97-1383covncil File # 97 - �31I3
Green Sheet # 39 3 70
RESOLUTION
SAINT PAUL, MINNESOTA 6�
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Presented By
Referred To
Committee: Date
RESOLUTION OF THE CITY COTJNCIL OF THE CITY OF SAINT PAUL
AUTHORIZING (A) TfIE MODIFICATION QF THE TAX INCREMENT FINANCING PLAN FOR
THE SEVENTH PLACE TAX INCREMENT FINANCING DISTRICT, ANll (B) THE CREATION
OF THE BLOCK 4 REDEVELOPNIENT TAX INCREMENT FINANCING DISTRICT AND
A.PPROVING THE
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TAX INCREMENT FINANCING PLAN RELATING THERETO
WI3EREAS: I
1. On November 30, 1978, the Housing and Redevelopment Authority of the City of Saint Paul,
Minnesota (the "I�A") approved the Seventh Place Redevelopment Plasi and the Project Financing Plan related
thereto (the "Redevelopment Plan") by Resolurion No. 78-ll130-1, to which the Ciry Council of the City of Saint
Paul (the "Council'� subsequently gaue its approval by Resolufion C.F. No. 272155 adopted on December 5,
1978. By Resolufion No. 81-11/5-8 adopted November 5, 1981 and Resolution No. 83-5/25-3 adopted May 25,
1983, the HRA adopted modifications to such plans which did not require approval of the Council, and by
Resolution No. 82-1/28-11 adopted amendments to the Redevelopment Plan and Project Financing Plan, which
amendments were approved by the Council by Resolutions C.F. No. 278173 and 278670 adopted February 4,
1982 and May 11, 1982. The Redevelopment Plan was again amended and a TaY Increment Financing Plan for
the Seventh Place Redevelopment Project (the "Seventh Place TIF Plan") was approved by the IIRA on
November 9, 1989 by Resolution No. 89-11/9-1, and approved by the Council by Resolution C.F. No. 89-2028
adopted on November 9, 1989, and the Redevelopment Plan and the Seventh Place TIF Plan were fi�rther
amended on May 28, 1997 by Resolution No. 97-5/28-9, and approved by the Council by Resolution C.F. No.
97-668, and fiuther amended on September 24, 1997 by Resolution No. 97-9l24-2, and approved by the Council
by Resolution No.97-1191.
2. On October 22, 1997 the City approved the execudon of a Development Agreement with the
Housing and Redevelopment Authority of the City of Saint Paul, Minnesota (the "HRA"), the Port Authority of
the City of Saint Paul (the "Port Authority") and Minnesota Mutuai Life Insurance Company ("MMLIC");
3. Pursuant to the Development Agreement, MIv1LIC has cominitted to conshucting an office building
consisring of not less than 350,000 rentable square feet and a parking ramp of no more than 1,000 spaces
(collectively the "Project") in the City on the biock bounded by Robert, Sixth, and Minnesota Streets and Seventh
Place (the "Project Block"} shown on the map attached hereto as E�ibit A, which Project Block is adjacent to
MMLIC's presentcorporate headquarters;
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4. Also pursuant to the Development Agreement the Port Authority has agreed to acquire the Project
Block, demolish existing shuctures, remove or remediate any hazardous waste, and se11 the Project Block to
MPvII.IC;
5. MMI,IC has indicated that they aze prepazed to act as developer and owner of the Proj ect and to
secure debt and equity financing for the Project;
6. Construction of the Project will retaiu MIvII,IC's corporate headquarters in the City, thereby
retaining 2,100 jobs in the City, and accommodating the expansion of 1�IIvILIC's corporate headquarters, creating
appror,imately 2,000 additional jobs;
7. In an effort to encourage the development and redevelopment of property in the Project area, and
specifically to provide for the acquisition of land, demolition of structures, and the construction of the Project,
it has beett proposed that the HRA establish the Block 4 Redevelopment T� Increment Financing District (the
"District") and that, in connection with the creation of the District, approve (i} the tas increment financing plan
relating thereto, and (ii) an amendment to the Seventh Place TIF Plan (collecfively, the "Plans"), a11 pursuant to
and in accordance with Mimiesota Statutes, Sections 469.001 through 469.047, inclusive; and Minnesota Statutes,
Sections 469.174 through 469.179, inclusive;
8. The District shall be formed by removing Block 4 from the Seventh Place Tas Increment Dislrict
by amending the Seventh Place TIF Plan for such district, and creating a new redevelopment district
encompassing Block 4. Since AMBAC has insured the bonds previously issued with respect to the Seventh Place
TaY Increment Aistrict, AMBAC's consent to the removal of Block 4 from that district has been obtained;
9. The HRA has investigated the facts and has caused to be prepared the proposed Plans;
10. The IIRA andlor the City, as applicable, have performed a11 actions required by law to be performed
prior to the establishment of the District and the adoption of the P1ans, including, but not limited to, notification
of Ramsey County and School District No. 625 having taxing jurisdicfion over the properry to be included in the
District, and the holding of a public hearing after published notice as required by law.
NOW, TI�REFORE, BE IT RESOLVED, by the City Council of the City of Saint Pau1, Minnesota (the
"City"), as follows:
1. Public Hearing. This council has conducted a pubfic hearing on the proposed Plans pursuant to and
in accordance with Minnesota Statutes, Sections 464.001 to 469.047 and Sections 469.174 to 464.179, inclusive,
as amendecl, in an effort to encourage the redevelopment of Biock 4 within the City to provide for the consmlcction
of the Project.
2. Ratification of Priar Action. All activifies previously undertaken by IIRA and City staff in working
with the Port Authority to finalize the Plans, and forwarding the Plans to the appropriate taxing jurisdictions
including IZamsey County and Independent School District No. 625, are hereby ratified and affumed.
3. Findings bv the City far the A�roval of the Taa� Increment Financing Plan for the Block 4
�ecievelopment Tax Increment Financin6 District.
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(a) The Council hereby finds that the Disirlct is a redevelopment district pursuant to Mimiesota
Statutes, Section 469174, Subd. 10, paragraph (a), clause (1).
(b) The Council hereby finds that the District, and the approval of the Plans relating thereto,
aze intended and, in the judgment of this Council, the effect of such actions will be, to provide an impetus
for redevelopment in the District and to further the public purposes and accompiish certain objectives as
specified in the Plans.
(c) The Council further finds that the proposed development or redevelopment in the District,
in the opinion of the City, would not occur solely through private inveshnent within the reasonably
foreseeable fuhxre and that the increased market value on the site that could reasonably be eapected to occur
without the use of tas increment financing (being $0) would be less than the increase in the market value
estimated to result from the proposed development (being approximately $32,122,800) after subtracting
the present value of the projected tazt increments for the masimum duration of the District pernutted by the
Plan (being approximately $15,000,000) and, therefore, the use of tax increment financing is deemed
necessary; that the Plans conform to the general p1an for the development or redevelopment of the City as
a whole; and that the Plans will afford maximum opporhznity consistent with the sound needs of the City
as a whole, for the development of the District by private enterprise.
(d) The City does not elect to compute the tas increments in accordance with Minnesota
Statutes, Section 469.177, Subd. 3, clause (b), meaning that tax increments will be determined before the
application of the fiscal disparities provisions of Minnesota Statutes, Chapter 473F.
(e) The CiTy elects to make a qualifying local contribution in accordance with Minnesota
Statutes, Section 273.1399, Subd. 6(d), in order to qualify the District for exemption from state aid losses
set forth in Section 273.1399.
(fl The Council fiuther fmds, declares and determines that the City made the above findings
stated in paragraphs (a) through (e) above and has set forth the reasons and supporting facts for each
determination in writing, attached hereto as Attachment A.
Section 4. Approval of the Plans and Further pocumentation.
(a) The Plans, as presented to the Council on this date, are hereby approved and adopted, and
sha11 be placed on file in the office of the Executive Director of the HRA.
(b) The staff of the City, the City's advisors and legal counsei are authorized and directed to
cooperate as necessary with the IIRA in the implementation of the Plans and for this purpose to negotiate,
draft, prepaze and present to this Council for its consideration all further plans, resolutions, documents and
contracts which may be deemed necessary for this purpose.
(c) The auditor of Ramsey County is requested to certify the original net tax capacity of the
District, as described in the Plan, and to certify in each year thereafter the amount by which the net ta�c
capacity has increased or decreased; and the HRA is authorized and directed to forthwith transmit this
request to the county auditor in such form and content as the auditor may specify, together with a list of
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132 all properties within the District for which building pernuts have been issued during the 18 months
133 immediately preceding the adoprion of this resolution. Further, the county auditor shall be informed of the
134 deletion of Block 4 from the Seventh Place Taz� Increment District.
Requested by Department of:
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Approved by Nlay _ �/� f�
By:
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Form Approved City Attorney
By:
Approved by Mayor for Submission to Council
BY� �� ��
/
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Adoption Certified by Council Secretary
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To� Schertler (66593)
T07AL # OF SIGNATURE PAGES
ii=iz=9� ► GREEN SHEET
cmarronNEv
suoc,�r oia�oa
MAYOR (Oli ASSISTANT)
(CLIP ALI. LOCATIONS FOR SIGNATURE)
39�7�
INRIAVOATE
� CITY CqUNCIL
Q cm c�AK
� FIN, & MGL SERVICES DIR.
�
Resolution authorizing the modification of ihe Tax Increment Financing Plan for the Sevemh Place Tas 3ncrement Financing District
and the Crearion of ihe Biock 4 Redevelopment Tas Increment Financing District and approving the Tax Incremern Finanoing Plan
related ffiereto.
RECOMMENDATIONS: Approve (A) or
_ PIANNING GOMMISSION _ qVIL S£RVICE COMMISSION
_ CI8 COMMRlEE _
_ STAFF _
_ DISiRICT CAUR7 _
SUPPOqTS WHICH GOUNCIL O&IECTIVE?
PERSONAL SERVICE CONTRACTS MUST ANSWER TNE FOLIOWiNG QUESTIONS:
1. Nas Mis personflirm evar worked under a Contract tor this department?
YES NO
2. Has this personnrm aver been a ciry employae?
YES NO
3. Does this person/firm possess a skill not normally possessetl by any curreni city employee9
YES NO
Explain all Yes anawers on separate aheet antl attaeh to green sheet
wmf�:
Minuesota Mumal Life Insurance Company (MMLIC) has decided to eacpand in dowmown St. Paul by building an office tower. The
Saint Paul Port Authority will acquire the downtown block (Block 4) and MMLSC will build a 350,000 square foot office tower with
a 1,000 parking space ramp. This Resolurion provides for the City to establish a Tax Increment Financing Districi.
The crearion of the Block 4 TIF District will ensure that MMLIC will begin to construct a new ofFice
iAL AMOUNT OF TRANSACTION S
COST/REVENUE BUDGETED (CIRCLE ONE)
YES NO
JDIfiG SOURCE ACTIVITY
iNqAL INFORRFATION. (EXPLAIN)
97 - i�3��
ATTACFIMENT A
RESOLUTION #_
The reasons and facts suppofting the findings for the adoption of the Ta�c Increment
Financing Plan (the "Plan") for the Block 4 Redevelopment T� Increment Financing District
(the "DistricY') as required pursuant to Minnesota Statutes, Section 464.175, Subdivision 3 aze as
follows:
1. Finding that the District is a redevelopment district as defzned in Minnesota Statutes,
Section 469.174, Subd. 10.
The District is a contiguous geographic azea consisting of a portion of a project within which (i)
parcels consisting of 70% of the area of the District are occupied by buildings, streets, utilities, or
other improvements; and (ii) 50% of the buildings are structurally substandazd. The District
contains 4 parcels of land totaling 90,000 square feet of which 100% is occupied by buildings,
streets, utilities or other improvements. A total of 3 buildings are located in the District.
Prelimina.ry extemal real estate appraisals (which aze on file in the offices of the HRA) of two
buildings located on Block 4 support the conclusion that both of them are shuchxrally
substandard. In connection with the prepazarion of these appraisals, interior inspecrions of the
buildings were conducted. More specifically, reports prepared by real estate professionals show
that, in connection with the Bremer Building, the cost to bring the building up to code would be
approxnnately $3,700,000, which is more than 15% of the cost of constructing a sunilar building
on the site (approximately $10,500,000). In addition, a report by rea) estate professionals with
regard to the Metropolitan Building came to the conclusion that the cost of bringing that building
up to code would be appro�mately $4,800,000, which is more than 15% of the cost of
constructing a similaz building on the site (appro�mately $16,800,000}.
2. Finding that the proposed development, in the opinion of the Council, would not occur
solely through private investment within the reasonably foreseeable f'uture anc� therefore, the use
of tax increment fznancing is deemed necessary and that the increased market value of the site
that could reasonably be expected to occur without the use of tczr increment financing would be
less than the increase in the market value estimated to result fi-om the proposed development
after subtracting the present value of the projected taY increments for the mazimum duration of
the disti-ict permitted by the plan.
Due to the fragmented ownership of the property in the District, excessive costs for clearance,
grading and soil correction, and the fact that approximately one-half of the block is occupied by
buildings that are more than 50% vacant and are funcrionally obsolete, and due to the existence
of the other factors that allow the District to be designated as a redevelopment district, this
project is feasible only through assistance, in part, from tas increment fmancing. The proposed
development consists, in part, of an approximately 350,000 square foot office building and
1,000-stall parking ramp, the cost of which is estimated to be approximately $80,000,000. The
value of development expected to occur without the use of tax increment financing is $0, (there
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are no other proposals or plans to redevelop the property in the district) which is less than the
estimated increase in market value of the taYable property expected to be created by the proposed
project (approximately $32,122,800) minus the present value ofthe projected ta�c increments
(appro�mately $15,000,000).
3. Finding that the Taz Increment Financing Plan conforms to the general plan for the
development or redevedopment of the municipaZity as a whote.
The site is appropriately zoned for the Project. The proposed redevelopment is consistent with
the Seventh Flace Redevelopment Project.
4. Finding that the Tax Increment Financing Plan for the Distr•ict will afford mcrYimurn
opportuniry, consistent with the sound needs of the Ciry as a whole, for the development of the
Disfrict by private enterprise.
The establishment of the District wilI result in the facilitafion of redevelopment in downtown
Saint Paul and the retention of 2200 jobs and the creation of 2000 new jobs for residents of the
City.
5. Finding that the City does not elect to compute the tax increment in accordance with
Minnesota Statutes, Section 469.177, subdivision 3, clause (b).
The failure to elect to calculate increments in accordance with the above referenced statute
results in a greater amount of increment to be captured from the District, which will facilitate the
fmancing of the Project.
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LS&D Draft: 11/12/97
HOUSING AND REDEVELOPMENT AUTHORITY
OF THE CITY OF SAINT PAUL
TAX INCREMENT FINANC�G PLAN FOR
BLOCK 4 REDEVELOPMENT
TAX INCREMENT FINANCING DISTRICT
I. Introduction
A. Background
The Housing and Redevelopment Authority of the City of Saint Paul (the "I3RA") proposes a
plan for the redevelopment of property in the City consisting of acquisition of land, demolition of
structures, and the wnstruction of (i) a parking ramp with no more than 1,000 pazking stalls, and (ii)
an office tower consisting of not less than 350,000 rentable square feet, both of which will be owned
by Minnesota Mutual Life Tnsurance Company ("A�IIvII,IC"), all on an approximately 90,000 squaze
foot site located in the central business district of downtown Saint Paul (the Project"). On November
30, 1978, the HRA approved the Seventh Place Redevelopment Plan and the Project Financing Plan
therefor by Resolution No. 78-11/30-1. Subsequently the City Council of the City of Saint Paul (the
"Council") gave its approval by Resolution C.F. No. 272155 adopted on December 5, 1978. By
Resolution No. 81-11/5-8 adopted November 6, 1981 and Resolution No. 83-5/25-3 adopted May 25,
1983, the HRA adopted modifications to such plans which did not require approval of the Council,
and by Resolution No. 82-1/28-ll adopted amendmenu to the Redevetopment Plan and Project
Financing Plan, which amendments were approved by the Council by Resolutions C.F. No. 278173
and 278670 adopted February 4, 1982 and May 11, 1982. The plans were again amended by
Resolution C.F. No. 89-2028 adopted by the Council on November 9, 1989 and the HRA on
November 9, 1989 by Resolution No. 89-1119-1. The plans were most recenfly amended by
Resolution C.F. No. 97-668 adopted by the Council on May 28, 1997 and by Resolution 97-5/28-9
adopted by the HRA on May 28, 1997, and further amended by Resolution C.F. No. 97-1191 adopted
by the Council on September 24, 1997 and by Resolution 97-9/24-2 adopted by the FTRA on
September 24, 1997.
