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13-003 - 01-15 - adopting administrative amendment to tax increment financing plan - hwy 55 west tax increment financing district #1 - renewal and renovation Resolution 13-3 January 15, 2�13 Member Pentel introduced the fallowing resoVution and moved its adoption: RESOLUTIUN APPROVING AN ADMINISTRATIVE AMENDMENT TO THE TAX INCREMENT FINANCING PLAN FOR HIGHWAY 55 WEST TAX INGREMENT FINANCING (RENEWAL AND RENOVATION) DISTRICT NO. 1 A. WHEREAS, the City of Golden Valley, Minnesota (the "City") has heretofore established a Tax Increment Financing (Renewal and Renovation) District for Highway 55 Renewal and Redevelopment Project (the "TIF District") within the Highway 55 West Redevelopment Project Area and adopted a Tax Increment Financing Plan therefor; and there is a proposal to amend the Tax Increment Financing Plan for the Tax Increment Financing (Renewal and Renovation) District (the "Tax Increment Financing Plan") under the provisions of Minnesota Statutes, Sections 469.174 to 469.1799 and Sections 469.124 to 469.134 (the "Act"); and B. WHEREAS, the Tax Increment Financing Plan as approved by the City Council on December 18, 2012 indicated no prior building permits had been issued in the 18 months immediately preceding the approval of the TIF Plan. C. WHEREAS, the City has determined that building permits have been issued on certain property included in the TIF District, within the 18 months prior to the District approval, and the City has prepared an Administrative Amendment to the Tax Increment Financing Plan for the TIF District, to list those permits; NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Golden Valley, as follows: 1. The City finds, determines and declares that with respect to the Administrative Amendment: a) The City is not modifying the boundaries of the TIF District nor increasing the budget in the Tax Increment Financing Plan therefor, but is, however, making an administrative amendment thereto. b) The City reaffirms the findings previousty made with respect to the TIF District. c) The Administrative Amendment conforms to the general plan of the development of the City as a whole. d) The Act does not require a public hearing on the Administrative Amendment. 2. The Administrative Amendment is hereby approved. 3. The City manager is authorized and directed to file a copy of the Administrative Amendment with the Commissioner of Revenue, the Office of the State Auditor and the Hennepin County Auditor. Resolution 13-3 - Continued January 15, 2013 Shepard . Harris, Mayor ATTEST: Susan M. Virnig, City lerk The motion for the adoption of the foregoing resolution was seconded by Member Clausen upon a vote being taken thereon, the following voted in favor thereof: Clausen, Harris, Pentel and Schmidgall; and the following was absent: Scanlon, and the following voted against the same: none, whereupon said resolution was declared duly passed and adopted, signed by the Mayor and his signature attested by the City Clerk. City of Golden Valley, Minnesota Golden Valley Housing and Redevelopment Authority Aministrative Amendment to the Tax Increment Financing Plan for Tax Increment Financing (Renewal and Renovation)District Within Highway 55 West Redevelopment Project Area (Highway 55 TIF Renewal and Redevelopment Project) Adopted by Housing and Redevelopment Authority: October 9, 2012 Planning Commission Review: November 26, 2012 Adopted by City Council: December 18, 2012 Administrative Amendement Dated: January 15, 2013 Prepared by: SPRINGSTED INCORPORATED 380 Jackson Street, Suite 300 St. Paul, MN 55101-2887 (651)223-3000 WWW.SPRINGSTED.COM INTRODUCTION The purpose of the Administrative Amendment to the Tax Increment Financing Plan for theTax Increment Financing (Renewal and Renovation) District Highway 55 TIF Renewal and Redevelopment Project is to list and account for any building permits issued during the 18 months immediately preceding approval of the TIF Plan. The Plan that was approved on December 18, 2012 did not include a list of the permits issued in the previous 18 months. This amendment should not materially impact the original estimates and will not increase the overall size of the District nor the overall size of the budget. The section being modified is Sections W,. The amendment makes no other modifications to the TIF District. TABLE OF CONTENTS Section Pa e s A. Definitions..............................................................................................................................................................1 B. Statutory Authorization..........................................................................................................................................1 C. Statement of Need and Public Purpose................................................................................................................1 D. Statement of Objectives........................................................................................................................................1 E. Designation of Tax Increment Financing District as a Renewal and Renovation District......................................1 F. Duration of the TIF District.....................................................................................................................................3 G. Property to be Included in the TIF District.............................................................................................................3 H. Property to be Acquired in the TIF District.............................................................................................................3 I. Specific Development Expected to Occur Within the TIF District..........................................................................4 J. Findings and Need for Tax Increment Financing...................................................................................................4 K. Estimated Public Costs..........................................................................................................................................5 L. Estimated Sources of Revenue.............................................................................................................................6 M. Estimated Amount of Bonded Indebtedness.........................................................................................................6 N. Original Net Tax Capacity......................................................................................................................................6 0. Original Local Tax Rate.........................................................................................................................................7 P. Projected Retained Captured Net Tax Capacity and Projected Tax Increment....................................................7 Q. Use of Tax Increment............................................................................................................................................8 R. Excess Tax Increment...........................................................................................................................................9 