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HomeMy WebLinkAbout7A - Premiere Dance TIF 16200 Eagle Creek Avenue S.E. Prior Lake, MN 55372-1714 CITY COUNCIL AGENDA REPORT MEETING DATE: AGENDA #: PREPARED BY: March 6, 2006 7A PAUL SNOOK, ECONOMIC DEVELOPMENT DIRECTOR AGENDA ITEM: PUBLIC HEARING TO CONSIDER APPROVAL OF RESOLUTION ESTABLISHING THE DEVELOPMENT PROGRAM FOR DEVELOPMENT DISTRICT NO. 5 AND ESTABLISHING TAX INCREMENT FINANCING DISTRICT NO. 5-1 AND THE PROPOSED ADOPTION OF THE TAX INCREMENT FINANCING PLAN THEREFORE (PREMIERE DANCE STUDIO). DISCUSSION: Introduction The purpose of this item is to consider the following: 1. The establishment of the Development Program for Development District No.5; and 2. The establishment of TIF District 5-1. City Council is asked to establish Tax Increment Financing District No. 5-1 for the purposes of assisting in the redevelopment of Lot 13, Block 13 & Lot 14 & west 12' of Lot 12 (4616 Colorado St.) in the downtown area, for the future location of Premiere Dance Academy (PDA). Historv PDA has outgrown its current facility at 16210 Eagle Creek Ave (the Library Resource Center). Over the last year PDA owner Dawn Schulberg has been seeking larger space in Prior Lake and has decided to keep her business in the downtown area, opting for property at 4616 Colorado St. The property currently includes a severely blighted house. The structure has been inspected and meets the statutory definition of blighted property. Current Circumstances PDA is proposing to construct a two story approximately 10,000 sq ft building on the subject property. The property is currently zoned C-3, with the 2030 Comprehensive Land Use Plan calling for that parcel to be designated as C-TC (Town Center). The applicant plans on starting demolition and construction as soon as possible, contingent upon City approvals of the site I building plan-design and TIF. Financing for the project will consist of bank financing and tax increment financing. The tax increment financing plan (attached) indicates that there are up to $330,000 in eligible expenses for which TIF could be requested. The applicant is requesting $135,000 in TIF funds to be applied toward eligible reimbursable costs of property acquisition and site preparation (demolition I clearance). The TIF amount represents approximately 18% of the total long term financing of the project. www.cityofpriorlake.com J:c:'Phone~52.4~7.42~l!rv- Fax'952.447-.4245 - The proposed use of TIF is "pay-as-you-go" method of reimbursing eligible project costs. Pay-as-you-go TIF is when tax increment receipts generated from the development are used to reimburse the developer and city for qualified costs over the life of the district. This form of tax increment financing does not guarantee a specific amount of benefits and therefore the taxpayer is not at financial risk. In accordance with State Statute, project eligibility is based on proposed redevelopment activities, and passing of the "But For" test (a finding that the proposed TIF assistance is necessary to bring about the proposed development). Both the eligibility and "But For" test have been completed and recommended for approval by city financial consultant Ehlers and Associates as part of the Development Program for Development District No.5, and Tax Increment Financing Plan for TIF District No. 5-1. In accordance with State Statutes, the City must also enter into a private development contract and business subsidy agreement with Premiere Dance Academy. Those items will be before you at the March 20th meeting. Conclusion Revitalizing this severely blighted property and retaining the successful dance studio business in the downtown through the use of tax increment financing is in keeping with the downtown revitalization and economic elements of the Comprehensive Plan and 2030 Vision and Strategic Plan. This project is also consistent with the City's Business Subsidy Policy. The proposed redevelopment project would not happen without the establishment of Development District NO.5 and TIF District 5-1. ISSUES: The proposed TIF project, if approved, would be followed by the demolition of the existing blighted house, and the construction of 10,000 sq. ft. building for the dance academy. The project's design is currently under review by the Development Review Committee. The company cannot commence construction until TIF has been approved by the City Council. In accordance with State Statutes, the proposed Development Program for District NO.5 and TIF Plan for TIF District 5-1 have been sent to the other affected taxing jurisdictions, including Scott County and the Prior Lake Savage School District 719. The City has not received comments from the jurisdictions other than the County regarding the TIF district. At its February 28th meeting, the County Board acknowledged that the district qualifies for redevelopment purposes and provided comments regarding the potential parking and student drop-off/pick up situation for the dance studio. The County asked that their comments be made part of the March 6, 2006 hearing record. It is our belief that the 65 stall parking lot across the street coupled with the addition of a car pull over lane, which is part of this project, will address both of these concerns. FINANCIAL IMPACT: The City is proposing to collect taxes that would normally be disbursed to additional taxing jurisdictions and allow the reimbursement of project costs back to the developer over a portion of the duration of the TIF District (The full term of a Redevelopment District is 25 years). According to the cash flow projection, the gross tax increment is estimated by the City financial consultant Ehlers and Associates to be approximately $328,522 over the duration of the TIF District, with a present value of $134,356. The proposed TIF financing for the project is $135,000 to assist in property acquisition and site preparation, and therefore, as highlighted on the associated cash flow under "cumulative TIF", the district would extend 12 years rather than the full 25 years. The cash flow and impacts to the local taxing jurisdictions are presented in greater detail in the attached TIF Plan for TIF District 5-1. ALTERNATIVES: 1. Adopt Resolution #OS-XX, approving the Development Program for Development District NO.5 and the establishment of TIF District 5-1. 2. Deny the resolution 3. Defer for a specific reason RECOMMENDED MOTION: Alternative 1. ATTACHMENTS: 1. Resolution #06-XX, approving the Development Program for Development District NO.5 and the establishment of TIF District 5-1. 2. Tax Increment Financing District Overview 3. Development Program for Development District NO.5 4. Tax Increment Financing Plan for establishment of Tax Increment Financing District No. 5-1 16200 Eagle Creek Avenue S.E. Prior Lake, MN 55372-1714 CITY OF PRIOR LAKE SCOTT COUNTY STATE OF MINNESOTA Council member introduced the following resolution and moved its adoption: RESOLUTION NO. RESOLUTION ADOPTING A REDEVELOPMENT PLAN FOR DEVELOPMENT DISTRICT NO.5; AND ESTABLISHING TAX INCREMENT FINANCING DISTRICT NO. 5-1 THEREIN AND ADOPTING A TAX INCREMENT FINANCING PLAN THEREFOR. BE IT RESOLVED by the City Council (the "Council") of the City of Prior Lake, Minnesota (the "City"), as follows: Section 1. Recitals 1.01. It has been proposed by the City that the City establish Development District No.5 and adopt a Development Program (the "Development Program") therefor and establish Tax Increment Financing District No. 5-1 (the "District") therein and adopt a Tax Increment Financing Plan (the "TIP Plan") therefor (the Development Program and the TIP Plan are referred to collectively herein as the "Program and Plan"); all pursuant to and in confonnity with applicable law, including Minnesota Statutes, Sections 469.124 to 469.134 and Sections 469.174 to 469.1799, all inclusive, as amended, (the "Act") all as reflected in the Program and Plan, and presented for the Council's consideration. 1.02. The City has investigated the facts relating to the Program and Plan and has caused the Program and Plan to be prepared. 1.03. The City has perfonned all actions required by law to be perfonned prior to the establishment of the District and the adoption and approval of the proposed Program and Plan, including, but not limited to, notification of Scott County and Independent School District No.719 having taxing jurisdiction over the property to be included in the District, a review of and written comment on the Program and Plan by the City Planning Commission and the holding of a public hearing upon published notice as required by law. 1.04. Certain written reports (the "Reports") relating to the Program and Plan and to the activities contemplated therein have heretofore been prepared by staff and consultants and submitted to the Council and/or made a part of the City files and proceedings on the Program and Plan. The Reports include the 2030 Vision and Strategic Plan, Development Potential and Market Analysis (by McComb Group), Business Subsidy Policy and TIP Policy, TIP Application, Report of Inspection Procedures and Results for Detennining Qualifications of a Tax Increment Financing District as a Redevelopment District (by urn on December 16, 2005), data, infonnation and/or substantiation constituting or relating to the basis for the other fmdings and detenninations made in this resolution. The Council hereby confrrms, ratifies and adopts the Reports, which are hereby incorporated into and made as fully a part of this resolution to the same extent as if set forth in full herein. 3/312006 www.cityofpriorlake.com Phone 952.447.4230 / Fax 952.447.4245 Section 2. Findings for the Adoption and Approval of the Program and Plan 2.01. The Council hereby fmds that the Program and Plan, are intended and, in the judgment of this Council, the effect of such actions will be, to provide an impetus for development in the public interest and accomplish certain objectives as specified in the Program and Plan, which are hereby incorporated herein. Section 3. Findings for the Establishment of Tax Increment Financing District No. 5-1 3.01. The Council hereby fmds that the District is in the public interest and is a "redevelopment district" under Minnesota Statutes, Section 469.174, Subd. 10. 3.02. The Council further fmds that the proposed redevelopment would not 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 fmancing 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 Plan, that the Program and Plan conforms to the general plan for the development or redevelopment of the City as a whole; and that the Program and Plan will afford maximum opportunity consistent with the sound needs of the City as a whole, for the development or redevelopment of the District by private enterprise. 3.03. The Council further fmds, declares and determines that the City made the above fmdings stated in this Section and has set forth the reasons and supporting facts for each determination in writing, attached hereto as Exhibit A. 3.04. The City of Prior Lake elects to calculate fiscal disparities for the District in accordance with Minnesota Statutes, Section 469.177, Subd. 3, clause b, which means the fiscal disparities contribution would be taken from inside the District. Section 4. Public Purpose 4.01. The adoption of the Program and Plan conforms in all respects to the requirements ofthe Act and will help fulfill a need to develop an area of the City which is already built up, to provide employment opportunities, to improve the tax base and to improve the general economy of the State and thereby serves a public purpose. Section 5. Approval and Adoption of the Program and Plan 5.01. The Program and Plan, as presented to the Council on this date, including without limitation the fmdings and statements of objectives contained therein, are hereby approved, ratified, established, and adopted and shall be placed on file in the office of the City Clerk. 5.02. The staff of the City, the City's advisors and legal counsel are authorized and directed to proceed with the implementation of the Program and Plan and to negotiate, draft, prepare and present to this Council for its consideration all further plans, resolutions, documents and contracts necessary for this purpose. 3/3/2006 ~~--~'_"'_'---"~~'_"--------__~,.._..",._~_._..,..__....._.'M".'"__....~_,__"._.,_~_,.,. _._~.~..._.__."'__..~.____~,,,...__.__..~..,_..,__,.,_.__"_"""_". 5.03 The Auditor of Scott County is requested to certify the original net tax capacity of the District, as described in the Program and Plan, and to certify in each year thereafter the amount by which the original net tax capacity has increased or decreased; and the City of Prior Lake is authorized and directed to forthwith transmit this request to the County Auditor in such form and content as the Auditor may specify, together with a list of all properties within the District, for which building permits have been issued during the 18 months immediately preceding the adoption of this resolution. 5.04. The City Clerk is further authorized and directed to file a copy of the Program and Plan with the Commissioner of the Minnesota Department of Revenue and the Office of the State Auditor pursuant to Minnesota Statutes 469.175, Subd. 4a. The motion for the adoption of the foregoing resolution was duly seconded by Council member , and upon a vote being taken thereon, the following voted in favor thereof: and the following voted against the same: Dated: March 6, 2006 ATTEST: Mayor City Clerk (Seal) 3/312006 A comparative analysis of estimated market values both with and without establishment of the District and the use oftax 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 $863,500. The present value of tax increments from the District is estimated to be $134,366. It is the Council's fmding that no development with a market value of greater than $729,134 would occur without tax increment assistance in this district within 25 years. This fmding is based upon evidence from general past experience with the high cost of acquisition and demolition in the general area of the District. (See Cashflow in Appendix D of the TIP Plan.) 3. Finding that the Tax Increment Financing Planfor Tax Increment Financing District No. 5-1 conforms to the general plan for the development or redevelopment of the municipality as a whole. The Planning Commission reviewed the TIP Plan and found that the TIP Plan conforms to the general development plan of the City. 4. Finding that the Tax Increment Financing Planfor Tax Increment Financing District No. 5-1 will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development or redevelopment of Development District No.5 by private enterprise. The project to be assisted by the TIP 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. 3/3/2006 " RECEIVED MAR - 3 2006 SCOTT COUNTY BOARD OF COMMISSIONERS l~~'" " Scott -~~--~---~,.,--_._-~._._-~--._-----_._--~------~ GOVERNMENT CENTER. 