HomeMy WebLinkAbout8A - Tax Increment Financing
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CITY COUNCIL AGENDA REPORT
MEETING DATE:
AGENDA #:
PREPARED BY:
December is, 2006
SA
PAUL SNOOK, ECONOMIC DEVELOPMENT DIRECTOR
AGENDA ITEM:
PUBLIC HEARING FOR AND RESOLUTION ESTABLISHING THE
DEVELOPMENT PROGRAM FOR DEVELOPMENT DISTRICT NO.
6 AND ESTABLISHING TAX INCREMENT FINANCING DISTRICT
NO. 6-1 AND ADOPTION OF THE TAX INCREMENT FINANCING
PLAN THEREFORE (SHEPHERD'S PATH SENIOR HOUSING).
City Council is asked to hold a public hearing on and adopt a resolution
establishing the Development Program for Development District NO.6 and
establishment of Tax Increment Financing District No. 6-1 and the adoption
the Tax Increment Financing Plan.
As you recall, a public hearing was held on June 26, 2006 for this tax
increment financing project. The need for a second hearing stems from the
fact that even though City staff and its consultant, Northland Securities,
submitted the Notice of Public Hearing to the Prior Lake American as
required by law, the notice was inadvertently never published.
Therefore in order for there to be sufficient and complete opportunity for the
public to provide comment on the establishment of TIF District No.6, this
subsequent and properly noticed hearing should be held, and a resolution
should be adopted including the City Council's findings and actions of the
June 26,2006 meeting, unless new information is provided.
It is not necessary to again notify the other taxing jurisdictions as this was
already done.
REQUIRED
ACTION:
Adopt Resolution #06-XX, Resolution Approving the Establishment of and
Development Program for Development District No.6 and the Establishment
of and Tax Increment Financing Plan for Tax Increment Financing District 6-
1 within Development District NO.6.
Revi"1J t
Frank Bayies, U ins r
ATTACHMENTS:
· Agenda Report from the June 26, 2006 City Council meeting
· Resolution
'I
www.cityofpriorlake.com
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- TIF Dist (12-1S-06).DOC
EXTRACT OF MINUTES OF A MEETING OF THE
CITY COUNCIL OF THE CITY
OF PRIOR LAKE, MINNESOTA
HELD: December 18, 2006
Pursuant to due call and notice thereof, a regular meeting of the City Council of
the City of Prior Lake, Scott County, Minnesota, was duly called and held on the 18th day of
December, 2006, at 6:00 p.m.
The following members of the Council were present:
and the following were absent:
Member
introduced the following resolution and moved its adoption:
RESOLUTION APPROVING THE ESTABLISHMENT OF AND DEVELOPMENT
PROGRAM FOR DEVELOPMENT DISTRICT NO.6 AND
THE ESTABLISHMENT OF AND TAX INCREMENT FINANCING PLAN FOR TAX
INCREMENT FINANCING DISTRICT 6-1 WITHIN DEVELOPMENT DISTRICT NO.6
WHEREAS:
A. The City of Prior Lake, Minnesota (the "City") has heretofore approved the
establishment of and Development Program for Development District No.6 (the "Development
Program") and the establishment of and Tax Increment Financing Plan for Tax Increment
Financing District 6-1 (the "Tax Increment Financing Plan") under the provisions of Minnesota
Statutes, Sections 469.174 to 469.1799 and Sections 469.124 to 469.134 (the "Act"); and
B. The City prepared a notice of a public hearing on the establishment of and
Development Program for Development District No.6 and the establishment of and Tax
Increment Financing Plan for Tax Increment Financing District 6-1 and submitted the notice to
the City's official newspaper, however the notice of the hearing was never published, and
C. A public hearing on the issuance of revenue bonds for the project covered by the
Tax Increment Financing Plan was held on June 5, 2006 and all persons who appeared at the
hearing were given an opportunity to express their views with respect to the project.
