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HomeMy WebLinkAbout11/02/2017 EDAC PacketCITY OF LINO LAKES ECONOMIC DEVELOPMENT ADVISORY COMMITTEE MEETING Thursday, November 2, 2017 8:00 A.M. Community Room AGENDA 1. CALL TO ORDER AND ROLL CALL 2. APPROVAL OF MINUTES. October 5, 2017 3. DISCUSSION ITEMS A. Lino Lakes Tax Increment and Abatement Financial Incentives Policy (Cont.) B. Hodgson Road & County Road J Concept Plan C. Project Updates 4. ADJOURN CITY OF LINO LAKES ECONOMIC DEVELOPMENT ADVISORY COMMITTEE MINUTES DATE: October 05, 2017 MEMBERS PRESENT: Thomas Colgan, Jim Schueller, Don Johnson, Michael Ruhland, Nathan Vojtech, Lou Masonick, Chad Wagner, Patrick Kohler MEMBERS ABSENT: Julie Schwartz OTHERS PRESENT: Michael Grochala, Kirsten Barsness, Joe Widing APPROVAL OF MINUTES It was moved by Mr. Kohler to approve the minutes from August 8, 2017. The motion was seconded by Mr. Wagner and passed unanimously. DISCUSSION ITEMS a. Lino Lakes Tax Increment and Abatement Financial Incentives Policy Kirsten Barsness shared a policy update on tax increment and tax abatement financing options for the Board. Ms. Barsness explained that 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 a specific wage floor for the wages to be paid for jobs created. In addition the 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. The committee asked if the City could make one piece of financing development abatement and the other piece increment financing. 1 Ms. Barsness replied that the differences between the two would make them incompatible within a single development. Abatement has more involved with other authorities and requires additional approval. Mr. Grochala stated that these would not be used on the same project and that abatement is more permissive. He continued that both have different revenue and support mechanisms. These tools would be used on a by project basis. The committee asked about if residential projects and if TIF would be a good use. Mr. Grochala stated that residential is different than commercial or industrial projects. He stated that increment financing would not work well for them and that abatement would be a more appropriate tool. TIF needs to be used on a single parcel or project that the tool is being used whereas abatement can be used on separate disparate properties within a jurisdiction. Ms. Barsness stated that TIF has limitations on what the money can be used on, but abatement is wider in scope for what the funds can be used for, but generally would have less money available for the project and require additional approvals. The committee asked if abatement is using a certain dollar amount on what the project is valued today and how long abatements typically take to be approved. Mr. Grochala answered that the abatement could be on the future value of the land like TIF. He also stated that the city still has both tax increment districts and abatement districts, Woods Edge and the Marshan Industrial Park are both in TIF districts. While the YMCA and the Lino Lakes fire hall are both abatement projects. Ms. Barsness added that abatement approval can vary, but can typically take 2 to 3 months from initial application to approval. Ms. Barsness began a discussion on what City objectives should be for TIF and abatement policies. Her first question was if City policies should still be specific to the town center area or to expand it to city wide. The Committee agreed that it should be expanded to include the entire city. Ms. Barsness asked next if the city should keep language about creating options for affordable housing or to include life cycle housing instead as it includes more options and affords the city more flexibility towards what kind of development can receive benefits. The Committee agreed that the language should provide more flexibility and questioned if the city wanted to be more open to retirement communities and housing for older people. Mr. Grochala stated that it was a question that is going to be looked at for the upcoming comprehensive plan. Mr. Grochala stated that abatement could be used to increase design standards for specific developments. Ms. Barsness asked if upfront payment should be included in the language or if its normal practice. Mr. Grochala answered that it is usually pay as you go, but that the language should stay to allow the City to bond for projects upfront. 2 Ms. Barsness next asked the committee if the language should be altered to provide the most amount of assistance and what limits should the city set for assistance. The committee inquired if this would include blight and what the City defines as blight. Mr. Grochala stated that it is statute and would require an inspector that would show that the cost to upgrade or repair a building exceeds the current value of it. He further explained that the 49 Club building was inspected and approved as blight and TIF was sued for its demolition and site cleanup. Mr. Grochala asked if the percentage for assistance on a project should stay as -is in the document. He stated that the 16% cap from the city keeps the developer with skin in the game on a project. The Committee agreed that the 16% cap is something that should stay as -is. The Committee discussed that project value is different than project cost and could be less than construction costs and minimum value agreements are needed to ok any TIF district to guarantee a revenue stream. This discussion was tabled for further conversation in a future meeting. b. Woods Edge Development Interest Mr. Grochala began the discussion by explaining that there is interest in developing the remaining large block in the Woods Edge development with a senior campus for the site. The original plan was for a mixed use district with commercial pads and residential above commercial uses. The area has been hoped for commercial to keep an