The URL can be used to link to this page

Home My WebLink About1998-08-05 PACKET 06.C.REQUEST OF CITY COUNCIL AC710N COUNCIL AGEfVDA MEETING ITEM # DATE 8/5/98 . (,'. . PREPARED BY: �conamic Development Kirstin Barsness ORIGINATING DEPARTMENT STAFF AUTHOR �.�,,��,�,��..�..�.��.>,�.�«��>»,�.�..�� COUNCIL ACTION REQUEST Hold a public hearing and consider the resolution adopting the modifications to Development District No. 1 and Tax Increment District No. 1-7 BUDGET IMPLICATION BUDGETED AMOU ADVISORY COMMISSION ACTION: ❑ PLANNING ❑ PUBLIC SAFETY ❑ PUBLIC WORKS � PARKS AND RECREATION ❑ HUMAN SERVICES/RIGHTS � ECONOMIC DEV. AUTHORITY ❑ SUPPORTING DOCUMENTS DATE 8/5/98 REVIEWED ❑ ❑ ❑ ❑ ❑ � ACTUA�AMOUNT APPROVED ❑ ❑ ❑ ❑ ❑ Pending ❑ DENIED ❑ ❑ ❑ ❑ ❑ �� MEMO/LETTER: Memo from Kirstin Barsness dated July 29, 1998 � RESOLUTION: Draft ❑ ORDINANCE: ❑ ENGINEERING RECOMMENDATION: ❑ LEGAL RECOMMENDATION: � OTHER: Draft modifications to the Tax Incremen4 Financing Plan for Tax increment Financing District No. 1-7 ADMINISTRATORS GOfVIMENTS ) ; - -- -- -- - � ---- City Administrator �� .:_ Date M R k d* k* a*�.t < t* rt b 4# k k R# t� 4 rt k A :4 * fv 4 i t+ k O a R# k w i 4###*'k t CCJUNCIL ACTIbIV TAKEN: ❑ APPROVED ❑ DE�IIED ❑ C)THER F:\GR!�UPS\PEF2 ECQPJ\KEB\CC Items\TIF �i-7 Covecduc� I . To: Honorable Mayor and City Council From: Kirstin Barsness, Economic Development Director Date: Q7l29198 Re: Modification for TIF District No.1-7 INTRODUCTION The term for Tax Incremerrt District No. 1-7 will expire at the end of the year. This district was created to faalitate the development of Target Stores in the community. In preparation for the expiration, staff has been working with Ehlers and Assoaates to ensure that the proper steps are being taken for the district to e3cpire with a fund balance of zero. During the process it was discovered that an excess fund balanced existed. Given the year the tax increment district was created, the statute permits funds to be transferred out of this particular TIF district to other parts of the development district for economic development activities. DISCUSSION it is anticipated that the excess increment generated by TIF DisUict No. 1-7 will be approximately $834,000. After careful deliberation ofi potential projects, staff recommends the following budget schedule for the expenditure of funds: A. Tax increments from District No. 1-7 to be spent in Development District No. 1 Tax Incxement District No. 1-9 (Renewai by Andersen). These funds will be used to supplement the budget for the Renewal by Andersen district. Site preparation costs �580,000 -... . . - � � i�r Total within TIF District No.1-9 a730,000 B. Tax increments from District No. 1-7 to be spent in Development District No. 1. These funds will be used for land acquisition for industriai property within the Cottage Grove industrial Park. Land Acquisition a100,000 The budget may need to be adjusted by resolution in December if the final allocations do not directly correspond with the adopted budget. It is acceptable to alter the budget, but a resolution amending the budget to reflect actual expenditures is needed for accounting and reporting reasons. Aii statutory requirements for the public process have been completed. • Public hearing notice was published in the July 22, 1998 edition of the South Washington County Builetin. • Independent Schoo� District 833 waived the thirty day notification and reviewed plan (confirmation received July 23, 1998). . Washington County waived the thirty day not�cation and reviewed plan (co�rmation received July 23, 1998), • Pianning Commission passed a resolution finding modification in comp�iance with Comprehensive Plan on July 27, 1998. • Economic Development Authority passed a resolution finding the modifications in the pubiic interest and in complianee with city economic developmerrt goals on August 5, 1998. ACTION REQUIRED The City Council shou�d hold the public hearing and then consider the resolution adopting the mod�cations to Devetopment district No.1 and Tax Increment District No. 1-7. ATTACHMENTS 1. Resolution adopting the modification to the development program for Development District No. 1; and modifying Tax Increment Financing District No. 1-7. CITY OF COTTAGE GROVE WASHINGTON COUNTY