HomeMy WebLinkAbout12-14-1998 EDA PacketAGENDA
ECONOMIC DEVELOPMENT AUTHORITY
MONDAY
DECEMBER 14, 1998
5:30 P.M.
1. Call to Order and Roll Call
2. Consideration of Minutes of October 26, 1998
3. Resolution No. 98-06 approving a Plan to Modify Tax Increment Financing District
No. 1-7 to remove parcels from the district and establishing Tax Increment Financing
District No. 1-9
4. Adjourn
CITY OF LINO LAKES
ECONOMIC DEVELOPMENT AUTHORITY
MINUTES
DATE: Monday, October 26, 1998
MEMBERS
PRESENT: K. Sullivan, J. Bergeson, C. Dahl, C. Lyden, A. Neal
MEMBERS
ABSENT:
OTHERS
PRESENT: Brian Wessel, Mary Divine, Mark Ruff
CONSIDERATION OF MINUTES
EDA Member Bergeson moved to approve the minutes from the September 28, 1998
EDA meeting. EDA Member Dahl seconded the motion. Motion passed unanimously.
CONSIDERATION OF RESOLUTION NO. 98-05 AUTHORIZING PREPARATION
OF A PLAN TO MODIFY DEVELOPMENT DISTRICT NO. 1 AND TO ESTABLISH
TAX INCREMENT FINANCING DISTRICT NO. 1-9
Mr. Wessel explained to the Authority that the city had a request for tax increment
financing from three businesses interested in locating in Apollo Business Center. This
resolution authorized preparation of the modification of Development District No. 1 to
delete the remaining G.M. Development parcels and the Rehbein business park parcels
from TIF District No. 1-7, and to reconstitute them into a new TIF District No. 1-9.
Additional parcels that were in TIF District No. 1-7 that were unlikely to develop as light
industrial uses were removed from the district altogether. The only parcels remaining in
1-7 had businesses with development agreements with the city.
Ms. Divine explained that Midwest Veneer and Pressing intends to purchase four acres
for a 40,000 square foot facility. H&L Mesabi was considering three acres for a 30,000
square foot facility, and All Test and Inspection was planning to purchase two acres for a
6,500 square foot building.
Mr. Ruff explained that the budget in this new TIF plan would be large enough to cover
all future development within the business park, which will eliminate the need for
modifications of the district in the future. Development agreements will be completed
later, spelling out the detail of the TIF assistance. The local contribution, which is 10
percent of the increment, will be included as part of the development agreement.
EDA President Sullivan questioned if TIF was needed in Rehbein's Lake Business Park.
Mr. Ruff stated that TIF allowed the city to control the type and quality of development
that would go in the park.
EDA Member Lyden said that the original TIF objective was to use it as a tool for
development, then growth would proceed on its own. Since other cities use it liberally,
Lino Lakes needs it to continue to compete. Mr. Wessel said the city was conservative in
its approach to TIF. Mr. Ruff noted using TIF is a policy question as to whether the city
wanted to guide development, or wait for business to develop on its own.
EDA President Sullivan said she wanted the local contribution noted in the TIF and a
sunset clause on undeveloped parcels. Mr. Ruff stated the TIF law removed parcels that
were undeveloped after four years. He suggested an annual review of the process. EDA
Member Dahl asked how much this was costing the city. Mr. Wessel explained the city
was not gaining the additional tax base over a period of time.
EDA Member Bergeson moved to adopt Resolution No. 98-05, with the addition of an
annual review and the inclusion of the local contribution within the plan. EDA Member
Lyden seconded the motion. Motion passed unanimously.
ADJOURNMENT
EDA Member Lyden moved to adjourn. EDA Member Dahl seconded the motion.
Motion passed unanimously.
AGENDA ITEM 3
STAFF ORIGINATOR: Brian Wessel
DATE: 12/14/98
TOPIC: Resolution No. 98-06 approving a modified Tax
Increment Financing Plan for TIF District 1-7 and the establishment
of a Plan for Tax Increment Financing District No. 1-9
BACKGROUND:
On October 26 the EDA approved the preparation of a modified plan for Tax
Increment Financing District No. 1-7 and a plan for the establishment of a new
TIF District No. 1-9. The modification of District No. 1-7 is to remove parcels
from the district. Some of these parcels to be removed are not likely to be
developed in the foreseeable future with the help of tax increment financing
assistance. Other parcels are to be incorporated into the new district to enable
the city to provide tax increment financing to prospective businesses in the
privately owned portion of the Apollo Business Park and in the Lakes Business
Park. This modification has been sent to School District #12 and Anoka County
for review. Later tonight the City Council will hold a public hearing on the
modification and the establishment of a new TIF District.
