CR 05-095 Tax increment District 1-3
CiTY OF
July 18, 2005
m
Council Report 2005-095
HOPKINS
TAX INCREMENT DISTRICT 1-3
Proposed Action
Staff recommends approval of the following motion: Resolution 2005-055. modifying the redevelopment
plan for Redevelopment Proiect 1 and establishing Tax Increment District 1-3 therein and adopting a tax
increment financing plan therefore. subiect to HRA approval ofHRA Resolution 430.
Overview
City staff has been working with both GPS Development, LLC, and The Cornerstone Group to facilitate
mixed use residential/retail projects on the property between Fifth and Eighth Avenues, north of
Mainstreet and south of First Street North. To facilitate these projects, staff is proposing that this
property be placed in a tax increment district. (A map is located within the plan document.)
State statute requires that a public hearing be held prior to a establishment of a tax increment district. The
Council previously held public hearings on this matter on June 21 and July 19. The subject item is a
continuation from the July 19 meeting. (The public hearing for this item has been closed.)
The proposed district would be a redevelopment TIF district. A property inspection report was prepared
by LHB with a determination that the subject area meets statutory qualifications for this type of district.
The Council has previously been provided a copy of this report.
The establishment of the district does not obligate the City nor HRA to provide tax increment assistance.
The Planning Commission approved a resolution on May 31, 2005, with a fmding that the proposed
district is in conformance with the City's Comprehensive Plan.
The City Council, acting as the HRA, will also need to take action on the establishment of the district.
This is being recommended for consideration at a special HRA meeting on July 26, 6: 15 p.m.
Supportinl! Documents
. Resolution 2005-055
. Modification to redevelopment plan for Redevelopment Project 1 and the tax increment plan for
the establishment ofTIF District 1-3 within Redevelopment Project 1, dated June 1,2005
. Zoning & Planning Commission Resolution RZ05-16
. Letters from Bradley Gunn, Leonard Street and Deinard, dated June 21, July 12, and July 19,2005
. Memo from Michael Fischer dated July 21,2005, re: property inspection
. Memo from Sid Inman dated July 21, 2005, re: review of Spider Development proposal, Block 64
Financial Impact: $ 0
N/A _ Budgeted: Y/N _ Source:
Related Documents (CIP, ERP, etc.):
Notes:
CITY OF HOPKINS
HEl\NEPIN COUNTY
STATE OF MINNESOTA
CouncIl member
introduced the following resolution and moved its adoption:
RESOLUTION NO. 2005-055
RESOLUTION ADOPTING A MODIFICATION TO THE REDEVELOPMENT
PLAN FOR REDEVELOPMENT PROJECT NO. I; AND ESTABLISHING TAX
INCREMENT FINANCING DISTRICT NO. 1-3 THEREIN AND ADOPTING A TAX
INCREMENT FINANCING PLAN THEREFOR.
BE IT RESOLVED by the City Council (the "CouncIl") of the City of Hopkms, Mmnesota (the
"City"), as follows:
Section 1.
Recllals
1.0 I. The Board of Commissioners (the "Board") of the Hopkms Housing and Redevelopment
Authority (the "HRA") has heretofore established Redevelopment Project No. I and adopted the
Redevelopment Plan therefor. It has been proposed by the HRA and the Clly that the City adopt a
Modification to the Redevelopment Plan for Redevelopment Project No. I (the "Redevelopment Plan
Modification") and establish Tax Increment Financing District No. 1-3 (the "District") therein and adopt a Tax
Increment Financing Plan (the "TIF Plan") therefor (the Redevelopment Plan Modification and the TIF Plan
are referred to collectively herein as the "Plans"); all pursuant to and in conformity with applicable law,
includmg Minnesota Statutes, Sections 469.00 I to 469.047 and Sections 469. 174 to 469.1 799, all inclusive, as
amended, (the "Act") all as reflected in the Plans, and presented for the Council's consideration.
1.02. The HRA and City have investigated the facts relating to the Plans and have caused the Plans
to be prepared.
1.03. The HRA and City have performed all actions required by law to be performed prior to the
establishment of the District and the adoption and approval of the proposed Plans, including, but not hmited to,
notlficatlOn of Henne pm County and Independent School DIstrict No. 270 having taxmgjurisdiction over the
property to be included in the District, a review of and written comment on the Plans by the City Planning
Commission, approval of the Plans by the HRA on June 7, 2005, and the holding ofa public hearing upon
published notice as required by law.
1.04. Certain written repol1s mcluding, the TIF application, Redevelopment and Blight Analysis by
LHB dated May 2005, Block 64 Redevelopment Relocation Plan by Wilson Development Services dated
January, 2005, Market Analysis Hopkms Main Street Residential Campus by GPS Financial Group dated
March 2005, (the "Reports") relatmg to the Plans and to the activities contemplated therein have heretofore
been prepared by staff and consultants and submitted to the Council and/or made a part of the CIty files and
proceedings on the Plans. The Reports include data, information and/or substantiation constituting or relating
to the basis for the other findings and determinations made in this resolution. The Council hereby confirms,
ratifies and adopts the Reports, which are hereby mcorporated into and made as fully a part of this resolution to
the same extent as if set forth in full herein.
1.05
The City is not modifying the boundaries of Redevelopment Project No.1.
SectIOn 2.
Findings for the Adoption and Approval of the Plans
2.01. The Council hereby finds that the Plans, are mtended and, in the judgment of this Council, the
effect of such actions will be, to provide an impetus for development in the public interest and accomplish
certain objectives as specified in the Plans, which are hereby incorporated herein.
SectIOn 3.
Fmdings for the Estabhshment of Tax Increment Financing Distnct No. 1-3
3.01. The Council hereby finds that the District is in the public interest and is a "redevelopment
district" under Minnesota Statutes, Section 469.174, Subd. 10 (a)(1).
3.02. The Council further finds that the proposed redevelopment would not occur solely through
private investment within the reasonably foreseeable future and that the increased market value ofthe site that
could reasonably be expected to occur without the use of tax increment financing would be less than the
increase in the market value esl1mated to result from the proposed development after subtracting the present
value of the projected tax increments for the maximum duration ofthe District permitted by the Tax Increment
Financing Plan, that the Plans conform to the general plan for the development or redevelopment ofthe City as
a whole; and that the Plans will afford maximum opportunity consistent with the sound needs of the City as a
whole, for the development or redevelopment of the District by private enterprise.
3.03. The Council further finds, declares and determines that the City made the above findings
stated m this Section and has set forth the reasons and supporting facts for each determination in wnting,
attached hereto as Exhlbll A.
3.04. The Hopkins Housing and Redevelopment Authonty elects to calculate fiscal disparities for
the District in accordance with Mmnesota Statutes, Section 469.177, Subd. 3, clause b, which means the fiscal
disparities contribution would be taken from inside the District.
Section 4.
Public Purpose
4.01. The adoption of the Plans confOlIDs in all respects to the requirements of the Act and will help
fulfill a need to develop an area of the City which is already built up, to remove, prevent and reduce blight,
bhghtif\g factors and the causes of blight, to prepare the area for redevelopment in accordance with the
Redevelopment Plan, to provide employment opportunities, to improve the tax base and to improve the general
economy of the State and thereby serves a public purpose.
Section 5.
Approval and Adoption of the Plans
5.01. The Plans, as presented to the Councll on this date, including without limitation the findings
and statements of objectives contained therem, are hereby approved, ratified, established, and adopted and
shall be placed on file in the office ofthe City Clerk.
5.02. The staff of the Clly, the City's advisors and legal counsel are authorized and directed to
proceed with the ImplementatIOn of the Plans and to negotiate, draft, prepare and present to this Council for its
consideration all further plans, resolutions, documents and contracts necessary for this purpose.
5.03 The Auditor of Hennepm County is requested to certify the ongmal net tax capacity of the
District, as described in the Plans, and to certify in each year thereafter the amount by which the origma1 net
tax capacity has mcreased or decreased; and the Hopkms Housing and Redevelopment Authority is authonzed
and dIrected to forthwith transmit this request 10 the County Auditor in such form and content as the Auditor
may specify, together with a list of all properties withm the District, for which buddmg permits have been
Issued during the 18 months immediately preceding the adoption of this resolution.
5.04. The City Clerk is further authorized and directed to file a copy of the Plans with the
Commissioner of the Minnesota Department of Revenue pursuant to Minnesota Statutes 469.175, Subd. 4a.
The motion for the adoption of the foregoing resolution was duly seconded by Council member
, and upon a vote being taken thereon, the following voted in favor thereof:
and the following voted against the same:
Dated: July 26, 2005
ATTEST:
City Clerk
Mayor
(Seal)
EXHIBIT A
RESOLUTION NO. 2005-055
The reasons and facts supporting the findings for the Modification of the Redevelopment Plan for Redevelopment
Project No.1 (pursuant to Minnesota Statutes, Section 469.001 to 469.047) and the adoption of the Tax Increment
Financing Plan (TIF Plan) for Tax Increment Financing District No. 1-3 (DIstrict), as required pursuant to Minnesota
Statutes, Section 469.175, Subdivision 3 are as follows:
1. Finding that Tax Increment Financing District No. 1-3 is a redevelopment district as defined in MS., Section
469.174, Subd. 10(a)(1).
The District consists of25 parcels, with plans to redevelop the area for housing and commercial purposes. At
least 70 percent of the area of the parcels in the District are occupied by buildings, streets, utilities, paved or
gravel parking lots or other similar structures and more than 50 percent of the buildings in the District, not
including outbuildings, are structurally substandard to a degree requiring substantial renovation or clearance.
(See Appendix F of the TIF Plan.)
2. Filldillg that the proposed development, ill the opinion of the City Council, would not reasonably be expected
10 occur solely through private investment within the reasonably foreseeable future alld that the increased
market value of the site that could reawl/ably he expected to occur without the u;e of tax illcrement
jil/allcillg would be less than the increase in the market value estimated to result from the proposed
development after subtracting the present value of the projected tax increments for the maximum duration of
Tax Illcrement Finallcing District No. 1-3 permitted by the TIF Plan.
The proposed developmellt. in the opinion of the City, would not reasonably be expected to occur solely
through private iI/vestment with ill the reasonably foreseeable future: This finding is supported by the fact
that the redevelopment proposed in this plan meets the City's objectives for redevelopment. Due to the high
cost of redevelopment on the parcels currently occupied by substandard buildings, the hmited amount of
commercial and for sale housing property for expansion adjacent to the existing project, the incompatible
land uses at close proximity, and the cost of financing the proposed improvements, this project is feasible
only through assistance, in part, from tax increment financing. The proposed development will clean up
blighted sites and remove substandard buildings in the City;s downtown are and continue with the
redevelopment of the area. The proposed development will also provide additional senior housing in the
community and therefore allow single-family homes to be available for new residents. The developer was
asked for and provided a letter and a proforma as justification that the developer would not have gone
forward without tax increment assistance. (See attachment in Appendix G of the TIF Plan.)
The iI/creased market value of the site that could reasollably be expected to occur without the use of tax
increment finallcillg would be less than the iI/crease ill market value estimated to result from the proposed
developmellt after subtracting the present value of the projected tax incrementsfor the maximum duration of
the TlF District permiued b)' the Plall: This findmg IS justified on the grounds that the cost of site and public
improvements and utihtles add to the total redevelopment cost. Historically, site and public improvements
costs in this area have made redevelopment infeasible without tax increment assistance. At the current time,
the site has an estimated $20 million in land acquisition, demolition and relocation costs. In addition, the site
requires from $3.5 million to $5 million for on-site structured parking to accommodate the buyers of the for
sale. housing. These two factors result in a cost per unit for land that greatly exceeds market conditions. The
tax mcrement is needed to reduce these costs and make them marketable. Therefore, the City reasonably
determines that no other redevelopment of similar scope is anticipated on this site without substantially
similar assIstance being provided to the development.
A comparative analysis of estimated market values both with and without establishment of the District and
the use of tax increments has been perfomled as described above. If all development which is proposed to be
assisted with tax increment were to occur in the District, the total increase in market value would be up to
$53,561,555. The present value of tax increments from the District is estimated to be $18,803,224. It is the
Council's finding that no development with a market value of greater than $34,758,331 would occur without
tax increment assistance in this district within 25 years. This finding is based upon evidence from general
past experience with the high cost of acquisition and public improvements in the general area ofthe District.
(See Cashflow in Appendix D of the TIF Plan.)
3. Finding that the Tax Increment Financing Planfor Tax Increment Financing District No. 1-3 conforms to
the general plan for the development or redevelopment of the municipality as a whole.
The Planning Commission reviewed the TIP Plan and found that the TlF Plan conforms to the general
development plan of the City.
4. Finding that the Tax Increment Financing Plan for Tax Increment Financing District No. 1-3 will afford
maximum opportunity, consistent with the sound needs of the City as a whole, for the development or
redevelopment of Redevelopment Project No.1 by private entelprise.
The project to be assisted by the TIF Distnct will result in increased employment in the City and the State of
Mmnesota, the redevelopment of substandard properties, increased tax base of the State and add a high
quality development to the City. Through the Implementation of the TlF Plan, the HRA and City will also
Increase the availability of safe and decent life-cycle housing in the City.
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As of June 1, 2005
Draft for City Council Review
MODIFICATION TO THE REDEVELOPMENT PLAN
FOR REDEVELOPMENT PROJECT NO.1
and the
TAX INCREMENT FINANCING PLAN
for the establishment of
TAX INCREMENT FINANCING DISTRICT NO. 1-3
(a redevelopment district)
fit
within
REDEVELOPMENT PROJECT NO.1
HOPKINS HOUSING AND REDEVELOPMENT AUTHORITY
CITY OF HOPKINS
HENNEPIN COUNTY
STATE OF MINNESOTA
Public Hearing: June 21, 2005
Adopted:
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EHLERS
& ASSOCIATES lNC
Prepared by: EHLERS & ASSOCIATES, INC.
3060 Centre Pointe Olive, Rosevllle, Minnesota 55113-1105
651-697-6500 fax: 651-697-6555 www.ehiers-inc.com
TABLE OF CONTENTS
(for reference purposes only)
SECTION I - MODIFICATION TO THE REDEVELOPMENT PLAN
FOR REDEVELOPMENT PROJECT NO.1. . .. . . . . . .. . . .. . . . . . . . . .. . .. . . . . . . .
Foreword .............................................................
A. Plan History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
B. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C. Statement of Need and Public Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
D. Statutory Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . . . .
E. Project Boundaries .................................................
F. Property Acquisition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
G. Redevelopment Project Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1-1
1-1
1-1
1-1
1-1
1-2
1-3
1-3
1-4
SECTION 11- TAX INCREMENT FINANCING PLAN
FOR TAX INCREMENT FINANCING DISTRICT NO. 1-3 ........................ 2-1
Subsection 2-1. Foreword.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . " 2-1
Subsection 2-2. Statutory Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . " 2-1
Subsection 2-3. Statement of Objectives ................................... 2-1
Subsection 2-4. Redevelopment Plan Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . " 2-1
Subsection 2-5. Description of Property in the District and Property To Be Acquired . 2-2
Subsection 2-6. Classification of the District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . " 2-2
Subsection 2-7. Duration ofthe District. . . . . . . . . . . . . .. . . . . . . . . . . . . . .. . . . . ... 2-4
Subsection 2-8. Original Tax Capacity, Tax Rate and Estimated Captured Net Tax Capacity
Valuellncrement and Notification of Prior Planned Improvements . . . . . . . . . . . . . . " 2-4
Subsection 2-9. Sources of RevenuelBonded Indebtedness ... . . . . . . . . . . . . . . . " 2-5
Subsection 2-10. Uses of Funds . . . . . . , . . . . . . . . . . . . . . . . . . . . . . .'. . . . . . . . . . . .. 2-6
Subsection 2-11. Fiscal Disparities Election.... . ............. . .. .. ........... 2-6
Subsection 2-12. Business Subsidies. . .. . . . . . . . .. . . . .. . " . . . . . . . . . " . . . .. " 2-7
Subsection 2-13. County Road Costs . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . .. 2-6
Subsection 2-14. Estimated Impact on Other Taxing Jurisdictions. . . . . . . . . . . . . . . " 2-8
Subsection 2-15. Supporting Documentation .................................. 2-9
Subsection 2-16. Definition of Tax Increment Revenues ........................ 2-9
Subsection 2-'17. Modifications to the District. . . . . . . . . . . . . . . . . . . . . . . . . . . . " . " 2-9
Subsection 2-18. Administrative Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2-10
Subsection 2-19. Limitation of Increment.. . .. . . . . .. . ... . . . . . . . . . . .. . . . . . ... 2-11
Subsection 2-20. Use of Tax Increment ...................... . . . . . . . . . . . . .. 2-12
Subsection 2-21. Excess Increments. ..... . . . . . . . . . " ... . . . . . . . . . . . . . . . . .. 2-12
Subsection 2-22. Requirements for Agreements with the Developer . . . . . . . . . . . . .. 2-13
Subsection 2-23. Assessment Agreements ................................. 2-13
Subsection 2-24. Administration of the District. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2-13
Subsection 2-25. Annual Disclosure Requirements ........................... 2-13
Subsection 2-26. Reasonable Expectations .... . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2-13
Subsection 2-27. Other Limitations on the Use of Tax Increment. . . . . . . . . . . . . . . .. 2-14
Subsection 2-28. Summary.............................................. 2-14
APPENDIX A
PROJECT DESCRIPTION ... . . . . . .. .. . . . . . . . .. . .. .. .. . . . . . . .. .. .. . . . . .. .. A-l
APPENDIX B
MAP(S) OF REDEVELOPMENT PROJECT NO.1 AND THE DISTRICT ............ B-1
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APPENDIX C
DESCRIPTION OF PROPERTY TO BE INCLUDED IN THE DISTRICT. . . . . . . . . . . .. C-1
APPENDIX D
ESTIMATED CASH FLOW FOR THE DISTRICT ..........................._.. D-1
APPENDIX E
MINNESOTA BUSINESS ASSISTANCE FORM ............................... E-1
APPENDIX F
REDEVELOPMENT QUALIFICATIONS FOR THE DISTRICT .................... F-1
APPENDIX G
BUT/FOR QUALIFICATIONS. .. . . . . . . . . . . ....... . . . . . ... . ..... . . . . .... .. .. G-1
SECTION I- MODIFICA TION TO THE REDEVELOPMENT PLAN
FOR REDEVELOPMENT PROJECT NO.1
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Foreword
Tbe following text represents a Modification to the Redevelopment Plan for Redevelopment Project No.1.
Tbis modification represents a continuation of the goals and objectives set fortb in the Redevelopment Plan
for Redevelopment Project No.1. Generally, the substantive cbanges include the establishment of Tax
lncrementFinancing District No. 1-3.
For fmiher information, a review of the Redevelopment Plan for Redevelopment Project No. I is
reconunended. 1\ is available from tbe City Clerk at the City of Hopkins. Other relevant information is
contained in the Tax Increment Financing Plans for the Tax Increment Financing Districts located within
Redevelopment Project No.1.
In addition the Redevelopment Plan for Redevelopment Project No.1 is bereby amended and supplemented
as follows:
A. Plan History
Redevelopment Project No.1 was originally created in 1971 as a federal urban renewal area. Redevelopment
Project No. 1 was subsequently modified numerous times. In 1989 tbe Housing and Redevelopment
Authority In and For the City of Hopkins (tbe "HRA") and the City of Hopkins (the "City") caused to be
prepared a Reorganization and Modification of Redevelopment Projects and Tax lncrement Financing
Districts dated November 7, 1989, which was approved by the City and the HRA (the" 1989 Modification").
The 1989 Modification contains a statement of the history of Redevelopment Project No. 1 and the
Redevelopment Plan. The Redevelopment Plan for Redevelopment Project No.1 was modified several times
after the 1989 Modification in connection with the creation or modification of tax increment financing
districts located within Redevelopment Project No.1.
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B. Definitions
Unless specifically defmed in this Modification, all capitalized tenus shall bave tbe meaning given to sucb
tel' us in the 1989 Modification. #-
C. Statement of Need and Public Purpose
A. The HRA reaffirms the statements of need and public purpose contained in tbe
Redevelopment Plan for Redevelopment Project No.1, and all modifications thereto. Tbe HRA further seeks
to achieve the following goals and objectives:
1. Acquire substandard or blighted areas and other real property for the purpose of removing,
preventing or reducing blight, blighting factors or the causes of blight;
2. Clear any areas acquired and install, construct or reconstruct streets, utilities and site
improvements essential to the preparation of the sites for redevelopment;
3. Provide a sufficient supply of adequate, safe and sanitary dwellings;
4.
Protect the health, safety, morals and welfare of the citizens oftbe City;
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Hopkins HRA
Modification to the Redevelopment Plan for Redevelopment Project No. I
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5. Encourage related development and redevelopment in order to protect and improve the tax
base and general economic vitality of the City, and
6. Assure that the long term housing needs of the City are met.
B. The HRA hereby reafiInns all fmdings contained in the Redevelopment Plan for
Redevelopment Project No. I, all amendments thereto, and all resolutions of the HRA or City approving the
same and specifically fmds for Redevelopment Project No. I that:
1. The land within the area of Redevelopment Project No. I would not be available for
redevelopment without the financial aid to be sought under this Redevelopment Plan and corresponding
documents, including the Tax Increment Plan for Tax Increment Financing District No. 1-3;
2. The Redevelopment Plan for Redevelopment Project No. I will afford maximum opportunity,
consistent with the needs of the City as a whole, for the development of Redevelopment Project No. I by
private ente'l'rise; and
3. The Redevelopment Plan for Redevelopment Project No. I confolms to the general plan for
the development ofthe City as a whole.
C. The HRA reaffirms its finding that Redevelopment Project No. I is a "redevelopment project"
within the meaning of Minnesota Statutes, Section 469.002 subd. 14, of the HRA Act.
The factual basis for the above finding includes:
I. The HRA relies on the various studies, surveys and planning documents prepared in
connection with' the creation of Redevelopment Project No. I to the extent that subsequent development
activities have not cured the conditions that allowed designation of Redevelopment Project No. I as a
"redevelopment project."
2. In May of2005 LHB, Inc. ("LHB") conducted a study of building conditions in the portion
of the area of Redevelopment Project No. I proposed to be included in Tax Iucrement Financing District No.
1-3.. That study determined that a substantial percentage of the buildings in that portion of the area of
RedevelopmentProj~ctNo. I are structurally-substandard as defined in Minnesota Statutes, Section469.174,
subd. 10. Such findings and other evidence on file with the HRA support the conclusion that said portion of
the area of Redevelopment Project No. I is a "blighted area" within the meaning of Section 469.002,
subdivision II of the HRA Act. Data from the LHB study are on file with the Authority. These study results
will also be used when considering the establishment of Tax Increment Financing District No. 1-3.
