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3. Plan for tax increment Dist No 2-1 I 3 I CITY O I kl'*, CHANHASSEN : , 690 COULTER DRIVE • P.O. BOX 147 • CHANHASSEN, MINNESOTA 55317 II (612) 937-1900 • FAX (612) 937-5739 IIMEMORANDUM TO: Don Ashworth, City Manager 1 FROM: Todd Gerhardt, Assistant City Manager . DATE: October 18, 1990 ISUBJ: Public Hearing to Consider the Modification of Development District No. 2 and TIF District No. 2-1 I In accordance with state law, the City Council must hold a public I hearing when considering modification to any development district. Attached for the City Council's consideration is the modified Development Plan and the modification which includes the new estimated project costs for upgrading Audubon Road (see page 6 of IAttachment #2) . At the October 8, 1990 meeting, the City Council approved the I resolution calling for a public hearing to consider the plan modification. Also at this meeting, Councilwoman Dimler requested a detailed outline of the total project costs. Listed below are the costs associated with this project: IConstruction Costs: 1 Construction Award $532,830 Land Acquisition/Tree Planting $ 10,000 Additional Storm Sewer $ 15,000 IEngineering $ 83,674 Administrative Expenses: I Bonding costs (Springsted, Moody, etc) $ 32,000 Staff Costs (City Manager/Engineer) S 64.000 1 TOTAL PROJECT COSTS $737,504 The Planning Commission at their October 17, 1990 meeting 1 unanimously approved the modified plan, finding the modifications consistent with the City's Comprehensive Plan and the development of the City of Chanhassen. II I Mr. Don Ashworth October 18, 1990 Page 2 RECOMMENDATION Staff recommends the City Council adopt the resolution modifying the Tax Increment Financing Plan for Development District No. 2 and Tax Increment District No. 2-1. ATTACHMENTS 1. Resolution 2. Modified TIF Plan 3. Planning Commission Resolution 1 1 1 I II I I CITY OF CHANHASSEN I CARVER AND HENNEPIN COUNTIES, MINNESOTA RESOLUTION Date Resolution No. I Motion By Seconded By RESOLUTION ADOPTING A MODIFIED TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO. 2-1 1 BE IT RESOLVED By the City Council (the Council) of the City of Chanhassen, Minnesota (the City) as follows: I Section 1. Recitals. 1.01. On October 10, 1988, the City adopted a Development Program for 1 Development District No. 2 and a Tax Increment Financing Plan for Tax Increment Financing District No. 2-1 therein, all pursuant to and in accordance with Minnesota Statutes Section 469.124 through 469.134 and Minnesota Statutes Sections 469.174 through 469.179. 1.02. On May 22, 1989, the City adopted a modified Development Program for Development District No. 2 and a modified Tax Increment Financing Plan for Tax Increment Financing District No. 2-1 and thereby expanded both districts. 1.03 It has been proposed that the City again modify the Tax Increment I Financing Plan for Tax Increment Financing District No. 2-1 to authorize expenditures for additional public improvements. The Council has investigated the facts and has caused to be prepared a modified Tax Increment Financing Plan describing the specific public improvements to be constructed within Development District No. 2. 1.04. The City has performed all actions required by law to be performed ' prior to the adoption of a modified Tax Increment Financing Plan, including, but not limited to, notification of Carver County and Independent School District No. 112; a review by the City planning commission of the modified Tax Increment Financing Plan for Tax Increment Financing District No. 2-1 for its consistency with the general plans for development of the City; and holding a public hearing regarding the modified Plan upon such notice as is required by law. ' 1.05. The modified Tax Increment Financing Plan is contained in a document entitled "Modified Tax Increment Financing Plan, Tax Increment Financing District No. 2-1, City of Chanhassen, Minnesota," dated October 22, 1990, and on file in the office of the City Manager. 1.06. The City Council has fully reviewed the contents of the modified Tax Increment Financing Plan and has on this date conducted a public hearing thereon at which the views of all interested persons were heard. friaebne41 *- • 1 I I rSection 2. Findings Related to the Modification of the Plan for Tax Increment Financing District No. 2-1. 2.01. It is the opinion of the Council that development of the properties included within the boundaries of Tax Increment Financing District No. 2-1 would not reasonably be expected to occur solely through private investment within the ' reasonably foreseeable future due to the lack of adequate public improvements and that the use of tax increment financing is therefore necessary. 