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12-18-12 CC Public Hearing - 4BCity Administration/ Council 763-593-8003 / 763-593-8109 (fax) Executive Summary For Action Golden Valley City Council Meeting December 18, 2012 Agenda Item 4. B. Public Hearing - Proposed Redevelopment Plan for the Highway 55 West Redevelopment Project Area and a Tax Increment Financing Plan for the Highway 55 West TIF District No. 1 Prepared By Jeanne Andre, Assistant Director, Housing and Redevelopment Authority Summary On October 9 the Housing and Redevelopment Authority (HRA) adopted a Redevelopment Plan for the Highway 55 West Redevelopment Project Area and a Tax Increment Financing Plan for a portion of the Redevelopment Area that will constitute the Highway 55 West TIF District No. 1. (Maps defining the Redevelopment Area and TIF District are included in the Plans). The HRA has forwarded the plans to the City Council for consideration. The proposed Highway 55 West Renewal and Renovation Area Plan (Redevelopment Plan) identifies the statutory authority, highlights current conditions in the project area, outlines anticipated improvements, and identifies goals, objectives, policies and administration for the proposed project area. The Highway 55 West Renewal and Renovation Tax Increment Financing Plan for District No. 1 (Financing Plan) outlines the anticipated income created by the new district and planned expenditures. The Redevelopment Area defines the area where improvements can occur. The TIF District defines the area from which tax increments will be generated. The main current objective in developing the plans is the desire to provide safer access at Highway 55 at Decatur Avenue North for vehicles and pedestrians and to improve pedestrian safety by creating a sidewalk system that connects 7th Avenue and Golden Valley Road east of Mendelssohn to the existing sidewalk system east of Boone Avenue North. The Tiburon Apartment project has been proposed at the former bowling alley site. During public review of this project, safety of new residents at this facility was identified as a major factor in considering the approval of this project. Although the developer will install sidewalks at the new facility, resident safety depends on a sidewalk system beyond the building site and managing vehicle traffic at the existing slip ramp to TH 55 at Decatur Avenue North. These improvements would be difficult to assess to the developer, and TIF was identified as a good source of funds to accomplish the improvements needed for this residential project. The increment will be generated by the increased value of the Tiburon project. As a Renewal and Renovation District, increment can be collected for up to fifteen years. The scope of project will depend on the amount of increment generated, which is estimated in the Financing Plan to be approximately $3.2 million dollars (present value). State Statutes outline the process for consideration of a redevelopment plan and tax -increment financing plan. The Council must hold a public hearing on the plans following appropriate published notice. Hennepin County and School District 270, which are both impacted by the plans, must be provided copies of the plans, notice of the public hearing and an opportunity to comment. The Planning Commission must review the plans and determine that they conform to the City's Comprehensive Plan. The Planning Commission reviewed the plan on November 26 and adopted a resolution finding the plans conform to the City's Comprehensive Plan. A Memo/Report was received from Hennepin County stating that the proposed TIF District "satisfies the preference of the Hennepin County Board of Commissioners for use of tax increment financing, as identified in Resolution 92- 10-01R1 adopted on 10/27/92, because TIF is a financing tool of last resort." School District 270 chose not to comment. The Council should hold the scheduled public hearing and consider adoption of the two plans. These plans establish the maximum scope of public improvements and parameters for related expenditures. If the plans are adopted, it is not anticipated that any of the public improvements identified in the plans would occur before 2014. The City will work with the State of Minnesota in 2013 to design and identify funding opportunities for roadway improvements that improve the connection to TH 55 at Decatur Avenue North and Golden Valley Road. Further defining that project and outside funding sources will establish the amount of TIF funds available for other public improvements. The scope of all improvements will be considered and authorized by the City Council prior to bidding a project for construction. Attachment • Resolution Adopting the Redevelopment Plan for the Highway 55 West Redevelopment Project Area (13 pages) • Resolution Adopting the Tax Increment Financing Plan for Highway 55 West Tax Increment Financing District No. 1 (Renewal And Renovation) (25 pages) • Planning Commission Resolution 12-01 (1 page) • Hennepin County Memo (Report) from Deputy County Administrator, David J. Hough, dated November 30, 2012 (1 page) Recommended Action Motion to adopt Resolution Adopting the Redevelopment Plan for the Highway 55 West Redevelopment Project Area. Motion to adopt Resolution Adopting the Tax Increment Financing Plan for Highway 55 West Tax Increment Financing District No. 1 (Renewal And Renovation). Resolution 12-101 Member introduced the following and moved its adoption: December 18, 2012 RESOLUTION OF THE CITY OF GOLDEN VALLEY, HENNEPIN COUNTY, MINNESOTA ADOPTING THE REDEVELOPMENT PLAN FOR THE HIGHWAY 55 WEST REDEVELOPMENT PROJECT AREA BE IT RESOLVED by the City of Golden Valley, Minnesota (the "City"), as follows: 1. Project Plan Review. The City has reviewed the Redevelopment Plan (the "Project Plan") for the Highway 55 West Redevelopment Project Area (the "Redevelopment Project") as approved by the Housing and Redevelopment Authority ("the Authority") attached hereto. 2. Approval. The Project Plan is hereby approved, based on the findings in Section 3 hereof. 3. Findings for Approval of Project Plan. The City hereby makes the following findings: 3.01. The Project Plan proposes that the Authority undertake certain redevelopment activities for the purpose of encouraging redevelopment of properties in the Redevelopment Project. 