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HomeMy WebLinkAbout2019 07-08 EDAPE conomic Development Authority City Hall - Council Chambers J uly 8, 2019 AGE NDA 1.Call to Order The City Council requests that attendees turn off cell phones and pagers during the meeting. A copy of the full C ity Counc il packet, including E D A (E conomic Development Authority ), is available to the public. The packet ring binder is located at the entrance of the council chambers. 2.Roll Call 3.Approval of Consent Agenda The following items are considered to be routine by the Economic Development Authority (E D A) and will been acted by one motion. There will be no separate disc ussion of these items unless a Commissioner so requests, in whic h event the item will be removed from the c onsent agenda and considered at the end of Commission Consideration I tems. a.Approval of Minutes - Motion to approve minutes from June 24, 2019 4.Commission Consideration Items a.Resolutions Regarding Removal of a Parcel from Redevelopment Tax I ncrement Financing District No. 3 and E stablishing Tax I ncrement Financing District No. 8 and Approving a Tax I ncrement Financing Plan - Motion to approve a resolution approvi ng the removal of a parcel from Redevelopment Tax Increment Financing Distri ct No. 3 wi thi n Housing Development and Redevelopment Project No. 1 - Motion to approve a resolution approvi ng a modi fi cation to the Redevel opment Plan for Housi ng Development and Redevelopment Project No. 1 establ ishing Tax Increment Fi nanci ng Di strict No. 8 therein and approving a Tax Increment Fi nanci ng Plan therefor 5.Adjournment ED A ITEM MEMOR ANDUM DAT E:7/8/2019 TO :C urt Boganey, C ity Manager T HR O UG H:Dr. R eggie Edwards , Deputy C ity Manager F R O M:Barb S uciu, C ity C lerk S UBJ EC T:Approval of Minutes Background: S trategic Priorities and Values: O perational Exc ellenc e AT TAC HME N T S: Desc ription Upload Date Type June 24, 2019 EDA Minutes 7/3/2019 C over Memo 06/24/19 -1- DRAFT MINUTES OF THE PROCEEDINGS OF THE ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF BROOKLYN CENTER IN THE COUNTY OF HENNEPIN AND THE STATE OF MINNESOTA REGULAR SESSION JUNE 24, 2019 CITY HALL – COUNCIL CHAMBERS 1. CALL TO ORDER The Brooklyn Center Economic Development Authority (EDA) met in Regular Session called to order by President Mike Elliott at 9:00 p.m. 2. ROLL CALL President Mike Elliott and Commissioners April Graves, Kris Lawrence-Anderson, and Dan Ryan. Commissioner Marquita Butler was absent and excused. Also present were Executive Director Curt Boganey, Community Development Director Meg Beekman, Police Chief Tim Gannon, and City Attorney Troy Gilchrist. 3. APPROVAL OF AGENDA AND CONSENT AGENDA Commissioner Ryan moved, and Commissioner Graves seconded to approve the Agenda and Consent Agenda, and the following item was approved: 3a. APPROVAL OF MINUTES 1. May 28, 2019 – Regular Session Motion passed unanimously. 4. COMMISSION CONSIDERATION ITEMS 4a. RESOLUTION NO. 2019-12 APPROVING A PURCHASE AGREEMENT AND CONVEYANCE OF CERTAIN PROPERTY TO CENTRA HOMES LLC Community Development Director Meg Beekman reviewed a proposed purchase agreement with Centra Homes LLC for development of a 7.5-acre property owned by the Economic Development Authority (EDA). She added the property was acquired using TIF #3 pooled funds with the intent of redeveloping the land into single-family homes. Ms. Beekman stated Centra Homes was selected to develop a site plan for 30-35 move-up single family homes with an average home price of $332,000. She added the purchase agreement $115,000 stipulates that Centra Homes would pay an earnest amount and conduct due diligence 06/24/19 -2- DRAFT and obtain financing, closing on the property on or before September 30 for a purchase price of $115,000. Commissioner Lawrence-Anderson stated residents of that neighborhood have asked about damage to the streets for which they were recently assessed. Ms. Beeman stated a pre-inspection would be conducted, which would document the condition of the streets before work commences. Commissioner Graves requested clarification regarding why the City does not have residential design standards, and whether that is typical for cities. Ms. Beekman stated the City of Brooklyn Center had been fully developed for many years, and landscape and design standards are generally required for new residential developments. She added the City Council could review this issue and consider the addition of residential design and landscaping standards. She noted this type of standard is especially helpful in a city like Brooklyn Center, where there are many mature trees, and tree removal guidelines might be required for redevelopment projects. Commissioner Graves stated she would support consideration of residential design standards as a future work session agenda item. Mr. Boganey stated that it is a topic that could be addressed by the Zoning Task Force. Ms. Beeman agreed. Commissioner Ryan moved, and Commissioner Lawrence-Anderson seconded to open the public hearing at 9:10 p.m. Motion passed unanimously. There were no comments Commissioner Graves moved, and Commissioner Ryan seconded to close the public hearing at 9:11 p.m. Motion passed unanimously. Commissioner Ryan stated he appreciates that residents are concerned about disruption to their neighborhood. He added the contractor and the City would do everything possible to minimize inconvenience. He noted this is a great opportunity for the City to provide move-up homes and bring the undeveloped residential property into more productive use. Commissioner Ryan moved, and Commissioner Lawrence-Anderson seconded to adopt RESOLUTION NO. 2019-12 Approving a Purchase Agreement and Conveyance of Certain Property to Centra Homes LLC. President Elliott abstained. Motion passed. 06/24/19 -3- DRAFT 4b. CONSIDERATION OF A TERM SHEET BETWEEN REAL ESTATE EQUITIES AND THE ECONOMIC DEVELOPMENT AUTHORITY OF BROOKLYN CENTER REGARDING TAX INCREMENT FINANCING Ms. Beekman reviewed a concept plan proposed by Real Estate Equities for EDA-owned property at 5801 Xerxes Avenue N. A Planned Unit Development (PDA) Agreement was approved by the City Council on June 10, 2019, for a residential community comprised of two buildings with senior living and workforce housing. The project qualifies for a 26-year TIF housing district, as requested by the applicant. The estimated market value of the property after construction would be $33.3 million and would generate $360,000 annually in property taxes. Ms. Beekman stated City Staff recommends the creation of a 26-year TIF district of $1.6 million pay as you go, likely to be paid off in 16 years. The EDA would retain 10% of the increment over the life of the note repayment that could be utilized to cover the City’s costs and other housing projects. The City can choose to keep the District open for the full 26 years. Ms. Beekman stated TIF District income limits would apply, which would be 40% of units at 60% AMI. She added this is a statutory requirement for TIF districts. Commissioner Ryan requested confirmation that the TIF note is the obligation of the developer and not the City. Ms. Beekman confirmed this. Commissioner Ryan asked whether the length of the TIF District is a legal requirement. Ms. Beekman confirmed this, adding there is a maximum length specified in State statute. Commissioner Ryan asked whether the TIF district could be applied to other projects. Ms. Beekman stated City Staff is proposing that this TIF district will be applied to this property only, but it can be spent outside the district for eligible development opportunities if the additional increment is produced. Commissioner Lawrence-Anderson asked when the developer will pay their full property tax revenue to the City. Ms. Beekman stated additional taxes besides the base tax that are generated off the development after the project is constructed are paid by the developer. She added they would receive a refund of 90% to pay off the TIF note up to the amount of the note or after 16 years. Commissioner Graves asked what the TIF district this will be, and whether there are a few districts close to ending. Ms. Beekman stated this would be TIF District #8. She added Districts 1 and two are no longer active and were decertified. She noted TIF #3 decertifies in 2021. She noted she could provide additional detail on each of the TIF Districts for the City Council’s review. Commissioner Ryan stated the development is dependent upon this modest subsidy. He added these sets aside City revenue over 16 years to provide an asset to the community for seniors and working families. 