B. Crea6on of Block 4 Redevelopment Tax Increment District
This tas increment plan relates to the creation, under Minnesota Statutes Section 469.174,
Subd. 10 of the Block 4 Redevelopment Taac Increment District (the "District"). Prior to the creation
of the District, Block 4 will be removed from the 5eventh Place Tas Increment Financing District
which was originally created in 1978 (the "Seventh Place DistricP').
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C. Need and Public Purpose
It is necessary that the f�RA exercise its powers under state law to develop, implement, and
finance a progtam designed to encourage, ensure and facilitate the development of the property, This
development will further accomplish the public purposes spec�ed in this Section.
The existing land use activities on Block 4 are blighting and constitute an underutilization of
the land. The Project will provide land necessary for MNII_IC to construct a new corporate
headquarters, on the block adjacent to their e�sting headquarters, which will retain 2,200 jobs in
downtown Saint Paul. In addirion, the City's taY base wili be increased by the construction of the
office tower and pazking ramp. The existing buildings on Block 4 have an estimated mazket value of
$5,377,200, as valued by the county, and the new office tower and pazking ramp will have a
constiuction cost of approximately $65,000,000.
II. Obiectives of the ffi2A for the improvements in the Block 4 District area
A. Retain and provide job opportunifies for Saint Paul residents.
The Project will result in the retention of approximately 2,204 jobs in downtown Saint Paul,
and it is expected that M1VfLIC will �pand and wntinue to grow, adding approximately 2,000
additional new jobs to the City in the ne�t ten years.
B. To redevelop underused property.
Block 4 is a site that has been underutilized for many years. There are three existing
buildings on the site, two of which are structurally substandazd (see description under Section III
below). Presentiy, 75% of the block is biighted and underutilized, which includes 50°l0 of the block
that is occupied by buildings that are over 50% vacant and functionally obsolete, and 25% of the
biock that is occupied by a surface parking lot. A surf'ace pazking lot is an underutilization of a pazcel
which is within a couple of blocks of the core of downtown Saint Paul.
In order to protect past investments and remain competitive, the Block 4 Redevelopment Taa�
Increment Financing District needs to be created, to provide additional public investment to bolster
employment opportunities, to solidify downtown as a cohesive o�ce retaii center, and to imQrove
pedestrian circulation and to develop accessibie parking.
C. Provide Parking
The parking gazage to be constructed on Block 4, although privately owned, will include
approxunatety 1,000 parking spaces, and may be availabie for general public use when not in use by
the private owner.
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D. Expand the ta�c base of the City of Saint Paul.
It is eacpected that the taYable mazket value of pazcels on Block 4 wiil increase by
approximately $32,122,800 once the new office building and parking ramp is placed in service,
resulting in a total new mazket value of approximately $37,SOQ000. This value consists of
$31,SOQ,000 for 35q000 squaze feet of office space in the office building, plus $6,000,000 for the
pazldng ramp. The total existing market value of all buiidings located on Biock 4 is $5,377,200.
E. Remove blight within downtown Saint Paul.
The Block 4 site is located in downtown Saint Paul. Block 41ies between Robert, Siaih, and
Minnesota Sueets and Seventh Place. Two of the three buildings on the biock are shucturally
substandard (see further description in Section III below), and those two buildings aze over 50%
vacant. The existing buildings will be removed in the renovation process, and replaced with a new
privately consiructed office-building and Quking ramp, substantially improving downtown St. Paul.
II7, Classification of the District
The HRA and the City, in determining the need to create a tax increment financing district in
accardance with Section 469.174, find that the District is a redevelopment distdct pursuant to
Minnesota Statutes, Section 469.174, Subd. 10 hecause (I) pucels consisting of 74% of the azea of
the District are occupied by buildings, streets, utilities or other improvements and (2) more than 50%
of the buiidangs are structurally substandard; and these conditions are reasonably distributed
throughout the geographic area of the District.
The Disttict cantains 4 parcels of land totaling 90,000 square feet of which 100% is occupied
by either buildings, streets, utilities or other improvements. A total of 3 buildings aze located within
the Aistrict. Preliminary independent real estaie appraisals (which aze on file in the offices of the
HI2A) of two buIldings located on Block 4 support the conclusion that boch of them aze struchually
substandard. More specificaliy, reports prepared by real estate professionals show that, in connection
with the Bremer Bualding, the cost to bring the building up to code would be appro�mately
$3,700,000, which is more than 15% of the cost of constructing a similar building on the site
(approximately $10,50Q000). In addition, a report by real estate professionals with regard to the
Metropolitan Building came to the conclusion that the cost of bringing thaY building up to code would
be approximately $4,800,OD0, which is more than 15°10 of the cost of constructing a similaz building
on the site (approximately $16,800,000).
In addition, the District meets the requirements of a redevelopment district pursuant to
Minnesota Statutes, Secrion 469.176, Subd. 4; because at least 9�% of the revenues derived from taY
increments from the District will be used to finance 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 include acquiring properties and adjacent parcels, demolirion of structures,
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clearing of land, and iastallation of utiliries, roads, sidewalks and parking faciliries for the Districk.
The allocated administrative costs may also be included in the qualifying costs.
IV. Description of the development program for the Block 4 District.
The development pro�am consists of the development of the site to provide a buildable site
for a parking gazage and an office tower on Block 4 in the District. This will require expending taY
inctement for eligible costs which include: acquisition of land; relocation of certain e�sting
operations; demolition of existing structures; installation of infrastruchue and skyway reconnections
including temporary covered access; geo-technical soil cozrections; and environmental remediation,
including asbestos removal; contracting for professional services essential to redevelopment activities;
financing related expenses and funding administrative functions. In addition, future development at
the site may ailow the use of YaY increments to pay for additional public costs incurred in the
construction of the pazking ramp, the costs of utility extension, lighting, sidewalks, streetscapes and
road improvements.
A. Estimated cost of redevelopment project.
The estimated totai cost of the new activities to be undertaken in the District is $80,000,000,
broken down as follows:
Office Tower Construction/Other
Site Improvements
$50,000,000
Pazking Ramp Construction I5,000,000
Acquisition of existing block, demolition, 15,000,000
removal or remediation of hazardous substance,
and relocation
TOTAL
$80.000_000
It is anticipated that the initial public costs of the Project wili be $15,000,000, and will inciude
amounts necessary to: acquire the project block; demolish exisring improvements; remove or
remediate asbestos and contaminated soil; remove or remediate any other hazardous materials;
remove foundations and footings; geo-technicai soil corrections; rough grading of the project block;
relocation of public and private utilities; relocation of present owners/tenants of the project block; and
skyway reconnections including temporary covered access. To the extent that public costs exceed
� The cost of the conshuction of the parking ramp may include sufficient structural footings, support and load-
bearing capacity to pemrit the construcfion of a comparable sewnd office tower above the parking ramp at some
point in the future. Such costs are not reimburseable from tas increments.
issi�o
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$15,000,000, MNILIC is obligated to pay such costs. Future development at the site may allow the
use of ta�c increments to pay for additional public costs incurred in tfie construction of the pazkin�
ramp, the costs of utility eactension, lighting, sidewalks, streetscapes and road improvements.
The costs set forth above aze estimates and the amounts allocated to any item may be
reallocated among any of the ottter items set forth above, provided that the total principal amount of
the costs for the items specified will not exceed $80,000,000, without formal modification this plan.
B. Incur costs and expenses connected with financing activities.
It is anticipated that the HRA will issue its t�able taac increment note to finance $I5,000,000
of public costs. Note issuance costs plus other financing related costs, and legal expenses, aze
anticipated to total approximately 1% of the principal amount of the Note. In addition, future
development at the site may allow the use of taY increments to pay for additional public costs incurred
in the construction of the pazking ramp, the costs of utility eactension, lighting, sidewalks, streetscapes
and road improvements.
C. City and HRA Annual Budget
At the time of final approval of the issuance of debt, the I3RA will adopt a more detailed
budget including a financing and spending plan that will further detail the costs and financing
activities of A and B above. Addiuonally, each year as part of the City and HRA annual budget
process, the detaited budget may be amended. As part of the annual budget process, the School
Board and County will be contacted to give any comments on the Tax Increment Financing Plan
which would include original plans and any annual budget amendments.
V. Description of contracts entered into at the time of �reparation of the Plan
Section 469.175, Subd. 1(3) requires this plan to contain a list of any development
activities proposed to take place within the project, for which contracts have been entered into at
the time of the preparation of this plan. At the time of the preparation of t}iis plan, the HRA, the
City or the Port Authority have entered into the following contracts:
(z) Activity: Appraisal of existing businesses
Contractor: C.R. Pelton & Associates, Inc.
Cost: Approximately $13,335
Estimated Completion Date: June, 1998
(ii) Activity: Relocation Consulting
Contractor: Conworth, Inc.
Cost: $65.00 per hour, not to exceed total of $67,500
Estimated Completion Date: September, 1998
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VI. Descriptian of ofher types of development activities which can reasonablv be espected to
take ulace within the Block 4 Arena District Project
Development activities in the District, wluch may require the e3cpenditure of taY increments,
will consist of activiries necessary and ancillary to promoting and ma�cimizing the above ob}ectives
set forth in Section II.
VII. Cost of the Project and descripfion of the Block 4 Redeveloement Taa Increment
District,
The following, as required hy Section 469175, Subd. 1(5), aze estimates of the (i) cost of the
Project, including administration expenses; (ii) amount of bonded or note indebtedness to be incurred;
(iii) sources of revenue to finance or otherwise pay public costs; (iv) the most recent net tax capacity
of taacable real property within the tax increment financing district; (v) the estimated captured net taY
capacity of the ta� increment financing district at completion; and (vi) the duration of the ta3c
increment financing districYs existence.
A. Cost of the Project, including administrative expenses.
The total cost of the Project is estimated at $80,000,000 plus administrative charges in an
amount up to 10% of the taY increment expenditures. In addition to the upfront wsts, an additional
cost of the Project will be a payment in the amount of approximately $57,000 per year tluough 2008,
to AMSAC, as the insurer of bonds presenfly outstanding and secured by taY incremenu from the
Seventh Place District This payment will compensate AMBAC for the decrease in increments from
the Seventh Place District that will occur as a result of removing Block 4 fram that district.
B. Amount of bonded indebtedness to be incurred.
The I-IRA shall be the issuer of a taa�able t� increment note in 1997 in the aggregate amount
of $15,000,000 to finance the public costs of development on Block 4. The HRA may, after the
initial issuance of the note, issue refunding bonds or notes for putposes of refmancing such
indebtedness.
C. Sources of revenue to finance or otherwise pay project costs.
The following aze the likely sources for funding the total Pro}ect, includang the taY increments
which will be pledged to the bonded indebtedness:
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Tas IncreEnents
Ta�c increments aze anticipated to equal $1,690,580 annually. The HItA hereby
determines that it will use 100% of the captured net taY capacity of the property in the District
to carry out the development program described above. All taY increments will be pledged
first to the payment of a portion of the administrative expenses of the District, second to the
payment of the AMBAC payment described in A above, third to the payment (including
prepayment) of debt service on the note described in B above, fourth to the payment of the
remainder of administrative expenses of the District, and fifth to other eligible costs which
wiil consist of the costs described in Section IV.
ii. Develooer Financing
MMI,IC wiil pay the total cost of construction of the office tower and parking ramp,
estimated to be $65,000,000. Future development of the site may allow the use of taY
increments to pay for certain public costs incurred by MNII�IC in this regazd, as set forth in
Section IV hereof, and as further set forth in the Development Ageement between the HRA,
the Port Authority and MNII.IC.
iii. Investment inwme
Certain interest earnings from the taat increments, if any, will he a source of revenue
to pay project costs. A current estimate of such earnings is not available.
D. The most recent net t� capacity of taxab�e real property within the t�
increment financing district.
At January 2, 1991 the total tas capacity of properry pazcels to be included in the District was
$252,728. Of the $5,377,200 total mazket value, $1,980,720, or 37% of the total, is attributable to
buildings on Block 4, all of which will be removed in connection with the development pursuant to
this Plan. The $3,396,480 of market value attributable to the land is assumed to remain constant.
The original tax capacity and TaY Rate are calculated in accordance with Minnesota Statutes, Section
469.174, Subd. 7 and Section 469.177, Subd. 1.
E. The estimated captured net tax capacity of the tax increment financing district
at completion.
The construction of the office tower and pazking ramp is expected to result in 350,000 square
foot office building and 1,000 sta11 pazking garage with an aggregate assessed value of $37,500,000.
Assuming land values remain constant at $3,396,480, the increase in mazket value is estimated at
$32,122,800. Applying a 3.4% tax capacity rate to the building and ramp and a 4% to the land results
in estimated captured tax capacity of approximately $1,159,520 assessed in the year 2001 and payable
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in the year 2002, the year following expected compietion of construction of buildings. There will be
a partial year's coliection of tax increment assessed in the yeaz 2000 and payable in the year 2001.
This capiured taY capacity is calculated in accordance with Minnesota Statutes, Section 469.174,
Subd. 4 and 469.177, Subd. 2.
F. The duration of the tax increment financing district's existence.
The request for certification of the District will be made in 1947. The first taac
increments are anticipated to be generated for taxes payable in the yeaz 2041. The duration of
the District will run 25 years from the first receipt by the City of tas increments, which wili be
through calendaz yeaz 2026. The HRA does, however, reserve the right to decertify the Disuict
prior to the legaily required date.
VIQ. Alternate estimates o1' the impact of the taz increment financing on the net ta4
capacities of a}i 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, the total market value of which the City of Saint Paui
contributes approximately 45%.
c. The Housing and Redevelopment Authority of the City of Saint Paul, whose
boundaries aze coterminous with those of the Ciry of Saint Paul.
d. The Port Authority of the City of Saint Paul, whose boundaries are coterminous with
those of the City of 5aint Paul and whose powers to levy and use property t�es aze limited.
e. Metropolitan authoriues, such as the Metropolitan Council, Metropolitan Airports
Commission, Metropolitan Waste Control Commission, and the Metropolitan Mosquito Control
Disuict. Of these, oniy the Metropolitan Council and the Metropolitan Mosquito Control District
cturently levy taxes on real estate.
The HRA is required by Minnesota Statutes Section 469.175, Subd. 1(a)(6) to make stazements
relative to the akernate estimates of the nnpact of the tas increment financing on the net tax
capacities of ali t�ing jurisdictions in which the tax increment financing district is located in
whole or in part.
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Impact on Taaing Jurisdictions
Under the assumption that the estimated captured net t� capacity would be available to
the t�ing jurisdictions without creation of the District, creation of the District will seive to deny
these taxing jurisdictions the taxes from the captured net ta7c capacity in the amount estimated in
Table 1 below. Note the District to be created is currentiv already within the Seventh Place
District which ex ires in 2008. Therefore, the creation of this new District will den the taYina
iurisdictions those ta�ces only from the years 2009 to 2026.
Table 1
Cuirent Fstimated Annual Loss to Tabng Jurisdictions
Ta�ne Jurisdiction T.C. Rafio Pacert Captured Incremart Present-2009/ 2009-2026
City of St Paul 42,733 293 495,340 0 8,420,750
Runsey County 36.714 252 426,026 0 7,242,942
SchoolDistrict#625 59.491 40.8 689,'757 0 11,725,869
O[her 6 4.7 79.457 0 1,350,769
145.802 100 1,690,580 0 28,739,860
IX. Studies and analvsis used to determine need for tax increment financing,
The FIRA and fhe City have determined that the proposed redevefopment of Block 4 would
not reasonabiy be expected to occw solely through private investment within the reasonably
foreseeable future and that the increased market value o£ the site that could reasonably be eapected to
occur without the use of taY increment fmancing would be less than the increase in the mazket value
estimated to result from the proposed development after subh Yhe present value of the projected
tax increments for the m�imum dwation of the district permitted by the plan.
The HRA anc3 the City made this finding in resolutions adopted on November 12, 1997 based
on data collected and presented to the Board by IIRA staff.
The studies and analyses used to make the determination that the proposed development in the
opinion of the City would not reasonably be expected to occur tk�rough private investment within the
foreseeable future, and therefore the use of tas increment is deemed necessary, are as follows:
(a) The Greater Saint Paul Building Owners and Managers Associations 1996
Annual Office Marketing Report indicates that the Net Rate for Class A office space ranges
from a Iow of $8.10 to $ I4.50 per squaze foot. This study demonstrates that in order to
provide the development of competitive Class A office space, there needs to be public
financial participation. The Towle Report's 1996 Office Market Update also substantiates the
market forces driving the lease rates.
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(b) The Project is consistent with the guidelines set forth in the "Saint Paul on the
Mississippi Development framework" particulaziy its ten principals.
X. Identification of all parcels to be induded in the District,
Attached hereto in Appendix A is a list of the Properry Identificarion Numbers (or legal
descriptions) for all properties to be included in the District, a map showing the Seventh Place
Redeveiopment Project azea (as most recently amended), the District aad the existing properties, and
a legal description identifying the boundaries of the District.
