##VIDEO ID:cVGxqdzSBhQ## h meeting will start okay well good morning everybody it is Thursday August 15 2024 this is the meeting of the uh din Housing and Redevelopment Authority and we've got some invited guests this morning thanks for being here uh and also our uh Public Finance folks that are assisting us on a regular basis from Ellers uh an important morning I think to be able to talk with our school district colleagues about uh tax increment financing and um our community development director bill nondorf I think has done a really Superior job of putting together uh this presentation so I want to compliment you for that and all your team that worked on getting this meeting pulled together and and uh it'll be really highly educational not only for the HRA but also for I think the residents of our community as well um this uh is uh our director of communications Jennifer berat stated um we've been doing these meetings on a hybrid basis since the beginning of the pandemic and continue to do so so folks can listen in online and call in if they want to uh for whatever is on the agenda that uh morning uh there's two usually two opportunities if there's a public hearing you get to call in for that and then for Community comment and the number was just up on the screen we're going to put it back up there uh if you have something you want to address with HRA this morning that's not on the agenda this morning or scheduled for a future public hearing feel free to call in uh and if we have folks in the audience that wish to uh participate in community comment they're C certainly welcome to as well uh put that number back up on the screen because the community comment comes up for really quickly if you could in the back room there we go so if you're uh watching the meeting and listening to the conversation make sure you jot these uh numbers down we'll have them back up on the screen uh momentarily but having provided information I'll call the me to order and ask Liz Olsson our planning Administration administrator to call the rooll M Olson commissioner Risser here commissioner Jackson here commissioner Pierce here commissioner U here chair huband here uh next is the pledge of allegiance to the flag of the United States of America and to the for it stands one nation under God indivisible with libery and justice for all kind of getting used to seeing that new state flag next to the US flag it's got some beautiful coloration in it um we've got a meeting agenda that's been uh published to the uh to the citizenry of our town and also for us and is anyone uh on the HRA or at the staff level wish to modify the meeting agenda any former fashion is there a motion to adopt the meeting agenda so moved second commissioner agno moves commissioner Pierce seconds the adoption of the meeting agenda for their HRA this third 15th day of August 2024 any further discussion all those in favor of adoption of the uh agenda is published say I I I opposed carried thanks for that um next uh we're going to go now to community comment so if you have something you want to address uh uh that's a concern to you an issue of concern to you with the HRA feel free to come forward it can't be on the agenda this morning or otherwise scheduled for a future public hearing otherwise we welcome your comment and we'll check on that first before we go to any online uh participants or potential online participants not hearing anything not seeing anybody coming forward um director benro anybody online that wishes to uh address the H for any reason this morning it's very early mayor huband and I do not have any callers but because there is a slight delay in the broadcast I would recommend that we wait 1 minute before moving on my clock shows it it's 7:30 34 so I will come back to you at 7:35 or when I have a caller whichever is first thank you e it is now 7:35 what I hope is your longest minute of the day has ended and I think it's safe for you to move forward with the agenda thank you all right uh there nobody calling in a community comment as well and then we'll move on to our executive director uh who usually has for us responses to commune comments that were made at the prior meeting and uh can't recall if there were any or not no comments to respon on to this time all right very good uh next on the agenda is the uh consent portion of the agenda and today there's only one thing on the consent agenda and that's the draft minutes of the regular meeting on July 25th 2024 commissioner rer has asked me to uh hold those over for further discussion because of the tight schedule that were're on there there were some uh comments she wanted to make about the I think the um um content of the of the minutes or or the lack thereof member rer um that is correct they have lack of content for one of the it don't keep pressing it come on all right um's a delay actually for both of the um the there's two items where content is insufficient thank you so why don't we hold those over you address those issues with staff and we'll see where we get and we'll just address it at the next meeting that sounds good okay you move to hold the draft minutes of the regular meeting of July 25th 2024 over to the next regular meeting of the HRA so move thanks commissioner is there a second second yeah commissioner Pierce second to holding over those draft minutes of the regular meeting on July 25th 2024 the h8 or our next regular meeting any further discussion all those in favor of adoption of the motion of stated say I I I oppos carried all right um now we'll move on to items that uh uh are part of our regular business routine here at the HRA and it's a reports and recommendations portion of the agenda and this is a tax increment financing morning it's uh all all you ever wanted to know Way Beyond Tiff 101 I think uh so I'm going to turn first to our executive director Scott Neil who wishes to provide an uh some uh introductory information and then we'll go to um U Bill newor thank you your honor uh we when we take up the issue of tax increment financing you know no matter how big no matter how small there's always lots of questions and concerns uh about how that decision-making process affects other local governments in particular uh schools uh schools are obviously very important they play they play a role in our in our taxing uh in our taxing and spending uh combinations in a we have three school districts that are represented in Adina uh Hopkins Richfield and the Adina schools uh we've invited representatives from those schools to attend today to listen to this presentation our our goal with this presentation is not to convince uh anyone that Tiff is is good our our goal with this uh presentation today is to uh dispel kind of misunderstandings and misinformation about how schools are impacted by tax INR financing so that you can you can make decisions based on based on that kind of information so with that uh Mr nindorf has has got the presentation queued up and we'll introduce our presenters right thank you yes good morning morning Mr NF uh so earlier this year uh this group this the HRA board asked for more information about school district financing and how Tiff impacts it as I recall that first request came shortly after we presented our year in review which is our our typical document we present every January of the year so we've been working on this for a while and this was a really good time uh in the year to to have this conversation it's a very uh timely moment um so this morning um we've invited our advisers at Ellers Associates um uh who are advisers to the H in the city but also advisers to the ad School District Richfield school districts and Hopkins Hopkins school districts so Ellers um as you uh may recall may recall is a um third party independent firm that specializes in Public Finance so for the h we rely on them for H financing or city financing they also have a team that focuses specifically on School District financing because one thing we've we've learned over the years is that the process for City financing and HRA financing is completely different from school financing um so we thought let's bring in those experts um so with no F further Ado I'd like to in introduce Matt hammer jod zespa and Nick Nick anhut uh they'll they have a presentation that was in your packet they'll run through that and be happy to answer any questions when they're finished and with that the team from ERS thank you yeah why don't you each introduce yourselves we're Familiar of course with Mr anhut we see him on a regular basis but uh we do too good morning I'm Jody zesau with ERS Matthew Hammer from Ellers and Nick an Hut from Ellers thank you thank you thanks to all of you for being here this morning thanks for having us this morning presentation great so we are going to start out with the school district portion of Tiff uh and financing and we thought we would start just with an overview of school district funding so we know this looks different than uh funding for cities the pie chart that we have before you is a typical General fund uh sources of revenue for school districts so you'll see that the largest category for school districts is state aid and within that formula you might hear uh the legislature frequently talking about the G general education form allowance which is provided at the same dollar amount for all school districts in the state of Minnesota currently that dollar amount is at $7,295 25 fiscal year or this upcoming school year so that's the largest share of funding that districts receive to finance their uh their general fund and day-to-day operations next is local revenue and these categories of funding are based upon a uniform accounting system that all school districts throughout the state need to use called eup fars in our neighboring state of Wisconsin it's called woofers um but in our state it's called eup fars so these categories are the same and this pie chart looks very similar for each School District throughout the state of Minnesota within that local uh portion of the pie chart the majority of the funding in that category are local property taxes but there are some other categories within that uh within that slice of the pi too including interest income and athletic and activity fees so we know the uh school district of Edina in particular has some awesome athletic and activity programs and they do collect some local fees to support some of those programs uh next is federal which is a very small part portion of the uh pie chart and then other Revenue which is very very very uh tiny so the again the primary source of funding for their operating cost in school districts is state aid there's a maximum authorized property tax levy each year that's determined by state funding formula so they don't get to decide what the what the tax amount is districts can Levy less than that amount but not more than the amount authorized by the state unless it's approved by their voters and there are three different categories of voter approved levies there's an operating Levy which all of the districts that are in the boundaries of the city of Adina have there is a capital project or technology Levy voters have approved those for all of your school districts here in the city of Edina too and then finally Debt Service levies which are approved when Bond referendums are put in place so next we'll take a look at the uh a little bit more about property tax levies so School finance and property tax systems in the state of Mina so it are very complex um but the revenue is primarily driven by enrollment not driven by the tax base so as property values increase that does not mean that school districts are collecting more money and that's a very common misnomer so we often um hear people say well there's so much development there's a lot going on certainly you're getting more and more funding for your schools and that isn't the case the funding is driven by enrollment so we've put together and there is one exception to that and that's the one voter approved category that I mentioned uh for technology costs so that is driven by a tax rate but that is the only funding formula for the operating portion of the B budget that is driven by that tax rate so we put together kind of a simple example at the bottom of the page there uh you'll see that in the area that we have highlighted in uh dark blue U we're assuming there's a 10% increase in the tax base but that the uh enrollment stays the same so in this example we're showing about 8,00 students with $2,000 per pupil coming from tax levy generating about $16 million then for that tax levy as the tax base Grows by 10% you can see that Revenue doesn't change it stays the same but the tax rate then declines uh uh on the other side then in Orange we're showing if the tax uh base goes down uh then you'll see that we're collecting the same amount of tax levy the same amount of revenue for the school district but the tax rate changed changes and and actually goes up with the decline in the tax base so the change in the tax base doesn't result