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HomeMy WebLinkAbout10/05/2017 EDAC PacketCITY OF LINO LAKES ECONOMIC DEVELOPMENT ADVISORY COMMITTEE MEETING Thursday, October 5, 2017 8:00 A.M. Community Room AGENDA 1. CALL TO ORDER AND ROLL CALL 2. APPROVAL OF MINUTES. August 3, 2017 3. DISCUSSION ITEMS A. Lino Lakes Tax Increment and Abatement Financial Incentives Policy B. Woods Edge Development Interest C. Project Updates 4. ADJOURN CITY OF LINO LAKES ECONOMIC DEVELOPMENT ADVISORY COMMITTEE MINUTES DATE: August 03, 2017 MEMBERS PRESENT: Jim Schueller, Nathan Vojtech , Lou Masonick, Patrick Kohler MEMBERS ABSENT: Don Johnson, Michael Ruhland, Chad Wagner, Julie Schwartz, Thomas Colgan OTHERS PRESENT: Michael Grochala, Joe Widing APPROVAL OF MINUTES It was moved by Mr. Schueller to approve the minutes from July 13, 2017. The motion was seconded by Mr. Vojtech and passed unanimously. DISCUSSION ITEMS A. Comprehensive Plan Update a. Industrial Land Use Categories Mr. Grochala presented the full build land use map scenario to EDAC members. He explained that the 35E Corridor will be moved up in guidance to the first utility stage and asked Committee members their opinions on the addition of a new category of industrial or commercial use. The committee members inquired about the status of the residential development east of I-35E and north of Main Street. Mr Grochala explained that the developer was submitting documents to the city next week and that the area is zoned PUD which gives the city and developer flexibility in terms of the mix of uses on site. Mr. Grochala began discussion with the Committee about the possibility of a new business designation for the city code adding that the news of a potential asphalt plant just north of the City could change future use designations away from residential in the I-35E corridor. Committee members agreed that the interstate (I-35E) is a positive for potential business and thought that the corridor should someday look like the TH 610 corridor. Committee members next inquired about the status of Ash St and Centerville Rd lot and the Ash St and Hodgson Rd area. Mr. Grochala explained that there is developer interest at both sites and that the Ash St and Centerville road site is in the planning process for a new development. Committee members agreed that more professional business buildings would be welcome in Lino Lakes and that the City should take steps to establish a new land use category. b. Data Center Discussion Mr. Grochala opened the discussion explaining that data center users are looking for sites and that the city has enough land for a high value center to be built. Committee members stated concerns about the amount of employment the centers offer and the financial assistance that other cities have offered. Mr. Grochala responded stating that data centers are very expensive and high value, any assistance is small compared to the value of the developments and they require little service from the city after completion. The high value and low service of the development could help alleviate the tax burden on city residents. Committee members asked about the cost to develop the project and any utility work that the city would need to do. Members also asked about the possibility of working jointly with neighboring communities. Mr. Grochala stated that most costs would be borne by the developer, but TIF use could still be a possibility as it has become standard for area cities and has had good results. He also stated that joint projects don't happen often, but have happened in the past. Committee members inquired on the status of a possible data center in the City. Mr. Grochala stated that there is work being done with a property owner in the City and potential tenant for the potential data center. The committee stated that all uses should be considered for the future of the area. c. Miscellaneous Discussion Committee members inquired about the status of Birch Rd, stating that traffic has become increasingly heavy and dangerous. Mr. Grochala responded that studies have been done and signals added, but that it was now a capacity issue with the road. He continued that traffic circles are likely on the road in the future. The Committee stated the Birch Rd. is overburdened and should be upgraded in some capacity soon. Mr. Grochala agreed with the assessment, but stated that a consensus has not been agreed upon on for the future of the road. ADJOURNMENT The meeting was adjourned at 9:03 AM. ECONOMIC DEVELOPMENT ADVISORY COMMITTEE AGENDA ITEM 3A STAFF ORIGINATOR: Michael Grochala EDAC MEETING DATE: October 5, 2017 REQUEST: Incentive Policy Update BACKGROUND In June of 2016 the City revised its Business Subsidy Criteria as required by State Law. The criteria are intended to set minimum requirements which recipients must meet to be eligible