PC Packet 08.18.15
AGENDA
HUTCHINSON PLANNING COMMISSION
Tuesday,August 18, 2015
5:30 p.m.
1.CALL TO ORDER 5:30 P.M.
2.PLEDGE OF ALLEGIANCE
3.CONSENT AGENDA
A.CONSIDERATION OF MINUTES DATEDJULY 21, 2015
4.PUBLIC HEARINGS
A.NONE
Motion to close hearing –Motion to approve with staff recommendations –Motion to reject
5.UNFINISHED BUSINESS
6.NEWBUSINESS
A.CONSIDERATION OF RESOLUTION NO. 14451 FINDING THAT A
MODIFICATION TO THE DEVELOPMENT PROGRAM FOR
DEVELOPMENT DISTRICT NO. 4 AND MODIFICATIONS TO THE TAX
INCREMENT FINANCING PLANS FOR TAX INCREMENT FINANCING
DISTRICT NOS. 5, 6, 7, 8, 11, 4-13, AND 4-14 CONFORM TO THE
GENERAL PLANS FOR THE DEVELOPMENT OR REDEVELOPMENT
OF THE CITY.
7.COMMUNICATION FROM STAFF
A.Upcoming Meetings
8.ADJOURNMENT
MINUTES
HUTCHINSON PLANNING COMMISSION
Tuesday,July 21, 2015
5:30 p.m.
1.CALL TO ORDER 5:30 P.M.
The July 21, 2015 Planning Commission meeting was called to order by Chair Hantge at
5:31p.m. Members in bold were present Chair Hantge,Commissioner Kirchoff,
Commissioner Johnston, Commissioner Norton, Commissioner Arndt,Commissioner
Wick, and Commissioner Fahey. Also present were Dan Jochum, City Planner and
Kyle Dimler Planning and Building Specialist.
2.PLEDGE OF ALLEGIANCE
3.CONSENT AGENDA
A.CONSIDERATION OF MINUTES DATEDJUNE 16, 2015
Motion by Commissioner Arndt, Second by Commissioner Wickto approve.
Approved unanimously.
4.PUBLIC HEARINGS
A.CONSIDERATION OF AVARIANCETO REDUCE THE NORTHERN SIDE-
YARD SETBACKFOR AN ACCESSORY STRUCTURE BY 38 INCHES ON
THE PROPERTYLOCATED AT 107 MARK DR. NE,RONALD & JEANIE
KALENBERG, APPLICANTS
Chair Hantge announced the agenda item.
Mr. Dan Jochum, City Planner addressed the Commission.
Mr. Jochum reviewed the Staff Reportconcerning the application, which was
included in the Planning Commission’s packet.
Mr. Jochum reviewed the statutory requirements of a variance application
meeting 3 specific practical difficulties in order for it to be approvedfor the
Commission.
Mr. Jochum presentedStaff’s review of the variance 3-part test concerning the
application to determine if there is a practical difficulty in the applicant’s request.
Minutes
Hutchinson Planning Commission
July 21, 2014
Page 2
Mr. Jochum stated Staff does believe it is a reasonable use to have a detached
garage ona residential lot.
Mr. Jochum noted Mr. Kalenberg’s difficulty with complying with the zoning
ordinance is the property owner’s preference of where to locate the proposed
structure on hisproperty and not a unique attribute of the piece of property itself.
Mr. Jochum stated Staff does not believe that reconstructing the garage in the
same location would change the essential character of the locality.
Chair Hantge asked when the existing garage was constructed.
Mr. Kalenberg stated the garage was likely constructed in 1968 with the
development of the house on thislot.
Mr. Jochum also noted that there a number of similar non-conformities elsewhere
in the City as well.
Commissioner Fahey asked how far the garage is currently from the house.
Mr. Kalenberg stated the garage is currently 40” from the house and he is
proposing to move the garage 60” from the house on his property.
Chair Hantge asked if Staff believed there would be any legal ramificationsif the
Commission determined the layout of the lot is in fact a practical difficulty.
Mr. Jochum stated that it is the Commission’s decision to recommend approval or
denial based upon Staff’s findings in the Staff Report and the Commission would
need to articulate why it believes there is a practical difficulty with the subject
property.
Commissioner Fahey asked Mr. Jochum if he had any standard conditions that the
Commission could include in the Commission’s decision to approve,should they
choose to do that.
Mr. Jochum noted the Commission would need to articulate why it believes the
applicant’s request is a practical difficulty and that the difficultyis particular to
this property.
Motion by Commissioner Kirchoff, Second by Commissioner Arndtto closethe
public hearing at 5:59 p.m.
Commissioner Fahey motioned to approve the applicant’s request as a practical
difficulty because the Commission believesrequiringthe garage to comply with
the current zoning setback requirements and causing the garage to overlap the
house would becreating a hardship for the applicant to maneuver vehiclesdue to
the layout of the existing property.
Minutes
Hutchinson Planning Commission
July 21, 2014
Page 3
Second by Commissioner Kirchoff. Motion approved unanimously.
This item will be on the City Council’s consent agenda for July 28, 2015 at 5:30
p.m.
Motion to close hearing –Motion to approve with staff recommendations –Motion to reject
5.UNFINISHED BUSINESS
Mr. Jochum noted staff is still working on ordinance revisions regarding dynamic signs
pertaining toreligious and institutional uses.
Mr. Jochum also noted staff is continuing to workon development of the Interim Use
Permit proposal for the Commission’s consideration.
6.NEWBUSINESS
7.COMMUNICATION FROM STAFF
A.Upcoming Meetings
Mr. Jochum noted that one application has been submitted for the August
Planning Commission meeting. The application is for an annexation on North
High Dr. NW just west of the Deer Park Apartments.
8.ADJOURNMENT
Motion by Commissioner Arndt, Second by Commissioner Wickto adjourn the meeting
at 6:05 p.m.Unanimously approved.
As of August 12, 2015
Draft for Planning Commission
Modification to the
Tax Increment Financing Plan for
Tax Increment Financing District No. 4-5
(a redevelopmentdistrict)
within
Development District No. 4
City of Hutchinson
McLeodCounty
State of Minnesota
Originally Adopted:April 24, 1990
Modification No. 1 Adopted:May 13, 1997
Modification No. 2 Adopted: June 29, 2004
Modification No. 3 Public Hearing: September 8, 2015
Prepared by: EHLERS & ASSOCIATES, INC.
3060 Centre Pointe Drive, Roseville, Minnesota 55113-1105
651-697-8500 fax: 651-697-8555 www.ehlers-inc.com
TAX INCREMENT FINANCING PLAN FOR
TAX INCREMENT FINANCING DISTRICT NO. 4-5
(AS MODIFIED MAY 13, 1997)
Introduction
The following text represents a modification to the Tax Increment Financing Plan for Tax Increment
Financing District No. 5. The Modified Tax increment Financing Plan represents a continuation of the goals
and objectives set forth in the Development Program for Development District No. 4 and the Tax Increment
Financing Plan for Tax Increment Financing District No. 5. Generally, the substantive changes include the
authority to spend additional tax increments generated from Tax Increment Financing District No. 4 for
other redevelopment related projects in Development District No. 4; to expand the budget for Tax
Increment Financing District No. 4; and to clarify budgets for previous expenditures. This modification
does not add any parcels to this District, nor does it change the expected life of the District.
For further information, a review of the Development Program for Development District No. 4, adopted
May 1980 and modified on April 24, 1990 and December 30, 1991 and the Tax Increment Financing Plan
for Tax Increment Financing District No. 5 adopted April 18, 1990, is recommended. They are available
from the City Administrator’s office of the City of Hutchinson.
(AS MODIFIED JUNE 29,2004)
The main objective of the modification to the TIF Plan is to enable the City to capture an increased amount
of tax increment in the TIF district by unfreezing the local tax rate which is applied against the captured tax
capacity in the TIF District. The additional increment will be available for special deficit pooling to Tax
Increment Financing District No. 6 (the “Deficit TIF District”).
Between 1997 and 2001 the Minnesota State Legislature made several changes to the property tax code,
including the “compression” of tax capacity rates. These changes reduced the amount of increment
collected in tax increment districts containing commercial, industrial, and multifamily residential
properties. As a result, many districts began experiencing deficits in 2002 and 2003.
The Legislature in 2001, 2001, and 2003 provided cities with certain remedies to offset property tax class
rate compression. The city is electing that the original local tax rate does not apply to the TIF District as
allowed by M.S., Section 469.1794, Subd. 3.
Pursuant to M.S., Section 4693.177, Subd. 1a, when a tax increment district is first certified, the County
Auditor sets an original local tax rate (or “frozen rate”) which is the combined rates of the city, county,
school district, and other minor taxing jurisdictions for that particular tax year. During the life of the TIF
District, the County Auditor uses the lesser of the original local tax rate or the combined local taxing
districts tax rate to calculate tax increment payments. When the current local taxrate is higher than the
original local tax rate, the amount of taxes received by the County Auditor on the difference between the
current local tax rate and the original local tax rate are redistributed to the major taxing jurisdictions in an
amount whichis proportional to their increase in tax rates. The original local tax rate for the TIF District is
122.412%. The current local tax rate for taxes Payable 2004 is 149.336%. As a result of this modification,
an additional $17,400 of increment will be distributed to the TIF District based on the 2003/Pay 2004 local
tax rate.
The City is required under M.S., Section 469.1792, Subd. 3b and M.S., Section 469.175, Subd. 2to notify
the affected county and school district at least 30 days prior to the holding ofa public hearing on the
City of Hutchinson
Modification to Tax Increment Financing Plan for Tax Increment District No. 4-5 1
modification of the TIF District. The public hearing is scheduled for June 29, 2004.
