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89-1255 s u-G-�-�� ' � � � �1- 1Z5 � �� j � �� Council File # ,� Green Sheet # - R S LUTION CITY OF SAI U M NESOTA , ,� ��, `� , � �_ Preaented By �� - Referred To Comm t ee: Date WHT?RFAS, the City of Saint Paul as ten tax increment financing districts, created between 1977 and 1990, and WHEREAS, these districts have be n n integral part of the City's efforts to remove physical blight, provide decen h using for all its citizens, stimulate economic development in order to prov de jobs and bolster the tax base, and provide quality public services, and WHEREAS, the City has used its t x ncrement financing powers conservatively, prudently, and effectively, NOW, THEREFORE, BE IT RESOLVED t, at the Mayor and administration adhere to the f�r� tax increment financing po 'ci s in the administration of the City's � existing tax increment districts and "n he consideration of any proposed new districts. to be found on �ages 22-29 of the Tax Increment Financing Status Report and Policy Recommendation, dated July 23, 1990. Y� Navs Abs nt Requested by Department of: ron osw z —� on �. — ac a ee `. e ma �... une ` B : i son � y Adopted by Council: Date A�� 9 1 94 Form Approved by City Attorney Adoption Ce�tified by Council Secret ry BY: 8 � :�-� Y� - Approved by Mayor for Submission to Approved Mayor: Date AU`'* -1 1 (�� Council B �,��fG%LC�"� BY' Y• PUBItSHEO �+�� 1990 r � ^ "� �C"�� y_r ��N��, ` DA �N �� GREEN SHEET Ho. 3 Plannin ant3 E�onomic llev. -� � I�� Q�� r3 OONTACT PER80P13 PNONE ��O e �DEPARTMENT DIRECfOR �CITY OOt1NqL Tony Goddard 228-3222 OZ' _ ��y ATfORNEY �cmr c��c MU8T E ON OOU��10EAN�DA BY(DATE � ^, �BUDOET DIRECTOR a FIN,d MOT.SERVtCE3 DIR. ' W � MAYOR(OR IISSIST TOTAL#O 8KiNATURE PAGiES 1 (CLI AL LOCATIONS FOR SIONATURE� REQUESTED: pproval of attached resolution wnich pd tes tax increment financing policies to be adhered to by the city in the administration o t e city`s existing tax increment districts and in the consideration of anp proposed new is ricts. RECOMMENDATION8:Approvs(/U a Rsject(R) MITTEE/t�BEARq1 REPORT OPTIONAL _PLANNINCi COMMISSION _qVIL SERVICE W�AMISSION ANALY PHONE 1�. _qB COMMITTEE _ OOMM . _STAFF _ _DIBTRICT COURT _ SUPPORTS WHICH WUNqL OBJECTIVE4 II�kTIATINO PR08LEM.188UE.OPPOR7UNITY(1Nho.What,Whsn.Whero.NThy): Resolution is in response to City Counci �s reques:ted assessment of City's tax increment financing program. ADVANTAOEB IF APPROVED: 1. �rqposes a cor�rehens�..ve, wxitten Cit p licy� on tax increment �inancing. ; 2. Proposed a system o� periodic rev3ew y he City Council of the per,formance of the City's ' tax incre�ent dist�^icts. DIBADVANTAQE8 IF APPROVED: None. DI8AGVANTA(iE8 IF NOT APPROVED: City Council will continue to xe�yiew acting eg rding the City�s tax increment districts without a corqprehensive wx�tten City policy n ax increment financing. Council Research Center s�„w 0 6 `��$9 TOTAL AMOUNT OF TRANSACTION = N� T/REVENUE BUDQETED(CIRCLE ONE) YES NO FUNDINO SOURCE � VITY NUM�R NA FlWWGAL INWRMATION:(EXPWI� � wv`tit�t�Cc�-� Council File #` �/! �Z�j� Green Sheet �` . R S LUTION � CITY OF SAI T U M NESOTA i Presented By .� - Referred To Comm t ee: Date WHEREAS, the City of Saint Paul h s en tax increment financing districts, created between 1977 and 1990, and WHEREAS, these districts have bee a integral part of the City's efforts to remove physical blight, provide decent ho sing for all its citizens, stimulate economic development in order to provi e obs and bolster the tax base, and provide quality puolic services, and WHERF.A.S, the City has used its ta i crement financing powers conservatively, prudently, and effectively, NOW, THEREFORE, BE IT RESOLVED th t he Mayor and administration adhere to thE �aAing tax increment financing poli ie in the administration of the City's � existing tax increment districts and i t consideration of any proposed new districts. ,� ,�� 'o lae.. �w�,� cm ZZ` Z`� � , �� T. t. F t �� G�?�I- � �l`c�- � ..---. _ � --- _ ---_ � � ----- a,,,., da�-- �"�,L �� V �r�': _-- -- � � � � / � � � �� l.�►�(,►�d X �30� Yeas Navs Abse t Requested by Department of: zmon OSW1tZ on acca ee — ettman une B : i son y Adopted by Council: Date Form Approved by City Attorney Adoption Certified by Council Secreta y gy: BY= Approved by Mayor for Submission to Council Approved by Mayor: Date Sy: By: ��-�a�"s- R4`�l*=o. s GITY OF S I T PAUL o � ; OFFICE OF H MAYOR ° I{�ii : �� 347 CI Y ALL '�� SAINT PAUL, IN ESOTA 55102 JAMESSCHEIBEL (612) 298 4323 MAYOR July 24, 1990 President Bill Wilson and Members of the City Council 7th Floor City Hall Saint Paul, Minnesota 55102 Dear President Wilson and Members o t e City Council: With this letter I am transmitting to ou the Tax Increment Financing Status Report and Policy Recommendation. Th s document was developed by PED staff upon the request of the City Counc l nd has received thorough review by the Council's Finance Committee. Saint Paul has never had a compre n 've, written policy on the use of tax increment financing. By adopting th recommended policies will you affirm that: - tax increment will on y e used for vital projects for which other funding is not feasib e; - bonded indebtedness il be avoided whenever possible; - revenue bonds will b p eferred rather than general obligation bonds to preclude a ur en on the property tax base of the city; that - conservative financ'al ethods will be used to further reduce risk; - a Progress Report w 11 be prepared for each district, beginning with the fifth year of life, that summarizes the attainments, remaining objectiv , dditional development opportunities, financial conditio , d prospects for district decertification or distribution of ta i crements; and - a Fiscal Impact St te ent will be prepared in connection with any proposed amendment to a district, which will clarify the financial consequences of a ro al or disapproval of the proposed amendment. -continued- s�4s rinted on Recycled Paper �c�I-/�.�.5_ President Wilson and Members of t e ity Council July 24, 1990 Page Two , I recommend you adopt the tax inc�em nt policies contained in the enclosed document. By so doing, you will $ro ide for the continued prudent use of a valuable redevelopment tool. Thank you for your consideration. Si e ely, J Scheibel Mayor JS:rb K:KSL:TRANSMIT � �� aiii'ii3a,� GITY O AINT PAUL OFFICE F HE CITY COUNCIL Members: Janice Rettman, Chair Roger Goswitz Paula Maccabee JANICS RETTMAN Counc�7person COM I EE REPORT FINANCE, MANAGEME T, AND PERSONNEL COMMITTEE J L 23, 1990 1. Call to order; introduction o m mbers, staff, guests; announcement of si n-u sheet a roval of min te of Jul 16 1990 meetin . Minutes were laid over due to la k of a quorum. 2. Discussion items - S ecific B' d t Goals and Policies. Consensus Budget Goals and P i 'es were discussed. . Resolution 89-1255 - updatin t increment financing policies to be adhered to by the City in th a inistration of its existing tax increment districts and in the con;ide at' n of any proposed new districts. (Referred from Council 7f18/ 9, laid over in Committee 10/16/89, 3/12/90 and 7 2 90 Referred to Council without ec mmendation due to lack of a quorum. Substitute resalution and a le n document wiil be submitted. 4. resen a ion by Jane McPeak, Ci y Attorney, regarding the request for payment of attorney's fees f r heryl Indehar, Carolen Bailey, and Richard Simmons of the Polic D partment. (Laid over in Committee 6 18 90 Referred to Council without e� mmendation due to lack of a quorum. Substitute resolution will b s bmitted. 5. Resolution 90-769 - amending th Capital Improvement Budget by trans- ferring $400,000 from Shepar R ad reconstruction project to the current on-going Shepard Road projec f r consulting design fees. (Referred fram Council 5 8 90 laid ov r 'n Committee 7 9 90 Referred to Council without f� mm�n�ation due to lack of a quorum. Commi ttee r�quested that a � ," � ��,,�� ,;f r�� - d to the resol uti on. CITY HALL ROOM NO.718 SAINT PAUL,MINNESOTA 55102 612/298-5289 S�s 46 ��F�� -� � . PURPOSE S A MENT Since the 1990 Legislative session has ended and staff as nalyzed the impact of the significant changes to the tax increment financing program,we are again bri gin this report to you for discussion of the Council's Tax Increment Financing Policy. The report does three things: first,answers the Ciry Council's specific que ion about potential for excess increment from the Ciry's t�increment districts; second,pro�oses,for the first time,a comp ehe sive,written Ciry policy on t�increment financing; and third,proposes a system of periodic scruti by he City Council of the performance of the City's tax increment districts(called the"Progress R por ".) 1 �� TAB F CONTENTS Pa�e PURPOSE STATEMENT 1 TABLE OF CONTENTS 2 STATUS REPORT Summary of Accomplishments 3 Chart of Key Data 5 Captured Value in Tax Increment Dis rict 8 Accomplishments 9 Bonded IndeUtedness 11 Financial Practices 12 Leveraging Private Investment 13 Public Involvement in Tax Increment ec sion-making 14 Administrative E�enses 15 Fiscal Disparities 16 The Legislature and Tax Increment na ing 17 RE UEST FOR CITY C NCIL A TIO 20 REHEN IVE TA N REMENT P LI IE Summary 22 Policy Recommendations 23 Progress Report-New Housing and lig ted Lands 30 Progress Report-Hammond Buildi 33 Progress Report-West Midway Dis ict 34 APPENDIX 35 2 ��-��-.