200 FOURTH AVENUE WEST. SHAKO PEE, MN 55379-1220 (952) 496-8100. Fax: (952) 496-8180. www.co.scott.mn.us JOSEPH WAGNER, DISTRIG 1 BOB VOGEL, DISTRIG 2 JERRY HENNEN, DISTRIG 3 BARBARA MARSCHALL, DISTRIG 4 JON ULRICH, DISTRIG 5 February 28, 2006 Frank Boyles Prior Lake City Manager 16200 Eagle Creek Ave Prior Lake, MN 55372 RE: Adoption of Tax Increment Financing District # 5-1 Dear Frank: On March 6, the Prior Lake City Council will be conducting a public hearing regarding the establishment of Tax Increment Financing District #5-1. The Scott County Board of Commissioners was given a presentation on the proposed project at the County Board meeting on February 28, 2006. Although the ultimate authority to approve the Tax Increment District rests with the City of Prior Lake, after reviewing the plan of the proposed district, the Scott County Board of Commissioners would like to submit these formal comments and recommendations for the City's consideration. The County agrees that the district qualifies as a Redevelopment District by statute; the Scott County Board of Commissioners concurs that the use of Tax Increment dollars to finance a project that tends to the needs of a blighted area that contains a substandard building is a good use of tax increment revenues. However, the Scott County Board of Commissioners is concerned about issues of public safety, the availability of parking, and street congestion and access. As such, we would like the City Council to consider the following concerns in making its final decision: · The street abutting the project property is narrow; has an elementary school located to the west of the development; and was formally residentially in use so therefore has residential properties adjacent to it. What will the impact be on the street with the increased traffic that will arise due to the creation of this project? · On site parking for clients. The business will need to utilize a municipal parking lot that is diagonally located across Colorado Street from the business. Should a business that accommodates the needs of families and children have sufficient on-site parking? · Congestion, due to increased traffic, will impact the ability of the local residents to access their property with ease, as clients will use on street parking for access to the facility. How can local residents be assured that no access problems will occur due to this project? An Equal Opportunity/Safety Aware Employer o Printed on recycled paper containing 30% post consllmer content 210 Proposed action: Establishment of Tax Increment Financing District No. 5-1 and the adoption of the Tax Increment Financing Plan. Establishment of Development District No.5 and adoption of the Development Program A Redevelopment Development District _ Ehlers & Associates ., Tax Increment Financing District Overview City of Prior Lake - Tax Increment Financing District No. 5-1 Development District No.5: Type of TIF District: Parcel Number: 25-001103-0 Location: See the attached map The District is being created to facilitate the demolition and site clean- up of an existing home and construction of a dance studio in the City of Prior Lake. Proposed development: Estimated annual tax increment: $10,915 Proposed uses of funds: The TIF Plan contains the following budget: Land Acquisition ......................... $200,000 Site ImprovementslPreparation ................ 25,000 Streets and Sidewalks. . . . . . . . . . . . . . . . . . . . . . . . 20,000 Bond Interest .............................. 52,000 Administrative Costs (up to 10%) .............. 33,000 TOTAL ................................ $330,000 Form of financing: Maximum duration: Pay-as-you-go note The duration of the District will be 25 years after receipt of the first increment by the City (a total of26 years of tax increment). The date of receipt by the City of the first tax increment is expected to be 2008. Thus, it is estimated that the District, including any modifications of the TIF Plan for subsequent phases or other changes, would terminate after 2033, or when the TIF Plan is satisfied. Up to 10% of annual increment, if costs are justified. Administrative fee: _._____."____________~"_..___~...o.._~___"._,._,~__..._.~......._'" .,.""'___"'"'_"_,_",,~_,,~_,_,_,_._~_,_"w~~~__~_._,_.__,,~....__... . _. . ."...__~_~ TIF District Overview 4 Year Activity Rule (~469.176 Subd 6) After four years from the date of certification of the District one of the following activities must have been commenced on each parcel in the District: · demolition · rehabilitation · renovation · other site preparation (not including utility services such as sewer and water) If the activity has not been started by the approximately March, 2010, no additional tax increment may be taken from that parcel until the commencement of a qualifying activity. Within 5 years of certification revenues derived from tax increments must be expended or obligated to be expended. Tax increments are considered to have been expended on an activity within the District if one of the following occurs: the revenues are actually paid to a third party with respect to the activity · bonds, the proceeds of which must be used to finance the activity, are issued and sold to a third party, the revenues are spent to repay the bonds, and the proceeds of the bonds either are reasonably expected to be spent before the end of the later of (i) the five year period, or (ii) a reasonable temporary period within the meaning of the use of that tenn under 9. 148(c)(1) of the Internal Revenue Code, or are deposited in a reasonably required reserve or replacement fund · binding contracts with a third party are entered into for perfonnance of the activity and the revenues are spent under the contractual obligation · costs with respect to the activity are paid and the revenues are spent to reimburse a pay for payment of the costs, including interest on unreimbursed costs. Any obligations in the Tax Increment District made after approximately March, 2011, will not be eligible for repayment from tax increments. 5 Year Rule (~ 469.1763 Subd 3) The previous summary contains an overview of the basic elements of the proposed Tax Increment Financing Plan for Tax Increment Financing District No. 5-1. More detailed infonnation on each of these topics can be found in the complete TIF Plan. Page 2 ......_-~--...,--_.,----..------,-----_.. ..._----"_.~~~-,~.~.._,._~._.,.__......._.~_.~-,._-----_.~-----.._---_._- TIF District Overview The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan (TIF Plan) for Tax Increment Financing District No. 5-1 (District), as required pursuant to Minnesota Statutes, Section 469.175, Subdivision 3 are as follows: 1. Finding that Tax Increment Financing District No. 5-1 is a redevelopment district as defined in MS., Section 469.174, Subd. 10. The District consists of 1 parcel, with plans to redevelop the area for commercial purposes. At least 70 percent of the area of the parcels in the District are occupied by buildings, streets, utilities, paved or gravel parking lots or other similar structures 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 F 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. 5-1 permitted by the TIF 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 the TIF 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 property for expansion adjacent to the existing project, the incompatible land uses at close proximity, and the cost offmancing the proposed improvements, this project is feasible only through assistance, in part, from tax increment financing. The total amount of assistance to the project is $135,000. This amount will be used to assist with redevelopment cost and help the project become more financially feasible. The assistance is being used to assist with the purchase of the dilapidate building, demolition of the building (estimated to be $24,000) and other redevelopment costs. 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 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 TIF Plan: This finding is justified 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 determines 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 ofthe 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 $863,500. The present value oftax increments from the District is estimated to be $134,366. It is the Council's finding that no development with a market value of greater than $729,134 would occur without tax increment assistance in this district within 25 years. This fmding is based upon evidence from general past experience with the high cost of acquisition and demolition in the general area of the District. (See Cashflow in Appendix D of the TIF Plan.) Page 3 TIF District Overview 3. Finding that the Tax Increment Financing Plan for Tax Increment Financing District No. 5-1 conforms to the general plan for the development or redevelopment of the municipality as a whole. The Planning Commission reviewed the TIF Plan and found that the TIF Plan conforms to the general development plan of the City. 4. Finding that the Tax Increment Financing Plan for Tax Increment Financing District No. 5-1 will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development or redevelopment of Development District No. 5 by private enterprise. The project to be assisted by the TIF 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. Page 4 TIF District Overview BOUNDARY MAPS OF DEVELOPMENT DISTRICT NO.5 AND TAX INCREMENT FINANCING DISTRICT NO. 5-1 Page 5 I- Zll) I- ,... I CJ) ...C C'IJ III~ L() ~ :l1-~8 ZW ...... 0 wa: I (j A.UO<t: LO :iC I- U O_a:a: c:: We:) I- ...a:~O a:z en III I- U) -l Ci AV H.lnlna CJ- u.. >000 zCJ i= - () -z lIIaLLCO ~~ I a ~(O ...- v ~ ....,-_.~ ......,--- -....-...........- CtH U. tvt'V 1\ \1 tv 1\1JIv f.... CI) ~ f ~ ~ <;(' iff 1# (j lJ.J c5 il ~ en ~ z ~ LiS -.J a.. f.... CI) 8 g i5 () 1\\1 \110~ ~0'\1 As of February 23, 2006 DEVELOPMENT PROGRAM for DEVELOPMENT DISTRICT NO.5 CITY OF PRIOR LAKE SCOTT COUNTY STATE OF MINNESOTA Public Hearing: March 6, 2006 Adopted: e EHLERS Prepared by: EHLERS & ASSOCIATES, INC. 3060 Centre Pointe Drive, Roseville, Minnesota 55113-1105 & ASSOCIATES INC (651) 697-8500 fax: (651) 697-8555 www.ehlers-inc.com TABLE OF CONTENTS (for reference purposes only) MUNICIPAL ACTION TAKEN ................................................... i SECTION I DEVELOPMENT PROGRAM FOR DEVELOPMENT DISTRICT NO.5. . . . . . . . . . . .. 1-1 Subsection 1-1. Definitions.............................................. 1-1 Subsection 1-2. Statutory Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1-2 Subsection 1-3. Statement of and Finding of Public Purpose . . . . . . . . . . . . . . . . . . .. 1-2 Subsection 1-4. Statement of Objectives ................................... 1-3 Subsection 1-5. Statement of Public Facilities and Costs to Be Financed .......... 1-3 Subsection 1-6. Funding of Developments and Redevelopments ................ 1-3 Subsection 1-7. Environmental Controls. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1-4 Subsection 1-8. Proposed Reuse of Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1-4 Subsection 1-9. Open Space to Be Created . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1-4 Subsection 1-10. Administration and Maintenance of Development District No.5. . . .. 1-4 Subsection 1-11. Rehabilitation ........................................... 1-4 Subsection 1-12. Relocation.............................................. 1-4 Subsection 1-13. Property Acquisition ...................................... 1-4 Subsection 1-14. Modification to the Development Program and/or Development District No. 5 ..................................................... 1-5 Subsection 1-15. Boundaries of Development District NO.5. . . . . . . . . . . . . . . . . . . .. 1-5 MUNICIPAL ACTION TAKEN (This Municipal Action is only for convenience of reference.) Based upon the statutory authority described in the Development Program attached hereto, the public purpose findings by the City Council and for the purpose of fulfilling the Council's development objectives as set forth in the Development Program, the City Council has created, established and designated Development District No.5 pursuant to and in accordance with the requirements of the Development District Act and the TIF Act as defined in the definitions of this document. Tax Increment Financing District No. 5-1, a redevelopment tax increment financing district, was established at the same time that Development District No.5 was established. The following municipal action was taken in connection therewith: Development District No.5: March 6. 2006: Development District No.5 was established by the Council and the Development Program adopted. Tax Increment Financine District No. 5-1: March 6. 2006: Tax Increment Financing District No. 5-1 was established by the Council and the Tax Increment Financing Plan adopted. SECTION I DEVELOPMENT PROGRAM FOR DEVELOPMENT DISTRICT NO.5 Subsection 1-1. Definitions The terms defined below shall, for purposes of this Development Program, have the meanings herein specified, unless the context otherwise specifically requires. 1. "Authority" means the Prior Lake City Council. 2. "City" means the City of Prior Lake. 3. "Comprehensive Plan" means the documents which contain the objectives, policies, standards and programs to guide public and private land use, development, redevelopment and preservation for all lands and water within the City. 4. "County" means the County of Scott, Minnesota. 5. "Development Program" means this Development Program for Development District No.5, as initially proposed, and as it shall be modified. 6. "Development District Act" means Minnesota Statutes, Sections 469.124 to 469.134, inclusive, as amended. 7. "Land Use Regulations" means all federal, state and local laws, rules, regulations, ordinances, and plans relating to or governing the use of development of land in the City, including but not limited to environmental, zoning and building code laws and regulations. 8. "Project Area" means the real property within the City constituting Development District No.5. 9. "Public Costs" means the costs set forth in the Tax Increment Financing Plan, and any other costs eligible to be financed by Tax Increments under the TIF Act and the Development District Act. 10. "Public Improvements" means the public improvements described in the Development Program and Tax Increment Financing Plan. 11. "State" means the State of Minnesota. 12. "Tax Increment Bonds" means any tax increment bonds or notes, including pay-as-you-go notes, issued by the City to finance the Public Costs as stated in the Development Program for Development District No.5 and in the Tax Increment Financing Plans, and any obligations issued to refund such bonds. 13. "TIF Act" means Minnesota Statutes, Sections 479.174 through 479.1799, inclusive, as amended. 14. "Tax Increment Financing District" means any tax increment financing district presently established or to be established in the future in Development District No.5. 15. "Tax Increment Financing Plan" or "Plan" means the Plans adopted by the Authority for any Tax Increment Financing District. City of Prior Lake Development Program for Development District No.5 I-I Subsection 1-2. Statutory Authority The City established Development District No.5 pursuant to the Development District Act. It is authorized that the City will administer Development District No.5 and any tax increment financing districts. Within Development District No.5, the City plans to create one or more tax increment financing districts established pursuant to the Tax Increment Act to finance the public improvements proposed for the Development District. The public improvements may be initially financed from other City sources, including, but not limited to the use of improvement bonds issued pursuant to Minnesota Statutes, Chapter 429, which sources the City may reimburse from tax increment proceeds derived from tax increment districts to be created within Development District No.5. The tax increment district or districts will be created at such time as will enable the City to capture the increase in taxable value of private improvements to be constructed within Development District No.5. Subsection 1-3. Statement of and Finding of Public Purpose In recent months, the City has been reviewing the future development of the community. This review has defined several important roles for the City of Prior Lake. · Facilitating development activities that are compatible with overall community development objectives of the City. · Removing the physical and economic barriers to development. · Providing the infrastructure needed to support development. . Providing sites for future development. The City intends to use the powers allowed under the Development District Act to fill these roles, to promote development and redevelopment throughout the City, and to pool resources in order to reduce financial barriers to providing decent housing and development and redevelopment opportunities. The City has found that there is a need for development and redevelopment within the Development District based upon the following conditions: 1. The Development District suffers from a lack of necessary streets, utilities and site improvements essential to preparing and making sites available for meaningful development. 