HomeMy WebLinkAboutMarch 16, 1998
PRIOR LAKE ECONOMIC DEVELOPMENT AUTHORITY
MEETING
Monday, March 16, 1998 5:30 p.m.
Fire Station City Council Chambers
1. Call to Order
2. Pledge of Allegiance
3. Approval of Minutes - February 17, 1998
4. Consent Agenda
5. Presentations
6. Public Hearings
7. Old Business
a) Election of Officers: President
Vice President
Secretary
Treasurer
b) Discuss the March 2, 1998 City Council Work Session report on Downtown
Redevelopment Task Force
8. New Business
a) Outline of Tax Increment Financing Policy presentation at Apri16, City Council Work
Session
9. Other Business
a) Review 1998 EDA Goals and Objectives
10. Announcements or Correspondence
a) Update on Franklin Trail North and South
b) Decisions with C.H. Carpenter
11. Adjournment, 7:00 p.m.
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16200 E~'~~~~~.IIDIa~M.G~~~~mG714 / Ph. (612) 447-4230 / Fax (612) 447-4245
,--. AN EQUAL OPPORTUNITY EMPLOYER
MINUTES OF THE
ECONOMIC DEVELOPMENT AUTHORITY
MEETING FEBRUARY 17, 1998
I. CALL TO ORDER: Present were: President Bob Barsness, Commissioners Kedrowski,
Underferth and Schenck, City Manager Boyles, Planning Director Rye, Recording Secretary
Oden.
II. PLEDGE OF ALLEGIANCE: President Barsness led the Pledge of Allegiance and welcomed
everyone to the meeting.
III. APPROVAL OF MINUTES:
A. Minutes of December 15, 1997 Meeting
B. Minutes of January 5, 1998 Special Meeting
C. Minutes of January 13, 1998 Meeting
MOTION BY SCHENCK SECOND BY UNDERFERTH TO APPROVE THE MINUTES OF
THE DECEMBER 15, JANUARY 5, AND JANUARY 13 ECONOMIC DEVELOPMENT
AUTHORITY MEETINGS.
Upon a vote, ayes by Barsness, Schenck, and Underferth, the motion carried.
IV. CONSENT AGENDA:
A. There were no items on the Consent Agenda.
V. PRESENTATIONS:
A. Jim Sherack of Marquette Bank, "Downtown Prior Lake Loan Program n.
. Jim Sherack of Marquette Bank reviewed the Downtown Prior Lake Loan Program. A brochure
was passed around which would be printed introducing the program.
. Councilrnember Schenck said it looks like the map specifically eliminates Priordale Mall. If
something outside the map were under discussion, would the opportunity be available to that
business as well?
. Planning Director Rye said the map is based on the Downtown Redevelopment district. If the
EDA wanted to expand the area, that would not be a problem.
. President Barsness said Prior Lake State Bank and First Bank may become involved as well.
. Mr. Sherack said part of Marquette's mission was to promote redevelopment, and the property
could include whatever the EDA wishes.
. Planning Director Rye asked did the Commissioners wish to expand the program to include
surrounding properties right now?
16200 Eagle Creek Ave. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 441.7-4245
AN EQUAL OPPORTUNITY EMPLOYER
· Commissioner Schenck said not at the present time, but perhaps in the future.
· City Manager Boyles asked about the Gateway area.
· Commissioner Kedrowski said it is in need. The old industrial park, could use money as well.
· President Barsness said that would require substantial infrastructure.
· Commissioner Kedrowski said how to pay for it is the question, but it could be a viable proposal.
· President Barsness said that was on the EDA goals and objectives for 1998.
· Mr. Sherack said the City could prepare a map for targeted areas.
· Consultant Guenette said this seems targeted toward commercial retail, not industrial, and at this
level of funding, it is significant for those types of entities, much more so than industrial.
· President Barsness said this was targeted toward the downtown area. Something similar could be
applicable elsewhere.
· The EDA by general consensus supported the program focusing in the downtown area only, at
least initially.
VI. PUBLIC HEARINGS:
A. There were no Public Hearings.
VII. OLD BUSINESS:
A. Election of Officers.
· This item was deferred to the March 16, 1998 meeting.
