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HomeMy WebLinkAbout10-24-2005 CITY OF MOUNDS VIEW ECONOMIC DEVELOPMENT AUTHORITY MEETING AGENDA NEW BRIGHTON CITY HALL Monday, October 24, 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 22, 2005 6. CONSENT AGENDA 7. EDA BUSINESS A. Presentation by Wanda Hart, Coldwell Banker, re Laport Meadow Residential Project. B. Resolution 05-EDA-210 Authorizing the Laport Meadow Wetland Delineation Study. 8. REPORTS 9. NEXT EDA MEETING: Monday, November 14, 2005 @6pm (New Brighton City Hall) 10. ADJOURNMENT PROCEEDINGS OF THE MOUNDS VIEW EDA 1 CITY OF MOUNDS VIEW 2 RAMSEY COUNTY, MINNESOTA 3 4 Regular Meeting 5 August 22, 2005 6 Mounds View City Hall 7 2401 Highway 10, Mounds View, MN 55112 8 6:02 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: Flaherty/Thomas. To Approve the August 22, 2005 Agenda as presented. 21 22 Ayes –5 Nays – 0 Motion carried. 23 24 4. PUBLIC INPUT 25 26 None. 27 28 5. APPROVAL OF MINUTES. 29 30 The following corrections were requested: 31 32 • Page 3, line 112, change “EDC” to read “EDA” 33 • Page 4, Line 154, change “RIK, SYSCO” to read “RLK, Kuusisto” 34 • Page 8, Line 310, change “that if they could put together the” to read “that if they could 35 get the” 36 37 MOTION/SECOND: Marty/Flaherty. To Approve the July 11, 2005 Minutes as amended. 38 39 Ayes –5 Nays – 0 Motion carried. 40 41 6. CONSENT AGENDA 42 43 None. 44 45 Mounds View EDA August 22, 2005 Regular Meeting Page 2 7. EDA BUSINESS 46 47 A. Consideration of EDA Resolution 05-EDA-208A, a Resolution Approving the 48 Elimination of Parcels from TIF District No. 3 and 05-EDA-209B, a 49 Resolution Approving the Establishment of TIF District No. 5, a Special-50 Legislation Economic Development District. 51 52 Economic Development Coordinator Bachman referenced the packet provided to the 53 Commission noting that at the June 27, 2005 meeting, the EDA and City Council adopted 54 resolutions approving the sale of land comprising the Bridges of Mounds View Golf Course, 55 approved the Medtronic Development proposal, terms of the purchase agreement. He explained 56 that in order to facilitate this development, the City sought passage of special TIF legislation 57 during the 2005 legislative session. On May 23, 2005, the Minnesota Legislature approved the 58 Public Finance Bill that included the City’s legislation and allows it to create a 25-year Economic 59 Development TIF District, with variations from TIF law authorized in Chapter 152, Article 2, 60 Section 26. The Economic Development TIF District legislation requires that the Boards for 61 Ramsey County and the Mounds View School District need to approve the legislation. Both 62 Boards approved the TIF District legislation for Medtronic on June 28, 2005. 63 64 Economic Development Coordinator Bachman used a colored map to describe the parcels and 65 adjacent rights-of-way that the proposed District No. 5 encompasses as well as District No. 3. 66 He noted that Parcel Number 05-30-23-22-0004 is 46 acres that will be retained by the City for 67 open space. This parcel is currently in TIF District No. 3 and it would be part of the new district, 68 less the three acres that is being deeded back to SYSCO Minnesota for that company’s expansion 69 project. 70 71 Economic Development Coordinator Bachman explained that the new District is being created to 72 facilitate development of Phase 1 of a business campus for Medtronic, which includes 73 approximately 820,000 square feet of office space. A development agreement has been 74 authorized, contingent on the approval of the proposed TIF Plan and establishment of TIF 75 District No. 5. If approved, development is likely to begin in the Fall of 2005. 76 77 Economic Development Coordinator Bachman noted the Mounds View EDA and City Council 78 have determined that it will be necessary to provide assistance to the project for certain TIF-79 qualified costs. He advised that Staff recommends approval of the two resolutions, as submitted. 80 81 Commissioner Thomas stated she held a brief discussion with Economic Development 82 Coordinator Bachman regarding this agenda item. She asked Ms. Eldridge to review the issues 83 related to Parcel Number 05-30-23-22-0004 and why Staff recommends it be included in the TIF 84 District. She noted that it would be undeveloped and she is uncomfortable with including this 85 parcel if it doesn’t have to be included in TIF. 86 87 Mounds View EDA August 22, 2005 Regular Meeting Page 3 Economic Development Coordinator Bachman explained that it is the recommendation of Ehlers 88 & Associates to include it for several reasons. He advised that if there are any TIF expenses 89 within that area such as roads or trails, or something TIF eligible, it could be paid by increment 90 generated from the District. He explained that with a TIF District, the City can subtract parcels 91 but once created the City cannot add parcels to the District. However, Staff is flexible in looking 92 at the wishes of the EDA and in looking at other options relative to this parcel. 93 94 Commissioner Thomas asked why there would be anything inhibiting the use of TIF dollars since 95 they would be TIF eligible improvements regardless of whether this parcel is or is not within the 96 TIF District. 97 98 President Marty noted the parcel in question is already within TIF District No. 3. 99 100 Commissioner Thomas suggested the EDA could remove the parcel from TIF District No. 3 and 101 leave it out completely. 102 103 Shelly Eldridge, Ehlers & Associates, Inc., advised that one reason Staff recommended to leave 104 the parcel in for now, but maybe not forever, is that the City does not yet know what will be on 105 that parcel. However, once the buildings are located Staff will know if more land is needed. 106 Also, once the City has a better idea of where and how the buildings will be set, actual land and 107 lots splits for both SYSCO and Medtronic, and what is happening with the SYSCO outlot, then 108 the EDA can decide if the parcel should be taken out of the TIF District. 109 110 Ms. Eldridge explained that putting the parcel in the District now will give the EDA more 111 flexibility and there is nothing to preclude removing the parcel in the future, once the EDA 112 knows what will be happening on the parcel. In addition, the EDA can use some of the 113 increment from older districts. However, Staff has not yet gone through that analysis or 114 determined whether the EDA will change or decertify districts. Ms. Eldridge stated she believes 115 it would be premature to take this parcel out of the TIF District at this point and recommended it 116 be reviewed again in the future. 