Loading...
2018/03/26 - ADMIN - Agenda Packets - City Council - Study SessionAGENDA MARCH 26, 2018 (Mayor Spano Out) 6:30 p.m. STUDY SESSION – Community Room Discussion Items 1. 6:30 p.m. Future Study Session Agenda Planning – April 2 & 9, 2018 2. 6:35 p.m. Central Park West Project Updates 3. 6:55 p.m. 2018 Bonding Review and Westwood Hills Nature Center Financing Update 4. 7:55 p.m. 2018 Market Value Overview 8:40 p.m. Communications/Updates (Verbal) 8:45 p.m. Adjourn Written Reports 5. 2040 Comprehensive Plan Update 6. February 2018 Monthly Financial Report 7. Park Village – Planned Unit Development (PUD) Major Amendment 8. Update on Rainwater Rewards Program Auxiliary aids for individuals with disabilities are available upon request. To make arrangements, please call the Administration Department at 952/924-2525 (TDD 952/924-2518) at least 96 hours in advance of meeting. Meeting: Study Session Meeting Date: March 26, 2018 Discussion Item: 1 EXECUTIVE SUMMARY TITLE: Future Study Session Agenda Planning April 2 & April 9, 2018 RECOMMENDED ACTION: The City Council and the City Manager to set the agenda for the Special Study Session scheduled for April 2 and the regularly scheduled Study Session on April 9, 2018. POLICY CONSIDERATION: Does the Council agree with the agendas as proposed? SUMMARY: This report summarizes the proposed agenda for the Special Study Session scheduled for April 2 and the regularly scheduled Study Session on April 9, 2018. Also attached to this report is the Study Session Prioritizaton & Tentative Discussion Timeline.. FINANCIAL OR BUDGET CONSIDERATION: Not applicable. VISION CONSIDERATION: Not applicable. SUPPORTING DOCUMENTS: Tentative Agenda – April 2 & 9, 2018 Study Session Prioritization & Projected Discussion Timeline Prepared by: Debbie Fischer, Administrative Services Office Assistant Approved by: Tom Harmening, City Manager Study Session Meeting of March 26, 2018 (Item No. 1) Page 2 Title: Future Study Session Agenda Planning – April 2 & 9, 2018 APRIL 2, 2018 6:45 p.m. – Special Study Session – Community Room Tentative Discussion Items 1.Wayside Recovery/Right-of-Way – Community Development (30 minutes) As Wayside Recovery considers an expansion of its facility, staff seeks direction from city council regarding whether to preserve the option for a planned future north-south road connection that would impact the western portion of Wayside Recovery’s property. APRIL 9, 2018 6:00 p.m. – Convene Local Board of Appeal & Equalization -- Council Chambers 6:30 p.m. – Study Sesssion – Council Chambers Tentative Discussion Items 1. Future Study Session Agenda Planning – Administrative Services (5 minutes) 2.Presentation of Petition “Safer Highway 7 Intersections” – Administrative Services (30 minutes) Susan Niz with the Allies of St. Louis Park has requested the opportunity to address and present to the city council a petition for safer Highway 7 intersections. Staff will be available to provide a status report on various improvments planned. 3. Westwood Hills Nature Center Update – Operations & Recreation (60 minutes) Staff and the architects from HGA will present the status of the Westwood Hills Nature Center through the design development phase. 4. Policy for Funding Non-profits – Administrative Services (45 minutes) City Council has requested time to talk about how we fund non-profits. This item has been listed as a “C4” to be discussed sooner rather than later. Staff will provide funding information showing the past 5 years including 2018. Communications/Meeting Check-In – Administrative Services (5 minutes) Time for communications between staff and Council will be set aside on every study session agenda for the purposes of information sharing. End of Meeting: 8:55 p.m. Written Reports 5. Housing Activity Report 6.On Street Parking Restrictions Study Session Meeting of March 26, 2018 (Item No. 1) Page 3 Title: Future Study Session Agenda Planning – April 2 & 9, 2018 Study Session Prioritization & Projected Discussion Timeline Priority Discussion Topic Comments Date Scheduled 4 Affordable Housing Preservation Policies/Ordinance First reading of TPO approved on 3/5 2nd reading 4/16 4 Race Equity Communication to HRC on Outreach & Next Steps Most recently discussed on 9/11/17 Ongoing 4 Race Equity/Inclusion Courageous Conversations Most recently discussed on 9/11/17 Ongoing 4 Policy for Funding Non-profits Will be discussed at upcoming study session April 9, 2018 4 Finalize Outcomes of Council Retreat (Includes Norms) Scheduled