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City Council Resolution 2005-21CITY OF MONTICELLO COUNTY OF WRIGHT STATE OF MINNESOTA Council member Brian Stumpf introduced the following resolution and moved its adoption: RESOLUTION NO. 2005-21 RESOLUTION ADOPTING A MODIFICATION TO THE REDEVELOPMENT PLAN FOR CENTRAL MONTICELLO REDEVELOPMENT PROJECT NO. 1; AND ESTABLISHING TAX INCREMENT FINANCING DISTRICT NO. 1-33 THEREIN AND ADOPTING A TAX INCREMENT FINANCING PLAN THEREFOR. BE IT RESOLVED by the City Council (the "Council") of the City of Monticello, Minnesota (the "City"), as follows: Section 1. Recitals. 1.01. The Monticello Housing and Redevelopment Authority (the "HRA") has heretofore established Central Monticello Redevelopment Project No. l and adopted the Redevelopment Plan therefor. It has been proposed by the HRA and the City that the City adopt a Modification to the Redevelopment Plan for Central Monticello Redevelopment Project No. l (the "Redevelopment Plan Modification") and establish Tax Increment Financing District No. 1-33 (the "District") therein and adopt a Tax Increment Financing Plan (the "TIF Plan") therefor (the Redevelopment Plan Modification and the TIF Plan are referred to collectively herein as the "Plans"); all pursuant to and in conformity with applicable law, including Minnesota Statutes, Sections 469.001 to 469.047 and Sections 469.174 to 469.1799, all inclusive, as amended, (the "Act") all as reflected in the Plans, and presented for the Council's consideration. 1.02. The HRA and City have investigated the facts relating to the Plans and have caused the Plans to be prepared. 1.03. The HRA and City have performed all actions required by law to be performed prior to the establishment of the District and the adoption and approval of the proposed Plans, Including, but not limited to, notification of Wright County and Independent School District No. 882 having taxing jurisdiction over the property to be included in the District, a review of and written comment on the Plans by the City Planning Commission, and the holding of a public hearing upon published notice as required by law. 1.04. Certain written reports (the "Reports") relating to the Plans and to the activities contemplated therein have heretofore been prepared by staff and consultants and submitted to the Council and/or made a part of the City files and proceedings on the Plans. The Reports include data, information and/or substantiation constituting or relating to the basis for the other findings and determinations made in this resolution. The Council hereby confirms, ratifies and adopts the Reports, which are hereby incorporated into and made as fully a part of this resolution to the same extent as if set forth in full herein. 1.05 The City is not modifying the boundaries of Central Monticello Redevelopment Project No. l but is, however, modifying the Redevelopment Plan therefor. 1.06. The City Council has reviewed a Contract for Private Redevelopment, dated on or after February 28, 2005 ("Contract") between the HRA and Tapper's Holdings LLC (the "Redeveloper") which agreement includes a "business subsidy agreement" as defined in Minnesota Statutes, Section 166J.993 to 116J.995. Section 2. Findinas for tile. Adoption and Approval of the Plans 2.01. The Council hereby finds that the Plans, are intended and, in the judgment of this Council, the effect of such actions will be, to provide an impetus for development in the public purpose and accomplish certain objectives as specified in the Plans, which are hereby incorporated herein. Section 3. Fi»dinas for the Establishment of Tax Increment Financing District No 1-33 3.01. The Council hereby finds that the District is in the public interest and is an "economic development district" under Minnesota Statutes, Section 469.174, Subd. 12. 3.02. The Council further finds that the proposed development would not occur solely through private investment within the reasonably foreseeable future and that the increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the District permitted by the TIF Plan, that the Pians conform to the general plan for the development or redevelopment of the City as a whole; and that the Plans will afford maximum opportunity consistent with the sound needs of the City as a whole, for the redevelopment or development of the District by private enterprise. 3.03. The Council ftirther finds, declares and determines that the City made the above findings stated in this Section and has set forth the reasons and supporting facts for each determination in writing, attached hereto as Exhibit A. Section 4. Public PUrUOse 4.01. The adoption of the TIF Plan conforms in al l respects to the requirements of the Act. The TIF Plan will enable redevelopment of an area which is underutilized to provide employment opportunities, improve the tax base, and improve the general economy of the City and State. The City expressly finds that any private benefit to be received by developers is incidental, as the assistance is only provided to remedy the conditions that impair the development potential of the site. That is, the tax increment assistance is necessary to produce the public benefits described above. Therefore, the City finds that the public benefits of the Plans exceed any private benefits. Section 5. Approval and Adoption of the Plans. 5.01. The Plans, as presented to the Council on this date, including without limitation the findings and statements of objectives contained therein, are hereby approved, ratified, established, and adopted and shall be placed on file in the office of the Executive Director of the HRA. 5.02. The staff of the City, the City's advisors and legal counsel are authorized and directed to proceed with the implementation of the Plans and to negotiate, draft, prepare and present to this Council for its consideration all further plans, resolutions, documents and contracts necessary for this purpose. 