D. Statutory Authority
The HRA is authorized under the the HRA Act to undertake and administer Redevelopment Project No.1,
and to finance Public Redevelopment Costs through issuance of bonds secured by Redevelopment Project
No. I revenues.
Hopkins HRA
Modification to the Redevelopment Plan for Redevelopment Project No. 1
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E.
Project Boundaries
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The boundaries of Redevelopment Project No. 1 are described in the existing Redevelopment Plan for
Redevelopment Project No. I and modifications thereto and are not being changed by this Modification.
F. Property Acquisition
The Authority may acquire any property within the area of Redevelopment Project No. I, or interests therein,
as the Authority may deem necessary or desirable to carry out the objectives of the Redevelopment Plan for
Redevelopment Project No. 1. Acquisition may be accomplished by negotiation or by the exercise of the
Authority's powers of eminent domain.
The Authority currently anticipates, and fmds a need to acquire, the parcels including but not limited to the
following in order to carry out this Redevelopment Plan:
. Parcel Number Addrll8s
24 117 Z2 42 0005 33 6" Ave.N.
24 117 22 42 0006 Parking Lot
24 11722420008 517 Malnstreet
24 11722 42 0009 SOl Mafustreet
24 117 22420012 44 - S" Ave. N.
2411722420013 30 - S" Ave. N.
24117 Z2 42 0014 36 - S" Ave. N.
24 11722 42 0015 24 - S" Ave. N.
2411722420016 10 S" Ave. N.
24 11722420017 IS 6" Ave. N.
2411722420018 13 6" Ave. N.
24 11722 42 0019 Parklnll Lot
24 177 22 42 0029 6 6tb Ave N
2411722 42 0030 611 Malnstreet
24 117 ZZ 42 0031 Uoassluoed
24 117 22 42 0032 Unassll!oed
24 117 22 42 0033 621 Malnstreet
24 11722 42 0048 Unassilmed
2411722 42 0049 701 Malnstreet
24117224200S0 Unasslgoed
2411722 42 0056 19 EIgbth Ave. N.
24 117 Z2 42 0057 21 8" Ave. N.
24 11H2 42 0166 525 MaIostreet
24 117 Z2 42 0167 U oasslmled
24117 ZZ 42 0169 Unassll!Ded
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Modification to the Redevelopment Plan for Redevelopment Project No. )
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G.
Redevelopment Project Financing
The HRA may establish one or more TIF Districts in Redevelopment Project No. 1 to finance Public
Redevelopment Costs. The HRA may also use any other revenues available to the HRA to pay such costs,
including without limitation grant funds, property tax abatements through the City under Minnesota Statutes,
Sections 469.1812 to 469.1815, and proceeds ofa special tax, if any, levied under Section 469.033 of the
HRA Act.
Hopkins HRA
Modificatian to the Redevelopment Plan for Redevelopment Project NO.1
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SECTION 11- TAX INCREMENT FINANCING PLAN
FOR TAX INCREMENT FINANCING DISTRICT NO. 1-3
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Subsection 2-1. Foreword
The Hopkins Housing and Redevelopment Authority (the "HRA"), the City of Hopkins (the "City"), staff and
consultants have prepared the following information to expedite the establishment of Tax Increment
Financing District No. 1-3 (the "District"), a redevelopment tax increment financing district, located in
Redevelopment Project No. I.
Subsection 2-2. Statutory Authority
Within the City, there exists areas where public involvement is necessary to cause development or
redevelopmentto occur. To this end, the HRA and City have certain statutory powers plll'Suantto Minnesota
Statutes ("MS.'J, Sections 469.001 to 469.047, inclusive, as amended, and MS., Sections 469.174 to
469.1799', inclusive, as amended (the "Tax Increment Financing Act" or "TIF Act"), to assist in financing
public costs related to this project.
This section contains the Tax Increment Financing Plan (the "TIF Plan") for Tax Increment Financing Distlict
No. 1-3. Other relevant infonnation is contained in the Modification to the Redevelopment Plan for
Redevelopment Project No. I.
Subsection 2-3. Statement of Objectives
The District currently consists of25 parcels ofland and adjacent and internal rights-of-way. The District is
being created to facilitate the redevelopment of a portion of the downtown area and constJ.uct a mixed-use
commercial and housing development in the City of Hopkins. Please see Appendix A for further project
infonnation. Contracts for this have not been entered into at the time of preparation of this TIF Plan, but
Phase I of the development is likely to begin in the Fall of2005. This TIF Plan is expected to achieve many
of the objectives outlined in the Redevelopment Plan for Redevelopment Project No. I.
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The activities contemplated in the Modification to the Redevelopment Plan and the TIF Plan do not preclude
the undertaking of other qualified development or redevelopment activities. These activities are anticipated
to occw' over the life of Redevelopment Project No.1 and the District.
Subsection 2-4. Redevelopment Plan Overview
I. Property to be Acquired - Selected property located within the District may be acquired by
the HRA or City and is further described in this TIF Plan.
2. Relocation - Relocation services, to the extent required by law, are available pursuant to
MS.. Chapter 117 and other relevant state and federal laws.
3. Upon approval of a developer's plan relating to the project and completion of the necessary
legal requirements, the HRA or City may sell to a developer selected properties that it may
acquire within the District or may lease land or facilities to a developer.
4. The HRA or City mayperfonn or provide for some or all necessary acquisition, construction,
relocation, demolition, and required utilities and public street work within the District.
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Hopkins HRA
Tax increment Financing Plan for Tax Increment Financing District No. 1-3.
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Subsection 2-5. Description of Property in the District and Property To Be Acquired
The District encompasses all property and adjacent rights-of-way and abutting roadways identified by the
parcels listed in Appendix C. See the map in Appendix B for further information on the location of the
District.
The HRA or City may acquire any parcel within the District including interior and adjacent street rights of
way. Any properties identified for acquisition will be acquired by the HRA or City only in order to
accomplish one or more of the following: storm sewer improvements; provide land for needed public streets,
utilities and facilities; carry out land acquisition, site improvements, clearance and/or development to
accomplish the uses and objectives set forth in this plan. The HRA or City may acquire property by gift,
dedication, condemnation or direct purchase from willing sellers in order to acbieve the objectives of this TIF
Plan. Such acquisitions will be undertaken only when there is assurance offunding to finance the acquisition
and related costs.
Subsection 2-6. Classification of the District
The HRA and City, in detenllining the need to create a tax increment financing district in accordance with
M.S., Sections 469.174 to 469.1799, as amended, inclusive, find that the District, to be established, is a
redevelopment district pursuant to M.S.. Section 469.174, Subd. 10(a)(1) as defined below:
(a) "Redevelopment district" means a type oJtax increment financing district consisting of a project.
or portions oj a project. within which the authority finds by resolution that one or more of the
following conditions, reasonably distributed throughout the district, exists:
(1) parcels consisting of 70 percent oJthe area in the district are occupied by buildings. streets,
utilities. paved 01' gravel parking lots or other similar structures and more than 50 percent
of the buildings, not including outbuildings. are stnlcturally substandard to a degree
requiring substantial renovation or clearance;
(2) The property consists oj vacant, unused. underused, inappropriately used, or infi'equently
used rail yO/'ds. rail storage Jacilities or excessive or vacated railroad l"ights-ofway;
(3) tankfacilities, orprope,1ywhose imme.diatelypr6vious usewasJor tankJacilities, as dzfined
in Section 115C. Subd. 15, if the tankJacility:
(i) have or had a capacity oJmo,'e than one million gallons:
(ii) are located adjacent to rail Jacilities; 0"
(iii) have been removed. or are unused, underused, inappropriately used or infrequently
used; or
(4) a qualifj'ing disaster area, as defined in Subd. lOb.
(b) For purposes oJthis subdivision, "stnlcturally substandard" shall mean containing defects in
structural elements or a combination oj deficiencies in essential utilities and Jacilities, light and
ventilation,fire protection including adequate egress, layout and condition o/interior partitions,
or similar Jactors, which dejects Or deficiencies are. oj sufficient total significance to justifY
substantial renovation 0" clearance.
Hopkins HRA.
Tax Increment Financing Plan for Tax Increment Financing District No. 1~3
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(c) A building is not stl"Uchtrally substandard ifit is in compliance with the building code applicable
to new buildings or could be modified to satisfY the building. code at a cost of less than 15
percent of tire cost of constructing a new structure of the same squarefootage and type on the
site. The municipality may find that a building is not disqualified as stl'ucturally substandard
under tire preceding sentence on tire basis of ,-easonably available evidence, suclr as the size,
type, and age of the building, tire average cost ofplumbing, electrical, or stl"Uctural ,'epairs or
other similar reliable evidence. The municipality may not make such a determination without
an interior inspection of the property, but need 'lOt have an independent, expert appraisal -.
prepared of the cost afrepair and rehabilitation of the building, An interior inspection of the
property is not required, if the municipality finds that (1) the municipality or authority is unable
to gain access to the property after using its best efforts to obtain permission from tire party that
owns or controls the property; and (2) the evidence otherwise supports a reasonable conclusion
that the building is stl"Ucturally subslanda/'d.
(d) A parcel is deemed to be occupied by a structurally substandard buildingfor pu'poses of the
finding WIder paragraph (a) tfall ofthefollowingconditions a"e met:
(1) Ihe parcel was occupied by a substandard building with ill three years of the filing of Ihe
requestfor certification of the parcel as part of the dishict with the county auditor;
(2) the substandard building was demolished or removed by the authority or the demolition or
removal was financed by the authority or was done by a developer unde,' a development
agreement with the authority;
(3) the authority found by ,'esolution before the demolition or removal thaI the parcel was
occupied by a structurally substandard building and that afte,' demolition and clearance the
authority intended to include the parcel within a disnict; and
(4) upon filing the request for certification of the tax capacity of the parcel as part of a district,
the auth(Jlity notifies the county auditor that the original tax capacity of the parcel must be
adjusted as provided by 9 469.177, subdivision 1, paragraph (f).
(e) For pwposes of this subdivision, a parcel is not occupied by buildings, streets, utilities, paved
or gravel parking lots or athet. Similar stl"Uctures unless 15 percent of the area of the parcel
contains buildings, streets, utilities, paved or gravel parking lots or other similar structures.
(f) For districts consisting of two or more noncontiguous areas, each area must qualify as a
redevelopment district under paragraph (a) to be included in the district, and the entire area of
the dishict must satisfy paragraph (a).
In meeting the statutory criteria the HRA and City rely on the following facts and fmdings:
.. The District is a redevelopment district consisting of 25 parcel(s).
.. An inventory shows that parcels consisting of more than 70 percent of the area in the District are
occupied by buildings, streets, utilities, paved or gravel parking lots or other similar structures.
.. An inspection of the buildings located within the District finds that more than 50 percent of the buildings
are strocturally substandard as def'med in the TIF Act. (See Appendix F).
Hopkins HRA
Tax Increment Financing Plan for Tax Increment Financing District No. 1-3
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Pursuant to M.S., Sections 469.176 Subd. 7, the District does not contain any parcel or part of a parcel that
qualified uuder the provisions of M.S., Sections 273.111 or 273.112 or Chapter 473H for taxes payable in
any of the five calendar years before the filing of the request for certificatiou of the District.
Subsection 2-7. Duration of the District
Pursuant to M.S., Section 469.175, Subd. 1, and Section 469.176, Subd. 1, the duration of the District must
be indicated within the TlF Plan. Pursuant to M.S., Section 469.176, Subd. 1 b, the duration of the District
will be 25 years afterreceipt of the first increment by the HRA or City (a total of26 years of tax increment).
The date of receipt by the City of the first tax increment is expected to be 2007. Thus, it is estimated that the
District, including any modifications of the TIF Plan for subsequent phases or other changes, would tenninate
after 2032, or when the TlF Plan is satisfied, whichever occurs first. If increment is received in 2006, the
term of the District will be 2031. The HRA or City reserves the right to decertify the District prior to the
legally required date.
Subsection 2-8. Original Tax Capacity, Tax Rate and Estimated Captured Net Tax Capacity
Value/Increment and Notification of Prior Planned Improvements
Pursuant to M.S., Section 469.174, Subd. 7 aIld M.S., Section 469.177, Subd. 1, the Original NetTax Capacity
(ONTC) as certified for the District will be based on the maIket values placed on the property by the assessor
in 2004 for taxes payable 2005.
Pursuant to M.S., Section 469.177, Subds. 1 and 2, the County Auditor shall certify in each year (beginning
in the payment year 2007) the amount by which the original value has increased or decreased as a result of:
1. Change in tax exempt status of property;
2. Reduction or eulargement of the geographic boundaries of the district;
3. Change due to adjustments, negotiated or court-ordered abatements;
4. Change in the use of the property and classification;
5. Change in state law governing class rates; or
6. Change in previously issued building permits.
In any year in which the current Net Tax Capacity (NTC) value of the District declines below the ONTC, no
value will be captured and no tax increment will be payable to the HRA or City.
The original local tax rate for the District will be the local tax rate for taxes payable 2005, assuming the
request for certification is made before June 30, 2005. The ONTC and the Original Local Tax Rate for the
District appear in the table on the following page.
Pursuant to M.S., Section 469.174 Subd. 4 and M.S., Section 469.177, Subd. I, 2, and 4, the estimated
Captured Net Tax Capacity (CTC) of the District, within Redevelopment Project No. I, upon completion of
the project, will annually approximate tax increment revenues as shown in the table on the following page.
The HRA and City request 100 percent of the available increase in tax capacity for repayment of its
obligations and current expenditures, beginning in the tax year payable 2007. The Project Tax Capacity
(PTC) listed is an estimate of values when the project is completed.
Hopkins HRA
Tax Increment Financing Plan for Tax Increment Financing District No. 1-3
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$1,097,255
$99,120
$998,135
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Project Estimated Tax Capacity upon Completion (PTC)*
Original Estimated Net Tax Capacity (ONTC)
Estimated Captured Tax Capacity (CTC)
Original Local Tax Rate
Estimated Annual Tax Increment (CTC x Local Tax Rate)
Percent Retained by the BRA
Pay 2005
$1,206,136
100%
"The tax capacity is the estimated tax capacity for 2009. The cashflow incorporates the Phasing for each project and
an inflation rate, which will result in higher CTC in future years.
Pursuant to MS.. Section 469.177, Subd. 4, the HRA shall, after a due and diligent search, accompany its
request for certification to the County Auditor or its notice of the District enlargement pursuant to M.S.,
Section 469.1 75, Subd. 4, with a listing of all properties within the District or area of enlargement for which
building pennits have been issued during the eighteen (18) months inunediately preceding approval of the
TIF Plan by the municipality pursuant to M.S., Section 469.175, .Subd. 3. The County Auditor shall increase
the original net tax capacity of the District by the net tax. capacity of improvements for which a building
pennit was issued.
The City of Hopkins has reviewed the area to be included in the District and found that no building
permits have been issued during the 18 months immediately preceding approval ofthe TIF Plan by the
City.
Subsection 2-9. Sources of Revenue/Bonded Indebtedness
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Public improvement costs, acquisition, relocation, utilities, parking facilities, streets and sidewalks, and site
preparation costs and other costs outlined in the Uses of Funds will be fmanced primarily through the alUlUal
collection of tax increments. The HRA or City reselVes the rightto use other sources of revenue legally ap-
plicable to the HRA or City and the TlF Plan, including, but not limited to, special assessments, general
property taxes, state aid for road maintenance and construction, proceeds from the sale ofland, other contribu-
tiot.s from the developer and investmem income, to pay for the estimated public costs.
The HRA or City reserves the right to incur bonded indebtedness or other indebtedness as a result of the TIF
Plan. As presently proposed, the project will be financed by a combination of a bond issue, a pay-as-you-go
note, and an interfund loan or transfer. Additional indebtedness may be required to finance other authorized
activities. The total principal amount of bonded indebtedness, including a general obligation (GO) TlF bond,
or other indebtedness related to the use of tax increment financing will not exceed $48,400,000 without a
modification to the TLF Plan pursuant to applicable statutory requirements. It is estimated that $48,400,000
in bonded indebtedness will be financed with tax increment revenues.
This provision does not obligate the HRA or City to incur debt. The HRA or City will issue bonds or incur
other debt only upon the determination that such action is in the best interest of the HRA or City, as the case
may be. The HRA or City may also fmance the activities to be undertaken pursuant to the TlF Plan through
loans from funds of the HRA or City or to reimburse the developer on a "pay-as-yon-go" basis for eligible
costs paid for by a developer.
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Hopkins HRA
Tax Increment Financing Plan for Tax. Increment Fmancing District No. 1-3
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The estimated sources of funds for the District are contained in the table below.
SOURCES OF FUNDS
TOTAL
$54,400,000
$54,400,000
Tax Increment
PROJECT REVENUES
Subsection 2-10. Uses of Funds
CWTently under consideration for the District is a proposal to facilitate the redevelopment ofa portion of the
downtown area and construct a mixed-use commercial and housing development in the City of Hopkins. The
HRA and City have determined that it will be necessary to provide assistance to the project for certain costs.
The HRA has studied the feasibility of the development or redevelopment of property in and around the
District. To facilitate the establishment and development or redevelopment of the District, this TlF Plan
authorizes the use of tax increment financing to pay for the cost of certain eligible eKpenses. The estimate
of public costs and uses of funds associated with the District is outlined in the following table.
USES OF FUNDS
TOTAL
$20,000,000
$5,000,000
$5,000,000
$18,960,000
$5,440,000
$54,400,000
Land/Building Acquisition
Site ImprovementslPreparation
Parking Facilities
Interest
Administrative Costs (up to 10%)
PROJECT COSTS TOTAL
It is estimated that .the cost of improvements, including administrative expenses which will be paid or
financed with tax increments, will equal $54,400,000 as is presented in the budget above.
Estimated costs associated with the District are subject to change among categories without a modification
to this TII" Plan. The cost of all activities to be considered for tax incremenl< financing will not exceed,
without formal modification, the budget above pursuant to the applicable statutory requirements. Pursuant
to M.S.. Section 469.1763, Subd. 2, no mOre than 25 percent ofthe tax increment paid by property within the
District will be spent on activities related to development or redevelopment outside ofthe District but within
the boundaries of Redevelopment Project No. I, (including administrative costs, which are considered to be
spent outside of the District) subject to the limitations as described in this TlF Plan.
Subsection 2-11. Fiscal Disparities Election
Pursuant to M.S., Section 469. I 77, SuM. 3, the HRA or City may elect one of two methods to calculate fiscal
disparities. If the calculations pursuant to M.S., Section 469.177, Subd. 3, clause b, (within the District) are
followed, the following method of computation shall apply:
(I) The original net tax capacity shall be determined before the application of the fiscal disparity
provisions of Chapter 27M Or 473F. The current net tax capacity shall exclude any fiscal
disparity commercial-industrialllet tax capacity illcrease between the original year and the
cun-ent year multiplied by the fiscal disparity ratio determined pursuant to M.S., Sectioll
Hopkins HRA
Tax lncrement Financing Plan for Tax Increment Financing District No. 1.3
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276A.06, subdivision 7 or MS., Section 473F.08, subdivision 6. Where the original net tax
capacity is equal to or greater than the CUl7'ent net tax capacity, there is 110 captured tax capacity
and no tax increment deternuiwtion. Where the original tax capacity is less than the current tax
capacity, the difference between the original net tax capacity and the current net tax capacity
is the captured net tax capacity. This amount less any portion thereofwhich the authority has
designated, in its tax increment financing plan, to share with the local taxing districts is the
retained captured net tax capacity of the authO/ity.
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(2) The county auditol' shall exclude the retained captured net tax capacity of the authority from the
net tax capacity of the local taxing districts in determining local faxing disllicf tax rates. The
local tax rates so determined are to be extended against the retained captured net tax capacity
of the authority as well as the net tax capacity of the local taxing districts. The tax generated by
the extension of the less of (A) the local tlUing district tax rates or (B) the original local tax rate
to the retained captured net tax capacity of the authO/ity is the tax increment of the authority.
The HRA will choose to calculate fiscal disparities by M.S., Section 469.177, Subd. 3, clause b.
According to M.S., Section 469.177, Subd. 3:
(c) The method of computation of tax increment applied to a district pursuant to paragraph (a) or
(b) shall remain the same for the duration of the district, except that the governing body may
elect to change its election from the method of computation in paragraph (a) to the method in
paragraph (b).
Subsection 2.12. Business Subsidies
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Pursuant to M.S. Sections 116J993, Subd. 3, the following forms of financial assistance are not considered
a business subsidy:
(I) A business subsidy ofless than $25,000;
(2) Assistance that is generally available to all businesses or to a general class of similar businesses, such
as a line of business, size, location, or similar general critelia;
(3) Public improvements to buildings or lands owned by the state or local govemrnent that serve a public
purpose and do not principally bel'.efit a single business or defined gr0up of businesses at the t;,.ne
the improvements are made;
(4) Redevelopment property polluted by contaminants as defined in MS., Section 116J.552, Subd. 3;
(5) Assistance provided for the sole purpose of renovating old or decaying building Slock or bringing
it up to code and assistance provided for designated historic preservation districts, provided that the
assistance is equal to or less than 50% of the total cost;
(6) Assistance to provide job readiness and training services if the sole purpose ofthe assistance is to
provide those services;
(7) Assistance for housing;
(8) Assistance for pollution control or abatement, including assistance for a tax increment fmancing
hazardous substance subdistrict as defined under M.S., Section 469.174, Subd. 23;
(9) Assistance for energy conservation;
(10) Tax reductions resulting from conformity witb federal tax law;
(11) Workers' compensation and unemployment compensation;
(12) Benefits derived from regulation;
(13) Indirect benefits derived from assistance to educational institutions;
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Tax Increment Financing Plan for Tax Increment Financing District No. 1-3
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(14)
(15)
(16)
(17)
(18)
(19)
(20)
(21)
(22)
Funds from bonds allocated under chapter 474A, bonds issued to refund outstanding bonds, and
bonds issued for the benefit of an organization described in section 501 (c) (3) of the Internal
Revenue Code of 1986, as amended through December 31, 1999;
Assistance for a collaboration between a Minnesota higher education institution and a business;
Assistance for a tax increment financing soils condition district as defined under M.S., Section
469.174. Subd. 19;
Redevelopment when the recipient's investment in the purchase of the site and in site preparation
is 70 percent or more of the assessor's current year's estimated market value;
General changes in tax increment financing law and other general tax law changes ofa principally
technical nature.
Federal assistance until the assistance has been repaid to, and reinvested by, the state or local
government agency;
Funds from dock and wharf bonds issued by a seaway port authority;
Business loans and loan guarantees of S75,000 or less; and
Federal loan funds provided through the United States Department of Commerce, Economic
Development Administration.
The HRA will comply with M.S., Section 116J.993 to 116J.995 to the extent the tax increment assistance
under this TIF Plan does not fall under any of the above exemptions.
