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Home My WebLink About2023/10/23 - ADMIN - Agenda Packets - City Council - Study Session AGENDA OCTOBER 23, 2023 6:30 p.m. City council study session – council chambers Discussion items 1. 75 min. Annual Tax Increment Financing (TIF) update: TIF management and pooled TIF 2. 30 min. Eviction notice ordinance amendments Written reports 3. Race, equity and inclusion system part 2 wrap-up 4. Quarterly development update – 4th Quarter 2023 Members of the public can attend St. Louis Park Economic Development Authority, regular city council meetings and study sessions in person or watch live by webstream at bit.ly/watchslpcouncil or at www.parktv.org, or on local cable (Comcast SD channel 14/HD channel 859). Recordings of the meetings are available to watch on the city's YouTube channel at www.youtube.com/@slpcable, usually within 24 hours of the end of the council meeting or study session. The council chambers is equipped with Hearing Loop equipment and headsets are available to borrow. If you need special accommodations or have questions about the meeting, please call 952.924.2505. Meeting: Study session Meeting date: October 23, 2023 Discussion item: 1 Executive summary Title: Annual Tax Increment Financing (TIF) update: TIF management and pooled TIF Recommended action: None at this time. Ehlers financial consultant will present the 2023 TIF District Management Review - Executive Summary. The EDA/council is asked to provide staff with policy direction which will be adopted at a future council meeting. Policy considerations: 1. Does the EDA/city council wish to continue pooling tax increment generated from eligible TIF Districts to be utilized for qualified affordable housing uses through the city’s affordable housing trust fund? 2. Does the EDA/city council wish to adopt Ehlers’ recommendation to pool an additional 10% of the tax increment from eligible redevelopment districts for qualified affordable housing uses? Summary: Stacie Kvilvang, financial advisor with Ehlers, will present the Annual TIF District Management Review - Executive Summary and discuss the EDA’s continued use of pooled tax increment for qualified affordable housing uses. The executive summary is a high-level overview of the larger TIF District Management Review & Analysis report prepared by Ehlers that reviews the status, financial condition, debt management and future value of the city’s tax increment districts. EDA/council will be asked to consider the policy questions above and provide staff direction, which will then be incorporated into 2024 budget planning. Following Ms. Kvilvang’s presentation, Jodie Zesbaugh, Senior Municipal Advisor with Ehlers will present information related to the impact of TIF on public schools. She will be joined by a representative of St. Louis Park Public Schools. 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 EDA/council makes impacts the amount of pooling available for affordable housing. In addition, some of these changes will impact the 2024 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 2023 TIF District Management Review - Executive Summary AHTF outcomes for new construction Prepared by: Greg Hunt, economic development manager Reviewed by: Karen Barton, community development director / EDA executive director Amelia Cruver, finance director Approved by: Kim Keller, city manager Study session meeting of October 23, 2023 (Item No. 1) Page 2 Title: Annual Tax Increment Financing (TIF) update: TIF management and pooled TIF Discussion Present considerations: Ehlers, the city’s/EDA’s financial advisor, along with city staff, annually present the EDA/council with a report regarding the financial status and management of the city’s tax increment financing (TIF) districts. The purpose of the 2023 TIF District Management Review & Analysis is to review the status, financial condition, debt management and future value of the city’s 24 active TIF districts. Information in the report is used by staff as a reference guide when performing analyses and making recommendations to the EDA/council. The report describes the revenues generated from each TIF district, outlines actions the city must make to stay in compliance with state law and presents recommendations for the EDA/council to consider, including the capture of tax increment for qualified affordable housing uses. It also describes how recently enacted legislation is providing the city with greater flexibility on the use of tax increment funds to: support city-sponsored programming that builds generational wealth, enable the creation of additional affordable rental and owner-occupied housing and incentivize private development projects that surpass what the city can compel. Stacie Kvilvang, financial advisor with Ehlers, will present the Annual TIF District Management Review - Executive Summary (attached and noted as the “Report”) and discuss the EDA’s continued use of pooled tax increment for qualified affordable housing uses. The report provides the following conclusions: 1. Conclusion: Decertify three TIF districts - Obligations for three TIF districts have been paid in full and all three districts have accumulated the allowable 35% for qualified affordable housing uses. The city is obligated to decertify these districts at the end of 2023. 2. Conclusion: Return of tax increment to county for redistribution - Each year, the city “returns” tax increment to the county for redistribution. After those dollars are returned to the county they are distributed to the county, the schools and the city. In 2023, the amount that must be returned to the county is approximately $1.2 million. Of that amount approximately $476,400 will be distributed to the city in 2023 and these dollars are available for any general fund purposes. Final dollars will be determined at the end of the calendar year. 3. Conclusion: 2021 special TIF legislation for AHTF – Ehlers will review the TIF districts that have cash balances available for transfer to the AHTF. Estimates show that $1.95 million would be available for transfer at the end of 2023. The report provides the following recommendations: 1. Recommendation/decision point: Continue pooling tax increment generated from all currently eligible TIF districts and dedicate the funds to the city’s AHTF Ehlers recommends that in 2024 the city continue to capture the annual allotment of tax increment from Wolfe Lake, Zarthan, Mill City, Park Center and Aquila Commons TIF Districts (approximately $1.95 million in 2023) to maximize the dollars for affordable Study session meeting of October 23, 2023 (Item No. 1) Page 3 Title: Annual Tax Increment Financing (TIF) update: TIF management and pooled TIF housing and utilize the authority provided for in the special legislation. The city’s authority to make this election ends on Dec. 31, 2026, unless the special legislative authority is extended or made permanent. 2. Recommendation/decision point: Elect to pool an additional 10% of tax increment from 4900 Excelsior, West End and Park Commons TIF Districts for affordable housing - Ehlers recommends making this election in 2024, which would capture an additional $500,000 for qualified affordable housing uses. The city’s authority to make this election ends on Dec. 31, 2026, unless the special legislative authority is extended or made permanent. The EDA/city council is asked to provide staff direction on the following policy questions: 1. Policy question: Does the EDA/city council wish to adopt Ehler’s first recommendation, which is to continue pooling tax increment generated from all currently eligible TIF districts and dedicate the funds to the city’s AHTF? The Minnesota TIF Act allows for the EDA/city to pool 25% of the tax increment generated from its 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 same 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 and do not need to be located within a specific project area. The EDA/council previously elected to retain an additional 10% of the tax increment in six (6) of its redevelopment TIF districts (Wolfe Lake, Mill City, Zarthan, Ellipse, Eliot Park, and The Shoreham) for qualified affordable housing uses. This allowed the city to retain a total of 35% of the tax increment from these districts for affordable housing and is providing a crucial funding source to assist the city meet its affordable housing goals. To date, the city has transferred approximately $3.34 million and is expected to transfer up to approximately $1.95 million in 2023, for a total of approximately $5.3 million. With the decertification of Ellipse, Elliot Park and The Shoreham TIF Districts at the end of 2023, the city has the authority to transfer tax increment from the remaining three TIF districts until Dec. 31, 2026. If the EDA/council elects to keep these districts open until that time, it is estimated to accumulate approximately $12.2 million for qualified affordable housing uses. If the city elects not to take advantage of the pooling ability in 2024, $1,365,000 in projected tax increment from the remaining three TIF districts would be returned to the county for redistribution. Of that amount, the city would receive back approximately $542,000 which could either be placed in the General Fund or the AHTF. Depending on where those 2024 monies were budgeted, the AHTF would have an estimated $823,000 – $1,365,000 less to spend on qualified affordable housing uses than if funds were pooled. Study session meeting of October 23, 2023 (Item No. 1) Page 4 Title: Annual Tax Increment Financing (TIF) update: TIF management and pooled TIF If the EDA/council decides not to pool increment from these districts, the districts must be decertified. This would result in an estimated $2.5 – $4.1 million less in the AHTF over the three-year period remaining in the special legislation. (To remain at the low end of the range, the council must place all returned increment into the AHTF instead of the General Fund.) Provided the EDA/council supports pooling tax increment from Wolfe Lake, Mill City and Zarthan TIF Districts for affordable housing purposes, staff will pool the tax increment for transfer to the AHTF at the end of 2024. 