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02-899� � � , C\i'v�iVP�L Presented Referred To Council File # 0�..899 Green Sheet # 101345 Corzunittee Date 1 2 3 4 5 6 7 8 9 10 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 39 40 41 RESOLUTION ADOPTING THE TAX INCREMENT F`INAi1'CING PLAN FOR THE ESTABLISHMENT BY THE PORT AUTHORITY OF THE CITY OF SAINT PAUL OF THE ENERGY LANE BUSINESS CENTER TAX INCREMENT FINANCING DISTRICT AND THE HAZARDOUS SUBSTANCE SUBDISTRICT THEREIN; AND THE APPROVAL OF THE ISSUANCE BY THE PORT AUTHORITY OF TAX INCREMENT BONDS BE TT RESOLVED by the City Council (the "Council") of the City of Saint Paul, Minnesota (the "Cit}�'), as follows: Section 1. Recitals. 1.01. In 1979 the Port Authority of the City of Saint Paul (the "Port Authorit}�') established the Energy Park Indushial Development District (the "Proj ect Area"). In 1981, the EnergyPark Tax Increment District was created. In 2001, three parcels were removed from the Energy Park Taac Increment District. It has now been proposed that the City establish those tluee parcels within the Project Area as the EnergyLane Business Center Tax Increment Financing District (the "DistricP'), the hazardous substance subdistrict therein (the "HSS"), and adopt the related Taac Increment Financing Plan therefor (the "Plan"); all pursuant to and in conformitywith applicable law, including Minnesota Statutes, Sections 469174 through 469.179, all inclusive, as amended, all as reflected in the Plan, and presented for the Council's consideration. 1.02 To meet the requirements of state law, the Port Authorityhas requested that the Council gives its requisite approval to the creation of the District and the HSS, and the adoption of the Plan. 1.03. The Council has investigated the facts relating to the Plan. 1.04. The Port Authority has performed all actions required by law to be performed prior to the adoption and approval of the proposed Plan, including, but not limited to, notification ofRamsey County and School District No. 625 having tasing jurisdiction over the property to be included in the District, a review of and written comment on the Plan by the City Planning Commission, and the holding of a pubic hearing upon published notice as required by law. 1A5. Certain written reports (the "Reports") relating to the Plan and to the activities contemplated therein have heretofore been prepazed by staff and submitted to the Council and/or made a part of the City files and proceedings on the Plan. The Reports include data, information and/or substantiation constituting the bases for the findings and determinations made in this resolution. The Council hereby confirms, ratifies and adopts the Repor[s, 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. RESOLUTION CITY OF SAINT PAUL, MINNESOTA � 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 ORIGIiJAL ��` `� 1.06. The Port Authority has given its preliminary approvai to the issuance of its tasable or tas exempt taac increment revenue bonds (the `Bonds'�, which may be in the form ofbonds or notes, in the aggregate principal amount of $2,100,000, to finance the costs of environmental remediarion in the District. 1.07 Laws of Miiuiesota 1976, Chapter 234, provides that any issue of revenue bonds authorized by the Port Authority shall be issued only with the consent of the City Council ofthe City of Saint Paul, by resolution adopted in accordance with law. 1.08 Approval ofthe issuance of the proposed Bonds by the City Council is also required by Section 147(� of the Intemal Revenue Code of 1986, as amended. 1.09 To meet the requirements ofboth state and federal law, the Port Authorityhas requested that the City Council gives its requisite approval to the issuance of the proposed Bonds by the Port Authority, subj ect to final approval of the details of said Bonds by the Port Authority. Section 2. Findings for the Adoption and Approval of the Plan. 2.01. The Council hereby finds that the Plan is intended, and in the judgment of this Council, the effect of such actions wiil be, to provide an impetus for development in the public purpose and accomplish certain objecrives as specified in the Plan, which aze hereby incoxporated herein. Section 3. Findings for the Establishment of The Ener¢y Lane Business Center Taac Increment Financin� District and the Hazazdous Substance Subdistrict therein. 3A1. The Council hereby finds that the District is in the public interest and is a "redevelopment districY' under Minnesota Statutes, Section 469.174, subdivision 10. 3.02 The Council hereby finds that the HSS is in the public interest and is a"designated hazardous substance site" under Minnesota Statutes, Section 469.174, subdivision 16. 3.03. The Council further finds that the proposed development would not occur solely through private investment within the reasonably foreseeabie future and that the increased market value on the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the mazket value estimated to result from the proposed development after subtracting the present value of the projected tas increments for the maximum duration of the Energy Park Development Proj ect Area permitted by the Plan, that the Plan conforms to the general plan for the development ar redevelopment of the City as a whole; and that the Plan will afford masimum opportunity consistent with the sound needs of the City as a whole, for the development of the Project Area by private enterprise. 3.03. The Council further finds, declares and determines that the City made the above fmdings stated in this Section and has set forth the reasons and supporting facts for each determination in writing, attached hereto as Exhibit A. 25492.1. 93 94 95 96 97 �i�;;��a�L Section 4. Avproval and Adovtion of the Plan. aa-��►, 98 4.01. The Plan, as presented to the Council on this date, inciuding without limitation the 99 findings and statements ofobjectives contained therein, as hereby approved, ratified, estabiished, and l00 adopted and shall be placed on file in the offices of the Port Authority and the City Adininistrator. 101 102 4.02. The staff of the Port Authority, the Port Authority's advisors and legal counsel, are 103 authorized and directed to proceed with the implementation of the Plan and to negotiate, draft, l0a prepare and implement all fiu•ther plans, resolutions, documents and contracts necessary for this 105 purpose. 106 107 4.03. The Auditor of Ramsey County is requested to certify the original net tax capacity of 108 the District, as described in the Plan, and to certify in each year thereafter the amount by which the 109 original net taz capacity has increased or decreased; and the Port Authority is authorized and directed i 10 to forthwith transmit this request to the County Auditor in such form and content as the Auditor may 111 specify, together with a list of all properties within the District, for which building permits have been 112 issued during the 18 months immediately preceding the adoption of this resolution. 113 114 Section 5. Authorization 115 i 16 5.01. The Mayor, City Clerk and Director, Financial Services, or such other officer as maybe 117 appropriate in the absence of either the Mayor, City Clerk or Director, Financial Services, are hereby i 18 authorized to execute any docuxnents necessary in connection with the adoption of the Plan and the 119 formation of the Dishict (to the extent the City is a party thereto) which in the opinion of City staff and 120 counsel aze necessary to the transaction herein described . The execution of any instrument by the 121 appropriate officer or officers ofthe City herein authorized shall be conclusive evidence ofthe approval izz of such documents in accordance with the terms hereof. 123 iz4 Section 6. Apnroval of Taat Increment Bonds. izs 126 6.01. In accordance with the requirements of Section 147( fl of the Internai Revenue Code of 127 1986, as amended, and in accordance with Laws of Minnesota 1976, Chapter 234, the City Council 128 hereby approves the issuance ofthe taac increment revenue bonds by the Port Authority for the purposes 129 described in the Port Authority resolution adopted September 24, 2002, the exact details of which, 130 including but not limited to, provisions relating to principal amount, maturiries, interest rates, discount, 131 redemprion, and the issuance of additional bonds aze to be determined by the Port Authority, and the 132 City Council hereby authorizes the issuance of any additional bonds (including refundingbonds) bythe 133 Port Authority found by the Port Authority to be necessary for catryiug out the purposes for which the 134 aforedescribed Bonds areissued. 