HomeMy WebLinkAboutPublic Hearing RE Elements of Financial Package for rono Woods coPt-f , P
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zoL , o Rt G S — REQUEST FOR COUNCIL ACTION
v►N n L Date: May 8, 2001
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Item No.: _ 3_
Department Approval: Administrator Approval: Agenda Section:
ReiCity Administrator's Report
Name: Ron Moorse J�
Title: City Administrator
Item Description: Public Hearing Regarding Elements of the Financial Package for the Orono
Woods Senior Housing Project
Attachments:
1. Schedule of Events (Revised May 8, 2001) Orono Woods Senior Housing Project
2. Program for the Financing of a Multifamily Rental Housing Development for Seniors
(Housing Program)
3. Tax Increment Financing Plan
4. Development Plan for Housing Project No. 1
5. Council Resolution approving the Development Plan, Establishing the TIF District,
and approving the TIF Plan
6. HRA Resolution approving the Development Plan, Establishing the TIF District, and
approving the TIF Plan
7. Council resolution approving Housing Program and stating intent to issue Housing
Revenue Bonds
8. TIF District Overview
The financial package for the Orono Woods senior housing project, which includes tax increment
financing and housing revenue bonds, requires a number of actions by the City Council. These
actions are listed in the attached"Schedule of Events". At the May 14 Council meeting, the
Council will hold a public hearing regarding three elements of the financial package:
1. Establishment of Tax Increment Financing District No. 1-1
2. Adoption of a Housing Program
3. A TEFRA hearing on the issuance of housing revenue bonds.
Because Mayor Peterson and Councilmember Flint will not be able to attend the May 14 Council
meeting, it is recommended that the Council hold the hearing but continue action on the
resolutions to the May 29 Council meeting.
COUNCIL ACTION REQUESTED
Motion to continue action on the resolutions related to the elements of the financial package for
the Orono Woods Senior Housing Project to the May 29, 2001 Council meeting.
SCHEDULE OF EVENTS
CITY OF ORONO
ORONO HOUSING AND REDEVELOPMENT AUTHORITY
ORONO WOODS HOUSING PROJECT
Revised-May 8,2001
March 12, 2001 City Council calls for public hearing on the establishment Project Area No. 1 and
Tax Increment Financing District No. 1-1 (a qualified housing district).
March 23, 2001 Project information,property identification numbers, and maps sent to Ehlers and
Associates for drafting documentation.
March 29, 2001 Letter received by County Commissioner giving notice of potential housing tax
increment financing district(at least 30 days prior to publication of public hearing
notice). [Sent by March 28, 2001]
March 30, 2001 Project information submitted to the County Board for review of county road
impacts(at least 45 days prior to public hearing).
April 10, 2001 Ehlers confirms with the City whether building permits have been issued on the
property to be included in the TIF District.
April 13, 2001 Draft of TIF Plan including fiscal and economic implications received by School
Board Clerk and County Auditor(at least 30 days prior to public hearing). [Sent
by April 12, 2001]
April 23, 2001 HRA approves draft housing program and adopts resolution calling for public
hearing on housing program and requesting corresponding action by City Council
on TIF Plan and housing program.
April 23, 2001 City Council adopts resolution calling for public hearing on housing program and
TEFRA hearing on issuance of 501(c)(3)bonds.
April 27, 2001 Housing Program submitted to Metropolitan Council for review.
April 28, 2001 Date of publication for the following: (1) Notice of hearing (with map) on
establishment of Project t Area No. 1 and Tax Increment Financing District No. 1-
1;(2) Notice of hearing on Housing Program;and(3)Notice of TEFRA on bonds.
[The Laker/Pioneer Newpapers publication deadline April 23, 2001]
leEHLERS
A A; 'IAT'S Ike
Orono Woods Schedule
May 8, 2001
Page Two
May 14, 2001 City Council holds public hearings on
1. Establishment of Tax Increment Financing District No. 1-1.
2. Adoption of Housing Program.
3. TEFRA hearing on issuance of housing revenue bonds.
The City Council will conduct the hearings for each of the above, but will not take
any approving actions on this date.
May 29, 2001 City Council(1) adopts resolution approving the Development Plan and TIF Plan,
(2) adopts resolution approving Housing Program, and (3) adopts resolution
approving issuance of the housing revenue bonds.
HRA(1) adopts resolution approving the Development Plan and TIF Plan, and(2)
adopts resolution approving Housing Program
This date assumes that the regular meeting is moved due to Memorial Day. These
action may also be taken at a later meeting. The City has 60 days from the date of
submission of the Plan by the HRA to approve or disapprove.
June 9, 2001 HRA development agreement.
City Council approves development agreement and 501(c)(3)bond documents.
By June 30,2001 Ehlers certifies District with county and state.
*Because the City staff believes that the proposed tax increment district will not require unplanned county road improvements,the TIF
Plan was-met-forwarded to the County Board 45 days prior to the public hearing. The County Board, by law, has 45 days to review
the plan to determine if any county roads will be impacted by the development. Please be aware that the County Board could claim
that tax increment should be used for county roads,even after the public hearing.
0EHLERS
3 A;S:,"IAT"S I\�
Ron Housing Program-(7rono.d".,-.�„�.�.,,�
oc Page 1
O1-AFf
PROGRAM FOR THE FINANCING
OF A MULTIFAMILY RENTAL HOUSING DEVELOPMENT
FOR SENIORS
Pursuant to Minnesota Statutes, Chapter 462C (the "Act"), the City of Orono (the "City")
has been authorized to develop and administer programs of multifamily housing developments
under the circumstances and within the limitations set forth in the Act. Minnesota Statutes,
Section 462C.07 provides that such programs for multifamily housing developments may be
financed by revenue bonds issued by the City.
The City has determined that it is in the best interests of the residents of the City to create
a program of financing to encourage and facilitate the development of multifamily rental housing
for seniors in the City(the "Program"). The City has received a proposal from representatives of
Wedum Foundation, a Minnesota nonprofit corporation, and Orono Senior Housing, LLC (the
"Owner"), requesting that, pursuant to the Act, the City approve a program providing for the
acquisition of the Land and construction of 62 units of multifamily housing for seniors (the
"Project") to be located at in the City and intended, by location and
design, to provide safe and affordable housing for, and to be occupied by, persons age 62 and
older. The acquisition and construction of the Project is to be funded through the issuance of up
to $9,000,000 in revenue bonds issued by the City (the "Bonds") pursuant to the Act. At least
twenty percent (20%) of the units financed will be specifically reserved for tenants whose
incomes are not greater than fifty percent (50%) of the area median income. It is estimated that
rents for the Project will range from $ per month to $ per month, depending on unit
size and amenities.
The City, in establishing this Program, has considered, among other things (i) the
availability and affordability of other government housing programs; (ii) the availability and
affordability of private marketing financing for the construction of multifamily housing units;
(iii)an analysis of population, employment trends and projections of future population trends and
future employment needs; (iv) the recent housing trends and future housing needs of the City;
and (v) an analysis of how the Program will meet the needs of persons and families residing and
expected to reside in the City.
The City, in adopting the Program, has further considered(i)the amount, timing and sale
of Bonds to finance the estimated costs of the housing units, to fund the appropriate reserves and
to pay the cost of issuance; (ii)the method of monitoring and implementation of the Program to
insure compliance with the City's housing plan and its objectives; (iii) the method of
administering, servicing and supervising the Program; (iv)the costs of the City, including future
administrative expenses;(v)the restrictions on the multifamily development to be financed under
the Program; and(vi)certain other limitations.
The City, in adopting the Program, considered the potential financing impact of a bond
issuance on affected public agencies. In addition,the City reviewed the method of marketing the
Program. Such review examined the equal opportunity for participation by (i) minorities; (ii)
households with incomes at the lower end of the range that can be served by the Program; (iii)
households displaced by public or private actions; and(iv)accessibility to the handicapped.
HOUSING PROGRAM
1
Ron Moorse- Housing Program-Orono.doc Page 2
The Project will be constructed and financed pursuant to Subdivision 1(a) of Section
462C.05 of the Act.
Subsection A. Definitions. The following terms used in this Program shall have the
following meanings,respectively:
(1) "Act" shall mean Minnesota Statutes, Chapter 462C, as currently in effect
and as the same may be from time to time amended.
(2) "Authority" shall mean the Orono Housing and Development Authority.
(3) "Bonds" shall mean the revenue bonds to be issued by the City or at the
discretion of the City,the Agency,to finance the Program.
(4) "City" shall mean the City of Orono, State of Minnesota.
(5) "Housing Unit" shall mean any one of the apartment units located in the
Project, occupied by one person or family, and containing complete living facilities.
(6) "Land" shall mean the parcel of real property upon which the Project is to
be constructed.
(7) "Owner" shall mean Wedum Foundation, a Minnesota nonprofit
corporation or Orono Senior Housing,LLC,a Minnesota limited liability company.
(8) "Program" shall mean the program for the financing of the Project
pursuant to the Act.
(9) "Project" shall mean the 62 unit senior housing facility to be located at
Subsection B. Program For Financing the Project. It is proposed that the City establish
this Program to provide financing for acquisition of the Land and construction of the Project
thereon by the Owner at a cost and upon such other terms and conditions as are set forth herein
and as may be agreed upon in writing between the City,the initial purchaser of the Bonds and the
respective Owner. To do this, the City or, upon authorization by the City, the Authority, expects
to issue Bonds the proceeds of which will be loaned to the Owner for financing the acquisition of
the Project. If determined to be necessary, a trustee will be appointed by the City to monitor the
disbursement of proceeds of the Bonds and payments of principal and interest on the Bonds. The
cost of any additional security devices for the Bonds will be borne by the Owner and payable in
addition to the principal and interest on the Bonds except as otherwise provided by resolution of
the City.
