Loading...
HomeMy WebLinkAbout07-27-15-EDAAPPROVAL OF AGENDA APPROVAL OF MINUTES Draft Minutes April 27, 2015 04 -27 -15.PDF PUBLIC HEARING Business Subsidy Criteria And City Public Financing Guidelines Matthew Bachler, Associate Planner MEMO.PDF, ATTACHMENT A.PDF, ATTACHMENT B.PDF NEW BUSINESS Preliminary 2016 EDA Budgets Sue Iverson, EDA Treasurer MEMO.PDF, ATTACHMENT.PDF EDA TIF District No 3 - Cottage Villas Update Sue Iverson, EDA Treasurer MEMO.PDF EDA MEMBER COMMENTS ADJOURN Chair: David Grant  Commissioners: Brenda Holden Fran Holmes Dave McClung Robert Woodburn Economic Development Authority July 27, 2015 6:00 p.m. City Hall Address: 1245 W Highway 96 Arden Hills MN 55112 Phone: 651 -792 -7800 Website : www.cityofardenhills.org 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. 2. 2.A. Documents: 3. 3.A. Documents: 4. 4.A. Documents: 4.B. Documents: 5. APPROVAL OF AGENDAAPPROVAL OF MINUTESDraft MinutesApril 27, 2015 04 -27 -15.PDFPUBLIC HEARINGBusiness Subsidy Criteria And City Public Financing GuidelinesMatthew Bachler, Associate PlannerMEMO.PDF, ATTACHMENT A.PDF, ATTACHMENT B.PDFNEW BUSINESSPreliminary 2016 EDA BudgetsSue Iverson, EDA TreasurerMEMO.PDF, ATTACHMENT.PDFEDA TIF District No 3 - Cottage Villas UpdateSue Iverson, EDA TreasurerMEMO.PDF EDA MEMBER COMMENTS ADJOURN Chair:David Grant Commissioners:Brenda HoldenFran HolmesDave McClungRobert Woodburn Economic Development Authority July 27, 20156:00 p.m. City Hall Address:1245 W Highway 96 Arden Hills MN 55112 Phone:651 -792 -7800 Website : www.cityofardenhills.org City VisionArden 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. AgendaCALL TO ORDER1.2.2.A.Documents:3.3.A.Documents:4.4.A.Documents:4.B.Documents: 5. Approved: July 27, 2015 CITY OF ARDEN HILLS, MINNESOTA ECONOMIC DEVELOPMENT AUTHORITY MEETING APRIL 27, 2015 6:00 PM – CITY COUNCIL CHAMBERS CALL TO ORDER/ROLL CALL Pursuant to due call and notice thereof, President Grant called to order the Economic Development Authority meeting at 6:01 p.m. Present: EDA President David Grant; EDA Commissioners Brenda Holden, Fran Holmes, Dave McClung, and Robert Woodburn Absent: None Also present: Secretary Patrick Klaers; Treasurer Sue Iverson; Public Works Director Terry Maurer; Assistant City Engineer John Anderson; Executive Director Jill Hutmacher; City Planner Ryan Streff; Associate Planner Matthew Bachler; Finance Analyst Dave Perrault; and City Clerk Amy Dietl 1. APPROVAL OF AGENDA MOTION: EDA President Grant moved and EDA Commissioner Woodburn seconded a motion to approve the meeting agenda as presented. The motion carried unanimously (5-0). 2. APPROVAL OF MINUTES A. January 26, 2015 MOTION: EDA President Grant moved and EDA Commissioner Woodburn seconded a motion to approve the January 26, 2015, Economic Development Authority meeting minutes as presented. The motion carried unanimously (5-0). 3. NEW BUSINESS ARDEN HILLS EDA MEETING – APRIL 27, 2015 2 A. Business Retention and Expansion Executive Director Hutmacher stated that at the January 26, 2015, Economic Development Authority meeting, the EDA approved a contract with the St. Paul Area Chamber of Commerce (SPACC) to administer a Business Retention and Expansion (BRE) program. Since then, the Economic Development Commission has been working to draft a survey instrument, recruit volunteer interviewers, and select businesses that will be targeted for interviews. Training for BRE volunteer interviewers will be held in May. Interviews will be scheduled for June, July, and August. Executive Director Hutmacher explained that the EDA requested action is as follows: 1. Approve the BRE survey instrument; 2. Accept the priority business interview list; and 3. Provide direction regarding the list of BRE volunteers. Executive Director Hutmacher indicated that the draft survey instrument is based on the Grow Minnesota! survey which is used by the Minnesota Chamber of Commerce. Using a similar instrument to Grow Minnesota! will allow the City to compare survey responses with other municipalities. The EDC added questions specifically addressing Arden Hills' topics including the revolving loan fund, the State of the City event, and the efficiency of the local transportation network. Executive Director Hutmacher reported that the BRE volunteers will be trained to administer the survey using a conversational approach. This will advance the City’s primary BRE goal of building relationships with the business community. EDA feedback on the survey instrument is requested. Executive Director Hutmacher explained that SPACC used sources from the Minnesota Department of Employment and Economic Development (DEED) to compile an initial list of Arden Hills businesses. The EDC and City staff refined the list based on local knowledge. Based on advice from SPACC, BRE interviews are targeted for the following categories of businesses:  Businesses in high-growth industries (construction; professional; business services; and education and health services);  Business that are not in high-growth industries but which have experienced significant growth over the past few years;  Large employers; and  Legacy businesses (long-term Arden Hills businesses that are closely identified with the local business community) Executive Director Hutmacher stated that SPACC recommends that the City complete 30-40 interviews, and 47 priority interviews have been identified with the understanding that some businesses will not choose to participate in the program. Interviews are also proposed with some ARDEN HILLS EDA MEETING – APRIL 27, 2015 3 of the larger landlords/property management companies such as Transwestern, Wellington, Roberts Management, and Inland Shannon Square. Transwestern is the manager/broker for significant space in the Red Fox/Grey Fox business district and of the North Park office complex on County Road E. Wellington, Roberts, and Inland manage/lease most of the City’s retail space. Executive Director Hutmacher indicated that the EDC members have volunteered