2. Policy question: Does the EDA/city council wish to adopt Ehlers’ second recommendation, which is to pool an additional 10% of the tax increment from 4900 Excelsior, West End and Park Commons TIF Districts for qualified affordable housing uses? The final payments on the 4900 Excelsior, West End and Park Commons TIF Notes are expected to be paid on Feb. 1, 2024. Once these payments are made, these redevelopment TIF districts must either be decertified or their TIF district plans modified. The city has the opportunity through Dec. 31, 2026 to transfer up to 35% of its tax increment from these districts for qualified affordable housing uses into the AHTF. Any additional dollars pooled after Dec. 31, 2026 cannot be deposited into the AHTF unless the special legislation is extended or made permanent. If the city elects not to take advantage of the pooling ability in 2024, $500,000 in projected tax increment from these three TIF districts would be returned to the county for redistribution. Of that amount, the city would receive approximately $198,000 which could either be placed in the General Fund or the AHTF. Depending on where those 2024 monies were budgeted, the AHTF would have an estimated, the AHTF would have an estimated $302,000 – $500,000 less to spend on qualified affordable housing uses than if funds were pooled. If the EDA/council decides not to pool increment from these districts, the districts must be decertified. This would result in an estimated $1.3 – $2. 1 million less in the AHTF over the three-year period remaining in the special legislation. (To remain at the low end of the range, the council must place all returned increment into the AHTF instead of the General Fund.) Provided the EDA/council supports pooling an additional 10% of tax increment from these three TIF Districts for affordable housing purposes, staff will modify the TIF plans for adoption later in 2023. TIF Dashboard During the 2021 TIF management review, the suggestion was made to staff that the TIF district information presented on the city’s website be made easier to understand and more user friendly. In response, staff created an online TIF Dashboard in 2022. The dashboard provides data and a map to visualize the various TIF districts throughout the city, as well as information Study session meeting of October 23, 2023 (Item No. 1) Page 5 Title: Annual Tax Increment Financing (TIF) update: TIF management and pooled TIF regarding the TIF districts’ financial and market value impacts. Here’s a link to 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: Study session meeting of October 23, 2023 (Item No. 1) Page 6 Title: Annual Tax Increment Financing (TIF) update: TIF management and pooled TIF AHTF outcomes for 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 Station $618,238 82 affordable units: 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 $850,000 114 affordable units: 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 and five units to 50% AMI. 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. Union Park Flats $650,000 60 affordable units: 16 units @ 30% AMI, 27 units @ 50% AMI, 17 units @ 60% AMI This development could not have been built as a 100% affordable project without AHTF dollars. These funds were used to fund project gaps and were quickly able to be increased due to a second gap. Under the inclusionary housing policy, this development was required to include three units @ 30% AMI; six units @ 50% AMI; or twelve units @ 60% AMI. October 2023 TIF DISTRICT MANAGEMENT REVIEW & ANALYSIS – EXECUTIVE SUMMARY: City of St. Louis Park, MN Tax Increment Financing Districts Prepared by: Ehlers 3060 Centre Pointe Drive Roseville, Minnesota 55113 BUILDING COMMUNITIES. IT’S WHAT WE DO. Study session meeting of October 23, 2023 (Item No. 1) Title: Annual Tax Increment Financing (TIF) update: TIF management and pooled TIF Page 7 TIF District Management Review & Analysis – Executive Summary October 2023 St Louis Park, Minnesota Page 2 Table of Contents OVERVIEW ...................................................................................................................................................................................................... 3 TIF DISTRICT SUMMARY ............................................................................................................................................................................................... 7 OBLIGATIONS OF THE TIF DISTRICTS ......................................................................................................................................................................... 11 TIF AS A DEVELOPMENT TOOL ................................................................................................................................................................................... 12 RECENT STATE-WIDE GENERAL LEGISLATION ........................................................................................................................................................... 17 TIF FOR AFFORDABLE HOUSING ................................................................................................................................................................................ 18 IMPACT OF DECERTIFIED TIF DISTRICTS .................................................................................................................................................................... 22 NEXT STEPS AND RECOMMENDATIONS .................................................................................................................................................................... 23 APPENDIX A ................................................................................................................................................................................................................ 25 Obligations of District ................................................................................................................................................................................................ 25 Term of TIF Districts ................................................................................................................................................................................................... 26 Study session meeting of October 23, 2023 (Item No. 1) Title: Annual Tax Increment Financing (TIF) update: TIF management and pooled TIF Page 8 TIF District Management Review & Analysis – Executive Summary October 2023 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 • Beltline Station (2021 Spending Plan) 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 Study session meeting of October 23, 2023 (Item No. 1) Title: Annual Tax Increment Financing (TIF) update: TIF management and pooled TIF Page 9 TIF District Management Review & Analysis – Executive Summary October 2023 St Louis Park, Minnesota Page 4 redevelopment, with the first district being a Hazardous Substance Tax Increment (HSTI) district for Park Nicollet to complete extensive 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 $105 million. Below is a chart showing total residential/hotel units and/or commercial uses that are currently constructed or under construction: Use Total Units or Sq. Ft.Market Rate Affordable % Affordable TIF Investment Residential 5,230 4,448 782 15% Commercial 566,654 Office 914,500 Industrial 201,100 Hotel 488 N/A N/A N/A 105,630,622$ 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. Seven of the districts are decertified (Oak Park Village, Excelsior Blvd, Trunk Hwy 7, Park Nicollet HSTI, Victoria Ponds, Hardcoat and Edgewood) and there are currently twenty-four (24) remaining districts as noted in the chart below (18 districts generating TIF). Four of these districts (The Shoreham, Ellipse, Eliot Park and Park Center) will decertify at the end of 2023. Six of the districts haven’t received their first increment since they were established in 2021 and 2022 (Beltline Residences, Rise on 7, 9920 Wayzata Boulevard, Wooddale Avenue Apartments, Beltline Station 1 and Beltline Station II). The following chart summarizes the active TIF districts by type: Active Districts Number Housing 7 Redevelopment 15 Renovation and Renewal 2 TOTAL 24 Study session meeting of October 23, 2023 (Item No. 1) Title: Annual Tax Increment Financing (TIF) update: TIF management and pooled TIF Page 10 TIF District Management Review & Analysis – Executive Summary October 2023 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 1,192 percent since their establishment (see chart on page 13). 3. Tax Dollars Available Due to TIF District Termination/Decertification. Due to four (4) TIF districts decertifying (Eliot Park, Ellipse, Park Center and The Shoreham) at the end of 2023, in 2024 the City will have an additional $757,000 available for General Fund purposes and this amount has been included in the 2024 preliminary budget. The additional tax capacity freed up by decertifying districts allows the city to set the levy to cover operational and debt needs without directly increasing the property tax impact on taxpayers. 4. Tax Capacity Captured in TIF. In 2023, the City has approximately 11.8% of its tax capacity captured in TIF districts. Over the last 5 years the City has averaged 11.6% and over the last 10 years it has averaged 10.7%. It is anticipated that this will fluctuate between 11.9% and 7.8% over the next five years as districts both come online and are decertified (see chart on page 15). 5. 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 in Appendix A). 6. Redevelopment TIF Districts and Affordable Housing. To date, the City has elected to retain an additional 10% of the TIF in six (6) of its redevelopment districts (Wolfe Lake, Ellipse, Eliot Park, The Shoreham, Mill City and Zarthan) 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. A portion of the remaining balance may be retained for affordable housing and a portion will be returned to the county. 7. 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. To date, the City has transferred approximately $3.342 million and is expected to transfer up to $1.954 million in 2023, for a total of approximately $5.26 million. Of the $1.954 million to be transferred in 2023, approximately $775,000 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 $12.2 million available for affordable housing. There is no timeframe in which the EDA/City need to expend the funds in the AHTF by (see chart on page 19). Study session meeting of October 23, 2023 (Item No. 1) Title: Annual Tax Increment Financing (TIF) update: TIF management and pooled TIF Page 11 TIF District Management Review & Analysis – Executive Summary October 2023 St Louis Park, Minnesota Page 6 8. 