07-09-2003 Council Agenda - Laserfiche WebLink

Home Browse Search

TIF District Overview The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan for Tax Increment Financing District No. 2 -2, as required pursuant to Minnesota Statutes, Section 469.175, Subdivision 3 are as follows: 1. Finding that Tax Increment Financing District No. 2 -2 is a renewal and renovation district as defined in M.S., Section 469.174, Subd. 10(a). The District consists of one parcel, with plans to redevelop the area for commercial purposes. At least 15 percent of the area of the parcel in the District is occupied by buildings, streets, utilities, paved or gravel parking lots or other similar structures and more than 20 percent of the buildings in the District are structurally substandard, and an additional 30 percent are requiring substantial renovation or clearance. (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 Tax Increment Financing District No. 2 -2 permitted by the 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 the TIF Plan meets the City's objectives for redevelopment. Due to the high cost of redevelopment on the parcel 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 developer was asked for and provided a letter and a proforma as justification that the developer would not have gone forward without tax increment assistance. (See attachment in Appendix F.) 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 the TIF District permitted by the TIF Plan: This finding is justified on the grounds that the cost of site and public improvements and utilities add to the total redevelopment cost. The City Council does not believe that the proposed property will further develop without public assistance. Despite freeway visibility, the access to and from the freeway is longer and more difficult than is common for retail facilities. The site is occupied by a former Knox lumber facility that was vacant until utilized for a wholesale gypsum board dealer. A historical review of the market value of the property for the past several years demonstrates that the value of the property has decreased in the past three years. The City expects that this trend will continue. In addition to demolition costs and poor site layout due to the former use of the property as a lumber yard, the major challenge to development of the site will be the cost of soils correction due to unstable soils. The proposed projects have a market value of over $10,900,000, assuming development of both phases of the project. For phase I of the project, the market value increase is Page 3 EHLERS