HomeMy WebLinkAbout2022/10/24 - ADMIN - Agenda Packets - City Council - Study Session AGENDA
OCT. 24, 2022
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meeting or study session.
6:30 p.m. STUDY SESSION – community room
Discussion items
1. 120 min. Annual TIF management update and pooled TIF policy discussion
Written reports
2. Quarterly development update – 4th Quarter 2022
3. City service impacts of new development
4. Third quarter investment report (July – Sept 2022)
5. September 2022 monthly financial report
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civic TV cable channel 17. The agenda and full packet are available after noon on Friday on the city’s website.
If you need special accommodations or have questions about the meeting, please call 952.924.2505.
Meeting: Study session
Meeting date: October 24, 2022
Discussion item: 1
Executive summary
Title: Annual TIF management update and pooled TIF policy discussion
Recommended action: Review the TIF District Management Report and provide staff with
policy direction.
Policy considerations:
1. Does the EDA/city council wish to adopt Ehlers’ recommendations to:
a) Return increment to county for redistribution: Continue to support pooling tax
increment generated from seven TIF districts (named in the report) to be utilized for
qualified affordable housing uses through the city’s affordable housing trust fund?
b) 2021 Special TIF Legislation: Review the TIF districts that have cash balances to
determine if funds should be transferred to the Affordable Housing Trust Fund?
c) Modify the TIF plan budgets: for two TIF districts (named in the report) to allow for
an additional 10% election for TIF pooling for qualified affordable housing uses?
d) Develop a spending plan: Develop a plan to transfer up to approximately $1.76
million in unobligated tax increment from existing TIF districts to a new account to
be used for construction or substantial renovation of building(s) by a private entity,
as temporarily allowed by the State Legislature?
2. Alternatively to 1a, does the EDA/city council wish to pool TIF for other allowable uses?
Summary: At the study session Stacie Kvilvang with Ehlers and staff will present the attached
Annual TIF District Management Executive Summary and discuss the EDA’s continued use of
pooled tax increment for qualified affordable housing uses. The Executive Summary is based on
a deeper dive that reviews the status, financial condition, debt management and future value
of the city’s tax increment districts. Revenues generated from each TIF district are also
described, alongside recommendations to consider. It also describes how recently enacted
special legislation will provide the city with greater flexibility on the use of tax increment funds
to enable the creation of additional affordable rental and owner-occupied housing as well as
other private development. EDA/council will be asked to consider the policy questions above
and provide staff direction. Staff direction will then be incorporated into 2023 budget planning.
Financial or budget considerations: A portion of the tax increment from several TIF districts is
being captured to advance the city’s strategic priority of increasing and maintaining the city’s
supply of affordable housing. The elections the EDA/council makes may impact the amount of
pooling available for affordable housing and may be limited by the amount of available TIF and
regulatory uses. In addition, some of these changes will impact the 2023 budget and long-range
financial plan.
Strategic priority consideration: St. Louis Park is committed to providing a broad range of
housing and neighborhood oriented development.
Supporting documents: Discussion, Annual TIF district management report - Summary
Prepared by: Greg Hunt, economic development manager
Reviewed by: Karen Barton, community development director / EDA executive director
Melanie Schmitt, finance director
Approved by: Kim Keller, city manager
Study session meeting of October 24, 2022 (Item No. 1) Page 2
Title: Annual TIF management update and pooled TIF policy discussion
Discussion
Present considerations: For many years, staff along with representatives from Ehlers, the
city’s/EDA’s financial advisor, have presented the EDA/city council with an annual report
regarding the financial status and management of the city’s tax increment financing (TIF)
districts.
The purpose of the Annual TIF District Management Report is to review the status, financial
condition, debt management and future value of the city’s 25 TIF districts. Information in the
report is used by staff as a reference guide when performing analyses and making
recommendations to the EDA. The report also describes the revenues generated from each TIF
district and presents recommendations to consider, including the capture of tax increment for
qualified affordable housing uses associated with the city’s affordable housing trust fund. It also
describes how recently enacted legislation will provide the city with greater flexibility on the
use of TIF funds to enable the creation of additional affordable rental and owner-occupied
housing as well as other private development.
The city currently has 25 TIF districts. 15 of them are Redevelopment Districts, seven are
Housing Districts, two are Renovation & Renewal Districts and one is a Economic Development
District. While all four district types serve to advance the city’s priorities, different allocation
and eligibility rules govern each of them.
Tax increment financing is a method to enable developers to invest in city priorities by
capturing the extra taxes generated by the new development. The funds captured are called
increment and are the difference in taxes generated on the original, or base value of the
property, and the taxes generated from the new development. When using TIF, the developer
must pay the full tax to Hennepin County. The county then returns a portion of the taxes paid
to the city for distribution to the developer per the TIF agreement.
Past policy direction from the EDA/council has led the city to use its portion of TIF increment in
the following ways:
• Establish and fund an Affordable Housing Trust Fund (AHTF): The AHFT exists to support
the preservation and production of affordable housing. TIF funds are a significant a
source of revenue toward the AHTF. Ehlers, the city’s financial consultant, recommends
establishing a minimum fund balance of $5 million for the AHTF. However, since the city
received special legislation allowing for the deposit of pooled TIF for affordable housing
directly into the AHTF for use per the AHTF guidelines, the city must demonstrate over
the next several years the effectiveness of allowing this. Therefore, the focus of the fund
has been to utilize the available funds to the greatest extent possible to support the
creation and preservation of affordable housing, as opposed to building the $5 million
fund balance at this time. More information about the AHTF can be found in this report.
• Fund related city infrastructure projects such as the Highway 7 and Wooddale Avenue
interchange, Wooddale bridge widening, 36th Street traffic signals, and Wooddale and
36th Street water/sewer infrastructure replacements and street reconstructions totaling
approximately $13.3 million.
Study session meeting of October 24, 2022 (Item No. 1) Page 3
Title: Annual TIF management update and pooled TIF policy discussion
Highlights from Ehlers 2022 TIF District Management Report include:
• The city has proactively utilized TIF to spur significant redevelopment within the city and
to create options for affordable housing. Overall, the city’s TIF districts have met their
intended purpose, performed well, and furthered other city projects.
• Most districts are expected to fully pay off their obligations to developers ahead of their
term. No general fund dollars have been used to supplement TIF obligations to date, nor
are they expected to.
• The overall market value of the city’s TIF district portfolio has increased approximately
1,117% from when the districts were established to 2022.
• Due to one TIF district expiring (Hardcoat) at the end of 2022, Ehlers estimates the city
will have approximately $25,000 additional tax capacity open up to alleviate residents’
tax burden.
• In 2022, the city will receive approximately $14.274 million in tax increment. These tax
dollars would not be generated but/for the EDA’s creation of a TIF district and approval
of TIF assistance provided to various developments.
• Fifty eight percent of the tax increment received will be distributed toward various
development projects as well as bond and interfund loan payments ($8.278M); 20% will
go to TIF fund balance ($2.9M); 8% to Affordable Housing Trust Fund (up to $1.2M); 7%
to the County for redistribution ($945k); 6% for Spending Plan authority ($815k); and l%
for administration ($147k).
• In 2022, the city has approximately 11.9% of its tax capacity captured in TIF districts.
Over the last 5 years the city has averaged 11.4% and over the last 10 years it has
averaged 10.5%. It is anticipated that this percentage will decrease in 2024 but increase
again in 2025 as the newer TIF districts come online.
• The EDA’s continued use of tax increment financing and its annual election to modify TIF
district budgets to utilize tax increment for affordable housing is helping the city meet its
affordable housing goals. Since 2017, the EDA’s use of TIF has resulted in the following:
o 3,388 total new housing units approved, constructed, or completed.
o 2,561 new market rate housing units.
o 827 new housing units considered affordable to households at various area
median incomes (AMI) levels. The breakdown of those units by income level is as
follows:
39 at 30% AMI
22 at 40% AMI
256 at 50% AMI
371 at 60% AMI
140 at 80% AMI
o Approximately 24% of the multifamily housing units constructed in St. Louis Park
since 2017 are considered affordable.
Study session meeting of October 24, 2022 (Item No. 1) Page 4
Title: Annual TIF management update and pooled TIF policy discussion
Status of Affordable Housing Trust Fund
The current balance of the city’s AHTF is $3,663,080 (through September 30, 2022) is
detailed in the following chart:
The revenue year-to-date for 2022 is only 50% of the revenue for the year, as the AHTF
will receive the remaining 50% of the revenue in December 2022 from both the pooled
TIF and the HRA levy payments. Transfers will be made from the AHTF to the Housing
Rehab Fund for staff salaries and benefits at the end of 2022. Two additional
redevelopment projects receiving AHTF deferred loans are expected to close by the end
of 2022. The balance of the AHTF at year end is estimated to be $2,755,375.34 and is
detailed as follows:
Estimated balance of AHTF December 31, 2022
9/30/22 balance $3,663,080.34
Revenue
Expected HRA levy settlement, December 2022 $782,366
Expected Housing TIF settlement, December
2022 $215,519
Expected Pooled TIF settlement, December 2022 $328,281
Expenditures
Transfer to housing rehab for salaries ($397,133)
Transfer to housing rehab fund for TIF eligible
programs ($368,500)
Beltline - deferred loan ($618,238)
Arbor House - deferred loan ($850,000)
Balance 12/31/2022 $2,755,375.34
Affordable Housing Trust
Fund 2019 2020 2021
2022 YTD
(9/30/2022) Total
Revenue:
HRA levy 1,029,752.00 1,126,513.16 782,366.16 2,938,631.32
Pooling from housing
TIF districts 1,044,748.98 215,519.15 1,260,268.13
35% pooling from
redevelopment districts 911,234.27 328,281.25 1,239,515.52
Net proceeds from estate
sale - 3611 Glenhurst 4,398.37 4,398.37
Interest income allocation 116.14 113.55 7,465.87 13,389.73 21,085.29
Expenditures:
Rise on 7 deferred loan (1,800,000.00) (1,800,000.00)
Bank fee allocation (546.88) (271.41) (818.29)
4,514.51 1,029,865.55 3,089,415.40 (460,715.12) 3,663,080.34
Study session meeting of October 24, 2022 (Item No. 1) Page 5
Title: Annual TIF management update and pooled TIF policy discussion
AHTF Impact on new construction
Development AHTF
dollars
Units created Impact of AHTF
Rise on 7 $1,800,000 120 affordable units:
19 units @ 30% AMI,
22 units @ 40% AMI,
21 units @ 50% AMI,
58 units @ 60% AMI
24 affordable three-bedroom
units
This development could not have
been built as a 100% affordable
project without AHTF dollars. Under
the inclusionary housing policy, this
development was required to
include one of the following
options: six units @ 30% AMI; 12
units @ 50% AMI; or 24 units @ 60%
AMI.
Beltline $618,238 Five units @ 30% AMI,
77 units @ 60% AMI
22 affordable three-bedroom
units
The AHTF bought down five units to
30% AMI affordability. Under the
inclusionary housing policy, this
development was only required to
include 77 units @ 60% AMI.
Arbor House $850,000 Five units @ 30% AMI,
Five units @ 50% AMI,
104 units @ 60% AMI
37 affordable three-bedroom
units
The AHTF bought down five units to
30% AMI affordability.
Under the inclusionary housing
policy, this development was only
required to include one of the
following options: six units @ 30%
AMI; 12 units @ 50% AMI; or 23
units @ 60% AMI.
In addition to the ongoing funding of a number of housing programs, it is also anticipated
that $1-2 million will be allocated from the AHTF in 2023 for the Minnetonka Blvd
affordable homeownership development and up to $3 million will be allocated in the next
few years towards the acquisition and rehabilitation of a NOAH (naturally occurring
affordable housing) apartment building for a pilot multi-family housing land trust project.
The AHTF will also likely be used to facilitate more deeply affordable and/or larger units in
proposed and planned multifamily development projects as they occur.
Policy question 1a: Does the EDA/city council wish to adopt Ehlers’ recommendation to
continue to support pooling tax increment generated from the Wolfe Lake, Ellipse, Park
Center, and Aquila TIF Districts and dedicate the funds to the city’s affordable housing
trust fund?
The Minnesota TIF Act allows for the EDA/city to pool 25% of the tax increment generated
from redevelopment TIF districts to be used for qualified redevelopment expenses outside
of those districts. It also allows an additional 10% of tax increment from these districts to be
pooled for rental housing expenses that meet low-income housing tax credit requirements
such as acquisition and site preparation, construction, rehabilitation, and public
improvements directly related to the housing, as long as those costs were not funded
through tax credits. The funds can be spent anywhere within the city geographically and do
not need to be located within a specific project area.
Study session meeting of October 24, 2022 (Item No. 1) Page 6
Title: Annual TIF management update and pooled TIF policy discussion
To date, the city has elected to retain an additional 10% of the TIF in four (4) of
its redevelopment districts (Wolfe Lake, Ellipse, Eliot Park and The Shoreham) for affordable
housing. This allows the city to retain a full 35% of the TIF for this purpose and is providing a
crucial funding source to assist the city in meeting its affordable housing goals. The Ellipse
TIF District will decertify at the end of 2023 so any available balances will be transferred to
the AHTF.
Policy question 1b: 2021 Special TIF Legislation: Review the TIF districts that have cash
balances to determine if funds should be transferred to the Affordable Housing Trust
Fund?
In 2021 the city received special legislation which allowed it to transfer any unused balances
in its housing TIF districts and the 35% from redevelopment districts to its Affordable
Housing Trust Fund (AHTF). In 2021, the city transferred $1,955,983 to the AHTF and in
2022 is expected to transfer approximately an additional $1.1 to $1.2 million for a total of
approximately $3.2 to $3.3 million over the two years. The city has the authority to transfer
funds until December 31, 2026, and if the EDA/city keeps the various districts open until
that time, in total it could have approximately $9.3 million available for eligible affordable
housing expenses. There is no timeframe in which the EDA/City need to expend the funds in
the AHTF.
Policy question 1c: Does the EDA/city council wish to adopt Ehlers’ recommendation to
modify the TIF plan budgets for the Mill City and Zarthan TIF Districts to allow for an
additional 10% election for TIF pooling for qualified affordable housing uses?
The final payments on the Mill City and Zarthan TIF Notes are expected to be paid on
February 1, 2023. Once all note obligations are paid, these redevelopment TIF districts must
either be decertified or the TIF district plans modified. Provided the EDA continues to
support pooling an additional 10% within these two TIF Districts for affordable housing
purposes, Ehlers recommends that the TIF plans for these two TIF districts be modified to
allow up to 35% of their tax increment be retained annually for eligible affordable housing
costs through the required decertification date of December 31, 2026. The remaining 65%
of the increment would be returned to the county each year for redistribution to the city,
county, and school district as general property taxes.
