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HomeMy WebLinkAbout8D - Tax Increment Financing MEETING DATE: AGENDA #: PREPARED BY: AGENDA ITEM: DISCUSSION: ISSUES: CITY COUNCIL AGENDA REPORT JULY 15, 2002 8D DONALD RYE, PLANNING DIRECTOR CONSIDER APPROVAL OF RESOLUTIONS 1) AMENDING THE BUDGETS FOR TIF DISTRICTS 1-1 AND 1-2 AND 2) DECERTIFYING TIF DISTRICT 2-4 History The City originally created TIP Districts 1-1, 1-2 and 2-4 in the Downtown area several years ago to facilitate develofment. In 1996, all three districts were modified. At the June 17t Council meeting, the City Council considered a report relating to TIP Districts 1-1,1-2 and 2-4. The report concluded that a modification of the districts in 1996 was improper as it related to TIP 2-4 and that district should be decertified and the fund balance in that particular account should be returned to Scott County for re-distribution to the appropriate taxing authorities. In addition, the budgets for TIP districts 1-1 and 1-2 need to be amended in order to be able to continue to receive increments and assist with redevelopment activities in the Downtown Development District. The Council subsequently directed staff to initiate the budget amendments for Districts 1-1 and 1-2 and to proceed with the decertification of District 2-4. Discussion Ehlers and Associates have calculated revised budgets for both TIP Districtsl-1 and 1-2. Both budgets are attached. These budgets are based on figures contained in the Modification that was approved in 1996. In addition, Ehlers re-calculated the budget for District 2-4 for the purpose of having a correct budget for reporting purposes. Approval of the revised budgets will allow the staff to prepare amended reports to the State Auditors Office consistent with the original modifications. The 1996 modifications were undertaken to enhance flexibility in the use of District proceeds. A consultant provided oversight of the establishment and modification of the districts. The decertification of District 2-4 and modification of the budgets for Districts 1-1 and 1-2 are the safest means of assuring that these 162~H'9~c!gf€~~'Il:.-~~<SF.t;dprior Lake, Minnesota 55372-1714 / Ph. (952) 447-4230 / Fax (952) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER FISCAL IMPACTS: ALTERNATIVES: RECOMMENDED MOTION: REVIEWED BY: L:\02FILES\02eda\1-11-2modrept.doc Districts comply with state TIF requirements. Another option would be to use the proceeds from District 2-4 for a bona fide Downtown redevelopment use. However, at some time in the future, the state auditor's office could find that District 2-4 was not in compliance with state law which could result in some form of penalty. Since tax increment financing is one of the few economic development tools available to the City, disqualification could affect our ability to develop the additional 58 acres of the business park. As a result of the decertification of District 2-4, the City will be returning approximately $188,000 to Scott County for re-distribution to the other taxing jurisdictions. Approximately $45,000 of this amount will be returned to the City. The Council may wish to determine how it wishes to allocate the $45,000. The modification of the budgets for Districts 1-1 and 1-2 will make approximately $288,000 available for Downtown redevelopment. By previous Council action, $150,000 of this money was allocated to fayade improvement grant program. An additional $28,000 could be used to fund the parking improvements on Pleasant A venue. An additional $40,000 will be required for the streetscape improvement along Pleasant A venue and these funds could be used for that purpose. If these uses of funds are approved, this would ea.rmark $218,000 of the $288,000 available from TIF Districts 1-1 and 1-2. Conclusion Amending the budgets and decertifying TIF District 2-4 will bring the City into compliance with the applicable state laws governing TIF district budgeting and reporting. 1. Approve Resolution 02-xx amending the budgets for TIF Districts 1-1 and 1-2 and Resolution 02-xx decertifying TIF District 2-4. 2. Do not approve resolutions. 3. Continue consideration of this case for specific reasons. Alternative 1 2 /16 RESOLUTION O~ RESOLUTION APPROVING MODIFIED TAX INCREMENT FINANCING PLANS FOR TAX INCREMENT FINANCING DISTRICTS NO. 1-1 AND 1-2 MOTION BY: \jv SECOND BY: ~ WHEREAS: The City Council for the City of Prior Lake (the "City") has heretofore established Development District No. 1 and adopted the Development Plan therefor and established Tax Increment Financing Districts No. 1-1 and No. 1-2 (the "Districts") and adopted Tax Increment Financing Plans (the "Plans") therefor. It has been proposed that the City adopt a Modification to the Tax Increment Financing Plans (the "Modification") for the District; all pursuant to and in conformity with applicable law, including Minnesota Statutes, Sections 469.00 through 469.047 and 469.174 through 469.179, all inclusive, as amended, all as reflected in the Modification, and presented for the Council's consideration. Generally, the substantive changes to the Tax Increment Financing Plans include an administrative modification to the Plans' budget line items. This modification will not increase the Plans' total budget. The purpose of this modification is to ensure the Modification's budget accurately reflects the project expenditures. The boundaries of Tax Increment Financing Districts No. 1-1 and No. 1-2 are not being modified. The "Modification" is contained in the attached Appendix A and is made part of this resolution. WHEREAS: The Council has investigated the facts relating to the Modification. WHEREAS: The City has performed all actions required by law to be performed prior to the adoption and approval of the proposed Modification. Because of the nature of this Modification, and because this Modification does not entail an enlargement of geographic area, an increase in the amount of bonded indebtedness, an increase to the amount of interest on debt, an increase in the portion of the captured net tax capacity, or an increase in the total estimated tax increment expenditures, this Modification is not subject to a public hearing requirement. The City Council hereby makes the following Findings for the Approval of the Modification 1. The Council hereby finds that the Modification is intended and, in the judgment of this Council, the effect of such actions will be: (i) to provide an impetus for commercial development ; (ii) to increase employment; and (iii) to provide such other facilities and improvements as shall further the objectives in the Plan and Minnesota Statutes Sections 469.090 through 469.1081. 