5.2. SR 11-20-1995* *ITEM 5.2.**
ity of MEMORANDUM
lk 0 TO: Mayor & City Council
River
FROM: William Rubin, ED Coordinat
DATE: November 20, 1995
SUBJECT: Proposed Modification to Tax
Increment Financing Plan No. 3
(Elk River Business Park Initiatives)
Introduction
On November 20, the Elk River City Council will be asked to schedule a
public hearing to consider a modification to Tax Increment Financing Plan
No. 3.
Background
• Following the activation of the EDA Business Park Task Force in 1993, its
Chair, Patrick Dwyer, presented a detailed overview of potential funding
sources to assist the EDA with the eventual development of a Business Park
in the western area of the community. A copy of the minutes from Chair
Dwyer's presentation to the City Council on October 11, 1993, is attached to
this memo. Following the presentation, the City Council authorized the
allocation of $400,000 in tax increment financing funds from Districts No. 1
and No. 3 to be used for land acquisition for a Business Park and an
Industrial Park in two separate locations in the community.
On November 14, 1994, the City Council reaffirmed its desire to allocate
funds toward the development of the Business Park when it authorized
approximately $429,000 in TIF funds for this use and/or to write down the
utility costs for a new senior high school.
The Elk River EDA discussed the proposed expenditure of TIF funds from
Districts No. 1, No. 3, and former District No. 4 at workshops in June and
July of this year. At the August workshop, general agreement was obtained
to allocate the expenditure of TIF funds as follows:
East Highway 10 Utilities Write Down $400,000
Business Park/Industrial Park Initiatives $400,000
is Downtown Redevelopment S 150.000
$950,000
13065 Orono Parkway • P.O. Box 490 • Elk River, MN 55330 • (612) 441 -7420 • Fax: (612) 441 -7425
• Because TIF District No. 3 is scheduled to be decertified by December 31 of
this year, a specific modification to the TIF Plan is requested. Like previous
modifications, the stated initiatives of the amendment and related budget
adjustments would be added to the existing plan. These modifications and
adjustments would enable the city/EDA to undertake the initiatives outlined
in the plan. Specifically, a budgetary modification in the amount of $400,000
is requested to enable the EDA to underwrite future infrastructure costs in
the Business Park, or, to acquire land on behalf of manufacturing companies
on a case -by -case basis. Expenditures that are attributable to land
acquisition costs would be recovered through the creation of subsequent TIF
Districts. Infrastructure assistance would also be recovered by attaching an
interest rate to whatever funds that are made available to a Business Park
land developer. It should be noted that neither Country Ridge Partnership
nor DMV Mall Corporation accessed TIF funds in order to underwrite a
portion of their respective assessment charges.
Failure to adopt a specific plan amendment prior to the decertification of TIF
District No. 3 will significantly limit how TIF funds attributable to this
District can be accessed.
As with previous modifications to TIF Plans, the following organizations
would review and comment on the proposed amendment: County
Commissioners, School Board, Planning Commission.
Action Requested
The City Council is asked to schedule a public hearing for December 21,
1995, to consider a modification to TIF Plan No. 3. The modification relates
to an allocation of $400,000 in TIF funds to be used for infrastructure and
land acquisition initiatives in a Business Park and/or an Industrial Park
area.
After deducting $400,000 from the TIF No. 3 balance, any remaining funds
would be attributable to a catch -all budget amendment to include downtown
redevelopment initiatives. This suggestion is consistent with the consensus
derived from the August EDA workshop.
•
0
0
•
TIF No. 1 and No. 3 Estimated Ending Cash Balance
Cash Balance 5/31/95
Debt Outstanding - Ref. Bonds
Transfers to Debt Service 2/1/95
Library Bond Obligation
1995 Increment
Balance Available
$809,459.00
- 371,020.00
102,897.50
- 51,000.00*
210,900.02
$495,441.52 (excludes interest income)
NOTE: TIF District No. 1 was decertified on 12/31/94; TIF
District No. 3 will be decertified on 12/31/95.
* Represents 20 percent debt service coverage on the $255,000 library bond.
This bond is retired in 2007, at which time the $51,000 may be used for
another purpose.
SOURCE:EDA JUNE 1995 WORKSHOP
FINANCE DEPT
Elk River City Council Meeting
October 11, 1993
--------------- - - - - --
Page 2
Commerce to see if they would be interested in having a community
billboard sign at their new location.
