HomeMy WebLinkAboutResolution No. 2003-40CITY OF COLUMBIA HEIGHTS
COUNTY OF ANOKA
STATE OF MINNESOTA
RESOLUTION NO. 2003-40
RESOLUTION ADOPTING A MODII~ICATION TO THE DOWNTOWN
CENTRAL BUSINESS DISTRICT (CBD) REVITALIZATION PLAN FOR THE
CBD REDEVELOPMENT PROJECT AND ESTABLISHING THE K-
MART/CENTRAL AVENUE TAX INCREMENT FINANCING DISTRICT
THEREIN AND ADOPTING A TAX INCREMENT FINANCING PLAN
THEREFOR.
BE IT RESOLVED by the City Council (the "Council") of the City of Columbia Heights,
Minnesota (the "City"), as follows:
Section 1. Recitals.
1.01. The Board of Commissioners (the "Board") of the Columbia Heights Economic
Development Authority (the "EDA") has heretofore established the CBD Redevelopment Project and
adopted the Downtown CBD Revitalization Plan therefor. It has been proposed by the EDA and the City
that the City adopt a Modification to the Downtown CBD Revitalization Plan for the CBD
Redevelopment Project (the "Revitalization Plan Modification") and establish the K-Mart/Central Avenue
Tax Increment Financing District (the "District") therein and adopt a Tax Increment Financing Plan (the
"TIF Plan") therefor (the Revitalization Plan Modification and the TIF Plan are referred to collectively
herein as the "Plans"), all pursuant to and in conformity with applicable law, including Minnesota
Statutes, Sections 469.090 to 469.1082, Sections 469.001 to 469.047, and Sections 469.174 to 469.1799,
all inclusive, as amended, (the "Act") all as reflected in the Plans, and presented for the Council's
consideration.
1.02. The City has investigated the facts relating to the Plans and has caused the Plans to be
prepared.
1.03. The City has performed all actions required by law to be performed prior to the
establishment of the District and the adoption and approval of the proposed Plans, including, but not
limited to, notification of County of Anoka and Independent School District No. 13 having taxing
jurisdiction over the property to be included in the District, a review of and written comment on the Plans
by the City Planning Commission, and the holding of a public hearing upon published notice as required
by law.
1.04. Certain written reports (the 'Reports") relating to the Plans and to the activities
contemplated therein have heretofore been prepared by staff and consultants and submitted to the Council
and/or made a part of the City files and proceedings on the Plans. The Reports include dam, information
and/or substantiation constituting or relating to the basis for the other findings and deternfinafions made in
this resolution. The Council hereby confirms, ratifies and adopts the Reports, which are hereby
incorporated into and made as fully a part of this resolution to the same extent as if set forth in full herein.
1.05 The City is not modifying the boundaries of the CBD Redevelopment Project.
Section 2. Findings for the Adoption and Approval of the Plans.
2.01. The Council hereby finds that the Plans, are intended and, in the judgment of this
Council, the effect of such actions will be, to provide an impetus for development in the public interest
and accomplish certain objectives as specified in the Plans, which are hereby incorporated herein.
Section 3.
Findings for the Establishment of the K-Mart/Central Avenue Tax Increment Financing
District.
3.01. The Council hereby finds that the District is in the public interest and is a "renewal and
renovation district" under Minnesota Statutes, Section 469.174, Subd. 10a.
3.02. The Council further finds that the proposed redevelopment would not occur solely
through private investment within the reasonably foreseeable future and that the increased market value of
the site that could reasonably be expected to occur without the use of tax increment financing would be
less than the increase in the market value estimated to result from the proposed development after
subtracting the present value of the projected tax increments for the maximum duration of the District
permitted by the TIF Plan, that the Plans conform to the general plan for the development or
redevelopment of the City as a whole; and that the Plans will afford maximum opportunity consistent
with the sound needs of the City as a whole, for the development or redevelopment of the District by
private enterprise.
