2003 10 27 Agenda
Economic Development Authority
Monday, October 27, 2003, 5:00 p.m.
Courtyard Conference Room, 7700 Market Boulevard
Approve Findings on 4 Pre-Conditions to Extend the Downtown Tax
Increment Financing (TIF) District for One Year.
Approve Transfer of Non-TIF Revenue from the Downtown Tax
Increment Financing District to Historic Preservation.
3. Approval of Minutes dated October 13, 2003.
CITYOF
CHANHASSEN
7700 Market Boulevard
PO Box 147
Chanhassen, MN 55317
Administration
Phone: 952.227.1100
Fax: 952.227.1110
Building Inspections
Phone: 952.227.1180
Fax: 952.227.1190
Engineering
Phone: 952.227.1160
Fax: 952.227.1170
Finance
Phone: 952.227.1140
Fax: 952.227.1110
Park & Recreation
Phone: 952.227.1120
Fax: 952.227.1110
Recreation Center
2310 Coulter Boulevard
Phone: 952.227.1400
Fax: 952.227.1404
Planning &
Natural Resources
Phone: 952.227.1130
Fax: 952.227.1110
Public Works
1591 Park Road
Phone: 952.227.1300
Fax: 952.227.1310
Senior Center
Phone: 952.227~1125
Fax: 952.227.1110
Web Sile
v^,^v, ci.chanhassen.mn.us
TO:
FROM:
DATE:
Economic Development Authority Members
Bruce M. DeJong, Finance Director ~)
October 22, 2003
SUBJECT: Approve Findings on Four Pre-conditions to Extend the Downtown
Tax Increment Financing (TIF) District for One Year
During the 2003 Special Session of the state legislature, a bill was passed that
changed the process for dealing with deficits in TIF districts. The new law allows
for a statutory extension, based on a formula of how much the district lost due to
2001 property tax reforms. This has been calculated by the Carver County
Auditor's Office to allow up to a one year extension from the date the district
would otherwise have been decertified. In our case that date would be November
1, 2003 when our final "qualified" debt service payments will be made.
Pre-Conditions
As shown on the attached bill language in Subd. 3. [PRECONDITIONS], there
are four preconditions that must be met.
1)
the original local tax rate under section 469.177, subd. la of the Act
does not apply because the District is a pre-1979 district;
2)
the fiscal disparities contribution of the District is calculated under
section 469.177, subd. 3, paragraph (a) of the Act because the
District is a pre-1979 district;
3)
the City has attempted to avail itself of the opportunity under
section 469.1763, subd. 6 of the Act to transfer available increment
from other districts within the City but no increment is available for
transfer due to obligation in those districts; and
4)
taking into account all increment available to pay qualifying
obligations of the District, increment from the District will be
insufficient to pay the amount of qualifying obligations, as defined
in section 469.1794, subd. 2 (e) of the Act, and the insufficiency is
the result of changes in tax class rates since 1997, as detailed in
Appendix B to the TIF Plan Modification
The City of Chanhassen · A growing community with clean lakes, qualily schools, a charming downtown, lhriving businesses, winding trails, and beautiful parks. A great place to live, work, and play.
Approve Findings on Four Pre-conditions
October 22, 2003
Page 2
CITYOF
CHANHASSEN
7700 Market Boulevard
PO Box 147
Chanhassen, MN 55317
Administration
Phone: 952.227.1100
Fax: 952.227.1119
Building Inspections
Phone: 952.227.1180
Fax: 952.227.1190
Engineering
Phone: 952.227.1160
Fax: 952.227.1170
Finance
Phone: 952.227,1140
Fax: 952.227.1110
Park & Recreation
Phone: 952.227.1120
Fax: 952,227,1110
Recrealion Cenler
2310 Coulter Boulevard
Phone: 952.227.1400
Fax: 952.227.1404
Planning &
Nalural Resources
Phone: 952.227.1130
Fax: 952.227.1110
Public Works
1591 Park Road
Phone: 952.227.1300
Fax: 952.227.1310
Senior Center
Phone: 952,227,1125
Fax: 952.227.1110
Web Sile
v,v,v~.ci.chaflhassen.mn.us
Recommendation
Staff recommends that the findings be adopted by the Economic Development
Authority as presented. This vote requires a simple majority of those present.
]~nc:
HF 7 text, Chapter 21 of 2003 Special Session
MN Stat 469.1792
Estimate of increments lost due to changes in tax class rates
The City of Chanhassen. A growing community wilh clean lakes, ~lualily schools, a charming downtown, thriving businesses, winding trails, and beautiful parks. A great place to live, work, and play.
