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HomeMy WebLinkAbout04-20-11 EDC PacketChair Ed von Holtum Committee Members Rob Davidson Dan Erickson James Huninghake Vacant Vacant Vacant Vacant Vacant Council Liaison Brenda Holden .!e-- AIWNHILLS Arden Hills Economic Development Commission April 20, 2011 8:00 am to 9:30 am 1245 W. Highway 96 Arden Hills, MN 55112 651.792.7800 www.ci.arden- hills.mn.us City Vision Arden Hills is a strong community that values its unique environmental setting, strong residential neighborhoods, vital business community, well - maintained infrastructure, fiscal soundness, and our long - standing tradition as a desirable City in which to live, work, and play. Agenda Call to Order 1. APPROVAL OF THE AGENDA 2. MINUTES A. January 12, 2011 3. UNFINISHED AND NEW BUSINESS A. EDC Goals and Work Plan B. B2 District C. Tax Increment Financing Draft White Paper D. Gateway Signage 4. UPDATES A. TCAAP & Other Projects B. Commission Members C. Council Liaison 5. ADJOURNMENT A quorum of the City Council may be present at this meeting. EN /7kIHILLS CITY OF ARDEN HILLS, MINNESOTA ECONOMIC DEVELOPMENT COMMISSION JANUARY 12, 2011 8:00 AM CITY HALL - -1245 WEST HIGHWAY 96 CALL MEETING TO ORDER Chair von Holtum called the meeting to order at 8:03 a.m. ROLL CALL Present: Chair Ed von Holtum, Committee Members Rob Davidson, James Huninghake, and Dan Erickson. Also Present: Council Liaison Brenda Holden, City Administrator Pat Klaers, and Community Development Director Jill Hutmacher. Absent: None. 1. APPROVAL OF AGENDA It was the consensus of the EDC to accept the agenda as presented. 2. APPROVAL OF MINUTES MOTION: Committee Member Davidson moved and Committee Member Huninghake seconded a motion to approve the March 17, 2010 and the April 21, 2010 EDC minutes as presented. The motion carried unanimously (4 -0). 3. UNFINISHED AND NEW BUSINESS A. Introductions Introductions were made as the City Administrator and Community Development Director are both new to the City and have not met the EDC. Staff, the Council Liaison, and the EDC members all offered comments on their background and experience. B. Discussion of History, Role, and Purpose of EDC Chair von Holtum led the discussion on the history of the EDC and recent activities /projects of the EDC. It was noted that for a variety of reasons, the EDC has not been very active in the last EDC Minutes January 12, 2011 Page 2 of 2 12 months and that the EDC, in general, has been lacking direction from the City Council on a work program and goals. The City Administrator stated that the City Council will discuss Economic Development and Finance Committees and Commissions at their goal setting meeting next month. The possibility of combining FPAC, EDC and /or the EDA was briefly discussed. The EDC discussed the Business Contact Program that was worked on in 2008 -2010; the Guiding Plan for the B2 District; and what work is needed by the City to help improve the Red Fox /Grey Fox area. C. Draft Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis Community Development Director Hutmacher reviewed a first draft of a community development SWOT analysis. 4. UPDATES A. TCAAP & Other Projects B. Commission Members B. Council Liaison Due to the time, these items were not discussed. Chair von Holtum stated that the EDC has gone to a quarterly meeting schedule. The next meeting of the EDC will be in April. ADJOURNMENT The meeting adjourned at 9:50 a.m. Minutes approved by: Ed von Holtum, Chair Jill Hutmacher Community Development Director --ARZENHILLS MEMORANDUM DATE: April 20, 2011 EDC Agenda Item 3.A TO: Economic Development Commission Chair and Commissioners FROM: Jill Hutmacher, Community Development Director -314 SUBJECT: Economic Development Commission Goals and Work Plan The City Council is currently working with staff and a public management consultant on creating goals and a work plan for the next one to three years. Two meetings have been held, and a third meeting is scheduled for May 2, 2011. Although Council priorities have not been established, preliminary goals include the following: Development Coordination Goal: Establish goals and work plans for committees and commissions. Example action items: • Evaluate how the EDC and FPAC can work more closely together. • Create a process to evaluate development issues. • Create a long -term development vision and goals. • Align resources to development vision. Community Identity Goal: Foster a community identity of a well-managed, prosperous, and forward - looking city. Example action items: • Install gateway signs. • Update City website and consider options for electronic information distribution and social networking. • Implement B2 Plan with streetscape improvements. • Complete a long-term planning study including design standards for Red Fox/Grey Fox. City of Arden Hills Economic Development Commission April 20, 2011 Page 1 of 2 Business Outreach Goal: Promote a business - friendly environment. Example action items: • Create a business page on the City website. • Establish a forum for regular communication with the business community. • Update the business