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MEMORANDUM
To:Dean Zuleger, City of Lake Elmo
From:Tammy Omdal
Date:May 14, 2014
Re:Establishment of RedevelopmentProjectand Economic Development Districtfor
Downtown Area
The EconomicDevelopmentAuthority of the City ofLake Elmo Economic(EDA)isscheduledto
discussthe potentialestablishment of a RedevelopmentProjectandEconomicDevelopmentDistrict
for the downtown area ata meetingon May21. This memorandum is intended to provide
background information for the discussion.
Background
The City Council and EDA have discussedthe conceptof the use oftax incrementfinancing (TIF)to
assist with payingfor project costsrelatedto the redevelopment of the downtown area. The TIF
authority thatexistsin Minnesota Statutes469.174through 469.174(the “TIFAct”) must be used in
conjunction with the underlying developmentandredevelopment powers thatexistin the statutes.
When the City Counciladoptedthe enablingresolution for establishingthe EDA, the Council
grantedthe fullcomplement of development powersthatexistfor an EDA. These powers include
the powers granted tohousingandredevelopmentauthorities(HRAs). The EDA’s development
powers allow the EDA topursue economicdevelopment objectives,such asthe redevelopment of
the downtown area.
The EDA willneedto adopt a plan toexercise its powers. Certain powerscan onlybe usedwithin
the boundaries of different types of areas asdefinedin the statutes. For example, certain powerscan
onlybe usedwithin the boundaries ofa “RedevelopmentProject”; andcertain powers can only be
usedwithin the areaofan“EconomicDevelopmentDistrict”.
Redevelopment Project
To allow the EDA toexercise many of the powers ofan HRA, itisrecommendedthe EDA consider
the establishmentof RedevelopmentProject No. 1(pursuant toMinnesotaStatutes 469.001to
469.047). Toestablish the RedevelopmentProject, the EDA willneed to adopta redevelopment plan
which providesan outline for the redevelopmentarea. A redevelopment plan for Redevelopment
Project No.1hasbeen draftedfor reviewby the EDA andis attached.
Before adopting a RedevelopmentPlan, the EDA must obtain the written opinion of the Planning
Commission. The City Council mustapprove or disapprove the Plan within 30 days after holding a
Establishment of Redevelopment Projectand EconomicDevelopmentDistrict
May14, 2014
Page 2
publichearing on the RedevelopmentProject. The City Council mustmake certain findingsin
connection with its approval. Those findings include:
1.The landin the projectarea wouldnotbe made available for redevelopmentwithoutthe
financialaid tobe sought;
2.The redevelopmentplansfor the redevelopmentareas in the localitywillafford maximum
opportunity,consistentwith the needs ofthe localityas awhole,for the redevelopment ofthe
areas byprivate enterprise; and
3.The redevelopmentplan conforms to ageneral plan for the development of the locality asa
whole.
Economic Development District
Because certain EDA powersmust beexercised onlywithin the boundaries ofan Economic
DevelopmentDistrict(pursuantto Minnesota Statutes469.100,Subdivision 1)it isrecommended the
EDA consider adopting an Economic DevelopmentDistrict in conjunction with adopting a
RedevelopmentProject. The boundaries of an Economic Development District must be contiguous.
It isrecommendedthe boundaries ofEconomic Development District No. 1be coterminouswith the
boundaries of the proposed RedevelopmentProjectNo. 1.
The EDA musthold a publichearing on the establishment of an Economic Development District.
Different from the establishment of a Redevelopment Project, the EDA doesnot need to adopt a plan
for the Economic DevelopmentDistrict. However, the EDA must find that an Economic
DevelopmentDistrictis proper anddesirable toestablish anddevelop within the City.
Tax Increment Financing District
TIF districtsmust beestablishedwithin the boundaries of a projectarea. Future TIF districts that
may be established (i.e.,redevelopmentTIF district,housing TIFdistrict,economic development TIF
district,etc.) bythe Cityand EDA wouldbe establishedwithin the boundariesof the proposed
RedevelopmentProjectAreaNo. 1. Other future actions the EDA maywish toexercise,using its
EDA powers,wouldbe exercisedwithin the boundaries ofthe Economic Development District No.
1.
Next Steps
Potentialinitialnext stepsfor the EDA’s consideration are asfollows:
1.Request the CityCouncilto call a public hearingfor the establishmentof Redevelopment
Project No.1 and the approval of the adoption of the Redevelopment Plan.
2.Requesta written opinionfrom the Planning Commission on the proposedRedevelopment
Plan.
3.Calla publichearingfor the establishment of Economic Development DistrictNo. 1.