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cp12-08-20C Hutchinson City Center 111 Hassan Street SE Hutchinson, MN 55350-2522 Phone 320-587-5151,Fax 320-234-4240 CITY OF HUTCHINSON MCLEOD COUNTY HUTCHINSON, MINNESOTA NOTICE OF A SPECIAL CITY COUNCIL WORKSHOP Tuesday, December 8, 2020 4:00 p.m. Council Chambers — Hutchinson City Center Notice is hereby given that the Hutchinson City Council has called a special workshop meeting for Tuesday, December 8, 2020, at 4:00 p.m.. in the Council Chambers at the Hutchinson City Center, 1 I 1 Hassan Street SE, Hutchinson, Minnesota for the following purpose: • REVIEW OF SUSTAINABLE FACILITIES ANALYSIS REPORT ON THE STATE THEATRE DATED: December 3, 2020 POSTED: City Center Matthew Jauni ,City Administrator — HUTCHINSON CITY COUNCIL MEETING AGENDA TUESDAY, DECEMBER 8, 2020 CITY CENTER — COUNCIL CHAMBERS (The City Council is provided background information for agenda items in advance by city staff, committees and boards. Many decisions regarding agenda items are based upon this information as well as: Citypolicy and practices, inputfrom constituents, and other questions or information that has not yet been presented or discussed regarding an agenda item) 1. CALL MEETING TO ORDER — 5:30 P.M. (a) Approve the Council agenda and any agenda additions and/or corrections 2. INVOCATION — Hope Family Church (The invocation is a voluntary expression of theprivate citizen, to and for the City Council, and is not intended to affiliate the City Council with, or express the City Council's preference for, any religious/spiritual organization. The views or beliefs expressed by the invocation speaker have not been previous y reviewed or approved by the Council or staff) 3. PLEDGE OF ALLEGIANCE 4. RECOGNITION OF GIFTS, DONATIONS AND COMMUNITY SERVICE TO THE CITY PUBLIC COMMENTS (This is an opportunity or members o 'the public to address the City Council. If'the topic you would like to discuss is on the agenda, please ask the Mayor if he will be acceptingpublic comments during the agenda item if not a public hearing. Ifyou have a question, concern or comment, please ask to be recognized by the mayor —state your name and address for the record. Please keep comments under 5 minutes. Individuals wishing to speakfor more than five minutes should ask to be included on the agenda in advance of the meeting. All comments are appreciated, butplease refrain from personal or derogatory attacks on individuals) 5. CITIZENS ADDRESSING THE CITY COUNCIL 6. APPROVAL OF MINUTES (a) Regular Meeting of November 24, 2020 (b) Budget Workshop Minutes of November 24, 2020 CONSENT AGENDA (The items listedfor consideration will be enacted by one motion unless the Mayor, a member of the City Council or a city staff member requests an item to be removed. Traditionally items are not discussed) 7. APPROVAL OF CONSENT AGENDA (a) Consideration for Approval of Resolution No. 15239 - Transferring Funds to the 2020 Construction Fund, General Fund and Capital Projects Fund (b) Consideration for Approval of Resolution No. 15240 - Expressing Support for State Assistance to Local Businesses Impacted by COVID-19 Shutdowns (c) Claims, Appropriations and Contract Payments PUBLIC HEARINGS — 6:00 P.M. PUBLIC HEARING ON THE PROPOSED ADOPTION OF A MODIFICATION TO THE DEVELOPMENT PROGRAM FOR DEVELOPMENT DISTRICT NO. 4 AND THE PROPOSED MODIFICATION OF TAX INCREMENT FINANCING DISTRICT 4-16 (a) Approve/Deny Resolution No. 15241 — Resolution Adopting a Modification to the CITY COUNCIL AGENDA December 8, 2020 Development Program for Development District No. 4; and Modifying Tax Increment Financing District No. 4-16 Therein and Adopting a Modified Tax Increment Financing Plan Therefor (b) Approve/Deny Resolution No. 15242 — Resolution Authorizing an Interfund Loan for Advance of Certain Costs in Connection with Tax Increment Financing District No. 4-16 MMUNICATIONS RE UESTS AND PETITIONS purpose o this portion oj the agenda is to provi e the ounci with information necessary to craft wise policy. rdes items like monthly or annual reports and communications from other entities.) 9. UPDATE ON NEW DESIGN OF POLICE STATION AND ESTIMATED PROJECT TIMELINE 10. UPDATE ON THE CITY'S CARES ACT FUNDS 11. REVIEW OF TRUTH IN TAXATION HEARING UNFINISHED BUSINESS NEW BUSINESS 12. APPROVE/DENY ISSUING TAXI SERVICE LICENSE TO ERICKSON ACRES CARRIAGE COMPANY LLC 13. APPROVE/DENY LETTER OF AGREEMENT WITH ARTSPACE TO CONDUCT THE NEXT PHASE OF ANALYSIS ON THE STATE THEATRE GOVERNANCE (T e purpose o t is portion of the agenda is to deal with organizational development issues, including policies, performances, and other matters that manage the logistics of the organization. May include monitoring reports, policy development and governance process items) 14. MINUTES/REPORTS FROM COMMITTEES, BOARDS OR COMMISSIONS MISCELLANEOUS 15. STAFF UPDATES 16. COUNCIL/MAYOR UPDATE ADJOURNMENT 2 HUTCHINSON CITY COUNCIL MEETING MINUTES TUESDAY, NOVEMBER 24, 2020 CITY CENTER — COUNCIL CHAMBERS (The City Council is provided background information for agenda items in advance by city staff- committees and boards. Many decisions regarding agenda items are based upon this information as well as: Citypolicy and practices, inputfrom constituents, and other questions or information that has not yet been presented or discussed regarding an agenda item) 1. CALL MEETING TO ORDER — 5:30 P.M. Mayor Gary Forcier called the meeting to order. Members present were Steve Cook, Chad Czmowski, Dave Sebesta and Mary Christensen. Members were present via electronic means. Others present in the Council Chambers were Matt Jaunich, City Administrator, Marc Sebora, City Attorney and Kent Exner, City Engineer (a) Approve the Council agenda and any agenda additions and/or corrections Motion by Czmowski, second by Sebesta, to approve agenda as presented. Roll call vote was taken: Christensen — aye; Cook — aye; Czmowski — aye; Sebesta — aye; Forcier — aye. Motion carried unanimously. 2. INVOCATION — Christ the King Lutheran Church (The invocation is a voluntary expression of theprivate citizen, to and for the City Council, and is not intended to affiliate the City Council with, or express the City Council's preference for, any religious/spiritual organization. The views or beliefs expressed by the invocation speaker have not been previous y reviewed or approved by the Council or staff) 3. PLEDGE OF ALLEGIANCE 4. RECOGNITION OF GIFTS, DONATIONS AND COMMUNITY SERVICE TO THE CITY (a) Resolution No. 15234 — Resolution Accepting $6000 Donation from Thomas Daggett for Two New Memorial Benches and Pads Around the Riverside Park Playground Motion by Czmowski, second by Christensen, to approve Resolution No. 15234. Roll call vote was taken: Christensen — aye; Cook — aye; Czmowski — aye; Sebesta — aye; Forcier — aye. Motion carried unanimously. PUBLIC COMMENTS (T is is an opportunity or members of the public to address the City Council. If the topic you would like to discuss is on the agenda, please ask the Mayor if he will be acceptingpublic comments during the agenda item if not a public hearing. Ifyou have a question, concern or comment, please ask to be recognized by the mayor —state your name and address for the record. Please keep comments under 5 minutes. Individuals wishing to speakfor more than five minutes should ask to be included on the agenda in advance of the meeting. All comments are appreciated, butplease refrain from personal or derogatory attacks on individuals) 5. CITIZENS ADDRESSING THE CITY COUNCIL Bryan Sieve, Century 9 Theaters, presented before the Council. Mr. Sieve noted that his theater has been in the community for 20 years and has thrived. Mr. Sieve explained that due to the COVID-19 pandemic, his business has been devastated. Mr. Sieve spoke before the Council on how upper level decisions by the state government are devastating businesses such as his. Mr. Sieve noted that his business has received a grant from the Hutchinson EDA which he is very grateful for, however only covers a portion of the property taxes. Mr. Sieve noted that his industry needs support from the local government to send to the Governor's office related to a potential bill Rep. Baker is presenting related to the use of rainy day money for industries like Sieve's. He asked that a formal Resolution of Support be considered to forward to the Governor's Office. Council Member Cook suggested sending a letter of support to the Governor's Office now due to the timing of things. He suggested that the letter urge the State to provide financial assistance to businesses such as movie theaters. A Resolution can be considered at the next Council meeting. Mr. Jaunich will work with Mr. Sieve on drafting a letter of support. APPROVAL OF MINUTES CITY COUNCIL MINUTES November 24, 2020 (a) Regular Meeting of November 10, 2020 (b) Canvassing Board Minutes of November 13, 2020 Council Member Cook noted that a correction needs to be made in the Public Hearing section. Council Member Cook stated that the minutes read "Council Member Cook feels that the assessments should be prorated on corner lots to be fair and consistent." Council Member Cook noted that "corner lots" needs to be replaced with "street widths". Motion by Cook, second by Christensen, to approve the minutes with the correction noted. Roll call vote was taken: Christensen — aye; Cook — aye; Czmowski — aye; Sebesta — aye; Forcier — aye. Motion carried unanimously. CONSENT AGENDA (The items listedfor consideration will be enacted by one motion unless the Mayor, a member of the City Council or a city staff member requests an item to be removed. Traditionally items are not discussed) 7. APPROVAL OF CONSENT AGENDA (a) Consideration for Approval of 2021 Invocation Schedule (b) Appointment of Tim Hacker to Planning Commission to March 2023 (Filling Jessica Forcier's Term) (c) Consideration for Approval of Application to Conduct Off -Site Gambling for Hutchinson Hockey Association, Inc. at Crow River Golf Club on January 16, 2021 (d) Consideration for Approval of Resolution No. 15236 — Resolution Calling for Public Hearing on Modification to the Development Program for Development District No. 4, the Proposed Modification of Tax Increment Financing District No. 4-16 Within the Development District, and the Proposed Adoption of a Modified Tax Increment Financing Plan Therefor (e) Consideration for Approval of Resolution No. 15237 — Resolution Adopting the City's Snow Removal and Ice Control Policy (f) Claims, Appropriations and Contract Payments Motion by Czmowski, second by Sebesta, to approve consent agenda. Roll call vote was taken: Christensen — aye; Cook — aye; Czmowski — aye; Sebesta — aye; Forcier — aye. Motion carried unanimously. PUBLIC HEARINGS — 6:00 P.M. - NONE COMMUNICATIONS RE UESTS AND PETITIONS e purpose o this portion o the agenda is to provi e the ounci with information necessary to craft wise policy. Includes items like monthly or annual reports and communications from other entities) 8. REVIEW OF MCLEOD COUNTY CSAH 115 IMPROVEMENTS PROJECT PUBLIC COMMENT REQUEST Kent Exner, City Engineer, presented before the Council. Mr. Exner explained that the McLeod County Highway Department is currently requesting public comment in regard to the development of an upcoming CSAH 115 improvements project. This corridor that runs from CSAH 7 to State TH 22 is a critical local and regional route from the City's point of view. Therefore, the City would like to administer a review of potential comments that would be communicated to the County staff and their consultant engineer. Mr. Exner provided a proposed letter he has drafted with feedback related 2 CITY COUNCIL MINUTES November 24, 2020 to the improvement project. These items include comments/feedback related to the following areas: County Fairgrounds access point, Montreal Street intersection, Sherwood Street intersection, Jefferson Street intersection, Adams Street intersection, speed limits and roadway/intersection lighting. Council Member Cook asked if any provisions should be made related to a turning lane for entrance into the Civil Air Patrol facility that will be constructed. Mr. Exner expressed that he feels the traffic volume will not necessitate the need for a turn lane. Council Member Cook also suggested commenting on paving more specific shoulder areas such as for bicyclists and at least six-foot paved shoulders. UNFINISHED BUSINESS NEW BUSINESS 9. APPROVE/DENY MN/DOT CONTRACT NO. 1045318 — TH 7/22 AND MONTANA STREET CROSSING IMPROVEMENTS Kent Exner, City Engineer, presented before the Council. Mr. Exner explained that MnDOT staff has determined that an Advanced Construction agreement is necessary to allow the City to construct the TH 7/22 and Montana Street crossing improvements prior to all of the Federal Aid funding being allocated. Mr. Exner also noted that MnDOT is requiring a formal Resolution be approved by the Council approving the agreement and authorizing the proper officials to sign the agreement, therefore Resolution No. 15238 has been distributed this evening for the Council's consideration. Motion by Cook, second by Christensen, to approve Mn/DOT Contract No. 1045318 for the TH 7/22 and Montana Street crossing improvements along with Resolution No. 15238. Roll call vote was taken: Christensen — aye; Cook — aye; Czmowski — aye; Sebesta — aye; Forcier — aye. Motion carried unanimously. 10. APPROVE/DENY SETTING COUNCIL WORKSHOP FOR DECEMBER 8, 2020, AT 4:00 P.M. (REVIEW OF SUSTAINABLE FACILITIES ANALYSIS REPORT ON THE STATE THEATRE) Matt Jaunich, City Administrator, asked that the Council set a workshop to review the report received from Artspace. Motion by Cook, second by Czmowski, to approve setting Council workshop for December 8, 2020, at 4:00 p.m. Roll call vote was taken: Christensen — aye; Cook — aye; Czmowski — aye; Sebesta — aye; Forcier — aye. Motion carried unanimously. 11. APPROVE/DENY SETTING CITY COUNCIL ORGANIZATIONAL MEETING FOR JANUARY 4, 2021 Motion by Czmowski, second by Christensen, to approve setting City Council organizational meeting for January 4, 2021, at 9:00 a.m. Roll call vote was taken: Christensen— aye; Cook— aye; Czmowski — aye; Sebesta — aye; Forcier — aye. Motion carried unanimously. GOVERNANCE e purpose o t is portion of the agenda is to deal with organizational development issues, including policies, performances,, and other matters that manage the logistics of the organization. May include monitoring reports, policy development and governance process items) 12. MINUTES/REPORTS FROM COMMITTEES, BOARDS OR COMMISSIONS (a) Hutchinson Housing & Redevelopment Authority Board Minutes from October 20, 2020 CITY COUNCIL MINUTES November 24, 2020 (b) City of Hutchinson Financial Report and Investment Report for October 2020 MISCELLANEOUS 13. STAFF UPDATES Tom Gifferson — Chief Gifferson updated the Council on the police department's communication center. Chief Gifferson noted that previously the decision was made not to continue with the communication center once the new police facility is constructed. Chief Gifferson noted that this has been communicated to his staff and as of December 2, 2020, the department will be down two full-time communication center staff. Chief Gifferson noted that the communication center will be staffed with part-time employees, however if another full-time position should leave, the department may not be able to staff a communication center 24 hours a day. Conversations are being held with the McLeod County Sheriff's Office to allow for additional coverage should the police department have such a need. Chief Gifferson noted that he is also waiting to receive the department's permit for turkey harvesting. Matt Jaunich — Mr. Jaunich noted that city offices are closed this week Thursday and Friday for Thanksgiving; the Truth in Taxation hearing is set for next Thursday, December 3, 2020; and he asked that council members be mindful of City committees/boards representations with a new council member coming on. 14. COUNCIL/MAYOR UPDATE Steve Cook — Council Member Cook spoke about traffic signals on Main Street/Hwy 15; he spoke about planting additional trees on Century Avenue; and he spoke about the fountain in the Crow River. Gary Forcier — Mayor Forcier encouraged residents to continue supporting local restaurants through ordering take-out. ADJOURNMENT Motion by Czmowski, second by Forcier, to adjourn at 6:25 p.m. Roll call vote was taken: Christensen — aye; Cook — aye; Czmowski — aye; Sebesta — aye; Forcier — aye. Motion carried unanimously. .19 HUTCHINSON CITY COUNCIL REVIEW OF 2021 ENTERPRISE FUND BUDGETS MINUTES TUESDAY, NOVEMBER 24, 2020, AT 4:00 PM CITY CENTER — COUNCIL CHAMBERS 1. Call to Order Mayor Forcier called the workshop to order at 4:00 p.m. Members present included Chad Czmowski, Steve Cook, Mary Christensen and Dave Sebesta. Others present were: Matt Jaunich, City Administrator; Marc Sebora, City Attorney; Kent Exner, City Engineer; Andy Reid, Finance Director; Andy Kosek, Creekside Manager; Candice Woods, Liquor Hutch Manager; and Tim Gratke, Water/Wastewater Supervisor. REVIEW OF 2021 ENTERPRISE FUND BUDGETS Matt Jaunich, City Administrator, spoke before the Council. Mr. Jaunich noted that a review of the following budgets will be held at today's workshop: Liquor Hutch, Creekside, Refuse/Garbage, Water/Wastewater/Storm Water. In addition, there will be a review of the local sales tax option and the enterprise fund transfers to the general fund. Lastly, an update will be given on the 2021 budget and tax levy and CIP. 2. Liquor Hutch Budget Matt Jaunich, City Administrator, presented before the Council. Mr. Jaunich reviewed the proposed budget for 2021 which sees a total revenue increase of 5.2%. Mr. Jaunich noted that since 2007, total sales have increased at an average annual rate of 2.8% and the customer count has increased by an average annual rate of 1.4%. Through October 2020, sales are up 21% and customer counts are up 3.6%. Proposed expenses for 2021 have increased 4.1%. The 2021 budgeted capital item is a placeholder for potential upgrades. The debt service is related to the 2005 store upgrades and is in the last year of payment. Candice Woods, Liquor Store Manager, provided an update on online orders which increases on a daily basis. The budget includes a proposed transfer to the general fund of $550,000. Mr. Jaunich also provided a 10-year liquor fund forecast. Ms. Woods spoke about protocols in place to protect Liquor Hutch employees during the pandemic. Creekside Budget Mr. Jaunich explained that Creekside's 2021 production model includes a small increase in total bagged product sales. Bulk sales are estimated to decrease 71%, or $175,000, as the bitcon inventory has been depleted and will not likely be replenished until late 2021 or 2022. Total expenses are budgeted at a decrease of 5.3% and total revenue is budgeted at a 4% decrease. The transfer to the general fund is budgeted at $110,000, the same as 2020. The ending cash balance for Creekside is budgeted at $1,832,343. Mr. Jaunich also provided a 10-year compost fund forecast. Andy Kosek, Creekside Manager, presented before the Council and spoke about a sales/marketing firm that the facility uses. The firm is paid on a commission basis. Refuse/Garbage Budget Mr. Jaunich noted that the refuse/garbage budget sees an increase in revenue of 2.4% from 2020. The residential rates have held flat with no rate increase since 2008. Expenses for the refuse/garbage budget will see an increase of 52.4% for 2021. There is a $55,000 transfer that goes out to the tree disease infestation/mitigation fund. This is mainly due to a large increase in capital outlay. The capital outlay assumption for 2021 is based on a potentially new source separated operating model that would go away from the expensive composting vessels that are currently used. The model would require an upfront capital investment of approximately $610,000 as compared to replacing the existing compost vessels at an estimated cost of $1.6 million. Also, West Central's contract was up in October of 2020. Mr. Jaunich provided a 10- year refuse fund forecast. Water Fund Budget Mr. Jaunich explained that the Water Fund budget shows a 2.2% decrease in total revenue for 2021. There will be no rate increase in 2021 and hasn't been since 2011. Water fund expenses are budgeted at a 6.5% decrease. Transfer to the