6.1. SR 07-06-2004
Item # 6.1.
MEMORANDUM
TO: Mayor & City Council
FROM: Catherine Mehelich. Director of Economic Development f{
DATE: July 6, 2004
SUBJECT: Consider Resolution Calling for a Public Hearing on the
Establishment of a Downtown Phase I Tax Increment Financing
District No. 22 (A Redevelopment District)
Attachments
. HRA Resolution Requesting the City Council Call for a Public Hearing
. Schedule of Events
. Resolution Calling for a Public Hearing on the Proposed Adoption of a Modification
of the Development Program for Development District No.1 and the
Establishment of Downtown Phase I Tax Increment Financing District No. 22 (A
Redevelopment District)
Issue
At its June 30, 2004 special meeting the HRA adopted a resolution requesting that the City
Council call for a public hearing on the proposed establishment of a Tax Increment
Financing (TIP) district for the MetroPlains downtown revitalization project. The attached
Schedule of Events outlines the statutory process for the establishment of the TIF district.
One of the first steps in establishing the district is for the City Council to schedule a public
hearing on September 20, 2004 to consider the TIF Plan. Ehlers & Associates is working
with staff to prepare the TIF Plan and related publication and notification requirements.
Recommendation
Staff recommends that the City Council, at the request of the HRA, adopt the attached
Resolution Calling for a Public Hearing on the Proposed Adoption of a Modification of the
Development Program for Development District No.1 and the Establishment of
Downtown Phase I Tax Increment Financing District No. 22 (A Redevelopment District).
CITY OF ELK RIVER
SHERBURNE COUNTY
STATE OF l\flNNESOTA
RESOLUTION NO.
RESOLUTION CALLING FOR A PUBLIC HEARING BY THE CITY COUNCIL ON
THE PROPOSED ADOPTION OF A MODIFICATION OF THE DEVELOPMENT
PROGRAM FOR DEVELOPMENT DISTRICT NO.1 AND THE ESTABLISHMENT
OF DOWNTOWN PHASE I TAX INCREMENT FINANCING DISTRICT NO. 22 (A
REDEVELOPMENT DISTRICT).
BE IT RESOLVED by the City Council (the "Council") for the City of Elk River, Minnesota (the "City"), as
follows:
Section 1. Public Hearing. This Council shall meet on September 20, 2004 at approximately 6:30
P.M., to hold a public hearing on the proposed adoption of a Modification to the Development Program for
Development District No. 1 (the "Development Program Modification"), the proposed establishment of
Downtown Phase I Tax Increment Financing District No. 22 (the "TIP District No. 22"), a redevelopment
district, and the proposed adoption of a Tax Increment Financing Plan (the "TIP Plan") therefor (the
Development Program Modification and the TIP Plan are referred to collectively herein as the "Modification
and Plan"), all pursuant to and in accordance with Minnesota Statutes, Sections 469.124 to 469.134, and
Sections 469.174 to 469.1799, inclusive, in an effort to encourage the development and redevelopment of
certain designated areas within the City; and
Section 2. Notice of Public Hearing. Filing of Modification and Plan. City staff is authorized and
directed to work with Ehlers & Associates, Inc., to prepare the Modification and Plan for Downtown TIP
District No. 22 and to forward documents to the appropriate taxing jurisdictions including Sherburne County
and Independent School District No. 728. The City Administrator is authorized and directed to cause notice of
the hearing, together with an appropriate map as required by law, to be published at least once in the official
newspaper of the City not later than 10, nor more than 30, days prior to September 20, 2004, and to place a
copy of the Modification and Plan on file in the City Administrator's office at City Hall and to make such copy
available for inspection by the public.
Dated: July 6, 2004
Adopted:
Mayor
ATTEST:
City Administrator
H:\SHRDOC\Downtown Revitalization\TIF\TIF Plan Docs\city call res.doc
SCHEDULE OF EVENTS
THE ELK RIVER HOUSING AND REDEVELOPMENT AUTHORITY
AND
THE CITY OF ELK RIVER
FOR THE MODIFICATION OF THE DEVELOPMENT PROGRAM
FOR DEVELOPMENT DISTRICT NO.1
AND THE ESTABLISHMENT OF A TAX INCREMENT FINANCING PLAN
FOR DOWNTOWN PHASE I TAX INCREMENT FINANCING DISTRICT NO. 22
(a redevelopment district)
Draft As of Julv 1.2004
June 30, 2004 HRA requests that the City Council call for a public hearing.
