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HomeMy WebLinkAbout2021/09/20 - ADMIN - Minutes - Economic Development Authority - Regular Official minutes EDA meeting St. Louis Park, Minnesota Sept. 20, 2021 1. Call to order President Brausen called the meeting to order at 5:45 p.m. 2. Roll call Commissioners present: President Brausen, Lynette Dumalag, Rachel Harris, Larry Kraft, Nadia Mohamed, Margaret Rog, and Jake Spano Commissioners absent: none Staff present: City Manager (Ms. Keller), CFO (Ms. Schmitt), Economic Development Manager (Mr. Hunt), City Attorney (Mr. Mattick), Executive Director/Community Development Director (Ms. Barton), Communications and Marketing Manager (Ms. Smith) 3. Approval of minutes 3a. EDA meeting minutes of Aug. 16, 2021 It was moved by Commissioner Spano, seconded by Commissioner Rog, to approve the Aug. 16, 2021, EDA meeting minutes as presented. The motion passed 7-0. 4. Approval of agenda and items on EDA consent calendar 4a. Accept for filing EDA disbursement claims for the period of July 24 through Aug. 27, 2021. 4b. Adopt EDA Resolution No. 21-22 supporting submission of a grant application to the Hennepin County Minnesota Brownfields Gap Financing Program relative to the Union Park Flats development. It was moved by Commissioner Spano, seconded by Commissioner Kraft, to approve the EDA agenda as presented and the items on the consent calendar. The motion passed 7-0. 5. Reports – none 6. Old business – none DocuSign Envelope ID: 4170C448-18C6-4F3B-A4CF-8524455BA6F4 Economic Development Authority -2- Sept. 20, 2021 7. New business 7a. 2022 preliminary HRA levy certification EDA Resolution No. 21-23 Ms. Schmitt presented the staff report. She noted the full amount recommended is $1,517,799, which is 0.0185 of the estimated market value allowable for HRA Levy purposes. It was moved by Commissioner Spano, seconded by Commissioner Harris, to waive the reading and adopt EDA Resolution No. 21-23, authorizing the 2022 Preliminary HRA Levy. The motion passed 7-0. 7b. 2022 preliminary EDA levy certification Ms. Schmitt presented the staff report. She noted this is a new request, to go to the redevelopment fund. Commissioner Kraft stated he has concerns on transparency and clarity. He is concerned about a perception of hiding the true number of the levy increase. He added the discussion was about a 6.5% levy increase and no where was it discussed the overall impact which would be 7.8-7.9% increase. He added he has concerns about clarity, noting the uses would be for partial staff salaries and climate investment, but only commercial uses. Commissioner Kraft stated only a minority of residents will understand these issues, adding these are complex issues. He does not understand how this creates a stable funding source as an EDA levy. He stated the council sets each levy amount each year and could eliminate a levy, if warranted. He asked what the difference between the amounts having noted as an EDA levy versus as part of the general levy but pointed out he does support the amounts of the levy. He noted, however, the way to address transparency and clarity would be to enter these amounts into the general levy, making it clear this is a 7.8-7.9% increase. Commissioner Spano asked what is different about the HRA levy versus the EDA levy in the issue of transparency. Commissioner Kraft stated the city could do a better job on clarity and communicating the combined impact of those levies. He thought the impact of levies should be better explained in materials that are sent out. He stated on transparency, he would like to have the impact of the levies explained better. Commissioner Harris asked about the taxable impact to residents on an EDA levy and HRA levy, on top of the annual levy that is set. She stated she is not sure on the amount of both levies and asked for an average amount per average home. Ms. Schmi tt stated DocuSign Envelope ID: 4170C448-18C6-4F3B-A4CF-8524455BA6F4 Economic Development Authority -3- Sept. 20, 2021 the impact would be $4-5 per year per home for the HRA and $12-15 per year per home for the EDA. Commissioner Harris stated she sees these are tools used in the city’s levy toolbox, and that the commissioners can help explain this information to residents. While she does understand Commissioner Kraft’s comments, she supported a levy at 5% and lower. However, she does support the EDA levy that helps with the city’s sustainability goals, which can be used to fund the climate action plan for commercial and residential. Commissioner Rog asked how the 7.8% figure was reached. Commissioner Kraft stated he looked at the total dollars levied proposed this year and nex t year. Ms. Schmitt stated staff is looking at 3 different