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HomeMy WebLinkAbout[05c] Spending Plan TIF 1-4CITY of NT. j06EPH MEETING DATE: April 21, 2011 Council Agenda Item 5 C AGENDA ITEM: Spending Plan TIF 1 -4 SUBMITTED BY: St. Joseph EDA BOARD /COMMISSION /COMMITTEE RECOMMENDATION: See attached memo PREVIOUS COUNCIL ACTION: The City Council authorized conducting a public hearing for the purpose of re- distributing excess TIF funds from TIF district 1 -4. The amount of excess is estimated at $ 50,000 and if the funds are not used for re- development the funds must be returned to Stearns County. BACKGROUND INFORMATION: A public hearing has been advertised for this matter.. BUDGET /FISCAL IMPACT: Reallocation of TIF funds to spur downtown development. ATTACHMENTS: Request for Council Action .............................. 5(c):1 MEMO — Cynthia Smith - Strack ........................ 5(c):2 Hearing Notice .................... ............................... 5(c):3 Resolution 2011 -008 Adopting Plan ............... 5(c):4 Spending Plan ..................... ............................... 5(c):5 -8 NOTE: Since this a public hearing, the hearing is opened, testimony accepted and discussion occurs after the hearing is closed. Action on this matter is two -fold, first the EDA considers and makes a recommendation to the City Council and then the City Council takes action. REQUESTED EDA ACTION: If the EDA is supportive of the spending plan, the EDA should affirm with a motion recommending the City Council execute the resolution adopting the spending plan. REQUESTED CITY COUNCIL ACTION: After the EDA recommendation the City Council would affirm the decision of the EDA authorizing execution of spending plan and resolution. 2011 -008. Administrator DATE: April 13, 2011 Judy Weyrens MEMO TO: Economic Development Authority Mayor Honorable Mayor Schultz Richard Schultz Administrator Weyrens Councilors FROM: Cynthia Smith - Strack, Municipal Development Group Steve Frank Bob Loso RE: Spending Plan for TIF District 1-4 Renee Symanietz Dale Wick Request: The 2010 Mn. Jobs Bill signed into law in April, 2010 by Governor Pawlenty authorized the EDA transfer of excess revenue from existing tax increment finance districts to other areas within Carolyn Yaggie- cities for the promotion of economic development activities. Heinen Steve Frank TIF 1-4 in the City of St. Joseph has excess revenue (from administrative retainings) which is Chad Davey available for redistribution under the 2010 jobs bill provided said is accomplished prior to Tom Skahen December 31, 2011. If the excess revenue is not redistributed for economic development Dale Wick purposes, the excess revenue will be returned to the County for redistribution to the City, County, and School District when the district is decertified in 2012. A Spending Plan for the excess revenue has been developed by the City's TIF Consultant Traci Ryan. The proposed projects that may benefit from the use of temporary authority to simulate construction include the expansion of the St. Joseph Meat Market ($27,000) and improvements to the Millstream Shops /Lofts facility that would accommodate a new restaurant ($20,000). The City proposes to provide assistance in the form of deferred loans that will be forgiven if the owner(s) continue ownership of the structure for ten years. Representatives from the St. Joe Meat Market and Millstream Shops /Lofts will be present at the meeting along with the City's TIF Consultant Traci Ryan. Action: If the EDA is supportive of the spending plan, a MOTION is in order to recommend the City Council approve spending plan and authorize execution thereof. CITY OF ST. JOSEPH COUNTY OF STEARNS STATE OF MINNESOTA NOTICE OF PUBLIC HEARING ON THE ADOPTION OF A SPENDING PLAN FOR TAX INCREMENT FINANCING DISTRICT 1-4 NOTICE IS HEREBY GIVEN that the City Council (the "Council ") of the City of St. Joseph, Stearns County, Minnesota, will hold a public hearing on Thursday, April 21, 2011, at approximately 7:00 p.m., at the St. Joseph City Hall in the City of St. Joseph, Minnesota, relating to the proposed adoption of a spending plan for Tax Increment Financing District No. 1 -4, all pursuant to and in accordance with Minnesota Statutes, Section 469.176 Subd 4m (the "Act "). Copies of the Spending Plan for Tax Increment Financing District No. 1 -4 as proposed to be adopted will be on file and available for public inspection at the office of the City Administrator at City Hall. All interested persons may appear at the hearing and present their view orally or in writing. BY ORDER OF THE CITY COUNCIL /s/ Judy Weyrens, City Administrator Resolution 2011 -008 RESOLUTION ADOPTING A SPENDING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO 