HomeMy WebLinkAbout5M - Tax Increment Financing Agreement for District 3-1
MEETING DATE:
AGENDA #:
PREPARED BY:
AGENDA ITEM:
DISCUSSION:
4646 Dakota Street S.E.
Prior Lake, MN 55372-1714
CITY COUNCIL AGENDA REPORT
December 7, 2009 .~
~~nk Boyles, City Manage~
CONSIDER APPROVAL OF A RESOLUTION AUTHORIZING THE MAYOR
AND CITY MANAGER TO EXECUTE AN AGREEMENT AUTHORIZING
REASSIGNMENT OF THE TIF AGREEMENT FOR DISTRICT 1-3
(LAKEFRONT PLAZA)
Introduction
The purpose of this agenda item is to request City Council approval of the
reassignment of Tax Increment Financing (TIF) for District 1-3.
Historv
On December 17,2001, the Prior Lake City Council approved a Tax Increment
Financing Plan for the establishment of Tax Increment Financing District1-3.
The developer at the time, Wensmann Homes, purchased three properties and
removed two houses and resolved soil contamination to render the site
developable. He then constructed a three-story mixed-use building which
included market rate owner occupied senior housing on the top two floors and
numerous commercial sites on the first floor. Also included were underground
and surface level parking lots. This mixed use building was the first of its sort in
the town center and the City Council, pursuant to Minnesota Statutes governing
tax increment financing, approved a 20-year redevelopment district which over its
lifetime would generate sufficient tax increment to support the obligations for the
tax increment revenue note ($945,000) with Wensmann Homes and the debt
service associated with the $400,000 bond issued by the City to finance
infrastructure improvements downtown. Since the original approval of this tax
increment project, the City has annually submitted to the building owner,
Wensmann Homes, 75% of the tax increment received pursuant to the
agreement.
Current Circumstances
Prior Lake State Bank carries the mortgage on the property. Accordingly, Bob
Facente representing Prior Lake State Bank, and Herb Wensmann have
requested that the tax increment note be assigned to Prior Lake State Bank.
According to Facente, the building would continue to be owned by Wensmann.
The reassignment only changes the party to whom the increments are remitted.
In accordance with the tax increment documents, the City Council must approve
any requests for reassignment. Accordingly, Danette Parr has worked with Mr.
Facente and Rebecca Kurtz at Ehlers and Associates to complete this action.
Mr. Facente prepared the documentation and Ms. Kurtz reviewed and approved
the document. A copy of her email commenting upon her review of the
documents is attached.
www.cityofpriorlake.com
Phonei952A47.9S0.0 / Fax 952.447.4245
Conclusion
The City Council should determine if it wishes to assign the TIF note to Prior
Lake State Sank as requested by Wensmann as building owners and the bank.
ISSUES:
Ms. Kurtz has concluded that the agreement prepared by Mr. Facente is very
typical when a bank requests reassignment. She also indicates that the bank is
considered a sophisticated investor, understanding the risks of tax increment
projects. She makes recommendations with respect to the filing of the
documents and advises that the terms of the original agreement do not change.
Finally, she advises that if the bank requests changes to the terms of the
agreement, that the City should have its attorney amend the development
agreement. Therefore, as written, the reassignment appears to be in order.
FINANCIAL
IMPACT:
Ehlers will bill the City $190 for the reassignment. I asked Mr. Facente if the
bank or Mr. Wensmann would reimburse the City for these costs and he said
they would.
ALTERNATIVES:
1. Approve the resolution of reassignment.
2. Take no action.
RECOMMENDED Alternative #1.
MOTION:
/~ PR~
!C,,~ 4646 Dakota Street S.E.
\U'W'" Prior Lake, MN 55372-1714
~ RESOLUTION 09-xxx
A RESOLUTION APPROVING ASSIGNMENT OF THE TAX INCREMENT NOTE FOR DISTRICT 1-3
TO PRIOR LAKE STATE BANK
Motion By:
Second By:
WHEREAS, On December 17,2001, the City of Prior Lake and Wensmann Homes, Inc. entered
into a Development Program for Development District 1 and a Tax Increment Financing
Plan for the Establishment of Tax Increment Financing District 1-3; and
WHEREAS, On September 3, 2002, the parties entered into a development agreement associated
with the Tax Increment Program and Plan; and
WHEREAS, The Development Agreement provides at Section 6.9 as follows: "Assianabilitvof
Aareement and Note. This agreement and the Note may be assigned only with the
prior written consent of the City."; and
WHEREAS, On November 18, 2009, Mr. Herbert H. Wensmann representing Wensmann Homes,
Inc. and Mr. Robert J. Facente, Jr. representing Prior Lake State Bank requested
assignment of the Note for District 1-3 from Wensmann Homes, Inc. to Prior Lake
State Bank; and
WHEREAS, Documents effectuating the assignment were submitted and reviewed by Ehlers and
Associates and deemed acceptable to effectuate the request.
NOW THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE,
MINNESOTA as follows:
1. The recitals set forth above are incorporated herein.
2. The Mayor and City Manager are authorized to execute documents to effectuate the transfer.
3. Costs incurred by the City in conjunction with this transaction will be reimbursed by the requesting
parties.
PASSED AND ADOPTED THIS ih DAY OF DECEMBER 2009.
YES
NO
I Hau9...en
I Erickson
I Hedberg
leMair
Millar
Haugen
Erickson
Hedberg
leMair
Millar
Frank Boyles, City Manager
www.cityofpriorlake.com
Phone 952.447.9800 / Fax 952.447.4245
Page 1 of2
Frank Boyles
From: Rebecca Kurtz [rkurtz@ehlers-inc.com]
Sent: Tuesday, December 01, 20091:31 PM
To: Danette Parr
Cc: Frank Boyles; Jerilyn Erickson; Jonathan North
Subject: FW: TIF Reassignment
As a follow-up to my discussion with Jerilyn, Ehlers has reviewed the Commercial Security Agreement from Prior
Lake State Bank for the reassignment of the TIF 1-3 Note, and we are comfortable with the language and
reassignment of the Note to the Bank.
The Agreement is very typical and a standard document that we see when a bank is being assigned the TIF
revenue. As part of our recommendation for moving forward with the reassignment, we have assumed that the
Bank is a sophisticated investor and has reviewed and understands the Terms of the Agreement for TIF 1-3,
including that the Note is NOT a general obligation of the City, and semi-annual payments are dependant on the
annual market value, tax rates and payment of taxes for the parcels included in the District. We would
recommend that the Security Agreement and the request be filed together to provide documentation of the details
in the future. (The Commercial Security Agreement does not layout the details for the parcels included in the
assignment.)
From the documents provided, the Terms of the original agreement will not change, and semi-annual payments
will be directed to the Bank beginning February 1, 2010, assuming approval by the Council. If the Bank requests
any changes in the Terms of the Agreement, we would recommend that the Development Agreement be
amended, and we would recommend that those changes be drafted by the City's legal counsel.
We will be forwarding an invoice to the City for $190 for the review of the documents, and as was indicated in the
e-mail from Danette, we recommend that the fee be passed on to the developer.
Please let us know if you have questions.
Rebecca
:~..~~)
~ ~ PRI..OR LAKE
YiJF STATE BANK
Main office: 16677 Duluth Ave SE P.O. Box 369 Prior lake, MN 55372
Branch office: 14033 Commerce Ave. NE Prior lake. MN 55372
McKenna office: 13810 Shepherd's Path Prior lake. MN 55379
Phone: 952-447-2101 24 Hour TeleBank: 952-447-BANK (2265)
www.priorlakestatebank.com
November 18, 2009
City of Prior Lake
16200 Eagle Creek Road
Prior Lake, MN 55372
To Whom It May Concern:
This letter is to inform you that Prior Lake State Bank has an assignment ofTIF Note 1-3
on Parcel Numbers 25-001062-0, 25-001063-0, 25-001066-0, 25-001067-0, 25-001068-0,
25-0011069-0, 25-001070-0 dated December 17, 2001.
See Attached Exhibit A.
By signing this letter you are acknowledging receipt and assignment of the attached TIF
Notes.
Future payments should be mailed to:
Prior Lake State Bank
Attn: Robert J. Facente Jr.
16677 Duluth Ave SE
Prior Lake, MN 55372
r~~~
Herbert H. Wensmann
President
Wensmann Homes, Inc.
~
Acknowledgement from
City of Prior Lake, Minnesota
Jack Haugen, Mayor
Frank Boyles, City Manager
Date
DEBTOR NAME AND ADDRESS
WENS MANN HOMES, INC.
1895 PLAZA DRIVE, SUITE ZOO
EAGAN, MN 55122
SECURED PARTY NAME AND ADDRESS
PRIOR LAKE STATE BANK
PO BOX 369
16677 DULUTH AVENUE SE
PRIOR LAKE, MN 55372
Type: 0 individual 0 partnership 00 corporation 0
State of organization/registration (if applicable) .MN
o If checked, refer to addendum for additional Debtors and signatures.
COMMERCIAL SECURITY AGREEMENT
The date of this Commercial Security Agreement (Agreement) is l.l:.l.JL,nnQ
SECURED DEBTS. This Agreement will secure all sums advanced by Secured Party under the terms of this Agreement and the payment and
performance of the following described Secured Debts that (check one) 0 Debtor 00 HFRRFRT H WFNSMANN
(Borrower) owes to Secured Party:
o Specific Debts. The following debts and all extensions. renewals, refinancings, modifications, and replacements (describe):
00 All Debts. All present and future debts, even if this Agreement is not referenced, the debts are also secured by other collateral, or the future
debt is unrelated to or of a different type than the current debt. Nothing in this Agreement is a commitment to make future loans or advances.
