V.1. Public Hearing for Property Tax Abatement Related to Public Infrastructure Improvements; Harkess (CR2016-062)June 7, 2016 City Council Report 2016-062
PUBLIC HEARING FOR PROPERTY TAX ABATEMENT
RELATED TO PUBLIC INFRASTRUCTURE IMPROVEMENTS
Proposed Action
Staff recommends approval of the following motion: Adopt Resolution 2016-045 approving property tax abatement
related to public infrastructure improvements in the City of Hopkins.
Adoption of this motion will result in moving forward with selling bonds for the Parking Ramp renovations and Park
Improvements in Cottageville, Oakes and Valley Parks.
Overview
The City is moving forward with the above referenced projects in the amount of approximately $1.6 million. The
City has the authority under Minnesota Statute 469 to issue Abatement Bonds for the improvements. To meet the
City’s financing parameters, it is anticipated that the City will issue abatement bonds with a 15-year term.
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 parcels are shown on the accompanying map. All parcels were listed in the
public notice as required by Statute and are located in the vicinity of the improvements being completed. These
parcels were selected since they were the larger tax payers in the immediate area, were not currently located in a TIF
district and are not likely to be included in a future TIF district.
Primary Issues
None
Staff Recommendation
Staff recommends approval of the resolution and further recommends, along with the City’s financial advisor, that
we ask for a rating from Standard & Poors for the issue. The cost of the rating will be paid with bond proceeds.
Supporting Information
Resolution No. 2016-045
Map of abated parcels
______________________________
Christine M. Harkess, CPA, CGFM
Finance Director Financial Impact: $ 1,630,000 bond proceeds
Budgeted: Y/N Yes
Source: Bond Funds
Related Documents: CIP
N o t e s :
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CITY OF HOPKINS, MINNESOTA
RESOLUTION NO. 2016-045
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. Recitals.
1.01. The City has contemplated granting a property tax abatement in order to aid in financing
certain public infrastructure improvements, including but not limited to the 2016 road reconstruction projects
and various park improvements and improvements to City-owned parking facilities (the “Project”), which
will benefit certain property in the City, 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 construction of public facilities and to finance or provide public infrastructure, whether or
not located on or adjacent to the parcel for which the tax is abated.
1.03. The City has identified three parcels located in the City, identified in EXHIBIT A hereto
(the “Abatement Property”), which will be benefitted by the Project and from which the City proposes to
abate 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 its general obligation tax abatement bonds in the approximate
aggregate principal amount of $1,630,000 (the “Abatement Bonds”) to pay the costs of the Project pursuant
to the Act. 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, as set forth above.
(b) The Abatement will finance or 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.
(d) The Abatement will provide access to better-quality parks to residents of the
City.
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 a portion of the
interest on the Abatement Bonds, up to a maximum of $1,630,000.
(ii) Notwithstanding anything to the contrary herein, the Abatement payable on
any August 1 and 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 pay the
Abatement in semiannual installments each August 1 and February 1, commencing
August 1, 2017, and continuing through August 1, 2032. The City will pay the Abatement solely
to finance the cost of the Project, through application of Abatement amounts toward debt service
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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.
(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 Administrator are authorized and directed to execute and deliver any
agreements, certificates or other documents that the City determines are necessary to implement this
resolution.
Approved by the City Council of the City of Hopkins, Minnesota, this 7th day of June, 2016.
Molly Cummings, Mayor
Attest:
Amy Domeier, City Clerk
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EXHIBIT A
ABATEMENT PROPERTY
Parcel Identification Numbers:
1911721130005
2411722430237
2511722410001
.
Legend
Parcel_2016B_Abatement_Bonds
Created: 6/2/2016 RVH