish Tax Increment Financing District No. 10: Wangstad Commons, a housing tax increment financing district ("TIF District No. 10"), within the Redevelopment Project; remove the Parcels from TIF District No. 6 and include them in TIF District No. 10; adopt the Tax Increment Financing Plan (the "TIF No. 10 Plan" and, together with the Redevelopment Plan and the TIF No. 6 Plan Modification, the "Plans") for TIF District No. 10; and authorize the execution of certain agreements and documents related thereto (as further described and defined herein); all pursuant to and in conformity with the Act, and all as reflected herein and in that certain document entitled in part "Modification to the Redevelopment Plan - Housing Development and Redevelopment Project No. 1 and Tax Increment Financing (TIF) Plan - Establishment of Tax Increment Financing District No. 10: Wangstad Commons (a housing district)" and presented for consideration by the Council; and WHEREAS, the Council has investigated the facts relating to the Plans and certain information and material (collectively, the "Materials") relating to the TIF No. 10 Plan and to the activities contemplated in TIF District No. 10 have heretofore been prepared and submitted to the Council and/or made a part of the City files and proceedings on the TIF No. 10 Plan. The Materials include the tax increment application made, project pro forma financial statement, project sources and uses and other information supplied by JO Companies, LLC (or an affiliate thereof, the "Developer") as to the activities contemplated therein, the items listed under the heading "Supporting Documentation" in the TIF No. 10 Plan, and information constituting or relating to (1) why the assistance satisfies the so-called "but for" test and (2) the basis for the other findings and determinations made in this resolution. The Council hereby confirms, ratifies and adopts the Materials, 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; and WHEREAS, the City has performed all actions required by law to be performed prior to the adoption and approval of the Plans, including but not limited to notice to the County Commissioner representing the area of the County to be removed from TIF District No. 6 and included in TIF District No. 10, delivery of the Plans to Hennepin County and Independent School District No. 279, and holding a public hearing thereon by the City on the date hereof following notice thereof published in accordance with state law; and WHEREAS, the Council has considered the documentation submitted in support of TIF District No. 10 and the Plans and has considered the information and knowledge gained in hearings upon and during consideration of other matters relating to the proposed development; and WHEREAS, TIF District No. 10 is being established to facilitate the construction by the Developer of an approximately 54-unit multi -family rental housing facility and related amenities and improvements (the "Development") in the City. NOW, THEREFORE, BE IT RESOLVED by the City Council (the "Council") of the City of Brooklyn Center, Minnesota (the "City"), as follows: 2 BR291422-864841.v2 RESOLUTION NO.2023-61 Section 1. Findings for the Adoption and Approval of the TIF No. 6 Plan Modification. 1.01. The Council hereby reaffirms the original findings for TIF District No. 6 and the findings made in connection with all subsequent modifications, including that, (i) the proposed development of the property in TIF District No. 6 would not have occurred solely through private investment within the reasonably foreseeable future; (ii) the increased market value of the property therein 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 No. 6 Plan; (iii) that the TIF No. 6 Plan Modification conforms to the general plan for the development or redevelopment of the City as a whole; and (iv) that the TIF No. 6 Plan Modification 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. The findings set forth in the TIF No. 6 Plan are reaffirmed and incorporated herein by reference and made a part hereof as if fully set forth herein. The TIF No. 6 Plan Modification does not affect the estimated fiscal impacts of TIF District No. 6 on the local taxing jurisdictions provided in connection with the adoption of the original TIF No. 6 Plan because the development described therein was not located on the Parcels. 1.02. The adoption of the TIF No. 6 Plan Modification conforms in all respects to the requirements of the Act and will provide necessary housing, help provide opportunities for additional development and will promote the public purposes and accomplish the objectives specified in the TIF No. 6 Plan and the Redevelopment Plan. 1.03. TIF District No. 6 and the TIF No. 6 Plan are hereby amended to remove the Parcels and the TIF No. 6 Plan Modification is hereby approved. Approval of the TIF No. 6 Plan Modification does not constitute approval of any project or a development agreement with any developer. 1.04. City staff are authorized to file this resolution as evidence of the TIF No. 6 Plan Modification with the Commissioner of Revenue, the Office of the State Auditor and the Hennepin County Auditor. Section 2. Findings for the Adoption and Approval of the Plans. 2.01. The Council hereby finds that the boundaries of the Redevelopment Project are not being expanded and the Redevelopment Plan is not being modified other than to adopt the TIF No. 6 Plan Modification and to incorporate the establishment of TIF District No. 10 therein and therefore the Council reaffirms the findings and determinations originally made in connection with the establishment of the Redevelopment Project and the adoption of the Redevelopment Plan therefor. The Council hereby finds that: (a) the land within the Redevelopment Project would not be available for redevelopment without the financial aid to be sought under the Plans; (b) the Plans will afford maximum opportunity, consistent with the needs of the City as a whole, for the 3 BR291-422-864841.v2 development of the Redevelopment Project by private enterprise; and (c) the Plans conform to the general plan for the development of the City as a whole, and otherwise promotes certain public purposes and accomplishes certain objectives as specified in the Plans, including without limitation the development of affordable housing. The purposes and development activities set forth in the Redevelopment Plan, as modified, are hereby expanded to include all development and redevelopment activities occurring within TIF District No. 10. 