Mn H.F.7 2003 sps 1st Page 1 of 3
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Sec. 8. [469.1794] [DURATION EXTENSION TO OFFSET
DEFICITS.]
subdivision 1. [AUTHORII~'.] Subject to the conditions and
limitations imposed by this section, an authority may, b~
resolution, extend the duration limit under section 469.176,
subdivision lb, lc, le, or lg, that applies to a preexisting
district by up to the maximum number of years permitted under
subdivision 5, plus any amount authorized by the commissioner of
revenue under subdivision 6.
subd. 2. [DEFINITIONS.] (a) For purposes of this section,
the following terms have the meanings given.
.(b) "Extended district" means a tax increment financing
district whose duration limit is extended under this section.
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(c) "Preexisting district" has the meaning given in section
469.1792, subdivision 2.
(d) "Preexisting obligation" has the meaning given in
section 469.1792, subdivision 2.
(e) "Qualifying obligation" means:
(1) a preexisting obligation that is:
(i) a general obligation bond of the municipality;
(ii) a general obligation bond of the authority;
(iii) a revenue bond of the authority to which other
revenues or money of the authority in addition to tax increments
pl
edged to pay;
are(iv) an interfund loan, including an advance or payment
made by the municipality or authority after 3une 1, 2002, to pay
an obligation listed in items (i) to (iii):
(v) an obligation assumed by a developer before 3anuary 1,
2001, to repay a general obligation bond issued by a
municipality to fund cleanup and development activities, if the
developer assumed the obligation more than five years after the
issuance of the bonds; or
(2) a bond issued to refinance a preexisting obligation
under clause (1)._
subd. 3. [PRECONDITIONS.] Before an authority may extend
the d~t~n of district under this section, the following
conditions must be met with regard to the district:
(1) the original local tax rate under section 469.177,
subdivision la, does not apply under an election made under
section 469.1792, subdivision 3, or under other operation of
1 aw;_
(2) for a district in the metropolitan area or taconite tax
relief area, the fiscal disparities contribution is computed
under section 469.177, subdivision 3, paragraph (a);
(3) the municipality has transferred any available
increments in other districts to pay qualified obligations of
the district or other districts in the municipality under
section 469.1763, subdivision 6; and
(4) the authority finds that, taking into account all of
the increments that are available to pay qualifying obligations
for the district, the increments from the district will be
insufficient to pay the amount of qualifying obligations and
that the insufficiency is a result of (i) the changes in the
class rates and (ii) elimination of the state-determined general
education property tax levy under Laws 2001, First Special
Session chapter 5.
~subd. 4. [NOTICE; HEARING; AND APPROVALS.] The authority
may extend the duration of a district under this section only
after the municipality has approved the extension after
providing public notice and holding a hearing in the manner
provided under section 469.175, subdivision 3.
subd. 5. [MAXIMUM EXTENSION.] (a) The maximum extension
for a district under this subdivision equals the lesser of: (1) four years; or
(2) the tax reform percentage for the district, determined
under paragraph (b), multiplied by the remaining duration of the
district rounded to the nearest whole number. Fractions in
167.21 excess of one-third are rounded up.
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Mn H.F.7 2003 sps 1st Page 2 of 3
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Lb) The tax reform percentage for the district, as
estimated by the county auditor, equals:
(1) (i) the total taxes paid by the original tax capacity
for the district for taxes payable in 2001, minus
_(ii) the average of the total taxes paid by the original
tax capacity for the district for taxes payable in 2002 and in
2003, divided by
(2) the total taxes paid by the original tax capacity for
the district for taxes payable in 2001.
(c) In the resolution approving the extension, the
municipality may elect to treat all preexisting obligations as
qualified obligations for pu. rposes of this section. If the
municipality makes an elect~on under this paragraph, the maximum
duration is reduced by one-half of the amount otherwise
permitted under paragraph (a).
_(d) The remaining duration of a district is the number of
calendar years, beginning after oecember 31, 2001, in which the
district may collect increment under its duration limit under
section 469.176, subdivision lb, lc, le, or lg, or a special law
approved before January 1, 2002, as applicable.
~e) For.purposes of-this subdivision, "taxes" exclude taxes
levied against market value, rather than tax capacity, and the
state general tax under section 275.025.
subd. 6. [COMMISSIONER AUTHORITY.] (a) If the muni ci pality
168.10 determines that the extension permitted under subdivision 5 will
168.11 not provide sufficient revenue to pay in full the amount of
168.12 qualifying obliqations, the municipality may apply to the
168.13 commissioner of revenue for an additional duration extension.
