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Public Hearing Draft - TIF Plan As of July 6, 2017 Draft for Public Hearing Modification to the Development Program for Development District No. 1 and the Tax Increment Financing Plan for the establishment of Tax Increment Financing District No. 3 - Guardian Angels Riverview Landing (a housing district) within Development District No. 1 City of Otsego Wright County State of Minnesota Public Hearing: July 17, 2017 Adopted: Prepared by: EHLERS & ASSOCIATES, INC. 3060 Centre Pointe Drive, Roseville, Minnesota 55113-1105 651-697-8500 fax: 651-697-8555 www.ehlers-inc.com Table of Contents (for reference purposes only) Section 1 - Modification to the Development Program for Development District No. 1 ............................................. 1-1 Foreword ............................................................. 1-1 Section 2 - Tax Increment Financing Plan for Tax Increment Financing District No. 3 - Guardian Angels Riverview Landing ...... 2-1 Subsection 2-1. Foreword............................................... 2-1 Subsection 2-2. Statutory Authority........................................ 2-1 Subsection 2-3. Statement of Objectives ................................... 2-1 Subsection 2-4. Development Program Overview ............................ 2-1 Subsection 2-5. Description of Property in the District and Property To Be Acquired . 2-2 Subsection 2-6. Classification of the District................................. 2-2 Subsection 2-7. Duration and First Year of Tax Increment of the District........... 2-3 Subsection 2-8. Original Tax Capacity, Tax Rate and Estimated Captured Net Tax Capacity Value/Increment and Notification of Prior Planned Improvements ................ 2-3 Subsection 2-9. Sources of Revenue/Bonds to be Issued ...................... 2-5 Subsection 2-10. Uses of Funds ........................................... 2-5 Subsection 2-11. Business Subsidies....................................... 2-6 Subsection 2-12. County Road Costs ....................................... 2-7 Subsection 2-13. Estimated Impact on Other Taxing Jurisdictions ................. 2-7 Subsection 2-14. Supporting Documentation ................................. 2-9 Subsection 2-15. Definition of Tax Increment Revenues ........................ 2-9 Subsection 2-16. Modifications to the District................................. 2-9 Subsection 2-17. Administrative Expenses .................................. 2-10 Subsection 2-18. Limitation of Increment ................................... 2-10 Subsection 2-19. Use of Tax Increment .................................... 2-11 Subsection 2-20. Excess Increments ...................................... 2-12 Subsection 2-21. Requirements for Agreements with the Developer .............. 2-12 Subsection 2-22. Assessment Agreements ................................. 2-12 Subsection 2-23. Administration of the District ............................... 2-13 Subsection 2-24. Annual Disclosure Requirements ........................... 2-13 Subsection 2-25. Reasonable Expectations ................................. 2-13 Subsection 2-26. Other Limitations on the Use of Tax Increment . ................ 2-13 Subsection 2-27. Summary.............................................. 2-14 Appendix A Project Description ...................................................... A-1 Appendix B Map of Development District No. 1 and the District ............................. B-1 Appendix C Description of Property to be Included in the District ............................ C-1 Appendix D Estimated Cash Flow for the District ........................................ D-1 Appendix E Housing Qualifications for the District........................................ E-1 Appendix F Findings for the District................................................... F-1 Section 1 - Modification to the Development Program for Development District No. 1 Foreword The following text represents a Modification to the Development Program for Development District No. 1. This modification represents a continuation of the goals and objectives set forth in the Development Program for Development District No. 1. Generally, the substantive changes include the establishment of Tax Increment Financing District No. 3 - Guardian Angels Riverview Landing. For further information, a review of the Development Program for Development District No. 1, adopted February 22, 2016, is recommended. It is available from the City Administrator at the City of Otsego. Other relevant information is contained in the Tax Increment Financing Plans for the Tax Increment Financing Districts located within Development District No. 1. City of Otsego Modification to the Development Program for Development District No. 1 1-1 Section 2 - Tax Increment Financing Plan for Tax Increment Financing District No. 3 - Guardian Angels Riverview Landing Subsection 2-1. Foreword The City of Otsego (the "City"), staff and consultants have prepared the following information to expedite the establishment of Tax Increment Financing District No. 3 - Guardian Angels Riverview Landing (the "District"), a housing tax increment financing district, located in Development District No. 1. Subsection 2-2. Statutory Authority Within the City, there exist areas where public involvement is necessary to cause development or redevelopment to occur. To this end, the City has certain statutory powers pursuant to Minnesota Statutes ("M.S."), Sections 469.124 to 469.133, inclusive, as amended, and M.S., Sections 469.174 to 469.1794, inclusive, as amended (the "Tax Increment Financing Act" or "TIF Act"), to assist in financing public costs related to this project. This section contains the Tax Increment Financing Plan (the "TIF Plan") for the District. Other relevant information is contained in the Modification to the Development Program for Development District No. 1. Subsection 2-3. Statement of Objectives The District currently consists of one parcel of land and adjacent and internal rights-of-way. The District is being created to facilitate the development of an approximately 142-unit independent and assisted-living campus facility in the City. Please see Appendix A for further District information. The City anticipates entering into an agreement with Riverview Landing, Inc. as the developer of the site. This TIF Plan is expected to achieve many of the objectives outlined in the Development Program for Development District No. 1. The activities contemplated in the Modification to the Development Program and the TIF Plan do not preclude the undertaking of other qualified development or redevelopment activities. These activities are anticipated to occur over the life of Development District No. 1 and the District. Subsection 2-4. Development Program Overview 1. Property to be Acquired - Selected property located within the District may be acquired by the City and is further described in this TIF Plan. 2. Relocation - Relocation services, to the extent required by law, are available pursuant to M.S., Chapter 117 and other relevant state and federal laws. 3. Upon approval of a developer's plan relating to the project and completion of the necessary legal requirements, the City may sell to a developer selected properties that it may acquire within the District or may lease land or facilities to a developer. 