STATE OF MINNESOTA Council member introduced the following resolution and moved its adoption: RESOLUTION NO. RESOLUTION ADOPTING THE MODIFICATION TO THE DEVELOPMENT PROGRAM FOR DEVELOPMENT DISTRICT NO. 1; AND MODIFYING WTTHIN DEVELOPMENT DISTRICT NO. 1 TAX IlVCREMENT FINANCING DISTRICT NO. 1-7 AND ADOPTING THE RELATED MODIFICATION TO THE TAX INCREMENT FINANCING PLAN THEREFOR BE IT RESOLVED by the Ciry Council (the "Council") of the City of Cottage Grove, Minnesota (the "City"), as follows: Section 1. Recitals 1.01. The City has heretofore esYablished Tax IncremenY Financing District No. 1-7 ("District No. 1-7") and adopted the Tax Increment Financing Plan therefor on June 7, ] 989 and modified the Tax Increment Financing Plan on April 25, 1990 and December 18, 1996. 1.02. It has been proposed that the City modify the Development Program for Development District No. I and modify the Tax Increment Financing Plan (the "Modifications") for Tax Increment Financing District No. 1-7, located within DevelopmenT District No. 1, all pursuant to and in accordance with Minnesota SYatutes, Sections 469.124 to 469.134, inclusive, as amended, and Minnesota Statutes, Sections 469. ] 74 to 469.179, (the "Acts") inclusive, as amended. Generally, the substantive change to Yhe Tas Increment Financing Plan for Tas Ia7crement Financing Districe No. 1-7 is a budget modification to authorize the expenditure of tax increments on additional projects within Development District No. 1. 1.03. The Council has investigated the facts and has caused the Modifications to be prepared. I.04. The City has performed all actions required by law to be performed prior to the adoption of the Modifications, including, but not limited to, notification of Washington County and School District No. 833 having ta�cing jurisdiction over the property included in Tax Increment Financing District No. 1- 7, a review by the City Planning Commission of the Modifications, and the holding of a public hearing upon published notice as required by ]aw. Section 2. Findin�s for the Modifications. 2.01. The Counci] hereby Finds that the Modifications, 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 Modifications, which are hereby incorporated herein. 2.02 The Council reaffirms the findings previously made with respect to Tax Increment CITY REIN:\Minnsota\COTGROVSTIFl-7mod\city_res.wpd Financing District No. 1-7. 2.03. The Modifications conform in all respects to the requirements ofthe Acts and will help fulfill a need to develop an area of the State wl�ich is already built up to provide employment opportunities to improve the ta�c base and to improve the general economy of the State and thereby serves a public purpose and will afford maYimum 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 intenY is to provide only that public assistance necessary Yo make the private developments financially feasible. Section 3. Apnroval of the Modifications; Filina. 3.01. The Modification to the Development Program for Development District No. 1 and the Modification to the Tax IncremenY Financing Plan for Tax Increment Financing District No. 1-7 are hereby approved, and shall be placed on file in the office of the City Clerk. Approval of the Modifications does noY constiYute approval of any project or a Development Agreement with any developer. 3.02. The staff of the City are authorized to Sle Modifications with the State Department of Revenue and the Washington County Auditor. 3.03. The staff of the City, the City'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 Council for its consideration al] further plans, resolutions, documents and contracts necessary for this purpose. 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 thereo£ and the following voted against the same: Dated: August 5, 1998 Mayor (Seal) ATTEST: City Clerk CITY_RE1N:�m�MSa��corcaov�r�Fi-�moa��h �es.