4D, Resolution Calling for Public Hearing - TIF - Presbyterian Homes

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Memo To: Sue Iverson Finance Director From: Stacie Kvilvang Date: October 25, 2010 Subject: Proposed TIF District Presbyterian Homes Redevelopment Presbyterian Homes has approached the City about its proposed redevelopment of portions of their facilities on their existing site. They have inquired about the possibility of the City providing Tax Increment Financing (TIF) to offset some of their costs associated with the redevelopment. Presbyterian Homes has submitted a formal application to the City along with the required application fee of $2,000 (non refundable) and $10,000 escrow fee to cover costs. As stated in the application, to the extent that the $10,000 is not adequate to cover all costs associated with creation of the TIF district and development agreement, the developer is required to submit payment for these additional costs upon notification from the City. At this time, it is estimated that the costs will range between $30,000 and $40,000 (excludes any estimate for legal costs associated with conduit financing requests). Based upon the existing site and qualifications required to create a district, we recommend that the City Council consider creating a renewal and renovation district, which has a sixteen (16) year term. In order to qualify for this type of district, the City must find: 1. That 70 of the area of the district is occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures; 2. 20 percent of the existing structures are structurally substandard; and 3. 30 percent of the other buildings require substantial renovation or clearance to remove exiting conditions In order to comply with the first condition, only 15 percent of each parcel in the district needs to be occupied. Since this district is going to be comprised of one parcel, 15 percent of that parcel needs to be occupied by the above referenced items (which is the case). For purposes of determining compliance with item #2, a building is considered to be structurally substandard if the cost to bring it into compliance with current building code costs more than 15 percent to construct a new structure of the same square footage and type on the site. We recommend that the City contract with a third-party entity to complete the required inspections to make the above referenced findings and complete a report for the City. It is estimated that the cost to have the inspection and accompanying report completed with be approximately $6,000 (included in the estimate above). EHLERS LEADERS IN PUBLIC FINANCE 3060 Centre Pointe Drive Roseville, MN 55113-1105 Phone: 651-697-8506 Fax: 651-697-8555 skvilvang@ehlers-inc.com