in more or less revenue for the school district because it's driven by enrollment but uh the tax rates then are a function of the amount that is generated because that per pupil amount is then distributed or spread over that tax base so next uh one of the reasons that uh one of the contributing factors to the complexity of property taxes in Minnesota is that there are two different tax bases that the taxes are spread on so that is different from other taxing jurisdictions so we have a referend a market value tax base and that's the taxable value of all of the property in the school district but excludes a couple of portions of property seasonal wreck and agricultural land so if you're in the brainer School District that's a big deal um if you're in some of our outlying rural districts that's a big deal when um they are uh when most of their tax base is made up by agricultural properties there are only a few categories of fundings funding that are spread on this tax base uh the one that um would be most common for the school districts that we're talking about here in Idina is the voter approved operating referendum all other taxes then are spread on net tax capacity and the value of the property uh uh that value of property is calculated by multiplying their the taxable market value of all of the properties by that assigned class rate that the legislature determines so a higher class rate for commercial industrial proper prop as compared to residential homes for example so we thought it might be helpful to take a look at the tax based composition this is unique from school district to school district so for the school district of Edina you can see the different types of properties on the leftand side the overall market value as determined by the assessor and then those two different types of property tax bases that I just mentioned so referenda market value and net tax capacity are in those final two col s if you take a look at the residential homes for the school district of Edina they have a high share of their property uh comp tax based composition from residential homes at 70% when you look at net tax capacity the residential homes represent about 63% so in that case then commercial industrial is picking up a little bit higher share of the uh of that type of that tax base and the Associated Tax tax levies so at the bottom of each of the columns you can see a description of the levies that are spread on those tax bases and about how much that represents of the school district's uh total Levy so remember the 70% of the residential homes for Edina school district and um commercial industrial representing about 12% of the overall and we'll uh contrast that now to the uh school district of Hopkins so in the case of Hopkins you can see that the residential homes are much smaller share of the overall tax base at about 52% and then that carries through to the referendum market value and how those are collected um and then finally the net tax capacity then for homes represents only about 42% if you look at the commercial industrial line then they have a much higher percentage of their tax base that uh is represented by those commercial properties at about 24% so they uh will pay and make up that portion of the referendum market value but then importantly you can see that on any net tax capacity based levies their commercial properties are paying for about 37% of those levies excuse me go ahead commissioner yes just to for briefly to interrupt you where do Apartments fall in these class Apartments would be in other residential thank you apartments condos multif family homes next then is the school district of Richfield and this is much more simp similar to Hopkins so you can see the residential homes again about that 50% level overall and then uh paying at that level for referend to market value based levies but then declining to under 40% for the net tax capacity based levies and then commercial industrial making up about 22% of the overall tax base and ultimately paying about 35% of the net tax capacity based levies so now we'll get into a little bit more about the impact of Tiff on school districts so if the city or HRA creates a tiff District that results in new development and an increase in the tax base with no change in enrollment so we'll just assume enrollment is uh remaining the same for referend of market value based levies because we have these two different tax bases that school district taxes are spread on there's an immediate impact of growth in that referendum market value as the Tiff property takes on a greater share of those levies the result to the school district though is uh Revenue neutral and the district's either going to receive more money from the state uh or I'm sorry less money from the state and more money from property taxes or they continue to receive the same amount of state aid and then there's a lower tax rate uh for the existing taxpayers as that tax base is brought on because we're not capturing any of those referendum market value uh any of that referend or market value for the Tiff so uh next again we're assuming that the Tiff District gets created with an increase in the tax base and then no change in enrollment for Capital project or technology levies since that is a rate that's applied against the tax base the growth in the net tax capacity causes an increase in Revenue but that is deferred until the Tiff district is decertified for all of the other NTC based levies because those are driven by enrollment the effect on the school district is deferred until the Tiff District is decertified it's Revenue neutral and then the district will either receive less from state aid more from property taxes or the same state aid with a lower tax rate on existing taxpayers the other topic that we wanted to touch on is the uh excess tax increment or Surplus uh tax increment funds so in a hypothetical example if the H returns any unused tax increment during or upon decertification of a tax increment District the County then redistributes that amount to each of the taxing jurisdictions according to their respective shares of the total local net tax capacity tax rate however there is a a statute that uh that limits the amount that a school district can keep of the uh money that's distributed to them so they actually get reductions in their aid and Levy formulas for the fiscal year when that excess tax increment is received and they're allowed to keep a maximum of 25,000 in any calendar year so they get reductions in their formulas but they can keep um 25,000 and that law has been in place for many many years I don't know the history exactly of that and why the 25,000 was arrived at but we believe that really that was intended to kind of keep funding formulas equal and make sure that um some school districts weren't benefiting more greatly from those distributions because they don't happen equally to all school districts so again that 25,000 is the limit that the school district can keep in any calendar year so overall just a couple of key takeaways the school districts realize no loss of Revenue as a result of a tiff District because the state formulas are driven by student enrollment so I think that's been a common misconception is that these Tiff districts are uh are are hurting a district or for some reason taking some Revenue away but that is absolutely not the case they are collecting their money based upon enrollment and the Tiff does not result in a loss of Revenue the tax-based growth as a result of Tiff will reduce School tax rates for existing Property Owners so that is uh a a conclusion that you can draw so no loss of Revenue but some declines in tax rates for your existing taxpayers and I think we're going to shift over to Nick so thank you for that overview and we wanted to kind of recap again you know what is Tiff in general and how does it mechanics work so that you can kind of corroborate some of that information um so it is a financing tool to help the HRA the city of viina to enable Redevelopment support of affordable housing that you've used uh in the past um and it's an interim use of that property tax revenue that's generated from new development so when we uh help incentivize a project to come forward redevelop a site that's at a lower value into a higher uh share of the tax base and in Tiff we defer that net tax capacity benefit for a period of time until the Tiff District DEC certifies using those revenues to help actually finance and reimburse the costs of those projects there are a couple of different property taxes that are not then captured within the Tiff district and and primarily with commercial there's a state property tax that is levied upon commercial sites there is a commercial property share in the fiscal disparities pool throughout the metro area that is also not captured and then the last bit that directly impacts the presentation is that referendum market value so properties within a tiff District they contribute all of their referendum market value right from the start and continuously through that Tiff District they are not captured um again the funds are used primarily to reimburse private development costs or to fund infrastructure needs that helps uh support that development uh in the community it also is a process that requires uh public hearing and vetting um and so there are notifications by Statute that are required to be provided to both the school and County boards uh 30 days prior to any public hearing that is held at the city council as well as uh HRA approvals there's a lot of information on this chart but this this chart is intended to show the taxes that are created from a property in a Redevelopment situation this would be a commercial example on the far left hand side prior to a tiff District being toestablish you typically will see either a flat or declining value for a property that might be aging um and needs to be redeveloped at the point in time that the development takes off and is phased over time maybe in two or three steps that value of that property increases it it joins uh the tax base and uh creates additional funding capacity however with the Tiff District we are capturing most of that increase at least as it relates to the net tax capacity of that property um the general share that you see here in the color coding the fiscal disparities and commercial property taxes that are not captured are at the bottom of the chart in the orange and uh Brown Brown the um local market value based levies that help the school district are in that uh Edina green um the base property taxes that are originating from the original value of that property do not also get captured and they carry through during the life of the Tiff district and that's represented in blue so that that property is contributing the same amount of funding potential through the entirety of the Tiff District to the county the city and all the other local taxing jur ditions it's that red portion that's captured as tax increment Revenue that is separately that is segregated once it's collected from the property and the county remits it to the HRA for use in helping finance that project and then the last bit that I'll point out is that light shaded blue area at the top when we do create a tiff District we also freeze the tax rate that is in effect at that time so if there's ever an increase in the local tax rate during the life of the Tiff District the revenue attributed to that increase is also not captured within the Tiff District so it's in effect capped now if the tax rate decreases we only collect the amount associated with the tax rate but if there is a point in time where local jurisdictions do need to increase their levies that causes a a greater draw on the tax base even on a net tax capacity basis those revenues are not captured within the Tiff District so if the school has a referendum for a capital need that comes forward while that tip district is active this property will help fund that uh increase in overall tax rate and then the light at the end of the tunnel is in green at the end of the day once that Tiff district is decertified all of that value comes back onto the general tax roles and can potentially create either more Revenue uh for the city and the county primarily uh or a decrease in tax rate as Jody mentioned for the school districts again assuming their formulas remain uh generally in the same principle so we wanted to provide a direct example of uh property within a tiff district and we decided to showcase the property across the street the Eden Wilson Tiff District was created recently to help spur Redevelopment of an old uh Perkins Restaurant and a regional office um that property was uh at about $3 million uh representing 3 million in estimated market value as part of the Edina school and henpen County tax brace and it was in a declining value equivalent to about .2% of your overall tax base at the time and it has now been uh redeveloped into a much larger site that creates uh a higher value um on a net tax capacity basis it's now at 