06/24/19 -4- DRAFT Commissioner Ryan moved, and Commissioner Lawrence-Anderson seconded to direct City Staff to prepare an agreement consistent with the term sheet. Motion passed unanimously. 5. ADJOURNMENT Commissioner Ryan moved, and Commissioner Graves seconded adjournment of the Economic Development Authority meeting at 9:30 p.m. Motion passed unanimously. ED A ITEM MEMOR ANDUM DAT E:7/8/2019 TO :C urt Boganey, C ity Manager T HR O UG H:N/A F R O M:Meg Beekman, C ommunity Development Director S UBJ EC T:R esolutions R egarding R emoval of a P arc el from R edevelopment Tax Inc rement F inanc ing District No. 3 and Establis hing Tax Inc rement F inanc ing District No. 8 and Approving a Tax Inc rement F inanc ing P lan Background: As part of the es tablis hment o f a tax inc rement financing d is tric t, the C ity C o unc il mus t hold a p ublic hearing and both the C ity C ounc il and EDA mus t approve the T I F plan and the establis hment of the dis tric t. O n F ebruary 22, 2019, the C ity received an ap p licatio n for p ublic financial assistanc e from R eal Estate Equities (the “Develo p er”). T he Developer req ues ted tax increment financing (T I F ) to p ro vide the nec es s ary as s is tance fo r cons truction o f 270-units of affordable rental hous ing within the C ity; 127-units o f non-age res tric ted hous ing and 143-units of s enior hous ing, all of whic h would be affordable to p ers o ns o r hous eholds at o r below 60% of the area median income (AMI) and wo uld be b o th rent and inc o me restricted as noted below: T he C ity will be c reating a ho using T I F district with a 26-year term. It is antic ipated that the firs t tax increment will be rec eived in 2021 s o the Dis tric t wo uld terminate o n Dec emb er 31, 2046. It s hould b e noted that the EDA o nly anticipates p ro viding 16 years o f as s is tance for the p ro ject(s ) s o in year 17, the C ity C o uncil at that time c an c hose to either d ecertify the Dis trict early, or keep the District o p en and collec t the remaining ten (10) years o f T I F fo r use o n future affo rd ab le hous ing projec ts (it s hould b e no ted that any future C o uncil in year 17 through 26 could c hoose to decertify the District early). W hen both projec ts are c o mp leted, the District will generate ap p ro ximately $486,000/year in T I F. T he C ity anticipates p ro viding two (2) P ay-As -You-G o (PAYG O ) T I F Notes whic h will be p aid from 90% o f the annual T I F generated from the District. T he EDA will retain 10% of the annual T I F (approximately $48,600/year) fo r ad ministrative costs o f the Dis tric t o r fo r use on other affordable ho using (rental or owner- occ upied) hous ing projec ts. After redevelo p ment the taxab le market value is es timated to be approximately $48.6 million ($22.86 million for the wo rkforc e apartments and $25.74 million for the s enior ap artments). O nc e the PAYG O notes are p aid , the projects will generate approximately $232,000 in annual revenue for the C ity. Interfund L oan T he C ity’s Economic Development Authority (EDA) is overseeing the adminis tration and development within the above referenced T I F Dis trict. As part o f this ad ministration, the EDA may need to loan funds from various EDA funds to this Dis tric t to temporarily finance ad ministrative c o s ts not covered by R eal Estate Equities esc row. S tate S tatute req uires that the EDA approve a res o lutio n authorizing an internal (interfund ) loan to the res pective T I F Dis tric t and set the terms fo r reimburs ement o f the c o s ts to be repaid with tax inc rements from the respec tive T I F Dis tric t. T he language autho rizing an interfund lo an for up to $50,000 fro m the EDA to the T I F District is inc luded in the res olution es tab lis hing the T I F District. T he interfund lo an would be p aid with future T I F fro m the Dis tric t (the EDA’s 10% admin portio n). As funds are advanc ed they will bear an interes t rate of 5%, whic h is the current, maximum interest rate that c an be charged. It s hould be noted that $50,000 is a maximum amount and that it may never need to be drawn up o n if there are no additio nal adminis trative c os ts charged to the District that are not the res ponsibility of the Developer. C ompleting this ac tion provid es the EDA with the mo s t flexibility to reimburs e its elf in the future if and when EDA funds are advanced and T I F funds are available from the newly c reated T I F District. R emoval of P arcel from T I F D istrict 3 T he C ity and EDA es tablished T I F dis tric t No. 3 (Earle Brown F arm P roject) in 1994 which encompassed a large area of the C ity. T his dis tric t inc luded the former Jerry’s F ood site loc ated at 5801 Xerxes Avenue, identified as parcel number 03-118-21-14-0024. T he C ity and EDA are c reating T I F District No. 8: R eal Estate Equities , on this parc el for the development of 270 affordable rental hous ing units . S ince the parc el is already contained within T I F District No. 3, the C ity is required to remove it prior to the es tablishment of the new hous ing T I F dis tric t. T he parc el was oc cupied by a building when T I F District No. 3 was c reated and s inc e then the building has been demolis hed. Due to this , the C ity is required to hold a public hearing on its removal since the tax capac ity of the parcel is lower today then when it was when T I F district No. 3 was establis hed. It should be noted that removal of this parcel from T I F Dis tric t No. 3 will actually have a positive impact on the District (albeit quite s mall) since the parc el has been generating negative inc rement for the District due to the current tax capac ity being les s than the bas e tax capac ity. Budget Issues: T he proposed action would have no impact on the budget. All c os ts as s ociated with the creation and administration of the T I F dis tric t will be paid by the Developer and/or future generated inc rement. S trategic Priorities and Values: Targeted R edevelopment AT TAC HME N T S: Desc ription Upload Date Type R esolution Approving the R emoval of a P arc el from R edevelopment Tax Increment F inancing Dis tric t No. 3 7/2/2019 R es olution Letter R esolution Approving the Establis hment of T I F Dis tric t No. 8 7/2/2019 R es olution Letter Tax Increment F inancing P lan Es tablishing T I F Dis tric t No. 8 7/2/2019 Bac kup Material 586972v2BR291-400 Commissioner _______________________ introduced the following resolution and moved its adoption: EDA RESOLUTION NO .____ APPROVING THE REMOVAL OF A PARCEL FROM REDEVELOPMENT TAX INCREMENT FINANCING DISTRICT NO. 3 WITHIN HOUSING DEVELOPMENT AND REDEVELOPMENT PROJECT NO. 1. WHEREAS, the Economic Development Authority of the City of Brooklyn Center, Minnesota (the “EDA”) and the City of Brooklyn Center, Minnesota (the “City”) have heretofore created Redevelopment Tax Increment Financing District No. 3 (the “TIF District”) within Housing Development and Redevelopment Project No. 1 (the “Project Area”) and approved a tax increment financing plan (the “TIF Plan”) for the TIF District, pursuant to Minnesota Statutes, Sections 469.174 to 469.1794, as amended (the “TIF Act”) and other applicable laws, including Minnesota Statutes, Sections 469.001 to 469.047 and Sections 469.090 to 469.1081, all inclusive, as amended, (collectively, and together with the TIF Act, the “Act”); and WHEREAS, the following parcel (the “Property”) was included in the TIF District: Parcel Identification No. 03 -118 -21 -14 -0024 WHEREAS, the EDA desires by this resolution to amend the TIF Plan to remove the Property from the TIF District, thereby reducing the size thereof (the “TIF Plan Modification”); and WHEREAS, the EDA and City have investigated the facts relating to the TIF Plan Modification and have performed all actions required by law to be performed prior to the adoption and approval of the proposed TIF Plan Modification, including, but