Subsection 2-13. County Road Costs
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Pursuantto M.S., Section 469.175, Subd. 1 a, the county board may require the HRA or City to pay for all or
part of the cost of coUnty road improvements if the proposed development to be assisted by tax increment
will, in the judgement of the county, substantially increase the use of county roads requiring construction of
road improvements or other road costs and if the road improvements are not scheduled within the next five
years under a capital improvement plan or within five years under another county plan.
If the county elects to use increments to improve county roads, it must notify the HRA or City within forty-
five days ofreceipt.of this TIF Plan. The HRA and City are aware that the county could claim that tax
increment should be used for county roads, even after the public hearing.
Subsection 2-14. Estimated Impact on Other Taxing Jurisdictions
Tbe estimated impact on other taxingjUlisdictions asswnes that the redevelopment co~templated by tbe TIF
Plan would occur without the creation of the District. However, the HRA or City has determined that such
development or redevelopment would not occur "but for" tax increment financing and that, therefore, tbe
fiscal impact on other taxing jurisdictions is SO. The estimated fiscal impact of the District would be as
follows if the "but for" test was not met:
IMPACT ON TAX BASE
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Hennepin County
City of Hopkins
ISD No. 270
2004/2005
Total Net
Tax Capacity
1,092,690,078
14,654,509
80,103,617
Estimated Captured
Tax Capacity (CTq
Uooo Comoletioo
998,135
998,135
998,135
Percent of CTC
to Entitv Total
0.0913%
6.8111%
1.2461%
Hopkins HRA .
Tax Increment Financing Plan for Tax Increment Financing District No. 1-3
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IMPACT ON TAX RATES
Hennepin County
City of Hopkins
ISO No. 270
Other
Total
2004/2005
Extension Rates
0.441720
0.489440
0.191760
0.085470
1.208390
Percent
of Total
36.55%
40.50%
15.87%
7.07%
100.00%
Potential
Taxes
440,896
488,527
191,402
85.311
1,206,136
eTe
998,135
998,135
998,135
998.135
The estimates listed above display the captured tax capacity when all construction is completed. The tax rate
used for calculations is the actua12004IPay 2005 rate. The total net capacity for the entities listed above are
based on actual Pay 2005 figures.
Subsection 2-15. Supporting Documentation
Pursuant to us. Section 469./75 Subd /, clause 7 the TIF Plan must contain identification and description
of studies and analyses used to make the determination set forth in M.S. Section 469./75 Subd 3, clause (2)
and the findings are required in the resolution approving the TIP district. Following is a list ofreports and
studies on file at the City that support the Authority's findings:
TIP application
Redevelopment and Blight Analysis by LHB dated May 2005
Block 64 Redevelopment Relocation Plan by Wilson Development Services dated January, 2005
Market Analysis Hopkins Main Street Residential Campus by GPS Financial Group dated March
2005
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Subsection 2-16.
Definition of Tax Increment Revenues
Pursuant to M.S., Section 469./74, Subd. 25, tax increment revenues derived from a tax increment financing
disllict include all of the following potential revenue sources:
1. Taxes paid by the captured net tax capacity, but excluding any excess taxes, as computed
under M.S., Section 469./77;
2. The proceeds from the sale or lease of property, tangible or intangible, purchased by the
Authority with tax increments;
3. Principal and interest received on loans or other advances made by the Authority with tax
increments; and
4. Interest or other investment earnings on or from tax increments.
Reduction or enlargement of the geographic area of Redevelopment Project No. I or the
District, ifthe reduction does not meet the requirements of M.S., Section 469.175, Subd. 4(e);
Increase in amount of bonded indebtedness to be incurred;
Subsection 2-17.
Modifications to the District
In accordance with M.S., Section 469.175, Subd. 4, ~y:
1.
2.
Hopkins HRA
Tax Increment Financing Plan for Tax Increment Financing District No. 1.3
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A determination to capitalize interest on debt if that detennination was not a part of the
original TlF Plan, or to increase or decrease the amount of interest on the debt to be
capitalized;
Increase in the portion of the captured net tax capacity to be retained by the HRA or City;
Increase in the estimate of the cost of the project, including administrative expenses, that will
be paid or financed with tax increment from the District; or
Designation of additional property to be acquired by the HRA or City,
4.
5.
6.
shall be approved upon the notice and after the discussion, public hearing and findings required for approval
of the original TlF Plan.
Pursuantto M.S. Section 469.175 Subd. 4(f), the geographic area of the District may be reduced, but shall not
be enlarged after five years following the date of certification of the original net tax capacity by the county
auditor. If a redevelopment district is enlarged, the reasons and supporting facts for the detennination that
the addition to the district meets the criteria of M.S., Section 469.174, Subd. 10, paragraph (a), clauses (1) to
(5), must be documented in writing and retained. The requirements of this paragraph do not apply if(l) the
only modification is elimination ofparcel(s) from Redevelopment Project No.1 or the District and (2) (A)
the current nettax capacity of the parcel(s) eliminated from the District equals or exceeds the nettax capacity
ofthose parcel( s) in the District's original net tax capacity or (B) the HRA agrees that, notwithstanding M.S.,
Section 469.177, Subd. 1, the original net tax capacity will be reduced by no more than the current net tax
capacity ofthe parcel(s) eliminated from the District.
The HRA or City must notify the County Auditor of any modification that reduces or enlarges the geographic
area of Redevelopment Project No. I or the District. Modifications to the District in the form of a budget
modification or an expansion of the boundaries will be recorded in the TlF Plan.
Subsection 2-18. Administrative Expenses
In accordance with M.S., Section 469.174. Subd. 14, administrative expenses means all expenditures ofthe
HRA or City, other t1)an:
I. Amounts paid for the purchase of land;
2. Amounts paid to contractors or others providing materials and services, including architectural and
engineering services, directly connected with the physical development of the real.p,:opeo:y in the
project;
3. Relocation benefits paid to or services provided for persons residing or businesses located in the
project; or
4. Amounts used to pay principal or interest on, fund a reserve for, or sell at a discount bonds issued
pursuantto M.S., Section 469.178; or
5. Amounts used to pay other financial obligations to the extent those obligations were used to finance
costs described in clauses (I) to (3).
For districts for which the request for certification were made before August I, 1979, or after June 30, 1982,
administrative expenses also include amounts paid for services provided by bond counsel, fiscal consultants,
and planning or economic development consultants. Pursuant to MS., Section 469.176, Subd. 3, tax
increment may be used to pay any authorized and documented administrative expenses for the District up
to but not to exceed 10 percent of the total estimated tax increment expenditures authorized by the TlF Plan
or the total tax increments, as defined by MS., Section 469.174, Subd. 25, clause (1), from the District,
whichever is less.
Hopkins HRA
Tax Increment Financing Plan for Tax lncrement Financing District No. 1-3
2-10
,
,." '
"
,
"
Pursuant to M.S., Section 469.176, Subd. 4h, lax increments may be used to pay for the County's actual
administrative expenses incurred in connection with the District. The county may require payment of those
expenses by February 15 ofthe year following the year the expenses were incurred.
PIU"Suant to M.S., Section 469. 177, Subd. 11, the County Treasw'er shall deduct an amount (currently .36
percent) of any increment distributed to the HRA or City and the County Treasurer shall pay the amount
. deducted to the State Treasurer for deposit in the state general fund to be appropriated to the Slate Auditor
for the cost of financial reporting of tax increment financing information and the cost of examining and
auditing authorities' use of tax increment fmancing. This amount may be adjusted annually by the
Commissioner of Revenue.
Subsection 2-19. Limitation of Increment
Pursuantto M8., Section 469.176, Subd. 1 a, no tax increment shall be paid to the HRA or City for the District
after three (3) years from the date of certification of the Original Net Tax Capacity value of the taxable
property in the District by the County Auditor unless within the three (3) year period:
(I) Bonds have been issued in aid of the project containing the District pursuant to MS., Section
469.178, or any other law, except revenue honds issued pursuant to MS., Sections 469.152
to 469.165, or
(2) Tbe HRA or City has acquired property within the District, or
(3) The HRA or City has constructed or caused to be constructed public improvements within
the District.
..
The bonds must be issued, or the HRA or City must acquire property or construct or cause public
improvements to be constructed by approximately June, 2008 and report such actions to the County Auditor.
The tax increment pledged to the payment of bonds and interest thereon may be discharged and the District
may be terminated if sufficient funds have heen irrevocably deposited in the debt service fund or other escrow
account held in trust for all outstanding bonds to provide for the payment of the bonds at maturity or
redemption date.
Pursuant to MS., Section 469.176, Subd. 6:
if, aft€l'four years ji'om the date of certijication of the original net tax capacity of the tax increment
financing district pursuant to M.S., Section 469.177, nO demolition, rehabilitation or renovation of
property or othe,' site preparation, including qualified improvement of a street adjacent to a parcel
but not installation of utility service including sewer 0/' water systems, has been commenced on a
parcel located within a tax increment financing district by the authority or by the owner of the parcel
in accordance with the tax increment fina,icing plan, no additional tax increment may be taken ji'om
that parcel and the original net tax capacity of that parcel shall be excluded from the original net
tax capacity of the tax increment financing district. If the authority or the owner of the parcel
subsequently commences demolition, rehabilitation or renovation or other site preparation on that
parcel including qualified improvement oj a su'eet adjacent to that parcel, in accordance with the
tax increment financing plan, the authority shall certifY to.the county auditor that the activity has
commenced and the county auditor shall certifY the net tax capacity thereof as most recently certified
by the commissioner of revenue and add it to the original net tax capacity of the tax increment
financing disu'ict. The county auditor must enforce the provisions of this subdivision. The authority
must submit to the county auditor evidence that the required activity has taken place for each parcel
iIil'
"
Hopkins HRA
Tax Increment Financing Plan for Tax. Increment Financing District No. )-3
2-11
,....:
, '.",
in the district. The evidencefor a parcel must be submitted by February 1 of the fiflh year following
the year in which the parcel was certified as included in the distlict. For pUlposes of this subdivision,
qualified improvements of a street are limited to (1) construction or opening of a new street, (2)
relocation of a street, and (3) substantial reconstruction or rebuilding of an existing street.
The HRA or City or a property owner must improve parcels within the District by approximately June, 2009
and report such actions to the County Auditor.
Subsection 2-20, Use of Tax Increment
The HRA or City hereby detennines that it will use 100 percent of the captured net tax capacity of taxable
property located in the District for the following pll1poses:
L
2.
3.
4.
5.
6.
. 7.
To pay the principal of and interest on bonds issued to finance a project;
To finance, or otherwise pay public redevelopment costs of Redevelopment Project No. I pursuant
to the M.S., Sections 469.001 to 469.047;
To pay for project costs as identified in the budget set forth in the TIF Plan;
To finance, or otherwise pay for other purposes as provided in M.S., Section 469.176, Subd. 4;
To pay principal and interest on any loans, advances or other payments made to or on behalf of the
HRA or City or for the benefit of Redevelopment Project No. I by a developer;
To flllance or otherwise pay premiums and other costs for insurance or other security guaranteeing
the payment when due of principal of and interest on bonds pursuant to the TIF Plan or pursuant to
M.S., Chapter 462C. M.S., Sections 469.152 through 469.165, and/or M.S., Sections 469.178; and
To accumulate or maintain a reserve seeming the payment when due of the principal and interest on
the tax increment bonds or bonds issued pursuant to M.S., Chapter 462C, M.S., Sections 469.152
through 469.165, and/or M.s., Sections 469.178.
These revenues shall not be used to circumvent any levy limitations applicable to the City nor for other
purposes prohibited by M.S., Section 469.176, Subd. 4.
Tax increments generated in the District will be paid by Hennepin County to the HRA for the Tax Increment
Fund of said District. The lIRA or City will pay to the developer(s) annually an amount not to exceed an
amount as specified in a developer's agreement to reimburse the costs of land acquisition, public
improvements, demolition and relocation, site preparation, and fldministration. Remaining incl:ement fW(ds
will be used for HRA or City administration (up to 10 percent) and the costs of public improvement activities
outside the District.
Subsection 2-21. Excess Increments
Excess increments, as defined inM.S., Section 469.1 76, Subd. 2, shall be used only to do one or more of the
following:
I. Prepay any outstanding bonds;
2. Discharge the pledge of tax increment for any outstanding bonds;
3. Pay into an escrow account dedicated to the payment of any outstanding bonds; or
4. Return the excess to the County Auditor for redistribution to the respective taxing jurisdictions in
proportion to their local tax rates.
"..it';",
"~"",::,,,
'~:.
In addition, the HRA or City may, subject to the limitations set forth herein, choose to modify the TIF Plan
in order to finance additional public costs in Redevelopment Project No. I or the District.
Hopkins HRA
Ta." Increment Financing Plan for Tax Incrcmen[ Financing District No. }.3
2-12
Subsection 2-22. Requirements for Agreements with the Developer
/!f)
.
The HRA or City will review any proposal for private development to determine its conformance with the
Redevelopment Plan and with applicable municipal ordinances and codes. To facilitate tbis effort, the
following documents may be requested for review and approval: site plan, construction, mechanical, and
electrical system drawings, landscaping plan, grading and storm drainage plan, signage system plan, and any
other drawings or narrative deemed necessary by the HRA or City to demonstrate the conformance of the
development with City plans and ordinances. The HRA or City may also use the Agreements to address other
issues related to the development.
Pursuant to M.S., Section 469./76, Subd. 5, no more than 25 percent, by acreage, of the property to be
acquired in the District as set forth in the TIF Plan shall at any time be owned by the HRA or City as a result
of acquisition with the proceeds of bonds issued pursuant to M.S.. Section 469.178 to which tax increments
from property acquired is pledged, unless prior to acquisition in excess of25 percent of the acreage, the HRA
or City concluded an agreement for the development or redevelopment of the property acquired and which
provides recourse f01" the HRA or City should the development or redevelopment not be completed.
Subsection 2-23. Assessment Agreements
Pursuant to MS., Section 469.177, Subd. 8, the HRA or City may enter into a written assessment agreement
in recordable form with the developer of property within the District which establishes a minimum market
value of the land and completed improvements for the duration of the District. The assessment agreement
shall be presented to the County Assessor who shall review the plans and specifications for the improvements
to be constructed, review the market value previously assigned to the land upon which the improvements are
to be constructed and, so long as the minimmn market value contained in the assessment agreement appears,
in the judgment of the assessor, to be a reasonable estimate, the County Assessor shall also certifY the
minimum market value agreement.
Subsection 2-24. Administration of the District
Administration of the District will be handled by the City Clerk.
Subsection 2-25. Annual Disclosure Requirements
Pursuant to MS., Section 469.175, Subd. 5, 6, and 6b the HRA or City must undertake fmancial reporting
for all tax increment financing districts to the Office of the State Auditor, County Board, County Auditor and
School Board on or before August I of each year. MS., Section 469./75, Subd. 5 also provides that an annual
statement shall be published in a newspaper of general circulation in the City on or before August 15.
If the City fails to make a disclosure or submit a report containing the information required by M.S., Section
469./75 Subd. 5 and Subd. 6, the OSA will direct the County Auditor to withhold the distribution of tax
increment from the District.
Subsection 2-26. Reasonable Expectations
As required by the TIF Act, in establishing the District, the determination has been made that the anticipated
development would not reasonably be expected to occur solely throngh private investment within the
reasonably foreseeable future and that the increased market value of the site that could reasonably be expected
to occur without the use of tax increment financing would be less than the increase in the market value
estimated to result from the proposed development after subtracting the present value of the projected tax
,c;f!;,'
.
Hopkins HRA
Tax Increment Financing Plan for Tax Increment Financing District No. 1-3
2-13
..
.
A":t:\'
.'
increments for the maximum duration of the District permitted by the TIF Plan. In making said
determination, reliance has been placed upon written representations made by the developer to such effects
and upon BRA and City staff awareness of the feasibility of developing the project site. A comparative
analysis of estimated market values both with and without establishment of the District and the use of tax
increments has been performed as described above. Such analysis is included with the cashflow in Appendix
D, and indicates tbat the increase in estimated market value of the proposed development (less the indicated
subtractions) exceeds the estimated market value of the site absent the establishment of the District and the
use oftax increments.
Subsection 2-27. Other Limitations on the Use of Tax Increment
I. General Limitations. All revenue derived from tax increment shall be used in accordance with the TIF
Plan. The revenues shall be used to fmance, or otherwise pay public redevelopment costs of the
Redevelopment Project No. I pursuant to the M.S., Sections 469.001 to 469.047. Tax increments may
not be used to circwnvent existing levy limit law. No tax increment may be used for the acquisition,
construction, renovation, operation, or maintenance of a building to be used primarily and regularly for
conducting the business of a municipality, county, school district, or any other local unit of government
or the state or federal government. This provision does not prohibit tbe use of revenues derived from tax
increments for the construction or renovation of a parking structure.
2. Poolinl! Limitations. At least 75 percent of tax increments from the District must be expended on
activities in the District or to pay bonds, to the extent that the proceeds ofthe bonds were used to fmance
activities within said district or to pay, or secure payment of, debt service on credit enhanced bonds. Not
more than 25 percent of said tax increments may be expended, through a development fund or otherwise,
on activities outside ofthe District except to pay, or secure payment of, debt service on credit enhanced
bonds. For purposes of applying this restriction, all administrative expenses must be treated as if they
were solely for activities outside of the District.
3. Five Year Limitation on Commitment of Tax Increments. Tax increments derived from the District shall
be deemed to hllve satisfied the 75 percent test set forth in paragraph (2) above only if the five year rule
set forth in M.S., Section 469.1763, Subd. 3, has been satisfied; and beginning with the sixth year
following certification of the District, 75 percent of said tax increments that remain after expenditures
pennitted under said five year rule must be used only to pay previously cOlmnitted expenditures or credit
enhanced bonds as more fully set forth in M.S., Section 469.1763. Subd. 5.
4. Redevelonment District. At least 90 percent of the revenues derived from tax increment from a
redevelopment district must be used to finance the cost of correcting conditions tbat allow designation
of redevelopment and renewal and renovation districts under M.S., Section 469.176 Subd. 4j. These costs
include, but are not limited to, acquiring properties containing structurally substandard buildings or
improvements or hazardous substances, pollution, or cOntaminants, acquiring adjacent parcels necessary
to provide a site of sufficient size to permit development, demolition and rehabilitation of structures,
clearing of the land, the removal of hazardous substances or remediation necessary for development of
the land, and installation of utilities, roads, sidewalks, and parking facilities for the site. The allocated
administrative expenses of the BRA or City, including the cost of preparation of the development action
response plan, may be included in the qualifying costs.
Subsection 2-28.
Summary
The Hopkins Housing and Redevelopment Authority is establishing the District to preserve and enhance the
tax base, redevelop substandard areas, and provide employment opportunities in the City. The TIF Plan for
Hopkins HRA
Tax lncrement Financing Plan for Tax Increment Financing District No. 1-3
2-14
the District was prepared by Ehlers & Associates, Inc., 3060 Centre Pointe Drive, Roseville, Minnesota
55113, telephone (651) 697-8500.
Hopkins HRA
iax Increment Financing Plan for Tax Increment Financing District No. ].3
c.;;..
.,
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2.15
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APPENDIX A
PROJECT DESCRIPTION
Tax Increment Financing District I -3 is being established to facilitate the redevelopment ofa portion of Main
Street in the downtown area of Hopkins. The area consists of 13 buildings of which 7 have been deemed to
be substandard.
The tax increment district will contain two separate projects. The first project is a mixed- use project
proposed by the Cornerstone Group. It is a continuation of the type of project they completed across the
street. The project consists of approximately 60 for sale town homes and condos and 5.000 to 8,000 square
feet of retail.
The second project is proposed by GPS corporation and consists of approx 260 for sale condos and 8,000 to
12,000 square feet of retail space. GPS has completed a market study, relocation plan. geotechnical analysis
and has begun the phase I analysis of their site.
At the current time both projects have engaged architects for design. Both projects are scheduled to begin in
the Fall of2005 with tmal phased completion in 2008 and 2009.
APPENDIX
A-I
APPENDIX B
MAP(S) OF REDEVELOPMENT PROJECT NO.1 AND THE DlSTRICT
APPENDIX
.
.
B-1
.'
Redevelopment Project No.1
Tax Increment Financing District No. 1-3
City of Hopkins
Hennepin County, Minnesota
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The shaded area represents
Redevelopment Project No.1
M1NNlmlNlA
TIF District No. 1-3
City of Hopkins
Hennepin County, Minnesota
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APPENDIX C
DESCRIPTION OF PROPERTY TO BE INCLUDED IN THE DISTRICT
The District encompasses all property and adjacent rights-of-way and abutting roadways identified by the
parcels listed below.
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t.' .,
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Parcel Number, A~dress ' Owner ' APpeiid~ B
Man PBrcel#
241172242000S 33 - 6th Ave. N. 33 - 6'" Ave. N. Ltd. 12
PartnershiD
241\722420006 Parking Lot S'" Avenue 7
Partnershin
241\722420008 Sl7,Mainstreet Sth Avenue 4A
PartnershiD
24 117 22 42 0009 SO I Mainstreet Sinclair Oil S
Corporation
24 1\722420012 44 - S'" Ave. N. Thomas W. Roof II
241\722 42 0013 30 - Sth Ave. N. S'" Avenue 9
PartnershiD
24 1\722420014 36 - Sth Ave. N. SIb Avenue 10
PartnershiD
241\7224200lS 24 - S'" Ave. N. S'b Avenue 8
PartnershiD
241\722420016 10 - SIb Ave. N. Stb Avenue 6
PartnershiD
241\722420017 IS-6'" Ave. N. Albert Feiler 13
241\722420018 13-6"'Ave.N. Sth Avenue 14
Partnershin
241\722420019 Parking Lot S'b Avenue IS
Partnershin
2417722420029 66th AveN J D Siler and L A 17
, Stroessner
24 1\722 42 0030 61 I Mainstreet Luther Co. Ltd. 16
PartnershiD
241\722420031 Unassigned Luther Co. Ltd. 17
PartnershiD
24 1\7 22 42 0032 Unassigned Luther Co. Ltd. 18
Partnershin
24 \I 7 22 42 0033 62 I Mainstreet Luther Co.. Ltd. 3
PartnersbiD
24 1\7 22 42 0048 Unassigned Luther Co. Ltd. I
PartnershiD
24 1\7 22 42 0049 701 Mainstreet Luther Co. Ltd. 2
Partnershin
24 1\7 22 42 OOSO Unassigned Luther Co. Ltd. 17
Partnership
APPENDIX
Cot
24 117 22 42 0056 19 Eighth Ave. N. Luther Co. Ltd. 20
partnersbin
24 117 22 42 0057 218'. Ave. N. Luther Co. Ltd. 21
Partnersbin
2411722420166 525 Mainstreet Aleksandr Tenlitski 4
, 24 11722420167 Unassignro Luther Co. Ltd. 4
Partnershin
2411722420169 Unassignro Luther Co. Ltd. 17
Partnershin
APPENDIX
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APPENDIX
APPENDIX D
ESTIMATED CASH FLOW FOR THE DISTRICT
D-t
512712005
HOPKINS 2.11
PAGE 1 aU
CITY OF HOPKINS .MAIN STREET
PROJECT A
~,
'"
BASIC ASSUMPTIONS
PLEASE READ ALL ASSUMPTIONS
NEW f{edelle!opmentDistrlct
S.DQQD%
'.00%
6.75%
1.2D%-
26.0824%
10.00%
1.5%-2.0%
2007
2.
