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00-349ORIGlNAL council File #� O� � 3yq Resolution # Green Sheet # �059 S 3 I 2 3 4 s 6 Presented By Re£erred To Committee: Date � s RESOLUTION ADOPTING THE MODIFICATION TO TI3E SEVENTH PLACE DEVELOPMENT PROJECT; ESTABLISHMENT OF THE THE LOWRY PROFESSIONAL BUILDING TAX INCREMENT FINANCING DISTRICT AND ADOPTING THE RELATED ESTABLISHMENT OF THE LOWRY PROFESSIONAL BUILDING TAX INCREMENT FINANCING PLAN 9 BE IT RESOLVED by the City Council (the "Council") of the City of Saint Paul, Minnesota (the "City"), l0 as foliows: 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 Section 1. Recitals. 1.01. The HRA has heretofore established the Seventh Place Development Project and adopted the Development Program therefor. It has been proposed that the City adopt the Modification to the Seventh Place Development Project and establish within the Seventh Place Development Project the Lowry Professional Building Tax Increment Financing District and adopt the related Tas Increment Financing Plan therefor (collectively, the "Program and Plan"); all pursuant to and in conformity with applicable law, including Minnesota Statutes, Sections 469.�90 through 469.1Q81 and 469174 through 469.179, all inclusive, as amended, a11 as reflected in the Program and Plan, and presented for the CounciPs consideration. 1.02. The Council has investigated the facts relating to the Program and Plan. 1.03. The City has performed all actions required by law to be performed priar to the adoption and approval of the proposed Program and Plan, including, but not limited to, notification of Ramsey County and School Dishict #625 having taxing jurisdiction over the properiy to be included in the Lowry Professional Building Tax Increment Financing District, a review of and written comment on the Program and Plan by the City Planning Commission, and the holding of a pubic heazing upon published notice as required by law. 1.04. Certain written reports (the "Reports") relating to the Program and Plan and to the activities contemplated therein have heretofore been prepared by staff and submitted to the council andlar made a part of the City files and proceedings on the Program and Plan. The Reports include data, information and/or substantiation constituting or relating to (1) the "studies and analyses" on why the new Lowry Professional Building Tax Increment Financing District meets the so-called "but for" test and (2) the bases for the other findings and determinations made in this resolution. The Council hereby confirxns, ratifies and adopts the Reports, which aze hereby incorporated into and made as fully a part of this resolution to the same extent as if set forth in full herein. 39 Section 2. Findings for the Adoption and Aproroval of the Proeram and Plan. �j O-3 yo� 40 41 2.01. The Council hereby finds that the Program and Plan, aze intended and, in the judgment of this a2 Council, the effect of such actions will be, to provide an impetus for development in the public purpose and 43 accomplish certain objectives as specified in the Program and Plan, which are hereby incorporated herein. 44 45 Section 3. F�s for the Establishment of The Lowrv Professional Building Tax Increment 46 Financin2 District 47 48 3.01. The Council hereby finds that the Lowry Professional Building Taac Increment Financing District 49 is in the public interest and is a"housing district" under Mirmesota Statutes, Secrion 469.174, subdivision 11. 50 51 3.02. The Council further finds that the proposed development would not occur solely through private 52 investment witlun the reasonably foreseeable future and that the increased market value on the site that could 53 reasonably be expected to occur without the use of tas increment financing would be less than the increase in the 54 mazket value estimated to result from the proposed development after subiracting the present value of the 55 projected tax increments for the maximum duration of the Seventh Place Development Project permitted by the 56 Tax Increment Financing Plan, that the Program and Plan conform to the general plan for the development or 57 redevelopment of the City as a whole; and that the Program and Plan will afford maximum opportunity consistent 58 with the sound needs of the City as a whole, for the development of the Seventh Place Development Project by 59 private enterprise. 60 61 3.03. The City elects to make a qualifying local contribution in accordance with Minnesota Statutes, 62 Section 273.1399, subdivision 6(d), in order to qualify the Seventh Place Development Project far exemption 63 from state aid losses set forth in Section 273.1399, subdivision 6(c). 64 65 3.04. The Council fiirther fmds, declares and determines that the City made the above findings stated in 66 this Section and has set forth the reasons and supporting facts for each determination in writing, attached hereto 67 as Exhibit A. 68 69 Section 4. A�proval and Adoption of the Proeram and Plan. 70 71 4.01. The Program and Plan, as presented to the Council on this date, including without limitation the 7z 73 74 75 76 77 78 findings and statements of objectives contained therein, as hereby approved, ratified, established, and adopted and sha11 be placed on file in the office of the HRA Director. 4.02. The staff of the City, the City's advisors and legal counsei are authorized and directed to proceed with the implementation of the Program and Plan and to negotiate, draft, prepare and present to this Council for its consideration all fuither plans, resolutions, documents and contracts necessary far this purpose. 79 4.03. The Auditor of Ramsey County is requested to certify the original net ta:c capaciTy of the Lowry 80 Professional Building Tax Increment Financing District, as described in the Program and Plan, and to certify in 81 each year thereafter the amount by which the original net tax capacity has increased or decreased; and the City 82 of Saint Paul is authorized and directed to forthwith transmit this request to the CounTy Auditor in such form and 83 content as the Auditor may specify, together with a list of all properkies within the Lowry Professional Building 84 Tax Increment Financing District, for which buiiding permits have been issued during the 18 months immediately ss preceding the adoption of this resolution. �sza3st 2 86 87 88 89 90 EXHIBIT A a o -� 4� The reasons and facts supporting the findings for the adoption of the Lowry Professional Building T� Increment Financing District as required pursuant to Minnesota Statutes, Section 469.175, Subdivision 3 aze as 9i follows: 92 93 1 94 95 96 97 98 Finding that the Distr•ict is a"housing district. " This TaY Increment District is in the public interest because it will provide needed multifamily housing Saint Paul of which at least 20% of the units will be afFordable to households at or below 50% of the azea median uacome. 99 2. Finding that the proposed development, in the opinion of the Council, would not reasonably be expected loo to occur solely through private investment within the reasonablyforeseeable future and that the increased lol market value of the site that could reasonably be expected to occur without the use of tax increment 102 financing would be Zess than the increase in the market value estimated to result fi�om the proposed 103 development after subtracting the present value ofthe projected tctt increments for the maximum duration i o4 of the district permitted by the plan. los 106 Due to the high cost of development on the parcels including the cost of land acquisition and financing the 107 proposed improvements, this project is feasible only through assistance, in part, from ta�c increment 108 financing. 109 i l0 A comparative analysis of estimated market values both with and without establishment of the Lowry 1 I 1 Professional Building Tax Increment Financing District and the use of tas increments has been performed ll2 as described above. If all development which is proposed to assist with tax increment wzxe to occur in the 113 Lowry Professional Building, the total increased mazket value wouid be up to $8,230,000. It is the 114 Council's finding that no development with a market value of greater than $8,230,000 would occur without 115 taY increment assistance in this district within 15 yeazs. T'his finding is based upon evidence from general ll6 past experience with the high cost of providing public improvements in the general area of this District. 117 i l8 3. Finding that the Lowry Professional Building Tax Increment Financing District conforms to the general 119 plan for the development or redevelopment of the municipaliry as a whole. 120 121 The Establishment of the Lowry Professional Building Tas Increment Financing District for the Seventh 122 Place Development Project has been reviewed by the Planning Commission and been £ound by resolution 123 to conform to the general development and redevelopment plan of the City. 124 125 4. 126 127 128 129 130 Finding that the Establashment of the Lowry Professional Building Tax Increment Financing District for the Seventh Place Development Project will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development of the Seventh Place Development Project. The number of housing units to be developed will increase the housing stock in the City and the State of Minnesota. IS20351 oo•3yq Requested by Department of: Plannin & Economic evelo ment By: Adoption Fo� Approved by C' y Ty rney / Certified by Council Secretary BY= „ By: � , � l—` �pg�oved by Mayor for Suhmission to Council Approved by Mayor: Date BY. �� BY. � ��/� ORfGfNAL 182Q351 Adopted by Council: Date A,r��__a-�LIC� "Public Hearing" PARTMINT/OFFIC�UNCIL PED MACT PERSON � RiOIJE Allen Carlson 6-6616 'ST BE ON COUNCILAGQ�/1 BY @4'f� 4/i2/oo 0-� DwTE WITW7ED 3/28/00 �� TOTAL # OF SIGNATURE PAGES � GREEN S ovun�ru�arae � 00 • 3 y.°1 No 105953 a� ancoocz 0 �,.,,�, �1 �1 � ❑ �,� - ❑,.�,�.�. ❑�,..v,�.a 3 �4 .maR�oRNm.nm � Crh� (CUP ALL LOCATIONS FOR SIGNATURE) �criorvREouESrfn Approve resoultion to: 1) expand 7th place redevelopment project to include Lowry Professional Building located at 350 St. Peter st. 2) Establish Lowry Professional Building tax increment district; and 3) approve Lowry Professional Building tax increment financing plan to allow development of 112 units of housing % A PLANNINGCOMMISSION CIB CAMMIT7'EE CIVIL SERVICE COMMIS: Hes this ae��m eyer rorkea unaer a carrt�aa f« tMis departmenn V6S NO ties thie DeworJfirm eier been a eity empbyee9 YES NO Oaes ihic Persauirm P� a sldll not rarmatlYO�� M'anY current cilY emProY�? VES NO Is tl�is pe�eoMxm a tarpeletl wMoR YES NQ Current building is 609 vacant & obsolete or professional office building I. Create 112 units of rental housing which 20� will be affordable Z Increase value of the building uitimately increase the tax base �� - �` A � t � g`�k3F�� 4 � I � � 'ry Y'Y�� . -.,�, ..,.':.n'rs'' �5 �F: �^.r� Building will continue to have high vacancy problems. OF TRANSACTION t N IA SOURCE COETrttEVENUE eUDOETED (GRCLE ON� _.�fuulr' - ' - "7I:Li�' VES t NO , �l �'..+!:l'J: oo_�y1 Interdepartmental Memorandum [yr�� : ��y� .�r�[n� TO: Council President Bostrom Councilmember Benanav Councilmember Blakey Councilmember Coleman Councilmember Harris Councilmember Lantry Councilmember Reiter FROM: Brian Sweeney��G?"�X Allen Carlson V DATE: March 28, 200� ��Z RE: PUBLIC HEARING: RESOLUTION ADOPTING THE MODIFICATION TO THE SEVENTH PLACE DEVELOPMENT PROJECT; ESTABLISHING THE LOWRY PROFESSIONAL BUILDING TAX INCREMENT FINANCING DISTRICT AND ADOPTING THE RELATED LOWRY PROFESSIONAL BUILDING TAX INCREMENT FINANCING PLAN Purpose The purpose of this public hearing is to receive public comment and request the City Council to approve a resolution which adopts the modification to the Seventh Place Development Project; establishes the Lowry Professionai Building Tax Increment District and adopt the related Tax Increment Financing Plan to assist in the redevelopment of the building into 112 units of rental housing of which 20% wiil be affordable to low income households. Background/Proposal The Lowry Professional Building (Lowry) is a 12 story building with approximately 280,000 gross square feet of Class C office/retail space. Much of the building's upper floors are not leased. The building was recently purchased from the Saint Paul Port Authority by the Avex Group (Avex) which has o�ces in Dallas, Texas and recently in Saint Paul. Avex is requesting City/HRA financial assistance to convert floors 6 through 12 into 112 units of residential rental housing units. The multifamily portion of the building wili occupy approximately 120,000 gross Page 1 of 9 oo-��t� square feet of which approximately 78,000 square feet will be actual living space. Floors 1 and 2 of the Lowry will maintain the bulk of the existing businesses. The skyway system within the building will also be remodeled to attract additional commercial tenants, provide improved pedestrian traffic flow and attract people to the first floor businesses. Floors 3 through 5 wiil be remodeled to upgrade the existing commercial office space to "B" category office space. Avex is working with existing commercial tenants to relocate them to floors 3 through 5. The proposed unit mix, size and tenant rents for the residential space are as follows: Unit Type # of Units Unit Size Gross Rent EfEiciency- Affordab{e 14 470 $556 One Bedroom 70 650 $875 One Bedroom/Den 4 869 $1,005 One Bedroom/Den - Affordable 11 869 $715 Two Bedroom 14 1035 $1,110 Total 112 Avg. unit size - 705 Based upon the above unit mix 25 units (22.3% of units) will be rented at the Section 8 Fair Market Rent levels which are affordable to households at or below 40% of the area median income. Page 2 of 9 oo-�� Proposed Financing Structure Below is the proposed Source and Uses of Fund Statement: Source of Funds Uses of Funds Tax Exempf Multifamily Revenue $7,740,000 Acquisition $1,500,000 Bonds Tax Increment Bonds 2,435,000 Construction 8,874,815 Construction Interest Earnings 31,000 Construction Mgmt 137,500 tow income tiousing Tax Credit 710,000 Financing Fees (HUD) 309,900 Equity HRA Grant 250,000 Issuer Fee 101,750 STAR 500,000 Underwriter's Discount 152,625 Minnesota Housing Finance Agency 190,000 Capitalized Interest 450,000 Family Housing Fund 290,000 Due Diligence/Legal 85,000 Title/Survey/Market 127,000 Study Building Closing/Due 80,000 Diligence GNMA Reserve 75,000 Contingency 252,410 Total $12,146,000 Total $12,146,000 The Project will be segmented by use, by means of condominium subdivision, to aliow the allocation of tax exempt revenue bonds to finance solely the multifamily portion of the building along with improvements to the other sections which support and improve the multifamily portion value (i.e. a portion of the garage and level 1 and 2 common areas.). Improvement of the retail and commercial portions (levels 2-5) of the building will be financed with separate private funds of approximately $4.5 million. Th primary source of financing for the project wili be the use of the City's year 2000 bonding authority to issue up to $7,740,000 of tax exempt multifamily revenue bonds and $2.4 miilion of tax exempt tax increment bonds. The City's annual bonding authority Page 3 of 9 0 0 -��lq is approximately $16 million per year. The City Council adopted on December 8, 1999 resolution no. 99-1178, which authorizes the HRA to issue the bonds. In no case with the multifamily bonds or tax increment bonds wili the City or HRA have an obligation or liability to repay the bonds. The bonds will be secured exclusively from the revenues and tax increments generated from the project. As an issuer of the bonds, the HRA wiil receive an issue�s fee the first year equal to 1% of the outstanding principal balance of the bonds plus annua{ly for the term of the bonds a fee equal to one-tenth of one percent of the outstanding principal balance of the bonds. In order to issue tax increment bonds, the City Council must approve expansion of ihe Seventh Place Redevelopment Project to inciude the Lowry building, estabiishment of a tax increment financing district for the 4'" through 12'" floors of the building and approve a tax increment financing pian which is included with this report. . In order to create the housing tax increment financing district necessary to finance the tax increment bonds, the City must by State statute contribute a local match of 5% of the total increment to be generated to avoid incurring local government aid penalties. The HRA laid over a$250,000 request of grants funds on November 24, 1999 until the project was further along in the process. Pursuant to Federal and State bonding statutes at least 20% of the units must be affordable to households at or below 50% of the area median income. The proposal is structured to be affordabie to households at or below 40°/o of area median income. Because tax exempt bonds will be used and 20% of the units will be affordable, Avex will automatically be eligible to receive low income housing tax credits for the affordable units. The credits wiil generate up to $710,000 of limited partner equity for the project. The City Council has approved a$500,000 STAR loan to the project bearing a 6% interest rate and 2� year term. The Minnesota Ffousing Finance Agency has approved $190,000 and the Family Page 4 of 9 00-��9 Housing Fund $290,000 to the project to subsidize the affordable housing units. Project Senefits The following are the reasons staff believe converting the building to partial housing is attractive, will be successful and provide public benefit to the City: • The current use of the building as a medical facility is obsolete. Most health care practices have built ciinics adjacent to hospitals due to convenience and synergies. A{so, most heafth care practices have followed their client base to the suburbs. Although there is a need for heaith care facilities downtown and within the building, it is not viable to expect Avex to fill 240,000 square feet of office space for medical related facifities. This is evident to the fact the building is only 40% occupied. The configuration of the building is not conducive to leasing to large tenants. The building is long and narrow. Most larger tenants want space that is conducive to an open space plan which requires a more rectangular or square foot print. There is a need for smaller office space, however it would be very difficult to lease up 200,000 plus square feet to tenants who only need 500 - 1,000 square feet. The configuration that is a detriment to renting the building for office use is an advantage to creating housing units. The narrow width, high ceilings, large windows and spacing of the structural posts lends itself to creating attractive, efficient housing units. Ample, large windows and high ceilings make the units very marketable. Furthermore, locating the units on the upper levels provides attractive panoramic views, which also help to market the units. The building has convenient access to off-street parking by means of the 170 car Lowry Ramp. The diffculty in converting warehouse buildings to housing such as the Strauss or JJ Hill building is the lack of on-site parking. The project promotes linkages with the transportation system, both pedestrian and mass transit. The building is on the skyway which allows tenants to access work or shopping Page 5 of 9 oc -�Ll`� without going outside. It also allows convenient handicapped accessibility. The building is also on a major bus route which allows tenants convenient travel within and outside the city. • The project is located in the cultural corridor which increases its marketability. It is located where the "action is" such as the Science Museum, Rice Park, the river, theaters, restaurants, etc. • The project promotes economic integration and diversity. We have not to date completed a project which has both high income and lower income tenants living together, which is a major goal of the City's housing action plan. • The project provides affordable housing which is in great demand downtown. Service workers and others wiil have a decent, safe place to live and be within walking distance of work. Again, this is a significant goal of the recently adopted housing action plan. • The project will be attractive to young professionals because it is conveniently located to major employers such as Lawson Software, St. Paul Companies and EcoLab. • The project promotes "IVew Urbanism". It combines mixed-use, mixed-income, transportation linkages and employment connections. It wiil maximize the use of the building. Creating 112 units of additional housing downtown promotes the concept of a 24 hour downtown vibrant with activity. • The project, by adding 112 housing units will support additional retail shopping in the downtown area. Housing should also benefit to strengthen the existing businesses in the building. Findings of Fact to Support Adoption of the Lowry Professional Building Tax Increment Financing District The reasons and facts supporting the findings for adoption of the Lowry Professionai Building Page 6 of 9 00 -3 �q Tax Increment District pursuant to MN Statutes, Section 469.175, Sub. 3, are as follows: 1. Finding that the District is a`housing district." This Tax Increment District is in the public interest because it wili provide needed multifamily housing Saint Paul of which at least 20% of the units wili be affordable to households at or below 50% of the area median income. 