Pooled funds would then be transferred to the AHTF to be used as permitted under the
Affordable Housing Trust Fund Policy. In 2023 the total annual amount available from these
districts would be approximately $1.1 million and the city’s proportionate share of these
dollars is approximately $462,000.
Study session meeting of October 24, 2022 (Item No. 1) Page 7
Title: Annual TIF management update and pooled TIF policy discussion
Policy question 2: Alternatively to 1a, does the EDA/city council wish to pool TIF for other
allowable uses?
As an alternative to pooling for affordable housing purposes, the EDA/city council could elect to
pool up to 25% of the available TIF for redevelopment purposes. These pooled TIF funds could
be used for authorized Public Redevelopment Costs (such as demolition, soil testing, correction
and remediation, excavation, shoring, as well as public infrastructure and structured parking)
and can be used anywhere in the city.
Policy question: Does the EDA/city council wish to adopt Ehlers’ recommendation to adopt a
spending plan to transfer up to approximately $1.76 million in unobligated tax increment
from existing TIF districts to a new account to be used for construction or substantial
renovation of building(s) by a private entity, under the 2021 Minnesota State Legislature
temporary authority?
In 2021 the legislature approved general legislation that allowed cities to transfer any legally
retained TIF into a special account for use to stimulate private development (no restrictions on
use). The city has until December 31, 2022, to approve a Spending Plan under this authority and
transfer the dollars to a separate account. If the EDA/city were to approve a Spending Plan,
they would have approximately $1.76 million available for projects and would be required to
expend the dollars by December 31, 2025 (unspent dollars go back to the “giving” districts, with
some being transferred to the city’s AHTF).
In 2023, Hennepin County will be paid $1.88 million from seven (7) TIF districts to be distributed
to the city, county, and school district. The city’s proportionate share of these dollars is
approximately $782,000 and will be utilized for capital projects pursuant to the city’s Capital
Improvement Plan and long-range Financial Management Plan.
Projects assisted with TIF are making substantive contributions to the city’s economy, taxable
market value, affordable housing goals and it’s AAA bond rating.
Management of the city’s TIF districts are regularly monitored by Ehlers and city staff and
annual reports on the financial condition of each TIF district are filed with the State Auditor’s
Office. While the EDA’s use of TIF is positively contributing to the city’s economic vitality, it will
need to continue monitoring the desire to keep districts open to fund affordable housing goals
versus utilizing those captured dollars to reduce the financial impacts to taxpayers.
Ehlers’ Recommendations
Based upon its updated financial review of the city’s TIF districts, Ehlers recommends the
following:
1. Return of Increment to County for Redistribution. Return approximately $1.88M from
seven (7) of the TIF Districts to Hennepin County for redistribution (Ellipse, Zarthan, Eliot
Park, Wolfe Lake, Hardcoat, Shoreham, and 4900 Excelsior). The city’s proportionate
share will be approximately $782,000 to be utilized by the city for various capital
improvements in accordance with its long-range financial management plan.
Study session meeting of October 24, 2022 (Item No. 1) Page 8
Title: Annual TIF management update and pooled TIF policy discussion
2. 2021 Special TIF Legislation. Ehlers and staff review the TIF districts that have cash
balances available for transfer prior to year-end to determine if the estimated $1.1 to
$1.2 million should be transferred to the city’s Affordable Housing Trust Fund (AHTF) for
2022.
3. Administrative Modification to TIF Plan Budgets for Affordable Housing. Modify the TIF
plan budgets for the Mill City and Zarthan TIF Districts to allow an additional 10% of
these district’s tax increment be retained for affordable housing (total of 35%). This
action would preserve the city’s ability to retain dollars for eligible rental housing
purposes starting in 2024.
4. Develop a Spending Plan. Pursuant to legislation adopted in 2021, develop a Spending
Plan and hold a public hearing to allow the EDA to transfer unobligated tax increment to
a new account for use in the construction or substantial renovation of private
developments that would not otherwise commence without the assistance. This would
provide the EDA the greatest flexibility in utilizing TIF balances in various districts for
approved projects. The EDA has approximately $1.76 million available from eight (8)
districts (West End, Victoria Ponds, Zarthan, Wolfe Lake, Mill City, Park Commons,
Aquila and 4900 Excelsior) for transfer under this authority if it approves a Spending
Plan by December 31, 2022 and transfers the dollars by this date to a separate account.
The EDA has until December 31, 2025, to expend the funds and any unspent funds
would be transferred back to the “giving” TIF District.
TIF Dashboard
During the 2021 TIF management review, the suggestion was made to staff that the TIF district
information presented on the city’s web site be made easier to understand and more user
friendly. In response, staff has created an online TIF Dashboard. The dashboard provides data
and a map to visualize the various TIF districts throughout the city, as well as information
regarding the TIF districts’ financial and market value impacts. The dashboard is still in draft
form and will be refined in the coming weeks to include the data provided in the 2022 TIF
Management Report. Here’s a link to the beta version of the TIF Dashboard.
Next steps: Provided the EDA/council concurs with the above recommendations; staff will work
with Ehlers to bring the following actions forward for formal consideration:
Previous/future actions Governing body Date
Modify the TIF plan budgets for the Mill City and Zarthan
TIF Districts
EDA
(consent)
Dec 5 or 19,
2022
Modify the TIF plan budgets for the Mill City and Zarthan
TIF Districts
City Council
(consent)
Dec 5 or 19,
2022
Hold a public hearing on a Spending Plan that allows the
EDA to transfer unobligated tax increment to a new
account for use in the construction of approved private
buildings.
City Council and EDA
action
Dec 5 or 19,
2022
October 2022 TIF DISTRICT MANAGEMENT REVIEW & ANALYSIS – EXECUTIVE SUMMARY: City of St. Louis Park, MN Prepared by: Ehlers 3060 Centre Pointe Drive Roseville, Minnesota 55113 BUILDING COMMUNITIES. IT’S WHAT WE DO. Study session meeting of October 24, 2022 (Item No. 1) Title: Annual TIF management update and pooled TIF policy discussionPage 9
TIF District Management Review & Analysis – Executive Summary October 2022 St Louis Park, Minnesota Page 2 Table of Contents OVERVIEW ................................................................................................................................................................................... 3 TIF DISTRICT SUMMARY ...................................................................................................................................................................... 9 TIF AS A DEVELOPMENT TOOL ....................................................................................................................................................... 15 RECENT STATE-WIDE GENERAL LEGISLATION .......................................................................................................................... 19 TIF FOR AFFORDABLE HOUSING ................................................................................................................................................... 20 IMPACT OF DECERTIFIED AND AFFORDABLE HOUSING POOLING TIF DISTRICTS ........................................................ 23 RECOMMENDATIONS ......................................................................................................................................................................... 24 Study session meeting of October 24, 2022 (Item No. 1) Title: Annual TIF management update and pooled TIF policy discussionPage 10
TIF District Management Review & Analysis – Executive Summary October 2022 St Louis Park, Minnesota Page 3 OVERVIEW Tax increment is a financing tool authorized by state law, that allows an authority to capture and use most of the increased local property tax revenues from new development within a defined geographic area for a defined period of time. In general, tax increment revenues are used to pay for eligible project costs which encourage creation or retention of jobs, redevelop blighted areas or polluted sites and construction of affordable housing. Revenue from tax increment financing (TIF) districts is a financial asset of the City. This revenue tool allows the City to address blight, contamination, housing or redevelopment needs for the parcels in the TIF district for a specified period of time. The revenue generated is first used to pay debt service on outstanding bonds, interfund loans and developer pay-as-you-go notes (PAYGO). A portion, but not all, of the remaining revenues can be used to participate in other eligible development projects and City initiatives. Over the years, the City utilized unobligated revenues from older TIF districts to complete the following projects: Park Commons property assembly and public improvements Excelsior Boulevard streetscape improvements Excelsior Boulevard bridge improvements Reilly tar clean-up activities Highway 7 and Louisiana Avenue storm water intersection improvements Louisiana Court Rehabilitation Erv’s Garage redevelopment Bikemasters (Construction Assistance Program) Hardcoat (Construction Assistance Program) Home Hardware Store (Construction Assistance Program) Projects related to Southwest Light Rail Transit (SWLRT) Fiber optic infrastructure The Quentin multifamily housing development The City has proactively utilized TIF to spur significant redevelopment within the City and to create options for life-cycle housing, different tenure of housing and affordable housing. In addition redevelopment was undertaken to increase commerce options and opportunities and to create jobs in the City in the form of new office, retail and industrial developments. In 1993 the City began investing in public/private partnerships for redevelopment, with the first district being a Hazardous Substance Tax Increment (HSTI) district for Park Nicollet to complete extensive Study session meeting of October 24, 2022 (Item No. 1) Title: Annual TIF management update and pooled TIF policy discussionPage 11
TIF District Management Review & Analysis – Executive Summary October 2022 St Louis Park, Minnesota Page 4 environmental remediation so they could construct approximately 486,500 sq/ft of new medical office space. In 1997, the City/EDA began investing in redevelopment projects that included housing, hotels, industrial and commercial in mixed-use buildings. Since that time, the City/EDA has invested (TIF PAYGO Notes issued) approximately $76 million of the $103 million. Of the $76 million invested, the current taxable market value is approximately $1.267 billion. Below is a chart showing total residential/hotel units and/or commercial uses that are or will be constructed when the remaining 11 TIF PAYGO notes are issued (bringing total investment up to $103 million): UseTotal Units or Sq. Ft.Market Rate Affordable % Affordable TIF InvestmentResidential5,1704,44872214%Commercial566,654Office914,500Industrial201,100Hotel488N/A N/A N/A103,150,384$ In 2015, the City adopted an inclusionary housing policy requiring any new housing developments receiving public financial assistance (i.e. TIF), seeking a PUD, or comprehensive plan amendment include affordable units. The policy was subsequently amended in 2017 and 2019. Overall, the City’s TIF districts have met their intended purpose, performed well, and furthered other City projects as noted above. In summary: 1. Number of Districts. The City has created thirty-one (31) TIF Districts since 1972. Six of the districts are decertified (Oak Park Village, Excelsior Blvd, Trunk Hwy 7, Park Nicollet HSTI, Victoria Ponds and Edgewood) and there are currently twenty-five (25) remaining districts as noted in the chart on the following page (18 districts generating TIF). Hardcoat will decertify at the end of 2022 and Park Center, The Shoreham, Ellipse and Eliot Park will decertify at the end of 2023. Seven (7) of the districts haven’t received their first increment since they were established in 2021 and 2022 (Texa Tonka, Beltline Residences, Rise on 7, 9920 Wayzata Boulevard, Wooddale Avenue Apartments, Beltline Station 1 and Beltline Station 2). The following chart summarizes the existing TIF districts by type: Type of DistrictNumberEconomic Development1Housing7Redevelopment15Renovation and Renewal2TOTAL25 Study session meeting of October 24, 2022 (Item No. 1) Title: Annual TIF management update and pooled TIF policy discussionPage 12
TIF District Management Review & Analysis – Executive Summary October 2022 St Louis Park, Minnesota Page 5 2. Increase in Market Value. The overall market value of the City’s eighteen (18) TIF districts where development is complete (or nearly completed) and generating tax increment has increased approximately 1,117 percent since their establishment (see chart on page 15). 3. Tax Dollars Available Due to TIF District Termination/Decertification. Due to one (1) district terminating (Hardcoat - end of legal term) at the end of 2022, in 2023 the City could have an additional $11,113 available for General Fund purposes. Over the next 5 years, decertifying districts could provide an additional $1.153 million in tax dollars to the City ($1.543M cumulative total) and over the next 10 years this cumulative amount will increase by approximately $2.3 million to $3.8 million. It should be noted that these dollars are only realized if the City choses to levy this amount. 2023Next 5Next 10TIF DistrictObligation(s) Paid In Full Decertifies Dec. 31 TOTALTOTALTOTALHardcoat 2022202224,872 24,872 24,872 Eliot Park20202023- 400,968 400,968 The Shoreham20212023- 467,981 467,981 Park Center 20152023- 161,590 161,590 Ellipse 20202023- 658,812 658,812 Zarthan20222025- 427,110 427,110 4900 Excelsior20252025- 617,435 617,435 Mill City 20222026- 537,098 537,098 Wolfe Lake 20202026- 157,954 157,954 Park Commons 20272027- - 2,647,097 Highway 7 Corporate Center 20272027- - 53,504 Elmwood Village20292029- - 2,208,659 Aquila 20182032- - 222,642 Total Annual Captured Net Tax Capacity Returned to Tax Rolls24,872 3,453,821 8,585,722 City Tax Rate for Taxes Payable in 2022 (1)44.681%Estimated Additional Annual Tax Levy Available (1)11,113$ 1,543,202$ 3,836,187$ (1) - Assumptions:- Calculates additional dollars the City could levy and still maintain the same tax rate as Pay 2022.- Assumes no change in existing tax base from prior year- Assumes no change in the Fiscal Disparities Distribution Dollars from Pay 2022 Study session meeting of October 24, 2022 (Item No. 1) Title: Annual TIF management update and pooled TIF policy discussionPage 13
