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HomeMy WebLinkAbout10-19-11 EDC PacketChair Ed von Holtum Committee Members Rob Davidson Dan Erickson Jim Huninghake Vacant Vacant Vacant Vacant Vacant Council Liaison Brenda Holden / EN HILLS Arden H i I Is Economic Development Commission October 19, 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. August 24, 2011 3. UNFINISHED AND NEW BUSINESS A. State of the City Wrap -Up B. B -2 District Implementation Plan C. 2012 EDC Work Plan D. EDC Meeting Schedule 4. UPDATES A. TCAAP & Stadium Development B. City Website Redesign Project C. Commission Members D. Council Liaison E. Staff Comments 5. ADJOURNMENT A quorum of the City Council may be present at this meeting. HILLS CITY OF ARDEN HILLS, MINNESOTA ECONOMIC DEVELOPMENT COMMISSION AUGUST 24, 2011 4:00 PM CITY HALL - -1245 WEST HIGHWAY 96 CALL MEETING TO ORDER Chair von Holtum called the meeting to order at 4:18 pm. ROLL CALL Present: Chair Ed von Holtum and Commissioner Jim Huninghake. Also Present: Council Liaison Brenda Holden, City Administrator Patrick Klaers, and Community Development Director Jill Hutmacher, and Planning Intern Mei -Ling Anderson. Absent: Commissioners Rob Davidson and Dan Erickson. 1. APPROVAL OF AGENDA It was the consensus of the EDC to accept the agenda as presented. 2. APPROVAL OF MINUTES It was the consensus of the EDC to accept the July 27, 2011, EDC minutes as presented. 3. UNFINISHED AND NEW BUSINESS A. State of the City Event Community Development Director Hutmacher distributed drafts for the State of the City postcard mailing and an advertisement for the Shoreview Arden Hills Bulletin. She said there have only been about a dozen RSVPs so far and suggested that EDC members promote the event to their colleagues and Arden Hills business acquaintances. Chair von Holtum and Commissioner Jim Hunginghake suggested e- mailing PDF versions of the postcard mailing and advertisement to absent EDC members for comments and asking members to help with event promotion. Councilmember Holden suggested also forwarding the postcard to the members of the City Council and the Planning Commission. There was discussion about using this opportunity to attract new EDC members. EDC Minutes August 24, 2011 Page 2 of 4 Community Development Director Hutmacher said there will be two boards thanking donors to Celebrating Arden Hills. There will be printed nametags for those who RSVP'd and blank nametags available for those who did not RSVP. Councilmember Holden will be emceeing the event; EDC members can focus on greeting attendees. Community Development Director Hutmacher stated that North Heights Lutheran Church was chosen as the venue in part because they provide set -up, catering, and audio - visual services. Chair von Holtum expressed that everything appears to be in good shape and that twelve RSVPs is encouraging considering it is still early. B. City Website Redesign Project Community Development Director Hutmacher announced that the Communications Committee is developing an on -line survey to gather suggestions from current users of the City's website. The on -line survey can be promoted at the State of the City and Celebrating Arden Hills events. It would be helpful to get feedback on the website from the EDC and the rest of the business community. Chair von Holtum supported the City's intention of working with professionals on the website redesign project. C. Tax Increment Financing Community Development Director Hutmacher introduced the topic of developing a benchmark limit for the total tax capacity captured by tax increment financing (TIF) districts. The Financial Planning and Analysis Committee (FPAC) has drafted a white paper that suggests Minnesota's state average as a potential benchmark. A recommendation is not needed today. Community Development Director Hutmacher reviewed definitions of tax capacity and tax rate. Tax capacity is a percentage of a property's assessed market value and differs among types of property. Residential units, for example, have a tax capacity of 1 %, whereas commercial /industrial property has a tax capacity of 1.5% for the first $150,000 in assessed value and 2% for value above $150,000. The tax rate, or "mill rate ", is a blended rate between all of the taxing jurisdictions including the City, County, school district, etc. Total property taxes are calculated by multiplying the tax capacity for each parcel by the jurisdiction's tax rate. The combined tax rate of Arden Hills' jurisdictions is around 1.05 %. TIF districts capture the tax increment that would otherwise have gone to other jurisdictions. The captured increment is used to pay for infrastructure required by development. State Statutes define eligible and ineligible TIF expenditures. For example, infrastructure upgrades are eligible, but parks and general government services are ineligible. Discussion took place about the issue of having constrained cash flow for public services during the duration of the tax increment district while taxes that would otherwise be available for public services are diverted to infrastructure costs. Commissioner Huninghake asked about the duration of tax increment districts. Community Development Director Hutmacher responded that it EDC Minutes August 24, 2011 Page 3 of 4 depends on the type of district and total eligible TIF costs, but there is a maximum duration of around twenty -six years. Community Development Director Hutmacher summarized Staffs findings that the City currently has 3.73% of its tax capacity captured by TIF districts, which will increase to 5% once Presbyterian Homes moves forward. Arden Hills is unique since 50% of the City's total tax capacity is from Commercial /Industrial (C /I) properties, which is very high compared to most cities in the metro. Only Fridley and Bloomington have similar proportions of tax capacity from C/I properties. Chair von Holtum asked if the proposed stadium could affect these numbers. Councilmember Holden and Community Development Director Hutmacher explained that the stadium would be tax - exempt but the 170 -acre section of the property that is proposed to be privately developed would be taxable. If anything, the City's total tax capacity could increase. Community Development Director Hutmacher went over reasons that C/I properties are beneficial to cities. These developments provide jobs and their higher tax capacity relieves the burden on residential property owners. Staff would like direction as to whether to recommend