2032
26
NJA
1.20839D
1.206390
0.511012:
1.298630
District
nflationRate
Pay As You Go Note Rate
Take out Revenue Note Rale
aka out Rewnue Note Coverage
F"1$ca1 Disp. Contribution Rallo
PooUng AssumDtion
lass Rate AssumptKlRS
Assumes Rrsl TBIt 100000ent
YesrsofTBltlntfemenl
fAsswnes Lest Tax [naernenl
YeersofTBltlntremenl
Assumes Note Issued
ax Capacfly (EXwnsionl RaCe. Fraun
Tax Capacity (extension) Rate .CU1'l'eflt
Stale Educallon Rate
Area Wide Rate
Amountaf lncroRlUntwlUvlllY depending upon mDrkotllalue,tlu flI1llll, clllu. ratOl,
constnJl:tlon schedlllll,andlnflsllon on matketllalull. lnftstlon on tax",t"
cannot_caDl.ur.d.
EST Pay 2005
Pay 2005
Pay 2005
Pay 2005
Pay 2005
FROZEN TAX CAPACITY PAYAElLE Pay 20DS
Total Marllet C,... Base Tax
p,o """" -'u V.... .... C"","""
24.11T-22-42.(101:!5fflAw~ 3O-5thAv.N. 541.000
24.111-22-42..()l)1451hAv.f>lrlnIlMIp 36-5IhAII.N 541,000
24.111.22-42.001SSthAv.l>mnar.h1sl24-5thAv.N. 541.000
24-1tT-22-42-001f5fflAw ~ 1Q.5{hAII.N. ....000
4.11742-42-oooe51hAv.~ Sl1MalnslJeel 1,589,000
24-117-22-42.oDOeSthAw Psttn8lShip Parillng lot 1.000
4-U7.22-42.(1Of6sthAv.A11V1mdt/p 13-6thAv.N. ',000
24.117-22-42-llOUI5IhAY.PlrtnIllShlpParklngLot 1.000
24-11742-42-00011 SwtsitollCorp 501 MaIn street 294,000
4-11T.:t2-42-Gf6lrAIexmcb TepItsld 525 MaIn $beet 231,000
24_11r.:~2-42.Q017 -- ls.6thAv.N. 209.000
24.117-22-42-0012 TlIornasW.RooI 44-SthAII.N. 0:.'31,000
Iu.ft742-42~ 3.WA>N Pfnshll 3J.6/h Av. N. 451 000
''''' '7419000
i">~- 1.91% 7;~'.81i' 1.5%-2.0% 2.086
"'- 9B.09% '7 Tr 183 1.00% n,772
''''' 1,419000 74858
TAXES PAYABLE
Total City ..""
Development r'='~ 0.".: C"~~'" CIty flsOls StataED To,",
T";' '"~ Taxes To><os Taxes Taxes
FOI'6tleUr& 903,127 903.127 0 1,091,330 0 0 1,091.330
~: 8.050 ~~.. 2,100 7,190 2,727 4,114 14,031
8050 .50 ~loo 7,190 2727 4,114 14,031
T"" 919.227 915028 4,199 1,105,710 5,453 6,227 1,119391
- PFi.QJECT VAlUE INFORMt,noN
Number of Total TIF
Sq.Ft - C:~per Percent Of U"'~ ......, To>< To>< To>< P-able
T~ U"" .R U"'" 250 V.... .... CIlDac!tv C."""'"
FOI'Sallll/nill 344.705 262 100.00% SO.OO% 45,156,355 1.00% 451,564 451.564- 2008
-~. 4.400 100 NJA NIA 440.000 1.5%-2.0% 8,050 5,950 2008
R-..", 4.400 100 NIA N/A 440 000 1.5%.2.0% 8,050 ~950 2008
,.. 46036.355 467.664 -...
PROJECT VALUE INFORMATION
Number of Total TIF
Sq,Fl- ~tPer "_01 Units Markel To>< To>< To><
T Units .R U"'" 250 V.... Ral& C.naritu ""- Pa"able
Fortal11Unlb 344,705 262 100.00% 100.00% 90.312,710 1,_ 903,127 9D3.127 '009
-..", 4._ 100 NJA NJA 440.000 1.5%-2.0% aoso 5,950 '009
-- 4400 100 NlA NJA 440 000 1.5%--20% aDSO 5950 2009
''''' 91192.710 919.227 915
-fj
~~
Ceshflow s..t7.(lS
5/27/2005
HOPKINS 2-11
PAGE2of6
6iii...
..
CITY OF HOPKINS. MAIN STREET
PROJECT A
TAX INCREMENT CASH FLOW
Annual Proled MmusHsDis Captured SemMrmuaJ AU<!..., Admlnistrallon SelJlJ-Annual EndlflgPertod
Base~~ T"" T",,)CCapaclty Tax CapacIty Gross Gross PAYMENT DATE
Mth. V,. CBnad C"nacllv Increment 0.36% 10.00% Increment Mth. V,.
1-Feb 2005 14,858 74,858 0 0 0 0 0 1-Aug 200'
1-Au9 2005 74,858 74,858 0 0 0 . . 1.fob 2006
1-Feb 200. 74,858 74,858 0 . 0 0 0 0 0 1-Aug 200.
1-Aug 200. 74,858 74,858 0 0 0 0 0 0 0 1-Feb 2007
1-Feb 2007 74,858 74,858 0 0 0 0 0 0 0.5 1-Aug 2007
1-Aug 2007 74,858 14.858 0 0 0 0 . 0 '.0 '.fob 2008
1-Feb 2008 74,858 463.464 3,655 384,95' 232,585 (837) (23,259} 208,490 15 1-Aug 2008
1-Aug 2008 74,858 463.464 3,655 384,951 232.585 (831) (23,259) 208,490 ~O 1.feb 2009
'~Feb 2009 74,858 915,028 3.655 836,515 505,418 (1,820) (5tI.542) 453,057 2.5 1-Aug 2009
1-Aug 2008 74,858 915,028 3,655 836,515 505,418 (1,820) (50,5<2) 453,057 3.. 1.fob 2010
1-Feb 2010 74,858 915,028 3,655 836,515 505,418 (1,920) (50.542) 453,057 3.5 ,-4"" 2010
1-Aug 2010 74.858 915,028 3.655 836,515 505,418 (1.820) (50,542) 453:,057 4.0 1.feb 2011
1-Feb 2011 74,858 960,779 3.838 882,083 53>.... (1,D19) (53,295) 4n,737 4.5 1...4u9 2011
'~Aug 2011 74,858 980,779 3,838 882,083 532,950 0,919) (53,295) 471,737 5.0 l.fob 2012
1-Feb 2012 74,658 1,009,818 4,030 929,930 561,659 12,023) (56,186) 5Oa,651 '5 1...4ug 2012
1-Au9 2012 74,858 1,008,818 4,030 929,930 561,859 (2,023) (55,196) 503,651 '.0 '.fob 2013
1-Feb 2013 74.858 1,059.259 4,231 980,170 592,214 (2,132) (59,221) 53tt.860 6.5 ,-4"" 2013
1-Au9 2013 74,858 1.059.259 4,231 980,170 592:,214 (2,132) (59,221) 530.860 1.0 1.feb 2014
1-Feb 20'4 74.858 1,112.222 4,443 1,032,921 624,088 (2,241) (52,409) 559,430 1.5 1-Aug 2014
1-Aug 2014 74,858 1.112,m 4,443 1.()32,921 624,086 (2.24n (62.409) 559,430 '.0 '.fob 2015
'.Feb 20,. 74.858 1,161.833 4,665 1,089,310 65'1.551 (~367) (65,755) 689,429 65 1...4u9 2015
1-Aug 2015 74,858 1,167,633 4,665 t,088,310 657,551 (-UST) (65,755) 589,429 9.0 l.fob 2016
1-Feb 20'6 14.656 1,226.225 4,898 1.146.468 692,691 (2,494) (69,269) 620,928 ..5 ,-4"" 2016
1-Aug 2016 74,858 1.226,225 4,898 1,146,468 692,691 (Z,494) (69,269) 620,928 10.0 l.fob 2011
'.Feb 2017 74,856 1,287,536 5,143 1,201,535 729,58& (2,627) (72,959) 654,001 10.5 1...4u9 2017
1-Aug 2017 74,858 1,287,536 5,143 1,201,535 729.586 (2,627) (72.959) 654.001 11.0 1-Feb 2018
'~Feb 20'6 14.858 1,351,913 5,400 1,271,654 768,327 (2,765) (16,833) 600,729 11,5 1-AuQ 2018
1-Aug 2016 74,858 1,351.913 5,400 1,271,854 768,327 (2,765) (76.833) 688,729 12.0 1.fob. 2019
1-Feb 2019 74,858 1,419,50B 5,670 1.338,980 909,005 (2.912) (80,901) 725,192 '~5 1-Aug 2019
HIu, 2019 74,858 1,419,509 5,670 1.336,980 809,005 (2,912) (80,901) 725,192 13.0 l.fob 2020
1-Feb 2020 74.658 ',490,484 5,954 1,409,672 851,717 (3,(l66) (65,172) 163,479 '~5 1-Aug 20"
l-Aug 2020 74,659 1,490,484 5,954 1.409.672 851,717 (3.066) (85.172) 763,479 14.0 1.feb 202'
1-Feb 2021 74,856 1.565,008 U51 1,483,898 696"" (3,228) (89,656) 803,680 145 1-Aug 202'
1-Aug 2021 14.858 1,565,008 &.251 1.483,998 ....... 13,228) {89,656} 603.680 15.0 '.fob 2022
1-Feb 2022 74,859 1.643,259 &.564 1,561,836 ll43.654 (3,397) (94,365) 845,891 155 '..... 2022
1-Aug 2022 74,858 1,643,259 6.564 1.561,836 ll43.654 (3,397) (94,365) 845,891 16.0 1..feb 2023
1-Feb 2023 74,658 1.725,421 6.892 1,643,671 993.098 (3,575) (99,310) 890,213 16.5 1-Aug 2023
1-Aug 2023 74,858 1,725,421 '~92 1,643,671 993,098 (3,575) (99,310) 890.213 17.0 1.feb 202'
1-Feb 2024 74,658 1.811,693 7,237 1,729.598 1,045.014 (3,762) (104,501) 936,751 17.5 1..Aug 2024
1-Au9 2024 74,859 1.811,693 7.231 1,729.598 1.045.014 13.762) (104,501) 936,751 18.0 1-Feb 2025
1-Feb 2025 74,858 1.902,277 7.599 1,019.820 , ,099,526 (3.958) (109,953) 985.615 18.5 1-Aug 2025
1-Aug 2025 74,858 1,902.2n 7,599 1,819,820 1,099.526 (3.959) (109,953) 985,615 19.0 l.fob 2026
1-Feb 2010 74,858 1.997,391 7,979 1,914,554 1,156,764 (4,164) (1\5,676) 1,036.923 19.5 ,-4"" 2026
,...."" 2026 14.858 1,997,391 7,979 1,914,554 1,156,764 (4,164) (115,676) 1,036,923 20.0 l""ob 2021
l""ob 2021 74,858 2,097.261 8,378 2,014.025 1.216.864 (4,381) (12.1,686) 1,090,797 20.5 1-4"" 2027
1-Au9 2021 74.858 2,097.261 8,378 2.014,025 1,2\6.864 14,381) (121,686) 1,090.197 21.0 1.fob 2028
1-Feb 202' 14,858 2.202,124 6.'" 2,118,469 1.219,968 (4,608) (127,997) 1,147,364 21.5 ,-4"" 2026
1-Aug 2026 74,858 2,202,124 8,796 2,118.469 1,279,968 (4,608) (127,997) 1.147,364 22.. 1.feb 202ll
'-Feb 202. 74.858 2.312,23D 9,236 2.22:8,135 1,346.228 (4.846) (134,623) 1.206,159 22.5 h~ug 202ll
1-Aug 202. 74,859 2,312,230 '.- 2,228,135 1,346,228 (4,846) (134.623) 1,206,759 23.0 1.fob "'"
1--Feb 2030 74,858 2,427',841 9,698 2,343.285 1,415,801 (5,097) (141.580) 1,269,124 235 1-Aug 203ll
1-Aug 2030 1.\858 2,42',841 9,698 2,343.285 1,415,801 (5,097) (:41,580) t,2G9,124 24.0 1-FQb 2031
1-Feb 2031 7<.658 2.549,233 10,183 2,464,192 1,488.853 (5,360) (148,8851 1,334,607 24.5 1-Aug 203'
1-Aug 2031 74,858 2,649,233 10,193 2.464,192 1,4$8,853 (5,360) (148,885) 1.334,607 25.0 1-FQb 2032
1-FelJ 2032 14\858 2,676,695 10,692 2,591,145 1,595.557 (5,636) 1:56.5'.:1 1,403,365 255 1-Aug 2032
1-A~n 2032 74858 2 678 695 10,692 2591,145 1 565 557 ;5636\ 156,556 1.400 365 10.0 1-FQb "33
TOTALS 45,022,597 (162.081) (4,502,260) 40,358,256
PRESENT VALUE 15,704,192 (56,Sl7) 14,On.716
,:,'"
~":'1:">. .
'-w:/
CBshflow 5-17..05
512112005
PAGE3cf6
CtTY OF HOPKINS. MAm STREET
PROJECT B
.c..,
"..
,
D1sl11Cl:
InflalionRate
Pay As You Go Note Rate
Take Qui Revenue Note Rate
Take out Revenue Note Coverage
AscaI D1sp. Contnbution Ratio
Pooling Assumption
Class Rate Assumptions
Assumes rlfStTax lneramenl
YUl'$ ofT3.\' Increment
Assumes last Tax tncremenl
YealS ofTm; Increment
Assumes Note Issued
Tax CapacIty (ExtensIon) Ral~. Frozen
Tax Capacity (EKtenslon) Rate - Currenl
state Education Rate
Area Wide Rate
AmounloflnchmDntwlU vary dllpendlnll upon rnatkelvlllue, tax IllItlID. clast rates,
conakucUon setl&dufe. IUld InflaUon on marbt value. foliation on fax rans
ClUlnotbec lured.
BASIC ASSUMPTIONS
PLEASE READ ALL 4SSUMPTtONS
NEW Redevelopment District
5.0'000%
6.15%
N1A
N1A
26.4202%
10.00%
1.5%-2.0%
2007
20
2032
20
N1A
1.2()8390
1.208390
0.541090
1.371070
Pay 2.005
Pay 2.0OS
Pay200s
Pay 2005
EST Pay 2005
FROZEN TAX CAPACITY PAYABLE Pay 2005
l'otaIMar1tel c"" Base Tax
PIC Owner Address ValuEt Ra" CAn8atv
240117-22~.oo33 130,300
24-117-22-42.0032 n,ooo
24-117-22-42.o1l31 14,000
24-117-22-42.0030 89,000
24-117-22-42.(1049 493,500
24-117-22-42-0050 117,000
24-111.22-42.oo4t1 210,000
4-111-22-42.0161 48.000
24-111-22-42-0056 52.000
24-111-22-42.()169 46,000
24-11;>-22-42-009 n,ooo
24-1n-22-42-ot129 230000
'"'' 1.m 800
:O~n:hIr 9,94% 157.fl21 1.5%-~.0% ~402
Hou.l.... QG.D6% 1,42$.179 1.00% 14282
ToIa' I.' .600 16,684
PROJECT VALUE INFORMAll0N
Namberof
DeVEllopment Sq.Fl- TotalCos1 Units r""".... rala' -., rex rex
Tw. Units ....u"" 60 Sn.F1.-Unit T""" Value - CeM.... Assessable Pavabl
Coma. 1,022 220,000 01 52.658 $135,581 11,220,000 1.00% 112,200 '00' 2000
,'"""""'. 2,365 490,000 9 $5,921 &:53,290 4,410,000 1.00% 44,100 200' 2008
RalDll 5,518 163.10 5,518 $5.60 $30,920 900,000 1.5"10-2.0% 17,250 '00' 2000
,,,. 5,578 1219.791 16,530,000 113,550'
TA)(ESPAYABLE
Total C,~ As"',
Development T'" Tex T", CIty FISOrs Slate EO
T"". Can~~t\' C811acitv eeo:.., r",es Tm;es Tex..
Co.... 112,200 112,200 0 135,581 0 0
-"'- 44,100 44,100 0 53.290 0 0
Rel811 17,250 12.693 4.667 15.338 6,249 9,334
T". 173,550 168,993 4.557 204,209 6249 93..
...
Li'?
.~'
Cashflow 5-11-05
-------
~_.
pp,Gl:4ol6
....,'hlS~e.e.t
0>'1<1.... ~.
C\1'l Of \\ PttOJEC1"\l
ijtCREMENTCAS,", ~~t1C1f1
,.~ Alld1\.Of
Se(\'U-AAnua\ ,~~O%
G\"Q'Ss 0.'36%
"~
poo\11'l9
"5.00"/0.
\ "".,""..... ~ 1
Sen'l\-Moua PA'ftAENl oA: '1((.
GroSS ~. 'lOGS
\l\C~en\ ,\_Au9 ~
o '!..fob 2006
o ,.PJJ9 iljl)'1
1..fob 'lOtI7
o 1..JW9 2{)\)&
~ 1-feb 2.008
,..Alll) '2.Qil~
6&,g13. ,..t=a'o 1009
66,9~ 1..p.ug 20'\0
12.19 1.fe\) Z01C
12,79& 1at.U9 1011
1&Ji14 '\.feb 20'\\
16.6'\4 ,.ro,u9 2.012
&1,03"\ ,..fell- 2012
61.031 ,.AUt to1'3
65.45& ..,-feb 2013
65.456 1~ug 2.014
90;1.08 ,\-Fc'D 201~
90,\06 ,,,,,,,US ?;l)1S-
94.969 ,.fOb 2015
94.959 1-Aug 2016
100.115 1..fd;) 101.6
100.115 '\~ 2M7
105,491 1..fe'o 201.1
105.491 t,.JWg 2.01a
...",146 \..f60 20'\6
111.1460 1-/lA19 1(}19
,\,1,oS1 1,.fe'o 2019
\11,0&" 1-AU9 2.D20
1'13,'1.2 ,.f8\) 2.Q20
121,3'\2 ,.l&JJg '};01.\
129.:A 1..feb 2021
129. 1-AU9 20~
'\35.112. 1-Feb 2022-
\~.T22 ,.!\U9 2t)23
1'@'.9'l5 ,.feu 21)23
143.935 i,.-IW9 'lJ'P.A
151.508 '\.fe'O 2024
151.506 1-Jl.'J9 ~75
159.459 1-Feb 10:2.5
159.659 1.Jl419 2026
161,606 '\..feU 2026
,\&T,f!!Jl'iJ ,-AU9 'l!J'11
. '\16.51'& ,\.fe'll 2.Q27
116.S7~ ,..p.ug, 2028-
165.1 1..f0b 10-2.6
'\85.1&0 1-AtlQ 2029
\95.445 ,-Feb 2029
\VS,4A5 ,\..$IlJ\l N10
ZO'S,,'S,Q4 \..fe\) '2030
'Z~5.594 1-Au9 7.6'31
216.150 1..fe'b 2031
216.250 1.~ 2032-
'221.43& 1.fa\) 2032
ztf ,436 ,\..Jl.U9 1fJ'S'$
2'39.\!J,6 ,.M
~.1B6
6.92.!t.l~
.....~
j
5JZfll00S
\
cap.~red.
M\I\IJ:S rlS CIS Ta-A C0.pac\W
pl1#lGl 1'()J\. Cal)~\\Y 1)05
"tal'. Os.\9 A\lQl.ls\.2 0
. ...... _~'\I;,\U8
ca .."'" p(la$I:Jl'" 0 0
\6,'t>'T"
16.t584 l) 0
16.664 () 0
1.6.684 0 0
\6,684 0 '\6'2..Q4~
"1.6.664 '3.91'1 152.,943
173,550 '3.92'3 161.424
11$.550 4.119 161..424
1&2,226 4.1.19 '\1Q,330
,&1,ozza 4;315 110,330
191.'339 4,31S 119.&a1
191.'339 4.541 179.M"I.
200.9G6 4.54'\ 169.499
1JJO,9l)6 4,16& "1.89.499
2.10,951 4,168 199,808
210.95'\ &,Qfll 199.60&
22,,499 'S,.OO? 210,633
211,499 5.2.51 210.633
232.514 5:Z51 221.996
'23'1.,514 S,520 22-1.~&
2,44,102. 5,520 233.932-
2.44,"lO'l. 5.196 233.932
2.56-412 5;196 246.463
156,412 6.0135 246.46'3
269'.2.33 6.0&5 259.621
1&9)3'3 &,39ll ~.62.1.
ZS2..695 6.390 213.436
'm'J..695 6;109 2.1'3.43&
zg6JI,29 6.109 281,942
296.629 T.045 2.61.942
311.611 1,045 303~13
3'\1.611. 1;191 303.113
'2.1.154 1;391 3'\9.'\66
3'l7 ,2&4 1.161 3'\9,166
343.6'\1 1.167 3'3S.9'59
343.61.7 5,'\55 3'35,9'39
3'00.196 5.1.55 3530.591
~.19& 6,563 353.$91.
316.63& 6~ 372.105
'3~.~ 6~1 ~2~Q5
391.760 $,99'\ 391.'544
391.160 9,441 ,g"l..644
41T,eel) 9.441 411.955
4'\1.6&9 9.913 41'\.955
43&,552. 9,9"\3 433,3&1
438.';1:,'2. ,0,40& ~.3&1
.wu.4&O 10.406 4$.$9'\
46O.46D 10.929 4'55.69'\
~.S':)4 10.92.9 419.510
483,5<14 11..415 419.$2.0
51)1.619 '\1.415 504.'330
SOT ,619 '\2.1)49 504,330
533.063 '\'2..M9 530,'36'\
513.06'3 12.651 53Q.361
569.T16 12.651
&;9.116
.
o
o
o
o
92.401
92,4CIl
0(1""
91,5$2
1()'2.912.