to participate in the BRE interviews. They have also recruited former or current members of the Planning Commission and Financial Planning and Analysis Committee. The EDC felt that these groups were experienced with business issues and would be excellent representatives of the City. In addition to the membership of the EDC, Roberta Thompson (Planning Commission, Chair), Clayton Zimmerman (Planning Commission), Jim Huninghake (EDC, former), and Jim Ostlund (FPAC, former) have volunteered as BRE interviewers. Thus far, a total of 11 interviewers have been identified; however, she noted that a few additional interviewers would be helpful. EDA President Grant stated that he believed that Ted Brausen would be a good individual for the City to contact. He also thought that Walgreens would be another interesting contact as it is a new business in the City of Arden Hills. He asked if staff would be able to get answers to each of the questions in a short interview. Jonathan Weinhagen, St. Paul Area Chamber of Commerce, commented that he would be pre- populating all of the public information within the interview to allow time for the core set of questions during the interviews. EDA President Grant suggested that interesting, or repeated, comments regarding the City be shared with the Council. Mr. Weinhagen explained that repeated comments would be “red flagged” and shared with the City. This would allow for the survey to be adapted or to have questions added. Commissioner Holmes suggested that information regarding salary ranges be gathered. She thought this would be valuable in order to project salary ranges for TCAAP. Mr. Weinhagen reported that this was a data set that companies were not interested in sharing. It was his opinion that job growth information would be more beneficial than the actual salaries. Commissioner Holmes disagreed and thought that the question should be asked. EDA President Grant indicated that the City could visit glassdoor.com in order to review salary information for larger companies. Executive Director Hutmacher recommended that the significant, legacy firms in Arden Hills be interviewed. ARDEN HILLS EDA MEETING – APRIL 27, 2015 4 EDA President Grant commented that the small data sample available within Arden Hills may not be representative of the whole. He explained that additional research may have to be conducted in order to find out where the high paying jobs are. Commissioner Holden questioned the purpose of the survey. Mr. Weinhagen stated that the survey would assist the City in understanding business retention and expansion. He believed that positive relationships would be built with the local businesses through the survey process. Executive Director Hutmacher indicated that two people would attend each interview. It was her hope that she and Associate Planner Bachler would attend as many as possible. Commissioner McClung inquired if Wilkerson Guthman would be interviewed. Mr. Weinhagen stated that this was the case and noted that a retention visit has already been conducted. Commissioner McClung recommended that a representative sample be conducted of the small businesses in Arden Hills. He suggested that businesses with ten or less employees be added to the survey list. Executive Director Hutmacher explained that several small businesses were included on the list of businesses to be interviewed. Commissioner Holden requested that another financial institution be added to the interview list. Mr. Weinhagen reported that after prioritizing the list of businesses to be interviewed in the City it was determined that the financial institutions in Arden Hills were franchises and not local. Commissioner Holmes suggested that the attorneys on the list did not need to be interviewed. She then questioned what in the survey would assist the City with situations like Smith’s Medical. Mr. Weinhagen restated his belief that the survey process would be a relationship building activity which would assist with business retention. Councilmember Holmes disagreed and stated that she didn’t think anything could have been done by the City to keep Smith’s Medical. B. Budget Parameters Treasurer Iverson stated that the EDA is a blended component unit of the City of Arden Hills which makes EDA Funds “Special Revenue Funds” of the City. Annually, the City is required by ARDEN HILLS EDA MEETING – APRIL 27, 2015 5 the State to set budgets for the City’s General Fund and all Special Revenue Funds (which includes all of the EDA Funds). These EDA Funds are: EDA General Fund EDA Revolving Loan Fund EDA TIF District #2 Round Lake EDA TIF District #3 Cottage Villas EDA TIF District #4 Presbyterian Homes Treasurer Iverson commented that overall, the EDA General Fund is in good financial condition for 2015 with an estimated reserve balance of $271,325. However, the EDA and City Council need to identify dependable, reoccurring revenue for EDA activities as the recent primary funding source of revenues (from the Round Lake Road TIF District) expires in 2015. The fund balance being projected at the end of the year includes money (approximately $80,000) that is intended to be used for the Gateway Signs program. Treasurer Iverson reported that most of the expenses for economic development related activities are going to exist regardless of whether they are in the City’s General Fund budget or if they are in the EDA’s General Fund budget. The majority of the economic development expenses are for personal services and other services/charges which are estimated to be in the $133,000 per year range. In 2015, the EDA budget includes a $30,000 transfer from the General Fund to help finance EDA operating expenses. Treasurer Iverson noted that staff is looking for Council input on the EDA budgets before the budgeting process begins as this will be included as part of the City’s overall budgeting exercise. He noted that the EDA is scheduled to review the preliminary budget at its July meeting and the final budget at its October