D. Without having discovered the publication error, the City held a public hearing on
the establishment of and Development Program for Development District No. 6 and the
establishment of and Tax Increment Financing Plan for Tax Increment Financing District 6-1 on
June 26, 2006 and all persons who appeared at the hearing were given an opportunity to express
their views with respect to the Development Program and Tax Increment Financing Plan; and
E. Upon discovering the publication error, the City submitted a notice to the City's
official newspaper regarding a public hearing the establishment of and Development Program for
Development District No.6 and the establishment of and Tax Increment Financing Plan for Tax
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Increment Financing District 6-1 and such notice appeared in the December 2, 2006 edition of
the Prior Lake American; and
F. The City has held another public hearing on the establishment of and
Development Program for Development District No.6 and the establishment of and Tax
Increment Financing Plan for Tax Increment Financing District 6-1 on the date hereof and all
persons who appeared at the hearing were given an opportunity to express their views with
respect to the Development Program and Tax Increment Financing Plan; and
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of
Prior Lake as follows:
1. The establishment of and Development Program for Development District No.6
and the establishment of and Tax Increment Financing Plan for Tax Increment Financing District
6-1 as approved by the City Council pursuant to Resolution No. 06-105 on June 26, 2006 and as
amended pursuant to Resolution No. 06-131 on August 7, 2006 is hereby confirmed and all
findings, representations and certifications made by the City Council pursuant to Resolution No.
06-105 and Resolution No. 06-131 are hereby confirmed as if fully incorporated herein.
member
The motion for the adoption of the foregoing resolution was du1y seconded by
and upon vote being taken thereon, the following voted in favor thereof:
and the following voted against the same:
Adopted by the City council of the City of Prior Lake, Minnesota, this 18th day of
December, 2006.
Mayor
AnnST:
City Manager
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2
STATE OF MINNESOTA
COUNTY OF SCOTT
CITY OF PRIOR LAKE
I, the undersigned, being the duly qualified and acting Manager of the City of
Prior Lake, Minnesota, DO HEREBY CERTIFY that I have compared the attached and
foregoing extract of minutes with the original thereof on file in my office, and that the same is a
full, true and complete transcript of the minutes of a meeting of the City Council of said City,
duly called and held on the date therein indicated, insofar as such minutes relate to the ratifying
the establishment of Development District No.6 and Tax Increment Financing District 6-1
therein in the City.
WITNESS my hand this
day of
. 2006.
City Manager
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3
AGENDA ITEM:
DISCUSSION:
PUBLIC HEARING TO CONSIDER APPROVAL OF RESOLUTION
ESTABLISHING THE DEVELOPMENT PROGRAM FOR
DEVELOPMENT DISTRICT NO.6 AND ESTABLISHING TAX
INCREMENT FINANCING DISTRICT NO. 8-1 AND THE
PROPOSED ADOPTION OF THE TAX INCREMENT FINANCING
PLAN THEREFORE (SHEPHERD'S PATH SENIOR HOUSING).
Introduction
The purpose of this item is to consider the following:
1. The establishment of the Development Program for Development
District No.6; and
2. The establishment of TIF District 6-1.
City Council is asked to establish Tax Increment Financing District No. 6-1
for the purposes of assisting in the development of a senior independent
living facility pursuant to Minnesota Law
At its May 15th meeting City Council received from Shepherd's Path LLC an
Application for Financial Assistance, and called public hearings on proposed
City and Economic Development Authority revenue bonds, and proP9sed
establishment of Tax Increment Financing district 6-1. At the June 5th
meeting, the City Council and Economic Development Authority approved
bonds for the development.
Shepherd's Path Senior Campus is designed to be a full service high quality
residential environment and a comprehensive community resource
exclusively for adults age 62 and over. Shepherd's Path will serve a wide
spectrum of lifestyle needs from active adults 62 and over to very frail adults
who need a wide range of support and services.
In order to have an affordable residential element to Shepherd's Path,
revenue bonds and tax increment financing are necessary to keep the rents
at an affordable rate. City Council is asked to hold the required public
hearing on the proposed tax increment financing and approve the TIF Plan.
Histor{
The development of the senior residential campus arrives on the heels of
the new Shepherd of the Lake Lutheran Church which was completed in
2003. The senior campus represents the implementation of the master plan
developed by the church to create a multi-generational community where
senior adults, family members, church members, youth, volunteers and the
www.cityofpriorlake.com
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residents of Prior Lake have an opportunity to benefit from the synergy of
cooperative programs.