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The commissioner may authorize an extension of the duration of
the district of up to two years after determining that:
(1) the insufficiency of revenues to pay the qualifying
obligations, which will be offset by the additional extension of
the duration limit, result from (i) the changes in the class
rates and (ii) elimination of the state-determined general
education property tax levy under Laws 2001, First Special
168.21 Session chapter 5;
168.22 (2) the municipality has or is transferring all available
168.23 increments from other preexisting districts and after Auqust 1,
168.24 2001, has not entered into new obligations or authorized new
168.25 spending that reduced the amount of those increments that are
168.26 available for transfer to pay qualifying obligations; and
168.27 (3) increases in increments over the term of the district
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are unlikely to eliminate the insufficiency. (b) The commissioner may:
(1) establish the form of and time for applications under
this subdivision; and
(2) require the municipality to provide the information
that the commissioner determines is necessary or useful in
evaluating the application.
~c) Th~s subdivision does not apply to a district if the
authority has made an election under subdivision 5, paragraph
Cc).
subd. 7. ELIMITS ON USE OF INCREMENTS.] (a) Tax increments
of an extended district may only be used to pay preexisting
obligations of the district and administrative expenses,
effective upon the final required approval of the extension
under this section. All tax increments that are attributable to
169.7 an extension of the duration of a district under this section
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must be used only to pay qualified obligations of the district.
If increments from a district subject to this subdivision are
pledged to pay preexisting obligations that are not qualified
obligations, increments received under the duration limit,
determined without regard to this section, must be used to pay
qualified obligations and preexisting obligations that are not
qualified obliqations in proportion to their relative shares of
all payments due on all preexisting obligations.
_(b) If the authority e]ects to extend the duration of a
district under this section and if increments from one or more
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Mn H.F.7 2003 sps 1st Page 3 of 3
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other districts are pledged to pay preexisting obligations of
the extended district, increments from all of the districts may
only be used to pay preexisting obligations and administrative
expenses.
subd. 8. [DECERTIFICATION.] An extended district must be
decerti fi ed at the end of the first calendar year when
sufficient increments have been received to pay the qualified
obligations of the extended district. Any remaining unspent
increments must be distributed as excess increments under
section 469.176, subdivision 2, clause (4).
[EFFECTIVE DATE.] This section is effective the day
following final enactment and applies to districts for which the
request for certification was made on, before, or after August
1, 1979, and before August 1, 2001.
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Minnesota Statutes 2002, 469.1792 Page 1 of 1
Minnesota Statutes 2002, Table of Chapters
Table of contents for Chapter 469
469. 1792 Special deficit authority.
subdivision 1. scope. This section applies only to
an authority with a preexisting district for which:
(1) the increments from the district were insufficient to
pay preexisting obligations as a result of the class rate
changes or the elimination of the state-determined general
education property tax levy under this act, or both; or
(2)(i) the development authority has a binding contract
with a person requiring the authority to pay to the person an
amount that may not exceed the increment from the district or a
specific development within the district; and
(ii) the authority is unable to pay the full amount under
the contract from the pledged increments or other increments
from the district that would have been due if the class rate
changes or elimination of the state-determined general education
property tax levy or both had not been made under Laws 2001,
First Special Session chapter 5.
subd. 2. Definitions. (a) For purposes of this
section, the following terms have the meanings given.
(b) "Preexisting district" means a tax increment financing
district for which the request for certification was made before
August 1, 2001.
(c) "Preexisting obligation" means a bond or binding
contract that:
(1) was issued or approved before August 1, 2001, or was
issued pursuant to a binding contract entered into before August
1, 2001;
(2) is secured by increments from a preexisting district.
subd. 3. Actions authorized. (a) An authority with a
district qualifying under this section may take either or both
of the following actions for any or all of its preexisting
districts:
(1) the authority may elect that the original local tax
rate under section 469.177, subdivision la, does not apply to
the district; and
(2) the authority may elect the fiscal disparities
contribution will be computed under section 469.177, subdivision
3, paragraph (a), regardless of the election that was made for
the district.
(b) The authority may take action under this subdivision
only after the municipality approves the action, by resolution,
after notice and public hearing in the manner provided under
section 469.175, subdivision 2.