2. Finding that the proposed development, in the opinion of the Council, would not reasonably be expected to occur solely through private investment wifhin 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 /ess 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 plan. Due to the high cost of development on the parcels inciuding the cost of land acquisition and financing the proposed improvements, this project is feasible only through assistance, in part, from tax increment financing. A comparative analysis of estimated market values both with and without establishment of the Lowry Professional Building Tax Increment Financing District and the use of tax increments has been performed as described above. If all development which is proposed to assist with tax increment were to occur in the Lowry Professional Buiiding, the total increased market value would be up to $8,230,000. It is the Council's finding that no development with a market value of greater than $8,230,000 wouid occur without tax increment assistance in this district within 15 years. This finding is based upon evidence from general past experience with the high cost of providing public improvements in the general area of this District. Finding fhat the Lowry Professiona/ Building Tax /ncrement Financing Disfrict conforms to the general plan for the development or redevelopment of the municipality as a whole. Page 7 of 4 oa -��4.°l The Establishment of the Lowry Professional Building Tax increment Financing District for the Seventh Place Development Project has been reviewed by the Pianning Commission and been found by resolution to conform to the general development and redevelopment plan of the City. 4. Finding that the Establishment of the Lowry Professional Building Tax lncrement Financing District for the Seventh Place Development ProjeCt will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development of the Seventh P/ace Development Project. The number of housing units to be developed will increase the housing stock in the City and the State of Minnesota. Recommendation Staff recommends and requests the City Council to consider adoption of the attached resolution which approves and adopts the foilowing: Expansion of the Seventh Place Redevelopment Project to include the Lowry Professional Building property; and Establishment of the Lowry Professional Building Tax Increment Financing District; and The Tax Increment Financing Pian to finance the Project. Statement of the Council President Being duly authorized by the City Council to conduct this Public Hearing, the hearing is now open. This Public Hearing is called for the proposed purpose to consider the following: Expansion of the Seventh Place Redevelopment Project to include the Lowry Professional Suilding property located at 250 St. Peter Street; and Page 8 of 9 oo-3�Lq Establishment of the Lowry Professional Building Tax Increment Financing District; and Approval of the Lowry Professional Building Tax Increment Financing Plan. Approval of the above actions wili permit the financing of tax exempt multifamily revenue bonds to develop 112 residential rental units in the buiiding of which at least 20% will be restricted to HUD determined Fair Market Rents, which rents are affordable to households at 40%-45% of the area median income. Notice of time, place, and purpose of this hearing was published in the Saint Paul Pioneer Press on Saturday, March 25, 2000. The affidavit of the publication of the Notice of Public Hearing will be made a part of these proceedings. Is there anyone who wishes to be heard on these sales? If not, the Chair will declare this Public Hearing adjourned. Attachments 1. Modification to Seventh Place Development Project. 2. Lowry Professional Building Tax Increment Financing Plan Allen Carlson 266-6616 K:�sna=ea�caRLSOae�iowry�� c�f Pian aPPso�ai.wP$age 9 of 9 0 0 -7 �t.°t Modification to Seventh Place Development Proiect Lowry/tif planning commission Itr.doc flc_��C`1 AMENDIZENT TO REDEVELOPMENT PLAle! SEVENTA PLACE REDEVELOPMENT PROJE�`�' DATED NOVEMBER 16,1978 AME�TDVIENT DATED , 209�P �8��3� p o -3�q A_�(ENDMENT TO REDEVELOPy1EtiT PLA� S E VENTH PLACE REDEVELOPMENT PRO7ECT DATED NOVE�(BER 16, 1978 A.�IEYDMENT DATED 1 2000 1. The Redevelopment Plan for the Seventh Place Redevelopment Project adopted November 16, 1978, as revised and modified on November S, 1981, January 28, 1482, and May 25, 1983, and as amended on March 25, 1985, November 9, 1989 and l�fay 28, 1997 (the "Redevelopment Plan"), is hereby further amended as follows: A There is hereby added to the Seventh Place Project the property described (by parcel number and/or physicalllegal description) on Exhibit 1 hereto and illustrated by the map which is also part of Exhibit l. B. Paragraph 1 of Section F, General Land Use, shall be amended to read as follows: «1. Ma�. A map of the Seventh Place Project area, as expanded, is set forth as Exhibit 3 hereto." C. Map No. I attached to the Redevelopment Plan is hereby deleted and replaced with Exhibit 3 hereto. 2. Except as amended hereby, the Redevelopment Plan shall remain in full force and effect. isineo 00 -3�l°I EXHIBIT 1 [Pazcel numbers and/or legal description and map ofProperty to be added to Project Area] Lots One (1) and Two (2}, except the Northwesterly fifty (SQ) feet of said Lots One (1) and Two (2), and except the Southeasterly riventy-five (25) feet of said Lots One (1) and Two (2); and all of Lots Three (3), Four (4) Five (5), Six (6), Seven (7), Eight (8), Nine (9) and Ten (10), all in Block Twenty-one (21), except all that part of Lots Eight (8), Nine (9) and Ten (10), Southeasterly of a conshuction buildin� line described as follows: Beginning at a point on the Westerly line of Lot Eight (8), 51.5 feet Northwesterly of a Southwest corner of said Lot Eight (8); thence Northeasterly on a line puallel to the Southeasterly line of said Lots Eight (8), Nine (9), and Ten (10), a distance of 51.96 feet; thence deflecting to the left 90 degrees of a distance of 3.5 feet; thence deflecting to the right 90 degees a distance of 12.4 feet; thence deflecting to the left 90 degrees, 2�.75 feet; thence deflecting to the right 90 degrees more or less 84.96 feet, more or less, to a point on the Easterly line of said Lot Ten (10) which is 80.7 feet ir'orthwesterly of Southeast comer of said Lot Ten (10); there terminating; all in Block Twenty-one (21), City of St. Paul, commonly referred to as "St. Paul Proper: ' iai�sbo 1-1 aa -� �{q �t 11 :lY� - � - - ; I _ ��; � _� �� '`"` �. � 0 C7 y - .:i � , ;_� � � , , � � '�� _ � X � , .-� L ' � = .l � � � " J - � � >� � = �— �e� _ � i� = - ' _ : i �/ i` � � // / ; :: � . �� /�\� ° i � _� t z; � ` I� Y � � � ` � � : - .,~ _ � � \� ,; ` ` tr . �� - /; � ` `\y/ ', ' /. �. i � /�'.' i � � � _-- _ - , - � / --_ --- � ='-= / —' J � _ �-� � i \ : � "� �—�--� = .�• � - ' ' ' a �/ ' � . � �` ':/ I8t9290v! (12ZR°/,01!.DOC) A-1 Homing Pmgam 00 -3�1,q TIF Plan Lowry/tif plannin� commission Itr.doc 0 0 •��,� Draft: 2/29/00 HOUSING AND REDEVELOPMENT AUTHORITY OF Tf� CZTY OF SAIlVT PATI., MINNESOTA TAX INCREMENT FII�ANCING PLAN FOR LOWRY PROFESSIONAL BUII.DING TAX INCREMENT FINANCING DISTRICT I. Introduction A. Background The Lowry Professional Building Housing Tax Increment Financing District (the "District") shall consist of an appro�mately 120,000 square foot pazcel located at 350 St. Peter Street (the "Property"), in the City of Saint Paul, County of Ramsey, State of Minnesota and legally described in Attachment A attached hereto and incorporated in this plan. The Housing and Redevelopment Authority of the City of Saint Paul, Minnesota (the "I IRA") proposes a plan for the development of the Dishict consisting of the acquisition of property, rehabilitation demolition, and the construction of a 112-unit rental housing facility (the "Project") on the Property to be owned by Avex Lowry Residential Limited Partnership, a Minnesota limited partnership. The Project comprises a portion of the exisling Lowry Professional Building. The remainder of the Buiiding is simultaneously being redeveloped as a retail and office facility (the "Cominercial Project") by an affiliate of Developer at an appro�cimate initial cost of $7,000,000. The Commerciai Project will not be included in the District. B. Creation of Lowry Professionai Building Housing Tax Increment District This tas increment plan relates to the creafion, under Mim�.esota Statutes Section 469.174, Subd. 11, of the Lowry Professional Building Housing Tas Increment Dishict (the "Dishict"). C. Need and Public Purpose To increase the supply of adequate housing witivn the community £or families of all income levels including rental housing for families of low and moderate income. ii. To provide such housing on land or in areas which qualify as redevelopment projeets with emphasis upon lands poten6ally usefut for contributing to the public welfaze, but ' which by reason of special probiems or conditions, have not reached full development potential by the ordinary operarions of private enterprise. iii. To cany out the provision of housing and development of underdeveloped lands within the City consistent with the general land use plan and other components of the City's Comprehensive Plan. 1819526 00 -3�t°l iv. To assist in the provision of rental housing to persons of low and moderate income at prices or rents within their means and to make advance commitments to such rental assistance in low and moderate income units in order to assist developers in securing fina�icing for housing improvements. v. To finance a portion of the development costs ofthe Project by means of tax increment generated by Project improvements and development. vi. To finance housing developmentby acombinationofprivate andpublic financing under authority and subject to the requirements of federal, state and local law and ordinance for the provision of revenue bond financing for housing purposes. It is necessary tUat the I3RA exercise its powers under state law to develop, implement, and finance a progrun designed to encourage, ensure and facilitate the development of affordable housing for its low- and moderate-income residents. The Project will fixrther accompiish the public pur�wses specified in this paragraph. II. Objectives of the HRA for the unprovements in the Lowry Professional Building Project area. A. Provideaffordablehousingforlow-audmoderate-incomeresidentsofSaint PauL As a result of an e�ensive neighborhood review process and a confirming market study currently being conducted by LAWCO Financial, LLC, the I-IRA believes there is a market for rental housing of the type being proposed for the Dishict. B. To redevelop underused property. The Properiy was previously operated as a 13 story mixed use commercial/retail o�ce building. Due to building obsolescence, changes in downtown demand far the kind of space offered in the Property, and high vacancy rates, the Property is no longer a viable commercial properry, and the buildings located on the Property have deteriorated. Cuxrently, the Property is 60% vacant. The construction of the Project will contribute to the public welfaze, as the Properiy has not reached its current development potential by the ordinary operations of private enterprise. C. Expand the tas base of the City of Saint Paul. It is expected that the taxable market value of parcels in the tax increment dishict will increase by appro�mately $8,230,000 once the new housing facility is placed in service. �si9sze 00 -�y°� III. Classificafion of the District The HRA and the City, in detennining the need to create a ta�c increment finaucing district in accordance with Section 469.174, find that the District is a housing district pi�*��ant to Mivnesota Statutes, Section 469.174, Subd. 11 because (i) the project which comprises the I7istrict is intended for occupancy, in part, by persons or families of low and moderate income, as defined in Minuesota Statates, Chapter 462A, Title II ofthe National Housing Act of 1934, the National Housing Act of 1959, the United States Housing Act of 1937, as amended, Title V of the Housing Act of 1949, as amended, other similaz federal, state, or municipal legislation, and the regulations promulgated under any of those acts; and (2) the fair mazket value of the improvements which shall be coustnicted for commercial uses or for uses other than low and moderate income housing consist of not more than 20 percent ofthe total fair market value of the planned improvement in the development plan or agreement. The fair mazket value ofthe improvements comprising the Project was determined using the income approach, modified by adjusting foz different types of uses, and adjusted further to reflect cunent taxable properiy values in the area surrounding the Project. At least 20% of the units will be occupied by individuals whose income is 50% or less of the area median gross income, adjusted for family size. In addition, the District meets the requirements of a housing dislrict pursuant to Mimiesota Statutes, Section 469.176, Subd. 4d, because 100% of the revenues derived from tax increments from the District will be used solely to finance the cost of a housing project as defined in Section 469.174, Subd. 11, including the cost of public improvements directly related to the housing project and the allocated administrative expenses of the IIRA. Finally, the District meets the requirements of a housing district pursuant to Minnesota Statutes, Section 469.1761, Subd. 1 and Subd. 3 because, for the duration of the District, either (a) the project which comprises the District will satisfy the income requirements for a qualified residentiai rental project as defined in Section 142(d) ofthe Intemal Revenue Code (the "Code"), ar(b) at least 50 percent ofthe residential units inthe projectwhich comprises the District will be occupiedby individuals whose income is 80 percent or less of azea median gross income. In this case, as mentioned above, at least 20 percent of the units will be occupied by individuals whose income is 50 percent or less of the area median gross income, adjusted for family size, which satisfies the income requirements for a residential rental project as defined in Section 142(d) of the Code. IV. Descripfion of the development program for the Lowrv Professional Building Project. The development program consists of the development of a 112-unit low and moderate income rental housing facility (the "Project") in the Dishict and the finaucing ofthe Project. The Project will be owned by Avex Lowry Residential Limited Partnership, a Minnesota limited partnership company (the "Developer"). This will require acquiring the properiy, installing infrastructure, contracting for professional services essenfial to redevelopment activifies, incurring finaucing related expenses and funding adininistrative fiuictions, all as described in more detaii below. All of the costs listed below aze reflected in the project budget, and there aze no additional public improvement wsts. 1819526 00 -'�y� A. Acquire property. The Developer will acquire the Properiy on or about May 16, 2000 for a purchase price of $1,500,000. B. Reimbursement for Demolition of Structures. There will be no demolition of structures located within the District. The cost of demolishing and removing obsolete internal improvements in the Project is included in E. C. Undertake and install site improvements and utilities. No site improvements or utility access costs will be incurred. D. Contractsforprofessionalservicesessentialtotheredevelopmentactivifies. Professional fees will include land surveys and title work, real estate and environxnental testing, legal, civil engineering, appraisals, accounting, consultants and azchitectural design. The total cost for professional services, other than bond issuance costs, is estimated at $167,525. There will be no developer's fee. E. Construction of Project Demolition of obsolete internal improvements, actual construction of the new internal improvements comprising the Project, construction management fees, and the funding of operating reserves, replacement reserves and debt service reserves therefore, and flie cost of fiunishings and equipment for the Project, is expected to total approximately $9,869,725. F. Incur costs and expenses connected with financing activities. The I�t1 shall issue tax exempt tax increment revenue obligafions to finance approxiniately $2,435,000 oftotal Project costs and taY exempt revenue bonds to finance appro�xnately $7,740,000 of Project costs. Bond issuance costs plus other financing related costs (including costs incurred in connection with other sources of funds set forth in Section VII.C.), including conshuction period interest and insurance, legal expenses, printing and underwriter's discount, aze anticipated to toYal approximately $608,750. V. Descripfion of contracts entered into at the time ofpreaaration of the Plan The following, as required by Section 469.175, Subd. 1(3), is a list of development activities that are proposed to take place within the District for which contracts have been entered into at the time of the prepazation of tlus plan, including the names of the parties to the contract, the activity governed by the contract, the cosi stated in the contract, and the e�;pected date of completion of that activity. 1819526 4 oa -34 q � L� Project Manaeement Consuitant Estimated Cost: Time and material basis for preliminary design Estimated completion date: Mazket Consultant Estimated Cost: F.stunated completion date: N/A $12,400 Mazch 31, 2000 VI. Descripfion of other tvaes of develonment activities which can reasonablv be expected to take place within the Lowrv Professional Buildin� Proiect Other development activities in the Dishict, which may require the expenditure of tax increments, will consist of acfivities necessary and ancillary to promoting and inaximizing the objectives set forth in Section II above. None VII. Cost of the Project and Description of the Lowry Professional Buildin�Housin�Tax Increment District. The following, as required by Section 469.175, Subd. 1(5), are estimates of the (I) cost of the Project, including administration eapenses; (ii) amount of bonded indebtedness to be incurred; (iii) sources of revenue to finance or otherwise pay the costs of the Project; (iv) the most recent net tax capacity of taxable real properry within ihe taY increment fmancing district; (v) the estimated captured net tax capacity of the t� increment financing district at completion; and (vi) the duration of the tax increment financing dishicYs e�cistence. A. Cost of the Project, including administrative expenses. The total cost of the Project is estimated at $12,146,000, wluch includes $0 of public nnprovement costs (see C. below). In addition, the III2A may use an amount up to 10% of the tax increment expenditures to pay for its costs in administering the District. B. Amount of bonded indebtedness to be incurred. The HR[� shall be the issuer of one or more series of tax exempt tax increment revenue bonds and housing revenue obligations by the end of the year 2000 in an aggregate amount not to exceed $10,175,000. The ta�c increments will be pledged to the payxnent of all series of the bonded indebtedness. The HRA may, after the initiat issuance of bonds, issue refunding bonds for purposes of refiiiancing such bonded indebtedness. C. Sources of revenue to finance or otherwise pay project costs. The following are the likely sources for funding the totai Project: �at9sze oa-3�(,°� i. Tas Increments Tax increments, net of up to 10% for adminishative expenses, aze anticipated to equal appro�mately $260,000 annually. All taY increments will be first pledged to the payment of debt service on the bonds described in B above, and any excess shall be pledged to the repayment of the STAR Loan referred to in C.iv. below. u. Investment income Certain interest eanvugs from bond proceeds, if any, will be a source of revenue to pay project costs. A current estimate of such earnnigs is not availabie. iii. Developer Capital The Developer is not expected to contribute capital to the Project. In its snnultaneous development of the Commercial Project, however, which contains shared facilities with the Project, the Developer's affiliate is conhibuting approximately $7,000,000. iv. Saint Paul STAR (Sates Taxl The City will contribute a$500,000, fully amortizing loan at a 6% interest rate for 20 years. Minnesota Housing Finance Aeency (MI�'A2 The 1VIHFA will contribute a$190,000 loan at a simple interest rate of 1% for 30 years with deferring interest and principal. vi. Family Housine Fund (FHFI The FHF will conhibute a$290,000 loan at a simple interest rate of 1% for 30 years with deferring interest and principal. vii. Citu of Saint Paul FIIZA Grant The I IRA will conhibute a$250,000 grant. D. The most recent net tax capacity of tagable real properly within the tas increment financing district. $218,000. 