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EDA-1. Modifications to TIF Districts 4 & 5-1 TO: Todd Gerhardt, Executive Director FROM: Laurie Hokkanen, Assistant Executive Director CITY OF DATE: October 15, 2010 Q CIIANIIASSEN SUBJ: Consider TIF #4 and #5 Budget Modifications 7700 Market Boulevard PO Box 147 Chanhassen, MN 55317 PROPOSED MOTION Administration The EDA approves a Resolution Adopting the Modifications to the Tax Phone: 952227.1100 Increment Financing Plans for Tax Increment Financing District Nos. 4 Fax: 952.227.1110 and 5 -1. Building Inspections Phone: 952.227.1180 A majority vote is required for adoption. Fax: 952.227.1190 BACKGROUND Engineering Phone: 952.227.1160 TIF #4: Fax: 952.227.1170 Finance This district was established in 1995 to facilitate redevelopment in the downtown Phone: 952.227.1140 area, especially the property around the Chanhassen Dinner Theatre. Last year, Fax: 952.227.1110 the council established Tax Increment District 10 to facilitate the construction of Park & Recreation the park and ride facility and potential development in and around the Chanhassen Phone: 952.227.1120 Dinner Theatre complex. Fax: 952.227.1110 At this point, TIF #4 has generated more increment than was anticipated in the Recreation Center TIF Plan. Staff is proposing to modify the plan for TIF #4 to reflect the true 2310 Coulter Boulevard Phone: 952.227.1400 revenues and expenditures in the district. The difference in plan versus actual is Fax: 952.227.1404 due to the fact the Office of the State Auditor (OSA) did not require reporting on tax increment revenues or interest earnings or payments in 1995, so the plan did Planning & Natural Resources not account for those expenses. Phone: 952.227.1130 Fax: 952.227.1110 The proposed modification to TIF #4 would also allow some of the increment from TIF #4 to be used, as needed, to pay for some of the city's park and ride Public Works costs and other project costs in TIF #10. Staff is working to complete the 1591 Park Road Phone: 952.227.1300 calculations, but at this point estimates that approximately $170,000 of TIF #10 Fax: 952.227.1310 expenses are eligible to be paid through these "pooling" dollars from TIF #4. Senior Center TIF #4 has outstanding bond obligations. The current schedule calls for the bonds Phone: 52227.11105 to be paid off in 2021, with annual payments ranging from $107,725 to $113,300. Fax: 952.227.1110 p p y g g The bonds are callable on 2/1/2013. The amount needed to defease the bonds is Web Site approximately $1.17 million. The account currently has a balance of www.ci.chanhassen.mn.us Chanhassen is a Community for Life - Providing for Today and Planning for Tomorrow Mr. Todd Gerhardt October 25, 2010 Page 2 approximately $500,000. Therefore, we need to modify the TIF budget to allow the district to remain open and generate increment /revenue sufficient to pay the bonds. Current projections show that the account will have sufficient funds to call the bonds in 2013. We may then be able to decertify the district in 2014. TIF #5: This is a housing district, established in 1997, that encompasses the Rottlund Housing Development known as North Bay. The city uses increment to repay itself and Rottlund for public improvements and other certain development costs associated with the project. The budget is being modified to reflect actual tax increment collections and to keep the district in compliance with the Office of State Auditor's requirements. As in TIF #4, the OSA reporting regulations in 1997 did not require the inclusion of tax increment revenues or interest expense, so the plan did not account for those items. The modification of TIF #5 is completely driven by the OSA's increased reporting requirements. We need to increase the total budget authority to include interest expense. TIF #5 obligations include payments to Rottlund Homes on a $400,000 + interest note. This is a pay -as- you -go note with the final payment due in 2014. This district may then be eligible for decertification in 2015. RECOMMENDATION Staff recommends approval of the modifications to the Tax Increment Financing Plans for Tax Increment Financing District Nos. 4 and 5 -1. ATTACHMENTS 1. Resolution Adopting the Modifications to the Tax Increment Financing Plans for Tax Increment Financing District Nos. 4 and 5 -1. 2. See City Council agenda and packet for supporting documents. CHANHASSEN ECONOMIC DEVELOPMENT AUTHORITY CITY OF CHANHASSEN CARVER AND HENNEPIN COUNTIES STATE OF MINNESOTA RESOLUTION NO. RESOLUTION ADOPTING A MODIFICATION TO THE TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO. 4. WHEREAS, it has been proposed by the Board of Commissioners (the "Board ") of the Chanhassen Economic Development Authority (the "EDA ") and the City of Chanhassen (the "City ") that the EDA adopt a Modification to the Tax Increment Financing Plan (the "Modification ") for Tax Increment Financing District No. 4 (the "District ") located within the Downtown Chanhassen Redevelopment Project Area (the "Project Area "), all pursuant to and in conformity with applicable law, including Minnesota Statutes, Sections 469.001 to 469.047, Sections 469.090 to 469.1082, Sections 469.124 to 469.134, and Sections 469.174 to 469. 1799, inclusive, as amended (the "Act "), all as reflected in the Modifications and presented for the Board's consideration; and WHEREAS, the EDA has investigated the facts relating to the Modification and has caused the Modification to be prepared; and WHEREAS, the EDA has performed all actions required by law to be performed prior to the adoption of the Modification. The EDA has also requested that the City Council schedule a public hearing on the Modification upon published notice as required by law. NOW, THEREFORE, BE IT RESOLVED by the Board as follows: 1. The EDA hereby reaffirms the original findings for the District, established as a redevelopment district. 2. The Modification is being completed to modify the budget to reflect actual expenditures to date and anticipated expenditures, increment received to date and anticipated through the remaining term of the District and to bring the Tax Increment Financing Plan into conformance with current Office of State Auditor requirements. The City is not modifying the boundaries or extending the term of the District. 3. The EDA further finds that the Modification will afford maximum opportunity, consistent with the sound needs for the City as a whole, for the development or redevelopment of the Project Area by private enterprise in that the intent is to provide only that public assistance necessary to make the private developments financially feasible. 4. Conditioned upon the approval thereof by the City Council following its public hearing thereon, the Modification, as presented to the EDA on this date, is hereby approved and adopted and shall be placed on file in the office of the City Manager. 5. Upon approval of the Modification by the City Council, the City Manager is authorized and directed to forward a copy of the Modification to the Carver County Auditor, the Minnesota Department of Revenue and the Office of the State Auditor pursuant to Minnesota Statutes 469.175, Subd. 4a. Approved by the Board of Commissioners of the Chanhassen Economic Development Authority this 25"' day of October, 2010. Thomas A. Furlong, Chair ATTEST: Todd Gerhardt, Executive Director (Seal)