to receive business subsidies. All business subsidy requests must comply with the State's Business Subsidy Act. A business subsidy must meet a public purpose such as increasing the tax base. The requirements must include specific wage floor for the wages to be paid for jobs created. In addition City has both a Tax Increment Financing Policy and a Tax Abatement Policy. These documents are intended to provide a guide for use of these financial tools for private development above and beyond the requirements of set forth by state law. Staff is proposing to update and combine these two policies into one overall policy document. Staff will provide a review of the differences between Tax Increment Financing (TIF) and tax abatement. Additionally, Kirsten Barsness, of Barsness Consulting, will lead a review and discussion on the objectives, policies, and project qualifications. EDAC CONSIDERATION Staff is requesting EDAC discussion and recommendation regarding the proposed policy changes. ATTACHMENTS 1. TIF and Tax Abatement comparison 2. Lino Lakes TIF policy 3. Lino Lakes Tax Abatement policy Tax Increment Tax Increment Financing (TIF): The ability to capture and use most of the increased local property tax revenues from new development within a defined geographic area for a defined period of time without approval of the other taxing jurisdictions. Minnesota Statutes 469.174 to 1799 City approves TIF Redevelop Blighted/Obsolete Buildings Affordable Housing Job & Tax Base Creation Tax Abatement Tax Abatement: The ability of one or more taxing jurisdictions to capture and use all or a portion of their share of local property tax revenues within a defined geographic area. It is a rebate rather than an exemption from paying taxes. Minnesota Statutes 469.1812 to 1816 O Cities O Counties Any one jurisdiction or 4 Schools any combination a Towns ■ Redevelop Blighted/Obsolete Buildings Affordable Housing Market Rate Housing Job & Tax Base Creation Retail, Commercial and Office Tests for blight and coverage, income limits, and type No inspections or coverage requirements; no income of businesses assisted Limited by MN Statutes limits; no use restrictions TIF district must be in a project area, which Parcels with taxes being abated must be sets boundaries for TIF expenditures; Project identified. Area may contain multiple TIF districts TIF district defines parcels for capture of value Captures only the increase in value Flexible structure May capture existing values requirements Tax Increment O Economic Development - 9 years *O Renewal and Renovation - 16 years 4 Redevelopment - 26 years O Housing - 26 years Tax Abatement 4 Participation by all 3 entities - 15 years O Participation by 1 or 2 entities - 20 years O Resolution is silent as to the term - 8 years Requires notification to County and School District, Requires public hearing by each participating but does not require approval from other jurisdictions jurisdiction City holds public hearing and adopts resolution with findings Annual reports are filed with the Office of the State Auditor by August 1 Business subsidy reports may need to be filed No maximum on the annual increment generated or number of TIF districts Each jurisdiction adopts a resolution with statement of public benefit and term of abatement Business subsidy reports may need to be filed Maximum cannot exceed the greater of $200,000 or 10% of the net tax capacity Must be used on activities including acquisition, O Few restrictions on use demolition, site improvements, public utilities, O Cannot abate taxes on a parcel located in a TIF streets and sidewalks, and administration district O General government use is prohibited *O Recreational use is prohibited Geographic restrictions and pooling O Abatements are special levies and outside levy limits. 4 Amount of abatement must be added to total levy for current year O Proposed levy and certified levy must include current levy abatement amounts. CITY' OF I I N 0 JAKFS City of Lino Lakes, Minnesota TIF policy: 1. Prospects must qualify according to the City business subsidy selection criteria. 2. TIF will be used to pay qualifying reimbursable costs, which include special assessments, land write down, administrative fees, landscaping and site preparation. 3. Land write down will be based on a minimum of 10,000 square feet (or more) of facility per acre of land. 4. Each project will be self-sufficient within the allowable TIF capacity of the district. 5. TIF commitments will not exceed 16% of the estimated market value. 6. Administrative fees (upfront escrow) will be reimbursed using TIF funds at the completion of the project. 7. Assessments will be paid upfront in the Apollo Business Park to allow for a more expedient return of the city's investment in the park's improvements. 8. In other TIF districts, the subsidy for land and assessments will be on a pay-as-you-go basis. 