1819526 co -3�4°� E. The estimated captured net tag capacity of the tag increment financing disixict at completion. The Project will consist of a 112-unit low and moderate income rental housing facility with an aggregate assumed mazket value of $7,000,000, including land value. The increase in mazket value is estanated at $6,830,000. Applying a 1% ta�c capacity rate to the low income units and 2.4% taY capacity rate to the market rate units results in tases (total) of $225,851 and tas increment of $219,715 based on an estimated captured taz capacity of appro�nately $6,830,000 assessed in the year 2001 and payable in the year 2002, the yeaz following expected completion of construction of the Project. This captured taY capacity is calculated in accordance with Mvuiesota Statutes, Section 469.174, Subd. 4 and 464.177, Subd. 2. In addition to the Project, appro�mately $1,400,000 of increased market value attributable to the commercial portion of the buiiding inciuded in the Dishict will be included in the captured net tax capacity. Applying a 4.9% tax capacity rate to the commercial portion results in ta7ces (total) of $70,160 and taY increment of $68,960 based on an estimated captured tax capacity of $1,400,000. F. The durafion of the tas increment financing district's egistence. The District will be certified in 2000. The first t� increments are anticipated to be generated for taxes payable in the year 2001. Pursuant to Section 469.176, Subd. lb(a)(5), the duration of the District will run 25 years from the first receipt by the HRA of taat increments, which will be through calendar yeaz 2025. The HRA does, however, reserve the right to decertify the District prior to the legally required date. VIII. Alternate estimates of the impact of the tax increment financing on the net tas ca�acities of all taxing jurisdictions. The taxing jurisdictions in which the District is located in whole or in part aze as follows: a. Independent School District #625, whose boundaries are coterminous with those of the City of Saint Paul. b. The County of Ramsey, wherein the City of Saint Paul is located. c. The Housing and Redevelopment Authority of the City of Saint Paul, whose boundaries aze coternunous with those of the City of Saint Paul. d. The Port Authorily of the City of Saint Paul, whose boundaries are coterminous with those of the City of Saint Paul and whose powers to levy and use properry taa�es aze limited. e. Metropolitan authorities, such as the Metropolitan Council, Met�opolitan Aixports Commission, Metropolitan Waste Control Commission, and the Metropolitan Mosquito Control Dishict. Of these, only the Metropolitan Council and the Metropolitan Mosquito Conh�ol District currently levy taxes on real estate. 18L9526 0 0 - 3�t.q The I�2A is required by Mimiesota Statutes Secrion 469.175, Subd. 1(a)(� to make statements relative to the alternate estunates of the impact of the tax increment financing on the net tas capaciries of all taxing jurisdicfions in which the tax increment financing district is located in whole or in part. Impact on Taging Jurisdictions Under the assumption that the estnnated captured net tax capacity would be available to the taxing jurisdictions without creation of the District, creation of the District will serve to deny these ta��ing jurisdictions the taxes from the captured net tax capacity in the amount estimated in Table 1 below. a,�t Taxine Jurisdiction T.C. Ratio Q Table 1 Estimazea nrmual Percent Caaturedlncrement City of St. Paul 38.460% 2527 Ramsey County 42.879% 28.17 School Distdct #625 63926% 42.00 Other 6.926% 4.55 1.52191 100 [Intentionally Omitted.l 288,675 288,675 288,675 288,675 Loss to Taeing Jurisdictions 111,023 123,781 184,538 19,943 2$$�6�$ X. Identification oi all �arcels to be included in the District. Attached hereto in Attachment A is a list of the Properry Idenfification Numbers for all properties to be included in the District, a map showing the Project area and the District, and a legal description idenrifying the boundaries of the District. XI. District administrafion and annual disclosure. Admivistration of the District will be the responsibiliry of the I3RA. Tax increments wiil be deposited into interest bearing accounts sepazate and distinct from other funds of the I�A. Tax inerements will be used only for activities deseribed in this tax increment plan. The I IRA will report annually to the State Auditor, county boazd, school board and Aepartment of Revenue regarding activities in the District as required by Secrion 469.175, subdivision 5 and subdivision 6 and will include information with regard to the Dishict in the data necessary to comply with subdivision 6a. 1819526 00 .a�� XII. Modifications to District Tn accordance with Mivuesota Stazutes, Section 469.175, Subd. 4, any reduction or enlazgement of the geographic azea of the Project or tax increment financing district; increase in amount of bonded indebtedness to be incurred, including a deteruiination to capitalize interest on debt ifthat detemiination was not a part of the original plan, or to increase or decrease the amount of interest on the debt to be capitalized; increase in the portion of the captured taY capacity to be retained by the City; increase in total estimated taY increment expenditures; or designation of additional properry to be acquired by the City shall be approved upon the notice and after the discussion, public hearing and findings required for approval of the original plan. The geographic azea of a tax increment financing district may be reduced, but shall not be enlazged after five years following the date of certification of the original tas capacity by the county auditor. XIII. Administrative Expenses In accordance with Mirniesota Statutes, Sections 469.174, Subd. 14 and 469.176, Subd. 3, admiiustrative expenses means all expenditiares of an authority other than amounts paid for the purchase of land or amounts paid to contractors or others providing materials and services, including azchitectural and engineering services, directly connected with the physical development of the real property in the District, relocafion benefits paid to or services provided for persons residing or businesses located in the Disirict or amounts used to pay interest on, fund a reserve for, or sell at a discount bonds issued pursuant to Section 469.173. Administrative expenses also include amounts paid for services provided by bond counsel, fiscal consultants, and plauning or economic development consultants. Admuiislrative expenses of the District will be paid from tax increments; provided that no tax increment shall be used to pay any admiuistrative expenses for the Project which exceed ten percent of the total taY increment expenditures authorized by the tax increment financing plan or the total tax increment �penditures for the Project, whichever is less. Pursuant to Minnesota Statutes, Section 469.176, Subd. 4h, tax increments may be used to pay for the county's actual admiiustrative expenses incurred in connection withthe Dishict. The county may require payment of those expenses by February 15 of the year following the year the ea}penses were incurred. XIV. Necessary Impravements in the District No tax increment sha11 be paid to the HRA after three yeazs from the date of certification of the original net t� capacity by the County Auditor unless wiYhin the three-yeaz period: (1) bonds have been issued in aid of the Project pursuant to Secrion 469.178 of the TTF Act or any other law, except revenue bonds issued pursuant to Mimiesota Statutes, Section 469159 to 469.165; (2) the HRA has acquired property within the District; or 1819526 oe -1�E°► (3) the FIl2A Y�s consiructed or caused to be constructed public improvements withiu the District. The bonds must be issued, or the HRA must acquire properiy or cotLStruct or cause public improvements to be conshucted by appro�nately May, 2001. Pursuant to Minnesota Statutes, Section 469.176, Subd. 6, if, after four yecrosfrom the date of certifzcation of the original tax capacity of the tczz increment fznancingdistrictpursuant to MinnesotaStatutes. Section 469.177, no demolition, rehabilitation or renovation ofproperty or other site preparation, including qual�ed improvement of a street adjacent to a parcel but not installation of utility service incZuding sewer or water systems, has been commenced on a parcel Zocated within a tux increment financing district by the authoriry or by the owner of the prncel in accordance with the tax incrementfinancingplan, no additional tccc increment may be takenfrom that parcel and the ariginal tttx capaciry of thatparcel shall be excluded from the original tax capaciry of the tax increment financing district. If the authority or the owner of the parcel subsequently commences demolition, rehabilitation or renovation or other site preparation on that parcel including improvement of a street adjacent to that parcel, in accordance with the tc� increment financing plan, the authority shall certify to the county auditor in the annual disclosure report that the activity has commenced. The county auditor shall certify the tae capacity thereof as most recently certified by the commissioner of revenue and add it to the original tcir cupacity of the tctt increment fznancing district. The county auditor must enforce the provisions of this subdivision. For purposes of this subdivision, qualified improvements are limzted to (1) construction or openfng of a new street, (2) relocation of a st� and (3) substantial reconstruction or rebuilding of an e,risting street. The HRA or a property owner must begin making improvements to pazcels within the Dishict by appro�mately June, 2003. Pursuant to Minnesota Statutes, Section 469.1763, Subd. 3, revenues derived from taY increments are considered to haue been spent on an acrivity within the Dishict only if one of the following occurs: 1. Before or within fzve years after certification of the District, the r-evenues are actually paid to a thirdparty with respect to the activity; 2. Bonds, the proceeds of which must be used to ftnance the activity, are issued and sold to a third party before or within five years after certification ofthe Distr�ict, the revenues are spent to repay the Bonds, and the proceeds of the Bonds either are, on the date of issuance, reasonably expected to be spent before the end of the latter of (i) the five year perioc� or �i) a reasonable temporary period within the meaning of the use of that term under Section 148(c)(1) of the Internal Revenue Code, or deposited in a reasonably required reserve oP repZacement fund,' 1819526 �� 00 , �y� 3. Binding contracts with a third party are entered into for perforrnance of the activity before or within fzve years after certifzcation of the District and the reverrues are spent under the contrttctual obligation; or 4. Costs with respect to the activity are paid before or within frve yecus after certifzcation of the District and the reverrues are spent to reimburse a party for payment of the costs, including interest on unreimbursed costs. Therefore, one of the above four events must occur by appro�mately May, 2003. XV. Use of Tax Increment A11 revenues derived from tas increment shall be used in accordance with this tax increment financing plan, and pursuant to Minnesota Statutes, Section 469.176, Subdivisions 4 and 4d. XVI. Notification of Prior Planned Improvements Pursuant to Mimiesota Statutes, Section 469.177, Subd. 4, the City has reviewed the area to be included'm the District and has not found properties for which building permits have been issued during the 18 months nnmediately preceding approval of the Plan by the City. XVII. Excess Tas Increments Pursuant to Mimiesota Statutes, Section 469.176, Subd. 2, in any year in which the tax increment exceeds the amount necessary to pay the costs authorized by the tas increment plan, including the amount necessary to cancel any tax levy as provided in Minnesota Statutes, Section 475.61, Subd. 3, the City sha11 use the excess amount to do any of the following: 1. prepay the outstanding bonds; 2. discharge the pledge of tax increment therefor; 3. pay into an escrow account dedicated to the payment of such bonds; or 4. return the excess to the County Auditor for redistribution to the respective taYing jurisdictions in proportion of their tas capacity rate. XVIII. Fiscal Dis ao rities The City and the I IRA have elected to compute Fiscal Dispariries contribution for the Disirict in accordance with Secrion 469.177, subdivision 3,paragraph a XIX. Requirements for Agreements with Develo�er. Pursuant to Minnesota Statutes, Section 469.176, subd. 5, no more than 10%, by acreage, of the property to be acquired in the Dish as set forth in this Ta�c Increment Financing Plan shall at any time be owned by the HRA or the City as a result of acquisition with the proceeds of bonds issued pursuant to Section 469.178, without the HRA ar City having, prior to acquisition in excess 7819526 11 00 •��q of 10% of the acreage, concluded an agreement for the development or redevelopment of the property acquired and which provides recourse for the I�A or City should the development not be completed. XX. Assessment AEreement. Pursuant to Minuesota Statutes, Sections 469175, Subd. 1(b) and 469.177, subd. 8, the I�RA or City may enter into an agreement in recordable form with the Developer of properry within the District which establishes a minimum mazket value ofthe land and completed improvements for the duration of the District. The assessment agreement shall be presented to the assessor who shall review the plans and specifications for the improvements constructed, review the market value previously assigned to the land upon which the improvements aze to be constructed and, so long as the minimum market value contained in the assessment agreement appeazs, in the judgment of the assessor, to be a reasonable estimate, the assessor may certify the minimum market value agreement. �si9sze 12 ATTACfIlVIENT A oo.��t� The Housing District will be located on floors 6 through 12, inclusive and on a portion of floor 5 of the Lowry Building. Each floor will comprise a sepazate unit within a condominium to be formed within the Lowry Professional Building. The Condominium will be formed from the foilowing metes and bounds legal description, which description describes the entirety of the Lowry Professional Building: Lots One (1) and Two (2), except the Northwesterly fifiy (50) feet of said Lots One (1) and Two (2), and except the Southeasterly twenty-five (25) feet of said Lots One (1) and Two (2); and all of Lots Three (3), Four (4) Five (5), Six (6), Seven (7), Eight (8), Nine (9) and Ten (10), all in Block Twenty-one (21), except all that part of Lots Eight (8), Nine (9) and Ten (10), Southeasteriy of a construction buiiding line described as follows: Beginning at a point on the Westerly line of Lot Eight (8), 51.5 feet Northwesterly of a Southwest corner of said Lot Eight (8); thence Northeasterly on a line parallel to the Southeasterly line of said Lots Eight (8), Nine (9), and Ten (10), a distance of 51.96 feet; thence deflecting to the left 90 degrees of a distance of 3.5 feet; thence deflecting to the right 90 degrees a distance of 12.4 feet; thence deflecting to the left 90 degrees, 25.75 feet; thence deflecting to the right 90 degrees more or less 84.96 feet, more or less, to a point on the Easterly line of said Lot Ten (10) which is 80.7 feet Northwesterly of Southeast corner of said Lot Ten (10); there ternunating; all in Block Twenty-one (21), City of St. Paul, commonly referA to as"St. Paul Proper." [Property Identification Numbers] [Map] 1519526 13 oo-�y� �,:.�c3uy Snr.�o,y j't (]OQ I�.�5Z6181 / c' - ` —�� // , /�� - � _ � / � --- ' / � : - � _;�—.^ � /� : ", -- � - -- - ; - ;:. : ;;�� ; �� - ':- � �� / %� . •,�:. _.� � ' .a'. ��J`� 5�� L I � : �. �i -! � l = i // � /� / \, ♦ � � O n E � <' n t � o � = -n N � b _ y _ ' � o - n � ' _. s, � � o = i � . _ � _ ' ^ x � _ ;1 � � � ' / - " ' ` � r�. 2 ' �, 1 s-� il ' '�� ., �•� �' � �r- u Y = � __ _ � — ■ :� : � d 11H1HX3 ORIGlNAL council File #� O� � 3yq Resolution # Green Sheet # �059 S 3 I 2 3 4 s 6 Presented By Re£erred To Committee: Date � s RESOLUTION ADOPTING THE MODIFICATION TO TI3E SEVENTH PLACE DEVELOPMENT PROJECT; ESTABLISHMENT OF THE THE LOWRY PROFESSIONAL BUILDING TAX INCREMENT FINANCING DISTRICT AND ADOPTING THE RELATED ESTABLISHMENT OF THE LOWRY PROFESSIONAL BUILDING TAX INCREMENT FINANCING PLAN 9 BE IT RESOLVED by the City Council (the "Council") of the City of Saint Paul, Minnesota (the "City"), l0 as foliows: 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 Section 1. Recitals. 1.01. The HRA has heretofore established the Seventh Place Development Project and adopted the Development Program therefor. It has been proposed that the City adopt the Modification to the Seventh Place Development Project and establish within the Seventh Place Development Project the Lowry Professional Building Tax Increment Financing District and adopt the related Tas Increment Financing Plan therefor (collectively, the "Program and Plan"); all pursuant to and in conformity with applicable law, including Minnesota Statutes, Sections 469.�90 through 469.1Q81 and 469174 through 469.179, all inclusive, as amended, a11 as reflected in the Program and Plan, and presented for the CounciPs consideration. 1.02. The Council has investigated the facts relating to the Program and Plan. 1.03. The City has performed all actions required by law to be performed priar to the adoption and approval of the proposed Program and Plan, including, but not limited to, notification of Ramsey County and School Dishict #625 having taxing jurisdiction over the properiy to be included in the Lowry Professional Building Tax Increment Financing District, a review of and written comment on the Program and Plan by the City Planning Commission, and the holding of a pubic heazing upon published notice as required by law. 1.04. Certain written reports (the "Reports") relating to the Program and Plan and to the activities contemplated therein have heretofore been prepared by staff and submitted to the council andlar made a part of the City files and proceedings on the Program and Plan. The Reports include data, information and/or substantiation constituting or relating to (1) the "studies and analyses" on why the new Lowry Professional Building Tax Increment Financing District meets the so-called "but for" test and (2) the bases for the other findings and determinations made in this resolution. The Council hereby confirxns, ratifies and adopts the Reports, which aze hereby incorporated into and made as fully a part of this resolution to the same extent as if set forth in full herein. 39 Section 2. Findings for the Adoption and Aproroval of the Proeram and Plan. �j O-3 yo� 40 41 2.01. The Council hereby finds that the Program and Plan, aze intended and, in the judgment of this a2 Council, the effect of such actions will be, to provide an impetus for development in the public purpose and 43 accomplish certain objectives as specified in the Program and Plan, which are hereby incorporated herein. 44 45 Section 3. F�s for the Establishment of The Lowrv Professional Building Tax Increment 46 Financin2 District 47 48 3.01. The Council hereby finds that the Lowry Professional Building Taac Increment Financing District 49 is in the public interest and is a"housing district" under Mirmesota Statutes, Secrion 469.174, subdivision 11. 50 51 3.02. The Council further finds that the proposed development would not occur solely through private 52 investment witlun the reasonably foreseeable future and that the increased market value on the site that could 53 reasonably be expected to occur without the use of tas increment financing would be less than the increase in the 54 mazket value estimated to result from the proposed development after subiracting the present value of the 55 projected tax increments for the maximum duration of the Seventh Place Development Project permitted by the 56 Tax Increment Financing Plan, that the Program and Plan conform to the general plan for the development or 57 redevelopment of the City as a whole; and that the Program and Plan will afford maximum opportunity consistent 58 with the sound needs of the City as a whole, for the development of the Seventh Place Development Project by 59 private enterprise. 60 61 3.03. The City elects to make a qualifying local contribution in accordance with Minnesota Statutes, 62 Section 273.1399, subdivision 6(d), in order to qualify the Seventh Place Development Project far exemption 63 from state aid losses set forth in Section 273.1399, subdivision 6(c). 64 65 3.04. The Council fiirther fmds, declares and determines that the City made the above findings stated in 66 this Section and has set forth the reasons and supporting facts for each determination in writing, attached hereto 67 as Exhibit A. 68 69 Section 4. A�proval and Adoption of the Proeram and Plan. 70 71 4.01. The Program and Plan, as presented to the Council on this date, including without limitation the 7z 73 74 75 76 77 78 findings and statements of objectives contained therein, as hereby approved, ratified, established, and adopted and sha11 be placed on file in the office of the HRA Director. 4.02. The staff of the City, the City's advisors and legal counsei are authorized and directed to proceed with the implementation of the Program and Plan and to negotiate, draft, prepare and present to this Council for its consideration all fuither plans, resolutions, documents and contracts necessary far this purpose. 79 4.03. The Auditor of Ramsey County is requested to certify the original net ta:c capaciTy of the Lowry 80 Professional Building Tax Increment Financing District, as described in the Program and Plan, and to certify in 81 each year thereafter the amount by which the original net tax capacity has increased or decreased; and the City 82 of Saint Paul is authorized and directed to forthwith transmit this request to the CounTy Auditor in such form and 83 content as the Auditor may specify, together with a list of all properkies within the Lowry Professional Building 84 Tax Increment Financing District, for which buiiding permits have been issued during the 18 months immediately ss preceding the adoption of this resolution. �sza3st 2 86 87 88 89 90 EXHIBIT A a o -� 4� The reasons and facts supporting the findings for the adoption of the Lowry Professional Building T� Increment Financing District as required pursuant to Minnesota Statutes, Section 469.175, Subdivision 3 aze as 9i follows: 92 93 1 94 95 96 97 98 Finding that the Distr•ict is a"housing district. " This TaY Increment District is in the public interest because it will provide needed multifamily housing Saint Paul of which at least 20% of the units will be afFordable to households at or below 50% of the azea median uacome. 