HomeMy WebLinkAbout2005-104 Council Resolution•
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CITY OF LINO LAKES, MINNESOTA
RESOLUTION NO. 05-104
RESOLUTION APPROVING
PROPERTY TAX ABATEMENT RELATED TO YMCA FACILITY
BE IT RESOLVED by the City Council (the "Council ") of the City of Lino Lakes,
Minnesota (the "City ") as follows:
Section 1. Recitals.
1.01. Under Minnesota Statutes, Sections 471.15 to 471.191 (the "Recreation Act "), the
City of Lino Lakes (the "City ") is authorized to acquire, equip and maintain recreational
facilities, and also to cooperate with a nonprofit organization in the operation of such a
recreational program in any manner in which the parties mutually agree; and
1.02. In furtherance of a cooperative program under the Recreation Act, the City and
the YMCA of Greater St. Paul ( "YMCA ") have entered into an agreement titled YMCA /City of
Lino Lakes Development Agreement dated June 16, 2005 (the "Development Agreement "). The
Development Agreement describes the parties' respective responsibilities in the construction and
operation of a recreational facility in the City (the "Facility ") to be located on property (the
"Site ", as legally described in the Development Agreement) within a larger development known
as the "Legacy at Woods Edge;" and
1.03. Under the Development Agreement, the City has agreed, among other things, to
contribute $1,500,000 toward construction of the Facility; and
1.04. Under Minn. Stat. Sections 469.1812 through 469.1815 (the "Abatement Act "),
the City is authorized to grant a property tax abatement on specified parcels in order to
accomplish certain public purposes, including situations where the abatement will provide
employment opportunities in the City, provide or help acquire or construct public facilities, help
provide access to services for City residents, or finance or provide public infrastructure; and
1.05. The City is also authorized under the Abatement Act to issue bonds to pay for
public improvements that benefit the property that is the source of the abatement; and
1.06. The City has determined that the Facility will help serve the City's recreational
programs under the Recreation Act, and that it will provide access to recreational services for
both future residents of the Legacy at Woods Edge development and residents in the City as a
whole.
1.07. The City has identified certain property located near the Site and within the
Legacy at Woods Edge development, described in Exhibit a hereto (the "Abatement Parcels "),
from which the City proposes to collect a portion of the City's share of taxes and pledge those
revenues to pay principal and interest on bonds to be issued by the City in a maximum principal
amount of $1,700,000 (the "Abatement Bonds ").
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1.08. On July 25, 2005 the Council conducted a duly noticed public hearing on the
Abatement at which the views of all interested persons were heard.
Section 2. Findins.
2.01. It is hereby found and determined that the benefits to the City from the Abatement
will be at least equal to the costs to the City of the Abatement, because (a) the Abatement will help
finance the Facility, which will help the City carry out its recreational programs under the
Recreation Act and provide access to these important services by City residents, (b) if the City were
required to finance the entire facility as a municipal recreation center, the costs to the City would far
exceed the amount provided through the Abatement described in this resolution; (c) the Facility will
help stimulate the development of the Abatement Parcels and the Legacy at Woods Edge
development as a whole, (d) the City taxes expected to be collected from the Abatement Parcels are
expected to exceed the amount of the Abatement to be collected from the those parcels during the
term of this resolution; and (e) the long term tax collections from the Abatement Parcels after the
term of this resolution will far exceed the amount of Abatement collected hereunder.
2.02. It is hereby found and determined that the Abatement is in the public interest for the
reasons described in Sections 2.01 and 2.03.
2.03. It is further specifically found and determined that the Abatement is expected to
result in the following public benefits:
(a) Help finance the Facility.
(b) Provide access to a high quality recreational facility to City residents, which would not
otherwise be financially feasible.
(c) Stimulate significant increases in taxable market value of the Abatement Parcels.
(d) Implement the City's long-term plans for the Legacy at Woods Edge development.
(e) Stimulate increases in employment in the City.
2.04. The maximum principal amount of Abatement Bonds to be secured by Abatements
under this resolution does not exceed the estimated sum of Abatement from the Abatement Parcels
for the term authorized under this resolution.
2.05. The Facility financed with proceeds of the Abatement Bonds will benefit the
Abatement Parcels, as those parcels are in the immediate vicinity of the Facility and residents of
expected housing development on the Abatement Parcels will have easy access to use of the
Facility.
Section 3. Actions Ratified; Abatement Approved.
• 3.01. The Council hereby ratifies all actions of the City's staff and consultants in
arranging for approval of this resolution in accordance with the Act.
3.02. Subject to the provisions of the Act, the Abatement is hereby approved and adopted
subject to the following terms and conditions:
(a) The term "Abatement" means a portion of the City's share of the real property taxes
generated from the improvements on the Abatement Parcels, in the amounts described
in this Section:
(i)
The annual Abatement collected by the City in any calendar year will not
exceed 105 % of the of debt service on the Abatement Bonds (as defined in
Section 1.07 hereof) due and payable on August 1 of the year in which the
Abatement is collected and on the next following February 1.
