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HomeMy WebLinkAbout04-01-2019 Council Packet 2Updated 3/29/2019 CITY COUNCIL WORK SESSION AGENDA CITY OF LINO LAKES Monday, April 1, 2019 Community Room 6:00 P.M. 1. Preview for Board of Appeal and Equalization, Anoka County Assessor Alex Guggenberger 2. Access to Channel 16, NMTV Executive Director Heidi Arnson 3. Lyngblomsten Financial Assistance Request, Mikaela Huot (Springsted), Michael Grochala 4. Well No. 7 Test Well revisions, Greg Johnson (WSB), Diane Hankee 5. Garbage Haulers, Mayor Reinert 6. Environmental Resource Inventory, Marty Asleson 7. Environmental Coordinator Salary Adjustment and Succession Planning, Karissa Bartholomew 8. Recreation Complex Discussion, Rick DeGardner 9. Council Updates on Boards/Commissions, City Council 10. Monthly Progress Report, Jeff Karlson 11. Review Regular Agenda 12. Adjourn 2019 ASSESSOR’S REPORT BOARD OF APPEAL AND EQUALIZATION Anoka County City of Lino Lakes 1 2019 Local Board of Appeal and Equalization Agenda May 6, 2019 1. Call the Board of Review to Order 2. Roll Call 3. Read Official Notice of the Board of Review 4. Board Chair outlines the ground rules for the meeting. The specific ground rules may vary for each local board but should include: • Purpose of the meeting; • Remind property owners that only appeals for the current year valuation or classification may be made. The 2019 board is to review the assessment as of January 2, 2019, which will be used to compute the property taxes payable in 2020. Prior years’ assessments or taxes (including taxes payable in 2019) are not within the jurisdiction of the board; • The order of the appellants - by appointment first, followed by walk-ins on a first-come basis. The board will also receive written appeals from property owners. The secretary will record the required information (name, mailing address, telephone number, and address of property, etc.) • The expectations of the appellant when presenting their appeal (i.e. the appeal must be substantiated by facts; where the appellant should stand or sit; the appellant should be prepared to answer questions posed by the board, etc.); • Time limits imposed (if any); • The procedure the board will follow for making decisions (Will the board hear all appeals before making any decisions? Will the board send a letter to appellants to inform them of the decision? Etc.) The Board may correct any erroneous valuation and add any omission of properties or increase of value after due process. The total decrease of valuations may not exceed one percent of the total valuation of the taxing district; 5. The Board Chair should give the assessor the opportunity to present a brief overview of the property tax process and a recap of the current assessment. 6. Appellants should then present their appeals to the board. If the assessor has had a chance to review the property prior to the meeting, the assessor can present facts and information either supporting the valuation and or classification, or recommend that the board make a change. If the assessor has not had a chance to review the property prior to the meeting, the board may ask the assessor to review the property and present his/her findings to the board at a reconvene meeting. 7. Recess or Close the Meeting. (If needed, the meeting will be reconvened at a date to be determined. The Board of Appeal and Equalization of any city must complete its work and adjourn within twenty days from the time of convening as specified in the notice of the clerk, unless a longer period is approved by the Commissioner of Revenue. No action taken subsequent to such date shall be valid.) Anoka County City of Lino Lakes 2 Understanding Your Assessment and Appeal Options Assessment Process Timeline In Minnesota it is the duty of the Assessor to value and classify property. This is done annually as of the assessment date of January 2nd. Each year's assessment is based on arms-length transactions (sales that meet the criteria of an open market transaction, see market value definition below) that occurred the previous October thru September. When the assessment is completed the local taxing jurisdictions begin their budgeting process for the following year. They use the total assessment to determine their tax base and develop their tax rates (formerly referred to as mill rates). All aspects of the assessment, including but not limited to the assessment date, sales period for each assessment and property tax classification are dictated by state statute and under the oversight of the Minnesota Department of Revenue. Market Value Defined As in private appraisal, Market Value is defined as: The most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by any undue stimulus. Implicit in this definition are the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: • buyer and seller are typically motivated: • both parties are well informed or well advised, and acting in what they consider their own best interests; • a reasonable time is allowed for exposure in the open market; • payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; • the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale (a foreclosure sale or a short sale [a sale to avoid foreclosure] is not considered an arms-length transaction). Mass Appraisal Defined Property values for Minnesota real estate tax purposes are determined via mass appraisal. Mass appraisal is the practice of determining individual values based on statistical analysis of a group of sales for a large area. The values are determined as of a specific date and are based on arms-length transactions that occurred during a specified sales period. Anoka County City of Lino Lakes 3 Sales Statistics Defined We have the ability by using statistical analysis to test the accuracy of the assessment. We use these statistics to ensure equity between properties at the neighborhood, municipal and county levels. The Minnesota Department of Revenue also uses these same techniques to test for equity between counties. The primary statistics used are: Median Ratio: This is a measure of central tendency that is the midpoint of a group of sales ratios when arrayed from low to high. The median is a useful statistic as it is not affected by extreme ratios. Aggregate Ratio: This is the total market value of all sale properties divided by the total sale prices. It, along with the mean ratio, gives an idea of our assessment level. Within the city, we constantly try to achieve an aggregate and mean ratio of 94% to 95% to give us a margin to account for a fluctuating market and still maintain ratios within state mandated guidelines. Also referred to as the Weighted Mean. Mean Ratio: The mean is the average ratio. We use this ratio not only to watch our assessment level, but also to analyze property values by development, type of dwelling and value range. These studies enable us to track market trends in neighborhoods, popular housing types and classes of property. Coefficient of Dispersion (COD): The COD measures the accuracy of the assessment. It is possible to have a median ratio of 93% with 300 sales, two ratios at 93%, 149 at 80% and 149 at 103%. Although this is an excellent median ratio, there is obviously a great inequality in the assessment. The COD indicates the spread of the ratios from the mean or median ratio. The goal of a good assessment is a COD of 10 to 20. A COD under 10 is considered excellent and anything over 20 will mean an assessment review