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HomeMy WebLinkAbout7.a. Approval of Resolution Adopting a Modification to the Development Program for Development District NO. 1 and Approving a Tax Increment Financing Plan for the Osprey Tax Increment Financing District EXECUTIVE SUMMARY City Council Meeting Date: May 18th, 2021 AGENDA ITEM: Approval of Resolution Adopting a Modification to the Development Program for Development District No. 1 and Approving a Tax Increment Financing Plan for the Osprey Tax Increment Financing District AGENDA SECTION: Public Hearing PREPARED BY: Eric Van Oss, Economic Development Coordinator AGENDA NO. 7.a. ATTACHMENTS: Resolution and TIF Plan APPROVED BY: LJM RECOMMENDED ACTION: 1: Hold Public Hearing take public testimony, and Close public hearing. 2: Motion to Approve a Resolution Adopting a Modification to the Development Program for Development District No. 1 and Approving a Tax Increment Financing Plan for the Osprey Tax Increment Financing District. BACKGROUND Staff has been working with representatives from Seefried Industrial Properties LLC to develop an industrial logistics facility in the Business Park. The developer is working on land acquisition, environmental assessment, and site planning issues. The City has been working with Rebecca Kurtz of Ehlers to assist in potential public financial assistance to facilitate the development project. A unique facet of this project is the need to extend Boulder Trail to State Highway 3. The City believes an additional access point to the Business Park is necessary to accommodate increased truck traffic, as well as to facilitate future development. It is recognized that the road extension is expensive and requires Right-of- Way (ROW) dedication of private property from the developer. In this instance, the City recognizes that the project could not move forward without some public assistance to construct the road extension and reimburse the developer for a portion of the ROW costs. During the meeting Ms. Kurtz will be discussing the TIF Plan and reviewing the necessary elements of the plan including the financing information. Staff continues to meet with the developer to discuss budget and funding strategies. At the May 18th Port Authority meeting, the Commission was asked to approve a resolution adopting a modification to the Development Program for Development District No. 1. The Council is being asked to hold a public hearing on the TIF Plan and consider approval of the TIF Plan. Ultimately, both the Port Authority and City Council will be asked to consider approval of the TIF Agreement at a later date. The last time the City approved a TIF District was in 2019, when the City modified the Downtown- Brockway Tax Increment Financing District to the KenRose district associated with the Morrison Development. The anticipated actions will again modify the Development Program for Development District No. 1. This modification represents a continuation of the goals and objectives set forth in the Development Program for Development District No. 1. Generally, the substantive changes include the establishment of the Osprey TIF District. 2 RECOMMENDATION Staff recommends holding a public hearing and a motion to approve the TIF Plan. 1 RS220-419-720697.v1 CITY OF ROSEMOUNT DAKOTA COUNTY, MINNESOTA RESOLUTION 2021 - 38 A RESOLUTION ADOPTING A MODIFICATION TO THE DEVELOPMENT PROGRAM FOR DEVELOPMENT DISTRICT NO. 1 AND APPROVING A TAX INCREMENT FINANCING PLAN FOR THE OSPREY TAX INCREMENT FINANCING DISTRICT BE IT RESOLVED by the City Council (the “Council”) of the City of Rosemount, Minnesota (the “City”), as follows: Section 1. Recitals 1.01. In 1979 the Housing and Redevelopment Authority in and for the city of Rosemount (the “HRA”) established Development District No. 1 and adopted a Development Program related thereto. 1.02. The Rosemount Port Authority (the “Port Authority”) is the successor in interest to the HRA and currently operates Development District No. 1. 1.03. On May 18, 2021 the Port Authority adopted a modification to the Development Program for Development District No. 1 (the “Modification”). 1.04. The City proposes to approve the Modification and adopt a Tax Increment Financing Plan (the “TIF Plan”) for the Osprey Tax Increment Financing District (the “TIF District”) located therein (the Modification and the TIF Plan are), all pursuant to and in conformity with applicable law, and presented for the Council’s consideration. 1.05. The City has performed all actions required by law to be performed prior to the establishment of the TIF District and the adoption and approval of the Plans, including, but not limited to, notification of Dakota County and Independent School District No. 196 having taxing jurisdiction over the property to be included in the TIF District, adoption of the Modification by the Port Authority, and the holding of a public hearing regarding establishment of the TIF District upon published notice as required by law. 1.06. Certain written reports (the ‘‘Reports”) relating to the Plans and the activities contemplated therein have been prepared by staff and consultants and submitted to the Council and made a part of the City files and proceedings on the Plans. The Reports include data, information and substantiation constituting or relating to the basis for the other findings and determinations made in this resolution. The Council hereby confirms, ratifies and adopts the Reports, which are hereby incorporated into and made a part of this resolution to the same extent as if set forth in full herein. 2 RS220-419-720697.v1 Section 2. Findings for the Approval of the Modification. 2.01. The Council hereby finds that the Modification is a continuation of the goals and objectives of the Development District and the only substantive change is to account for the establishment of the TIF District. Section 3. Findings for the Establishment of the TIF District 3.01. The Council hereby finds that the TIF District is in the public interest and is an economic development district under Minnesota Statutes, Section 469.174, Subd. 12. 3.02. The Council further finds that the proposed development would not occur solely through private investment within the reasonably foreseeable future, that the TIF Plan conforms to the general plan for the development of the City as a whole and that the TIF Plan will afford maximum opportunity consistent with the sound needs of the City as a whole for the development of the TIF District by private enterprise. 