117 118 Commissioner Thomas stated she had forgotten about the triangle piece of property and whether 119 the City may need it for an access way. She asked if the City can get a right-of-way easement. 120 121 Vice-President Stigney questioned the impact to the money that Medtronic is giving the City for 122 trailways. 123 124 Economic Development Coordinator Bachman explained that the contribution to the park 125 dedication is $865,000 of which up to $150,000 can be allocated for trails. There is no 126 specification whether the parcel is in TIF District No. 3 or TIF District No. 5 or some other 127 configuration. There is no regulation or specificity in that regard. He used a map to note the 128 location of the triangular piece of property that was referred to by Commissioner Thomas. 129 Mounds View EDA August 22, 2005 Regular Meeting Page 4 130 Economic Development Coordinator Bachman advised that OPUS does not anticipate any 131 buildings would be located on the SYSCO property but there would be a fire road so they will 132 grant easements. 133 134 Vice-President Stigney pointed out that if an easement is needed, the City owns the property and 135 could grant the easement. Economic Development Coordinator Bachman stated that is correct. 136 137 Vice-President Stigney noted that if they want to purchase the triangular piece of property, they 138 could negotiate with the City. Economic Development Coordinator Bachman concurred. 139 140 Vice-President Stigney stated that since this parcel is not part of the 72.2 acres they purchased, he 141 is uncomfortable with putting it in TIF District No. 5. 142 143 Commissioner Flaherty stated the parcel is “healthy” in TIF District No. 3 and he sees no 144 rationale for putting it in TIF District No. 5. Also, the parcel isn’t part of the development or 145 needed for the development. 146 147 President Marty stated his agreement with Commissioner Flaherty’s comments. 148 149 Commissioner Thomas stated this would be a tax-exempt property and it is not doing anything in 150 TIF District No. 3 so it would be fine to take it out. But, she is not sure that it needs to be put 151 into TIF District No. 5. If removed from TIF District No. 3, it would be totally decertified at that 152 point. She stated she has not yet determined why it should be included in TIF District No. 5 153 unless for access, but it appears the City can get easements anyway. 154 155 Commissioner Gunn pointed out that if the parcel is put into TIF District No. 5, the EDA would 156 have the TIF pool to use. 157 158 Commissioner Thomas noted the TIF pool could be used anyway. 159 160 Commissioner Gunn stated it was discussed in the past about decertifying sooner and, in that 161 case, the TIF pools disappear. 162 163 Commissioner Thomas stated that with this piece of property, it makes no difference to either 164 TIF District and the pool of funds would be available regardless. She stated she does not see the 165 benefit of transferring this parcel to TIF District No. 5 unless it is needed for access. 166 167 President Marty agreed and noted it could stay alive for the next 27 years. 168 169 Mounds View EDA August 22, 2005 Regular Meeting Page 5 Commissioner Thomas pointed out that it is a tax-exempt property anyway so it would not make 170 a difference. She restated her position that she is not comfortable with putting the parcel in a 171 TIF District if there is no reason to do so. 172 173 Commissioner Flaherty agreed and noted the EDA still has options to use, if needed. He added 174 that if there is an easement issue, it can be easily rectified. 175 176 Economic Development Coordinator Bachman stated he generally supports recommendations of 177 advisors but for this particular issue, Staff is flexible. He explained that the key issue is the other 178 five parcels comprising the 72.2 acres and the 46 acre triangular area is less critical for this 179 development. He stated that Parcel Number 05-30-23-22-0004 could be included or excluded 180 from the District from Staff’s point of view. 181 182 President Marty stated his preference to leave the parcel in TIF District No. 3. 183 184 President Marty read a paragraph from Page 2 of the Staff report indicating: “The Mounds View 185 EDA and City Council have determined that it will be necessary to provide assistance to the 186 project for certain TIF-qualified costs. These include, but are not limited to, land acquisition, site 187 improvements, public utilities, parking facilities, roads, billboard removal and relocation, and 188 demolition. The amount and use of TIF by Medtronic is outlined in the previously approved 189 development agreement. 190 191 President Marty stated the issue of land acquisition pertaining to Blaine has been mentioned a 192 number of times at past meetings. In his opinion, that would be the last priority. He asked why 193 land acquisition is listed first, ahead of everything else. 194 195 Economic Development Coordinator Bachman explained that the Staff report includes the listing 196 as shown in the legislation. It is not a listing of priority. He stated he believes there are other 197 items that would entail more TIF expenditures. 198 199 President Marty referred to the Ehler’s presentation, and drew the EDA’s attention to the list of 200 authorized uses on Page 2, noting the project cost total of $32,700,000 and interest of 201 $16,947,319, but the land acquisition is only $2,100,000. 202 203 Sid Inman, Ehlers & Associates, explained that this is a TIF Plan and the numbers are estimated 204 costs. He advised that the EDA can make line item changes as needed. With regard to President 205 Marty’s earlier question, he explained that the State Auditor lists acquisition first but that doesn’t 206 mean it would be reimbursed first. 207 208 President Marty noted that even with the interest removed, it still equals, $15,752,681. He stated 209 his understanding that this project would have a cap of $14.8 million but the numbers show it is 210 Mounds View EDA August 22, 2005 Regular Meeting Page 6 almost $1 million higher than that and does not include almost $17 million in interest being paid 211 to Medtronic. 212 213 Mr. Inman explained that this is a budget and the amount they get will be limited by the contract. 214 That limit is $14.8 million. He explained that this is an estimate and the EDA can ago lower but 215 cannot go higher so it is generally estimated on the higher side. 216 217 City Attorney Riggs concurred that there is a cap of $14.8 million. 218 219 Mr. Inman stated the EDA is legally obligated to $14.8 million and the interest would be on top 220 of that. 221 222 President Marty noted there will be almost $17 million of interest on top of the $14.8 million 223 amount. 