6.4. EDSR 03-17-2014 City of
Elk - Request for Action
River O.
To Item Number
Economic Development Authori 6.4
Agenda Section Meeting Date Prepared by
General Business March 17, 2014 Jeremy Barnhart,Deputy Director, CODD
Item Description Reviewed by
Introduce Comprehensive Plan
Reviewed by
Action Requested
Receive Comprehensive Plan overview.
Background/Discussion
In May 2013, the city began the process of updating its plan with the formation and monthly meetings of
a Citizens Advisory Committee (CAC). The CAC,representing the various boards, commissions, and City
Council, as well as Sherburne County and the Chamber of Commerce,met and discussed appropriate
updates to the plan. The CAC also hosted two open houses, one in July and one in December. Through
this process,a draft plan was developed for review. A copy has been posted to the city's website and the
land use maps were published in the Star News on March 8, 2014. The public comment period opened at
the Planning Commission on March 11 and is expected to close at the City Council meeting on April 21.
The Comprehensive Plan includes chapters on vision,land use, transportation,housing,utilities,
environmental resources,parks, community facilities, community development, and community image. A
brief description of the chapters can be found on page three of the document.
The Comprehensive Plan incorporates recently approved plans,including the Mississippi Connections
Downtown Plan (2012), the FAST study (2010), and the Highway 10 and Highway 169 geometric studies
(2008).
In addition,the major changes of the plan from 2004 include:
• Commercial Reserve (Development) Reserve is expanded to include the mining area west of
Highway 169.
• Commercial Reserve along Highway 10 on the east side was removed,in favor of highway
business, mixed use, and open space.
• Wetlands and the floodplain are shown on the land use map,in part to establish expectations
early in land use decision making.
• The Elk River Gun Club is shown as open space, similar to the designation for the Elk River Golf
Course.
• The urban service area is expanded to include residential properties along Yale Street and 175"'
Avenue. This allows for planning for eventual expansion of the water and sanitary sewer system.
• City-owned land north of the Youth Athletic Complex is guided for industrial uses, from rural
residential uses.
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Chapter 12 is attached; a full color version may be found on the city's website by searching
Comprehensive Plan and clicking on "Comprehensive Plan Update."
The document is formatted to provide background,general information,goals, and vision. Each chapter
closes with implementing a strategy to complete the vision.
The EDA is asked to review the document,in particular Chapter 12 as it deals with Community
Development. In particular, are adequate industrial/ commercial growth opportunities identified?
Opportunity to discuss this and other questions will be provided on April 21.
Financial Impact
None
Attachments
■ Chapter 12, Community Development
N:\Departments\Community Development\Economic Development\Council HRA EDA Items\2014\3-17-14\6.4 sr Introduce comprehensive
plan.docx
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`t Communities with strong economies have the financial resources
' necessary to support the services that their residents need and rh
L desire. However, sustainable communities recognize that community
development is not simply about increasing the financial resources
of the community; it is not simply about promoting businesses and
industries that will create more products and deliver more services
without regard to the natural and social environments; nor is it simply
about increasing the financial wealth of individuals. Rather, community
development in a sustainable community is about bringing together
social, natural, and economic resources to sustain the "whole"
community.
Chapter 12: Community Development 1 123
Elk River Cornprehens,a P!�n
The community development section is, to some degree, the sum of all the other parts in the
Comprehensive Plan. The process of discovery that is required to complete the Comprehensive Plan
provides a basis for current and future City leaders to decide things like what, if anything, should
the City of Elk River do to help facilitate business and/or residential growth. In addition, this section
aims to outline planning activities that should be undertaken in achieving the current economic
development goals of the City of Elk River. One of the current goals of the City is to "foster a pro-
business atmosphere that provides incentives and other opportunities for new and existing business
growth".
Three aspects of Elk River's future that require particular attention and action by the City include:
Expanding the tax base
Attracting jobs
Encouraging redevelopment
These actions remain the three key aspects for the 2013 Comprehensive Plan Advisory Committees.
Expanding the Tax Base
Property taxes remain the largest source of revenue for the City of Elk River. In fact, roughly
three-fourths of the City's budget is derived from property taxes. While all forms of development
contribute tax base to the community, it can be risky to place too much weight on tax base growth
as a strategy. A lack of local control over the critical elements of the tax system is cited as the
main reason for the risk.
Chart12-1: Tax Base
$30,000,000
$25,000,000
$20,000,000
$15,000,000 J 2010
2011
■2012
$10,000,000 —
■2013*
$5,000,000 —
Gross Net Tax Less Captured Tax Net Tax Capacity Tax Levy
Capacity Increment for Levy
($5,000,000)
Source: City of Elk River, WS8 &Associates, Inc.