meeting. Commissioner Holden asked about the status of the Round Lake TIF district. Treasurer Iverson stated that this district is scheduled to be decertified in 2015. Commissioner McClung asked if the City Council also approves the EDA budget. Treasurer Iverson stated that this is the case. 4. EDA COMMISSIONER COMMENTS None. 5. ADJOURN MOTION: EDA President Grant moved and EDA Commissioner Holmes seconded a motion to adjourn the Economic Development Authority meeting. The motion carried unanimously (5-0). ARDEN HILLS EDA MEETING – APRIL 27, 2015 6 EDA President Grant adjourned the Economic Development Authority meeting at 6:44 p.m. __________________________ __________________________ Jill Hutmacher David Grant Executive Director EDA President Page 1 of 1 DATE: July 27, 2015 TO: Economic Development Authority President and Commissioners FROM: Matthew Bachler, Associate Planner SUBJECT: Business Subsidy Criteria and City Public Financing Guidelines Requested Action The EDA is asked to hold a public hearing on the Arden Hills Business Subsidy Criteria and City Public Financing Guidelines and to consider the following: 1. Approval of the Business Subsidy Criteria and City Public Financing Guidelines 2. Approval of the Public Financing Proposal Grading and Report Card Background The EDA and City Council approved the Business Subsidy Criteria and City Public Financing Guidelines and the Public Financing Proposal Grading and Report Card on April 29, 2013. Minnesota State Statute requires that the City hold a public hearing on the business assistance criteria and guidelines before approving the policy and rewarding subsidies. A public hearing was not held in April 2013 when the City previously approved the criteria and guidelines. The EDA is asked to hold the public hearing on the business assistance criteria and guidelines and to consider approval of these items. Notice of the public hearing was published in the Arden Hills/Shoreview Bulletin on July 15, 2015. At this time, the City has not received any comments from the public regarding this item. No changes have been made to these documents since they were previously approved in April 2013. The City Council will be asked to consider approval of the Business Subsidy Criteria and City Public Financing Guidelines and the Public Financing Proposal Grading and Report Card at the July 27, 2015 Regular Meeting. Attachments A. Business Subsidy Criteria and City Public Financing Guidelines B. Public Financing Proposal Grading and Report Card PUBLIC HEARING – 3A MEMORANDUM City of Arden Hills Public Financing Policy Page 1 of 7 April 29, 2013 City of Arden Hills Business Subsidy Criteria and City Public Financing Guidelines APRIL 29, 2013 1. PURPOSE AND AUTHORITY A. The purpose of this document is to establish the criteria for the City of Arden Hills for granting of business subsidies and for City public financing for private development within the City. These criteria shall be used as a guide in processing and reviewing applications requesting business subsidies and/or City public financing. B. The City's ability to grant business subsidies is governed by the limitations established in Minnesota Statutes 116J.993 through 116J.995 (Statutes). The City may choose to apply its Business Subsidy Criteria to other development activities not covered under this statute. City public financing may or may not be considered a business subsidy as defined by the Statutes. C. Unless specifically excluded by the Statutes, business subsidies include grants by state or local government agencies, contributions of personal property, real property, infrastructure, the principal amount of a loan at rates below those commercially available to the recipient of the subsidy, any reduction or deferral of any tax or any fee, tax increment financing (TIF), abatement of property taxes, loans from the City’s Revolving Loan Fund, any guarantee of any payment under any loan, lease, or other obligation, or any preferential use of government facilities given to a business. D. These criteria are to be used in conjunction with other relevant policies of the City. Compliance with the Business Subsidy Criteria and City Public Financing Guidelines shall not automatically mean compliance with such separate policies. E. The City may deviate from these criteria by documenting in writing the reason(s) for the deviation. The documentation shall be submitted to the Department of Employment and Economic Development with the next annual report. F. The City may amend this document at any time. Amendments to these criteria are subject to public hearing requirements contained in the Statutes. 2. BUSINESS SUBSIDY PUBLIC PURPOSE REQUIREMENT A. All business subsidies must meet a public purpose with measurable benefit to the City as a whole. Public purpose may include, but not be limited to, creating needed services or facilities not currently available, providing a variety of housing ownership alternatives and housing choices, redeveloping and removing blight City of Arden Hills Public Financing Policy Page 2 of 7 April 29, 2013 and encouraging redevelopment in the commercial and industrial areas of the City in order to encourage high levels of property maintenance and private reinvestment in those areas, retaining local jobs, increasing the job base, and providing diversity in that job base, enhancing existing jobs through increased wages, encouraging additional unsubsidized private development in the area, either directly, or through secondary “spin off” development, offsetting increased costs of redevelopment over and above those costs that a developer would incur in normal urban and suburban development, and meeting other uses of public policy, as adopted by the Council from time to time including the promotion of quality urban design, quality architectural design, energy conservation, decreasing the capital and operating costs of local government, etc. B. Job retention may only be used as a public purpose in cases