HIST: 1Sp2001 c 5 art 15 s 22; 2002 c 377 art 7 s 4
copyright 2002 by the office of Revisor of Statutes, State of ~4innesota.
http://www, revisor, leg. state, mn. us/stats/469/1792, html 10/22/2003
Downtown TIF District #1
Yearly Comparsions
1996 1997 1998 1999 2000 2001 2002 2003
EMV $ 99,570,200 $ 108,680,900 $ 118,022,400 $ 122,109,000 $ 127,710,700 $ 140,880,200 $ 156,570,200 $ 173,010,700
Land $ 23,008,600 $ 27,863,900 $ 30,260,000 $ 31,260,400 $ 31,542,000 $ 39,935,700 $ 42,722,800 $ 44,826,400
Building $ 76,561,600 $ 80,817,000 $ 87,762,400 $ 90,848,600 $ 96,168,700 $ 100,944,500 $ 113,847,400 $ 128,183,600
Tax Increment $ 5,954,188 $ 6,337,545 $ 5,814,117 $ 5,258,065 $ 5,657,037 $ 5,470,614 $ 3,467,219 $ 4,132,031
Assessments $ 136,206 $ 117,569 $ 506,694 $ 410,221 $ 554,002 $ 192,233 $ 149,349 $ 140,407
Taxes $ 6,141,354 $ 6,538,587 $ 6,219,408 $ 5,636,668 $ 5,993,808 $ 5,949,285 $ 5,368,201 $ 5,929,766
Taxes + Assessments $ 6,277,560 $ 6,656,156 $ 6,726,102 $ 6,046,889 $ 6,547,811 $ 6,141,518 $ 5,517,550 $ 6,070,174
Same Level as 1997 523,428 1,079,480 680,509 866,931 2,870,326 2,205,514 8,226,189
Proportional Growth to EMV 5.8313% 1,068,162 1,862,518 1,790,200 2,744,580 5,662,911 5,956,799 19,085,170
CITYOF
7700 Markel Boulevard
PO Box 147
Chanhassen, MN 55317
Administration
Phone: 952.227.1100
Fax: 952.227.1110
Building Inspections
Phone: 952.227.1180
Fax: 952.227.1190
Engineering
Phone: 952.227.1160
Fax: 952.227.1170
Finance
Phone: 952.227.1140
Fax: 952.227.1110
Park & Recreation
Phone: 952.227.1120
Fax: 952.227.1110
Recreation Center
2310 Coulter Boulevard
Phone: 952.227.1400
Fax: 952.227.1404
Planning &
Natural Resources
Phone: 952.227.1130
Fax: 952.227.1110
Public Works
1591 Park Road
Phone: 952.227.1300
Fax: 952.227.1310
Senior Center
Phone: 952.227.1125
Fax: 952.227.1110
Web Site
~,~,,~¥.ci.chaflhassen .mn .us
TO: Economic Development Authority Members
FROM: Bruce M. DeJong, Finance Director ~?~ ~
DATE: October 22, 2003
SUBJECT: Approve Transfer of Non-TIF Revenue from the Downtown Tax
Increment Financing (TIF) District to Historic Preservation
The Downtown TIF district has a significant amount of commingled non-TIF
revenue that should be removed from the district. The specific amount in this
case is the investment earnings of $2,688,128 as shown on line 25 of the 2002 TIF
District Report.
The city has placed the non-TlF revenues associated with our TIF districts into the
Historic Preservation Trust Fund. This fund was originally set up to be a
perpetual care fund for the maintenance of the Downtown TIF area after the
district closed. We have previously approved transfers from the district in the
amount of $914,543 as detailed on the enclosed history sheet. The Office of State
Auditor has issued guidance that non-increment and increment should be
segregated in different funds to avoid confusion regarding which fun, ds were used
to pay which expenses.
Recommendation
Staff recommends that the non-increment revenues of $2,688,128 be transferred
from fund 460 - Downtown TIF to fund 800 - Historic Preservation as presented.
This vote requires a simple majority of those present.
Enc: 2002 TIF District Report - Page 3
History of Transfers Out for TID #1
The C]ly of Chanhassen * A growing community wilh clean lakes, quality schools, a charming downtown, lhriving businesses, winding trails, and beautiful parks. A great place to live, work, and play.
Revenues and Other
Financing Sources (OFSs)
24. Tax increment revenue
125. Investment earnings
26. Bond proceeds
27. Loan proceeds
28. Special assessments
29. Sales/lease proceeds
30. Loan/advance repayments
31. Grants
32. Other (describe) A. Miscellaneous
B. HACA/prop tax/mkt value crd
C. Insurance recovery
~,3. Transfers in (from line 65)
34. Total Revenues and OFSs
Expenditures and Other
Financing Uses (OFUs)
;5. Land/building acquisition
;6. Site improvements/
preparation costs
7. Installation of public utilities
8. Public Parking facilities
9. Streets and sidewalks
Public park facilities
1. Social, recreational, or
conference facilities
_~. Interest reduction payments
Bond principal paYments
Bond interest payments
Loan principal payments
Loan/note interest payments
'. Administrative expenses
I. Other (describe)
A. Payment to other govt's
B. contingent
C. property taxes/relocate
'. Transfers out (from line 69)
· Total Expenditures and OFUs
· Revenues and OFSs Over (Under)
_ Expenditures and OFUs
· Fund Balance- t2/31/01
. Fund Balance - 12/31/02
Original TIF-Plan
Budget Amount
$23,OOO,OOO
OPERATING STATEMENT
B.
