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HomeMy WebLinkAboutResolution No. 2008-168RESOLUTION N0.2008-168 CITY OF COLUMBIA HEIGHTS, MINNESOTA RESOLUTION APPROVING PROPERTY TAX ABATEMENT RELATED TO SENIOR HOUSING IMPROVEMENTS AND APPROVING FIRST AMENDMENT TO CONTRACT FOR PRIVATE REDEVELOPMENT 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 Columbia Heights Economic Development Authority (the "Authority") and Pratt Ordway, LLC, dba Pratt Ordway Properties (the "Original Redeveloper") entered into that certain Contract for Private Redevelopment, dated as of November 28, 2006 (the "Original Contract") providing for redevelopment of certain property in the City (as defined in the Original Contract, the "Redevelopment Property"). 1.02. The Original Redeveloper assigned all of its rights and interests in the Original Contract to Columbia Heights COH, LLC ("COH"} under an assignment and assumption agreement, dated as of January 26, 2007. I.03. Lighthouse Acquisition Group, LLC will purchase the Redevelopment Property and assign all of its rights and interests in the Redevelopment Property and the Original Contract to New Perspective Fund III, LLC (the "Redeveloper"}. 1.04. The Original Redeveloper failed to complete construction of a senior rental housing facility (as defined in the Original Contract, the "Minimum Improvements") on the Redevelopment Property and the Redeveloper has requested certain assistance in order to complete such improvements. 1.05. The Original Cantract is being amended (the "First Amendment"} to, among other items, include the City as a party to the Original Contract, as well as to provide for a property tax abatement to the Redeveloper. 1.06. Pursuant to Minnesota Statues, Sections 469.1812 through 469.1815, as amended (the "Act"), the City is authorized to abate a portion of its real property taxes on the Redevelopment Property (the "Abatement") to facilitate development of the Minimum Improvements. 1.07. On July 14, 2008, and continued to July 28, 200$, the Council conducted a duly noticed public hearing on the Abatement pursuant to the Act at which the views of all interested persons were heard. Section 2. Findings; Benefits of the Abatement. 2.01. Benefits Equal Costs. It is hereby found and determined that the benefits to the City from the Abatement will be at least equal to the costs to the City of the Abatement for the following reasons: (a) The Abatement will help finance the construction of the Minimum Improvements, which will redevelop real property that is presently zmderutilized and will prevent the emergence of blight at a critical location. in the City. (b) Construction of the Minimum Improvements will complete the redevelopment of the area surrounding 37th Avenue and Stinson Boulevard, which was otherwise a vacant and undeveloped area of the City. (c) Construction of the Minimum Improvements will increase the value of the Redevelopment Property, thereby generating additional City tax revenues after expiration of the Abatement. 2.02. Public Interest. It is further found and determined that the Abatement is in the public interest, as set forth in Section 469.1813, Subdivision 1 of the Act, for the following reasons: (a) Increase or preserve tax base, by stimulating development on the Redevelopment Property, as described in Section 2.01. (b) Help to redevelop and renew blighted areas in the City, or areas that may become blighted, as described in Section 2.01. (c} Help provide access to services for residents of the City, because construction of the Minimum Improvements will offer residents a service that is not presently utilized to its fullest extent within the City. Section 3. Terms of the Abatement. 3.01. Generally. According to the First Amendment, the Redeveloper is eligible to receive the Abatement each. tax.-payable year from 201.1. through 201. S (the "Abatement Period"). The Redeveloper will receive the Abatement in a specific tax-payable year during the Abatement Period only if the amount of aggregate taxes from the Redevelopment Property, payable to the City, Anoka County, Independent School District No. 13, and any special taxing districts (collectively, the "Aggregate Taxes"), equals or exceeds the following numbers, as shown on the following chart: Taws Pa able Year A r ate Taws 2011 $80,000 2012 82,400 2013 84,872 2014 87,418 2015 90,041 3.02. City Contribution. If the Aggregate Taxes exceed the amounts listed in Section 3.01 for any tax-payable year during the Abatement Period, the City agrees to pay to the Redeveloper a portion of the City's share of the Aggregate Taxes for that specific tax-payable year (the ``City Contribution"), as an abatement under the Act. The City Contribution will be the City's share of property taxes from the Redevelopment Property in each specific tax-payable year during the Abatement Period in which the Redeveloper's Aggregate Taxes exceed the amounts in Section 3.01, minus the City's share of the property taxes from the Redevelopment Property in tax-payable year 2009. The City will levy the City Contribution, if any, using its best estimates and projections of the Redevelopment Property's tax capacity and the City's tax rates thereon for each tax-payable year within the Abatement Period. 