It is contemplated that the Bonds shall have a maturity of up to forty (40) years and will
be priced to the market at the time of issuance. The Bonds may be issued in two series, one of
which has a claim on revenuesGgsisAn/Al-to the other
The City will hire no additional staff for the administration of the Program. The City
intends to select and contract with a financial institution or trustee experienced in trust matters to
HOUSING PROGRAM
2
[Ron Moorse- Housing Program-Orono.doc Page 3
administer the Bonds.
Insofar as the City will be contracting with underwriters, legal counsel, bond counsel,the
trustee, and others, all of whom will be reimbursed from bond proceeds and revenues generated
by the Program, no administrative costs will be paid from the City's budget with respect to this
Program except as otherwise provided by resolution of the City. The Bonds will not be general
obligation bonds of the City, but are to be paid only from properties pledged to the payment
thereof, which may include additional security such as additional collateral, insurance or a letter
of credit.
Subsection C. Local Contributions To The Program. It is presently contemplated that
there will be a local contribution of funds to the Project consisting of tax increment financing by
the Authority or the City for Land acquisition and certain public costs, together with an
appropriation of funds for a local contribution.
Subsection D. Standards and Requirements Relating to the Financing of the Projects
Pursuant to the Program. The following standards and requirements shall apply with respect to
the operation of the Project by the Owner pursuant to this Program:
(1) Substantially all of the proceeds of the sale of the Bonds will be used to
provide funds for the acquisition and construction of the Project. The funds will be made
available to the Owner pursuant to the terms of the Bond offering, which may include
certain covenants to be entered into between the City and the Owner.
(2) The Owner will not arbitrarily reject an application from a proposed tenant
because of race, color, creed, religion, national origin, sex, marital status, or status with
regard to public assistance or disability.
(3) No Housing Unit may be in violation of applicable zoning ordinances or
other applicable land use regulations, including any urban renewal plan or development
district plan, and including the state building code as set forth under Minnesota Statutes,
Section 16.83,et seq.
Subsection E. Evidence of Compliance. The City may require from the Owner or such
other person deemed necessary at or before the issuance of the Bonds, evidence satisfactory to
the City of the ability and intention of the Owner to complete the Project, and evidence
satisfactory to the City of compliance with the standards and requirements for the making of the
financing established by the City, as set forth herein; and in connection therewith, the City or its
representatives may inspect the relevant books and records of the Owner in order to confirm such
ability, intention and compliance. In addition, the City may periodically require certification
from either the Owner or such other person deemed necessary concerning compliance with
various aspects of the Program.
Subsection F. Issuance of Bonds. To finance the Program authorized by this Section,the
City may by resolution authorize, issue and sell its Revenue Bonds in one or more series, and
using any additional credit enhancement devices determined by the City to be necessary or
desirable for each such series, in an aggregate principal amount estimated to be up to$9,000,000.
The Bonds shall be issued pursuant to Section 462C.07, Subdivision 1 of the Act, and shall be
HOUSING PROGRAM
3
Ron Moorse Housing Program Orono doc
Page 4
payable primarily from the revenues of the Program authorized by this Section. The City
anticipates the issuance of such amount prior to the end of 2001.
Subsection G. Severability. The provisions of this Program are severable and if any of
its provisions, sentences, clauses or paragraphs shall be held unconstitutional, contrary to statute,
exceeding the authority of the City or otherwise illegal or inoperative by any court of competent
jurisdiction,the decision of such court shall not affect or impair any of the remaining provisions.
Subsection H. Amendment. The City shall not amend this Program while Bonds
authorized hereby are outstanding,to the detriment of the holders of such Bonds.
Subsection I. Issuance of Tax Increment Notes. At the discretion of the City and
Authority, obligation to finance the Land and certain public costs of the Program may be issued
by the Authority or City pursuant to authority granted by Minnesota Statues, Section 469.178.
M1.740376.01
HOUSING PROGRAM
4
As of May 9, 2001
Draft for Public Hearing iiiii
TAX INCREMENT FINANCING PLAN
for the establishment of
TAX INCREMENT FINANCING DISTRICT NO. 1 -1
(a housing district)
within
HOUSING PROJECT AREA NO. 1
CITY OF ORONO
ORONO HOUSING AND REDEVELOPMENT AUTHORITY
HENNEPIN COUNTY
STATE OF MINNESOTA
Public Hearing: May 14,2001
Adopted:
EHLERS
Prepared by: EHLERS &ASSOCIATES, INC.
03060 Centre Pointe Drive, Roseville, Minnesota 55113-1105
& ASSOCIATES INC (651) 697-8500 fax: (651) 697-8555 www.ehlers-inc.com
TABLE OF CONTENTS
(for reference purposes only)
SECTION II
TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING
DISTRICT NO. 1-1 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 Plan 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 of the District 2-3
Subsection 2-8. Original Net Tax Capacity 2-3
Subsection 2-9. Prior Planned Improvements 2-4
Subsection 2-10. Original Tax Rate 2-4
Subsection 2-11. Estimated Tax Increment 2-4
Subsection 2-12. Use of Tax Increment 2-5
Subsection 2-13. Sources of Revenue 2-6
Subsection 2-14. Bonded Indebtedness 2-6
Subsection 2-15. Uses of Funds 2-6
Subsection 2-16. Local Contribution (State Tax Increment Financing Aid) 2-7
Subsection 2-17. Fiscal Disparities Election 2-8
Subsection 2-18. Business Subsidies 2-8
Subsection 2-19. County Road Costs 2-8
Subsection 2-20. Estimated Impact on Other Taxing Jurisdictions 2-8
Subsection 2-21. Supporting Documentation 2-9
pp 9
Subsection 2-22. Modifications 2-9
Subsection 2-23. Time Factors 2-9
Subsection 2-24. Administration of the District 2-11
Subsection 2-25. Administrative Expenses 2-11
Subsection 2-26. Excess Tax Increments 2-12
Subsection 2-27. Requirements for Agreements with the Developer 2-12
Subsection 2-28. Assessment Agreements 2-12
Subsection 2-29. Annual Disclosure Requirements 2-12
Subsection 2-30. Reasonable Expectations 2-13
Subsection 2-31. Other Limitations on the Use of Tax Increment 2-13
APPENDIX A
PROJECT DESCRIPTION A-1
APPENDIX B
ESTIMATED CASH FLOW FOR THE DISTRICT B-1
APPENDIX C
BUT/FOR QUALIFICATIONS C-1
SECTION II
TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO. 1-1
Subsection 2-1. Foreword
The Orono Housing and Redevelopment Authority,(the"Authority"),the City of Orono(the"City"),staff,
and consultants have prepared the following information to expedite the establishment of Tax Increment
Financing District No. 1-1 ("the District"), a housing tax increment financing district, located in Housing
Project Area No. 1 (the"Project Area"). This Section contains the Tax Increment Financing Plan(the"TIF
Plan") for Tax Increment Financing District No. 1-1. Other relevant information is contained in the
Development Plan for Housing Project Area No. 1. The Tax Increment Financing Plan for the District was
prepared by Ehlers & Associates, Inc., 3060 Centre Pointe Drive, Roseville, Minnesota 55113-1105,
telephone 651-697-8500.
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 Authority has certain statutory powers pursuant to Minnesota
Statutes ("MS."), 469.001 through 469.047, inclusive, as amended (the "HRA Act"), and M.S., Sections
469.174 through 469.179, inclusive, as amended(the"Tax Increment Financing Act"or"TIF Act").
This Plan is based on statutory authority at the time of adoption. Subsequent legislation action may alter the
ability of the Authority to use tax increment collected from the District.
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 construction of senior housing in the City of Orono consisting of approximately
62 units of housing for senior citizens(the"Project"). The Project will provide safe,decent,and affordable
housing for persons of low and moderate income. Contracts for this have not been entered into at the time
of preparation of this TIF Plan, but the proposed development will begin in the summer of 2001. This TIF
Plan is expected to achieve many of the objectives outlined in the Development Plan for Housing Project
Area No. 1.
The activities contemplated in the Development Plan 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 Housing Project Area No. 1 and the District.
Subsection 2-4. Development Plan Overview
Activities to be undertaken by the Authority and the City pursuant to the Development Plan for Housing
Project No. 1 include, but are not limited to,the following:
1. Property to be Acquired - Property located within the District may be acquired by the
Authority and is further described in this TIF Plan.
2. Upon approval of a developer's plan relating to the Project and completion of the necessary
legal requirements,the Authority may sell or lease to a developer selected properties that
they may acquire within the District.
Orono HRA Tax Increment Financing Plan for Tax Increment Financing District No. 1-1 -1
3. The City and the Authority may perform or provide for some or all necessary acquisition,
construction,relocation,demolition,and required utilities and public streets work within the
District.
Subsection 2-5. Description of Property in the District and Property To Be Acquired
The District encompasses all the parcel and adjacent rights-of-way identified below. The map below shows
the parcel included in the District and the boundaries of Housing Project No. 1.
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Parcel Numbers
34-118-23-24-0058*
*The above parcel number represents current identification.
The parcel will be subdivided and a new parcel number will be assigned
to the property included within the District.
