HomeMy WebLinkAboutItem 06.gJune 11, 2015 0 Item No.
RESOLUTION APPROVING AN ADMINISTRATIVE AMENDMENT TO THE TAX INCREMENT
PLAN FOR TAX INCREMENT FINANCING DISTRICT NO. 19
June 15, 2015 City Council Meeting
Proposed Action
Staff recommends adoption of the following motion: Move to adopt a resolution approving an
Administrative Amendment to the Tax Increment Financing Plan for Tax Increment Financing District
No. 19 for the BTD Manufacturing Expansion.
Passage of this motion will result in the legal description of Tax Increment Financing (TIF) District No.
19 being consistent with the re -platted land area contained in TIF District No. 19.
Overview
Last October, the City Council approved a TIF Plan to facilitate an expansion by BTD Manufacturing.
The Company, in conjunction with the Fulford Group, is currently constructing a 200,000 square foot
expansion of the Fulford Group Warehouse located at 21350 Cedar Avenue.
Since the TIF Plan was approved, the Fulford Group re -platted the property in which TIF District 19 is
located. An amendment to the previously approved TIF Plan is required in order to complete the
certification of TIF District No. 19 by Dakota County.
Attached is the original TIF Plan for TIF District with the amendments to the legal description of the
property for TIF District No. 19 to reflect the recently approved Fulford Group 15Y Addition plat. The
proposed changes are shown on pages 6 and 7 of the TIF along with new Exhibit IB. Staff
recommends approval of this Administrative Amendment.
Primary Issues to Consider
• What is the impact of this proposed Administrative Amendment? It allows for the final
certification of TIF District No. 19 for the BTD Manufacturing Project.
Supporting Information
• City Council Resolution and Amended Tax Increment Financing Plan
David L. Olson, Community and Economic Development Director
c: Paul Gintner - BTD, Dave Welte - BTD, Mikaela Huot - Springsted
Financial Impact: $ None Budgeted:Y/N N Source:
Envision Lakeville Community Value: Diversified Economic Development
CITY OF LAKEVILLE
COUNTY OF DAKOTA
RESOLUTION NO.
RESOLUTION APPROVING AN ADMINISTRATIVE AMENDMENT
TO THE TAX INCREMENT FINANCING PLAN FOR TAX
INCREMENT FINANCING (ECONOMIC DEVELOPMENT)
DISTRICT NO. 19
WHEREAS, by a resolution approved October 20, 2014 the Housing and
Redevelopment Authority for the City of Lakeville (the "Authority") approved the
Redevelopment Plan modification for Airlake Redevelopment Project No. 1 (the "Project
Area") and the Tax Increment Financing Plan (the "Plan") for Tax Increment Financing
(Economic Development) District No. 19 (the "TIF District"), pursuant to and in
conformity with Minnesota Statutes, Sections 469.124 through 469.133 and Sections
469.174 through 469.1794 (the "TIF Act"); and
WHEREAS, by a resolution approved October 20, 2014, the City Council
of the City of Lakeville (the "City") after a duly noticed public hearing, approved the
Plan for the TIF District; and
WHEREAS, the City and Authority have proposed an administrative
amendment to the Tax Increment Financing Plan for the TIF District (the
"Modification"), in order to update the parcel ID number and legal description of the
property within the TIF District, pursuant to and in accordance with the Act; and
WHEREAS, under Minnesota Statutes, Section 469.175, subdivision 4 of
the TIF Act, the Authority may modify the TIF Plan for the TIF District without the
notice and hearings required for a new district, if the changes are not those described in
Section 469.175, subdivision 4(b), clauses (1) through (6); and
WHEREAS, the proposed modification to the TIF Plan does not increase
the total estimated cost of the project or the total amount of bonded indebtedness, and
does not increase the geographic boundaries of the TIF District; and
WHEREAS, the Board of the Authority, on June 15, 2015, adopted the
Modification, subject to approval by this City Council, and transmitted the Modification
to this City Council for consideration.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City
of Lakeville, Minnesota as follows:
1. The administrative amendment to the Plan is hereby approved in
substantially the form on file in City Hall.
2. Upon approval of the Modification to the Plan by the Board of the
Authority, the Community Development Director is authorized to forward a copy
of the modified Plan to the Department of Revenue and the State Auditor pursuant
to Minnesota Statutes, Section 469.175, subdivision 4a.
3. The City Clerk is authorized and directed to forward a copy of the Plan to
Dakota County for informational purposes.
Adopted this 15th day of June, 2015.
Attest:
City Clerk
W
Mayor
City of Lakeville, Minnesota
Housing and Redevelopment Authority for the City of Lakeville
Administrative Amendment to the
Tax Increment Financing Plan
1571
Tax Increment Financing (Economic Development)
District No. 19
Within
Airlake Redevelopment Project No.1
(BTD Manufacturing Expansion Project)
Public Hearing Scheduled: October 20, 2014
Approval Date: October 20, 2014
Administrative Amendment Dated: June 9, 2015
Administrative Amendment Approval Date (Anticipated): June 15, 2015
Prepared by:
SPRINGSTED INCORPORATED
380 Jackson Street, Suite 300
St. Paul, MN 55101-2887
(651) 223-3000
WWW.SPRINGSTED.COM
INTRODUCTION
The Housing and Redevelopment for the City of Lakeville and the City Council of the City of Lakeville
previously approved the Tax Increment Financing Plan and established Tax Increment Financing (Economic
Development) District No. 19 for the BTD Expansion Project on October 20, 2014. Since establishment of the
TIF District, one of the parcels listed in the original plan was split and combined with another parcel with one
new parcel ID number and legal description created for the project. The purpose of the Administrative
Amendment to the Tax Increment Financing Plan is to make adjustments to Section G to reflect the updated
parcel ID number and legal description for the project. There are no other adjustments to the information
contained within the Tax Increment Financing Plan as originally approved.