�' SUMMARY OF A C MPLISHMENTS Saint Paul has used its tax increment financing auth ity onservatively and effectively to build the city's tax base with a minimum of financial risk and to promot ot er city goals. The City has created 11 tax increment districts since 1976;one district was decertified in ea ly 1 90. Saint Paul's investment of$100 million in its tax inc m t districts has leveraged over$800 million in non-city investment. Saint Paul has employed a high degree of citizen pa tici ation in its ta�c increment process. The CIB Committee reviews district financing plans,the Pla nin Cornmission reviews and approves redevelopment plans,and affected District Councils review plans. Saint Paul has complied with state taY increment� an ng law;more important,the Ciry has complied with the spirit of the law. Saint Paul has used t�incre ent 'nancing for the redevelopment of blighted areas and for vital projects that have added needed jobs and ou ing,and bolstered the city's properry tax base. Using tu�increment financing,Saint Paul has: HousinQ: Created two housing districts,bo h s ccessful,but with different aims. Park Nursery added 300 units of housing to the ciry's toc ;240 of the units are condominiums limited to people over age 55-the goal being to fr e u single family housing for young families. The New Housing and Blighted Lands dis ict edeveloped blighted and previously unbuildable land and has added 812 units of hous ng, 42 of them available to people of low and moderate income. Jobs: Assisted local Uusiness people i sal aging the Waldorf Company for Saint Paul. The alternative was the loss of 900 j bs t Saint Paul and the state. Energy Park added more than 3,000 joUs. Neighborhoods: Embarked on major efforts to ede elop the city's riverfront and neighUorhood commercial strips. To date the significant ew evelopment in these areas are the Department of Revenue,Spruce Tree Centre, ee er Square,and the Capitol Office Building. Downtown: Assisted in the resurgence of t e c 's downtown,which was declining in real estate market value in the middle 1970s. T inc ement has Ueen,and continues to be,a vital part of the resurgence of downtown. Lar e s le public investment was necessary to attract private investment. Without large fe eral assistance (as in the old urban renewal program),t� increment is the only means t e ci has to make the needed public improvements. Ener�v Park: Created Energy Park-a new o uniry built on what would otherwise be derelict or underused railroad land.In ost ounties in Minnesota a ptace the size of Energy Park would be the dominant com uni . Like the downtown,the project was made possiUle only by large public investment a ad f private investment. Energy Park has added retail,office, and industrial employment t th ciry plus new housing. Over 1100 of the 3700 permanent jobs were taken Uy people of low nd moderate income,and 160 of the 870 housing units are available to people of low a m derate income. 3 ��=�a��_ Ta�t increment financing has allowed the city to make he ublic improvements necessary to accomplish these development goals because it uses the taxes from the esu ing developments to pay for the public's investment. We use real estate tax to promote real e ate rowth and get important side benefits such as jobs and housing for targeted groups. Further,the use of �i crement allows the ciry to accomplish these goals with little or no use of general oUligation debt. 4 . � � � ` � � �.3 N f� P O O P N CO O O O O f0 YI � N N O O N N O u'1 00 � Y1 GO U' � N n +�i 01 �i m +�"i M G tG v1 7 N 7 m V1 �d O .-� O a� 0 0 .� .e a .c a .-i m � °w e > o o w m > 3 F N �a� U O 'O O Zr�+ �o' a�i .� a�i E w � > � E �•�i 7 �x '�O 7 3 7y+ N ae +�+ p�', F .-�i W a�0 a�0 A �-+ co m o o v o ao 0 0 0 0 - a rn C � N N O O � � �-I e-1 +1 .� O O M d ('i 1� m 00 M � �!1 m U .-1 1� CD N y'. 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V1 N �D Of W O r7 O � N O .i � � � O 1� •.i N c0 N 'O .-I .�-� � e-1 •� O O G 'O (O 1 O7 '�i+ •.-I � me o�D .�-� m � a�.7 � T a� +�i H W N 30 o v oi w o .-�i N 3 � ro �o £ > n q � � � C P � VEl � -1 Ne � CJ O a � � p 3W �0 i� D+ U • 'O � H .-OI N .�-1 W C A � W O N D •.i �.i O N �l N .-1 � y b � i�i .b-I � o O � C w � � y a 3 �.�i rn �i v .-�i aNO rn rn o o .N oo rn ro rn rn rn m c�u v �.Ci .-� .� � � . _ y 'o � O .-i � M N p�q x H � a�i w U � v u ,-�i a w w ,e4 U .{ ry y,� •� U N � �"+ � SL N o � g .., U W U i-�i � � � � m o .�i ro m ,�i � �, �, s d Q Q a� C m �n � eo a �.�i �i �C .G J� �1 A +1 W t/! C. m U U Ul ul a� �-i N 'i5 N 7 �.i ',a .-i W T! N +i .M-� o � q , � � ca � v � ,� ,� •a a a d a .a m a r. .� w d a, .-� a� � a�, a�, o �.�i c� ti V � e ro d ro m a� eo a N a m a .N m m N E m m � o o a a� � W N •.� O N o a� ..��R O •n N •n •a % C4 }C •� � �d N ',.�•.� FI .-1 � .-1 O ��N H A � G A H W N W N U O C] W H q O D U U H ��C] O CJ H O O H U F E 6 F 6 • � � � � V rn .s a o o � �o W .r .-i N �O � O O 10 O � N N � .� a .+ .� f� z 3 N V] G > O F U W N o .� E+ E E aC� m O 7S.�i N m r1 N .��y m m ~ p m � O � a m � m �n �n o o �o 0 m .. .. ,n O> O O N � N N C W ° � H � � N N .i F (�O � G '� G � h � � U M .-1 .-1 > F � n > m � � � � � a w � .F+ w � � + + o o n a m .�+ .�+ o 0 o ro eo o� o 0 0 o ro .�n � N N ..�i v1 v1 aD aD 'O � ^ O N -.-1 {a�7 Ol � .r t0 O +i M ,�•1 � � � N V Y � � E O .-I B • O W w .e o is .� w p N .-�i O t7 .��1 .-�p1� N .-1 i� p O � E t) a�.� O a +� C�L � t� F�i �-�i tA U . ,� O IG a1 �1 CD O O a� 'O O O �D.\i q � � a�.� E • a� c � O a1 eo a .� .� .� F. i� it .0 +y\ O� V) C. m t� U W p s� .-1 7 7 m 'O N .9 +� D .-1 �0 'O �0 +i .a w u o o +� o o a •+ •+ .� ..� ..� o a o a .�+ .r O ++ G � G � o .. a� F m .� G e w o A �r +� o m o .� a� � • m u .� U 7 U ta m O Opy r1 �D �o M q O Il J m N T t� a0 V O O N y�++ M.��I 7 � O �a O y� 7 G �,p N O a O �0 tf C W F G O D U f� F p O O U +y O O F U F E < 7 � ��a� CAPTUR D AL E: For taxes payable in 1990 tax increment districts cap re .9%of Saint Pau('s ta�c base,up from 8.7% for Pay 1989. 1fie proportion of the ciry's real estate t�base that ' ca tured by tax increment districts has risen steadily since 1978. (Saint Paul had a previous tax incremen dist ict,the Downtown Development District#1,that was created in 1974 and terminated in 1978 and fold d i to the Downtown and Seventh Place district. Downtown Development District#1 captured a sm 1 a declining part of the tax base for taxes payable in 1975 through 1977.) Of the 283 local governments sin tax increment for Pay 1989(no Pay 1990 data are available),48(or 17%) had higher percentages than Sai t Paul's. Eighteen cities had more than 15% captured,including five over 20%. Minneapolis ha mo e than 11%captured for Pay 1989. (See Table 2 in the Appendix.) T'he new tax base is captured by t�increment distr cts nly long enough to accomplish development objectives and to pay off any debt incurred for puU c i provements. It has always been the intention of the city to return the newly-developed tax base to the ne al t�roles as soon as possible. The Council has already acted to close the Park Nursery district ear y a the administration is examining the early closing of the Hammond Building district. $ ��s�" A C M LI HMEN PARK NURSERY(Created 1977) The Wilder Foundation,with the assistance of the built 60 townhouse and 240 condominium units, now called Wilder Park. T'he condominium units a av 'lable only to persons age 55 and older. One of the goals of the district was to provide housing suitable or'empry-nesters"in order to free up single family housing for young families. Tax increments also paid part of the cost of the Ed ecu Ue Recreation Center. In 1988$100,000 of excess increments were distributed to the taxing jurisdicti ns, nd the Council has already resolved to cease collecting increments at the end of 1989. A resolu 'on as passed by the City Council to terminate the district as of February 1, 1990. DOWNTOWN AND SEVENTH PLACE(1978) Since the creation of this tax increment district in 9'7 Saint Paul's downtown has made a dramatic resurgence. Properry values in the old Downtown De lopment District#1 were dropping in the middle 1970s-the assessed value captured by that distric dr ped to zero for taares payable in 1978. Worse,the downtown as a whole was in decline. The market al of downtown property fell by$15 million from Pay 1976 to Pay 1978. Downtown began to rebound P 1979 and has not stopped increasing in value since. The total market value of downtown,exclusive of he alue captured by the Downtown tax increment district, rose from$204 million for Pay 1978 to$642 milli n f r Pay 1989. The list of publicly-assisted projects in the Down w district is a catalogue of Saint Paul's vital downtown core: Block 7A (Science Museum an Ga ery Plaza) Town Square World Trade Center Galtier Plaza 39 skyway bridges Civic Center renovation Block 28 (HEMAR) District Heating Hotel Saint Paul The ciry's investment in puUlic improvements, s I eraged significant private investment-roughly seven dollars for every city dollar invested. Of the pri ate �nvestment,64%was privately financed,and 36%revenue bond financed. This dynamic growth has not been confined to he increment district;the rest of downtown is also growing. The district has been a critical part o the esurgence of downtown,a resurgence that is not, however,confined to the district. The largest rr t construction project in the ciry-the Saint Paul Companies'expansion of$40 million or more is o tside the district and is entirely privately financed. In November 1989,$18.6 million of tax incre nt evenue bonds were sold. Uses of the proceeds include a parking ramp,skyways and other puUlic impro em nts which will stimulate private development in the downtown core. 9 ��..�y�i�s.�_ ENERGY PARK(1981) Energy Park represents Saint Paul's most ambiti us nd visionary use of tax increment-an effort to create an entire,energy-efficient community on underuse rail oad properry. The effort has been a success. The market value of property in the district has' cr sed by over$80 million. The ciry made a significant investment which leveraged $17 million in feder t gr nts and$195 million in private investment. Energy Park includes industrial development,re ail, ffice,and 871 units of energy efficient housing- 160 of which are assisted. Current employment is abo 37 0, 1170 of which are filled by hard-to-employ workers. NEW HOUSING AND BLIGHTED LANDS 198 } This district was created for two general purpo s: rst to create more housing opportuniry in the ciry, especially for low and moderate income people,and second,to redevelop Ulighted or"unbuildable"land in the city to taxable uses. To the end of 1988,th dis ict has aided in the construction of 812 units of housing, half rental and half ownership;642 of the units re vailable to low and moderate income people. Ten of the district's 22 sites have been developed,and thr si s have been dropped from the district. Eight sites with development potential remain. NEIGHB RHO D B INESS DEVEL P E PR GRAM This district was created as the first stage of t inc ement assistance to the Saint Paul Neighborhood Business Development Program. The Hammo d ildin project involved a loan from the ciry's UDAG Revolving Loan F�nd and revenue bond to re abil tate a vacant office building on Universiry Avenue. In 1988 increment from the Hammond distric w combined with a pledge of increments from the two new districts in the Neighborhood Business Devel m t Program: �nruce Tree-Metz(1987) and Scattered Site (1988) to support a bond issue for public impr ve ents in the new district. This"pooling" of increments was part of the original Hammond plan-the distr' t w rntended to provide seed money for a wider program. WEST MIDWAY(Waldorf� (1985) The ciry was able to use tax increment financi g t keep a sound employer in Saint Paul and preserve over 900 good-paying jobs. The