HomeMy WebLinkAboutEDA MIN 10-25-04ECONOMIC DEVELOPMENT AUTHORITY (EDA)
SPECIAL MEETING MINUTES
OCTOBER 25, 2004
CALL TO ORDER/ROLL CALl.
President, Murzyn called the meeting to order at 6:31 p.m.
Present: Don Murzyn Jr., Patricia Jindra, Julienne Wyckoff, Bobby Williams and Bruce
Nawrocki, Tammera Ericson, and Bruce Kelzenberg
PLEDGE OF ALLEGIANCE
ITEMS FOR CONSIDERATION
Resolution 2004-13~ Modification to the Downtown Revitalization Plan for the CBD
Redevelopment Proiect and Establishment of the Huset Park Area TIF Plan
Schumacher stated this is the last action to be taken prior to the demolition and removal of
contaminated sod in the industrial'park. Once the Tax Increment Financing Plan and the
elimination of the parcels from the MURP district to the new district is approved, staff will take
the item to City Council for approval of the grant application for the removal of the Honeywell
and Rayco buildings and clean up of the soil. As you know the rezoning of the property has
taken place, the comprehensive plan has been amended, the environmental assessment worksheet
has been approved, the moratorium has been removed and the Schafer Richardson Development
Agreement has been completed.
Mark Ruff, Ehlers & Associates Inc. stated the process they followed for the Tax Increment
District included notifying the County and School District to review the plan and giving them 30
days notice of the Public Hearing with just positive comments being received, the public hearing
notice was published and documents were available to review for weeks. One of the documents
in the TIF plan is the redevelopment eligibility assessment study preformed by S.E.H State law
requires an attempted inspection on the buildings in the tax increment district, which all but two
were inspected, with only two meeting substandard qualifications. The TIF plan lays out a
maximum in terms of budget and the length of the TIE district. Under state law the district can
go up to 26years, but we don't anticipate it going that long and if everything works out with the
developers budget and the grant from the state, it is anticipated the district could be as short as
11 to 12 years. Keep in mind the EDA approved a development agreement a few weeks ago that
states the number of years could increase if the costs are higher and the developer would have to
share the costs. The district sets a maximum budget of $12 million but with current rates we are
looking at $8 million in tax increment assistance. The $12 million of tax increment, compared
with the project cost of $125 million would make the tax increment about 10%, which is very
good for a project of this size.
Williams asked how much the developer pays of the cost over the 12years. Ruff stated in the
development agreement it states that if there were increased costs, the developer would Pay 20%
and 80% would be the tax increment share for certain costs, not everything, which kicks in at the
time the total budget is established.
Wyckoff stated she understood the development agreement covers all three phases, does the TIF
plan cover all thr~e'phases. Ruff stated it did.
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October 25, 2004 Special
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Ruff stated in previous days we wouM set up a plan with the exact amount of TIF we assume to
give the developer. Then the state auditor said if you ever exceed that budget you have to go back
and modify the TIF plan, which takes time and money. So most public entities find it much easier
to pass a tax increment plan that has a budget, which is much higher than what we intend to
spend. The City could then use some of this additional income stream for other projects in the
City, without modifying the TIF plan.
Nawrocla' asked under Use of Funds, what is not applicable in this project. Ruff stated each of
the categories are applicable to this project, each category has a higher estimate than what is
currently proposed in the development agreement, which was listed in an addendum to the
agreement the EDA approved last month.
Nawrocla'stated on page 7, two ways to compute fiscal disparities what is B. Ruff stated the City
and EDA have a choice to pick the fiscal disparities from inside the district or outside the
district. The plan identifies the use of plan ,4, which would collect fiscal disparities from
commercial property inside the district at a total of $6,5OO per year.
Ruff stated 1) the developer doesn't have any incentive to spend more money, because they have
to finance it and want to get the development finished as quickly as possible, just like the city is;
and 2) there are a lot of uncertainties, so we came to the agreement with the developer to
estimate low on the costs, but let them know if the costs go over that amount, we would have to
come back and modify the district. Fehst stated with this we have no risk up front.
Williams stated by giving this much leeway would they have less incentive to produce. Ruff
stated TIF does not drive the developer, what drives them is what they can get built and the
flexibility in the development agreement to get that. If you truly want to reduce the budget, we
would have to go back to the development agreement, as that is what drives the development.
Fehst stated the developer can't make more than his 15%profit on the development and does not
get paid until the third phase of the project is complete.
Nawrocki stated he does not believe this is the greatest project to come to Columbia Heights. If
it worked for 12 years, but we have 20 years to capture the money, there won't be any increase
in funds for extra police, fire, city staff and school district costs, but all taxpayers will have to
pay more taxes to pay for these extra services, is still concerned with the high density of housing
and wan~s to see documentation the development will be aH owner occupied housing. Ruff stated
the school district would receive revenue of the development from the operating levy.
Williams asked with the estimated $8 to $12 million, for the 10 to 12 years the City would start to
obtain tax increment after 5 years. Ruff stated 1) after 12 years it is the ED,4 and City's choice
on the tax increment, not the developer and 2) in 5 years, if we find the development -is not going
to be done you have the choice to extend the tax increment beyond the 12years, but this must be
done within 5 years per state statue.
Fehst stated there is up to lO%for administrative staff costs in the TlF plan, which with all the
future development.s, staff can easily utilize. The current taxes received in the development area
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October 25, 2004 Special
Page 3 of 3
is hardly anything and the question Mr. Nawrocki is addressing on owner-occupied housing will
be the ultimate decision of the Planning and Zoning and City Council prior to anything being
developed.
Motion by Ericson, second by Wyckoff, to Adopt Resolution 2004-13, a Resolution Adopting a
Modification to the Downtown Revitalization Plan for the CBD Redevelopment Project and
Establishment of the Huset Park Area TIF Plan. Upon Vote: Jindra- Aye, Nawrocki- Nay,
Ericson- Aye, Kelzenberg- Aye, Williams- Aye, Wyckoff- Aye, Murzyn, Jr.- Aye. Motion
Carried.
Resolution 2004-12~ Eliminating Parcels from K2 TIF District
Ruff stated this Resolution is to take the properties out of the K2 district and put them into the
new district you have just established for the development. Tax increment was set up in 1989for
the industrial park under the MURP district, which no activity occurred in the area, so the area
fell out of the district and have been on the tax rolls since approximately 1994per state law.
Technically we need to acknowledge the parcels and eliminate them from the MURP district and
place them in the new TIF district being established tonight.
Motion by Williams, second by Kelzenberg, to Adopt Resolution 2004-12, a Resolution
Approving the Elimination of Parcels from the TIF 4 Multi Use Redevelopment Project (MURP)
K2 Tax Increment Financing District within the Central Business District Redevelopment Project
in the City of Columbia Heights. All aYes. Motion Carried.
ADJOURNMENT
Motion by Williams, second by Ericson to adjourned the meeting at 7:17 p.m. All ayes. Motion
Carried.
Respectfully submitted,
Cheryl Bakken
Community Development Secretary
H:~DAminutes2004\October 25, 2004 Spec.