2007.02.20 EDA Packet - Laserfiche WebLink

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City of Hugo, Minnesota Proposed development not expected to occur: The proposed redevelopment consists of the acquisition and demolition of substandard buildings within the proposed TIF District boundaries in the City of Hugo for development of new residential life cycle housing, retail commercial space, and office units. Such redevelopment requires assembly of multiple parcels which are under multiple ownership in the TIF District, demolition and clearance of the assembled area,with significant site costs, which together make the total cost of this effort significantly higher than costs reasonably incurred for similar developments on a clean site. The City anticipates analyzing future developer's proformas in detail to determine the minimal amount of assistance needed to compensate developer for these extraordinary costs. No higher market value expected: This finding is based on the fact that no other development of comparable scope to the proposed development is practical without the same type of assistance described in this plan. While some of the substandard buildings have been demolished as of the date of this plan, most of the extraordinary costs remain (or would need to be reimbursed). Smaller, piecemeal developments in this area might be feasible, but any large-scale development that would create the market value expected under the current proposal would require significant assistance, as bome out by the City's analysis of the preliminary developer discussions. Moreover, this is a downtown redevelopment project in the City with many buildings requiring significant assemblage, demolition and site improvements prior to development opportunities. There is no basis for expectation that the area would redevelop in any significant way purely by private action without public subsidy. To summarize the basis for the City's findings regarding alternative market value, in accordance with Minnesota Statutes, Section 469.175, Subd.3(d),the City makes the following determinations: a. The City's estimate of the mount by which the market value of the site will increase without the use of tax increment financing is anywhere from $0 to some modest amount based on small scale development that could be possible without assistance; any estimated values would be too speculative to ascertain. b. If the proposed development to be assisted with tax increment occurs in the District, the total increase in market value would be approximately$260,390,671, including the value of the building (See Exhibit III). 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$15,785,471 (See Exhibit VI) 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 $244,605,200(the amount in clause b less the amount in clause c)without tax increment assistance. (3) The TIF Plan will afford maximum opportunity, consistent with the sound needs of the City as a whole, for development of the Project Area by private enterprise. Factual basis: The anticipated redevelopment cited in the Maxfield study may include the construction of up to 592 units of residential development, 145,500 square feet of retail, and 37,700 square feet of office space in the Project Area that is expected to create substantial new tax base for the City and the state, as well as expected future private development. The development clearly meets the City's housing and redevelopment goals of creating additional housing opportunities, and meeting the City's goal of the removal of blight. (4) The TIF Plan conforms to general plans for development of the City as a whole. SPRINGSTED Page 6