Loading...
PC Packet 02.22.16 AGENDA HUTCHINSON PLANNING COMMISSION **Special Meeting** Monday,February 22, 2016 4:00p.m. 1.CALL TO ORDER 4:00P.M. 2.PLEDGE OF ALLEGIANCE 3.CONSENT AGENDA A.No Items for Consent Agenda 4.PUBLICHEARINGS A.No Public Hearing 5.NEW BUSINESS A.RESOLUTION OF THE CITY OF HUTCHINSON PLANNING COMMISSION FINDING THAT A MODIFICATION TO THE DEVELOPMENT PROGRAM FOR DEVELOPMENT DISTRICT NO.4 AND A TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO. 4-16 CONFORM TO THE GENERAL PLANS FOR THE DEVELOPMENT AND REDEVELOPMENT OF THE CITY. 6.UNFINISHED BUSINESS 7.COMMUNICATION FROM STAFF A.Upcoming Meetings 8.ADJOURNMENT PLANNING COMMISSION CITY OF HUTCHINSON, MINNESOTA RESOLUTION NO. ____________ RESOLUTION OF THE CITY OF HUTCHINSON PLANNING COMMISSION FINDING THAT A MODIFICATION TO THE DEVELOPMENT PROGRAM FOR DEVELOPMENT DISTRICT NO.4 AND A TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO. 4-16 CONFORM TO THE GENERAL PLANS FOR THE DEVELOPMENT AND REDEVELOPMENT OF THE CITY. WHEREAS, the City of Hutchinson (the "City") has proposed to adopt a Modification to the Development Program for Development District No. 4 (the "Development Program Modification") and a Tax Increment Financing Plan for Tax Increment Financing District No. 4-16 (the "TIF Plan") therefor (the Development Program Modification and the TIF Planare referred to collectively herein as the "Program and Plan") and has submitted the Program and Plan to the City Planning Commission (the "Commission") pursuant to Minnesota Statutes, Section 469.175, Subd. 3, and WHEREAS, the Commission has reviewed the Program and Plan to determine their conformity with the general plans for the development and redevelopment of the City as described in the comprehensive plan for the City. NOW, THEREFORE, BE IT RESOLVED by the Commission that the Program and Plan conform to the general plans for the development and redevelopment of the City as a whole. Dated: February 16, 2016 _______________________________________ Chair ATTEST: ___________________________________ Secretary As of February 9, 2016 Draft for Planning Commission Modification to the Development Program for Development District No. 4 and the Tax Increment Financing Plan for the establishment of Tax Increment Financing District No. 4-16 (a redevelopment district) within Development District No. 4 City of Hutchinson McLeod County State of Minnesota Public Hearing: February 23, 2016 Adopted: 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) Section 1 - Modification to the Development Program for Development District No. 4.............................................1-1 Foreword.............................................................1-1 Section 2 - Tax Increment Financing Plan for Tax Increment Financing District No. 4-16.................................2-1 Subsection 2-1.Foreword...............................................2-1 Subsection 2-2.Statutory Authority........................................2-1 Subsection 2-3.Statement of Objectives...................................2-1 Subsection 2-4.Development Program Overview............................2-1 Subsection 2-5.Description of Property in the District and Property To Be Acquired .2-2 Subsection 2-6.Classification of the District.................................2-2 Subsection 2-7.Duration and First Year of Tax Increment of the District...........2-4 Subsection 2-8.Original Tax Capacity, Tax Rate and Estimated Captured Net Tax Capacity Value/Increment and Notification of Prior Planned Improvements................2-4 Subsection 2-9.Sources of Revenue/Bonds to be Issued......................2-5 Subsection 2-10.Uses of Funds...........................................2-6 Subsection 2-11.Business Subsidies.......................................2-6 Subsection 2-12.County Road Costs.......................................2-7 Subsection 2-13.Estimated Impact on Other Taxing Jurisdictions.................2-7 Subsection 2-14.Supporting Documentation.................................2-9 Subsection 2-15.Definition of Tax Increment Revenues........................2-9 Subsection 2-16.Modifications to the District................................2-10 Subsection 2-17.Administrative Expenses..................................2-10 Subsection 2-18.Limitation of Increment...................................2-11 Subsection 2-19.Use of Tax Increment....................................2-12 Subsection 2-20.Excess Increments......................................2-12 Subsection 2-21.Requirements for Agreements with the Developer..............2-13 Subsection 2-22.Assessment Agreements.................................2-13 Subsection 2-23.Administration of the District...............................2-13 Subsection 2-24.Annual Disclosure Requirements...........................2-13 Subsection 2-25.Reasonable Expectations.................................2-13 Subsection 2-26.Other Limitations on the Use of Tax Increment.................2-14 Subsection 2-27.Summary..............................................2-14 Appendix A Project Description......................................................A-1 Appendix B Map of Development District No. 4 and the District.............................B-1 Appendix C Description of Property to be Included in the District............................C-1 Appendix D Estimated Cash Flow for the District........................................D-1 Appendix E Minnesota Business Assistance Form.......................................E-1 Appendix F Redevelopment Qualifications for the District..................................F-1 Appendix G Findings Including But/For Qualifications.....................................G-1 Section 1 - Modification to the Development Program for Development District No. 4 Foreword The following text represents a Modification to the Development Program for Development District No. 4. This modification represents a continuation of the goals and objectives set forth in the Development Program for Development District No. 4. Generally, the substantive changes include the establishment of Tax Increment Financing District No. 4-16. For further information, a review of the Development Program for Development District No. 4, adopted May 1980 and modified on April 24, 1990; December 30, 1991; May 13, 1997; June 8, 2003; June 29, 2004; August 23, 2005; and June 12, 2007. It is available from the City Administrator or Economic Development Director at the City of Hutchinson. Other relevant information is contained in the Tax Increment Financing Plans for the Tax Increment Financing Districts located within