TIF District Management Review & Analysis – Executive Summary October 2022 St Louis Park, Minnesota Page 6 4. 2022 TIF Collections. In 2022, the City will receive approximately $14.274 million in TIF. These tax dollars would not be generated But For the creation of a TIF district and TIF assistance provided to the developments. If these dollars were not captured in TIF districts, below is a chart detailing where the funds would go to by taxing entity: Study session meeting of October 24, 2022 (Item No. 1) Title: Annual TIF management update and pooled TIF policy discussionPage 14
TIF District Management Review & Analysis – Executive Summary October 2022 St Louis Park, Minnesota Page 7 5. Where TIF Dollars are Spent. The $14.274 million in TIF collected in 2022 will be utilized as follows: As noted, the majority or 58% will go to PAYGO, bond and interfund loan payments ($8.278M), 20% goes to fund balance ($2.9M), 8% to Affordable Housing Trust Fund ($1.2M), 7% to the County for redistribution ($945k), 6% for Spending Plan authority ($815k) and l% for administration ($146k). 6. Tax Capacity Captured in TIF. In 2022, the City has approximately 11.9% of its tax capacity captured in TIF districts. Over the last 5 years the City has averaged 11.4% and over the last 10 years it has averaged 10.5%. It is anticipated that this amount will go down in 2024 but increase again in 2025 as the newer TIF districts come online (see chart on page 17). Study session meeting of October 24, 2022 (Item No. 1) Title: Annual TIF management update and pooled TIF policy discussionPage 15
TIF District Management Review & Analysis – Executive Summary October 2022 St Louis Park, Minnesota Page 8 7. Average Number of Years of TIF Assistance. The average number of years of TIF assistance for projects in the last ten (10) years is approximately thirteen (13) years and within the last five (5) years is seventeen (17) years (see chart on page 16). 8. Redevelopment TIF Districts and Affordable Housing. To date, the City has elected to retain an additional 10% of the TIF in four (4) of its redevelopment districts (Wolfe Lake, Ellipse, Eliot Park and The Shoreham) for affordable housing. This allows the City to retain 35% of the TIF for this purpose and is providing a crucial funding source to assist the City in meeting its affordable housing goals. Eliot Park, The Shoreham and Ellipse are decertifying at the end of 2023. 9. TIF For Affordable Housing. In 2021 the City received special legislation which allowed it to transfer any unused balances in its housing TIF districts and the 35% from redevelopment districts to its Affordable Housing Trust Fund. In 2021, the City transferred $1,955,983 and in 2022 is expected to transfer up to $1.22 million for a total of approximately $3.346 million. Of the $1.22M transferred, approximately $475,655 is the City’s portion of taxes. The City has the authority to transfer funds until December 31, 2026, and if the City keeps the various districts open until that time, in total it could have approximately $9.354 million available for affordable housing. There is no timeframe in which the EDA/City need to expend the funds in the AHTF by (see chart on page 21). 10. 2021 Spending Plan Authority. In 2021 the legislature approved general legislation that allowed cities to transfer any legally retained TIF into a special account for use to stimulate private construction of buildings (no restrictions on use). The City has until December 31, 2022, to approve a Spending Plan under this authority and transfer the dollars to a separate account. If the EDA and City were to approve a Spending Plan, they would have approximately $1.76 million available for projects and would be required to expend the dollars by December 31, 2025 (unspent dollars go back to the “giving” districts, with some being transferred to the City’s AHTF). DistrictSpending Plan DollarsWest End355,716$ * Victoria Ponds132,337$ * Zarthan247,269$ * Wolfe Lake123,817$ * Mill City150,654$ Park Commons300,345$ * Aquila234,704$ 4900 Excelsior217,177$ TOTAL1,762,019$ * If not used under Spending Plan transfer to AHTF Study session meeting of October 24, 2022 (Item No. 1) Title: Annual TIF management update and pooled TIF policy discussionPage 16
TIF District Management Review & Analysis – Executive Summary October 2022 St Louis Park, Minnesota Page 9 11. Returned Increment. The City will be returning approximately $1.88 million from seven (7) districts. The City’s proportionate share of these dollars is approximately $780,000 and will be utilized for capital projects pursuant to the City’s Capital Improvement Plan and long-range Financial Management Plan. District Amount Returned City Portion *Ellipse 874,001$ 361,155$ Zarthan155,000$ 64,049$ Eliot Pk355,421$ 146,867$ Wolfe Lake117,075$ 48,378$ Hardcoat53,326$ 22,035$ Shoreham272,288$ 115,050$ 4900 Excelsior58,000$ 23,967$ TOTAL1,885,111$ 781,500$ * Ellipse is split 50/50 for returned TIF in 2022 and 2023 12. Financial Health of TIF Districts. The City’s TIF districts are self-supporting and most districts are anticipated to fully pay off their obligations to developers ahead of their term. No general fund dollars have been used to supplement TIF obligations to date, nor are they expected to. 13. City Bond Rating. Projects assisted with TIF are making a substantive contribution to the City’s economy, taxable market value, affordable housing goals and its AAA bond rating Management of the City’s TIF districts are regularly monitored by Ehlers and City staff and annual reports on the financial condition of each TIF district are filed with the State Auditor’s Office. While the EDA’s use of TIF is positively contributing to the City’s economic vitality, it will need to continue monitoring the desire to keep districts open to fund affordable housing goals versus utilizing those captured dollars to reduce the financial impacts to taxpayers. TIF DISTRICT SUMMARY Currently the City has twenty-five (25) active TIF districts, and one HSTI District (Hwy 7 Corporate Center). These districts are outlined in the charts that follow on the next pages. Study session meeting of October 24, 2022 (Item No. 1) Title: Annual TIF management update and pooled TIF policy discussionPage 17
TIF District Management Review & Analysis – Executive Summary October 2022 St Louis Park, Minnesota Page 10 ParkZarthan/ MillParkAquilaElmwoodCenter16th AvenueCityCommonsCommonsVillageDistrict TypeHousingRedevelopmentRedevelopmentRedevelopmentRedevelopmentHousingRenewal and RenovationProject91 units of senior assisted living Two hotels developed by CSM and 86 townhome units built by Rottlund200 rental housing units developed by MSP Real EstatedExcelsior and Grand retail, office and rental housing and condos developed by TOLDTwo office/commercial buildings consisting of 65,000 s.f. developed by Beltline Industrial Park, Inc. 122 senior cooperative developed by StonebridgeRottlund ‐ 224 townhomes and condos. Hoigaards ‐ 74 apts over 25,000 sq/ft of retail, 220 non age restricted apartments, 100 sr. apartmenst and 22 town homes. Grecco ‐ 115 senior rental units over 10,000 sq/ft of retailCertified5/19/19975/9/20006/19/20006/7/20014/26/20044/4/20055/31/2005Legal Max Term12/31/202312/31/202612/31/202612/31/202712/31/203112/31/203212/31/2029Keep Open for Pooling for Aff. Hsg.YesTBDTBDTBDYesYesTBDAnticipated Term12/31/202312/31/202512/31/202612/31/202712/31/202612/31/203212/31/20291st Increment1998200120012002200620072007Current ObligationsObligation Paid in Full - 100% TIF for affordable housing$1,101,362 PAYGO Note 1 $1,448,088 PAYGO Note 2 and $1,395,547 PAYGO Note 3$3,531,853 PAYGO Note$3,145,046 interfund loan $3,500,000 Phase I PAYGO Note, $3,300,715 Phase E PAYGO Note, $4,668,633 Phase NE PAYGO Note, $4,079,105 Phase NW PAYGO NoteObligation Paid in Full - 35% TIF for affordable housingObligation Paid in Full - 100% TIF for affordable housingHoigaards ‐ 2010A TIF Revenue Bonds ‐ $3,495,000 and IFL ‐ $3,298,200 Other Obligations$500,000 Loan to Lousisana Ct to buy down bondsNoneNoneNoneNoneNoneNoneContruction Assistance Program (CAP) NoneNone$70,000 to CKJ Properties (former Bikemasters property)NoneNoneNoneNone2022 TIF Revenue$193,060$521,413$612,454$2,988,002$180,116$241,196$2,345,572County Number13041305/130613071308131013111312District Wolfe Lake Study session meeting of October 24, 2022 (Item No. 1) Title: Annual TIF management update and pooled TIF policy discussionPage 18
TIF District Management Review & Analysis – Executive Summary October 2022 St Louis Park, Minnesota Page 11 Highway 7 CorporateEllipse on Center & HSTIExcelsior (Bader)District TypeRedevelopment and HSTIRedevelopmentRedevelopmentEconomic DevelopmentRedevelopmentRedevelopmentRedevelopmentProject 78,000 s.f. multi tenant office/warehouse buildingMajor mixed use redevelopment (office, retail, hotel, entertainment, housing, hotel) developed by Duke Realty. Ellipse I ‐ 132 Market Rate Apartments and 16,000 s.f. commercial and Ellipse II ‐ 58 Units of MarketRrate ApartmentsAcqisition and renovation of a 33,600 sq/ft manufacturing facility and construction of 1,500 sq/ft of officeRedevelopment of the Eliot School site into 138 market rate apartments and 2 single‐family homesRedevelopment of 5 parcels into 148 apartments with 20% of the units affordable at 50% of the AMI and 20,000 sq/ft of retail/office spaceRedevelopment of the former Bally's site into 164 apartments with 10% of the units affordable at 60% of AMI and a 28,000 sq/ft grocery storeCertified7/17/20067/9/20087/9/20094/27/20117/16/20134/18/20167/1/2016Legal Max Term12/31/203212/31/203612/31/203612/31/202212/31/204112/31/204312/31/2044Keep Open for Pooling for Aff. Hsg.TBDTBDYesTBDYesYesTBDAnticipated Term12/31/202712/31/203612/31/202312/31/202212/31/202312/31/202312/31/20251st Increment2007201120112014201620182019Current Obligations PAYGO Notes - Note A $2,100,000 Note B $360,000 Note C $72,000 and Note D $23,000$21,100,000 - PAYGO and 2008B GO Tax Increment Bonds35% TIF for affordable housing$115,000 Interfund Loan from Victoria Ponds TIF District35% TIF for affordable housing35% TIF for affordable housing $2.6 Million PAYGO NoteOther ObligationsNoneNoneNoneNoneNoneNoneNoneContruction Assistance Program (CAP) NoneNoneNoneNoneNoneNoneNone2022 TIF Revenue$148,863$3,463,032$700,758$29,513$473,894$555,308$704,062County Number13131314131513161318/131913201321Eliot Park (Dan Hunt)District West End Hardcoat The Shoreham (Bader) 4900 Excelsior (Weidner) Study session meeting of October 24, 2022 (Item No. 1) Title: Annual TIF management update and pooled TIF policy discussionPage 19
TIF District Management Review & Analysis – Executive Summary October 2022 St Louis Park, Minnesota Page 12 District TypeRedevelopmentRedevelopmentRedevelopmentRedevelopmentHousingRedevelopmentHousingProjectRedevelopment of 1 parcel into 70 agre restricted apartment units with 20% of units reserved for 60% of AME and 4,400 sq/ft of retailRedevelopment of 2 parcels into 217 unit mixed income apartment building, 2,500 square feet of commercial space, e-generation building and structural parkingRedevelopment of 3 parcels into the Headquarters for Bridgewater Bank (38,967 sq/ft), Bank Facility (7,152 sq/ft ), 19,775 sq/ft of office and 7,530 sq/ft of retailRedevelopment of 6 parcels into a 95‐unit market rate apartmentRedevelopment of 9 parcels into 101 apartments and 11 retnal town homes Redevelopment of 1 parcel into a 250‐unit market rate apartment with 7,445 sq/ft of retailRedevelopment of 1 parcel into 120‐unit affordable apartmentCertified6/30/20176/30/20175/11/20197/17/20205/10/20217/20/20227/20/2022Legal Max Term12/31/202612/31/204612/31/204612/31/204712/31/204812/31/204912/31/2049Keep Open for Pooling for Aff. Hsg.TBDTBDTBDTBDYesYesYesAnticipated Term12/31/202612/31/203012/31/204612/31/204712/31/204812/31/204912/31/20491st Increment2019202120212022 2023 est2024 est2024 estCurrent Obligations$950,000 PAYGO Note$3,377,236 PAYGO Note (Note not issued yet)$951,596 IFL$3,350,000 PAYGO Note (Note not issued yet)$2,600,000 PAYGO Note (Note not issued yet)$5,200,000 PAYGO Note (Note not issued yet)$1,800,000 Deferred loan from AHTF at 1% interest (repaid with TIF. If not enough developer pays remaining at earlier of 40 years from CO, refinance/resyndication or sale)Other ObligationsNone$975,000 mortgage for purchase of EDA propertyNone NoneNoneNoneNoneContruction Assistance Program (CAP) NoneNoneNoneNoneNoneNoneNone2022 TIF Revenue$215,072$493,153$214,550$162,149$0$0$0County Number13231324132513261327TBDTBDDistrict Elmwood AptsWooddale Station (PLACE)Bridgewater Bank Parkway ResidencesTexa Tonka (Pastor Properties)Beltline Residences (Opus)Rise on 7 (Common Bond) Study session meeting of October 24, 2022 (Item No. 1) Title: Annual TIF management update and pooled TIF policy discussionPage 20
TIF District Management Review & Analysis – Executive Summary October 2022 St Louis Park, Minnesota Page 13 District TypeHousingHousingHousingRenewal & RenovationProjectRedevelopment of 2 parcels into 233‐unit apartment with 20% of units affordable at 50% of AMIRedevelopment of 1 parcel into a 114‐unit affordable apartment Redevelopment of 2 parcels into 82‐unit affordable apartmentRedevelopment of 6 parcels into 302-unit market rate apartments in 2 buildings, 23,376 sq/ft of commercial space and a 546-stall parking structure which will include a park and ride facilityCertified7/20/20227/20/2022TBDTBDLegal Max Term12/31/204912/31/204912/31/205012/31/2040Keep Open for Pooling for Aff. Hsg.YesYesYesTBDAnticipated Term12/31/204912/31/204912/31/205012/31/20401st Increment2024 est 2024 est 2025 est 2025 estCurrent Obligations$6,300,000 PAYGO Note (Note not issued yet)$1,462,000 PAYGO Note (Note not issued yet) and $850,000 AHTF loan$1,442,847 PAYGO Note (Note not issued yet) and $618,238 AHTF loanUnder negotiation and TBDOther ObligationsNoneNoneNoneNoneContruction Assistance Program (CAP) NoneNoneNoneNone2022 TIF Revenue$0$0$0$0County NumberTBDTBDTBDTBDDistrict Beltline Station 1 (Sherman)Beltline Station 2 (Sherman)9920 Wayzata Blvd (Bigos)Woodale Ave. Apts. (REE) Note: District Summary excludes the Wayzata Boulevard TIF district which was decertified in 2022 when the City/EDA created the 9920 Wayzata Blvd District. However, the City/EDA did receive TIF in 2022 of approximately $32,000.Study session meeting of October 24, 2022 (Item No. 1) Title: Annual TIF management update and pooled TIF policy discussionPage 21