VIII. NEW BUSINESS:
A. Discuss Presentation to City Council at March 2, 1998 Work Session.
· President Barsness said he would prefer a member of EDA do the presentation. Commissioner
Underferth was making a presentation regarding the downtown steering committee.
· City Manager Boyles said there were time parameters. The Council work session on March 2
starts at 5:30 and ends at 7:30. There are three items on the next work session, two related to the
EDA; the status report and TIF policy. A recommendation from the City Council workshop is
that TIF should focus one or more types of businesses instead of a wide-open policy. The focus
should be on certain types and be more aggressive. There should be a focus on stable businesses,
not warehousing, but clean, high tech, kinds of firms that will survive and are established.
· Commissioner Kedrowski said the focus could be more on industry than fledgling businesses. He
said he wanted to see a focus on certain types of industry, but he didn't know if3M would come
out here.
· Commissioner Schenck said what came out of this is if we focus on small, we will get small.
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. City Manager Boyles said business size is the next item, to focus on larger not smaller businesses.
The City needs to consider the issue of payback for tax support received. He listed some other
considerations from the workshop:
. Initiate targeted marketing effort toward specific industry.
. Retain an inventory of property, zoned and serviced.
. Don 'tforget redevelopment and its relationship to multifamily and commercial retail.
. Don't lose the chance to hit a home run with a big business.
. Consider annexation as a tool.
. President Barsness said there is reality too. They spent considerable time working on recruiting
Kaytun to Prior Lake.
. Consultant Guenette said it was a nice wish list, but the City may need to be willing to take the
initiative to acquire property.
. Commissioner Kedrowski said in the redevelopment district, some acquisition would be
beneficial, but with raw development, the City does not want to buy the land and do the work.
. President Barsness said he did not envision becoming the developer again.
. Consultant Guenette said Prior Lake is proving to be a market for small to medium size business.
Prior Lake hasn't demonstrated anything for large corporate-size business.
. Councilrnember Kedrowski said Shakopee has a 400 acre industrial park. Prior Lake does not
have raw land.
. Planning Director Rye said land is available but the people controlling it don't intend to sell or
develop it.
. Consultant Guenette said was different with Shakopee. The insurance company controls the site,
and has money to do the marketing. Shakopee is in a better position with the road network and
railroad.
. City Attorney Pace said in the context of whether using TIF is supported philosophically, the use
was limited.
. City Manager Boyles said he did not hear any complete opposition to TIF from the City Council
at the workshop.
. President Barsness said everyone will have a different opinion. TIF will be favored for use with
certain conditions.
. Commissioner Kedrowski said the City Council was looking for a comfort level.
. Consultant Guenette said the community was not positioned to accommodate large employers.
. President Barsness said TIF comes to a head when looking at a proposal. Until there is a specific
proposal, no one can capsulize the ideal use ofTIF.
. Consultant Guenette said he talked with everyone that has expressed an interest. First about
compatible land uses, then credit-worthiness, then what level of incentive is necessary.
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· Commissioner Kedrowski said there were two developers on two tracts of land (Deerfield and
Wensman), and developers want to know what the City will do.
· Consultant Guenette said there was a message to developers. Under the right set of circumstances,
the City will assist. The Council and EDA can be somewhat subjective. The City will not own the
land this time.
· Commissioner Kedrowski said there was not a problem delaying this report to the Council for a
month.
· Consultant Guenette said there were new Councilrnembers, and it would not hurt to give them an
overview of the reasons for the community's development limitations. What can the City do that
will be positive from a development perspective?
· Commissioner Kedrowski said the City doesn't have a comprehensive plan to deal with large
corporations.
· Consultant Guenette said the City does not have a lot of requests from large corporations.
· President Barsness said there could be a presentation on March 2nd, to start the dialogue and go
from there.
· Commissioner Underferth said he would rather the presentation be made when President Barsness
is able to attend.
· City Manager Boyles said Monday, April 6th was a work session. The EDA can outline its
response to Council concerns, and give new Councilrnembers background at the same time.
· Consultant Guenette said they could do the downtown redevelopment committee report on March
2nd.
· City Attorney Pace said on the TIF policy it had talked about the application procedure. If land-
use approval was necessary, it should occur at a time before the EDA is boxed in.
· Consultant Guenette said he understood that all who are developing need to go to a site plan
committee.