2.02. The Council hereby finds that TIF District No. 10 is in the public interest and is a "housing district" within the meaning of Minnesota Statutes, Section 469.174, Subdivision 11, because it consists of a project or a portion of a project, intended for occupancy, in part, by persons or families of low and moderate income as defined in Chapter 462A, Title II of the National Housing Act of 1934; the National Housing Act of 1959; the United States Housing Act of 1937, as amended; Title V of the Housing Act of 1949, as amended; and any other similar present or future federal, state or municipal legislation or the regulations promulgated under any of those acts. No more than 20% of the square footage of buildings in the Development that receive assistance from tax increments will consist of commercial, retail or other nonresidential uses. The Development to be constructed in TIF District No. 10 will consist of approximately 54 units of rental housing. The Developer has represented that at least 40% of the rental housing units (i.e., 22 units) will be rented to and occupied by individuals or families whose income is not greater than 60% or less of area median income and that no more than 20% of the square footage of buildings in the Development that receive assistance from tax increments will consist of commercial, retail, or other nonresidential uses. 2.03. The Council hereby makes the following additional findings in connection with TIF District No. 10: (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 rents for affordable housing projects do not provide a sufficient return on investment to stimulate new development. The Developer has represented that it could not proceed with the Development without the tax increment assistance to be provided to the Developer. The Developer has provided the City its estimated Development proforma outlining project sources and uses as well as projected rent, vacancy and financing assumptions. City staff and the City's advisors reviewed the information and have determined the Development is not feasible without the proposed assistance due to anticipated rent levels and market returns not supporting the development costs. Based on the review, the City does not expect that a development of this type would occur in the reasonably foreseeable future but for the use of tax increment assistance. (b) The Council further finds that the TIF No. 10 Plan conforms to the general plan for the development or redevelopment of the City as a whole. The specific basis for such finding being: 4 BR291-422-864841.v2 Subject to the approval by the Council of proposed changes to the City's Comprehensive Plan and applicable zoning to be considered on the date hereof, the TIF No. 10 Plan will conform with the general development plan of the City and will generally complement and serve to implement policies adopted in the City's comprehensive plan. The Development contemplated on the property will be in accordance with the zoning, as amended, or approved zoning variances for the property. (c) The Council further finds that the TIF No. 10 Plan will afford maximum opportunity consistent with the sound needs of the City as a whole for the development of TIF District No. 10 by private enterprise. The specific basis for such finding being: The proposed Development to occur within TIF District No. 10 is the construction by private enterprise of primarily low and moderate income multi -family rental housing. The Development will increase the taxable market valuation of the City, and the number of available low and moderate income multi -family housing units in the City. Through the implementation of the TIF No. 10 Plan, the EDA will provide an impetus for residential development, which is desirable or necessary for the increased population and the increased need for workforce and affordable housing within the City. The TIF No. 10 Plan also helps the City meet its goal of providing more affordable housing options in the City. 2.04. The City elects to retain all of the captured tax capacity to finance the costs of TIF District No. 10 and the Redevelopment Project and elects to delay the receipt of the first increment until tax payable year 2025. Pursuant to Minnesota Statutes, Section 469.177, Subd. 3, the City elects to calculate fiscal disparities under clause (b) (inside). 2.05. The provisions of this Section 1 are hereby incorporated by reference into and made a part of the TIF No. 10 Plan and the findings set forth in Appendix C to the TIF No. 10 Plan are hereby incorporated by reference into and made a part of this resolution. 2.06. The Council further finds that the Plans are intended and in the judgment of the Council their effect will be to promote the public purposes and accomplish the objectives specified in the TIF No. 10 Plan for TIF District No. 10 and the Redevelopment Plan for the Redevelopment Proj ect. Section 3. Approval and Adoption of the Plans; Policy on Interfund Loans and Advances. 3.01. TIF District No. 10 is 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 Executive Director of the EDA. Approval of the Plans does not constitute approval of any project or a development agreement with any developer. The Deputy Community Development Director, or his designee, is hereby directed to request, in writing, the Hennepin County Auditor to certify the new TIF District and to file the Plans with the Commissioner of Revenue and the Office of the State Auditor. 5 BR291-422-864841.v2 3.02. The Council hereby approves a policy on interfund loans or advances ("Loans") for TIF District No. 10, as follows: (a) The authorized tax increment eligible costs (including without limitation out-of-pocket administrative expenses in an amount up to $211,832, interest in an amount up to $846,336 and other development costs in an amount up to $1,271,983) payable from TIF District No. 10, as provided in the TIF No. 10 Plan as originally adopted or as it 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 or account 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 $2,330,151 outstanding at any time. (d) All Loans shall mature not later than February 1, 2051 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 Minnesota Statutes, Section 469.178, Subdivision 7, which is the greater of the rates specified under Minnesota Statutes, 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). (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. Approved by the City Council of the City of Brooklyn Center this 8"' day of May, 2023. MayorMayoi pzil Graves ATTEST: City Clerk, Barb Suciu 6 BR291-422-864841.v2 The motion for the adoption of the foregoing resolution was duly seconded by member Jerzak and upon vote being taken thereon, the following voted in favor thereof: Butler, Graves, Jerzak, Kragness, Lawrence -Anderson and the following voted against the same: None whereupon said resolution was declared duly passed and adopted. 7 BR291-422-864841.v2