not limited to, notification of Hennepin County and Independent School District No. 281 (Robbinsdale), having taxing jurisdiction over the property in the TIF District, and the holding by the City of a public hearing on the date hereof upon published notice as required by law; and WHEREAS, the Property being removed from the TIF District has a current market values below the frozen value thereof and, therefore, the EDA and City may make the TIF Plan Modification to remove the Property from the TIF District only upon the notice and after the discussion, public hearing, and findings required for approval of the original TIF Plan pursuant to Section 469.175, Subdivision 4 of the TIF Act. NOW THEREFORE, BE IT RESOLVED by the Board of Commissioners of the EDA (the “Board”) as follows: Section 1. Findings for the TIF Plan Modification. The Board hereby reaffirms the original findings for the TIF District and the findings made in connection with all subsequent 586972v2BR291-400 modifications, including that when the TIF District was established, the TIF District was, and currently is, a redevelopment district and that, in the opinion of the EDA, (i) the proposed development of the Property would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future; (ii) the increased market value of the Property 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; (iii) that the TIF Plan Modification conforms to the general plan for the development or redevelopment of the City as a whole; (iv) that the TIF 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, which findings are further supported by the resolutions of the City and the EDA, adopted on the date hereof, establishing Tax Increment Financing District No. 8: Real Estate Equities (a housing district) in connection with the proposed development of the Property. Section 2. Public Purpose. The adoption of the TIF Plan Modification conforms in all respects to the requirements of the Act and will help provide opportunities for additional redevelopment and will improve the tax base. These public purposes and benefits exceed any benefits expected to be received by private developers, who will receive assistance only in the amount needed to make the proposed development on the Property financially feasible. Section. 3 Approval and Adoption of the TIF Plan Modification. 3.01. The TIF District and the TIF Plan are hereby amended to remove the Property and the TIF Plan Modification is hereby approved. Approval of the TIF Plan Modification does not constitute approval of any project or a development agreement with any developer. 3.02. City staff is authorized to file this resolution as evidence of the TIF Plan Modification with the Commissioner of Revenue, the Office of the State Auditor and the Hennepin County Auditor. 3.03. City staff, the City’s advisors and legal counsel are authorized and directed to proceed with the implementation of the TIF Plan Modification. July 8, 2019 Date Chair ATTEST: Secretary The motion for the adoption of the foregoing resolution was duly seconded by Commissioner ___________________ and upon vote being taken thereon, the following voted in favor thereof: 586972v2BR291-400 and the following voted against the same: whereupon said resolution was declared duly passed and adopted. 587107v3BR291-400 ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF BROOKLYN CENTER, MINNESOTA CITY OF BROOKLYN CENTER COUNTY OF HENNEPIN STATE OF MINNESOTA Commissioner _______________________ introduced the following resolution and moved its adoption: RESOLUTION NO. ______ RESOLUTION APPROVING A MODIFICATION TO THE REDEVELOPMENT PLAN FOR HOUSING DEVELOPMENT AND REDEVELOPMENT PROJECT NO. 1, ESTABLISHING TAX INCREMENT FINANCING DISTRICT NO. 8 THEREIN AND APPROVING A TAX INCREMENT FINANCING PLAN THEREFOR 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”); establish Tax Increment Financing District No. 8: Real Estate Equities (a housing district) (“TIF District No. 8”) within the Redevelopment Project; and adopt the Tax Increment Financing Plan (the “TIF Plan”) therefor; all pursuant to and in conformity with applicable law, Minnesota Statutes, Sections 469.174 to 469.1794, as amended (the “TIF Act”), Minnesota Statutes, Sections 469.001 to 469.047 and Sections 469.090 to 469.1081, all inclusive, as amended, (collectively, and together with the TIF Act, the “Act”), and all as reflected in that certain document entitled in part “Modification of the Redevelopment Plan for Housing Development and Redevelopment Project No. 1 and Tax Increment Financing Plan for Tax Increment Financing District No. 8: Real Estate Equities (a Housing District)” dated June 7, 2019 (collectively, the “Plans”), presented for the Board’s consideration; WHEREAS, the Board has investigated the facts relating to the Plans and certain information and material (collectively, the “Materials”) relating to the TIF Plan and to the activities contemplated in TIF District No. 8 have heretofore been prepared and submitted to the Board and/or made a part of the EDA files and proceedings on the TIF Plan. The Materials include the tax increment application made and other information supplied by Real Estate Equities, Inc., a Minnesota corporation (or one or more limited partnerships or other entities to be formed thereby or affiliated therewith, the “Developer”) as to the activities contemplated therein, the items listed under the heading “Supporting Documentation” in the TIF Plan, and information constituting or relating to (1) why the assistance satisfies the so-called “but for” test and (2) the bases for the other findings and determinations made in this resolution. The Board 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; 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 to notice to the County Commissioner representing the area of the County to be included in TIF District No. 8, and delivery of the Plans to Hennepin County and Independent School District No. 281 2 587107v3BR291-400 (Robbinsdale); and the City Council has held a public hearing thereon on the date hereof following notice thereof published in accordance with state law; WHEREAS, TIF District No. 8 is being established to facilitate the acquisition, construction and equipping of an approximately 270-unit rental housing development, including workforce housing and senior housing, and related amenities (the “Development”) to be constructed by the 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: 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. 8 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. 8 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 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 that receive assistance from tax increments will consist of commercial, retail or other nonresidential uses. The Development to be constructed in TIF District No. 8 will consist of approximately 270 units of workforce or senior rental housing. Developer has represented that at least 40% of the units (i.e., 108 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 that receive assistance from tax increments will consist of commercial, retail or other nonresidential uses. 1.03. The Board hereby makes the following additional findings in connection with TIF District No. 8: (a) The Board further finds that the proposed development, in the opinion of the Board of Commissioners, 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 construction of the Development would not be undertaken in the reasonably foreseeable future. The property has remained 3 587107v3BR291-400 undeveloped for several years despite previous efforts to redevelop the property. 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 EDA 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 EDA 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 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, as modified in accordance with an approved planned unit development agreement. (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. 