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CC Staff Report 03-08-21CITY COUNCIL STAFF REPORT Monday, March 8, 2021 Subject Resolution 2021XX: Consider Resolution to Adopt TIF Plan Documents Section 7:00 P.M. ECONOMIC DEVELOPMENT AUTHORITY MEETING Item No: B.2. Prepared By Kate Aanenson, AICP, Community Development Director File No: PROPOSED MOTION “The Economic Development Authority (EDA) adopts the attached resolution making a modification to the Redevelopment Plan for the Downtown Chanhassen Redevelopment project area and a Tax Increment Financing (TIF) Plan for Tax Increment Financing District No. 12." Approval requires a Simple Majority Vote of members present. SUMMARY Over the last several months, the City Council has discussed the desire to create affordable senior housing. The Lakes at Chanhassen received site plan approval with a density bonus requiring that 50 of the 110 units must meet the affordable housing criteria of 60% of Area Median Income (AMI). The developer sought the use of TIF for assistance on the affordability. The EDA will be reviewing the TIF housing district and District modification. BACKGROUND As part of the EDA discussion, Nick Anhut with Ehlers, the city's financial advisors, plans to review the proposed terms for the contract for private development. The EDA will not give formal adoption until after the public hearing at the City Council meeting on March 22, 2021. The next steps in the TIF process will be for the City Council to hold a public hearing. After the public hearing, the City Council will adopt Findings for creating the TIF. The EDA will then create a private development agreement for the TIF between the EDA and the Developer. RECOMMENDATION Review the modification to the Redevelopment Plan and TIF and adopt the attached resolution. CITY COUNCIL STAFF REPORTMonday, March 8, 2021SubjectResolution 2021XX: Consider Resolution to Adopt TIF Plan DocumentsSection7:00 P.M. ECONOMICDEVELOPMENT AUTHORITYMEETING Item No: B.2.Prepared By Kate Aanenson, AICP, CommunityDevelopment Director File No: PROPOSED MOTION“The Economic Development Authority (EDA) adopts the attached resolution making a modification to theRedevelopment Plan for the Downtown Chanhassen Redevelopment project area and a Tax Increment Financing(TIF) Plan for Tax Increment Financing District No. 12."Approval requires a Simple Majority Vote of members present.SUMMARYOver the last several months, the City Council has discussed the desire to create affordable senior housing. The Lakesat Chanhassen received site plan approval with a density bonus requiring that 50 of the 110 units must meet theaffordable housing criteria of 60% of Area Median Income (AMI). The developer sought the use of TIF forassistance on the affordability. The EDA will be reviewing the TIF housing district and District modification.BACKGROUNDAs part of the EDA discussion, Nick Anhut with Ehlers, the city's financial advisors, plans to review the proposedterms for the contract for private development. The EDA will not give formal adoption until after the public hearing atthe City Council meeting on March 22, 2021. The next steps in the TIF process will be for the City Council to hold a public hearing. After the public hearing, theCity Council will adopt Findings for creating the TIF. The EDA will then create a private development agreement forthe TIF between the EDA and the Developer.RECOMMENDATION Review the modification to the Redevelopment Plan and TIF and adopt the attached resolution. ATTACHMENTS: Resolution Chanhassen TIF 12 Plan CHANHASSEN ECONOMIC DEVELOPMENT AUTHORITY CITY OF CHANHASSEN CARVER AND HENNEPIN COUNTIES STATE OF MINNESOTA RESOLUTION NO. 2021-01 RESOLUTION ADOPTING A MODIFICATION TO THE REDEVELOPMENT PLAN FOR THE DOWNTOWN CHANHASSEN REDEVELOPMENT PROJECT AREA AND A TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO. 12 THEREIN WHEREAS, it has been proposed by the Board of Commissioners (the "Board") of the Chanhassen Economic Development Authority (the "EDA") and the City of Chanhassen (the “City”) that the EDA adopt a Modification to the Redevelopment Plan (the "Redevelopment Plan Modification") for the Downtown Chanhassen Redevelopment Project Area (the “Project Area”) to establish Tax Increment Financing District No. 12 (the "District") and adopt a Tax Increment Financing Plan (the "TIF Plan") therefor (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, inclusive, as amended (the "Act"), all as reflected in the Plans and presented for the Board's consideration; and WHEREAS, the EDA has investigated the facts relating to the Plans and has caused the Plans to be prepared; and WHEREAS, the EDA has performed all actions required by law to be performed prior to the adoption of the Plans. The EDA has also requested the City Planning Commission to provide for review of and written comment on the Plans and that the Council schedule a public hearing on the Plans upon published notice as required by law. NOW, THEREFORE, BE IT RESOLVED by the Board as follows: 1. The EDA hereby finds that the District is in the public interest and is a "housing district" under Minnesota Statutes, Section 469.174, Subd. 11, and finds that the adoption of the proposed Plans conforms in all respects to the requirements of the Act and will help fulfill a need to develop an area of the State of Minnesota for affordable and high-quality housing and thereby serves a public purpose. 