to the City Council that the City's TIF- captured tax capacity benchmark match the state average or comparable cities. The EDC was provided with a spreadsheet listing Twin Cities municipalities with populations between 2,000 and 35,000 and percentages of C/I tax capacity and TIF - captured tax capacity. Among cities with percentages of C/I tax capacity above 35%, the median TIF- captured tax capacity is approximately 9 %. City Administrator Klaers checked the list and verified that Roseville was missing from the list and should be added. Chair von Holtum asked for Councilmember Holden's view on setting the TIF- captured tax capacity benchmark, to which she replied that the EDC should consider the reasons we give TIF, not the amount we give. For example, TIF could be used to encourage development in the B -2 district. The City does not need to use TIF for business attraction, since the City already has low vacancy rates and significant commercial development. Also, although the City seldom uses TIF, that has not hindered commercial development. Commissioner Huninghake agreed with Councilmember Holden that we should not give businesses a tax advantage. In response to a question on the significance of the City having 50% of its tax capacity generated by C/I development, Community Development Director Hutmacher explained that Arden Hills not only has significant commercial development, but the City also has large areas of tax - exempt land such as lakes, colleges, parks, and TCAAP as well as very low - density residential neighborhoods. The City's proportion of commercial tax base is high in comparison to its relatively low residential tax base. Councilmember Holden suggested that the TIF- captured tax capacity benchmark may provide a reason for approving or denying TIF. TIF may not make or break a project, but the City can help make it more affordable and attractive to develop in Arden Hills. Presbyterian Homes received about $1.1 million in TIF but the City is getting a lot back in return, such as sewer repairs and the triangle parcel. EDC Minutes August 24, 2011 Page 4 of 4 This topic will be discussed in greater detail at a future EDC meeting so that the EDC's feedback can be conveyed to FPAC. 4. UPDATES A. TCAAP & Other Projects The August 4, 2011, stadium open house attracted twenty -seven Arden Hills residents, which is about one -third of the total number of people in attendance. The event was well- received by attendees. The most common comments were that people do not want public funding to support the stadium and they would prefer to have park space on the site. The City has not been contacted by the County or Vikings since the meeting. There are still a lot of unknowns. The costs and benefits of development depend on what you are comparing it to. The EDC reviewed a map of the County's proposed stadium - related transportation improvements. B. Commission Members None. C. Council Liaison None. D. Staff Comments Council will vote on the Select Senior Living development agreement at their next meeting. Staff asked EDC members to consider a monthly meeting schedule. Some monthly meetings may be cancelled, but more frequent meetings would be helpful to keep economic development projects moving forward in a timely manner. Staff will poll EDC members on potential meeting dates. 5. ADJOURNMENT The meeting adjourned at 5:32 p.m. Minutes approved by: Ed von Holtum, Chair Jill Hutmacher Community Development Director --ARp...ENHILLS MEMORANDUM DATE: October 19, 2011 EDC Agenda Item 3.A TO: Economic Development Commission Chair and Commissioners FROM: Jill Hutmacher, Community Development Director j/ SUBJECT: State of the City Wrap -Up The Arden Hills State of the City was held at North Heights Lutheran Church on Wednesday, September 12, 2011. Approximately 50 business owners and residents attended the event in addition to City Councilmembers and staff. The event was well - received, and attendees reported that it was informative. Expenditures for the event as follows were paid from the EDA General Fund. Postcard notices (2 mailings) $443.91 Shoreview -Arden Hills Bulletin (2 ads) $422.40 North Heights Lutheran Church (catering and AV services) $1,801.17 Total $2,667.48 As a wrap -up of the event, staff would appreciate feedback on the following questions. 1. Would the EDC recommend a similar event in 2012? 2. If so, what worked well for the 2011 event? 3. What could be improved in 2012? City of Arden Hills Economic Development Commission October 19, 2011 Page 1 of 1 ARpENHILLS MEMORANDUM DATE: October 19, 2011 EDC Agenda Item 3.B TO: Economic Development Commission Chair and Commissioners FROM: Jill Hutmacher, Community Development Director t3 SUBJECT: B -2 District Implementation Plan At the October 17, 2011, Work Session meeting, the City Council discussed a Scope of Work and phasing plan for the B -2 District Implementation Plan. The Council memo is attached. The City Council liaison and staff will provide a summary and outcome of the October 17 discussion. City of Arden Hills Economic Development Commission October 19, 2011 Page 1 of 1 Attachment A October 17, 2011 City Council Work Session Memo October 19, 2011, Economic Development Commission EN HILLS MEMORANDUM DATE: October 17, 2011 TO: Honorable Mayor and Councilmembers FROM: Jill Hutmacher, Community Development Director Terry Maurer, Public Works Director SUBJECT: B -2 District Implementation Plan Background The City Council accepted the Guiding Plan for the B -2 District on October 27, 2008. The Guiding Plan provides a framework for long -range public and private improvements in the B -2 District along County Road E between Lexington Avenue and Highway 51. In December 2008, the City adopted design guidelines for the B -2 District which have been used to evaluate redevelopment proposals for McDonald's, the former Holiday Inn site, and Arden Plaza. The design guidelines insure that new development and redevelopment meet the goals of the B -2 Guiding Plan. The Implementation Plan is the next step for the B -2 District. The Implementation Plan will allow the City Council to determine enhancements along County Road E which may include utility upgrades, access improvements, bicycle and pedestrian facilities, and streetscape amenities. Once completed, the Implementation Plan will allow the City to move forward with improvement projects. Twin Cities Corridor and Streetscape Projects In preparation for moving forward with the B -2 Implementation Plan, staff identified