135 136 Dated: September 25, 2002 137 138 254g2.1. f��3 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 164 165 166 167 168 169 170 171 172 173 174 175 176 177 178 179 180 181 182 183 184 185 186 187 188 189 J�1r��1L EXHIBTI' A TO RESOLUTION # EXHIBTT A TO CTTY COUNCIL RESOLUTION # O�- 8"lR I. The reasons and facts supporting the findings for the adoption of the Energy Lane Business Center Financing District (the "Tas Increment DistricY') as required pursuant to Minnesota Statutes, Section 469.175, Subdivision 3: 1. Finding that the District is a"redevelopment district. " This Taac Increment District is a redevelopment district because it is a portion of a project in which the following conditions, reasonably distributed throughout the district, exist: parcels consisting of 70 percent ofthe azea ofthe district aze occupied bybuildings, streets, urilities, paved or gravel parking lots, or other similar structures and more than 50 percent of the buildings, not including outbuildings, are structuraily substandard to a degree requiring substantial renovation or clearance, as more fully described below: A. The Project is in the St. Paul Energy Pazk Industrial Development District established by the Port Authority of the City of Saint Paul in 1979, whose boundaries aze larger than the boundaries of the Tax Increment District. B. The Tas Increment District consists of the foliowing tax pazcels: • Parcel A(consisting of 127,979 total square feet); • Parcel B(consisting of 122,833 total square feet); and • Parcel C(consisring of 137,179 total square feet) C. Prior to the creation of the Tas Increment District, parcels constituring 70% of the area of the Taac Increment District were occupied (at least 15% covered) by buildings, streets, utiliries, paved ar gra�el pazking lots or other similar structures (collectively "Improvements"). These parcels and the azeas covered by such Improvements were as: • Pazcel A-100% of this pazcel has been completely covered by gravel to enable it to be used as a parking lot for businesses located in Saint Paul Energy Park, the Minnesota State Fair and other events held at the State Fair Grounds and surrounding venues. • Parcel B- 100% ofthis parcel has been completely covered by gravel to enable it to be used as a parking lot for businesses located in Saint Paul Energy Park, the Minnesota State Fair and other events held at the State Fair Grounds and surrounding venues. 25492.1. 190 191 192 193 194 195 196 197 198 199 200 201 202 203 204 205 206 207 208 209 210 211 212 213 214 215 216 217 218 219 220 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 �Ji\iv!id/ oa-�g • Pazcel C- at least 54,870 square feet (40%) this parcel has been black topped and the remaining 82,307 square feet (60%) has been covered by gravel, all for use as a parking lot for businesses located in Saint Paul Energy Park, the Minnesota State Fair and other events held at the State Fau Grounds and surrounding venues. D. Prior to its creation, the Tas Increment District contained no buildings. 2. Finding that the proposed deveZopment, in the opinion of the Port Authority, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future and that the increased market value of the site that could reasonabZy be ezpected ta occur without the use of tax increment financing would be less than the increase in the market vaZue estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the distr-ict permitted by the plan. Due to the high cost of development on the parcels including specifically the cost of environmental remediation, this project is feasibie only through assistance, in part, from taac increment financing. A comparative analysis of estimated market values both with and without establishment of the Taac Increment Financing District and the use of taac increments has been performed as described above. If all development which is proposed to assist with tas increment were to occur in the Tas Increment District, the total increased mazket value would be up to approximately $8,454,123. It is the Port Authority's fmding that there would be no significant increase in the base market value expected to occur within 25 years without the use of taY increment financing to facilitate the necessary environmental remediation. This finding is based upon evidence from general past experience with the high cost of providing environmental remediation in the general area of this Taac Increment Aistrict. 3. Finding that the Tax Increment District conforms to the general plan for the development or redevelopment of the municipality as a whole. The Tas Increment Plan has been reviewed by the Port Authority and has been found to conform to the general development and redevelopment plan ofthe Port Authority and the City. The general development plan for the Port Authority and the City contemplates a mixed-use, residentiaUcommercial use for the propertyin the District. II� 4. Finding that the ta,r increment financing plan will afford maximum opportunity, consistent with the sound needs of the community as a whole, for the development or redeveZopment of the project by private enterpr-ise. Private enterprise will occupy the facilities constructed in the Tas Increment Dishict. The reasons and facts supporting the fmdings for adoption of a Hazazdous Substance Subdistrict (the "HSS") witl�in the Ta�c Increment District as required pursuant to Minnesota Statutes, Section 469.175, Subdivision 7: 25492.1. za2 243 t� ('� r" 244 � � j � 245 1. 246 247 248 249 2. Other parcels that are not designated hazardous substance sites are expected to be developed together with the designated hazardous substance site. 250 The parcels in the HSS were previously part of the Coppers Company Koch Plant 251 properiy, and have been placed on the United States Environmental Poliution Conirol 252 Agency's (USEP) superfund site national priorities list (NPL) and the Minnesota 253 Pollution Control Agency's (MPCA's) permanent list of priorities. The HSS have 254 been subject ofmulriple environmental investigations and clean up activities, and are 255 currently part of an ongoing ground water momtoring program. The cost of clean 256 up and increased construcrion costs made private development of the HSS unlikely. 257 Tas increments anticipated to be generated from the Dishict will not, without the 258 additional tas increments generated by the HSS, be sufficient to pay the remediation 259 costs needed to put the property in the District to productive use. 260 261 262 263 264 265 266 267 268 269 270 .� : i'y � � Q�- fq9 Finding that the development or redeveZopment of the site, in the opinion of the Port Authority, would not reasonably be ezpected to occur solely through private investment and tax increment otherwise available, and therefore the HSS is deemed necessary. The HSS consists of parcels B and C. Parcel A is included in the District, but not in the HSS, and is expected to be developed together with parcels B and C.] 3. The HSS is not larger than, and the period of time which increments are elected to be received is not Zonger than, that which is necessary in the opinion of theAuthority to provide for the additional cost due to the designated hazardous substance site. 271 The estnnated cost to remediate the land in the District is approximately 272 $1,500,000. In addition, the anticipated costs for the development of the District, 273 which are eligible for reimbursement from tax increments, are expected to be 274 $1,600,000. Tax increments expected to be generated from the District, without 275 the creation of the HSS, are $146,000, which are not sufficient to pay all eligible 276 costs. It is anricipated that increments from the HSS wiil be collected during the 277 period commencing 2004 and ending 2029, in an amount sufficient, but not 278 greater than that needed, to provide for the payment of remediation costs. 25492.1. � �•� �� l� 7 i 1 LJ ; j'�( f� �� _�� • � C-�.�. �-- ��-- : ; � . ; �-- I�--� �I . � � �-- I ��-- -��. AdoptedbyCouncil: Date .�,. ° �S ��'�a ��. Adoprion Certified by Council Secretary � App� � st dbyD tof r�X1(l\. � \ By: Foxtn Approved by City Attomey 0�.-849 Saint Paul Port Authority K. Johnson/B. Kessel USf BE IXJ CIXINGLAGB�4 BY @4TE On September 25, 2002 ��w TOTAL S OF SIGNATURE PAGES GREEN SHEET No 1� i �!+5 tim�uos. �rm,� 1 oaiunrrtsa�a¢ a�rcaao. �" J -b Q�..,,�. �9-aa ❑m.� � ��a� � �� ❑ MYOR�ItAfYfYR� ❑ (CLJP ALL LOCATIONS FOR SIGNATURt� Approval of the Energy Lane Business Center Redevelopment Tax Increment Financing District and Hazardous Substance Subdistrict Fiancning Plan for the Distict and make the necessary findings and elections in connection with the Plan and the District, and approval of the issuance by the Port Authority of Tax Increment bonds not to exceed $2,100,000. PLANNING CAMMISSION CIB COMMRTEE CNIL SERVICE CAMMISSION Port Authoritv Board Has mis pe�sonlfirm euaworwed under e carc,a�t firnxs deaa�nta YES NO Flas th"s pe�amlfiim ewr been a ah emPloYee4 YES NO Does Mic persaMum v�eess a sldl iwt rionnaNYO� by em� cu�rent cilY emDloYee7 YES NO h Mis pnsa��m a taryefetl �entloY7 YES t� �F.�lain aIl Y� a�xe's m sepe�ate sl�eet and aGach to 9men sheet JITIATING PROBLEM ISSUE, OPPORTUNITV (Who, Whaf, When, Whne, Why) Approval of this Tax Increment Financing Plan and Hazardous Substance Subdistrict will assist the redevelopment and remediation of the Energy Lane-Business Center, and approval of bonds will assist with the soil remediation costs. The Energy Lane Business Center will provide land and a related business showroom to businesses to expand and/or relocate in Saint Paul. Further, job potential will be maximized with approximately 270 jobs being provided on site. IFAPPROVED ISADVANTAGESIF NOTAPPROVED Private development is not likely to occur since the land is contaminated and included as a Superfund site. JTAL AMOUNT OF TRANSACTION t 7, 425 . 