by the Department of Revenue. Price Related Differential (PRD): This statistic measures the equality between the assessments of high and low valued property. A PRD over 100 indicates a regressive assessment, or the lower valued properties are assessed at a greater degree than the higher. A PRD of less than 100 indicates a progressive assessment or the opposite. A perfect PRD of 100 means that both higher and lower valued properties are assessed exactly equal. Appeals Procedure Each spring Anoka County sends out a property tax bill (based on the prior year assessment) along with the Notice of Valuation and Classification. Three factors that affect the tax bill are: 1. The amount your local governments (town, city, county, etc.) spend to provide services to your community; 2. The estimated market value of your property; 3. The classification of your property (how it is used). The assessor determines the final two factors. You may appeal the value or classification of your property as described on the next page. Anoka County City of Lino Lakes 4 Informal Appeal • Property owners are encouraged to call the appraiser or assessor whenever they have questions or concerns about their market value, classification of the property, or the assessment process. • Almost all questions can be answered during this informal appeal process. • When taxpayers call questioning their market value, every effort is made to make an appointment to inspect properties that were not previously inspected. • If the data on the property is correct, the appraiser can show the property owner other sales in the market that support the estimated market value. • If errors are found during the inspection, or other factors indicate a value reduction is warranted, the appraiser can easily make the changes at this time. Local Board of Appeal and Equalization • The Local Board of Appeal and Equalization is typically made up of city council members or township board members. In certain cases, a special board is appointed and is typically consists of real estate professionals. • The Board meets during late April and early May. • Taxpayers can make their appeal in person or by letter. • If an interior inspection is denied no adjustment can be made to value per MN Statute. • The assessor is present to answer any questions and present evidence supporting their value. County Board of Appeal and Equalization • In order to appeal to the County Board of Appeal and Equalization, a property owner must first appeal to the Local Board of Appeal and Equalization. • The County Board of Appeal and Equalization follows the Local Board of Appeal and Equalization in the assessment appeals process. • Again, if an interior inspection is denied no adjustment can be made to value per MN Statute. • Their role is to ensure equalization among individual assessment districts and classes of property. • Decisions of the County Board of Appeal and Equalization can be appealed to the Minnesota Tax Court. Minnesota Tax Court The Tax Court has statewide jurisdiction. Except for an appeal to the Supreme Court, the Tax Court shall be the sole, exclusive and final authority for the hearing and determination of all questions of law and fact arising under the tax laws of the state. There are two divisions of tax court: the small claims division and the regular division. The Small Claims Division of the Tax Court only hears appeals involving one of the following situations: • The assessor’s estimated market value of the property is <$300,000 • The entire parcel is classified as a residential homestead and the parcel contains no more than one dwelling unit. • The entire property is classified as an agricultural homestead. • Appeals involving the denial of a current year application for homestead classification of the property. The proceedings of the small claims division are less formal and property owners often represent themselves. There is no official record of the proceedings. Decisions made by the small claims division are final and cannot be appealed further. Small claims decisions do not set precedent. Anoka County City of Lino Lakes 5 The Regular Division of the Tax Court will hear all appeals, including those with the jurisdiction of the small claims division. Decisions made here can be appealed to a higher court. The principal office for the Tax Court is in St. Paul. However, the Tax Court is a circuit court and can hold hearings at any other place within the state so that taxpayers may appear with as little inconvenience and expense to the taxpayer as possible. Appeals of property located in Anoka County are heard at the Anoka County Courthouse. Three judges make up the Tax Court. Each may hear and decide cases independently. However, a case may be tried before the entire court under certain circumstances. The petitioner must file in tax court on or before April 30 of the year in which the tax is payable. Anoka County City of Lino Lakes 6 Lino Lakes Assessment Overview Lino Lakes Assessment Staff Name Position License Level Responsibility Scott Schutz Residential Appraiser SAMA Residential 1-3 Units Shawn Halligan Senior Appraiser CMA – Income Qualified Apartments Dan Eischens Senior Appraiser SAMA Commercial/Industrial/Exempt Alex Guggenberger County Assessor SAMA Countywide Oversight City of Lino Lakes Property Breakdown Property Type Number of Parcels Vacant Residential 610 Improved Residential 6,742 Apartment (Vacant & Improved) 9 Commercial/Industrial (Vacant & Improved) 201 Public Utility 8 Mobile Homes 94 Total 7,657 2019 Assessment As part of this mass appraisal process, all properties are re-valued annually based on the information on record. Properties are physically inspected and property records reviewed once every 5 years (as statutorily required). This is an ongoing process whereby 20% (referred to as quintile) of a city is inspected each year so that in a cycle of 5 years all properties have been inspected at least once. In addition to this quintile review, properties are also inspected when there is a building permit issued or at the request of the property owner. The sale of a property does not initiate a reassessment. The map on the next page depicts the residential quintile plan for the next 5 years. Anoka County City of Lino Lakes 7 Anoka County City of Lino Lakes 8 As stated earlier, Minnesota state law governs the assessment date, which is January 2nd of each year, as well as the sales periods associated with each assessment date. The 2018 assessment which was used for tax calculations this year (2019) was based on transactions that closed between October 1, 2016 and September 30, 2017. Property owners were notified of their 2018 value on their Notice of Valuation and Classification (also referred to as a valuation notice). The notices were mailed out in March of 2018 in the same envelope as the tax statement. The appeals process took place at the municipal level during the month of April of 2018 and at the county level in June of 2018. At this point, if a property owner wishes to appeal their 2018 assessment (for taxes payable 2019) their only option is to file a tax court petition. This must be done no later than April 30, 2019. The 2019 assessment was completed in February and the valuation notices were mailed the week of March 18th. The 2019 assessed value will be used for tax calculation purposes next year. The sales period associated with this assessment is October 1, 2017 thru September 30, 2018. As with past assessments, the