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2001.04.18 PACKET
r— Secretary • CITY OF COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY AGENDA SPECIAL MEETING • WEDNESDAY, APRIL 18, 2001 6:45 P.M. 1. Call to Order 2. Business Items A. Consider Resolution Adopting the Modification to the Development Program for Development District No. 1 and the Modifications to the Tax Increment Financing Plans for Tax Increment Financing District Nos. 1-1 and 1-3, Within Development District No. 1. 3. Miscellaneous Items 4. Adjourn • • City of Cottage Grove Memo To: Economic Development Authority J From: Michelle A. Wolfe, Assistant City Administrator Date: 04/12/01 Re: Consider Modifications to TIF District 1-1 and 1-3 SUMMARY At the March 21st City Council meeting, a resolution was adopted calling for a public hearing on the modifications to TIF 1-1 and 1-3. The hearing was scheduled for April 18, 2001. Public notice was given as required by Minnesota statute. On March 28th, the Economic Development Authority approved a resolution requesting the City Council to call the public hearing. (In addition, the EDA is expected to review the completed plan document and take action on the modifications prior to the April 18th Council meeting.) On March 26th, the Planning Commission approved a resolution finding that the proposed modifications were consistent with the City's comprehensive plan. Background materials regarding these actions are attached. As previously reported, these modifications are proposed in order to maintain our current abilities to use tax increment generated from pre-1990 districts. This ability could be limited if a current legislative proposal is adopted by the State legislature. The attached documents contain additional information about the need for these modifications. I have included as an attachment the Draft Fiscal Implications as prepared by Ehlers and Associates Inc. This draft was previously forwarded to School District 833 and Washington County. Currently, Ehlers staff is finishing work on the final TIF plan modifications and a summary document. I expect the final plan document to be forwarded to you on Monday, April 16th. There may be some changes to the plan as per comments received from the school district, • Washington County, and City staff. \\CG_FS1\SYS\GROUPS\PER_ECON\Economic Development\T I F\Modify 1-1 and 1-3\EDA Memo 2.doc Please note that the modifications are such that there are no additional fiscal or • economic implications for the districts. These modifications do not create any new Tax Increment Financing Districts and do not increase the geographic size of any TIF District. Therefore, there are no additional fiscal implications that affect taxing jurisdictions. ACTION REQUESTED Approve the attached Resolution Adopting the Modification to the Development Program for Development District No. 1 and the Modifications to the Tax Increment Financing Plans for Tax Increment Financing District Nos. 1-1 and 1-3, Within Development District No. 1. Attachment • • \\CG_FS1\SYS\GROUPS\PER_ECON\Economic Development\T I F\Modify 1-1 and 1-3\EDA Memo 2.doc • COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY CITY OF COTTAGE GROVE WASHINGTON COUNTY STATE OF MINNESOTA RESOLUTION NO. RESOLUTION ADOPTING THE MODIFICATION TO THE DEVELOPMENT PROGRAM FOR DEVELOPMENT DISTRICT NO. 1 AND THE MODIFICATIONS TO THE TAX INCREMENT FINANCING PLANS FOR TAX INCREMENT FINANCING DISTRICT NOS. 1-1 AND 1-3, WITHIN DEVELOPMENT DISTRICT NO. 1. WHEREAS, it has been proposed by the Board of Commissioners (the "Board") of the Cottage Grove Economic Development Authority(the "EDA") and the City of Cottage Grove (the "City")that the EDA adopt the modification to the Development Program for Development District No. 1 and modifications to the Tax Increment Financing Plans (collectively, the "Modifications") for Tax Increment Financing District Nos. 1-1 and 1-3 (the "Districts"), all pursuant to and in conformity with applicable law, including Minnesota Statutes, Sections 469.090 through 469.1081, and Sections 469.174 to 469.179, inclusive, as amended (the "Act"), all as reflected in the Modifications and presented for the Board's consideration; and WHEREAS, the EDA has investigated the facts relating to the Modifications and has caused the • Modifications to be prepared; and WHEREAS, the EDA has performed all actions required by law to be performed prior to the adoption of the Modifications. The EDA has also requested the City Planning Commission to provide for review of and written comment on Modifications and that the Council schedule a public hearing on the Modifications upon published notice as required by law. NOW,THEREFORE,BE IT RESOLVED by the Board as follows: 1. The EDA hereby reaffirms that the Districts as modified herein are in the public interest and District 1-1 is a "housing district" under Minnesota Statutes, Section 469.174, subd. 11. and District 1-3 is a "redevelopment district" under Minnesota Statutes, Section 469.174, subd. 10 (a)(1), and fords that the Modifications conform in all respects to the requirements of the Act and will help fulfill a need to develop an area of the Sate of Minnesota which is already built up and that the adoption of the propose Modifications will help clarify budgets and comply with the current requirements of the State Auditor. 2. The EDA further finds that the Modifications 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 Modifications, as presented to the EDA on this date, are hereby approved, established and adopted and shall be placed on file in the office of the City Clerk. • 4. Upon approval of the Modifications by the City Council, the staff, the EDA's advisors and legal counsel are authorized and directed to proceed with the implementation of the Modifications and for this purpose to 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 Modifications does not constitute approval of any project or a Development Agreement with any developer. • 5. Upon approval of the Modifications by the City Council, the City Clerk is authorized and directed to forward a copy of the Modifications to the Minnesota Department of Revenue pursuant to Minnesota Statutes 469.175, subdivision 2. 