2. The EDA further finds that the Plans will afford maximum opportunity, consistent with the sound needs for the City as a whole, for the development or redevelopment of the Project Area by private enterprise in that the intent is to provide only that public assistance necessary to make the private developments financially feasible. 3. The boundaries of the Project Area are not being expanded. 4. The reasons and facts supporting the findings in this resolution are described in the Plans. 5. The EDA elects to calculate fiscal disparities for the District in accordance with Minnesota Statutes, Section 469.177, Subd. 3, clause b, which means the fiscal disparities contribution would be taken from inside the District. 6. Conditioned upon the approval thereof by the City Council following its public hearing thereon, the Plans, as presented to the EDA on this date, are hereby approved, established and adopted and shall be placed on file in the office of the EDA Executive Director. 7. Upon approval of the Plans by the City Council, the staff, the EDA's advisors and legal counsel are authorized and directed to proceed with the implementation of the Plans and for this purpose to negotiate, draft, prepare and present to this Board for its consideration all further plans, resolutions, documents and contracts necessary for this purpose. Approval of the Plans does not constitute approval of any project or a Development Agreement with any developer. 8. Upon approval of the Plans by the City Council, the EDA Executive Director is authorized and directed to forward a copy of the Plans to the Minnesota Department of Revenue and the Office of the State Auditor pursuant to Minnesota Statutes 469.175, Subd. 4a. 9. The EDA Executive Director is authorized and directed to forward a copy of the Plans to the Carver County Auditor and request that the Auditor certify the original tax capacity of the District as described in the Plans, all in accordance with Minnesota Statutes 469.177. Approved by the Board on March 8, 2021. Elise Ryan, Chair ATTEST: Heather Johnston, Interim Executive Director MODIFICATION TO THE REDEVELOPMENT PLAN Downtown Chanhassen Redevelopment Project Area - AND - TAX INCREMENT FINANCING PLAN Establishment of Tax Increment Financing District No. 12 (a housing district) City of Chanhassen, Carver County, Minnesota Public Hearing: March 22, 2021 City of Chanhassen Tax Increment Financing District No. 12 2 Table of Contents Modification to the Redevelopment Plan for the Downtown Chanhassen Redevelopment Project Area .............................................................................................................................................. 3 Foreword ................................................................................................................................... 3 Tax Increment Financing Plan for Tax Increment Financing District No. 12 ................................. 4 Foreword ................................................................................................................................... 4 Statutory Authority .................................................................................................................... 4 Statement of Objectives ............................................................................................................ 4 Redevelopment Plan Overview ................................................................................................. 4 Description of Property in the District and Property to be Acquired .......................................... 5 Classification of the District ....................................................................................................... 5 Duration and First Year of Tax Increment of the District ........................................................... 6 Original Tax Capacity, Tax Rate and Estimated Captured Net Tax Capacity Value/Increment and Notification of Prior Planned Improvements ....................................................................... 6 Sources of Revenue/Bonds to be Issued .................................................................................. 7 Uses of Funds ........................................................................................................................... 8 Estimated Impact on Other Taxing Jurisdictions ....................................................................... 8 Supporting Documentation ..................................................................................................... 10 Administration of the District ................................................................................................... 