OPTIONS:
1. Adopt Resolution No. 98-06 approving a modified tax increment financing plan
for TIF District No. 1-7 and establishment of TIF District No. 1-9
2. Return to staff for further consideration.
RECOMMENDATION:
Option 1
DEC 09 '98 02:22PM EHLERS & ASSOCIATES
P.2/8
LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY
CITY OF LINO LAKES
ANOKA COUNTY
STATE OF MINNESOTA
RESOLUTION NO.
RESOLUTION MODIFYING TAX INCREMENT FINANCING DISTRICT NO. 1-7
AND ADOPTING THE MODIFICATION TO THE TAX INCREMENT FINANCING
PLAN THEREFOR AND ESTABLISHING TAX INCREMENT FINANCING
DISTRICT NO. 1-9 WIT}IIN DEVELOPMENT DISTRICT NO. 1 AND ADOPTING
THE TAX INCREMENT FINANCING PLAN THEREFOR.
WHEREAS, the Board of Commissioners (the "Board") of the Economic Development Authority
(the "EDA)" for the City of Lino Lakes (the "City") has proposed to modify Tax Increment Financing District
No. 1-7 ("District No. I -7") and adopt the Modification to the Tax Increment Financing Plan therefor and
establish Tax Increment Financing District No. 1-9 and adopt the Tax Increment Financing Plan therefor,
(collectively, the "Plans"), all pursuant to and in conformity with existing law, including Minnesota Statutes,
Sections 469.090 through 469.1081, and Sections 469.174 to 469.179, inclusive, as amended, all as reflected
in the Plans and presented for the Board's consideration. Generally, the Modification of District No. 1-7 is
to remove 14 parcels from District No. 1-7, as listed in Appendix 11-A of the Modification to the Tax
Increment Financing Plan. Five of these parcels will be in Tax Increment Financing District No. 1-9 and are
listed in Appendix 111-C of the Tax Increment Financing Plan for District No. 1-9; and
WHEREAS, the EDA has investigated the facts relating to the Plans and has caused the Plans to be
prepared; and
WHEREAS, the proposed developments as described in the Plans, in the opinion of the EDA, would
not reasonably be expected to occur solely through private investment within the reasonable foreseeable
future and, therefore, the use of tax increment financing is deemed necessary; and
WHEREAS, the EDA has performed all actions required by law to be performed prior to the
adoption of the Plans, including but not limited to, notification of Anoka County and School District No. 12
having taxing jurisdiction over the property to be included in Tax Increment Financing District No. 1-9, a
request for review of and written comment on the Plans by the City Planning Commission, and a request that
the Council schedule a public hearing on the Plans upon published notice as required by law.
NOW, TIIEREFORE, BE IT RESOLVED by the Board as follows:
1. The EDA hereby reaffirms its previous findings with regards to District No. 1-7, namely that
the Modifications are in the public interest; that District No. 1-7 is an "econom ic development district" under
Minnesota Statutes, Section 469.174, subd. 12; and that the Modifications will advance the LDA's and City's
objectives to encourage development within Development District No. 1.
2. The EDA hereby finds that Tax Increment Financing District No. 1-9 is in the public interest
and is an "economic development district" under Minnesota Statutes, Section 469.174, subd. 12, and finds
N:\Minnsuta\LtNOLAKE\T1F I.9\EDA—res.wpd
DEC 09 '98 02:22PM EHLERS & ASSOCIATES P.3/8
that the adoption of the proposed Plans will advance the EDA's and City's objectives of encouraging
development within Development District No. 1.
3. Conditioned upon the approval thereof by the City Council following its public hearing
thereon, the Plans, as presented to the EDA on this date, are hereby approved, established and adopted and
shall be placed on file in the office of the City Clerk/Treasurer.
