03-10-26 City Council Workshop Packet

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3 Development Opportunities on City-Owned Land | Lake Elmo, Minnesota Public Works facility. Should the City entertain relocating those functions elsewhere in the city or even to Parcel 1, the site’s most valuable real estate could be repositioned for a new high-value retail tenant, and the signature red building could be repurposed into a more community-facing and profitable use. Trail and greenway connections through this parcel, again along the east side but also through the low land that bisects the parcel east to west, would also provide welcome community connections. The northern half of this parcel would work well for new residential development. Apartments, townhomes, and new small-lot single-family homes could provide welcome alternatives and new price points for the Lake Elmo residential market. Phasing development hinges on new road and utility access. Once roadway access is created to Ideal Avenue and 34th Street, and utilities are accessible, development can begin nearly anywhere across the three parcels. The phasing schedule outlined by the panel can help guide the infrastructure improvements, but should not be used to limit other development potential. Local Benefit The City asked the panel to consider the various opportunities to generate City tax revenue through development of the parcels. Potential property tax generation is similar across uses. The table on page 21 of this report models four potential development scenarios, including the mix of uses posed by the panel in the Market Feasibility section (starting on page 11). The key takeaway from this analysis is that the potential City tax revenue of development at the site is relatively similar across all potential uses. Industrial development does generate more tax revenue than the other uses under consideration; however, the impact of the Fiscal Disparities Program flattens that benefit to a point where it no longer presents a significant financial advantage to the City. These results can enable the City and its development partners to make decisions based on other factors rather than being driven primarily by the potential to generate tax revenue at the site. Address policies relating to the use of City financial tools. The City will likely be asked by developers to participate in site improvements in some fashion, most likely through a request for financial support for work on the site. Before those requests come in, the City is encouraged to establish its policies for the deployment of its financial tools. Establishing these policies now will equip City staff with the guidance needed to field those eventual developer requests in a timely manner. Generally, the City has access to and should have policies guiding its use of the following financial tools: • Tax increment financing to assist a qualified industrial development. • Tax abatement to assist with development or financing public infrastructure. • Land write-down or discounts to reduce the price of the land paid by a developer. • Bonding to finance public infrastructure, which in this case could help fund the sewer extension. Community Role The City was also interested in the panel’s recommendations for community participation in the development process. Given the size of the site, its location, and the passion residents have expressed for Lake Elmo, the City is encouraged to formulate its community engagement and messaging strategies early. Transparency and consistency will be key, and compromise, from all parties at some point, will likely be required. The panel’s ideas for development across the three parcels include a number of uses. UL I PA N E L