(AS MODIFIED SEPTEMBER 8,2015)
The TIF Plan is being modified in order to modify the budget, to reflect updates inlegislation, to
identify parcels for acquisitionand to confirm the application of the frozen tax rate due to the
satisfaction of the deficit in the Deficit TIF District.
(AS MODIFIED JUNE 29,2004)
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 of Hutchinson (the “City”) has certain statutory powers
pursuant to Minnesota Statutes (“M.S.”), Sections 469.124to 469.134, inclusive, as amended, and M.S.,
Sections 469.174 to 469.1799, inclusive, as amended ( the “Tax Increment Financing Act” or “TIF Act”), to
assist in financing public costs related to this project.
A. Use of Tax Increment
Pursuant to Section 469.176, Subd. 4, of the Tax Increment Act, all revenues derived from the Tax
Increment District shall be used in accordance with the tax increment financing plan. The revenues shall
be used for the following purposes:
1.to pay the principal of and interest on bonds used to finance a project;
2.to finance or otherwise pay the capital and administration costs of the Development District
pursuant to the Development District Act.
3.to pay for project costs as identified in the budget; and
4.to finance or otherwise pay for other purposes as provided in Section 469.176, Subd. 4, of the Tax
Increment Act.
These revenues shall not be used to circumvent any levy limits.
(AS MODIFIED SEPTEMBER 8,2015)
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 cost of redevelopment ofthe Redevelopment Project
No. 1 pursuant to M.S., Sections 469.090 to 469.1082;
3.To pay for project costs as identified in the budget set forth in the TIF Plan;
4.To finance, or otherwise pay for other purposes as provided in M.S., Section 469.176,
Subd. 4;
5.To pay principal and interest on any loans, advances or other payments made to or
on behalf of the EDA or City or for the benefit of Redevelopment Project No. 1 by a
developer;
6.To finance or otherwise pay premiums and other costs for insurance or other security
City of Hutchinson
Modification to Tax Increment Financing Plan for Tax Increment District No. 4-5 2
guaranteeing the payment when due of principal of and interest on bonds pursuant
to the TIF Plan or pursuant toM.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 toM.S., Chapter
462C, M.S., Sections 469.152 through 469.165, and/orM.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 McLeodCounty to the Cityfor 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.
B.Excess Tax Increments
Pursuant to Section 469.176, Subd. 2, of the Tax Increment Act, in the year in which the tax increment
exceeds the amount necessary to pay the costs authorized by the tax increment financing plan including the
amount necessary to cancel an tax levy as provided in Minnesota Statutes, Section 475.61, Subd. 3, the City
shall use the excess amounts to:
1.prepay any outstanding bonds;
2.discharge the pledge of tax increment therefor;
3.pay into an escrow account dedicated to the payment of such bonds; or
4.return the excess amount to the County Auditor for distribution as provided in Section 469.176,
Subd. 2, of the Tax Increment Act.
(AS MODIFIED SEPTEMBER 8,2015)
The City must spend or return the excess increments under paragraph (c) within nine months after
the end of theyear. 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. 4or the
District.
C. Limitation of Increment
Pursuant to section 469.176,Subd. 1, of the Tax Increment Act:
1.No tax increment shall be paid to the City for the Tax Increment District after three (3) years from
the date of certification of the original net tax capacity value of the taxable property in the Tax
Increment District by the County Auditor unless within the three (3) year period: (a) bonds have
been issued pursuant to Section 469.178 or in aid of a project pursuant to any other law, except
revenue bonds issued pursuant to Chapter 474 prior to August 1, 1979, or (b) the city has acquired
property within the Tax Increment District or (c) the City has constructed or caused to be
City of Hutchinson
Modification to Tax Increment Financing Plan for Tax Increment District No. 4-5 3
constructed public improvements within the Tax Increment District.
2.The tax increment pledged to the payment of bonds and interest thereon may be discharged and the
Tax Increment 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 a maturity or redemption date.
3.The City has determined that parcels constituting 70% of the area of the proposed Tax Increment
Financing District are occupied by buildings, streets, utilities or other improvements and more than
20% of the buildings, not including outbuildings, are structurally substandard to a degree requiring
substantial renovation or clearance. At least 30% of the area of each parcel contains improvements.
These findings qualify the district as a redevelopment district pursuant to Minnesota Statutes,
Section 469.174, Subdivision 10(2). No tax increment shall in any event be paid to the City from
the Tax Increment District after twenty-five (25) years from the date of the receipt of the first tax
increment or after the goals of this plan have been satisfied, whichever comes first. Modification of
this tax increment financing plan pursuant to Section 469.176, Subd. 4 of the Tax Increment Act
shall not extend the durational limits of the provision.
At least 90% of the tax increments derived from the redevelopment district will be used for
redevelopment related costs.
4.If, after four (4) years from the date of certification of the original net tax capacity value of the Tax
Increment District pursuant to Section 469.177 of the Tax Increment Act, no demolition,
rehabilitation or renovation of property or other site preparation, including utility service, has been
commenced on a parcel located within the Tax Increment District by the city 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 value of that parcel shall be excluded
from the original net tax capacity value of the Tax Increment District. If the City or the owner of the
parcel subsequently commences demolition, rehabilitation or renovation or other site preparation
on that parcel, including improvement of a street adjacent to that parcel,. In accordance with 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 value thereof as most
recently certified by the Commissioner of Revenue and add it to the original net tax capacity value
of the Tax Increment District. For purposes of this subdivision, “parcel” means a tract or plat of
land established as a single unit for purposes of assessment.
A list will be maintained by the City of document all building permits issued within the District for
private redevelopment including alterations, additions, new construction and demolition.
D.Limitation on Administrative Expenses
Pursuant to Section 469.176, Subd. 3, of the Tax Increment Act, no tax increment shall be used to pay any
administrative expenses for the Tax Increment District which exceed ten percent (10%) of the total tax
increment expenditures authorized by the tax increment financing plan or the total tax increment
expenditures for the Tax Increment District, whichever is less.
City of Hutchinson
Modification to Tax Increment Financing Plan for Tax Increment District No. 4-5 4
(AS MODIFIED SEPTEMBER 8, 2015)
In accordance with M.S., Section 469.174, Subd. 14,administrative expenses means all expenditures
of the City,other than:
1.Amounts paid for the purchase of land;
2.Amounts paid to contractors or others providing materials and services, including
architectural and engineering services, directly connected with the physical development of
the real property in the District;
3.Relocation benefits paid to or services provided for persons residing or businesses located in
the District; or
4.Amounts used to pay principal or interest on, fund a reserve for, or sell at a discount bonds
issued pursuant to M.S., Section 469.178; or
5.Amounts used to pay other financial obligations to the extent those obligations were used to
finance costs described in clauses (1) to (3).
For districts for which the request for certification were made before August 1, 1979, or after June
30, 1982, 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 authorizedand
documentedadministrative expenses for the District up to but not to exceed 10 percent of the total
estimated tax increment expenditures authorized by the TIF Plan or the total tax increments, as
defined by M.S., Section 469.174, Subd. 25, clause (1), from the District, whichever is less.
Pursuant to M.S., Section 469.176, Subd. 4h, tax increments may be used to pay for the County's
actual administrative expenses incurred in connection with the District and are not subject to the
percentage limits of M.S., Section 469.176, Subd. 3. The county may require payment of those
expenses byFebruary 15 of the year following the year the expenses were incurred.
Pursuant to M.S., Section 469. 177, Subd. 11, the County Treasurer shall deduct an amount
(currently .36 percent) of any increment distributed to the City and the County Treasurer shall pay
the amount deducted to the State Treasurer for deposit in the state general fund to be appropriated
to the State Auditor for the cost of financial reporting of tax increment financing information and
the cost of examining and auditing authorities' use of tax increment financing. This amount may be
adjusted annually by the Commissioner of Revenue.
E.Parcels for Acquisition
The parcels identified for acquisition at this time are those comprising the entire Tax Increment District No.
5.
1.Any properties identified for acquisition will be acquired by the City only in order to accomplish
one or more of the following: provide land for needed public streets, utilities and facilities; carry
out clearance and a demolition program to accomplish the uses andobjectives set forth in the
Development.
2.The following are conditions under which properties not designated to be acquired may be
acquired.
The City may acquire property by gift, dedication, condemnation or direct purchase from willing sellers in
City of Hutchinson
Modification to Tax Increment Financing Plan for Tax Increment District No. 4-5 5
order to achieve the objectives of this tax increment financing plan. Such acquisitions will be undertaken
only when there is assurance of funding to finance the acquisition and related costs.
(AS MODIFIED SEPTEMBER 8, 2015)
A description of targeted areaswhere parcels maybe acquired can be found in Appendix E.
F.Estimate of Project Investment
The City has received a proposal and executed a Development Agreement with Shopko for the
redevelopment of Block 43 and 44 and part of 48. The City has received proposals for the redevelopment of
Block 48 and 49 including abutting rights-of-way. No development agreement has been executed as of
adoption.
The City expects total Redevelopment Project investment for property tax purposes to be $4,500,000 in
Blocks 43 and 44 and $3,500,000 in Blocks 48 and 49.
There are no developmentactivities related to this plan for which contracts have already been entered into.
The City reasonably expects to have a Developer or Developers for the redevelopment of blocks 48 and 49.
The Redevelopment Program contemplates the phasing of acquisition and redevelopment of Tax Increment
District No. 5. The City expects to expend all tax increments received from the tax increment district.