102.9'2-
'\08,562
1l)8,~
114.494
114.494
1.20.T2.3
120;t~
1't1.?m
,27,m3
,,....130
H4,131l
141,341
'\41:Yrt
,\~,9'\.2.
'\46.912
156,662-
15'6.&6'2
165,'lO9
'1&5.21)9
113,~
113,QU
1&'3.11&
16'3,116
,......
,ll2....
..,ll'5
ttJ'l.,9?A
213.6S5
:21'3.e36
214,62.4
224.614
'2,3ij.5fl9
_.569
7.46.9G1
'l4&,9~1
2.61.650
'",....
215,447
2.15.441
2.69,123
289,113-
3\l4,114
31)4.114
'SIi'f'IS'
310.4&'3
9.11&,e;71
3.'166:368
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o
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{31t1l
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{391)
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(509'
(...,
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(5651
(595'
(595'
(.2Il'
(62.6)
("'1
('6S9)
(694'
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('T31.)
(13'\)
{1119l
(109)
\~l
(as)
(8521
(."1'
(..'"
(94l1
(94l1
(gg2'
("2)
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(1.091)
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{'\.,,~~
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o
o
.
.
o
(~,2.41)
l,9.241)
(9.153)
(9,15'))
(16,'2.91)
l10:2.91)
(,0.0561
('0....'
(,\,\.449)
(1,\,449)
(12.012.)
(12.01:2)
(12.126)
(12.126)
~13.4'\3)
(13.41'3)
l14.134}
(14.134)
('\4.691)
(14.69'\)
t\s.e66)
('\5.6&6)
(16.57.1)
(16.521.)
(17.391)
~tl,391)
l\6.3'\6)
(1&.3'\6)
(,g.....1
(19.2.64)
(20....'
(......1
("Z.,\,'1&4)
(2,.....,
(12i..2'
l'21.461\
(.....1\
(23.651)
~2.4,690)
('Z4.$gt))
(2.6,165)
(2.6,165~
('l,J.545)
(21....'
(...912)
('Z$,9'7'2.)
(30.411)
(30,41'\)
l32.Q4~~
i3,-;;04S1
(921.&66)
t3:t6.63T'i
-"'"
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,.". z>05 16....
,\-1\119 2006 &4
t.fe'O ....06 '\6,6
1 p,ug '" 16.684
. '2.001 16.6&4
1-F~ 2.001 16.6&4
....AU9 200& 1.6.6&4
1..Fal:l '2l)0! "\6,68.4
"~ 1009 16.6&\
1.f '2.0n~ 16.664
1.Jl,Ug 2MO 16.654
'\.f9b ~1.() 1.6,664
1-Al.19 2i)1'\ 16,664
t-fa'o 10'\1 ,._.
'\.NJ9" p<r'
1-feb 1.131,<. 1t).684
1~Q 2012 16.6&4
fin 2$)13 '\6.tiB4
,.F 2013 1.6,684
,\-Au9 2.0'\~ '\6.6&4
1-fe.'O '2.l114 6&4
,\-1\JJ9 'l()15 \G.
1.,f9~ 2.015 16.664
, IW9 16,664
. 2.{)16 "'6.664
1-faD '2.1)'\6 "\6~&4
1..1\119 2.0'\1 B4
1...fe'o 20'\1 1&,6
1/WIJ 16.664
. 2MB- 1&.664
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1.j\\lg 1()'\9 16.664
1..1'&'0 ?J)19 '\6.6&4
,\.AU9 ?fP!J 6aA
1.feb tt)'ll1 11).
\.rwg; ......2.... 16.6SA
1.~eD ,<.v 16.664
~2.1 16.664
.....AUg 'lO'Z'Z 16.664
~-::. to'Z2. 16.664
\.feb ~ 16,6114
,-AUlJ ,..., 4 \6~
,\.fob ~4 \6.664-
1-A\l9 ,<.v,<. 16.664
1-FetI '2.Q25 16.664
'\.t0u9 2.015 ,\6,6&4
,\,.fab 21)'2:6 16,'l8A
t.l\UQ 2026 16.66A
1..feb 7.021 16.664
1-P/ol9 '2.021 16.6&4
....feb 2.02& 16,6&4
,\-AA9 '102B '\6';6!l4
t.f4'O 2;C29 '\6,6&lo
1..Au9 2019 16,684
'\..f$b 7.~ 16,684
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. 1031 16.664
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l16.2.54\
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\15.10&)
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l19.0&9)
(21).120)
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(2.\.'lO\)
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(....'"
(2.4.161)
(14.16'1
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-
512712lJ()5
HOt'KINS2-11
CITY OF HOPKINS _ MAIN STREET
Summary
PAGE5of6
BASIc ASSUMPTIONS
PLEASE READ ALL ASSUMPTIONS
NEW Redevelopment District
-5.0000%
7.00%
6.75%
1.20%
26.0824% EST Pay 2005
10.00%
Db_
IrdlalionRate
Pay As YQtJ Go Nate Rate
Take out Revenue NoteROIte
Taka out Revenue Note Coverage
AscalDlsp.ConlrlbubonRatlo
Pooling Assumption
Class Rate Assumptions
Assumes Rm Tax IllCt8lT'ient
Years of Tax lnaemenl
Assumes Last Tax Increment
Years of Tax InCf8menl
Assumes Note Issued
Tax Capacity IExtfmSlon) Rate - Frozen
Tax Capadly (ExWnslon) Rate - Current
State EducaUon Rale
"".Rate
olinc:nllntlltwlnv~ dapencllngvpon ~rbt"lIliu., tQll,rtltoa,dtM mos,
COIlllllldlbn~,llftdlftnotlonC>>lmDJtult,.ll1uo.lnfl.lIonontax....
COInnOlbol:ll ..d..
2007
2'
2032
26
N1A
1.208390
1.208390
0.$11012
1.2:98630
Pay 2005
Pay200S
Pay 2005
Pay 2005
CashfJow S-17~S
,"
..<,
:,'h~,~i~:
.s
.~~
512112005
HOPKINS 2-11
PAGE6of6
.
CITY OF HOPKINS. MAIN STREET
Summary
TAX INCREMENT CASH FL.OW
""""'" Project MlnusFisOls Captured SemJ.Annual Auditor AcIminislratlon Seml-Annual Ending Period
BaseTllK T'" TaxCapaQty TaxCapaClly Gross G",,,, PAYMENT DATE
Mth. y,. Ca""ci'" Ca acltv Increment 0.36% 15.00% lnaement Mth. y,.
I-Fe!> 2"", 91,~ 91.542 0 0 0 0 0 1-Aug 2005
1-Aug 2005 91.542 91.542 0 0 0 0 0 l-Fe!> 200<
1-Feb 2006 91,542 91.542 0 0 0 0 0 0 0 1-Aug 2006
1-Avg 2005 91.642 91.542 0 0 0 0 0 0 0 '-Fe!> 2007
1-FBb 2007 91.542 91.542 0 0 0 0 0 0 0.' ,...., 2007
1-Aug 2007 91.542 91,542 0 0 0 0 0 0 1.0 '-Fob 2008
l-Fe!> 2008 91.542 637.014 f7.ST8) 537,894 324,993 (1.110) (46,360) 271,463 lS 1-.1\u9 2008
1-Aug 2006 91,542 637.014 (1.578) 531.894 324,993 (1.110) (46,360) 271,463 20 '-Fob 2JJlJ!J
1-Feb 2009 91.542 1,091,255 (1.774) 991.939 602,950 (2.111) (74,925) 525,854 2' 1-Au9 2009
1-Aug 2009 91.542 1.091.255 (7.774) 991.939 602,850 (2.111) (14,925) 525,854 ao 1.feb 2010
1-Feb 2010 91.542 1.106.367 (1.980) 1.006.844 ....330 (2.190) (76.210) 529,810 a. '-Aug 2010
1-Aug 2010 91.542 1.106.361 (1,980) 1.006,844 809,330 (2.190) (16,210) 529,870 4.0 l-Fob 2011
I-Fob 2011 91.542 1.161,685 (8.319) 1,061.764 641.512 (2.309) (80,436) 558.767 4.5 1-Aug 2011
1-Aug 2011 91.542 1.161.685 (8.379) 1.061.764 641,512 (2,309) (80.436) 558,167 '.0 l-Fob 2012
1-Feb 2012 91.542 1,219.769 (8,798) 1.119.429 616,353 (2.435) (84,809) 589,109 .. 1-Aug 2012
1-Aug 2012 91,542 1,219.169 (8.798) 1,119,429 676,353 (2435) (84.809) 589.109 '.0 l-Fob 2013
1-Feb 2013 91,542 1.280.758 (9,238) 1.179.978 712,937 (2.567) (89.402) 620,968 ... 1-Aug 2013
1-Aug 2013 91.542 1.280.758 (9.238) 1.179.978 712,937 (2,561) (89,402) 620.968 7.0 1-Feb 2014
'-Fe!> 2014 91.542 1.344.196 (9,700) 1.243,554 151.349 (2,105) (94,224) 654.420 7.' 1-Aug 2014
1-Aug 2014 91.542 1.344,196 (9.700) 1.243.554 151,349 (2,705) (94,224) 654,420 '.0 1.f'eb 2015
1.Feb 2015 91.542 1,412.035 (10.185) 1.310,308 791,682 (2,850) (99,288) ....... ... 1-Aug 2015
l-Aug 2015 91.542 1,412.035 (10,185) 1.310.308 791.682 (2,850) (99,288) 689,544 '.0 1.f'eb 2016
1-Feb 2016 91,542 1.482.637 (10.694) 1,380,401 834.031 (3,003) (104,604) 726,425 ,.. 1-Aug 2016
1-Aug 2016 at542 1.482,637 (10,694) 1.380.401 834.031 (3.003) (104,604) 726.425 10.0 1-Feb 2017
l-Feb 20J7 91,542: 1.556,769 (11.229) 1,453,998 878.498 (3,163) (110.187) 165,149 10.5 1-Aug 2017
1-Aug 2017 91.542 1.556.769 (11,229) 1.453,998 - 878,498 (3,163) (1'D.18n 165,149 11.0 .-Fob 2018
1-Feb 2018 91,542 1.634,608 (11,790) 1,531.275 925.199 (3,331) (116,048) 805,810 11.5 1-Aug 2018
l-Aug 2018 91,542 1.634,608 (11,790) 1,531.215 925.169 (3,331) ("6.048) 805,810 12.0 1-Feb 20'9
1-Feb 20'9 91,542 1.718.338 (12.380) 1.612.416 974,214 (3.son (122,203) ....504 12.5 l-Aug 201.
1-Aug 2019 91.542 1.716,338 (12,380) 1.612,416 974,214 (3,507) (122,203) ....504 .ao 1-Feb 2020
1-Feb 2020 91.542 1.802,155 (12.998) 1,697.614 1,025,690 (3,692) (128.665) 893,332 13.5 1-Aug .1120
1-Au9 21120 91.542 1.802,155 (12,998) '.697.614 1.025.690 (3,692) (128.665) "~332 14.0 l-Feb 21121
1-Feb 2021 91,542 1.892,263 (13,648) 1,787.012 1,079.740 (3,881) (135,450) 940.402 14.5 1-Aug 21121
l-Aug 2021 91.542 1.892,263 (13,648) 1,787.072 1,079.140 (3,887) (135.450) 940,402 150 1-Feb 21122
1-Feb 2022 91,542 1.9B6.876 (14,331) 1.881.002 1,136,492 (4.091) (142,575) 989.826 15.5 1-Aug 2f122
1.Aug Z022 91.542 1.986,876 (14.331) 1.881.002 1,136,492 (4,091'- (142,575) 989,826 16.0 1.feb 21123
1-Feb 21123 91.542 2,086,219 (15,047) 1,979.630 1,196,082 (4,306) (150.056) 1,041.721 16.5 l-Aug 21123
1-Au9 21123 91.542 2.086.219 (15,04n 1,979.630 1.196,082 (4,305) (150,056) 1,041,121 f7.a ,-Fe, 202'
1-Feb 2024 91,542 2.190.530 (15,800) 2,083,188 1,256,652 (4.531) (157.911) 1.096,210 17.5 ,-Aug 2112'
1-Aug 21124 91,542 2,190.530 (15,800) 2,083,188 1,258.652 (4,531) (157.911) 1,096,210 18.0 1-Feb 21125
1-Feb '02' 91.542 2.300.057 (16,590) 2.191,925 1.324,350 (4,168) (166.159) 1.153.424 1M '-Aug 21125
l-Aug 2025 91.542 2,300.057 (16,590) 2.191,925 1,324,350 (4,768) (166,159) 1,153,424 19.0 1.feb 21126
1-Feb 21126 91,542 2.415.060 (17,419) 2,306,098 1.393,333 (5.016) (174.819) 1.213,498 19.5 1-Aug .025
1-Au9 21126 91,542 2.415.060 (17,419) 2,308,098 1,393,333 (5,016) (174.819) 1,213,498 20.0 1-Fob 21127
1-Feb 21127 91,542 2,5;\5,1313 (18,290) 2.425,980 1.465,165 (5.2n) (183.912) 1,216,571 20S '-A"" 21127
1-Aug 2027 91,542 2,535,613 (18.290) 2,425,980 1.465,765 (5,277) (183,912) 1,27e.5n 21.0 l-FeO 21128
1-Feb '028 91,542 2,662,603 (19,205) 2.551,856 1.541.819 (5.551) (f93.459) 1,342:.809 21.5 l-Aug 2112.
1-Au9 2028 91.542 2.662.603 (19.zo5) 2,551,856 1.541,819 (5.551) (193.459) 1.34~.809 22.0 l-FeO 21129
1-Feb 2029 91,542 2,795.734- (20,165) 2,684,026 1.621,675 (~ll381 (203.485) 1,41~,353 22.' 1-Aug 2112'
1-Au9 202' 91.542 2.195,734 (20,1651 2.684,026 1,621.675 (5.8381 (203.485) 1.412.353 2aO 1-Feb 2030
1-Feb 2030 91.542 2.935.520 (21.173) 2,822,805 1,705.524 (6.140) (214,011) 1,485,374 23.5 1-Aug 2030
1-Aug 2030 91.542 2.935.520 (21,173) 2,822.805 ',105.~ (8,140) (214,011) 1,465,374 24.0 l-FeO 2031
1.Feb 2031 91,542 .3,082,298 (22.232) 2,966.522 1.793, . (6...57) (225,064) , 1.562,046 24. '~lJ9 200'
1-Aug 2031 91.542 3,082,296 (22,232) 2.968,522 1,793,566 (6.457) (225,064) 1.562.046 25.0 1-Feb 2002
1-Feb 2032 91.542 3,236,411 g~'~~l 3.121,525 1,88fl,010 (6,790) j~36'''':l 1.642.551 2~' 1-Aug 2032
1-Aun 2032 91.542 3,236.411 3343 3.121.525 1,666 alo {e.79oi 236,669 1842.551 26.V 1-Feb 2003
TOTALS 54,301.474 {195,4851 (6',821,979) 47,284,010
PRESENT VAlUE 18,871.160 (67,936) 16,520,917
,,,.
.~:*
.y
Cashflow 5.17-05
APPENDIX E
MINNESOTA BUSINESS ASSISTANCE FORM
(MINNESOTA DEPARTMENT OF EMPLOYMENT AND ECONOMIC DEVELOPMENT)
APPENDIX
E-l
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,ES1,,'
~.
---- ------ ------ -------- -- --- ---
~~~y ~~
, . mJ1i~J(Jtrl Please fill in date agreement signed (same as qnestion 21)
.
... Minnesota Business Assistance Form
. The Minnesota Business A,sistance Form (MBAF) is u,ed to report each business subsidy and linancial assistance
agreement signed fromAul!us/1. 1999 t"roul!lz December 31.2003 unless goals have been achieved and reported
in a MBAF per Minn. Stat. ~116J.993 to ~116J.995.
. The following government agencies must subrnit a MBAF: I) any local government/agency that signed a business
subsidy agreement since January 1, 1999. or represents a population of more than 2,500; 2) all state government
agencies authorized to provide business subsidies.
. If a tocal or state government agency that is required to report has not done so by April I, DEED will mail a
warning. If it fail, to report by June I, it may not award any business subsidies until a report has been filed.
. Questions? Call (651) 296-0580. lnfom18tion on where to mail or fax your completed MBAF(s) is on page 4.
Section 1 Grantor Information
1. Name of grantor (funding entity) 2. Name of person completing this foml
3. Street address 4. City 5. ZtP code
6. County 7. Phone number 8. Fax number 9. E-mail address
10. Please indicate who in your organization should receive the MBAF if different from the person in Question 2.
ie Nameffitle Phone number Street address City ZIP code
t I. Classification of grantor (Malt one./f grantor is entity 12. Has your organization held a public hearing on and
created by gov 't age"cy. please indicate affiliation. For adopt~ criteria for awarding business subsidies in
example, a city EDA would check "City govemrnent.'~ compliance with Minn. Stat. ~t 16).9947 (Mark aile.)
. -City government . -Yes, in 2004 (attach crheria)
. .Yes. in 2004 but have not yet adopted criteria
. -County government . .Yes, prior to 2004
. -Regional government if Yes:
Heal"ing Dote:_ Year Cliteria Submitted:
. -State government
. -No
. O()ther (please specifY.) . o()ther (Please attach explanation.)
13. Has your organization signed any agreements to award a business subsidy or financial assistance from August I, 1999
through December 31, 2003 unless goals have been achieved and reported in a previous filed MBAF? (Ma,'k one.)
. .Yes (Complete the remainder of the {ann Ullless goats have been aclrieved Olld . -l'Jo ~tOD here. go to section 5 011 page 4.)
reported III apreviouslyfiled MBAF per Mill". Stat. 81161.993 alld sJ/6J.994.)
Section 2 ReciDient Information
14. Name of business or organization 1 S. Address where business subsidy or financial assistance
receiving subsidy or financial assistance will be used
Street address City State ZIP code
16. Does the recipient have a parent corporation? (Mm'k one.)
PC'- . .Yes (Indicate name and address of parent corporation beIQU'. Ifmore than one, indicate ultimate owner.)
I
. . -No
Name of parent corporation Street address City State ZIP code
Minnesota Business Assistance Fonn (1/14/04) Page I of4 Dept. of Employment & Economic Development
17. Industry of recipient's facility (Mark one.):
. -Manufacturing . -Services . .Finance~ Insurance. Real Estate
. -Retail Trade . 'Whotesale Trade . -Construction . -othe, (please specifY)
18. Did the recipient relocate as a result of signing this agreement? (Mark olle.)
. .Yes (Indicate city a'ld state of previolls address and reason recipielll did not complete tlris project at that address.)
. 'No (Go ro Question 19.)
City/State of prevlous address Reason project not completed at previous address
19. Would the recipient have remained in previous location or relocated elsewhere ifoo! awarded this business subsidy or
financial assistance? (Mark olle.)
. -Remained at previous location . -Relocated to different Mitmesota location . -Relocated outside Minnesota
Section 3 Al!l"eement Information
20. Total dollar value of business subsidy or financial 21. Date agreement signed (1" addition to the agreement
assistance (Please sepalYlte value by type ill Questions 24 date. i"dicate an)' dates the agreemellt was amended.)
and 15.)
22. Benefit date (Indicate the date the recipiem will benefit/rom the busilless subsidy or financial assistance. For example,
indicate the date improvements u1erefbzished, equipment was placed illto sen'ice. or the recipie1ll occupied the property,
whichever is earlier.)
23. Does the agreement provide a business subsidy or one of the four types of financial assistance (see Question 25) required to
be reported? (Mark one.)
. -business subsidy . -financial assistance
24. If the agreement provided a business subsidy, please 25. [fthe assistance was one of the four types offinancial
indicate the t)'pe(s) and total dollar value for eacb type. assistance, please indicate the type(s).
.. "Dot applicable, agreement provided. financial assistance .. '"I\ot applicable, agreement provided a business subsidy
.. .loan (only principal) $ .. "assistance for property polluted $
. "grant (Le., forgivable loan) $ by contaminants
.. "'tax abatement $ .. '"assistance for renovating building $
.. "Tlf or other tax reduction or deferral $ srock or bringing it up to code, and
. 'guarantee of payment $ assistance provided for designated
. -contribution of property or infiastructure $ historic preservatio:'l. districts, when
.. "preferential use of governmental facilities $ 50% or less of total cost
. .Jand contribution $ . "assistance for pollution control or $
. 'Odler (SpecifY subsidy type.) $ abatement
.. "8Ssistance for a TIF soils condition district $
26. If the assistance included tax increment financing, please 27. Are any other grantors providing a business subsidy or
indicate the type ofTIF di,trict? (Mark otle.) financial assistance to the same project? (Mark one.)
.. -not applicable. assistance was not in the fotm ofTlF .. .Yes (Specifj' each granto,. and the value of their
assista11ce below; attach all additional sheet if necessaIY.)
. -redevelopment
. 'fenewal and renovation . -No
.. -soils condition
. oeconomic development Grantor(s} and value of the agreement(s):
. "Il1ined underground space
.. "'hazardous substance subdistrict
Grantor Value ($)
Grantor V.lue ($)
Minnesota Business Assistance FonD (J1l4/04}
Page 2 of4
Dept. ofEmplQyment & Economic Development
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t.
.'
ill
.;~
..
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".'....
'.'~~1'~
':'..s
s
4GoI
d P bli P
Id
oft d' th A
ection a san u c urnose enti Ie m e ll!:reement
28. Minn. Stat. fi 116J.994 requires that business subsidy and financial assistance agreements state a public purpose. Which
of the followiog pubtic purposes were stated in the agreement? (Mark all that apply.)
. -Enhancing economic diversity . -Increasing tax base (cannot be only purpose)
. <Creating high-quality job growth . <lther (please specifY)
. -Job retention
. -Stabilizing the community
29. Indicate whether the agreement included the following types of goals, and whether the recipient h~d attained those goals
at the time of this report. (Fill it! tire boxes and attaimnem daters) for each goal.)
Goal, Target attainment All goals
established? dates (month & year) attained?
A) Specific wage and job goals to be attained within 2 years . .Yes . -No . .Yes . ~o
B) Other job-creation and/or retention goats . .Yes . -No . 'Yes . -No
C) Other wage goals . .Yes . -No . .Yes . -No
D) Other goals other than wage and job goals . .Yes . -No . .Yes . -No
(Please auach descriptions of goals and progress IowaI'd
attaimnellt ifllol documented ill Questions 30 and 31.)
30. For each of the following wage categories, indicate the job creation and/or retention goals stated in the
agreement and the average hourly value of any empJoyer-provided health insurance goals for those jobs. (01111' illdicate job
creation goals infilll-tirne equil.alems if you are unable to separate goals bJ'full- and part-time positions.)
