HomeMy WebLinkAbout7A, Tax Increment Financing for District #3Prepared By: Sue Iverson, I
Council Meeting Date: December 14, 2009
Finance Director/Treasurer I
Approve Modification to the Tax Increment Financing Plan for Tax Increment Financing
District No. 3 (A Housing District) within Development District No.l.
Budgeted Amount: Actual Amount: Funding Source:
N/A N/A N/A
Recommendation:
1. Adopt Resolution 2009-042, a Resolution adopting a modification to the
Development Program for Development District No. 1; and a Modification to the
Tax Increment Financing Plan for Tax Increment Financing District No. 3.
Supporting Documents:
1. See the attached memo from Sue Iverson, dated December 14, 2009.
2. See attached memo from Stacie Kvilang, dated December 14, 2009.
3. Draft TIF No. 3 District Modification Plan
4. Resolution 2009-042
lt'--
,,--ARQEN HILLS
MEMORANDUM
DATE: December 14, 2009
TO: Honorable Mayor and City Council Members
Ron Moorse, City Administrator
FROM: Sue Iverson, Finance Director/Treasurer
SUBJECT: Tax Increment District No. 3 Plan modification (Cottage Villa)
Backiround
The Cottage Villa TIF district is set to expire on December 31, 2009. State Statute allows
the City to extend the district until December 31, 2019. There have been some
discussions with the City Council about extending the district and possibly using the
remaining funds for other housing projects in the City such as the Arden Village, the Old
City Hall Property, or the B2 District. On October 13, 2009, the City Council passed a
resolution calling for a public hearing on December 14, 2009 to modify the district until
December 31, 2019.
Discussion
Our Financial Advisor, Stacie Kvilvang, will be present at the meeting to answer any
questions about the modification or extension of the district. Attached is a memo
outlining the issues associated with this modification and an analysis of each of the
issues.
Council Action
Adopt Resolution 2209-042, a Resolution adopting a modification to the Development
Program for Development District No. 1; and a Modification to the Tax Increment
Financing Plan for Tax Increment Financing District No. 3.
City Council Meeting
\\Metro-inet.us\ardenhills\Admin\Council\Agendas & Packet Information\2009\12-14-09 Regular\Packet
Information\Cottage_Village_TIF_Dist Ext Memo.doc
Page 1 of 1
i
LEADERS IN PUBLIC FINANCE
OTo: Sue Iverson —Finance Director
From: Stacie Kvilvang —Ehlers and Associates
WDate: December 14, 2009
Subject: TIF 1-3 Modification
Overview
In 1993, the City created TIF District 1-3, a housing district, to assist in the development of
Cottage Villas which is a 60-unit senior apartment complex that is affordable to persons that
meet the low -to -moderate income guidelines. A housing district by State Statute can have a
maximum duration of 26 years (25 years after the receipt of the first increment). At the time of
creation of this District, the City Council limited the term to 15 years, since that was the term
needed to satisfy the financial obligation to the development.
Since creating this district, the City has had a request for assistance for a new affordable
housing development, as well as the City has identified some sites that could be redeveloped
for affordable housing. Based upon discussions with the City Council, it was determined that
rather than creating a new housing TIF district to assist future affordable housing
developments, the City could utilize the TIF generated from the Cottage Villas project by
extending the term of the district from 15 years to the statutory maximum of 26 years.
Issues to Consider
1. Can the City extend the term of the original district?
2. What is the new term of the District?
3. Can the City use the TIF generated from Cottage Villas on other projects even though they
are not located within the TIF District boundaries?
4. How much TIF will be available for future affordable housing developments by extending
the District?
5. How will TIF assistance be provided to future affordable housing developments?
Analysis of Issues
1. Can the City extend the term of the original district?
Yes. In order to extend the term to the statutory maximum, the City needs to hold a public
hearing since it will be modifying the development program to outline potential, future
projects and the budget to reflect increased increment to be collected due to the extension.
LEADERS IN PUBLIC FINANCE
.... ... .... .... ....................................................................................
3o6o Centre Pointe Drive
Roseville, MN 55113-1105
........................................................................................................................................................................................................................................:
Phone:651-697-85o6 Fax:651-697-8555
skviIva ng@a ehlers-inc.com
Sue Iverson
TIF District 1-3 Modification
December 14, 2009
Page 2
2. What is the new term of the District?
The District received its first increment in 1994. Therefore, by extending the term to the
maximum duration of 26 years, it is anticipated that the District will expire after December
31, 2019.
3. Can the City use the TIF generated from Cottage Villas on other projects even
though they are not located within the TIF District boundaries?
Yes. In order to utilize TIF, cities are required to create a Development District(s) which
outline, among other things, the area in which tax increments may be spent and where
increment may be created. Once cities establish a development district, they can then
create individual TIF districts that are located within the boundaries of the development
district. In the case of housing TIF districts, you can utilize funds generated from the TIF
district anywhere within the development district, without regards to pooling limitations.
The boundaries of the City's development district are shown on page 14 of the TIF Plan
and TIF generated from TIF 1-3 can be utilized anywhere within those boundaries to
develop affordable housing.