9. If the subsidy includes upfront payments of assessments, the city will be reimbursed first from available increment. The grantee will receive its pay-as-you-go after the city is paid back. Updated 1/16 600 Town Center Parkway, Lino Lakes, MN 55014 Phone: 651-982-2400 • Fax: 651-982-2499 Tax Abatement Policy City of Lino Lakes June 2001 Prepared by: Springsted Incorporated 85 East Seventh Place St. Paul, MN 55101 Corporate Headquarters 85 East Seventh Place Suite 100 St. Paul, MN 55101-2887 651.223.3000 651.223.3002 Fax Des Moines Office Milwaukee Office 100 Court Avenue 8651 North Port Washington Road Suite 204 Suite A Des Moines, IA 50309-2257 Milwaukee, WI 53217-2203 515.244.1358 414.247.8686 515.244.1508 Fax 414.247.8649 Fax Kansas City Office Minneapolis Office 7211 West 98th Terrace 520 Marquette Avenue Suite 100 Suite 900 Overland Park, KS 66212-2257 Minneapolis, MN 55402-1122 913.345.8062 612.333.9177 913.341.8807 Fax 612.349.5230 Fax Virginia Beach Office 1206 Laskin Road Suite 210 Virginia Beach, VA 23451-5263 757.422.1711 757.422.6617 Fax Washington, D.C. Office 2121 K Street NW Suite 800 Washington, D.C. 20037-1829 202.261.6505 202.261.3508 Fax advisors@springsted.com www.springsted.com City of Lino Lakes, Minnesota I. POLICY PURPOSE The purpose of this policy is to establish the City of Lino Lakes' position relating to the use of Tax Abatement, for private development above and beyond the requirements and limitations set forth by State Law. This policy shall be used as a guide in the processing and review of applications requesting tax abatement assistance. The fundamental purpose of Tax Abatement in the City of Lino Lakes is to encourage desirable development or redevelopment that would not otherwise occur but for the assistance provided through Tax Abatement. The City of Lino Lakes is granted the power to utilize Tax Abatement by the Minnesota Tax Abatement Act, as amended. It is the intent of the City to provide the minimum amount of Tax Abatement, as well as other incentives, at the shortest term required for the project to proceed. The City reserves the right to approve or reject projects on a case by case basis, taking into consideration established policies, project criteria, and demand on city services in relation to the potential benefits from the project. Meeting policy criteria does not guarantee the award of Tax Abatement to the project. Approval or denial of one project is not intended to set precedent for approval or denial of another project. II. DIFFERENCE BETWEEN TAX ABATEMENT & TAX INCREMENT FINANCING The primary difference between Tax Abatement and Tax Increment Financing (TIF) is the way in which the dollars are awarded to the project. When TIF is awarded to a project by the city, the other political subdivisions (the school district and the county) are required to contribute their portion of the increased taxes to the project. Conversely, when Tax Abatement is requested, each political subdivision has the option of granting its portion of the increased taxes to the project. Subsequently, the dollars generated for the project with Tax Abatement are generally less than the dollars generated with TIF. III. OBJECTIVES OF TAX ABATEMENT As a matter of adopted policy, the City will consider using Tax Abatement to assist private development projects to achieve one or more of the following objectives: To Provide assistance in the Town Center • To retain local jobs and/or increase the number and diversity of jobs that offer stable employment and/or attractive wages and benefits. • To enhance and diversify the City of Lino Lakes' economic base. �i SPRINGSTED Page 1 City of Lino Lakes, Minnesota • To encourage additional unsubsidized private development in the area, either directly or indirectly through "spin off" development. • To facilitate the development process and to achieve development on sites which would not be developed without Tax Abatement assistance. • To remove blight and/or encourage redevelopment of commercial and industrial areas in the city that result in high -quality redevelopment and private reinvestment. • To offset increased costs of redevelopment (i.e., contaminated site clean up) over and above the costs normally incurred in development. • To create opportunities for affordable housing. • To contribute to the implementation of other public policies, as adopted by the city from time to time, such as the promotion of quality urban or architectural design, energy conservation, and decreasing capital and/or operating costs of local government. IV. POLICIES FOR THE USE OF TAX ABATEMENT a. Tax Abatement assistance will be provided to the developer upon receipt of taxes by the City, otherwise referred to as the pay-as-you-go method. Requests for up- front financing will be considered on a