out-of-state owner of 's aint Paul paper plant wanted to sell in 1984 and the city's assistance helped a group of local Uusiness�e ple o buy the plant and other assets. In return,the local group agreed to keep their new corporate headquar ers n Saint Paul and maintain production at current levels for at least ten years,make at least$1 million of' pr vements over four years,and pay properry taxes at a minimum value of$25,370,000 through the li e of the district. Without the local group's purchase,the plant would probaUly have closed. RIVERFRONT(1987) The city is in the midst of making extensive bli improvements. The first major development-the new Department of Revenue Building-opened i 19 8. WESTGATE(1987) The Port Authoriry is in the midst of extensi e p btic improvements. TWIN CITY TEST'ING(1989) The city is in the midst of public improveme ts. 10 BONDED I D BTEDNESS Saint Paul has been a conservative user of bonded d Ut ' tax increment districts,in accordance with our informal policy,and has generally avoided general lig tion debt. The last g.o.Uond issue for a tax increment project was the 1985 issue of$10,215,00 for he World Trade Center project. At the end of 1989 total debt outstanding in the ci 's t increment districts was$180,572,294. Of the total, $16,045,000 is general obligation debt,and$164,52 ,29 revenue-based. Bonded debt has increased since 1985 as the ciry h e Uarked on a series of new districts in the neighborhoods. Debt is naturally higher in the ear y ye rs of district life. Saint Paul has instead chosen to use less debt and finance some or all development acti itie in our tax increment districts with other ciry funds. In many Minnesota municipalities it is routine to i cu substantial debt at the outset of every tax increment district. The last state-wide published bond data e f r 12/31/88;they show twenty cities with more than$10 million in tax increment district debt. The ratio U twe n captured tax capacity and debt is a rough measure of the income stream available to pay deUt,and ther ,for a measure of relative risk. Of the twenty cities,Saint Paul has the highest captured tax capacity/debt ra io .41. Only two of the other cities have a ratio greater than.30. TaUle 3 in the Appendix details the debt of the C ry's �incrernent districts. Table 4 compares Saint Paul's tax increment debt and captured tax capacity to the 1VIinnesota cities. 11 (:/�'�`/�33� FIN CI PRA TT E Tax increment districts are wlnerable to two f rce Ueyond the control of the ciry: the marketplace and the legislature. We can influence,but not direct,t e p ce and scale of development. We can advise the legislature.But,less real estate development i a d strict will certainly mean less tax increment revenue to the district;and changes to the properry tax syste oft n mean a decline in increment revenues. Because of these uncertainties,Saint Paul has Iw s used conservative financial methods that minimize the risk of the public investment in t�increment ist cts. We: - use conservative revenue nrojections,bas d on zero inflation in most cases,and based only on development that seems certain.Proj cti s that assume a generous rate of inflation or development that is not certain could lead to over- sti ation of increment revenues and lead the city to make poor investment decisions. - lan for collection of 1 0 of incr nt or the full eriod allowable. T'his is really a fail-safe measure. If,for some reason,increm nt evenues fall short of projections,we are able to continue collections until we have recouped o r co ts. If increment revenues meet or exceed projections,the district can either support new public acti ity or Ue closed early(as with the Park Nursery district). - evaluate each re uest for develo er sis nce individualt . We rigorously evaluate each request through pro forma analysis,and assis on those that need assistance and that fulfill a district development goal. - use assessment a reements wheneve le 1 and feasible. These agreements oblige a developer to pay taxes at predetermined level of mark t v uation as a minimum. The counry assessor may value the pro�erty at a higher rate Uut not a lo er ne during the life of the agreement. In this way the tu� increment district is guaranteed a mi im m level of increment revenue. 12 ��d�/a�_ LEVERA IN P I TE IN TMENT The goal of creating tax increment districts is to in uce rivate investment. The financial mechanism of the district allows the city to make the necessary up-fr nt blic improvements that encourage private interests to invest. The ciry's willingness and abiliry to make t u front investment also leverages,in some cases,federal and state investment in our projects. Because the ciry's investment comes first, as a pre ond tion to private investment,district leverage ratios are poor if ineasured during the initial years of distric tife The leverage ratio makes sense only for districts that have been operating at least four years and we ha e n t computed ratios for the districts created since 1986. The table below shows the ciry's leverage ratios in our six tax increment districts created prior to 1987, including all investment through 12/31/88. The° iry" igure represents the total invested from ciry-controlled funds,including the proceeds of general oUligatio an tax increment revenue bonds,tax levy funds,other development funds,Port Authoriry funds,and C B We have included CDBG,even though it is federal money,because it is an entitlement of the city. The"non-city" figure represents the total invest ent y other parties. The great majoriry of this amount is private investment,including that financed thro h RA and Port Authority revenue bonds. We count revenue bond amounts as non-city Uecause they re bligations of the private parties,not the ciry,and are repaid by the private parties. "Non-city" also in ud Minneapolis/Saint Paul Family Housing F�nd monies and competitive state and federal grants(notabl U AGs). In the case of bonds,in both"city" and "non-ci ",t e principal amount,including any costs of issuance,are used in the calculation,but interest is not. As th y productive investment,the income stream that is generated pays the interest as well as the princi al o the debt. TAX INCREMENT DIS I INVESTMENT AND LEVERAGE (Th ou 12/31/88) Leverage nvestment City: District Created Ci Non-Citv Non-Citv Park Nursery 1977 $ ,0 1,025 $ 14,109,275 1:4.65 Downtown 1978 14 ,2 7,011 969,201,876 1:6.58 Energy Park 1981 4 ,6 6,984 212,628,760 1:4.76 New Housing 1981 ,4 2,266 41,251,051 1:4.90 Hammond Building 1982 2 0,000 1,850,000 1:6.61 West Midway 1985 4, 0,000 21,736,249 1:4.53 Spruce Tree-Metz 1987 2, 74,631 20,727,500 1:8.05 Riverfront 1987 7, 76,737 28,300,000 1:3.79 Totals $2 8, 88,654 $1,309,804,711 1:5.99 13 ��;��s P BLI INV LVEMENT I IN REMENT DE I I N-MAKIN Saint Paul has consistently done more to involve t e p lic in t�increment decision-making than is required by state law. The statute basically has three pertinent requirem ts: 1. Public Hearings in front of the C unc I at which the proposed tax increment financing plan is discussed; 2. Public Notice in a newspaper of g ne t circulation at least ten days before the public hearing;and 3. Opportuniry for the School Boar an County Board to review the plan for at least 30 days before the public hearing. We have always had more public involvement tha req ired and propose that our e�isting procedures be formally adopted as policy. Ta7t increment financing plans re so reviewed by: The HRA Board,as the administering au hor ty; The CIB Committee; The Plannin�Commission (in the case of red velopment districts); District Councils affected by proposed di ric or amendments;as well as The Citv Council as the approving Uody. This extensive public involvement extends the pr ess f creating or amending tax increment districts,but we believe the opportunity for public discussion to be vital. An a le of the time required for review and approval is the Riverfront district,created in 1987. Under ideal conditions, he view and approval would have taken 18 weeks from the first submission to the Planning Commission of the re uir d amendment to the Comprehensive Plan to Ciry Council approval of the district financing plan. (The process actuall to k much longer because of necessary changes.) This review process cannot,of course,begin until after a great deal o sta work has been done. 14 C��/°7,�`� ADMINI T ATIVE EXPENSES State law currently allows the administering author o a tax increment district to use as much as 10%of the districYs increment to pay for qualified administrative expen es. he 10%limit is imposed over the life of the district rather than on an annual basis. "Administrative expenses" are defined generally in he atute to mean all e�enditures by the authority except: land acquisition;development costs,including related c sul ing services;relocation costs;and bonding costs. The definition specifically includes payment for Uond,fiscal,plann g, r development consultants. Saint Paul has chosen not to take reimbursement f r a inistrative expenses from most tax increment districts in most years,though we have increased reimbursement in ece t years due to continued erosion of state and federal development funds;in some cases at a lower leve!t an he statutory 10%limit. The total amount of increment used to reimburse the city for administrative expense,thro gh t e end of 1989,was$3,344,026-(ess than 4%of increment collected to date. The reimbursement is for act�ial ost only-primarily staff time. Table 6 in the Appendix details administrative exp se by district. �'�✓�-ias5" I AL DI PA ITIE Tax increment financing and the Metropolitan ax ase Sharing Law,known commonly as the fiscal dis�arities pool, interact in a way that can affect the city's gene I� perty tax rate. Under fiscal disparities all metro municipalitie co tribute a portion (currently 40%) of their post-1971 growth in commercial-industrial tax base to the metro ar a p ol. T'he tax base in the pool is then distributed to municipalities based on the fiscal disparities formula. Saint Paul h be n a net gainer under fiscal disparities-our distribution has always exceeded our contribution. TaY increment districts are treated in one of o w ys in the fiscal disparities calculation. Pre-19'79 districts(Park Nursery and the original Downtown,excluding the Blo k 4 amendment) are excluded. Growth in commercial-industrial t�base in those districts is ignored in the calculation f th ciry's contribution;the districts have no effect on fiscal disparities. Post-1979 districts(i.e.all the others in the ci ,in luding the Block 40 portion of the Downtown district)are included in the fiscal disparities calculation;40% of the c mm rcial-industrial growth in those districts must be contributed to the metro pooL But the districts do not necessari co tribute directly to the pool. At the time of district creation,the ciry elects whether to pay the district's fiscal dispa itie contribution from the district or from the general tax base. Saint Paul has elected not to contribute from any distric Uurden for contribution then falls on the general ta7t base. In 1988 the legislature amended the TIF Act o al ow cities to Uegin changing the fiscal disparities election of Post-1979 districts. 