Any property within the Project Area may be acquired by the Authority.
Subsection 2-6. Classification of the District
The Authority,in determining the need to create a tax increment financing district in accordance with M.S.,
Sections 469.174 to 469.179, as amended, inclusive, finds that the District,to be established, is a housing
district pursuant to M.S., Section 469.174, Subd. 11 as defined below:
Orono HRA Tax Increment Financing Plan for Tax Increment Financing District No. 1-1 2-2
"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.A district does not qualify as a housing district
under this subdivision if the fair market value of the improvements which are constructed in the
district for commercial uses or for uses other than low and moderate income housing consists of
more than 20 percent of the total fair market value of the planned improvements in the development
plan or agreement. The fair market value of the improvements may be determined using the cost of
construction,capitalized income,or other appropriate method of estimating market value. 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.
In meeting the statutory criteria the Authority relies on the following facts and findings:
• The District consists of one parcel.
• The development will consist of 62 units of rental housing for senior citizens.
• 20%of the units will be occupied by persons with incomes less than 50%of the area median income
Pursuant to 469.176 Subd. 7,the District does not contain any parcel or part of a parcel that qualified under
the provisions of Section 273.111 or 273.112 of Chapter 473H(Green Acres)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 of the District
Pursuant to M.S., Section 469.175, Subd. 1, and Section 469.176, Subd. 1,the duration of the District must
be indicated within the TIF Plan. Pursuant to M.S., Section 469.176, Subd. Ib,the duration of the District
will be 25 years after receipt of the first increment by the Authority(a total of 26 years). The date of receipt
by the Authority of the first tax increment is expected to be 2003. Thus, it is estimated that the District,
including any modifications of the TIF Plan for subsequent phases or other changes,would terminate after
2028, or when the TIF Plan is satisfied. If increment is received in 2002, the term of the District will be
2027. The Authority reserves the right to decertify the District prior to the legally required date.
Subsection 2-8. Original Net Tax Capacity
The Original Net Tax Capacity(ONTC)value of the District is the base value of the parcels. The ONTC
certified for the district pursuant to M.S., Section 469.174, Subd. 7 and M.S., Section 469.177, Subd. 1,will
be based on the Assessor's Estimated Market Value in 2000 for taxes payable 2001. The value will be
prorated after the parcel is split for development. Based on the current market value, the ONTC of the
District is estimated to be$1,570.
Changes in the following factors may alter the amount of the ONTC in future years:
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 and tax classification of the property;
5. change in statutory rates used to determine Tax Capacity.
Orono HRA Tax Increment Financing Plan for Tax Increment Financing District No. 1-1 2-3
In any year in which the current Net Tax Capacity value of the District declines below the ONTC,no value
will be captured and no tax increment will be payable to the Authority.
Subsection 2-9. Prior Planned Improvements
The Authority has determined that no building permits have been issued for property within the District
during the eighteen (18) months immediately preceding approval of the TIF Plan by the municipality
pursuant to M.S., Section 469.175, Subd. 3.
Subsection 2-10.Original Tax Rate
The amount of tax increment is calculated by multiplying the total local tax rate (excluding market value
rates) by the Captured Tax Capacity value of the District. If the current total local tax rate exceeds the
Original Tax Rate(OTR),the amount of tax increment produced by the tax rate above the OTR is distributed
to the taxing jurisdictions as excess tax increment.
The OTR for the District will be the local tax rate for taxes payable 2001, assuming the request for
certification is made before June 30, 2001. The local tax rate for taxes payable 2001 is 104.005%
Subsection 2-11. Estimated Tax Increment
The Authority estimates that the total tax capacity value of property within the District upon completion of
the proposed development will be $73,935. The amount of annual tax increment revenue is shown in the
table below.
Project Estimated Tax Capacity upon Completion (PTC) $73,935
Original Estimated Net Tax Capacity(ONTC) (1,570)
Estimated Captured Tax Capacity (CTC) $72,365
Original Local Tax Rate (OTR) 104.0050% Pay 2001
Estimated Annual Tax Increment (CTC x Local Tax Rate) $75,263
Percent Retained by the Authority 100%
The Authority requests 100 percent of the available increase in tax capacity for repayment of its obligations
and current expenditures, beginning in the tax year payable 2003
The following factors will determine the actual amount of tax increment received by the Authority:
• Actual market value of property within the District as determined by the Assessor.
• Statutory rates for setting tax capacity values.
• Actual total local tax rate.
The cash flow projections in Appendix B show the potential tax increment revenues collected by the
Authority.
Orono HRA Tax Increment Financing Plan for Tax Increment Financing District No. 1-1 2-4
Subsection 2-12. Use of Tax Increment
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., Section 469.174, subd. 11. The cost of public improvements
directly related to the housing projects and the allocated administrative expenses of the Authority may
be included in the cost of a housing project. Within this limitation,the Authorityhereb 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 public development costs of the Housing Project Area No. 1
pursuant to the M.S. Sections 469.001 to 469.047;
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 the
Authority or for the benefit of Housing Project Area 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.
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 Hennepin County to the Authority for the Tax
Increment Fund of said District. The Authority 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 fultds
will be used for Authority administration(up to 10 percent)and the costs of public improvement activities.
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 Housing Project Area 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,and(2)pubic costs within the District shall be limited to reimbursement of public
costs paid before or within five years after certification of said district by the County Auditor and interest
on all such unreimbursed expenditures.
Orono HRA Tax Increment Financing Plan for Tax Increment Financing District No. 1-1
Subsection 2-13. Sources of Revenue
The estimated sources of revenue for the District are contained in the table below.
SOURCES OF FUNDS TOTAL
Tax Increment $2,030,000
Other City Funds $0
PROJECT REVENUES $2,030,000
Interfund Loans/Transfers $1,393,000
Bond Proceeds $0
TOTAL PROJECT AND FINANCING REVENUES $3,423,000
The costs outlined in the Uses of Funds will be financed primarily through the annual collection of tax
increments. The Authority and the City reserve the right to use other sources of revenue legally applicable
to the Authority, the City and the TIF Plan, including, but not limited to, special assessments, general
property taxes, state aid for road maintenance and construction, proceeds from the sale of land, other
contributions from the developer and investment income,to pay for the estimated public costs.
In addition to the actual tax increment collected by the Authority,the TIF Act(M.S. Section 469.174,Subd.
25) places restrictions on the use of revenues derived from the following sources:
• the proceeds from the sale or lease of property,tangible or intangible, purchased by the authority with
tax increments;
• repayments of loans or other advances made by the authority with tax increments; and
• interest or other investment earnings on or from tax increments.
Subsection 2-14. Bonded Indebtedness
It is anticipated that the Authority will use a pay-as-you-go note to reimburse the Developer for eligible
expenses and interest on the unpaid balance. The City may use an interfund loan or a transfer of funds to
pay for public costs. Tax increment revenues may be used to repay an interfund loan or transfer.
The City reserves the right to incur bonded indebtedness or other indebtedness as a result of the TIF Plan.
Any bonded indebtedness will be incurred by the City or the Authority without a modification to the TIF
Plan pursuant to applicable statutory requirements. 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.
It is expected that the Authority or the City will issue not more than$9,000,000 of housing revenue bonds
under M.S.Chapter 462C to provide for the costs of the Project that are not paid by tax increment or a local
contribution.
Subsection 2-15. Uses of Funds
Currently under consideration for the District is a proposal to facilitate construction of senior housing. The
Orono HRA Tax Increment Financing Plan for Tax Increment Financing District No. 1-1 2-6
Authority has determined that it will be necessary to provide financial assistance to the project. To facilitate
the proposed development,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 FUNDS TOTAL
Land/Building Acquisition $775,000
Site Improvements/Preparation 100,000
Public Utilities 77,000
Parking Facilities 0
Streets and Sidewalks 562,000
Other Public Improvements 31,000
Interest on Pay-as-you-go Note $1,159,000
Administrative Costs(up to 10%) 70,000
PROJECT COSTS TOTAL S2.774.000
Interfund Loans/Transfers $649,000
Loan Interest 0
Bond Interest 0
Bond Principal 0
TOTAL FINANCING AND PROJECT COSTS 53,423,000
The above budget is organized according to the current State reporting forms. The information in Appendix
A contains additional information about the project.
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 the
Total Project Costs in the table above without formal modification of this Plan pursuant to the applicable
statutory requirements. The Authority may expend funds for qualified housing activities outside of the
District boundaries.
Subsection 2-16. Local Contribution (State Tax Increment Financing Aid)
The City elects to make the annual local contribution to the project(pursuant to M.S.,Section 273.1399,
Subd. 6) to exempt itself from the LGA-HACA penalty set forth in M.S. Section 273.1399.
The District is exempt from the LGA-HACA reduction if the elects to make a qualifying local contribution
at the time of approving the tax increment financing plan. To qualify for the exemption in each year, the
must make a qualifying local contribution to the project in an amount equal to five percent(5%)of the annual
tax increment for the District. The maximum local contribution for all districts in the City in any year is
limited to two percent of the City's net tax capacity, after which point the City must make an additional
contribution equal to the lesser of(a) 0.25 percent of the City's net tax capacity or (b) 3 percent of tax
increment revenues for that year.