levies, in 3 different buckets, which are not combined. Commissioner Kraft stated the impact to residents is the total amount they are being taxed. Commissioner Rog agreed with this 7.8% total tax figure and is uncomfortable adding a new levy which could be supported within the general levy and be more transparent. She stated franchise fees are a hidden tax as well. She noted no new levy should be started this year, and while she supports the goals of the EDA levy, this levy should be added into the general fund for transparency. Commissioner Dumalag stated this is a messaging conversation about the EDA fund and how funds are separate or combined. She stated with the separate levies, the council can expressly state the priories for each year, so she is comfortable with the separate levies, but agreed there should be better messaging around this. President Brausen pointed out the table on page 3 of the packet shows clarity and transparency on the 3 levies. Commissioner Spano asked about the implications of moving the levies if there are legal or staffing impacts. Ms. Schmitt stated this has been looked at and the idea of rolling climate action into an EDA levy is more transparent. She stated the EDA levy is $500,000 and is not rolled into anything else, while being able to be called out easily. She explained the climate action funding can be moved into the general fund, adding the salaries would not be impacted initially. She noted if the preliminary EDA levy is not passed, it will be off the table for the year, adding the commission can pass the preliminary EDA levy and then not pass the final levy. Commissioner Mohamed agreed with Commissioner Kraft’s comments on messaging. She asked if Commissioner Kraft wants to pull the EDA levy off the table completely. Commissioner Kraft stated he would like to have a new line item within the general levy to include the climate action fund, for clarity purposes. DocuSign Envelope ID: 4170C448-18C6-4F3B-A4CF-8524455BA6F4 Economic Development Authority -4- Sept. 20, 2021 Commissioner Mohamed stated she is not comfortable putting the EDA levy aside at this time. She understands the comments about messaging and transparency, but she is in favor of the levy. President Brausen stated he is supportive of the preliminary EDA levy and as the discussions continue, the transparency and clarity will be evident for those who are listening. It was moved by Commissioner Harris, seconded by Commissioner Spano, to adopt the 2022 Preliminary EDA levy by the city council. The motion passed 5-2 (Commissioners Kraft and Rog opposed). 7c. Establishment of the Beltline Residences Tax Increment Financing (TIF) District EDA Resolution No. 21-24 and EDA Resolution No. 21-25 Mr. Hunt presented the staff report. Commissioner Harris asked what constitutes the public redevelopment costs. Mr. Hunt stated there are several costs specified under state statute for which TIF can reimburse developers. In this instance, they refer to building demolition, soil remediation and correction, and structured parking. Commissioner Harris asked who determines what is an appropriate revenue projection. Mr. Hunt stated staff works with Ehlers in analyzing development proformas to ensure they meet the required “but-for” test. Commissioner Rog stated, as noted in the past, she will be opposing the next two items. She stated she is not completely opposed to TIF, as it can be a useful tool, but has concerns that TIF is consuming an ever-larger portion of the tax base, benefiting developers but potentially creating extra costs for the community. Commissioner Rog stated TIF comes with the territory when dealing with development and the council approves it every time. She stated all systems warrant scrutiny. She stated Opus is the developer here and the affordable portion of the project comprises about 2/3 of the total of the TIF request. She continued given that only 1 in 10 of the apartments will be affordable, is this what the city wants, and is this the best bargain the city can strike. She stated given these developers’ access to resources, from a wealth disparities perspective, she questions if TIF is critical to this projects’ success and whether the city needs to forego tax revenue for that many years to get 19 affordable singles and 5 family units. She stated the city gets the money back eventually but loses out as well and forgoes significant tax revenue of about $400,000 per year, as does the county and school district. She stated these monies could be invested in climate DocuSign Envelope ID: 4170C448-18C6-4F3B-A4CF-8524455BA6F4 Economic Development Authority -5- Sept. 20, 2021 initiatives, lowering the levy, paying down debt, and partnering with non-profits to create more