TIF District Management Review & Analysis – Executive Summary October 2022 St Louis Park, Minnesota Page 14 OBLIGATIONS OF THE TIF DISTRICTS The revenues from these districts are largely site specific, meaning that the revenues are restricted by law and by contract with the developers. The revenues must be used primarily to address blight, contamination, housing or redevelopment needs for the parcels in the TIF district within a specified period of time. The City has the following obligations outstanding (after the August 1, 2022 bond and PAYGO payments were made): Summary of Outstanding Obligations (after the 8/1/2022 payment) DistrictNoteTypeOutstanding After 8/1/2022Total By TIF DistrictIssueAmount Paying District TermNote A PAYGO 520,956$ 2008B GO Tax Increment Bonds1,105,000$ West End2/1/2024Note B PAYGO 89,307$ 2010A Tax Increment Revenue Bonds - Hoigaards 320,000$ Elmwood2/1/2023Note C PAYGO 72,372$ TOTAL1,425,000$ N/AN/ANote D PAYGO 23,119$ Phase NE PAYGO 3,676,286$ Phase E PAYGO 3,850,704$ Phase NW PAYGO 3,423,206$ Mill CitySLP Apts PAYGO 2,394,408$ 2,394,408$ CSM Note 1 PAYGO 1,218,476$ CSM Note 2 PAYGO 1,750,836$ West EndDuke Realty PAYGO 20,909,528$ 20,909,528$ 4900 ExcelsiorWeidnerPAYGO1,263,213$ 1,263,213$ Wooddale StationPLACE (not issued yet)PAYGO3,377,236$ 3,377,236$ Elmwood Apartments36th Street LLCPAYGO659,003$ 659,003$ Bridgewater BankBridgewater Bank IFL883,552$ 883,552$ Pakway ResidencesSela Investments LLC (not issued yet)PAYGO3,350,000$ 3,350,000$ Texa TonkaPastor Properties (not issued yet)PAYGO2,600,000$ 2,600,000$ Beltline ResidencesOpus (not issued yet)PAYGO5,200,000$ 5,200,000$ 9920 Wayzata BlvdBigos (not issued yet)PAYGO6,300,000$ 6,300,000$ Rise on 7Common BondAHTF Loan 1,800,000$ 1,800,000$ TOTAL63,362,201$ Zarthan2,969,312$ Bonds After 8/1/2022Pay As You Go Obligations, Interfund Loans and AHTF LoansHwy 7 Corporate Center $ 705,754 Excelsior and Grand10,950,195$ Study session meeting of October 24, 2022 (Item No. 1) Title: Annual TIF management update and pooled TIF policy discussionPage 22
TIF District Management Review & Analysis – Executive Summary October 2022 St Louis Park, Minnesota Page 15 TIF AS A DEVELOPMENT TOOL Continuous redevelopment is vital to maintaining the City’s long-term economic health and vitality. St Louis Park has judiciously utilized TIF for key redevelopment and housing projects since 1972 when the Oak Park Village TIF District was established. Utilizing this tool to accomplish the various community development goals of the City has optimized land uses, strengthened the tax base and diversified housing options, while cleaning up contaminated sites and increasing employment opportunities. One immediate benchmark of the benefit of utilizing TIF is the overall increase in market value from when the district was created to when it is fully developed and aging. As indicated in the following table, the overall market value of the City’s TIF district portfolio has increased by nearly 1,117%: DistrictCounty District NumberOriginal Market ValuePay 2022 Taxable Market ValuePercent Increase in ValuePark Center1304493,00013,468,0002631.85%Zarthan1305 and 1306 4,053,600 42,661,700952.44%Mill City1307708,70042,000,0005826.34%Park Commons13084,618,000 221,303,300 4692.19%Wolfe Lake13101,717,300 13,704,000698.00%Aquila13111,900,000 24,584,4001193.92%Elmwood131210,864,500 193,112,900 1677.47%Highway 7 Business Center13132,792,700 9,444,000238.17%West End (Partial Construction)131443,051,000 310,558,000621.37%Ellipse 13151,931,800 54,105,0002700.76%Hardcoat13161,184,700 3,099,000161.59%Eliot Park 1318/13192,143,000 34,392,1001504.86%The Shoreham 13202,476,200 44,328,0001690.16%4900 Excelsior 13212,404,000 49,795,0001971.34%Elmwood Apartments 13231,100,000 16,200,0001372.73%Wooddale Station13245,811,900 39,060,000572.07%Bridgewater Bank 13253,772,400 18,265,000384.17%Parkway Residences (partial value)13263,006,60013,989,000465.28%94,029,400 1,144,069,400 1116.71%Texa Tonka13272,114,000 2,165,0000.00%Beltline Residences TBD5,423,000 5,423,0000.00%Rise on 7TBD2,735,000 2,735,0000.00%9920 Wayzata BlvdTBD3,375,640 3,375,6400.00%Woodale Ave Apts (REE)TBD2,616,000 2,616,0000.00%Beltline Station 1TBD1,833,180 1,833,1800.00%Beltline Station 2TBD7,240,090 7,240,0900.00%TOTALN/AN/AN/ANote: % increase in value excludes the 7 districts where construction hasn't commenced or value realizedStudy session meeting of October 24, 2022 (Item No. 1) Title: Annual TIF management update and pooled TIF policy discussionPage 23
TIF District Management Review & Analysis – Executive Summary October 2022 St Louis Park, Minnesota Page 16 Due to the age of the City, the majority of the TIF districts created are redevelopment districts which have a 26-year term. However, most of the City’s Districts do not extend to the entire term as noted in the chart below: DistrictYear Established Type of District Term of District# of Years of TIF Based Upon Obligation Being Paid Off # of Years of TIF Based Upon Pooling for Affordable HousingDifference Between Term and Obligations Being Paid OffPark Center 1997 Housing 26 6 26 0Zarthan 1999 Redevelopment 26 22 22‐4Mill City2000Redevelopment262222‐4Park Commons2001Redevelopment2626260Wolfe Lake2003Redevelopment2614260Aquila2004Housing261212‐14Elmwood Village2004 Renewal and Renovation2222220Highway 7 Business Center2006Redev/HSS262222‐4West End (Partial Construction)2007Redevelopment262020‐6Ellipse 2009Redevelopment261010‐16Hardcoat2010 Economic Development9990Eliot Park 2013Redevelopment2655‐21The Shoreham 2015Redevelopment2622‐244900 Excelsior 2015Redevelopment2688‐18Elmwood Apartments 2017Redevelopment2688‐19Wooddale Station (Under construction)2017Redevelopment261515‐11Bridgewater Bank 2017Redevelopment2666‐20Parkway Residences (Under construction)2020Redevelopment261515‐11Texa Tonka (Pastor Properties ‐ Under construction) 2021Housing261212‐14Beltline Residences (Opus ‐ No construction yet)2021Redevelopment2688‐18Rise on 7 (Common Bond)2022Housing26262609920 Wayzata Blvd (Bigos)2022Housing2615260Woodale Ave Apts (REE)2022Housing2615260Beltline Station 1 (Sherman)2022Housing2626260Beltline Station 2 (Sherman)2022 Renewal and Renovation1616160AVERAGEN/AN/A251417‐8AVERAGE LAST 10 YEARSN/AN/A251314‐11AVERAGE LAST 5 YEARSN/AN/A251719‐5 As noted, since 1997, the average term of the TIF districts is approximately 14 years. In the last 5 years, the average has increased to approximately 17 years. This is due to many factors, including but not limited to, increases in labor and construction costs, interest rates, property acquisition, operating costs of projects and City requirements for sustainability and affordable housing. Study session meeting of October 24, 2022 (Item No. 1) Title: Annual TIF management update and pooled TIF policy discussionPage 24
TIF District Management Review & Analysis – Executive Summary October 2022 St Louis Park, Minnesota Page 17 While there are undoubtedly many benefits to utilizing TIF as a development tool, cities still wonder if they are utilizing the tool too much or not enough. A city’s use of TIF should be independent from comparison to like size or neighboring cities. It should be balanced between a community’s strategic priorities/goals and an appropriate level of taxation. To quantify a community’s use of TIF, a common benchmark or measure is the percentage of the gross tax base captured in TIF districts. Below is a chart which demonstrates the City’s current and projected tax base, which is captured in TIF districts. City of St. Louis ParkProjected Captured TIF Tax Capacity and Comparison with Other CitiesCity of St. Louis Park2018 2019 2020 2021 20222023 2024 2025 2026 2027Park Center-1304 Hsg 139,228 144,515 150,890 156,578 159,990 161,590 0 0 0 0Zarthan-1305/1306 Redev 408,163 419,982 467,481 451,000 410,444 414,548 418,694 422,881 427,110 0Mill City-1307 Redev 453,641 466,141 491,141 516,141 516,141 521,302 526,515 531,781 537,098 0Park Commons-1308 Redev 2,230,111 2,327,335 2,406,018 2,546,930 2,518,622 2,543,808 2,569,246 2,594,939 2,620,888 2,647,097Edgewood-1309 Redev 49,321 50,117 0 0 0 0 0 0 0 0Wolfe Lake-1310 Redev 110,527 121,173 129,144 133,709 151,791 153,309 154,842 156,390 157,954 0Aquila Commons-1311 Redev 170,473 184,737 201,109 209,382 211,836 213,954 216,094 218,255 220,437 222,642Elmwood-1312 R & R 1,725,298 1,765,394 1,975,041 2,032,483 2,060,056 2,080,657 2,101,463 2,122,478 2,143,703 2,165,140Highway 7 Business Center-1313 Redev 78,272 79,537 81,904 84,865 85,777 86,635 87,501 88,376 89,260 90,152Highway 7 Subdistrict-1313 HSS 53,504 53,504 53,504 53,504 53,504 53,504 53,504 53,504 53,504 53,504West End-1314 Redev 2,114,759 2,621,257 2,855,997 2,838,055 3,372,514 3,406,239 3,440,302 3,474,705 3,509,452 3,544,546Ellipse on Excelsior-1315 Redev 546,235 620,639 652,232 656,421 652,289 658,812 0 0 0 0Hardcoat-1316 Econ Dev 19,314 19,626 22,974 24,919 24,872 0 0 0 0 0Eliot Park-1318/1319 Redev 345,732 364,571 390,896 399,659 400,968 404,978 0 0 0 0The Shoreham - 1320 Redev 301,653 482,482 444,609 469,362 467,981 472,661 0 0 0 04900 Excelsior - 1321 Redev 0 405,085 548,563 592,423 593,343 599,276 605,269 611,322 617,435 623,609Wayzata Blvd - 1322 Redev 0 0 4,021 7,164 15,725 0 0 0 0 0Elmwood Apartments - 1323 Redev 0 3,555 0 181,250 181,250 183,063 184,893 186,742 188,609 190,496Wooddale Station - 1324 Redev 0 0 0 415,601 415,601 419,757 423,955 428,194 432,476 436,801Bridgewater Bank - 1325 Redev 0 0 0 47,859 184,679 186,526 188,391 190,275 192,178 194,099Parkway Residences - 1326 Redev 0 0 0 0 136,650 138,017 381,924 831,635 839,951 848,351Texa Tonka (Pastor Properties) - 1327 Hsg 0 0 0 0 0 124,096 420,256 538,720 544,107 549,548Beltline Reidences - 1328 R & R 0 0 0 0 0 202,039 606,779 831,635 839,951 848,351Captured TIF Tax Capacity8,746,231 10,129,650 10,875,524 11,817,305 12,614,033 13,024,771 12,379,628 13,281,831 13,414,114 12,414,336Total Tax Capacity (Gross) 82,002,664 88,770,448 96,057,628 102,157,645 106,119,396 107,180,590 108,252,396 109,334,920 110,428,269 111,532,552Percentage of Tax Base in TIF10.7% 11.4% 11.3% 11.6% 11.9% 12.2%11.4% 12.1% 12.1% 11.1%Assumes 1% annual increase in tax base and TIF beginning in payable 2023ProjectedActualDistrict Type Today, the City’s use of TIF is a bit higher compared to other first ring suburbs, however historically shorter terms of assistance in your TIF districts mitigates this. Overall, this amount of use is expected given that St Louis Park is fully developed, portions are in need of redevelopment and the Study session meeting of October 24, 2022 (Item No. 1) Title: Annual TIF management update and pooled TIF policy discussionPage 25
TIF District Management Review & Analysis – Executive Summary October 2022 St Louis Park, Minnesota Page 18 City has chosen to use TIF to achieve strategic priorities such as affordable housing, climate action and sustainability, and race equity and inclusion. Also shown are comparable cities’ tax rates and bond ratings. Although this is a small sample of municipalities, the amount of TIF used by a City does not seem to correlate directly with a City’s tax rate or bond rating. In conversations with rating agencies, we do know that market value growth and redevelopment are important factors in maintaining St Louis Park’s AAA bond rating. Following is a table which demonstrates the historical market value growth of St. Louis Park. ComparableFinal Pay 2022CityCityCaptured TIF as a % of Tax Base City Tax Rate Bond RatingBrooklyn Park1.1%47.523%AA+Golden Valley2.0%54.306%AaaBloomington3.1%40.730%Aaa/AAAMinnetonka3.0%36.763%AaaMinneapolis2.7%59.351%Aaa/AAAEdina1.1%28.936%Aaa/AAARichfield10.0%53.681%Aa2Hopkins9.5%65.426%AA+St. Louis Park11.9%44.681%AAAFinal Pay 2022 Tax YearTaxable Percent ChangeTax YearCityPercent ChangePayable Market Value From Prior YearPayableTax Rate From Prior Year20228,428,814,718 4.57%202244.6810.29%20218,060,720,233 5.79%202144.5542.66%20207,619,717,196 8.27%202043.398-2.93%20197,037,442,189 8.50%201944.706-7.06%20186,486,028,398 5.65%201848.1014.11%20176,138,955,694 8.47%201746.2000.01%20165,659,666,031 7.95%201646.195-3.26%20155,242,685,184 6.68%201547.754-1.68%20144,914,404,312 0.48%201448.5700.71%20134,891,018,550 -2.54%201348.2285.60%20125,018,306,562 -5.61%201245.6725.54%20115,316,617,000 -4.40%201143.27611.44% Study session meeting of October 24, 2022 (Item No. 1) Title: Annual TIF management update and pooled TIF policy discussionPage 26
TIF District Management Review & Analysis – Executive Summary October 2022 St Louis Park, Minnesota Page 19 The above two tables show the history for St Louis Park’s taxable market value and the City’s tax rate over the last ten (10) years. Factors such as total general and debt levy needs, State law and economic factors will influence both the market value and the corresponding tax rate. A correlation cannot always be made when considering market value, tax rate and total tax capacity captured by tax increment districts. RECENT STATE-WIDE GENERAL LEGISLATION In 2021 the Minnesota State Legislature provided temporary authority to use unobligated TIF from existing tax increment districts to help stimulate private development that would not otherwise commence without assistance before December 31, 2025. The City/EDA may provide loans, interest rate subsidies, or assistance in any form (including an equity or similar investment in a private project) to private development, as long as it consists of new construction or substantial rehabilitation of buildings and ancillary facilities AND if doing so will create or retain jobs in the State (including construction jobs). Unobligated increment includes increment from any district that is not obligated as of July 1, 2021 nor required for payment on outstanding obligations during the six months following the transfer of the increment out of the district. The City can use ALL unobligated increment and is not restricted to the normal “pooling” thresholds (i.e., 20%, 25% or 35% for districts that elect the additional 10% for affordable housing purposes). The City may use the unobligated tax increment for any private development that would otherwise not commence without the assistance. That means these dollars can be used for end uses typically not permitted for tax increment districts, such as retail or market rate housing on a vacant site. In order to be able to utilize these dollars, the City and EDA are required to develop a Spending Plan and hold a public hearing on it and the use of TIF dollars. The City has approximately $1.76 million of unobligated tax increment in eight (8) of its TIF districts as of December 31, 2022 that it could transfer. Study session meeting of October 24, 2022 (Item No. 1) Title: Annual TIF management update and pooled TIF policy discussionPage 27
TIF District Management Review & Analysis – Executive Summary October 2022 St Louis Park, Minnesota Page 20 TIF FOR AFFORDABLE HOUSING General The rules for utilizing TIF for affordable housing are complex. St. Louis Park has used TIF from several sources to assist affordable housing developments. The statutory authorities for each case are outlined below: 1. Special Pooling Provision for Housing. Minnesota Statutes, Section 469.1763, subdivision 2(d), allows the EDA/City to pool up to an additional 10% above the standard allowable limit for owner-occupied housing that meets the income qualifications noted in #2 below and rental housing that meets low-income housing tax credit requirements (the projects do not need to receive tax credits, they just need to be tax credit eligible, meaning they are both rent and income restricted). Eligible uses include acquisition and site preparation, construction, rehabilitation and public improvements directly related to the housing, as long as these costs were not funded through tax credits (does not apply if all eligible expenses are funded through tax credits). The funds can be spent anywhere within the City and do not need to be located within a Project Area. The income and rent guidelines are defined as follows: Rental Housing: 20% of the units occupied by families at 50% of area median income (AMI) (20/50) or 40% of the units occupied by families at 60% of AMI (40/60) and rents for all the income-restricted units must not exceed 30% of the applicable income limit For a redevelopment district the total pooling may be up to 35%. This pooling, pursuant to Minnesota Statutes, Section 469.176 subdivision 4k, can be done without regard to project area/development district limitations. The EDA/City would not implement this pooling until the obligations in the various TIF districts are paid off since typically 95% of the TIF is pledged to the obligation. 2. Pooling from Housing Districts. A housing district is established for either rental or owner-occupied housing. The rental housing developments are income limited to those noted in #1 above. The owner-occupied housing is limited to 100% of AMI for families of two or less, or 115% for families of three or more. The rental housing restrictions remain for the life of the TIF district while the owner-occupied restrictions apply only to the first occupants. If excess funds from a housing district are realized, then 100% of the tax increment may be pooled for other housing projects that meet the income limitations listed above. This pooling can be done without regard to project area and development district limitations. Study session meeting of October 24, 2022 (Item No. 1) Title: Annual TIF management update and pooled TIF policy discussionPage 28