000 COSTRtEVENUE BUDGETED (CIRCLE ON� rEa r+o Tax Increment Financing. JNOINGSOURCE �rant receipts �cmnTyN�e�e 4� � � � , ♦ � Resolution No. 3966 PORT AVI�IORZI'Y dF TFIE CTTY OF SAINT PAUL Ener;y Lane Business Center Tax 7ncrement Aistrict Final Approval of Plan and Sale Preluninary Approval of Bonds VJHEREAS, the Port Authority of the City of Saint Paul (the "Port Authority") previously established the Energy Park Industrial Development Dishict (in 1979) and the Energy Park Tax Increment I7istrict (in 1981). In 2001, tluee parcels were removed from the Energy Pazk Tax Increment Bistrict due to lack of development; and WHEREAS, it has been proposed thaf the Board of Commissioners (the "Board'� of the Port Authority adopt the tax increment financing plan (the "Plan") for and establish the three parcels previously removed from the Energy Pazk T� Increment as the Energy Lane Business Center Taac Increment Financing District (the "DistricY') and the hazardous substance subdistrict therein (the "HSS'�, all pursuant to and in confornuty with existing law, including Minnesota Statutes, Section 469.174 to 469.179, inclusive, as amended, all as reflected in the Plan and presented for the Board's considerarion; and WHEREAS, the Port Authority has investigated th�_�acts �elating to tl�� estab�ishm�nt of the District and the HSS, and has caused the PIan to be prepazed; and WHEI2EAS, the District will provide approximately 8.91 net developable acres of Iand of which 8.06 acres are intended for office showroom users (the "ProjecY'); and WHEREAS, the Project, as described in the Plan, in the opinion of the Port Authority, wouid not reasonably be expected to occur solely through private investment within the reasonably foreseeable future, and, therefore, the use of ta�c increment financing is deemed necessary; and WHEREAS, the Port Authority has performed all actions required by law to be performed prior to the adoption of the Plan, but not i'vnited to, notification of Ramsey County and School District No. 625 having taxing jurisdicfion over the property to be included in the Taac Increment Financing District; and WHEREAS, it is proposed that the portion of the proper[y comprising the District, which portion is legally described on E�ibit B hereto (the "Land"), be sold to Capital City Properties ("CCP") which shall enter into a joint venture (the "Joint Ventiu with Ryan Noms Circle, LLC ("Ryan") to develop the Project; 2za�ao��i A-1 ea-s�q WI3EREAS, pursuant to the Plan and tIie 7oint Venture A�eement, it is contemplated that the Port Authority wiIi issue its taxable or tas-exempt taY increment bonds in the approximate principal amount of $2,100,000 fo provide funds for the payment of environmental remediafion costs (the "Bonds"); and W��, p,,,-c„ant fo the requiremenfs of Section I47( fl of the Intemal Revenue Code of 1986, as amended, and Minn. Stat. §§ 469.065 and 459.175, Subd. 3 and pursuant to a notice published by the Port Authority not less than 15 days prior to the public hearing, a public heazing has been held on (a) fhe issuance of the Bonds, (b) the creation of the District and (c) the sale of the Land comprising the Dis�ict to CCP; and WHEREAS, the Port Authority did conduct a public hearing pursuant to said notice on this date, at which hearing all taxpayers in the port district, both for and against the issues under consideration, were allowed to state their views; and WHEREAS, it is in the best interests of the port district and the peopie thereof, and in furtherance of the general plan of port improvement and indushial development, to sell the Land as described; and WF7EREAS, the Port Authority has investigated the facts of the proposed agreement to purchase the Land, said investigation including the terms and conditions of said ageement, the proposefl use of the Land, and the relationship thereof to the port district of Saint Paul and the business facilities of the Port Authority in general; and WHEREAS, the proposal presented by CCP meets the terms and conditions set forth by the Port Authority as its guide in deterniining if such proposaLs are in the best interests of the port district and of the public. NOW, T'FIEREFORE, BE IT RESOLVED by the Boazd of Commissioners of the Port Authority of fhe City of Saint Paul as follows: 1. The Port Authoriry hereby finds that the creation of the District is in the public interest and is a"redevelopment dishicY' under Minnesota Statutes, Section 469.174, subdivision 10, and has set forth ttie reasons and supporting facts fox its deternvnation in writing, attached hereto as Part I of Exhibit A. 2. The Port Authority hereby finds that the creation of the HSS is in the public interest and is a"designated hazardous substance site" under Minnesota Statutes, Section 469.174, subd. 16, and has set forth the reasons and supporting facts for its deternunation in wriYing, attached hereto as Part II of Eacliibit A. 3. Conditioned upon the approval thereof by the Saint Pau1 City Council following its public hearing thereon, the Plan, as presented to the Port Authority on this date, is hereby z2a�ao��i A_2 w oa-s�q approved, established and adopted and sha11 be placed on fiIe in the offices of the Port Authority and the City Administrafor. d. Upon approval of the Plan by the Saint Paul City Council, Port Authority manaaement, together with its advisors and le�al counsel, are authorized to proceed with the implementation of the Plan and for this purpose to negoriate, draf�, prepaze and present to this Board for its consideration all further plans, resoIufions, documents and contracts necessary for this purpose. 5. Upon approval of the Plan by the Saint Paul City Council, tbe President of the Port Aufhority is authorized to forward copies of the Plan to the Ramsey County Auditor and tfie Minnesota Department of Revenue pursuant to Minnesota Statutes 469.175, subdivision 2. 6. The Port Authority hereby indicates its intention to issue its revenue bonds (which may be taY-exempt and/or taxable) in a principal amount of up to approxunately $2,100,000, to provide funds to pay the costs of environmentai remediation in the District, provided that the Port Authority and the purchaser of the revenue bonds aze able to reach a�eement as to the details of the documents necessary to evidence and effect the financing described herein, and the issuance of tke revenue bonds, and further provided that the Project and its financing receive such approval by the Department of Trade and Economic ➢evelopment of the State of Minnesota as is needed. 7. Port Authority management is further authorized to continue negotiarions with the Joint Venture so as to resolve the issues necessary to the preparation of documents necessary to the approval by the Port Authority of any tax increment revenue band financing. If issued, such talc increment revenue bond financing shall not coxistitute an indebtedness of the Port Authority ar the City of Sanzt Paul within the meaning of any constitutional or statutory limitation and shall not constitute or giva rise to a pecuniary liability of the Port Authority or the City of Saint Paul or a charge against their geaeral credit or taxing powers and neither the full faith and credit nor the taxing powers of the Port Authority or the City of Saint Paut will be pledged for the payment of any such bonds or the interest thereon. 8. Appxovai of this resolution is not a commitment from the Port Authority to issue ta�c increment revenue bond financing, and the issuance of such financing is subject fiuther review by the Credit Committee and Commissioners of the Port Authority. If' issued, the revenue bonds (including any interim note or notes) and interest thereon shall not constitute an indebtedness of the Authority or the City of Saint Paul wifl�in the meaning of any constitutional or statutory 1'unitation and shall not constitute or give rise to a pecuniary liability of the Authority or the City of Saint Paui or a charge against their general credit or taxing powers and neither the fiill faith and credit nor the taacing powers of the Authority or the City of Saint Paul is pledged for the payment of the bonds (and intexim note or notes) or interest thereon. 9. 