4. The City may perform or provide for some or all necessary acquisition, construction, relocation, demolition, and required utilities and public street work within the District. City of Otsego Tax Increment Financing Plan for Tax Increment Financing District No. 3 - Guardian Angels Riverview Landing 2-1 Subsection 2-5. Description of Property in the District and Property To Be Acquired The District encompasses all property and adjacent rights-of-way and abutting roadways identified by the parcel listed in Appendix C of this TIF Plan. Please also see the map in Appendix B for further information on the location of the District. The City may acquire any parcel within the District including interior and adjacent street rights of way. Any properties identified for acquisition will be acquired by the City only in order to accomplish one or more of the following: storm sewer improvements; provide land for needed public streets, utilities and facilities; carry out land acquisition, site improvements, clearance and/or development to accomplish the uses and objectives set forth in this plan. The City may acquire property by gift, dedication, condemnation or direct purchase from willing sellers in order to achieve the objectives of this TIF Plan. Such acquisitions will be undertaken only when there is assurance of funding to finance the acquisition and related costs. Subsection 2-6. Classification of the District The City, in determining the need to create a tax increment financing district in accordance with M.S., Sections 469.174 to 469.1794, as amended, inclusive, finds that the District, to be established, is a housing district pursuant to M.S., Section 469.174, Subd. 11 and M.S., Section 469.1761 as defined below: M.S., Section 469.174, Subd.11: "Housing district" means a type of tax increment financing district which consists of a project, or a portion of a project, intended for occupancy, in part, by persons or families of low and moderate income, as defined in chapter 462A, Title II of the National Housing Act of 1934, the National Housing Act of 1959, the United States Housing Act of 1937, as amended, Title V of the Housing Act of 1949, as amended, any other similar present or future federal, state, or municipal legislation, or the regulations promulgated under any of those acts, and that satisfies the requirements of M.S., Section 469.1761. Housing project means a project, or portion of a project, that meets all the qualifications of a housing district under this subdivision, whether or not actually established as a housing district. M.S., Section 469.1761: Subd. 1. Requirement imposed. (a) In order for a tax increment financing district to qualify as a housing district: (1) the income limitations provided in this section must be satisfied; and (2) no more than 20 percent of the square footage of buildings that receive assistance from tax increments may consist of commercial, retail, or other nonresidential uses. (b) The requirements imposed by this section apply to property receiving assistance financed with tax increments, including interest reduction, land transfers at less than the authority’s cost of acquisition, utility service or connections, roads, parking facilities, or other subsidies. The provisions of this section do not apply to districts located within a targeted area as defined in Section 462C.02 Subd 9, clause (e). (c) For purposes of the requirements of paragraph (a), the authority may elect to treat an addition to an existing structure as a separate building if: City of Otsego Tax Increment Financing Plan for Tax Increment Financing District No. 3 - Guardian Angels Riverview Landing 2-2 (1) construction of the addition begins more than three years after construction of the existing structure was completed; and (2) for an addition that does not meet the requirements of paragraph (a), clause (2),if it is treated as a separate building, the addition was not contemplated by the tax increment financing plan which includes the existing structure. Subd. 2. Owner occupied housing. For owner occupied residential property, 95 percent of the housing units must be initially purchased and occupied by individuals whose family income is less than or equal to the income requirements for qualified mortgage bond projects under section 143(f) of the Internal Revenue Code. Subd. 3. Rental property. For residential rental property, the property must satisfy the income requirements for a qualified residential rental project as defined in section 142(d) of the Internal Revenue Code. The requirements of this subdivision apply for the duration of the tax increment financing district. Subd. 4. Noncompliance; enforcement. Failure to comply with the requirements of this section is subject to M.S., Section 469.1771. In meeting the statutory criteria the City relies on the following facts and findings: • The District consists of one parcel. • The development will consist of 142 units of assisted living • 20% of the units will be occupied by person with incomes less than 50% of median income Pursuant to M.S., Section 469.176, Subd. 7, the District does not contain any parcel or part of a parcel that qualified under the provisions of M.S., Sections 273.111, 273.112, or 273.114 or Chapter 473H for taxes payable in any of the five calendar years before the filing of the request for certification of the District. Subsection 2-7. Duration and First Year of Tax Increment of the District Pursuant to M.S., Section 469.175, Subd. 1, and Section 469.176, Subd. 1, the duration and first year of tax increment of the District must be indicated within the TIF Plan. Pursuant to M.S., Section 469.176, Subd. 1b., the duration of the District will be 25 years after receipt of the first increment by the City (a total of 26 years of tax increment). The City elects to receive the first tax increment in 2020, which is no later than four years following the year of approval of the District. Thus, it is estimated that the District, including any modifications of the TIF Plan for subsequent phases or other changes, would terminate after 2045, or when the TIF Plan is satisfied. The City reserves the right to decertify the District prior to the legally required date. Subsection 2-8. Original Tax Capacity, Tax Rate and Estimated Captured Net Tax Capacity Value/Increment and Notification of Prior Planned Improvements Pursuant to M.S., Section 469.174, Subd. 7 and M.S., Section 469.177, Subd. 1, the Original Net Tax Capacity (ONTC) as certified for the District will be based on the market values placed on the property by the assessor in 2017 for taxes payable 2018. Pursuant to M.S., Section 469.177, Subds. 1 and 2, the County Auditor shall certify in each year (beginning City of Otsego Tax Increment Financing Plan for Tax Increment Financing District No. 3 - Guardian Angels Riverview Landing 2-3 in the payment year 2020) the amount by which the original value has increased or decreased as a result of: 1. Change in tax exempt status of property; 2. Reduction or enlargement of the geographic boundaries of the district; 3. Change due to adjustments, negotiated or court-ordered abatements; 4. Change in the use of the property and classification; 5. Change in state law governing class rates; or 6. Change in previously issued building permits. In any year in which the current Net Tax Capacity (NTC) value of the District declines below the ONTC, no value will be captured and no tax increment will be payable to the City. The original local tax rate for the District will be the local tax rate for taxes payable 2018, assuming the request for certification is made before June 30, 2018. The ONTC and an assumption for the Original Local Tax Rate using Pay 2017 information for the District appear in the table below. Pursuant to M.S., Section 469.174 Subd. 4 and M.S., Section 469.177, Subd. 1, 2, and 4, the estimated Captured Net Tax Capacity (CTC) of the District, within Development District No. 1, upon completion of the projects within the District, will annually approximate tax increment revenues as shown in the table below. The City requests 100 percent of the available increase in tax capacity for repayment of its obligations and current expenditures, beginning in the tax year payable 2020. The Project Tax Capacity (PTC) listed is an estimate of values when the projects within the District are completed. Project Estimated Tax Capacity upon Completion (PTC) $248,449 Original Estimated Net Tax Capacity (ONTC) $7,549 Estimated Captured Tax Capacity (CTC) $240,900 Original Local Tax Rate 1.1411 Pay 2017 