TIF District Management Review & Analysis – Executive Summary October 2022 St Louis Park, Minnesota Page 21 Currently, the main tax increment sources, from which the City could fund affordable housing, are from Aquila and Park Center (housing), Wolfe Lake, Ellipse, Eliot Park and The Shoreham (redevelopment). In addition, the EDA will review making the additional 10% election to the Zarthan, Mill City, West End and 4900 Excelsior TIF Districts closer to the payoff date of the obligations. The table below summarizes the amounts that are anticipated to be available and are based upon pay 2022 TIF estimates: Wolfe Lake Zarthan Mill City Ellipse Eliot Park Shoreham West End 4900 Excelsior Park Park Center AquilaRedev Redev Redev Redev Redev Redev Redev Redev Commons Hsg Hsg2020170,000 170,000 170,0002021 109,421 492,066 163,361 146,387 460,787 583,962 1,955,984 2,125,984 2022353,562 135,009 544,233 187,367 2 1,220,172 3,346,157 2023275,639 189,845 234,706 700,189 4,046,346 2024234,706 234,706 4,281,051 2025234,706 234,706 4,515,757 2026722,770 1,459,107 2,421,850 ‐ ‐ ‐ 234,706 4,838,433 9,354,190 2027‐ ‐ ‐ ‐ ‐ 1,747,539 4,037,785 234,706 6,020,030 15,374,220 2028‐ ‐ ‐ ‐ ‐ 234,706 234,706 15,608,926 2029‐ ‐ ‐ ‐ 234,706 234,706 15,843,632 2030‐ ‐ ‐ ‐ 234,706 234,706 16,078,337 2031‐ ‐ ‐ ‐ ‐ 234,706 234,706 16,313,043 2032‐ ‐ ‐ ‐ ‐ 234,706 234,706 16,547,749 2033‐ ‐ ‐ ‐ ‐ ‐ 16,547,749 2034‐ ‐ ‐ ‐ ‐ 16,547,749 2035‐ ‐ ‐ ‐ ‐ 16,547,749 2036‐ ‐ 21,146,626 ‐ 21,146,626 37,694,375 TOTAL 832,191 1,459,107 2,421,850 1,291,267 298,370 690,620 21,146,626 1,747,539 4,037,785 837,998 2,931,021 37,694,375 POOLING FOR AFFORDABLE HOUSINGGray Shaded Areas Depict TIF District That Have Been Modified to Allow For Additional 10% ‐ Green Shaded Area Are Hsg TIF DistrictsYearYearly Total Cumulative Study session meeting of October 24, 2022 (Item No. 1) Title: Annual TIF management update and pooled TIF policy discussionPage 29
TIF District Management Review & Analysis – Executive Summary October 2022 St Louis Park, Minnesota Page 22 Special City TIF Legislation During the 2021 legislative session, the State approved Minnesota Sessions Laws 2021, 1st Special Session, Chapter 14, Article 9, Section 5 (the “Special Legislation”). The Special Legislation authorizes the City/EDA to transfer tax increment accumulated for housing purposes from its housing TIF districts and 35% from its redevelopment TIF districts to the City’s Affordable Housing Trust Fund (AHTF). The Special Legislation allows the City/EDA to provide grants, loans, and loan guarantees for the development, rehabilitation, or financing of housing; or match other funds from federal, state, or private resource for housing projects. Housing projects are not defined in the Special Legislation, but it is the intent of the City/EDA to use it for rental and for-sale housing projects in accordance with its AHTF guidelines. The City’s EDA has until December 31, 2026 to transfer the funds to its AHTF. In addition, the City/EDA has to provide a report to the Chair and ranking Minority Leader of the House and Senate Tax Committees by February 1, 2024 and February 1, 2026 detailing the housing projects financed with the transferred funds, including the percentage of area median income provided, total cost per project, number of units and income and rent limitations The City/EDA currently has six (6) districts as noted above that are transferring funds (Wolfe Lake, Ellipse, Eliot Park, The Shoreham, Park Center and Aquila). In 2021, the City/EDA transferred $1,955,983 and in 2022 is expected to transfer an additional $1.22 million for a total of approximately $3.346 million. The City/EDA has the authority to transfer funds until December 31, 2026. If the EDA makes the election to increase the percentage of TIF available for affordable housing in two (2) additional redevelopment districts (Zarthan and Mill City), and if the EDA keeps the various districts open until either their term ends or they collect what they legally can for this purpose, in total the City could have approximately $9.354 million available for affordable housing. Once these funds are transferred over to the City’s AHTF, they are no longer considered TIF and all restrictions (income and percent of units required to be affordable), are no longer applicable. The only limitations are what are in the City’s policy, which is to fund affordable housing projects for extremely low (30% or less AMI), very low (50% or less AMI), or low (up to 60% AMI) for rental and up to 80% AMI for ownership. Staff will review the TIF funds annually to determine future transfers, up until December 31, 2026 per the Special Legislation. Study session meeting of October 24, 2022 (Item No. 1) Title: Annual TIF management update and pooled TIF policy discussionPage 30
TIF District Management Review & Analysis – Executive Summary October 2022 St Louis Park, Minnesota Page 23 IMPACT OF DECERTIFIED AND AFFORDABLE HOUSING POOLING TIF DISTRICTS One frequent question we receive is what are the additional levy dollars the City can expect to receive from future TIF districts after they are decertified? The City will see the gradual decertification of Nine (9) TIF districts over the next five (5) years, starting with Hardcoat, on December 31, 2022. These districts, when decertified, will return value to the tax rolls for general taxing purposes, and the City will see a corresponding increase in its tax base. The Districts to provide the most benefit to the tax levy will be when Park Commons decertifies in 2027 and Elmwood Village Decertifies in 2029. The table below shows how much more the City could levy and still maintain a stable tax rate over the next 10 years. It should be noted that these dollars are only realized if the City chooses to levy this amount. 2023Next 5Next 10TIF DistrictObligation(s) Paid In Full Decertifies Dec. 31 TOTALTOTALTOTALHardcoat 2022202224,872 24,872 24,872 Eliot Park20202023- 400,968 400,968 The Shoreham20212023- 467,981 467,981 Park Center 20152023- 161,590 161,590 Ellipse 20202023- 658,812 658,812 Zarthan20222025- 427,110 427,110 4900 Excelsior20252025- 617,435 617,435 Mill City 20222026- 537,098 537,098 Wolfe Lake 20202026- 157,954 157,954 Park Commons 20272027- - 2,647,097 Highway 7 Corporate Center 20272027- - 53,504 Elmwood Village20292029- - 2,208,659 Aquila 20182032- - 222,642 Total Annual Captured Net Tax Capacity Returned to Tax Rolls24,872 3,453,821 8,585,722 City Tax Rate for Taxes Payable in 2022 (1)44.681%Estimated Additional Annual Tax Levy Available (1)11,113$ 1,543,202$ 3,836,187$ (1) - Assumptions:- Calculates additional dollars the City could levy and still maintain the same tax rate as Pay 2022.- Assumes no change in existing tax base from prior year- Assumes no change in the Fiscal Disparities Distribution Dollars from Pay 2022 Study session meeting of October 24, 2022 (Item No. 1) Title: Annual TIF management update and pooled TIF policy discussionPage 31
TIF District Management Review & Analysis – Executive Summary October 2022 St Louis Park, Minnesota Page 24 RECOMMENDATIONS The updated financial analysis of the City’s TIF Districts offers the following recommendations: 1. Return of Increment to County For Redistribution. We recommend returning approximately $1.88M from seven (7) of the TIF Districts noted below to the County for redistribution in 2022 (50% of the Ellipse amount would be returned in 2023). The City’s proportionate share will be approximately $782,000 and will be utilized by the City for various capital improvements in accordance with its long-range financial management plan. District Amount Returned City Portion *Ellipse874,001$ 361,155$ Zarthan155,000$ 64,049$ Eliot Pk355,421$ 146,867$ Wolfe Lake117,075$ 48,378$ Hardcoat53,326$ 22,035$ Shoreham272,288$ 115,050$ 4900 Excelsior58,000$ 23,967$ TOTAL1,885,111$ 781,500$ * Ellipse is split 50/50 for returned TIF in 2022 and 2023 2. 2021 Special TIF Legislation for Affordable Housing Trust Fund (AHTF). We recommend staff and Ehlers review the TIF districts that have cash balances available for transfer prior to year-end to determine if the approximately $1.22 million should be transferred to the City’s AHTF for 2022. 3. Administrative Modification to TIF Plan Budgets for Affordable Housing. We recommend the EDA modify the TIF plan budgets for Mill City and Zarthan TIF Districts to allow for the additional 10% to be retained for affordable housing (total of 35%). This action does not require a public hearing, just a resolution of approval. This action would preserve the City’s/EDA’s ability to retain dollars for this purpose starting in 2024.The annual amount retained and the various taxing jurisdictions allocation is noted in the table below: District Zarthan Mill City TotalCity 201,695$ 260,052$ 461,748$ County 173,951$ 215,862$ 389,813$ School 112,460$ 139,557$ 252,016$ Total 488,107$ 615,471$ 1,103,577$ Study session meeting of October 24, 2022 (Item No. 1) Title: Annual TIF management update and pooled TIF policy discussionPage 32
TIF District Management Review & Analysis – Executive Summary October 2022 St Louis Park, Minnesota Page 25 4. Develop a Spending Plan. We recommend developing and holding a public hearing on a Spending Plan pursuant to recent legislation in 2021 to allow the EDA to transfer unobligated TIF to a new account for use on construction of a building(s) or substantial renovation of a building(s) by a private entity. This would provide the EDA the greatest flexibility in utilizing TIF balances in various districts for projects. The EDA has approximately $1.76 million available from eight (8) districts for transfer under this authority if it approves a Spending Plan by December 31, 2022 and transfers the dollars by this date to a separate account (West End, Victoria Ponds, Zarthan, Wolfe Lake, Mill City, Park Commons, Aquila and 4900 Excelsior). The EDA has until December 31, 2025, to expend the funds and any unspent funds will be transferred back to the “giving” TIF District. Study session meeting of October 24, 2022 (Item No. 1) Title: Annual TIF management update and pooled TIF policy discussionPage 33
Meeting: Study session
Meeting date: October 24, 2022
Written report: 2
Executive summary
Title: Quarterly development update – 4th Quarter 2022
Recommended action: None. The attached report summarizes the status of major development
projects in St. Louis Park.
Policy consideration: Not applicable. Contact staff with any questions.
Summary: The attached report is meant to keep the EDA/city council informed on a quarterly
basis as to the metrics and tentative schedule of major development projects occurring in the
city. For clarity, “Proposed developments” are those that are working through the planning
entitlement process such as platting, PUDs, variances, and have not yet been approved.
“Approved developments” are those whose planning applications have been approved by the
city council and have not yet commenced construction (whose financial assistance agreements
may or may not yet have been approved). “Under construction” are developments that have
commenced, but not yet completed construction, and “Completed developments” are those
which have received their certificates of occupancy.
More detailed information can be found on the interactive development dashboard. The
dashboard provides project metrics for all large developments or additions that have been
approved, under construction, or completed within the city since 2010. The dashboard includes
website links, market rate and affordable unit counts by bedroom size, parking information for
overall stalls, bike facilities, and electric vehicle charging stations, and more.
Financial or budget considerations: Not applicable.
Strategic priority consideration: St. Louis Park is committed to providing a broad range of
housing and neighborhood oriented development.
Supporting documents: Major developments in St. Louis Park – 4th Quarter 2022
Prepared by: Jennifer Monson, redevelopment administrator
Reviewed by: Greg Hunt, economic development manager
Karen Barton, community development director, EDA executive director
Approved by: Kim Keller, city manager
Study session meeting of October 24, 2022 (Item No. 2) Page 2
Title: Quarterly development update – 4th Quarter 2022
Major Developments in St. Louis Park
4th Quarter 2022
Multifamily housing development summary Total Market rate Affordable
Proposed units 8 0 8
Approved units 950 745 205
Units under construction 1,460 952 508
Recently completed units (last two years) 499 439 60
All units 3,306 2,519 787
Total Development Costs (TDC)* $898.4 million
*TDC includes all developments in the above categories to the extent known
For additional information please see Development Projects on the city’s web site.
Proposed developments
Project, location &
developer Project Description Tentative
Schedule
Minnetonka Blvd
redevelopment
5707 – 5639
Minnetonka Blvd.
GMHC (Greater
Metropolitan Housing
Corporation) &
(WHAHLT) West
Hennepin Affordable
Housing Land Trust
Proposed is the removal of four modest single-family houses
and construction of four twin homes (eight-units), providing
eight affordable home-ownership opportunities.
Estimated total development cost: $3.7 million
Website: NA – too early in the process.
Project plans could
be presented to
council by Q2
2023.
Construction
commencement
Q1, 2024 upon
securing LIHTC
financing.
Study session meeting of October 24, 2022 (Item No. 2) Page 3
Title: Quarterly development update – 4th Quarter 2022
Approved developments
Project, location &
developer Project Description Tentative
Schedule
2625 Louisiana Avenue
2625 Louisiana Ave.
Web Development LLC
Largely vacant parcel adjacent to North Cedar Lake Regional
Trail to be redeveloped with a 57-unit, four-story, mixed-use
market-rate building with approximately 4,000 square feet of
ground floor commercial space along with underground and
surface parking. Project includes a public path connecting
Louisiana Avenue to the Regional Trail.