845,000 so a dramatic increase and now represents about half a percentage point of the share of the gross tax base of the city of udina you can see on the school district we also are highlighting the referendum market value change um which is is generally the same uh for this because it is primarily a residential uh project but it is a dramatic increase in the amount of tax value that's coming online right away um and so this uh property is going to be using that tax increment Revenue during the time the Tiff district is open to fund about 5.1 million in private Redevelopment costs that took place on that site as well as about 6 million in public roadway costs um that we can all see outside of our Windows here um that are benefiting the entire uh tax base of Edina uh once all those uh reimbursements and bonds are paid off then the property's net tax capacity will come back onto the general tax Rolos and you'll be able to leverage that for future levies um or again uh help reduce tax rates for the overall uh populace Within the community um but now the property is expected to represent over 23 times a greater share of the school referendum market value tax base um starting right away next year in 25 so it will provide immediate benefit um that will result in lower tax rates for um Edina schools or and this kind of just shows the same thing the revenue that would actually be expected and how it's distributed you can see on the on the far left hand side um the bottom is the base property tax Tes that existed before the Tiff District was created when it was the old Perkins site um you can see the the the henpen county the other jurisdictions are going to be rece receiving generally the same uh tax base uh they're going to be able to Levy upon it the just as they were in the past that is not captured when a tiff district is created um the state and fiscal disparities actually will be receiving a little bit less because we've now converted a 100% commercial site to a mixed use which is primarily residential so there's you know that was a conversion in the tax classification um not again impacted from the Tiff district and then the last bit is the din schools actually this property will now represent a greater share of that overall Levy for referendum market value and you can see it's a it's actually quite a dramatic when you compare them side by side just to understand that Mr an Hut if the school comes up with a new technology Levy uh during the Tiff existence of this Tiff District there's more money available from this particular prop property for a special Levy like that as opposed to the general Levy I would I would just say that this property is now representing a greater share of the total P that the school district is levying upon and so it will now provide whether they change their Levy or not um so during this period in time we expect what's really going to happen the school district is not going to receive any more money but everyone else is going to be paying less in their property tax bills because now they're representing a larger share of that base if the school was to adopt a new referendum or expand that um they would be able to draw upon this and this would again represent a greater share than it was prior to the ti Tiff District being created I think the exception would be if it's a net tax capacity Levy um it potentially will be deferred while the Tiff district is active unless the overall tax rate actually goes up that that loose liver on that previous slide that I mentioned in that case than than it would not but I know it's a bit complicated but I hope I explained and answer your question it was helpful thank you um and at the end of the day once the Tiff District expire or DEC certifies it not on this chart is the actual tax increment revenue and it would be well off the scale at that point in time the capacity that this property is going to be able to benefit the local tax and jurisdictions um over you know 23-fold increases for all of those funding sources so final insights you know the H is used Tiff strategically for certain sites as a tool to help achieve growth within the community they've been able to deliver a number of different projects that have aligned with City priorities not only for U building out a public realm spaces that are beneficial to the entire Community um achieving certain Urban design standards providing affordable housing within the community and also um incentivizing sustainability uh within those projects um it's a tool that is designed to incentivize private investment in those public realm improvements um that help kind of enhance the appearance uh create a desirable place to live and walk and play and um additional connectivity with some of the other infrastructure and other built environment within the community um and it helps again redevelop sites so we are able to transform vacant outdated declining uh property values within the community um primarily uh used for commercial industrial uh districts within the city and it has provided funding for direct investment in public infrastructure and affordable housing um with the the streets and roadways and other types of infrastructure that have been funded over the years throughout the city and finally it helps grow the overall tax base um so why primarily why we do this and this chart just shows the existing Tiff districts within the city of Edina what where they were at um before and what has been uh captured as far as net tax capacity um from those Tiff districts year-over-year you can see that overall you know some e and flow affordable housing projects don't necessarily deliver a higher increase in in tax base as much as a commercial site or a mixed use site might um but even uh considering the affordable housing that's included Within These Tiff districts we've seen over a 347 per increase in tax base just attributable to these Tiff properties over over time um and this is just the current Tiff districts we've also got historical examples that would show that you've you've got a thousand and plus perc increases in those tax bases so it does help grow the overall pie even though you're deferring it for a time at the end of the day you're uh creating a much larger tax base that will provide you uh additional resources in the future to fund programs not only in the schools uh but also in the city and the county so we'd be happy to address any immediate questions um we hope this was helpful um and we thank you for your time yeah thanks thanks Mr anook um one of the questions we get periodically is and I think you've addressed it within the context of your presentation uh is that let's just use the Perkins site it was I think you showed that it was worth $3 million on it was estimated market value for purposes of property taxation I don't remember the slide uh but folks will wonder well uh if Perkins just stayed there and we didn't replace it with a something worth $80 million we we're waiting 25 years for Tiff District to elapse and have it all come back into the general fund would that organic growth in taxation that increment uh where it might in you know taxation might track inflation for example would would that would that period of taxation of whatever the length of the Tiff district is uh be something that the school district would be deprived of because uh but what I heard you say was that school district funding is primarily based on enrollment and so that Tiff is tax neutral so for folks that are raising that concern how would you address that did I make myself clear yeah I think so you know one of the findings that the H and the city council makes when they created a tip districts is that but for the use of this tool we're not going to have the same type of development or growth that occurs and so I think that's readily evident when you see a transformative project like this but as you mentioned there could be Alternatives where let's just say another entity comes in buys out Perkins and um operates a similar business on that site we'd expect them to make some modest improvements maybe interior improvements to that building um it could result in a slight increase in the tax base but maybe not as dramatic as what takes place with a a large Redevelopment when that takes place if there was no Tiff District to incentivize that uh purchase you know we would not expect to see any kind of change in enrollment or composition at the school district level um at the city or the county level you know I don't know that there'd be any change in services there wouldn't be a need to draw on those resources so I think there would be um negligible or minimal impact um and I think one of the determinations that you know we help facilitate and that you all make when you go through these transformative projects that you see that that overall benefit at the end of the 2025 years is going to vastly overshadow that small Improvement uh or inflationary Improvement that you say over time so it's not going to provide a different funding mechanism necessarily um but uh at the end of the day you're making a finding that without providing that Tiff resource the city is not going to benefit as greatly as that alternative T Jackson yes thank you Mr chair so I want to just take a step back and do you know Elementary tax law in Minnesota or property tax law so my I'm going to say what I think it is and you're going to tell me if I'm right so often times we think of here's an asset here's the tax on that asset here's the revenue but that's not how Minnesota property tax Works what it is is like here's the overall base in a taxing district say a city or a school district and then we the school or the city sets a levy and then the rate is what varies but the levy does not vary in another system the rate is uh so in Iowa for instance the rate is um constant and the revenue is what varies so here we have more stability in our government um financing because we know what we lovey is what we're going to get and the rate varies on different properties but in other states it's the revenue that varies and the rate is constant is that correct it can be okay that that case I know it's so compx I would say you know the the only caveat that I would say is that um you use the term other property and I would say when the city adopts its Levy that is spread out in one tax rate to all properties within that Community um there's not a differentiation in how that Levy is spread so if a property represents 3 million in value no matter what its use is um that value or that what its share of that tax base is that that Levy that you adopt is going to be spread uniformly to it as compared to its neighbors um but yes you are correct so the city and the county have autonomy to set your budgets for the services that you provide and make sure that you're levying an amount sufficient to cover them the school district also gets to Levy a property tax but as we mentioned and I'll definitely let my colleagues step in at this point you know they are a bit more constrained because they are dealing with State funding formulas and they need to be able to demonstrate that they're um you know essentially being fair with a state resource in in that is spread throughout the entire state of Minnesota so they are a little bit more constrained than the city council um but I think the rest of your statement is correct and we do have the one uh Revenue category that is based on a tax rate and so the revenue would vary from year to year um for that so as um development occurs and the and the um net tax capacity goes up um even you know without tax increment districts they can enjoy increase in Revenue as a result of that voter approved category terrific that's only schools and thene you have follow well I did but I forgotten it so you were drifting back to your younger days in Iowa where they had the mill Levy I think that's right yes commissioner Pierce uh thanks Mr chair um so thanks for the presentation I had a couple of questions um and they may or may not be fair so I I'll just Tee It Up with that um I appreciate Mr anhut when you started you started by saying Tiff is a vehicle for development and not the vehicle for development so my question is um what are some other vehicles a city might use um for development using we could use the perking site you gave that example of how a private investor might come in and purchase that property uh but what are some other uh vehicles that might be used that that ERS is aware of or may have experience with so I'm going to focus on financial but there are definitely other avenues that the city can entertain to make development easier for for developers um but I'm going to financial so uh the city can adopt what's called a tax abatement um which is very similar to Tiff but um the city deciding that its own share of those levies that are being put upon that property are going to be directly used to help uh fund um whatever cost or incentivization is needed for that development so that's a that's a one alternative tool the HRA has