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HomeMy WebLinkAbout09-12-2005 CITY OF MOUNDS VIEW ECONOMIC DEVELOPMENT AUTHORITY MEETING AGENDA Monday, September 12, 2005 6:30 PM 1. CALL TO ORDER 2. ROLL CALL: President Marty, Vice President Stigney, Commissioner Flaherty, Commissioner Gunn, Commissioner Thomas 3. APPROVAL OF AGENDA 4. PUBLIC INPUT: Citizens may speak to issues not on tonight’s agenda. Before speaking, please give your full name and address for the minutes. Also, please limit your comments to three minutes. 5. APPROVAL OF MINUTES A. EDA Minutes, August 8, 2005. 6. CONSENT AGENDA - NONE 7. EDA BUSINESS A. Possible Development of Laport Meadows. Presentation by Cheryl Stinski and Wanda Hart. 8. REPORTS - NONE 9. NEXT EDA MEETING: Monday, September 26, 2005 @ 7pm 10. ADJOURNMENT PROCEEDINGS OF THE MOUNDS VIEW EDA 1 CITY OF MOUNDS VIEW 2 RAMSEY COUNTY, MINNESOTA 3 4 Regular Meeting 5 August 8, 2005 6 Mounds View City Hall 7 2401 Highway 10, Mounds View, MN 55112 8 6:30 P.M. 9 10 11 1. CALL MEETING TO ORDER 12 13 2. ROLL CALL: President Marty; Vice President Stigney, Commissioners Flaherty, Gunn, 14 and Thomas. 15 16 NOT PRESENT: 17 18 3. APPROVAL OF AGENDA 19 20 MOTION/SECOND: Thomas/Flaherty. To Approve the August 8, 2005 Agenda as presented. 21 22 Ayes – 4 Nays – 0 Motion carried. 23 24 4. PUBLIC INPUT 25 26 Bill Werner, 2765 Shorewood Road, stated that he has a philosophical issue that has to do with 27 mitigation. He reviewed the dictionary definition stating that to mitigate is to make pain, grief, 28 punishment, or the like milder, and asked how it relates to the wetlands. 29 30 Director Ericson stated that in terms of wetland mitigation, the mitigation aspect relates to the 31 fact that you are taking and replacing wetlands that are potentially lost by a development and 32 mitigating it to a different area, the mitigation being the replacement. He further explained that 33 in terms of making a painful situation less, you make the loss of the wetland a less of a problem 34 by creating additional wetland in its’ place so it is termed as a mitigation. 35 36 Mr. Werner asked where they would replace the wetlands, in the City, the County or the State. 37 He clarified that the location where it would be replaced would matter. 38 39 Commissioner Flaherty explained that mitigation could be done either on the site or where the 40 development would go noting that it could be anywhere within the City or County. He explained 41 that typically the City tries to mitigate within the site itself. He further explained that if a parcel 42 of land is developed and water needs to be moved they try to mitigate within the development 43 itself. 44 45 Mounds View EDA August 8, 2005 Regular Meeting Page 2 Mr. Werner asked if this is a law or is this something that the EDA does because they think it is a 46 good thing to do. 47 48 Director Ericson confirmed that it is a law although the City whole-heartedly supports the 49 replacement of wetlands regardless. He explained that this is from the Wetland Conservation 50 Act Legislation as well as the Rice Creek Watershed District regulations. 51 52 Duane McCarty, 8060 Long Lake Road, suggested that someone on the EDA or Council explain 53 the local wetland ordinance and the priorities as set forth in the ordinance in terms of the 54 mediations that could take place. 55 56 Director Ericson stated that the City has a very aggressive position on wetland management and 57 has had for a number of years. He explained that there are two levels of wetland review in the 58 City; there is a wetland buffer that protects all land within 100-feet of a wetland noting that any 59 of activity that occurs within 100-feet of a wetland necessitates a wetland buffer permit and has 60 to come before the Council; any work that occurs within a wetland has to come before Council 61 for a wetland alteration permit and there are various standards that have to be adhered to based 62 on specific criteria. He stated that the City cannot grant a permit in excess of what is necessary 63 and is in a sense, the minimum alteration necessary to accomplish the goals of the project. He 64 stated that the intent is to limit, to whatever extent possible, any alteration or development within 65 a wetland. He stated that the City has taken the position, since the early 1990’s, that the wetlands 66 are very critical to the City’s environmental eco-system and the benefit that they provide the City 67 in terms of stormwater management, they do not want to lose the wetlands that they have adding 68 that the City has been actively protecting them for a number of years. 69 70 President Marty further clarified that it is not just stormwater management it is also for water 71 quality. 