8 by private enterprise. The specific basis for such finding being: The proposed development to occur within TIF District No. 8 is primarily low and moderate income senior or workforce housing. The development will increase the taxable market valuation of the City, and the number of available low and moderate income senior and workforce housing units in the City. 1.04. The provisions of this Section 1 are hereby incorporated by reference into and made a part of the TIF Plan and the findings set forth in Appendix C to the TIF Plan are hereby incorporated by reference into and made a part of this Resolution. 1.05. 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. 8 and the Redevelopment Plan for the Redevelopment Project. 4 587107v3BR291-400 Section 2. Approval and Adoption of the Plans; Policy on Interfund Loans and Advances. 2.01. TIF District No. 8 is hereby established and 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. The Business and Development Director is hereby directed to request, in writing, the Hennepin County Auditor to certify the new TIF District No. 8 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. 8, as follows: (a) The authorized tax increment eligible costs (including without limitation out-of-pocket administrative expenses in an amount up to $1,750,780, interest in an amount up to $6,978,073 and other development costs in an amount up to $10,529,725) payable from TIF District No. 8, as provided in the TIF 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 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 may exceed $19,258,578 outstanding at any time. (d) All Loans shall mature not later than February 1, 2047 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 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). (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 maintain all necessary or applicable data on the Loans. (g) In particular the EDA authorizes an interfund loan to be advanced from Redevelopment Tax Increment Financing District No. 3, in the amount of up to $50,000, 5 587107v3BR291-400 to pay administrative expenses not paid by the Developer, to be repaid, not later than February 1, 2047, from tax increments of TIF District No. 8 to the extent not otherwise pledged to other obligations of TIF District No.8, with interest thereon at 4% per annum from the date advanced until repaid in full unless otherwise provided, in writing, by the City Finance Director. July 8, 2019 Date Chair ATTEST: Secretary The motion for the adoption of the foregoing resolution was duly seconded by Commissioner ___________________ and upon vote being taken thereon, the following voted in favor thereof: and the following voted against the same: whereupon said resolution was declared duly passed and adopted. 6 587107v3BR291-400 SECRETARY’S CERTIFICATE I, the undersigned, being the duly qualified and acting Secretary of the Economic Development Authority of the City of Brooklyn Center, Minnesota, DO HEREBY CERTIFY that I have carefully compared the attached and foregoing extract of minutes of a duly called and regularly held meeting of the Board of Commissioners of said EDA held on July 8, 2019, with the original minutes thereof on file in my office and I further certify that the same is a full, true, and correct transcript thereof insofar as said minutes relate to the tax increment and related actions referenced therein with respect to the EDA’s Housing and Redevelopment Project No. 1 and Tax Increment Financing District No. 8 therein. WITNESS My hand this ____ day of July, 2019. _______________________________________ Secretary Economic Development Authority of the City of Brooklyn Center, Minnesota MODIFICATION OF THE REDEVELOPMENT PLAN Housing Development and Redevelopment Project No. 01 - AND - TAX INCREMENT FINANCING PLAN Establishment of Tax Increment Financing District No. 8: Real Estate Equities (a housing district) Brooklyn Center Economic Development Authority City of Brooklyn Center, Hennepin County, Minnesota Public Hearing: July 8, 2019 Table of Contents Modification to the Redevelopment Plan for Housing Development and Redevelopment Project No. 01 ........................................................................................................................................... 2 Foreword ....................................................................................................................... 2 Tax Increment Financing Plan for Tax Increment Financing District No. 8: Real Estate Equities. 3 Foreword ....................................................................................................................... 3 Statutory Authority .......................................................................................................... 3 Statement of Objectives .................................................................................................. 3 Redevelopment Plan Overview ........................................................................................ 3 Description of Property in the District and Property to be Acquired ...................................... 4 Classification of the District ............................................................................................. 4 Duration and First Year of Tax Increment of the District ..................................................... 5 Original Tax Capacity, Tax Rate and Estimated Captured Net Tax Capacity Value/Increment and Notification of Prior Planned Improvements ................................................................ 5 Sources of Revenue/Bonds to be Issued .......................................................................... 6 Uses of Funds ............................................................................................................... 7 Estimated Impact on Other Taxing Jurisdictions ................................................................ 7 Supporting Documentation .............................................................................................. 9 Administration of the District ............................................................................................ 9 Appendix A: Map of Housing Development and Redevelopment Project No. 01 and the District......................................................................................................................... 10 Appendix B: Estimated Cash Flor of the District .............................................................. 11 Appendix C: Findings Including But/For Qualifications ..................................................... 12 City of Brooklyn Center Tax Increment Financing District No. 8: Real Estate Equities 2 Modification to the Redevelopment Plan for Housing Development and Redevelopment Project No. 01 Foreword The following text represents a Modification to the Redevelopment Plan for Housing Development and Redevelopment Project No. 01. This modification represents a continuation of the goals and objectives set forth in the Redevelopment Plan for Housing Development and Redevelopment Project No. 01. Generally, the substantive changes include the establishment of Tax Increment Financing District No. 8: Real Estate Equities. For further information, a review of the Redevelopment Plan for Housing Development and Redevelopment Project No. 01 is recommended. It is available from the Community Development Director at the Brooklyn Center City Hall. Other relevant information is contained in the Tax Increment Financing Plans for the Tax Increment Financing Districts located within Housing Development and Redevelopment Project No. 01. City of Brooklyn Center Tax Increment Financing District No. 8: Real Estate Equities 3 Tax Increment Financing Plan for Tax Increment Financing District No. 8: Real Estate Equities Foreword The Brooklyn Center Economic Development Authority (the “EDA”), the City of Brooklyn Center (the "City"), staff and consultants have prepared the following information to expedite the establishment of Tax Increment Financing District No. 8: Real Estate Equities (the "District"), a housing tax increment financing district, located in Housing Development and Redevelopment Project No. 01. Statutory Authority Within the City, there exist areas where public involvement is necessary to cause development or redevelopment to occur. To this end, the EDA and City have certain statutory powers pursuant to Minnesota Statutes ("M.S."), Sections 469.090to 469.1082, inclusive, as amended, and M.S., Sections 469.174 to 469.1794, inclusive, as amended (the "Tax Increment Financing