TIF Report from Stacie Kvilvang with EhlersTIF
REPORT
FROM
EHLERS
Given by Stacie Kvilvang
■S-0— Economic Development and Redevelopment
-ET0--
March 2012
Management Review & Analysis
Tax Increment Financing Districts
City of Hopkins. Minnesota
EHLERS
LEADERS IN PUBLIC FINANCE
•or';_
Prepared By:
City Staff
And
Ehlers
651-697-8500 3060 Centre Pointe Drive
Offices also in Wisconsin and Illinois 651-697-8555 Roseville, MN 55113-1122
800-552-1171
Table of Contents
ManagementReview and Analysis.........................................................................................................3
Overview .............. ......................................................................................................................................................
......................... 3
TIFDistrict Summa
....................................................................4
Obligationsof the TIF Districts..........................................................................................................................................................5
AdministrativeExpenses....................................................................................................................................................................9
9
Assumptions........................................................................................................................................................................................
Recommendations.............................................................................................................................................................................10
RedevelopmentProject Area................................................................................................................13
TaxIncrement Financing Districts.........................................................................................................14
TIF1-2 Entertainment District..........................................................................................................................................................14
TIF1-4 Marketplace and Main.........................................................................................................................................................21
TIF 2-1 RL Johnson Property
......................26
TIF 2-6 Hopkins Barrier Free Housing
.............................................................31
TIF2-9 Oaks of main........................................................................................................................................................................36
TIF2-11 Super Valu.........................................................................................................................................................................41
Mapof the TIF Districts..................................................................................................................................................................49
Definitions.............................................................................................................................................50
Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 2
Management Review and Analysis
Overview
Revenue from tax increment financing (TIF) districts is a financial asset of the City of Hopkins. This revenue must be used primarily to address
blight, contamination, housing or redevelopment needs for the parcels in the TIF district within a specified period of time. The revenue generated
is first used to pay debt service on outstanding bonds, interfund loans and developer pay-as-you-go notes (PAYGO). A portion, but not all, of the
remaining revenues can be used to participate in other eligible development projects and City initiatives. In the past twenty two years, the HRA
has utilized unobligated revenues from older TIF districts to complete the following projects:
• Streetscape improvements on Main Street in the 1990's
• Market Place Lofts redevelopment for land acquisition and road improvements in 2002
The factors that produce tax increment revenues change every year. At the same time, the state property tax laws have changed significantly since
1997, including the major reforms enacted in 2001. Despite reductions in revenue due to the reform, the City has more than adequate cash flow to
pay for all outstanding general obligation tax increment bonds. A few of the TIF districts for which project costs were paid through a developer
financed PAYGO note are not meeting scheduled principal and interest payments. However, it should be noted that these Notes were approved
prior to the 2001 legislative tax reform which effectively decreased the amount of TIF available to these Notes. In addition, the interest rates on
these notes is much higher than what we are seeing in today's market. Overall, the City has no obligation to make up shortfalls for these PAYGO
notes, since they are revenue based notes and the risk is borne by the developer.
The Office of the State Auditor (OSA) has a TIF division which is mandated by state law to collect annual reporting forms and, if necessary, audit
the use of TIF. Such audits could result in a letter to the county attorney or attorney general for enforcement actions. To date the City has not
been audited. Due to legislative and market changes and oversight of TIF districts by the OSA, the management of the City's TIF districts is an
ongoing activity. Ehlers worked with City staff to create the following plan for the management of its TIF districts and their related obligations.
Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 3
TIF District Summary
Currently the City has five active TIF districts as outlined in the chart below. A more detailed explanation of each district can be found starting on
page 14.
AVMlk Management Review & Analysis - Tag Increment Financing Districts March 2012
Hopkins, Minnesota Page 4
TIF 1-2
TIF 2-6
District
Entertainment
TIF 1-4
Marketplace and Main
Hopkins Barrier Free
T IF 2-9 TIF 2-11
Oaks of Main Super Valu
District
Housing
District Type
Redevelo ment
Redevelopment
Housing
Redevelopment Redevelopment
Redevelopment of a
mixed used
Public infrastructure paid by
Development of
development consisting
Development of 24 units of
Redevelopment of a
Supervalu warehouse and
Project Description
Hopkins Art Center,
of 53 market rate
handicapp accessible
former trailer court park
into 66 owner occupied
development of a 279,872complex
Mann Theater, Big 10
apartments over 5.500
housing
sq/ftelated A office complex
Restaurant and Retail
sq/ft of retail and 7
town homes
and related parking structures
owner occupied town
homes
Approved
4/4/1995
4/18/2006
10/14/1992
9/3/1996
10/6/1998
Legal max term
12/31/2023
12/31/2032
12/31/2019
12/31/2023
12/31/2029
Anticipated/ Actual
12/31/2023
12/31/2032
12/3/12019
12/31/2016
12/31/2023
Term
First Increment
1998
2007
1994
1998
2000
$2,490,000 TE GO TIF Bonds,
Series 2002A, $1,585,000 TE
GO Refunding Bonds, Series
$1,630,000 GO TIF
20108, $9,005,000 Phase 1
$1,000,000 Phase I
Refunding Bonds, Series
TIF Rev Bond, Series 2007,
$750,000 Interfund
PAYGO Note and
$566,500 Interfund Loan from
2005A and the
$5,290,000 Phase II TIF Rev
Current Obligations
Loan from EDA Fund
$360,000 Phase II
EDA Fund
$1,755,000 GO Taxable
Bond, Series 2008,
PAYGO Note
TIF Refunding Bonds,
$4,825,000 Phase III TIF Rev
Series 2005B
Bond, Series 2009,
$3,032,879 Phase PAYGO
Note, $374,597.50 Coverage
PAYGO Note
2012TIF Revenue
$58,172
$0
$9,384
$132,759
$2,132,261
Fiscal Disparities
Outside (A)
Inside (B)
Outside (A)
Outside (A)
Inside (13)
Election
County Number
1165
1172
1163
1 1167
1169/1170
AVMlk Management Review & Analysis - Tag Increment Financing Districts March 2012
Hopkins, Minnesota Page 4
Obligations of the TIF Districts
The revenues from these districts are largely site specific, meaning that the revenues are restricted by law and by contract with the developers.
The revenues must be used primarily to address blight, contamination, housing or redevelopment needs for the parcels in the TIF district within a
specified period of time. The City has the following obligations outstanding as of December 31, 201:
:.12/31/2011
. •.U/31/2011
Amount
DistrictIssue
Paying
2005A GO TIF Refunding Bonds
$
695000
2-9 Oaks of
Mainstreet
2/1/2016
2005B GO Taxable TIF Refunding Bonds $ 865,000
2/1/2018
TE GO TIF Bonds Series 2002A
$
1,504,000
2-11 Super Valu
2/1/2013
TE GO Refundinp Bonds Series 2010B $ 2,680,000
2/1/2026
Phase I TIF Rev Bond Series 2007 $ 8865 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
$
24724,000
1 N/A I
N/A
Pay As You
. •.U/31/2011
Note
OutstandingDistrict
2/1/2012
TIF 1.2 Entertainment District
EDA Interfund Loan
$
242,158
TIF 1.4 Marketplace and Main
Note A
$
1,000,000
Note B
$
360,000
TIF 2-6 Barrier Free Housing
EDA Interfund Loan
$
793,834
Opus Coverage Not
$
988,283
TIF 2-11 SuperValu
Cargill Phase Note
$
3,032,879
Cargill Coverage Not $
374,598
TOTAL
N/A
1 $
6,791,7
Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 5
TIF as a Development Tool
Continuous redevelopment is vital to maintaining the City's long-term economic health and vitality. Hopkins has utilized TIF for key
redevelopment and housing projects since 1976, when TIF District 1-1 was created. Utilizing this tool to accomplish the various goals of the City
has strengthened the overall diversity of housing options, land uses and tax base, while increasing employment opportunities and cleaning up
blighted areas. One immediate benchmark of the benefit in utilizing TIF is the overall increase in market value from when the district was created
to when it is fully developed and aging. As illustrated in the following table. the City's overall market value has increased in the various TIF
districts by over 573%:
Even though there are many benefits to utilizing TIF as a development tools, cities still wonder if they are utilizing the tool too much or not
enough. One good way to measure a citv's use of'I'1F is to compare the use of TIF with similar cities. A common measure of the use of TIF is the
percentage of the gross tax base captured in TIF districts. Below is a chart which demonstrates Hopkins's current and projected tax base which is
captured in TIF districts with similar cities.
Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 6
City of Hopkins
Projected Captured TIF Tax Capacity and Comparison with Other Cities
City of Hopkins
8.8%
55.762%
Aaa
St Anthony
12.9%
68.634%
AA
2012
2013
2014
2016
2016
2017
Captured TIF Tax Capacity
AAA
Hopkins
12.6%
60.321%
AA
New Hope
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 2,629,239 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
Golden Valley
8.8%
55.762%
Aaa
St Anthony
12.9%
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
8.2%
64.109%
AA
Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 7
Today, the City's use of TIF is lower than average when compared to similar cities. Also shown are comparable cities' tax rates and bond ratings.
Although this is a small sample of municipalities, the amount of TIF used by a City does not seem to correlate directly with a City's tax rate or
bond rating. In conversations with rating agencies, we do know that market value growth is an important factor in maintaining Hopkins's AA
bond rating and that redevelopment plays an important factor in that. Following is a table which demonstrates the historical market value growth
of the City of Hopkins.
2012 Prelim
1,471,076,286
-6.69%
2011
1,576,485,200
-7.04%
2010
1,695,916,200
0.90%
2009
1,680,859,300
0.57%
2008
1,671,252,600
5.16%
2007
1,589,259,600
8.80%
2006
1,460,671,900
8.99%
2 Prelim
59.279
6.35%
2011
55.739
13.76%
2010
48.999
3.56%
2009
47.315
4.22%
2008
45.401
-1.01%
2007
45.862
-4.97%
2006
48.262
-1.39%
" Does not include HRA rate, which was first adopted in 2008
The above two tables show the history for the City's taxable market value and the City's tax rate. Factors such as total general and debt levy needs,
state law and economic factors will influence both the market value and the corresponding tax rate. A correlation cannot always be made when
considering market value, tax rate and total tax capacity captured by tax increment districts.
Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 8
Administrative Expenses
Minnesota TIF law defines certain costs to administer and maintain the district as allowable costs that can be paid for from tax increment revenues.
These generally include City staff time, legal expenses, financial advisory expenses and publication and reporting expenses. This allows a City to
defray documented staff time that is most likely a General Fund expense, such as Finance, Community Development, and Administration such as
the City Manager. Time spent can be paid for from TIF revenues rather than general property tax or other revenues. The table below shows the
estimated amount of increment remaining in the City's TIF districts for payable 2012 after district obligations have been paid and after estimated
administrative costs.
HopkinsDistrict TIF 1-2 TIF 1-4 TIF 2-6 TIF 2-9 TIF 2-11
Entertainment District Market Place/Main Oaks of Mainstreet -Super Value
Pay 2011 TIF 52,546 0 9,454 147,777 2,030,408
Obligations Paid 238,354 0 0 120,185 906,523
Allowable admin 5.255 Q 91a 14.778 203.041
Net TIF (191,063) 0 8,509 12,814 920,844
Assumptions
Before discussing the recommendations of the current TIF analysis, it is important to understand the assumptions used in making these
projections.
1. Fund Balances. Fund balances shown for debt service funds are based on amounts for December 31, 2011.
2. Tax Increment. Pay 2012 tax increment revenues are based upon Hennepin County reports. Payable 2011 increment revenues are actual
amounts.
3. Protected Revenues. Projected revenues do not account for additional development or inflation/decrease of existing values.
4. Administrative Expenses. Maximum amount of 10% is deducted annually, even though traditionally the HRA has not utilized this amount.
