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HomeMy WebLinkAbout07-08-2019 Council Work Session PacketOrono City Council Work Session Monday, July 8, 2019 Council Chambers 6:00 p.m. AGENDA 1. Esinger Flats TIF Discussion 2. Marina Licensing Annual: • Budget: Part of June, All of July, August and October. • City Administrator & Police Chief Update (3 times per year for 15 minutes) Previous Work Session Topics June 24, 2019 • Budget • Eisinger Flats TIF Discussion • Performance Reviews • City Owned Properties May 28, 2019 • Heritage Preservation • Budget Priorities • HR Performance Review Update • Fire Discussion May, 13 2019 • Consider Re -initiating Marina Licenses • Discuss Crystal Bay Road City Lots • Discuss Wayzata Country Club CITY OF ORONO MEMORANDUM DATE: July 8, 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) discussed with the City Council at their workshop on June 24' the potential of using Tax Increment Financing (TIF) to assist with the costs associated with the soil corrections on the property. The City Council requested additional information regarding TIF and the clean up requirements. Since the meeting, staff has invited Mark Otsby and Amy Hadiaris from the Minnesota Pollution Control Agency (MPCA) to a workshop to discuss mitigation options, and comment on any danger to the public and public waters if leaving the site as is. Additionally, staff received some additional information from Ehlers and Associates regarding TIF, attached as Exhibit A. Ehlers identified three different TIF options, the general purpose behind each, and the term of those programs. The information also includes a sample tax breakdown. Note that with TIF, the school district still collects the incremental funds due for operating referendums. Lastly, a generic schedule was provided. If the Council supports the idea of using TIF funds for the project, the city would require an application fee of $5,000 and an escrow of $5,000 to facilitate Ehlers' review of the TIF application. Final plat (and final master plan) approval would occur at the same time the TIF application is reviewed. At least preliminary plat approval would be required to complete a TIF application as the project parameter needs clarification. r E H L E RS LEADERS IN PUBLIC FINANCE Potential TIF District Statutory Authority Soils Condition TIF District (max of 21 TIF collection years). A type of tax increment financing district consisting of a project, or portions of a project, within which the HRA or City finds by resolution that the following conditions exist: a. the presence of hazardous substances, pollution, or contaminants requires removal or remedial action for use; b. the estimated cost of the proposed removal and remedial action exceeds the fair market value of the land before completion of the preparation. There is an exception if the estimated costs of the proposed removal or remedial action exceeds $2 per square foot for the area of each parcel. The proposed removal or remediation action must be specified in a development action response plan submitted to the Pollution Control Agency and the actions recommended in the plan or proposal are approved in writing by the commissioner of the agency as reasonable and necessary to protect the public health, welfare, and environment. Tax Increment can be used to correct the applicable conditions. 2. Redevelopment (26 years) or Renovation and Renewal (16 years) TIF District. A TIF district created to facilitate redevelopment of a site that contains one or more substandard buildings or areas occupied by surface improvements in need of significant renovations and/or clearance. A substandard building is defined as one containing structural defects or deficiencies in essential light, utilities, ventilation, layout and egress; and requiring repair costs to bring it up to applicable building codes in excess of 15% of the cost of constructing a new building of same size and type on the site. Tax Increment can be used for site acquisition, environmental remediation, demolition, site preparation, pubic improvements and parking necessary to redevelop the site. 3. Housing TIF District (26 years). A tool to assist with projects intended for occupancy, in part, by persons or families of low and moderate income. A rental housing development can comply with the income requirements if at least: (1) 20% of the units are held for persons at or below 50% Area Median Income, or (2) 40% of the units are held for persons at or below 60% Area Median Income. The income limits must remain in place for as long as the TIF is collected and spent to assist the costs of developing the housing project. Tax Increment Financing allows for the capture of most of the increased local tax revenue created from a new development for a limited period of time. TIF is structured in a way so that taxes generated from the undeveloped site ("Base Taxes") continue to flow to local jurisdictions, as well as certain state and local school operating tax revenues generated from the new development. A sample breakdown between the uncaptured base taxes collected