3.02. The land in the Redevelopment Project would not be made available for development without the financial aid to be sought since private developers could not economically develop the Redevelopment Project without the proposed redevelopment activities. 3.03. The Project Plan will afford maximum opportunity, consistent with the needs of the City as a whole, for the redevelopment of the District by private enterprise. The redevelopment activities contemplated in the Project Plan would help to retard blight in the Redevelopment Project and provide an increase in employment and housing opportunities in the City and enhance the tax base of the City and overlapping taxing jurisdictions. 3.04. The redevelopment activities proposed by the Project Plan conform to the general plan for the development or redevelopment of the City as a whole. The redevelopment activities are compatible with the City's zoning ordinances and other related regulations and encourage efficient use of existing infrastructure as set forth in the City's Land Use Plan and has been so found by the City's Planning Commission on November 26, 2012. 3.05. The Project Plan provides an outline for the development or redevelopment of the area and is sufficiently complete to indicate its relationship to definite local objectives as to appropriate land uses and to indicate general land uses and general standards of development or redevelopment. Resolution 12-101 - Continued December 18, 2012 4. Transmittal and Public Hearing. The Project Plan has been submitted to Hennepin County and School District 270 for review and comment, a notice of public hearing was published, and said hearing held on December 18 prior to Council consideration, in accordance with Minnesota Statutes, Chapter 469. 5. Filin . The Director is hereby authorized and directed to file the Project Plan with the Commissioner of the Minnesota Department of Revenue and the Office of the State Auditor pursuant to Minnesota Statutes, Section 469.175, subdivision 4a. Shepard M. Harris, Mayor ATTEST: Susan M. Virnig, City Clerk The motion for the adoption of the foregoing resolution was seconded by Member and upon a vote being taken thereon, the following voted in favor thereof: and the following voted against the same: whereupon said resolution was declared duly passed and adopted, signed by the Mayor and his signature attested by the City Clerk. Redevelopment Plan for Highway 55 West Redevelopment Area Golden Valley, Minnesota Golden Valley Housing and Redevelopment Authority Approval: October 9, 2012 Planning Commission Review: Approved by the City Council: TABLE OF CONTENTS Page(s) Introduction......................................................................................................................... 3 Background..........................................................................................................................3 PublicImprovements..........................................................................................................3 Statement of Need and Public Purpose, Statutory Authorization......................................4 Statementof Objectives......................................................................................................4 ItemizedGoals and Objectives............................................................................................5 Policies................................................................................................................................6 Boundaries of the Project Area and Redevelopment Opportunities..................................7 Definitions............................................................................................................................ 8 Administration of Redevelopment Project..........................................................................9 Maintenanceand Operations..............................................................................................9 Paymentof Public Costs.................................................................................................9 Property Acquisition and Proposed Reuse.....................................................................9 Relocation.....................................................................................................................10 Environmental Controls; Land Use Regulations............................................................10 Park and Open Space to be Created.............................................................................10 Amendments.................................................................................................................10 Mapof the Project Area....................................................................................................11 Introduction In the 1970s the City took the initiative to create a mixed-use, walkable downtown centered at the historic village crossroads at Golden Valley Road and Winnetka Avenue. This area has many community resources, including retail destinations, restaurants, the library, the post office, and City Hall. Recently interest has grown in connecting the area west of Boone Avenue to this urban core. The goal is to make better and safer connections for both pedestrians and vehicles and provide better access to transit stops. It is anticipated that public improvements that improve vehicle and pedestrian safety will promote private redevelopment in the area. Recent rezoning of two parcels at 9220 and 9130 Olson Memorial Highway to high-density housing is the immediate impetus to establish a new Highway 55 West Renewal and Renovation Area (Project Area). A developer has proposed the construction of a 142 -unit apartment building, adding many new residents to the area and spurring the need to create improved transportation linkages. This Plan will define the geographic area of proposed improvements, outline existing conditions, identify possible improvements, and set goals and objectives and policies that will guide projects as they are implemented. The proposed Renewal and Renovation Area includes parcels on the north and south side of Golden Valley Road west of Decatur Avenue North to 9400 Golden Valley Road and parcels on the south side of 7`h Avenue North between Boone Avenue North and Decatur Avenue North (See Map, page 11). Background The Project Area has a wide range of land uses and building types, including 24 parcels and 21 buildings, from 12 to 86 years old. When parcels in the Project Area were