levying Authority so you can set a levy every year that collects and you can use those funds generally to incentivize Redevelopment um you could you use that Levy to fund different types of loan or Grant programs within the community that are Target targeted towards certain types of development or needs that you want to see through um there are other public resources like tax credits you know historic preservation and those are federal funding tools but the city can help uh facilitate those processes as well as maybe supplement them um there are various types of Grant programs that are administered from other uh jurisdictions so there there's a Litany of other things but the ones I mentioned there are kind of the primary tools that cities in Minnesota will use so that was probably the easy question all right so and I'm going let Jody answer this the the followup though um and I'll try to simplify it just to stick to the first two you gave um tax de batement and then um the ability to set a new Levy for development so just stick to those two give me the pros and cons of Tiff versus doing a tax abatement and then the third one setting a levy and then I'll just frame it for you um I I don't have I really don't have an issue if the city as a city we decide to use Tiff but often the way this gets framed is that we either do Tiff or this development doesn't get done and so I know there are other vehicles that we could look at what I'm more used to and this is a business example if we have a project we might look at all the various funding models you might do a pros and cons and you might say we don't want to do Tiff for this one or you know I'll use an abstract example I have a checking account a savings account and a credit card and I want to buy a vehicle um I have all three of those as options and I may have my pros and cons as a as a purchaser to to decide how I want to do it or I might decide to take out a loan but there's all pros and cons for that and so I I appreciate the the presentation very much but that's the question I have like I want to know what are the pros and cons what what tells us Tiff is the best option for this I mean I know you're not making that call but understanding how Ellers might view the pros and cons just against those three so Tiff tax abatement was your first example and then the third one was uh setting a levy for the city that would be earmarked for development so I think there there's two um maybe categories or or two ways of thinking that I that I think need to be addressed in answering that question and um the level of risk that the city wants to take on and and then the capacity of the funding okay and so when we are utilizing tax increment we're usually able to harness a greater degree of funding capacity for that project and it's isolated to that project and the new value that it potentially is going to create you know these are very uncertain what the future may hold for that development um and there's a lot of work that the property owner the property developer needs to do in order to get to the point completing the project you know which is has many steps in it along the way actually running a successful business that sustains that value over time paying their taxes into the pool and creating the funding source um but that the capacity that's created within that is much higher um than those other tools um and it does not incur necessarily additional risk to the city in terms of providing upfront dollars out of your own funds um and we often utilize what's called a pay as you go financing method so we're reimbursing costs after the fact the developer needs to demonstrate that they actually built the project the city wanted that they actually incurred the cost that they said they were going to and then they are provided access to that uh Tiff Revenue stream to reimburse those costs so there is little to no risk to the city for any outof pocket we can set up an abatement in a similar fashion but it is going to be maybe 20% or 25% of the funding capacity that a tiff District could create and um the way abatements are they're actually levied on an annual basis and they might actually incur some level of risk to the community in terms of dollars that you actually could have spent on something else the last one is the HRA Levy those are dollars that are uh generally available for for use they are your funds and so they would be you would need to use them in a way that means that you are putting them out there to assist that development whether it's through a loan um whether it's through some some other type of financing vehicle so you would be on the hook I would say whereas in a in a tiff District typically we're deferring that risk to the developer they need to demonstrate and incur all of The Upfront expense and then we're reimbursing it over time if that if that helps yeah yeah y yeah no thank you I thought those were very fair questions that wasn't the the topic of the presentation though but thank you um well to that point we have uh uh some of our friends here from uh our own School District the finance director is here uh and I don't know whether uh you'd have any questions or anybody else involved in from either uh Hopkins or Richfield or here would want to have any questions they'd want to advance if so we'd like to have you come up to the front here so we can record the question um question does a great job all right all right thank um that trigger anything from anybody else any other Commissioners commissioner Jackson yes so um I do have a question for the school districts and that is about the notification process and if you could would you mind coming up and telling us a little bit about what it's like to get a notice for Tiff and um and how you respond and identify yourself for the record too please good morning Mart water Director of Finance and operations with Independent School District 273 eam Public Schools so Mr Woodard um if you wouldn't would mind we're one of the things we're going to be talking about is a new Tiff District um and sending it to the city council for a public hearing if we send it to the city council for a public hearing we'll send notice to the school district you get a letter from the um city of Edina saying we're going to have a tiff District can you tell me who do you talk to about that what just walk us through once you get that letter how you respond yeah I haven't actually received a letter from the city in my time in the school district those may have been routed to the superintendent um we review the Tiff District perhaps reach out to a member of city council or one of the staff of the city to understand the project I think the city and the school district have a very strong partnership and we believe in development within the school district and in the district's boundaries um so we would probably support that I know we don't have any say whether you proceed or not and we would simply fulfill our statutory obligation of um confirming receipt of that letter in responding to it and does it go to the school board in this process there is no Schoolboard action taken on those there's no Schoolboard action taken but I think the letter itself was directed to the clerk right of the school board just as a technical matter okay so everybody's fully aware of what's happening and if there are complaints or or concerns you have the opportunity to send it back to us absolutely okay terrific thank you so much thank you Mr Woodard good to have you here this morning all right uh our folks from ERS thank you so much for being here and stand by we may have something that comes up in the context of our subsequent conversation here on another topic so um thank you yeah so M zbo and Mr Hammer thank you for being here along with Mr anut all right um thank you manager Neil and uh manager newor for putting that together was really I think important for us to have that conversation relative to potential impact on school districts when we use Tiff uh all right and then that brings us to the next part of the agenda which is a conversation about uh 7235 France Avenue and we started having this conversation I think it was July 25th Late July and uh held it over here so you could uh present yet again the uh proposal and and to be clear we're we're kind of at the front end of this conversation about whether we want to start exploring the use of potential use of tax increment financing uh in conjunction with the 7235 France Avenue project great uh yes thank you um so when we last uh uh where we left off on July 25th was uh in your request and your uh discussion uh and as part of that discussion you asked us to look into a few items uh the process involved in considering Tiff um and Tiff term sheets and agreements and how that all that fits in um you asked for some clarifications in the term sheet um and you ask for a few changes and improvements to the term sheet uh so in the packet we've included a lot of information including an extraordinary amount of background information um just to have it all in one place at your fingertips um I don't intend to go through through a lot of that but it's out there for you what I was going to run through this morning is um a little bit of more detail about a process there's a lot of questions about that last time um and then uh a summary of the changes that we made to the term sheet then would love a turn to turn it back to you for your uh consideration and discussion um so just a a bit on background so for decades ad has used Tax increment financing to create places that people seem to love um when we when we do when we do surveys people generally identify places that were built with Tiff as some of their favorite places in a Dina so we've turned gravel pits and sand pits into Parks uh We've turned 50th in France from a a small business district with four gas stations on every corner um to a place that people love with shops and restaurants and we've turned an old industrial district in Grand View into a place with Condominiums senior centers and and parks and libraries um why is Tiff even a discussion right wouldn't it be great if every project could be self- financed and and most projects in a Dina are quite frankly we use Tiff on maybe I haven't done the numbers recently maybe 10% of the projects 90% of projects in a Dina are privately financed and we don't even talk about them as an H but it seems like these bigger more ambitious projects that are on larger sites and delivered in multi multiple phases are much more complicated to finance so what are some of those hurdles um uh in a built out Community like AA we all know in order to build something new you have to tear down something old and there's a lot of cost and expense in that both the demolition costs plus the site prep costs um in this particular location um uh on France Avenue that all used to be the sand pit and the gravel pit and when they filled it in in the 1970s they just filled it with what they had so in order to build something new you're not just tearing down a building you're doing a lot of excavation and getting rid of the junk that was used and replacing it with something that's suitable and buildable and that's very expensive we've all heard the conversations about construction costs um cost really skyrocketed during Co um up depending on the type of commodity um you know double triple in in many cases um these two graphics show the cost construction index um over time uh and it shows that huge jump in around 2020 and 2021 um it has started to level that's the good news but the costs are still very very high and then the um the graph on the bottom shows uh some example costs of of typical Commodities in a construction project um plywood cost Lumber costs the price of Pop copper the price of PVC all up dramatically and when you buy a home or rent an apartment you're not going to pay more just because that piece of PVC pipe that connects to your kitchen sync cost 10 times as much you're that's the consumer isn't going to do that um and then the cost of money the financing costs have changed dramatically in the LA in the last two years a few examples there um a few years ago typically a mortgage lender would provide a loan uh valued at in the range of 75 to 80% of a project the rest would be private equity in in the deal these days the banks are willing to lend a lot less in the realm of 55 to 65% um that construction mortgage mortgage is the cheapest money in the deal um so now they have to not just go to their typical investors for about 20% of the project it's 30% of the project 40% of the project maybe even 50% of the project in some cases and that all raises the cost CU those Equity investors have their money completely at risk if there's any project disruption or default their money's gone so they're going to want a higher return and that's just the state of of the financial world that we're in today and of course we all know that interest rates have gone up dramatically um at the bottom chart that shows the prime rate um uh doubling getting