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4. Establishment of Devlpmt Dist. 6 & Tax Increm. Dist 6-1 C ITV OF CHAHHASSEN 4 - 690 COULTER DRIVE. P.O. BOX 147. CHANHASSEN, MINNESOTA 55317 (612) 937-1900. FAX (612) 937-5739 MEMORANDUM TO: Don Ashworth, City Manager FROM: Todd Gerhardt, Assistant Executive Director DATE: May 20, 1997 SUBJ: Public Hearing; Consider Establishment of Development District No.6 and Tax Increment District No.6-I. Under Minnesota Statute, the city council must hold a public hearing when approving a tax increment financing district (see Attachment #1). Staff has also prepared a development district program outlining the public assistance needed to assist the developments within the boundaries ofTIF District No. 6-1 (see Attachment #2). The plan's Statement of Objectives are to provide the following: 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 areas of the city which have not been utilized to their full potential. 4. Implement relevant portions of the Comprehensive Plan. 5. Provide funding for certain public roadway and infrastructure improvements which are essential for full development of the Development District; specifically intersections, roadways, sewer, water, water storage and park improvements. Listed below are the estimated project costs: Mr. Don Ashworth May 20, 1997 Page 2 Estimated Project Costs Public Improvements: . Intersection Signal . Water Storage Facility . Sewer, Water and Road . Roadway: - Coulter - TH 5 Frontage Road . Park $ 800,000 2,500,000 1,000,000 2,000,000 2,500,000 350.000 Subtotal $9,150,000 Administrative Expenses School District Payment 700,000 1.600.000 TOTAL $11,450,000 Note: Some ofthe above funds will be spent directly for the cost of the listed improvements. Other funds will be spent to reimburse qualified landowners for the cost of special assessments levied to pay for the listed improvements. The Planning Commission will be reviewing the plan at their May 21, 1997 meeting. Staff will provide a verbal update on their action and whether or not they find the plan consistent with the Comprehensive Plan on Monday evening. Staffhas also provided notice to both Carver County and School District 112 (see Attachment #3). No comments have been received, however, staff will be attending the May 29th District 112 School Board meeting to give an overview of the project. The City Council also requested staff to prepare a conservative analysis of the tax increment generated from the Gateway West project (see Attachment #4). In this analysis you will notice that the example used does not generate enough increment to payoff the special assessment. This was true when Chanhassen Lakes Business Park was developed. In the first 8 years, all of the projects built in the park, only received special assessment write down due to high assessment costs (trunk water and sewer, storm sewer, lateral water and sewer, roads, intersection signals, etc.). Only after 8 to 9 years, when the specials were paid down, was there enough increment available for land write down. Due to the length of this TlF District, 11 years and 9 years of collection, staff would not see the benefit of a land write occurring. Mr. Don Ashworth May 20, 1997 Page 2 RECOMMENDATION Based on this example, staff would recommend approving the resolution (Attachment #5) adopting a Development District Program for Development District No.6 and Tax Increment District No. 6-1 and providing financial assistance only in means of special assessment write- down. NOTE: If the City Council would like to table this action for further discussion, staff would recommend that you approve the resolution adopting the Development District Program, so as to beat the new TIF restrictions which go into effect June 1, 1997. ATTACHMENTS 1. Public hearing notice 2. Development District Program and Plan 3. Letter to Carver County/School District 112 4. TIF analysis 5. Resolution g:\admin\tg\tif6-1.doc DEVELOPMENT DISTRICT PROGRAM, DEVELOPMENT DISTRICT NO.6 AND TAX INCREMENT FINANCING PLAN, TAX INCREMENT FINANCING DISTRICT NO. 6-1 CITY OF CHANHASSEN May 27, 1997 This document drafted by: KENNEDY & GRAVEN, CHARTERED 470 Pillsbury Center Minneapolis, MN 55402 (612) 337-9300 RHB121772 CH130-64 /. ., ~~ J j . . :- f' "....,'1, ~ ~- -' '1 ,-.... TABLE OF CONTENTS Page SECTION I. DEVELOPMENT DISTRICT PROGRAM FOR DEVELOPMENT DISTRICT No. 6 Subsection A. Subsection B. Subsection C. Subsection D. Subsection E. Subsection F. Subsection G. Subsection H. Subsection I. Subsection J. Subsection K. Subsection L. Definitions ....................................... 1 Statutory Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Statement of Public Purpose ........................... 2 Statement of Objectives .............................. 