72 73 Mr. McCarty asked what the requirements are in terms of onsite retention. He asked if this is one 74 of the first requirements for onsite. 75 76 Director Ericson stated that in terms of mitigating on site or accommodating stormwater 77 management features on site, it is the intent of the City that a project would accommodate 78 stormwater management on site on a property. He stated that it is important that the stormwater 79 runoff generated from one property does not continue to flow downstream and cause further 80 problems. He stated that in terms of mitigation there is a hierarchy of where the City can 81 mitigate noting that the first goal is to always mitigate on site, the second is to mitigate 82 immediately adjacent to the site and third is within the Watershed district. He stated that this is 83 also a recognized goal of the Watershed District and is definitely a requirement that mitigation is 84 accommodated on site. 85 86 Mounds View EDA August 8, 2005 Regular Meeting Page 3 5. APPROVAL OF MINUTES. 87 88 A. EDA Minutes for July 11 and July 25, 2005 will be presented at the next 89 EDA Meeting. 90 91 6. CONSENT AGENDA 92 93 NONE 94 95 7. EDA BUSINESS 96 97 A. Resolution 05-EDA-207 Approving the Development Agreement to Provide 98 $250,000.00 in Tax Increment Financing (TIF) Assistance to SYSCO Food 99 Services of Minnesota to facilitate the expansion of the Business located at 100 2400 County Road J in Mounds View. 101 102 Economic Development Coordinator Backman stated that SYSCO Minnesota has outgrown its 103 available truck and employee parking and desires to add capacity. He stated that the company is 104 seeking to expand the SYSCO PUD site by approximately three acres. He stated that on August 105 3, 2005 the Mounds View Planning Commission approved SYSCO’s request for a PUD 106 amendment and they approved the Comprehensive Plan amendment to expand the parking lot 107 and driveway. He stated that the outlot that is part of the 48 acres east of SYSCO has been 108 basically kept natural noting that the three acres would be transferred back from the City to 109 SYSCO for this particular expansion. He stated that SYSCO has estimated that the expansion 110 project would cost approximately $1.2 million and the budget has been included for review. 111 112 Economic Development Coordinator Backman stated that SYSCO has requested $250,000.00 in 113 TIF assistance to pay for extraordinary development costs, specifically stormwater management 114 and wetland mitigation expenses noting that the company has submitted a completed a TIF 115 application to the City. He stated that the project includes the construction of parking areas to 116 the east and the south side of the cold storage portion of the complex and reviewed with the 117 Commission. He explained that this would require the relocation of the existing stormwater 118 pond to the south and east of its’ present location. 119 120 Economic Development Coordinator Backman stated that Briggs and Morgan prepared a draft of 121 the agreement noting that the agreement reflects a pay-as-you -go TIF reimbursement. He 122 explained that the terms if the tax increment revenue would be three years at 5-percent interest 123 adding that in the first two years the company has committed to creating 40 fulltime jobs at an 124 hourly wage of at least $18.00 per hour from the date the project is completed. He stated that 125 initially they talked about 100 jobs over five years and typically for the purposes of deed and 126 other State agencies they are typically looking at what is created over the first two years. He 127 provided the Commission with a breakdown of the positions noting that out of the 40 jobs the 128 Mounds View EDA August 8, 2005 Regular Meeting Page 4 positions would include 12 drivers, 12 would be sales, 10 in the warehouse and six would be 129 administrative/office functions. He stated that Staff is recommending that the EDA adopt the 130 resolution approving the development agreement to provide $250,000.00 in TIF assistance to 131 SYSCO Food Services of Minnesota. 132 133 Economic Development Coordinator Backman indicated that Ehlers has recommended revising 134 two elements within the proposed draft agreement and referenced page four, where it discusses 135 tax increment definitions noting that each of the development agreements typically has various 136 definitions that refer to what the district is. He explained that they should specify a percentage in 137 the definitions noting that due to the way it is currently written SYSCO would potentially receive 138 all of the increments and this is a healthy district right now with a balance of over $300,000.00. 