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HomeMy WebLinkAbout06/07/2001 EDAC Minutes 1 APPROVED CITY OF LINO LAKES ECONOMIC DEVELOPMENT ADVISORY COMMITTEE MINUTES DATE: Thursday, June 7, 2001 MEMBERS PRESENT: H. Juni, J. Schwartz, J. Milbauer, F. Chase, K. Hansmann, R. Jensen, D. Gorowsky, MEMBERS ABSENT: T. Vacha, B. Hicks OTHERS PRESENT: D. Carlson, M. Divine, B. Wessel, A. Rolek, M. Grochala GENERAL/MINUTES The April 5, 2001 minutes were approved. VILLAGE UPDATE Ms. Divine stated the development team and staff were continuing to work through a series of issues for a development agreement for the city-owned land and it was the intent to have it in place by August. The developers were appearing at the city council work session on June 19 to give an update. The YMCA is bringing in a fund raising professional to focus on this YMCA. Mr. Milbauer stated that this fundraiser is experienced in securing foundation funding. COMPREHENSIVE PLAN UPDATE Ms. Carlson stated that the city council would be holding two public hearings to receive comments on the proposed plan and should be approving the plan on June 25. She stated there is full council support. LINO LAKES IMAGE Mr. Wessel stated that in dealing with developers in the city, the perception is anti- growth, and developers don’t understand the perspective that commercial development needs to “catch up” to residential. Residential growth is what spurs commercial growth. He said he hears that Lino Lakes is the city that turned away a church. He noted that actual population is where the Comprehensive Plan states the city will be in 2010, and developers are concerned about the housing cap. 2 Ms. Carlson stated that the council would not be changing the outdated population figures in the plan, since it is the total 7,575 households planned for the future that is the important number. Ms. Carlson informed the board that she had received a call from the commercial workers union regarding the Target project. She suggested that the caller meet with her and Mr. Grochala later in the project, and that the image of a labor issue needs to be dealt with. Mr. Wessel stated that the Target project being approved will help to change the anti- development image and that a full marketing campaign for the Town Center is needed. And it is important to facilitate the Village development over the next few months. It is also important how economic development issues are presented in public forums, because the sense in the development community is there is not support for that in the community. This perception has developed over a number of years and performance will turn it around. Mr. Milbauer agreed that certain factions in the city are not eager to have people come in to Lino Lakes. The cap on housing units may eliminate the perception of a population cap. He added that the Tagg land issue is perceived as a “black hole” that will also nag this city until the deal is done. Ms. Divine said the Village project is ahead of the market, and it shouldn’t be seen as a black hole. The city is working with developers to plan a quality project for the day the market arrives. Mr. Milbauer said local banks would love to get involved in the financing of these local projects. ECONOMIC DEVELOPMENT FEASIBILITY STUDY Ms. Divine gave the board an overview of the Springsted study, explaining the study area, the costs already incurred in development of the Town Center, and the commitment the city made toward the YMCA. The study shows that the Village site is more expensive to develop, but will have significantly higher tax generation. The study also recommends the city taking the lead in the development of the Village. The study compares the Ryan/Target project and the Village project and shows about a 2:1 difference in tax revenue generation. The reason the values are so much higher in traditional neighborhood development is that the quality is higher and the density of development is significantly higher. The study recommends the city begin an abatement program to capture city tax revenues from these projects to assist development. She explained that tax abatement permits cities to abate the city taxes only. Mr. Rolek added that the school district and the county can participate, but it is up to them whether they will or not. In tax abatement, the city can use the abatement city-wide, not just within a particular district. Ms. Divine added that the city will ask the school district and county to participate, but historically, they have not. The city will have approximately $200,000 per year to use to assist development. 3 Tax Increment is only available on a portion of the Tagg site, and since the Target property is a greenfield site, TIF can’t be used there either. The city will be discussing whether to use abatement in the Town Center. Mr. Jensen said the city will be in a better position than other cities if it does not use TIF on the Target project, because of the potential changes in property tax legislation. Mr. Wessel stated that the Ryan/Target/Kohl’s request is $778,100 net present value in tax abatement. The process to establish a tax abatement program is underway and the council will make its decisions July 23. MARKETPLACE Mr. Wessel said Target is still planning to open July 2002, with groundbreaking late August. Kohl’s will follow shortly after. The tenant retail may be phased. There are still regulatory hurdles, primarily the wetland mitigation plan and the secondary access. Mr. Jensen questioned what are the major issues from the council. Ms. Carlson said she had no indication the council didn’t support it. She has concerns with using abatement to assist businesses, such as a bank and convenience store that already exist in the city. She