,Current Circumstances
Shepherd's Path contracted with Maxfield Research to conduct a market
analysis of the senior housing needs in Prior Lake. Maxfield's market
analysis shows a total potential market base for senior housing of 660
households in the Prior Lake market area. It is estimated that 45% of the
market base will need or want subsidized I affordable housing. Thus,
demand in the Prior Lake market area exists for 297 subsidized I affordable
senior housing units. Some but not all of that demand is or will be met by
existing affordable units provided by other sources such as the Scott County
HRA.
The market analysis also reveals that Scott County is one of the few
counties in the state that has an inadequate number of skilled nursing beds
to serve the senior population. In fact, there are no skilled nursing facilities
in Savage or Prior Lake. Maxfield's calculations reveal the potential to
support up to 180 beds in the Prior Lake market area through 2009.
Shepherd's Path is proposing to construct a senior housing development
containing approximately 154 rental units which consists of 82 independent
units, 54 assisted living units and 18 dementia units. The facility will provide
affordable housing that is currently lacking within the city. The applicant
plans on starting 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, tax increment
financing and conduit revenue bonds. The tax increment financing plan
(attached) indicates that there are up to $5.5 million in eligible expenses for
which TIF could be requested. The applicant is requesting TIF funds to be
applied toward eligible costs of site improvements and preparation costs.
The TIF amount represents approximately 13% of the total long term
financing of the project.
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 Northland
Securities as part of the Development Program for Development District No.
6, and Tax Increment Financing Plan for TIF District No. 6-1.
The City must also enter into a private development contract with
Shepherd's Path. Those items will be before you at a meeting in the near
R:\Agenda Reports\June 26 2006\Agenda Report - Public Hearing - TIF Dist 6-1 (6-26-06).DOC
future.
Conclusion
The Shepherd's Path project meets many of the objectives of the City's
2030 Vision and Strategic Plan under the Housing Quality and Diversity
section. Most importantly, the developers of this project will make available
various styles and levels of senior housing (Iifecycle housing). This project is
also consistent with the City's Tax Increment Financing Policy. The
proposed project would not happen without the establishment of
Development District No.6 and TIF District 6-1. If the Council wishes to
proceed, it should by resolution, approve establishment of Development
District No.6, TIF District 6-1 and the related TIF Plan.
ISSUES:
The City Council needs to determine if it is important to have Shepherd's
Path be a development that provides opportunity for lifecycle housing,
inclusive of affordable units. If so, tax increment financing along with the
previously approved bonds will help achieve the affordable residential
component of the project, and provide a significantly greater degree of
related services than would otherwise occur.
FINANCIAL
IMPACT:
In accordance with State Statutes, the proposed Development Program for
District NO.6 and TIF Plan for TIF District 6-1 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 June 13'
2006 meeting, the County Board acknowledged that the district qualifies for
housing purposes and provided comments in support of the project and
stressed that the term of the district only extend for the required financing
amount which is represented in the TIF Plan as 15 years rather than the 25
years maximum allowed by law. The County asked that their comments be
made part of the June 26, 2006 hearing record.
NOTE: a" financial approvals for this project are conditioned upon
approval of a final plat.
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 Housing District is 25 years). According to the cash flow
projection, the gross tax increment is estimated by the City financial
consultant Northland Securities to be approximately $6.2 million over 15
years of the TIF District, with a present value of $4.2 million. The proposed
net TIF financing for the project is $5.5 million to assist in the development.
The district would extend 15 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 6-1.
Allen Black of Presbyterian Homes I Shepherd's Path, and Nick Skarich of
Northland Securities will be in attendance at the publiC hearing to answer
questions you may have.
R\Agenda Reports\June 26 2006\Agenda Report - Public Hearing - TIF Dist 6-1 (6-26-06).DOC
AL TERNAnvES:
1. Adopt Resolution #OS-XX, approving the Development Program for
Development District No.6 and the establishment of TIF District 6-1.
2. Deny the resolution
3. Defer for a specific reason
Alternative 1.
ATTACHMENTS:
1. Resolution #06-XX, approving the Development Program for Development District No.6 and
the establishment of TI F District 6-1.
2. Development Program for Development District No.6
3. Tax Increment Financing Plan for establishment of Tax Increment Financing District No. 6-1
R:\Agenda Reports\June 26 2006\Agenda Report - Public Hearing - TIF Dist 6-1 (6-26-06).DOC