99 2. Finding that the proposed development, in the opinion of the Council, would not reasonably be expected loo to occur solely through private investment within the reasonablyforeseeable future and that the increased lol market value of the site that could reasonably be expected to occur without the use of tax increment 102 financing would be Zess than the increase in the market value estimated to result fi�om the proposed 103 development after subtracting the present value ofthe projected tctt increments for the maximum duration i o4 of the district permitted by the plan. los 106 Due to the high cost of development on the parcels including the cost of land acquisition and financing the 107 proposed improvements, this project is feasible only through assistance, in part, from ta�c increment 108 financing. 109 i l0 A comparative analysis of estimated market values both with and without establishment of the Lowry 1 I 1 Professional Building Tax Increment Financing District and the use of tas increments has been performed ll2 as described above. If all development which is proposed to assist with tax increment wzxe to occur in the 113 Lowry Professional Building, the total increased mazket value wouid be up to $8,230,000. It is the 114 Council's finding that no development with a market value of greater than $8,230,000 would occur without 115 taY increment assistance in this district within 15 yeazs. T'his finding is based upon evidence from general ll6 past experience with the high cost of providing public improvements in the general area of this District. 117 i l8 3. Finding that the Lowry Professional Building Tax Increment Financing District conforms to the general 119 plan for the development or redevelopment of the municipaliry as a whole. 120 121 The Establishment of the Lowry Professional Building Tas Increment Financing District for the Seventh 122 Place Development Project has been reviewed by the Planning Commission and been £ound by resolution 123 to conform to the general development and redevelopment plan of the City. 124 125 4. 126 127 128 129 130 Finding that the Establashment of the Lowry Professional Building Tax Increment Financing District for the Seventh Place Development Project will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development of the Seventh Place Development Project. The number of housing units to be developed will increase the housing stock in the City and the State of Minnesota. IS20351 oo•3yq Requested by Department of: Plannin & Economic evelo ment By: Adoption Fo� Approved by C' y Ty rney / Certified by Council Secretary BY= „ By: � , � l—` �pg�oved by Mayor for Suhmission to Council Approved by Mayor: Date BY. �� BY. � ��/� ORfGfNAL 182Q351 Adopted by Council: Date A,r��__a-�LIC� "Public Hearing" PARTMINT/OFFIC�UNCIL PED MACT PERSON � RiOIJE Allen Carlson 6-6616 'ST BE ON COUNCILAGQ�/1 BY @4'f� 4/i2/oo 0-� DwTE WITW7ED 3/28/00 �� TOTAL # OF SIGNATURE PAGES � GREEN S ovun�ru�arae � 00 • 3 y.°1 No 105953 a� ancoocz 0 �,.,,�, �1 �1 � ❑ �,� - ❑,.�,�.�. ❑�,..v,�.a 3 �4 .maR�oRNm.nm � Crh� (CUP ALL LOCATIONS FOR SIGNATURE) �criorvREouESrfn Approve resoultion to: 1) expand 7th place redevelopment project to include Lowry Professional Building located at 350 St. Peter st. 2) Establish Lowry Professional Building tax increment district; and 3) approve Lowry Professional Building tax increment financing plan to allow development of 112 units of housing % A PLANNINGCOMMISSION CIB CAMMIT7'EE CIVIL SERVICE COMMIS: Hes this ae��m eyer rorkea unaer a carrt�aa f« tMis departmenn V6S NO ties thie DeworJfirm eier been a eity empbyee9 YES NO Oaes ihic Persauirm P� a sldll not rarmatlYO�� M'anY current cilY emProY�? VES NO Is tl�is pe�eoMxm a tarpeletl wMoR YES NQ Current building is 609 vacant & obsolete or professional office building I. Create 112 units of rental housing which 20� will be affordable Z Increase value of the building uitimately increase the tax base �� - �` A � t � g`�k3F�� 4 � I � � 'ry Y'Y�� . -.,�, ..,.':.n'rs'' �5 �F: �^.r� Building will continue to have high vacancy problems. OF TRANSACTION t N IA SOURCE COETrttEVENUE eUDOETED (GRCLE ON� _.�fuulr' - ' - "7I:Li�' VES t NO , �l �'..+!:l'J: oo_�y1 Interdepartmental Memorandum [yr�� : ��y� .�r�[n� TO: Council President Bostrom Councilmember Benanav Councilmember Blakey Councilmember Coleman Councilmember Harris Councilmember Lantry Councilmember Reiter FROM: Brian Sweeney��G?"�X Allen Carlson V DATE: March 28, 200� ��Z RE: PUBLIC HEARING: RESOLUTION ADOPTING THE MODIFICATION TO THE SEVENTH PLACE DEVELOPMENT PROJECT; ESTABLISHING THE LOWRY PROFESSIONAL BUILDING TAX INCREMENT FINANCING DISTRICT AND ADOPTING THE RELATED LOWRY PROFESSIONAL BUILDING TAX INCREMENT FINANCING PLAN Purpose The purpose of this public hearing is to receive public comment and request the City Council to approve a resolution which adopts the modification to the Seventh Place Development Project; establishes the Lowry Professionai Building Tax Increment District and adopt the related Tax Increment Financing Plan to assist in the redevelopment of the building into 112 units of rental housing of which 20% wiil be affordable to low income households. Background/Proposal The Lowry Professional Building (Lowry) is a 12 story building with approximately 280,000 gross square feet of Class C office/retail space. Much of the building's upper floors are not leased. The building was recently purchased from the Saint Paul Port Authority by the Avex Group (Avex) which has o�ces in Dallas, Texas and recently in Saint Paul. Avex is requesting City/HRA financial assistance to convert floors 6 through 12 into 112 units of residential rental housing units. The multifamily portion of the building wili occupy approximately 120,000 gross Page 1 of 9 oo-��t� square feet of which approximately 78,000 square feet will be actual living space. Floors 1 and 2 of the Lowry will maintain the bulk of the existing businesses. The skyway system within the building will also be remodeled to attract additional commercial tenants, provide improved pedestrian traffic flow and attract people to the first floor businesses. Floors 3 through 5 wiil be remodeled to upgrade the existing commercial office space to "B" category office space. Avex is working with existing commercial tenants to relocate them to floors 3 through 5. The proposed unit mix, size and tenant rents for the residential space are as follows: Unit Type # of Units Unit Size Gross Rent EfEiciency- Affordab{e 14 470 $556 One Bedroom 70 650 $875 One Bedroom/Den 4 869 $1,005 One Bedroom/Den - Affordable 11 869 $715 Two Bedroom 14 1035 $1,110 Total 112 Avg. unit size - 705 Based upon the above unit mix 25 units (22.3% of units) will be rented at the Section 8 Fair Market Rent levels which are affordable to households at or below 40% of the area median income. Page 2 of 9 oo-�� Proposed Financing Structure Below is the proposed Source and Uses of Fund Statement: Source of Funds Uses of Funds Tax Exempf Multifamily Revenue $7,740,000 Acquisition $1,500,000 Bonds Tax Increment Bonds 2,435,000 Construction 8,874,815 Construction Interest Earnings 31,000 Construction Mgmt 137,500 tow income tiousing Tax Credit 710,000 Financing Fees (HUD) 309,900 Equity HRA Grant 250,000 Issuer Fee 101,750 STAR 500,000 Underwriter's Discount 152,625 Minnesota Housing Finance Agency 190,000 Capitalized Interest 450,000 Family Housing Fund 290,000 Due Diligence/Legal 85,000 Title/Survey/Market 127,000 Study Building Closing/Due 80,000 Diligence GNMA Reserve 75,000 Contingency 252,410 Total $12,146,000 Total $12,146,000 The Project will be segmented by use, by means of condominium subdivision, to aliow the allocation of tax exempt revenue bonds to finance solely the multifamily portion of the building along with improvements to the other sections which support and improve the multifamily portion value (i.e. a portion of the garage and level 1 and 2 common areas.). Improvement of the retail and commercial portions (levels 2-5) of the building will be financed with separate private funds of approximately $4.5 million. Th primary source of financing for the project wili be the use of the City's year 2000 bonding authority to issue up to $7,740,000 of tax exempt multifamily revenue bonds and $2.4 miilion of tax exempt tax increment bonds. The City's annual bonding authority Page 3 of 9 0 0 -��lq is approximately $16 million per year. The City Council adopted on December 8, 1999 resolution no. 99-1178, which authorizes the HRA to issue the bonds. In no case with the multifamily bonds or tax increment bonds wili the City or HRA have an obligation or liability to repay the bonds. The bonds will be secured exclusively from the revenues and tax increments generated from the project. As an issuer of the bonds, the HRA wiil receive an issue�s fee the first year equal to 1% of the outstanding principal balance of the bonds plus annua{ly for the term of the bonds a fee equal to one-tenth of one percent of the outstanding principal balance of the bonds. In order to issue tax increment bonds, the City Council must approve expansion of ihe Seventh Place Redevelopment Project to inciude the Lowry building, estabiishment of a tax increment financing district for the 4'" through 12'" floors of the building and approve a tax increment financing pian which is included with this report. . In order to create the housing tax increment financing district necessary to finance the tax increment bonds, the City must by State statute contribute a local match of 5% of the total increment to be generated to avoid incurring local government aid penalties. The HRA laid over a$250,000 request of grants funds on November 24, 1999 until the project was further along in the process. Pursuant to Federal and State bonding statutes at least 20% of the units must be affordable to households at or below 50% of the area median income. The proposal is structured to be affordabie to households at or below 40°/o of area median income. Because tax exempt bonds will be used and 20% of the units will be affordable, Avex will automatically be eligible to receive low income housing tax credits for the affordable units. The credits wiil generate up to $710,000 of limited partner equity for the project. The City Council has approved a$500,000 STAR loan to the project bearing a 6% interest rate and 2� year term. The Minnesota Ffousing Finance Agency has approved $190,000 and the Family Page 4 of 9 00-��9 Housing Fund $290,000 to the project to subsidize the affordable housing units. Project Senefits The following are the reasons staff believe converting the building to partial housing is attractive, will be successful and provide public benefit to the City: • The current use of the building as a medical facility is obsolete. Most health care practices have built ciinics adjacent to hospitals due to convenience and synergies. A{so, most heafth care practices have followed their client base to the suburbs. Although there is a need for heaith care facilities downtown and within the building, it is not viable to expect Avex to fill 240,000 square feet of office space for medical related facifities. This is evident to the fact the building is only 40% occupied. The configuration of the building is not conducive to leasing to large tenants. The building is long and narrow. Most larger tenants want space that is conducive to an open space plan which requires a more rectangular or square foot print. There is a need for smaller office space, however it would be very difficult to lease up 200,000 plus square feet to tenants who only need 500 - 1,000 square feet. The configuration that is a detriment to renting the building for office use is an advantage to creating housing units. The narrow width, high ceilings, large windows and spacing of the structural posts lends itself to creating attractive, efficient housing units. Ample, large windows and high ceilings make the units very marketable. Furthermore, locating the units on the upper levels provides attractive panoramic views, which also help to market the units. The building has convenient access to off-street parking by means of the 170 car Lowry Ramp. The diffculty in converting warehouse buildings to housing such as the Strauss or JJ Hill building is the lack of on-site parking. The project promotes linkages with the transportation system, both pedestrian and mass transit. The building is on the skyway which allows tenants to access work or shopping Page 5 of 9 oc -�Ll`� without going outside. It also allows convenient handicapped accessibility. The building is also on a major bus route which allows tenants convenient travel within and outside the city. • The project is located in the cultural corridor which increases its marketability. It is located where the "action is" such as the Science Museum, Rice Park, the river, theaters, restaurants, etc. • The project promotes economic integration and diversity. We have not to date completed a project which has both high income and lower income tenants living together, which is a major goal of the City's housing action plan. • The project provides affordable housing which is in great demand downtown. Service workers and others wiil have a decent, safe place to live and be within walking distance of work. Again, this is a significant goal of the recently adopted housing action plan. • The project will be attractive to young professionals because it is conveniently located to major employers such as Lawson Software, St. Paul Companies and EcoLab. • The project promotes "IVew Urbanism". It combines mixed-use, mixed-income, transportation linkages and employment connections. It wiil maximize the use of the building. Creating 112 units of additional housing downtown promotes the concept of a 24 hour downtown vibrant with activity. • The project, by adding 112 housing units will support additional retail shopping in the downtown area. Housing should also benefit to strengthen the existing businesses in the building. Findings of Fact to Support Adoption of the Lowry Professional Building Tax Increment Financing District The reasons and facts supporting the findings for adoption of the Lowry Professionai Building Page 6 of 9 00 -3 �q Tax Increment District pursuant to MN Statutes, Section 469.175, Sub. 3, are as follows: 1. Finding that the District is a`housing district." This Tax Increment District is in the public interest because it wili provide needed multifamily housing Saint Paul of which at least 20% of the units wili be affordable to households at or below 50% of the area median income. 2. Finding that the proposed development, in the opinion of the Council, would not reasonably be expected to occur solely through private investment wifhin 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 /ess 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 plan. Due to the high cost of development on the parcels inciuding the cost of land acquisition and financing the proposed improvements, this project is feasible only through assistance, in part, from tax increment financing. A comparative analysis of estimated market values both with and without establishment of the Lowry Professional Building Tax Increment Financing District and the use of tax increments has been performed as described above. If all development which is proposed to assist with tax increment were to occur in the Lowry Professional Buiiding, the total increased market value would be up to $8,230,000. It is the Council's finding that no development with a market value of greater than $8,230,000 wouid occur without tax increment assistance in this district within 15 years. This finding is based upon evidence from general past experience with the high cost of providing public improvements in the general area of this District. Finding fhat the Lowry Professiona/ Building Tax /ncrement Financing Disfrict conforms to the general plan for the development or redevelopment of the municipality as a whole. Page 7 of 4 oa -��4.°l The Establishment of the Lowry Professional Building Tax increment Financing District for the Seventh Place Development Project has been reviewed by the Pianning Commission and been found by resolution to conform to the general development and redevelopment plan of the City. 4. Finding that the Establishment of the Lowry Professional Building Tax lncrement Financing District for the Seventh Place Development ProjeCt will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development of the Seventh P/ace Development Project. The number of housing units to be developed will increase the housing stock in the City and the State of Minnesota. Recommendation Staff recommends and requests the City Council to consider adoption of the attached resolution which approves and adopts the foilowing: Expansion of the Seventh Place Redevelopment Project to include the Lowry Professional Building property; and Establishment of the Lowry Professional Building Tax Increment Financing District; and The Tax Increment Financing Pian to finance the Project. Statement of the Council President Being duly authorized by the City Council to conduct this Public Hearing, the hearing is now open. This Public Hearing is called for the proposed purpose to consider the following: Expansion of the Seventh Place Redevelopment Project to include the Lowry Professional Suilding property located at 250 St. Peter Street; and Page 8 of 9 oo-3�Lq Establishment of the Lowry Professional Building Tax Increment Financing District; and Approval of the Lowry Professional Building Tax Increment Financing Plan. Approval of the above actions wili permit the financing of tax exempt multifamily revenue bonds to develop 112 residential rental units in the buiiding of which at least 20% will be restricted to HUD determined Fair Market Rents, which rents are affordable to households at 40%-45% of the area median income. Notice of time, place, and purpose of this hearing was published in the Saint Paul Pioneer Press on Saturday, March 25, 2000. The affidavit of the publication of the Notice of Public Hearing will be made a part of these proceedings. Is there anyone who wishes to be heard on these sales? If not, the Chair will declare this Public Hearing adjourned. Attachments 1. Modification to Seventh Place Development Project. 2. Lowry Professional Building Tax Increment Financing Plan Allen Carlson 266-6616 K:�sna=ea�caRLSOae�iowry�� c�f Pian aPPso�ai.wP$age 9 of 9 0 0 -7 �t.°t Modification to Seventh Place Development Proiect Lowry/tif planning commission Itr.doc flc_��C`1 AMENDIZENT TO REDEVELOPMENT PLAle! SEVENTA PLACE REDEVELOPMENT PROJE�`�' DATED NOVEMBER 16,1978 AME�TDVIENT DATED , 209�P �8��3� p o -3�q A_�(ENDMENT TO REDEVELOPy1EtiT PLA� S E VENTH PLACE REDEVELOPMENT PRO7ECT DATED NOVE�(BER 16, 1978 A.�IEYDMENT DATED 1 2000 1. The Redevelopment Plan for the Seventh Place Redevelopment Project adopted November 16, 1978, as revised and modified on November S, 1981, January 28, 1482, and May 25, 1983, and as amended on March 25, 1985, November 9, 1989 and l�fay 28, 1997 (the "Redevelopment Plan"), is hereby further amended as follows: A There is hereby added to the Seventh Place Project the property described (by parcel number and/or physicalllegal description) on Exhibit 1 hereto and illustrated by the map which is also part of Exhibit l. B. Paragraph 1 of Section F, General Land Use, shall be amended to read as follows: «1. Ma�. A map of the Seventh Place Project area, as expanded, is set forth as Exhibit 3 hereto." C. Map No. I attached to the Redevelopment Plan is hereby deleted and replaced with Exhibit 3 hereto. 2. Except as amended hereby, the Redevelopment Plan shall remain in full force and effect. isineo 00 -3�l°I EXHIBIT 1 [Pazcel numbers and/or legal description and map ofProperty to be added to Project Area] Lots One (1) and Two (2}, except the Northwesterly fifty (SQ) feet of said Lots One (1) and Two (2), and except the Southeasterly riventy-five (25) feet of said Lots One (1) and Two (2); and all of Lots Three (3), Four (4) Five (5), Six (6), Seven (7), Eight (8), Nine (9) and Ten (10), all in Block Twenty-one (21), except all that part of Lots Eight (8), Nine (9) and Ten (10), Southeasterly of a conshuction buildin� line described as follows: Beginning at a point on the Westerly line of Lot Eight (8), 51.5 feet Northwesterly of a Southwest corner of said Lot Eight (8); thence Northeasterly on a line puallel to the Southeasterly line of said Lots Eight (8), Nine (9), and Ten (10), a distance of 51.96 feet; thence deflecting to the left 90 degrees of a distance of 3.5 feet; thence deflecting to the right 90 degees a distance of 12.4 feet; thence deflecting to the left 90 degrees, 2�.75 feet; thence deflecting to the right 90 degrees more or less 84.96 feet, more or less, to a point on the Easterly line of said Lot Ten (10) which is 80.7 feet ir'orthwesterly of Southeast comer of said Lot Ten (10); there terminating; all in Block Twenty-one (21), City of St. Paul, commonly referred to as "St. Paul Proper: ' iai�sbo 1-1 aa -� �{q �t 11 :lY� - � - - ; I _ ��; � _� �� '`"` �. � 0 C7 y - .:i � , ;_� � � , , � � '�� _ � X � , .-� L ' � = .l � � � " J - � � >� � = �— �e� _ � i� = - ' _ : i �/ i` � � // / ; :: � . �� /�\� ° i � _� t z; � ` I� Y � � � ` � � : - .,~ _ � � \� ,; ` ` tr . �� - /; � ` `\y/ ', ' /. �. i � /�'.' i � � � _-- _ - , - � / --_ --- � ='-= / —' J � _ �-� � i \ : � "� �—�--� = .