where job loss is specific and demonstrable. The City shall document the information used to determine the nature of the job loss. C. The creation of tax base shall not be the sole public purpose of a subsidy. D. Unless the creation of jobs is removed from a particular project pursuant to the requirements of the Statutes, the creation of jobs is a public purpose for granting a subsidy. Creation of at least one Full Time Equivalent (FTE) job is a minimum requirement for consideration of assistance. E. The wage floor for wages to be paid for the jobs created shall be not less than 150% of the State minimum wage in effect at the time the subsidy is granted. The City will seek to create jobs with higher wages as appropriate for the overall public purpose of the subsidy. Wage goals may also be set to enhance existing jobs through increased wages, which increase must result in wages higher than the minimum under this Section. 3. SUBSIDY AGREEMENT A. In granting a business subsidy, the City shall enter into a subsidy agreement with the recipient that provides the following information: wage and job goals (if applicable), commitments to provide necessary reporting data, and recourse for failure to meet goals required by the Statutes. B. The subsidy agreement may be incorporated into a broader development agreement for a project. C. The subsidy agreement will commit the recipient to providing the reporting information required by the Statutes. 4. CITY’S OBJECTIVE FOR THE USE OF PUBLIC FINANCING A. As a matter of adopted policy, the City may consider using public financing which may include tax increment financing (TIF), tax abatement, bonds, waiver of City fees (excluding building permit fees), and other forms of public financing City of Arden Hills Public Financing Policy Page 3 of 7 April 29, 2013 as appropriate, to assist private development projects when such assistance complies with all applicable statutory requirements to: 1. Remove blight and/or encourage redevelopment in designated redevelopment/development area(s) per the goals and visions established by the City Council 2. To achieve the following housing-related goals: a. To provide a balanced and sustainable housing stock to meet diverse needs both today and in the future b. To ensure all housing is safe and well-maintained c. To promote neighborhood stabilization and revitalization by the removal of blight and the upgrading of existing housing stock. 3. To retain local jobs and/or increase the number and diversity of quality jobs 4. To encourage additional unsubsidized private development in the area, either directly or through secondary “spin-off” development. 5. To offset increased costs for redevelopment over and above the costs that a developer would incur in normal urban and suburban development (determined as part of the But-For analysis). 6. To facilitate the development process and to achieve development on sites which could not be developed without this assistance. 7. To meet other uses of public policy, as adopted by the City Council from time to time, including but not limited to promotion of quality urban design, quality architectural design, energy conservation, sustainable building practices, and decreasing the capital and operating costs of local government. 5. PUBLIC FINANCING PRINCIPLES A. The guidelines and principles set forth in this document pertain to all applications for City public financing regardless of whether they are considered a business subsidy as defined by the Statutes. The following general assumptions of redevelopment shall serve as a guide for City public financing: 1. All viable requests for City public financing assistance shall be reviewed by a third party financial advisor who will inform the City of its findings and recommendations. 2. The City shall establish mechanisms within the development agreement to ensure that adequate checks and balances are incorporated in the distribution of financial assistance where feasible and appropriate, including but not limited to: a. Third party review of the “but for” analysis City of Arden Hills Public Financing Policy Page 4 of 7 April 29, 2013 b. Establishment of “look back provisions” c. Establishment of minimum assessment agreements 3. TIF and abatement will be provided on a pay-as-you -go-basis. Any request for upfront assistance will be evaluated on its own merits and may require security to cover any risks assumed by the City. 4. The City will elect the fiscal disparities to come from inside applicable TIF district(s) to eliminate any impact to the existing tax payers of the community. 5. The City will target up to the maximum allowed by State Statute of tax increment for administrative purposes only. 6. The developer shall proactively attempt to minimize the amount of public assistance needed through the pursuit of grants, innovative solutions in structuring the deal, and other funding mechanisms. 7. Proposals should not be used to support speculative industrial, commercial, office or housing projects. In general the developer should be able to provide market data, tenant letters of commitment or finance statements which support the market potential/demand for the proposed project. 8. Public financing will not be used in a project that involves an excessive land and/or property price. This will normally be where the acquisition price is more than 20% in excess of market value as determined by an independent appraisal of the property (exclusive of relocation benefits). The City shall commission an appraisal and the cost will be paid from Developer’s escrow. 9. Public financing will not be used in projects that would give a significant competitive financial advantage over similar projects in the area due to the use of public subsidies. Developers should provide information to support that assistance will not create such a competitive advantage. Priority consideration will be given to projects that fill an unmet market need. 10. TIF and Abatement will not be utilized for the construction of new rental housing units. The City will consider waivers of various City fees for new rental housing developments (building permit fees excluded). 