Development District No. 4. City of Hutchinson Modification to the Development Program for Development District No. 41-1 Section 2 - Tax Increment Financing Plan for Tax Increment Financing District No. 4-16 Subsection 2-1.Foreword The City of Hutchinson (the "City"), staff and consultants have prepared the following information to expedite the establishment of Tax Increment Financing District No. 4-16 (the "District"), a redevelopment tax increment financing district, located in Development District No. 4. Subsection 2-2.Statutory Authority Within the City, there exist areas where public involvement is necessary to cause development or redevelopment to occur. To this end, the City has certain statutory powers pursuant to Minnesota Statutes ("M.S."), Sections 469.124 to 469.133, inclusive, as amended, and M.S., Sections 469.174 to 469.1794, inclusive, as amended (the "Tax Increment Financing Act" or "TIF Act"), to assist in financing public costs related to this project. This section contains the Tax Increment Financing Plan (the "TIF Plan") for the District. Other relevant information is contained in the Modification to the Development Program for Development District No. 4. Subsection 2-3.Statement of Objectives The District currently consists of one parcel of land and adjacent and internal rights-of-way. The District is being created to enable the EDA and City to acquire property and prepare the site for future development in the City. Please see Appendix A for further District information. The City has not entered into an agreement or designated a developer at the time of preparation of this TIF Plan. This TIF Plan is expected to achieve many of the objectives outlined in the Development Program for Development District No. 4. The activities contemplated in the Modification to the Development Program and the TIF Plan do not preclude the undertaking of other qualified development or redevelopment activities. These activities are anticipated to occur over the life of Development District No. 4 and the District. Subsection 2-4.Development Program Overview 1.Property to be Acquired - Selected property located within the District may be acquired by the City and is further described in this TIF Plan. 2.Relocation - Relocation services, to the extent required by law, are available pursuant to M.S., Chapter 117 and other relevant state and federal laws. 3.Upon approval of a developer's plan relating to the project and completion of the necessary legal requirements, the City may sell to a developer selected properties that it may acquire within the District or may lease land or facilities to a developer. 4.The City may perform or provide for some or all necessary acquisition, construction, relocation, demolition, and required utilities and public street work within the District. City of Hutchinson Tax Increment Financing Plan for Tax Increment Financing District No. 4-162-1 Subsection 2-5.Description of Property in the District and Property To Be Acquired The District encompasses all property and adjacent rights-of-way and abutting roadways identified by the parcels listed in Appendix C of this TIF Plan. Please also see the map in Appendix B for further information on the location of the District. The City may acquire any parcel within the District including interior and adjacent street rights of way. Any properties identified for acquisition will be acquired by the City only in order to accomplish one or more of the following: storm sewer improvements; provide land for needed public streets, utilities and facilities; carry out land acquisition, site improvements, clearance and/or development to accomplish the uses and objectives set forth in this plan. The City may acquire property by gift, dedication, condemnation or direct purchase from willing sellers in order to achieve the objectives of this TIF Plan. Such acquisitions will be undertaken only when there is assurance of funding to finance the acquisition and related costs. Subsection 2-6.Classification of the District The City, in determining the need to create a tax increment financing district in accordance with M.S., Sections 469.174 to 469.1794, as amended, inclusive, finds that the District, to be established, is a redevelopment district pursuant to M.S., Section 469.174, Subd. 10(a)(1) as defined below: (a)"Redevelopment district" means a type of tax increment financing district consisting of a project, or portions of a project, within which the authority finds by resolution that one or more of the following conditions, reasonably distributed throughout the district, exists: (1)parcels consisting of 70 percent of the area in the district are occupied by buildings, streets, utilities, paved or gravel parking lots or other similar structures and more than 50 percent of the buildings, not including outbuildings, are structurally substandard to a degree requiring substantial renovation or clearance; (2)The property consists of vacant, unused, underused, inappropriately used, or infrequently used rail yards, rail storage facilities or excessive or vacated railroad rights-of-way; (3)tank facilities, or property whose immediately previous use was for tank facilities, as defined in Section 115C, Subd. 15, if the tank facility: (i)have or had a capacity of more than one million gallons; (ii)are located adjacent to rail facilities; or (iii)have been removed, or are unused, underused, inappropriately used or infrequently used; or (4)a qualifying disaster area, as defined in Subd. 10b. (b)For purposes of this subdivision, "structurally substandard" shall mean containing defects in structural elements or a combination of deficiencies in essential utilities and facilities, light and ventilation, fire protection including adequate egress, layout and condition of interior partitions, or similar factors, which defects or deficiencies are of sufficient total significance to justify substantial renovation or clearance. (c)A building is not structurally substandard if it is in compliance with the building code applicable to new buildings or could be modified to satisfy the building code at a cost of less than 15 percent of the cost of constructing a new structure of the same square footage and type on the City of Hutchinson Tax Increment Financing Plan for Tax Increment Financing District No. 4-162-2 site. The municipality may find that a building is not disqualified as structurally substandard under the preceding sentence on the basis of reasonably available evidence, such as the size, type, and age of the building, the average cost of plumbing, electrical, or