· Planning Director Rye said there was a preliminary site review.
· City Attorney Pace said it would not make sense to proceed without a preliminary review and end
up needing a variance.
· Planning Director Rye said it would be submitted at the same time as the TIF request is
considered.
· Planning Coordinator Kansier said they have a process.
· Planning Director Rye said the land-use approval should be earlier in the process.
· Consultant Guenette said that was in concept form.
· Planning Director Rye said they won't be asking for fmallandscaping and grading.
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. Consultant Guenette said in Item #6 the applicant and developer needs to show 20% equity in the
project. What is the project defmed as? One common fmancing is SPA 504 to minimize equity in
the land and building to 10% so they can reserve cash for working capital and operating costs. He
said he would hate to see double equity from what SPA requires. Why not 10% equity showing in
the project?
. City Attorney Pace said if the developer is getting leverage once with SPA, and then again, isn't
that double leveraging? Ten percent encourages small business.
. Consultant Guenette asked if fixed assets are included in the showing of equity?
. Planning Director Rye said he assumed fixed assets were included.
. Commissioner Kedrowski said he would prefer 10%.
. President Barsness said land, building and equipment are basically 10% equity.
. Consultant Guenette said he favors the 10% requirement as a minimum. All participation has been
on a pay as you go basis. He said he would expect that would not change. The only time it would
not be on that basis is if it involved a large corporation, but then equity would not be an issue.
. President Barsness said the "but for" is an issue just as the SPA loan, and the developer may not
qualify for TIF if there is another way to get fmancing. Conventional borrowers must show a
20% equity.
. Commissioners Underferth and Schenck said they supported 10%.
. Consultant Guenette said it should be consistent with SPA.
. City Manager Boyles asked what is wrong with 20%?
. Consultant Guenette said he would reduce the amount of people to work with.
. President Barsness said most have struggled with 10%. It would wipe out many possibilities.
. Consultant Guenette said for most this is the fIrst building. It is in the best interests to conserve
cash to run the business.
. Commissioner Schenck said what happens to 10% if they walk?
. Consultant Guenette said it was 10% into the deal. If the deal fails, the burden on economic risk
falls much more on the lender than City.
. The Commissioners requested that the nF policy be discussed at the April 6 work session, outline
responses to the City Council and talk with new Councilrnembers to give them background on
TIF.
IX. OTHER BUSINESS:
A. Update on Franklin Trail North and South.
. City Manager Boyles said the EDA talked about the TH 13 long range development plan. The
City and MnDOT are at loggerheads because of the Franklin Trail North and South intersections.
On February 6th, City Engineer Ilkka and City Manager Boyles met with Paul Kachelrnyer of
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MnDOT. A letter restates a solution which was a recommendation from the EDA. MnDOT seems
to support it. City Manager Boyles wants to run it past the EDA and City Council and make sure
that both bodies concur.
· At Franklin Trail North, off TH 13 by Lakers, Norex, and First Bank, MnDOT has proposed a
raised median for left turn lanes, into Lakers northbound and to Franklin Trail southbound. Traffic
would not be able to turn left out of Lakers or Southbound onto 13. The EDA concern was with
accessibility of getting into businesses southbound.
· City Manager Boyles said at Franklin Trail South, the intersection off Anna Trail, EZ Stop, and
the office building, it was agreed that the proposed restrictions to Franklin Trail would occur after
the ring road to CSAH 23 is open and that Anna Trail would not be disconnected from TH 13.
That would be the access to all of that property.
· Commissioner Kedrowski said they were talking once with C.H. Carpenter about realigning the
intersection. Is that an issue?
· Commissioner Schenck said the fIrst he heard of it was at the Council meeting.
· President Barsness, said they have not talked about it yet. They were looking for buyers for four
acres.
· Commissioner Kedrowski said he would like to see more intense use of the development on that
property .
· President Barsness said that is a possibility now.
· Planning Director Rye said MnDOT did not want a full-movement or full- signal intersection at
Franklin Trail South.
· Councilmember Kedrowski said that would open an opportunity.
· Planning Director Rye said the land could be added to the intersection on the Carol Furniture side.
· President Barsness said it is worth considering. How would the intersection work if it was
straightened?
· Planning Director Rye said once it is made a 4-way it is tough to restrict movements.