2. The Development District requires active promotion, attraction, encouragement and development of economically sound commerce through government action for the purpose of preventing emergence and continuation of blight and the occurrence of conditions requiring redevelopment 3. The Development District contains vacant, unused, underused and inappropriately used land. Therefore, the City has detennined to exercise its authority to develop a program for improving the Development District to provide impetus for private development and redevelopment, to maintain and increase employment, to provide infrastructure to serve citizens and employees of the City, to utilize existing land for potential redevelopment and to provide other facilities as are outlined in the Development Program. The City has also detennined that proposed developments to be assisted by the City would not occur solely through private investment in the foreseeable future. The City finds that the welfare of the City, as well as City of Prior Lake Development Program for Development District No.5 1-2 the State, requires active promotion, attraction, encouragement and development of economically sound industry and commerce to carry out its stated public purpose objectives. The City has also detennined that any tax increment financing plans to be proposed herein will be consistent with the Development Program, and that the tax increment financing plans will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development or redevelopment of the Development District by private enterprise. Subsection 1-4. Statement of Objectives The City detennines that it is necessary, desirable and in the public interest to establish, designate, develop and administer the Development District. The City detennines that the establishment of Development District No. 5 will provide the City with the ability to achieve certain public purpose objectives not otherwise obtainable in the foreseeable future without City intervention in the nonnal development process. The City seeks to achieve the following program objectives: 1. Promoting and securing the prompt development of property in the Development District in a manner consistent with the City's planning and with a minimal adverse impact on the environment, which property is less productive because of the lack of proper utilization and lack of investment, and thereby promoting and securing the development of other land in the City; 2. Promoting and securing additional employment opportunities within the Development District and the City for residents of the City and the surrounding area, thereby improving living standards and preventing unemployment and the loss of skilled and unskilled labor and other human resources in the City; 3. Securing the increase in value of property subject to taxation by the City, Independent School District No. 719 and Scott County, and any other taxing jurisdictions in order to better enable such entities to pay for public improvements and governmental services and programs required to be provided by them; 4. Securing the construction and providing of moneys for the payment of the cost of public improvements in the Development District, which are necessary for the orderly and beneficial development of the Development District; and Subsection 1-5. Statement of Public Facilities and Costs to Be Financed The preceding objectives will be promoted by providing improvements and opportunities within the Development District which may include various types of site improvements, land acquisition, redevelopment, demolition, parking, street, sewer, water and other public improvements. A description of the items of expenditure and the estimated costs can be found in the Tax Increment Financing Plans for the Tax Increment Financing Districts created within this Development District. Subsection 1-6. Funding of Developments and Redevelopments To implement the established objectives, the City plans to utilize a number of public and private financing tools. Funding of the necessary activities and improvements in the Development District is expected to be accomplished through, and is not limited to, tax increment financing, special assessments, state aid for road construction, proceeds from the sale of property, and federal and state grants. Any public facilities within the Development District will be financially feasible and compatible with longer range development plans. Any acquisition of property for the public improvements will be done to provide City of Prior Lake Development Program for Development District No.5 1-3 the impetus for private development within the Development District. Subsection 1-7. Environmental Controls All municipal actions, public improvements and private development shall be carried out in a manner consistent with existing environmental controls and all applicable Land Use Regulations. Subsection 1-8. Proposed Reuse of Property The Development Program contemplates that the City may acquire property and reconvey the same to another entity. Prior to formal consideration of the acquisition of any property, the City will require the execution of a binding development agreement with respect thereto and evidence that Tax Increments or other funds will be available to repay the Public Costs associated with the proposed acquisition. It is the intent of the City to negotiate the acquisition of property whenever possible. Appropriate restrictions regarding the reuse and redevelopment of property shall be incorporated into any development agreement to which the City is a party. Subsection 1-9. Open Space to Be Created Any open space within the Development District will be created in accordance with the zoning and ordinances of the City. Subsection 1-10. Administration and Maintenance of Development District No.5 Maintenance and operation of the Development District will be the responsibility of the City Clerk. Each year, the City Clerk will submit to the City Council the maintenance and operation budget for the following year. The City Clerk will administer the Development District pursuant to the provision of the Development Program; provided, however, that such powers may only be exercised at the direction of the City. No action taken by the City Clerk pursuant to the above-mentioned powers shall be effective without authorization by the City. Subsection 1-11. Rehabilitation Owners of properties within the Development District may be encouraged to rehabilitate their properties to conform with the applicable state and local codes and ordinances, as well as any design standards. Persons who purchase property within the Development District from the City may be required to rehabilitate their properties as a condition of sale of land. The City may provide such rehabilitation assistance as may be available from federal, state or local sources. Subsection 1-12. Relocation Any person or business that is displaced as a result of the Development Program will be relocated in accordance with Minnesota Statutes, Section 117.50 to 117.56. The City accepts its responsibility for providing for relocation assistance pursuant to the Development District. Subsection 1-13. Property Acquisition The City intends to acquire such property, or appropriate interest therein, within the Development District as the City may deem to be necessary or desirable to assist in the implementation of the Development Program. City of Prior Lake Development Program for Development District No.5 1-4 '~._._-~._.,,~__..~.._.,__..~_--t-___.~._~~"~~__.... .,_.._._,.._~.~_,_..____,_,_____~__,__.,,____ ..,_,..._,_~_,"_,,_,~,.._..,,_,"^__,",".....___^._~._.~~~__.__._.____~_____~_.,_~__,_ Subsection 1-14. Modification to the Development Program and/or Development District No.6 The City reserves the right to alter and amend the Development Program and the Tax Increment Financing Plans, subject to the provisions of state law regulating such action. The City specifically reserves the right to enlarge or reduce the size of the Development District and the Tax Increment Financing District, the Development Program, the Public Costs and the amount of Tax Increment Bonds to be issued to finance such cost by following the procedures specified in Minnesota Statutes, Section 469.175, Subd. 4. Subsection 1-16. Boundaries of Development District No.6 A boundary map of the Development District is shown on the attached Appendix A. City of Prior Lake Development Program for Development District NO.5 1-5 APPENDIX APPENDIX A MAP OF DEVELOPMENT DISTRICT NO.5 BOUNDARIES A-I ...C Zw wDl: :lc we a:z u- Zu -z ~~ ...- II. J... Ci) ~ ~ ~ f:t H '.J. NJIV .-1 It N /ItJIV .-1 It It/Q ItOeJlt ...... III I- U c:: I- C/) Ci LL i= I - C'IJ J: o (j ~ "(" if 1# (j I.J.J c5 i$ J... Ci) g l c5 () I- Zlftl~ III =It L() 0 :1...1-0 a.UO<( O_a:a: ...a:1-0 IIIl-cn...J >cnoO _ u lIIaU-co a 1-(0 v I- C/) I- Z <C C/) i1i ...J D.. ^ V' Hlnlna e As of February 24, 2006 Draft for City Review TAX INCREMENT FINANCING PLAN for the establishment of TAX INCREMENT FINANCING DISTRICT NO. 5-1 (a redevelopment district) within DEVELOPMENT DISTRICT NO.5 CITY OF PRIOR LAKE SCOTT COUNTY STATE OF MINNESOTA Public Hearing: March 6, 2006 Adopted: EHLERS Prepared by: EHLERS & ASSOCIATES, INC. 3060 Centre Pointe Drive, Roseville, Minnesota 55113-1105 651-697-8500 fax: 651-697-8555 www.ehlers-inc.com & ASSOCIATES INC TABLE OF CONTENTS (for reference purposes only) SECTION 11- TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO. 5-1 ........................ 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 ............................ 2-1 Subsection 2-5. Description of Property in the District and Property To Be Acquired . 2-2 Subsection 2-6. Classification of the District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2-2 Subsection 2-7. Duration of the District. .................................... 2-4 Subsection 2-8. Original Tax Capacity, Tax Rate and Estimated Captured Net Tax Capacity Value/Increment and Notification of Prior Planned Improvements. . . . . . . . . . . . . . .. 2-4 Subsection 2-9. Sources of Revenue/Bonded Indebtedness .................... 2-5 Subsection 2-10. Uses of Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2-6 Subsection 2-11. Fiscal Disparities Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2-6 Subsection 2-12. Business Subsidies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2-7 Subsection 2-13. County Road Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2-8 Subsection 2-14. Estimated Impact on Other Taxing Jurisdictions. . . . . . . . . . . . . . . .. 2-8 Subsection 2-15. Supporting Documentation ................................ 2-10 Subsection 2-16. Definition of Tax Increment Revenues ....................... 2-10 Subsection 2-17. Modifications to the District. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2-10 Subsection 2-18. Administrative Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2-11 Subsection 2-19. Limitation of Increment ................................... 2-12 Subsection 2-20. Use of Tax Increment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2-12 Subsection 2-21. Excess Increments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2-13 Subsection 2-22. Requirements for Agreements with the Developer. . . . . . . . . . . . .. 2-13 Subsection 2-23. Assessment Agreements ................................. 2-14 Subsection 2-24. Administration of the District. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2-14 Subsection 2-25. Annual Disclosure Requirements ........................... 2-14 Subsection 2-26. Reasonable Expectations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2-14 Subsection 2-27. Other Limitations on the Use of Tax Increment. . . . . . . . . . . . . . . .. 2-14 Subsection 2-28. Summary.............................................. 2-15 APPENDIX A PROJECT DESCRIPTION A-1 APPENDIX B MAPS OF DEVELOPMENT DISTRICT NO.5 AND THE DISTRICT. . . . . . . . . . . . . . .. B-1 APPENDIX C DESCRIPTION OF PROPERTY TO BE INCLUDED IN THE DISTRICT. . . . . . . . . . . .. C-1 APPENDIX D ESTIMATED CASH FLOW FOR THE DISTRICT .............................. D-1 APPENDIX E MINNESOTA BUSINESS ASSISTANCE FORM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. E-1 APPENDIX F REDEVELOPMENT QUALIFICATIONS FOR THE DISTRICT .................... F-1 APPENDIX G BUT/FOR QUALIFICATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G-1 SECTION 11- TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO. 5-1 Subsection 2-1. Foreword The City of Prior Lake (the "City"), staffand consultants have prepared the following information to expedite the establishment of Tax Increment Financing District No. 5-1 (the "District"), a redevelopment tax increment financing district, located in Development District No.5. Subsection 2-2. Statutory Authority Within the City, there exists 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. "), Sections 469.124 to 469.134, inclusive, as amended, and MS., Sections 469.174 to 469.1799, inclusive, as amended (the "Tax Increment Financing Act" or "TIF Act"), to assist in fmancing public costs related to this project. This section contains the Tax Increment Financing Plan (the "TIF Plan") for the District. Other relevant information is contained in the Development Program for Development District No.5. Subsection 2-3. Statement of Objectives The District currently consists of 1 parcel ofland and adjacent and internal rights-of-way. The District is being created to facilitate the demolition and site clean-up of an existing home and construction of a dance studio in the City of Prior Lake. Please see Appendix A for further project information. Contracts for this have not been entered into at the time of preparation of this TIF Plan, but development is likely to occur in 2006. This TIF Plan is expected to achieve many ofthe objectives outlined in the Development Program for Development District No.5. The activities contemplated in the Development Program and the TIF Plan do not preclude the undertaking of other qualified development or redevelopment activities. These activities are anticipated to occur over the life of Development District No.5 and the District. Subsection 2-4. Development Program Overview 1. Property to be Acquired - Selected property located within the District may be acquired by the City and is further described in this TIF Plan. 2. Relocation - Relocation services, to the extent required by law, are available pursuant to 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 it may acquire within the District or may lease land or facilities to a developer. 