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HomeMy WebLinkAbout02-13-2006PROCEEDINGS OF THE MOUNDS VIEW EDA CITY OF MOUNDS VIEW RAMSEY COUNTY, MINNESOTA Regular Meeting February 13, 2006 New Brighton City Hall 803 Old Highway 8, New Brighton, MN 55112 6:33 P.M. 1. CALL MEETING TO ORDER 2. ROLL CALL: President Marty, Vice-President Stigney, Commissioner Gunn, Commissioner Flaherty, and Commissioner Thomas. NOT PRESENT: None. 3. APPROVAL OF AGENDA MOTION/SECOND: FLAHERTY/GUNN. To Approve the February 13, 2006 Agenda as presented. Ayes – 5 Nays – 0 Motion carried. 4. PUBLIC INPUT Kenneth Glidden, 5240 Edgewood Drive, asked what rules are planned for time limits of discussions during the public hearing. He asked that the Commission be as generous and open as possible so resident concerns can be heard. Mr. Glidden asked if the Authority intends to answer questions tonight or sometime in the future. He asked if the answer will be provided when the question is asked or after all the questions have been asked. Mayor Marty stated the Authority attempts to answer questions when asked, but if the answer is not known, Staff will be asked. 5. APPROVAL OF MINUTES MOTION/SECOND: STIGNEY/MARTY. To Approve the January 23, 2006 Minutes as corrected. Ayes – 5 Nays – 0 Motion carried. Mounds View EDA February 13, 2006 Regular Meeting Page 2 6. CONSENT AGENDA No items were removed from the Consent Agenda. A. Set a Public Hearing for Monday, February 27, 2006 at 6:00 pm to Consider the Amended and Restated Development Agreement and Modification to the Business Subsidy Agreement for the Medtronic CRM Project. B. Establish an Executive Session of the EDA immediately following conclusion of the City Council meeting, Monday, February 13, 2006, to consider negotiations relating to the possible acquisition of 2390 County Road 10. MOTION/SECOND: GUNN/THOMAS. To Approve the Consent Agenda, as presented. Ayes –5 Nays – 0 Motion carried. 7. EDA BUSINESS A. Consideration of a Modification to the Project Plan for the Mounds View Economic Development Project and the Proposed Modification of Tax Increment Financing District No. 5. Economic Development Coordinator Backman explained the potential to accelerate Phase 2 of the Medtronic CRM Headquarters in Mounds View. Economic Development Coordinator Backman stated that the development agreement signed by Mounds View EDA and Medtronic provides $14.8 million in TIF assistance to Medtronic to implement the first phase of the three phase development. He explained that additional TIF assistance may be requested by Medtronic for Phases 2 and 3. He noted that Ehlers and Associates prepared a financial analysis and it is essentially the same document that was approved on August 22, 2005. He stated that changes include the increase from 820,000 to 1.2 million square feet of building space, an additional $30,400,000 in market value, $1.7 million in new tax capacity upon project completion, and an increase in the TIF Note from $14.8 to $22.9 million. He commented that the increase in the TIF Note reflects greater development costs for a significantly larger initial development phase. Economic Development Coordinator Backman stated that some people may wonder what the benefits of accelerating the development and the benefit of having thousands of employees in community are. He stated Medtronic is a unique company and opportunity for the City of Mounds View. He noted that Medtronic focuses on innovation. Economic Development Coordinator Backman stated that research and development leads to new technologies, contributes to economic growth and enhances competitiveness. He noted the two Minnesota- Mounds View EDA February 13, 2006 Regular Meeting Page 3 based companies with the highest levels of research and development expenditures are 3M with $1.18 billion and Medtronic with $1.14 billion. He noted that a significant portion of Medtronic’s research and development will take place in Mounds View. He noted Medtronic fosters technical breakthroughs and plans for the long term, and Mounds View has the opportunity to be a partner in that. Economic Development Coordinator Backman stated that the benefit to Medtronic is that innovation happens when people are brought together with different disciplines. He explained this will result in better communication flow and increased efficiency. He added another benefit is a better working environment, faster response to customers and more cost effective products. Economic Development Coordinator Backman explained how the City will benefit from the project. He stated it will provide the City with certainty as to what will be built on site and when it will be built. He commented by moving up Phase 2, this part of the campus will be on the tax rolls five to six years earlier. He stated it also provides the City with an additional commercial building with over $30 million of capital investment. Economic Development Coordinator Backman added the combined Phase 1 and Phase 2 increases the City’s market value, expands the number of high paying jobs to approximately 1,400 over time, and saves the City potentially $2.7 million in utility costs, billboard buyouts and relocation costs. He stated it provides $545,000 to upgrade Well Number 4 to ensure adequate water supply for the City, and provides $355,000 for street reconstruction projects to offset potential traffic impacts. He added it provides an estimated $40,000 in annual franchise fees. Economic Development Coordinator Backman explained that the community will benefit by this project as well, such as providing the Mounds View school district with over $30 million for referendums. Economic Development Coordinator Backman noted that by having thousands of people with jobs in Mounds View, it is likely that a portion of the workforce will buy products and services in the community. He stated there is likely to be an increased number of residents in Mounds View, and this skilled work force may become involved in the City and in the schools. Economic Development Coordinator Backman stated the amended TIF plan represents the spirit of collaboration between the City and Medtronic. He stated it reflects the City’s efforts to promote thoughtful and planned business