May 7, 2018 3 The Nest Postponed per their request April/May 2018 3 Creating an Affirming Environment for Transgender Individuals TBD 3 Design Guidelines for New Home Construction TBD 3 Develop a Youth Advisory Commission 2nd Qtr 2018 3 Historical Society Space Part of Walker Bldg discussions on 8/28/17 & 11/20/17 and 12/11/17 Ongoing 3 Living Streets Policy After Vision 3.0 work is completed 2nd Qtr 2018 3 Off-sale Liquor License Regulations May, 2018 3 Overview of Crime Free Ordinance TBD 3 Revitalization of Walker/Lake Area Part of Preserving Walker Building Reports: 8/28/17, 9/25/17, 1/22/18, Design Study 2/12/18 Ongoing 3 SEED’s Community Green House / Resiliant Cities Initiative TBD 2 Bird Friendly Glass 2 Dark Skies Ordinance (Light Pollution) 2 Community Center Project Other Comments / Suggested Topics (Not yet prioritized.) Zoning Guidelines for Front-facing Buildings with Windows Not Papered Over Establish a Local Housing Trust Fund Discuss and Evaluate Our Public Process Easy Access to Nature, Across the City, Starting w/ Low-income Neighborhoods Priority Key 5 = High priority/discuss ASAP 4 = Discuss sooner than later 3 = Discuss when time allows 2 = Low priority/no rush 1 = No need to discuss Meeting: Study Session Meeting Date: March 26, 2018 Discussion Item: 2 EXECUTIVE SUMMARY TITLE: Central Park West Project Updates RECOMMENDED ACTION: None at this time. Staff desires direction on the policy questions noted below. POLICY CONSIDERATION: Does the EDA/City Council support extending the required commencement and completion dates of the Central Park West Phases IV and V office buildings by two years? Does the EDA/City Council support extending the required commencement and completion dates of the Central Park West Phase II apartment building by approximately two years as well as extending its related minimum assessment agreement? SUMMARY: The Excelsior Group and Ryan Companies (developers responsible for constructing the Central Park West office buildings (CPW Phases IV and V) have requested to extend the construction schedule for the facilities by two years to allow additional time to prelease the buildings and attract equity investors. Additionally, CPW Phase II (multifamily housing) has missed its required construction commencement date, and is proposing the revised construction schedule below: PROPOSED REVISED CONSTRUCTION SCHEDULE FINANCIAL OR BUDGET CONSIDERATION: CPW has also requested an amendment to the Assessment Agreement for the CPW Phase II property to delay the minimum assessment implementation. The agreement sets a minimum market value for property tax purposes of $30,340,000 as of January 2, 2018 and each year thereafter, regardless of the status of construction. Due to the delay in construction, CPW would be paying property taxes on vacant land valued at over $30 million for the next several years under the current Assessment Agreement. CPW has indicated that this creates an extreme financial hardship and has requested to modify the existing Assessment Agreement to implement the higher assessed value on January 2, 2023, to more accurately coincide with the revised CPW Phase II construction schedule. SUPPORTING DOCUMENTS: Discussion Memo from The Excelsior Group Prepared by: Greg Hunt, Economic Development Coordinator Reviewed by: Karen Barton, Community Development Director Approved by: Tom Harmening, EDA Executive Director, and City Manager Central Park West Phase Current Required Commencement Date Proposed Revised Commencement Date Current Required Completion Date Proposed Revised Commencement Date Phase II (apt building #2) October 2, 2017 April 1, 2020 March 4, 2019 April 1, 2022 Phase IV (office building #1) April 1, 2018 April 1, 2020 September 30, 2019 September 30, 2021 Phase V (office building #2) April 1, 2021 April 1, 2023 September 30, 2022 September 30, 2024 Study Session Meeting of March 26, 2018 (Item No. 2) Page 2 Title: Central Park West Project Updates DISCUSSION Background and Redevelopment Contract Summary: In May of 2015, the EDA, City of St. Louis Park, Duke Realty, LLC (“Duke”) and Central Park West, LLC (“CPW”; an affiliate of DLC Residential) entered into a Second Amendment to Amended and Restated Contract for Private Redevelopment for The West End redevelopment project, which constituted a major amendment to the existing Amended and Restated Contract with Duke Realty. Duke had previously constructed West End Phases I, IIA, and assigned Phase IIC to The Excelsior Group. Under the Second Amendment, Duke