S. Tax Increment Pooling and the Five Year Rule.....................................................................................................9 T. Limitation on Administrative Expenses..................................................................................................................9 U. Limitation on Property Not Subject to Improvements- Four Year Rule...............................................................10 V. Estimated Impact on Other Taxing Jurisdictions.................................................................................................10 W. Prior Planned Improvements...............................................................................................................................11 X. Development Agreements...................................................................................................................................11 Y. Assessment Agreements.....................................................................................................................................11 Z. Modifications of the Tax Increment Financing Plan.............................................................................................12 AA. Administration of the Tax Increment Financing Plan...........................................................................................12 AB. Filing TIF Plan, Financial Reporting and Disclosure Requirements....................................................................13 Map of the Tax Increment Financing District and Renewal and Redevelopment Project Area...............EXHIBIT I AssumptionsReport...............................................................................................................................EXHIBIT II Projected Tax Increment Report............................................................................................................EXHIBIT III Estimated Impact on Other Taxing Jurisdictions Report...................................................................... EXHIBIT IV Market Value Analysis Report............................................................................................................... EXHIBIT V Redevelopment District Findings.......................................................................................................... EXHIBIT VI Housing and Redevelopment Authority of the City of Golden Valley, Minnesota Section A Definitions The terms defined in this section have the meanings given herein, unless the context in which they are used indicates a different meaning: "Authoritv" means the Housing and Redevelopment Authority of the City of Golden Valley. "City„ means the City of Golden Valley, Minnesota; also referred to as a"Municipalitv". "Citv Council" means the City Council of the Golden Valley; also referred to as the'Governinq Bodv". "County„ means Hennepin County, Minnesota. "Redevelopment Project Area" means the Highway 55 West Redevelopment Project Area in the City, which is described in the corresponding Redevelopment Plan. "Redevelopment Plan" means the Redevelopment Plan for the Highway 55 West Project Area. "Proiect Area" means the geographic area of the Redevelopment Project Area. "School District" means Independent School District No. 270, Minnesota. "State" means the State of Minnesota. "TIF AcY' means Minnesota Statutes, Sections 469.174 through 469.1799, both inclusive. "TIF District" means Tax Increment Financing (Renewal and Redevelopment) District No. . "TIF Plan" means the tax increment financing plan for the TIF District(this document). Section B Statutory Authorization See"Statutory Authorization"on page 4 of the Redevelopment Plan for the Project Area. Section C Statement of Need and Public Purpose See"Statement of Need and Public Purpose"on page 4 of the Redevelopment Plan for the Project Area. Section D Statement of Objectives See "Statement of Objectives"on pages 4-5 of the of the Redevelopment Plan for the Project Area. Section E Designation of Tax Increment Financing District as a Renewal and Renovation District Renewal and Renovation districts are a type of tax increment financing district in which the following conditions exists: 1) i) parcels comprising at least 70% of the area of the district are occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures; ii) 20 percent of the buildings are structurally substandard; and iii) 30 percent of the other buildings require substantial renovation or clearance to remove existing conditions such as: inadequate street layout, incompatible uses or land use relationships, overcrowding of buildings on the land, excessive dwelling unit density, obsolete buildings not SPRINGSTED Page 1 Housing and Redevelopment Authority of the City of Golden Valley, Minnesota suitable for improvement or conversion, or other identified hazards to the health, safety, and general well-being of the community. 2) the conditions described in clause (1) are reasonably distributed throughout the geographic area of the district. For purposes of determining whether a building is structurally substandard, whether parcels are occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures, or whether noncontiguous areas qualify,the provisions of Minnesota Statutes 469.174, subdivision 10, paragraphs(b)through (�, apply. For districts consisting of two more noncontiguous areas, each area must individually qualify under the provisions listed above, as well as the entire area must also qualify as a whole. The TIF District qualifies as a renewal and renovation district in that it meets all of the criteria listed in (1) and (2) above. An executive summary of a report prepared by LHB Corporation that details the qualifications is included in Exhibit VI. A copy of the entire report with supporting facts and documentation for this determination is on file with the Authority and is available to the public upon request. The full report will be retained by the Authority for the life of the TIF District. "Structurally substandard" is defined as buildings containing defects or deficiencies in structural elements, essential utilities and facilities, light and ventilation, fire protection (including egress), layout and condition of interior partitions, or similar factors. Generally, a building is not structurally substandard if it is in compliance with the building code applicable to a new building, or could be modified to satisfy the existing code at a cost of less than 15% of the cost of constructing a new structure of the same size and type. A city may not find that a building is structurally substandard without an interior inspection, unless it can not gain access to the property and there exists evidence which supports the structurally substandard finding. Such evidence includes recent fire or police inspections, on-site property tax appraisals or housing inspections, exterior evidence of deterioration, or other similar reliable evidence. Written documentation of the findings and reasons why an interior inspection was not conducted must be made and