general fund will increase from $60,000 to $70,000 for 2021. The ending cash balance for the water fund budget is budgeted at $3,237,107. Mr. Jaunich provided a 10-year water fund forecast. Kent Exner, City Engineer, spoke about capital items included in the water fund budget. Wastewater Fund Budget Mr. Jaunich explained that the wastewater fund budget sees a 3.4% increase in revenues for 2021. There will be no rate increases in 2021 and there haven't been since 2011. Total expenses have a budgeted increase of 38.0% mainly due to the headworks project. The wastewater fund budget has an ending cash balance budgeted at $4,621,052. Mr. Jaunich provided a 10-year wastewater fund forecast. Andy Reid spoke about the difference in revenues between the water fund and wastewater fund. These center around surcharges mainly. Kent Exner noted that structural changes in the rate approach need to be addressed. Tim Gratke spoke about permitting from the MPCA and that no news is good news as far as any costly changes needing to be made at the plant. Mr. Jaunich reviewed the local option sales tax program and the purpose of it which is dedicated solely to retiring the debt in water and wastewater funds. Mr. Jaunich provided quick facts in reference to local option sales tax, which included: local sales tax on a $100 purchase amounts to $.050; local sales tax is applicable to the same retail purchases, subject to Minnesota sales tax; sale of vehicles by dealers are exempt and instead are subject to an excise fee of $20 per vehicle sold; local sales tax is applicable to any sale made within city limits as determined by the last four digits of your zip code; point of possession determines taxability; purchases item/service received/performed within city limits is subject to the local sales tax; purchased items/service is received/performed outside city limits ex exempt from local sales tax; organizations exempt from paying state sales tax are also exempt from the local sales tax. Mr. Jaunich also reviewed other nearby cities with local sales tax. Mr. Jaunich explained that early retirement of debt is an option if cash reserves are sufficient. While the main purpose of the tax is to retire existing debt, it also allows the City to build healthy cash reserves to help with annual street projects with water & sewer infrastructure improvements, improvements that may be needed in each facility, other projects that create efficiencies and stable water/sewer rates. Mr. Jaunich reviewed the outstanding debt. Stormwater Fund Budget Mr. Jaunich explained that total revenue in the stormwater fund budget is seeing an increase of 3.6%. There is a planned rate increase of 3% over nine classifications. Expenses are budgeted at a 4.2% decrease. City's leaf vacuuming program is accounted for in this fund and street sweeping is also funded by this account. The ending cash balance in the stormwater fund is budgeted at $1,221,084 for 2021. Mr. Jaunich provided a 10-year stormwater fund forecast. Lastly, Mr. Jaunich provided an overview on enterprise fund transfers to the general fund. Mr. Jaunich noted that the liquor fund continues to do really well. There are no rate changes for garbage, water and sewer users. There is a slight rate increase in the stormwater fees. The enterprise fund transfers into the general fund account for 5.9% of general fund revenue. Cash balances continue to remain healthy. Capital needs are starting to increase in the Creekside/Water/Sewer funds. In addition, regulatory agencies may impact future needs and Creekside's business model will likely be addressed in early 2021. Mr. Jaunich provided an update on the general fund budget. Approximately $116,806 has been reduced since September which is mainly reduced wages and benefits related to recent employee turnover. Building permit revenue has increased by $35,000 and back to the 2020 budget level. The plan is to use general fund balance to pay for the 2021 compensation study ($20,000). A general fund tax levy increase of 2.8% is needed to balance the current budget — this is down from 5.6% levy increase in September and is a $147,115 tax levy reduction. Department adjustments have been made based on meetings between Administration/Finance and departments. There still may be budgetary impacts from the employee open enrollment in the various insurance plans. Major budget assumptions that were made for 2021 include operations going back to normal or post -pandemic; departments have essentially held budget flat other than wages and benefits; and the general fund does not include any of the 2021 certified LGA increase of $69,590 (staff proposes to include the increase in the capital projects fund due to uncertainty with the State's budget). In September staff was proposing a 3.9% totally tax levy increase and has now been reduced to a 2.0% total tax levy increase. Mr. Jaunich provided several other metrics on tax rate history, past tax levies, price of government, tax levy comparison to tax base, and tax levy comparison to CPI. Mr. Jaunich also provided an update/review on the Capital Improvement Plan. Some minor adjustments have been made since August which include: overall costs have decreased by $1,947,900, added $15,000 to the Capital Projects Fund for new election equipment in 2022, Fleet Committee completed its 5-year prioritization, Refuse has assumed a change in the source separated operations with a program requiring substantially less capital investment, and the Storm Water South Central Drainage cost estimate was adjusted for 2021. There is a potential for some additional adjustments before approval in December such as Water and Wastewater CIP adjustments expected and directors have been given until the end of November to make any other changes. Mr. Jaunich also provided information on State projections. 3. Adjournment Motion by Christensen, second by Czmowski, to adjourn the workshop at 5:10 p.m. Roll call vote was taken: Christensen — aye; Czmowski — aye; Sebesta — aye; Cook — aye; Forcier — aye. Motion carried unanimously. ATTEST: Gary T. Forcier Mayor Matthew Jaunich City Administrator HUTCHINSON CITY COUNCIL Request for Board Action Resolution 15239 Transferring Funds to the 2020 Construction Fund, General Fund Agenda Item: and Capital Projects Fund Department: Finance LICENSE SECTION Meeting Date: 12/8/2020 Application Complete N/A Contact: Andy Reid Agenda Item Type: Presenter: Andy Reid Reviewed by Staff ❑� Consent Agenda Time Requested (Minutes): 0 License Contingency N/A Attachments: Yes BACKGROUND/EXPLANATION OFAGENDA ITEM: This resolution identifies the following transfers of monies related to the 2020 Airport Area Utility Extension and South Central Drainage projects. 1) Transfers from the Water, Wastewater and Storm Water funds to the 2020 construction fund to finance a portion of the project costs related to enterprise fund infrastructure installed during the improvement projects. These enterprise fund contributions to the project costs help to keep our debt levy at a manageable level. 2) Transfers from the 2020 construction fund to the general fund to cover budgeted operating expenses for engineering services and project administration. 4) A transfer from the 2020 construction fund to the capital projects fund for future comprehensive plan updates and other city infrastructure planning needs. All transfers in this resolution are effective for the 2020 fiscal year. Highway 15 / Main Street was the other major project in 2020. Contributions from the Water ($834,094) and Wastewater ($395,781) funds were made prior to the start of the project with payments directly to MnDOT. The accounting for those contributions will be within each enterprise fund rather than through the 2020 Construction Fund. The Water and Wastewater funds also funded future connection charges for water utility services ($72,500) and sanitary sewer utility services ($22,500). These amounts essentially represent assessments calculated against property owners who have opted not to connect to the new main street service lines. Those business would be required to pay a connection fee if service from main street is requested in the future. BOARD ACTION REQUESTED: Approve resolution 15239 Fiscal Impact: Funding Source: FTE Impact: Budget Change: Included in current budget: No PROJECT SECTION: Total Project Cost: Total City Cost: Funding Source: N/A Remaining Cost: $ 0.00 Funding Source: N/A CITY OF HUTCHINSON RESOLUTION NO. 15239 TRANSFERRING FROM WATER, WASTEWATER AND STORM WATER FUNDS TO THE 2020 IMPROVEMENT BOND CONSTRUCTION FUND AND FROM THE 2020 IMPROVEMENT BOND CONSTRUCTION FUND TO THE GENERAL FUND & CAPITAL PROJECTS FUNDS FOR ENGINEERING AND PROJECT ADMINISTRATION FEES BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF HUTCHINSON, MINNESOTA THAT, $203,442 is hereby transferred from the Water Fund to the 2020 Construction Fund. THAT, $188,248 is hereby transferred from the Wastewater Fund to the 2020 Construction THAT, $521,195 is hereby transferred from the Stormwater Fund to the 2020 Construction Fund. THAT, $402,309 is hereby transferred from the 2020 Construction Fund to the General Fund for Engineering Fees. THAT, $85,000 is hereby transferred from the 2020 Construction Fund to the General Fund for Project Administration Fees. THAT, $90,662 is hereby transferred from the 2020 Construction Fund to the Capital Projects for the purpose of Comprehensive Planning and other planning needs. THAT, said transfers are hereby effective and apply to the 2020 fiscal year. Adopted by the City Council this 8th day of December. ATTESTED: Matthew Jaunich City Administrator Gary T. Forcier Mayor HUTCHINSON CITY COUNCIL Request for Board Action Approval of Resolution 15240 -- Expressing Support for State Assistance to Agenda Item: Local Businesses Impacted by COVID-19 Shutdowns Department: Administration LICENSE SECTION Meeting Date: 12/8/2020 Application Complete N/A Contact: Matt Jaunich Agenda Item Type: Presenter: Matt Jaunich Reviewed by Staff ❑� Consent Agenda Time Requested (Minutes): 1 License Contingency N/A Attachments: Yes BACKGROUND/EXPLANATION OFAGENDA ITEM: At our last council meeting, council members heard from a local business on the impact of recent State mandated shutdowns. In response to that local businesses concerns, the City Council agreed to write a letter to the Governor's office and our local representatives, along with providing a resolution of support. Included in your council packet is resolution for your consideration. This resolution contains information that was included in the letter that was sent off by staff last week. BOARD ACTION REQUESTED: Approval of Resolution 15240 Fiscal Impact: Funding Source: FTE Impact: Budget Change: New Bu Included in current budget: No PROJECT SECTION: Total Project Cost: Total City Cost: Funding Source: N/A Remaining Cost: $ 0.00 Funding Source: N/A RESOLUTION NO. 15240 A RESOLUTION EXPRESSING SUPPORT FOR STATE ASSISTANCE TO LOCAL BUSINESSES IMPACTED BY COVID-19 AND MANDATED SHUTDOWNS WHEREAS, COVID-19 has infected more than 320,000 and killed more than 3,600 Minnesotans; and WHEREAS, COVID-19 has had a devastating impact on all facets of life within the Hutchinson Community; and WHEREAS, to help stop the spread of COVID-19, State mandates have been put in place that have required several local businesses to close their doors, many for a second time in the last nine months; and WHEREAS, talks have begun within the Governor's office and at the State Legislature on the potential to provide financial assistance to those businesses hit hard by the latest restrictions; and WHEREAS, the Hutchinson City Council is imploring the State to help in providing some sort of state assistance to aid our local businesses; and WHEREAS, we are particularly concerned about the impact the recent restrictions will have on our restaurants, gyms, and movie theaters; and WHEREAS, our concern is that a failure to act will devastate those industries, potentially resulting in permanent closures within our community; and WHEREAS, while CARES Funding provided temporary assistance (the City was able to provide assistance to 67 businesses), additional help is needed. THEREFORE, BE IT RESOLVED that the Hutchinson City Council is hereby asking for the Governor's office and the State Legislature to do whatever is possible to support local businesses impacted by the recent shutdowns. The City Council would encourage any type of support that would include anything from direct assistance, to regulatory waivers, to assistance for displaced workers. FURTHER MORE BE IT RESOLVED that a copy of this resolution be passed onto the Governor's office and the City's local State Representatives. ADOPTED BY THE HUTCHINSON CITY COUNCIL THIS 8TU DAY OF DECEMBER, 2020 GARY T. FORCIER, MAYOR ATTEST: MATTHEW JAUNICH, CITY ADMINISTRATOR CHECK REGISTER A FOR CITY OF HUTCHINSON CHECK DATE FROM 11/24/20 - 12/8/20 Check Date -------------------- 11/20/2020 Check -------------- EFT1346 Vendor Name --------------------------------------------------------------- EFTPS Description ------------------------------------------------------------------------ Payroll ll/1/20-11/14/20 Amount ----------------------- 70,427.86 11/20/2020 EFT1347 Child Support Payroll 11/1/20 - 11/14/20 577.29 11/20/2020 EFT1348 MN Dept of Revenue Payroll 11/1/20 - 11/14/20 13,405.21 11/20/2020 EFT1349 Provident Life Payroll 11/1/20 - 11/14/20 606.14 11/20/2020 EFT1350 PERA Payroll 11/1/20-11/14/20 54,883.72 11/20/2020 EFT1351 TASC-Flex Payroll 11/1/20-11/14/20 1,491.70 11/20/2020 EFT1352 TASC-H S A Payroll 11/1/20-11/14/20 12,981.92 11/20/2020 EFT1353 ICMA Payroll 11/1/20 - 11/14/20 3,315.04 11/20/2020 EFT1354 VOYA Payroll 11/1/20 - 11/14/20 330.00 11/20/2020 EFT1355 MNDCP Payroll 11/1/20 - 11/14/20 350.00 11/20/2020 213282 VOID VOID 11/20/2020 213283 VOID VOID 11/20/2020 213284 MNPEA Payroll 11/1/20-11/14/20 585.00 11/20/2020 213285 Unum Life Insurance Payroll 11/1/20 - 11/14/20 1,246.29 11/20/2020 213286 LELS Payroll 11/1/20-11/14/20 310.00 11/20/2020 213287 HART Payroll 11/1/20 - 11/14/20 469.77 11/25/2020 213288 MN DEPT OF TRANSPORTATION COOP CONST AGREE - MAIN ST PROJECT 2,532.20 11/25/2020 213289 POSTMASTER DECEMBER SR NEWSLETTERS 132.00 12/08/2020 213290 A.M. LEONARD INC RAKES FOR PUBLIC WORKS 137.32 12/08/2020 213291 ACE HARDWARE - 1315 UTILITY PULLS, PIPE - MULTIPLE DEPTS 49.95 12/08/2020 213292 ALLINA HEALTH SYSTEM 2ND QTR BILLING IVIED ED - FIRE DEPT 847.53 12/08/2020 213293 AMERICAN TEST CENTER LADDER 1- ANNUAL AERIAL TESTED 560.00 12/08/2020 213294 ARAMARK UNIFORM & CAREER APPAREL GR CLEANING SUPPLIES - LIQUOR HUTCH 160.59 12/08/2020 213295 ARTISAN BEER COMPANY COST OF GOODS SOLD - LIQUOR HUTCH 669.90 12/08/2020 213296 ASH, MATTHEW REFUND: BASKETBALL FOR LAUREN - REC 29.00 12/08/2020 213297 ASPIRE COUNSELING LLC SIGN & AWNING GRANT 870.40 12/08/2020 213298 AUTO VALUE - GLENCOE MISC EQUIPMENT PARTS - HATS 1,191.61 12/08/2020 213299 B & C PLUMBING & HEATING INC REPAIR FRONT OFFICE HEATER - POLICE 259.99 12/08/2020 213300 BELLBOY CORP COST OF GOODS SOLD - LIQUOR HUTCH 5,763.83 12/08/2020 213301 BENTZ, JOHN REFUND: DRIVER CLASS CANCELLED - COMM ED 44.00 12/08/2020 213302 BERNICK'S COST OF GOODS SOLD - LIQUOR HUTCH 403.10 12/08/2020 213303 BRAUN INTERTEC CORP SOUTH CENTRAL DRAINAGE AREA IMPVS 769.00 12/08/2020 213304 BREAKTHRU BEVERAGE COST OF GOODS SOLD - LIQUOR HUTCH 9,676.03 12/08/2020 213305 C & L DISTRIBUTING COST OF GOODS SOLD - LIQUOR HUTCH 33,456.05 12/08/2020 213306 CAL KOTA PROPERTIES UB refund for account: 3-065-5460-7-01 192.88 12/08/2020 213307 CANNON RIVER WINERY COST OF GOODS SOLD - LIQUOR HUTCH 156.00 12/08/2020 213308 CENTRAL HYDRAULICS FEMALE PIPE REDUCER - WWTP 2.78 12/08/2020 213309 CENTRAL MCGOWAN TUNGSTEN ELECTRODES, UTILITY BRUSHES - HATS 79.93 12/08/2020 213310 CINTAS CORPORATION VARIOUS CLEANING SUPPLIES - MULTIPLE DEPTS 137.71 12/08/2020 213311 CREEKSIDE SOILS BITCON FOR SC DRAINAGE PROJECT 20,662.57 12/08/2020 213312 CROW RIVER PRESS INC RECEIPT BOOKS - POLICE 429.16 12/08/2020 213313 CROW RIVER WINERY COST OF GOODS SOLD - LIQUOR HUTCH 2,864.40 12/08/2020 213314 DELEGARD TOOL CO SCRAPER, IMPACTS, SOCKETS, WRENCH - HATS 386.80 12/08/2020 213315 DETECTACHEM INC MOBILEDETECT POUCHES - POLICE 120.70 12/08/2020 213316 DISPLAY SALES ADJ BANDING STRAPS, POLE PLATES - PARKS 387.00 12/08/2020 213317 DOUVIER, MADISEN REIMB: FOOTWEAR - POLICE 172.94 12/08/2020 213318 DRAEGER, TRENT REIMB: WINTER BOOTS - PARKS 125.00 12/08/2020 213319 DYNA SYSTEMS NUTS, WASHERS - WWTP 148.53 12/08/2020 213320 E2 ELECTRICAL SERVICES INC REHOOK GARAGE DOOR WASH BAY - HATS 200.40 12/08/2020 213321 ECOLAB PEST ELIMINATION 11/16 PEST CONTROL - COMPOST 167.17 12/08/2020 213322 FASTENAL COMPANY REPAIR & MAINT SUPPLIES - MULTIPLE DEPTS 344.14 12/08/2020 213323 FIRST CHOICE FOOD & BEVERAGE SOLUTI COFFEE - HATS 228.00 12/08/2020 213324 FLOW MEASUREMENT & CONTROL COMPANY METER CERTIFICATIONS - WWTP 1,455.00 12/08/2020 213325 FORESTEDGE WINERY COST OF GOODS SOLD - LIQUOR HUTCH 252.00 12/08/2020 213326 FOSTER MECHANICAL MINI SPLIT IN KITCHEN - SR DINING 4,980.00 12/08/2020 213327 FREDERICKSON, JESSICA REFUND: PRCE COACHING - REC 50.00 12/08/2020 213328 GEB ELECTRIC INC INSTALL 4 GFI'S - POLICE 375.00 12/08/2020 213329 GOLDSTAR PRODUCTS INC GRAY NON -SLIP 5 GAL FOR MECH SHOP - HATS 1,947.80 12/08/2020 213330 GRO-WELL BRANDS, INC ALL WEST CEDAR, CEDAR CHIPS - COMPOST 6,124.03 12/08/2020 213331 HAUGEN KRIS REFUND: OUTDOOR DECORATION CLASS - COMM ED 23.00 12/08/2020 213332 I HAWKINS INC CITRIC ACID - WWTP 1,944.60 CHECK REGISTER A FOR CITY OF HUTCHINSON CHECK DATE FROM 11/24/20 - 12/8/20 Check Date -------------------- 12/08/2020 Check -------------- 213333 Vendor Name --------------------------------------------------------------- HJERPE CONTRACTING Description ------------------------------------------------------------------------ SUMMERSET STORM POND IMPROVEMENTS Amount ----------------------- 43,994.91 12/08/2020 213334 HUTCH AUTO BODY 2017 CAPRICE REPAIRS - POLICE 1,688.12 12/08/2020 213335 HUTCHINSON CHAMBER & TOURISM OCTOBER 2020 LODGING TAX 7,312.03 12/08/2020 213336 HUTCHINSON HEALTH DRUG TESTING - MULTIPLE DEPTS 1,296.00 12/08/2020 213337 HUTCHINSON HRA 907 DALE STREET: RENTAL REHAB PROJECT 13,728.00 12/08/2020 213338 HUTCHINSON WHOLESALE #1550 WAX, OIL FILTER, SPARK PLUGS - MULTIPLE DEPTS 22.55 12/08/2020 213339 HUTCHINSON, CITY OF REPLENISH ATM - MV 1,500.00 12/08/2020 213340 HYBA BASKETBALL REIMB: FEES COLLECTED FOR TRAVEL BBALL - REC 22,671.00 12/08/2020 213341 INNOVATIVE FOAM "HOPE" LETTERS - MAYOR/CITY COUNCIL 1,220.00 12/08/2020 213342 INTERSTATE BATTERY SYSTEM MINNEAPOL BATTERIES - HATS 81.90 12/08/2020 213343 J & B PALLET, LLC PALLETS - COMPOST 4,984.00 12/08/2020 213344 JOHNSON BROTHERS LIQUOR CO. COST OF GOODS SOLD - LIQUOR HUTCH 14,076.98 12/08/2020 213345 JOHNSON CONTROLS FIRE PROTECTION LP 12/1/20 - 11/30/21 FIRE ALARM TESTING - EV CTR 612.47 12/08/2020 213346 JOHNSON, ROZANNE REIMB: LUNCH FOR FRAUD TRAINING - DMV 40.00 12/08/2020 213347 KERI'S CLEANING & HANDYMAN SERVICES NOVEMBER CLEANING - MULTIPLE DEPTS 4,109.94 12/08/2020 213348 KILIAN, JANET REFUND: DRIVER CLASS CANCELLED - COMM ED 22.00 12/08/2020 213349 KRANZ LAWN & POWER AIRPORT MOWER: AIR DAM KIT 129.00 12/08/2020 213350 KTREES & NURSERY LLC BLACK HILLS SPRUCE - PARKS 120.00 12/08/2020 213351 KURTH, DONALD REFUND: DRIVER CLASS CANCELLED - COMM ED 44.00 12/08/2020 213352 L & P SUPPLY CO EQUIPMENT PARTS - MULTIPLE DEPTS 49.60 12/08/2020 213353 LARSON PLUMBING INC PERMIT REFUND - BLDG 51.00 12/08/2020 213354 LOCHER BROTHERS INC COST OF GOODS SOLD - LIQUOR HUTCH 42,041.05 12/08/2020 213355 LUHRING, DONNA REFUND: DRIVER CLASS CANCELLED - COMM ED 44.00 12/08/2020 213356 MACQUEEN EMERGENCY MSA APR KITS, CARTRIDGES - FIRE DEPT 5,836.56 12/08/2020 213357 MADDEN GALANTER HANSEN LLP OCT LABOR RELATION SERVICES - POLICE 486.00 12/08/2020 213358 MCLEOD COUNTY AUDITOR -TREASURER 2020ASSESSMENT/MAINT FEES 61,183.50 12/08/2020 213359 MCLEOD COUNTY RECORDER RESOLUTION APPROVING CUP FOR 115 ERIE ST- P/Z 46.00 12/08/2020 213360 MCRAITH, JOHN REIMB: TEAM SPONSOR PICTURES - REC 56.91 12/08/2020 213361 MENARDS HUTCHINSON REPAIR & MAINT SUPPLIES - MULTIPLE DEPTS 378.71 12/08/2020 213362 MEYER LABORATORY INC BOWL CLEANER - PARKS 365.19 12/08/2020 213363 MILLNER HERITAGE VINEYARD & WINERY COST OF GOODS SOLD - LIQUOR HUTCH 1,548.00 12/08/2020 213364 MINI BIFF 10/16 - 11/12 RENTAL @ COMPOST 86.96 12/08/2020 213365 MINNESOTA DEPT OF HEALTH 2O21 LICENSE RENEWAL - EVENT CENTER 315.00 12/08/2020 213366 MINNESOTA VALLEY TESTING LAB LAB SAMPLE TESTING - MULTIPLE DEPTS 1,289.95 12/08/2020 213367 MORGAN CREEK VINEYARDS COST OF GOODS SOLD - LIQUOR HUTCH 492.00 12/08/2020 213368 NEAL, WILLIAM UB refund for account: 2-241-5250-1-00 8.94 12/08/2020 213369 NERO ENGINEERING LLC PROF SERVICES FOR VARIOUS PROJECTS 23,455.00 12/08/2020 213370 NORTHERN BUSINESS PRODUCTS LYSOL - COMPOST 21.87 12/08/2020 213371 NORTHERN STATES SUPPLY INC ADHESIVE SHRINK TUBE - HATS 5.60 12/08/2020 213372 NORTHERN TIER TRANSPORTATION LLC CREEKSIDE FREIGHT TO MULTIPLE LOCATIONS 1,400.00 12/08/2020 213373 OFFICE DEPOT OFFICE SUPPLIES - MULTIPLE DEPTS 238.18 12/08/2020 213374 PAUSTIS WINE COMPANY COST OF GOODS SOLD - LIQUOR HUTCH 3,991.25 12/08/2020 213375 PEASLEY, PATRICIA REFUND: DRIVER CLASS CANCELLED - COMM ED 22.00 12/08/2020 213376 PELLINEN LAND SURVEYING ALTA/NSPS LAND TITLE SURVEY - EDA 1,800.00 12/08/2020 213377 PENMAC STAFFING SERVICES, INC. CREEKSIDE TEMP STAFFING 637.56 12/08/2020 213378 PHILLIPS WINE & SPIRITS COST OF GOODS SOLD - LIQUOR HUTCH 6,429.49 12/08/2020 213379 PINEDA, GERARDO UB refund for account: 2-585-6040-9-02 32.79 12/08/2020 213380 PLATH, WESTON REFUND: DRIVER CLASS CANCELLED - COMM ED 22.00 12/08/2020 213381 POSTMASTER POSTAGE - UB BILLS 1,540.00 12/08/2020 213382 RAHN PAINTING & CONTRACTING LLC DEC SNOW REMOVAL - MULTIPLE LOCATIONS 4,895.00 12/08/2020 213383 REINDERS REPAIR & MAINT SUPPLIES - MULTIPLE DEPTS 729.49 12/08/2020 213384 REINER ENTERPRISES INC CREEKSIDE FREIGHT TO MULTIPLE LOCATIONS 7,028.14 12/08/2020 213385 RNLTRANSPORT LLC CREEKSIDE FREIGHT TO MULTIPLE LOCATIONS 450.00 12/08/2020 213386 ROLLING FORKS VINEYARDS COST OF GOODS SOLD - LIQUOR HUTCH 505.68 12/08/2020 213387 RUDEBUSCH, MELISSA REFUND: PRCE COACHING - REC 50.00 12/08/2020 213388 RUNNING'S SUPPLY BOLTS, COMPRESSION CAPS - WWTP 6.59 12/08/2020 213389 SAM'S TIRE SERVICE COMPOST LOADER TIRE REPAIR 810.50 12/08/2020 213390 SORENSEN'S SALES & RENTALS TRENCHER RENTAL - PARKS 303.60 12/08/2020 213391 SOUTHERN WINE & SPIRITS OF MN COST OF GOODS SOLD - LIQUOR HUTCH 10,402.45 12/08/2020 213392 STANDARD PRINTING-N-MAILING UB & DMV ENVELOPES 1,749.54 12/08/2020 213393 I STAPLES ADVANTAGE OFFICE SUPPLIES- MULTIPLE DEPTS 484.36 CHECK REGISTER A FOR CITY OF HUTCHINSON CHECK DATE FROM 11/24/20 - 12/8/20 Check Date -------------------- 12/08/2020 Check -------------- 213394 Vendor Name --------------------------------------------------------------- SWANSON, DONNY Description ------------------------------------------------------------------------ UB refund for account: 1-455-5930-1-05 Amount ----------------------- 25.73 12/08/2020 213395 TITLE MARK, LLC 907 DALE STREET: RENTAL REHAB 197,786.50 12/08/2020 213396 TRUE BRANDS COST OF GOODS SOLD - LIQUOR HUTCH 173.14 12/08/2020 213397 UNITED FARMERS COOP DYED FUEL PURCHASE 12,318.90 12/08/2020 213398 VERIZON WIRELESS SEP 24 - OCT 23, 2020 PHONE SERVICES 3,722.18 12/08/2020 213399 VIKING BEER COST OF GOODS SOLD - LIQUOR HUTCH 18,066.95 12/08/2020 213400 VIKING COCA COLA COST OF GOODS SOLD - LIQUOR HUTCH 475.90 12/08/2020 213401 VIKING SIGNS & GRAPHICS INC SIGNS & SUPPLIES - MULTIPLE DEPTS 775.00 12/08/2020 213402 VINOCOPIA INC COST OF GOODS SOLD - LIQUOR HUTCH 2,295.21 12/08/2020 213403 WASTE MANAGEMENT OF WI -MN 11/1- 11/15 RESIDENTIAL REFUSE 5,544.96 12/08/2020 213404 WATERVILLE FOOD & ICE COST OF GOODS SOLD - LIQUOR HUTCH 64.72 12/08/2020 213405 WELCOME NEIGHBOR NEW RESIDENT VISITS - LIQUOR HUTCH 60.00 12/08/2020 213406 WEST CENTRAL SHREDDING NOV SHREDDING: 3 CONSOLES - VARIOUS DEPTS 50.00 12/08/2020 213407 WINE COMPANY, THE COST OF GOODS SOLD - LIQUOR HUTCH 1,402.23 12/08/2020 213408 WINE MERCHANTS INC COST OF GOODS SOLD - LIQUOR HUTCH 672.05 12/08/2020 213409 WINTERFELDT, KRISTA REIMB: MILEAGE FOR FRAUD TRAINING - MV 76.48 12/08/2020 213410 WOLD ARCHITECTS & ENGINEERS NEW POLICE FACILITY DESIGN -THRU 11/30/20 37,705.23 Total - Check Disbursements: $ 842,648.52 HUTCHINSON CITY COUNCIL ci=wof Request for Board Action 7AL =- M-7 Agenda Item: PUBLIC HEARING ON THE PROPOSED ADOPTION OF A MODIFICATION T(� Department: EDA LICENSE SECTION Meeting Date: 12/8/2020 Application Complete N/A Contact: Miles R. Seppelt Agenda Item Type: Presenter: Miles R. Seppelt Reviewed by Staff ❑ Public Hearing Time Requested (Minutes): 10 License Contingency N/A Attachments: Yes BACKGROUND/EXPLANATION OFAGENDA ITEM: The Hutchinson EDA is requesting City Council authorization to expand the existing boundaries of TIF District 4-16 to include an adjoining blighted property (this is the area of the Old Medical Clinic, located on the north end of Franklin Street). The EDA intends to acquire the blighted property located at 135 Franklin Street NW, clear the lot, and prepare the site for future redevelopment. By expanding the existing Redevelopment TIF District to include this property, the EDA will be able to reimburse itself for the costs of acquisition, demolition and clean-up of the site. Enclosed in your Council packet please find: 1. TIF Plan entitled "Modification to the Development Program Development District No. 4 and Tax Increment Financing Plan for the modification of Tax Increment Financing District No. 4-16 (a redevelopment district)" 2. Resolution adopting the TIF Plan 3. Resolution authorizing an inter -fund loan (to cover the costs of establishing the TIF District) At the public hearing, staff will provide a report on the project and the proposed TIF District modification. The EDA Board has reviewed this proposal and are recommending approval. If you have any questions or need additional information, please give me a call anytime at 234-4223. BOARD ACTION REQUESTED: Approval of resolution adopting the TIF Plan Approval of the resolution authorizing the inter -fund loan Fiscal Impact: $ 0.00 Funding Source: N/A FTE Impact: 0.00 Budget Change: No Included in current budget: No PROJECT SECTION: Total Project Cost: Total City Cost: Funding Source: Remaining Cost: $ 0.00 Funding Source: ECONOMIC DEVELOPMENT & REDEVELOPMENT MODIFICATION TO THE DEVELOPMENT PROGRAM Development District No. 4 -AND - TAX INCREMENT FINANCING PLAN Modification of Tax Increment Financing District No. 4-16 (a redevelopment district) City of Hutchinson, McLeod County, Minnesota Adopted- March 18, 2016 Modification #1 Public Hearing- December 8, 2020 `FREERS BUILDING COMMUNITIES. IT'S WHAT WE DO. infoaehlers-inc.com 1 (800) 552-1171 ij www,ehiers-inc.com M LEADERS IN PUBLIC FINANCE Table of Contents (for reference purposes only) Section 1 - Modification to the Development Program for Development District No. 4.................................................... 1-1 Foreword.................................................................... 1-1 Section 2 - Tax Increment Financing Plan for Tax Increment Financing District No. 4-16........................................ 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 ................................... 2-2 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 and First Year of Tax Increment 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/Bonds to be Issued ............................. 2-6 Subsection 2-10. Uses of Funds .................................................. 2-7 Subsection 2-11. Business Subsidies .............................................. 2-9 Subsection 2-12. County Road Costs ............................................. 2-10 Subsection 2-13. Estimated Impact on Other Taxing Jurisdictions ....................... 2-10 Subsection 2-14. Supporting Documentation ....................................... 2-13 Subsection 2-15. Definition of Tax Increment Revenues .............................. 2-13 Subsection 2-16. Modifications to the District ....................................... 2-14 Subsection 2-17. Administrative Expenses ......................................... 2-14 Subsection 2-18. Limitation of Increment .......................................... 2-15 Subsection 2-19. Use of Tax Increment ........................................... 2-16 Subsection 2-20. Excess Increments ............................................. 2-16 Subsection 2-21. Requirements for Agreements with the Developer ..................... 2-16 Subsection 2-22. Assessment Agreements ........................................ 2-17 Subsection 2-23. Administration of the District ...................................... 2-17 Subsection 2-24. Annual Disclosure Requirements .................................. 2-17 Subsection 2-25. Reasonable Expectations ........................................ 2-17 Subsection 2-26. Other Limitations on the Use of Tax Increment ........................ 2-18 Subsection 2-27. Summary ..................................................... 2-18 Appendix A Project Description............................................................. A-1 Appendix B Map of Development District No. 4 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 Findings Including But/For Qualifications ............................................ G-1 Section 1 - Modification to the Development Program for Development District No. 4 Foreword The following text represents a Modification to the Development Program for Development District No. 4. This modification represents a continuation of the goals and objectives set forth in the Development Program for Development District No. 4. Generally, the substantive changes include the establishment of Tax Increment Financing District No. 4-16. For further information, please review the Development Program for Development District No. 4, adopted May 1980 and modified on April 24, 1990; December 30, 1991; May 13, 1997; June 8, 2003; June 29, 2004; August 23, 2005; and June 12, 2007. It is available from the City Administrator or Economic Development Director at the City of Hutchinson. Other relevant information is contained in the Tax Increment Financing Plans for the Tax Increment Financing Districts located within Development District No. 4. City of Hutchinson Modification to the Development Program for Development District No. 4 1-1 Section 2 - Tax Increment Financing Plan for Tax Increment Financing District No. 4-16 Subsection 2-1. Foreword The City of Hutchinson (the "City"), staff and consultants have prepared the following information to expedite the establishment of Tax Increment Financing District No. 4-16 (the "District"), a redevelopment tax increment financing district, located in Development District No. 4. (As Modified December 8, 2020) The City of Hutchinson (the "City"), staff and consultants have prepared the following information to expedite the expansion of Tax Increment Financing District No. 4-16 (the "District"), a redevelopment tax increment financing district, located in Development District No. 4. Subsection 2-2. Statutory Authority 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 469.133, inclusive, as amended, and M.S., Sections 469.174 to 469.1794, inclusive, as amended (the "Tax Increment Financing Act" or "TIF Act"), to assist in financing 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 Modification to the Development Program for Development District No. 4. Subsection 2-3. Statement of Objectives The District currently consists of one parcel of land and adjacent and internal rights -of -way. The District is being created to enable the Hutchinson Economic Development Authority (the "EDA") and City to acquire property and prepare the site for future development in the City. Please see Appendix A for further District information. The City has not entered into an agreement or designated a developer at the time of preparation of this TIF Plan. This TIF Plan is expected to achieve many of the objectives outlined in the Development Program for Development District No. 4. The activities contemplated in the Modification to 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. 4 and the District. (As Modified December 8, 2020) The District currently consists of two parcels of land and adjacent and internal rights -of -way. The District is being created to enable the Hutchinson Economic Development Authority (the `EDA") and City to acquire property and prepare the site for future development in the City. Please see Appendix A for further District information. The City has not entered into an agreement or designated a developer at the time of the modification of this TIF Plan. This TIF Plan is expected to achieve many of the objectives outlined in the Development Program for Development District No. 4. The activities contemplated in the Modification to 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. 4 and the District. City of Hutchinson Tax Increment Financing Plan for Tax Increment Financing District No. 4-16 2-1 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 M.S., 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. 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 parcels listed in Appendix C of this TIF Plan. Please also see the map in Appendix B for further information on the location of the District. 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 financing district in accordance with M.S., Sections 469.174 to 469.1794, as amended, inclusive, finds that the District, to be established, is a redevelopment district pursuant to M.S., Section 469.174, Subd. 10(a)(1) as defined below: (a) "Redevelopment district" means a type of tax increment financing 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 -of -way; (3) tank facilities, or property whose immediately previous use was for tank facilities, as defined in Section 115C, Subd. 15, if the tankfacility: (i) have or had a capacity of more than one million gallons; City of Hutchinson Tax Increment Financing Plan for Tax Increment Financing District No. 4-16 2-2 (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. lob. (b) 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. (c) 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 ofplumbing, 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) or by the improvement described in paragraph (e) if all of the following conditions are met: (1) the parcel was occupied by a substandard building or met the requirements ofparagraph (e), as the case may be, 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 or the improvements described in paragraph (e) were 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 or met the requirement of paragraph (e) 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 ],paragraph f. (e) Forpurposes 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. f For districts consisting of two or more noncontiguous areas, each area must qualify as a redevelopment district underparagraph (a) to be included in the district, and the entire area of the district must satisfy paragraph (a). City of Hutchinson Tax Increment Financing Plan for Tax Increment Financing District No. 4-16 2-3 hi meeting the statutory criteria the City relies on the following facts and findings: • The District is a redevelopment district consisting of one parcel. • An inventory shows that more than 15 percent of the parcel is occupied by buildings, streets, utilities, paved or gravel parking lots or other similar structures. • An inspection of the sole building located within the District finds that the building is structurally substandard as defined in the TIF Act. (See Appendix F). (As Modifed December 8, 2020) hi meeting the statutory criteria the City relies on the following facts and findings for the expansion portion of the District: • The expanded District is a redevelopment district consisting of one additional parcel. • An inventory shows that more than 15 percent of the parcel is occupied by buildings, streets, utilities, paved or gravel parking lots or other similar structures. • An inspection of the sole building located within the District finds that the building is structurally substandard as defined in the TIF Act. (See Appendix F). Pursuant to M.S., Section 469.176, Subd. 7, the District does not contain any parcel or part of a parcel that qualified under the provisions ofM. S., Sections 273.111, 273.112, or 273.114 or Chapter 473H for taxes payable in any of the five calendar years before the filing of the request for certification of the District. Subsection 2-7. Duration and First Year of Tax Increment of the District Pursuant to M.S., Section 469.175, Subd. 1, and Section 469.176, Subd. 1, the duration and first year of tax increment of the District must be indicated within the TIF Plan. Pursuant to M.S., Section 469.176, Subd. I b., 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 City elects to receive the first tax increment in 2019, which is no later than four years following the year of approval of the District. Thus, it is estimated that the District, including any modifications of the TIF Plan for subsequent phases or other changes, would terminate after 2044, or when the TIF Plan is satisfied. The City reserves the right to decertify the District prior to the legally required date. (As Modified December 8, 2020) Pursuant to M.S., Section 469.175, Subd. 1, and Section 469.176, Subd. 1, the duration and first year of tax increment of the District must be indicated within the TIF Plan. Pursuant to M.S., 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 of 26 years of tax increment). The City elects to receive the first tax increment in 2019, which is no later than four years following the year of approval of the District. No increment has been received as of 2020. First increment is expected to be received in 2023. Thus, it is estimated that the District, including any additional modifications of the TIF Plan for subsequent phases or other changes, would terminate after 2048, or when the TIF Plan is satisfied. 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 M.S., Section 469.174, Subd. 7 and M.S., 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 2015 for taxes payable 2016. City of Hutchinson Tax Increment Financing Plan for Tax Increment Financing District No. 4-16 2-4 Pursuant to M.S., Section 469.177, Subds. I and 2, the County Auditor shall certify in each year (beginning in the payment year 2019) 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 2016, assuming the request for certification is made before June 30, 2016. The ONTC and the Original Local Tax Rate for the District appear in the table below. 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. 