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HomeMy WebLinkAbout2022/10/24 - ADMIN - Minutes - City Council - Study Session Official minutes City council study session St. Louis Park, Minnesota Oct. 24, 2022 The meeting convened at 6:30 p.m. Councilmembers present: Mayor Jake Spano, Tim Brausen, Sue Budd, Lynette Dumalag, Larry Kraft, Nadia Mohamed, and Margaret Rog Councilmembers absent: none Staff present: City Manager (Ms. Keller), Economic Development Manager (Mr. Hunt), Community Development Director (Ms. Barton), Communications and Technology Director (Ms. Smith). Guests: Stacie Kvilvang, Ehlers 1. Annual TIF management update and pooled TIF policy discussion Ms. Kvilvang presented the staff report. Councilmember Rog asked what would be returned to developers in 2023 through TIF agreements, and what would be received in tax revenue to the city. Ms. Kvilvang stated if districts will be taken off, there would be nothing going to developers. Ms. Kvilvang added she does not have that number but can get that to the council. Councilmember Rog asked about the future tax capacity in TIF for the Beltline Station. Ms. Kvilvang stated it is not yet included as it is planned for future TIF. Councilmember Kraft asked if the increase in market value noted is for the whole community. Ms. Kvilvang stated yes, over the last 10 years. Councilmember Kraft referenced the city tax rate and asked if Hopkins is high, and Edina is low. Ms. Kvilvang stated when comparing a $300,000 home in Edina, and a $300,000 home in St. Louis Park, a person will pay more taxes in St. Louis Park, adding it is a lower tax rate in Edina because they have a bigger base to spread the tax across, per market value. Councilmember Budd asked about comparable cities. Ms. Kvilvang stated this is the comparable group that has been looked at historically, these cities are in redevelopment mode, they are similar in AAA rating, and they look at neighboring cities an d demographics. Councilmember Mohamed stated Minnetonka and Edina have large malls and asked if sales tax has an impact. Ms. Kvilvang stated no, sales tax has no impact, it is only property tax valuation. Councilmember Mohamed asked why it is lower in Edina. Ms. Kvilvang stated this is how much tax capacity is captured in a TIF district, so in Edina they do not have as many TIF districts or as much value captured in TIF districts. DocuSign Envelope ID: 40686F5C-5A00-40E1-A7F7-56E9CD1A3236 Study session minutes -2- Oct. 24, 2022 Councilmember Rog asked if the legislature would extend the special legislation allowing cities to deposit pooled TIF into their affordable housing trust funds depending on their success. Ms. Barton stated that is the hope. Councilmember Kraft asked about the total numbers and if in 2021, the $2.125 is what was transferred in or the overall housing trust fund balance. Ms. Kvilvang stated that is what has been transferred in, which is only tax increment funds. Councilmember Kraft asked if there are any different restrictions v ersus the HRA levy. Ms. Barton stated yes, the HRA levy is more flexible, but once that is transferred into the affordable housing trust fund, the dollars are used the same as the pool of TIF dollars per the trust fund policy. A portion of the levy is transferred into housing rehab, which is a more flexible use. Councilmember Kraft asked about the money in TIF districts. Ms. Kvilvang stated it could be pooled and used for the needs of the district . She continued for redevelopment districts, it would have to be used for the elimination of blight and for housing, it would have to be used for affordable housing. Councilmember Kraft asked if districts can be decertified and then monies can be moved . Ms. Kvilvang stated the only ones that will decertify naturally are Victoria Ponds and Wolfe Lake. She noted the council can choose to decertify districts at any time. Councilmember Rog asked where blighted property is in the community. Ms. Kvilvang stated every time a redevelopment is created, there are inspections required and if the code deficiencies are more than 15% of the cost to construct the building new today, it is blighted. Councilmember Rog asked if this works against renovations of buildings. Ms. Kvilvang stated not necessarily, adding this is the state’s definition of blight. Councilmember Rog asked if these funds can be transferred into the general fund . Ms. Kvilvang stated no, adding the city has no authority to transfer the funds out of the TIF district except for special circumstances such as affordable housing needs. Councilmember Rog asked if education would receive $500,000-600,000 from this. Ms. Kvilvang stated no, adding the school districts are capped at $25,000 and are funded by the state on a per student basis. Councilmember Rog stated this is hard to understand and she would like further discussion on this topic. Councilmember Kraft added he is interested in this topic as well and pointed out Councilmember Rog had referred to the