3.03. The Council further finds, declares and determines that the City made the above findings
stated in this Section and has set forth the reasons and supporting facts for each determination in writing,
attached hereto as Exhibit A.
3.04. The City elects to calculate fiscal disparities for the District in accordance with
Minnesota Statutes, Section 469.177, Subd. 3, clause b, which means the fiscal disparities contribution
would be taken from inside the District.
Section 4. Public Purpose
4.01. The adoption of the Plans conforms in all respects to the requirements of the Act. The
Plans will enable redevelopment of an area now occupied by substandard buildings, creating new housing
and commercial uses. The City expressly finds that any private benefit to be received by developers is
incidental, as the assistance is only provided to remedy the conditions that impair the development
potential of the site. That is, the tax increment assistance is necessary to produce the public benefits
described above. Therefore, the City finds that the public benefits of the Plans exceed any private
benefits.
Section 5. Approval and Adoption of the Plans.
5.01. The Plans, as presented to the Council on this date, including without limitation the
findings and statements of objectives contained therein, are hereby approved, ratified, established, and
adopted and shall be placed on file in the office of the Community Development Director.
5.02. The staff of the City, the City's advisors and legal counsel are authorized and directed to
proceed with the implementation of the Plans and to negotiate, draft, prepare and present to this Council
for its consideration all further plans, resolutions, documents and contracts necessary for this purpose.
5.03 The Auditor of Anoka County (the "Auditor") is requested to certify the original net tax
capacity of the District, as described in the TIF Plan, and to certify in each year thereafter the amount by
which the original net tax capacity has increased or decreased; and the City is authorized and directed to
forthwith transmit this request to the Auditor in such form and content as the Auditor may specify,
together with a list of all properties within the District, for which building permits have been issued
during the 18 months immediately preceding the adoption of this resolution.
5.04. The Community Development Director is further authorized and directed to file a copy of
the Plans with the Commissioner of the Minnesota Department of Revenue pursuant to Minnesota
Statutes 469.175, Subd. 4a.
Dated this 22nd day of September, 2003
Offered by:
Seconded by:
Roll Call:
Kelzenberg
Williams
Ayes: Wyckoff, Williams, Nawrocki, Ericson, Kelzenberg
Nays: None
Attest:
Deputy City Clerk/Council Secretary
Mayor Julienne Wyckoff
EXHIBIT A
RESOLUTION NO. 2003-.40
The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan for the K-
Mart/Central Avenue Tax Increment Financing District, as required pursuant to Minnesota Statutes, Section
469.175, Subdivision 3 are as follows:
1. Finding that the K-Mart/Central Avenue Tax Increment Financing District is a renewal and renovation
district as defined in M.S., Section 469.174, Subd. lOa.
The District consists of six parcels, with plans to redevelop the area for housing and commercial purposes.
More than 70 percent of the area in the District are occupied by buildings, streets, utilities, paved or gravel
parking lots or other similar structures. More than 20 percent of the buildings in the District are structurally
substandard (as defined in Section 469.174, subd. 10a), and more than 30 percent of the other buildings
require substantial renovation or clearance to remove existing conditions such as inadequate street layout,
incompatible uses or land use relationships, overcrowding of buildings on the land, excessive dwelling unit
density, obsolete buildings not suitable for improvement or conversion, or other identified hazards to the
health, safety and general well-being of the City. The City further expressly finds that the buildings
identified above are reasonably distributed throughout the area of the District (See Appendix F of the TIF
Plan, and the TIF Eligibility Assessment prepared by SEH on file in City Hall)
Finding that the proposed development, in the opinion of the City Council, would not reasonably be
expected to occur solely through private investment within the reasonably foreseeable future and that the
increased market value of the site that could reasonably be expected to occur without the use of tax
increment financing would be less than the increase in the market value estimated to result from the
proposed development after subtracting the present value of the projected tax increments for the maximum
duration of the K-Mart/Central Avenue Tax Increment Financing District permitted by the TIF Plan.