affordability. She stated the city should be requiring more and be a leader like the city is in other areas. She would like a deeper dive into TIF impacts and look at other ways to achieve city goals. Commissioner Dumalag stated she will support this TIF proposal and the “but -for” is pretty unique, especially with the city’s history of being a dumping ground for others. She stated the project is compliant with inclusionary housing policies for 25 years , green policies, and while the city’s racial equity policies are still being created regarding TIF, they are working with the city on that. She stated the community needs to know the city is thinking broadly about housing. Commissioner Kraft thanked Commissioner Rog for her comments, adding they should continue to be discussed further. He added there is another development item on the agenda tonight that is next door and similar with flood plain, and that one is complying with green policies and not asking for TIF. He asked for staff perspective on this. Mr. Hunt stated since the other project has not asked for TIF, staff has not seen their financial information or pro forma. He stated they might have lower property acquisition price, construction costs, operating costs, or different financing structure. Commissioner Mohamed agreed with Commissioner Rog on her comments. She added every time TIF comes up, there is minimal affordable housing. However, as hesitant as she is to support this, one apartment is better than nothing to her and it will help at least one family. She added though a lot of the TIF is for luxury apartments noting most of the apartments she approves of, she cannot afford to live in. She stated we may need to look at affordable housing differently than with TIF only. Commissioner Spano stated if the EDA is uncomfortable with what developers propose, then that is on the EDA. He stated the EDA sets those parameters and the developers work with that. He agreed with Commissioner Mohamed’s comments. He stated he will support this request and asked how many dollars the city has given out in TIF and how much has the city gotten back over time. Mr. Hunt stated the city’s TIF district portfolio shows over 1100% increase in market value. Commissioner Spano stated he typically looks at TIF as an investment fund that the city puts money into and that brings back a return, in order to fund more projects in the future. Commissioner Rog stated she is not criticizing staff or her colleagues or anyone’s performances but she would like to find other times to discuss her concerns outside of the approval process. Commissioner Spano stated he would like to discuss this further, compare what other cities are doing to pay for the cost of affordable housing, how they are using or not DocuSign Envelope ID: 4170C448-18C6-4F3B-A4CF-8524455BA6F4 Economic Development Authority -6- Sept. 20, 2021 using TIF, as well as look at additional financing options to facilitate these developments. President Brausen stated he will support this TIF request. He stated the development will allow for workforce racial equity goals, create luxury and affordable units and commercial property, and follow green policies. He stated he disagreed with the characterization that the EDA always approves TIF requests. He said Ehlers carefully reviews all TIF requests before they come to the EDA and staff only presents deals that have been vetted and the EDA can support. He stated he will support this request. Commissioner Kraft stated the key question for a study session will be if this is the most cost-effective use of the city’s dollars. He stated he will support this. It was moved by Commissioner Dumalag, seconded by Commissioner Harris, to waive the reading and adopt EDA Resolution No. 21-24, approving the establishment of the Beltline Residences Tax Increment Financing District (a redevelopment district); and to waive the reading and adopt EDA Resolution No. 21-25, authorizing an interfund loan for advance of certain costs in connection with the Beltline Residences TIF District. The motion passed 6-1 (Commissioner Rog opposed). 7d. Redevelopment contract with Beltline Residences, LLC EDA Resolution No. 21- 26 Mr. Hunt presented the staff report. It was moved by Commissioner Dumalag, seconded by Commissioner Mohamed, to waive the reading and adopt EDA Resolution No. 21-26, approving the redevelopment contract between the EDA and Beltline Residences, LLC. The motion passed 6-1 (Commissioner Rog opposed). 8. Communications – none 9. Adjournment The meeting adjourned at 6:48 p.m. ______________________________________ ______________________________________ Melissa Kennedy, secretary Tim Brausen, president DocuSign Envelope ID: 4170C448-18C6-4F3B-A4CF-8524455BA6F4