2.02. The Council finds that the modified Tax Increment Financing Plan for Tax Increment Financing District No. 2-1 conforms to the general plan for development of the City, based upon the recommendations of the planning corn mission. 2.03. The Council finds that the modified Tax Increment Financing Plan for Tax Increment Financing District No. 2-1 will afford maximum opportunity, ' consistent with the sound needs of the City as a whole, for development of Development District No. 2 by private enterprise. 2.04. The Council further finds that the modification of the Tax Increment Financing Plan for Tax Increment Financing District No. 2-1 is intended, and in the judgment of the Council, its effect will be to promote the public purposes and accomplish the objectives specified in the modified Tax Increment Financing Plan. 2.05. The City Council has relied upon the opinions and recommendations of its staff and planning commission and the personal knowledge of the members of 1 the Council in reaching its conclusions regarding the modification of the Plan for Tax Increment Financing District No. 2-1. Section 3. Approval of the Modified Tax Increment Financing Plan. 3.01. The modified Tax Increment Financing Plan for Tax Increment Financing District No. 2-1 is hereby approved and adopted. 3.02. The boundaries of Development District No. 2 and of Tax Increment Financing District No. 2-1 remain as described in the modified Development Program and modified Tax Increment Financing Plan adopted on May 22, 1989. 3.03. The City Manager is authorized and directed to transmit a certified copy of this resolution together with a certified copy of the modified Tax ' Increment Financing Plan to the auditor of Carver County and to file a copy of the modified Tax Increment Financing Plan with the Minnesota Commissioner of Trade and Economic Development. ' DATED: October 22, 1990. Donald Chmiel, Mayor ATTEST: Donald Ashworth, City Clerk/Manager CH130-011 2 I I I 1 MODIFIED TAX INCREMENT FINANCING PLAN, ' TAX INCREMENT FINANCING DISTRICT NO. 2-1 1 CITY OF CHANHASSEN, MINNESOTA October 22, 1990 I 1 I Prepared b :y Holmes & Graven, Chartered I 470 Pillsbury Center Minneapolis, MN 55402 (612)337-9262 1 ditachwail a`a2 I II IITable of Contents Page 1 Modified Tax Increment Financing Plan for Tax Increment Financing District No. 2-1 • IISubsection A. Definitions 1 Subsection B. Statutory Authority 2 I Subsection C. Statement of Objectives 2 Subsection D. Statement of Public Purpose 3 Subsection E. Development District Program 3 1 Subsection F. Description of TIF District 3 Subsection G. Development District Contracts 3 Subsection H. Classification of TIF District 4 Subsection I . Modification of TIF Plan 4 I Subsection J. Use of Tax Increment 4 Subsection K. Excess Tax Increment 4 Subsection L. Limitation on Increment 5 1 Subsection M. Limitation on Administrative Expenses 5 Subsection N. Limitation on Boundary Changes 6 Subsection O. Relocation 6 Subsection P. Parcels to be Acquired within TIF I District 6 Subsection Q. TIF Account 6 Subsection R. Estimate of Project Costs 6 II Subsection S. Estimate of Bonded Indebtedness . . . 7 Subsection T. Original Tax Capacity 7 Subsection U. Estimate of Captured Tax Capacity . . 7 I Subsection V. Duration of TIF District 8 Subsection W. Alternate Estimates of Impact on Other Taxing Jurisdictions 8 - Subsection X. Annual Financial Report 8 ISubjection Y. Assessment Agreements 10 II I I II II 1 1 1 I MODIFIED TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO. 2-1 A. Definitions. For the purposes of the modified Tax Increment Financing Plan, the following terms shall have the meanings specified below, unless the context otherwise requires: ' "Administrative Expenses" means all expenditures of the City other than amounts paid for the purchase of land or amounts paid to contractors or others providing materials and services, including architectural and engineering services, directly connected with the physical development of real property in the District, relocation benefits -paid to or services provided for persons residing or businesses located in the District, or amounts used to pay interest on, fund a reserve for, or sell at a discount bonds issued pursuant to Section 469.178 of the TIF Act. Administrative expenses includes amounts paid for services provided by bond counsel, fiscal consultants and planning or economic development consultants. "City" means the City of Chanhassen, a municipal corporation under the laws of the state of Minnesota; "Comprehensive Plan" means the City's Comprehensive Plan, including the objectives, policies, standards and programs to guide public and private land use, development, redevelopment and preservation for all lands and water within the City; "City Councils' or "Council" means the Chanhassen City Council; 1 "City Development District Act" or "Act" means Minnesota Statutes, Sections 469.124 through 469.134, as amended; ' "County" means Carver County, Minnesota; "Development District" means Development District No. 2 which was established on October 10, 1988, pursuant to and in accordance with the City Development District Act, and which was , expanded on May 22, 1989; 1 "Development Program" or "Program" means the Development Program for Development District No. 2, which adopted by the Council on October 10, 1988, and modified on May 22, 1989; "Project Area" or "Project" means the property within Development District No. 2, as described in the modified Development Program; 1 1 1 I "State" means the State of Minnesota; ' "Tax Increment Bonds" means any general obligation or revenue tax increment bonds issued by the City to finance the public costs associated with Development District No. 2 as stated in the Program and in the Plans for all Tax Increment ' Financing Districts within Development District No. 2 or any obligations issued to refund the Tax Increment Bonds; ' "Tax Increment Financing District" means Tax Increment Financing District No. 2-1, which was established on October 10, 1988, pursuant to and in accordance with the TIF Act and which was expanded on May 22, 1989; "Tax Increment Financing Act" or "TIF Act" means Minnesota Statutes, Sections 469.174 through 469.179, inclusive, as amend- ed; and "Tax Increment Financing Plan" or "Plan" means the TIF Plan ' for TIF District No. 2 which was adopted by the Council on October 10, 1988, and which was previously modified on May 22, 1989. ' B. Statutory Authority. Pursuant to Section 469. 175, Subd. 4 of the TIF Act, the ' City has adopted the Plan for TIF District No. 2-1 and has established TIF District No. 2-1 within Development District No. 2. The City is hereby modifying the Plan for TIF District No. ' 2-1 to provide authorization for additional public improvements. No additional land is being included in TIF District NO. 2-1 as a result of this modification. C. Statement of Objectives. In addition to the objectives outlines in Section I, subdi- vision C of the modified Development Program adopted on May 22, 1989, the City seeks to achieve the following objectives through the modified Plan for TIF District No. 2-1: ' 1. provide employment opportunities within the City; 2. improve the tax base of the City and the general economy of the City and state; 3. encourage development in an area of the City which has ' not been utilized to its full potential; 4. provide for additional roadway improvements; and ' 5. implement relevant portions of the Comprehensive Plan. ' 2 I I/ D. Statement of Public Purpose. In adopting the modified Plan, the City Council intends to make the following findings: 1. Anticipated development would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future and, there- fore, the use of TIF is deemed necessary; 2. The modified TIF Plan will afford maximum opportunity, , consistent with the sound needs of the City as a whole, for development of the District by private 11 enterprise; and 3. The modified TIF Plan conforms to general plans for development of the City as a whole. 1 The conclusion summarized in paragraph 1 of this subdivision will be adopted by the City upon approval of this modification and is one which has been reached by the City Council following consultation with the planning commission and city staff. The conclusion has also been reached based upon the personal knowledge of members of the City Council regarding the property and development trends within the City. E. Development District Program. ' The City created Development District No. 2 at the same time as creation of TIF District No. 2-1. A modified Program was adopted on May 22, 1989, which describes development activities planned or authorized within the Development District. This modification does not include a modified Development District Program. F. Description of TIF District. A description and a map of the expanded boundaries of TIF ' District No. 2-1 was included with the modified Plan adopted on May 22, 1989. No Additional property is being added to TIF 11 District No. 2-1 by this modification. G. Development District Contracts. The City has not entered into any development contracts for properties within TIF District No. 2-1. If necessary, contracts regarding property within the Development District will be entered into in accordance with Section 469.176, Subd. 5 of the TIF Act and no more than 10 percent, by acreage, of the land within TIF District No. 2-1 will be acquired by the City with bond proceeds without having concluded an agreement for develop- ment or redevelopment of the property. 