2021 Spending Plan Authority. In 2021 the legislature approved general legislation that allowed cities to transfer any legally retained TIF into a special account for use to stimulate private construction of buildings (no restrictions on use). The City approved a Spending Plan on December 5, 2022, under this authority and transferred the dollars to a separate account. The chart that follows shows the amounts transferred by December 31, 2022. The dollars must be expended by December 31, 2025 (unspent dollars go back to the “giving” districts, with some being transferred to the City’s AHTF). To date, these dollars have not been expended but have been committed to Beltline Station Redevelopment and are anticipated to be expended by December 31, 2025. District Spending Plan Dollars West End 146,200$ * Victoria Ponds 133,179$ * Zarthan 249,120$ * Wolfe Lake 119,287$ * Mill City 149,686$ Park Commons 450,000$ * Aquila 170,523$ 4900 Excelsior 136,658$ TOTAL 1,554,653$ * If not used under Spending Plan transfer to AHTF 9. Returned Increment. The City is required to return tax increment balances that exceed the statutory limit they are allowed to retain. By December 31, 2023, the City will be returning approximately $1.2 million from three (3) districts since the City has collected the maximum amount allowed for affordable housing and all obligations are paid in full. The County will redistribute the dollars back to the various taxing jurisdictions and the City’s proportionate share of these dollars is approximately $476,000. These are unrestricted dollars and the City will utilize them for General government purposes. District Amount Returned City Portion Ellipse 361,981$ 143,725$ Eliot Park 387,897$ 154,015$ Shoreham 449,972$ 178,661$ TOTAL 1,199,850$ 476,400$ Study session meeting of October 23, 2023 (Item No. 1) Title: Annual Tax Increment Financing (TIF) update: TIF management and pooled TIF Page 12 TIF District Management Review & Analysis – Executive Summary October 2023 St Louis Park, Minnesota Page 7 10. 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. 11. 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-four (24) active TIF districts, and one HSTI District (Hwy 7 Corporate Center). These districts are outlined in the charts that follow on the next four (4) pages. Study session meeting of October 23, 2023 (Item No. 1) Title: Annual Tax Increment Financing (TIF) update: TIF management and pooled TIF Page 13 TIF District Management Review & Analysis – Executive Summary October 2023 St Louis Park, Minnesota Page 8 Park Zarthan/ Mill Park Aquila Center 16th Avenue City Commons Commons District Type Housing Redevelopment Redevelopment Redevelopment Redevelopment Housing Project 91 units of senior assisted living Two hotels developed by CSM and 86 townhome units built by Rottlund 200 rental housing units developed by MSP Real Estated Excelsior and Grand retail, office and rental housing and condos developed by TOLD Two office/commercial buildings consisting of 65,000 s.f. developed by Beltline Industrial Park, Inc. 122 senior cooperative developed by Stonebridge Certified 5/19/1997 5/9/2000 6/19/2000 6/7/2001 4/26/2004 4/4/2005 Keep Open for Pooling for Aff. Hsg. Yes Yes Yes TBD Yes Yes Anticipated Term 12/31/2023 12/31/2026 12/31/2026 12/31/2027 12/31/2026 12/31/2032 Current Obligations Obligation 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 Note Obligation Paid in Full - 35% TIF for affordable housing Obligation Paid in Full - 100% TIF for affordable housing 2023 TIF Revenue $204,489 $516,937 $642,849 $3,072,429 $204,075 $216,629 District Wolfe Lake Study session meeting of October 23, 2023 (Item No. 1) Title: Annual Tax Increment Financing (TIF) update: TIF management and pooled TIF Page 14 TIF District Management Review & Analysis – Executive Summary October 2023 St Louis Park, Minnesota Page 9 Elmwood Highway 7 Corporate Ellipse on Village Center & HSTI Excelsior (Bader) District Type Renewal and Renovation Redevelopment and HSTI Redevelopment Redevelopment Redevelopment Redevelopment Project Rottlund - 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 retail 78,000 s.f. multi tenant office/warehouse building Major 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 Apartments Redevelopment of the Eliot School site into 138 market rate apartments and 2 single-family homes Redevelopment 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 space Certified 5/31/2005 7/17/2006 7/9/2008 7/9/2009 7/16/2013 4/18/2016 Keep Open for Pooling for Aff. Hsg. TBD TBD TBD Yes Yes Yes Anticipated Term 12/31/2029 12/31/2027 12/31/2036 12/31/2023 12/31/2023 12/31/2023 Current Obligations Hoigaards - 2010A TIF Revenue Bonds - $3,495,000 and IFL - $3,298,200 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 Bonds 35% TIF for affordable housing 35% TIF for affordable housing 35% TIF for affordable housing 2023 TIF Revenue $2,356,489 $162,614 $3,667,127 $749,688 512,331$ 552,296$ District West End Eliot Park (Dan Hunt)The Shoreham (Bader) Study session meeting of October 23, 2023 (Item No. 1) Title: Annual Tax Increment Financing (TIF) update: TIF management and pooled TIF Page 15 TIF District Management Review & Analysis – Executive Summary October 2023 St Louis Park, Minnesota Page 10 District Type Redevelopment Redevelopment Redevelopment Redevelopment Redevelopment Housing Project Redevelopment 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 store Redevelopment of 1 parcel into 70 agre restricted apartment units with 20% of units reserved for 60% of AME and 4,400 sq/ft of retail Redevelopment of 2 parcels into 217 unit mixed income apartment building, 2,500 square feet of commercial space, e-generation building and structural parking Redevelopment 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 retail Redevelopment of 6 parcels into a 95-unit market rate apartment Redevelopment of 9 parcels into 101 apartments and 11 retnal town homes Certified 7/1/2016 6/30/2017 6/30/2017 5/11/2019 7/17/2020 5/10/2021 Keep Open for Pooling for Aff. Hsg. TBD TBD TBD TBD TBD Yes Anticipated Term 12/31/2025 12/31/2026 12/31/2037 12/31/2029 12/31/2047 12/31/2048 Current Obligations $2.6 Million PAYGO Note $950,000 PAYGO Note $3,377,236 PAYGO Note (Note not issued yet)$951,596 IFL $3,350,000 PAYGO Note $2,600,000 PAYGO Note 2023 TIF Revenue 756,275$ $212,639 $487,575 $245,119 $332,060 $66,807 Elmwood Apts Wooddale Station (PLACE)Bridgewater Bank Parkway Residences Texa Tonka (Pastor Properties) 4900 Excelsior (Weidner)District Study session meeting of October 23, 2023 (Item No. 1) Title: Annual Tax Increment Financing (TIF) update: TIF management and pooled TIF Page 16 TIF District Management Review & Analysis – Executive Summary October 2023 St Louis Park, Minnesota Page 11 District Type Redevelopment Housing Housing Housing Housing Renewal & Renovation Project Redevelopment of 1 parcel into a 250-unit market rate apartment with 7,445 sq/ft of retail Redevelopment of 1 parcel into 120-unit affordable apartment Redevelopment of 2 parcels into 233-unit apartment with 20% of units affordable at 50% of AMI Redevelopment of 1 parcel into a 114-unit affordable apartment Redevelopment of 2 parcels into 82-unit affordable apartment Redevelopment 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 facility Certified 7/20/2022 7/20/2022 7/20/2022 7/20/2022 TBD TBD Keep Open for Pooling for Aff. Hsg.Yes Yes Yes Yes Yes TBD Anticipated Term 12/31/2049 12/31/2049 12/31/2049 12/31/2049 12/31/2050 12/31/2040 Current Obligations $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) $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 $980,238 AHTF loan $5,088,472 PAYGO Note for market rate apts and $5,751,036 PAYGO Note for mixed-use apts (Notes not issued yet) and $1,554,000 grant (spending plan dollars) 2023 TIF Revenue $0 $0 $0 $0 $0 $0 Beltline Station 1 (Sherman) Beltline Station 2 (Sherman) Beltline Residences (Opus) Rise on 7 (Common Bond)District 9920 Wayzata Blvd (Bigos) Woodale Ave. Apts. (REE) Study session meeting of October 23, 2023 (Item No. 1) Title: Annual Tax Increment Financing (TIF) update: TIF management and pooled TIF Page 17 TIF District Management Review & Analysis – Executive Summary October 2023 St Louis Park, Minnesota Page 12 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 currently has approximately $40 million in outstanding PAYGO Notes and $570,000 in one bond. See chart in Appendix A for district detail. TIF AS A DEVELOPMENT TOOL Continuous redevelopment is vital to maintaining the City’s long-term economic health and vitality. St Louis Park has 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 table on the following page, the overall market value of the City’s TIF district portfolio has increased by 1,192% (Districts that are certified, and collecting TIF): Study session meeting of October 23, 2023 (Item No. 1) Title: Annual Tax Increment Financing (TIF) update: TIF management and pooled TIF Page 18 TIF District Management Review & Analysis – Executive Summary October 2023 St Louis Park, Minnesota Page 13 District Market Value at Time of Certification Pay 2023 Taxable Market Value Percent Increase in Value Park Center 493,000 14,613,000 2864.10% Zarthan 4,053,600 45,078,000 1012.05% Mill City 708,700 44,545,000 6185.45% Park Commons 4,618,000 229,427,100 4868.11% Wolfe Lake 1,717,300 15,112,000 779.99% Aquila 1,900,000 22,524,000 1085.47% Elmwood 10,864,500 194,267,800 1688.10% Highway 7 Business Center 2,792,700 10,266,000 267.60% West End (Partial Construction)43,051,000 360,162,000 736.59% Ellipse 1,931,800 57,641,000 2883.80% Hardcoat 1,184,700 3,373,000 184.71% Eliot Park 2,143,000 37,315,400 1641.27% The Shoreham 2,476,200 45,449,000 1735.43% 4900 Excelsior 2,404,000 53,789,000 2137.48% Elmwood Apartments 1,100,000 16,200,000 1372.73% Wooddale Station 5,811,900 39,060,000 572.07% Bridgewater Bank 3,772,400 19,771,000 424.10% Parkway Residences 3,006,600 25,650,000 853.12% Texa Tonka (Partial Value)2,114,000 7,926,000 274.93% TOTAL 96,143,400 1,242,169,300 1192.00% Beltline Residences 5,423,000 6,251,000 15.27% Rise on 7 2,735,000 2,761,000 0.95% 9920 Wayzata Blvd 3,565,000 5,659,000 58.74% Woodale Ave Apts (REE)2,616,000 2,616,000 0.00% Beltline Station 1 1,833,180 1,833,180 0.00% Beltline Station 2 7,240,090 7,240,090 0.00% TOTAL N/A N/A N/A Study session meeting of October 23, 2023 (Item No. 1) Title: Annual Tax Increment Financing (TIF) update: TIF management and pooled TIF Page 19 TIF District Management Review & Analysis – Executive Summary October 2023 St Louis Park, Minnesota Page 14 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. Since 1997, the average term of the TIF districts is approximately 17 years. In the last 5 years, the average has increased to approximately 19 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. In addition, many of the newer districts are housing districts which the City has typically allowed to go the full duration to capture 100% of the TIF for affordable housing once the obligations are paid off (See chart in Appendix A). The City’s election to retain 35% of the TIF for affordable housing in redevelopment districts has only added three (3) years onto the term of those particular districts. 