getting close to Triple in the last couple years from where it was just two years ago so the cost of build and the cost of Finance these projects are very high we wish it wasn't but that's this the state that we are in today and then one other thing to also consider is the cost um applied by city of Adina standards um over time the the city has established standards for PUD zoning and while we while we use P PUD to come up with a zoning um configuration that's more suitable to achieve City goals um it's more expensive it's more expensive to build that in ad we have higher standards for construction materials we have higher standards for public realm spaces um a lot of our uh planning Provisions strongly discourage surface parking um which is the cheapest way to park a car the cost to build structured parking um is double triple sometimes four times the price um we have our affordable housing policy and then we have our our new sustainability policy all solid good policies but it costs money um it for a project like this Millions it adds Millions to the project um so just as a reminder I'm not encouraging we change that but there's a price for all these extras we add we ask the developer um and then there's the typical fees um uh we have development fees in a Dina um that are pretty much in line with other places um but for this project the Park dedication fee for example um in order to to pull a building permit on the site the developer will have to write a check to the city I forgot the exact amount around $2.8 million um to the park Department to use for Park improvements throughout the city that's standard City policy we apply that to every project where the state law says we can do those kinds of things um but again that adds money to the project it adds benefit to the general community so there's a lot of challenges right financial markets construction pricing our own standards and that's where the role of the H really becomes a parent the HRA can help with public financing to make projects that meet all of our goals and standards to make those possible to to build and to finance um I'll walk a little bit through our process as we consider um Tiff um and and I'll uh put it in a graphic that combines the regul approvals as well as the financial approvals so first um these these first several steps are taken by you uh sitting as a city council or as a h board members uh of course staff helps prepare them we hire outside advisors to do the technical work and there's a fair amount of public engagement um in each one of these steps so from a regulatory perspective the first key step is securing preliminary zoning approvals for a site plan that's um that's done by the city council as a regulator once that pre preliminary site plan is is achieved that's where you as an HRA step in um uh We've identified that there's there's cost burden cost hurdles to this project and so we've prepared a term sheet asking you um based on the preliminary plans that you approved here's a way to get over some of these cost hurdles um and we do that um to get your general guidance something you can live with something you can support something you're excited about or something you're adamantly opposed to um but our policies specifically call for this order first the preliminary zoning if that's successful then let's start talking about the terms uh with your consent we would like to proceed um drafting a tiff plan and actually getting into all the full legal documents getting those prepared that'll take a few months um uh so that's the step that we're at today the next step steps on this project and and this process is typical for everyone um is the final zoning that's currently scheduled for mid-september on September 17th so if the project advances Past final zoning uh you can expect that we will be back sitting as the H actually looking at the Tiff plan giving that consideration uh we'll also be looking at a Redevelopment agreement so today we have about 40 page term sheet full of pictures and some high level um comments that will be developed into probably a 400 page legal document that's suitable for consideration and signing in the future um but we'll only get to that point if the project secures its final zoning uh if it fails to do that we're going to stop with a tiff conversation but each of those steps are what we do as uh uh as public officials um uh and and at the conclusion of those steps if they're all successful then the developer and The Architects and the engineers really get to work because they've got to do all the construction plans prepare documents that are suitable for bidding to get firm pricing because everything up until that point the pricing is it's fluid it's estimates they're not sure what is the content of that final approval um so once once they lock in those approvals then they can really get to work and that takes time uh months sometimes more than a year after that point the city's involvement is really pretty rudimentary on a staff basis the zoning has been approved the Tiff term sheet and redevelopments have been approved so at that point the only um steps left are for staff to carry out your directives so um the building department would issue construction permits um the HRA would receive a letter from the developer saying yes they've got their permit in hand they've got their mortgage lender lined up they've got the cash in their escal account at the title company and they're going to break down break ground on Tuesday that's the go-ahead letter then they have to build it that takes months years to build the projects especially large ones like this that are actually four separate buildings when all that is finished um the building department follows up with a certificate of occupancy confirming that everything was built to code built to the zoning requirements Etc and safe to be occupied uh after that step uh the HRA um staff this city staff follows up with a tiff certificate of completion to make sure that not only did they build it safy safely and follow all the construction rules did they deliver all those easements that were promised did they make the investment that they promised to make did they hire the companies they they um promised to hire did they provide the public realm space the artwork the parking the affordable housing everything that was promised we go back and double and triple check that it was delivered um and uh when that's the case we issue a tiff Tiff certificate of completion once we have that piece then we wrap it up with the final step and that's to issue the payo note so there's several steps in the process um to make sure that they followed through with what they said they were going to do um and at the conclusion from an HRA perspective we award them a note which is basically the IOU so they've made the investment they've taken on the loans they've taken on the risk they've taken on all the risk of construction and in return they get a piece of paper from the HRA that says yes if you pay your taxes in the future we will return a portion them to of them to you based on the agreement we signed a couple years ago so the reason that we try to consolidate some of these steps is that it takes time it takes a lot of time so if we would wait um to start the the financing discussion after they've received all their final approvals we just added six to nine months to the process and the uh America moves a lot faster than that so that forces us to be responsive so in uh in an overview that's a quick look at our processes our policies of how we've gotten here um what I'd like to do next is go through the highlights of the term sheet um and so the presentation I have it's the same as as last time so I'm not going to go through every slide I know that you guys want to talk about things um but Ju Just know that um we have made changes to the term sheet and um this is a little bit unusual for us but we we submitted them to you in the strikeout underline format we wanted wanted to make it clear and obvious to you what the changes were so in your packet that's why it's um some is black print some is red print it look looks kind of messy but in general in general these are the things that we changed based on your directive last meeting uh we clarify the purpose and intentions of the term sheet to make sure the context was better understood um we clarified the pending nature of these final zonings um about a week ago the developer did submit their packet for final zoning consideration um so we added some language in the term sheet just to just to clarify that we're not getting ahead of ourselves we also clarified the application of the but for test um but for the use of Tiff can this project move forward uh based on our evaluation we found that but for Tiff it won't go forward um so we we clarified that we also um put footnotes on each of the renderings to clarify that these are just preliminary placeholders these are the renderings that were approved by by the city council in June but they are not the final approval so there's a footnote on each of those pages to make sure that's understood um we did have um conversations with the developer um to encourage them to increase the the length of time that the affordable housing will be affordable um they are open to that conversation and willing to to to uh move further down as we get into the Redevelopment agreement we added Provisions to make sure to make it clear that um the affordable Condominiums can't be flipped for a massive Pro profit after the first owner um uh it that that of course was Our intention um but right now in the term sheet we have about three sentences about the condominiums in the final legal agreement that'll probably be 15 to 20 pages so we'll make sure we get those kind of Provisions in there we've also made sure that there's a clear access to and from the public parking um we've Amplified the importance of Grants uh and applying for Grants it's a little bit too early at this point in time to apply for those grants um but if the final approvals are are secured in September we hope to get our first Grant application in November followed by one probably in the spring of 25 another one in by the August deadline of 25 and maybe even one in 2026 so we're that's all on track but we're just we're not at that point yet and then um while we do have a general catch all to make sure the developer complies with all state and federal requirements we um based on your on your suggestions we did add language just to make it even more clear that they're required to address all fair labor standards and we did make it extra clear that they're required to address all design standards for handicap accessibility um the state laws the federal laws Etc um that was all baked into a kind of catchall statement but based on the level of comments and concerns um we broke those out as as separate items um so that's a quick overview of the of the red line um and the project itself I'm just going to um uh I'm I'm going to just cut to the chase with with this because you we've seen this multiple times we have all the renderings we have the site plans we have all the explanation of the public benefits that can be that can be delivered on this site happy to have have any conversation or or use these renderings to assist in a conversation um uh but to suffice it to say the project is the same today as it was two weeks ago um we did make a few clarifications as I just summarized um but the project does have a lot of potential to to deliver public benefits that are not realized today and wouldn't be realized without this project um I'll stop here for a moment on that France Avenue pedestrian Crossing we did a brief update at our last meeting um we do have that SK we were going to we had planned on talking about that more today but we pushed that to later in the month um but this project along with the companion project on the other side of the street certainly could provide a lot of funding for that kind of public infrastructure if that's something we do want to pursue um the affordable housing benefit we changed this slide um our current policy calls for a 20-year minimum term of affordability we've already been negotiating with the developer to increase that to 25 years um and we will continue uh at your urging to push that as far out as we can get um uh public parking is is uh still a public benefit all of the sustainability benefits are there uh also urging the um the contractors to do um a better job that has been that has been done historically to engage and hire underrepresented people on the job site uh this this is primarily women and people of color um this is there's a Nuance here where there's state and federal laws that say we can do some things and they those laws also clearly State there's a line of what we can do and um and so we we feel we've balanced that that provision um but the project financing is still the same um the potential tax impact is tremendous uh we have the same slide about the current tax collections um