HomeMy WebLinkAbout2015/06/01 - ADMIN - Minutes - City Council - Study Session 11�St. Louis Park OFFICIAL MINUTES
MINNESOTA CITY COUNCIL SPECIAL STUDY SESSION
ST. LOUIS PARK, MINNESOTA
JUNE 1, 2015
The meeting convened at 7:00 p.m.
Councilmembers present: Mayor Jeff Jacobs, Tim Brausen, Steve Hallfin, Gregg Lindberg,
Anne Mavity, Susan Sanger, and Jake Spam.
Councilmembers absent: None.
Staff present. City Manager (Mr. Harmening), Economic Development Coordinator (Mr Hunt),
and Recording Secretary (Ms. Hughes).
1. Bader Development's Application for Tax Increment Financing (TIF) — The
Shoreham Project
Mr. Hunt presented the staff report and stated that Bader Development's cost to construct this
project is estimated at over $44 million and staff had determined that the proposed project is not
financially feasible due to more than $7.8 million of extraordinary costs associated with
redeveloping the site, including contamination cleanup, demolition, removal of underground
storage tanks, and poor soils. He stated the developer has applied for $4 million in TIF
assistance and staff recommends that the EDA consider providing up to $3,050,000 in pay-as-
you-go TIF assistance, noting that this amount could be further reduced by grants the developer
has applied for through DEED, Met Council, and Hennepin County. He stated the project
includes an affordability component resulting in a loss of approximately $280,000 per year and
those costs are primarily covered through interest rate savings achieved through private activity
revenue bonds and tax credits.
Councilmember Sanger stated she liked this project but was uncomfortable with the amount of
TIF financing requested. She stated the developer has indicated it is foregoing $280,000 per year
because of the affordable units, which equals about $2 5 million worth of foregone cash flow
over nine years and if the developer had not incurred that loss, the TIF request would be much
less. She stated she wanted to see a comparison of what it costs the City in TIF to meet the
developer's 10% goal if a project has no affordable housing versus the TIF cost if a project ,
includes affordable housing and noted that the City's housing policy does not include a
discussion about that cost She stated she wanted to know the cost of affordable housing in every
project and felt the public needs to have access to that information and she would be making the
same request for any project that comes forward with an affordable housing component.
Councilmember Mavity stated that the extraordinary cost estimates Council is being asked to
consider for the project total approximately $7.8 million and those are costs that Council would
normally see whether or not a project includes an affordable housing component
Mr. Hunt advised that with a Redevelopment TIF District, the qualified expenses allowed to be
reimbursed to the developer are related to cleanup, demolition, site work, etc., and the City
cannot statutorily reimburse a developer for any costs related to affordable housing.
Councilmember Brausen stated he was supportive of the TIF request. He noted this property is
currently worth $2.5 million and the developer is turning it into a $36 million property and after
nine years the City gets all that tax revenue and this project turns into a profitable enterprise for
the developer. He stated the City does not receive compensation for additional services provided
Special Study Session Minutes -2- June 1, 2015
whenever a new development is built, e.g., police and fire, and questioned whether the cost to
provide those essential services should be evaluated along with the number of additional jobs
that are created as part of a project, adding he would like to capture all those costs on every
project and not just direct project costs.
Councilmembers Spano, Hallfin, and Lindberg spoke in favor of the TIF request.
It was the consensus of the majority of the EDA/City Council to support Bader Development's
Shoreham project proposed for the SW corner of CSAH 25 and France Avenue and is willing to
consider entering into a redevelopment contract to reimburse the Developer for qualified costs up
to $3,050,000 in tax increment generated by The Shoreham project to make it financially
feasible.
Mr. Hunt distributed a map depicting existing TIF districts in the City, three proposed TIF
districts and four potential TIF districts in the future. He also distributed a summary of specifics
related to each of the existing TIF districts and noted that two of the TIF districts have been
decertified and another TIF district will be decertified in the next few years. He advised that
there is no limitation on the maximum number of TIF districts allowed and stated that the
summary also includes information about how much of the City's tax capacity is included in TIF
districts and how St. Louis Park compares to other communities
Mayor Jacobs adjourned the meeting at 7:20 p m.
Meliss. Kennedy, ity Clerk Jeff Jac ye sf,I ay or