124 9 Chapter 12: Community Development
El _ Elk River Comp eher�e�Plan
River
Chart 12-1: Tax Base, on the pevious page, shows a decline in gross net tax
capacity for the City of Elk River since 2010. It also shows that even though
the City was able to reduce the tax levy amount in recent years, the local tax
rate increased from 44.56% in 2010 to 49.56% in 2013. According to the
2013 Budget, the decline in gross net tax capacity is mainly due to a decline
in residential taxable market values, which dropped 13% in 2012. The taxable
market values for commercial properties dropped .21% and industrial properties
increased .38%. Seeking commercial and industrial development as a means
of building tax base is commonly thought of as ideal since, historically, a dollar
of estimated market value of commercial-industrial property carried a higher tax
capacity value than residential property. Legislative changes to the tax system
resulted in declining tax capacity values for commercial-industrial properties
from 1997 to 2002. However, given the relative stability of the taxable market
values for commercial-industrial properties compared to residential properties in
recent years, it is clear that focusing attention on tax base growth as a strategy
for commercial-industrial properties is a legitimate community development
strategy.
The disparity in declines in taxable market values between residential and
commercial-industrial properties results in businesses taking on a larger share
of the local tax levy. Local tax competitiveness is an issue that falls within the
context of business retention and expansion, commonly known as BR&E. City
officials should continue efforts to perform functions within the BR&E framework
to ensure local businesses have an opportunity to have an open dialogue with
the City on an ongoing basis. This would aid in achieving the City's Community
Development goal, which aims to, "Enhance and expand community involvement
and public participation through a variety of innovative outlets".
Jobs
Planning for commercial-industrial development continues to be an important
issue for the City. A motivation for commercial-industrial development is the
creation of jobs.
Retaining and attracting livable wage jobs has been an ongoing objective
for the City of Elk River. In 2013, commercial and industrial properties
made up 23% of the tax base in Elk River (21% and 2% respectively).
According to the 2010 Census, 68% of Elk River workers had jobs
outside of the City. Since 1990, roughly 40% of Elk River workers travel
35 or more minutes to work and nearly 80% of workers drive alone. By
comparison, only 17.1% of Minnesota workers have an average commute
time of 35 minutes or more. Refer to chart 12-2: Community-2010 for more
information.
Long commute times and employment outside of the City creates barriers to
building local connections, can contribute to retail leakage, and reduces the
amount of time available for recreation. In addition, there is a growing body of
evidence that the next generation of workers will want to spend as little time
commuting as possible. Retaining and attracting livable wage jobs will provide
current and future Elk River residents the option of working where they live.
Chapter 12: Community Development 1125
Elk R1V2r C--aprehe sve Nan
The major employers in Elk River have traditionally been various institutions in the service-providing sector
including Elk River Independent School District 728, Sherburne County, City Hall, and various religious
institutions. Over time, the employment base began to diversify and add new major employers including Wal-
Mart and other retail establishments, Metal Craft Machine & Engineering, Cretex and other retail, service, and
light industrial institutions. The top 20 employers within the City include:
Chart 12-2:1Commuting-2010
90.0%
80.0%
70.0
60.0% -- Percent of Workers
50.0% -- Traveling 35 or More
Minutes to Work
40.0% -i - ■Drove Alone-Car,Truck
30.0% — or Van
20.0% - --- --
10.0%
0.0% — -- - - --
1990 2000 2010
Source: US Census
Top 20 Employers within Elk River
Largest Employers Product/Service Full-Time Part-Time Total
Employees Employees
Independent School District 728 Education 892 706 1598
Sherburne County Government 560 38 598
Wal-Mart Retail Store nla nla 380
Guardian Angels of Elk River,Inc. Nursing/Housing 79 238 317
Great River Energy Electric Utility 236 0 236
Tescom Corporation Pressure Control Devices 187 0 187
City of Elk River Government 114 45 159
Menards Retail Store nla nla 150
Cornerstone Auto Resource Automobile Sales 105 42 147
Coborn's Grocery Store 27 95 122
Sportech,Inc. Plastics Thermoforming 103 8 111
Cub Foods Grovery Store 44 65 109
Metal Craft Machine&Engineering Precision Maching 100 5 105
Cretex Companies,Inc. Precast Concrete Products 100 0 100
Crystal Distribution, Inc. Custon Curb Adaptors 100 nla 100
The Home Depot Retail Store nla nla 100
The Bank of Elk River Financial Institution 86 13 99
E&D Tool and Plastics, Inc. Injection Molding 98 0 98
Faribault Foods,Inc. I Pouch Packaging 79 nla 79
Source: City of Elk Riven
126 / Chapter 12: Community Development
El Elk River comp -r e,,,e Pi,,
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Planning Efforts time, the lack of investment leads to a deterioration
of property. These conditions of blight often spread to
Economic Development Strategic Plan adjacent properties.