Full~thne l'art-dme/ FTE (onlv If goals not
Hourly Wage Job Seasonavtemp. ...led as FT/PT) Job Retention Hourly Value of
(excluding benefits) Creation Job Creation Job Creation HeaJth Insunlhce
00 boW'ly wage-level goal - - - - '-
IesslhanS7.00 - - - - '-
S7.00 loS8.99 - - - - '-
S9.OOto$10.99 - - - - '-
S1\.00'oSI2.99 - - - - '-
$1J.00 to $14.99 - - - - , -
SIS.OOandhigher - - - - '-
3!, for each of the following wege categories, indicate the number of actual jobs crea;ed and/or retained since the benefir
date and dIe actual hourly value of any employer-provided health insurance for those jobs. (Ql1.!J?)1uficatejob creation ill
jUll~lime equivalents ifYOl/ are ullable to separalejob creation into full~ QlId part-rime positions.)
FuU-time Part-time! FTE (2!!Jv if unable to
Hourly Wage Job SeasonallTemp. separate FT/PT) Job Retention Houri)' Value of
(exdudlng benefits) Creation Job Creation Job Creation Health Insurance
less than $7.00 - - - - '-
S7.00 to $8.99 - - - -- '-
$9.001<>$10.99 - - - - '-
Stl.OOto S12.99 - - - - '-
S13.oo to $14.99 - - - - '-
$15.00 and higher - - - - '-
32. Has the recipient achieved aU Roals (see Questions 29, 30 and 31) and fulfilled all obli28.tions stipulated in the agreement?
(Mark one.)
. .Yes . -No
Minnesota Business Assi.stance Fonn (1114/04)
Page3of4
Dept. of Employment & Economic Development
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Section 5 Recipients Failing to Fulfill Obligations .
(Do /lot complete this section if you comvleted it on another MBAF submitted to DEED.)
33. During the period January 1. 2003 through December 31, 2003. did your organization have any recipients who failed to
report as required by Minn. Stat. ~lt61.993 and ~ 116J.994? {Mark one.}
. .Yes (ItJdicate the name of each ,'ecipie/Jt failing 10 report and the value of subsidy orjillQllcial assistance awarded to that
recipient. Attac" additional pages ijnecessalY.)
. -No
Name of recipient Type of subsidy or assistance (See Questions 24 and 25.) Value of subsidy or assistance
34, Did your organization bave any recipients who failed to achieve any goals or futfill any other obligations under an
agreement signed on or after August 1. 1999. that were required to be fulfilled by the time of this report? (Mark one.)
. .Yes (Complete the remainder of this section.) . -No (Stop here alld submit fonn to DEED .)
3;. _ 39. Provide the following information for each recipient failing to fulfill goals or any other temlS of an agreement that
were to be attained by the time of reporting. (Attaclt additiollal pages if llecessalJ1.)
35. lntonnation on recipient and agreement:
Name of recipient in default Type of subsidy or assistance Initial value of
sub~idy or assistance
Street address of recipient City/ZIP code of recipient Outstanding value of
subsidy or assistance
36. Reason(s) for default (Mark all that apply.):
.. -recipient ceased operation .. "recipient relocated to a different conununity
.. -recipient was unable to fill vacant positions .. 'Other (SpecifY reason.)
37. To date, has the recipient fulfilled its repayment obligation? (Mark olle.)
.. "Yes .. "No. recipient has bel!Un to repay the assistance. . oNo. recipient has not beeun to repay the assistance.
38. Has the agreement been amended to extead the recipient's deadline for fulfilling its clJligations? (MarkOlre.)
.. 'Yes . -No
39. Describe the steps being taken to bring recipient into compliance or recoup the subsidy:
Return your completed MBAF(s) by Avrill. 2004, to:
Minnesota Business Assistance Fonn
Minnesota Department of Employment and Economic Development - AEO
500 Metro Square, 121 East 7'" Place
St. Paul, MN 55101-2146
Or fax to: (651) 215-3841 ,
."~
Minnesota Business Assistance Form (1114/04) Page 4 of4 Dept. of Employment & Economic Development
.
.
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~'7
APPENDIX F
REDEVELOPMENT QUALIFICATIONS FOR THE DISTRICT
In May of2005, LHB prepared a Report oflnspection Procedures and Results for Determining Qualifications
of a Tax Increment Financing District as a Redevelopment District. This report is being submitted under a
separate cover.
APPENDIX
F-I
APPENDIX G
BUT/FOR QUALIFICATIONS
;'.
~ut-ForAn8!~~i$
Current Market Value - Estimate
"~;" ' ' ."
$9,004,800
62.566.355
$53,561,555
18.803.224
$34,758,331
New Market Value - Estimate
Difference
Present Value of Tax Increment
Difference
Value Likely to Occur Without TIF is Les~ Than:
$34,758,331
At the current time, the site has an estimated $20 million in land acquisition, demolition and relocation costs.
In addition, the site requires from $3.5 million to $5 million for on-site structured parking to accommodate
the buyers ofthe for sale housing. These two factors result in a cost per unit for land that greatly exceeds
. market conditions. The tax increment is needed to reduce these costs and make them marketable.
APPENDIX
I'"
--'",'\.<.','''.
J "
.
~
."
0.1
~.ii;
~
USES
Construction Costs
Soft Costs
Relocation
Sales Commission
TOTAL USES
Price/Sq. Ft.
SOURCES
Condos
Retail Sales
Parking
TIF
Non
(. TOTAL SOURCES
Profit
Profit Percent
.,
.
APPENDIX
CITY OF HOPKINS
BUT FOR TEST
DISTRICT #3
SUMMARY BASEO ON THREE DIFFERENT MARKET ANALYSIS
High Average High
3yr 3 yr 6yr
$60,000,000 $60,000,000 $66,000,000
$28,632,248 $28,632,248 $28,632,248
$2,860,000 $2,860,000 $2,860,000
$4,915,028 $4,669,276 $5,308,230
$96,407,276 $96,161,524 $102,800,478
254.46 232.50 287.51
344,705
2 4,400
100 30,000
89,364,137 $84,895,930 96,513,268
$1,117,600 $1,117,600 $1,117,600
$3,000,000 $3,000,000 $3,000,000
$15,000,000 $19,000,000 $15,000,000
$108,481,737 $108,013,530 $115,630,866
$12,074,461 $11,852,006 $12,830,390
12.52% 12.33% 12.48%
0.2
CITY OF HOPKINS
COUNTY OF HENNEPIN
RESOLUTION RZOS-16
RESOLUTION OF THE HOPKINS PLANNING COMMISSION FINDING
THAT THE MODIFICATION TO THE REDEVELOPMENT PLAN FOR
REDEVELOPMENT PROJECT NO.1 AND THE TAX INCREMENT
FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT 1-3
CONFORM TO THE GENERAL PLANS FOR THE DEVELOPMENT
AND REDEVELOPMENT OF THE CITY.
WHEREAS, the City Council for the City of Hopkins, Minnesota (the "City"), has proposed
to adopt a modification to the Redevelopment Plan for Redevelopment Project No. 1 and Tax
Increment Financing Plan for Tax Increment Financing District 1-3 (collectively, the "Plan") and has
submitted the Plan to the Hopkins Planning Commission (the "Commission"), pursuant to Minnesota
Statutes, Section 469.175, Subdivision 3; and
WHEREAS, the Commission has reviewed the Plan to determine its conformity with the
general plans for the development and redevelopment of the City as described in the Comprehensive
Plan for the City.
NOW, THEREFORE, BE IT RESOLVED by the Commission that the Plan conforms with
the general plans for the development and redevelopment of the City as a whole.
Adopted this 31 sl day of May 2005.
ATTEST:
~/~
Mary Hatcher, Ch Ir
ISO SOUTK FIFTH STRE.E.T SUITE 2~OO
MINNEAPOLIS, MINNESOTA SS402
612-HS-ISOO MAIN
612-335-[657 FAX
LEONARD
STREET
AND
DEINARD
BRADLEY J. GUNN
612-335-1671 DIRECT
BRADLEY.GUNN@LEONARD.COM
July 12, 2005
Robert J. LindaU, Esq.
Kennedy & Graven Chartered
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, MN 55402
Re: Hopkins Block 64 Redevelopment
LS&D File No. 18630.00010
Dear Mr. LindaU:
I am writing in response to your letter dated June 27, 2005, concerning the
redevelopment proposal by Hopki,:!s Park Plaza and Spyder Development.
The specific responses to your inquiries and requests are as follows;
1. Earlier this afternoon I sent you a copy of the purchase agreement between
Hopkins Park Plaza and Spyder Development. As I told you, I believe there is an
amendment to the purchase agreement which provides that the inspection period
referenced in section 6.1 is extended to September 15,2005, and the closing date
referenced in section 7.1 is extended to 30 days after the expiration of the inspection
period.
2. As you are aware, neither Hopkins Park Plaza nor Spyder Development
have purchase or option agreements over those portions of Block 64 that they do not own.
Similarly, we note that GPS does not possess purchase or option agreements over those
portions of Block 64that it does not own. Hopkins Park Plaza and Spyder Development
are prepared to pursue such agreements as it may become necessary.
3. The redevelopment uses and proposed square footages were previously
submitted to the City Council at the public hearing on June 21, 10025.
4. Spider Development, L.L.C. has performed its own analysis of the market.
Principals of Spider have been the driving force in regard to the redevelopment of the 66th
LAW O'fF[CES IN MINNEAPOLIS, SAINT PAUL, MANKATO, SAINT CLOUD AND WASIDNGTON, D.C. A Professional Association
WWW.LEONARD.COM.
Robert J. Lindall, Esq.
Page 2
July 12,2005
and Lyndale area in Richfield, Minnesota, and numerous other projects, including Sun
Lake apartments and Sun Lake Woods apartments in Chaska, Minnesota. As a council
member in Chaska, and as a City Attorney for Richfield, you are personally aware of
their involvement and success in urban environments. Principals have also been involved
in Hopkins, Minnesota with Rosewood West since 1976. The lmowledge gained from
the various experiences with urban development has led Spider to conclude that the
market for the senior condos and assisted living in Hopkins i strong. The demographics
of both Hopkins and the United States improve daily as to s ior condos and assisted
living facilities. The past experiences and successes of S (ler Development, L.L.C. and
its principals have allowed Spider to conclude that the arket for the project is excellent,
particularly considering that the density at the site will less than alternate proposals
showing condos only.
5. We anticipate that the planning and zoning approvals would involve a
mixed-use PUD development, similar to what GPS has proposed. The majority ofthe
underlying zoning would remain the same, and the specific performance' standards would
typically be included in the development agreement between the City and the developer.
We have discussed the proposal with Jim Kerrigan, Rick Getschow and Nancy Anderson,
and they should be able to provide you with any additional information you may need.
6. We are continuing to refine the economic feasibility summary that was
presented to the City Council at the public hearing on June 21,2005, and also to develop
and document viable alternative development models. In light of the fact that GPS
required, and the City granted, several months for GPS to provide such information, we
expect the City to understand that the 10 working days since your request has simply not
been enough time to properly respond. Nonetheless, we hope to be able to provide the
City Council with additional information at the workshop tonight.
7. Construction would be commenced in the spring of 2006 and completed in
the summer of 2007.
8. We have already permitted LHB to inspect Hopkins Park Plaza, and you
have now requested that LHB be permitted to "thoroughly re-inspect" Hopkins Park
Plaza. Frankly, we would have hoped that the initial inspection would have been
sufficiently thorough to accomplish its intended purpose. Nonetheless, we are willing to
allow a re-inspection provided that our experts are allowed to inspect (for the first time)
the other eight buildings located within the proposed TIF District. If you wish to proceed
with the fe-inspection, we are able to schedule it anytime on Monday, July 18, 2005.
Robert J. LindaU, Esq.
Page 3
July 12,2005
Please feel free to contact me if you would like any other information or
documentation.
Very truly yours,
LEONARD, STREET AND DEINARD
Professional Association
By ~J1
Bradley J. Gun
BJG:c1p:2643324
Attachment
c: Wayne Rixmann
Jan Susee
Timothy T. Welch, Esq.
COrJ.b I ~s>is1nl (
Y-Il...-ro.,"(
& Associates, PLC
July 12, 2005
FAX MEMO:
Wayne P. Rixmann
Dear Wayne,
Attached is a draft summary of the development budgets for the 5th Main project. The
amounts are directly based on the cost figures provided by Frana Sons, a general contractor
and Cluts O'Brien Architects. Certain assumptions, such as fin cing, soft costs and sales are
based on our conversations with your staff.
As this is a draft, further analysis of costs, financing and alloc ions may be considered that will
impact the results of this development budget. As you work through thoughts, changes and other
concepts please contact me to assist in the analysis.
As YQu know our firm has been heavily involved in the real estate industry for over 20 years.
Our experience includes several residential rental projects around the country, many residential
and commercial projects here in the Twin Cities metro area. Recent projects we have consulted
on include the new cooperative housing projects, assisted living and custom multi-family
projects.
p~?
,
Carl G. Peterson
!""
Crl'lifitd Pub/it AU(lJmtallls
Business Ad\llSors
"ftTX COt/suitt/illS
6600 LYl'lda\l.,' A\'t~llll(, S.. Sui{(' I 10
Richfield, MN 55+2;
Ph 6(1-866-7414 Fx 6r2-g66-7~9)
5th & Main Development
Project Summary Retail/Assisted Condo's Total
~and Units 100 97 197
6,598,985 6,401,015 13,000,000
Construction costs
Hard costs, including parking per Frana/O'Brien
Condominiums 14,985,000 14,985,000
Assisted living 6,643,443 8,643,443
Retail space 1,441 ,000 1,441,000
Demolition 126,904 123,096 250,000
Commercial kitchen 250,000 250,000
Contingency 5.0% 533,067 755,405 1,266,472
Total Hard Costs 11,194,414 15,663,501 27,057,915
Soft Costs
Fees, b/4 financing costs 2.0% 355,668 445,290 601,156
Rent-up expense - assisted living 1,440,000 1,440,000
Rent-up expense - retail space 65, 65,691
Total Soft Costs 1,861,759 445,290 2,307,049
Financing Costs
Construction loan fees, 75% L TV 1.0% 147,414 170,324 317,737
Construction period interest 6.5% 716,642 630,327 1,546,969
Total Financing 866,055 1,000,651 1,666,706
Total Project Cost 20,521,213 23,710,456 44,231,671
Sales
Condominium units 97 270,000 26,190,000 26,190.000
Sale costs 6% (1,571,400) (1,571,400)
Total Sales 24.616,600 24,616,600
Gain (Loss) on Sate 906,142 906.142
Rental income - Assisted Living 100 2,400 2.860,000
Vacancy 3.0% (66,400)
Estimated operating expenses 45.0% (1,296.000)
Annual reserve payments 2.0% (57,600)
Rental income - Retail 131,000
Net operating cash flow before debt service 1.571.000
Loan payments, 25 year 6.5% 1,247.046
Annual cash flow (deficit) 323.954
.& Main Development
ject Summary - Condominiums/Retail
Land
Construction costs
Hard costs, including parking per Frana/O'Brien
Condominiums
DemolUion
Contingency 5.0%
Total Hard Costs
Soft Costs
Fees, b/4 .nancing costs
Arch fees, ivil eng
2.0%
2.8%
Total osts
Financing Costs
Construction loan fees, 75% L TV
Construction period interest
1.0%
6.5%
T olal Financing
Total Project Cost
Sales
Condominium units
Retail
Sale costs
326,726
7,370
6%
T alai Sales
Gain (Loss) on Sale
Units
262
13,000,000
41,533,000
250,000
2,089,150
43,872,150
1,137.443
1,592,420
2,729,863
447,015
2,905,598
3,352,613
62,954,626
233 76,127,158
150 1,105,500
(4,633,959)
72,598,699
9,644,072
c.o",J.,() I ra-a.,'(
Initial Draft
FAX TRANSMITTAL
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TO:
COll.fPANY:
H~YNL R1X!l:lAN
Attr.:
W~ne R.ix:oan
RE:
Hopl;::os Pmk Plaza
FAX No:
(952} 646-2nl
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lv1..<\IN AND FIFTH, HOPKINS rv1INNESOTA O'j,'l:z.<l~
C""-J BUILDING 1 (SOLlH\VEST)
CL ~BC~g
I:ESCF.IP":JO~~ "'-"1Er. rIBS: Sl!(XIJ>.-n T3JRD FOJR':":-l T\Y.:AL F:!IlCaH
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st:BIOTAL - '1"'\00 J1EIIROO~] ti 9 ~ 9 U S-1%
TOTAL Bt:ll.IllliC 10 11 11 11 61 1::1:%
GROSS 1'1)f[SRlJ) .'\JUl.. U,SH 10,llBI IIl,llBI WoB61 'lYi,ISf Sol',
GROSS f1l'IJSIIm.ulEA PIlR lINIT: ,,lotO &.1',
I\EfAII. ?,)"iJ 'f"!"lO
roT AL llL.'lLDlNG WoBE' 2ll,lIH '0,8EI '"Bet tu.su
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SUIIT{JI'JU... OJ>."BB&mtOOM 7 B 8 8 ~: .f6%
2A T~O IlEl)Ro-:M :,(l1$ $ $ $ j 20 :10%
1C Tb"O llEl)r..o-:M, ~ Jl.I.TIfS. COro-ER :,1::9 4 4 4 4 :6 Z4'!>;
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GIlOSll Im;ISII1m ARKA. zo,m :!O,SSI :!O,m 10,$81 lI!.SM 5.1'.
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BUILDING 3 (NORTHEASTl
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TOTALBIllLDING J6 IT 17 17 ;or IiJO~.
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GROSS PlriI!IlIED Am.<l I'm Ul\1'(. 1.14' !1.F.
BCILDI~G 4 (NORlHVv""EST)
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TOTAL PROJE.CT
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PRELUIINARY ESTIMATE
]\{A.lN & FIFT~ HOPKI~S, l'vN - ALL CO)IDOS
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Page 1 of 4
Gunn, Bradley
From: Rixmann, Wayne [wpr@rixmann.com]
Sent: Tuesday, July 12, 2005 5:19 PM
To: Gunn, Bradley
Subject: WPR Resume 07-2004
Wayne P. Rixmann
181 River Ridge Circle
Burnsville, MN 55337
MN office 952-646-1TII
MN fax 952-646-2TII
BUSINESS
EXPERIENCE
CONSULTANT
August 1991 to Present
. Assisted in the setup and operations of a Rixmann Family Trust for his children. Currently
the Trust operates fourteen retail outlets with sales of $18,700,000 in 2003; in addition the
trust holds 7 Payday America stores.
. SelupGrandehildren's Trust to hold buildings of the Rixmann Family Trust. This Trust
currently holds 5 commercial buildings with a value of over 6 million and net yeady cash flow
of $240,000.
EVANS PLACE I & II, AND 33RD STREET APARTMENTS Fargo,ND
Partner, 2001 to Present
00 This investment is 262 units, consisting of 8 buildings constructed in the late 199015
Wayne Rixmann holds a 17% interest
EDGEWATER APARTMENTS St. Cloud, MN
Part Owner, 2000 to Present
. Recently constructed high-end apartment project with 57 units located in St. Cloud, MN.
Wayne Rixmann holds 16.65% of the ownership of that building.
RIXMANN AMCON, LLC Minneapolis, MN
Owner, 2000 to Present
. This was formed through a 1031 exchange with Cities 94 Apartments.
. This entity holds a 12,500-foot office building, leased by Pawn America and was built in the
year 2000. In addition it holds an 8,000 square foot commercial building that is leased by
Pawn America in Coon Rapids.
. This lLC has no debt.
Wayne Rixmann held 100% of the ownership of this entity. He sold it in 2002 to Rixmann Family
Trust (Grandchildren).
CHERRY STREET INN Kansas City, MO
Part Owner, 1994 to Present
. Fonned the Cherry Street Corp. for the purpose of purchasing this 145-unit motel.
. Remodeled property and achieved higher occupancy projections.
Wayne Rixmann holds 66% of stock in Cheny Street Corp.
4010 CORPORATION Edina, MN
Part Owner, 1989 to Present
. Formed the 4010 Corporation to purchase a commercial office building toeated one block
from the Sonthdale Fairview Hospital ftom Bankers Life.
7/I2I2005
Wayne P
BUSINESS
EXPERIENCE
(CONTINUED)
.
7/12/2005
Page 2 of 4
. Increased occupancy from 60% to 100% level.
. Rehabbed heating and air conditioning controls and replaced the central chiller system.
. Refurbished public areas and made improvements in the individual office areas.
G Successfully marketed to the medical and insurance sectors of the rental market.
Wayne Rixmann holds 50% of stock.
DUPONT VILLA APARTMENTS Minneapolis, MN
Part Owner, 1987 to Present
. Purchased a 159-unit apartment ptoject located in the Lakes Area of Minneapolis.
. Rehabbed property and turned over all residents, boosting the project's rent levels by 25%
and achieving a 98% occupancy level (previously at 88% occupancy) within a seven-month
time frame.
Wayne Rixmann owns 50% of this property.
RIXMANN PROPERTIES, LTD. Bumsville, MN
Owner, 1988 to Present
LivINN SUITES, LLC Bumsville, MN
Owner, 2002 to Present
" These companies manage multi-family properties associated with W. Rixmann's ownership.
. Oversees other Rixmann investments in both multi-family and commercial ptoperties
managed by other parties.
Wayne Rixmann owns 1000/0 stock.
RIXMANN-MAPLEWOOD, LLC Maplewood, MN
Owner, 2002 to Present
. Purchased and renovated a 114 unit Super B pmperty to become a LivINN Suites extended
stay property. This involved extensive interior and exterior work along with new camera
systems. WiFi computer connections, and mechanical updates
Wayne Rixmaon holds 100% of stock in this u..C.
RIXMANN-FRlDLEY, LLC Fridley,MN
Owner 2003 to Present
. Purchased and renovated a 95-unit Kelly lon/Best Western property to become a LivINN
Suites extended stay property. This involved extensive interior and exterior work along with
new camera systems. WiFi computer connections. and mechanical updates.
Wayne Rixmann holds 100% of stock in this u..c.
RIXMANN-BURNSVILLE, LLC Bumsville,MN
Owner 2003 to Present
. Purchased and renovated a t2t unit Days Ion property to become a LivlNN Suites extended
stay property. This involved extensive interior and exterior work along with new camera
systems. WiFi computer connections, and mechanical updates.
Wayne Rixmann holds 100% of stock in this 1LC.
RIXMANN-SHARONVILLE, LLC Cincinnati,OH
Owner 2004 to Present
. Purchased and renovated a 130 unit Signature Ion property to become a LivINN Suites
extended stay property. This involved extensiye interior and exterior work along with new
camera systems, WiFi computer connections, and mechanical updates.
Wayne Rixmann holds 100% of stock in this u..c.