Act" or "TIF Act"), to assist in financing public costs related to this project. This section contains the Tax Increment Financing Plan (the "TIF Plan") for the District. Other relevant information is contained in the Modification to the Redevelopment Plan for Housing Development and Redevelopment Project No. 01. Statement of Objectives The District currently consists of one parcel of land and adjacent and internal rights-of-way. The District is being created to facilitate the development of 270 units of affordable rental housing in the City. Development will include 127 units of workforce housing and 180 units of senior housing. The City anticipated entering into an agreement with Real Estate Equities and development on Phase I (workforce) is expected to begin in 2019 and the senior housing will commence in 2020. This TIF Plan is expected to achieve many of the objectives outlined in the Redevelopment Plan for Housing Development and Redevelopment Project No. 01. The activities contemplated in the Modification to the Redevelopment Plan and the TIF Plan do not preclude the undertaking of other qualified development or redevelopment activities. These activities are anticipated to occur over the life of Housing Development and Redevelopment Project No. 01 and the District. Redevelopment Plan Overview 1. Property to be Acquired - Selected property located within the District may be acquired by the City and is further described in this TIF Plan. 2. Relocation - Relocation services, to the extent required by law, are available pursuant to M.S., Chapter 117 and other relevant state and federal laws. 3. Upon approval of a developer's plan relating to the project and completion of the City of Brooklyn Center Tax Increment Financing District No. 8: Real Estate Equities 4 necessary legal requirements, the City may sell to a developer selected properties that it may acquire within the District or may lease land or facilities to a developer. 4. The City may perform or provide for some or all necessary acquisition, construction, relocation, demolition, and required utilities and public street work within the District. Description of Property in the District and Property to be Acquired The District encompasses all property and adjacent rights-of-way and abutting roadways identified by the parcels listed below. The parcel is currently in Tax Increment Financing District No. 3 and will be removed prior to the establishment of the TIF District. Please also see the map in Appendix A for further information on the location of the District. The EDA or City may acquire any parcel within the District including interior and adjacent street rights of way. Any properties identified for acquisition will be acquired by the EDA or City only in order to accomplish one or more of the following: storm sewer improvements; provide land for needed public streets, utilities and facilities; carry out land acquisition, site improvements, clearance and/or development to accomplish the uses and objectives set forth in this plan. The EDA or City may acquire property by gift, dedication, condemnation or direct purchase from willing sellers in order to achieve the objectives of this TIF Plan. Such acquisitions will be undertaken only when there is assurance of funding to finance the acquisition and related costs. Classification of the District The EDA and City, in determining the need to create a tax increment financing district in accordance with M.S., Sections 469.174 to 469.1799, as amended, inclusive, find that the District, to be established, is a housing district pursuant to M.S., Section 469.174, Subd. 11 and M.S., Section 469.1761. In meeting the statutory criteria, the EDA and City rely on the following facts and findings: ▪ The District consists of one parcel. ▪ The development will consist of 270 units of affordable rental housing in the City. ▪ 100% of the units will be occupied by persons with incomes at or below 60% of median income. Pursuant to M.S., Section 469.176, Subd. 7, the District does not contain any parcel or part of a parcel that qualified under the provisions of M.S., Sections 273.111, 273.112, or 273.114 or Chapter 473H for taxes payable in any of the five calendar years before the filing of the request for certification of the District. Parcel number Address Owner 03-118-21-14-0024 5801 Xerxes Ave.Ilex Group City of Brooklyn Center Tax Increment Financing District No. 8: Real Estate Equities 5 Duration and First Year of Tax Increment of the District Pursuant to M.S., Section 469.175, Subd. 1, and Section 469.176, Subd. 1, the duration and first year of tax increment of the District must be indicated within the TIF Plan. Pursuant to M.S., Section 469.176, Subd. 1b., the duration of the District will be 26 years. The EDA and City elect to receive the first tax increment in 2021, which is no later than four years following the year of approval of the District. Thus, it is estimated that the District, including any modifications of the TIF Plan for subsequent phases or other changes, would terminate after 2046, or when the TIF Plan is satisfied. The EDA and City reserve the right to decertify the District prior to the legally required date. Original Tax Capacity, Tax Rate and Estimated Captured Net Tax Capacity Value/Increment and Notification of Prior Planned Improvements Pursuant to M.S., Section 469.174, Subd. 7 and M.S., Section 469.177, Subd. 1, the Original Net Tax Capacity (ONTC) as certified for the District will be based on the market values placed on the property by the assessor in 2019 for taxes payable 2020. Pursuant to M.S., Section 469.177, Subds. 1 and 2, the County Auditor shall certify in each year (beginning in the payment year 2021) the amount by which the original value has increased or decreased as a result of: 1. Change in tax exempt status of property; 2. Reduction or enlargement of the geographic boundaries of the district; 3. Change due to adjustments, negotiated or court-ordered abatements; 4. Change in the use of the property and classification; 5. Change in state law governing class rates; or 6. Change in previously issued building permits. In any year in which the current Net Tax Capacity (NTC) value of the District declines below the ONTC, no value will be captured, and no tax increment will be payable to the EDA or City. The original local tax rate for the District will be the local tax rate for taxes payable 2020, assuming the request for certification is made before June 30, 2020. The ONTC and the Original Local Tax Rate for the District appear in the table below (Pay 2019 rate was used since 2020 rates are not yet available). Pursuant to M.S., Section 469.174 Subd. 4 and M.S., Section 469.177, Subd. 1, 2, and 4, the estimated Captured Net Tax Capacity (CTC) of the District, within Housing Development and Redevelopment Project No. 01, upon completion of the projects within the District, will annually generate tax increment revenues as shown in the table below. The EDA and City request 100 percent of the available increase in tax capacity for repayment of its obligations and current expenditures, beginning in the tax year payable 2021. The Project Tax Capacity (PTC) listed is an estimate of values when the projects within the District are completed. City of Brooklyn Center Tax Increment Financing District No. 8: Real Estate Equities 6 Note: Tax capacity includes a 3% inflation factor for the duration of the District. The tax capacity included in this chart is the estimated tax capacity of the District in year 25. The tax capacity of the District in year one is estimated to be $76,200. Pursuant to M.S., Section 469.177, Subd. 4, the City shall, after a due and diligent search, accompany its request for certification to the County Auditor or its notice of the District enlargement pursuant to M.S., Section 469.175, Subd. 4, with a listing of all properties within the District or area of enlargement for which building permits have been issued during the eighteen (18) months immediately preceding approval of the TIF Plan by the municipality pursuant to M.S., Section 469.175, Subd. 3. The County Auditor shall increase the original net tax capacity of the District by the net tax capacity of improvements for which a building permit was issued. The EDA and City have reviewed the