6. The City Clerk is authorized and directed to forward a copy of the Modifications to the Washington County Auditor and request that the Auditor certify the original tax capacity of the District as described in the Modifications,all in accordance with Minnesota Statutes 469.177. Approved by the Board of Commissioners of the Cottage Grove Economic Development Authority this 10th day of April,2001. Chair ATTEST: Secretary • 110 City of Cottage Grove 0 Memo To: Honorable Mayor and City Council From: Michelle A. Wolfe,Assistant City AdministratorMP Date: 04/12/01 Re: Public Hearing on Modification to the Development Program for Development District No. 1 and the Modification of the Tax Increment Financing Plans for Tax increment Financing District Nos. 1-1 and 1-3, and Resolution approving the Modifications SUMMARY At the March 21 City Council meeting, a resolution was adopted calling for a • public hearing on the modifications to TIF 1-1 and 1-3. The hearing was scheduled for April 18, 2001. Public noticed was published as required by statute. On March 28, the Economic Development Authority approved a resolution requesting the City Council to call the public hearing. (In addition, the EDA is expected to review the completed plan document and take action on the modifications prior to the April 18 Council meeting.) On March 26, the Planning Commission approved a resolution finding that the proposed modifications were consistent with the City's comprehensive plan. Background material regarding these actions is attached. As previously reported, these modifications are proposed in order to maintain our current abilities to use tax increment generated from pre-1990 districts. This ability could be limited if legislation currently proposed is adopted by the State legislature. The attached documents contain additional information about the need for these modifications. PUBLIC HEARING I have included as an attachment the Draft Fiscal Implications as prepared by Ehlers and Associates Inc., and forwarded to School District 833 and Washington County. As of this writing, Ehlers staff is finishing work on the final TIF plan modifications and a summary document. I have requested that material in time • for the April 16 packet. There may be some changes to the plan as per comments received from the school district, Washington County, and City staff. \\CG_FS1\SYS\GROUPS\PER_ECON\Economic Development\T I F\Modify 1-1 and 1-3\Council memo.doc Please note that the modifications are such that there are no additional fiscal or economic implications of the districts. These modifications do not create any • new Tax Increment Financing Districts and do not increase the geographic size of any TIF District. Therefore there are no additional fiscal implications that affect taxing jurisdictions. On April 18, the City Council should open the public hearing. Upon conclusion, comments received should be considered before proceeding to take action on the resolution. RESOLUTION APPROVING MODIFICATIONS Once the Public Hearing is closed, the Council should take action regarding the resolution to approve the modifications. The actual resolution will be included in the Monday packet. ACTION REQUESTED AT APRIL 18, 20001 CITY COUNCIL MEETING 1. Hold the public hearing. 2. Adopt the resolution approving the modifications. • Attachments • \\CG_FS1\SYS\GROUPS\PER_ECON\Economic Development\T I F\Modify 1-1 and 1-31Council memo.doc • . • . . . . (CITY OF COTTAGE GROVE NOTICE OF PUBLIC HEARING .. - - , - NO ICE is HEREBY GIVEN that me.City Cotarcil of the Cityof • • C'£ ry -0T 0TC Cer-O`3r : °ty State of Minnesota,will bold a Cottage stove.t ly 7:15 . p.m.at me Cottage Grove City Council Chamb City Hail.7516-"'Street 0th St zSouth. eta •.• _3 J 3�•• J � Grove,M<ineso a,DA")wt m ac of of me Cottage Grove Economic DevelopmmCt°t"se is •`i "'-p03•'�. - . ,.' • -Ruth n No.11'E to ado*the modification to the Development Program for Development •-• 31'_-14• -9A - 1 11V) , •bores")for Tax lac:r t Financing (diet Ditxriet Noe.1-1 and i-3(a housing tax increment • • 4 ' • . ...31113)..:_j), � a t"°dev redevelopment increment financing 090m�t)w1081 Find aatsx!a s District . • �' /• MO�' 469 me e esotatatute me Modifications are on file and available for public • •4 - :sta4p• » City Clerk at City Ha1L ,w1 y The property included in Tax Increment Financing Diacid Nos.1.1 and I-3 is located within • •`e �sr ( 4 P- Development District No.1 •and the City of Cottage Grove.A map of Development District No.1 - — ��___- and Tax lawman Financing District Nos.1-1 and 1-3 therein is set forth below.Subject to certain limitations tart infrom Tax Increment Financing District Nos. on 1-1 and 1-3 may be spent eligible uses withinaeraat the boundaries of Development District Na 1. - CITY OF COTTAGE GROVE - WASHINGTON COUNTY,MN _ - I - DEVELOPMENT DISTRICT NO.1 i JM -'tri 11- 1--....,... LPnr trL C_�/NINE �;i'►"- 11/11■ • .r, ,:ate_:, In L (TtF Gtrdrtq No.t-t 5 � ,bill .i e--wnizie �`tMEN IIIIlls- �-v1 3,, at.. tr ... /�� J• �I�- t`.ti /�. 1111 sPP_ qj . 1-z a 12sira w . gHftrrr �teal,, . �_1o� �mtu�� ,ln l,•■r:��iEt;i� [T>F anter wo.1Z -- 4._etL I•FEiili • iti la'aiiitiilrfishiluiVIIIII ..„, r:iefillill -III tri . z •ice■\► ,. •4 400.9 9.4,:..4.-3. 1:43 � 3 TMs--+rv.argts.r. Co 0........owe t ar+.�+tal. • • Q 0 . 33 -- I ------------ • 41 :Ve • 1 310 . — -- ---- • • t 1�C.:' • 3 v will personsed may appear at tbehearing and present their views orally ce prior to the meet- • • • C�10`� • • a0 BY ORDER OF ME CITY cOUNCU.OF THE CITY OF COTTAGE GROVE,MINNESOTA • •• tC-0-0-0-0"0 ©-3 rclron stem,;city c� . (Published in the SouthWashington CounntyBnlletin on Wedrresda . ■■ fgolJk�nopgrsmvwxyz) y April 1,2001.abode- 1 d..........._ ._ . .. ,. _ / - - • CITY OF COTTAGE GROVE WASHINGTON COUNTY, MN DEVELOPMENT DISTRICT NO. 1 1 i=IIIIU ie■ _ �I �'�'�=' I.