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City of Mountain Iron, Minnesota



Resolution 23-01 Approving TIF 13

RESOLUTION NUMBER 23-01

APPROVING A MODIFICATION TO THE REDEVELOPMENT PLAN FOR REDEVELOPMENT PROJECT NO. 1 AND A TAX INCREMENT FINANCING PLAN FOR THE ESTABLISHMENT OF TAX INCREMENT FINANCING DISTRICT NO. 13 WITHIN REDEVELOPMENT PROJECT NO. 1, AS PROPOSED BY THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF MOUNTAIN IRON

NOW, THEREFORE BE IT RESOLVED by the City Council of Mountain Iron, Minnesota, as follows:

Section 1. Recitals.

1.01 The Council has been informed that the Housing and Redevelopment Authority in and for the City of Mountain Iron, Minnesota (the Authority), desires to promote development of property located in the City.

1.02 In order to promote such development, the Authority has established Redevelopment Project No. 1 in the City (the Project) and intends to adopted a Modified and Restated Redevelopment Plan (the Redevelopment Plan) therefore pursuant to Minnesota Statutes, Sections 469.027, 469.028 and 469.029, subdivision 5 (collectively, the Act). The Authority has represented to the City that the proposed changes to the Redevelopment Plan do not alter or affect the exterior boundaries of the Project and do not substantially alter or affect the general land uses established in the Redevelopment Plan.

1.03 The Authority is considering establishment of Tax Increment Financing District No. 13 (the TIF District) within the Project and adoption of a Tax Increment Financing Plan (the TIF Plan) therefore pursuant to Minnesota Statutes, Sections 469.174 through 469.179 (the TIF Act) for the purpose of financing public improvements and encouraging investment in the Project. The Authority has prepared the TIF Plan in accordance with the TIF Act.

1.04 Pursuant to Section 469.175, subdivision 3 of the TIF Act, the Authority has requested the City to hold a public hearing on the TIF Plan and approve the TIF Plan, which hearing was held this day, at which the views of all interested parties were heard.

1.05 The Authority has previously transmitted a copy of the Redevelopment Plan and the TIF Plan (collectively, the Plans) to the Planning Commission of the City. The Planning Commission has rendered its written opinion, finding the Plans to be consistent with and conform to the general plan for development and redevelopment of the City as a whole and with local objectives as to appropriate land uses and general standards of development and redevelopment.

1.06 The Authority has transmitted a copy of the written opinion of the Planning Commission to the Council along with a copy of each of the Plans in a document entitled Modification to the Redevelopment Plan for Redevelopment Project No. 1 and the Tax Increment Financing Plan for the establishment of Tax Increment Financing District within Redevelopment Project No. 1, which is now on file in the office of the City Administrator.

1.07 The Council has fully reviewed the contents of the Plans.

1.08 Certain written reports (the ”Reports) relating to the Plans and to the activities contemplated therein have heretofore been prepared by staff and made a part of the City files and proceedings on the Plans. The Reports include information and substantiation constituting or relating to the basis for the other findings and determinations made in this resolution. The Council hereby confirms, ratifies and adopts the Reports, which are hereby incorporated into and made as fully a part of this resolution to the same extent as if set forth in full herein.

1.09 The Council recognizes that, pursuant to Minnesota Statutes, Section 469.177, Subd. 3, clause b, there is a mandatory fiscal disparities contribution for the TIF District, an economic development district.

Section 2. Findings. After investigation of the facts, the Council is of the opinion that: it is necessary for the sound and orderly development of the Project and of the City as a whole and for the protection and preservation of the public health, safety and general welfare, that the powers authorized by the Act and the TIF Act be exercised by the Authority to provide public financial assistance to the Project; proper development of the Project and implementation of the Redevelopment Plan in accordance with the City�s long range plans is essential to the economic viability of the Project, the economic well-being of the City and its residents and the orderly development of the City; it is necessary for the orderly and beneficial development of the Project to ensure the construction of and provide moneys for the payment of the cost of certain public improvements within the Project, including site improvements, in order to provide and finance development of suitable and necessary sites for development; there is a need for new development within the Project to provide employment opportunities for residents of the City, the surrounding communities and the State of Minnesota (the State), to improve the tax base of the City and the State, to improve the general economy of the City and the State, and to provide other facilities identified in the Plans; creation of the Project and TIF District is in the public interest and will result in increased employment in the City and in the preservation and enhancement of the tax base of the City; that the TIF District is intended and, in the judgment of the City, its effect will be to promote the public purposes and accomplish the objectives specified in the Redevelopment Plan, which are all consistent with the efforts already made for the development of the Project.

Section 3. Statutory Findings.

3.01 The land in the Project would not be made available for redevelopment without the financial aid to be sought by establishing the TIF District.

3.02 It is the opinion of the Council, based on discussions with developers of projects proposed to be constructed in the TIF District and information contained in the Plans: that development and redevelopment within the TIF District would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future; that the increased market value of the site to be included in the TIF District that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the market value estimated to result from development in the TIF District after subtracting the present value of the projected tax increments for the maximum duration of the TIF District permitted by the TIF Plan; and that the use of tax increment financing is necessary.

3.03 Based on information contained in the Plans, the Reports and the findings of the Planning Commission, the Plans conform to the general plan for the development and redevelopment of the City as a whole.

3.04 Based on information contained in the Plans, Plans will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development and redevelopment of the Project by private enterprise.