doesn’t see that limiting competition as the same thing as subsidizing businesses that the city already has. If the businesses want to come in without a subsidy, it’s not a problem. She wondered if the subsidy could be directed to Target and Kohl’s. Mr. Wessel said the market determines what the need is. He took back to the developer the suggestion to take the subsidy request off the table for those users that are controversial. The other controversy is the plan for wetland mitigation in the Rice Creek park reserve. These projects are always complicated, and delay is always a possibility. Ms. Carlson said most concerns of neighbors have been addressed. Ms. Divine stated that in EDAC’s long range economic development plan, use of available tools for assistance for development are recommended. EDAC needs to consider several issues, whether it would recommend the use of abatement to help finance projects within the Town Center, should the council adopt a tax abatement policy that distributes the abatement dollars throughout the Town Center in a way that best benefits the community, and whether the city council should use abatement to limit competition. Mr. Wessel said the specific request asks for a breakout between the three major components, Target, Kohl’s and the Ryan piece. Mr. Rolek said taxes can be abated on any property in the city, to be used anywhere in the city. It doesn’t have to be used just on this project. In this instance we’re looking at abating additional tax dollars generated by this development, so that there is no negative impact on the taxpayers. The city can use it for as long as it wants up to 15 years. As the city looks at the Village, it is likely there will be request for subsidy. Because abatement is a limited tool, we have to structure this so that it is useful for the entire development. 4 Mr. Milbauer stated he is not against competition, but he is paying taxes and his assessments, and he paid a good price for the land. Mr. Wessel said the Ryan development is also paying a good price for the land, and special assessments, but that is why he asked them to take the Ryan portion of the subsidy off the table. Mr. Chase said while some may be opposed to subsidy for competing business, it might have to be done to make the other deal happen. Ms. Carlson said the city should be subsidizing business the city needs. Mr. Rolek said Ryan is saying this development is a package, and the whole package is requesting the abatement. It may have to find a way to work around it, but we can’t just sever a piece of the project off. The Ryan piece is more vulnerable, because it is multi-users. Mr. Milbauer said he supports tax abatement, but certain types of business should not be subsidized. If it is the only way to get the entire project, it is necessary. Ms. Hansmann said she built her store because she saw the potential and if they can see the potential, they shouldn’t need a subsidy either. Mr. Chase stated that this is an issue any time a subsidy is given to any business. He suggested a motion to support tax abatement for the Ryan/Target/Kohl’s project. Mr. Milbauer moved, Mr. Gorowsky seconded. Motion passed unanimously. Ms. Divine stated that by July 23 staff will be been working with Springsted to formulate policies and programs that define the direction for the use of abatement. A meeting was set for July 12 to discuss this further. Ms. Hansmann said she hopes tax abatement is used to lower taxes for existing business as a part of the overall plan, and not always use the funding for generation of new business. Mr. Rolek said the total tax generation of the Town Center project is over $600,000/year, and the city will be capturing only $200,000/year. So there will be a benefit to the taxpayers. Mr. Jensen said EDAC wants to convey to the council how important the project is. Lino Lakes does have a perception of being hard to work with, and the council needs to do whatever is necessary to make the project happen. If the city loses it, it will damage us. Mr. Chase asked for an amendment to the motion to add terms that EDAC recognizes that this project is important to economic development and the city council do whatever is reasonably necessary to make it happen, and to consider tax abatement for use on this project. Mr. Jensen moved. Mr. Gorowsky seconded. Motion passed unanimously. LIGHT INDUSTRIAL LAND ON LAKE DRIVE Ms. Divine stated that staff is in discussion regarding the light industrial park owned by Glenn Rehbein. Centennial School District is buying a portion of it for a new elementary school. It is time to reassess the light industrial designation and look at the best use of the remaining parcel. If it develops for light industrial, the current market for light industrial is similar to what is in Apollo Business Park. It may be some years before a market is there for a business campus environment, or it possibly could develop sooner if it is marketed for commercial use. 5 Mr. Gorowsky noted that when the middle school was built EDAC took a position on the parcel that the city should not give up any light industrial property in the city. The consequence of that is the light industrial that remains is smaller and is not as viable. Ms. Carlson said requests have been made to add commercial and it might not be much of a net loss. Mr. Wessel said this group decided that they were comfortable with the loss of industrial for the school. It might be that a more commercial emphasis is appropriate. Ms. Divine said the reality is it is zoned for light industrial, so the city has no ability to limit it if a proposal comes in. There may be a request for rezoning in the future. Mr. Milbauer moved to adjourn. Mr. Gorowsky seconded the motion. Meeting adjourned.