G.Estimated Costs of Improvements for Tax Increment District No. 5
ItemEstimated Cost
(See Exhibit B)
(AS MODIFIED MAY 13, 1997)
Estimated Public Improvement Costs
The estimate of public costs, including all previous modifications to the Tax Increment Financing Plan for
Tax Increment Financing District No. 5 and the current modified estimated cost breakdown of
Development District No. 4 costs associated with financing Tax Increment Financing District No. 5 is
found in Appendix A.
(AS MODIFIED SEPTEMBER 8, 2015)
The estimate of publiccosts is found in Exhibit B.
H.Use of Tax Increments
Tax increments generated in Redevelopment Tax Increment Financing District No. 5 will be paidby
McLeod County to the city ofHutchinson for its Tax increment Activities for said District. The City will
use the tax increment funds in accordance with the provisions of the Development Agreement.
City of Hutchinson
Modification to Tax Increment Financing Plan for Tax Increment District No. 4-5 6
I.Sources of Revenue for Public Costs
Tax increment is the primary source of revenue for public costs. The City may also use special assessments,
user charges and land sales and other revenue to defray public costs.
(AS MODIFIED SEPTEMBER 8, 2015)
The Sources of Revenue for Public Costs is found in Exhibit B.
J.Estimate of Tax Increment
The estimate of tax increment is set forth on the following pages.
K.Original Net Tax Capacity Value
Pursuant to Section 469.177, Subd. 1, of the Tax Increment Act, the Original Net Tax Capacity Value
(“ONTC”) for Tax Increment Financing District No. 5 is estimated to be $40,761 on all taxable real
property within the Tax Increment District. Pursuant to Section 469.177, Subds. 1 and 2 of the Tax
Increment Act, the County Auditor shall certify in each year (beginning in the payment year 1993) the
amount by which the original net tax capacity value has increased (see next section) or decreased as a result
of a change in tax exempt property within the Tax Increment District, reduction or enlargement of the Tax
Increment District or changes in connection with previously issued building permits. In any year in which
the current net tax capacity value of the Tax Increment District declines below the ONTC, no net tax
capacity value will be captured and no tax increment will be payable to the City.
(AS MODIFIED SEPTEMBER 8, 2015)
K. Original Tax Capacity and Tax Rate
Pursuant to Minnesota Statutes, Section 469.174, Subdivision 7 and Section 469.177, Subdivision 1,
the Original Net Tax Capacity (OTC) as certified for Tax Increment Financing District No.4-5 is
based on the market values placed on the property by the assessor in 1989for taxes payable 1990.
The original tax capacity of the property when the tax increment district wascertified on July 18,
1991was$19,752.
The original local tax rate for Tax Increment Financing District No. 4-5 is the local tax rate for 1990
taxes. The actual original local tax rate for the TIF District is 122.412%.
L.Current Net Tax Capacity Value
The current net tax capacity value is thesame as the original net tax capacity value set forth in Subsection L.
M.Estimated Captured Net Tax Capacity Value/Increment
Pursuant to Section 469.177, subd. 1, 2 and 4, of the Tax Increment Act, the estimated captured net tax
capacity value in the Tax increment District No. 5 within Development District no. 4 as of January 2, 1992
(for 1993 collection), first captured date, will be $152,026.
The city expects to use 100% of the captured net tax capacity and the resulting increment.
City of Hutchinson
Modification to Tax Increment Financing Plan for Tax Increment District No. 4-5 7
N.Tax incrementFinancing Account for the Tax Increment District
The tax increment received with respect to the Tax Increment District shall be segregated by the City in a
special account or accounts on its official books and records.
O.Duration of the District
Pursuant to Section 469.176, Subd. 1, of the Tax Increment Act, the duration of Tax Increment Financing
District No. 5 within Development District no. 4 of the city will be no more than twenty-five (25) years after
the date of receipt by the city of the first tax increment for the point at which the City’s plan has been
satisfied. The date of receipt by the City of the first tax increment will be approximately July 15, 1993.
The City expects the District’s duration will be the maximum permitted by law.
(AS MODIFIED JUNE 29,2004)
Pursuant to M.S., Section 469.175, Subd. 1, and section 469.176, Subd. 1, the duration of the District must
be indicated within the TIF Plan. This modification does not change the term of the TIF District. The first
increment wasreceived in 1994. Thus, it is estimated that the TIF District, including any modifications of
the TIF Plan for subsequent phases or other changes, would terminate after 2019.
P.Estimated Impact on Other Taxing Jurisdictions
It is anticipated that net tax capacity value of the parcels included in the Tax Increment District will remain
stable from year to year after project completion because of the construction thereon, the impact of tax
increment financing on the net tax capacity values of all taxing jurisdictions in which the Tax Increment
District is located in whole or in part would also remain stable from year-to-year. Based on this assumption,
it is anticipated that ax increments will be captured annually. The estimate is based on the qualification
identified in this report and does not include the possible tax increment derived from any other future
development, tax capacity changes or inflation factors.
Latest Gross Tax Capacity Value of Each Government Body(latest figures available)
1989/90 Total Gross 1989/90 Gross Percentage of Total
Tax CapacityTax Capacity Rates
McLeod County$18,433,36231.0826.37%
I.S.D. No. 423 (Hutchinson)8,797,42552.1944.29%
City of Hutchinson6,490,90834.4129.20%
Total117.85100.00%
School District No. 423 comprised 44.29% of the 1988/89 tax capacity rate, while McLeod County
comprised 26.37%. The City of Hutchinson made up 29.20% of the 1988/89 cumulative tax capacity levy
for the taxing jurisdictions affected by the Tax Increment District proposal, and the RDC was 0.14%. A tax
capacity rate of 117.85 has been utilized in this tax increment financing plan.
If the new taxes estimated within the Redevelopment Tax Increment District are captured for the duration of
the District, taxes and values will experience no change until termination of the District. After that time, the
amounts identified below will be available to the taxing jurisdictions.
City of Hutchinson
Modification to Tax Increment Financing Plan for Tax Increment District No. 4-5 8
If the new taxes upon completion were not captured (and if the project could be done without tax increment
financing), they would be distributed annually as follows:
McLeod County $28,270
I.S.D. No. 423 (Hutchinson)47,473
City of Hutchinson31,300
Regional Development Commission155
Total$107,198
(AS MODIFIEDMAY 13, 1997)
Estimated Impact on Other Taxing Jurisdictions
No additional fiscal implications are anticipated due to this modification.
(AS MODIFIED JUNE 29,2004)
The fiscal impacts are demonstrated in the following table. It is likely that without pooling to the Deficit
TIF District, the TIF District would have been decertified prior to the maximum expiration date allowed by
law.
IMPACT ON TAX BASE
Pay 2004 TotalPay 2004 CapturedPercent of CTC
Net Tax CapacityTax Capacity (CTC)to Entity Total
McLeod County21,530,24564,6280.3002%
City of Hutchinson7,937,11264,6280.8143%
ISD No. 42310,755,02364,6280.6009%
IMPACT ON TAX RATES
Pay 2004Potential
Extension RatesPercent of TotalCTCTaxes
McLeod County0.63256042.36%64,62840,881
City of Hutchinson0.61554041.22%64,62839,781
ISD No. 4230.23094015.46%64,62814,925
Other0.0143200.96%64,628925
Total1.493360100.00%64,62896,513
Q.Annual Disclosure Requirements
The city is subject to reporting requirements specified in Minnesota Statutes, Section 469.175, Subd. 5, 6
and 6A and will comply with said requirements.
R.Requirement for Agreements with the Developer
Pursuant to Section 469.176, Subd. 5, of the Tax Increment Act, no more than ten percent (10%), by
acreage, of the property to be acquired in the Tax Increment District as set forth in the tax increment
City of Hutchinson
Modification to Tax Increment Financing Plan for Tax Increment District No. 4-5 9
financing plan shall at any time be owned by the City as a result of acquisition with the proceeds of bonds
issued pursuant to Section 469.178 of the Tax Increment Act without the City having, prior to acquisition in
excess of ten percent (10%) of the acreage, concluded an agreement for the development or redevelopment
of the property acquired and which provides recourse for the City should the development not be
completed.
S.Assessment Agreements
The City may, upon entering into a development or redevelopment agreement, enter into a written
assessment agreement in recordable form with the developer or redeveloper of the property within the Tax
Increment District which establishes a minimum market value of the land and completed improvements to
be constructed thereon, until a specified termination date, which date shall not be later than the duration of
the Tax Increment District. The assessment agreement shall be presented to the County Assessor of
McLeod County, 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 County Assessor, to be a reasonable estimate, the Assessor shall certify the minimum market value
contained in the agreement. An assessment agreement is not anticipated for this proposal.
T. Assumptions and Analysis for Tax Increment Redevelopment District
Project Net Tax Capacity Value After Construction$152.026
Current net tax capacity value estimated 1988/1989: $61,064
Projected Timing
First Tax Increment received approximately July 15, 1993
Base Net Tax Capacity Value, Est.$40,761
Captured Tax Capacity$90,962
Tax Capacity Rate
1988/1989 Tax Capacity Rate –117.85
Assumed Future Tax Capacity Rate –117.85
Land Sales
Land Sales -$125,000.00
Bond Issues: Shopko Project, Phase 1: Bonds will be sold in an amount not to exceed $1,570,000. Phase II:
Bonds will be sold in an amount not to exceed $1,500,000.
Bond Issues
TheCity anticipates issuing G.O. bonds to finance the activities of the district. (See Exhibits C and D).
Captured Tax Capacity
City of Hutchinson
Modification to Tax Increment Financing Plan for Tax Increment District No. 4-5 10
Block 33Block 40
$16, 125$11,175
(4,550)(2,873)
$11,575$8,302
Tax Increment
The tax increment upon completion has been calculated at approximately $107,198, assuming a static tax
capacity rate of 117.