retained. A parcel is deemed to be occupied by a structurally substandard building if the following conditions are met: (1) the parcel was occupied by a substandard building within three years of the filing of the request for certification of the parcel as part of the district; (2) the demolition or removal of the substandard building was performed or financed by the City, or was performed by a developer under a development agreement with the City, (3) the City found by resolution before such demolition or removal occurred that the building was structurally substandard and that the City intended to include the parcel in the TIF district, and (4) the City notifies the county auditor that the original tax capacity of the parcel must be adjusted upon filing the request for certification of the tax capacity of the parcel as part of a district. In the case of(4) above, the County Auditor shall certify the original net tax capacity of the parcel to be the greater of (a)the current tax capacity of the parcel, or (b)a computed tax capacity of the parcel using the estimated market value of the parcel for the year in which the demolition or removal occurred, and the appropriate classification rate(s) for the current year. A parcel is deemed "occupied" if at least 15% of the area of the parcel contains buildings, streets, utilities, paved or gravel parking lots; or other similar structures. At least 90 percent of the tax increment from a renewal and renovation district must be used to finance the cost of correcting conditions that allow designation as a redevelopment district. These costs include, but are not limited to, acquiring properties containing structurally substandard buildings or improvements or hazardous substances, pollution, or contaminants, acquiring adjacent parcels necessary to provide a site of sufficient size to permit development, demolition and rehabilitation of structures, clearing of land, removal of hazardous substances or SPRINGSTED Page 2 Housing and Redevelopment Authority of the City of Golden Valley, Minnesota remediation necessary to develop the land, and installation of utilities, roads, sidewalks, and parking facilities for the site. The allocated administrative expenses of the Authority may be included in the qualifying costs. Section F Duration of the TIF District Renewal and Renovation districts may remain in existence 15 years from the date of receipt of the first tax increment. The Authority anticipates that the TIF District will remain in existence the maximum duration allowed by law (projected to be through the year 2030). Motlifications of this plan (see Section Z) shall not extend these limitations. All tax increments from taxes payable in the year the TIF District is decertified shall be paid to the Authority. The Authority has elected to delay receipt of increment for a period of one year; therefore, the anticipated first collection year will be 2015. The Authority reserves the right to allow the TIF District to remain in existence the maximum duration allowetl by law (projected to be through the year 2030), and anticipates that the TIF District may be active for the maximum duration allowed (see Section P). However the Authority will decertify the TIF District as early as possible should the projected increment be received in a shorter time period than originally projected. All tax increments from taxes payable in the year the TIF District is decertified shall be paid to the Authority. Section G Property to be Included in the TIF District The TIF District is an approximate 4.46-acre area of land located within the Project Area. A map showing the location of the TIF District is shown in Exhibit I. The boundaries and area encompassed by the TIF District are described below: Parcel Number Le al Descri tion 31-118-21-32-0009 THAT PART OF NW 1/4 OF SW 1/4 LYING E OF W 749 8/10 FT THOF AND W OF E 291.14 FT THOF N OF STATE HWY NO 55 AND S OF WATERTOWN ROAD 31-118-21-32-0008 W 211 141100 FT OF E 291 14/100 FT OF THAT PART OF NW 1/4 OF SW 1/4 LYING S OF MPLS WATERTOWN ROAD AND N OF STATE HWY NO 55 31-118-21-32-0007 E 80 FT OF THAT PART OF NW 1/4 OF SW 1/4 LYING S OF MPLS WATERTOWN ROAD AND N OF STATE HWY NO 55 31-118-21-31-0001 THE W 115 FT OF THAT PART OF NE 114 OF SW 1/4 LYING NLY OF STATE HWY NO 55 AND SLY OF 6TH AVE N 31-118-21-31-0002 THE E 115 FT OF W 230 FT OF THAT PART OF NE 1/4 OF SW 1/4 LYING NLY OF STATE HWY NO 55 AND SLY OF 6TH AVE N _ 31-118-21-31-0040 REGISTERED LAND SURVEY N0. 0030 HENNEPIN COUNTY, MINNESOTA TRACTS S &W The area encompassed by the TIF District shall also include all street or utility right-of-ways located upon or adjacent to the property described above. Section H Property to be Acquired in the TIF District The Authority may acquire and sell any or all of the property located within the TIF District; however, the Authority does not anticipate acquiring any such property at this time. Section I Specific Development Expected to Occur Within the TIF District SPRINGSTED Page 3 Housing and Redevelopment Authority of the City of Golden Valley, Minnesota The proposed project includes the redevelopment of a currently blighted site by the construction of a 142-unit market rate apartment project. Proposed to be constructed as a result of the apartment project are public improvements proposed for the area to include improvements to the Highway 55 access/exit to Decatur Avenue North, sidewalks and lighting to improve pedestrian safety, burial of overhead electrical lines, regional storm water facilities and sanitary sewer lining. These improvements are necessary to facilitate the redevelopment of the blighted site, by facilitating a safer pedestrian neighborhood and removing costs prohibitive to the redevelopment of the project area. The Authority anticipates using tax increment revenues to finance a portion of the eligible public costs related to redevelopment of the project area, as well as related atlministrative expenses. The Authority anticipates development commencing in 2013 for the apartment portion of the project. The public improvements are slated to be undertaken in conjunction with the apartment project. It is likely that multiple projects will occur within the District, although it is assumed that all project costs eligible for TIF assistance will have been initiated by 2016. Section J Findings and Need for Tax Increment Financing In establishing the TIF District,the Authority makes the following findings: (1) The TIF District qualifies as a renewal and renovation district; The City of Golden Valley retained the services of LHB to inspect and evaluate property within the proposed Tax Increment Financing District to be established by the Authority. The purpose of the evaluation was to determine if the proposed district met the statutory requirements for coverage and if the buildings met the qualifications required for a Renewal and Renovation District. These findings are described more completely in Section E and Exhibit VI. (2) The proposed development, in the opinion of the Authority, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future and 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 the district permitted by the TIF Plan. Factual basis: Proposed developmenf not expected fo occur.