July 6, 2004 City Council calls for public hearing on the Modification of the Development
Program for Development District No. 1 and the establishment of Downtown Phase I
Tax mcrement Financing District No. 22.
July 13,2004 Project information, property identification numbers, and maps sent to Ehlers &
Associates for drafting documentation. Ehlers & Associates confirms with the City
whether building permits have been issued on the property to be included in the TIF
District.
August 6, 2004 Project information submitted to the County Board for review of county road impacts
(at least 45 days prior to public hearing). [Ehlers willfax & mail on August 4, 2004J
August 9,2004 Letter received by County Commissioner giving notice of potential redevelopment
tax increment financing district (at least 30 days prior to publication of public hearing
notice). [Ehlers willfax & mail on August 5, 2004J
August 20,2004 Fiscal/economic implications received by School Board Clerk and County Auditor
(at least 30 days prior to public hearing). [Ehlers will fax & mail on August 18,
2004J
September 6, 2004 HRA considers the Plans.
August 24, 2004 Planning Commission reviews Plans to determine if they are in compliance with
City's comprehensive plan.
September 8, 2004 Date of publication of hearing notice and map (at least 10 days but not more than 30
days prior to hearing). [Ehlers will fax and mail notice and map to the Elk River Star
News publication deadline - September 3, 2004 Noon.)
e I ~A~t~'~E~I~
SCHEDULE OF EVENTS-PAGE 2
THE ELK RIVER HOUSING AND REDEVELOPMENT AUTHORITY
AND
THE CITY OF ELK RIVER
FOR THE MODIFICATION OF THE DEVELOPMENT PROGRAM
FOR DEVELOPMENT DISTRICT NO.1
AND THE ESTABLISHMENT OF A TAX INCREMENT FINANCING PLAN
FOR DOWNTOWN PHASE I TAX INCREMENT FINANCING DISTRICT NO. 22
(a redevelopment district)
September 20,2004
City Council holds public hearing at 6:30 p.m. on the establishment of the Downtown
Revitalization Project Area and Downtown Phase I Tax Increment Financing District
No. 22 passes resolution approving the Plans. [Council packet information to be sent
by -September 13, 2004J
,2004
City authorizes Ehlers to request certification ofthe TIF District.
,2004
Ehlers & Associates files the Plans with the MN Department of Revenue, requests
certification of the TIF District from Sherburne County.
An action under subdivision 1, paragraph (a), contesting the validity of a determination by an authority under section 469.175,
subdivision 3, must be commenced within the later of:
(1) 180 days after the municipality's approval under section 469.175, subdivision 3; or
(2) 90 days after the request for certification of the district is filed with the county auditor under section 469.177, subdivision1.
. I ~A~t~I~E~I~
ELK RIVER HOUSING AND REDEVELOPMENT AUTHORITY
CITY OF ELK RIVER
SHERBURNE COUNTY, STATE OF MINNESOTA
RESOLUTION NO.
RESOLUTION REQUESTING THE CITY COUNCIL OF THE CITY OF ELK RIVER CALL FOR
A PUBLIC HEARING ON THE MODIFICATION OF THE DEVELOPMENT PROGRAM FOR
DEVELOPMENT DISTRICT NO.1 AND THE ESTABLISHMENT OF DOWNTOWN PHASE I
TAX INCREMENT FINANCING DISTRICT NO. 22 (A REDEVELOPMENT DISTRICT).