16 � �iia� THE LE ISLA1 RE AND TA IN REMENT FINANCIN Minnesota cities have had tax increment financing authoriry s nce he early 1970s,in the early years under a variety of statutes. In 1979,the T�Increment Financing Act codified he 1 w in one location. The state law has been amended almost every legislative session since 1979. In 1986 the Legi ativ Auditor issued an extensive report on the use of tax increment financing in Minnesota,spurring more legislative cti ty. The tax increment financing amendments made in 1988 - 1990 were extensive,severely restricting the use of t in ement financing in existing districts and limiting city authority to create new districts. Major elements of the 19 0 a endments are as follows(the following summary is based upon an analysis by Holmes&Graven dated May 2, 1990)• Financial Penalties. The Legislature historically esig ed tax increment financing to dedicate t�value growth to repayment of the puUlic development costs assoc ate with a taY increment district. Since this growth was not available to the local taxing jurisdictions,it was t c unted when determining local taxing capaciry for the purposes of state aid payments to them. The 1990 Legislature changed this historical p itio for new districts created after April 30, 1990. The impact of the change is immediate for economic develop en and soils condition districts,but phased in for redevelopment,housing,hazardous substance nd enewal and renovation districts. Under the new legislation,one first calculate the amount by which state aide payments would decline if all growth in tax increment districts would have cc red without creation of the districts. This hypothetical amount is then deducted from the sponsoring city's oca Government Aid (LGA) and Homestead and Agricultural Credit Aid (HACA)payments. Surplus tax ncr ments cannot be used to offset this penalry. Redevelovment Districts. The Legislature ad two significant changes to its definition of redevelopment districts. First,the obsolescence test(whic au horized qualification of a district if parcels comprising 70 percent of the area were occupied,20 percent of t e b 'Idings were structurally substandard and 30 percent of the buildings required renovation)was elimin ted A 25 year redevelopment district can only be created if 50 percent of the buildings are substandard r if t consists of underutilized railroad properry. Secondly,the amended law adds a new I' it ion to the definition of a substandard building. A building cannot be found to be substandard if(1) the b Idi is in compliance with the relevant building code,or(2)it is not in compliance,but would be at a cost of le s t n 15 percent of replacement cost. This finding can be based upon reasonably avai(able evidence and does ot equire interior ins�ection or independent,expert appraisal. Renewat and Renovation Districts. e o solescence test that was eliminated for redevelopment districts was added as a separate definition of rene al nd renovation districts. The durational limit was thereby shortened from 25 to 15 years for this type of di tric . Housine Districts. 'I'he percentage fai market value of a housing development which can be comprised of non-low and moderate income hou ng ses and still have the development qualify as a housing district was reduced from 30 percent to 20 perc nt. Economic Devetovment Districts. he amended tax increment law changes the criteria for the creation of economic development districts. ne f three findings must be made: (1) That it will discourage c m rce from moving to another state or ci ; (2) That it will increase em lo ent in the staie (not city);or (3) That it will preserve or nh nce the state's(not ciry's) tax base. 17 ��-ia.� Thus,a city can create an economic vel pment district in order to prevent a Uusiness from moving to another city in Minnesota,but can only use o e t attract businesses from outside the state,or local businesses looking for an additional location. In addition,as of May 1, 1990,no m e t an 10 percent of the square footage of an assisted facility can be used for anything other than manufacturi ,w rehousing,research and development and telemarketing. This 10 percent limit can be increased to 25 rc t for otherwise non-qualifying uses directly related and in support of the qualifying uses. Credit Enhanced Bonds. This newly efi ed term allows Uonds supported Uy tax increment from one district to also be backed by increments from o er istricts,if the issuer determines that it is necessary to make the Uonds marketable. Poolin Restrictions• Five-Year Rul e amendments require that 75 percent of the revenue derived from tax increment districts be spent in the di tric or pay debt service on bonds,the proceeds of which are spent in the district. Debt service on credit enha ce Uonds is exempted from this rule. Also,the new law requires that the q ali ing e�penditures be made in the first five years of a district or that they thereafter be limited to payment of lig tions incurred during the first five years. Beginning in the sixth year following certification,75 percent of he increments remaining after bond and contract payments must be used to prepay bonds or contracts,s tha the 25 percent expenditures outside the district becomes substantially less after the first five years. Enforcement Provisions. The Com issi ner of Revenue is mandated to enforce the provisions of the tax increment act. Any taxpayer can sue and recover cost,including attorneys'fees. Penalties include repayment of increment collected from non-yuali 'ng arcels and repayment of e�enditures not authorized by the act. In light of changing state legislation,the issu of' egislative risk" arises. However,changes to the tax increment statutes have generally not been retroactive. Thus cit s c n anticipate the new requirements and plan their new districts accordingly. Old districts are administered a or ing to the legislation in affect at the time of their certification. In addition,Saint Paul can protect itself from fu re egislative action by following the policies and principles detailed below on pages 23-29. 18 (/�'�� 4 'r/�� The Mayor is requesting that the City Council take o a tions concerning tax increment financing: 1. Approve the recommended compr en 've policies(Resolution attached); 2. Authorize PED to examine the ear cl se-out of the Hammond Building t�increment district and bring back a recommendation by t e a inistration to the City Council. 20 ��--�a.� TAX IN E ENT POLI Y Saint Paul has never had a comprehensive,written poli y o the use of tax increment financing. The Mayor and Council have established some basic finance policies in the Cap tal Ilocation Policies and the Mayor and PED have followed an informal policy in proposing new t�increment district . e hallmarks of the informal policy have been: - reliance on t�increment only for vit l pr jects for which other funding is not feasible; - avoidance of Uonded indebtedness w ene er possible; - preference for revenue bonds rather han general oUligation bonds to preclude a burden on the property t�base of the ciry; and - use of conservative financial method th further reduce risk. POLI Y: A set of recommended policies on tax increment fina cin is attached. 'The policies clarify and formalize our informal operating policies and add several new policies. All r co mended policies are consistent with the e�risting Capital Allocation Policies and Budget policies. The two mo t si nificant are: A Progress Report on each district,Ueginni g wi h the fifth year of life,that the administration will furnish to the Council annually. The Progress Report will ucc nctly state the accomplishments and prospects of the district. A Fiscal Impact Statement that the adminis rati n will furnish to the Ciry Council in connection with any proposed amendment to a district. The stat me t will clarify the financial consequences of approval or disapproval of the proposed amendment. 22 (,��'-/a S''S TAX IN REMENT FIN N IN P LI Y RE MMENDATIONS I. Policies A. Principles 1. Tax increment fina ing has Ueen a development financing method that allows the Ciryl to leverage significa t p 'vate,state,and federal investment without resorting to a city-wide properry t le . The Ciry's goals for he se of tax increment financing are: (a) to remove lig ; (b) to develop r r tain jobs,especially for dislocated workers and the disadvanta ed; (c) to foster e ono ic development in the neighborhoods and downtown to expand th city s property tax base;and (d) to develop or r tain affordaUle housing for people of low and moderate income. 2. The Ciry wi(1 consi er eating a tax increment finaneing district only when other development finan ing ethods are not feasiU(e or avai(able. 3. Each developer re ues for tax increment financing assistance will be evaluated on a project-Uy-project asi The City will extend only enough tax increment financing assistance to make the roject a viable investment. 4. The City does not'up rt a"cap" on the percentage of t�capacity captured by tax increment district Pr jects will Ue evaluated individually and assistance extended only to the minimum a ou t necessary to allow the project to proceed. 5. The Ciry will mini ize risks in new tax increment financing districts by: (a) using con erv tive financial projections that do not overstate the speed or value of the pr os d development or future levels of properry taYation; (b) securing ini um market value agreements whenever legal and feasible; (c) using"pa -as ou-go"financing rather than bonded debt whenever feasible in order to ini ize Uorrowing e�ense; (d) setting b nd aturiry schedules that are one or two years longer than our best estimate f t term needed for repayment;and -------------------- 1.Ciry means the City government proper or the H usi g and Redevelopment Authority or the Port Authoriry. 