224 225 Economic Development Coordinator Bachman noted that administrative costs show 10% but the 226 cap is at 5% so that would be a difference of about $1 million less in expenditures. He restated 227 this is a budget estimate and if there are additional increments because of larger valuations, this 228 could get paid off early and back on the tax rolls in 19.5 years. In that case, less interest would 229 be paid. 230 231 Mr. Inman stated they tend to recommend to give the broadest range of possibilities. That is why 232 Staff recommended the parcel be included and why the budget is somewhat higher. He noted 233 that interest would have to be paid in any case no matter how it is financed, even if bonds are 234 issued. The interest is to finance the cost of the improvements. 235 236 President Marty noted the administrative costs would be about $1 million less so the full 237 $2,100,000 would go to Blaine for the land acquisition. Mr. Inman stated that would be correct if 238 it got that far down in the “pecking order.” 239 240 President Marry read the Interfund Loan Requirement indicating: “If the City wants to pay for 241 administrative or other expenditures from a tax increment fund, it is recommended that a 242 resolution authorizing a loan from another fund be passed prior to the issuance of the check.” He 243 asked if there are any plans for interfund loans. 244 245 Mr. Inman stated it is on the budget page. 246 247 President Marty asked where those funds would come from. 248 249 Mr. Inman stated they are defined to give flexibility and if the EDA decided to do that, Staff will 250 bring back recommendations and resolutions for approval that identifies where the funds would 251 Mounds View EDA August 22, 2005 Regular Meeting Page 7 come from. He explained this section merely memorializes the fact that the EDA may do that. 252 However, this is a method of finance and would need to be approved by the EDA by resolution. 253 254 President Marty noted if the State compresses business taxes, as they have in the past, and the 255 EDA gets into a bind, the EDA could transfer from the TIF pool in order to meet obligations. 256 257 Mr. Inman stated that would not be the case for this situation because the contract limits the 258 developer to whatever taxes they generate. If there is tax compression, they just get whatever 259 they pay. The EDA would not be required or obligated to find funds to pay them. 260 261 President Marty stated he understands this being included as a “safe gap” but he does not 262 understand why interfund loans and transfers are included as $5 million. 263 264 Mr. Inman explained that none can take place unless approved in the future and it is only 265 included as an option. 266 267 Director Ericson explained that the Highway 10 plan is adopted and if financing comes up short 268 and there are excess dollars in TIF District No. 5, then the City could authorize a loan to borrow 269 from that District. This resolution would allow that ability but it does not mean the City would 270 have to approve an interfund loan. It would have to be approved by a resolution adoption. 271 272 President Marty stated his understanding this TIF District is a pay-as-you -go so it will not be 273 creating a pool. 274 275 Mr. Inman stated it does not create a pool but experience is that it will be paid off early so in a 276 certain period of time, the EDA will have to decide whether to shut down the district and put it 277 back on tax rolls. Or, it could be used for a different project such as a highway project 278 mentioned by Director Ericson. 279 280 Commissioner Thomas stated it is the same as TIF District No. 3; the EDA can determine if it 281 wants to end it early or use the funds for other projects. 282 283 Economic Development Coordinator Bachman stated another option is that utilities could be paid 284 from administration. 285 286 President Marty referred to the last paragraph of Page 2-2, Subsection 2-5 indicating: “The EDA 287 or City may acquire any parcel within the District including interior and adjacent street rights-of-288 way…The EDA or City may acquire property by gift, dedication, condemnation or direct 289 purchase from willing sellers in order to achieve the objectives of this TIF Plan.” He stated he 290 personally does not like condemnation and including it makes him uncomfortable. 291 292 Mounds View EDA August 22, 2005 Regular Meeting Page 8 Commissioner Thomas stated some of the language is standard “boiler plate” and not specific to 293 just this District. 294 295 President Marty referenced Page 2-3, Subsection 2-6, Classification of the District, and read the 296 following definition of TIF: “Economic development district’ means a type of tax increment 297 financing district which consists of any project, or portions of a project, which the authority finds 298 to be in the public interest” and then lists three different reasons. He stated all three are to the 299 benefit of the State and does not reference local jurisdiction. He stated that the creation of TIF 300 Districts is of benefit to the State. 301 302 Commissioner Thomas noted President Marty is reading from the State Statute, which is why it 303 is referencing benefits to the State. 304 305 President Marty read Subsection 2-7, Duration of the District, indicating “Pursuant to the special 306 legislation, subd. 2(b), the duration of the District will be 25 years after receipt of the first 307 increment by the EDA or City. The date of receipt by the City of the first tax increment is 308 expected to be in 2007. He pointed out that the clock won’t “start ticking” for about two and a 309 half years. 310 311 Commissioner Flaherty noted that section also indicates: “The EDA or City reserves the right to 312 decertify the District prior to the legally required date.” He explained the EDA can decertify the 313 district prior to the legally required date so it wouldn’t have to go the full 27 years. 314 315 President Marty referenced Page 2-4, Subsection 2-8, that indicates: “…the Original Net Tax 316 Capacity as certified for the District will be based on the market values placed on the property by 317 the assessor at the time the property is classified as taxable.” He stated it is up to the Ramsey 318 County Assessor but the City’s appraisal came in at $10 million. 319 320 President Marty stated he does not understand the chart at the bottom on Page 2-4 and questioned 321 the Original Local Tax Rate of 125.768%. 322 323 Mr. Inman referenced the chart on Page 2-9 and explained the combined tax rates of all taxing 324 jurisdictions. 