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HomeMy WebLinkAboutNovember 18, 1997P Prior Lake Economic Development Authority Meeting Tuesday, November 18, 1997 1) CALL TO ORDER: President Barsness called the meeting to order at 5:30 p.m. Present were: President Barsness, Commissioners Schenck and Underferth. Commissioner Kedrowski arrived at 6:00 p.m. Commissioner Gresser arrived at 6:10 p.m. 2) PLEDGE OF ALLEGIANCE: President Barsness led the Pledge of Allegiance and welcomed everyone to the meeting. 3) APPROVAL OF MINUTES: MOTION BY SCHENCK SECOND BY UNDERFERTH TO APPROVE THE MINUTES OF THE OCTOBER 20, 1997 ECONOMIC DEVELOPMENT AUTHORITY MEETING. Upon a vote, ayes by Barsness, Schenck, and Underferth, the motion carded. 4) CONSENT AGENDA: There were no items on the Consent Agenda. 5) PRESENTATIONS: There were no presentations. 6) PUBLIC HEARINGS: There were no public hearings. 7) OLD BUSINESS: · There was a request to consider item 7B as the first item of OLD BUSINESS. B) Consider Sale of One-Acre Parcel to NBC Products and Modification of Tax Increment Financing District 2-6. Development I-acre parcel Roger Guenette presented the proposal for the sale of the parcel, which involves acquisition of one additional acre adjacent to NBC. The price is $1 per square foot, or $44,000, with a $7,500 down payment due December 31, 1997, and the balance due March 31, 1998. This will allow the owner, Tony Shank, time to put together the 16200 Eh~lda~ahnb_i_,~a~l Ei. lE}Tglrior Lake, Minnesota 55372-1714 / Ph. (612)447-4230 / Fax (612)44%4245 AN EQUAL OPPORTUNITY EMPLOYER project, a 14,000 square foot expansion to the NBC building. He referred to page 7 of the TIF Booklet. The land cost to the City is $2.04 per square foot, and the purchase price is $1.00 per square foot. Page 9 explains the cash flow of TIF. With the present agreement, there is $19,000 reimbursement through 2001. After 2002, there is an annual $7,500 reimbursement. The cash rebate is just over $84,000. The present value of the City share is $170,000. President Barsness asked if these were the same numbers as Mr. Guenette's earlier memo. Consultant Guenette said yes. President Barsness asked what if construction does not occur within a given period of time? Consultant Guenette said the developer's agreement will cover terms and also require a financial guarantee from the owner. Expansion will create 15 new jobs. Currently, there are 22 full-time equivalent positions. MOTION BY SCHENCK SECOND BY KEDROWSKI TO APPROVE THE PURCHASE AGREEMENT AND RECOMMEND CITY COUNCIL APPROVAL OF THE TAX INCREMENT PLAN FOR TAX INCREMENT DISTRICT 2-6. Upon a vote, ayes by Barsness, Kedrowski, Underferth, and Schenck, the motion carded. Mike Gresser arrived at 6:10 p.m. 7A) TAX INCREMENT FINANCING POLICY: Planning Director Rye presented a redraft of a Tax Increment Policy to the Economic Development Authority. The proposed policy combines the procedures reviewed at the last meeting. He suggested the should EDA review the proposed policy and make changes if they wished. Commissioner Schenck asked about program goals, #2, whether it should read "increase" or "diversify" tax base. Commissioner Kedrowski said he thinks "increase" is a good term. President Barsness said they could add "increase and diversify." Executive Director Boyles asked is there any value to adding "long term"? This would recognize that tax base diversification and growth is a long term proposition. TIF i:\eda\edaminut\l 11897.doc 2 He asked about criteria #1, how do we know development would otherwise not occur? · Planning Director Rye said the criteria would be passing the "but for" test. · Commissioner Underferth said they would leave it open-ended with regard to residential development. Consultant Guenette said the discussion last time focused on redevelopment rather than new residential development. He suggested changing the language in #4 to include housing especially since the EDA has been advised that housing is a key ingredient to downtown redevelopment. · Commissioner Schenck asked if this goes to the Council? · Planning Director Rye said they should run it by the Council. · Executive Director Boyles said the City Council has historically not considered use of TIF funds on residential uses. Commissioner Kedrowski said past approaches have been to take raw land and develop it as residential. There is a possible redevelopment of the Downtown area with mixed use. Commissioner Gresser said they could leave it open ended so as not to completely rule out other types of development. They do not want to discourage potential development. They want to encourage "Commercial, industrial, and other development." · Planning Director Rye said they could say something such as "housing that may