'Fhe Chair and Secretary of the Port Authority, or such other officer as may be appropriate in the absence of either the Chair or Seeretary, are hereby authorized to execute any zza�ao��i A-3 , r. ,.. documents necessary in coanection with the adoption of the P1an, tfie formation of the District and the IiSS, and tbe sale of the Land to CCP (to the extent the Port Authority is a pariy thereto) which in the opinion of Port Authority mana�ement and counsel aze necessary fo the lransaction herein described. T'ne execution of any inshvment by the appropriate officer or officers of the Port Authority herein authorized sba11 be conclusive evidence of the approval of such documents in accardance with the ferms hereof. The execution of auy documen�s necessary for the transaction herein described by indi��iduals who were at the time of execution thereof fhe authorized officers of the Port Authoriry shall bind the Port Authority, notwithstanding that such individuals or any of them has ceased to hold such office or offices. Adopted: September 24, 2002 POKT AIJTHORITY OF TI� CITY dF SAINT PAUL �l.i.. . I�ri-. i : �, /' . ATTEST: �� 2247407v1 A-4 �• % 1 EX�IIBTT A TO PORT AU'THORITY RESOLUTION I. The reasons and facts supporting the findings for the adoption of the Energy Lane Business Center Financing District (the "Tax Increment District'� as required pursuant to Mtnn esota Statutes, Section 469.175, Subdivision 3: l. Finding that the District is a"redevelopment district. " This Tax Increment District is a redevelopment district because it is a portion of a project in which the following conditions, reasonably distributed throughout the district, exist: pazcels consisting of 70 percent of the azea of the district are occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar stnzctures and more than 50 percent of the buildings, not including outbuildings, aze structurally substandard to a de�-ee requiring substantial renovation or cleazance, as more fully described below: A. The Project is in the St. Paul Energy Park Industrial DeveIopment District established by the Port Authority of the City of Saint Paul in 1979, whose boundaries aze larger than the boundaries of the Tas Increment Disirict. B. The Tast 7ncrement District consists of the following taat parcels: • Parcel A(consisting of 127,979 total square feet); • Parcei B(consisting of 122,833 total square feet); and • Parcel C(consisting of 137,179 total square feet) C. Prior to the creation of the Taic Increment District, pazcels constitufing 70% of the area of the Tax Increment Aistrict were occupied (at least 15% covered) by buildings, streets, urilities, paved or gravel parking lots or other similaz strucfures (collectively "Improvements"). These pazceIs and the areas covered by such Txnprovements were as: Parcel A- 100% of this parcel has been completely covered by gravel to enable it to be used as a parking lot for businesses located in Saint Paui Energy Pazk, the Minnesota State Fair and other events held at the State Fair Grounds and surrounding venues. 2247407v1 A-5 �. ��i Parcel B- 100% of this parcel has been completely covered by gravel to enable it to be used as a parldng lot for businesses located in Saint Paul Energy Park, the Minnesota State Fair and other events held at the State Fair Grounds and surrounding venues. Parcel C- at least 54,870 square feet (40%) this parcel has been black topped and the remaining 82,307 squaze feet (60°l0) has been covered by gravel, a11 for use as a parking 1ot for businesses located in Saint Paul Energy Pazk, the Minnesota State Fair and other events held at the State Fair Grounds and sutrounding venues. D. Prior to its creation, the Tas Increment District contained no buildings. 2. Finding that the proposed development, in the opinion of the Port �tuthority, wouZd not reasonably be expected to occur solely through private investment within the reasonably foreseeable future and that the increased market value of the site that could reasonably be e�.pected to occur without the use of tax increment financing would be Zess 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 dishzct permit2ed by the plan. Due to the high cost of development on fhe parcels including specifically the cost of environmental remediation, this pro}ect is feasible only through assistance, in part, from taac increment financin�. A comparative analysis of estimated market values both with and without establishment of the Tax Increment Financing District and the use of taY increments has been performed as described above. Lf ali development which is proposed to assist with ta�c increment were to occur in the Tax Increment District, the total increased market value would be up to approximately $8,454,123. It is the Port Authority's finding that there would be no significant increase in the base market value expected to occvr within 25 years without the use of taJC ineremenf financing to facilitate the necessary environmental remediation. This finditzg is based upon evidence from general past experience with the high cost of providing environmental remediation in the general area of this Tax Increment District. 3. Finding th¢t the Tax Increment District conforms to the gener¢l plan for the deveZopment or redevelopment of the municipality as a whole. The Ta� Increment Plan has been reviewed by the Port Authority and has been found to conform to the general development and redevelopment plan of the Port Authority and the City. The general development plan.for the Port Authority and zza�ao�� A_6 v. • i s� the City contemplates a mixed-use, residentiaUcommercial use for the property in the District. 4. Finding that the tax increment financing plan will afford maximum opportunity, consistent with the sound needs of the community as a whole, fos the deveZopment or redeveZopment of the project by private enterprise. Private enterprise will occupy the facilities constructed in the Tax Increment District. II. The reasons and facts supporting the findings for adoption of a Hazazdous Substance Subdistrict (the "HSS") within the Tax Increment District as required pursuant to Minn esota Statutes, Section 469.175, Subdivision 7: Finding that tlxe development or redevelopment of the site, in the opinion of the Port Authority, would not reasonably be expected to occur solely through private investment ¢nd tax increment othenvise available, and therefore the HSS is deemed necessary. The parcels in the HSS were previously part of the Coppers Company Koch Plant properiy, and have been placed on the United 5tates Environmental Pollution Conh Agency's {tJSEP) superfund site nafional priorities list (NPL) and the Minnesota Pollution Control Agency's (MI�CA's) permanent list of priorities. The HSS have been subject of multiple environmental investigafions and clean up activities, and are curtently part of an ongoing ground water monitoring program. The cost of clean up and increased construction costs made private development of the IiSS unJikely. Tax inerements anticipated to be generated from the District will not, without the additional taY increments generated by the HSS, be sufficient to pay the remediation costs needed to put the property in the District to productive use. 2. Other parcels that are not designated hazardous substance sites are expected to be developed together with the designated hazardous substance site. The HSS consists of parcels B and C. Parcel A is included in the Dishict, but not in the ASS, and is expected to be developed together with pazcels B and C.] 3. The HSS is not larger than, and the period of time which increments are elected to be received is not longer than, that which is necessary in the opinion of the Authority to provide for the additional cost due to the designated hazardous substance site. zza�ao��i A-7 o a-g99 The estimated cost to remediate the land in the District is appro�mateIy $1,500,000. In addifion, the anticipated costs for the development of the District, whioh aze elio ble for reimbursement from taY increments, aze expected to be $1 TaY incremenfs expected to be generated from the District, without the creation of the HSS, are $14b,000, which are not sufficient to pay all eligible costs. It is anticipated that increments from the HSS will be collected durin� ths period comxnencin� 2004 and ending 2029, in an amount sufficient, but not greater than that needed, to provide for the paymznt of remediation costs. zza�am�� A-8 �a-$�9 ��.:�,:� Legal Description Lot 1, Block 1, Energy Pazk No. 4(Pazcel A) Lot 5, Block i, Energy Pazk No. 2(Parcel B) Lot 4, Block 1, Ener�y Pazk No. 2, except the west 113 feet thereaf, as measured at right anQles from the west limit of said lot (Pazcel C) aza�ao��t B_l 1900 Landmark Towers 345 St. Peter Street Saint Paui, Minnesota 55102-1667 Ms. Martha Fulier. Director Planning & Economic Development Department 13Q0 City Hall Annex 25 West Fourth Street Saint Paul, Minnesota 55102 7e1: b51-224-5686 0 a� �� \ Fax:651-223-5198 � Tol{ kee: 800328-SA17 � s www.sppz.com 0 � September 16, 2002 RE: ENERGY LANE BUSINESS CENTER REDEVELOPMEPJS TAX {NCREMENT FINANCING DISTRICT AND HAZARDOUS SUBSTANCE SUBDISTRICT AND THE APPROVAL OF T E ISSUANCE OF TAX INCREMENT BONDS ��-� DeaF�i�� ., We submit for your review and referral to the office of the Mayor, City Council, and City Attorney's office, details pertaining to the creation of the Energy Lane Business Center Redevelopment Tax Increment Financing District and Hazardous Substance Subdistrict and the adoption of the Tax Increment Financing Plan and the issuance of tax increment bonds not to exceed $2,100,000. In addition to the staff memorandum, we are attaching a draft copy of the proposed City Council Reso{ution and a copy of the Tax Increment Financing Plan that will be considered by the Port Authority's Board on September 24, 2002. City Council action will be required after the Port Authority's Board meeting of September 24, 2002. Your expeditious handiing of this matter will be appreciated. Attachment Q O R t J � 9 Q � a � Z �b T � Sincerely, ��' Kenneth R. Johnson President cc: Mayor Kelly 23980.1. SAIIVT PAUL PORT AUTHORI'1'Y 1// 1 .