(AS MODIFIED MAY 13, 1997)
Estimated Amount of Bonded Indebtedness
Pursuant to Minnesota Statutes, Section 469.178, Subdivision 1, General Obligation Tax Increment Bonds
may be used as required to amortize the costs identified in this modification. It is further anticipated that
future bond sales will be based on availability of tax increment. The City reserves the right to incur bonded
indebtedness as a result of this modification. As presently proposed, the City will not be incurring G.O.
bonded indebtedness as a result of this modification. As presently proposed, the City will not be incurring
G. O. bonded indebtedness, but may incur indebtedness through interfund borrowing, revenue indebtedness
or pay-as-you-go financing in an amount up to $1,200,000.
(AS MODIFIED JUNE 29,2004)
The city reserves the right to incur bonded indebtedness or other indebtedness as a result of the TIF Plan.
The total principal amount of bonded indebtedness or other indebtedness related to the use of tax increment
financing will not exceed $1,200,000 in bonded debt will be financed with tax increment revenues. It is
estimated that $200,000 in interfund loans will be financed with tax increment revenues.
(AS MODIFIED SEPTEMBER 8, 2015)
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 $4,000,000. Such bonds may be in the formof
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.
U. Legal Description of redevelopment Tax Increment Financing District No. 5
The Tax Increment District consists of four square blocks plus rights-of-way legally described in Exhibit A.
V. Reasonable Expectations
As required by the Tax Increment Financing Act, in establishing Redevelopment Tax Increment Financing
District No. 5, the determination has been made that the anticipated development and improvements would
not reasonably be expected to occur solely through private investment within the reasonably foreseeable
future and that therefore the use of tax increment financing is necessary and has been based upon
negotiations with the developer and upon City staff awareness of the feasibility of developing the subject
site.
City of Hutchinson
Modification to Tax Increment Financing Plan for Tax Increment District No. 4-5 11
W. Building Permits Issued: Tax Increment Anticipated
Building permits are expected to be issued in 1990, 1991, and 1992 for redevelopment activities to be
located on Block 43, 44, 48 and 49 and rights-of-way.
X. Notification of Prior Planned Improvements
The City shall, after due and diligent search, accompany its request for certification to the County Auditor
or its notice of Tax Increment District enlargement with a listing of all properties within the Tax Increment
District or area of enlargement for which building permits havebeen issued during the eighteen (18) months
immediately preceding approval of the tax increment financing plan by the municipality pursuant to Section
469.175, Subdivision 3, of the Tax Increment Act. The County Auditor shall increase the original net tax
capacity value of the Tax Increment District by the net tax capacity value of improvements for which a
building permit was issued.
Y. In Summary
The City of Hutchinson is establishing Redevelopment Tax Increment Financing District No. 5 to preserve
and enhance the tax base of the City and State and to correct the blighted condition in Tax Increment
Financing District No. 5.
(AS MODIFIED SEPTEMBER 8, 2015)
The City of HutchinsonestablishedTax Increment Financing District No. 5. The TIF Plan for the
District was modified by Ehlers & Associates, Inc., 3060 Centre Pointe Drive, Roseville, Minnesota
55113-1105, telephone (651) 697-8500.
City of Hutchinson
Modification to Tax Increment Financing Plan for Tax Increment District No. 4-5 12
Exhibit A
CITY OF HUTCHINSON, MINNESOTA
LEGAL DESCRIPTION OF PROPERTY
TO BE DELETED IN TAX INCREMENT FINANCING DISTRICT NO. 4
AND INCLUDED IN TAX INCREMENT FINANCING DISTRICT NO. 5
That part of the NORTH HALF OF HUTCHINSON, according to the
recorded plat thereof, described as follows:
Beginning at the southwest corner of Block 31; thence southerly, along the
east line of Main Street, to the northwest corner of the south 8 inches (0.67
feet) of Lot 8 of Block 49; thence easterly, along the northline of said south 9
inches and its easterly prolongation and along said north line of the south
20.00 feet, to the intersection with the east line of the west 55.00 feet of said
Lot 3; thence southerly, along the last said east line, to the south line of said
Lot 3; thence easterly, along said westerly prolongation and along said north
line of the south 20.00 feet, to the intersection with the east line of the last said
east line, to the south line of said Lot 3; thence easterly, along said south line of
Lot 3, to the southeast corner of said Lot 3; thence southerly along the west
line of Hassan street, to the southeast corner of Lot 5 of said Block 49; thence
easterly, along the north line of Washington Street, tothe southwest corner of
Block 47; thence northerly, along the east line of Jefferson Street, to the
southerly shore line of Crow River; thence westerly and northwesterly, along
said shore line, to the north line of Second Avenue Northeast, thence westerly,
along said north line of Second Avenue Northeast, to the point of beginning.
AS MODIFIED JUNE 29,2004)
MAPS OF TAX INCREMENT FINANCING DISTRICT NO. 5
(AS MODIFIED SEPTEMBER 8, 2015)
Exhibit B
CITY OF HUTCHINSON
PROJECT COSTS
Phase IPhase II
Land Acquisition$900,000$1,215,000
Demolition, Clearing, Utilities280,000378,000
Contingency95,000215,000
Relocation180,000315,000
$1,455,000$2,123,000
Financing Expenses40,00055,000
Discount25,00042,000
TOTAL PROJECT BUDGET$1,570,000$2,220,000
(AS MODIFIED MAY 13, 1997)
Modified Sources and Uses of Funds for
Tax increment Financing Districts Nos. 4, 5 and 6
(AS MODIFIED JUNE 29,2004)
The estimated public costs and uses of funds associated with the TIF District is outlined in the following
table.
USES OF FUNDS
Land/Building Acquisition$1,600,000
Transfers out$5,000
Public Improvements$0
Installation of Public Utilities$0
Demolition and Relocation$1,000,000
Interest on Bonds$1,350,000
Interest on Interfund Loans$250,000
Administrative Expenses$400,000
Other –Pooling for Deficits to TIF District No. 6$345,000
Sub-total $4,950,000
Interfund Loan$200,000
Bond Principal$1,200,000
TOTAL $6,350,000
The sources and uses of funds in this modification (dated June 29, 2004) are cumulative. The estimated
sources of funds for the TIF District is contained in the table below.
SOURCES OF FUNDS
Tax Increment$3,500,000
Other$200,000
Land Sale Proceeds$130,000
Transfers In$820,000
Interest$300,000
Interfund Loan$200,000
Bond Proceeds$1,200,000
PROJECT REVENUES$6,350,000
Tax increment revenue includes tax increment pooled from other districts under special deficit pooling
authority.
(AS MODIFIED SEPTEMBER 8, 2015)
Sources of Revenue
The costs outlined in the Uses of Funds will be financed primarily through the annual collection of
tax increments. The City reserves the rightto incur bonds or other indebtedness as a result of the
TIF Plan. As presently proposed, the projects within the District will be financed by an interfund
loan and available increments. 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.
The total estimated tax increment revenues for the District are shown in the table below:
SOURCES OF FUNDSTOTAL
Tax Increment$4,200,000
Sales/Lease Proceeds545,000
Interest200,000
TOTAL$4,945,000
Uses of Funds
The estimate of public costs and uses of funds associated with the District is outlined in the following
table.
USES OF TAX INCREMENT FUNDSTOTAL
Land/Building Acquisition$2,000,000
Site Improvements/Preparation850,000
Utilities200,000
Other Qualifying Improvements575,000
Administrative Costs (up to 10%)420,000
PROJECT COST TOTAL$4,045,000
Interest900,000
PROJECT AND INTEREST COSTS TOTAL$4,945,000
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 above.
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.
Exhibit C
Exhibit D
Exhibit E
(AS MODIFIED SEPTEMBER 8, 2015)
Parcels for Acquisition
Development District # 4 Authorized Areas
Updated:27 July 2015
Legal Description Reference
Block 24 North 1/2 Hutchinson Dale Ritz / Ford Rolf lots on Hwy 7
Block 23 North 1/2 Hutchinson Wright lot etc. / Hwy 7
Block 19 North 1/2 Hutchinson NAPA / Car dealerships / Standard printing
Block 18 North 1/2 Hutchinson Rental place on Adams Street
Block 15 North 1/2 Hutchinson Budget Hotel on Hwy 7
Block 16 North 1/2 Hutchinson Old houses / Apt on High Street NE
Block 41 North 1/2 Hutchinson Old medical clinic
Block 42 North 1/2 Hutchinson Group home
Block 51 North 1/2 Hutchinson Apartment (former church?)
Block 50 North 1/2 Hutchinson DQ block, Main Street
Block 49 North 1/2 Hutchinson State Theatre block, Main Street
Block 9 South 1/2 Hutchinson Police station block
Block 8 South 1/2 Hutchinson Main street buildings (State Farm / Zella's block)
Block 7 South 1/2 Hutchinson Library Square east block (George Quast house)
Block 6 South 1/2 Hutchinson Houses / Old cars building / VFW block
Block 5 South 1/2 Hutchinson Depot Block
Block 4 South 1/2 Hutchinson B & C Plumbing / Betker Builders
Block 12 South 1/2 Hutchinson Hutch Café block / Main Street
Block 13 South 1/2 Hutchinson 101 Park Place Block / Quast Houses
Block 16 South 1/2 Hutchinson Old houses on Adams, just south of Depot MarketPlace
Block17South 1/2 HutchinsonFormer lumberyard block SE of Depot
Block 18 South 1/2 Hutchinson Older houses / welding shop on 2nd Ave. SE
Block 27 South 1/2 Hutchinson Main Street / Post Office / American Legion / former Dental clinic
Block 25 South 1/2 Hutchinson Old buildings converted to offices / Fire Dept.