4. Upon approval of the Plans by the City Council, the staff, the EDA's advisors and legal
counsel are authorized and directed to proceed with the implementation of the Plans and for this purpose to
negotiate, draft, prepare and present to this Board for its consideration all further plans, resolutions,
documents and contracts necessary for this purpose. Approval of the Plans does not constitute approval of
any project or a Development Agreement with any developer.
5. The City Clerk/Treasurer is authorized and directed to forward a copy of the Modification
to Tax Increment Financing District No. 1-7 to the Anoka County Auditor and request that the Auditor
remove the parcels from District No. 1-7 and adjust the base tax values accordingly.
6. Upon approval of the Plans by the City Council, the Community Development Director is
authorized to forward a copy of the Plans to the Minnesota Department of Revenue pursuant to Minnesota
Statutes 469.175, subdivision 2.
7. The City Clerk/Treasurer is authorized and directed to forward a copy of the Plan for Tax
Increment Financing District No. 1-9 to the Anoka County Auditor and request that the Auditor certify the
original tax capacity of District No. 1-9 as described in the Plan, all in accordance with Minnesota Statutes
469.177.
Approved by the Board of Commissioners of the Lino Lakes Economic Development Authority this
day of , 1998.
ATTEST:
Executive Director
President
N:lMinnsota\UNOLAKE\TIF1-9\EDA res.wpd
DEC 08 '98 02:40PM EHLERS & ASSOCIATES
P. 3/9
alEhlers and Associates
Tax Increment Financing District Overview
City of Lino Lakes - Tax Increment Financing District No. 1-9
Proposed action:
Establishment of TIF District No. 1-9 and the adoption of the Tax
Increment Financing Plan and Modification of District No. 1-7 to
remove parcels to be included in District No. 1-9.
Project Area: No Modification to the Development Program for Development
District No. 1 is needed.
Type of TIF District: An Economic Development District
Parcel Number:
17-31-22-23-0012
17-31-22-32-0004
18-31-22-42-0002
18-31-22-41-0008
17-31-22-21-0019
Location: See the attached map
Proposed development:
To facilitate development of the Apollo Business Center in the City of
Lino Lakes. It is anticipated that upon completion of development that
there will the potential for a total of approximately 35 new businesses
in the park assuming a two acre average per development site.
Estimated annual tax increment: $552,963
Proposed uses: The TIF Plan contains the following budget:
Land Acquisition $1,860,503
Site Improvements 100,000
dilt6` , Public Improvements 933,475
Street and Public Utilities 100,000
Loan Principle Repayment 3,000,000
Interest 600,000
Administrative Costs (up to 10%) 359,404
TOTAL $6,953,382
Form of financing: Inter -fund loans and pay-as-you-go notes
Maximum duration:
The duration of District No. 1-9 will be 9 years from the date of
receipt of the first increment or 11 years from the date of approval of
the Plan, whichever is less. The date of receipt of the first tax
increment will be approximately 2001. Thus, it is estimated that
District No. 1-9, including any modifications of the Plan for
subsequent phases or other changes, would terminate after 2009, or
when the Plan is satisfied
DEC 08 '98 02:41PM EHLERS & ASSOCIATES P.4/9
TIF District Overview
Administrative fee: Up to 10% of annual increment, if costs are justified.
L G A / H A C A The City elects to make the annual local contribution to the project to exempt
penalty: itself from the LGA-HACA penalty. Contribution for an economic
development district is 10% of annual tax increment. The contribution can
be made annually or in larger contribution throughout the life of the district.
3 Year Activity Rule
(§469.176 Subd. la)
At least one of the following activities must take place in the District within
3 years from the date of certification:
o bonds have been issued
o the authority has acquired property within the district
❑ the authority has constructed or caused to be constructed public
improvements within the district
The estimated date whereby this activity must take place is December, 2001.
4 Year Activity Rule After four ycars from the date of certification of the District one of the
(§ 469.176 Subd 6) following activities must have been commenced on each parcel in the District:
❑ demolition
❑ rehabilitation
O renovation
o other site preparation (not including utility services such as sewer and
water)
If the activity has not been started by the approximately December, 2002, no
additional tax increment may be taken from that parcel until the
commencement of a qualifying activity.