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. Study session meeting of October 23, 2023 (Item No. 1) Title: Annual Tax Increment Financing (TIF) update: TIF management and pooled TIF Page 20 TIF District Management Review & Analysis – Executive Summary October 2023 St Louis Park, Minnesota Page 15 City of St. Louis Park 2020 2021 2022 2023 2024 2025 2026 2027 2028 Park Center Hsg 150,890 156,578 159,990 174,303 0 0 0 0 0 Zarthan Redev 467,481 451,000 410,444 441,199 445,611 450,067 454,568 0 0 Mill City Redev 491,141 516,141 516,141 547,954 553,434 558,968 564,558 0 0 Park Commons Redev 2,406,018 2,546,930 2,518,622 2,618,887 2,645,076 2,671,527 2,698,242 2,725,224 0 Edgewood Redev 0 0 0 0 0 0 0 0 0 Wolfe Lake Redev 129,144 133,709 151,791 173,950 175,690 177,446 179,221 0 0 Aquila Commons Redev 201,109 209,382 211,836 190,260 192,163 194,084 196,025 197,985 199,965 Elmwood R & R 1,975,041 2,032,483 2,060,056 2,069,644 2,090,340 2,111,244 2,132,356 2,153,680 2,175,217 Highway 7 Business Center Redev 81,904 84,865 85,777 98,643 99,629 100,626 101,632 102,648 0 Highway 7 Subdistrict HSS 53,504 53,504 53,504 53,504 53,504 53,504 53,504 53,504 0 West End Redev 2,855,997 2,838,055 3,372,514 4,044,266 4,084,709 4,125,556 4,166,811 4,208,479 4,250,564 Ellipse on Excelsior Redev 652,232 656,421 652,289 697,833 0 0 0 0 0 Hardcoat Econ Dev 22,974 24,919 24,872 0 0 0 0 0 0 Eliot Park Redev 390,896 399,659 400,968 437,510 0 0 0 0 0 The Shoreham Redev 444,609 469,362 467,981 470,768 0 0 0 0 0 4900 Excelsior Redev 548,563 592,423 593,343 644,636 651,082 657,593 0 0 0 Wayzata Blvd Redev 4,021 7,164 15,725 0 0 0 0 0 0 Elmwood Apartments Redev 0 181,250 181,250 181,250 183,063 184,893 186,742 0 0 Wooddale Station Redev 0 415,601 415,601 415,601 419,757 423,955 428,194 432,476 436,801 Bridgewater Bank Redev 0 47,859 184,679 208,935 211,024 213,135 215,266 217,419 219,593 Parkway Residences Redev 0 0 136,650 283,042 381,924 831,635 839,951 848,351 856,834 Texa Tonka (Pastor Properties)Hsg 0 0 0 56,945 420,256 538,720 544,107 549,548 555,044 Beltline Reidences R & R 0 0 0 606,779 831,635 839,951 848,351 856,834 Captured TIF Tax Capacity 10,875,524 11,817,305 12,614,033 13,809,130 13,214,040 14,124,587 13,601,129 12,337,666 9,550,852 Total Tax Capacity (Gross)96,057,628 102,157,645 106,119,396 116,626,650 117,792,917 118,970,846 120,160,554 121,362,160 122,575,781 Percentage of Tax Base in TIF 11.3% 11.6% 11.9% 11.8% 11.2% 11.9% 11.3% 10.2% 7.8% Assumes 1% annual increase in tax base and TIF beginning in payable 2024 Distict District Type ProjectedActual 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 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 the tax rates and bond ratings for similar cities. The cities shown were selected because (i) they may be immediately adjacent to St. Louis Park (ii) they are first-ring, fully developed suburbs (iii) may be similar in size; and (iv) have similar economic characteristics. Although this is a small sample of municipalities, the amount of TIF used by a City does not correlate directly with a City’s tax rate or bond rating. As noted, even though St. Louis Park has the second highest percent of tax capacity captured in TIF, more of the cities have a higher tax rate. This means that for Study session meeting of October 23, 2023 (Item No. 1) Title: Annual Tax Increment Financing (TIF) update: TIF management and pooled TIF Page 21 TIF District Management Review & Analysis – Executive Summary October 2023 St Louis Park, Minnesota Page 16 the same value home in these cities, their local taxes are higher than in St. Louis Park, even though they use TIF less. In addition, 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. Comparable City Population City Tax Rate Bond Rating Edina 52,437 1.2%28.056%Aaa/AAA Minnetonka 52,554 1.7%33.922%Aaa New Brighton 22,413 9.4%39.795%AA St. Louis Park 48,827 11.8%42.861%AAA Fridley 30,289 12.2%43.017%Aa2 Robbinsdale 14,210 9.6%48.265%AA+ Richfield 36,710 10.4%52.120%Aa2 Golden Valley 21,545 2.0%53.407%Aaa Hopkins 18,269 8.7%61.432%AA+ Captured TIF as a % of Tax Base Study session meeting of October 23, 2023 (Item No. 1) Title: Annual Tax Increment Financing (TIF) update: TIF management and pooled TIF Page 22 TIF District Management Review & Analysis – Executive Summary October 2023 St Louis Park, Minnesota Page 17 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. In 2022, the City transferred $1,554,653 to a special fund and these dollars have been committed to the Beltline Station redevelopment. Study session meeting of October 23, 2023 (Item No. 1) Title: Annual Tax Increment Financing (TIF) update: TIF management and pooled TIF Page 23 TIF District Management Review & Analysis – Executive Summary October 2023 St Louis Park, Minnesota Page 18 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 23, 2023 (Item No. 1) Title: Annual Tax Increment Financing (TIF) update: TIF management and pooled TIF Page 24 TIF District Management Review & Analysis – Executive Summary October 2023 St Louis Park, Minnesota Page 19 TIF District Sources 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, The Shoreham, Mill City and Zarthan (redevelopment). In addition, the EDA should review making the additional 10% election to the West End, 4900 Excelsior and Park Commons TIF Districts in 2023. The table below summarizes the amounts that are anticipated to be available and are based upon pay 2023 TIF estimates. Based upon this table: • The districts shaded in gray are redevelopment districts where the City has elected to retain the additional 10% for affordable housing. • The districts in white are redevelopment districts where the City has not yet elected to retain the additional 10% for affordable housing. • The districts shaded in green are housing districts and the City has always allowed these districts to remain open to capture 100% of the TIF for affordable housing. • 2023 is highlighted in bold to show how much from each district is available; and • The orange highlighted year (2026) represents the last year the City can transfer from the various districts to the AHTF pursuant to the special legislation discussed on the following page. 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 Hsg 2020 170,000 170,000 170,000 2021 109,421 492,066 163,361 146,387 460,787 583,962 1,955,984 2,125,984 2022 353,562 135,627 542,960 184,410 4 1,216,563 3,342,547 2023 125,000 500,000 630,000 279,809 2,620 205,135 211,812 1,954,376 5,296,924 2024 225,000 500,000 640,000 500,000 211,812 2,076,812 7,373,736 2025 250,000 500,000 630,000 200,000 795,000 211,812 2,586,812 9,960,548 2026 200,392 541,925 644,984 - - - 200,000 472,686 - 211,812 2,271,799 12,232,348 2027 - - - - - 2,400,000 211,812 2,611,812 14,844,160 2028 - - - - - 693,000 211,812 904,812 15,748,972 2029 - - - - 211,812 211,812 15,960,784 2030 - - - - 211,812 211,812 16,172,597 2031 - - - - - 211,812 211,812 16,384,409 2032 - - - - - 211,812 211,812 16,596,221 2033 - - - - - - 16,596,221 2034 - - - - - 16,596,221 2035 - - - - - 16,596,221 2036 - - 23,960,909 - 23,960,909 40,557,130 TOTAL 909,813 2,041,925 2,544,984 1,295,437 301,608 689,347 24,360,909 1,767,686 3,093,000 850,332 2,702,089 40,557,130 POOLING FOR AFFORDABLE HOUSING Gray Shaded Areas Depict TIF District That Have Been Modified to Allow For Additional 10% - Green Shaded Area Are Hsg TIF Districts Year Yearly Total Cumulative Study session meeting of October 23, 2023 (Item No. 1) Title: Annual Tax Increment Financing (TIF) update: TIF management and pooled TIF Page 25 TIF District Management Review & Analysis – Executive Summary October 2023 St Louis Park, Minnesota Page 20 If the City continues to keep the existing three (3) redevelopment TIF districts open as allowed through 2026, it will capture approximately $1.365 to $1.38 million annually for the AHTF. If the City were to decertify these districts and return 100% of the increment back to the County for redistribution, the City’s proportionate share would be approximately $542,000 to $550,000. Depending upon where the City dedicates those returned dollars the net loss to the AHTF ranges from $823,000 to $1.365 million. The Chart below illustrates this as well as the dollars associated with the two (2) of the three (3) future districts as well (did not include Park Commons since those dollars come in after 2026). Projected Dollars to AHTF Projected Current TIF Districts 2024 2025 2026 Wolfe Lake 225,000 250,000 200,392 Mill City 640,000 630,000 644,984 Zarthan 500,000 500,000 541,925 Total Annual Increment 1,365,000 1,380,000 1,387,301 Future TIF Districts Projected West End - 200,000 200,000 4900 Excelsior 500,000 795,000 472,686 Total Annual Increment 500,000 995,000 672,686 GRAND TOTAL- Annual Increment 1,865,000 2,375,000 2,059,987 Projected Dollars To General Fund OR AHTF as a Result of 100% of Returned Increment Projected TIF District 2024 2025 2026 Wolfe Lake 89,336 99,263 79,566 Mill City 254,112 250,142 256,091 Zarthan 198,525 198,525 215,171 Total Annual City Share of Taxes if Districts Decertified 541,973 547,929 550,828 Future TIF Districts Projected West End - 79,410 79,410 4900 Excelsior 198,525 315,655 187,680 Total Annual City Share of Taxes if Districts Decertified 198,525 395,065 267,090 GRAND TOTAL - Annual City Share of Taxes if Districts Decertified 740,498 942,994 817,918 Existing 3 Districts Annual Loss in Tax Dollars to AHTF (100%)(1,365,000) (1,380,000) (1,387,301) # Annual Loss in Tax Dollars to AHTF (IF City portion is deposited into AHTF)(823,027) (832,071) (836,473) All Districts Annual Loss in Tax Dollars to AHTF (100%)(1,865,000) (2,375,000) (2,059,987) Annual Loss in Tax Dollars to AHTF (IF City portion is deposited into AHTF)(1,124,502) (1,432,006) (1,242,069) Study session meeting of October 23, 2023 (Item No. 1) Title: Annual Tax Increment Financing (TIF) update: TIF management and pooled TIF Page 26 TIF District Management Review & Analysis – Executive Summary October 2023 St Louis Park, Minnesota Page 21 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). To date, the City has transferred approximately $3.342 million and is expected to transfer up to $1.954 million in 2023, for a total of approximately $5.296 million. 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 $12.2 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 23, 2023 (Item No. 1) Title: Annual Tax Increment Financing (TIF) update: TIF management and pooled TIF Page 27 TIF District Management Review & Analysis – Executive Summary October 2023 St Louis Park, Minnesota Page 22 IMPACT OF DECERTIFIED 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 eleven (11) TIF districts over the next five (5) years, starting with Eliot Park, The Shoreham, Ellipse and Park Center on December 31, 2023. 