2 ��-��`�" (e) not dis ib ing tax increment from the district to the taxing jurisdictions until the de lop ent objectives have been substantially attained and sufficient reserve ar available to repay outstanding debt. B. District Operation 1. Tax increment nan ing districts will comply fully with federal and state law and existing Ciry financial p lici ,procedures,and plans. Z. 'I'he Authority ill c nsider distributing ta�t increment from a district or decertifying part of a distric wh feasible and prudent. 3. Beginning with he fth year of the tife of each district the Tax Increment Financine Annual Status e t will include a Progress Report of district performance.The Progress Repor will summarize the attainments,remaining objectives,additional development op or nities,financial condition,and prospects for district decertification or distribution t increments. C. District Decertification 1. T'he Ciry intend to mply with Minnesota Statutes Sections 469.176,Subd.2 and 469.1763,Subd. an decertify tax increment financing districts as soon as feasible, legal and prude t to dd the newly created ta�t base to the taxing jurisdictions. 2. No ta7t increme fin ncing district will be extended beyond its adopted durational limit. 3. At the discretio of e Ciry,a tax increment financing district may be decertified when all of the followi g h ve occurred: (a) The dev lop ent oUjectives as originally adopted and amended have been substan ally met,and: (b) In the c se general obligation bonds which may be outstanding,sufficient reserves exis for retirement of the bonds,including premiums,arbitrage rebates, nd ny other costs associated with prepayment. (c) In the c e o revenue bonds, (1.) uffi ient reserves exist for retirement of bonds,including premiums, rbi age reUates,and any other costs associated with prepayment; (2.) he ntity providing the security or credit enhancement for the bonds ro des its consent. (d) All oblig tio s of the t�increment Uond agreements have been completed. (e) No othe lie or financial obligation exists against the district or its t� increme t re enue stream. 2 ��y ias�_ II. Procedures A. District Creation The City will consider creatin a t increment financing district for the following purposes: - to remove blight; - to develop or retain j Us, specially for dislocated workers and the disadvantaged; - to foster economic d elo ment in the neighborhoods and downtown to e�and the ciry's property tax base; an - to develop or retain for aUle housing for people of low and moderate income. 1. The ta�t increment fi nci g plan will be evaluated for consistency with the Economic Development Strate ,C pital Allocation Policy,Budget Goals and Policies,elements of the Comprehensive Plan,Dis rict Ptan(s),and,as applicaUle,the Redevelopment District,Economic Development Distric or unicipal Development District Plan. 2. The tax increment fi 'anc g plan will inclucle the following elements as required by Minnesota Statutes 469.175,Su d. 1 (a) a statement f t objectives of the Authoriry2 for the project; (b) a statement s t the development program for the project,including the identification of any prop ry t at the Authoriry intends to acquire; (c) a list of any eve opment activities for which contracts have been entered into at the time of the rep ration of the plan,and details of the contract; (d) a descriptio of he type of development reasonably expected to take place within the project,and the ate when the development is likely to occur; (e) estimates of the ollowing: (1.) cos of e project,including administrative expenses; (2.) am unt of bonded indebtedness to Ue incurred; (3.) sou ces f revenue to finance or otherwise pay public costs; (4.) the mo recent net ta�t capaciry of taxable real property within the ta�t inc em nt financing district; (5.) the esti ated captured net tax capaciry of the tax increment financing district at co ple ion; and (6.) th dur tion of the ta�t increment�nancing district's existence; -------------------- 2.Authoriry means either the Housing and de lopment Authority or the Port Authority. 25 ��i�a.� (� two estimates f t e impact of the proposed tax increment financing district on the net taat capaciry o the ity,Counry,and School District. One estimate assumes that none of the project d t base growth would occur without public subsidy;the other assumes that all of the ro h would occur without any public subsidy. (g) identification d escription of studies and analyses used to make the determination that the propo ed evelopment or redevelopment,in the opinion of the City,would not reasonably be pe ted to occur solely through private investment within the reasonably foreseeaUle fu re nd therefore the use of tax increment financing is deemed necessary (the"But For" et mination); (h) identification o all ax parcels to be included in the district and; (i) an estimate of t e i pact of the proposed development on the Ciry's fiscal disparities contribution an dis ribution. 3. Plans for proposed tax i re ent districts which wou(d be subject to the provisions of Minnesota Statutes 273. 399 must include an analysis of the impact of a proposed district on the Ciry's local governm t a s and homestead and agricultural credit aid. 4. The Ciry Attorney will re de to the City Council opinions on whether the ta�c increment financing plan's factual fi din s conform with the requirements of the State law. 5. As provided in Minnesot Sta tes 469.175,Subd.3,the Ciry Council must make the following findings: (a) the type of distric (re evelopment,renewal/renovation,mined underground space development,hou ing soils condition,economic development); (b) the"But For" det rmi ation; (c) that the tax incre ent inancing plan conforms to the general plan for the development or redevelopment f t Ciry as a whole; (d) that the increment 'na cing plan will afford maximum opportunity,consistent with the sound needs of the Ci as a whole,for the development or redevelopment of the project by private e te rise,and (e) the elected method i t atment of the tax increment financing district under fiscal disparities. 6. In determining the classifica 'on f t�increment financing districts,the Authoriry will develop supporting documentation f r its determination,and present such documentation to the Ciry Council as part of the tax inc em nt financing plan. 7. T'he Authority will make the ro sed tax increment financing plan available for puUlic review by the following bodies: Ramsey Counry Board of Co mi ioners Saint Paul School Board Planning Commission (redeve op ent districts only) CIB Committee HRA Board City Council 2 �'�/�.5"`5_ affected District Council( 8. T'he Authority will publis a 1 al notice of the City Council public hearing at which approval of the tax increment financi g pl n will be considered. 9. The Authoriry will provid th proposed tax increment�nancing plan to Ramsey Counry and to the Saint Paul School Bo rd least 30 days prior to the public hearing before the City Council. 10. Upon approval of a taat i cre ent financing plan by the City Council the required documents will be forwarded to the a ey County Auditor who will certify the new district. 11. The Authoriry will make a di igent effort to locate all Uuilding permits issued within the district during the 18 months pr ced ng district creation and forward them to the Counry Auditor. 12. The Ciry will provide co ies f approved tax increment financing plans to the Saint Paul Puvlic LiUrary in order that th be easily available to the public. B. Financial Procedures 1. Revenue projections by con ultant: revenue projections prepared by Ciry staff and bond underwriters for all gen ral Uligation tax increment bond issues should be analyzed by the Ciry's Treasurer in ord r to etermine reasonaUleness. 2. The City Treasurer sh Id eview all revenue-Uacked and general obligation tax increment bond issues. 3. Tax increment financi g di trict accounts will be kept separate from other funds. 4. Whenever legal and fe sib the Authority will secure assessment agreements from developers guaranteeing a minim m arket level. 5. Annual�nancial repo ts ll be filed in accordance with the standards published by the State Auditor. The Ciry wil co tinue to publish an annual report more detailed than the State Auditor's requiremen ,in luding the Progress Reports on individual district performance. C. Use of Tax Increment 1. Capitalized interest ay e used for the payment of debt service for tax increment financing bonds during constr tio periods,or during periods when there are anticipated to be disparities between r cei t of revenue and debt service payment dates. 2. Other costs funded om ond sale proceeds: all other costs relating to any tax increment proposal may be fin ce with bond proceeds and included in the justification of the proposal. These costs include, ut re not limited to: design,acquisition and relocation,construction, bond counsel fees,c edi enhancement costs,reserve funds,other costs of issuance,and staff time. 3. No more than 10% f t gross tax increment received over the life of the district shall be used to pay administrativ e enses as defined in the state law. Each tax increment financing plan will specify the proj cte level,if any,of use of increment for administrative expenses. 4. Tax increments will be sed only for purposes allowed under the state law,in general: (a) Paying or cu ng the principal and interest on bonds or other obligation; 27 ��j/°?`�`�i (a) Paying or se uri g the principal and interest on bonds or other obligation; (b) Cost of publ c i rovements and redevelopment costs; (c) Interest rate red ction for low and moderate homebuyers; (d) Administrat e e enses. 5. When feasiUle,ta�t in re ent may be used to reimUurse other Ciry development funds that were used to pay allowabl pu lic costs within the district. 6. The use of revenue nd to finance public improvement commitments for economic development project is referred over other types of obligation. The City may consider using tax increment,t�abl b ds,or tax-exem�t revenue bonds for: - long term in est ents which serve the puUlic purpose; - parking pro osa ; - other proje -sp cific public redevelopment costs which leverage significant private, state,or fed ral nvestment. D. District Administration 1. T'he Authority will f'e a annual financial disclosure statement for all tax increment financing districts with the St e ditor and also publish the disclosure in a newspaper of general circulation Uefore J y 1 f the following year. 2. By February 1 of th fift year following the creation of a tax increment financing district the Authoriry will file w h t e Counry Auditor a statement of qualifying activiry on each parcel in the district. Parcels hi have had no qualifying activiry will be removed from the district. 