Estimated Annual Tax Increment (CTC x Local Tax Rate) $274,891 Percent Retained by the City 100% Tax capacity includes a 2% inflation factor for the duration of the District. The tax capacity included in thischart is the estimated tax capacity of the District in year 25. The tax capacity of the District in year one isestimated to be $151,438. Pursuant to M.S., Section 469.177, Subd. 4, the City shall, after a due and diligent search, accompany its request for certification to the County Auditor or its notice of the District enlargement pursuant to M.S., Section 469.175, Subd. 4, with a listing of all properties within the District or area of enlargement for which building permits have been issued during the eighteen (18) months immediately preceding approval of the TIF Plan by the municipality pursuant to M.S., Section 469.175, Subd. 3. The County Auditor shall increase the original net tax capacity of the District by the net tax capacity of improvements for which a building permit was issued. The City has reviewed the area to be included in the District and found no parcels for which building permits have been issued during the 18 months immediately preceding approval of the TIF Plan by the City. City of Otsego Tax Increment Financing Plan for Tax Increment Financing District No. 3 - Guardian Angels Riverview Landing 2-4 Subsection 2-9. Sources of Revenue/Bonds to be Issued The costs outlined in the Uses of Funds will be financed primarily through the annual collection of tax increments. The City reserves the right to incur bonds or other indebtedness as a result of the TIF Plan. As presently proposed, the projects within the District will be financed by a pay-as-you-go note. Any refunding amounts will be deemed a budgeted cost without a formal TIF Plan Modification. This provision does not obligate the City to incur debt. The City will issue bonds or incur other debt only upon the determination that such action is in the best interest of the City. The total estimated tax increment revenues for the District are shown in the table below: SOURCES OF FUNDS TOTAL Tax Increment $5,574,409 Interest $286,451 TOTAL $5,860,860 The City may issue bonds (as defined in the TIF Act) secured in whole or in part with tax increments from the District in a maximum principal amount of $3,233,271. Such bonds may be in the form of pay-as-you-go notes, revenue bonds or notes, general obligation bonds, or interfund loans. This estimate of total bonded indebtedness is a cumulative statement of authority under this TIF Plan as of the date of approval. Subsection 2-10. Uses of Funds Currently under consideration for the District is a proposal to facilitate of an approximately 142-unit independent and assisted-living facility. The City has determined that it will be necessary to provide assistance to the project(s) for certain District costs, as described. The City has studied the feasibility of the development or redevelopment of property in and around the District. To facilitate the establishment and development or redevelopment of the District, this TIF Plan authorizes the use of tax increment financing to pay for the cost of certain eligible expenses. The estimate of public costs and uses of funds associated with the District is outlined in the following table. USES OF TAX INCREMENT FUNDS TOTAL Land/Building Acquisition $446,022 Site Improvements/Preparation $700,000 Utilities $500,000 Other Qualifying Improvements $1,029,808 Administrative Costs (up to 10%)$557,441 PROJECT COST TOTAL $3,233,271 Interest $2,627,589 PROJECT AND INTEREST COSTS TOTAL $5,860,860 City of Otsego Tax Increment Financing Plan for Tax Increment Financing District No. 3 - Guardian Angels Riverview Landing 2-5 The total project cost, including financing costs (interest) listed in the table above does not exceed the total projected tax increments for the District as shown in Subsection 2-9. Estimated costs associated with the District are subject to change among categories without a modification to this TIF Plan. The cost of all activities to be considered for tax increment financing will not exceed, without formal modification, the budget above pursuant to the applicable statutory requirements. The City may expend funds for qualified housing activities outside of the District boundaries. Subsection 2-11. Business Subsidies Pursuant to M.S., Section 116J.993, Subd. 3, the following forms of financial assistance are not considered a business subsidy: (1) A business subsidy of less than $150,000; (2) Assistance that is generally available to all businesses or to a general class of similar businesses, such as a line of business, size, location, or similar general criteria; (3) Public improvements to buildings or lands owned by the state or local government that serve a public purpose and do not principally benefit a single business or defined group of businesses at the time the improvements are made; (4) Redevelopment property polluted by contaminants as defined in M.S., Section 116J.552, Subd. 3; (5) Assistance provided for the sole purpose of renovating old or decaying building stock or bringing it up to code and assistance provided for designated historic preservation districts, provided that the assistance is equal to or less than 50% of the total cost; (6) Assistance to provide job readiness and training services if the sole purpose of the assistance is to provide those services; (7) Assistance for housing; (8) Assistance for pollution control or abatement, including assistance for a tax increment financing hazardous substance subdistrict as defined under M.S., Section 469.174, Subd. 23; (9) Assistance for energy conservation; (10) Tax reductions resulting from conformity with federal tax law; (11) Workers' compensation and unemployment compensation; (12) Benefits derived from regulation; (13) Indirect benefits derived from assistance to educational institutions; (14) Funds from bonds allocated under chapter 474A, bonds issued to refund outstanding bonds, and bonds issued for the benefit of an organization described in section 501 (c) (3) of the Internal Revenue Code of 1986, as amended through December 31, 1999; (15) Assistance for a collaboration between a Minnesota higher education institution and a business; (16) Assistance for a tax increment financing soils condition district as defined under M.S., Section 469.174, Subd. 19; (17) Redevelopment when the recipient's investment in the purchase of the site and in site preparation is 70 percent or more of the assessor's current year's estimated market value; (18) General changes in tax increment financing law and other general tax law changes of a principally technical nature; (19) Federal assistance until the assistance has been repaid to, and reinvested by, the state or local government agency; (20) Funds from dock and wharf bonds issued by a seaway port authority; (21) Business loans and loan guarantees of $150,000 or less; (22) Federal loan funds provided through the United States Department of Commerce, Economic Development Administration; and (23) Property tax abatements granted under M.S., Section 469.1813 to property that is subject to City of Otsego Tax Increment Financing Plan for Tax Increment Financing District No. 3 - Guardian Angels Riverview Landing 2-6 valuation under Minnesota Rules, chapter 8100. The City will comply with M.S., Sections 116J.993 to 116J.995 to the extent the tax increment assistance under this TIF Plan does not fall under any of the above exemptions. Subsection 2-12. County Road Costs Pursuant to M.S., Section 469.175, Subd. 1a, the county board may require the City to pay for all or part of the cost of county road improvements if the proposed development to be assisted by tax increment will, in the judgment of the county, substantially increase the use of county roads requiring construction of road improvements or other road costs and if the road improvements are not scheduled within the next five years under a capital