3.03. The Council further finds, declares and determines that the City made the above findings stated in this Section based on the Reports and the knowledge of such matters by its members and has set forth the reasons and supporting facts for each determination in Exhibit A attached hereto. 3.04. The City elects to calculate fiscal disparities for the TIF District in accordance with Minnesota Statutes, Section 469.177, Subd. 3, clause b, which means any fiscal disparities contribution will be taken from inside the District. Section 4. Public Purpose 4.01. The approval of the Plans conforms in all respects to the requirements of the relevant statutory authority and will help fulfill a need to develop an area of the City which is undeveloped, which will improve the tax base and improve the general economy of the State and thereby serves a public purpose. For the reasons described in Exhibit A, the City believes these benefits directly derive from the tax increment assistance provided under the TIF Plan. A private developer will receive only the assistance needed to make this development financially feasible. As such, any private benefits received by a developer are incidental and do not outweigh the primary public benefits. Section 5. Approval and Adoption of the Plans 5.01. The Plans, as presented to the Council on this date, including without limitation the findings and statements of objectives contained therein, are hereby approved, ratified, established, and adopted and shall be placed on file in the office of the Community Development Director. 5.02. The city staff and consultants are authorized and directed to proceed with the implementation of the Plans and to negotiate, draft, prepare and present to this Council for its consideration all further plans, resolutions, documents and contracts necessary for this purpose. 5.03 The Auditor of Dakota County is requested to certify the original net tax capacity of the TIF District, as described in the TIF Plan, and to certify in each year thereafter the amount by which the original net tax capacity has increased or decreased. The city staff and consultants are 3 RS220-419-720697.v1 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 TIF District for which building permits have been issued during the 18 months immediately preceding the adoption of this resolution. 5.04. The City staff and consultants are further authorized and directed to file a copy of the TIF 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. ADOPTED this 18th day of May, 2021. William H. Droste, Mayor ATTEST: Erin Fasbender, City Clerk A-1 RS220-419-720697.v1 EXHIBIT A RESOLUTION 2021 - 38 The reasons and facts supporting the findings for the approval of the Tax Increment Financing Plan (TIF Plan) for the Osprey Tax Increment Financing District, as required pursuant to Minnesota Statutes, Section 469.175, Subdivision 3 are as follows: 1. Finding that the Tax Increment Financing District is an economic development district as defined in M.S., Section 469.174, Subd. 12. The Osprey Tax Increment Financing District consists of two parcels located within the Development District. The development will consist of construction of 417,600 square foot warehouse facility which will provide employment opportunities and enhance the tax base of the City and the state. 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. This finding is supported by the fact that the proposed development is in an economic development district which meets the City’s objectives for development. Access to the site is limited and not suitable for a facility requiring service by large trucks. Infrastructure improvements (roadway extension) are necessary to support development of the site and are beyond the developer’s ability to finance. The developer was asked for and provided a letter and a proforma outlining project source and uses and financing assumptions. City staff and consultants reviewed the information and have determined the project is not feasible without the proposed assistance. Based on the review, the City does not expect that a development of this type would occur in the reasonably foreseeable future but-for the use of tax increment financing. 3. Finding 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 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 TIF District permitted by the TIF Plan. The cost of land acquisition, site and public improvements, including a required roadway extension, and utilities add to the total development cost and make the project infeasible without tax increment assistance. The City reasonably determines that no other development of similar scope is anticipated on this site without substantially similar assistance being provided to the development. Therefore, the City concludes as follows: a. The City's estimate of the amount by which the market value of the TIF District will increase without the use of tax increment financing is $0. b. If the proposed development occurs, the total increase in market value will be $31,320,000. A-2 RS220-419-720697.v1 c. The present value of tax increments from the TIF District for the maximum duration of the district permitted by the TIF Plan is estimated to be $2,816,270. d. Even if some development other than the proposed development were to occur, the Council finds that no alternative would occur that would produce a market value increase greater than $25,816,535 (the amount in clause b less the amount in clause c) without tax increment assistance. 4. Finding that the TIF Plan for the Osprey Tax Increment Financing District conforms to the general plan for the development or redevelopment of the municipality as a whole. The city staff reviewed the TIF Plan and has determined that the TIF Plan conforms to the general plan for development or redevelopment of the City. 5. Finding that the TIF Plan for the Osprey Tax Increment Financing District will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development of Development District No. 1 by private enterprise. Through the implementation of the TIF Plan, the City will provide an impetus for industrial development, which is desirable and necessary for providing enhanced employment opportunities and expanded tax base in the City.