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HomeMy WebLinkAbout2016-008 EDARCommissioner Dan Ryan introduced the following resolution and moved its adoption: EDA RESOLUTION NO. 2016-08 RESOLUTION APPROVING A MODIFICATION TO THE REDEVELOPMENT PLAN FOR HOUSING DEVELOPMENT AND REDEVELOPMENT PROJECT NO. 1, ESTABLISHING TAX INCREMENT FINANCING DISTRICT NO. 7 (REDEVELOPMENT DISTRICT) THEREIN AND APPROVING A TAX INCREMENT FINANCING PLAN THEREFOR (OPPORTUNITY SITE) WHEREAS, it has been proposed that the Economic Development Authority of the City of Brooklyn Center, Minnesota (the "EDA") modify the Redevelopment Plan for its Housing and Redevelopment Project No. 1 (the "Redevelopment Project"); and establish Tax Increment Financing District No. 7 ("TIF District No. 7") within the Redevelopment Project and adopt the Tax Increment Financing Plan (the "TIF Plan") therefor (collectively, the "Plans"); all pursuant to and in conformity with applicable law, including Minnesota Statutes, Sections 469.001 through 469.047 and Sections 469.174 through 469.1794, as amended; all as reflected in that certain document entitled in part "Modification to Redevelopment Plan for Housing Development and Redevelopment Project No. 1 and Tax Increment Financing Plan for Tax Increment Financing District No. 7 (Redevelopment District)" dated March 28, 2016, and presented for consideration by the Board of Commissioners (the "Board") of the Economic Development Authority of the City of Brooklyn Center, Minnesota (the "EDA"); and WHEREAS, the Board has investigated the facts relating to the Plans; and WHEREAS, the EDA has performed all actions required by law to be performed prior to the adoption and approval of the Plans, including but not limited notice to the County Commissioner representing the area of the County to be included in TIF District No. 7, delivery of the Plans to the County and School Board and a review of the Plans by the Brooklyn Center Planning Commission; provided that that City Council will hold a public hearing thereon on the date hereof following notice thereof published in accordance with state law; and WHEREAS, the TIF District is being established to facilitate the acquisition, construction and equipping of approximately 749 market rate apartment units, 60 owner- occupied townhome units, and approximately 10,000 square feet of commercial/retail buildings (the "Development"); and WHEREAS, the initial phase of the Development will be constructed by Sand Development, LLC (or an affiliate, the "Initial Developer"). NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners (the "Board") of the Economic Development Authority of the City of Brooklyn Center, Minnesota (the "EDA"), as follows: EDA RESOLUTION NO. 2016-08 Section 1. Findings for the Adoption and Approval of the Plans. 1.01 The Board hereby finds that the boundaries of the Project Area are not being expanded and the Redevelopment Plan is not being modified other than to incorporate the establishment of TIF District No. 7 therein and therefore the Board reaffirms the findings and determinations originally made in connection with the establishment of the Redevelopment Project area and the adoption of the Redevelopment Plan therefor. 1.02 The Board hereby finds that TIF District No. 7 is in the public interest and is a "redevelopment district" within the meaning of Minnesota Statutes, Section 469.174, Subdivision 10, because TIF District No. 7 consists of a project or portions of a project within which the following conditions, reasonably distributed throughout TIF District No. 7, exist: (1) parcels consisting of at least 70% of the area of TIF District No. 7 are occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures; and (2) more than 50% of the buildings located within TIF District No. 7 are deemed "structurally substandard" (within the meaning of Minnesota Statutes, Section 469.174, Subdivision 10(b)) to a degree requiring substantial renovation or clearance. TIF District No. 7 consists of 12 parcels and all of the parcels are "occupied" as defined in Minnesota Statutes, Section 469.174, Subd. 10(a)(1) in that at least 15% of the area of the parcel is occupied by buildings, streets, utilities, paved or gravel parking lots or similar structures. Based on the Report of Inspection Procedures and Results for Determining Qualifications of a Tax Increment Financing District, dated November 10, 2015, prepared by LHB, Inc. (the "Redevelopment Assessment"), 8 of the 14 buildings (not including outbuildings) in TIF District No. 7 (57.1%, which is more than 50% of the buildings within TIF District No. 7), are found to be structurally substandard, are not in compliance with applicable building codes, and could not be brought into such compliance at a cost of less than 15% of the cost of constructing new structures of the same size and type on the subject sites, respectively. These findings are based in part upon on-site examination of those 8 substandard buildings and the written Redevelopment Assessment report substantiating the structurally substandard nature of the buildings. The reasons and supporting facts for the determination that TIF District No. 7 is a redevelopment district under the statute are set forth in the Redevelopment Assessment, which is incorporated herein by reference, and a copy of which is on file with the Executive Director. 