SECURITY INTEREST. To secure the payment and performance of the Secured Debts, Debtor gives Secured Party a security interest in all of the
Property described in this Agreement that Debtor owns or has sufficient rights in which to transfer an interest, now or in the future, wherever the
Property is or will be located, and all proceeds and products of the r,u,,~"J. "Property" includes all parts, accessories, repairs, replacements,
improvements, and accessions to the Property; any original evidence of title or ownership; and all obligations that support the payment or
performance of the Property. "Proceeds" includes anything acquired upon the sale, lease, license, exchange, or other disposition of the Property;
any rights and claims arising from the Property; and any collections and distributions on account of the Property. This Agreement remains in effect
until terminated in writing,' even if the Secured Debts are paid and Secured Party is no longer obligated to advance funds to Debtor or Borrower.
PROPERTY DESCRIPTION., The P,u,,~"J is described as follows:
o Accounts and Other Rights to Payment: All rights to payment, whether or not earned by performance. including, but not limited to, payment
for property or services sold, leased, rented, licensed, or assigned. This includes any rights and interests (including all liens) which Debtor
may have by law or agreement against any account debtor or obligor of Debtor.
o Inventory: All invent~ry held for ultimate sale or lease, or which has been or will be supplied under contracts of service, or which are raw
materials, work in process. or materials used or consumed in Debtor's business.
o Equipment: All equip!llent including, but not limited to, machinery, vehicles, furniture, fixtures, manufacturing equipment, farm machinery
and equipment, shop equipment, office and record keeping equipment, parts, and tools. The Property includes any equipment described in a
list or schedule Debtor gives to Secured Party, but such a list is not necessary to create a valid security interest in all of Debtor's equipment.
o Instruments and Chattel Paper: All instruments, including negotiable instruments and promissory notes and any other writings or records
that evidence the right to payment of a monetary obligation, and tangible and electronic chattel paper.
o General Intangibles: All general intangibles including, but not limited to, lax refunds, patents and applications for patents, copyrights,
trademarks, trade secrets, goodwill, trade names, customer lists, permits and franchises, payment intangibles, computer programs and all
supporting information provided in connection with a transaction relating to computer programs, and the right to use Debtor's name.
o Documents: All documents of title including, but not limited to, bills of lading, dock warrants and receipts, and warehouse receipts.
o Farm Products and Supplies: All farm products including, but not limited to, all poultry and livestock and their young, along with their
produce, products, and replacements; all crops, annual or perennial, and all products of the crops; and all feed, seed, fertilizer, medicines, and
other supplies used or produced in Debtor's farming operations.
o Government Payments and Programs: All payments, accounts, general intangibles, and benefits including, but not limited to, payments in
kind, deficiency payments, letters of entitlement. warehouse receipts, storage payments, emergency assistance and diversion payments,
production flexibility contracts, and conservation reserve payments under any preexisting, current, or future federal or state government program.
o Investment Property: All investment property including, but not limited to, certificated securities, uncertificated securities, securities
entitlements, securities accounts, commodity contracts, commodity accounts, and financial assets.
o Deposit Accounts: All, deposit accounts including, but not limited to, demand, time, savings, passbook, and similar accounts.
IX] Specific Property Description: The Property includes, but is not limited by, the following (if required, provide real estate description):
ASSIGNMENT OF TIF NOTE 11.3 DATED DECEMBER 17,2001 FOR THE CITY OF PRIOR LAKE, TO WENS MANN HOMES, INC. SEE ATTACHED EXHIBIT A.
USE OF PROPERTY. The PrQperty will be used for 0 personal 00 business 0 agricultural 0
purposes.
SIGNATURES. Debtor agrees to the terms on pages I and 2 of this Agreement and acknowledges receipt of a copy of this Agreement.
DEBTOR
WENSMANN HO~ I
~~. ~,.e./ ~2--,_____ ------e--.-
HERBERT H. WENSMANN
PRESIDENT
~M @20aO Bankers Systems, Inc., St. Cloud, MN Form SA-BUS 7/2412001
(page 1 of 21
GENERAL PROVISIONS. Each Debtor's obligations under this
Agreement are independent of the obligations of any other Debtor.
Secured Party may sue each Debtor individually or together with any
other Debtor. Secured Party may release any part of the Property and
Debtor will remain obligated ullder this Agreement. The duties and
benefits of this Agreement will bind the successors and assigns of Debtor
and Secured Party. No modification of this Agreement is effective unless
made in writing and signed by Debtor and Secured Party. Whenever used,
the plural includes the singular and the singular includes the plural. Time
is of the essence.
APPLICABLE LAW. This Agreement is governed by the laws of the
state in which Secured Party is located. In the event of a dispute, the
exclusive forum, venue, and place of jurisdiction will be the state in which
Secured Party is located, unless otherwise required by law. If any
provision of this Agreemeni is unenforceable by law, the unenforceable
provision will be severed and the remaining provisions will still be
enforceable.
NAME AND LOCATION. Debtor's name indicated on page 1 is
Debtor's exact legal name. If Debtor is an individual, Debtor's address is
Debtor's principal residence. If Debtor is not an individual, Debtor's
address is the location of Debtor's chief executive offices or sole place of
business. If Debtor is an entity organized and registered under state law.
Debtor has provided Debtor's state of registration on page I. Debtor will
provide verification of registration and location upon Secured Party's
request. Debtor will provide Secured Party with at least 30 days notice
prior to any change in Debtor's name, address, or state of organization or
registration.
WARRANTIES AND REPRESENTATIONS. Debtor has the right,
authority, and power to enter into this Agreement. The execution and
delivery of this Agreement will not violate any agreement governing
Debtor or Debtor's property, or to which Debtor is a party. Debtor makes
the following warranties and representations which continue as long as
this Agreement is in effect:
(I) Debtor is duly organized and validly existing in all jurisdictions in
which Debtor does business;
(2) the execution and performance of the terms of this Agreement have
been duly authorized. have received all necessary governmental
approval, and will not violate any provision of law or order;
(3) other than previously disclosed to Secured Party, Debtor has not
changed Debtor's name or principal place of business within the last
10 years and has not used any other trade or fictitious name; and
(4) Debtor does not and will not use any other name without Secured
Party's prior written consent.
Debtor owns all of the Property, and Secured Party's claim to the
Property is ahead of the claims of any other creditor, except as otherwise
agreed and disclosed to Secured Party prior to any advance on the
Secured Debts. The Property has not been used for any purpose that
would violate any laws or subject the Property to forfeiture or seizure.
DUTIES TOWARD PROPERTY. Debtor will protect the Property and
Secured Party's interest against any competing claim. Except as otherwise
agreed, Debtor will keep the Property in - Debtor's possession at the
address indicated on page 1 of this Agreement. Debtor will keep the
Property in good repair and use the Property only for purposes specified
on page I. Debtor will not use the Property in violation of any law and
will pay all taxes and assessments levied or assessed against the Property.
Secured Party has the right of reasonable access to inspect the Property,
inclUding the right to require Debtor to assemble and make the Property
available to Secured Party. Debtor will immediately notify Secured Party
of any loss or damage to the Property. Debtor will prepare and keep
books, records, and accounts about the Property and Debtor's business, to
which Debtor will allow Secured Party reasonable access.
Debtor will not sell, offer to sell, license, lease, or otherwise transfer or
encumber the Property without Secured Party's prior written consent. Any
disposition of the Property will violate Secured Party's rights, unless the
Property is inventory sold in the ordinary course of business at fair
market value. If the Property includes chattel paper or instruments, either
as original collateral or as proceeds of the Property. Debtor will record
Secured Party's interest on the face of the chattel paper or instruments.
If the Property includes accounts, Debtor will not settle any account for
less than the full value, dispose of the accounts by assignment, or make
any material change in the terms of any account without Secured Party's
prior written consent. Debtor will collect all accounts in the ordinary
course of business, unless otherwise required by Secured Party. Debtor
will keep the proceeds of the accounts, and any goods returned to Debtor,
in trust for Secured Party and will not commingle the proceeds or
returned goods with any of Debtor's other property. Secured Party has the
right to require Debtor to pay Secured Party the full price on any returned
items. Secured Party may require account debtors to make payments
under the accounts directly to Secured Party. Debtor will deliver the
accounts to Secured Party at Secured Party's request. Debtor will give
Secured Party all statements, reports, certificates, lists of account debtors
(showing names, addresses, and amounts owing), invoices applicable to
each account, and any other data pertaining to the accounts as Secured
Party requests.
If the Property includes farm products, Debtor will provide Secured Party
with a list of the buyers, commission merchants, and selling agents to or
through whom Debtor may sell the farm products. Debtor authorizes
Secured Party to notify any additional parties regarding Secured Party's
interest in Debtor's farm products. unless prohibited by law. Debtor
agrees to plant, cultivate, and harvest crops in due season. Debtor will be
in default if any loan proceeds are used for a purpose that will contribute
to excessive erosion of highly erodible land or to the conversion of
wetland to produce or to make possible the production of an agricultural
commodity, further explained in 7 CFR Part 1940. Subpart G, Exhibit M.
If Debtor pledges the Property to Secured Party (delivers the Property into
the possession or control of Secured Party or a designated third party),
Debtor will, upon receipt, deliver any proceeds and products of the
Property to Secured Party. Debtor will provide Secured Party with any
notices, documents, financial statements, reports, and other information
relating to the Property Debtor receives as the owner of the Property.
PERFECTION OF SECURITY INTEREST. Debtor authorizes Secured
Party to file a financing statement covering the Property. Debtor will
comply with, facilitate, and otherwise assist Secured Party in connection
with obtaining possession or control over the Property for purposes of
perfecting Secured Party's interest under the Uniform Commercial Code.
