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HomeMy WebLinkAbout08-15-94 Special CCMLAKE ELMO CITY COUNCIL WORKSHOP MONDAY, AUGUST 15, 1994 AGENDA 7:00 P.M. WORKSHOP CONVENES 1. Discussion of Finance Options for 1-94 Sanitary Sewer with Kathy Aho, Springsted Financial 2. Adjourn MINUTES APPROVED: 9-6-94 LAKE ELMO CITY COUNCIL MINUTES AUGUST 15, 1994 Mayor John called the special workshop to discuss Finance Options for 1-94 Sanitary Sewer with Kathy Aho and Paul Donna, Springsted Financial to order at 7:10 p.m. in the council chambers. PRESENT: Mottaz, John, Conlin, Johnston, Johnson, Finance Director Banister and Administrator Kueffner. Kathy Aho and Paul Donna, Springsted Financial, provided copies of Tax Increment Financing (TIF) in Minnesota- Concepts and Mechanics. The Council's discussion was primarily based on this material. When asked what it would cost to set up a TIF in the city, Kathy Aho responded that just for the Tax Increment Plan, absent of any negotiations with developer or drafting some kind of development agreement, the cost would be up to $5,000. Kathy Aho explained you need to have something other than a public improvement to keep it as a Tax Increment District. Someone is going to have to come in and build something there, and the city has to ask, what is it that they have to build, what kind of value do they have to put on there in order for the city to afford the $2 million. Prior to designating the district, Administrator Kueffner asked if the city could bond and put in some improvements. The increase value of property that's going to benefit from this could pay off at least the interest on the loan. Aho felt they would have to work with the numbers on this, but was skeptical to do this in absence of any discussions with a developer going in there. Since establishing a project area is a fairly low cost, Johnson asked if this is enough for a city to show a developer that the city is serious about developing in the project area. Aho thought it would start building the base case and they would suspect you are offering TIF as a method of assistance. Other options beside TIF. Infrastructure for water, sewer, roads, storm sewers, etc, are financed under Statute 429, which requires the city to special assess up to 20 percent to the benefiting properties. Referendum - ask the people if they want to support $2 million worth of improvements. Free money; such as grants Aho indicated if you are talking about an economic development district, there is a limit on what you can do for retail. The primary focus for economic development districts is manufacturing, warehousing, etc. If the office building is an essential part of their operations, the headquarters for manufacturing, you could do this kind of project. You could not do a strip mall. If you zone an area Business Park, they would have to sit down with the council and package the project so the office building, as the headquarters, becomes an incidental use. Communities do go out and make an active search for a developer for a piece of property. Council member Johnston asked what could be built along the 1-94 corridor that is in an economic development district. The current ordinance that the city has is basically for office uses and is not manufacturing or warehouse. Does that mean it is not appropriate for an economic development district without revising the ordinance? If you are looking at a headquarters for 3M, this would be permitted even if 3M isn't manufacturing at the site. If we are looking at headquarters for a company where there is no manufacturing, this would not be permitted Johnston asked, in their experience, what has been typical supportable levels of assessments for these types of projects? Aho responded she would get back to her with an answer. The following explanation was given on the TIF Economic Development District: At least 85% of the square footage of the facilities to be constructed have to be used for any of the following purposes: (1) manufacturing, production of processing of tangible personal property; (2) warehouse, storage and distribution of tangible personal property, excluding retail sales; (3) research and development related to the activities of those of (1) or (2) above; (4) telemarketing, if that activity is the exclusive use of the property, (5) applies outside of the metro area -tourism facilities or (6). space necessary for and related to the activities listed in (1-5) above. This is where the city may be able to get office space in. Council member Conlin pointed out the two perceived benefits to the city for doing a project like this: preventing detachment/annexation and raising our tax base. Is jobs an identifiable benefit to the city? Do we see a need for that? The Council set another workshop for Monday, August 29, 1994 at 7 p.m. at city hall to review the presentation on TIF and discuss examples prepared by Springsted Financial based on $2 million as the total cost of the project if the city has the 440 acres; such as, study numbers for sewer extension up to Highway 13, make a list of options and how they would affect the city and taxpayers over short term versus long term M/S/P John/Johnson - to adjourn the workshop at 9:05 p.m. (Motion passed 5- 0).