TABLE OF CONTENTS
PART
LAKEVILLE
AIRLAKE REDEVELOPMENT PLAN
MODIFICATION NO.8
INTRODUCTION AND LEGAL BASIS
A. Statement of Intent of Modification ............
B. Statement of Public Purpose ....................
C. Project Area Boundary ...........................
D. Statement of Authority ............................
II. REDEVELOPMENT PROJECT
A. Redevelopment Plan Objectives .............
B. Land Use ..........................................
C. Development Standards .......................
D. Environmental Controls ........................
E. Redevelopment Activities ......................
1. City Activities -Original Plan
2. City Activities - Plan Modification
3. Private Activities - Original Plan
F. Project Cost Estimates .........................
G. Relocation .........................................
H. Development Contracts ........................
I. Operation of Public Improvements ..........
J. Administriation of Project ......................
K. Modification Plan .................................
................................................. I........ 1
.......................................................... 1
.......................................................... 1
..........................................................1
............................................................................ 1
............................................................................ 2
............................................................................ 2
............................................................................ 2
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...................................................................... 3
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PARTI............................................................................................................................................................... EXHIBIT I
TABLE OF CONTENTS
(Continued)
PART II
TAX INCREMENT FINANCING PLAN NO. 19
Section
A.
Definitions..................................................................................................................... 5
B.
Statutory Authorization.....................................................................................................
5
C.
Statement of Need and Public Purpose................................................................................
5
D.
Statement of Objectives....................................................................................................
5
E.
Designation of Tax Increment Financing District as an Economic Development District ....................
5
F.
Duration of the TIF District.................................................................................................
6
G.
Property to be Included in the TIF District..............................................................................
6
H.
Property to be Acquired in the TIF District.............................................................................
7
I.
Specific Development Expected to Occur Within the TIF District .................................................
7
J.
Findings and Need for Tax Increment Financing.....................................................................
7
K.
Estimated Public Costs.....................................................................................................
9
L.
Estimated Sources of Revenue..........................................................................................
9
M.
Estimated Amount of Bonded Indebtedness........................................................................
10
N.
Original Net Tax Capacity...............................................................................................
10
0.
Original Tax Capacity Rate..............................................................................................
10
P.
Projected Retained Captured Net Tax Capacity and Projected Tax Increment .............................
11
Q.
Use of Tax Increment.....................................................................................................11
R.
Excess Tax Increment....................................................................................................
12
S.
Tax Increment Pooling and the Five Year Rule.....................................................................
12
T.
Limitation on Administrative Expenses...............................................................................
13
U.
Limitation on Property Not Subject to Improvements - Four Year Rule .......................................
13
V.
Estimated Impact on Other Taxing Jurisdictions...................................................................
14
W.
Prior Planned Improvements............................................................................................
14
X.
Development Agreements...............................................................................................
15
Y.
Assessment Agreements................................................................................................
15
Z.
Modifications of the Tax Increment Financing Plan................................................................
15
AA.
Administration of the Tax Increment Financing Plan..............................................................
15
AB.
Financial Reporting and Disclosure Requirements................................................................
16
Map of the Tax Increment Financing District within Airlake Redevelopment Project No. 1 .................
Map of the Tax Increment Financing District.......................................................................................
AssumptionsReport...........................................................................................................................
Projected Tax Increment Report.........................................................................................................
Estimated Impact on Other Taxing Jurisdictions Report......................................................................
MarketValue Analysis Report.............................................................................................................
Page(s)
EXHIBIT I -A
EXHIBIT I -B
EXHIBIT II
EXHIBIT III
EXHIBIT IV
EXHIBIT V
Housing and Redevelopment Authority for the City of Lakeville and City of
Lakeville, Minnesota
PART
MODIFICATION NO.8
TO AIRLAKE REDEVELOPMENT PROJECT
I. INTRODUCTION AND LEGAL BASIS
Section A Statement of Intent of Modification
The City proposes to implement the plan objective listed in Section II.A.3 of the Original Redevelopment Plan
approved by the Authority and Council in 1984. The activity objective primarily includes the expansion of the project
boundary to include the proposed BTD Manufacturing Expansion TIF 19 as well as certain Airlake public
Improvements.
Section B Statement of Public Purpose
No Change
The Authority and Council find that there is a need to provide impetus for private development, maintain and increase
employment, and to increase tax base for the taxing jurisdiction within the City's corporate limits. These public
purpose goals are not attainable in the foreseeable future without the intervention of the Authority and City in the
normal development process.
Section C Project Area Boundary
No Change
The expanded boundaries of the Project area are shown in Exhibit "A" "Project Area Boundary Map". All land included
in the Project Area is within the legal boundaries of the City
Section D Statement of Authority
No Change
The Authority is authorized to modify a project pursuant to Minnesota Statutes Sections 469.001 to 469.047 (the HRA
Act) within boundaries of municipalities. The project as contemplated by this Plan consists of a Redevelopment
Project in the HRA Act, pursuant to Section 469.002, Subdivision 14 and Minnesota Statutes, Section 469.028,
Subdivision 3.
II. REDEVELOPMENT PROJECT
Section A Redevelopment Plan Objectives
No Change
The Authority and City, through the implementation of this Plan, seek to achieve the following objectives:
1. To provide logical and organized land use for the Project Area consistent with the Comprehensive Land Use
Plan and the zoning ordinance of the City.
2. To promote the prompt development of property in the Project Area with a minimal adverse impact on the
environment
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Housing and Redevelopment Authority for the City of Lakeville and City of
Lakeville, Minnesota
3. To provided adequate streets, utilities, and other public improvements and facilities to enhance the Project
Area and the City for new and existing development.
4. To enhance the project Area and the City and surrounding area by retaining current, and providing additional
employment opportunities for the residents of the City and surrounding community.
5. To increase the City's tax base.
6. To afford existing business in the City the opportunity to expand or relocate within the Project Area.
7. To stimulate development and investment within the project Area by private interest by providing land of
suitable size and configuration to permit it's economic and appropriate development.
Section B Land Use
No Change
Current use:
a. The project is partially vacant and undeveloped and used for both industrial and farming purposes.
The Area is principally Zoned 1-1 and 1-2, which provides for the establishment of warehousing, light
and heavy industrial and manufacturing development.
