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HomeMy WebLinkAbout4B, Economic Development Authority (EDA) 2013 Work Plan ,—AF,,DEN HILLS Request for Council Action 4B Prepared By: Patrick Klaers, City Administrator EDA Meeting Date: January 28, 2013 Economic Development Authority (EDA) 2013 Work Plan Budgeted Amount: Actual Amount: Funding Source: n/a n/a n/a Recommendation: Approve the Economic Development Authority Work Plan subject to any adjustments ►Dade at tonight's meeting. Supporting Documents: 1. Memorandum dated January 28, 2013, from Patrick Klaers, City Administrator. 2. Attachment A: Memo from Sue Iverson, Director of Finance and Administrative Services, dated February 21, 2012. lt EN HILLS MEMORANDUM DATE: January 28, 2013 TO: Economic Development Authority (EDA) Board of Commissioners FROM: Patrick Klaers, City Administrator SUBJECT: EDA 2013 Work Plan Background/Discussion On February 21, 2012 the City Council met in a work session to discuss the need for an EDA in Arden Hills. The City established an EDA in 1996, and in 1997, the City Council transferred authority over the TIF Districts to the EDA. At the February 21, 2012, Council work session, Director of Finance and Administrative Services Sue Iverson reviewed with the Council the status of the TIF Districts and the status of the Revolving Loan Program. Attached for your review is the February 21 sc memo from Sue. Most of the items noted in Sue's memo from 2/21/12 are proposed to be included in the EDA work plan for 2013 -14. If the proposed by-laws are approved,then the quarterly EDA meetings in 2013 are scheduled for April 29, July 29 and October 28. The proposed work program includes: Proiect/Activity Timeline 1. Finalize the TIF Policy (includes a chart 1. Special EDA work session meeting for the ranking of applications) and in February or March; April EDA update the Business Subsidy Policy meeting agenda. 2. Research the City revolving loan 2. April and July EDA meetings program including loan restrictions and guidelines; consider/decide future program activities 3. Consider using TIF 2 District funds for 3. July EDA meeting; and if the project a Round Lake Road West street and moves forward, it will be on all the sanitary sewer improvement project in EDA quarterly agendas until 2014 completed at the end of 2014. 4. EDA 2014 operating budget- review 4. July and October EDA meetings and consideration (the EDA needs to identify and approve a sustainable revenues source) 5. TIF 3 District(Cottage Villas) - 5. October and January 2014 EDA discussion on use of fund balance. The meetings funds need to be spent on low to moderate housing. The July EDA meeting agenda looks a little heavy. We may want to think about a special EDA meeting to discuss TIF 2 District funds and the need for a Round Lake Road West street and sanitary sewer improvement project. Recommendation: Approve the Economic Development Authority Work Plan subject to any adjustments made at tonight's meeting. i i i I I I i Attachment A • Memo from Sue Iverson, Director of Finance and Administrative Services, Dated February 21 , 2012 January 28, 2013 —EDA Meeting City of Arden Hills "` EN HILLS i --ARZEN HILLS ( MEMORANDUM DATE: February 21,2012 TO: Honorable Mayor and City Councilmembers Patrick Klaers,City Administrator FROM: Sue Iverson, Director of Finance and Administrative Services SUBJECT: Economic Development Authority(EDA) Background The EDA was created on January 29 1996, by Resolution No. 96-08 by the City Council (a public hearing was held on this date and the resolution adopted — the purpose stated in the City Council minutes was to assist the City with its economic development efforts at the Gateway Business District and potential TCAAP projects.) The City Council had reviewed this item at its December 1995 worksession and Bob Deike was the Attorney who helped establish the authority. The By-laws of the Authority were revised on April 14, 1997. On April 14, 1997, Resolution 97-18 was passed by the City Council which transferred the control, authority, and operation of any project as defined in Section 469.174, Subd. 8, or any other program or project authorized by Sections 469.001 to 469.124 to Section 469.134 located within the City, from the government agency that established the project to the Economic Development Authority. At that time the City had Development Dist. No. 1 and TIF Dist. Nos. 1, 2, and 3. This Resolution transferred to the EDA all activities, programs, operations, and control of budgeting, financing,property ownership, and personnel related to the economic development activities taking place within these districts. The EDA currently has five active funds, The EDA General Fund, Revolving Loan Fund, and TIF Dist 2, 3, and 4. The EDA met as needed, with the last meeting in 2004 prior to the recent December 2011 meeting. The Economic Development Commission(EDC) was established on March 8, 2004 and the first EDC meeting was help on September 29, 2004. It was stated at that time that the broad charge of the EDC would center on business connections, marketing and assisting in developing redevelopment strategies. These areas were outlined in the City Council's original EDC ordinance. City Council Meeting P:\Admin\Council\Agendas&Packet Information\2012\01-30-12 Reg Mtg\Packet Information Page 1 of 4 EDA General Fund This fund accounts for general administration activities that are not specific to any individual TIF District, as well as activities associated with the Economic Development Commission. The estimated balance on December 31, 2011 is $88,262. EDA Revolving Loan Fund In 1996, a grant was applied for thru the Minnesota Department of Trade and Economic Development for CPI/Guidant. In both 1997 and 1998, the EDA secured $300,000 in forgivable loans for CPI/Guidant totaling $600,000. If CPI/Guidant achieved certain employment goals, up to $500,000 of these loans were to be forgiven. $100,000 of the $300,000 1998 grant was not forgivable and was