139 He further explained that if they don’t change it, it would basically be paid off in a year even 140 though they have a term of three-years and if it is in this language the increment would come in 141 and basically take care of the note. He referenced C-1, Exhibit B, stating that this is the TIF Note 142 itself, and if they look at the third paragraph, which outlines the payment schedule over three-143 years and should clarify the intent. He stated that the sentence stating ‘on each payment date the 144 authority shall pay by check or draft and mail to the person registered as the owner of the note, at 145 the close of the last business day of the authority preceding such payment date an amount equal 146 to the sum of the tax increments received by the authority during the six-month period preceding 147 such payment date’ adding that rather than an amount equal to the sum of the increments it 148 should be 30-percent of the increments. He stated that there should be a reference to ‘an amount 149 equal to the sum of 30-percent’. He stated that he would review this with Staff to ensure that 150 they have the correct language adding that it should be consistent throughout the document. He 151 explained that if these changes are not incorporated and it is generating a $309,000.00 increment 152 the note would be paid off in less than a year. He stated that these are the two areas of change 153 and assured the Commission that Staff would review the document to make sure that all other 154 areas are accurate. 155 156 Commissioner Thomas asked why Staff recommended 30-percent and what other scenarios were 157 used to determine the payment structure. 158 159 Economic Development Coordinator Backman explained that if they are looking at payments 160 over three years and the amount is $250,000.00 they would have the principal of approximately 161 $83,333.00 and then factor in the interest would bring the payment to approximately $90,000.00 162 for one year, which would represent approximately one-third of the increment that is currently 163 being generated. He stated that this would reflect a three-year scenario. 164 165 Commissioner Flaherty asked if this is based on 2006 or 2008 dollars and asked for clarification 166 as to why it would be a good thing to extend this out over a three-year period. 167 168 Economic Development Coordinator Backman explained that it is not so much the time value of 169 money it is more in terms of cash flow and making sure that the City covers their obligations. He 170 Mounds View EDA August 8, 2005 Regular Meeting Page 5 noted that typically the City has had terms longer than three years noting that the consensus was 171 to have the assistance within a defined, shorter period of time. He stated that Scott McGuire, 172 CFO, also indicated that this would be a sufficient time period for them. 173 174 Vice President Stigney stated that it was his understanding that SYSCO indicated that cash flow 175 was not a problem for them and they didn’t care if they got it upfront or stretched out. He stated 176 that if the City received a one-year TIF then the TIF would be ready to close out when the TIF 177 District is ready to close out. He stated that to him this appears as if they are extending the TIF 178 District to accommodate SYSCO and he has a problem with that. 179 180 Economic Development Coordinator Backman stated that the City is looking at various aspects 181 in terms of cash flow noting that the City would still have the ability to decertify the district five 182 years early noting that it would not preclude a lot of options for the City. 183 184 Vice President Stigney asked how the City could decertify a district if they are still collecting 185 revenues on it over a three-year period. He asked why the City wouldn’t want them to pay it 186 back within the one-year and close the district. 187 188 Economic Development Coordinator Backman stated that the City has various projects currently 189 in the works and have ideas on how the City would improve the Highway 10 corridor noting that 190 it would be a bit premature to presume how much the City would spend on these efforts right 191 now. He stated that hopefully in the next year or two Staff would have a better sense of what 192 those improvements would costs. 193 194 Vice President Stigney stated that when a district has met its purpose it is his personal belief that 195 this is when the district should be closed out because it costs the taxpayers money to keep the 196 districts going. 