assigned most of the remaining improvements required under the Contract to CPW. CPW agreed to construct the improvements in six phases (called Central Park West Phases I through VI). The Contract has been amended twice since that time to revise the construction schedule for certain phases. CPW has also partially assigned the Contract to separate developer entities for specific phases. The phases and their current construction schedules and statuses are listed in the table below: Current Construction Schedule Phase Required Commencement Date Required Completion Date Phase I (Duke)* (Demolition and 16th St.) December 18, 2007 August 1, 2009 (completed) Phase IIA (Duke)* (Retail and office; West End Blvd.) July 1, 2008 June 1, 2010 (completed) Phase IIC** (Multifamily housing) March 1, 2014 December 31, 2016 (completed) Central Park West Phase I+ (multifamily housing) November 28, 2015 June 30, 2017 (completed) Central Park West Phase II (multifamily housing) October 2, 2017 March 4, 2019 Central Park West Phase III (hotel)++ April 1, 2016 August 31, 2017 (completed) Central Park West Phase IV (office) April 1, 2018 September 30, 2019 Central Park West Phase V (office) April 1, 2021 September 30, 2022 Central Park West Phase VI (TBD) TBD TBD Construction Update *Duke Realty completed site preparation and construction of the 350,000 sq. ft. West End lifestyle shopping center and 28,000 sq. ft. office space (Phases I & IIA) in September 2009 and Certificates of Completion were delivered for these Phases. **The Excelsior Group completed construction on the six-story, 119-unit upscale Flats at West End (Phase IIc) in June 2013 and a Certificate of Completion was delivered for this Phase. +CPW (an affiliate of DLC Residential) completed construction on the six-story, 199-unit luxury Central Park West Apartments (Central Park West Phase I) in December 2017. A Certificate of Completion is being prepared for this Phase. Study Session Meeting of March 26, 2018 (Item No. 2) Page 3 Title: Central Park West Project Updates ++TPI Hospitality completed construction on the six-story, 126-room is the AC Hotel by Marriott (Central Park West Phase III) this month. A Certificate of Completion is being prepared for this Phase. Map of Central Park West Phases Study Session Meeting of March 26, 2018 (Item No. 2) Page 4 Title: Central Park West Project Updates Excelsior Group & Ryan Companies Contract Extension Requests In December 2014 responsibility for the construction of the Phase IV and V office buildings required under the Redevelopment Contract with Central Park West, LLC, was assigned to The Excelsior Group. Under the Third Amendment to the Contract, the construction commencement and completion dates for Phase IV were established at April 1, 2017 and September 30, 2018, respectively. The construction commencement and completion dates for Phase V were established at April 1, 2020 and September 30, 2021, respectively. The Excelsior Group subsequently teamed with Ryan Companies for the development, design, and construction of the office buildings. The team has conducted property due diligence and prepared complete site and building plans for the structures. These plans were submitted to both St. Louis Park and Golden Valley and approvals for the first office building (10 West End) were granted by both municipalities in fall 2016. During this time, the team was in active discussions with a prospective anchor tenant for 125,000 SF or 35% of the building. Unfortunately, that tenant elected to renew its lease in its current location rather than relocate into the new 10 West End building. As a result, the developers requested and were granted a Fourth Amendment last year extending the construction commencement dates for the Phase IV office building to April 1, 2018 and the commencement date for the Phase V office building to April 1, 2021 To date, the development team has been actively marketing the site and has received expressions of interest from prospective tenants but they have not yet translated into lease commitments sufficient to spur building construction. Based on discussions with prospective equity partners (who remain very interested in the development), the team maintains that 40-50% of the proposed office building needs to be pre-leased (approximately. 