4. How much TIF will be available for future affordable housing developments by
extending the District?
The increment available to use on projects, after the additional ten years of increment, is
estimated to be $6801000. The present value, or amount of principal available,at a 6%
interest rate, is around $ 5 5 0, 000 .
5. How will TIF assistance be provided to future affordable housing developments?
Any future TIF request will be brought before the City Council for review and
consideration. If the City determines it would like to provide assistance to a development,
the terms and conditions will be outlined in a Development Agreement that will be
approved the City Council.
Please contact me at 651-697-8506 with any questions.
.............
................ ......<DRAFT FOR
PZIBLIG HEARING
MODIFICATION TO THE TAX INCREMENT FINANCING PLAN
FOR TAX INCREMENT FINANCING DISTRICT NO. 3
(A HOUSING DISTRICT)
within
DEVELOPMENT DISTRICT NO. 1
CITY OF ARDEN HILLS
RAM S EY COUNTY
STATE OF MINNE S O TA
Adopted: April 26, 1993
Modification No. 1: May 27, 1997
Modification No. 2: Public Hearing December 14, 2009
Prepared by: EHLERS & ASSOCIATES INC.
H L R S 3060 Centre Pointe Drive Roseville Minnesota 55113-1105
651-697-8500 fax: 651-697-8555 www.ehiers-inc.com
TAX INCREMENT FINANCING PLAN FOR
TAX INCREMENT FINANCING DISTRICT NO. 3
(COTTAGE LIFESTYLES)
(AS MODIFIED MAY 27, 2997)
Tntrnti -tinn
The following text represents a modification to the Tax Increment Financing Plan for Tax Increment Financing
District No. 3. The modified Tax Increment Financing Plan represents a continuation of the goals and objectives set
forth in the Development Program for Development District No. 1 and the Tax Increment Financing Plan for Tax
Increment Financing District No. 3. Generally, the substantive changes include the authority to spend additional tax
increments generated from Tax Increment Financing District No. 3 for other housing and redevelopment related
projects in Development District No. 1; to expand the budget for Tax Increment Financing District No. 3; and to
clarify budgets for previous expenditures.
For further information, a review of the Development Program for Development District No. 1 and the Tax
Increment Financing Plan for Tax Increment Financing District No. 3, is recommended. They are available from the
City Administrator's office of the City of Arden Hills.
Section 2.1. Statement of Objectives. See Article I, Section 1.4. Statement of Objectives.
(AS MODIFIED DECEMBER 14, 2009)
Within the City, there exist areas where public involvement is necessary to cause development or
redevelopment to occur. To this end, the City has certain statutory powers pursuant to Minnesota Statutes
("M.S."), Sections 469.124 to 469.134, inclusive, as amended, and M.S., Sections 469.174 to 469.1799,
inclusive, as amended (the "Tax Increment Financing Act" or "TIF Act"), to assist in financing public costs
related to low and moderate income housing projects.
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. 1.
The new major objective for this District is to assist in financing new low -to -moderate income
developments within the City. There is one development currently under consideration by the City which is
not located in the District, but is located within Development District No. 1. The project consists of the
construction of 55 units of rental housing affordable to persons and families at or below 60% of the area
median income. In addition, there are other redevelopment sites located within Development District No. 1
that may be suitable for the construction of low -to -moderate income housing in the future. It is the intent of
the City to utilize available TIF funds generated from this District to assist those developments as
appropriate.
Section 2.2. Development Program. See Article I, Sections 1.2. through 1. 11.
Section 2.3. Parcels to be Included. The parcels included within Tax Increment Financing District No. 3
are described on the attached Exhibit IV -A and the boundaries of Tax Increment Financing District No. 3 are
illustrated on Exhibit IV-B.
Section 2.4. Parcels in Acquisition. The City may publicly acquire and reconvey any or all of the
parcels in Tax Increment Financing District No. 3 identified on the attached Exhibit IV -A.
City of Arden Hills Modification of Tax Increment Financing District No. 3 2
The following are conditions under which properties not designated to be acquired may be acquired at a future date:
(1) The City may acquire property by gift, dedication, condemnation or direct purchase from willing
sellers in order to achieve the objectives of the Tax Increment Financing Plan; and
(2) Such acquisition will be undertaken only when there is assurance of funding to finance the
acquisition and related costs.
(AS MODIFIED DECEMBER 14, 2009)
The City has determined a need to assist affordable housing at sites throughout Development District
No. 1. Accordingly, the City may acquire any parcel in Development District No. 1 that meets the City's
criteria as a site desirable for affordable housing. Property may be acquired for housing as well as for streets,
utilities and other infrastructure directly related to such housing.
Section 2.5. Development Activity for which Contracts have been Signed. As of the date of adoption of
the Tax Increment Financing Plan, the City has not entered into a Development Agreement.
(AS MODIFIED MA Y 2 7, 1997)
On February 28, 1994, the City signed a Development Agreement with Cottage Villas of Arden Hills
Limited Partnership
Section 2.6. Specific Development Expected to Occur. At this time it is anticipated that the project will
include a 60-unit two-story apartment building with approximate construction cost of 1 $35,000 per unit.