structural repairs or other similar reliable evidence. The municipality may not make such a determination without an interior inspection of the property, but need not have an independent, expert appraisal prepared of the cost of repair and rehabilitation of the building. An interior inspection of the property is not required, if the municipality finds that (1) the municipality or authority is unable to gain access to the property after using its best efforts to obtain permission from the party that owns or controls the property; and (2) the evidence otherwise supports a reasonable conclusion that the building is structurally substandard. (d)A parcel is deemed to be occupied by a structurally substandard building for purposes of the finding under paragraph (a) or by the improvement described in paragraph (e) if all of the following conditions are met: (1) the parcel was occupied by a substandard building or met the requirements of paragraph (e), as the case may be, within three years of the filing of the request for certification of the parcel as part of the district with the county auditor; (2) the substandard building or the improvements described in paragraph (e) were demolished or removed by the authority or the demolition or removal was financed by the authority or was done by a developer under a development agreement with the authority; (3) the authority found by resolution before the demolition or removal that the parcel was occupied by a structurally substandard building or met the requirement of paragraph (e) and that after demolition and clearance the authority intended to include the parcel within a district; and (4) upon filing the request for certification of the tax capacity of the parcel as part of a district, the authority notifies the county auditor that the original tax capacity of the parcel must be adjusted as provided by § 469.177, subdivision 1, paragraph (f). (e) For purposes of this subdivision, a parcel is not occupied by buildings, streets, utilities, paved or gravel parking lots or other similar structures unless 15 percent of the area of the parcel contains buildings, streets, utilities, paved or gravel parking lots or other similar structures. (f) For districts consisting of two or more noncontiguous areas, each area must qualify as a redevelopment district under paragraph (a) to be included in the district, and the entire area of the district must satisfy paragraph (a). In meeting the statutory criteria the City relies on the following facts and findings: •The District is a redevelopment district consisting of one parcel. •An inventory shows that more than 15 percent of the parcel is occupied by buildings, streets, utilities, paved or gravel parking lots or other similar structures. Therefore the parcel qualifies as a redevelopment district. •An inspection of the building located within the District finds that the building is structurally substandard as defined in the TIF Act. (See Appendix F). Pursuant to M.S., Section 469.176, Subd. 7, the District does not contain any parcel or part of a parcel that qualified under the provisions of M.S., Sections 273.111,273.112, or 273.114 or Chapter 473H for taxes City of Hutchinson Tax Increment Financing Plan for Tax Increment Financing District No. 4-162-3 payable in any of the five calendar years before the filing of the request for certification of the District. Subsection 2-7.Duration and First Year of Tax Increment of the District Pursuant to M.S., Section 469.175, Subd. 1, and Section 469.176, Subd. 1, the duration and first year of tax increment of the District must be indicated within the TIF Plan. Pursuant to M.S., Section 469.176, Subd. 1b., the duration of the District will be 25 years after receipt of the first increment by the City (a total of 26 years of tax increment). The City elects to receive the first tax increment in 2019, which is no later than four years following the year of approval of the District. Thus, it is estimated that the District, including any modifications of the TIF Plan for subsequent phases or other changes, would terminate after 2044, or when the TIF Plan is satisfied. The City reserves the right to decertify the District prior to the legally required date. Subsection 2-8.Original Tax Capacity, Tax Rate and Estimated Captured Net Tax Capacity Value/Increment and Notification of Prior Planned Improvements Pursuant to M.S., Section 469.174, Subd. 7 and M.S., Section 469.177, Subd. 1, the Original Net Tax Capacity (ONTC) as certified for the District will be based on the market values placed on the property by the assessor in 2015 for taxes payable 2016. Pursuant to M.S., Section 469.177, Subds. 1 and 2, the County Auditor shall certify in each year (beginning in the payment year 2019) the amount by which the original value has increased or decreased as a result of: 1.Change in tax exempt status of property; 2.Reduction or enlargement of the geographic boundaries of the district; 3.Change due to adjustments, negotiated or court-ordered abatements; 4.Change in the use of the property and classification; 5.Change in state law governing class rates; or 6.Change in previously issued building permits. In any year in which the current Net Tax Capacity (NTC) value of the District declines below the ONTC, no value will be captured and no tax increment will be payable to the City. The original local tax rate for the District will be the local tax rate for taxes payable 2016, assuming the request for certification is made before June 30, 2016. The ONTC and the Original Local Tax Rate for the District appear in the table below. Pursuant to M.S., Section 469.174 Subd. 4 and M.S., Section 469.177, Subd. 1, 2, and 4, the estimated Captured Net Tax Capacity (CTC) of the District, within Development District No. 4, upon completion of the projects within the District, will annually approximate tax increment revenues as shown in the table on the following page. The City requests 100 percent of the available increase in tax capacity for repayment of its obligations and current expenditures, beginning in the tax year payable 2019. The Project Tax Capacity (PTC) listed is an estimate of values when the projects within the District are completed. City of Hutchinson Tax Increment Financing Plan for Tax Increment Financing District No. 4-162-4 Project Estimated Tax Capacity upon Completion (PTC)$63,965 Original Estimated Net Tax Capacity (ONTC)$8,372 Estimated Captured Tax Capacity (CTC)$55,593 Estimated Original Local Tax Rate146.095% Pay 2016 Estimated Annual Tax Increment (CTC x Local Tax Rate)$81,219 Percent Retained by