11 Appendix A: Map of Downtown Chanhassen Redevelopment Project Area and the TIF District ..................................................................................................................................... 12 Appendix B: Estimated Cash Flow for the District .................................................................. 13 Appendix C: Findings Including But/For Qualifications .......................................................... 14 City of Chanhassen Tax Increment Financing District No. 12 3 Modification to the Redevelopment Plan for the Downtown Chanhassen Redevelopment Project Area Foreword The following text represents a Modification to the Redevelopment Plan for the Downtown Chanhassen Redevelopment Project Area. This modification represents a continuation of the goals and objectives set forth in the Redevelopment Plan for the Downtown Chanhassen Redevelopment Project Area. Generally, the substantive changes include the establishment of Tax Increment Financing District No. 12. For further information, a review of the Redevelopment Plan for the Downtown Chanhassen Redevelopment Project Area is recommended. It is available on file at the office of the Assistant City Manager at the City of Chanhassen. Other relevant information is contained in the Tax Increment Financing Plans for the Tax Increment Financing Districts located within Downtown Chanhassen Redevelopment Project Area. City of Chanhassen Tax Increment Financing District No. 12 4 Tax Increment Financing Plan for Tax Increment Financing District No. 12 Foreword The City of Chanhassen (the "City"), staff and consultants have prepared the following information to expedite the Establishment of Tax Increment Financing District No. 12 (the "District"), a housing tax increment financing district, located in the Downtown Chanhassen Redevelopment Project Area (the “Project Area”). Statutory Authority Within the City, there exist areas where public involvement is necessary to cause development or redevelopment to occur. To this end, the City has certain statutory powers pursuant to Minnesota Statutes ("M.S."), Sections 469.124 - 469.133, inclusive, as amended, and M.S., Sections 469.174 to 469.1794, inclusive, as amended (the "Tax Increment Financing Act" or "TIF Act"), to assist in financing public costs related to this project. This section contains the Tax Increment Financing Plan (the "TIF Plan") for the District. Other relevant information is contained in the Redevelopment Plan for the Project Area, as modified. Statement of Objectives The District currently consists of one (1) parcel of land and adjacent roads and internal rights-of- way. The District is being created to provide financial assistance to facilitate the development of a new 110-unit, three story mixed-income apartment facility for senior living to be known as Lake Place in the City. The City is preparing to enter into an agreement with Lakes at Chanhassen, LLC as the developer. Under terms of the agreement, the developer is expected to designate 50 affordable housing units within the facility. Development is anticipated to begin in 2021. This TIF Plan is expected to achieve many of the objectives outlined in the Redevelopment Plan for the Project Area. The activities contemplated in the Modification to the Redevelopment Plan and the TIF Plan do not preclude the undertaking of other qualified development or redevelopment activities. These activities are anticipated to occur over the life of the Project Area and the District. Redevelopment Plan Overview Pursuant to the Redevelopment Plan and authorizing state statutes, the City is authorized to undertake the following activities in the District: 1. Property to be Acquired – If deemed necessary, selected property located within the District may be acquired by the City and is further described in this TIF Plan. 2. Relocation - Relocation services, to the extent required by law, are available pursuant to M.S., Chapter 117 and other relevant state and federal laws. City of Chanhassen Tax Increment Financing District No. 12 5 3.Upon approval of a developer's plan relating to the project and completion of the necessary legal requirements, the City may sell to a developer selected properties that it may acquire within the District or may lease land or facilities to a developer. 