right now the site pays about 350,000 during the Tiff District when the project is finished it'll pay about 3.6 million so a 10 time increase um and then uh after the Tiff District it still pays about the same but the dollars get reallocated a lot differently and uh we still have the slides about the Gap so that's I mean that's fundamentally why the H gets involved there's lots of potential public benefit and there's Financial hurdles that prevent those from being delivered um our Gap analysis is the same and so just in closing couple questions for you to consider and I think these were were refined based on last week's conversation but to me fundamentally um you know looking at what what's been prepared and evaluated to me it's a question of whether or not this proposal delivers a suitable degree of public benefit the developer asking the H to step up with a pledge of future financial support if they deliver these benefits so to me that's kind of how I do my calculus is what they're delivering worth that money um and secondly um if if we do well to to minimize risk we always recommend that we use these payo notes that keeps the risk on the developer side um is the use of notes warranted or Justified to achieve th those public benefits in staff recommendation we believe that it is um if if you have a contrary opinion we would love to to hear that but if your opinion is contract is contrary we should really consider are our standards and our extras really what we want to ask Developers for if we ask them to add all these extra costs that makes their project unfin and if we're not willing to support it should we reconsider a lot of these standards that we've adopted over the years so uh the final action uh it's our staff recom recommendation and our uh uh suggestion this morning um is to get your support to authorize staff to draft a complete Redevelopment agreement based on these term sheets uh now drafting that agreement is not approving that agreement we would come back to you later in the fall with the full agreement get all the details worked out we would then present that to both the city council and the H we'd be notifying the school districts the county all the all the regular folks that were considering the use of Tiff um but in order to start with that process we're looking for your consent and authorization um and I'll I'll leave it at that this morning um there's a lot of content we've got a room full of experts uh Nick an Hut has worked extensively on the financing Jay lingren has worked thoroughly and um quite a bit on on the term sheet and uh both developers Patrick Brahma from enclave and Ben Ben louser from lifestyle communities are here we're all available for your questions and look forward to your conversation thanks Mr Nar for that presentation commissioner Jackson yes thank you Mr chair so last time I had a whole list of questions and um you and I sat down and talked and someone asked me you know did we have anything in writing and we didn't but I the presentation that you've done today encapsulates the conversation that you and I had so I want to thank you for going back and uh clarifying all those things and then to present them to the public as well that's really helpful um I think want to start I also raised some questions about assessment and so I met yesterday with our assessor and our city manager and went through the process and uh I'm a policy maker so and I'm not an assessor but what I learned is that assessors are very highly regulated both by state law and by Professional Standards um and it really is not at all linked to our policymaking they follow the rules and that's how assessments are done but as a policy maker I'm going to summarize that what I learned is that the assessment is based on what is there now not what could be there in the future and so you know we talked a lot about Meson green it was a Perkins a functioning restaurant and that's what the assessment for purposes of Tiff was and so I think it's really important that we as policy makers um aren't the ones who set that that's set by state law and by Professional Standards on top of state law in addition to so the assessment is um in my interpretation and I I think it's accurate that the assessment is based on what is actually there and that was a really important thing for me to learn um and then going to the Tiff um terms we talked a little bit uh last time about is what does the but four test mean and again this is controlled by state law and the butt four test is not um broad or general it's is this specific project going to go forward without Tiff and if it is not then the but for test is met so but for Tiff financing this specific project won't go forward and I just wanted to clarify that because you know we're seeing a lot of change and it's happening rapidly and so I kind of want to stop and and look at some of these fundamental principles um the second one is a misconception well a a belief that I had um when I was first elected and prior to that that we have this PUD process it's a give to get and that um we give a little bit more height a little more density in response for public improvements and that's part of it but I think you have did a really nice job job of flushing out the details of why PUD is not sufficient so we still have a give to get with the Pud that we allow more height more density in exchange for things that we as policy makers have set forward so public policies but the greater density greater height does not pay for all the public improvements that we have asked for so and I think you and I said that or when we were talking you told me of course we have not changed what we're asking for but the cost of what we're asking for has gone up considerably and so PUD does give us the give to get and trigger a lot of um public policy options but it is not creating enough wealth in this particular development to pay for all the public policy um public benefits that we are asking for and so um I'm I'm satisfied but I do want to put out some questions um we're going to have a public hearing on this and so we want to know are the public policies that we're asking for supported by the public and that's the purpose of a public hearing and comment period um so some of the things that I wanted to highlight that were in the term sheet that you gave us last time and you went over Redevelopment and that this isn't simply tearing down a building and putting up a new building it's a very complicated Redevelopment on this site having been prior uh Gravel Pit we ask we have a Green Building policy and an inclusion Area Housing policy um one of the things that I've learned in the last couple of uh discussions we've had about affordable housing is that the cost of these in includ inclusionary housing uh units the cost goes up dramatically the nicer the building is so um that lost rent is dramatic um and the nicer the building the more dramatic it is and so um it's very important we've talked a lot about the importance of meeting our affordable housing goals um inclusionary housing is a very special kind because it's not distinguished from other types of housing so it there's no Stigma of living in affordable housing the units are the same um and that's an important policy that we have um to help meet our goals one thing that is not has not been highlighted which is very important to me and that's that's the fee paid for maintenance of Centennial Lakes we get the um uh Park fee uh that goes to Hardscape that's playground equipment um things like that but it doesn't do the Mowing and the weeding and the plant replenishment at Centennial Lakes and one of the concerns is that we're going to be bringing a lot more people in and we're not going to be getting the tax revenue to service Centennial Lakes for the term of the Tiff and so one of the things that you've been able to negotiate for us is a maintenance fee for Centennial Lakes Park and that's really important especially as the other properties around Centennial Lakes their agreement for maintenance is sunsetting um and so the Centennial Lakes maintenance fee is is significant in this term and I want to know if that's something that the public is in approved for I love Mr anut described it as Urban Design um it's the 200x 200t grid um but I like that term Urban Design we're paying for that that's not that's land that will be put under an easement that's going to be publicly available that is not profitable for the developer and um and they're going to be maintaining that this is the Southdale design um to break it into the Super blocks into smaller bids and that costs money um so that's a public benefit that I'd like to hear from the public and then finally I'd like to hear um you know what the support level is for the potential Cal pedestrian pass under France Avenue so those are all matters that um as we go into the public hearing process I'm going to be looking for feedback from the public on that they're important to me but I want to make sure that um that we are sitting here representing the community and not just our own personal opinions um so again I'm just going to summarize that one more time Redevelopment Green Building inclusionary housing policies the fee paid to maintain Centennial Lakes Park the Urban Design 200 X200 grid layout and The Pedestrian pass under France Avenue so those are some really big unique things um to this site that I'm looking I think are public benefits they way outstrip the cost um or the income that the Redevelopment will make on this site um but they're important to us and I'd like to hear the public uh response to that so thank you all for for the um background information on this it's been really this is a complicated project and I think that we've had the opportunity to uh dig down a little bit more to explain to the public what's going on so thank you very much thanks commissioner I'm going to go to commissioner AG then commissioner rer thank you uh so I specifically want to talk about the section uh related to affordable housing um particularly because this is the the one I will say I was most hesitant to include as a line item within the Tiff District because I do feel that including affordable housing is just like the bare minimum for what we require in developing within Adina and so I don't necessarily feel like it's something that should be included within the Tiff financing um however as I'm reading through here right I do think that there are some really tangible benefits to us as a city by including this language in here to hold them um to a contractual agreement right on what does it mean to do affordable housing especially as you refer to um the owner occupied units and ensuring that those aren't just flipped so I have two questions um whether or not you know it today um I want information on you know if we remove the line item for the affordable housing would everything else still stand is there enough of the other components that we would be um financing that would still fall within that total amount that we're proposing today um and would all of that still stand and I I see you looking for papers you might know this you might not um but that's one question that stands out to me and I'll I'll pause if you do have an answer for that um I have a best guess I haven't done the math that way uh the state law that governs Tiff identifies a whole range of eligible expenses some of of those we like in a others we don't um if we if we were to my gut says without doing math um my gut says that if we were to remove the full cost of affordable housing I don't think the project would pencil we could substitute other eligible costs um we could put in more for parking we could we could replace the affordable price or the affordable expenses with private parking expenses um we could replace it with the acquisition cost that's that's also eligible the challenge is our Tiff policy says we shouldn't do that so um uh there's probably some creative way to to get there we've got a great team that can figure it out in a lawful way um but then we'd be looking for a waiver from our own policy um just historically we've not subsidized private parking we've helped reimburse for public parking um uh so that's something you might want to discuss with your colleagues but I uh without there's a way to get there but we'd be doing some dancing on other policy issues okay thank you that's helpful um so going maybe just one layer deeper into the actual language then that's used within this section I see a lot of uses of shall as opposed to must and I'm nervous that that's going to leave too much wiggle room can you speak to the word selection might be a legal issue legal yeah I'll speak to it generally and Jay can get into the details but when I prepare these um shall is mandatory should is wiggle you should um stand up straight when you're at a Podium versus you shall speak into the microphone otherwise no one will hear you um and to me I always think of shall and must as the same context but I'll refer to our legal expert good