�• � - ' ' ' a �/ ' � . � �` ':/ I8t9290v! (12ZR°/,01!.DOC) A-1 Homing Pmgam 00 -3�1,q TIF Plan Lowry/tif plannin� commission Itr.doc 0 0 •��,� Draft: 2/29/00 HOUSING AND REDEVELOPMENT AUTHORITY OF Tf� CZTY OF SAIlVT PATI., MINNESOTA TAX INCREMENT FII�ANCING PLAN FOR LOWRY PROFESSIONAL BUII.DING TAX INCREMENT FINANCING DISTRICT I. Introduction A. Background The Lowry Professional Building Housing Tax Increment Financing District (the "District") shall consist of an appro�mately 120,000 square foot pazcel located at 350 St. Peter Street (the "Property"), in the City of Saint Paul, County of Ramsey, State of Minnesota and legally described in Attachment A attached hereto and incorporated in this plan. The Housing and Redevelopment Authority of the City of Saint Paul, Minnesota (the "I IRA") proposes a plan for the development of the Dishict consisting of the acquisition of property, rehabilitation demolition, and the construction of a 112-unit rental housing facility (the "Project") on the Property to be owned by Avex Lowry Residential Limited Partnership, a Minnesota limited partnership. The Project comprises a portion of the exisling Lowry Professional Building. The remainder of the Buiiding is simultaneously being redeveloped as a retail and office facility (the "Cominercial Project") by an affiliate of Developer at an appro�cimate initial cost of $7,000,000. The Commerciai Project will not be included in the District. B. Creation of Lowry Professionai Building Housing Tax Increment District This tas increment plan relates to the creafion, under Mim�.esota Statutes Section 469.174, Subd. 11, of the Lowry Professional Building Housing Tas Increment Dishict (the "Dishict"). C. Need and Public Purpose To increase the supply of adequate housing witivn the community £or families of all income levels including rental housing for families of low and moderate income. ii. To provide such housing on land or in areas which qualify as redevelopment projeets with emphasis upon lands poten6ally usefut for contributing to the public welfaze, but ' which by reason of special probiems or conditions, have not reached full development potential by the ordinary operarions of private enterprise. iii. To cany out the provision of housing and development of underdeveloped lands within the City consistent with the general land use plan and other components of the City's Comprehensive Plan. 1819526 00 -3�t°l iv. To assist in the provision of rental housing to persons of low and moderate income at prices or rents within their means and to make advance commitments to such rental assistance in low and moderate income units in order to assist developers in securing fina�icing for housing improvements. v. To finance a portion of the development costs ofthe Project by means of tax increment generated by Project improvements and development. vi. To finance housing developmentby acombinationofprivate andpublic financing under authority and subject to the requirements of federal, state and local law and ordinance for the provision of revenue bond financing for housing purposes. It is necessary tUat the I3RA exercise its powers under state law to develop, implement, and finance a progrun designed to encourage, ensure and facilitate the development of affordable housing for its low- and moderate-income residents. The Project will fixrther accompiish the public pur�wses specified in this paragraph. II. Objectives of the HRA for the unprovements in the Lowry Professional Building Project area. A. Provideaffordablehousingforlow-audmoderate-incomeresidentsofSaint PauL As a result of an e�ensive neighborhood review process and a confirming market study currently being conducted by LAWCO Financial, LLC, the I-IRA believes there is a market for rental housing of the type being proposed for the Dishict. B. To redevelop underused property. The Properiy was previously operated as a 13 story mixed use commercial/retail o�ce building. Due to building obsolescence, changes in downtown demand far the kind of space offered in the Property, and high vacancy rates, the Property is no longer a viable commercial properry, and the buildings located on the Property have deteriorated. Cuxrently, the Property is 60% vacant. The construction of the Project will contribute to the public welfaze, as the Properiy has not reached its current development potential by the ordinary operations of private enterprise. C. Expand the tas base of the City of Saint Paul. It is expected that the taxable market value of parcels in the tax increment dishict will increase by appro�mately $8,230,000 once the new housing facility is placed in service. �si9sze 00 -�y°� III. Classificafion of the District The HRA and the City, in detennining the need to create a ta�c increment finaucing district in accordance with Section 469.174, find that the District is a housing district pi�*��ant to Mivnesota Statutes, Section 469.174, Subd. 11 because (i) the project which comprises the I7istrict is intended for occupancy, in part, by persons or families of low and moderate income, as defined in Minuesota Statates, Chapter 462A, Title II ofthe National Housing Act of 1934, the National Housing Act of 1959, the United States Housing Act of 1937, as amended, Title V of the Housing Act of 1949, as amended, other similaz federal, state, or municipal legislation, and the regulations promulgated under any of those acts; and (2) the fair mazket value of the improvements which shall be coustnicted for commercial uses or for uses other than low and moderate income housing consist of not more than 20 percent ofthe total fair market value of the planned improvement in the development plan or agreement. The fair mazket value ofthe improvements comprising the Project was determined using the income approach, modified by adjusting foz different types of uses, and adjusted further to reflect cunent taxable properiy values in the area surrounding the Project. At least 20% of the units will be occupied by individuals whose income is 50% or less of the area median gross income, adjusted for family size. In addition, the District meets the requirements of a housing dislrict pursuant to Mimiesota Statutes, Section 469.176, Subd. 4d, because 100% of the revenues derived from tax increments from the District will be used solely to finance the cost of a housing project as defined in Section 469.174, Subd. 11, including the cost of public improvements directly related to the housing project and the allocated administrative expenses of the IIRA. Finally, the District meets the requirements of a housing district pursuant to Minnesota Statutes, Section 469.1761, Subd. 1 and Subd. 3 because, for the duration of the District, either (a) the project which comprises the District will satisfy the income requirements for a qualified residentiai rental project as defined in Section 142(d) ofthe Intemal Revenue Code (the "Code"), ar(b) at least 50 percent ofthe residential units inthe projectwhich comprises the District will be occupiedby individuals whose income is 80 percent or less of azea median gross income. In this case, as mentioned above, at least 20 percent of the units will be occupied by individuals whose income is 50 percent or less of the area median gross income, adjusted for family size, which satisfies the income requirements for a residential rental project as defined in Section 142(d) of the Code. IV. Descripfion of the development program for the Lowrv Professional Building Project. The development program consists of the development of a 112-unit low and moderate income rental housing facility (the "Project") in the Dishict and the finaucing ofthe Project. The Project will be owned by Avex Lowry Residential Limited Partnership, a Minnesota limited partnership company (the "Developer"). This will require acquiring the properiy, installing infrastructure, contracting for professional services essenfial to redevelopment activifies, incurring finaucing related expenses and funding adininistrative fiuictions, all as described in more detaii below. All of the costs listed below aze reflected in the project budget, and there aze no additional public improvement wsts. 1819526 00 -'�y� A. Acquire property. The Developer will acquire the Properiy on or about May 16, 2000 for a purchase price of $1,500,000. B. Reimbursement for Demolition of Structures. There will be no demolition of structures located within the District. The cost of demolishing and removing obsolete internal improvements in the Project is included in E. C. Undertake and install site improvements and utilities. No site improvements or utility access costs will be incurred. D. Contractsforprofessionalservicesessentialtotheredevelopmentactivifies. Professional fees will include land surveys and title work, real estate and environxnental testing, legal, civil engineering, appraisals, accounting, consultants and azchitectural design. The total cost for professional services, other than bond issuance costs, is estimated at $167,525. There will be no developer's fee. E. Construction of Project Demolition of obsolete internal improvements, actual construction of the new internal improvements comprising the Project, construction management fees, and the funding of operating reserves, replacement reserves and debt service reserves therefore, and flie cost of fiunishings and equipment for the Project, is expected to total approximately $9,869,725. F. Incur costs and expenses connected with financing activities. The I�t1 shall issue tax exempt tax increment revenue obligafions to finance approxiniately $2,435,000 oftotal Project costs and taY exempt revenue bonds to finance appro�xnately $7,740,000 of Project costs. Bond issuance costs plus other financing related costs (including costs incurred in connection with other sources of funds set forth in Section VII.C.), including conshuction period interest and insurance, legal expenses, printing and underwriter's discount, aze anticipated to toYal approximately $608,750. V. Descripfion of contracts entered into at the time ofpreaaration of the Plan The following, as required by Section 469.175, Subd. 1(3), is a list of development activities that are proposed to take place within the District for which contracts have been entered into at the time of the prepazation of tlus plan, including the names of the parties to the contract, the activity governed by the contract, the cosi stated in the contract, and the e�;pected date of completion of that activity. 1819526 4 oa -34 q � L� Project Manaeement Consuitant Estimated Cost: Time and material basis for preliminary design Estimated completion date: Mazket Consultant Estimated Cost: F.stunated completion date: N/A $12,400 Mazch 31, 2000 VI. Descripfion of other tvaes of develonment activities which can reasonablv be expected to take place within the Lowrv Professional Buildin� Proiect Other development activities in the Dishict, which may require the expenditure of tax increments, will consist of acfivities necessary and ancillary to promoting and inaximizing the objectives set forth in Section II above. None VII. Cost of the Project and Description of the Lowry Professional Buildin�Housin�Tax Increment District. The following, as required by Section 469.175, Subd. 1(5), are estimates of the (I) cost of the Project, including administration eapenses; (ii) amount of bonded indebtedness to be incurred; (iii) sources of revenue to finance or otherwise pay the costs of the Project; (iv) the most recent net tax capacity of taxable real properry within ihe taY increment fmancing district; (v) the estimated captured net tax capacity of the t� increment financing district at completion; and (vi) the duration of the tax increment financing dishicYs e�cistence. A. Cost of the Project, including administrative expenses. The total cost of the Project is estimated at $12,146,000, wluch includes $0 of public nnprovement costs (see C. below). In addition, the III2A may use an amount up to 10% of the tax increment expenditures to pay for its costs in administering the District. B. Amount of bonded indebtedness to be incurred. The HR[� shall be the issuer of one or more series of tax exempt tax increment revenue bonds and housing revenue obligations by the end of the year 2000 in an aggregate amount not to exceed $10,175,000. The ta�c increments will be pledged to the payxnent of all series of the bonded indebtedness. The HRA may, after the initiat issuance of bonds, issue refunding bonds for purposes of refiiiancing such bonded indebtedness. C. Sources of revenue to finance or otherwise pay project costs. The following are the likely sources for funding the totai Project: �at9sze oa-3�(,°� i. Tas Increments Tax increments, net of up to 10% for adminishative expenses, aze anticipated to equal appro�mately $260,000 annually. All taY increments will be first pledged to the payment of debt service on the bonds described in B above, and any excess shall be pledged to the repayment of the STAR Loan referred to in C.iv. below. u. Investment income Certain interest eanvugs from bond proceeds, if any, will be a source of revenue to pay project costs. A current estimate of such earnnigs is not availabie. iii. Developer Capital The Developer is not expected to contribute capital to the Project. In its snnultaneous development of the Commercial Project, however, which contains shared facilities with the Project, the Developer's affiliate is conhibuting approximately $7,000,000. iv. Saint Paul STAR (Sates Taxl The City will contribute a$500,000, fully amortizing loan at a 6% interest rate for 20 years. Minnesota Housing Finance Aeency (MI�'A2 The 1VIHFA will contribute a$190,000 loan at a simple interest rate of 1% for 30 years with deferring interest and principal. vi. Family Housine Fund (FHFI The FHF will conhibute a$290,000 loan at a simple interest rate of 1% for 30 years with deferring interest and principal. vii. Citu of Saint Paul FIIZA Grant The I IRA will conhibute a$250,000 grant. D. The most recent net tax capacity of tagable real properly within the tas increment financing district. $218,000. 1819526 co -3�4°� E. The estimated captured net tag capacity of the tag increment financing disixict at completion. The Project will consist of a 112-unit low and moderate income rental housing facility with an aggregate assumed mazket value of $7,000,000, including land value. The increase in mazket value is estanated at $6,830,000. Applying a 1% ta�c capacity rate to the low income units and 2.4% taY capacity rate to the market rate units results in tases (total) of $225,851 and tas increment of $219,715 based on an estimated captured taz capacity of appro�nately $6,830,000 assessed in the year 2001 and payable in the year 2002, the yeaz following expected completion of construction of the Project. This captured taY capacity is calculated in accordance with Mvuiesota Statutes, Section 469.174, Subd. 4 and 464.177, Subd. 2. In addition to the Project, appro�mately $1,400,000 of increased market value attributable to the commercial portion of the buiiding inciuded in the Dishict will be included in the captured net tax capacity. Applying a 4.9% tax capacity rate to the commercial portion results in ta7ces (total) of $70,160 and taY increment of $68,960 based on an estimated captured tax capacity of $1,400,000. F. The durafion of the tas increment financing district's egistence. The District will be certified in 2000. The first t� increments are anticipated to be generated for taxes payable in the year 2001. Pursuant to Section 469.176, Subd. lb(a)(5), the duration of the District will run 25 years from the first receipt by the HRA of taat increments, which will be through calendar yeaz 2025. The HRA does, however, reserve the right to decertify the District prior to the legally required date. VIII. Alternate estimates of the impact of the tax increment financing on the net tas ca�acities of all taxing jurisdictions. The taxing jurisdictions in which the District is located in whole or in part aze as follows: a. Independent School District #625, whose boundaries are coterminous with those of the City of Saint Paul. b. The County of Ramsey, wherein the City of Saint Paul is located. c. The Housing and Redevelopment Authority of the City of Saint Paul, whose boundaries aze coternunous with those of the City of Saint Paul. d. The Port Authorily of the City of Saint Paul, whose boundaries are coterminous with those of the City of Saint Paul and whose powers to levy and use properry taa�es aze limited. e. Metropolitan authorities, such as the Metropolitan Council, Met�opolitan Aixports Commission, Metropolitan Waste Control Commission, and the Metropolitan Mosquito Control Dishict. Of these, only the Metropolitan Council and the Metropolitan Mosquito Conh�ol District currently levy taxes on real estate. 18L9526 0 0 - 3�t.q The I�2A is required by Mimiesota Statutes Secrion 469.175, Subd. 1(a)(� to make statements relative to the alternate estunates of the impact of the tax increment financing on the net tas capaciries of all taxing jurisdicfions in which the tax increment financing district is located in whole or in part. Impact on Taging Jurisdictions Under the assumption that the estnnated captured net tax capacity would be available to the taxing jurisdictions without creation of the District, creation of the District will serve to deny these ta��ing jurisdictions the taxes from the captured net tax capacity in the amount estimated in Table 1 below. a,�t Taxine Jurisdiction T.C. Ratio Q Table 1 Estimazea nrmual Percent Caaturedlncrement City of St. Paul 38.460% 2527 Ramsey County 42.879% 28.17 School Distdct #625 63926% 42.00 Other 6.926% 4.55 1.52191 100 [Intentionally Omitted.l 288,675 288,675 288,675 288,675 Loss to Taeing Jurisdictions 111,023 123,781 184,538 19,943 2$$�6�$ X. Identification oi all �arcels to be included in the District. Attached hereto in Attachment A is a list of the Properry Idenfification Numbers for all properties to be included in the District, a map showing the Project area and the District, and a legal description idenrifying the boundaries of the District. XI. District administrafion and annual disclosure. Admivistration of the District will be the responsibiliry of the I3RA. Tax increments wiil be deposited into interest bearing accounts sepazate and distinct from other funds of the I�A. Tax inerements will be used only for activities deseribed in this tax increment plan. The I IRA will report annually to the State Auditor, county boazd, school board and Aepartment of Revenue regarding activities in the District as required by Secrion 469.175, subdivision 5 and subdivision 6 and will include information with regard to the Dishict in the data necessary to comply with subdivision 6a. 1819526 00 .a�� XII. Modifications to District Tn accordance with Mivuesota Stazutes, Section 469.175, Subd. 4, any reduction or enlazgement of the geographic azea of the Project or tax increment financing district; increase in amount of bonded indebtedness to be incurred, including a deteruiination to capitalize interest on debt ifthat detemiination was not a part of the original plan, or to increase or decrease the amount of interest on the debt to be capitalized; increase in the portion of the captured taY capacity to be retained by the City; increase in total estimated taY increment expenditures; or designation of additional properry to be acquired by the City shall be approved upon the notice and after the discussion, public hearing and findings required for approval of the original plan. The geographic azea of a tax increment financing district may be reduced, but shall not be enlazged after five years following the date of certification of the original tas capacity by the county auditor. XIII. Administrative Expenses In accordance with Mirniesota Statutes, Sections 469.174, Subd. 14 and 469.176, Subd. 3, admiiustrative expenses means all expenditiares of an authority other than amounts paid for the purchase of land or amounts paid to contractors or others providing materials and services, including azchitectural and engineering services, directly connected with the physical development of the real property in the District, relocafion benefits paid to or services provided for persons residing or businesses located in the Disirict or amounts used to pay interest on, fund a reserve for, or sell at a discount bonds issued pursuant to Section 469.173. Administrative expenses also include amounts paid for services provided by bond counsel, fiscal consultants, and plauning or economic development consultants. Admuiislrative expenses of the District will be paid from tax increments; provided that no tax increment shall be used to pay any admiuistrative expenses for the Project which exceed ten percent of the total taY increment expenditures authorized by the tax increment financing plan or the total tax increment �penditures for the Project, whichever is less. Pursuant to Minnesota Statutes, Section 469.176, Subd. 4h, tax increments may be used to pay for the county's actual admiiustrative expenses incurred in connection withthe Dishict. The county may require payment of those expenses by February 15 of the year following the year the ea}penses were incurred. XIV. Necessary Impravements in the District No tax increment sha11 be paid to the HRA after three yeazs from the date of certification of the original net t� capacity by the County Auditor unless wiYhin the three-yeaz period: (1) bonds have been issued in aid of the Project pursuant to Secrion 469.178 of the TTF Act or any other law, except revenue bonds issued pursuant to Mimiesota Statutes, Section 469159 to 469.165; (2) the HRA has acquired property within the District; or 1819526 oe -1�E°► (3) the FIl2A Y�s consiructed or caused to be constructed public improvements withiu the District. The bonds must be issued, or the HRA must acquire properiy or cotLStruct or cause public improvements to be conshucted by appro�nately May, 2001. Pursuant to Minnesota Statutes, Section 469.176, Subd. 6, if, after four yecrosfrom the date of certifzcation of the original tax capacity of the tczz increment fznancingdistrictpursuant to MinnesotaStatutes. Section 469.177, no demolition, rehabilitation or renovation ofproperty or other site preparation, including qual�ed improvement of a street adjacent to a parcel but not installation of utility service incZuding sewer or water systems, has been commenced on a parcel Zocated within a tux increment financing district by the authoriry or by the owner of the prncel in accordance with the