Orono HRA Tax Increment Financing Plan for Tax Increment Financing District No. 1-1 2-7
The amount of the local contribution must be made out of unrestricted money of the City,such as the general
fund, a property tax levy, or a federal or state grant-in-aid which may be spent for general government
purposes. The local contribution may not be made,directly or indirectly,with tax increments or developer
payments. The local contribution must be used to pay project costs and cannot be used for general
government purposes. Such contribution may be in form of either lump sum or annual payments(in addition
to tax increment payments)towards costs identified in this Plan or other costs related to that development
or redevelopment. The contribution may also be made in the form of public improvements financed by the
City or other unit of government with unrestricted funds.
Subsection 2-17. Fiscal Disparities Election
It is not anticipated that the District will contain commercial/industrial property. Therefore, the fiscal
disparities provision does not apply to the District.
Subsection 2-18. Business Subsidies
Pursuant to M.S. Statutes 116J.993, Subdivision 3, assistance for housing is not considered a business
subsidy.
Subsection 2-19. County Road Costs
Pursuant to M.S.,Section 469.175,Subd. la,the county board may require the Authority 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 judgement 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.
In the opinion of the Authority and consultants,the proposed development outlined in this T1F Plan will have
little or no impact upon county roads. If the county elects to use increments to improve county roads,it must
notify the Authority within forty-five days of receipt of this TIF Plan.
Subsection 2-20. 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 Authority 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
2000/2001 Estimated Captured
Total Net Tax Capacity(CTC) Percent of CTC
Tax Capacity Upon Completion to Entity Total
Hennepin County 1,385,934,076 72,365 0.0052%
City of Orono 17,779,001 72,365 0.4070%
Orono ISD No. 278 23,991,541 72,365 0.3016%
Orono HRA Tax Increment Financing Plan for Tax Increment Financing District No. 1-1 2-8
1
IMPACT ON TAX RATES
2000/2001 Percent Potential
Extension Rates of Total CTC Taxes
Hennepin County 0.376240 36.18% 72,365 27,227
City of Orono 0.137080 13.18% 72,365 9,920
Orono ISD No. 278 0.431840 41.52% 72,365 31,250
Other 0.094890 9.12% 72,365 6,867
Total 1.040050 100.00% 75,263
The estimates listed above display the captured tax capacity when all construction is completed. The tax rate
and total net tax capacities used for calculations is for taxes payable in 2001.
Subsection 2-21.Supporting Documentation
Pursuant to M.S.Section 469.175 Subd la, clause 7 the TIF Plan must contain identification and description
of studies and analyses used to make the determination set forth in M.S. Section 469.175 Subd 3, clause(2).
Following is a list of reports and studies on file at the Authority that support the authority's findings:
A list of applicable studies, if any, will be listed here prior to the public hearing.
Subsection 2-22. Modifications
The Authority reserves the right to make future modifications to the TIF Plan and District. In accordance
with the TIF Act(MS. Section 469.175, Subd. 4) the following modifications may be made only upon the
notice and after the discussion,public hearing and findings required for approval of the original TIF Plan:
1. reduction or enlargement of the geographic area of Housing Project Area No. 1 or the District;
2. increase in amount of bonded indebtedness to be incurred, including a determination to capitalize
interest on debt if that determination was not a part of the original plan,or to increase or decrease the
amount of interest on the debt to be capitalized;
3. increase in the portion of the captured net tax capacity to be retained by the Authority;
4. increase in total estimated tax increment expenditures; or
5. designation of additional property to be acquired by the Authority,
Subsection 2-23. Time Factors
1. District Enlargement
Pursuant to M.S. Section 469.175 Subd. 4(b),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 Housing Project Area No. 1 or 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
Orono HRA Tax Increment Financing Plan for Tax Increment Financing District No. 1-1 2-9
of those parcel(s) in the District's original net tax capacity or (B) the Authority agrees that,
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 Authority
must notify the County Auditor of any modification that reduces or enlarges the geographic area of
Housing Project Area No. 1 or 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.
2. Activity Within 3 Years
No tax increment shall be paid to the Authority for the District after three(3)years from the date of
certification of the Original Net Tax Capacity value of the taxable property in the District by the
County Auditor(MS. Section 469.176, Subd la)unless:
(a)bonds have been issued in aid of the project containing the district pursuant to M.S.
Section 469.178, or any other law, except revenue bonds issued pursuant to M.S.,
Sections 469.152 to 469.165,or
(b)the Authority has acquired property within the District, or
(c)the Authority has constructed or caused to be constructed public improvements within
the District.
The bonds must be issued, or the Authority must acquire property or construct or cause public
improvements to be constructed by approximately June,2004 and report such actions to the County
Auditor.
3. 4-Year Knockdown
Parcels without"qualifying activity"will be knocked out of the District after four years from the date
of certification of the original net tax capacity. M.S. Section 469.176, Subd. 6 defines qualifying
activities as"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" in accordance with the TIF Plan. For purposes of the knock down
requirements,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.
Knock down means that the original net tax capacity of that parcel is excluded from the original net
tax capacity of the District and no tax increment may be collected from that parcel. If the Authority
or the owner of the parcel subsequently commences a qualifying activity in accordance with the TIF
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
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.
The Authority, the City or a property owner must improve parcels within the District by
approximately June,2005 and report such actions to the County Auditor.
Orono HRA Tax Increment Financing Plan for Tax Increment Financing District No. 1-1 2.10
4. 5-Year Limit
After five years from the date of certification of the TIF District,tax increment may only be used to
(1) repay existing bonds the proceeds of which must be used to finance the activity, are issued and
sold to a third party before or within five years after certification,the revenues are spent to repay the
bonds, and the proceeds of the bonds either are, on the date of issuance, reasonably expected to be
spent before the end of the later of(a) the five-year period, or (b) a reasonable temporary period
within the meaning of the use of that term under § 148(c)(1) of the Internal Revenue Code, or are
deposited in a reasonably required reserve or replacement fund; (2)reimburse a developer or other
third party for eligible expenses paid before or within five year period, including interest on
unreimbursed costs;(3)eligible administrative expense;and(4)eligible expenses under M.S.Sect on
469.1763, Subd. 2 (Pooling).
Subsection 2-24. Administration of the District
Administration of the District will be handled by the City Administrator.
Subsection 2-25.Administrative Expenses
In accordance with M.S., Section 469.174, Subd. 14, and M.S., Section 469.176, Subd. 3, administrative
expenses means all expenditures of the Authority, 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
project;
3. relocation benefits paid to or services provided for persons residing or businesses located in the
project; or
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 sections 1 to 3.
For districts for which the request for certification were made before August 1, 1979,or after June 30, 1982,
administrative expenses also include amounts paid for services provided by bond counsel,fiscal consultants,
and planning or economic development consultants. 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 tax
increment expenditures authorized by the TIF Plan or the total tax increment expenditures for Housing
Project Area No. 1,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. 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 equal to 0.25
percent of any increment distributed to the Authority and the county treasurer shall pay the amount deducted
to the state treasurer 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.
Orono HRA Tax Increment Financing Plan for Tax Increment Financing District No. 1-1 2-11
Subsection 2-26. Excess Tax Increments
Pursuant to M.S., Section 469.176, Subd. 2, in any year in which the tax increment exceeds the amount
necessary to pay the costs authorized by the TIF Plan,including the amount necessary to cancel any tax levy
as provided in M.S., Section 475.61, Subd. 3, the Authority shall use the excess amount to do any of the
following:
1. prepay any outstanding bonds;
2. discharge the pledge of tax increment therefor;
3. pay into an escrow account dedicated to the payment of such bonds; or
4. return the excess to the County Auditor for redistribution to the respective taxing jurisdictions in
proportion to their local tax rates.
In addition,the Authority may, subject to the limitations set forth herein,choose to modify the TIF Plan in
order to finance additional public costs in Housing Project Area No. 1 or the District.
Subsection 2-27. Requirements for Agreements with the Developer
The Authority 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 Authority to demonstrate the conformance of the
development with Authority plans and ordinances. The Authority 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 Authority 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
Authority concluded an agreement for the development of the property acquired and which provides recourse
for the Authority should the development not be completed.
Subsection 2-28.Assessment Agreements
Pursuant to M.S., Section 469.177, Subd. 8,the Authority may enter into a written assessment agreement in
recordable form with the developer of property within the District which establishes a minimum market value
of the land and completed improvements for the duration of the District. The assessment agreement shall
be presented to the 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 assessor shall also certify the minimum
market value agreement.
Subsection 2-29.Annual Disclosure Requirements
Pursuant to M.S., Section 469.175, Subd. 5, 6 and 6a the Authority must undertake financial reporting for
all tax increment financing districts to the Office of the State Auditor, County Board, County Auditor and
School Board on or before August 1 of each year. M.S., Section 469.175, Subd. 5 also provides that an
Orono HRA Tax Increment Financing Plan for Tax Increment Financing District No. 1-1 2-12
annual statement shall be published in a newspaper of general circulation in the Authority on or before
August 15.
If the Authority 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 2-30. Reasonable Expectations
As required by the Tax Increment Financing 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 and that 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 the 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 District permitted by the TIF Plan. In making
said determination, reliance has been placed upon written representatives made by the developer to such
effects and upon City staff awareness of the feasibility of developing the project site. A comparative analysis
of estimated market values both with and without establishment of the District and the use of tax increments
has been performed as described above. Such analysis is included with the cashflow in Appendix C, and
indicates that the increase in estimated market value of the proposed development (less the indicated
subtractions)exceeds the estimated market value of the site absent the establishment of the District and the
use of tax increments.
