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HomeMy WebLinkAbout07/12/2001 EDAC Minutes 1 APPROVED CITY OF LINO LAKES ECONOMIC DEVELOPMENT ADVISORY COMMITTEE MINUTES DATE: Thursday, July 12, 2001 MEMBERS PRESENT: H. Juni, J. Schwartz, J. Milbauer, F. Chase, K. Hansmann, D. Gorowsky, B. Hicks, T. Vacha MEMBERS ABSENT: R. Jensen OTHERS PRESENT: D. Carlson, M. Divine, B. Wessel, A. Rolek GENERAL/MINUTES The June 7, 2001 minutes were approved. COMPREHENSIVE PLAN UPDATE Ms. Carlson stated that the city council has approved the Comprehensive Plan. Ms. Divine said the next step will be submission to the Metropolitan Council after staff review to ensure all the parts are complete. MORATORIUM ON DEVELOPMENT Mr. Wessel stated that Mike Grochala was requested by the Environmental Board to explore the possibility of a moratorium on development for one year, to enable the city to put into place the regulations needed to implement the Comprehensive Plan. The P&Z tabled discussion regarding it until August. Mr. Wessel said the city is struggling with an anti-growth image and a moratorium could shut down commercial and industrial development. Mr. Juni said it seems shortsighted to go for a moratorium. Ms. Carlson said the council and the Environmental Board will be holding a joint meeting to discuss the board’s role, because the board members are feeling left out of the process. Mr. Brixius, the city’s consulting planner, recommended a housing moratorium until the ordinances are in place. Ms. Carlson added that if the city can move ahead without having to give MUSA to the first projects that get to the gate, which might not be the best projects, we’re okay, but there is a limited amount of MUSA. 2 Mr. Chase said stopping development is not the answer. Ms. Carlson said she didn’t believe C/I would be included in a moratorium. Mr. Wessel said staff continues to work with developers in the Village, and there is a housing piece that could be under construction next year. A housing moratorium would affect that. Mr. Milbauer said the market will determine development. Are we telling commercial developers that they can bring a business here, but they can’t live here? Mr. Milbauer moved that EDAC does not recommend to the city council that a moratorium for residential, commercial or industrial be considered at this time. Ms. Schwartz said this didn’t know if it was appropriate to make a recommendation regarding residential, since EDAC didn’t know enough about those issues. Mr. Chase said residential is a part of economic development. All boards will have an opportunity to review projects and problems can be addressed through the process. Ms. Carlson said she believes the P&Z is waiting for more information on projects in the pipeline. Each board will have a point of view, and the council should look at all of them. Mr. Gorowsky seconded the motion. Mr. Chase added that the numbers in the Comp Plan are a limited moratorium to begin with. Ms. Schwartz said the city has already exceeded the 147 housing units/year. Ms. Carlson said the council is looking at a limit of 7,575 households by 2020. The city has been building well ahead of that. The census shows that Lino Lakes has the highest percentage of married families with children in Minnesota. Phasing will be an important tool. Ms. Hansmann said it is premature to have a moratorium if there is no problem with people coming into the city now. Mr. Chase said the Environmental Board can always present more facts, but now EDAC is acting on what is before them. Mr. Vacha wants more information regarding the Environmental Board recommendation. Mr. Milbauer amended his motion to include a request for additional information from the Environmental Board regarding the basis for its position. Mr. Gorowsky seconded the motion. Mr. Gorowsky said EDAC does not want to take on the Environmental Board’s responsibility, but is charged with economic development responsibility. Ms. Carlson stated the council would not approve a moratorium on the Village plan. Ms. Schwartz questioned if a moratorium would enable the city to implement policy by doling out limited MUSA. Motion passed, with Mr. Vacha and Ms. Schwartz opposing. MARKETPLACE DEVELOPMENT Mr. Wessel said a tax abatement request from the Marketplace Development has been made, and is being negotiated. The Village is also a candidate for tax abatement, and both projects need to be studied in a balanced sense. Tax abatement has become problematic because of recent changes by the legislature. Mr. Rolek said the city had Springsted analyze what the Marketplace would generate in taxes to provide subsidy. Prior to the action of the legislature, the development had ample capacity to provide a subsidy with a 5-6 year payback. Since tax reform, general funding for school districts was removed from the property tax, and C/I properties pay lower taxes 3 than before. So the capacity is diminished to provide the subsidy. The payback period would be 11-12 years. The question for the council is whether it is willing to accept the longer payback period