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HomeMy WebLinkAbout7E, Arden Village Letter of Support Request�` EN HILLS Request for Council Action Prepared By: James Lehnhoff, Community Development Director Council Meeting Date: September 14, 2009 Arden Village —Letter of Support Request Budgeted Amount: Actual Amount: Funding Source: Recommendation: Motion regarding Sand Companies, Inc request for a letter of support for housing tax credits with the Minnesota Housing Finance Agency as proposed in the September 14, 2009, memorandum. ........................................................................ ................. Supporting Documents: 1. September 14, 2009, Memo to the City Council 2. September 14, 2009, Letter of Support Request 3. Preliminary Review based on the Business Subsidy, B2 Design Standards, and TIF Options ......... HILLS MEMORANDUM DATE: September 14, 2009 TO: Mayor & City Council FROM: James Lehnhoff, Community Development Director SUBJECT: Arden Village Workforce Housing Concept Proposal — Letter of Support Sand Companies, Inc Action Request Motion regarding Sand Companies, Inc request for a letter of support for housing tax credits with the Minnesota Housing Finance Agency as proposed in the September 14, 2009, memorandum. Backiround At the August 19, 2009, work session, the City Council reviewed a presentation from Sand Companies, Inc (SCI) to construct a 55 unit workforce rental housing building at 1296 County Road F. The 2.74 acre property is immediately west of the Land O' Lakes headquarters and includes a communications antenna that would remain on the site. SCI has requested a letter of support from the City for a housing tax credit application with the Minnesota Housing Finance Agency (MHFA). Additionally, SCI is requesting $400,000 in public assistance. Applications with community financial support score higher and have a better chance of obtaining the housing tax credits, which are a key part of making the building affordable. The public financial assistance could be in the form of Tax Increment Financing (TIF) or relief from other development fees. Cottage Villas at 3744 Cleveland Ave N. a senior affordable rate rental building, is a past example of a project that received housing tax credits and TIF assistance. Public Financing Options The City has two TIF options: creating a new TIF district or extending the existing Cottage Villas TIF district. If TIF is used, the City would not need to identify which option is being used at this time. The letter of support would just note that the City is offering the use of TIF. Either City of Arden Hills City Council Meeting for September 14, 2009 IlMetro-inetlardenhillsUdminl CouncillAgendas & Packet Information12009109-14-09 RegularlPacket Informationl7E 091409 - CCMemo - Arden Village - Sand Companies.doc Page 1 of 3 option would use pay-as-you-go repayment terms. A new TIF district would be in place just long enough to cover the requested $400,000 in assistance. The existing Cottage Villas TIF district is set to expire on December 31, 2009, but could be extended up to ten years for "low to moderate income housing." The Cottage Villas TIF district is projected to produce $545,000 over that ten year period. Alternatively, the City could reduce or waive the development fees. Based on the preliminary design and project value, the estimated building permit fee is $72,500. City sewer and water access charges (SAC/WAC) would be an additional $34,600. Since they intend to subdivide the existing antenna from the rest of the lot, it would be subject to the park dedication fee. Based on a 2009 market value of $715,600 from Ramsey County, the park dedication fee is estimated at $71,560. The base cost for the Comprehensive Plan amendment, rezoning, planned unit development, and subdivision application is $3,000. The total estimated cost for all City related development fees is $181,660. The Metropolitan Council will also charge a sewer availability charge of $110,000. The City is responsible for collecting this charge and remitting it to the Metropolitan Council. While the City could pay the fee on behalf of the development, it would be an actual charge to the City. While waiving all or a portion of the fees can be simpler than creating a new TIF district, Staff would be concerned about waiving or significantly reducing the fees because that represents a direct cost to the City for services that would still be provided. Without the fees, the costs would need to be absorbed elsewhere in the budget. Conversely, a new TIF district requires additional front end footwork but the costs are supported by the project itself through property taxes. As with any TIF district, the new increment of property taxes would go to the development instead of being distributed out to the City, county, and school district. Comprehensive Plan and Rezoning As discussed at the August 19 work session, this project would require a Comprehensive Plan amendment and rezoning. Given the size of the property and the type of proposal, a Comprehensive Plan amendment is likely to receive Metropolitan Council approval through their administrative review process. Additionally, the project helps the City advance the affordable housing goals described in the 2030 Comprehensive Plan. Timeline and Letter of Support The deadline for the housing tax credit application is October 1, 2009. In order to meet that deadline, SCI would need the letter of support from the City by September 14 so that they can complete the other application requirements, including a housing market study that is specific to this property. MHFA will make its determination by January 29, 2010. If the tax credits are City of Arden Hills City Council Meeting for September 14, 2009 IlMetro-inetlardenhillslAdminlCouncilUgendas & Packet Info rmation12009W9-14-09 RegularlPacketIn0rmationl7E 091409 - CCMemo - Arden Village -Sand Companies. doc Page 2 of 3 approved, SCI will move forward with the formal application for public assistance along with the development review process. It is important to note that a letter of support is not an approval of the project. The project must still meet all TIF statutory requirements, undergo a detailed financial review by the City, and conform to City development requirements. Offering any type of financial assistance in a letter of support is not an automatic approval of the project. However, the letter of support is