V.1. Public Hearing on Amended Property Tax Abatement Related to Public Infrastructure Improvements; Bishop
May 1, 2018 Council Report 2018-052
PUBLIC HEARING ON AMENDED PROPERTY TAX ABATEMENT
RELATED TO PUBLIC INFRASTRUCTURE IMPROVEMENTS
Proposed Action
Staff recommends approval of the following motion. Approve Resolution 2018-039 Approving Amended Property Tax
Abatement Related to the Public Facility Improvements in the City of Hopkins
Overview
The City has awarded the contract for the 2018 Hopkins Pavilion Upgrade project and construction has begun. The
City has authority under Minnesota Statute § 469 to issue Abatement Bonds for the improvements. The bonds will
have a 15-year term.
In order to grant tax abatement for 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 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.
The City previously held a Public Hearing for Property Tax Abatements for this project at its July 31st, 2017 meeting
for $3,580,000. This was done early, to allow the City to provide a $550,000 guaranty for a Hopkins Youth Hockey
Association loan that is financing the project. The City had not completed final design, received bids or finalized
financing parameters before July 31st. These steps have been completed and the amount of bond proceeds needed and
related abatement amounts have increased. The project came in slightly over budget and the financing parameter were
adjusted and no longer include an internal loan between the Community Development and Pavilion Funds. The amount
of property tax abatement being considered tonight is $3,905,000.
Primary Issues to Consider
• None
Supporting Information
• Resolution No. 2018-039
• Map of Abated Properties
______________________________________
Nick Bishop, CPA
Finance Director
Financial Impact: $ 3,905,000
Budgeted: Y/N Y__
Source: Bond Funds
Related Documents: CIP
Notes:
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CITY OF HOPKINS, MINNESOTA
RESOLUTION NO. 2018-039
RESOLUTION APPROVING AMENDED PROPERTY TAX
ABATEMENT RELATED TO PUBLIC FACILITY
IMPROVEMENTS IN THE CITY OF HOPKINS
BE IT RESOLVED By the City Council of the City of Hopkins, Minnesota (the “City”), as
follows:
Section 1. Background.
1.01. The City owns an ice hockey and multipurpose facility known as the Hopkins Pavilion,
located at 11000 Excelsior Boulevard in the City (the “Facility”), and the Hopkins Youth Hockey
Association, a Minnesota nonprofit corporation (the “Association”), currently uses the ice arena within the
Facility (the “Ice Arena”) and rents space in the Ice Arena on an annual basis for its youth hockey activities.
The City has determined to finance the construction of certain improvements to the Facility (the
“Improvements”). The Association has agreed to contribute $1,000,000 to finance the Improvements and
Independent School District No. 270 has also agreed to contribute $1,000,000 to finance the Improvements.
1.02. Anchor Bank, N.A., a national banking association (the “Bank”), has agreed to loan
$950,000 to the Association (the “Loan”) for the Association’s contribution to the Improvements. As a
condition of providing the Loan, the Bank will require the City to guaranty up to $550,000 of the Loan,
provided the guaranty would be utilized only upon a default under the loan documents by the Association.
The terms of the guaranty are set forth in the Hopkins Pavilion Contribution Agreement (the “Contribution
Agreement”) to be entered into between the City, the Association, and the Bank.
1.03. The City has contemplated granting a property tax abatement in order to aid in financing the
Improvements, including the guaranty of up to $550,000 of the Loan, as required by the Bank, all pursuant to
Minnesota Statutes, Sections 469.1812 through 469.1815, as amended (the “Act”).
1.04. 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 provide access to such public facilities to residents of
the City, whether or not located on or adjacent to the parcel for which the tax is abated.
1.05. On July 31, 2017, the City Council of the City adopted Resolution No. 2017-053 (the
“Original Abatement Resolution”), which approved the abatement of property taxes for fourteen (14)
parcels located in the City in the maximum principal amount of $3,580,000.
1.06. The City has determined to modify the list of parcels for which property taxes will be
abated and to also increase the maximum abatement amount to $3,905,000. The modified list of parcels
is attached hereto as EXHIBIT A (the “Abatement Property”). The Abatement Property is not located in
a tax increment financing district. The City proposes to abate a portion of the City’s share of taxes to
finance the Improvements and to provide a guaranty of up to $550,000 of the Loan, subject to all the
terms and conditions of this resolution (the “Abatement”).
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1.07. The City intends to issue one or more series of its general obligation tax abatement
obligations in the approximate aggregate principal amount of $3,355,000 (the “Abatement Bonds”) to pay the
costs of the Improvements and has agreed to guaranty the payment of up to $550,000 of the Loan pursuant to
the Act. The Abatement Bonds and the guaranty are expected to be paid primarily through the collection of
Abatement revenues.
1.08. On the date hereof, the City Council conducted a duly noticed public hearing on the
Abatement, as modified, 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 improved public facilities in a way that will
strengthen the local economy, preserve natural resources, and ensure a high quality of life for
residents of the City.
(b) The Abatement will provide access to improved recreational services to residents
of the City.
(c) The Improvements 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 facilities, 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 access to improved recreational facilities to residents
of the City.
Section 3. Actions Ratified; Abatement Approved.
3.01. The City 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:
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(i) The aggregate Abatement paid by the City during the term of this resolution
will not exceed the amount necessary to pay the principal of the Abatement Bonds, up to a
maximum of $3,905,000.
(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. With respect to
Improvements to be financed with a portion of the proceeds of the Abatement Bonds, payment of
the Abatement will commence August 1, 2019, and continue through February 1, 2034. With
respect to the guaranty to be provided by the City for $550,000 of the Loan, payment of the
Abatement will not commence until the Association has defaulted in its payment obligations
under the Loan documents as provided in the Contribution Agreement and the City has been
provided with proper notice thereof by the Bank. Each time the Association defaults in its
repayment obligation, the City will be required to collect Abatement to pay the Loan. The City
will pay the Abatement solely to finance the cost of the Improvements (including the guaranty of
up to $550,000 of the Loan) through application of Abatement amounts toward debt 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 Bonds
are issued, this resolution may not be modified.
(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.
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Adopted by the City Council of the City of Hopkins, Minnesota this 1st day of May, 2018.
Molly Cummings, Mayor
ATTEST:
Amy Domeier, City Clerk
521655v1 JAE HP110-98 A-1
EXHIBIT A
ABATEMENT PROPERTY
Parcel Identification Numbers:
24-117-22-32-0138 24-117-22-34-0093 23-117-22-44-0021
25-117-22-22-0021 24-117-22-34-0100 24-117-22-31-0059
24-117-22-31-0055 24-117-22-34-0104 24-117-22-32-0097
24-117-22-33-0003 24-117-22-34-0105 24-117-22-43-0235
24-117-22-34-0092 24-117-22-34-0249
Excelsior BlvdExcelsior Blvd1st St NMainstreet1st St S11th Ave S9th Ave S8th Ave S17th Ave S12th Ave S13th Ave S7th Ave S9th Ave N8th Ave N7th Ave N17th Ave N16th Ave N15th Ave N11th Ave N14th Ave N12th Ave N10th Ave S10th Ave N2nd St S15th Ave SRenaissance Ct13th Ave N2nd St S2nd St SLegendIce Arena2018 Abatement Parcels