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HomeMy WebLinkAboutResolution No. 2012-058 Modifiying Redevel9opment Plan SE Edina Redevel. Area Southdale 2 TIF District RESOLUTION NO. 2012-58 CITY OF EDINA HENNEPIN COUNTY • STATE OF MINNESOTA Councilmember Sprague introduced the following resolution and moved its adoption: RESOLUTION ADOPTING A MODIFICATION TO THE REDEVELOPMENT PLAN FOR THE SOUTHEAST EDINA REDEVELOPMENT PROJECT AREA; AND ESTABLISHING THE SOUTHDALE 2 TAX INCREMENT FINANCING DISTRICT THEREIN AND ADOPTING A TAX INCREMENT FINANCING PLAN THEREFOR. BE IT RESOLVED by the City Council (the "Council") of the City of Edina, Minnesota (the "City"), as follows: Section 1. Recitals. 1.01. The City Council and the Board of Commissioners of the Edina Housing and Redevelopment Authority (the "HRA") have heretofore established the Southeast Edina Redevelopment Project Area and adopted the Redevelopment Plan therefor. It has been proposed by the HRA and the City that the City adopt a Modification to the Redevelopment Plan (the "Redevelopment Plan Modification") for the Southeast Edina Redevelopment Project Area (the "Project Area") and establish the Southdale 2 Tax Increment Financing District (the "District") therein and adopt a Tax Increment Financing Plan (the "TIF Plan") therefor (the Redevelopment Plan Modification and the TIF Plan are referred to collectively herein as the "Plans"), all pursuant to and in conformity with applicable law, including Minnesota Statutes, Sections 469.001 to 469.047 and Sections 469.174 to 469.1799, all inclusive, as amended, (the "Act") all as reflected in the Plans, and • presented for the Council's consideration. 1.02. The HRA and City have investigated the facts relating to the Plans and have caused the Plans to be prepared. 1.03. The HRA and City have 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, Independent School District No. 280 and Independent School District No. 273 having taxing jurisdiction over the property to be included in the District, a review of and written comment on the Plans by the City Planning Commission on March 28, 2012, approval of the Plans by the HRA on April 17, 2012, and the holding of a public hearing upon published notice as required by law. 1.04. Certain written reports (the "Reports") relating to the Plans and to the activities contemplated therein have heretofore been prepared by staff and consultants and submitted to the Council and/or made a part of the City files and proceedings on the Plans. The Reports include data, information and/or substantiation constituting or relating to the basis for the other findings and determinations made in this resolution. The Council hereby confirms, ratifies and adopts the Reports, which are hereby incorporated into and made as fully a part of this resolution to the same extent as if set forth in full herein. 1.05 The Council recognizes that, pursuant to Minnesota Statutes, Section 469.177, Subd. 3, clause b, there is a mandatory fiscal disparities contribution for the District, an economic development district. • 1.06. The City is not modifying the boundaries of the Project Area, but is modifying the Redevelopment Plan therefor to include activities related to the District. Section 2. Findings for the Adoption and Approval of the Redevelopment Plan Modification. Resolution No. 2012-58 Page 2 2.01. The Council approves the Redevelopment Plan Modification, and specifically finds that: (a) the land within the Project area would not be available for redevelopment without the financial aid to be sought • under this Redevelopment Plan; (b) the Redevelopment Plan, as modified, will afford maximum opportunity, consistent with the needs of the City as a whole, for the development of the Project by private enterprise; and (c) that the Redevelopment Plan, as modified, conforms to the general plan for the development of the City as a whole. Section 3. Findings for the Establishment of the Southdale 2 Tax Increment Financing District. 3.01. The Council hereby finds that the District is in the public interest and is an "economic development district" under Minnesota Statutes, Section 469.174, Subd. 12 of the Act. 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 redevelopment or development of the District by private enterprise. 3.03. 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. Findings for Use of the District to Provide Assistance Pursuant to Section 469.176, Subd. 4c(d) of the Act. 4.01. The Council further expects that the District will meet the requirements of Minnesota Statutes, Section 469.476, Subd. 4c(d) (exempting the District from manufacturing, warehouse, and distribution use restrictions), because: (i) the proposed development will create or retain jobs in the State (including construction jobs), and construction of the project would not have commenced before July 1, 2012 without the assistance provided through tax increment under the TIF Plan; (ii) construction of the project will begin no later than July 1, 2012; and (iii) the City and HRA will request certification of the District by no later than June 30, 2012. 