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HomeMy WebLinkAbout09-22- 2003 EDA Minutes DRAFT CITY OF LINO LAKES 1 ECONOMIC DEVELOPMENT AUTHORITY 2 MINUTES 3 4 5 DATE : September 22, 2003 6 MEMBERS PRESENT : J. Bergeson, D. Carlson, C. Dahl, J. O'Donnell, J. Reinert 7 MEMBERS ABSENT : None 8 OTHERS PRESENT : Mary Divine, Dan Tesch, Michael Grochala and Bill 9 Hawkins 10 11 CONSIDERATION OF MINUTES OF AUGUST 11, 2003 12 13 EDA Member Bergeson moved to approve the August 11, 2003 minutes, as presented. EDA Member 14 O’Donnell seconded the motion. Motion passed unanimously. 15 16 PUBLIC HEARING: PROPOSED BUSINESS SUBSIDY TO PANATTONI DEVELOPMENT, 17 LLC 18 19 EDA President Carlson opened the public hearing at 6:09 p.m. 20 21 Ms. Divine summarized the Staff report, indicating the Economic Development Advisory Committee 22 has reviewed this project. The committee recommended the EDA support the project, since it met the 23 necessary subsidy criteria, building standards, zoning codes and the Comprehensive Plan land use 24 designation. 25 26 EDA Member Bergeson indicated there was discussion at the work session about fiscal disparities. 27 He asked Ms. Divine to review that topic. Ms. Divine indicated the question was whether the city had 28 to take fiscal disparities from within this TIF District, which reduces the amount available for TIF. 29 She stated she has since learned that last year Legislation was passed that requires it be taken from 30 within the District, if it is an Economic Development District. 31 32 EDA Member O'Donnell stated they talked about costs associated with TIF. He questioned what the 33 project cost will be. Ms. Divine indicated about $12 million. 34 35 Rob Davidson, representing DAI, indicated one thing that was undetermined at the work session was 36 the number of years that might be appropriate. He indicated they are in a 10-year district, and will 37 create eight years of increment within that district. He noted the City’s TIF consultant said there 38 really is not a right answer, and he has to agree. He indicated the only person who can answer the 39 question is the person who will pay the taxes each year, which is the President of the company, and he 40 believes eight years is the length of time that would allow him to make this project work on this site. 41 42 EDA Member Bergeson asked if eight years represented the $1.1 million figure. Mr. Davidson 43 indicated that was correct. 44 45 EDA MINUTES SEPTEMBER 22, 2003 DRAFT 2 Ms. Divine indicated at the request of the Council they ran numbers showing from five years up to 46 eight years, with eight years being $1.1 million. She noted at five years the company’s rental rates are 47 10 cents a square foot away from what the business had requested. If they went seven years it brings 48 them to $5.89 per square foot, which is .01 cent from the original request. She added their revised 49 request is $5.84. 50 51 EDA Member Dahl moved to close the public hearing at 6:20 p.m. EDA Member Bergeson seconded 52 the motion. Motion carried unanimously. 53 54 A. CONSIDERATION OF RESOLUTION NO. 03-06, APPROVING A CONTRACT FOR 55 PRIVATE DEVELOPMENT BY AND BETWEEN THE LINO LAKES EDA AND 56 PANATTONI DEVELOPMENT, LLC 57 58 Ms. Divine summarized the Staff report, indicating there have been minor language changes in the 59 last few days, but none of them affect the overall agreement. She stated Staff recommends approval. 60 She clarified that if the Board approves the agreement, they may, under separate motion, want to 61 authorize a Subordination Agreement. 62 63 Ms. Divine explained that section 5.2 discussed the Subordination Agreement, and she reviewed that 64 section for the Board. She noted the language is in all of the City’s agreements, but if the lender 65 requests a separate Subordination Agreement it must be done under a separate motion. 66 67 EDA Member Bergeson asked if $127,000 a year is the total tax subsidy; City, School District and 68 County. Ms. Divine indicated it is. EDA Member Bergeson stated in terms of a decision on the 69 number of years, the City’s portion would be about $40,000 a year. Ms. Divine indicated that was 70 correct. 71 72 EDA Member Bergeson moved to adopt Resolution No. 03-06 approving a contract for private 73 development and awarding the sale of, and providing the form, terms, covenants and directions for the 74 issuance of its $638,400 tax increment revenue note, Series 2001, contingent on City Council 75 approval of the EAW and Preliminary Plat. EDA Member Bergeson seconded the motion. 76 77 EDA Member Dahl asked if this is the actual subsidy approval. Ms. Divine indicated it is; they are 78 approving $638,000, with the requirement of four new jobs over two years. 