11. Public financing will not be used for projects that would generate significant environmental problems in the opinion of the local, state, or federal governments. Priority will be given to projects that aim to clean-up existing contaminated sites and would facilitate the location of an industry or business that has an environmentally-sound track record, or that meets a housing need in the City. 12. The City will not approve new TIF districts that would cause the percentage of the City’s total tax capacity captured within TIF districts to rise above six percent. City of Arden Hills Public Financing Policy Page 5 of 7 April 29, 2013 6. PROJECTS WHICH MAY QUALIFY FOR PUBLIC FINANCING ASSISTANCE A. All new applications for assistance considered by the City must meet each of the following minimum qualifications and will also be evaluated based on their ability to meet the desired qualifications for assistance. However, it should not be presumed that a project meeting any of the qualifications will automatically be approved for assistance. Meeting the qualifications does not imply or create contractual rights on the part of any potential developer to have its project approved for assistance. 6.1 Minimum Qualifications: A. In addition to meeting the applicable requirements of State law, the project shall meet one or more of the Public financing objectives outlined in Section 4; and shall either: 1. Remove blight and/or encourage redevelopment in the City in order to encourage high quality development or redevelopment and private reinvestment in those areas; OR 2. Facilitate the development process and to achieve development on sites which would not be developed without this assistance. B. The developer must demonstrate to the satisfaction of the City that the project is not financially feasible “but for” the use of tax increment or other public financing. C. The project must be consistent with the City’s Comprehensive Plan and Zoning Ordinances, Design Guidelines or any other applicable land use document. D. Prior to approval of a financing plan, the developer shall provide any requested market and financial feasibility studies, appraisals, soil boring, private lender commitment, and/or other information the City or its financial consultants may require in order to proceed with an independent evaluation of the proposal. E. The developer must provide adequate financial guarantees to ensure the repayment of any public financing and completion of the project. These may include, but are not limited to, assessment agreements, letters of credit, personal deficiency guarantees, guaranteed maximum cost contract, etc. F. Any developer requesting assistance must be able to demonstrate past successful general development capability as well as specific capability in the type and size of development proposed. Public financing will not be used when the developer’s credentials, in the sole judgment of the City, are inadequate due to past history relating to completion of projects, general reputation, and/or bankruptcy, or other problems or issues considered relevant to the City. City of Arden Hills Public Financing Policy Page 6 of 7 April 29, 2013 G. The developer, or its contractual assigns, shall retain ownership of any portion of the project long enough to complete it, to stabilize its occupancy, to establish project management and/or needed mechanisms to ensure successful operation. 6.2 Desired Qualifications: A. Projects providing higher than a 3 to 1 ratio of private investment to City public investment will receive priority consideration. Private investment includes developer cash, government and bank loans, conduit bonds, tax credit equity, and land if already owned by the developer. B. Projects meeting the following minimum building valuation will receive priority consideration: C. Proposals that significantly increase the amount of property taxes paid after redevelopment will receive priority consideration. D. Proposals that encourage the following will receive priority consideration: 1. Provides significant improvement to surrounding land uses, the neighborhood, and/or the City 2. Provides opportunities for development of restaurants 3. Attracts or retains a significant employer within the City 4. Provides opportunity for hi-tech, med-tech and R & D facilities/office 5. Provides significant rehabilitation of an existing apartment complex or significant rehabilitation and/or expansion of existing office, commercial or industrial facility 6. Provides opportunities for high end and/or specialty retail that is not currently available to City residents 7. Redevelops a blighted and/or challenged site Use Minimum Value Per Sq/Ft or Unit Industrial 60$ Commercial/Retail 125$ Office 100$ Rental Housing 100,000$ City of Arden Hills Public Financing Policy Page 7 of 7 April 29, 2013 8. Provides opportunities for small businesses E. Preference will be given to projects that meet good public policy criteria as determined by the City Council, including: 1. High project quality (e.g. sound architectural design, quality construction and materials, sustainable building practices) 2. Projects that meet financial feasibility criteria established by the City 3. Projects that provide the highest and best desired use for the property 7. PUBLIC FINANCING PROJECT EVALUATION PROCESS A. The following five methods of analysis for all public financing proposals will be used: 1. Consideration of project meeting minimum qualifications 2. Consideration of project meeting desired qualifications 3. Project meets “but-for” analysis and/or statutory qualifications 4. Project is deemed consistent with City’s Goals and Objectives 5. Score of a “B” or higher on the TIF report card Please note that the evaluation methodology is intended to provide a balanced review. Each area will