improvement plan or within five years under another county plan. If the county elects to use increments to improve county roads, it must notify the City within forty-five days of receipt of this TIF Plan. In the opinion of the City and consultants, the proposed development outlined in this TIF Plan will have little or no impact upon county roads, therefore the TIF Plan was not forwarded to the county 45 days prior to the public hearing. The City is aware that the county could claim that tax increment should be used for county roads, even after the public hearing. Subsection 2-13. Estimated Impact on Other Taxing Jurisdictions The estimated impact on other taxing jurisdictions assumes that the redevelopment contemplated by the TIF Plan would occur without the creation of the District. However, the City has determined that such development or redevelopment would not occur "but for" tax increment financing and that, therefore, the fiscal impact on other taxing jurisdictions is $0. The estimated fiscal impact of the District would be as follows if the "but for" test was not met: IMPACT ON TAX BASE 2016/Pay 2017 Total Net Tax Capacity Estimated Captured Tax Capacity (CTC) Upon Completion Percent of CTC to Entity Total Wright County 146,611,070 240,900 0.1643% City of Otsego 14,872,821 240,900 1.6197% Elk River ISD No. 728 16,496,452 240,900 1.4603% IMPACT ON TAX RATES Pay 2017 Extension Rates Percent of Total CTC Potential Taxes Wright County 0.395990 34.70% 240,900 95,394 City of Otsego 0.378520 33.17% 240,900 91,185 Elk River ISD No. 728 0.366590 32.13% 240,900 88,312 Other 0.000000 0.00%240,900 0 Total 1.141100 100.00%274,891 City of Otsego Tax Increment Financing Plan for Tax Increment Financing District No. 3 - Guardian Angels Riverview Landing 2-7 The estimates listed above display the captured tax capacity when all construction is completed. The tax rate used for calculations is the actual Pay 2017 rate. The total net capacity for the entities listed above are based on actual Pay 2017 figures. The District will be certified under the actual Pay 2018 rates, which were unavailable at the time this TIF Plan was prepared. Pursuant to M.S. Section 469.175 Subd. 2(b): (1) Estimate of total tax increment. It is estimated that the total amount of tax increment that will be generated over the life of the District is $5,574,409; (2) Probable impact of the District on city provided services and ability to issue debt. An impact of the District on police protection is not expected. The City currently contracts with the Wright County Sheriff’s Office for police services. The Wright County Sheriff's Office does track all calls for service including property-type calls and crimes. With any addition of new residents, police calls for service may be increased. New developments add an increase in traffic, and additional overall demands to the call load. However, the City does not expect that the proposed development, in and of itself, will necessitate new capital investment. The probable impact of the District on fire protection is not expected to be significant. Typically new buildings generate few calls, if any, and are of superior construction. The City currently contracts with City of Elk River for fire protection services for the area including the District. The impact of the District on public infrastructure is expected to be minimal. The development is not expected to significantly impact any traffic movements in the area. The current infrastructure for sanitary sewer, storm sewer and water will be able to handle the additional volume generated from the proposed development. Based on the development plans, there are no additional costs associated with street maintenance, sweeping, plowing, lighting and sidewalks. The development in the District is expected to contribute an estimated $938,415 in sanitary sewer (SAC) and water (WAC) connection fees. The probable impact of any District general obligation tax increment bonds on the ability to issue debt for general fund purposes is expected to be minimal. It is not anticipated that there will be any general obligation debt issued in relation to this project, therefore there will be no impact on the City's ability to issue future debt or on the City's debt limit. (3) Estimated amount of tax increment attributable to school district levies. It is estimated that the amount of tax increments over the life of the District that would be attributable to school district levies, assuming the school district's share of the total local tax rate for all taxing jurisdictions remained the same, is $1,791,058; (4) Estimated amount of tax increment attributable to county levies. It is estimated that the amount of tax increments over the life of the District that would be attributable to county levies, assuming the county's share of the total local tax rate for all taxing jurisdictions remained the same, is $1,934,320; (5) Additional information requested by the county or school district. The City is not aware of any standard questions in a county or school district written policy regarding tax increment districts and impact on county or school district services. The county or school district must request additional information pursuant to M.S. Section 469.175 Subd. 2(b) within 15 days after receipt of the tax increment financing plan. City of Otsego Tax Increment Financing Plan for Tax Increment Financing District No. 3 - Guardian Angels Riverview Landing 2-8 No requests for additional information from the county or school district regarding the proposed development for the District have been received. Subsection 2-14. Supporting Documentation Pursuant to M.S. Section 469.175, Subd. 1 (a), clause 7 the TIF Plan must contain identification and description of studies and analyses used to make the findings are required in the resolution approving the District. Following is a list of reports and studies on file at the City that support the City's findings: •Guardian Angels Riverview Landing Request For Financial Assistance Subsection 2-15. Definition of Tax Increment Revenues Pursuant to M.S., Section 469.174, Subd. 25, tax increment revenues derived from a tax increment financing district include all of the following potential revenue sources: 1. Taxes paid by the captured net tax capacity, but excluding any excess taxes, as computed under M.S., Section 469.177; 2. The proceeds from the sale or lease of property, tangible or intangible, to the extent the property was purchased by the authority with tax increments; 3. Principal and interest received on loans or other advances made by the authority with tax increments; 4. Interest or other investment earnings on or from tax increments; 5. Repayments or return of tax increments made to the Authority under agreements for districts for which the request for certification was made after August 1, 1993; and 6. The market value homestead credit paid to the Authority under M.S., Section 273.1384. Subsection 2-16. Modifications to the District In accordance with M.S., Section 469.175, Subd. 4, any: 1. Reduction or enlargement of the geographic area of the District, if the reduction does not meet the requirements of M.S., Section 469.175, Subd. 4(e); 2. Increase in amount of bonded indebtedness to be incurred; 3. A determination to capitalize interest on debt if that determination was not a part of the original TIF Plan; 4. Increase in the portion of the captured net tax capacity to be retained by the City; 5. Increase in the estimate of the cost of the District, including administrative expenses, that will be paid or financed with tax increment from the District; or 6. Designation of additional property to be acquired by the City, shall be approved upon the notice and after the discussion, public hearing and findings required for approval of the original TIF Plan. Pursuant to M.S. Section 469.175 Subd. 4(f), the geographic area of the District may be reduced, but shall not be enlarged after five