Agenda - WSTuesday, April 3, 2012
City Hall - Raspberry Room
6:15 P.M.
6:15 pm TIF Management Plan; Stacie Kvilvang
Other
Adjourn
CITY OF HOPKINS
MEMORANDUM
Date: April 3, 2012
To: Mayor & City Council
From: Christine Harkess, Finance Director &
Kersten Elverum, Planning & Economic Development Director
Subject: Tax Increment Management Plan
Stacie Kvilvang of Ehlers will be at the April 3rd council meeting to present the Tax Increment
Management Plan we asked Ehlers to develop for Hopkins. This document analyzes all
outstanding TIF Plans, evaluates their financial status, determines the financial health of each
district and develops a plan if the district is projected to have excess funds or a shortfall.
Once the TIF Management Plan is presented staff will begin developing a plan for how best to
use the anticipated funds. Keep in mind that the TIF Management Plan is only one piece of the
total financial position of the City.
City of Hopkins
April 3, 2012
Stacie Kvilvang — Ehlers
EH - LERS
Lt Mutils 114 PUOL Ii. FIN AN ,
■ 5 TIF Districts
✓ 4 Redevelopment (26 years)
■ Entertainment (1-2), Marketplace and Main (1-4), Oaks on Mainstreet (2-9)
and Super Valu (2-11)
✓ 1 Housing (26 years)
■ Barrier Free Housing (2-6)
Oaks of Mainstreet
(2-9) -
Before
_
-
♦ � In n- � � 6
�s
•+6 a
R #
OAKS
ttA 1N S TRF.F.'1�
r
W, Ave--_
Former Supervalu Warehouse/future Excelsior Crossings site outlined
4) - ■
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-r—, -Ty
L C
,y
Tax Capacity
Captured
•
.
TIF
i
City of Hopkins
2012
2013
2014
2015
2016
2017
Captured TIF Tax Capacity
TIF 1-2
39,832
40,629
41,441
42,270
43,115
43,978
TIF 1-4
0
0
100,402
102,410
104,458
106,547
TIF 2-6
6,976
7,116
7,258
7,403
7,551
7,702
TIF 2-9
100,722
102,736
104,791
106,887
109,025
0
TIF 2-11
2,332.116
2,378,758
2,426,333
2,474,860
2,524,357
2,574,845
Future Captured TIF Tax Capacity
2,479,646
2,529,239
2,680,226
2,733,830
2,788.507
2,733,072
Total Tax Capacity (Gross)
19,721,224
20,115,648 20,517,961
20,928,321
21,346,887
21,773,825
Percentage of Tax Base in TIF
12.6%
12.6%
13.1%
13.1%
13.1%
12.6%
Assumes 2% annual increase in tax base and TIF beginning in payable 2013
ComparableBond
Increase in
Value
1-2 Entertainment District
$451,800
New Brighton
15.9%
City Tax Rate
37.871%
Rating
AA
Golden Valley
8.8%
55.762%
Aaa
St Anthony
12.6%'
68.634%
AA
Richfield
12.8%
62.337%
Aa2
St Louis Park
8.7%
45.418%
AAA
Hopkins
12.6%
60.321%
AA
New Hope
5.8%
54.940%
AA
West St Paul
5.5%
64.109%
AA
Tax capacity % captured by TIF is expected to increase to approximately 13% in 2014 due to increased value of TIF 1-4 being
captured
• Based upon pay 2012 values
■ Value for Market Place & Main is only a partial value
District Original Market Value Pay 2012 Market Percent
Value
Increase in
Value
1-2 Entertainment District
$451,800
$2,402,000
531.65%
2-1 RL Johnson
$3,010,900
$24,491,000
813.41%
2-6 Hopkins Barrier Free Housing
$414,900
$1,524,000
367.32%
2-9 Oaks of Main
$520,000
$10,721,930
2061.91%
2-11 Super Valu
$25,655,200
$142,224,000
554.37%
1-4 Marketplace and Main (Under Construction)
$1,817,000
$1,383,000
N/A
TOTAL
$31,869,800
$182,745,930
573.41%
■ Increase in Value will be approximately 600% when TIF 1-4 is fully developed
'Existing Obligation
Bonds
Date
District
Year Certifed
End Term of
District
Obligations
Issue
2005A GO TIF Refunding Bonds
$
Amount
695,000
PayingD
2-9 Oaks of
Mainstreet
TIF 1-2 Entertainment District
2/1/2016
2005B GO Taxable TIF Refunding Bonds $ 865,000
2/1/2018
TIF 1-4 Marketplace and Main
TE GO TIF Bonds, Series 2002A
$
1,504,000
2-11 Super Valu
2/1/2013
TE GO Refunding Bonds, Series 2010B $ 2,680,000
2/1/2026
Phase I TIF Rev Bond, Series 2007 $ 8,865,000
2/1/2030
Phase II TIF Rev Bond, Series 2008 $ 5,290,000
2/1/2030
Phase III TIF Rev Bond, Series 2009 $ 4,825,000
2/1/2030
TOTAL
$
24,724,000
N/A
N/A
Pay As You
District
TIF 1-2 Entertainment District
Go Oblig.