197 198 President Marty explained that right now with the TIF Districts the City captures 100-percent of 199 the taxes coming in. He noted that the consultants have pointed out for years that to redesign and 200 redo County Highway 10 would cost far more. He stated that even if the City didn’t spend a 201 dime of the TIF pool up to the time the districts would be re-certified the City would still not 202 have enough money to redo County Highway 10. He stated that they could go ahead and tax the 203 citizens to redo Highway 10 and install a couple of trails. He stated that adding trails, 204 landscaping, repairing some of the intersections and making County Highway 10 safer and more 205 pedestrian friendly would take a lot more money than what the City has. He explained that this is 206 one of the main purposes the City has been earmarking TIF dollars for. He stated that they could 207 also use TIF for housing and redevelopment costs too noting that if they de-certify the district 208 early the City would not have the funds available without taxing for them. 209 210 Vice President Stigney clarified that President Marty’s philosophy is that the City should milk 211 every dollar the City can legally get from the TIF district. He stated that he has a problem with 212 Mounds View EDA August 8, 2005 Regular Meeting Page 6 this noting that this is just one district and the City has three districts. He stated that the City has 213 to consider what they are charging the taxpayers noting that the taxpayers are picking up 214 approximately $61,000.00 a year for SYSCO for fiscal disparities. He agreed that everyone 215 would like to get the maximum dollars noting that there is a time limit for these districts when it 216 has met its’ original purpose. He stated that he believes that when the development is done it 217 should be closed out. 218 219 Director Ericson pointed out that by adopting this development agreement and authorizing the 220 three-year TIF note for this project it does not preclude the authority for having an opportunity to 221 review the financing of the TIF Districts, City obligations and expenditures to ensure that the 222 City has the necessary funds available. He stated that it is his understanding that there are no pre-223 payment penalties and the City could pay off the TIF note before a year concludes. 224 225 President Marty confirmed that it is setup so that it would come back so that the City could 226 review the TIF priorities and Districts. He referenced Page 7, Article 3, Item 3.2, No. 2, noting 227 that it states that an unpaid balance of the note shall bear simple, non-compounded interest from 228 the date of issuance of the note at 5-percent per annum and interest shall be computed on the 229 basis of a 365-day year with 12 30-day months’ and asked for clarification. 230 231 Vice President Stigney explained that what he is trying to suggest is that they make it a one year 232 district, with one payment and they pay-as-you-go one payment. 233 234 Economic Development Coordinator Backman explained that with TIF notes there is typically an 235 interest rate that is considered as part of the TIF note. He stated that a 5-percent rate is a good 236 rate and is typically used for companies with strong financials. He stated that they have had rates 237 that have ranged from the lower interest all the way up to 8-percent noting that in terms of the 238 computation, the 365-day/year is the standard calculation method and the interest rate is applied 239 to the principal for the $250,000.00. 240 241 Economic Development Coordinator Backman further explained that in terms of the calculations 242 the City is estimating that over the three-year period of time, as payments are coming in, the City 243 would be making payments back to the developer, i.e. SYSCO. He stated that under usual 244 circumstances the City is paying principal and interest noting that the way it was structured the 245 City was only able to pay on the interest and it was not being paid off. He explained that 246 ultimately the risk is on the developer because if the increment were not sufficient to pay off the 247 note, at the end of the note time period they would be out. 248 249 President Marty clarified that the City would be paying SYSCO 5-percent interest on the 250 $250,000 over the three-year time period. 251 252 Economic Development Coordinator Backman confirmed that there would be interest on the 253 $250,000. 254 Mounds View EDA August 8, 2005 Regular Meeting Page 7 255 President Marty referenced Page 8, Section 3.3, Business Subsidies Act, Item 2, states that ‘if the 256 goals are met in part the developer would pay a portion of the business subsidy, plus interest, 257 determined by multiplying the business subsidy by a fraction, the numerator, of which is the 258 number of jobs of the goals which are not created at the wage level set forth above and the 259 denominator, which is 40’ and clarified that if they do not create the jobs they state then they 260 would pay the City interest back. 261 262 Economic Development Coordinator Backman stated that they would have to re-pay a portion of 263 the business subsidy plus interest. He explained that it holds their feet to the fire in the sense that 264 the City wants to have job creation and that the City has expectations about the wage levels. 