2 Environmental Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Open Space to be Created . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Public Facilities to be Constructed ....................... 3 Proposed Reuse of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Development District Financing ... . . . . . . . . . . . . . . . . . . . . . . 3 Relocation ....................................... 4 Administration of Development District . . . . . . . . . . . . . . . . . . . . 4 Map of Development District . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 SECTION II. TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT No. 6-1 Subsection A. Subsection B. Subsection C. Subsection D. Subsection E. Subsection F. Subsection G. Subsection H. Subsection I. Subsection 1. Subsection K. Subsection L. Subsection M. Subsection N. Subsection O. Subsection P. Subsection Q. Subsection R. Subsection S. Subsection T. Subsection U. Subsection V. Subsection W. RHB121772 CH130-64 Statutory Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Statement of Objectives .............................. 5 Statement of Public Purpose ........................... 5 Development District Program . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Description of TIF District ............................ 6 Development District Contracts ......................... 6 Classification of TIF District . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Modification of TIF Plan ............................. 6 Use of Tax Increment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Excess Tax Increment ............................... 6 Limitation on Increment .............................. 7 Limitation on Administrative Expenses .................... 7 Limitation on Boundary Changes ........................ 8 Relocation ....................................... 8 Parcels to be Acquired within TIF District . . . . . . . . . . . . . . . . . . 8 TIF Account ..................................... 8 Estimate of Project Costs ............................. 8 Estimate of Bonded Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . 8 Original Tax Capacity and Tax Increment .................. 9 Duration of the TIF District . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Estimate of Captured Tax Capacity ...................... 9 Estimate of Impact on Other Taxing Jurisdiction. . . . . . . . . . . . . . 9 Annual Reports ................................... 10 (i) SECTION I. DEVELOPMENT DISTRICT PROGRAM FOR DEVELOPMENT DISTRICT NO.6 A. Definitions For the purposes of the Development District Program for Development District No.6 and the Tax Increment Financing Plan for Tax Increment Financing District No. 6-1, 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 Minnesota; "City Council" or "Council" means the Chanhassen City Council; "City Development District Act" or "Act" means Minnesota Statutes, sections 469.124 through 469.134, as amended; "Comprehensive Plan" means the City's objectives, policies, standards and programs to guide public and private land use, development, redevelopment and preservation for all lands and water within the City; "County" means Carver County, Minnesota; "Development District" or "District" means Development District No.6 in which Tax Increment Financing District No. 6-1 will be located; "Development District Program" or "Program" means the Program for Development District No.6, which will be adopted by the City on May 27, 1997; "School District" means the Chaska school district, Independent School District No. 112; "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.6 as stated in the Program or in the Plan for TIF District No. 6-1 or any obligations issued to refund any Tax Increment Bonds; "Tax Increment Financing Act" or "TIF Act" or means Minnesota Statutes, sections 469.174 through 469.179, as amended; "Tax Increment Financing District" or "TIF District" or "TIF District No. 6-1" means Tax Increment Financing District No. 6-1, which is being created and established within Development District No.6 pursuant to the TIF Act; and "Tax Increment Financing Plan" or "TIF Plan" or "Plan" means the Plan for TIF District No.6-I, which will be adopted by the City on May 27, 1997. RHB121772 CH130-64 1 B. Statutory Authority The City has determined that it is necessary, desirable and in the public interest to establish Development District No.6, pursuant to the provisions of the Act. The City has also determined that the funding of the necessary activities and improvements in Development District No.6 shall be accomplished in part or in whole through tax increment financing in accordance with the TIF Act. C. Statement of Public Purpose It is found that there is a need for the City to offer assistance for a 102 acre industrial development proposed to be constructed within the City. The project will be constructed