4. The City may perform or provide for some or all necessary acquisition, construction, relocation, demolition, and required utilities and public street work within the District. City of Prior Lake Tax Increment Financing Plan for Tax Increment Financing District No. 5-1 2-1 Subsection 2-5. Description of Property in the District and Property To Be Acquired The District encompasses all property and adjacent rights-of-way and abutting roadways identified by the parcel listed below. See the map in Appendix B for further information on the location of the District. Parcel Number 25-001103-0 The City may acquire any parcel within the District including interior and adjacent street rights of way . Any properties identified for acquisition will be acquired by the City only in order to accomplish one or more of the following: storm sewer improvements; provide land for needed public streets, utilities and facilities; carry out land acquisition, site improvements, clearance and/or development to accomplish the uses and objectives set forth in this plan. The City may acquire property by gift, dedication, condemnation or direct purchase from willing sellers in order to achieve the objectives of this TIF Plan. Such acquisitions will be undertaken only when there is assurance of funding to finance the acquisition and related costs. Subsection 2-6. Classification of the District The City, in determining the need to create a tax increment fmancing district in accordance with MS., Sections 469.174 to 469.1799, as amended, inclusive, fmds that the District, to be established, is a redevelopment district pursuant to MS., Section 469.174, Subd. IO(a)(I) as defmed below: (a) "Redevelopment district" means a type of tax incrementfinancing district consisting of a project, 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 of 70 percent of the area in the district are occupied by buildings, streets, utilities, paved or gravel parking lots or other similar structures and more than 50 percent of the buildings, not including outbuildings, are structurally substandard to a degree requiring substantial renovation or clearance; (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; (3) tankfacilities, or property whose immediately previous use wasfor tankfacilities, as defined in Section 115C, Subd. 15, if the tank facility: (i) have or had a capacity of more than one million gallons; (ii) are located adjacent to rail facilities; or (iii) have been removed, or are unused, underused, inappropriately used or infrequently used; or (4) a qualifying disaster area, as defined in Subd. IOb. (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, fire 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. City of Prior Lake Tax Increment Financing Plan for Tax Increment Financing District No. 5-1 2-2 (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 to gain access to the property after using its best efforts to obtain permission from 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 building for purposes of the finding under paragraph (a) if all of the following conditions are met: (1) 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 ~ 469.177, subdivision 1, paragraph (j). (e) For purposes of this subdivision, a parcel is not occupied by buildings, streets, utilities, paved or gravel parking lots or other similar structures unless 15 percent of the area of the parcel contains buildings, streets, utilities, paved or gravel parking lots or other similar structures. (j) 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 is a redevelopment district consisting of 1 parcel. · An inventory shows that parcels consisting of more than 70 percent of the area in the District are occupied by buildings, streets, utilities, paved or gravel parking lots or other similar structures. · An inspection of the buildings located within the District finds that more than 50 percent of the buildings are structurally substandard as defmed in the TIF Act. (See Appendix F). Pursuant to MS., Sections 469.176 Subd. 7, the District does not contain any parcel or part of a parcel that qualified under the provisions of MS., Sections 273.111 or 273.112 or Chapter 473Hfor taxes payable in City of Prior Lake Tax Increment Financing Plan for Tax Increment Financing District No. 5-1 2-3 any of the five calendar years before the filing of the request for certification of the District. Subsection 2-7. 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 TIF Plan. Pursuant to MS., Section 469.176, Subd. 1 b, the duration of the District will be 25 years after receipt of the first increment by the City (a total of26 years of tax increment). The date of receipt by the City of the first tax increment is expected to be 2008. Thus, it is estimated that the District, including any modifications of the TIF Plan for subsequent phases or other changes, would terminate after 2033, or when the TIF Plan is satisfied. Ifincrement is received in 2007, the term ofthe District will be 2032. The City reserves the right to decertify the District prior to the legally required date. Subsection 2-8. Original Tax Capacity, Tax Rate and Estimated Captured Net Tax Capacity Value/Increment and Notification of Prior Planned Improvements Pursuant to MS., Section 469.174, Subd. 7 and MS., Section 469.177, Subd. 1, the Original Net Tax Capacity (ONTC) as certified for the District will be based on the market values placed on the property by the assessor in 2005 for taxes payable 2006. Pursuant to MS., Section 469.177, Subds. 1 and 2, the County Auditor shall certify in each year (beginning in the payment year 2007) the amount by which the original value has increased or decreased as a result of: 1. Change in tax exempt status of property; 2. Reduction or enlargement of the geographic boundaries of the district; 3. Change due to adjustments, negotiated or court-ordered abatements; 4. Change in the use of the property and classification; 5. Change in state law governing class rates; or 6. Change in previously issued building permits. In any year in which the current Net Tax Capacity (NTC) value of the District declines below the ONTC, no value will be captured and no tax increment will be payable to the City. The original local tax rate for the District will be the local tax rate for taxes payable 2006, assuming the request for certification is made before June 30, 2006. The ONTC and the Original Local Tax Rate for the District appear in the table below. Pursuant to MS., Section 469.174 Subd. 4 and MS., Section 469.177, Subd. 1, 2, and 4, the estimated Captured Net Tax Capacity (CTC) of the District, within Development District No.5, upon completion of the project, will annually approximate tax increment revenues as shown in the table below. The City requests 100 percent ofthe available increase in tax capacity for repayment of its obligations and current expenditures, beginning in the tax year payable 2008. The Project Tax Capacity (PTC) listed is an estimate of values when the project is completed. City of Prior Lake Tax Increment Financing Plan for Tax Increment Financing District No. 5-1 2-4 Gross Project Estimated Tax Capacity upon Completion Fiscal Disparities from Inside the TIF District Net Project Estimated Tax Capacity updon Completion (PTC) Original Estimated Net Tax Capacity (ONTC) Estimated Captured Tax Capacity (CTC) Original Local Tax Rate Estimated Annual Tax Increment (CTC x Local Tax Rate) Percent Retained by the City $19,950 $7,096 $12,854 $2,680 $10,174 1.07285 Pay 2005 $10,915 100% Pursuant to MS., Section 469.177, Subd. 4, the City shall, after a due and diligent search, accompany its request for certification to the County Auditor or its notice of the District enlargement pursuant to 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 TIF Plan by the municipality pursuanttoMS., 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 of Prior Lake 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 ofthe TIF Plan by the City. Subsection 2-9. Sources of Revenue/Bonded Indebtedness Public improvement costs, acquisition, relocation, utilities, parking facilities, streets and sidewalks, and site preparation costs and other 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. The City reserves the right to incur bonded indebtedness or other indebtedness as a result of the TIF Plan. As presently proposed, the project will be financed by a pay-as-you-go note. Additional indebtedness may be required to finance other authorized activities. The total principal amount of bonded indebtedness, including a general obligation (GO) TIF bond, or other indebtedness related to the use of tax increment financing will not exceed $330,000 without a modification to the TIF Plan pursuant to applicable statutory requirements. It is estimated that $330,000 in bonded indebtedness will be fmanced with tax increment revenues. This provision does not obligate the City to incur debt. The City will issue bonds or incur other debt only upon the determination that such action is in the best interest of the City. The City may also finance the ac- tivities to be undertaken pursuant to the TIF Plan through loans from funds of the City or to reimburse the developer on a "pay-as-you-go" basis for eligible costs paid for by a developer. The estimated sources of funds for the District are contained in the table below. City of Prior Lake Tax Increment Financing Plan for Tax Increment Financing District No. 5-1 2-5 SOURCES OF FUNDS TOTAL $330,000 $330.000 Tax Increment PROJECT REVENUES Subsection 2-10. Uses of Funds Currently under consideration for the District is a proposal to facilitate the demolition and site clean-up of an existing home and construction of a dance studio. The City has determined that it will be necessary to provide assistance to the project for certain costs. The City has studied the feasibility ofthe development or redevelopment of property in and around the District. To facilitate the establishment and development or redevelopment of the District, this TIF Plan authorizes the use of tax increment fmancing 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 $200,000 $25,000 $20,000 $52,000 $33,000 $330.000 Land/Building Acquisition Site Improvements/Preparation Streets and Sidewalks Bond Interest Administrative Costs (up to 10%) PROJECT COSTS TOTAL The above budget is organized according to the Office of State Auditor (OSA) reporting forms. It is estimated that the cost of improvements, including administrative expenses and financing which will be paid or financed with tax increments, will equal $330,000, which includes all authorized obligations, as is presented in the budget above. Estimated costs associated with the District are subject to change among categories without a modification to this TIF Plan. The cost of all activities to be considered for tax increment financing will not exceed, without formal modification, the budget above pursuant to the applicable statutory requirements. Pursuant to MS., Section 469.1763, Subd. 2, no more than 25 percent of the tax increment paid by property within the District will be spent on activities related to development or redevelopment outside of the District but within the boundaries of Development District No.5, (including administrative costs, which are considered to be spent outside of the District) subject to the limitations as described in this TIF Plan. Subsection 2-11. 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 b, (within the District) are followed, the following method of computation shall apply: (1) The original net tax capacity shall be determined before the application of the fiscal disparity provisions of Chapter 276A or 473F. The current net tax capacity shall exclude any fiscal disparity commercial-industrial net tax capacity increase between the original year and the City of Prior Lake Tax Increment Financing Plan for Tax Increment Financing District NO.5-I 2-6 current year multiplied by the fiscal disparity ratio determined pursuant to MS., Section 276A.06, subdivision 7 or MS., Section 473F.08, subdivision 6. Where the original net tax capacity is equal to or greater than the current net tax capacity, there is no captured tax capacity and no tax increment determination. Where the original tax capacity is less than the current 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 thereofwhich the authority has designated, in its tax increment financing plan, 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 generated by the extension of the less 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 will choose to calculate fiscal disparities by clause b. 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 2-12. Business Subsidies Pursuant to MS. Sections 116J.993, Subd. 3, the following forms offmancial assistance are not considered a business subsidy: (1) A business subsidy ofless than $25,000; (2) Assistance that is generally available to all businesses or to a general class of similar businesses, such as a line of business, size, location, or similar general criteria; (3) Public improvements to buildings or lands owned by the state or local government that serve a public purpose and do not principally benefit a single business or defined group of businesses at the time the improvements are made; (4) Redevelopment property polluted by contaminants as defined in MS., Section 116J.552, Subd. 3; (5) Assistance provided for the sole purpose of renovating old or decaying building stock or bringing it up to code and assistance provided for designated historic preservation districts, provided that the assistance is equal to or less than 50% of the total cost; (6) Assistance to provide job readiness and training services if the sole purpose of the assistance is to provide those services; (7) Assistance for housing; (8) Assistance for pollution control or abatement, including assistance for a tax increment financing hazardous substance subdistrict as defined under MS., Section 469.174, Subd. 23; (9) Assistance for energy conservation; (10) Tax reductions resulting from conformity with federal tax law; (11) Workers' compensation and unemployment compensation; (12) Benefits derived from regulation; (13) Indirect benefits derived from assistance to educational institutions; City of Prior Lake Tax Increment Financing Plan for Tax Increment Financing District No. 5-1 2-7 (14) Funds from bonds allocated under chapter 474A, bonds issued to refund outstanding bonds, and bonds issued for the benefit of an organization described in section 501 (c) (3) of the Internal Revenue Code of 1986, as amended through December 31, 1999; (15) Assistance for a collaboration between a Minnesota higher education institution and a business; (16) Assistance for a tax increment fmancing soils condition district as defined under MS., Section 469.174, Subd. 19; (17) Redevelopment when the recipient's investment in the purchase of the site and in site preparation is 70 percent or more of the assessor's current year's estimated market value; (18) General changes in tax increment financing law and other general tax law changes of a principally technical nature. (19) Federal assistance until the assistance has been repaid to, and reinvested by, the state or local government agency; (20) Funds from dock and wharf bonds issued by a seaway port authority; (21) Business loans and loan guarantees of $75,000 or less; and (22) Federal loan funds provided through the United States Department of Commerce, Economic Development Administration. The City will comply with MS., Section 116J.993 to 116J.995 to the extent the tax increment assistance under this TIF Plan does not fall under any of the above exemptions. Subsection 2-13. 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. If the county elects to use increments to improve county roads, it must notify the City within forty-five days of receipt of this TIF Plan. The City is aware that the county could claim that tax increment should be used for county roads, even after the public hearing. Subsection 2-14. 