Subsection 2-31.Other Limitations on the Use of Tax Increment
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 public development costs of the Housing Project Area No. l
pursuant to the M.S., Sections 469.001 to 469.047 and the costs of a housing development project described
in M.S. Section 469.017. These revenues shall not be used to circumvent existing levy limit law. No
revenues derived from tax increment shall 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 or for a
commons area used as a public park,or a facility used for social,recreational,or conference purposes. This
provision shall not prohibit the use of revenues derived from tax increments for the construction or
renovation of a parking structure or of a privately owned facility for conference purposes.
Orono HRA Tax Increment Financing Plan for Tax Increment Financing District No. 1-1 2-13
APPENDIX A
PROJECT DESCRIPTION
The Authority and the Developer will enter into a development agreement containing a pay-as-you-go note.
Through the Note, the Authority will reimburse the Developer for eligible expenses with interest on the
unpaid balance. The anticipated reimbursable expenses include:
Land acquisition $775,000
Site improvements 100,000
Sewer connection fees 41,000
Park dedication fees 161,200
The actual costs to be reimbursed will be determined through the negotiation of the development agreement.
In undertaking the TIF Plan,the Cityand the Authorityexpect to incur certain expenses. These expenses
include, but are not limited to,the following:
Sidewalk $12,000
Street lighting 32,000
Bury power lines 45,000
Traffic control(Brown Road/Highway 12) 150,000
Intersection improvements(Brown Road/Highway 12) 100,000
Access to Brimhall/Highway 12 intersection 100,000
Traffic control(Brimhall Avenue) 150,000
Access to Highway 12 50,000
To the degree permissible by the TIF Act,this Plan and the available funds,the Authority and the City will
finance these activities with interfund loans and repayment from future tax increment revenues.
APPENDIX -1
APPENDIX B
ESTIMATED CASH FLOW FOR THE DISTRICT
Project Value Information
EMV Tax
Per Capacity Units Built Per Year
Project Unit Per Unit 2001 2002 2003 2004
Senior Housing (Class rate-1.20%/1.65%) 93,000 1,193 62 0 0 0
Tax Increment Projections
Tax Gross Local Net Local
Tax Capacity Values Extension Tax Retained Semi-Annual Contribution
Year Base Total Captured Rate Increment 10.00% Increment 5%
2001 1,570 0 0 1.04005 0 0 0 0 8/1/2001
0 2/1/2002
2002 1,570 0 0 1.04005 0 0 0 0 8/1/2002
0 2/1/2003
2003 1,570 73,935 72,365 1.04005 75,263 (7,526) 33,868 3,763 8/1/2003
33,868 2/1/2004
2004 1,570 76,892 75,322 1.04005 78,339 (7,834) 35,253 3,917 8/1/2004
35,253 2/1/2005
2005 1,570 76,892 75,322 1.04005 78,339 (7,834) 35,253 3,917 8/1/2005
35,253 2/1/2006
2006 1,570 76,892 75,322 1.04005 78,339 (7,834) 35,253 3,917 8/1/2006
35,253 2/1/2007
2007 1,570 76,892 75,322 1.04005 78,339 (7,834) 35,253 3,917 8/1/2007
35,253 2/1/2008
2008 1,570 79,968 78,398 1.04005 81,538 (8,154) 36,692 4,077 8/1/2008
36,692 2/1/2009
2009 1,570 83,167 81,597 1.04005 84,865 (8,486) 38,189 4,243 8/1/2009
38,189 2/1/2010
2010 1,570 86,493 84,923 1.04005 88,325 (8,832) 39,746 4,416 8/1/2010
39,746 2/1/2011
2011 1,570 89,953 88,383 1.04005 91,923 (9,192) 41,365 4,596 8/1/2011
41,365 2/1/2012
2012 1,570 93,551 91,981 1.04005 95,665 (9,567) 43,049 4,783 8/1/2012
43,049 2/1/2013
2013 1,570 97,293 95,723 1.04005 99,557 (9,956) 44,801 4,978 8/1/2013
44,801 2/1/2014
2014 1,570 101,185 99,615 1.04005 103,605 (10,360) 46,622 5,180 8/1/2014
46,622 2/1/2015
2015 1,570 105,233 103,663 1.04005 107,814 (10,781) 48,516 5,391 8/1/2015
48,516 2/1/2016
2016 1,570 109,442 107,872 1.04005 112,192 (11,219) 50,486 5,610 8/1/2016
50,486 2/1/2017
2017 1,570 113,820 112,250 1.04005 116,745 (11,675) 52,535 5,837 8/1/2017
52,535 2/1/2018
2018 1,570 118,372 116,802 1.04005 121,480 (12,148) 54,666 6,074 8/1/2018
54,666 2/1/2019
2019 1,570 123,107 121,537 1.04005 126,405 (12,640) 56,882 6,320 8/1/2019
56,882 2/1/2020
2020 1,570 128,031 126,461 1.04005 131,526 (13,153) 59,187 6,576 8/1/2020
59,187 2/1/2021
2021 1,570 133,153 131,583 1.04005 136,853 (13,685) 61,584 6,843 8/1/2021
61,584 2/1/2022
2022 1,570 138,479 136,909 1.04005 142,392 (14,239) 64,076 7,120 8/1/2022
64,076 2/1/2023
Total 2,029,504 (202,950) 1,826,554 101,475
The figures above are estimates of future tax increment revenues based on assumptions about property
values in the District and the operation of the property tax systems. Changes in these assumptions will alter
the projected revenues. These projections intended solely to illustrate the revenues that could be created
if these assumptions become reality.
APPENDIX B-I
If collected over the maximum statutory duration,present value of the projected tax increments is estimated
to be$848,000. Based on experience with other development in Orono and in comparable communities and
based on the analysis of the proposed development,it is reasonable to expect that the increased market value
of the site without the use of tax increment financing would be less than$4,918,000. This amount represents
the estimated increase in market value from the proposed development minus the estimated present value of
the tax increments. This finding is based on the assumption that other development of the site would meet
similar public purposes and objectives and would comply with City plans and land use regulations.
APPENDIX B_2
APPENDIX C
BUT/FOR QUALIFICATIONS
The Developer has submitted proforma analysis and other supporting information related to the need for the
use of tax increment financing. This information shows that without the use of tax increment financing,the
proposed development is not financially feasible. The rents required with the assistance cannot be supported
and do not make the housing available for persons of low and moderate income. The projected income from
the development do not produce sufficient return on investment to make a feasible project without tax
increment assistance.
The Authority will enter into a development agreement in conjunction with granting the tax increment
assistance. This agreement will provide additional representations by the Developer concerning the need for
the use of tax increment financing.
APPENDIX C-1
A- O 1" 14
Droll as of May 9, 2001
For Public Hearing
DEVELOPMENT PLAN
for
HOUSING PROJECT NO. 1
ORONO HOUSING AND REDEVELOPMENT AUTHORITY
CITY OF ORONO
HENNEPIN COUNTY
STATE OF MINNESOTA
Public Hearing: May 14,2001
Adopted:
0
EHLERS
Prepared by: EHLERS &ASSOCIATES, INC.
3060 Centre Pointe Drive, Roseville, Minnesota 55113-1105
ti s s o c A T E s NC (651) 697-8500 fax: (651)697-8555 www.ehlers-inc.com
TABLE OF CONTENTS
(for reference purposes only)
MUNICIPAL ACTION TAKEN iii
SECTION I
Development Plan for Housing Project No. 1 1-1
Subsection 1-1. Definitions 1-1
Subsection 1-2. Statutory Authority 1-2
Subsection 1-3. Statement of and Finding of Public Purpose 1-2
Subsection 1-4. Statement of Objectives 1-2
Subsection 1-5. Statement of Public Facilities and Costs to Be Financed 1-3
Subsection 1-6. Funding of Developments and Redevelopments 1-4
Subsection 1-7. Environmental Controls 1-4
Subsection 1-8. Proposed Reuse of Property 1-4
Subsection 1-9. Open Space to Be Created 1-4
Subsection 1-10. Administration and Maintenance of Housing Project No. 1 1-4
Subsection 1-11. Rehabilitation 1-5
Subsection 1-12. Relocation 1-5
Subsection 1-13. Property Acquisition 1-5
Subsection 1-14. Modification of the Development Plan and/or Housing Project No. 1 1-5
Subsection 1-15. Boundaries of Housing Project No. 1 A-1
ii
MUNICIPAL ACTION TAKEN
(This Municipal Action is only for convenience of reference.)
Based upon the statutory authority described in the Development Plan attached hereto,the public purpose
findings by the Board of Commissioners and for the purpose of fulfilling the Authority's development
objectives as set forth in the Development Plan, the Board of Commissioners has created, established and
designated Housing Project No. 1 pursuant to and in accordance with the requirements of the HRA Act and
the TIF Act as defined in the definitions of this document.
Tax Increment Financing District No. 1-1,a housing tax increment financing district,was established at the
same time that the Housing Project No. 1 was established.
The following municipal action was taken in connection therewith:
Housing Project No. 1:
May 14, 2001: The Housing Project No. 1 was established by the Authority and the Development Plan
adopted.
Tax Increment Financing District No. 1-1:
May 14,2001: The Tax Increment Financing District No. 1-1 was established by the Authority and the Tax
Increment Financing Plan adopted.
iii
SECTION I
Development Plan for Housing Project No. 1
Subsection 1-1. Definitions
The terms defined below shall,for purposes of this Development Plan,have the meanings herein specified,
unless the context otherwise specifically requires.