· President Barsness said pursuing it may be an option.
· Consultant Guenette said maybe C.H. Carpenter would relocate to the old industrial park on
CSAH 21.
· Planning Director Rye said that lumber is not impulse buying.
· Commissioner Kedrowski said the downtown lumberyard will have to go somewhere.
· President Barsness asked if it is feasible for any lumber yard to go into the old industrial park
under the current zoning?
· Planning Director Rye said yes.
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. City Manager Boyles said does that suggest backing off on Franklin Trail South compromise
solution?
. Commissioner Kedrowski said no, but it may be a better use of the property in the future.
. President Barsness asked if the City would send a copy of the MnDOT letter to affected property-
owners?
. City Manager Boyles said they would wait until MnDOT and the City Council accepts the actual
plan.
X. ANNOUNCEMENTS /CORRESPONDENCE:
. Consultant Guenette thanked Commissioner Kedrowski who talked with Paul Weiss who has a
brick and stone contracting business. Mr. Weiss is interested in coming into the business park. He
may enter into negotiations on the 4.5 acre piece. He was told a minimum building of 40,000
square feet was required. He only needs 10-15,000 but may lease. Consultant Guenette sent him
the material. That is the only current prospect for the remaining four-acre parcel. They also
drafted an agreement for Tony Shank.
. Commissioner Schenck said the EDA acted on TIF District 2.9. It went before the Council. The
remainder of the EDA is not aware of the outcome.
. Consultant Guenette said Roberts Foods asked to be removed from agenda. Bob Paschke did not
return calls. The project is dead at the present time. The Council canceled and did not reschedule
or reconvene the public hearing.
MOTION BY KEDROWSKI SECOND BY SCHENCK TO ADJOURN THE MEETING
Upon a vote, ayes by Barsness, Kedrowski, Schenck, and Underferth, the motion carried.
. President Barsness said at the end of each meeting he would like to review the status of the EDA
goals and objectives.
. :30 p.m.
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Recording Secretary
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2. The terms of the Commissioners shall be as set forth in the Enabling Resolution.'
3. The Board of Commissioners may exercise all powers of the Authority and do all
such lawful acts and things as are authorized pursuant to Minnesota State Statutes
,
the Enabling Resolution or pursuant to these Bylaws.
4. All vacancies in the Board of Commissioners, whether caused by resignation,
termination of Councilmembers, death or otherwise, shall be filled by City Council
Mayoral appointment with City Council confirmation.
ARTICLE FOUR - MEETINGS
1. The Authority shall meet monthly as determined by the authority at the location set y/
forth in Article Two, Section 4. At least seven (7) days written notice of such
meetings shall be given to the Commissioners and City Council members. Meetings
may be held immediately preceding, during or after the City Council meeting. Notice
of a regular meeting shall comply with the requirements of the Minnesota Open
Meeting Law. .
2. Special meetings of the Board of Commissioners may be called at any time by the
President, or, in his/her absence, by the Vice President or by any two (2)
Commissioners. Notice of special meetings of the Board of Commissioners shall be
given to each Commissioner and the City Council members at least three (3) days
prior to the meeting via telephone, telegram, letter or personal contact and shall
state the time, place and the business scheduled to come before the Authority.
Notice of a special meeting shall comply with the requirements of the Minnesota
Open Meeting Law.
3. Three commissioners shall constitute a quorum for the purpose of conducting
business. Less than a quorum may, however, adjourn any meeting, which may be
held on a subsequent date without further notice, provided a quorum be present at
such deferred meeting. Commissioners are to notify the staff prior to the meeting if
they are unable to attend.
ARTICLE FIVE - QFFICEB;;! ~ ~
1. The officers of the Authori shall be a President. a Vice President, a Secretary andjP
a Treasurer who shall be elected by the Board to a one year term on a ca en ar
year basis and shall hold office until their successors are elected and aualiti,ed.
The President, Vice President, and Treasurer shall be members of the ard of
Commissioners. e City Manager or his designee may serve as the Secretary.
2. The President shall preside at all meetings of the Authority, shall sign or counter-
sign all certificates, contracts and other instruments of the Authority as authorized
by the Board of Commissioners, shall make reports to the Board of Commissioners,
EDABYLA W.DOC
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AGENDA #:
PREPARED BY:
SUBJECT:
DATE:
INTRODUCTION:
DISCUSSION/
ISSUES:
ALTERNATIVES: 1.
