Title
Approving the establishment of the Landmark Towers Tax Increment Financing District (a redevelopment district) in the Seventh Place Redevelopment Project Area and adopting a Tax Increment Financing Plan therefor (District 17, Ward 2).
Body
WHEREAS, the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota (the “HRA”) has heretofore established the Seventh Place Redevelopment Project Area (the “Project Area”), and has adopted a redevelopment plan therefor (the “Redevelopment Plan”) pursuant to Minnesota Statutes, Sections 469.001 to 469.047, as amended (the “HRA Act”); and
WHEREAS, the Redevelopment Plan contains an identification of need and a statement of purpose and objectives, land uses and standards for development for carrying out a redevelopment project, including property to be acquired, public improvements to be provided, development and redevelopment to occur, and sources of revenue to pay redevelopment costs within the Project Area; and
WHEREAS, Minnesota Statutes, Section 469.175 requires that before a county auditor may certify a tax increment financing district created under Minnesota Statutes, Section 469.174 to 469.1794 (the “TIF Act”) the governing body of the municipality must approve the tax increment financing plan after a public hearing thereon; and
WHEREAS, the HRA has asked the City Council (the “Council”) of the City of Saint Paul, Minnesota (the “City”) to approve the creation, within the Project Area, of the Landmark Towers Tax Increment Financing District, as a redevelopment tax increment financing district under Section 469.174, Subdivision 10, clause (a)(1) of the TIF Act (the “TIF District”), and adopt a Tax Increment Financing Plan therefor (the “TIF Plan”), all pursuant to and in accordance with the TIF Act; and
WHEREAS, the TIF District is being established to facilitate the redevelopment of a portion of the building commonly known as Landmark Towers, a substandard residential and commercial office building with parking, by converting the vacant commercial office floors into approximately 187 market rate rental housing units, and related parking improvements and exterior and streetscaping enhancements (collectively, the “Development”); and
WHEREAS, the HRA has investigated the facts and has caused the TIF Plan to be prepared for the TIF District; and
WHEREAS, the HRA has performed all actions required by law to be performed prior to the creation of the TIF District and the adoption of the TIF Plan, including, but not limited to, notification of the Ramsey County Commissioner representing the area of the Ramsey County (the “County”) in which the TIF District is located, and transmitting a copy of the TIF Plan to the County and to Independent School District Number 625 (the “School District”), which have taxing jurisdiction over the property to be included in the TIF District; and
WHEREAS, on this date, the Council conducted a public hearing on the TIF Plan, after duly published notice thereof; and
WHEREAS, at said public hearing the Council considered comments provided by all interested parties on the TIF Plan; and
WHEREAS, the Council has considered certain reports referred to herein and other information respecting the TIF District and the anticipated redevelopment thereof, together with the TIF Plan and other documentation submitted in support of the same, and has taken into account the information and knowledge gained in hearings upon and during consideration of other matters relating to the developments proposed within the Project Area.
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Saint Paul, Minnesota as follows:
Section 1. Findings for the Creation of the TIF District and Adoption of a TIF Plan therefor.
1.01 The Council hereby finds that the creation of the TIF District and the adoption of the TIF Plan therefor are intended and, in the judgment of the Council, the effect will be, to carry out the objectives of the Redevelopment Plan by creating an impetus for redevelopment of blighted structures and the development of rental housing facilities in the City, and will otherwise promote certain public purposes and accomplish certain objectives as specified in the Redevelopment Plan and the TIF Plan.
1.02 The Council hereby finds that the TIF District qualifies as a “redevelopment district” within the meaning of the TIF Act for the following reasons:
The TIF District is, pursuant to Section 469.174, Subdivision 10, clause (a)(1) of the TIF Act, a “redevelopment district”. The reasons and supporting facts for these determinations are set forth in that certain Report of Inspection Procedures and Results for Determining Qualifications of a Tax Increment Financing District - Landmark Towers Redevelopment TIF District, prepared for the City of Saint Paul, Minnesota by LHB, Inc., dated July 14, 2023 (the “Redevelopment Assessment Report”), copies of which are on file with the Executive Director of the HRA. Based on an on-site inspection of the properties, LHB, Inc. concluded in the Redevelopment Assessment Report that the TIF District qualifies as a redevelopment district because (i) the TIF District has a coverage calculation of 100 percent which is above the 70 percent requirement under Section 469.174, Subd. 10(a)(1) of the TIF Act; (ii) 100 percent of the buildings are structurally substandard which is above the 50 percent requirement under Section 469.174, Subd. 10(a)(1) of the TIF Act; and (iii) the substandard buildings are reasonably distributed as required under Section 469.174, Subd. 10(a) of the TIF Act.