- ill. MI J� 11111 . . Ea-.9 aiii mon �._air. =�1�i�_� Pi NI- ter.. :�=i 'l/ - is l�� TIF District No. 1-1 ' s ► • _ .'�, �■ ` •T. wi, 7 �IV _■ N ���_�� �.ll iiiii 4b A� � .moi swim, 111 w E •.•••• 11 `4.91111imbil ii It :��E -eiii7rrri►, t Beiti> • : � �1 �� S hent � ��. ��r/ a1illi NMI I" WE� A �VPRn try im '�i�i TIF District No. 1-3 ims r _ ��I_-�'! — Ivi .! ' naglinillibidki"::NIIITAIlliall EIJI 0 Iiii Pliwo.. riii ,,,,,., ;E:..:"....,..b:, ....viiiii inigniii .:::, . e: . .-_, Mf *I Ihm �� ��r lll y"' ��� ,111 .'l�� I ��� ' �.-„ o '111 Ellilla -%.•- .IL il = Ar---:-..----,.-:-;- imi hx:r.,-,4-,,,__,-Aumm_r_____-L, „,„:,„,„__. N-4,....,..,, . ..---.7t-,:-:,_,._;,0 v........-isc.„-_-,,---- ,.. _,_,-,„:::.K...,:„ - , '��L`� -x� _:=,>.„-_-,;--:..,.„..2,-,,,, ...... -,-.-- � '- Fie =s`-- : , . r ----4-427 A-,,ref f 1 0. 1 2 Miles 41110 Tax Increment Financing DistrictCI) Development District No. 1 40 Mississippi River • PLANNING COMMISSION CITY OF COTTAGE GROVE,MINNESOTA RESOLUTION RESOLUTION OF THE CITY OF COTTAGE GROVE PLANNING COMMISSION FINDING THAT THE MODIFICATION TO THE DEVELOPMENT PROGRAM FOR DEVELOPMENT DISTRICT NO. 1 AND THE MODIFICATION TO THE TAX INCREMENT FINANCING PLANS FOR TAX INCREMENT FINANCING DISTRICT NOS. 1-1 AND 1-3 CONFORM TO THE GENERAL PLANS FOR THE DEVELOPMENT AND REDEVELOPMENT OF THE CITY. WHEREAS,the City Council for the City of Cottage Grove,Minnesota, (the "City")has proposed to •• adopt a modification to the Development Program for Development District No. 1 and the modifications to the Tax Increment Financing Plans for Tax Increment Financing District Nos. 1-1 and 1-3 (the "Modifications") and has submitted the Modifications to the City Planning Commission (the "Commission")pursuant to Minnesota Statutes,Section 469.175,Subdivision 3,and WHEREAS, the Commission has reviewed the Modifications to determine their conformity with the • general plans for the development and redevelopment of the City as described in the comprehensive plan for the City. NOW, THEREFORE, BE IT RESOLVED by the Commission that the Modifications conform with the general plans for the development and redevelopment of the City as a whole. Dated: `-• �� �� Litiff&F Chair • ATTEST: . - JD cre •'9 • REQUEST OF CITY COUNCIL ACTION COUNCIL AGENDA MEETING ITEM # L / DATE 3/21/01 7 V • PREPARED BY: Administration Michelle Wolfe ORIGINATING DEPARTMENT STAFF AUTHOR COUNCIL ACTION REQUEST: Consider adopting a resolution calling for a Public Hearing Regarding Modification to the Development Program for Development District No. 1 and Modification to the Tax Increment Financing Plan for TIF District No's 1-1 and 1-3. STAFF RECOMMENDATION: Adopt the resolution. The public hearing would take place at the April 18Regular City Council Meeting. SUPPORTING DOCUMENTS: ® MEMO/LETTER: Memo from Michelle Wolfe dated 3/15/01. ® RESOLUTION: Draft. 0 ORDINANCE: • ❑ ENGINEERING RECOMMENDATION: ❑ LEGAL RECOMMENDATION: ® OTHER: Attachments. ADMINISTRATORS COMMENTS: 10 , , 1 /Ado City Administrat.r Date COUNCIL ACTION TAKEN: dAPPROVED 0 DENIED 0 OTHER D, ' v2(f • • C:\WINDOWS\Desktop\TIF Call Public Hearing-21 Mar 01.doc • City of Cottage Grove • Memo To: Honorable Mayor and City Council From: Michelle Wolfe fl Date: 03/15/01 /' Re: Resolution Calling for Public Hearing Regarding Modification to Development Program for Development District No. 1 and Modification to Tax Increment Financing Plan for TIF District Nos. 1-1 and 1-3 Attached is a resolution calling for a public hearing on the above-referenced TIF districts. The Public Hearing will be scheduled for April 18, 2001. TIF District 1-1 is Oakwood Apartments, and TIF District 1-3 is Up North Plastics. A schedule for • this modification process is also attached. The reason the City is pursuing modification of these districts at this time is anticipation of legislation that would impair our ability to use the revenues from these districts in the future. I have attached a Legislative Alert that was provided to us by Ehlers and Associates, that explains the issues relating to the possible approval of this legislation. City staff is working with Ehlers and Associates to prepare the fiscal/economic implications and to revise the district budgets. REQUESTED ACTION Approve the attached Resolution calling for a public hearing by the City Council on the proposed adoption of the modification to the development program for development district No. 1 and the proposed modification to the tax increment financing plans for tax increment financing district nos. 1-1 and 1-3. F:\GROUPSTER ECOMEconomic DevelopmenttT I F Modifiy 1-1 &1-3.doc . SCHEDULE OF EVENTS COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY AND THE CITY OF COTTAGE GROVE CITY COUNCIL • FOR THE MODIFICATION TO THE DEVELOPMENT PROGRAM FOR DEVELOPMENT DISTRICT NO. 1 AND THE MODIFICATION OF THE TAX INCREMENT FINANCING PLANS FOR TAX INCREMENT FINANCING DISTRICT NOS. 1-1 AND 1-3 (a housing district and a redevelopment district) As of March 13,2001 March 7,2001 Project information, property identification numbers, and maps sent to Ehlers and Associates for drafting documentation. March 16,2001 Fiscal/economic implications received by School Board Clerk and County Auditor (at least 30 days prior to public hearing). [Sent by March 15, 2001] March 21,2001 City Council calls for public hearing on the modification to the Development Program for Development District No. 1 and the modification of the Tax Increment Financing Plans for Tax Increment Financing District Nos. 1-1 and 1-3. March 26,2001 Planning Commission reviews Plans to determine if they are in compliance with City's comprehensive plan. March 28,2001 EDA requests that the City Council call for a public hearing. • April 4,2001 Date of publication of hearing notice and map for the modification to the Development Program for Development District No. 1 and the modification of the Tax Increment Financing Plans for Tax Increment Financing District Nos. 1-1 and 1-3 (at least 10 days but not more than 30 days prior to hearing). [South Washington County Bulletin publication deadline: March 29, 2001 at 5:00 P.M] April 10,2001 EDA considers the Modifications. April 18,2001 City Council holds public hearing at 7:15 p.m. on modification to the Development Program for Development District No. 1 and the modification of the Tax Increment Financing Plans for Tax Increment Financing District Nos. 1-1 and 1-3, and passes resolution approving the Modifications. [Council packet information sent by April 9, 2001] By June 30,2001 Ehlers certifies Modifications with county and state. 