5 Year Rule
(§ 469.1763 Subd 3)
Within 5 years of certification revenues derived from tax increments must be
expended or obligated to be expended. Tax increments are considered to have
been expended on an activity within the District if one of the following
occurs:
o the revenues are actually paid to a third party with respect to the activity
❑ bonds, the proceeds of which must be used to finance the activity, are
issued and sold to a third party, the revenues are spent to repay the bonds,
and the proceeds of the bonds either are reasonably expected to be spent
before the end of the later of (i) the five year period, or (ii) a reasonable
temporary period within the meaning of the use of that term under §.
148(c)(1) of the Internal Revenue Code, or are deposited in a reasonably
required reserve or replacement fund
o binding contracts with a third party are entered into for performance of
the activity and the revenues are spent under the contractual obligation
o costs with respect to the activity are paid and the revenues are spent to
reimburse a pay for payment of the costs, including interest on
unreimbursed costs.
Any obligations in the Tax Increment District made after approximately
December, 2003, will not be eligible for repayment from tax increments.
The previous summary contains an overview of the basic elements of the proposed Tax Increment Financing
Plan for Tax Increment Financing District No. 1-9. More detailed information on each of these topics can be
found in the complete TIF Plan.
Page 2
TIF District Overview
The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan for District No.
1-9 as required pursuant to M.S., Section 469.175, Subd. 3 are as follows:
1. Finding that the District No. 1-9 is an economic development district as defined in M.S., Section 469.174, Subd.
12.
Tax Increment Financing District No. 1-9 consist of several parcels within the City's Development District No.
1, delineated in the Plan, for the purpose of financing economic development in the City through the use of tax
increment. District No. 1-9 consists of a portion of Development District No. 1 not meeting requirements for
other types of tax increment financing districts, which is in the public interest because it will facilitate
construction of a manufacturing facility for Midwest Veneer, H.L. Mesabi, Lino Lakes Business Center Phases
5, 6, and 7, and additional manufacturing development which will discourage commerce, industry, or
manufacturing from moving their operations to another state or municipality; it will increase employment in
the state, and preserve and enhance the tax base of the state.
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
marker 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 District No. 1-9
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
development proposed in this plan is a manufacturing facility that meets the City's objectives for economic
development. The cost of land acquisition, site and public improvements and utilities makes development of
the facility infeasible without City assistance. The developers have asked for and provided a letter 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 reasonable 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 T1F District permitted by the Plan: The City supported this finding on the grounds that the cost of land
acquisition, site and public improvements and utilities add to the total development cost. Historically, site
development costs in this area have made development infeasible without tax increment assistance. This site
has been marketed for at least 8 years without success. Therefore, the City reasonably determines that no other
development of any kind is anticipated on this site without substantially similar assistance being provided to
the development. Accordingly, the increased market value anticipated without tax increment assistance is $0.
A comparative analysis of estimated market values both with and without establishment of Tax Increment
Financing District No. 1-9 and the use of tax increments has been performed as described above. If all
development which is proposed to be assisted with tax increment were to occur in District No. 1-9, the total
increased market value would be up to $29,641,900. The present value of tax increments from District No. 1-9
is estimated to be $2,276,967. It is the Council's finding that no development with a market value of greater
than $26,254,455 would occur without tax increment assistance in this district within 9 years. This finding is
based upon evidence from general past experience with the high cost of acquisition and public improvements
in the general area of District No. 1-9 (see Cashflow in Appendix D).
3. Finding that the Tax Increment Financing Plan for District No. 1-9 conforms to the general plan for the
Page 3
2/Z ' d S31d I OOSSU '8 Sd31H3 WU82 :0I 86, 60 OM
DEC 08 '98 02:42PM EHLERS & ASSOCIATES P.6/9
TIP District Overview
development or redevelopment of the municipality as a whole.
The Plan was reviewed by the Planning Commission on December 9, 1998. The Planning Commission found
that the Plan conforms to the general development plan of the City.
4. Finding that the Tax Increment Financing Plan for District No. 1-9 will afford maximum opportunity,
consistent with the sound needs of the City as a whole, for the development of Development District No. 1 by
private enterprise.
The project to be assisted by District No. 1-9 will result in increased employment in the City and the State of
Minnesota, increased tax base of the State, and add a high quality development to the City.
Page 4
DEC 08 '98 02:42PM EHLERS & ASSOCIATES P.8/9
. Tax Increment Financing District No. 1-7
Development District No. 1
City of Lino Lakes
Anoka County, Minnesota
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