WINDOM GABLES
Manager and former 25% Owner, 1984 to 1993
Minneapolis, MN
Wayne P
BUSINESS
EXPERIENCE
(CONTINUED
7/12/2005
Page 3 of 4
& Purchased this 157-unit Town home project from an estate; made major repairs and
improvements.
. Completed all rehab work two months ahead of schedule, with a rental income of 54%
greater than at the time of purchase.
Wayne Rixmann sold his intetest in 1993.
BERKSHIRE OF BURNSVILLE Bumsville, MN
Owner/Manager, 1986 to Present
. Developed, built and manages this 206-unit townhome project; construction commenced in
July of t986 and was completed in September of 1987 using Rixmann Companies as the
general contractor for this $11,000,000 construction project.
. This project has the ful1list of amenities and has enjoyed a fast lease-up process.
. Secured original financing of this project througb issuance of $8,500,000 in bousing bonds
backed by an $8,750,000 Letter of Credit by Sumitomo Trost & Banking Co., Ltd. Of Japan.
Wayne Rixmann owns 100% of this project, whicb is managed by LivlNN Suites, LID.
RENTAL HOUSES Bumsville. MN
Owner/Manager, 1986 to Present
. Owns 4 town homes and one single-family home located near the Berkshire town home
devdopment. Wayne built 30 town homes and construction was complete in 1988.
. These houses have been rented at 1000/0 capacity since they were built.
Wayne Rixmann owns 100% of this project, whicb is managed by LivlNN Suites, LID.
PARK PLACE APARTMENTS Hibbing. MN
Part Owner/Manager, 1977 to Present
. Formed a limited partnership to acquire this 135-unir D3 apartment project, HUD project
number 092-35229-lD.
. Wayne Rixmann developed this project.
. Selected, pw:cbased, zoned and developed project, working closely with Eberhart Mortgage
Company, the mortgage banker, and HUD representatives to process this project through
HUD.
e Sold a percentage of the project to a Limited Partnership, with Boston Financial Corporation
~cting as the syndicate for the Limited Partnership.
. Directed work by Lundgren Bros. Constructions, the General Contractor. working closely to
oversee the progress of the construction.
. The project received its final occupancy in October of 1978.
Wayne Rixmann is a General Partner for Park Place Apartments, a Limited Partnership; LivlNN
Suites, LID manages the project wroch is 98% occupied. Wayne Rixmann purchased 950/0 of this
project in 2001.
SOUTH SIDE ELECTRIC, INC. Bloomington,MN
Master Electrician, 1968 to Present
. Wayne Rixmann otiginally started as an apprentice for this 50-employee company with
annual sales 0[$6,500,000 a year.
. Received Master's License in 1966.
. Estimated and coordinated work, purchasing the fiim in 1968, selected David Wintheiser as
CEO, who bas managed the linn since 1970.
Wayne Rixmann currently owns 50% of the slOck.
SOLAR ELECTRIC, INC. Minneapolis, MN
Control Wiring contractor/Owner, 1968 to 1982
. Started up apartment project wiring work in t 971; originally started as a control-wiring
contractor, (the finn has wired approximately 3,500 apartment units in addition to various
sized commercial projects).
,
Wayne P
BUSINESS
EXPERIENCE
(CONTINUED
EDUCATION
7/12/2005
Page 4 of 4
Wayne Rixmann currently owns 100% of the stock; the corporation is inactive.
RIXMANN & RIXMANN, INC. Minneapolis,MN
General Contractor! Owner, 1968 to 1978
. Purchased a 30,000 square foot concrete structure, (formerly the Fairmant Community
Hospital) from the City of Fainnont.
. Completely remodeled the building following rezoning, including new electrical systems, 33
additional % baths, various additional exterior windows, interior walls, and door relocation.
. Supervised all work including the plumbers. electricians, carpenters. carpet layers, painters
and laborers who all worked directly for this corporation.
. Operated building as a successful motel before selling it in 1978.
Wayne Rixmann's partner in this corporation was Eston Rixmann, who owned another motel in
Fairmont.
DUNWOODY INDUSTRIAL INSTITUTE
Graduate - Electrical Division, 1964
Minneapolis, MN
CENTRAL HIGH SCHOOL
Graduate, 1962
Minneapolis, MN
150 SOUTH FIFTH STREET SUITE 2300
MINNEAPOLIS, MINNESOTA 55402
612-335-1500 MAIN
612-335-1657 fAX
LEONARD
STREET
AND
DEINARD
BRADLEY J. GUNN
612-335-1671 DIRECT
BRADLEY.GUNN@LEONARD.COM
July 19,2005
HAND DELIVERED
The Honorable Eugene Maxwell and
Members of the City Council
City of Hopkins
City Hall
1010 First Street South
Hopkins, MN 55343
Re: Block 64 Redevelopment Proposal
LS&D File No. 18630.00010
Dear Mayor Maxwell and Councilmembers:
I am again writing on behalf of the owners of Hopkins Park Plaza to object to the
proposed use of tax increment financing ("TlF") to subsidize GPS Financial Group's
redevelopment proposal for Block 64.
On June 21, 2005, we submitted to the City Council a letter and other materials in
support of our objections to the use ofTIF. On June 12,2005, we submitted a second
letter and additional materials relating to the Rixmann/Spyder Development proposals to
redevelop Block 64 without the use ofTlF. We now incorporate those previous'
submissions by reference and note our continuing objections to the use ofTIF on the
following grounds:
· The GPS project fails the "but for" test in Minn. Stat. ~ 469.175
because it, or something substantially equivalent to it, could be
constructed without requiring the taxpayers to provide the developer
with a TIF subsidy.
· TIF funds may be expended only on uses that are primarily for a public
purpose. Walser Auto Sales. Inc. v. City of Richfield, 635 N.W.2d 391,
399-400 (Minn. Ct. App. 2001), aff'd by equally divided court, 644
N.W.2d 425 (Minn. 2002). To the best of our knowledge, the City of
LAW OFfICES IN MINNEAl'OLIS, SAINT PAUL, MANKATO, SAINT CLOUD AND WASHINGTON, D.C. A Professional AssociatIon
WWW.LEONARD.COM
The Honorable Eugene Maxwell and
Members of the City Council
Page 2
July 19,2005
Hopkins has not completed the kind of "comparative analysis" of the
public and private benefits that is required by the Walser decision.
. The proposed TlF Redevelopment District does not meet the
requirements of Minn. Stat. Ii 469.174 because over 50 percent of the
buildings in the proposed district are not "structurally substandard," for
the reasons detailed in my letter dated June 21, 2005. In addition, I am
attaching a report from Forum Architects that: (1) further discredits the
analysis conducted for the HRA by LHB, Inc., particularly with respect
to the issues of accessibility compliance and fire code compliance, and
(2) as set forth in part in the accompanying spreadsheet, further
documents that LHB's estimated code compliance costs are
unrealistically inflated.
Our objections to the use ofTlF do not end with these legal issues. To the
contrary, the GPS proposal raises several other important objections and questions that
will affect the citizens of Hopkins for the next 25 years, as follows:
1. What is the total amount of the TIF subsidy that the City anticipates
paying to GPS over the next 25 years? What would the City's share of
that revenue be if a similar project were to be constructed without the
use ofTlF?
2. Why does the City seem so interested in pursuing the GPS proposal,
which will cost the taxpayers of this City millions of dollars, and so
uninterested in considering the Rixmann/Spyder Development
proposals, which will greatly benefit the City's taxpayers?
3. Similarly, why does the City favor GPS over Rixmann/Spyder
Development when GPS apparently has no experience with these kinds
of projects?
4. Does the City have proof that GPS had adequate financing to even
construct its proposed project? Have you seen evidence of financial
commitments from lenders? If so, who are the lenders and what
conditions are attached to the commitments?
. .'
The Honorable Eugene Maxwell and
Members of the City Council
Page 3
July 19,2005
5. Does the City know if GPS even intends to construct its proposed
project, or if it is merely a "conduit" that intends to sell or assign or
"flip" the project to some other developer? If you believe you have
established a working relationship with GPS, will you add a
nonassignability clause to the development agreement?
6. Has the City reviewed, and is it in agreement with, GPS's proposed
development costs? How much is budgeted for tenant relocation costs?
How much is budgeted for the condemnation of Hopkins Park Plaza?
7. The whole GPS project is dependent on the City's (or the HRA's)
ability to condemn Hopkins Park Plaza. Under Minnesota law, private
property may be condemned only when reasonably necessary, and only
for a public purpose. Why do you believe that condemning Hopkins
Park Plaza is necessary or that it serves a public purpose?
8. Why is the City Council planning to cut-off public comments at
tonight's hearing, and then to keep the record open for the City's staff
and consultants to speak-at either tonight's meeting or at the City
Council meeting on July 26, or both-without any opportunity for us to
respond to what is said after you have cut us off? We fully expect the
City's consultants to attempt to discredit the Rixmann/Spyder
Development proposals, in order to advance GPS's proposal. Since that
would cost the Hopkins' taxpayers millions of dollars, isn't it only fair
to allow Rixmann/Spyder Development a fair opportunity to address
and respond to whatever questions may be mised concerning their
development?
In conclusion, I am inclined to believe that you have already made up your minds
to move forward with the GPS proposal. What I cannot understand, however, is why you
would believe that would be in the best interests ofthe citizens and taxpayers in the City
of Hopkins.
.. "
.
The Honorable Eugene Maxwell and
Members of the City Council
Page 4
July 19,2005
Very truly yours,
LEONARD, STREET AND DEINARD
Professional Association
By trJ(~
Bradley J. Gunn
BJG:clp:2635766(2)
Attachment
c: Wayne Rixmann
J an Susee
Timothy T. Welch
<
LEONARD
STREET
AND
DEINARD
150 SOUTH FIFTH STREET SUITE 2300
MINNEAPOLIS, MINNESOTA 55402
612-335-1500 MAIN
612-335-1657 FAX
BRADLEY J. GUNN
612-335-167I DIRECT
BRADLEY.GUNN@LEONARD.COM
June 21, 2005
The Honorable Eugene Maxwell and
Members of the City Council
City of Hopkins
City Hall
1010 Pirst Street South
Hopkins, MN 55343
Re: Use of Tax Increment Financing for Block 64 Redevelopment Proposal
LS&D File No. 18630.00010
--:1
Dear Mayor Maxwell and Councilmembers:
Our office represents the owners of Hopkins Park Plaza in connection with the
proposed redevelopment of Block 64. I am writing to express our objections to, and
concerns over, the request to use tax increment financing ("TIP") to subsidize the
proposed redevelopment. Our objections and concerns are as follows:
1. We Were Not Provided With Kev Documents on a Timelv Basis.
Our office has had numerous conversations and meetings with City staff over the
past 8 weeks, attempting to obtain all of the documents relating to the Block 64
redevelopment proposal. During this period, we were consistently told that the TIP
inspection reports were not complete and not available. Last Wednesday, the TIP
inspection reports were finally made available and we discovered that they appear to have
been prepared in Pebruary, March and April of2005.
It apparently took the City's consultants at least four months to prepare the TIP
inspection reports, and it is not fair or reasonable for Hopkins Park Plaza to have to
analyze and respond to these reports in only four working days. This evening's hearing
should be continued to allow Hopkins Park Plaza a fair opportunity to respond to the
opinions and conclusions in the TIP inspection reports.
LAW OFFICES IN MINNeAPOLIS, SAINT PAUL, MANKATO, SAINT CLOUD AND WASHINGTON, D.C. A Professional Association
WWW.LEONARD.COM
''\ ~
The Honorable Eugene Maxwell and
Members of the City Council
Page 2
June 21, 2005
Finally, we have never received a copy of the draft TIF Plan for the Block 64
project, which is another essential document. The proposed Block 64 redevelopment is
obviously very important to our clients, and it should be equally important to the City
because of its financial and legal implications. The City Council should be permitted to
fully consider both sides of these issues, which cannot happen if this request is "rushed"
for approval without an adequate opportunity for Hopkins Park Plaza to respond.
2. The Block 64/GPS Project Falls the "But For" Test for the Use ofTIF.
Minnesota law is clear that public subsidies such as TIF may not be used unless
the redevelopment would not occur without the public subsidy. Minn. Stat. ~ 469.175,
subd.3(b)(2). This is commonly known as the "but for" test, and it is intended to prevent
unnecessary public subsidies in areas that are ripe for redevelopment without such
subsidies.
In this case, our client, Hopkins Park Plaza, L.L.C., has entered into a purchase
agreement to sell Hopkins Park Plaza to Spyder Development, L.L.C., for $6.7 million.
Hopkins Park Plaza (by Wayne Rixmann) and Spyder Development, L.L.C. (by Jan
Susee, who has accomplished a number of successful redevelopment projects) have been
preparing a substantial condominium and assisted housing project for Block 64 that
would require no public subsidies. A preliminary outline of this project has been
completed, and we anticipate presenting it to City staff in more detail in the next few
months. See Exhibit A.
If Block 64 is to be redeveloped, it seems only fair-and in the best interests of the
City-to favor a project by experienced redevelopers who have already invested in, and
own, much of the block, especially when they do not require a public TIF subsidy that
will diminish the revenues of the City and the County for 15 years. Perhaps more to the
point, the RixmannlSusee plan demonstrates that TIF is not needed for the redevelopment
of Block 64, and therefore that the use ofTIF is unlawful.
The Honorable Eugene Maxwell and
Members of the City Council
Page 3
June 21,2005
3. The Proposal to Use TIF for Block 64 Is Unlawful Because the Proiect
Is Not Primarily for a Public Purpose.
The leading case on the use ofTIF for redevelopment projects makes it clear that
TIF funds may be expended only for primarily public purposes. Walser Auto Sales. Inc.
v. City of Richfield, 635 N.W.2d 391,399-400 (Minn. Ct. App. 2001), aff'd by equally
divided court, 644 N. W.2d 425 (Minn. 2002). To the best of our lmowledge, the City has
not even addressed this issue.
The proposed Block 64/GPS project contemplates the destruction of
approximately 162 units of housing for primarily low-income residents. This fact alone
raises a serious question about whether the project is primarily for a public purpose. In
addition, the cost of displacing and relocating these residents is estimated to exceed
$1.8 million, which is an extraordinary "add on" to an otherwise questionable public
investment. Most importantly, it appears that GPS Financial Group, and not the public,
will be the primary beneficiary of the TIF expenditures, which is clearly unlawful. At an
absolute minimum, the City needs to direct its staff to address this issue, to estimate the
public's costs and benefits and compare them to the private costs and benefits, and to
allow Hopkins Park Plaza an opportunity to respond to the seeming rush to approve the
Block 64/GPS proposal. The Court in Walser clearly requires this kind of comparative
analysis.
4. The Proposed Use ofTIF Is Unlawful Because Over 50% ofthe
Properties Are Not "Structurallv Substandard."
In order to qualify as a TIF redevelopment district, more than 50 percent (50%) of
the buildings in the district must be "structurally substandard to a degree requiring
substantial renovation or clearance." Minn. Stat. ~ 469.174, subd. 10(a)(1). The
applicable statute defines "structurally substandard" as follows:
For purposes of this subdivision, "structurally substandard" shall mean
containing defects in structural elements or a combination of deficiencies in
essential utilities and facilities, light and ventilation, fire protection
including adequate egress, layout and condition of interior partitions, or
The Honorable Eugene Maxwell and
Members of the City Council
Page 4
June 21, 2005
similar factors, which defects or deficiencies are of sufficient total
significance to justify substantial renovation or clearance.
Minn. Stat. ~ 469.174, subd. 10(b) (emphasis added). In other words, the test for whether
or not a property is "structurally substandard" is focused on whether the property exhibits
sufficient defects or deficiencies so as to justify substantially renovating or clearing it. If
a building does not require substantial renovation or bulldozing, it is not, by statutory
definition, structurally substandard.
As noted above, we have not had nearly enough time to analyze and respond to the
City's TlF inspection reports. Nonetheless, even a cursory review reveals that they are
fundamentally flawed for the reasons that follow:
a. Hopkins Park Plaza is subject to annual housing inspections, and to the best
of our knowledge it is in full compliance with all of the City's requirements. In other
words, the six buildings owned by our clients are in compliance with the applicable
codes, and they do not require substantial renovation or clearance. This should be the
end ofthe City Council's inquiry. While the City's consultants concluded (on erroneous
grounds discussed below) that our clients' buildings were structurally substandard, this
conclusion defies common sense and the law.
Subtracting even the six Hopkins Park Plaza buildings from the alleged 11 of 14
structurally substandard buildings in the proposed TlF District means that only 5 ofthe
14 buildings are allegedly structurally substandard. This, in turn, means that the 50%
requirement is not met and that TlF may not be used for the proposed project.
b. The City's consultants' conclusion that the buildings at Hopkins Park Plaza
are structurally substandard is flawed in several other important respects.
. First, the City's consultants apparently focused on whether the cost of
bringing the buildings up to the current building code exceeded 15% of the cost of
replacing the buildings. See Report ofInspection Procedures and Results for
Determining Qualifications of a Tax Increment Financing District As a Redevelopment
District, Appendix A spreadsheet. This is fundamentally incorrect, because it
presupposes that buildings whose costs of obtaining code compliance exceed 15% are
The Honorable Eugene Maxwell and
Members of the City Council
Page 5
June 21, 2005
necessarily structurally substandard. The Minnesota Court of Appeals specifically
rejected this approach, stating that:
[A]lthough Minn. Stat. ~ 469.174, subd. 10(c), specifically provides a
mathematicaI formula for determining, for certain, when a building is not
structurally substandard, [the City's consultants) flipped this guideline
around; every property that the statutory formula did not specifically
exempt from those potentially structurally substandard was determined to
be structurally substandard. There is no legal basis for this methodological
assumption.
Walser, supra, 635 N.W.2d at 402. In this case, the City's consultant's sometimes refer
to 15%, and sometimes to 20%, but in either case the approach is fundamentally flawed.
· Second, the City's consultants estimate the costs of code compliance for the
six Hopkins Park Plaza buildings, as a percentage of replacement cost, as follows:
Total Percental!:e
TIF Code No. Percental!:e From ADA
4A 21% 5.0%
6A 17% 11.3%
6B 19% 10.7%
8 24% 13.7%
9 24% 13.7%
10 24% 13.7%
As the table indicates, approximately half of the alleged code compliance costs arise from
accessibility or ADA issues. These costs are flawed, however, and should not be
considered for two reasons:
(l) Hopkins Park Plaza consists of five buildings on a .single lot, plus the
TIF Parcel 4A building on a separate lot. Accordingly, on the parcel containing the five
The Honorable Eugene Maxwell and
Members of the City Council
Page 6
June 21, 2005
buildings all of the ADA compliant units and features could be located in a single
building, and no ADA compliance costs would be incurred on the other four buildings.
(2) The Minnesota building code does not require any of the Hopkins
Park Plaza buildings to be made compliant with the ADA. The ADA itself does not
require the kinds of alterations proposed by the City's consultants, because they are not
readily achievable and would impose an undue burden. Moreover, the applicable statute,
Minn. Stat. ~ 469.174, subd. 10(c), refers to buildings that are "in compliance with the
building code applicable to new buildings or could be modified to satisfy the building
code. . ." (emphasis added). In other words, buildings are only required to "satisfy the
building code," and Hopkins Park Plaza already satisfies the building code with respect to
accessibility issues.
(3) In Walser, the City of Richfield's consultant concluded that most of
the buildings evaluated were structurally substandard because they did not meet the
standards of the Minnesota Energy Code. The Court of Appeals rejected this approach,
stating that substandard insulation in an older building did not make a property
"structurally substandard." Similarly, in this case the fact that an older building is not
ADA compliant does not make it structurally substandard.
. Third, the City's consultants' alleged code compliance costs are in any event
way too high. In determining these costs, they appear to have used the most expensive
ways possible to achieve compliance with the code, but if the code can be "satisfied" at a
lower cost, the lower cost must be used. Our analysis of the actual costs of achieving
code compliance indicates that none of the six Hopkins Park Plaza buildings meets the
15% threshold, and therefore none ofthem may be regarded as structurally substandard.
See Exhibit B.
. Fourth, the City's consultants provide absolutely no information to support
their opinions as to the alleged replacement costs of the buildings. This information is
critical because it directly affects the question of whether the 15% threshold is met. We
believe that the City's consultants have significantly underestimated the replacement
costs of the buildings, thus overstating the percentage costs of code compliance.
The Honorable Eugene Maxwell and
Members of the City Council
Page 7
June 21, 2005
· Finally, the City's consultants claim, in some parts oftheir report, to use a
20% figure for determining whether a property is structurally substandard. There is,
however, absolutely no legal basis or authority for applying such a standard. Moreover,
in practice it is clear that the consultants actually used a 15% figure (which the Court
already prohibited in Walser). See, for example, TIF parcels 2, 5, 6A and 6B on the
Exhibit A spreadsheet to the consultants' report: All were found to be structurally
substandard even though their alleged costs of code compliance were less than 20% of
their replacement costs as determined by the City's consultants.
For all of these reasons, we believe that the use of tax increment financing on the
Block 64 project would be unlawful. We therefore respectfully request the City Council
to deny the request to provide such financing.
Very truly yours,
LEONARD, STREET AND DEINARD
Professional Association
By ~~'j~
Bradley J. Gunn
BJG:clp:2635766
250 Third Avenue North, Suite 450
Minneapolis, MN 55401
PH: (612) 338-2029
Fax: (612) 338-2088
www.LHBcOlp.com
MEMORANDUM
DATE:
July 21, 2005
TO:
Mayor Gene Maxwell
Hopkins City Council
FROM:
Michael A. Fischer, AIA - LHB, Inc.
RE:
RESPONSE TO BRADLEY GUNN LETTER DATED JUNE 21, 2005
This memo is written in response to the letter from Bradley J. Gunn titled Use of Tax Increment
Financingfor Block 64 Redevelopment dated June 21, 2005.
Inspection work can be very subjective. In some cases, it is difficult to get different parties to
agree on what they are looking at, especially when they have different agendas. With that in
mind, LHB attempts to reduce the amount of subjectivity in all of our TIF analysis work. We
only utilize staff with significant experience in the field of construction and inspection. Please
see the following credentials of our Hopkins team:
Michael A. Fischer, AlA - Project PrincipaVTIF Analyst
Michael has nineteen years of architectural experience as project principal, project manager,
project designer and project architect on municipal planning, educational, commercial and
governmental projects. He is a Vice President at LHB and currently leads the Community
Design Group in LHB's Minneapolis office. Michael completed a two-year Bush Fellowship at
the Massachusetts Institute of Technology in 1999, earning Masters Degrees in City Planning
and Real Estate Development. Michael has served on over 35 committees, boards and
community task forces, including a term as City Council President and Chair of the
Duluth/Superior Metropolitan Planning organization. He is currently a Planning
Commissioner in Edina, Minnesota. He was one offour architects in the countlY to receive the
National "Young Architects Citation "from the American Institute of Architects in 1997.