the City100% Tax capacity includes a 3% inflation factor for the duration of the District. The tax capacity included in this chart is the estimated tax capacity of the District in year 25. The tax capacity of the District in year one is estimated to be $30,550. Pursuant to M.S., Section 469.177, Subd. 4, the City shall, after a due and diligent search, accompany its request for certification to the County Auditor or its notice of the District enlargement pursuant to M.S., Section 469.175, Subd. 4, with a listing of all properties within the District or area of enlargement for which building permits have been issued during the eighteen (18) months immediately preceding approval of the TIF Plan by the municipality pursuant to M.S., Section 469.175, Subd. 3. The County Auditor shall increase the original net tax capacity of the District by the net tax capacity of improvements for which a building permit was issued. TheCity has reviewed the area to be included in the District and found no parcels for which building permits have been issued during the 18 months immediately preceding approval of the TIF Plan by the City. Subsection 2-9.Sources of Revenue/Bonds to be Issued The costs outlined in the Uses of Funds will be financed primarily through the annual collection of tax increments. The City reserves the right to incur bonds or other indebtedness as a result of the TIF Plan. As presently proposed, the projects within the District will be financed by a and interfund loan, pay-as-you go or a combination of both. Any refunding amounts will be deemed a budgeted cost without a formal TIF Plan Modification. This provision does not obligate the City to incur debt. The City will issue bonds or incur other debt only upon the determination that such action is in the best interest of the City. The total estimated tax increment revenues for the District are shown in the table below: SOURCES OF FUNDSTOTAL Tax Increment$1,400,000 Land Sale Proceeds$1 Interest$139,999 TOTAL$1,540,000 The City may issue bonds (as defined in the TIF Act) secured in whole or in part with tax increments from the District in a maximum principal amount of $984,326. Such bonds may be in the form of pay-as-you-go notes, revenue bonds or notes, general obligation bonds, or interfund loans. This estimate of total bonded indebtedness is a cumulative statement of authority under this TIF Plan as of the date of approval. City of Hutchinson Tax Increment Financing Plan for Tax Increment Financing District No. 4-162-5 Subsection 2-10.Uses of Funds Currently under consideration for the District is a proposal to enable the EDA and City to acquire property and prepare the site for future development. The City has determined that it will be necessary to provide assistance to the project(s) for certain District costs, as described. The City has studied the feasibility of the development or redevelopment of property in and around the District. To facilitate the establishment and development or redevelopment of the District, this TIF Plan authorizes the use of tax increment financing to pay for the cost of certain eligible expenses. The estimate of public costs and uses of funds associated with the District is outlined in the following table. TOTAL USES OF TAX INCREMENT FUNDS Land/Building Acquisition$225,000 Site Improvements/Preparation$284,000 Other Qualifying Improvements$335,326 Administrative Costs (up to 10%)$140,000 PROJECT COST TOTAL$984,326 Interest$555,674 PROJECT AND INTEREST COSTS TOTAL$1,540,000 The total project cost, including financing costs (interest) listed in the table above does not exceed the total projected tax increments for the District as shown in Subsection 2-9. Estimated costs associated with the District are subject to change among categories without a modification to this TIF Plan. The cost of all activities to be considered for tax increment financing will not exceed, without formal modification, the budget above pursuant to the applicable statutory requirements. Pursuant toM.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. Subsection 2-11.Business Subsidies Pursuant to M.S., Section 116J.993, Subd. 3, the following forms of financial assistance are not considered a business subsidy: (1) A business subsidy of less than $150,000; (2)Assistance that is generally available to all businesses or to a general class of similar businesses, such as a line of business, size, location, or similar general criteria; (3) Public improvements to buildings or lands owned by the state or local government that serve a public purpose and do not principally benefit a single business or defined group of businesses at the time the improvements are made; (4) Redevelopment property polluted by contaminants as defined in M.S., Section 116J.552, Subd. 3; (5) Assistance provided for the sole purpose of renovating old or decaying building stock or bringing it up to code and assistance provided for designated historic preservation districts, provided that the assistance is equal to or less than 50% of the total cost; City of Hutchinson Tax Increment Financing Plan for Tax Increment Financing District No. 4-162-6 (6) Assistance to provide job readiness and training services if the sole purpose of the assistance is to provide those services; (7) Assistance for housing; (8) Assistance for pollution control or abatement, including assistance for a tax increment financing hazardous substance subdistrict as defined under M.S., Section 469.174, Subd. 23; (9) Assistance for energy conservation; (10) Tax reductions resulting from conformity with federal tax law; (11) Workers' compensation and unemployment compensation; (12) Benefits derived from regulation; (13) Indirect benefits derived from assistance to educational institutions; (14) Funds from bonds allocated under chapter 474A, bonds issued to refund outstanding bonds, and bonds issued for the benefit of an organization described in section 501 (c) (3) of the Internal Revenue Code of 1986, as amended through December 31, 1999; (15) Assistance for a collaboration between a Minnesota higher education institution and a business; (16) Assistance for a tax increment financing soils condition district as defined under M.S., Section 469.174, Subd. 19; (17) Redevelopment when the recipient's investment in the purchase of the site and in site preparation is 70 percent or more of the assessor's current year's estimated market value; (18) General changes in tax increment financing law and other general tax law changes of a principally technical nature; (19) Federal assistance until the assistance has been repaid