125,000 SF – 160,000 SF) to initiate construction of the $100+ million project. As required under the Redevelopment Contract, the team recently submitted a report to staff (attached) outlining its progress and its plans to continue to aggressively market 10 West End to prospective tenants. Given the required commencement and completion dates for Phases IV and V established in the Contract will not be realized, the developers have requested a two year extension to allow them sufficient time to reach their pre-leasing threshold. DLC Residential’s Contract Extension Requests Installation of a new Metropolitan Council lift station and other related sewer improvements in the Central Park West area in 2015 & 2016 severely hampered the reconstruction of Utica Avenue, which in turn, restricted access to the Central Park West project sites. As a result of this and an issue with their lumber supplier, construction of the CPW Phase I apartments was delayed approximately 6 months and, as noted above, were just recently completed in December. Construction of the CPW Phase II apartments was originally intended to commence shortly thereafter, however the developer (CPW) needs time to sufficiently lease up Central Park West Apartments Phase I before they begin constructing Phase II. Because the developer has missed its required construction commencement date, staff reached out to CPW to request a revised construction schedule for that phase. The developer has requested a revised commencement date of April 1, 2020 and completion date of April 1, 2022. CPW has also requested an amendment to the Assessment Agreement for the CPW Phase II property. That agreement sets a minimum market value for property tax purposes of $30,340,000 as of January 2, 2018 and each year thereafter, regardless of the status of construction. Due to the delay in construction, the Assessment Agreement would require CPW to pay property taxes on vacant land valued at over $30 million for the next several years. CPW has indicated that this Study Session Meeting of March 26, 2018 (Item No. 2) Page 5 Title: Central Park West Project Updates would create an extreme financial hardship and has requested to modify the existing Assessment Agreement to delay the higher assessed value to January 2, 2023, to coincide with the revised construction schedule of CPW Phase II. In addition to EDA approval of the minimum assessment extension, the TIF Act requires that Hennepin County and St. Louis Park School District also approve the modification, since the current estimated market value of the property is less than the value established in the Assessment Agreement. If the EDA agrees to an amendment of the Assessment Agreement, CPW has indicated that they will take the lead on any conversations or presentations needed to bring the requested amendment to the governing bodies of the County and School District. Implications for Developer’s TIF Note The construction delays means that the original Redeveloper’s (Duke Realty) reimbursement by the City of TIF-eligible expenses related to the Central Park West portion of the overall West End project will likewise be delayed. Once the subject properties are redeveloped and fully assessed, Duke’s TIF payments will increase. Next Steps Should the EDA/City Council agree to provide the above extensions, a Fifth Amendment to the Redevelopment Contract will be presented for consideration on April 16th which will establish a revised construction schedule for Phases II, IV and V as follows: PROPOSED REVISED CONSTRUCTION SCHEDULE Central Park West Phase Current Required Commencement Date Proposed Revised Commencement Date Current Required Completion Date Proposed Revised Commencement Date Phase II (apt building #2) October 2, 2017 April 1, 2020 March 4, 2019 April 1, 2022 Phase IV (office building #1) April 1, 2018 April 1, 2020 September 30, 2019 September 30, 2021 Phase V (office building #2) April 1, 2021 April 1, 2023 September 30, 2022 September 30, 2024 MEMORANDUM Date: February 2, 2018 To: Greg Hunt, Economic Development Coordinator, City of St. Louis Park From: Brandl Radovitskiy cc: Emily Goellner, Associate Planner/Grant Writer, City of Golden Valley Andy Finn, The Excelsior Group Tony Barranco, Ryan Companies RE: 10 West End Office Development Update and West End Development Agreement Milestone Dates Background On May 8, 2015, OPF IV purchased approximately 7 acres of development land referred to as Central Park West Phase IV and Central Park West Phase V of the Central Park West Master Site Plan. As part of the purchase, OPF IV and its affiliates inherited the obligations as described in the Contract for Private Redevelopment related to the parcels. Prior to 2016, previous owners