XI. District administration and annual disdosure.
Administration of the District will be the responsibiliry of the City of Saint Paul. Tax
increments will be deposited into interest bearing accounts sepazate and distinct from other funds of
the City. Tas increments will be used only for activities described in this tax increment plan.
The City will report annuaily to the State Auditor, county boazd, school boazd and
Department of Revenue regazding activities in the District as rec}uired by Section 4b9.175,
subdivision 5 and subdivision 6 and will include information with regazd to the Disuict in the data
necessary to comply with subdivision 6a. With regazd to the local contribution as discussed in Section
�VIII, the City will file necessary reports as required by the Depariment of Revenue.
XII. Modifecations to District
In accordance with Minnesota Statutes, Secuon 469.175, Subd, 4, any reduction or
enlargement of the geogaphic area of the Project or tax increment financing district; increase in
amount of bonded indebtedness to be incurred, including a determination to capitalize interest on debt
if that determination 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 tax capaciry to be retained
by the City; increase in total estimated taY increment expenditures; or designation of additional
property to be acquired by the City shall be approved upon the notice and after the discussion, public
heazing and findings required for approval of the original plan. The geographic area of a tax
increment financing district may be reduced, but shail nat be enlazged after five years following the
date of certification of the original ta7c capacity by the county auditor.
XIII. Administrative Expenses
In accordance with Minnesota Statutes Section 464.174, Subd. 14; and Minnesota Statutes
Section 469176, Subd. 3 administrative expenses means ail expenditures of an authority other than
amounts paid for the purchase of land or amounts paid to contractors or others providing materials
and services, including architecturai and engineering services, directly connected with the physical
development of the real property in the District, relocation benefits paid to or services provided for
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persons residing or businesses located in the District or amounts used.to pay interest on, fund a
reserve for, or sell at a discount bonds issued pursuant to Section 469.178. Administrative expenses
also include amounts paid for services provided by bond counsel, fiscal consultants, and planning or
economic development consultants. Administrative expenses of the District will be paid from ta��
increments; provided that no taY increment shall be used to pay any administrative expenses for the
Project which exceed ten percent of the total taac increment expenditures authorized by the taa�
increment financing plan or the total taa� increment expenditures for the Project, whichever is less.
Pursuant to Minnesota Statutes Section 469.176, Subd. 4h, t� increments may be used to
pay for the county's actual administrative expenses incurred in connection with the District. The
counry may require payment of those expenses by February 15 of the year following the yeaz the
expenses were incurred.
XIV. Necessarv Improvements in the District
No taac increment shall be paid to the City after three years from the date of certification of the
originai net taY capacity by the County Auditoi unless within the three-year period:
(1) bonds have been issued in aid of the Project pursuant to Section 464.178 of the TIF
Act or any other law, except revenue bonds issued pursuant to Minnesota Statutes,
Section 469.159 to 469.165;
(2) the City ar HRA has acquired property within the District; or
(3) the City or f�ZA has constructed or caused to be constructed public improvements
within the District.
The bonds must be issued, or the City or HRA must acquire properry or conshuct or cause
public improvements to be conshucted by approximately November I, 2000.
Pursuant to Minnesota 5tatutes, Section 469.176, Subd. 6,
if, after four years from the date of certifzcation of the original tax capacity of the taz
increment financing district purszrant to �nnesota Statutes. Secfron 469.177, no demolition,
rehabilitation or renovafron of property or other site preparation, including qualified
improvement of a sireei adjacent to a parcel bui not insfallation of utility service including
sewer or water systems, has been commenced on a parcel Zocated within a fca increment
financing districi by the authority or by the owner of the parcel in accordance with the tca
increment fi»cmcing plan, no additional tax increment may be taken from thai parcel and the
original tax capacity of that paz-cel shall be excluded fiom the originczl tca capacity of the tczx
increment financing district. If the authority or the owner of the parcel subsequenfly
commences demolition, rehabilitation or renovation or other site prepat on that parcel
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including improvement of a streef adjacent to ihat pcncel, in accordance wiih the tae
increment financing plan, the authority shall certify to the county auditar in the annual
disclosure report thuf the activity has commenced The county auditor shall cerfrfy the tctt
capacity thereof ar most recently certified by ihe commissioner of revemre cnzd add it to the
original tar capacity of the tax if:crement financing district. The caunty auditor must enforce
Ij72 �JYOVISlOfl.S Of flllS SI[IICIiVIS10Yl.. FOY jlltY�JOS2S Of lIt1S SUIIti�IVIS1071� qual�ed improvements
are limited to (I) corzrtruction or opening of a new street, (2) relocation of a street, and (3)
substarztial reconshuction or rebuilding of an existing streef.
The City or I-Il2A or a property owner must begin making improvements to parcels within the
District by approximately November, 2001.
Pursuant to Minnesota Statutes, Section 469.1763, Subd. 3, revenues derived from tax
increments are considered to have been spent on an activity within the Dastrict only if one of the
foliowing occurs:
1. Before or within ftve years afier cerfification of fhe District, ihe revenues are actually
paid to a third party with respect to the activity;
2. Bonds, the proceeds of which must be used to fincmce the activity, are issued and sold
to a third party befare or within fzve years after certification of the District, the revemres are spent to
repay the Bonds, and the proceeds of the Bonds either are, on the date of iss�{ance, reasonably
expected to be spent befare the end of the Zatter of (i) the frve year perioc� or (ii) a reasonable
temporary period within the meaning of the use of that term unrler Section 148(c) (1) of the Iniemal
Reverrue Code, ot dzposited in a reusonably required resetve or replacement fund,�
3. Binding contracts with a third party are entered into for perfo»nance of the aciivity
before or wifhin ftve years afier certiftcation of the Disti and the revemres are spent under the
contractual obligation; or
4. Costs with respect ta the activity are perid before or within five years after certifzca&on
o,f the District and the revenues are spent to reimburse a party for payment af the costs, including
interest on unreimbursed costs.
Therefore, one of the above four events must occur by approximately November, 2002.
XV. Use of Taz Increment
Ail revenues derived from taY increment shall be used in accordance with this tas increment
financing plan, and pursuant to Nfinnesota Statutes, Section 469176, Subdivisions 4 and 4j.
XVI. Notification of Prior Planned Improvements
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Pursuant to Minnesota Statutes Section 469.177, Subd. 4, the City has reviewed the area to
be included in the District and has found properties for which building permits have been issued
during the 18 months immediately preceding approval of the Plan by the City. Therefore, the county
auditor shall increase the original tax capacity of the District by the valuation of the improvements for
which the buIlding permits were issued.
XVII. Egcess Tax Increments
Pursuant to Minnesota Statutes 5ection 469.176, Subd. 2, in any year in which the tax
increment exceeds the amount necessary to pay the costs authorized by the tax increment plan,
including the amount necessary to cancel any tax levy as provided in Minnesota 5tatutes, Secrion
475.61, Subd. 3, the City shall use the excess amount to do any of the following:
1. prepay the outstanding bonds or notes;
2, discharge the pledge of tax increment therefor,
3. pay into an escrow account dedicated to the payment of such bonds; or
4. retum the excess to the County Auditor for redistribution to the respective taYing
jurisdictions in proportion of their tax capacity rate.
XVIII. Lucal Contribution Requirement
For taac increment financing districts which request certification after 7une 30, 1994,
Minnesota Statutes, Section 273.1399, Subd. 6(d) provides that the City may be exempt from local
government aid ar homestead and agricultural credit aid penalty if the HRA and/or the City makes a
local contribution to the Project equal to five percent of the taY increment. The HIZA and the City
elect to make the local contributions in lieu of the state aid penalty. Five percent of the tas
increments expected to be collected from the District annually, is approximately $86,000. The HI2A
and the City will either make yeazly contributions, or a combination of yeariy contributions and an
upfront contribution. If an upfront contribution is made, it will be paid prior to September 31, 1999.
Pursuant to Section 273.1399, Subd. 6(d)(2), if the FIRA or City fails to make the requited
contribution for any year, the state aid reduction will apply for that yeaz. The state aid reduction will
be equai to the greater of (A) the required local contribution (5% of taJ� increments collected that
year) or (B} the amount of the aid reduction that applies under Subdivision 3 of Section 273.1399.
XIX. Fiscal Disparities
The City and the City have elected to compute Fiscal Disparities contribution for the District
in accordance with Section 469177, subdivision 3, paragraph a.
XX. Requirements for Agreements with Develoner.
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Pursuant to Minnesota Statutes, §469.176, subd. 5, no more than 25%, by acreage, of the
property to be acquired in the District as set forth in the Tax 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 or City having, prior to acquisition in
excess of 25% of the acreage, concluded an agreement for the development or redevelopment of
the property acquired and which provides recourse for the HRA or City should the development
not be completed.
XXI. Assessment Apreement.
Pursuant to Minnesota Statutes, §469.177, subd. 8, the F�tA or City may enter into an
agreement in recordabie form with the Developer of property within the District which
establishes a minimum mazket value of the land and completed improvements for the duration of
the District. Such assessment agreement must be gresented to the assessor who sha11 review the
plans and specifications for the improvements consttucted, review the market value previously
assigned to the land upon which the improvements are 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 mazket value
agreement. It is not anticipated that an assessment agreement will be executed by MMI,IC in
connection with this Project.
X�I. Deveionment aad Job Creafion.
To the extent applicable, the HRA or City agrees to comply with Minnesota Statutes,
§116J.991, which states that a business receiving state or local government assistance for
economic development or job growth purposes, including tax increment financing must create a
net increase in jobs and meet wage level goals in Minnesota within two years of receiving
assistance.
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jlist of pazcels in new tax increment district, map of district and map of project azea]
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BLOCK 4
PROPERTY IDENTIFICATION NUMBERS
Biock bounded by Seventh Place, Robert Street, Sixth Street and Minnesota
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06282212-0105
06282212-0106
06282212-0017
06262212-0018
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MODIFICATION TO TAX INCREMENT
FINANCING PLAN RELATING TO
TI� SEVENTH PLACE TAX INCREMENT FINANCING DISTRICT
ORIGINALLY CREATED ON NOVEMBER 16, 1978
Dated: November 12, 1997
WHEREAS, the City of Saint Paul, Minnesota (the City) and the Housing and
Redevelopment Authority of the City of Saint Pau1(the "HRA"), on November 9, 1989
approved the Tas Increment Financing Plan for the Seventh Place Redevelopment Project (the
"Plan") relating to the Seventh Place Taac Increment Financing District originally create in 1978
(the "District"); and
WF-IEREAS, it has been proposed by the HRA that the following pazcels of land (the
"Removed Parceis") be deleted from the District: 06282212-0105, 06282212-0106,
06282212-0017 and 06282212-0018.
NOW THEREFORE, the Plan is hereby modified as follows:
The Removed Parcels are hereby deleted from the District.
Except for the deletion of the Removed Pazcels, the Plan and District shall remain in full
force and effect for all other purposes without change or modification except as provided hereby.
This amendment to the Plan does not create or enlarge an existing tax increment
financing district. There will be no new property from which tax capacity will be caphued. The
duration of the District will not change.
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covncil File # 97 - �31I3
Green Sheet # 39 3 70
RESOLUTION
SAINT PAUL, MINNESOTA 6�
�
Presented By
Referred To
Committee: Date
RESOLUTION OF THE CITY COTJNCIL OF THE CITY OF SAINT PAUL
AUTHORIZING (A) TfIE MODIFICATION QF THE TAX INCREMENT FINANCING PLAN FOR
THE SEVENTH PLACE TAX INCREMENT FINANCING DISTRICT, ANll (B) THE CREATION
OF THE BLOCK 4 REDEVELOPNIENT TAX INCREMENT FINANCING DISTRICT AND
A.PPROVING THE
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TAX INCREMENT FINANCING PLAN RELATING THERETO
WI3EREAS: I
1. On November 30, 1978, the Housing and Redevelopment Authority of the City of Saint Paul,
Minnesota (the "I�A") approved the Seventh Place Redevelopment Plasi and the Project Financing Plan related
thereto (the "Redevelopment Plan") by Resolurion No. 78-ll130-1, to which the Ciry Council of the City of Saint
Paul (the "Council'� subsequently gaue its approval by Resolufion C.F. No. 272155 adopted on December 5,
1978. By Resolufion No. 81-11/5-8 adopted November 5, 1981 and Resolution No. 83-5/25-3 adopted May 25,
1983, the HRA adopted modifications to such plans which did not require approval of the Council, and by
Resolution No. 82-1/28-11 adopted amendments to the Redevelopment Plan and Project Financing Plan, which
amendments were approved by the Council by Resolutions C.F. No. 278173 and 278670 adopted February 4,
1982 and May 11, 1982. The Redevelopment Plan was again amended and a TaY Increment Financing Plan for
the Seventh Place Redevelopment Project (the "Seventh Place TIF Plan") was approved by the IIRA on
November 9, 1989 by Resolution No. 89-11/9-1, and approved by the Council by Resolution C.F. No. 89-2028
adopted on November 9, 1989, and the Redevelopment Plan and the Seventh Place TIF Plan were fi�rther
amended on May 28, 1997 by Resolution No. 97-5/28-9, and approved by the Council by Resolution C.F. No.
97-668, and fiuther amended on September 24, 1997 by Resolution No. 97-9l24-2, and approved by the Council
by Resolution No.97-1191.
2. On October 22, 1997 the City approved the execudon of a Development Agreement with the
Housing and Redevelopment Authority of the City of Saint Paul, Minnesota (the "HRA"), the Port Authority of
the City of Saint Paul (the "Port Authority") and Minnesota Mutuai Life Insurance Company ("MMLIC");
3. Pursuant to the Development Agreement, MIv1LIC has cominitted to conshucting an office building
consisring of not less than 350,000 rentable square feet and a parking ramp of no more than 1,000 spaces
(collectively the "Project") in the City on the biock bounded by Robert, Sixth, and Minnesota Streets and Seventh
Place (the "Project Block"} shown on the map attached hereto as E�ibit A, which Project Block is adjacent to
MMLIC's presentcorporate headquarters;
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4. Also pursuant to the Development Agreement the Port Authority has agreed to acquire the Project
Block, demolish existing shuctures, remove or remediate any hazardous waste, and se11 the Project Block to
MPvII.IC;
5. MMI,IC has indicated that they aze prepazed to act as developer and owner of the Proj ect and to
secure debt and equity financing for the Project;
6. Construction of the Project will retaiu MIvII,IC's corporate headquarters in the City, thereby
retaining 2,100 jobs in the City, and accommodating the expansion of 1�IIvILIC's corporate headquarters, creating
appror,imately 2,000 additional jobs;
7. In an effort to encourage the development and redevelopment of property in the Project area, and
specifically to provide for the acquisition of land, demolition of structures, and the construction of the Project,
it has beett proposed that the HRA establish the Block 4 Redevelopment T� Increment Financing District (the
"District") and that, in connection with the creation of the District, approve (i} the tas increment financing plan
relating thereto, and (ii) an amendment to the Seventh Place TIF Plan (collecfively, the "Plans"), a11 pursuant to
and in accordance with Mimiesota Statutes, Sections 469.001 through 469.047, inclusive; and Minnesota Statutes,
Sections 469.174 through 469.179, inclusive;
8. The District shall be formed by removing Block 4 from the Seventh Place Tas Increment Dislrict
by amending the Seventh Place TIF Plan for such district, and creating a new redevelopment district
encompassing Block 4. Since AMBAC has insured the bonds previously issued with respect to the Seventh Place
TaY Increment Aistrict, AMBAC's consent to the removal of Block 4 from that district has been obtained;
9. The HRA has investigated the facts and has caused to be prepared the proposed Plans;
10. The IIRA andlor the City, as applicable, have performed a11 actions required by law to be performed
prior to the establishment of the District and the adoption of the P1ans, including, but not limited to, notification
of Ramsey County and School District No. 625 having taxing jurisdicfion over the properry to be included in the
District, and the holding of a public hearing after published notice as required by law.
NOW, TI�REFORE, BE IT RESOLVED, by the City Council of the City of Saint Pau1, Minnesota (the
"City"), as follows:
1. Public Hearing. This council has conducted a pubfic hearing on the proposed Plans pursuant to and
in accordance with Minnesota Statutes, Sections 464.001 to 469.047 and Sections 469.174 to 464.179, inclusive,
as amendecl, in an effort to encourage the redevelopment of Biock 4 within the City to provide for the consmlcction
of the Project.
2. Ratification of Priar Action. All activifies previously undertaken by IIRA and City staff in working
with the Port Authority to finalize the Plans, and forwarding the Plans to the appropriate taxing jurisdictions
including IZamsey County and Independent School District No. 625, are hereby ratified and affumed.