Management Review 8 Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 9
Recommendations
The updated financial analysis of Hopkins 111 Districts offers the following recommendations:
General Recommendations:
1. 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, 14, 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.
3. Pooline Balances - End of Oblieation 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. For TiF Districts 2-9 and
2-11, we recommend reviewing the obligations and look for opportunities to expend pooling dollars prior to when the obligations will
be paid off and/or look to extending the obligations in order to maximize pooling dollars for other projects.
1-2 Entertainment District
2023
2=$3(22362
02
$
697,002
Redevelopment
1-4 Marketplace and Main
2032
2-
$
-
Redevelopment
2-1 RL Johnson
2010
262
$
211,462
Redevelopment
2-6 Barrier Free Housing2019
230)
$
(182,130)
Affordable Housin
2-9Oaks ofMain
2023
207
$
289,694
Redevelopment
2-11 Super Valu/Cargill
2029
262
$
3,232,662
Redevelo ment
Management Review & Analysis - Tax Increment Financing Districts Marcri X012
Hopkins, Minnesota Page 10
4. Pooling Balances - Cumulative by Year. Some of the districts will have cash balances available on an annual basis due to funds not being
utilized for staff and consultant administration or other projects within or outside the district. We recommend continuing to monitor
possible pooling dollars on an annual basis and develop strategies to secure the use of these funds if deemed appropriate by the
HRA. Following is a chart outlining the districts and their cumulative annual cash balances (based upon when the obligations are paid off,
not the legal term of the districts:
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.11 $
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- 5 -
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5. Debt Service Fund Balance. We recommend that balances in the debt service funds be maintained at minimal levels pursuant to
federal arbitrage regulations. Monies needed to pay principal and interest should be transferred from tax increment funds only as needed.
6. 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 and 2-11 to see if it makes
sense to extend the obligations to the end term of each district.
7. Excess Increment. Excess increment is a new law which impacts the ability to use increment above any outstanding budgeted or actual
obligations. Excess increment calculations are required each year by the OSA in their reporting forms. We recommend monitoring total
budgets and annual TIF reports carefully to avoid excess increment.
Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 11
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-
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5. Debt Service Fund Balance. We recommend that balances in the debt service funds be maintained at minimal levels pursuant to
federal arbitrage regulations. Monies needed to pay principal and interest should be transferred from tax increment funds only as needed.
6. 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 and 2-11 to see if it makes
sense to extend the obligations to the end term of each district.
7. Excess Increment. Excess increment is a new law which impacts the ability to use increment above any outstanding budgeted or actual
obligations. Excess increment calculations are required each year by the OSA in their reporting forms. We recommend monitoring total
budgets and annual TIF reports carefully to avoid excess increment.
Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 11
8. Interfund Loans. The 2001 Legislature made several changes to the process for establishing an interfund loan. We recommend that the
HRA continue its practice of approving interfund loan resolutions and setting amortization schedules each time funds for TIF
projects are borrowed from City or HRA funds (even if repayment isn't anticipated). This will assure repayment to the fund
originating the loan in the future, if revenues are available.
TIF District Specific Recommendations
1. 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, we recommend utilizing these dollars for pooling for other redevelopment projects as
appropriate.
2. TIF District 2-6. Currently estimates show that approximately $119,000 will remain of the $566,500 intcrfund loan from the Economic
Development Fund. We recommend adding an interest component to this loan and utilizing available cash balances from either TIF
district 2-1 and/or TiF 2-9 to pay the interfund loan in full.
3. TIF District 1-4. MN Statute 469.1763 subd. 3 1 year rule) requires that, within five years from certification date, revenues have to be
expended on an activity, which can include payment to a third party for an activity, issuance of bonds, binding contracts with third parties
and affordable housing purposes. The State Legislature amended the five year rule to increase it by an additional five years for districts that
were certified on or after June 30, 2003 and before April 20, 2009. The only district that falls within this timeframe is TiF 1-4, Marketplace
and Main. We recommend that staff and consultants review the district to make sure all obligations are in place to avoid any lost
opportunities for additional projects.
4. TIF District 1-4. The HRA provided a loan to the developer to assist in land acquisition. The loan was to be forgiven at the time of
constructions. We recommend that the HRA approve a $400,000 interfund loan from the EDA fund to this district. The interfund
loan will be repaid from tax increment not needed to pay obligations in district 1-4, 1-2, 2-9, and 2-11.
Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota face 12
Redevelopment Project Area
The City established the original project area in 1970. In 1971, the City established the R-46 Urban Renewal Project, which was
subsequently expanded. In 1976, the City adopted the Central Business District Redevelopment Plan, also known as the North Sector Project Area,
and Tax Increment District 1-1 was established. The North Sector Project Area was subsequently renamed the Redevelopment Project No. 1.
In 1978, the South Hopkins Industrial Redevelopment Program was established, which was also known as the South Sector Project Area. A tax
increment financing district was established within this Project Area. The South Sector Project Area was subsequently renamed the Redevelopment
Project No. 2 in 1989. Tax Increment Districts 2-1, 2-2, 2-3, 2-4 and 2-5 were established between 1989 and 1990.
In 1992, Redevelopment Project No. 2 was combined with Redevelopment Project No.1 and the entire area has since been known as Redevelopment
Project No. 1. Tax Increment Districts 2-6, 2-7, 2-8, 2-97 2-10 and 2-11 were established within the renamed Redevelopment Project No. 1.
Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 13
Tax Increment Financing Districts
TIF 1-2 Entertainment District
TIF 1-2, the Entertainment District (County #1165) is a Redevelopment District established on
April 4, 1995 and is located within the Redevelopment Project No. 1. Originally the district
encompassed nine (9) parcels of land, that housed the Suburban Chevrolet dealership. All (9)
parcels were purchased by the City for redevelopment. The City developed a new performing arts
center on three (3) of the parcels in July 1997 and it was formally opened to the public in May
1998.
On January 20. 1995, the HRA entered into a development agreement with the Beard Group to
construct a seven (7) screen movie theater of approximately 26,000 sq/ft (Mann Theater), a 5,000
sq/ft casual dining establishment (Big Ten Restaurant) and ancillary office and retail space. The
City sold the remaining six (6) parcels to the Beard Group for S1.00 and provided $50,000 toward
utilities, soil corrections, SAC/WAC, park dedication and streetscape fees. In addition, the HRA
provided two (2) loans for construction of the project in the amount of S 1.4 million and $750,000.
The $1.4 million loan was at 2% interest and required monthly payments of accrued interest in the
I" three years. Starting in year four, the Beard Group was required to make monthly payments on
the full principal and interest based upon a 30 -year amortization schedule. but overall the loan had to
be paid in full in fifteen years. This loan was paid in full in August, 2010. The 5750,000 loan was
at 0% interest to the Beard Broup, but was booked as an interfund loan from the EDA fund at a 5%
interest rate (to be repaid from TIF generated from the project). If the project was sold and/or
transferred within five (5) years of closing on loan it was to be repaid in full by the Beard Group. if
the Beard Group sold and/or transferred the property in years 6-15, they were required to repay a
portion of the loan. The Beard Group retained ownership for the 15 year duration so the loan was
forgiven to them but is still an interfund loan from the EDA Fund to the District. Both loans were
secured by a mortgage, personal guarantee and assignment of leases and revenue, but were
subordinate to the first mortgage.
Management Review & Analysis - Tax Increment Financing Districts March 2012
01 Hopkins, Minnesota Pace 14
The Beard Group was required to provide a minimum of $300,000 in equity to the project and were allowed a developer fee of 5% of total
development costs and a leasing fee of $3 sq/ft. In addition, there was a formal lease executed for use of the City's parking facility at no cost with a
term the same as the Movie Theater lease and with the same options for extension.
Adopted....................................04/04/1995
Requested Date............................06/05/1995
Certified Date..............................07/25/1995
Decertifies.................................12/31 /2023
Obligation End Date.............................2024
Farmer and Current PID Numbers:
Former PID #
New PID #
New Use
24-117-22-31-0046
24-117-22-31-0149
Performing Arts Center
24-117-22-31-0047
24-117-22-31-0048
24-117-22-34-0058
24-117-22-34-0249
Mann Theater, Big Ten
Restaurant and Ancillary
Retail
24-117-22-34-0059
24-117-22-34-0060
24-117-22-34-0061
24-117-22-34-0063
24-117-22-34-0077
Fiscal Disparities Election:
The City elected to calculate fiscal disparities from outside the district, or Option A.
Frozen Tax Rate: 146.5720
Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 15
;i
MN Statute 469.176 subd. 4j specifies the activities on which tax increment from a redevelopment district may be spent. In general, tax increment must
be spent on correcting those conditions v,hich caused the area to be designated a redevelopment district. Allowable uses include property acquisition,
demolition, rehabilitation, installation of public utilities, road, sidewalks, public parking facilities, and allowable administrative expenses.
0f•!i(1 )tic,ns:
There is one interfund loan for this district as follows:
• $750,000 interfund loan adopted in 1985 from the Economic Development Fund at 5% interest. Final payment is expected on February 1,
2024.
F(,ur Year Rule
MN Statute 469.176 subd. 6 requires that, within four years from certification date, certain activities must have taken place on each parcel with the TIF
district. Required activities include demolition, rehabilitation, renovation and site improvements. If these activities have not taken place within the
required time, the parcel is `knocked down' from the district. meaning, that no increment may be collected from that individual parcel for the duration
of the district. The law, does, however allow for reinstatement procedures should the required activity later occur on the parcel. TIF 1-2 original Four
Year Rule deadline was July 1999 and was met by the projects.
Fiv - Year Rule.-
MN
ule:MN Statute 469.1763 places limits on the amount and the length of time in which revenues from the TIF district may be used for activities
outside the district. In general, for the TIF 1-2 redevelopment district, at least 75°o of tax increment revenues must be used to pay for qualified
costs within the district. This is considered the 'in district percent. Subdivision 3 of this section of the statute further specifies that within five
years, tax increment must actually be paid for activities, bonds issued, contracts entered into in order for revenues to be considered to have been
spent. The original five year deadline was July 2000 and was met by the various projects.
Geographic Enlargements
MN Statute 469.175 subd. 4 (f) places limits on the length of time a TIF district may add parcels. No parcels may be added five years after the
certification date. TIF 1-2 is past this deadline and the City may no longer enlarge the geographic size of the district.
Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 16
R�-ccmrner��!a'ti�ms:
Inrerfund Loan. We recommend reamortizing the $750,000 interfund loan to February 1, 2024 (2nd half of 2023 increment) to maximize
available cash/fund balance for other projects.
Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 17
City of Hopkins, MN
TIf District 1-2 Enteroinment Diahut
TOyea Y-
a-
DAIGIXAI
4 X39 Gen.EMargemens
n,amr
lu✓ti
ln[ome pMrAevenw
1:. UmaM PoplmB pp'.ans iv4xibk
ImXeel on
BondM Debt IMeXund.1 Admin
Elpense CXmty Adltln OuXide UXrkt
N. Elpeme
Distrin Type
Endnl sulk
U-1
0.eaevebpmenl
11
>aT•n l.per.se
IC 09.