Block 23 South 1/2 Hutchinson Old houses / Trailer storage building
Block 22 South 1/2 Hutchinson Old houses / railroad right-of-way
Block 38 South 1/2 Hutchinson Farmer's Elevator Assn. Quonsets, etc.
Block 39 South 1/2 Hutchinson Lakes Gas block
Block 45 South 1/2 Hutchinson Old houses between 4th & 5th Aves SE
Block 44 South 1/2 Hutchinson Old houses between 4th & 5th Aves SE, area next to park
NW 1/4 SW 1/4 Sect-01, Twp - 116,
Range-030 Hutchinson High school
W 1/2 Sect 5, Twp 116, Range-029Haefner Industrial Building
As of August 12, 2015
Draft for Planning Commission
Modification to the
Tax Increment Financing Plan for
Tax Increment Financing District No. 4-8
(a housingdistrict)
within
Development District No. 4
City of Hutchinson
McLeodCounty
State ofMinnesota
Originally Adopted:August 23, 1994
Modification No. 1 Public Hearing Date:September 8, 2015
Prepared by: EHLERS & ASSOCIATES, INC.
3060 Centre Pointe Drive, Roseville, Minnesota 55113-1105
651-697-8500 fax: 651-697-8555 www.ehlers-inc.com
TAX INCREMENT FINANCING PLAN FOR
TAX INCREMENT FINANCING DISTRICT NO. 4-8
Foreword
TheTax Increment Financing Plan (the “TIF Plan”) for Tax Increment Financing District No. 8(the
“TIF District”)is being modified to update the budget, to identify new parcels for acquisition, and to
bring the TIF Plan into conformance with current statutory guidelines.This includes modifications
to the following sections of the TIF Plan: A, B, F,G,H, I, L, N, O, Q, T, and Y. Section Z and Exhibit
II-B have also been added to the TIF Plan.
The housing needs of Hutchinson are varied and impacted by many forces, including job
growth, unemployment rates, workforce wages, construction and development costs,
interest rates, foreclosure rates, tax forfeitures and demographic changes. The available
TIF housing funds from Housing District No. 8 will help to meet some of our future,
community housing needs for low and moderate income residents.The following potential
housing programs within the TIF housing plan include, but are not limited to:
Housing rehab for low and moderate income residents of the city help to address
deferred maintenance and improve neighborhoods is an immediate priority.
Rehab programs help stabilize or improve neighborhood housing values. Available
TIF Housing Rehab Programs may include both owner occupied and rental
rehabilitation and may be leveraged with other programs when available. Owner
Occupied and Rental Rehab Programs have been on-going activities within the City
of Hutchinson.
Owner occupied accessibility loans address the accessibility needs of an aging and
disabled population.
Purchase of substandard properties to either demolish or rehab has been an ongoing
effort of the city and HRA to improve neighborhoods and stabilize or improve
neighborhood housing values.
Gap financing to assist in the development of housing. Gap financing in the form of
TIF for Augusta homes for the development of Century Court Apartments, value
gap for acquisition/demolition/re-sale in existing neighborhoods and affordability
gap in the Rolling Meadows and Rolling Meadows East developments have been
used in the past to spur housing development.
Land write downs are a TIF eligible expenditure to encourage new housing
development or redevelopment and are a tool that may be employed to facilitate
additional workforce housing or housing due to demographic changes.
A. Statutory Authority
It is found that there is a need for new development within the corporate limits of the City of
Hutchinson (the "City") (the "Development District") to provide employment opportunities, to
improve the tax base and to improve the general economy of the City, McLeod County (the
"County"), and State of Minnesota. It is found that the area within the Development District is
potentially more useful and valuable than has been realized under existing development, is less
productive because of the lack of proper utilization and lack of investment, and is not contributing
to the tax base to its full potential. There exists areas where public involvement is necessary to
cause development and redevelopment. To this end, the City has certain statutory powers
pursuantto Minnesota Statutes, Sections 469.124 to 469.134 to create municipal development
districts. In addition, the City is authorized to establish a tax increment district pursuant to
Minnesota Statutes, Sections 469.174 to 469.179 as amended to assist in financing public costs
related to this project. Tax increments are derived only from the increased amount of taxes which
are paid on a parcel of property after the construction of a new structure on the parcel has occurred.
It is hereby found that there isa need to provide funds for property acquisition, site improvements,
site costs and various other improvements.
(AS MODIFIED SEPTEMBER 8, 2015)
Within the City, there exist areas where public involvement is necessary to cause development or
redevelopment to occur. To this end, the City of Hutchinson (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.
B. Statement of Objectives
Housing Tax Increment District No. 8 (Housing TID No. 8) currently consists of one parcel of land
bound between Cleveland Avenue and Century Avenue. Present plans for new development on
the site include the construction of seven buildings consisting of eight housing units within each
building or a total of 56 units. The buildings will be a mix of one-bedroom, two-bedroom, and
three-bedroom units. Construction is to start Fall, 1994 and be completed early 1995.
The City Council of Hutchinson, Minnesota (the "City Council"), determines that is necessary,
desirable and in the public interest to amend and administer Development District No. 4 (the
"Development District") in the City of Hutchinson, Minnesota (the "City") The City Council
determines that the funding of the necessary activities and improvement in the Development
District (the "Development Program") shall be accomplished in whole or in part through tax
increment financing. The City and the City Council seek to achieve the following objectives
through the Development Program:
1.Work cooperatively with other local organizations, the Hutchinson Community
Development Corporation, the Hutchinson HRA, and other governmental agencies in promoting
any projects which will improve the housing stock in the City, increase employment, and add to
the tax base of the City.
2.Assist in increased opportunities for senior citizens to choose from housing options
which offer a wide array of services without regard to income and for residents looking for a wide
range of multi-family units.
3.Promote and secure additional employment opportunities within the Development
District, hereby improving living standards, reducing unemployment and the loss of skilled and
unskilled labor.
4.Encourage and provide maximum opportunity for private redevelopment of
existing areas and structures which are compatible with the Development Program.
5.Alleviate the shortage of housing as stated in the City of Hutchinson Housing Study
prepared by Maxfield Research Group, Inc. in 1993 which found that a shortage of housing options
exists for seniors and renters interested in general occupancy apartments.
6.Additional property contains vacant, unused, underused and inappropriately used
land.
(AS MODIFIED SEPTEMBER 8, 2015)
The TIF Plan is being modified to update the budget to facilitate various programs outlined in
Exhibit II-B.The City intends to work with the Hutchinson HRA in order to use available tax
increment to acquire parcels for acquisition and redevelopment within the City.
C.Housing Tax Increment Plan Overview
1.The City has identified the following estimated costs of the project which are
eligible for tax increment assistance:
Assessments for Public Improvements$145,500
Site Development Costs145,641
Total$291,141
The City is proposing that any tax increment assistance provided by the City will be funded on a
pay-as-you-go basis. Under this proposal the developer will pay all costs of the project and then
will be reimbursed for certain eligible costs from tax increment revenue received from Housing
TID No. 8.
2.Relocation --Complete relocation services are available pursuant to Minnesota
Statutes, Chapter 117 and other relevant state and federal laws.
3.The City may perform or provide for some or all necessary acquisition, relocation,
demolition, and required utilities and public streetswork within Housing TID No. 8 and those
costs allowed within Development District No. 4.
4.Phase I of Housing TID No. 8 is zoned R-3, an appropriate status for the anticipated
facility. All development in the area will conform to applicable state and local codes and
ordinances.
D.Description of Property in Tax Increment District No. 8
Housing TID No. 8 encompasses the parcels and all adjacent and internal right-of-ways as
identified below and on the map in Exhibit A.
Parcel No. 12-116-30-02-0040
The legal boundaries of Housing TID No. 8 are proposed to be as follows:
The south half of the northwest quarter of the northeast quarter of Section 12, Township 116
North, Range 30 west of the 5th principal meridian.
Except the north 30.00 feet thereof; plus the full right-of-way of Cleveland Avenue and Century
Avenue adjoining said parcel.
E.Classification of the Tax Increment Financing District
The City, in determining the need to create a tax increment financing district in accordance with
Minnesota Statutes, Section 469.174 to 469.179 inclusive, finds that Housing TID No. 8 to be
established is a redevelopment district pursuant to Minnesota Statutes, Section 469.174,
Subdivision 11 as defined below:
"Housing district" means a type of tax increment financing district which consists of a project, or
a portion of a project, intended for occupancy, in part, by persons or families of low and moderate
income, as defined in Chapter 462A, Title II of the National Housing Act of 1934, the National
Housing Act of 1959, the United States Housing Act of 1937, as amended, Title V of the Housing
Act of 1949, as amended, any other similar present or future federal, state, or municipal
legislation, or the regulations promulgated under any of those acts. A project does not qualify
under this subdivision if the fair market value of the improvements which are constructed for
commercial uses or for uses other than low and moderate income housing consists of more than
20% of the total fair market value of the planned improvements in the development plan or
agreement. The fair market value of the improvements may be determined using the cost of
construction, capitalized income, or other appropriate method of estimating market value.
Additionally the City will determine this Housing District is a "Qualified Housing District" as
defined below:
"Qualified housing district" means a housing district for a residential rental project or projects in
which the only properties receiving assistance from revenues derived from tax increments from the
district meet all of the requirements for a low income housing credit under Section 42 of the
Internal Revenue Code of 1986, as amended through December 31, 1992.
