2017.01.17 CC Packet - Goal Setting Session

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RED ROCK CROSSING TAX INCREMENT FINANCING DISTRICT Position: Washington County supports the Washington County Community Development Agency (CDA) request for a special law which waives certain provisions to Red Rock Crossing Tax Increment Financing (TIF) districts within the City of Newport. Issue: The Red Rock Crossing area is approximately 188 acres located in the City of Newport, south of 1-494, north of 15th Street between the Mississippi River and Highway 61. The Washington County CDA and the City of Newport are working together under a Joint Powers Agreement to redevelop the Red Rock Crossing area and build on the County's transit investments. Red Rock Crossing has had and continues to have extensive impediments to redevelopment. The municipal vision for the area is to develop approximately 60,000 square feet of commercial, office and light industrial uses and over 460 units of various types of housing. The current market value of the area is approximately $6.1 million and if the municipal vision became a reality, the market value is estimated to be in excess of $98.9 million. The issue is that the cost of the relocation, demolition, site preparation, mass grading, installation of public utilities, streets and sidewalks are in excess of the value of the property. The problem is compounded because the redevelopment will take at least 10 to 15 years to develop while a substantial amount of the costs must be incurred at its inception. In addition, to maximize density and market value some structured parking may be necessary. These redevelopment activities and public infrastructure improvements are expected to cost $14 million. A portion of these expenses will be reimbursed by selling the developable parcels to private developers. In addition, tax increment financing is crucial to help fill the remaining estimated $6.3 million gap. Minnesota statutes related to tax increment financing districts are ideally suited to development that proceed on a relatively short timeline and may involve only one or two buildings. Based on a recent market study and current lending requirements, private sector development plans may not be able to correlate to the legal timeframes currently prescribed. Second, it is anticipated that developments will occur in many phases spanning more than a decade. Many communities have obtained special laws related to tax increment financing to facilitate comparable redevelopment projects. The proposed special law would provide greater flexibility in the timelines associated with creating districts and the start of tax increment collection, facilitate site assembly, and allow for more flexible use of TIF funding. Support and Opposition: Supported by the Washington County CDA and the City of Newport. Previous Consideration: The special law was proposed in the 2016 legislation session but was held over in the respective tax committees. 22