4.The City may perform or provide for some or all necessary acquisition, construction, relocation, demolition, and required utilities and public street work within the District. Description of Property in the District and Property to be Acquired The District encompasses all property and adjacent rights-of-way and abutting roadways identified by the parcels listed below. Parcel number Address Owner 25.636.0020 1361 Lake Drive W.Island Mgmt LLC Please also see the map in Appendix A for further information on the location of the District. The City may acquire any parcel within the District including interior and adjacent street rights of way. Any properties identified for acquisition will be acquired by the City only in order to accomplish one or more of the following: storm sewer improvements; provide land for needed public streets, utilities and facilities; or carry out land acquisition, site improvements, clearance and/or development to accomplish the uses and objectives set forth in this plan. The City may acquire property by gift, dedication, condemnation or direct purchase from willing sellers in order to achieve the objectives of this TIF Plan. Such acquisitions will be undertaken only when there is assurance of funding to finance the acquisition and related costs. Classification of the District The City, in determining the need to create a tax increment financing district in accordance with M.S., Sections 469.174 to 469.1794, as amended, inclusive, finds that the District, to be established, is a housing district pursuant to M.S., Section 469.174, Subd. 11 and M.S., Section 469.1761. $The District consists of one (1) parcel $The development will consist of 110 units of multi-family rental housing $At least 40% of the units will be occupied by persons with incomes less than 60% of median income, and $No more that 20 percent of the square footage of the building that is receiving assistance from tax increment consists of commercial, retail or other non-residential uses. Pursuant to M.S., Section 469.176, Subd. 7, the District does not contain any parcel or part of a parcel that qualified under the provisions of M.S., Sections 273.111, 273.112, or 273.114 or Chapter 473H for taxes payable in any of the five calendar years before the filing of the request for certification of the District. City of Chanhassen Tax Increment Financing District No. 12 6 Duration and First Year of Tax Increment of the District Pursuant to M.S., Section 469.175, Subd. 1, and Section 469.176, Subd. 1, the duration and first year of tax increment of the District must be indicated within the TIF Plan. Pursuant to M.S., Section 469.176, Subd. 1b., the maximum duration of the District will be 25 years after receipt of the first increment by the City (a total of 26 years of tax increment). The City elects to receive the first tax increment in 2023, which is no later than four years following the year of approval of the District. Thus, it is estimated that the District, including any modifications of the TIF Plan for subsequent phases or other changes, would terminate after 2048, or when the TIF Plan is satisfied. The City reserves the right to decertify the District prior to the legally required date. Original Tax Capacity, Tax Rate and Estimated Captured Net Tax Capacity Value/Increment and Notification of Prior Planned Improvements Pursuant to M.S., Section 469.174, Subd. 7 and M.S., Section 469.177, Subd. 1, the Original Net Tax Capacity (ONTC) as certified for the District will be based on the market values placed on the property by the assessor in 2020 for taxes payable 2021. Pursuant to M.S., Section 469.177, Subds. 1 and 2, the County Auditor shall certify in each year (beginning in the payment year 2023) the amount by which the original value has increased or decreased as a result of: 1.Change in tax exempt status of property; 2.Reduction or enlargement of the geographic boundaries of the District; 3.Change due to adjustments, negotiated or court-ordered abatements; 4.Change in the use of the property and classification; 5.Change in state law governing class rates; or 6.Change in previously issued building permits. In any year in which the current Net Tax Capacity (NTC) value of the District declines below the ONTC, no value will be captured and no tax increment will be payable to the City. Pursuant to M.S., Section 469.174 Subd. 4 and M.S., Section 469.177, Subd. 1, 2, and 4, the estimated Captured Net Tax Capacity (CTC) of the District, within Downtown Chanhassen Redevelopment Project Area, upon completion of the projects within the District, will annually approximate tax increment revenues as shown in the table below. The City requests 100 percent of the available increase in tax capacity for repayment of its obligations and current expenditures, beginning in the tax year payable 2023. The Project Tax Capacity (PTC) listed is an estimate of values when the projects within the District are completed. The original local tax rate for the District will be the local tax rate for taxes payable 2021, assuming the request for certification is made before June 30, 2021. The ONTC and the Original Local Tax Rate for the District appear in the table below. City of Chanhassen Tax Increment Financing District No. 12 7 Estimated Project Tax Capacity (PTC) upon completion 233,750 Estimated Original Net Tax Capacity (ONTC)9,195 Fiscal Disparities 0 Estimated Captured Tax Capacity (CTC)224,555 Original Local Tax Rate 95.1546%Pay 2021 Estimated Annual Tax Increment $213,674 Percent Retained by the City 100% Project Tax Capacity Note: The tax capacity included in this chart is the estimated tax capacity of the District in year 25. The tax capacity of the District based on partial