Note Outstanding
2/11/2012
EDA Interfund Loan $
a
242.158
TIF 1-4 Marketplace and Main
Note A
Note B
$
$
1,000,000
360,000
TIF 2-6 Barrier Free Housing
EDA Interfund Loan $
793,834
TIF 2-11 SuperValu
Phase Note $
Coverage Note $
3,032,879
374,598
TOTAL
N/A
$
5,803A9
J. ORO
Date
District
Year Certifed
End Term of
District
Obligations
Paid•
TIF 1-2 Entertainment District
1995
2023
2023
TIF 1-4 Marketplace and Main
2006
2032
2032
TIF 2-6 Barrier Free Housing
1992
2019
2019
TIF 2-9 Oaks of Mainstreet
1996
2023
2016
TIF 2-11 Su erValu
1998
2029
2029
Note: Obligation is paid of before end term of TIF 2-9
Aga
all 71
Assure obligations can be met
Review for compliance with 10% administrative
expense
Look for pooling opportunities to complete
other projects within the City
Overall planning tool for staff and City Council
to meet policy objectives
f . Administrative Expenses. We recommend that a process be
put in place to track staff time to all TIF districts in order to
maximize utilizing 10% of the tax increment generated to pay
for staff time in administering the districts (i.e. negotiations,
paygo and bond calculations and payments, TIF reporting,
TIF management, etc.). This will allow other funds that pay for
staff time to be decreased accordingly and will help in future years
for budgeting purposes.
2. Base Tax Capacity. MN Statute 469.1763 subd. 3 requires that
the original tax classification for a parcel included in a TIF district
be changed to the future use of the property. Hennepin County
does not make this change unless asked by the City. We
recommend that for TIF districts 1-2, 1-4, 2-6, and 2-9 that the
HRA make the request for the appropriate changes in base
tax capacity by June 30, 2012, which will be effective for tax
increment collected starting in 2013.
Note: These district will see increased TIF collections
Ur -JR4 11MI
3. Poolin-g Balances - End of Obligation and District. Some of the
districts will have cash balances within them at the end of the
district and/or obligation due to funds not being utilized for
administration or other projects within or outside the district. We
recommend reviewing these balances annually and that a
plan be developed for their expenditure to meet other
redevelopment needs of the City.
Cash Balance Cash Balance
District d Date of End..Type of Project
ObligationDistrict Eligible
District Obligation
1-2 Entertainment District 2023 2023 $ 697,002 $ 697,002 Redevelopment
1-4 Market Place and Main 2032 2032 $ - $ - Redevelopment
2-1 RL Johnson 2010 2010 $ 211,462 $ 211,462 Rede\elo ment
2-6 Barrier Free Housing 2019 2019 $ 182,130 $ 182,130 Affordable Housing
2-9 Oaks of Main 2023 2016 $ 1,169,907 $ 289,694 Redewelo ment
2-11 Super Valu/Cargill 1 2029 1 2023 $ 2,722,525 2,722,5 5 Redevelopment
4. Early Decertification. Minnesota Statute 469.1763 subd. 4
places restrictions on the use of increment after the applicable
five-year period is completed. Revenues may only be used to pay
debt or contracts that were entered into before the five year rule
deadline. Once outstanding obligations are paid, the district must
be decertified. We recommend looking at obligations in TIF
district 2-9 to see if it makes sense to extend the obligation to
the end term of the district.
5. TIF District 2-11. There is approximately $213,000 annually in the
allowable 10% administrative fee for this district. Since it is unlikely
that the HRA will ever utilize this amount for actual administration of
the district, we recommend developing a plan to utilizethese
dollars for pooling for other redevelopment projects as
appropriate.
6. TIF District 2-6. Currently estimates show that approximately
$119,000 will remain of the $566,500 interfund loan from the
Economic Development Fund. We recommend utilizing
available cash balances from either TIF district 2-1 and/or TIF
2-9 to pay the interfund loan in full.
7. TIF District 1-4. A loan was made to this district from the EDA fund
($400,000) and TIF 2-11($500,000). We recommend discussing
with the HRH's TIF Attorney the possibility of converting the
loan from the EDA fund to an interfund loan to preserve the
ability to recapture these funds from this District or other
existing TIF districts.
1. Hopkins TIF districts are in overall good financial health
The City has opportunities to utilize funds from several districts
to augment its housing and redevelopment efforts
✓ Comprehensive plan should be developed for use and "recycling"
of these funds
Redevelopment efforts have increased property valuations
significantly and justify the short term investment
b�� s
Questions