3. Findings bv the City far the A�roval of the Taa� Increment Financing Plan for the Block 4
�ecievelopment Tax Increment Financin6 District.
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(a) The Council hereby finds that the Disirlct is a redevelopment district pursuant to Mimiesota
Statutes, Section 469174, Subd. 10, paragraph (a), clause (1).
(b) The Council hereby finds that the District, and the approval of the Plans relating thereto,
aze intended and, in the judgment of this Council, the effect of such actions will be, to provide an impetus
for redevelopment in the District and to further the public purposes and accompiish certain objectives as
specified in the Plans.
(c) The Council further finds that the proposed development or redevelopment in the District,
in the opinion of the City, would not occur solely through private inveshnent within the reasonably
foreseeable fuhxre and that the increased market value on the site that could reasonably be eapected to occur
without the use of tas increment financing (being $0) would be less than the increase in the market value
estimated to result from the proposed development (being approximately $32,122,800) after subtracting
the present value of the projected tazt increments for the masimum duration of the District pernutted by the
Plan (being approximately $15,000,000) and, therefore, the use of tax increment financing is deemed
necessary; that the Plans conform to the general p1an for the development or redevelopment of the City as
a whole; and that the Plans will afford maximum opporhznity consistent with the sound needs of the City
as a whole, for the development of the District by private enterprise.
(d) The City does not elect to compute the tas increments in accordance with Minnesota
Statutes, Section 469.177, Subd. 3, clause (b), meaning that tax increments will be determined before the
application of the fiscal disparities provisions of Minnesota Statutes, Chapter 473F.
(e) The CiTy elects to make a qualifying local contribution in accordance with Minnesota
Statutes, Section 273.1399, Subd. 6(d), in order to qualify the District for exemption from state aid losses
set forth in Section 273.1399.
(fl The Council fiuther fmds, declares and determines that the City made the above findings
stated in paragraphs (a) through (e) above and has set forth the reasons and supporting facts for each
determination in writing, attached hereto as Attachment A.
Section 4. Approval of the Plans and Further pocumentation.
(a) The Plans, as presented to the Council on this date, are hereby approved and adopted, and
sha11 be placed on file in the office of the Executive Director of the HRA.
(b) The staff of the City, the City's advisors and legal counsei are authorized and directed to
cooperate as necessary with the IIRA in the implementation of the Plans and for this purpose to negotiate,
draft, prepaze and present to this Council for its consideration all further plans, resolutions, documents and
contracts which may be deemed necessary for this purpose.
(c) The auditor of Ramsey County is requested to certify the original net tax capacity of the
District, as described in the Plan, and to certify in each year thereafter the amount by which the net ta�c
capacity has increased or decreased; and the HRA is authorized and directed to forthwith transmit this
request to the county auditor in such form and content as the auditor may specify, together with a list of
1588655.01
c� 7 = l3Ff�
132 all properties within the District for which building pernuts have been issued during the 18 months
133 immediately preceding the adoprion of this resolution. Further, the county auditor shall be informed of the
134 deletion of Block 4 from the Seventh Place Taz� Increment District.
Requested by Department of:
�
Approved by Nlay _ �/� f�
By:
� � 1, i� �
Form Approved City Attorney
By:
Approved by Mayor for Submission to Council
BY� �� ��
/
1588655.01
Adoption Certified by Council Secretary
97 = /3Ff3
����
To� Schertler (66593)
T07AL # OF SIGNATURE PAGES
ii=iz=9� ► GREEN SHEET
cmarronNEv
suoc,�r oia�oa
MAYOR (Oli ASSISTANT)
(CLIP ALI. LOCATIONS FOR SIGNATURE)
39�7�
INRIAVOATE
� CITY CqUNCIL
Q cm c�AK
� FIN, & MGL SERVICES DIR.
�
Resolution authorizing the modification of ihe Tax Increment Financing Plan for the Sevemh Place Tas 3ncrement Financing District
and the Crearion of ihe Biock 4 Redevelopment Tas Increment Financing District and approving the Tax Incremern Finanoing Plan
related ffiereto.
RECOMMENDATIONS: Approve (A) or
_ PIANNING GOMMISSION _ qVIL S£RVICE COMMISSION
_ CI8 COMMRlEE _
_ STAFF _
_ DISiRICT CAUR7 _
SUPPOqTS WHICH GOUNCIL O&IECTIVE?
PERSONAL SERVICE CONTRACTS MUST ANSWER TNE FOLIOWiNG QUESTIONS:
1. Nas Mis personflirm evar worked under a Contract tor this department?
YES NO
2. Has this personnrm aver been a ciry employae?
YES NO
3. Does this person/firm possess a skill not normally possessetl by any curreni city employee9
YES NO
Explain all Yes anawers on separate aheet antl attaeh to green sheet
wmf�:
Minuesota Mumal Life Insurance Company (MMLIC) has decided to eacpand in dowmown St. Paul by building an office tower. The
Saint Paul Port Authority will acquire the downtown block (Block 4) and MMLSC will build a 350,000 square foot office tower with
a 1,000 parking space ramp. This Resolurion provides for the City to establish a Tax Increment Financing Districi.
The crearion of the Block 4 TIF District will ensure that MMLIC will begin to construct a new ofFice
iAL AMOUNT OF TRANSACTION S
COST/REVENUE BUDGETED (CIRCLE ONE)
YES NO
JDIfiG SOURCE ACTIVITY
iNqAL INFORRFATION. (EXPLAIN)
97 - i�3��
ATTACFIMENT A
RESOLUTION #_
The reasons and facts suppofting the findings for the adoption of the Ta�c Increment
Financing Plan (the "Plan") for the Block 4 Redevelopment T� Increment Financing District
(the "DistricY') as required pursuant to Minnesota Statutes, Section 464.175, Subdivision 3 aze as
follows:
1. Finding that the District is a redevelopment district as defzned in Minnesota Statutes,
Section 469.174, Subd. 10.
The District is a contiguous geographic azea consisting of a portion of a project within which (i)
parcels consisting of 70% of the area of the District are occupied by buildings, streets, utilities, or
other improvements; and (ii) 50% of the buildings are structurally substandazd. The District
contains 4 parcels of land totaling 90,000 square feet of which 100% is occupied by buildings,
streets, utilities or other improvements. A total of 3 buildings are located in the District.
Prelimina.ry extemal real estate appraisals (which aze on file in the offices of the HRA) of two
buildings located on Block 4 support the conclusion that both of them are shuchxrally
substandard. In connection with the prepazarion of these appraisals, interior inspecrions of the
buildings were conducted. More specifically, reports prepared by real estate professionals show
that, in connection with the Bremer Building, the cost to bring the building up to code would be
approxnnately $3,700,000, which is more than 15% of the cost of constructing a sunilar building
on the site (approximately $10,500,000). In addition, a report by rea) estate professionals with
regard to the Metropolitan Building came to the conclusion that the cost of bringing that building
up to code would be appro�mately $4,800,000, which is more than 15% of the cost of
constructing a similaz building on the site (appro�mately $16,800,000}.
2. Finding that the proposed development, in the opinion of the Council, would not occur
solely through private investment within the reasonably foreseeable f'uture anc� therefore, the use
of tax increment fznancing is deemed necessary and that the increased market value of the site
that could reasonably be expected to occur without the use of tczr increment financing would be
less than the increase in the market value estimated to result fi-om the proposed development
after subtracting the present value of the projected taY increments for the mazimum duration of
the disti-ict permitted by the plan.
Due to the fragmented ownership of the property in the District, excessive costs for clearance,
grading and soil correction, and the fact that approximately one-half of the block is occupied by
buildings that are more than 50% vacant and are funcrionally obsolete, and due to the existence
of the other factors that allow the District to be designated as a redevelopment district, this
project is feasible only through assistance, in part, from tas increment fmancing. The proposed
development consists, in part, of an approximately 350,000 square foot office building and
1,000-stall parking ramp, the cost of which is estimated to be approximately $80,000,000. The
value of development expected to occur without the use of tax increment financing is $0, (there
q 7 - /<38.3
are no other proposals or plans to redevelop the property in the district) which is less than the
estimated increase in market value of the taYable property expected to be created by the proposed
project (approximately $32,122,800) minus the present value ofthe projected ta�c increments
(appro�mately $15,000,000).
3. Finding that the Taz Increment Financing Plan conforms to the general plan for the
development or redevedopment of the municipaZity as a whote.
The site is appropriately zoned for the Project. The proposed redevelopment is consistent with
the Seventh Flace Redevelopment Project.
4. Finding that the Tax Increment Financing Plan for the Distr•ict will afford mcrYimurn
opportuniry, consistent with the sound needs of the Ciry as a whole, for the development of the
Disfrict by private enterprise.
The establishment of the District wilI result in the facilitafion of redevelopment in downtown
Saint Paul and the retention of 2200 jobs and the creation of 2000 new jobs for residents of the
City.
5. Finding that the City does not elect to compute the tax increment in accordance with
Minnesota Statutes, Section 469.177, subdivision 3, clause (b).
The failure to elect to calculate increments in accordance with the above referenced statute
results in a greater amount of increment to be captured from the District, which will facilitate the
fmancing of the Project.
�� q�-i3��
LS&D Draft: 11/12/97
HOUSING AND REDEVELOPMENT AUTHORITY
OF THE CITY OF SAINT PAUL
TAX INCREMENT FINANC�G PLAN FOR
BLOCK 4 REDEVELOPMENT
TAX INCREMENT FINANCING DISTRICT
I. Introduction
A. Background
The Housing and Redevelopment Authority of the City of Saint Paul (the "I3RA") proposes a
plan for the redevelopment of property in the City consisting of acquisition of land, demolition of
structures, and the wnstruction of (i) a parking ramp with no more than 1,000 pazking stalls, and (ii)
an office tower consisting of not less than 350,000 rentable square feet, both of which will be owned
by Minnesota Mutual Life Tnsurance Company ("A�IIvII,IC"), all on an approximately 90,000 squaze
foot site located in the central business district of downtown Saint Paul (the Project"). On November
30, 1978, the HRA approved the Seventh Place Redevelopment Plan and the Project Financing Plan
therefor by Resolution No. 78-11/30-1. Subsequently the City Council of the City of Saint Paul (the
"Council") gave its approval by Resolution C.F. No. 272155 adopted on December 5, 1978. By
Resolution No. 81-11/5-8 adopted November 6, 1981 and Resolution No. 83-5/25-3 adopted May 25,
1983, the HRA adopted modifications to such plans which did not require approval of the Council,
and by Resolution No. 82-1/28-ll adopted amendmenu to the Redevetopment Plan and Project
Financing Plan, which amendments were approved by the Council by Resolutions C.F. No. 278173
and 278670 adopted February 4, 1982 and May 11, 1982. The plans were again amended by
Resolution C.F. No. 89-2028 adopted by the Council on November 9, 1989 and the HRA on
November 9, 1989 by Resolution No. 89-1119-1. The plans were most recenfly amended by
Resolution C.F. No. 97-668 adopted by the Council on May 28, 1997 and by Resolution 97-5/28-9
adopted by the HRA on May 28, 1997, and further amended by Resolution C.F. No. 97-1191 adopted
by the Council on September 24, 1997 and by Resolution 97-9/24-2 adopted by the FTRA on
September 24, 1997.
B. Crea6on of Block 4 Redevelopment Tax Increment District
This tas increment plan relates to the creation, under Minnesota Statutes Section 469.174,
Subd. 10 of the Block 4 Redevelopment Taac Increment District (the "District"). Prior to the creation
of the District, Block 4 will be removed from the 5eventh Place Tas Increment Financing District
which was originally created in 1978 (the "Seventh Place DistricP').
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C. Need and Public Purpose
It is necessary that the f�RA exercise its powers under state law to develop, implement, and
finance a progtam designed to encourage, ensure and facilitate the development of the property, This
development will further accomplish the public purposes spec�ed in this Section.
The existing land use activities on Block 4 are blighting and constitute an underutilization of
the land. The Project will provide land necessary for MNII_IC to construct a new corporate
headquarters, on the block adjacent to their e�sting headquarters, which will retain 2,200 jobs in
downtown Saint Paul. In addirion, the City's taY base wili be increased by the construction of the
office tower and pazking ramp. The existing buildings on Block 4 have an estimated mazket value of
$5,377,200, as valued by the county, and the new office tower and pazking ramp will have a
constiuction cost of approximately $65,000,000.
II. Obiectives of the ffi2A for the improvements in the Block 4 District area
A. Retain and provide job opportunifies for Saint Paul residents.
The Project will result in the retention of approximately 2,204 jobs in downtown Saint Paul,
and it is expected that M1VfLIC will �pand and wntinue to grow, adding approximately 2,000
additional new jobs to the City in the ne�t ten years.
B. To redevelop underused property.
Block 4 is a site that has been underutilized for many years. There are three existing
buildings on the site, two of which are structurally substandazd (see description under Section III
below). Presentiy, 75% of the block is biighted and underutilized, which includes 50°l0 of the block
that is occupied by buildings that are over 50% vacant and functionally obsolete, and 25% of the
biock that is occupied by a surface parking lot. A surf'ace pazking lot is an underutilization of a pazcel
which is within a couple of blocks of the core of downtown Saint Paul.
In order to protect past investments and remain competitive, the Block 4 Redevelopment Taa�
Increment Financing District needs to be created, to provide additional public investment to bolster
employment opportunities, to solidify downtown as a cohesive o�ce retaii center, and to imQrove
pedestrian circulation and to develop accessibie parking.
C. Provide Parking
The parking gazage to be constructed on Block 4, although privately owned, will include
approxunatety 1,000 parking spaces, and may be availabie for general public use when not in use by
the private owner.
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D. Expand the ta�c base of the City of Saint Paul.
It is eacpected that the taYable mazket value of pazcels on Block 4 wiil increase by
approximately $32,122,800 once the new office building and parking ramp is placed in service,
resulting in a total new mazket value of approximately $37,SOQ000. This value consists of
$31,SOQ,000 for 35q000 squaze feet of office space in the office building, plus $6,000,000 for the
pazldng ramp. The total existing market value of all buiidings located on Biock 4 is $5,377,200.
E. Remove blight within downtown Saint Paul.
The Block 4 site is located in downtown Saint Paul. Block 41ies between Robert, Siaih, and
Minnesota Sueets and Seventh Place. Two of the three buildings on the biock are shucturally
substandard (see further description in Section III below), and those two buildings aze over 50%
vacant. The existing buildings will be removed in the renovation process, and replaced with a new
privately consiructed office-building and Quking ramp, substantially improving downtown St. Paul.
II7, Classification of the District
The HRA and the City, in determining the need to create a tax increment financing district in
accardance with Section 469.174, find that the District is a redevelopment distdct pursuant to
Minnesota Statutes, Section 469.174, Subd. 10 hecause (I) pucels consisting of 74% of the azea of
the District are occupied by buildings, streets, utilities or other improvements and (2) more than 50%
of the buiidangs are structurally substandard; and these conditions are reasonably distributed
throughout the geographic area of the District.
The Disttict cantains 4 parcels of land totaling 90,000 square feet of which 100% is occupied
by either buildings, streets, utilities or other improvements. A total of 3 buildings aze located within
the Aistrict. Preliminary independent real estaie appraisals (which aze on file in the offices of the
HI2A) of two buIldings located on Block 4 support the conclusion that boch of them aze struchually
substandard. More specificaliy, reports prepared by real estate professionals show that, in connection
with the Bremer Bualding, the cost to bring the building up to code would be appro�mately
$3,700,000, which is more than 15% of the cost of constructing a similar building on the site
(approximately $10,50Q000). In addition, a report by real estate professionals with regard to the
Metropolitan Building came to the conclusion that the cost of bringing thaY building up to code would
be approximately $4,800,OD0, which is more than 15°10 of the cost of constructing a similaz building
on the site (approximately $16,800,000).
In addition, the District meets the requirements of a redevelopment district pursuant to
Minnesota Statutes, Secrion 469.176, Subd. 4; because at least 9�% of the revenues derived from taY
increments from the District will be used to finance 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 include acquiring properties and adjacent parcels, demolirion of structures,
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clearing of land, and iastallation of utiliries, roads, sidewalks and parking faciliries for the Districk.
The allocated administrative costs may also be included in the qualifying costs.
IV. Description of the development program for the Block 4 District.
The development pro�am consists of the development of the site to provide a buildable site
for a parking gazage and an office tower on Block 4 in the District. This will require expending taY
inctement for eligible costs which include: acquisition of land; relocation of certain e�sting
operations; demolition of existing structures; installation of infrastruchue and skyway reconnections
including temporary covered access; geo-technical soil cozrections; and environmental remediation,
including asbestos removal; contracting for professional services essential to redevelopment activities;
financing related expenses and funding administrative functions. In addition, future development at
the site may ailow the use of YaY increments to pay for additional public costs incurred in the
construction of the pazking ramp, the costs of utility extension, lighting, sidewalks, streetscapes and
road improvements.