4, upon completion of the projects within the District, will annually approximate tax increment revenues as shown in the table on the following page. The City requests 100 percent of the available increase in tax capacity for repayment of its obligations and current expenditures, beginning in the tax year payable 2019. The Project Tax Capacity (PTC) listed is an estimate of values when the projects within the District are completed. Project Estimated Tax Capacity upon Completion (PTC) $63,965 Original Estimated Net Tax Capacity (ONTO) $8,372 Estimated Captured Tax Capacity (CTC) $55,593 Original Local Tax Rate 155.990% Estimated Pay 2016 Estimated Annual Tax Increment (CTC x Local Tax Rate) $86,720 Percent Retained by the City 100% Tax capacity includes a 3% inflation factor for the duration of the District. The tax capacity included in this chart is the estimated tax capacity of the District in year 25. The tax capacity of the District in year one is estimated to be $30,550. Pursuant to M.S., 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 M.S., 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 pursuant to M.S., 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 has reviewed the area to be included in the District and found no parcels for which building permits have been issued during the 18 months immediately preceding approval of the TIF Plan by the City. City of Hutchinson Tax Increment Financing Plan for Tax Increment Financing District No. 4-16 2-5 (As Modified December 8, 2020) The original local tax rate for the expansion of the District will be the local tax rate for taxes payable 2021, assuming the request for certification is made before June 30, 2021. The ONTC and the Original Local Tax Rate for the District appear in the table below are for taxes payable in 2020 as that is the most recent rate available at the time of the preparation of this modification. Pursuant to M.S., Section 469.174 Subd. 4 andM.S., Section 469.177, Subd. 1, 2, and 4, the estimated Captured Net Tax Capacity (CTC) of the District, within Development District No. 4, upon completion of the projects within the District, will annually approximate tax increment revenues as shown in the table on the following page. The City requests 100 percent of the available increase in tax capacity for repayment of its obligations and current expenditures, beginning in the tax year payable 2023. The Proj ect Tax Capacity (PTC) listed is an estimate of values when the projects within the District are completed. Project Estimated Tax Capacity upon Completion (PTC) $63,965 Original Estimated Net Tax Capacity (ONTO) $8,372 Estimated Captured Tax Capacity (CTC) $55,593 Original Local Tax Rate 164.147% Pay 2020 Estimated Annual Tax Increment (CTC x Local Tax Rate) $91,254 Percent Retained by the City 100% Tax capacity includes a 3% inflation factor for the duration of the District. The tax capacity included in this chart is the estimated tax capacity of the District in year 25. The tax capacity of the District in year one is estimated to be $51750. Pursuant to M.S., 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 M.S., 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 pursuant to M.S., 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 has reviewed the area to be included in the District and found no parcels for which building permits have been issued during the 18 months immediately preceding approval of the TIF Plan by the City. Subsection 2-9. Sources of Revenue/Bonds to be Issued The costs outlined in the Uses of Funds will be financed primarily through the annual collection of tax increments. The City reserves the right to incur bonds or other indebtedness as a result of the TIF Plan. As presently proposed, the projects within the District will be financed by a and interfund loan, pay -as -you go or a combination of both. Any refunding amounts will be deemed a budgeted cost without a formal TIF Plan Modification. 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. City of Hutchinson Tax Increment Financing Plan for Tax Increment Financing District No. 4-16 2-6 The total estimated tax increment revenues for the District are shown in the table below: SOURCES OF FUNDS TOTAL Tax Increment $1,400,000 Land Sale Proceeds $1 Interest $139,999 TOTAL $1,540,000 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 $984,326. Such bonds may be in the form of pay-as-you-go notes, revenue bonds or notes, general obligation bonds, or interfand loans. This estimate of total bonded indebtedness is a cumulative statement of authority under this TIF Plan as of the date of approval. (As Modified December 8, 2020) The total estimated tax increment revenues for the District are shown in the table below: SOURCES OF FUNDS TOTAL Tax Increment $4,525,000 Land Sale Proceeds $1 Interest $578,499 TOTAL $5,103,500 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 $3,403,500. Such bonds may be in the form 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 approval. Subsection 2-10. Uses of Funds Currently under consideration for the District is a proposal to enable the EDA and City to acquire property and prepare the site for future development. The City has determined that it will be necessary to provide assistance to the project(s) for certain District costs, as described. The City has studied the feasibility of the 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 financing 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. City of Hutchinson Tax Increment Financing Plan for Tax Increment Financing District No. 4-16 2-7 USES OF TAX INCREMENT FUNDS TOTAL Land/Building Acquisition $225,000 Site Improvements/Preparation $284,000 Other Qualifying Improvements $335,326 Administrative Costs (up to 10%) $140,000 PROJECT COST TOTAL $984,326 Interest 555 674 PROJECT AND INTEREST COSTS TOTAL $1,540,000 (As Modified December 8, 2020) Currently under consideration for the District is a proposal to enable the EDA and City to acquire property and prepare the site for future development. The City has determined that it will be necessary to provide assistance to the project(s) for certain District costs, as described. The City has studied the feasibility of the 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 financing 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 TAX INCREMENT FUNDS TOTAL Land/Building Acquisition $650,000 Site Improvements/Preparation $750,000 Other Qualifying Improvements $1,551,000 Administrative Costs (up to 10%) $452,500 PROJECT COST TOTAL $3,403,500 Interest $1,700,000 PROJECT AND INTEREST COSTS TOTAL $5,103,500 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 Subsection 2-9. 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 M. S., 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. 4, (including administrative costs, which are considered to be spent outside of the District) subject to the limitations as described in this TIF Plan. City of Hutchinson Tax Increment Financing Plan for Tax Increment Financing District No. 4-16 2-8 Subsection 2-11. Business Subsidies Pursuant toM.S., Section 116J.993, Subd. 3, the following forms of financial assistance are not considered a business subsidy: (1) A business subsidy of less than $150,000; (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 M.S., 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 M.S., 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; (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 financing soils condition district as defined under M.S., 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 $150,000 or less; (22) Federal loan funds provided through the United States Department of Commerce, Economic Development Administration; and (23) Property tax abatements granted underM.S., Section 469.1813 to property that is subject to valuation under Minnesota Rules, chapter 8100. The City will comply with M.S., Sections 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. City of Hutchinson Tax Increment Financing Plan for Tax Increment Financing District No. 4-16 2-9 Subsection 2-12. County Road Costs Pursuant to M.S., Section 469.175, Subd. I a, 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 judgment 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. In the opinion of the City and consultants, the proposed development outlined in this TIF Plan will have little or no impact upon county roads, therefore the TIF Plan was not forwarded to the county 45 days prior to the public hearing. The City is aware that the county could claim that tax increment should be used for county roads, even after the public hearing. Subsection 2-13. 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 financing 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: IMPACT ON TAX BASE Estimated 2015/Pay 2016 Estimated Captured Total Net Tax Capacity (CTC) Percent of CTC Tax Capacity Upon Completion to Entity Total McLeod County 35,498,296 55,593 0.1566% City of Hutchinson 8,908,926 55,593 0.6240% Hutchinson ISD No. 423 14,965,582 55,593 0.3715% IMPACT ON TAX RATES Estimated Pay 2016 Percent Potential Extension Rates of Total CTC Taxes McLeod County 0.509340 34.86% 55,593 28,316 City of Hutchinson 0.744170 50.94% 55,593 41,371 Hutchinson ISD No. 423 0.173390 11.87% 55,593 9,639 Other 0.034050 2.33% 55,593 1,893 Total 1.460950 100.00% 81,219 The estimates listed above display the captured tax capacity when all construction is completed. The tax rate used for calculations is the estimated Pay 2016 rate. The total net capacity for the entities listed above are based on actual Pay 2015 figures. The District will be certified under the actual Pay 2016 rates and figures, which were unavailable at the time this TIF Plan was prepared. City of Hutchinson Tax Increment Financing Plan for Tax Increment Financing District No. 4-16 2-10 Pursuant to M.S. Section 469.175 Subd. 2(b): (1) Estimate of total tax increment. It is estimated that the total amount of tax increment that will be generated over the life of the District is $1,400,000; (2) Probable impact of the District on city provided services and ability to issue debt. An impact of the District on police protection is not expected. The City Police Department does track all calls for service including property -type calls and crimes. With any addition of new residents or businesses, police calls for service will be increased. New developments add an increase in traffic, and additional overall demands to the call load. The City does not expect that the proposed development, in and of itself, will necessitate new capital investment. The probable impact of the District on fire protection is not expected to be significant. Typically new buildings generate few calls, if any, and are of superior construction. The existing building, which will be eliminated by the new development, is blighted and not maintained. The impact of the District on public infrastructure is expected to be minimal. The development is not expected to significantly impact any traffic movements in the area. 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, there are no additional costs associated with street maintenance, sweeping, plowing, lighting and sidewalks. The development in the District is expected to contribute to sanitary sewer (SAC) and water (WAC) connection fees, however the exact amount is unknown at this time. 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) Estimated amount of tax increment attributable to school district levies. 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 $166,180; (4) Estimated amount of tax increment attributable to county levies. 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 $488,040; (5) Additional information requested by the county or school district. The City is not aware of any standard questions in a county or school district written policy regarding tax increment districts and impact on county or school district services. The county or school district must request additional information pursuant toM.S. Section 469.175 Subd. 2(b) within 15 days after receipt of the tax increment financing plan. No requests for additional information fromthe county or school district regarding the proposed development for the District have been received. (As Modified December 8, 2020) 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 financing 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 Hutchinson Tax Increment Financing Plan for Tax Increment Financing District No. 4-16 2-11 IMPACT ON TAX BASE Estimated 2019/Pay 2020 Estimated Captured Total Net Tax Capacity (CTC) Percent of CTC Tax Capacity Upon Completion to Entity Total McLeod County 40,577,603 161,696 0.3985% City of Hutchinson 11,220,809 161,696 1.4410% Hutchinson ISD No. 423 18,536,711 161,696 0.8723% IMPACT ON TAX RATES Estimated Pay 2020 Percent Potential Extension Rates of Total CTC Taxes McLeod County 0.598090 36.44% 161,696 96,709 City of Hutchinson 0.664730 40.50% 161,696 107,484 Hutchinson ISD No. 423 0.342530 20.87% 161,696 55,386 Other 0.036120 2.20% 161,696 5,840 Total 1.641470 100.00% 265,419 The estimates listed above display the captured tax capacity when all construction is completed for both the original and the expansion project combined. The tax rate used for calculations is the final Pay 2020 rate. The total net capacity for the entities listed above are based on actual Pay 2020 figures. The expansion of the District will be certified under the actual Pay 2021 rates and figures, which were unavailable at the time this TIF Plan modification was prepared. Pursuant to M.S. Section 469.175 Subd. 2(b): (1) Estimate of total tax increment. It is estimated that the total amount of tax increment that will be generated over the life of the District is $5,103,500; (2) Probable impact of the District on city provided services and ability to issue debt. An impact of the District on police protection is not expected. The City Police Department does track all calls for service including property -type calls and crimes. With any addition of new residents or businesses, police calls for service will be increased. New developments add an increase in traffic, and additional overall demands to the call load. The City does not expect that the proposed development, in and of itself, will necessitate new capital investment. The probable impact of the District on fire protection is not expected to be significant. Typically new buildings generate few calls, if any, and are of superior construction. The existing building, which will be eliminated by the new development, is blighted and not maintained. City of Hutchinson Tax Increment Financing Plan for Tax Increment Financing District No. 4-16 2-12 The impact of the District on public infrastructure is expected to be minimal. The development is not expected to significantly impact any traffic movements in the area. 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, there are no additional costs associated with street maintenance, sweeping, plowing, lighting and sidewalks. The development in the District is expected to contribute $62,775 to sanitary sewer (SAC) and water (WAC) connection fees. 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) Estimated amount of tax increment attributable to school district levies. 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 $166,180; (4) Estimated amount of tax increment attributable to county levies. 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 $488,040; (5) Additional information requested by the county or school district. The City is not aware of any standard questions in a county or school district written policy regarding tax increment districts and impact on county or school district services. The county or school district must request additional information pursuant to M.S. Section 469.175 Subd. 2(b) within 15 days after receipt of the tax increment financing plan. No requests for additional information from the county or school district regarding the proposed development for the District have been received. Subsection 2-14. Supporting Documentation Pursuant to M.S. Section 469.175, Subd. I (a), clause 7 the TIF Plan must contain identification and description of studies and analyses used to make the determination set forth inM.S. Section 469.175, Subd. 3, clause (b)(2) and the findings are required in the resolution approving the District. Following is a list of reports and studies on file at the City that support the City's findings: Redevelopment Tax Increment Financing District Eligibility Study: "Old Medical Clinic". Imagine Hutchinson Downtown Vision and Action Plan. Levee Area Walkway Alternatives. Subsection 2-15. 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; 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. City of Hutchinson Tax Increment Financing Plan for Tax Increment Financing District No. 4-16 2-13 Subsection 2-16. Modifications to the District In accordance with M.S., Section 469.175, Subd. 4, any: 1. Reduction or enlargement of the geographic area of the District, if the reduction does not meet the requirements of M.S., 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; 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 District, 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 findings required for approval of the original TIF Plan. Pursuant to M.S. Section 469.175 Subd. 469, 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 M.S., Section 469.174, Subd. 10, 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 the District and (2)(A) the current net tax capacity of the 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 M. S., 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 to 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 2-17. Administrative Expenses In accordance with M.S., Section 469.174, Subd.14, administrative expenses means all expenditures ofthe 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 District; 3. Relocation benefits paid to or services provided for persons residing or businesses located in the District; 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, and before August 1, 2001, 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. City of Hutchinson Tax Increment Financing Plan for Tax Increment Financing District No. 4-16 2-14 For districts for which certification was requested after July 31, 2001, no tax increment may be used to pay any administrative expenses for District costs which exceed ten percent of total estimated tax increment expenditures authorized by the TIF Plan or the total tax increments, as defined in 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 maybe 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 Commissioner of Management and Budget 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 2-18. 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 M.S., Section 469.176, Subd. 6: if, after fouryears from the date of certification of the original net tax capacity of the tax increment financing districtpursuant to M.S., 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 increment financing plan, no additional tax increment may be taken from 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 February 2020 and report such actions to the County Auditor. City of Hutchinson Tax Increment Financing Plan for Tax Increment Financing District No. 4-16 2-15 Subsection 2-19. 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 Development District No. 4 pursuant to M.S., Sections 469.124 to 469.133; 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 Development District No. 4 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 McLeod 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 for the costs of public improvement activities outside the District. Subsection 2-20. 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 M.S., Section 469.176, Subd. 2, 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 Development District No. 4 or the District. Subsection 2-21. 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. City of Hutchinson Tax Increment Financing Plan for Tax Increment Financing District No. 4-16 2-16 Pursuant to M.S., 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 acquisition with the proceeds of bonds issued pursuant to M.S., 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 2-22. Assessment Agreements Pursuant to M. S., Section 469.177, Subd. 8, the 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 assessment agreement. Subsection 2-23. Administration of the District Administration of the District will be handled by the City Administrator. Subsection 2-24. Annual Disclosure Requirements Pursuant to M.S., Section 469.175, Subds. 5, 6, and 6b the City must undertake financial reporting for all tax increment financing districts to the Office of the State Auditor, County Board and County Auditor on or before August 1 of each year. M.S., 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 information required by M.S., Section 469.175 Subd. 5 and Subd. 6, the Office of the State Auditor will direct the County Auditor to withhold the distribution of tax increment from the District. Subsection 2-25. Reasonable Expectations As required by the TIF Act, in establishing the District, the determination 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 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 the District permitted by the TIF Plan. In making said determination, reliance has been placed upon City staff awareness of the feasibility of developing the project site(s) within the District. 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. 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. City of Hutchinson Tax Increment Financing Plan for Tax Increment Financing District No. 4-16 2-17 Subsection 2-26.Other Limitations on the Use of Tax Increment General Limitations. All revenue derived from tax increment shall be used in accordance with the TIF Plan. The revenues shall be used to finance, or otherwise pay the capital and administration costs of Development District No. 4 pursuant to M.S., Sections 469.124 to 469.133. 