originally developed, Golden Valley Road served as the primary east -west arterial roadway in the area, which originally contained farmsteads. In fact, a farmhouse built in 1926 still exists on the north side of Golden Valley Road. Commercial Uses, which included a bowling alley, restaurants and office uses developed over time. Single and multifamily housing now coexist with the commercial uses. When Olson Memorial Highway (Highway 55) was constructed in the 1960s, some of the existing uses ended up with frontage on both Highway 55 and Golden Valley Road and the local street system was truncated. The unusual shaped lots, highway orientation and truncated local street system create a challenge for development. The Valley Square Redevelopment Area east of the Project Area has been redeveloped with a mix of uses, but has a more urban pedestrian orientation that helps integrate the uses. The goal of the Project Area is to develop public improvements that will support the current range of land uses and encourage new development, including new high-density residential housing now proposed for the area. Public Improvements Public improvements proposed in the area include improvements to the Highway 55 access/exit to Decatur Avenue North, sidewalks and lighting to improve pedestrian safety, burial of overhead electrical lines, addition of regional storm water facilities, and sanitary sewer lining. These improvements are aimed to assist residents from the proposed 142 -unit apartment move safely in 3 the area and to foster further development in the area by creating a safe neighborhood environment. Pedestrian safety will also support walking programs promoted by existing local businesses and connect residents and employees of businesses west of Boone Avenue to transit stops on Wisconsin Avenue or Winnetka Avenue. Statement of Need and Public Purpose, Statutory Authorization The Housing and Redevelopment Authority (HRA) finds there is a need for development within the City and the Project Area in order to provide employment and housing opportunities, to improve the local tax base, and to improve the general economy of the City and the State. The economic security of the people in the City depends upon proper development of property that meets any one of a number of conditions, including properties with values too low to pay for the public services required or rendered and properties where lack of use or improper use has resulted in stagnant or unproductive land that could otherwise contribute to the public health, safety, and welfare. The HRA finds that in many cases, such property cannot be developed without public participation and assistance in various forms, including property acquisition and/or write-down; proper planning; the financing of development costs associated with clearance, grading, and soils correction; and the making of various other public and private improvements necessary for development. In cases where the development of property cannot be done by private enterprise alone, the HRA believes it to be in the public interest to consider the exercise of its powers, to advance and spend public money, and to provide the means and impetus for such development. The HRA finds that in certain cases, property within the Project Area would or may not be available for development without the specific financial aid to be sought, that the Redevelopment Plan will afford maximum opportunity, consistent with the needs of the City as a whole, for the development of the Project Area by private enterprise, and that the Redevelopment Plan conforms to the general plan for the development of the City as a whole. Overall Objectives The HRA seeks to achieve one or more of the following objectives with respect to the Project Area, as the Authority may deem appropriate and necessary: • promote and secure the prompt development of property within the Project Area, such property which is not now in its most productive use, in a manner consistent with the Comprehensive Plan of the City, thus realizing Comprehensive Plan, land use, and tax base goals • assist development in the Project Area through the acquisition or write-down of certain interests in property which is not now in productive use or in its highest and best use, to make or defray the cost of soil corrections or site improvements on said property, and to construct or reimburse for the construction of public improvements and other facilities on or for the benefit of said property, thereby promoting and securing the development of other land within the Project Area 4 • secure the increase and availability of rental housing property for individuals and families of low to moderate income within the Project Area • secure the increase of industrial and commercial property subject to taxation within the Project Area • promote and secure additional employment opportunities within the City and to prevent the loss of existing employment opportunities, thereby preventing the loss of valuable human resources • To provide funding for an ongoing development strategy and to prioritize the use of available resources • implement and revise from time to time, as may be deemed necessary or desirable, a consolidated and unified Redevelopment Plan and to finance the associated development costs on an area -wide basis • employ any of the powers of the Authority for the benefit of the Project Area in such cases and upon such terms as the Authority may deem appropriate • constructor acquire facilities deemed desirable for the development of the Project Area Itemized Goals and Objectives To achieve its mission of structured redevelopment, this Plan has identified six goals with related objectives to encourage cohesive planning and structured renewal within the area. It then outlines policies that will help to achieve the goals and objectives. Goal 1— Improve vehicle and pedestrian access Objectives • Improved access/exit from Highway 55 to Decatur Avenue North • Added pedestrian and non -motorized transportation facilities • Improved connections to the Luce Line Regional Trail Goal Z — Redevelop obsolete properties Objectives • Blighted, functionally obsolete, and/or economically unsustainable buildings removed • New uses compatible with existing uses • Maximized development density along Highway 55 Goal 3 — Create jobs and life -cycle housing Objectives • Increased high -paying jobs • Housing stock that is maintained or improved • Higher density housing 5 Affordable, zero crime, housing Commercial uses that serve the community Goal 4 -- Require design that is sustainable and aesthetically pleasing Objectives • Enhanced community identity through features that reflect Golden Valley • Visually attractive development that complements its surroundings • Buildings constructed with environmentally sustainable `green building` practices (development that meets environmental criteria set forth by Leadership in Energy and Environmental Design (LEED) and the United States Department of Energy) • Active living criteria included in design • Undergrounded utilities • Signage and wayfinding features to connect the area to downtown Golden Valley and the Luce Line Trail Goal 5 — Protect the environment Objectives • Wetlands that are protected and enhanced • Land free of soil and wetland contamination • Arborous environments • Natural features retained and native vegetation (re)established Goal 6 — Maintain a regional framework Objectives • Growth compatible with the Metropolitan Council development framework • Public infrastructure designed in cooperation with Hennepin County and the Minnesota Department of Transportation • Participation in grant programs available through Hennepin County, the Metropolitan Council and other agencies • A positive relationship with surrounding communities and governmental agencies • Continued participation in cooperative traffic management strategies • Improved transit options Policies Land use The City will study planned land uses to determine the need or desirability of individual parcel or area -wide comprehensive plan or zoning amendments to accommodate desired land uses. The City and HRA will assure that its review processes, zoning, and building regulations will promote desired development projects. The City will assure that new uses in the redevelopment area are compatible with existing development and the City's Land Use Plan. 11 The City and HRA will review existing properties in the area to consider their long term viability and/or options for alternative uses. Land use plans will promote mixed use developments and increased density where appropriate, in keeping with the Metropolitan Council's regional growth strategy. Financing The City and HRA will identify criteria to target redevelopment funds such as tax increment financing, tax abatements, Livable Communities, Community Development Block Grants and other funding made available by the Legislature or other agencies or governmental units. The City and HRA will consider providing public assistance to redevelopment projects that serve a substantial public purpose, remove blight, or mitigate contamination. The City and HRA will consider using land write-downs to subsidize redevelopment projects. Redevelopment funding will be paired with other funding options such as assessments, based on the Golden Valley Special Assessment Policy. The City will consider franchise fees and utility surcharges to underwrite the cost of utility and infrastructure upgrades. Design and Environmental Standards The City will promote best practices to meet the highest environmental standards. The City and HRA will identify approaches and/or incentives to promote a corridor beautification program. This program will include both public and private components. The City will monitor ongoing research on sustainable development initiatives to guide redevelopment and future updates of this plan. Transportation The City will work with Metropolitan Transit to monitor transportation needs of area residents and workers and identify ways to improve transportation services, including improving transit routes and working with area businesses to develop transportation management plans. Boundaries of the Project Area and Redevelopment Opportunities The property within the City which constitutes the Project Area includes the property contained within the boundaries described below and is illustrated on the attached map. Area 1A South of Golden Valley Road, north of Highway SS, and west of Decatur Avenue North This area currently contains several small office buildings, the former bowling alley, and Valvoline Rapid Oil Change. This area is very visible from Highway 55. The Tiburon, a six -story, 142 -unit apartment building is proposed to be constructed on the site of the former bowling alley and the adjacent office building, which were recently rezoned to High -Density Residential. The remainder of the Area 1A could remain commercial or move to residential uses. Area 1B South of Golden Valley Road and north of Highway 55, where it exits to Highway 169. This area is located directly north of the Highway 169/Highway 55 interchange and is zoned Commercial. National Camera Exchange is currently located at this site. it has relocated from another site in the Area and may wish to further expand in the future. Area 2 North of Golden Valley Road from Highway 169, east halfway to Decatur Avenue North Two office buildings, two single family homes, and a five -building apartment complex (Trentwood, 54 units) are located in this area. Trentwood is zoned medium -density residential and the rest of the parcels are zoned Business and Professional Offices. The easterly office building and single family homes are currently listed for sale. if the parcels are joined and redeveloped, residential or institutional uses on those properties would complement the existing and proposed residential development in the area. Alternately, if redeveloped as Business and Professional Offices, the site would relate to the office use to the west and north. Area 3 North of Golden Valley Road from Decatur Avenue North, west to the mid -block This area includes Red lobster Restaurant and two fast food restaurants and is zoned Commercial. While this area is appropriate for continued long-term commercial and retail use, it may develop more densely in the future if the current uses end. Golden Valley Road serves as the frontage road for Highway 55 in this area. The road currently ends at Decatur Avenue North, with frontage road signage directing drivers north on Decatur Avenue and east on 7th Avenue. It may be beneficial to realign the frontage road in this area to provide a continuous roadway and eliminate confusing turning movements. The current access to Highway 55 at Decatur does not provide standard, save vehicular movement. Area 4 North of Highway 55 west of Boone Avenue