be evaluated individually and collectively and in no case should one area outweigh another in terms of importance to determining the level of assistance. Adopted by Arden Hills City Council April 29, 2013 1 FINAL GRADE:F 1 Ratio of private investment to public investment in project:Points:0 Points -$ 3 to 1 1 -$ 4 to 1 2 #DIV/0!5 to 1 3 6 to 1 4 7 & Up to 1 5 2 Minimum Valuation threshold Points:0 Points -$ $60 1 0 $61 to $70 2 $0.00 $71 to $80 3 $81 &Up 4 Points:0 Points -$ $125 1 0 $126 to $150 2 $151 to $175 3 $176 &Up 4 Points:0 Points -$ $100 1 0 $101 to $110 2 $111 to $120 3 $121 &Up 4 Points:0 3 Increase in real estate value:Points:0 Points -$ 1 to 1.9 0 -$ 1 to 2 1 #DIV/0!1 to 3 2 1 to 4 3 1 to 5 4 1 & Up 5 4 Bonus Points (18 points total)Points:0 Avail Awarded A. Project will add value to and likely stimulate further investment in surrounding neighborhood 3 0 B. Provides opportunities for restaurant 3 0 C. Project attracts or retains significant employer within the City 3 0 D. Provides opportunity for hi-tech, med-tech and R & D facilities/office 3 0 E. Provides significant rehabilitation or expansion of existing facility 2 0 F. Provides opportunities for high end and/or specialty retail 2 0 G. Project will redevelop a blighted and/or challenged site 1 0 H. Provides opportunities for small business 1 0 TOTAL 18 0 5 0 Grade:F 0 to 5 F 6 to 10 D 11 to 15 C 16 to 21 B 22 to 32 A TOTAL POINTS Points Value of site after redevelopment Total Points Public Financing Proposal Grading and Report Card Business and Commercial Redevelopment Public Investment Private Investment Building Square Footage Value Per Sq/Ft Office Valuation Building Valuation Note: Private investment includes developer cash, loans from banks, conduit bonds, tax credit equity and land if already owned by developer 32 Total Points Available Industrial Valuation Building Valuation Building Square Footage Value Per Sq/Ft Retail Valuation Building Valuation Building Square Footage Value Per Sq/Ft Private Funds/Public Funds Ratio of Private/Public Financing Before/After Ratio of value before/after redevelopment Value of site before redevelopment Page 1 of 2 DATE: July 27, 2015 TO: EDA Chair and Commissioners Jill Hutmacher, Executive Director Patrick Klaers, EDA Secretary FROM: Sue Iverson, EDA Treasurer SUBJECT: Preliminary 2016 EDA Budgets Background/Discussion The EDA is a blended component unit of the City of Arden Hills which makes EDA Funds Special Revenue Funds of the City. Annually we are required by the State to set budgets for the City’s General Fund and all Special Revenue Funds (which includes all the EDA Funds). These EDA Funds are: EDA General Fund EDA Revolving Loan Fund EDA TIF District #2 Round Lake EDA TIF District #3 Cottage Villas EDA TIF District #4 Presbyterian Homes Overall, the EDA General Fund is in good financial condition for 2015 with an estimated year- end reserve balance of $271,963; but the EDA and City Council need to identify dependable, reoccurring revenue for EDA activities in the future as the primary funding source of revenues from the Round Lake Road TIF District will be done at the end of 2015. The other main reason the EDA General Fund is in good condition is because of the transfers of Conduit Fees from Presbyterian Homes in 2011 and 2012 and General Fund transfers for operating expenses. Unless the EDA and City Council decided to change priorities, the expenses for economic development related activities are going to exist regardless if they are in the City General Fund budget or if they are in the EDA General Fund budget. Today these economic development expenses for Personal Services and for Other Services/Charges are estimated to be in the $140,000 per year range. NEW BUSINESS – 4A MEMORANDUM Page 2 of 2 The fund balance being projected at the end of the year includes funds that are intended to be used for the Gateway Signs program (approximately $70,000). Tax revenues are likely the only reoccurring source of funding for EDA activities. Given this situation, it may be appropriate to start slowly. The City Council approved $30,000 in tax revenues for the EDA as part of the 2015 budget and, based on long-term cash flow projections, staff is recommending $60,000 in tax revenues for the 2016 budget. This amount can be adjusted in future years as needed. A transfer was done from the General Fund for 2015 and being recommended for 2016, but there is an option to do an EDA levy. The advantage to a levy is that you can separate out the funds being levied for EDA activities when presenting the budget, but it would still be part of the City’s overall levy amount. The key issue here would be the transparency on where we are spending the funds. The Commissioners discussed this EDA levy possibility last year and decided to recommend a General Fund transfer to fund this budget. Staff is looking for Council input on this item. Attached are the preliminary budget revenues and expenditures for the funds showing a transfer from the General Fund for the EDA Operating Fund. The EDA will review the final budget at its October meeting. EDA GENERAL Function: Economic Development Supervisor: Community Development Director Fund#: 250 Activity#: 47300 Activity Scope This Special Revenue Fund accounts for general administration activities that are not specific to any individual Tax Increment Financing (TIF) District, as well as activities associated with the Economic Development Commission and Economic Development Authority. Objectives 1. Review operating budget and identify a sustainable funding source. 2. Continuing working with EDC to establish a business retention program. 