'Because the City staff believes that the modified tax increment districts will not require unplanned county road improvements,the TIF Plans were not forwarded to the County Board 45 days prior to the public hearing. The County Board, by law,has 45 days to review the plans to determine if any county roads will be impacted by the modifications. Please be aware that the County Board could claim that tax increment should be used for county roads,even after the public hearing. • • CITY OF COTTAGE GROVE,MINNESOTA RESOLUTION NO. RESOLUTION CALLING FOR A PUBLIC HEARING BY THE CITY COUNCIL ON THE PROPOSED ADOPTION OF THE MODIFICATION TO THE DEVELOPMENT PROGRAM FOR DEVELOPMENT DISTRICT NO. 1 AND THE PROPOSED MODIFICATION TO THE TAX INCREMENT FINANCING PLANS FOR TAX INCREMENT FINANCING DISTRICT NOS. 1-1 AND 1-3. BE IT RESOLVED by the City Council (the "Council") for the City of Cottage Grove, Minnesota (the "City"),as follows: Section 1. public Hearing. This Council shall meet on April 18, 2001, at approximately 7:15 p.m.,to hold a public hearing on the proposed adoption of the modification to the Development Program for Development District No. 1 and the proposed Modification to the Tax Increment Financing Plans for Tax Increment Financing District Nos. 1-1 and 1-3 (a housing district and a redevelopment district), all pursuant to and in accordance with Minnesota Statutes, Sections 469.174 through 469.179, inclusive, as amended,in an effort to encourage the development and redevelopment of certain designated areas within the City; and Section 2. Notice of Public Hearing. Filing of the Modifications. City staff is authorized and directed to work with Ehlers and Associates, Inc., to prepare the modification to the Development • Program for Development District No. 1 and the modification to the Tax Increment Financing Plans for Tax Increment Financing District Nos. 1-1 and 1-3 (the "Modifications"). City staff authorized and directed Ehlers and Associates, Inc. to forward documents to the appropriate taxing jurisdictions, including Washington County and Independent School District No. 833. The City Clerk is authorized and directed to cause notice of the hearing, together with an appropriate map as required by law, to be published at least once in the official newspaper of the City not later than 10,nor more than 30, days prior to April 18, 2001, and to place a copy of the Modifications on file in the City Clerk's office at City Hall and to make such copy available for inspection by the public. Dated: Adopted: Mayor ATTEST: City Clerk •• 4 . e - MAIL i Legislative Alert! Bill No. S.F. 73 Area Tax Increment Financing Impacts Limitations on ability to use tax increment revenues from districts requesting certification prior to May 1, 1990. • Last chance to modify TIF Plan is April 30,2001. • Requires expenditure or obligation of these revenues by April 30,2002. Issues This bill creates three important concerns: 1. Cities may be forced to act on plan modifications before the legislation is adopted. 2. The legislation significantly impairs the ability to use pre-1990 districts for on-going redevelopment programs. 3. Cities may be prohibited from making modifications address future OSA compliance issues. III Actions 1. Determine implications for your TIF Districts and development plans if legislation passes as drafted. 2. Determine need to make TIF Plan modifications to accommodate anticipated uses of tax increment. 3. If necessary,initiate plan modifications process at earliest opportunity to ensure completion by April 30,2001. 4. Provide supporting information and coordinate legislative efforts with LMC, EDAM,AMM and other groups. 5. Contact Ehlers&Associates for more information. Full www.ehlers-inc.com Text • Minnesota 4 Legislative 4 TIF/Municipal Legislation • LEADERS IN PUBLIC FINANCE 3060 Centre Pohle Drive Roseville,MN 55113-1105 651.687.6500 lex 651 667.8555 ww.v.eAlen inc.corn City of Cottage Grove • Memo To: Planning Commission From: Michelle Wolfe,Assistant City Administrator Date: 3/21/01 Re: Resolution Regarding TIF Districts 1-1 and 1-3 Legislation is currently proposed that would limit the ability to use tax increment revenues from pre-1990 districts. In order to prepare for the possible adoption of this legislation, the City is proceeding with modifications to two pre-1990 districts: 1-1 (Oakwood Heights Apartments), and 1-3 (Up North Plastics). Essentially, the modifications requested will allow for the ability to transfer funds • and have inter-fund loans between the various TIF funds. The goal is to clarify the financing to bring the plans into compliance with State Auditor reporting requirements. The changes are reflected in the line items of the plan budgets. There are no new projects included for either district, nor is the duration of the districts being changed. These are primarily administrative corrections and updates to bring them into compliance with the State Auditor's reporting requirements and to allow for transfers/loans. Attached is a copy of a Legislative Alert prepared by Ehlers and Associates, which summarizes the proposed legislation. At this time, the League of Minnesota Cities is encouraging cities to prepare for the adoption of this legislation, because if it is passed