325 326 President Marty referenced the first paragraph on Page 2-7, that indicates: “The cost of all 327 activities to be considered for tax increment financing will not exceed, without formal 328 modification, the budget above pursuant to the applicable statutory requirements.” He asked if 329 the costs could be modified upwards. 330 331 Mr. Inman referred to Page 2-6 and explained that the State Auditor will allow the EDA, by 332 resolution, to move money from one area to another. However, that at the end of the day it 333 Mounds View EDA August 22, 2005 Regular Meeting Page 9 cannot be increased but can be reduced. To increase the amount the City would have to repeat 334 the entire public hearing process. 335 336 President Marty asked about the costs. Mr. Inman stated they have to be statutory qualified costs. 337 338 President Marty asked for an explanation of the charts on Page 2-9, Impact on Tax Base and 339 Impact on Tax Rates. 340 341 Mr. Inman explained it is a statutory requirement to set forward the percent of the tax or tax 342 capacity as a percentage of the whole. Right now the City’s tax capacity is $6.679 million and 343 when adding Medtronic into the tax capacity, it will be approximately 14.28% of the City’s total 344 tax capacity. The other chart is showing it in tax rate. The charts show what taxes each taxing 345 jurisdiction would get based on that tax rate. Also, there is a State education tax that is not 346 required to be included in this chart for that calculation. 347 348 President Marty referenced Page 2-10, Subsection 2-16, Definition of Tax Increment Revenues, 349 sub. 1, that indicates: “Taxes paid by the captured net tax capacity, but excluding any excess 350 taxes, as computed under M.S. Section 469.177.” He asked what those taxes would be. 351 352 Mr. Inman reviewed the rate and explained if approved, it will be a frozen tax rate. So, if 353 Mounds View and the County increases the levy rate, that increase does not go back to the 354 District. 355 356 President Marty referenced Page 2-11, Subsection 2-17, Modifications to the District, and read 357 sub. 5 and 6 that indicates: 358 “5. Increase in the estimate of the cost of the project, including administrative expenses, 359 that will be paid or financed with tax increment from the District; or 360 6. Designation of additional property to be acquired by the EDA or City, 361 Shall be approved upon the notice and after the discussion, public hearing and findings required 362 for approval of the original TIF Plan.” 363 364 President Marty noted that prior to this it states “during the first five years” and asked if it could 365 be enlarged. Mr. Inman explained the District could not be enlarged or the budget increased 366 without going through the same notice and public hearing process. 367 368 City Attorney Riggs stated the same would be true of the special legislation. 369 370 President Marty read the last paragraph indicating: “…the tax increments may be used to pay for 371 the County’s actual administrative expenses incurred in connection with the District. The county 372 may require payment of those expenses by February 15 of the year following the year the 373 expenses were incurred.” 374 375 Mounds View EDA August 22, 2005 Regular Meeting Page 10 President Marty asked what the County’s administrative expenses would be and where payment 376 would come from. 377 378 Mr. Inman stated each County deals with TIF differently and some have a computer program or 379 Staff time. Each year the County will provide the City with a list of expenses and they will 380 deduct that cost from the TIF prior to giving it to the City. He explained that it varies from 381 County to County and some bill for their expenses while others deduct the costs. 382 383 Ms. Eldridge advised that Ramsey County goes through substantial analysis of the City’s TIF 384 Districts. Mound View is now getting billed for District Nos. 1, 2, and 3 every year. The 385 deduction is made prior to settlement and goes to the State Auditor for their administrative fees. 386 Ramsey County will send a bill that will be split into the amount and divided by all Districts in 387 the County so it is a flat fee. The other side of it is by parcel. The more parcels in the District, 388 the more maintenance at the County level that is involved. She estimated it will be less than 389 District Nos. 1 and 2. 390 391 President Marty stated those dedications come from the City’s portion. Ms. Eldridge explained 392 they come from the TIF increment as they do with the other Districts. 393 394 Director Ericson clarified that it comes from the increment but does not reduce the City’s 395 percent. The City still retains 5% of the increment collected. 396 397 President Marty referenced Page 2-13, second sentence of the third paragraph, that indicates: 398 “The EDA or City will pay to the developer(s) annually an amount not to exceed an amount as 399 specified in a developer’s agreement to reimburse the costs of land acquisition, public 400 improvements, demolition and relocation, site preparation, and administration.” 401 402 President Marty asked if these are the payments that Medtronic has. Mr. Inman stated that is 403 correct and they are further limited by the agreement. 404 405 President Marty referenced Page 2-15, Subsection 2-27, Other Limitations on the Use of Tax 406 Increment, that indicates: “…Increment may only be spent on one or more of the following 407 costs, improvements, or activities: …including structured parking; administrative expenses; 408 wetland mitigation; soil correction …” 409 410 President Marty asked if these are eligible corrections and if the Blaine property needs soil 411 corrections, would it come from here. Mr. Inman stated the agreement does not say that. 412 413 President Marty referenced Page 2-15, item 3, that indicated: “Five Year Limitation on 414 Commitment of Tax Increments. Pursuant to the Special Legislation, Subd. 2(c), the five year 415 rule under M.S., Section 469.1763. Subd. 3, has been extended to a ten year period. He asked if 416 they will have up to 10 years from 2007 to create Phases 2 and 3. 417 Mounds View EDA August 22, 2005 Regular Meeting Page 11 418 Mr. Inman stated it is indicating that they have up to ten years to spend the qualified costs that 419 Mounds View will reimburse them for. If they only do Phase 1 and never do Phases 2 and 3 420 within the ten years, then everything goes away. 421 422 President Marty referenced Appendix A-2, the project description under transportation 423 indicating: “The Bridges AUAR, authorized by the City, reviewed all transportation issues 424 related to the proposed development of the site. RLK-Kuusisto of Minnetonka prepared the 425 AUAR documents.” President Marty stated he does not feel it is correct because the AUAR 426 considered the freeways and trunk roads but the City street traffic was not taken into 427 consideration. 