area to be included in the District and found no parcels for which building permits have been issued during the 18 months immediately preceding approval of the TIF Plan by the City. Sources of Revenue/Bonds to be Issued The costs outlined in the Uses of Funds will be financed primarily through the annual collection of tax increments. The EDA and City reserve the right to incur bonds or other indebtedness as a result of the TIF Plan. As presently proposed, the projects within the District will be financed by a pay-as-you-go note and interfund loan. Any refunding amounts will be deemed a budgeted cost without a formal TIF Plan Modification. This provision does not obligate the EDA or City to incur debt. The EDA or City will issue bonds or incur other debt only upon the determination that such action is in the best interest of the City. The total estimated tax increment revenues for the District are shown in the table below: The EDA or City may issue bonds (as defined in the TIF Act) secured in whole or in part with tax increments from the District in a maximum principal amount of $12,280,505. Such bonds may be in the form of pay-as-you-go notes, revenue bonds or notes, general obligation bonds, or interfund loans. This estimate of total bonded indebtedness is a cumulative statement of authority under this TIF Plan as of the date of approval. Project estimated Tax Capacity upon completion 648,465$ Original estimated Net Tax Capacity 4,042 Estimated Captured Tax Capacity 644,423$ Original Local Tax Rate 152.5150%Pay 2019 Estimated Annual Tax Increment 982,841$ Percent Retainted by the City 100% Project Tax Capacity SOURCES Tax Increment 17,507,798$ Interest 1,750,780 TOTAL 19,258,578$ City of Brooklyn Center Tax Increment Financing District No. 8: Real Estate Equities 7 Uses of Funds Currently under consideration for the District is a proposal to facilitate to facilitate the development of 270 units of affordable housing. The EDA and City have determined that it will be necessary to provide assistance to the projects for certain District costs, as described. The EDA and City have studied the feasibility of the development or redevelopment of property in and around the District. To facilitate the establishment and development or redevelopment of the District, this TIF Plan authorizes the use of tax increment financing to pay for the cost of certain eligible expenses. The estimate of public costs and uses of funds associated with the District is outlined in the following table. The total project cost, including financing costs (interest) listed in the table above does not exceed the total projected tax increments for the District as shown in the Sources of Revenue section. Estimated Impact on Other Taxing Jurisdictions The estimated impact on other taxing jurisdictions assumes that the development contemplated by the TIF Plan would occur without the creation of the District. However, the EDA and City have determined that such development or redevelopment would not occur "but for" tax increment financing and that, therefore, the fiscal impact on other taxing jurisdictions is $0. The estimated fiscal impact of the District would be as follows if the "but for" test was not met: USES Land/Building Acquisition 1,000,000$ Site Improvements/Preparation 750,000$ Utilities 350,000$ Affordable Housing 7,429,725$ Other Qualifying Improvements 1,000,000$ Administrative Costs (up to 10%)1,750,780$ PROJECT COST TOTAL 12,280,505$ Interest 6,978,073 PROJECT AND INTEREST COSTS TOTAL 19,258,578$ Entity 2018/Pay 2019 Total Net Tax Capacity Estimated Captured Tax Capacity (CTC) upon completion Percent of CTC to Entity Total Hennepin County 1,817,980,868 644,423 0.0354% City of Brooklyn Center 18,867,746 644,423 3.4155% Robbinsdale ISD 281 97,653,903 644,423 0.6599% Impact on Tax Base City of Brooklyn Center Tax Increment Financing District No. 8: Real Estate Equities 8 The estimates listed above display the captured tax capacity when all construction is completed. The tax rate used for calculations is the Pay 2019 rate. The total net capacity for the entities listed above are based on Pay 2019 figures. The District will be certified under the Pay 2020 rates, which were unavailable at the time this TIF Plan was prepared. Pursuant to M.S. Section 469.175 Subd. 2(b): (1) Estimate of total tax increment. It is estimated that the total amount of tax increment that will be generated over the life of the District is $17,507,798; (2) Probable impact of the District on city provided services and ability to issue debt. An impact of the District on police protection is expected. The current site is a vacant parking lot adjacent to a heavily used transit facility. The transit facility currently generates a high volume of police calls, some of which spill onto this site. It is anticipated that the development will reduce the amount of spillover activity from the transit center and increase the amount of positive activity on the site. Further, the increase in transit users generated from the development will likely have a positive effect on the transit facility. The City does not expect that the proposed development, in and of itself, will necessitate new capital investment in vehicles or facilities. The probable impact of the District on fire protection is not expected to be significant. Typically, new buildings generate few calls, if any, and are of superior construction. The existing buildings, which will be eliminated by the new development, have public safety concerns that include several unprotected old buildings with issues such as access, hydrant locations, and converted structures. The City does not expect that the proposed development, in and of itself, will necessitate new capital investment in vehicles or facilities. The impact of the District on public infrastructure is expected to be minimal. The development is not expected to significantly impact any traffic movements in the area. The current infrastructure for sanitary sewer, storm sewer and water will be able to handle the additional volume generated from the proposed development. Based on the development plans, there are no additional costs associated with street maintenance, sweeping, plowing, lighting and sidewalks. The development in the District is expected to contribute an estimated $668,465 (269 units at $2,485/unit) in sanitary sewer connection fees. The probable impact of any District general obligation tax increment bonds on the ability to issue debt for general fund purposes is expected to be minimal. It is not anticipated that there will be any general obligation debt issued in relation to this Entity Pay 2019 Extension Rate Percent of Total CTC Potential Taxes Hennepin County 41.8610%27.45% 644,423 $ 269,762 City of Brooklyn Center 71.8600%47.12% 644,423 463,082 Robbinsdale ISD 281 29.9090%19.61% 644,423 192,740 Other 8.8850%5.83% 644,423 57,257 Total 152.5150%100.00% $ 982,841 Impact on Tax Rates City of Brooklyn Center Tax Increment Financing District No. 8: Real Estate Equities 9 project, therefore there will be no impact on the City's ability to issue future debt or on the City's debt limit. (3) Estimated amount of tax increment attributable to school district levies. It is estimated that the amount of tax increments over the life of the District that would be attributable to school district levies, assuming the school district's share of the total local tax rate for all taxing jurisdictions remained the same, is $3,443,372; (4) Estimated amount of tax increment attributable to county levies. It is estimated that the amount of tax increments over the life of the District that would be attributable to county levies, assuming the county's share of the total local tax rate for all taxing jurisdictions remained the same, is $4,805,389; (5) Additional information requested by the county or school district. The City is not aware of any standard questions in a county or school district written policy regarding tax increment districts and impact on county or school district services. The county or school district must request additional information pursuant to M.S. Section 469.175 Subd. 2(b) within 15 days after receipt of the tax increment financing plan. No requests for additional information from the county or school district regarding the