EDA Minutes 06-20-2012MINUTES
ECONOMIC DEVELOPMENT AUTHORITY (EDA)
Wednesday, June 20, 2012 - 6:00 p.m.
Commissioners Present: President Bill Demeules, Vice President Bill Tapper, Treasurer Tracy
Hinz, Matt Frie, Rod Dragsten and Council Member Tom Perrault
Commissioners Absent: Brian Stumpf
Staff. Executive Director Megan Barnett - Livgard
Call to Order
Bill Demeules called the meeting to order at 6 p.m.
2. Approve Meeting Minutes
a) Regular Meeting May 9, 2012
ROD DRAGSTEN MOVED TO APPROVE THE MAY 9, 2012 EDA MINUTES.
BILL TAPPER SECONDED THE MOTION. MOTION CARRIED 6 -0.
b) Special Joint Meeting May 9, 2012
TOM PERRAULT MOVED TO APPROVE THE SPECIAL JOINT MEETING
MINUTES MAY 9, 2012 EDA MINUTES. BILL TAPPER SECONDED THE
MOTION. MOTION CARRIED 6 -0.
3. Consideration of additional agenda items
a) Krutzig Property
b) TIF 1 -19 Mississippi Shores
4. Consideration of Adopting the 2012 TIF Management Plan
Tammy Omdal from Northland Securities presented a draft of the 2012 TIF Analysis and
Management Plan for EDA review. She highlighted the study process and
accomplishments made by the EDA since the 2009 report, presented management
strategies common to all districts, summarized district- specific strategies and focused on
districts with management issues.
Since 2009, the EDA has completed a downtown study, purchased property, provided
fonding for key road projects, taken action to call bonds, used special TIF pooling
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authority, met all annual obligations, and acted to decertify 5 TIF districts.
There are fourteen active TIF Districts. The majority of these districts were created for
housing and job growth. All districts are governed by four factors: state law when created,
current state law, a TIF plan, and the development agreement.
The Five Year rule requires that tax increments must be spent or obligated within 5 years of
certification. After 5 years, spending is subject to pooling limits which constrains the
ability to use funds for new purposes. TIF District decertification takes place when
obligations are met. Remaining monies would be sent to the county for redistribution.
TIF District 1 -5 and TIF District 1 -6 were created pre -1990 and are not subject to current
limitations. TIF District 5 is eligible for decertification this year and TIF District 6 is
eligible for decertification next year.
There are management issues in three out of the fourteen parcels in districts created
post -1990. The Five Year rule limits future use in TIF 1 -22 (Downtown District). The EDA
could consider partial decertification to provide a source of excess funds. TIF 1 -35
(Landmark Square II) is a single parcel redevelopment in which the site is cleared but the
project is not built so no increment is accruing. TIF 1 -36 (Dahlheimer Distributing) is a
single parcel Economic Development District in which the internal loan is not projected to
be repaid.
TIF 1 -39 (Suburban Manufacturing) was certified this month as a new single parcel
Economic Development District.
Matt Frie asked about past issues with TIF District 1 -38 (Walker In Store). Tom Kelly
noted that there was a slight negative ending balance. There was an internal loan for the
land purchase.
Rod Dragsten asked how the EDA handled that shortfall. Tom Kelly indicated that it
became a land write -off. Staff noted that in the past the developer has had to pay the
shortfall. Issues are considered on a case -by -case basis.
Tammy Umdahl noted that staff and EDA comments and corrections would be reflected in
the final report presented.
TRACY HINZ MOVED TO ADOPT THE 2012 TIF MANAGEMENT PLAN. MATT
FRIE SECONDED THE MOTION. MOTION CARRIED 6 -0.
5. Consideration of allocating funds from TIF 1 -5 for a transportation and
beautification project
Staff reported that the City Council would like the EDA to consider allocating $400,000 of
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TIF District 1 -5 funds to complete a transportation and beautification project at the
intersection of Highway 25 and 7th Street East. The project would include constructing a
right turn lane from east bound 7th Street to Highway 25; constructing a two tier retaining
wall along Highway 25 and a single tier retaining wall along 7th Street adjacent to the
cemetery; and adding monument signs.
The Embracing Downtown plan had outlined the need to improve the aesthetics along
Highway 25 and identified a green plaza at the corner of 6th Street and Highway 25. City
Council had allocated $75,000 to improve the appearance of the landscape wall along
Highway 25 that abuts the cemetery.
TIF District 1 -5 is set to expire at the end of 2012. It is estimated that the fund balance will
be approximately $480,000. If the EDA does not allocate funds by that time, the funds will
be returned to the County for redistribution.
Bill Demeules asked how these improvements would affect 7th and Cedar. Staff indicated
that, at this time, the EDA is just being asked to consider the concept and funding sources.
Matt Frie asked if it would be feasible to do the improvement project and where it would
go. He also asked if using these funds for this improvement would reduce EDA ability to
have funds available for a downtown project. Staff gave a few specifics about the plan and
suggested that it would depend on what projects were ready to implement and what
funding sources were utilized. He noted his dismay that the EDA would be focusing on
aesthetic concerns at this point rather than land purchase.
Bill Tapper suggested that the funds be used to purchase right of way for Fallon Avenue.
Tom Perrault stated that utilizing excess funds for the purchase of property should be the
EDA's priority and suggested waiting until year -end to make a decision about spending.