in phases beginning in 1997 and ending in 2002. The effect of the project will be to increase employment opportunities, improve the tax base and improve the general economy of Chanhassen and the State. In order to accomplish this purpose, the City intends to incur those costs and expenses specified in the Plan for TIF District No.6-I. D. Statement of Objectives The Authority seeks to achieve the following objectives through the Development District Program: 1. promote and secure the prompt development of property in Development District No.6 in a manner consistent with the Comprehensive Plan and with minimal adverse impact on the environment, which property is currently less productive because of the lack of proper utilization and lack of investment, thus promoting and securing the development of other land in Chanhassen; 2. encourage additional employment opportunities within Development District No.6 and Chanhassen for residents of the community and the surrounding area, thereby improving living standards and preventing unemployment and the loss of skilled labor and other human resources in the area; 3. secure the increase of property subject to taxation by the City, County, School District and other taxing jurisdictions in order to better enable such entities to pay for public improvements and governmental services and programs required to be provided by them; 4. promote the concentration of appropriate industrial uses and related development within Development District No.6 in order to develop the area in a manner compatible with its highest and best use; and 5. encourage development within the District which is aesthetically pleasing and which creates a positive visual image of the community. RHB121772 CH130-64 2 E. Environmental Controls It is not anticipated that any development within the Development District will present environmental concerns which cannot be accommodated through compliance with applicable laws. Because of the size of the proposed development, mandatory environment review will occur. Portions of Development District No.6 contain wetlands. The Development District will contain at least 15 acres of wetlands and 10 acres of upland woods. About 36 acres will be included in a city park. The City will require that the developer comply with all statutes, regulations and ordinances when developing any land within the District. All public improvements and private development will be constructed and carried out in compliance with applicable environmental standards. F. Open Space to be Created Open space within the Development District will be created in accordance with the development controls of the City and will be adequate for the needs of the residents of the community as well as those who work in or visit the Development District. A portion of the Development District will be devoted to park purposes, which will serve the community at large as well as the recreational needs of persons employed within the industrial park. G. Public Facilities to be Constructed All public facilities constructed within the Development District will be financially feasible and compatible with the City's Comprehensive Plan. H. Proposed Reuse of Property The City does not intend to acquire property within Development District No.6. Property within the Development District will be reused in accordance with the City's ordinances and Comprehensive Plan as well as with this Program and the Plan for TIF District No.6-I. No property will be acquired or sold by the City without entering into an agreement with the developer regarding the specific reuse of the land. I. Development District Financing Within Development District No.6, the City will establish TIF District No. 6-1 to finance the cost of development activities. Project costs for TIF District No. 6-1 will be met at least in part through pledged increment. Details of project cost are contained in the TIF Plan which follows this Program. RHB121772 CH130-64 3 J. Relocation Although no relocation is anticipated in connection with any project within Development District No.6, the City accepts its responsibility for providing for relocation pursuant to section 469.133 of the Act. If relocation is necessary, provision will be made in accordance with Minnesota Statutes, sections 117.50 through 117.56, as amended. K. Administration of Development District Maintenance and operation of the public improvements is the responsibility of the administrator of Development District No.6. The administrator will be appointed by the City Council. Each year the administrator will submit to the City the maintenance and operation budget for the following year. The administrator will administer the Development District pursuant to the provisions of section 469.131 of the Act; provided, however, that such powers may only be exercised