project completion in year one is estimated to be $58,438. Pursuant to M.S., Section 469.177, Subd. 4, the City shall, after a due and diligent search, accompany its request for certification to the County Auditor or its notice of the District enlargement pursuant to M.S., Section 469.175, Subd. 4, with a listing of all properties within the District or area of enlargement for which building permits have been issued during the eighteen (18)months immediately preceding approval of the TIF Plan by the municipality pursuant to M.S., Section 469.175, Subd. 3. The County Auditor shall increase the original net tax capacity of the District by the net tax capacity of improvements for which a building permit was issued. The City is reviewing the area to be included in the District to determine if any building permits have been issued during the 18 months immediately preceding approval of the TIF Plan by the City. Sources of Revenue/Bonds to be Issued The total estimated tax increment revenues for the District are shown in the table below: SOURCES Tax Increment 5,369,315$ Interest 268,466 TOTAL 5,637,781$ The costs outlined in the Uses of Funds will be financed primarily through the annual collection of tax increments. If necessary, The City reserves the right to incur bonds or other indebtedness as a result of the TIF Plan. As presently proposed, the projects within the District will be financed by one or more pay-as-you-go notes. Any refunding amounts will be deemed a budgeted cost without a formal TIF Plan Modification. This provision does not obligate the City to incur debt. The City will issue bonds or incur other debt only upon the determination that such action is in the best interest of the City. The City may issue bonds (as defined in the TIF Act) secured in whole or in part with tax increments from the District in a maximum principal amount of $5,013,288. Such bonds may be in the form of pay-as-you-go notes, revenue bonds or notes, general obligation bonds, or interfund loans. This estimate of total bonded indebtedness is a cumulative statement of authority under this TIF Plan as of the date of approval. City of Chanhassen Tax Increment Financing District No. 12 8 Uses of Funds Currently under consideration for the District is a proposal to facilitate financial assistance for the development of a new 110-unit mixed-income senior housing apartment facility in the city. The City has determined that it will be necessary to provide assistance to the project(s) for certain District costs, as described. The City has studied the feasibility of the development or redevelopment of property in and around the District. To facilitate the establishment and development or redevelopment of the District, this TIF Plan authorizes the use of tax increment financing to pay for the cost of certain eligible expenses. The estimate of public costs and uses of funds associated with the District is outlined in the following table. USES Land/Building Acquisition -$ Site Improvements/Preparation - Affordable Housing 4,476,356 Utilities - Other Qualifying Improvements - Administrative Costs (up to 10%)536,932 PROJECT COSTS TOTAL 5,013,288$ Interest 624,493 PROJECT AND INTEREST COSTS TOTAL 5,637,781$ The total project cost, including financing costs (interest) listed in the table above does not exceed the total projected tax increments for the District as shown in the Sources of Revenue section. Estimated costs associated with the District are subject to change among categories without a modification to this TIF Plan. The cost of all activities to be considered for tax increment financing will not exceed, without formal modification, the budget above pursuant to the applicable statutory requirements. The City may expend funds for qualified housing activities outside of the District boundaries pursuant to the TIF Act. Fiscal Disparities Election Pursuant to M.S., Section 469.177, Subd. 3, the City may elect one of two methods to calculate fiscal disparities. The City will choose to calculate fiscal disparities by clause b (inside). Estimated Impact on Other Taxing Jurisdictions The estimated impact on other taxing jurisdictions below assumes that the redevelopment contemplated by the TIF Plan would occur without the creation of the District. However, the City has determined that such development or redevelopment would not occur "but for" tax increment financing and that, therefore, the fiscal impact on other taxing jurisdictions is $0. The estimated fiscal impact of the District would be as follows if the "but for" test was not met: City of Chanhassen Tax Increment Financing District No. 12 9 Entity Final 2020/Pay 2021 Total Net Tax Capacity Estimated Captured Tax Capacity (CTC) upon completion Percent of CTC to Entity Total Carver County 159,157,722 224,555 0.1411% Chanhassen 50,969,757 224,555 0.4406% ISD No. 112 (Eastern Carver County Schools)93,580,837 224,555 0.2400% Impact on Tax Base Entity Pay 2021 Extension Rate Percent of Total CTC Potential Taxes Carver County 34.6337% 36.40% 224,555 $ 