Jerry A. Putnam, AlA, FCSI, CCS - Project ManagerlInspector
Jerry is a senior architect in LHB's Minneapolis office with twenty-jive years of experience in
all phases of the architectural process, from pre-design through construction administration,
including specialty consulting in investigations for buildings, building condition surveys, TIF
inspections, code reviews, estimating and specification writing.
JerlY is an active member in the Construction Specification Institute (CSI). He has been
recognized as a Fellow ofCSIfor his dedication and leadership in the construction industry. In
addition to being past president of the largest CSI chapter in the United States, he serves on
Duluth, MN
Minneapolis, MN
Hopkins Block 64 TIT District
Response memo to Bradley Gunn Letter of June 21, 2005
July 21, 2005
Page 2
many local, regional and national committees, and has given presentations at many
specification writing classes and workshops.
As you can see from Jerry's credentials, he is not some young architect cutting his teeth on TIF
inspection work. He is one of only 249 Fellows in the Construction Specifications Institute, an
organization of over 17,000 members worldwide. Jerry is very conservative in his investigation
work. Ifhe writes something on his inspection form, it's the real thing.
LHB is a ISO-person design firm founded in 1966, providing architecture, engineering,
planning, urban design, landscape architecture and interior design from our offices in
Minneapolis and Duluth, Minnesota. The Community Design Studio, led by Michael Fischer,
specializes in designing for local communities and governments.
Our team has significant experience in building evaluations and cost estimating, including:
. Facility assessments for the Minnesota State College and University system.
. Facility assessments for the State of Minnesota Department of Administration.
. ADA compliance assessments for the State of Minnesota Department of Administration.
. Conducted a condition survey of every property along the 1-394 corridor for the
Minnesota Department of Transportation, prior to and during the construction ofI-394.
Jerry Putnam and Michael Fischer have comprised LHB's TIF analysis team since our first
inspection for the City of Mound in 2002. The City of Mound requested that we review the
work of their TIF consultant as a direct result of the Richfield Walser case. We reviewed State
Statutes and studied the Walser Auto Sales, Inc, vs. City of Richfield Court of Appeals case as
the foundation for our inspection process.
Since 2002, LHB has analyzed or is currently analyzing 36 TIT districts with over 250 buildings
in over 20 different Cities, including: Mound, Osseo, St. Louis Park, St. Anthony Village, New
Richmond, St. Paul, Columbia Heights, West St. Paul, Andover, Hopkins, Breezy Point,
Roseville, North Oaks, St. Michael, Champlin, Minnetonka, North Branch, Monticello and
Richfield.
We have focused on TIF analysis for the past few years because we understand how few tools
municipalities have to encourage redevelopment. The best way to ensure the continued viability
of TIT is to make sure our clients are using it properly according to current State Statutes.
Our role on a TIF analysis project is not to promote a specific development project. In most
cases, such as in Hopkins, we have not met the developer and are unfamiliar with the proposed
project(s). Our job is to assure the city staff, and ultimately the City Council that the proposed
TIT District meets all of the rules set forth in Minnesota Statutes, Chapter 469.
Duluth, MN
Minneapolis, MN
Hopkins Block 64 TIF District
Response memo to Bradley Gunn Letter of June 21, 2005
July 21,2005 .
Page 3
The following comrnents are direct responses to Bradley Gunn's comments (headings refer to
sections ofMr. Gunn's June 21, 2005 letter):
"1. We Were Not Provided With Kev Documents on a Timelv Basis."
It is not unusual for TIT inspections to stretch out for several months. Often, it is a case of
scheduling with multiple building owners, tenants, and management companies. In addition,
our staff is working on several TIT districts with overlapping schedules, so it is common to put
some on hold for periods of time based on the schedule of public hearings.
In this case, we were given less than one day of notice to get into the buildings owned by Mr.
Gunn's client and had not even officially begun the project at that point. After the inspection of
the Hopkins Park Plaza buildings, our work was put on hold for a short period of time until we
could work the remaining inspections into our schedule.
TIT analysis is rnore than just inspecting the buildings. It involves a thorough code analysis
compared with inspector findings and cost estimating. We also analyze the coverage of the
district and the distribution of substandard buildings. Often, results of our initial work cause
new strategies to be employed to make sure we are in compliance with State Statutes. For
example, late in the Hopkins Block 64 process, we determined that the district lacked continuity,
so we added another property, requiring the scheduling of an additional inspection and
subsequent analysis.
"4. The Proposed Use of TIF Is Unlawful Because Over 50% of the Properties Are Not
"Structurallv Substandard."" .
In Paragraph a., Mr. Gunn contends that because the Hopkins Park Plaza buildings get inspected
annually, they must be in compliance with all applicable codes. Typically, unless it is a life-
safety issue, older buildings will be "grandfathered" into compliance until the owner attempts a
major renovation. At the time of renovation, he would be required to meet certain (not all)
current codes as determined by the local building official.
The point of Minnesota Statutes, Section 469.174, subd. lO( c), is to compare a new
"replacement" building of similar size, type, and location that meets current codes with the costs
to bring the existing building into "compliance with the building code applicable to new
buildings..." to see whether code compliance can be achieved "at a cost ofless than 15 percent
of the cost of constructing a new structure of the same square footage and type on the site." We
believe (and have been advised) that this requires the inspector to analyze the cost of bringing
the building being studied into cornpliance with the building code appli<;able to new buildings
rather than to analyze the cost of bringing the building into compliance with the building code
Duluth, MN
Minneapolis, MN
Hopkins Block 64 nF District
Response memo to Bradley Gunn Letter of June 21, 2005
July 21, 2005
Page 4
applicable to existing buildings. While a building owner in a non- TIF situation would certainly
attempt to claim that he was "grandfathered in" and could perhaps avoid the need to make
certain modifications, that is not the process contemplated by section 469.174, Subd. 10(c). We
believe Mr. Gunn's consultants have instead assumed that they should be analyzing the cost of
achieving compliance with the building code applicable to existing buildings.
In Paragraph b., Mr. Gunn claims our inspection process is flawed because we first look at
whether or not the building meets the code criteria before we determine if it is structurally
substandard.
The first step in our process is to do a cursory exterior review of the buildings to determine their
"apparent" general condition. If a building appears to be in excellent condition, we may choose
not to conduct an interior inspection, or will conduct an abbreviated inspection to confirm that
the building will not meet the structurally substandard criteria. Once inside, we look at the
buildings comprehensively since the inspector has only so much time in a building and must
write down and take pictures of everything he sees. After returning to our office, we execute the
calculations on the code compliance issues first because we do not want to spend the taxpayer's
money developing lists of structurally substandard issues when the property is never going to
meet the code compliance requirement.
Our standard procedure is to verify that the building is going to exceed 15 percent in code
deficiencies and then to set those aside and determine if the building requires "substantial"
renovation. It is not unusual for us to find that a building meets the code test but does not
require substantial renovation or clearance.
As I mentioned earlier, our process was designed as a direct result of the Walser case. It has
been reviewed, scrutinized, and validated by the most respected TIF attorneys in the State of
Minnesota through the course of the past four years. This group includes Bruce D. Malkerson,
attorney for Walser Auto Sales, Inc., whom I subsequently worked with on behalf of another
municipal client.
Consistency is very important to our process. I have personally reviewed and scrutinized every
TIT inspection conducted by LHB, and written every summary report with our findings. I take
this work very seriously, as I understand the financial implications to the City and its taxpayers.
When I have had questions or needed an interpretation on the State Statutes, I have utilized the
network of attorneys mentioned above to help clarify and defme those issues. In some cases, I
have convened panels of attorneys to discuss specific items within the Statutes outside of
specific projects to assure that we would not be influenced by specific project situations.
The defmition of Substantial Renovation is a prime example of how I utilized the advice and
experience of several attorneys and my own understanding of buil4ing development and
construction in an attempt to bring consistency to a piece of the Statutes that seemed very
Duluth, MN
Minneapolis, MN
Hopkins Block 64 TIT District
Response memo to Bradley Gunn Letter of June 21, 2005
July 21, 2005
Page 5
arbitrary. One of the problems with the State Statutes is that they do not actually define
"Substantial". I have gone to great lengths to define why we consider 20 percent of the
building's replacement value to be substantial (see excerpt below).
Definition of Substantial Renovation
Because "Substantial renovation" can mean different things to different people, LHB
has attempted to clarify exactly what we consider to be "substantial renovation" as it
relates to Minnesota Statutes, Section 469.174, Subdivision JO(a) (1).
a. First we researched national standards as to how much building owners should
budget for annual maintenance and repair on their buildings as a percentage of
replacement cost of the building.
1. According to the University of California "Facilities Renewal Budget
Model" report of 1999, building owners should budget between two and
three percent of current replacement value of their buildings for maintenance
and repair work. This does not include routine janitorial work and routine
items such as changing light bulbs and filters.
2. According to the Building Research Board of the National Research Council,
one and one-half to three percent of a building's replacement value should be
budgetedfor maintenance and repair.
b. Based on this information, LHB utilized two and one-half percent as the desired
amount of maintenance and repair that should be budgeted annually to keep a
building in good working condition. We recognize through experience that only
a small percentage of sophisticated building owners actually budget for and
spend this amount of money every year on maintenance and repair. This is
because most business owners are driven by other budgetary issues and tend to
neglect the building maintenance and repair line items in their annual budgets.
c. By establishing how much a building owner should be budgeting per year for
maintenance and repairs, LHB is of the opinion that we could more easily
establish an amount that would be considered "substantial" in comparison. If
an owner is budgeting 2.5 percent of the building's replacement cost annually,
most business owners or home owners would have to take out a loan to cover the
cost of a substantial building improvement. Assuming they had a fixed level of
income to work with, they would have to keep the loan payment at a level very
near the original 2.5 percent they should have been budgeting each year. In
addition, they still would have to budgetfor the original 2.5 percent on top of the
loan. In most cases, the mortgage terms would have to extend out to a point
Duluth, MN Minneapolis, MN
Hopkins Block 64 TIF District
Response memo to Bradley Gunn Letter of June 21, 2005
July 21, 2005
Page 6
beyond the life expectancy of the building they were trying to improve, as most
buildings built in the pastfifty years are /lot designed to last beyond 40 years.
d. Based on the calculations described above, we have defined substantial
renovation for purposes of Minnesota Statutes, Section 469.174, Subdivision
1O(a)(1), as renovation with costs exceeding 20% of the building's replacement
value.
ADA Issues
Mr. Gunn argued that LHB relied too heavily on the ADA and compared it to the Walser case
where the Court did not like the excessive use of the Energy Code. In the Walser case, the
Energy Code was recently adopted and it was an easy target. The ADA is law, it is required of
all building owners, and has been in place for many years (Minnesota Code of Administrative
Rules Section 1300.0401, subps. I and 2). Furthermore, it requires every building to include at
least one accessible route and building entrance (Minnesota Code of Administrative Rules
Section 1341.0405(A)).
There is still some disagreement about how the energy code should be applied in TIT analysis
work. It is a State of Minnesota code just as much as every other code in the books. In fact, the
State Department of Administration Management and Analysis Division produced a report to
the Minnesota Legislature in January of 2002 to determine the impacts of the energy code on the
construction and development community. The report found that the energy code added
approximately $5,000 per square foot to the construction cost of a typical 2,600 s.f. new home.
It is illogical to conduct a comparison using replacement costs of a building that factor in the
energy code, while not being able to utilize those numbers in the renovation costs of the existing
structure.
Despite the fact that I believe the energy code should be factored into building deficiencies as
part of the TIT analysis, I have chosen to take a conservative approach and have not used it on
any of our previous TIT Districts, including Hopkins Block 64.
In paragraph (l) on page 5, Mr. Gunn states that "Hopkins Park Plaza consists of five buildings
on a single lot". The information we received from the City and Hennepin County was
reviewed by multiple attorneys and finance consultants and indicates separate parcels for every
building except for 6A and 6B (the unique County property identification number and address
assigned to each parcel is illustrated in table 1 later in this memo). Property lines are also a
factor in other LHB code-related findings. Jerry Putnam identified several Hopkins Park Plaza
buildings being too close to property lines without adequate fire ratings on the exterior walls.
Let's pretend for a moment that these buildings were all on one parcel. I do not believe the
Owner would be able to legally build multiple new buildings open to the public that are not
Duluth, MN
Minneapolis, MN
Hopkins Block 64 TIT District
Response memo to Bradley Gunn Letter of June 21, 2005
July2l,2005
Page 7
ADA compliant. The purpose of this evaluation is not to see how much a building owner can
avoid doing under a grandfathering situation, but rather comparing the cost of building a new
"replacement" building with the cost of renovating the existing building to current standards that
would be imposed on a new building, including compliance with the ADA.
Replacement Costs Versus Cost to Fix
Mr. Gunn argues that our replacement costs are too low and our code compliance fixes are too
high. This is where my earlier comment about subjectivity enters the discussion.
In Mr. Gunn's third point on page 6, he states that "the City's consultants alleged code
compliance costs are in any event way too high". We use a National standard with localized
information to determine the replacement value of the building. We then use those same
numbers (as much as practical) for the basis of our code compliance renovations. That way, if
we are too low or high on our replacement values, we are going to be equally low or high on our
proposed renovations.
We utilize R.S. Means Cost Works for our construction cost data. R.S. Means is a 60-year-old
company that tracks construction costs nationally. They are considered the experts in the
industry, as the recognized source for armual Wall Street construction projections, and over
100,000 customers subscribe to their data service. We have used this source for our cost
estimating on every TIT analysis project over the past four years. Again, it is more important
that we be consistent, than accurate, as these numbers are for comparison purposes, not
construction.
Apparently, Mr. Gunn is getting his construction cost information from a contractor residing in
Baldwin, Wisconsin. I do not know this contractor, or how he establishes his costs, but I trust
Jerry Putnam and know he tries very hard to be fair in his assessments and conservative in his
findings. We do keep records of our work and could make them available for your review if
necessary.
Mr. Gunn's fourth point on page 6 states "We believe that the City's consultants have
significantly underestimated the replacement costs of the buildings, thus overstating the
percentage costs of code compliance".
I have included in table I the square foot replacement costs LHB established for each building
in the proposed Hopkins Block 64 TIT District.
Duluth, MN
Minneapolis, MN
Hopkins Block 64 TIF District
Response memo to Bradley Gunn Letter of June 21, 2005
July 21, 2005
Page 8
TlF Building Building RepJacement
PION Property Address Replacement Cost per Gross Building Type
Code No. G.B.F. Cost Square Foot
2 24.117.Z2-42.o049 701 Main Street 11,520 $1,414,171 $122.76 Auto Body Shop
3 24-117-22-42-0033 621 MainStreet 660 $68,000 $100.00 Auto Dealer Used Car Sales Offices, Qne-Slory
4 24.117.22-42.0166 525 Main Street 1,925 $225,920 $117.36 Auto Sales and Repair Building. One-Slory
4A 24.117.22-42-0008 517 Main Street 17,n2 $3.153,563 $177.45 Former HoteUCummtlyWeekly Renlal Housing
5 24-117-22-42-0009 501 Main Street 1,647 $181,970 $110.49 Gas Station
6A 24-117-22-42.0016 10 5th Avenue North 4,870 $408,000 $83.78 Boarding House (2-Story), EKleriorCorridorfErVances
6B 24-117-22-42-0016 11 5th Avenue North 4,870 $1.076.845 $221.12 Boarding House (2-Story), nleriorConidor
. 24-117-22-42-0015 24 5th Avenue North 5,600 $845,679 $151.01 Boarding House (2-Story), Interior Conidor
9 24-117.22-42.0013 30 5th Avenue North 5,600 $845,679 $15101 Boarding House (2.Story), Interior Conidor
10 24-117-22-42-0014 365thAvenueNorth 5,600 $645.679 $151.01 Boarding House (2-Story), InleriorComdor
11 24.117-22-42-0012 44 5th Avenue North .32 $100,537 $107.87 Single Family Home
12 24.117.22-42-0005 33 6th Avenue North 46,710 $4,537,550 $97.14 Apartment Buildlng
13 24-117-22-42-0017 156thAvenueNorth 2,200 $249,114 $11323 Single Family Home
22 24.117.22-42.0029 66th Avenue North 5,531 $742.000 $134.15 Former Single FamilyHomefJaycees Cll.bhouse
Table 1- LHB Replacement Values
The replacement costs listed above are total construction cost per gross square foot, for hard
costs only (with no site work or demolition, or soft costs such as architect fees). We utilized
union rates for construction costs.
By contrast, Mr. Gunn's client (and/or Spyder Development) is proposing a new development
for the Block 64 site. According to preliminary documents submitted to the City by Mr. Gunn,
Spyder's proposed construction costs for new condominiums are $83/sf, retail at $72/sf and
assisted living structures for $94/sf. It is not clear if any site work is factored into these costs. It
appears that LHB's replacement costs are, in all but one case, higher to substantially higher than
the construction costs estimated by Mr. Gunn's source. Therefore, if LHB has underestimated
replacement costs, it would appear that Spyder's costs are even more greatly underestimated.
Mr. Gunn's final argument on page 7 is that I have no basis for the 20 percent threshold on
structurally substandard findings. I feel I have made a strong argument for the 20 percent
number and have consistently stuck with it over the past several years. If Mr. Gunn can find a
better rationale for determining the definition of "substantial", I would be interested in hearing it
as I am sure would the many attorneys I have worked with to establish this defmition.
I will be attending the Council meeting on July 26 to present an overview of this information as
well as a response to the Evaluation Letter from FORUM Architects & Consultants dated June
30,2005, presented ~t the Council meeting on July 19,2005.
Duluth, MN
Minneapolis, MN
Hopkins Block 64 TIF District
Response memo to Bradley Gunn Letter of June 21, 2005
July 21, 2005
Page 9
c: LHB File No.: 050lO1.10-F203.1
M:\OSProj\050101\ADMN\F200\Memo\Edited Response to Bradley Guon Comments 7.21.05.doc
Duluth, MN
Minneapolis, MN
EHLERS
& ASSOCIATES INC
0 To:
~ CC:
W
~ From:
Date:
Subject:
Jim Kerrigan -- City of Hopkins
Kersten Elverum -- City of Hopkins
Robert Deike - Bradley & Deike, P.A.
Robert Lindall - Kennedy & Graven, Chartered
Sid Inman - Ehlers & Associates
July 21,2005
Review of Spyder Development Proforma
As per your request, we have reviewed the draft of a letter dated July 12, 2005 to
Robert Lindall from Bradley Gunn. Your request was to review the information in
the letter and determine, in our opinion based on current market conditions, whether
the project was financially feasible.
Market Study. One common element in the review of financial feasibility is a
market study. Most lenders require a market study from an independent third party
to determine how fast the project will lease up or sell and what are the price points
for rents and sale values. The developer has not indicated that a market study has
been completed. The absorption rates and the rent and sale amounts are solely the
opinions of the developer.
Financing Terms and Commitment. A financial feasibility report for any type of
real estate development would also include the terms and conditions of the
financing. We have not seen any detailed information on what bank or other
financial institution will be lending the project money for construction or permanent
financing and what the terms would be for such a loan.
Land Control. Another common element in the review of financial feasibility is land
control. One of the largest expense items in a redevelopment project is acquisition
costs. According to Bradley Gunn's letter to Robert Lindall, dated July 12, 2005,
neither Hopkins Park Plaza LLC nor Spyder Development has either purchase
agreements or option agreements on properties in Block 64 other than those parcels
owned by Hopkins Park Plaza LLC. It is our understanding that GPS Development
LLC either owns or has purchase rights controlling all other properties in the block.
Proforma Analysis. The last element we looked at was the proforma analysis of
the project. The proforma demonstrates how the project will cash flow and what
returns on equity the investors are likely to receive for the project. Spyder
Development submitted two proforma options. It should be pointed out that these
were prepared by an accountant in a format referred to as a "compilation". In
general, the accountant receives information from the client and arranges the
information in proper accounting format.
The first proforma is a mixed use project with 97 for sale owner-occupied
condominiums, 100 units of assisted living senior rental housing and a smaller
component of retail space. . The condos are expected to sell at a base price of
$270,000 or $216.52 per s.f. of finished unit size. This is a price point that is in the
middle to high range of the market study done for the GPS project. The profit on the
sale of condos is $908,142 out of a total sales price of $26,190,000. This results in
LEADERS IN PUBLIC FINANCE
J:.
3060 Centre Pointe Drive
Roseville. MN 55113-1105
Phone: 651-697-8507 Fax: 651-697-8555
a 3.8% return on sales and no stated developer overhead cost. A developer could
obtain a 3.8% return by investing in U.S. Treasury instruments in today's market
with virtually no risk. Our experience is most developers require at least a 12% to
15% return on sales on this type of project plus covering overhead costs for
developer staff and time. The low return indicates one of three possibilities: 1. This
project is not market feasible and may have difficulty in achieving bank financing. 2.
The developer's pro forma is not accurate or complete. 3. This project requires
some type of public assistance to be feasible. However, Mr. Gunn's June 21, 2005
letter to the Mayor and City Council of Hopkins indicates that TIF is not necessary
for his client's (Rixmann/Susee) project.
The senior assisted rental and retail space has a one year operation cash flow and
is much less detailed than we usually see for an experienced developer. We
assumed from the pro forma that the "75% L TV" meant that the rental portion of the
project could obtain 75% loan to value for a mortgage, which would mean that
equity would be approximately $5,130,000. Based on that calculation and the
developer's stated annual stabilized cash flow of $323,000, the project shows an
annual return on equity of 6% to 7%. Again this appears to be lower than what most
developers are requiring for a redevelopment project. Assisted living is an
especially risky market given the vacancies in this type of product in today's market
and the movement of many non-profits to a senior housing campus approach (a
variety of housing types oriented specifically to seniors in one location). We would
recommend that the City require a market study detailing the assisted living portion
of the project alone.
The second proforma was a 262 unit for sale condo's and 7,270 square feet of
retail. The price point for the condo's in this proforma was $326,726 as compared to
the $270,000 on the first proforma (it may be that this per unit price is an error
because next to the sales price per unit, the number of units is shown at 233 rather
than 262 - the price per unit is $290,562 if total sales is divided by 262 units). It is
also not clear in what year the 262 units would be built. The higher unit price yields
a return on the second proforma which is more in line with typical projects at 13%.
In summary, without independent information on the actual market conditions, an
indication of terms of financing, and a better understanding of the land cost, it is not
possible to conclude that the Spyder proposed development would be financially
feasible without public assistance. Further, the information in the first proforma was
below normal investor return requirements. The second proforma had a price point
that was much higher than a current market study had determined was feasible in
the near future. Based on the information provided we do not believe that we can
make a determination that the project is financially feasible without more detail.
Please let me know if you have questions or comments.