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. The additional tax capacity freed up by decertifying districts allows the city to set the levy to cover operational and debt needs without directly increasing the property tax impact on taxpayers. As shown in the table, over the next 5 years, decertifying districts could provide an additional $2.04 million in tax dollars to the City ($2.8M cumulative total) and over the next 10 years this cumulative amount will increase by approximately $2.3 million to $3.9 million. The future district decertification’s have been incorporated into the long-range financial forecast for City budgeting purposes. 2024 Next 5 Next 10 TIF District Obligation(s) Paid In Full Decertifies Dec. 31 TOTAL TOTAL TOTAL Eliot Park 2020 2023 437,510 437,510 437,510 Shoreham 2021 2023 470,768 470,768 470,768 Ellipse 2020 2023 697,833 697,833 697,833 Park Center 2003 2023 161,590 161,590 161,590 Zarthan 2022 2026 - 441,199 441,199 4900 Excelsior 2024 2025 - 644,636 644,636 Mill City 2023 2026 - 547,954 547,954 Wolfe Lake 2020 2026 - 173,950 173,950 Elmwood Apartments 2026 2026 - 181,250 181,250 Park Commons 2027 2027 - 2,618,887 2,618,887 Highway 7 Corporate Center 2027 2027 - 152,147 152,147 Elmwood Village 2029 2029 - - 2,207,356 Bridgewater Bank 2029 2029 - - 208,935 Aquila Commons 2018 2032 - - 190,260 - - - - - - Total Annual Captured Net Tax Capacity Returned to Tax Rolls 1,767,701 6,527,724 9,134,275 City Preliminary Tax Rate for Taxes Payable in 2023 (1)42.861% Estimated Additional Annual Tax Levy Available (1)757,654$ 2,797,848$ 3,915,041$ (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 2023 Study session meeting of October 23, 2023 (Item No. 1) Title: Annual Tax Increment Financing (TIF) update: TIF management and pooled TIF Page 28 TIF District Management Review & Analysis – Executive Summary October 2023 St Louis Park, Minnesota Page 23 CONCLUSIONS AND RECOMMENDATIONS Based upon the updated financial review and analysis of the City’s TIF districts, following are the conclusions, actions anticipated as well as recommendations: Conclusions 1. Decertify Three TIF Districts. The City is required to decertify Eliot Park, Ellipse and The Shoreham Districts because their obligations are paid in full and they have accumulated the allowable 35% for affordable housing. A portion of the remaining cash balances can be transferred to the City’s AHTF (as noted in the chart below) and the portion noted in #2 below will be returned to the County for redistribution. The City will be approving resolutions at a meeting in November to decertify these districts early. The City will submit the required resolutions to the County Auditor so the tax capacity of these districts will be removed for taxes payable in 2024. In addition, the City will be required to submit a confirmation of decertification form to the Office of the State Auditor to account for any remaining TIF in the District (Ehlers will assist staff with these forms and accounting). In addition, we recommend retaining $100,000 in each of these districts until the active tax petitions are resolved to assure the City has the funds available for any awards granted to those property owners, if any (so no impact on the City’s General Fund). District AHTF Amount Ellipse 279,809$ Eliot Park 2,620$ Shoreham -$ TOTAL 282,429$ 2. Return of Increment to County For Redistribution. The City will be returning approximately $1.2M from the three (3) TIF Districts noted in #1 above to the County for redistribution by December 31, 2023. The City’s proportionate share will be approximately $476,000 and these dollars are available for any general fund purposes. District Amount Returned City Portion Ellipse 361,981$ 143,725$ Eliot Park 387,897$ 154,015$ Shoreham 449,972$ 178,661$ TOTAL 1,199,850$ 476,400$ Study session meeting of October 23, 2023 (Item No. 1) Title: Annual Tax Increment Financing (TIF) update: TIF management and pooled TIF Page 29 TIF District Management Review & Analysis – Executive Summary October 2023 St Louis Park, Minnesota Page 24 3. 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 $1.954 million is the appropriate amount to be transferred to the City’s AHTF for 2023. Recommendations 1. Continue Pooling Tax Increment Generated From All Currently Eligible TIF Districts and Dedicate the Funds to the City’s AHTF. We recommend the City continue to capture the annual allotment of TIF from Wolfe Lake, Zarthan, Mill City, Park Center and Aquila districts through 2026 to maximize the dollars for affordable housing and utilize the authority provided for in the special legislation. 2. Election to Retain an Additional 10% for Affordable Housing: We recommend making this election in 2023 for the 4900 Excelsior, West End and Park Commons TIF Districts to provide the City the flexibility to retain the additional funds. For 4900 Excelsior and West End, this will allow the City to transfer available funds to the AHTF prior to December 31, 2026, when the special legislative authority ends. For Park Commons, this will allow the City to retain those funds in the TIF District for use on affordable housing as well but will carry the restrictions noted on page 18. Study session meeting of October 23, 2023 (Item No. 1) Title: Annual Tax Increment Financing (TIF) update: TIF management and pooled TIF Page 30 TIF District Management Review & Analysis – Executive Summary October 2023 St Louis Park, Minnesota Page 25 APPENDIX A Obligations of District District Note Type Outstanding After 8/1/2023 Total By TIF District Issue Amount Paying District Term Note A 399,576$ 2008B GO Tax Increment Bonds 570,000$ West End 2/1/2024 Note B 68,499$ TOTAL 570,000$ N/A N/A Note C 72,372$ Note D 23,119$ Phase NE 2,852,302$ Phase E 3,485,707$ Phase NW 2,583,726$ West End Duke Realty PAYGO 20,909,528$ 20,909,528$ 4900 Excelsior Weidner PAYGO 617,461$ 617,461$ Elmwood Apartments 36th Street LLC PAYGO 481,976$ 481,976$ Bridgewater Bank Bridgewater Bank IFL 918,564$ 918,564$ Parkway Residences Sela Investments LLC PAYGO 3,350,000$ 3,350,000$ Texa Tonka Pastor Properties PAYGO 2,600,000$ 2,600,000$ Rise on 7 Common Bond AHTF Loan 1,800,000$ 1,800,000$ TOTAL OBLIGATIONS ISSUED 40,162,830$ Wooddale Station PLACE (not issued yet)PAYGO 3,377,236$ 3,377,236$ Beltline Residences Opus (not issued yet)PAYGO 5,200,000$ 5,200,000$ 9920 Wayzata Blvd Bigos (not issued yet)PAYGO 6,300,000$ 6,300,000$ Real Estate Equities (not issued yet)PAYGO 1,462,000$ Real Estate Equities (not issued yet)AHTF Loan 850,000$ Sherman (not issued yet)PAYGO 1,442,847$ Sherman (not issued yet)AHTF Loan 980,238$ Sherman Mk Apt (not issued yet)PAYGO 5,088,472$ Sherman Mixed Use (not issued yet)PAYGO 5,751,036$ TOTAL OBLIGATIONS NOT ISSUED 30,451,829$ GRAND TOTAL 70,614,659$ PAYGO PAYGO 2,312,000$ Woodale Ave Apts Beltline Station 1 2,423,085$ Beltline Station 2 10,839,508$ Bonds After 8/1/2023Pay As You Go Obligations, Interfund Loans and AHTF Loans Hwy 7 Corporate Center $ 563,566 Excelsior and Grand 8,921,735$ Study session meeting of October 23, 2023 (Item No. 1) Title: Annual Tax Increment Financing (TIF) update: TIF management and pooled TIF Page 31 TIF District Management Review & Analysis – Executive Summary October 2023 St Louis Park, Minnesota Page 26 Term of TIF Districts District Year 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 Housing Difference Between Term and Obligations Being Paid Off Park Center 1997 Housing 26 6 26 0 Zarthan 1999 Redevelopment 26 23 26 0 Mill City 2000 Redevelopment 26 23 26 0 Park Commons 2001 Redevelopment 26 26 26 0 Wolfe Lake 2003 Redevelopment 26 14 21 -5 Aquila 2004 Housing 26 12 12 -14 Elmwood Village 2004 Renewal and Renovation 22 22 22 0 Highway 7 Business Center 2006 Redev/HSS 26 22 22 -4 West End (Partial Construction)2007 Redevelopment 26 20 20 -6 Ellipse 2009 Redevelopment 26 10 13 -13 Hardcoat 2010 Economic Development 9 9 9 0 Eliot Park 2013 Redevelopment 26 5 8 -18 The Shoreham 2015 Redevelopment 26 3 6 -20 4900 Excelsior 2015 Redevelopment 26 8 8 -18 Elmwood Apartments 2017 Redevelopment 26 8 8 -19 Wooddale Station 2017 Redevelopment 26 15 15 -11 Bridgewater Bank 2017 Redevelopment 26 6 6 -20 Parkway Residences (Under construction)2020 Redevelopment 26 15 15 -11 Texa Tonka (Pastor Properties)2021 Housing 26 12 12 -14 Beltline Residences (Under construction)2021 Redevelopment 26 8 8 -18 Rise on 7 (Common Bond)2022 Housing 26 26 26 0 9920 Wayzata Blvd (Bigos)2022 Housing 26 15 26 0 Woodale Ave Apts (REE)2022 Housing 26 15 26 0 Beltline Station 1 (Sherman)2022 Housing 26 26 26 0 Beltline Station 2 (Sherman)2022 Renewal and Renovation 16 16 16 0 AVERAGE N/A N/A 25 15 17 -8 AVERAGE LAST 10 YEARS N/A N/A 25 13 15 -11 AVERAGE LAST 5 YEARS N/A N/A 25 17 19 -5 Note: Districts highlighted in grey are redevelopment districts where the city has made the election to retain up to 35% for affordable housing. Study session meeting of October 23, 2023 (Item No. 1) Title: Annual Tax Increment Financing (TIF) update: TIF management and pooled TIF Page 32 Meeting: Study session Meeting date: October 23, 2023 Discussion item: 2 Executive summary Title: Eviction notice ordinance amendments Recommended action: Review recommended changes to the notice of eviction ordinance to be consistent with the new Minnesota state law that is effective January 1, 2024. Policy consideration: Does the council support the proposed amendments to the notice of eviction ordinance? Summary: In March 2019, staff and city council began a robust process to determine if the City of St. Louis Park should enact an ordinance that would require notice be provided to people who rent their homes prior to initiating an eviction action for non-payment of rent or any unpaid financial obligations in violations of the lease. The city council passed the ordinance on Nov. 16, 2020, providing for a seven-day notice of eviction with an effective date of Feb. 1, 2021. The current ordinance requires a property owner to provide a seven-day written notice to the residential renter before bringing an eviction action alleging a material breach of the lease for nonpayment of rent or other unpaid financial obligations. The 2023 Minnesota State Legislature enacted MN State Statute 504B.321 requiring a 14-day notice of eviction, effective Jan. 1, 2024. The law allows the city to either repeal its existing seven-day notice of eviction ordinance or amend the ordinance to be consistent with the State Statute. If the city chooses to amend its ordinance, the ordinance must increase the notice period to a minimum of 14 days. In light of the new State law, staff initially considered repealing the city’s notice of eviction ordinance. However, upon further consideration and additional community input, staff is recommending council amend the existing notice of eviction ordinance to be consistent with