at the direction of the City. No action taken by the administrator shall be effective without authorization by the City. The City has not and does not anticipate the need to create an advisory board to advise it on the planning, construction or implementation of the activities and improvements outlined in the Development Program. L. Map of Development District A map of the area to be included within Development District No.6 is attached hereto as Exhibit A. RHB121772 CH130-64 4 SECTION II. TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT No.6-I. A. Statutory Authority. Pursuant to section 469.175, subd 4 of the TIF Act, the City is authorized to establish tax increment financing districts to facilitate and provide financing for the development objectives articulated in the Development District Program. At the time of the adoption of the Program for Development District No.6, the City also intends to establish TIF District No. 6-1 pursuant to the TIF Act. B. Statement of Objectives. The City seeks to achieve the following objectives through the establishment of TIF District No. 6-1; 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 areas of the City which have not been utilized to their full potential; 4. provide funding for certain public roadway and infrastructure improvements which are essential for full development of the Development District; and 5. implement relevant portions of the Comprehensive Plan. The City's specific objective in establishing TIF District No. 6-1 is to provide for intersection, roadway, sewer and water, water storage, and park improvements in the vicinity of a large industrial area. The development will be phased between 1997 and 2002 and will involve an estimated total of 909,358 sq. ft. of space when completed. C. Statement of Public Purpose. In adopting the Plan for TIF District No. 6-1, the City will make the following findings: 1. Anticipated development would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future and, therefore, the use of TIF is deemed necessary; 2. The TIF Plan will afford maximum opportunity, consistent with the sound needs of the City as a whole, for development of the Development District by private enterprise; 3. The TIF Plan conforms to general plans for development of the City as a whole; and 4. The area included within TIF District No. 6-1 qualifies as an economic development TIF district within the meaning of the TIF Act. The conclusions to be reached by the City Council regarding the above will be based upon the recommendations of city staff and the planning commission as well as the familiarity of members of the City Council with the properties involved and the likelihood that those properties will develop within the reasonably foreseeable future solely through private efforts. The City Council's conclusions will also be based on a calculation that the RHB121772 CH130-64 5 increased market value of the land within TIF District No. 6-1 which 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 increment for the maximum duration of the TIF District. D. Development District Program. At the time of the establishing TIF District No. 6-1, the City also intends to adopt a Program for Development District No.6. The plan for development of the City outlined in the Program will provide the basis of the City's efforts to develop portions of the community which have not and remain unlikely to be developed solely through private efforts. The Plan for TIF District No. 6-1 is consistent with the Program for Development District No.6. E. Description of TIF District. The TIF District is composed of five parcels. The property identification numbers of the parcels and a map of the boundaries of TIF District No. 6-1 is attached hereto as Exhibit A. F. Development District Contracts. The City has not yet entered into a development contract with regard to the development of any property within TIF District No.6-I. Contracts regarding property with TIF District No. 6-1 will be entered into in accordance with section 469.176, subd 5 of the TIF Act. G. Classification of TIF District. TIF District No. 6-1 qualifies as an economic development TIF district, pursuant to section 469.174, subd. 12 of the TIF Act. H. Modification ofTIF Plan. The Plan for TIF District No. 6-1 may be modified by the City, provided that any enlargement of the 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 tax capacity 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. 