�a � Draf[ as ofJuly I5, 1998 � Draft for School and County Boards Review � � MODIFICATIONS TO THE TAX INCREMENT FINANCING PLAN •• TAX INCREMENT FINANCING DISTRICT NO. 1-7 Ciiy of Coitage Grove ° ,� n�� City of Cottage Grove Counry of Washington State of Minnesota Approved: June 7, 1989 Pirst Modification: April 25, 1990 Second Modification: December 18, 1996 Third Modification Public Hearing: August 5, 1998 Third Modification Adopted: August 5, 1998 Prepazed by: EHLERS AND ASSOCIATES, INC. 3060 Centre Pointe Drive Rosevitle, Minnesota 55113 Phone: (651) 697-8500 Fax: (651)697-8555 E-mail: info@ehlers-inc.com Web Site: cvww.ehlers-inacom TABLE OF CONTENTS (for reference purposes only) Modification to the Tax Increment Financing Plan for Tax Increment Financing District No. 1-7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-I Introduction ................................................................. I-1 Subsection A. Statement ofNeed and Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1 Subsection B. Use of Tax Increment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1 Subsection F. Parcels for Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-I Subsection G. Estimate of Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-I Subsection I. Sources of Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2 Subsection Q. Estimated Impacfon Other Taxing Jurisdictions . . . . . . . . . . . . . . . . . . . . . . . I-2 Subsection P. Duration of the District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2 EXHIBIT A - DESCRIPTION OF PROJECT COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1 EXHIBIT B- MAPS OF DEVELOPMENT DISTRICT NO. 1 AND TAXINCREMENTFINANCINGDISTRICTNO. I-7 ............................. B-I City of Cottage Grove, Minnesota Modification to the Tas Increment Financing Plan for Tax Increment Financing Disfrict No. 1-7 August 5, 1998 Introduction The following text represents a modification to the Tax Increment Financing Plan for the Tax Increment Financing District No. 1-7 ("District No. 1-7). The modified Tax Inaement Financing Plan represents a continuation of the goals and objectives set forth in the original Development Program and Tax Increment Financing Plan. Generally, the substantive changes include the authority to spend ta�c increments generated from Tax Increment Financing District No. 1-7 for public improvements and other qualified economic development costs in Development District No. 1 and in Tax tncrement Financing District No. i-9. For further information, a review ofthe Development Program for Development Distri ctNo. 1, dated January 7, 1985, and subsequeotly modified on December 17, 1986, on March 15, 1989 and on December 18, 1996; and the Tax Increment Financing Plan for Tax lncrement Financing District No. I-7 dated June 7, 1989 and subsequently modified on April 25, 1990 and on December I8, 1996 is recommended. They are available from the City Cierk's office of the City of Cottage Grove. Subsection A. Statement of Need and Purpose District No. 1-7 is expected to continue fo achieve many ofthe objectives set forth the section "Statement of Objectives for Improvementof Development District" in the Development Plan for Development District No. 1, dated January �, 1985. Subsection B. Use ot Tax Increment The proposed uses of tax increment in this modification to ttte Tax Increment Financing Plan for Tax Increment Financing District No. 1-7 are within the uses oftax increment financing authorized by the original Tax Increment Financing Plan adopted on June 7, 1989. Subsection F. Parcels for Acquisition Tax increments from District No. ]-7 may be used to acquire parcels located within Taac Increment Financing District No. I-7 or Development District No. 1, including land within the Cottage Grove Industriai Park. See E�chibit A for details. Subsection G. Estimate of Costs A modified estimated cost breakdown associated with financing the Tax Increment Financing District is provided in E�chibit A. Ciry of Conage Grove Modification ro the Taz Increment Financing Pian for Tae Increment Financing District No. i-0 I-I Subsection I. Sources otRevenue The costs outlined in E�chibit A will be financed through the continued annual collection of tax increments. (AS MODIFIED AUGUST 5, 1998) It is estimated that the totai tax increment to be collected for the duration of Tax Incremen4 District No. 1-7 witl not exceed $2,983,000. Subsection O. Estimated Impact on Other Taxing Jurisdictions This modification does not create any new Tax Increment Financing Districts and does not increase the geographic size of any Tax Increment Financing District, therefore there