state education budget versus the city’s school district funding. Ms. Kvilvang explained the state set up this funding and have a budget they set for this. She added she can bring an expert from Ehlers in for further discussion on this issue. Councilmember Brausen noted this is based on forecasts the state already has set for education. DocuSign Envelope ID: 40686F5C-5A00-40E1-A7F7-56E9CD1A3236 Study session minutes -3- Oct. 24, 2022 Councilmember Kraft stated there is confusion about money at the state level for education and taxes collected for school districts, adding this needs further clarification. Councilmember Rog stated as elected officials, the councilmembers need to understand that if one-third of property tax is going for education and schools or not , then this needs to be clarified for residents. Mayor Spano stated this information already comes to residents on their county property tax statements. He stated the school district levies, residents, and the state have another way to tax on a per student rate. Councilmember Kraft asked if the return on increment is new. Ms. Kvilvang stated this has been an ongoing process, adding it is to help plan for the city’s capital budgeting process. Mayor Spano stated he has been through 11 of these discussions on TIF and it remains as complicated as ever. He encouraged Ehlers to think a bit more about competitive cities and not comparing St. Louis Park to Edina, Bloomington, and Golden Valley, all of which have many different characteristics as compared to St. Louis Park. He added the report presented is very long, and the policy questions are focused on means and not ends. He is less concerned with the policy questions and asked if these things are achieving goals of the city, and then let staff figure out the tools to get the city there. He is not interested in having someone come in to discuss how the school district is funded unless the school district has concerns about the impacts of the levies. Ms. Kvilvang stated Ehlers does not select the comparative cities, adding that staff and former council have selected them, noting that council can change those. Ms. Kvilvang added TIF is a tool to help the city meet their priorities and the question is , does the council want to continue with it. Councilmember Brausen stated he agrees with all the recommendations of Ehlers and staff, noting that in past years there was no affordable housing , and now the city has it. He stated 11% is tied up in TIF, but added it has been balanced, and some districts are expiring, while others are coming on, and the return on investment makes this worthwhile. He added imposing our climate action goals on developments work well with TIF, and he supports the recommendations. Councilmember Dumalag asked about blight and for clarification on this. Ms. Kvilvang stated it relates only to code deficiencies. Councilmember Dumalag referenced the Rise on 7 development and asked, because the past property was a church and was tax exempt if the baseline is zero. Ms. Kvilvang stated no, the baseline is never zero when it is placed into the TIF district. Councilmember Dumalag asked how TIF affects the city’s bond rating. Ms. Kvilvang stated they look at how the tax base is increasing, adding TIF is a good thing for the bond rating. DocuSign Envelope ID: 40686F5C-5A00-40E1-A7F7-56E9CD1A3236 Study session minutes -4- Oct. 24, 2022 Councilmember Dumalag stated she supports recommendations 1 and 2, adding TIF helps get the developments the city wants in areas they want it in. She added she likes how the city’s racial equity policy is included in TIF and sees this as a way for others to hire diverse contractors and help folks build wealth. Councilmember Kraft stated he appreciated the mayor’s thoughts on this and tying this into the housing development process. He stated the question of how much affordable housing should be in St. Louis Park and how much should be spent on affordable housing are both good to review, but these have not been adopted as goals. He added the amount of affordable housing added in the city is extraordinary but noted discussing 30% levels and setting policy goals are also important, as well as reviewing the status. Councilmember Kraft added there is a limit on how much the city can invest. He added he wants to look at how much the community invests in affordable housing annually, and how much the city government spends on this annually. He stated that money is collec ted and then it is spent, and the HRA levy and the TIF captured that goes to affordable projects is how this is collected. He noted of the $14.274 million of TIF that is coming in, about $7.2 million is associated with projects that have a significant affordable housing component. He stated there are opportunities to have a lower HRA levy this year and still have a tremendous amount of investment in affordable housing. Councilmember Kraft stated he agrees with recommendations 1a, b, c, and d, but noted it ties into the