16200 EIi~tPt5!hE~Jg~5~:~~&9!Jt(~9JIfJ~~g6~c?%5372-1714 / Ph. (952) 447-4230 / Fax (952) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER 2. The Council hereby reaffirms the original findings for Tax Increment Financing Districts No. 1-1 and No. 1-2 as modified herein, namely: that the Districts are in the public interest and are "redevelopment districts" under Minnesota Statutes, Section 469.174, subd. 10 (a)(2); that the proposed redevelopment would not occur solely through private investment within the reasonably foreseeable future, that the increased market value on 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 Tax Increment Financing Plans; that the Modification conforms to the general plan for the development or redevelopment of the City as a whole; and that the Modification will afford maximum opportunity consistent with the sound needs of the City as a whole, for the development of the District by private enterprise. 3. The Council hereby finds that the Modification, is intended and, in the judgment of this Council, the effect of such actions will be, to provide an impetus for development in the public purpose and accomplish certain objectives as specified in the Modification, which is hereby incorporated herein. NOW, THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, MINNESOTA: 1. The above recitals are incorporated herein as if fully set forth. 2. The Modified Tax Increment Financing Plans for Tax Increment Financing Districts No. 1-1 and No. 1-2 are hereby approved, and shall be placed on file in the office of the City Clerk/Treasurer. Approval of the Modification does not constitute approval of any project or a Development Agreement with any developer. 3. The staff of the City is authorized to file the Modification with the State Department of Revenue and the Scott County Auditor. 4. The staff of the City, the City's advisors and legal counsel are authorized and directed to proceed with the implementation of the Modification and for this purpose to negotiate, draft, prepare and present to this Council for its consideration all further plans, resolutions, documents and contracts necessary for this purpose. Passed and adopted this 15th day of July, 2002. YES NO Haugen Haugen Gundlach Gundlach LeMair LeMair Petersen Petersen Zieska Zieska L:\02FILES\02eda\budget mod l-1res.doc RESOLUTION O~ I J 1. RESOLUTIONAPPROVING THE DECERTIFICATION OF TAX INCREMENT FINANCING DISTRICT NO. 2-4 OF THE CITY OF PRIOR LAKE. MOTION BY: ~p SECOND By:--0L- WHEREAS: On August 2, 1994, the City of Prior Lake (the "City") created its Tax Increment Financing District No. 2-4 ("District No. 2-4") within its Project Area No.2 (the "Project Area"); and WHEREAS: As of the date hereof all bonds and obligations to which tax increment from District No. 2-4 have been pledged have been paid in full or defeased and all other costs of the Project have been paid; and WHEREAS: the City desires by this resolution to cause the decertification of District No. 2-4 after which all property taxes generated by property within the District will be distributed in the same manner as all other property taxes. NOW THEREFORE, BE IT RESOLVED BY THE CITY OF PRIOR LAKE, MINNESOTA: 1. The above recitals are incorporated herein as if fully set forth. 2. The City's staff shall take such action as is necessary to cause the County Auditor of Scott County to decertify the District No. 2-4 as a tax increment district and to no longer remit tax increment from the District No. 2-4 to the City. Passed and adopted this 15th day of July, 2002 Yes No Haugen Haugen Gundlach Gundlach LeMair LeMair Petersen Petersen Zieska Zieska Frank Boyles, City Manager (Seal) resdecert2-4 16200 Eagle Creek Ave. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (952) 447-4230 / Fax (952) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER Note: TIF is allocated based on total revenue projected through the decertification for the district. City of Prior lake T1F District No. 1-2 Original Budget Modification/ 2002 Modification (per TIF Plan) Allocation Total ofTlF (16%) Revenues Tax Increment Revenue 532,800 532,800 Interest on Invested Funds 0 Bond Proceeds 77 ,800 77,800 Loan Proceeds 0 Special Assessments 0 Sales/lease Proceeds 15,200 15,200 Loan/Advance Repayments 0 Grants 0 Other: 0 Reimbursement of Admin. 7,500 7,500 Transfers in Total Revenues 100,500 532,800 633,300 Expenditures Land/Building Acquisition 70,000 370,000 440,000 Site Improvements 0 Installation of Public Utilities 0 Parking Facilities 0 Streets and Sidewalks 8,000 41 ,500 49,500 Public Park Facilities 0 Social, Recreational Facilities 0 Interest Reduction Payments 0 Bond Principal Payments 0 Bond Interest Payments 0 Loan Principal Payments 0 Loan/note Interest Payments 0 Administrative Expenses 7,500 53,300 60,800 Other: 0 Capital Interest 11 ,800 56,000 67,800 Relocation 0 Contingency 3,200 12,000 15,200 Transfers Out Total Expenditures 100,500 532,800 633,300 Revenues Over (Under) 0 0 0 Note: TIF is allocated based on total revenue projected through the decertification for the district.