1-4 WHEREAS, in the spring of 2010, the State of Minnesota modified the tax increment statutes to provide temporary authority to stimulate construction. The new law indicates that tax increments from an existing tax increment district, whenever the district was certified and not withstanding any law to the contrary, may be spent for the following purposes: a) To provide improvements, loans, interest rate subsidies or assistance in any form to private development consisting of the construction or substantial rehabilitation of buildings and ancillary facilities, if doing so will create or retain jobs in the state, including construction jobs, and construction commences before July 1, 2011, and would not commence before that date without the assistance; and b) To make an equity or similar investment in a corporation, partnership or limited liability company that the authority determines is necessary to make the construction of a development meeting the requirements of (a) above financially feasible. WHEREAS, the City of St. Joseph has determined that there is an opportunity and a need to provide funds to leverage further private investment promote the rehabilitation of commercial buildings within the boundaries of Municipal Development District No. 1 and is proposing to utilize local revolving loan funds and increments to leverage private reinvestment to provide assistance for exterior, fagade, code and energy efficiency improvements that will serve to preserve the existing buildings while maintaining their economic viability. WHEREAS, It is believed that the work that will be completed through this type of effort will generate numerous jobs for the local trades as well as improve opportunities for increased business that may generate future long term employment in businesses within the community. WHEREAS, the proposed project meets the tests established in the 2010 legislation for the use of tax increments as a temporary means of stimulating construction. WHEREAS, the City has performed all actions required by law to be performed prior to the adoption of the tax increment financing spending plan relating thereto, including, but not limited to holding of a public hearing upon published and required notice as required by law. NOW, THEREFORE, BE IT RESOLVED, BY THE CITY COUNCIL OF THE CITY OF ST. JOSEPH, STEARNS COUNTY, MINNESOTA THAT: Spending Plan - Tax Increment Financing District No. 1-4. The City hereby adopts the spending plan proposed for Tax Increment Financing District No. 1-4. Authorization of Interfund Loan. The City intends to finance up to $643,000 of eligible development activities and administrative expenses associated with the project utilizing funds from Tax Increment Financing District No. 1-4. Adopted this 215' day of April, 2011. Richard Schultz, Mayor Judy Weyrens, Administrator City of St. Joseph, Minnesota Tax Increment Financing Spending Plan for Tax Increment Financing District No. 1 -4 To be Adopted: 21 April 2011 r DAVID DROWN ASSOCIATES Minneapolis Office: 5029 Upton Avenue South Minneapolis, MN 55410 -2244 612 - 920 -3320 (phone); 612 -605 -2375 (fax) Table of Contents Spending Plan for Tax Increment Financing District No.1 SectionA Background .................................................................................................... ............................... 3 Section B Budget for TIF District 1- 4 .............................................................................. ............................... 3 SectionC Spending Plan ................................................................................................ ............................... 4 Spending Plan for Tax Increment Financing District No. 1 -4 Section A Background The City of St. Joseph created Tax Increment Financing District No. 1-4 on June 27, 2002 to assist St. Joseph Development LLC with the construction of a manufacturing facility that would be leased to Vic West. That project was accomplished and pay as you go assistance was provided to assist. To date, the assistance committed to has not consumed all of the increment that has been generated by the District and the City is considering utilizing the available increment in TIF District 1-4 to provide assistance to a number of projects utilizing TIF "Temporary Authority to Stimulate Construction ". In the spring of 2010, the State of Minnesota modified the tax increment statutes to provide temporary authority to stimulate construction. The new law indicates that tax increments from an existing tax increment district, whenever the district was certified and not withstanding any law to the contrary, may be spent for the following purposes: a. To provide improvements, loans, interest rate subsidies