428 429 President Marty referenced the Exhibit B chart and asked for larger-sized print on future reports 430 so it is easier to read. 431 432 President Marty questioned Appendix F, the but/for for qualifications. 433 434 Mr. Inman gave an example of someone buying a car that is worth $10,000 but comes to $17,000 435 when you add principal and interest. You wouldn’t say it’s a $17,000 car, you’d say it is a 436 $10,000 car. He stated the same is done with the stream of TIF payments. The chart shows it is 437 worth $15,700,000 in today’s dollars. This formula is a statutory formula that is required to be 438 performed. The theory is that if the number at the bottom was rather small in comparison with 439 the other two, it would show that you are not getting much market value. The larger number at 440 the bottom the more the statute indicates you will be getting in market value than if you had not 441 done this project. Mr. Inman explained that is the theory. 442 443 President Marty stated this is close to what he had arrived at from the $32,700,000 figure, which 444 was $15,752,681 so this is only off by about $50,000. 445 446 President Marty referenced the second paragraph of Appendix F that includes a sentence that 447 indicates: “In addition, site constraints require the developer to acquire adjacent land to preserve 448 existing wetlands and green space which adds additional costs.” He stated the land being 449 acquired is developed and asked about this comment. 450 451 Economic Development Coordinator Bachman stated it comes into play if they don’t acquire the 452 adjacent properties, the two businesses, and move them in Blaine. They would have to have a 453 greater proportion in parking, wetland #2 may be lost, and it may be more difficult to get wetland 454 mitigation to the east. This also allows for better placement of the park facility. 455 456 President Marty read a sentence in Appendix F2 that indicated: “Therefore, the City concludes 457 as follows: a. The City’s estimate of the amount by which the market value of the entire district 458 Mounds View EDA August 22, 2005 Regular Meeting Page 12 will increase without the use of tax increment financing is $0.” He pointed out that the City of 459 New Brighton is finding the opposite to be the case. 460 461 President Marty read another subparagraph as follows: “c. The present value of tax increments 462 from the District for the maximum duration of the district permitted by the TIF Plan is estimated 463 to be $15,708,780.” He stated that it is capped at $14.8 million and not a fluid number, but it 464 will be higher with the interest. 465 466 Mr. Inman stated this is the present value number and includes $14.8 million plus administrative 467 expenses. That is the cap and the maximum this plan will let you have. 468 469 Commissioner Thomas commented that the TIF dollars for the City’s property is not the same 470 situation as what New Brighton has because they don’t have a tax exempt city function on the 471 property they are talking about. She noted that Mounds View currently has a functioning 472 business on that property and that will not change in any way except for this project. That is why 473 subparagraph a., in Appendix F2, is shown as $0. 474 475 President Marty referenced the last paragraph of Appendix F-2 that indicated: “The conclusion 476 and recommendation of City Staff is that the TIF Plan is consistent with the City’s 477 comprehensive plan based upon the following information and City actions. …On February 2, 478 2005, the Planning Commission for the City approved a recommendation to the City Council as 479 to the approval of a comprehensive plan amendment revising the land use designation for this 480 development site in the District from Outdoor Sport Recreation (SRO) and Passive Open Space 481 (OSP) to Office (OFC).” He stated that facts have changed considerably since February 2, 2005 482 and there has even been a change of flavor with the Planning Commission. 483 484 President Marty read a portion of the first paragraph of Appendix F-3 that indicated: “On July 485 20, 2005, the Planning Commission confirmed that the proposed sale of the development site in 486 the District to Medtronic was consistent with the City’s comprehensive plan. On August 3, 2005, 487 the Planning Commission did not approve a resolution finding that the TIF Plan for the District 488 conformed to the general plan for the development and redevelopment of the City as a whole.” 489 490 President Marty stated the conclusion is that it is consistent but the City has modified the 491 Comprehensive Plan to make it consistent. He noted that from the beginning to now, there have 492 been a number of modifications and they are still working on that so it seems there are a number 493 of items and statements in this report that appear, as you read through it, somewhat of a mass of 494 inconsistencies. He noted the City is getting them in order but things have changed tremendously 495 since February. 496 497 Commissioner Flaherty stated the EDA and City reserves the right to decertify the District prior 498 to the date and, by all discussions, that date will be 19.5 years to decertify the District. 499 500 Mounds View EDA August 22, 2005 Regular Meeting Page 13 Commissioner Flaherty asked for an explanation of the indication on Page 2-13, Subsection 2-21, 501 Excess Increments, that indicates: “The EDA or City must spend or return the excess increments 502 under paragraph ( c) within nine months after the end of the year.” 503 504 Economic Development Coordinator Bachman explained that the EDA cannot hoard TIF dollars 505 and if increments are being generated by TIF Districts, then projects must utilize those dollars. If 506 there are no obligations, Ramsey County could say they believe it is excessive and needs to be 507 redistributed. 508 509 Commissioner Flaherty asked if that is based on the desertification of the District. 510 511 Economic Development Coordinator Bachman explained that TIF Districts are created for the 512 purpose of economic development. If the TIF dollars are not used they cannot be funneled to 513 general fund dollars. The TIF dollars must either be used or the District decertified. 514 515 Commissioner Flaherty drew the EDA’s attention to Appendix A, Introduction, indicating: “The 516 current site has acreage that is not buildable and wetland relocation will be required.” He asked 517 if that means this current contract is selling about 20 acres of swampland and the actual buildable 518 land of the 72.2 acres is 52.2 acres. 