morning Mr chair Commissioners I think of shell and must meaning the same thing and I'm sorry I'm old and gray and I use a old-fashioned language I'm the one that uses shell I think it means must I think it's a mandate mandatory y I Concur and I would say that then we go from the term sheet into the Redevelopment agreement if that's your wishes I all that language would be very tight and show what the mandates are I believe okay and that's how courts see it as well yeah okay thank you anything else at this point in time commissioner Mr agna um I'm just reviewing my notes and making sure um no I think it's all for this thanks all right go to commissioner rer then commissioner per okay um I want to thank Mr lingren for um clarifying at our last meeting that this is not a commitment um but it it is indicating that we're generally going in the right direction and a signal to keep going and that's what's being asked for and for me um I am very concerned about the direction that we are heading and part of my concern stems from the fact that this process I would say um elements of it particularly The Pedestrian Crossing began a while ago and back in February we made an agreement to fund $80,000 a study by lhb that would give us a deliverable within 3 to four months of the options and um perhaps it would be narrowed to a preferred direction we would in that agreement um they would investigate the need the scope the intent they would assemble a Project based mapping um tool and we have not received that so um I feel as if I'm you know when I have brought this up you know the scope does this make sense to put a public pathway between two private developments at our last meeting of the H um Mr Fitcher from lhb did note that they had done a pedestrian Watershed study and that he would bring it to the next meeting this is the next meeting I still have not seen that so I kind of feel as if there's factors out there that I don't have that I need I realize so back to the site in question the Macy's site and whether the proposed plans Merit Tiff investment um going back and looking at last meeting we were told that at the very initial stages the developer said he would need Tiff because of the condition of the land and one thing I hear from a lot of people is that the land values in Edina just keep skyrocketing and a question I have is why isn't the land conditions factored into the price that is going to be paid by the developer for the land we also we do when we do PUD and we do it differently than other places do when we reone to PUD we are committing to a specific site plan we're committing to subdividing um so it's this one big swoop that comes down and changes the land value significantly and so you know while we're looking at an estimate of 12, 149,000 right now when it's subdivided the estimate um given for all three created Parcels goes to 25 million so we're increasing the value by that act alone um so there's there's a lot of benefits that the developer is getting the other thing is we keep getting this binary narrative um but for Tiff this particular project which must have Tiff will not go forward and if you do that you're going to be if you don't do that then you're going to be stuck with the Macy's site forever and ever and nobody else is going to come up with a plan and I think that's a false narrative um when I look at the list of public benefits number one remove an obsolete building from a prominent site macus is still functioning people go there my neighbor said I was there last weekend um I would argue it's not an obsolute obsolete building um so that is something that I'm concerned about back to process um lhb that's doing the study and also presenting designs for the underpass is also a third party consultant for the Tiff terms um and lhb is the one in this Tiff agreement that inspected the Macy's site and found it to be in a condition that potentially qualifies it for redevelopment um lhb was awarded the $80,000 study um and when I look at today's suncurrent um we do have quotes from lhb about the progress on this project which is going to turn out to be a 15 to20 million project so I'm feeling very uncomfortable um when we award Tiff that's public financing okay um and I feel there needs to be a process that is super transparent and um one that is not looking as if it is going the end result has been obtained already and it looks like that's kind of the direction that we're heading here so I I do have concerns about that I have concerns we're running out of time and I have other issues um another Resident told me that this idea for an underpass is Complicated by the fact that the existing uh PUD 16 for the 7200 7250 site requires an access road for vehicles off of France so I mean there is a lot here that's coming at us the other thing if we I don't if we could go back to the list of public benefits one that's been talked about for a really long time is that the developer is going to maintain the um Park Trail my understanding is that there's a permanent easement there that's that is an essential character of the parcel okay and so and the other thing is when you look at this parcel we keep hearing it's an 8 Acre Site well there's roads on it if you took away those roads what would it be and I feel like what what we're being asked to do is to take this site that already has an existing commitment and um take this site that really is not 8 Acres of buildable land and we don't talk about what the buildable acreage is we just talk about the whole site and I feel as if we have gotten into this situation where Tiff becomes a financing tool to take a parcel that has existing issues that should be you know calculated and considered part of the market value you know bring in the free market what is it actually worth and what Tiff is going to do is say okay well we'll let you count the easement that is there uh will say that you're doing a good thing by maintaining it well that's a commitment you take when you purchase the land um I'm sorry I've talked kind of quickly again we've had another meeting where C only speaks at the end and we really don't have time for a dialogue and I want to leave some time for other um Commissioners thank you thank you commissioner uh commissioner Pierce thanks Mr Mayor um so couple of things um if first off um Mr nordor thank you for your presentation um and I I think you nailed it for me so we've exchanged some emails on this and I think you're slide 34 um yeah slide 34 um I think that that that nailed it for me the questions and so what I've been trying to to frame you essentially asking us if we believe if we step back that this project and then you're actually forcing us to step even further back to say the companion projects with the underpass if we believe that there's Community benefit um and does it warrant public investment and so when I do that it was it was so easy I wasn't here um when we that decision was made on Centennial Lakes cuz it was a gravel pit right it was it was probably easy for that Council maybe to say yeah we should invest in in that there's nothing out there and so um that might have gone through a little easier what we're looking at now is harder because there is existing value in that that that quadrant today but if you step back and you can imagine the Centennial Lakes that prominade at some point in the future expanding across France right to the other side and creating a venue where people can walk through um uh an underpass participate in the prominade there's additional spaces there that can be utilized it just takes more effort right right it takes more imagination maybe I put it that way to be able to step back and envision that whereas before it was a gravel pit so we could have put a circus there and that would have been better than what was there before um and so that was never a question for me my question was well then from a process standpoint we never do the opposite of saying here's the vision um if you want to expand the prominade that's going to cost you an extra $2 million if you want to do the underpass to connect these two that's going to cost you an extra whatever $5 million and then we'd be able to sit back and go all right is it is it worth that can we fund that if we think it's worth it how can we we fund it that's why I asked Mr Ellers all right well if we were going to do these then what are the vehicles that we have from a process standpoint that seems logical to me that we would lean into it and be able to ask those questions but we kind of do the opposite we look at the project we apply our policy so you asked that very pointed question uh we add all these things to it to increase the public benefit that's why we're doing it and then we come and we say that's going to cost and I'm making these numbers up that's going to cost 22 million doar to do that um and then we go all right well we need to fund that how are we going to do that and I think that for the city like we can't answer those questions when you're in an HRA meeting asking for funding right that's kind of the shipping sailed at that point from my perspective however as a city Mr Neil we could say all right got that framework maybe there are some things we need to tweak in our process we got to lean into that outside of this room to figure out what do these vehicles make sense which ones don't some have inherent risk others don't um I love the answer of well if you do an abatement it doesn't create the capacity to do the Investments that you want to do in this space that seems logical to me so if we want to do the underpass if we want to extend extend the prominade it's 5 million we need to create that much capacity to do it um that seems logical to me and so what I'm always looking for is the logic in the process for which we make the decision and personally I do like like to have levers and choices right I'm just used to that I think most of us are used to having um options and choices to make um as we we look at developments um and so I I think your slide 34 um that that coins it for me I want to be able to do that um moving forward um in in a more um public Forum so that people really understand what we as a council are valuing and then the due diligence of yes we considered all of these vehicles but we think this is the right one because we need more capacity or what have you um so so thank you um for that um the only question I had and and maybe it's just another ask in that process piece uh one of the concerns I have when we do projects of this capacity and I think we see it with Mason green if you follow a typical Market process um and I'll use masung green you probably would tear down Perkins or you might renovate it and I don't know maybe it goes from a Perkins to a red cow or you know and then that goes there for a little bit and then red cow that gets torn down and maybe there's um you know a twostory uh apartment complex that goes up there and so you kind of follow this Market what the market needs gets developed there um and I use that example because I like sometimes I think I like that flow because it allows for services to grow along with that uh and so sometimes I have this concern that if we grow too quickly too big and and we're not able to to have the underlying services to support that kind of growth um eventually the Market's going to adjust and uh we could find ourselves in a place where we don't have all of the underlying services that we need uh to service the capacity that we have and that's when I ask the questions around traffic and things like that and when we talk about the Macy site uh wanting to just make sure we're doing that um running those scenarios out of into the future um that's not really a question uh but I think in the process as we think about that um it would make a lot of sense for to me uh to be um trying to come up with scenarios to make sure that we're able to provide services along the way um and so yeah that oh this one other clarification with the affordable housing um I did just want to make clear I didn't quite understand the question so I I asked member agnu we don't want to pull out the requirement to have affordable housing we just don't want to pay for it right and so I kind of missed that so I wanted to make sure we definitely want it in there but I I the question of we don't want to pay for actually fits with the frame that I talked about earlier because that could reduce the amount of Tiff that we might need if the developer is is covering the cost of that uh 100% on their own so I am in support of saying yep we've all given feedback on what should be in that term sheet you've done a preliminary of that and then doing the rest of the work to finalize that and I'm sure that we will continue to have other questions um of things that might go in there we're going to do a public hearing um and I I know I have a couple of other um follow-ups with residents on this to and so there might be other uh feedback as well thank you yeah thank you member Pierce um just a couple of overarching thoughts uh because