to, and reinvested by, the state or local government agency; (20) Funds from dock and wharf bonds issued by a seaway port authority; (21) Business loans and loan guarantees of $150,000 or less; (22) Federal loan funds provided through the United States Department of Commerce, Economic Development Administration; and (23) Property tax abatements granted under M.S., Section469.1813 to property that is subject to valuation under Minnesota Rules, chapter 8100. The City will comply with M.S., Sections 116J.993 to 116J.995 to the extent the tax increment assistance under this TIF Plan does not fall under any of the above exemptions. Subsection 2-12.County Road Costs Pursuant to M.S., Section 469.175, Subd. 1a, the county board may require the City to pay for all or part of the cost of county road improvements if the proposed development to be assisted by tax increment will, in the judgment of the county, substantially increase the use of county roads requiring construction of road improvements or other road costs and if the road improvements are not scheduled within the next five years under a capital improvement plan or within five years under another county plan. If the county elects to use increments to improve county roads, it must notify the City within forty-five days of receipt of this TIF Plan. In the opinion of the City and consultants, the proposed development outlined in this TIF Plan will have little or no impact upon county roads, therefore the TIF Plan was not forwarded to the county 45 days prior to the public hearing. The City is aware that the county could claim that tax increment should be used for county roads, even after the public hearing. Subsection 2-13.Estimated Impact on Other Taxing Jurisdictions The estimated impact on other taxing jurisdictions assumes that the redevelopment contemplated by the TIF Plan would occur without the creation of the District. However, the City has determined that such development or redevelopment would not occur "but for" tax increment financing and that, therefore, the City of Hutchinson Tax Increment Financing Plan for Tax Increment Financing District No. 4-162-7 fiscal impact on other taxing jurisdictions is $0. The estimated fiscal impact of the District would be as follows if the "but for" test was not met: IMPACT ON TAX BASE EstimatedEstimated Captured 2015/Pay 2016Tax Capacity (CTC)Percent of CTC Total NetUpon Completionto Entity Total Tax Capacity McLeod County 35,498,29655,593 0.1566% City of Hutchinson8,908,92655,593 0.6240% Hutchinson ISD No. 42314,965,58255,593 0.3715% IMPACT ON TAX RATES PercentPotential Estimated Pay 2016of TotalCTCTaxes Extension Rates McLeod County 0.50934034.86%55,593 28,316 City of Hutchinson0.74417050.94%55,593 41,371 Hutchinson ISD No. 4230.17339011.87%55,593 9,639 Other0.0340502.33%55,593 1,893 1.460950100.00% Total81,219 The estimates listed above display the captured tax capacity when all construction is completed. The tax rate used for calculations is the estimated Pay 2016 rate. The total net capacity for the entities listed above are based on actual Pay 2015 figures. The District will be certified under the actual Pay 2016 rates and figures, which were unavailable at the time this TIF Plan was prepared. Pursuant to M.S. Section 469.175 Subd. 2(b): (1) Estimate of total tax increment. It is estimated that the total amount of tax increment that will be generated over the life of the District is $1,400,000; (2) Probable impact of the District on city provided services and ability to issue debt. An impact of the District on police protection is not expected. The City Police Department does track all calls for service including property-type calls and crimes. With any addition of new residents or businesses, police calls for service will be increased. New developments add an increase in traffic, and additional overall demands to the call load. The City does not expect that the proposed development, in and of itself, will necessitate new capital investment. The probable impact of the District on fire protection is not expected to be significant. Typically new buildings generate few calls, if any, and are of superior construction. The existing building, which will be eliminated by the new development, is blighted and not maintained. The impact of the District on public infrastructure is expected to be minimal. The development is not expected to significantly impact any traffic movements in the area. The current infrastructure for City of Hutchinson Tax Increment Financing Plan for Tax Increment Financing District No. 4-162-8 sanitary sewer, storm sewer and water will be able to handle the additional volume generated from the proposed development. Based on the development plans, there are no additional costs associated with street maintenance, sweeping, plowing, lighting and sidewalks. The development in the District is expected to contribute to sanitary sewer (SAC) and water (WAC) connection fees, however the exact amount is unknown at this time. It is not anticipated that there will be any general obligation debt issued in relation to this project, therefore there will be no impact on the City's ability to issue future debt or on the City's debt limit. (3) Estimated amount of tax increment attributable to school district levies. It is estimated that the amount of tax increments over the life of the District that would be attributable to school district levies, assuming the school district's share of the total local tax rate for all taxing jurisdictions remained the same, is $166,180; (4) Estimated amount of tax increment attributable to county levies. It is estimated that the amount of tax increments over the life of the District that would be attributable to county levies, assuming the county's share of the total local tax rate for all taxing jurisdictions remained the same, is $488,040; (5) Additional information requested by the county or school district. The City is not aware of any standard questions in a county or school district written policy regarding tax increment districts and impact on county or school district services. The county or school district must request additional information pursuant to M.S. Section 469.175 Subd. 2(b) within 15 days after receipt of the tax increment financing plan. No requests for additional information from the county or school district regarding the proposed development for the District have been received. Subsection 2-14.Supporting Documentation Pursuant to M.S. Section 469.175, Subd. 1 (a), clause 7 the TIF Plan must contain identification and description of studies and analyses