1. Use of Tax Increment. Pursuant to section 469.176, subd 4 of the TIF Act, all revenues derived from TIF District No. 6-1 shall be used in accordance with the TIF Plan. The revenues shall be used to finance or otherwise pay the capital and administrative costs of development activities within the Project as identified in the Program and Plan. J. Excess Tax Increment. Pursuant to section 469.176, subd 2 of the TIF Act, in any year in which the increment exceeds the amount necessary to pay the costs authorized by the TIF RHB121772 CH130-64 6 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 or other obligations; 2. discharge the pledge of tax increment therefor; 3. pay into an escrow account dedicated to the payment of bonds or other obligations; or 4. return the excess amount to the County auditor who shall distribute the excess amount to the City, the County and School District in direct proportion to their respective tax capacity rates. The City may also choose to modify the TIF Plan in order to provide for other public expenditures within the Project. K. Limitation of Increment. 1. No increment shall be paid to the City from TIF District No. 6-1 after three years from the date of certification of the original tax capacity of the property in the TIF 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.6-I, or (c) the City has constructed or caused to be constructed public improvements within TIF District No.6-I. 2. If, after four years from the date of certification of the original tax capacity of TIF District No. 6-1, no demolition, rehabilitation, or renovation of property or other site preparation, including qualified 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. 6-1 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 one of these activities subsequently commences, 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. 3. No tax increment shall in any event be paid to the City from TIF District No. 6-1 after nine years from the date of receipt by the City of the first increment or 11 years from the date of approval of the Plan, whichever occurs first. L. Limitation on Administrative EXDenses. Pursuant to section 469.176, subd 3 of the TIF Act, Administrative Expenses are limited to 10 percent of the total tax increment expenditures budgeted or actually incurred, whichever is less. Each time the City increases the budget of TIF District No.6-I, the amount of increment 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. RHB121772 CH130-64 7 M. Limitation on Boundary Changes. The geographic area of TIF District No. 6-1 may be reduced, but cannot be enlarged after five years following the date of certification of the original tax capacity by the County auditor. N. Relocation. Although no relocation is anticipated, the City accepts as binding its obligations under state law regarding relocation benefits and, if necessary, will administer relocation services for families, individuals and businesses displaced by public action. O. Parcels to Be Acquired Within the TIF District. It is not anticipated that the City will acquire any property within TIF District No. 6-1, except such easements or other interests in property as may be necessary to complete roadway and other infrastructure improvements. P. TIF Account. The tax increment received with respect to the TIF District No. 6-1 shall be segregated by the City in a special account on its official books and records. Q. Estimate of Proiect Costs. The following costs are authorized for expenditures within TIF District No. 6-1: Public Improvements: Intersection Signal Water Storage Facility Sewer, Water and Road Roadway Coulter T.H. 5 Frontage Road $ Total 800,000 2,500,000 1,000,000 2,000,000 2,500,000 350.000 9,150,000 700,000 1.600.000 $11,450,000 Park Subtotal Administrative Expenses School District Payment Some of the above funds will be spent directly for the cost of the listed improvements. Other funds will be spent to reimburse qualified land owners for the cost of special assessments levied to pay for the listed improvements. R. Estimate of Bonded Indebtedness. The City may choose to sell bonds in an amount not to exceed $7,950,000 to finance the public costs authorized by the Plan for TIF District No.6-I. The City may sell general obligation bonds to finance the public improvements within the TIF District. The City may also enter into a "pay-as-you-go" revenue obligation with the developers of industrial facilities to reduce their special assessment obligations. RHB121772 CH130-64 8 s. Original Tax Capacity and Tax Increment. Pursuant to section 469.177, subd. 1 of the TIF Act, the original tax capacity for TIF District No. 6-1 is $13,407. Each year the County auditor will measure the increase or decrease in the total tax capacity of property in the TIF district. Any year in which the tax capacity of TIF District No. 6-1 exceeds $13,407, an increment will be payable to the City. Any year in which the tax capacity is below $13,407, no value will be captured and 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. 