519 520 Economic Development Coordinator Bachman stated that is correct. 521 522 Commissioner Flaherty reviewed the “but/for” qualifications detailed in Appendix F indicating: 523 “While property could be sold to another developer for some other use, these scenarios are not 524 feasible in the market due to various constraints mentioned above along with others. First 525 industrial uses could not meet the market valuation due to the fact that they are single story in 526 nature (can’t get to the same density as office), lack the amenities in design and construction and 527 are traditionally valued at ½ the market value of commercial and office uses. Second, 528 commercial retail uses have the same restraint in that the market does not allow for vertical 529 commercial/retail development.” He asked if the Medtronic development is going up (vertical) 530 so it creates higher density and higher value on the land. 531 532 Economic Development Coordinator Bachman answered in the affirmative. 533 534 Commissioner Flaherty noted that by those two statements, the City is getting better value than 535 someone else coming in. 536 537 Economic Development Coordinator Bachman stated that is correct. 538 539 President Marty noted there are two resolutions for the EDA’s consideration. 540 541 Mounds View EDA August 22, 2005 Regular Meeting Page 14 MOTION/SECOND: Thomas/Stigney. To waive the reading and adopt EDA Resolution 05-542 EDA-208A, Approving the Elimination of Parcels from Tax Increment Financing District No. 3 543 located within the Mounds View Economic Development Project in the City of Mounds View, 544 removing parcel 05-30-23-22-0004, the triangular property, from TIF District No. 3. 545 546 President Marty asked that the signature line of the resolution be changed from “Chair” to 547 “President”. 548 549 Ayes –4 Nay – 1 (Marty) Motion carried. 550 551 President Marty indicated he would like to amend the resolution in reference to the Planning 552 Commission’s lack of recommendation. Commissioner Thomas stated the motion must first be 553 moved prior to an amendment being made. 554 555 MOTION/SECOND: Gunn/Stigney. To waive the reading and adopt EDA Resolution 05-EDA-556 208B, Adopting a Modification to the Project Plan for the Mounds View Economic Development 557 Project, Establishing Tax Increment Financing District No. 5 Therein and Adopting a Tax 558 Increment Financing Plan Therefor. 559 560 Mr. Inman stated it indicates the EDA does not want parcel 05-30-23-22-0004 in this District 561 either. 562 563 President Marty stated that is correct. 564 565 Mr. Inman stated the record should show the EDA is modifying the Plan without that parcel and 566 Staff will amend plans accordingly. 567 568 Brian Amundson, 3048 Wooddale Drive, asked for clarification on the EDA action. He 569 explained that on the City’s web site he found Exhibit A, City of Mounds View TIF Policy, and 570 applications. Mr. Amundson asked what step the EDA is taking tonight in relation to this exhibit 571 that says how the EDA will deal with TIF. He also asked if Medtronic has asked for a TIF 572 District, which is the first step of the policy. 573 574 City Administrator Ulrich stated there is an application for TIF from Medtronic and that 575 application is part of the first step of the process. This is the creation of the public hearing for 576 the TIF District and approval of the Plan. 577 578 Mr. Amundson asked when that application was submitted to the City. Economic Development 579 Coordinator Bachman stated it was submitted in June of 2005. 580 581 Mr. Amundson stated that he was told by Staff at the end of June that there was no application. 582 583 Mounds View EDA August 22, 2005 Regular Meeting Page 15 Commissioner Thomas explained the application came in just after that question was raised. She 584 further explained that no agreement was necessary up to that point but after the meetings were 585 held and the TIF district approved, the application was necessary. 586 587 Mr. Amundson asked if the EDA is currently reviewing the application for TIF, its public 588 purpose, job creation numbers, and sources and uses. Commissioner Thomas stated the action is 589 the creation of the TIF District by the EDA. The EDA talked about job creation numbers at the 590 last meeting. 591 592 Mr. Amundson asked if there is a deposit agreement submitted. City Administrator Ulrich 593 answered in the affirmative 594 595 Mr. Amundson asked if the application is available to the public for review. City Administrator 596 Ulrich answered in the affirmative. 597 598 Mr. Amundson asked if the application has it been available prior to this meeting. City 599 Administrator Ulrich answered in the affirmative. 600 601 Mr. Amundson asked if the public was advised it was available for review. Commission Thomas 602 stated it was part of the report. 603 604 Director Ericson explained that the City does not announce every time a document is available 605 for public viewing because all documents are available for public viewing. 606 607 Mr. Amundson asked if the application proposal worksheet is also available that provides the 608 evaluation points in determining whether a District is appropriate. City Administrator Ulrich 609 answered in the affirmative. 610 611 Mr. Amundson asked if EDA members have all received that document. Commissioner Thomas 612 stated all members have the information in the report. 613 614 City Administrator Ulrich explained the information was passed out the end of June and it went 615 through the worksheet in terms of job creation as required. 616 617 Mr. Amundson stated since there is a pending request for such development to go to the public 618 on a ballot, he is surprised the EDA is taking any action prior to the public saying whether there 619 will be a sale. He stated to him it seems premature to issue authorization for the creation of a TIF 620 District that may never see an owner. Also, he thought the TIF application had to be after the 621 applicant acquired the property. He pointed out that these questions relate to procedural issues 622 related to the EDA’s own policies. 623 624 Mounds View EDA August 22, 2005 Regular Meeting Page 16 President Marty asked if the application is to be after the owner acquires property. City 625 Administrator Ulrich stated it could be either ownership or control of the property, but he would 626 have to look at the policy. 627 628 Economic Development Coordinator Bachman stated the problem is that it would compromise 629 the but/for test. Basically if the EDA is justifying the TIF expenditure, it needs to say that but/for 630 this particular assistance, this project would not happen. 