3 1 1 1 H. Classification of TIF District. ' TIF District No. 2-1 is an economic development TIF district, pursuant to Section 469.174, Subd. 12 of the TIF Act. I. Modification of TIF Plan. The Plan for TIF District No. 2-1 is being modified at this time to authorize expenditures for improvements to Audubon Road I from the Chicago, Milwaukee, St. Paul and Pacific Railroad tracks south to Lyman Boulevard. The Plan for TIF District No. 2-1 may be modified in the future by the City, provided that any reduction or enlargement of geographic area of the TIF District, increase in amount of bonded indebtedness to be incurred, including a determination to capitalize interest on the debt if that determination was not a part of the original plan, or to ' increase or decrease the amount of interest on the debt to be capitalized, increase in the portion of the captured assessed value to be retained by the City, increase in total estimated ' tax increment expenditures or designation of additional property to be acquired by the City shall be approved upon the notice and after such discussion, public hearing and findings as required for approval of the original Plan. ' J. Use of Tax Increment. ' Pursuant to Section 469.176, Subd. 4 of the TIF Act, all revenues derived from TIF District No. 2-1 shall be used in accordance with the modified TIF Plan. The revenues shall be I used to finance or otherwise pay the capital and administrative costs of development activities within the Development District as identified in the modified Development Program and TIF Plan. K. Excess Tax Increment. Pursuant to Section 469.176, Subd. 2 of the TIF Act, in any I year in which the increment exceeds the amount necessary to pay the costs authorized by the modified TIF Plan, the City shall use the excess amount to do any of the following, in the order determined by the 'City: 1. prepay the outstanding bonds; 2. discharge the pledge of tax increment therefor; 3. pay into an escrow account dedicated to the payment of Ibonds; or 4. return the excess amount to the Carver county auditor who shall distribute the excess amount to the City, ' the county, and the school district in direct proportion to their respective tax capacity rates. I4 I • I/ In addition, the City may choose to modify the TIF Plan again in order to provide for other public improvements within the Development District. , L. Limitation of Increment. 1. No increment shall be paid to the City from TIF Dis- ' trict No. 2-1 after three years from the date of certification of the original tax capacity of the taxable real property in the District by the county auditor unless within the three year period (a) bonds have been issued pursuant to Section 469 .178 of the TIF Act, or (b) the City has acquired property within TIF District No. 2-1, or (c) the City has constructed or caused to be constructed public improvements within TIF District No. 2-1. 2 . If, after four years from the date of certification of the original tax capacity of TIF District No. 2-1, no demolition, rehabilitation, or renovation of property or other site preparation, including improvement of a street or right-of-way adjacent to a parcel but not installation of underground utility service, including sewer or water systems, have been commenced on a parcel located within TIF District No. 2-1 by the City, or by the owner of the parcel in accordance with the TIF Plan, no additional increment may be taken from that parcel, and the original tax capacity of that parcel shall be excluded from the original tax capacity of the TIF District. If these activities subsequently commence, the City shall so certify to the county auditor, and the tax capacity of the property as most recently certified by the commissioner of revenue may be added to the TIF District. The City shall submit to the county auditor evidence that the required activity has taken place for each parcel in TIF District No. 2-1. The evidence shall be submitted by February 1 of the fifth year following the year in which the parcels were certified as included within TIF District No. 2- 1. 3. No tax increment shall in any event be paid to the City from TIF District No. 2-1 after eight years from the date of receipt by the City of the first increment or 10 years from the date of approval of the original TIF Plan, whichever occurs first. ' M. Limitation on Administrative Expenses. Pursuant to Section 469.176, Subd. 3 of the TIF Act, Admin- istrative Expenses are limited to 10 percent of the total tax 5 1 11 11 increment expenditures. Each time the City increases the budget of TIF District No. 2-1, the amount of tax increment money ' allocated to Administrative Expenses may be increased as long as the total of Administrative Expenses does not exceed 10 percent of the total budget of the TIF District. N. Limitation on Boundary Changes. The geographic area of TIF District No. 2-1 may be reduced, ' but cannot be enlarged after five