Future Land Use:
a. It is anticipated that the Project Area will develop consistent with existing zoning districts. The uses
of the Project Area proposed are consistent with the Plan, the Lakeville Comprehensive Plan, and,
to the knowledge of the City and Authority at this time, all other federal state and local laws and
regulation.
Section C Development Standards
The Authority and City will consider, among other things, the following factors when evaluating development
proposals in all phases:
1. Degree to which development objectives are provided for or enhanced.
2. Consistency with this Plan and the Lakeville Comprehensive Plan.
3. Ability of proposed tax increment projects to generate enough annual tax increment to retire the debt created
by the project.
4. Developer's ability to perform both from a standpoint of financial ability to perform and the necessary
experience and expertise to complete the proposed development.
5. Displaced Project Area property owners and tenants will be given priority over competing projects of similar
scale and magnitude.
Section D Environmental Controls
It is presently anticipated that the proposed development in the Project Area will not present major environment
problems. All municipal actions, public improvements, and private development will be carried out in a manner that
will comply with applicable environmental standards. Then environmental controls to be applied within the Area are
contained within the codes an ordinance of the City of Lakeville.
The Minnesota Code of Agency Rules (6 MCAR 3.021-3.056) defines Minnesota's environmental policy. The
threshold factor for the industrial/commercial projects on second class cities is 1,000,000 square feet (gross floor
area). Projects above this threshold would require an Environmental Impact Statement. There are no properties on
the National Historic Register of Historic Places within the Project Area.
Section E Redevelopment Activities
The Authority and the City proposes to implement this plan in phases. The activities of this Plan are described as
follows:
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Housing and Redevelopment Authority for the City of Lakeville and City of
Lakeville, Minnesota
1. City Activities — Original Plan
a. To acquire the land from the current owners and dedicate the land to an acceptable developer for
the purposes of constructing a 150,000 square foot office, warehouse and manufacturing facility.
2. City Activities — Plan Modification
a. A full discussion of the proposed City Activities can be found in the Tax Increment District Nos. 4,
13, 14, 15, 16, 17, 18 and 19 Plans prepared by the City and is hereby adopted by reference,
3. Private Activities — Original plan
a. Phase One (TIF# 4) included a major private development project — Please See TIF #4 Plan.
b. Phase Two (TIF #13) included a major private development project - Please See TIF #13 Plan.
c. Phase Three (TIF #14) included a major private development project — Please See TIF #14 Plan.
d. Phase Four (TIF #15) included a major private development project — Please See TIF #15 Plan.
e. Phase Five (TIF #16) included a major private development project. — Please See TIF #16 Plan.
f. Phase Six (TIF #17) — Please See TIF #17 Plan
g. Phase Seven (TIF #18) — Please See TIF # 18 Plan
h. Phase Eight (TIF #19) — Please See TIF # 19 Plan
Section F Project Cost Estimates
A full description of project costs is provided in Tax Increment Financing District No. 19 project budget.
Section G Relocation
No Change
Phase One of the Plan requires no relocation. In subsequent phases where development proposals require the
acquisition of either commercial, industrial or residentially occupied parcels of land, the displaced party or parties shall
be eligible for and receive those relocation benefits in conformance with the Minnesota Uniform Relocation Act.
Minnesota Statutes, Section 117.50-56.
The relocation plan will be part of any tax increment financing plan that provides for acquisition and subsequent
displacement.
Section H Development Contracts
No Change
The City and Authority will not authorize any public improvement or facilities projects nor acquire any property for
development which will be wholly or partially funded by the use of tax increment financing without first having secured
development contracts.
The Development Contracts shall require the developer to among other things, cause to be constructed an industrial
facility of at least a specified minimum cost, and having a specified minimum Assessor's Market Value; to complete
the work by a specified date pursuant to plans and specifications submitted to and building permits issued by or on
behalf of the City, and pursuant to an and in accordance with all other applicable governmental regulations; and to
demonstrate its financial capability for doing so.
Section I Operation of Public Improvements
No Change
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Housing and Redevelopment Authority for the City of Lakeville and City of
Lakeville, Minnesota
All public improvements constructed under the provisions of this program shall be operated by the City of Lakeville in
the same manner as all publicly owned streets and utilities.
Section J Administration of Project
No Change
The Lakeville Housing Authority shall be responsible for seeing that contents of this plan are promoted, implemented
and enforced. The Executive Director shall be delegated day by day responsibilities while the Board of Directors shall
make all policy regarding the Project Area. Administrative maintenance activities will be funded out of tax increment
revenue and other HRA funds.
Section K Modification of Plan
No Change
Modifications or revisions of this Plan which change the permitted uses; modify the Project Area Boundary; set forth,
revise, or modify and Developers Contract with respect to any part of the Project or terminate all or any part of the
Project require approval of such modifications by the Authority and the City, upon notice and other public hearing as
required for the adoption of this Plan and in accordance with Section 462.525, Subdivision 6 of the Act.
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Housing and Redevelopment Authority for the City of Lakeville and City of
Lakeville, Minnesota
7.1vRol
TAX INCREMENT FINANCING PLAN NO. 19
Section A Definitions
The terms defined in this section have the meanings given herein, unless the context in which they are used indicates
a different meaning:
"Authority' means the Housing and Redevelopment Authority for the City of Lakeville_
"City" means the City of Lakeville, Minnesota; also referred to as a "Municipality".
"City Council" means the City Council of the City; also referred to as the "Governing Body".
"County„ means Dakota County, Minnesota
"Redevelopment Project Area" means Airlake Redevelopment Project No.1 in the City, which is described in the
corresponding Redevelopment Plan.
"Redevelopment Plan" means the Redevelopment Plan for the Redevelopment Project Area.
"Project Area" means the geographic area of the Redevelopment Project Area.
"School District" means Independent School District No. 192, Minnesota.
"State" means the State of Minnesota.
"TIF Act" means Minnesota Statutes, Sections 469.174 through 469.1794, both inclusive.
"TIF District" means Tax Increment Financing (Economic Development) District No, 19.
"TIF Plan" means the tax increment financing plan for the TIF District (this document).