North, south of 7th Avenue, and east of Decatur Avenue North This area contains two restaurants, an automotive service shop, and a vacant parcel, all of which are zoned Commercial. With its highway visibility and proximity to the Boone Avenue/Highway 55 intersection, this area could redevelop into more intense uses, particularly if a number of the parcels are consolidated. Definitions The terms defined in this section have the meanings given herein, unless the context in which they are used indicates a different meaning: "Authority" 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 "Municipality" 8 "City Council" means the City Council of the City. "County" means Hennepin County, Minnesota. "Governing Body" means the Board of Commissioners of the Authority. "HRA Act" means the Minnesota Municipal Housing and Redevelopment Act, Minnesota Statutes, Sections 469.001 through 469.047, both inclusive. "Land Use Regulations" means all federal, state and local laws, rules, regulations, ordinances and plans relating to or governing the use or development of land in the Project Area, including but not limited to environmental, platting, zoning and building code laws, regulations and ordinances. "Proiect Area" means the geographic area of the Highway 55 West Redevelopment Project Area. "Public Costs" means the costs of land acquisition, public and site improvements, repayment of debt service on tax increment bonds, and other eligible costs as set forth in the Redevelopment Plan and Tax Increment Financing Plan(s). "Redevelopment Plan" means the Redevelopment Plan for the Project Area. "State" means the State of Minnesota. "TIF Act" means Minnesota Statutes, Sections 469.174 through 469.179, both inclusive. "TIF District" means any tax increment financing district presently established or to be established in the future in the Project Area. "TIF Plan" means the respective tax increment financing plan for each TIF district located within the Project Area. Administration of Redevelopment Project Maintenance and Operations Maintenance and operation of the Project Area will be the responsibility of the HRA Director, who shall serve as administrator of the Project Area. Each year the administrator will submit to the Governing Body the maintenance and operation budget for the following year. The administrator will administer the Redevelopment Plan pursuant to the provisions of the HRA Act, provided, however, that such powers may only be exercised at the direction of the Governing Body. No action taken by the administrator pursuant to the above-mentioned powers shall be effective without authorization by the Governing Body. Payment of Public Costs It is anticipated that the Public Costs of the Project Area will be paid primarily from tax increments or proceeds of tax increment bonds. Such costs are identified in the TIF Plan(s) for the corresponding TIF District(s) located within the Project Area. The Authority reserves the right to Ci use other sources of revenue legally applicable to the Project Area to pay for such Public Costs including, but not limited to, special assessments, federal or state funds, and investment income. Property Acquisition and Proposed Reuse The HRA may acquire property, or appropriate interest therein, within the Project Area as it deems necessary or desirable to assist in the implementation of the Redevelopment Plan. The Redevelopment Plan contemplates that the HRA may acquire property and reconvey the same to another entity. Prior to formal consideration of the acquisition of any property, the Governing Body will require the execution of a binding development agreement with respect thereto and evidence that tax increments or other funds will be available to repay the Public Costs associated with the proposed acquisition. It is the intent of the HRA to negotiate the acquisition of property whenever possible. Appropriate restrictions regarding the reuse and redevelopment of property shall be incorporated into any development agreement to which the HRA is a party. Relocation Any person or business that is displaced as a result of the Redevelopment Plan will be relocated in accordance with the provisions of the HRA Act and other applicable state law. Environmental Controls; land Use Regulations All HRA actions, public improvements, and private development shall be carried out in a manner consistent with existing environmental controls and all applicable land Use Regulations. Park and Open Space to be Created Park and open space created within the Project Area will be done so in accordance with the zoning and platting ordinances of the City. Amendments The HRA reserves the right to alter and amend the Redevelopment Plan subject to the provisions of state law regulating such action. 10 O O O 00 ^CND M O AVOU00 CO o � 00 O 00 O CD OD OD OD R R saw 7 Q Q O $ y S S x all y�� U w c $a e€� y �Q u 00 N OAA i ijeoo(] O N /A¢ i yy y� /+jeog OAA e 1 M M R M 7 Q O CO O> N oOi co O N O COD N M O Cp O n O Q 00 Opp `� COO N c cm Aq N op tpOM COD d' � c L LO V) 00 O toLV 00 ,y� v co N Of UO M ^ In 3 0 MtM') to L M ce Q rn W ;z 3 M c c O O O00 ppl�y�( 11d o) > O O CIA 1'A W to O ter. 0 N Op O O O ONi - C14 ONi O to _ r� O O rn O O tO`1 0 ! �wayR Q Cb O N C4 M O Ma v�0y16 O OO OMi N_ M O O O ^ O 000 O O tNo b U e puaw AV 11 • 3S Resolution 12-102 December 18, 2012 Member introduced the following and moved its adoption: RESOLUTION OF THE CITY OF GOLDEN VALLEY, HENNEPIN COUNTY, MINNESOTA, ADOPTING THE TAX INCREMENT FINANCING PLAN FOR HIGHWAY 55 WEST TAX INCREMENT FINANCING DISTRICT NO. 1 (RENEWAL AND RENOVATION) BE IT RESOLVED by the City Council of the City of Golden Valley, Minnesota (the "City"), as follows: 1. Financing Plan Review. The City has previously reviewed and approved the Redevelopment Plan (the "Project Plan") for the Highway 55 West Redevelopment Project Area (the "Redevelopment Project") and now has before it a Tax Increment Financing Plan (the "Financing Plan") for Tax Increment Financing (Renewal and Renovation) District No. 1 (the "District"). 2. Approval. The Financing Plan is hereby approved, as provided in Section 4, based on the findings in Section 3 hereof. 