Business Park Task Force Presentation
Pat Dwyer, Chair of the EDA Business Park Task Force, updated the
Council on the Task Force composition and reviewed the progress and
current status of the Task Force. Pat Dwyer also reviewed the current
status of the existing industrial lots available in Elk River and noted
that the City is quickly running out of industrial lots. He stated
there is a need to develop industrial property. He further noted that
the concept of the Task Force is to have two different types of
industrial parks available. The Task Force is recommending that a
light industrial park be located in the eastern area of the City along
Highway 10 and that a business park be created along Highway 10 in the
western area of the City.
Pat Dwyer reviewed possible funding sources for the City or the EDA to
acquire the land for the parks. He stated that the Task Force is
recommending to amend TIF Plans No. 1 and No. 3 to enable funds from
TIF Districts No. 1 and No. 3 to be used in the acquisition of land for
additional industrial and business parks. He noted that there is an
estimated $430,000 to $435,000 in funds available from Districts No. 1
and No. 3.
Pat Dwyer also discussed infrastructure improvements necessary for the
parks. He stated that the options available to pay for the
construction of roads and the installation of utilities include the
sale of bonds via Minnesota Statutes, Chapter 429, or an application to
the U.S. Economic Development Administration (USEDA).
Pat Dwyer stated that the Business Park Task Force is also requesting
that a recommendation be made to the Planning Commission to study the
creation of a new business park zone in the western area of the City.
Mayor Duitsman stated it is important to get industrial development in
Elk River and the only way to get ahead is to dedicate the TIF funds
from Districts No. 1 and No. 3 for land acquisition. Mayor Duitsman
further stated that if money is needed for Main Street redevelopment,
the BRA could dedicate some of its funds to that purpose.
Councilmember Dietz indicated he agreed with Mayor Duitsman in that it
is important to acquire land for industrial development and that the
funds from Districts No. 1 and No. 3 be used.
Economic Development Coordinator Bill Rubin indicated that the money
from Districts No. 1 and No. 3 would be used as seed money and would be
recaptured from land sales. These funds would be used in subsequent
phases of the business park.
Councilmember Holmgren questioned whether it was necessary to use all
• of the money from Districts No. 1 and No. 3. He indicated he would
rather not commit all of the funds at one time, but would like to see a
project prior to committing the funds.
Elk River City Council Meeting
October 11, 1993
Page 3
Councilmember Farber noted that it was important that the City provide
a business park on the west end and an industrial park on the east end
of the City.
COUNCILMEMBER HOLMGREN MOVED TO REFER THE CONCEPT OF A BUSINESS PARK
ZONE TO THE PLANNING COMMISSION FOR FURTHER STUDY. COUNCILMEMBER
FARBER SECONDED THE MOTION. THE MOTION CARRIED 4 -0.
6.1. Consider 221st Avenue Improvements
Pat Klaers, City Administrator, informed the Council that the 221st
Avenue improvement project has been delayed. He indicated that
financing and timing of the project will be discussed by the City
Engineer, Street Superintendent, and himself. He further noted that
this issue will be brought back to the Council at a Council meeting in
October.
6.2. Consider Park and Recreation Terms and Vacancies
City Administrator Pat Klaers noted that the City Council previously
determined that the best time to advertise for Park and Recreation
Commission vacancies was sometime after Labor Day and before
Christmas. He noted that there will be three vacancies at the end of
1993, and all three Commissioners, Dave Anderson, Clair Olson, and Sue
Daleiden, have requested reappointment. The City Administrator
questioned whether the Council wished to reappoint the three
Commissioners or to advertise for the positions and interview new
applicants and existing Commissioners.
Councilmember Holmgren noted that in the past there have been times
when the City Council advertised and interviewed both new applicants
and existing applicants who have requested reappointment.
Councilmember Holmgren suggested that the City have a consistent policy
for all boards and commissions. He further noted that it would be best
to advertise for all boards and commissions so that the door would be
kept open for new applicants to apply.
• COUNCILMEMBER HOLMGREN MOVED TO ADOPT A POLICY REGARDING BOARD AND
COMMISSION APPOINTMENTS. THE POLICY WOULD REQUIRE THAT ALL COMMISSION
Jeff Gongoll, EDA President, noted that it is important to commit the
entire amount at this time if the City is to move forward. Pat Dwyer
indicated that the EDA would like to tie up as much land as possible at
this time and, therefore, it is necessary that all of the funds be
dedicated.
Councilmember Holmgren stated he was hoping some of the money could be.
used to develop some of the City's existing park land.