�� TO: BOARD OF COMNiISSiONERS (Regular Meeting of Sept. 24, 2002) FROM: Bruce A. Kessel 4� Laurie J. Hansen � ^' - Kenneth R. :lohnson DATE: Sept. 18, 2002 SUBJECr ENERGY LANE BUSINESS CENTER REDEVELOPMENT — PUBLIC HEARINGS: (1} TAX tNCREMENT FINANCING DtSTRiCT & HAZAI2DOUS SUBSTANCE SUBDISTRICT; (2) BOARD CONTINUATfON OF PUBLIC HEARING AND RELATED LAND SALE; (3) PREIIMINARY APPROVAL FOR 1SSUANCE OF TAXABLE TAX INCREMEN7 REVENUE BONDS NOT TO EXCEED $2,100,000 RESOLUTION NO. Action Requested C�a.-� (1) Fina{ approva{ of the Energy Lane Business Center Redeve{opment Tax increment Financing District and Hazardous Substance Subdistrict; (2) the Board's continuation of the public hearing and related land safe of three parcels, and (3) the preiiminary approval for issuance of taxable tax increment revenue bonds not to exceed $2,100,000. Public Purpose Approval of the Tax Increment Plan and Hazardous Substance Subdistrict with related tax incremenf revenue bonds will provide partial funding for: • Remediation of 3 parcels of land in the Saint Paul Energy Park Industrial Development District. • Development of a 108,000 square foot office/showroom • Creation of 270 jobs Business Subsidv Not Applicable Backqround In 1979, the Board of Commissioners approved the creation of the Saint Paul Energy Park Industrial Development District, which was followed by the creation of the Energy Park Tax Increment District in 1981. In 2001, three parcels within the tax increment district were decertified and removed from said district. The creation of this district with those three 25463.1. BOARD OF COMMISSIONERS September 18, 2002 Page 2 parcels will allow for the remediation of their polfuted soil and create an office-showroom and thereby create jobs at livable wages and maximize the tax base in the area. ProAOSa! The $8,900,000 of estimated new construction at the Energy lane Business Center would not be expected to occur in the reasonably foreseeable future without the use of the tax increment financing. No such developmenf or redevelopmenf has taken piace af the site in recent years. Further, pollution found at the sife necessitates the creation of the hazardous substance subdistrict to help pay the cosf of remediation. The Port Authority has developed a redevelopment finance pian for the Energy Lane Business Center, A summary of this projecYs sources and uses is included as Appendix A. At the present time, the authority is conducting further analysis of the soi! contamination at the site and its impact on the land sale and potential joint venture between CCP and Ryan Companies. As such, it is recommended thaf the public hearing on the land saie scheduled for the Board meeting on September 24, 2002, be continued until October 22, 2002, at which time such sale should be able to proceed. It is proposed that the Authority continue with the creation of the Tax Increment Financing (TIF) District and related Hazardous Substance Subdistrict to ensure that the District is in place and future development at the site is able to proceed. TIF Statutes generafly require activity to occur within three to five years after the creation of a District. Currently it appears that activity will be occurring within this time line. As part of the proposed development and TIF District, is contemplated that taxable bonds be issued which would be repaid from tax increments generated by the developmenf. Upon finalization of the land sale and site plans for development, a finaf proposal for TIF bonds will be presented to the Board for approval. Workforce Implications Current estimates are for the creation of 270 jobs by the proposed development as well as approximately 147 construction jobs. Recommendation We recommend final approval of (1) the creation of the Energy Lane Business Center Redevelopment Tax Increment Financing District and Hazardous Substance Subdistrict; (2) the Board's continuation of the public hearing and related land sale, and (3) the preliminary approval for issuance of taxable tax increment revenue bonds not to exceed $2,100,000. BAK:ca Attach. 25463.1. aa- �1 � 9/12/02 PORT AUTHORITY OF THE CITY OF SAINT PAUL TAX INCREMENT FINANCING PLAN FOR THE ENERGY LANE BUSINESS CENTER REDEVELOPMENT TAX INCREMENT FI1��ANCING DISTRICT AND HA7ARnOUS SUBSTANCE SUBDISTRICT I. Introduction A. Background The Port Authority owns three parcels of land consisting of approximately 8.9 acres located at the southwest corner of the intersection of Energy Lane and Norris Circle in the Energy Park area of St. Paul. The site is located in a former industrial area that has been developed for residences, commercial businesses, and light industry. It was previously part of the Koppers Company Coke Plant property (Koppers Company, Inc. and subsequentiy Beazer East, Inc), and has been placed on the United States Environmental Pollution Control Agency's (LT5EPA) Superfiuid Site National Priorities List (NPL) and the Minnesota Poliution Control Agency's (MPCA's) Permanent List of Priorities. The site has been the subject of multiple environmental investigations and cleanup activities, and is currently part of an ongoing groundwater mozritoring program. Due to the cost of cleanup and increased construction costs for building on the site, the land has 6een used for blacktop and gravel surface parking. In August 1979, the Port Authority Board of Commissioners created the St. Paul Energy Pazk Industrial Development District. In May 1981, the Energy Park Tax Increment District was created. The goal in creating the industrial development district and tax increment district was identified as being to create an impetus for commercial development and to increase employment. Since the creation of the industrial development district, all of the properiy in Energy Park, except the three parcels included in tYris redevelopment dishict have been developed and improved to include residential, commercial and light indushial uses. In 2001, the three parcels to be included in this redevelopment district were removed from the Energy Pazk Tas Increment District. B. Creafion of Redevelopment Tax Increment District and Hazardous Substance Subdistrict; Statutory Authority. This t� increment plan relates to the creation, under Minnesota Statutes Section 469.174, Subd. 10 of the Energy Lane Business Center Redevelopment Tax Increment District (the "District"), and the creation within the District of a Hazazdous Substance Subdislrict (the "HSS") pursuant to Section 469.175, Subd.7. 23737.1. C. Need and Public Purpose The North End neir,hborhoods of Saint Paul have seen a reduction in living wage manufacturing jobs since the 1980's. Private sector development of the Energy Lane Business Center has not been possible for a variety of reasons. These reasons include soil condition, pollution remediation, and the site being included on the USEPA's Superfund Site National Priorities 2ist AII of these conditions have resulted in a lack of private investment in this azea. As a result, the property has not provided adequate employment opporhxnities and has not contn to the tas base and general economy of the City, the school dishict, the County, and the State to its full potential. The anticipated clean up of the three parcels to be included in the District, which will be made possible by the creation and development of the District and the HSS, will provide appro�mately 388,000 squaze feet of land azea to businesses to expand in or relocate to the City. The City's taY base will be increased by the construction of approacimately 108,000 square feet of new office showroom facilities. 7ob creation potential will be maxixnized with an estimated 270 jobs being pmvided on site. These jobs will be available to Saint Paul residents. Further, customized job training services may be available to employers locating theiz businesses in the Energy Lane Business Center. It is necessary that tke Part Authority exercise its port authority powers under state law to develop, implement, and finance a progiani designed to encourage, ensure and facilitate the redevelopment of the three parcels to be included in the Distict. This redevelopment will fiirther accomplish the public purposes specified in this paragraph. II. Obiectives of the Port Authoritv for the Improvements in the District A. Provide job opportunities for Saint Paul residents. Given the new construction of appmximately 108,000 squaze feet and using a ratio of two and one-half job per 1,000 squaze feet, it is estnnated that the oppommiry will exist for a minimum of 270 jobs. B. To redevelop underused, inappropriately used, or infreqnently nsed property. The Dishict is presenfly occupied by blacktop and gravel surface parlflng. This is an under-utiIization o€the area, and results in a stagnant and only mazginaily productive use of the property. C. Develop the Energy Lane Business Center as an office showroom bnsiness ceater . The initial phase of development in the District will provide approximately 8.06 net developable acres of land intended for office showroom users. There will be good access to and from the business center on Norris Circle, Energy Lane, Energy Pazk Drive and Le�ngton Parkway. The Disirict area is currently zoned I-1. The Dishict is located on rivo major bus lines on Energy Pazk Drive and Lexington Parkway, which enhances access to 23737.1. 