Estimated total development cost: $TBD
Planning
entitlements
approved.
Construction
commencement by
Q2, 2023.
Arlington Row
East & West
7705 Wayzata Blvd. &
7905 Wayzata Blvd.
Melrose Company
Two development sites:
• 7905 Wayzata includes two three-story apartment
buildings with 34 units total and off-street parking
covered by a solar power carport.
• 7705 Wayzata includes a three-story apartment building
with 27 units and surface parking.
Estimated construction cost: $TBD
Planning
applications
approved.
Tentative
construction
commencement
TBD.
Study session meeting of October 24, 2022 (Item No. 2) Page 4
Title: Quarterly development update – 4th Quarter 2022
Approved developments
Project, location &
developer Project Description Tentative
Schedule
Beltline Blvd Station
Site
SE quadrant of CSAH 25
& Beltline Blvd.
Sherman Associates
Major mixed-use, mixed income, transit-oriented,
multi-phase development adjacent to
SWLRT Beltline Blvd. Station.
Building I includes:
• Seven-story mixed-use building with six levels of market
rate housing (156 units) and 20,000 square feet of
neighborhood commercial space.
• A 592-stall parking ramp, which would include 268 park
& ride stalls, 326 residential stalls and approximately
2,000 square feet of commercial space.
Estimated development cost: $55 million
Building 2 includes:
• Four-story all affordable apartment building with 82
units, 77 units will be affordable to households at 60%
AMI and five units will be affordable to households at
30% AMI. 22 units will have three-bedrooms.
Estimated development cost: $25 million
Building 3 includes:
• Five-story market rate apartment building with 146
units.
Estimated development cost: $47 million
Altogether, the multi-phase redevelopment will have
384 apartment units of which 82 (21%) would be affordable.
Estimated total development cost: $150 million
Awarded $13.7
million in LIHTC
bonds January
2022 for affordable
component.
Planning
applications
approved
April 18, 2022.
Financial
assistance
agreements
approved June 20,
2022, with
remaining
agreements
expected
November 2022.
Anticipated
construction:
• Grading fall/winter
2022
• Building 2 Q1, 2023
• Building 1 Q1, 2023
• Building 3 Q1, 2023
• Ramp Q2, 2023
Construction
completion all
phases Q4, 2024.
Study session meeting of October 24, 2022 (Item No. 2) Page 5
Title: Quarterly development update – 4th Quarter 2022
Approved developments
Project, location &
developer Project Description Tentative
Schedule
Bremer Bank
7924 Hwy. 7
Frauenshuh The retail building containing Knollwood Liquor and Papa
Murphy’s Pizza to be removed and replaced with a two-story,
5,850 square foot office building to be occupied by Bremer
Bank.
Developer’s
conditional use
permit extended to
June 15, 2023.
OlyHi
Wooddale Ave Station
redevelopment site
5950 W. 36th St.
& 5802 36th St.
Saturday Properties
and Anderson
Companies
Mixed-use, mixed income, transit-oriented development next
to SWLRT Wooddale Avenue Station.
Two, six-story, mixed use buildings with a total of 315
apartment units.
• 252 market rate units.
• 32 units affordable to households @ 50% AMI.
• 31 units affordable to households @ 60% AMI.
• 12,000 square feet of ground floor commercial space.
• 3,500 square feet of co-working/community space.
• 17,000 square feet public plaza for public events, site
amenities, and public art.
Estimated total development cost: $105.3 million
Planning
entitlements
approved.
TIF request to be
considered Q4,
2022.
Construction
commencement
Q2, 2023.
Study session meeting of October 24, 2022 (Item No. 2) Page 6
Title: Quarterly development update – 4th Quarter 2022
Approved developments
Project, location &
developer Project Description Tentative
Schedule
Union Park Flats
3700 Alabama Ave. &
6027 37th St. W.
PPL (Project for Pride in
Living)
Redevelopment of the north portion of the Union
Congregational Church property with a three story, 60-unit
affordable apartment building on the north half of the
property. All unit rents would be affordable to households
ranging from 30%-80% AMI. Union Congregational Church
plans to remain on the south portion of the property.
Estimated total development cost: $28.6 million
Planning
applications
approved
July 6, 2020.
Applying for
additional funding
from MHFA June
2022 and from
SLP AHTF in
fall 2022.
Construction
commencement
Q2, 2023 upon
securing additional
financing.
Study session meeting of October 24, 2022 (Item No. 2) Page 7
Title: Quarterly development update – 4th Quarter 2022
Under construction
Project, location &
developer Project Description Tentative
Schedule
Arbor House
3801 Wooddale Ave. S.
Real Estate Equities LLC
Redevelopment of former Aldersgate Church property
adjacent to Burlington Coat/Micro Center and Highway 100.
All affordable housing development includes 114-units, with
205 parking stalls, of which 117 stalls would be underground.
• Five units affordable to households at 30% AMI
• Five units affordable to households at 50% AMI
• 104 units affordable to households at 60% AMI
Estimated total development cost: $30.1 million
Awarded $17.5
million in LIHTC
bonds January
2022.
Construction
commencement
August 2022.
Caraway
(Formerly Luxe
Residential)
5235 Wayzata Blvd.
(Phase VI of
Central Park West)
Greystar Real Estate
Partners
Redevelopment of former Olive Garden property in The West
End area.
Luxe Residential is a six-story, 207-unit, apartment building
(including eight units affordable to households at 60% AMI)
along with two levels of underground parking. The
development also includes a new pocket park along 16th
Street and pedestrian improvements connecting the
apartment building to the rest of The West End area.
Estimated construction cost: $51.8 million
Construction
commencement
October 2021 to be
completed by
September 30,
2023.
Study session meeting of October 24, 2022 (Item No. 2) Page 8
Title: Quarterly development update – 4th Quarter 2022
Under construction
Project, location &
developer Project Description Tentative
Schedule
Corsa
(Formerly Beltline
Residences)
3440 Beltline Blvd.
Opus Group
Five-story, 250-unit mixed-use, mixed income development
with two retail spaces totaling 7,445 square feet and
six live/work units. 10% of the units (25) will be affordable to
households at 50% AMI.
Estimated total development cost: $78.1 million
Construction
commencement
March 2022 to be
completed by
October 2023.
Mera
(Formerly 9920
Wayzata)
9808 & 9920 Wayzata
Blvd.
Bigos Management
Redevelopment of former Santorini’s restaurant property at
northwest quadrant of I-394 & US 169.
Six-story, 233-unit, mixed income apartment building with
20% (47) of the units affordable to households at 50% AMI.
Estimated total development cost: $68.6 million
Construction
commenced
September 2022 to
be completed by
July 2024.
Study session meeting of October 24, 2022 (Item No. 2) Page 9
Title: Quarterly development update – 4th Quarter 2022
Under construction
Project, location &
developer Project Description Tentative
Schedule
Parkway Residences
W 31st St. between
Inglewood Ave. &
Glenhurst Ave.
Sela Group & Affiliates
Multi-phase redevelopment includes four, multi-family
buildings with 211 units. The affordable housing includes 24
rehabilitated units at 50% AMI, and six new units at 60% AMI.
Phase I:
• Parkway Place: Four-story, 95-unit apartment building.
• Parkway Flats: Six-unit apartment building.
• Rehab of 24 NOAH apartment units.
Estimated development cost: $40.6 million
Phase II: Parkway Commons: Four-story, 37-unit apartment
building.
Estimated development cost: $14.6 million
Phase III: Eleven-story, 73-unit apartment building.
Estimated development cost: $36.2 million
Estimated total development cost (all phases): $91.4 million
Phase I (Parkway
Place) commenced
May 2020
completed
April 30, 2022.
Phase III (Parkway
Commons)
Anticipated
completion
February 2023.
Phase III
commencement
Spring 2024.
Rise on 7
8115 Hwy. 7
CommonBond
Redevelopment of former Prince of Peace church property
across from Shops at Knollwood. Includes a four-story, 120-
unit, all affordable apartment building with income
Awarded $17.7
million in LIHTC
bonds January
2022.
Construction
commencement
August 2022 to be
completed by
August 2024.
Study session meeting of October 24, 2022 (Item No. 2) Page 10
Title: Quarterly development update – 4th Quarter 2022
Under construction
Project, location &
developer Project Description Tentative
Schedule
restrictions ranging between 30%-80% AMI along with a
6,600 square foot “affordable” early childhood center.
Estimated total development cost: $40.7 million
Risor
3510 Beltline Blvd.
Roers Company Six-story, 170-unit apartment building with 4,100 square feet
of ground floor commercial space and 14 ground floor live-
work units. The development will be an age restricted (55+)
community with 10% (18) of the units affordable to
households at 50% AMI.
Estimated construction cost: $56.5 million
Construction
commencement
April 2022.
Study session meeting of October 24, 2022 (Item No. 2) Page 11
Title: Quarterly development update – 4th Quarter 2022
Under construction
Project, location &
developer Project Description Tentative
Schedule
VIA Sol
SE quadrant Hwy. 7 &
Wooddale Ave.
5855 Hwy. 7
PLACE Mixed-use, mixed-income, transit-oriented development
including a five-story, 217-unit apartment bldg (65 market
rate units, 22 units affordable to households at 50% AMI, and
130 units affordable to households at 80% AMI),
e-generation, wind turbine, solar panels, and one-acre urban
forest.
Estimated total development cost: $88.4 million
Commenced
January 2020.
Closed on
additional
financing January
2022.
Apartments
complete August
2022.
E-Generation
building to
completed by
June 30, 2023.
Volo at Texa-Tonka
NE corner Texas Ave. &
Minnetonka Blvd.
Paster Development
Mixed income redevelopment includes 101 apartment units
in a three- to four-story building, and 11 walk-up style
townhome units located in two two-story buildings on the
northern end of the site. Twenty percent (23) of the units
would be affordable to households at 50% AMI.
Estimated total development cost: $26.6 million
Construction
commencement
September 2021
to be completed by
Spring 2023.
Temporary
Certificate of
Occupancy issued
for 1 townhome
unit Oct 2022.
Study session meeting of October 24, 2022 (Item No. 2) Page 12
Title: Quarterly development update – 4th Quarter 2022
Recently completed developments
Project, location &
developer Project Description Tentative
Schedule
10 West End
(Phase IV of
Central Park West)
1601 Utica Ave. S.
Excelsior Group and
Ryan Co.
Award winning eleven story, 343,000 square foot Class A,
LEED certified, office building with 3,500 square feet of
ground floor commercial space, 5,000 square feet of shared
outdoor amenity space and 1,214 stall parking structure.
Estimated construction cost: $55.8 million
Completed
January 2021.
The Elmwood
5605 W. 36th St.
Main Street Companies
Five story, 70-unit, mixed-use, mixed income, age restricted
development (53 market rate and 17 units affordable to
households at 60% AMI), 4,400 square feet of ground floor
office/commercial space.
Estimated total development cost: $24.6 million
Completed
August 2021.
Louisiana Crossing
3745 Louisiana Ave.
Loffler Companies
Warehouse
operations moved
in Q4, 2021.
Office renovation
completed in
Q3, 2022. Still
working on final
landscaping.
Study session meeting of October 24, 2022 (Item No. 2) Page 13
Title: Quarterly development update – 4th Quarter 2022
Recently completed developments
Project, location &
developer Project Description Tentative
Schedule
Loffler Companies is renovating the 132,485 square foot
former Sam’s Club building. The Midwest’s largest office-
technology and IT-services company is consolidating its
headquarters and warehouse operations at this new location
resulting in over 500 jobs. Loffler is leasing out 30,000 square
feet in the building and may eventually sell the south end of
the 13-acre property for multifamily housing.
Estimated construction cost: $TBD
The Quentin
4900 Cedar Lake Rd.
Crowe Companies LLC
Project included the removal of three substandard buildings
and construction of a five story, 79-unit sustainable
apartment building that includes two levels of structured
parking. The housing includes eight units affordable to
households at 50% AMI.
Estimated total development cost: $21.3 million.
Completed
August 2021.
Study session meeting of October 24, 2022 (Item No. 2) Page 14
Title: Quarterly development update – 4th Quarter 2022
Recently completed developments
Project, location &
developer Project Description Tentative
Schedule
Xchange Medical Office
6009 Wayzata Blvd.
Davis Group Three-story, Class A, medical office development fronting
I-394. Ear Nose & Throat Specialty Care (ENTSC) and Surgical
Care Affiliates (SCA) anchor the 77,996-square foot medical
office building. Includes one level of underground parking
with 51 stalls and 253 surface parking stalls on the building’s
south side.
Estimated construction cost: $13 million
Completed
November 2021.
Nordic Ware
expansions
Buildings 8 & 9
5005 CSAH 25
Dalquist Properties LLC
21,853-square-foot warehouse and loading dock addition to
Building 8. 45,000 square foot warehouse and loading dock
addition to Building 9 along with a small café and outdoor
patio on the property’s south side facing the regional trail.
Estimated construction cost: $11.6 million
Completed
Q2, 2022.
Meeting: Study session
Meeting date: October 24, 2022
Written report: 3
Executive summary
Title: City service impacts of new development
Recommended action: No action needed.
Policy consideration: None at this time.
Summary: One or more city councilmembers have asked, “What are the city service impacts of
new development?” The question related specifically to new developments receiving tax
increment financing. Essentially, it is a question of, “Is the city subsidizing the development by
providing services to the new residents, business, employees, and visitors during the term of
the tax increment financing?”
Many city services are fee-for-service and generate revenue for the city that help offset the cost
for the services. Others are sunk costs and will be incurred regardless of the development (i.e.,
snow plowing an adjacent existing street). The fiscal impact of the development is generally
focused on two city services that are not fee based, namely police and fire services, and the
calls for service that they generate.
Every TIF request includes an analysis of fiscal impacts to the city of the development and
focuses on these calls for service. The tax increment captured is clearly defined as modeled and
presented to the city council and economic development authority. The tax increment expected
to be captured and returned to the projects is openly shared, along with the number of years
projected to provide the assistance.
As will be described in the report, staff’s conclusion is that while the number of calls for service
and the actual costs to the city generated from these developments is difficult to estimate,
there appears to be low financial costs to the city during the term of a TIF district. However,
both the near-term and long-term beneficial impacts are numerous and significant.
Financial or budget considerations: Not applicable.
Strategic priority consideration: St. Louis Park is committed to providing a broad range of
housing and neighborhood oriented development.
Supporting documents: discussion
Prepared by: Sean Walther, planning manager/deputy CD director
Reviewed by: Karen Barton, community development director
Approved by: Kim Keller, city manager
Study session meeting of October 24, 2022 (Item No. 3) Page 2
Title: City service impacts of new development
Discussion
Background: One or more city councilmembers have asked, “What are the city service impacts
of new development?” The question related specifically to new developments receiving tax
increment financing. Essentially, it is a question of, “Is the city subsidizing the development by
providing services to the new residents, business, employees, and visitors during the term of
the tax increment financing?”