Section B Statutory Authorization
See Section I. D. of the Redevelopment Plan for the Redevelopment Project Area,
Section C Statement of Need and Public Purpose
See Section LA and LB of the Redevelopment Plan for the Redevelopment Project Area.
Section D Statement of Objectives
See Section ILA of the Redevelopment Plan for the Redevelopment Project Area.
Section E Designation of Tax Increment Financing District as an
Economic Development District
Economic development districts are a type of tax increment financing district which consist of any project, or portions
of a project, which the City finds to be in the public interest because:
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Housing and Redevelopment Authority for the City of Lakeville and City of
Lakeville, Minnesota
(1) it will discourage commerce, industry, or manufacturing from moving their operations to
another state or municipality;
(2) it will result in increased employment in the state; or
(3) it will result in preservation and enhancement of the tax base of the state.
The TIF District qualifies as an economic development district in that the proposed development described in this TIF
Plan (see Section 1) meets the criteria listed above in (2) and (3). Without establishment of the TIF District, the
proposed development would not occur within the City. The proposed development will also result in increased
employment and enhancement of the tax base in both the City and the State.
Tax increments from an economic development district must be used to provide improvements, loans, subsidies,
grants, interest rate subsidies, or other assistance in which at least 85% of the square footage of the facilities to be
constructed are used for any of the following purposes:
(1) manufacturing or production of tangible personal property, including processing, resulting in the
change of the condition of the property;
(2) warehousing, storage and distribution of tangible personal property, excluding retail sales;
(3) research and development related to the activities listed in (1) or (2) above;
(4) telemarketing if that activity is the exclusive use of the property;
(5) tourism facilities (see M.S. Section 469.174, Subd. 22);
(6) qualified border retail facilities (see M.S. Section 469.176, Subd. 4c); or
(7) space necessary for and related to the activities listed in (1) through (6) above.
Section F Duration of the TIF District
Economic development districts may remain in existence 8 years from the date of receipt by the Authority and City of
the first tax increment. The Authority and City anticipate that the TIF District will remain in existence the maximum
duration allowed by law (projected to be through the year 2024, assuming first increment is received in 2016). The
district will remain open through the year 2025 if the first collection of increment is in taxes payable 2017. The
Authority and City may decertify the TIF District earlier if fulfillment of all District obligations occurs prior to the
statutory maximum duration of 9 total years.
Section G Property to be Included in the TIF District
The TIF District is an approximate 32 28.67 acre area of land located within the Project Area. A map showing the
location of the TIF District is shown in Exhibit I. The boundaries and area encompassed by the TIF District are
described below:
Parcel ID Number Legal Description
22 77001 01 013 Tnon nioi KEE IND PARK 7non enn
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Housing and Redevelopment Authority for the City of Lakeville and City of
Lakeville, Minnesota
AN A
PIMA-
- - ....
MIF-ITM M10 ZE! VIA
Administrative Amendment Dated June 15, 2015
Parcel ID Number Legal Description
22-27900-01-010 * Lot 1, Block 1 Fulford Group 1St Addition
" previously listed parcels were split and replatted into a new parcel with the listed parcel ID number and
corresponding legal description
The area encompassed by the TIF District shall also include all street or utility right-of-ways located upon or adjacent
to the property described above.
Section H Property to be Acquired in the TIF District
The Authority and City may acquire and sell any or all of the property located within the TIF District; however, the
Authority and City does not anticipate acquiring any such property at this time.
Section I Specific Development Expected to Occur Within the TIF District
The proposed development is expected to consist of an approximately 199,615 square foot industrial warehouse
facility expansion. The development will result in increased employment (by adding a projected 100 new jobs) within
the City, in compliance with statutory requirements. It is anticipated tax increment will be used to finance a portion of
the site development and infrastructure costs. In addition, the Authority and City anticipate using available tax
increment for related administrative expenses and any other eligible expenditures associated with the development of
the site.
Construction of the facility is projected to start in 2014. The project is expected to be partially completed by
December 31, 2014 and fully constructed by December 31, 2015, and be 100% assess and on the tax rolls as of
January 2, 2016 for taxes payable in 2017.
At the time this document was prepared there were no signed construction contracts with regards to the above
described development.
Section J Findings and Need for Tax Increment Financing
In establishing the TIF District, the City makes the following findings:
(1) The TIF District qualifies as an economic development district;
See Section E of this document for the reasons and facts supporting this finding.
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Housing and Redevelopment Authority for the City of Lakeville and City of
Lakeville, Minnesota
(2) 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, and the increased market value of
the site that could reasonably be expected to occur without the use of tax increment would be less than
the increase in market value estimated to result from the proposed development after subtracting the
present value of the projected tax increments for the maximum duration of the TIF District permitted by
the TIF Plan.
Factual basis:
Proposed development not expected to occur.,
The project includes the development of an approximately 199,615 square foot expansion of an industrial
warehouse facility. The proposed developer of the site has submitted information to the city demonstrating
that the development of this site is not financially feasible without the assistance provided in this TI F Plan.
The City has determined that the proposed development would not occur but for the financial assistance
provided in this TIF Plan because of the increased costs related to site development, infrastructure including
street improvements of east/north to Hwy 50 and building construction. Due to the high costs of investment
for the proposed expansion, including site improvements and infrastructure costs incurred by the developer
in conjunction with development of the project, the developer has stated that the project as proposed would
not occur without the financial assistance provided by the City, as it would not be economically feasible
without financial assistance. The City finds the use of tax increment necessary to finance a portion of the
site improvements and infrastructure street improvement costs to facilitate development of the expansion
and developer investment. The City anticipates providing financial assistance on a pay-as-you-go basis.
No higher market value expected .•
The increased market value of the site that could reasonably be expected to occur without the use of tax
increment financing would be less than the increase in market value estimated to result from the proposed
development after subtracting the present value of the projected tax increments for the maximum duration of
the TIF District permitted by the TIF Plan. Without improvements the City has no reason to expect that
significant development would occur without assistance similar to that provided in this plan. For the same
reasons that the desired development described above is not feasible without tax increment assistance, the
City believes that no alternative development is likely to occur without similar assistance.
