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EDA Minutes 10-10-2012MINUTES ECONOMIC DEVELOPMENT AUTHORITY (EDA) Wednesday, October 10, 2012 - 6:00 p.m. Commissioners Present: Vice President Bill Tapper, Matt Frie, Rod Dragsten and Council Members Tom Perrault and Brian Stumpf Commissioners Absent: Bill Demeules, Tracy Hinz Staff. Executive Director Jeff O'Neill, Angela Schumann, Wayne Oberg Call to Order Bill Tapper called the meeting to order at 6 p.m. 2. Approve Meeting Minutes The September 12`x', 2012 regular meeting minutes were not yet available for review. 3. Consideration of approving payment of bills Tom Perrault asked for a more detailed record of eligible expenses and repairs related to Lakeland Dental's relocation. Staff agreed to provide that specific information for EDA review. Jeff O'Neill noted that Dan Wilson has worked to ensure that tenants are protected and that the costs to the EDA are appropriate. BRIAN STUMPF MOVED TO APPROVE PAYMENT OF BILLS FOR OCTOBER 10TH 2012. MATT FRIE SECONDED THE MOTION. MOTION CARRIED 5 -0. 4. Consideration of additional agenda items None 5. Consideration of an update on TIF 1 -22 Knockdown Analysis Rusty Fifield from Northland Securities outlined the Knockdown Analysis and provided an overview of the current financial capacity of TIF District 1 -22. The analysis determined that $42,000 in excess tax increment had been collected and must be returned to the County for redistribution. $17,500 of this excess will be returned to the City's General fund. Ten percent of the increment from taxes collected from property in TIF 1 -22 could be used for qualified housing projects. Such expenditures must be authorized in the TIF plan, finance the cost of correcting conditions in the redevelopment district, and meet low- income housing requirements. Economic Development Authority Minutes: 10/14/12 A portion of the existing fund balance could be used for TIF eligible expenses (not subject to 5 year and pooling limits). This portion is revenue resulting from investment income, state payments, and the sale of land. TIF 1 -22 is required to be decertified by 2024. Northland had previously recommended decertifying the district in 2012. Further review indicated that there seems to be more flexibility to use existing resources than initially assumed. There are currently 58 parcels in TIF 1 -22. The following three options are proposed for removing the 55 parcels unencumbered by existing obligations from the district. These options only address current parcels and assume 40% of redistributed funds are returned to the City. o Option 1: Decertify TIF 1 -22 and redistribute all funding. $1.3 million would be declared excess, filtered through the county, and returned to the City's General fund. There would be $95,000 in tax revenue resulting from decertification. o Option 2: Decertify TIF 1 -22 and retain usable funds for the EDA. There would be an approximate $2.9 million dollar fund balance available ($2.5 million current funds and $384,000 future funds). The City's General Fund would receive $177,000 as a share of redistributed funds and $95,000 in tax revenue from decertification. o Option 3: Do not decertify TIF 1 -22 at this time and use current and future funds as allowed by pooling. This option provides the EDA $2.9 million in current funding and $1.1 million in future funding. Rusty Fifield recommended a variation of Option 3 as it provides a sizable amount of money that can be invested in the downtown. He pointed out that using the allowable 10% in TIF administration funding for related staff time and marketing is a great way to leverage resources rather than spending from the General fund. He also suggested that there may be areas within TIF 1 -22 that could drop out and instead be created as independent tax increment districts. Additionally, there are 124 parcels eligible for reinstatement into the district due to a qualifying activity and 14 parcels still under review for activity. 6. Consideration to approve Resolution 2012 -88, a Resolution Ratifying Modification to the Tax Increment Financing Plan for Tax Increment Financing District No. 1 -5. The EDA is required to define a purpose for fiords available in TIF District 1 -5 by the end of 2012. Due to the flexibility in pooling allowances and spending in this district, staff asked that the EDA consider modifying the original budget to allow for the reallocation of increment within the district to the West 7 th Street Extension project (Minnesota to Elm). Economic Development Authority Minutes: 10/14/12 This project is identified as a proposed improvement in the City's Transportation Plan, and is also included in the City's current 5 -year Capital Improvement Plan as a proposed improvement for 2013. The City Council authorized a feasibility report for the completion of the 7th Street project. Preliminary funding estimates and sources for the project are as follows: Estimated Project Costs $ 1,230,000 Estimated Eligible State -Aid Costs $ 633,700 Estimated Assessments (Deferred) $ 652,290 Staff asked that the EDA allocate all of the available increment in TIF 1 -5 ($450,890) toward the 7th Street project to fund much of the deferred assessments. The deferred assessment amount would be applied to the adjoining property and be paid when the land develops. The property owner is interested in cooperating but unable to pay the assessment right away. By utilizing the increment in TIF 1 -5 for deferred assessments, the City would be paid back once assessments are levied and paid. Those funds could then be re -used for additional projects that foster economic development. Staff will consider options to address the $150,000 - $200,000 funding gap. Brian Stumpf suggested that the gap may be larger because other associated costs have not yet been identified. Rod Dragsten asked why the project is important considering all vacant land and expressed concern that funds would not available for the downtown project. Jeff O'Neill stated that the project