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7.1. SR 12-19-1994 ),.; ~( ( ;; .ity of ft Ell{ River TO: ITEM 7.1. MEMORANDUM FROM: MAYOR AND CITY COUNCIL STEVEN B. ACH, CITY PLANNE~J- DECEMBER 19, 1994 DATE: SUBJECT: UPDATE ON CUSTOM MOTORS On August 15, 1994, the City Council adopted Ordinance 94-11, rezoning Custom Motors from II (Light Industrial) to RIb (Single Family Residential). As part of that motion, the Council added the following conditions: 1. Staff was directed to initiate a text amendment to the zoning ordinance to change the amortization period from 5 years to 10 years. . 2. Staff was directed to explore the purchase of the property and all other options for assisting the Roy's in relocating their business. This update is to address the second of those conditions regarding the purchase and financial assistance to the Roy's either at their current site or in conjunction with relocating of their business to another site within the community. Staff has had several meetings with the Roy's, including on site visits of the property by Peter Beck, Steve Rohlf, Bill Rubin and myself, to examine the condition of the property and the existing buildings. Subsequent to these meetings and on-site visits, Bill Rubin has prepared the attached memo which outlines the potential projects or financing applications that could be applied to Custom Motors. The primary concerns have to do with the amount of increment that would be generated to reduce the costs associated with the land acquisition, relocation benefits and environmental cleanup. Based on these issues, staff believes that the best option at this time is to wait until a prospective user of the property comes forward, whereby a particular program can be structured around this specific project. . On the other hand, the City is in a better position to immediately work with Custom Motors on relocating their business and providing financing opportunities directly related to a new site. Apparently, Custom Motors has council:custom 13065 Orono Parkway. P.O. Box 490. Elk River, MN 55330. (612) 441-7420. Fax: (612) 441-7425 . been exploring a potential site in the southeast corner of the City that could be developed to meet Custom Motors long-term needs. In regards to the environmental issues, the earlier assessment performed by B.A. Liesch and Associates, Inc. was somewhere between a Phase I and Phase II assessment. It involved some minor on-site exploration to botain a "flavor" of the environmental impact. Staff believes in order to accurately determine the full extent of the environmental impacts, a full-blown Phase II assessment would have to be conducted, and even then the full extent of the environmental problem would not be discovered until the actual cleanup was to occur. The point to be made here is that if the City was to ever enter into any type of purchase or financing program for the Custom Motors site, serious consideration will need to be given to who is responsible for the environmental cleanup. . In conclusion, staff will continue to work with the Roy's in exploring opportunities to relocate their business to another site in the City. Based upon proposed redevelopment projects of their current site, staff will explore applicable districts that could be established. Bill Rubin will also be in attendance at Monday night's meeting to answer any questions the Council may have regarding the districts outlined in the attached memo. In addition, Joe and Sandy Roy have been contacted and informed of Monday night's meeting in the event that they may want to be present to ask the Council questions or answer any questions that the Council may have for them. . 'rei ---'\) ( )j ~l~ MEMORANDUM TO: INTERESTED PARTIES FROM: WILLIAM RUBIN, ECONOMIC DEVELOPMENT COORDINAT~VL- OCTOBER 18, 1994 DATE: SUBJECT: TAX INCREMENT FINANCING OPTIONS; CUSTOM MOTORS SITE State law provides an opportunity for potential proje~ts to qualify under a variety of Tax Increment Financing (TIF) Districts. These Districts include: . · Redevelopment District, · Renewal and Renovation District, . Housing District, . Economic Development District, . Mined Underground Space Development District, · Hazardous Substance Subdistrict (a subset of another primary TIF District), · Soils Condition District. Following our recent site review of Custom Motors, we believe the potential exists for this area to meet the thresholds of a Renewal and Renovation District. That is, based on the information found below, the Custom Motors site can potentially be designated as a TIF Renewal and Renovation District. Thresholds of a Renewal and Renovation District "...parcels consisting of 70 percent of the area of a District are occupied by buildings, streets, utilities, or other improvements." Comment: The Custom Motors site is a single parcel which contains numerous buildings. "...20 percent of the buildings are structurally substandard." . Comment: Two of the four buildings of the Custom Motors site (i.e. the barn and building used as the initial staging area) meet the thresholds of structurally substandard (see 469.174 Subd. 10(b)) P.O. Box 490 · 13065 Orono Parkway · Elk River, MN 55330 · (6l2) 441-7420 · Fax: (612) 441-7425 ~ . . . "and 30 percent of the other buildings require substantial renovation or clearance to remove existing conditions such as: inadequate street layout, incompatible uses or land use relationships, overcrowding of buildings on the land, excessive dwelling unit density, obsolete buildings not suitable for improvement or conversion, or other identified hazards to the health, safety, and general well being of the community." Comment: Numerous thresholds can be achieved under this subdivision. Lastly, the thresholds of a Renewal and Renovation District require that the conditions described above are reasonably distributed throughout the geographic area of the District. Another consideration for a Renewal and Renovation District is that of the District's life and a municipality's ability to collect tax increments from the District. The TIF law gives a municipality the ability to collect increments from a Renewal and Renovation District for a period of fifteen years. SUMMARY Based on the site visit of October 12, 1994, it appears as though the Custom Motors site has the potential to qualify as a TIF Renewal and Renovation District. Because this site is only about 11 acres, it may be difficult to generate an increment sufficient to reduce the costs associated with land acquisition, environmental clean up, and relocation benefits, etc. Issues such as the balance of the Roy's Contract for Deed, the price which Bill Gagne paid for an adjacent site, and the City's/EDA's ability to include the Custom Motors site with an adjacent site, thereby increasing the size of the District and the amount of increment generated, are being explored.