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HomeMy WebLinkAbout08-24-11 EN HILLS CITY OF ARDEN HILLS, MINNESOTA ECONOMIC DEVELOPMENT COMMISSION AUGUST 24,20114:00 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 Bullelin. 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 Staff,s 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/1) 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.l 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: I Ed von Holtum, Chair Jill H macher • CorAmunity Development Director