are no additional fiscal implications that affect tasing jurisdictions. Subsection P. Duration of the District It is anticipated that tax increments wiil be collected from District No. ]-7 through the year 1998. Ciry�otCottage Grovc Modification to the Taz Increment Financing Plan for Tae Increment Financing District No. 1-7 1•2 EXHIBIT A DESCRIPTION OF PROJECT COSTS (ASMODIFIEDAUGUSfiS, 1998) This modifications is to allow for the expenditure of tax increments generated in Tax Increment Financing District No. 1-7 in Development District No. 1 and Tax Increment Financing District No. 1-9. Note that this modification to the budgets for Development District No. 1 and District No. 1-9 are in addition to the budgets previously established. Cost Determination of Future Proiects includine 'Fax lncrements generated from District No. 1-7 to be spent in Development District No. 1 and Tax Increment Financing District No. 1-9 Renewal by Anderson Site preparation costs $58�,000 Road Improvements 150.000 Total within Tas Increment District No. 1-9 $730,000 Cost Determination of Future Projects in Development District No. 1 Land Acquisition $100,000 Cost Determination For Future Projects In Development District No. 1, Tax Increment Finaocing District No. I-7 1990 - Ryan Project Public Improvements OrganizationlAdm inistration Disconnt allowance Finance related expenses Capitalized interest $413,000 20,000 7,875 11,000 76.125 Subtotal Less: Interest earnings G.O. Tax-Exempt Bond Issue Site Improvements Discount allowance Finance related expenses Capitalized interest Subtotal Less: Interest earnings G.O. Taxabte Tax Increment Bond Issue 528,313 -3313 52$ 5.000 $500,000 14,500 10,625 705.000 630,125 -5.125 62$ S.Q00 Ciry of Cottage Grove Modi6cation m the T� Increment Financing Plan for T� Increment Financing District No. t�7 A-r 1991 - Public Improvements Jamaica Avenue Turn Lanes Screening, Landscaping, Berming Traffic Signals at Jamaica Inflation Factor (5%lyr.) Amount to finance Discount allowance Finance related expenses Capitalized interest Subtotal Less: Interest earnings G. O Tax-Exempt Bond Issue $ 48,000 84,000 153,000 28.500 313,500 6,700 9,500 72.000 401,700 -6 700 395 000 NOTE: The City reserve the right to combine one or more proposed future bond issues and(or modify the proposed timing of the public projects in Tax Increment Financing District 1-7. The amounts listed reflect the projected local share which is payable entirely from TIF revenues. Any amount special assessed against a project will be added to these bond issues but will be payable from special assessments. Cost Determination of Projects in Tax Increment Financing District No. 1-7 (cont.) 1992 Public Im�rovement�s Pt. Dougtas Street/[Jtility Relocation NW StreetfUtility Construction Inflation Factor (5%/yr.) Amount to Finance Discount allowance Finance related expenses Capitalized interest Sobtotal Less: Interest earnings G.O. Tax-Exempt Tax lncrement Bond Issue $ 27,600 662,400 103,500 793,500 16,100 18,500 100.050 928, I50 8 920 000 Ciry of Conage Grove Modification ro the ?ax Increment Financing Plan for Taz (ncrement Finar�cing District No. 1-7 A-z 1993 Site Development Site Development (Other parcels in TID ]-7) Discount allowance Financerelated expenses Capitalized interest Subtotal Less: Interest eamings G. O. Taxable Tax Increment Bond Issue $500,000 11,100 12,000 54.150 577,250 7 250 57� 0,000 NOTE: The City reserves the right to use MSA funds for MSA eligible projects to cover any TIF shortfall. None are projected at this time. If a shortfall occurs, the City will reimburse the MSA account for these amounts plus interest if TIF revenues are available in the future. ]n addition, the City reserves the right to reimburse the City for Utility area charges on properfy within the tax incremenT district from future tax increment revenues. In addition to the above identified projects, the City reserves the right to use tax increment revenues if they become available for any project that is a part ofthe Development Program for Development District No. 1 and any current or subsequent tax increment finance district. Following are additional projects that currently are identified within the Development District Program. Cost Determination for