BE IT RESOLVED, by the Board of Commissioners (the "Board") of the Elk River Housing and
Redevelopment Authority, Elk River, Minnesota (the "HRA") as follows:
WHEREAS, the City Council (the "Council") of the City of Elk River, Minnesota (the "City")
established Development District No. 1 pursuant to Minnesota Statutes, Sections 469.174 to 469.1799,
inclusive, as amended, in an effort to encourage the development and redevelopment of certain designated
areas within the City; and
WHEREAS, the HRA is proposing the modification of Development District No. 1 and the
establishment of Downtown Phase I Tax Increment Financing District No. 22, pursuant to, and in accordance
with, Minnesota Statutes, Sections 469.174 to 469.1799 and Sections 469.001 to 469.047, inclusive, as
amended;
NOW, THEREFORE BE IT RESOLVED by the Board as follows:
1. The HRA hereby requests that the Council call for a public hearing on September 20, 2004 to consider
the proposed adoption of the Modification to the Development Program for Development District No. 1
and the proposed adoption of the Tax Increment Financing Plan for Downtown Phase I Tax Increment
Financing District No. 22 (collectively, the "Modification and Plan") and cause notice of said public
hearing to be given as required by law.
2. The HRA directs the Executive Director to transmit copies of the Modification and Plan to the Planning
Commission of the City and requests the Planning Commission's written opinion indicating whether the
proposed Modification and Plan are in accordance with the Comprehensive Plan of the City, prior to the
date of the public hearing.
3. The Executive Director of the HRA is hereby directed to submit a copy of the Modification and Plan to
the Council for its approval.
4. The HRA directs the Executive Director to transmit the Modification and Plan to the county and the
school district(s) in which Downtown Phase I Tax Increment Financing District No. 22 is located not
later than August 20, 2004.
5. Staff and consultants are authorized and directed to take all steps necessary to prepare the Modification
and Plan and related documents and to undertake other actions necessary to bring the Modification and
Plan before the Council.
Approved by the Board on June 30, 2004.
Chair
ATTEST:
H:\SHRDOC\Downtown Revitalization\TIF\TIF Plan Docs\HRA request call res.DOC
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DoUJ11ioU/ltt 1(~fV
&A Newsletter
JUNE 2004
Enhancing Downtown Elk River's Role
As a Vital Retail, Commercial and Residential Area.
Q. What is happening with the Downtown
Revitalization Project?
A. On May 3, 2004, the Elk River Housing & Redevelopment
Authority (HRA) approved the key points of a final develop-
ment agreement with MetroPlains Development for the Bluff
and Jackson Blocks. The HRA and developer are working
on the final development agreement which will be finalized
upon the establishment of the Tax Increment Financing (TIF)
District. This is expected in late summer 2004.
Q. What type of development is proposed for
the Bluff and Jackson Blocks?
A. The Bluff Block is located on the southwest corner of Main St.
and County Rd, 42 (Parrish Ave. Bridge).
The Bluff Block proposal includes a four
story building with an estimated 68
underground parking stalls; about 10,000
square feet of commercial space on the
first floor along Main Street; 52 for-sale
residential units and a riverwalk connec-
tion to a city park.
The Jackson Block is located on the
northeast corner of Jackson Ave. and
Main St. The Jackson Block proposal
includes a three story building with an estimated 50 under-
ground parking stalls; 32 rental housing units and about
10,000 square feet of commercial space on the first floor
along Main Street and Jackson Avenue.
River and to assure the public's involvement in the planning
and design stage.
Q. What is the anticipated schedule for
the project?
A. The anticipated project schedule is as follows:
· TIF District established - late summer 2004
· Final development agreement - late summer 2004
· Land use approvals - fall/winter 2004
· Property acquisition - summer/fall 2004
· Land clearance and construction - spring 2005
Q. How will the project be funded?
A. The project will be funded primarily by
MetroPlains' financing related to future
sales and rentals of residential and com-
mercial space. The City provides assis-
tance through Tax Increment Financing
(TIF) as necessary for public improve-
ments. The City has retained financial con-
sultants to ensure that any assistance pro-
vided to the developer is only the amount
that is justifiable and reasonable.
Q. What is Tax Increment Financing (TIF)?
A. TIF is a financing tool created by the Minnesota Legislature
in the 1970s to help encourage development and redevel-
opment of underutilized and/or blighted properties. Under
TIF, property tax revenue equivalent to what the current
property generates continues to go to all taxing jurisdictions.
The portion of the tax revenue that results from the
increased value of the new development, also called the
"tax increment," is used to pay site costs such as acquisi-
tion, demolition, water, sewer and street improvements.
Once the site costs have been paid, the tax increment goes
to the taxing jurisdictions.
