4.0. SR 07-24-2000Tity of
River
MEMORANDUM
Item #4.
TO:
FROM:
DATE:
SUBJECT:
Mayor & City Council
Pat Klaers, City Administrator
July 24, 2000
Financial Consultant Presentation by Springsted, Inc.
Two weeks ago, Ehlers and Associates, Inc., made a presentation to the City
Council regarding the experience and expertise at this firm.
At this meeting, Springsted, Inc., will make a presentation to the City
Council regarding its experience and expertise. It is anticipated that Dave
MacGillivray, Allan Erickson, and Kathy Aho from Springsted, Inc., will be in
attendance for this presentation. The city has had a long ongoing relationship
with Springsted as its bond consultant.
The citfs financial needs have changed over the years, and currently staff
sees a need for financial services beyond bonding. In general, the city needs
to develop a financial strategic plan and help from the consultants in its
development and implementation. To a large extent, the implementation
relates to working with the City Council in establishing priorities in
balancing the available financial resources against needed projects and
programs. The decisions by the City Council on priorities needs to relate both
to the day to day operating budget and to the long term capital improvement
program. The capital needs, such as buildings or street programs, are very
visible and somewhat easy to identify. On the other hand, operating budget
issues are sometimes more difficult to identify and we need to make sure the
appropriate priority decisions are made regarding revenues (i.e. mainly
taxes) and expenditures (i.e. mainly personnel and equipment).
Attached for your review is some material prepared by and about Springsted
Inc.
13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 · TDD & Phone: (612) 441-7420 · Fax: (612) 441-7425
by
SPRINGSTED Incorporated
Spnn sted l ncorporated
Financial Advisors
Economic Development Advisors
Investment Advisors
Management Se~ices Consultants
David N. MacGillivray, Principal, Chairman of the Board
(651) 223-3068 email: dmacgillivray~springsted.com
Kathleen A. Aho, Principal, Head of Housing and Economic
Development
(651) 223-3048 email: kaho~springsted.com
Alan J. Erickson, Executive Vice President
(651) 223-3066 email: aerickson~springsted.com
w~'.springsted.com
~ SPRINGSTED
.~ Public Finance Advisors
'.f ..............
B,r e : Profile
* Foremost Financial Advisor in Minnesota
* Pioneering Studies-"The Business of Government"
- Light Rail Feasibility Study
- Telecommunications Deregulation-Public ROW Costing
- Metro Radio Board, 800 MH, Radio System-Feasibility
- Operations/Capital Modeling
* Economic Development and Housing
- Mall of America
- Nicollet Mall
- Saint Paul Downtown
- Downtown Vitality and Redevelopment
- Guardian Angels Assisted Living Project
Largest Staff
Variety of Client Needs/Services :>
Our Clients
- All AAA-rated Cities in Minnesota
- Vast majority of suburban entities
SPRINGSTED
Public Finance Advisors
Springsted Mission and Approach
"Independent"- Only Represent Elk River
· "Works with Them"- Partnership with our Clients
· "Fiscally Sound and Well Managed Basis"
"Long-Term Process of Building their Communities"
SPRINGSTED
Public Finance Advisors
Springsted Misst'~n Statement'
"Springsted provides high quality, independent financial
and management advisory services to public and
non-profit organizations and works with them in the
long-term process of building their communities on a
fiscally sound and well-managed basis.
SPRINGSTED
Public Finance Advisors
Elk River's Objectives
.Infrastructure Investment and Expansion to
Manage Growth
· Economic Development and Housing
· Downtown Vitality
· Transportation Corridor Impacts
· Next Step in Financial Management Tools and
Planning Systems
~ SPRINGSTED
~r~'i Public Finance Advisors
Financing
Operations
Springsted
Services
Parking
Transportation
SPRINGSTED
Public Finance Advisors
Housing -
Private Initiative
Housing and
EconOmic
Development
Se .rvices
Special
Development
Studies
Development
Process
Management
Private
Development
Review &
Analysis
Public
Development
Planning &
Analysis
SPRINGSTED
Public Finance Advisors
Description of Housing and
Economic Development Services
1. Policy Development- Develop Objectives, Subsidy Criteria,
Public Safeguards
- City of Oakdale, Tax Increment Financing Policy
- City of Mankato, Industrial Revenue Bond Policy
- City of Lake Elmo, Tax Abatement Policy
- Scott County, Tax Increment and Abatement Policy
2. Public Development Planning, Analysis & Execution-Realizing the Vision
- City of Vadnais Heights, 1-35E and County Road E Development
- City of Eagan, Downtown Development and Infrastructure Financing
- City of Burnsville, Heart of Downtown Redevelopment Initiative
- City of Plymouth, Downtown Development and Infrastructure Financing
SPRINGSTED
Public Finance Advisors
3. Private Development Review & Analysis-Costs and Benefits of Project - City of Brooklyn Center, Brookdale Mall Redevelopment
- City of Rochester, Times Square Downtown Redevelopment
- City of Columbia Heights, Senior Assisted Living Proposal
4. Developer Review & Negotiations-Do They Need the Money? Do You
Want Them as Your Partner?