2.
ACTION REQUIRED:
Document2
DR
ECONOMIC DEVELOPMENT AUTHORITY
STAFF AGENDA REPORT
8A
DONALD RYE, PLANNING DIRECTOR
TAX INCREMENT FINANCING POLICY
MARCH 16, 1998
On December 15, 1997 the EDA adopted a policy for the provision of tax
increment financing for projects which might be proposed in the future. This
policy will be the subject of a joint EDN City Council workshop on April 6.
The proposed policy has been modified. slightly to clarify the application
procedure but is otherwise identical to what was approved on December 15.
One of the things the EDA should consider is whether the recommended policy
should be modified to reflect the input staff received from the City Council at
its' recent retreat. Some of the issues raised by the Council include:
. Should the City express a preference for businesses with demonstrable
long-term viability?
. Should the City focus on larger rather than smaller companies?
. Should the City enhance its' marketing efforts?
. Should "return on investment" be the principal determinant of whether TIF
is utilized?
. Should the City focus on manufacturing uses rather than office/warehouse?
. Should the payback period be minimized as a matter of policy?
. Should housing be considered for TIF assistance?
The EDA should discuss these issues and determine whether the TIF policy
should be further modified to reflect any of these issues.
Recommend theTIF policy as presently constituted
Recommend the TIF policy with modifications as approved
Motion as appropriate to recommend desired course of action.
Reviewed by: Frank Boyles, City Manager
16200 Eagle Creek Ave. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245
AN EQUAL OPPORTUNITY EMPLOYER
CITY OF PRIOR LAKE
ECONOMIC DEVELOPMENT AUTHORITY
TAX INCREMENT FINANCING POLICY
ADOPTED BY THE EDA DECEMBER 15, 1997
PURPOSE
This policy is established to outline the City's position on the use of tax increment
financing (TIF) policy for private development. This policy will be used as a guide in
processing and reviewing applications for tax increment financing assistance. In
accordance with the TIF policy, TIF requests must comply with applicable state statutes.
The City of Prior Lake is governed by the limitations established in Minnesota Statutes
Chapter 469.174, the Minnesota Tax Increment Financing Act, for all districts created
after August 1, 1979.
PROGRAM GOALS
This program exists to achieve the following goals:
1. To promote commercial, industrial and residential developm~nt under special
circumstances that would otherwise not occur.
2. To increase and diversify the long-term tax base of the City in order to ensure the
ability of the City to provide adequate services for its' residents while lessening
reliance on the residential property tax.
3. To improve the City's economic vitality through the creation and expansion of
employment opportunities.
4. To remove blight and encourage redevelopment in the commercial and industrial
areas of the City in order to encourage high levels of property maintenance and
private reinvestment in those areas.
5. To assure that projects are constructed and maintained at a level of quality consistent
with the goals ofthe City of Prior Lake.
6. To retain local jobs, increase the local job base and provide economic diversity in that
job base.
7. To assist in achieving other goals contained in adopted public policies as may be
adopted by the City Council from time to time, including without limitation, quality
design and construction, energy conservation and reductions in the capital and
operating costs of government.
PROGRAM ELIGIBILITY CRITERIA
Qualified projects should meet or exceed the following criteria to be eligible for TIF
assistance. Meeting the threshold of eligibility does not guarantee approval of the project
by the City. Conversely, failure to meet the criteria will not automatically exclude a
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16200 Eagle Creek Ave. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245
AN EQUAL OPPORTUNITY EMPLOYER
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proposal from further consideration. Final approval of any project will be made by the
City Council and Economic Development Authority.
1. The project must be consistent with the City's Comprehensive Plan, zoning ordinance
and other applicable City ordinances.
2. The applicant must be willing to enter into a development or redevelopment
agreement satisfactory to the City.
3. The project must comply with all applicable environmental regulations.
4. The applicant must submit all ofthe materials required in the application.
5. The applicant must agree to provide surety to the City to cover all costs paid by the
increment, unless the project is a "pay as you go" agreement. These may include
assessment agreements, letters of credit, personal deficiency guarantees, guaranteed
maximum cost contracts and minimum payment agreements.