77,772 Chanhassen 22.1140% 23.24% 224,555 49,658 ISD No. 112 (Eastern Carver County Schools)32.3272% 33.97% 224,555 72,592 Other 6.0797% 6.39% 224,555 13,652 95.1546% 100.00% $ 213,674 Impact on Tax Rates The estimates listed above display the captured tax capacity when all construction is completed. The tax rate used for calculations is the Pay 2021 rate. The total net capacity for the entities listed above are based on Pay 2021 figures. The District is expected to be certified under the Pay 2021 rates. Pursuant to M.S. Section 469.175 Subd. 2(b): (1)Estimate of total tax increment. It is estimated that the total amount of tax increment that will be generated over the life of the District is $5,369,315; (2)Probable impact of the District on city provided services and ability to issue debt. A marginal impact of the District on police protection is expected. With any addition of new residents or businesses, police calls for service will be increased and the City estimates an increase of 50 calls per year. New developments also add an increase in traffic and additional overall demands to the call load. However, the City does not anticipate any material financial impact and does not expect that the proposed development, in and of itself, will necessitate new capital investment in vehicles or facilities. The probable impact of the District on fire protection is not expected to be significant. Typically new buildings generate few calls, if any, and are of superior construction. The City estimates residents within the development may generate 25 calls per year. Similar to police, the City does not expect that the proposed development, in and of City of Chanhassen Tax Increment Financing District No. 12 10 itself, will create a material financial impact or necessitate new capital investment in vehicles or facilities. The impact of the District on public infrastructure is expected to be minimal. No public roads are necessitated by the development, and it the development is not expected to significantly impact any traffic movements in the area. All on-site infrastructure capital costs will be paid by the development including the installation of a trail and pedestrian access. The City’s current infrastructure for sanitary sewer, storm sewer and water will be able to handle the additional volume generated from the proposed development. Based on the development plans, there are no additional public costs associated with street maintenance, sweeping, plowing, lighting and sidewalks. The development in the District is expected to contribute an estimated $1,094,280 in sanitary sewer (SAC) and water (WAC) connection fees. The probable impact of any District general obligation tax increment bonds on the ability to issue debt for general fund purposes is expected to be minimal. It is not anticipated that there will be any general obligation debt issued in relation to this project, therefore there will be no impact on the City's ability to issue future debt or on the City's debt limit. (3)Estimated amount of tax increment attributable to school district levies. It is estimated that the amount of tax increments over the life of the District that would be attributable to school district levies, assuming the school district's share of the total local tax rate for all taxing jurisdictions remained the same, is $1,824,136; (4)Estimated amount of tax increment attributable to county levies. It is estimated that the amount of tax increments over the life of the District that would be attributable to county levies, assuming the county's share of the total local tax rate for all taxing jurisdictions remained the same, is $1,954,286; (5)Additional information requested by the county or school district. The City is not aware of any standard questions in a county or school district written policy regarding tax increment districts and impact on county or school district services. The county or school district must request additional information pursuant to M.S. Section 469.175 Subd. 2(b) within 15 days after receipt of the tax increment financing plan. No requests for additional information from the county or school district regarding the proposed development for the District have been received. Supporting Documentation Pursuant to M.S. Section 469.175, Subd. 1 (a), clause 7 the TIF Plan must contain identification and description of studies and analyses used to make the determination set forth in M.S. Section 469.175, Subd. 3, clause (b)(2) and the findings are required in the resolution approving the District. In making said determination, reliance has been placed upon (1) written representation made by the developer to such effects, (2) review of the developer’s proforma; and (3) City staff awareness of the feasibility of developing the project site within the District, which is further outlined in the City Council resolution approving the establishment of the TIF District and Appendix C. City of Chanhassen Tax Increment Financing District No. 12 11 Administration of the District Administration of the