Cumulative Modified
TIF-Plan Budget
$76,844,950
$500,000
SI,500,000
$25,000,000
$7,5OO,OO0
$7,250,000
$7,250,000
$3,000,000
$25,000,000
Prior Years ~ 2002 Amount
. ~ , $3,421,074
_.~~~"~ $109,718
$1,553,868
$124,246
$500,000
$1,500,000 $2,497,395
$718,856
$394,729
$68,767 $30,865
$92,691
$2,700,000
$81,544,950
'$26,501,850
$3,685,903
$4,944,304
$127,926,979
$16,313,028
$450,000
$19,062,750 $26,828,901 $27,419
$1,499,500 $1,236,234
$19,850,000 $16,327,784
$750,000 $577,717
$1,308,988 $345,132
$2,320,000
$43,554,044
$2,530,378
$1,155,525
($3,362,433)
($2,206,908)]
$15,778,155 $101,931
$2,418,187 $77,182
$5,511,612 $5,047,007 $3,846
$1,316,000
$4,110,25O
-
~ $914,543~,~
$79:044,950 i ' '131,289,412I
$2,500,000 ($3,362,433)~
· ' District Name: TIF #1 2002 TIF District Report - Page 3 ~
CITY OF CHANHASSEN, MINNESOTA
Tax Increment District No. 1
History of Interfund Transfers Out
Year Amount Transferred to
1988 $ 134,393 City Hall Expansion (1)
1989 45,000 Motor Vehicle Depr Fund
1990 50,537 Historic Preservation Fund
1990 270,292 Historic Preservation Fund
1990 51,600 Lake Susan Fund
1991 173,000 Fund 300 debt service
1995 23,161 Audubon Road
1996 87,255 Permanent Improvement Revolving
1997 79,305 Hwy 101 South Realignment
$ 914,543 total
Footnotes:
1. transfer of 1988 land sale proceeds
CHANHASSEN ECONOMIC
DEVELOPMENT AUTHORITY
SPECIAL MEETING
OCTOBER 13, 2003
Mayor Furlong called the meeting to order at 9:53 p.m.
MEMBERS PRESENT: Jim Bohn, Steve Labatt, Tom Furlong, and Craig Peterson
MEMBERS ABSENT: Bob Ayotte, and Brian Lundquist
STAFF PRESENT: Todd Gerhardt, Justin Miller and Bruce DeJong
CONSIDER MODIFICATION OF THE TAX INCREMENT FINANCING PLAN FOR
THE DOWNTOWN TIF DISTRICT.
Justin Miller: Good evening Chair, commissioners. As you're aware the City's been looking
into extending our downtown TIF district for a year to help rectify the deficit situation that it's in.
Recent state law has changed to allow us to extend that TIF district for another year. One of the
requirements of that is that it goes before the Planning Commission to make sure any
modifications to TIF plans have to go before the Planning Commission to find out if they're in
conformance with the Comprehensive Plan. That has been done. Another requirement is that it
comes before the EDA. That is the purpose of this meeting tonight. Staff is recommending that
the EDA approve the attached resolution approving the extension of the TIF district for another
year. The downtown TIF district.
Mayor Furlong: Thank you. Are there any questions for staff? Hearing none, is there a motion
to approve?
Bohn: I'I1 make a motion we approve the extension of the EDA...
Mayor Furlong: Thank you, is there a second?
Councilman Peterson: Second.
Mayor Furlong: Any discussion? Hearing none we'll proceed with the vote.
Resolution g2003-03: Bohn moved, Peterson seconded to approve the downtown TIF plan
modifications as presented. All voted in favor and the motion carried unanimously with a
vote of 4 to 0.
APPROVAL OF MINUTES: Labatt moved, Furlong seconded to approve the summary
and verbatim minutes of the Economic Development Authority meeting dated July 28, 2003
as presented. All voted in favor and the motion carried unanimously with a vote of 4 to 0.
Furlong moved, Bohn seconded to adjourn the meeting. All voted in favor and the motion
carried. The EDA meeting was adjourned at 9:55 p.m.
Submitted by Todd Gerhardt
Executive Director
Prepared by Nann Opheim