1. "Authority" means the Orono Housing and Redevelopment Authority.
2. "Board of Commissioners" means the Board of Commissioners of the Authority.
3. "City" means the City of Orono.
4. "Comprehensive Plan" means the documents which contain the objectives, policies, standards and
programs to guide public and private land use, development, redevelopment and preservation for all
lands and water within the City.
5. "County" means the County of Hennepin, Minnesota.
6. "Development Plan"means this Development Plan for Housing Project No. 1,as initially proposed,and
as it shall be modified.
7. "HRA Act" means Minnesota Statutes, Section 469.001 through 469.047.
8. "Land Use Regulations"means all federal,state and local laws,rules,regulations,ordinances,and plans
relating to or governing the use of development of land in the City, including but not limited to
environmental,zoning and building code laws and regulations.
9. "Project Area" means the real property within the City constituting the Housing Project No. 1.
10. "Public Costs"means the costs set forth in the Tax Increment Financing Plan,and any other costs eligible
to be financed by Tax Increments under the TIF Act and the HRA Act.
11. "Public Improvements" means the public improvements described in the Development Plan and Tax
Increment Financing Plan.
12. "State" means the State of Minnesota.
13. "Tax Increment Bonds" means any tax increment bonds or notes issued by the Authority to finance the
Public Costs as stated in the Development Plan for Housing Project No. 1 and in the Tax Increment
Financing Plans, and any obligations issued to refund such bonds.
14. "TIF Act"means Minnesota Statutes, Sections 479.174 through 479.179, inclusive, as amended.
15. "Tax Increment Financing District"means any tax increment financing district presently established or
to be established in the future in Housing Project No. 1.
16. "Tax Increment Financing Plan" or "Plan" means the Plans adopted by the Authority for any Tax
Increment Financing District.
Orono HRA Development Plan for Housing Project No. 1 1-1
Subsection 1-2. Statutory Authority
The HRA Act authorizes the Authority,upon certain public purpose findings by the Authority and City,to
establish and designate housing,development and redevelopment projects within the City and to establish,
develop and administer redevelopment plans therefore to meet the needs and accomplish the public purposes
specified in Statement of and Finding of Public Purpose. In accordance with the purposes set forth in the
HRA Act, the Authority has established Project Area. The Project Area shall be designated as Housing
Project No. 1 contain the area described in Subsection 1.15.
The Tax Increment Financing Act authorizes the Authority,upon certain findings, establish and designate
tax increment financing districts within the Project Area and to adopt and implement a tax increment
financing plan to accomplish the Development Plan established for the Housing Project No. 1.
Subsection 1-3. Statement of and Finding of Public Purpose
The Authority has determined that there is a need for the Authority to take certain actions designed to
encourage,ensure,and facilitate development and redevelopment by the private sector of underutilized and
unused land located within the corporate limits of the City, in order to provide adequate and affordable
housing for residents of the City and the surrounding area,to improve the tax base of the City,the County
and the School District,to better utilize existing public facilities and provide needed public services,and to
improve the general economy of the City, the County, and the State. Specifically, the Authority has
determined that the property within the Project Area is either underutilized or unused due to a variety of
factors,which has resulted in a lack of private investment. The Authority further finds that the private sector
has not provided the variety of housing opportunities necessary to meet the needs of the community. It is
necessary for the Authority to exercise its authority under the HRA Act and the TIF Act to develop,
implement and finance a program designed to encourage, ensure and facilitate the development of the
property located in the Project Area, to further and accomplish the public purposes specified in this
Development Plan.
The development currently proposed in the Project Area consists of approximately 62 units of rental housing
for senior citizens. The Authority finds that this development will alleviate a shortage of decent, safe and
affordable housing for persons of low and moderate income.
In adopting this Development Plan,the Authority also finds:
1. The development proposed for the Project Area would not occur solely through private investment in
the foreseeable future.
2. The proposed development is consistent with the overall plans for the development of the City.
3. The proposed use oftax increment financing will afford maximum opportunity,consistent with the sound
needs of the City as a whole,for the development or redevelopment of the property located in Housing
Project No. 1 by private enterprise.
4. The welfare of the City, County, and the State of Minnesota requires active promotion, attraction,
encouragement and development of a variety of housing opportunities.
Subsection 1-4. Statement of Objectives
The establishment of the Project Area in the City, pursuant to the HRA Act, is necessary and in the best
interests of the City and its residents and is necessary to give the Authority the ability to meet certain public
purpose objectives that would not be obtainable in the foreseeable future without intervention by the
Authority in the normal development process.
Orono HRA Development Plan for Housing Project No. 1 -2
The Authority intends,to the extent permitted by law,to accomplish the following objectives through the
implementation of the Development Plan:
1. Promoting and securing the prompt development of property in the Project Area in a manner consistent
with the City's planning and with a minimal adverse impact on the environment,which property is less
productive because of the lack of proper utilization and lack of investment,and thereby promoting and
securing the development of other land in the City.
2. Promoting and securing additional housing opportunities within the Project Area and the City for
residents ofthe City and the surrounding area,thereby improving living standards and preventing the loss
of residents.
3. Securing the increase in value of property subject to taxation by the City, School District, County and
any other taxing jurisdictions in order to better enable such entities to pay for public improvements and
governmental services and programs required to be provided by them.
4. Securing the construction and providing moneys for the payment of the cost of public improvements in
the Project Area, which are necessary for the orderly and beneficial development of the Project Area.
5. Creating a desirable and unique character within the Project Area through quality land use alternatives
and design quality in new buildings.
6. Providing and securing the development of increased opportunities for senior citizens to choose from
housing options which offer a wide array of services without regard to income.
Subsection 1-5. Statement of Public Facilities and Costs to Be Financed
The Authority will perform or cause to be performed, to the extent permitted by law, all project activities
pursuant to the HRA Act,the TIF Act and other applicable state laws, and in doing so anticipates that the
following may, but are not required,to be undertaking by the Authority:
1. The making of studies,planning,and other formal and informal activities relating to the Development
Plan.
2. The implementation and administration of the Development Plan.
3. The re-zoning of land within the City.
4. The acquisition of property,or interests in property,by purchase or condemnation,which acquisition is
consistent with the objectives of the Development Plan.
5. The resale or lease of property to private parties.
6. The establishment of covenants or other restrictions to protect public interests.
7. The preparation of property for use and development in accordance with applicable Land Use
Regulations and any development agreements, including demolition of structures, clearance of sites,
placement of fill and grading.
8. The construction of public improvements and facilities needed to serve the Project Area.
Orono HRA Development Plan for Housing Project No. 1 1-3
9. The construction, expansion, or relocation of private utilities.
10. The construction or reconstruction of facilities to own and lease as described in the Tax Increment
Financing Plans.
11. The issuance of Tax Increment Bonds to finance the Public Costs of the Redevelopment Plan,and the
use of Tax Increments or other funds available to the Authority to pay or finance the Public Costs of the
Development Plan incurred or to be incurred by it pursuant to the Development Agreement.
12. The use of Tax Increments to pay debt service on the Tax Increment Bonds or otherwise pay or
reimburse with interest the Public Costs of the Development Plan.
13. The issuance of housing revenue bonds by the Authority or the City to finance the costs of the Project.
Subsection 1-6. Funding of Developments and Redevelopments
It is anticipated that the Public Costs of the Development Plan will be paid from proceeds of Tax Increment
revenues. The Authority reserves the right to utilize other available sources of revenue, including but not
limited to special assessments and user charges,which the Authority may apply to pay a portion of the Public
Costs.
Subsection 1-7. Environmental Controls
All municipal actions, public improvements and private development shall be carried out in a manner
consistent with existing environmental controls and all applicable Land Use regulations.
Subsection 1-8. Proposed Reuse of Property
The Development Plan contemplates that the Authority may acquire property and reconvey or lease the same
to another entity. Prior to formal consideration of the acquisition of any property,the Authority will require
the execution of a binding development agreement with respect thereto and evidence that Tax Increments
or other funds will be available to repay the Public Costs associated with the proposed acquisition. It is the
intent of the Authority to negotiate the acquisition of property whenever possible. Appropriate restrictions
regarding the reuse and redevelopment of property shall be incorporated into any development agreement
to which the Authority is a party.
Subsection 1-9. Open Space to Be Created
Any open space within the Project Area will be created in accordance with the zoning and ordinances of the
Authority.
Subsection 1-10. Administration and Maintenance of Housing Project No. 1
Maintenance and operation of the Project Area will be the responsibility of the City Administrator. Each
year,the Administrator of the Project Area will submit to the Board of Commissioners the maintenance and
operation budget for the following year.
The Administrator of the Project Area will administer the Project Area pursuant to the provision of the HRA
Act;provided,however,that such powers may only be exercised at the direction of the Authority. No action
taken by the administrator of the Project Area pursuant to the above-mentioned powers shall be effective
without authorization by the Authority.
Orono HRA Development Plan for Housing Project No. 1 1-4
Subsection 1-11. Rehabilitation
Owners of properties within the Project Area may be encouraged to rehabilitate their properties to conform
with the applicable state and local codes and ordinances, as well as any design standards. Persons who
purchase property within the Project Area from the Authority may be required to rehabilitate their properties
as a condition of sale of land.The Authority may provide such rehabilitation assistance as may be available
from federal, state or local sources.