Q. Why does the HRA need to establish
a TIF District?
A. Minnesota State Statute permits cities to establish TIF
Districts as a method to assist with redevelopment.
Establishing a TIF District allows the HRA/City Council to
capture the tax increment created by the new development.
Then the HRA/City Council may use portions or all of the
increment to provide financial assistance to the developer.
Q. Which of the blocks will be developed first?
A. MetroPlains has agreed with the HRA's goal that the Bluff
Block be redeveloped first before the Jackson Block. At this
time it is unknown how much longer after construction
begins on the Bluff Block that construction will begin on the
Jackson Block. It is possible that construction of both blocks
could be done simultaneously,
Q. What is the typical time frame for a
redevelopment project?
A. The planning process for a typical redevelopment project
can take up to two years. Construction then begins and that
could take two years depending on the size of the project.
For a redevelopment project to work, it must not only meet
community goals, but also make sense from both a market
and financial perspective. Elk River's project is unique due
to the complexities of developing adjacent to the Mississippi
CITY OF ELK RIVER
DOWNTOWN REVITALIZATION Q&A NEWSLETTER
JUNE 2004
The amount of the actual assistance provided is determined
by an analysis by the City's independent financial advisor.
The financial performance submitted by the developer will
be analyzed to determine the gap or amount that would be
necessary to make the development financially feasible.
Q. Will providing TIF assistance to the developer
impact my property taxes?
A. No. Because the tax increment comes from only the
increased value of the property and the pre-existing level of
taxes still continues to be paid to local governments (city,
county and school district), there should be no impact on
your property taxes.
Q. Does MetroPlains own the Bluff Block
property?
A. MetroPlains is currently negotiating with the Bluff Block prop-
erty owners. The negotiation process is a private process
held between MetroPlains and the property owners,
Q. What happens if the property owners cannot
reach an agreement with MetroPlains?
A. The City will encourage MetroPlains to reach a voluntary
agreement with property owners. If the developer and the
property owner are unable to reach agreement, a mediator
will be used to assist with the process. If the mediation
process is unsuccessful, the City could pursue the process
of condemnation, but it would only be used as a last resort.
Q. How do the Jackson Block rental housing
rates compare to the current rental housing
rates in the downtown?
A. The Jackson Block rates will be $600 to $700 per month,
which are slightly higher than the current rental housing
rates in the downtown. Monthly rent payments will be paid in
full by the tenant and not subsidized. In today's market-
place, the Jackson Block must compete with market rate
developments for it to be successful.
Q. How will the City address parking needs
when the Jackson Block is developed?
A. The City recognizes that since many of the businesses rely
on public parking, adequate and well located parking
spaces are a key ingredient to the continued vitality of exist-
ing and new businesses in downtown. An important part of
the project will be the development of replacement parking
by closing the King Avenue access to Highway 10 and
expanding the parking lot behind Kemper Drug for down-
town businesses and employees. Preliminary designs indi-
cate approximately 50 additional spaces. The timing of the
replacement parking will be coordinated with the Jackson
Block construction.
Q. Once the final development agreement is
signed, is the redevelopment a "sure thing"?
A. No, there will still be land use and other regulatory
approvals, securing of financing, and acquisition of property
that must occur before the development is a "sure thing".
Q. How can I stay informed?
A. There are several ways you can stay informed:
· Attend regular HRA meetings, which are held on the first
Monday of each month at 5:00 p.m. at Elk River City Hall,
13065 Orono Parkway. In addition, regular HRA meetings
are broadcast live and replayed on ERtV Channel 12.
· Visit the Downtown Revitalization Project Update page of the
City's Website located at www.ci.elk-river.mn.us
· Attend regular Rivers Edge Downtown Business Association
meetings held on the second Wednesday of each month at
8:00 a.m. at the Elk River Area Chamber of Commerce office.
· Read the Elk River Star News. Articles on the project fre-
quently appear in the Star News and in the City's newsletter,
The Current, which is distributed as a Star News insert every
other month.
· Contact the Director of Economic Development Cathy
Mehelich or the Assistant Director Heidi Steinmetz at any
time. The Economic Development Department number is
(763) 635-1040.
13065 Orono Parkway
Elk River, MN 55330