1: &:dBet Nod Mot 8e4ommen0ld ai rns tnrw
71)031
35,60a ]OSE od
PrpjM Pres
w2%
15,066
76S694S
3,042,311
1233,676)
201,253
3'. kers b-.. ..4.....11, <_4,
Al or Urkx limit
1,453
4JM
iwlDispariUts
139118%
AE%clbn
562
53,108
11,086
3251
15.000
95,310
(275,508)
166071
(arnh Number
7017
1165
67,190
39.831
118130%
56,11)
-
51,112
1]11]
5,83)
frozen Aall
E" ill UTA
14.577%
CAM C0.30`i
15
M13
7,459
1),290
39831
ia813Ja
58.371
Add 2nd UTA
OAM
5811
11925
1195,N71
216.42
16
M4
1,453
47190
Add3rd UTA
Ob"
Add X39 Aad Gec
-
31.172
a.44
$,Bl)
17925
1155,199)
286.730
1run Rax
Delete AamTIF
7.459
11.290
PUN BVDGH
ANALY9S
58.]71
51.171
'3.308
5917 -
I],92S
De4en�Ae,
326977
18
7016
❑xrkrcpre4
47,290
39.831
14::1
58.171
ON Appaed
4 ftwe3
[rood legal lean l4pMMlerm
lax xarement
Im -ln[ome OrM1er Aevenue
TOM -HUES
1mdM Debt IMerMk- Pdminfn,, a County M., Outside0.krit
utnX Eye 7-1-51
Toon 6*"
Orymal Wdlet
4/a/1995
6/5/1995
7/15/1995 411 3:.1023 11/31/1013
1535:15
58.:71
1,519,135
)9A d"+1 151913
1,<68,)61
3,519,1I5
1,515,111
16,4)
[umWUw xeM.e
37D,OM
20
1018
),539,115
47,29,0
1,519,135
198151 151,913
],168,)nl
3,519,125
3,5]9,115
5.867
5811 -
15,6)9
End of Mon. ArojMed..I T.'
5161,646
36166 'a OSE eU(
3,559.812
466,)19 118,119
1,731,915
3916.$S2
3,316.$53
58.111
-
$8,172
UMx/10x4.1 Budlet
'a.05.,a7Y
(311.! I2-.-1
11.010,6811
196451 1166,7)9', 133,764
11.263.116)
f»1,7171
1797,7271
TOyea Y-
a-
Cnrt901 Sud
Uptu'M
Eurrnrt lxal
148.$x4
iv h,nemeM ImerlX
ln[ome pMrAevenw
7OT.FtMNUES
ImXeel on
BondM Debt IMeXund.1 Admin
Elpense CXmty Adltln OuXide UXrkt
N. Elpeme
101A1E10KN31
Endnl sulk
U-1
Eking Gln
Balance"
11
m
71)031
35,60a ]OSE od
1,101,635
w2%
15,066
76S694S
3,042,311
1233,676)
201,253
13
2011
1,453
4JM
3167)
139118%
5),546
562
53,108
11,086
3251
15.000
95,310
(275,508)
166071
14
7017
7ASB
67,190
39.831
118130%
56,11)
-
51,112
1]11]
5,83)
]7,958
(235,64)
206,235
15
M13
7,459
1),290
39831
ia813Ja
58.371
5/.171
s11M
5811
11925
1195,N71
216.42
16
M4
1,453
47190
35837
1a9139a
Sg,])1
-
31.172
a.44
$,Bl)
17925
1155,199)
286.730
17
2%5
7.459
11.290
35932
1N 131R
58.]71
51.171
'3.308
5917 -
I],92S
(14.9531
326977
18
7016
1,1
47,290
39.831
14::1
58.171
m"
I1.3a1
5,81) -
17,
11,958
114.7111
351,128
19
701]
1,453
47,19,0
3983)
11613C%
58.:71
531]1
x1,1]0
5,81)
16,4)
(33,552)
37D,OM
20
1018
7,459
47,29,0
3983)
1c813C%
58,1)1
SI,IR
5.867
5811 -
15,6)9
1,41
45.$39
21
2019
7,153
11,290
39131
Ill Bis
58.111
-
$8,172
1,481
5817
14,305
S1,B08
400,»1
22
20M
7,451
41,29,0
39631
148130.$
56.1)1
51,177
),063
5,81) -
12980
91,100
41&149
23
2@l
7,158
47,390
39831
14813994
58.111
SI,IIi
5.519
5.811 -
1194[
14,936
41,501
24
M22
7,48
4),190 �
39.831
IN 1304.
58.]12
-
51,172
- 3936
5,817
9,753
193,45
46,/59
25
7(173
7,158
47.190
35.832
149130%
Se,t11
-
min
2,267
5,811
8,079
243,438
47,211
M
m4
-
CSMA
1
179
4)9
242,959
165,112)
"aAuxed br yex
end xcruW
ic6).Mb
36,166 2J56 iW
3,559,113
166779
]16119
3,731,945
33:6652
Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 18
City o1 Hopkins, MN
TIF District 1-2 Entertainment District
Pursuont to M.S. 469.176 Subd. 3:
Admin limit is based on: Expenses
ADMINISTRATIVE EXPENSE TEST
TEST 1: Admin per TIF Plan $251,913
1T2:
Estimated TIF Admin Allowable (10%)
226,721
Estimated Total TIF Expenses per TIF Plan
$2,267,212
sT3:
Cumulative TIF Admin Allowable (30%)
$319,872
Puquont to M.S. 169.]7635ubd. 2:
Total TIF Expenses for the Project
3,198,724
District Type:
Does this section apply?
Redevelopment
Yes
WILTS:
Estimated TIF Admin Allowable (10%)
$319,672
Certification Request Date:
6/5/1995
Actual Admin Expenses
$118,129
Does TIF Plan Specify Assisting Housing Outside
Project Area?
No
Available Admin
$108,592
N so, Whal Is the Additional % Allowed In
TIF Plan (Up to 10%):
0%
Actual Percentage
3.
Total Pooling %:
25%
Accummulated Totals
Tax Increment
POOLING CALCULATION
(25% Outside
of District)
25%
for Qualified
F Year
Year
Admin. Expenses Total
%Allowable
Current Year Cummulatfve
Admin Costs
Costs
Spent Outside
Cumulative
12
45,068 2,997,243
1.5%
717,031
717,031
45,068
134,190
-
134,190
13
2011
48,322 3,089,329
1.6%
52,546
769,577
48,322
144,072
144,072
14
2012
S4,139 3,101,470
1.7%
58,172
827,750
54,139
152,798
-
152,798
15
2013
59,956 3,113,578
1.9%
58,172
885,922
59,956
161,524
-
161,524
16
2014
65,774 3,125,686
2.1%
58,172
944,094
65,774
1701
-
170,250
17
2015
71,591 3,137,794
2.3%
58,172
1,002,267
71,591
178,976
-
178,976
18
2016
77,408 3,149,935
2.5%
58,172
1,060,439
77,408
187,702
-
187,702
19
2017
83,225 3,161,104
2.6%
58,172
1,118,611
$3,225
196,427
-
196,427
20
2018
89,043 3,170,966
2.8%
58,172
1,176,784
89,043
205,153
-
205,153
21
2019
94,860 3,179,455
3.0%
58,172
1,234,956
94,860
213,879
-
213,879
22
2020
100,677 3,186,517
3.2%
58,172
1,293,129
300,677
222,605
-
222,605
23
2021
106,494 3,192,D47
3.3%
58,172
3,351,301
106,494
231,331
-
231,331
24
2022
112,312 3,195,982
3.5%
58,172
1,409,473
112,312
240,057
240,057
25
2023
118,129 3,198,245
3.7%
58,172
1,467,646
118,129
248,783
-
248,783
26
2024
118,129 3,198,724
3.7%
1
1,467,646
118,129
248,783
-
Management Review & Analysis - Tax Increment Financing Districts March 2012
49 Hopkins, Minnesota Page 19
crcy or Hoywal.
nr 1a
Management Review & Analysis - Tax Increme,i f inancina Districts March 2012
Hopkins, Minnesota Page 20
1750.000
3
750,000.00
2/11,99s
929.52.05
811/1996
i82
10.69063
18,)50.00
51.37
18698.63 3
749,948.63
211/1 B9.
-el
8,750.00
18.750.00
(152.817
5,59
8,902.81 E
8.598{1 1
750,101 *4
9.85
D/111p9.
2/111990
8.59841
18.902.85
2],311.00
8.15
8.902.85 b
1.70
•/111899
18 386.17
27.311.00
8,9245]
18.386.17 3
.32.616.8)
2/1/1999
18.465.96
1.00
8451
465.96 S
a
723271.83
0/1/1999
+].945.58
27.311.00
9.36542
94556
]144%40
2/1/2000
184
18.0%.96
27.311.00
9.30404
18,0%.eb 5
705.102.36
D/1 /2000
11,579.26
27.311.00
] t .>4
1) 579.26 S
O 62
2/12001
17.52).15
27 311.00
787.85
17 327.15 3
5.586.]]
D/112001
t8t
16.89850
27.711.00
312.20
8.80 3
6752.4.6)
"'.002
e/1/2002
17,02062
16,487.96
2].311.000
2].311.00
0.827.04
110]062 S
6,48).96 3
x1.15
2/1/2003
184
18,48845
27.311.00
0,822.55
6488.45 3
]8.60
D/1 /2003
15.951.2
27,311.00
1 359.)7
51.2) 3
6J1,97H.87
2/1/2004
5.928.33
27.]11.00
1.781,6]
5.929.33 3
620.597.20
8/1no04
15!7242
27.311.00
]e.5tl
1547212 3
608,758.62
2/1/2005
8/1/2005
15.344 05
14 797.16
2].311.00
2] J+1.00
6.95
12 513.84
15.344.05 3
14.797.16 3
67
584.2.7.84
21'..-
4 )2).00
2).311 00
114.00
422] 00 $
71.69354
01112006
2I1rz00)
184
14.178.12
27.311.00
27,311.00
3.136.13
13232.28
3
14.078 J2 3
57.]2
s4s.3zs..3
811/200)
1].521.06
2).31 1,00
],]89.92
13,521.08 S
531.535.51
2/1/2008
13.307.61
27.311.00
913.79
]e].fi1 3
617,622 1'
•/112006
12,805.10
27,311.00
405.90
12.905.10 3
503216.22
211.009
12,683.01
2].311.00
117e71
683.81 3
488.589.03
e/1.009
12.1+4.33
2].311.00
19667
4.]3 S
173.392.36
2H rz010
+.9]2.0.
27.31+00
6.378.92
932.08 3
D/12010
1356.22
27.311.00
5.854.)8
1.356.22 $
442.05866
2/1/2011
142.30
16.004.19
211.043.00
199.900.70
142.30 3
16.004.19
242157.%
N1 2011
2/112012
6.103-)1
6.004.19
6., OS.iI
-
-
3
6.103.)1 s
242.,57.%
.1/2012
6.037.36
6.017.]6
-
6037.36 $
342.,5-
2111201)
D/1/3013
101
6103.71
0].711
1 103.71
6.004.19
-
6.103.)1 3
242.157.%
242,157.%
.1/2014
6.103.71
-
6,103.7, E
242,157.%
8/1/2014
6.004.19
6004.19
-
6.004.19 3
242,+SJ.%
21//2015
6.t OJ.)1
6.103.71
-
6,103.11 $
5..%
•/1/2015
6.004.19
-
3
242.157.%
2/12016
6113.71
6.103.)1
6.10371 S
242,157.%
.1/2016
6.037.36
8500.00
62.64
6037.38 3
229695.33
211201]
5.789.58
18.50000
12710.42
578958 3
216.994.91
01112011
5.3801
18500 a0
360.04 3
2035641
2/120016
6.138.51
0.500.00
3661 3
4.72344
1J6.726.so
.11
.?234.
