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HomeMy WebLinkAbout12-12-2005 UNAPPROVEDPROCEEDINGS OF THE MOUNDS VIEW EDA 1 CITY OF MOUNDS VIEW 2 RAMSEY COUNTY, MINNESOTA 3 4 Regular Meeting 5 December 12, 2005 6 New Brighton City Hall 7 803 Old Highway 8, New Brighton, MN 55112 8 6:55 P.M. 9 10 11 1. CALL MEETING TO ORDER 12 13 2. ROLL CALL: President Marty, Vice-President Stigney, Commissioner Gunn, 14 Commissioner Flaherty, and Commissioner Thomas. 15 16 NOT PRESENT: None. 17 18 3. APPROVAL OF AGENDA 19 20 MOTION/SECOND: Gunn/Flaherty. To Approve the December 12, 2005 Agenda as presented. 21 22 Ayes –5 Nays – 0 Motion carried. 23 24 4. PUBLIC INPUT 25 26 There was none. 27 28 5. APPROVAL OF MINUTES 29 30 A. July 25, 2005, EDA Minutes 31 32 MOTION/SECOND: Flaherty/Thomas. To Approve the July 25, 2005 Minutes as presented. 33 34 Ayes –5 Nays – 0 Motion carried. 35 36 B. September 12, 2005, EDA Minutes 37 38 MOTION/SECOND: Thomas/Stigney. To Approve the September 12, 2005 Minutes as 39 corrected. 40 41 Ayes –5 Nays – 0 Motion carried. 42 43 44 Mounds View EDA December 12, 2005 Regular Meeting Page 2 C. November 28, 2005, EDA Minutes 45 46 MOTION/SECOND: Marty/Gunn. To Approve the November 28, 2005 Minutes as presented. 47 48 Ayes –5 Nays – 0 Motion carried. 49 50 6. CONSENT AGENDA 51 52 A. The EDA Meeting scheduled for Tuesday, December 27, 2005 is canceled. 53 54 MOTION/SECOND: Gunn/Flaherty. To Approve the Consent Agenda, as presented. 55 56 Ayes –5 Nays – 0 Motion carried. 57 58 7. EDA BUSINESS 59 60 A. Review Medtronic CRM Development Project Acceleration; Request City 61 Council Establish a Public Hearing to Consider a Proposed Modification to 62 TIF District 5 63 64 Community Development Director Ericson reviewed that at the meeting of November 28, 2005, 65 staff brought forward information that Medtronic was considering options of constructing 66 additional space in the metro area and are considering construction of Phase 2 concurrent with 67 the construction of Phase 1 in Mounds View. At that meeting, the EDA directed staff to review 68 that option so staff worked with Ehlers & Associates to conduct an analysis regarding the 69 financial ramifications of a combined Phase 1 and Phase 2 project. 70 71 Director Ericson explained that Phase 2 is for 380,000 square feet and two additional levels to 72 the parking ramp. It would result in an additional $30 million in property values and the phases 73 together it would be $96 million of project value. TIF generated based on a $96 million project 74 is $22 million. Director Ericson stated the City authorized an agreement with Medtronic for 75 Phase 1 for $14.8 million so the difference with including Phase 2 is $7.2 million. 76 77 Director Ericson noted that Medtronic has $25 million in reimbursable or qualified costs for 78 Phase 1 and would be reimbursed only $14.8 million dollars. To determine the impact to 79 combine Phases 1 and 2, staff set aside Phase 1 and then looked at Phase 2 to see what it would 80 bring in for additional increment. Staff determined Phase 2 would provide $7.2 million in 81 additional increment and the only qualified costs to Phase 2 construction are the two levels of the 82 parking ramp, costing about $8 million dollars. 83 84 Director Ericson explained that in return for this consideration, Medtronic would assist in City 85 expenses for the project. Medtronic would pay for the cost to extend the utilities on their 86 Mounds View EDA December 12, 2005 Regular Meeting Page 3 property as well as the $400,000 cost to bring the utilities up to their property. In addition, 87 Medtronic would agree to cover City costs for relocating the billboards. Originally the City was 88 going to pay $550,000 and Medtronic had agreed to cover part of that but would now agree to 89 cover all of that cost. Finally, and perhaps more importantly, Clear Channel has to relocate four 90 billboards from the Medtronic site. The City is potentially on the hook for two billboards if they 91 cannot find a home for them, or a cost of $1.6 million to Clear Channel. Medtronic would pick 92 up the cost for the other two billboards, or $1.65 million. That anticipates one of the billboard 93 would go to the SYSCO outlot area. Director Ericson stated that Medtronic knows they could be 94 on the hook to pay for relocation of all four billboard at a cost that could equal $2.7 million. In 95 addition, Medtronic will pay for the costs for staff to prepare that amendment to allow them to 96 bring in Phase 2, which could equal $150,000. 