cities that had completed corridor and streetscape projects. In August staff had an opportunity to tour three projects that have similarities to the B -2 District. The tour was led by representatives of Bolton & Menk and HKGi who were the consultants for all three projects. A "virtual tour" of the following sites will be provided at the October 17 work session meeting. City of Arden Hills City Council Work Session October 17, 2011 Page 1 of 5 CSAH 101 — Shakopee County State Aid Highway (CSAH) 101, also known as First Avenue East, had dire infrastructure replacement needs due to the age and condition of the road and utilities. The CSAH 101 Infrastructure Replacement project focused on addressing the immediate infrastructure needs, recognizing and encompassing mobility and safety improvements, and preserving future regional opportunities associated with the CSAH 101 river bridge. The infrastructure reconstruction included replacing the current roadway and sidewalk pavement, implementing decorative street lighting and streetscape elements, and corridor safety improvements. r The project faced several challenges including: • Evaluating existing and near -term corridor capacity and safety needs within a narrow 80' right -of -way; • Improving corridor capacity and safety through access management strategies; • Implementing a substantial public and business involvement process from design through construction; • Coordinating public and private utilities in the corridor; • Developing construction staging options to reduce the construction schedule and impacts to adjacent businesses; • Improving corridor aesthetics through use of colored concrete, decorate street lighting, and bollards. Excelsior Boulevard — Hopkins and St. Louis Park The City of Hopkins commissioned a corridor study for Excelsior Boulevard. The study resulted in a corridor master plan that addressed land use, transit, pedestrian and bicycle circulation, roadway improvements and financial implementation. Implementation strategies focused on redevelopment recommendations, funding sources, phasing and business relocation requirements. City of Arden Hills City Council Work Session October 17, 2011 Page 2 of 5 In St. Louis Park, the corridor project included pedestrian and street lighting, median landscaping, custom bus shelters, paving, retaining walls and boulevard plantings. The project involved close coordination with Hennepin County and was subject to the County's roadway and aesthetic design policies. Central Avenue — Osseo To accommodate projected residential and commercial growth and to maintain a vibrant downtown business district, Central Avenue's infrastructure required a major upgrade of utilities, roadway pavement, and streetscaping. High quality streetscape improvements reflect the City's sentiments and dedication toward downtown Osseo. Gateway monuments greet visitors at both ends. Decorative paver sidewalks direct pedestrians along a corridor of ornamental trees, planter boxes, benches, bollards and waste receptacles. The street is lined with decorative LED lighting with poles that support banners, flagpoles, and hanging baskets. The boulevard was constructed using pervious pavers, reducing storm water runoff into the street and storm sewer. Key Elements of Corridor and Streetscape Projects The corridor and streetscape projects in Shakopee, Hopkins, St. Louis Park, and Osseo have key elements that the City of Arden Hills may need or want to incorporate into the B -2 Implementation Plan. These include: • Extensive communication with and input from the business community on access changes and construction schedule; • Coordination with the county for curb -to -curb spacing and design; • Optimization of existing right -of -way; • Consideration of vehicle, bicycle, and pedestrian movements; and • Implementation recommendations that adhere to the community's needs and budget; B2 Implementation Plan Staff recommends that the Scope of Work for the B -2 Implementation Plan be divided into two phases. The first phase will be focused on gathering and analyzing information. At the end of City of Arden Hills City Council Work Session October 17, 2011 Page 3 of 5 Phase I, the City will have analyzed options, obtained input from business owners, and defined specific objectives, a preliminary construction budget, and a timeline for B -2 District improvements. Phase I 1. Consider budget needs and funding sources. a. Determine a preferred level of intensity of streetscape improvements. b. Establish an assessment method for the B -2 District. c. Suggest options for public funding such as MSA funds. 2. Work with Ramsey County to determine project scope and goals. a. Reaffirm the County's acceptance of the B -2 Guiding Plan. b. Determine space needs within the right -of -way. 3. Determine a public participation process. a. Promote business participation in discussions of streetscape and amenities. b. Work individually with businesses to determine access needs and vehicle /pedestrian movements onto and within their sites. 4. Evaluate utilities along County Road E. a. Determine whether utility upgrades are necessary. b. Work with Xcel Energy to consider options for electrical boxes. c. Provide cost estimates for any necessary utility upgrades. 5. Evaluate traffic and transportation options. a. Update the 2008 traffic study and include pedestrian movements. b. Suggest options for traffic improvements without a new signalized intersection. c. Investigate options for an alternative access for the Arden Plaza development. 