5.03 The Auditor of Wright County is requested to certify the original net tax capacity of the District, as described in the Plans, and to certify in each year thereafter the amount by which the original net tax capacity has increased or decreased; and the HRA is authorized and directed to forthwith transmit this request to the County Auditor in such form and content as the Auditor may specify, together with a list of all properties within the District, for which building permits have been issued during the 18 months immediately preceding the adoption of this resolution. 5.04. The City Administrator is further authorized and directed to file a copy of the Plans with the Commissioner of Revenue pursuant to Minnesota Statutes 469.175, Subd. 4a. 5.05. The City Council approves the Contract, including the business subsidy agreement contained therein, in substantially the form on file in City Hall. The motion for the adoption of the foregoing resolution was duly seconded by Council member Tom Perrault , and upon a vote being taken thereon, the following voted in favor thereof: Clint Herbst, Tom Perrault, Brian Stumpf and Glen Posusta and the following voted against the same: None Dated: February 28, 2005 6��' ;,V&k Clint Herbst, Mayor (Seal) A t Rick Wolfsteller, (Ity Administrator EXHIBIT A RESOLUTION NO. 2005-21 The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan (TIF Plan) for Tax Increment Financing District No. 1-33 (TIF District No. 1-33) as required pursuant to M.S., Section 469.175, Subd. 3 are as follows: 1. Finding that the TIF District No. 1-33 is an economic development district as defined in M.S., Section 469.174, Subd. 12. Factual basis: TIF District No. 1-33 is a contiguous geographic area within the City's Central Monticello Redevelopment Project No. 1, delineated in the TIF Plan, for the purpose of financing economic development in the City through the use of tax increment. TIF District No. 1-33 is in the public interest because it will facilitate construction of a 25,000 s.f. addition to the existing approximate 60,000 s.f. industrial building owned by Tapper's Holdings LLC to be rented to Strategic Equipment & Supply Corporation which will discourage commerce, industry, or manufacturing from moving their operations to another state or municipality, increase employment in the state, and preserve and enhance the tax base of the state. 2. Finding that the proposed development, in the opinion of the City Council, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future and that the increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the market value estimated to result fi°om the proposed development after subtracting the present value of the projected tax increments for the maximum duration of7IF District No. 1-33 permitted by the TIF Flan. Factual basis: Proposed development not expected to occur The proposed development consists of an approximately 25,000 square foot addition to an existing vacant building in the City. Tapper's Holdings LLC, the developer of the site, has submitted a pro forma to the City demonstrating that the development of this site is not financially feasible without the assistance provided in this plan. No higher market value expected. - As the basis for the second part of this finding, the City notes that the existing building has no other conceivable use other than a distribution facility. No other use of the property has been proposed. Further, while it is possible for the property to be purchased by another user as is, there is no reasonable expectation that another user would expand the facility as proposed by Tapper's Holdings LLC. In fact, it is far more likely that another buyer would simply acquire the property and make minor improvements, if any. Also, any proposal to expand the facility would likely require assistance similar to that requested by Tapper's Holdings LLC. Lastly, the estimated increase in market value is higher than what can be expected given the current zoning of the site (See Memo attached as Exhibit F of TIF Plan). Therefore, the City reasonably believes that, without public assistance, little or no market value increase is expected for this property. To summarize the basis for the City's findings regarding alternative market value, in accordance with Minnesota Statutes, Section 469.175, Subd. 3(d), the City makes the following determinations: a. The City's estimate of the amount by which the market value of the site will increase without the use of tax increment financing is $0 (for the reasons described above), except some unknown amount of appreciation. b. If the proposed development to be assisted with tax increment occurs in the District, the total increase in market value would be approximately $750,000, including the value of the building addition and increases in market value of the existing building that are expected along with the addition (See Exhibit D of TIF Plan). c. The present value of tax increments from the District for the maximum duration of the district permitted by the TIF Plan is estimated to be no more than $100,000 (See Exhibit D of TIF Plan) d. Even if some development other than the proposed development were to occur, the Council finds that no alternative would occur that would produce a market value increase greater than $650,000 (the amount in clause b less the amount in clause c) without tax increment assistance. 3. Finding that the TIF Plan for TIF District No. 1-33 conforms to the general plan for the development or redevelopnent of the municipality as a whole. Factual basis: The Planning Commission reviewed the TIF Plan and found that the TIF Plan conforms to the general development plan of the City. 4. Finding that the TIF Plan for TIF District. No. 1-33 will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development of Central Monticello Redevelopment Project No. 1 by private enterprise. Factual basis: The proposed development is a new distribution facility to be constructed as an expansion of an existing manufacturing facility in the Project manufacturing facility that is expected to create 40 new jobs, plus create substantial new tax base for the City and the state. The development clearly meets the City and HRA's economic development goals in terms of land use, job creation, and wage levels.