A. Estimated cost of redevelopment project.
The estimated totai cost of the new activities to be undertaken in the District is $80,000,000,
broken down as follows:
Office Tower Construction/Other
Site Improvements
$50,000,000
Pazking Ramp Construction I5,000,000
Acquisition of existing block, demolition, 15,000,000
removal or remediation of hazardous substance,
and relocation
TOTAL
$80.000_000
It is anticipated that the initial public costs of the Project wili be $15,000,000, and will inciude
amounts necessary to: acquire the project block; demolish exisring improvements; remove or
remediate asbestos and contaminated soil; remove or remediate any other hazardous materials;
remove foundations and footings; geo-technicai soil corrections; rough grading of the project block;
relocation of public and private utilities; relocation of present owners/tenants of the project block; and
skyway reconnections including temporary covered access. To the extent that public costs exceed
� The cost of the conshuction of the parking ramp may include sufficient structural footings, support and load-
bearing capacity to pemrit the construcfion of a comparable sewnd office tower above the parking ramp at some
point in the future. Such costs are not reimburseable from tas increments.
issi�o
�,.� _ ���-.�
$15,000,000, MNILIC is obligated to pay such costs. Future development at the site may allow the
use of ta�c increments to pay for additional public costs incurred in tfie construction of the pazkin�
ramp, the costs of utility eactension, lighting, sidewalks, streetscapes and road improvements.
The costs set forth above aze estimates and the amounts allocated to any item may be
reallocated among any of the ottter items set forth above, provided that the total principal amount of
the costs for the items specified will not exceed $80,000,000, without formal modification this plan.
B. Incur costs and expenses connected with financing activities.
It is anticipated that the HRA will issue its t�able taac increment note to finance $I5,000,000
of public costs. Note issuance costs plus other financing related costs, and legal expenses, aze
anticipated to total approximately 1% of the principal amount of the Note. In addition, future
development at the site may allow the use of taY increments to pay for additional public costs incurred
in the construction of the pazking ramp, the costs of utility eactension, lighting, sidewalks, streetscapes
and road improvements.
C. City and HRA Annual Budget
At the time of final approval of the issuance of debt, the I3RA will adopt a more detailed
budget including a financing and spending plan that will further detail the costs and financing
activities of A and B above. Addiuonally, each year as part of the City and HRA annual budget
process, the detaited budget may be amended. As part of the annual budget process, the School
Board and County will be contacted to give any comments on the Tax Increment Financing Plan
which would include original plans and any annual budget amendments.
V. Description of contracts entered into at the time of �reparation of the Plan
Section 469.175, Subd. 1(3) requires this plan to contain a list of any development
activities proposed to take place within the project, for which contracts have been entered into at
the time of the preparation of this plan. At the time of the preparation of t}iis plan, the HRA, the
City or the Port Authority have entered into the following contracts:
(z) Activity: Appraisal of existing businesses
Contractor: C.R. Pelton & Associates, Inc.
Cost: Approximately $13,335
Estimated Completion Date: June, 1998
(ii) Activity: Relocation Consulting
Contractor: Conworth, Inc.
Cost: $65.00 per hour, not to exceed total of $67,500
Estimated Completion Date: September, 1998
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VI. Descriptian of ofher types of development activities which can reasonablv be espected to
take ulace within the Block 4 Arena District Project
Development activities in the District, wluch may require the e3cpenditure of taY increments,
will consist of activiries necessary and ancillary to promoting and ma�cimizing the above ob}ectives
set forth in Section II.
VII. Cost of the Project and descripfion of the Block 4 Redeveloement Taa Increment
District,
The following, as required hy Section 469175, Subd. 1(5), aze estimates of the (i) cost of the
Project, including administration expenses; (ii) amount of bonded or note indebtedness to be incurred;
(iii) sources of revenue to finance or otherwise pay public costs; (iv) the most recent net tax capacity
of taacable real property within the tax increment financing district; (v) the estimated captured net taY
capacity of the ta� increment financing district at completion; and (vi) the duration of the ta3c
increment financing districYs existence.
A. Cost of the Project, including administrative expenses.
The total cost of the Project is estimated at $80,000,000 plus administrative charges in an
amount up to 10% of the taY increment expenditures. In addition to the upfront wsts, an additional
cost of the Project will be a payment in the amount of approximately $57,000 per year tluough 2008,
to AMSAC, as the insurer of bonds presenfly outstanding and secured by taY incremenu from the
Seventh Place District This payment will compensate AMBAC for the decrease in increments from
the Seventh Place District that will occur as a result of removing Block 4 fram that district.
B. Amount of bonded indebtedness to be incurred.
The I-IRA shall be the issuer of a taa�able t� increment note in 1997 in the aggregate amount
of $15,000,000 to finance the public costs of development on Block 4. The HRA may, after the
initial issuance of the note, issue refunding bonds or notes for putposes of refmancing such
indebtedness.
C. Sources of revenue to finance or otherwise pay project costs.
The following aze the likely sources for funding the total Pro}ect, includang the taY increments
which will be pledged to the bonded indebtedness:
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Tas IncreEnents
Ta�c increments aze anticipated to equal $1,690,580 annually. The HItA hereby
determines that it will use 100% of the captured net taY capacity of the property in the District
to carry out the development program described above. All taY increments will be pledged
first to the payment of a portion of the administrative expenses of the District, second to the
payment of the AMBAC payment described in A above, third to the payment (including
prepayment) of debt service on the note described in B above, fourth to the payment of the
remainder of administrative expenses of the District, and fifth to other eligible costs which
wiil consist of the costs described in Section IV.
ii. Develooer Financing
MMI,IC wiil pay the total cost of construction of the office tower and parking ramp,
estimated to be $65,000,000. Future development of the site may allow the use of taY
increments to pay for certain public costs incurred by MNII�IC in this regazd, as set forth in
Section IV hereof, and as further set forth in the Development Ageement between the HRA,
the Port Authority and MNII.IC.
iii. Investment inwme
Certain interest earnings from the taat increments, if any, will he a source of revenue
to pay project costs. A current estimate of such earnings is not available.
D. The most recent net t� capacity of taxab�e real property within the t�
increment financing district.
At January 2, 1991 the total tas capacity of properry pazcels to be included in the District was
$252,728. Of the $5,377,200 total mazket value, $1,980,720, or 37% of the total, is attributable to
buildings on Block 4, all of which will be removed in connection with the development pursuant to
this Plan. The $3,396,480 of market value attributable to the land is assumed to remain constant.
The original tax capacity and TaY Rate are calculated in accordance with Minnesota Statutes, Section
469.174, Subd. 7 and Section 469.177, Subd. 1.
E. The estimated captured net tax capacity of the tax increment financing district
at completion.
The construction of the office tower and pazking ramp is expected to result in 350,000 square
foot office building and 1,000 sta11 pazking garage with an aggregate assessed value of $37,500,000.
Assuming land values remain constant at $3,396,480, the increase in mazket value is estimated at
$32,122,800. Applying a 3.4% tax capacity rate to the building and ramp and a 4% to the land results
in estimated captured tax capacity of approximately $1,159,520 assessed in the year 2001 and payable
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in the year 2002, the year following expected compietion of construction of buildings. There will be
a partial year's coliection of tax increment assessed in the yeaz 2000 and payable in the year 2001.
This capiured taY capacity is calculated in accordance with Minnesota Statutes, Section 469.174,
Subd. 4 and 469.177, Subd. 2.
F. The duration of the tax increment financing district's existence.
The request for certification of the District will be made in 1947. The first taac
increments are anticipated to be generated for taxes payable in the yeaz 2041. The duration of
the District will run 25 years from the first receipt by the City of tas increments, which wili be
through calendaz yeaz 2026. The HRA does, however, reserve the right to decertify the Disuict
prior to the legaily required date.
VIQ. Alternate estimates o1' the impact of the taz increment financing on the net ta4
capacities of a}i 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, the total market value of which the City of Saint Paui
contributes approximately 45%.
c. The Housing and Redevelopment Authority of the City of Saint Paul, whose
boundaries aze coterminous with those of the Ciry of Saint Paul.
d. The Port Authority of the City of Saint Paul, whose boundaries are coterminous with
those of the City of 5aint Paul and whose powers to levy and use property t�es aze limited.
e. Metropolitan authoriues, such as the Metropolitan Council, Metropolitan Airports
Commission, Metropolitan Waste Control Commission, and the Metropolitan Mosquito Control
Disuict. Of these, oniy the Metropolitan Council and the Metropolitan Mosquito Control District
cturently levy taxes on real estate.
The HRA is required by Minnesota Statutes Section 469.175, Subd. 1(a)(6) to make stazements
relative to the akernate estimates of the nnpact of the tas increment financing on the net tax
capacities of ali t�ing jurisdictions in which the tax increment financing district is located in
whole or in part.
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Impact on Taaing Jurisdictions
Under the assumption that the estimated captured net t� capacity would be available to
the t�ing jurisdictions without creation of the District, creation of the District will seive to deny
these taxing jurisdictions the taxes from the captured net ta7c capacity in the amount estimated in
Table 1 below. Note the District to be created is currentiv already within the Seventh Place
District which ex ires in 2008. Therefore, the creation of this new District will den the taYina
iurisdictions those ta�ces only from the years 2009 to 2026.
Table 1
Cuirent Fstimated Annual Loss to Tabng Jurisdictions
Ta�ne Jurisdiction T.C. Rafio Pacert Captured Incremart Present-2009/ 2009-2026
City of St Paul 42,733 293 495,340 0 8,420,750
Runsey County 36.714 252 426,026 0 7,242,942
SchoolDistrict#625 59.491 40.8 689,'757 0 11,725,869
O[her 6 4.7 79.457 0 1,350,769
145.802 100 1,690,580 0 28,739,860
IX. Studies and analvsis used to determine need for tax increment financing,
The FIRA and fhe City have determined that the proposed redevefopment of Block 4 would
not reasonabiy be expected to occw solely through private investment within the reasonably
foreseeable future and that the increased market value o£ the site that could reasonably be eapected to
occur without the use of taY increment fmancing would be less than the increase in the mazket value
estimated to result from the proposed development after subh Yhe present value of the projected
tax increments for the m�imum dwation of the district permitted by the plan.
The HRA anc3 the City made this finding in resolutions adopted on November 12, 1997 based
on data collected and presented to the Board by IIRA staff.
The studies and analyses used to make the determination that the proposed development in the
opinion of the City would not reasonably be expected to occur tk�rough private investment within the
foreseeable future, and therefore the use of tas increment is deemed necessary, are as follows:
(a) The Greater Saint Paul Building Owners and Managers Associations 1996
Annual Office Marketing Report indicates that the Net Rate for Class A office space ranges
from a Iow of $8.10 to $ I4.50 per squaze foot. This study demonstrates that in order to
provide the development of competitive Class A office space, there needs to be public
financial participation. The Towle Report's 1996 Office Market Update also substantiates the
market forces driving the lease rates.
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(b) The Project is consistent with the guidelines set forth in the "Saint Paul on the
Mississippi Development framework" particulaziy its ten principals.
X. Identification of all parcels to be induded in the District,
Attached hereto in Appendix A is a list of the Properry Identificarion Numbers (or legal
descriptions) for all properties to be included in the District, a map showing the Seventh Place
Redeveiopment Project azea (as most recently amended), the District aad the existing properties, and
a legal description identifying the boundaries of the District.
XI. District administration and annual disdosure.
Administration of the District will be the responsibiliry of the City of Saint Paul. Tax
increments will be deposited into interest bearing accounts sepazate and distinct from other funds of
the City. Tas increments will be used only for activities described in this tax increment plan.
The City will report annuaily to the State Auditor, county boazd, school boazd and
Department of Revenue regazding activities in the District as rec}uired by Section 4b9.175,
subdivision 5 and subdivision 6 and will include information with regazd to the Disuict in the data
necessary to comply with subdivision 6a. With regazd to the local contribution as discussed in Section
�VIII, the City will file necessary reports as required by the Depariment of Revenue.
XII. Modifecations to District
In accordance with Minnesota Statutes, Secuon 469.175, Subd, 4, any reduction or
enlargement of the geogaphic area of the Project or tax increment financing district; increase in
amount of bonded indebtedness to be incurred, including a determination to capitalize interest on debt
if that determination 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 tax capaciry to be retained
by the City; increase in total estimated taY increment expenditures; or designation of additional
property to be acquired by the City shall be approved upon the notice and after the discussion, public
heazing and findings required for approval of the original plan. The geographic area of a tax
increment financing district may be reduced, but shail nat be enlazged after five years following the
date of certification of the original ta7c capacity by the county auditor.
XIII. Administrative Expenses
In accordance with Minnesota Statutes Section 464.174, Subd. 14; and Minnesota Statutes
Section 469176, Subd. 3 administrative expenses means ail expenditures of an authority other than
amounts paid for the purchase of land or amounts paid to contractors or others providing materials
and services, including architecturai and engineering services, directly connected with the physical
development of the real property in the District, relocation benefits paid to or services provided for
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persons residing or businesses located in the District or amounts used.to pay interest on, fund a
reserve for, or sell at a discount bonds issued pursuant to Section 469.178. Administrative expenses
also include amounts paid for services provided by bond counsel, fiscal consultants, and planning or
economic development consultants. Administrative expenses of the District will be paid from ta��
increments; provided that no taY increment shall be used to pay any administrative expenses for the
Project which exceed ten percent of the total taac increment expenditures authorized by the taa�
increment financing plan or the total taa� increment expenditures for the Project, whichever is less.
Pursuant to Minnesota Statutes Section 469.176, Subd. 4h, t� increments may be used to
pay for the county's actual administrative expenses incurred in connection with the District. The
counry may require payment of those expenses by February 15 of the year following the yeaz the
expenses were incurred.
XIV. Necessarv Improvements in the District
No taac increment shall be paid to the City after three years from the date of certification of the
originai net taY capacity by the County Auditoi unless within the three-year period:
(1) bonds have been issued in aid of the Project pursuant to Section 464.178 of the TIF
Act or any other law, except revenue bonds issued pursuant to Minnesota Statutes,
Section 469.159 to 469.165;
(2) the City ar HRA has acquired property within the District; or
(3) the City or f�ZA has constructed or caused to be constructed public improvements
within the District.
The bonds must be issued, or the City or HRA must acquire properry or conshuct or cause
public improvements to be conshucted by approximately November I, 2000.
Pursuant to Minnesota 5tatutes, Section 469.176, Subd. 6,
if, after four years from the date of certifzcation of the original tax capacity of the taz
increment financing district purszrant to �nnesota Statutes. Secfron 469.177, no demolition,
rehabilitation or renovafron of property or other site preparation, including qualified
improvement of a sireei adjacent to a parcel bui not insfallation of utility service including
sewer or water systems, has been commenced on a parcel Zocated within a fca increment
financing districi by the authority or by the owner of the parcel in accordance with the tca
increment fi»cmcing plan, no additional tax increment may be taken from thai parcel and the
original tax capacity of that paz-cel shall be excluded fiom the originczl tca capacity of the tczx
increment financing district. If the authority or the owner of the parcel subsequenfly
commences demolition, rehabilitation or renovation or other site prepat on that parcel
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including improvement of a streef adjacent to ihat pcncel, in accordance wiih the tae
increment financing plan, the authority shall certify to the county auditar in the annual
disclosure report thuf the activity has commenced The county auditor shall cerfrfy the tctt
capacity thereof ar most recently certified by ihe commissioner of revemre cnzd add it to the
original tar capacity of the tax if:crement financing district. The caunty auditor must enforce
Ij72 �JYOVISlOfl.S Of flllS SI[IICIiVIS10Yl.. FOY jlltY�JOS2S Of lIt1S SUIIti�IVIS1071� qual�ed improvements
are limited to (I) corzrtruction or opening of a new street, (2) relocation of a street, and (3)
substarztial reconshuction or rebuilding of an existing streef.
The City or I-Il2A or a property owner must begin making improvements to parcels within the
District by approximately November, 2001.
Pursuant to Minnesota Statutes, Section 469.1763, Subd. 3, revenues derived from tax
increments are considered to have been spent on an activity within the Dastrict only if one of the
foliowing occurs:
1. Before or within ftve years afier cerfification of fhe District, ihe revenues are actually
paid to a third party with respect to the activity;
2. Bonds, the proceeds of which must be used to fincmce the activity, are issued and sold
to a third party befare or within fzve years after certification of the District, the revemres are spent to
repay the Bonds, and the proceeds of the Bonds either are, on the date of iss�{ance, reasonably
expected to be spent befare the end of the Zatter of (i) the frve year perioc� or (ii) a reasonable
temporary period within the meaning of the use of that term unrler Section 148(c) (1) of the Iniemal
Reverrue Code, ot dzposited in a reusonably required resetve or replacement fund,�
3. Binding contracts with a third party are entered into for perfo»nance of the aciivity
before or wifhin ftve years afier certiftcation of the Disti and the revemres are spent under the
contractual obligation; or
4. Costs with respect ta the activity are perid before or within five years after certifzca&on
o,f the District and the revenues are spent to reimburse a party for payment af the costs, including
interest on unreimbursed costs.