The developer will be receiving tax credits for this proposed project.
F.Property to be Acquired
The City may acquire parcels within Housing TID No. 8 including interior street and railway
right-of-ways.
(AS MODIFIED SEPTEMBER 8, 2015)
A description of the parcels to be acquired by the City will be insertedin Exhibit II-Bprior
to the public hearing.
G.Estimate of Costs
The estimate of public costs associated with Housing TID No. 8 are outlined in the following line
item budget.
Assessments for Public Improvements$145,500
Site Development Costs145,641
Total$291,141
Any funds to be expended for off-site improvements outside the boundaries of Housing TID No. 8
but within the boundaries of Development District No. 4 would be less than 25% of total tax
increment generated by Housing TID No. 8, including administrative costs.
(AS MODIFIED SEPTEMBER 8, 2015)
The total uses of funds has been revised to reflect actual costs to date plus anticipated future project
costs. The HRA and City expect that there will also be additional costs in various categories. The
revised cumulative uses of tax increment funds is summarized in the table below:
USES OF TAX INCREMENT FUNDSTOTAL
Land/Building Acquisition$950,000
Site Improvements/Preparation$200,000
Other Public Improvements$125,000
Construction of Affordable Housing$1,000,000
Administrative Costs (up to 10%)$150,000
PROJECT COST TOTAL$2,425,000
Interest$575,000
PROJECT AND INTEREST COSTS TOTAL$3,000,000
For purposes of OSA reporting forms, uses of funds include interfundloans, bond principal, TIF
Note principal, and transfers, all in the principal amount of $2,425,000. These amounts are not
cumulative, but represent the various forms of “bonds” included within the concept of bonded
indebtedness under the TIF Act.
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 Section I.
Estimated capital and administrative costs listed above are subject to change amongcategories by
modification of the TIF Plan without hearings and notices as required for approval of the initial TIF
Plan, so long as the total capital and administrative costs combined do not exceed the total listed
above. The City may spend increments from the TIF District in any amount, for housing projects
located anywhere in the Development District, as all such expenditures are deemed to be within the
TIF District under Section 469.1763, Subd. 2 of the TIF Act.
H.Estimated Amount of Loan/Bonded Indebtedness
It is anticipated that the developer will finance this project and recover these costs under a
"pay-as-you-go" development agreement. The developer will be entitled to tax increment
revenues to achieve net operating income prior to debt service of 130% greater than the annual
debt service on the developer's bank mortgage.
(AS MODIFIED SEPTEMBER 8, 2015)
The HRA or 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 $2,425,000. 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 this Modification.
I.Sources of Revenue
The major source of revenue to be used to finance public costs associated with the public
development projects in the municipal development district is tax increment generated as a result
of the taxation of the land and improvements in Housing TID No. 8. The developer currently
estimates sources of funds forthe project as follows:
Bank (1st mortgage)$1,837,223
Equity 873,343
Total Sources of Funds$2,710,566
The equity portion is estimated to consist of tax credits ($582,202) and the TIF portion ($291,141).
(AS MODIFIED SEPTEMBER 8, 2015)
In light of the duration of the District, the total estimated tax increment revenues for the District are
expected to be approximately $3,000,000, as shown in the table below:
SOURCES OF FUNDSTOTAL
Tax Increment$1,500,000
Interest500,000
Land Sale Proceeds1,000,000
Total Revenues$3,000,000
J.Original Tax Capacity
Pursuant to Minnesota Statutes, Section 469.174, Subdivision 7 and Section 469.177, Subdivision
1, the Original Net Tax Capacity (OTC) for Housing TID No. 8 is based on the value placed on the
property by the assessor in 1993 for taxes payable 1994, which is $251. The original tax rate for
Housing TID No. 8 is expected to be 141.8570%, the local tax rate for taxes payable in 1993.
Each year the Office of the County Auditor will measure the amount of increase or decrease in the
total tax capacity of Housing TID No. 8 to calculate the tax increment payable to the City of
Hutchinson. In any year in which there is an increase in total tax capacity in the tax increment
financing district above the annual percentage of annual increase, a tax increment will be payable.
In any year in which the total tax capacity in Housing TID No. 8 declines below the original tax
capacity, no additional valuation will be captured and no tax increment will be payable.
The County Auditor shall certify in each year after the date the OTC was certified, the amount the
OTC 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 stipulations, adjustments, negotiated or court-ordered abatements;
4.change in the use of the property and classification; or
5.change in state law governing class rates.
K.Amount of Captured Tax Capacity
Pursuant to Minnesota Statutes, Section 469.174, Subdivision 4 and Minnesota Statutes, Section
469.177, Subdivision 2, the estimated Captured Net Tax Capacity (CTC) of Housing TID No. 8,
upon completion of all phases of the project, will annually approximate $31,581. The City
requests 100% of the available increase in tax capacity for repayment of debt and current
expenditures, beginning in the tax year payable 1996. The original tax capacity and project tax
capacity are estimated at current market values and class rates to be the total amount when all
development is in place and uses of the property have changed. (See Exhibit B.)
Estimated Project Net Tax Capacity$31,831
Original Net Tax Capacity (in tax year payable 1996)-251
Estimated Captured Net Tax Capacity$31,580
L.Duration of the District
Pursuant to Section 469.176, Subd.1, of the Tax increment Act, the duration of Housing Tax
Increment Financing District No. 8 of the City will be no more than twenty-five (25) years after the
date of receipt by the City of the first tax increment or the point at which the City's plan has been
satisfied. The date of receipt by the City of the first tax increment will be approximately July 15,
1996. Thus, it is estimated that Housing TID No. 8, including any modifications of the Plan for
subsequent phases or other changes, would terminate at the end of the year 2022. The City does
reserve the right to decertify Housing TID No. 8 prior to the legally required date. (See Exhibit
C.)
(AS MODIFIED SEPTEMBER 8, 2015)
Pursuant to M.S., Section 469.175, Subd. 1, and Section 469.176, Subd. 1, the duration of the TIF
District must be indicated within the TIF Plan. This modification does not change the term of the
TIF District. The first increment was received in 1996. Thus, it is estimated that the TIF District,
including any modifications of the TIF Plan for subsequent phases or other changes, would
terminate after 12/31/2021. The City reserves the right to decertify the TIF District prior to the
legally required date.
M.Estimated Impact on Other Taxing Jurisdictions
It is anticipated that the value of the parcels included in the Housing TID No. 8 will remain stable
from year to year because of the completion of construction thereon. The impact of tax increment
financing on values of all taxing jurisdictions in which the Housing TID No. 8 is located in whole
or in part would also remain stable from year to year. Based on this assumption, it is anticipated
that tax increments will be captured annually. The estimate is based on the qualifications
identified in this report and does not include the possible tax increment derived from any other
future development, tax law changes, or inflation factors.
IMPACT ON TAX BASE
Entity's TotalCaptured% of Captured Tax
EntityTax CapacityTax CapacityCapacity to Entity
Total
McLeod County$12,891,738$31,580.25%
City of 5,198,01131,580.61%
Hutchinson
I.S.D. 4237,005,14131,580.45%
Region 6012,891,73831,580.25%
IMPACT ON TAX RATES
CurrentCaptured
EntityTax RateTax CapacityPotential Taxes
McLeod County.45111$31,580$14,246
City of .3846631,58012,149
Hutchinson
I.S.D. 423.5804531,58018,331
Region 60.0023431,58074
Total1.41856$44,800
The estimates listed above display captured tax capacity when all construction is completed,
estimated to be for taxes payable in 1997. The tax rates and tax capacities are the payable 1993
figures for all jurisdictions. Housing TID No. 8 will be certified under rates for tax year payable
1994.
In addition, the impact on I.S.D. 423 does not include the effect of state aids for education upon
school district funding.
N.Modifications of the Tax Increment Financing District
In accordance with Minnesota Statutes, Section 469.175, Subdivision 4, any reduction or
enlargement of the geographic area of the project or tax increment financing district, increase in
amount of bonded indebtedness to be incurred, including a determination to capitalize interest on
debt if that determination was not a part of the original plan, or to increase or decrease the amount
of interest on the debt to be capitalized, increase in the portion of the captured tax capacity to be
retained by the City, increase in total estimated tax increment expenditures or designation of
additional property to be acquired by the City shall be approved uponthe notice and after the
discussion, public hearing and findings required for approval of the original plan. The geographic
area of a tax increment financing district may be reduced, but shall not be enlarged after five years
following the date of certification of the original tax capacity by the county auditor. Housing TID
No. 8 may therefore be expended until approximately the end of 1998.
Modifications to Housing TID No. 8, in the form of a budget modification or an expansion of the
boundaries will be recorded in this subsection of the Plan.
(AS MODIFIED SEPTEMBER 8, 2015)
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 EDA or 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 EDA or 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. 4(f), 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 EDA 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.
O.Limitation on Administrative Expenses
In accordance with Minnesota Statutes, Section 469.174, Subdivision 14 and Minnesota Statutes,
Section 469.176, Subdivision 3, administrative expenses means all expenditures of an authority
other than amounts paid for the purchase of land or 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, relocation benefits paid to or services
provided for persons residing or businesses located in the district or amounts used to pay interest
on, fund a reserve for, or sell at a discount bonds issued pursuant to Section 469.178.
Administrative expenses includes amounts paid for services provided by City staff, HRA staff,
bond counsel, fiscal consultants, and planning or economic development consultants. No tax
increment shall be used to pay any administrative expenses for a project which exceed 10% of the
total tax increment expenditures authorized by the tax increment financing plan or the total tax
increment expenditures for the project, whichever is less.