of the Phase IV and Phase V parcels focused on other components of the development area, and did very little to advance design of the office component of the project. Since our acquisition of the parcels, we’ve made great strides to advance design and get the parcels ready for development. Here is a list of important milestones achieved to date: 2016 •In early 2016, Ryan Companies, one of the largest Developers and General Contractors in the region, was selected to support the project team with Design, Construction, and Development Services. •Throughout the year, we worked through important due diligence, including physical inspections - environmental, geotechnical, survey, etc. •Building design was advanced through complete schematic design. •Land Use entitlements were submitted to both St. Louis Park and Golden Valley, with approvals for the project granted from both municipalities in Fall, 2016. •Development Agreement contracts were negotiated. •A land swap with DLC to straighten the property lines to accommodate our project specific design was completed. 2017 •In early 2017, Transwestern’s top office brokerage team was retained to bolster the marketing effort and secure an anchor tenant for the first phase of the project. •Launched http://10westendmn.com/, video content, brochures, 3D renderings and other marketing materials. Study Session Meeting of March 26, 2018 (Item No. 2) Title: Central Park West Project Updates Page 6 2 •On-site signage consisting of a fence wrap around the site was installed. •In addition to continuing to search for an anchor tenant to kick off the project, we continued to explore ways to capitalize it and proceed on a speculative basis. •Held roadshow presentations for every brokerage firm in the Twin Cities. •Held lunches with every tenant representation brokerage team in the Twin Cities. •Held a large-scale broker event across the street and overlooking the site at The Flats. •Directly met with large tenants in the Twin Cities. •Engaged with all possible prospects/tenants in the market by responding to RFPs or sending unsolicited proposals. Next Steps While we have been continuing to make great progress and do everything we can to be successful we have yet to identify an anchor tenant to kickoff construction. Schedule G of the current Contract for Private Redevelopment contemplates that construction for Phase IV will begin in April 2018, with a completion date in September 2019. Despite best efforts, these milestone dates are not achievable. We would like to work with staff to discuss the extension of these dates to more closely align with more realistic delivery dates. At this time, we propose that we extend the dates out as follows: •Central Park West Phase IV – Commencement April 1, 2020 – Completion September 30, 2021 •Central Park West Phase V – Commencement April 1, 2023 – Completion September 30, 2024 We understand that the City has made a significant investment in this redevelopment area and is excited to advance the project. We share this objective, as it is critically important for us to put this highly valuable land into production. Study Session Meeting of March 26, 2018 (Item No. 2) Title: Central Park West Project Updates Page 7 Meeting: Study Session Meeting Date: March 26, 2018 Discussion Item: 3 EXECUTIVE SUMMARY TITLE: 2018 Bonding Review and Westwood Hills Nature Center Financing Update RECOMMENDED ACTION: No action required. Staff requests feedback on the policy questions noted below. POLICY CONSIDERATION: Does the City Council wish to proceed with the bond issuance for the 2018 projects? Does the City Council need additional information on the General Obligation (G.O.) bond issuance in 2019 for the WHNC project? SUMMARY: 2018 bond issuance amounts are subject to change since not all bids have yet been awarded. The anticipated G.O. bond issue in April/May 2018 would include the following: • Connect the Park (est. $1.28 million) • Filter #4 project (est. $3 million) remaining amount anticipated to be issued in 2018 based on project timing ($1 million issued in 2017). • Water and Sewer capital projects (est. $3.725 million) • SWLRT, Softball Fields, and Fiber (est. $1.16 million) The WHNC project has 3 viable forms of bond issuance, including G.O. Charter Bonds, G.O. Tax Abatement Bonds, and EDA Lease-purchase revenue bonds. The City’s Bond Attorney, Municipal Advisor, and staff will be in attendance to present the various bonding options for Council to consider related to the WHNC project. FINANCIAL