years following the date of certification of the original net tax capacity by the county auditor. If a housing district is enlarged, the reasons and supporting facts for the determination that the addition to the district meets the criteria of M.S., Section 469.174, Subd. 11 must be documented. The requirements of this paragraph do not apply if (1) the only modification is elimination of parcel(s) from the District and (2) (A) the current net tax capacity of the parcel(s) eliminated from the District equals or exceeds the net tax capacity of those parcel(s) in the District's original net tax capacity or (B) the City agrees that, City of Otsego Tax Increment Financing Plan for Tax Increment Financing District No. 3 - Guardian Angels Riverview Landing 2-9 notwithstanding M.S., Section 469.177, Subd. 1, the original net tax capacity will be reduced by no more than the current net tax capacity of the parcel(s) eliminated from the District. The City must notify the County Auditor of any modification to the District. Modifications to the District in the form of a budget modification or an expansion of the boundaries will be recorded in the TIF Plan. Subsection 2-17. Administrative Expenses In accordance with M.S., Section 469.174, Subd. 14, administrative expenses means all expenditures of the City, other than: 1. Amounts paid for the purchase of land; 2. Amounts paid to contractors or others providing materials and services, including architectural and engineering services, directly connected with the physical development of the real property in the District; 3. Relocation benefits paid to or services provided for persons residing or businesses located in the District; 4. Amounts used to pay principal or interest on, fund a reserve for, or sell at a discount bonds issued pursuant to M.S., Section 469.178; or 5. Amounts used to pay other financial obligations to the extent those obligations were used to finance costs described in clauses (1) to (3). For districts for which the request for certification were made before August 1, 1979, or after June 30, 1982, and before August 1, 2001, administrative expenses also include amounts paid for services provided by bond counsel, fiscal consultants, and planning or economic development consultants. Pursuant to M.S., Section 469.176, Subd. 3, tax increment may be used to pay any authorized and documented administrative expenses for the District up to but not to exceed 10 percent of the total estimated tax increment expenditures authorized by the TIF Plan or the total tax increments, as defined by M.S., Section 469.174, Subd. 25, clause (1), from the District, whichever is less. For districts for which certification was requested after July 31, 2001, no tax increment may be used to pay any administrative expenses for District costs which exceed ten percent of total estimated tax increment expenditures authorized by the TIF Plan or the total tax increments, as defined in M.S., Section 469.174, Subd. 25, clause (1), from the District, whichever is less. Pursuant to M.S., Section 469.176, Subd. 4h, tax increments may be used to pay for the County's actual administrative expenses incurred in connection with the District and are not subject to the percentage limits of M.S., Section 469.176, Subd. 3. The county may require payment of those expenses by February 15 of the year following the year the expenses were incurred. Pursuant to M.S., Section 469. 177, Subd. 11, the County Treasurer shall deduct an amount (currently 0.36 percent) of any increment distributed to the City and the County Treasurer shall pay the amount deducted to the State Commissioner of Management and Budget for deposit in the state general fund to be appropriated to the State Auditor for the cost of financial reporting of tax increment financing information and the cost of examining and auditing authorities' use of tax increment financing. This amount may be adjusted annually by the Commissioner of Revenue. Subsection 2-18. Limitation of Increment The tax increment pledged to the payment of bonds and interest thereon may be discharged and the District City of Otsego Tax Increment Financing Plan for Tax Increment Financing District No. 3 - Guardian Angels Riverview Landing 2-10 may be terminated if sufficient funds have been irrevocably deposited in the debt service fund or other escrow account held in trust for all outstanding bonds to provide for the payment of the bonds at maturity or redemption date. Pursuant to M.S., Section 469.176, Subd. 6: if, after four years from the date of certification of the original net tax capacity of the tax increment financing district pursuant to M.S., Section 469.177, no demolition, rehabilitation or renovation of property or other site preparation, including qualified improvement of a street adjacent to a parcel but not installation of utility service including sewer or water systems, has been commenced on a parcel located within a tax increment financing district by the authority or by the owner of the parcel in accordance with the tax increment financing plan, no additional tax increment may be taken from that parcel, and the original net tax capacity of that parcel shall be excluded from the original net tax capacity of the tax increment financing district. If the authority or the owner of the parcel subsequently commences demolition, rehabilitation or renovation or other site preparation on that parcel including qualified improvement of a street adjacent to that parcel, in accordance with the tax increment financing plan, the authority shall certify to the county auditor that the activity has commenced and the county auditor shall certify the net tax capacity thereof as most recently certified by the commissioner of revenue and add it to the original net tax capacity of the tax increment financing district. The county auditor must enforce the provisions of this subdivision. The authority must submit to the county auditor evidence that the required activity has taken place for each parcel in the district. The evidence for a parcel must be submitted by February 1 of the fifth year following the year in which the parcel was certified as included in the district. For purposes of this subdivision, qualified improvements of a street are limited to (1) construction or opening of a new street, (2) relocation of a street, and (3) substantial reconstruction or rebuilding of an existing street. The City or a property owner must improve parcels within the District by approximately July 2021 and report such actions to the County Auditor. Subsection 2-19. Use of Tax Increment The City hereby determines that it will use 100 percent of the captured net tax capacity of taxable property located in the District for the following purposes: 1. To pay the principal of and interest on bonds issued to finance a project; 2. To finance, or otherwise pay the capital and administration costs of Development District No. 1 pursuant to M.S., Sections 469.124 to 469.133; 3. To pay for project costs as identified in the budget set forth in the TIF Plan; 4. To finance, or otherwise pay for other purposes as provided in M.S., Section 469.176, Subd. 4; 5. To pay principal and interest on any loans, advances or other payments made to or on behalf of the City or for the benefit of Development District No. 1 by a developer; 6. To finance or otherwise pay premiums and other costs for insurance or other security guaranteeing the payment when due of principal of and interest on bonds pursuant to the TIF Plan or pursuant to M.S., Chapter 462C. M.S., Sections 469.152 through 469.165, and/or M.S., Sections 469.178; and 7. To accumulate or maintain a reserve securing the payment when due of the principal and interest on the tax increment bonds or bonds issued pursuant to M.S., Chapter 462C, M.S., Sections 469.152 through 469.165, and/or M.S., Sections 469.178. City of Otsego Tax Increment Financing Plan for Tax Increment Financing District No. 3 - Guardian Angels