V.3. Public Hearing on Property Tax Abatement Related to Public Infrastructure Improvement; BishopApril 21, 2020 Council Report 2020-025
PUBLIC HEARING ON PROPERTY TAX ABATEMENT RELATED TO PUBLIC INFRASTRUCTURE IMPROVEMENT
Proposed Action.
Staff recommends that the Council approve the following motion: Approve Resolution 2020-018
Approving Property Tax Abatement Related to Public Infrastructure Improvements in the City of
Hopkins.
Overview:
The City is completing mill and overlay projects on 1st Street North, North Central Business
District Avenues and in the Maetzold Field lot in 2020 with a project cost of $450,000. The
City’s Capital Improvement Plan also includes a mill and overlay project in the Knollwood
Neighborhood and a trail segment in 2021. The City’s 2020A Bond issuance will include
$475,000 for mill and overlay under tax abatement authority. (The bond amount includes cost of
issuance and capitalized interest).
In order to grant tax abatement for a public improvement, the City is required to hold a public
hearing on the amount of the abatement to be granted, identify the properties from which they
will abate the City’s portion of the taxes and describe the public purpose for granting the
abatement. The public purpose and the required findings are outlined in the attached resolution.
The affected parcel is shown on the accompanying map. The parcel was listed in the public
notices as required by Statute and is located in the vicinity of the improvements being completed.
This parcel was selected since it was a larger tax payer in the immediate area, was not currently
located in a TIF district and is not likely to be included in a future TIF district.
Primary Issues to Consider
•None
Supporting Information:
•Resolution No. 2020-018
•Map of Abated Property
________________________________________
Nick Bishop, CPA
Finance Director
Financial Impact $475,000 Bond Proceeds
Budgeted: Y/N Yes
Source: Tax Levy
Related Documents: Capital Improvement Plan
Notes:
CITY OF HOPKINS, MINNESOTA
RESOLUTION NO. 2020-018
RESOLUTION APPROVING PROPERTY TAX ABATEMENT
RELATED TO PUBLIC INFRASTRUCTURE IMPROVEMENTS
IN THE CITY OF HOPKINS
BE IT RESOLVED By the City Council (the “Council”) of the City of Hopkins, Minnesota (the
“City”), as follows:
Section 1. Background.
1.01. The City has contemplated granting a property tax abatement in order to aid in financing
certain public infrastructure improvements, including mill and overlay on 1st Street North, North Central
Business District Avenues, Maetzold Field Lot, and the Knollwood Neighborhood, construction of trails
within the City, and other similar projects (collectively, the “Project”), all pursuant to Minnesota Statutes,
Sections 469.1812 through 469.1815, as amended (the “Act”).
1.02. Pursuant to Section 469.1813, subdivision 1 of the Act, the City may grant an abatement of
all or a portion of the taxes imposed by the City on a parcel of property to pay for all or part of the cost of
acquisition or improvement of public infrastructure, whether or not located on or adjacent to the parcel for
which the tax is abated.
1.03. The City has identified one parcel located in the City, identified in EXHIBIT A attached
hereto (the “Abatement Property”), which will be benefitted by the Project and from which the City
proposes to abate all or a portion of the City’s share of taxes to help finance the Project, subject to all the
terms and conditions of this resolution (the “Abatement”). The Abatement Property is not located in a tax
increment financing district.
1.04. The City intends to issue one or more series of general obligation tax abatement bonds (the
“Abatement Bonds”) in the estimated maximum principal amount of $1,500,000 pursuant to the Act to pay
the costs of the Project. The Abatement Bonds are expected to be paid primarily through the collection of
Abatement revenues.
1.05. On the date hereof, the Council conducted a duly noticed public hearing on the Abatement at
which the views of all interested persons were heard.
Section 2. Findings.
2.01. It is hereby found and determined that the benefits to the City from the Abatement will be
at least equal to the costs to the City of the Abatement for the following reasons:
(a) The Abatement will help finance the Project, which is necessary to finance or
provide public infrastructure in a way that will strengthen the local economy, preserve natural
resources, and ensure a high quality of life for residents of the City.
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(b) The Project will help preserve and increase the value of the Abatement Property,
thereby helping to generate additional City tax revenues over the long term after the expiration of
the Abatement.
2.02. It is hereby found and determined that the Abatement is in the public interest for the
following reasons:
(a) The Abatement will increase or preserve tax base by stimulating development
and helping to maintain values in the area.
(b) The Abatement will finance and provide public infrastructure, which will protect
the general health and welfare of the community and contribute to the quality of life in the City
by maintaining public infrastructure and facilities in proper working order.
(c) The Abatement will provide residents of the City with access to improved
roadways and trails.
Section 3. Actions Ratified; Abatement Approved.
3.01. The Council hereby ratifies all actions of the City’s staff and consultants in arranging for
approval of this resolution in accordance with the Act.
3.02. Subject to the provisions of the Act, the Abatement is hereby approved and adopted subject
to the following terms and conditions:
(a) The term “Abatement” means the City’s share of the real property taxes generated
from the land and improvements on the Abatement Property, in the amounts described in this
Section:
(i) The aggregate Abatement paid by the City during the term of this resolution
will not exceed the amount necessary to pay all of the principal of and all or a portion of the
interest on the Abatement Bonds, up to a maximum amount of $1,500,000.
(ii) Notwithstanding anything to the contrary herein, the Abatement payable on
any August 1 and the subsequent February 1, combined, will not exceed the amount
produced by extending the City’s total tax rate for the applicable year against the tax
capacity of the Abatement Property, as of January 2 in the prior year.
(iii) In accordance with Section 469.1813, subdivision 8 of the Act, in no year
shall the Abatement, together with all other abatements approved by the City under the Act
and paid in that year, exceed the greater of ten percent (10%) of the City’s net tax capacity
for that year or $200,000 (the “Abatement Volume Cap”). The City may grant any other
abatements permitted under the Act after the date of this resolution, provided that to the
extent the total abatements in any year exceed the Abatement Cap, the allocation of
Abatement Cap to such other abatements is subordinate to the Abatements under this
resolution.
(b) The Abatement will be for a term of fifteen (15) years, and the City will collect
the Abatement in semiannual installments each August 1 and February 1, commencing
August 1, 2022 and continuing through February 1, 2036. The City will pay the Abatement
solely to finance the cost of the Project, through application of Abatement amounts toward debt
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service payments on the Abatement Bonds (including any bonds issued to refund the initial
Abatement Bonds).
(c) This resolution may be modified only with the prior written approval of the City,
and any modification is subject to Section 469.1813, subdivision 7 of the Act. Once the
Abatement Bonds are issued, this resolution may not be amended.
(d) In accordance with Section 469.1815 of the Act, the City will add to its levy in
each year during the term of the Abatement the total estimated amount of current year Abatement
granted under this resolution.
3.03. The Mayor and City Manager are authorized and directed to execute and deliver any
agreements, certificates or other documents that the City determines are necessary to implement this
resolution.
Adopted by the City Council of the City of Hopkins, Minnesota this 21st day of April, 2020.
Jason Gadd, Mayor
ATTEST:
Amy Domeier, City Clerk
A-1
EXHIBIT A
ABATEMENT PROPERTY
Parcel Identification Number:
19-117-21-21-0006
HP110-101 (JAE)
647090v2