3.176.56
3
2112019
+5441
8.500.00
4.045.51
449 3
162,681.38
011 2019
.0336'
18.50000
466.39
]361 S
14..214.98
2/1/2020
102
3.]3553
3.327.13
16.500.00
00.00
4.764.17
5.172.07
]5.8] S
S
13345052
7.95
8112020
2/1. 21
2.981.25
18.500.00
.1J
81.25 3
102 ]59.20
D/1/2021
181
2347.87
18.500.00
5552.13
2,541.87 3
8650).07
2/12022
2.188.01
10.500 00
1.99
88.01 3
0485.08
.12022
181
1 )47.89
18.500.00
16.)52.11
1,747.89 S
53,742.97
2/1/203)
184
1]5462
18.500.00
17.145 38
462 3
36397.59
8/11202]
' B 1
90142
18.500.00
1).592 58
90]42 $
19 005 01
2/1/1024
479 O]
19484.04
479.03 $
O 00
Management Review & Analysis - Tax Increme,i f inancina Districts March 2012
Hopkins, Minnesota Page 20
TIF 1-4 Marketplace and Main
TIF 1-4 Marketplace and Main (County #1172) is a Redevelopment District established on April 18, 1996 and is
located within the Redevelopment Project No. 1. Originally the district encompassed 12 parcels of land, which
were removed from TIF 1-3, and was established to facilitate the redevelopment of the downtown area for mixed
use commercial and housing developments. It is anticipated that one parcel which currently contains an office
building (Wellness Center) will not be redeveloped.
On February 20, 2007 the HRA entered into a --�
development agreement with the Beard Group to ,�., 7oi ^>l
construct a mixed-use development consisting of 45
condominium units over 5,500 sq/ft of retail and 13 '"►� l
town homes. The HRA provided a loan to the Beard Group to acquire the property in the J - s - — _ ►�
amount of $900,000 ($400,000 from the EDA fund and $500,000 from TIF 2-11 via special ! `1
legislation in 2008 which allowed pooling up to 20% for housing purposes) which was to be
repaid by October 1, 2008. The Beard Group's obligation to repay the loan was secured by a j �_ +—'= LL
second mortgage on the property and the personal guarantees of the principals. The loan was ia,: ver- +�rw
to be repaid if the Beard Group had not closed on financing and commenced construction,,a
of the first phase of the development by August 31, 2008. If they completed construction =`
of the first phase, the loan was to have been forgiven. No interest accrues on the principal amount of the loan, provided that if the loan was not paid
M-
in full when due, interest at the rate of 7.5% per year would accrue on the unpaid principal amount until
the loan was paid in full.
Due to the change in the market for the demand for owner -occupied condominiums, the HRA entered
into the first amended and restated development agreement for construction of Phase I on May 5, 2009.
The new Phase I development would consist of a vertical mixed-use development consisting of 53 units
of market rate apartments over 5,500 sq/ft of retail and Phase II would consist of the construction of 7
owner -occupied town homes. The $900,000 loan payment due date was extended to October 1, 2009
and the loan was to be forgiven once construction of Phase I was completed. In addition, in the event
that the Beard Groun nroceeded with the construction of Phase I but did not cmmnly with itc
Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 21
obligations to market and construct Phase IIA or Phase 11B the City had the right to purchase Parcel IIA for a purchase price of $255,840 and
Parcel IIB for a purchase price of $170,560. The Beard Group would be issued a $1,000.000 PAYGO TIF Note at 6.25% interest for Phase I and a
yet to be determined PAYGO TIF Note for Phase 11, once development plans were submitted.
On January 5, 2010, the HRA entered into the second amended and restated development agreement which extend the repayment date on the $900,000
loan to May 31, 2010; provided that the date for commencement of construction of Phase I is May 31, 2010, the date for completion of
construction of Phase I is July 30, 2011; and that the Beard Group conveyed Parcel IIB to a third party so the definition of Redevelopment
Property was modified to delete Parcel IIB as a part of the Redevelopment Property and all references to Parcel ❑B and Phase IIB were deleted
from the development agreement.
On April 20, 2010, the HRA entered into the third amended and restated development agreement which extend the repayment date on the $900,000
loan to August 31, 2010; provided that the date for commencement of construction of Phase I is August 31, 2010, the date for completion of
construction of Phase I is October 31, 2011; and that the City would issue a Phase 11 PAYGO TIF Note in the amount of $360,000 with interest
payable at 6.25%.
On August 23, 2010, the HRA entered into the fourth amended and restated development agreement which extend the repayment date on the $900,000
loan to August 31, 2011, provided that the date for commencement of construction of Phase 1 is August 31, 2011, the date for completion of
construction of Phase I is July 31, 2012; and that the interest on the $360,000 Phase 11 PAYGO TIF Note will equal the rate of interest on the
mortgage loan obtained by the Beard Group to finance the construction of Phase I IA, but in no event will the interest rate on either PAYGO TIF
Note exceed 7%.
Adopted .................................... 04/18/2006
Requested Date ........................... 05/15/2006
Certified Date ............................. 06/05/2006
Decertifies ................................. 12/31/2032
Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Face 22
Former PID #
...
New Use
0
24-117-22-42-0029
Town Homes
24-117-22-42-0030
Town Homes
24-117-22-42-0031
24-117-22-42-0175 Division in Process - see below
Town Homes
24-117-22-42-0032
Town Homes
24-117-22-42-0033
Town Homes
24-117-22-42-0048
24-117-22-42-0173
Market Place and Main
Apartments
24-117-22-42-0049
24-117-22-42-0050
24-117-22-42-0167
24-117-22-42-0056
24-117-22-42-176
Hopkins Health &Wellness Center
24-117-22-42-0057
24-117-22-42-00169
24-117-22-42-0175 Division in Process - see below
Town Homes
Town Homes will be:
24-117-22-42-0178, 0179,0180,0181, 0182, 0183, 0184, 0185 (vacant open space)
Fiscal Disparities Election.
The City elected to calculate fiscal disparities from inside the district, or Option B.
Frozen Tax Rate: 118.9470
Allo%vable Useq
MN Statute 469.176 subd. 4j specifies the activities on which tax increment from a redevelopment district may be spent. In general, tax increment must
be spent on correcting those conditions which caused the area to be designated a redevelopment district. Allowable uses include property acquisition,
demolition, rehabilitation, installation of public utilities, road, sidewalks, public parking facilities, and allowable administrative expenses
O Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 23
There are two PAYGO Notes that will be issued for the projects within this district as follows:
• Phase I - PAYGO Note in the amount not to exceed $1,000,000 at 4.47% interest. The HRA has pledged 95% of the tax increment revenues
from the project. First payment is expected in 2104 and the final payment on February 1, 2033.
• Phase 11— PAYGO Note in the amount of $360,000 at 6.25% interest. The HRA has pledged 95% of the tax increment revenues from the
project. First payment is expected in 2014 and the final payment on February 1, 2033.
Fosr YEr�r RuIF
MN Statute 469.176 subd. 6 requires that, within four years from certification date, certain activities must have taken place on each parcel with the TIF
district. Required activities include demolition, rehabilitation, renovation and site improvements. If these activities have not taken place within the
required time, the parcel is `knocked down' from the district. meaning, that no increment may be collected from that individual parcel for the duration
of the district. The law, does, however alloy, for reinstatement procedures should the required activity later occur on the parcel. The State Legislature
amended the four year rule to increase it by an additional two years for districts that were certified on or after January 1. 2005 and before April 20,
2009. TIF 1-4 falls within this timeline and the Four Year Rule deadline is nog+ June 5, 2012. The TIF 1-4 original Four Year Rule deadline was June
5, 2010.
Five YEL ar Rule:
MN Statute 469.1763 places limits on the amount and the length of time in which revenues from the TIF district may be used for activities
outside the district. In general, for the TIF 1-4 redevelopment district, at least 75% of tax increment revenues must be used to pay for qualified
costs within the district. This is considered the 'in district' percent. Subdivision 3 of this section of the statute further specifies that within five
years, tax increment must actually be paid for activities, bonds issued, contracts entered into in order for revenues to be considered to have been
spent. The State Legislature amended the five year rule limit to increase it to ten years for Redevelopment or Renewal and Renovation districts
certified after June 30, 2003 and before April 20, 2009. This district fits this timeline and the extended Five Year Rule limit is now June 5, 2016. The
original five year deadline was June 5, 2011.
Geographic Enlargements
MN Statute 469.175 subd. 4 (f) places limits on the length of time a TIF district may add parcels. No parcels may be added five years after the
certification date. This district is past this timeline and no additional parcels may be added to its geographic size.
Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Pace 24
1. Phase II TIF Note. Due to market value exclusion, the Phase II TIF Note should be reviewed to determine how much TIF will be generated due
to the reduction in taxable market value and possibly be revised as appropriate.
2. Base Tax Capacity. The original tax classification for all the parcels was commercial (1.5%-2%). The tax classification should be changed to
reflect the new end uses, as allowed in State Statute. We would recommend requesting the County to change PID #'s 24-117-2242-0029
through 0033 and 24-117-22-42-0169 to the homestead residential tax classification (1%) and PID #'s 24-117-22-42-0048 through 0050 and
24-117-22-42-0167 to rental (1.250%). This request should be completed by June 2012, and will be in effect for the pay 2013 taxes/ IF.
5. Interfund Loan. The HRA provided a loan to the developer to assist in land acquisition. The loan was to be forgiven at the time of
construction/development of the project. We recommend that the HRA approve a $400,000 interfund loan from the EDA fund to this
district. The interfund loan will be repaid from tax increment not needed to pay obligations in district 1-4, 1-2, 2-9, and 2-11.
Management Review & Analysis -Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 25
TIF 2-1 RL Johnson Property
TIF 2-1 RL Johnson Property (County #1158) is a Redevelopment District established on December 3, 1985 and is located within the Redevelopment
Project No 1. Originally the district contained 10 parcels of land in a disused industrial site that contained a 500,000 sq/ft obsolete manufacturing
building that was home to the White Motors Plant, property owned by Minneapolis Moline company and a vacant train depot.
On April 27, 1989, the HRA entered into an agreement with Marcus Corporation to construct a 10,000 sq/ft commercial facility on the fonner
Minneapolis Moline property and to establish a minimum market value of $425,000 that would be in effect until August 1, 2009.
On December 6, 1995, the HRA entered into an agreement with RL Johnson Company to construct a 222,494 sq/ft office/warehouse facility.
The HRA provide the RL Johnson Corporation a PAYGO TIF Note in the amount of $2,017,556 at 8.5% interest, payable from 90% of the
increment generated from the project. In return, RL Johnson was to create a minimum of 75 full time jobs payable at federal minimum wage, as
adjusted from time to time.
Adopted ............................... 12/03/1985
Requested Date ....................... 12/03/1985
Certified Date ........................ 12/06/1985
Budget Modification ................ 04/04/1995
* Decertified .......................... 07/06/2010
Note: The City decertified this district one year early.
Management Review & Analysis - Tax Increment Financing Districts Marc? 2012
40 Hopkins, Minnesota Page 26
Fo riTi,ar =illi! Curru[it 1`10
Former PID #
NewPID#
New Use
25-117-22-12-0005
25-117-22-21-0023 and outlot25-117-22-12-0013
Cornerstone Warehouse
19-117-21-31-0002
19-117-21-31-0002
HCRRA
25-117-22-24-0006
same
Same - Industrial
25-117-22-24-0007
same
Same - Industrial
24-117-22-43-0043
same
Same - Industrial
24-117-22-43-0142
same
Same - Industrial
24-117-22-43-0039
same
Same - Industrial
25-117-22-13-0118
same
Same - Industrial
25-117-22-12-0004
25-117-22-12-0012
HRA Outlot
25-117-22-21-0004
25-117-22-21-1022
Wendy's
-dlowable Uses:
MN Statute 469.176 subd. 4j specifies the activities on which tax increment from a redevelopment district may be spent. In general, tax increment must
be spent on correcting those conditions which caused the area to be designated a redevelopment district. Allowable uses include property acquisition,
demolition, rehabilitation, installation of public utilities, road, sidewalks, public parking facilities, and allowable administrative expenses.
Obligations:
Currently all obligations have been satisfied.
Four Year RUle.