� The proposed redevelopment consists of the acquisition and demolition/renovation of substandard buildings, and the undertaking of necessary public improvements within the proposed TIF District boundaries in the City of Golden Valley for development of new market rate apartments. The cost of acquisition and demolition/renovation of the existing buildings coupled with the cost of the public improvements, make the total cost of this effort significantly higher than reasonably incurred for similar developments on a clean site. The Authority anticipates undertaking the public improvements necessary to provide for an area safe for both pedestrian and vehicle traffic, and to remove costs prohibitive to the redevelopment of the project area. No higher market value expected: If the proposed redevelopment did not go forward, for the same reasons described above, no large scale alternative redevelopment of the project site would likely occur. The currently blighted building is now closetl and vacated, and it is highly unlikely that significant improvements would be made. It is conceivable that the existing buildings could be rehabilitated and reopened, but even if that occurred, the result would be only a SPRINGSTED Page 4 Housing and Redevelopment Authority of the City of Golden Valley, Minnesota modest increase in market value compared to the significant value growth created by the proposed redevelopment. In short, there is no basis for expectation that the area would redevelop or be renovated in any significant way purely by private action without public subsidy given the improvements necessary for the development of the project area. To summarize the basis for the Authority's findings regarding alternative market value, in accordance with Minnesota Statutes, Section 469.175, Subd. 3(d),the Authonty makes the following determinations: a. The Authority's estimate of the amount 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 renovation or redevelopment 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 $25,905,935, including the value of the building (See Exhibit II). c. The present value of tax increments from the Distnct for the maximum duration of the district permitted by the TIF Plan is estimated to be$3,229,283(See Exhibit V) d. Even if some development other than the proposed development were to occur, the Authority finds that no alternative would occur that would produce a market value increase greater than $22,676,652 (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 Authority as a whole,for development of the Project Area by private enterprise. Factual basis: The anticipated redevelopment of the project site may include the construction of a new 142- unit market rate apartment building, and the redevelopment of project area consistent with the City's design goals. (4) The TIF Plan conforms to general plans for development of the Authority as a whole. Factual basis; The City Planning Commission has determined that the development proposed in the TIF Plan conforms to the City comprehensive plan. Section K Estimated Public Costs The estimated public costs of the TIF District are listed below. Such costs are eligible for reimbursement from tax increments of the TIF District. Land/Building Acquisition, Demolition, Special Assessments, Public Utilities, Site $3,034,633 Improvements/Preparation Costs, and other Eli ible Im rovement Costs Bond/Note Interest Pa ments 2,289,264 Administrative ex enses 591,544 Other Ex enditures Total $5,915,441 SPRINGSTED Page 5 Housing and Redevelopment Authority of the City of Golden Valley, Minnesota The Authority reserves the right to administratively adjust the amount of any of the items listed above or to incorporate additional eligible items, so long as the total estimated public cost is not increased. The estimated cost of capitalized interest is included in the loan interest payment amount. The Authority reserves the right to spend available tax increment outside of the TIF District boundaries and within the project area. Section L Estimated Sources of Revenue Tax Increment revenue $5,915,441 Interest on invested funds Bond roceeds Loan roceeds Grants Other Total $5,915,441 The Authority anticipates using future tax increments for reimbursement of public costs incurred from Section K. As increments are collected from the TIF District in future years, these taxes will be reserved by the Authority as reimbursement for public costs incurred, either through internal funding or general obligation or revenue debt. The Authority reserves the right to finance any or all public costs of the TIF District using pay-as-you-go assistance, internal funding, general obligation or revenue debt, or any other financing mechanism authorized by law. The Authority also reserves the right to use other sources of revenue legally applicable to the Project Area to pay for such costs including, but not limited to, special assessments, utility revenues, federal or state funds, and investment income. Section M Estimated Amount of Bonded Indebtedness The Authority anticipates issuing tax increment bonds to finance a portion of the estimated public costs of the TIF District, to internally loan funds to the TIF District from allowable Authority and/or City in an amount not to exceed $3,641,560 (eligible costs+20%allowance for cost of issuance). Section N Original Net Tax Capacity The County Auditor shall certify the original net tax capacity of the TIF District. This value will be equal to the total net tax capacity of all property in the TIF District as certified by the State Commissioner of Revenue. For districts certified between January 1 and June 30, inclusive, this value is based on the previous assessment year. For - districts certified between July 1 and December 31, inclusive, this value is based on the current assessment year. The Estimated Market Value of all the land within the TIF District as of January 2, 2012, for taxes payable in 2013, is $3,457,000 and the original net tax capacity of the TIF District is $53,240. This assumes a portion of the property is reclassified to rental, and the remaining area continues to be classified commercial/industrial. Each year the County Auditor shall certify the amount that the original net tax capacity has increased or decreased as a result of: (1) changes in the tax-exempt status of property; (2) retluctions or enlargements of the geographic area of the TIF District; (3) changes due to stipulation agreements or abatements; or (4) changes in property classification rates. SPRINGSTED Page 6 Housing and Redevelopment Authority of the City of Golden Valley, Minnesota Section 0 Original Local Tax Rate The County Auditor shall also certify the original local tax rate of the TIF District. This rate shall be the sum of all local tax rates that apply to property in the TIF District. This rate shall be for the same taxes payable year as the original net tax capacity. In future years, the amount of tax increment generated by the TIF District will be calculated using the lesser of (a)the sum of the current local tax rates at that time or(b)the original local tax rate of the TIF District. At the time this document was prepared, the sum of the final local tax rates that apply to property in the TIF District, for taxes levied in 2012 and payable in 2013, was not yet available. When this total becomes available, the County Auditor shall certify this amount as the original tax capacity rate of the TIF District. For purposes of estimating the tax increment generated by the TIF District, the sum of the final local tax rates for taxes levied in 2011 and payable in 2012, is 143.443%as shown below. 