6-1 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; or 3. reduction of valuation by means of a court-ordered abatement, stipulation agreement, voluntary abatement made by the assessor or auditor or by order of the Minnesota commissioner of revenue. In addition, each year the auditor will adjust the original tax capacity of the property within TIF District No. 6-1 in compliance with the requirements of section 469.177, subd. 1(t) of the TIF Act. T. Duration of the TIF District. In accordance with section 469.176, subd 1 of the TIF Act, the City wishes to retain its right to receive TIF payments until nine years from the date of the receipt of the first increment, or 11 years from the date of approval of the Plan, whichever first occurs. u. Estimate of Captured Tax Capacity. Pursuant to sections 469.175, subd. 1 and 469.177, subd. 2 of the TIF Act, the estimated net captured tax capacity ofTIF District No.6-I, will be $2,127,455 after completion of all proposed improvements in 2002. The captured tax capacity was estimated in the following manner: Tax Capacity After Completion (2002) Original Tax Capacity Captured Tax Capacity $2,140,862 13,407 $2,127,455 Pursuant to section 469.177, subd. 2 of the TIF Act, it is found and declared that all of the captured tax capacity generated by TIF District No. 6-1 is necessary to finance or otherwise make permissible expenditures authorized by section 469.176, subd. 4 of the TIF Act. v. Estimate ofImpact on Other Taxing Jurisdiction. In is anticipated that $3,169,908 in increment will be captured annually within TIF District No.6-I. This increment amount is based on the value of the development following completion of all development in 2002. For the purposes of estimating increment during the life of TIF District No. 6-1, no inflation has been assumed in the value of the new development. The composite original tax capacity rate for the affected property is 147.611 percent. Applying the percentage of the total tax capacity rate RHB121772 CH130-64 9 attributable to each taxing jurisdiction to the annual increment of $3,169,908 reveals the annual "loss" of tax dollars by each jurisdiction if the projects would have occurred without TIF. Although the City believes the actual impact on other taxing jurisdictions is zero because development would not have occurred within the reasonably foreseeable future without public intervention, the assumed amount of tax dollars foregone by each jurisdiction is listed below: Estimate of Annual Amount of Tax Increment Attributable to Various Taxing Jurisdictions Taxing Jurisdiction City of Chanhassen Carver County Chaska School District Other Tax Capacity Rate 27.536 46.606 69.138 4.331 147.611 TOTAL % of Total Tax Capacity 18.6 31.6 46.8 2.9 100.0 Est. Tax Loss ($) $ 591,328 1,000,852 1,484,721 93,007 $3,169,908 W. Annual Reports. Pursuant to section 469.175, subd 6 of the TIF Act, the City must file an annual financial report regarding TIF District No.6-I. 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. 6-1; 2. the captured tax capacity of TIF District No. 6-1, 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. 6-1; 4. for the reporting period and for the duration of TIF District No. 6-1, the amount budgeted under the TIF Plan and the actual amount expended for the following categories: (a) acquisition ofland and buildings through condemnation 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; 5. for properties sold to developers, the total cost of the property to the City and the price paid by the developer; and RHB121772 CH130-64 10 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.6-I. In addition, the City must report annually by March I to the Minnesota commissioner of revenue the following amounts for the entire municipality: (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. 6-1: (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 tax increment financing plan or other governing document permits 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 financing district; and (6) any additional information that the commissioner of revenue may require. RHB121772 CH130-64 11 EXHIBIT A TAX INCREMENT FINANCING DISTRICT FOR DEVELOPMENT DISTRICT NO.6 TAX INCREMENT FINANCING DISTRICT NO. 6-1 o ~i"~ 5-0160600 25-0160300 25- 160200 N Development District NO.6 - Green TIF District No. 6-1 - Pink C ITV OF CHAIHASSEI 690 COULTER DRIVE. P.O. BOX 147. CHANHASSEN, MINNESOTA 55317 (612) 937-1900 . FAX (612) 937-5739 MEMORANDUM TO: Don Ashworth, City Manager FROM: Todd Gerhardt, Assistant City Manager DATE: May 20, 1997 SUBJ: Analysis of the Potential Benefits in Creating a Tax Increment Financing District for the Gateway West Project The City Council has requested staff to provide conservation analysis of the potential benefits in creating a tax increment financing district for the Gateway West project. In the Gateway Business Park development summary, they are proposing to build 1,156,937 square feet of office industrial. Based on this information, staff reduced the development by 50% and produced the following total amounts of incentive available for city public improvements as follows: TIF Analysis Break out of Regular Taxes 537,769 sq. ft. of industrial *$2.00 sq. ft. in taxes per year $1,075,538 Total taxes per year +2 $537,739 Total available increment for industrial Total taxes Fiscal Disparities 50% School District 50% County 30% remaining City 16% $1,238,334 (619,167) (309,584) (185,750) (123,833) ($1,238,334) ** Minus 50% for fiscal disparities. 