Many city services are fee-for-service and generate revenue for the city that help offset the cost
for the services. Examples of these include utilities and waste removal. Others are sunk costs
and will be incurred regardless of the development (e.g., snow plowing and reconstructing or
maintaining an existing adjacent street). For these reasons, the fiscal impact determination is
generally focused on city services that are not fee based and whose level of service may be
impacted by a change in type of use (e.g. from industrial to residential) or level of intensity (e.g.
single family home to medium or high density residential). Increased intensity can reasonably
lead to increased calls for police and fire (including medical emergency) services and so those
are the services that are evaluated.
Every TIF request includes an analysis of fiscal impacts to the city from the proposed
development and focuses on emergency calls for service. The tax increment captured is clearly
defined as modeled and presented to the city council and economic development authority.
The tax increment expected to be captured and returned to the projects is openly shared, along
with the number of years projected to provide the assistance.
As will be described in the report, staff’s conclusion is that while the number of calls for service
and the actual costs to the city generated from these developments is difficult to estimate,
there appears to be low financial costs to the city during the term of a TIF district. However,
both the near-term and long-term beneficial impacts are numerous and significant.
Present considerations:
Calls for service. Every tax increment financing (TIF) request includes a fiscal impact analysis.
One of the specific questions asked and answered each time is, “How many new calls may be
generated by the new development?” Below is the response submitted by the police
department for the OlyHi development. All other project responses have followed a similar
template.
Quantifying future call load is difficult at best. There are numerous variables involved.
Attempting to arrive on a concrete number requires speculation. In 2021, the police
department averaged roughly one call for service per resident. It can be assumed that this
ratio will continue and police calls for service will increase in proportion to the population
added by the proposed OlyHi development project. Metropolitan Council estimates that St.
Louis Park has an average household size of 2.06. As such, the OlyHi development’s 315
units will conservatively add 649 residents to the city population with an assumed equivalent
increase in police calls for service.
2021 Calls for service (source: city data) 51,620
2020 Population (source: 2020 census) 50,010
2021 Officers per 10,000 population (source: city data) 11.8 (59 sworn)
Study session meeting of October 24, 2022 (Item No. 3) Page 3
Title: City service impacts of new development
The example above shows that staff expect overall call volumes to be impacted. When
reviewing historical responses to the question of service impacts of new development to police
and fire, whether for TIF assistance or environmental assessment worksheets, the police
department has estimated one call per year per dwelling unit in a building.
To prepare for this report, community development staff worked with the police department to
sample three to five years of calls (2018 - 2022 YTD) to 21 new development sites of varying
types. That sample showed the average annual combined calls for service for both police and
fire are lower per unit than the citywide average. The data is inclusive of proactive police
patrols to properties that may not have involved a 911 call.
• 0.5 calls per dwelling unit per year in residential and hotel buildings, including any
commercial uses on the first floor of mixed-use buildings.
• 0.3 calls per year per 1,000 square feet of floor area for commercial and office buildings.
• 0.2 calls per year per 1,000 square feet of floor area used for institutional uses.
For this sample, the annual volume of calls for service was half, or less than half, of what we
generally estimate.
The current data shows that no single development generates enough calls for service to
require additional staffing even over the full term of a TIF district. The developments in the
sample generated an average of 57 calls for service in a year, or 0.1% of the total annual calls
for service in the city. Altogether, the 21 developments totaled approximately 2% of the annual
calls. Over time, cumulative population growth will demand additional staffing; however, in
that longer timeframe TIF districts would have terminated and the tax base would increase to
help support those services.
For fire service calls specifically, there are two factors at play. Most fire department calls are
medical calls. One demographic element the fire department watches closely is the 65 years
and older cohort. The fire department indicates people ages 65 years and older are three times
more likely to call 911, and people ages 80 years and older are nine times more likely to call 911
each year. At the same time, new developments will have fire sprinkler systems. Fire sprinkler
systems reduce the time spent on a fire call, because the fire has most likely been extinguished
when the firefighters arrive on site, which mitigates the fiscal impact of calls. More importantly,
the fire sprinklers reduce property damage, protect the life and safety of all involved including
first responders, and reduce the environmental impacts resulting from structure fires.
Population forecasts: Recognizing that general population growth, older population cohorts,
and perhaps employment growth (an indication of daytime population) forecasts increase
police and fire staffing needs, we’ve shared the following demographic information that that
was readily available.
Study session meeting of October 24, 2022 (Item No. 3) Page 4
Title: City service impacts of new development
Sources: U.S. Census Bureau Decennial Census, Metropolitan Council Annual Estimates, and Metropolitan Council
Forecasts.
Source: Quarterly Census of Employment and Wages, Minnesota Department of Employment and Economic
Development, 2nd quarter data; Metropolitan Council staff have estimated some data points; and Metropolitan
Council Forecasts.
Senior Population in St. Louis Park
Age group 2017 estimate 2020 estimate 2030 projection
65-78 3,830 4,447 4,606
75-79 1,114 1,253 1,417
80-84 948 870 1,207
85+ 1,571 1,749 1,660
TOTAL 7,463 8,319 8,890
(Source: 2017 Maxfield Housing Study for 2017 estimate and 2030 projection and 2020 American Community
Survey 5-year estimate.)
Study session meeting of October 24, 2022 (Item No. 3) Page 5
Title: City service impacts of new development
Metropolitan Council forecasts the city will grow in population by 11 percent from 2020-2030.
Also, the city’s employment is forecast to grow 35% by 2030, as it recovers from a precipitous
drop during the pandemic. In 2017, Maxfield Research and Consulting projected the city’s
senior population would grow 19% by 2030. The city should continue to watch these estimates
and anticipate and prepare to meet the resulting service demands. As such, the housing report
for the city is slated to be updated this winter and available in the spring of 2023.
Infrastructure impacts: In St. Louis Park, developments can make use of existing infrastructure.
This makes more efficient use of past city and regional infrastructure investments. As part of
the review process, anticipated short-term impacts on level of service that need to be mitigated
are paid directly by the developer or perhaps using pooled TIF generated in the TIF district from
development. Examples of this include Methodist Hospital paying for traffic signal and turn lane
improvements around its campus, or more recently the left turn proposed to be built on the
Hwy 100 off-ramp for the Arbor House development. In both these cases, the development
paid the full amount of the improvement costs. TIF funds are being allocated from the Corsa
development to contribute toward a future signal at Beltline and Park Glen Road.
Longer term, there may be cumulative impacts that require further investment, but those are
much harder to define, subject to many different forces, and well outside the limited duration
of a project TIF district. While traffic modeling from those developments indicated significant
traffic growth, after all the redevelopment that has occurred on Excelsior Boulevard west of
Highway 100 over the past 20 years, there has been essentially no increase in the traffic
volumes on the county highway over that time. Regional and local transportation
improvements, along with multimodal focused travel behavior changes, have offset the traffic
growth associated with redevelopment in the Excelsior Boulevard corridor. Even with the
forecasted growth assumptions, the existing and planned transportation system is expected to
have reserve capacity and operate within acceptable levels of service.
The Elmwood TIF district has paid $13.3 million toward city infrastructure improvements in that
area:
• Highway 7 and Wooddale Avenue interchange $4,774,133
• 36th Street West streetscape improvements $420,964
• 36th Street West and Xenwood Avenue South signal $32,100
• 36th Street West and Wooddale Avenue traffic signal $840,589
• Highway 7 and Wooddale Avenue bridge widening $2,940,059
• 36th Street West and Wooddale Avenue utility and street project $4,325,000 (estimated)
New developments also contribute to public infrastructure through impact fees. They pay to
connect to existing utilities (i.e., Metropolitan Council sewer access charges and city water
access charges are based on the projected increase in annual usage of the new development).
Most developments pay park and trail dedication fees to fund new facilities. These payments
are deemed fair and reasonable because they directly correlate to system impacts. They
amount to tens of thousands of dollars for most projects. These new and expanded
developments also represent new paying customers for the city utility services generating
additional revenue. Some park programs are funded, at least in part, through participant
program fees.
Study session meeting of October 24, 2022 (Item No. 3) Page 6
Title: City service impacts of new development
Impacts to the school district: While not a city service specifically, frequently people ask about
school district impacts. We do not include these TIF fiscal impacts, because they are essentially
cost neutral aside from general growth. The school district’s funding is based on the state’s per-
pupil formula and is unaffected by TIF, and any referendum assessments are collected before
distributing captured increment to a project or the TIF pool. Additionally, many of the new
developments are providing new housing units that include family sized units, bringing more
children to the school district.
Benefits of new development: There are several immediate benefits of developments to the
community that warrant public investment and are leveraged through TIF:
• Redevelop blighted areas and
remove nuisances.
• Remediate polluted sites.
• Use land more efficiently.
• Construct housing and affordable
housing.
• Create or retain jobs.
• Increase long-term tax base.
• Change community market
conditions.
• Transform community image.
• Create more energy efficient
buildings and housing units (i.e.,
multifamily versus single-family
housing).
• Develop more compactly making the
developments more efficient for
walking, biking, and transit service.
A clear example of the But/For test used to determine the use of TIF or other public financing,
half of Sherman Associate’s Beltline Station development site would have been a surface
parking lot for the METRO Green Line Extension park and ride under the LRT Project’s base
plan.
Subsidies: Due to Minnesota tax rates, multiple-family residential, commercial and industrial
properties pay nearly twice the tax rate of single-family residential properties. These types of
properties subsidize services to single-family residential areas of the city.
Fiscally sound use of land: One way to analyze the relative fiscal efficiency of land uses, and
whether they are a net negative or benefit to the city’s bottom line, is to look at the taxable
value per acre of developments. An analysis of Hennepin County by Urban3 of few years ago
indicated the typical Target store in Hennepin County had a taxable value per acre of
$1,096,732. The Burlington Coat Factory/Micro Center site had a taxable value per acre of
$862,586. By comparison, The Shops at West End had a value per acre of $8,173,827, and
Excelsior and Grand had a value per acre of $18,673,349 per acre.
Continuing to develop in an efficient and mixed-use pattern is better for the city’s financial
health, the city’s goal to be walking, biking and transit-oriented, and community goals to make
this a more inclusive place to live, work, learn, and play.
Meeting: Study session
Meeting date: October 24, 2022
Written report: 4
Executive summary
Title: Third quarter investment report (July – Sept 2022)
Recommended action: No action required at this time.
Policy consideration: Reporting on investments each quarter is part of our financial
management policies.
Summary: The quarterly investment report provides an overview of the City’s investment
portfolio, including the types of investments held, length of maturity and yield.
Financial or budget considerations: The total portfolio value on September 30, 2022 is $87.7
million. Approximately $40 million of the portfolio is invested in securities that include
certificates of deposit, U.S. Treasury notes, federal agency bonds and municipal debt securities
with maturity dates ranging from less than a year up to 6 years. The remainder of the portfolio
is invested in money market accounts so that cash is available for capital project expenditures,
debt service and operating cashflow needs between property tax settlements, as well as future
investment opportunities. Interest rates on both the money market accounts and new
securities purchased increased again in the third quarter. The overall yield to maturity of the
portfolio is 1.97% compared to 1.24% last quarter and .52% at the end of 2021.
Strategic priority consideration: Not applicable.
Supporting documents: Discussion
Investment Portfolio Summary
Prepared by: Darla Monson, accountant
Reviewed by: Melanie Schmitt, finance director
Approved by: Kim Keller, city manager
Page 2 Study session meeting of October 24, 2022 (Item No. 4)
Title: Third quarter investment report (July – Sept 2022)
Discussion
Background: The City’s investment portfolio is focused on cash flow needs and investment in
longer term securities in accordance with Minnesota Statute 118A and the City’s investment
policy objectives of: 1) preservation of capital; 2) liquidity; and 3) return on investment.
Present considerations: The total portfolio value increased by about $7 million to $87.7 million
on September 30 from $80.7 million on June 30, 2022. The increase was primarily in the money
market account balances due in part to receiving the proceeds from the Bridgewalk housing
improvement area bonds in September. The first construction draw from these bond proceeds
has already occurred.
Interest rates continued to increase in the 3rd quarter. The overall yield to maturity of the
portfolio is 1.97% up from 1.24% at June 30 and .52% at the end of 2021. This is the combined
yield including both liquid funds held in money market accounts and long-term investments.
Interest rates on money markets were near zero at the end of 2021 but are now over 2%. The
two-year Treasury, a benchmark used by cities for yield comparison of their portfolio, has gone
from .73% at December 31, 2021 to 4.22% on September 30. As securities mature in the
portfolio and are replaced with new investments, the yield to maturity will continue to
increase.
The money market accounts ensure there is cash available to fund payroll, operating and
capital project expenses and debt service payments between the June/July and December
property tax settlements, as well as one-time cash requirements such as the loan to STEP and
the purchase of the commercial building at 4300 36 ½ Street that occurred this quarter. It also
keeps cash available for buying new investments in the higher interest rate environment. Five
million dollars of Treasury securities have been purchased with some of the cash in the 4M
liquid asset fund in October and have rates to maturity of over 4%. About $5.5 million of
Treasury notes and CD’s will also mature by the end of the 4th quarter and will be replaced with
new investments at higher rates.
There were only 2 smaller securities that reached maturity in the 3rd quarter that had rates to
maturity of 1.76 % and 2.76%. A new CD and a municipal debt security were purchased to
replace these with rates of 3.46% and 3.8%.
A breakdown of the portfolio at September 30 is shown below and in more detail in the
attachment.
Next steps: None at this time.