local appeals process will begin in April and finish up in June. The options and requirements to appeal this assessment are listed on the back of the valuation notice. If a property owner has an issue with their 2019 assessment, the first thing they should do is contact their local assessor. The phone numbers are listed on their valuation notice. Please note that only arms-length sales that closed between October 1, 2017 and September 30, 2018 have been used to determine valuations for the 2019 assessment, for taxes payable in 2020. The following chart may be helpful in following the timeline of your assessment: SALES PERIOD ASSESSMENT DATE TAX YEAR October 1, 2015 to January 2, 2017 2018 September 30, 2016 October 1, 2016 to January 2, 2018 2019 September 30, 2017 October 1, 2017 to January 2, 2019 2020 September 30, 2018 Anoka County City of Lino Lakes 9 We are aware that due to the time frames we are required to work within it sometimes appears as though the assessor’s estimated market value does not represent the market. It seems lower than it should be during times of inflation and higher than it should be in times of deflation. The following chart illustrates the relationship between assessed values and actual sale prices; and how the assessor’s market values have been following the changes as they occur in the open market. Note: The Median Assessor’s Estimated Market Value represents the homes that are in the sales study. One important thing to remember is the assessment process is completed before the budgeting process begins. Assessors do not adjust values in order to increase revenue. There is little correlation between changes in assessments due to market changes and how the resulting real estate tax changes. When we adjust assessments due to market conditions, all properties are adjusted. The only time that an adjustment in an assessor’s estimated market value will have an impact on the increase or decrease in tax is if the change in value is due to value added for new construction or value removed due to demolition/destruction of an improvement. 2019 Sales Statistics – Residential The table below uses various sales metrics to compare how the residential market in Lino Lakes performed compared to the rest of the county. The sales study figures were gathered using Northstar MLS data. $165,000$170,000$175,000$180,000$185,000$190,000$195,000$200,000$205,000$210,000$215,000$220,000$225,000$230,000$235,000$240,000$245,000$250,000$255,000$260,000$265,000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Median Assessed Value vs. Median Sale Price Median Sale Price Median Assessor's Estimated Market Value Metric Lino Lakes CountywideAverage Sale Price & % Change (YOY)$316,200 (+.7%)$250,700 (+6.95%)Median Sale Price % Change (YOY)$297,800 (+7.12%)$228,600 (+6.33%)Median Days on Market (DOM)55 26# of Sales & % Change (YOY)367 (+5.0%)6,172 (+4.03%)# of Arm’s Length Sales & % Change (YOY)357 (+8.0%)5,855 (+8.77%)# of Non-Arm’s Length Sales & % Change (YOY)10 (-3.0%)317 (-42.36%) Anoka County City of Lino Lakes 10 2019 Sales Ratio Statistics The tables below display the final adjusted sales ratios for Residential, Apartments, Commercial, and Industrial properties. All the numbers are within State of MN requirements and indicate a high-quality assessment with good equalization. City Town # of Sales Ratio COD City Town # of Sales Ratio COD Andover 440 94.02%5.46 Columbia Heights 6 92.15%5.92 Anoka 212 94.17%5.94 Fridley 7 90.73%4.46 Bethel 7 91.77%9.86 Countywide 25 91.85%6.56 Blaine 1026 94.56%5.62 Centerville 52 94.53%4.48 Circle Pines 84 94.35%5.61 Columbia Heights 318 94.89%10.35 City Town # of Sales Ratio COD Columbus 34 94.17%9.20 Anoka 8 96.08%8.83 Coon Rapids 927 94.21%5.12 Coon Rapids 11 96.64%9.85 East Bethel 150 94.69%8.16 Columbia Heights 6 97.21%13.47 Fridley 350 94.52%5.95 Countywide 46 94.14%15.12 Ham Lake 139 93.03%7.20 Hilltop 2 85.31%0.94 Lexington 16 94.15%7.40 Lino Lakes 227 94.31%5.40 City Town # of Sales Ratio COD Linwood 52 94.14%8.20 Blaine 9 97.24%7.64 Nowthen 25 95.69%7.28 Countywide 25 92.59%11.71 Oak Grove 71 94.50%7.00 Ramsey 415 94.64%6.52 Spring Lake Park 105 94.57%6.23 St. Francis 124 95.36%4.81 Countywide 6,964 94.40%6.03 Residential Countywide Apartments Countywide Commercial Countywide Industrial Anoka County City of Lino Lakes 11 Market Value History The graphs below indicate how aggregate values have changed over the last 5 years for each of the four largest property types. Anoka County City of Lino Lakes 12 2019 Market Value Statistics & New Construction The tables below indicate the percentage change (YOY) for each of the four largest property types as well as the total market value. The increase due to New Construction (NC) is also included in the table below. Property Type 2019 EMV % Increase % Increase Due to NCResidential$2,156,592,600 12.68%1.81%Apartment $22,726,600 6.08%N/ACommercial$97,557,000 6.50%0.02%Industrial $80,181,500 2.03%N/ATotal EMV $2,363,899,200 9.41%1.81% WS – 2 WORK SESSION STAFF REPORT Work Session Item No. 2 Date: April 1, 2019 To: City Council From: Jeff Karlson, City Administrator Re: Access to Channel 16 Background A few weeks ago, staff responded to a message from a Lino Lakes resident who complained about no longer having access to the public access channel when his receiver box ceased to function. He found out from Comcast had scrambled the signal and he could only get channel 16 through Comcast directly. The Comcast system underwent a complete digital conversion March 2013. Following the upgrade, a subscriber required digital service in order to watch any programming through the Comcast system. In 2014/2015, North Metro TV negotiated a franchise settlement agreement. Comcast had requested approval to transfer NMTV’s franchises to a newly formed company called Midwest Cable. In return for certain provisions, Comcast was released from their obligation to provide free Universal Service to any new subscribers. Subscribers who were already getting Universal Service were grandfathered in. Comcast does not have any record that the complainant was a Universal Service subscriber prior to the Settlement Agreement with Comcast. Comcast is not obligated to provide free Universal Service to subscribers unless they had Universal Service in 2014, at the time the Settlement Agreement was signed. Channel 16 can be accessed two ways in our franchise area, with a third option on the way. •Subscribing to any level of cable service. •The channel is live streamed 24/7 on the NMTV website and is accessible through the City’s website, which requires internet service. •NMTV is working to provide the City channel as an OTT (over the top) channel via Roku and Apple TV by the end of this year. This will require purchasing hardware. NMTV Executive Director Heidi Arnson will be at the work session to explain the Settlement Agreement and subsequent change in Universal Service, and to answer any questions the Council may have. Requested Council Direction No action is required. WS – Item 3 WORK SESSION STAFF REPORT Work Session Item No. 3 Date: April 1, 2019 To: City Council From: Michael Grochala, Community Development Director Re: 49 & J Redevelopment - Lyngblomsten Background The City has been working with Lyngblomsten, a senior care provider, regarding construction of a senior community in the northwest quadrant of the Hodgson Road (CSAH 49) and County Road J (Ash Street) intersection. The preliminary plat/development stage plan was