tax incrementfinancingplan, no additional tccc increment may be takenfrom that parcel and the ariginal tttx capaciry of thatparcel shall be excluded from the original tax capaciry of the tax increment financing district. If the authority or the owner of the parcel subsequently commences demolition, rehabilitation or renovation or other site preparation on that parcel including improvement of a street adjacent to that parcel, in accordance with the tc� increment financing plan, the authority shall certify to the county auditor in the annual disclosure report that the activity has commenced. The county auditor shall certify the tae capacity thereof as most recently certified by the commissioner of revenue and add it to the original tcir cupacity of the tctt increment fznancing district. The county auditor must enforce the provisions of this subdivision. For purposes of this subdivision, qualified improvements are limzted to (1) construction or openfng of a new street, (2) relocation of a st� and (3) substantial reconstruction or rebuilding of an e,risting street. The HRA or a property owner must begin making improvements to pazcels within the Dishict by appro�mately June, 2003. Pursuant to Minnesota Statutes, Section 469.1763, Subd. 3, revenues derived from taY increments are considered to haue been spent on an acrivity within the Dishict only if one of the following occurs: 1. Before or within fzve years after certification of the District, the r-evenues are actually paid to a thirdparty with respect to the activity; 2. Bonds, the proceeds of which must be used to ftnance the activity, are issued and sold to a third party before or within five years after certification ofthe Distr�ict, the revenues are spent to repay the Bonds, and the proceeds of the Bonds either are, on the date of issuance, reasonably expected to be spent before the end of the latter of (i) the five year perioc� or �i) a reasonable temporary period within the meaning of the use of that term under Section 148(c)(1) of the Internal Revenue Code, or deposited in a reasonably required reserve oP repZacement fund,' 1819526 �� 00 , �y� 3. Binding contracts with a third party are entered into for perforrnance of the activity before or within fzve years after certifzcation of the District and the reverrues are spent under the contrttctual obligation; or 4. Costs with respect to the activity are paid before or within frve yecus after certifzcation of the District and the reverrues are spent to reimburse a party for payment of the costs, including interest on unreimbursed costs. Therefore, one of the above four events must occur by appro�mately May, 2003. XV. Use of Tax Increment A11 revenues derived from tas increment shall be used in accordance with this tax increment financing plan, and pursuant to Minnesota Statutes, Section 469.176, Subdivisions 4 and 4d. XVI. Notification of Prior Planned Improvements Pursuant to Mimiesota Statutes, Section 469.177, Subd. 4, the City has reviewed the area to be included'm the District and has not found properties for which building permits have been issued during the 18 months nnmediately preceding approval of the Plan by the City. XVII. Excess Tas Increments Pursuant to Mimiesota Statutes, Section 469.176, Subd. 2, in any year in which the tax increment exceeds the amount necessary to pay the costs authorized by the tas increment plan, including the amount necessary to cancel any tax levy as provided in Minnesota Statutes, Section 475.61, Subd. 3, the City sha11 use the excess amount to do any of the following: 1. prepay the outstanding bonds; 2. discharge the pledge of tax increment therefor; 3. pay into an escrow account dedicated to the payment of such bonds; or 4. return the excess to the County Auditor for redistribution to the respective taYing jurisdictions in proportion of their tas capacity rate. XVIII. Fiscal Dis ao rities The City and the I IRA have elected to compute Fiscal Dispariries contribution for the Disirict in accordance with Secrion 469.177, subdivision 3,paragraph a XIX. Requirements for Agreements with Develo�er. Pursuant to Minnesota Statutes, Section 469.176, subd. 5, no more than 10%, by acreage, of the property to be acquired in the Dish as set forth in this Ta�c Increment Financing Plan shall at any time be owned by the HRA or the City as a result of acquisition with the proceeds of bonds issued pursuant to Section 469.178, without the HRA ar City having, prior to acquisition in excess 7819526 11 00 •��q of 10% of the acreage, concluded an agreement for the development or redevelopment of the property acquired and which provides recourse for the I�A or City should the development not be completed. XX. Assessment AEreement. Pursuant to Minuesota Statutes, Sections 469175, Subd. 1(b) and 469.177, subd. 8, the I�RA or City may enter into an agreement in recordable form with the Developer of properry within the District which establishes a minimum mazket value ofthe land and completed improvements for the duration of the District. The assessment agreement shall be presented to the assessor who shall review the plans and specifications for the improvements constructed, review the market value previously assigned to the land upon which the improvements aze to be constructed and, so long as the minimum market value contained in the assessment agreement appeazs, in the judgment of the assessor, to be a reasonable estimate, the assessor may certify the minimum market value agreement. �si9sze 12 ATTACfIlVIENT A oo.��t� The Housing District will be located on floors 6 through 12, inclusive and on a portion of floor 5 of the Lowry Building. Each floor will comprise a sepazate unit within a condominium to be formed within the Lowry Professional Building. The Condominium will be formed from the foilowing metes and bounds legal description, which description describes the entirety of the Lowry Professional Building: Lots One (1) and Two (2), except the Northwesterly fifiy (50) feet of said Lots One (1) and Two (2), and except the Southeasterly twenty-five (25) feet of said Lots One (1) and Two (2); and all of Lots Three (3), Four (4) Five (5), Six (6), Seven (7), Eight (8), Nine (9) and Ten (10), all in Block Twenty-one (21), except all that part of Lots Eight (8), Nine (9) and Ten (10), Southeasteriy of a construction buiiding line described as follows: Beginning at a point on the Westerly line of Lot Eight (8), 51.5 feet Northwesterly of a Southwest corner of said Lot Eight (8); thence Northeasterly on a line parallel to the Southeasterly line of said Lots Eight (8), Nine (9), and Ten (10), a distance of 51.96 feet; thence deflecting to the left 90 degrees of a distance of 3.5 feet; thence deflecting to the right 90 degrees a distance of 12.4 feet; thence deflecting to the left 90 degrees, 25.75 feet; thence deflecting to the right 90 degrees more or less 84.96 feet, more or less, to a point on the Easterly line of said Lot Ten (10) which is 80.7 feet Northwesterly of Southeast corner of said Lot Ten (10); there ternunating; all in Block Twenty-one (21), City of St. Paul, commonly referA to as"St. Paul Proper." [Property Identification Numbers] [Map] 1519526 13 oo-�y� �,:.�c3uy Snr.�o,y j't (]OQ I�.�5Z6181 / c' - ` —�� // , /�� - � _ � / � --- ' / � : - � _;�—.^ � /� : ", -- � - -- - ; - ;:. : ;;�� ; �� - ':- � �� / %� . •,�:. _.� � ' .a'. ��J`� 5�� L I � : �. �i -! � l = i // � /� / \, ♦ � � O n E � <' n t � o � = -n N � b _ y _ ' � o - n � ' _. s, � � o = i � . _ � _ ' ^ x � _ ;1 � � � ' / - " ' ` � r�. 2 ' �, 1 s-� il ' '�� ., �•� �' � �r- u Y = � __ _ � — ■ :� : � d 11H1HX3 ORIGlNAL council File #� O� � 3yq Resolution # Green Sheet # �059 S 3 I 2 3 4 s 6 Presented By Re£erred To Committee: Date � s RESOLUTION ADOPTING THE MODIFICATION TO TI3E SEVENTH PLACE DEVELOPMENT PROJECT; ESTABLISHMENT OF THE THE LOWRY PROFESSIONAL BUILDING TAX INCREMENT FINANCING DISTRICT AND ADOPTING THE RELATED ESTABLISHMENT OF THE LOWRY PROFESSIONAL BUILDING TAX INCREMENT FINANCING PLAN 9 BE IT RESOLVED by the City Council (the "Council") of the City of Saint Paul, Minnesota (the "City"), l0 as foliows: 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 Section 1. Recitals. 1.01. The HRA has heretofore established the Seventh Place Development Project and adopted the Development Program therefor. It has been proposed that the City adopt the Modification to the Seventh Place Development Project and establish within the Seventh Place Development Project the Lowry Professional Building Tax Increment Financing District and adopt the related Tas Increment Financing Plan therefor (collectively, the "Program and Plan"); all pursuant to and in conformity with applicable law, including Minnesota Statutes, Sections 469.�90 through 469.1Q81 and 469174 through 469.179, all inclusive, as amended, a11 as reflected in the Program and Plan, and presented for the CounciPs consideration. 1.02. The Council has investigated the facts relating to the Program and Plan. 1.03. The City has performed all actions required by law to be performed priar to the adoption and approval of the proposed Program and Plan, including, but not limited to, notification of Ramsey County and School Dishict #625 having taxing jurisdiction over the properiy to be included in the Lowry Professional Building Tax Increment Financing District, a review of and written comment on the Program and Plan by the City Planning Commission, and the holding of a pubic heazing upon published notice as required by law. 1.04. Certain written reports (the "Reports") relating to the Program and Plan and to the activities contemplated therein have heretofore been prepared by staff and submitted to the council andlar made a part of the City files and proceedings on the Program and Plan. The Reports include data, information and/or substantiation constituting or relating to (1) the "studies and analyses" on why the new Lowry Professional Building Tax Increment Financing District meets the so-called "but for" test and (2) the bases for the other findings and determinations made in this resolution. The Council hereby confirxns, ratifies and adopts the Reports, which aze hereby incorporated into and made as fully a part of this resolution to the same extent as if set forth in full herein. 39 Section 2. Findings for the Adoption and Aproroval of the Proeram and Plan. �j O-3 yo� 40 41 2.01. The Council hereby finds that the Program and Plan, aze intended and, in the judgment of this a2 Council, the effect of such actions will be, to provide an impetus for development in the public purpose and 43 accomplish certain objectives as specified in the Program and Plan, which are hereby incorporated herein. 44 45 Section 3. F�s for the Establishment of The Lowrv Professional Building Tax Increment 46 Financin2 District 47 48 3.01. The Council hereby finds that the Lowry Professional Building Taac Increment Financing District 49 is in the public interest and is a"housing district" under Mirmesota Statutes, Secrion 469.174, subdivision 11. 50 51 3.02. The Council further finds that the proposed development would not occur solely through private 52 investment witlun the reasonably foreseeable future and that the increased market value on the site that could 53 reasonably be expected to occur without the use of tas increment financing would be less than the increase in the 54 mazket value estimated to result from the proposed development after subiracting the present value of the 55 projected tax increments for the maximum duration of the Seventh Place Development Project permitted by the 56 Tax Increment Financing Plan, that the Program and Plan conform to the general plan for the development or 57 redevelopment of the City as a whole; and that the Program and Plan will afford maximum opportunity consistent 58 with the sound needs of the City as a whole, for the development of the Seventh Place Development Project by 59 private enterprise. 60 61 3.03. The City elects to make a qualifying local contribution in accordance with Minnesota Statutes, 62 Section 273.1399, subdivision 6(d), in order to qualify the Seventh Place Development Project far exemption 63 from state aid losses set forth in Section 273.1399, subdivision 6(c). 64 65 3.04. The Council fiirther fmds, declares and determines that the City made the above findings stated in 66 this Section and has set forth the reasons and supporting facts for each determination in writing, attached hereto 67 as Exhibit A. 68 69 Section 4. A�proval and Adoption of the Proeram and Plan. 70 71 4.01. The Program and Plan, as presented to the Council on this date, including without limitation the 7z 73 74 75 76 77 78 findings and statements of objectives contained therein, as hereby approved, ratified, established, and adopted and sha11 be placed on file in the office of the HRA Director. 4.02. The staff of the City, the City's advisors and legal counsei are authorized and directed to proceed with the implementation of the Program and Plan and to negotiate, draft, prepare and present to this Council for its consideration all fuither plans, resolutions, documents and contracts necessary far this purpose. 79 4.03. The Auditor of Ramsey County is requested to certify the original net ta:c capaciTy of the Lowry 80 Professional Building Tax Increment Financing District, as described in the Program and Plan, and to certify in 81 each year thereafter the amount by which the original net tax capacity has increased or decreased; and the City 82 of Saint Paul is authorized and directed to forthwith transmit this request to the CounTy Auditor in such form and 83 content as the Auditor may specify, together with a list of all properkies within the Lowry Professional Building 84 Tax Increment Financing District, for which buiiding permits have been issued during the 18 months immediately ss preceding the adoption of this resolution. �sza3st 2 86 87 88 89 90 EXHIBIT A a o -� 4� The reasons and facts supporting the findings for the adoption of the Lowry Professional Building T� Increment Financing District as required pursuant to Minnesota Statutes, Section 469.175, Subdivision 3 aze as 9i follows: 92 93 1 94 95 96 97 98 Finding that the Distr•ict is a"housing district. " This TaY Increment District is in the public interest because it will provide needed multifamily housing Saint Paul of which at least 20% of the units will be afFordable to households at or below 50% of the azea median uacome. 99 2. Finding that the proposed development, in the opinion of the Council, would not reasonably be expected loo to occur solely through private investment within the reasonablyforeseeable future and that the increased lol market value of the site that could reasonably be expected to occur without the use of tax increment 102 financing would be Zess than the increase in the market value estimated to result fi�om the proposed 103 development after subtracting the present value ofthe projected tctt increments for the maximum duration i o4 of the district permitted by the plan. los 106 Due to the high cost of development on the parcels including the cost of land acquisition and financing the 107 proposed improvements, this project is feasible only through assistance, in part, from ta�c increment 108 financing. 109 i l0 A comparative analysis of estimated market values both with and without establishment of the Lowry 1 I 1 Professional Building Tax Increment Financing District and the use of tas increments has been performed ll2 as described above. If all development which is proposed to assist with tax increment wzxe to occur in the 113 Lowry Professional Building, the total increased mazket value wouid be up to $8,230,000. It is the 114 Council's finding that no development with a market value of greater than $8,230,000 would occur without 115 taY increment assistance in this district within 15 yeazs. T'his finding is based upon evidence from general ll6 past experience with the high cost of providing public improvements in the general area of this District. 117 i l8 3. Finding that the Lowry Professional Building Tax Increment Financing District conforms to the general 119 plan for the development or redevelopment of the municipaliry as a whole. 120 121 The Establishment of the Lowry Professional Building Tas Increment Financing District for the Seventh 122 Place Development Project has been reviewed by the Planning Commission and been £ound by resolution 123 to conform to the general development and redevelopment plan of the City. 124 125 4. 126 127 128 129 130 Finding that the Establashment of the Lowry Professional Building Tax Increment Financing District for the Seventh Place Development Project will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development of the Seventh Place Development Project. The number of housing units to be developed will increase the housing stock in the City and the State of Minnesota. IS20351 oo•3yq Requested by Department of: Plannin & Economic evelo ment By: Adoption Fo� Approved by C' y Ty rney / Certified by Council Secretary BY= „ By: � , � l—` �pg�oved by Mayor for Suhmission to Council Approved by Mayor: Date BY. �� BY. � ��/� ORfGfNAL 182Q351 Adopted by Council: Date A,r��__a-�LIC� "Public Hearing" PARTMINT/OFFIC�UNCIL PED MACT PERSON � RiOIJE Allen Carlson 6-6616 'ST BE ON COUNCILAGQ�/1 BY @4'f� 4/i2/oo 0-� DwTE WITW7ED 3/28/00 �� TOTAL # OF SIGNATURE PAGES � GREEN S ovun�ru�arae � 00 • 3 y.°1 No 105953 a� ancoocz 0 �,.,,�, �1 �1 � ❑ �,� - ❑,.�,�.�. ❑�,..v,�.a 3 �4 .maR�oRNm.nm � Crh� (CUP ALL LOCATIONS FOR SIGNATURE) �criorvREouESrfn Approve resoultion to: 1) expand 7th place redevelopment project to include Lowry Professional Building located at 350 St. Peter st. 2) Establish Lowry Professional Building tax increment district; and 3) approve Lowry Professional Building tax increment financing plan to allow development of 112 units of housing % A PLANNINGCOMMISSION CIB CAMMIT7'EE CIVIL SERVICE COMMIS: Hes this ae��m eyer rorkea unaer a carrt�aa f« tMis departmenn V6S NO ties thie DeworJfirm eier been a eity empbyee9 YES NO Oaes ihic Persauirm P� a sldll not rarmatlYO�� M'anY current cilY emProY�? VES NO Is tl�is pe�eoMxm a tarpeletl wMoR YES NQ Current building is 609 vacant & obsolete or professional office building I. Create 112 units of rental housing which 20� will be affordable Z Increase value of the building uitimately increase the tax base �� - �` A � t � g`�k3F�� 4 � I � � 'ry Y'Y�� . -.,�, ..,.':.n'rs'' �5 �F: �^.r� Building will continue to have high vacancy problems. OF TRANSACTION t N IA SOURCE COETrttEVENUE eUDOETED (GRCLE ON� _.�fuulr' - ' - "7I:Li�' VES t NO , �l �'..+!:l'J: oo_�y1 Interdepartmental Memorandum [yr�� : ��y� .�r�[n� TO: Council President Bostrom Councilmember Benanav Councilmember Blakey Councilmember Coleman Councilmember Harris Councilmember Lantry Councilmember Reiter FROM: Brian Sweeney��G?"