3. Beginning with the fth ear following the creation of each tax increment financing district the Tax Increment Fina cin Annual tatus Re ort will include,at the end of the Descriptive History,a Progress ep rt detailing the district's attainments,remaining objectives,financial condition,and pros ect for decertification or distribution of tax increments. E. District Amendment 1. The following modi cati ns to a tax increment financing district will require formal amendment of the plan,includin all he public disclosure procedures: (a) Increase in he eographic area; (b) Increase in on ed indebtedness; (c) Decision to cap alize interest on existing Uonded deUt; (d) Increase in he roportion of the captured t�capaciry retained by the district; (e) Increase in ota increment e�enditures; 28 �lc�-�a.�' 2. The Authoriry will fu nis to the Ciry Council a Fiscal Impact Statement in conjunction with any t�increment financi g pl n amendment. The Statement will specify the effect of the amendment on the d rati n of the tax increment financing district and the projected return of excess increments to he t 'ng jurisdictions,and an assessment of the City's financial risk if there is a G.O.pledg o� �er-�oterr�l-��abi�k�i�tvok�ed.Other notential liabilities will also be analvzed. 29 ��i��s P GRESS REPORT: NEW HOUSING AND I HTED LANDS DEVELOPMENT PROJECT BACKGROUND When created by the City Council in 1981,th Ne Housing and Blighted Lands Tax Increment District consisted of 18 noncontiguous sites. (Each site contained on or ore parcels.) A district amendment in 1986 resulted in three sites being deleted from the district and four sites ein added,for a revised total of 19 noncontiguous sites. The original development objectives,as revis by the 1986 plan amendment,estimated the following housing production: NumUer of Total Housing U its 1,342 Number(Percentage) of Low and Moderate Income ou ing Units 1,003 (75%) Unit production was expected to include bot ne construction and rehabilitation. The plan defined "low and moderate income" in accordance with the then-existing tat tory definitions.T'hese definitions generally translate into 110 percent of area median income. ACHIEVEMENTS A summary of the actual housing production o-d te is provided in ExhiUit A. T'his summary shows that approximately 60 percent of the total unit development objecti h been reached,while 65 percent of the low/moderate income unit development objective has been reached. (In th words,the proportion of low/moderate income units produced to-date has exceeded the original expectation ) With one or two exceptions,site-Uy-site devel pm nt has occurred relatively close to the original objectives. On sites where actual development has been less inten e t n originally estimated,the reason for the reduced nurnber of units has been for neighborhood compatibility. (The R th nd Burns site,for example,was built at a lower density than allowed by zoning.) The Hazel Park site was acquired la ye r for a stormwater ponding area,and will have no housing development. Of the nineteen sites in the district,ten could e c nsidered "substantially complete": l. Baker School 2. Ellis Avenue 3. St.Theresa's 4. South-of-Front 5. Otto Mercer 6. Belvidere Park 7. Ruth&Burns 8. Lincoln School 9. Minnehaha/Kent 10. Concardia/Milton 30 ��'✓'/��/ Five sites have realized some new constructio or ehabilitation,but stitl hold potential for additional housing development: l. Selby Avenue 2. Nevada/Arkwright 3. Mississippi Terrace 4. Railroad Island 5. Etna-Birmingham T'hree sites have had no housing development but still hold potential: l. Bradley Street 2. Trout Brook Phase I 3. Union Gospel Missi n DEVELOPMENT OPPORTUNITIES Staff is analyzing the financing needs of the s alle ,hard-to-develop sites like Bradley Street and Nevada/Arkwright. A proposal for 30 cooperative housing units for e radley Street site is now under review by the neighborhood,the district planning council,and ciry staff. Significant new housing development opportu itie exist for both the Etna-Birmingham and the Trout Brook Phase II sites where there is an abiliry to assemble larg tra ts of land. Staff will be working with the district councils in these two areas to undertake major planning and design nal ses in order to develop financially feasible housing and land use plans. FINANCING In September 1986,the HRA issuecl $6,210,00 in ax increment revenue bonds to finance various public improvement activities for sites which had yet to be develop d. portion of the bond proceeds have also been used to reimburse the HRA for puUlic redevelopment costs paid fro no -tax increment sources prior to the 1986 bond sale. � Principal and interest on the Uonds are payabl sol ly from tax increments. The Uonds are further secured by an insurance policy issued by the AMBAC Indem iry orporation. The Uond indenture requires that tax increments from the District maintain at least a 125%Five Yea Co puted Average debt service coverage for the life of the bonds. Increments from the District have been suffici nt, us far,to satisfy this requirement. 31 , � AI � J ' O�i O) .� C +� M 7 U U O 'O .�-I 7 O O V N O v N � .c • n H L .� .� Z�y O�i m f� o � a �" �' . O ; a i � .�+ N � c o � o b a f%a �-m. o a o o � o c � o d V � 7 � 1-1 O O O o O O o o O o 0 0 0 0 o O O O I O O A 2 m +n-� m � � i N P� P�i F O C N � � v1 +E+ � F .^-I U O +y 01 .�-1 � A �-+ 7 � a c � �. r. .o mp �o 0 .m.+ CS .�i Z �� < ° ..�. t�d .-�i .-�Qi. a�i !+ i+ D+ D. � i� Z Z Z � Z T� � D+ D+ i+ N Z .+ � .� > E •�• � .,yi �1 m O o 'O 6 O U � � ti N r � � M 3 � 6� n Y'1 O .� 10 m O a O O O 01 aD a .-+ O 1 N 'O ri Y1 d N N .N T 10 N t� .-� N � I o N W � s ~ ~ 1 � U O ++ O U +r = a o M .a � ,�. a � ♦1 .-1 .r W N �/1 O rl tD aD d O O O O O aD d .� O I N O m F � .� V� t0 N N .-� d i0 N N .-� N .r i � u S1 I F � G a�t O � b � N +� d W U 1 � o o n� o � o o a> o 0 0 0 0 � � N � ° � o E�r a " s � " < m -� o e a � � • F � o c • o> o 0 o rn .� +� .-� o o e� o m o 0 0 0 0 0 0 �o m e .-� o i .�+ rn .-� a F m N b .�n-1 .Ni .� N '+ � � � C M 0.'I F � +� • �. ..�i �] � N 'O +Vi O� O a�.� n O�i m N .� F � .� aD O v1 P .-1 10 :O ED O O O O � O O O O � O 'O �yE '�O 00 � � pl '� .y v1 N v1 .� 10 N /D i � � a .0 +�i N � I 4 f7 �1 ll Z H �+ a .,�a�.� 'O s '�O ~�C � +Fi � m 7 C � F r+ ao o vi o .+ : o m o 0 0 0 : o 0 0 o i .+ .a o o � F M e .r v1 N � .� 10 N CD 1 � O J ./ O N Cpi at � � +�i +�i O � � i H v �i �.�i � G �I � .�i o G ♦1 f� M �+ � '� a�.i +�r � G ►a N .�i n O W O b ~ s s y U � � o c < m m o � x E -+ .°� L°o °c ° a o t� F O 7 o w 7 s N n �e0 0 .r a O m .��. W .�i � a0 � � z o F a w c x a � ►, x � °" w � o � � �c ro s�+ .� m r+ .a m m � o w a v� 4 E o n 7 vJ o 0 0 � .� R •+ fn t> > ►� W > 6 +� 'O m G t+ PO .G +� O t7 q C ' m < m O < � a p. a a ..� � O i o n o o fa �O kf .-�i � w � •• +p+ o �-oi a � a w o � .c a. �o .. .� s� .a � .. � m o .. .� a m a a .-i m a > o t c�i c °o � � m � .. .. � � a� ,!C .� 7 .� > a o ..i N C •� ++ N R O G o F� a� +� �tl � �t O m m ++ 4 O 4 J m � 7 ++ +� O 1+ O O .� N e7 �c O 1A R1 W VJ V] N Z E Oq 0.' C.' W iA ."'�- C .7 f U F F+ Z v .. v v 32 �-f.�-/a�' ROGRESS REPORT: H ND BUILDING DISTRICT BACKGROUND T'he Hammond Building t�increment distri w created in August 1982 as an economic development district. It was intended to be the first phase of the envision d S int Paul Neighborhood Business Development Program. The immediate objective of the district was t red velop the vacant Hammond Building into upgraded office space. 'The long term objective of the district was to ro uce tax increment to partially fund suUsequent phases of the Program. ACHIEVEMENTS The immediate objective was promptly attain d;t e Hammond Building was redeveloped and is now known as Iris Park Place. The project paid its first ta�t increment in 1 R4 and has been paying fu(1 incrernent since 1986. T'he long term objective was attained in 1987 he accumulated increment from the Hammond Building district was used to help estaUlish the Spruce Tree-Metz Bake t increment district,the second phase of the Neighborhood Business Development Program. In addition,future i re ents from the Hammond Building district were pledged as securiry on the Spruce Tree ramp bonds issued in 1988. , DEVELOPMENT OPPORTUNITIE : None in the Hammond district itself;develop en is complete. There are still significant opportunities in the Neighborhood Business Program. RECOMMENDATION: T'he Spruce Tree-Metz district is producing t in ement substantially in excess of original projections. T'he Hammond Building district could be closed if the Ciry is ble o secure the agreement of the Spruce Tree ramp bondholders to re(ease the pledge. We recommend that PE pur ue negotiations with bondholders. 33 ��a��, ROGRESS REPORT T MIDWAY DISTRICT BACKGROUND In October 1985,the City established the We Mi way tax increment district as an economic development district with the following objectives: 1. to discourage commerce,ind st or manufacturing from moving to another state; 2. to increase employment in th Ci of Saint Paul;and 3. to preserve and enhance the b se of the City of Saint Paul. In 1984,Champion International Corporation ffe ed their Saint Paul plant for sale in order to raise additional capital. A group of local investors and executives,und r t name of Waldorf Corporation,submitted an offer to buy the local plant and at the same time approached the Ci of aint Paul for financial participation in order to improve their chances for acceptance of their offer. As a result,the iry, hrough the Housing and Redevelopment Authoriry,acquired two industrial buildings and underlying land on th sou hwest corner of University Avenue and Vandalia Street. In addition, the Housing and Redevelopment Authoriry p ch ed the rights to excess steam in the future for the purpose of providing below market rate energy to industri l,c mmercial and residential users in the West Midway-South Saint Anthony Park Redevelopment Project Area. ACHIEVEMENTS The immed�ate ob�ective of keeping the Saint aul aper plant open was promptly attained,as Champion International Corporation accepted the Walclorf offer. In ex ha e for the Housing and Redevelopment Authoriry's acquisition of the surplus Waldorf Corporation assets,Waldorf a ree to: 1. maintain corporate headquart rs the Saint Paul plant for ten years; 2. maintain employment at curre t 1 els at the Saint Paul plant for ten years; 3. undertake a minimum of$1,0 0,0 0 over four years in improvements with the site;and 4. execute an assessment agreem nt r the period 1986- 1994 which indicates a market value of the remaining real properry at the al orf Corporatron at$25,370,000 for the term of the agreement,a substantial increase from the ost ecent value of approximately$'1,536,100. The Waldorf Corporation has honored the ter s o the agreement. The 900 jobs at the Saint Paul plant were retained through the use of tax increment financing. Th W Idorf Corporation has made signi�cant investment in the plant and its real property. In 1989,the Housing and Redevelopment Aut ri sold the properry it had acquired at University and Vandalia to HEI Development,Inc.for the construction of an 83 750 square foot office/showroom faci(ity. This$4.3 million facility will add to both the employment and tax bases of th ci . The project received loans totaling$43Q000&om the ta�t increment district. DEVELOPMENT OPPORTUNITIES None. Development is complete. The use of th ex ss steam rights purchased Uy the Housing and Redevelopment Authority for district heating no tonger seems li'ely ue to a fall in energy prices. RECOMMENDATION It is as yet unclear how Legislative changes to th pr perry tax system will affect the district. Monitor the fund balance for possible early closure. District will otherwise e ire i� 1993. 