265 266 Commissioner Flaherty stated that when this first came up at the EDA Commission hearing he 267 was not very happy because it came on the heels of everything else when the EDA was talking 268 TIF District as far as Medtronic was concerned. He explained that they had decided as a 269 Commission that they wanted to review the TIF Districts and determine what exactly the TIF 270 Districts are earning and exactly how much the City has in districts. He stated that this is a bit 271 quick for him noting this came back up again before they have had an opportunity to review 272 where the districts are, where they are going, where they want to decertify and what funds the 273 City has with the increment monies. He stated that he is still of this mindset noting that it is 274 quick for him coming on the heels of the Medtronic deal. 275 276 Commissioner Thomas stated that she is stilling going back and forth on this noting that she has 277 expressed concerns in the past with regards to spreading the payments out, when knowing what 278 they want to do and understanding still the cash flow issues, what they want to do with the funds. 279 She stated that she tends to agree with Vice President Stigney. She noted that this is a difficult 280 situation and suggested, as a compromise, a 50-percent split taking it down to a two-year spread 281 She stated that it is her understanding that they have the cash flow, at that point, in that district, 282 without taking it too far out. She stated that this would cut it down to a reasonable planning level 283 for the City without dragging it out and allows the City to cash flow some items to get the project 284 going. She noted that they couldn’t wait until next year adding that this is where she believes the 285 City is in trying to manage a compromise. 286 287 President Marty stated that he spoke with Phil Seipp, President/CEO of SYSCO, earlier this 288 afternoon noting that Mr. Sipes explained that this is time sensitive and if this doesn’t go 289 through, their cap is approximately $1 million and in reviewing the spreadsheets the amounts 290 were over $300,000 and the criteria that SYSCO uses is that if they can keep it under $1 million 291 they would get the funds from their corporate headquarters, if not SYSCO might be looking to 292 invest in their money in other areas, possibly outside of the State of Minnesota. He stated that he 293 sees SYSCO as being a very good neighbor and strong business here in Mounds View and it is 294 not like they are asking for millions of dollars. He stated that they pay their taxes and they have 295 been a growing business and sees this as a positive way that the EDA Authority and City could 296 Mounds View EDA August 8, 2005 Regular Meeting Page 8 use as a tool to help compliment SYSCO noting that this would be paid back to the City. He 297 stated that he is going ask Economic Development Coordinator Backman and Director Ericson to 298 clarify how the 50-percent versus the 30-percent would impact the City. 299 300 Economic Development Coordinator Backman confirmed stating that in terms of the $1 million 301 relative to SYSCO that is their threshold from Corporate noting that if it exceeds this amount it is 302 probable that SYSCO would look at locations in the Wisconsin or Iowa areas. He stated that he 303 is concerned about the possibilities of Rice Creek Watershed coming back with additional 304 changes. He stated that they have had some discussions with the State about finding an 305 additional $50,000 to $100,000 so that they do not end up with a gap. He stated that they met 306 last week in an effort to have this covered in the event that the Watershed does come back with 307 additional changes. He stated that in regards to the two-years versus three-years, a document 308 Ehlers just completed has been included in their packet noting that it addresses the state of the 309 health of the districts. He reviewed the district fund balances with the EDA noting that the 310 healthiest district at the end of 2004 was District 3. He noted the revenues coming in stating that 311 the revenues from District 1 outshined everything else. He stated that the district had over 312 $600,000 in revenues coming in noting that all together revenues coming in for the first half of 313 2005 was $861,000, which was offset by expenses of $143,000 with a current balance of 314 $1,060,000. He stated that the second-half payments coming in with another $861,000.00 noting 315 that there would be developer payments and administrative costs. He stated that bottom line the 316 City could have a balance at the end of December of $1,600,000. He stated that in looking at the 317 individual districts the largest district would be District 1 with approximately $900,000; District 318 2, the smallest district, would have approximately $133,000; He noted that District 2 was the 319 district where they decertified 87 parcels this past summer; and District 3 would have $633,000. 