proposed development for the District have been received. Supporting Documentation Pursuant to M.S. Section 469.175, Subd. 1 (a), clause 7 the TIF Plan must contain identification and description of studies and analyses used to make the determination set forth in M.S. Section 469.175, Subd. 3, clause (b)(2) and the findings are required in the resolution approving the District. (i) In making said determination, reliance has been placed upon (1) written representation made by the developer to such effects; and (2) City staff awareness of the feasibility of developing the project site within the District, which is further outlined in t he City Council resolution approving the establishment of the TIF District and in Appendix C. (i) A comparative analysis of estimated market value both with and without establishment of the TIF District and the use of tax increments has been performed. Such analysis is included with the cashflow in Appendix B and indicates that the increase in estimated market value of the proposed development (less the indicated subtractions) exceeds the estimated market value of the site absent the establishment of the TIF District and the use of tax increments. Administration of the District Administration of the District will be handled by the Community Development Director. City of Brooklyn Center Tax Increment Financing District No. 8: Real Estate Equities 10 Appendix A: Map of Housing Development and Redevelopment Project No. 01 and the District I S L A N D S O F P E A C E P A R K (A N O K A C O U N T Y ) WEST F IRESTATION HEN NEP IN CO .LI B R A RY & GOV E RNMENT SERVICE CEN TER P A L M E R L A K E P R E S E R V E A R E A U .S . P O S T O F F I C E WA TERTOWERNo. 2 EV E R GREENPARK LA K E S ID E PARK(T RI A N G L E PARK) PUB L I C WORKSMAINTENANCE FA CI LI TY ST . A L P H ONSUS SCH OOL WI L LOW LANEEARLY CHI LDHOOD C EN TER LIQUOR ST O R E 2 LIQUOR ST O R E 1 N EW MILL E NNIUM AC A D EMY EASTFIRE ST A TION EV E RGREENELEMENTARY SCH OOL R I V E R D A L E P A R KEAST PA LMERLAKE PARK WE S T P A LMERLAKE PARK PA L ME R LAKEELEMENTARY SC H OOL WIL LOW LANE PA RK A R B O R E T U M O R C H A R D L A N E P A R K N O MP ENGACADEMY M O U N D C E M E T E R Y FREEWAYPARK GA R D E N CITYELEMENTARY SC H OOL MA R LINPARK WA TERTOWERNo.1 FIREHOUSEPARK BRO OK LYN CENTER HIG H SCHOOL EA RLEBROWN EL E ME NTARYSCHOOL B E L L V U E P A R K CEN TENNIALPARK CITYHALL CEN TE R BROOKGOLF COURSE WA TERTOWERNo. 3 KYL AWNPARK NORT HPORTELEMENTARY SC H OOL N OR T H PORTPARK H AP PY HOLLOW PA RK EA RL E B ROWNHERITAGE C EN TER GR A N D VIEWPARK LIONSPARK N O R T H M I S S I S S I P P I R E G I O N A L P A R K CAH LA NDERPARK WA NGSTADPARK PO LICESTATION TW IN LA KE PA RK GARDENCITY PA RK PA L ME R LAKEPARK COMM U NITYCENTER 0 0.5 10.25 Mi l es Hou s ing D ev elop men t an d R ede velop ment Project No. 1 and Tax In creme nt F inancing (TIF) District No. 8 ² Legend TIF P rojectBoundary Line TIF Dis tr i ct No. 8 C it y Border V I N C E N T A V E . N . U P T O N A V E . N . NORTHWAY DR. CO. RD . NO.10 W A S H B U R N A V E . N . 58T H AV E. N. ADMIR AL LA. A V E 60T H AVE. N. 59T H AV E. N. X E R X E S A V E . N . Y O R K A V E . N . Z E N I T H A V E . N . A B B O T T A V E . N . B E A R D N O R T H W A Y N O R T H P O R T D R . B R O O K L Y N B L V D . X E R X E S A V E . N . 56TH. AVE. N. City of Brooklyn Center Tax Increment Financing District No. 8: Real Estate Equities 11 Appendix B: Estimated Cash Flow for the District 6/4/2019 Base Value Assumptions - Page 1 Real Estate Equities - No Inflation Brooklyn Center, MN 127 Workforce Apartments and 143 Senior Apartments ASSUMPTIONS AND RATES DistrictType:Housing District Name/Number: County District #:Exempt Class Rate (Exempt)0.00% First Year Construction or Inflation on Value 2019 Commercial Industrial Preferred Class Rate (C/I Pref.) Existing District - Specify No. Years Remaining First $150,000 1.50% Inflation Rate - Every Year:3.00%Over $150,000 2.00% Interest Rate:4.00%Commercial Industrial Class Rate (C/I)2.00% Present Value Date:1-Aug-20 Rental Housing Class Rate (Rental)1.25% First Period Ending 1-Feb-21 Affordable Rental Housing Class Rate (Aff. Rental) Tax Year District was Certified:Pay 2020 First $150,000 0.75% Cashflow Assumes First Tax Increment For Development:2021 Over $150,000 0.25% Years of Tax Increment 26 Non-Homestead Residential (Non-H Res. 1 Unit) Assumes Last Year of Tax Increment 2046 First $500,000 1.00% Fiscal Disparities Election [Outside (A), Inside (B), or NA]Inside(B)Over $500,000 1.25% Incremental or Total Fiscal Disparities Incremental Homestead Residential Class Rate (Hmstd. Res.) Fiscal Disparities Contribution Ratio 33.7006%Pay 2019 First $500,000 1.00% Fiscal Disparities Metro-Wide Tax Rate 143.9920%Pay 2019 Over $500,000 1.25% Maximum/Frozen Local Tax Rate: 152.515%Pay 2019 Agricultural Non-Homestead 1.00% Current Local Tax Rate: (Use lesser of Current or Max.)152.515%Pay 2019 State-wide Tax Rate (Comm./Ind. only used for total taxes)42.4160%Pay 2019 Market Value Tax Rate (Used for total taxes)0.26683%Pay 2019 Building Total Percentage Tax Year Property Current Class After Land Market Market Of Value Used Original Original Tax Original After Conversion Map ID PID Owner Address Market Value Value Value for District Market Value Market Value Class Tax Capacity Conversion Orig. Tax Cap. 1 03-118-21-14-0024 Ilex Group 5801 Xerxes Ave.1,617,000 1,617,000 33%539,000 Pay 2020 C/I Pref.10,030 Aff. Rental 4,042 1 1,617,000 0 1,617,000 539,000 10,030 4,042 Note: 1. Base values are for pay 2020 based upon review of County website on May 8, 2019. 2. Located in SD #281 and WS #8 Area/ Phase Tax Rates BASE VALUE INFORMATION (Original Tax Capacity) Prepared by Ehlers & Associates, Inc. - Estimates Only N:\Minnsota\Brooklyn Center\Housing - Economic - Redevelopment\TIF\TIF Districts\TIF 8 - Real Estate Equities (Jerry's Food Site)\TIF Run - FINAL 6/4/2019 Base Value Assumptions - Page 2 Real Estate Equities - No Inflation Brooklyn Center, MN 127 Workforce Apartments and 143 Senior Apartments Estimated Taxable Total Taxable Property Percentage Percentage Percentage Percentage First Year Market Value Market Value Total Market Tax Project Project Tax Completed Completed Completed Completed Full Taxes Area/Phase New Use Per Sq. Ft./Unit Per Sq. Ft./Unit Sq. Ft./Units Value Class Tax Capacity Capacity/Unit 2019 2020 2021 2022 Payable 1 Workforce Apt 180,000 180,000 127 22,860,000 Aff. Rental 152,400 1,200 50%100%100%100%2022 2 Sr. Apt 180,000 180,000 143 25,740,000 Aff. Rental 171,600 1,200 0%50%100%100%2023 TOTAL 48,600,000 324,000 Subtotal Residential 270 48,600,000 324,000 Subtotal Commercial/Ind.0 0 0 Note: 1. Market values are based upon estimates. Total Fiscal Local Local Fiscal State-wide Market Tax Disparities Tax Property Disparities Property Value Total Taxes Per New Use Capacity Tax Capacity Capacity Taxes Taxes Taxes Taxes Taxes Sq. Ft./Unit Workforce Apt 152,400 0 152,400 232,433 0 0 60,997 293,430 2,310.47 Sr. Apt 171,600 0 171,600 261,716 0 0 68,682 330,398 2,310.47 TOTAL 324,000 0 324,000 494,149 0 0 129,679 623,828 Note: 1. Taxes and tax increment will vary significantly from year to year depending upon values, rates, state law, fiscal disparities and other factors which cannot be predicted. Total Property Taxes 623,828 Current Market Value - Est.539,000 less State-wide Taxes 0 New Market Value - Est.48,600,000 less Fiscal Disp. Adj.0 Difference 48,061,000 less Market Value Taxes (129,679)Present Value of Tax Increment 9,789,626 less Base Value Taxes (6,165) Difference 38,271,374 Annual Gross TIF 487,983 Value likely to occur without Tax Increment is less than:38,271,374 WHAT IS EXCLUDED FROM TIF?MARKET VALUE BUT / FOR ANALYSIS TAX CALCULATIONS PROJECT INFORMATION (Project Tax Capacity) Prepared by Ehlers & Associates, Inc. - Estimates Only N:\Minnsota\Brooklyn Center\Housing - Economic - Redevelopment\TIF\TIF Districts\TIF 8 - Real Estate Equities (Jerry's Food Site)\TIF Run - FINAL 6/4/2019 Tax Increment Cashflow - Page 3 Real Estate Equities - No Inflation Brooklyn Center, MN 127 Workforce Apartments and 143 Senior Apartments TAX INCREMENT CASH FLOW Project Original Fiscal Captured Local Annual Semi-Annual State Admin.Semi-Annual Semi-Annual PERIOD % of Tax Tax Disparities Tax Tax Gross Tax Gross Tax