Therefore, one of the above four events must occur by approximately November, 2002.
XV. Use of Taz Increment
Ail revenues derived from taY increment shall be used in accordance with this tas increment
financing plan, and pursuant to Nfinnesota Statutes, Section 469176, Subdivisions 4 and 4j.
XVI. Notification of Prior Planned Improvements
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Pursuant to Minnesota Statutes Section 469.177, Subd. 4, the City has reviewed the area to
be included in the District and has found properties for which building permits have been issued
during the 18 months immediately preceding approval of the Plan by the City. Therefore, the county
auditor shall increase the original tax capacity of the District by the valuation of the improvements for
which the buIlding permits were issued.
XVII. Egcess Tax Increments
Pursuant to Minnesota Statutes 5ection 469.176, Subd. 2, in any year in which the tax
increment exceeds the amount necessary to pay the costs authorized by the tax increment plan,
including the amount necessary to cancel any tax levy as provided in Minnesota 5tatutes, Secrion
475.61, Subd. 3, the City shall use the excess amount to do any of the following:
1. prepay the outstanding bonds or notes;
2, discharge the pledge of tax increment therefor,
3. pay into an escrow account dedicated to the payment of such bonds; or
4. retum the excess to the County Auditor for redistribution to the respective taYing
jurisdictions in proportion of their tax capacity rate.
XVIII. Lucal Contribution Requirement
For taac increment financing districts which request certification after 7une 30, 1994,
Minnesota Statutes, Section 273.1399, Subd. 6(d) provides that the City may be exempt from local
government aid ar homestead and agricultural credit aid penalty if the HRA and/or the City makes a
local contribution to the Project equal to five percent of the taY increment. The HIZA and the City
elect to make the local contributions in lieu of the state aid penalty. Five percent of the tas
increments expected to be collected from the District annually, is approximately $86,000. The HI2A
and the City will either make yeazly contributions, or a combination of yeariy contributions and an
upfront contribution. If an upfront contribution is made, it will be paid prior to September 31, 1999.
Pursuant to Section 273.1399, Subd. 6(d)(2), if the FIRA or City fails to make the requited
contribution for any year, the state aid reduction will apply for that yeaz. The state aid reduction will
be equai to the greater of (A) the required local contribution (5% of taJ� increments collected that
year) or (B} the amount of the aid reduction that applies under Subdivision 3 of Section 273.1399.
XIX. Fiscal Disparities
The City and the City have elected to compute Fiscal Disparities contribution for the District
in accordance with Section 469177, subdivision 3, paragraph a.
XX. Requirements for Agreements with Develoner.
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Pursuant to Minnesota Statutes, §469.176, subd. 5, no more than 25%, by acreage, of the
property to be acquired in the District as set forth in the Tax 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 or City having, prior to acquisition in
excess of 25% of the acreage, concluded an agreement for the development or redevelopment of
the property acquired and which provides recourse for the HRA or City should the development
not be completed.
XXI. Assessment Apreement.
Pursuant to Minnesota Statutes, §469.177, subd. 8, the F�tA or City may enter into an
agreement in recordabie form with the Developer of property within the District which
establishes a minimum mazket value of the land and completed improvements for the duration of
the District. Such assessment agreement must be gresented to the assessor who sha11 review the
plans and specifications for the improvements consttucted, review the market value previously
assigned to the land upon which the improvements are 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 mazket value
agreement. It is not anticipated that an assessment agreement will be executed by MMI,IC in
connection with this Project.
X�I. Deveionment aad Job Creafion.
To the extent applicable, the HRA or City agrees to comply with Minnesota Statutes,
§116J.991, which states that a business receiving state or local government assistance for
economic development or job growth purposes, including tax increment financing must create a
net increase in jobs and meet wage level goals in Minnesota within two years of receiving
assistance.
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jlist of pazcels in new tax increment district, map of district and map of project azea]
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BLOCK 4
PROPERTY IDENTIFICATION NUMBERS
Biock bounded by Seventh Place, Robert Street, Sixth Street and Minnesota
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06282212-0105
06282212-0106
06282212-0017
06262212-0018
p�� _ � ���
MODIFICATION TO TAX INCREMENT
FINANCING PLAN RELATING TO
TI� SEVENTH PLACE TAX INCREMENT FINANCING DISTRICT
ORIGINALLY CREATED ON NOVEMBER 16, 1978
Dated: November 12, 1997
WHEREAS, the City of Saint Paul, Minnesota (the City) and the Housing and
Redevelopment Authority of the City of Saint Pau1(the "HRA"), on November 9, 1989
approved the Tas Increment Financing Plan for the Seventh Place Redevelopment Project (the
"Plan") relating to the Seventh Place Taac Increment Financing District originally create in 1978
(the "District"); and
WF-IEREAS, it has been proposed by the HRA that the following pazcels of land (the
"Removed Parceis") be deleted from the District: 06282212-0105, 06282212-0106,
06282212-0017 and 06282212-0018.
NOW THEREFORE, the Plan is hereby modified as follows:
The Removed Parcels are hereby deleted from the District.
Except for the deletion of the Removed Pazcels, the Plan and District shall remain in full
force and effect for all other purposes without change or modification except as provided hereby.
This amendment to the Plan does not create or enlarge an existing tax increment
financing district. There will be no new property from which tax capacity will be caphued. The
duration of the District will not change.
1590590.01
covncil File # 97 - �31I3
Green Sheet # 39 3 70
RESOLUTION
SAINT PAUL, MINNESOTA 6�
�
Presented By
Referred To
Committee: Date
RESOLUTION OF THE CITY COTJNCIL OF THE CITY OF SAINT PAUL
AUTHORIZING (A) TfIE MODIFICATION QF THE TAX INCREMENT FINANCING PLAN FOR
THE SEVENTH PLACE TAX INCREMENT FINANCING DISTRICT, ANll (B) THE CREATION
OF THE BLOCK 4 REDEVELOPNIENT TAX INCREMENT FINANCING DISTRICT AND
A.PPROVING THE
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TAX INCREMENT FINANCING PLAN RELATING THERETO
WI3EREAS: I
1. On November 30, 1978, the Housing and Redevelopment Authority of the City of Saint Paul,
Minnesota (the "I�A") approved the Seventh Place Redevelopment Plasi and the Project Financing Plan related
thereto (the "Redevelopment Plan") by Resolurion No. 78-ll130-1, to which the Ciry Council of the City of Saint
Paul (the "Council'� subsequently gaue its approval by Resolufion C.F. No. 272155 adopted on December 5,
1978. By Resolufion No. 81-11/5-8 adopted November 5, 1981 and Resolution No. 83-5/25-3 adopted May 25,
1983, the HRA adopted modifications to such plans which did not require approval of the Council, and by
Resolution No. 82-1/28-11 adopted amendments to the Redevelopment Plan and Project Financing Plan, which
amendments were approved by the Council by Resolutions C.F. No. 278173 and 278670 adopted February 4,
1982 and May 11, 1982. The Redevelopment Plan was again amended and a TaY Increment Financing Plan for
the Seventh Place Redevelopment Project (the "Seventh Place TIF Plan") was approved by the IIRA on
November 9, 1989 by Resolution No. 89-11/9-1, and approved by the Council by Resolution C.F. No. 89-2028
adopted on November 9, 1989, and the Redevelopment Plan and the Seventh Place TIF Plan were fi�rther
amended on May 28, 1997 by Resolution No. 97-5/28-9, and approved by the Council by Resolution C.F. No.
97-668, and fiuther amended on September 24, 1997 by Resolution No. 97-9l24-2, and approved by the Council
by Resolution No.97-1191.
2. On October 22, 1997 the City approved the execudon of a Development Agreement with the
Housing and Redevelopment Authority of the City of Saint Paul, Minnesota (the "HRA"), the Port Authority of
the City of Saint Paul (the "Port Authority") and Minnesota Mutuai Life Insurance Company ("MMLIC");
3. Pursuant to the Development Agreement, MIv1LIC has cominitted to conshucting an office building
consisring of not less than 350,000 rentable square feet and a parking ramp of no more than 1,000 spaces
(collectively the "Project") in the City on the biock bounded by Robert, Sixth, and Minnesota Streets and Seventh
Place (the "Project Block"} shown on the map attached hereto as E�ibit A, which Project Block is adjacent to
MMLIC's presentcorporate headquarters;
1588655.01
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4. Also pursuant to the Development Agreement the Port Authority has agreed to acquire the Project
Block, demolish existing shuctures, remove or remediate any hazardous waste, and se11 the Project Block to
MPvII.IC;
5. MMI,IC has indicated that they aze prepazed to act as developer and owner of the Proj ect and to
secure debt and equity financing for the Project;
6. Construction of the Project will retaiu MIvII,IC's corporate headquarters in the City, thereby
retaining 2,100 jobs in the City, and accommodating the expansion of 1�IIvILIC's corporate headquarters, creating
appror,imately 2,000 additional jobs;
7. In an effort to encourage the development and redevelopment of property in the Project area, and
specifically to provide for the acquisition of land, demolition of structures, and the construction of the Project,
it has beett proposed that the HRA establish the Block 4 Redevelopment T� Increment Financing District (the
"District") and that, in connection with the creation of the District, approve (i} the tas increment financing plan
relating thereto, and (ii) an amendment to the Seventh Place TIF Plan (collecfively, the "Plans"), a11 pursuant to
and in accordance with Mimiesota Statutes, Sections 469.001 through 469.047, inclusive; and Minnesota Statutes,
Sections 469.174 through 469.179, inclusive;
8. The District shall be formed by removing Block 4 from the Seventh Place Tas Increment Dislrict
by amending the Seventh Place TIF Plan for such district, and creating a new redevelopment district
encompassing Block 4. Since AMBAC has insured the bonds previously issued with respect to the Seventh Place
TaY Increment Aistrict, AMBAC's consent to the removal of Block 4 from that district has been obtained;
9. The HRA has investigated the facts and has caused to be prepared the proposed Plans;
10. The IIRA andlor the City, as applicable, have performed a11 actions required by law to be performed
prior to the establishment of the District and the adoption of the P1ans, including, but not limited to, notification
of Ramsey County and School District No. 625 having taxing jurisdicfion over the properry to be included in the
District, and the holding of a public hearing after published notice as required by law.
NOW, TI�REFORE, BE IT RESOLVED, by the City Council of the City of Saint Pau1, Minnesota (the
"City"), as follows:
1. Public Hearing. This council has conducted a pubfic hearing on the proposed Plans pursuant to and
in accordance with Minnesota Statutes, Sections 464.001 to 469.047 and Sections 469.174 to 464.179, inclusive,
as amendecl, in an effort to encourage the redevelopment of Biock 4 within the City to provide for the consmlcction
of the Project.
2. Ratification of Priar Action. All activifies previously undertaken by IIRA and City staff in working
with the Port Authority to finalize the Plans, and forwarding the Plans to the appropriate taxing jurisdictions
including IZamsey County and Independent School District No. 625, are hereby ratified and affumed.
3. Findings bv the City far the A�roval of the Taa� Increment Financing Plan for the Block 4
�ecievelopment Tax Increment Financin6 District.
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(a) The Council hereby finds that the Disirlct is a redevelopment district pursuant to Mimiesota
Statutes, Section 469174, Subd. 10, paragraph (a), clause (1).
(b) The Council hereby finds that the District, and the approval of the Plans relating thereto,
aze intended and, in the judgment of this Council, the effect of such actions will be, to provide an impetus
for redevelopment in the District and to further the public purposes and accompiish certain objectives as
specified in the Plans.
(c) The Council further finds that the proposed development or redevelopment in the District,
in the opinion of the City, would not occur solely through private inveshnent within the reasonably
foreseeable fuhxre and that the increased market value on the site that could reasonably be eapected to occur
without the use of tas increment financing (being $0) would be less than the increase in the market value
estimated to result from the proposed development (being approximately $32,122,800) after subtracting
the present value of the projected tazt increments for the masimum duration of the District pernutted by the
Plan (being approximately $15,000,000) and, therefore, the use of tax increment financing is deemed
necessary; that the Plans conform to the general p1an for the development or redevelopment of the City as
a whole; and that the Plans will afford maximum opporhznity consistent with the sound needs of the City
as a whole, for the development of the District by private enterprise.
(d) The City does not elect to compute the tas increments in accordance with Minnesota
Statutes, Section 469.177, Subd. 3, clause (b), meaning that tax increments will be determined before the
application of the fiscal disparities provisions of Minnesota Statutes, Chapter 473F.
(e) The CiTy elects to make a qualifying local contribution in accordance with Minnesota
Statutes, Section 273.1399, Subd. 6(d), in order to qualify the District for exemption from state aid losses
set forth in Section 273.1399.
(fl The Council fiuther fmds, declares and determines that the City made the above findings
stated in paragraphs (a) through (e) above and has set forth the reasons and supporting facts for each
determination in writing, attached hereto as Attachment A.
Section 4. Approval of the Plans and Further pocumentation.
(a) The Plans, as presented to the Council on this date, are hereby approved and adopted, and
sha11 be placed on file in the office of the Executive Director of the HRA.
(b) The staff of the City, the City's advisors and legal counsei are authorized and directed to
cooperate as necessary with the IIRA in the implementation of the Plans and for this purpose to negotiate,
draft, prepaze and present to this Council for its consideration all further plans, resolutions, documents and
contracts which may be deemed necessary for this purpose.
(c) The auditor of Ramsey County is requested to certify the original net tax capacity of the
District, as described in the Plan, and to certify in each year thereafter the amount by which the net ta�c
capacity has increased or decreased; and the HRA is authorized and directed to forthwith transmit this
request to the county auditor in such form and content as the auditor may specify, together with a list of
1588655.01
c� 7 = l3Ff�
132 all properties within the District for which building pernuts have been issued during the 18 months
133 immediately preceding the adoprion of this resolution. Further, the county auditor shall be informed of the
134 deletion of Block 4 from the Seventh Place Taz� Increment District.
Requested by Department of:
�
Approved by Nlay _ �/� f�
By:
� � 1, i� �
Form Approved City Attorney
By:
Approved by Mayor for Submission to Council
BY� �� ��
/
1588655.01
Adoption Certified by Council Secretary
97 = /3Ff3
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To� Schertler (66593)
T07AL # OF SIGNATURE PAGES
ii=iz=9� ► GREEN SHEET
cmarronNEv
suoc,�r oia�oa
MAYOR (Oli ASSISTANT)
(CLIP ALI. LOCATIONS FOR SIGNATURE)
39�7�
INRIAVOATE
� CITY CqUNCIL
Q cm c�AK
� FIN, & MGL SERVICES DIR.
�
Resolution authorizing the modification of ihe Tax Increment Financing Plan for the Sevemh Place Tas 3ncrement Financing District
and the Crearion of ihe Biock 4 Redevelopment Tas Increment Financing District and approving the Tax Incremern Finanoing Plan
related ffiereto.
RECOMMENDATIONS: Approve (A) or
_ PIANNING GOMMISSION _ qVIL S£RVICE COMMISSION
_ CI8 COMMRlEE _
_ STAFF _
_ DISiRICT CAUR7 _
SUPPOqTS WHICH GOUNCIL O&IECTIVE?
PERSONAL SERVICE CONTRACTS MUST ANSWER TNE FOLIOWiNG QUESTIONS:
1. Nas Mis personflirm evar worked under a Contract tor this department?
YES NO
2. Has this personnrm aver been a ciry employae?
YES NO
3. Does this person/firm possess a skill not normally possessetl by any curreni city employee9
YES NO
Explain all Yes anawers on separate aheet antl attaeh to green sheet
wmf�:
Minuesota Mumal Life Insurance Company (MMLIC) has decided to eacpand in dowmown St. Paul by building an office tower. The
Saint Paul Port Authority will acquire the downtown block (Block 4) and MMLSC will build a 350,000 square foot office tower with
a 1,000 parking space ramp. This Resolurion provides for the City to establish a Tax Increment Financing Districi.
The crearion of the Block 4 TIF District will ensure that MMLIC will begin to construct a new ofFice
iAL AMOUNT OF TRANSACTION S
COST/REVENUE BUDGETED (CIRCLE ONE)
YES NO
JDIfiG SOURCE ACTIVITY
iNqAL INFORRFATION. (EXPLAIN)
97 - i�3��
ATTACFIMENT A
RESOLUTION #_
The reasons and facts suppofting the findings for the adoption of the Ta�c Increment
Financing Plan (the "Plan") for the Block 4 Redevelopment T� Increment Financing District
(the "DistricY') as required pursuant to Minnesota Statutes, Section 464.175, Subdivision 3 aze as
follows:
1. Finding that the District is a redevelopment district as defzned in Minnesota Statutes,
Section 469.174, Subd. 10.