a good faith commitment from the City to provide the requested support if the housing tax credits are approved by MHFA and if the project meets City requirements. Location During the August work session discussion, there were several comments about the proposed location of the workforce housing project. There are pros and cons to the proposed location, and the 2030 Comprehensive Plan did not contemplate housing in this area. Traffic along County Road F, noise from Interstate 694, accessibility to parks and open space, and access to transit on Lexington Avenue do present some concerns. Finally, developing this site as a residential use would remove this land from future commercial/industrial use. Despite those concerns, the location provides a number of positive attributes. Since housing tends to have a different traffic pattern than commercial/office uses, the traffic impact from a development this size would likely be minimal, though further study is needed. The applicant is proposing to construct a tot lot playground on the site for occupants to help offset the lack of recreational space. Floral Park is accessible from the site, but one would need to cross County Road F and Hamline Avenue to access the sidewalk to the park. The workforce housing site is located close to many jobs at Boston Scientific, Land O'Lakes, Fair Isaac, and other employers along County Road F and Lexington Avenue. There is also relatively quick access to Cub Foods and Super Target on the south side of Interstate 694 for food and other retail services. In order to improve pedestrian access to Lexington Avenue, it would also be important to extend the sidewalk on County Road F from Land O'Lakes to the housing site. There is currently a commuter bus service on Lexington Avenue to downtown Saint Paul. A tta Ph m on N. • Draft Letter of Support • Preliminary Review based on the Business Subsidy, B2 Design Standards, and TIF Options City of Arden Hills City Council Meeting for September 14, 2009 llMetro-inetlardenhillsWdminICouncilWgendas & Packet Information12009109-14-09 RegulaHPacketInformationl7E 091409 - CCMemo - Arden Village - Sand Companies.doc Page 3 of 3 '000�� �RQEN September 10, 2009 Minnesota Housing Finance Agency 400 Sibley St. Suite 300 St. Paul, MN 55101 Attention: Multi -family Underwriting Re: Housing Tax Credit Program & Super RFP ARDEN VILLAGE -- ARDEN HILLS Dear Multifamily Development: The City of Arden Hills is a. community made up of residents, businesses and institutions sharing a common history. One of the primary purposes of a community is to serve as a place of residence for its citizens. Assuming this charge, offering a mix of life cycle housing opportunities becomes a challenge for local governments, especially in suburban markets. The City has a strong desire to support affordable and work -force housing and is an active participant in the Livable Communities Program. The City's 2030 Comprehensive Plan sets goals that emphasize the development of a variety of housing types that are suitable for a mix of incomes, including work -force housing. Developers and the City must be partners to cooperatively develop housing plans to provide life cycle housing in Arden Hills. The City of Arden Hills proposes to use local financial assistance for this project as part of its participation and endorsement. If the project is selected for funding, the City Council supports the use of tax increment financing (TIF) for the project. The TIF structure is proposed to be pay-as-you-go with a projected tax exempt bond amount of $400,000 with 90 percent of increment returned to the project until the bonds are repaid. As part of the TIF, the project will need to meet all state guidelines for TIF, including the "but for test." The project must also be reviewed under the City's business subsidy policy as well as conform to the City's development standards. Along with its financial endorsement of Arden village, the City is supportive of offering flexibility in site development standards such as density and zoning code requirements as the project moves through the development approvals of the City. Although the project will be required to meet all building code requirements, the building officials will, to the best of their abilities, work with project to allow for fast -track permitting approvals. The proposed development is an excellent opportunity for the City of Arden Hills to meet a large portion of its housing goals. This endorsement is based upon the Endings that the project will meet locally identified housing needs and that the proposed housing is in short supply in the local housing market. This need is evidenced by the gap between the local supply and demand for the proposed type of housing. The City Council's endorsement is evidenced by this letter of support for the proposed development. we respectfully request funding approval for this needed development in the City of Arden Hills. Sincerely, Stan Harpstead Honorable Mayor City of Arden Hills * 1245 west Highway 96 + Arden Hills, Mai ♦ 55112-5743 Prone 651.792.7800 Fax 651.634.5137 * ww-mcl.arden-hills.mn.us ltma,— �iAZEN HILLS ws'.� CITY OF ARDEN HILLS MEMORANDUM DATE: September 4, 2009 TO: Mayor and City Council FROM: James Lehnhoff, Community Development Director SUBJECT: Arden Village — Business Subsidy Policy BackLyround At the August 17, 2009, City Council work session, Sand Companies Inc. (SCI) presented a concept proposal for a 55 unit affordable housing building at 1296 County Road F. As part of that proposal, SCI is requesting a letter of support from the City Council for a Housing Tax Credit application with the Minnesota Housing Finance Agency (MHFA). Housing Tax Credit applications have a greater chance of approval with support from the local government unit. The proposal to the City includes a preliminary request for $400,000 in public assistance in the form of Tax Increment Financing (TIF). An alterative to TIF is a waiver or reduction of development fees such as building permit fees, SAC/WAC, and/or park dedication. The project would also require a Comprehensive Plan amendment and rezoning. Letter of Support The deadline for the Housing Tax Credit application is October 1, 2009; however, SCI would need to be working on the application well in advance of the deadline. In order to move forward with this funding cycle, the City Council would need to make a decision on the letter of support no