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 M.S., 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 permitted under said five year rule must be used only to pay previously committed expenditures or credit enhanced bonds as more fully set forth in M.S., 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 finance the cost of correcting conditions that allow designation of redevelopment and renewal and renovation districts under M.S., 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 permit 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 2-27. Summary The City of Hutchinson 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 Hutchinson Tax Increment Financing Plan for Tax Increment Financing District No. 4-16 2-18 Appendix A Project Description The proposed Tax Increment District project involves acquisition of the property located at 111 Hassen St SE in Hutchinson, by the Economic Development Authority (the "EDA"). In order to prepare the site for new commercial or office development, the EDA will use tax increments generated to pay for costs incurred for demolition and removal of the existing building, site corrections, parking lot maintenance and repair, and the possible addition of a new sidewalk segment. The EDA will issue an interfund loan to Development District No 5, the 1990 Shopko redevelopment tax increment district. The increments received from the proposed District will repay the interfund loan. (As Modified December 8, 2020) In addition to the original proposed project and in order to spur development of that project, the proposed expansion of the Tax Increment District project involves acquisition of the property located across the street at 135 Franklin Street N in Hutchinson, by the Economic Development Authority (the "EDA"). In order to prepare the site for new apartment project development, the EDA will use tax increments generated to pay for costs incurred for demolition and removal of the existing building and site preparation. The EDA issued an interfund loan to Development District No 5, the 1990 Shopko redevelopment tax increment district and will issue an additional interfund loan for up to $150,000 to the Downtown Revolving Loan Fund. The increments received from the modified District will repay the interfund loans. Appendix A-1 Appendix B Map of Development District No. 4 and the District Appendix B_1 � N WE Map of Development District No. 4 and the Expanded District (As Modified on December 8, 2020) Appendix B_2 III n , .nllllllll mnnmm■N _' _ _ =__ ��■. r =_ �_ _: 1. nn�mn= e16■�..� mme C iii Tax Increment Financing Development District #4 City of Hutchinson / McLeod County 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 Numbers Address Owner 23.056.2880 111 Hassan St SE Applegate Properties LLC (As Modified December 8, 2020) The District encompasses all property and adjacent rights -of -way and abutting roadways identified by the parcel listed below. Parcel Numbers Address Owner 23.056.2880 111 Hassan St SE City of Hutchinson 23.056.3040 135 Franklin St N McLeod Treatment Programs Inc. Appendix C-1 Appendix D Estimated Cash Flow for the District Appendix D-1 1/21/2016 DistriclType: District Name/Number: County District #: First Year Construction or Inflation on Value Existing District - Specify No. Years Remaining Inflation Rate - Every Year: Interest Rate: Present Value Date: First Period Ending Tax Year District was Certified: Cashflow Assumes First Tax Increment For Development: Years of Tax Increment Assumes Last Year of Tax Increment Fiscal Disparities Election [Outside (A), Inside (B), or NA] Incremental or Total Fiscal Disparities Fiscal Disparities Contribution Ratio Fiscal Disparities Metro -Wide Tax Rate Maximum/Frozen Local Tax Rate: Current Local Tax Rate: (Use lesser of Current or Max.) State-wide Tax Rate (Comm./Ind. only used for total taxes) Market Value Tax Rate (Used for total taxes) Base Value Assumptions - Page 1 EHLERS TIF District No 4-16 City of Hutchinson Redevelopment Project Redevelopment Tax Rates TIF District No. 4-16 Exempt Class Rate (Exempt) 0.00% 2017 Commercial Industrial Preferred Class Rate (C/I Pref.) First $150,000 1.50% 3.00 % Over $150,000 2.00% 4.00 % Commercial Industrial Class Rate (C/1) 2.00% 1-Aug-16 Rental Housing Class Rate (Rental) 1.25% 1-Feb-17 Affordable Rental Housing Class Rate (Aff. Rental) Pay 2016 First $106,000 0.75% 2019 Over $106,000 0.25% 26 Non -Homestead Residential (Non-H Res. 1 Unit) 2044 First $500,000 1.00% NA Over $500,000 1.25% Incremental Homestead Residental Class Rate (Hmstd. Res.) 0.0000% Pay 2016 TNT First $500,000 1.00% 0.0000% Pay 2016 TNT Over $500,000 1.25% 146.095% Pay 2016 TNT Agricultural Non -Homestead 1.00% 146.095% Pay 2016 TNT 49.0000% Pay 2016 TNT 0.19340% Pay 2016 TNT INFORMATIONBASE VALUE Capacity) Building Total Percentage Year Property Current Class After Land Market Market Of Value Used Original Original Tax Original After Conversion Area/ lap # PID Owner Address Market Value Value Value for District Market Value Market Value Class Tax Capacity Conversion Orig. Tax Cap, Phase 126 23-056-2880 Applegate Properties 126 Franklin St 364,100 92,000 456.100 100% 456,100 Pay 2016 C/I Pref. 8,372 C/I Pref. 8. 372 456,100 8,372 8.372 Note: 1. Base values are based email from County auditor on 1/11116. Pr ,ecl by Ehlers 8 Assoaates, Inc_ -Estimates Only NW,nnsota\HutchinsonUtousing-Economic-Rctlevelapment\TIFITIF Hisbicts\TIF 4-16�s I Implications TIF Run 117 16xis 1/21/2016 EHLERS lfxOL-51n 1 TIF District No 4-16 City of Hutchinson Redevelopment Project Base Value Assumptions - Page 2 PROJECT•' Estimated Taxable Total Taxable Property Percentage Percentage Percentage Percentage First Year Market Value Market Value Total Market Tax Project Project Tax Completed Completed Completed Completed Full Taxes Area/Phase New Use Per Sq. Ft./Unit Per Sq. Ft./Unit Sq. Ft./Units Value Class Tax Capacity Capacity/Unit 2017 2018 2019 2020 Payable Commerical 1,565,000 1,565,000 1 1,565,000 C/I Pref. 30,550 30,550 100% 100% 100% 100% 2019 iubtotal Residential 0 0 0 iubtotal Commercialllnd. 1 1,565,000 30,550 Note: 1. Market values are based upon estimates from City staff. TAX CALCULATIONS ma riscan Mate —be ar e Tax Disparities Tax Property Disparities Property Value Total Taxes Per New Use Ca acit Tax CapcityaCa aci Taxes Taxes Taxes Taxes Taxes Sq Ft./Unit Commerical 30,550 0 30,550 1 44,632 0 14,970 3,027 1 62,628 62.628, 23 Jote: 1. Taxes and tax increment will vary signfcamly from year to year depending upon values, rates, state law, and other factors which cannot be predicted. WHAT IS EXCLUDED FROM FOR Ll Property Taxes 62,628 Current Market Value - Es. 4,State-wide TaxesNew Market Value - Est. 1,565:000 Fiscal Disp. AcitDifferenceMarket Value Taxes (3,027) Present Value of Tax IncrementBase Value Taxes (12,231) Differenceual Gross TIF Value likely to occur without Tax Increment is less than: Prcp xo,! by Ehlers & Assoaates, Inc_ - Estimates Only N Vvtinnsota\HutchinsonUtousing - Economic - RetlevelepmennTIBT F Olsbicr MF 4-16�—I Implications TIF Run 1 1716 As 1/21/2016 Tax Increment Cashflow - Page 3 EHLERS ..ows w rusrk r,e,. TIF District No 4-16 City of Hutchinson Redevelopment Project %of Tax Tax Disparities Tax Tax Gross Tax I Gross Tax Auditor at Net Tax Present I ENDING Tax Payment - - - - 08/01/17 - - - - 02/01/18 - - - - 08/01/18 - - - - 02/01/19 100% 30,550 (8,372) - 22,178 146.095% 32,401 16,200 (58) (1,614) 14,528 12,900 0.5 2019 08/01/19 16,200 (56) (1,614) 14,528 25,548 1 2019 02/01/20 100% 31,467 (8,372) - 23,095 146.095% 33,740 16,870 (61) (1,681) 15,128 38,460 1.5 2020 08/01/20 16,870 (61) (1,681) 15,128 51,118 2 2020 02/01/21 100% 32,410 (8,372) - 24,038 146.095% 35,119 17,560 (63) (1,750) 15,747 64,036 2.5 2021 08/01/21 17,560 (63) (1,750) 15,747 76701 3 2021 02/01/22 100% 33,383 (8,372) - 25,011 146.095% 36,540 18,270 (fib) (1,820) 16,394 89:619 3.5 2022 08/01/22 18,270 (66) (1,820) 16,394 102,284 4 2022 02/01/23 100% 34,384 (8,372) - 26,012 146.095% 38,003 19,001 (68) (1,893) 17,040 115,198 4.5 2023 08/01/23 19,001 (68) (1,893) 17,040 127:859 5 2023 02/01/24 100% 35,416 (8,372) - 27,044 146.095% 39,510 19,755 (71) (1,968) 17,715 140,763 5.5 2024 08/01/24 19,755 (71) (1,9fi8) 17,715 113:415 6 201 01011 100% 36,478 (8,372) - 28,106 146.095% 41,062 20,531 (74) (2,046) 18,411 166306 6.5 2025 08/01/25 20,531 (74) (2,046) 18,411 178944 7 2025 02/01/26 100% 37,573 (8,372) - 29,201 146.095% 42,661 21,330 (77) (2,125) 19,128 191:817 7.5 2026 08/01/26 21,330 (77) (2,125) 19,128 204,437 8 2026 02/01/27 100% 38,700 (8,372) - 30,328 146.095% 44,307 22,154 (80) (2,207) 19,867 217,287 8.5 2027 08/01/27 22,154 (80) (2207) 19,867 229,886 9 2027 0 01/28 100% 39,861 (8,372) - 31,489 146.095% 46,004 23,002 (83) (2:292) 20,627 242,710 9.5 2028 08/01/28 23,002 (83) (2,292) 20,627 255,283 10 2028 02/01/29 100% 41,057 (8,372) - 32,685 146.095% 47,751 23,875 (86) (2:392 21,410 268:078 10.5 2029 08/01/29 23,875 (86) (2,379) 21,410 280,621 11 2029 02/01/30 100% 42,288 (8,372) - 33,916 146.095% 49,550 24,775 (89) (2,4fi9) 22,217 293382 11.5 2030 08/01/30 24,775 (89) (2,469) 22,217 305:893 12 2030 02/01/31 100% 43,557 (8,372) - 35,185 146.095% 51,404 25,702 (93) (2,561) 23,048 318,617 12.5 2031 08/01/31 25,702 (93) (2,561) 23,048 331,092 13 2031 02/01/32 100% 44,864 (8,372) - 36,492 146.095% 53,313 26,656 (96) (2,656) 23,904 343,776 13.5 2032 08/01/32 26,656 (96) (2,656) 23,904 356,212 14 2032 02/01/33 100% 46,210 (8,372) - 37,838 146.095% 55,279 27,639 (100) (2,7541 24,786 368,854 14.5 2033 08/01/33 27,639 (100) (2,754) 24,786 381:247 15 2033 02/01/34 100% 47,596 (8,372) - 39,224 146.095% 57,304 28,652 (103) (2,855) 25,694 393,843 15.5 2034 08/01/34 28,652 (103) (2,855) 25,694 16:192 16 2034 021011 100% 49,024 (8,372) - 40,652 146.095% 59,390 29,652 (107) (2:959) 26,629 418,739 16.5 2035 08/01/35 29,695 (107) (2,959) 26,629 431,041 17 2035 OZ/01/36 100% 50,494 (8,372) - 42,122 146.095% 61,539 30,769 (111) (3,059 27,593 443,537 17.5 2036 08/01/36 30,769 (111) (3,066) 27,593 455,789 18 2036 02/01/37 100% 52,009 (8,372) - 43,637 146.095% 63,752 31,876 (115) (3,176) 28,585 468,232 18.5 2037 08/01/37 31,876 (115) (3,176) 28,565 1:431 19 201 010111 100% 53,570 (8,372) - 45,198 146.095% 66,031 33,016 (119) (3:276 289607 4902819 19.5 2038 08/01/38 33,016 (119) (3,290) 29,607 504,964 20 2038 02/01/39 100% 55,177 (8,372) - 46,805 146.095% 68,379 34,190 (123) (3,407) 30,660 517,294 20.5 2039 08/01/39 34,190 (123) (3,407) 30,fi60 529,382 21 2039 02/01/40 100% 56,832 (8,372) - 48,460 146.095% 70,798 35,399 (127) (3,527) 31,744 541,652 21.5 2040 08/01/40 35,399 (127) (3527) 31,744 553,682 22 2040 02/01/41 100% 58,537 (8,372) - 50,165 146.095% 73,288 36,644 (132) (3:6571 32,861 565,891 22.5 2041 08/01/41 36,644 (132) (3,651) 32,861 577,860 23 2041 02/01/42 100% 60,293 (8,372) - 51,921 146.095% 75,854 37,927 (137) (3,779) 34,011 590,006 23.5 2042 08/01/42 37,927 (137) (3,779) 34,011 fi01,913 12042 OZ/01/43 100% 62,102 (8,372) - 53,730 146.095% 78,497 39,246 (141) (3,911) 35,196 613,994 24.5 2043 08/01/43 39,248 (141) (3,911) 35,196 625,837 25 2043 02/01/44 100% 63,965 (8,372) - 55,593 146.095% 81,218 40,609 (146) (4,046) 36,417 637,852 25.5 2044 08/01/44 40,609 146 4,046 36,417 649,630 26 2044 02/01/45 Total 1,402,692 (5,050) (139,764) 1,257,878 Present Value From 08/01/2016 Present Value Rate 4.00% 724,419 (2,606) (72,181) 649,630 -,amtl by Ehl-& Asmciates, Inc. - Estimates Only Estimated Cash Flow for the District (As Modified December 8, 2020) Appendix D_2 11/5/2020 Base Value Assumptions -Page 1 ekEHLERS ooe 11--e Aovlso Rs 2020 Expansion to TIF 4-16 City of Hutchinson, MN Franklin Street Rental Townhome Project 23 Units DistrictType: Redevelopment Tax Rates District Name/Number: TIF District 4-16 Expansion County District #: Exempt Class Rate (Exempt) 0.00% First Year Construction or Inflation on Value 2021 Commercial Industrial Preferred Class Rate (C/I Pref.) Existing District - Specify No. Years Remaining 26 First $150,000 1.50% Inflation Rate - Every Year: 3.00 % Over $150,000 2.00% Interest Rate: 4.00 % Commercial Industrial Class Rate (C/1) 2.00% Present Value Date: 1-Aug-22 Rental Housing Class Rate (Rental) 1.25% First Period Ending 1-Feb-23 Affordable Rental Housing Class Rate (Aff. Rental) Tax Year District was Certified : Pay 2021 First $162,000 0.75% Cashfiow Assumes First Tax Increment For Development: 2023 Over $162,000 0.25% Years of Tax Increment 26 Non -Homestead Residential (Non-H Res. 1 Unit) Assumes Last Year of Tax Increment 2048 First $500,000 1.00% Fiscal Disparities Election [Outside (A), Inside (B), or NA] NA Over $500,000 1.25% Incremental or Total Fiscal Disparities Homestead Residential Class Rate (Hmstd. Res.) Fiscal Disparities Contribution Ratio First $500,000 1.00% Fiscal Disparities Met -Wide Tax Rate Over $500,000 1.25% Maximum/Frozen Local Tax Rate: 164.147% Pay 2020 Agricultural Non -Homestead 1.00% Current Local Tax Rate: (Use lesser of Current or Max.) 164.147% Pay 2020 State-wide Tax Rate (Comm./Ind. only used for total taxes) 38.8460% Pay 2020 Market Value Tax Rate (Used for total taxes) 0.19188% Pay 202O BASE VALUE INFORMATION Building Total Percentage Tax Year Property Current Class After Land Market Market Of Value Used Original Original Tax Original After Conversion Map Area/ ID PID Owner Address Market Value Value Value for District Markel Value Market Value Class Tax Capacity Conversion Ong. Tax Cap. Phase 1 23-056-3040 McLeod Treament 135 Franklin St 45,900 134.100 180,000 100% 180,000 Pay 2021 Exempt - Rental 2,250 1 180,000 0 2,250 Note: 1. Base values are for pay 2020 based upon review of County website on 8/25/20. 2. Located in SD # 0423. Prepared by Ehlers R A wueies, Nc- Eshmafes Only NWxnsof ntrhinsan\Housng-Emnomie-Red—bpmenl\T1RTIF pshiels\TIF 416\20211 WDIFICATIOM2020 TIF Run Fiscal Impiia xs Eg nsunPmj- 11/5/2020 EN'EHLERS ''U5L'.:, FINANCE ADVISORS 2020 Expansion to TIF 4-16 City of Hutchinson, MN Franklin Street Rental Townhome Project 23 Units Base Value Assumptions - Page 2 Estimated Taxable PROJECTINFORMATION Total Taxable Property Percentage Percentage Percentage Percentage First Year Market Value Market Value Total Market Tax Project Project Tax Completed Completed Completed Completed Full Taxes Area/Phase New Use Per Sq. Ft./Unit Per Sq. Ft./Unit Sq. Ft./Units Value Class Tax Capacity Capacity/Unit 2021 2022 2023 2024 Payable 1 Apartments 1 U IAL 180,000 180.000 23 4,140,000 4,140,000 Rental 51,750 51,75 2,250 100% 100% 100% 100% 2023 Subtotal Residential 23 4,140,000 51,750 Subtotal CommercialAnd. 0 0 0 Note: 1. Market values are based upon County Assessors estimate of 10.05.20. New Use o a Isca oca Tax Disparities Tax Capacity Tax Capacity Capacity TAX CALCULATIONS oca Isca a e-wI a ar e Property Disparities Property Value Taxes Taxes Taxes Taxes Total Taxes Taxes Per Sq. Ft./Unit Apartments 0 51,750 0 51,750 0 0 0 84,946 0 0 7,944 0 0 0 0 92,890 0 4,038.69 KDN/0! Note: 1. Taxes and tax increment will vary significantly from year to year depending upon values, rates, state law and other factors which cannot be predicted. EXCLUDEDWHAT IS FROM ANALYSIS TIF? MARKET VALUE BUT I FOR o rope axes unent a e[ a less State-wide Taxes 0 New Market Value - Est. 4,140,000 less Fiscal Disp. Adj. 0 Difference less Market Value Taxes (7,944) Present Value of Tax Increment less Base Value Taxes (3,693) Difference Annual Gross TIF ul,zbj Value likely to occur without Tax Increment is less than: P.Irar by Ehlers 8 A wastes, Nc- Eshmsf,s Onty N UrnsofaVWNhinsan\Housng-Emnomie-Red—bpmenl\TIRTIF Dshiels\TIF 415\2020 MODIFICAT1AMM TIF Run Fiscal Implkahons Egansun P.,- Tax Increment Cashflow- Page 3 EHLERS . 2020 Expansion to TIF 4-16 City of Hutchinson, MN Franklin Street Rental Townhome Project 23 Units Project Original Fiscal Captured Local Annual Semi -Annual State Admin. Semi -Annual Semi -Annual PERIOD of Tax Tax Disparities Tax Tax Gross Tax Gross Tax Auditor at Net Tax Present ENDING Tax Payment 100% 51,750 (2,250) - 49,500 164.147% 81,253 40,626 (146) (4,048) 36,432 35,017 0.5 2023 08/01/23 40,626 (146) (4,048) 36,432 69,348 1 2023 010114 100% 53,303 (2,250) - 51,053 164.147% 83,801 41,901 (151) (4,175) 37,575 104,061 1.5 2024 0 01/24 41,901 (151) (4,175) 37,575 138,094 2 2024 02/01/25 100% 54,902 (2,250) - 52,652 164.147% 86,426 43,213 (156) (4,306) 38,752 172,504 2.5 2025 08/01/25 43,213 (156) (4,306) 38,752 206,240 3 2025 02/01/26 100% 56,549 (2,250) - 54,299 164.147% 89,130 44,565 (160) (4,440) 39,964 240,349 3.5 2026 08/01/26 44,565 (160) (4,440) 39,964 273,789 4 2026 0210117 100% 58,245 (2,250) - 55,995 164.147% 91,914 45,957 (165) (4,579) 41,213 307,598 4.5 2027 08/01/27 45,957 (165) (4,579) 41,213 340:743 5 2027 02/01/28 100% 59,992 (2,250) - 57,742 164.147% 94,782 47,391 (1 71 ) (4,722) 42,499 374,253 5.5 2028 08/01/28 47,391 (171) (4,722) 42,499 407,106 6 2028 02/01/29 100% 61,792 (2,250) - 59,542 164.147% 97,737 48,868 (176) (4,869) 43,823 440:311 6.5 2029 011119 48,868 (176) (4,869) 43,823 47280 7 2029 02/01/30 100% 63,646 (2,250) - 61,396 164.147% 100,780 50,390 (181) (5'021) 45,188 505,796 7.5 2030 08/01/30 50,390 (181) (5,021) 45,188 538,068 8 2030 02/01/31 100% 65,555 (2,250) - 63,305 164.147% 103,914 51,957 (187) (5,177) 46,593 570,690 8.5 2031 08/01/31 51,957 (187) (5,177) 46,593 6002673 9 2031 02/01/32 100% 67,522 (2,250) - 65,272 164.147% 107,142 53,571 (193) (5,338) 48,040 635,003 9.5 2032 08/01/32 53,571 (193) (5,338) 48,040 666,699 10 2032 02/01/33 100% 69,548 (2,250) - 67,298 164.147% 110,467 55,234 (199) (5,503) 49,531 698,737 10.5 2033 08/01/33 55,234 (199) (5,503) 49,531 730,148 11 2033 02/01/34 100% 71,634 (2,250) - 69,384 164.147% 113,892 56,946 (205) (5'674) 51,067 761,897 11.5 2034 08/01/34 56,946 (205) (5,674) 51,067 793,024 12 2034 02/01/35 100% 73,783 (2,250) - 71,533 164.147% 117,419 58,710 (211) (5,850) 52,649 824,486 12.5 2035 08/01/35 58,710 (211) (5,850) 52,649 855,330 13 2035 02/01/36 100% 75,997 (2,250) - 73,747 164.147% 121,053 60,526 (218) (6,031) 54,278 886,506 13.5 2036 08/01/36 60,526 (218) (6,031) 54,278 917,071 14 2036 02/01/37 100% 78,277 (2,250) - 76,027 164.147% 124,795 62,398 (225) (6,217) 55,956 947,962 14.5 2037 08/01/37 62,398 (225) (6,217) 55,956 978,248 15 2037 02/01/38 100% 80,625 (2,250) - 78,375 164.147% 128,650 64,325 (232) (6,409) 57,684 1,008,857 15.5 2038 0811111 64,325 (232) (6,409) 57,684 1,038,866 16 2038 02/01/39 100% 83,044 (2,250) - 80,794 164.147% 132,620 66,310 (239) (6,607) 59,464 1,069,194 16.5 2039 08/01/39 66,310 (239) (6,607) 59,464 1,098,928 17 2039 02/01/40 100% 85,535 (2,250) - 83,285 164.147% 136,710 68,355 (246) (6,811) 61,298 1, 128,978 17.5 2040 08/01/40 68,355 (246) (6,811) 61,298 1,158,438 18 2040 02/01/41 100% 88,101 (2,250) - 85,851 164.147% 140,922 70,461 (254) (7,021) 63,186 1,188,211 18.5 2041 08/01/41 70,461 (254) (7021) 63,186 1,217,400 19 2041 02/01/42 100% 90,744 (2,250) - 88,494 164.147% 145,260 72,630 (261) (7:237) 65,132 1,246,897 19.5 2042 08/01/42 72,630 (261) (7,237) 65,132 1,275,816 20 2042 02/01/43 100% 93,466 (2,250) - 91,216 164.147% 149,729 74,864 (270) (7,459) 67,135 1,305,041 20.5 2043 08/01/43 74,864 (270) (7,459) 67,135 1,333,692 21 2043 02/01/44 100% 96,270 (2,250) - 94,020 164.147% 154,331 77,166 (278) (7,689) 69,199 1,362,645 21.5 2044 08/01/44 77,166 (278) (7,689) 69,199 1,391,030 22 20" 02/01/45 100% 99,158 (2,250) - 96,908 164.147% 159,072 79,536 (286) (7:925) 71,325 1,419,714 22.5 2045 08/01/45 79,536 (286) (7,925) 71,325 1,447,835 23 2045 02/01/46 100% 102,133 (2,250) - 99,883 164.147% 163,955 81,978 (295) (8,168) 73,514 1,476,251 23.5 2046 08/01/46 81,978 (295) (8,168) 73,514 1,504,110 24 2046 02/01/47 100% 105,197 (2,250) - 102,947 164.147% 168,985 84,492 (304) (8,419) 75,769 1,532,260 24.5 2047 08/01/47 84,492 (304) (8,419) 75,769 1,559,858 25 2047 02/01/48 100% 108,353 (2,250) - 106,103 164.147% 174,165 87,082 (313) (8,677) 78,092 1,587,745 25.5 2048 08/01/48 87,082 (313) (8,677) 78,092 1,615,085 26 2048 02/01/49 Total 3,178,904 (11,444) (316,746) 2,85Q,714 Present Value From 08/01/2022 Present Value Rate 4.00% 1,801,023 (6,484) (179,454) 1,615:085 Preps by Ehlers B Assouales, Inc.