as proposed, the deadline for making modifications is April 30, 2001. Also attached is a copy of the modified plans, which were submitted to School District 833 and Washington County as required by law. The City Council will hold a public hearing regarding the proposed modifications on April 18. REQUESTED ACTION Adopt the attached Resolution: Resolution of the City of Cottage Grove Planning Commission Finding that the Modification to the Development Program for Development District No. 1 and the Modification to the Tax Increment Financing Plans for Tax Increment Financing District Nos. 1-1 and 1-3 Conform to the • General Plans for the Development and Redevelopment of the City. F:\GROUPS\PER_ECON\Economic Development\T I F\Modify 1-1 and 1-3\plan comm memo.doc 1 ' EHLERS • March 16,2001 & ASSOCIATES INC BY FAX AND BY REGULAR MAIL Molly 0' Rourke,Director Susan Moore,School Board Clerk Assessment/Taxpayer Services&Elections - South Washington County School Washington County District No.833 14949 62nd Street North 7362 East Point Douglas Road South P.O.Box 6 Cottage Grove, MN 55016-3025 Stillwater,MN 55802-0006 Re: The City of Cottage Grove and the Cottage Grove Economic Development Authority's("City and EDA")proposed modifications to the Tax Increment Financing Plans for Tax Increment • Financing District Nos. 1-1 and 1-3,within Development District No. 1. The City of Cottage Grove will be considering the adoption of the modification to the Tax Increment Financing Plans (the "Plans") for Tax Increment Financing Districts Nos. 1-1, a housing tax increment financing district,and 1-3,a redevelopment tax increment financing district(the"Districts"),located within Development District No. 1,at a public hearing to be held at City Hall,City of Cottage Grove,on April 18, 2001 at approximately 7:30 p.m. A housing district and a redevelopment district each have a maximum life • of 25 years of tax increment(or a shorter period as determined by the City Council). Enclosed please find one copy of the proposed modified Plans for each of the Districts. The proposed Modifications are to facilitate budget modifications. The location of the Districts can be seen on the map as found in the enclosed Plans. The Minnesota Tax Increment Financing Act at Minnesota Statues,Section 469.175, Subdivision 2 and 4, requires that prior to the holding of a public hearing on the adoption or modification of a tax increment financing plan, the EDA must provide an opportunity to the members of the affected county and school boards to review the fiscal and economic implications of the proposed modified or new tax increment financing plan 30 days from the transmittal of the enclosed fiscal implications or until the County or School Boards have presented written comment on the proposal,whichever is less. The Modifications are such that there are no additional fiscal and economic implications of the Districts. These modifications do not create any new Tax Increment Financing Districts and do not increase the geographic size of any Tax Increment Financing District,therefore there are no additional fiscal implications that affect taxing jurisdictions. We invite you to attend the public hearing to be held by the City Council on April 18,2001, beginning at approximately 7:30 p.m.,or to direct any comments or questions that you may have to Michelle Wolfe,City of Cottage Grove at 651-458-2882,or to meat 651-697-8504. EQual Opportunity Employer • LEADERS IN PUBLIC FINANCE Charter Member of the National Association of Independent Public Finance Advisors 3060 Centre Pointe Drive, Roseville, MN 55113-1105 651.697.8500 fax 651.697.8555 www.ehlers-inc.com March 16,2001 • Page 2 Thank you for your consideration in reviewing the enclosed proposed Modifications. Sincerely, EHLERS AND ASSOCIATES,INC. ��Gx%Lla!✓ Shelly Eldrid Financial Advisor Acting for and on behalf of the City of Cottage Grove,Minnesota SE/sl Enclosures cc: Michelle Wolfe,City of Cottage Grove Ron Batty, Kennedy& Graven,Chartered 411 • Draft as of March 16, 2001 • for Fiscal Implications Correspondence MODIFICATION TO THE DEVELOPMENT PROGRAM FOR DEVELOPMENT DISTRICT NO. 1 AND THE MODIFICATIONS TO THE TAX INCREMENT FINANCING PLANS FOR TAX INCREMENT FINANCING DISTRICT NO. 1-1 (housing district) • AND TAX INCREMENT FINANCING DISTRICT NO. 1-3 (redevelopment district) City of Cottage Grove Washington County State of Minnesota Public Hearing on Modifications: Modifications Adopted: August 18, 1997 Prepared by: EHLERS AND ASSOCIATES,INC. • TABLE OF CONTENTS (for reference purposes only) SECTION I MODIFICATION TO THE DEVELOPMENT PROGRAM FOR DEVELOPMENT DISTRICT NO. 1 1-1 Foreword 1-1 Findings 1-1 Description of the Development District I-1 EXHIBIT I-A -BOUNDARY MAP OF DEVELOPMENT DISTRICT NO. 1 AND TAX INCREMENT FINANCING DISTRICT NOS. 1-1 AND 1-3 1-A SECTION H MODIFICATION TO THE TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO. 1-1 11-1 Introduction II-1 Findings II-1 Use of Tax Increment 11-2 Estimate of Costs I1-2 Sources of Revenue I1-3 Duration of the District 11-4 Assessed Value of Parcel in Tax Increment Financing District No. 1-1 11-4 SECTION HI MODIFICATION TO THE TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO. 1-3 III-1 Introduction III-1 Findings III-1 Use of Tax Increment I11-2 Estimate of Costs 1I1-2 Sources of Revenue 111-3 Duration of the District 111-3 Assessed Value of Parcel in Tax Increment Financing District No. 1-3 1I1-4 S SECTION I • City of Cottage Grove,Minnesota Modification to the pevelopment Program for Development District No. 1 April 18,2001 Foreword The following text represents a modification to the Development Program for Development District No.1 and a modification to the Tax Increment Financing Plans for Tax Increment Financing Districts Nos. 1-1 and 1-3. The modifications to the Tax Increment Financing Plans represent a continuation of the goals and objectives set forth in the Development Plan for Development District No. 1 and the Tax