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2021-11CITY OF CHANHASSEN CARVER AND HENNEPIN COUNTIES, MINNESOTA DATE: March 22, 2021 RESOLUTION: 2021-11 MOTION: Campion SECONDED BY: Rehm RESOLUTION ADOPTING A MODIFICATION TO THE DEVELOPMENT PLAN FOR THE DOWNTOWN CHANHASSEN REDEVELOPMENT PROJECT AREA AND APPROVING A TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO. 12 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 Board of Commissioners of the Chanhassen Economic Development Authority (the "EDA") has heretofore established the Downtown Chanhassen Redevelopment Project Area (the "Project Area") and adopted the Redevelopment Plan therefor. It has been proposed by the EDA that the City approve and the EDA adopt 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. 12 (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 "Act") all as reflected in the Plans, and presented for the Council' s consideration. 1.02. The EDA and City have investigated the facts relating to the Plans 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 Planning Commission, adoption of the Plans by the EDA on March 8, 2021, and the holding of a public hearing 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. The Reports include data, information and/or substantiation constituting or relating to the basis for the other findings and determinations made in this resolution. The Council hereby 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 City is not modifying the boundaries of the Project Area, but is, however, modifying the Redevelopment Plan to include activities related to the District. Section 2. Findings for the Adoption and Approval of the Plans. 2.01. The Council hereby finds that the Plans are intended and, in the judgment of this Council, the effect of such actions will be, to provide an impetus for development in the public interest and accomplish certain objectives as specified in the Plans, which are hereby incorporated herein. 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 "housing district" under Minnesota Statutes, Section 469.174, Subd. 11 of the Act. 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 the City 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 further finds, declares and determines that the City made the above findings stated in this Section and has set forth the reasons and supporting facts for each determination in writing, attached hereto as Exhibit A. 3.04. The EDA 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 and will help fulfill a need to develop an area of the City which is already built up, to provide housing 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 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 staff of the City, the City's advisors and legal counsel are authorized and directed to proceed with the implementation of the Plans and to negotiate, draft, prepare and present to this 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; and the EDA 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 this 22°d day of March, 2021. ATTEST: Laurie Hokkanen, City Manager YES NO Ryan Campion McDonald Rehm Schubert A 4 ise Ryan, Mayor ABSENT EXHIBIT A RESOLUTION NO.2021-11 The reasons and facts supporting the findings for the approval of the Tax Increment Financing Plan (TIF Plan) for Tax Increment Financing District No. 12, as required pursuant to Minnesota Statutes, Section 469.175, Subdivision 3 are as follows: 1. Finding that Tax Increment Financing District No. 12 is a housing district as defined in M.S., Section 469.174, Subd. 11. Tax Increment Financing District No. 12 consists of one (1) parcel and its internal and adjacent rights -of -way. The development will consist of a new I I0-unit mixed -income senior housing apartment facility in the city, all or a portion of which will receive tax increment assistance and will meet income restrictions described in M.S. 469.1761. At least 40 percent of the units receiving assistance will have incomes at or below 60 percent of area median income. 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. This finding is supported by the fact that the development proposed in this plan is a housing district that meets the City's objectives for development and redevelopment and is intended for occupancy, in part, by low and moderate -income persons. At least 40% of the assisted housing units are intended to be income restricted. Due to decreased rental income from affordable units, there is insufficient cash flow to provide a sufficient rate of return, pay operating expenses, and service the debt necessary to develop the housing. This leaves a gap in the funding for the project and makes this housing development feasibe only through assistance, in part, from tax increment financing. The necessity of public assistance is true for most affordable housing development in Minnesota. The developer was asked for and provided a letter and a proforma outlining project source and uses as well as projected rent, vacancy and financing assumptions. City staff and the City's advisors reviewed the information and have determined the project is not feasible without the proposed assistance due anticipated rent levels and market returns not supporting the development costs for the site. Based on the review, the City does not expect that a development of this type would occur in the reasonably foreseeable future but -for the use of tax increment assistance. 3. Finding that the TIF Plan for Tax Increment Financing District No. 12 conforms to the general plan for the development or redevelopment of the municipality as a whole. The Planning Commission reviewed the TIF Plan on March 2, 2021 and approved a recommendation to the City Council that the TIF Plan conforms to the general plan for development or redevelopment of the City. 4. Finding that the TIF Plan for Tax Increment Financing District No. 12 will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development A-1 CH135\62\708438.v2 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 residential development, which is desirable and necessary for providing for an increased population and increased need for life -cycle housing within the City. gAadmin\resol\2021\2021-11.docx A-2 CH135\62\708438.v2