3. Plan for the future of Gateway sign(s). Issues 1. Consistent administration of the City's policies, plan, ordinances, guidelines, statutes, etc. 2. Promotion of industrial property available. Measurable Workload Data None developed at this time. Budget Commentary The revenue to this fund has been primarily from excess increment and interest income in the past years with transfers from the General Fund from 2008 - 2011. A transfer was made in 2012 and 2013 for the Conduit Debt revenue received in 2011 and 2012 from the Presbyterian Homes project. The tax increment excess funding source is gone as the Round Lake District Expires at the end of 2015. Historically the EDA has always been its own fund, but in 2008, the salary and benefit costs for this activity were transferred to the General Fund in the Planning Department. At that time, there was a negative fund balance and a transfer from the General Fund was set up to correct the negative balance and fund Gateway signs, 2012 and 2014 have budgeted transfers from the PIR fund. As previously stated, transfers had been routine from 2008 through 2012. With the 2012 budget, the salary and benefit costs were transferred back to the fund as before. An administrative charge was also established in 2008 and all funds are charged back for overhead costs associated with Administration, Finance and Administrative Services, and Government Building departments in the General Fund. Other costs such as auditing, financial software, IT, and insurance have also been allocated to this fund as the EDA's share of the costs. This is a separate legal authority and with operating activity that is reported as economic development in our financial report as a blended component unit, as such, it should stay as its own fund regardless of whether it is funded with transfers from the General Fund or another source. The preliminary budget shows a transfer from the General fund of$60,000 as the only funding source other than interest revenue; and the expenditure budget shows an increase of 6.03% over 2015 primarily due to increases in salaries as a result of the compensation study completed in 2015. Budget Summary Function Economic Development Department EDA General Fund Appropriation Detail Actual Actual Budget Amended Year To Date Proposed %Change Activity FY 2013 FY 2014 FY 2015 FY2015 06/30/2015 FY 2016 15 vs 16 Revenues Taxes 60,292 61,280 60,000 60,000 100.00% Intergovernmental 0.00% Miscellaneous 2,698) 12,172 4,000 4,000 3,440 4,000 0.000/0 Other Financing Sources 30,000 50,000 30,000 30,000 60,000 100.00% Total Revenues 87,595 $ 123,452 $ 94,000 $ 94,000 $ 3,440 $ 64,000 -31.91% Expenditures Total Personnel Services 43,264 46,673 63,632 63,632 28,096 68,883 8.25% Total Materials and Supplies 3,522 237 650 650 650 0.00% Other Service Charges 40,909 21,927 68,445 68,445 6,806 71,195 4.02% Capital Outlay 28,967 12,333 5,015 0.00% Total Expenditures 116,662 $ 81,170 $ 132,727 $ 132,727 $ 39,917 $ 140,728 6.03% Fund Balance-January 1 297,475 268,408 310,690 310,690 310,690 271,963 Excess Revenue Over Expenditure 29,067) 42,282 (38,727) (38,727) (36,478) (76,728) Fund Balance-December 31 $ 268,408 $ 310,690 $ 271,963 $ 271,963 $ 274,212 $ 195,235 EDA REVOLVING LOAN FUND Function: Economic Development Supervisor: Community Development Director Fund#: 251 Activity#: 47306 Activity Scope This Special Revenue Fund was established to administer economic development loans. The primary revenue source is from investment income. Obiectives 1. Finalize the City revolving loan program guidelines and work with the EDC to market the program. 2. To assist local businesses that meet the loan criteria established by the EDA. Issues 1. Current economy does not lend itself to expansion or improvements. 2. Promoting the program to the community businesses. Measurable Workload Data None developed at this time. Budget Commentary There are currently no planned expenditures at this time. Activity in this fund would occur if the Economic Development Authority authorized a loan after an application is made. Budget Summary Function Econondc Development Department EDA Revolving Fund Appropriation Detail Actual Actual Budget Amended Year To Date Proposed %Change Activity FY 2013 FY 2014 FY 2015 FY2015 06/30/2015 FY 2016 15 vs 16 Revenues Total Miscellaneous 1,158) 6,378 2,500 2,500 2,005 2,500 0.00% Total Revenues 1,158) $ 6,378 $ 2,500 $ 2,500 $ 2,005 $ 2,500 0.00% Fund Balance-January 1 155,649 154,491 160,869 160,869 160,869 163,369 Excess Revenue Over E)penditure 1,158) 6,378 2,500 2,500 2,005 2,500 Fund Balance-December 31 $ 154,491 $ 160,869 $ 163,369 $ 163,369 $ 162,873 $ 165,869 EDA TIF DISTRICT #2 -ROUND LAKE Function: Economic Development Supervisor: Director of Finance and Administrative Services Fund#: 252 Activity#: 47307 Activity Scope TIF District No. 2, Round Lake Office, was established as a twenty-five year Redevelopment District on June 29, 1989. This district is located on the northeast quadrant of the I-35W/I694 intersection. This district will decertify on December 31, 2015. Improvements for this district were funded with the issuance of$3,100,000 General Obligation Tax Increment Bonds on March 1, 1998. Debt Service Fund No. 325 was created, per statute, to track repayment of the bond principal and interest. An inter-fund loan from the Permanent Revolving Fund No. 411 was needed for the acquisition of the Indykiewicz property. This loan was repaid in full in 2004. All non-tax increment revenue was transferred out of this fund in 2013 to the PIR Fund. Obiectives 1. Close out and decertify TIF District 2. Issues 1. Ensure compliance with TIF laws for use of available funds. Measurable Workload Data None developed at this time. Budget Commentary One significant change in this fund in 2015 was the use of the remaining TIF funds after the final bond payment to fund part of the Round Lake Road reconstruction(figures are just estimates at this time until the actual amounts are known). The remaining monies in the fund will be used for Round Lake Road and administration costs of decertifying the district and final reports. Annual transfers were made to Debt Service Fund No. 325 for principal and interest payments on the G.O. Tax Increment Refunding Bonds, 2004A which was paid-in-full in February of 2015. Budget Summary Function: Economic