631 632 Mr. Amundson explained he is asking the Authority why it is moving ahead at this point when 633 other actions may result in never requiring the creation of this District. He stated it seems 634 appropriate to do things in order and to also avoid legal contentions by assuring actions follow 635 the City’s policy. Mr. Amundson explained that he was previously told that the application had 636 not been submitted and believes it is not appropriate to entertain one before moving forward with 637 the sale. He stated he appreciates that the application now exists and he would like the 638 opportunity to review it. He was surprised the notice was not made available. 639 640 Commissioner Flaherty stated it behooves the City to move forward on a project of this 641 magnitude and he cannot in good conscience stop the project where it is now without moving 642 forward. He stated that he understands the petition is being submitted and that Mr. Amundson is 643 asking the City to stop any negotiation until the petition is ratified. 644 645 Mr. Amundson asserted the EDA is taking an action it is not authorized to take since the 646 ordinance is not in effect that allows the EDA to sell the property to the requested future property 647 owner. Commissioner Thomas advised that the Ordinance had a 30 day effective period and 648 went into effect on August 20, 2005. 649 650 Mr. Amundson asserted the action does not take effect until the petition is ratified. 651 652 President Marty stated the petition issue will be addressed at the Council meeting. 653 654 Mr. Amundson stated he wanted to address whether policy and procedure is being followed. 655 656 AMENDMENT MOTION: Stigney/. To waive the reading and adopt EDA Resolution 05-EDA-657 208B, Adopting a Modification to the Project Plan for the Mounds View Economic Development 658 Project, Establishing Tax Increment Financing District No. 5 Therein and Adopting a Tax 659 Increment Financing Plan Therefor, as amended to add Section 7. Exempting parcel 05-30-23-660 22-0004, the triangular property, as approved in EDA Resolution 05-EDA-208A. 661 662 Commissioner Thomas questioned how the exemption would be reflected since the PIN is no 663 longer listed in the previous resolution. For documentation sake, when the resolution is filed, she 664 noted it will not have that parcel reflected so referring to it in this document will not make sense. 665 666 Mounds View EDA August 22, 2005 Regular Meeting Page 17 Mr. Inman noted the parcel does not appear in the second resolution but does appear in the Plan 667 and all documents the EDA has received. He stated he would like the action to include the parcel 668 number to avoid confusion. 669 670 City Attorney Rigg agreed that is the most correct route since it is referenced in the Plan. He 671 stated what is before the EDA does not have that parcel pulled out at this time and the EDA 672 should have a record. 673 674 Economic Development Coordinator Bachman suggested Section 1 of the resolution be revised 675 to state: “…Minnesota which is underutilized and that the adoption of the proposed Plans, as 676 amended, will help provide employment opportunities…” 677 678 Commissioner Thomas stated there are only the five parcels and suggested including those PIN 679 numbers rather than excluding the one that is being omitted. 680 681 Vice-President Stigney stated Staff can determine how to best reflect that amendment. 682 683 SECOND: /Thomas. 684 685 Vote on amendment motion: 686 687 Ayes – 5 Nays – 0 Motion carried. 688 689 Duane McCarty, 8060 Long Lake Road, stated he has reviewed the draft contract and believes 690 this proposal is being piecemealed, not by design, but in actual fact. He stated there are several 691 other issues in the overall contract that the EDA will need to deal with. He stated the original 692 contract had an exclusion for existing jobs that has been stricken from the current contract. He 693 assumed that it is intended that Medtronic will move positions from other facilities to the 694 Mounds View location and wondered if that qualifies as the jobs goal as required under the 695 Economic Development Act. Other issues of concern relate to indemnification for liability; 696 however, studies have found a certain amount of hazardous conditions, and that the contract 697 requires the City to indemnify all comers in the first phase. Mr. McCarty stated he has many 698 other issues and is in fear that the EDA is “digging a hole” and when the end comes the City will 699 not like the results but be hard pressed to retract actions. He stated in his mind, the City should 700 understand every contingency from beginning to end before getting this far. That is what the 701 previous speaker was alluding to and is his concern as well. 702 703 Commissioner Flaherty read the Purchase Agreement, Section 5.2, Jobs and Wages, which 704 indicates that within two years after the date of issuance of the certificate of completion, the 705 compliance date, that developer shall cause to be created at least 1,500 new full-time equivalent 706 jobs on the development property. 707 708 Mounds View EDA August 22, 2005 Regular Meeting Page 18 Mr. McCarty stated that language does not exclude existing positions and does not prevent them 709 from bringing existing positions in from other facilities. He stated those are the concerns the 710 residents have been talking about and should be addressed. 711 712 City Administrator Ulrich asked Mr. Inman to respond to the concern that this project does not 713 meet the job creation goals of the State. 714 715 Mr. Inman explained there are no job creation goals of the State but the State requires that you 716 have job creation goals and they were adopted by the public hearing. He further explained that 717 the City can determine if that involves new jobs or existing jobs. 718 719 City Administrator Ulrich stated the indemnification on environmental issue is meant to protect 720 the City during the construction phase. There would be limited liability with the City picking up 721 to $200,000 of environmental clean up costs, if any. 722 723 Mr. McCarty referenced Section 116, j., 943, and noted that some criteria expected on the 724 business subsidy that there would be economic gain to the State and job creation. He explained 725 that he is saying the City can, if they wish, require those new jobs promised to the citizens of 726 Mounds View and anyone else attending the public hearing on June 20, 2005. The City can hold 727 them to that promise and if they don’t fulfill then the City can “pull the pin” on this thing. Mr. 728 McCarty stated the deeper you go the more difficult it will be to “turn the train around” should 729 new evidence make it less desirable for this project to go forward as proposed. 