To summarize the basis for the City's findings regarding alternative market value, in accordance with
Minnesota Statutes, Section 469.175, Subd. 3(d), the City makes the following determinations:
a. The City's estimate of the amount by which the market value of the site will increase
without the use of tax increment financing is $0 (for the reasons described above), except some
unknown amount of appreciation.
b. If the proposed development to be assisted with tax increment occurs in the District, the
total increase in market value would be approximately $9,025,215, including the value of the
building (See Exhibit V).
C. The present value of tax increments from the District for the maximum duration of the
district permitted by the TIF Plan is estimated to be $1,081,726 (See Exhibit V).
d. Even if some development other than the proposed development were to occur, the City
finds that no alternative would occur that would produce a market value increase greater than
$7,943,489 (the amount in clause b less the amount in clause c) without tax increment assistance.
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Housing and Redevelopment Authority for the City of Lakeville and City of
Lakeville, Minnesota
(3) The TIF Plan would afford maximum opportunity, consistent with the sound needs of the City as a
whole, for development of the Project Area by private enterprise.
Factual basis: The proposed development is the construction of an industrial warehouse facility and office
to be constructed in the Project Area that is proposed to create approximately 100 new jobs in the City, while
retaining these jobs in the State, plus create substantial new tax base for the City and the State. The
development clearly meets the City's economic development goals in terms of tax base expansion, job
retention, and wage levels.
(4) The TIF Plan conforms to general plans for development of the City as a whole.
Factual basis: The City Planning Commission has reviewed the TIF Plan and supporting documents and
following subdivision and replatting of the property within the District as identified in Section G can make the
determination that the development proposed in the TIF Plan conforms to the City comprehensive plan.
Section K Estimated Public Costs
The estimated public costs of the TIF District are listed below. Such costs are eligible for reimbursement from tax
increments of the TIF District.
Land/building acquisition
0
Site Improvements/preparation costs
1,023,941
Utilities
0
Other qualifying Improvements
0
Construction of affordable housing
0
Bond principal payments
0
Bond interest payments
0
Loan Interest payments
0
Administrative expenses
53,891
Total $1,077,832
The Authority and City anticipate using tax increment to the extent available to assist with financing a portion of the
site improvements and infrastructure costs, related administrative expenses, and other TIF -eligible expenditures as
necessary and related to development of the project.
The Authority and City reserve the right to administratively 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.
Section L Estimated Sources of Revenue
Tax increment revenue
1,077,832
Interest on invested funds
0
Loan proceeds
0
Special assessments
0
Rent/lease revenue
0
Grants
0
Total $1,077,832
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Housing and Redevelopment Authority for the City of Lakeville and City of
Lakeville, Minnesota
The Authority and City anticipate providing financial assistance on a pay-as-you-go basis for site improvement and
infrastructure costs, as well as other TIF -eligible expenses related to the proposed development. As tax increments
are collected from the TIF District in future years, a portion of these taxes will be used by the Authority and City to
reimburse the developer/owner for public costs incurred (see Section K),
The Authority and City reserve the right to finance any or all public costs of the TIF District using pay-as-you-go
assistance, internal funding, general obligation or revenue debt (referred to together as "TIF Bonds"), or any other
financing mechanism authorized by law. The Authority and City also reserve the right to use other sources of
revenue legally applicable to the Project Area to pay for such costs including, but not limited to, special assessments,
utility revenues, federal or state funds, and investment income.
Section M Estimated Amount of Bonded Indebtedness
The maximum principal amount of bonds (as defined in the TIF Act) secured in whole or part with tax increment from
the TIF District is $1,077,832. The Authority and City currently plan to finance the improvement costs in the form of a
pay -as -you go revenue note, but reserve the right to issue bonds in any form, including without limitation any interfund
loan with interest not to exceed the maximum permitted under Section 469.178, subd. 7 of the TIF Act.
Section N Original Net Tax Capacity
The County Auditor shall certify the original net tax capacity of the TIF District. This value will be equal to the total net
tax capacity of all property in the TIF District as certified by the State Commissioner of Revenue. For districts certified
between January 1 and June 30, inclusive, this value is based on the previous assessment year. For districts
certified between July 1 and December 31, inclusive, this value is based on the current assessment year.
The Estimated Market Value of all property within the TIF District as of January 2, 2014, for taxes payable in 2015, is
projected to be $7,275,169 with an estimated tax capacity value of $144,753, which is estimated to be the original net
tax capacity of the TIF District upon establishment and subsequent certification.
Each year the County Auditor shall certify the amount that the original net tax capacity has increased or decreased as
a result of:
(1) changes in the tax-exempt status of property;
(2) reductions or enlargements of the geographic area of the TIF District;
(3) changes due to stipulation agreements or abatements; or
(4) changes in property classification rates.
Section 0 Original Tax Capacity Rate
The County Auditor shall also certify the original tax capacity rate of the TIF District. This rate shall be the sum of all
local tax rates that apply to property in the TIF District. This rate shall be for the same taxes payable year as the
original net tax capacity.
In future years, the amount of tax increment generated by the TIF District will be calculated using the lesser of (a) the
sum of the current local tax rates at that time or (b) the original tax capacity rate of the TIF District.
At the time this document was prepared, the sum of all local tax rates that apply to property in the TIF District, for
taxes levied in 2014 and payable in 2015, was not yet available. When this total becomes available, the County
Auditor shall certify this amount as the original tax capacity rate of the TIF District. For purposes of estimating the tax
SPRINGSTED Page 10
Housing and Redevelopment Authority for the City of Lakeville and City of
Lakeville, Minnesota
increment generated by the TIF District, the sum of the local tax rates for taxes levied in 2013 and payable in 2014, is
134.387% as shown below.