Construction is estimated to be completed in 1993. The apartments will be rented to persons over 55 years of age
with low to moderate income.
(AS MODIFIED MAY 27, 1997)
A 60 unit rental housing facility, rented primarily to elderly persons, was completed in 1995. The project
received low income housing tax credits allocation from the Minnesota Housing Finance Agency.
(AS MODIFIED DECEMBER 14, 2009)
The City realizes that there exists a need to assist in financing public costs related to low and
moderate income housing projects within the City. Currently under consideration by the City is the
construction of a 55-unit workforce rental housing project that will be affordable to persons and families at
or below 60% of the area median income. This project is located near Land O' Lakes, a large employer, at
1296 County Road F. In addition there is a potential for two other projects: an affordable housing project
as part of the redevelopment of the old City Hall site; and a mixed -use redevelopment that includes an
affordable housing component on the old Holiday Inn site.
Section 2.7. Prior Planned Improvements. The City shall, after due and diligent search, accompany its
request for certification to the County Auditor or its notice of district enlargement with a listing of all properties
within Tax Increment Financing District No. 3 for which building permits have been issued during the eighteen
(18) months immediately preceding approval of the Tax Increment Financing Plan by the City. The County Auditor
shall increase the original tax capacity of Tax Increment Financing District No. 3 by the tax capacity of each
improvement for which the building permit was issued. If said listing does not accompany the aforementioned
request or notice, the absence of such listing shall indicate to the County Auditor that no building permits were
issued in the eighteen (18) months prior to the Authority's approval of the Tax Increment Financing Plan.
City of Arden Hills Modification of Tax Increment Financing District No. 3
Section 2.8. Fiscal Disparities. The City hereby elects the method of tax increment computation set
forth in Minnesota Statutes, Section 469.177, Subdivision 3, clause (a).
Section 2.9. Estimated Public Improvements Costs. The estimated costs associated with Development
District No. 1 are listed on the following page.
Cost
Total Including the
April 26, 1993
May 27, 1997
Original Budget
Modification
Land Acquisition
1969000
1949210.17
Excavation/grading
12500
1259000.00
Landscaping/sod-lawn sprinklers
5000
379908.60
Curb/gutter
1200
10,150.00
Site concrete
2135000
21300.00
Site utilities
421000
575730.23
Bituminous paving/stripping
17,000
17,000.00
Site/electrical
125000
1200.00
Financing costs @3.8%, 15 years
1315000
131,000.00
City Administrative Expenses
9505
95,895.00
Total Cost
8935895
8939894.00
(AS MODIFIED DECEMBER 14, 2009)
The total uses of funds has been revised to reflect the increased revenues due to extending the term of the
district to 26 years and the additional expenditures to pay additional housing costs and future obligations as
described in this Plan. The City expects that there may be additional costs, in various categories, needed to
facilitate additional housing needs in the City. The revised cumulative uses of tax increment funds is
summarized in the table below.
USES OF TAX INCREMENT FUNDS TOTAL
Land/Building Acquisition P $2509000
Site Improvements/Preparation $5009000
Public Utilities $1029500
Streets and Sidewalks $2509000
Administrative Costs (up to 10%) $147,500
PROJECT COST TOTAL $192509000
Interest 225 000
PROJECT AND INTEREST COSTS TOTAL $194759000
For purposes of OSA reporting forms, uses of funds include interfund loans, bond principal, TIF Note
principal, and transfers, all in the principal amount of $3,000,000.These amounts are not cumulative, but
represent the various forms of "bonds" included within the concept of bonded indebtedness under the TIF
Act.
City of Arden Hills Modification of Tax Increment Financing District No. 3 4
The total project cost, including financing costs (interest) listed in the table above does not exceed the total
projected tax increments for the District as shown in the Calculation of Tax Increment section of this plan.
Estimated capital and administrative costs listed above are subject to change among categories by
modification of the TIF Plan without hearings and notices as required for approval of the initial TIF Plan, so
long as the total capital and administrative costs combined do not exceed the total listed above. The City
may expend funds for qualified housing activities outside of the District boundaries. A summary of the
modification to the District, as reported on the OSA forms, can be found in Exhibit IV-F.
Section 2.10. Estimated Amount of Bonded Indebtedness. It is anticipated that $0 of bonded
indebtedness will be incurred with respect to this portion of Development District No. 1 at this time. Pursuant to
Minnesota Statutes, Section 469.178, Subdivision 1, General Obligation Tax Increment Bonds may be used as
required to amortize the costs identified in Article I, Section 1.5. It is further anticipated that future bond sales will
be based on availability of tax increment. It is also contemplated that future bonds will not be issued at one time but
as they are needed.
(AS MODIFIED MAY 2 7, 1997)
The pay as you go note established with the developer is set at an original principal balance of $723,237,
with annual interest calculated at 1.95834%.