6. The applicant/developer must provide a minimum of 10% equity in the project.
7. The EDA will favor owner-occupied projects over projects which will be leased.
8. For projects in an Economic Development District, a maximum of $10,000 of public
money will be invested for each full-time equivalent position created or retained.
9. For projects in Redevelopment Districts, those which remove or prevent blight will be
favored.
10. For projects in Redevelopment Districts, a ratio of taxes paid before and after
redevelopment of 1:2 is desired.
11. TIF will not be used in projects that would give a significant competitive financial
advantage over similar projects in the area. Developers will provide information to
demonstrate that this criterion is met.
12. TIF proposals should normally not be used to assist speculative developments. The
developer should be able to provide market data, letters of intent or financial
statements which illustrate the market potential or demand for the project.
The applicant for assistance must complete an Application for TIF Assistance pursuant to
the procedures outlined below.
APPLICATION PROCEDURE
1) EDA establishes goals and objectives (EDA)
2) Advance Resources for Development acts as agent for EDA (Staff)
3) The applicant submits a sketch plan and information on sources and uses of funds
for consideration and meets with appropriate staff and consultants to discuss the
scope of the project, the amount of public assistance being requested, the time
schedule and other appropriate information.
4) The applicant completes an Application for Tax Increment Financing and submits
this to the Planning Department.
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5) The application will be reviewed by staff and their consultant for feasibility and
compliance with the criteria and a report to the EDA will prepared.
6) Advance Resources proposes projects to EDA (Staff)
7) EDA approval/denial of project in concept (EDA) If the EDA's preliminary review
is positive, the applicant can make final application for assistance. This shall be
accompanied by a non-refundable application fee of $2,000 and a completed "But-
For" worksheet. If approved, the applicant shall be responsible for any additional
costs incurred by the City or EDA.
8) Concept goes to City Development Review Committee (DRC) for concept plan
review and comment (Staff)
9) Advance Resources negotiates with Developer (Staff)
10) Advance Resources prepares preliminary documents, which include comments
from DRC on concept plan review (Staff)
11) EDA approves documents to assure consistency with concept plan approval (EDA)
12) City Attorney reviews documents (Staff)
13) EDA recommends approval or approves applicable agreements for City Council
consideration, subject to site review approval including, but not limited to,
variances, CUP's, PUD's. Comprehensive Plan amendments, rezonings and
subdivision approvals (EDA)
14) Developer submits site plan, including necessary zoning applications, for official
action (Developer)
15) Staff reviews plans according to applicable Zoning and Subdivision Ordinance
requirements and refers to Planning Commission and/or City Council as necessary
(Staff)
16) Documents granting necessary approvals are incorporated into agreement in
Paragraph 7 (Staff). Following final analysis of the submission, the EDA and City
Council will receive a report with staff recommendations for final action. If
approved, staff will prepare a Development or Redevelopment Agreement between
the City and developer.
17) Obtain any required City Council approvals (Council)
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18) EDA and Developer execute agreement (EDA, Staff, and Developer). Any zoning
or land use approvals required shall be completed prior to execution of the
developers agreement.
PROJECT COSTS ELIGIBLE FOR TIF ASSISTANCE
Project costs which qualify for TIF assistance include the following:
· Property acquisition
· Land clearance
· Relocation and demolition of structures
· Site preparation
· Soils correction
· Removal of hazardous wastes or remediation of site contamination
· Installation of utilities
· Construction of public or private improvements
· Administrative costs directly related to the identified parcels.
· Design fees
· Surveys
· Environmental studies
· Relocation of building occupants
· Rehabilitation of structures
· Special assessments
· Other costs allowed by Minnesota statute
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ECONOMIC DEVELOPMENT AUTHORITY
PRIOR LAKE, MINNESOTA
MISSION STATEMENT
PROMOTE THE BUSINESS ASSETS OF PRIOR LAKE AND FACILITATE A
DIVERSIFIED TAX BASE.
GOALS
1. Prepare redevelopment plan and policy for Priordale MalllPark Nicollet site to
facilitate expeditious redevelopment.
2. Prepare Tax Increment Finance Policy statement, and review and comment on
County TIF, Local Effort TIF and Economic Development policies.
3. Expand Business Office Park.(On going)
Develop incentives to encourage Prior Lake residents to establish and maintain their
businesses within the City.