Pursuant to Minnesota Statutes, Section 469.176, Subdivision 4h, tax increments may be used to
pay for the county's actual administrative expenses incurred in connection with Housing TID No.
8. The county may require payment of those expenses by February 15 of the year following the
year the expenses were incurred.
(AS MODIFIED SEPTEMBER 8, 2015)
In accordance with M.S., Section 469.174, Subd. 14,administrative expenses means all expenditures
of the City, other than:
1.Amounts paid for the purchase of land;
2.Amounts paid to contractors or others providing materials and services, including
architectural and engineering services, directly connected with the physical development of
the real property in the project;
3.Relocation benefits paid to or services provided for persons residing or businesses located in
the project; or
4.Amounts used to pay principal or interest on, fund a reserve for, or sell at a discount bonds
issued pursuant to M.S., Section 469.178; or
5.Amounts used topay other financial obligations to the extent those obligations were used to
finance costs described in clauses (1) to (3).
For districts for which the request for certification were made before August 1, 1979, or after June
30, 1982, administrative expenses also include amounts paid for services provided by bond counsel,
fiscal consultants, and planning or economic development consultants. Pursuant to M.S., Section
469.176, Subd. 3, tax increment may be used to pay any authorized and documented administrative
expenses for the District up to but not to exceed 10 percent of the total estimated tax increment
expenditures authorized by the TIF Plan or the total tax increments, as defined by M.S., Section
469.174, Subd. 25, clause (1), from the District, whichever is less.
Pursuant to M.S., Section 469.176, Subd. 4h, tax increments may be used to pay for the County's
actual administrative expenses incurred in connection with the District. The county may require
payment of those expenses by February 15 of the year following the year the expenses were incurred.
Pursuant to M.S., Section 469. 177, Subd. 11, the County Treasurer shall deduct an amount
(currently .36 percent) of any increment distributed to the City and the County Treasurer shall pay
the amount deducted to the State Treasurer for deposit in the state general fund to be appropriated
to the State Auditor for the cost of financial reporting of tax increment financing information and
the cost of examining and auditing authorities' use of tax increment financing. This amount may be
adjusted annually by the Commissioner of Revenue.
P.Limitation on Qualification of Property in Tax Increment District
Pursuant to Minnesota Statutes, Section 469.176, Subdivision 6:
"If, after four years from the date of certification of the original tax capacity of the tax
increment financing district pursuant to Minnesota Statutes, Section 469.177, no demolition,
rehabilitation or renovation of property or other site preparation, including 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 a parcel in accordance with the tax increment financing plan, no additional tax
increment may be taken from that parcel and the original tax capacity of that parcel shall be
excluded from the original 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 improvement of a street adjacent to that parcel, in
accordance with the tax increment financing plan, the authority shall certify to the county auditor
in the annual disclosure report that the activity has commenced. The county auditor shall certify
the tax capacity thereof as most recently certified by the commissioner of revenue and add it to the
original tax capacity of the tax increment financing district. The county auditor must enforce the
provisions of this subdivision . . . For purposes of this subdivision, qualified improvements are
limited to (1) construction or opening of a new street, (2) relocationof a street, and (3) substantial
reconstruction or rebuilding of an existing street."
The City or a property owner must improve the parcels withing Housing TID No. 8 by
approximately the end of 1997.
Q.Limitation on the Use of Tax Increment
Pursuantto Minnesota Statutes, Section 469.176, Subdivision 4, at least 90% of the revenues
derived form tax increments from a redevelopment district must be used to finance the cost of
correcting conditions that allow designation of redevelopment districts under Section 469.174,
Subdivision 10. These costs include acquiring properties containing structurally substandard
buildings or improvements, acquiring adjacent parcels necessary to provide a site of sufficient size
to permit development, demolition of structures, clearing of the land and installation of utilities,
roads, sidewalks, and parking facilities for the site.
The revenues shall be used to finance or otherwise pay public development costs pursuant to
Minnesota Statutes, Chapter 462C or 469. These revenues shall not be used to circumvent
existing levy limit law. No revenues derived from tax increment shall be used for the
construction or renovation of a municipally owned building used primarily and regularly for
conducting the business of the municipality; this provision shall not prohibit the use of revenues
derived from tax increments for the construction or renovation of a parking structure, a commons
area used as a public park or a facility used for social, recreational or conference proposes andnot
primarily for conducting the business of the municipality. For tax increment financing districts
for which certification was requested after April 30, 1990, pursuant to Minnesota Statutes, Section
469.1763, Subdivisions 1 and 2, an amount equal to atleast 75% of the revenue derived from tax
increments from the district's parcels must be expended on activities in the district.
(AS MODIFIED SEPTEMBER 8, 2015)
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 cost of redevelopment of the 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 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 toM.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 toM.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.
Revenues derived from tax increment from a housing district must be used solely to finance the cost
of housing projects as defined in M.S., Sections 469.174, Subd. 11 and 469.1761.The cost of public
improvements directly related to the housing projects and the allocated administrative expenses of
the City may be included in the cost of a housing project.
These revenues shall not be used to circumvent any levy limitations
R.Notification of Prior Planned Improvements
Pursuant to Minnesota Statutes, Section 469.177, Subdivision 4, the City has reviewed the area to
be included in Housing TID No. 8 and found no properties for which building permits have been
issued during the 18 months immediately preceding approval of the tax increment financing plan
by theCity. If the building permit had been issued within the 18-month period preceding
approval of the tax increment financing plan by the City, the county auditor shall increase the
original tax capacity of the district by the valuation of the improvements for which the building
permit was issued.
S.Requirements for Agreements with the Developer
Developer's Obligations
The City will review the Developer's proposal to determine its conformance with the Development
Plan and with applicable municipal ordinances and codes. To facilitate this effort, the following
documents may be requested for review and approval: site plan, construction, mechanical, and
electrical system drawings, landscaping plan, grading and storm drainage plan, signage system
plan, andany other drawings or narrative deemed necessary by the City to demonstrate the
conformance of the development with city plans and ordinances. Land acquired by the City will
be subject to a Contract for Sale upon disposition to the Developer. The general requirements to
be imposed upon the developer by the Contract for Sale are:
1.Develop the land purchased in accordance with this development plan.
2.To commence and complete the building of improvements on the land within a
reasonable period of time as determined by the City.
3.Not to resell the land before improvements are made without the prior consent of
the City.
4.Not to discriminate on the basis of race, color, sex, creed, or national origin on the
sale, lease, transfer, occupancy of the land purchased from the City.
The requirements to be imposed upon the Developer and the City's exact participation in the
project will be negotiated as part of the Development Agreement between the City and the
Developer.
T.Assessment Agreements
Pursuant to Minnesota Statutes, Section 469.177, Subdivision 8, the City will enter into an
agreement in recordable form with the developer of property within the tax increment financing
district which establishes a minimum market value of the land and completed improvements in the
amount of $1,400,000 for the duration of the tax increment district. The assessment agreement
shall be presented to the county assessor who shall review the plans and specifications for the
improvements 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 appear, in the judgment of the assessor, to be a reasonable estimate, the
assessor may certify the minimum market value agreement.
(AS MODIFIED SEPTEMBER 8, 2015)
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
assessmentagreement shall be presented to the County Assessor who shall review the plans and
specifications for the improvements to be constructed, review the market value previously assigned
to the land upon which the improvements are to be constructed and, so long as the minimum market
value contained in the assessment agreement appears, in the judgment of the assessor, to be a
reasonable estimate, the County Assessor shall also certify the minimum market value agreement.
U.Administration of Housing TID No. 8
Administration Housing TID No. 8 will be handled by the City Administrator. The tax increment
received as a result of increases in the tax capacity of Housing TID No. 8 will be maintained in a
special account separate from all other municipal accounts andexpended only upon sanctioned
municipal activities identified in the tax increment financing plan.
V.Financial Reporting Requirements
Pursuant to Minnesota Statutes, Section 469.175, Subdivisions 5, 6, and 6(a); an authority must
file an annual disclosure report for all tax increment financing districts with the Office of the State
Auditor, the county board, school board, and Department of Revenue.
W.Municipal Approval
Pursuant to Minnesota Statues, Section 469.175, Subdivision 3, before or at the time of approval of
the tax increment financing plan, the municipality shall make the following findings and shall set
forth in writing the reasons and supporting facts for each determination.
1.Finding that the Housing TID No. 8 is a housing district asdefined in Minnesota Statutes,
Section 469.175, Subd 11.
Housing TID No. 8 consists of one parcel of property. Development of these parcels will be
undertaken by the Developer, Augusta Housing Management Company, under the tenant income
restrictions of the low income hosing credit under Section 42 of the Internal Revenue Code of
1986, as amended.
2.Finding that the proposed development, in the opinion of the Council, would not occur
solely through private investment within the reasonably foreseeable future and, therefore, the use
of tax increment financing is deemed necessary.
Due to the high costs of development, current rent levels within the Hutchinson housing market are
too low compared to the rent levels necessary to support this housing project. The assistance of
TIF will reduce rent levels to current market rates that were found to exist in the 1993 market
analysis by Maxfield Research Group.
3.Finding that the Tax Increment Financing Plan conforms to the general plan for the
development or redevelopment of the municipality as a whole.
The site is appropriately zoned. The Tax Increment Financing Plan has been reviewed by the
Planning Commission and been found to conform to the general development plan of the City.
4.Finding that the Tax Increment Financing Plan for Housing Tax Increment Financing
District No. 8 will afford maximum opportunity, consistent with the sound needs of the City as a
whole, for the development of Development District No. 4 by private enterprise.
