The URL can be used to link to this page

Home My WebLink About2005-04-05 Applicant Ltr to OPHMr. Eric Jo hnso n City Administrator City of oak Park Heights 14168 Oak Park Blvd. Box 2007 Oak Park Heights, MN 55082 Re: Tax Increment Financing Proposal Dear Mr. Johnson: Summary Description of Project Detailed Description of Project April 5, 2005 &v- 0 This is in response to your letter dated February 16, 2005, and our subsequent meeting regarding possible tax increment assistance for a portion of the housing development we are proposing in the City of Oak Park Heights. The following is intended to be a your response to the points in our letter we agreed we would address when we met earlier this p month: The name of the proposed project is Oakgreen Villas Phase II. The developer will be Anchobaypro, Inc. and/or its assigns. As you are aware, the overall housing project which Anchbaypro, Inc. is undertaking consists of the construction of 149 units of single family housing. The Oakgreen Villas Phase II project, to which the tax increment proposal pertains, consists of 21 townhouse units to be located where there currently exists six single family homes directly to the north of Oakgreen Avenue North. That part of the project involves the acquisition of the six single family ho me s and the construction of 21 townhouse units on the property acquired. We are proposing that the City create a tax increment district to encompass the acquired property and certain additional land and use the tax increment from the district to offset the costs of acquisition of the six homes. Type of Tax Increment District. We propose that the City create a redevelopment tax increment district as defined in Minnesota Statutes, section 469. 174, subd. 10. Under Minnesota law in order to create a redevelopment district 70% of the area of the district must be "occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures ". In addition, more than 50 percent of the buildings, not including outbuildings, must be structurally substandard to a degree requiring substantial renovation or clearance. Based on our initial review of the site and the law, we believe that that the area proposed would likely qualify as a redevelopment district. In order to determine whether in fact the district could be created and in order to create the necessary supporting documentation, we, or the City at our cost, would retain a consultant to inspect the property and buildings to determine whether they qualify. It may be possible to include in the district some property in addition to the six single family homes being acquired. We propose to create a new tax parcel consisting of a portion of the property to the north of the single family homes and include such additional property in the district to extent possible without exceeding the statutory 30% limit on unimproved property that may be in the district. We believe that 26 townhouse units, in addition to the 21 units to be built on the property where the 6 homes are currently located, can be built on property included in the district. A portion of the property on which the 6 homes are located will be made available to the City to be used to widen and improve Oakgreen Avenue North. Project Schedule. The following is a proposed schedule for the creation of the tax increment district and development of the project: Event Date City Council Preliminary Review of Project April, 2005 Developer Acquisition of Properties May /June 2005 City or Developer Hiring of Property Inspector May, 2005 Preparation of Tax Increment Plan May, 2005 City Council Hearing on Creation of District June, 2005 Demolition of Single Family Homes Fall, 2005 Commencement of Construction Fall, 2005 Completion of Construction and Sale of All Units Fall, 2007 Responsibilities of Parties. We anticipate that the developer will be responsible for the following in connection with the project: • Acquisition of the 6 single family homes • Construction of all aspects of the private townhouse project • Payment of all costs of the City associated with the creation of the tax increment district We expect that the City will be responsible for the following; Benefits Analysis You requested an analysis of the estimated benefits that the City would derive from the use of tax increment as proposed. We believe the City will benefit as follows: • The project will result in the removal of substandard buildings and other buildings whose location is inappropriate in light of surrounding uses. • As a result of the project the City will be able to acquire property necessary to undertake improvements to Oakgreen Avenue North that will enhance traffic flow in the area of the project. • The neighbors affected by the overall project will be able to sell. their homes at a reasonable price and concerns about the project and the effect on their properties will be avoided. • The project will result in a continuous landscape west of Oakgreen. We hope that the information in this letter will assist the City in determining whether it is willing to utilize tax increment to assist the proposed project. If you need additional information at this time please feel free to contact me. Tim Nolde Cost Summary Amount Percent Land Acquisition $1,515,000 29.13% Site Work $ 90,000 1.73% Environmental $ 5,000 0.10% Demolition $ 120,000 2.31% Broker Fees, Commissions $ 45,000 0.87% Relocation Total Acquisition $1,605,000 30.87% New Construction Private $ 2,280,000 43.85% City Fees $ 70,000 1.35% Private Streets $ 105,000 2.02% Excavation $ 220,000 4.23% Contingency $ 100,000 1.92% Total New Construction $2,775,000 53.37% Architectural and Engineering $ 68,000 1.31% Architectural lnspections $ 6,000 0.12% Soil Testing Surveys $ 1 0,000 0.19% Total Architectural and Engineering $ 84,000 1.62% Sales Fees and Marketing $ 308,000 5.92% Signage Sales Commissions Advertising $ 15,000 4.29% Total Marketing $ 323,000 6.21% Construction Interest and Fees $ 147,000 2.83% Association Fees and Taxes $ 95,000 1.83% Insurance $ 8,000 0. Total Carrying Costs $ 250,000 4.81 % Lender Fees City TIF Fees Total Financing Fees $ Environmental Consultants $ 13,000 0.25% Total Environmental Consultants $ 13,000 0.25% Condo Documents Attorneys Fees Title Costs Total Condo, Attorneys, Title Developer's Overhead Developer Fees Total Developer's Overhead $ 20,000 0.38% $ 25,000 0.48% $ 5,000 0.10% $ 50,000 0.96% $ 100,000 1.92% $ 100,000 1.92% Total Project Costs $ 5,200,000 100.00% Income Summary Total Sales Prices of Units $ 4,620,000 Tax Increment $ 900,000 Total Proceeds $ 5,520,000 Proceeds $ 5,520,000 Project Costs $ 5,360,000 Profit $ 160,000 Percent of Cost 2.99% 8 , 4 ;4 10 il 4.4 w 4.4 li .4 , wwN- 4 " .‘k‘kiw-s-. ..-*. , N%-‘,_‘%, ttk%, iblvsk71 4 tIlqstlotTilstnnk - N - . ts.-- ,p,, s,A,-,.. ,.. 6. Ciktk i NtelANAd1/4 141414141:„.0,\,laWNN. t i ii ` 'ice li �-1W- N iggpm velp.).1114 j T-1 C flb ‘-' N ( 11" P'V-- itil k N ' - 1 ' taikM0 ► . '� .t.,gily X111 'Tgiibt NKOMO ‘y*NIKa.Mkb :t NW& *MAL ..1 -144r.r.-` Zw..N.-N,,' .., ..;:' , Tt. III _ {f�� } ,� , m . r . tr� - f to Lr� t -- `� • y f . 1 ' Al% 161;/7 NINNI ice' .► �.. � ~ - , 17ie7ir7Y7r rir MEM a MEM . • C k ease p MEM MORE. •� «rte !11r 1m MEM I -ii1i � EMU- ihimitue .111 wit` offingown N � , MSS immtrug �a ,smarweliN MI I I CC C