6/30/22 9/30/22
<1 Year 67% 71%
1-2 Years 9% 7%
2-3 Years 12% 11%
3-4 Years 6% 6%
>4 Years 6% 5%
6/30/22 9/30/22
Money Markets/Cash $40,611,751 $47,988,284
Commercial Paper/Other $5,000,000 $5,493,635
Certificates of Deposit $3,028,813 $3,193,207
Municipal Debt $8,292,881 $8,149,120
Agencies/Treasuries $23,736,044 $22,914,229
City of St. Louis Park
Investment Portfolio Summary
Sept 30, 2022
Institution/Broker Investment Type CUSIP
Maturity
Date
Yield To
Maturity Par Value
Market Value at
9/30/2022
4M Fund Liquid Asset Money Market 2.23%9,736,935 9,736,935 217,134
4M Fund Plus Money Market 2.25%38,211,695 38,211,695 859,763
UBS Institutional Money Market 2.31% 39,655 39,655 916
47,988,284
4M Fund Collateral - Pentagon Federal Credit Union, VA 01/20/2023 0.50% 5,000,000 5,000,000 25,000
UBS Comm Paper - First Boston NY 2254EBNP2 01/23/2023 3.57% 500,000 493,635 17,850
4M Fund CD - Western Alliance / Torrey Pines Bnk, CA 11/16/2022 0.20% 249,400 249,400 499
4M Fund CD - Greenstate Credit Union, IA 11/16/2022 0.20% 249,500 249,500 499
UBS CD - Texas Exchange Bk TX 88241TNG1 02/04/2025 1.35% 245,000 228,823 3,308
UBS CD - Amer Express Natl UT 02589ABM3 03/03/2025 1.80% 245,000 230,905 4,410
UBS CD - CDG Community Bank, MD 12527CFL1 03/11/2026 3.80% 245,000 240,759 9,310
UBS CD - Goldman Sachs Bank UT 38149M3C5 03/16/2026 2.00% 245,000 226,549 4,900
UBS CD - Comenity Bank DE 981993FX1 03/18/2026 2.00% 200,000 182,440 4,000
UBS CD - Capital One Bank VA 14042TFV4 05/04/2026 3.00% 245,000 234,090 7,350
UBS CD - Capital One Bank VA 14042RQZ7 05/04/2026 3.00% 245,000 234,090 7,350
UBS CD - National Bank WI 633368GC3 06/03/2026 3.10% 245,000 234,646 7,595
UBS CD - State Bank of Indi NY 856285E98 02/01/2027 1.75% 245,000 219,758 4,288
UBS CD - Beal Bank NV 07371CG37 02/17/2027 1.85% 245,000 220,402 4,533
UBS CD - Beal Bank Plano TX 07371AYL1 02/17/2027 1.85% 245,000 220,402 4,533
UBS CD - Medallion Bank UT 58404DNF4 03/08/2027 2.00% 245,000 221,443 4,900
3,193,207
UBS Muni Debt - San Jose CA Txbl GO 798135H51 09/01/2023 2.13% 650,000 639,314 13,845
UBS Muni Debt - Westminster CO Pub Schools 960666AC9 12/01/2023 2.60% 840,000 803,317 21,840
UBS Muni Debt - New York St Urban Dev Co Txbl Bds 64985TAZ4 03/15/2025 1.90% 300,000 282,291 5,712
UBS Muni Debt - S. Washington Co Sch Dist 840610QK8 06/01/2025 3.29% 250,000 251,488 8,235
UBS Muni Debt - S. Washington Co Sch Dist 840610QK8 06/01/2025 3.25% 375,000 377,231 12,191
UBS Muni Debt - University Calif Txbl Bds 91412GU94 07/01/2025 2.51% 600,000 576,108 15,042
UBS Muni Debt - New York City Trans Fin Auth Bds 64971XAW8 08/01/2025 3.42% 240,000 228,053 8,208
UBS Muni Debt - Calif St Univ Txble Bds 13077DQD7 11/01/2025 1.51% 750,000 670,718 11,355
UBS Muni Debt - Nassau Cnty NY Interim Fin Auth 631663RF0 11/15/2025 3.39% 140,000 124,058 4,743
UBS Muni Debt - Massachusetts St Sch Bldg Bds 576000ZF3 08/15/2026 3.00% 700,000 614,271 21,000
UBS Muni Debt - Massachusetts St Sch Bldg Bds 576000ZF3 08/15/2026 3.46% 350,000 307,136 12,110
UBS Muni Debt - North Dakota Pub Fin Auth Tax 65887PWD3 12/01/2026 1.35% 500,000 445,830 6,755
UBS Muni Debt - New York City Trans Fin Auth Bds 64971XLS5 05/01/2027 3.63% 160,000 142,789 5,805
UBS Muni Debt - La Habra CA Pension Oblig Txble 503433AF1 08/01/2027 1.90% 500,000 437,785 9,510
UBS Muni Debt - Alabama Fed Aid Hwy Fin Tax 010268CP3 09/01/2027 1.50% 700,000 601,769 10,521
UBS Muni Debt - Connecticut St Health Txbl 20775DLB6 11/01/2027 2.22% 500,000 430,250 11,080
UBS Muni Debt - New York NY GO Bonds 64966ML31 12/01/2027 2.23% 400,000 378,788 8,928
UBS Muni Debt - San Ramon Valley CA Uni Tax 7994082H1 08/01/2028 1.69% 500,000 423,310 8,450
UBS Muni Debt - New York NY City Transit Txbl 64971XD47 08/01/2028 1.95% 500,000 414,615 9,735
8,149,120
UBS US Treasury Note 912828N30 12/31/2022 2.78% 925,000 921,864 25,715
UBS US Treasury Note 912828N30 12/31/2022 2.51% 2,550,000 2,541,356 64,005
UBS US Treasury Note 912828N30 12/31/2022 2.55% 1,675,000 1,669,322 42,713
UBS FHLB 3130AJ7E3 02/17/2023 1.44% 620,000 614,637 8,928
UBS US Treasury Note 912828R69 05/31/2023 2.53% 1,000,000 983,910 25,300
UBS US Treasury Note 912828R69 05/31/2023 1.83% 350,000 344,369 6,405
UBS US Treasury Note 912828T91 10/31/2023 1.55% 75,000 72,885 1,163
UBS US Treasury Note 912828T91 10/31/2023 1.48% 450,000 437,310 6,660
UBS FHLB 3130AFW94 02/13/2024 2.58% 500,000 488,740 12,900
UBS US Treasury Note 912828XX3 06/30/2024 1.55% 1,050,000 1,009,890 16,275
UBS US Treasury Note 912828XX3 06/30/2024 1.66% 1,150,000 1,106,070 19,090
UBS US Treasury Note 912828XX3 06/30/2024 0.85% 260,000 250,068 2,210
UBS US Treasury Note 912828XX3 06/30/2024 1.36% 350,000 336,630 4,760
UBS US Treasury Note 912828XX3 06/30/2024 1.66% 1,150,000 1,106,070 19,090
UBS US Treasury Note 912828XX3 06/30/2024 0.41% 475,000 456,855 1,948
UBS FHLB 3130AGWK7 08/15/2024 1.55% 175,000 166,605 2,713
UBS US Treasury Note 91282CCT6 08/15/2024 0.41% 850,000 791,002 3,485
UBS US Treasury Note 912828YY0 12/31/2024 0.32% 1,900,000 1,801,067 6,080
UBS Fannie Mae 3135G0X24 01/07/2025 1.69% 650,000 613,327 10,985
UBS Freddie Mac 3137EAEP0 02/12/2025 1.52% 750,000 704,520 11,400
UBS US Treasury Note 912828ZW3 06/30/2025 0.36% 150,000 134,672 540
UBS US Treasury Note 912828ZW3 06/30/2025 0.58% 725,000 650,912 4,205
UBS US Treasury Note 912828ZW3 06/30/2025 0.39% 3,300,000 2,962,773 12,870
UBS US Treasury Note 912828ZW3 06/30/2025 0.72% 575,000 516,241 4,140
UBS US Treasury Note 91282CBC4 12/31/2025 0.75% 725,000 641,197 5,438
UBS US Treasury Note 91282CBC4 12/31/2025 0.70% 750,000 663,308 5,250
UBS US Treasury Note 91282CBC4 12/31/2025 0.82% 350,000 309,544 2,870
UBS US Treasury Note 91282CBC4 12/31/2025 0.57% 700,000 619,087 3,990
22,914,229
GRAND TOTAL 87,738,475 1,724,326
Current Portfolio Yield To Maturity 1.97%
Study session meeting of October 24, 2022 (Item No. 4)
Title: Third quarter investment report (July - Sept 2022)Page 3
Meeting: Study session
Meeting date: October 24, 2022
Written report: 5
Executive summary
Title: September 2022 monthly financial report
Recommended action: No action is required.
Policy consideration: Monthly financial reporting is required as part of our financial
management policies.
Summary: The monthly financial report provides an overview of general fund revenues and
departmental expenditures comparing them to budget throughout the year.
Financial or budget considerations: Expenditures in September should generally be at about
75% of the annual budget. General fund expenditures in total are running approximately 3%
under budget through September. Revenues tend to be harder to measure in the same way
since they aren’t spread as evenly during the year, examples of which include property taxes
and State aid payments. A summary of revenues and departmental expenditures compared to
budget is included with a few comments provided below.
License and permit revenues are exceeding the total annual budget at 121%. Some of the larger
permits include Beltline Residences, Risor Apartments, and the Bridgewalk Condominiums
renovation project. The building permits for some of the other new developments just starting
construction such as Rise on 7, Arbor House/Wooddale Avenue Apartments and The Mera will
be reviewed by staff to determine the portion of revenue that needs to be deferred to 2023 to
offset staffing costs for the on-going inspection work.
Intergovernmental revenue is near 100% of budget after receiving the police and fire state aid
payment of $871,000 in September.
The other income at 198.5% of budget is primarily private activity revenue bond fees. This fee is
now collected as a lump sum upfront rather than over the life of the bonds and the 2022
revenue includes Rise on 7, Beltline and Arbor House.
Most department expenditures continue to be at or under budget. Some of the recreation
departments are running a bit higher than budget which is quite typical at this time of year
because of seasonal fluctuations from the summer months when temporary staffing and
supplies expenses tend to be higher. The engineering variance is due to the portion of staff
hours charged to capital project funds year to date being less than what was budgeted.
Strategic priority consideration: Not applicable.
Supporting documents: Summary of revenues and departmental expenditures – General Fund
Prepared by: Darla Monson, accountant
Reviewed by: Melanie Schmitt, finance director
Approved by: Kim Keller, city manager
Summary of Revenues & Departmental Expenditures - General Fund As of September 30, 202220222022202020202021202120222022Balance YTD Budget Budget Audited Budget Audited Budget YTD SeptRemaining to Actual %General Fund Revenues: General Property Taxes28,393,728$ 28,635,694$ 29,601,811$ 29,446,907$ 30,532,470$ 16,131,211$ 14,401,259$ 52.83% Licenses and Permits4,660,811 5,294,310 4,621,829 4,997,980 4,750,604 5,745,156 (994,552) 120.94% Fines & Forfeits280,000 126,192 231,000 150,965 231,000 98,941 132,059 42.83% Intergovernmental1,760,082 2,061,267 1,661,549 1,773,949 1,748,770 1,745,180 3,590 99.79% Charges for Services2,273,824 1,600,806 2,013,834 2,278,004 2,284,483 2,153,506 130,977 94.27% Rents & Other Miscellaneous1,456,102 1,201,119 1,499,091 1,472,637 1,589,934 1,298,007 291,927 81.64% Transfers In2,038,338 2,049,976 2,055,017 2,054,819 2,198,477 1,569,733 628,744 71.40% Investment Earnings 210,000 486,468 200,000 (314,347) 200,000 71,303 128,697 35.65% Other Income621,280 3,442,900 593,300 606,695 526,829 1,045,878 (519,049) 198.52% Use of Fund Balance25,000 250,000 250,000 Total General Fund Revenues41,694,165$ 44,898,732$ 42,502,431$ 42,467,610$ 44,312,567$ 29,858,913$ 14,453,654$ 67.38%General Fund Expenditures: General Government: Administration1,868,599$ 1,472,421$ 1,617,882$ 1,362,006$ 2,010,605$ 972,502$ 1,038,103$ 48.37% Finance1,124,045 1,194,828 1,129,591 1,190,180 1,178,516 790,285 388,231 67.06% Assessing808,171 792,277 798,244 767,705 821,530 603,685 217,845 73.48% Human Resources823,209 796,088 837,736 823,448 882,849 491,942 390,907 55.72% Community Development1,571,894 1,536,657 1,576,323 1,443,624 1,606,474 1,078,908 527,566 67.16% Facilities Maintenance1,265,337 1,246,439 1,349,365 1,413,873 1,407,116 1,056,375 350,741 75.07% Information Resources1,709,255 1,596,487 1,683,216 1,650,478 1,622,619 872,846 749,773 53.79% Communications & Marketing828,004 710,334 970,934 807,217 974,064 738,815 235,249 75.85%Total General Government9,998,514$ 9,345,531$ 9,963,291$ 9,458,531$ 10,503,773$ 6,605,357$ 3,898,416$ 62.89% Public Safety: Police10,853,821$ 10,611,141$ 11,307,863$ 11,347,597$ 11,846,760$ 8,832,887$ 3,013,873$ 74.56% Fire Protection5,040,703 4,764,337 4,998,636 5,066,383 5,364,179 3,998,033 1,366,146 74.53% Building 2,696,585 2,321,664 2,571,968 2,493,832 2,712,400 2,045,723 666,677 75.42%Total Public Safety18,591,109$ 17,697,142$ 18,878,467$ 18,907,812$ 19,923,339$ 14,876,644$ 5,046,695$ 74.67% Operations: Public Works Administration273,318$ 216,899$ 249,256$ 239,575$ 255,766$ 176,446$ 79,320$ 68.99% Public Works Operations3,331,966 3,168,538 3,285,820 2,957,465 3,523,669 2,377,509 1,146,160 67.47% Vehicle Maintenance1,278,827 1,207,998 1,303,159 1,259,534 1,368,929 1,038,055 330,874 75.83% Engineering551,285 531,801 523,547 655,722 556,115 577,259 (21,144) 103.80%Total Operations5,435,396$ 5,125,236$ 5,361,782$ 5,112,296$ 5,704,479$ 4,169,269$ 1,535,210$ 73.09% Parks and Recreation: Organized Recreation1,637,002 1,369,309 1,639,358 1,516,192 1,769,060 1,412,721 356,339 79.86% Recreation Center2,061,394 1,864,459 2,082,697 2,198,272 2,274,043 1,895,528 378,515 83.35% Park Maintenance1,906,363 1,802,534 1,916,643 1,857,392 2,034,509 1,600,800 433,709 78.68% Westwood Nature Center748,683 606,378 736,515 652,505 794,170 568,014 226,156 71.52% Natural Resources504,143 433,362 496,497 412,015 612,110 461,966 150,144 75.47%Total Parks and Recreation6,857,585$ 6,076,042$ 6,871,710$ 6,636,376$ 7,483,892$ 5,939,028$ 1,544,864$ 79.36% Other Depts and Non-Departmental: Racial Equity and Inclusion 314,077$ 272,994$ 341,293$ 185,280$ 292,194$ 121,089$ 171,105$ 41.44% Sustainability497,484 244,655 432,043 297,217 404,890 272,013 132,877 67.18% Transfers Out4,878,845 4,878,845 Contingency and Other144,860 225,000 Total Other Depts and Non-Departmental811,561$ 662,509$ 5,877,181$ 5,361,342$ 697,084$ 393,101$ 303,983$ 56.39%Total General Fund Expenditures41,694,165$ 38,906,460$ 46,952,431$ 45,476,356$ 44,312,567$ 31,983,400$ 12,329,167$ 72.18%Study session meeting of October 24, 2022 (Item No. 5) Title: September 2022 monthly financial reportPage 2