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 determined that such development or redevelopment would not occur "but for" tax increment fmancing and that, therefore, the fiscal impact on other taxing jurisdictions is $0. The estimated fiscal impact of the District would be as follows if the "but for" test was not met: City of Prior Lake Tax Increment Financing Plan for Tax Increment Financing District No. 5-1 2-8 -"-"--'---~"'-~~~_''''_''~'<____'~~~'''_____'~b'''''''''.,~ .... ,_,<,_"_,~~,,,__~,_~__,~~'~u"_'_____"""".~____.__,,_.'__'_'_'~_~__,_._._."__.____....__.._.__ IMPACT ON TAX BASE Estimated Estimated Captured 2005/2006 Tax Capacity (CTC) Total Net Upon Completion Tax Capacity Percent of CTC to Entitv Total Scott County City of Prior Lake ISD No. 719 118,130,745 21,452,916 36,651,269 10,174 10,174 10,174 0.0086% 0.0474% 0.0278% IMPACT ON TAX RATES Scott County City of Prior Lake ISD No. 719 Other Total Estimated Percent Potential 2005/2006 of Total CTC Taxes Extension Rates 0.343100 31.98% 10,174 3,491 0.313370 29.21% 10,174 3,188 0.346000 32.25% 10,174 3,520 0.070380 6.56% 10.174 716 1.072850 100.00% 10,915 The estimates listed above display the captured tax capacity when all construction is completed. The tax rate used for calculations is the estimated 2005IPay 2006 rate. The total net capacity for the entities listed above are based on estimated Pay 2006 figures. The District will be certified under the actual2005IPay 2006 rates, which were unavailable at the time this TIF Plan was prepared. Pursuant to MS. Section 469.175 Subd. 2(b): 1. It is estimated that the total amount of tax increment that will be generated over the life of the District is $330,000 2. The probable impact of the District on police protection is not expected to be significant. The probable impact ofthe District on fire protection is not expected to be significant according to the Fire Chief. Typically new buildings generate few calls, if any, and are of superior construction. The existing building, which will be eliminated by the new development, has public safety concerns that include issues such as access, defects in structural elements, deficiencies in essential facilities, such as fire protection and adequate egress. The levels of deficiencies in the existing building j ustify substantial renovation or clearance. Thus, the impact of the District's new building on fire protection will not be increased. The impact ofthe District on public infrastructure is expected to be minimal. According to the public works department, the current infrastructure for sanitary sewer, storm sewer and water will be able to handle the additional volume generated from the proposed development. Based on the development plans, additional costs, including street maintenance, sweeping, plowing, lighting and sidewalks are minimal because no new roads are being constructed. The development in the District is expected to contribute an estimated $4,900 in sanitary sewer (SAC) and water (WAC) connection fees. City of Prior Lake Tax Increment Financing Plan for Tax Increment Financing District No.5-I 2-9 The probable impact of borrowing costs is expected to be minimal. It is not anticipated that there will be any general obligation debt issued in relation to this project, therefore there will be no impact on the City's ability to issue future debt or on the City's debt limit. 3. It is estimated that the amount of tax increments over the life of the District that would be attributable to school district levies, assuming the school district's share of the total local tax rate for all taxing jurisdictions remained the same is $91,520; 4. It is estimated that the amount of tax increments over the life of the District that would be attributable to county levies, assuming the county's share of the total local tax rate for all taxing jurisdictions remained the same is $90,766; 5. No requests for additional infonnation from the county or school district regarding the proposed development for the District were received. Subsection 2-15. Supporting Documentation Pursuant to MS. Section 469.175 Subd 1, clause 7 the TIF Plan must contain identification and description of studies and analyses used to make the detennination set forth in MS. Section 469.175 Subd 3, clause (b)(2) and the findings are required in the resolution approving the TIF district. Following is a list of reports and studies on file at the City that support the Authority's findings: · City of Prior Lake 2030 Vision and Strategic Plan · Prior Lake Development Potential and Market Analysis (by McComb Group) · Prior Lake Business Subsidy Policy and TIF Policy · TIF Application for proposed TIF District 5-1 · Report of Inspection Procedures and Results for Detennining Qualifications of a Tax Increment Financing District as a Redevelopment District (by LHB on December 16, 2005) Subsection 2-16. Definition of Tax Increment Revenues Pursuant to MS., Section 469.174, Subd. 25, tax increment revenues derived from a tax increment financing district include all of the following potential revenue sources: 1. Taxes paid by the captured net tax capacity, but excluding any excess taxes, as computed under MS., Section 469.177; 2. The proceeds from the sale or lease of property, tangible or intangible, to the extent the property was purchased by the Authority with tax increments; 3. Principal and interest received on loans or other advances made by the Authority with tax increments; 4. Interest or other investment earnings on or from tax increments; 5. Repayments or return of tax increments made to the Authority under agreements for districts for which the request for certification was made after August 1, 1993; and 6. The market value homestead credit paid to the Authority under MS., Section 273.1384. Subsection 2-17. Modifications to the District In accordance with MS., Section 469.175, Subd. 4, any: City of Prior Lake Tax Increment Financing Plan for Tax Increment Financing District No. 5-1 2-10 --'~-_"________'~____'''~'~''~~~_.''''''''''''''_.'_.~.~_b~_~.~ "_"'~~"..~,~_~~~__._..~.,.._~...~_,...,~_~__._.___.."."_,,. . _,_.~,__.__ ... '___' __'__"_'_'''~''_'''__'.__'''______'___,"..,~.____.___,____,~__~..____.,,_..._.... 1. Reduction or enlargement of the geographic area of Development District No. 5 or the District, ifthe reduction does not meetthe requirements of MS., Section 469.175, Subd. 4(e); 2. Increase in amount of bonded indebtedness to be incurred; 3. A determination to capitalize interest on debt if that determination was not a part of the original TIF Plan, or to increase or decrease the amount of interest on the debt to be capitalized; 4. Increase in the portion of the captured net tax capacity to be retained by the City; 5. Increase in the estimate of the cost of the project, including administrative expenses, that will be paid or financed with tax increment from the District; or 6. Designation of additional property to be acquired by the City, shall be approved upon the notice and after the discussion, public hearing and fmdings required for approval of the original TIF Plan. Pursuantto MS. Section 469.175 Subd. 4(f), 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, paragraph (a), clauses (1) to (5), must be documented in writing and retained. The requirements of this paragraph do not apply if (1) the only modification is elimination of parcel(s) from Development District No.5 or the District and (2) (A) the current net tax capacity ofthe parcel(s) eliminated from the District equals or exceeds the net tax capacity of those 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. 5 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. Subsection 2-18. Administrative Expenses In accordance with MS., Section 469.174, Subd. 14, administrative expenses means all expenditures of the City, other than: 1. 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 fmancial obligations to the extent those obligations were used to finance costs described in clauses (1) to (3). For districts for which the request for certification were made before August 1, 1979, or after June 30, 1982, administrative expenses also include amounts paid for services provided by bond counsel, fiscal consultants, and planning Or economic development consultants. Pursuant to MS., Section 469.176, Subd. 3, 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 estimated tax increment expenditures authorized by the TIF Plan City of Prior Lake Tax Increment Financing Plan for Tax Increment Financing District No. 5-1 2-11 ~'"----_.~~--......_- .._~-----'-----,,~._--~---.,"~_.,--'".'^._'"--_._-_.~,_..--~-,--"._~_.....,.,_... _._._'~-~~-----~--~-_._."---",._- or the total tax increments, as defined by MS., Section 469.174, Subd. 25, clause (1), from the District, 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 ofthe year following the year the expenses were incurred. Pursuant to MS., Section 469. 177, Subd. 11, the County Treasurer shall deduct an amount (currently .36 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 information and the cost of examining and auditing authorities' use of tax increment financing. This amount may be adjusted annually by the Commissioner of Revenue. Subsection 2-19. Limitation of Increment The tax increment pledged to the payment of bonds and interest thereon may be discharged and the District may be terminated if sufficient funds have been irrevocably deposited in the debt service fund or other escrow account held in trust for all outstanding bonds to provide for the payment of the bonds at maturity or redemption date. Pursuant to MS., Section 469.176, Subd. 6: if, after four years from the date of certification of the original net tax capacity of the tax increment financing district pursuant to MS., Section 469.177, no 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, has been commenced on a parcel located within a tax increment financing district by the authority or by the owner of the parcel in accordance with the tax incrementfinancingplan, no additional tax increment may be takenfrom that parcel and the original net tax capacity of that parcel shall be excluded from the original net tax capacity of the tax increment financing district. If the authority or the owner of the parcel subsequently commences demolition, rehabilitation or renovation or other site preparation on that parcel including qualified improvement of a street adjacent to that parcel, in accordance with the tax increment financing plan, the authority 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 county auditor must enforce the provisions of this subdivision. The authority 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 1 of the fifth year following the year in which the parcel was certified as included in the district. For purposes of this subdivision, qualified improvements of a street are limited to (1) construction or opening of a new street, (2) relocation of a street, and (3) substantial reconstruction or rebuilding of an existing street. The City or a property owner must improve parcels within the District by approximately March, 2010 and report such actions to the County Auditor. Subsection 2-20. Use of Tax Increment 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: City of Prior Lake Tax Increment Financing Plan for Tax Increment Financing District No.5-I 2-12 1. To pay the principal of and interest on bonds issued to finance a project; 2. To finance, or otherwise pay the capital and administration costs of Development District No.5 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; 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 of the City or for the benefit of Development District No.5 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 outside the District. Subsection 2-21. Excess Increments ' Excess increments, as defined inMS., Section 469.176, Subd. 2, shall be used only to do one or more of the following: 1. Prepay any outstanding bonds; 2. Discharge the pledge of tax increment for any outstanding bonds; 3. Pay into an escrow account dedicated to the payment of any outstanding bonds; or 4. Return the excess to the County Auditor for redistribution to the respective taxing jurisdictions in proportion to their local tax rates. The City must spend or return the excess increments under paragraph (c) within nine months after the end of the year. In addition, the City may, subject to the limitations set forth herein, choose to modify the TIF Plan in order to fmance additional public costs in Development District No.5 or the District. Subsection 2-22. 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 TIF Plan shall at any time be owned by the City as a result of City of Prior Lake Tax Increment Financing Plan for Tax Increment Financing District No. 5-1 2-13 -_...~~--_._,..", ~_"_~_""__""~_'__.h____""""""""_~'__'_'M--,"_~........"_~.__,,_~~.~M'.__._.... .~,_,.~____..__~,._______"_._.,.,,,.",."__._'m_.'_.__ ".,.__. acquisition with the proceeds of bonds issued pursuant to MS., Section 469.178 to which tax increments from property acquired is pledged, unless prior to acquisition in excess of 25 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 2-23. Assessment Agreements Pursuant to MS., Section 469.177, Subd. 8, the City may enter into a written assessment agreement in recordable fonn 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 County 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 County Assessor shall also certify the minimum market value agreement. Subsection 2-24. Administration of the District Administration of the District will be handled by the City Clerk. Subsection 2-25. Annual Disclosure Requirements Pursuant to MS., Section 469.175, Subd. 5, 6, and 6b the City must undertake fmancial 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 1 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 15. If the City fails to make a disclosure or submit a report containing the infonnation required by MS., Section 469.175 Subd. 5 and Subd. 6, the OSA will direct the County Auditor to withhold the distribution of tax increment from the District. Subsection 2-26. Reasonable Expectations As required by the TIF Act, in establishing the District, the detennination 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 fmancing 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 pennitted by the TIF Plan. In making said detennination, reliance has been placed upon written representation 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 perfonned as described above. Such analysis is included with the cashflow in Appendix D, and indicates that the increase in estimated market value of the proposed development (less the indicated subtractions) exceeds the estimated market value of the site absent the establishment of the District and the use of tax increments. Subsection 2-27. Other Limitations on the Use of Tax Increment 1. General Limitations. All revenue derived from tax increment shall be used in accordance with the TIF City of Prior Lake Tax Increment Financing Plan for Tax Increment Financing District No. 5-1 2-14 "'---'---'--~-'-~+~~_._.~...., '-^---"""---' - __......~_~_~.~.__._~___.~__h._____,,_.__. __.._._._...., __"~"'____'."_~___M Plan. The revenues shall be used To finance, or otherwise pay the capital and administration costs of Development District No. 5 pursuant to the MS., Sections 469.124 to 469.134. Tax increments may not be used to circumvent existing levy limit law. No tax increment may be used for the acquisition, construction, renovation, operation, or maintenance of a building to be used primarily and regularly for conducting the business of a municipality, county, school district, or any other local unit of government or the state or federal government. This provision does not prohibit the use of revenues derived from tax increments for the construction or renovation of a parking structure. 