repaid to the EDA. The loan was expected at that time to become seed money for revolving loans to community businesses meeting loan criteria. The estimated balance on December 21, 2011 is approximately $150,000 and it currently only received interest income. No other disbursements have ever been made. (Please note that research may be required to determine loan guidelines and State law restrictions or requirements.) TIF District No. I Round Lake Housing was certified as an Economic Development District on June 29, 1989. The district was generally located on the southeast corner of Round Lake and encompassed the Brueberry Townhomes project. This housing development occurred after the City had removed a rendering plant business (Kem Milling) on the southwest corner of Round Lake within TIF Dist No. 2. The tax increment was used to reimburse the PIR Fund for expenditures incurred in 1989 and 1990 to remove the Kem Milling business. This district has since been decertified (June, 1999)and the loan was repaid to the PIR Fund. TIF District No. 2 Round Lake Office was established as a 25-year Redevelopment Development District on June 29, 1989. This district will expire on December 31, 2015. Since the creation of the district,the following significant events have occurred: • 1989 - 1990 In conjunction with the creation of the district, the City removed a rendering plant business (Kem Milling) within the district that was funded from a loan from the PIR Fund.. • 1997 - 1998 In conjunction with the execution of a Development Agreement with Welsh Companies, the EDA undertook significant public improvements to facilitate development of approximately 450,000 square feet of office/warehouse construction. Public improvements included the relocation of a sanitary sewer trunk line, relocation of a water main line, relocation of Fourteenth Street, and the creation of storm retention ponds. These improvements, and Round Lake Road, Phase I, were funded by the issuance of a$3,100,000 G.0. Tax Increment Bond on March 1, 1998. (The bond was refinanced in 2004 at a lower interest rate and the approximate balance remaining to be paid as of December 31, 2011 is $1,065,000. The last payment is scheduled in 2015.) City Council Meeting P:\Admin\Council\Agendas&Packet Information\2012\01-30-12 Reg Mtg\Packet Information Page 2 of 4 1999 - 2000 The EDA completed Round Lake Road, Phase I, in 1999. This project included the relocation of the Round Lake Road/Highway 96 intersection, signalizing the intersection, property acquisition, and the creation of a storm retention pond. An inter-fund loan from the PIR Fund was needed for the acquisition of the Indykiewicz property and was repaid in 2004. The estimated balance in this account as of December 31, 2011 is $1,209,533. The estimated future increment to be collected is $1,386,743, if added to the current estimated balance, less the outstanding bond payments, this would amount to approximately $1,531,276 that could be used for other improvements. Since this is an older district, the City is able to use these fiends for a number of different uses, but not for recreational purposes. It may be used for sidewalks, infrastructure, and other improvements, but a plan would have to be in place before the district decertifies in 2015. The additional tax base that this district has added to the City is $346,686, which is the increment currently received. TIF District No. 3 Cottage Villas Housing was originally certified as a Housing District on May 10, 1993. The district is generally located on the east side of Cleveland Avenue,just south of the County Road E-2/Cleveland Avenue intersection, and encompasses the sixty-four (64) unit Cottage Villas Apartments complex. These apartments are available for low-to-moderate income seniors. The City entered into a "pay-as-you-go" Development Agreement with Cottage Villas of Arden Hills Limited Partnership on February 28, 1994. The Development Agreement calls for the developer to be reimbursed for certain public development activities including: land acquisition, site preparation, site utilities, and financing costs. Repayment to the developer would only be from, and to, the extent tax increment was actually received from the district. The developer was entitled to no more than $57,557 per payment year for 14.5 years. The City was not obligated to make any payments subsequent to February 1, 2010. As a result of the class rate reduction for property taxes, increment received was less than expected, but payments ceased to the developer on February 1, 2010. The district was originally set to decertify on December 31, 2009, but the City Council extended the district in December 2009 to its statutory limit and will now expire in 2019. The estimated balance in this account as of December 31, 2011 is approximately $166,844. The estimated future increment to be collected is $312,500,if added to the current estimated balance this would amount to $479,344 that could be used for "low-to-moderate income housing." TIF District No. 4 This is the new Presbyterian Homes district and we have not yet begun to receive increment on this district or incurred any costs, thus there is no balance in this fund. This is a renovation and renewal district. On December 13, 2010, the City Council modified the development program for Development District No. 1 and establish Tax Increment Financing District No. 4 within Development.District No.1 and adopt the Tax Increment City Council Meeting PAAdmin\Council\Agendas&Packet information\2012\01-30-12 Reg Mtg\Packet Information Page 3 of 4 Financing Plan. As part of the process, the City Council approved the Development Contract between the City and Presbyterian Homes and approved an interfund loan to advance money from the PIR Fund to finance qualified costs and be reimbursed from the tax increments derived from the Tax Increment District. City Council Meeting P:\Admin\Council\Agendas&Packet Lnformation\2012\01-30-12 Reg Mtg\Packet Information Page 4 of 4