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12.0. EDSR 11-15-1994 ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY MEMORANDUM TO: ECONOMIC DEVELOPMENT AUTHORITY FROM: WILLIAM RUBIN,EXECUTIVE DIRECTO DATE: NOVEMBER 15, 1994 SUBJECT: AGENDA MEMO FOR NOVEMBER 15, 1994 EDA WORKSHOP AGENDA "PUBLIC/PRIVATE PARTNERSHIPS IN THE BUSINESS PARK" A. POTENTIAL LAND USES B. POTENTIAL PARTNERSHIPS 1. UNDERWRITE ASSESSMENTS 2. BUSINESS LEADS • C. CITY PROGRAMS 1. TIF NO. 1 AND NO. 3 2. 'TIF NO. 4 (RDF$)/UTILITIES CONTRIBUTION 3. NEW TIF DISTRICTS A. Potential Land Uses In an effort to work with representatives of Country Ridge Partnership, City staff agreed to develop some conceptual designs for what the initial phases of a business park may look like. Included in these general concepts are some lots that have been designed for limited commercial uses. The majority of the lots, however, are designed for light manufacturers-subject to these standards set forth. in the Business Park Ordinance. While nothing is cast in stone,the enclosed conceptual designs represent several versions of an emerging Business Park Area. B. Potential Partnerships Commissioners will recall that an early discovery by the EDA B-P Task Force was the "disincentive"by the private sector to develop industrially-zoned areas or business campuses because of the inherent risks associated with these types of • developments. These risks include the lengthy build-out of the property, cost to P.O. Box 490 • 13065 Orono Parkway • Elk River, MN 55330-1743 • (612) 441-7420 • Fax: (612) 441-7425 Equal Opportunity Housing and Equal Opportunity Employment borrow funds, a cyclical economy, assessments, etc. Early on,the Task Force • explored opportunities for a business park to be developed under public sector ownership by, say,the EDA. Currently, it appears as though the initial phase of the business park will be developed by the private sector-beginning with Country Ridge Partnership. The challenge here is working with Country Ridge (and others)to ensure that the business park development is a successful endeavor. Two examples of this public/private partnership may be in the areas of underwriting or deferring the assessments for the road and utility improvements, and, providing the property owner with sufficient and qualified industrial prospects that are looking for improved industrial sites. A discussion of potential City programs to supplement these examples follows. C. City Programs 1. TIF No. 1 and No. 3 - In October, 1993, the City Council agreed to reserve up to $300,000 in TIF funds from the TIF No. 1 and No.3 account to be used by the EDA for the acquisition of land in the event that a business park were to be developed by the public sector. Again, it appears as though the initial phase of the business park will be developed by the private sector. Therefore,perhaps these funds could be used for other purposes. Underwriting the infrastructure cost is • one example. 2. TIF No. 4 (RDF$) - TIF District No. 4 was created as part of the Refuse Derived Fuel (RDF) facility at US Highway 10/169 and 165th Avenue NW. Since no public debt was incurred for this project, the tax increments collected from the RDF project were to be used by the City to provide partial funding of certain water and sanitary sewer system improvements to allow development of the Western area of the City. As we are all aware, this TIF district was in dispute from the start. Consequently, it was decertified in December 1990. However, some increments were collected by the City. With investment income,this figure has now grown to nearly $430,000. On November 14, 1994,the City Council and Municipal Utilities Commission will conduct a joint meeting to discuss potential ways on how these funds will be expended. Some discussion has been held for the City to contribute these funds to the Utilities Commission to reduce the Commission's obligation on the construction of a new water tower at Gary Street near Orono Road. Bids for the construction of the water tower have been awarded and a bond sale in the amount of$1,010,000 is scheduled. Language in the bond sale resolution is worded in • such a way that the amount of the bond will be reduced if the City Council authorizes the transfer of TIF funds from District No. 4 to the Utilities • Commission. There is, however, some expectation that if the transfer of TIF funds occurs,that the Utilities Commission provides some level of funding to the business park area. Whether or not this is a dollar for dollar exchange is not known, but the potential exists for the business park area to benefit from either a TIF no. 4 contribution or a Utilities Commission contribution. 3. New TIF districts - With the August 1993 restriction in State Law which prohibits developers from paying the City back for its loss in State Aid associated with the creation with a TIF district, it is safe to say that very few districts have been created. Increasingly,however, communities with pre-1990 TIF districts are using them as a competitive advantage as these districts do not incur State Aid losses, etc., as, say, a post-1993 district would. One way to ensure a successful business park would be to create new TIF districts for the manufacturing projects and incur the State Aid loss over a 3-5 year period for each new district-recognizing that there is perhaps a greater benefit than the short term State Aid losses. These long term benefits include an expanded industrial tax base, employment opportunities, construction activity,momentum, etc.