Redevelopment will become an increasingly important
The Elk River 2013-16 Economic Development Strategic community development issue for Elk River. Several
Plan seeks to "Modify [the] Industrial Development goal to factors define the need for city action:
Business Development and include two sets of strategies:
1) Industrial Development Strategies, and 2) Commercial Redevelopment becomes a public issue because
Strategies." Under the Business Development goal is market forces are not likely to solve the problem.
the following objective: "Attract new businesses and While Elk River has the ability to expand,
development demand can bypass redevelopment
support existing businesses to increase the city's industrial parcels and seek out vacant land. There is little or
tax base, commercial base and employment base." no incentive to correct the problems on blighted
The Economic Development Strategic Plan provides a parcels. Vacant land avoids many of the barriers
strategic approach for attracting industrial and commercial of redevelopment sites.
businesses. Redevelopment property is often more expensive.
Acquisition includes both land and buildings.
Strategic Industrial Marketing Plan Redevelopment often requires the assembly of
smaller parcels into a larger site. Multiple property
There is a realization among City officials that reaching the owners with differing interests compound the
industrial development goals will require more effort than complexity of land acquisition.
simply designating property in a land use plan; especially Redevelopment sites have more site preparation
as it relates to attracting new business to Elk River. costs. Buildings must be demolished and the site
To this end, the City has created a Strategic Industrial cleared before new construction can occur.
Marketing Plan. The vision of this plan is for Elk River "to
• Redevelopment may face the need and cost of
be the light industrial hub for small to medium-size firms environmental remediation. Old buildings may have
in the northwest metro region." The Strategic Industrial asbestos or other hazardous materials that require
Marketing Plan provides the framework for identifying special treatment. Certain commercial and industrial
opportunities and attracting new businesses to Elk River. may have allowed pollutants to enter the soil.
Energy City 2024 Action Plan All of these factors combine to create significant
economic barriers to redevelopment. Removal of
The Energy City Commission is developing an action these barriers is a primary focus of city actions
plan to focus its efforts on creating tangible targets and related to redevelopment.
benefits to the City, its residents, and business partners.
Mississippi Connections Redevelopment
171st Avenue Focused Area Study (FAST) Framework
The 171 st Avenue FAST has an employment focus. It The Mississippi Connections Redevelopment
seeks to leverage key assets that are embedded in the Framework establishes a long-range vision for the
community to reinforce Elk River as a regional hub. The 400-acre core of Elk River. The objective of the
plan is to, "provide guidance to property owners,
Plan also seeks to create nearly 6.5 million square feet of stakeholders, and community leadership to
retail, office and industrial space at the maturity of the position the area in such a way that strengthens
plan, which is a 25 to 30 year planning horizon. the area to survive the impacts of time and
change; methods to reestablish the downtown
Redevelopment area as a destination; a desirable address to do
business, live, and enjoy the diversity of uses in
The roots of redevelopment are intrinsically tied to local a character rich downtown amid the hustle and
economic factors. Limitations on income means a lack of bustle of a growing community."
disposable income needed to reinvest in property. Over
Chapter 12: Community Developments 127
Elk River C�nprehen�e P?7n
Mississippi Connections Area
The area identified as the Mississippi Connections
Area is an essential part of Elk River's heritage and
identity. The Mississippi Connections land use seeks
to preserve and enhance the commercial districts and
residential neighborhoods in this area. Continued f
designation of a land use is only one step in the
effort to preserve and enhance the downtown area. _
Continued actions must be taken to achieve the 3
objectives of the Mississippi Connections plan. !
V
Continue to Build Connections
A key to the revitalization and sustainability of the _ -- ~�
Mississippi Connection area is creating connections '
within the area to other parts of the community.
Some potential connections include:
Continued streetscape improvements along Main,
Proctor and Jackson to maintain the sense of
identify andappearance of the downtown area.
Build off of and strengthen a well-defined system
of sidewalks and trails to encourage pedestrian
and other non-vehicular movement within the
area. North–south connections and safe access
across Highway 10 are critical in this area. Further
connections should link downtown to school
campuses, Lion's Park, the River, Handke School
and the Library, which are outside the area.
Continued connections through parks, other
public open spaces, trails, and orientation of
private development to create visual and physical
connections between the Mississippi Connections
area and the Mississippi River.
Continued Maintenance of Public Facilities
Public facilities are key elements of the Mississippi
Connections Area. Schools, Lion's Park Center, --- —_-
other parks and the Library shape the identity of the
Mississippi Connections Area. They also attract
people into the area. Continued improvements
and maintenance of these public facilities should
be considered and objectives of the Mississippi
Connections area and public actions should focus on {
retaining these public uses within the area.