recommended for approval by the Planning and Zoning Board on February 13, 2019. The City Council will be considering preliminary approval of the project at the April 8, 2019 regular council meeting. The intersection of 49 & J is a major gateway into the city and has been a high priority redevelopment objective over the past 20 years. The site has been the focus of several proposed commercial/residential development proposals. However it has proven to be a challenge for development/redevelopment due to a number of factors including: • lack of public utilities • inadequate transportation infrastructure • multiple property owners/businesses • meeting neighborhood/community expectations • development timing Over the past nine months Lyngblomsten has been working to overcome these challenges, as well as address comments received from residents, advisory boards, and the City Council. Lyngblomsten has incorporated the 4 corner properties into the site plan, obtaining purchase options on each. They have also been working with Anoka and Ramsey County Highway Departments to address some of the existing traffic concerns. While still under review, the overall plan has addressed a number of long standing city goals for the area. The total project cost is estimated at $77,000,000. Due to costs associated with the highway improvements, utility improvements and land acquisition, the developer is requesting public assistance in the form of Tax Increment Financing (TIF). Springsted Inc. is in the process of reviewing the application and has prepared a summary of the review status. Mikaela Huot, of Springsted will be present at the City Council meeting to discuss the attached memorandum, dated March 29, 2019. As more fully discussed in the memorandum, Lyngblomsten has requested Tax Increment Financing assistance in the amount of $5.3 million. The request would be “pay as you go” financing as reimbursement of eligible costs over a term of 15 years. In the past is has been the practice of the city to limit the term/assistance to the increment generated over 5 to 6 years. As noted in the memorandum Springsted is still working through the process of the evaluating the proposal. The Springsted evaluation will be the basis for the City making an informed “but for” decision on the need for assistance. The 49/J master plan did contemplate the possible need for assistance to facilitate redevelopment of the area. The project, as proposed, does address a number of City goals related to this area including: • Demolition and consolidation of existing underutilized properties. • Redevelopment of corner with new commercial opportunities • Extension of public water and sanitary sewer areas currently without service. • Extension of trunk water main through development area shortening remaining looping needs for southwest area. • Creation of approximately 130 FTE jobs with average hourly wages of $22.50/hour. • Provision of variety of senior housing options not previously provided for in the City. • The applicant will still be subject to all city fees including building permits, trunk utility and park dedication requirements. • County road improvements. • The project would generate include additional taxable market value While the review is still underway staff believes it is important to check in at this point with the council on the following questions: 1) Is the City willing to provide assistance for the project, provided the need is demonstrated; and 2) Is there a maximum term the City Council is unwilling to exceed regardless of demonstrated need i.e., 5-6 years. Requested Council Direction Staff is requesting Council direction regarding the use of tax increment financing for the proposed Lyngblomsten project. Attachments 1. Springsted Memo, dated March 29 , 2019 MEMORANDUM TO: Michael Grochala, Community Development Director, City of Lino Lakes Sarah Cotton, Finance Director, City of Lino Lakes FROM: Mikaela Huot, Vice President/Consultant DATE: March 29, 2019 SUBJECT: Financial Review of Preliminary Application for Assistance through Tax Increment Financing (TIF) for Proposed Lyngblomsten Senior Care Campus Project Background The City of Lino Lakes has received an application for financial assistance through Tax Increment Financing (TIF) to assist with financing a portion of the extraordinary development costs related to the construction of an approximate 200-unit senior care campus and 19 adjacent rental townhomes. The project also includes the acquisition of several properties on the corner of County Road J and CSAH 49 where the senior housing development will not occur but will present future development opportunities. The total investment budget including acquisition of all properties is about $77M and includes approximately $9.6M of TIF eligible expenditures including site improvements, acquisition, and demolition. City Council will be discussing the application with City staff at the April 1 work session. The purpose of this memorandum is to provide a summary of review status of the application and next steps Springsted will incorporate regarding the submitted materials. Included will be review of the development project costs, sources of revenue, and operating pro forma as provided by the developer to assist the City with making a determination if the project as proposed would be unlikely to proceed without the requested Tax Increment Financing (TIF) assistance, and to determine the appropriate amount, if any, of financial assistance based on TIF-eligible costs. Developer Request for Assistance Assistance has been requested for financing a portion of the costs associated with completion of the project. The developer has proposed the $77.2 million project will be funded by an estimated $9.8 million of equity and $66 million through a bank loan with a TIF request of $5.3 million. The developer’s submitted information provides that the request for assistance would be pay-as-you-financing as reimbursement for extraordinary development costs and has requested a term of 15 years. Additional analysis regarding the financing components, estimated amount of Springsted Incorporated 380 Jackson Street, Suite 300 Saint Paul, MN 55101-2887 Tel: 651-223-3000 Fax: 651-223-3002 www.springsted.com City of Lino Lakes, Minnesota Prelim Review of Lyngblomsten Request for TIF Assistance April 1, 2019 Page 2 available tax increment revenues and the amount necessary for the project to proceed will need to occur as the project proceeds. The total estimated sources and uses of funds is shown below: Sources Amount Uses Amount Equity $9,800,000 Property Acquisition $3,620,000 Debt $66,000,000 Building Costs $44,855,442 TIF * $5,300,000 Site Development $6,000,000 Soft Costs $19,570,162 Financing Costs $850,000 Contingencies $2,325,267 Total $77,220,871 Total $77,220,871 * TIF assistance would be provided as pay-as-you-go (reimbursement) and not upfront Tax Increment Financing Assumptions Springsted made certain assumptions to calculate the estimated amount of tax increment revenues generated by the project. Those assumptions include the following: • Estimated 6-year collection term o Maximum term for housing districts is 26 years  25 years after receipt of first increment o First year taxes payable 2022 (construction commences in 2019)  Full year collected in 2022 • Total base value for land and building o Housing District: $634,300  Parcel ID: 31-31-22-43-0018 • Total completed value following development o Housing TIF District  