Title
Resolution approving (i) 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, (ii) an amendment to the Tax Increment Financing Plan for the Minnesota Event Tax Increment Financing District, and (iii) an HRA budget amendment, all for the Landmark Towers Project, 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, it has been proposed that within the Project Area, the HRA create the Landmark Towers Tax Increment Financing District as a redevelopment tax increment financing district under Minnesota Statutes, Section 469.174, Subdivision 10, clause (a)(1) (the “TIF District”) and adopt a Tax Increment Financing Plan therefor (the “TIF Plan”), all pursuant to Minnesota Statutes, Sections 469.174 through 469.1794 (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 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 August 9, 2023 the City Council (the “Council”) of the City of Saint Paul, Minnesota (the “City”) (a) held a public hearing on (i) adoption of the TIF Plan and (ii) the establishment of the TIF District, (b) made the findings required by the TIF Act and the HRA Act, and (c) approved the establishment of the TIF District and the adoption of the TIF Plan; and
WHEREAS, the HRA previously created the Minnesota Event Tax Increment Financing District (the “Prior TIF District”) located within the Project Area and adopted a tax increment financing plan for the Prior TIF District (as previously amended, and as further amended hereby, the “Prior TIF Plan”); and
WHEREAS, the HRA has determined that it is necessary to further amend the Prior TIF Plan to remove the following tax parcels (collectively, the “Parcels”) from the Prior TIF District in order to establish the TIF District within the Project Area:
Parcel ID Parcel ID Parcel ID
062822130088 062822130134 062822130248
062822130089 062822130135 062822130249
062822130097 062822130136 062822130250
062822130098 062822130137 062822130251
062822130099 062822130138 062822130252
062822130100 062822130139 062822130253
062822130104 062822130140 062822130254
062822130106 062822130141 062822130255
062822130107 062822130142 062822130256
062822130108 062822130143 062822130257
062822130109 062822130144 062822130258
062822130110 062822130145 062822130259
062822130113 062822130146 062822130260
062822130116 062822130147 062822130261
062822130118 062822130148 062822130262
062822130119 062822130149 062822130263
062822130120 062822130236 062822130264
062822130121 062822130237 062822130265
062822130122 062822130238 062822130266
062822130123 062822130239 062822130267
062822130124 062822130240 062822130268
062822130125 062822130241 062822130269
062822130126 062822130242 062822130270
062822130127 062822130243 062822130271
062822130128 062822130244 062822130272
062822130129 062822130245 062822130273
062822130130 062822130246 062822130274
062822130131 062822130247 062822130275
WHEREAS, the HRA has investigated the facts and has caused to be prepared an Amendment to Tax Increment Financing Plan for the Minnesota Event TIF District (the “Prior TIF Plan Amendment”); and
WHEREAS, the total current net tax capacity of the Parcels is at least equal to the net tax capacity of those Parcels in the Prior TIF District’s original net tax capacity, and therefore the Prior TIF Plan Amendment may be accomplished without notice or hearing pursuant to Section 469.175, Subdivision 4(e)(2)(A) of the TIF Act; and
WHEREAS, Sherman Ventures Management LLC, a Delaware limited liability company (or an affiliate thereof, the “Developer”) has represented that it could not proceed with the Development without tax increment assistance; and
NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners (the “Board”) of the HRA as follows:
Section 1. Findings for the Creation of TIF District and Adoption of TIF Plan therefor.
1.01 The HRA 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 Board, the effect will be, to carry out the objectives of the Redevelopment Plan by (i) redeveloping blighted property, (ii) expanding the tax base of the City, (iii) expanding available housing to residents in the Project Area, and (iv) otherwise promoting certain public purposes and accomplishing certain objectives as specified in the Redevelopment Plan and the TIF Plan.
1.02 The HRA 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 of the TIF Act, clause (a)(1), 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 HRA further finds that the Development, in the opinion of the HRA, 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 HRA 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 HRA 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 HRA 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 HRA 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 are hereby approved and the TIF Plan shall be placed on file in the office of the Executive Director of the HRA.
2.02 The HRA’s Executive Director and staff of the HRA and the HRA'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 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 execute all further plans, resolutions, documents, notes and contracts necessary to accomplish these actions.
2.03 The staff of the HRA is hereby 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.
Section 3. Approval of the Prior TIF Plan Amendment.
3.01 The Prior TIF District and the Prior TIF Plan are hereby amended to remove the Parcels and the Prior TIF Plan Amendment is hereby approved. The Prior TIF Plan Amendment shall be placed on file in the office of the Executive Director of the HRA.
3.02 The staff of the HRA is hereby directed to file a copy of the Prior TIF Plan Amendment with the County Auditor of Ramsey County, the Commissioner of Revenue and the Office of the State Auditor simultaneously with the filings authorized in Sections 2.03 and 2.04.
Section 4. Approval and Adoption of Policy on Interfund Loans and Advances. The HRA hereby approves a policy on interfund loans or advances (“Loans”) for the TIF District, as follows:
4.01 The authorized tax increment eligible costs (including without limitation out-of-pocket administrative expenses in an amount up to $2,128,000, interest in an amount up to $9,962,000 and other project costs in an amount up to $9,850,000) payable from the TIF District, as its TIF Plan is originally adopted or may be amended, may need to be financed on a short-term and/or long-term basis via one or more Loans, as may be determined by the Executive Director from time to time.
4.02 The Loans may be advanced if and as needed from available monies in any fund or account of the HRA designated by the Executive Director. Loans may be structured as draw-down or “line of credit” obligations of the lending fund(s).
4.03 Neither the maximum principal amount of any one Loan nor the aggregate principal amount of all Loans may exceed $21,940,000 outstanding at any time.
4.04 Any Loan shall mature not later than March 1, 2052 or such earlier date as the Executive Director may specify in writing. All Loans may be pre-paid, in whole or in part, whether from tax increment revenues, TIF bond proceeds or other eligible sources.
4.05 The outstanding and unpaid principal amount of each Loan shall bear interest at the rate prescribed by the statute (Minnesota Statutes, Section 469.178, Subdivision 7), which is the greater of the rates specific under Sections 270C.40 or 549.09 at the time a Loan, or any part of it, is first made, subject to the right of the Executive Director to specify a lower rate.
4.06 Such Loans within the above guidelines are pre-approved. The Loans need not take any particular form and may be undocumented, except that the Executive Director shall maintain all necessary or applicable data on the Loans.
Section 5. Approving an HRA Budget Amendment. The Board hereby approves the HRA budget as set forth in the attached Financial Analysis.