(AS MODIFIED DECEMBER 14, 2009)
The City may issue bonds (as defined in the TIF Act) secured in whole or in part with tax increments
from the District in a maximum principal amount of $3,000,000. Such bonds may be in the from of pay -as -
you go notes, revenue bonds or notes, general obligation bonds, or interfund loans. This estimate of total
bonded indebtedness is a cumulative statement of authority under this TIF Plan as of the date of this
modification.
Section 2.11. Sources of Revenue. The costs outlined on the attached Exhibit IV -A will be financed
through the annual collection of tax increments.
Revenue
Total as of
April 26, 1993 May 27, 1997
Establishment Modification
Tax Increments 958,950 883,921
Interest Earnings 10,000
Special Assesments 0
Other
Total 9581950 8935921
(AS MODIFIED DECEMBER 14, 2009)
Land/Building Acquisition, site improvements/preparation, public improvement costs, utilities, 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.
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
activities 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.
City of Arden Hills Modification of Tax Increment Financing District No. 3
The estimated sources of funds for the District are contained in the table below are based on the increments
received to date and an extrapolation of future increment expected.
SOURCES OF FUNDS TOTAL
Tax Increment $194759000
The other financing sources listed in Exhibit IV-F are included for purposes of OSA reporting for the TIF
District. Transfers are authorized in case money is moved from one fund to another, before an expenditure
is made.
Section 2.12. Estimated Original and Captured Tax Capacities. The tax capacity of all taxable property in
Tax Increment Financing District No. 3 for the 1992/93 tax year is estimated to be 5,443.
The City anticipates entering into a development contract with the developer and that the City will agree to
reimburse the developer for costs of the public improvements from collections of tax increment.
The estimated captured tax capacity of Tax Increment Financing District No. 3 upon completion of the
proposed improvements on January 2, 1994 is estimated to be $48,853.
(A S MODIFIED MA Y 2 7, 199 7)
For taxes payable in 1997, the original tax capacity was $3,524 and the captured tax capacity was $62,329.
(AS MODIFIED DECEMBER 14, 2009)
Pursuant to M.S., Section 469.177, Subds. I and 2, the County Auditor shall certify in each year 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 EDA or City.
Pursuant to M.S., Section 469.174 Subd. 4 and M.S., Section 469.177, Subd. 1, 2, and 4, the estimated
Captured Net Tax Capacity (CTC) of the District, within Development District No. 1, will annually
approximate tax increment revenues as shown in the table below. The Project Tax Capacity (PTC) listed is
the final values used for taxes payable in 2009.
City of Arden Hills Modification of Tax Increment Financing District No. 3 6
Project Estimated Tax Capacity upon Completion (PTC) 389033
Original Estimated Net Tax Capacity (ONTO) 19352
Estimated Captured Tax Capacity (CTC) 36,681
Original Local Tax Rate
97.654% Pay 2009
Estimated Annual Tax Increment (CTC x Local Tax Rate) 359820
Percent Retained by the EDA 100%
Section 2.13. Tax Capacity. The current total tax capacity rate is 130.864.
(AS MODIFIED DECEMBER 14, 2009)
The actual original local tax rate for the TIF District is 1.30864, which is the rate for taxes payable in
1993. The estimated rate for taxes payable in 2009 is lower, as shown in the chart in Section 2.12 above, so
the lower rate is used for purposes of tax increment projections in the Modification.
Section 2.14. Tax Increment. Tax increment has been calculated at approximately $63,930 assuming a
static tax capacity rate and a valuation increase of zero percent (0%) compounded annually.
Section 2.15. Type of Tax Increment Financing District. Tax Increment Financing District No. 3 is,
pursuant to Minnesota Statutes, Section 469.174, Subdivision 12, a Housing District. The District consists of a
project intended for occupancy, in part, by persons or families of low and moderate income as defined in the federal
housing statutes. Minnesota Statutes, Section 469.1761 designates income requirements for such housing projects.
(AS MODIFIED ON DECEMBER 14, 2009)
Tax Increment Financing District No. 3 is, pursuant to Minnesota Statutes, Section 469.174, Subdivision 11, a
Housing District. Such designation means that any housing project must meet the requirements of Section
469.1761 of the TIF Act. Those requirements are summarized as follows:
1. No more than 20 percent of the square footage of buildings that receive assistance from TIF District
No. 3 may consist of commercial, retail, or other nonresidential uses.
2. For owner -occupied housing: 95 percent of the housing units must be initially purchased and
occupied by individuals whose family income is less than or equal to the income requirements for
qualified mortgage bond projects under section 143(f) of the Internal Revenue Code. Generally, the
income for one or two person households may not exceed 100% of areawide or statewide median
income (whichever is greater); and the income for three -or -more person households may not exceed
115% of areawide or statewide median income (whichever is greater).
3. For rental housing, the property must satisfy the requirements for residential rental project as
defined in Section 143(d) of the Internal Revenue Code. This means that at either: at least 20% of
the units are occupied by persons with income no greater than 50% of areawide median; or at least
40% of the units are occupied by persons with income no greater than 60% of areawide median.
Housing projects that meet one of these income limitations may be located anywhere within Development
District No. 1, whether or not such developments are actually established as a housing district.