MN Statute 469.176 subd. 6 requires that, within four years from certification date, certain activities must have taken place on each parcel with the TIF
district. Required activities include demolition, rehabilitation, renovation and site improvements. If these activities have not taken place within the
required time, the parcel is `knocked down' from the district, meaning, that no increment may be collected from that individual parcel for the duration
of the district. The law, does, however allow for reinstatement procedures should the required activity later occur on the parcel. The TIF 2-1 original
Four Year Rule deadline was December 1989 and was met.
Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 27
Fivr:; YE- <ir F2,,;!,
MN Statute 469.1763, which restricts the amount of increment that may be spent outside a tax increment financing district, was effective for districts
where the certification was requested before April 30, 1990. Therefore, this section of the lay+ does not appi(r to this district. The district, therefore, has
flexibility in the use of increment.
Ri.,�,(:mrnt:r ,11a<.. .
1. Use of Funds. There is approximately 5211,462 left in the district. Since this is a Pre -1990 TIF district, the HRA has a lot of flexibility in the use
of these funds for projects. We recommend that the HRA develop a plan for use of these funds.
Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 28
City of Hopkins, MN
TIF District 2-1 RL Johnson Property
ORIGINAL H55 11 Umited Ppolir%p0lidr ava4able
Msbin Trye Rederabpment ..,.��tar -., 1G0e% 21 Mg. Mad Mot RtapnmeMMal Wsume
hoj-Area 31 Admin. 6merde is ounerrck'. 3.4% At or UWu UmN
Fival Onwrltle 0Ele .
foamy Numhtr
komn Rate Ed.10 UTA DBDOIA 01000% 04110%
Add 2W UTA 0000'%
Add3rd UTA 0.000% Add NSS Add Geo.
Insert how 0ekte AowBUDGET ANALYSIS
Ot11rUlNa Revenues FgeWNvtl
Ctl'A98F9F9d oftaw' t C."" LWWT R O9tMdTerm Tb— htereat Mtmne Oth,,R—oe TOTALAIDANIMS Bmded NW Ad—Eq— fw., Adnin Uwide DNDitt Other Egtaae TOTAL EXPENSE Total BRden
E1d MOEAFdheje0edA—t ToW 7,710,733 660,949 8,137779 16,71C,K1 9.912491 516,919 2,113 6,051446 16,512,999 16,512,999
UMer/IOvm1BW6et 9,312,267 1680,9491 18.:32,129; 29X.539 (8,516,359) 1155,351 12113) 7,905122 510,001 110001
11F Year Year Bare CuneM FN4d DNpadties 4pdrM
Cvrint
TU Rate Taa Mcrement Other Rerenae iOTAI R[VfMUFS
M Mt
Bmr6ed1—
Mein Egeme c—„Admin
ODUIde Omrirt O Egeme
WiM— tnd, fas6
TOTALERPENSE Balarce Ba —'
23 MC
1,110,233 819B2`' 8,12..360 16,718,920
9,505X01
536,205
2,113 6,051446
16.095.168 623,752 623,751
24 2.1
1,122 1,419 5,562
407X87
ic,7M
117,831 211,162 211,162
”-.Eluded f,,y,erw -1
7,710,733 Blo'W9 8,132,779 16,724,461
9,912,191
546,949
6,051446
1E51?999
Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 29
City of Hopkins, MN
TIF District 2-1 RL Johnson Property
Pursuant to M.S. 469.176 Subd. 3:
Admin limit is based on: Expenses
1: Admin per IIF Plan
2: Estimated TIE Admin Allowable (10%) $1,532,070
Estimated Total TIE Expenses per TIE Plan $15,320,700
TEST 3: Cumulative TIF Admin Allowable (10%)
Total TIF Expenses for the Project
$1,596,605
$15,966,050
RESULTS: Estimated TIE Admin Allowable (10%)
$1,596,605
Actual Admin Expenses
$546,949
Available Admin
$985,121
Actual Percentage
3.4%
Pursuant to M.S. 469.1763 Subd. 2:
District Type: Redevelopment
Does this section apply? No
Certification Request Date: 12/3/1985
Does TIF Plan Specify Assisting Housing Outside Project Area? No
If so, What is the Additional % Allowed in TIE Plan (Up to 10%)-. 0%
Total Pooling W 100%
Ez::]
• • rr• r Tax Increment
100% for
TIE YearYear al %Allowable Current Year Cummulative Admin Costs Qualified Costs Spent Outside Cumulative
23 58,963 3.4% 7,710,733 7,710,733 536,205 7,174,528 - 7,174,528
24 2011966,050 3.44 - 7,710,733 546,949 7,163,784 - 7,163,784
Management Review & Analysis - Tax Increment Financing Districts March 2012
01 Hopkins, Minnesota Page 30
TIF 2-6 Hopkins Barrier Free Housing
TIF 2-6 Hopkins Barrier Free Housing (County #1163) is a Housing District established on October 14, 1992 and is
located within the Redevelopment Project No. 1. The district is located at the comer of 5'h Avenue and 2nd Street
and originally encompassed 7 parcels of land that contained single-family homes. The district was established to
facilitate the development of an affordable 24 unit rental handicap housing facility called Sonoma Apartments
which is owned by the National Handicapped Housing Institute. On August 31, 1992 the HRA entered into a
development agreement for the construction of the
not to exceed $566,500 to assist in writing down
the costs of land acquisition, relocation and
demolition of the existing single-family homes. The funds were provided to the
project from an interfund loan from TIF district 1-1 and were to be repaid with no
interest. This loan was subsequently transferred to the Economic Development Fund
in 2000.
The developer was required to enter into a minimum assessment agreement for
$825,000 through the term of the obligation (commencing on January 2, 1994). The
developer also provided a TIF guarantee in that to the extent the amount of TIF
generated from the project fell below $19,024, the developer would make up the short fall. Finally, in the event of a sale or transfer of the property, the
developer is required to pay the HRA 25% of any proceeds received as prepayment on the loan.
On April 15, 2004, the district was modified to add two additional parcels of land (24-117-2243-0015 and 24-117-22-43-0016) that were inadvertently
omitted as part of the original TIF plan.
Adopted .................................... 10/14/1992
Requested Date ........................... 10/14/1992
Certified Date ............................. 03/04/1993
Decertifies ................................. 12/31/2019
Obligation End date ..................... 12/31/2019
Modifications..............................04/ 15/1994
Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 31
Former PID #
24-117-22-43-0010
New PID #
24-117-22-43-0157
New Use
Hopkins Barrier Free Housing
24-117-22-43-0011
24-117-22-43-0012
24-117-22-43-0013
24-117-22-43-0014
24-117-22-43-0158
Public Parking
24-117-22-43-0015
24-117-22-43-0016
24-117-22-43-0017
24-117-22-43-0018
r,,,cal Disparities Election.
The City elected to calculate fiscal disparities from outside the district, or Option A. This district does not contain any commercial properties, and
therefore, the fiscal disparities election does not affect the City's fiscal disparities contribution as a whole.
Frozen Tax Rate:: 135.0070
AiiovvatJ-
MN Statute 469.176 sub 4d specifies the activities on which tax increment from a housing district may be spent. In general, tax increment must
be spent public improvements directly related to housing projects and administrative expenses.
Obligations.
There is one interfund loan that is due to the Economic Development fund as follows:
• $566,500 at 0% interest. The HRA has pledged 100% of the tax increment revenues from the project. First payment was made in 1994 and
the final payment is expected on February I, 2020 (second half of 2019 increment). If the project does not generate 519,024 in TIF, the
developer is obligated to pay the difference to the HRA. It is not anticipated that this loan will be repaid in full and that a balance of
approximately $119,000 will remain when the district is decertified on December 31, 2019.
Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 32
Four Year RO(
MN Statute 469.176 subd. 6 requires that, within four years from certification date, certain activities must have taken place on each parcel with the TIF
district. Required activities include demolition, rehabilitation, renovation and site improvements. If these activities have not taken place within the
required time, the parcel is `knocked down' from the district, meaning, that no increment may be collected from that individual parcel for the duration
of the district. The law, does, however allow for reinstatement procedures should the required activity later occur on the parcel. The Four Year Rule
deadline for TIF 2-6 was March 1997 and was met.
Five Year Rule'
MN Statute 469.1763 places limits on the amount and the length of time in which revenues from the TIF district may be used for activities
outside the district. In general, for the TIF 1-2 redevelopment district, at least 75% of tax increment revenues must be used to pay for qualified
costs within the district. This is considered the `in district' percent. Subdivision 3 of this section of the statute further specifies that within five
years, tax increment must actually be paid for activities, bonds issued, contracts entered into in order for revenues to be considered to have been
spent. The original five year deadline was July 2000 and was met by the various projects.
Geographic Enlargements:
MN Statute 469.175 subd. 4 (f) places limits on the length of time a TIF district may add parcels. No parcels may be added five years after the
certification date. This district is past this timeline and no additional parcels may be added to its geographic size.
Recommendations.-
1.
ecommendations:1. Base Tax Capacity. The original tax classification for all the parcels was residential homestead (1%) or rental (1.25%). The tax classification was
never changed to reflect the new end uses, as allowed in State Statute. We would recommend requesting the County to change PID #'s 24-117-
22-43-0010 through 0013 to the 4d tax classification (.75%) and PID #'s 24-117-2243-0014 through 0018 to exempt (0%). By changing the
base tax capacity, the development will generate approximately $3,200 more in tax increment annually. This request should be
completed by June 2012, and will be in effect for the pay 2013 taxes/TIF.
2. Repayment to EDA Fund. We recommend adding an interest component to the loan starting with the August 1, 2012 payment and
utilizing TIF from TIF districts 2-1, 2-9 and 2-11 to pay off the balance of the interfund loan.
Management Review & Analysis*- Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 33
City of Hopkins, MN
TIE D,,-. 2.6 Ho*,, miner 6r« 33 g
2�$1
Management Review & Analysis - 7ax Increment Financing Districts March 2012
Hopkins, Minnesota Pace 34
ORIGINAL
His flew EW,1 m 0 n . i me
10.
--... 4 Wbk
D...Type
297,KB
housing
Admr Eeceise
1COTh
c. .. n.:5ecomnended.7fistme
AojM Nee
3; Mrr ls— "I AI or U.., -,I
int.l DispHfte
203 1'
AElec
197,156
19,017
13,9901
CounryMumber
71,027
1163
ira.en ft.
E1ee719U4 _
13500]%
OCDO% 0.000k'
FLOW PROjECTIONSROLL
UP
AOd2MUTA
0.000%
Add 3rd VIA
OW..
Add HIS axC:
(ASH
R'u
MIM Row
We .Row
bp m_
TIF PLAN BUDGET ANALYSIS
DerMilies
Rerewes
F.pendw
Cvrent fool
0I6 AAnN.N
ON, ReleNA
C." 1M.ITerm E.pmted1l. lelmrement ImmeAMtome
OtNNReeerwe TOTALAE6ENUE5
Bawd Deq McNwe wnRl Mm,n f.Rmoe (o."Mm Od I— DINH EN;wH,1 70TAIIXKW 7_18.det_.
2�$1
Management Review & Analysis - 7ax Increment Financing Districts March 2012
Hopkins, Minnesota Pace 34
ENA dDistritt lrojMed Artu.l lora
29I.1'.1
6,217
297,KB
^4 epee npAunJ b•
36.953
3,990
438614
479,597
6]9.597
UMm/10rc0 Bwg.
203 1'
16.117)
197,156
19,017
13,9901
56.000
71,027
71.027
FLOW PROjECTIONSROLL
UP
TAB CAPACIM
(ASH
R'u
bp m_
Cvrent fool
Ellin iurld
Ending Wh
TV IN.