3. Findings for Approval of the Financing Plan. The City hereby makes the following findings: 3.01. The Financing Plan provides the means to finance certain public redevelopment costs of the Redevelopment Project, including the redevelopment activities described in the Financing Plan that benefit the District. The Financing Plan contains a statement of objectives for the improvement of the Redevelopment Project, a statement as to the development program for the District, and a statement of the property within the Redevelopment Project which the Authority intends to acquire. The Financing Plan also estimates the public redevelopment costs of the Redevelopment Project, the amount of bonded indebtedness to be incurred, the sources of revenues to finance or otherwise pay public costs of the District, the most recent net tax capacity of taxable real property within the District, the captured net tax capacity of the District at completion, and the duration of the District. The Financing Plan also describes and identifies the development activities to be undertaken or expected to be undertaken in the District and all parcels to be included in the District. The Financing Plan further contains alternative estimates of the impact of the proposed tax increment financing on the net tax capacities of all taxing jurisdictions in which the District is located. All the captured tax capacity is necessary for the objectives of the District. 3.02. The District consists of a contiguous geographic area within a "project" as defined in Minnesota Statutes, Section 469.174, subdivision 8, and is a proper "tax increment financing district" within the meaning of Section 469.174, subdivision 9. Based on the information in the Financing Plan and representations of the developer, the District contains the following conditions: Parcels consisting of 70% of the area of the District are occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures; 20% of the buildings are structurally substandard; and 30% of the other Resolution 12-102 - Continued December 18, 2012 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 suitable for improvement or conversion, or other identified hazards to the health, safety, and general well-being of the City. The foregoing conditions are reasonably distributed throughout the geographic area of the District. Therefore, the District qualifies as a "renewal and reno- vation district" within the meaning of Minnesota Statutes, Section 469.174, subdivision 10a. 3.03. The private redevelopment proposed to be encouraged in the Redevelopment Project pursuant to the proposed Project Plan would not, in the opinion of the City, reasonably be expected to occur solely through private investment within the reasonably foreseeable future and, therefore, the use of tax increment financing is deemed necessary. Furthermore, in the opinion of the City, 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 Financing Plan. The studies and analyses supporting these findings are identified in the Financing Plan, 3.04. The Financing Plan conforms to the general plan for the development or redevelopment of the City as a whole. The redevelopment activities are compatible with the City's zoning ordinances and other related regulations and encourage efficient use of existing infrastructure as set forth in the City's Land Use Plan as determined by the Planning Commission on November 26, 2012. 3.05, The Financing Plan will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development or redevelopment of the District by private enterprise. The redevelopment activities contemplated in the Project Plan would help to retard blight in the Redevelopment Project and provide an increase in employment and housing opportunities in the City and enhance the tax base of the City and overlapping taxing jurisdictions. 4. Transmittal and Public Hearing. The Financing Plan was transmitted to the Golden Valley Planning Commission to affirm the findings in Section 3.04, and to Hennepin County and School District 270 for review and comment, and a notice of public hearing published prior the December 18 public hearing, all in accordance with Minnesota Statutes, Chapter 469. 5. Filing. The Director is hereby authorized and directed to file the Financing Plan with the Commissioner of the Minnesota Department of Revenue and the Office of the State Auditor pursuant to Minnesota Statutes, Section 469.175, subdivision 4a. Shepard M. Harris, Mayor Resolution 12-102 - Continued ATTEST: Susan M. Virnig, City Clerk December 18, 2012 The motion for the adoption of the foregoing resolution was seconded by Member and upon a vote being taken thereon, the following voted in favor thereof: and the following voted against the same: 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 ax 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) Dated: October 10, 2012 (Draft) Prepared by: SPRINGSTED INCORPORATED 380 Jackson Street, Suite 300 St. Paul, MN 55101-2887 (651) 223-3000 WWW..SPRINGST£D.COM TABLE OF CONTENTS P es 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 ....................................... 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........................................................................................................................................6 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 111 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 a re used indicates a different meaning: "Author' means the Housing and Redevelopment Authority of the City of Golden Valley. "Citi means the City of Golden Valley, Minnesota; also referred to as a'Munici li 'City Council" means the City Council of the Golden Valley; also referred to as the `Governing Body". "Cour means Hennepin County, Minnesota. 'Redevelopment Proiect 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 PI an for the Highway 55 West Project Area. "Project 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& 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 docu ment). 