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HomeMy WebLinkAbout10-27-2003 EDA PacketAGENDA ECONOMIC DEVELOPMENT AUTHORITY MONDAY OCTOBER 27, 2003 6:00 P.M. 1. Call to Order and Roll Call 2. Consideration of Minutes of September 22, 2003 3. Consideration of Resolution No. 03-08 Decertifying Tax Increment No. 1-6 4. Consideration of Resolution No. 03-09 Decertifying Tax Increment No. 1-7 5. Consideration of Resolution No. 03-10 Decertifying Tax Increment No. 3-1 6. Adjourn Financing District Financing District Financing District 6 DATE 7 MEMBERS PRESENT 8 MEMBERS ABSENT 9 OTHERS PRESENT 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31. 32 33 34 35 36 37 38 39 40 41 42 43 44 45 DRAFT CITY OF LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY MINUTES September 22, 2003 : J. Bergeson, D. Carlson, C. Dahl, J. O'Donnell, J. Reinert None Mary Divine, Dan Tesch, Michael Grochala and Bill Hawkins CONSIDERATION OF MINUTES OF AUGUST 11, 2003 EDA Member Bergeson moved to approve the August 11, 2003 minutes, as presented. EDA Member O'Donnell seconded the motion. Motion passed unanimously. PUBLIC HEARING: PROPOSED BUSINESS SUBSIDY TO PANATTONI DEVELOPMENT, LLC EDA President Carlson opened the public hearing at 6:09 p.m. Ms. Divine summarized the Staff report, indicating the Economic Development Advisory Committee has reviewed this project The committee recommended the EDA support the project, since it met the necessary subsidy criteria, building standards, zoning codes and the Comprehensive Plan land use designation. EDA Member Bergeson indicated there was discussion at the work session about fiscal disparities. He asked Ms. Divine to review that topic. Ms. Divine indicated the question was whether the city had to take fiscal disparities from within this TIF District, which reduces the amount available for TIF. She stated she has since learned that last year Legislation was passed that requires it be taken from within the District, if it is an Economic Development District. EDA Member O'Donnell stated they talked about costs associated with TIF. He questioned what the project cost will be. Ms. Divine indicated about $12 million. Rob Davidson, representing DAI, indicated one thing that was undetermined at the work session was the number of years that might be appropriate. He indicated they are in a 10-year district, and will create eight years of increment within that district. He noted the City's TIF consultant said there really is not a right answer, and he has to agree. He indicated the only person who can answer the question is the person who will pay the taxes each year, which is the President of the company, and he believes eight years is the length of time that would allow him to make this project work on this site. EDA Member Bergeson asked if eight years represented the $1.1 million figure. Mr. Davidson indicated that was correct. EDA MINUTES DRAFT 46 Ms. Divine indicated at the request of the Council they ran numbers showing from five years up to 47 eight years, with eight years being $1.1 million. She noted at five years the company's rental rates are 48 10 cents a square foot away from what the business had requested. If they went seven years it brings 49 them to $5.89 per square foot, which is .01 cent from the original request. She added their revised 50 request is $5.84. 51 52 EDA Member Dahl moved to close the public hearing at 6:20 p.m. EDA Member Bergeson seconded 53 54 55 A. CONSIDERATION OF RESOLUTION NO.03-06, APPROVING A CONTRACT FOR 56 PRIVATE DEVELOPMENT BY AND BETWEEN THE LINO LAKES EDA AND 57 PANATTONI DEVELOPMENT, LLC 58 59 Ms. Divine summarized the Staff report, indicating there have been minor language changes in the 60 last few days, but none of them affect the overall agreement. She stated Staff recommends approval. 61 She clarified that if the Board approves the agreement, they may, under separate motion, want to 62 authorize a Subordination Agreement. 63 64 Ms. Divine explained that section 5.2 discussed the Subordination Agreement, and she reviewed that 65 section for the Board. She noted the language is in all of the City's agreements, but if the lender 66 requests a separate Subordination Agreement it must be done under a separate motion. 67 68 EDA Member Bergeson asked if $127,000 a year is the total tax subsidy; City, School District and 69 County. Ms. Divine indicated it is. EDA Member Bergeson stated in terms of a decision on the 70 number of years, the City's portion would be about $40,000 a year. Ms. Divine indicated that was 71 correct. 72 73 EDA Member Bergeson moved to adopt Resolution No. 03-06 approving a contract for private 74 development and awarding the sale of, and providing the form, terms, covenants and directions for the 75 issuance of its $638,400 tax increment revenue note, Series 2001, contingent on City Council 76 approval of the EAW and Preliminary Plat. EDA Member Bergeson seconded the motion. 