(ii) Notwithstanding anything to the contrary herein, the Abatement collected by
the City on any August 1 and subsequent February 1, combined, will not
exceed the amount produced by extending the City's total tax rate for the
applicable year against the tax capacity of improvements on the Abatement
Parcels, excluding the tax capacity of the land and the tax capacity
attributable to the areawide tax under Minnesota Statutes, Chapter 473F, as
of January 2 in the prior year.
(iii) In accordance with Section 469.1813, subdivision 8 of the Act, in no year
shall the Abatement, together with all other abatements approved by the City
under the Act and paid in that year exceed the greater of 10% of the City's
levy for that year or $200,000 (the "Abatement Cap "). The City may grant
any other abatements permitted under the Act after the date of this
resolution, provided that to the extent the total abatements in any year
exceed the Abatement Cap, the allocation of Abatement Cap to such other
abatements is subordinate to the Abatements under this Agreement.
(b) The City will collect the Abatement in tax collection years 2008 through 2022, and will
pledge those revenues to principal and interest on the Abatement Bonds and any bonds
issued to refund the initial Abatement Bonds. The pledge of Abatement will be further
reflected in the resolution awarding sale of the Abatement Bonds (and any refunding
bonds).
(c) In accordance with Section 469.1814, subd. 4 of the Act, the amount of Abatement is
not subject to periodic review by the City; provided that the actual amounts of
Abatement will be determined only upon issuance of the Abatement Bonds and any
refunding bonds, which final determination will not constitute a modification of the
Abatement amount.
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2005.
Attest:
(d) In accordance with Section 469.1815 of the Act, the City will add to its levy in each
year during the term of the Abatement the total estimated amount of current year
Abatement granted under this resolution.
Approved by the City Council of the City of Lino Lakes, Minnesota this 25th day of July,
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EXHIBIT A
Abatement Parcels
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81-1EET 3 OF
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AGENDA ITEM 6A
STAFF ORIGINATOR: Mary Alice Divine
DATE: 7/25/05
TOPIC: Public Hearing: Consideration of approving a Tax
Abatement for the Chain of Lakes YMCA
VOTE REQUIRED: 3/5
BACKGROUND:
On June 27, 2005 the City Council called for a public hearing to consider
providing a business subsidy with tax abatement as a source of funding for its
commitment of $1.5 million toward construction of the YMCA. This is a
commitment that dates back to a 1999 agreement to partner with the YMCA to
bring a facility to Lino Lakes. The YMCA is anticipating beginning construction
this fall in the Legacy at Woods Edge development, with a completion target in
the fall of 2006.
Springsted, the city's financial consultant, and Kennedy & Graven, the city's bond
consultant, have analyzed various methods of meeting this commitment and are
recommending the use of tax abatement and the issuance of tax abatement
bonds for a 15 -year term as the most appropriate method for financing this
commitment. Issuance of abatement bonds produce the lowest interest rate
possible, is a simple transaction compared to other options, and the abatement
levy is offset by growth anticipated in the Legacy at Woods Edge project.
Tax abatement is not an actual abatement of taxes. Using tax abatement permits
a levy of taxes to be used for development purposes. In this case, properties
have been identified in the new Legacy at Woods Edge development (outside of
TIF District No. 1 -11) totaling approximately $60 million in residential and
commercial property taxes as the source of the property taxes to meet the tax
abatement bond obligations.
The City of Lino Lakes adopted a Tax Abatement Policy in 2001. The objectives
for using tax abatement include providing assistance in the Town Center,
encouraging additional unsubsidized private "spin off' development in the area,
and fulfilling defined city objectives such as those identified in the
Comprehensive Plan. This project meets the goals and objectives of the policy.
Springsted reviewed the use of tax abatement with the city's Economic
Development Advisory Committee (EDAC). The committee voted 7 -0 to
• recommend the financing of the $1.5 million for the YMCA project through the
issuance of G.O. Tax Abatement Bonds.
Providing a tax abatement to cover the costs associated with the city's
partnership with the YMCA, and the provision of land to the YMCA, is considered
a business subsidy under the Minnesota Business Subsidy Act. The city council
updated its Business Subsidy Criteria in 2003. The goals and objectives in
granting business subsidies include projects consistent with the Comprehensive
Plan, ones that meet a public purpose, (in this case providing access to a high
quality recreational facility to city residents) and stimulate increases in taxable
market value and increases in employment.
After closing the public hearing, the city council will consider two resolutions. The
first resolution approves the use of tax abatement for the YMCA facility. The
second resolution approves a business subsidy to the YMCA and outlines the
public purposes of the subsidy to further the city's recreational programs. The
goals that must be met by the YMCA include completion of the facility by April 1,
2007, meeting the use covenants for the residents of Lino Lakes, and
maintaining a teen center.
OPTIONS:
• 1. Open the public hearing
2. Continue the public hearing
RECOMMENDATION:
Option 1
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