later than the September 14, 2009, Council meeting. MHFA would make its determination on the Housing Tax Credits by January 29, 2010. It is important to note that a letter of support is not an approval of the project or public assistance. However, the letter would be a good faith commitment from the City to provide the identified support if the Tax Credits are approved by MHFA. Even with the good faith commitment, the project would need to meet all TIF statutory requirements, including the "but for" test. The City would not begin processing a TIF request or any other part of the City of Arden Hills Arden Village — Preliminary Business Subsidy Policy Review Page 1 of 2 development review until MHFA has made their decision in January 2010. If the City is willing to use TIF or any other type of support, the City would still have the opportunity to complete a financial analysis to ensure the soundness of the project. If the project receives the Housing Tax Credits but is ultimately not able to meet City requirements, the City would not be obligated to approve the project. Offering any type of public assistance in a letter of support is not a blind approval for the project. The City would be able to tie in specific design standards with the rezoning and/or public assistance. Direction from the City Council Since this project was discussed at a work session, the Council could not vote on a letter of support. The Council did request the following information: • How would the project compare to the B2 Zoning District design standards? • What does the Business Subsidy Policy say about this type of project? • In regards to TIF, how much in property taxes would this housing project generate and how would that compare to a commercial/industrial use on the property? Finally, what would be the difference between extending the existing Cottage Villas TIF district for this project or creating a new TIF district? Because this project is in the concept stage, detailed designs and financial analysis are not able to be completed. The project relies on obtaining the Housing Tax Credits from MFRA, and the detailed plans would likely not be created until MFRA makes their decision. However, Staff has prepared an initial analysis based on available information. SCI has also supplied preliminary estimates for the TIF request which has been reviewed by the Finance Director. Attachments The following three documents are attached to this memo: Preliminary Design Review Preliminary Business Subsidy Review Preliminary TIF Review Page 2 of 2 Ital'- �RZEN HILLS CITY OF ARDEN HILLS MEMORANDUM DATE: September 4, 2009 TO: James Lehnhoff, Community Development Director FROM: Meagan Beekman, City Planner SUBJECT: Arden Village — Preliminary Design Review The following review is based on preliminary information provided by Sand Companies, Inc. in regards to the Arden Village housing proposal. The City Council requested that Staff examine the proposed development through the lens of the recently adopted design guidelines for the B2 and B3 Business Districts. While the proposed project would be located outside of these zoning districts, this project would require a zoning change and would likely be reviewed through a PUD process, which would allow the City to impose greater design review scrutiny in exchange for other flexibilities in the Zoning Code. Findings Summary Since the project is in the concept stage, much of the information needed to a complete a review has not yet been prepared by S CI. However, based on the submitted information, a preliminary review finds that the known aspects of this project are in substantial conformance with the City's design guidelines. Although many aspects of the design guidelines remain unknown due to the early stage of the project, it is likely that most, if not all, pertinent design standard requirements could be achieved. The rest of this memo includes excerpts from the Section 1325.05 Subd. 8 of the Zoning Code, which is the B2 and B3 Zoning District design standards. A brief review of how the design standard applies to the Arden Village project is included in italicized text. City of Arden Hills Arden Village — Preliminary Design Standards Review Page 1 of 9 Findings: Section 1325.05 Subd. 8 — Additional Design Standards for the B2 and B3 Districts A. Building Materials. Buildings shall be constructed of materials that are enduring, timeless, and well -detailed. 1. At least seventy-five percent (75%) of the exterior building materials shall be of brick, stone, decorative concrete plank, transparent glass or any combination thereof. This requirement appears to be met. While the submitted documents do not show enough detail to calculate exact percentages of building material types, it appears that the building would primarily be constructed of brick, stone, concrete plank, and glass. 2. Trim and other accent or decorative features may be metal, wood, or EIFS. Other high -quality materials that increase the variety and appeal of buildings may be considered as accents. Metals shall have a matte finish and neutral or earth tone colors. Metals that are used on exterior walls shall have visible corner moldings and trim. This requirement appears to be met. Trim would consist of metal and EIFS. I Undesirable materials shall include simulated brick or stone, vinyl or aluminum siding, sheet metal, corrugated metal, concrete blocks, materials that have no pattern or relief when applied to large walls, brightly colored metal roofing or canopies, and pre -cast tilt -up walls. Extensive use of mirrored or tinted glass on the first floor and materials that represent corporate colors or trademarks that are not in conformance with approved building materials are also undesirable. This requirement appears to be met. None of the above mentioned materials appear to be used. B. Building Design. The arrangement, geometry, massing, materials and colors shall work to create a high quality development that is responsive to existing buildings, site features, and site design on adjoining sites in the district. 