before it sees a general tax benefit. Mr. Juni said the taxes developers will pay will be lower, also, so they will benefit that way. Mr. Rolek said the taxes coming into the city are almost cut in half, but the state is implementing its own tax on C/I. The cities see less revenue, but businesses won’t see more than 10-15% tax break. Mr. Wessel said one option is to sell a remnant piece that the city will own and will be available as part of the Marketplace site after Apollo Drive is constructed. He believes it is useless to the city, but has value to the developers. It could become a part of the subsidy negotiation, but the city doesn’t know what it will cost yet. The Environmental Board had a preference for the city to retain it as a park-like entrance. He asked for the group’s opinion of making it available to the developer. Mr. Chase requested action on the Business Subsidy Policy first. Ms. Divine said the policy is similar to the one the Economic Development Authority already adopted. Mr. Gorowsky moved to adopt the Business Subsidy Policy. Mr. Milbauer seconded the motion. Motion passed unanimously. Members discussed clarifications within the Tax Abatement Policy: 1) including commercial and industrial as a use for tax abatement; the only thing to be excluded would be residential outside of the Town Center; 2) define the Town Center boundaries with a map; 3) include all affected school districts. Mr. Hicks questioned how a project could not be economically feasible without the subsidy, since the city wouldn’t support a development that is not economically feasible. Mr. Wessel said the Marketplace was a project based request, the market isn’t quite there, they need assistance to catalyze it. Ms. Schwartz mentioned that subsidies can be unfair to those who have built here without assistance. Mr. Rolek said it is one consideration when a subsidy is requested from a business that competes against current uses. Mr. Hicks said that a subsidy to a new business is an advantage over any current business. It’s not fair, but other considerations are taken into account when giving an abatement, and the policy should reflect that. Ms. Hansmann said the overall analysis should fall into the high bracket to justify abatement. Mr. Hicks said the policy should reflect what the city is actually doing, and the wording should be correct. Mr. Milbauer moved to accept the the Tax Abatement Policy and recommend the changes discussed to the City Council. Mr. Gorowsky seconded the motion. Mr. Vacha suggested that the policy regarding competitive advantage be changed to read “…projects and/or existing businesses.” Mr. Milbauer amended the motion to include the change. Mr. Gorowsky seconded. Motion passed unanimously. 4 RYAN/TARGET/KOHLS ABATEMENT Ms. Divine stated that the request for participation from Forest Lake School District and Anoka County had been denied by both entities. Mr. Chase said EDAC should give some consideration regarding the payback period of the abatement request. Ms. Divine said the tax reform changes are dramatic and pushes the terms for payback out a lot longer. However, TIF and abatement are still viable tools, and cities still have the charge of economic development. Mr. Gorowsky said the tax savings should offset less abatement dollars. Mr. Rolek said that after this year, cities will be playing on a level playing field. Mr. Wessel said Ryan’s plan is to sell out their part and move on. But with industrial projects there is an option of giving them less or extending the length of payback. Mr. Rolek explained the maximum that can be abated is 5% of the general levy, but the city’s capacity will rise over time. Ms. Hansmann said the Ryan project will use a large portion of what’s available and will limit other projects, including those in the Village. Mr. Rolek said each year the city makes a payment on this project, it is freeing up capacity for future use. Ms. Carlson said the city has to pay for services to the new projects. Mr. Milbauer said bonds could be issued. Mr. Rolek said pay-as-you-go lowers the risk to the city. Ms. Divine said the TIF projects out are in the range of 4-5 years payback. Mr. Wessel asked for recommendation regarding making the severed piece available as an incentive. Ms. Schwartz moved to approve using the severed piece as a tool in the negotiations in the Ryan/Target/Kohl’s subsidy request. Mr. Gorowsky seconded the motion. Motion passed unanimously. Ms. Carlson said the city can control the subsidy issue, but has no control over the access. The county does not want to allow the second access. The council approved a resolution supporting the access and sent it to the county. VILLAGE DEVELOPMENT- LETTER OF INTENT Ms. Divine said a letter that outlined a schedule and city and developer responsibility was approved by the city council. This will be the basis to develop a more binding agreement. Mr. Juni said he appreciated getting the documents in advance to have the opportunity to read them over. Mr. Juni moved to adjourn. Mr. Gorowsky seconded the motion. Meeting adjourned.