3.05 The City is a small city within the meaning of Section 469.174, subdivision 27, being a city organized under Minnesota Statutes, Chapter 412 and located 10 miles or more from a Minnesota city with a population 10,000 or more.

3.05 The Council further finds, declares and determines that the City made the above findings stated in this Section and has set forth the reasons and supporting facts for each determination in writing, which have been presented to the Council and are attached to this resolution as Exhibit A.

Section 4. Approval.

4.01 The Redevelopment Plan is approved.

4.02 The TIF Plan is approved.

4.03 The geographic boundaries of the Project and TIF District are described in the Redevelopment Plan and the TIF Plan which documents are incorporated herein by reference and which together with this resolution contain the requirements set forth in Section 469.002, subdivision 16 of the Act and Section 469.175, subdivision 3 of the TIF Act. The Plans are directed to be placed on file in the office of the City Administrator.

4.04 The City�s advisors and legal counsel are authorized and directed to proceed with the implementation of the Plans and for this purpose to negotiate, draft, prepare and present to this Council for its consideration all further plans, resolutions, documents and contracts necessary for this purpose.

Section 5. Designation of TIF District.

5.01 The proposed TIF District is an economic development district as defined by Section 469.174, subdivision 12 of the TIF Act because: it consists of a portion of the Project not meeting the requirements found in the definition of redevelopment district, renewal and renovation district, soils condition district, mine underground space development district, or housing district, but which the City hereby finds to be in the public interest because:

(a) it will discourage commerce, industry or manufacturing from moving operations to another state or municipality;

(b) it will result in increased employment in the state; and

(c) it will result in preservation and enhancement of the tax base of the state.

5.02 As permitted and required by Section 469.176, subdivision 4c(c) of the TIF Act:

(a) revenues derived from tax increment from the TIF District will be used to assist less than 15,000 square feet of separately owned commercial facility and for administrative expenses;

(b) Randy Cernohlavek, d/b/a North Central Supply/Plumbing & Heating Direct (the Developer), has represented to the Authority that tax increment assistance is necessary to develop an approximately 10,000 square-foot building to be used in Developer�s business of the retail and wholesale sale of plumbing and heating equipment and supplies, including storage of such supplies; and

(c) all tax increment from the TIF District will be spent only for activities within the TIF District.

Duly Adopted by the city council this 6th day of August, 2001.

EXHIBIT A

The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan for Tax Increment Financing District No. 13 as required pursuant to M.S., Section 469.175, Subd. 3 are as follows:

1. Finding that the TIF District is an economic development district as defined in M.S., Section 469.174, Subd. 12.

The TIF District is a contiguous geographic area within the City’s Redevelopment Project No. 1, delineated in the TIF Plan, for the purpose of financing economic development in the City through the use of tax increment. The TIF District consists of a portion of Redevelopment Project No. 1 not meeting requirements for other types of tax increment financing districts, which is in the public interest because it will facilitate construction of a 10,000 square foot commercial and storage building in the City of Mountain Iron, which will discourage commerce, industry, or manufacturing from moving their operations to another state or municipality; it will increase employment in the state, and preserve and enhance the tax base of the state.

It has been confirmed that the City of Mountain Iron has a population less than 5,000 and is located at least 10 miles from a city with a population greater than 10,000 and therefore the City meets the definition of a small city found in M.S. Section 469.174 Subd. 27.

2. Finding that the proposed development, in the opinion of the City Council, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future and that the increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the TIF District permitted by the TIF Plan.

The proposed development, in the opinion of the City, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future: This finding is supported by the fact that the development proposed in this TIF Plan is an office facility that meets the City�s objectives for economic development. The cost of land acquisition, site and public improvements, streets and sidewalks, and utilities makes development of the facility infeasible without City assistance. The developer was asked for and will provide a letter and a proforma as justification that the developer would not have gone forward without tax increment assistance prior to the signing of a Developer Agreement providing assistance.

The increased market value of the site that could reasonable be expected to occur without the use of tax increment financing would be less than the increase in market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the TIF District permitted by the TIF Plan: The City supported this finding on the grounds that the cost of site and public improvements, streets and sidewalks, and utilities add to the total development cost. Historically, site development costs in this area have made development infeasible without tax increment assistance. Therefore, the City reasonably determines that no other development of similar scope is anticipated on this site without substantially similar assistance being provided to the development.

A comparative analysis of estimated market values both with and without establishment of the TIF District and the use of tax increments has been performed as described above. If all development which is proposed to be assisted with tax increment were to occur in the TIF District, the total increase in market value would be up to $399,300. The present value of tax increments from the TIF District is estimated to be $79,762. It is the Council�s finding that no development with a market value of greater than $0 would occur without tax increment assistance in the TIF District within 8 years. This finding is based upon evidence from general past experience with the high cost of site and public improvements in the general area of the TIF District (see Cashflow in Appendix D).

3. Finding that the TIF Plan conforms to the general plan for the development or redevelopment of the municipality as a whole.

The TIF Plan was reviewed by the Planning Commission on July 23, 2001. The Planning Commission found that the TIF Plan conforms to the general development plan of the City.

4. Finding that the TIF Plan will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development of Redevelopment Project No. 1 by private enterprise.

The project to be assisted by the TIF District will result in increased employment in the City and the State of Minnesota, increased tax base of the State, and add a high quality development to the City.

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