Future Proiects in Development District No. I, Tax Increment Financing District No. 1& 4 Oakwood Heights 3rd Addition Property acquisition from developer -Oakwood Heights Limited Partnership in TID No. 1 Public costs for developer including: Acquisition of property, siYe improvemeots, connection fees, park dedication fees, SAC fees, adm inistration/contingency Adm i n i strat ion/organ ization Net project cost Finance related fees Discount allowance Capitalized interest (2.5 years) Less: Interest earnings Tax Exempt General Obligation Tax Increment Bonds $102,000 276,000 12.000 $390,000 12,000 9,975 116,025 3 525 060 Ciry of Cottage Grove Modification to the Taz increment Financing Plan for Tex [ncrement Financi�g Disvict No. 1-7 A-3 Cost Determination of FuCUre Pro'eci ts in Development District No. 1, Tax Increment Financing District No. 1-3 Reuse of Vacant Industrial Property Acquisition of property Administration Legal, Fiscal Net project cost Interest during construction Discount allowance Bond issue $300,000 ] 0,000 I 2.000 $328,000 70,400 ��60� 400 000 Golf Course Equiri Fund -- In order to expand the local tax base and provide employment opportunities within the City, it is necessary for the Ciry to be competitive. The City will establish a Golf Course Equity Fund to make available financial incentives to expand tax base and employment opportunities. The use of these funds wi11 conform to the objectives outlined in the Development District and Tax lncrement District programs. These funds witl be used to provide equity financing for a golf course. It is the intention of the City to utilize annual tax increments to the extent that they are not needed to pay annual debt service obligations to fund this project or any other project in the Development Program for Development District No. I . Cost Determination of Proiects in TID I1o. 1-5 Development District No. i, Tax Increment Financing District No. 1-5 Developer Costs Costs agreed to in the Development Agreement Storm sewer, street improvements, and curb & gutter Storm sewer are charge Park dedication fee excavation streets Total Developer Costs Ci Costs Emergency roadway access construction Right of way for roadway access OuTlot A Development Safety fencing Administrative costs Economic Development Loan Fund Total Ciry Costs TOTAL PROJECT COSTS $318,155 84,071 3,522 94.252 $500,000 $ 73,600 25,000 I 50,000 50,000 Up to ] 0 % 96 308 494.342 $994;342 Ciry of Conage Grove Modification to the Taz Increment Financing Plan for Taz Increment Financing Disvict No. 1 J A-4 Adm in i strative Expen ses: The C ity wi I I reimbu rse itself foc adm in istrative expenses for proj ect managem ent andprojectadministrationfromyearlyTlFrevenues. ThefinalamountallocaTedwillnotexceedthoselimits in the tax increment law and will reflect the City's actual expenses. Any cost directly or indirecCly related to the implementation of objectives of the Development District and TaY IocremenT Project Ptan is considered a"project cost" and eligible to be paid from tax increments ofYhe Tax Increment District including but not limited to the list above. With all projects the costs of engineering, design, survey, inspection, materials, construction, restoring property to its original condition, apparatus necessary for the public work, legal and other consultant fees, testing, environmentai studies, permits, judgements or claims for damages and other expenses are inctuded as project costs. The City has increased project costs by 5%per year as an inflation factor. The City reserves the right to adjust these projected costs to reflect final construction costs when implemented. In the event any such public works projects are not reimbursable out of the special TIF fund under Minnesota Statutes 469.174 through 469.179 in the written opinion ofnationatly recognized bond counsel or a courtof record so rutes in a final order, then such project or projects shatl be deleted here from and theremainderofthe projects hereu�der sha(I be deemed the entirety of the projects for purposes of t6is project plan. In addition to the projects identified above within Exhibit A, the Ciry is hereby modifying the estimate of costs to include the foltowing projects, all located within Development District No. l: l. The City currently operates an Economic Development small business loan program. The City would use increment from Tax Increment Financing District I�'o. I-"7 to fund the loan program and make those funds available for economicdeve lopment loans under the existing program gu idel ines for proj ects that wouid be constructed with Development District No. 1. Loans would be made only for Tax Increment Financing eligible expenditures. 