marketing packet and determine how it should be distributed. B2 District Plan Goal: Establish a plan for the redevelopment of the B2 District. Example action items: • Determine a process for the selection of a consultant for the B2 Implementation Plan. • Work with property owners on development and redevelopment proposals. • Align resources to the vision and goals for the B2 district. Staff would appreciate Commissioner feedback on the draft preliminary goals and example action items described above. City of Arden Hills Economic Development Commission April 20, 2011 Page 2 of 2 HILLS MEMORANDUM DATE: April 20, 2011 EDC Agenda Item 3.B TO: Economic Development Commission Chair and Commissioners FROM: Jill Hutmacher, Community Development ment Director .J SUBJECT: B2 District Implementation Plan The City Council has authorized staff to move forward with planning and design of improvements along County Road E as described in the B2 District Plan. The Capital Improvement Plan designates $270,000 in 2011 for this work. Staff will work with the City Council to determine a process for selection of a consultant to work on a Scope of Work that will address: • Upgrades to utilities along County Road E; • Streetscape improvements along County Road E; • Public participation process for evaluating construction of a landscaped center median and restriction of left turns from and onto County Road E; • Cost estimates, proposed timeline, and analysis of funding sources for public improvements along County Road E; • Density scenarios and their affect on traffic counts and need for a new signalized intersection; • Options for "back door" access from Arden Plaza to Pine Tree Drive including cost estimates for acquisition, relocation, and construction; and • Other issues as identified by the City Council, consultant, and staff. Staff expects to discuss the consultant selection process with the City Council in May. City of Arden Hills Economic Development Commission April 20, 2011 Page 1 of 1 ---AITEN HILLS MEMORANDUM DATE: April 20, 2011 EDC Agenda Item 3.0 TO: Economic Development Commission Chair and Commissioners FROM: Jill Hutmacher, Community Development Director III SUBJECT: Tax Increment Financing White Paper The City Council has asked the Financial Planning and Analysis Committee (FPAC) to draft a white paper analysis on the use of tax increment financing (TIF). FPAC held a joint meeting with the City Council on April 12, 2011. Councilmember Holden, the Council liaison to FPAC, will provide a summary of that meeting. FPAC has asked the EDC to attend the May 10, 2011, FPAC meeting to discuss the white paper. The meeting is scheduled for 6 p.m. in the Council Chambers. City of Arden Hills Economic Development Commission April 20, 2011 Page 1 of 1 TIF Selection Process Whitepaper for Arden Hills February 1, 2011 Summary We recommend that the City Council: 1. Establish long -term TIF assessment criteria 2. Develop a point-based assessment system Background TIF The original argument made to legislatures to create TIF was that it created a way for cash - strapped communities to finance the upfront costs associated with redeveloping blighted areas, most commonly cleanup /remediation costs and infrastructure improvements. Subsidized redevelopment in an area could then spur future, unsubsidized redevelopment. TIF has long -term effects that need to be considered when making a decision about providing TIF for a project. "Unlike property taxes, increments are not used to pay for the general costs of cities, counties, and schools. Instead, increments go to the development authority and are used to repay public indebtedness or current costs the city incurred in acquiring the property, removing existing structures or installing public services." (League of Minnesota Cities) FPAC Committee Arden Hills already has TIF Districts and anticipates the need for more TIF financing. The Financial Planning and Analysis Committee was asked to look at how the City selects TIF projects and make recommendations about the process. The Committee addressed three broad questions: • How much of the city's tax base can it afford to have in TIF Districts? • How does the city best allot its TIF dollars to support its long term goals? (First come, first served may not provide the best outcome for the city.) • Are there tools or methods that will help city leadership assess each TIF request? The committee has reviewed cases and policies from other cities around the United States as well as processes used in corporate America to evaluate long -term strategic options and projects. TIF Decision Process Overview There are many tools the City of Arden Hills can use to drive development in the city, including preferential use of city facilities, loans, direct subsidies, property tax abatement, and Tax Increment Page 1of6 Financing (TIF). These varying tools have different long -term and short -term costs. TIF is one type of business subsidy. Importantly, TIF is a long -term subsidy with long -term cost and benefit impacts that must be considered. This stands in contrast to some other forms of subsidies where the costs and impacts