34 • ►t K ►f !! 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W O! 1 O1 O! � OI O1 1 Ol O/ � O� p� O� a: ., .+ .+ .. .. � ., � ... ..� ., � .� .. .. .. .. ... a � � o � , t. � , 6 • / . � ��-i�s�� Note to Table I Assumntions: � 1. Estimated market values will not be change by ounry or state Boards of Equalization. 2. The special session of the Legislature will co tin e the Pay'89 t�capaciry rates for taYes payable 1990. 3. Personal property valuations are the same f r P '90 as Pay'89. 4. Fiscal disparities net contribution is the sam fo Pay'90 and Pay'89. 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WHITE - CITV CLERK I PINK - FIN4NCE (�I TY O A I NT �A U L Council CANARV - DEPARTMENT BI.UE - MAVOR File NO. -' �� Counc 'l Resolution �� Presented By Referred To ' Committee: Date � �� Out of Committee By Date, � �i1HEREAS, the City of ai t Paul has even tax increment financing districts, created between 1 77 nd 1989, and WHEREAS, these distri s ave een an integral part of the City's efforts to remove physical b 'gh , rovide decent housing for all its citizens, stimulate economic ev 1 pment in order to provide jobs and bolster the tax base, and p vi e quality public services, and �fiE:.�,EAS, the City ha u ed its tax increment financing powers conservatively, prudently, d effectively, NOW, THEiR,EFORE, E IT RESOLVED that the Mayor and administration adhere to the followin� ax ' c ment financing policies in the administration of the City's existing t x in re ent districts and in the consideration of any proposed new istric s. 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B ` � By . ,; .,. , . _, :}_ : ,',,. E '�ii1TE R,CITV fLERK.` .�.. . . � � � . . CO11f1C1I ' PINK - FINANCE G I TY O F� S I �� T PA U L � CANARV - OEPARTMENT � . BLUE - MAVOR . � - . FI�e NO. .. � ; Council al�tion " ,- _ �.�- . � . Presented By `' - .,.� ,� , � Referred To ` �f-'' " ` -r- Committee: Date �r ��+ �� a� Out of Committee By Date �, �r j'' �H�sA�, t1t! C�t� a[ h�;�n �ts i�r�at �tt dist�s. � b� if'� �,!asd � �aa�►a. ta... e�ea �.sw � � wn at ts. €�s �ifara �e �.a►. Pi�Ta�l b� �st io� !e� � it� � ,,�. dfla�s. � �o�t t � o[�s t�a p�o�rid� �o�6s a�1 �' n�.- � ' . . � . �" �! �Z Ot�!• t� ��t �! � � Mss�ta4s, t�s t� t.s �t �ot�s po�r.r. ea�s.�rr,�►�b►, p�t�r,�#wd , �� , �HB�lB��« �E I? flLYB� t1�tt ths� Ys�oe tea aA�a� adia�rr� t� tN to�o�rfa� �is t �� pe�r ia tla aed�l�ts+�t ,,:, �sri tla C�►'� � �c d�s�tr�r an�d Lr th� �rat�t . - , �t �oT pr�pt�d �w �. - i ' �� _ .: COUNCIL MEMBERS Requested by Department of: . Yeas Nays Dimond _ �� [n Favor - c�;t� .f' �,o� � sce�i Against BY �- �x ' .. ..:-........._...- , � sonnen � � � � � �V'�son - Form Approved by City At orney • Adopted by Council: Date � . . .,-F�',. � . Certified Passed by Council Secretary BY � j. ��r '�� By �,,, �' , A►pproved by Mavor: t�'te... Approved by Mayor for Submission,to Council -�° � �, . . -�___ Sy g� 4 -,�s. __ . . . , �rf� -��_ TAX INCREMENT FINAN N P LICY RE OMMENDATION I. Policies A. Principles 1. Ta1t increment fin ci is a development financing method that allows the Ciry* to leverage s gni cant private,state,and federal investment without resorting to a city- id property tax levy. The Ciry's goals f r th use of tax increment financing are: (a) to remov bli t; (b) to devel p o retain jobs,especially for dislocated workers and the disadva age ; (c) to foste eco omic development in the neighborhoods and downto t expand the city's property taac base;and (d) to deve p retain affordable housing for people of low and moder e i ome. 2. The City will co sid r ereating a tax increment financing district only when other develop nt nancing methods are not feasible or available. 3. Each develope req est for tax increment financing assistance wil(be evaluated on a roj ct-by-project basis. The City will extend only enough tax increment n ing assistance to make the project a viable investment. 4. The Ciry will 'ni ize risks in new tax increment financing districts by: (a) using on rvative financial projections that do not overstate the speed or ue of the proposed development or future levels of prop ty ation; (b) secur ng inimum market value agreements whenever legal and feasi le; (c) usin "p -as-you-go"financing rather than bonded debt whenever feasi le i order to minimize borrowing expense; (d) setti g b nd maturity schedules that are one or two years longer tha ou best estimate of the term needed for repayment;and � (e) not ist �buting tax increment from the district to the taxing juri dic ons until the development objectives have been sub tan ially attained and sufficient reserves are available to repay ou tan ing debt. � � �� -�a� B. District Operarion 1. Tax increment fi anc' g districts wii(comply fully with federal and state law and existing City na cial policies,procedures,and plans. 2. The Authoriry w'1 co sider distributing taac increment from a district or decertifying part f a istrict when feasible and prudent. 3. Beginning with t e fi h year of the life of each district the Tax Increment Financin Annu t tus Re ort will include a Report Card of district performance.Th Re ort Card will summarize the attainments,remaining objectives,additi nat development opportunities,financial condition,and prospects for dis ict ecerrification or distribution of tax increments. C. District Decerrification 1. The City intends to certify tax increment financing districts as soon as feasible and lega an to add the newly created tax base to the ta�ng jurisdictions. 2. No tax increme fin ncing district will be extended beyond its adopted durational limit. 3. A tax increment na cing district m.ry be decertified when all of the following have o ur ed: (a) The de lo ent objectivec as originally adopted and amended have be n s bstantially met,and: (b) In the c se f general oblig�tion bonds which may be outstanding, sufficie t re rves exist for ietirement of the bonds,including premiu s, bitrage rebates,and any other costs associated with prepay ent (c) In the f revenue bonds, (1.) su cient reserves exist for retirement of bonds,including pr iums,azbitrage rebates,and any other costs ass ciated with prepayment; (2.) th entity providing the security or credit enhancement for th bonds provides its consent. (d) A(1 obl ati ns of the tu�increment bond agreements have been compl ed. (e) No ot r li n or financia! obligation e�rists against the district or its tax inc em t revenue stream. . . . � : � � l'.��-�a�' II. Procedures A. District Creation 1. The t�increment financin pla will be consistent with the Economic Development Strategy,Capital A loc ion Policy,Budget Goals and Policies,elements of the Comprehensiv Pla ,District Plan(s),and,as applicable,the Redevelopment Di tric ,Economic Development District or Municipal Development Dist 'ct lan. 2. The tax increment �na cing plan will include the following elements: (a) a stateme t o the objectives of the Authority• for the project; (b) a stateme t a to the development program for the project, including he ' entification of any properry that the Authority intends t ac ire; (c) a list of a y d velopment activities for which contracts have been entered i to the time of the preparation of the plan,and details of the co tra ; (d) a descrip 'on f the type of�levelopment reasonably expected to take plac wi 'n the project,and the date when the development is (ikety to cu ; (e) estimate of e following: (1.) ost f the project,including administrarive e�enses; (2.) o nt of bonded indebtedness to be incurred; (3.) ou s of revenue to finance or otherwise pay public costs; (4.) he ase gross tax capacity of taxable rea(property within he ax increment financing district; (5.) the srimated captured gross tax capacity of the tax inc ment financing district at complerion;and (6.) the uration of the ta7t increment financing districYs exi ence; (� two es at s of the impact of the proposed tax increment financi g d' trict on the gross ta�r capaciry of the Ciry,County,and Scnool is ict. One estimate assumes thai none of the projected . t�b gr h would occur without public subsidy;the other � assum th t ail of the growth would occur without any public subsid (g) identi ati n and description of written studies and analyses used to m th determination that public subsidy is necessary(the "But r" etermination); � .� �� C��-�a.� (h) identifi atio of all tax parcels to be included in the district; (i) an esti ate f the impact of the proposed development on the City's, ou ty's,and School District's tax capacity;and (j) an esti ate of the impact of the proposed development on the City's scat disparities contribution and distribution. 3. The Ciry Attor ey 'll render to the City Council opinions on the Authority's"B t F r"study,blight determinadon,and other pertinent questions. 4. The City Cou il ust make a legal finding that the creation of the tax increment fina cin district is necessary,based on the Authority's"But For" study an the opinion of the Ciry Attorney. 5. In determinin th classification of taa�increment financing districts,the Authority will dev lop supporting documentation for its determination,and present such ocu entation to the City Council as part of the tax increment financing pla . .. , ; � � ��-i�� 6. The Authority I! ke the proposed tax increment financing plan available for pu ic r view by the following bodies: Ramsey County oa of Commissioners --- Saint Paul Scho B d Planning Comm' sio (redevelopment districts only) CIB Committee HRA Board City Council affected District ou cil(s) 7. The Authoriry 1 p lish a legal norice of the City Council public hearing at which approv of e tax increment financing plan will be considered. 