The District is a contiguous geographic azea consisting of a portion of a project within which (i)
parcels consisting of 70% of the area of the District are occupied by buildings, streets, utilities, or
other improvements; and (ii) 50% of the buildings are structurally substandazd. The District
contains 4 parcels of land totaling 90,000 square feet of which 100% is occupied by buildings,
streets, utilities or other improvements. A total of 3 buildings are located in the District.
Prelimina.ry extemal real estate appraisals (which aze on file in the offices of the HRA) of two
buildings located on Block 4 support the conclusion that both of them are shuchxrally
substandard. In connection with the prepazarion of these appraisals, interior inspecrions of the
buildings were conducted. More specifically, reports prepared by real estate professionals show
that, in connection with the Bremer Building, the cost to bring the building up to code would be
approxnnately $3,700,000, which is more than 15% of the cost of constructing a sunilar building
on the site (approximately $10,500,000). In addition, a report by rea) estate professionals with
regard to the Metropolitan Building came to the conclusion that the cost of bringing that building
up to code would be appro�mately $4,800,000, which is more than 15% of the cost of
constructing a similaz building on the site (appro�mately $16,800,000}.
2. Finding that the proposed development, in the opinion of the Council, would not occur
solely through private investment within the reasonably foreseeable f'uture anc� therefore, the use
of tax increment fznancing is deemed necessary and that the increased market value of the site
that could reasonably be expected to occur without the use of tczr increment financing would be
less than the increase in the market value estimated to result fi-om the proposed development
after subtracting the present value of the projected taY increments for the mazimum duration of
the disti-ict permitted by the plan.
Due to the fragmented ownership of the property in the District, excessive costs for clearance,
grading and soil correction, and the fact that approximately one-half of the block is occupied by
buildings that are more than 50% vacant and are funcrionally obsolete, and due to the existence
of the other factors that allow the District to be designated as a redevelopment district, this
project is feasible only through assistance, in part, from tas increment fmancing. The proposed
development consists, in part, of an approximately 350,000 square foot office building and
1,000-stall parking ramp, the cost of which is estimated to be approximately $80,000,000. The
value of development expected to occur without the use of tax increment financing is $0, (there
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are no other proposals or plans to redevelop the property in the district) which is less than the
estimated increase in market value of the taYable property expected to be created by the proposed
project (approximately $32,122,800) minus the present value ofthe projected ta�c increments
(appro�mately $15,000,000).
3. Finding that the Taz Increment Financing Plan conforms to the general plan for the
development or redevedopment of the municipaZity as a whote.
The site is appropriately zoned for the Project. The proposed redevelopment is consistent with
the Seventh Flace Redevelopment Project.
4. Finding that the Tax Increment Financing Plan for the Distr•ict will afford mcrYimurn
opportuniry, consistent with the sound needs of the Ciry as a whole, for the development of the
Disfrict by private enterprise.
The establishment of the District wilI result in the facilitafion of redevelopment in downtown
Saint Paul and the retention of 2200 jobs and the creation of 2000 new jobs for residents of the
City.
5. Finding that the City does not elect to compute the tax increment in accordance with
Minnesota Statutes, Section 469.177, subdivision 3, clause (b).
The failure to elect to calculate increments in accordance with the above referenced statute
results in a greater amount of increment to be captured from the District, which will facilitate the
fmancing of the Project.
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LS&D Draft: 11/12/97
HOUSING AND REDEVELOPMENT AUTHORITY
OF THE CITY OF SAINT PAUL
TAX INCREMENT FINANC�G PLAN FOR
BLOCK 4 REDEVELOPMENT
TAX INCREMENT FINANCING DISTRICT
I. Introduction
A. Background
The Housing and Redevelopment Authority of the City of Saint Paul (the "I3RA") proposes a
plan for the redevelopment of property in the City consisting of acquisition of land, demolition of
structures, and the wnstruction of (i) a parking ramp with no more than 1,000 pazking stalls, and (ii)
an office tower consisting of not less than 350,000 rentable square feet, both of which will be owned
by Minnesota Mutual Life Tnsurance Company ("A�IIvII,IC"), all on an approximately 90,000 squaze
foot site located in the central business district of downtown Saint Paul (the Project"). On November
30, 1978, the HRA approved the Seventh Place Redevelopment Plan and the Project Financing Plan
therefor by Resolution No. 78-11/30-1. Subsequently the City Council of the City of Saint Paul (the
"Council") gave its approval by Resolution C.F. No. 272155 adopted on December 5, 1978. By
Resolution No. 81-11/5-8 adopted November 6, 1981 and Resolution No. 83-5/25-3 adopted May 25,
1983, the HRA adopted modifications to such plans which did not require approval of the Council,
and by Resolution No. 82-1/28-ll adopted amendmenu to the Redevetopment Plan and Project
Financing Plan, which amendments were approved by the Council by Resolutions C.F. No. 278173
and 278670 adopted February 4, 1982 and May 11, 1982. The plans were again amended by
Resolution C.F. No. 89-2028 adopted by the Council on November 9, 1989 and the HRA on
November 9, 1989 by Resolution No. 89-1119-1. The plans were most recenfly amended by
Resolution C.F. No. 97-668 adopted by the Council on May 28, 1997 and by Resolution 97-5/28-9
adopted by the HRA on May 28, 1997, and further amended by Resolution C.F. No. 97-1191 adopted
by the Council on September 24, 1997 and by Resolution 97-9/24-2 adopted by the FTRA on
September 24, 1997.
B. Crea6on of Block 4 Redevelopment Tax Increment District
This tas increment plan relates to the creation, under Minnesota Statutes Section 469.174,
Subd. 10 of the Block 4 Redevelopment Taac Increment District (the "District"). Prior to the creation
of the District, Block 4 will be removed from the 5eventh Place Tas Increment Financing District
which was originally created in 1978 (the "Seventh Place DistricP').
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C. Need and Public Purpose
It is necessary that the f�RA exercise its powers under state law to develop, implement, and
finance a progtam designed to encourage, ensure and facilitate the development of the property, This
development will further accomplish the public purposes spec�ed in this Section.
The existing land use activities on Block 4 are blighting and constitute an underutilization of
the land. The Project will provide land necessary for MNII_IC to construct a new corporate
headquarters, on the block adjacent to their e�sting headquarters, which will retain 2,200 jobs in
downtown Saint Paul. In addirion, the City's taY base wili be increased by the construction of the
office tower and pazking ramp. The existing buildings on Block 4 have an estimated mazket value of
$5,377,200, as valued by the county, and the new office tower and pazking ramp will have a
constiuction cost of approximately $65,000,000.
II. Obiectives of the ffi2A for the improvements in the Block 4 District area
A. Retain and provide job opportunifies for Saint Paul residents.
The Project will result in the retention of approximately 2,204 jobs in downtown Saint Paul,
and it is expected that M1VfLIC will �pand and wntinue to grow, adding approximately 2,000
additional new jobs to the City in the ne�t ten years.
B. To redevelop underused property.
Block 4 is a site that has been underutilized for many years. There are three existing
buildings on the site, two of which are structurally substandazd (see description under Section III
below). Presentiy, 75% of the block is biighted and underutilized, which includes 50°l0 of the block
that is occupied by buildings that are over 50% vacant and functionally obsolete, and 25% of the
biock that is occupied by a surface parking lot. A surf'ace pazking lot is an underutilization of a pazcel
which is within a couple of blocks of the core of downtown Saint Paul.
In order to protect past investments and remain competitive, the Block 4 Redevelopment Taa�
Increment Financing District needs to be created, to provide additional public investment to bolster
employment opportunities, to solidify downtown as a cohesive o�ce retaii center, and to imQrove
pedestrian circulation and to develop accessibie parking.
C. Provide Parking
The parking gazage to be constructed on Block 4, although privately owned, will include
approxunatety 1,000 parking spaces, and may be availabie for general public use when not in use by
the private owner.
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D. Expand the ta�c base of the City of Saint Paul.
It is eacpected that the taYable mazket value of pazcels on Block 4 wiil increase by
approximately $32,122,800 once the new office building and parking ramp is placed in service,
resulting in a total new mazket value of approximately $37,SOQ000. This value consists of
$31,SOQ,000 for 35q000 squaze feet of office space in the office building, plus $6,000,000 for the
pazldng ramp. The total existing market value of all buiidings located on Biock 4 is $5,377,200.
E. Remove blight within downtown Saint Paul.
The Block 4 site is located in downtown Saint Paul. Block 41ies between Robert, Siaih, and
Minnesota Sueets and Seventh Place. Two of the three buildings on the biock are shucturally
substandard (see further description in Section III below), and those two buildings aze over 50%
vacant. The existing buildings will be removed in the renovation process, and replaced with a new
privately consiructed office-building and Quking ramp, substantially improving downtown St. Paul.
II7, Classification of the District
The HRA and the City, in determining the need to create a tax increment financing district in
accardance with Section 469.174, find that the District is a redevelopment distdct pursuant to
Minnesota Statutes, Section 469.174, Subd. 10 hecause (I) pucels consisting of 74% of the azea of
the District are occupied by buildings, streets, utilities or other improvements and (2) more than 50%
of the buiidangs are structurally substandard; and these conditions are reasonably distributed
throughout the geographic area of the District.
The Disttict cantains 4 parcels of land totaling 90,000 square feet of which 100% is occupied
by either buildings, streets, utilities or other improvements. A total of 3 buildings aze located within
the Aistrict. Preliminary independent real estaie appraisals (which aze on file in the offices of the
HI2A) of two buIldings located on Block 4 support the conclusion that boch of them aze struchually
substandard. More specificaliy, reports prepared by real estate professionals show that, in connection
with the Bremer Bualding, the cost to bring the building up to code would be appro�mately
$3,700,000, which is more than 15% of the cost of constructing a similar building on the site
(approximately $10,50Q000). In addition, a report by real estate professionals with regard to the
Metropolitan Building came to the conclusion that the cost of bringing thaY building up to code would
be approximately $4,800,OD0, which is more than 15°10 of the cost of constructing a similaz building
on the site (approximately $16,800,000).
In addition, the District meets the requirements of a redevelopment district pursuant to
Minnesota Statutes, Secrion 469.176, Subd. 4; because at least 9�% of the revenues derived from taY
increments from the District will be used to finance 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 include acquiring properties and adjacent parcels, demolirion of structures,
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clearing of land, and iastallation of utiliries, roads, sidewalks and parking faciliries for the Districk.
The allocated administrative costs may also be included in the qualifying costs.
IV. Description of the development program for the Block 4 District.
The development pro�am consists of the development of the site to provide a buildable site
for a parking gazage and an office tower on Block 4 in the District. This will require expending taY
inctement for eligible costs which include: acquisition of land; relocation of certain e�sting
operations; demolition of existing structures; installation of infrastruchue and skyway reconnections
including temporary covered access; geo-technical soil cozrections; and environmental remediation,
including asbestos removal; contracting for professional services essential to redevelopment activities;
financing related expenses and funding administrative functions. In addition, future development at
the site may ailow the use of YaY increments to pay for additional public costs incurred in the
construction of the pazking ramp, the costs of utility extension, lighting, sidewalks, streetscapes and
road improvements.
A. Estimated cost of redevelopment project.
The estimated totai cost of the new activities to be undertaken in the District is $80,000,000,
broken down as follows:
Office Tower Construction/Other
Site Improvements
$50,000,000
Pazking Ramp Construction I5,000,000
Acquisition of existing block, demolition, 15,000,000
removal or remediation of hazardous substance,
and relocation
TOTAL
$80.000_000
It is anticipated that the initial public costs of the Project wili be $15,000,000, and will inciude
amounts necessary to: acquire the project block; demolish exisring improvements; remove or
remediate asbestos and contaminated soil; remove or remediate any other hazardous materials;
remove foundations and footings; geo-technicai soil corrections; rough grading of the project block;
relocation of public and private utilities; relocation of present owners/tenants of the project block; and
skyway reconnections including temporary covered access. To the extent that public costs exceed
� The cost of the conshuction of the parking ramp may include sufficient structural footings, support and load-
bearing capacity to pemrit the construcfion of a comparable sewnd office tower above the parking ramp at some
point in the future. Such costs are not reimburseable from tas increments.
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$15,000,000, MNILIC is obligated to pay such costs. Future development at the site may allow the
use of ta�c increments to pay for additional public costs incurred in tfie construction of the pazkin�
ramp, the costs of utility eactension, lighting, sidewalks, streetscapes and road improvements.
The costs set forth above aze estimates and the amounts allocated to any item may be
reallocated among any of the ottter items set forth above, provided that the total principal amount of
the costs for the items specified will not exceed $80,000,000, without formal modification this plan.
B. Incur costs and expenses connected with financing activities.
It is anticipated that the HRA will issue its t�able taac increment note to finance $I5,000,000
of public costs. Note issuance costs plus other financing related costs, and legal expenses, aze
anticipated to total approximately 1% of the principal amount of the Note. In addition, future
development at the site may allow the use of taY increments to pay for additional public costs incurred
in the construction of the pazking ramp, the costs of utility eactension, lighting, sidewalks, streetscapes
and road improvements.
C. City and HRA Annual Budget
At the time of final approval of the issuance of debt, the I3RA will adopt a more detailed
budget including a financing and spending plan that will further detail the costs and financing
activities of A and B above. Addiuonally, each year as part of the City and HRA annual budget
process, the detaited budget may be amended. As part of the annual budget process, the School
Board and County will be contacted to give any comments on the Tax Increment Financing Plan
which would include original plans and any annual budget amendments.
V. Description of contracts entered into at the time of �reparation of the Plan
Section 469.175, Subd. 1(3) requires this plan to contain a list of any development
activities proposed to take place within the project, for which contracts have been entered into at
the time of the preparation of this plan. At the time of the preparation of t}iis plan, the HRA, the
City or the Port Authority have entered into the following contracts:
(z) Activity: Appraisal of existing businesses
Contractor: C.R. Pelton & Associates, Inc.
Cost: Approximately $13,335
Estimated Completion Date: June, 1998
(ii) Activity: Relocation Consulting
Contractor: Conworth, Inc.
Cost: $65.00 per hour, not to exceed total of $67,500
Estimated Completion Date: September, 1998
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VI. Descriptian of ofher types of development activities which can reasonablv be espected to
take ulace within the Block 4 Arena District Project
Development activities in the District, wluch may require the e3cpenditure of taY increments,
will consist of activiries necessary and ancillary to promoting and ma�cimizing the above ob}ectives
set forth in Section II.
VII. Cost of the Project and descripfion of the Block 4 Redeveloement Taa Increment
District,
The following, as required hy Section 469175, Subd. 1(5), aze estimates of the (i) cost of the
Project, including administration expenses; (ii) amount of bonded or note indebtedness to be incurred;
(iii) sources of revenue to finance or otherwise pay public costs; (iv) the most recent net tax capacity
of taacable real property within the tax increment financing district; (v) the estimated captured net taY
capacity of the ta� increment financing district at completion; and (vi) the duration of the ta3c
increment financing districYs existence.
A. Cost of the Project, including administrative expenses.
The total cost of the Project is estimated at $80,000,000 plus administrative charges in an
amount up to 10% of the taY increment expenditures. In addition to the upfront wsts, an additional
cost of the Project will be a payment in the amount of approximately $57,000 per year tluough 2008,
to AMSAC, as the insurer of bonds presenfly outstanding and secured by taY incremenu from the
Seventh Place District This payment will compensate AMBAC for the decrease in increments from
the Seventh Place District that will occur as a result of removing Block 4 fram that district.
B. Amount of bonded indebtedness to be incurred.
The I-IRA shall be the issuer of a taa�able t� increment note in 1997 in the aggregate amount
of $15,000,000 to finance the public costs of development on Block 4. The HRA may, after the
initial issuance of the note, issue refunding bonds or notes for putposes of refmancing such
indebtedness.
C. Sources of revenue to finance or otherwise pay project costs.
The following aze the likely sources for funding the total Pro}ect, includang the taY increments
which will be pledged to the bonded indebtedness:
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Tas IncreEnents
Ta�c increments aze anticipated to equal $1,690,580 annually. The HItA hereby
determines that it will use 100% of the captured net taY capacity of the property in the District
to carry out the development program described above. All taY increments will be pledged
first to the payment of a portion of the administrative expenses of the District, second to the
payment of the AMBAC payment described in A above, third to the payment (including
prepayment) of debt service on the note described in B above, fourth to the payment of the
remainder of administrative expenses of the District, and fifth to other eligible costs which
wiil consist of the costs described in Section IV.
ii. Develooer Financing
MMI,IC wiil pay the total cost of construction of the office tower and parking ramp,
estimated to be $65,000,000. Future development of the site may allow the use of taY
increments to pay for certain public costs incurred by MNII�IC in this regazd, as set forth in
Section IV hereof, and as further set forth in the Development Ageement between the HRA,
the Port Authority and MNII.IC.
iii. Investment inwme
Certain interest earnings from the taat increments, if any, will he a source of revenue
to pay project costs. A current estimate of such earnings is not available.