2011/2012 Taxinq Jurisdiction Local Tax Rate City of Golden Valley 55.796% Hennepin County 48.231% ISD#270 29.270% Other 10.146% Total 143.443% Section P Projected Retained Captured Net Tax Capacity and Projected Tax Increment The Authority anticipates that the apartment project will be 75%completed by December 31, 2013, creating an initial tax capacity for the TIF District of $210,271 as of January 2, 2014. The captured tax capacity as of that date is estimated to be $157,031 and the first-year of tax increment is estimated to be $225,250 payable in 2015. The first full year of increment is projected to be in $307,091 in taxes payable 2016. A complete schedule of estimated tax increment from the TIF District is shown in Exhibit IV. � The estimates shown in this TIF Plan assume that commercial class rates remain at 1.5% for the first $150,000 of estimated market value and 2.0% of the market value above $150,000; and that rental class rates remain at 1.25%. The projections also assume a 3%annual increase in market values. Each year the County Auditor shall determine the current net tax capacity of all property in the TIF District. To the extent that this total exceeds the original net tax capacity, the difference shall be known as the captured net tax capacity of the TIF District. For communities affected by the fiscal disparity provisions of Minnesota Statutes, Chapter 473F and Chapter 276A, the original net tax capacity of the TIF District shall be determined before the application of fiscal disparity. In subsequent years, the current net tax capacity shall either(a) be determined before the application of fiscal disparity or (b)exclude the product of any fiscal disparity increase in the TIF District (since the original net tax capacity was certified) times the appropriate fiscal disparity ratio. The methotl the Authority elects shall remain the same for the life of the TIF District, except that a single change may be made at any time from method (a) to method (b) above. »The Authority elects method (a), or M.S. Section 469.177, Subdivision 3(a). The County Auditor shall certify to the Authority the amount of captured net tax capacity each year. The Authority may choose to retain any or all of this amount. It is the Authority's intention to retain 100% of the captured net tax SPRINGSTED Page 7 Housing and Redevelopment Authority of the City of Golden Valley, Minnesota capacity of the TIF District. Such amount shall be known as the retained captured net tax capacity of the TIF District. Exhibit II gives a listing of the various information and assumptions used in preparing a number of the exhibits contained in this TIF Plan, including Exhibit III which shows the projected tax increment generated over the anticipated life of the TIF District. Section Q Use of Tax Increment Each year the County Treasurer shall deduct 0.36% of the annual tax increment generated by the TIF District and pay such amount to the State's General Fund. Such amounts will be appropriated to the State Auditor for the cost of financial reporting and auditing of tax increment financing information throughout the state. Exhibit III shows the projected deduction for this purpose over the anticipated life of the TIF District. The Authority has determined that it will use 100% of the remaining tax increment generated by the TIF District for any of the following purposes: (1) pay for the estimated public costs of the TIF District (see Section K) and County administrative costs associated with the TIF District(see Section T); (2) pay principal and interest on tax increment bonds or other bontls issued to finance the estimated public costs of the TIF District; (3) accumulate a reserve securing the payment of tax increment bonds or other bonds issued to finance the estimated public costs of the TIF District; (4) pay all or a portion of the county road costs as may be required by the County Board under M.S. Section 469.175, Subdivision 1 a; or (5) return excess tax increments to the County Auditor for redistribution to the City, County and School District. Tax increments from property located in one county must be expended for the direct and primary benefit of a project located within that county, unless both county boards involved waive this requirement. Tax increments shall not be used to circumvent levy limitations applicable to the Authority. Tax increment shall not be used to finance the acquisition, construction, renovation, operation, or maintenance of a building to be used primarily and regularly for conducting the business of a municipality, county, school district, or any other local unit of government or the State or federal government, or for a commons area used as a public park, or a facility used for social, recreational, or conference purposes. This prohibition does not apply to the construction or renovation of a parking structure or of a privately owned facility for conference purposes. If there exists any type of agreement or arrangement providing for the developer, or other beneficiary of assistance, to repay all or a portion of the assistance that was paid or financed with tax increments, such payments shall be subject to all of the restrictions imposetl on the use of tax increments. Assistance includes sale of property at less than the cost of acquisition or fair market value, grants, ground or other leases at less then fair market rent, interest rate subsidies, utility service connections, roads, or other similar assistance that would otherwise be paid for by the developer or beneficiary. Section R Excess Tax Increment SPRINGSTED Page 8 Housing and Redevelopment Authority of the City of Golden Valley, Minnesota In any year in which the tax increments from the TIF District exceed the amount necessary to pay the estimated public costs authorized by the TIF Plan, the Authority shall use the excess tax increments to: (1) prepay any outstanding tax increment bonds; (2) discharge the pledge of tax increments thereof; (3) pay amounts into an escrow account dedicated to the payment of the tax increment bonds; or (4) return excess tax increments to the County Auditor for redistribution to the City, County and School District. The County Auditor must report to the Commissioner of Education the amount of any excess tax increment redistributed to the School District within 30 days of such redistribution. Section S Tax Increment Pooling and the Five Year Rule At least 75% of the tax increments from the TIF