development. He stated Medtronic is committed long term to Mounds View to make the development a world class facility. MOTION/SECOND: GUNN/STIGNEY. To waive the reading and adopt Resolution 06EDA- 215 Modification to the Project Plan for the Mounds View Economic Development Project and the Proposed Modification of Tax Increment Financing District No. 5. Vice-President Stigney welcomed Medtronic to the City and added the project will be a benefit to Mounds View EDA February 13, 2006 Regular Meeting Page 4 taxpayers. President Marty noted that a benefit of consolidation is that it will make Medtronic much more efficient, because in the past there were five different sites that needed to be coordinated. President Marty explained if TIF is decreased to $4 million from $8.1 million, the TIF value would be $18.8 million. He explained at $80 per square foot it would be paid off in 2028, and at $100 per square foot, it would be paid off in 15.5 years. Mayor Marty pointed out that with the original cap of $14.89 million and with the additional $8.1 million, the combined TIF value would be $22.9 million. He stated the original interest was $16.9 million, and now the interest will be $21.3 million, resulting in a total of $44.2 million. President Marty noted if the City did not give Medtronic TIF, this would make the TIF district pay off that much sooner. He noted that property taxes in Phase 1 would have been $563,000 and the school districts in Phase 1 would receive $163,000 per year. He noted because it is a TIF district, it does not pay off until 2033. He stated he wished to put the project on the tax rolls to affect the citizens of Mounds View as quickly as possible. President Marty noted that he does not think Medtronic would walk away from the project, but rather they need Phase 2 right now in light of demands in cardiac rhythm management and the State putting in $20.5 million for streets and roads. He stated the State moved up County Road J 20 years ahead of schedule and it was his understanding that 35W is now on the radar map. President Marty questioned the excess increments, and suggested it is not bonding if taxes are higher and noted that it does seem to be paying off sooner. He asked if this would all go into the TIF district to help it pay off sooner and once it is paid off, if it reverts to the County Auditor for redistribution. President Marty stated that in regard to the transportation issues relating to the proposed development, the development did not review or take into consideration excess traffic on City streets. President Marty noted the fiscal disparities inside the TIF district and asked if August 1, 2007 is when the first note for the TIF district will be issued. He stated this assumes the first tax increment for the District will be in 2008, and pointed out that although the property was sold in 2005, it will not be effective until 2008. President Marty stated that he has never seen the TIF application for Medtronic Phase 1 and/or Phase 2. President Marty asked for clarification if most of the new jobs in Phase 1 were transfers, and that most of the new jobs in Phase 2 would be newly created jobs. Mounds View EDA February 13, 2006 Regular Meeting Page 5 Roger McCombs, Medtronic, stated that Phase 2 is another extension and will have the same proportion of jobs as Phase 1. President Marty stated he thought that 400-700 new jobs were created each year over the past several years. Mr. McCombs responded that 300-350 jobs on average are added in Minneapolis/St. Paul per year. President Marty stressed if the TIF was kept at a lower amount, this would be a great boost to the taxpayers and this project would pay off that much sooner. Vice-President Stigney stated by accelerating this project, it will increase the project’s value to $96 million for Phase 2. He commented by Phase 1 and 2 occurring at the same time, it is a “win-win” situation for Mounds View. He stated he was thankful for Medtronic coming into the City. Commissioner Thomas stated that Medtronic is coming in and is going to adjust their development based on the assistance they are going to get. She stated the City will get less value if it gives less TIF assistance. She stated these are the terms that were discussed and negotiated. She stated she is supporting the development as it is set. Commissioner Flaherty stated there was concern if Phase 2 and Phase 3 were going to happen, and TIF levels were not discussed at that time. He stated Medtronic is a company that is negotiating with the City in good faith, and the City is negotiating with Medtronic. He stated that by rolling Phase 1 and Phase 2 into the same time slot as Phase 1, the TIF district will be reduced by five to six years. He stated this is not even mentioning all of the other bonuses the City is getting, such as the repair of Well Number 4 which would have cost the City $445,000 and was something the City needed to do anyway. He added that additional funds are going into the street infrastructure fund. He added he hopes the Medtronic employees will live in the City of Mounds View, as often employees like working close to home. He stated he sees the development as a tremendous benefit to Mounds View. Councilmember Gunn stated her support for the development. President Marty stated Medtronic is contributing to the streets and has pledged to contribute $355,000. He noted he finds this admirable and recognized that it was not required; however, as stated previously, if this was not in a TIF district, the City would be getting $560,000 per year. He stated the $355,000 is to cover a 25 year period and is very good, but compared to when the district is finally paid off, it will only be a fraction of that. Ayes – 4 Nays – 1 (Marty) Motion carried. 8. REPORTS Mounds View EDA February 13, 2006 Regular Meeting Page 6 None. 9. NEXT EDA MEETING: Monday, February 27, 2006 at 6:00 p.m. 10. RECESS President Marty recessed the EDA meeting at 7:04 p.m. to hold an Executive Session of the EDA. President Marty called the meeting back to order at 10:47 p.m. 11. ADJORNMENT President Marty adjourned the meeting at 11:12 p.m. Respectfully submitted, Recorded and transcribed by: Annette Anderson TimeSaver Off Site Secretarial, Inc.