1. At least fifty percent (50%) of the largest building on each site shall be constructed at the front setback line. Unknown, though this may not be a desirable requirement in this location since proximity to the street is less important than in the B2 or B3 districts. More detail is required to determine if this requirement is met. A proposed site plan was not submitted. Page 2 of 9 2. Fagade treatment shall be carried around all sides. Architectural elements such as, but not limited to, windows, shutters, awnings, doors, masonry exterior veneers, cornice detailing, window casings, and other architectural details should demonstrate consistency on all sides of the structure that are reasonably visible to the general public. Plain flat walls shall not be permitted when viewable from the public right-of-way or public areas. Unknown. Photographs of the sides and rear of the example building were not provided. This would be required through the review process. 3. To avoid long unbroken expanses and to increase visual interest from the street, buildings of more than 40 feet in width shall be divided into smaller increments (between 20 and 40 feet) through articulation of the facades to convey the impression of individually -constructed small storefronts or, in the case of housing, housing units. This requirement appears to be met. 4. Awnings or overhangs shall be provided at entryways to provide shelter from the sun and rain. The awnings shall be opaque so as not to create a glowing effect with lights under the awnings. Awnings shall be constructed of durable, protective, and water repellant material; however, plastic or fiberglass awnings shall not be permitted. This requirement appears to be met. 5. Any multi -level building shall distinguish the ground floor level from the upper floors by use of any or a combination of these techniques: an intermediate cornice line, difference in building materials or details, awnings trellis or arcade, special window details, or brick corbels or quoins. A strong base and top for multi -story buildings shall be established; middle layers shall be simpler. Detail shall be an integral part of the architecture rather than a series of applied elements. Based on the submitted documents, this requirement does not appear to be met, though it could be required in the review process. 6. Franchise architecture identified with a particular chain shall be discouraged unless it is architecturally integrated into the district and conforms to these design standards. Not Applicable 7. Entrances shall have convenient access to the street frontage and to parking serving the use. For those properties along County Road E, access to the street frontage shall be given priority where feasible. Page 3 of 9 Unknown. A site plan was not submitted. Adequate access to County Road F and to parking areas can be assumed. C. Commercial Fagade Transparency — Not Applicable D. Building Color. Colors shall be harmonious. Building colors shall consist of muted colors with low reflectance. Recommended colors include browns, grays, tans, beiges, and dark or muted green, blues, and reds. Bright or brilliant colors and sharply contrasting colors may be used for only accent purposes occupying a maximum of five percent (5%) of building fagades. This requirement appears to be met by the photographs. Details, such as color, can be amended through the review process. E. Fences. Fences shall blend into the landscape, be compatible with other materials used on site, and be made of a material that minimizes corrosion. Finished and treated wood, brick, stone or wrought iron is encouraged. Unknown. Fence materials are not shown. F. Signs. 1. Business signs shall be architecturally compatible with the style, composition, materials, colors and details of the building and should be an integral part of the building. Signs shall be incorporated into the fagades of the buildings rather than extending past the roof line and should not project more than twelve (12) inches beyond the plane of the fagades. Retail business wall signs shall be located in a position above the front window that is located consistently among stores. Unknown. There would likely be minimal signage compared with a commercial use. 2. All other provisions in Chapter 12, Sign Code, shall apply. This requirement would need to be met. G. Site Furnishings and Seating Areas. 1. Site furnishings shall be provided based on the scale of the project. The site furnishings may be spread out on the site or clustered to provide a more formal area. Placing site furnishings near landscaped areas is encouraged. These areas may be shared by multiple tenants on a property or adjacent properties and may include tables, chairs, benches, plantings, and other outdoor amenities such as a plaza. These areas shall be maintained for year round use. Creativity is highly encouraged. These spaces shall be connected to the sidewalk system. Page 4 of 9 This intent of this requirement appears to be met. The development would provide on -site recreation areas for tenants including play areas and seating areas. 2. Benches and decorative plantings shall be provided near the primary entrance of all buildings on a site. This requirement appears to be met. 3. Restaurants shall include a functional outdoor seating area with tables, chairs, plantings, and access to the restaurant. Not Applicable. H. Screening. 1. Trash and recycling equipment, materials, and containers shall be fully enclosed and integrated into the architecture of the buildings. This requirement would be met. 2. All mechanical equipment, whether roof -mounted or ground -mounted should be integrated into the architecture of the building. It shall be completely screened from the ground -level view of adjacent properties and public streets. Wood screening shall not be permitted. This requirement would be met. 3. Truck docks and delivery areas shall face away from the public street and shall be integrated into the architecture of the building. This requirement would be met. There would be minimal need for truck docks. Garbage and recycling removal would be required. I. Landscaping. A generous amount of plant material and landscaping shall be used on all new development and redevelopment sites. Office parking areas shall include a generous amount of perimeter and internal landscaping. Parking structures shall be visually softened with plantings. A minimum of one tree shall be placed along the right-of-way every forty (40) feet. The tree shall not interfere with the roadway and shall be on private property. This requirement appears to be met. The submitted documents do not show enough detail to calculate exact landscaping requirements. There is significant tree coverage existing on site and would likely require a significant amount of mitigation due to Page 5 of 9 removal. Affordable housing and LEED building design are two reasons, listed in the Zoning Code, for the City Council to allow reduced tree mitigation if required. J. Parking. 