3.03. Excess Cites Contribution. 1f the City levies for the City Contribution during the Abatement Period based on its best estimates and projections of the Redevelopment Property's tax capacity and the City's tax rates thereon, and the Redeveloper is not eligible for the Abatement because the Aggregate Taxes do not exceed the amount for a specific tax-payable year pursuant to L Section 3.01, the City will irrevocably credit that specific City Contribution into a subaccount of the City. If the Redeveloper later qualifies for the City Contribution in a given tax-payable year during the Abatement Period, the City will disburse the funds already irrevocably credited to the Redeveloper. If, at the end of the Abatement Period, the balance of the City Contribution has not been credited to the Redeveloper, and the Redeveloper has not become otherwise eligible for the City Contribution, the City will use the remainder of the City Contribution to reduce its general levy for the tax-payable year following the expiration of the Abatement Period. 3.04. Shortage of City Contribution. If the City levies for the City Contribution during the Abatement Period based on its best estimates and projections of the Redevelopment Property's tax capacity and the City's tax rates thereon, and the Redeveloper is bath eligible for the Abatement and an increased City Contribution because the Aggregate Taxes are higher than projected by the City, the City will levy the excess amount of the City Contribution for the following tax-payable year, whether or not the Abatement Period has expired. During the Abatement Period, the excess City Contribution will be in addition to the regular City Contribution estimated to be due to the Redeveloper for the following tax-payable year, if any. Section 4. Actions Ratified; Abatement Ap rp Dyed. 4.01. Ratification. The Council hereby ratifies all actions of the City's staff and consultants in arranging for approval of this Resolution in accordance with the Act. 4.02. Additional Terms. Subject to the provisions of the Act, the Abatement is hereby approved and adopted subject to the following additional terms and conditions: (a} The aggregate Abatement paid to the Redeveloper during the Abatement Period will not exceed $150,000, (b) In accordance with Section 469.1813, Subdivision 8 of the Act, in no year shall the Abatement, together with all other abatements approved by the City under the Act and paid in that year, exceed the greater of 10 percent of the net tax capacity of the City for the taxes payable year to which the Abatement applies or $200,000 (the "Abatement Cap"). The City may grant any other abatements permitted under the Act after the date of this Resolution, provided that to the extent the total abatements in any year exceed the Abatement Cap, the allocation of the Abatement Cap to such other abatements is subordinate to the Abatement granted under this Resolution. (c} If the City determines that a City Contribution is due to the Redeveloper in a specific tax-payable year during the Abatement Period, the City will disburse the City Contribution to the Redeveloper on August 1 of that tax-payable year and the next following February 1. For example, if a City Contribution is due to the Redeveloper in 2011, half of the City Contribution will be payable on August 1, 2011, and the second half will be payable on February 1, 2012. Such payments will continue by the City until the end of the Abatement Period or until the total Abatement payments reach $150,000, whichever occurs first. (d} This Resolution may be modified only with the prior written approval of the City. All determinations of the City regarding the Redeveloper's eligibility for the Abatement and the amount of the City Contribution are controlling. (e) In accordance with Section 469.1815 of the Act and according to the First Amendment, the City will add to its levy in each year during the Abatement Period the total estimated amount of current year Abatement granted under this Resolution. 4.03. Approval of First Amendment. The First Amendment, as presented and on file with the City Council, is hereby approved, subject to modifications that do not alter the substance of the transaction and that are approved by the Mayor and the City Manager, provided that execution. of the document by such officials shall be conclusive evidence of approval. The Mayor and the City Manager are authorized and directed to execute and deliver the First Amendment in order to implement the agreements and certifications agreed to by the Authority, the City and the Redeveloper and contained in this Resolution. The Mayor and the City Manager are further authorized to execute and deliver any additional agreements, certificates, or other documents that the City determines are necessary to implement this Resolution. 4.04. Effective Date. This Resolution is effective only upon the execution of the First Amendment and the closing date of the transfer of the Redevelopment Property to the Redeveloper. Approved by the City Council of the City of Columbia Heights, Minnesota this 28th day of July, 2008. Motion by: Kelzenberg Second by: Williams Passed: Ayes: Peterson, Williams, Nawrocki, Diehm, Kelzenberg Attest: ~~ "' Patricia Muscovitz C - ity Clerk Y