2 oa-�9 jobs for Saint Paul residents. Consirucrion values aze estimated at $75.00 per square foot based upon recent business center build-out experience. D. Egpand the industrial tag base of the City of Saint Paul. It is eapected that the tasable mazket value of pazcels in the District will increase by appro�xnately $8,000,000 once the Energy Lane Business Center is placed in service. This value will come from private development of appro�mately 108,000 squaze feet of office showroom buildings with an average construcrion value of $75.00 per squaze foot. The requirement is to have 34% coverage of the land by buildings. The taYable value of new facilities is assumed to be 90% of their construction cost. The estimated cost to remediate the land in the Dishict is approxunately $1,SQ0,000, which exceeds the estisnated mazket value of $1,160,000 for similarly sized h of unpolluted land. E. Hazardous Substance Remediation. The Port Authority will undertake the remediation of the soil, as specified in a Response Action Plan to be approved by the MPCA. Contamina»ts, such as polynuclear azomaric hydrocarbons (PAHs), volarile organic compounds (VOCs), and diesel range organics (DROs) will be addressed. These acrivities will eliminate areas of hazardous substance in the designated hazardous substance sites. III. Classification of the District. The Port Authority and the City of Saint Paul, in deteimiiung the need to create a tax increment financing district in accordance with Section 469.174, find that the District is entitled to be qualified as a redevelopment district pursuant to Minnesota Statutes, Section 469.174, Subd. 10 because parcels consisting of 70% of the area of the District aze occupied by blacktop and gravel parking lots. There are no buildings in the District. In addition, the District meets the requirements of a redevelopment dishict pursuant to Minnesota Statutes, Section 469.176, Subd. 4, because at least 90% of the revenues derived from taac increments from the Dishict will be used to &nance the cost of correcting conditions that allowed designation of the District as a redevelopment district under Section 469.174, Subd. 10 described above. These costs consist primarily of environmental cleanup and installation of utilities, roads and sidewalks for the site. The allocated aduiinistrative costs may also be included in the qualifying costs. The Port Authority and the City fiuther find that it is appropriate to create an HSS within the Disirict pursuant to Miimesota Statutes, Secrion 469.175, Subdivision 7 because: a. Due to the presence of significant environxnental contamination, and the significant costs of the remediation that would have to be completed, redevelopment of the District would not reasonably be expected to occur solely through private inveshnent or the tax increment otherwise available from the District; 23737.1. b. A portion of parcel A that is included in the District, and is eapected to be devetoped as part of the Energy Lane Business Center, is not included in the HSS; and c. 'I'he HSS is not larger than, and the period of time which increments are elected to be received is not longer than, that which is necessary to pay the additional and significant costs of the environmental remediation needed in the Disfzict. IV. Description of the Development Program for the Ener�v Lane Bnsiness Center Site. The development prograuz consists of the development of an office showroom business center to provide buildable sites for up to eIeven industrial users in the Disirict. T'his wiIl require managing site cleazance, pollution remediation, installing infrastructure, inciuring financing related expenses, and €unding admiuistrafive functions, all as described in more detail below: A. Remediate polluted soils. Remediation and engineering oversight cosis aze estimated to total in excess of $1,500,000. These costs are estimates and may change_ The cost will include line items for field tesling, soil remediation, MPCA oversight, anfl professional services. B. Undertake aud instalt site improvements and utitities. Site improvements will include engineering, site grading, installation of storm and sanitary sewers, water mains, roadway construction, gas and electric utilities, street lighting and landscaping. Total site nnprovement costs are anticipated to equal approximately $200,000. C. Contracts for professional services essential to the redevelopment activities. Professional services will include land surveys and tifle work, real estate, legal, civil engineering, geotechnical engineeriug, appraisals, traffic engineering and site design. The total cost for pmfessional services, other than bond issuance costs, is estimated at $400,000. D. Incur eosts and expenses connected with financing activities. The Port Autkority shall, by the middle of the year 2003, issne taY increment bonds in the approximate principal amount of $2,100,000 to finauce appro�mately $1,600,000 of total project costs including the cost of environmental remediakion. Bond issuance costs plus other finaucing related costs, including construction period interest, legal ezcpenses, printing, and undeiwriter's discount, aze anticipated to total appro�mately $400,000. E. Incur costs and expenses in connection with the marketing of the redeveloped business center. Once redeveloped, the office showroom in the business center will be mazketed for grivate use. Marketing costs, including advertising, promotional events and materials, and broker commissions are expected to be $100,000. 23737.1. 4 oa-�t1 V. Description of Conttacts Entered Into af the Time of Preparation of the Plan The following, as required by Section 469.175, Subd. 1(3), is a list of development activifies that aze proposed to take place within the District for which contracts have been entered into at the time of the prepazation of this plan, including the naxnes of the parties to the contract, the activity govemed by the contract, the cost stated in the contract, and the expected date of completion of that activity. A. Energy Lane Venture, LLC The Port Authority has agreed to se118.06 acres of land to Capital City Properties, Ina (CCP), a Mimiesota 501(c)(3) entity, at the appraised market value. It is anticipated that CCP will enter into a joint venture named Energy Lane Venture, LLC, a joint venture between Ryan Builders, Inc. and CCP. Under this joint venhue agreement, CCP will contribute the land to the Venture, which will then undertake remediation of the soil. Uncontaminated ]and is estimated to have an appraised value of $1,050,000; however, an appraisal will not be available on said property until September 2002. As noted above, remediation costs are estimated to exceed $1,500,000. VI. Description of Other TVpes of Develonment Activities Which Can Reasonablv be Exnected to Take Place Within the Ener¢v Lane Business Center Site. It is expected that the end-users of the Energy Lane Business Center will consist of office showroom businesses. These activities are anticipated to provide space that leads to the creation of living wage jobs. This District will generate new construction value of approxunately $8,l OQ000 based upon appro�cimately 108,000 square feet with a construction cost of $75.00 per square foot, assutning a 34% building to land coverage rario applied to 8.06 aeres. At least 270 jobs will be at the site based upon an estimate oftwo and one-halfjobs per 1,000 square feet ofbuilding space. Construction of the new building is expected to commence during the fourth quarter of calendar year 2002 and will continue into 2003. VLi. Cost of the Project and Descripfion of the District The following, as required by Section 469.175, Subd. 1(5), are estimates of the (i) cost of the project, including administration expenses; (ii) amount of bonded indebtedness to be incurred; (iii) sources of revenue to finance or otherwise pay pubiic costs; (iv) the most recent net taac capacity of taxable real property within the t� increment financing district; (v) the estimated captured net tax capacity of the tax increment fmancing district at completion; (vi) the original tax capacity and captured tas capacity of the H5S and (vii) the duration of the DistricYs existence. 