District must be expended on activities within the district or to pay for bonds used to finance the estimated public costs of the TIF District (see Section E for additional restrictions). No more than 25% of the tax increments may be spent on costs outside of the TIF District but within the boundaries of the Project Area, except to pay debt service on credit enhanced bonds. All administrative expenses are considered to have been spent outside of the TIF District. Tax increments are considered to have been spent within the TIF District if such amounts are: (1) actually paid to a third party for activities performed within the TIF District within five years after certification of the district; (2) used to pay bonds that were issued and sold to a third party,the proceeds of which are reasonably expected on the date of issuance to be spent within the later of the five-year period or a reasonable temporary period or are deposited in a reasonably required reserve or replacement fund. (3) used to make payments or reimbursements to a third party under binding contracts for activities performed within the TIF District, which were entered into within five years after certification of the district; or (4) used to reimburse a party for payment of eligible costs (including interest) incurred within five years from certification of the district. Beginning with the sixth year following certification of the TIF District, at least 75% of the tax increments must be used to pay outstantling bonds or make contractual payments obligated within the first five years. When outstanding bonds have been defeased and sufficient money has been set aside to pay for such contractual obligations, the TIF District must be decertified. The Authority does currently anticipate that an eligible portion of tax increments will be spent outside the TIF District (including allowable administrative expenses), and such expenditures are expressly authorized in this TIF Plan. Section T Limitation on Administrative Expenses Administrative expenses are defined as all costs of the Authority other than: (1) amounts paid for the purchase of land; (2) amounts paid for materials and services, including architectural and engineering services directly connected with the physical development of the real property in the project; SPRINGSTED Page 9 Housing and Redevelopment Authority of the City of Golden Valley, Minnesota (3) relocation benefits paid to, or services provided for, persons residing or businesses located in the project; (4) amounts used to pay principal or interest on, fund a reserve for, or sell at a discount bonds issued pursuant to section 469.178; or (5) amounts used to pay other financial obligations to the extent those obligations were used to finance costs described in clause(1)to(3). Administrative expenses include amounts paid for services provided by bond counsel, fiscal consultants, planning or economic development consultants, and actual costs incurred by the County in administering the TIF District. Tax increments may be used to pay administrative expenses of the TIF District up to the lesser of(a) 10%of the total tax increment expenditures authorized by the TIF Plan or(b) 10%of the total tax increments received by the TIF District. Section U Limitation on Property Not Subject to Improvements - Four Year Rule If after four years from certification of the TIF District no demolition, rehabilitation, renovation, or qualified improvement of an adjacent street has commenced on a parcel located within the TIF District, then that parcel shall be excluded from the TIF District and the original net tax capacity shall be adjusted accordingly. Qualified improvements of a street are limited to construction or opening of a new street, relocation of a street, or substantial reconstruction or rebuilding of an existing street. The Authority must submit to the County Auditor, by February 1 of the fifth year, evidence that the required activity has taken place for each parcel in the TIF District. If a parcel is excluded from the TIF District and the Authority or owner of the parcel subsequently commences any of the above activities, the Authority shall certify to the County Auditor that such activity has commenced and the parcel shall once again be included in the TIF District. The County Auditor shall certify the net tax capacity of the parcel, as most recently certified by the Commissioner of Revenue, and add such amount to the original net tax capacity of the TIF District. Section V Estimated Impact on Other Taxing Jurisdictions Exhibit IV shows the estimated impact on other taxing jurisdictions if the maximum projected retained captured net tax capacity of the TIF District was hypothetically available to the other taxing jurisdictions. The Authority believes that there will be no adverse impact on other taxing jurisdictions during the life of the TIF District, since the proposed development would not have occurred without the establishment of the TIF District and the provision of public assistance. A positive impact on other taxing jurisdictions will occur when the TIF District is decertified and the development therein becomes part of the general tax base. The fiscal and economic implications of the proposed tax increment financing district, as pursuant to Minnesota Statutes, Section 469.175, Subdivision 2, are listed below. 1. The total amount of tax increment that will be generated over the life of the district is estimated to be $5,936,814. 2. To the extent the project in the TIF District generates any public cost impacts on city-provided services such as police and fire protection, public infrastructure, and the impact of any general obligation tax increment bonds attributable to the district upon the ability to issue other debt for general fund purposes, such costs will be levied upon the taxable net tax capacity of the Authority, excluding that portion captured by the District. SPRINGSTED Page 10 Housing and Redevelopment Authority of the City of Golden Valley, Minnesota 3. The amount of tax increments over the life of the district that would be attributable to school district levies, assuming the school districYs share of the total local tax rate for all taxing jurisdictions remained the same, is estimated to be$1,211,426. 4. The amount of tax increments over the life of the district that would be attributable to county levies, assuming the county's share of the total local tax rate for all taxing jurisdictions remained the same is estimated to be$1,996,183. 