2013/2014
Taxing Jurisdiction Local Tax Rate
City of Lakeville 40.696%
Dakota County 31.827%
ISD #192 56.326%
Other 5.538%
Total 134.387%
Section P Projected Retained Captured Net Tax Capacity and
Projected Tax Increment
The Authority and City anticipate that the project will begin construction in 2014 and be partially completed on
December 31, 2014 and 100% completed by December 31, 2015, creating a total tax capacity for TIF District No. 19
of $290,770 as of January 2, 2016. The captured tax capacity as of that date is estimated to be $88,935. The first
year of tax increment is estimated to be $18,395 payable in 2016 (as partial value is achieved). A complete schedule
of estimated tax increment from the TIF District is shown in Exhibit IV.
The estimates shown in this TIF plan assume that commercial class rates remain at 1.5% of the estimated market
value up to $150,000 and 2.0% of the estimated market value over $150,000, and assume 3% annual increases in
market values.
Each year the County Auditor shall determine the current net tax capacity of all property in the TIF District. To the
extent that this total exceeds the original net tax capacity, the difference shall be known as the captured net tax
capacity of the TIF District.
The County Auditor shall certify to the Authority and City the amount of captured net tax capacity each year. The
Authority and City may choose to retain any or all of this amount. It is the Authority and City's intention to retain 100%
of the captured net tax capacity of the TIF District. Such amount shall be known as the retained captured net tax
capacity of the TIF District.
Exhibit II gives a listing of the various information and assumptions used in preparing a number of the exhibits
contained in this TIF Plan, including Exhibit III which shows the projected tax increment generated over the
anticipated life of the TIF District.
Section Q Use of Tax Increment
Each year the County Treasurer shall deduct 0.36% of the annual tax increment generated by the TIF District and pay
such amount to the State's General Fund. Such amounts will be appropriated to the State Auditor for the cost of
financial reporting and auditing of tax increment financing information throughout the state. Exhibit III shows the
projected deduction for this purpose over the anticipated life of the TIF District.
The Authority and City have determined that it will use 100% of the remaining tax increment generated by the TIF
District for any of the following purposes:
(1) pay for the estimated public costs of the TIF District (see Section K) and County administrative
costs associated with the TIF District (see Section T);
(2) pay principal and interest on tax increment bonds or other bonds issued to finance the estimated
public costs of the TIF District;
SPRINGSTED Page 11
Housing and Redevelopment Authority for the City of Lakeville and City of
Lakeville, Minnesota
(3) accumulate a reserve securing the payment of tax increment bonds or other bonds issued to
finance the estimated public costs of the TIF District;
(4) pay all or a portion of the county road costs as may be required by the County Board under M.S.
Section 469.175, Subdivision 1a; or
(5) return excess tax increments to the County Auditor for redistribution to the City, County and School
District.
Tax increments from property located in one county must be expended for the direct and primary benefit of a project
located within that county, unless both county boards involved waive this requirement. Tax increments shall not be
used to circumvent levy limitations applicable to the City.
Tax increment shall not be used to finance 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, or for a commons area used as a public park, or a
facility used for social, recreational, or conference purposes. This prohibition does not apply to the construction or
renovation of a parking structure or of a privately owned facility for conference purposes.
If there exists any type of agreement or arrangement providing for the developer, or other beneficiary of assistance, to
repay all or a portion of the assistance that was paid or financed with tax increments, such payments shall be subject
to all of the restrictions imposed on the use of tax increments. Assistance includes sale of property at less than the
cost of acquisition or fair market value, grants, ground or other leases at less then fair market rent, interest rate
subsidies, utility service connections, roads, or other similar assistance that would otherwise be paid for by the
developer or beneficiary.
Section R Excess Tax Increment
In any year in which the tax increments from the TIF District exceed the amount necessary to pay the estimated
public costs authorized by the TIF Plan, the Authority and City shall use the excess tax increments to:
(1) prepay any outstanding tax increment bonds;
(2) discharge the pledge of tax increments thereof;
(3) pay amounts into an escrow account dedicated to the payment of the tax increment bonds; or
(4) return excess tax increments to the County Auditor for redistribution to the City, County and School
District. The County Auditor must report to the Commissioner of Education the amount of any
excess tax increment redistributed to the School District within 30 days of such redistribution.
Section S Tax Increment Pooling and the Five Year Rule
At least 80% of the tax increments from the TIF District must be expended on activities within the district or to pay for
bonds used to finance the estimated public costs of the TIF District (see Section E for additional restrictions). No
more than 20% of the tax increments may be spent on costs outside of the TIF District but within the boundaries of
the Project Area, except to pay debt service on credit enhanced bonds. All administrative expenses are considered to
have been spent outside of the TIF District. Tax increments are considered to have been spent within the TIF District
if such amounts are:
(1) actually paid to a third party for activities performed within the TIF District within five years after
certification of the district;
SPRINGSTED
Page 12
Housing and Redevelopment Authority for the City of Lakeville and City of
Lakeville, Minnesota
(2) used to pay bonds that were issued and sold to a third party, the proceeds of which are reasonably
expected on the date of issuance to be spent within the later of the five-year period or a reasonable
temporary period or are deposited in a reasonably required reserve or replacement fund.
(3) used to make payments or reimbursements to a third party under binding contracts for activities
performed within the TIF District, which were entered into within five years after certification of the
district; or
(4) used to reimburse a party for payment of eligible costs (including interest) incurred within five years
from certification of the district.
Beginning with the sixth year following certification of the TIF District, at least 80% of the tax increments must be used
to pay outstanding bonds or make contractual payments obligated within the first five years. When outstanding bonds
have been defeased and sufficient money has been set aside to pay for such contractual obligations, the TIF District
must be decertified.
The Authority and City do not expect that allowable pooling expenditures will be made outside of the TIF District but
within the Project Area (along with allowable administrative expenses), but such expenditures are expressly
authorized in this TIF Plan.
Section T Limitation on Administrative Expenses
Administrative expenses are defined as all costs of the Authority and City other than:
(1) amounts paid for the purchase of land;
(2) amounts paid for materials and services, including architectural and engineering services directly
connected with the physical development of the real property in the project;
(3) relocation benefits paid to, or services provided for, persons residing or businesses located in the
project;
(4) amounts used to pay principal or interest on, fund a reserve for, or sell at a discount bonds issued
pursuant to section 469.178; or
(5) amounts used to pay other financial obligations to the extent those obligations were used to finance
costs described in clause (1) to (3).