100 independent living units valued at $21,990,000  50 assisted living units valued at $6,840,000  Total estimated taxable value of $28,830,000  Preliminary – based on construction cost estimates • Construction schedule o Commences in 2019 and complete in 2020 o Partial value as of assess Jan. 1, 2020 for taxes payable 2021 o Full value as of assess Jan. 1, 2021 for taxes payable 2022 o Election to delay receipt of first increment until full value realized • Payable 2019 tax rates constant o Combined rate of 117.574% City of Lino Lakes, Minnesota Prelim Review of Lyngblomsten Request for TIF Assistance April 1, 2019 Page 3 o ISD 12 and watershed district included o Will change each year with actual rates • Tax rates, class rates and future market values o Rental (Housing TIF District)  1.25% • No annual market value inflator • Net present value o Discount rate of 5.0% o Subject to financing assumptions Tax Increment Revenue Estimates Based on the assumptions outlined above and the City’s past practice for terms of TIF Districts, the projected tax increment revenues that may be generated from the project are shown in the chart below. Housing TIF Estimated Total Taxable Value $28,830,000 Estimated Annual Increment (full buildout) $412,893 Total Gross Tax Increment (6 total years: first collection 2022) $2,477,358 City Retainage (5%) $123,870 Net Amount Available to Development (95%) $2,353,488 Estimated Present Value City Share $95,046 Estimated Present Value Developer Share $1,805,832 Total Remaining Increment (20 years) $8,257,860 The values for the townhomes would not be included within the boundaries of the TIF District and would be included within the taxing entities existing tax base once constructed and on the tax rolls. The construction schedule is assumed to be in conjunction with the senior care campus. In addition, redevelopment of the corner to include new commercial buildings would also enhance the tax bases and not be included in the district. Developer Pro forma But-For Analysis In approving a TIF district and project, the City must make several findings, including the “but for” test: that the proposed development would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future. The developer has stated the assistance is necessary due to the high costs of City of Lino Lakes, Minnesota Prelim Review of Lyngblomsten Request for TIF Assistance April 1, 2019 Page 4 developing/redeveloping the site, including acquisition of the 17-acre site, in addition to the properties on the corner to create a larger redevelopment opportunity. There are also significant public improvement and site development costs to allow access into the site. The project is unable to entirely support those extraordinary costs upon completion. Based on the developer’s stated position relative to the need for tax increment financing assistance, the City could make its “but for” finding and provide tax increment assistance. We recommend, however, that the City also consider an appropriate level and type of TIF assistance for the project based on the information submitted by the developer. The application includes a requested 15-year term of assistance to equal approximately $5.3 million. The City’s position relative to the use of tax increment has typically been to finance extraordinary costs and the level of assistance is in part dictated by the ‘extraordinary’ costs of the project. Historically, on past projects the maximum term of assistance has been about 5-6 years. Following thorough evaluation of the project as provided allows the City to be prepared to make an informed “but-for” decision based on the likelihood of the project needing assistance, as well as the appropriate level of assistance. The “but-for” test is used to determine whether a project is likely to proceed as proposed without the use of public dollars. To complete this analysis, we review the developer’s provided operating proforma and will also construct similar ten-year project proformas, showing a result if the developer receives the assistance as pay-as-you-go (reimbursement for TIF eligible costs) and showing a result if the developer does not receive assistance. Our analysis of the proformas include a review of the development budget, projected operating revenues and expenditures, and the project’s capacity to support annual debt service on the bank loan. The purpose of evaluating the operating proformas is to understand the potential returns to the developer through the initial development of the project and the operation of the enterprise over a period. A 10-year period may not be indicative of the developer’s intended investment period. Generally, should the rates of return lie below a reasonable range without assistance; we could assume the project as proposed would not move forward without assistance. Should the returns lie within a reasonable range with the assistance, we could assume the amount of assistance tested is appropriate for the project. All such estimates should be viewed as general indicators of performance and not exact forecasts. The number of current and future variables affecting these estimates and actual results are great. There are no set rate of return benchmarks that dictates whether a project needs TIF assistance or not; however, there are market/industry standards for certain types of projects, as well as more specific investor/developer thresholds that need to be achieved. An additional measure of project feasibility is the Debt Coverage Ratio (DCR), which is a calculation detailing the ratio by which operating income exceeds the debt-service payments for the project. If the DCR is greater than 1.0 it indicates the project has operating income that is greater than the debt-service payment by some margin; conversely if the DCR is less than 1.0 it indicates the project is incapable of meeting its debt-service payment and would need to seek additional revenue sources in order to pay its debt. Typical lending standards will require a DCR of significantly greater than 1.0 as a measure of cushion in the event actual revenues and expenses are different than projected. City of Lino Lakes, Minnesota Prelim Review of Lyngblomsten Request for TIF Assistance April 1, 2019 Page 5 Project Financing There are generally two ways in which assistance can be provided for most projects, either upfront or on a pay-as- you-go basis. With upfront financing, the City would finance a portion of the developer’s initial project costs through the issuance of bonds or as an internal loan. Future tax increment would be collected by the City and used to pay debt service on the bonds or repayment of the internal loan. With pay-as-you-go financing, the developer would finance all project costs upfront and would be reimbursed over time for a portion of those costs as revenues are available. Pay-as-you-go-financing is generally more acceptable than upfront financing for the City because it shifts the risk for repayment to the developer. If tax increment revenues are less than originally projected, the developer receives less and therefore bears the risk of not being reimbursed the full amount of their financing. However, in some cases pay as you go financing may not be financially feasible. With bonds, the City would still need to make debt service payments and would have to use other sources to fill any shortfall of tax increment revenues. With internal financing, the City reimburses the loan with future revenue collections and