2. Pooling Limitations. At least 75 percent of tax increments from the District must be expended on activities in the District or to pay bonds, to the extent that the proceeds of the bonds were used to finance activities within said district or to pay, or secure payment of, debt service on credit enhanced bonds. Not more than 25 percent of said tax increments may be expended, through a development fund or otherwise, on activities outside of the District except to pay, or secure payment of, debt service on credit enhanced bonds. For purposes of applying this restriction, all administrative expenses must be treated as if they were solely for activities outside of the District. 3. Five Year Limitation on Commitment of Tax Increments. Tax increments derived from the District shall be deemed to have satisfied the 75 percent test set forth in paragraph (2) above only if the five year rule set forth in MS., Section 469.1763, Subd. 3, has been satisfied; and beginning with the sixth year following certification of the District, 75 percent of said tax increments that remain after expenditures pennitted under said five year rule must be used only to pay previously committed expenditures or credit enhanced bonds as more fully set forth in MS., Section 469.1763, Subd. 5. 4. Redevelopment District. At least 90 percent of the revenues derived from tax increment from a redevelopment district must be used to fmance the cost of correcting conditions that allow designation of redevelopment and renewal and renovation districts under MS., Section 469.176 Subd. 4j. 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 pennit development, demolition and rehabilitation of structures, clearing of the land, the removal of hazardous substances or remediation necessary for development of the land, and installation of utilities, roads, sidewalks, and parking facilities for the site. The allocated administrative expenses of the City, including the cost of preparation of the development action response plan, may be included in the qualifying costs. Subsection 2-28. 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 TIF 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. 5-1 2-15 APPENDIX A PROJECT DESCRIPTION Tax Increment District No. 5-1 is being established to facilitate the development of a 10,000 square foot dance studio. The estimated cost for the structure is $980,000. Tax increment in the amount of$135,000 is being requested to assist with demolition of the blighted house and to redevelop the site into a commercial property. The City will include a provision to the development agreement to assure that the amount of assistance does not exceed the actual costs. APPENDIX A-I --'--~----_._-~---,.. ',--_._~-~...__._-~.~"."-".__.,-_._-,,--_..__. -~.."._.-.......,~_._---~"..~,_._--_._,-_._..--,-,-_._.~""'~'_."--'--'--~'''_._''''''--------''-''~ APPENDIX APPENDIX B MAPS OF DEVELOPMENT DISTRICT NO.5 AND THE DISTRICT B-1 ...cc ZW Wa= ==:cc We) a=z u- Zu -z =~ ...- II. ...... I LO l- t) ii: I- en o u.. ~ I J... CI) ~ ~ ~ el H '.J.NVV '" \1 NI\1VV '" \1 \1IQ \100'\1 .... C'IJ .:t' o () ~ ~ i5 1# (j l.L.J c5 W I- CI) g g cf () ... ZIl)I~ III =11= L() 0 ::EI-r-o A.UO<( O_a:a: ...a:r-O 1II1-Cf)...J >cnOO _ 0 lIIaLLCO a r-co v I- CJ) I- Z ~ ..J a.. Nv Hlnlna APPENDIX C DESCRIPTION OF PROPERTY TO BE INCLUDED IN THE DISTRICT The District encompasses all property and adjacent rights-of-way and abutting roadways identified by the parcel listed below. Parcel Number Address Owner 25-001103-0 4616 Colorado St SE Dawn Schulberg APPENDIX c-! APPENDIX D ESTIMATED CASH FLOW FOR THE DISTRICT APPENDIX D-I 31312006 . EHLERS . ......C.4T.. ..C Page 1 of 2 Proposed Redevelopment Project - Dance Studio CITY OF PRIOR LAKE, MINNESOTA - Redevelopment TIF District . - 1I_I;I~i~II.IIi~I;I~~I_i:'l'- - __._P'I District New Redevelopment District County District II Inflation Rate. Every _ Years Pay-As-You-Go Interest Ratei Note Issued Date (Present Value Date)i Local Tax Rate - Certified Fiscal Disparities Election (A - outside or B inside) Year District was certified Assumes First Tax Increment For District Assumes First Tax lnaement For Dev Years of Tax Increment Assumes Last Year of Tax Increment Fiscal Disparities Ratio Fiscal Disparities Metro 'Mde Tax Rate Local Tax Rate - Current State 'Mde Property Tax Rate (Used for total taxes) Market Value Tax Rate (Used for total taxes) CommerciallndustriaJ Class Rate First 150,000 Over 150,000 Rental Class Rate Residental Class Rate Under $500,000 H~1!ijftiiii(illlm!!1 2.??oo% 6.0000% 01-Fe1>-07 107.2850% est. Pay 2006 B 2006 2008 August 2008 26 2033 35.5686% est. Pay 2006 121.8020% Pay 2006 107.2850% est. Pay 2006 51.??oo% est. Pay 2006 0.21209% est. Pay 2006 1.5%-2.0% Pay 2006 1.50% 2.00% 1.25% Pay 2006 1.0%-1.25% 1.00% i Property Land Building Total Class Base Date PID Owner Market Value Market Value Market Value Rate Tax Caoacitv Pavable 25-001103-0 50,000 121,500 171,500 1.5%-2.0% 2,680 2005 Totals 171,500 2,680 Total Market Value Taxes Per Total Market Class New Date Use Sq. FtJUnits So. FtJUnits Sq. Ft.lUnils Taxes Value Rate Tax Caoacitv Pavable Commercial 34,803 1,035,000 1.5%-2.0% 19,950 2008 TOTAL 34,803 1,035,000 19,950 Note: 1. Final taxes are based upon market value. 2. T1F run assumes 100% of the building is constructed by January 2,2007 for payable 2008. 3. Market value is estimated at 90% of estimated land ($200,000) and construction ($950,000) expense. Final market value will be provided by the County Assessor. II I i I II Total Local Fiscal Local Fiscal State-wide Local Fiscal State-wlde Market Use Tax Tax Disparities Tax Disparities Property Taxes Disparities Property Value Total Caoacitv Caoacitv Tax Caoacilv Rate Tax Rate Tax Rate Taxes Tax_ Taxes Taxes Man 19,950 12,854 7,096 1.07285 1.21802 0.51000 13,790 8,843 10,175 2,195 34,803 TOTAL 19,950 12,854 7,096 1.07285 1.21802 0.51000 13,790 8,643 10,175 2, 195 34,803 Note: 1. City of Prior Lake does pay Fiscal Disparities. Cashflow assumes that Fiscal Disparities will be paid from inside the District. Pntpored by Ehlol$ ---__~___..~...~...,_.".,_,".M_~M.'.".,.__.,,"~O__~,~.~._._'""~~'"~"--"'"'_"'_""_"_'''_.____'', ....~__._~W_""'.__.-~_.._~~~ Cuh!low3.1.- 3/312006 Page 2 of 2 . EHLERS . AI&.':"'11. ""~ CITY OF PRIOR LAKE, MINNESOTA - Redevelopment T1F District Proposed Redevelopment Project - Dance Studio Semi-Annual Admin. Semi-Annual Semi-Annual PA PERIOD BEGINNING Gross Tax AudRor & Pooling Net Tax Cumrn. Present PERIOD ENDING YIS. Mlh. Yr. Increment 0.36% 10.00% Increment TlF Value YIS. Mlh. Yr. 0.0 06-01 2005 0 0 0 0 0 0 0 0 0 0.0 02-01 2006 0.0 02-01 2006 0 0 0 0 0 0 0 0 0 0.0 08-01 2006 0.0 06-01 2006 0 0 0 0 0 0 0 0 0 0.0 02-01 2007 0.0 02-01 2007 0 0 0 0 0 0 0 0 0 0.0 08-01 2007 0.0 06-01 2007 0 0 0 0 0 0 0 0 0 0.0 02-01 2008 0.0 02-01 2008 2,880 12,854 10,174 5,458 (20) (544) 4,894 4,894 4,479 _1_' 0.5 06-01 200B 2,880 12,854 10,174 5,458 (20) (544) 4,894 9,788 8,827 1.0 02-01 2009 1.0 02-01 2009 2,880 12,854 10,174 5,458 (20) (544) 4,894 14,683 13,049 1.5 08-01 2009 1.5 06-01 2009 2,880 12,854 10,174 5,458 (20) (544) 4,894 19,577 17,148 2.0 02-01 2010 2.0 02-01 2010 2,880 13,111 10,431 5,596 (20) (558) 5,018 24,595 21,228 2.5 08-01 2010 2.5 06-01 2010 2,880 13,111 10,431 5,596 (20) (558) 5,018 29,812 25,189 3.0 02-01 2011 3.0 02-01 2011 2,880 13,373 10,893 5,736 (21) (572) 5,144 34,758 29,131 3.5 08-01 2011 3.5 08-01 2011 2,880 13,373 10,893 5,736 (21) (572) 5,144 39,900 32,959 4.0 02-01 2012 4.0 02-01 2012 2,880 13,641 10,961 5,880 (21) (586) 5,273 45,173 36,768 4.5 08-01 2012 4.5 06-01 2012 2,880 13,641 10,961 5,880 (21) (586) 5,273 50,448 40,486 5.0 02-01 2013 5.0 02-01 2013 2,880 13,914 11,234 8,026 (22) (600) 5,404 55,850 44,148 5.5 08-01 2013 5.5 06-01 2013 2,880 13,914 11,234 6,026 (22) (600) 5,404 61,253 47,719 6.0 02-01 2014 6.0 02-01 2014 2,880 14,192 11,512 6,175 (22) (615) 5,538 68,791 51,273 6.5 08-01 2014 6.5 06-01 2014 2,880 14,192 11,512 6,175 (22) (615) 5,538 72,329 54,724 70 02-01 2015 7.0 02-01 2015 2,880 14,476 11,796 6,328 (23) (630) 5,674 78,003 58,157 7.5 08-01 2015 7.5 06-01 2015 2,880 14,476 11,796 6,328 (23) (630) 5,674 83,678 61,490 8.0 02-01 2016 8.0 02-01 2016 2,880 14,765 12,085 6,483 (23) (648) 5,814 89,491 64,805 8.5 08-01 2016 8.5 06-01 2016 2,880 14,765 12,085 6,483 (23) (648) 5,814 95,305 68,024 9.0 02-01 2017 9.0 02-01 2017 2,880 15,061 12,381 6,641 (24) (662) 5,958 101,260 71,226 9.5 08-01 2017 9.5 06-01 2017 2,880 15,061 12,381 6,641 (24) (662) 5,958 107,216 74,334 10.0 02-01 2018 10.0 02-01 2018 2,880 15,362 12,682 8,803 (24) (678) 6,101 113,316 77,425 10.5 08-01 2018 10.5 08-01 2018 2,880 15,362 12,682 6,803 (24) (678) 6,101 119,417 80,426 11.0 02-01 2019 11.0 02-01 2019 2,880 15,869 12,989 6,968 (25) (694) 6,248 125,665 83,410 11.5 08-01 2019 11.5 08-01 2019 2,880 15,669 12,989 6,968 (25) (694) 6,248 131,913 86,308 12.0 02-01 2020 12.0 02-01 2020 2,880 15,9B2 13,302 7,136 (26) (711) 6,399 138,313 89,188 12.5 08-01 2020 12.5 08-01 2020 2,880 15,982 13,302 7,136 (26) (711) 6,399 144,712 91,985 13.0 02-01 2021 13.0 02-01 2021 2,880 16,302 13,622 7,307 (26) (728) 6,553 151,264 94,766 13.5 08-01 2021 13.5 08-01 2021 2,880 16,302 13,622 7,307 (26) (728) 6,553 157,817 97,486 14.0 02-01 2022 14.0 02-01 2022 2,880 16,628 13,948 7,482 (27) (748) 6,710 164,527 100,149 14.5 08-01 2022 14.5 08-01 2022 2,880 16,628 13,948 7,462 (27) (748) 6,710 171,237 102,755 15.0 02-01 2023 15.0 02-01 2023 2,880 16,961 14,281 7,661 (28) (763) 6,870 178,106 105,345 15.5 08-01 2023 15.5 06-01 2023 2,880 16,961 14,281 7,661 (28) (763) 6,870 164,976 107,880 16.0 02-01 2024 16.0 02-01 2024 2,880 17,300 14,620 7,642 (28) (781) 7,033 192,009 110,359 16.5 08-01 2024 16.5 08-01 2024 2,880 17,300 14,620 7,642 (28) (781) 7,033 199,041 112,785 17.0 02-01 2025 17.0 02-01 2025 2,880 17,648 14,968 8,028 (29) (600) 7,199 206,241 115,197 17.5 08-01 2025 17.5 08-01 2025 2,880 17,648 14,968 8,028 (29) (600) 7,199 213,440 117,538 18.0 02-01 2026 18.0 02-01 2026 2,880 17,999 15,319 8,217 (30) (819) 7,369 220,809 119,865 18.5 08-01 2026 18.5 08-01 2026 2,680 17,999 15,319 8,217 (30) (819) 7,369 228,178 122,124 19.0 02-01 2027 19.0 02-01 2027 2,880 18,359 15,679 8,410 (30) (838) 7,542 235,720 124,369 19.5 08-01 2027 19.5 08-01 2027 2,880 18,359 15,679 8,410 (30) (838) 7,542 243,262 126,548 20.0 02-01 2028 20.0 02-01 2028 2,880 18,726 16,048 8,807 (31) (858) 7,719 250,981 128,714 20.5 08-01 2028 20.5 08-01 2028 2,880 18,726 16,048 8,607 (31) (858) 7,719 258,700 130,816 21.0 02-01 2029 21.0 02-01 2029 2,880 19,100 16,420 8,808 (32) (878) 7,899 266,599 132,905 21.5 08-01 2029 21.5 08-01 2029 2,880 19,100 16,420 8,808 (32) (878) 7,899 274,498 134,933 22.0 02-01 2030 22.0 02-01 2030 2,880 19,462 16,802 9,013 (32) (898) 8,083 262,581 136,948 22.5 08-01 2030 22.5 08-01 2030 2,880 19,462 16,802 9,013 (32) (898) 8,083 290,663 138,904 23.0 02-01 2031 23.0 02-01 2031 2,880 19,872 17,192 9,222 (33) (919) 8,270 298,934 140,647 23.5 08-01 2031 23.5 08-01 2031 2,880 19,872 17,192 9,222 (33) (919) 8,270 307,204 142,733 24.0 02-01 2032 24.0 02-01 2032 2,880 20,270 17,590 9,435 (34) (940) 8,481 315,665 144,607 24.5 08-01 2032 24.5 08-01 2032 2,880 20,270 17,590 9,435 (34) (940) 8,481 324,126 148,426 25.0 02-01 2033 25.0 02-01 2033 2,880 20,675 17,995 9,653 (35) (962) 8,658 332,783 148,234 25.5 08-01 2033 25.5 08-01 2033 2880 20 675 17 995 9653 35 962 8656 341 439 149988 26.0 02-01 2034 Totals 380748 1371 37 938 341 439 341 439 149988 NOTES: 1. State Auditor payment is based upon 1 st half, pay 2006 actual and may increase over term of district 2. Assumes 100% ofthe building is completed on January 1, 200Horfirst increment collected in 2008 which starts the district, & the 1 st full year of increment is 2008. 3. Amount of increment will vary depending upon market value, tax rates, class rates, construction schedule and inflation on Market Value. 4. Inflation on tax rates cannot be captured. 5. TlF does not capture state wide property taxes or market value property taxes Pnlporod by Ehlers CashIIow 3-1-116 ~~_'._."___e_~...._._____.~~.._,_____.,,~~___~" "'___~~~_~~.~_'~__'__.~"__"_,_~__,,,,,_ _.""..__..~..__~,_,,_~,,~_~__,,__.._~.__ APPENDIX E MINNESOTA BUSINESS ASSISTANCE FORM (MINNESOTA DEPARTMENT OF EMPLOYMENT AND ECONOMIC DEVELOPMENT) APPENDIX E-} IIIL~ .......== VWtn';&tJ!tf _ Please fill in date agreement signed (same as question 21) Minnesota Business Assistance Form . The Minnesota Business Assistance Form (MBAF) is used to report each business subsidy (including Job Opportunity Zone (JOBZ) tax exemptions/credit) and fmancial assistance agreement signed from AUl'ust 1.1999 throul'h December 31.2004 unless goals have been achieved and reported on a MBAF per Minn. Stat. ~ 116J.993 to ~ 116J.995. . Businesses receiving JOBZone Benefits must report through 2015 even if goals have been achieved. . The following government agencies must submit a MBAF: 1) any local government/agency that signed a business subsidy agreement since January 1, 1999, or represents a population of more than 2,500; 2) all state government agencies authorized to provide business subsidies. . DEED will contact any local or state government agency that is required to report but has not done so by April 1. Business assistance may not be awarded after June 1 of each year until a report has been submitted. . Questions? Call (651) 296-0580. Information on where to mail or fax your completed MBAF(s) is on page 5. An online version of this form is available at www.deed.state.mn.us/Community/subsidies/MBAFForm.htm Section I: (Grantor Information) 1. Name of grantor (funding entity) 2. Name of person completing this form 3. Street address 4. City 5. Zip Code 6. County 7. Phone number 8. Fax number 9. E-mail address 10. Please indicate who in your organization should receive the MBAF if different from the person in Question 2. Name/Title Phone number Street address City Zip Code 11. Classification of grantor (Mark one. If grantor is entity created 12. Has your organization held a public hearing on and adopted by gov 't agency, please indicate affiliation. For example, a city criteria for awarding business subsidies in compliance with EDA would check "City government. ") Minn. Stat. ~ II6J.994? (Mark one.) (J City government (J Yes, in 2005 (attach criteria) (J Yes, in 2005 but have not yet adopted criteria (J County government (J Yes, prior to 2005 (J Regional government If Yes: Hearing Date: Year Criteria Submitted: (J State government (J No (J Other (please specifY) (J Other (Please attach explanation.) 13. Has your organization signed any agreements to award a business subsidy or financial assistance from August 1, 1999 through December 31, 2004 unless goals have been achieved and reported in a previously filed MBAF? (Mark one.) (J Yes (Complete the remainder of the form unless goals have been achieved and (J No(StoD here. go to section 5 on page 4.) reported in a previously filed MBAF per Minn. Stat. 91 I 6J. 993 and 9116J.994.) S 2 R .. I ti ectlOn : eClDlent n ormatIOn 14. Name of business or organization 15. Address where business subsidy or fmancial assistance receiving subsidy or fmancial assistance will be used Street address City State ZIP Code 16. Does the recipient have a parent corporation? (Mark one.) (J Yes (Indicate name and address of parent corporation below. Ifmore than one, indicate ultimate owner.) (J No Name ofoarent corporation Street address City State ZIP Code Minnesota Business Assistance Form (02/01/05) Page 1 of5 Dept. of Employment and Economic Development 17. Industry of recipient's facility (Mark one.): D Manufacturing D Services D Finance, Insurance, Real Estate D Retail Trade D Wholesale Trade D Construction 18. Did the recipient relocate as a result of signing this agreement? (Mark one.) D Yes (Indicate city and state of previous address and reason recipient did not complete this project at that address.) City/State of previous address Reason project not completed at previous address D No Go to estion 19. 