D. The most recent net t� capacity of taxab�e real property within the t�
increment financing district.
At January 2, 1991 the total tas capacity of properry pazcels to be included in the District was
$252,728. Of the $5,377,200 total mazket value, $1,980,720, or 37% of the total, is attributable to
buildings on Block 4, all of which will be removed in connection with the development pursuant to
this Plan. The $3,396,480 of market value attributable to the land is assumed to remain constant.
The original tax capacity and TaY Rate are calculated in accordance with Minnesota Statutes, Section
469.174, Subd. 7 and Section 469.177, Subd. 1.
E. The estimated captured net tax capacity of the tax increment financing district
at completion.
The construction of the office tower and pazking ramp is expected to result in 350,000 square
foot office building and 1,000 sta11 pazking garage with an aggregate assessed value of $37,500,000.
Assuming land values remain constant at $3,396,480, the increase in mazket value is estimated at
$32,122,800. Applying a 3.4% tax capacity rate to the building and ramp and a 4% to the land results
in estimated captured tax capacity of approximately $1,159,520 assessed in the year 2001 and payable
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in the year 2002, the year following expected compietion of construction of buildings. There will be
a partial year's coliection of tax increment assessed in the yeaz 2000 and payable in the year 2001.
This capiured taY capacity is calculated in accordance with Minnesota Statutes, Section 469.174,
Subd. 4 and 469.177, Subd. 2.
F. The duration of the tax increment financing district's existence.
The request for certification of the District will be made in 1947. The first taac
increments are anticipated to be generated for taxes payable in the yeaz 2041. The duration of
the District will run 25 years from the first receipt by the City of tas increments, which wili be
through calendaz yeaz 2026. The HRA does, however, reserve the right to decertify the Disuict
prior to the legaily required date.
VIQ. Alternate estimates o1' the impact of the taz increment financing on the net ta4
capacities of a}i 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, the total market value of which the City of Saint Paui
contributes approximately 45%.
c. The Housing and Redevelopment Authority of the City of Saint Paul, whose
boundaries aze coterminous with those of the Ciry of Saint Paul.
d. The Port Authority of the City of Saint Paul, whose boundaries are coterminous with
those of the City of 5aint Paul and whose powers to levy and use property t�es aze limited.
e. Metropolitan authoriues, such as the Metropolitan Council, Metropolitan Airports
Commission, Metropolitan Waste Control Commission, and the Metropolitan Mosquito Control
Disuict. Of these, oniy the Metropolitan Council and the Metropolitan Mosquito Control District
cturently levy taxes on real estate.
The HRA is required by Minnesota Statutes Section 469.175, Subd. 1(a)(6) to make stazements
relative to the akernate estimates of the nnpact of the tas increment financing on the net tax
capacities of ali t�ing jurisdictions in which the tax increment financing district is located in
whole or in part.
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Impact on Taaing Jurisdictions
Under the assumption that the estimated captured net t� capacity would be available to
the t�ing jurisdictions without creation of the District, creation of the District will seive to deny
these taxing jurisdictions the taxes from the captured net ta7c capacity in the amount estimated in
Table 1 below. Note the District to be created is currentiv already within the Seventh Place
District which ex ires in 2008. Therefore, the creation of this new District will den the taYina
iurisdictions those ta�ces only from the years 2009 to 2026.
Table 1
Cuirent Fstimated Annual Loss to Tabng Jurisdictions
Ta�ne Jurisdiction T.C. Rafio Pacert Captured Incremart Present-2009/ 2009-2026
City of St Paul 42,733 293 495,340 0 8,420,750
Runsey County 36.714 252 426,026 0 7,242,942
SchoolDistrict#625 59.491 40.8 689,'757 0 11,725,869
O[her 6 4.7 79.457 0 1,350,769
145.802 100 1,690,580 0 28,739,860
IX. Studies and analvsis used to determine need for tax increment financing,
The FIRA and fhe City have determined that the proposed redevefopment of Block 4 would
not reasonabiy be expected to occw solely through private investment within the reasonably
foreseeable future and that the increased market value o£ the site that could reasonably be eapected to
occur without the use of taY increment fmancing would be less than the increase in the mazket value
estimated to result from the proposed development after subh Yhe present value of the projected
tax increments for the m�imum dwation of the district permitted by the plan.
The HRA anc3 the City made this finding in resolutions adopted on November 12, 1997 based
on data collected and presented to the Board by IIRA staff.
The studies and analyses used to make the determination that the proposed development in the
opinion of the City would not reasonably be expected to occur tk�rough private investment within the
foreseeable future, and therefore the use of tas increment is deemed necessary, are as follows:
(a) The Greater Saint Paul Building Owners and Managers Associations 1996
Annual Office Marketing Report indicates that the Net Rate for Class A office space ranges
from a Iow of $8.10 to $ I4.50 per squaze foot. This study demonstrates that in order to
provide the development of competitive Class A office space, there needs to be public
financial participation. The Towle Report's 1996 Office Market Update also substantiates the
market forces driving the lease rates.
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(b) The Project is consistent with the guidelines set forth in the "Saint Paul on the
Mississippi Development framework" particulaziy its ten principals.
X. Identification of all parcels to be induded in the District,
Attached hereto in Appendix A is a list of the Properry Identificarion Numbers (or legal
descriptions) for all properties to be included in the District, a map showing the Seventh Place
Redeveiopment Project azea (as most recently amended), the District aad the existing properties, and
a legal description identifying the boundaries of the District.
XI. District administration and annual disdosure.
Administration of the District will be the responsibiliry of the City of Saint Paul. Tax
increments will be deposited into interest bearing accounts sepazate and distinct from other funds of
the City. Tas increments will be used only for activities described in this tax increment plan.
The City will report annuaily to the State Auditor, county boazd, school boazd and
Department of Revenue regazding activities in the District as rec}uired by Section 4b9.175,
subdivision 5 and subdivision 6 and will include information with regazd to the Disuict in the data
necessary to comply with subdivision 6a. With regazd to the local contribution as discussed in Section
�VIII, the City will file necessary reports as required by the Depariment of Revenue.
XII. Modifecations to District
In accordance with Minnesota Statutes, Secuon 469.175, Subd, 4, any reduction or
enlargement of the geogaphic area of the Project or tax increment financing district; increase in
amount of bonded indebtedness to be incurred, including a determination to capitalize interest on debt
if that determination 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 tax capaciry to be retained
by the City; increase in total estimated taY increment expenditures; or designation of additional
property to be acquired by the City shall be approved upon the notice and after the discussion, public
heazing and findings required for approval of the original plan. The geographic area of a tax
increment financing district may be reduced, but shail nat be enlazged after five years following the
date of certification of the original ta7c capacity by the county auditor.
XIII. Administrative Expenses
In accordance with Minnesota Statutes Section 464.174, Subd. 14; and Minnesota Statutes
Section 469176, Subd. 3 administrative expenses means ail expenditures of an authority other than
amounts paid for the purchase of land or amounts paid to contractors or others providing materials
and services, including architecturai and engineering services, directly connected with the physical
development of the real property in the District, relocation benefits paid to or services provided for
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persons residing or businesses located in the District or amounts used.to pay interest on, fund a
reserve for, or sell at a discount bonds issued pursuant to Section 469.178. Administrative expenses
also include amounts paid for services provided by bond counsel, fiscal consultants, and planning or
economic development consultants. Administrative expenses of the District will be paid from ta��
increments; provided that no taY increment shall be used to pay any administrative expenses for the
Project which exceed ten percent of the total taac increment expenditures authorized by the taa�
increment financing plan or the total taa� increment expenditures for the Project, whichever is less.
Pursuant to Minnesota Statutes Section 469.176, Subd. 4h, t� increments may be used to
pay for the county's actual administrative expenses incurred in connection with the District. The
counry may require payment of those expenses by February 15 of the year following the yeaz the
expenses were incurred.
XIV. Necessarv Improvements in the District
No taac increment shall be paid to the City after three years from the date of certification of the
originai net taY capacity by the County Auditoi unless within the three-year period:
(1) bonds have been issued in aid of the Project pursuant to Section 464.178 of the TIF
Act or any other law, except revenue bonds issued pursuant to Minnesota Statutes,
Section 469.159 to 469.165;
(2) the City ar HRA has acquired property within the District; or
(3) the City or f�ZA has constructed or caused to be constructed public improvements
within the District.
The bonds must be issued, or the City or HRA must acquire properry or conshuct or cause
public improvements to be conshucted by approximately November I, 2000.
Pursuant to Minnesota 5tatutes, Section 469.176, Subd. 6,
if, after four years from the date of certifzcation of the original tax capacity of the taz
increment financing district purszrant to �nnesota Statutes. Secfron 469.177, no demolition,
rehabilitation or renovafron of property or other site preparation, including qualified
improvement of a sireei adjacent to a parcel bui not insfallation of utility service including
sewer or water systems, has been commenced on a parcel Zocated within a fca increment
financing districi by the authority or by the owner of the parcel in accordance with the tca
increment fi»cmcing plan, no additional tax increment may be taken from thai parcel and the
original tax capacity of that paz-cel shall be excluded fiom the originczl tca capacity of the tczx
increment financing district. If the authority or the owner of the parcel subsequenfly
commences demolition, rehabilitation or renovation or other site prepat on that parcel
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including improvement of a streef adjacent to ihat pcncel, in accordance wiih the tae
increment financing plan, the authority shall certify to the county auditar in the annual
disclosure report thuf the activity has commenced The county auditor shall cerfrfy the tctt
capacity thereof ar most recently certified by ihe commissioner of revemre cnzd add it to the
original tar capacity of the tax if:crement financing district. The caunty auditor must enforce
Ij72 �JYOVISlOfl.S Of flllS SI[IICIiVIS10Yl.. FOY jlltY�JOS2S Of lIt1S SUIIti�IVIS1071� qual�ed improvements
are limited to (I) corzrtruction or opening of a new street, (2) relocation of a street, and (3)
substarztial reconshuction or rebuilding of an existing streef.
The City or I-Il2A or a property owner must begin making improvements to parcels within the
District by approximately November, 2001.
Pursuant to Minnesota Statutes, Section 469.1763, Subd. 3, revenues derived from tax
increments are considered to have been spent on an activity within the Dastrict only if one of the
foliowing occurs:
1. Before or within ftve years afier cerfification of fhe District, ihe revenues are actually
paid to a third party with respect to the activity;
2. Bonds, the proceeds of which must be used to fincmce the activity, are issued and sold
to a third party befare or within fzve years after certification of the District, the revemres are spent to
repay the Bonds, and the proceeds of the Bonds either are, on the date of iss�{ance, reasonably
expected to be spent befare the end of the Zatter of (i) the frve year perioc� or (ii) a reasonable
temporary period within the meaning of the use of that term unrler Section 148(c) (1) of the Iniemal
Reverrue Code, ot dzposited in a reusonably required resetve or replacement fund,�
3. Binding contracts with a third party are entered into for perfo»nance of the aciivity
before or wifhin ftve years afier certiftcation of the Disti and the revemres are spent under the
contractual obligation; or
4. Costs with respect ta the activity are perid before or within five years after certifzca&on
o,f the District and the revenues are spent to reimburse a party for payment af the costs, including
interest on unreimbursed costs.
Therefore, one of the above four events must occur by approximately November, 2002.
XV. Use of Taz Increment
Ail revenues derived from taY increment shall be used in accordance with this tas increment
financing plan, and pursuant to Nfinnesota Statutes, Section 469176, Subdivisions 4 and 4j.
XVI. Notification of Prior Planned Improvements
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Pursuant to Minnesota Statutes Section 469.177, Subd. 4, the City has reviewed the area to
be included in the District and has found properties for which building permits have been issued
during the 18 months immediately preceding approval of the Plan by the City. Therefore, the county
auditor shall increase the original tax capacity of the District by the valuation of the improvements for
which the buIlding permits were issued.
XVII. Egcess Tax Increments
Pursuant to Minnesota Statutes 5ection 469.176, Subd. 2, in any year in which the tax
increment exceeds the amount necessary to pay the costs authorized by the tax increment plan,
including the amount necessary to cancel any tax levy as provided in Minnesota 5tatutes, Secrion
475.61, Subd. 3, the City shall use the excess amount to do any of the following:
1. prepay the outstanding bonds or notes;
2, discharge the pledge of tax increment therefor,
3. pay into an escrow account dedicated to the payment of such bonds; or
4. retum the excess to the County Auditor for redistribution to the respective taYing
jurisdictions in proportion of their tax capacity rate.
XVIII. Lucal Contribution Requirement
For taac increment financing districts which request certification after 7une 30, 1994,
Minnesota Statutes, Section 273.1399, Subd. 6(d) provides that the City may be exempt from local
government aid ar homestead and agricultural credit aid penalty if the HRA and/or the City makes a
local contribution to the Project equal to five percent of the taY increment. The HIZA and the City
elect to make the local contributions in lieu of the state aid penalty. Five percent of the tas
increments expected to be collected from the District annually, is approximately $86,000. The HI2A
and the City will either make yeazly contributions, or a combination of yeariy contributions and an
upfront contribution. If an upfront contribution is made, it will be paid prior to September 31, 1999.
Pursuant to Section 273.1399, Subd. 6(d)(2), if the FIRA or City fails to make the requited
contribution for any year, the state aid reduction will apply for that yeaz. The state aid reduction will
be equai to the greater of (A) the required local contribution (5% of taJ� increments collected that
year) or (B} the amount of the aid reduction that applies under Subdivision 3 of Section 273.1399.
XIX. Fiscal Disparities
The City and the City have elected to compute Fiscal Disparities contribution for the District
in accordance with Section 469177, subdivision 3, paragraph a.
XX. Requirements for Agreements with Develoner.
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Pursuant to Minnesota Statutes, §469.176, subd. 5, no more than 25%, by acreage, of the
property to be acquired in the District as set forth in the Tax 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 or City having, prior to acquisition in
excess of 25% of the acreage, concluded an agreement for the development or redevelopment of
the property acquired and which provides recourse for the HRA or City should the development
not be completed.
XXI. Assessment Apreement.
Pursuant to Minnesota Statutes, §469.177, subd. 8, the F�tA or City may enter into an
agreement in recordabie form with the Developer of property within the District which
establishes a minimum mazket value of the land and completed improvements for the duration of
the District. Such assessment agreement must be gresented to the assessor who sha11 review the
plans and specifications for the improvements consttucted, review the market value previously
assigned to the land upon which the improvements are 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 mazket value
agreement. It is not anticipated that an assessment agreement will be executed by MMI,IC in
connection with this Project.
X�I. Deveionment aad Job Creafion.
To the extent applicable, the HRA or City agrees to comply with Minnesota Statutes,
§116J.991, which states that a business receiving state or local government assistance for
economic development or job growth purposes, including tax increment financing must create a
net increase in jobs and meet wage level goals in Minnesota within two years of receiving
assistance.
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jlist of pazcels in new tax increment district, map of district and map of project azea]
7581630
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BLOCK 4
PROPERTY IDENTIFICATION NUMBERS
Biock bounded by Seventh Place, Robert Street, Sixth Street and Minnesota
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06282212-0105
06282212-0106
06282212-0017
06262212-0018
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MODIFICATION TO TAX INCREMENT
FINANCING PLAN RELATING TO
TI� SEVENTH PLACE TAX INCREMENT FINANCING DISTRICT
ORIGINALLY CREATED ON NOVEMBER 16, 1978
Dated: November 12, 1997
WHEREAS, the City of Saint Paul, Minnesota (the City) and the Housing and
Redevelopment Authority of the City of Saint Pau1(the "HRA"), on November 9, 1989
approved the Tas Increment Financing Plan for the Seventh Place Redevelopment Project (the
"Plan") relating to the Seventh Place Taac Increment Financing District originally create in 1978
(the "District"); and
WF-IEREAS, it has been proposed by the HRA that the following pazcels of land (the
"Removed Parceis") be deleted from the District: 06282212-0105, 06282212-0106,
06282212-0017 and 06282212-0018.
NOW THEREFORE, the Plan is hereby modified as follows:
The Removed Parcels are hereby deleted from the District.
Except for the deletion of the Removed Pazcels, the Plan and District shall remain in full
force and effect for all other purposes without change or modification except as provided hereby.
This amendment to the Plan does not create or enlarge an existing tax increment
financing district. There will be no new property from which tax capacity will be caphued. The
duration of the District will not change.
1590590.01