District will be handled by the Community Development Director. City of Chanhassen Tax Increment Financing District No. 12 12 Appendix A: Map of Downtown Chanhassen Redevelopment Project Area and the TIF District an Bl v d (CSAH 18) Lyman Blv d (CSAH 18)Powers Blvd (C.R. 17)01Grea t Plai ns BlvdSta t e H w y 5 State H w y 5Galpin Blvd. (C.R. 117)Chanhassen Rd. Hwy. 101AudubonRoadGalpin Blvd (C.R. 15)Z[212Powers Blvd (C.R. 17)Project Area Downtown Chanhassen Redevelopment Project Area City of Chanhassen, Minnesota s 7D[,QFUHPHQW)LQDQFLQJ'LVWULFW1R 'RZQWRZQ5HGHYHORSPHQW3URMHFW$UHD TIF District No. 12 Tax Increment Financing District No. 12 City of Chanhassen Tax Increment Financing District No. 12 13 Appendix B: Estimated Cash Flow for the District 2/16/2021Lake Place Senior Apartments - No InflationCity of Chanhassen, MN 110-unit Senior Multifamily DevelopmentASSUMPTIONS AND RATESDistrictType:HousingDistrict Name/Number: TIF District 12County District #: TBDExempt Class Rate (Exempt) 0.00%First Year Construction or Inflation on Value 2021Commercial Industrial Preferred Class Rate (C/I Pref.)Existing District - Specify No. Years RemainingFirst $150,000 1.50%Inflation Rate - Every Year:0.00%Over $150,000 2.00%Interest Rate:1.00%Commercial Industrial Class Rate (C/I) 2.00%Present Value Date:1-Aug-22Rental Housing Class Rate (Rental) 1.25%First Period Ending 1-Feb-23Affordable Rental Housing Class Rate (Aff. Rental)Tax Year District was Certified:Pay 2021First $174,000 0.75%Cashflow Assumes First Tax Increment For Development: 2023 Over $174,000 0.25%Years of Tax Increment 26 Non-Homestead Residential (Non-H Res. 1 Unit)Assumes Last Year of Tax Increment2048First $500,0001.00%Fiscal Disparities Election [Outside (A), Inside (B), or NA]Inside(B)Over $500,0001.25%Incremental or Total Fiscal DisparitiesIncrementalHomestead Residential Class Rate (Hmstd. Res.)Fiscal Disparities Contribution Ratio36.5748% Pay 2020First $500,0001.00%Fiscal Disparities Metro-Wide Tax Rate139.5040% Pay 2021 est.Over $500,0001.25%Maximum/Frozen Local Tax Rate: 95.155% Pay 2021 est.Agricultural Non-Homestead1.00%Current Local Tax Rate: (Use lesser of Current or Max.)95.155%Pay 2021 est.State-wide Tax Rate (Comm./Ind. only used for total taxes) 36.0000% Pay 2021 est.Market Value Tax Rate (Used for total taxes) 0.17888% Pay 2021 est.Building Total Percentage Tax Year Property Current Class AfterLand Market Market Of Value Used Original Original Tax Original After ConversionMap ID PID Owner Address Market ValueValueValue for District Market Value Market Value Class Tax Capacity Conversion Orig. Tax Cap.25.636.0020Island Mgmt LLC1361 Lake Drive W.735,6000 735,600100% 735,600 Pay 2021 Rental9,195 Rental9,195 1735,6000 735,600735,6009,1959,195Note:1.Base values are for pay 2021 based upon review of County website on 2/2/2021.2. Located in SD # 112 and WS #064. TAG 2506.Area/ PhaseTax Rates BASE VALUE INFORMATION (Original Tax Capacity)Prepared by Ehlers 2/16/2021Lake Place Senior Apartments - No InflationCity of Chanhassen, MN 110-unit Senior Multifamily DevelopmentEstimated Taxable Total Taxable Property Percentage Percentage Percentage Percentage First YearMarket Value Market Value Total Market Tax Project Project Tax Completed Completed Completed Completed Full TaxesArea/PhaseNew UsePer Sq. Ft./UnitPer Sq. Ft./UnitSq. Ft./UnitsValueClassTax CapacityCapacity/Unit2021202220232024Payable1Apartments 170,000 170,000 110 18,700,000 Rental 233,750 2,125 25%100% 100% 100% 2024TOTAL18,700,000 233,750 Note:1. Market values are based upon estimates provided by the Carver County Assessor's office on 2/12/2021.TotalFiscal LocalLocalFiscal State-wideMarketTax Disparities Tax Property Disparities PropertyValue Total Taxes PerNew Use Capacity Tax Capacity Capacity Taxes Taxes Taxes Taxes Taxes Sq. Ft./UnitApartments 233,750 0 233,750 222,424 0 0 33,451 255,875 2,326.14TOTAL233,7500233,750222,4240033,451255,875Note: 1. Taxes and tax increment will vary significantly from year to year depending upon values, rates, state law, fiscal disparities and other factors which cannot be predicted.Total Property Taxes 255,875less State-wide Taxes 0less Fiscal Disp. Adj. 0less Market Value Taxes (33,451)less Base Value Taxes (8,749)Annual Gross TIF 213,674 WHAT IS EXCLUDED FROM TIF?TAX CALCULATIONSPROJECT INFORMATION (Project Tax Capacity)Prepared by Ehlers 2/16/2021Tax Increment Cashflow - Page 3Lake Place Senior Apartments - No InflationCity of Chanhassen, MN 110-unit Senior Multifamily DevelopmentTAX INCREMENT CASH FLOWProject Original Fiscal CapturedLocal Annual Semi-Annual State % Retained Semi-Annual Semi-Annual PERIOD% of TaxTax Disparities TaxTax Gross Tax Gross Tax Auditor Fee For Admin. Net Tax Present ENDING Tax PaymentOTC Capacity Capacity Incremental CapacityRate Increment Increment 0.36%10% Increment Value Yrs. Year Date- - - - 02/01/23100% 58,438 (9,195) - 49,243 95.155% 46,856 23,428 (84) (2,334) 21,010 20,801 0.52023 08/01/23100% 58,438 (9,195) - 49,243 95.155% 46,856 23,428 (84) (2,334) 21,010 41,498 12023 