23737.1. A. Cost of the project, including administrative egpenses. The total cost of the project is estimated at $2,100,000 plus admiuistrative chazges in an amount up to 10% of the ta�c increment expenditures. B. Amonnt of bonded indebtedness to be incurred. The Port Authority shall be the issuer of one or more series of tas increment bonds by the middle of the year 2003 in the approxunate principal asnount of $2,100,000. C. Sources of revenue to fmance or otherwise pay public costs. -_ The following are the likely sources for funding the total project, includitng the tax increments, wluch will be pledged initially to the bonded indebtedness: Tax Increments Taac increments, net of up to 10% for administrative e�cpenses, are anticipated to equal $196,000 annually. All taz increments will be fust pledged to the payment of debt service on the $2,100,000 tax increment bonds. It is further anticipated that t� increments in excess of those needed to pay the $2,100,000 taa� increment bonds will either be used to support additional indebtedness or to pay or reimburse the eligible costs incurred in the redevelopment of the District, to the extent not paid from the $2,100,000 bond issue. ii. Inveshnent income None expectetL It is eapected that all funds will be expended as received, iii. Gav Fundin� Presenfly, the proceeds of the proposed $2,100,000 bond issue are not anticipated to be sufficient to fund the costs incurred in the redevelopment of the District, and if three is a delay in issuing bonds or costs exceed cunent estimates, the gap in funding will increase. It is anticipated that all costs will be fully paid either frnm the proceeds of the proposed $2,100,000 bond issue, from an additionat bond issue, or from direct payment or reunbursement from ta�c increments. Complete funding sources will be identified prior to full implementation of the Project. D. The Most Recent Net Tax Capacity of Taxable Real Properly Within the Taz Increment FYnancing District At January 31, 2002, Ramsey County's estimafed market vatue of the parce2s to be included in the District was $1,047,800. Since all the properiy was owned by the Port Authority, it was not subject to property ta�ces. It is anticipated that appro�mately 8 acres 23737.1. 6�--�'l1 will be sold to a joint venture at which time the property will be placed back on the properiy tax roles. Prior to such a sale, an appraisal will be completed. The mazket value attributable to the land is assumed to remain constant. The original taY capacity and Tas Rate are calculated in accordance with Minnesota Statutes, Section 469.174, Subd. 7 and Secrion 469.177, Subd. 1. E. The Estimated Captured Net Tax Capacity of the Tag Increment FYnancing District at Completion. Eight acres of developable land at a 34% building to land rario and $75.00 per square foot construction value aze expected to result in 108,000 squaze feet of new conshuction with an aggregate assumed market value of $7,290,000 based upon a 90% capitalization rate. With a$0 base tax capacity for buildings, and applying a 2.00% tas capacity rate results in estimated captured tax capacity of approxnnately $146,000 at 7anuary 2, 2004, the year following expected completion of construction of buildings in the industrial pazk. This captured tax capacity is calculated in accordance with Minnesota Statutes, Section 469.174, Subd. 4 and 469.177, Subd. 2. F. The original t� capacity and captured t� capacity of the HSS. At January 31, 2002, Ramsey County's estimated market value of the parcels to be included in the District was $1,047,800. Since all the property was owned by the Port Authority, it was not subject to property taYes. An appraisal of the property should be completed in September 2002, and it is anticipated that the appraised value will be lower than Ramsey County's estimated market value. At the present tune, the original tas capacity of the HSS is $0. Expected remediation expenditures of $1,500,040 deducted from the original tas capacity results in the maximum captured taac capacity allowed in the aanount of $0. G. The duration of the tax increment financing district's e�stence. The request for certification of the District will be filed in 2002. The first taY increments are anticipated to be generated for taaces payable in the year 2004. The duration of the. District wiil run 25 years from the first receipt by the Port Authority of tas increments, which is anticipated to be the calendar years 2004 through 2029. VIII. Alternate Estimates of the Impact of the Tas Increment FivancinE on the Net Tag Capacities of All Taxing Jurisdicfions. The taxing jurisdictions in which the 1?istrict is located in whole or in part are as follows: a. Independent School District #625, whose boundaries are coterminous with those of the City of Saint Paul. b. The County of Ramsey, the total mazket value of which the City of Saint Paul contributes appro�mately 45%. 23737.1. 7 a The Housing and l2edevelopment Authority of the City of Saint Paul, whose boundaries are cotemunous with those of the City of Saint Paul. d. The Port Auffiority of the City of Saint Paul, the requesting authority, whose boundaries aze cotenvinous with those of the City of Saint Paul and whose powers to tevy and use properiy tases are limited. e. Metropolitan authorities, such as the Metropolitan Council, iVletropolitan Aixports Commission, Metxopolitan Waste Contml Commission, and the Metropolitan Mosquito Control District. Of these, only the Metropolitan Council and the Metropolitan Mosquito Conirol District currently levy taxes on real estate. The Port Authority is required by Minnesota Statutes Section 469.175, Subd. 1(a)(6) to make statements relative to the alternate estimafes of fhe impact of the ta�c increment financing on the net tax capacities of all t�ing jurisdictions in which the ta�c increment financing district is located in whole or in part. For purposes of one statement, which is made in Statement A below, the Port Authority shall assume that the estimated captured net tazc capacity would be available to the taacing jurisdictions without creation of the Dishict. For purposes of the second statement, made in Statement B below, the Port Authority shall assume that none of the estimated captured net taY capacity would be available to the ta�cing jurisdicrions without creation of the District. Statement A. Under the assumption that the esiimated captured net ta7c capaciry would be availab2e to the taxing jurisdictions without creation of the Dishict, creation of the District will serve to deny these taacing jurisdictions the Ta:ces from the captured net taY capacity in the amount estimated under Section VII.E. above. In addition, the taxes on the base value will also be lost due to the Hazazdous Substance Subdish created within the Dislrict. For the period 2002, when the properiy is held in the name of the Port Authority and is exempt from taxation prior to being sold to private parties, therefore there will be no taxes paid from property in the District. Statement B. The Port Authority believes that none of the estimated captured aet tas capacity would be available to the taacing jurisdictions without creation of the District due to the expense of getting the land to a state in which it would be conducive to the generation of such increased value. Assiuning this to be true, the taxing jurisdictions would continue to receive the same amount of tases as they ha�e currettfly been receiving based on the current net taY capacity of the Distact as set forth in Section VII.D. above. Once the taa� increment dishict terminates in 2029, the ta�cing jurisdictions will receive tases for pazcels estimated value after redevelopment at $8,350,000. IY. Stadies and Analvsis Used to Determine Need for Tax Increment Financing. The Port Authority has determined that the proposed development or redevelopment of the Dishict wotild not reasonably be expected to occur solely through private inveshnent within the reasonably foreseeable future and that the increased market value of the site that could reasonably be e�ected to occur without the use of tax increment financing would be less than the increase in the mazket value estimated to result from the proposed development after subtracflng the present value of the pmjected tas increments for the maximum duration of the district permitted by the plan. 23737.1. aa-t�� The Port Authority has studied the District and concluded that (a) due to the presence of significant environmentai contamivation, and the significant costs of the remediation that would have to be completed, redevelopment of the District would not reasonably be expected to occur solely through private investment or the tax increment otherwise available from the District; (b) a portion of pazcel A that is included in the District, and is expected to be developed as part of the Energy Lane Business Center, is not included in the HSS; and (c) the HSS is not larger than, and the period of time which increments are elected to be received is not longer than, tliat which is necessary to pay the addirional and significant costs of the environmental remediation needed in the Dishict. X. Identification of All Parcels to be Included in the District Attached hereto in Appendix A is a list of the Property Idenrificarion Numbers for all properties to be included in the District, a map showing the Project area, the Dishict and the eacisting properties, and a legal description identifying the boundaries of the District. XI. Hazardous Substance Subdistric� Certification of the HSS will allow taxes athibutable to the base value of the District to be used to reimburse or pay all or a portion of the estimated $1,500,000 of pollufion testing and remediation costs. As was mentioned in Section VIII above, the HSS will cause taxes on the base value of the District to be lost until such time as the pollution costs aze satisfied. Total taxes payable in .2002 were $0. A response action plan will be completed and submitted to the MPCA for approval. The Port Authority has studied the tazc increment district and concluded the development would not reasonably be expected to occur solely through private investment and taY increment otherwise available from the District, and therefore the use of the HSS is deemed necessary. Attached hereto in Appendix B is a list of the Properiy Identification Numbers for ali properties to be included in the HSS, a map showing the Project area, the HSS and the existing properties, and a legal description identifying the boundaries of the HSS. XIT. District Administration and Annual Disclosure. Admiiustration of the District will be the responsibility of the Port Authority. The resolutions of the City and the Port Authority approving and creating the District will direct the County to forwazd all taac increment from the District to the Port Authority. Tas increments will be deposited into interest bearing accounts sepazate and distinct from other fiuids of the Port Authority. Tax increments will be used only for acrivities described in this tas increment plan. _- The Port Authority will report annually to the State Auditor, county board, school board and Department of Revenue regazding activifies in the District as required by Section 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. 