be considered if it meets other goals,". Commissioner Underferth referred to #4. He said they should promote commercial and industrial development. In special circumstances, they should promote residential development. · Consultant Guenette said the market rate housing has not been an issue in Prior Lake. Commissioner Schenck said a key point was the "but for" test generally fails in residential development. There may be special circumstances like livable communities, redevelopment, etc. which it will not fail. · The committee reviewed items 1 -5 of the proposed TIF Policy: TIF i:\eda\edaminut\l 11897.doc 3 1) TIF Program Eligibility. · Commissioner Schenck asked in # 10 what is the rationale for a 1:2 ratio? · Planning Director Rye said 1:2 is easy to determine. · President Barsness asked do we want to work with this specific set of numbers and matrix? Consultant Guenette said these numbers can be used as expectations. They do not necessarily have to deny a project that does not meet the qualifications, nor do they automatically approve a project that does meet the criteria. · Planning Director Rye proposed a change to page one. He said projects "should meet the criteria, but failure to meet all of the criteria may not disqualify the project." · President Barsness agreed that the EDA should make the change in the first paragraph as recommended. · Executive Director Boyles asked about #2, "which is satisfactory to the City?" and #5, no surety requirement for "pay-as-you-go". Consultant Guenette said the Waterfront Passage is not a true "pay-as-you-go". He said they get a guaranteed payment. This guideline is for projects that do their own front-end financing. 2) TIF Project Costs · President Barsness asked if the project costs were per state statute? · Consultant Guenette said yes. · Commissioner Schenck said it should say per state statute. 3) Application Procedures · President Barsness asked if the application fee was refimdable. · Planning Director Rye said it was not. · President Barsness asked about the purpose of the deposit. i:\eda\edaminut\l 11897.doc 4 · Planning Director Rye said $5,000 is for City costs to evaluate and process an application. To the extent the City does not use it, it would be refunded. · Commissioner Schenck said it should state this, then. · President Barsness asked if we are discouraging people from applying? Consultant Guenette said the intent is to discourage people who are not serious. It is not insignificant, it is still a nominal charge, and applicants expect to pay a reasonable fee. Executive Director Boyles said it could be clarified by saying the application fee is non-refundable and developer may be responsible for additional expenses incurred by the City. They could add reimbursement language, should be "will be," or could authorize a negotiated fee if they want. · Consultant Guenette said they could revise the fee provisions to apply only if an application is approved. 4) Outline · Consultant Guenette explained the purpose of the outline was to gather the information necessary to evaluate the application. 5) Development Guidelines on TIF proposal: Consultant Guenette explained he uses this form in South Saint Paul and the EDA could use this type of format. These are examples and the EDA should select a format. The matrix should refer to the EDA not the HRA. · Commissioner Kedrowski said he likes the report card format. · President Barsness asked if they could consolidate the two formats. · Planning Director Rye said they could combine it into one form. · Commissioner Schenck said B could be the worksheet and the development guidelines can be the summary. · President Barsness asked about the discussion for the guarantee of the bond. Where is that? · Planning Director Rye said in letter to City Attorney Pace on page 3. i:\eda\edaminut\l 11897.doc 5 · President Barsness said he prefers a letter of credit. · Executive Director Boyles said they could leave it up to City Attorney Pace. · Planning Director Rye said #5 says it "may" include. · President Barsness asked who decides and when. · Planning Director Rye said the EDA. He said it will be in the development agreement. He said the EDA has control over that. · Commissioner Schenck suggested the staff make modifications and put it on the Consent Agenda at the next EDA meeting. MOTION BY KEDROWSKI SECOND BY SCHENCK TO REVISE THE TIF POLICY ACCORDING TO THE DISCUSSION AND PUT IT ON THE DECEMBER 15 CONSENT AGENDA. Upon a vote, ayes by Barsness, Gresser, Kedrowski, Schenck, and Underferth, the motion carded. 