budget discussion. He stated he is a no on recommendation number 2. Councilmember Budd agreed with Mayor Spano’s comments, and noted the 24% stood out to her, adding this is something to be proud of. She stated she does not disagree with any of the recommendations adding it is a win-win and will support the recommendations. Councilmember Mohamed stated she supports 1a, b, c, and d. She asked who sets the spending plan. Ms. Kvilvang stated the city creates the spending plan and it can be related to any new development that comes in, with the staff recommendation she agrees with discussing with the school board and the effects of the levy and who gets what monies. She stated TIF is solely the primary tool that leads to affordable housing but noted there is not a lot of affordable housing for larger families or townhomes. Councilmember Rog asked why some developers cannot build without TIF and some can. Ms. Kvilvang stated the Roars Development was much more willing to not take TIF because th ey were interested in the property, the senior housing product type, and the financing structure, and sometimes this happens with developers, especially as it relates to affordable housing. Councilmember Rog stated that possibly, we are too generous in our city with TIF, and developers come to build here, which may not be a bad thing, but there are impacts on taxpayers and cost burdens for seniors, especially due to maintenance and taxes. She stated she does not have enough knowledge on TIF, and while there are many affordable housing projects coming up, many are studio and 1-bedroom units. She is not sure this is the best tradeoff for the tax impact. She asked if this is the proper tool for the community – adding she struggles with the but-for clause. DocuSign Envelope ID: 40686F5C-5A00-40E1-A7F7-56E9CD1A3236 Study session minutes -5- Oct. 24, 2022 Councilmember Rog added the city is very desirable to build in and it can be competitive, adding there is interest here. She asked about recommendation 1d and the spending plan and if that is increasing the amount of TIF provided to developers. Ms. Kvilvang stated it puts TIF dollars into a bucket to give the city more flexibility. Councilmember Rog stated she agrees with all the recommendations under the current conditions with the understanding that more discussions will take place on the use of TIF. It was the consensus of the council to have the discussion with the school board about TIF and levies. Mayor Spano stated for comparable cities he would like to see less from a geographic perspective and more of an apples-to-apples comparison and would like to hear that from staff in providing context related to population, properties. Councilmember Brausen stated he would like to see Roseville, Brooklyn Park, and Brooklyn Center, and added he’d like to continue to see the ones shown as well. Written Reports 2. Quarterly development update – 4th Quarter 2022 3. City Service impacts of new development Councilmember Rog referenced the city services impacts of new development report noting it is hard to believe there are zero cost impacts on city services. Ms. Barton stated there are impacts and costs as well as benefits, so there is a balance. Councilmember Rog added with TIF she is focused on tax burden and has concerns about if the city is adding to expenditures for city services and then adding onto the tax bill. Councilmember Brausen stated he appreciated the fact that staff does the analysis of all the costs in a development. He noted his property tax value went up this year, and if the general levy is increased by 8%, his social security will go up by 9%, so he will be covered. Councilmember Kraft added TIF has been a useful tool for the city and the results have been phenomenal for affordable housing but noted sometimes the analysis can be a bit too rosy, adding it is hard to back this on anything. Mayor Spano stated the concern is whether we are getting enough for all the development the city is doing. He stated many things can be quantified such as police and fire calls. He also noted that more federal funding is available to the city because the population has increased over 50,000, which would not have been there if not for this development and growth. 4. Third quarter investment report (July – Sept. 2022) 5. Sept. 2022 monthly financial report DocuSign Envelope ID: 40686F5C-5A00-40E1-A7F7-56E9CD1A3236 Study session minutes -6- Oct. 24, 2022 Communications/meeting check-in (verbal) Mayor Spano encouraged all to vote in the coming election. He also noted the Twin Cities Film Fest is open and running. Ms. Keller stated the MN Wild are going to practice at the ROC on Nov. 5 at 10:30 a.m., and no are tickets needed. Polestar showroom grand opening is Thursday from 6-8 p.m. The meeting adjourned at 8:10 p.m. ______________________________________ ______________________________________ Melissa Kennedy, city clerk Jake Spano, mayor DocuSign Envelope ID: 40686F5C-5A00-40E1-A7F7-56E9CD1A3236