Bill Demeules noted that the EDA must make a decision by September in order to have
time to take action by year -end.
Tom Kelly indicated that choosing to use excess TIF 1 -5 funds for land acquisition wasn't
in the original TIF plan so it would be necessary to do a budget amendment as soon as
possible.
TOM PERRAULT MOVED TO TABLE ALLOCATING SURPLUS TIF FOR
TRANSPORTATION AND BEAUTIFICATION IMPROVEMENTS ALONG
HIGHWAY 25 AND EASTBOUND 7T" STREET FOR FURTHER RESEARCH AND
DISCUSSION UNTIL THE AUGUST 8, 2012 EDA MEETING. BILL TAPPER
SECONDED THE MOTION. MOTION CARRIED 6 -0.
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6. Consideration of Appeal Process This item will be discussed at the next meeting.
Director Report
Staff received notice from Braun Intertec that Phase II of the environmental review for
Fred's Auto had been completed. The Minnesota Pollution Control Agency (MPCA) has
been notified that there is some contamination on the site and will recommend a
remediation action plan. It is expected to be a 2 -3 week wait before obtaining clear title
status so that the EDA could close on the purchase of the property. Staff will bring a plan
forward to the EDA at that time.
Staff will also provide the most recent mapping of the Great River Trailways Project for the
EDA as noted in the agenda packet.
8. Consideration of items added to the agenda
a) Krutzig Property
The City Council directed the EDA to determine if the purchase/holding of the 2.7-
acre commercial parcel in Jefferson Commons owned by Mike Krutzig would be of
interest.
Mike Krutzig had originally purchased the property from the City. He asked the
City to buy it back from him for a period of 24 months as it had become a financial
burden. He is aware of some interest in the parcel. He pointed out that the parcel
creates an important first impression of the local entertainment district.
Bill Demeules shared his concern about depleting the General Fund with no
mechanism to replenish it without a levy.
Bill Tapper said that other potential purchases had more of an immediate EDA
need.
Tracy Hinz suggested that the priority must be downtown redevelopment.
Tom Perrault questioned if the City should be in the real estate business.
Matt Frie agreed that such a purchase would tie up a significant amount of the
General Fund.
BILL TAPPER MOVED NOT TO UTILIZE EDA GENERAL FUNDS TO
PURCHASE THE KRUTZIG PROPERTY. MATT FRIE SECONDED THE
MOTION. MOTION CARRIED 6 -0.
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Megan Barnett - Livgard asked if the EDA would be willing to explore the option of
utilizing a 24 -month GMEF loan to purchase the Krutzig property. There was
general EDA consensus.
b) TIF 1 -19 Mississippi Shores
Because the term for obligation of TIF District 1 -19 expired as of February 2012,
Mississippi Shores no longer receives TIF payments twice a year. They are asking
for EDA assistance in being reclassified as a 4D tax rate so that they would pay
about 40% less in taxes for residential property. This would allow them to keep the
rents from increasing and continue to provide a balanced mix of residential
opportunities throughout the community.
Bill Tapper asked why this issue was of concern to the EDA as it has nothing to do
with tax rates. Staff indicated that the EDA need be aware of the impact of
decertifying a district.
Tracy Hinz asked why this situation had happened. Tom Kelly indicated that the
property hadn't generated the tax that had been anticipated and the term had ended
before the full obligation was realized.
Staff reported that the Oakdale EDA has been dealing with same issue. The EDA
would have to trade tax dollars to allow the Mississippi Shores to continue to
operate low- income rental housing.
Rod Dragsten confirmed that Mississippi Shores would become eligible for HUD
dollars with the new tax classification.
Bill Tapper asked if the TIF District could be extended. EDA attorneys said that
extension would not be an option because the obligation was fulfilled.
Tom Kelly clarified that the TIF District was eligible for decertification when the
obligation was paid in full or by end of term. Excess TIF would be sent to the
County and be redistributed at 40 %.
Tracy Hinz confirmed that the excess housing funds could be used toward the
proposed Podawiltz Development housing project. Megan Barnett Livgard said it
could, however it would by no means meet their subsidy requirements.
Bill Demeules noted that the EDA had created this TIF district to meet a need in the
community and that a resolution of EDA support would help to keep Mississippi
Shores functioning as a low income housing development.
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BILL TAPPER MOVED TO DIRECT STAFF TO CONTINUE TO WORK
WITH KENNEDY AND GRAVEN TO OBTAIN A LOW INCOME
CLASSIFICATION FOR MISSISSIPPI SHORES. TRACY HINZ SECONL
THE MOTION. MOTION CARRIED 6 -0.
Staff confirmed that a proposed change in tax status would come before City
Council for approval. Representatives from Kennedy & Graven and Mississippi
Shores will be invited to attend the next EDA meeting.
c) Finance Director Resignation
Tom Kelly will be returning to his previous position as Finance Director at White
Bear Township. He thanked the EDA for their support and let them know how
much he'd enjoyed working with them. Tom Perrault said that Tom Kelly is top in
his field and will be missed.
9. Adiourn
MATT FRIE MOVED TO ADJOURN THE MEETING AT 7:28 P.M. TOM PERRAULT
SECONDED THE MOTION. MOTION CARRIED 6 -0.
Recorder:
Approved:
Attest:
Kerry T. Burn O1