730 731 Commissioner Thomas stated the responsibility of the State and City is new jobs in Mounds 732 View. Medtronic currently has 90 employees at the shipping facility in Mounds View. She 733 stated anything above that is new jobs to her and that is where she draws the line. 734 735 Mr. McCarty asked Commissioner Thomas if she feels that that imported jobs are new jobs. 736 Commissioner Thomas answered in the affirmative. 737 738 Mr. McCarty stated the employee may be living in New Brighton and he thinks that is a limited 739 view. 740 741 Mr. McCarty asked who guarantees anything above the $200,000 liability limit should a law suit 742 be brought, since the City is the indemnifier. He also asked under what law the City can claim a 743 liability limit of $200,0000. He noted the tort liability for governments under statute is 744 $600,000. 745 746 City Attorney Riggs explained that this is EDA property that would be transferred and just like 747 any landowner if in the chain of title, they are jointly and severally liable for any type of 748 environmental obligation. He stated this is the case whether by contract or insurance. He 749 Mounds View EDA August 22, 2005 Regular Meeting Page 19 advised that the City has taken steps to shift liability and there is also insurance to cover certain 750 percentages. He offered to review the contract terms with Mr. McCarty and the EDA, if desired. 751 752 Mr. McCarty stated the proposed draft contract does not go into those details, which is part of the 753 dissatisfaction of many residents in Mounds View. He suggested the contract lays the entire 754 indemnification requirements entirely on the City. Mr. McCarty read a portion of the 755 indemnification language and stated to him, that is a very strong commitment. He stated that it is 756 fine to say “only to the extent of $200,000,” but he would like to see evidence where this body 757 can predispose a court order of over $200,000. He stated that it is a commonsense point of view 758 that until the project is finished for the two years or whatever it is, he doubts that a strong case on 759 behalf of an injured party would allow a limit of $200,000 unless Medtronic will pick up the 760 amount over $200,000. 761 762 SECOND AMENDMENT MOTION: President Marty/. To amend the third WHEREAS to 763 indicate: “…The EDA has also requested the City Planning Commission to review the plans and 764 did not approve a resolution accordingly, and that the Council schedule a public hearing on the 765 plans upon published notice as required by law. 766 767 Amendment motion died due to lack of a second. 768 769 Vote on motion as amended: 770 771 Ayes –4 Nay – 1 (Marty) Motion carried. 772 773 B. Consideration of EDA Resolution 05-EDA-209, a Resolution Authorizing 774 Payment of Pay-As-You-Go Developer Payment to Red Cent Management, 775 LLC for the Building N Project in Mounds View. 776 777 Economic Development Coordinator Bachman referenced the packet provided to the 778 Commission and stated he does this report every six months for the Finance Director. He noted 779 two payments were approved for the first part of August to the Silver Lake Point and Midwest 780 Ivy projects. He stated that basically there were additional property taxes paid by Bethlehem 781 Baptist Church. He stated there was acquisition of Building N by the EDC at the end of June 782 2004. They made a payment at the end of the year and applied for property tax exemption that 783 would be effective for 2005. Ramsey County looked at the transactions and determined there 784 was additional lease revenue paid to the new property owner, Bethlehem Baptist Church, by 785 Medtronic Systems and that went on for a number of months. As a result, Ramsey County 786 determined a portion of the building was taxable so payment of $26,667 was made to Ramsey 787 County in May of 2005. 788 789 Economic Development Coordinator Bachman advised that there was a larger payment last time 790 but that was for the full building. The way the TIF agreement is structured, there is an excluded 791 Mounds View EDA August 22, 2005 Regular Meeting Page 20 base so they get $3,066.16. He explained that there will be a follow up payment in the fall of 792 this year for a similar amount. 793 794 President Marty asked if that will pay it off at that point. Economic Development Coordinator 795 Bachman stated he hopes so. 796 797 MOTION/SECOND: Thomas/Stigney. To Adopt EDA Resolution 05-EDA-209, a Resolution 798 Authorizing Payment of Pay-As-You-Go Developer Payment to Red Cent Management, LLC for 799 the Building N Project in Mounds View. 800 801 Carol Mueller, 8343 Groveland Road, stated she raised several questions at the last meeting and 802 asked Staff to respond at the meeting tonight so all the residents of Mounds View can hear the 803 answers. 804 805 Commissioner Thomas suggested it be discussed during the Council meeting so all can hear the 806 answers who are watching the Council meeting. 807 808 Ayes –5 Nays – 0 Motion carried. 809 810 8. REPORTS 811 812 Ms. Mueller asked Staff to explain what the existing TIF Districts are, what property the Districts 813 entail, and what percentage of the City’s property is in TIF Districts. In addition, she asked how 814 the new action and establishment of a new TIF District will increase the percentage of the City 815 that is TIF. 816 817 Director Ericson stated there were three TIF Districts prior to the action taken tonight. Currently 818 there are 225 acres in TIF Districts and Mounds View is about 2,600 acres. Of the total City of 819 Mounds View, 8.55% is captured in TIF District Nos. 1, 2, and 3. The creation of TIF District 820 No. 5 adds 2% that is captured within TIF Districts. However, Outlot A is no longer part of TIF 821 District No. 5. It remained within TIF District No. 3 so that will change, but 10.56% remains the 822 same. 823 824 Ms. Mueller thanked Mr. Ericson for the response. 825 826 Vice-President Stigney reported that he attended the YMCA community meeting last week 827 dealing with relocation of employees during reconstruction of City Hall. 828 829 Vice-President Stigney stated the fireworks last night were fantastic. 830 831 Economic Development Coordinator Bachman announced a Caribou sighting at Mounds View 832 Square, and that the grand opening will be held this Saturday, August 27 at 5:00 a.m. 833 Mounds View EDA August 22, 2005 Regular Meeting Page 21 834 9. NEXT EDA MEETING: Monday, September 12, 2005 at 6:30 p.m. 835 836 10. ADJOURNMENT 837 838 President Marty adjourned the meeting at 7:37 p.m. 839 840 Respectfully submitted, 841 842 843 Recorded and transcribed by: 844 845 Carla Wirth 846 TimeSaver Off Site Secretarial, Inc. 847 848