Subsection 1-12. Relocation
Any person or business that is displaced as a result of the Development Plan will be relocated in accordance
with Minnesota Statutes, Section 117.50 to 117.56. The Authority accepts its responsibility for providing
for relocation assistance pursuant to the HRA Act.
Subsection 1-13. Property Acquisition
The Authority intends to acquire such property, or appropriate interest therein,within the Project Area as
the Authority may deem to be necessary or desirable to assist in the implementation of the Development Plan.
Subsection 1-14. Modification of the Development Plan and/or Housing Project No. 1
The Authority reserves the right to alter and amend the Development Plan and the Tax Increment Financing
Plans, subject to the provisions of state law regulating such action. The Authority specifically reserves the
right to enlarge or reduce the size of the Project Area and the Tax Increment Financing District, the
Development Plan,the Public Costs and the amount of Tax Increment Bonds(if any)to be issued to finance
such cost by following the procedures specified in Minnesota Statutes, Section 469.175, subdivision 4.
Orono HRA Development Plan for Housing Project No. 1 1-5
1
Subsection 1-15. Boundaries of Housing Project No. 1
The boundaries of the Project Area shall be as shown in the map below.
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These boundaries include the following parcels and all adjacent street right-of way:
[to be added]
Orono HRA Development Plan for I lousing Project No. I q-I
CITY OF ORONO
HENNEPIN COUNTY
STATE OF MINNESOTA
Council member introduced the following resolution and moved its
adoption:
RESOLUTION NO.
RESOLUTION ADOPTING THE REDEVELOPMENT PLAN FOR HOUSING
PROJECT AREA NO. 1,ESTABLISHING TAX INCREMENT FINANCING
DISTRICT NO. 1-1 THEREIN, AND ADOPTING THE TAX INCREMENT
FINANCING PLAN THEREFOR.
BE IT RESOLVED by the City Council(the"Council")of the City of Orono,Minnesota(the
"City"),as follows:
Section 1. Recitals.
1.01. It has been proposed by the Orono Housing and Redevelopment Authority (the
"HRA") and the City that the City adopt the Development Plan for Housing Project Area No. 1,
establish Tax Increment Financing District No. 1-1 (the "District") therein and adopt the Tax
Increment Financing Plan therefor(collectively,the"Plans"); all pursuant to and in conformity with
applicable law,including Minnesota Statutes,469.001 through 469.047 and 469.174 through 469.179,
all inclusive, as amended, (the "Act") all as reflected in the Plans, and presented for the Council's
consideration.
1.02. The City has investigated the facts relating to the Plans and has caused the Plans to
be prepared.
1.03. The City has performed all actions required by law to be performed prior to the
establishment of the District and the adoption and approval of the proposed Plans, including,but not
limited to, notification of Hennepin County and Independent School District No. 278 having taxing
jurisdiction over the property to be included in the District,and the holding of a public hearing upon
published notice as required by law.
1.04. Other written reports and analysis(the"Supporting Data")relating to the Plans and
to the activities contemplated therein have heretofore been prepared and submitted to the Council
and/or made a part of the City files and proceedings on the Plans. The Supporting Data include data,
information and/or substantiation constituting or relating to the bases for the other findings and
determinations made in this resolution. The Council hereby confirms, ratifies and adopts the
Supporting Data,which are hereby incorporated into and made as fully a part of this resolution to the
-1-
same extent as if set forth in full herein.
Section 2. Findings for the Adoption and Approval of the Plans.
2.01. The Council hereby finds that the Plans, are intended and, in the judgment of this
Council, the effect of such actions will be, to provide an impetus for development in the public
purpose and accomplish certain objectives as specified in the Plans, which are hereby incorporated
herein.
Section 3. Findings for the Establishment of Tax Increment Financing District No. 1-1.
3.01. The Council hereby finds that Tax Increment Financing District No. 1-1 is in the
public interest and is a "housing district" under Minnesota Statutes, Section 469.174, subd. 11.
3.02. The Council further finds that the proposed development would not occur solely
through private investment within the reasonably foreseeable future and that 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 the 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
District permitted by the Tax Increment Financing Plan,that the Plans conform to the general plan for
the development or redevelopment of the City as a whole; and that the Plans will afford maximum
opportunity consistent with the sound needs of the City as a whole, for the development or
redevelopment of the District by private enterprise.
3.03. The City elects to make a qualifying local contribution in accordance with Minnesota
Statutes, Section 273.1399, subd. 6(d), in order to qualify the District for exemption from state aid
losses set forth in Section 273.1399.
3.04. The Council further finds, declares and determines that the City made the above
findings stated in this Section and has set forth the reasons and supporting facts for each determination
in writing, attached hereto as Exhibit A.
Section 4. Public Purpose
4.01. The adoption of the Plans conforms in all respects to the requirements of the Act and
will help fulfill a need to develop an area of the City which is already built up, to provide housing
opportunities,to improve the tax base and to improve the general economy of the State and thereby
serves a public purpose.
Section 5. Approval and Adoption of the Plans.
5.01. The Plans,as presented to the Council on this date, including without limitation the
findings and statements of objectives contained therein,are hereby approved,ratified,established,and
adopted and shall be placed on file in the office of the City Administrator.
-2-
5.02. The HRA,the staff of the City,the City's advisors and legal counsel are authorized
and directed to proceed with the implementation of the Plans and to negotiate, draft, prepare and
present to this Council for its consideration all further plans, resolutions, documents and contracts
necessary for this purpose.
5.03 The Auditor of Hennepin County is requested to certify the original net tax capacity
of the District, as described in the Plans, and to certify in each year thereafter the amount by which
the original net tax capacity has increased or decreased; and the City of Orono is authorized and
directed to forthwith transmit this request to the County Auditor in such form and content as the
Auditor may specify, together with a list of all properties within the District, for which building
permits have been issued during the 18 months immediately preceding the adoption of this resolution.
5.04. The City Administrator is further authorized and directed to file a copy of the Plans
as required by the Act.
The motion for the adoption of the foregoing resolution was duly seconded by Council
member , and upon a vote being taken thereon, the following voted in favor
thereof:
and the following voted against the same:
Dated: ,2001
ATTEST:
Mayor City Administrator
(Seal)
-3-
EXHIBIT A
RESOLUTION#
As required pursuant to Minnesota Statutes, Section 469.175, Subdivision 3, the reasons and facts
supporting the findings for the adoption of the Tax Increment Financing Plan for Tax Increment Financing District
No. 1-1, set forth below. Additional supporting information for each finding appears in the Plans and in the files
of the City.
1. Finding that Tax Increment Financing District No. 1-1 is a housing district as defined in M.S., Section
469.174, Subd. 11.
The District consists of one parcel. The proposed development will consist of approximately 62 units of
rental housing for senior citizens. Twenty percent(20%) of the units will be occupied by persons with
incomes less than 50%of the area median income.
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 and that 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 the market value estimated to result from the
proposed development after subtracting the present value of theprojected tax increments for the maximum
duration of Tax Increment Financing District No. 1-1 permitted by the Plan.
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 that meets the City's objectives for development
and redevelopment. The cost of land acquisition, site and public improvements and utilities makes this
housing development infeasible without City assistance. Due to the high cost of building affordable new
housing in the City and the cost of financing the proposed public improvements,this project is feasible only
through assistance, in part, from tax increment financing. The developer has provided information
demonstrating that the proposed development would not have gone forward without tax increment
assistance.
The increased market value of the site that could reasonable be expected to occur without the use of tax
increment financingwould 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 Plan: The City supported this finding on the grounds that the cost of
land acquisition,site and public improvements and utilities add to the total development cost. With the tax
increment assistance the proposed housing development could not offer rents afford able to persons of low
or moderate income. Therefore, land and site development costs in this area have made the proposed
development infeasible without tax increment assistance. The City reasonably determines that no other
development of similar scope is anticipated on this site without substantially similar assistance being
provided to the development.
A comparative analysis of estimated market values both with and without establishment of the District and
the use of tax increments has been performed as described above. If all development which is proposed
to be assisted with tax increment were to occur in the District,the total increase in market value would be
up to $5,766,000. The present value of tax increments from the District is estimated to be $848,000. It
is the Council's finding that no development with a market value of greater than$4,918.000 would occur
-4-
without tax increment assistance in this district within 25 years. This finding is based upon evidence from
general past experience with the development of the area,existing land use regulations and development
objectives of the City.
3. Finding that the Tax Increment Financing Plan for Tax Increment Financing District No. 1-1 conforms to
the general plan for the development or redevelopment of the municipality as a whole.
The Planning Commission and the City Council have conducted reviews of the proposed development for
compliance with City land use regulations and the Comprehensive Plan. Based on the results of the
reviews,the City Council determines that the Plan conforms to the general development plan of the City.
4. Finding that the Tax Increment Financing Plan for Tax Increment Financing District No. 1-1 will afford
maximum opportunity, consistent with the sound needs of the City as a whole,for the development or
redevelopment of Housing Project Area No. 1 by private enterprise.
Through the implementation of the Plan,the City will provide provide safe,decent,and affordable housing
for persons of low and moderate income.
-5-
NT
ORONO HOUSING AND REDEVELOPMENT AUTHORITY
CITY OF ORONO
HENNEPIN COUNTY
STATE OF MINNESOTA
RESOLUTION NO.
RESOLUTION ADOPTING THE REDEVELOPMENT PLAN FOR HOUSING
PROJECT NO. 1; AND ESTABLISHING TAX INCREMENT FINANCING
DISTRICT NO. 1-1 WITHIN HOUSING PROJECT NO. 1 AND ADOPTING THE
TAX INCREMENT FINANCING PLAN THEREFOR.