5. No additionai information has been requested by the county or school district that would enable it to determine additional costs that will accrue to it due to the development proposed for the district. Section W Prior Planned Improvements The City shall accompany its request for certification to the County Auditor(or notice of district enlargement), with a listing of all properties within the TIF District for which building permits have been issued during the 18 months immediately preceding approval of the TIF Plan. The County Auditor shall increase the original net tax capacity of the TIF District by the net tax capacity of each improvement for which a building permit was issued. The City does not believe the issuance of the permits will have a significant impact on the original net tax capacity for the District. Various permits have been issued for property within the TIF District within the last 18 months are a listed below: Permit Value of Pro ert Address Pro ert ID Number Permit Date Work Performed Im rovement 9100 Olson Memorial Hi hwa 31-118-21-32-0007 GV058048 11-1-2012 Move Interior Wall $25,000 9100 Olson Memorial Hi hwa 31-118-21-32-0007 GV058470 12-4-2012 Electrical-Office Remodel $0 9100 Olson Memorial Hi hwa 31-118-21-32-0007 GV058569 12-12-2012 Duct Work $1,700 9010 Olson Memorial Hi hwa 31-118-21-32-0001 GV055140 03-29-2012 Install 4 S rinkler Heads $1,000 9010 Olson Memorial Hi hwa 31-118-21-32-0001 GV056446 07-23-2012 Si n Removal $0 8950 Oison Memorial Hi hwa 31-118-21-31-0040 GV053183 09-07-2011 Re lace Furnace&Gas Pi in $1,921 Section X Development Agreements If within a project containing a renewal and renovation district, more than 25% of the acreage of the property to be acquired by the Authority is purchased with tax increment bonds proceeds (to which tax increment from the property is pledged), then prior to such acquisition, the Authority must enter into an agreement for the development of the property. Such agreement must provide recourse for the Authority should the development not be completed. The Authority does not anticipate acquiring any property located within the TIF District, or entering into an agreement for development.. However, the Authority does reserve the right to acquire property and enter into an agreement if deemed necessary. Section Y Assessment Agreements The Authority may, upon entering into a development agreement, also enter into an assessment agreement with the developer, which establishes a minimum market value of the land and improvements for each year during the life of the TIF District. The assessment agreement shall be presented to the County or City Assessor who shall review the plans and specifications for the improvements to be constructed, review the market value previously assigned to the land, and so long as the minimum market value contained in the assessment agreement appears to be an accurate estimate, shall certify the assessment agreement as reasonable. The assessment agreement shall be filed for record in the SPRINGSTED Page 11 Housing and Redevelopment Authority of the City of Golden Valley, Minnesota office of the County Recorder of each county where the property is located. Any modification or premature termination of this agreement must first be approved by the City, County and School District. The Authority does not anticipate entering into an assessment agreement; however, it does reserve the right to enter into an assessment agreement for future projects if deemed necessary. Section Z Modifications of the Tax Increment Financing Plan Any reduction or enlargement in the geographic area of the Project Area or the TIF District; a determination to capitalize interest on the debt if that determination was not part of the original TIF Plan, increase in the portion of the captured net tax capacity to be retained by the Authority; increase in the total estimated public costs; or designation of property to be acquired by the Authority shall be approved only after satisfying all the necessary requirements for approval of the original TIF Plan. This paragraph does not apply if: (1) the only modification is elimination of parcels from the TIF District; and (2) the current net tax capacity of the parcels eliminated equals or exceeds the net tax capacity of those parcels in the TIF District's original net tax capacity, or the Authority agrees that the TIF DistricYs original net tax capacity will be reduced by no more than the current net tax capacity of the parcels eliminated. The Authority must notify the County Auditor of any modification that reduces or enlarges the geographic area of the TIF District. The geographic area of the TIF District may be reduced but not enlarged after five years following the date of certification. Section AA Administration of the Tax Increment Financing Plan Upon adoption of the TIF Plan, the Authority shall submit a copy of such plan to the Minnesota Department of Revenue and the Office of the State Auditor. The Authority shall also request that the County Auditor certify the original net tax capacity and net tax capacity rate of the TIF District. To assist the County Auditor in this process,the Authority shall submit copies of the TIF Plan, the resolution establishing the TIF District and adopting the TIF Plan, and a listing of any prior planned improvements. The Authority shall also send the County Assessor any assessment agreement establishing the minimum market value of land and improvements in the TIF District, and shall request that the County Assessor review and certify this assessment agreement as reasonable. The County shall distribute to the Authority the amount of tax increment as it becomes available. The amount of tax increment in any year represents the applicable property taxes generated by the retained captured net tax capacity of the TIF District. The amount of tax increment may change due to development anticipated by the TIF Plan, other development, inflation of property values, or changes in property classification rates or formulas. In administering and implementing the TIF Plan, the following actions should occur on an annual basis: (1) prior to July 1, the Authority shall notify the County Assessor of any new development that has occurred in the TIF District during the past year to insure that the new value will be recorded in a timely manner. (2) if the County Auditor receives the request for certification of a new TIF District, or for modification of an existing TIF District, before July 1, the request shall be recognized in determining local tax rates for the current and subsequent levy years. Requests received on or after July 1 shall be used to determine local tax rates in subsequent years. SPRINGSTED Page 12 Housing and Redevelopment Authority of the City of Go/den Valley, Minnesota (3) each year the County Auditor shall certify the amount of the original net tax capacity of the TIF District. The amount certified shall reflect any changes that occur as a result of the following: (a) the value of property that changes from tax-exempt to taxable shall be added to the original net tax capacity of the TIF District. The reverse shall also apply; (b) the original net tax capacity may be modified by any approved enlargement or reduction of the TIF District; (c) if laws governing the classification of real property cause changes to the percentage of estimated market value to be applied for property tax purposes, then the resulting increase or decrease in net tax capacity shall be applied proportionately to the original net tax capacity and the retained captured net tax capacity of the TIF District. The County Auditor shall notify the Authority of all changes made to the original net tax capacity of the TIF District. Section AB Filing TIF Plan, Financial Reporting and Disclosure Requirements The Authority will file the TIF Plan, and any subsequent amendments thereto, with the Commissioner of Revenue antl the Office of the State Auditor pursuant to Minnesota Statutes, Section 469.175, subdivision 4A. The Authority will comply with all reporting requirements for the TIF District under Minnesota Statutes, Section 469.175, subdivisions 5 and 6. SPRINGSTED Page 13 Exhibit 1 MAP OF TAX INCREMENT FINANCING (Renewal and Renovation) DISTRICT Within Highway 55 West Redevelopment Project Area LOGISMap Output Page Page 1 of 1 . ..._ . wv � �� + � � '� '� � � e + tp °� eiR ' °ip �� vs i� � �� riP ,; � 'IP qis '� 'V s ' � � �41Miiia°i* ND q1 '� � � ; 4 ��f �� rip �3� 5 �� z _� ii�b'�1�1�� NI�1��'� � i��!'