OR BUDGET CONSIDERATION: Total bond issue for 2018 is $9.39million (includes underwriters discount and cost of issuance) based on estimates and will be adjusted once final bids and pricing is available. The 2018 and 2019 bond issuances have been included in the City’s Long Range Financial Plan and Debt Model. VISION CONSIDERATION: Not applicable. SUPPORTING DOCUMENTS: Discussion 2018 Bond Run Estimates Kennedy & Graven (Bond Attorney) Memo on Financing Ehlers Review of Credit Rating FAQ’s on Tax Abatement Bonds Prepared by: Tim Simon, Chief Financial Officer Reviewed by: Nancy Deno, Deputy City Manager/HR Director Approved by: Tom Harmening, City Manager Study Session Meeting of March 26, 2018 (Item No. 3) Page 2 Title: 2018 Bonding Review and Westwood Hills Nature Center Financing Update DISCUSSION 2018 Bonding The City has a number of projects in 2018 that are proposed to be financed with bonds: Project Amount (est. only) Term Connect the park $1,280,000 10 year Softball Fields project $416,000 10 year Fiber $250,000 10 year SWLRT $495,123 10 year Water Treatment Plan #4 Filter $3,000,000 15 year Water Rehab/Infrastructure $2,600,000 15 year Sewer Improvements $1,125,000 15 year Total $9,166,123 N/A Overview of Bond Market While the bond market has started to see interest rate increases, it is still at relatively historic lows in looking at a 30 year trend and a good time to be in the municipal bond market. The market is still very competitive with multiple bidders on each bond sale and in some cases providing premiums. Study Session Meeting of March 26, 2018 (Item No. 3) Page 3 Title: 2018 Bonding Review and Westwood Hills Nature Center Financing Update Future Debt Plans and S&P Rating Implications Staff recently had Ehlers look at our future debt plans from our debt modeling and estimate if any of those plans would have an adverse effect on our credit rating (see complete report attached). In summary, if many of our current economic factors stay the same or improve and we don’t have much variance in the planned debt issuances over the next 10 years, we should continue to maintain our strong credit quality. Bank qualified and next steps By staying under $10 million, the bonds will be bank qualified for 2018. This provides a slightly lower interest rate. In 2019 we are projected to go over that amount. The process to issue the 2018 bonds will begin over the next two months. Future action is on April 16th where the council would be asked to approve the pre-sale report/resolution and on May 21st award the bond sale via resolution. Westwood Hills Nature Center Financing Options (2019 bonding) Bond Attorney, Ehlers, and staff have been reviewing the various financing options other cities have used for recreation type projects in the past (Kennedy and Graven memo attached). Three primary bonding options exist that have been used in other cities for similar type projects. A summary of the bonds options are listed below: City Charter Bonds Tax Abatement Bonds Lease-Revenue Bonds General Obligation Yes Yes No Interest/Financing Cost Low: tax-exempt, excellent security, highly marketable Low: tax-exempt, excellent security, highly marketable Moderate: tax-exempt, disfavored and limited security, decreased marketability, higher costs of issuance due to need for trustee Debt Limit Would count toward debt limit (currently no statutory debt limit in place) Would not count toward debt limit Amounts over $1 million would count (currently n/a) Legal/Procedural Requirements Authorization by 6/7 supermajority of Council Public hearing by the City Council with authorization by 4/7 vote Preparation of ground lease and lease- purchase agreements, authorization by 4/7 majority of EDA and Council Complexity Low Low High Maximum Term 30 years 20 years (assumes county or school district decline to participate) 30 years Study Session Meeting of March 26, 2018 (Item No. 3) Page 4 Title: 2018 Bonding Review and Westwood Hills Nature Center Financing Update G.O. City Charter Bonds: Section 6.15 (b) of the St. Louis Park Charter provides authority for the City to issue Charter Bonds. Minnesota Statues, Chapter 475 authorizes statutory or home rule charter cities to issue bonds for items including public buildings, schools, parks, playgrounds, and the like so the Nature Center would qualify under the Charter Bonds. Recent City Charter bonds have included bonds issued for improvements to the Recreation Center, for the citywide sidewalk network, for improvements to the fire station, and