case -by -case basis. b. Any developer receiving Tax Abatement assistance shall provide a minimum of twenty percent (20%) cash equity investment in the project. C. Tax Abatement will not be used in circumstances where land and/or property price is in excess of fair market value. d. Developer shall be able to demonstrate a market demand for a proposed project. e. Tax Abatement may not be utilized in cases where it would create an unfair and significant competitive financial advantage over other projects and/or existing businesses in the area. f. Tax Abatement may not be used for projects that would place extraordinary demands on city services or for projects that would generate significant environmental impacts. g. The developer must provide adequate financial guarantees to ensure completion of the project, including, but not limited to: assessment agreements, letters of credit, personal guaranties, etcetera. h. The developer shall adequately demonstrate, to the City's sole satisfaction, an ability to complete the proposed project based on past development experience, general �i SPRINGSTED Page 2 City of Lino Lakes, Minnesota reputation, and credit history, among other factors, including the size and scope of the proposed project. For the purposes of underwriting the proposal, the developer shall provide any requested market, financial, environmental, or other data requested by the City or its consultants. V. PROJECT QUALIFICATIONS All Tax Abatement projects considered by the City of Lino Lakes must meet each of the following requirements: a. The project shall meet at least one of the objectives set forth in section IV of this document. b. The use of Tax Abatement will be limited to: • Projects occurring in Town Center; or • Commercial or Industrial development, expansion, redevelopment, or rehabilitation; or C. The developer shall demonstrate that the project is not financially feasible but -for the use of Tax Abatement. d. The project shall comply with all provisions set forth in the state's Tax Abatement Law, statutes 469.1812 to 469.1815, as amended. e. The project must be consistent with the City's Comprehensive Plan, Land Use Plan, and Zoning Ordinances. f. The project shall serve at least two of the following public purposes: • Job creation. • Increase tax base. • Enhancement or diversification of the city's economic base. • Development or redevelopment that will spur additional private investment in the area. • Fulfillment of defined city objectives, such as those identified in the Comprehensive Plan. • Removal of blight or the rehabilitation of a high profile or priority site. VI. SUBSIDY AGREEMENT & REPORTING REQUIREMENTS All developers/businesses receiving Tax Abatement assistance from the City of Lino Lakes shall be subject to the provisions and requirements set forth by state statute 116J.993 and summarized below. �i SPRINGSTED Page 3 City of Lino Lakes, Minnesota All developers/businesses receiving Tax Abatement assistance shall enter into a subsidy agreement with the City of Lino Lakes that identifies: the reason for the subsidy, the public purpose served by the subsidy, and the goals for the subsidy, as well as other criteria set forth by statute 116J.993. The developer/business shall file a report annually for two years after the date the benefit is received or until all goals set forth in the application and performance agreement have been met, whichever is later. Reports shall be completed using the format drafted by the State of Minnesota and shall be filed with the City of Lino Lakes no later than March 1 of each year for the previous calendar year. Businesses fulfilling job creation requirements must file a report to that effect with the city within 30 days of meeting the requirements. The developer/business owner shall maintain and operate its facility at the site where Tax Abatement assistance is used for a period of five years after the benefit is received. In addition to attaining or exceeding the jobs and wages goals set forth in the Subsidy Agreement, the borrower shall achieve at least one of the objectives set forth in Section IV of this document. Developers/Businesses failing to comply with the above provisions will be subject to fines, repayment requirements, and be deemed ineligible by the State to receive any loans or grants from public entities for a period of five years. VII. APPLICATION PROCESS FOR TAX ABATEMENT A. City of Lino Lakes Applicant submits the completed application and completes the Application Review Worksheet. 2. City staff reviews the application and completes the Application Review Worksheet. 3. Results of the Worksheet are submitted to the appropriate governing authorities for preliminary approval of the proposal. 4. If preliminary approval is granted, all necessary notices, resolutions and certificates are prepared by City staff and/or consultants. 