06-24-2019 Council Work Session Packet

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CITY OF ORONO MEMORANDUM DATE: June 24, 2019 TO: Mayor Walsh, City Council Members FROM: Jeremy Barnhart, AICP, Community Development Director RE: Eisinger Flats Tax Increment Financing (TIF) The developer of the proposed Eisinger Flats apartments (3245 Wayzata Blvd W) has approached the Mayor regarding the possibility of receiving Tax Increment Financing to assist with the soil corrections on the property. This is the same project that requested and received City assistance for a grant from the Met Council earlier this Spring; we have not yet been notified as to the result of that application. Cities, Counties, and Development Authorities may use TIF financing to help offset costs of real estate development to encourage development, and to pay for public improvements such as streets, sidewalks, sewer, and water, and similar public infrastructure improvements that are related to the development. Mitigation of poor soils is a permissible expense. The last TIF project staff is aware of was for the Orono Woods Senior Housing project at the NW corner of Brown Rd and Wayzata Blvd, in 2003. TIF, if used, would capture the taxes associated with increment between the property value now and the property value at the conclusion of the project, for a specific period of time; funds are to be used within the district. In addition to City taxes, TIF funds capture County and School District taxes. The Comprehensive Plan, in the Housing action plan, discusses the various incentive tools available to the City. This is attached as Exhibit A. The City has in the past retained the services of Ehlers and Associates to perform the review of TIF applications necessary to meet statutory requirements. With favorable feedback from the Council, the property owner would make an application. There is no application fee for TIF in the fee schedule; staff recommends a $5,000 application and a $5,000 escrow to pay invoices incurred with the understanding that all expenses incurred as part of the project would be paid by the applicant. If supported by the Council, one of the first steps would include a meeting with Ehlers to determine if there are more attractive financial assistance tools available for the Council's consideration.