03-27-2002 Council Agenda - Laserfiche WebLink

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Functional Analysis March 21, 2002 Page 7 The key to determining the use of tax increment financing (TIF) is the ability to establish a TIF district. State Law authorizes two types of TIF districts with application to Rice Street Crossings — redevelopment and renewal /renovation. The ability to create both redevelopment and renewal /renovation districts relies in part on the presence of "structurally substandard" buildings as defined in the statutes. The comments in this memo are based on the observation of exterior conditions and previous experience. The actual inspection of building interiors by a qualified individual is needed to make an accurate evaluation of existing conditions. This inspection may discover conditions not obvious from the outside. Redevelopment TIF District The first choice for use of TIF is a redevelopment district. This type of district provides the greatest funding capacity. The city can capture tax increments for up to 25 years after the receipt of the first tax increment. The use of this district hinges on the ability to meet the necessary criteria. The criteria for the establishment of a redevelopment TIF district are contained in Minnesota Statutes, Section 469.174, Subdivision 10. The following portions of the statute describe the key criteria: (a) "Redevelopment district " means a type of lax increment financing district consisting ofa project, or portions of a project, within which the authority finds by resolution that one or more of the following conditions, reasonably distributed throughout the district, exists: (/) parcels consisting of 70 percent of the area of the district are occupied by buildings, streets, utilities, or other improvements and more than 50 percent of the buildings, not including outbuildings, are structurally substandard to a. degree requiring substantial renovation or clearance; (b) For purposes of this subdivision, "structurally substandard "shall meat containing defects in structural elements ar 0 combination ofdeftciencies in essential utilities and facilities, light and ventilation, fire protection including adequate egress, layout and condition of interior partitions, or similar factors, which defects or deficiencies are ofsufficient total significance to jnstifjr substantial renovation or clearance. (0,4 building is not structurally substandard if it is in compliance with the building code applicable to new buildings or could be modified to satisfy the building code at a cost of less than 15 percent of the cost of constructing a new structure of the same square footage and type on the site. The municipality may fund that a building is not disqualified as structurally substandard under the preceding sentence on the basis of reasonably available evidence, such as the size, type, and age oldie building, the average cost ofplumbbng, electrical, or structural repairs, or other similar reliable evidence. Applying the statute to the Rice Street Crossings area requires answers to the following questions: (1) Do developed parcels make up 7O% or more of the area to be included in the TIP district? (2) How many buildings are located within the proposed district?