19. What would recipient have done without business subsidy or fmancial assistance? (Mark one): D Remain at previous location, but not expand D Remain at previous location but expand D Relocate to different Minnesota location D Relocated outside Minnesota D Other SectIOn 3: Al!reement InformatIon 20. Total dollar value of business subsidy or fmancial assistance (Please separate value by type in Questions 24 and 25.) (Enter zero for JOBZ, Biozone and Agzone projects.) 21. Date agreement signed (In addition to the agreement date, indicate any dates the agreement was amended) 22. Benefit date (Indicate the date the recipient receives the business subsidy or improvements were finished, equipment was placed into service, or the recipient occupied the property, whichever is earlier.) 23. Does the agreement provide a business subsidy or one of the four types offmancial assistance (see Question 25) required to be reported? (Mark one.) D business subsidy 24. If the agreement provided a business subsidy, please indicate the type(s) and total dollar value for each type. D not applicable, agreement provided fmancial assistance D loan (only principal) D grant (Le., forgivable loan) D tax abatement D TIF or other tax reduction or deferral D guarantee or payment D contribution of property or infrastructure D preferential use of governmental facilities D land contribution D Biozone D JOBZ (state tax exemptions/credits and sales tax) D JOBZ - Agzone D other (Specify subsidy type.) $- $- $- $- $- $- $- $- $~ $~ $~ $- (Note: no dollar value for zone proiects) 26. Ifthe assistance included tax increment fmancing, please indicate the type of TIF district? (Mark one.) D not applicable, assistance was not in the form of TIF D redevelopment D renewal and renovation D soils condition D economic development D mined underground space D hazardous substance subdistrict Minnesota Business Assistance Form (02/01/05) D financial assistance 25. If the assistance was one of the four types offmancial assistance, please indicate the type(s). D not applicable, agreement provided a business subsidy D assistance for property by contaminants D assistance for renovating building stock or bringing it up to code, and assistance provided for designated historic preservation districts, when 50 percent or less of total cost D assistance for pollution control or abatement D assistance for a TIF soils condition district $ $ $ $ 27. Are any other grantors providing a business subsidy or fmancial assistance to the same project? (Mark one.) D Yes (Specify each grantor and the value of their assistance below; attach an additional sheet ifnecessary. Grantor Value ($) Grantor Value ($) DNo Page 2 of5 Dept. of Employment and Economic Development Section JZ: JOZ Information Complete Questions 28-31 if the fmancia1 assistance was awarded to a JOBl qualified business recipient receiving JOBl benefits. (Ifnot, go directly to Question 32.) JZl. What was the amount of private capital investment of the business in the JOBZ zone prior to December 31, 2004? Real (land and buildings) $ Personal (equipment) $ Jl2. What was the property tax assessment which was not collected for the property where the JOBl qualified business was operating during the period of January 1,2004 and December 31, 2004? (Please specify each additional parcel identification number and the value of the property tax assessment that was not collected during the period of January 1, 2004 and December 31,2004; attach an additional sheet if necessary - obtain information from county tax assessor's office.) $ for Parcel Identification Number: JZ3. What was the value of Wind Energy Production Tax, ifany, for the JOBZ qualified business that was operating during the period of January 1,2004 and December 31, 2004? $ Section 4: Goals and Public Pu ose Identified in the A reement 28. Minn. Stat. 9116J.994 requires that business subsidy and fmancial assistance agreements state a public purpose. Which of the following public purposes were stated in the agreement? (Mark all that apply.) [J Enhancing economic diversity [J Creating high-quality job growth [J Job retention [J Stabilizing the community [J Increasing tax base (cannot be only purpose) [J Other (please specify) 29. Indicate whether the agreement included the following types of goals, and whether the recipient had attained those goals at the time of this report. (Fill in the boxes and attainment date(s) for each goal.) C) Other wage goals Goals Target attainment All goals established? dates (month & year) attained? [J Yes [JNo [J Yes [JNo [J Yes [JNo [J Yes [JNo [J Yes [JNo [J Yes [JNo [J Yes [JNo [J Yes [JNo A) Specific wage andjob goals to be attained within 2 years B) Other job-creation and/or retention goals D) Goals other than wage andjob goals Please attach descri tion 0 oals and ro ess toward attainment i not documented in estions 30 and 31. 30. For each of the following wage categories, indicate the job creation and/or retention goals stated in the agreement and the average hourly value of any employer-provided health insurance goals for those jobs. (Onlv indicate job creation goals in full-time equivalents if you are unable to separate goals by full- and part-time positions.) Hourly Wage (excluding benefits) Full-time Job Creation Part-timel Seasonavremp. Job Creation FTE (onlv if unable to stated as FTIPT) Job Creation Job Retention Hourly Value of Health Insurance no hourly wage-level goal less than $7.00 $ $ $7.00 to $8.99 $ $9.00 to $10.99 $ $ $11.00 to $12.99 $13.00 to $14.99 $ $15.00 and higher $ Minnesota Business Assistance Form (02/01/05) Page 3 of 5 Dept. of Employment and Economic Development 31. For each of the following wage categories, indicate the number ofactualjobs created and/or retained since the benefit date and the actual hourly value of any employer-provided health insurance for those jobs. (Onlv indicate job creation in full-time equivalents if you are unable to separate job creation into jUll- and part-time positions.) Hourly Wage (excluding benefits) Full-time Job Creation Part-time/ Seasonalffemp. Job Creation FTE (onlv ifunable to stated as FTIPT) Job Creation Job Retention Hourly Value of Health Insurance less than $7.00 $ $ $ $7.00 to $8.99 $9.00 to $10.99 $11.00 to $12.99 $ $13.00 to $14.99 $ $15.00 and higher $ 32. Has the recipient achieved all goals (see Question 33, 34 and 35) and fulfilled all obligations stipulated in the agreement (Mark one.) [,J Yes [,J No Section 5: Recipients Failing to Fulfill Obligations (Do not comolete this section if yOU comoleted it on another MBAF submitted to DEED.) 33. During the period January 1,2004 through December 31,2004, did your organization have any recipients who failed to report as required by Minn. Stat. ~1l6J.993 and ~1l6J.994? (Mark one.) [,J Yes (Indicate the name of each recipient failing to report and the value of subsidy or financial assistance awarded to that recipient. Attach additional pages if necessary.) Name of recipient Type of subsidy or assistance (See Questions 24 & 25.) Value of subsidy or assistance [,J No 34. Did your organization have any recipients who failed to achieve any goals or fulfill any other obligations under an agreement signed on or after January 1,2004, that were required to be fulfilled by the time of this report? (Mark one.) [,J Yes (Complete the remainder of this section.) o No (Stop here and submit form to DEED.) Name of recipient in default Type of subsidy or assistance Initial value of subsidy or assistance Street address of recipient City/Zip code of recipient Outstanding value of subsidy or assistance 36. Reason(s) for default (Mark all that apply.): o recipient ceased operation o recipient relocated to a different community [,J recipient was unable to fill vacant positions [,J other (SpecifY reason.) Minnesota Business Assistance Form (02/01/05) Page 4 of5 Dept. of Employment and Economic Development 37. To date, has the recipient fulfilled its repayment obligation? (Mark one.) i:l Yes i:l No, recipient has belZun to repay the assistance. i:l No, recipient has not belrull to repay the assistance. 38. Has the agreement been amended to extend the recipient's deadline for fulfilling its obligations? (Mark one.) DYes DNo 39. Describe the steps being taken to bring recipient into compliance or recoup the subsidy: Return your completed MBAF(s) by ADrill. 2005 EITHER Mail To: Minnesota Business Assistance Report Minnesota Department of Employment and Economic Development - Analysis and Evaluation 151 National Bank Building 332 Minnesota Street, Suite E200 St. Paul, Minnesota 55101-1351 OR Fax To: (651) 215-3841 (Next year, please use the online version of this form. It can be found at www.deed.state.mn.us/Community/subsidies/MBAFForm.htm.) Minnesota Business Assistance Form (02/01/05) Page 5 of 5 Dept. of Employment and Economic Development APPENDIX APPENDIX F REDEVELOPMENT QUALIFICA nONS FOR THE DISTRICT F-I REPORT OF INSPECTION PROCEDURES AND RESULTS FOR DETERMINING QUALIFICATIONS OF A TAX INCREMENT FINANCING DISTRICT AS A REDEVELOPMENT DISTRICT Tax Increment Financing District Prior Lake, Minnesota LHB Project No. 050496.10 December 16, 2005 Prepared For The City of Prior Lake Prepared by LHB, Inc. 250 Third Avenue North, Suite 450 Minneapolis, Minnesota 55401 PART 1 PART 2 PART 3 PART 4 PART 5 APPENDIX A APPENDIX B APPENDIX C TABLE OF CONTENTS Page Executive Summary......... .......................................................... ............3 Purpose of Evaluation ........................................................... .....3 Scope of Work........... .................................. .......... ....................4 Conclusion .................... .................................................. ...... .....4 Minnesota Statute 469.174, Subdivision 10 Requirements ...................4 Procedures Followed.............. ................................................................6 Findings... ................................ ...............................................................6 A. Coverage Test .................. ..........................................................6 B. Condition of Building Test ........................................................8 I. Replacement Cost....................................................... .........8 2. Code Deficiencies ................................................................8 3. System Condition Deficiencies ............................................9 C. Distribution of Substandard Structures ....................................10 Team Credentials...... ..................................... ......... ......... ....................10 Property Condition Assessment Summary Sheet Building Code and Condition Deficiencies Reports Property Condition Assessment Code Deficiency Cost Reports Photographs Page 2 PART 1- EXECUTIVE SUMMARY PURPOSE OF EVALUATION LHB was hired by the City of Prior Lake to inspect and evaluate the properties within a Tax Increment Financing Redevelopment District ("TIP District") proposed to be established by the city. The proposed TIF District is located at 4616 Colorado Street in the City of Prior Lake, in a general area bounded by Colorado Street Southeast on the south and Eagle Creek Avenue Southeast on the north and adjacent private properties on the east and west sides (Diagram 1). The purpose of LHB' s work was to determine whether the proposed district meets the statutory requirements for coverage, and whether the single residential building on a single parcel, located within the proposed TIF District, meets the qualifications required for a Redevelopment District. Diagram I - Proposed TIF District Page 3 SCOPE OF WORK The proposed district consists of one (1) parcel with one residential structure. The building in the proposed district received an on-site interior and exterior inspection on November 10, 2005. The Building code and Condition Deficiency report for the building inspection by LHB are located in Appendix B. CONCLUSION After inspecting and evaluating the property within the proposed TIF District and applying current statutory criteria for a Redevelopment District under Minnesota Statutes, Section 469.174, Subdivision 10, it is our professional opinion that the proposed TIP District qualifies as a Redevelopment District. The remainder of this report describes our process and findings in detail. PART 2 - MINNESOTA STATUTE 469.174. SUBDIVISION 10 REOUIREMENTS The properties were inspected in accordance with the following requirements under Minnesota Statutes, Section 469.174, Subdivision 10(c), which states: Interior Inspection "The municipality may not make such determination [that the building IS structurally substandard] without an interior inspection of the property..." Exterior Inspection and Other Means "An interior inspection of the property is not required, if the municipality finds that (1) the municipality or authority is unable to gain access to the property after using its best efforts to obtain permission from the party that owns or controls the property; and (2) the evidence otherwise supports a reasonable conclusion that the building is structurally substandard." Documentation "Written documentation of the fmdings and reasons why an interior inspection was not conducted must be made and retained under section 469.175, subdivision 3(1)." Qualification Requirements Minnesota Statutes, Section 469.174, Subdivision 10 (a) (1) requires two tests for occupied parcels: A. Coverage Test ... "parcels consisting of 70 percent of the area of the district are occupied by buildings, streets, utilities, or paved or gravel parking lots" The coverage required by the parcel to be considered occupied is defined under Minnesota Statutes, Section 469.174, Subdivision lOre), which states: "For purposes of this subdivision, a parcel is not occupied by buildings, streets, utilities, or paved or gravel Page 4 parking lots unless 15 percent of the area of the parcel contains building, streets, utilities, or paved or gravel parking lots." B. Condition of Buildings Test . . . "and more than 50 percent of the buildings, not including outbuildings, are structurally substandard to a degree requiring substantial renovation or clearance;" I. Structurally substandard is defined under Minnesota Statutes, Section 469.174, Subdivision 10(b), which states: "For purposes of this subdivision, 'structurally substandard' shall mean containing defects in structural elements or a combination of deficiencies in essential utilities and facilities, light and ventilation, fire 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." Definition of Substantial Renovation Because "Substantial renovation" can mean different things to different people, LHB has attempted to clarify exactly what we consider to be "substantial renovation" as it relates to Minnesota Statutes, Section 469.174, Subdivision 10(a) (1). a. First we researched national standards as to how much building owners should budget for annual maintenance and repair on their buildings as a percentage of replacement cost of the building. 1. According to the University of California "Facilities Renewal Budget Model" report of 1999, building owners should budget between two and three percent of current replacement value of their buildings for maintenance and repair work. This does not include routine janitorial work and routine items such as changing light bulbs and filters. 