2. Toenhancetrafficflowandeconomicdevelopment,theCitymayuseincrementfromTaxIncrement Financing District No. 1-7 for various traffic and roadway improvements which could inctude: A. Traffic signats at the interchange of Highway 61 and Jamaica Ave. B. The upgrading of 80th Street from Highway 61 to Jamaica Ave., which includes reconstruction, beautification, frontage roads, turn lanes and other related public improvements. 3. To facilitate economic development the City may acquire 20 to 25 ac�es of land within the Cottage Grove Industriai Park. This land would be made available to interested parties for the construction of development projects. The budget for these additional projects is in addition to the projects previously identified in the Tax lncrement Financing Plan for Tax Increment Financing DistrictNo. 1-7. Thetotal combined budget for the above named projects, including administrative costs, will not exceed $640,000. Loan program, traffic and roadway improvements, and industrial park land acquisition $589,500 Up to 10% Administration 65,500 Total Budget Change 655.000 Ciry of Cottage Grove Modification to the 7ax Increment Financing Plan for Tae [ncrement Financing Disvict No. 1-7 A'$ An analysis of the City's motivations for these projects is as follows: The four alternaYives listed below were published as part of the Pubiic Hearing notice for this modification. The following text lays out the City's motivation for the each project in this plan amendment. 1. Enterprise Fund - Business Loan Pool In the 1989 Comprehensive Plan, the City identified certain economic development activities as highly desirable. The revitalization of commercial and industrial areas is encouraged to maintain a high quality of development in the ciry and the enhancement ofthe city's image as a desirable place to live, work, and play, are both goals which the Comprehensive Plan sets forth. To meet these goals, the City hired a professional economic developerto coordinate the communities efforts and create program to assist in meeting the city's goals and objectives. One ofthe programsdeveloped is the Enterprise Fund, a revolving loan pool designed to facilitate business growth. The existing fund is capitalized at $200,000, a level which does not allow for reasonable public assistance for multiple projects. This has historically been proven. Since its creation in 1993, the fund has yet to make a loan. As a community we have submitted 8 customized proposals to qualified companies that then decided to locate in other communities. We have had discussions conceming our financial assistance programs with over 75 companies, and yet have not made a loan. In projects that total in the millions, the interjection of a few thousand dollars dces not impact or demonstrate a benefit to the company. The use of additional tax increment dollars to enhance the fund balance would allow for the Enterprise Fund to provide a greater impact in assisting businesses in locating or growing in the community. It would also take a more active role in the city's financial assistance packages. This use of funds as a revolving loan limits the use of tax base related programs. 2. Traffic and Roadway Improvements A. Traffic Signals at Highway 61 and Jamaica Avenue In the Comprehensive Plan's transportation policies, it states thaY the City shall periodicalty monitor traffic and turning movements at major intersections to determine if traffic control devices are warranted. In examiningthe Jamaica Avenue and Highway 61 intersection, it is apparent that the proposed improvement would not occur within the foreseeable future a�d therefore the use of ta� increment financing is deemed necessary. This area represents one of the key gateways to the city's commercial and industrial districts. Gurrent traffic levels do not warrant the use