active town center feeling to the area. The developer has submitted concept plans of a 200 unit facility with 100 independent living units and assisted living units for the remainder. The developer would maintain a retail pad nearer to Lake Drive with some first floor commercial abutting the community green area. All existing senior buildings in the area are 100% occupied currently. The city has some concern about the vertical mixed use, but the developer wants to build amenities onsite for residents and having them available for the public as well. Mr. Grochala asked the committee if the proposal is something the City should be interested in pursuing further. Committee members asked if there are similar projects in the area and if this would create too much senior living in the Woods Edge area. Mr. Grochala responded that the development near the Tria event center is similar and has been successful and that the City has some concern about having too much of a single housing type in the area, but with the townhome development coming online that the age mix could be fine. He also stated that the value of the project could be high enough on its own to merit construction. The Committee discussed the merits of senior living communities and the lack of them currently in the City. The Committee thought that this development fits the area as there is ample retail nearby, easy access to the freeway, a large programmable green space adjacent and would be compatible with the housing options currently being constructed and already existing in the area. The Committee recommends that the city should pursue continuing to discuss the possibility with the developer. c. Projects Update Mr. Grochala stated that Lennar is still in the process of purchasing the site and the Planning and Zoning Board had approved the changes on the master at the last meeting and the City Council will see and make a decision on the changes soon. Mr. Grochala also mentioned that Lennar is looking to start phase one by as early as next spring. ADJOURNMENT The meeting was adjourned at 9:17 AM. 4 ECONOMIC DEVELOPMENT ADVISORY COMMITTEE AGENDA ITEM 3A STAFF ORIGINATOR: Michael Grochala EDAC MEETING DATE: November 2, 2017 REQUEST: Incentive Policy Update Cont. 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. This discussion is a continuation of the one discussed in the October 51h meeting. EDAC CONSIDERATION Staff is requesting continued 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 IIjurisdictions 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 4 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 10 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 *O 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 CITY OF LINO LAKES LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY BUSINESS SUBSIDY CRITERIA (Revised June 13, 2016) Section 1. Purpose; Statutory Compliance 1.01 The purpose of this document is to establish the criteria to be considered by the City of Lino Lakes (the "City") and the Lino Lakes Economic Development Authority (the "EDA") in processing, evaluating and reviewing requests for business subsidies. It is the intent of the City and the EDA in adopting these revised criteria to comply with Minnesota Statutes, Sections 116J.993 through 116J.995 (the "Business Subsidy Act"). The City and the EDA hereby adopts the definitions contained in the Business Subsidy Act for application in the criteria. 1.02. Business subsidy criteria were adopted by the City on July 23, 2001, revised on June 23, 2003 and are hereby further revised. The Board of the EDA adopted the revised business subsidy criteria on the date hereof. The City and the EDA have the option to amend these criteria again in the future if doing so is determined necessary or appropriate. Amendments to these criteria are subject to the public hearing requirements of the Business Subsidy Act. 1.03. These criteria are intended to set specific minimum requirements which recipients must meet to be eligible to receive business subsidies. Neither the City nor the EDA will adopt business subsidy criteria on a case by case basis. 1.04. In accordance with the Business Subsidy Act, all business subsidy requests must comply with the Business Subsidy Act and other applicable Minnesota statutes. The City's and the EDA's ability to grant business subsidies is subject to the limitations established in the Business Subsidy Act. Section 2. Goals, Objectives, and Requirements 2.01 It is the City's and the EDA's intent to advance the following goals and objectives in granting business subsidies: (a) Projects must be consistent with City's comprehensive plan and any other similar plan or guide for development of the community. (b) Business subsidies will not be provided to projects which have the financial feasibility to proceed without a public subsidy. 2.02 When applying for a business subsidy, potential recipients will be required to provide such studies, reports, appraisals, financial information or other data as may be requested by the City or the EDA prior to consideration of a request for a business subsidy. 