City of Arden Hills Modification of Tax Increment Financing District No. 3
Section 2.16. Duration of Tax Increment Financing District. The duration of Tax Increment Financing
District No. 3 is expected to be fifteen (15) years from receipt of the first tax increment. The date of receipt of the
first tax increment is estimated to be July, 1995. Thus, it is estimated that Tax Increment Financing District No. 3,
including any modifications for subsequent phases or other changes, would terminate in the year 2009.
(AS MODIFIED DECEMBER 14, 2009)
Pursuant to M.S., 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 M.S., Section 469.176, Subd. lb, the duration of the
District will be 25 years after receipt of the first increment by the City (a total of 26 years of tax increment).
The date of receipt by the City of the first tax increment was July, 1994. Thus, it is estimated that the
District, including any modifications of the TIF Plan for subsequent phases or other changes, would
terminate after December 31, 2019, or when the TIF Plan is satisfied. The City reserves the right to decertify
the District prior to the legally required date.
Section 2.17. Estimated Impact on Other Taxing Jurisdictions. The estimated impact on other taxing
jurisdictions assumes construction would have occurred without the creation of Tax Increment Financing District
No. 3. If the construction is a result of tax increment financing, the impact is $0 to other entities. Notwithstanding
the fact that the fiscal impact on the other taxing jurisdictions is $0 due to the fact that the financing would not have
occurred without the assistance of the City, the attached Exhibit IV-E reflects the estimated impact of Tax
Increment Financing District No. 3 if the "but for" test was not met.
(AS MODIFIED MA Y 2 7, 1997)
No additional fiscal implications are contemplated. Even though the captured tax capacity amount is higher
than expected, the total tax increment to be retained by the City will not increase and will only be used to retire the
existing debt and pay for city administrative costs.
(AS MODIFIED DECEMBER 14, 2009)
IMPACT ON TAX BASE
Estimated Captured
Pay 2009 Total Net
Tax Capacity
(CTC) Percent of CTC to
Tax Capacity
Upon Completion Entity Total
Ramsey County
48398839904
35,820
0.0074%
City of Arden Hills
1391159681
359820
0.2731 %
ISD #621
8696889879
359820
0.0413 %
IMPACT OF TAX RATE
Pay 2009 Extension
Percent of
Potential
Rates
Total
CTC
Taxes
Ramsey County
0.46546
47.66%
359820
169673
City of Arden Hills
0.20534
21.03 %
359820
79355
ISD #621
0.22937
23.49%
359820
89216
Other
0.07637
7_ 82%
359820
2,736
Total
0.97654
100.00%
349980
City of Arden Hills Modification of Tax Increment Financing District No. 3
The estimates listed above display the captured tax capacity as of 2009. The tax rate used for
calculations is the final Pay 2009 rate. The total net capacity for the entities listed above are based on actual
Pay 2009 figures.
Section 2.18. Modification of Tax Increment Financing District and/or Tax Increment Financing Plan.
As of April 26, 1993, no modifications to Tax Increment Financing District No. 3 or the Tax Increment Financing
Plan therefore have been made, said date being the date of initial approval and adoption thereof by the City
Council.
(AS MODIFIED MAY 27, 1997)
As of May 27, 1997, the Tax Increment Financing Plan was modified to account for a more detailed project
costs and account for the bonded indebtedness.
(AS MODIFIED DECEMBER 14, 2009)
Section 2.19. Administrative Expenses.
In accordance with M.S., 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 M.S., Section 469.178; or
5. Amounts used to pay other financial 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 M.S., 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 or the total tax increments, as defined by M.S., Section 469.174, Subd. 25, clause (1), from the District,
whichever is less.
Pursuant to M.S., 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 and are not subject to the percentage
limits of M.S., Section 469.176 Subd. 3. The county may require payment of those expenses by February 15
of the year following the year the expenses were incurred.
Pursuant to M.S., 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.
City of Arden Hills Modification of Tax Increment Financing District No. 3
(AS MODIFIED DECEMBER 14, 2009)
Section 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:
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 the Development District
No. 1 pursuant to the M.S., Sections 469.090 to 469.1082;
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 M.S., 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 the Development District No. 1 by a developer;
6. To finance or otherwise pay premiums and other costs for insurance or other security
guaranteeing the payment when due of principal of and interest on bonds pursuant to the
TIF Plan or pursuant to M.S., Chapter 462C. M.S., Sections 469.152 through 469.165, and/or
M.S., 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 M.S., Chapter 462C, M.S.,
Sections 469.152 through 469.165, and/or M.S., Sections 469.178.
These revenues shall not be used to circumvent any levy limitations applicable to the City nor for
other purposes prohibited by M.S., Section 469.176, Subd. 4.
Tax increments generated in the District will be paid by Ramsey County to the City for the Tax
Increment Fund of said District.
(AS MODIFIED DECEMBER 14, 2009)
Section 2.21. Excess Increments.
Excess increments, as defined in M.S., 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 finance additional public costs in the Development District No. 1 or the District.
Section 2.22. Definition of Tax Increment Revenues
Pursuant to M.S., 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 M.S., Section 469.177;
City of Arden Hills Modification of Tax Increment Financing District No. 3 10
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 M.S., Section 273.1384.