6. Summarize Phase I findings. a. Provide a preliminary project budget. b. Provide project and decision matrix timelines to align planning, design, and construction with the reconstruction of the Highway 51 bridge. In Phase II, improvements identified in Phase I will be designed. Cost estimates, specifications, and a construction timeline and phasing schedule, if necessary, will be prepared. At the end of Phase II, the City will be ready to proceed to bidding and the construction of improvements. Budget Implications City of Arden Hills City Council Work Session October 17, 2011 Page 4 of 5 Expenditures and funding sources for the B -2 District Implementation Project are outlined as below in the draft 2012 — 2016 Capital Improvement Plan (CIP). Expenditures 2012 2014 Total Planning /Design 278,000 0 278,000 Construction 0 2,334,000 2,334,000 Total 278,000 2,334,000 2,612,000 Funding Sources 2012 2014 Total Capital Improvement Funds (PIR) 175,000 1,53 8,000 1,713,000 Sanitary Sewer Utility Fund 20,000 160,000 180,000 Surface Water Mgmt Utility Fund 52,000 371,000 423,000 Water Utility Funds 31 ,000 265,000 296,000 Total 278,000 2,334,000 2,612,000 The City may assess a portion of the cost of improvements to adjacent properties. Development Agreements for Select Senor Living and Arden Plaza contemplate an assessment rate of not more than $350.00 per lineal foot along County Road E. Assessments for properties that redevelop prior to the construction of County Road E improvements may be adjusted based on improvements made by the property owner at the time of redevelopment. In addition to CIP funds designated for County Road E improvements, $150,000 from PIR funds is programmed for the Highway 51 bridge replacement in 2014. The majority of the planning and design funds will be needed in Phase II of the Implementation Plan. Work products of Phase I include a preliminary budget, an identified assessment method for B -2 properties, and options for public funding. Recommendation Staff recommends that the City Council direct staff to negotiate a contract with Bolton & Menk for Phase I of the B -2 District Implementation Plan and to present the contract to the City Council for consideration. City of Arden Hills City Council Work Session October 17, 2011 Page 5 of 5 EN HILLS MEMORANDUM DATE: October 19, 2011 EDC Agenda Item 3.0 TO: Economic Development Commission Chair and Commissioners FROM: Jill Hutmacher, Community Development Director SUBJECT: 2012 EDC Work Plan At the December 7, 2011, EDC meeting, staff will present a draft 2012 EDC Work Plan for consideration. Potential work plan items include: • Tax Increment Financing Policy o Analyze TIF captured tax capacity benchmark o Consider role of TIF in implementation of City vision and development goals • Gateway Signs o Review staff reports and recommendations to the City Council • TCAAP Development o Communicate TCAAP development issues with the business community • B -2 Implementation Plan o Review and comment on draft Plan o Communicate with B -2 businesses • City Website Redesign Project o Outline economic development pages o Determine business information to be included on website • New member recruitment • 2012 State of the City o Plan event o Promote event to business community o Consider other business outreach activities Staff would appreciate EDC comments and suggestions on the 2012 Work Plan. The work plan will be presented for City Council consideration in December. City of Arden Hills Economic Development Commission October 19, 2011 Page 1 of 1 EN HILLS MEMORANDUM DATE: October 19, 2011 EDC Agenda Item 3.D TO: Economic Development Commission Chair and Commissioners FROM: Jill Hutmacher, Community Development Director SUBJECT: EDC Meeting Schedule At the August 24, 2011, EDC meeting, Commissioners discussed options for EDC meeting dates. Based on Commissioners' schedules, it appears that meetings on the first Wednesday of the month at 8 a.m. are preferred. More frequent meetings will help the EDC make significant progress on its work plan. If the EDC has little business to discuss in a particular month, the meeting will be cancelled. Recommendation Approve scheduling EDC meetings for the first Wednesday of the month, 8 a.m. to 9:30 a.m. in the Arden Hills Council Chambers beginning with the EDC meeting scheduled for Wednesday, December 7, 2011. City of Arden Hills Economic Development Commission October 19, 2011 Page 1 of 1 ARJJEJI HILLS MEMORANDUM DATE: October 19, 2011 EDC Agenda Item 4.A TO: Economic Development Commission Chair and Commissioners FROM: Jill Hutmacher, Community Development Director SUBJECT: TCAAP and Stadium Development Update On Tuesday, October 11, the Ramsey County Charter Commission voted 10 -6 to not include a stadium sales tax referendum on the 2012 ballot. Commissioners stated that the sales tax was a policy issue that should be decided by the County board. On Wednesday, October 12, the Metropolitan Council released the Stadium Proposal Risk Analysis requested by Governor Dayton. The executive summary is provided as Attachment A. The full report can be found at the Metropolitan Council's website which is linked to the City's website. The report makes a number of findings of risk and related measures to mitigate these risks. According to the report, the following risks present the greatest challenges to the stadium proposal. 1. Cost of Delay. The stadium proposal calls for opening the stadium in 2015. The Metropolitan Council found that an opening in 2016 is more likely, and a 2017 opening is a worst -case scenario. Each year of delay could result in approximately $46 million in inflationary costs. 2. Unfunded Cost Gap. The Metropolitan Council identified a cost gap of $39 million, or approximately 3.6% of the total $1.1 billion project. Ramsey County and the Vikings dispute that there is actually a cost gap. 3. Ramsey County Sales Tax. The Metropolitan Council confirmed that the proposed Ramsey County 0.50% sales tax and the $20 motor vehicle sales tax will fully meet the County's $350 million obligation towards the stadium. The Metropolitan Council questioned whether these funding sources would be sufficient to cover $58 million in cost overruns in a worst case scenario. City of Arden Hills Economic Development Commission October 19, 2011 Page 1of2 The Ramsey County press release and a letter from the Minnesota Vikings in response to the Metropolitan Council's Stadium Proposal Risk Analysis are provided in Attachment B. Representatives from Ramsey County and the Vikings are expected to meet with Governor Dayton and legislative leaders during the week of October 17 to discuss the risk analysis, determine methods of mitigating the risk, and consider sources for the State's $300 million funding share. City of Arden Hills Economic Development Commission October 19, 2011 Page 2 of 2 Attachment A October 12, 2011 Metropolitan Council Stadium Proposal Risk Analysis October 19, 2011, Economic Development Commission Stadium Proposal Risk Analysis Executive Summary in. cooperation Avith LWJ .1.1ETROOOKE Metropolitan Sports Facilities Commission EXECUTIVE SUMMARY EXECUTIVE SUMMARY Ramsey County and the Minnesota Vikings organization have proposed a new stadium to be built at the site of the former Twin Cities Army Ammunition Plant (TCAAP) in Arden Hills. In August 2011, Governor Mark Dayton requested the Metropolitan Council and the Metropolitan Sports Facilities Commission (MSFC) to evaluate the stadium