the State Statute as detailed in the attached draft ordinance, including increasing the notice period to 14 days. The city attorney was consulted in drafting the amended ordinance and approves of the proposed amendments. Financial or budget considerations: None. Strategic priority consideration: St. Louis Park is committed to providing a broad range of housing and neighborhood oriented development. Supporting documents: Discussion Draft ordinance Prepared by: Marney Olson, housing supervisor Reviewed by: Karen Barton, community development director Approved by: Kim Keller, city manager Study session meeting of October 23, 2023 (Item No. 2) Page 2 Title: Eviction notice ordinance amendments Discussion Background: In March 2019, staff and city council began a robust process to determine if the City of St. Louis Park should enact an ordinance that would require notice be provided to renters prior to initiating an eviction action for non-payment of rent or any unpaid financial obligations in violations of the lease. Since the proposed ordinance was similar to a bill presented for consideration during the 2020 state legislative session, the council deferred further action on a local ordinance pending the outcome at the legislature. The 2020 legislature did not act on the bill and the local ordinance was reintroduced for council consideration at the Sept. 29, 2020 city council study session. At that meeting, the city council directed staff to conduct a public outreach process stressing the importance of engaging renters and rental property owners for their input. After the public process concluded, staff drafted a proposed ordinance that incorporated input garnered from renters, rental property owners/managers and community members. The city council heard the first reading of the notice of eviction ordinance on Nov. 2, 2020, and the second reading on Nov. 16, 2020. The city council passed the ordinance requiring a seven-day notice of eviction, with an effective date of Feb. 1, 2021. Current notice of eviction ordinance: The current ordinance requires a property owner to provide a seven-day written notice to the residential renter before bringing an eviction action alleging a material breach of the lease for nonpayment of rent or other unpaid financial obligations. The written notice must specify the allegations of non-payment of rent or other unpaid financial obligations and must state the total amount due along with specific accounting of the total amount. The notice must be delivered personally, mailed to the residential renter at the address of the leased premise, or emailed to the residential renter’s email address on file with the owner. If the alleged rent delinquency or other financial obligation breach of the lease is not corrected within seven days of the delivery or mailing of the notice, the property owner may proceed with filing a complaint based on any allegations in the notice. Current conditions: Minnesota state law effective Jan. 1, 2024: The 2023 Minnesota State Legislature enacted MN State Statute 504B.321 requiring a 14-day notice of eviction that goes into effect Jan. 1, 2024. The law allows the city to either repeal our existing seven-day notice of eviction ordinance or amend the ordinance to be consistent with the State Statute. If the city chooses to amend its ordinance, the ordinance must increase the notice period to a minimum of 14 days. State law also requires that: •The following statements are included in the notice: o ‘You have the right to seek legal help. If you can’t afford a lawyer, free legal help may be available. Contact Legal Aid or visit www.LawHelpMN.org to know your rights and find your local Legal Aid office.” o “To apply for financial help, contact your local county or Tribal social services office, apply online at MNBenefits.mn.gov or call the United Way toll-free information line by dialing 2-1-1 or 800-543-7709.” Study session meeting of October 23, 2023 (Item No. 2) Page 3 Title: Eviction notice ordinance amendments •The landlord or an agent of the landlord must deliver the notice personally or by first class mail to the residential tenant at the address of the leased premises. Community input: City staff and council members met with both the St. Louis Park Eviction Prevention Team (“Team”), an informal, grass roots community group that has been working with St. Louis Park residents facing eviction, and the Minnesota Multi Housing Association (“MHA”), an organization that represents multi-family housing property owners and managers to discuss changes to the current policy. Staff initially met with the Team in August where the group presented several suggested changes they would like to see in a revised ordinance. Staff considered all of their comments and incorporated a number of their suggestions into the revised ordinance and accompanying sample notice, including: •Identify the notice as a pre-eviction notice (instead of a “notice of eviction”); •Focus on clear, concise and plain language in the notice; •Create a city template that rental property owners/managers can choose to use and translate it into multiple languages; •Outline pathways to financial and legal resources for renters; and The Team had several additional suggestions that the city attorney recommended not be included in the ordinance including that the landlord be required to negotiate a plan with the renter; to include additional phone numbers and contact information for various renter resources in the city in the notice; and to allow for the notice to be emailed to the renter. The Team voiced some concerns to staff regarding the requirement in the state statute to contact the United Way 2-1-1 for renter assistance. Staff subsequently called the United Way 2- 1-1 number to gauge the level and efficacy of assistance offered. Staff found the United Way operator to be very helpful and offering resources specific to the residents of St. Louis Park, including legal assistance and resources for payment of rent. The 2- 1-1 operator provided information on how to access assistance from the following agencies for a St. Louis Park resident (in the following order): •STEP •Community Action Partnership – Hennepin County •Emergency Assistance – Hennepin County •As well as resources for three specific situations: active military, living with MS, and undergoing treatment for cancer. Staff found the legal and financial resources listed in the state statute to be appropriate and helpful for renters to access resources. Consistency with the state statute ensures that phone numbers and websites included in the city ordinance and pre-eviction form are up-to-date and renters can access the resources included in the notice. Since the city’s amended ordinance will reiterate the requirements of the new state law, the city attorney deemed it appropriate for the city to encourage use of the city sample pre-eviction notice rather than make it a legal requirement. Study session meeting of October 23, 2023 (Item No. 2) Page 4 Title: Eviction notice ordinance amendments MHA expressed their support for consistency across city and state notice of eviction requirements for both property owners and renters since many rental property owners and managers operate in multiple jurisdictions and renters often move between cities. Both the Team and MHA agreed that providing a recommended form of the pre-eviction notice on the city’s website would be beneficial. Amended ordinance: Staff drafted the revised ordinance to include the state requirements, suggestions from the Team, staff and attorney review. The revised ordinance also encourages rental property owners to utilize a recommended pre-eviction notice form provided by the city. The pre-eviction notice will include the required language under state law, while incorporating the city’s requirements and additional recommendations from the Team. The pre-eviction notice will be available on the city’s website in multiple languages and staff will encourage rental property owners and managers to use the form for consistency. Staff considered a longer notice period, up to 30 days, but based on input gathered from community stakeholders, the state’s comprehensive process leading to a 14-day period, the consistency a 14-day notice period will provide with state law and the consistency it will provide for renters and rental property owners, staff is recommending 14 days. Collecting actionable data on this issue continues to be a priority and staff looks forward to working with system and community partners on how best to do this. Present considerations: In light of the robust work that was undertaken in 2019 and 2020 to create the current notice of eviction policy, engagement done at the state level, the additional community outreach with both the eviction prevention team and MHA, and review and input from the city attorney, staff recommends council amend the existing notice of eviction ordinance as detailed in the attached draft ordinance. Next steps: The next step in the revision of the ordinance is the first reading of the ordinance. Action Proposed Date First reading November 6, 2023 Second reading November 20, 2023 Date of publication November 30, 2023 Date ordinance takes effect January 1, 2024 Study session meeting of October 23, 2023 (Item No. 2) Page 5 Title: Eviction notice ordinance amendments Ordinance No. ____-23 Ordinance amending the St. Louis Park City Code Section 8-337 requiring 14 days written notice to tenant prior to owner initiating eviction proceedings The City of St. Louis Park, Minnesota does ordain: Section 1. The St. Louis Park City Code is amending Chapter 8, Section 8-337 as follows: Sec. 8-337. Notice required prior to initiating eviction proceedings. (a) At least seven days before Before bringing an eviction action alleging nonpayment of rent or other unpaid financial obligations in violation of the lease, a landlord an Owner must provide written notice to the residential tenant specifying the basis for future eviction action. The landlord is encouraged to utilize a pre-eviction notice form provided by the city. Any pre- eviction notice should be titled “Pre-eviction notice” and include: (b) For an allegation of nonpayment of rent or other unpaid financial obligations in violation of the lease, the Owner must include the following in the written notice: (1) The total amount due; (2) A specific accounting of the amount of the total due that is comprised of from unpaid rents, late fees, or and other charges under the lease; and (3) The name and address of the person authorized to receive rent and fees on behalf of the Owner landlord;. (4) The following statement: “You have the right to seek legal help. If you can’t afford a lawyer, free legal help may be available. Contact