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 (f), apply. For districts consisting of two more noncontiguous areas, each area must individually qualify under the provisions listed above, as wail 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 ventliation, 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 properly 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 parol 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). Modifications 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 allowed 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 L The boundaries and area encompassed by the TIF District are described below. Parcel Number Legal Description 31-118-21-32-0009 THAT PART OF NW 114 OF SW 114 LYING E OF W 749 8110 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 21114/100 FT OF E 29114/100 FT OF THAT PART OF NW 114 OF SW 114 LYING S OF MPLS WATERTOWN ROAD AND N 0 F STATE HWY NO 55 31-118-21-32-0007 E 80 FT OF THAT PART OF NW 114 OF SW 114 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 114 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 114 OF SW 114 LYING NLY OF STATE HWY NO 55 AND SLY OF 6TH AVE N 31-118-21-31-0040 REGISTERED LAND SURVEY NO. 0030 HENNEPIN COUNTY, M INNESOTA 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 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 SPRINGSTED Page 3 Housing and Redevelopment Authority of the City of Golden Valley, Minnesota 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 bilghted 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 administrative 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 I 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 estim ated 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: Proiaased development not expEctecl to accLC 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 Cily 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 Aghernuket vakre expected If the proposed redevelopment did not go forward, for the same reasons described above, no large scale alfemative redevelopment of the project site would likely occur. The currently blighted building is now closed 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 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 SPRINGSTED Page 4 Housing and Redevelopment Authority of the City of Golden Valley, Minnesota 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 Authority 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. 9 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 11). 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 $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 pan. 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 Eligible Improvement Costs Bond/Note interest Payments 2,289,264 Administrative expenses 591,544 Other Expenditures Total $5,915,441 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. SPRINGSTED Page 5 Housing and Redevelopment Authority of the City of Golden Valley, Minnesota Section L Estimated Sources of Revenue Tax Increment revenue $5,915,441 Interest on invested funds Bond proceeds Loan proceeds 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 commercialtindustrial. 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) reductions 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. Section 0 Original Local Tax Rate SPRIAIGSTPD Page 6 Housing and Redevelopment Authority of the City of Golden Valley, Minnesota 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. 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 method 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 capacity of the TIF District. Such amount shall be known as the retained captured net tax capacity of the TIF District. SPRINGSTED Page 7 2011/2012 Taxing 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 method 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 capacity of the TIF District. Such amount shall be known as the retained captured net tax capacity of the TIF District. SPRINGSTED Page 7 Housing and Redevelopment Authority of the City of Golden Valley, Minnesota 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 bonds 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 1a; 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 imposed 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 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: SPRINGSTED Page 8 Housing and Redevelopment Authority of the City of Golden Valley, Minnesota (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 I 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 fnre 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 T IF District, at least 75% of the tax increments must be used to pay outstanding 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; (3) relocation benefits paid to, or services provided for, persons residing or businesses located In the project; SPRINGSTED Page 9 Housing and Redevelopment Authority of the City of Golden Valley, Minnesota (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. 3. The amount of tax increments over the life of the district that would be attributable to school district levies, assuming the school district's 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. SPRINGSTED Page 10 Housing and Redevelopment Authority of the City of Golden Valley, Minnesota 5. No additional 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 oertification 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 Pian. 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. There have been no building permits issued in the last 18 months in conjunction with any of the properties within the TIF District. 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 constricted, 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 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 Y 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, SPRINGSTED Page 11 Housing and Redevelopment Authority of the City of Golden Valley, Minnesota (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 District's 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 adoptlon 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. (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, SPRINGSTED Page 12 Housing and Redevelopment Authority of the City of Golden Valley, Minnesota 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 and 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 TI F District under Minnesota Statutes, Section 469.175, subdivisions 5 and 6, SPRINGSTED Page 13 Map of Highway 55 West Tax Increment Financing District No. 1 Exhibit I N ANf aU008001,00 Q N LO > c Z ah , CO c00 E �. 76 3 o \15, O _ M � 00 , o 00 - o F. s N OAd i nmea . G VN OAd jn4e3e M h a O CO �L CO ClCn/� O � O N CO OCN O W O M V 00 00 00 CO �D 00 kyr N 00 CN N O � .. xxyR LO V•O R O O M C-) Mp,,, 00 o - °° /R R R ♦' .