1. Placing parking between the street right-of-way and a building shall be discouraged. Unknown. This would be determined with the submission of a detailed site plan. Approximately 110 parking spots are anticipated to be part of the plan, and half of those would be under the building according to Sand Companies. 2. No more than fifty percent (50%) of the parking on a site may be between buildings or in the side yards. Unknown. Due to the underground parking it is likely that this requirement would be met. 3. Sufficient parking shall be provided to accommodate the reasonable hourly peak on a given site. Shared parking is encouraged to reduce land devoted to parking. Hourly variations among different types of land use may be considered when estimated parking demands. This requirement would be met. 4. Plantings shall be used to soften and shade parking lots and parking structures. Parking and service areas shall be visually screened from street views with plantings and architectural treatments. Unknown. Landscaping and site plans were not submitted for this stage of review. 5. Parking lot islands shall be used to distribute large parking fields into separate "outdoor" rooms that have visual relationship to the buildings they serve. Parking lot islands shall be planted with trees or include infiltration basins and plantings. Entry drives shall be defined by trees and shrubs. Unknown. Landscaping and site plans were not submitted for this stage of review. 6. A concrete curb shall be provided around the periphery of all parking lots and access roads, except where the City Engineer determines that a curb would impede drainage. This requirement would be met. Page 6 of 9 7. Parking adjacent to streets should be screened from views with landscaping, including but not limited to trees, hedges, flowers and other bushes and/or decorative masonry walls. Berms shall be discouraged. Unknown. Landscaping and site plans were not submitted for this stage of review. 8. Parking structures that are visible from off the site shall display an integration of building materials building form, textures, architectural motif, and building colors with the principal building. No signs other than directional signs shall be permitted on parking ramp facades. Not applicable, no parking structures are proposed. K. Traffic Study. A traffic study shall be required for all new developments, redevelopments, and significant modifications to existing sites unless waived by the City Council. A traffic study would be required as part of the proposal. L. Lighting. Exterior lighting shall be provided for the safety and convenience of occupants and visitors. 1. A lighting plan shall be submitted that shows location, type of illumination and design. A photometric analysis of site and building shall be submitted for City approval with all new construction or redevelopment projects. This requirement would be met. 2. Exterior lighting shall be consistent in type, design, scale, and color to create unity in the Districts. High-pressure sodium lighting and other similar types of lighting color may be required by the City to promote a unified lighting color throughout the Districts. Other lighting colors may be considered during the City review process. Unknown. Alighting plan was not submitted for this stage of review. 3. Exterior lighting for parking lots and buildings shall not be excessive and shall be directed at their intended purposes. Unknown. Alighting plan was not submitted for this stage of review. 4. Lighting under a gasoline station canopy shall not be directly visible from the street but shall be recessed into the canopy or otherwise shielded. Not applicable. Page 7 of 9 5. Light washing of buildings and accent lighting may be permitted through the City review process provided that it does not negatively impact residential areas or traffic safety and is complementary to the district as a whole. Unknown. Alighting plan was not submitted for this stage of review. M. Pedestrian and Bicycle Circulation. Pedestrian and bicycle improvements shall be installed in accordance with the City of Arden Hills Comprehensive Plan and the local guiding plan and shall be in conformance with the following: 1. Site design shall facilitate pedestrian connections and mobility within and between building, sites, and uses by providing clear visual indicators through door placement, signage, striping, raised pathways, and integrating landscaping components. Other features or materials may be considered that enhance and provide a safe pedestrian experience. Unknown. A site plan was not submitted for this stage of review; however it is likely that this requirement would be met. 2. A sidewalk shall link the primary entrance of each building on site with the public sidewalk network. In the event a building is subdivided into multiple separated tenant spaces, a sidewalk must link the primary entrance of each separated tenant space with the public sidewalk network. Unknown. A site plan was not submitted for this stage of review; however it is likely that this requirement would be met. There is no public sidewalk in this area, though it may be desirable to have the sidewalk extended from the entrance to Land O'Lakes to this property as part of this project. 3. Bike racks shall be required near a public entrance of all buildings. Unknown. A site plan was not submitted for this stage of review; however it is likely that this requitement would be met. 4. Internal sidewalk systems shall connect with adjacent planned or developed public sidewalks or trails. Unknown. A site plan was not submitted for this stage of review; however it is likely that this requirement would be met. 5. The grades of all walks, parking spaces, terraces, and other paved areas shall conform to the requirements of the Americans with Disabilities Act. This requirement would be met. Page 8 of 9 6. Where there is new building construction or renovation where the renovation value is thirty percent (30%) or more of the pre -renovation value of the structure, a minimum six foot concrete sidewalk adjacent to or in all rights -of -way shall be provided. The location of the sidewalk shall be prescribed by the Public Works Director. The new sidewalks shall