ITEM 4.2 Tax Increment Financing DistrictOtkgoF
MINNESOTA V
DEPARTMENT INFORMATION
Request for
City Council Action
ORIGINATING DEPARTMENT
REQUESTOR:
MEETING DATE:
Administration
City Administrator/ Finance Director
Flaherty
February 12, 2018
PRESENTER(s)
REVIEWED BY:
ITEM #:
City Administrator/ Finance
Director Flaherty
The proposed redevelopment would include the decommissioning of the private waste water treatment
4.2
AGENDA ITEM DETAILS
RECOMMENDATION:
City staff is recommending that the City Council conduct the public hearing for consideration of tax
increment financing on the redevelopment of the Riverbend North site by Otsego Apartments, LLC.
ARE YOU SEEKING APPROVAL OF A CONTRACT?
IS A PUBLIC HEARING REQUIRED?
No
Yes — February 12, 2018
BACKGROUND/JUSTIFICATION:
At a special meeting on December 11, 2017, the City Council concurred to move forward with the
consideration of tax increment financing on the Riverbend North redevelopment project.
The proposed redevelopment would include the decommissioning of the private waste water treatment
facility currently operating on the Riverbend North site. Once the site has been cleared of such operations,
the new development would be clear to begin. The proposed new development includes phased
construction of multi -family housing, mini -storage units, and the platting of two outlots for future
commercial development.
The public hearing is required by Minnesota Statute and provides the opportunity for the public to ask
questions and provide input on the proposed use of tax increment financing. Other than hosting the public
hearing, no formal action will be taken by the City Council at this meeting, but would be required at future
meetings if the Council chooses to continue the process.
SUPPORTING DOCUMENTS ATTACHED:
0 Tax Increment Financing District Overview
POSSIBLE MOTION
PLEASE WORD MOTION AS YOU WOULD LIKE ITTO APPEAR IN THE MINUTES:
No formal action is being requested at this meeting.
BUDGET INFORMATION
FUNDING: BUDGETED:
N/A
Tax Increment Financing District Overview
City of Otsego
Tax Increment Financing District No. 4 - Riverbend North
The following summary contains an overview of the basic elements of the Tax Increment Financing Plan
for Tax Increment Financing District No. 4 — Riverbend North. More detailed information on each of
these topics can be found in the complete Tax Increment Financing Plan.
Proposed action: Establishment of Tax Increment Financing District No. 4 — Riverbend North
(the "District") and the adoption of a Tax Increment Financing Plan (the "TIF
Plan").
Modification to the Development Program for Development District No. 1 to
include the establishment of TIF District No. 4 — Riverbend North, which
represents a continuation of the goals and objectives set forth in the
Development Program for Development District No. 1.
Type of TIF District: A redevelopment district
Parcel Numbers: 118303000010 118303000020
118500262400
Proposed The District is being created to redevelop the existing site, including the
Development: decommissioning of a private wastewater treatment facility, to facilitate the
construction of 164 units of market rate multifamily housing, a mini -storage
facility, and approximately 15,000 square feet of commercial retail in the
City. Please see Appendix A of the TIF Plan for a more detailed project
description.
Maximum duration: The duration of the District can be 25 years from the date of receipt of the
first increment (26 years total). The City expects the first tax increment to be
2020. It is estimated that the District, including any modifications of the TIF
Plan for subsequent phases or other changes, would terminate at the earlier of
December 31, 2043 or when the TIF Plan is satisfied.
Estimated annual tax Including a 1% inflation factor, the TIF Plan identifies up to $340,277 in year
increment: 26.
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LEADERS IN PUBLIC FINANCE
Authorized uses: The TIF Plan contains a budget that authorizes the maximum amount that
may be expended over the life of the district:
Land/Building Acquisition ..................................................$1,500,000
Site Improvements/Preparation ...........................................$1,000,000
Utilities................................................................................$1,800,000
Other Qualifying Improvements ............................................$888,170
Administrative Costs (up to 10%) ..........................................$384,409
PROJECT COSTS TOTAL ................................................$5,572,579
Interest................................................................................ 2 500 000
PROJECT COSTS TOTAL.............................................$8,072,579
Any obligations of the District made after approximately 2023, will not be
eligible for repayment from tax increments as an in -district expense. Up to
25% of tax increment can be pooled, or expended, on qualifying "out -of -
district expenses.
The reasons and facts supporting the findings for the adoption of the TIF Plan for the District, as required
pursuant to M.S., Section 469.175, Subd. 3, are included in Exhibit A of the City resolution.
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See Subsection 2-10, on page 2-6 of the TIF Plan for the full budget
authorization.
Form of financing:
The project is proposed to be financed by one or more pay-as-you-go notes.
Administrative
Up to 10% of increment may be utilized for administrative purposes, if costs
Costs:
are justified.
Interfund Loan
If the City wants to pay for advance administrative expenditures to be repaid
Requirement:
from a tax increment fund, it is recommended that a resolution authorizing a
loan from another fund be passed PRIOR to, or within 60 days of, the
issuance of the check.
The developer has agreed to pay as a project expense the administrative costs
incurred in creation of the TIF agreement. No loan is anticipated at this time.
4 Year Activity Rule
After four years from the date of certification of the District one of the
(§ 469.176 Subd. 6)
following activities must have been commenced on each parcel in the District:
• Demolition
• Rehabilitation
• Renovation
• Other site preparation (not including utility services such as sewer and
water)
If activities have not started by that time, no additional tax increment may be
taken from that parcel until the commencement of a qualifying activity.
5 Year Rule
Within 5 years of certification revenues derived from tax increments must be
(§ 469.1763 Subd. 3)
expended or obligated to be expended on qualifying activities.
Any obligations of the District made after approximately 2023, will not be
eligible for repayment from tax increments as an in -district expense. Up to
25% of tax increment can be pooled, or expended, on qualifying "out -of -
district expenses.
The reasons and facts supporting the findings for the adoption of the TIF Plan for the District, as required
pursuant to M.S., Section 469.175, Subd. 3, are included in Exhibit A of the City resolution.
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LEADERS IN PUBLIC FINANCE
EHLERS
LEADERS IN PUBLIC FINANCE