Section 2.23. Requirements for Agreements with the Developer
The City will review any proposal for private development to determine its conformance with the
Redevelopment Plan 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 EDA or City may also use the Agreements to address
other issues related to the development.
Section 2.24. Assessment Agreements
Pursuant to M.S., Section 469.177, Subd. 8, the EDA or City may enter into a written assessment
agreement in recordable form with the developer of property within the District which establishes a
minimum market value of the land and completed improvements for the duration of the District. The
assessment agreement shall be presented to the 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.
City of Arden Hills Modification of Tax Increment Financing District No. 3 11
EXHIBIT IV -A
PARCELS INCLUDED WITHIN TAX INCREMENT FINANCING DISTRICT NO. 3 AS ORIGINALLY
ADOPTED APRIL 26, 1993
28-30-23-32-0018
28-30-23-32-0023
28-30-23-32-0020
28-30-23-32-0014-6*
*Original Pre-apportionment/split PIN number 28-30-23-32-0014.
(AS MODIFIED DECEMBER 14, 2009)
Parcels including in the District as of December 31, 2009 are listed below
PID
Address
Owner
28.30.23.32.0014
3746 Cleveland E2 W
First American Commercial Real Estate Service
28.30.23.32.0018
2057 Thom Dr
First American Commercial Real Estate Service
28.30.23.32.0020
3759 New Brighton Rd
28.30.23.32.0023
3744 Cleveland Ave N
City of Arden Hills Modification of Tax Increment Financing District No. 3 12
J
IV-B
BOUNDARY MAP OF TIF DISTRICT NO. 3
RAMSEY
COUNTY
LIBRARY
VALENTINE
HILLS
� SCHOOL
,q.
0
D`
City of Arden Hills Modification of Tax Increment Financing District No. 3 13
City of Arden H*"1'*11,::s
Devetopment D"I......"strict N-0.
ni U No 1,
's D nient, Dlnt: eve.i.o. p
TIF Distdct #3
-leg
Map Createdi.. October 28::, 2W9
City of Arden Hills Modification of Tax Increment Financing District No. 3 14
IV-C
CITY OF ARDEN HILLS; MINNESOTA
COTTAGE LIFESTYLES SENIOR HOUSING
Original
Estimated
Captured
Estimated
10%
Available
Tax
Tax
Tax
Tax
Admin.
Tax
Year
Capacity
Capacity
Capacity
Increment
Expense
Increment
1993
$5,443
$5,443
0
0
0
0
1994
5,443
5,443
0
0
0
0
1995
51443
54,296
$48,853
$63,930
$6,393
$57,537
1996
51443
54,296
48,853
63,930
6,393
57,537
1997
5,443
54,296
48,853
63,930
61393
57,537
1998
51443
54, 296
48,853
63,930
61393
57,537
1999
51443
54,296
48,853
63,930
61393
57,537
2000
51443
54,296
48,853
63,930
61393
57,537
2001
51443
54,296
48,853
63,930
6,393
57,537
2002
51443
54,296
48,853
63,930
61393
57,537
2003
51443
54, 296
48,853
63,930
61393
57,537
2004
51443
54,296
48,853
63,930
61393
57,537
2005
5,443'
54,296
48,853
63,930
61393
57,537
2006
51443
54,296
48,853
63,930
61393
57,537
2007
5,443
54,296
48,853
63,930
61393
57,537
2008
51443
54,296
48,853
63,930
61393
57,537
2009
51443
54,296
48,853
63,930
6,393
57,537
958,950 $95,895 $863,055
Original tax capacity: 51443
Estimated Market Value:
Building (2 .4 % class rate) 2,100,000
Land (3 .4 % class rate) 114,600
Total Tax Capacity 54,296
Tax Capacity Rate 130.864
Completion 1993
(AS MODIFIED DECEMBER 14, 2009)
See Section 2-12 of this Plan for the current assumptions used in the estimates of increments used in
the authorized budgets for Tax Increment Financing District No. 3.
City of Arden Hills Modification of Tax Increment Financing District No. 3 15
EXHIBIT IV-D
BUT FOR ANALYSIS
The City and staff has determined that this project is likely the best use of this property and that this type of
development is not likely to occur without tax increment financing.
Approximately 4 parcels located west of Cleveland Avenue and south of County Road E2 and north of Thom
Drive will be developed to provide 60 senior housing units as rental property. The City has promoted proper
usage and development in this area and does not anticipate development will occur without public participation.
This development will create employment opportunities resulting from the construction of the units and add over
$2.1 million of new market value to the City's tax base.
Access to nearby city parks is anticipated as a need to address through the Park and Trail System. Previous
expense to the City in anticipation of a higher use including water main extension and sanitary sewer line
including installation of sewage lift station.