8. The Authority 1 pr vide the proposed tax increment financing plan to Ramsey County d the Saint Paul School Board at least 30 days prior to the public hearin be re the Ciry Council. 9. Upon approval o a t increment financing plan by the City Council the required docume ts 'll be forwarded to the Ramsey Counry Auditor who will certify the ne di trict. 10. The Authority wi m e a diligent effort to locate all building permits issued within the ist ct during the 18 months preceding district creation and fonvard the to e County Auditor. 11. The Cyry will pro de opies of approved tax.increment financing plans to the Saint Paul Pu lic ibrary in order that they be easily available to the public. B. Financial Procedures 1. Revenue projecti s b consultant: revenue projections prepared by City staff and bond un e 'ters for all general obligation tax increment bond issues should be al d by the Ciry's 5sca1 adviser in order to determine reasonableness. 2. The CYry Treasure sh uld review all revenue•backed and general obligation tax increment bon iss es. 3. Tax increment fin ci district accounts wili be kept separate from other funds. 4. Whenever legal an fe ible the Authoriry will secure assessment agreements from d el pers guaranteeing a minimum market level. . 5. Annual financial r o wi!(be filed in accordance with the standards published by the S te uditor. The Ciry will continue to publish an annual report more detail d t n the State Auditor's requirement,including the Report Cards on i ivi ual district performance. . . . �v i /�`"' C. Use of Talc Increment 1. Capitalized interest �11 e used for the payment of debt service for ta� increment financin bo s only when tax increment revenues are insufficient.Capital d nterest for bond-financed tax increment projects will be limited to n mo e than the first three years after the sale of bonds. 2. Other costs funded o bond sale proceeds: all other costs relating to any tax increment prop sal ay be financed with bond proceeds and included in the justification of oposal. These rosts include,but are not limited to: design,acquisition d elocation,construction,bond counsei fees,credit enhancement costs re rve funds,other costs of issuance,and staff time. 3. No more than 10% of t e gross tax increment received over the life of the district shall be u to ay administrative expenses as defined in the state law. Each tax incr me financing plan will specify the projected level,if any,of use of incre en for administrative expenses. 4. Tax increments wi be sed on(y for purposes allowed under the state law, in general: (a) Paying or 'ng the principal and interest on bonds or other obligatio (b) Cost of p blic improvements and redevelopment costs; (c) Interest r te r duction for low and moderate homebuyers; (d) Administ a ' eapenses. S. When feasible,t in ement may be used to reimburse other Ciry development fun s t t were used to pay atlowable public costs within the district. 6. The use of reven e nds to finance public improvement commitments for economic develo me t projects is preferred over other types of obligation. The City may co ide using tax increment,taxable bonds,or t�-exempt revenue bonds in 1 or 1991 for the following projects: - riverfro d elopment - downto p king proposals; - other pr je specific public redevelopment costs which leverage signific t p ate,state,or federal investmen� Such bond issue m be general obligation bonds if there is dedicated revenue sufficie to ver the interest and principal payments and if there is additional fin ci other than property tax revenues to secure the payment of debt se . . : : � � �� D. District Administratio 1. The Authority 'll le an annuai financial disclosure statement for all tax increment fina' cin districts with the State Auditor and also publish the disclosure in a ew paper of general circutation before July 1 of the following year. 2. By February 1 f t fifth year following the creation of a tax increment � financing distri t th Authority will file with the County Auditor a statement of q ali 'ng activiry on each parcel in the district. Parcels which have had no q li ng activity will be removed from the district. 3. Beginning with the fth year following the creation of each tax increment financing distri t th Tax Increment Financing Annual Status Renort will include,at the nd i the Descriptive History,a Report Card detailing the district's attai en s,remaining objectives,financial condition,and prospects for d ce �ication or distribution of tax increments. E. District Amendment 1. The following odi cations to a tax increment financing district will require formal amend ent f the plan,including all the public disclosure procedures: (a) Incre in he geographic area; (b) Incre in onded indebtedness; (c) Decisi to capitalize interest on e�sting bonded debt; (d) Incre in he proportion of the captured tax capacity retained by the dis ict; (e) Incre in otal increment expenditures; (� Acquisi ion f additional property(not previously idenrified in the plan). 2. The Authority ,'ll rnish to the City Council a Fiscal Impact Statement in conjunction wit an Tax increment financing plan amendment. The Statement will s eci the effect of the amendment on the duration of the Tax increment an ing district and the projected return of excess increments to t t "ng jurisdictions. F. District Decertification 1. The Authority ay opose decertification or increment distnbution plans for any district 'c meets the decertification criteria: (a) The dev lop ent objectives as originalty adopted and amended have be n s stantially met,and: . . �� (b) In the se f general obligation bonds which may be outstanding, sufficie t re rves exist for retirement of the bonds,including premiu s, bitrage rebates,and anS�other costs associated with prepay en (c) In the se f revenue bonds, (1.) su cient reserves exist for retirement of bonds,including pr iums,arbitrage rebates,and any other costs ass ciated with prepayment; (2.) th entiry providing the security or credit enhancement for th bonds provides its consent. (d) Atl obl ati ns of the tax inc rement bond agreements have been comple ed. (e) No oth r li n or financial obligation exists against the district or its tax inc m t revenue stream. *Authority means either the Housing and Redev top ent Authoriry or the Port Authority. `City means the City government proper or the ous ng and Redevetopment Authority or the Port Authoriry. _ .� � : � - .1,�`�� DEVELOPME EPORT CARD: NEW HOUSING AND BLIGHTE DS DEVELOPMENT PROJECT BACKGROUND When created by the City Council in 1981,the New Ho sing and Blighted Lands Tag Increment District consisted of 18 noncontiguous sites. (Each site con ain d one or more pazcels.) A district amendment in 1986 resulted in three sites being deleted from the istri t and four sites being added,for a revised total of 19 noncontiguous sites. The original development objectives,as revised by t e 1 86 plan amendment,estimated the following housing production: Number of Total Housing Units 1,342 Number(Percentage) of Low and Moderate Income Housi U its 1,�3 (75%) Unit production was e�cpected to include both new c nst ction and rehabilitation. The plan defined"low and maderate income" in accordance with the then- xist ng statutory definitions.These definitions generally translate into 110 percent of area median income. ACHIEVEMENTS A s�.�m:nary of the actua! housing production to-date is p ovided in Exhibit A. This summa�-y shaws that approximately 60 percent of the total unit developm nt jective has teen reached,wh;le 65 percent of the low/moderate income unit development objective h be n reached. (In other words,the proportion of low/moderate income units produced to-date has ex ed d the original e3tpectationa) With c,ne or two exceptions,site-by-site developmen has occuned reletively close to the original objectives. On sites where actual development has been less int se han originally estimated,the reason for the reduced number of units has been for neighborhood compati ility (The Ruth and Burns site,for example,was built at a lower densiry than allowed by zoning.) The Hazel ark ite was acquired last year for a stormwater ponding area,and will have no housing development. Of the nineteen sites in the district,ten could be con der d"substantially complete": 1. Baker School 2. Ellis Avenue 3. St.Theresa's 4. South-of-Front 5. Otto Mercer 6. Belvidere Park 7. Ruth&Burns 8. Lincotn Schoot 9. Minne�:�'�w'Kent _ _ __. ._ 10. ConcordialMilton . - : : � � �F%�1"�0?�� Five sites have realized some new construction or re abi itation,but still hold potential for additional housing development: 1. Selby Avenue 2. Nevada/Arkwright 3. Mississippi Terrace 4. Railroad Island 5. Etna-Birmingham Three sites have had no housing deve(opment,but till old potential: 1. Bradley Street 2. Trout Brook Phase II 3. Union Gospel Mission DEVELOPMENT OPPORTUrTITIES Staff is analyzing the financing needs of the smalle ,h d-to-develop sites like Bradley Street and Nevada/Arkwright. A proposal for 30 cooperativ ho ing units for the Bradley Street site is now under review by the neighborhood,the district planning ou il,and ciry staff. Significant new housing development opportuniti s e st for both the Etna-Birmingham and the Trout Brook Phase II sites where there is an ability to assembl lar tracts of land. Staff will be working with the district councils in these two areas to undzrtake major pl nni g and design ana(yses in order to devetop financially feasible ho��sing and land use plans. FINANCING In September 1986,the HRA issued $6,210,000 i increment revenue bonds to finance various public improvement activities for sites which had yet to e d veloped. A portion of the bond proceeds have also been used to reimburse the HRA for public rede elo ment costs paid from non-tax increment sources prior to the 1986 bond sale. Principal and interest on the bonds are payable ley om tax increments. The bonds are further secured by an insurance policy issued by the AMBAC Inde ni Corporation. The bond indenture requires that tax increments from the District maintain at least a 25 Five Year Computed Average debt service coverage for the life of the bonds. Increments from the Dist ct ve been sufficient,thus far,to satisfy this requirement� lle/13/tif-reco