4.02. if construction does not commence by July 1, 2012 (unless this date is extended by state law), the proposed project will need to meet the criteria of Minnesota Statutes, Section 469.176, Subd. 4c(a) and must satisfy the finding required under Minnesota Statutes, Section 469.174, Subd. 12. Section 5. Public Purpose. 5.01. The adoption of the Plans conforms in all respects to the requirements of the Act and will result in increased employment in the state, and will result in preservation and enhancement of the tax base of • the State and thereby serves a public purpose. For the reasons described in Exhibit A, the City believes these benefits directly derive from the tax increment assistance provided under the TIF Plan. A private mall owner will receive only the assistance needed to make this development financially feasible. As such, any private benefits received by a mall owner are incidental and do not outweigh the primary public benefits. Resolution No. 2012-58 Page 3 Section 6. Approval and Adoption of the Plans. 6.01. 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 Executive Director. 6.02. 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. 6.03 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 Edina Housing and Redevelopment Authority 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. 6.04. The Executive Director is further authorized and directed to file a copy of the Plans with the Commissioner of Revenue and the Office of the State Auditor pursuant to Minnesota Statutes 469.175, Subd. 4a. The motion for the adoption of the foregoing resolution was duly seconded by Council member Brindle, and upon a vote being taken thereon,the following voted in favor thereof: Members Brindle, Sprague, Swenson and Mayor Hovland; and the following voted against the same: Member Bennett. Dated: April 17, 2012 t- Attest:_ Debra A. Mangen, City Clerk '.._ James B. Hovland, Mayor STATE OF MINNESOTA ) COUNTY OF HENNEPIN)SS CITY OF EDINA ) CERTIFICATE OF CITY CLERK I, the undersigned duly appointed and acting City Clerk for the City of Edina do hereby certify that the attached and foregoing Resolution was duly adopted by the Edina City Council at its Regular Meeting of April 17, 2012 and as recorded in the Minutes of said Regular Meeting. WITNESS my hand and seal of said City this r day of l_, 20__ R . C i ty,Cl e rk Resolution No. 2012-58 Page 4 EXHIBIT A RESOLUTION NO. 2012-58 FINDINGS The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan for the Southdale 2 Tax Increment Financing District as required pursuant to M.S., Section 469.175, Subd. 3 are as follows: 1. Finding that the Southdale 2 Tax Increment Financing District is an economic development district as defined in M.S., Section 469.174, Subd. 12. The Southdale 2 Tax Increment Financing District (the "District") is a contiguous geographic area within the City's the Southeast Edina Redevelopment Project Area, delineated in the TIF Plan, for the purpose of financing economic development in the City through the use of tax increment. The District is in the public interest because it will facilitate renovations to the common areas of Southdale Mall and exterior improvements to the shopping center, which will increase employment in the state, and preserve and enhance the tax base of the state. Furthermore, the assistance being provided meets the requirements for assistance under Section 469.176, subd. 4c(d) of the Act, because: • The private development to be assisted pursuant to the TIF Plan will create or retain jobs in the state, including construction jobs; • the development consists of improvements to interior and exterior common areas, and construction will commence no later than July 1, 2012; • • construction of the proposed development would not have commenced before July 1, 2012, without the tax increment financing assistance to be provided pursuant to the TIF Plan; and • the City will file the request for certification of the District by June 30, 2012. 