479195v2 2.03 Business subsidies must be justified by evidence that the project cannot proceed without the benefit of the subsidy. If tax increment financing is used to grant a subsidy, the recipient must demonstrate compliance with all statutory requirements of the TIF Act, including the "but for" test, if applicable, and any TIF policy adopted by the City or the EDA. The recipient will be required to provide all documentation necessary for the City or the EDA to make the requisite findings under the TIF Act and the Business Subsidy Act. 2.04 Recipients will be required to enter into an agreement with the City or the EDA which is consistent with statutory requirements and which contains measurable, specific and tangible goals. The agreement must include a commitment to remain in business in Lino Lakes for a minimum of five years after the benefit date (as defined in the Business Subsidy Act, benefit date means the date the item or work paid for with the business subsidy is placed in service), unless waived by the City or the EDA, and a requirement to comply with the specific job and wage goals established for the project, if any. Section 3. Business Subsidy Criteria 3.01 The City and the EDA recognizes that every proposal is unique. Nothing in these criteria shall be deemed to be an entitlement or to establish a contractual right to a subsidy. The City and the EDA may modify these criteria from time to time and reserves the right to evaluate each project on its individual merits. The City and the EDA may deviate from these criteria by documenting in writing the reason for the deviation and attaching a copy of the document to its next annual report to the Minnesota state agency charged with administration thereof. 3.02 The following criteria shall be utilized in evaluating a request for a business subsidy: (a) Public purpose. A business subsidy must meet a public purpose, including but not limited to increasing the tax base. Job retention may only be considered a public purpose if the loss of jobs is specific and demonstrable. (b) Increase in tax base. While an increase in the tax base cannot be the sole rounds for granting a subsidy, the City and the EDA believe it is a necessary condition for any subsidy. (c) Jobs and Wages. In instances in which job creation is determined to be a goal, the City and the EDA will review all of the unique circumstances surrounding the proposed development to determine how many jobs should be required in exchange for the proposed subsidy. If job creation is determined to be one of the main goals of a proposed development, it is the City's and the EDA's intent that the recipient create the maximum number of livable wage jobs at the site.. with no fewer than 5 jobs. This may include jobs to be retained but only if retention is specific and demonstrable. The job and wage goal must be attained within two years of the benefit date (as defined in the Business Subsidy Act). The City and the EDA may, after a 479195v2 public hearing, extend for up to one year the period for meeting the job and wage goal. Qualifying jobs are those which pay, at a minimum, 110 percent of the federal minimum wage, plus benefits. Any deviation from the established wage level must be documented in conformity with the requirements set forth in the Business Subsidy Act. If the City or the EDA, following a public hearing, determines that job creation or retention is not part of the public purpose of the subsidy, the wage and job goal may be set at zero. (d) Economic Development. Projects should promote one or more of the following: 1. Encourage economic and commercial diversity within the community; 2. Contribute to the establishment of a critical mass of commercial development within an area; 3. Increase the range of goods and services available or encourage fast growing or other desirable businesses to locate or expand within the community; 4. Promote redevelopment objectives and removal of blight, including pollution cleanup; 5. Promote the retention or adaptive reuse of buildings of historical or architectural significance; 6. Promote additional or spin-off development within the community; 7. Development of safe and affordable housing; or 8. Encourage full utilization of existing or planned infrastructure improvements. Section 4. Compliance and Reporting Requirements 5.01 Any subsidy granted by the City or the EDA will be subject to the requirement of a public hearing; if necessary. 5.02 It will be necessary for both the recipient and the City or the EDA to comply with reporting and monitoring requirements of the Business Subsidy Act. 5.03 A recipient may be authorized to move from the City within five years of the benefit date (as defined in the Business Subsidy Act) only if, after a public hearing, the City or EDA approves the request to move. The City or EDA may discontinue the subsidy if the recipient moves from the City. 479195v2 ECONOMIC DEVELOPMENT ADVISORY COMMITTEE AGENDA ITEM 3B STAFF ORIGINATOR: Michael Grochala EDAC MEETING DATE: November 2, 2017 REQUEST: Hodgson Road & Cty Rd J Concept Plan BACKGROUND In January of 2016 the property owner of 6075 Hodgson Road approached the City in developing their parcel with a higher density residential concept consisting of townhomes and multi -family. Staff asked for the plan to be revised to include the four parcels at the corner of Hodgson Road and County Road J for a commercial component. The property owner attempted to come to an agreement to include the parcels in the current proposal, but was unable to reach an agreement with a property owner. Therefore, the concept plans for 50 attached townhomes, a 32 unit senior housing complex and an 80 unit market rate apartment on the 6075 Hodgson Rd. parcel. This is the latest concept that the property owner is considering moving forward with. The master plan for the area, completed in 2007, and 2030 comprehensive plan call for this parcel to be mixed use. This proposal is for solely residential on the 6075 Hodgson Rd. parcel with possible future commercial redevelopment on the four parcels on the northwest corner of Hodgson Rd. and CR J intersection. Attached will be a copy of the master plan site layout and the current concept plan site layout for your consideration. EDAC CONSIDERATION Staff is requesting EDAC discussion regarding the concept plan for the site. ATTACHMENTS 1. Site Location Map 2. Hodgson Road & CR J Master Plan 3. Hodgson Road & CR J Concept Plan �I 4 Le a - o L4n� - •� If.Yn1%L�ALJ� -1 J x im 3 d In _ e - _ a- i LF . I I ll r u ' � r-k ;-9 -.4ft ,. 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