�X Allen Carlson V DATE: March 28, 200� ��Z RE: PUBLIC HEARING: RESOLUTION ADOPTING THE MODIFICATION TO THE SEVENTH PLACE DEVELOPMENT PROJECT; ESTABLISHING THE LOWRY PROFESSIONAL BUILDING TAX INCREMENT FINANCING DISTRICT AND ADOPTING THE RELATED LOWRY PROFESSIONAL BUILDING TAX INCREMENT FINANCING PLAN Purpose The purpose of this public hearing is to receive public comment and request the City Council to approve a resolution which adopts the modification to the Seventh Place Development Project; establishes the Lowry Professionai Building Tax Increment District and adopt the related Tax Increment Financing Plan to assist in the redevelopment of the building into 112 units of rental housing of which 20% wiil be affordable to low income households. Background/Proposal The Lowry Professional Building (Lowry) is a 12 story building with approximately 280,000 gross square feet of Class C office/retail space. Much of the building's upper floors are not leased. The building was recently purchased from the Saint Paul Port Authority by the Avex Group (Avex) which has o�ces in Dallas, Texas and recently in Saint Paul. Avex is requesting City/HRA financial assistance to convert floors 6 through 12 into 112 units of residential rental housing units. The multifamily portion of the building wili occupy approximately 120,000 gross Page 1 of 9 oo-��t� square feet of which approximately 78,000 square feet will be actual living space. Floors 1 and 2 of the Lowry will maintain the bulk of the existing businesses. The skyway system within the building will also be remodeled to attract additional commercial tenants, provide improved pedestrian traffic flow and attract people to the first floor businesses. Floors 3 through 5 wiil be remodeled to upgrade the existing commercial office space to "B" category office space. Avex is working with existing commercial tenants to relocate them to floors 3 through 5. The proposed unit mix, size and tenant rents for the residential space are as follows: Unit Type # of Units Unit Size Gross Rent EfEiciency- Affordab{e 14 470 $556 One Bedroom 70 650 $875 One Bedroom/Den 4 869 $1,005 One Bedroom/Den - Affordable 11 869 $715 Two Bedroom 14 1035 $1,110 Total 112 Avg. unit size - 705 Based upon the above unit mix 25 units (22.3% of units) will be rented at the Section 8 Fair Market Rent levels which are affordable to households at or below 40% of the area median income. Page 2 of 9 oo-�� Proposed Financing Structure Below is the proposed Source and Uses of Fund Statement: Source of Funds Uses of Funds Tax Exempf Multifamily Revenue $7,740,000 Acquisition $1,500,000 Bonds Tax Increment Bonds 2,435,000 Construction 8,874,815 Construction Interest Earnings 31,000 Construction Mgmt 137,500 tow income tiousing Tax Credit 710,000 Financing Fees (HUD) 309,900 Equity HRA Grant 250,000 Issuer Fee 101,750 STAR 500,000 Underwriter's Discount 152,625 Minnesota Housing Finance Agency 190,000 Capitalized Interest 450,000 Family Housing Fund 290,000 Due Diligence/Legal 85,000 Title/Survey/Market 127,000 Study Building Closing/Due 80,000 Diligence GNMA Reserve 75,000 Contingency 252,410 Total $12,146,000 Total $12,146,000 The Project will be segmented by use, by means of condominium subdivision, to aliow the allocation of tax exempt revenue bonds to finance solely the multifamily portion of the building along with improvements to the other sections which support and improve the multifamily portion value (i.e. a portion of the garage and level 1 and 2 common areas.). Improvement of the retail and commercial portions (levels 2-5) of the building will be financed with separate private funds of approximately $4.5 million. Th primary source of financing for the project wili be the use of the City's year 2000 bonding authority to issue up to $7,740,000 of tax exempt multifamily revenue bonds and $2.4 miilion of tax exempt tax increment bonds. The City's annual bonding authority Page 3 of 9 0 0 -��lq is approximately $16 million per year. The City Council adopted on December 8, 1999 resolution no. 99-1178, which authorizes the HRA to issue the bonds. In no case with the multifamily bonds or tax increment bonds wili the City or HRA have an obligation or liability to repay the bonds. The bonds will be secured exclusively from the revenues and tax increments generated from the project. As an issuer of the bonds, the HRA wiil receive an issue�s fee the first year equal to 1% of the outstanding principal balance of the bonds plus annua{ly for the term of the bonds a fee equal to one-tenth of one percent of the outstanding principal balance of the bonds. In order to issue tax increment bonds, the City Council must approve expansion of ihe Seventh Place Redevelopment Project to inciude the Lowry building, estabiishment of a tax increment financing district for the 4'" through 12'" floors of the building and approve a tax increment financing pian which is included with this report. . In order to create the housing tax increment financing district necessary to finance the tax increment bonds, the City must by State statute contribute a local match of 5% of the total increment to be generated to avoid incurring local government aid penalties. The HRA laid over a$250,000 request of grants funds on November 24, 1999 until the project was further along in the process. Pursuant to Federal and State bonding statutes at least 20% of the units must be affordable to households at or below 50% of the area median income. The proposal is structured to be affordabie to households at or below 40°/o of area median income. Because tax exempt bonds will be used and 20% of the units will be affordable, Avex will automatically be eligible to receive low income housing tax credits for the affordable units. The credits wiil generate up to $710,000 of limited partner equity for the project. The City Council has approved a$500,000 STAR loan to the project bearing a 6% interest rate and 2� year term. The Minnesota Ffousing Finance Agency has approved $190,000 and the Family Page 4 of 9 00-��9 Housing Fund $290,000 to the project to subsidize the affordable housing units. Project Senefits The following are the reasons staff believe converting the building to partial housing is attractive, will be successful and provide public benefit to the City: • The current use of the building as a medical facility is obsolete. Most health care practices have built ciinics adjacent to hospitals due to convenience and synergies. A{so, most heafth care practices have followed their client base to the suburbs. Although there is a need for heaith care facilities downtown and within the building, it is not viable to expect Avex to fill 240,000 square feet of office space for medical related facifities. This is evident to the fact the building is only 40% occupied. The configuration of the building is not conducive to leasing to large tenants. The building is long and narrow. Most larger tenants want space that is conducive to an open space plan which requires a more rectangular or square foot print. There is a need for smaller office space, however it would be very difficult to lease up 200,000 plus square feet to tenants who only need 500 - 1,000 square feet. The configuration that is a detriment to renting the building for office use is an advantage to creating housing units. The narrow width, high ceilings, large windows and spacing of the structural posts lends itself to creating attractive, efficient housing units. Ample, large windows and high ceilings make the units very marketable. Furthermore, locating the units on the upper levels provides attractive panoramic views, which also help to market the units. The building has convenient access to off-street parking by means of the 170 car Lowry Ramp. The diffculty in converting warehouse buildings to housing such as the Strauss or JJ Hill building is the lack of on-site parking. The project promotes linkages with the transportation system, both pedestrian and mass transit. The building is on the skyway which allows tenants to access work or shopping Page 5 of 9 oc -�Ll`� without going outside. It also allows convenient handicapped accessibility. The building is also on a major bus route which allows tenants convenient travel within and outside the city. • The project is located in the cultural corridor which increases its marketability. It is located where the "action is" such as the Science Museum, Rice Park, the river, theaters, restaurants, etc. • The project promotes economic integration and diversity. We have not to date completed a project which has both high income and lower income tenants living together, which is a major goal of the City's housing action plan. • The project provides affordable housing which is in great demand downtown. Service workers and others wiil have a decent, safe place to live and be within walking distance of work. Again, this is a significant goal of the recently adopted housing action plan. • The project will be attractive to young professionals because it is conveniently located to major employers such as Lawson Software, St. Paul Companies and EcoLab. • The project promotes "IVew Urbanism". It combines mixed-use, mixed-income, transportation linkages and employment connections. It wiil maximize the use of the building. Creating 112 units of additional housing downtown promotes the concept of a 24 hour downtown vibrant with activity. • The project, by adding 112 housing units will support additional retail shopping in the downtown area. Housing should also benefit to strengthen the existing businesses in the building. Findings of Fact to Support Adoption of the Lowry Professional Building Tax Increment Financing District The reasons and facts supporting the findings for adoption of the Lowry Professionai Building Page 6 of 9 00 -3 �q Tax Increment District pursuant to MN Statutes, Section 469.175, Sub. 3, are as follows: 1. Finding that the District is a`housing district." This Tax Increment District is in the public interest because it wili provide needed multifamily housing Saint Paul of which at least 20% of the units wili be affordable to households at or below 50% of the area median income. 2. Finding that the proposed development, in the opinion of the Council, would not reasonably be expected to occur solely through private investment wifhin 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 /ess 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 plan. Due to the high cost of development on the parcels inciuding the cost of land acquisition and financing the proposed improvements, this project is feasible only through assistance, in part, from tax increment financing. A comparative analysis of estimated market values both with and without establishment of the Lowry Professional Building Tax Increment Financing District and the use of tax increments has been performed as described above. If all development which is proposed to assist with tax increment were to occur in the Lowry Professional Buiiding, the total increased market value would be up to $8,230,000. It is the Council's finding that no development with a market value of greater than $8,230,000 wouid occur without tax increment assistance in this district within 15 years. This finding is based upon evidence from general past experience with the high cost of providing public improvements in the general area of this District. Finding fhat the Lowry Professiona/ Building Tax /ncrement Financing Disfrict conforms to the general plan for the development or redevelopment of the municipality as a whole. Page 7 of 4 oa -��4.°l The Establishment of the Lowry Professional Building Tax increment Financing District for the Seventh Place Development Project has been reviewed by the Pianning Commission and been found by resolution to conform to the general development and redevelopment plan of the City. 4. Finding that the Establishment of the Lowry Professional Building Tax lncrement Financing District for the Seventh Place Development ProjeCt will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development of the Seventh P/ace Development Project. The number of housing units to be developed will increase the housing stock in the City and the State of Minnesota. Recommendation Staff recommends and requests the City Council to consider adoption of the attached resolution which approves and adopts the foilowing: Expansion of the Seventh Place Redevelopment Project to include the Lowry Professional Building property; and Establishment of the Lowry Professional Building Tax Increment Financing District; and The Tax Increment Financing Pian to finance the Project. Statement of the Council President Being duly authorized by the City Council to conduct this Public Hearing, the hearing is now open. This Public Hearing is called for the proposed purpose to consider the following: Expansion of the Seventh Place Redevelopment Project to include the Lowry Professional Suilding property located at 250 St. Peter Street; and Page 8 of 9 oo-3�Lq Establishment of the Lowry Professional Building Tax Increment Financing District; and Approval of the Lowry Professional Building Tax Increment Financing Plan. Approval of the above actions wili permit the financing of tax exempt multifamily revenue bonds to develop 112 residential rental units in the buiiding of which at least 20% will be restricted to HUD determined Fair Market Rents, which rents are affordable to households at 40%-45% of the area median income. Notice of time, place, and purpose of this hearing was published in the Saint Paul Pioneer Press on Saturday, March 25, 2000. The affidavit of the publication of the Notice of Public Hearing will be made a part of these proceedings. Is there anyone who wishes to be heard on these sales? If not, the Chair will declare this Public Hearing adjourned. Attachments 1. Modification to Seventh Place Development Project. 2. Lowry Professional Building Tax Increment Financing Plan Allen Carlson 266-6616 K:�sna=ea�caRLSOae�iowry�� c�f Pian aPPso�ai.wP$age 9 of 9 0 0 -7 �t.°t Modification to Seventh Place Development Proiect Lowry/tif planning commission Itr.doc flc_��C`1 AMENDIZENT TO REDEVELOPMENT PLAle! SEVENTA PLACE REDEVELOPMENT PROJE�`�' DATED NOVEMBER 16,1978 AME�TDVIENT DATED , 209�P �8��3� p o -3�q A_�(ENDMENT TO REDEVELOPy1EtiT PLA� S E VENTH PLACE REDEVELOPMENT PRO7ECT DATED NOVE�(BER 16, 1978 A.�IEYDMENT DATED 1 2000 1. The Redevelopment Plan for the Seventh Place Redevelopment Project adopted November 16, 1978, as revised and modified on November S, 1981, January 28, 1482, and May 25, 1983, and as amended on March 25, 1985, November 9, 1989 and l�fay 28, 1997 (the "Redevelopment Plan"), is hereby further amended as follows: A There is hereby added to the Seventh Place Project the property described (by parcel number and/or physicalllegal description) on Exhibit 1 hereto and illustrated by the map which is also part of Exhibit l. B. Paragraph 1 of Section F, General Land Use, shall be amended to read as follows: «1. Ma�. A map of the Seventh Place Project area, as expanded, is set forth as Exhibit 3 hereto." C. Map No. I attached to the Redevelopment Plan is hereby deleted and replaced with Exhibit 3 hereto. 2. Except as amended hereby, the Redevelopment Plan shall remain in full force and effect. isineo 00 -3�l°I EXHIBIT 1 [Pazcel numbers and/or legal description and map ofProperty to be added to Project Area] Lots One (1) and Two (2}, except the Northwesterly fifty (SQ) feet of said Lots One (1) and Two (2), and except the Southeasterly riventy-five (25) feet of said Lots One (1) and Two (2); and all of Lots Three (3), Four (4) Five (5), Six (6), Seven (7), Eight (8), Nine (9) and Ten (10), all in Block Twenty-one (21), except all that part of Lots Eight (8), Nine (9) and Ten (10), Southeasterly of a conshuction buildin� line described as follows: Beginning at a point on the Westerly line of Lot Eight (8), 51.5 feet Northwesterly of a Southwest corner of said Lot Eight (8); thence Northeasterly on a line puallel to the Southeasterly line of said Lots Eight (8), Nine (9), and Ten (10), a distance of 51.96 feet; thence deflecting to the left 90 degrees of a distance of 3.5 feet; thence deflecting to the right 90 degees a distance of 12.4 feet; thence deflecting to the left 90 degrees, 2�.75 feet; thence deflecting to the right 90 degrees more or less 84.96 feet, more or less, to a point on the Easterly line of said Lot Ten (10) which is 80.7 feet ir'orthwesterly of Southeast comer of said Lot Ten (10); there terminating; all in Block Twenty-one (21), City of St. Paul, commonly referred to as "St. Paul Proper: ' iai�sbo 1-1 aa -� �{q �t 11 :lY� - � - - ; I _ ��; � _� �� '`"` �. � 0 C7 y - .:i � , ;_� � � , , � � '�� _ � X � , .-� L ' � = .l � � � " J - � � >� � = �— �e� _ � i� = - ' _ : i �/ i` � � // / ; :: � . �� /�\� ° i � _� t z; � ` I� Y � � � ` � � : - .,~ _ � � \� ,; ` ` tr . �� - /; � ` `\y/ ', ' /. �. i � /�'.' i � � � _-- _ - , - � / --_ --- � ='-= / —' J � _ �-� � i \ : � "� �—�--� = .�• � - ' ' ' a �/ ' � . � �` ':/ I8t9290v! (12ZR°/,01!.DOC) A-1 Homing Pmgam 00 -3�1,q TIF Plan Lowry/tif plannin� commission Itr.doc 0 0 •��,� Draft: 2/29/00 HOUSING AND REDEVELOPMENT AUTHORITY OF Tf� CZTY OF SAIlVT PATI., MINNESOTA TAX INCREMENT FII�ANCING PLAN FOR LOWRY PROFESSIONAL BUII.DING TAX INCREMENT FINANCING DISTRICT I. Introduction A. Background The Lowry Professional Building Housing Tax Increment Financing District (the "District") shall consist of an appro�mately 120,000 square foot pazcel located at 350 St. Peter Street (the "Property"), in the City of Saint Paul, County of Ramsey, State of Minnesota and legally described in Attachment A attached hereto and incorporated in this plan. The Housing and Redevelopment Authority of the City of Saint Paul, Minnesota (the "I IRA") proposes a plan for the development of the Dishict consisting of the acquisition of property, rehabilitation demolition, and the construction of a 112-unit rental housing facility (the "Project") on the Property to be owned by Avex Lowry Residential Limited Partnership, a Minnesota limited partnership. The Project comprises a portion of the exisling Lowry Professional Building. The remainder of the Buiiding is simultaneously being redeveloped as a retail and office facility (the "Cominercial Project") by an affiliate of Developer at an appro�cimate initial cost of $7,000,000. The Commerciai Project will not be included in the District. B. Creation of Lowry Professionai Building Housing Tax Increment District This tas increment plan relates to the creafion, under Mim�.esota Statutes Section 469.174, Subd. 11, of the Lowry Professional Building Housing Tas Increment Dishict (the "Dishict"). C. Need and Public Purpose To increase the supply of adequate housing witivn the community £or families of all income levels including rental housing for families of low and moderate income. ii. To provide such housing on land or in areas which qualify as redevelopment projeets with emphasis upon lands poten6ally usefut for contributing to the public welfaze, but ' which by reason of special probiems or conditions, have not reached full development potential by the ordinary operarions of private enterprise. iii. To cany out the provision of housing and development of underdeveloped lands within the City consistent with the general land use plan and other components of the City's Comprehensive Plan. 1819526 00 -3�t°l iv. To assist in the provision of rental housing to persons of low and moderate income at prices or rents within their means and to make advance commitments to such rental assistance in low and moderate income units in order to assist developers in securing fina�icing for housing improvements. v. To finance a portion of the development costs ofthe Project by means of tax increment generated by Project improvements and development. vi. To finance housing developmentby acombinationofprivate andpublic financing under authority and subject to the requirements of federal, state and local law and ordinance for the provision of revenue bond financing for housing purposes. It is necessary tUat the I3RA exercise its powers under state law to develop, implement, and finance a progrun designed to encourage, ensure and facilitate the development of affordable housing for its low- and moderate-income residents. The Project will fixrther accompiish the public pur�wses specified in this paragraph. II. Objectives of the HRA for the unprovements in the Lowry Professional Building Project area. A. Provideaffordablehousingforlow-audmoderate-incomeresidentsofSaint PauL As a result of an e�ensive neighborhood review process and a confirming market study currently being conducted by LAWCO Financial, LLC, the I-IRA believes there is a market for rental housing of the type being proposed for the Dishict. B. To redevelop underused property. The Properiy was previously operated as a 13 story mixed use commercial/retail o�ce building. Due to building obsolescence, changes in downtown demand far the kind of space offered in the Property, and high vacancy rates, the Property is no longer a viable commercial properry, and the buildings located on the Property have deteriorated. Cuxrently, the Property is 60% vacant. The construction of the Project will contribute to the public welfaze, as the Properiy has not reached its current development potential by the ordinary operations of private enterprise. C. Expand the tas base of the City of Saint Paul. It is expected that the taxable market value of parcels in the tax increment dishict will increase by appro�mately $8,230,000 once the new housing facility is placed in service. �si9sze 00 -�y°� III. Classificafion of the District The HRA and the City, in detennining the need to create a ta�c increment finaucing district in accordance with Section 469.174, find that the District is a housing district pi�*��ant to Mivnesota Statutes, Section 469.174, Subd. 11 because (i) the project which comprises the I7istrict is intended for occupancy, in part, by persons or families of low and moderate income, as defined in Minuesota Statates, Chapter 462A, Title II ofthe National Housing Act of 1934, the National Housing Act of 1959, the United States Housing Act of 1937, as amended, Title V of the Housing Act of 1949, as amended, other similaz federal, state, or municipal legislation, and the regulations promulgated under any of those acts; and (2) the fair mazket value of the improvements which shall be coustnicted for commercial uses or for uses other than low and moderate income housing consist of not more than 20 percent ofthe total fair market value of the planned improvement in the development plan or agreement. The fair mazket value ofthe improvements comprising the Project was determined using the income approach, modified by adjusting foz different types of uses, and adjusted further to reflect cunent taxable properiy values in the area surrounding the Project. At least 20% of the units will be occupied by individuals whose income is 50% or less of the area median gross income, adjusted for family size. In addition, the District meets the requirements of a housing dislrict pursuant to Mimiesota Statutes, Section 469.176, Subd. 4d, because 100% of the revenues derived from tax increments from the District will be used solely to finance the cost of a housing project as defined in Section 469.174, Subd. 11, including the cost of public improvements directly related to the housing project and the allocated administrative expenses of the IIRA. Finally, the District meets the requirements of a housing district pursuant to Minnesota Statutes, Section 469.1761, Subd. 1 and Subd. 3 because, for the duration of the District, either (a) the project which comprises the District will satisfy the income requirements for a qualified residentiai rental project as defined in Section 142(d) ofthe Intemal Revenue Code (the "Code"), ar(b) at least 50 percent ofthe residential units inthe projectwhich comprises the District will be occupiedby individuals whose income is 80 percent or less of azea median gross income. In this case, as mentioned above, at least 20 percent of the units will be occupied by individuals whose income is 50 percent or less of the area median gross income, adjusted for family size, which satisfies the income requirements for a residential rental project as defined in Section 142(d) of the Code. IV. Descripfion of the development program for the Lowrv Professional Building Project. The development program consists of the development of a 112-unit low and moderate income rental housing facility (the "Project") in the Dishict and the finaucing ofthe Project. The Project will be owned by Avex Lowry Residential Limited Partnership, a Minnesota limited partnership company (the "Developer"). This will require acquiring the properiy, installing infrastructure, contracting for professional services essenfial to redevelopment activifies, incurring finaucing related expenses and funding adininistrative fiuictions, all as described in more detaii below. All of the costs listed below aze reflected in the project budget, and there aze no additional public improvement wsts. 1819526 00 -'�y� A. Acquire property. The Developer will acquire the Properiy on or about May 16, 2000 for a purchase price of $1,500,000. B. Reimbursement for Demolition of Structures. There will be no demolition of structures located within the District. The cost of demolishing and removing obsolete internal improvements in the Project is included in E. C. Undertake and install site improvements and utilities. No site improvements or utility access costs will be incurred. D. Contractsforprofessionalservicesessentialtotheredevelopmentactivifies. Professional fees will include land surveys and title work, real estate and environxnental testing, legal, civil engineering, appraisals, accounting, consultants and azchitectural design. The total cost for professional services, other than bond issuance costs, is estimated at $167,525. There will be no developer's fee. E. Construction of Project Demolition of obsolete internal improvements, actual construction of the new internal improvements comprising the Project, construction management fees, and the funding of operating reserves, replacement reserves and debt service reserves therefore, and flie cost of fiunishings and equipment for the Project, is expected to total approximately $9,869,725. F. Incur costs and expenses connected with financing activities. The I�t1 shall issue tax exempt tax increment revenue obligafions to finance approxiniately $2,435,000 oftotal Project costs and taY exempt revenue bonds to finance appro�xnately $7,740,000 of Project costs. Bond issuance costs plus other financing related costs (including costs incurred in connection with other sources of funds set forth in Section VII.C.), including conshuction period interest and insurance, legal expenses, printing and underwriter's discount, aze anticipated to toYal approximately $608,750. V. Descripfion of contracts entered into at the time ofpreaaration of the Plan The following, as required by Section 469.175, Subd. 1(3), is a list of development activities that are proposed to take place within the District for which contracts have been entered into at the time of the prepazation of tlus plan, including the names of the parties to the contract, the activity governed by the contract, the cosi stated in the contract, and the e�;pected date of completion of that activity. 