from a property today and captured TIF is included below. In this example, the school district operating referendum levies would benefit from the new development even during the TIF District. New Development $50000000 625000 Gross Taxes: 16.4060% 41.8610% 10.1190% 23.5520% 0.22649% Multifamily Housing ,, , $102,538 $261,631 $63,244 $147,200 $113,245 $687,858 As is Today- $623,000 _ _ red $1278 $3260 $788 $1834 1,411 $120,405 Ongoing Base Value Baa Base Taxes: ,, , $111,834 l ntalValue $49,377,000 617,213 TIF: $101,260 $258171 $62,456 $145,366 $0 ,453 BUILDING COMMUNITIES. IT'S WHAT WE DO. LJ infv@ehlers-inc.com � 1 (800) 552-1171 (D www.ehiers-inc.com r E H L E RS LEADERS IN PUBLIC FINANCE Sample TIF Schedule of Events *The County Board, by law, has 45 days to review the TIF Plan to determine if any county roads will be impacted by the development and require funding. Because City staff believes that the proposed TIF district project will require county road improvements to be funded by the developer, the TIF Plan need not be forwarded to the County Board 45 days prior to the public hearing. Please be aware the County Board could claim that tax increment should be used for county roads, even after the public hearing, if it determines the project induces public costs for additional road improvements. D - 46, 2019 HRA (if necessary) requests City Council call for a public hearing on the proposed Creation/Modification to Housing Project # 1 and the proposed establishment of Tax Increment Financing District No. ("TIF District"). [Ehlers will provide resolution by .] D - 46, 2019 City Council calls for public hearing on the proposed Modification and TIF District. [Ehlers will provide resolution by .] D - 45, 2019 Project information, property identification numbers, fiscal impacts and maps sent to Ehlers for drafting documentation. Ehlers confirms whether building permits have been issued on the property to be included in the TIF District and reviews project pro forma satisfies the "But/For" test. D - 35, 2019 City staff and Ehlers complete internal review of draft TIF Plans. D - 30, 2019 Fiscal/economic implications and TIF Plans received by School Board Clerk and County Auditor (at least 30 days prior to public hearing). [Ehlers will distribute by 2019.] [TBD), 2019 Planning Commission reviews land use approvals and considers a resolution affirming proposed development and land use within the TIF Plans conforms to the general plans for development and redevelopment of the City as a whole. (Ehlers will provide packet information by , 2019.1 D - 10, 2019 Publication of hearing notice and map in the City Newspaper (at least 10 days but not more than 30 days prior to hearing). [Ehlers will submit notice, map and instructions by , 2019. (Publication deadline: , 2019)] D + 0, 2019 HRA reviews the TIF Plans and considers resolution adopting the Plans and establishing the TIF District (as necessary). [Ehlers will provide packet information by , 2019.] If necessary: HRA considers an Interfund Loan resolution in connection with the advance of Project or TIF costs. D + 0, 2019 City Council holds public hearing at P.M. on Plans and the establishment of the TIF District and considers a resolution approving the Plans. (Ehlers will provide packet information 2019.1 D + 1, 2019 City may issue building permits without jeopardizing the base value. June 30, 2020 Ehlers files the Plans with the MN Department of Revenue, Office of the State Auditor, and requests certification of the TIF District with the County. An action under subdivision 1, paragraph (a), contesting the validity of a determination by an authority under section 469.175, subdivision 3, must be commenced within the later of: (1) 180 days after the municipality's approval under section 469.175, subdivision 3; or 2 90 days after the request for certification of the district is filed with the county auditor under section 469.177, subdivision 1. BUILDING COMMUNITIES. IT'S WHAT WE DO. IJ info@ehlers-inc.com �,,, 1 (800) 552-1171 (D www.ehiers-inc.com CITY OF ORONO MEMORANDUM DATE: July 8, 2019 TO: Mayor Walsh, City Council FROM: Jeremy Barnhart, AICP, Community Development Director RE: Marina Licensing Marina Committee members Johnson and Seals meet with staff to discuss reinstating marina licensing for the 5 existing marinas on Orono. To better understand rules and regulations for each of the marinas, which are regulated by ordinance, conditional use permit, and/or non -conforming status, the Committee directed staff to prepare a summary of regulations for each. This summary will be provided to the Committee members July 22nd, and the council could discuss that and recommended next steps in August. With a better understanding of the governing rules and regulations, the Committee may be recommending changes to the licensing standards and or the governing zoning district. It is recommended that if the Council is considering reinstating marina licensing or changes to the standards, marina owners be invited to a worksession to add their voice to the discussion, likely sometime this fall.