77 78 EDA Member Dahl asked if this is the actual subsidy approval. Ms. Divine indicated it is; they are 79 approving $638,000, with the requirement of four new jobs over two years: 80 81 EDA Member Bergeson noted that at the work session EDA Member O'Donnell brought up the 82 subject of the 'but for' test. He is not sure how to assess that. He stated the issue was raised, but he is 83 not sure they received an answer. He indicated this is an important project for the City and within 84 reason they need to do what it takes to make it work, but he does not know how to determine it meets 85 the 'but for' rationale. 86 87 Ms. Divine stated that can be subjective, that this request was based on the target base rent needed to 88 make the project comparable to other rents. She indicated the City's TIF Consultant evaluation was 89 that five years stayed within the policy and scope of what has been approved over the last several 90 years, and was within the acceptable range. the motion. Motion carried unanimously. EDA MINUTES DRAFT SEPTEMBER 22, 2003 Mr. Davidson indicated Ms. Divine described the basis for their request. He stated they are hoping to 93 get within the economic market range for going ahead with this project, noting without this subsidy 94 the cost of the project would make it economically out of reach. 95 96 EDA Member O'Donnell noted the job growth is at the required minimum, and asked if there was any incentive to go beyond the minimum. Mr. Davidson stated he spoke with the President of the 98 company this afternoon on wage goals, noting they are committed to four jobs at a minimum of $10 99 per hour. He indicated the penalty for failing to achieve the job goals is severe. He believes they 10o have some range on salaries, and will not gravitate to the lowest wage. He stated they are feeling 101 good about the growth they can have, but also have to be conservative. He added in addition to their 102 regular employees they have a great number of temporary employees they employ year round. 103 104 EDA Member O'Donnell stated he understands the uncertainty, and there is some of that on the part 105 of the City as well, not knowing what the future holds for cities. He stated there is a 2 to 2.5% 106 difference between what the company wants and what this subsidy is proposing. He indicated given 107 what he knows, and without having all the answers on the 'but for', he would be in support of the five 1o8 year recommendation on the table now. 109 110 Patrick Pelstring offered two suggestions that might move them toward a resolution to meet the 111 customer's needs. He indicated the average wage is $13.37. He believes a couple of the jobs will be 112 above the $10.00 minimum. He stated the other aspect is that they originally looked at $5.88 per 113 square foot. Seven years gets them to $5.89. He indicated given their discussion if they could move 114 into that range it would be helpful. 115 116 EDA Member Dahl suggested they poll the Authority. She stated she is hearing some of the members 117 may be in favor of a longer term. She also stated she has a history of voting no on TIF subsidies. She 118 does not believe they should be necessary and no one has ever convinced her otherwise. She believes 119 you should be able to make it on your own, especially with the low interest rates. She stated the City 120 relies heavily on their TIF Consultant; however everyone who cannot afford what they want has to cut 121 back. She indicated the developer has the option of making it a smaller project and adding on when 122 they can afford it. 123 124 EDA President Carlson stated if the motion on the floor fails they can introduce a second motion. 125 126 Motion carried. EDA Member Dahl opposed. 127 128 B. CONSIDERATION OF A SUBORDINATION AGREEMENT 129 130 Ms. Divine reviewed the Subordination section of the contract. 131 132 EDA President Carlson asked if they would need to vote on this at the City Council meeting also. 133 Ms. Divine indicated they would not. 134 EDA MINUTES DRAFT 135 EDA President Carlson verified the City Attorney had reviewed the information and recommended 136 this action. Ms. Divine stated the City's TIF Attorney made the recommendation. 137 138 EDA Member Bergeson moved to adopt a resolution authorizing a Subordination Agreement between 139 the City of Lino Lakes and the lender for the developer. EDA Member O'Donnell seconded the 140 motion. 141 142 Motion carried. EDA Member Dahl opposed. 143 144 145 146 147 148 Ms. Divine summarized the Staff report, indicating Staff recommends approval of the resolution. 149 150 EDA Member O'Donnell moved to adopt Resolution No. 03-07 authorizing preparation of a modified 151 - program for Development District No. 1 and the establishment of Redevelopment Tax Increment 152 Financing District No. 1-11. 153 154 Motion carried unanimously. 