05.02 - Tax Increment Financing Project - Lonesome Cottage

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EXHIBIT A RESOLUTION NO. The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan (TIF Plan) for Tax Increment Financing District No. 1-13 (District) as required pursuant to M.S., Section 469.175, Subd. 3 are as follows: 1. Finding that the District is an economic development district as defined in M.S., Section 469.174, Subd. 12. The District is a contiguous geographic area within the City's Development District No. 1, delineated in the TIF Plan, for the purpose of financing economic development in the City through the use of tax increment. The District is in the public interest because it will facilitate construction of a 24,000 square foot manufacturing facility for Lonesome Cottage Furniture Company which will help discourage commerce, industry, or manufacturing from moving their operations to another state or municipality, will result in increased employment in the state, and will result in preservation and enhancement of the tax base of the State. 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 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 plan is a manufacturing facility that meets the City's objectives for economic development. The cost of land acquisition and utilities makes development of the facility infeasible without City assistance. The developer was asked for and provided a letter and a proforma as justification that the developer would not have gone forward without tax increment assistance (see attachment in Appendix F). 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 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 land acquisition and utilities add to the total development cost. Historically, site development costs in this area have made development infeasible without tax increment assistance. The City has owned the land and attempted to sell lots in the Industrial Park since before 1996, with limited success. In 2004, the City extended the infrastructure in an attempt to encourage additional sales. Only four of the total lots have sold. The Lonesome Cottages project will use and additional four lots with potential for expansion on a fifth. 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. Therefore, the City concludes as follows: a. City's estimate of the amount by which the market value of the site will increase without the use of tax increment financing is $0 (for the reasons described above), except some unknown amount of �' appreciation.