23737.1. XIII. Modifications to Disri In accordance with Minnesota Statutes, Section 469.175, 5ubd. 4, any reduction or enlazgement of the geographic azea of the District; increase in amount of bonded indebtedness to be incurred, including a determination to capitalize interest on debt if that deteimination was not a part of the original plan, or to increase or decrease the amount of interest on the debt to be capitatized; increase in the portion of the captured taac capacity to be retained by the Port Authority; increase in total estimated taJ� increment e�cpenditures; or designation of additional properiy to be acquired by the Port Authority shall be appmved only upon the notice and after the discussion, public hearing and findings required for approval of the original plan. The geogaphic area of a ta�c increment financing dishict may be reduced, but shall not be enlazged after five years following the date of certification of the original taY capaciry by the county auditor. XIV. Adnvnistrative Expenses In accordance with Minnesota Statutes, Section 469.174, Subd. 14; and Minnesota Statutes, Section 469.176, Subd. 3 administrative expenses means all eapenditures of an authority other than amounts paid for the purchase of land or amounts paid to contractors or others providing materials and services, including architectural and engineering services, directly connected with the physical development of the real property in the District, relocation bexiefits paid to or services provided for persons residing or businesses located in the Dishict or amounts used to pay interest on, fund a reserve for, or sell at a discount bonds issued pursnant to Section 469.178. Administrative expenses also include amounts paid for services provided by bond counsei, fiscal consultants, and pYanning or economic development consultants. Admiuishative eapenses of the District will be paid from t� increments; provided that no taY increment shall be used to pay any administrative expenses for the pmject which exceed ten percent of the total tax increment e�cpenditures authorized by the ta7f increment financing plan or the total ta7c increment expenditures for the proj ect, whichever is less. Pursuant to Minnesota Statutes, Section 469.176, Subd. 4h, tax increments may be used to pay for the county's actual administrative eapenses incurred in connection with the District. The county may require payment of those e�cpenses by February 15 of the yeaz following the yeaz the �penses were incurred. XV. Necessarv Improvements in the District No ta�c increment shall be paid to the Port Authority after three years from the date of certification of the original net tax capacity by the County Auditor unless within the three-year period: (1) _ bonds have been issued in aid of the Project pursuant to Section 469.178 of the TiF Act or any other law, except revenue bonds issued pursuant to Mu�nesota Statutes, Section 469.159 to 469.165; (2) the Port Authority has acquired property within the District; or (3) the Port Authority has constructed or caused to be constructed public improvements within the District. za�azi. 10 oa- �a1 The bonds must be issued, or the Port Authority must acquire properiy or conshuct or cause public improvements to be coustructed by approximately Decexnber, 2005. Pursuant to Mimiesota Statutes, Secrion 469.176, Subd. 6, if, afzer four years from the date of certification of the orzginal tax capacity of the tax increment financing district pursuant to Minnesota Statutes Seciion 469.177, no demoZition, rehabilitation or renovation of property 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 located within a tax increment financing district by the authority or by the owner of the parcel in accordance with the tax increment financing plan, no additional tax increment may be taken from that parcel and the originaT tax capaciry of that parcel shall be excluded from the original tczz capacity 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 tax increment financing plan, the authority shall certify to the county auditor in the annual disclosure report that the activity has commenced. The counly auditor shall certify the tax capacity thereof as most recently certifzed by the commissioner of revenue and add it to the original tax capacity of the tczr increment fznancing district. The county auditor must enforce the provisions of this subdivision.. For purposes of this subdivision, qualified improvements are limited to (1) construction or opening of a new street, (2) relocation of a street, and (3) substantial reconstruction or rebuzlding of an exisring street. The Port Authority or a property owner must begin making improvements to parcels within the District by approxunately December, 2006. Pursuant to Mimiesota Statutes, Section 469.1763, Subd. 3, revenues derived from tax increments are considered to have been spent on an activity within the District only if one of the following occurs: 1. Before or within five years after cert�cation of the District, the revenues are actually paid to a third party with respect to the activity; 2. Bonds, the proceeds of which must be used to finance the activity, are issued and sold ta a third party before or within five years after cert�cation of the District, 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 period, or (ii) 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 or replacement fund; 3. Binding contracts with a third party are entered into for perfornzance of the activity before or within five years after certiftcation of the District and the revenues are spent under the contructual obligation; or 23737.1. 11 4. Costs with respect to the acfivity are paid before or within fzve years after cert�cation of the District and the revenues are spent to reimburse a party for payment of the costs, incZuding interest on unreimbursed costs. T'herefore, one of the above four events must occur by approximately December, 2007. XVI. Use of T� Increment All revenues derived from taac increment shall be used in accordance with this tas increment financing plan, and pursuant to Miunesota Statutes, Section 469.176, Subdivisions 4, 4e and 4j. KVII. Notification of Prior Planned Imarovements Pursuant to Minnesota Stahxtes, Section 469177, Subd. 4, the Port Authority has reviewed the area to be included in the District and has not found properties far which building pernuts have been issued during the 18 months uxtmediately preceding approval of the Pian by the Port Authority. XV1II. Excess Tax Increments Pu�uant to Minnesota Statutes Section 469.176, Subd. 2, in any yeaz in which the taY increment exceeds the amount necessary to pay the costs authorized by the taY increment plan, including the amount necessary to cancel any ta�� levy as provided in Minnesota Statutes, Section 475.61, Subd. 3, the Port Authority shall use the excess amount to da any of the following: 1. prepay the outstanding bonds; 2. discharge the pledge of tax increment fherefor; 3. pay into an escrow account dedicated to the payment of such bonds; or 4. return the excess to the County Auditor for redistribufion to the respective taating jurisdictions in proportion of their tax capacity rate. %IX. Fiscal Disnarities The Port Aufhority and the City have elected to compute Fiscal I}isparities contribuiion for the District in accordance with Section 469.177, subdivision 3, pazagraph a 23737.L 12 aa� �� 27-29-23-42-0077 27-29-23-42-0073 27-29-23-42-0072 Appendix A Property Idenrification Numbers within the I7istrict Lot 1, Block l, Energy Park No. 4(Parcel C) Lot 5, Block 1, Energy Park No. 2(Parcel B) Lot 4, Block 1, Energy Pazk No. 2(Pazcel A) 23737.1. - 13 Appendig B Properiy Identification Nuxnbers within the HSS 27-29-23-42-0077 Lot 1, Block 1, Energy Park No. 4(Pazcel C) 27-29-23-42-0073 Lot 5, Block 1, Energy Park No. 2(Parcel B) 23737.1. 14 aa��a� ;� a o- ry� V� d Ytl9G Q J � 9 3l'Jt3I� 'Siki4iON ! �J U 0 �� U fa � a t �J O� O t4 m U St � a � ' .-� � o v W ' a __. _ _ Ii .� e `cb a.� $m , Lm€� �� =p�O a�i¢ —`Fo =s`"o ua� � n o��i / � s � x ¢ : Z t � ¢ » s n � m o z z 0 � 3 � � m w z<��