COUNCILMEMBER DIETZ MOVED TO ALLOCATE $400,000 IN TAX INCREMENT
FINANCING FUNDS FROM DISTRICTS NO. 1 AND NO. 3 TO BE USED FOR LAND
ACQUISITION FOR A BUSINESS PARK ON THE WEST END OF THE CITY AND LIGHT
INDUSTRIAL PARK ON THE EAST END OF THE CITY. COUNCILMEMBER HOLMGREN
SECONDED THE MOTION. THE MOTION CARRIED 4 -0.
Councilmember Farber noted that it was important that the City provide
a business park on the west end and an industrial park on the east end
of the City.
COUNCILMEMBER HOLMGREN MOVED TO REFER THE CONCEPT OF A BUSINESS PARK
ZONE TO THE PLANNING COMMISSION FOR FURTHER STUDY. COUNCILMEMBER
FARBER SECONDED THE MOTION. THE MOTION CARRIED 4 -0.
6.1. Consider 221st Avenue Improvements
Pat Klaers, City Administrator, informed the Council that the 221st
Avenue improvement project has been delayed. He indicated that
financing and timing of the project will be discussed by the City
Engineer, Street Superintendent, and himself. He further noted that
this issue will be brought back to the Council at a Council meeting in
October.
6.2. Consider Park and Recreation Terms and Vacancies
City Administrator Pat Klaers noted that the City Council previously
determined that the best time to advertise for Park and Recreation
Commission vacancies was sometime after Labor Day and before
Christmas. He noted that there will be three vacancies at the end of
1993, and all three Commissioners, Dave Anderson, Clair Olson, and Sue
Daleiden, have requested reappointment. The City Administrator
questioned whether the Council wished to reappoint the three
Commissioners or to advertise for the positions and interview new
applicants and existing Commissioners.
Councilmember Holmgren noted that in the past there have been times
when the City Council advertised and interviewed both new applicants
and existing applicants who have requested reappointment.
Councilmember Holmgren suggested that the City have a consistent policy
for all boards and commissions. He further noted that it would be best
to advertise for all boards and commissions so that the door would be
kept open for new applicants to apply.
• COUNCILMEMBER HOLMGREN MOVED TO ADOPT A POLICY REGARDING BOARD AND
COMMISSION APPOINTMENTS. THE POLICY WOULD REQUIRE THAT ALL COMMISSION
Elk River City Council Special Meeting Page 3
November 14, 1994
---------------------------
4. City Contribution to the Western Area Water Tower
3. Utility Commission Participation in the Business Park
City Administrator Pat Klaers stated that in 1987 the City captured TIF funds from
the RDF project with the goal in mind to use these funds for infrastructure
improvements. He indicated that in 1992 the Council informally decided to use
these funds for the Western Area water tower. The City Administrator indicated
that since 1992, the goal of developing a business park has become closer to
reality and this project is in competition for any funds that are available for public
improvements. The City Administrator stated that the City Council and Utilities
must decide at what level of funding the City should participate for the Western
Area water tower project.
The Council and Commission discussed the financial needs of the water utility in
financing the western area water tower. If growth continues at its current high
rate, it is estimated that sufficient water connections will take place to finance
this water tower. However, if the rate of growth decreases, then a shortfall in
meeting its bond obligations may take place.
Mayor Duitsman indicated that he is in support of building a new high school in
the community and feels that some of the TIF funds could be used for this
purpose.
COUNCILMEMBER DIETZ MOVED TO ISSUE BONDS FOR $1,010,000 AND TO USE THE
APPROXIMATELY $429,000 IN TIF FUNDS FOR THE BUSINESS PARK AND TO POSSIBLY
WRITE DOWN THE UTILITIES FOR THE NEW SENIOR HIGH SCHOOL. COUNCILMEMBER
HOLMGREN SECONDED THE MOTION. THE MOTION CARRIED 5 -0.
4.4. Street Lighting Standards
Discussion was held regarding the possibility of offering higher quality street
lighting for both residential and commercial developments. Bill Birrenkott stated
that he will be working on offering other options to residential developers,
however, the developers will have to pay for the upgrade. He further indicated
that he has been working with commercial developers regarding this issue.
4.5. 1995 New Street Lights
Glenn Sundeen indicated that the fifteen new street lights that were approved in
December, 1993 for installation in the City of Elk River will be installed within a
month.
Councilmember Farber requested that the Utilities consider more street lighting
along Jackson Avenue for safety purposes.
4.6. Water Ordinance
The City Attorney handed out a draft water ordinance which would require water
connections similar to the required sewer connections in the sewer ordinance. It
was the consensus that the Utilities would review the ordinance and make their
recommendations to the City Council. Bill Birrenkott suggested that the City