Ta
meg
O_ Rd WAINNIINI
Cadmee T.. mte
I..Imremem Interest lns4me
bMrRe — TOTAIRENENUES
Boded Deq MerlW soon Rl Aemin E.peeNe
County Admin
ON de DHU lAbm EsANNe TOTAL
EMNSE
W—
AW,Ne'
16
MID
2-119;
6,:81
212,97.
779:5
395
438624
K6,N8
1253,94)
1253,941
17
2011
1,454
alm -
6976 139748%
9384
36
9,420
1,561
399
I'm
(246,s4)
12.6,504)
11
2012
115'
11630 -
697E 14613.
9384
-
934
938
399
1.337
1238,1511
.,.111
19
2013
1.454
11.43D -
6.9-6 146130°.
9364
-
9,361
938
399
1,137
1230,.1o)
1230,410)
20
2014
.,e5<
11,41130 -
6.976 148 130'.
9.361
-
9,34
538
399
1,337
1221361)
1222,34)
21
7015
[,t4
11.430 -
0'9 146 13.
9.364
9,3&
938
399
1,337
(214317)
1214,3171
27
1016
i,15e
11,430 -
6,9-6 146:3.
9,364
9.34
938
399
-
1,317
(206.210)
1206,2101
13
2017
4,.54
11,430 -
6,976 In 13.
9.364
9.34
938
399
-
1,337
(198,223)
(196,223)
24
2018
4!5t
1:.130 -
69'E 14813.
934
-
934
938
399
1,137
1110,176)
119D,1%)
25
1019
61St
iLUD -
69]6 I4F 13.
934
-
9,34
938
399
1,137
I18111o)
(I82,13D)
2�$1
Management Review & Analysis - 7ax Increment Financing Districts March 2012
Hopkins, Minnesota Pace 34
City of Hopkins, MN
TIF District 2-6 Hopkins Barrier Free Housing
Pursuant to M.S. 469.176 Subd. 3:
Admin limit is based on: Expenses
Admin per TIF Plan
Estimated TIF Admin Allowable (10%)
Estimated Total TIF Expenses per TIF Plan
TEST J: Cumulative TI1 Admin Allowable (10%) 1 $44,261
Total TIF Expenses for the Project $442,614
RESULTS: Cumulative TIF Admin Allowable (10%) $44,261
Actual Admin Expenses $36,983
Awilable Admin $7,278
ArYnal Parrantaea a axe
F Year
Year
Admin. Expenses
Total
%Allowable
16
206,793
27,915
439,023
6.4%
17
2011
29,476
439,422
6.7%
18
2012
30,414
439,821
6.99(
19
2013
31,353
440,220
7.1%
20
2014
32,291
440,619
7.3%
21
2015
33,230
441,018
7.5%
22
2016
34,168
441,417
7.7%
23
2017
35,107
441,816
7.9%
24
2018
36,045
442,215
82%
25
2019
36,983
442,614
8.4%
Pursuant to M.S. 469.1763 Subd. 2:
District Type: Housing
Does this section apply? Yes
Certification Request Date: 10/14/1992
Does TIF Plan Specify Assisting Housing Outside Project Area? No
If so, What is the Additional % Allowed in TIF Plan (Up to 10%): 0%
Total Pooling %: 25%
Current Year
Cummulative
Ad - in Costs
25% for Qualified
Costs Spent Outside
CumulatWe
206,793
206,793
27,915
23,783 -
23,783
9,384
216,177
29,476
24,568 -
24,568
9,384
225,561
30,414
25,976 -
25,976
9,384
234,946
31,353
27,384 -
27,384
9,384
244,330
32,291
28,791 -
28,791
9,384
253,714
33,230
30,199 -
30,199
9,384
263,098
34,168
31,606 -
31,606
9,384
272,482
35,107
33,014 -
33,014
9,384
281,866
36,045
34,422 -
34,422
9,384
291,251
36,983
35,829 -
35,829
Management Review & Analysis - Tax Increment Financing Districts March 2012
to Hopkins, Minnesota Page 35
TIF 2-9 Oaks of main
TIF 2-9 Oaks of Main (County #1167) is a Redevelopment District established on September 3, 1996 and
is located within the Redevelopment Project No. 1. Originally the district encompassed I parcel of land,
which was The Pines Trailer Court Park.
The District was established to facilitate the
development of a 66 unit townhome project.
Adopted .................................... 09/03/1996
Requested Date ........................... 11/12/1996
Certified Date ............................. 03/04/1997
Decertifies ................................. 12/31/2023
Obligation End date..............................2016
Former aria Current PID r:
Fiscal Disnarities Eletction
The City elected to calculate fiscal disparities from outside the district, or Option A. This district does not contain any commercial properties, and
therefore, the fiscal disparities election does not affect the City's fiscal disparities contribution as a whole.
Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 36
Fro7f�n T<,x Rate: 132.2840
Allowable Uses:
MN Statute 469.176 subd. 4j specifies the activities on which tax increment from a redevelopment district may be spent. In general, tax increment must
be spent on correcting those conditions which caused the area to be designated a redevelopment district. Allowable uses include property acquisition,
demolition, rehabilitation, installation of public utilities, road, sidewalks, public parking facilities, and allowable administrative expenses.
Obligations.-
There
bligations:There are two (2) obligations comprised of two (2) Tax Exempt GO Bonds as follows:
• $1,630,000 Tax Increment Refunding Bonds, Series 2005A. These Bonds were issued on November 3, 2005 and refunded the 1996C
General Obligation Tax Increment Bonds and the 1997A General Obligation Tax Increment Bonds (Pooled Debt).
• $1,755,000 Taxable General Obligation Refunding Bonds, Series 2005B. The 2005B issue is not a pooled obligation. The 2005B Bonds
refunded the Taxable General Obligation Housing Improvement Area Bonds of 1997B and the General Obligation Taxable TIF Bonds of
1996D.
Four Year Rule
MN Statute 469.176 subd. 6 requires that, within four years from certification date, certain activities must have taken place on each parcel with the TIF
district. Required activities include demolition, rehabilitation, renovation and site improvements. If these activities have not taken place within the
required time, the parcel is `knocked down' from the district, meaning, that no increment may be collected from that individual parcel for the duration
of the district. The law, does, however allow for reinstatement procedures should the required activity later occur on the parcel. The Four Year Rule
deadline for TIF 2-9 was March 2001 and was met.
Five Year Rule
MN Statute 469.1763 places limits on the amount and the length of time in which revenues from the TIF district may be used for activities
outside the district. In general, for the TIF 1-2 redevelopment district, at least 75% of tax increment revenues must be used to pay for qualified
costs within the district. This is considered the `in district' percent. Subdivision 3 of this section of the statute further specifies that within five
years, tax increment must actually be paid for activities, bonds issued, contracts entered into in order for revenues to be considered to have been
spent. The original five year deadline was July 2000 and was met by the various projects.
Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 37
Geogr„l:�k�ir Enlarc;r,tner�t�
MN Statute 469.175 subd. 4 (f) places limits on the length of time a TIF district may add parcels. No parcels may be added five years after the
certification date. This district is past this timeline and no additional parcels may be added to its geographic size.
1li�trket',',flue Exrlusicn
In the 2011 legislative session, the entire Market Value Homestead Credit (MVHC) and reimbursement program was eliminated and takes effect
beginning with taxes payable in 2012. In place of the current MVHC program, homeowners will receive an exclusion of a portion of the market value
of their house from property taxes. The Homestead Market Value Exclusion excludes from taxation 40% of the value on the first $76,000 of a
property's value. The amount excluded is reduced as the value rises above $76.000 (the exclusion reduction is equal to 9% of the value above
$76,000). Homesteads that exceed $413,800 in value will receive no homestead exclusion.
TIF districts that contain homestead property are impacted by this change since TIF statutes do not provide for any adjustment to a TIF district's
original net tax capacity resulting from the new market value exclusion. As a result. the application of market value exclusion will reduce increments
in districts containing homesteaded property that qualifies for the exclusion.
For TIF District 2-9, the taxable market value has been reduced by S1,161.069 or 9.7% (from Sl 1,883,000 to S 10.721 .930). This reduces the annual
TIF generated, net of 10% set aside for admin and pooling, to S 119,480. If the la" had not changed, the annual TIF, net of 10% set aside for admin
and pooling, would have been $133,254 (net loss of S 13,774 annually). If we assume pay 2012 market values and the frozen City tax rate were held
constant through the remaining term of the district, the future value of the net loss of TIF would be S165,282 (loss in 10% set aside for admin and
pooling would be $18,365).
Ret;ommcndation�.
1. Pooiin . We are projecting that approximately $289,000 in available TIF for pooling for other projects. We recommend that the HRA utilize
these funds to repay loan in TIF 2-6 and develop a plan for the use of the remaining funds.
2. Base Tax Capacity. The original tax classification for the parcel was non -homestead residential (1.25%). The tax classification should be changed
to reflect the new end use, as allowed in State Statute. We would recommend requesting the County to change PID 4's 23-117-22-44-0001 to the
homestead residential tax classification (1 %). This request should be completed by June 2012, and will be in effect for the pay 2013 taxes/TIF.
Management Review & Analysis - Tax Increment F nancino Districts March 2012
Hopkins, Minnesota Paae 38
City of Hopkins, MN
TIF DMriO 1-9 Oaks of Main
no1H3 er%a
iMal Owe��
carry rwnkr
Clry.ypw91 3r19gwp 0.r110r0 Wal Te.m ONn eww3�e ] 14VlIIUFs
m
01L13/1596
MMofel
M1n9f Mi WwM 0b6H
�M1p50,000
pvawrof uIVIMt ad wY.)
�
4rN6u16uef•� Ml9% 3/1ary99) ]U31/5033 11/31/3 13 f.e50.ao0 3p).000 IISOO,WD Sf,ssOp00
sA00.000
lylsDOD ss,]n.oaa 15.])5.000
fAM.000 500,000 f
13500M
Uls I5.720M n3
EMMDu11M 9reMnf6u6e1Ted fY333 13A10396 }1.9Y.9'a
1416f tro fs981
11;a
0. F
Ir.w. /loerl w38w 1fY 311) R31o59a1 ry;x,en)
Nw9 ]wl All,
M)
p9KlmMl 13.-111%
CrMI11fsW 10 Ye1M�a [ndnl line
n9'fx =� kw ]huI01 uM Tr 9m 3:9gn9u1 ime oM e...we ) Oe 73f1 o - o- TO -MISE
�9s13a6 Aw 2.636.911 Ivfa, a].63) A]o 36]653 ase e.e3].66] l,uf.2o IY,Io: Ise.16s
Y my s.soo u9a90 - la,Y9 Irl I.).m a339 2,w In.SY Is- 9],Y1 5.995 IY v6.sY x9.7.6 v6Y6
Y ]013 1.500 IM;I3 1M,ni IY.1 23.>a 13M 106.331 Y,n6 3L IY.9n 23,765 l33]w
Is 3013 63M 107.25 - 1M,)I3 I -M I.- 1394 - In- IM.IM 11,216 IY llt]Y 33)Ais zf],Yi
16 1016 63M ]0]32 - 1M,m -.1 113.759 lAn - 2321 IW.656 13,1)6 3L 1Y.)A 511.066 1N.M6
17 5015 FSM 10]]31 - 1Mni INS 133.759 3.ffl Wfm Imam U]76 359 113W mU]
SnNI
18 1016 6,500 107)2 - IM,723 14.1 115,39 3.T]B 135.W II1.M1 - 13,1]6 35B - ]IS.f% 199,[W IN.W
Y MI] f300 107,23 - 1M.m Iu.13Yf 13;29 -o - Ys,sx - 11,13 358 Y.W 111.117 113m
M lMe 63M 107,131 - 100,23 ]4. 13x.39 011 - ]YA]] - 11.33 3L - 11,W 511.159 511.939
n 3011 63M 10),3]1 - 1M,n] 111. I35.7N 9350 133109 - 13.])6 311 Y.fY 659,.11 653W
i} ]OID 6,500 10],3]] - ]M,nl IY.1 113.759 3393 - iffAv 13.])6 311 - - v,W H5,156 m,W
2 mn 6.'o, 1m.m ]M,n: ]a.] 25,- -1 - Iro.6u - 132. 359 ss,W I.- vx,m
}6 1On 63M 10],12 - ]M.n3 14.1 23,159 9.23 - 111,111 I3.n6 35e - Y.W 1pw,379 1.0ro33
55 5013 fSM sol n - 1M7zz ]ae.1 Yi.3a w909 - 19],163 - - Yns ase - Y.W 1.16336) 329.w7
••Mer9tl}mns9m9 bryew ertl9mu91 3.63,389 6133a9 ]]A10.39a i1,Y6p5e 10,299,]30 65z1A] 5-.055 9]3,959 !,93],66) 30,716.110
Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 39
Cfty of Hopkins, MN
TIF 06-1 t 2-9 Oaks of Main
hrstront to M.S. 469.176 Subd. 3:
Admin liml[ is based on: Expens¢s
2: Estimated TIF Admin Allowable (10%)
Estim-d Total TIF Expenses per TIF Plan
TEST S: Cumulatve TaIF m[eP52,044,6
Tol TIF Ea 20,22,161
RESULTS: Admin pas TIF Pen $2,024,316
Actual Admin Expenses S472,959
AY411,be Admin 5517,041
ACtual Perc¢ntng,. F 2.3%
M.S. 469.1763 Subd. 2:
D irsup Fo ype
Dorts this sectmn apply?
