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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.