tend to be more short -term nature. The use of TIF can be thought about as having two decision layers. The first layer involves near term considerations: • Is the individual project acceptable under the City of Arden Hills business subsidy Policy? • Is the project financially feasible? • Is the TIF request currently affordable under the cities TIF Spending Guidelines? (see recommendation below) The second layer of considerations involves long -term considerations. • How does an individual project compare to the stated long -term goals and vision of Arden Hills? • How does the project compare to other potential long -term projects that are not yet identified? • How much long term leverage can the City obtain from a particular TIF project? Before a TIF project is approved, the project should be acceptable under both levels of consideration. Short -term consideration The first step is to match the project to the City's Business Subsidy criteria. The project must fall within the guidelines outlined. The second step is the project must meet the financial thresholds for a TIF project. Finally, as a third step the project alone or in conjunction with other known projects cannot drive the city to exceed its total desired TIF limit as defined in this TIF selection process guideline. These short -term considerations should be considered a threshold. A project must pass these tests to be considered for TIF funding. However, TIF funding is long -term, therefore the more important considerations are the long -term considerations. Long -term consideration By its nature TIF has long term impacts. The creation of a TIF District reallocates the tax money the district creates for a period of time measured in years or even decades. Because only so much TIF is affordable for the City, at a very minimum any individual TIF District presents a long -term (lost) opportunity cost —a project today may preclude another different, potentially more beneficial, yet unknown project tomorrow. Therefore the TIF decision making process should be focused on long -term considerations. Recommendation for Creating a TIF Evaluation Process Develop TIF Spending Guidelines In order to better manage TIF financing decisions over the long term we recommend the City debate and set into policy a guideline on the total projected tax capacity of all tax increments in the City. The City should limit the total projected tax capacity of all tax increments to not exceed 3/4 of the state average of 6.4% of the taxable market value. This would mean a guideline for projected tax capacity for all tax increments in the City not to exceed X %. Page 2 of 6 Additionall we recommend the ' A - - - - ' I regular graphically monitoring of TIF projects either every oth.er year or after a certain level of new TIF activity. The items that will be reviewed should include the total projected tax capacity, the percentage of increase in services since the last review, the number of TIF projects and their respective end dates, the effectiveness of active TIF projects to their original concept, and any other statistics or benchmarks that the committee deemsdeemed to be of importance. Develop measurement criteria We recommend that the city debate and approve a set of long -term criteria with which to weigh potential TIF projects. The City has already developed a vision statement. The Committee considered whether this might be adequate as long term measurement criteria. One could simply compare a development project to the City's stated long -term strategic goals. While the process would be a good first step, we feel that it is too broadly worded to be used as criteria and would lead to confusion from both developers trying to assess how the city will view their individual projects and citizens who wonder why a particular project is or is not approved. We recommend the city develop a set of more refined, long -term selection criteria with which to weigh development projects seeking TIF. We further recommend that developing these criteria be done outside the process of considering any individual project. This will help ensure, as best as possible, an independent view of the long -term needs and strategy of the City. These long -term criteria would then be integrated into the current process of evaluating business subsidies. Assign points We recommend using a point based assessment system. There are multiple ways to implement this, but the goal of any method should be that when a project is assessed it would be granted points relative to how much it met each criterion and how relatively important that criterion is. The intent of the points system is not that it would make the decision for the City Council, but rather that it would focus discussion on the most salient points of the project under consideration. Any large project is inherently complex and it is important to avoid prematurely debating its finer points. It has been suggested that an objective rather than subjective point system be developed, however given the complexity of redevelopment projects and the mix of short- and long -term costs and benefits involved, the Committee could come up with no strictly objective measure. That said, where possible we strongly encourage objective measure wherever feasible. We also recommend that specific minimum requirements be laid out, including enumerating any specific types of projects that are not considered appropriate for TIF because by their nature such projects do not provide the necessary long -term benefits. Scoring would be done by the City Council or its designated representatives. Page 3 of 6 We commend that the following points, taken from our research, be held in mind throughout this process: 1. The "but for" tests are only the minimum requirements for qualifying for TIF; prudent communities set more stringent requirements. 