5. Public hearing(s) on the proposed project are held. 6. The EDA or HRA recommends approval or denial of the proposal to the City Council. �i SPRINGSTED Page 4 City of Lino Lakes, Minnesota 7. The City Council grants final approval or denial of the proposal. B. Applications to other political subdivisions It is recommended that applicants intending to seek Tax Abatement from the affected County or School District make their applications to those bodies concurrent with their application to the City of Lino Lake N SPRINGSTED Page 5 ECONOMIC DEVELOPMENT ADVISORY COMMITTEE AGENDA ITEM 3B STAFF ORIGINATOR: Michael Grochala, Community Development Director EDAC MEETING DATE: October 5, 2017 REQUEST: Woods Edge Development Interest Background In 2010 the Legacy at Woods Edge Property forfeited to the State of Minnesota for failure to pay property taxes. The City's Economic Development Authority (EDA) obtained title for the remaining 20 acres of undeveloped land in September of 2013. The acquisition was made possible through special legislation approved in the 2013 legislative session. The property transfer was made at no cost to the City. The purpose of the transfer was to streamline the conveyance process and allow the City opportunity to recoup outstanding special assessment debt with land sale proceeds. In 2015 DR Horton purchased approximately 11 acres from the EDA for $1,000,000. The property is currently being developed with 112 townhomes. This leaves approximately 9 acres remaining. When the Legacy project was first envisioned and approved it was based on a set of core principles and objectives: • Develop land uses linked to local and regional transportation systems. • Connect housing and centers of employment, education, retail and recreational uses • Provide a range of housing choices • Protect and enhance natural resources Site Development The Planning & Zoning Board and City Council reviewed the site design/layout and reaffirmed the development principles in March of 2014. The master plan breaks up the with land use alternatives on a block by block approach. This approach was used to simply recognize the different land use areas within the development that can function independently and would likely be sold/developed separately. We have identified these as the Neighborhood Block, Town Square Block and the Urban Block. Neighborhood Block The neighborhood block was originally guided for 190 attached residential units (townhomes). DR Horton is developing 112 townhomes on the site. Town Square Block Two (2) acres remains for development in this area. The town square block was originally guided for civic uses (YMCA) and mixed uses allowing for 1st floor commercial with multi- family (68) residential uses above. The concept master plan provides for either a multi -family building or commercial pads on the west side of the block. Urban Block Approximately 7 acres is available for development. The Urban Block was originally guided for mixed use (1st floor commercial with housing above) along the community green, including approximately 140 residential units . The balance of the property was guided for commercial. Subsequent discussions with P & Z and City Council allowed for consideration of this area as all commercial. Current Development Interest Staff has received an inquiry form a real estate broker regarding acquisition of the entire 6.49 acres located in the Urban Block. The proposed use is a senior community including approximately 200 units. The unit mix would include independent (100), assisted (50) and skilled (50) living options. The proposal also anticipates 1st floor commercial along the community green area and stand alone commercial pads on the west side of the site. No sale price has been discussed at this time. While there are a number of design questions that would need to be addressed the bigger question at this point is whether the City wants to consider this type of use on the specific site. Initial concerns raised by staff include: 1) There is an existing assisted living and memory care facility within the development. Does the City want more of this product in the same area? 2) How will this use impact the existing uses? 3) Is there a market for additional vertical mixed use (1st floor commercial). The existing 1st floor commercial on the Legacy Apartments in not 100% full. If not how would the residential use impact existing commercial around the community green? Requested Council Direction 1. Does the Council want to further consider this request. Attachments 1. Original Master Plan 2. Master Plan Alternate 3. Proposed Concept Layout Lard Use Plan for Legacy at - L Inu LA.., Mlnn,, - I�.WnIYI `i7 17YrdY11 W a Cwmw wl M- Na.nU. MIM M1M MW% Mk MTM $11MM LGt EUMOING 11UNNFt NUMM. 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