~ @2000 Bankers Systems, Inc.. St. Cloud, MN Form SA-BUS 7/24/2001
INSURANCE. Debtor agrees to keep the Property insured again;t the
risks reasonably associated with the Property until the Property is released
from this Agreement. Debtor will maintain this insurance in the amounts
Secured Party requires. Debtor may choose the insurance company,
subject to Secured Party's approval, which will not be unreasonably
withheld. Debtor will have the insurance provider name Secured Party as
loss payee on the insurance policy. Debtor will give Secured Party and
the insurance provider immediate notice of any loss. Secured Party may
apply the insurance proceeds toward the Secured Debts. Secured Party
may require additional security as a condition of permitting any insurance
proceeds to be used to repair or replace the Property. If Secured Party
acquires the Property in damaged condition, Debtor's rights to any
insurance policies and proceeds will pass to Secured Party to the extent of
the Secured Debts. Debtor will immediately notify Secured Party of the
cancellation or termination of insurance., If Debtor fails to keep the
Property insured, or fails to provide Secured Party with proof of
insurance, Secured Party may obtain insurance to protect Secured Party's
interest in the Property. The insurance may include coverages not
originally required of Debtor, may be written by a company other than
one Debtor would choose, and may be written at a higher rate than
Debtor could obtain if Debtor purchased the insurance.
AUTHORITY TO PERFORM. Debtor authorizes Secured Party to do
anything Secured Party deems reasonably necessary to protect the
Property and Secured Party's interest in t1\e Property. If Debtor fails to
perform any of Debtor's duties under this: Agreement, Secured Party is
authorized. without notice to Debtor, to perform the duties or cause them
to be performed. These authorizations include, but are not limited to,
permission to pay for the repair, maintenance, and preservation of the
Property and take any action to realize the value of the Property. Secured
Party's authority to perform for Debtor does not create an Obligation to
perform, and Secured Party's failure to perform will not preclude Secured
Party from exercising any other rights under the law or this Agreement.
If Secured Party performs for Debtor, Secured Party will use reasonable
care. Reasonable care will not include any steps necessary to preserve
rights against prior parties or any duty to take action in connection with
the management of the Property.
If Secured Party comes into possession of the Property, Secured Party will
preserve and protect the Property to the extent required by law. Secured
Party's duty of care with respect to the Property will be satisfied if
Secured Party exercises reasonable care in the safekeeping of the Property
or in the selection of a third party in possession of the Property.
Secured Party may enforce the obligations I of an account debtor or other
person obligated on the Property. Secured Party may exercise Debtor's
rights with respect to the account debtor's or other person's obligations to
make payment or otherwise render perforinance to Debtor, and enforce
any security interest that secures such obligations.
PURCHASE MONEY SECURITY INTEREST. If the Property
includes items purchased with the Secured 'Debts, the Property purchased
with the Secured Debts will remain subject to Secured Party's security
interest until the Secured Debts are paid in full. Payments on any
non-purchase money loan also secured by this Agreement will not be
applied to the purchase money loan. Payments on the purchase money
loan will be applied first to the non-purchase money portion of the loan, if
any, and then to the purchase money portion in the order in which the
purchase money Property was acquired. If the purchase money Property
was acquired at the same time, payments will be applied in the order
Secured Party selects. No security interest will be terminated by
application of this formula.
DEFAULT. Debtor will be in default if:
(I) Debtor (or Borrower, if not the same) fails to make a payment in full
when due;
(2) Debtor fails to perform any condition or keep any covenant on this or
any debt or agreement Debtor has with Secured Party;
(3) a default occurs under the terms of I any instrument or agreement
evidencing or pertaining to the Secured Debts;
(4) anything else happens that either causes Secured Party to reasonably
believe that Secured Party will have difficulty in collecting the
Secured Debts or significantly impairs the value of the Property.
REMEDIES. After Debtor defaults, and after Secured Party gives any
legally required notice and opportunity to cure the default, Secured Party
may at Secured Party's option do anyone or more of the following:
(1) make all or any part of the Secured Debts immediately due and accrue
interest at the highest post-maturity interest rate;
(2) require Debtor to gather the Property and make it available to Secured
Party in a reasonable fashion;
(3) enter upon Debtor's premises and take possession of all or any part of
Debtor's property for purposes of preserving the Property or its value
and use and operate Debtor's property to protect Secured Party's
interest, all without payment or compensation to Debtor;
(4) use any remedy allowed by state or federal law, or provided in any
agreement evidencing or pertaining to the Secured Debts.
If Secured Party repossesses the Property or enforces the obligations of an
account debtor, Secured Party may keep or dispose of the Property as
provided by law. Secured Party will apply the proceeds of any collection
or disposition first to Secured Party's expenses of enforcement, which
includes reasonable attorneys' fees and legal expenses to the extent not
prohibited by law, and then to the Secured Debts. Debtor (or Borrower, if
not the same) will be liable for the deficiency, if any.
By choosing anyone or more of these remedies, Secured Party does not
give up the right to use any other remedy. Secured Party does not waive a
default by not using a remedy.
WAIVER. Debtor waives all claims for damages caused by Secured
Party's acts or omissions where Secured Party acts in good faith.
NOTICE AND ADDITIONAL DOCUMENTS. Where notice is
required, Debtor agrees that 10 days' prior written notice will be
reasonable notice to Debtor under the Uniform Commercial Code. Notice
to one party is notice to all parties. Debtor agrees to sign, deliver,. and file
any additional documents and certifications Secured Party considers
necessary to perfect, continue. or preserve Debtor's obligations under this
Agreement and to confum Secured Party's lien status on the Property.
(page 2 of 2J
Final Copy for Certification ~
~..- ... ',- -- '". . .oo"" _'. . '.' . " '.' -: .
t~.~-~-~~~f'~:t.~~~~~~~~~..l' '
EXHIBIT A
MODIFICATION TO THE DEVELOPMENT PROGRAM
FOR DEVELOPMENT DISTRICT NO.1
and the
TAX INCREMENT FINANCING PLAN
FOR THE ESTABLISHMENT OF
TAX INCREMENT FINANCING DISTRICT NO. 1-3
(a redevelopment district)
CITY OF PRl OR LAKE
SCOTT COUNTY
STATE OF MINNESOTA
Public Hearing: June 4, 200]
Adopted: December ]7,200]
e
EHLERS
& ASSOCIATES INC
Prepared by: EHLERS & ASSOCIATES, INC.
3060 Centre Pointe Drive, Roseville, Minnesota 55113-1105
(651) 697-8500 fax: (651) 697-8555 www.ehlers-inc.com
TABLE OF CONTENTS
(for reference purposes only)
SECTION I
MODIFICATION TO THE DEVELOPMENT PROGRAM FOR
DEVELOPMENT DISTRICT NO.1. . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . .. . . . .. 1-1
SECTION II
TAX INCREMENT FINANCING PLAN FOR
TAX INCREMENT FINANCING DISTRICT NO. 1-3 ..... ........ .... .. ....... 2-1
Subsection 2-1. Foreword.............................................. 2-1
Subsection 2-2. Statutory Authority ....................................... 2-1
Subsection 2-3. Statement of Objectives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1
Subsection 2-4. Development Program Overview ............................ 2-2
Subsection 2-5. Description of Property in the District ........................ 2-2
Subsection 2-6. Property for Acquisition ................................... 2-2
Subsection 2-7. Classification of the District ................................ 2-3
Subsection 2-8. Duration of the District .................................... 2-5
Subsection 2-9. Original Tax Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2-5
Subsection 2-10. Original Tax Rate ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-5
Subsection 2-11. Estimated Tax Increment .................................. 2-5
Subsection 2-12. Notification of Prior Planned Improvements .................... 2-6
Subsection 2-13. Use of Tax Increment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-6
Subsection 2-14. Sources of Revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2-7
Subsection 2-15. Bonded Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-8
Subsection 2-16. Uses of Funds .......................................... 2-8
Subsection 2-17. Local Contribution (State Tax Increment Financing Aid) . . . . . . . . . .. 2-8
Subsection 2-18. Fiscal Disparities Election. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-9
Subsection 2-19. Business Subsidies ...................................... 2-9
Subsection 2-20. County Road Costs ...................................... 2-9
Subsection 2-21. Estimated Impact on Other Taxing Jurisdictions. . . . . . . . . . . . . . .. 2-10
Subsection 2-22. Modifications .......................................... 2-10
Subsection 2-23. Time Factors .......................................... 2-11
Subsection 2-24. Administration of the District. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-12
Subsection 2-25. Administrative Expenses ................................. 2-12
Subsection 2-26. Requirements for Agreements with the Developer. . . . . . . . . . . . .. 2-13
Subsection 2-27. Assessment Agreements ......... . . . . . . . . . . . . . . . . . . . . . . . . 2-13
Subsection 2-28. Annual Disclosure Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . 2-13
Subsection 2-29. Reasonable Expectations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2-13
Subsection 2-30. Summary ............................................. 2-14
APPENDIX A - PROJECT DESCRIPTION ...................................... A-1
APPENDIX B - DESCRIPTION OF PROPERTY TO BE INCLUDED IN THE DISTRICT '" B-1
APPENDIX C - ESTIMATED CASH FLOW FOR THE DISTRICT... ....... .... . ..... . C-1
APPENDIX D - REDEVELOPMENT QUALIFICATIONS FOR THE DISTRICT... . . ... ... D-1
APPENDIX E - BUT FOR QUALIFICATIONS FOR THE DISTRICT . . . . . . . . . . . . . . . . . . . E-1
SECTION I
MODIFICA T10N TO THE DEVELOPMENT PROGRAM FOR DEVELOPMENT DISTRICT NO.1
Foreword
The creation of Tax Increment Financing District No. 1-3 represents a Modification to the Development
Program for Development District No.1. This modification represents a continuation of the goals and
objectives set forth in the Development Program for Development District No.1. In addition, the City
proposes to expand the boundaries of the Development District as indicated in the map below.