Development Department EDA TIF District#2 Round Lake Office Park Appropriation Detail Actual Actual Budget Amended Year To Date Proposed %Change Activity FY 2013 FY 2014 FY 2015 FY2015 06/30/2015 FY 2016 15 vs 16 Revenue Taxes 358,332 345,058 350,000 350,000 100.00% Miscellaneous 2,530 8,867 200 200 4,411 100.00% Total Revenue 360,862 $ 353,925 $ 350,200 $ 350,200 $ 4,411 $ 100.00% Expenditures Other Services and Charges 1,359 1,181 2,300 2,300 138 2,325 1.09% Capital Outlay 125,000 230,000 230,000 100.00% Operating Trans 1,311,504 282 575 285,350 285,350 100.00% Total Expenditures 1,312,863 $ 408,757 $ 517,650 $ 517,650 $ 138 $ 2,325 -99.55% Fund Balance-January 1 1,287,591 335,590 280,759 280,759 280,759 113,309 Excess Revenue Over Expenditure (952,001) (54,832) (167,450) (167,450) 4,274 (2,325) Fund Balance-December 31 $ 335,590 $ 280,759 $ 113,309 $ 113,309 $ 285,032 $ 110,984 EDA TIF DISTRICT #3 - COTTAGE VILLAS Function: Economic Development Supervisor: Director of Finance and Administrative Services Fund#: 253 Activity#: 47305 Activity Scope TIF District No. 3, Cottage Villas Housing, was originally certified as a Housing District on May 10, 1993. This district is located on the east side of Cleveland Avenue,just south of County Road E-2/Cleveland Avenue intersection. This 64 unit Cottage Villas Apartment complex is available for low-moderate income seniors. Originally,this district was set to decertify on December 31, 2009. In December, 2009, the City Council extended this district until December 31, 2019, to allow the City the possibility of using these funds for other affordable housing projects within the City. The City entered into a"pay-as-you-go" agreement with Cottage Villas of Arden Hills Limited Partnership on February 28, 1994. The Development Agreement called for the developer to be reimbursed for certain public development activities initially estimated at 834,286. Repayment to the developer would only be from tax increment actually received from the district. Payments were to be 90% of the tax increment received not- to-exceed a total annual payment of$57,557. The City is no longer obligated to make payments after February 1, 2010. Obiectives 1. Utilize available funds for low to moderate income housing projects. Issues 1. Ensure use of funds is consistent with TIF laws. Measurable Workload Data None developed at this time. Budget Commentary The City no longer has any obligations to pay the development as of February 1, 2010. Only administrative costs have been planned for 2015. Budget Summary Function:Econornic Development Department EDA TIF District#3 Cottage Villas Appropriation Detail Actual Actual Budget Amended Year To Date Proposed %Change Activity FY 2013 FY 2014 FY 2015 FY2015 06/30/2015 FY 2016 15 vs 16 Revenues Taxes 47,656 60,555 45,000 45,000 60,000 33.33% Intergovernmental 0.00% Miscellaneous 2,511) 12,718 4,000 4,000 4,064 5,000 25.00% Total Revenues 45,144 $ 73,273 $ 49,000 $ 49,000 $ 4,064 $ 65,000 32.65% Expenditures Other Services and Charges 1,059 1,181 4,700 4,700 138 4,725 0.53% Total E¢renditures 1,059 $ 1,181 $ 4,700 $ 4,700 $ 138 $ 4,725 0.53% Fund Balance-January 1 212,355 256,441 328,532 328,532 328,532 372,832 Excess Revenue Over Expenditure 44,086 72,092 44,300 44,300 3,926 60,275 Fund Balance-December 31 $ 256,441 $ 328,532 $ 372,832 $ 372,832 $ 332,459 $ 433,107 EDA TIF DISTRICT #4 — PRESBYTERIAN HOMES Function: Economic Development Supervisor: Director of Finance and Administrative Services Fund#: 254 Activity#: 47308 Activity Scope TIF district No. 4, Presbyterian Homes, was established as a 15 year renewal and renovation district to facilitate the redevelopment of existing senor housing units and replacement of existing nursing home units. The first increment is scheduled to be received in 2014 with the districted expiring on December 31, 2029. Obiectives 1. Utilize funds for Presbyterian Homes project per the development agreement. Issues 1. Ensure compliance with TIF laws for uses of available funds. Measurable Workload Data None developed at this time. Budget Commentary Increment was received in 2014 and 2015 and is estimated for 2016. Payments are based on 90% of increment received to the developer. The only other charges budgeted are administrative charges. Budget Summary Function Economic Development Department EDA TIF District#4 Pres Fomes Appropriation Detail Actual Actual Budget Amended Year To Date Proposed %Change Activity FY 2013 FY 2014 FY 2015 FY2015 06/30/2015 FY 2016 15 vs 16 Revenues Taxes 98,529 95,200 95,200 99,000 0.00% Intergovernmental 0.00% Miscellaneous 240) 355 600 0.00% Total Revenues 98,289 $ 95,200 $ 95,200 $ 355 $ 99,600 0.00% Expenditures Total Materials and Supplies 0.00% Other Services and Charges 1,997 90,784 88,180 88,180 243 92,825 0.00% Capital Outlay 0.00% Total Operating Expenses 1,997 90,784 88,180 88,180 243 92,825 0.00% Total Expenditures 1,997 $ 90,784 $ 88,180 $ 88,180 $ 243 $ 92,825 Fund Balance-January 1 972) (2,969) 4,536 4,536 4,536 11,556 Excess Revenue Over Expenditure 1,997) 7,505 7,020 7,020 112 6,775 Fund Balance-December 31 $ (2,969) $ 4,536 $ 11,556 $ 11,556 $ 4,648 $ 18,331 Page 1 of 1 NEW BUSINESS – 4B MEMORANDUM DATE:July 27, 2015 TO:EDA Chair and Commissioners Jill Hutmacher, Executive Director Patrick Klaers, EDA Secretary FROM:Sue Iverson, EDA Treasurer SUBJECT:EDA TIF District No. 3 Cottage Villas Update Background/Discussion Presently TIF District No. 3 is accumulating funds to be available for low to moderate housing projects should the need occur. Recently there has been some question as to whether the district will still qualify as an affordable housing district given the changes at Cottage Villa. Staff has had discussions with our financial consultant and they suggest we continue to collect funds on this district and reassess next year when we see whether or not Cottage Villa’s report to Minnesota Housing qualifies for 2015. Currently they are qualified and the City has received the reports.