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EDA Resolution #2022-17 Approving the Establishment of TIF District 1-45CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO.2022-017 RESOLUTION APPROVING THE ESTABLISHMENT OF TAX INCREMENT FINANCING (REDEVELOPMENT) DISTRICT NO. 1-45 (BLOCK 52) WITHIN CENTRAL MONTICELLO REDEVELOPMENT PROJECT NO. 1 AND THE ADOPTION OF A TAX INCREMENT FINANCING PLAN THEREFOR WHEREAS, the Board of Commissioners (the "Board") of the City of Monticello Economic Development Authority (the "Authority") proposes to establish Tax Increment Financing (Redevelopment) District No. 1-45 (the "TIF District") within the Central Monticello Redevelopment Project No. 1 (the "Project Area") in the City of Monticello, Minnesota (the "City") and adopt the related Tax Increment Financing Plan therefor (the "TIF Plan"), all pursuant to Minnesota Statutes, Sections 469.001 through 469.047, 469.090 through 469.1082, and 469.174 through 469.1794, as amended (the "TIF Act"), all as reflected in that certain document entitled "Tax Increment Financing Plan for Tax Increment Financing (Redevelopment) District No. 1-45 within Central Monticello Redevelopment Project No. 1" and presented for the Board's consideration; WHEREAS, the City, the Board, and its consultants will perform all actions required by law to be performed prior to the adoption and approval of the TIF Plan, including without limitation, notification of the commissioner of Wright County, Minnesota ("Wright County") representing the area included in the TIF District, notification of Wright County and Independent School District No. 882, approval of the TIF Plan by the City's planning commission, and the holding of a public hearing by the City Council of the City thereon on May 23, 2022, and continued to June 27, 2022, following notice thereof published in the City's official newspaper at least 10 but not more than 30 days prior to the public hearing; WHEREAS, certain information, written reports and other documentation and materials (collectively, the "Materials") relating to the establishment of the TIF District and the approval and adoption of the TIF Plan and to the activities contemplated therein have heretofore been prepared and submitted to the Board and/or made a part of the Authority and City files and proceedings on the TIF Plan. The Materials, which are incorporated herein by reference, include data, information and/or substantiation constituting or relating to (1) the "studies and analyses" on why the new TIF District meets the requirements to be a redevelopment tax increment financing district, including a "Report of Inspection Procedures and Results for Determining Qualifications of a Tax Increment Financing District as a Redevelopment District"; dated March 7, 2022, prepared by LHB, Inc., Minneapolis, Minnesota (the "LHB Report"), (2) why the TIF District meets the so-called "but for" test, including an analysis of the proforma, application for assistance, and other materials submitted by Deephaven Development LLC, or an affiliate thereof or entity related thereto (the "Developer"); and (3) 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; MN 190\ 159\796333.v5 WHEREAS, the TIF District is being established to facilitate a redevelopment project by the Developer consisting of the acquisition of certain property, demolition of existing blighted buildings, and construction of approximately 87 rental housing units and approximately 27,342 square feet of commercial retail and office space, with 83 lower -level parking spaces and 114 adjacent off-street parking stalls and related amenities in the City (the "Development"). NOW THEREFORE BE IT RESOLVED by the Board of Commissioners (the "Board") of the City of Monticello Economic Development Authority as follows: 1. The Board hereby finds that the land within the Project Area is proper and desirable to establish and develop within the City, its effect will be to carry out the objectives of the Redevelopment Plan for the Redevelopment Project (the "Redevelopment Plan") by creating an impetus for the redevelopment of a site in the City's downtown, and otherwise promote certain public purposes and accomplish certain objectives as specified in the TIF Plan and the Redevelopment Plan. The Redevelopment Plan has been previously established by the City and the Authority and is not being expanded in connection with the establishment of the TIF District. 2. The Board hereby finds that the TIF District is in the public interest and is a redevelopment district, as defined in Minnesota Statutes, Section 469.174, Subdivision 10 for the following reasons: The TIF District is, pursuant to Minnesota Statutes, Section 469.174, Subdivision 10, a "redevelopment district" because it consists of a project or portions of a project within which the following conditions, reasonably distributed throughout the District, exist: (1) parcels consisting of at least 70% of the area of the TIF District are occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures and (2) more than 50% of the buildings located within the TIF District are deemed "structurally substandard" (within the meaning of Minnesota Statutes, Section 469.174, Subdivision 10(b) and (c)) to a degree requiring substantial renovation or clearance. Such conditions are reasonably distributed throughout the geographic area of the proposed TIF District The TIF District consists of thirteen parcels, and the parcels are "occupied" as defined in Minnesota Statutes, Section 469.174, Subd. 10(e), in that: (1) 100% of the parcel is occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures and (2) the buildings in the TIF District (i.e. 100% of the buildings in the TIF District) are structurally substandard to a degree requiring substantial renovation or clearance. In addition, the costs of bringing the structurally substandard building into compliance with building codes applicable to new buildings would exceed 15% of the cost of constructing a new structure of the same size and type on the site. The Materials, including, without limitation, the LHB Report. and the supporting facts for these detenninations, are on file with the staff of the Authority. There have been no building permits issued or improvements made to the parcel or building since the date of the report. 