For further infonnation, a review of the complete Development Program for Development District No.1 is
recommended. It is available from the City of Prior Lake. Other relevant infonnation is contained in the
Tax Increment Financing Plans for the Tax Increment Financing Districts located within Development
District No. I.
City of Prior Lake
Municipal Development District NO.1
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City of Prior Lake
Modification to the Development Program for Development District No. I
I-I
SECTION /I
TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO. 1-3
Subsection 2-1. Foreword
The City of Prior Lake (the "City"), City staff, and consultants have prepared the following infonnation to
expedite the establishment of Tax Increment Financing District No. 1-3 ("the District"), a redevelopment tax
increment financing district, located within Development District No. I.
Subsection 2-2. 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
("MS."), 469.124 through 469.134, inclusive, as amended, and MS., Sections 469.174 through 469.179,
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 Tax Increment Financing
District No. 1-3. Other relevant information is contained in the Modification to the Development Program
for Development District No. I.
Subsection 2-3. Statement of Objectives
The City has prepared a plan for the redevelopment property in and around the downtown area. The
Downtown Plan provides a framework for guiding public and private development decisions. The
development activities contemplated by the TIF Plan are consistent with the Downtown Plan.
The development proposed in the District would result in approximately 79 housing units intended for
occupancy by senior citizens and approximately 12,000 square feet of retail uses. The proposed development
helps to achieve several development objectives, including:
Bringing permanent residents to the Downtown area witb the potential to support existing and future
businesses.
Redeveloping substandard and underutilized properties.
Providing a catalyst for additional private investment in the Downtown area.
Providing a catalyst for public improvements identified in the Downtown Plan.
Increasing housing opportunities in the City.
The District is being created to facilitate the redevelopment of property in the downtown area with a mix of
senior housing and ~etail development (the Lakefront Plaza Project) in the City of Prior Lake. Contracts for
this have not been entered into at the time of preparation ofthis Plan, but the date when development is likely
to occur is in the Spring of2002 This Plan is expected to achieve many of the objectives outlined in the
Development Program for Development District No. I.
The activities contemplated in the Modification to the Development Program and the Plan do not preclude
the undertaking of other qualified development or redevelopment activities. These activities are anticipated
to occur over the life of Development District No. I and the District.
City of Prior Lake
Tax Increment Financing Plan for Tax Increment Financing District No. 1-3
2-1
Subsection 2-4. Development Program Overview
Activities to be undertaken by the City to further the Development Program for Development District No.
I include, but are not limited to, the following:
I. Property to be Acquired - Selected property located within the District may be acquired by
the City and is further described in this Plan.
2. Relocation - Relocation services, to the extent required by law, are available pursuant to
MS., Chapter 117 and other relevant state and federal laws.
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 they 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 streets work within the District.
Subsection 2-5. Description of Property in the District
The property to be included in the District includes the following seven parcels and the adjacent rights-of
way, which prior to the establishment of the District will be combined into a single parcel. The proposed
development requires the reconfiguration of the property into a common site and single parcel. The TIF Plan
is based on this action. The parcels will be replatted and combined prior to the certification of the District.
Q."I COIL Parcel Numbers
25-001062-0 25-001068-0
25-001063-0 25-001069-0
25-001066-0 25-001070-0
25-001067 -0
Subsection 2-6. Property for Acquisition
City of Prior Lake
Municipal Development District NO.1
City of Prior Lake
Tax Increment Financing Plan for Tax Increment Financing District No. 1-3
2-2
The City may acquire any parcel within the Tax Increment Financing District and the Development 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: stonn sewer improvements; provide
land for needed public streets, utilities and facilities; 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 Plan. Such acquisitions will be undertaken only when there is assurance of funding to
finance the acquisition and related costs.
Subsection 2-7. Classification of the District
The City finds that the District meets the criteria for the establishment of the redevelopment district pursuant
to M.S., Section 469.174, Subd. 10. The statutory criteria for a redevelopment district are as follows:
(a) "Redevelopment district" means a type of tax incrementfinancingdistrict consisting of aproject,
or portions of a project, within which the authority finds by resolution that one or more of the
following conditions, reasonably distributed throughout the district, exists:
(1) parcels consisting of70 percent afthe area in the district are occupied by buildings, streets,
utilities, paved or gravel parking lots or similar structures and more than 50 percent of the
buildings, not including outbuildings, are structurally substandard to a degree requiring
substantial renovation or clearance; or
(2) The property consists of vacant, unused, underused, inappropriately used, or infrequently
used rail yards, rail storage facilities or excessive or vacated railroad rights-ol-way; or
(3) tank facilities, or property whose immediately previous use was for tank facilities, as
defined in Section lJ5C, Subd. 15, if the tankfacility:
have or had a capacity of more than one million gallons;
are located adjacent to rail facilities; or
have been removed, or are unused, underused, inappropriately used or infrequently
used.
(b) For purposes of this subdivision, "structurally substandard" shall mean containing defects in
structural elements or a combination of deficiencies in essential utilities andfacilities, light and
ventilation,jire protection including adequate egress, layout and condition of interior partitions,
or similar factors, which defects or deficiencies are of sufficient total significance to justify
substantial renovation or clearance.
(c) A building is not structurally substandard ifit is in compliance with the building code applicable
to new buildings or could be modified to satisfy the building code at a cost of less than 15
percent of the cost of constructing a new structure of the same square footage and type on the
site. The municipality may find that a building is not disqualified as structurally substandard
under the preceding sentence on the basis of reasonably available evidence, such as the size,
type, and age of the building, the average cost of plumbing, electrical, or structural repairs or
other similar reliable evidence. The municipality may not make such a determination without
an interior inspection of the property, but need not have an independent, expert appraisal
prepared of the cost of repair and rehabilitation of the building. An interior inspection of the
property is not required, if the municipality finds that (1) the municipality or authority is unable
City of Prior Lake
Tax Increment Financing Plan for Tax Increment Financing District No. 1-3
2-3
to gain access to the property after using its best efforts to obtain permissionfrom the party that
owns or controls the property; and (2) the evidence otherwise supports a reasonable conclusion
that the building is structurally substandard..
(d) A parcel is deemed to be occupied by a structurally substandard buildingfor purposes of the
finding under paragraph (a) if all of the following conditions are met:
(I) the parcel was occupied by a substandard building within three years of the filing of the
request for certification of the parcel as part of the district with the county auditor;
(2) the substandard building was demolished or removed by the authority or the demolition or
removal was financed by the authority or was done by a developer under a development
agreement with the authority;
(3) the authority found by resolution before the demolition or removal that the parcel was
occupied by a structurally substandard building and that after demolition and clearance the
authority intended to include the parcel within a district; and
(4) upon filing the request for certification of the tax capacity of the parcel as part of a district,
the authority notifies the county auditor that the original tax capacity of the parcel must be
adjusted as provided by 9 469.177, subdivision I, paragraph (h).
(e) For purposes of this subdivision, a parcel is not occupied by buildings, streets, utilities, paved
or gravel parking lost or other similar structures unless 15 percent of the area of the parcel
contains buildings, streets, utilities, paved or gravel parking lost or other similar structures.
(f) For districts consisting of two or more noncontiguous areas, each area must qualify as a
redevelopment district under paragraph (a) to be included in the district, and the entire area of
the district must satisfy paragraph (a).
In meeting the statutory criteria the City relies on the following facts and findings:
The District consists of one parcel.
100% of the District area is occupied by buildings, streets, utilities, paved or gravel parking lots or other
similar structures within the statutory definition.
An inspection of the property shows that 16% of the area of the parcel is occupied by buildings, utilities
paved or gravel parking lost or other similar structures. These buildings, utilities paved or gravel parking
lots or other similar structures exceed the 15% minimum required by statute to determine that the parcel
is occupied.
Four buildings are located within the District. Two of these buildings are houses, and two of the
buildings are outbuildings. The City has undertaken inspections to determine that the buildings, not
including outbuilding, are structurally substandard to a degree requiring substantial renovation or
clearance pursuant to the statutory criteria.
A more complete explanation of the redevelopment findings are contained in Appendix D.
Pursuant to 469.176 Subd. 7, the District does not contain any parcel or part of a parcel that qualified under
the provisions of Section 273.111 or 273.112 of 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 Prior Lake
Tax Increment Financing Plan for Tax Increment Financing District No. 1-3
2-4
Subsection 2-8. Duration of the District
Pursuant to MS., Section 469.175, Subd 1, and Section 469.176, Subd. 1, the duration of the District must
be indicated within the Plan. Pursuant to MS., Section 469.176, Subd.lb, the duration of the District will
be 25 years after receipt of the first increment by the City (a total of26 years). The date of receipt by the
City of the first tax increment is expected to be 2004. Thus, it is estimated that the District, including any
modifications of the Plan for subsequent phases or other changes, would terminate after 2029, or when the
Plan is satisfied. If increment is received in 2003, the term of the District will be 2028. The City reserves
the right to decertify the District prior to the legally required date.
Subsection 2-9. Original Tax Capacity
PursuanttoMS., Section 469.174, Subd 7 andMS., Section 469.177, Subd 1, the Origina] Net Tax Capacity
(ONTe) as certified for the District will be based on the market values placed on the property by the assessor
in 2001 for estimated taxes payable 2002. The TIF Plan estimates the ONTC to be $3,984.