ihcation Request Date-
Dons l if Plan Specify A.11- g Housing Outside Prolecl Area'
If so, What is the Additional % Allowed in 111 Pl.,n (()I,
(oral Popling %:
YMs Y49r
Admin. ExpensesTolal
122,972 -
153,921
%Allowable
173,835 -
Current Year
Cummulatlxe Admin
Cests
12
307,653
19.581.16)
l.Gx
253,493 -
1.722,499
1.)22.499
307.653
13 2011
313,"8
19,701,210
] GY..
333,146
147,777
1,870,276
3]3,648
14 2012
326,924
19,808,405
1.7x
13].759
2.003,035
324.924
SS 2013
340,200
19,916,963
1.7x.
1. ], 9
2,135.195
340,200
16 2014
353,476
20,021.811
132,759
2,268,554
353,476
17 2015
366,752
20,128,235
1.8%
132,759
2,401,314
36.,752
18 2016
380,029
20,240,655
1.9%.
132,159
2,534,073
390,028
19 2017
393,304
20,241,013
1.9
132,759
2,666,833
393,304
20 2018
406,580
20,241.372
2.OY^
132.259
2,799,592
406,580
21 2019
419,856
20,241,729
21%
132,759
2,932,351
4]9,856
22 2020
433,131
20,242,087
2.1x
132.159
3,065,111
433,131
23 2021
446,407
20,242,445
1.2%
132,159
3.19),810
446.407
24 2022
459,683
20.242,903
2.3%,
132,759
31330,630
450,6.3
25 2023
472,959
20,243.1.1
2.3%
132.159
3,463.389
412,959
Re dexelopment
11/12/1996
No
ON
25x for puaiNied
Costs Spent Outside
Cumula[Ixe
122,972 -
153,921
122,9 J2
153,921
173,835 -
313,835
193,149 -
193,749
213,663 -
213,663
233,577 -
233,577
253,493 -
253,491
273,404 -
273,404
293,318 -
293,318
313,232 -
313,232
333,146
333,146
353,060 -
3S3,060
372,974 -
312,974
392,888
392,888
Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 40
TIF 2-11 Super Valu
TIF 2-11 Super Valu (County #1169/1170) is a Redevelopment District established on October 6, 1998,
and is located within the Redevelopment Project No. 1. Originally the district encompassed 6 parcels
of land, and was established to facilitate the redevelopment of a Super Valu complex and development
of adjacent properties. The district was modified in 2001 to add parcel 19-117-21-32-0032 to further
assist the development of a corporate headquarters.
r --" ,L On July 20, 1998, the HRA entered into a development agreement with Super Valu, as amended by a
OEM"— {i .tib: First Amendment to Redevelopment Agreement dated February 18, 2003 to construct the new
..— Super Valu warehouse. The City sold a tax
exempt, General Obligation TIF bond in 2002 to
provide funding for a portion of the public
improvements related to Highway 7 upgrade east
of Highway 100. This bond was advance refunded in 2010 as part of a larger refinancing
(Series 2010B). The 2002A bonds will continue to be paid out of tax increment from the new
Super Valu Warehouse and when the final payment is made on February 1, 2013 (call date), the
debt service on the 2010B bonds will then be paid from this same source. This will not change
and all tax increment both current and future are first pledged to these bonds.
On March 29, 2006, the HRA entered into a development agreement with Opus Northwest LLC
to pay for cost related to land assembly, demolition and site remediation in order to facilitate the construction of a three office building of
approximately 250,000 sq/ft, 268,000 sq/ft and 279,872 sq/ft as part of a multi -phased development on a 27 -acre parcel (Phase 1, Phase Il and
Phase III). The development agreement was first amended on January 2, 2007 to detail the allocation of eligible public redevelopment project
costs between Opus and Cargill and to authorize the issuance of bonds for Phase I that exceed the amount detailed in the existing agreement. A
second amendment was approved on March 20, 2007 to address Opus and Cargill's rights regarding development of Parcel C. The HRA issued
$9,005,000 in TIF Revenue Bonds in 2007 and $5,290,000 in TIF Revenue Bonds on April 28, 2008 to reimburse the developer for qualified costs.
In order to fully reimburse Opus, the HRA agreed that it would issue a Coverage Note payable from funds released to the HRA by the trustee for
the Bonds with respect to a debt service reserve established in connection with the issuance of the Bonds and from (a) the lesser of the amount of
any interest actually earned by the Trustee on the debt service reserve fund or (b) any amounts actually paid to the HRA pursuant to Section 5.6(d)
of the Indenture (if Excess TIF is 25% or greater than what is needed to pay debt service on the bonds, then this entire amount is returned to the HRA).
Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 41
The HRA and Cargill Incorporated entered into a development agreement on March 17, 2007, and a First Amendment to Redevelopment
Agreement on September 28, 2009 in order for Cargill to construct Phase 111 of the development consisting of a 279,872 square foot office
building. The HRA agreed in the development agreement that it would utilize tax increment generated from Phase Ill to reimburse them for
qualified costs incurred in constructing Phase III. In 2009, the HRA issued $4,825,000 in TIF Revenue Bonds (Excelsior Crossings Project
Phase Three) to reimburse Cargill for qualified costs. In order to fully reimburse Cargill, the HRA agreed that it would issue a Phase Note
payable from certain excess tax increment generated by Phase ill and a Coverage Note payable from funds released to the HRA by the trustee
for the Bonds with respect to a debt service reserve established in connection with the issuance of the Bonds.
r�
v
On November 7. 2011, the HRA issued the Phase Note in the amount of $3,032,879 at an
interest rate of 5.75°/x. The Phase note was to be paid beginning on February 1, 2012, and
continuing on each February 1 and August 1, thereafter until termination of the TIF
District.
On November 7, 2011 the HRA issued the Coverage Note in the amount of $374,597.50.
Pursuant to the indenture of Trust between the HRA and U.S. Bank National Association,
as trustee for the Bonds, $374597.50 of the proceeds of the Bonds were deposited into a
debt service reserve fund for the Bonds. In order for Cargill to receive the benefits of tax
increment financing agreed to in the Contract, the HRA agreed to pay to Cargill the
following amounts:
1. The amount of the debt service reserve fund released to the H RA pursuant to the terms of the Indenture;
2. The lesser of (a) the amount of any interest actually earned by the Trustee on amounts on deposit
in the debt service reserve fund or (b) any amounts actually paid to the HRA pursuant to Section
5.6(d) of the Indenture; and
3. The lesser of (a) any amount that Cargill may have paid or reimbursed the HRA to reimburse
Opus Northwest, LLC, for amounts previously paid to Cargill as required pursuant to Section 7
of the First Amendment to Redevelopment Agreement referenced above or (b) any amounts
actually paid to the HRA pursuant to Section 5.6(d) of the Indenture, after deducting any
amounts paid by the HRA pursuant to item 2 above.
After payment in full of the entire principal amount of and interest on the Bonds and tennination of the
Indenture, amounts remaining unpaid under items 2 and 3 above, shall be payable solely from and to the extent of Available Tax Increment.
Available Tax Increment shall have the meaning given such term in the Contract.
Management Review & Analysis - Tax Increment Financing Disincts March 2012
Hopkins, Minnesota Page 42
Adopted .................................... 10/06/1998
Requested Date ........................... 12/07/1998
Certified Date ............................. 04/05/1999
Decertifies ................................. 12/31/2029
Obligation End date..........................02/01/30
Modification...............................12/04/2001
ier and Current PID Numbers:
Former •.•
New PID $4
New Use
19-117-21-33-0027
Same as Former
I SuperValu existing Warehouse
24-117-22-44-0046
Same as Former
Former EBCO site - currently vacant
25-117-22-11-0001
25-117-22-11-0003
SuperValu existing Jefferson Site
25-117-22-11-0002
19-117-21-32-0032
19-117-21-31-0068
Cargill Holding Pond East
19-117-21-31-0069
Cargill Parking Lot SE
19-117-21-32-0033
Cargill Parking Structure/West Bldg
19-117-21-32-0036
Cargill Holding Pond West
19-117-21-32-0038
Cargill Holding Pond along Excelsior Blvd
19-117-21-32-0039
Cargill Parking Structure/North Bldg
19-117-21-32-0040
Cargill Parking Structure/East Bldg
19-117-21-32-0041
Holding Pond in front of Cargill Bldg
Fr:: Jisp: Llection:
The City elected to calculate fiscal disparities from inside the district, or Option B.
Frozen Tax Rate:
Original: 141.5810
Geographic Modification: 141.7550
Management Review & Analysis -Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 43
6�a�l.iltl-
The City received special legislation on this district in 2003 and 2008. In 2003, the district was granted special legislation (Laws of 2003, Chapter 127,
Article 10, Section 31) in order to extend the duration by 4 years and to provide an additional four years to the five year rule. In 2008, (Laws of 2008,
Chapter 366, Article 5, Section 21) the City received special legislation in order to provide for 20% of increment from the District that could be spent
on housing activities.
MN Statute 469.176 subd. 4j specifies the activities on which tax increment from a redevelopment district may be spent. In general, tax increment must
be spent on correcting those conditions which caused the area to be designated a redevelopment district. Allowable uses include property acquisition,
demolition, rehabilitation, installation of public utilities, road, sidewalks. public parking facilities, and allowable administrative expenses.
Obligation".
There are eight (8) obligations comprised of two (2) Tax Exempt GO Bonds, three (3) TIF Revenue Bonds and two (3) PAYGO Notes that were issued
for the projects within this district as follows:
• $2,490,000 Tax Exempt GO TIF Bonds, Series 2002A. These Bonds were issued on December 12, 2002 to pay for improvements to fund a
portion of the public improvements related Excelsior Boulevard cast of Highway 169. These bonds were advance refunded as part of the
2010B GO refunding issue. However, since it was an advance refunding, the HRA is obligated to pay on the existing 2002A Bonds until the
call date of February 1, 2013.
• $1,585,000 Tax Exempt GO Refunding Bonds, Series 20106. These Bonds were issued on November 17, 2010 as an advance refunding of
the 2002A GO TIF bonds that were issued originally. The HRA has pledged 90% of the tax increment revenues from the Super Valu
warehouse to pay the debt service on these bonds. The bonds are callable in 2018.
