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City Council Resolution 2005-100CITY OF MONTICELLO COUNTY OF WRIGHT STATE OF MINNESOTA RESOLUTION NO. 2005-100 RESOLUTION ADOPTING A MODIFICATION TO THE REDEVELOPMENT PLAN FOR CENTRAL MONTICELLO REDEVELOPMENT PROJECT NO. 1 AND ESTABLISHING TAX INCREMENT FINANCING DISTRICT NO. 1-35 THEREIN AND ADOPTING A TAX INCREMENT FINANCING PLAN THEREFOR. Section 1. Recitals. 1.01 The Board of Commissioners (the "Board") of the Monticello Housing and Redevelopment Authority (the "Authority") has established Central Monticello Redevelopment Project No. 1 and adopted a Redevelopment Plan therefore. 1.02. The Authority and the City Council of the City of Monticello (the "City") Have proposed that the City adopt a Modification to the Redevelopment Plan ("Redevelopment Plan Modification") for Central Monticello Redevelopment Project No. 1 (the "Project") and establish Tax Increment Financing District No. 1-35 and adopt a Tax Increment Financing Plan (the "TiF Plan") therefore (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, inclusive, as amended (the "Act"), all as reflected in the Plans and presented for the City's consideration. 1.03. The City has investigated the facts relating to the Plans and has caused the Plans to be prepared. 1.04. The City has 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 County of Wright 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. 1.05. 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 Authority and 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. 1.06. The City is not modifying the boundaries of Redevelopment Project No. 1. MTN-268045v5 MN 190-1 1 5 Section 2. Findings for the Adoption and Approval of the Redevelopment Plan Modification. 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. Findings for the Establishment of Tax Increment Financing District No. 1-35. 3.01. The City hereby finds that the District is a "redevelopment district" under Minnesota Statutes, Section 469.174, Subd. 10 (a)(1). 3.02.. The City further finds that the proposed redevelopment would not occur solely through private investment within the reasonably foreseeable future and that the increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the District permitted by the TIF Plan, that the Plans conform to the general plan for the development or redevelopment of the City as a whole; and that the Plans will afford maximum opportunity consistent with the sound needs of the City as a whole, for the development or redevelopment of the District by private enterprise in that the intent is to provide only that public assistance necessary to make the private developments financially feasible. 3.04. The City finds that the reasons and facts supporting the findings in this resolution are described in the Plans and the Reports included therein. The City further finds that there are three parcels in the District, each of approximately 11,000 square feet in area. All three parcels are necessary to support the development proposed for the District, since the three parcels will contain new commercial development and associated parking necessary and convenient for the commercial development. Pursuant to the analysis provided to the City, parcels in the District consisting of 70 percent of the area of TIF District No. 1-35 are occupied by buildings, streets, utilities, paved or gravel parking lots or other similar structures, and more than 50 percent of the buildings are structurally substandard to a degree requiring substantial renovation or clearance, since the Reports show that 100 percent of the area of the District are SO occupied. The City further finds that the above conditions are reasonably distributed throughout the District because the substandard conditions exist over at least two thirds of the area of the District. 3.05. The City further finds, declares and determines that the City made the above findin��s stated in this Resolution and has set forth the reasons and supporting facts for each determination in writing, attached hereto as Exhibit A. Section 4. Public Purpose. 4.01 The City finds that the Plans conform in all respects to the requirements of the Act and will help fulfill a public purpose and the need to redevelop an area of the State of Minnesota which is underutilized, and that the adoption of the proposed TIF Plan will preserve and enhance the tax base of the City and the State. The Plan will redevelop substandard areas, provide an impetus for commercial development by providing for an 11,000 square foot commercial space consisting of a restaurant, office, other uses and associated parking which will have an estimated value of $1,000,000 and will enhance and compliment existing adjacent commercial development in downtown Monticello, and thereby serves a public purpose. The assistance will be given to a private developer, but only to the extent necessary to make the development feasible, for the reasons stated in Exhibit A. Therefore, the Council finds that the public benefits described above, outweigh any private benefits to the developer. MTN-268045v5 MN 190-115 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 and the Office of the State Auditor pursuant to Minnesota Statutes 469.175, Subd. 4a. The motion for the adoption of the foregoing resolution was duly seconded by Council member Mayer , and upon a vote being taken thereon, the following voted in favor thereof: Clint Herbst, Wayne Mayer, Tom Perrault, Glen Posusta and Brian Stumpf and the following voted against the same: None Dated: September 12, 2005 Clint Herbst, Mayor MTN-268045v5 MN 190-1 1; ATTEST: i Rick Wolfsteller, City Administrator (Seal) EXHIBIT A RESOLUTION NO. 2005-100 The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan for Tax Increment Financing District No. 1-35, as required pursuant to Minnesota Statutes, Section 469.17-, Subdivision 3 are as follows: Finding that Tax Increment Financing District No 1-35 Js a redevelopment district as defined in M.S., Section 469.174, Subd. 10(a) (1). The District consists of three ftill parcels with plans to redevelop the area for commercial/retail purposes by the construction of an 11,000 sq. ft. building containing a restaurant, office and other uses. At least 70 percent of the parcels in the District are occupied by buildings, streets, utilities, paved or gravel parking lots or other similar structures and more than 50 percent of the buildings in the District, not including outbuildings, are structurally substandard to a degree requiring substantial renovation or clearance. (See Appendix G of the TIF Plan.) 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 facture 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 Tax Increment Financing District No. 1-35 permitted by the TIF Plan. The proposed development, in the opinion of the City, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future: This finding is supported by the fact that two of the parcels in the District are occupied by substandard buildings, and are characterized by significant code deficiencies and system deficiencies relating to defects or substantial deterioration of mechanical and electrical systems, exterior of the structures and building components. Sixty-seven percent of the buildings in the District contained code deficiencies exceeding the fifteen percent threshold required by Minnesota Statutes Section 469. 174, Subd. 10( c ). The proposed development requires demolition of the existing structure and construction of an approximately 11,000 sq. ft. building containing a restaurant, office and other uses, with associated parking to serve this project and adjacent development. The City has analyzed a proforma submitted by the developer, which, in the City's opinion, demonstrates that the cost of demolition, soil correction as needed, and site improvements make the proposed redevelopment infeasible without the tax increment assistance provided under this plan. The developer has submitted a cost estimate of the project totaling approximately $2,000,000, of which $439,000 is attributable to net land and building acquisition and demolition. Even after development occurs, the land value portion of the project is estimated to be $230,000. The TIF, therefore, will be directed to the costs of acquisition which are higher than can be supported by normal market forces. Without TIF assistance and given current lease rates for commercial properties, the developer would receive a return on equity of less than 40%, well beyond industry standards. The developer has further represented to the City that it would not proceed with the redevelopment described above absent tax increment assistance. The increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in market value estimated to result from the MTN-268045v5 MN 190-115 proposed development after subtracting the present value of the projected tax increments for the maximum duration. of the TIF District permitted b_y the TIF Plan: This finding is supported by the fact that the site is now occupied by substandard buildings which have not been developed or improved despite adjacent redevelopment. The only way that the market value of the site would increase is through substantial redevelopment similar to that proposed in this plan. Any such redevelopment would need to address the same demolition, relocation and possible soil correction costs that confront the proposed developer. Therefore, the City concludes as follows: 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. b. If all development which is proposed to be assisted with tax increment were to occur in the District, the total increase in market value would be up to $645,500. 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 $198,982. (See Appendix G in the 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 $446,518 (the amount in clause b less the amount in clause c) without tax increment assistance. Finding that the Tax Increment Financing Plan for Tax Increment Financing District No. 1- 35 conforms to the general plan for the development or redevelopment of the municipality as a whole. The Planning Commission reviewed the TIF Plan and found that the TIF Plan conforms to the general development plan of the City. 4. Finding that the Tax Increment Financing Plan for Tax Increment Financing District No. 1-33 will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development or redevelopment of Redevelopment Project No. I by private enterprise. The project to be assisted by the District will result in the preservation and enhancement of the tax base, the redevelopment of substandard areas, assist in the viability of adjacent development through the increase in retail customers and creation of additional parking improvement of the new project, provide for public safety, and provide employment opportunities in the City. The goals of the City and the Authority include quality retail and office development in the core downtown area which will be assisted by the Plans and their implementation in part, through the proposed development project. MTN-268045v5 MN 190-115