Administrative expenses include amounts paid for services provided by bond counsel, fiscal consultants, planning or
economic development consultants, and actual costs incurred by the County in administering the TIF District. Tax
increments may be used to pay administrative expenses of the TIF District up to the lesser of (a) 10% of the total tax
increment expenditures authorized by the TIF Plan or (b)10% of the total tax increments received by the TIF District.
Section U Limitation on Property Not Subject to Improvements - Four Year Rule
If after four years from certification of the TIF District no demolition, rehabilitation, renovation, or qualified
improvement of an adjacent street has commenced on a parcel located within the TIF District, then that parcel shall
be excluded from the TIF District and the original net tax capacity shall be adjusted accordingly. Qualified
improvements of a street are limited to construction or opening of a new street, relocation of a street, or substantial
reconstruction or rebuilding of an existing street. The Authority and City must submit to the County Auditor, by
February 1 of the fifth year, evidence that the required activity has taken place for each parcel in the TIF District.
SPRINGSTED
Page 13
Housing and Redevelopment Authority for the City of Lakeville and City of
Lakeville, Minnesota
If a parcel is excluded from the TIF District and the Authority and City or owner of the parcel subsequently
commences any of the above activities, the Authority and City shall certify to the County Auditor that such activity has
commenced and the parcel shall once again be included in the TIF District. The County Auditor shall certify the net
tax capacity of the parcel, as most recently certified by the Commissioner of Revenue, and add such amount to the
original net tax capacity of the TIF District.
Section V Estimated Impact on Other Taxing Jurisdictions
Exhibit IV shows the estimated impact on other taxing jurisdictions if the maximum projected retained captured net tax
capacity of the TIF District was hypothetically available to the other taxing jurisdictions. The Authority and City
believe that there will be no adverse impact on other taxing jurisdictions during the life of the TIF District, since the
proposed development would not have occurred without the establishment of the TIF District and the provision of
public assistance. A positive impact on other taxing jurisdictions will occur when the TIF District is decertified and the
development therein becomes part of the general tax base.
The fiscal and economic implications of the proposed tax increment financing district, as pursuant to Minnesota
Statutes, Section 469.175, Subdivision 2, are listed below.
1. The total amount of tax increment that will be generated over the life of the district is estimated to be
$1,081,726.
2. To the extent the facility in the proposed TIF District generates any public cost impacts on city -provided
services such as police and fire protection, public infrastructure, and borrowing costs attributable to the
district, such costs will be levied upon the taxable net tax capacity of the City, excluding that portion captured
by the District. The City does not anticipate issuing bonds in conjunction with this project.
3. 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
estimated to be $453,387.
4. 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
estimated to be $256,186.
5. No additional information has been requested by the county or school district that would enable it to
determine additional costs that will accrue to it due to the development proposed for the district.
Section W Prior Planned Improvements
The Authority and City shall accompany its request for certification to the County Auditor (or notice of district
enlargement), with a listing of all properties within the TIF District for which building permits have been issued during
the 18 months immediately preceding approval of the TIF Plan. The County Auditor shall increase the original net tax
capacity of the TIF District by the net tax capacity of each improvement for which a building permit was issued.
The following building permits have been issued in the last 18 months in conjunction with the properties within the TIF
District;
Permit Number
Issue Date
Type of Improvement
Permit Value
Permit #128644
7/22/13
Small Office/Warehouse Remodel
$20,000
Permit #129938
9/30/13
Office Remodel
$44,000
SPRINGSTED Page 14
Housing and Redevelopment Authority for the City of Lakeville and City of
Lakeville, Minnesota
Section X Development Agreements
If within a project containing an economic development district, more than 10% of the acreage of the property to be
acquired by the Authority and City is purchased with tax increment bonds proceeds (to which tax increment from the
property is pledged), then prior to such acquisition, the Authority and City must enter into an agreement for the
development of the property. Such agreement must provide recourse for the Authority and City should the
development not be completed.
The Authority and City anticipate entering into an agreement for development, but does not anticipate acquiring any
property located within the TIF District.
Section Y Assessment Agreements
The City may, upon entering into a development agreement, also enter into an assessment agreement with the
developer, which establishes a minimum market value of the land and improvements for each year during the life of
the TIF District.
The assessment agreement shall be presented to the County or City Assessor who shall review the plans and
specifications for the improvements to be constructed, review the market value previously assigned to the land, and
so long as the minimum market value contained in the assessment agreement appears to be an accurate estimate,
shall certify the assessment agreement as reasonable. The assessment agreement shall be filed for record in the
office of the County Recorder of each county where the property is located. Any modification or premature
termination of this agreement must first be approved by the City, County and School District.
The Authority and City do not anticipate entering into an assessment agreement.
Section Z Modifications of the Tax Increment Financing Plan
Any reduction or enlargement in the geographic area of the Project Area or the TIF District; increase in the amount of
bonded indebtedness to be incurred; increase in the amount of capitalized interest; increase in that portion of the
captured net tax capacity to be retained by the Authority and City; increase in the total estimated public costs; or
designation of additional property to be acquired by the Authority and City shall be approved only after satisfying all
the necessary requirements for approval of the original TIF Plan. This paragraph does not apply if:
(1) the only modification is elimination of parcels from the TIF District; and
(2) the current net tax capacity of the parcels eliminated equals or exceeds the net tax capacity of
those parcels in the TIF District's original net tax capacity, or the Authority and City agree that the
TIF District's original net tax capacity will be reduced by no more than the current net tax capacity
of the parcels eliminated.
The Authority and City must notify the County Auditor of any modification that reduces or enlarges the geographic
area of the TIF District. The geographic area of the TIF District may be reduced but not enlarged after five years
following the date of certification.