7C) Consider Option Request of Mondo Management, LLC for 4.5 acre Parcel and Creation of Tax Increment Financing District 2-9. Consultant Guenette reviewed the request by Mr. Jeff Wallis. He is seeking an option for $10,000 on this 4-5 acre parcel. The penalty is $45,000 if he does not close on the purchase by December 1998 and if a 25,000 square foot building is not constructed by December 1999. Page 7 lays out the budget. The developer is responsible for the survey. They get 50% reimbursement from the EDA when the property sale takes place. Page 9 outlines the cash flow of the project. · President Barsness asked if the EDA did NBC the same way. Consultant Guenette explained NBC is different. Look at cash being paid. If the second phase never goes, the EDA will break even. The incentive to them is to build phase 2 to recoup their land costs. They have to do phase 2 to get a rebate on the increment. Wallis is working with a single user. Their interest is to develop as soon as possible. · Commissioner Schenck asked about the 50 cent rate on the dollar per square foot. · Consultant Guenette said other Cities in the South Metro are building at $1 per square foot plus rebates, and site work and soil work. i:\eda\edaminufil 11897.doc 6 President Barsness asked whether Mr. Guenette was recommending a price that is fair and equitable compared to other Cities. Commissioner Kedrowski discussed other developments. The City will have no land in the Waterfront Business Park if the proposals on this agenda are approved. He asked if Wensmann and Deerfield would compete against the Waterfront? Consultant Guenette said the goal of the City was to promote Economic Development to get an industrial tax base. JeffWallis of 15117 Tuxedo Boulevard in Mound addressed the EDA. He said he wants to change the agreement to get up-front money. AMCON and he are considering building everything up front. He wants his up-front costs returned via excess TIF revenues. As part of the project he is asking the City to mitigate wetland on the four acre parcel. Commissioner Gresser asked about the net effect. Planning Director Rye said he and the City Engineer thought $30,000 would be adequate to cover costs of mitigation. He described what was to be filled. Wallis said he wanted to make sure that $30,000 was enough. He mentioned the extra dirt on Dick Hanson's lot. Consultant Guenette explained the City recovers its costs if a 25,000 square feet building is constructed. If they build additional square footage, they will get 50% rebate on the additional increment. Mr. Wallis is asking for a rebate for the entire amount. Wallis said they prefer to keep costs low. Up-front costs are less if they build the entire project. President Barsness asked why should we give the developer 100% of land costs back for doing the entire deal now: That is an economic decision he and the developer should make. Consultant Guenette said the EDA has done it in the past. Commissioner Schenck said you are looking for free land. Mr. Wallis said he was under the impression he would recapture 100%. It makes the deal better. i:\eda\edaminutkl 11897.doc 7 President Barsness asked Mr. Wallis if he would refuse the deal if he does not get what he wants. He said there is incentive for him to develop. Commissioner Gresser said doing the deal is good. If the City rebates 100%, it is a diminishing return. Consultant Guenette clarified the break even point. President Barsness said they have agreed to mitigate, which is good for the developer. Commissioner Kedrowski asked if they needed to table the matter. Consultant Guenette said no there is no need to table the matter. Consultant Guenette said if the deal is done as proposed, the City does not lose anything. MOTION BY KEDROWSKI SECOND BY SCHENCK TO APPROVE THE OPTION AGREEMENT WITH MONDO DEVELOPMENT INCLUDING CITY RESPONSIBILITY TO MITIGATE WETLAND AND TO RECOMMEND CITY COUNCIL APPROVAL OF THE TAX INCREMENT PLAN FOR TAX INCREMENT FINANCE DISTRICT 2-9. Upon a vote, ayes by Barsness, Kedrowski, Schenck, and Underferth, abstention Gresser, the motion carded. 7D) Consider Sale of. 5 Acres to Keyland Homes for Building Expansion Purposes and Modification of Tax Increment Finance District 2-1. MOTION BY SCHENCK SECOND BY GRESSER TO APPROVE PURCHASE AGREEMENTS AND RECOMMEND CITY COUNCIL APPROVAL OF THE TAX INCREMENT PLAN FOR TAX INCREMENT DISTRICT 2-1. Upon a vote, ayes by Barsness, Gresser, Kedrowski, Underferth, and Schenck, the motion carried. 8) NEW BUSINESS: · There was no new business. 9) OTHER BUSINESS: The next meeting of the EDA will be December 15, 1997, at 5:30 at the Fire Hall. i:\eda\edaminufil 11897.doc 8 · President Barsness said they should present a summary to the Council of the transactions in Waterfront Business Park. · Executive Director Boyles said include objectives as well as accomplishments. MOTION BY SCHENCK SECOND BY GRESSER TO ADJOURN THE MEETING. Recording Secretary i:\eda\edaminut\l 11897.doc 9