Auditor at Net Tax Present ENDING Tax Payment OTC Capacity Capacity Incremental Capacity Rate Increment Increment 0.36%10%Increment Value Yrs.Year Date - - - - 02/01/21 100%76,200 (4,042) - 72,158 152.515%110,051 55,026 (198) (5,483) 49,345 47,429 0.5 2021 08/01/21 100%76,200 (4,042) - 72,158 152.515%110,051 55,026 (198) (5,483) 49,345 93,927 1 2021 02/01/22 100%238,200 (4,042) - 234,158 152.515%357,125 178,563 (643) (17,792) 160,128 241,861 1.5 2022 08/01/22 100%238,200 (4,042) - 234,158 152.515%357,125 178,563 (643) (17,792) 160,128 386,893 2 2022 02/01/23 100%328,572 (4,042) - 324,530 152.515%494,956 247,478 (891) (24,659) 221,928 583,959 2.5 2023 08/01/23 100%328,572 (4,042) - 324,530 152.515%494,956 247,478 (891) (24,659) 221,928 777,161 3 2023 02/01/24 100%338,429 (4,042) - 334,387 152.515%509,990 254,995 (918) (25,408) 228,669 972,328 3.5 2024 08/01/24 100%338,429 (4,042) - 334,387 152.515%509,990 254,995 (918) (25,408) 228,669 1,163,669 4 2024 02/01/25 100%348,582 (4,042) - 344,540 152.515%525,474 262,737 (946) (26,179) 235,612 1,356,953 4.5 2025 08/01/25 100%348,582 (4,042) - 344,540 152.515%525,474 262,737 (946) (26,179) 235,612 1,546,447 5 2025 02/01/26 100%359,039 (4,042) - 354,997 152.515%541,424 270,712 (975) (26,974) 242,764 1,737,864 5.5 2026 08/01/26 100%359,039 (4,042) - 354,997 152.515%541,424 270,712 (975) (26,974) 242,764 1,925,528 6 2026 02/01/27 100%369,811 (4,042) - 365,768 152.515%557,851 278,926 (1,004) (27,792) 250,129 2,115,095 6.5 2027 08/01/27 100%369,811 (4,042) - 365,768 152.515%557,851 278,926 (1,004) (27,792) 250,129 2,300,945 7 2027 02/01/28 100%380,905 (4,042) - 376,863 152.515%574,772 287,386 (1,035) (28,635) 257,716 2,488,677 7.5 2028 08/01/28 100%380,905 (4,042) - 376,863 152.515%574,772 287,386 (1,035) (28,635) 257,716 2,672,729 8 2028 02/01/29 100%392,332 (4,042) - 388,290 152.515%592,200 296,100 (1,066) (29,503) 265,531 2,858,642 8.5 2029 08/01/29 100%392,332 (4,042) - 388,290 152.515%592,200 296,100 (1,066) (29,503) 265,531 3,040,911 9 2029 02/01/30 100%404,102 (4,042) - 400,060 152.515%610,151 305,075 (1,098) (30,398) 273,579 3,225,022 9.5 2030 08/01/30 100%404,102 (4,042) - 400,060 152.515%610,151 305,075 (1,098) (30,398) 273,579 3,405,523 10 2030 02/01/31 100%416,225 (4,042) - 412,183 152.515%628,640 314,320 (1,132) (31,319) 281,870 3,587,847 10.5 2031 08/01/31 100%416,225 (4,042) - 412,183 152.515%628,640 314,320 (1,132) (31,319) 281,870 3,766,597 11 2031 02/01/32 100%428,712 (4,042) - 424,669 152.515%647,685 323,842 (1,166) (32,268) 290,409 3,947,150 11.5 2032 08/01/32 100%428,712 (4,042) - 424,669 152.515%647,685 323,842 (1,166) (32,268) 290,409 4,124,163 12 2032 02/01/33 100%441,573 (4,042) - 437,531 152.515%667,300 333,650 (1,201) (33,245) 299,204 4,302,961 12.5 2033 08/01/33 100%441,573 (4,042) - 437,531 152.515%667,300 333,650 (1,201) (33,245) 299,204 4,478,254 13 2033 02/01/34 100%454,820 (4,042) - 450,778 152.515%687,504 343,752 (1,238) (34,251) 308,263 4,655,312 13.5 2034 08/01/34 100%454,820 (4,042) - 450,778 152.515%687,504 343,752 (1,238) (34,251) 308,263 4,828,899 14 2034 02/01/35 100%468,465 (4,042) - 464,423 152.515%708,314 354,157 (1,275) (35,288) 317,594 5,004,233 14.5 2035 08/01/35 100%468,465 (4,042) - 464,423 152.515%708,314 354,157 (1,275) (35,288) 317,594 5,176,130 15 2035 02/01/36 100%482,519 (4,042) - 478,477 152.515%729,749 364,874 (1,314) (36,356) 327,205 5,349,755 15.5 2036 08/01/36 100%482,519 (4,042) - 478,477 152.515%729,749 364,874 (1,314) (36,356) 327,205 5,519,977 16 2036 02/01/37 100%496,995 (4,042) - 492,952 152.515%751,826 375,913 (1,353) (37,456) 337,104 5,691,909 16.5 2037 08/01/37 100%496,995 (4,042) - 492,952 152.515%751,826 375,913 (1,353) (37,456) 337,104 5,860,470 17 2037 02/01/38 100%511,904 (4,042) - 507,862 152.515%774,566 387,283 (1,394) (38,589) 347,300 6,030,725 17.5 2038 08/01/38 100%511,904 (4,042) - 507,862 152.515%774,566 387,283 (1,394) (38,589) 347,300 6,197,641 18 2038 02/01/39 100%527,262 (4,042) - 523,219 152.515%797,988 398,994 (1,436) (39,756) 357,802 6,366,232 18.5 2039 08/01/39 100%527,262 (4,042) - 523,219 152.515%797,988 398,994 (1,436) (39,756) 357,802 6,531,518 19 2039 02/01/40 100%543,079 (4,042) - 539,037 152.515%822,112 411,056 (1,480) (40,958) 368,619 6,698,462 19.5 2040 08/01/40 100%543,079 (4,042) - 539,037 152.515%822,112 411,056 (1,480) (40,958) 368,619 6,862,132 20 2040 02/01/41 100%559,372 (4,042) - 555,329 152.515%846,961 423,480 (1,525) (42,196) 379,760 7,027,444 20.5 2041 08/01/41 100%559,372 (4,042) - 555,329 152.515%846,961 423,480 (1,525) (42,196) 379,760 7,189,513 21 2041 02/01/42 100%576,153 (4,042) - 572,110 152.515%872,554 436,277 (1,571) (43,471) 391,236 7,353,207 21.5 2042 08/01/42 100%576,153 (4,042) - 572,110 152.515%872,554 436,277 (1,571) (43,471) 391,236 7,513,690 22 2042 02/01/43 100%593,438 (4,042) - 589,395 152.515%898,916 449,458 (1,618) (44,784) 403,056 7,675,781 22.5 2043 08/01/43 100%593,438 (4,042) - 589,395 152.515%898,916 449,458 (1,618) (44,784) 403,056 7,834,693 23 2043 02/01/44 100%611,241 (4,042) - 607,198 152.515%926,068 463,034 (1,667) (46,137) 415,231 7,995,195 23.5 2044 08/01/44 100%611,241 (4,042) - 607,198 152.515%926,068 463,034 (1,667) (46,137) 415,231 8,152,550 24 2044 02/01/45 100%629,578 (4,042) - 625,535 152.515%954,035 477,018 (1,717) (47,530) 427,770 8,311,479 24.5 2045 08/01/45 100%629,578 (4,042) - 625,535 152.515%954,035 477,018 (1,717) (47,530) 427,770 8,467,291 25 2045 02/01/46 100%648,465 (4,042) - 644,423 152.515%982,841 491,421 (1,769) (48,965) 440,686 8,624,661 25.5 2046 08/01/46 100%648,465 (4,042) - 644,423 152.515%982,841 491,421 (1,769) (48,965) 440,686 8,778,945 26 2046 02/01/47 Total 17,571,054 (63,256) (1,750,780) 15,757,018 Present Value From 08/01/2020 Present Value Rate 4.00%9,789,626 (35,243) (975,438) 8,778,945 Prepared by Ehlers & Associates, Inc. - Estimates Only N:\Minnsota\Brooklyn Center\Housing - Economic - Redevelopment\TIF\TIF Districts\TIF 8 - Real Estate Equities (Jerry's Food Site)\TIF Run - FINAL City of Brooklyn Center Tax Increment Financing District No. 8: Real Estate Equities 12 Appendix C: Findings Including But/For Qualifications 1.01. The Council 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. 8 therein and therefore the Council 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 Council hereby finds that TIF District No. 8 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 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 that receive assistance from tax increments will consist of commercial, retail or other nonresidential uses. The Development to be constructed in TIF District No. 8 will consist of approximately 270 units of workforce or senior rental housing. The Developer has represented that at least 40% of the units (i.e., 108 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 that receive assistance from tax increments will consist of commercial, retail or other nonresidential uses. 1.03. The Council hereby makes the following additional findings in connection with TIF District No. 8: (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 construction of the Development would not be undertaken in the reasonably foreseeable future. The property has remained undeveloped for several years despite previous efforts to redevelop the property. 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 City of Brooklyn Center Tax Increment Financing District No. 8: Real Estate Equities 13 would occur in the reasonably foreseeable future but for the use of tax increment assistance. (b) The Council further finds that the TIF Plan conforms to the general plan for the development or redevelopment of the City 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, as modified in accordance with an approved planned unit development agreement. (c) The Council further finds that the TIF Plan will afford maximum opportunity consistent with the sound needs of the City as a whole for the development of TIF District No. 8 by private enterprise. The specific basis for such finding being: The proposed development to occur within TIF District No. 8 is primarily low- and moderate-income senior or workforce housing. The development will increase the taxable market valuation of the City, and the number of available low- and moderate-income senior and workforce housing units in the City.