- Estimates Only N VAinnsotaW.tchinson\Housing-Economic- Retlevelopmenl\TIFITIF [), N-s\TIF 4-16t2020 MOOIFIC TION\2020 TIF Run Fiscal Implications Expansion Project Appendix E Minnesota Business Assistance Form (Minnesota Department of Employment and Economic Development) A Minnesota Business Assistance Form (MBAF) should be used to report and/or update each calendar year's activity by April 1 of the following year. Please see the Minnesota Department of Employment and Economic Development (DEED) website at http://www.deed.state.nm.us/Community/subsidies/MBAFForm.htm for information and forms. Appendix E-1 Appendix F Redevelopment Qualifications for the District Appendix F-1 Redevelopment Tax Increment Financing District Eligibility Study Modification of TIF District 4-16 to include "Franklin House" 135 Franklin Street NW Prepared By Miles R. Seppelt, EDA Director Kyle Dimler, Building Official November 20, 2020 I. Governing Statutory Language To be eligible for a Redevelopment Tax Increment Financing District, the area to be redeveloped must meet certain requirements as outlined in state statute. These are: Minnesota Statute 469.174 Subd. 10. Redevelopment district. Subd. 10 (a) "Redevelopment district" means a type of tax increment financing 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: (])parcels consisting of 70 percent of the area of 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; Subd. 10 (b) 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. Subd. 10 (c) 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. 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. Items of evidence that support such a conclusion include recent fire or police inspections, on -site property tax appraisals or housing inspections, exterior evidence of deterioration, or other similar reliable evidence. Written documentation of the findings and reasons why an interior inspection was not conducted must be made and retained under section 469.175, subdivision 3, clause (1). Failure of a building to be disqualified under the provisions of this paragraph is a necessary, but not a sufficient, condition to determining that the building is substandard. Subd. 10(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. Study Area Figure 1— Aerial view of study area 2ND AVE NW •1 f 7-'.11114 r r "�114 r r f r r r r Irmo. N — F' The modification of Development TIF District 4-16 will add 135 Franklin Street NW in downtown Hutchinson to the existing redevelopment district. The site is composed of one city lot known as the "Franklin House." Table 1— Identification of Study Area "Franklin house" 135 Franklin Street NW Lots 9 & 10, excluding WILY 1/3, Blk 42, North Half of Hutchinson, County of McLeod, MN Figure 2 — Map of Study Area f 1 145 135 z 125 3 z F !n z W J 145 135 1ST AVE NW L S 7 z H N z_ J Y 126 z Q LL. R. z N c Y n tst Ave NW LL 135 125 115 85 2ND AVE NW 1 III. Criterion 1 Minnesota Statute 469.174, Subd. 10 (1) states: "(1) parcels consisting of 70 percent of the area of the district are occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures... " Findings There is one parcel in the proposed addition to the TIF-4-16 Redevelopment TIF District. This one lot is occupied by a house, shed and sidewalks. 1 parcel = 100% 1 occupied Since 100% of the parcels in the proposed Redevelopment TIF District are in fact occupied by buildings and related items as specified in statute, this criterion is satisfied. IV. Criterion 2 The second criterion that must be satisfied is that more than one-half of the buildings in the proposed redevelopment district must be found to be substandard based upon an internal inspection. The governing statutes state: Minnesota Statute 469.174, Subd 10. (1) "...and more than 50 percent of the buildings, not including outbuildings, are structurally substandard to a degree requiring substantial renovation or clearance; " Findings There is one building, not including outbuildings, on the parcel and it was found to be substandard based upon an internal inspection. (see below). 1 sub -standard building = 100% 1 building on the lot 100% of the buildings on the parcel were found to be substandard, thus satisfying the criterion in Minnesota Statute 469.174, Subd 10. (1). Minnesota Statute 469.174, Subd. 10 (b) further 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. Subd. 10 (c) 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. 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. Items of evidence that support such a conclusion include recent fire or police inspections, on -site property tax appraisals or housing inspections, exterior evidence of deterioration, or other similar reliable evidence. Written documentation of the findings and reasons why an interior inspection was not conducted must be made and retained under section 469.175, subdivision 3, clause (1). Failure of a building to be disqualified under the provisions of this paragraph is a necessary, but not a sufficient, condition to determining that the building is substandard. Findings An internal inspection of the "Franklin House" was completed on October 19, 2020. Building Code violations, along with the estimated cost to repair, include the following: 1. The west entry door is damaged and in need of replacement to provide a proper weather seal to the exterior. Cost to Remedy $800 2. The stair leading to the west entry deck contains uneven riser heights exceeding the 3/8" maximum allowed by the MN Building Code and ought to be replaced. Cost to Remedy $300 3. The southerly bathroom on the 1" level of the structure is not accessible as required by the MN Accessibility Code: a. The entry door does not provide the required 32" minimum clear width. b. The lavatory/sink does not provide the required knee and toe clearance. c. The accessories in the restroom are not within the reach range required by the MN Accessibility Code. d. The toilet is too close to the adjacent wall, the flush control lever is on the wrong side of the water tank, and there are no grab bars provided as required. Cost to Remedy $10,000 to $14,000 4. The stair to the basement level does not provide the minimum 36" deep landing as required. Cost to Remedy $1,200 5. The stair to the 2nd level does not provide the required guard at portions greater than 30" above the adjacent floor. Cost to Remedy $1,200 6. The window in the 1" level kitchen is in need of replacement as the seal between the panes of glass has become displaced. Cost to Remedy $1,300 7. The floor surface in the 1" level kitchen is in need of repair to the uneven/inaccessible floor surface remaining following some apparent partial demolition. Cost to Remedy $1,400 8. The kitchen dishwasher wiring is not abandoned properly and exposed wiring is present. Cost to Remedy $400 9. The short stair leading to the change in floor level on the 1" level's north end is in need of a guard as a portion of the adjacent floor is greater than the maximum 7" above the adjacent stair. Cost to Remedy $400 10. The window in the northwest 1" level office area is in need of replacement as the seal between the panes of glass appears to have become displaced. Cost to Remedy $900 11. The northerly bathroom on the 1" level of the structure is not accessible as required by the MN Accessibility Code: a. No grab bars are provided at the toilet, as required. b. The shower is not accessible at all. c. The lavatory/sink does not provide the required knee and toe clearance. d. The accessories in the restroom are not within the reach range required by the MN Accessibility Code. Cost to Remedy $7,500 12. The smoke/fire alarm system installed in the structure could not be verified to be operational. A function test of the system should be completed and repairs/replacement of components be made as necessary. Cost to Remedy $200 to $2,000 13. The stair to the 2nd level's top riser does not comply with the 3/8" maximum variance from greatest to least difference. The stair would need to be reconstructed. Cost to Remedy $2,500 to $20,000 (may require addition to house to meet code) 14. The guard at the top of the stair to the 2nd level is less than 36" and needs to be replaced. Cost to Remedy $1,200 15. The 2nd level restroom is not accessible: a. A 30" wide space for the toilet is not provided and the toilet is essentially in an alcove between the entry door and the adjacent lavatory. b. The lavatory/sink does not provide the required knee and toe clearance. c. The shower is not accessible at all. Cost to Remedy $7,500 16. The accessories in the restroom are not within the reach range required by the MN Accessibility Code. Cost to Remedy $1,000 17. The bathroom entry door does not provide the minimum 32" clear width required. Cost to Remedy $10,000 to $14,000 18. The exterior door at the top of the stair to the 2nd level has a step/landing at the immediate edge of the threshold. The door needs to be raised. Cost to Remedy $9,500 to $20,000 (may require reconstructing part of the building) 19. The 2nd level exterior balcony guard openings are greater than 4" exceeding the maximum allowed. The guard rails needs to be reconstructed. Cost to Remedy $2,500 20. The stair leading to the exterior grade from the exterior balcony does not provide a graspable handrail as required. Cost to Remedy $800 21. No fall protection devices are provided in the 2nd level sleeping room windows as required. Cost to Remedy $4,000 22. The stair leading to the basement level is not provided with a continuous handrail as required. Cost to Remedy $1,200 23. The stair leading to the basement has riser heights at the top and bottom that exceed the 3/8" maximum variance from greatest to least difference. The stair would need to be reconstructed. Cost to Remedy $2,500 24. In the northeast room of the basement (electrical/water softener room) in multiple locations, PVC pipe is used as a "transition duct" for the HVAC system. PVC is not a permitted duct material and this must be replaced. Cost to Remedy $800 to $3,500 25. In the same room as Item 24, there is an open electrical junction box with accessible electrical wiring exposed. Cost to Remedy $400 26. The condensate drain tubing from the furnace is routed and crossing multiple electrical distribution wires in the basement. Cost to Remedy $400 27. The receptacle/switch box powering the furnace is hanging loose by its conduit and is need of proper fastening. Cost to Remedy $400 28. The PVC vent pipes serving the furnace are not supported at a maximum 48" on center as required. Cost to Remedy $100 29. The basement stair is not provided with a guard having openings less than 4" and a minimum 36" high as required. Cost to Remedy $1,000 30. The ramp on the east side of the building provides no graspable handrails as required, no edge protection as required, landings that are only 44" deep rather than the minimum 60" deep required, and guards that are structurally unsound. Cost to Remedy $3,500 31. The clothes dryer vent terminations are only approximately 4" above grade on the building exterior rather than the minimum 12" above grade required. Cost to Remedy $2,500 32. The 2nd level balcony ledger is not fastened to the building structure as required by code, the exterior beam supporting the floor joists is not fastened to the supporting posts and have almost no wood support material against rotation forces. Balcony is in need of reconstruction. Cost to Remedy $9,000 33. The building's air conditioning unit is not provided with locking fill port caps as required by the MN Mechanical Code. Cost to Remedy $1,000 34. The plumbing serving the 2nd level bathroom is not provided with a trap as required. Trap is installed in basement at lowest point of drain pipe rather than at fixtures it is serving as required. Cost to Remedy $400 35. The sump pump discharge in the basement is not connected to the discharge piping protruding from the southerly exterior wall. Cost to Remedy $300 Inspection was conducted by Kyle Dimler, Hutchinson Building Official. Kyle Simler Building Official City Center 111 Hassan St. SE Hutchinson, MN 55350 Phone: (320) 234-4220 Fax: (320) 234-4240 kdimler@ci.hutchinson.mn.us Estimated repair costs along with the estimated cost of a new building of the same type was provided by Ben Anderson, project estimator and manager for First Class Builders in Hutchinson, Minnesota. Ben Anderson Project Manager First Class Builders - The Broll Team 902 Hwy. 15 South, Suite 400 Hutchinson, MN 55350 T: 320-234-7000 C: 320-583-4650 Per a cost estimate provided by First Class Builders, LLC, the total cost to bring the existing building up to current building code standards would be between $88,100 and 128,600. Also, per First Class Builders, a new building of the same type and size would cost approximately $380,000. Low Estimate High Estimate Repair Cost $88,100 $128,600 New Building $380,000 $380,000 Percentage 23.2% 33.8% Since the total cost to renovate the existing building is more than 15% of the cost to construct a new building, the 'Franklin House' does meet the statutory definition of substandard. V. Criterion 3 Minnesota State Statute 469.174 Subd. 10(e) states: 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. The parcel in question covers an area encompassing .330754 acres or 14,408 square feet. The improved area of the parcel is as follows: Improvement Buildings 1,800 Sidewalks 700 TOTAL 2,500 The total improved area is 2,500 square feet. 2,500 / 14,408 = 17.35 17.35 % of the parcel is 'improved,' therefore this criterion is satisfied. VI. Conclusion All statutory criteria are satisfied. Therefore the area of this study being considered for a Redevelopment Tax Increment Financing District is in fact eligible for inclusion in the existing Redevelopment TIF District (4-16). Any questions regarding this eligibility study can be directed to Miles R. Seppelt, Economic Development Director, City of Hutchinson at (320) 234-4223 or mseppelt@ci.hutchinson.mn.us Appendix G Findings Including But/For Qualifications The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan (TIF Plan) for Tax Increment Financing District No. 4-16 (District), as required pursuant to Minnesota Statutes, Section 469.175, Subdivision 3 are as follows: 1. Finding that Tax Increment Financing District No. 4-16 is a redevelopment district as defined in M.S., Section 469.174, Subd. 10. The District consists of one parcel, with plans to redevelop the area for commercial/industrial 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 that the sole building on the parcel, not including outbuildings, is structurally substandard to a degree requiring substantial renovation or clearance. 2. Finding that the proposed development, in the opinion of the City Council, would not reasonably be expected to occursolely through private investment within the reasonablyforeseeablefuture 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 the District permitted by the TIF Plan. Theproposed 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 parcel currently occupied by a single substandard building, the incompatible land uses at close proximity, and the cost of financing the proposed demolition and land purchase, this project is feasible only through assistance, in part, from tax increment financing. 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 add to the total redevelopment cost. Historically, site and public improvements costs in this area have made redevelopment infeasible without tax increment assistance. This site has been marketed for approximately ten years without success. 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. Therefore, the City concludes as follows: a. The City's estimate of the amount by which the market value of the entire 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 $1,108,900. C. The present value of tax increments from the District for the maximum duration of the district permitted by the TIF Plan is estimated to be $724,419. 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 $384,481 (the amount in clause b less the amount in clause c) without tax increment assistance. Appendix G-1 3. Finding that the TIFPIan for the District conforms to the general plan for the development or redevelopment of the municipality as a whole. The City Council has reviewed the TIF Plan and finds that the TIF Plan conforms to the general development plan of the City pending approval by the City Planning Commission. 4. Finding that the TIFPIan for the District will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development or redevelopment of Development District No. 4 by private enterprise. The project to be assisted by the 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. But -For Analysis Current Market Value 456,100 New Market Value - Estimate 1,565,000 Difference 1,108,900 Present Value of Tax Increment 724,419 Difference 384,481 Value Likely to Occur Without TIF is Less Than: 384,481 (As Modified December 8, 2020) But -For Analysis Current Market Value 636,100 New Market Value - Estimate 5,705,000 Difference 5,068,900 Present Value of Tax Increment 2,548,915 Difference 2,519,985 Value Likely to Occur Without TIF is Less Than: 2,519,985 Appendix G-2 Council member CITY OF HUTCHINSON MCLEOD COUNTY STATE OF MINNESOTA introduced the following resolution and moved its adoption: RESOLUTION NO. 15241 RESOLUTION ADOPTING A MODIFICATION TO THE DEVELOPMENT PROGRAM FOR DEVELOPMENT DISTRICT NO. 4; AND MODIFYING TAX INCREMENT FINANCING DISTRICT NO. 4-16 THEREIN AND ADOPTING A MODIFIED TAX INCREMENT FINANCING PLAN THEREFOR BE IT RESOLVED by the City Council (the "Council") of the City of Hutchinson, Minnesota (the "City"), as follows: Section 1. Recitals. 1.01. The Council has heretofore established Development District No. 4 and adopted the Development Program therefor. It has been proposed by the City that the City adopt a Modification to the Development Program (the "Development Program Modification") for Development District No. 4 (the "Project Area") and modify Tax Increment Financing District No. 4-16 (the "District") therein to add an addition parcel of land and adopt a modified Tax Increment Financing Plan (the "TIF Plan") therefor (the Development Program Modification and the modified TIF Plan are referred to collectively herein as the "Program and Plan"); all pursuant to and in conformity with applicable law, including Minnesota Statutes, Sections 469.124 to 469.133 and Sections 469.174 to 469.1794, 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 performed all actions required by law to be performed prior to the establishment of the District and the adoption and approval of the proposed Program and Plan, including, but not limited to, (i) providing the proposed TIF Plan and the information on the fiscal and economic implications of the plan to the county auditor and the clerk of the school district board at least 30 days before a public hearing to be held by the City on the Program Modification and TIF Plan and (ii) publishing notice of the public hearing as required by the Act. 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 data, information and/or substantiation constituting or relating to the basis for the other fmdings and determinations made in this resolution. The Council hereby confirms, 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. 1.05. The City is not modifying the boundaries of the Project Area, but is however, modifying the Development Program therefor. 4853-0766-8668\2 Section 2. Findinvs for the Adoption and Approval of the Development Program Modification. 2.01. The Council approves the Development Program Modification, and specifically finds that: (a) the land within the Project area would not be available for redevelopment without the financial aid to be sought under this Development Program; (b) the Development Program, as modified, will afford maximum opportunity, consistent with the needs of the City as a whole, for the development of the Project by private enterprise; and (c) that the Development Program, as modified, conforms to the general plan for the development of the City as a whole. Section 3. Findings for the Modification of Tax Increment Financing District No. 4-16. 3.01. The Council hereby finds that the District is in the public interest and is a "redevelopment district" under Minnesota Statutes, Section 469.174, Subd. 10 of the Act. 3.02. The District is being modified to add an additional parcel, and such addition shall enlarge the geographic area of the District. 3.03. The Council finds that, with the enlargement of the District, the criteria of section 469.174, subdivision 10, paragraph (a), clauses (1) and (2) of the Act is satisfied. 