The TIF District currently contains 84 tax parcels. All of the parcels are occupied since they meet the requirements of Section 469.174, Subd. 10(e) of the TIF Act in that at least 15% of the area of each of these parcels is occupied by buildings, streets, utilities, paved or gravel parking lots or similar structures. The occupied parcels comprise 100% of the area of the TIF District, which is greater than 70%. In addition, there is one building, including a connected parking structure, located in the TIF District. As set forth in the Redevelopment Assessment Report, one (1) out of one (1) buildings (i.e. 100%) are “structurally substandard” to a degree requiring substantial renovation or clearance. The “structurally substandard” buildings are not in compliance with the building code applicable to new buildings, and the costs to modify the building to satisfy the building code would be more than 15% of the cost of constructing new structures of the same square footage and type on the site.
1.03 The Council further finds that the Development, in the opinion of the Council, would not occur solely through private investment within the reasonably foreseeable future and, therefore, the use of tax increment financing is deemed necessary. The specific basis for such finding is:
Based on conversations with the Developer, the HRA has determined that the proposed redevelopment of the parcels in the TIF District, consistent with the Redevelopment Plan and the conversion of vacant commercial and office space into market-rate residential rental housing, in an historic building, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future. This finding is consistent with the HRA’s experience on other historic buildings being converted from commercial uses to residential rental housing.
1.04 The Council further finds that the TIF Plan conforms to the general plan for the development or redevelopment of the City as a whole. The specific basis for such finding being:
The TIF Plan will generally complement and serve to implement policies adopted in the City’s comprehensive plan. The Development contemplated is or will be in substantial accordance with the City’s comprehensive plan.
1.05 The Council further finds that the TIF Plan will afford maximum opportunity consistent with the sound needs of the City as a whole for the development of the TIF District by private enterprise. The specific basis for such finding being:
The proposed Development to occur within the TIF District is a market-rate housing development project, together with parking improvements and exterior and streetscaping enhancements, which is consistent with other uses in the area. The Development will increase the taxable market valuation of the City. The available housing in the City will expand by approximately 187 market rate rental units with the completion of the Development contemplated by the TIF Plan.
1.06 The City elects to retain all of the captured tax capacity to finance the costs of the TIF District. The City elects the method of tax increment computation set forth in Section 469.177, Subdivision 3(a) of the TIF Act.
1.07 The City elects to delay the receipt of the first increment until tax payable year 2026.
1.08 For purposes of compliance with Section 469.175, Subdivision 3(2) of the TIF Act, the HRA hereby finds that the increased market value of the property to be developed within the Tax Increment District that could reasonably be expected to occur without the use of tax increment financing is $0, which is less than $38,365,832 which is the increase in the market value estimated to result from the proposed development (i.e., approximately $48,245,100), after subtracting the present value of the projected tax increments for the maximum duration of the TIF District (i.e. approximately $9,879,268). Thus, the use of tax increment financing will be a positive net gain to the City, the School District, and the County, and the tax increment assistance does not exceed the benefit which will be derived therefrom.
1.09 The provisions of this Section 1 are hereby incorporated by reference into and made a part of the TIF Plan.
Section 2. Approval of Creation of the TIF District and Approval of the TIF Plan Therefor; Other Authorizations.
2.01 The creation of the TIF District and the adoption of the TIF Plan therefor are hereby approved.
2.02 Upon approval by the HRA, the staff of the HRA and the City and the HRA’s and City’s advisors and legal counsel are authorized and directed to proceed with the establishment and implementation of the TIF District, the TIF Plan and this Resolution. The HRA’s Executive Director and the staff of the HRA and the City and the HRA’s and City’s advisors and legal counsel are authorized and directed to negotiate, draft, prepare and present to the Board of Commissioners of the HRA for its consideration all further plans, resolutions, documents, notes and contracts necessary to accomplish these actions.
2.03 Upon approval by the HRA, the staff of the HRA is directed to file a copy of the TIF Plan with the County Auditor of the County (the “County Auditor”) and to request the County Auditor to certify the original tax capacity of the TIF District.
2.04 The staff of the HRA is also directed to file a copy of the TIF Plan with the Commissioner of Revenue and the Office of the State Auditor within 60 days after the latest of: (a) the filing of the request with the County Auditor to certify the TIF District and (b) the date of approval of the TIF Plan by the City and the HRA.