2. TIF is there to solve community problems. 3. Use TIF only when truly necessary; it was never designed to be an alternate financing method for private developers. TIF Selection Criteria Below is a draft of what selection criteria might look like. This is for discussion purposes only. The goal would be to modify the percentages and the specific criteria and have the City Council eventually, debate, vote and approve the Criteria. Once this is done the Economic Development Committee (EDC), with any assistance needed from FPAC, should develop a detailed scoring process and methodology. Minimum requirements to use TIF • The long -term viability of the development partner has been reviewed and the City has determined that the partner has the financial stability and track record to drive the full benefit of the project over the life of the project • The objective of the project produces long -term expected benefit that exceeds the length of the TIF and is at least 15 years in duration. Selection Criteria (in rank priority order within each section) Community Goals 60% 1. Materially enhances the health, safety and well -being of all who live, work and play in the City. a. Enhances an interconnected system of trails, pathways and open spaces. b. Protects and preserves the community's natural resources including open spaces, lakes, wetlands, other significant natural features and historic resources. 2. Enhances or retains development of TCAAP in a way that accommodates a mix of land uses that is sensitive to the natural environment, economically sustainable and a benefit to the community 3. Retains or creates jobs that are long -term in nature and at or above the median for the State of Minnesota (vs. Business Subsidy Policy standard ?) 4. Creates a desirable commercial /retail environment that enhances the long -term vitality of the City. 5. Provides a transportation system that has convenient and effective multi -modal connections within Arden Hills and to adjacent municipalities, the remainder of the Twin Cities Metropolitan Area and greater Minnesota. Future Leverage Goals 30% 1. Likelihood project will spur other projects that will not require further subsidy. a. Increases the ability to further develop a healthy and accessible community b. the center for further business development c. Increases likelihood of job growth in a growing industry Page 4 of 6 Regional Goals 10% 2. Moves the region closer to its mix goals for affordable housing 3. Enhances the regional trail system and it's integration with the Arden Hills trail system Next Steps l.) Circulate Whitepaper with entire FPAC; debate and modify as appropriate. 2.) Review the City of Bloomington's methodology for creating its TIF spending guidelines. 3.) Place topic on City Council working session agenda for discussion and feedback. 4.) City Council to debate and approve (subject to modifications and amendment) "Long- term TIF Selection Criteria" 5.) Based on City Council's approved Long -term TIF Selection Criteria, EDC (with assistance from FPAC) to develop Long -term TIF Criteria point system and revised TIF approval process Page 5 of 6 6.) City to embody new process and point system into TIF approval policy.what the final components and process might look like TIF Assessment Components and Process City Management Information (Identified outside any project proposal) City development goals Prioritized and weighted City financial goals Prioritized and weighted TIF Budget and plan TIF Assessment Worksheet TIF Assessment Process (The 3 steps of the worksheet done for each project) Initial project screening Passes City's subsidy criteria? TIF regulatory qualification? City has TIF capacity? Long -term screening Long term benefits to City? Long term viability of partner? TIF assessment How well does project rank? EDC recommendation? Matches well enough to continue Matches well enough to continue TIF assessment City Council approval? Ranks well enough to recommend to City Council Page 6 of 6 EN HILLS MEMORANDUM DATE: April 20, 2011 EDC Agenda Item 3.D TO: Economic Development Commission Chair and Commissioners FROM: Jill Hutmacher, Community Development Director n-] SUBJECT: Gateway Signs The City Council will discuss Gateway Signs at the April 18 Work Session Meeting. The Council Liaison and staff will provide a summary of the Council discussion. City of Arden Hills Economic Development Commission April 20, 2011 Page 1 of 1