2. According to the Building Research Board of the National Research Council, one and one-half to three percent of a building's replacement value should be budgeted for maintenance and repair. b. Based on this information, LHB utilized two and one-half percent as the desired amount of maintenance and repair that should be budgeted annually to keep a building in good working condition. We recognize through experience that only a small percentage of sophisticated building owners actually budget for and spend this amount of money every year on maintenance and repair. This is because most business owners are driven by other budgetary issues and tend to neglect the building maintenance and repair line items in their annual budgets. c. By establishing how much a building owner should be budgeting per year for maintenance and repairs, LHB is of the opinion that we could more easily establish an amount that would be considered "substantial" in comparison. If an owner is budgeting 2.5 percent of the building's replacement cost annually, most Page 5 business owners or home owners would have to take out a loan to cover the cost of a substantial building improvement. Assuming they had a fixed level of income to work with, they would have to keep the loan payment at a level very near the original 2.5 percent they should have been budgeting each year. In addition, they still would have to budget for the original 2.5 percent on top of the loan. In most cases, the mortgage terms would have to extend out to a point beyond the life expectancy of the building they were trying to improve, as most buildings built in the past fifty years are not designed to last beyond 40 years. d. Based on the calculations described above, we have defined substantial renovation for purposes of Minnesota Statutes, Section 469.174, Subdivision 10(a)(1), as renovation with costs exceeding 20% of the building's replacement value. 2. Buildings are not eligible to be considered structurally substandard unless they meet certain additional criteria, as set forth in Subdivision lO(c) which states: "A building is not structurally substandard if it 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." "Items of evidence that support such a conclusion [that the building is not disqualified] include recent fire or police inspections, on-site property appraisals or housing inspections, exterior evidence of deterioration, or other similar reliable evidence." PART3-PROCEDURESFOLLOWED A. LHB was able to schedule an interior and exterior inspection of the building in the proposed TIF District. Inspections were conducted on November 10,2005. PART 4 - FINDINGS A. Coverage Test 1. The total square foot area of each parcel in the proposed TIF District was obtained from City records, GIS mapping and site verification. 2. The total square foot area of buildings and site improvements on the parcels in the proposed TIF District was obtained from City records, GIS mapping and site verification. Page 6 3. The percentage of coverage for each parcel in the proposed TIF District was computed to determine if the 15 percent minimum requirement was met. The total square footage of parcels meeting the 15 percent requirement was divided into the total square footage of the entire district to determine if the 70 percent requirement was met. Finding: The district met the coverage test under Minnesota Statutes, Section 469.174, Subdivision JO(e). The district consists of only one parcel that is occupied by buildings, streets, utilities or paved drives or parking lots in excess of 15% of the parcel's area (Diagram 2). Since this parcel is the only parcel in the proposed district the coverage requirement is met by 100 percent of the parcels, this exceeds the 70 percent requirement for the proposed TIF District under Minnesota Statutes, Section 469.174, Subdivision (a) (1). Diagram 2 - Coverage Diagram Page 7 B. Condition of Building Test 1. Replacement Cost The first step in evaluating a building to determine if it is substandard to a degree requiring substantial renovation or clearance is to determine its replacement cost. This is the cost of constructing a new structure of the same square footage and type on site. Replacement costs were researched using R.S. Means Cost Works square foot models for 2004. A replacement cost was calculated by first establishing building use (office, retail, residential, etc.), building construction type (wood, concrete, masonry, etc.), and building size to obtain the appropriate median replacement cost, which factors in the costs of construction in Prior Lake, Minnesota. Replacement cost includes labor, materials, and the contractor's overhead and profit. Replacement costs do not include architectural fees, legal fees or other "soft" costs not directly related to construction activities. Replacement cost for the building is tabulated in Appendix A. 2. Code Deficiencies The next step in evaluating a building is to determine what code deficiencies exist with respect to such building. Code deficiencies are those conditions for a building which are not in compliance with current building codes applicable to new buildings in the State of Minnesota. Minnesota Statutes, Section 469.174, Subdivision 10(c), specifically provides that a building cannot be considered structurally substandard if its code deficiencies are not at least 15 percent of the replacement cost of the building. As a result, it was necessary to determine the extent of code deficiencies for each building in the proposed TIF District. The evaluation was made by reviewing all available information with respect to such buildings contained in City Building Inspection records and making interior and exterior inspections of the buildings. LHB utilizes the 2003 Minnesota State Building Code as the official code for our evaluations. The Minnesota State Building Code is actually a series of provisional codes written specifically for Minnesota only requirements, adoption of several international codes, and amendments to the adopted international codes. We chose not to count energy code deficiencies toward the thresholds required by Minnesota Statutes, Section 469.174, Subdivision W(b) and 10(c), due to concerns expressed by the State of Minnesota Court of Appeals in the Walser Auto Sales, Inc. vs. City of Richfield case filed November 13, 2001. After identifying the code deficiencies in each building, we used R.S. Means Cost Works 2004: Unit and Assembly Costs to determine the cost of correcting the identified deficiencies. We were than able to compare the correction costs with the Page 8 replacement cost of each building to determine if the costs for correcting code deficiencies meet the required 15 percent threshold. Finding: The building in the proposed TIF District contained code deficiencies exceeding the 15 percent threshold required by Minnesota Statutes, Section 469.174, Subdivision 10(c). A complete Building Code and Condition Deficiency report for the building in the proposed TIF District can be found in Appendix B of this report. 3. System Condition Deficiencies System condition deficiencies are a measurement of defects or substantial deterioration in site elements, structure, exterior envelope, mechanical and electrical components, fire protection and emergency systems, interior partitions, ceilings, floors and doors. The evaluation was made by reviewing all available information contained in City records, and making interior and exterior inspections of the buildings. LHB only identified system condition deficiencies that were visible upon our inspection of the building or contained in City records. We did not consider the amount of "service life" used up for a particular component unless it was an obvious part of that component's deficiencies. Minnesota Statutes, Section 469.174, Subdivision 10(c), provides for the minimum threshold of code deficiencies that must be met in order to consider a building substandard. If a building meets the minimum code deficiency threshold under Minnesota Statutes, Section 469.174, Subdivision 10(c), then in order for such building to be "structurally substandard" under Minnesota Statutes, Section 469.174, Subdivision JO(b), the building's defects or deficiencies should be of sufficient total significance to justify substantial renovation or clearance." Based on this definition, LHB re-evaluated each of the buildings that met the code deficiency threshold under Minnesota Statutes, Section 469.174, Subdivision 10(c), to determine if the total deficiencies warranted "substantial renovation or clearance" based on the criteria we outlined above. Finding: In our professional opinion, the building in the proposed TIF District is structurally substandard to a degree requiring substantial renovation or clearance, because of defects in structural elements or a combination of deficiencies in essential utilities and facilities, light and ventilation, fire 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. Page 9 C. Distribution of substandard structures Much of this report has focused on the condition of individual buildings as they relate to requirements identified by Minnesota Statutes, Section 469.174, Subdivision 10. It is also important to look at the distribution of substandard buildings throughout the geographic area of the proposed TIF District. Finding: The substandard buildings are reasonably distributed throughout the geographic area of the proposed TIF District. PART 5 - TEAM CREDENTIALS Michael A. Fischer, AL4 - Project Principal/I'IF Analyst Michael has nineteen years of architectural experience as project principal, project manager, project designer and project architect on municipal planning, educational, commercial and governmental projects. He is a Vice President at LHB and currently leads the Community Design Group in LHB's Minneapolis office. Michael completed a two-year Bush Fellowship at the Massachusetts Institute of Technology in 1999, earning Masters Degrees in City Planning and Real Estate Development. Michael has served on over 35 committees, boards and community task forces, including a term as City Council President and Chair of the Duluth/Superior Metropolitan Planning organization. He is currently a Planning Commissioner in Edina, Minnesota. He was one of four architects in the country to receive the National "Young Architects Citation" from the American Institute of Architects in 1997. Jerry A. Putnam, AU, FCSI, CCS - Project Manager/Inspector Jerry is a senior architect in LHB's Minneapolis office with twenty-five years of experience in all phases of the architectural process, from pre-design through construction administration, including specialty consulting in investigations for buildings, building condition surveys, TIF inspections, code reviews, estimating and specification writing. Jerry is an active member in the Construction Specification Institute (CSI). He has been recognized as a Fellow of CSI for his dedication and leadership in the construction industry. In addition to being past president of the largest CSI chapter in the United States, he serves on many local, regional and national committees, and has given presentations at many specification writing classes and workshops. C:\Docwnents and Settings\jap\My Docwnents\TIF\050496 Redevelopment TIF Final Report.doc Page 10 .--.,..-..-...-."-.--.,.-----~,-....-.....,__.._.________.,_~.___". ~...._'_~~.M.'..~~_.~,.__..~''"..."..,,_...~'".._~,__..,"_._.,..~_,_,',.__.__ APPENDICES APPENDIX A APPENDIX B APPENDIX C Property Condition Assessment Summary Sheet Building Code and Condition Deficiencies Reports Property Condition Assessment Code Deficiency Cost Reports Photographs Page 11 APPENDIX A Property Condition Assessment Summary Sheet APPENDIX B Building Code and Condition Deficiencies Reports APPENDIX C Property Condition Assessments Code Condition Cost Reports Photographs I- W _W ,~ ::I: a..t/) u;c cti5 u.o:: i=o.. .t/) CDW ~C) ~~ oW 'I: > 0..0 -0 O...J ~W ,- 0 00:: ~ .1 fll - ~E - - ~i~ ..J ..1! iii"! . IL > oil L ~ Ii iii Iii ~ U ~ ~ .! I...- ri: iij - - .,. ~Ju .. ~ - fi! .., UJ ~. ~ '0 Ill; z: I ! a !1 ~ = ,.. - .. c ~h .!! s U s '" ~ ~ -3 .! .. .., 0 u rl- ~ ~ I ~ ~ ~ .! ~r ii - - .il tf"' - ~ ~ .,. ~ ~ .. ~ ~ d ~ 1!1 ~- i c .. ill l! te I'i :. ~t .. '" l! il~ ~ 0 u ~ i t ~ " ~ ~f !~ ; ~ 1 !~ ~ - 11 i! ~ I~ .. i! - f jl! Ii 1 . - ~ ~ I j c ~ I I ~ ~ i J ! ~ ~ i ti . Q ~ It I~ .: -fJ'I-I ~ i UI .ii ~~ IJ ..J ot l ~ 1 e .,. ~ l!l .. N ~ ~ .., .!! .. X :::J oi '" .., iii "l! -ll c J! . .0 ~ UI o C .. l! .. 0.. ~ .. ill' 0.. ~ ~ !. !. i I 1 ~ "' ~ i "' i ;A ~ 1: ~ I on .. o z U .. .~ Q. 0) :z: ..J ~ z APPENDIX G BUT/FOR QUALIFICATIONS But-For Analysis Difference $171,500 $1.035.000 $863,500 $134.366 $729,134 Current Market Value New Market Value - Estimate Difference Present Value of Tax Increment Value Likely to Occur Without TIF is Less Than: $729,134 The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan (TIF Plan) for Tax Increment Financing District No. 5-1 (District), as required pursuant to Minnesota Statutes, Section 469.175, Subdivision 3 are as follows: 1. Finding that Tax Increment Financing District No. 5-1 is a redevelopment district as defined in MS., Section 469.174, Subd. 10. The District consists of 1 parcel, with plans to redevelop the area for commercial purposes. At least 70 percent of the area of the parcels in the District are occupied by buildings, streets, utilities, paved or gravel parking lots or other similar structures 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 F 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 foreseeablefuture 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. 5-1 permitted by the TIF 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 the TIF 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 property for expansion adjacent to the existing project, the incompatible land uses at close proximity, and the cost of financing the proposed improvements, this project is feasible only through assistance, in part, from tax increment financing. The total amount of assistance to the project is $135,000. This amount will be used to assist with redevelopment cost and help the project become more financially feasible. The assistance is being used to assist with the purchase of the dilapidated building, demolition of the building (estimated to be $24,000) and other redevelopment costs. APPENDIX G-l The increased market value of the site that could reasonably be expected to occur without the use of tax increment jinancingwould be less than the increase in market value estimated to result from the proposed development after subtracting the present value of the projected tax incrementsfor the maximum duration of the District permitted by the TIF Plan: This finding is justified 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 determines 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 $863,500. The present value of tax increments from the District is estimated to be $134,366. It is the Council's finding that no development with a market value of greater than $729,134 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 demolition in the general area of the District. (See Cashflow in Appendix D of the TIF Plan.) 3. Finding that the Tax Increment Financing Plan for Tax Increment Financing District No. 5-1 conforms to the general plan for the development or redevelopment of the municipality as a whole. The Planning Commission reviewed the TIF Plan and found that the TIF Plan conforms to the general development plan of the City. 4. Finding that the Tax Increment Financing Planfor Tax Increment Financing District No. 5-1 will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development or redevelopment of Development District No. 5 by private enterprise. The project to be assisted by the TIF 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. APPENDIX G-2