proposal to determine: • The potential risks, if any, of State participation in the Stadium Proposal and necessary regional transportation improvements. and • Potential ways to mitigate or eliminate any resulting exposure to the public. This report presents the results of that evaluation. It includes information from several sources, including the consulting firm of Kimley-Horn and Associates, Inc., the Metropolitan Council, the MSFC, Ramsey County, the Minnesota Vikings, the Minnesota Department of Transportation, the City of Arden Hills, the City of Shoreview, the City of Mounds View, the City of New Brighton, the City of Blaine, the Minnesota Pollution Control Agency, U.S. General Services Administration. the U.S. Army. the Minnesota National Guard, and others. The Stadium Proposal The Minnesota Vikings envision the Stadium Proposal Property to be a mixed-use development initially consisting of a new stadium, parking for stadium events, and possibly team facilities. Sometime in the future, depending on the state of the economy, the property would include a mix of commercial (office, retail, hotel, restaurants) and residential space. The Stadium Proposal Property would occupy 430 acres within the 2,400-acre TCAAP site (see Image 1 in the Scope of Analysis/TCAAP Site Ownership and Land Uses section of this report). Within this property, the stadium, parking areas, support facilities, and circulation roadways would be built on approximately 260 acres (the Stadium Parcel) . The remaining 170 acres (Development Parcel) would be reserved for future residential and commercial development. The 430-acre Stadium Proposal Property would be acquired by Ramsey County from the U.S. Army through the federal General Services Administration (GSA). The 260 acres of the Stadium Proposal Property (the Stadium Parcel), including the stadium facilities, .vvould be conveyed to a. Stadium Authority, to be established by the Minnesota Legislature. The Minnesota Vikings would enter The rvii.rinesota., Vikings envi.si.or.i. the Stadiurn. Iroosa.1 'Property to be a nrixed-ouse initially consisting of a new- stadium, parking for stadium events, and possibly team facilities.: Sometime in the future, cle.Tending on. the state of the economy, the property wcytil.d. include a. ntix of cerr.trrie.rda.1 arni residential space,: into a long-term lease or use agreement for a term of 30 years, with options to extend the term, with the Stadium Authority. The remaining approximately 170 acres (the Development Parcel) would be conveyed to the Minnesota Vikings or a related entity for future development once Ramsey County acquires the Stadium Pro- posal Property. The estimated cost for the Stadium Proposal is $1.111 billion, with the following proposed funding. Chart 'I Funding of $1,.111 Billion Project Cost 1 Minnesota Vikings $407 miUion , State of „rxilinnesota $300 million Funding Gap 39 rniHion_ MetrodorneS_ rvisFc $15 million Ramsey County _$350 million The May 2011 agreement between Ramsey County and the Minnesota Vikings had proposed an estimate of $1.072 billion. The budget was later revised to include $101 million to pay for necessary offsite transportation improvements and a cost reduction for building a fixed roof instead of a retractable one. The $1.111 billion budget includes $39 million for which a funding source is not yet identified. It is assumed that the State of Minnesota and Ramsey County shares will not change, but negotiations continue to address this funding gap. Under the proposal, the Vikings would receive all revenue generated from NFL activities held at the stadium. Land Transfer and Remediation The land transaction like the one contemplated by Ramsey County and the General Services Administration (GSA) is complex because of the related nature of site remediation responsibilities and land-use controls that restrict the use of the land. It is estimated that land acquisition and site demolition and remediation costs could range from $23 million to $70 million. The wide cost range is due primarily to uncertainty regarding the existing contamination, the development plan and the land appraisal. These uncertainties should be better understood in order to negotiate the land sale price with the GSA. In addition to completing an additional environmental site assessment, the County should have a plan in place for indemnification against the uncertainty of the site remediation costs. Ramsey County has found that remediation. stop-loss/cleanup cost cap insurance is not available in today's market, which means there may be no risk mitigation available in the insurance industry to ad- dress the primary risk of remediation cost overruns. The potential risk for increases in site remediation costs could be mitigated through the use of a fixed-price remediation contract, which, if available at a cost within project resources, passes the risk of cost overruns to the remediation contractor. Ramsey County and the Vikings have proposed early 2012 for the start of environmental remediation., but site remediation. cannot begin until the Minnesota Pollution Control Agency (MPCA) approves an action plan for remediation. Producing such a plan and obtaining MPCA. approval could delay the start of site remediation by three to) eight months. Thereafter, the time required to complete site rem .. edial:ion. depends on steps that MPCA needs to confirm. MPCA has indicated that a year to complete site remediation appears to be unrealistic considering the many factors that. are difficult to predict. A,. year m.ay be sufficient, but the project may incur increased costs to meet that sched.ule. Ultimately, site remediation may take longer than proposed, posing a risk to the development schedule. While the risk to the schedule is significant, mitigation measures are limited. The primary mitigation action would be to accelerate the review process and begin obtaining as much soil information on the site as possible. Environmental Review and Documentation Process Federal and state laws requiring environmental analysis apply to the Stadium Proposal. The federal environmental review would be limited to the transportation improvements proposed for the Interstate highway system. The risk stemming from the federal process is that the environmental analysis could reveal the need for other improvements to the Interstate system not currently identified. The state environmental review would cover all environmental effects Land transactions like this one are un.comrrion and complex. it is difficult to estimate remedial ienup Costs arid schedule at this time A strategy for limiting potential site remediation cost overruns should be developed. NTPC,',A has indicated ti a' a year to cornpleLe site remcdiatiofl appears to be unrealistic considering I he Ilia factors that are to rwedici. 