40,699 sq. ft. of commercial/retail x $4.00 sq. ft. in taxes per year $162,796 +2 ** $81,398 Total taxes for commercial/retail /!3Vi I' $.!.) (~c.frMe""" / . . ~..''''-'''..~'~.~. .~"~..~="'.::.:::=;:::::::: Mr. Don Ashworth May 20, 1997 Page 2 *** It should be noted that the city can only use TIF for the costs associated with the industrial portion of development, not the commercial/retail. However, you can collect a 100% of commercial/retail increment to assist the industrial or write-down public improvements benefiting just the industrial. $537,769 Total available increment of industrial uses 81.398 Total available increment of commercial/retail $619,167 Total available increment * 9 years Maximum number of years of collection $5,572,503 Total available increment through the life of the district * Assumption: If the city council provides their special assessment reduction program of Yz years worth of taxes over 3 years. $537,769 Total available increment of industrial per year 3 years Special assessment reduction program *$1,613,307 Total available increment for the incentives to industrial users $5,572,503 1.613.307 $3,959,196 Total available increment through the life of the district Incentives to industrial users over the life of the district Available increment for city public improvements over the life of the district (All ofthese numbers take into account that the Gateway West would be fully developed 5.5 years.) Example of the Special Assessment Reduction Lot 3, Block 1 -- 10 acres 100,000 square foot industrial building 100,000.00 *$2.00 $200,000.00 2 $100,000.00 *3 $300,000.00 sq. ft. of industrial taxes per sq. ft. Fiscal Disparities Total Available Increment Total Available Increment over the 3 years of special assessment reduction Staff estimate for specials are approximately $1.00 per sq. ft. Mr. Don Ashworth May 20, 1997 Page 3 10 *43.560 435,600 ~ 435,600 -300.000 $135,600 acres sq. ft. in an acre Total sq. ft. Special assessment per sq. ft. Special assess. against the proposed development Total incentives over 3 years Remaining Special Assessment Not Covered by TIF Based on this example, there would not be enough money to cover all the specials, thus, the property owner would not qualify for a land-write down. The same would be for any other development. g:\admlOllgIGalewayTIF .1 CITY OF CHANHASSEN CARVER AND HENNEPIN COUNTIES, MINNESOTA RESOLUTION Date Resolution No. Motion By Seconded By RESOLUTION ADOPTING A DEVELOPMENT DISTRICT PROGRAM FOR DEVELOPMENT DISTRICT NO. 6 AND A T AX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO. 6-1 BE IT RESOLVED By the City Council (the "Council") of the City of Chanhassen, Minnesota (the "City") as follows: Section 1. Recitals. 1.01. It has been proposed that the City establish Development District No.6 pursuant to Minnesota Statutes, ~~ 469.124 through 469.134 and create Tax Increment Financing District No. 6-1 pursuant to Minnesota Statutes, gg 469.174 through 469.179 within Development District No.6. 1.02. The Council has investigated the facts and has caused to be prepared a development district program (the "Program") describing the public assistance needed within Development District No.6 and a tax increment financing plan (the "Plan") describing the specific acts to be taken to assist development within the boundaries of Tax Increment Financing District No.6-I. 1.03. The City has performed all actions required by law to be performed prior to the establishment of Development District No.6 and Tax Increment Financing District No. 6-1 and the adoption of a Program and Plan relating thereto, including, but not limited to, notification of Carver county and Independent School District No. 112; a review of the Program and Plan by the planning commission for their consistency with the general plans for development of the City; and holding a public hearing regarding the Program and Plan upon such notice as is required by law. 1.04. The Program and Plan are contained in a document entitled "Development District Program, Development District No. 6 and Tax Increment Financing Plan, Tax Increment Financing District No. 6-1, City ofChanhassen, Minnesota," dated May 27,1997, and on file in the office of the City Manager. RHB123109 CH13 0 - 64 ;U j t- "-' " ..., " . ~~-~t ---' _____- __'h' .