�0 N end U i C 93 $ LL OO O N M Cb N MLO O to � o §,am 0e OILUCjCc� ah , O � O OD 10 F. s . G N 00CN �L � N 00 C-4 a N O � M O Ch $ LL OO N M Cb O O � o §,am ZGmg CN y^a C N U C$ OAd UyOSSIOPUew IaJ� m€�o Exhibit 11 Assumptions Report City of Golden Valley, Minnesota Tax Increment Financing (Renewal S 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 1st increment Projected Certification Request Date 12/04112 Decertification Date 12/31/30 (16 Years of Increment) 201212013 Base Estimated Market Value $3,457,000 Original Net Tax Capacity $53,240 Assessment/Collection Year 201212013 2013/2014 2014/2015 2015/2016 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,DOO 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% 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 O.DO% Bonds Bonds Dated Bond Issue Q 0.00% (NIC) Eligible Project Costs Present Value Date & Rate 12/04/12 $0 $0 Note (Pay -As -You -Go) Note Dated 12104/12 6.00% $2,999,500 Note Rate Note Amount 12/0412 6.00% Notes Projections assume no future changes to tax and classification rates. 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LL T = M♦ h 1P ao m o C m h m M m h m m 0 -a - aa - - a - - - N--------aaa - -- aaa r r V �2� CD Q., i Am Q r W � w EMh W 8: T 0 �p9 0 Ln Yi N Ln s� o 0 n� © C2 o to 0 �p9 0 c N r r CR 0 c t7 •a sV �a C, J r C3 C co chi r a o $ ¢ n h- C H CLC C cq tm to c_ 0 w X JC R P N do p W yVj � Z3 SSSa CLm 4 U Q m 3 0 Z �3e op �pQ a E 0 C& P umi v N N o O Y O U n '� I o N I d r m ti 0 n_o^�p0U 1 O � W Q a Co N urs N tn7 3 a L p c s r N G G V • s 0 �p9 0 0 c t7 •a sV h- 0 �p9 0 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 P.V. Rate - Grass T.I. 12/04/12 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 District") 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 D istrict. 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 469.974, Subdivision 90a, 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. SPRINGST)EI3 Resolution 12-01 November 26, 2012 Commissioner Kisch introduced the following resolution and moved its adoption: PLANNING COMMISSION CITY OF GOLDEN VALLEY STATE OF MINNESOTA RESOLUTION NO. 12-01 RESOLUTION OF THE GOLDEN VALLEY PLANNING COMMISSION FINDING THAT THE REDEVELOPMENT PLAN FOR THE HIGHWAY 55 WEST REDEVELOPMENT PROJECT AREA AND THE TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING (RENEWAL AND RENOVATION) DISTRICT NO. 1 CONFORM TO THE GENERAL PLAN FOR THE DEVELOPMENT AND REDEVELOPMENT OF THE CITY, AS AMENDED (AMENDED 2008 COMPREHENSIVE PLAN UPDATE) WHEREAS, it has been proposed that the City of Golden Valley, Minnesota (the "City") and the City's Housing and Redevelopment Authority (the "Authority") establish the Highway 55 West Redevelopment Project Area (the "Project Area") and the Tax Increment Financing (Renewal and Renovation) District No. 1 (the "TIF District"), and adopt a Redevelopment Plan for the Project Area (collectively the "Plans"), all pursuant to and in accordance with Minnesota Statutes, Sections 469.001 through 469.047, inclusive, and Sections 469.174 through 469.1799; and WHEREAS, the City and the Authority have caused to be prepared and submitted the Plans to the City Planning Commission (the "Commission") for review prior to the holding of a public hearing upon published notice as required by law; and WHEREAS, the Commission has reviewed the Plans to determine their conformity with the general plan for the development and redevelopment of the City as described in the 2008 Comprehensive Plan Update for the City, as approved by the City Council on March 17, 2009 and amended thereafter. NOW, THEREFORE, BE IT RESOLVED by the Commission that the Plans conform with the general plan for the development of the City as a whole and furthermore, the redevelopment activities are compatible with the City's zoning ordinance and other related regulations and encourage efficient use of existing infrastructure as set forth in the City's Land Use Plan. Adopted this 26th day of November, 2012. Chair Attest: Secretary The motion for the adoption of the foregoing resolution was seconded by Commissioner Kluchka and upon a vote being taken thereon, the following voted in favor thereof: Cera, Kisch, Kluchka, McCarty, Schmidgall, Segelbaum and Waldhauser; and the following voted against the same: none, whereupon said resolution was declared duly passed and adopted, signed by the Chair and her signature attested by the Secretary. Hennepin County Memo Date: November 30, 2012 To: Board of County Commissioners From: David J. Hough, Deputy County Administrator Subject: Golden Valley, Renewal and Renovation TIF District (Highway 55 West #1) Public Hearing: Tuesday, December 18, 2012 Proposal: The Golden Valley Housing and Redevelopment Authority has proposed the creation of the Highway 55 West#1 Renewal and Renovation Tax Increment Financing District. The site of the proposed TIF District is 4.46 acres on 6 parcels bordered by Golden Valley Road to the north, Highway 55 to the south, Decatur Avenue to the west, and Hwy 169 to the east. The parcels included within the TIF District are 31-118-21-31-0001, 31-118-21-31-0002, 31-118-21- 31-0040, 31-118-21-32-0007, 31-118-21-32-0008, and 31-118-21-32-0009. The Authority anticipates development commencing in 2013 with the construction of a 142 -unit market rate apartment complex and related public improvements. The public improvements include improved access to Highway 55 via Decatur Ave, sidewalks and lighting to improve pedestrian safety, burial of overhead power lines, addition of regional storm water facilities, and sanitary sewer lining. The apartment project is anticipated to be completed in 2014, related public improvements will continue through 2016. The Authority anticipates issuing tax increment bonds in an amount up to $3,641,560 to finance a portion of the estimated costs. Use of Tax Increment: The TIF District is projected to generate $5,936,814 of tax increment through 2030. These funds will be used for to pay the principal and interest on bonds, for public costs and administrative expenses. SUMMARY: The TIF Plan states that extensive redevelopment costs including renovation/demolition and public improvements make it infeasible for the project to proceed without TIF assistance. This TIF District satisfies the preference of the Hennepin County Board of Commissioners for use of tax increment financing, as identified in Resolution 92-10-017R1 adopted 10/27/92, because TIF is a financing tool of last resort. A copy of this report will be sent to the Golden Valley City Council with a request that it be entered into the public record of the public hearing to be held on Tuesday, December 18, 2012, to reflect the county's position on this proposal.