$9,005,000 Phase I TIF Revenue Bond, Series 2007. This Bond was issued on May 10, 2007 and was sold to third party investors. This
Bond is paid from 90% of the tax increment revenues from the project and any increment generated from the existing Super Valu Warehouse
not needed to pay the 2002A and 2010B Bonds.
$5,290,000 Phase 11 TIF Revenue Bond, Series 2008. This Bond was issued on April 28, 2008 and was sold to third party investors. This
Bond is paid from 90% of the tax increment revenues from the project. Starting on April I, 2012 and every April thereafter, the Bonds are
subject to prepayment in inverse order from any Excess Tax Increment collected and accounted for in accordance with the indenture (25%
coverage).
Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 44
• $4,825,000 Phase III TIF Revenue Bond, Series 2009. This Bond was issued on October 15, 2009 and was sold to third party investors.
This Bond is paid from 90% of the tax increment revenues from the project and tax increment generated with respect to Phase 1 and Phase 2
after the Opus Phase Notes/Bonds and any notes issued to Opus under the Opus Redevelopment Agreement for Coverage have been paid
in full, minus ten percent (10%). Any TIF in excess of u to 25% needed to pay debt service is received, it shall be applied on the following
special redemption date to the prepayment of the Bonds in accordance with Section 3.1(c) of the Indenture (first special redemption date is
February 1, 2014). Available Tax Increment" shall also include.
• $988,283 Coverage PAYGO Note. This Note was issued on April 24, 2008 to Opus. It is paid from funds released by the Trustee from
the debt service reserve fund ($588,310) on the $9,005,000 Phase I TIF Revenue Bond, Series 2007 and from the debt service reserve fund
($399,973) on the $5,290,000 Phase 11 TIF Revenue Bond, Series 2008. In addition it is paid from the lesser of (a) the amount of any interest
actually earned by the Trustee on the amounts on deposit in the DSRF or (b) any amounts actually paid to the HRA pursuant to Section 5.6(d)
of the Indenture (if Excess TIF is 25% or greater than what is needed to pay debt service on the bonds, then this entire amount is returned to the
HRA).
• $3,032,879 Phase PAYGO Note at 5.75% interest. This Note was issued on November 7, 2011 to Cargill. It is paid if the TIF needed to pay
the principal and interest payments on the Phase III TIF Revenue Bond, Series 2009 equals or exceeds 25% of the payment due (also assuming
the reserve fund is fully funded). After the Phase III TIF Revenue Bond, Series 2009 has been paid in full, this Note shall be payable solely
from 90% of the tax increment generated from the project.
• $374,597.50 Coverage PAYGO Note. This Note was issued on November 7, 2011 to Cargill. It is paid from funds released by the Trustee
from the debt service reserve fund on the $4,825,000 Phase III TIF Revenue Bond, Series 2009.
Four Year Rule:
NN Statute 469.176 subd. 6 requires that, within four years from certification date, certain activities must have taken place on each parcel with the TIF
district. Required activities include demolition, rehabilitation, renovation and site improvements. If these activities have not taken place within the
required time, the parcel is `knocked down' from the district, meaning, that no increment may be collected from that individual parcel for the duration
of the district. The law, does, however allow for reinstatement procedures should the required activity later occur on the parcel. The Four Year Rule
deadline for TIF 2-11 was April 2001.
Management Review & Analysis - Tax Increment Financing Districts March 2012
is Hopkins, Minnesota Page 45
Fivc, Y., -;,r R :ie.
MN Statute 469.1763 places limits on the amount and the length of time in which revenues from the TIF district may be used for activities
outside the district. In general, for the TIF 2-11 redevelopment district, at least 75% of tax increment revenues must be used to pay for qualified
costs within the district. This is considered the `in district` percent. Subdivision 3 of this section of the statute further specifies that within five
years, tax increment must actually be paid for activities, bonds issued, contracts entered into in order for revenues to be considered to have been
spent. The City received special legislation on this district in 2003 (Laws of 2003. Chapter 127. Article 10. Section 3 1 ) in order to add four years to the
five year rule. The extended Five Year Rule limit was April 5, 2008.
Geographic. Enlargements
MN Statute 469.175 subd. 4 (f) places limits on the length of time a TIF district may add parcels. No parcels may be added five years after the
certification date. The district was modified in 2001 to add additional parcels. This district is now past this timeline and no additional parcels may be
added to its geographic size.
Rer,omrnendatioIis,
1. Payment Chart. Calculating tax increment and payment obligations when there are multiple parcels and obligations can be difficult. We
recommend creating a new template for calculating tax increment and the flow of payments for ease of use.
2. Pooling. We are projecting that approximately 5213,000 annually in administrative costs will be available for pooling for other projects (to the
extent no dollars will be needed for actual administration). We recommend that the HRA develop a plan to utilize these funds as appropriate
for various redevelopment projects.
3. Neeative Increment. Parcel # 191 1721330027 has a lower value today, than it did in 1999 when the district was certified. If it is anticipated
that the value will continue to decline, the HRA should consider removing this parcel from the district since it generates negative increment.
We recommend that the HRA review future valuation trends and the district as a whole to see if this parcel is needed to continue to
qualify the district as a redevelopment district. If it is not needed, we recommend decertifying this parcel from the district.
Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 46
tlry ON"klm, MN
of Uisbkt i�lliupe,v�lu
Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 47
Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 48
3.1«,031
3..31.1,1 3,131.111
,.111,1,1 1.111.1.
....,.,.. ,.,......
1,734.113 ,....,
1.111..31 1.111..3
6,113,669 1,.13,16
1,313,1.3 3,313,66
33 30,5
31 �,q
�. >a>3
31 7„3.,
34 3071
33 7a,>t+
]6 I.—
FRs.S . A.36a.7n> s >
>..,., -—.14. 99
3., >._,. _,..�.s91 , >
=.e, &.7e„ 35.=n=,sM, ,o.e
4.q sn,ggq q=,ne>,q E, ,0.3
1.871.474
,>.>F, > 478.>—
3.,37,76,
17,373,i31
>.,,..037,313
- ,5,80,,374 q.gsn.gqn E.9�,.tl9J
Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 48
Map of the TIF Districts
Management Review & Analysis - Tax Increment Financing Districts March 2012
Hopkins, Minnesota Page 49
Definitions
Administrative expenses. "Administrative expenses" means all expenditures of an authority other than: amounts paid for the purchase of land; amounts
paid to contractors or others providing materials and services, including architectural and engineering services, directly connected with the physical
development of the real property in the project; relocation benefits paid to or services provided for persons residing or businesses located in the project;
amounts used to pay principal or interest on, "administrative expenses" includes amounts paid for services provided by bond counsel, fiscal consultants,
and planning or economic development consultants.
Authority. "Authority" means a rural development financing authority created pursuant to sections 469.142 to 469.151; a housing and redevelopment
authority created pursuant to sections 469.001 to 469.047; a port authority created pursuant to sections 469.048 to 469.068; an economic development
authority created pursuant to sections 469.090 to 469.108; a redevelopment agency as defined in sections 469.152 to 469.165; a municipality that is
administering a development district created pursuant to sections 469.124 to 469.134 or any special law, a municipality that undertakes a project pursuant
to sections 469.152 to 469.165, except a town located outside the metropolitan area or with a population of 5,000 persons or less; or a municipality that
exercises the powers of a port authority pursuant to any general or special law.
Bonds. Bonds or other obligations include: refunding bonds, notes. interim certificates, debentures; and interfund loans or advances.
Captured net tax capacity. "Captured net tax capacity" means the amount by which the current net tax capacity of a tax increment financing district or
an extended subdistrict exceeds the original net tax capacity.
Compact development district. "Compact development district" means a type of tax increment financing district consisting of a project, or portions of a
project, within which the authority finds by resolution that blighting conditions exist and that when the redevelopment is complete, the total square
footage of buildings will be three times greater
Economic development district. "Economic development district" means a type of tax increment financing district which consists of any project, or
portions of a project, which the authority finds to be in the public interest because it will discourage commerce, industry, or manufacturing from moving
their operations to another state or municipality; or it will result in increased employment in the state; or it will result in preservation and enhancement of
the tax base of the state.
Five Year Rule. Within five years from certification.. certain financing activities must take place in the district in order to retain the ability to collect
increment from the district as a whole. These financing activities include issuing bonds, paying revenues to a third party fbr site improvements and
binding contracts have been entered into. For certain districts, no additional obligations may be entered into after the five years have elapsed.
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Four Year Rule. Within four year; from certification, certain improvements must be made to each parcel or to a street adjacent to the parcel in order for
the Authority to retain the ability to capture increment from that parcel. If no activities take place, the parcel is `knocked down' from the district and no
increment is collected on that parcel. If those activities subsequently take place, the authority must notify the county in order to collect future increment
from the parcel. Activities include: demolition, rehabilitation, renovation, site preparation and improvement of a street adjacent to a parcel. Qualified
street improvements are limited to construction or opening of a new street, relocation of a street, and substantial reconstruction or rebuilding of an
existing street.
Governing body. "Governing body" means the elected council or board of a municipality.
Housing district. "Housing district" means a type of tax increment financing district which consists of a project, or a portion of a project, intended for
occupancy, in part, by persons or families of low and moderate income.
Increment Revenue. "Tax increment revenues" include: taxes paid by the captured net tax capacity, proceeds from the sale or lease of property that was
purchased with tax increments, principal and interest received on loans or other advances made by the authority with tax
Municipality. "Municipality" means the city, however organized, in which the district is located.
Original net tax capacity. "original net tax capacity" means the tax capacity of all taxable real property within a tax increment financing district as
certified by the commissioner of revenue for the previous assessment year.
Project. "Project' means a project as described in section 469.142; an industrial redevelopment district as described in section 469.058, subdivision 1; an
economic development district as described in section 469.101, subdivision 1; a project as defined in section 469.002, subdivision 12; a development
district as defined in section 469.125, subdivision 9, or any special law; or a project as defined in section 469.153, subdivision 2, paragraph (a), (b), or (c).
Tax increment financing district. "Tax increment financing district" or "district" means a contiguous or noncontiguous geographic area within a project
delineated in the tax increment financing plan, for the purpose of financing redevelopment, housing or economic development in municipalities through
the use of tax increment generated from the captured net tax capacity in the tax increment financing district.
Parcel. "Parcel" means a tract or plat of land established prior to the certification of the district as a single unit for purposes of assessment
Project Area "Project Area" means a defined geographic area in which tax increment districts may be established. The project area may be larger than or
equal to the size of the district. A Project Area Plan is adopted that outlines the conditions in the district and the statutory authority under which
development or redevelopment will take place.
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Redevelopment district. "Redevelopment district" means a type of tax increment financing district consisting of a project, or portions of a project,
within which the authority finds by resolution that one or more blighting conditions exist, reasonably distributed throughout the district. Parcels in a
Redevelopment District must be analyzed to detemtine if they qualify under the law to be included in the District. Blighting factors include structurally
substandard buildings, parcels that are vacant, unused, underused or inappropriately used.
Renewal and renovation district. "Renewal and renovation district" means a type of tax increment financing district consisting of a project, or portions
of a project, within which the authority finds by resolution that one or more blighting conditions exist, similar to a Redevelopment District. The
qualification rules are less stringent than a Redevelopment District.
Soils condition district. "Soils condition district" means a type of tax increment financing district consisting of a project, or portions of a project, within
which the authority finds by resolution that hazardous substances, pollution or contaminants exist that require removal.
Tax increment financing plan. A Tax Increment Financing Plan is a document that is adopted by resolution by the Authority which outlines certain
statutory requirements. These include a statement of objectives of the project, a list of development activities that the plan proposes, identification of
parcels to be included in the district, a budget of revenues and pro�ject costs, and district duration.
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