Increment Financing Plans for Tax Increment Financing Districts Nos. 1-1 and 1-3. The following modifications are intended to update the original Development Program for Development District No. 1 according to the content below. These modifications are intended to supplement the existing Development Program. For further information, a review of the Development Program for Development District No. 1,adopted January 7, 1985,and most recently modified on August 18,2000 is recommended. It is available from the City Administrator at the City of Cottage Grove. Other relevant information is contained in the Tax Increment Financing Plans for the Tax Increment Financing Districts located within • Development District No. 1. Findings The original and modified Development Program for Development District No.1 set forth the applicable findings for the establishment and modification of Development District No. 1. The current modification does not require that the City Council adopt new findings,however,the City Council confirms all previous findings establishing and modifying Development District No. 1. Subsection L. Description of the Development District The boundaries of the Development District No. 1 are not changing from the description in the modification of August 18,2001 for Development District No. 1. Cit}of Cottage Grove Modification to the Redevelopment Plan for Redevelopment Project and Development District No.4 I-I • EXHIBIT I-A BOUNDARY MAP OF DEVELOPMENT DISTRICT NO. I AND TAX INCREMENT FINANCING DISTRICT NOS. 1-1 AND 1-3 • S City of Cottage Grove Modification to the Redevelopment Plan for Redevelopment Project and Development District No.4 1-A CITY OF COTTAGE GROVE WASHINGTON COUNTY, MN di. 7 DEVELOPMENT DISTRICT NO. 1 IIIi _ . 1 1 iii•i_ !! __� Ili. _It-�ainum II di ;:'4- 701111411111LIZ2 m:: 1111 IU --- ,�'�� , ,Tax Increment LL - ' _` -- ` � �Financing j -• District No. 1-1 , Al r��114,Br-__ -;� -. `. 12-''';.,-.--1.---- -.7,t-. -:_-_---111111�_ ` -.---Y-.. .-:=1_. -� St,.4.1. =f•; s � eta ' -''r 1. � z moi_ �� •�. . II Vi,t5 A__ mai Ft,-,-miniid LAI.-14,,A-,:„.4 t,_,,,_ _-.. „..,_.,,,,i,im„. ,,,.,.. . 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Development District No. 1 Boundary �" `�= Mississippi River rw.,. ..�1147a111! • SECTION H City of Cottage Grove,Minnesota Modification to the Tax Increment Financing Plan for Tax Increment Financing District No. 1-1 April 18,2001 jntroduction The following text represents a modification to the Tax Increment Financing Plan for Tax Increment Financing Districts No.1-1. The modification to the Tax Increment Financing Plan represents a continuation of the goals and objectives set forth in the Redevelopment Plan for Redevelopment Project and Development District No. l and the Tax Increment Financing Plan for Tax Increment Financing Districts No. 1-1. The purchase of land was financed through tax increments to facilitate the construction of a number of apartment buildings with 207 units for low and moderate income individuals. The development began in 1983 and was completed in 1987. The first tax increment was received in 1986. The City issued$525,000 definitive tax-exempt Tax Increment Bonds to finance land acquisition of property,par improvements,and other public costs. The original plan for Tax Increment District No. 1-1 is being modified to clarify the budget and to comply with the current requirements of the Office of the State Auditor. The amount of • estimated tax increment for the modification is not changing, therefore, there are no additional fiscal implications to the taxing jurisdictions. The budget is being modified to explicitly authorize transfer amounts for the project area expenses,and may be interpreted as increasing,requiring a public hearing. Generally,the substantive changes in Tax Increment Financing District No. 1-1 include: 1. To expand the budget for Tax Increment Financing District No.1-1 to include interest earnings, inter-fund loans and inter-fund transfers as tax increment funds; 2. To clarify budgets for previous expenditures; 3. To clarify duration;and 4. To clarify the amount of transfers of tax increments. The following modifications are intended to serve as additions to the original tax increment financing plan for Tax Increment Financing District No. 1-1 according to the content below and are not contemplated to replace any sections unless specified. A copy of the full tax increment financing plan for Tax Increment Financing District No. 1-1 is on file with the City Administrator of the City of Cottage Grove. Findings The original and modified Development Plan Development District No. 1 set forth the applicable findings for the establishment and modification of Tax Increment Financing District No. 1-I. The current modification does not require that the City Council adopt new findings,however,the City Council confirms all previous findings establishing and modifying Tax Increment Financing District No. I-1. • City of Cottage Grove Modification to the Tax Increment Financing Plan for Tax Increment Financing District No. 1-1 11-1 B. Use of Tax Increment • Pursuant to Section 273.75,sub.4,of the Tax Increment Act,all revenues derived from the Tax Increment District shall be used in accordance with the tax increment financing plan. The revenues shall be used for the following purposes: I. to pay the principal of and interest on bonds used to finance a project; 2. to finance or otherwise pay the capital and administration costs of the Development District pursuant to the Development District Act; 3. to accumulate and maintain a reserve in a special development account for the payment of the principal of and interest on bonds used to finance a project as allowed in Minnesota Statutes Chapters 462C and 474; 4. to pay for project costs as identified in the budget;and 5. to finance or otherwise pay for other purposes as provided in Section 276.75,Subd.4,of the Tax Increment Act. (As Modified April 18, 2001) • This section