- Minneapolis CDA, Elliot Park Condominium Housing Project
- City of Bettendorf, Iowa, Downtown Riverfront Redevelopment
- City of Bloomington, Mall of America Negotiations
5. Incentive Options Analysis-Define Public-Private Funding Options
and Levels
- City of Coon Rapids, Riverdale Alternative Land Use Analysis
- City of Robbinsdale, Hubbard Marketplace Redevelopment Analysis
- City of Shakopee, Excelsior-Henderson Motorcycle Proposal
SPRINGSTED
Pttblic Finance ~4dvisors
6. TIF/Abatement Modeling & Projections-Project Financing Feasibility
- Saint Paul PED, Lawson Software TIF Analysis
- City of Saint Cloud, New Flyer Industries TIF Projections
- City of Woodbury, Comprehensive TIF Modeling
e
TIF/Abatement Establishment Process - Saint Paul PED, Downtown Housing TIF Districts
- City of North Branch, Industrial Park TIF Districts
- Approximately 50 TIF Districts Per Year (Minimum)
8. TIF/Abatement Monitoring, Amendments, Reporting
- City of Golden Valley, TIF Plan Modifications and Amendments
- City of Marshall, Comprehensive TIF District Review
- City of Delano, Annual Reports to Sate Auditor
SP~NGSTED
Public Finance Advisors
9. Development Process Management-Project Facilitation
- City of Shoreview, Deluxe Check Development
- City of Saint Anthony, Apache Plaza Redevelopment
- City of Kansas City, Kansas, NASCAR Racetrack Development.
10. Special Development Studies-Multi-Phase, Multi-Use Projects
- City of Minneapolis, Target Center Study and Development Agreement
- Montgomery County, Maryland, American Dream Megamall Proposal
- City of Woodbury, Downtown/Transportation
- City of Shakopee, Downtown Redevelopment
- City of Merriam, Kansas-Downtown Establishment
SPRINGSTED
Public Finance ~4 dvisors
11. Housing- Public Initiative - Dakota County CDA, Multifamily Housing Capital Improvement Plan
- Carver County HRA, Chaska Brickyard Mixed-Use Housing Project
- Scott County HRA< Savage Senior Housing/Retail Project
12. Housing- Private Initiative - City of Mahtomedi, Saint Andrew's Village Senior Housing Project
- City of Eden Prairie, Eden Shores Senior Housing Project
- City of Hibbing, Fountain View Proforma Review
SPRINGSTED
Public Finance ~4dvisors
Representative Housing and Economic
Development Client List
· Minneapolis Community Development · Burnsville
Agency · Lakeville
· Saint Paul Planning and Economic
· Savage
Development
· Shakopee
· Bloomington HRA and Port Authority · Chaska
· Dakota County CDA
· Eden Prairie
· Carver County HRA
· Plymouth
· Scott County HRA
· Maple Grove
· Ramsey County HRA
· Golden Valley
· Vadnais Heights · Robbinsdale
· Mahtomedi
· Brooklyn Center
· Stillwater
· Columbia Heights
· Lake Elmo
· New Brighton
· Maplewood
· Saint Anthony
· Oakdale
· Rochester
· Woodbury · Mankato
· Newport · Saint Cloud
· Eagan · Moorhead
. Inver Grove Heights
· Hibbing
SPRINGSTED
Public Finance Advisors
F I~N A N C I A L
MANAGEMENT
TIF helps city shape up blighted area
By David MacGillivray
The author is director of project
management for Springsted, St.
Paul, Minn.
Merriam, Kan., is moving toward com-
pletion of a major commercial rede-
velopment of a sizable, formerly residential
area. The key to the project's success was
the city's use of tax increment financing
(TIF) in a way that reduced future risks
while preserving the city's options.
TIF is a redevelopment financing tool
that is normally used to fund the costs of
public infrastructure related to redevelop-
ment and, in some cases, limited expendi-
tures for private site preparation.
Merriam is an established residential
community with approximately 12,000 res-
idents located in the western Kansas City
metropolitan area. The city's 60-acre rede-
velopment area consisted primarily of old-
er, single-family housing that was experi-
encing increased levels of absentee owner-
ship, reduced private investment and
heightening demand on public services.