79 80 EDA Member Bergeson noted that at the work session EDA Member O'Donnell brought up the 81 subject of the ‘but for’ test. He is not sure how to assess that. He stated the issue was raised, but he is 82 not sure they received an answer. He indicated this is an important project for the City and within 83 reason they need to do what it takes to make it work, but he does not know how to determine it meets 84 the ‘but for’ rationale. 85 86 Ms. Divine stated that can be subjective, that this request was based on the target base rent needed to 87 make the project comparable to other rents. She indicated the City’s TIF Consultant evaluation was 88 that five years stayed within the policy and scope of what has been approved over the last several 89 years, and was within the acceptable range. 90 EDA MINUTES SEPTEMBER 22, 2003 DRAFT 3 91 Mr. Davidson indicated Ms. Divine described the basis for their request. He stated they are hoping to 92 get within the economic market range for going ahead with this project, noting without this subsidy 93 the cost of the project would make it economically out of reach. 94 95 EDA Member O'Donnell noted the job growth is at the required minimum, and asked if there was any 96 incentive to go beyond the minimum. Mr. Davidson stated he spoke with the President of the 97 company this afternoon on wage goals, noting they are committed to four jobs at a minimum of $10 98 per hour. He indicated the penalty for failing to achieve the job goals is severe. He believes they 99 have some range on salaries, and will not gravitate to the lowest wage. He stated they are feeling 100 good about the growth they can have, but also have to be conservative. He added in addition to their 101 regular employees they have a great number of temporary employees they employ year round. 102 103 EDA Member O'Donnell stated he understands the uncertainty, and there is some of that on the part 104 of the City as well, not knowing what the future holds for cities. He stated there is a 2 to 2.5% 105 difference between what the company wants and what this subsidy is proposing. He indicated given 106 what he knows, and without having all the answers on the ‘but for’, he would be in support of the five 107 year recommendation on the table now. 108 109 Patrick Pelstring offered two suggestions that might move them toward a resolution to meet the 110 customer’s needs. He indicated the average wage is $13.37. He believes a couple of the jobs will be 111 above the $10.00 minimum. He stated the other aspect is that they originally looked at $5.88 per 112 square foot. Seven years gets them to $5.89. He indicated given their discussion if they could move 113 into that range it would be helpful. 114 115 EDA Member Dahl suggested they poll the Authority. She stated she is hearing some of the members 116 may be in favor of a longer term. She also stated she has a history of voting no on TIF subsidies. She 117 does not believe they should be necessary and no one has ever convinced her otherwise. She believes 118 you should be able to make it on your own, especially with the low interest rates. She stated the City 119 relies heavily on their TIF Consultant; however everyone who cannot afford what they want has to cut 120 back. She indicated the developer has the option of making it a smaller project and adding on when 121 they can afford it. 122 123 EDA President Carlson stated if the motion on the floor fails they can introduce a second motion. 124 125 Motion carried. EDA Member Dahl opposed. 126 127 B. CONSIDERATION OF A SUBORDINATION AGREEMENT 128 129 Ms. Divine reviewed the Subordination section of the contract. 130 131 EDA President Carlson asked if they would need to vote on this at the City Council meeting also. 132 Ms. Divine indicated they would not. 133 134 EDA MINUTES SEPTEMBER 22, 2003 DRAFT 4 EDA President Carlson verified the City Attorney had reviewed the information and recommended 135 this action. Ms. Divine stated the City’s TIF Attorney made the recommendation. 136 137 EDA Member Bergeson moved to adopt a resolution authorizing a Subordination Agreement between 138 the City of Lino Lakes and the lender for the developer. EDA Member O’Donnell seconded the 139 motion. 140 141 Motion carried. EDA Member Dahl opposed. 142 143 CONSIDERATION OF RESOLUTION NO. 03-07 AUTHORIZING THE PREPARATION OF 144 A PLAN TO MODIFY DEVELOPMENT DISTRICT NO. 1 AND TO ESTABLISH 145 REDEVELOPMENT TAX INCREMENT FINANCING DISTRICT NO. 1-11 146 147 Ms. Divine summarized the Staff report, indicating Staff recommends approval of the resolution. 148 149 EDA Member O'Donnell moved to adopt Resolution No. 03-07 authorizing preparation of a modified 150 program for Development District No. 1 and the establishment of Redevelopment Tax Increment 151 Financing District No. 1-11. 152 153 Motion carried unanimously. 154 155 ADJOURNMENT 156 157 There being no further business, EDA Member O’Donnell moved to adjourn. EDA Member 158 Bergeson seconded the motion. Motion passed unanimously. 159 160 Meeting adjourned at 6:43 p.m. 161 162 163 Transcribed by: 164 Karen Whaley 165 TimeSaver Off Site Secretarial, Inc. 166 167