authorizes the use of increments from Tax Increment District No.1-1 to be used for costs authorized and incurred in Development District No. 1 or any costs authorized and incurred in other Tax Increment District located within Development District No.1. These revenues shall not be used to circumvent any levy limits. G Estimate of Costs (As Modified April 18,2001) The following is an estimate of public costs including all modifications to the Tax Increment Financing Plan for Tax Increment Financing District No. 1-1.A modified estimated cost breakdown of costs associated with financing Tax Increment Financing District No. 1-1 is as follows: Uses January 7, December 17, March 15, Totals of 1985 1986 1989 including Funds Original Modification Modification the April 18, Budget 2001 Modification Land acquisition $650,000 $842,000 $102,000 $1,594,000 Site improvements $0 $468,565 $276,000 $744,565 Public utilities $0 $193,950 $0 $500,000 Parks $0 $22,200 S22,200 Bond interest payments $782,550 $685,257 $0 $1,583,832 Loan interest payments $0 $0 $0 $500,000 Bond discount $16,150 $25,275 $9,975 $51,400 S City of Cottage Grove Modification to the Tax increment Financing Plan for Tax Increment Financing District No. 1-1 11-2 • Development district public improvements $0 $1,649,526 $0 $1,024,122 Administration costs 530.850 $57,600 $24.000 $112.450 Total Cost $1,479,550 $3,944,373 $411,975 $6,132,569 Bond principal payments $850,000 $525,000 $0 $1,375,000 Loan principal payments $0 $0 $0 $500,000 Transfers $0 $0 $0 $500,000 It is the intention of the City to use increments in excess of what is needed for debt service herein and to pay towards any other project expenses within Development District No. 1,including shortfalls of other Tax Increment Districts. J. Sources of Revenue. Costs outlined in the Estimate of Costs(Subsection G)will be financed through the annual collection tax increments. See Cash Flow Analysis in Subsection W for more detail on tax increment assumptions,as well as Subsection N-Estimated Captured Assessed Values. (As Modified Apri118,2001) Costs outlined in the Estimate of Costs(Subsection G)will be financed through the annual collection tax increments,general obligation bonds,interest on invested funds,inter-fund loans and transfers,and • other City revenues. See Cash Flow Analysis in Subsection W for more detail on tax increment assumptions, as well as Subsection N - Estimated Captured Assessed Values. The estimated sources of funds for District No. 1-1 are contained in the table below. Sources January 7, December 17, March 15, Totals of 1985 1986 1989 including Funds Original Modification Modification the April 18, Budget 2001 Modification Tax Increments $1,270,819 $4,439,294 $0 $5,710,068 Interest on invested funds $0 $3,000 $10,751 $21,000 Developer Charge 111 $401.501 $401.501 Total Cost $1,270,819 $4,442,294 $412,252 $6,132,569 Bond proceeds $850,000 $525,000 $0 $1,375,000 Loans $0 $0 $0 $500,000 Transfers $0 $0 $0 $500,000 111 City of Cottage Grove Modification to the Tax Increment Financing Plan for Tax Increment Financing District No. 1-1 11-3 Q. Duration of the District S Pursuant to Section 273.75,subd. 1,of the Tax Increment Financing Act,the duration of the Taxi Increment District within Development District No. l of the city will be twenty-five(25)years from the date of the receipt by the City of tax increments. The date of receipt by the City of the first tax increment was 1986. Thus it is estimated that the Tax Increment District,including any modifications for subsequent phases or other changes,will terminate on December 31,2011. X. Assessed Value of Parcel in Tax Increment Financing District No. l-1 The boundaries of the Tax Increment Financing Plan for Tax Increment Financing District No. 1-1 are not changing from the description in the original plan of January 7, 1985 for Tax Increment Financing District No. 1-1. A copy of the map showing the boundaries of Tax Increment District No. 1-1 within Development District No. I can be found on page I-A(in Section I)of this document. S City of Cottage Grove Modification to the Tax Increment Financing Plan for Tax Increment Financing District No. 1-1 11-4 . • SECTION HI City of Cottage Grove,Minnesota Modification to the Tax Increment Financing Plan for Tax Increment Financing District No. 1-3 April 18,2001 Introduction The following text represents a modification to the Tax Increment Financing Plan for Tax Increment Financing Districts No. 1-3. The modification to the Tax Increment Financing Plan represents a continuation of the goals and objectives set forth in the Redevelopment Plan for Redevelopment Project and Development District No. 1 and the Tax Increment Financing Plan for Tax Increment Financing Districts No. 1-3. The purchase of land was financed through tax increments to facilitate the redevelopment of an 87 acres site that was previously owned by Whirlpool. The City purchased the site to ensure that the vacant building was reused for private enterprise. Up North Plastics purchased the site and constructed a manufacturing plant. The development began in 1986 and was completed in 1987. The first tax increment was received in 1986. The City issued$725,000 definitive tax-exempt Tax Increment Bonds to finance land acquisition ofproperty, par improvements, and other public costs. In 1991 the increment was reduced due to a court proceeding. The original plan for Tax Increment District No. 1-3 is being modified to clarify the budget and to comply with the current requirements of the Office of the State Auditor. The amount of estimated tax increment for the modification is not changing, therefore, there are no additional fiscal implications to the taxing jurisdictions. The budget is being modified to explicitly authorize transfer amounts for the project area expenses,and may be interpreted as increasing,requiring a public hearing. Generally,the substantive changes in Tax Increment Financing District No. 1-3 include: 1. To