Riverview Landing 2-11 Revenues derived from tax increment from a housing district must be used solely to finance the cost of housing projects as defined in M.S., Sections 469.174, Subd. 11 and 469.1761. The cost of public improvements directly related to the housing projects and the allocated administrative expenses of the City may be included in the cost of a housing project. These revenues shall not be used to circumvent any levy limitations applicable to the City nor for other purposes prohibited by M.S., Section 469.176, Subd. 4. Tax increments generated in the District will be paid by Wright County to the City for the Tax Increment Fund of said District. The City will pay to the developer(s) annually an amount not to exceed an amount as specified in a developer's agreement to reimburse the costs of land acquisition, public improvements, demolition and relocation, site preparation, and administration. Remaining increment funds will be used for City administration (up to 10 percent) and for the costs of public improvement activities outside the District. Subsection 2-20. Excess Increments Excess increments, as defined in M.S., Section 469.176, Subd. 2, shall be used only to do one or more of the following: 1. Prepay any outstanding bonds; 2. Discharge the pledge of tax increment for any outstanding bonds; 3. Pay into an escrow account dedicated to the payment of any outstanding bonds; or 4. Return the excess to the County Auditor for redistribution to the respective taxing jurisdictions in proportion to their local tax rates. The City must spend or return the excess increments under paragraph (c) within nine months after the end of the year. In addition, the City may, subject to the limitations set forth herein, choose to modify the TIF Plan in order to finance additional public costs in Development District No. 1 or the District. Subsection 2-21. Requirements for Agreements with the Developer The City will review any proposal for private development to determine its conformance with the Development Program and with applicable municipal ordinances and codes. To facilitate this effort, the following documents may be requested for review and approval: site plan, construction, mechanical, and electrical system drawings, landscaping plan, grading and storm drainage plan, signage system plan, and any other drawings or narrative deemed necessary by the City to demonstrate the conformance of the development with City plans and ordinances. The City may also use the Agreements to address other issues related to the development. Pursuant to M.S., Section 469.176, Subd. 5, no more than 10 percent, by acreage, of the property to be acquired in the District as set forth in the TIF Plan shall at any time be owned by the City as a result of acquisition with the proceeds of bonds issued pursuant to M.S., Section 469.178 to which tax increments from property acquired is pledged, unless prior to acquisition in excess of 10 percent of the acreage, the City concluded an agreement for the development of the property acquired and which provides recourse for the City should the development not be completed. Subsection 2-22. Assessment Agreements Pursuant to M.S., Section 469.177, Subd. 8, the City may enter into a written assessment agreement in recordable form with the developer of property within the District which establishes a minimum market value City of Otsego Tax Increment Financing Plan for Tax Increment Financing District No. 3 - Guardian Angels Riverview Landing 2-12 of the land and completed improvements for the duration of the District. The assessment agreement shall be presented to the County Assessor who shall review the plans and specifications for the improvements to be constructed, review the market value previously assigned to the land upon which the improvements are to be constructed and, so long as the minimum market value contained in the assessment agreement appears, in the judgment of the assessor, to be a reasonable estimate, the County Assessor shall also certify the minimum market value agreement. Subsection 2-23. Administration of the District Administration of the District will be handled by the City Administrator. Subsection 2-24. Annual Disclosure Requirements Pursuant to M.S., Section 469.175, Subds. 5, 6, and 6b the City must undertake financial reporting for all tax increment financing districts to the Office of the State Auditor, County Board and County Auditor on or before August 1 of each year. M.S., Section 469.175, Subd. 5 also provides that an annual statement shall be published in a newspaper of general circulation in the City on or before August 15. If the City fails to make a disclosure or submit a report containing the information required by M.S., Section 469.175 Subd. 5 and Subd. 6, the Office of the State Auditor will direct the County Auditor to withhold the distribution of tax increment from the District. Subsection 2-25. Reasonable Expectations As required by the TIF Act, in establishing the District, the determination has been made that the anticipated development would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future. In making said determination, reliance has been placed upon written representation made by the developer to such effects and upon City staff awareness of the feasibility of developing the project site(s) within the District. Subsection 2-26. Other Limitations on the Use of Tax Increment 1. General Limitations. All revenue derived from tax increment shall be used in accordance with the TIF Plan. The revenues shall be used to finance, or otherwise pay the capital and administration costs of Development District No. 1 pursuant to M.S., Sections 469.124 to 469.133. Tax increments may not be used to circumvent existing levy limit law. No tax increment may be used for the acquisition, construction, renovation, operation, or maintenance of a building to be used primarily and regularly for conducting the business of a municipality, county, school district, or any other local unit of government or the state or federal government. This provision does not prohibit the use of revenues derived from tax increments for the construction or renovation of a parking structure. 2. Housing District Exceptions to Restriction on Pooling; Five Year Limit. Pursuant to M.S., Section 469.1763, (1) At least 80% of the tax increment derived from the District must be expended on Public Costs incurred within said district, and up to 20% of said tax increments may be spent on public costs incurred outside of the District but within Development District No. 1; provided that in the case of a housing district, a housing project, as defined in M.S., Section 469.174, Subd. 11, is deemed to be an activity in the District, even if the expenditure occurred after five years. City of Otsego Tax Increment Financing Plan for Tax Increment Financing District No. 3 - Guardian Angels Riverview Landing 2-13 Subsection 2-27. Summary The City of Otsego is establishing the District to provide an impetus for residential development and provide safe and decent life cycle housing in the City. The TIF Plan for the District was prepared by Ehlers & Associates, Inc., 3060 Centre Pointe Drive, Roseville, Minnesota 55113-1105, telephone (651) 697-8500. City of Otsego Tax Increment Financing Plan for Tax Increment Financing District No. 3 - Guardian Angels Riverview Landing 2-14 Appendix A Project Description Riverview Landing, Inc. is a subordinate affiliate of the non-profit senior healthcare provider Guardian Angels Senior Services. The organization is exploring the opportunity to acquire a site owned by 521 Land Company within the City of Otsego in order to develop, construct, own and operate a new senior living community. The site to be acquired is approximately 6 acres and the development assumes construction starting in Fall, 2017 of approximately 142-units of independent, assisted-living, and memory care units. To service the residents as well as accessible