would create an important circulation pattern for the City and that there will be other sources of funding available for downtown. As the EDA is not modifying the amount of the original project budget, but rather reallocating funds among the line items, no public hearing is required. The district would be decertified after reallocation. Bill Tapper asked how long assessments can be deferred. Staff said that a date is not typically set until development or sunset. It may be ten years or so before payback. Rod Dragsten asked what if the property owner doesn't agree to the assessments. Jeff O'Neill noted the road improvements would increase the property value and that would be a benefit to the owner. Wayne Oberg suggested that the 7th Street project would be a good use for these funds. Bill Tapper indicated that he had mixed emotions about spending this money but saw the benefit of connecting Seventh Street through town. Economic Development Authority Minutes: 10/14/12 Matt Frie agreed that the project would be a benefit in that it would more easily move traffic through the City even if the downtown redevelopment doesn't play out as he hoped. Tom Perrault confirmed that funds designated at this time can be used for this purpose in the future. He also stated that, although this wasn't the transportation project that he'd intended to spend these funds on, he would do so. TOM PERRAULT MOVED TO RECOMMEND THAT THE CITY COUNCIL APPROVE EDA RESOLUTION #2012 -88, A RESOLUTION RATIFYING MODIFICATION TO THE TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO. 1 -5. BILL TAPPER SECONDED THE MOTION. MOTION CARRIED 5-0. 7. Consideration of an update regarding TIF Housing District Increment Rusty Fifield indicated that some, if not all, existing housing districts would continue to generate increment beyond their obligation notes until the time of their required decertification. Obligations under TIF District 1 -19 (Mississippi Shores) have been met, and the EDA had initially considered decertifying the district. The district has, however, remaining excess increment available for use and is not required to be decertified until 2023. He recommended that the district not be decertified at this time if there may be opportunities to utilize any excess increment to benefit low to moderate income housing. Renovations and expansions may be options for consideration. 8. Consideration to review and approve the EDA General Fund budget for 2013 Due to the current absence of a consistent source of funds necessary to replenish the EDA General Fund, the City Administrator and Finance Director recommended that the City Council continue to fund an amount from the General Fund levy for Economic Development and allocate that amount to the EDA General Fund for marketing, staffing and other administrative activities not associated with a TIF district. The EDA would also be asked to prepare a budget based on a workplan to obtain funding for the following year. This process would result in close alignment of goals of both bodies and provide a funding source for Economic Development/EDA activities. Jeff O'Neill stated that this funding linkage would not limit the EDA authority to what has been approved by City Council. He also pointed out that the EDA would continue to have access to 10% of TIF district funding for administrative costs. Wayne Oberg suggested that, rather than co- funding certain line items, the City Council instead transfer $80,000 to the EDA General Fund where it would be allocated among the line items. In addition, $40,000 would be allocated to TIF administration. Economic Development Authority Minutes: 10/14/12 He also noted that he had identified a difference between the city's TIF 1 -22 district report and the 2009 state audit report. An $890,000 entry, which had been transferred in from a closed debt service fund, was reported in the TIF 1 -22 account. This entry will be moved to the EDA General Fund as one time revenue and is not recommended to be used for general operating expenses. MATT FRIE MOVED THAT THE EDA ACCEPT AN ANNUAL ALLOCATION FROM THE CITY'S GENERAL FUND TO THE EDA GENERAL FUND AND THAT THE EDA PRESENT A BUDGET REQUEST TO THE CITY COUNCIL EACH JULY FOR FUNDS NEEDED TO ACCOMPLISH A WORKPLAN FOR THE FOLLOWING YEAR. BILL TAPPER SECONDED THE MOTION. MOTION CARRIED 5 -0. 9. Director Report Industry of the Year Bill Tapper noted that the IEDC had requested that the EDA provide $500 in funding for the Industry of the Year banquet. Staff will clarify the exact allocation depending on number of event attendees. The Industry of the Year Award & Manufacturer's Appreciation Breakfast will be held on Wednesday, October 24th at 7:30 AM at the Monticello Community Center. ROD DRAGSTEN MOVED TO RECOMMEND THAT THE EDA PROVIDE FUNDING IN AN AMOUNT NOT TO EXCEED $750 FOR THE INDUSTRY OF THE YEAR BANQUET. BRIAN STUMPF SECONDED THE MOTION. MOTION CARRIED 5 -0. Fred's Auto The Limited Scope Investigation (LSI) on Fred's Auto has been completed. Closure of the leak site is recommended. The City would likely have limited to no clean up responsibilities subject to Minnesota Pollution Control Agency (MPCA) review. Staff will discuss the findings with Braun Intertec and the Department of Commerce and report back to the EDA. The two invoices that had been submitted to pay for studies costs on the property were eligible for reimbursement through the Petrofund. The not -to- exceed amount has not yet been reached. 10. Items added to the aeenda Broadband Conference - Jeff O'Neill invited EDA Commissioners to consider attending an upcoming broadband conference in Danville, Virginia to learn about what other communities have done to use their fiber technology as a tool for economic development. Economic Development Authority Minutes: 10/14/12 11. Adiourn MATT FRIE MOVED TO ADJOURN THE MEETING AT 8:13 PM. TOM PERRAULT SECONDED THE MOTION. MOTION CARRIED 5 -0. Recorder: Kerry T. Burri Approved: December 12, 2012 Attest: r z C //�rc !'X Jeff O xecutive Director