may risk not repaying itself in full if tax increment revenues are not sufficient. The developer’s financial information includes pay-as-you-go financing. Conclusion Per the submitted application for assistance, the developer has requested approximately $5.3 million over 15 years as related to development of the project site and construction of a senior care campus. Through the submission of the tax increment financing application and supporting financial information, the developer has indicated that the project as proposed would not occur on the current site without financial assistance from the City due to extraordinary costs associated with acquisition of the additional properties and site development/infrastructure improvements. We recommend additional review as the project proceeds relating to the following: • Identification of extraordinary project costs for reimbursement o Acquisition of redevelopment properties o Installation of public improvements • Estimated amount of assistance necessary for the project to proceed o Number of years required  City preference of maximum 6 years  Developer request of 15 years Thank you for the opportunity to be of assistance to the City of Lino Lakes. Please contact me at 651.223.3036 or 651.368.2533 or mhuot@springsted.com with any questions or comments. Attachments: Project Qualifications: Definition of Housing Districts Tax Increment Financing (TIF) District – Housing In order to establish the area identified above as a Housing TIF District, the project as proposed will need to qualify for inclusion within a housing TIF District. A housing TIF District is a type of tax increment district which consists of a project that is intended for occupancy by persons or families of low and moderate income. Revenue derived from tax increment from a housing district must be used solely to finance the cost of a housing project as defined. The cost of public improvements directly related to the housing projects and the allocated administrative expenses of the City may be included in the cost of a housing project. For the proposed project to qualify as a tax increment financing housing district, the property must satisfy the income requirements for a qualified residential rental project as defined in section 142(d) of the Internal Revenue Code. The requirements of this subdivision apply for the duration of the tax increment financing district. The income requirements are as follows: • at least 20% of units are occupied by individuals whose income is 50% or less of area median income, or • at least 40% of units are occupied by individuals whose income is 60% or less of area median income. In addition, not more than 20 percent of the square footage of the buildings that receive assistance from tax increments may consist of commercial, retail, or other nonresidential uses. Lyngblomsten Senior Housing Campus City of Lino Lakes Monday, April 1, 2019 Presenter: Mikaela Huot Vice President/Consultant 1 Proposed Senior Care Campus •City received application for financial assistance –Tax increment financing (housing) –Amount of $5.3 million over 15 years •Approximate $77 million investment –$28.8 million within district boundaries (senior building) •Annual net increment estimate of $392,248 –$6-7 million (estimate) outside boundaries •Annual estimate of City share of taxes $36,000 * * Does not include corner retail 2 Proposed Senior Care Campus •Project includes –Senior care campus •Approximately 148 independent, assisted living and memory care •Approximately 50 skilled care nursing units •Approximately 19 townhomes –Restaurant pad and adjacent retail 3 Proposed Senior Care Campus •Boundaries of proposed district –Senior care campus (198 units) •Independent, assisted and memory care units taxable and generate future increment •Skilled care units tax exempt –Townhomes and all retail/commercial excluded •Request for assistance as pay-as-you-go (PayGO) –Entire project financed upfront by developer –Developer pays annual property taxes and is reimbursed over time, to the extent increment is available Proposed Senior Care Campus 4 55 What Drives The “Gap” Or Need For Public Financing Assistance? •Extraordinary redevelopment costs •Extraordinary public improvement development costs •“Oversizing” of utility and infrastructure for future growth •Development needs more than it can pay for •Extraordinary affordable housing costs 6 Due Diligence Review •Developer has submitted application for financial assistance •Evaluation process including legal and financial to determine –Qualification as TIF District –Amount of public assistance needed for entire project to occur Questions? Mikaela Huot, Vice President/Consultant Springsted Incorporated 380 Jackson Street, Suite 300 Saint Paul, MN 55101 651-223-3036 mhuot@springsted.com 7 WS – Item #4 WORK SESSION STAFF REPORT Work Session Item No. 4 Date: March 27, 2019 To: City Council From: Diane Hankee, City Engineer Greg Johnson, WSB & Associates, Inc. Re: Screened Test Well No. 7 Background The City is proposing to construct Well No. 7 on property located at 509 Birch Street and to use the farm house as the well house. As part of the Feasibility Study the council approved a test well. The site is currently owned by Anoka County and Well No. 7 would be completed in coordination with the County. A test well is typically used to provide representative water quality samples and test pumping results to demonstrate that the site would be suitable for a future municipal well. A standard bedrock test well typically costs $30,000 to $40,000. Construction of a municipal well would cost between $275,000 to $315,000. When considering a municipal well, a test well is recommended step to obtain site- specific information regarding the depth of water-producing zones, hard layers (confining layers) that separate aquifers, well production capabilities, and most importantly groundwater quality. The depth of the test well is the same as the proposed future well itself of 300 feet. A test well is typically 6 inches in diameter and municipal well is 10 - 12 inches in diameter, thus a test well is not sized large enough to become the municipal well and would significantly reduce the amount of water supplied. During the construction of the bedrock test well the contractor, Traut Companies, drilled approximately 142-feet into the Prairie du Chien formation. The uncemented portion of the formation was not stable and continually collapsed as Traut attempted to reach the Jordan formation below. Traut then switched their drilling method and was able to make it approximately 187-feet, which was close to the top of the Jordan aquifer. However, the well continued to collapse within the uncemented zone and produced sediment filled water. In working with the well drillers Traut and Barott Drilling Services (local well driller) it was concluded that a bedrock test well would not be feasible in this unique formation. Due to the geological conditions in this area, it is recommended to seal the bedrock test well and consider other options. The City could consider constructing a new screened test well, with Anoka County approval, in a different location on the 509 Birch Street site. The screened well would be constructed to hold the uncemented portion of the formation open, and thus obtain representative water quality and test pumping results. The cost of the screened test well is $75,000 to $80,000. With the screened well construction, the uncemented portion of