years following the date of certification of original tax capacity by the Carver county auditor. This modification does not include an expansion of the boundaries of TIF District No. 2-1. O. Relocation. ' Although no relocation is anticipated, the City accepts as binding its obligations under state law for relocation and will administer relocation services for families, individuals and businesses displaced by public action. P. Parcels to be Acquired Within the TIF District. ' It is not anticipated that any property will be acquired in connection with development proposals contained in the modified TIF Plan. ' Q. TIF Account . The tax increment received with respect to TIF District No. 2-1 shall be segregated by the City in a special account on its official books and records and held by a trustee for the benefit of holders of bonds issued to finance development activities. - R. Estimate of Project Costs. ' The estimated budgeted amounts for the original TIF District were included in the Plan adopted on October 10, 1988. Additional expenditures were authorized by the TIF Plan ' modification approved on May 22, 1989. The following represent additional amounts which will be expended within TIF District No. 2-1 as a result of this second modification relating to the phase II improvement of Audubon Road from the Chicago, ' Milwaukee, St Paul and Pacific Railroad tracks south to Lyman Boulevard: ' Phase II improvement of Audubon Road $ 641,504 ( including grading, construction of base, final surface, sanitary sewer, water main, street lighting, landscaping ' and trail) Administrative Expenses $ 96,000 ' Total 6 $ 737,504 I/ I S. Estimate of Bonded Indebtedness. The City has previously sold bonds to pay for the I improvements to Audubon Road. The City does not intend to sell additional tax increment bonds to pay for the construction of the phase II improvements to Audubon Road authorized by this modification. T. Original Tax Capacity. , Pursuant to Section 469.177, Subd. 1 of the TIF Act, each year the Carver county auditor will measure the increase or decrease in the total tax capacity of the property. Any year in which there is an increase in total tax capacity of property within the TIF District, an increment will be payable to the City. Any year in which the total tax capacity is below the original tax capacity of all property within TIF District No. 2- 1, ' no increment will be payable to the City. Each year after the certification of the original tax capacity, the county auditor will increase or decrease the original tax capacity of property within TIF District No. 2-1 as a result of: 1. change in the tax exempt status of the property; 2. reduction or enlargement of the geographic boundaries of the TIF District; 3. reduction of valuation by means of a court-ordered i abatement, stipulation agreement, voluntary abatement made by the assessor or auditor or by order of the Minnesota commissioner of revenue; or 4. any change in tax classification under Minnesota Statutes Section 273.13 of property after it has been added to the TIF District. In addition, each year the auditor shall add to the original tax capacity of TIF District No. 2-1 an amount equal to the original tax capacity for the preceding year multiplied by the average percentage increase in tax capacity of all property within the TIF District during the preceding five years. U. Estimate of Captured Tax Capacity. The City's estimate of captured tax capacity within I TIF District No. 2-1 was contained in the modified Plan adopted on May 22, 1989. Since this second modification does not involve the addition of property to the TIF District, the City has not revised its estimate of captured tax capacity. 7 1 I V. Duration of the TIF District. 1 In accordance with Section 469.176, Subd. 1 of the TIF Act, the City may continue to receive TIF payments until eight years from the date of the receipt of the first increment or 10 years from the date of the approval of the original TIF Plan, whichever occurs first. W. Estimates of Impact on Other Taxing Jurisdiction. The City included its estimate of the impact of TIF District No. 2-1 in the original Plan adopted on October 10, ' 1988, and the modified Plan adopted on May 22, 1989. Since this second modification does not involve adding any property to TIF District No. 2-1, the City has not changed its estimate of the fiscal impact of the TIF District No. 2-1 on other taxing jurisdictions. X. Annual Financial Report. ' Pursuant to Section 469.175, Subd. 6 of the TIF Act, the City must file an annual financial report regarding TIF District No. 2-1. The report shall be filed by July 1 of each year with the school board, the county board and the state auditor . The report to be filed by the City shall include the following information: 1. the original