320 He stated that on that basis he would agree that a two-year payout would work. 321 322 Vice President Stigney stated that it is interesting to note that this passive open space land that 323 was given to the City for the purpose of keeping it as open space land and now SYSCO wants to 324 develop on it and change it to heavy industrial. He stated that he does not have a big problem 325 with this if they can mitigate this in some way and the City does not lose the wetland area or the 326 purpose of the wetland. He stated that he does have problems with SYSCO asking for TIF 327 assistance. He noted that they also have two billboards in the area adding that he questions 328 whether SYSCO really needs TIF assistance. He stated that if SYSCO wants to build a new 329 wetland they should do it on their own dime. 330 331 Commissioner Flaherty acknowledged that SYSCO has been a good neighbor in Mounds View 332 adding that the City appreciates their efforts. He stated that he understands the $1 million 333 benchmark from Corporate noting that he has had experience with this and this is a big concern. 334 He stated that he understands that this is why they are asking for the TIF assistance. He stated 335 that he is in between on this issue adding that he would be inclined to go with the 50/50 option 336 versus a three-year payout. 337 338 Mounds View EDA August 8, 2005 Regular Meeting Page 9 Vice President Stigney stated that he would like further clarification on the 50/50 split. He 339 suggested that the 50/50 split should be 50-percent of what they are asking for, which would be a 340 two-year payout at $125,000. 341 342 MOTION Stigney/ To adopt Resolution 05-EDA-207 Approving the Development Agreement 343 to Provide a 50/50 split with a Two-Year Payout at $125,000.00 in Tax Increment Financing 344 (TIF) Assistance to SYSCO Food Services of Minnesota to facilitate the expansion of the 345 Business Located at 2400 County Road J in the City of Mounds View, Minnesota. 346 347 Motion dies due to lack of a second. 348 349 MOTION/SECOND: Thomas/Marty. To adopt Resolution 05-EDA-207 Approving the 350 Development Agreement to Provide a 50/50 split with a Two-Year Payout at $250,000.00 in Tax 351 Increment Financing (TIF) Assistance to SYSCO Food Services of Minnesota to facilitate the 352 expansion of the Business located at 2400 County Road J in Mounds View. 353 354 Ayes –4 Nay – 1 (Stigney) Motion carried. 355 356 8. REPORTS 357 358 A. Update regarding the Medtronic Redevelopment Project 359 360 Economic Development Coordinator Backman provided the Commission with a brief update on 361 where the City is at on the County Road J Reconstruction project. He referenced the meeting 362 held on July 18th noting that several things have been accomplished relative to the road project 363 including: 364 • A meeting was held with MnDOT to discuss geometric needs for the future of the 365 35W/County Road J interchange. 366 • Wetland and threatened/endangered species fieldwork has been completed; 367 • An initial meeting has been held with the Rice Creek Watershed District to discuss the 368 Judicial Creek impacts. 369 • There has been work on the overall hydrology, watershed boundaries and preliminary 370 stormwater pond sizing and location. 371 • Development of a bridge plan and elevation concept drawing is under way. 372 • Soil borings have commenced in this area. 373 • Meetings have been held with the Medtronic Staff and Engineers to coordinate the tie-ins to 374 the Coral Sea improvements. 375 376 Economic Development Coordinator Backman stated that the current actions include: 377 • Shoreview City Council is holding a workshop to discuss the County Road J Reconstruction 378 project. 379 • A utility meeting is scheduled for Tuesday, August 9, 2005, that would include all utilities 380 Mounds View EDA August 8, 2005 Regular Meeting Page 10 along County Road J. 381 • An Open House for the County Road J Reconstruction Project is scheduled for Tuesday, 382 August 9, 2005, at the Blaine City Hall, 4:30 p.m. to 7:00 p.m. to allow the public an 383 opportunity to ask questions about the project. 384 • The goal of Ramsey County and S.E.H. to have design work 30-percent done by the end of 385 August 2005. 386 387 9. NEXT EDA MEETING: Monday, August 22, 2005 at 6:00 p.m. 388 389 10. ADJOURNMENT 390 391 President Marty adjourned the meeting at 7:20 p.m. 392 393 Respectfully submitted, 394 395 Recorded and transcribed by: 396 Bonnie Sullivan 397 TimeSaver Off Site Secretarial, Inc. 398