DISCLAIMER

PLANNING AND ECONOMIC DEVELOPMENT COMMITTEE

08-0374R


RESOLUTION APPROVING LAWS OF MINNESOTA 2008, CHAPTER 366, ARTICLE 5, SECTION 31 EXTENDING THE TIME FOR ACTIVITY IN TAX INCREMENT FINANCING DISTRICT NOS. 20 AND 21.

CITY PROPOSAL:

     RESOLVED, that the Duluth City Council hereby approves laws of Minnesota 2008, Chapter 366, Article 5, Section 31, extending the time for activities to be undertaken in tax increment financing (TIF) district Nos. 20 and 21 from five years from the date of certification of the TIF district as required by Minnesota Statutes Section 469.1763 to ten years from the date of certification of the TIF district.


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STATEMENT OF PURPOSE:  Under laws regulating tax increment financing, certain activities are required to be undertaken within a five-year period from the date of certification of a tax increment financing district.


TIF District 20 located next to Minnesota Power’s Herbert Service Center was created in 2000 to provide for development of the Duluth Technology Park. Duluth had a lack of good sites for companies needing access to fiber optic cables and redundant power. The first project to occur there was the Uniprise office building. There was a development agreement with this project which was later terminated. Located in the TIF District behind Uniprise are additional sites which have remained undeveloped because of rock issues and lack of a street and utilities. One major project was proceeding with development at this site, but was abandoned before construction began. These delays resulted in noncompliance with the five-year rule. Currently Minnesota Power and Apex are working with a high tech data project which has interest in this site. The project has applied for JOBZ benefits. In the event that this project does not go forward, the extension of the five-year rule will allow DEDA to look at other development opportunities at this site in the future using tax increment financing.


TIF District No. 21 known as the Garfield Industrial Park was created in 2001. The developer proposed to acquire a portion of the Burlington Northern railyard on Garfield Avenue and develop it for office/light industrial uses. The developer’s first building, which was built on speculation, was very slow to find tenants. The developer did not wish to construct additional buildings until the first one was filled. This resulted in noncompliance with the five-year rule.


Based on the above, the city requested legislation extending the five-year period to ten years. The legislature recently passed the legislation. The legislation is effective upon compliance by the city council with the requirements of Minnesota Statutes Section 645.021, subd. 3 which requires that the city council approve the legislation and file the approval with the secretary of state. This resolution is the first step in that process.