of Minnesota State Aid funds to pay for the signalization, however, the insta(lation ofthe traffic si gnals would greatly enhance the city's ability to market the industrial park which is located to the south ofthis intersection. The currenY situation, involving the usage of stop signs to facilitate traffic, is cumbersome and unattractive for companies which want to use a more seamless route to distribute their product. In comparison to the industrial parks in the Twin Cities, the ingress and egress to the Cottage Grove Industrial Park is a detriment. B. The upgrading of 80th Street from Highway 61 to Jamaica Avenue (est. Budget $31 Million) Aesthetic upgrades focused on the Highway 61 to East Point Douglas section. The 80th Street Reconstruction project represents a$3.1 million upgrade to one of the major road arteries in the community. This project has been identified in the Capital Improvements Program to take place in 1997. A task force has been established to help guide the process. Ciry of Cottage Grove Modification ro the Taz Increment Financing Plan for Taz Increment Financing Disvict No. ]-7 A-6 For years, the Highway 61 and 80th Street intersection and corridor has served as a gateway to the community. In 1994, the City sponsored a study of retail development opportunities. The report called A Study of the ReCail Potential for Cottag,e Grove , Minnesota addressed the aesthetic deficiencies of the community and the flagged this conidor as needing an upgrade to promote additional development an redevelopment in the area. Unfortunately, there does not exist the resources to under take the type of improvement necessary. Current MSA doltars are allocated to the construction and reconstruction of roads in the community and the demand for these dollars out paces the suppty. The aesthetic upgrades would include the utilization of landscaping,paverbricks and other decorative block, irrigation systems. Projected improvements would cost approximately $80,000 and would not be covered by the MSA dollars allocated for landscaping under the 80th Street project which is currently being undertakenbythe Ciry. At this time it is estimated that the MSA budget for landscaping would be approximately $40,000 and this amount would need to be spread over the two mile project area. In addition, other capital road improvements such as the 103rd Street Bridge and the extension of Harkness would be eligible for future MSA dollars. The creation of the gateway at the intersection would help facilitate the developmeni of existing vacant property abutting the conidor and may serve to attract interest in redeveloping the Rose of Sharon Church properry located at the intecsection of 80th Street and East Point Douglas Road. 3. The Acquisition of 20-25 acres of land within the Cottage Grove Industtial Park The Cottage Grove lndustrial Park is comprised of over 700 acres as part of the City's Comprehensive Plan process, it is the community's policyto encourage quality development of major commercial and industrial area in planned and concentrated centers. The history of the area in meeting the goal has been brief. The ]ast development, the Soo Line Mazshalling Yard, was constructed in 1987. At the time, it was felt that this developmeat would be the catalyst for attracting other tenants to the Park. However, given the oversuppiy of industrial land in the metropolitan area and the geographic disadvantage of not being located on a major freeway or interstate, little has happened in the area over the past 9 years. Marketing of this area has increased over the past four years, but with the increasing restrictions on developmenttools such as the green acres resTriction on tax increment financi�g, it has become difficult for the city fo offer tBe properry at the same level as neighboring muoicipalities, both in Minnesota and Wisconsin. Given current land prices and the location of Cottage Grove in the broader metropolitan region, the purchase of property would allowthe cityto use the land as a catalyst for private development. The funds would be used to make the property more attractive in today's market, thus spuning growth in the area which would otherwise not occur in the next few years. The additional development wfiich would result