1819526 4 oa -34 q � L� Project Manaeement Consuitant Estimated Cost: Time and material basis for preliminary design Estimated completion date: Mazket Consultant Estimated Cost: F.stunated completion date: N/A $12,400 Mazch 31, 2000 VI. Descripfion of other tvaes of develonment activities which can reasonablv be expected to take place within the Lowrv Professional Buildin� Proiect Other development activities in the Dishict, which may require the expenditure of tax increments, will consist of acfivities necessary and ancillary to promoting and inaximizing the objectives set forth in Section II above. None VII. Cost of the Project and Description of the Lowry Professional Buildin�Housin�Tax Increment District. The following, as required by Section 469.175, Subd. 1(5), are estimates of the (I) cost of the Project, including administration eapenses; (ii) amount of bonded indebtedness to be incurred; (iii) sources of revenue to finance or otherwise pay the costs of the Project; (iv) the most recent net tax capacity of taxable real properry within ihe taY increment fmancing district; (v) the estimated captured net tax capacity of the t� increment financing district at completion; and (vi) the duration of the tax increment financing dishicYs e�cistence. A. Cost of the Project, including administrative expenses. The total cost of the Project is estimated at $12,146,000, wluch includes $0 of public nnprovement costs (see C. below). In addition, the III2A may use an amount up to 10% of the tax increment expenditures to pay for its costs in administering the District. B. Amount of bonded indebtedness to be incurred. The HR[� shall be the issuer of one or more series of tax exempt tax increment revenue bonds and housing revenue obligations by the end of the year 2000 in an aggregate amount not to exceed $10,175,000. The ta�c increments will be pledged to the payxnent of all series of the bonded indebtedness. The HRA may, after the initiat issuance of bonds, issue refunding bonds for purposes of refiiiancing such bonded indebtedness. C. Sources of revenue to finance or otherwise pay project costs. The following are the likely sources for funding the totai Project: �at9sze oa-3�(,°� i. Tas Increments Tax increments, net of up to 10% for adminishative expenses, aze anticipated to equal appro�mately $260,000 annually. All taY increments will be first pledged to the payment of debt service on the bonds described in B above, and any excess shall be pledged to the repayment of the STAR Loan referred to in C.iv. below. u. Investment income Certain interest eanvugs from bond proceeds, if any, will be a source of revenue to pay project costs. A current estimate of such earnnigs is not availabie. iii. Developer Capital The Developer is not expected to contribute capital to the Project. In its snnultaneous development of the Commercial Project, however, which contains shared facilities with the Project, the Developer's affiliate is conhibuting approximately $7,000,000. iv. Saint Paul STAR (Sates Taxl The City will contribute a$500,000, fully amortizing loan at a 6% interest rate for 20 years. Minnesota Housing Finance Aeency (MI�'A2 The 1VIHFA will contribute a$190,000 loan at a simple interest rate of 1% for 30 years with deferring interest and principal. vi. Family Housine Fund (FHFI The FHF will conhibute a$290,000 loan at a simple interest rate of 1% for 30 years with deferring interest and principal. vii. Citu of Saint Paul FIIZA Grant The I IRA will conhibute a$250,000 grant. D. The most recent net tax capacity of tagable real properly within the tas increment financing district. $218,000. 1819526 co -3�4°� E. The estimated captured net tag capacity of the tag increment financing disixict at completion. The Project will consist of a 112-unit low and moderate income rental housing facility with an aggregate assumed mazket value of $7,000,000, including land value. The increase in mazket value is estanated at $6,830,000. Applying a 1% ta�c capacity rate to the low income units and 2.4% taY capacity rate to the market rate units results in tases (total) of $225,851 and tas increment of $219,715 based on an estimated captured taz capacity of appro�nately $6,830,000 assessed in the year 2001 and payable in the year 2002, the yeaz following expected completion of construction of the Project. This captured taY capacity is calculated in accordance with Mvuiesota Statutes, Section 469.174, Subd. 4 and 464.177, Subd. 2. In addition to the Project, appro�mately $1,400,000 of increased market value attributable to the commercial portion of the buiiding inciuded in the Dishict will be included in the captured net tax capacity. Applying a 4.9% tax capacity rate to the commercial portion results in ta7ces (total) of $70,160 and taY increment of $68,960 based on an estimated captured tax capacity of $1,400,000. F. The durafion of the tas increment financing district's egistence. The District will be certified in 2000. The first t� increments are anticipated to be generated for taxes payable in the year 2001. Pursuant to Section 469.176, Subd. lb(a)(5), the duration of the District will run 25 years from the first receipt by the HRA of taat increments, which will be through calendar yeaz 2025. The HRA does, however, reserve the right to decertify the District prior to the legally required date. VIII. Alternate estimates of the impact of the tax increment financing on the net tas ca�acities of all taxing jurisdictions. The taxing jurisdictions in which the District is located in whole or in part aze as follows: a. Independent School District #625, whose boundaries are coterminous with those of the City of Saint Paul. b. The County of Ramsey, wherein the City of Saint Paul is located. c. The Housing and Redevelopment Authority of the City of Saint Paul, whose boundaries aze coternunous with those of the City of Saint Paul. d. The Port Authorily of the City of Saint Paul, whose boundaries are coterminous with those of the City of Saint Paul and whose powers to levy and use properry taa�es aze limited. e. Metropolitan authorities, such as the Metropolitan Council, Met�opolitan Aixports Commission, Metropolitan Waste Control Commission, and the Metropolitan Mosquito Control Dishict. Of these, only the Metropolitan Council and the Metropolitan Mosquito Conh�ol District currently levy taxes on real estate. 18L9526 0 0 - 3�t.q The I�2A is required by Mimiesota Statutes Secrion 469.175, Subd. 1(a)(� to make statements relative to the alternate estunates of the impact of the tax increment financing on the net tas capaciries of all taxing jurisdicfions in which the tax increment financing district is located in whole or in part. Impact on Taging Jurisdictions Under the assumption that the estnnated captured net tax capacity would be available to the taxing jurisdictions without creation of the District, creation of the District will serve to deny these ta��ing jurisdictions the taxes from the captured net tax capacity in the amount estimated in Table 1 below. a,�t Taxine Jurisdiction T.C. Ratio Q Table 1 Estimazea nrmual Percent Caaturedlncrement City of St. Paul 38.460% 2527 Ramsey County 42.879% 28.17 School Distdct #625 63926% 42.00 Other 6.926% 4.55 1.52191 100 [Intentionally Omitted.l 288,675 288,675 288,675 288,675 Loss to Taeing Jurisdictions 111,023 123,781 184,538 19,943 2$$�6�$ X. Identification oi all �arcels to be included in the District. Attached hereto in Attachment A is a list of the Properry Idenfification Numbers for all properties to be included in the District, a map showing the Project area and the District, and a legal description idenrifying the boundaries of the District. XI. District administrafion and annual disclosure. Admivistration of the District will be the responsibiliry of the I3RA. Tax increments wiil be deposited into interest bearing accounts sepazate and distinct from other funds of the I�A. Tax inerements will be used only for activities deseribed in this tax increment plan. The I IRA will report annually to the State Auditor, county boazd, school board and Aepartment of Revenue regarding activities in the District as required by Secrion 469.175, subdivision 5 and subdivision 6 and will include information with regard to the Dishict in the data necessary to comply with subdivision 6a. 1819526 00 .a�� XII. Modifications to District Tn accordance with Mivuesota Stazutes, Section 469.175, Subd. 4, any reduction or enlazgement of the geographic azea of the Project or tax increment financing district; increase in amount of bonded indebtedness to be incurred, including a deteruiination to capitalize interest on debt ifthat detemiination was not a part of the original plan, or to increase or decrease the amount of interest on the debt to be capitalized; increase in the portion of the captured taY capacity to be retained by the City; increase in total estimated taY increment expenditures; or designation of additional properry to be acquired by the City shall be approved upon the notice and after the discussion, public hearing and findings required for approval of the original plan. The geographic azea of a tax increment financing district may be reduced, but shall not be enlazged after five years following the date of certification of the original tas capacity by the county auditor. XIII. Administrative Expenses In accordance with Mirniesota Statutes, Sections 469.174, Subd. 14 and 469.176, Subd. 3, admiiustrative expenses means all expenditiares of an authority other than amounts paid for the purchase of land or amounts paid to contractors or others providing materials and services, including azchitectural and engineering services, directly connected with the physical development of the real property in the District, relocafion benefits paid to or services provided for persons residing or businesses located in the Disirict or amounts used to pay interest on, fund a reserve for, or sell at a discount bonds issued pursuant to Section 469.173. Administrative expenses also include amounts paid for services provided by bond counsel, fiscal consultants, and plauning or economic development consultants. Admuiislrative expenses of the District will be paid from tax increments; provided that no tax increment shall be used to pay any admiuistrative expenses for the Project which exceed ten percent of the total taY increment expenditures authorized by the tax increment financing plan or the total tax increment �penditures for the Project, whichever is less. Pursuant to Minnesota Statutes, Section 469.176, Subd. 4h, tax increments may be used to pay for the county's actual admiiustrative expenses incurred in connection withthe Dishict. The county may require payment of those expenses by February 15 of the year following the year the ea}penses were incurred. XIV. Necessary Impravements in the District No tax increment sha11 be paid to the HRA after three yeazs from the date of certification of the original net t� capacity by the County Auditor unless wiYhin the three-yeaz period: (1) bonds have been issued in aid of the Project pursuant to Secrion 469.178 of the TTF Act or any other law, except revenue bonds issued pursuant to Mimiesota Statutes, Section 469159 to 469.165; (2) the HRA has acquired property within the District; or 1819526 oe -1�E°► (3) the FIl2A Y�s consiructed or caused to be constructed public improvements withiu the District. The bonds must be issued, or the HRA must acquire properiy or cotLStruct or cause public improvements to be conshucted by appro�nately May, 2001. Pursuant to Minnesota Statutes, Section 469.176, Subd. 6, if, after four yecrosfrom the date of certifzcation of the original tax capacity of the tczz increment fznancingdistrictpursuant to MinnesotaStatutes. Section 469.177, no demolition, rehabilitation or renovation ofproperty or other site preparation, including qual�ed improvement of a street adjacent to a parcel but not installation of utility service incZuding sewer or water systems, has been commenced on a parcel Zocated within a tux increment financing district by the authoriry or by the owner of the prncel in accordance with the tax incrementfinancingplan, no additional tccc increment may be takenfrom that parcel and the ariginal tttx capaciry of thatparcel shall be excluded from the original tax capaciry of the tax increment financing district. If the authority or the owner of the parcel subsequently commences demolition, rehabilitation or renovation or other site preparation on that parcel including improvement of a street adjacent to that parcel, in accordance with the tc� increment financing plan, the authority shall certify to the county auditor in the annual disclosure report that the activity has commenced. The county auditor shall certify the tae capacity thereof as most recently certified by the commissioner of revenue and add it to the original tcir cupacity of the tctt increment fznancing district. The county auditor must enforce the provisions of this subdivision. For purposes of this subdivision, qualified improvements are limzted to (1) construction or openfng of a new street, (2) relocation of a st� and (3) substantial reconstruction or rebuilding of an e,risting street. The HRA or a property owner must begin making improvements to pazcels within the Dishict by appro�mately June, 2003. Pursuant to Minnesota Statutes, Section 469.1763, Subd. 3, revenues derived from taY increments are considered to haue been spent on an acrivity within the Dishict only if one of the following occurs: 1. Before or within fzve years after certification of the District, the r-evenues are actually paid to a thirdparty with respect to the activity; 2. Bonds, the proceeds of which must be used to ftnance the activity, are issued and sold to a third party before or within five years after certification ofthe Distr�ict, the revenues are spent to repay the Bonds, and the proceeds of the Bonds either are, on the date of issuance, reasonably expected to be spent before the end of the latter of (i) the five year perioc� or �i) a reasonable temporary period within the meaning of the use of that term under Section 148(c)(1) of the Internal Revenue Code, or deposited in a reasonably required reserve oP repZacement fund,' 1819526 �� 00 , �y� 3. Binding contracts with a third party are entered into for perforrnance of the activity before or within fzve years after certifzcation of the District and the reverrues are spent under the contrttctual obligation; or 4. Costs with respect to the activity are paid before or within frve yecus after certifzcation of the District and the reverrues are spent to reimburse a party for payment of the costs, including interest on unreimbursed costs. Therefore, one of the above four events must occur by appro�mately May, 2003. XV. Use of Tax Increment A11 revenues derived from tas increment shall be used in accordance with this tax increment financing plan, and pursuant to Minnesota Statutes, Section 469.176, Subdivisions 4 and 4d. XVI. Notification of Prior Planned Improvements Pursuant to Mimiesota Statutes, Section 469.177, Subd. 4, the City has reviewed the area to be included'm the District and has not found properties for which building permits have been issued during the 18 months nnmediately preceding approval of the Plan by the City. XVII. Excess Tas Increments Pursuant to Mimiesota Statutes, Section 469.176, Subd. 2, in any year in which the tax increment exceeds the amount necessary to pay the costs authorized by the tas increment plan, including the amount necessary to cancel any tax levy as provided in Minnesota Statutes, Section 475.61, Subd. 3, the City sha11 use the excess amount to do any of the following: 1. prepay the outstanding bonds; 2. discharge the pledge of tax increment therefor; 3. pay into an escrow account dedicated to the payment of such bonds; or 4. return the excess to the County Auditor for redistribution to the respective taYing jurisdictions in proportion of their tas capacity rate. XVIII. Fiscal Dis ao rities The City and the I IRA have elected to compute Fiscal Dispariries contribution for the Disirict in accordance with Secrion 469.177, subdivision 3,paragraph a XIX. Requirements for Agreements with Develo�er. Pursuant to Minnesota Statutes, Section 469.176, subd. 5, no more than 10%, by acreage, of the property to be acquired in the Dish as set forth in this Ta�c Increment Financing Plan shall at any time be owned by the HRA or the City as a result of acquisition with the proceeds of bonds issued pursuant to Section 469.178, without the HRA ar City having, prior to acquisition in excess 7819526 11 00 •��q of 10% of the acreage, concluded an agreement for the development or redevelopment of the property acquired and which provides recourse for the I�A or City should the development not be completed. XX. Assessment AEreement. Pursuant to Minuesota Statutes, Sections 469175, Subd. 1(b) and 469.177, subd. 8, the I�RA or City may enter into an agreement in recordable form with the Developer of properry within the District which establishes a minimum mazket value ofthe land and completed improvements for the duration of the District. The assessment agreement shall be presented to the assessor who shall review the plans and specifications for the improvements constructed, review the market value previously assigned to the land upon which the improvements aze to be constructed and, so long as the minimum market value contained in the assessment agreement appeazs, in the judgment of the assessor, to be a reasonable estimate, the assessor may certify the minimum market value agreement. �si9sze 12 ATTACfIlVIENT A oo.��t� The Housing District will be located on floors 6 through 12, inclusive and on a portion of floor 5 of the Lowry Building. Each floor will comprise a sepazate unit within a condominium to be formed within the Lowry Professional Building. The Condominium will be formed from the foilowing metes and bounds legal description, which description describes the entirety of the Lowry Professional Building: Lots One (1) and Two (2), except the Northwesterly fifiy (50) feet of said Lots One (1) and Two (2), and except the Southeasterly twenty-five (25) feet of said Lots One (1) and Two (2); and all of Lots Three (3), Four (4) Five (5), Six (6), Seven (7), Eight (8), Nine (9) and Ten (10), all in Block Twenty-one (21), except all that part of Lots Eight (8), Nine (9) and Ten (10), Southeasteriy of a construction buiiding line described as follows: Beginning at a point on the Westerly line of Lot Eight (8), 51.5 feet Northwesterly of a Southwest corner of said Lot Eight (8); thence Northeasterly on a line parallel to the Southeasterly line of said Lots Eight (8), Nine (9), and Ten (10), a distance of 51.96 feet; thence deflecting to the left 90 degrees of a distance of 3.5 feet; thence deflecting to the right 90 degrees a distance of 12.4 feet; thence deflecting to the left 90 degrees, 25.75 feet; thence deflecting to the right 90 degrees more or less 84.96 feet, more or less, to a point on the Easterly line of said Lot Ten (10) which is 80.7 feet Northwesterly of Southeast corner of said Lot Ten (10); there ternunating; all in Block Twenty-one (21), City of St. Paul, commonly referA to as"St. Paul Proper." 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