02/01/24100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 135,413 1.52024 08/01/24100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 228,861 22024 02/01/25100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 321,844 2.52025 08/01/25100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 414,364 32025 02/01/26100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 506,424 3.52026 08/01/26100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 598,025 42026 02/01/27100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 689,171 4.52027 08/01/27100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 779,864 52027 02/01/28100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 870,105 5.52028 08/01/28100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 959,898 62028 02/01/29100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 1,049,244 6.52029 08/01/29100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 1,138,145 72029 02/01/30100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 1,226,604 7.52030 08/01/30100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 1,314,623 82030 02/01/31100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 1,402,203 8.52031 08/01/31100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 1,489,349 92031 02/01/32100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 1,576,060 9.52032 08/01/32100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 1,662,341 102032 02/01/33100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 1,748,192 10.52033 08/01/33100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 1,833,615 112033 02/01/34100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 1,918,614 11.52034 08/01/34100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 2,003,190 122034 02/01/35100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 2,087,345 12.52035 08/01/35100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 2,171,082 132035 02/01/36100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 2,254,402 13.52036 08/01/36100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 2,337,307 142036 02/01/37100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 2,419,800 14.52037 08/01/37100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 2,501,883 152037 02/01/38100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 2,583,557 15.52038 08/01/38100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 2,664,825 162038 02/01/39100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 2,745,688 16.52039 08/01/39100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 2,826,149 172039 02/01/40100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 2,906,210 17.52040 08/01/40100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 2,985,873 182040 02/01/41100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 3,065,139 18.52041 08/01/41100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 3,144,011 192041 02/01/42100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 3,222,490 19.52042 08/01/42100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 3,300,579 202042 02/01/43100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 3,378,280 20.52043 08/01/43100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 3,455,594 212043 02/01/44100% 233,750 (9,195) - 224,555 95.155%213,674 106,837 (385) (10,645) 95,807 3,532,523 21.52044 08/01/44100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 3,609,070 222044 02/01/45100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 3,685,236 22.52045 08/01/45100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 3,761,022 232045 02/01/46100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 3,836,432 23.52046 08/01/46100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 3,911,467 242046 02/01/47100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 3,986,128 24.52047 08/01/47100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 4,060,418 252047 02/01/48100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 4,134,338 25.52048 08/01/48100% 233,750 (9,195) - 224,555 95.155% 213,674 106,837 (385) (10,645) 95,807 4,207,891 262048 02/01/49 Total5,388,715 (19,399) (536,932) 4,832,384 Present Value From 08/01/2022 Present Value Rate 1.00%4,692,326 (16,892) (467,543) 4,207,891 Prepared by Ehlers & Associates, Inc. - Estimates OnlyN:\Minnsota\Chanhassen\Housing - Economic - Redevelopment\TIF\TIF Districts\TIF 12\Cash Flows\Chanhassen_TIF 12 Cashflow Model.xls City of Chanhassen Tax Increment Financing District No. 12 14 Appendix C: Findings Including But/For Qualifications The reasons and facts supporting the findings for the adoption of the Tax Increment Financing 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 110-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 feasible 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 or redevelopment of the Downtown Chanhassen Redevelopment Project Area by private enterprise. City of Chanhassen Tax Increment Financing District No. 12 15 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.