Pursuant to MS., Section 469.177, Subds. 1 and 2, the County Auditor shall certify in each year (beginning
in the payment year 2002) the amount by which the original value has increased or decreased as a result of:
I. 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 connection with previously issued building permits.
In any year in which the current Net Tax Capacity value of the District declines below the ONTC, no value
will be captured and no tax increment will be payable to the City.
Subsection 2-10.
Original Tax Rate
The amount of tax increment is calcu]ated by multiplying the total ]ocal tax rate (exc]uding market value
rates) by the Captured Tax Capacity v2a]ue of the District. If the current total ]ocal tax rate exceeds the
Original Tax Rate (OTR), the amount of tax increment produced by the tax rate above the OTR is distributed
to the taxing jurisdictions as excess tax increment.
The OTR for the District will be the local tax rate for estimated taxes payable 2002, assuming the request
for certification is made before June 30, 2002. The local tax rate for estimated taxes payable 2002 is
120.0000%
Subsection 2-11.
Estimated Tax Increment
The City estimates that the total tax capacity value of property within the District upon completion of the
proposed development will be $149,720. The amount of annual tax increment revenue is shown in the table
on the next page.
City of Prior Lake
Tax Increment Financing Plan for Tax Increment Financing District No. 1-3
2-5
Project Estimated Tax Capacity upon Completion (PTC)
Original Estimated Net Tax Capacity(ONTC)
Estimated Captured Tax Capacity (CTC)
Original Local Tax Rate (OTR)
Estimated Annual Tax Increment (CTC x Local Tax Rate)
Percent Retained by the City
$128,750
(3,984)
$124,766
120.0000% Pay 2002 est.
$149,720
100%
The City requests 100 percent of the available increase in tax capacity for repayment of its obI igations and
current expenditures, beginning in the tax year payable 2004.
The following factors will determine the actual amount of tax increment received by the City:
Actual market value of property within the District as determined by the Assessor.
Statutory rates for setting tax capacity values.
Actual total local tax rate.
The cash flow projections in Appendix C show the potential tax increment revenues collected by the City.
Subsection 2-12.
Notification of Prior Planned Improvements
Pursuant to MS, Section 469.177, Subd. 4, the City shall, after due and diligent search, accompany its
request for certification to the County Auditor or its notice of the District enlargement pursuant to MS,
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
Plan by the municipality pursuant to MS, 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 has reviewed the area to be included in the District and determined that no
building permits have been issued during the 18 months immediately preceding approval of the Plan
by the City.
Subsection 2-13.
Use of Tax Increment
Pursuant to M.S. Section 469.176, Subd. 4j, at least 90% of the revenues derived from tax increments from
the District must be used to finance the cost of correcting conditions that allow the redevelopment
designation. These costs include, but are not limited to, acquiring properties containing structurally
substandard buildings or improvements, or hazardous substances, pollution, or contaminants, acquiring
adjacent parcels necessary to provide a site of sufficient size to permit development, demolition and
rehabilitation of structures, clearing of the land, the removal of hazardous substances or remediation
necessary to development of the land, and installation of utilities, roads, sidewalks, and parking facilities for
the site. Within this limitation, the City hereby determines that it will use 100 percent of the captured net
tax capacity of taxable property located in the District for the following. purposes:
1. to pay the principal of and interest on bonds issued to finance a project;
2. to finance, or otherwise pay the public development costs of Development District No.1 pursuant
to the MS Sections 469.124 to 469.134;
3. to pay for project costs as identified in the budget set forth in the TIF Plan;
City of Prior Lake
Tax Increment Financing Plan for Ta... Increment Financing District No. 1-3
2-6
4. to finance, or otherwise pay for other purposes as provided in MS., Section 469.176, Subd. 4;
5. to pay principal and interest on any loans, advances or other payments made to or on behalf the City
or for the benefit of Development District No.1 by a developer;
6. to finance or otherwise pay premiums and other costs for insurance or other security guaranteeing
the payment when due of principal of and interest on bonds pursuant to the TIF Plan or pursuant to
MS., Chapter 462C. MS., Sections 469.152 through 469.165, and/or MS., Sections 469.178; and
7. to accumulate or maintain a reserve securing the payment when due of the principal and interest on
the tax increment bonds or bonds issued pursuant to MS., Chapter 462C, MS., Sections 469.152
through 469.165, and/or MS., Sections 469.178.
These revenues shall not be used to circumvent any levy limitations applicable to the City nor for other
purposes prohibited by MS., Section 469.176, subd. 4.
Tax increments generated in the District will be paid by Scott County to the City for the Tax Increment Fund
of said District. The City will pay to the developer(s) annually an amount not to exceed an amount as
specified in a developer's agreement to reimburse the costs of land acquisition, public improvements,
demolition and relocation, site preparation, and administration. Remaining increment funds will be used for
City administration (up to 10 percent) and the costs of public improvement activities.
Pursuant to MS., Section 469.1763, (1) At least 75% of the tax increment derived from the District must be
expended on Public Costs incurred within said district, and lip to 25% of said tax increments may be spent
on Public Costs incurred outside of the District but within Development District No. l; provided that in the
case of a housing district, a housing project, as defined in MS., Section 469.174, Subd. 11 is deemed to be
an activity in the District, and (2) public costs within the District shall be limited to reimbursement of public
costs paid before or within five years after certification of said district by the County Auditor and interest
on all such unreimbursed expenditures.
Subsection 2-14.
Sources of Revenue
The estimated sources of revenue for the District are contained in the table below.
SOURCES OF FUNDS
TOTAL
$3,000,000
$3,000,000
$110,000
$3,110,000
Tax Increment
PROJECT REVENUES
Interfund Loans/Transfers
TOTAL PROJECT AND FINANCING REVENUES
The costs outlined in the Uses of Funds will be financed primarily through the annual collection of tax
increments. The City reserves the right to use other sources of revenue legally applicable to the City and the
TIF Plan, including, but not limited to, special assessments, general property taxes, state aid for road
maintenance and construction, proceeds from the sale of land, other contributions from the developer and
investment income, to pay for the estimated public costs.
In addition to the actual tax increment collected by the City, the TIF Act (MS. Section 469.174, Subd. 25)
places restrictions on the use of revenues derived from the following sources:
· the proceeds from the sale or lease of property, tangible or intangible, purchased by the City with tax
increments;
· repayments of loans or other advances made by the City with tax increments; and
City of Prior Lake
Tax Increment Financing Plan for Tax Increment Financing District No. )-3
2-7
· interest or other investment earnings on or from tax increments.
Subsection 2-15.
Bonded Indebtedness
It is anticipated that the City will use a pay-as-you-go note to reimburse the Developer for eligible expenses
and interest on the unpaid balance. The City may use an interfund loan or a transfer of funds to pay for
public costs. Tax increment revenues may be used to repay an interfund loan or transfer.
The City reserves the right to incur bonded indebtedness or other indebtedness as a result of the TIF Plan.
The City may issue bonds to finance public improvements or other eligible costs of the TIF Plan. The
amount of the bonded indebtedness may not exceed $1,000,000 without a modification to the TIF Plan
pursuant to applicable statutory requirements. 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.
Subsection 2-16.
Uses of Funds
Currently under consideration for the District is a proposal to facilitate construction of senior housing. The
City has determined that it will be necessary to provide financial assistance to the project. To facilitate the
proposed development, 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 OF FUNDS
TOTAL
Site Improvements/Preparation
Streets and Sidewalks
Other Public Improvements
Interest on Pay-as-you-go Note
Administrative Costs (up to 10%)
$950,000
565,000
100,000
1,315,000
70,000
PROJECT COSTS TOTAL
$3,000,000
Interfund Loans/Transfers
TOTAL FINANCING AND PROJECT COSTS
$110,000
$3,000,000
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 the
. Total Project Costs in the table above without formal modification of this Plan pursuant to the applicable
statutory requirements.
Subsection 2-17.
Local Contribution (State Tax Increment Financing Aid)
The 2001 Legislature eliminated the provisions for a reduction in state tax increment financing aid
(RlSTIF A) or the alternative qualifying local contribution. Ifrequired by future legislation, it is the City's
intention to consider taking the steps necessary to preserve state-paid local government aid.
City of Prior Lake
Tax Increment Financing Plan for Tax Increment Financing District No. 1-3
2-8
Subsection 2-18.
Fiscal Disparities Election
Pursuant to MS., Section 469.177, Subd. 3, the City may elect one of two methods to calculate fiscal
disparities. If the calculations pursuant to MS., Section 469.177, Subd. 3, clause a, (outside the District) are
followed, the following method of computation shall apply:
(1) The original net tax capacity and the current net tax capacity shall be determined before the
application of the fiscal disparity provisions of Chapter 276A or 473F Where the original net
tax capacity is equal to or greater than the current net tax capacity, there is no captured net tax
capacity and no tax increment determination. Where the original net tax capacity is less than
the current net tax capacity, the difference between the original net tax capacity and the current
net tax capacity is the captured net tax capacity. This amount less any portion thereof which
the authority has designated, in its tax incrementfinancingplan, to share with the local taxing
districts is the retained captured net tax capacity of the authority.
(2) The county auditor shall exclude the retained captured net tax capacity of the authority from the
net tax capacity of the local taxing districts in determining local taxing district tax rates. The
local tax rates so determined are to be extended against the retained captured net tax capacity
of the authority as well as the net tax capacity of the local taxing districts. The tax generaied
by the extension of the lesser of (A) the local taxing district tax rates or (B) the original local
tax rate to the retained captured net tax capacity of the authority is the tax increment of the
authority.
The City shall submit to the County Auditor at the time of the request for certification which method of
computation of fiscal disparities the City elected.
The City will choose to calculate fiscal disparities by clause a.
