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City Council Resolution 2005-83CITY OF MONTICELLO COUNTY OF WRIGHT STATE OF MINNESOTA Council member Wayne Mayer introduced the following resolution and moved its adoption: RESOLUTION NO. 2005-83 RESOLUTION ADOPTING A MODIFICATION TO THE REDEVELOPMENT PLAN FOR CENTRAL MONTICELLO REDEVELOPMENT PROJECT NO. 1; AND ESTABLISHING TAX INCREMENT FINANCING DISTRICT NO. 1-34 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 Board of Commissioners (the "Board") of the Monticello Housing and Redevelopment Authority (the "HRA") has heretofore established Central Monticello Redevelopment Project No. 1 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. 1 (the "Redevelopment Plan Modification") and establish Tax Increment Financing District No. 1-34 (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, approval of the Plans by the HRA on June 27, 2005, 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 boundaries of Central Monticello Redevelopment Project No. 1 (the "Project") are being expanded. The additions to the Project include (1) a portion of the District, and (2) an area for future development south and west of the current Project boundaries. The portion of the District that will be added to the Project area has been annexed by the City, which annexation was approved through the State of Minnesota's Chief Administrative Law Judge signing the State's resolution approving the annexation on June 9, 2005. Section 2. Findings for the Adoption and Approval of the Redevelopment Plan Modification. 2.01. The Council approves the Redevelopment Plan Modification, and specifically finds that: (a) the land within the Project area as expanded would not be available for redevelopment without the financial aid to be sought under this Redevelopment Plan; (b) the Redevelopment Plan, as modified, will afford maximum opportunity, consistent with the needs of the City as a whole, for the development of the Project by private enterprise; and (c) that the Redevelopment Plan, as modified, conforms to the general plan for the development of the City as a whole. Section 3. Findings for the Establishment of Tax Increment Financing District No. 1-34. 3.01. The Council hereby finds that the District is in the public interest and is a "renewal and renovation district" under Minnesota Statutes, Section 469.174, Subd. 10a. 3.02. The Council 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 redevelopment or development of the District by private enterprise. 3.03. The Council further 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 Purpose 4.01. The adoption of the Plans conforms in all respects to the requirements of the Act and will help fulfill a 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 because it redevelop substandard areas, provide an impetus for commercial and industrial development by improving the efficiency of the transportation system, including access to the interstate highway system and roads adjacent to the interchange with the interstate highway, and thereby serves a public purpose. 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 Tom Perrault , 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: Dated: July 25, 2005 cf-�l Clint Herbst, Mayor (Seal) None ATTEST: Rick Wolfsteller, CiVy Administrator EXHIBIT A RESOLUTION NO. 2005-83 The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan (TIF Plan) for Tax Increment Financing District No. 1-34 (TIF District No. 1-34) as required pursuant to M.S., Section 469.175, Subd. 3 are as follows: 1. Finding that the TIF District No. 1-34 is a renewal and renovation district as defined in M.S., Section 469.174, Subd. 10a. TIF District No. 1-34 consists of eight parcels, delineated in the TIF Plan, for the purpose of constructing of various public improvements including a new interchange with Interstate 94 and a portion. of the public improvements adjacent to the District. TIF District No. 1-34 is in the public interest because it will it redevelop substandard areas, provide an impetus for commercial and industrial development by improving the efficiency of the transportation system, including access to the interstate highway system and roads adjacent to the interchange with the interstate highway, and preserve and enhance the tax base of the state. At least 70 percent of the area of the District consists of occupied parcels and at least 15 % of the area of the occupied parcels are covered by buildings, streets, utilities, paved or gravel parking lots, or other similar. (See Appendix E 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 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 TIF District No. 1-34 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 the redevelopment proposed in this plan meets the City's objectives for redevelopment. Due to the high cost of redevelopment on the parcels currently occupied by substandard buildings, the limited amount of commercial/industrial property for expansion adjacent to the existing project, the incompatible land uses at close proximity, and the cost of financing the proposed improvements, this project is feasible only through assistance, in part, from tax increment financing. The interstate interchange project requires substantial public and private investment. The City's engineer has negotiated with landowners adjacent to the new public improvements and has set special assessment levels for benefited properties. However, the special assessments are not sufficient to cover all costs of the project. The County will be paying for $2,000,000 of the road costs associated with the project and the State of Minnesota will also contribute to the acquisition and construction costs associated with the interchange. Without tax increment financing, the City's share of the project costs, even after the other public and private sources, is over $6,000,000 plus various storm sewer utility costs. The City's share could be higher if the award for the AVR site under condemnation is substantially more than the City's initial appraisal. Tax increment financing from a portion of the new development (the Target store and an adjacent outlot) will help to reduce the City's share of the development reduce the tax burden to City residents only. The interchange is expected to benefit all resident in the County, City and School District. Without TIF, the City would have not proceeded with the interchange and must less than 50% of the new commercial development would have occurred within the foreseeable future. (See attachment in Appendix F of the TIF Plan.) 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 proposed development after subtracting the present value of the projected tax increments for the maximum duration of TIF District No. 1-34 permitted by the TIF Plan: The City supported this finding on the grounds that the cost of public improvements, acquisition of substandard and incompatible buildings all add to the total development cost. The interchange is expected to benefit all resident in the County, City and School District. Without TIF, the City would have not proceeded with the interchange and must less than 50% of the new commercial development would have occurred within the foreseeable future. This site and surrounding sites have been marketed for several years without success. Therefore, the City reasonably determines that no other redevelopment of similar scope is anticipated on this site without substantially similar assistance being provided to the development. To summarize this finding: 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 $15,198,700. The increase in market value would be due primarily to new construction within the District. (See Appendix D and F 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 $3,523,505 (See Appendix F 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 $11,675,195 (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. 1-34 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 TIF Plan for TIF District No. 1-34 will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development of Central Monticello Redevelopment Project No. I by private enterprise. The project to be assisted by the District will result in preservation and enhancement of the tax base, and an impetus for commercial and industrial development by improving the efficiency of the transportation system, including access to the interstate highway system and roads adjacent to the interchange with the interstate highway