the aquifer would be sealed off by a deeper well casing so the water would only be coming from the lower portion of the aquifer. Based on input from the well drillers (Traut and Barott), they believe that with the screened well and sealing off the portion of the Prairie du Chien, that this would eliminate the sediment. Therefore, making this location a potential location for a future municipal well. Requested Council Direction If the Council would like to move forward, staff recommends a screened test well and is seeking Council direction to obtain a quote for a screened test well. WS – 5 WORK SESSION STAFF REPORT Work Session Item No. 5 Date: April 1, 2019 To: City Council From: Jeff Karlson, City Administrator Re: Garbage Hauling Background Mayor Reinert brought up the idea of limiting the number of garbage hauler licenses from four to three, which still allows residents to choose their hauler. Section 507.04(1) states that the City reserves the right to limit the number of licenses to four (initially five were issued). Mayor Reinert would also like to provide a more clear process for suspending or revoking a hauler license when code violations occur. Sections 507.04(5) and 507.05(5) currently state: “The City Council may suspend or revoke the license of any hauling company whose conduct is found to be in violation of the provisions of this chapter.” The mayor provided an example of Chanhassen’s code that adds more clarity: “The city manager may suspend or revoke the license of any person whose conduct is found to be in violation of the provisions of this chapter. . . . Revocation or suspension of a license by the manager shall be preceded by a public hearing conducted in accordance with M.S. §14.57 to §14.69. . . . Any person aggrieved by the decision of the city manager may appeal the decision to the city council by filing written notice with the city clerk within ten days after the manager’s decision.” Requested Council Direction This is for Council consideration. Attachments Code Section 507.04(1) Residential Solid Waste Collection License Code Section 507.05(5) License Revocation WS – 6 WORK SESSION STAFF REPORT Work Session Item No. 6 Date: April 1, 2019 To: City Council From: Marty Asleson, Environmental Coordinator Re: Natural Resources in Lino Lakes Background Mayor Reinert requested an update of natural resources in Lino Lakes and a Standard Operating Procedures (SOP) Manual of Environmental Management. Staff will present a review of the unique resources of Lino Lakes at the work session. The SOP is still in progress and nearly complete. Attachments None Requested Council Direction None Lino Lakes Unique Resources Land CoverResidentialIndustrial/CommercialRecreationalRoad/Railroad EasmentsMowed Lawn/Landscaped trees, shrubsAgricultural LandResidence/Out BuildingsFields (cropped)CornAlfalfaPastureOtherFields (fallowedUnmowedMowedBare SoilFence Row (shrub/tree)Recently Developed Forested SystemsHistoric Oak Savanna/BarrensPlantations/Orchards/NurseryMesic ForestWetlands - Native GrassesSedgesCattailReed Canary GrassShrub (tamarack)Shrub ThicketLakeDetention/Maintained PondFarm Ditch/CanalDry Prairie Clearwater Creek Development, First Wetland Restoration/Conservation Development Exercise Minnesota Land Cover Classification Wetland Preservation or Management Corridors Lino Lakes “Lakes” Lino Lakes High Value Wetlands Lino Lakes Flood Plain Lino Lakes Important Soils Floodplain Overlay Eco points of Importance Lino Lakes Fens and Seeps and Tamarack Basins DNR NHIS National Heritage Information System Blanding’s Turtle Model Blanding’s Turtle Observed Anoka County Sandplain Model Anoka County Sand Plane Model Lino Lakes Unnnnn nnn nnnn nnnnnn n nnnn nnnRestored, Preserved, Protected Wollen’s Park Wetland Restoration Lino Lakes DWSMA and Wellhead Protection City wide tree inventory City Ash Trees Oak Wilt Bnnn Hnnnn N nnnnnn R nnnnnnnnnn Significant Effort for Lino Lakes: Driven by LOCAL volunteers in cooperation with City staff, & Environmental Board; Efforts included: 1) Researching the problem of nest abandonment 2) No-Wake Zone established near the island; 3) Flashing trees to reduce predation by raccoons 4) Monitoring of population & maintenance of flashing Counting Egg Shells Flashing trees Herons Nesting Herons 2018 •1996 1149 nests •2005 36 nests •2015 224 •2016 306 nests •2017 342 nests •2018 350 to 400 nests Volunteers WS – 7 WORK SESSION STAFF REPORT Work Session Item No. 7 Date: April 1, 2019 To: City Council From: Karissa Bartholomew, Human Resources Manager Re: Environmental Coordinator Salary Adjustment and Succession Planning Background Environmental Coordinator Marty Asleson announced his plans to retire after approximately 30 years with the City. Asleson is amenable to assisting the City with transitional planning and a phased retirement. Salary Adjustment Staff recommends the position be filled, but at a reduced salary range. The position is above the market for comparable positions in the metro area. Six cities were found to have similar positions: Golden Valley, Roseville, Eden Prairie, Shoreview, White Bear Lake, and Woodbury. Woodbury, Eden Prairie, and Roseville are not typically used as comparables due to their larger populations, but are included in staff’s market comparisons. Staff removed the highest and lowest salaries to create an adjusted market average range of $63,252 - $79,046. Lino Lakes’ current range is $69,104 - $86,380. Staff is recommending a new salary range of $60,120 - $75,151. Phased Retirement Staff is requesting Council consideration of a phased retirement option for Asleson to assist the City with the transition. Asleson would drop down to 75% until the City hires a replacement. Upon filling the position, Asleson would work an additional two months, between 25% to 50%, depending on the workload. Staff anticipates being able to bring in a new hire by the end of July. Staff will work within the current budget to execute the phased retirement and transition. Requested Council Direction 1. Approve new salary, effective with a new hire. 2. Approve filling the Environmental Coordinator position, effective immediately. 3. Approve a phased retirement plan for Asleson. Attachments 1. Adjusted Market Wage Data 2. Job Description WS – 7 ATTACHMENT I Adjusted Market Wage Data City Position Title Min Max Golden Valley Environmental Specialist 58,059 69,114 Roseville Environmental Specialist 73,575 88,670 Eden Prairie (highest) Water Resources Coordinator 76,440 91,738 Shoreview Natural Resources Coordinator 63,179 74,020 White Bear Lake (lowest) Environmental Specialist 49,625 67,140 Woodbury Environmental Resources Specialist 58,195 84,382 Average (Removing Highest & Lowest) 63,252 79,046 Lino Lakes (Current) 69,104 86,380 Lino Lakes (Recommended) 60,120 75,151 *Cities such as Woodbury, Eden Prairie, and Roseville are not typically used as a comparable – however, in circumstances where staff needs to appropriately identify more than a couple positions to create an understanding of the market, the City may have to expand its search and look at larger cities. **The City’s methodology is to not lead or lag with the market. Identifying that larger cities were used to identify a market range, staff placed a 5% reduction on the recommended revised range after removing both the highest and lowest ranges from the average. 