��1s e�� i °9 �� ) �� _ �� -71nAnM � - - = J S � 7P]0 iy� � � , t �� i,1 �� 1�6 t �� 9 U 7�p �PH � !� , . 0 b _ _ My " . . '�r� • � t p . - ._r-- �14�N � Mo.SQ �� x+n ��`atia + - ��Mo.65 ' t5 m N{� N� . . . ' OMd`M�i10� WS7 � S ... 71 4u � � ,� �' � �� 31 � �y $ / �p� � z �, �� 747 � 10 12 �6 � � � YOS s . IN � $., �,�p� ' �a�� w.ay,e� �� i � ,� zoaa: � 'ei r, I.._ •1ll�It °�;�' � � �lR2 . ,�'{ :• r' ]Ot i�1 � 6enual Flills IVature Pr�.srve / � ,f :o��?,�,� � /,� ,�,, � 4.� e,.--....; "M�n:c.l4.. sn�r� t �� urasms�+.vuusv!..w: � , Boundary of Nwy 55 Wsst Rsdsvelopmsnt Projset Aree �Boundary o(Rsmrd end Rsnov�ion TIF DisMct http://gis.logis.org/LOGI S_ArcIM S/ims?ServiceName=gv_LOGI Smap_OV SDE&ClientV... 9/18/20 I 2 SPRINGSTED Page 14 Exhibit ll � -- - _ - Assumptions Report � City of Golden Valley, Minnesota Tax Increment Financing (Renewal & Renovation) District Highway 55 TIF District Scenario A -$18.5M EMV Type of Tax Increment Financing District Renewal& Renovation Maximum Duration of TIF District 15 years from 1 st increment Projected Certification Request Date 12/04/12 Decertification Date 12/31/30 (16 Years of Increment) 2012/2013 Base Estimated Market Value $3,457,000 Original Net Tax Capacity $53,240 AssessmenUCollection Year 2012/2013 2013/2014 2014/2015 2015I2016 Base Estimated Market Value $3,457,000 $3,457,000 $3,457,000 $3,457,000 Increase in Estimated Market Value 0 0 12,562,500 17,126,875 Total Estimated Market Value 3,457,000 3,457,000 16,019,500 20,583,875 Total Net Tax Capacity $53,240 $53,240 $210,271 $267,326 City of Golden Valley 55.796% Hennepin County 48.231% ISD#270 29.270°/a Other 10.146% Local Tax Capacity Rate 143.443% 2011/2012 Fiscal Disparities Contribution From TIF District 0.0000% Administrative Retainage Percent(maximum = 10%) 10.00% Pooling Percent 0.00% Bonds Note (Pav-As-You-Go) Bonds Dated 12/04/12 Note Dated 12/04/12 Bond Issue @ 0.00% (NIC) $0 Note Rate 6.00% Eligible Project Costs $0 Note Amount $2,999,500 Present Value Date& Rate 12/04/12 6.00% Notes Projections assume no future changes to tax and classification rates. Assumptions are based on a 3% market value inflator. Projections are based on a total post development estimated market value of$18.5M. SPRINGSTED O O O T N fh N V o0 M aD a0 M m c0 W � O O O O O O O O O O c�7 O Q CO 1� 00 (O (�7 N V � I� e0 O� M H N (O c`'1 O �O c0 a0 O M I� N o0 N M N N c`') <D IO .- o ch V Q� M c0 (h 01 C Q1 N o cD N W V O R � G N V � 1� N O O O� 01 a0 W aD I� f� (O (D (O M � � N N N N N � .- � � � � .- .- •- '- O � a Q � � if1 �.. N � M � � Z � � � � � � X O O O u) (D o0 oD c�7 � I� N c7 00 I� O f� N a0 O O O O O O O O O O f�- � � aD � N N � V N � N r' Q1 O M � '7 O) W O� M (O � O� Ol N o0 (O a0 (h O N tD V � a0 � '- N M N O O� O� a0 a0 c0 � O � N V (O M � � O I� a0 Q� O O .- N M � �f) I� aD � O N � C N N N N M (�7 (h ch M M ch �7 (�7 M V V C'7 N C Z N � fA Q � O O O V O� I� N (O O� N (O N V N t0 (O � (h O O O O O O O O O O O V O1 CO M (7 1� M M (O N N N N M oJ C d V N N V V V R � (O 1� � � M (O O� N v1 ' ' _ ' ' ' . _ . . . . 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� C I I � � 6> � N � d YO �, Q � � � � H � ,U T f/� � x � � N * ..�. C V O � � N T � C C V � ~ �' � � � � a c� � ° N o L v' � N " � � H O C � � � L m U = � O � " N Exhibit V Market Value Analysis Report City of Golden Valley, Minnesota Tax Increment Financing (Renewal & Renovation) District Highway 55 TIF District Scenario A - $18.5M EMV Assumptions Present Value Date 12/04/12 P.V. Rate - Gross T.I. 6.00% Increase in EMV With TIF District $25,905,935 Less: P.V of Gross Tax Increment 3,229,283 Subtotal $22,676,652 Less: Increase in EMV Without TIF 0 Difference $22,676,652 Annual Present Gross Tax Value @ Year Increment 6.00% 2014 0 0 1 2015 225,250 191,063 2 2016 307,091 245,738 3 2017 316,304 238,783 4 2018 325,793 232,025 5 2019 335,567 225,459 6 2020 345,634 219,078 7 2021 356,003 212,877 8 2022 366,683 206,852 9 2023 377,684 200,998 10 2024 389,014 195,310 11 2025 400,684 189,782 12 2026 412,705 184,411 13 2027 425,086 179,191 14 2028 437,839 174,120 15 2029 450,974 169,192 16 2030 464,503 164,404 $5,936,814 $3,229,283 SPRINGSTED Exhibit VI RENEWAL AND RENOVATION QUALIFICATIONS FOR THE DISTRICT EXECUTIVE SUMMARY PURPOSE OF EVALUATION LHB was hired by the City of Golden Valley to inspect and evaluate the properties within a Tax Increment Financing Renewal and Renovation District ("TIF DistricY') proposed to be established by the City. The proposed TIF District is located in the City of Golden Valley, bounded by Golden Valley Road on the North, Highway 55 on the South, and Decatur Avenue North on the West (Diagram 1). The purpose of LHB's work is to determine whether the proposed TIF District meets the statutory requirements for coverage, and whether five buildings on seven parcels, located within the proposed TIF District, meet the qualifications required for a Renewal and Renovation District. _ _l ,� .{ ; .�.. � �.r.,- .,�_ 7 ,.,. �,; � � �: �� ,+, �,� . i�[�ie}�� i ...�� `� ' .�C�; rua�,6 f� � � �� =�. ��,� �.. �49� , '`��2.. .� �3 °n° _='�g Diagram 1 -Proposed TIF District SCOPE OF WORK The proposed TIF District consists of six (6) parcels and a section of public road, with five (5) commercial buildings. All five of the buildings received a curbside visual inspection. Three buildings in the proposed TIF District received an on-site interior and exterior inspection. Building code and Condition Deficiency reports for each building inspected by LHB are located in Appendix B. SPRINGSTED Exhibit VI CONCLUSION After inspecting and evaluating the properties within the proposed TIF District and applying current statutory criteria for a Renewal and Renovation District under Minnesota Statutes, Section 469.174, Subdivision 10a, it is our professional opinion that the proposed TIF District qualifies as a Renewal and Renovation District because: � The proposed TIF District has a coverage calculation of 100 percent which is above the 70 percent requirement. • 20 percent of the buildings are structurally substandard which meets the 20 percent requirement. • 50 percent of the other buildings require substantial renovation or clearance which is above the 30 percent requirement. • The substandard buildings are reasonably distributed throughout the geographic area of the proposed TIF District. SPRINGSTED