to the community, the proposed development will include inside and surface exterior parking facilities, a wellness center, resident and senior community dining facilities, as well as classroom and activity space. Completion of the construction is expected by the close of 2018. The City plans to utilize Tax Increment generated from the District to enable private development of the site by assisting the housing project. The City expects to utilize a pay-as-you-go revenue note to the developer to reimburse qualifying site improvement, infrastructure and housing project costs associated with the estimated $31 million project. The assistance will enable the developer to adequately secure private financing for the affordable housing project. In keeping with the TIF Statue, the developer will ensure that at least 20% of the units are occupied by tenants at or below 50% of the area median income. Appendix A-1 Appendix B Map of Development District No. 1 and the District Appendix B-1 7D[ ,QFUHPHQW )LQDQFLQJ 'LVWULFW 1R   *XDUGLDQ $QJHOV 5LYHUYLHZ /DQGLQJ 'HYHORSPHQW 'LVWULFW 1R  &LW\ RI 2WVHJR :ULJKW &RXQW\ 0LQQHVRWD 7,) 'LVWULFW 1R  TIF District Inset The boundaries of Development District No. 1 are coterminous with the corporate boundaries of the City of Otsego. Appendix C Description of Property to be Included in the District The District encompasses all property and adjacent rights-of-way and abutting roadways identified by the parcel listed below. Parcel Numbers Address Owner 118264000010* Unassigned 521 Land Company LLC *The District will be comprised of a portion of the parcel listed above subject to a future plat. The proposed legal description for the property is Lot 1, Block 1 Guardian Angels Riverview Landing. A final parcel identification number is anticipated to be provided prior to certification of the District. Appendix C-1 Appendix D Estimated Cash Flow for the District Appendix D-1 6/27/2017 Base Value Assumptions - Page 1 Guardian Angels Riverview Landing Housing TIF District City of Otsego, MN 142 unit assisted living facility ASSUMPTIONS AND RATES DistrictType:Housing District Name/Number:TIF No. 3 County District #:ISD 728 Exempt Class Rate (Exempt)0.00% First Year Construction or Inflation on Value 2018 Commercial Industrial Preferred Class Rate (C/I Pref.) Existing District - Specify No. Years Remaining First $150,000 1.50% Inflation Rate - Every Year:2.00%Over $150,000 2.00% Interest Rate:5.00%Commercial Industrial Class Rate (C/I)2.00% Present Value Date:1-Feb-18 Rental Housing Class Rate (Rental)1.25% First Period Ending 1-Aug-18 Affordable Rental Housing Class Rate (Aff. Rental) Tax Year District was Certified:Pay 2018 First $115,000 0.75% Cashflow Assumes First Tax Increment For Development:2020 Over $115,000 0.25% Years of Tax Increment 26 Non-Homestead Residential (Non-H Res. 1 Unit) Assumes Last Year of Tax Increment 2045 First $500,000 1.00% Fiscal Disparities Election [Outside (A), Inside (B), or NA]NA Over $500,000 1.25% Incremental or Total Fiscal Disparities Incremental Homestead Residential Class Rate (Hmstd. Res.) Fiscal Disparities Contribution Ratio 33.4802%Pay 2017 First $500,000 1.00% Fiscal Disparities Metro-Wide Tax Rate 150.0490%Pay 2017 Over $500,000 1.25% Maximum/Frozen Local Tax Rate: 114.110%Pay 2017 Agricultural Non-Homestead 1.00% Current Local Tax Rate: (Use lesser of Current or Max.)114.110%Pay 2017 State-wide Tax Rate (Comm./Ind. only used for total taxes)45.8020%Pay 2017 Market Value Tax Rate (Used for total taxes)0.19373%Pay 2017 Building Total Percentage Tax Year Property Current Class After Land Market Market Of Value Used Original Original Tax Original After Conversion Map #PID Owner Address Market Value Value Value for District Market Value Market Value Class Tax Capacity Conversion Orig. Tax Cap. 1 118-264-000010 1,078,400 0 1,078,400 56%603,904 Pay 2018 C/I Pref.11,328 Rental 7,549 1,078,400 0 1,078,400 603,904 11,328 7,549 Note: 1. Base values are for pay 2018 based upon review of County website on 5.30.2017 and apportionment of the property value to the proposed development after an anticipated subdivision. Area/ Phase Tax Rates BASE VALUE INFORMATION (Original Tax Capacity) Prepared by Ehlers & Associates, Inc. - Estimates Only N:\Minnsota\Otsego\Housing - Economic - Redevelopment\TIF\TIF Districts\TIF 3\TIF Run - Guardian Angels Housing TIF PLAN FINAL.xls 6/27/2017 Base Value Assumptions - Page 2 Guardian Angels Riverview Landing Housing TIF District City of Otsego, MN 142 unit assisted living facility Estimated Taxable Total Taxable Property Percentage Percentage Percentage Percentage First Year Market Value Market Value Total Market Tax Project Project Tax Completed Completed Completed Completed Full Taxes Area/Phase New Use Per Sq. Ft./Unit Per Sq. Ft./Unit Sq. Ft./Units Value Class Tax Capacity Capacity/Unit 2018 2019 2020 2021 Payable Apartments 85,317 85,317 142 12,115,000 Rental 151,438 1,066 100%100%100%100%2020 TOTAL 12,115,000 151,438 Subtotal Residential 142 12,115,000 151,438 Note: 1. Market values are based upon initial estimates from the County Assessor's Office provided 3.31.2017. Total Fiscal Local Local Fiscal State-wide Market Tax Disparities Tax Property Disparities Property Value Total Taxes Per New Use Capacity Tax Capacity Capacity Taxes Taxes Taxes Taxes Taxes Sq. Ft./Unit Apartments 151,438 0 151,438 172,805 0 0 23,470 196,276 1,382.22 TOTAL 151,438 0 151,438 172,805 0 0 23,470 196,276 Note: 1. Taxes and tax increment will vary significantly from year to year depending upon values, rates, state law, fiscal disparities and other factors which cannot be predicted. Total Property Taxes 196,276 less State-wide Taxes 0 less Fiscal Disp. Adj.0 less Market Value Taxes (23,470) less Base Value Taxes (8,614) Annual Gross TIF 164,191 TAX CALCULATIONS PROJECT INFORMATION (Project Tax Capacity) WHAT IS EXCLUDED FROM TIF? Prepared by Ehlers & Associates, Inc. - Estimates Only N:\Minnsota\Otsego\Housing - Economic - Redevelopment\TIF\TIF Districts\TIF 3\TIF Run - Guardian Angels Housing TIF PLAN FINAL.xls 6/27/2017 Tax Increment Cashflow - Page 3 Guardian Angels Riverview Landing Housing TIF District City of Otsego, MN 142 unit assisted living facility TAX INCREMENT CASH FLOW Project Original Fiscal Captured Local Annual Semi-Annual State Admin.Semi-Annual Semi-Annual PERIOD % of Tax Tax Disparities Tax Tax Gross Tax Gross Tax Auditor at Net Tax Present ENDING Tax Payment OTC Capacity Capacity Incremental Capacity Rate Increment Increment 0.36%10%Increment Value Yrs.Year Date - - - - 08/01/18 - - - - 02/01/19 - - - - 08/01/19 - - - - 02/01/20 100%151,438 (7,549) - 143,889 114.110%164,191 82,096 (296) (8,180) 73,620 65,069 0.5 2020 08/01/20 100%151,438 (7,549) - 143,889 114.110%164,191 82,096 (296) (8,180) 73,620 128,552 1 2020 02/01/21 100%154,466 (7,549) - 146,917 114.110%167,648 83,824 (302) (8,352) 75,170 191,790 1.5 2021 08/01/21 100%154,466 (7,549) - 146,917 114.110%167,648 83,824 (302) (8,352) 75,170 253,485 2 2021 02/01/22 100%157,556 (7,549) - 150,007 114.110%171,173 85,586 (308) (8,528) 76,750 314,941 2.5 2022 08/01/22 100%157,556 (7,549) - 150,007 114.110%171,173 85,586 (308) (8,528) 76,750 374,899 3 2022 02/01/23 100%160,707 (7,549) - 153,158 114.110%174,768 87,384 (315) (8,707) 78,363 434,622 3.5 2023 08/01/23 100%160,707 (7,549) - 153,158 114.110%174,768 87,384 (315) (8,707) 78,363 492,889 4 2023 02/01/24 100%163,921 (7,549) - 156,372 114.110%178,436 89,218 (321) (8,890) 80,007 550,928 4.5 2024 08/01/24 100%163,921 (7,549) - 156,372 114.110%178,436 89,218 (321) (8,890) 80,007 607,551 5 2024 02/01/25 100%167,199 (7,549) - 159,650 114.110%182,177 91,089 (328) (9,076) 81,685 663,952 5.5 2025 08/01/25 100%167,199 (7,549) - 159,650 114.110%182,177 91,089 (328) (9,076) 81,685 718,977 6 2025 02/01/26 100%170,543 (7,549) - 162,994 114.110%185,993 92,996 (335) (9,266) 83,396 773,784 6.5 2026 08/01/26 100%170,543 (7,549) - 162,994 114.110%185,993 92,996 (335) (9,266) 83,396 827,254 