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2024-241 CH135-65-937449.v1 CITY OF CHANHASSEN CARVER AND HENNEPIN COUNTIES, MINNESOTA DATE: April 15, 2024 RESOLUTION NO: 2024-24 MOTION BY: von Oven SECONDED BY: McDonald RESOLUTION ADOPTING A MODIFICATION TO THE REDEVELOPMENT PLAN FOR THE DOWNTOWN CHANHASSEN REDEVELOPMENT PROJECT AREA AND APPROVING A TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO. 13 BE IT RESOLVED by the City Council (the “Council”) of the City of Chanhassen, Minnesota (the “City”), as follows: Section 1. Recitals 1.01. The Chanhassen Economic Development Authority (the “EDA”) and the City have heretofore established the Downtown Chanhassen Redevelopment Project Area (the “Project Area”) and adopted the Redevelopment Plan therefor. It has been proposed that the EDA adopt and the City approve a modification to the Redevelopment Plan for the Project Area (the “Redevelopment Plan Modification”) and a Tax Increment Financing Plan (the “TIF Plan”) for the establishment of Tax Increment Financing District No. 13 (the “District”) therein (the Redevelopment Plan Modification and the TIF Plan are referred to collectively herein as the “Plans”), all pursuant to and in conformity with applicable law, including Minnesota Statutes, Sections 469.090 to 469.1082 and Sections 469.174 to 469.1794, all inclusive, as amended, (the “Acts”), all as reflected in the Plans and presented for the Council’s consideration. 1.02. In response to a proposal for a mixed use redevelopment project, the EDA and City have investigated the facts relating to the Project Area and the District and have caused the Plans to be prepared. 1.03. The EDA and City have performed all actions required by law to be performed prior to the establishment of the District and the adoption and approval of the proposed Plans, including, but not limited to, notification of Carver County and Independent School District No. 112 having taxing jurisdiction over the property to be included in the District, a review of and written comment on the Plans by the City’s Planning Commission, adoption of the Plans by the EDA on March 11, 2024, and the holding of a public hearing by the Council upon published notice as required by law. 1.04. Certain written reports (the “Reports”) relating to the Plans and the activities contemplated therein have heretofore been prepared by staff and consultants and submitted to the Council and/or made a part of the City files and proceedings on the Plans. Among those reports is one entitled “Report of Inspection Procedures and Results for Determining Qualifications of a Tax Increment Financing District, West 78th Street Renewal and Renovation TIF District” dated December 1, 2023 and prepared by LHB. The Reports include data, information and/or substantiation constituting or relating to the basis for the other findings and determinations made DocuSign Envelope ID: 3D31DA30-D621-4E1C-BE23-5E7C69BD093A 2 CH135-65-937449.v1 in this resolution. The Council confirms, ratifies and adopts the Reports, which are hereby incorporated into and made as fully a part of this resolution to the same extent as if set forth in full herein. 1.05 The boundaries of the Project Area are not being changed but the Redevelopment Plan is being modified to include activities related to the District. Section 2. Findings for the Adoption and Approval of the Plans. 2.01. The Council hereby find that the Plans are intended and, in the judgment of this Council, will provide an impetus for redevelopment which is in the public interest and accomplish certain objectives as specified in the Plans. Section 3. Findings for the Establishment of the District 3.01. The Council hereby finds that the District is in the public interest and is a renewal and renovation district under Minnesota Statutes, Section 469.174, Subd. 10a. 3.02. The Council further finds that the proposed redevelopment would not occur solely through private investment within the reasonably foreseeable future, that the TIF Plan conforms to the general plan for the development or redevelopment of Chanhassen as a whole, and that the TIF 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. 3.03. The Council has made the above findings and has set forth additional reasons and supporting facts for each determination in writing, attached hereto as Exhibit A. 3.04. The City elects to calculate fiscal disparities for the District in accordance with Minnesota Statutes, Section 469.177, Subd. 3, clause b, which means any fiscal disparities contribution would be taken from inside the District. Section 4. Public Purpose 4.01. The approval of the Plans conforms in all respects to the requirements of the Act s and will help fulfill a need to redevelop an area of the City with housing and commercial opportunities, to improve the tax base and to improve the general economy of the State and thereby serves a public purpose. For the reasons described in Exhibit A, the City believes these benefits directly derive from the tax increment assistance provided under the TIF Plan. A private developer will receive only the assistance needed to make this development financially feasible. As such, any private benefits received by a developer are incidental and do not outweigh the primary public benefits. Section 5. Approval and Adoption of the Plans DocuSign Envelope ID: 3D31DA30-D621-4E1C-BE23-5E7C69BD093A 3 CH135-65-937449.v1 5.01. The Plans, as presented to the Council on this date, including without limitation the findings and statements of objectives contained therein, are hereby approved, ratified, established, and adopted and shall be placed on file in the office of the Community Development Director. 5.02. The City’s staff, advisors and legal counsel are authorized and directed to proceed with the implementation of the Plans and to negotiate, draft, prepare and present to the Council for its consideration all further plans, resolutions, documents and contracts necessary for this purpose. 5.03 The Auditor of Carver County is requested to certify the original net tax capacity of the District, as described in the Plans, and to certify in each year thereafter the amount by which the original net tax capacity has increased or decreased. The EDA Executive Director is authorized and directed to forthwith transmit this request to the County Auditor in such form and content as the Auditor may specify, together with a list of all properties within the District, for which building permits have been issued during the 18 months immediately preceding the adoption of this resolution. 