97 98 Director Ericson reported that with bundling Phases 1 and 2, staff has found there would be no 99 cost or risk to the City and no additional tax dollars spent on this project or revenues from the 100 City being spent that would not be reimbursed. The tax dollars would reimburse Medtronic for 101 the $7.2 million in qualified costs. He noted a summary of the terms are included in the staff 102 report, identified as the draft, and includes 16 points. He explained that staff is not asking for 103 EDA consent or agreement but to set a public hearing and allow for the process to move forward. 104 105 Director Ericson advised that staff received confirmation from Ehlers that Medtronic would be 106 acceptable to paying out for these costs that the City of Mounds View is currently on the hook 107 for. The benefit for combining Phases 1 and 2 is that both would be paid off at the same time 108 and back on the tax rolls at the same point in time. Also, rather than $65 million in today’s 109 dollars it would be $96 million in today’s dollars. 110 111 Director Ericson stated staff and financial advisors recommend the EDA establish a public 112 hearing for February 13, 2005 so staff can send out notices and talk to the school district. Staff 113 recommends moving forward with negotiations since it seems like a good project for the City 114 without any additional expenditure, and assures Mounds View will get Phase 2 construction. 115 116 President Marty noted staff has indicated there would be a benefit of $2.75 million but the report 117 states $2.57 million. Director Ericson explained that when preparing the staff report he forgot to 118 add in reimbursable TIF administration expenses and did not correctly add up the billboard 119 buyout. He stated the figure is closer to $2.75 million. 120 121 Commissioner Thomas asked if this is going through the standard TIF hearing process and 122 regulations. Director Ericson stated that is correct and noted that this is not a new TIF district, 123 simply a modification to the original agreement and holding the necessary public hearings to do 124 so. All information will be presented publicly and will go through the proper channels with the 125 School District and County. 126 127 Commissioner Flaherty stated he thinks this option looks good. 128 Mounds View EDA December 12, 2005 Regular Meeting Page 4 129 President Marty noted that Phase 1 would be $65 million as built out and adding Phase 2 130 increases it to $96 million, or a $31 million addition. He stated that it seems it should be one-131 third of what Phase 1 was. President Marty reviewed the calculations for Phase 1 and Phase 2 132 and stated it really seems to be a “wash” because the City would be providing a benefit of $2.5 133 million. 134 135 President Marty stated he is very concerned about running sewer and water under the freeway, 136 noting the engineer projected the cost to be $800,000. Medtronic had agreed to pay $400,000 and 137 the City would pay $400,000. He explained he is concerned because he has seen engineering 138 estimates go “north and south.” However, if Medtronic picks up the entire cost then it would 139 relieve his concern about the accuracy of the estimate. 140 141 President Marty stated Medtronic has possession of the property and if Mounds View can get 142 Phase 2 built on Mounds View soil, it will generate a $96 million complex. He asked Ms. 143 Kvilvang about the numbers with increasing TIF to want Medtronic wants. He noted the early 144 projection that this was supposed to pay off early and asked if another $31 million building 145 project will pay off early. 