WHEREAS, it has been proposed by the Board of Commissioners (the "Board") of the Orono
Housing and Redevelopment Authority(the "HRA")and the City of Orono(the"City")that the HRA adopt
the Development Plan for Housing Project No. 1 and establish Tax Increment Financing District No. 1-1 and
adopt the Tax Increment Financing Plan therefor,(collectively,the"Plans"),all pursuant to and in conformity
with applicable law,including Minnesota Statutes,Sections 469.001 through 469.047,and Sections 469.174
to 469.179, inclusive, as amended (the "Act"), all as reflected in the Plans and presented for the Board's
consideration; and
WHEREAS,the City has investigated the facts relating to the Plans and has caused the Plans to be
prepared; and
WHEREAS,the City has performed all actions required by law to be performed prior to the adoption
of the Plans. The City has also requested the Council schedule a public hearing on the Plans upon published
notice as required by law.
NOW,THEREFORE, BE IT RESOLVED by the Board as follows:
1. The HRA hereby finds that Tax Increment Financing District No. 1-1 is in the public interest
and is a"housing district"under Minnesota Statutes,Section 469.174,subd. 11 and Minnesota Statutes,and
finds that the adoption of the proposed Plans conforms in all respects to the requirements of the Act and will
facilitate the development of a parcel of land in the City that due to a variety of conditions and reasons has
remained undeveloped and will result in the construction of needed decent, safe and sanitary housing for
persons of low and moderate income and thereby serves a public purpose.
2. The HRA further finds that the Plans will afford maximum opportunity,consistent with the
sound needs for the City as a whole, for the development or redevelopment of the project area by private
enterprise in that the intent is to provide only that public assistance necessary to make the private
developments financially feasible.
3. Conditioned upon the approval thereof by the City Council following its public hearing
thereon,the Plans,as presented to the HRA on this date,are hereby approved,established and adopted and
shall be placed on file in the office of the City Administrator.
4. Upon approval of the Plans by the City Council, the staff, the HRA's advisors and legal
counsel are authorized and directed to proceed with the implementation of the Plans and for this purpose to
-1-
negotiate, draft, prepare and present to this Board for its consideration all further plans, resolutions,
documents and contracts necessary for this purpose. Approval of the Plans does not constitute approval of
any project or a Development Agreement with any developer.
5. Upon approval of the Plans by the City Council,the City Administrator is authorized and
directed to forward a copy of the Plans to the Minnesota Department of Revenue pursuant to Minnesota
Statutes 469.175, subdivision 2.
6. The City Administrator is authorized and directed to forward a copy of the Plans to the
Hennepin County Auditor and request that the Auditor certify the original tax capacity of the District as
described in the Plans,all in accordance with Minnesota Statutes 469.177.
Approved by the HRA of the City of Orono on this day of ,2001.
Chair
ATTEST:
Secretary
-2-
CITY OF ORONO
HENNEPIN COUNTY
STATE OF MINNESOTA
Council member introduced the following resolution and moved
its adoption:
RESOLUTION NO.
RESOLUTION APPROVING HOUSING PROGRAM AND
STATING INTENT TO ISSUE HOUSING REVENUE BONDS
BE IT RESOLVED by the City Council (the "Council") of the City of Orono,
Minnesota(the "City"), as follows:
1. On May 14, 2001 this Council held public hearings on a Program for
the Financing of a Multifamily Rental Housing Development for Seniors (the
"Housing Program") and on the issuance of up to $9 million of housing revenue
bonds (the "Housing Bonds") pursuant to Minnesota Statutes, Chapter 462C to
finance the Program. The Program provides for acquisition of land and construction
of 62 units of multifamily housing for seniors to be located at Brown Road and
Wayzata Boulevard and to be owned by Wedum Foundation or Orono Senior
Housing, LLC.
2. The Program is hereby approved.
3. The issuance of the Bonds given preliminary approval. The City
intends to issue the Bonds subject to negotiation and consideration of the terms
thereof and related documents. City staff, the City Attorney and bond counsel are
authorized to negotiate and prepare appropriate documents relating to the Bonds for
consideration by this Council.
The motion for the adoption of the foregoing resolution was seconded by
Council member , and upon a vote being taken thereon
the following voted in favor thereof:
and the following voted against the same:
Dated:
ATTEST:
Mayor City Administrator
MI:750269.01
4.77 rC N fr JT- a
N
0 Ehlers $t Associates
Tax Increment Financing District Overview
City of Orono/Orono HRA '
Tax Increment Financing District No. 1 -1
Proposed action: Establishment of Housing Project Area No. and the adoption of a
Development Plan.
Establishment of Tax Increment Financing District No. 1-1 and the
adoption of the Tax Increment Financing Plan.
It is anticipated that the City Council will conduct the public hearing o
May 14, 2001, but not take any formal action. The adoption of th
resolutions approving the above actions will be considered at a subsequen
meeting.
Type of TIF District: A Housing District. Twenty percent(20%)of the units will be occupied
by persons with incomes less than 50%of the area median income.
Parcel Numbers: 34-118-23-24-0058* (*The parcel will be subdivided and a new parcel number
will be assigned to the property included within the district.)
Location:
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vd�a
Proposed development: Orono Woods. Approximately 62 units of housing for occupancy by
senior citizens.
Estimated annual tax $75,263. This amount is based on assumptions value of the proposed
increment: development after the completion of construction. The estimate is also
based on the current parameters of the property tax system. Changes i j
these assumptions will alter the actual tax increment revenues.
TIPDistrict Na 1-1 - Overview
Proposed uses: Tax increment collected from the District will be used to reimburse the
Developer for costs of land acquisition and site development. The actual
terms of assistance will be set forth in a development agreement between
the City,the HRA and the developer. The City anticipates retaining 10%
of the tax increment to pay for administration and other eligible public
costs. The table below contains the authorized expenditures in the TIF
Plan. These amounts set the maximum expenditures that can be made
without a formal modification of the TIF Plan. The TIF Plan does not
compel the City or the HRA to make these expenditures.
Land/Building Acquisition $775,000
Site Improvements/Preparation $100,000
Public Utilities $77,000
Streets and Sidewalks $562,000
Other Public Housing Improvements $31,000
Interest on Pay-as-you-go Note $1,159,000
Administrative Costs(up to 10%) $70,000
PROJECT COSTS TOTAL $2,774,000
Interfund Loan/Transfers $649,000
Loan Interest $0
Bond Interest $0
Bond Principal
TOTAL FINANCING & PROJECT COSTS $3,423,000
Form of financing: It is anticipated that the Authority will use a pay-as-you-go note to
reimburse the Developer for eligible expenses and interest on the unpaid
balance. The City may use an interfund loan or a transfer of funds to pay
for public costs. Tax increment revenues may be used to repay an
interfund loan or transfer.
Maximum duration: The maximum duration of the District will be 25 years after receipt of the
first increment by the HRA or City. The date of receipt by the City of the
first tax increment is expected to be 2003. Thus, it is estimated that the
District,including any modifications of the Plan for subsequent phases of
other changes,would terminate after 2028, or when the Plan is satisfied,
If increment is received in 2002, the term of the District will be 2027.
Administrative fee: Up to 10% of annual increment, if costs are justified.
LGA/HACA penalty: The City elects to make the annual local contribution to the project to
exempt itself from the LGA-HACA penalty. Contribution for a housing
district is 5% of annual tax increment. The contribution can be made
annually or in larger contribution throughout the life of the district.
3 Year Activity Rule At least one of the following activities must take place in the District
0469.176 Subd. 1 a) within 3 years from the date of certification:
• bonds have been issued
• the authority has acquired property within the district
• the authority has constructed or caused to be constructed public
improvements within the district
The estimated date whereby this activity must take place is June, 2004.
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TIF District No. 1-1 - Overview
4 Year Activity Rule After four years from the date of certification of the District one of the
((469.176 Subd 6) following activities must have been commenced on each parcel in the
District:
• demolition
• rehabilitation
• renovation
• other site preparation(not including utility services such as sewer and
water)
If the activity has not been started by the approximately June, 2005, no
additional tax increment may be taken from that parcel until the
commencement of a qualifying activity.
5 Year Rule • Within 5 years of certification revenues derived from tax increments
('469.1763 Subd 3) must be expended or obligated to be expended. Tax increments are
considered to have been expended on an activity within the District if
one of the following occurs:
• the revenues are actually paid to a third party with respect to the
activity
• bonds,the proceeds of which must be used to finance the activity,are
issued and sold to a third party, the revenues are spent to repay the
bonds,and the proceeds of the bonds either are reasonably expected to
be spent before the end of the later of(i)the five year period,or(ii)a
reasonable temporary period within the meaning of the use of that term
under§. 148(c)(1)of the Internal Revenue Code,or are deposited in a
reasonably required reserve or replacement fund
• binding contracts with a third party are entered into for performance
of the activity and the revenues are spent under the contractual
obligation
• costs with respect to the activity are paid and the revenues are spent to
reimburse a pay for payment of the costs, including interest on
unreimbursed costs.
Any obligations in the Tax Increment District made after approximately
June, 2006,will not be eligible for repayment from tax increments.
The previous summary contains an overview of the basic elements of the proposed Tax Increment Financing
Plan for Tax Increment Financing District No. 1-1. More detailed information on each of these topics can be
found in the complete TIF Plan.
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