connect to sidewalks on adjacent properties if they exist. At the discretion of the City Council, the property owner may, in lieu of constructing the sidewalk, pay the City an amount equal to the cost of constructing the sidewalk to satisfy the obligations of this section. Said payment shall be used by the City to further maintain and construct the pathway system within the City. This requirement would be met. 7. When there is more than one building on a site, a sidewalk must link the primary building entrances of each building to one another. Not applicable. The proposed development would not be more than one building. N. Drainage/Water Management Plan: A plan must be submitted with each project or lot development in the Districts. The plan must be approved by the Rice Creek Watershed District, other agencies as required, and the engineer assigned by the City. Two or more lots or projects may coordinate their plans for their mutual benefit. The project would be required to go through the Rice Creek Watershed District review process. O. Environmental Conservation and Sustainability. The City encourages the use of green materials and environmentally friendly construction and site design such as the use of pervious surfaces, green rooftops, energy efficient materials, LEED standards, and other green building techniques. The proposed building would incorporate green building principals through site design, building materials, water conservation, and on -staff LEED accredited professionals. The project would be required to meet the "Minnesota Overlay to the Green Communities Criteria " While this program incorporates green building techniques, it is different than LEED accreditation. Page 9 of 9 ".0 t ,,�ARZEN HILLS CITY OF ARDEN HILLS MEMORANDUM DATE: September 4, 2009 TO: Mayor and City Council FROM: James Lehnhoff, Community Development Director SUBJECT: Arden Village — Business Subsidy Policy On August 17, 2009, Sand Companies Inc. (SCI) presented a concept for a 55 unit affordable housing project, Arden Village, to the City Council. Since this project would be requesting Tax Increment Financing (TIF), it would be subject to review under the City's Business Subsidy policy that was adopted on December 8, 2008. The applicant, Sand Companies Inc. (SCI) has not submitted an official business subsidy application; therefore, a thorough TIF analysis is not yet possible. This memo lists the applicable sections from the Business Subsidy Policy and, where possible, it provides a brief analysis of how those sections pertain to the concept. To help guide the review, some information has been underlined to draw attention to parts that particularly relate to the project. It is important to note that the Business Subsidy Policy does not guarantee a path to an approved subsidy. Each project is evaluated on its own merits. The policy is a guideline for reviewing public subsidy requests in light of overall City goals, needs, and resources. Section 2: Public Purpose Requirement. The business subsidy policy requires a project to have a public purpose and benefit. Section 2.1 of the policy states: 2.1 - 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, the creation of needed services or facilities not currently available, provide a variety of housing ownership alternatives and housing choices, redevelop and remove blight and encourage redevelopment in the commercial and industrial areas of the City in order to encourage high levels of property maintenance and private City of Arden Hills Arden Village — Preliminary Business Subsidy Policy Review Page 1 of 5 reinvestment in those areas, retain local jobs, increase the job base, and provide diversity in that job base, enhance existing jobs through increased wages, encourage additional unsubsidized private development in the area, either directly, or through secondary "spin off' development, offset increased costs of redevelopment over and above those costs that a developer would incur in normal urban and suburban development, and meet 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. The project would increase housing choices in the City. Section 3. City's Objective for the Use of Public Financing. In order to approve a public subsidy, the project must work to advance a City objective. Parts B and G of section 3.1 relate to housing. The other sections pertain to job creation and retention. 3.1 As a matter of adopted policy, the City of Arden Hills may consider using Tax Increment Financing (TIF) and other forms of public financing, such as tax abatement, bonds, and other forms as appropriate, to assist private development projects when such assistance complies with all applicable statutory requirements to: B. To achieve the following housing -related goals: 1. To provide a balanced and sustainable housing stock to meet diverse needs both today and in the future 2. To ensure all housing is safe and well -maintained 3. To promote neighborhood stabilization and revitalization by the removal of blight and the upgrading of existing housing stock. G. 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, decreasing the capital and operating costs of local government. The project would work to creating a more diverse housing stocks. The SCI proposal also includes information about energy conservation and sustainable building practices for multi- family housing. Section 4. Cost Which May Qualify for Public Financing Assistance, The Business Subsidy Policy limits the types of expenses that would qualify for public assistance. The costs that pertain to this project may include: A. Project design fees including utilities, landscape, architectural, and engineering design B. Site -related work, including earthwork/excavation, soil correction, landscaping, utilities, streets and roads, street/parking lot paving, street/parking lot lighting, curb and gutter, and sidewalks C. Land acquisition E. Soil tests Page 2 of 5 F. Environmental studies J. Any other costs allowable by state statute and approved by the City Council Section 5. Projects Which May Qualify for Public Financing Assistance. The Business Subsidy Policy includes minimum qualifications that a project must meet to obtain public assistance. According to the Policy, a project must meet all of the minimum requirements. The Policy also lists desired qualifications. The minimum qualifications are: 5.1 Minimum Qualifications: A. In addition to meeting the applicable