used to make the determination set forth in M.S. Section 469.175, Subd. 3, clause (b)(2) and the findings are required in the resolution approving the District. Following is a list of reports and studies on file at the City that support the City's findings: •Redevelopment Tax Increment Financing District Eligibility Study: “Old Medical Clinic”. •Imagine Hutchinson Downtown Vision and Action Plan. •Levee Area Walkway Alternatives. Subsection 2-15.Definition of Tax Increment Revenues Pursuant to M.S., Section 469.174, Subd. 25, tax increment revenues derived from a tax increment financing district include all of the following potential revenue sources: 1.Taxes paid by the captured net tax capacity, but excluding any excess taxes, as computed under M.S., Section 469.177; 2.The proceeds from the sale or lease of property, tangible or intangible, to the extent the property was purchased by the authority with tax increments; 3.Principal and interest received on loans or other advances made by the authority with tax increments; 4.Interest or other investment earnings on or from tax increments; 5.Repayments or return of tax increments made to the Authority under agreements for districts for which the request for certification was made after August 1, 1993; and City of Hutchinson Tax Increment Financing Plan for Tax Increment Financing District No. 4-162-9 6.The market value homestead credit paid to the Authority under M.S., Section 273.1384. Subsection 2-16.Modifications to the District In accordance with M.S., Section 469.175, Subd. 4, any: 1.Reduction or enlargement of the geographic area of the District, if the reduction does not meet the requirements of M.S., Section 469.175, Subd. 4(e); 2.Increase in amount of bonded indebtedness to be incurred; 3.A determination to capitalize interest on debt if that determination was not a part of the original TIF Plan; 4.Increase in the portion of the captured net tax capacity to be retained by the City; 5.Increase in the estimate of the cost of the District, including administrative expenses, that will be paid or financed with tax increment from the District; or 6.Designation of additional property to be acquired by the City, shall be approved upon the notice and after the discussion, public hearing and findings required for approval of the original TIF Plan. Pursuant to M.S. Section 469.175 Subd. 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 City agrees that, notwithstanding M.S., Section 469.177, Subd. 1, the original net tax capacity will be reduced by no more than the current net tax capacity of the parcel(s) eliminated from the District. The City must notify the County Auditor of any modification to the District. Modifications to the District in the form of a budget modification or an expansion of the boundaries will be recorded in the TIF Plan. Subsection 2-17.Administrative Expenses In accordance with M.S., Section 469.174, Subd. 14, administrative expenses means all expenditures 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; 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 City of Hutchinson Tax Increment Financing Plan for Tax Increment Financing District No. 4-162-10 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 authorizedanddocumented 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. For districts for which certification was requested after July 31, 2001, no tax increment may be used to pay any administrative expenses for District costs which exceed ten percent of total estimated tax increment expenditures authorized by the TIF Plan or the total tax increments, as defined in M.S., Section 469.174, Subd. 25, clause (1), from the District, whichever is less. Pursuant to M.S., Section 469.176, Subd. 4h, tax increments 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 ofM.S., Section 469.176, Subd. 3. The county may require payment of those expenses by February 15 of the year following the year the expenses were incurred. Pursuant to M.S., Section 469. 177, Subd. 11, the County Treasurer shall deduct an amount (currently .36 percent) of any increment distributed to the City and the County Treasurer shall pay the amount deducted to the State Commissioner of Management and Budget for deposit in the state general fund to be appropriated to the State Auditor for the cost of financial reporting of tax increment financing information and the cost of examining and auditing authorities' use of tax increment financing. This amount may be adjusted annually by the Commissioner of Revenue. Subsection 2-18.Limitation of Increment The tax increment pledged to the payment of bonds and interest thereon may be discharged and the District may be terminated if sufficient funds have been irrevocably deposited in the debt service fund or other escrow account held in trust for all outstanding bonds to provide for the payment of the bonds at maturity or redemption date. Pursuant to M.S., Section 469.176, Subd. 6: if, after four years from the date of certification of the original net tax capacity of the tax increment financing district pursuant to M.S., Section 469.177, no demolition, rehabilitation or renovation of property or other site preparation, including qualified improvement of a street adjacent to a parcel but not installation of utility service including sewer or water systems, has been commenced on a parcel located within a tax increment financing district by the authority or by the owner of the parcel in accordance with the tax increment financing plan, no additional tax increment may be taken from that parcel, and the original net tax capacity of that parcel shall be excluded from the original net tax capacity of the tax increment financing district. If the authority or the owner of the parcel subsequently commences demolition, rehabilitation or renovation or other site preparation on that parcel including qualified improvement of a street adjacent to that parcel, in accordance with the tax increment financing plan, the authority shall certify to the county auditor that the activity has commenced and the county auditor shall certify the net tax capacity thereof as most recently certified by the commissioner of revenue and add it to the original net tax capacity of the tax increment financing district. The county auditor must enforce the provisions of this subdivision. The authority must submit to the county auditor evidence that the required activity has taken place for each parcel in the district. The evidence for a parcel must be submitted by February 1 of the fifth year following the year in which the parcel was certified as