tax capacity of TIF District No. 2-1; ' 2. the captured tax capacity of TIF District No. 2-1, including the amount of any captured tax capacity shared with other taxing districts; 3. the outstanding principal amount of bonds issued or other loans incurred to finance project costs in TIF District No. 2-1; ' 4. for the reporting period and for the duration of TIF District No. 2-1, the amount budgeted under the TIF ' Plan and the actual amount expended for the following categories: a) acquisition of land and buildings through condem- nation or purchase; b) site improvement or preparation costs; ' c) installation of public utilities or other public improvements; d) administrative costs, including the allocated cost of the City; ' 8 I 5. for ro erties sold to developers, the total cost of P P the property to the City and the price paid by the developer; and 1 6. the amount of tax exempt obligations, other than those reported under clause (3) , which were issued on behalf of private entities for facilities located in TIF District No. 2-1. In addition, the City must report annually by March 1 to the Minnesota commissioner of revenue the following amounts for the entire City: 1. the total principal amount of nondefeased tax increment financing bonds that are outstanding at the end of the previous calendar year; and 2. the total annual amount of principal and interest payment that are due for the current calendar year on (i) general obligation tax increment financing bonds, and (ii) other tax increment financing bonds. The City must annually report to the commissioner of revenue the following amounts for TIF District No. 2-2: 1. the type of district, whether economic development, redevelopment, housing, soils condition, mined underground space, or hazardous substance site; 2. the date on which the district is required to be decertified; 3. the captured net tax capacity of the district, by property class as specified by the commissioner of revenue, for taxes payable in the current calendar year; 4. the tax increment revenues for taxes payable in the current calendar year; 5. whether the Plan or other governing document permits 1 increment revenues to be expended (i) to pay bonds, the proceeds of which were or may be expended on activities located outside of the district, (ii) for deposit into a common fund from which money may be expended on activities located outside of the district, or (iii) to otherwise finance activities located outside of the tax increment district; and 6. any additional information that the commissioner of revenue may require. 9 1 I Y. Assessment Agreements. Pursuant to Section 469.177, Subdivision 8 of the TIF Act, the City may, upon entering into a development agreement pursuant to Section 469.176, Subdivision 5 of the TIF Act, execute an agreement in recordable form with the developer which establishes a minimum market value of the land and completed improvements for the duration of TIF District No. 2- 1. The agreement shall be presented to the Carver county assessor who shall review the plans and specifications for the improvements to be constructed, review the market value previously assigned to the land upon which the improvements are to be constructed and so long as the minimum market value ' contained in the agreement appears in the judgment of the assessor to be a reasonable estimate, the assessor may certify the minimum market value agreement. i 1 ' CH130-011 I i I r10 I I PLANNING COMMISSION CITY OF CHANHASSEN CARVER AND HENNEPIN COUNTIES, MINNESOTA RESOLUTION Date October 16 , 1990 Resolution No. 90-02 Motion By Betzli Seconded By Ahrens 1 RESOLUTION FINDING THE MODIFIED PLAN FOR TAX INCREMENT FINANCING DISTRICT NO. 2-1 CONSISTENT WITH THE PLANS FOR DEVELOPMENT OF THE CITY OF CHANHASSEN WHEREAS, the City Council of the City of Chanhassen (City) has authorized preparation of a modified plan (Plan) for Tax Increment Financing District No.2-1; I and WHEREAS, the modified Plan has been submitted to the planning commission to review regarding its consistency with the plans for development of ' the City as a whole; and WHEREAS, the planning commission has made a thorough review of the 1 modified Plan and has compared it with the plans for development of the City as a whole. NOW, THEREFORE, BE IT RESOLVED By the planning commission of the ' City of Chanhassen, Minnesota as follows: 1. The modified Plan is found to be consistent with the plans for development 1 of the City of Chanhassen as a whole. 2. It is recommended that the City Council of the City of Chanhassen hold the public hearing required by law and approve and adopt the modified Plan. Passed this 16th day of October , 1990, by the Planning Commission of I the City of Chanhassen, Minnesota. I Chairperson ATTEST: Secretary i^,, �. 1 CH130-11 rrAcgM 1`.r r' -3.