Legal Aid or visit www.LawHelpMN.org to know your rights and find your local Legal Aid office.” (5) The following statement: “To apply for financial help, contact your local county or Tribal social services office, apply online at MNBenefits.mn.gov or call the United Way toll-free information line by dialing 2-1-1 or 800-543-7709”; and (6) The following statement: “Your landlord can file an eviction case if you do not pay the total amount due or move out within 14 days from the date of this notice.” (c) A notice provided under this section must: (1) provide a description of how to access legal and financial assistance through information posted on the city’s website. Study session meeting of October 23, 2023 (Item No. 2) Page 6 Title: Eviction notice ordinance amendments (2) state that the Owner may bring an eviction action following expiration of the seven-day notice period if the tenant fails to pay the total amount due or fails to vacate. (db) The Owner landlord or an agent of the Owner landlord must deliver the notice personally or by first class mail to the residential tenant at the address of the leased premises. If the tenant has agreed in writing, notice may be delivered by email to the residential tenant at the residential tenant’s email address on file with Owner. (c) If the residential tenant fails to correct the rent delinquency within seven 14 days of delivery or mailing of the notice, or fails to vacate, the Owner then the landlord may bring an eviction action under Minn. Stat. § 504B.321. subdivision 1 based on nonpayment of rent. (d) If applicable, the landlord filing a complaint must attach a copy of the written notice described in Sec. 8-337(a). Section 2. This ordinance shall take effect February 1, 2021 January 1, 2024. Adopted this ______ day of _______________, 2023, by the city council of the City of St. Louis Park. First Reading November 6, 2023 Second Reading November 20, 2023 Date of Publication November 30, 2023 Date Ordinance takes effect January 1, 2024 Reviewed for administration Adopted by city council Nov. 20, 2023 ____________________________________ ____________________________________ Kim Keller, city manager Jake Spano, mayor Attest: Approved as to form and execution: ____________________________________ ____________________________________ Melissa Kennedy, city clerk Soren Mattick, city attorney Meeting: Study session Meeting date: October 23, 2023 Written report: 3 Executive summary Title: Race, equity and inclusion system part 2 wrap-up Recommended action: None Policy consideration: The purpose of this report is to summarize the outcomes of the recent discussions within the race, equity and inclusion study sessions. Summary: On Oct. 9, 2023, the council completed a series of discussions focused on advancing the city’s strategic priority related to racial equity. These discussions primarily focused on making profound and sustainable progress toward developing policies and practices that advance proactive and long-lasting solutions for equity and justice. The REI system started on Sept. 11, 2023. Since that time, staff has provided council with information and there have been policy discussions on topics that will change how we serve and engage with residents, as well as the people who work for the city of St. Louis Park. This report serves as a summary of all the discussions and includes the council directions provided. Financial or budget considerations: None at this time. Strategic priority consideration: St. Louis Park is committed to being a leader in racial equity and inclusion in order to create a more just and inclusive community for all. Supporting documents: Discussion Prepared by: Radious Guess, race, equity and inclusion director Reviewed by: Jocelyn Hernandez, race, equity and inclusion specialist Approved by: Kim Keller, city manager Study session meeting of October 23, 2023 (Item No. 3) Page 2 Title: Race, equity and inclusion system part 2 wrap-up Discussion Background: This system included study sessions covering a range of topics relating to race, equity and inclusion. Reports on these topics were considered and discussed by the city council, and, where appropriate, directions on future expectations and outcomes were provided to staff for implementation or further research. A summary of the topics covered in this system is included. REI System Reports/Presentations (September 2023 – October 2023) • 9/11/2023 – REI system part 2 kickoff • 9/11/2023 – Unbanked and underbanked • 9/18/2023 – Internship pathways approaches • 10/2/2023 – Boards and commissions • 10/2/2023 – Cultural observances • 10/9/2023 – REI policy update • 10/23/2023 – Wrap up Meeting subject: Race, equity and inclusion part 2 system kickoff Date: 9/11/2023 Overview: Staff is building capacity for racial equity work through training and infrastructure. Training increases understanding of the difference between being nonracist and antiracist and the use of racial equity tools. Staff is healing and transforming our structures, our environments and themselves while developing a strategy and actions that build internal capacity and a shared vision of equity. Staff continues to deepen employees’ awareness and understanding of the conditions that uphold systemic racism by implementing strategies that promote race, equity and inclusion in staff’s daily work. Meeting subject: Unbanked and Underbanked Date: 9/11/2023 Overview: This was a follow-up on a council request to review what it would mean for the City of St. Louis Park to require businesses to accept cash for payment of services and products. • Minnesota does not have a state law requiring businesses to accept cash, and it does not have a statute which expressly authorizes municipalities to impose such a requirement. However, the city does have jurisdiction under its charter to enact and enforce an ordinance. • Despite attempts to understand the scope of the issue, it is unclear how many businesses in the City of St. Louis Park have gone fully cashless, though staff believes it is only a handful. • If adopted, this ordinance would be enforced on a complaint basis by the city’s building and energy department, like other business-related regulations. Study session meeting of October 23, 2023 (Item No. 3) Page 3 Title: Race, equity and inclusion system part 2 wrap-up Staff direction provided: Council wishes staff to continue the policy development process. This decision will require additional engagement to better determine the number of businesses that would be affected and how an ordinance would impact on them. Staff will also attempt to better understand the relative importance of this issue to people who rely on or prefer to use cash. The group acknowledged that gaining insight from this latter group may be challenging. Meeting subject: Internship and career pathway approaches Date: 9/18/2023 Overview: The purpose of this report is to inform council of internships and pathway programs offered by the City of St. Louis Park Staff introduced existing internship and career pathway programs and their intended evolution. • Internships – the city offers 18 traditional internships in the areas of community development, community health worker, elections, engineering, finance, geographic information system, HR, inspections, naturalist, natural resources, police and parks and recreation. Some internships are only available in the summer and some are yearlong opportunities and target current or recent graduates. • Jobs in the park – the Jobs in the Park program has been a collaboration between HR, the police department and the St. Louis Park School District to promote summer employment opportunities to 20 high potential yet at-risk youth ages 14-18. Participants are identified by the respective school resource officer/juvenile response officer. • Pathways to policing – this program provides an opportunity for college graduates to explore transitioning into the law enforcement career field. • Fire cadet – this program provides access and opportunity underserved and unrepresented populations interested in fulltime work as a firefighter/EMT. The cadet program provides participants with a livable wage and benefit package while participating in the program. While the program doesn’t guarantee a full-time position, program participants will have the necessary experience and certification to find full- time employment. Meeting subject: Boards and Commissions Date: 10/2/2023 Overview: Staff presented a recommended program purpose and structure for the board and commissions program. (Note: this discussion originated in the Civic Engagement System) Staff is recommending the purpose of the boards and commissions program be to support community-informed decision-making and develop leaders in St. Louis Park. Staff also recommended a new structure of a single strategic board in order to address recommendations from the boards and commissions program assessment, what was heard as a result of engagement with stakeholders, as well as reduce barriers to participation. The staff recommended model of a single strategic board would be made up of approximately 25 community members that meets two to three times per year as a full body. Members from that board would participate in smaller, project and topic-based groups throughout the year in alignment with topics brought forward through the systems approach. Study session meeting of October 23, 2023 (Item No. 3) Page 4 Title: Race, equity and inclusion system part 2 wrap-up Staff direction provided: There was majority support for continuing to build out and advance staff’s recommended model and, at the same time, there were a few council members who had more questions and needed more information. Staff will bring back additional information for a follow-up conversation with council. Meeting subject: Cultural Observances and Proclamations Date: 10/2/2023 Overview: Sthe City of St. Louis Park encourages community members to be aware of and respectful of diverse religious and cultural observances. Beginning in 2023, the council supported staff’s request to adopt proclamations in recognition of cultural and religious observances. Staff outlined a practice for recognizing culturally significant days by issuing proclamations and bringing the community together for events (e.g. the National Day of Racial Healing and Juneteenth Celebration). Internally, city staff attend activities hosted by employee resource groups and educational material is shared on the internal intranet. The following holidays will be recognized by the council when establishing meeting schedules in 2024: • New Year’s Day • Reverend Dr. Martin Luther King Day • Presidents Day • Memorial Day • Juneteenth • Independence Day • Labor Day • Veterans Day • Thanksgiving