'The 3tdturri Proposal includes a :[..)arkage of 13 Ira n sp or a lion pal er t s at a total net osi of -1.07 ruillion related to transportation improvements for state and federal facilities and the overall site development. For the state process, the transportation requirements of the future development could differ from those of the Stadium Proposal as currently defined, posing a risk to both cost and schedule of the project. The federal and state processes pose differing risks depending on whether the entire parcel is evaluated or just the Stadium Parcel. The environmental review process on only the 260-acre Stadium Parcel preferred by Ramsey County and the Vikings could be allowable, but has a potential risk for legal challenge because it does not include the arguably connected action of the future 170-acre development. Transportation Significant levels of traffic will be generated by a new stadium at the TCAAP site. To accommodate the traffic, the Stadium Proposal includes a package of 13 transportation projects at a total net cost of $101 million. Three bridge-related projects, totaling a projected $20 million, were previously programmed and funded by MnDOT for the area as part of its normal transportation funded improvements program. The regional travel-demand model shows that traffic congestion with the stadium and 13 transportation improvements would be negligibly worse than otherwise forecast for 2030 with the already programmed $20 million transportation improvements. However, there is still a risk of increased congestion at some intersections and roads within the stadiu.m area, which could, in turn, cause delays on some parts of the regional highway network. Localized congestion may have a cascading effect on some segments of regional highway network, depending on the nature of the congestion. A more detailed peak-travel analysis for the stadium's major entrance and exit locations, as part of the environmental review process, would help in refining a response strategy for potential localized congestion. Traffic-behavior information could be collected during the first few major events and used to refine traffic management. Rights-of-way or temporary construction easements are anticipated on some of the Stadium Proposal transportation improvements and possibly for stormwater management. Right-of-v ,ay needs have not yet been specifically identified or costs estimated for individual projects. Mitigation measures can add substantial costs to a project, but those measures will not be known until the environmental review process is complete. As a result, the costs cannot be determined at this time. An additional risk is that the final design of a project may differ sign from the current concept, requiring different or additional measures. A range of $91 million to $111 million, providing for plus or minus 10 percent., should adequately address the uncertainties around surface transportation improvements needed for the Stadium Parcel. Access from County Road I to the stadium for game-day events is a critical transportation need for the Stadium Proposal. Lack of this access will result in unacceptable congestion on the regional and lo- cal roads. Agreement must he reached by the National Guard and all Wildlife Corridor stakeholders on an acceptable design and alignment and operations responsibilities for a stadium access road connecting to County Road I. Until this agreement is reached, the project cannot. be defined for purposes of environmental review. Delay in the envi- ronmental review process can be mitigated by including environmen- tal advocacy groups early in the process. Permitting and Approvals The greatest risk associated with obtaining federal and state approvals is the impact on the project schedule. Federal approvals would involve the Army Corps of Engineers, the Environmental Protection Agency, the Departm.ent of interior, and the Federal Highway Administration. State approvals and permits would be required from the MPCA and the Minnesota Department of Transportation (MnDOT). These federal and state approvals are not typically regarded as high-risk processes. The highest-risk approval could be approval of the federal Environ.m.ental Assessment. because it potentially involves the longest time frame. Coordination with the permitting and approving agencies will be important to minimizing the risk in delays to the overall schedule. State legislation could include measures to streamline permit reviews, but this would affect only state permits, not the federal reviews. Among the regional approvals, a metropolitan significance review, if conducted, poses a major schedule risk to the project. Once a metropolitan significance review commen.ces, the process could delay the project schedule by u.p to 12 months. However, the Legislature could take action to exempt this project from metropolitan significance review. The Stadium Proposal would re . quire a number of local permits and approvals from several municipalities, the Rice Creek Watershed Distric,t. and Ramsey County. Presenting the most risk. is obtaining .'(!ess from Roa- I to the sLadiurn for irrie-day (Nents is a (Tit ica tTaiispori. ation need for. the Stadium Proposal,, Coorclination with the permitting and approving :igeri.cies ‘vill be important to nlinimizing the risk in delays to the overall ..:::c.neciule„ State legislation could include Ineasure:: to s.i.reaniline reviews hilt this would affect onl:y state perrnits, not •the federal reviews, Presen.ting iii .-, most is obtaining the rnurli•ioa.1 consent trunk h•ghway 1.1'.rorn affer•ed cities. riviro rim. en. t a 1. i.