The city's objectives were to eliminate
the increasingly blighted conditions and to
enhance its operating position by diversify-
ing revenues, the latter a result of the abili-
ty of Kansas municipalities to participate
in locally generated sales tax collections.
TIF is increasingly being considered by
Kansas jurisdictions as a viable redevelop-
ment option. The state's TIF law, although
broadened somewhat in the most recent
legislative session, is targeted mainly at
helping local governments deal with
blighted conditions.
If the major part of a certain area is
blighted, a city may choose to establish a
Making the project technically feasibl
for the developer and funding a $2 millio
upgrade of related roadways were the city
greatest challenges. The cost of acquirin
and demolishing approximately 100 pr~
vately owned structures, including 16
apartment units, was a major obstacle.
TIF was chosen as the cornerstone i
the city's efforts to meet these challenge
TIF revenues were used to reimburse th
developer for acquisition costs, as well as t
fund Merriam's related acquisition and dc
molition costs. Also, TIF, combined wit
the project's new sales tax revenues, f:
nanced the roadway improvements.
The city reduced its risks by structurin
the transaction as a "reimbursement," ¢
"pay-as-you-go," revenue note placed wit
the developer. According to the deal, Me~
riam receives increment income from d~
veloper/tenant property tax payments.
The city in turn uses these payments t
cover its administrative costs and debt se~
vice payments under the 18-year not~
Thus, the developer's only source of pa5
ment from the city is the project's ow
property taxes.
Since the note will be fully retired aft~
18 years whether or not all payments hay
been made as scheduled, the city has, "in
sense, created an arrangement where th
developer must perform or the bonds the
own will not be repaid," according to Cit
Administrator Eric Wade.
The city recruited a national commm
cial developer with experience in buildin
Merriam reduced its risk by making a "pay-as-you-go" deal'.
TIF district. The municipality may then
collect the increase in property taxes gen-
erated by new development -- "the incre-
ment'' -- to directly fund associated rede-
velopment costs or to pay debt service on
bonds issued to finance such costs.
Eligible TIF redevelopment costs speci-
fied by the state law include land acquisi-
tion, demolition, relocation, public im-
provements and related administration.
and operating regional commercial center:
The approximately $40 million, 500,00C
square-foot Merriam Town Center is slate
to open in the spring of 1997 and will b
anchored by several retail stores, a mult:
screen movie theater, restaurants, a publi
park and several interchange/roadway irt
provements. Thus, the city will have er
hanced its economic vitality through th
use of innovative financing. ~
Debt Capacity
Studies
Debt Mgmt
Planning & Policies
Capital
Improvement
Plan g
Operational
Finance
Management
Growth/Fiscal
Impact Analysis
SeP ices
Modeling
~ Service Delivery
An nexation/Consolidation
T=,, Im,,=~,-. ~.~.~,~.~.t -Joint Public Ventures
- Privatization
Revenue
Diversification/
Cost Recovery
(Rates & Fees)
Referendum
Assistance
SPRINGSTED
Public Finance ~4dvisors
Management Services
· Big Picture - Fiscal Impacts of Growth and Transportation
- Plymouth, Woodbury, Eastern Carver County (Chaska and Chanhassen)
- Light Rail Feasibility Study
- Newport Corridor Study
· Organization Structural Analysis
- Redefining finance operations delivery- Bumsville,
Eden Prairie, Stillwater, Kansas City
· Funding Operations --, Reduced Reliance on Property
Tax
- Oakdale, Bumsville, Inver Grove Heights, West Saint Paul
SPRINGSTED
Public Finance .4dvisors
Managemen.t Serv ces (continued)
· Recreation/Facility Finance
- Metrodome, Target Center, Wild Arena
- Park Referendums: Eden Prairie, Savage, Maplewood
- Community Centers: Shoreview, Chaska, Plymouth, Stillwater,
Eagan, Woodbury, and many others
- Ice Arenas: Amateur Sports Commission, Most Twin City Arenas
- Golf Courses: Most New Twin City Public Courses
· Public/Private and Privatization
- Bumsville Forestry
- Metropolitan Waste Control
- Saint Paul Riverfront Corporation
· Capital/Operational Planning
- Saint Paul, Ramsey County, Saint Paul
School District, Saint Paul Port Authority
- Bloomington
- Mahtomedi
SPRINGSTED
Public Finance Advisors
Elk River Com, mitment
· Long-Term Relationship -
"Building the Elk River Community"
· West Elk River Expansion
· East Elk River Expansion (Credit Rating Upgrade)
· Ice Arena
· Economic Development
· Refinancing Debt - Reduced Interest Costs
· Utility Debt Analysis - 1998
· Multiple Credit Rating Upgrades
· Most Senior Staff Dedicated to Elk River
SPRINGSTED
Public Finance Advisors