Continue to market existing business park properties.
4. Meet with downtown property and business owners to explore redevelopment
opportunities.
Develop a culture which encourages and supports business acquisition and retention
5. Develop a plan to capitalize on traffic generated by Shakopee Mdewakanton
Dakota Community and The Wilds.
Develop promotional materials.
Explore economic development linkages with Shakopee, Savage and the Dakota
Community.
6. Inventory and review existing commercial and industrial properties and develop a
position on development possibilities
Develop a recommendation on extension of utilities to old industrial park
Explore the relationship between housing availability and business development
16200 Ea~~~RCA'J€. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245
AN EQUAL OPPORTUNITY EMPLOYER
DVANCE
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_.//
,
TO:
Prior Lake EDA & City Council
FROM:
Roger Guenette
DATE:
March 16, 1998
RE:
Issues Impacting Economic Development Potential In Prior Lake
As the EDA and City Council are about to consider establishment of a TIF policy, it may be
appropriate to assess what has transpired and the current status of economic development opportunities
within the City. The purpose in preparing this memorandum is to aid new City Council and EDA
members in their understanding of why various developments have occurred to date and to facilitate
discussion as to what is likely to happen in the foreseeable future regarding commercial/industrial
development.
Eight years ago the City Council directed the Business Development Committee (BDC) to
investigate the potential for creation of a business/industrial park. At the time the only concentrated
area of commercial/industrial development was the "Credit River" industrial area located north of
County Road 21 on the east edge of the City. The "Credit River" area consisted of mixed use service,
distribution and manufacturing entities occupying facilities developed without access to municipal
services and lacking any consistency relative to building materials or design standards. Following an
extensive analysis, the BDC identified 5 potential areas to locate an industrial park (see attached map).
Of the 5 areas identified only two areas (#4 and #5) were eligible for municipal utility service prior to
the year 2000. The study also noted that while the average size business/industrial park comprised 140
acres, there were numerous reasons for the City to consider initiation of a smaller scale industrial park.
The reasons included: (1) lack of sizable land parcels available for service with municipal utilities; (2)
reduced costs relating to land and utility extensions; (3) lack of proximity to major transportation
arterials; and (4) lack of amenities necessary to support large scale business/industrial development (e.g.
hotels, restaurants, day care).
Based upon these and related factors in 1992-93, the City Council opted to acquire and develop
infrastructure on a 33 acre parcel situated in the southeast quadrant of the City (WaterFront Passage).
This decision conformed to the study's conclusion that the market for commercial/industrial prospects
for Prior Lake would likely be small manufacturers, distributors and service related companies. The
down side to investing in a small scale industrial park included increased costs per square foot for utility
and road extensions, diminished developable acreage due to wetland conditions and need for storm
water holding ponds and small lot sizes preclude marketing to large scale users.
Despite these limitations, WaterFront Passage Business Park enabled the City to provide
opportunities for economic diversification without incurring inordinate risk. Since no private developers
had theretofore stepped forward to develop commercial/industrial sites, the establishment of WaterFront
Business Finance and
Economic Development
Specialists
CORPORATE OFFICES
P.O. Box 32609
Mpls.. MN 55432-0609
Phone (612) 755-5393
Fax (612) 755-7741
P.O. Box 3027
Mankato, MN 56002-3027
Phone (507) 387-7117
Fax: (507) 387-6115 \
Prior Lake EDA & City Council
March 16, 1998
Page 2
Passage by the City was a calculated risk for an unproven market. Over the past five years, the City has
successfully marketed all but 4 acres of the land available for development in WaterFront Passage. The
one remaining parcel consists of an odd configuration and will require additional wetland mitigation to
successfully market. The existing occupants of WaterFront Passage Business Park are consistent with
the proposed tenants identified in the 1990 study (small manufacturers, warehouse/distributors and
service related businesses).
If the City wants to change the focus of development objectives and seek to attract large scale
businesses, the following steps must be taken:
Assemble a substantial land parcel (100+ acres with 10 - 20 acre tracts available for sale)
that are ready for development (absence of soil/terrain problems and full complement of
utilities).