3. The Board hereby makes the following additional findings: MN l 90\ 159\796333.v5 (a) The Board further finds that the proposed Development, in the opinion of Board, 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 Development is located in a residential and commercial area of the City that includes parcels that have been found to be occupied by blighted buildings and under-utilized areas which are a detriment to redevelopment by the private sector. Such conditions render properties within the TIF District unsuitable for redevelopment due to the excessive costs involved with redevelopment. It is only through a coordinated and comprehensive redevelopment effort using tax increment revenues to fund certain of these excessive development expenses will private redevelopment occur. The Development requires public financial assistance to offset the cost of land acquisition, removal of blighted and substandard buildings, utility relocation, constructing underground parking, and site improvements to allow for the Developer to proceed with construction of the Development within the TIF District. The Developer has represented that they could not proceed with the Development without tax increment assistance. (b) The Board further finds that the TIF Plan conforms to the general plan for the development or redevelopment of the City as a whole. The specific basis for such finding being: The TIF Plan conforms with the general development plan of the City and will generally complement and serve to implement policies adopted in the City's comprehensive plan. The construction of the Development contemplated on the property is in accordance with the existing zoning or approved zoning variances for the property. The City's planning commission has determined that the TIF District confirms with the general development plan of the City as a whole. (c) The Board further finds that the TIF Plan will afford maximum opportunity consistent with the sound needs of the City as a whole for the development of the Project Area by private enterprise. The specific basis for such finding being: The Development proposed to occur within the TIF District will afford maximum opportunity for the development of the applicable parcels consistent with the needs of the City and the removal of blighted buildings will increase the potential for future redevelopment. The Development is primarily rental housing and commercial space. Through the implementation of the TIF Plan, the Development will increase the availability of safe and decent rental housing within the City, remove substandard properties, increase the tax base of the State, and add high - quality development to the City. MN 190\159\796333.v5 3 (d) For purposes of compliance with Minnesota Statutes, Section 469.175, Subdivision 3(b)(2), the Board hereby finds that the increased market value of the property to be developed within the TIF District that could reasonably be expected to occur without the use of tax increment financing is likely $452,089, which is less than the market value estimated to result from the proposed development (approximately $23,724,992), after subtracting the present value of the projected tax increments for the maximum duration of the TIF District (approximately $4,033,474), which is approximately $18,090,818. In making these findings, the Board has noted that the existing buildings on the Development Property are blighted and would likely remain in its current condition or further deteriorate if tax increment financing were not available. Thus, the use of tax increment financing will be a positive net gain to the City, the School District, and the County, and the tax increment assistance does not exceed the benefit which will be derived therefrom. 4. The Authority elects to retain all of the captured tax capacity to finance the costs of the TIF District and the Project Area. The Authority elects to delay the receipt of the first increment until tax payable year 2025. 5. The provisions of Sections 3-4 are hereby incorporated by reference into and made a part of the TIF Plan and of the findings of the TIF Plan, including but not limited to, the LHB Report included as an exhibit to the TIF Plan, are incorporated herein by reference and made a part hereof. 6. The Board further finds that TIF Plan is intended and in the judgment of the Board its effect will be to promote the public purposes and accomplish the objectives specified therein. The TIF Plan will help diversify housing opportunities and increase the number and availability of housing units in the City, eliminate blighting factors, and improve the tax base. The Authority expressly finds that any private benefit to be received by a private developer is incidental, as the tax increment assistance is provided solely to make the development financially feasible and thus produce the public benefits described. Therefore, the Authority finds that the public benefits of the TIF Plan exceed any private benefits. 7. Subject to approval by the City Council of the City (the "City Council"), the TIF District is hereby established and the TIF Plan, as presented to the Board on this date, including without limitation the findings and statements of objectives contained therein, is hereby approved, ratified, established, and adopted and shall be placed on file in the office of the in the office of the City Finance Director. Approval of the TIF Plan does not constitute approval of any project or a development agreement with any developer. City and Authority staff and consultants are authorized and directed to proceed with implementation of the TIF Plan and to transmit the request for certification of the TIF District to the Wright County Auditor in such form and content as the County Auditor may specify. The Wright County Auditor is requested to certify the original net tax capacity of the TIF District as described in the TIF Plan, and to certify in each year thereafter the amount by which the original net tax capacity has increased or decreased in accordance with the Act. MN 190\159\796333.v5 4 8. Subject to approval by the City Council, City staff, advisors, and legal counsel are authorized and directed to proceed with the implementation of the TIF Plan and to negotiate, draft, prepare, and present to the City Council for its consideration all further plans, resolutions, documents, and contracts necessary for this purpose. Adopted this 22nd day of June, 2022. President ATTEST: MN 190\ 159\796333.v5