or assistance in any form to private development consisting of the construction or substantial rehabilitation of buildings and ancillary facilities, if doing so will create or retain jobs in the state, including construction jobs, and construction commences before July 1, 2011, and would not commence before that date without the assistance, and b. To make an equity or similar investment in a corporation, partnership or limited liability company that the authority determines is necessary to make the construction of a development meeting the requirements of paragraph (a) above financially feasible. The authority must approve a written spending plan that specifically authorizes these actions after a public hearing is held with notice duly published. The authority to spend tax increments under this authorization expires on December 31, 2011. Section B Budget for TIF District 1-4 The estimated costs of the proposed development in the TIF District, which are eligible for reimbursement with tax increments of the TIF District, and the projected sources of revenue available to fund these costs are summarized below. This budget is adequate to serve the projects proposed by this spending plan. Uses of Funds (Public Costs) Capital Costs: Land Acquisition $308,000 Site Improvements 50,000 Streets & Sidewalks 46,400 Subtotal Capital Costs $404,400 Finance Costs: Capitalized Interest 42,000 Loan & Note Interest Payments 130.000 Subtotal Finance Costs $172,000 Administrative Costs Ongoing Administration 64,300 Other (OSA) 2.300 Subtotal Administration Costs $66,600 Total Uses of Funds $643,000 Sources of Funds Tax Increments $643,000 Bond & Note Proceeds 0 Other 0 Total Sources of Funds $643,000 The Authority reserves the right to adjust the amount of any of the items listed above or to incorporate additional eligible items, so long as the total estimated public cost is not increased. The Authority also reserves the right to fund the full amount of public costs with tax increment revenues. The City of St. Joseph estimates that there is approximately $50,000 of increment in TIF 1-4 that may be utilized in connection with the Temporary Authority to Stimulate Construction. This amount would increase to approximately $60,000 if legislation extends this authority one more year. The current budget for TIF District 1-4 will accommodate these expenditures without the need to amend the budget. Section C Spending Plan The City of St. Joseph proposes to utilize the Temporary Authority to Stimulate Construction to promote the expansion, improvement and/or rehabilitation of commercial buildings within the City. The City, upon recommendation of the St. Joseph Economic Development Authority, is proposing to utilize local revolving loan funds and increments to leverage private reinvestment to provide assistance for exterior, fagade, accessibility, code and energy efficiency improvements and health and safety improvements that will serve to preserve the existing buildings while maintaining their economic viability. It is believed that the work that will be completed through this type of effort will generate numerous jobs for the local trades as well as improve opportunities for increased business that may generate future long term employment. St. Joseph Meat Market is one of the proposed projects that may benefit from the use of Temporary Authority to Stimulate Construction. The business is planning to construct a 3,000 square foot Expansion to its existing facility to improve operating efficiencies and increase production of their meat processing business. The project costs are estimated to be $505,000. The City proposes to provide approximately $27,500 of assistance in the form of a deferred loan that will be forgiven if the owner continues ownership of the structure for ten (10) years. The Mill Stream Shops/Lofts are also proposing to construct improvements to their facility to accommodate a new restaurant. Project costs are unknown at this time but it is anticipated that the City would provide assistance through the Temporary Authority to Stimulate Construction in the form of a deferred loan as mentioned above. Additional projects are also being discussed at this time. The proposed project(s) meet the tests established in the 2010 legislation for the use of tax increments as a temporary means of stimulating construction by providing assistance to private development consisting of the substantial rehabilitation of buildings and creating construction jobs. All expenditures made under the proposed assistance program, through this special authority, will be identified in future TIF reports as "Site Improvements" for TIF reporting purposes unless otherwise directed by the State Auditor's Office.