requirements of State law, the project should meet one or more of the Public Financing Objectives outlined in Section 3; but at a minimum 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 should 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. G. The developer, or its contractual assigns, should 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. H. Enter into a Development Agreement crafted to meet the conditions of the actual project. Page 3 of 5 It would be subject to discussion if the project meets the requirements of Section 5.1 part A.1 or A.2. Under part A.1, the property would not be considered blighted; however, this could be an opportunity to encourage high quality development. Due to the lack of available vacant land in the area, the project probably would not promote additional private reinvestment above and beyond what would already occur. In reference to A.2, this particular development may not be able to occur without public assistance but it is likely that this property would eventually have some type of development. As previously noted, the project would need to meet the "but for" test described in part B but additional analysis would be required with a complete application. The project would be in conformance with part C if the Comprehensive Plan is amended and the rezoning approved. The Comprehensive Plan amendment would likely be approved at an administrative level at the Metropolitan Council since it is unlikely to have a negative impact on the regional systems. Assuming the project meets the "but for" test, the remaining qualifications D through H could likely be met. These parts would require additional analysis with a complete application and/or would be addressed during the development process. 5.2 Desired Qualifications: A. Proposals creating a higher ratio of property taxes paid after redevelopment will receive priority consideration. B. 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. C. 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. D. 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. E. TI F 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. F. 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. Page 4 of 5 G. 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 provide significant improvement to surrounding land uses, the neighborhood, and/or the City 3. Projects that provide a significant increase in tax base 4. Projects that provide significant new, or retained employment 5. Projects that meet financial feasibility criteria established by the City 6. Projects that provide the highest and best desired use for the property Of the desired qualifications, it is likely that most and possibly all of the criteria could be met. Again, additional analysis would be required with a full application. The project would generate more taxes than the currently land use, it would not be speculative, and it would not create an unfair advantage in the affordable housing market. It would be a pay-as-you-go financing project as required in part E. The project is also unlikely to create negative environmental impacts. Reviewing part G would require additional City Council discussion. Part H, the development agreement, would be required. Section 6. Public Financing Principles. This section does not list evaluation criteria. This section provides basic assumptions and requirements for the review process if the project moves forward (i.e. the "but for" analysis, look back provisions, and how to address fiscal disparities). Section 7. Public Financing Project Evaluation Process. If a formal proposal is submitted, the follow four criteria are used for analyzing the proposal: A. Consideration of project meeting minimum qualifications B. Consideration of project meeting desired qualifications C. Project meets "but -for' analysis and/or statutory qualifications D. Project is deemed consistent with City's Goals and Objectives Section 8. Application for Public Financing Assistance. A formal application will require a $2000 application fee and a $10,000 escrow for additional expenses. The application and fees would need to be submitted before any detailed TIF analysis could be completed. The fees are meant to cover City costs; however, they can be waived or reduced by the Council. Page 5 of 5 „,,--A-RZEN HILLS CITY OF ARDEN HILLS MEMORANDUM DATE: September 4, 2009 TO: Mayor and City Council FROM: James Lehnhoff, Community Development Director SUBJECT: Arden Village — Tax Increment Financing Review At the August 17, 2009, City Council work session, Sand Companies Inc. (SCI) presented a concept proposal for a 55 unit affordable housing building at 1296 County Road F. As part of that proposal, SCI is requesting a letter of support from the City Council for a Housing Tax Credit application with the Minnesota Housing Finance Agency (MHFA). Housing Tax Credit applications have a greater chance of approval with support from the local government unit. The proposal to the City includes a preliminary request for $400,000 in public assistance in the form of Tax Increment Financing (TIF). An alterative to TIF is a waiver or reduction of development fees such as building permit fees, SAC/WAC, and/or park dedication. A letter of support from the City would be a good faith commitment; however, it is not a TIF approval. The project would still need to meet all state and local requirements, including the "but for” analysis. Since the project is contingent upon the tax credits, the complete TIF analysis would not occur until after the tax credits are awarded by MHFA. Despite the letter of support, if the project is ultimately unable to meet state or local requirements, the City would not be required to approve the TIF assistance. During the work session, the City Council requested additional information regarding the preliminary TIF request: • How much in property taxes would this housing project generate and how would that compare to a commercial/industrial use on the property? • What would be the difference between extending the existing Cottage Villas TIF district for this project or creating a new TIF district? Until a complete application is submitted, it is not possible to complete a full analysis. This analysis is considered preliminary and could change with the final application. SCI has submitted their projection of how much the project would generate in property taxes. City of Arden Hills Arden Village — Preliminary Tax