3.04. The Council further finds that the proposed development 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 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 the District permitted by the Tax Increment Financing Plan, that the Program and Plan conform 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 redevelopment or development of the District by private enterprise. 3.03. The Council further finds, declares and determines that the City made the above findings stated in this Section and has set forth the reasons and supporting facts for each determination in writing, attached hereto as Exhibit A. Section 4. Public Purpose. 4.01. The adoption of the Program and Plan conforms in all respects to the requirements of the Act and will help discourage commerce, industry, or manufacturing from moving their operations to another state or municipality, will result in increased employment in the state, and will result in preservation and enhancement of the tax base 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. 4853-0766-8668\2 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 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 City Administrator. 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. 5.03 The Auditor of McLeod 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 Hutchinson 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 Administrator is further authorized and directed to file a copy of the Program and Plan with the Commissioner 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: December , 2020 Gary Forcier, Mayor (Seal) 4853-0766-8668\2 ATTEST: Matt Jaunich, City Administrator EXHIBIT A The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan for Tax Increment Financing District No. 4-16 (the "District") as required pursuant to M.S., Section 469.175, Subd. 3 and Subd 4 are as follows: 1. Finding that Tax Increment Financing District No. 4-16 is a redevelopment district as defined in M.S., Section 469.174, Subd. 10 and that with the enlargement of the Tax Increment Financing District, the criteria of section 469.174, subdivision 10, paragraph (a), clauses (1) and (2) of the Act is satisfied. The District consists of one parcel, with plans to redevelop the area for commercial/industrial 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 that the sole building on the parcel, not including outbuildings, is structurally substandard to a degree requiring substantial renovation or clearance. 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 the District 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 parcel currently occupied by a single substandard building, the incompatible land uses at close proximity, and the cost of financing the proposed demolition and land purchase, this project is feasible only through assistance, in part, from tax increment financing. 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 theproposed 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 add to the total redevelopment cost. Historically, site and public improvements costs in this area have made redevelopment infeasible without tax increment assistance. This site has been marketed for approximately ten years without success. 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. Therefore, the City concludes as follows: a. The City's estimate of the amount by which the market value of the entire 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 $1,108,900. c. The present value of tax increments from the District for the maximum duration of the district permitted by the TIF Plan is estimated to be $724,419. 4853-0766-8668\2 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 $384,481 (the amount in clause b less the amount in clause c) without tax increment assistance. 3. Finding that the TIF Plan for the District conforms to the general plan for the development or redevelopment of the municipality as a whole. The City Council has reviewed the TIF Plan and finds that the TIF Plan conforms to the general development plan of the City pending approval by the City Planning Commission. 4. Finding that the TIF Plan for the District will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development or redevelopment of Development District No. 4 by private enterprise. The project to be assisted by the 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. But -For Analysis Current Market Value 636,100 New Market Value - Estimate 5,705,000 Difference 5,068,900 Present Value of Tax Increment 2,548,915 Difference 2,519,985 Value Likel%- to Occur Without TIF is Less Than: 2,519,985 4853-0766-8668\2 RESOLUTION NO. 15242 RESOLUTION AUTHORIZING AN INTERFUND LOAN FOR ADVANCE OF CERTAIN COSTS IN CONNECTION WITH TAX INCREMENT FINANCING DISTRICT NO. 4-16. BE IT RESOLVED by the City Council (the "Council") of the City of Hutchinson, Minnesota (the "City"), as follows: Section 1. Background. 1.01. The City has approved the modification of Tax Increment Financing District No. 4-16 (the "TIF District") within Development District No. 4 (the "Project Area"), and has adopted a modified Tax Increment Financing Plan (the "TIF Plan") for the purpose of financing certain improvements within the Project Area. 1.02. The City has determined to pay for certain costs identified in the TIF Plan consisting of site acquisition & demolition (collectively, the "Qualified Costs"), which costs may be financed on a temporary basis from City funds available for such purposes. 1.03. Under Minnesota Statutes, Section 469.178, Subd. 7, the City is authorized to advance or loan money from the City's general fund or any other fund from which such advances may be legally authorized, in order to finance the Qualified Costs. 1.04. The City intends to reimburse itself for the Qualified Costs from tax increments derived from the TIF District in accordance with the terms of this resolution (which terms are referred to collectively as the "Interfund Loan"). Section 2. Terms of Interfund Loan. 2.01. The City hereby authorizes the advance of up to $150,000 from the Downtown Revolving Loan Fund or so much thereof as may be paid as Qualified Costs. The City shall reimburse itself for such advances from Available Tax Increment (defined below) together with interest at the rate of 4%, which does not exceed the greater of the rates specified under Minnesota Statutes, Section 270C.40 or Section 549.09 as of the date the loan is authorized. Interest accrues on the principal amount from the date of each tranche. 2.02. Principal and interest ("Payments") on the outstanding Interfund Loan balance shall be paid annually on each December 31 (each a "Payment Date"), commencing on the first Payment Date on which the City has Available Tax Increment (defined below), or on any other dates determined by the City Administrator, through the date of last receipt of tax increment from the TIF District. 2.03. Payments on this Interfund Loan are payable solely from "Available Tax Increment," which shall mean, on each Payment Date, tax increment available after other obligations have been paid, or as determined by the City Administrator, generated in the preceding twelve (12) months with respect to the property within the TIF District and remitted to the City by McLeod County, all in accordance with Minnesota Statutes, Sections 469.174 to 469.1794, all inclusive, as amended. Payments on this Interfund Loan may be subordinated to any outstanding or future bonds, notes or contracts secured in whole or in part with Available Tax Increment, and are on parity with any other outstanding or future interfund loans secured in whole or in part with Available Tax Increment. 2.04. The principal sum and all accrued interest payable under this Interfund Loan are pre -payable in whole or in part at any time by the City without premium or penalty. No partial prepayment shall affect the amount or timing of any other regular payment otherwise required to be made under this Interfund Loan. Error! Unknown document property name. 2.05. This Interfund Loan is evidence of an internal borrowing by the City in accordance with Minnesota Statutes, Section 469.178, Subd. 7, and is a limited obligation payable solely from Available Tax Increment pledged to the payment hereof under this resolution. This Interfund Loan and the interest hereon shall not be deemed to constitute a general obligation of the State of Minnesota or any political subdivision thereof, including, without limitation, the City. Neither the State of Minnesota, nor any political subdivision thereof shall be obligated to pay the principal of or interest on this Interfund Loan or other costs incident hereto except out of Available Tax Increment, and neither the full faith and credit nor the taxing power of the State of Minnesota or any political subdivision thereof is pledged to the payment of the principal of or interest on this Interfund Loan or other costs incident hereto. The City shall have no obligation to pay any principal amount of the Interfund Loan or accrued interest thereon, which may remain unpaid after the final Payment Date. 2.06. Before the latest decertification of any tax increment financing district from which the interfund loan is to be repaid, the City may modify or amend the terms of this Interfund Loan, in writing, by resolution of the City Council, including a determination to forgive the outstanding principal amount and accrued interest to the extent permissible under law. Section 3. Effective Date. This resolution is effective upon the date of its approval. 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 , 2020 Gary Forcier, Mayor (Seal) Error! Unknown document property name. ATTEST: Matt Jaunich, City Administrator HUTCHINSON CITY COUNCIL Request for Board Action Agenda Item: Update on New Design of Police Station and Estimated Project Timeline Department: Administration LICENSE SECTION Meeting Date: 12/8/2020 Application Complete N/A Contact: Matt Jaunich Agenda Item Type: Presenter: Matt Jaunich Reviewed by Staff ❑� Communications, Requests Time Requested (Minutes): 15 License Contingency N/A Attachments: No BACKGROUND/EXPLANATION OFAGENDA ITEM: Wold Architects will be at the council meeting on Tuesday to give an update on the design/layout of the new Police Station and they will give an update on the estimated project timeline. Wold will be seeking council feedback on what has been put together to date. BOARD ACTION REQUESTED: No action at this time. Just a progress report on the project. Fiscal Impact: Funding Source: FTE Impact: Budget Change: New Bu Included in current budget: No PROJECT SECTION: Total Project Cost: Total City Cost: Funding Source: N/A Remaining Cost: $ 0.00 Funding Source: N/A rwo New Police Facility Council Meeting December 8, 2020 HUTCHINSON 000x CITY OF HUTCHINSON NEW POLICE DEPARTMENT /-,t8�nda I. Review of Updated Building Diagram 2. Review of Updated Site Plan 3. Review Schedule 4. Next Steps )F HUTCHINSON CE DEPARTMENT IG DIAGRAM PROGRAM SUMMARY ADMINISTRATIONIOFFICES 1,652 SF LOBBY/RECORDS 2,576 SF PRISONER PROCESSING 962 SF FLEET SERVICESNEHICLES 9,100 SF 71 STAFF SUPPORT 2,296 SF E.O.C. 2,310 SF PATROL 5,124 SF 0 INVESTIGATION 2,940 SF EVIDENCE 3,248 SF SUBTOTAL 30, 128 SF NET GROSS FACTOR x 1.2 TOTAL GROSS SF 36,154 SF CITY OF HUTCHINSON NEW POLICE DEPARTMENT SITE PLAN DIAGRAM - PROPERTY - "-- ` - 58,24D SF 145.750 SF t.. ICE P KI . _ FUTURE BUILDING EOCl6MV ENTRY S' I III�Il�ll 1 ' F I I 36,000 SF Hill POLICE DEPT, PRISONER RELEASE ....f ` v Ii:. �I IIIII......... I---- -" SECURE GATE VF SECURE r • _ PARKING - { It + EXISTING (14 STALLS) y IIIII BUILDING i lIOU¢R STOR£ ENTRY CITY OWNED PROPERTY : � d IBM t CITY OF HUTCHINSON NEW POLICE DEPARTMENT UPDATED SCHEDULE 2020 2021 2022 So Oct Nov Dec Jan Feb Mar Apr Ma Jun Jul AugSep Oct Nov Dec Jan Feb Mar Apr May Jun Jul May TASKS Shematic Design Kick -Off Meeting Develop Final Solution Design Development Solution Development Cost Estimating Council Approval Construction Documents 959'a Review Set Complete 100% Set complete Cost Estimating Council Approval Bidding and Award Construction Demolition & Site Preparation Police Station Construction Substantial Completion * So .g z 22 PnNect Close Out CITY OF HUTCHINSON NEW POLICE DEPARTMENT N EX S' 'PS 1. Site Development 2. Detailed Plan Development. 3. Follow-up Departmental Meetings. CITY OF HUTCHINSON NEW POLICE DEPARTMENT Questions? HUTCHINSON CITY COUNCIL Request for Board Action Agenda Item: Council Update on the City's CARES Act Funds Department: Finance LICENSE SECTION Meeting Date: 12/8/2020 Application Complete N/A Contact: Andy Reid Agenda Item Type: Presenter: Reviewed by Staff ❑� Communications, Requests Time Requested (Minutes): License Contingency N/A Attachments: Yes BACKGROUND/EXPLANATION OFAGENDA ITEM: Last July, the City received $1,074,352 of CARES Act monies from the State, which originated from the Federal government. The intent of the monies was to help cities and counties fund costs brought about by the COVID-19 public health emergency. Use of the monies was restricted by the US Treasury to limited, qualifying expenditures. A deadline of November 15 was imposed by the State for cities to use the monies. Any unspent monies were to be remitted to the county for the county's potential use. The good news is that we spent 100% of our funds and do not need to remit any unspent balance to McLeod County. The attached report shows how the City spent its monies, with expenditure categories as dictated by the State's reporting structure. City council committed $750,000 of CARES Act funds to a small business assistance program. Unfortunately, we fell short of delivering the balance of those funds by a little over $50,000. In the end, $696,921 was distributed to 67 businesses, averaging $10,402 per business. The unspent balance was redirected to Police officer wages and benefits, which the US Treasury designated as a qualifying expenditure in response to the COVID-19 pandemic. Another major use of the funds was for employee leaves of absence paid during the State's shelter in place order, and for leave resulting from an employee, or employee's family members, having to stay home due to contraction or exposure to COVID-19. Employee leave to stay home with children for distance learning qualifies as well. Funds were also spent on cleaning supplies, cleaning of city facilities and personal protection equipment, such as masks, gloves and plexi-glass partitions. HVAC improvements were completed which will provide cleaner and safer indoor air for employees and the public. Technology was purchased to assist with virtual meetings and telework capabilities. Feel free to contact me with any questions. BOARD ACTION REQUESTED: Fiscal Impact: Funding Source: FTE Impact: Budget Change: Included in current budget: No PROJECT SECTION: Total Project Cost: Total City Cost: Funding Source: N/A Remaining Cost: $ 0.00 Funding Source: N/A CARES Act Funding City of Hutchinson Final Allocations Budgeted Personnel Repurposed Employees told to stay home/Federal Leave Facilitate Distance Learning Air blower to dry out child care space at Event Center Improve Telework Capabilities Laptops, GoToMeeting, Sound System, headphones, virtual mtg rooms Payroll for Pub Health/Safety Employees PR for safety employees forced to stay home or be repurposed due to Pandemic Personal Protective Equipment Face masks, disinfectant/sanitizers, gloves, plexiglass installs Public Health Expenses Election Crowd Control, Electronic Displays, Secured Doors, Full disinfecting cleaning after COVID exposure, upgrades to service counters Small Business Assistance Program EDA Grants, Website Creation, EDA Staff Time Other Miscellaneous Items HVAC Ionization & Air Movement Upgrades at City facilities April - July August September October November Total 99,833.69 7,470.42 - 22,462.11 129,766.22 - - 254.99 - 254.99 7,008.54 184.52 3,790.36 19,596.30 14,074.00 44,653.72 5,428.73 - - - 50,430.58 55,859.31 11,575.69 2,955.92 485.20 15,458.00 3,604.74 34,079.55 22,751.17 1,351.60 2,178.06 1,927.00 8,193.38 36,401.21 - - 1,695.00 552,085.00 144,946.00 698,726.00 - - - 8,878.00 65,733.00 74,611.00 146,597.82 11,962.46 8,403.61 597,944.30 309,443.81 1,074,352.00 CARES Funding Received 1,074,352.00 Amount Remaining HUTCHINSON CITY COUNCIL Request for Board Action Agenda Item: Review of Truth in Taxation Hearing Department: Administration LICENSE SECTION Meeting Date: 12/8/2020 Application Complete N/A Contact: Matt Jaunich Agenda Item Type: Presenter: Matt Jaunich Reviewed by Staff ❑� Communications, Requests Time Requested (Minutes): 5 License Contingency N/A Attachments: No BACKGROUND/EXPLANATION OFAGENDA ITEM: As a follow up to the Truth in Taxation Hearing from December 3, the Council should have a discussion on whether or not there is a desire to change anything in regards to the 2021 budget and/or tax levy. Requests (if any) for additional information from the Truth in Taxation Hearing and/or any changes to the proposed budget/levy will be presented at this time as well. BOARD ACTION REQUESTED: No action at this time. Final budget and levy will be approved at the December 22 meeting Fiscal Impact: Funding Source: FTE Impact: Budget Change: New Bu Included in current budget: No PROJECT SECTION: Total Project Cost: Total City Cost: Funding Source: N/A Remaining Cost: $ 0.00 Funding Source: N/A HUTCHINSON CITY COUNCIL Request for Board Action Taxi Service License - Erickson Acres Carriage Company, LLC Agenda Item: Department: Administration LICENSE SECTION Meeting Date: 12/8/2020 Application Complete N/A Contact: M. Jaunich Agenda Item Type: Presenter: M. Jaunich Reviewed by Staff ❑� New Business Time Requested (Minutes): 5 License Contingency N/A Attachments: Yes BACKGROUND/EXPLANATION OFAGENDA ITEM: Shari Erickson of Erickson Acres Carriage Company, LLC, has requested to operate a horse carriage ride service for the month of December. Upon review of Ms. Erickson's request, staff believed it prudent for her to apply for a taxi service license. Ms. Erickson is requesting that the carriage route run from Riverside Park west to the stop sign at Masonic West River park and then back to Riverside Park. Ms. Erickson has proper insurance in place and the police department has conducted a background investigation that has come back favorable. Both the Street Department and the Police Department are aware of this request/application and have not raised any concerns. BOARD ACTION REQUESTED: Approve issuing taxi service license to Erickson Acres Carriage Company, LLC Fiscal Impact: $ 0.00 Funding Source: FTE Impact: 0.00 Budget Change: New Bu Included in current budget: No PROJECT SECTION: Total Project Cost: Total City Cost: Funding Source: N/A Remaining Cost: $ 0.00 Funding Source: N/A oily °f 111 Hassan Street Southeast Hutchinson, MN 55350 (320) 587-5151 Fax: (320) 234-4240 t3usmess M.Lurindtluu City of Hutchinson Application for Taxi Service License (Under Ordinance No. 115) Business Name License Fee: S5.00�i3er tax Number of taxi(s): Operating Year: Phone Number IL."Ik1 610 Milr !2F;A'I�() Address City State Zip -,art Checklist The following items need to be completed and/or attached in order for the application to be processed: A schedule of proposed rates to be charged for license year ❑ yes ❑ no A certificate signed by competent and experienced mechanic (ordinance 115.06) ❑ yes ❑ no Copy of insurance that meets or exceeds limits established in the ordinance: ❑ yes ❑ no Application fee paid in full (check or money order): b yes ❑ no 3leted in full and signed: t2 yes ❑ no I hereby certify that I have completely filled out the entire above application and that the application is true, correct, and accurate. I fully understand that any person who violates any provision of the Taxicabs Ordinance No. 115 is guilty of a misdemeanor and upon conviction thereof shall be punished by a fine not exceeding $1,000 or by imprisonment for a period not exceeding 90 days or both, plus, in either case, the costs of prosecution. Signature of Applicant Internal Use Only Police* �approved City Council ❑ approved ❑ denied Notes: ❑ denied Notes: Date *done by practice, not required oy coae Z:/Licenses/Applications/Taxi. doc Melissa Starke From: Shari Erickson <ericksonacrescarriageco@gmail.com> Sent: Thursday, December 3, 2020 1:04 PM To: Melissa Starke Subject: Rates and map Attachments: 20201203_125845 jpg EXTERNAL EMAIL ALERT: This message originated from outside the City of Hutchinson email system. Unless you recognize the sender and know the content, DO NOT click links or open attachments. Melissa, Thank you for contacting me today, gives me impetus. Rates for Erickson Acres Carriage Company LLC rides in the park will be: $17 adults(18 and up) $9 children(17 to 5) 4 and under ride for free Please if there are any other questions feel free to give me a call or email me. Thanks so much for your help! Shari Erickson In i MDEPARTMENT OF NATURAL RESOURCES Information Center O 651-296-6157 1-888-646-6367 mndnrgov Hunting and fishing regulations are available from license agents, Minnesota DNR Information Center and online. EWA SIGN UP FOR EMAIL UPDATES mndnngov/emallupdates STOP THE SPREAD OF INVASIVE SPECIES mndnr.gov/invasives CLEAN t� O CLEAN OUT MMNFSOTA CONSERVATION NTM SUBSCRIBETODAYI Supported by reader donations, the magazine is devoted to wildlife and conservation issues. 