from the land program wouid generate new taxes and would more than offset the cost to the )ocal taxing jurisdiction, by amending the tax increment plan and not pursuing the decertifcation. This can be best demonstrated through an example. Proposed land scenario: For every three acres purchased by a compa�y, one acre is given to the project by the city. If the city purchases 20 acres an additional 60 acres of private ownership can be leveraged through this formula a total of 80 acres of development can occur. Tax Calculation: Assuming that all project have a 45% coverage ratio (from 1-2 Zoning) The amount of taxable squaze footage is 1,568,160 sf. Assuming an average building construction cost of $25/sf. City of Cottage Grove Modification to the Tae Increment Financing Plan for Taz lncrement Financing Disvict No. i-7 A-0 the taxable value is $39,304,000. The taxes �enerated from this value would be $1,767,301. This figure does not include the value ofthe land itself. The return on investment potential is very significant. ln response to the information presented by staff and the attorney, the EDA passed a resolution suppoRing the amendment of tax increment plan for District 1-Z Their prefereoce would be the expenditure of the funds to support the Land Purchase program. Ciry otCottage Grove ModificaHon to the Taz Increment Financing Ptan tor Tax Incrcment Financing DisVict No. 1-7 A�8 EXHIBIT B MAPS OF DEVELOPMENT DISTRICT NO. 1 AND TAX INCREMENT FINANC1I�rG DISTRICT NO. 1-7 Ciry of Cottage Cmove Modification to the Tsx Incremcnt Financing Plen Por Tax Incrcment Financing Disvict No. 1-7 B-7 Yax Increment Financing District No. 1-7 Development District No. 1 City of Cottage Grove Washington County, Minnesota i � �,_ I ! — �� , ' . . . " ;. ,� '�� - � _ �' � �� ' t � �,_ �F � �' _---- � ' . t . —, . I��. ,� - ` �� 1 �� y_� i . . ' �� , � � � • � � �i��%�"_j -- } � � i_ l �•� ; 't— � ' \ �—�� ., �� (��'v,,,.X� --- ---" . � — 1 1 �`��. .... . �-- _ • '��-p I �� ._�,.'�jv � r i \ '� � -- ' �.: . ' .�. } „ r � .— . '_-.. � ry , = �� i '� Q � �' . y • �; � ��. �_ . . i i�.. ��_ %: .� ' - 1 „ C . `� . T a.0 �.� �� - n� �: � m � � , .�..., �� -7 `t=�. .:r' _ - • - L� \' T�✓�;�� t ,?►1, F . s '� ' ^� �~ ,' , �` -. �I r ��,� ;�,�� • +'� �� !,! � � �1 1' '�. - ,'r� `�>—' ^. �' _� i' � � � f . L � ii � I � '�' •. —• � �. ' / �� C � ��`� J�r �. ��y ', - l _ �� . `� y / � fiY� � u Lr � � � � ' i � . . " i - A � lfaxincrement � � ��' ' ' � e J � � ' � Financing " � , � ----Gr-�,.� '� �.- �`�District No. 1-7., � � —� � • � � � "' ' '� t� ' � ` �• ' � . , '" ~�`•^ � `` �` ' . � �� , • ..� � � v � _- - . ' u %� 4 -� � i e �. , �� ; - _��_.�-....___._ '-.. . _ ' )..r =----. .. � � �� —• - � i � i � � � � �. � �� ``� 1� t � ;'��,--•--. . �� • ' �' � . • " , � � '- _ = •--- ._ � ' iilYfll t ��' _ � � � � ,. � e _ e�� • e ' � ` ` a � a c � � • � � j Z � — � . ' � � � � f `.�! ��'�� _, ,' ',• 1` � ' � � � � \ `i � � . ��. � � •... i�= ° \ " O wS ' � •��w � o a. � � �C�� ° � ��\ � �� i e ♦e��. ♦`\ �;\\� � \` ``'`` � Aa/ \ \ \ \� \ \ �� \` � 6 r= / � \�` \� ♦ \��\ ~�'�� J� \� �� Q� ` ��l� \� �� `� ♦ ♦ � �� : \� ♦\ �� \ � � �\ ��\� . �`\` �\\ `�;�` � \ � \�, �' `� ♦ • � � \\ :�� \ `� �. � \ �. �� . . � ..\ `l✓ �\ \�� ii . `\ � � / ��J ,., � , . „� ., `� ' i i r � LNGl" �. .•'(i / . �, e d��e� m I12 �'9ii! IU i� 23 f O � � n f .� e` 5 0 0 120 w(29 9ty0 Q 91li � / � i. � 27221- 7 e� h a e� „ 9�� z Hs iss z ia� ��i �/ 2000 ° aeo e „ � i � .4, 9�e= �� ' Q o�0 p�56 O�L a, a p �� 7e YITI � //// � \ / �iii ttm _ T . n / /!!/ '�' n n e. - n.e - .+ ✓ �/� � i o o e� o o i �� o g° a ° o �� .�/� � ' o 0 o c.c n n n o a o \\�, L // �4 1 � l � /� / �� 2��21-22�� : � r, `, :� 4 �� ( �� : . `• �� .. . / C,.. � •�� • �. • •� � �` � � ` � � �:. � � a \'�' -' � �= �` �' Areas Not Inciuded i `�.�`.�.:. � f; ``~_ `1\1`` �"' � ` the TIF Districfi : ; ��` � e v �, +`� o `""` ��'�`` �\ � � � \� o ��` � � ` \\` � N ` \ `� �� = �` ' , ,\`'� b L O 7 \� � a � O� �1 C ` a a` `� + O o .\` ;v� w. 7ax tnerement Financang District No. 1-7 y :`: m e� Development District No. 1 $ � � �: �; a � ;��` City of Cottage Grove � `,`` � �\ �e� � Washington County MInI1850�3 '� � � .m w �; �� p ` a� \ \�` �a ` o R � ``; � a� > � s � � , � . S F�f � {�----{ `+ y � � `a ♦ { � �� .