128 ; Chapter 12: Community Development
El Elk River comprer-en_•e pan
River
Tools for City Actions Tax Abatement
The Community Development section of the Tax abatement acts like a simpler and less powerful
Comprehensive Plan presents items that serve version of tax increment financing. With TIF, the city
as a focus for city actions. These actions seek
controls the entire property tax revenue from new
to achieve the vision for the future of Elk River
development. Under the abatement statute (Minnesota
in areas where market forces alone will not be
sufficient. State Law provides a broad array of Statutes, Sections 469.1812 through 469.1815), the
powers and tools that may assist the city in these City, County and School District have independent
initiatives. The following section provides a brief authority to grant tax abatement.
discussion of the tools currently available to the
city. This information is designed as a point of Special Assessments
reference in continued community development
planning. Public improvements are often financed using the
power to levy special assessments (Minnesota
Finance Tools Statutes Chapter 429). A special assessment is
a means for benefiting properties to pay for all or
Community development actions require a framework part of the costs associated with improvements,
for financial decision-making. The investment of and to spread the impact over a period of years.
public dollars to achieve community development This tool can be applied to both the construction of
objectives should be guided by several key principles: new improvements and the rehabilitation of existing
Financial resources are limited. The City improvements.
has limited funding to apply to community
development initiatives, so the use of resources Utility Revenues
must be targeted to achieve the greatest effect on
community needs. The City operates three municipal utilities: water,
Financial decisions require a long-term perspective. sanitary sewer and storm water. The revenues from
The current use of financial resources may reduce the operation of these utilities are available to pay
monies available in the future. In evaluating for capital improvements in support of community
short-term opportunities, it is important to question development initiatives. State Law (Minnesota
the long-term impact on community development. Statutes, Section 444.075) gives the authority to
Public funds should lead to private investment. pledge these revenues to general obligation bonds for
While this section focuses on public finance utility system improvements.
actions, the Comprehensive Plan cannot become
reality without private investment. The use of Capital Improvement Bonds
public funds should be targeted to actions that
encourage private investment in Elk River. Cities may issue capital improvement bonds
(Minnesota Statute, Section 475.521) for specific
Tax Increment Financing purposes.
Tax increment financing (TIF) is the primary
development finance tool available to Minnesota Mieroloans
cities (Minnesota Statutes, Sections 469.174
through 469.179). TIF is simple in concept, but The Microloan program provides low interest, long-
complex in its application. Through tax increment term (i.e. greater than one year) loans as incentives to
financing, the property taxes created by new encourage the following:
development (or redevelopment) are captured and
used to finance activities needed to encourage Industrial development that supports the tax base
the development. The challenge in using TIF lies and brings quality jobs to the city
with the complex and ever changing statutory Rehabilitation of existing buildings in the Central
limitations. The City has utilized TIF sparingly in Business District
the past, and it is expected that it will continue to Energy Efficiency improvements to businesses and
do so in the future. manufacturers
Chapter 12: Community Development 1 129
Elk River Comprehensive Plan
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Implementation
The following are broad implementation strategies Encourage the development of new, value-added
reflecting the City's vision, specifically as it relates to industries and businesses that can benefit from the
community development. area's amenities and existing industries.
Set retention of existing businesses and industries As appropriate, coordinate with the Elk River
as a priority of the City's economic development Area Chamber of Commerce, neighboring and
plan. overlapping jurisdictions, and others to promote Elk
Continue implementation of periodic BR&E River and/or the area as a special destination area
meetings on an individual basis with businesses with unique shops and restaurants and diverse
and industries to listen to concerns and discuss recreation activities and community events.
opportunities for success. Also identify any Strive to identify under-utilized or under-served
perceived or real barriers or obstacles (such as local and regional markets and give priority to local
overly restrictive ordinances) that the City could business development to service these markets.
potentially remove or minimize to help businesses Coordinate with businesses and industries to
and industries prosper, while still protecting the explore opportunities for the City to stand out as
health, safety, and welfare of the public. a leader in sustainable business and community
Coordinate with Sherburne County, the Elk River development.
Area Chamber of Commerce, Minnesota School of Analyze the long-term viability of existing and
Business - Elk River Campus, the School District, proposed neighborhood convenience nodes in
GreaterMSP, and others in their efforts to promote the City. Where appropriate, work with property
training opportunities that can help businesses owners and neighbors to ensure continued success
and industries prosper. If appropriate, co-sponsor of neighborhood convenience uses in a manner
and/or offer City facilities for employee training that compliments the surrounding neighborhoods.
programs.
Identify and implement strategies to enhance
• Coordinate with energy providers and others to the infrastructure in a way that can help support
help businesses and industries conserve energy residents telecommute or conduct business out of
resources and reduce operating costs. their home.
Continue to promote Elk River's high quality of life Continue to promote and encourage the expansion
as a means to help attract new businesses and of jobs and buisness growth within the city.
industries.
130 I Chapter 12: Community Development