(AS MODIFIED DECEMBER 14, 2009)
It is found and determined, and it is the reasoned opinion of the City, that:
(i) The proposed redevelopment described in the TIF Plan Modification would not reasonably be
expected to occur solely through private investment within the reasonably foreseeable future. The major
purpose of the TIF Plan Modification is to encourage the development of additional housing that is
affordable to persons who meet the income limits for such housing under the Act. Historically, affordable
housing has not occurred in the City without significant public assistance because of high construction costs
and lower revenues produced by affordable rents or sale prices. The use of tax increment resources from
the TIF District will offer opportunities for private developers to incorporate more affordable housing in
new developments at various locations throughout Development District No. 1, all of which will be deemed
to occur within the TIF District by virtue of Minnesota Statutes, Section 469.1763, subd. 2(b).
(ii) The Tax Increment Plan Modification conforms to the general plan for the redevelopment of
the City as a whole. The Tax Increment Plan Modification was reviewed and commented upon by the
City's Planning Commission on December 9, 2009, and was approved by the Commission on that same
date.
(iii) The Tax Increment Plan Modification will afford maximum opportunity, consistent with the
sound needs of the City as a whole, for the redevelopment of the Project by private enterprise. The City has a
need for more affordable rental and owner -occupied housing. The tax increment from the TIF District will
be used to encourage the private market to offer a range of affordable housing choices and ensure that
affordability is maintained over an extended period of time.
City of Arden Hills Modification of Tax Increment Financing District No. 3 16
EXHIBIT IV-E
ESTIMATED IMPACT OF TAX INCREMENT FINANCING DISTRICT NO. 3
ON OTHER TAXING JURISDICTIONS
IMPACT ON TAX BASE
-------------------------------
NET TAXABLE TAX CAPACITIES
% OF
ENTITY TAX BASE ORIGINAL ESTIMATED CAPTURED TOTAL
------------------------------------------------------------------------------------------------------------------------------------- ---------------
City of Arden Hills 91668,094 5, 443 54,f296 48,853 0 . 521 %
County of Ramsey
ISD #621
ENTITY
City of Arden Hills
County of Ramsey
ISD #621
Other
282, 966, 817 51443
54,296
48,853
0. 018 %
51,917,445 5,443
54,296
48,853
0.097%
IMPACT ON TAX CAPACITY
----------------------------------------------
RATE
CURRENT
TAX CAPACITY
% OF
TAX
RATE
RATE
TOTAL INCREMENT
INCREASE
14.382
10 . 00 %
71032
0 . 073 %
42.380
32.00%
20,458
0.007%
68.898**
53.00%
33,883
0.065%
5.204
4.00%
21557
130.864
100.00%
63,930
* Assumes the construction would have occurred without the creation of a Tax Increment
Financing District. If the construction is a result of Tax Increment Financing, the impact is $0.
* * Includes tax rate of 1.701 for Intermediate District No. 916.
(AS MODIFIED DECEMBER 14, 2009)
See Section 2-17 of this Plan for the current estimated impact of Tax Increment Financing District
No. 3 on other taxing jurisdictions.
City of Arden Hills Modification of Tax Increment Financing District No. 3 17
EXHIBIT IV-F
DISTRICT BUDGET SUMMARY
(AS MODIFIED DECEMBER 14, 2009)
City of Arden Hills, Minnesota
TIF 3 Cottage Villas Housing
Budget Summary
December 14, 2009
Revenues
As Adopted
4/26/1993
As Modified
5/27/1997
As Modified
12/14/2009
Tax Increment
958,950
883,921
11400,000
Investment Earnings
-
10,000
75,000
Bond Proceeds
-
110001000
Loan Proceeds
19000,000
Other
Transfers In
17000,000
Total Revenues
958,950
8937921
41475,000
As Adopted As Modified As Modified
Expenditures 4/26/1993 5/27/1997 12/14/2009
Land Acquisition
196,000
194,210
250,000
Site Improvements
375,909
500,000
Public Utilities
-
697730
102,500
Streets and Sidewalks
-
277150
250,000
Bond Principal Payments
-
110001000
Bond Interest Payments
-
-
-
Loan Principal Payments
1,000,000
Loan Interest Payments
131,000
225,000
Administration Expenses
-
95,895
147,500
Other
Transfers Out
110007000
Total Expenditures
196,000
893,894
41475,000
City of Arden Hills Modification of Tax Increment Financing District No. 3 18
Council member
CITY OF ARDEN HILLS
RAMSEY COUNTY
STATE OF MINNESOTA
introduced the following resolution and moved its adoption:
RESOLUTION NO.2009-042
RESOLUTION ADOPTING A MODIFICATION TO THE DEVELOPMENT
PROGRAM FOR DEVELOPMENT DISTRICT NO. 1; AND A MODIFICATION
TO THE TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT.
FINANCING DISTRICT NO.3.
BE IT RESOLVED by the City Council of the City of Arden Hills, Minnesota, as follows:
Section 1. Recitals
1.01. The City Council ("Council") of the City of Arden Hills, Minnesota ("City") has
heretofore established Development District No. 1 (the "Project Area") and adopted a Development
Program therefor. It has been proposed that the City adopt a Modification to the Development Program
(the "Development Program Modification") for the Project Area and a Modification to the Tax Increment
Financing Plan (the "TIF Plan Modification") for Tax Increment Financing District No. 3 (the "TIF
District") therein (the Development Program Modification and the TIF Plan Modification are referred to
collectively herein as the "Modifications"), all pursuant to and in conformity 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 Modifications, and presented for the Council's
consideration.