-- 1.05. The Council has fully reviewed the contents of the Program and the Plan and has on this date conducted a public hearing thereon at which the views of all interested persons were heard. Section 2. Findings Related to Establishment of Develooment District No.6. 2.01. The Council hereby finds that the establishment of Development District No.6 is intended, and in the judgment of the Council, its effect will be to provide an impetus for industrial development, increase employment, and otherwise promote the public purposes and objectives specified in the Program. 2.02. It is further found and determined that: a) The land in the Development District No.6 would not be made available for industrial development without the public intervention and financial assistance described in the Program and Plan; b) The Program will afford maximum opportunity, consistent with the sound needs of the city as a whole, for the development of the District by private enterprise; and c) In accordance with the findings made by the planning commission, the Program conforms to the general plan for development of the community as set forth in the city's comprehensive plan. 6-1. Section 3. Findings Related to Establishment of Tax Increment Financing District No. 3.01. It is the opinion of the Council that development of the properties included within Tax Increment Financing District No. 6-1 would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future due to the lack of adequate public investment and that the increased market value of property within the TIF District 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 TIF District and that the use of tax increment financing is therefore necessary. 3.02. The Council finds that the Plan for Tax Increment Financing District No. 6-1 conforms to the general plan for development of the City, based upon the recommendations of the planning commission. 3.03. The Council finds that the Plan for Tax Increment Financing District No. 6-1 will afford maximum opportunity, consistent with the sound needs of the City as a whole, for development of the District by private enterprise. RHB123109 CH130-64 2 3.04. The Council further finds that the establishment of Tax Increment Financing District No. 6-1 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 Program and Plan. 3.05. The Council has relied upon the opinions and recommendations of its staff and planning commission and the personal knowledge of the members of the Council in reaching its conclusions regarding the creation of Tax Increment Financing District No.6-I. 3.06. The Council hereby finds that Tax Increment Financing District No. 6-1 is an economic development tax increment financing district within the meaning of Minnesota Statutes ~ 469.174, Subd. 12. Section 4. Approval of Development District Program and Tax Increment Financing Plan: Establishment of Development District and Tax Increment Financing: District. 4.01. The Program for Development District No.6 and the Plan for Tax Increment Financing District No. 6-1 are hereby approved and adopted. Development District No. 6 is hereby established. Tax Increment Financing District No. 6-1 is hereby established. 4.02. The boundaries of Development District No.6 and Tax Increment Financing District No. 6-1 are described in the Program and Plan therefor and are incorporated herein by reference. 4.03. The City elects to make a qualifying local contribution each year with respect to Tax Increment Financing District No. 6-1 in an amount necessary to satisfy the requirements of Minnesota Statutes, ~ 273.1399, subd. 6. 4.04. The City elects for Tax Increment Financing District No. 6-1 to be treated as described in Minnesota Statutes, section 469.177, subd. 3(a) with regard to fiscal disparities. 4.05. The City Manager is authorized and directed to transmit a certified copy of this resolution together with a certified copy of the Plan to the auditor of Carver county with a request that the original tax capacity of the property within Tax Increment Financing District No. 6-1 be certified to the City pursuant to Section 469.177, Subd. 1 of the Tax Increment Financing Act and to file a copy of the Program and the Plan with the Minnesota state auditor. 4.06. The City may, at the appropriate time, take action to issue and sell its general obligation bonds pursuant to the Tax Increment Financing Act to finance the costs identified in the Plan for Tax Increment Financing District No.6-I. RHB123109 CH130-64 3 DATED: May 27, 1997. ATTEST: Donald Ashworth, City ClerklManager RHB123109 CH130-64 Nancy Mancino, Mayor 4 co 3 U ~% ~~ u% j ~ R ~ .; ~ ~ .- 11 ~ i I ,~~ l ell ~ ~ ~ ~ - ; ~~ en UJ 0: ~ CD...~ 10 ... ~...... . ....:ai~ .... 10 CJ)C').... .... 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