\\ .,.... 'y IBe prepared to use TIF to write down land cost to as low as $1 and waive development
., ~ ~~""' fees (e.g. park dedication, trunk connection, etc.). '
.}J ~ ,;d" "" ___~~\ Improve transportation amenities to enable development sites to be served by 4-lane
,,\ ~ '" jJQ'Y highways with direct connections to Interstate highways.
i ~ '0 \
~ ,0
~~~
Create a more substantial commercial retail area with business support services to serve
large scale industrial users.
In the absence of these conditions, I must conclude that it is unlikely that the City of Prior Lake
will be successful in attracting large scale businesses in the near term.
The alternative is to continue to work with evolving small businesses. Based upon the City's
reluctance to acquire and develop additional industrial property, the inability to open up large tracts of
land for utility extensions and the absence of large scale private real estate developers, it would appear
\ prudent to continue to focus on small business development. By assisting local developers (Wensman
and Messenbrink) by underwriting costs of infrastructure extensions, via TIF, it should be possible to
open up approximately 100 acres of additional commercial/industrial sites. These sites would most likely
be developed by prospects similar to those currently located in WaterFront Passage. The City will be
able to evaluate each proposed project and request for TIF assistance on a case-by-case basis. The exact
amount of TIF assistance may be negotiated based upon the perceived value of the project as well as the
overall economic circumstances at that point in time.
I am aware that the City Council has asked for some method of measurement regarding return
on investment (ROI) relating to economic development. The enclosed cash flow statement pertaining to
the WaterFront Passage Business Park identifies overall expenditures including interest carrying costs,
cash sales proceeds and tax increment revenues relating to the development. While one 4 acre lot
remains to be marketed, the City stands to recapture all of their original investment, the interest carrying
costs and should realize a ROI of approximately $470,519. Discounting this amount by a 7% interest
factor over 15 years yields a net present value of $158,000. Based upon an initial City cost of
Prior Lake EDA & City Council
March 16, 1998
Page 3
approximately $1,805,000 to acquire and develop WaterFront Passage the ROI would be approximately
9%. This amount could increase substantially depending upon the disposition of the final parcel.
In addition to the "cash" return, the City has experienced an increase of 140 employment
positions and retention of 10 employment positions. These jobs account for an estimated annual payroll
of $3.8 million/year; furthermore, the City share of the tax base relating to WaterFront Passage will be
approximately $69,300/year upon termination of the 11 year tax increment districts created therein.
While it is reasonable to attempt to evaluate the ROI of the City's investment in economic development
it should be recognized that there may be intangible, intrinsic benefits of having a diversified economic
base within the community.
The residents of Prior Lake desire a high quality of life that includes recreational amenities,
quality housing, employment opportunities, infrastructure that works and a secure environment. Like
everyone else they would like to see their taxes reduced to a minimum. I believe that the City's initial
investment in WaterFront Passage will positively impact these objectives and that the proposed TIF
policy will help to ensure prudent investment of public resources in the future.
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TO:
FROM:
DATE:
RALPH TESCHNER, FINANCE DIRECTOR
CO~ECARLSON,PL~GSECRETARY
FEBRUARY 24,1998
Ralph, I have calculated the EDA stipends for 1997 as requested. Please remit the
amounts shown below. If you have any questions let me know. Thanks.
ECONOMIC DEVELOPMENT AUTHORITY
1997 ATTENDANCE
Schenck Kedrowski Campagnoli Barsness Schmidt
January 8 X x x X X
February 24 X x X
March 15 Workshop X X X X X
March 17 X X X
April 28 X X X X
May 19 X x x
June 17 X x X Underferth
July 21 x x x x x
August 18 X X X
September 15 x x x
October 20 X X x X
November 3 special meeting X X Gresser X X
November 18 X X x X
December 15 x X x x x
MEETINGS ATTENDED AT $40/PER MEETING:
b /1 9/6 Pete Schenck
~ f II ~ 0 Tom Kedrowski
-23-23n_Roseanne Campagonli
.....2 3 o l1J___ Bob Barsness
~L3~J.~_Dick Underferth
..::uJ.1J3____ Sally Schmidt
..2;:;;_02/_3_ Mike Gresser
13
10
6
13
7
3
2
$520
$400
$240
$520
$280
$120
$ 80
II ~ IbOo~
I
L:\97FILES\97EDA \97 A TTEND.DOC