According to MS., Section 469.177, Subd. 3:
(c) The method of computation of tax increment applied to a district pursuant to paragraph (a) or
(b) shall remain the same for the duration of the district, except that the governing body may
elect to change its election from the method of computation in paragraph (a) to the method in
paragraph (b).
Subsection 2-19.
Business Subsidies
Pursuant to MS. Statutes 116J.993, Subdivision 3, assistance for housing is not considered a business
subsidy. The assistance to the developer will be structured in a manner to be targeted solely at the housing
or to qualify for other exemptions from a business subsidy.
Subsection 2-20.
County Road Costs
Pursuant to MS., Section 469.175, Subd. la, the county board may require the City to pay for all or part of
the cost of county road improvements if the proposed development to be assisted by tax increment will, in
the judgement of the county, substantially increase the use of county roads requiring construction of road
improvements or other road costs and if the road improvements are not scheduled within the next five years
under a capital improvement plan or within five years under another county plan.
In the opinion of the City and consultants, the proposed development outlined in this TIF Plan will have little
or no impact upon county roads. If the county elects to use increments to improve county roads, it must
notify the City within forty-five days of receipt of this TlF Plan.
City of Prior Lake
Tax Increment Financing Plan for Tax Increment Financing District No. 1-3
2-9
Subsection 2-21.
Estimated Impact on Other Taxing Jurisdictions
The estimated impact on other taxing jurisdictions assumes that the redevelopment contemplated by the TIF
Plan would occur without the creation of the District. However, the City has detennined 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:
IMPACT ON TAX BASE
2001/2002 est.
Total Net
Tax Canacitv
Estimated Captured
Tax Capacity (CTC)
Unon Comnletion
- -
Scott County
City of Prior Lake
Prior Lake ISD NO.7] 9
64,152,757
]0,930,]96
10,930,] 96
124,766
]24,766
]24,766
Percent of CTC
to Entitv Total
0.1945%
1.1415%
1.1415%
IMPACT ON TAX RATES
2001/2002 est. Percent Potential
Extension Rates of Total CTC Taxes
Scott County 0.40] 650 33.47% ]24,766 50,112
City of Prior Lake 0.397440 33.]2% ]24,766 49,587
Prior Lake ISO No. 719 0.3] 6620 26.39% ]24,766 39,503
Other 0.084290 7.02% 124.766 10.517
Total 1.200000 100.00% 149,719
The estimates listed on the previous page display the captured tax capacity when all construction is
completed. The tax rate and total net tax capacities used for calculations is for estimated taxes payable in
2002.
Subsection 2-22.
Modifications
The City reserves the right to make future modifications to the TIF Plan and District. In accordance with the
TIF Act (MS. Section 469.175, Subd. 4) the following modifications may be made only upon the notice and
after the discussion, public hearing and findings required for approval of the original TIF Plan:
1. reduction or enlargement of the geographic area of Development District No.1 or the District;
2. increase in amount of bonded indebtedness to be incurred, including a detennination to capitalize
interest on 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;
3. increase in the portion of the captured net tax capacity to be retained by the City;
4. increase in total estimated tax increment expenditures; or
5. designation of additional property to be acquired by the City,
City of Prior Lake
Tax Increment Financing Plan for Tax Increment Financing District No. 1-3
2-10
Subsection 2-23.
Time Factors
1. District Enlargement
Pursuant to MS Section 469.175 Subd. 4 (b), the geographic area of the District may be reduced, but
shall not be enlarged after five years following the date of certification of the original net tax
capacity by the county auditor. If a redevelopment district is enlarged, the reasons and supporting
facts for the determination that the addition to the district meets the criteria of MS, Section 469. 174,
Subd. 10 must be documented. The requirements of this paragraph do not apply if (l) the only
modification is elimination of parcel(s) from Development District No. ] or the District and (2) (A)
the current net tax capacity of the parcel(s) eliminated from the District equals or exceeds the net
tax capacity ofthose parcel(s) in the District's original net tax capacity or (B) the City agrees that,
notwithstanding MS, Section 469.177, Subd. 1, the original net tax capacity will be reduced by no
more than the current net tax capacity of the parcel(s) eliminated from the District. The City must
notify the County Auditor of any modification that reduces or enlarges the geographic area of
Development District No. I or the District. Modifications to the District in the form of a budget
modification or an expansion of the boundaries will be recorded in the TIF Plan.
2. Activity Within 3 Years
No tax increment shall be paid to the City for the District after three (3) years from the date of
certification of the Original Net Tax Capacity value of the taxable property in the District by the
County Auditor (MS. Section 469.176, Subd. 1a) unless:
(a) bonds have been issued in aid of the project containing the district pursuant to MS.
Section 469.178, or any other law, except revenue bonds issued pursuant to MS.,
Sections 469.152 to 469.165, or
(b) the City has acquired property within the District, or
( c) the City has constructed or caused to be constructed public improvements within the
District.
The bonds must be issued, or the City must acquire property or construct or cause public
improvements to be constructed by approximately June, 2004 and report such actions to the County
Auditor.
3. 4- Year Knockdown
Parcels without "qualifying activity" will be knocked out of the District after four years from the
date of certification ofthe original net tax capacity. MS. Section 469.176, Subd. 6 defines qualifying
activities as" demolition, rehabilitation or renovation of property or other site preparation, including
qualified improvement of a street adjacent to a parcel but not installation of utility service including
sewer or water systems" in accordance with the TIF Plan. For purposes of the knock down
requirements, qualified improvements of a street are limited to (I) construction or opening of a new
street, (2) relocation of a street, and (3) substantial reconstruction or rebuilding of an existing street.
Knock down means that the original net tax capacity of that parcel is excluded from the original net
tax capacity of the District and no tax increment may be collected from that parcel. If the City or
the owner of the parcel subsequently commences a qualifying activity in accordance with the TIF
Plan, the City shall certify to the county auditor that the activity has commenced and the county
auditor shall certify the net tax capacity thereof as most recently certified by the commissioner of
revenue and add it to the original net tax. capacity of the tax increment financing district. The City
must submit to the county auditor evidence that the required activity has taken place for each parcel
in the district. The evidence for a parcel must be submitted by February I ofthe fifth year following
the year in which the parcel was certified as included in the district.
City of Prior Lake
Tax Increment Financing Plan for Ta'{ Increment Financing District No. )-3
2-11
The City or a property owner must improve parcels within the District by approximately June, 2005
and report such actions to the County Auditor.
4. 5- Year Limit
After five years from the date of certification of the TIF District, tax increment may only be used to
(I) repay existing bonds the proceeds of which must be used to finance the activity, are issued and
sold to a third party before or within five years after certification, the revenues are spent to repay the
bonds, and the proceeds of the bonds either are, on the date of issuance, reasonably expected to be
spent before the end of the later of (a) the five-year period, or (b) a reasonable temporary period
within the meaning of the use of that term under S 148(c)(l) of the Internal Revenue Code, or are
deposited in a reasonably required reserve or replacement fund; (2) reimburse a developer or other
third party for eligible expenses paid before or within five year period, including interest on
unreimbursed costs; (3) eligible administrative expense; and (4) eligible expenses under M.S.
Section 469.1 763, Subd. 2 (Pooling).
Subsection 2-24.
Administration of the District
Administration of the District will be handled by the Planning Director.
Subsection 2-25.
Administrative Expenses
In accordance with MS, Section 469.174, Subd. 14, and MS, Section 469.176, Subd. 3, administrative
expenses means all expenditures of the City, other than:
I. amounts paid for the purchase of land;
2. amounts paid to contractors or others providing materials and services, including architectural and
engineering services, directly connected with the physical development of the real property in the
project;
3. relocation benefits paid to or services provided for persons residing or businesses located in the
project; or
4. amounts used to pay principal or interest on, fund a reserve for, or sell at a discount bonds issued
pursuant to MS, Section 469.178; or
5. amounts used to pay other financial obligations to the extent those obligations were used to finance
costs described in sections I to 3.
For districts for which the request for certification were made before August I, 1979, or after June 30, 1982,
administrative expenses also incJudeamounts paid for services provided by bond counsel, fiscal consultants,
and planning or economic development consultants. Tax increment may be used to pay any authorized and
documented administrative expenses for the District up to but not to exceed 10 percent of the total tax
increment expenditures authorized by the Plan or the total tax increment expenditures for Development
District No. I, whichever is less.
Pursuant to MS, Section 469.176, Subd. 4h, tax increments may be used to pay for the county's actual
administrative expenses incurred in connection with the District. The county may require payment of those
expenses by February 15 of the year following the year the expenses were incurred.
Pursuant to MS, Section 469. 177, Subd. 11, the county treasurer shall deduct an amount equal to 0.25
percent of any increment distributed to the City and the county treasurer shall pay the amount deducted to
the state treasurer for deposit in the state general fund to be appropriated to the State Auditor for the cost of
financial reporting of tax increment financing infonnation and the cost of examining and auditing authorities'
use of tax increment financing.
City of Prior Lake
Tax Increment Financing Plan for Tax Increment Financing District No. 1-3
2-]2
Subsection 2-26.
Requirements for Agreements with the Developer
The City will review any proposal for private development to determine its conformance with the
Development Program and with applicable municipal ordinances and codes. To facilitate this effort, the
following documents may be requested for review and approval: site plan, construction, mechanical, and
electrical system drawings, landscaping plan, grading and storm drainage plan, signage system plan, and any
other drawings or narrative deemed necessary by the City to demonstrate the conformance of the
development with City plans and ordinances. The City may also use the Agreements to address other issues
related to the development.