The establishment ofHousing TID No. 8 will result in increased and wide range of housing
opportunities for the community and improve the housing stock, consistent with the City's
Comprehensive Housing Study and Development District No. 4 objectives.
X.County Road Costs
Pursuant to Minnesota Statutes, Section 469.175, Subdivision 1a, the county board may require the
authority 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 judgement 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 other county plan.
Theimprovements outlined in the Plan serve as notice to the county that the development of the
retail facility will be assisted with tax increment. In the opinion of the City and consultants, the
proposed development will have little or no impact upon county roads. If the county elects to use
increments to improve county roads, it must notify the City within thirty days of receipt of this
plan.
Y.Reduction in State Tax Increment Financing Aid
Pursuant to Minnesota Statutes, Section 273.1399 for tax increment financing districts for which
certification was requested after April 30, 1990, a municipality incurs a reduction in state tax
increment financing aid (RISTIFA) applied to the municipality's Local Government Aids (LGA)
first and Homestead and Agricultural Aid (HACA) second, in an amount equal to a formula based
upon the equalized qualifying captured tax capacity (QCTC) of the tax increment financing
district. Qualifiedhousing districts are exempt from this provision.
(AS MODIFIED SEPTEMBER 8, 2015)
This section has been repealed.
(AS MODIFIED SEPTEMBER 8, 2015)
Z.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.
EXHIBIT II-A
Boundary Map ofHousing Tax Increment Financing District No. 8
(AS MODIFIED SEPTEMBER 8, 2015)
EXHIBIT II-B
Description of Parcels to be Acquired
(AS MODIFIED SEPTEMBER 8, 2015)
The target area for housing rehab funds is within the City limits of Hutchinson.
The target area for purchase of substandard properties is:
NE Neighborhood: Hwy 7 to North High Dr. and Hwy 15 (Main Street) to Marshall Concrete on the
east.
Downtown: Dale Street to the River to Ontario Street along Oakland to Main St./Hwy 15 to South
Grade Road.
The Land Write Down target area: vacant lots within the city limits of Hutchinson.
As of August 12, 2015
Draft for Planning Commission
Modification to the
Development Program for
Development District No. 4
and the
Modification to the
Tax Increment Financing Plans for
Tax Increment Financing District Nos. 6, 7, 11, 4-13, and 4-14.
City of Hutchinson
McLeod County
State of Minnesota
Public Hearing: August 23, 2005
Adopted:
This document is in draft form for distribution to the County and the School District. The City
may make minor changes to this draft document prior to the public hearing.
Prepared by: EHLERS & ASSOCIATES, INC.
3060 Centre Pointe Drive, Roseville, Minnesota 55113-1105
(651) 697-8500 fax: (651) 697-8555www.ehlers-inc.com
Table of Contents
(for reference purposes only)
Municipal Action Taken........................................................i
Modification to the Development Program
for Development District No. 4.............................................1-1
Subsection 1-1.Background.............................................1-1
Subsection 1-2.Modifications to the Development Program....................1-1
Subsection 1-3.Boundaries of Development District No. 4.....................1-1
Modification to the Tax Increment Financing Plans for
for Tax Increment Financing District No.’s 6, 7, 11, 4-13, and 4-14.................2-1
Subsection 2-1.Background.............................................2-1
Subsection 2-2.The Modification.........................................2-1
Appendix A
Boundary Map of Development District No. 4 ....................................A-1
Municipal Action Taken
(This Municipal Action is only for convenience of reference.)
Based upon the statutory authority described in the Development Program attached hereto, the public purpose
findings by the City Council and for the purpose of fulfilling the City's development objectives as set forth
in the Development Program, the City Council has created, established and designated Development District
No. 4 pursuant to and in accordance with the requirements of the Municipal Development District Act and
the TIF Act as defined in the definitions of this document.
The following municipal action was taken in connection therewith:
Development District No. 4:
May 1980: The Development Program for Development District No. 4 was adopted by the City Council.
Development District No. 4 is a merger and consolidation of Development District Nos. 1, 2, and 3, together
with an additional area.
April 24, 1990: The Development Program for Development District No. 4 was modified by the City Council
to expand the boundaries and create Tax Increment Financing District No. 5.
December 30, 1991: The Development Program for Development District No. 4 was modified by the City
Council to create Tax Increment Financing District No. 6.
December 14, 1993: The Development Program for Development District No. 4 was modified by the City
Council to expand the boundaries and create Tax Increment Financing District No. 7.
August 23, 1994: The Development Program for Development District No. 4 was modified by the City
Council to create Tax Increment Financing District No. 8.
June 12, 1995: The Development Program for Development District No. 4 was modified by the City Council
to expand the boundaries and create Tax Increment Financing District No. 9.
October 22, 1996: The Development Program for Development District No. 11 was modified by the City
Council to create Tax Increment Financing District No. 11.
May 13, 1997: The Development Program for Development District No. 4 was modified to expand the
boundaries of Development District No. 4; to revise the budget and project costs in Tax Increment Financing
District Nos. 4, 5, and 6; and to create Tax Increment Financing District No. 12.
June 29, 2004: The Development Program for Development District No. 4 was modified to clarify that the
City is authorized to undertake activities with respect to the redevelopment of property included in Tax
Increment Financing District No. 13.
September 8, 2015: The Development Program for Development District No. 4 was modified to expand the
boundaries and provide for the modification of the Tax Increment Financing Districts therein.
i
Section 1 - Modification to the Development Program
for Development District No. 4
Subsection 1-1.Background
The City of Hutchinson (the “City”) has, pursuant to Minnesota Statutes (“M.S.”), Sections 469.124 to
469.133, inclusive, as amended (the “Development District Act”), approved a Development Program for
Development District No. 4 (the “Development Program”) in the City. This document was prepared to modify
the Development Program that was adopted by the City Council in May 1980 and modified on April 24,
1990; December 30, 1991; December 14, 1993; August 23, 1994; June 12, 1995; October 22, 1996; May 13,
1997; June 29, 2004; and September 8, 2015. The changes herein are intended to clarify the existing
Development Program and modifications already on file with the City and to expand the boundaries of
Development District No. 4.
Subsection 1-2.Modifications to the Development Program
The City reserves the right to alter and amend the Development Program and the Tax Increment Financing
Plans, subject to the provisions of state law regulating such action. The City specifically reserves the right
to enlarge or reduce the size of the Development District and the Tax Increment Financing Districts therein,
the Development Program, the Public Costs and the amount of Tax Increment Bonds to be issued to finance
such cost by following the procedures specified in Minnesota Statutes, Section 469.175, subdivision 4.
Subsection 1-3.Boundaries of Development District No. 4
The boundaries of Development District No. 4 are being expanded to include area in the City as outlined in
the map in Appendix A.
City of Hutchinson Development Program for Development District No. 41-1
Section 2 - Modification to the Tax Increment Financing Plans for
Tax Increment Financing District Nos. 6, 7, 11, 4-13, and 4-14
Subsection 2-1Background
The purpose of the modification to the Tax Increment Financing Plans for Tax Increment Financing District
Nos. 6, 7, 11, 4-13, and 4-14 (the “TIF Districts”) is to provide for the enlargement of the Development
District No. 4.
Subsection 2-2Modification
The City is hereby modifying the Tax Increment Financing Plans for the TIF Districts to reflect the expansion
of the boundaries of Development District No. 4.
The following sentence is to be inserted into the Tax Increment Financing Plan for each of the TIF Districts:
The boundaries of Development District No. 4 are being expanded, as shown on Appendix A hereto.
City of Hutchinson Development Program for Development District No. 42-1
Appendix A
Boundary Map of Development District No. 4
City of Hutchinson Development Program for Development District No. 4A-1
PLANNING COMMISSION
CITY OF HUTCHINSON
COUTY OF MCLEOD
STATE OF MINNESOTA
RESOLUTION NO. 14451
RESOLUTION OF THE CITY OF HUTCHINSONPLANNING COMMISSION
FINDING THAT A MODIFICATION TO THE DEVELOPMENT PROGRAM
FOR DEVELOPMENT DISTRICT NO. 4ANDMODIFICATIONSTO THE TAX
INCREMENT FINANCING PLANSFOR TAX INCREMENT FINANCING
DISTRICT NOS. 5, 6, 7, 8, 11, 4-13, AND 4-14CONFORM TO THE GENERAL
PLANS FOR THE DEVELOPMENT ORREDEVELOPMENT OF THE CITY.
WHEREAS, the City Council for the City of Hutchinson, Minnesota, (the "City") has proposed to
adopt a Modification to the Development Program for Development District No. 4,reflecting its increase
in size, (the "Development Program Modification") and modificationsto theTax Increment Financing
Plansfor Tax Increment Financing District Nos.5, 6, 7, 8, 11, 4-13, and 4-14(the "TIF Plan
Modifications") therefor (the Development Program Modification and the TIF PlanModificationsare
referred to collectively herein as the "Modifications") and has submitted the Modifications to the City
Planning Commission (the "Commission") pursuant to Minnesota Statutes, Section 469.175, Subd. 3, and
WHEREAS, the Commission has reviewed the Modificationsto determine their conformity with the
general plans for the development orredevelopment of the City as described in the comprehensive plan
for the City.
NOW, THEREFORE, BE IT RESOLVED by the Commission that the Modificationsconform tothe
general plans for the development orredevelopment of the City as a wholeand that the TIF Districts are
properly zoned and afford maximum opportunity, consistent with the sound needs of the City as a whole,
for the development or redevelopment of the project by private enterprise.
Dated: August 18, 2015
_______________________________________
Chair
ATTEST:
___________________________________
Secretary