1.03 The Board hereby makes the following additional findings in connection with TIF District No. 7: (a) The Board further finds that the proposed development, in the opinion of the Board, would not occur solely through private investment within the reasonably foreseeable future and, therefore, EDA RESOLUTION NO. 2016-0R the use of tax increment financing is deemed necessary. The specific basis for such finding being: The construction of the Development would not be undertaken in the reasonably foreseeable future. The property has remained underutilized for several years despite previous efforts to redevelop the property. The demolition, redevelopment and public infrastructure costs are higher than for new development. The Developer has represented that it could not proceed with the Development without tax increment assistance. (b)The Board further finds that the TIF Plan conforms to the general plan for the development or redevelopment of the EDA as a whole. The specific basis for such finding being: The TIF Plan will generally compliment and serve to implement policies adopted in the City's comprehensive plan. The development contemplated on the property is in accordance with the existing zoning for the property. The Planning Commission has reviewed the Plans, and approved the same as being in conformity with the City's comprehensive plan and the general plan for the development and redevelopment of the City as a whole. (c)The Board further finds that the TIF Plan will afford maximum opportunity consistent with the sound needs of the EDA as a whole for the development of TIF District No. 7 by private enterprise. The specific basis for such finding being: The Development proposed to occur within the TIF District No. 7 to be completed, owned and operated by the Developer and will afford maximum opportunity for the development of the applicable parcels consistent with the needs of the City. The Development will increase the taxable market valuation of the City and the available housing and commercial facilities in the City. Without the construction of necessary public infrastructure, private enterprise would not undertake the Development. (d) For purposes of compliance with Minnesota Statutes, Section 469.175, Subdivision 3(b)(2)(ii), the Council hereby finds that the increased market value of the site that could reasonably be expected to occur without the use of tax increment financing ranges from $0 to some modest amount based on small scale development that could be possible without assistance, which is less than $127,477,094 which is the increase in the market value estimated to result from the proposed development (approximately $151,342,929, assuming no annual inflation) after subtracting the EDA RESOLUTION NO. 2016-08 present value of the projected tax increments for the maximum duration of the TIF District (approximately $23,865,835). Thus, the use of tax increment financing will be a positive net gain to the City, the School District, and the County, and the tax increment assistance does not exceed the benefit which will be derived therefrom. 1.04 The EDA elects to retain all of the captured tax capacity to finance the costs of the TIF District. The EDA elects the method of tax increment computation set forth in Minnesota Statutes, Section 469.177, Subd. 3(a). 1.05 The EDA elects to delay the receipt of the first increment until tax payable year 2019. 1.06 The provisions of this Section 1 are hereby incorporated by reference into and made a part of the TIF Plan. 1.07 The Board further finds that the Plans are intended and in the judgment of the Board their effect will be to promote the public purposes and accomplish the objectives specified in the TIF Plan for TIF District No. 7 and the Redevelopment Plan for the Redevelopment Project. Section 2. Approval and Adoption of the Plans Policy on Interfund Loans and Advances. 2.01 The Plans, as presented to the Board 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 Finance Director. Approval of the Plans does not constitute approval of any project or a development agreement with any developer. Subject to approval by the City Council following a public hearing, the Business and Development Director is hereby directed to request, in writing, the Hennepin County Auditor to certify the new TIF District No. 7 and to file the Plans with the Commissioner of Revenue and the Office of the State Auditor. 2.02 The Board hereby approves a policy on interfund loans or advances ("Loans") for TIF District No. 7, as follows: (a) The authorized tax increment eligible costs (including without limitation out-of-pocket administrative expenses in an amount up to $5,463,715) payable from the District, as its TIF Plan is originally adopted or 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. EDA RESOLUTION NO. 2016-08 (b)The Loans may be advanced if and as needed from available monies in any fund or account of the EDA 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 $54,637,164 outstanding at any time. (d)The maximum term of any Loan shall not exceed 26 years or such earlier date as the City Finance Director may specify in writing. (e)The outstanding and unpaid principal amount of each Loan shall bear interest at the rate prescribed by the statute (Minnesota Statutes, Section 469.178, Subdivision 7), which is the greater of the rates specified under 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 EDA Finance Director to specify a lower rate (but not less than the EDA's then-current average investment return for similar amount and term). 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 maintain all necessary or applicable data on the Loans. March 28, 2016 Date President The motion for the adoption of the foregoing resolution was duly seconded by Commissioner April Graves and upon vote being taken thereon, the following voted in favor thereof: Tim Willson, April Graves, Kris Lawrence-Anderson, Dan Ryan and the following voted against the same: whereupon said resolution was declared duly passed and adopted.