Pursuant to MS, Section 469.176, Subd 5, no more than 25 percent, by acreage, of the property to be
acquired in the District as set forth in the Plan shall at any time be owned by the City as a result of
acquisition with the proceeds of bonds issued pursuant to M.S., Section 469.] 78 to which tax increments
from property acquired is pledged, unless prior to acquisition in excess of25 percent of the acreage, the City
concluded an agreement for the development or redevelopment of the property acquired and which provides
recourse for the City should the development or redevelopment not be completed.
Subsection 2-27.
Assessment Agreements
Pursuant to MS, Section 469.177, Subd 8, the City may enter into a written assessment agreement in
recordable form with the developer of property within the District which establishes a minimum market value
of the land and completed improvements for the duration of the District. The assessment agreement shall
be presented to the assessor who shall review the plans and specifications for the improvements to be
constructed, review the market value previously assigned to the land upon which the improvements are to
be constructed and, so long as the minimum market value contained in the assessment agreement appears,
in the judgment of the assessor, to be a reasonable estimate, the assessor shall also certify the minimum
market value agreement.
Subsection 2-28.
Annual Disclosure Requirements
Pursuant to MS, Section 469.175, Subd 5, 6 and 6a the City must undertake financial reporting for all tax
increment financing districts to the Office of the State Auditor, County Board, County Auditor and School
Board on or before August I of each year. MS, Section 469.175, Subd 5 also provides that an annual
statement shall be published in a newspaper of general circulation in the City on or before August IS.
If the City fails to make a disclosure or submit a report containing the information required by MS Section
469.175 Subd 5 and Subd 6, the Office of the State Auditor will direct the County Auditor to withhold the
distribution of tax increment from the District.
Subsection 2-29.
Reasonable Expectations
As required by the Tax Increment Financing Act, in establishing the District, the determination has been
made that the anticipated development would not reasonably be expected to occur solely through private
investment within the reasonably foreseeable future and that the increased market value of the site that could
reasonably be expected to occur without the use of tax increment financing would be less than the increase
in the 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 District permitted by the Plan. In making said
determination, reliance has been placed upon written representations made by the developer to such effects
and upon City staff awareness of the feasibility of developing the project site. A comparative analysis of
estimated market values both with and without establishment of the District and the use of tax increments
has been performed as described above. Such analysis is included with the cashflow in Appendix E, and
indicates that the increase in estimated market value of the proposed development (less the indicated
City of Prior Lake
Tax Increment Financing Plan for Ta.x Increment Financing District No. ]-3
2-13
subtractions) exceeds the estimated market value of the site absent the establishment of the District and the
use of tax increments.
Subsection 2-30.
Summary
The City of Prior Lake is establishing the District to preserve and enhance the tax base, redevelop
substandard areas, and provide employment opportunities in the City. The Tax Increment Financing Plan
for the District was prepared by Ehlers & Associates, Inc., 3060 Centre Pointe Drive, Roseville, Minnesota
55113, telephone (651) 697-8500.
City of Prior Lake
Tax Increment Financing Plan for Tax Increment Financing District No. 1-3
2-14
APPENDIX A
PROJECT DESCRIPTION
The Lakefront Plaza project is proposed to be built on Block 9 on the northern edge of downtown Prior
Lake. The Development will consist of approximately 79 units of housing for purposes 55 years of age
or older and 12,000 square feet of retail uses. The residential component would consist of one- and two-
bedroom condominium units with various support facilities and amenities. The retail element could
contain office and small stores compatible with the residential use. The City plans to undertake
improvements on adjacent streets.
APPENDIX
A-I
APPENDIX B
DESCRIPTION OF PROPERTY TO BE INCLUDED IN THE DISTRICT
The District encompasses all property and adjacent rights-of-way identified by the parcels listed below.
These parcels have been combined prior to the establishment of the District by the City Council into a single
parcel. This parcel has not received a parcel identification number as of the date ofthe establishment of the
District.
Clb I ~ It Parcel NlITIbers
25-001062-0 25-001068-0
25-001063-0 25-001069-0
25-001066-0 25-001070-0
25-001067 -0
APPENDIX
B-1
APPENDIX C
ESTIMATED CASH FLOW FOR THE DISTRlCT
APPENDIX
C-I
12112101
TIF DISTRICT NO. 1-3
T.I.F. CASH FLOW ASSUMPTIONS
Innation Rate:
Present Value Rate Pay As You Go Nole:
Present Value Rate City Internal Rate:
Note Issue Date:
Tax Extension Rate Frozen: (from City)
Tax Extension Rate Curren\: (from City)
Assumes First Tax Increment
Years of T ax Increment
Amount of incremenl win vary depending upon market value, tax rates, class rates,
construction schedule, and inflation on market value. Inflation on tax rates
cannot be captured.
BASE VALUE INFORMATION
PIO Market Class Tax
Value Rate Caoacitv
125-001062-0 45.000 1.00% 450
25-001063-0 152.700 1.00% 1.527
125-001066-0 35.000 1.00% 350
125-001067-0 90.700 1.00% 907
125-001068-0 35,000 1.00% 350
125-001069.0 25.000 1.00% 250
125-001070-0 15.000 1.00% 150
ITotal 398.400 3.984
PROJECT IN FORMA TION
ICommerical
I Housing
I Total
Number
Units - Sq. Ft.
12,000
79
Class
Rate
1.5% - 2.0%
1.00%
MVPer
Units - Sq. Ft.
100
133.544
Tax
Capacity
23.250
105,500
128.750
Prepared by Ehlers
Date
Pavable
2002
2002
2002
2002
2002
2002
2002
Market
Value
1.200.000
10.550.000
11.750,000
0.0000%
8.000%
6.000%
February 1, 2002
1.200000 est. Pay 2002
1.200000 est. Pay 2002
2004
26
Date
Payable
2004
P1an-2001-1
12/12/01
llF DISTRICT NO. 1-3
TJ.F. CASH FLOW ASSUMPTIONS
Base Project Captured Sem~Annual Slate Aud. PooUng Admin Sem~Annual Sem~Annual PAYMENT DATE
PERIOD BEGINNING Tax Tax Tax Tax at At at Net Tax Present Pay
Yrs. Mth. Yr. Capacity Capacity Capacity Increment 0.50% 15.00% 10.00% Increment Value Yrs. MIh. Yr.
0.0 02-01 2002 3,984 3,984 0 0 0 0 0 0 0 0.0 08-01 200:;
0.0 08-01 2002 3,984 3,984 0 0 0 0 0 0 0 0.0 02-01 200~
0.0 02-01 2003 3.984 3.984 0 0 0 0 0 0 0 0.0 08-01 200~
0.0 08-01 2003 3,984 3,984 0 0 0 0 0 0 0 0.0 02-01 2rot
0.0 02-01 2004 3,984 128.750 124.766 74,860 (374) (11,173) (7,449) 55.884' 45,916 0.5 08-01 2rot
0.5 08-01 2004 3.984 128,750 124.766 74.860 (374) (11,173) (7,449) 55,864. 90,066 1.0 02-01 200~
1.0 02-01 2005 3,984 128.750 124.766 74,860 (374) (11,173) (7,449) 55.864. 132,518 1.5 08-01 200~
1.5 08-01 2005 3,984 128.750 124,766 74.860 (374) (11,173) (7.449) 55,864- 173,338 2.0 02-01 200e
2.0 02-01 2006 3.984 128.750 124,766 74.860 (374) (11,173) (7.449) 55,864- 212,587 2.5 08-01 200E
2.5 08-01 2006 3,984 128.750 124,766 74.860 (374) (11.173) (7,449) 55,864 . 250.327 3.0 02-01 2007
3.0 02-01 2007 3,984 128,750 124,766 74,860 (374) (11,173) (7.449) 55,864 . 286.615 3.5 08-01 2007
3.5 08-01 2007 3.984 128,750 124.766 74.860 (374) (11.173) (7,449) 55.884 . 321.507 4.0 02-01 200E
4.0 02-01 2008 3,984 128,750 124,766 74,860 (374) (11,173) (7,449) 55.864 355.058 4.5 08-01 200E
4.5 08-01 2008 3.984 128,750 124.766 74,860 (374) (11,173) (7,449) 55.864. 387.318 5.0 02-01 200S
5.0 02-01 2009 3.984 128,750 124,766 74,860 (374) (11,173) (7,449) 55.864' 418.337 5.5 08-01 200S
5.5 08-01 2009 3.984 128.750 124,766 74.860 (374) (11,173) (7,449) 55.864 . 448,163 6.0 02-01 201C
6.0 02-01 2010 3.964 128.750 124,766 74,860 (374) (11,173) (7,44!l) !j5,864 476.642 6.5 08-01 201C
6.5 08-01 2010 3.984 128.750 124,766 74.860 (374) (11.173) (7.449) 55.864. 504.418 7.0 02-01 2011
7.0 02-01 2011 3.964 128,750 124,766 74,860 (374) (11,173) (7,449) 55,864. 530,934 7.5 08-01 2011
7.5 08-01 2011 3,984 128.750 124.766 74,860 (374) (11,173) (7,449) 55,864. 556,429 8.0 02-01 2012
8.0 02-01 2012 3.984 128.750 124,766 74,860 (374) (11.173) (7,449) 55.864 . 580,944 8.5 08-01 2012
8.5 08-01 2012 3.984 128.750 124,766 74,860 (374) (11,173) (7.449) 55.864 . 604,516 9.0 02-01 2013
9.0 02-01 2013 3,984 128.750 124.766 74,860 (374) (11.173) (7,449) 55.864 . 627.182 9.5 08-01 2013
9.5 08-01 2013 3.964 128.750 124,766 74,860 (374) (11,173) (7.449) 55,864. 648.976 10.0 02-01 2014
10.0 02-01 2014 3.984 128.750 124.766 74,860 (374) (11,173) (7,449) 55.864. 669,931 10.5 08-01 2014