Increment Financing Review Page 1 of 4 What Does the Property Currently Generate in Property Taxes? For 2009, the total market value of the property as determined by Ramsey County is $903,300, and the property generated $27,580 in property taxes. In 2008, the City was responsible for about 21 percent of the property tax bill, which means the City should collect about $5,792 in property taxes from this property. There is currently a transmission antenna and support structure on the property. Existing - Year 2009 t Value $903,300 Property Tax Value EEst. $27,580 ty Portion of Property Taxes $5,792Ramsey County Property Records The preliminary property tax calculations prepared by SCI are attached. If the development moves forward, the antenna and support structure would be subdivided into a separate property with the existing structures left in place. For this initial assessment, it was assumed that the antenna property would continue to generate one half of the existing property taxes, which would be $13,790 per year. If the City continues to collect about 21 percent of the property taxes, the City would continue to collect $2,896 from the antenna property Upon completion of the 55 unit apartment building, SCI estimates that the housing property would generate $52,250 in property taxes in the first year after development. This is an increase of $3 8,460 in property taxes from the existing $13,790 for this portion of the property. If the City continues, to collect about 21 percent of the property taxes, the City would collect $11,602 in property taxes from the new apartment property. Not including any increases for the antenna property, the total property taxes for the antenna property and apartment property combined would be $69,040 in 2013. This is an increase of $41,460 over the existing $27,580. If the City continues to collect about 21 percent of the property taxes, the City would collect $14,498 from the two properties. This is an increase of $8,706 over the existing $5,792. Completed Housing Development (SCI Data) Antenna Market Value* $4517650 Antenna Property Tax Value* $137790 Est. City Portion of Property Taxes $2,896 Housing Market Value $57500,000 Housing Property Tax Value $55,250 Est. City Portion of Property Taxes $11,603 Combined Market Value $5,9517650 Total Property Tax Value $697040 Total Est. City Portion of Property Taxes $14,498 *Based on 2009 Data City of Arden Hills Arden Village — Preliminary TIF Review Page 2 of 4 If the housing property is placed into a TIF district, the City, County, and school district would continue to collect the existing property taxes. However, the new increment for the housing property would be used for the project. The antenna property would not be part of the TIF district and would continue to contribute its full property taxes to the property taxing authorities. Commercial/Industrial Development Compared to Housiniz Development Without a specific development plan, it is difficult to calculate a market value and property tax value for this property if it were developed into a commercial/industrial use. However, in order to provide some type of comparison, the market values and property taxes of the other commercial/industrial properties along County Road F were reviewed. While the scale of uses varies significantly from Boston Scientific to Bremer Bank, the general style is professional office building. If a project of similar style but scaled to fit this property were constructed, staff has roughly estimated that the project could have a market value in the neighborhood of $3.1 million. While this is less than the market value of the housing project, multi -family housing and commercial/industrial uses are taxed at different rates. The rough estimate for property taxes collected would be around $77,000 per year. If the City continues to collect 21 percent of the overall property taxes, the City's portion would be $16,170. By comparison, the housing/antenna property would produce an estimated combined property tax value of $14,498 for the City. Although the housing/antenna property tax value is less, Staff s calculations for a commercial/industrial use are speculative. Additionally, the City has no way of knowing when or how this property would ultimately redevelop or the impact on surrounding property uses. Market Value & Property Tax Value Comparison Market Value Property Tax Value Est. City Portion of PropertyTax 2009 - Existing* $903,300 $27,580 $5,792 Antenna & Housing Property Combined $5,951,950 $69,040 $14,499 Antenna Property $4517950 $13,790 $2,896 Housing Property** $5,500,000 $55,250 $11,603 Commercial/Industrial Use*** $3,100,000 $77,000 $16,170 *Ramsey County Property Data, **SCI Estimates, ***City Staff Estimates Cottage Villas TIF District As discussed during the work session, the existing Cottage Villas TIF district is set to decertify on December 31 of this year. The TIF district could be extended an additional ten years for a low to moderate income housing project. The housing project can be located outside of the TIF district boundaries. If extended, the Cottage Villas is anticipated to produce about $45,000 per year of increment or about $450,000 over ten years. With the existing $95,000 fund balance, the TIF district could provide up to $545,000 for a low to moderate income housing project. City of Arden Hills Arden Village — Preliminary TIF Review Page 3 of 4 If the project is allowed to decertify, the fund balance would be returned to the property taxing authorities (i.e. school district, County, and City). The future $45,000 increment would also be divided out to the property taxing authorities. Assuming the City would collect 21 percent of the $45,000, the City would collect an additional $9,450 each year for general fund use if the district is allowed to decertify. By extending the district, the City would be able to use the full $45,000 per year for a housing project. For comparison, the housing/antenna property is estimated to produce $8,706 in new property taxes for the City if the development were to move forward as proposed. If the City put the housing property into a new TIF district, the City would collect an estimated $47,025 in the first year for use in the housing project. The Finance Director is reviewing the data provided by SCI and may have additional comments or analysis on September 8. City of Arden Hills Arden Village —Preliminary TIF Review Page 4 of 4