-ernedi a *Hon, land Iran sfer, transpor.7ta t ion arid permitting, tasks could pose risks for the schedille of deliverilif,4 a stadiun. Aevel(ipmerl t. the municipal consent for trunk highway projects from affected cities. In this case, if municipal consent is withheld, a possibly lengthy appeals process may be needed for the project to proceed. This appeal period may adversely affect the project schedule. Schedule Environmental remediation, land transfer, transportation and permitting tasks could pose risks for the schedule of delivering a stadium development. The Vikings schedule assumes a three-party agreement among Ramsey County, the Vikings and the State of Minnesota by October 2011 and a stadium open for use for the 2015 NFL season. The Vikings proposed project schedule appears to be based on an assumption that the tasks necessary fbr completion will take a minimum or nearly a minimum amount of time. Some tasks lie within the Vikings control, but a majority of the tasks do not. If it is assumed that all tasks would take a maximum amount of time, it is possible that the Vikings stadium could take until the 2016 or 2017 NFL season to open. Naturally, any schedule delays have associated cost impacts. The Vikings estimate the cost of delay to be in the range of $35 million to $57 million for each additional year the opening is moved back. Assuming a one year delay and a mid-range cost estimate of $46 million, $7 million for Ramsey County and $39 million for Minnesota Vikings, the project cost would increase to $1.157 billion. Chart 2: Funding of $1.157 Billion Project Cost Assumes 1 Year Schedule Delay Minnesota Vikings $446 million_ Funding C3a $39 million State of Minnesota .,:00 rnfflion Ramsey County Metrodon _S357 million MSFC $15 million Financial Analysis The ability of the Minnesota Vikings to meet its funding commitment has not been evaluated and is considered beyond the scope of this review. Funding sources for the state's anticipated contribution have yet to be identified, and will require legislative review and approval. To pay for its share of project costs, Ramsey County would issue $350 million in tax-exempt revenue bonds. The bond issue would be supported by the combined net revenue from two tax. sources: a half percent local sales and use tax and a $20 excise tax on vehicle sales collected in the county. An analysis of current market conditions suggests revenue from the sales and use tax and the vehicle excise tax would be sufficient to support a bond issue of the a.m.ou.nt that the county proposes. The May 2011 agreement between Ramsey County and the Vikings reduces the project cost by $15 million based on proceeds from the sale of Metrodome property and .MSFC reserves. State law governs the disposition of sales proceeds of such property and reserves, and further analysis would be needed to determine the marketability and costs involved in decommissioning the Metrodome. Use of these funds is subject to further negotiation. For stadium operations, the Vikings would be the responsible party through a lease agreement with the Stadium Authority. Ramsey County would contribute $1.5 million annually to pay incremental costs of civic, noncommercial public events. This amount is subject to an inflationary index but the amount is not to exceed the increase in net sales tax proceeds each year. The Vikings would contribute $150,000 annually for operations of a Stadium Authority, subject to an inflationary index, Ramsey County would have no funding responsibility for the authority. The impact of the proposed half percent sales tax collected in Ramsey County would be to increase the tax rate on retail sales in the City of Saint Paul to 8.125 percent, making it the highest tax: rate in the seven-county metro area. The sales tax rate on retail sales in suburban Ramsey County cities would increase to 7.625 percent, eclipsed only by the City of Minneapolis, at 7.775 percent. It is not clear if a half-percent change in tax rate would significantly affect consumer spending habits or business retention and development. It may. however, compromise other public interests by limiting the county's and region's ability to finance other local or re- gional projects. An analysis of current market, conclitions stigge,!sts revenue front tile sales and use tax and the vehicle excise tax would be sufficient IC) support U bond :issue of the arriotint I Iliul the eourity proposes TFie li•pa.0.., of t•.f.:‘, p•oposecl half percent sales t.ix collected in. R.a.insey (.1'..ounty would be to increase the tax rate o.n retail sales in the C' v of Satrit Pa.1.11 to 8.125 'percent. r.naldria it the highesi tax rate in the [,-(..,:nren-cc.).1.1nty metro a.rea.. in :.,aciclitiorl to the ( out vs $35() irwestirierit, 11 . vill as- sume risk for cost ayeril1:1.15 or ].72 nililion (15 percent) of. tIte. total project costs, In addition to the County's $350 million investment, it will assume risk for cost overruns on $172 million (15 percent) of the total project costs. Assuming a high-range cost risk outcome, the County would be responsible for funding cost overruns of greater than $50 million. The County's excess net sales tax proceeds may not be a sufficient funding source for potential cost overruns. Assuming both a one-year schedule delay and worst case scenario of a high cost range outcome would result in a $1.234 billion overall project cost, and increasing funding for both Ramsey County ($58 million) and the Minnesota Vikings ($65 million). chart 3. Funding of $1 & -234. Billion Project Cost Hag 1 Year Schedule Delay High Cost Range Minnesota Vikings $472 million Funding Gap $39 million State of _Minnesota $300 million Metrodom , MSFC 15 million Ramsey County $408 million Attachment B Ramsey County and Minnesota Vikings Response October 19, 2011, Economic Development Commission Ramsey County EWS Contact Art Coulson Communications Director (651) 266 -8017 (office) (612) 655 -$102 (mobile) art.caulson c,co.ramsey.mn.us FOR IMMEDIATE RELEASE Commissioners Urge State to Move Forward with Stadium Project ST. PAUL, MN, OCTOBER 12, 2011— All of the issues raised in the Metropolitan Council's Vikings Stadium review, which was released today, have been previously identified by Ramsey County and the Minnesota Vikings and can be managed, if the state musters the political will to do so. The Arden Hills site is the best location for a new Vikings Stadium and is the team's choice for development. Cleanup and redevelopment of the state's largest Superfund site and return of that land to productive use is one of Ramsey County's top priorities. The project would also put Minnesota construction tradespeople to work now, spur economic development in the north metro and jump start much - needed improvements to the local highway system. "This project is economically viable and can be done on the schedule we've laid out," said Ramsey County Commissioner Tony Bennett. "The governor asked the Vikings to choose a site and a local partner and to come up with a financing plan. They've done that. Now, Ramsey County encourages