The proposed development, in the opinion of the City, would not reasonably be expected to occur solely
through private investment within the reasonably foreseeable future: This finding is supported by the fact
that the redevelopment proposed in this TIF Plan meets the City's objectives for redevelopment. The
District is occupied by various commercial buildings, including a K-Mart facility that is now vacant.
Redevelopment will require acquisition, demolition and site clearance, extensive grading (to address
difficulties created by elevation changes) and relocation of certain businesses. The first phase of the
proposed redevelopment calls for high density owner-occupied housing on the former K-Mart property.
The type and intensity of owner-occupied housing to be built is relatively untested in the Columbia Heights
market and the developer is assuming a substantial risk in the investment in the property in order to obtain a
reasonable return on the project. The amount of TH: will be reduced if the developer's ultimate rate of
return is higher than industry standards. The TIF is intended to mitigate the risk by providing assistance
initially for demolition and other site clearing costs of property. The later phases of the project will include
more substantial acquisition costs of commercial property as well as potential of structured parking for
higher density commercial uses than are currently on the site. The costs of acquisition, especially given the
lower relative availability of TW for commercial property since the 2001 property tax reforms, are
substantially higher than what vacant land could be purchased for on an undeveloped site. (See attachment
in Appendix G.) For all these reasons, the City reasonably concludes that the proposed redevelopment of
the District (including both the housing and future commercial developments) is not financially feasible or
likely to occur in the foreseeable future without the assistance described in this Plan.
The increased market value of the site that couM reasonably be expected to occur without the use of tax
increment financing would be less than the increase in market value estimated to result from the proposed
development afier subtracting the present value of the projected tax increments for the maximum duration
of the TIF District permitted by the TIF Plan: This finding is based on the fact that the land in the Dislxict
is now fully developed, with various substandard and obsolete uses. Any increase in market value without
tax increment assistance would only occur if existing owners made substantial improvements, or the area is
redeveloped through large-scale improvements similar to those proposed in this Plan. The City has no
o
evidence to support the expectation that existing owners or tenants will make improvements on their own.
Further, comprehensive redevelopment has not traditionally occurred in Columbia Heights without public
intervention. From June 2002 to the end of 2002, the current owner unsuccessfully marketed the K-Mart
building for another retail/office use. Without public intervention, the likely reuse of the K-Mart property
would be another "big box" user that would not substantially increase the value of the property and would
not act as a catalyst in the redevelopment of the commercial property along Central Avenue in the District.
Therefore, the City reasonably determines that no other redevelopment of similar scope is anticipated on
this site without substantially similar assistance being provided to the development.
The above findings are stated in monetary terms in Appendix G of the TIF Plan, which can be summarized
as follows:
ao
The City's estimate of the amount by which the market value of the site will increase without
the use of tax increment financing is $0 (for the reasons described above).
bo
If all development which is proposed to be assisted with tax increment were to occur in the
District, the total increase in market value would be up to $61,240,900.
C°
The present value of tax increments from the District for the maximum duration of the district
permitted by the TIF Plan is estimated to be $5,725,538. (See Appendix G in the TIlt Plan)
do
Even if some development other than the proposed development were to occur, the Council
finds that no alternative would occur that would produce a market value increase greater than
$55,515,362 (the amount in clause b less the amount in clause c) without tax increment
assistance.
Finding that the Tax Increment Financing Plan for the K-Mart/Central Avenue Tax Increment Financing
District conforms to the general plan for the development or redevelopment of the municipality as a whole.
The Planning Commission reviewed the Tlle Plan and found that the TIF Plan conforms to the general
development plan of the City.
Finding that the Tax Increment Financing Plan for K-Mart/Central Avenue Tax Increment Financing
District will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the
development or redevelopment of the CBD Redevelopment Project by private enterprise.
The project to be assisted by the District will result in the creation of quality life-cycle housing, the
preservation and enhancement of the tax base, the redevelopment of substandard areas, and provide
employment opportunities in the City.