1 WS – 7 ATTACHMENT II POSITION DESCRIPTION TITLE: Environmental Coordinator REPORTS TO: Community Development Director DEPARTMENT: Community Development STATUS: Full-time/Union/Exempt POSITION SUMMARY Administers the City’s environmental program, forestry, erosion control and MS4/ National Pollution Discharge Elimination System (NPDES) permitting. Other responsibilities include coordinating the recycling program and managing the water conservation program. ESSENTIAL DUTIES & RESPONSIBILITIES General: 1.Serve as staff liaison to the Environmental Board, Rice Creek Watershed District, Vadnais Lake Area Water Management Organization (VLAWMO), Anoka County Solid Waste group as well as other boards and commissions. 2. Perform administrative duties including budget preparation, monitoring expenses, writing grants and preparing staff reports for environmental programs. 3. Respond to citizen questions, complaints and requests for assistance related to native landscaping, drainage, erosion control, tree preservation and water quality issues. 4.Develops environmental education opportunities and implements an environmental outreach program. Prepares informational pieces and public service announcements as necessary. 5.Train and supervise seasonal interns and recycling intern. 6. Prepare surveys and take inventories of various environmental elements of the community to include indigenous/migratory animals and plants. 7.Assist with the development of ordinances and policies to protect and enhance environmental resources of the community. 8.Perform weed and code compliance inspections. 9. Review development proposals for conformance with City environmental development standards including landscaping and stormwater management. Surface Water Resources/Ground Water/Wellhead Protection: 10. Coordinates implementation of National Pollution Discharge Elimination System (NPDES) program. 11. Coordinates annual inspection of privately maintained storm water permit best management practice (BMP) sites for functionality and compliance. 12.Coordinates wellhead protection activities in the City. 13.Implements and administers the City’s erosion control program including plan review, site inspection and follow-up. Investigates and follows up on illicit discharge complaints. 14. Coordinates and assists with protection and vegetative management of City owned native vegetation areas including wetland banking areas. 2 Recycling and Solid Waste: 15.Coordinates the City’s solid waste and recycling programs. Forestry: 16.Administers City Emerald Ash Borer plan diseased tree control program, tree inventory, hazard tree assessment for public property trees, tree preservation plan reviews, maintain public property trees (replace, plant fertilize, pest control, etc.) and coordinates boulevard tree planting. Other: 17. Performs other duties as assigned or apparent. Note: These examples are intended only as illustrative of various types of work performed, and are not all- inclusive. The City reserves the right to add, modify, change or rescind work assignments. REQUIRED KNOWLEDGE AND ABILITIES 1.Ability to communicate effectively and professionally with co-workers and members of the public; the ability to maintain effective working relationships. 2. The ability to work independently and set departmental goals and work plans. 3.The ability to attend evening meetings when required. 4. Knowledge of environmental trends, development procedures, habitat preservation and methods of modern forestry techniques. 5.The ability to use Microsoft Office, including Microsoft Word, Excel, and PowerPoint. 6. Knowledge of commonly used budgeting practices, as well as the ability to perform arithmetic computations. 7.Skill in the application of time and project management principles. MINIMUM QUALIFICATIONS 1.Bachelor’s Degree in Environmental Science, Environmental Planning, Forestry Management Biology, Soil Sciences or related field. 2.One year experience in environmental or natural resources. 3.Valid driver’s license. 4.MN Tree Inspector’s Certification within one year of hire. 5.MN Erosion Control Installer Certification within one year of hire. PREFERRED QUALIFICATIONS 1.Three to five years of experience in planning, forestry or environmental services. 2.Master’s degree in Environmental Science, Biology, Soil Sciences, Civil Engineering or related field. 3. Experience or ability to work with GIS. 4.Certified Wetland Delineator. 5.Licensed pesticide applicator. WS – Item 8 WORK SESSION STAFF REPORT Work Session Item No. 8 Date: April 1, 2019 To: City Council From: Rick DeGardner, Public Services Director Re: Recreation Complex Discussion Background The City Council discussed this topic during last month’s work session and directed staff to place this on the April work session agenda. The total estimated cost for Phase 1A Base Development is $592,232, including contingency and design fees. The City Council has previously designated $375,000 to fund this first phase. Staff has identified the following funding sources to fill the gap: (1) $137,000 from 2018 Parks and Trails Capital Projects Fund (2)$80,232 from the Dedicated Parks Fund. The master plan and cost estimates for Phase 1A are attached. The proposed development includes six pickle ball courts, two tennis courts, parking lot, trails, and landscaping. The shelter and basketball court are not reflected in the base development costs. Requested Council Direction For informational purposes. Staff will need further direction if the City Council wishes to proceed with construction. K:\012854-000\Cad\Exhibits\012854 lino lakes _Rec Phase 1a EnlargmentUtility Easement Existing Wetland Stormwater Pond Birch Street Parking (+/- 36 Stalls) Existing Fire Station 6 Pickleball Courts 2 Tennis Courts Shelter (Alternate) Full Basketball Court(Alternate) WaterTower 10’ Wide Regional Trail 8.5’ Wide Trails Graphic Scale 0’200’100’ Recreation Complex Phase 1a Enlargement Lino Lakes, Minnesota February 26, 2019 | WSB Project number: 012854-000 K:\012854-000\Quantity\Preliminary\012854_Lino Lakes_Memorandum .docx 2019-01-29.docx 701 XENIA AVENUE S | SUITE 300 | MINNEAPOLIS, MN | 55416 | 763.541.4800 | WSBENG.COM Memorandum To: Rick DeGardner, Lino Lakes From: Jason Amberg, WSB Bailey Krause, WSB Date: January 29, 2019 Re: Lino Lakes Recreation Complex – Updated Cost Estimates WSB Project No. 012854-000 Rick, the following pages provide an overview of the probable costs to construct Phase 1A (the court area) and Phase 1B (the ballfield area) based on the final concept master plan which has been updated per your direction following the council meeting on Jan. 7, 2019. This information will be updated and reviewed with you in the next steps of final design for phases / elements approved by the City. Rick DeGardner January 29, 2019 Page 2 K:\012854-000\Quantity\Preliminary\012854_Lino Lakes_Memorandum .docx 2019-01-29.docx Item #10 Monthly Progress Report April 1, 2019 Item Last Action Taken Staff Status Digital Scanning Project 8/7/17 – Scanner Operator Rusty Ray submitted his resignation. Julie Sharon Fiebiger accepted the position and started Feb. 19 White Bear Lake Restoration Assn. v. Dept. of Natural Resources (DNR) 5/21/18 – HF 4003 was signed into law by the governor, which temporarily suspends enforcement of the water appropriation permit amendments Jeff The law is effective through July 1, 2019 Employment Update Jan. 2019 – A CSO resigned after accepting another position. Feb. 2019 – The Recycling Intern position is still open. Jeff CSO – job interviews were conducted Recycling Intern – a conditional offer has been made