expand the budget for Tax Increment Financing District No. 1-3 to include interest earnings, inter-fund loans and inter-fund transfers as tax increment funds; 2. To clarify budgets for previous expenditures; 3. To clarify duration;and 4. To clarify the amount of transfers of tax increments. The followingmodifications are intended to serve as additions to the original tax increment financing pIan for Tax Increment Financing District No. 1-3 according to the content below and are not contemplated to replace any sections unless specified. A copy of the full tax increment financing plan for Tax Increment Financing District No. 1-3 is on file with the City Administrator of the City of Cottage Grove. Findings The original and modified Development Plan Development District No. 1 set forth the applicable findings for the establishment and modification of Tax Increment Financing District No. 1-3. The current modification does not require that the City Council adopt new findings,however,the City Council confirms • all previous findings establishing and modifying Tax Increment Financing District No. 1-3. City of Cottage Grove Modification to the Tax Increment Financing Plan for Tax Increment Financing District No. 1-3 III-1 B. Use of Tax Increment Pursuant to Section 273.75,sub.4,of the Tax Increment Act,all revenues derived from the Tax Increment District shall be used in accordance with the tax increment financing plan. The revenues shall be used for the following purposes: A. to pay the principal of and interest on bonds used to finance a project; B. to finance or otherwise pay the capital and administration costs of the Development District pursuant to the Development District Act; C. to accumulate and maintain a reserve in a special development account for the payment of the principal of and interest on bonds used to finance a project as allowed in Minnesota Statutes Chapters 462C and 474; D. to pay for project costs as identified in the budget;and E. to finance or otherwise pay for other purposes as provided in Section 276.75,Subd.4,of the Tax Increment Act. (As Modified Apri118,2001) This section authorizes the use of increments from Tax Increment District No.1-3 to be used for costs authorized and incurred in Development District No. 1 or any costs authorized and incurred in other Tax Increment District located within Development District No. 1. These revenues shall not be used to circumvent any levy limits. G Estimate of Costs • (As Modified April 18,2001) The following is an estimate of public costs including all modifications to the Tax Increment Financing Plan for Tax Increment Financing District No. 1-3.A modified estimated cost breakdown of costs associated with financing Tax Increment Financing District No. 1-3 is as follows: Uses December 4, March 15, Totals of 1985 1989 including Funds Original Modification the April 18, Budget 2001 Modification Land Acquisition $300,000 $0 SO Site Improvements $0 $0 $500,000 Bond interest payments $364,900 $0 $294,900 Loan interest payments $0 $0 $286,000 Bond Discount $7,600 $0 $7,600 Development district public improvements $0 $651,000 5158,000 Administration costs $22.000 $120,000 • City of Cottage Grove Modification to the Tax Increment Financing Plan for Tax Increment Financing District No. 1-3 111-2 • Total Cost $694,500 $651,000 $1,366,500 Bond principal payments $400,000 $0 $400,000 Loan principal payments $0 $0 $1,350,000 Transfers $0 $0 $1,350,000 It is the intention of the City to use increments in excess of what is needed for debt service herein and to pay towards any other project expenses within Development District No. 1,including shortfalls of other Tax Increment Districts. J. Sources of Revenue. Costs outlined in the Estimate of Costs(Subsection G)will be financed through the annual collection tax increments. See Cash Flow Analysis in Subsection W for more detail on tax increment assumptions,as well as Subsection N-Estimated Captured Assessed Values. (As Modified Apri118,2001) Costs outlined in the Estimate of Costs(Subsection G)will be financed through the annual collection tax increments,general obligation bonds, interest on invested funds,inter-fund loans and transfers,and other City revenues. See Cash Flow Analysis in Subsection W for more detail on tax increment assumptions, as well as Subsection N - Estimated Captured Assessed Values. The estimated sources of funds for District No. 1-3 are contained in the table below. • Sources December 4, March 15, Totals of 1985 1989 including Funds Original Modification the April 18, Budget 2001 Modification Tax Increments $1,345,500 $0 $1,345,500 Interest on invested funds $0 $0 $21,000 Total Cost $1,345,500 $0 $1,366,500 Bond proceeds $400,000 $0 $400,000 Loans $0 $0 $1,350,000 Transfers $0 $0 $1,350,000 Q. Duration of the District Pursuant to Section 273.75, subd. 1,of the Tax Increment Financing Act,the duration of the Taxi Increment District within Development District No. 1 of the city will be twenty-five(25)years from the date of the receipt by the City of tax increments. The date of receipt by the City of the first tax • increment was 1986. Thus it is estimated that the Tax Increment District, including any modifications for subsequent phases or other changes,will terminate on December 31,2011. City of Cottage Grove Modification to the Tax Increment Financing Plan for Tax Increment Financing District No. 1-3 111-3 • • • X. Assessed Value of Parcel in Tax Increment Financing District No. 1-3 The boundaries of the Tax Increment Financing Plan for Tax Increment Financing District No. 1-3 are not changing from the description in the original plan of December 4. 1985 for Tax Increment Financing District No. 1-3. A copy of the map showing the boundaries of Tax Increment District No. 1-3 within Development District No. 1 can be found on page I-A(in Section I)of this document. • • City of Cottage Grove Modification to the Tax Increment Financing Plan for Tax Increment Financing District No. 1-3 111-4