Section AA Administration of the Tax Increment Financing Plan
Upon adoption of the TIF Plan, the Authority and City shall submit a copy of such plan to the Minnesota Department
of Revenue. The Authority and City shall also request that the County Auditor certify the original net tax capacity and
net tax capacity rate of the TIF District. To assist the County Auditor in this process, the Authority and City shall
SPRINGSTED Page 15
Housing and Redevelopment Authority for the City of Lakeville and City of
Lakeville, Minnesota
submit copies of the TIF Plan, the resolution establishing the TIF District and adopting the TIF Plan, and a listing of
any prior planned improvements. The Authority and City shall also send the County Assessor any assessment
agreement establishing the minimum market value of land and improvements in the TIF District, and shall request that
the County Assessor review and certify this assessment agreement as reasonable.
The County shall distribute to the Authority and City the amount of tax increment as it becomes available. The
amount of tax increment in any year represents the applicable property taxes generated by the retained captured net
tax capacity of the TIF District. The amount of tax increment may change due to development anticipated by the TIF
Plan, other development, inflation of property values, or changes in property classification rates or formulas. In
administering and implementing the TIF Plan, the following actions should occur on an annual basis:
(1) prior to July 1, the Authority and City shall notify the County Assessor of any new development that
has occurred in the TIF District during the past year to insure that the new value will be recorded in
a timely manner.
(2) if the County Auditor receives the request for certification of a new TIF District, or for modification of
an existing TIF District, before July 1, the request shall be recognized in determining local tax rates
for the current and subsequent levy years. Requests received on or after July 1 shall be used to
determine local tax rates in subsequent years.
(3) each year the County Auditor shall certify the amount of the original net tax capacity of the TIF
District. The amount certified shall reflect any changes that occur as a result of the following:
(a) the value of property that changes from tax-exempt to taxable shall be added to the
original net tax capacity of the TIF District. The reverse shall also apply;
(b) the original net tax capacity may be modified by any approved enlargement or reduction of
the TIF District;
(c) if laws governing the classification of real property cause changes to the percentage of
estimated market value to be applied for property tax purposes, then the resulting increase
or decrease in net tax capacity shall be applied proportionately to the original net tax
capacity and the retained captured net tax capacity of the TIF District.
The County Auditor shall notify the Authority and City of all changes made to the original net tax capacity of the TIF
District.
Section AB Filing TIF Plan, Financial Reporting and Disclosure Requirements
The Authority and City will file the TIF Plan, and any subsequent amendments thereto, with the Commissioner of
Revenue and the Office of the State Auditor pursuant to Minnesota Statutes, Section 469.175, subdivision 4A. The
Authority and City will comply with all reporting requirements for the TIF District under Minnesota Statutes, Section
469.175, subdivisions 5 and 6.
SPRINGST D Page 16
Exhibit !-A
Map of Tax Increment Financing (Economic Development) District No. 19
Within Airlake Redevelopment Project No.1
SPRINGSTED Page 17
Map of Boundaries of Tax Increment Financing
(Economic Development) District No. 19
FULFORD GROUP 1ST ADDITION
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Exhibit I -B
SPRINGSTED Page 18
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SPRINGSTED Page 18
Exhibit 11
Assumptions Report
City of Lakeville, Minnesota
Tax Increment Financing (Economic Development) District No. 19
Proposed BTD Manufacturing Expansion (199,615 SF)
Draft TIF Plan Exhibits: EMV $14.6 Million, 3% Inflation, Maximum Term
Type of Tax Increment Financing District
Maximum Duration of TIF District
Projected Certification Request Date
Decertification Date
Base Estimated Market Value
Original Net Tax Capacity
Economic Development
8 years from 1st increment
10/31/14
12/31/24 (9 Years of Increment)
2014/2015
$7,275,169
$144,753
Assessment/Collection Year
2014/2015 2015/2016 2016/2017 2017/2018
Base Estimated Market Value
$7,275,169 $7,275,169
$7,275,169
$7,275,169
Estimated Decrease in Value - Bldg Demo
$0
$0
$0
Estimated Increase in Value- New Construction
0 1,161,143
7,338,325
7,558,475
Total Estimated Market Value
Total Net Tax Capacity
7,275,169 8,436,311 14,613,494 14,833,644
$144,753 $167,226 $290,770 $295,173
City of Lakeville 40.696%
Dakota County 31.827%
ISD# 192 56.326%
Other (V Watershed) 5.538%
Local Tax Capacity Rate 134.387% 2013/2014
Fiscal Disparities Contribution From TIF District 39.0927%
Administrative Retainage Percent (maximum = 10%) 5.00%
Pooling Percent 0.00%
Bonds Note (Pay -As -You -Go)
Bond Dated NA Note Dated 08/01/15
Bond Rate NA Note Rate 0.00%
Bond Amount NA Note Amount $1,023,941
Present Value Amount
Notes
Calculation assumes no changes to future tax rates and class rates and includes 3% market value inflator.
EMV: $14.1 Milion - High end of estimated value range as provided by County Assessor
Construction on project commences in late 2014 and 100% complete by December 31, 2015.
Payable 2014 Tax Rates and Net Tax Capacity values used, if request for certification made by 6/30/15,
payable 2015 tax rates will apply, but are not yet available.
SPRINGSTED Page 19
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Exhibit V
City of Lakeville, Minnesota
Tax Increment Financing (Economic Development) District No. 19
Proposed BTD Manufacturing Expansion (199,615 SF)
Draft TIF Plan Exhibits: EMV $14.6 Million, 3% Inflation, Maximum Term
Assumptions
Present Value Date
P.V. Rate - Gross T.I.
08/01/15
0.00%
Increase in EMV With TIF District
$9,025,215
Less: P.V of Gross Tax
Increment
1,081,726
Subtotal
$7,943,489
Less: Increase in EMV Without TIF
0
Difference
$7,943,489
Annual
Present
Gross Tax
Value @
Year
Increment
0.00%
1
2016
18,395
18,395
2
2017
119,516
119,516
3
2018
123,121
123,121
4
2019
126,833
126,833
5
2020
130,656
130,656
6
2021
134,594
134,594
7
2022
138,651
138,651
8
2023
142,829
142,829
9
2024
147,131
147,131
$1,081,726
$1,081,726
SPRINGSTED Page 22