146 147 Stacie Kvilvang, Ehlers and Associates, stated they looked at that issue. The original projection 148 was based on $80 per square foot as set by the Assessor. She explained that they believe the 149 building will be valued at higher than $80 per square foot so it will pay off faster. 150 151 In response to President Marty, Ms. Kvilvang advised that with this large size of project, another 152 $1 million is about half a year of savings. 153 154 Director Ericson pointed out there are $8 million in qualified costs and the City would offer $7.2 155 million in TIF assistance. When Ehlers ran the numbers based on a $96 million project and 156 factoring out the City’s 5% administration fees, then $7.2 million is available. He explained that 157 you then factor out what Medtronic will cover in costs. The value is actually 50% more than 158 with Phase 1 so the $14.8 million half is about $7.2 million. Also, the City will increase 159 franchise fees by 50% for that project, resulting in an increase in the administrative TIF fees back 160 to the City by 50%. Director Ericson explained that the benefit would be beyond $2.75 million 161 in tangible benefits by moving forward with this request. 162 163 President Marty stated that makes him feel more comfortable. 164 165 Commissioner Thomas stated her support to have staff further explore this option. 166 167 President Marty asked when the draft of 16 points was available. Director Ericson stated it was 168 not available to include in the meeting packet but each summary point was taken from the staff 169 report. 170 Mounds View EDA December 12, 2005 Regular Meeting Page 5 171 Duane McCarty, 8060 Long Lake Road, stated he hopes there will be an informational meeting in 172 advance of the public hearing as was done last summer. He stated the offer from Medtronic to 173 take over all public utility cost is generous but the City’s portion is covered through the Phase 1 174 TIF District and pools of other Districts so that does not really “save” any money over the 175 original plan. 176 177 Mr. McCarty stated he doubts staff has the answers tonight but he would like to know how much 178 this will add to TIF captured market value/tax capacities. He would also like to know how much 179 will be added to District 5 if it comes in as a subdistrict. Mr. McCarty asked how much it will 180 impact in terms of percentage the total market value/tax increments as opposed to market value. 181 As far as the offer goes for Phase 2, he stated he cannot make a decision. However at first blush 182 he is not impressed and it may or may not be worthwhile. He asked if Medtronic would also 183 provide the numbers to the City if Phase 2 was not allowed a TIF package, and if that can be 184 done considering the original plan included three phases. 185 186 Mr. McCarty stated he knows what it would add if Phase 2 is non-TIF, it would add $41,000 to 187 the kitty which will bring tax collections from $33,000 to $84,000 a year. 188 189 In response to President Marty, Mr. McCarty stated he is talking about evaluation, not the size of 190 the project. 191 192 Director Ericson stated the City can notice and hold additional sessions advertised as a public 193 meeting or disclosure of the project and everything it entails. 194 195 President Marty asked Ehlers to run those numbers and stated his support to hold an 196 informational meeting in January. 197 198 MOTION/SECOND: Thomas/Gunn. To Approve Resolution 05-EDA-211, Requesting the City 199 Council of the City of Mounds View Call for a Public Hearing on the Proposed Adoption of a 200 Modification to the Project Plan for the Mounds View Economic Development Project and the 201 Proposed Modification to the Tax Increment Financing Plan for Tax Increment Financing District 202 No. 5. 203 204 Ayes –5 Nays – 0 Motion carried. 205 206 8. REPORTS 207 208 None. 209 210 9. NEXT EDA MEETING: Monday, January 9, 2006 at 6:30 p.m. 211 212 Mounds View EDA December 12, 2005 Regular Meeting Page 6 10. ADJOURNMENT 213 214 President Marty adjourned the meeting at 7:25 p.m. 215 216 Respectfully submitted, 217 218 219 Recorded and transcribed by: 220 221 Carla Wirth 222 TimeSaver Off Site Secretarial, Inc. 223 224