5.04. The EDA Executive Director is further authorized and directed to file a copy of the Plans with the Commissioner of the Minnesota Department of Revenue and the Office of the State Auditor pursuant to Minnesota Statutes 469.175, Subd. 4a. PASSED AND ADOPTED by the Chanhassen City Council on this 15th day of April, 2024. ATTEST: Kim Meuwissen, City Clerk Elise Ryan, Mayor YES NO ABSENT Ryan Schubert McDonald von Oven Kimber DocuSign Envelope ID: 3D31DA30-D621-4E1C-BE23-5E7C69BD093A A-1 CH135-65-937449.v1 EXHIBIT A RESOLUTION NO. 2024-24 The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan (the “TIF Plan”) for Tax Increment Financing District No. 13 (the “District”), as required pursuant to Minnesota Statutes (M.S.), Section 469.175, Subdivision 3 are as follows: 1. Finding that Tax Increment Financing District No. 13 is a renewal and renovation district as defined in M.S., Section 469.174, Subd. 10a. The District consists of six (6) parcels and their internal and adjacent rights-of-way, with plans to redevelop the area into a mixed-use development consisting of approximately 310 multi-family housing units and 18,000 rentable square feet of commercial space. 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. One of two buildings in the District, not including outbuildings, is structurally substandard and the other building requires substantial renovation or clearance to remove inadequate street layout and obsolescence not suitable for improvement or conversion. (See Appendix D of the TIF Plan.) 2. Finding that the proposed development, in the opinion of the City Council, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future and that the increased 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 Tax Increment Financing District No. 13 permitted by the TIF Plan. The proposed development, in the opinion of the City, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future: This finding is supported by the fact that the activities proposed in the TIF Plan meet the City's objectives for redevelopment. The existing property contains substandard or obsolete buildings whose renovation requires high costs related to demolition, remediation, site improvement, and construction of infrastructure. The redevelopment also requires substantial investment toward public improvements including the extension of Laredo Drive, utility relocations, and various internal and external sidewalk and roadway improvements to connect with the downtown area. Because of the combination of limited amounts of property available for expansion adjacent to the renewal site and the public and private costs of financing the proposed improvements which are essential to the comprehensive redevelopment of the area, this project is feasibly only through assistance, in part, from tax increment financing. DocuSign Envelope ID: 3D31DA30-D621-4E1C-BE23-5E7C69BD093A A-2 CH135-65-937449.v1 The developer provided a pro forma outlining project sources and uses as well as projected rent, operating cost, vacancy and financing assumptions. City staff and the City’s financial advisor reviewed the information and have determined that the project is not feasible without assistance due to anticipated net operating income and market returns not supporting the overall redevelopment costs for the site. This review supports justification that the Developer would not have gone forward without tax increment assistance. 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 market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the District permitted by the TIF Plan: This finding is justified on the grounds that the development intensity and tax based created on currently underutilized and declining property requires site and public improvement costs that are improbable without public assistance. Specifically, the costs of site preparation, demolition, remediation, and public improvements to include infrastructure and site parking will add significantly to the total redevelopment costs of any development in this area. Site and public improvements costs in this area have made redevelopment infeasible without tax increment assistance. The City reasonably determines that no other redevelopment of similar scope is anticipated on this site without substantially similar assistance being provided to the development. Therefore, the City concludes as follows: a. The City's estimate of the amount by which the market value of the entire District will increase without the use of tax increment financing is $0. b. If the proposed development occurs, the total increase in market value will be $82,213,460. 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 $8,617,446. d. Even if some development other than the proposed development were to occur, the Council finds that no alternative would occur that would produce a market value increase greater than $73,596,014 (the amount in clause b less the amount in clause c) without tax increment assistance. 3. Finding that the TIF Plan for the District conforms to the general plan for the development or redevelopment of the municipality as a whole. The City of Chanhassen Planning Commission reviewed the TIF Plan on February 20, 2024 and found that the TIF Plan conforms to the general plans for the development and redevelopment of the City as a whole. DocuSign Envelope ID: 3D31DA30-D621-4E1C-BE23-5E7C69BD093A A-3 CH135-65-937449.v1 4. Finding that the TIF Plan for Tax Increment Financing District No. 13 will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development or redevelopment of the Downtown Chanhassen Redevelopment Project Area by private enterprise. Through the implementation of the TIF Plan, the City will provide an impetus for the renovation of substandard and underutilized property, construction of a new mixed -use private development which will result in increased employment in the City and the State of Minnesota, an increased tax base of the State and add a high-quality development to the City. DocuSign Envelope ID: 3D31DA30-D621-4E1C-BE23-5E7C69BD093A