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 the projected tax increments for the maximum duration of the Southdale 2 Tax Increment Financing District permitted by the TIF 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 following facts: • Southdale Center is a 1.2 million square foot indoor mall originally constructed in 1956. Portions of the mall have an obsolete configuration that makes it difficult to attract retail tenants. • Retail property in general has experienced declining property values and lease rates as evidenced by successful tax appeals at Southdale Center and other retail establishments in the City. • Southdale Center is the hub of economic development, retail activity, office space, and high density housing in the City of Edina. A decline in the value and retail traffic at the mall will negatively impact the value and economic development activity on the property surrounding the mall. Conversely, a vibrant mall will spur economic development for mall tenants, other mall owners such as Macy's and • JC Penny's and the surrounding property within the District. • The costs of the proposed improvements to the common areas of the mall cannot be passed on to tenants and is therefore a long-term investment on the part of the mall owner, Simon Properties. In the short-term they will not, in and of themselves, increase the market value of the property. However, they are being undertaken to increase retail traffic at the mall, and improve occupancy a Resolution No. 2012-58 Page 5 and lease rates which, over time, will increase the value of the mall and surrounding properties, as well as spur additional development in the District. • Best Buy is closing the retail store located within the District. Successful redevelopment of this site will depend on a financially viable Southdale Center that attracts more retail traffic. • The City and HRA, as a condition to tax increment assistance, will be requiring the mall owner to invest at least $ 14,000,000 in interior and exterior improvements to the common areas of Southdale Center. The amount of tax increment will increase if the mall owner increases improvement investments up to $15,000,000. Without the assistance, the mall owner has submitted statements that it would limit the renovations to approximately $7.34 million in basic improvements. Without the tax increment assistance, the mall property would not generate sufficient returns to the mall owner to undertake the full $14,000,000 to $15,000,000 in improvements. With the tax increment, the mall owner has indicated that the Southdale Center renovations will result in a return on investment under the normal thresholds for Simon Properties for a third year return, but is expected to achieve the corporate minimum investment threshold in the fifth year with the tax increment assistance. The mall owner has provided the City and HRA evidence that without assistance, the mall owner would be unable to construct the full level of proposed renovations. The increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the TIF District permitted by the TIF Plan: The City supported this finding on the grounds that the assessed market value of Southdale Center has declined 32% in the last five years. Best Buy recently announced it will be closing its retail store in the District. The declining values and declining or stagnant retail lease rates evidenced by successful tax appeals at Southdale Center, the current obsolete configuration of the existing Southdale Center that was constructed over fifty years ago, and the internal competition for resources within the 350 mall portfolio of Simon Properties all make it unlikely that the full level of mall renovations will be constructed in the next 9 years without public assistance of some kind. The City further determines that these same challenges suggest that no other development of similar scope could reasonably be expected to occur on this site without similar assistance being provided to the development. Therefore, the City concludes as follows: a. If the proposed development occurs, the total increase in market value will be $119,112,310 (see Appendix D and F of the TIF Plan) b. The present value of tax increments from the District for the maximum duration of the district permitted by the TIF Plan is estimated to be$7,873,815 (see Appendix D and F of the TIF Plan). C. The Council finds that no alternative would occur that would produce a market value increase greater than $111,238,495 (the amount in clause b less the amount in clause c) without tax increment assistance. 3. Finding that the TIF Plan for the Southdale 2 Tax Increment Financing District conforms to the general plan for the development or redevelopment of the municipality as a whole. The Planning Commission reviewed the TIF Plan on March 28, 2012 and found that the TIF Plan conforms to the general development plan of the City. Resolution No. 2012-58 Page 6 4. Finding that the Tax Increment Financing Plan for the Southdale 2 Tax Increment Financing District will afford maximum opportunity, consistent with the sound needs of the City as a whole,for the development of the Southeast Edina Redevelopment Project Area by private enterprise. The project to be assisted by the District will result in increased employment in the City and the State of Minnesota, increased tax base of the State and the redevelopment of currently underutilized land by a private business. III