included in the district. For purposes of this subdivision, qualified improvements of a City of Hutchinson Tax Increment Financing Plan for Tax Increment Financing District No. 4-162-11 street are limited to (1) construction or opening of a new street, (2) relocation of a street, and (3) substantial reconstruction or rebuilding of an existing street. The City or a property owner must improve parcels within the District by approximately February 2020 and report such actions to the County Auditor. Subsection 2-19.Use of Tax Increment The City hereby determines that it will use 100 percent of the captured net tax capacity of taxable property located in the District for the following purposes: 1.To pay the principal of and interest on bonds issued to finance a project; 2.To finance, or otherwise pay the capital and administration costs of Development District No. 4 pursuant to M.S., Sections 469.124 to 469.133; 3.To pay for project costs as identified in the budget set forth in the TIF Plan; 4.To finance, or otherwise pay for other purposes as provided in M.S., Section 469.176, Subd. 4; 5.To pay principal and interest on any loans, advances or other payments made to or on behalf of the City or for the benefit of Development District No. 4 by a developer; 6.To finance or otherwise pay premiums and other costs for insurance or other security guaranteeing the payment when due of principal of and interest on bonds pursuant to the TIF Plan or pursuant to M.S., Chapter 462C. M.S., Sections 469.152 through 469.165, and/or M.S., Sections 469.178; and 7.To accumulate or maintain a reserve securing the payment when due of the principal and interest on the tax increment bonds or bonds issued pursuant to M.S., Chapter 462C, M.S., Sections 469.152 through 469.165, and/or M.S., Sections 469.178. These revenues shall not be used to circumvent any levy limitations applicable to the City nor for other purposes prohibited by M.S., Section 469.176, Subd. 4. Tax increments generated in the District will be paid by McLeod County to the City for the Tax Increment Fund of said District. The City will pay to the developer(s) annually an amount not to exceed an amount as specified in a developer's agreement to reimburse the costs of land acquisition, public improvements, demolition and relocation, site preparation, and administration. Remaining increment funds will be used for City administration (up to 10 percent) and for the costs of public improvement activities outside the District. Subsection 2-20.Excess Increments Excess increments, as defined in M.S., Section 469.176, Subd. 2, shall be used only to do one or more of the following: 1.Prepay any outstanding bonds; 2.Discharge the pledge of tax increment for any outstanding bonds; 3.Pay into an escrow account dedicated to the payment of any outstanding bonds; or 4.Return the excess to the County Auditor for redistribution to the respective taxing jurisdictions in proportion to their local tax rates. The City must spend or return the excess increments under paragraph (c) within nine months after the end of the year. In addition, the City may, subject to the limitations set forth herein, choose to modify the TIF Plan in order to finance additional public costs in Development District No. 4 or the District. Subsection 2-21.Requirements for Agreements with the Developer City of Hutchinson Tax Increment Financing Plan for Tax Increment Financing District No. 4-162-12 The City will review any proposal for private development to determine its conformance with the Development Program and with applicable municipal ordinances and codes. To facilitate this effort, the following documents may be requested for review and approval: site plan, construction, mechanical, and electrical system drawings, landscaping plan, grading and storm drainage plan, signage system plan, and any other drawings or narrative deemed necessary by the City to demonstrate the conformance of the development with City plans and ordinances. The City may also use the Agreements to address other issues related to the development. Pursuant to M.S., Section 469.176, Subd. 5, no more than 25 percent, by acreage, of the property to be acquired in the District as set forth in the TIF Plan shall at any time be owned by the City as a result of acquisition with the proceeds of bonds issued pursuant to M.S., Section 469.178 to which tax increments from property acquired is pledged, unless prior to acquisition in excess of 25 percent of the acreage, the City concluded an agreement for the development or redevelopment of the property acquired and which provides recourse for the City should the development or redevelopment not be completed. Subsection 2-22.Assessment Agreements Pursuant to M.S., Section 469.177, Subd. 8, the City may enter into a written assessment agreement in recordable form with the developer of property within the District which establishes a minimum market value of the land and completed improvements for the duration of the District. The assessment agreement shall be presented to the County Assessor who shall review the plans and specifications for the improvements to be constructed, review the market value previously assigned to the land upon which the improvements are to be constructed and, so long as the minimum market value contained in the assessment agreement appears, in the judgment of the assessor, to be a reasonable estimate, the County Assessor shall also certify the minimum market value agreement. Subsection 2-23.Administration of the District Administration of the District will be handled by the City Administrator. Subsection 2-24.Annual Disclosure Requirements Pursuant to M.S., Section 469.175, Subds. 