the governor and state legislators to come to the table in good faith and begin the real work of making this stadium project a reality." "We know that the TCAAP site is developable and the Vikings Stadium is the best chance the east metro region has to return fallow land back to productive use," said Ramsey County Commissioner Rafael Ortega. "There are no other viable development proposals that would remediate the largest Superfund site in the state of Minnesota. The stadium project will bring jobs, economic development and much- needed highway improvements to the region. This project is a much - needed stimulus for the east metro economy that will have far - reaching beneficial impacts. We have had a workable plan on the table for six months. We are still waiting for the state to step up and become a full partner in the project." "State officials must show true leadership by stepping forward soon to publicly support this project," said Bennett. "Every time Ramsey County and the Vikings meet the requirements set by the governor, another hurdle is created, the latest being the Met Council study that largely replicates analytical work that has already been done. This project seems to be suffering a death by a thousand paper cuts. Further delays will result in additional costs. Time is running out." -30- October 12, 2011 Susan Haigh Chair Metropolitan Council St. Paul, MN 55101 Ted Mondale Chair Metropolitan Sports Facilities Commission Minneapolis, MN 55415 Dear Chairs Haigh and Mondale: On behalf of the Minnesota Vikings, we appreciate the work of the Metropolitan Council and Metropolitan Sports Facilities Commission in analyzing the proposal to build a publicly-owned, multi-purpose stadium at the TCAAP site in Arden Hills. While the Met Council study raises some questions and worst-case scenarios, the Vikings are encouraged with the overall positive findings of the report. As we expected, the study did not find any significant issues to prevent this exciting stadium project in Arden Hills from moving forward. Within the report, the following three key concerns were identified, all of which had previously been identified and all of which are already being addressed by the State, Ramsey County and the Vikings; 1) Cost Delay — The report indicates that it may be too late to complete the project by 2015 and that a one-year delay could cost an additional $46 million. We believe it is for this exact reason that we move forward now with the Arden Hills project. A delay to 2016 is inevitable if the location is changed from Arden Hills. Furthermore, we have identified a contractor who may be willing to take the responsibility to clean and demolish the site within the time frames and costs identified at the low-end cost. The schedule is aggressive, but achievable. 2) Unfunded Cost Gap of $39 Million — The parties contributions and overrun risk responsibilities are currently being negotiated with State leadership. The Vikings and Ramsey County do not believe there is an unfunded cost gap, but all three parties need to meet to finally resolve the few remaining open cost issues as soon as possible. 3) Ramsey County Sales Tax Shortfall — While we believe the County can attest to its funding capabilities, County Commissioners and staff believe their funding sources and financing methodology will cover their contribution to the project. Interest rates are at an all-time low, which will allow for significant savings to cover additional costs, if any, and we believe we can limit cost- overruns on this project. Overall, the Vikings believe the report is generally positive for the Arden Hills stadium location, which we continue to believe is the best site for the State, the County, the Vikings and our fans. We are also encouraged that the Council identified a potential $76 million of savings, which could lower the overall price tag. The Vikings and the County stand ready to proceed with constructing a new stadium in Arden Hills, and we look forward to Governor Dayton and State leadership's help in working toward the final step of passing stadium legislation during a Fall Special Session. The sooner we begin the process, the better chance we have of mitigating any risks. As importantly, moving forward now will also put thousands of construction trades workers back on the job and allow us to take advantage of low interest rates and material costs. Sincerely, 7221"-1- Mark Wi If Owner/President 9520 Viking Drive . Eden Prairie, MN 55344 . (952} 828-6500 * www,vikirigs.corn AIWN HILLS MEMORANDUM DATE: October 19, 2011 EDC Agenda Item 4.B TO: Economic Development Commission Chair and Commissioners FROM: Jill Hutmacher, Community Development Director .5'1/ SUBJECT: City Website Redesign Project Update On September 26 the City Council authorized a preliminary website redesign budget of $35,000, which would include the cost of the website design vendor contract and a temporary Project Manager to assist with the website redesign project. On October 10 the City Council appointed an ad hoc committee for the website redesign project. Ad hoc committee members include: Councilmember Nick Tamble Sam Scott, Planning Commission Arlene Mitchell, Communications Committee Jill Hutmacher, Community Development Director Meagan Beekman, City Planner City Administrator Patrick Klaers will attend and participate in the ad hoc committee meetings but will not be a regular member. The ad hoc committee's first meeting is scheduled for Thursday, October 20. The committee's first work tasks will include drafting a Scope of Work for the website design vendor and providing recommendations on hiring a Project Manager. The EDC has been asked to evaluate the City's website and consider other municipal websites to make suggestions on how the City's website could better meet the needs of the business community. The on -line website survey will be available through the end of October. The website redesign project will ultimately involve every City department, committee, and commission. The EDC will be asked to outline economic development pages and recommend what information or links should be provided on the website to support and promote the City's business community. Prior to the December EDC meeting, Commissioners are requested to review the Brooklyn Park, Coon Rapids, Woodbury and other municipal websites and be prepared to discuss the EDC's role in and goals for the website redesign project. City of Arden Hills Economic Development Commission October 19, 2011 Page 1 of 1