1-844-245-7115 - mrift gov/magazine TURN IN POACHERS (TIP) O 1-800-652-9093 TIP #TIP (#847) on cell phone mndnr.gov/tip Rewards for tips leading to an arrest. You can remain anonymous. Minnesota Department of Natural Resources Annual Horse Pass M D N R#: 811-043-587 SHARI LYNN ERICKSON 20 23151 H WY 7 HUTCHINSON, MN 55350 Height: 5'2 DOB: 11 /08/1963 Weight: 260 LBS Drivers License: Z826210092216 Gender: FEMALE Firearm Safety: Eyes: BLUE Annual Horse Pass, Code 027 Effective Dates: 01 /01/2020 - 12131 /2020 Valid for residents and nonresidents age 16 and older, required while riding, leading, or driving a horse on horse trails and associated day use area and trails, in state parks, on state. trails, in state recreational areas, and in state forests. Pass must be in immediate possession and available for inspection. 027-Annual Horse Pass $21.00 Total: $21.00 JF This license is NON-REFUNDABLE. Licensee Signature:. _ % _ I hereby certify that my UNR license I. iwleges have not been revoked prior to this dale. Trans#: 060420805 Agent: 043021 Issued: 08114/202019:52 Terminal: 52290620 Capitol Specialty Insurance Corporation COMMERCIAL GENERAL LIABILITY P.O. Box 5900, Madison, WI 53705 COVERAGE PART DECLARATIONS TRANSACTION TYPE: New Business ENDORSEMENT #: 000 POLICY NUMBER POLICY PERIOD AGENCY/PRODUCER CODE PR03025292-01 11 /09/2020 - 11 /09/2021 4831 P 12:01 A.M. Standard Time at the address of the insured stated herein. NAMED INSURED AND ADDRESS AGENCY/PRODUCER Erickson Acres Carriage Co LLC Allen Financial Insurance Group, Inc. 23151 Highway 7 W 13880 N Northsight Blvd Hutchinson, MN 55350-4247 Bldg C #109 Scottsdale AZ 85260 Form of Business: LLC Business Description: Carriage Rides General Aggregate Limit (Other Than Products -Completed Operations) $ 2,000,000 Products -Completed Operations Aggregate Limit Personal And Advertising Injury Limit Each Occurrence Limit Damage To Premises Rented To You Limit Medical Expense Limit $ 2,000,000 $ 1,000,000 $ 1,000,000 $ 100,000 Any One Fire $ 5,000 Any One Person Location of all Premises You Own, Rent or Occupy: SEE ATTACHED LOCATION FORM SCHEDULE CICG 176 Classification Code No. Premium Rate Advance Premium Basis Pr/Co Pr/Co Other SEE ATTACHED COMMERCIAL GENERAL LIABILITY SCHEDULE CICL 043 Balance To Meet Minimum $ 518.00 TOTAL ADVANCE PREMIUM $ 700.00 THE LIABILITY PREMIUM BASIS OF THIS POLICY IS SUBJECT TO AN AUDIT. ADDITIONAL PREMIUM MAY BE DUE. FORMS AND ENDORSEMENTS: SEE COMMERCIAL GENERAL LIABILITY COVERAGE PART FORM SCHEDULE CICL 044 COUNTERSIGNED 11/12/2020 By Authorized Representative CICL 042 (05-15) Page 1 of 1 Capitol Specialty Insurance Corporation P.O. Box 5900, Madison, WI 53705 POLICY NUMBER PR03025292-01 NAMED INSURED AND ADDRESS Erickson Acres Carriage Cc LLC 23151 Highway 7 W Hutchinson, MN 55350-4247 Prems No. Classification 1 Carriage & Wagon Rides COMMERCIAL GENERAL LIABILITY SCHEDULE TRANSACTION TYPE: New Business ENDORSEMENT #: 000 POLICY PERIOD AGENCY/PRODUCER CODE 11 /09/2020 - 11 /09/2021 4831 P 12:01 A.M. Standard Time at the address of the insured stated herein. Code No. 40045 CG 20 11 - Additional Insured Manager 49950 Or Lessors Of Premises AGENCY/PRODUCER Allen Financial Insurance Group, Inc. 13880 N Northsight Blvd Bldg C #109 Scottsdale AZ 85260 Premium Rate Advance Premium Basis Pr/Co Other Pr/Co Other 2,200 60 $ 0.00 $ 132.00 Sales 1 $ 50.00 Each Balance To Meet Minimum Premium $ 518.00 Total Advance Premium $ 700.00 Minimum Earned Premium 25 % CICL 043 (05-15) Page 1 of 1, HUTCHINSON CITY COUNCIL Request for Board Action Approve/Deny Letter of Agreement with Artspace to Conduct the Next Phase Agenda Item: of Analysis on the State Theatre Department: Administration LICENSE SECTION Meeting Date: 12/8/2020 Application Complete N/A Contact: Matt Jaunich Agenda Item Type: Presenter: Matt Jaunich Reviewed by Staff ❑� New Business Time Requested (Minutes): 10 License Contingency N/A Attachments: Yes BACKGROUND/EXPLANATION OFAGENDA ITEM: Following the workshop on Tuesday to review the Artspace report on the State Theatre, the City Council is being asked to consider moving forward with the second phase of analysis on the State Theatre. Artspace is proposing to conduct a more defined and refined Sustainable Facilities Analysis. Included with this BAF is a letter of agreement and exhibit A which details the scope of work for the next phase. BOARD ACTION REQUESTED: Approve/Deny Letter of Agreement with Artspace to Conduct a More Defined and Refined Sustainable Facilities Analysis based on the Analysis Completed in September of 2020 Fiscal Impact: $ 10,000.00 Funding Source: Community Improvement Fund FTE Impact: Budget Change: No Included in current budget: No PROJECT SECTION: Total Project Cost: Total City Cost: Funding Source: N/A Remaining Cost: $ 0.00 Funding Source: N/A artspace Letter of Agreement — Technical Consulting • •00 •0000 ARTSPACE CONSULTING THIS LETTER OF AGREEMENT (this "Agreement") made and entered into this loth day of November, 2020 (the "Effective Date") by and between ARTSPACE PROJECTS, INC., a MINNESOTA NONPROFIT CORPORATION having an address at 250 3RD AVENUE NORTH, SUITE 400, MINNEAPOLIS, MN 55401("Artspace") and CITY OF HUTCHINSON, a municipality, with a mailing address at 111 Hassan St SE, Hutchinson, MN 55350. ("City of Hutchinson" and Artspace are each a "party" and together the "parties") The parties agree as follows: i. Overview: Subject to the terms, conditions and covenants in this Agreement, Artspace contracts with City of Hutchinson, and City of Hutchinson contracts with Artspace, to perform the scope of work ("Scope") as more particularly described in Exhibit "A" attached hereto. The Scope's budget, timeline, and fee disbursement schedule are more particularly described in Exhibit "B" attached hereto. 2. Term: The term of this Agreement shall commence on the Effective Date (as defined above) and shall continue until all deliverables as outlined in Exhibit "A" are completed (the "Scope Completion"; such period, the "Term"). 3. Qualifications: City of Hutchinson shall provide any and all support relevant to the successful completion of the Scope as outlined in "Exhibit C" including, but not limited to, providing documents relevant or appropriate for Artspace review, arranging for site/building tours and information, assigning key staff to work with Artspace, coordinating logistics for meetings and leading public outreach and promotional efforts. 4. Fee: The total fee for this work is Ten Thousand Dollars and oo/1oo (s1o,000). On the Effective Date, City of Hutchinson shall pay Artspace an initial deposit in the amount of Five Thousand Dollars and 00/100 ($5,000) ("Initial Deposit"). City of Hutchinson shall pay Artspace the remaining balance in the amount of Five Thousand Dollars and 00/100 ($5,000) ("Balance") upon receiving the first draft of the report. In the event of a cancellation requested by City of Hutchinson within the first thirty (3o) days of the Effective Date, Artspace shall be entitled to a nonrefundable cancellation fee in the amount Two Thousand and Five Hundred Dollars and oo/100 ($2,500) ("Cancellation Fee"), which may be deducted from the Initial Deposit. In the event of a cancellation requested by City of Hutchinson at any point after the first thirty (3o) days of the Term but before Scope Completion, Artspace shall be entitled to compensation calculated at the hourly rate described in Exhibit "B" for the actual hours worked, not to exceed the total s/8 Ir#space • •00 •0000 ARTSPACE CONSULTING contracted amount of $zo,000, plus any documented out-of-pocket expenses ("Balance Due"). Artspace may retain a portion of the Initial Deposit up to the amount of Balance Due. In the event that the Initial Deposit is insufficient, City of Hutchinson agrees to immediately remit the remaining Balance Due to Artspace. 5. Proprietary Use: With the exception of the deliverables described in Exhibit "A", all materials, written or otherwise, provided by Artspace remain the property of Artspace and may not be reproduced, copied or disseminated to third parties for purposes of sale or other benefit beyond the intended use under this contract as particularly described in Exhibit "A" as "The Scope", without the prior written approval of Artspace. 6. Trademark Infringement: City of Hutchinson is granted the right to use the Artspace name and/or brand solely in conjunction with the Scope of the project as outlined in this Agreement, and shall not use the Artspace name and/or brand in conjunction with or connection to any other projects or marketing materials for which Artspace is not a consultant including, but not limited to, identifying a future project or development as arts -focused. City of Hutchinson agrees to notify Artspace of any potentially unauthorized use of the trademarks internally or by others promptly as it comes to City of Hutchinson's attention. Artspace shall have the sole right and discretion to bring infringement proceedings involving trademarks. Because the damages resulting from unauthorized use will render irreparable harm to Artspace that will be difficult to quantify, Artspace shall be entitled to seek any and all equitable relief, including, but not limited to, injunctive relief, and to any other remedy that may be available under any applicable law or agreement between the parties. City of Hutchinson acknowledges that an award of damages to Artspace does not preclude a court from ordering injunctive relief. Both damages and injunctive relief shall be proper modes of relief and are not to be considered as alternative remedies. 7. Assignment or Subcontracting: With the exception of Subcontractors identified in Exhibit "A", Artspace may not subcontract any portion of the Scope without the prior written consent of City of Hutchinson. 8. Address of Artspace and City of Hutchinson Notices: All notices required hereunder between Artspace and City of Hutchinson shall be given in writing, by United States certified mail, return receipt requested, or by nationally recognized overnight courier service, to Artspace and City of Hutchinson at the address shown in the opening paragraph of the Agreement. All payments due hereunder shall be given to Artspace and City of Hutchinson, as the case may be, at the address shown in the opening paragraph of the Agreement. g. Termination: 2/8 Ir#space • •00 •0000 ARTSPACE CONSULTING This Agreement may be terminated by either party without cause with ten (zo) business days advance written notice; provided, however, that all compensation due to Artspace through such termination date shall be paid by City of Hutchinson. Upon termination, Artspace shall deliver to City of Hutchinson all completed materials as of the date of termination. io. Amendment and Modification: This Agreement embodies the full agreement of the parties and supersedes any and all prior understandings or commitments concerning the subject matter of this Agreement. Any modification or amendment must be in writing and signed by both parties. ii. Governing Law: This Agreement is governed by and shall be construed in accordance with the laws of the state in which City of Hutchinson is located. 12. Release and Indemnification: Except as provided herein, neither Artspace nor any of its respective affiliates, agents, consultants, partners, officers, members, managers, directors or employees, shall be liable for any claims relating to damages arising out of or in connection with the performance of this Agreement. City of Hutchinson shall indemnify and hold Artspace harmless from and against any and all costs, damages, claims and liabilities arising out of or relating to the Scope responsibilities of Artspace as described in "Exhibit A." The provisions of this paragraph shall survive the expiration and any termination of this Agreement. 13. Disclaimer: Results depend upon a variety of factors unique to each agreement. Prior results do not guarantee or predict a similar result in any pending or future project undertaken by Artspace. The Deliverables in addition to the written or other materials provided by Artspace are intended as guidance for those who wish to explore or advance an arts -related project. While the deliverables and other materials provided reflect Arts pace's expertise as a real estate developer for artists and arts organizations, and are provided in good faith, Artspace makes no representation or warranty about the value of any of the information in relation to the success of any specific project. 14. Return of Property: Upon Scope Completion or termination of this Agreement, City of Hutchinson agrees to return to Artspace any property, documentation, records, or information that is the property of Artspace. 15. Capacity/Independent Contractor: 3/8 Ir#space • •00 •0000 ARTSPACE CONSULTING Artspace shall be deemed to be an independent contractor and is not an employee, partner, or co -venturer of, or in any other service relationship with City of Hutchinson. The manner in which Artspace's services are rendered shall be within Artspace's sole control and discretion. 16. Severability of Provisions: Each provision of this Agreement shall be considered to be severable, and if for any reason any provision that is not essential to the effectuation of the basic purposes of the Agreement is determined to be invalid and contrary to any existing or future law, such invalidity shall not impair the operation of or affect those provisions of this Agreement that are valid. 17. No Continuing Waiver: The waiver by either party of any breach of the terms of this Agreement shall not operate or be construed to be a waiver of any subsequent breach. 18. Binding Agreement: This Agreement shall be binding on the parties hereto, and their heirs, executors, personal representatives, successors and assigns. 1g. Headings: All section headings in this Agreement are for convenience of reference only and are not intended to qualify the meaning of any section. 20. Terminology: All personal pronouns used in this Agreement, whether used in the masculine, feminine and neuter gender, shall include all other genders, the singular shall include the plural, and vice versa as the context may require. 21. Confidentiality: It is understood and agreed to that Artspace may provide certain information that is and must be kept confidential. The Confidential Information to be disclosed may include, but is not limited to, technical and business information relating to proprietary ideas and inventions, ideas, patentable ideas, trade secrets, drawings and/or illustrations, existing and/or contemplated products and services, research and development, production, costs, profit and margin information, finances and financial projections, customers, clients, contact lists, survey responses, marketing, and current or future business plans and models, regardless of whether such information is designated as "Confidential Information" atthe time of its disclosure. [Remainder of page intentionally left blank. Next page is the signature page.] IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date shown on the first page of this Agreement. 4/8 • •00 •0000 space 0000:000 ARTSPACE CONSULTING AGREED TO: Artspace Projects, Inc Wendy Holmes November 10, 2020 Senior VP, Consulting and Strategic Partnerships City of Hutchinson Matt Jaunich City Administrator Contact Information Wendy Holmes Senior VP Artspace Projects, Inc. 25o Third Avenue North Suite 400 Minneapolis, MN 55401 wendy.holmes@artspace.org (612) 747-57o8 Please return executed contract: ATTN: Naomi Marx Artspace Projects, Inc. 25o Third Avenue North Suite 400 Minneapolis, MN 55401 naomi.marx@artspace.org November 10, 2020 Matt Jaunich City Administrator City of Hutchinson iii Hassan Street SE Hutchinson, MN 55350 mjaunich@ci.hutchinson.mn.us (320) 234-4241 5/8 artspace Exhibit A Technical Consulting • •.• •0000 ARTSPACE CONSULTING Artspace Projects, Inc. ("Artspace") proposes the following scope of work to continue to aid the City of Hutchinson, MN with its vision to successfully redevelop its downtown State Theatre. Artspace, based in Minneapolis, is the nation's leading nonprofit developer for cultural organizations and the arts with 54 operating projects in twenty-two states. Artspace proposes the following: Project Concept Refinement Facilitate up to ten one -hour meetings with potential users of the State Theatre in downtown Hutchinson to better understand usage, cost of usage, and what would make the facility more attractive for their needs. Through these conversations Artspace will help refine the project concept, the potential users and the earned sources of revenue needed to successfully operate the Theatre. An outcome of these conversations will be a more defined and refined sustainable facilities analysis based on the analysis completed in September 2020. Facilitate one -hour meetings with the following individuals and organizations: 1. Ridgewater Community College for theater usage 2. Mandy Thode regarding live music venue 3. Zellas owners, Tiffany Barnard and Sara Pollmann 4. Hutchinson Art Center as they are the umbrella sponsor for other smaller creative businesses and nonprofits and act as their fiscal agent 5. Hutchinson Theatre Company for theater usage 5. Red and Linda McMonagle regarding the movie theater component of the business. 6. September Jacobson who operates Events Center (PRCE) downtown. 7. Talk to several corporate leaders, such as 3M, Uponor and Hutchinson Health, regarding potential use of theater for corporate events. 8. Mary Hodson, President of the Chamber and Valeric Mackenthun (Compass Occasions) regarding work/meeting spaces, events, etc. 9. Conversations with Hopkins Art Center and Paramount Center for the Arts regarding operations and relationship with the cities where they reside (governance, management, etc.) a. Deliverables: o Summary of Meetings o Refined Sustainable Facilities Analysis (up to two drafts) o Input from Small Community Group via Zoom 6/8 • •00 •0000 Prtspace 0000:000 ARTSPACE CONSULTING Exhibit B Budget, Timeline, and Fee Disbursement Budge The fee for the proposed Scope of work is $io,000. This flat fee includes staff time, and deliverables. This contract is set up not to exceed the total fee of $Zo,000 as noted above unless another agreement is put into place with a specific work scope. For additional services, Artspace charges $250 per hour for its consulting work Hours Fee* Project Concept Refinement 40 $101000 o Virtual interviews o Refined Sustainable Facilities Analysis o Input from Small Community Group TOTAL FEE $10 * Artspace charges a rate of $250 per hour for consulting work. ** Does not include fees for a third -party architect Timeline and Fee Disbursement Scope of Work will commence upon receipt of deposit. This timeline assumes that a contract is signed and an initial payment of $5,000 (1/2 of the work fee) is received by November 30, 2020. The remaining $5,000 would be due within 3o days of the delivery of the draft final report. Exhibit C 7/8 • •00 •0000 artspace 00*0:00* ARTSPACE CONSULTING Additional notes on roles and responsibilities City of Hutchinson in Hutchinson, MN agrees to: • Assign amain point of contact/proxy for communication with Artspace; • Provide any relevant documents for Artspace to review; • Coordinate logistics for the execution of the agenda. Including: a. Identifying and inviting the appropriate individuals or groups. b. Responding to requests for feedback with timely edits in agreed upon format. 8/8