5, 6, and 6b the City must undertake financial reporting for all tax increment financing districts to the Office of the State Auditor, County Board and County Auditor on or before August 1 of each year. M.S., Section 469.175, Subd. 5 also provides that an annual statement shall be published in a newspaper of general circulation in the City on or before August 15. If the City fails to make a disclosure or submit a report containing the information required by M.S., Section 469.175 Subd. 5 and Subd. 6, the Office of the State Auditor will direct the County Auditor to withhold the distribution of tax increment from the District. Subsection 2-25.Reasonable Expectations As required by the TIF Act, in establishing the District, the determination has been made that the anticipated development would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future and that the increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the District permitted by the TIF Plan. In making said determination, reliance has been placed upon written representation made by the developer to such effects and upon City staff awareness of the feasibility of developing the project site(s) within the District. A comparative analysis City of Hutchinson Tax Increment Financing Plan for Tax Increment Financing District No. 4-162-13 of estimated market values both with and without establishment of the District and the use of tax increments has been performed as described above. Such analysis is included with the cashflow in Appendix D, and indicates that the increase in estimated market value of the proposed development (less the indicated subtractions) exceeds the estimated market value of the site absent the establishment of the District and the use of tax increments. Subsection 2-26.Other Limitations on the Use of Tax Increment 1.General Limitations. All revenue derived from tax increment shall be used in accordance with the TIF Plan. The revenues shall be used to finance, or otherwise pay the capital and administration costs of Development District No. 4 pursuant to M.S., Sections 469.124 to 469.133. Tax increments may not be used to circumvent existing levy limit law. No tax increment may be used for the acquisition, construction, renovation, operation, or maintenance of a building to be used primarily and regularly for conducting the business of a municipality, county, school district, or any other local unit of government or the state or federal government. This provision does not prohibit the use of revenues derived from tax increments for the construction or renovation of a parking structure. . At least 75 percent of tax increments from the District must be expended on 2.Pooling Limitations activities in the District or to pay bonds, to the extent that the proceeds of the bonds were used to finance activities within said district or to pay, or secure payment of, debt service on credit enhanced bonds. Not more than 25 percent of said tax increments may be expended, through a development fund or otherwise, on activities outside of the District except to pay, or secure payment of, debt service on credit enhanced bonds. For purposes of applying this restriction, all administrative expenses must be treated as if they were solely for activities outside of the District. . Tax increments derived from the District shall 3.Five Year Limitation on Commitment of Tax Increments be deemed to have satisfied the 75 percent test set forth in paragraph (2) above only if the five year rule set forth in M.S., Section 469.1763, Subd. 3, has been satisfied; and beginning with the sixth year following certification of the District, 75 percent of said tax increments that remain after expenditures permitted under said five year rule must be used only to pay previously committed expenditures or credit enhanced bonds as more fully set forth in M.S., Section 469.1763, Subd. 5. . At least 90 percent of the revenues derived from tax increment from a 4.Redevelopment District redevelopment district must be used to finance the cost of correcting conditions that allow designation of redevelopment and renewal and renovation districts under M.S., Section 469.176 Subd. 4j. These costs include, but are not limited to, acquiring properties containing structurally substandard buildings or improvements or hazardous substances, pollution, or contaminants, acquiring adjacent parcels necessary to provide a site of sufficient size to permit development, demolition and rehabilitation of structures, clearing of the land, the removal of hazardous substances or remediation necessary for development of the land, and installation of utilities, roads, sidewalks, and parking facilities for the site. The allocated administrative expenses of the City, including the cost of preparation of the development action response plan, may be included in the qualifying costs. Subsection 2-27.Summary The City of Hutchinson is establishing the District to preserve and enhance the tax base, redevelop substandard areas, and provide employment opportunities in the City. The TIF Plan for the District was prepared by Ehlers & Associates, Inc., 3060 Centre Pointe Drive, Roseville, Minnesota 55113, telephone (651) 697-8500. City of Hutchinson Tax Increment Financing Plan for Tax Increment Financing District No. 4-162-14 Appendix A Project Description The proposed Tax Increment District project involves acquisition of the property located at 126 Franklin Street NW in Hutchinson, by the Economic Development Authority (the “EDA”). In order to prepare the site for new commercial or office development, the EDA will use tax increments generated to pay for costs incurred for demolition and removal of the existing building, site corrections, parking lot maintenance and repair, and the possible addition of a new trail/sidewalk segment. The EDA will issue and interfund loan to Development District No 5, the 1990 Shopko redevelopment tax increment district. The increments received from the proposed District will repay the interfund loan. AppendixA-1 Appendix B Map of Development District No. 4 and the District AppendixB-1 -!Njooftpub! z Djuz!pg!Ivudijotpo! NdMfpe!Dpvou Efwfmpqnfou!Ejtusjdu!Op/!5! Uby!Jodsfnfou!Gjobodjoh!Ejtusjdu!Op/!5.27! Op/!5.27! Uby!Jodsfnfou! Gjobodjoh!Ejtusjdu! UJG!Ejtusjdu!Jotfu! Appendix C Description of Property to be Included in the District The District encompasses all property and adjacent rights-of-way and abutting roadways identified by the parcel listed below. Parcel NumbersAddressOwner 23.056.2880126 Franklin St. NW Applegate Properties LLC AppendixC-1 Appendix D Estimated Cash Flow for the District AppendixD-1 Appendix E Minnesota Business Assistance Form (Minnesota Department of Employment and Economic Development) A Minnesota Business Assistance Form (MBAF) should be used to report and/or update each calendar year's activity by April 1 of the following year. Please see the Minnesota Department of Employment and Economic Development (DEED) website at http://www.deed.state.mn.us/Community/subsidies/MBAFForm.htm for information and forms. AppendixE-1 Appendix F Redevelopment Qualifications for the District To be added to prior to the public hearing AppendixF-1 Appendix G Findings Including But/For Qualifications To be added to prior to the public hearing But-For Analysis Current Market Value456,100 New Market Value - Estimate1,565,000 Difference1,108,900 Present Value of Tax Increment724,419 Difference384,481 384,481 Value Likely to Occur Without TIF is Less Than: AppendixG-1