10.5 08-01 2014 3.984 128.750 124,766 74.860 (374) (11.173) (7.449) 55.864. 690.081 11.0 02-01 2015
11.0 02-01 2015 3,984 128.750 124.766 74,860 (374) (11.173) (7.449) 55.864. 709.455 11.5 08-01 2015
11.5 08-01 2015 3,984 128.750 124,766 74,860 (374) (11.173) (7.449) 55,864 . 728.085 12.0 02-01 2016
12.0 02-01 2016 3,964 128,750 124.766 74.860 (374) (11.173) (7.449) 55,864. 745.997 12.5 08-01 2016
12.5 08-01 2016 3,984 128.750 124,766 74.860 (374) (11,173) (7,449) 55.864. 763,221 13.0 02-01 2017
13.0 02-01 2017 3.984 128,750 124.766 74.860 (374) (11.173) (7.449) 55,864 . 779.783 13.5 08-01 2017
13.5 08-01 2017 3,984 128.750 124,766 74,860 (374) (11,173) (7,449) 55.864 795,707 14.0 02-01 2018
14.0 02-01 2018 3,964 128,750 124,766 74.860 (374) (11.173) (7,449) 55,864 . 811.019 14.5 08-01 2018
14.5 08-01 2018 3.964 128.750 124,766 74,860 (374) (11,173) (7.449) 55.864 . 825.742 15.0 02-01 2019
15.0 02-01 2019 3.984 128.750 124,766 74,860 (374) (11.173) (7,449) 55.864 . 839,899 15.5 08-01 2019
15.5 08-01 2019 3.964 128.750 124,766 74,860 (374) (11,173) (7,449) 55.864 853,511 16.0 02-01 2020
16.0 02-01 2020 3.984 128,750 124.766 74,860 (374) (11.173) (7,449) 55,864 . 866,600 16.5 08-01 2020
16.5 08-01 2020 3.964 128,750 124.766 74.860 (374) (11.173) (7,449) 55.864 . 879,186 17.0 02-01 2021
17.0 02-01 2021 3.964 128.750 124,766 74.860 (374) (11,173) (7,449) 55,864 . 891,287 17.5 08-01 2021
17.5 08-01 2021 3.984 128.750 124,766 74.860 (374) (11.173) (7,449) 55,864 . 902.923 18.0 02-01 2022
18.0 02-01 2022 3.984 128,750 124,766 74.860 (374) (11.173) (7,449) 55,864 . 914,111 18.5 08-01 2022
18.5 08-01 2022 3,984 128.750 124,766 74,860 (374) (11,173) (7,449) 55,864 . 924.869 19.0 02-01 2023
19.0 02-01 2023 3.984 128,750 124.766 74,860 (374) (11,173) (7,449) 55,864 . 935,213 19.5 08-01 2023
19.5 08-01 2023 3,984 128,750 124,766 74,860 (374) (11,173) (7,449) 55,864 ,. 945,160 20.0 02-01 2024
20.0 02-01 2024 128,750 128.750 0 0 0 0 0 0 945.160 20.5 08-01 2024
20.5 08-01 2024 128.750 128.750 0 0 0 0 0 0 945.160 21.0 02-01 2025
21.0 02-01 2025 128,750 128,750 0 0 0 0 0 0 945,160 21.5 08-01 2025
21.5 08-01 2025 128,750 128,750 0 0 0 0 0 0 945,160 22.0 02-01 2026
22.0 02-01 2026 128,750 128,750 0 0 0 0 0 0 945,160 22.5 08-01 2026
22.5 08-01 2026 128,750 128.750 0 0 0 0 0 0 945,160 23.0 02-01 2027
23.0 02-01 2027 128,750 128.750 0 0 0 0 0 0 945,160 23.5 08-01 2027
23.5 08-01 2027 128.750 128,750 0 0 0 0 0 0 945.160 24.0 02-01 2028
24.0 02.01 2028 128.750 128,750 0 0 0 0 0 0 945.160 24.5 08-01 2028
24.5 08-01 2028 128.750 128,750 0 0 0 0 0 0 945,160 25.0 02-01 2029
25.0 02-01 2029 128.750 128,750 0 0 0 o. 0 0 945.160 25.5 08-01 2029
25.5 08-01 2029 128.750 128.750 0 0 0 0 0 0 945.160 26.0 02-01 2030
Tolals 2,994.364 (14.972) (446.912) (297.941) 2.234.559 I
Present Value 1.266.546 1229,458) 1152.972) 945.160 I
Present Value Rate 8.000% 6.000"/0 6.000% 8.000%
Prepared by Ehlers
Pla....ZOO1.1
APPENDIX D
REDEVELOPMENT QUALIFICATIONS FOR THE DISTRICT
The parcel contains four buildings - one house with an attached garage and one house with an unattached
garage and a shed. The unattached garage an.d the shed are outbuildings. The two houses are determined
to be structurally substandard based on the findings of the City's Building Inspector contained in the
attached memorandum. The District consists of one parcel and 100% of the area of the District is
occupied because the parcel meets the occupied test as set forth in the attached.
APPENDIX
D-I
City of Prior Lake, Minnesota - TIF District No. 1-3 Qualifications
12-Dec-01
Parcel
Name
Combined Parcel
Parcel
Number
TBD
Occupied Type
Sq. Ft. (Approx.) Occupied
12,376 Improyemer
Percent
Occupied
16%
Total
77 ,508
12,376
77,508
PERCENT OCCUPJED* =
100.00%
Occupied can include buildings, parking lots, and utilities.
Step Two
S~ .... _._ ....,.,_. ........,'~.%~f~f~~~~i'gii~~~I~~~~:~j.~,~{~t:r~'{;fi1i:ji).'Ii~~1~\~{~i~~ig1~~~J~jf~Ji"$;i:;}.~:,~::.:}~T::;;?i~~:.;f~"
Parcel Parcel Number of Buildings
Name Number Buildings Substandard
Combined Parcel TBD 2 2
Total
2
2
PERCENT BLIGHTED =
100.00%
re qualif.123
APPENDIX E
BUT FOR QUALIFICA nONS FOR THE DISTRlCT
But For Analysis
Current Market Value Est.
New Market Value Est.
Difference
Present Value of Tax Increment
Difference
, Value Likely to Occur Without TJ.F is Le~~_._Than:
APPENDIX
$398,400
10.550.000
$10,151,600
1.266.546
$8,885,054
$8,885,054
E-l
The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan for Tax
Increment Financing District No. 1-3, as required pursuant to Minnesota Statutes, Section 469.175,
Subdivision 3 are as follows:
1. Finding that Tax Increment Financing District No. 1-3 is a redevelopment district as defined in MS,
Section 469.174, Subd 10(a)(1).
The District consists of seven parcels, with plans to redevelop the area for senior housing and
commercial purposes. At least 70 percent of the area in the parcels in the District are occupied by
buildings, streets, utilities, or other improvements and more than 50 percent of the buildings in the
District, not including outbuildings, are structurally substandard to a degree requiring substantial
renovation or clearance (See Appendix D of the TIF plan).
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 and that
the increased market value of the site that could reasonably be expected to occur without the use of tax
increment financing would be less than the increase in the market value estimated to result from the
proposed development after subtracting the present value of the projected tax increments for the
maximum duration of Tax Increment Financing District No. 1-3 permitted by the Plan.
The proposed development, in the opinion of the City, 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 redevelopment proposed in this plan meets the City's objectives for redevelopment. Due
to the high cost of redevelopment on the parcels currently occupied by substandard buildings, the limited
amount of commercial/industrial property for expansion adjacent to the existing project, the incompatible
land uses at close proximity, and the cost offinancing the proposed improvements, this project is feasible
only through assistance, in part, from tax increment financing. The developer was asked for and
provided a letter and a proforma as justification that the developer would not have gone forward without
tax increment assistance (see attachment in Appendix E).
The increased market value of the site that could reasonable 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 increments for the
maximum duration of the TIF District permitted by the Plan: The City supported this finding on the
grounds that the cost of site and public improvements and utilities add to the total redevelopment cost.
Historically, site and public improvements costs in this area have made redevelopment infeasible without
tax increment assistance. Therefore, the City reasonably determined that no other redevelopment of
similar scope is anticipated on this site without substantially similar assistance being provided to the
development.
A comparative analysis of estimated market values both with and without establishment of the District
and the use of tax increments has been performed as described above. If all development which is
proposed to be assisted with tax increment were to occur in the District, the total increase in market
value would be up to $10,151,600. The present value of tax increments from the District is estimated
to be $1,266,546. It is the Council's finding that no development with a market value of greater than
$8,885,054 would occur without tax increment assistance in this district within 25 years. This finding
is based upon evidence from general past experience with the high cost of acquisition and public
improvements in the general area of the District(see Cashflow in Appendix C of the TIF Plan).
E-2
3. Finding that the Tax Increment Financing Planfor Tax Increment Financing District No. 1-3 conforms
to the general plan for the development or redevelopment of the municipality as a whole.
The Planning Commission reviewed the Plan and found that the Plan conforms to the general
development plan of the City.
4. Finding that the Tax Increment Financing Planfor Tax Increment Financing District No. 1-3 will afford
maximum opportunity, consistent with the sound needs of the City as a whole, for the development or
redevelopment of Development District No. 1 by private enterprise.
The project to be assisted by the District will result in increased employment in the City and the State
of Minnesota, the renovation of substandard properties, increased tax base of the State and add a high
quality development to the City.
Through the implementation of the Plan, the City will increase the availability of safe and decent senior
housing in the City.
E-3