1.02. The City has investigated the facts relating to the Modifications and has caused the
Modifications to be prepared.
1.03. The City has performed all actions required by law to be performed prior to the adoption
and approval of the proposed Modifications, including, but not limited to, notification of Ramsey County
and Independent School District No. 621, having taxing jurisdiction over the property in the TIF District,
a review of and written comment on the Modifications by the City Planning Commission, and the holding
of a public hearing upon published notice as required by law.
1.04. The City is not modifying the boundaries of the Project Area or the TIF Districts.
Section 2. Findings for the Development Program Modification
2.01. The Council hereby finds that: (a) the land within the Project Area would not be available
for development or redevelopment without the financial aid to be sought under the Development Program
Modification; (b) the Development Program Modification will afford maximum opportunity, consistent with
the needs of the City as a whole, for the development of the Project Area by private enterprise; and (c) the
Development Program Modification conforms to the general plan for the development of the City as a whole.
2.02. These findings are based on the facts and conditions described in the Development Program
Modification, which is incorporated herein by reference.
Section 3. Findings for the TIF Plan Modification
3.01 The Council hereby reaffirms the original findings for the TIF District, namely that the
when the TIF District was established, TIF District No. 3 was established as a housing tax increment
financing district. In addition, the City makes the following findings:
(1) The proposed redevelopment described in the TIF Plan Modification would not reasonably be
expected to occur solely through private investment within the reasonably foreseeable future. The major
purpose of the TIF Plan Modification is to encourage the development of additional housing that is
affordable to persons who meet the income limits for such housing under the Act. Historically, affordable
housing has not occurred in the City without significant public assistance because of high construction
costs and lower revenues produced by affordable rents or sale prices. The use of tax increment resources
from the TIF District will offer opportunities for private developers to incorporate more affordable
housing in new developments at various locations throughout Development District No. 1, all of which
will be deemed to occur within the TIF District by virtue of Minnesota Statutes, Section 469.1763, subd.
2(b).
(ii) The Tax Increment Plan Modification conforms to the general plan for the redevelopment of the
City as a whole. The Tax Increment Plan Modification was reviewed and commented upon by the City's
Planning Commission on December 9, 2009, and was approved by the Commission on that same date.
The Tax Increment Plan Modification will afford maximum opportunity, consistent with the sound
needs of the City as a whole, for the redevelopment of the Project by private enterprise. The City has a
need for more affordable rental and owner -occupied housing. The tax increment from the TIF District
will be used to encourage the private market to offer a range of affordable housing choices and ensure that
affordability is maintained over an extended period of time.
3.02 The TIF Plan Modification is being completed to extend the term of the TIF District to its
statutory maximum duration to enable the City to continue in its efforts to support low and moderate
income housing opportunities, to increase the budget to reflect the extended term, actual development and
associated obligations and bring the TIF Plan into conformance with current Office of State Auditor
requirements and legislative changes. The City is not modifying the boundaries of the TIF District. The
Council hereby finds that the Modifications are intended to provide an impetus to accomplish certain
objectives as specified in the Modifications.
3.03 The TIF Plan Modification conforms to the general plan for development or
redevelopment of the City as a whole. The fact supporting this finding is that the TIF Plan Modification
will generally complement and serve to implement policies adopted in the City's comprehensive plan.
3.04 The TIF Plan Modification will afford maximum opportunity, consistent with the sound
needs of the City as a whole, for the development or redevelopment of the Project Area by private
enterprise. The facts supporting this finding are that the TIF Plan Modification will help continue the
redevelopment by private enterprise that has been stimulated under the original plan for the TIF District.
3.05 The Council further finds the proposed development and redevelopment, in the opinion
of the City, would not reasonably be expected to occur solely through private investment within the
reasonably foreseeable future and therefore the use of tax increment financing is deemed necessary.
Section 4. Public Purpose
4.01. The adoption of the Modifications conforms in all respects to the requirements of the Act
and will help fulfill a need to develop an area of the City which is already built up, to provide housing
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 Modifications
5.01. The Modifications, as presented to the Council on this date, are hereby approved, ratified,
established and adopted and shall be placed on file in the office of City Administrator.
5.02. The staff, the City's advisors and legal counsel are authorized and directed to proceed
with the implementation of the Modifications and for this purpose to negotiate, draft, prepare and present
to this Council for its consideration all further Modifications, resolutions, documents and contracts
necessary for this purpose. Approval of the Modifications does not constitute approval of any project or a
Development Agreement with any developer.
5.03. The City Administrator is authorized and directed to forward a copy of the Modifications
to the Commissioner of the Minnesota Department of Revenue and the Office of the State Auditor
pursuant to M.S., Section 469.175, Subd. 4a.
5.04. The City Administrator is further authorized and directed to file a copy of the
Modifications with Ramsey County Auditor.
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: December 14, 2009
Stan Harpstead, Mayor
(Seal)
ATTEST:
Ron Moorse, City Administrator