155 156 ADJOURNMENT 157 158 159 160 161 Meeting adjourned at 6:43 p.m. 162 163 164 165 166 167 CONSIDERATION OF RESOLUTION NO. 03-07 AUTHORIZING THE PREPARATION OF A PLAN TO MODIFY DEVELOPMENT DISTRICT NO. 1 AND TO ESTABLISH REDEVELOPMENT TAX INCREMENT FINANCING DISTRICT NO. 1-11 There being no further business, EDA Member O'Donnell moved to adjourn. EDA Member Bergeson seconded the motion. Motion passed unanimously. Transcribed by: Karen Whaley TimeSaver Off Site Secretarial, Inc. AGENDA ITEM 3 STAFF ORIGINATOR: Mary Alice Divine DATE: 10/27/03 TOPIC: Resolution No. 03-08 Decertifying Tax Increment Financing District No. 1-6, Apollo Business Park BACKGROUND: Tax Increment Financing District No. 1-6 was established in 1994 as a one - project district to provide assistance to UDOR U.S.A. The obligations in that district have been satisfied. This resolution terminates the district as of November 15, 2003. This project, totaling approximately $375,000 in market value, will add an additional $3,000 of city taxes on the tax rolls as of the second half of 2003. OPTION 1. Adopt Resolution No. 03-08 Decertifying Tax Increment Financing District No. 1-6 2. Return to staff for further consideration RECOMMENDATION: Option 1 RESOLUTION 03-08 TERMINATING TAX INCREMENT FINANCING DISTRICT 1-6 AND DIRECTING DECERTIFICATION THEREOF BY THE COUNTY, AUDITOR WHEREAS, by adoption of a resolution on August 11, 1994, the Economic Development Authority of the City of Lino Lakes, Minnesota (the "Authority") has heretofore created Tax increment Financing District 1-6 (the "District"), located within Development District No. 1, and has approved a Tax Increment Financing Plan (the "TIF Plan"), for the District to provide assistance to the UDOR; and WHEREAS, the County Auditor of Anoka County has certified the original net tax capacity and the original local tax rate of the District pursuant to the provisions of Minnesota Statutes, Section 469.177; and WHEREAS, as of the date hereof, all of the projects have been completed, all obligations to which tax increment from the District has been pledged have been paid in full or defeased, and the Authority has determined that it is in the best interests of the City to terminate and decertify the District. NOW, THEREFORE, BE IT RESOLVED by the Economic Development Authority of the City of Lino Lakes, Minnesota that: (1) Tax Increment Financing District 1-6 is hereby terminated as of November 15, 2003. (2) The Clerk -Administrator shall provide a certified copy of this resolution to the County Auditor of Anoka County so that the District may be decertified on the books and records of the County Auditor with no further tax increment from the District being remitted to the City. Adopted by the Lino Lakes Economic Development Authority on the 27th day of October 2003. Executive Director STAFF ORIGINATOR: Mary Alice Divine DATE: 10/27/03 TOPIC: Resolution No. 03-09 Decertifying Tax Increment Financing District No. 1-7, Apollo Business Park BACKGROUND: Tax Increment Financing District No. 1-7 was established in 1995 to provide assistance to businesses to develop the Apollo Business Park. The businesses within the district are Mag Con, Emergency Apparatus Maintenance, Lino Lakes Business Center Phases 1, 2, 3, and 4, Progressive Engineering, Nol-Tech and Rice Industries. These businesses have added approximately $10 million in market value to the city's tax base, hundreds of jobs and approximately $92,000 in city taxes. The obligations in that district have been satisfied. This resolution decertifies the District as of November 15, 2003. OPTION 1. Adopt Resolution No. 03-09 Decertifying Tax Increment Financing District No. 17 2. Return to staff for further consideration RECOMMENDATION: Option 1 RESOLUTION 03-09. TERMINATING TAX INCREMENT FINANCING DISTRICT 1-7 AND DIRECTING DECERTIFICATION THEREOF BY THE COUNTY AUDITOR WHEREAS, by adoption of a resolution on May 22, 1995, the Economic Development Authority of the City of Lino Lakes, Minnesota (the "Authority") has heretofore created Tax Increment Financing District 1-7 (the "District"), located within Development District No. 1, and has approved a Tax Increment Financing Plan (the "TIF Plan"), for the District to provide assistance to several projects within the District; and WHEREAS, the County Auditor of Anoka County has certified the original net tax capacity and the original local tax rate of the District pursuant to the provisions of Minnesota Statutes, Section 469.177; and WHEREAS, as of the date hereof, all of the projects have been completed, all obligations to which tax increment from the District has been pledged have been paid in full or defeased, and the Authority has determined that it is in the best interests of the City to terminate and decertify the District; and WHEREAS, there remains an excess balance of tax increments collected from within the District. NOW, THEREFORE, BE IT RESOLVED by the Economic Development Authority of the City of Lino Lakes, Minnesota that: (1) Tax Increment Financing District 1-7 is hereby terminated as of November 15, 2003. (2) The Clerk -Administrator shall provide a certified copy of this resolution to the County Auditor of Anoka County so that the District may be decertified on the books and records of the County Auditor with no further tax increment from the District being remitted to the City. (3) The balance of excess tax increments shall be returned to the County Auditor of Anoka County for redistribution to the appropriate taxing jurisdictions. Adopted by the Lino Lakes Economic Development Authority the 27th day of October 2003. President Executive Director