Day • Day after Thanksgiving • Christmas Day • Rosh Hashanah • Yom Kippur • Passover • Eid al-Fitr • Eid al-Adha The following proclamations were recommended for public recognition in 2024: • Reverend Dr. Martin Luther King Day • Black History Month • National Day of Racial Healing • International Holocaust Remembrance Day • National Women’s History Month • Ramadan • Jewish Heritage Month • AAPINH Heritage Month Study session meeting of October 23, 2023 (Item No. 3) Page 5 Title: Race, equity and inclusion system part 2 wrap-up • PRIDE Month • Indigenous People’s Day • Latine Heritage Month • American Indian Month Meeting subject: Race, equity and inclusion policy framework Date: 10/9/2023 Overview: This presentation provided an update on the design of a race, equity and inclusion policy for future council acceptance. Acknowledging the gap between our organization and the diverse community we serve; we are determined to strive for racial equity by fostering understanding and proactively dismantling barriers to create a just and inclusive community. In the ongoing journey towards advancing racial equity, the City of St. Louis Park recognizes the profound impact that its practices, programs, services and culture have on the well-being of its community and the people it serves. Work towards advancing racial equity is an ongoing journey that is woven into the fabric of our city's regular business and service delivery. The City of St. Louis Park has committed itself to this path through a clear and resolute racial equity statement created in 2017: • "If the practices, programs, services, and culture of the city are not fair, inclusive, and equitable to all, the potential of the community, and those it serves is diminished." Staff direction provided: Council supported the engagement process to date. Staff will incorporate feedback from the council and develop internal and external engagement opportunities that will help to refine the draft policy. The final draft will be brought to council for acceptance in 2024. Meeting: Study session Meeting date: October 23, 2023 Written report: 4 Executive summary Title: Quarterly development update – 4th Quarter 2023 Recommended action: None. The attached report summarizes the status of major development projects occurring 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 to be constructed 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 (but whose financial assistance agreements may or may not yet have been approved). “Completed developments” are those that have received their final certificates of occupancy. More detailed information can be found on the interactive development dashboard on the city’s website. The dashboard provides project metrics for all major 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. Additionally, recent developments receiving financial assistance from the city are required to track Diversity, Equity and Inclusion (DEI) goals related to business enterprises and workforce hiring goals. The current goal status for each development is also included in the update. 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 2023 DEI goal summary 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 Major Developments in St. Louis Park 4th Quarter 2023 Multifamily housing development summary Total Market rate Affordable Proposed units 8 0 8 Approved units 708 566 142 Units under construction 1,068 591 477 Recently completed units (last two years) 818 727 91 All units 2,602 1,884 718 Total Development Costs (TDC)* $785.1 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. Applying for pre- development grant funding from Met. Council July 2023. Project plans could be presented to council by Q4 2023. Construction commencement Q3, 2024 upon GMHC securing LIHTC financing. Study session meeting of October 23, 2023 (Item No. 4) Title: Quarterly development update - 4th Quarter 2023 Page 2 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 TBD. 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 23, 2023 (Item No. 4) Title: Quarterly development update - 4th Quarter 2023 Page 3 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 (152 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 1,850 square feet of commercial space. Estimated development cost: $55.8 million Estimated development cost of public ramp: $11.9 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: $25.2 million Building 3 includes: •Five-story market rate apartment building with 146 units. Estimated development cost: $49.2 million Altogether, the multi-phase redevelopment will have 380 apartment units of which 82 (21%) would be affordable. Estimated total development cost: $142 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, and July 2023 Anticipated construction: •Grading Q1, 2024 •Building 2 Q1, 2024 •Building 3 Q2, 2024 •Building 1 Q3, 2024 •Ramp Q3, 2024 Construction completion all phases Q3, 2025. Study session meeting of October 23, 2023 (Item No. 4) Title: Quarterly development update - 4th Quarter 2023 Page 4 Approved developments 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 III: Eleven-story, 73-unit apartment building. Estimated development cost: $36.2 million Estimated total development cost (all phases): $91.4 million Phase III commencement anticipated spring 2024. 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. Received funding from MHFA in June 2022 and fall 2022 SLP AHTF approved May 2023 Construction commencement Q4 2023, to be completed by July 31, 2025 Study session meeting of October 23, 2023 (Item No. 4) Title: Quarterly development update - 4th Quarter 2023 Page 5 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 to be completed by February 2024 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 November 2023. Mera (formerly 9920 Wayzata) 9808 & 9920 Wayzata Blvd. Bigos Management Construction commencement September 2022, to be completed by July 2024. Study session meeting of October 23, 2023 (Item No. 4) Title: Quarterly development update - 4th Quarter 2023 Page 6 Under construction Project, location & developer Project Description Tentative Schedule 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 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 restrictions ranging between 30%-80% AMI along with a 6,600 square foot “affordable” early childhood center. Estimated total development cost: $40.7 million Awarded $17.7 million in LIHTC bonds January 2022. Construction commencement August 2022, to be completed by August 2024. 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, to be completed by November 2023. Study session meeting of October 23, 2023 (Item No. 4) Title: Quarterly development update - 4th Quarter 2023 Page 7 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. Apartment building received its temporary certificate of occupancy (TCO) in July 2022. Complete E-Generation building TBD. 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. Completed January 2021. Study session meeting of October 23, 2023 (Item No. 4) Title: Quarterly development update - 4th Quarter 2023 Page 8 Recently completed developments Project, location & developer Project Description Tentative Schedule Estimated construction cost: $55.8 million 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 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 Warehouse operations moved in Q4 2021. Office renovation completed in Q4 2022. Study session meeting of October 23, 2023 (Item No. 4) Title: Quarterly development update - 4th Quarter 2023 Page 9 Recently completed developments 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 Parkway Place & rehab completed April 30, 2022. Parkway Flats completed October 2022. Parkway Commons completed March 2023. 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 Completed August 2021. Study session meeting of October 23, 2023 (Item No. 4) Title: Quarterly development update - 4th Quarter 2023 Page 10 Recently completed developments Project, location & developer Project Description Tentative Schedule parking. The housing includes eight units affordable to households at 50% AMI. Estimated total development cost: $21.3 million. 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. Study session meeting of October 23, 2023 (Item No. 4) Title: Quarterly development update - 4th Quarter 2023 Page 11 Recently completed developments Project, location & developer Project Description Tentative Schedule 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 Completed 11 townhome units Dec. 2022. Completed 101 multifamily units May 2023 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 Completed October 2023 Study session meeting of October 23, 2023 (Item No. 4) Title: Quarterly development update - 4th Quarter 2023 Page 12 Recently completed 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 was removed and replaced with a two-story, 5,850 square foot office building and is occupied by Bremer Bank. Completed October 2023 Study session meeting of October 23, 2023 (Item No. 4) Title: Quarterly development update - 4th Quarter 2023 Page 13 Diversity, Equity, and Inclusion Hiring Goals Through October 1, 2023 Corsa (Beltline Residences) Opus Rise on 7 CommonBond Arbor House Real Estate Equities The Mera (9920 Wayzata) Bigos LLC QUARTERLY COMPLINANCE SUMMARY ACTUAL GOALS ACTUAL GOALS ACTUAL GOALS ACTUAL GOALS Total number of business enterprises contracted in development 38 50 59 24 Percentage of women-owned business enterprises in development 11.43% 6% 4% 6% 5% 6% 21% 6% Percentage of BIPOC/AAPI owned business enterprises in development 2.72% 13% 0% 13% 1% 13% 0% 13% Percentage of total development dollars paid to women-owned business enterprises in development -- NA 5.02% 6% 0.5% 6% 6.58% 6% Percentage of total development dollars paid to BIPOC/AAPI owned business enterprises in development -- NA 0.00% 13% 0.6% 13% 0.00% 13% Total number of construction workers contracted in development NA NA 499 407 565 Percentage of women workforce in development -- NA 2% 6% 2% 6% 2% 6% Percentage of BIPOC/AAPI workforce* in development -- NA 9% 32% 26% 32% 5% 32% Percentage of total construction hours for women workforce in development 5% 20% 1.01% 6% 2% 6% 1.07% 6% Percentage of total construction hours for BIPOC/AAPI workforce* in development 17% 32% 7.53% 32% 27% 32% 4.61% 32% *The BIPOC/AAPI workforce demographic data is self-reported, and likely does not fully capture Hispanic/Latinx individuals. **There are several items that are Not Applicable (NA) to the Corsa Development. This was the first development where a DEI component was required, but the DEI policy had not been drafted yet. Study session meeting of October 23, 2023 (Item No. 4) Title: Quarterly development update - 4th Quarter 2023 Page 14