7 2026 02/01/27 100%173,954 (7,549) - 166,405 114.110%189,885 94,943 (342) (9,460) 85,141 880,512 7.5 2027 08/01/27 100%173,954 (7,549) - 166,405 114.110%189,885 94,943 (342) (9,460) 85,141 932,471 8 2027 02/01/28 100%177,433 (7,549) - 169,884 114.110%193,855 96,928 (349) (9,658) 86,921 984,222 8.5 2028 08/01/28 100%177,433 (7,549) - 169,884 114.110%193,855 96,928 (349) (9,658) 86,921 1,034,711 9 2028 02/01/29 100%180,982 (7,549) - 173,433 114.110%197,904 98,952 (356) (9,860) 88,736 1,084,998 9.5 2029 08/01/29 100%180,982 (7,549) - 173,433 114.110%197,904 98,952 (356) (9,860) 88,736 1,134,058 10 2029 02/01/30 100%184,601 (7,549) - 177,053 114.110%202,035 101,017 (364) (10,065) 90,588 1,182,921 10.5 2030 08/01/30 100%184,601 (7,549) - 177,053 114.110%202,035 101,017 (364) (10,065) 90,588 1,230,591 11 2030 02/01/31 100%188,293 (7,549) - 180,745 114.110%206,248 103,124 (371) (10,275) 92,477 1,278,069 11.5 2031 08/01/31 100%188,293 (7,549) - 180,745 114.110%206,248 103,124 (371) (10,275) 92,477 1,324,389 12 2031 02/01/32 100%192,059 (7,549) - 184,511 114.110%210,545 105,273 (379) (10,489) 94,404 1,370,521 12.5 2032 08/01/32 100%192,059 (7,549) - 184,511 114.110%210,545 105,273 (379) (10,489) 94,404 1,415,527 13 2032 02/01/33 100%195,901 (7,549) - 188,352 114.110%214,928 107,464 (387) (10,708) 96,370 1,460,350 13.5 2033 08/01/33 100%195,901 (7,549) - 188,352 114.110%214,928 107,464 (387) (10,708) 96,370 1,504,080 14 2033 02/01/34 100%199,819 (7,549) - 192,270 114.110%219,399 109,700 (395) (10,930) 98,374 1,547,630 14.5 2034 08/01/34 100%199,819 (7,549) - 192,270 114.110%219,399 109,700 (395) (10,930) 98,374 1,590,119 15 2034 02/01/35 100%203,815 (7,549) - 196,266 114.110%223,959 111,980 (403) (11,158) 100,419 1,632,432 15.5 2035 08/01/35 100%203,815 (7,549) - 196,266 114.110%223,959 111,980 (403) (11,158) 100,419 1,673,714 16 2035 02/01/36 100%207,891 (7,549) - 200,342 114.110%228,611 114,305 (411) (11,389) 102,504 1,714,825 16.5 2036 08/01/36 100%207,891 (7,549) - 200,342 114.110%228,611 114,305 (411) (11,389) 102,504 1,754,933 17 2036 02/01/37 100%212,049 (7,549) - 204,500 114.110%233,355 116,678 (420) (11,626) 104,632 1,794,876 17.5 2037 08/01/37 100%212,049 (7,549) - 204,500 114.110%233,355 116,678 (420) (11,626) 104,632 1,833,844 18 2037 02/01/38 100%216,290 (7,549) - 208,741 114.110%238,195 119,097 (429) (11,867) 106,802 1,872,650 18.5 2038 08/01/38 100%216,290 (7,549) - 208,741 114.110%238,195 119,097 (429) (11,867) 106,802 1,910,509 19 2038 02/01/39 100%220,616 (7,549) - 213,067 114.110%243,131 121,565 (438) (12,113) 109,015 1,948,211 19.5 2039 08/01/39 100%220,616 (7,549) - 213,067 114.110%243,131 121,565 (438) (12,113) 109,015 1,984,993 20 2039 02/01/40 100%225,028 (7,549) - 217,479 114.110%248,166 124,083 (447) (12,364) 111,273 2,021,621 20.5 2040 08/01/40 100%225,028 (7,549) - 217,479 114.110%248,166 124,083 (447) (12,364) 111,273 2,057,356 21 2040 02/01/41 100%229,529 (7,549) - 221,980 114.110%253,301 126,651 (456) (12,619) 113,575 2,092,941 21.5 2041 08/01/41 100%229,529 (7,549) - 221,980 114.110%253,301 126,651 (456) (12,619) 113,575 2,127,657 22 2041 02/01/42 100%234,119 (7,549) - 226,570 114.110%258,540 129,270 (465) (12,880) 115,924 2,162,228 22.5 2042 08/01/42 100%234,119 (7,549) - 226,570 114.110%258,540 129,270 (465) (12,880) 115,924 2,195,955 23 2042 02/01/43 100%238,802 (7,549) - 231,253 114.110%263,883 131,941 (475) (13,147) 118,320 2,229,539 23.5 2043 08/01/43 100%238,802 (7,549) - 231,253 114.110%263,883 131,941 (475) (13,147) 118,320 2,262,305 24 2043 02/01/44 100%243,578 (7,549) - 236,029 114.110%269,333 134,666 (485) (13,418) 120,763 2,294,931 24.5 2044 08/01/44 100%243,578 (7,549) - 236,029 114.110%269,333 134,666 (485) (13,418) 120,763 2,326,762 25 2044 02/01/45 100%248,449 (7,549) - 240,900 114.110%274,892 137,446 (495) (13,695) 123,256 2,358,457 25.5 2045 08/01/45 100%248,449 (7,549) - 240,900 114.110%274,892 137,446 (495) (13,695) 123,256 2,389,380 26 2045 02/01/46 Total 5,594,550 (20,140) (557,441) 5,016,968 Present Value From 02/01/2018 Present Value Rate 5.00%2,664,458 (9,592) (265,487) 2,389,380 Prepared by Ehlers & Associates, Inc. - Estimates Only N:\Minnsota\Otsego\Housing - Economic - Redevelopment\TIF\TIF Districts\TIF 3\TIF Run - Guardian Angels Housing TIF PLAN FINAL.xls Appendix E Housing Qualifications for the District INCOME RESTRICTIONS - ADJUSTED FOR FAMILY SIZE (HOUSING DISTRICT) - WRIGHT COUNTY WRIGHT COUNTY MEDIAN INCOME: $90,400 No. of Persons 50% of Median Income 60% of Median Income 1-person $31,650 $37,980 2-person $36,200 $43,440 3-person $40,700 $48,840 4-person $45,200 $54,240 Source: Department of Housing and Urban Development and Minnesota Housing Finance Agency The two options for income limits on a standard housing district are 20% of the units at 50% of median income or 40% of the units at 60% of median income. There are no rent restrictions for a housing district. The developer expects to covenant to maintain 20% of units at 50% area median income. ***PLEASE NOTE: THESE NUMBERS ARE ADJUSTED ANNUALLY. ALL INCOME FIGURES REPORTED ON THIS PAGE ARE FOR 2017. Appendix E-1 Appendix F Findings for the District The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan for Tax Increment Financing District No. 3 - Guardian Angels Riverview Landing, as required pursuant to Minnesota Statutes, Section 469.175, Subdivision 3 are as follows: 1. Finding that Tax Increment Financing District No. 3 - Guardian Angels Riverview Landing is a housing district as defined in M.S., Section 469.174, Subd. 11. TIF District No. 3 - Guardian Angels Riverview Landing consists of one parcel. The development will consist of approximately 142 units of independent, assisted-living, and memory care. All or a portion of which will receive tax increment assistance and will meet income restrictions described in M.S. 469.1761. At least 20 percent of the units/homes receiving assistance will have incomes at or below 50 percent of median income. Appendix E of the TIF Plan contains background for the above finding. 2. 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. 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 development proposed in this plan is a housing district that meets the City's objectives for development and redevelopment and is intended for occupancy in part by low and moderate income persons. A portion of units will be income restricted and require operating subsidy, which means that rental revenues are insufficient to make the project economically feasibly without public assistance. The necessity of public assistance is true for most affordable rental housing development in Minnesota. Due to the high cost of building affordable new housing in the City, this project is feasible only through assistance, in part, from tax increment financing. The affordable project also requires public assistance in the form of tax-exempt conduit bonding. The developer has provided its project budget and financial projections (on file at City Hall) that demonstrate the need for tax increment assistance as described in the TIF Plan. 3. Finding that the TIF Plan for Tax Increment Financing District No. 3 - Guardian Angels Riverview Landing conforms to the general plan for the development or redevelopment of the municipality as a whole. The City of Otsego Planning Commission has reviewed the developer’s proposal for the site and approved preliminary zoning finding that the proposed land use conforms to the general development plan of the City. Appendix F-1 4. Finding that the TIF Plan for Tax Increment Financing District No. 3 - Guardian Angels Riverview Landing will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development or redevelopment of Development District No. 1 by private enterprise. Through the implementation of the TIF Plan, the City will provide an impetus for residential development, which is desirable or necessary for increased population and an increased need for life-cycle housing within the City. Appendix F-2