I'm supportive of this as well uh taking this next step and and this um sequencing that you've done I think is is pretty interesting I mean the logical sequence might be that you wait until there's a final approval see if there's a final approval they met all the conditions of their preliminary approval we have preliminarily approved this matter they've got certain things they have to do uh for you to be able to come forward from a staff level you and Curry and say yeah they did everything that was on this to-do list that would the council put together and now they're ready for final approval uh and then go to the Tiff conversation but I think it's much like it's a a bit akin to this construction project that's going out here they're resurfacing the road right now even though they don't have the the the retaining wall thing figured out well they're trying to figure out how to piece things together to make things operate as effectively and efficiently as possible you're doing the same thing and I think that's that's just that's something I'm comfortable with in terms of this butt for test it's first of all I would say you know I had M olon made me a copy this morning of our tax inrent financing policy and you go to the back of the tax inment financing policy on page nine and we got 25 things that we think about before we use tip any data and at the top of the list is delivering public benefits and then is the about four tests and they're related because we ask for all these public benefits that you've described uh in your presentation this morning and in Prior presentations uh we've got the potential capacity to maybe do something under France Avenue maybe not it doesn't that's still early in the stages here but you're posing that as a possibility and so that we we reach a point where we've asked for so many public things that the but for test application to me uh Embraces all those public improvements and we're saying well but for the but you know but for uh you know the but for test application only appes that the project goes forward if the let me read the language the but four use uh the but for test for the use of tax and financing that project but for the use of tax in financing the project will not be constructed well that's because we've put in all these public elements I mean if we've easily got what do they have 42% of the project is public use in the space so we've created ourselves I'm trying to figure out a way to articulate this well we've created ourselves the um obligations we put obligations on the developer to do these things that we want to do that have a public benefit and that's caused us to be in a situation that if if we don't want those public benefits then this is probably just a regular old project but if we want these public benefits in there then the but four test is applicable because we can't do the project but for having all these public benefits in there at the cost still that they would that they have and uh I guess I figured out a way to say that in somewhat Artful way so um in terms of the affordable housing issue that member Comm commissioner eggy raised I thought it was interesting but I thought one important factor that you raised was you I thought about maon green we you did 10% affordable down there at the minimum uh but we only got 15 years so I think let's also think about the duration that we're going to get out of it that has public value yeah so I think let's let's not forget about that as we move forward um you know Tiff Tiff itself is is a leveler mechanism as I recall from from working on this over the years it's it's designed to let cities like ours that are fully developed be able to compete effectively for economic development with cities that are all green field or have a lot of Green Field available space available to them so what do you find on France Avenue uh you know the reason that that hey located piece of property kitty corner from Smack Shack has hasn't been developed is because that was where the Adina dump was and the soil conditions and the environmental condition are so bad over there that it requires a significant public investment to make that work and I am sure that when Enclave went to negotiate the purchase price of this property they knew what the soil conditions were and the prices probably reflective of that but soil's conditions and environmental conditions are things that we can think about in order to make us more competitive with Greenfield cities and so when we think about that being a factor in improving soil conditions and allowing things to be built out there uh you know you think of the TCO project over there they had to put that on pilings then cost of that was about $6 million just to put it on pilings to make sure that it didn't start collapsing you know so there there are challenges out there that if we think it's important to be able to develop these areas and it's a great piece of property that 8 Acres then these are the kinds of things we have to think about as potential public Investments and you've done that for us you're you and your team you and your team and I thank you for that so um we're going in a good sequence we're taking our time and carefully looking at all of this we're being very transparent and public about what we're doing and we're going to think about now this morning moving on to the next step which is allowing you to come up with a term sheet which is non-binding I mean You' got it kind of put together you don't have an approval on the term sheet with somebody else and then we're going to move on to a proposed form of Redevelopment agreement and we're authorizing you to enter into that negotiation but to the point you made early on until we approved that Redevelopment agreement we don't have an agreement and so we're we're going about this in a very logical methodical way I think that makes a lot of sense to me and I'm I'm in favor of taking that next step and moving forward so uh does anyone yes commissioner um yes thank you I just I wanted to respond to uh commissioner Pierce's comment about too quickly too big and I think it's important this is in the Southdale area and the Southdale plan is transformational which means it's not going to change gradually they the zoning code allows the Macy's building uh furniture store to be turned into a Perkins that would be perfectly acceptable we wouldn't be having this discussion it could change gradually um but to implement the Southdale plan that's transformational and from the discussion that I heard today is that this subdivision and recreating creates a exponential amount of New Wealth um whereas gradual transformation does not um I'm a big fan of the Southdale plan and I think its potential is is really um uh extraordinary and Innovative um but I I don't think if we are talking about incremental growth that means we're not um going to support the Southdale plan or a developer can come in and and change it incrementally today without our any discussion from us um so this is an opportunity for us to um have this transformational change one thing that we haven't talked about and I don't know the Forum to do that that you mentioned is are we as a city wanting to put public funds into this transformation and I think that's the nut of what we're talking about today so we are asking for big transformational change the request today is are we going to put public funds towards that transformational change and that's why we're going to have a public hearing this is a big deal there's a lot of process around it but we're not going to be alone in making this decision um we want to hear from the public on that so I just wanted to to lay that out there so thank you commissioner you gave me time to think of one other point I wanted to cover and that was this isn't in our our Tiff policy but we have G taken the position sort of informally amongst ourselves as a councel and with you at staff that we're not going to use Tiff uh we're going to try to make sure that we look hard at being able to use Tiff we're in a situation where it represents less than 10% of the market value of the project so here we got a proposed I'll call it a $300 million project and I think you're at about the seven or 8% level on potential Tiff funding and I thought that was an important consideration as well even though that's not embodied in our Tiff policy so I thank you all on that team for that too including the the developer so uh do we have a motion to authorize I don't know what's going on upstairs but uh um they're on the they're on the roof putting in that new solar is that what it um is there a motion to authorize staff to engage dorsy and Whitney and ERS Associates to draft a tiff Redevelopment agreement based on the term sheet that we've seen this morning for the 7235 France Avenue site to be presented to the H board and city council for uh further consideration after the pending site plan secures final approval so moved commissioner Jackson moves commissioner appear second the motion as stated any further discussion all those in favor of adoption of the motion of stated say I I I opposed the motion is approved came on late yeah no I got it okay um the motion's approved and uh that will authorize staff to engage dorsy and Whitney and ERS Associates to draft a tiff Redevelopment agreement based on the term sheet for 7235 France Avenue site to be presented at the HRA board and city council for consideration after the pending site plan secures final approval which will be sometime in September uh and then quickly Mr nindorf I think this won't take too much time uh it's a it's a logical sequence here that we we set a public Hearing in this matter and and commissioner Jackson has talked quite a bit about that this morning and the importance of the voice of the public here on this idea of Tiff increment financing being used at that site go ahead correct so the last item on your agenda is consideration of resolution 20246 and what that resolution does is uh forward your recommendation to the city council and ask that the city council to schedule that public hearing um I did re rewrite some portions of this resolution to make it crystal clear that the public hearing about taxing increment financing would only occur after the project secures its final zoning so if it doesn't pass that hurdle then we would not hold that public hearing and with that certainly staff recommends that this resolution be approved questions for manager nindorf on this particular matter yes member Richard okay commissioner in the agreement that you marked up today item D it says that the city has engaged D dorsy Whitney ERS Associates and lhb collectively third party Consultants um to provide assistance in preparing the studies and evaluations um with the motion that we just made is it only dorsy Whitney and Ellers is lhb still part of the three-party Consultants lhb was not named in the motion okay yeah thank you yeah the the work that lhb did there their Tiff evaluation division was completed several months ago so that work is finished thank you all right this this resolution 20246 requests the city council of the city call for a public hearing on the proposed establishment of the 72nd in France uh number three tax income and financing District a Redevelopment District any further questions from me manager nondorf on the issue is someone care to move that passage of that resolution member commissioner agnu moves commissioner Pierce seconds the adoption of resolution 20246 um as uh as recommended uh any further discussion all those in favor of adoption resolution 20 2406 say I I I opposed carried the resolution 20246 is adopted and um executive director comments any no comments okay and uh commissioner comments commissioner Brer uh yesterday was the first online meeting for the FAA um regarding the conversion to Arnav and today there's an evening meeting and um people can go to the FAA website we did post information about that online but if you would like to learn more about that uh there was a meeting tonight I believe it is from you know what I'm not going to say it's online and I did not bring that information with me but um it was good questions came in yesterday and I believe it did run over time so thank you all right thank you anyone else okay is there a motion just real briefly commission continue to shop at 50th in France and 44th in France during the construction this is the economic development board um and we want to make sure that our businesses stay vibrant they're open I was down there yesterday Lots going on um so shop local must have been in the air I went down there yesterday too I thought I better go do some look look for sale opportuni yeah okay uh is there a motion to adour Second commission uh agno moves commissioner Pierce seconds a motion to adjourn the meeting of the HRA this uh Thursday August 15 2024 any further uh discussion on that all those in favor of adjourning say I I I oppos carried HRA for the city of Udan stands adjourned this Thursday August 15 2024 at 9:32 p.m. amm like