for improvements to the municipal service center building. The City has frequently issued bonds under its Charter in the past. G.O. Tax Abatement Bonds: Under Minnesota Statutes, the City may issue general obligation abatement bonds to finance capital projects that have a public purpose. Public purpose under the Abatement Act include providing public facilities and helping to provide access to services for City residents. Other cities have used these bonds for a variety of related projects. (See attached FAQ’s on Tax Abatement Bonds) Some projects that have used tax abatement bonds include (See exhibit B-Kennedy and Graven memo): •In 2008, the City of Burnsville issued $16.8m in tax abatement bonds for construction of its performing arts center. •In 2014, the City of Eden Prairie issued $17.1m in tax abatement bonds for its Aquatics Center expansion. •In 2016, the City of Shakopee issued $29.5m in tax abatement bonds for improvements to its Community Center. •In 2010, the City of St. Cloud issued $22.3m in tax abatement bonds for an expansion of its Civic Center. •In 2012, the City of West St. Paul issued $5m in tax abatement bonds for its Sports Dome construction. •In 2013, the City of Woodbury issued $16m in tax abatement bonds for construction of the Bielenberg Sports Center. EDA Lease-Purchase Revenue Bonds: Under Minnesota Statutes, the City may lease real property with an option to purchase under a lease-purchase transaction. While this is an option, these bonds are more complex than the other two options since it involves ground-leases, purchase options, and the Economic Development Authority issues the bonds, and the City pledges the lease payments as security. Interest rates tend to be a little higher given the complexity. This is an option and can be used to finance the WHNC project. St Louis Park, Minnesota $9,390,000 General Obligation Bonds, Series 2018A Issue Summary Assumes Current Market BQ AAA rates plus 25bps Total Issue Sources And Uses Dated 05/30/2018 | Delivered 05/30/2018 Sidewalks/ Trails Fiber Softball Fields SWLRT Water Treatment Plant #4 Filter Water Rehab/ Infrastructure Sanitary Sewer Issue Summary Sources Of Funds Par Amount of Bonds $1,330,000.00 $255,000.00 $435,000.00 $510,000.00 $3,060,000.00 $2,650,000.00 $1,150,000.00 $9,390,000.00 Total Sources $1,330,000.00 $255,000.00 $435,000.00 $510,000.00 $3,060,000.00 $2,650,000.00 $1,150,000.00 $9,390,000.00 Uses Of Funds Total Underwriter's Discount (1.000%)13,300.00 2,550.00 4,350.00 5,100.00 30,600.00 26,500.00 11,500.00 93,900.00 Costs of Issuance 12,322.68 2,362.63 4,030.35 4,725.23 28,351.44 24,552.71 10,654.96 87,000.00 Deposit to Capitalized Interest (CIF) Fund 20,054.88 3,834.24 6,562.23 7,693.59 ---38,144.94 Deposit to Project Construction Fund 1,280,000.00 250,000.00 416,000.00 495,123.00 3,000,000.00 2,600,000.00 1,125,000.00 9,166,123.00 Rounding Amount 4,322.44 (3,746.87)4,057.42 (2,641.82)1,048.56 (1,052.71)2,845.04 4,832.06 Total Uses $1,330,000.00 $255,000.00 $435,000.00 $510,000.00 $3,060,000.00 $2,650,000.00 $1,150,000.00 $9,390,000.00 Series 2018A GO Bonds - # | Issue Summary | 3/16/2018 | 9:22 AM Study Session Meeting of March 26, 2018 (Item No. 3) Title: 2018 Bonding Review and Westwood Hills Nature Center Financing Update Page 5 St Louis Park, Minnesota $9,390,000 General Obligation Bonds, Series 2018A Issue Summary Assumes Current Market BQ AAA rates plus 25bps Debt Service Schedule Date Principal Coupon Interest Total P+I CIF Net New D/S Fiscal Total 05/30/2018 ------- 02/01/2019 695,000.00 1.600%155,634.11 850,634.11 (38,144.94)812,489.17 812,489.17 08/01/2019 --110,681.25 110,681.25 -110,681.25 - 02/01/2020 625,000.00 1.750%110,681.25 735,681.25 -735,681.25 846,362.50 08/01/2020 --105,212.50 105,212.50 -105,212.50 - 02/01/2021 640,000.00 1.900%105,212.50 745,212.50 -745,212.50 850,425.00 08/01/2021 --99,132.50 99,132.50 -99,132.50 - 02/01/2022 650,000.00 2.050%99,132.50 749,132.50 -749,132.50 848,265.00 08/01/2022 --92,470.00 92,470.00 -92,470.00 - 02/01/2023 660,000.00 2.200%92,470.00 752,470.00 -752,470.00 844,940.00 08/01/2023 --85,210.00 85,210.00 -85,210.00 - 02/01/2024 680,000.00 2.300%85,210.00 765,210.00 -765,210.00 850,420.00 08/01/2024 --77,390.00 77,390.00 -77,390.00 - 02/01/2025 695,000.00 2.450%77,390.00 772,390.00 -772,390.00 849,780.00 08/01/2025 --68,876.25 68,876.25 -68,876.25 - 02/01/2026 715,000.00 2.600%68,876.25 783,876.25 -783,876.25 852,752.50 08/01/2026 --59,581.25 59,581.25 -59,581.25 - 02/01/2027 720,000.00 2.700%59,581.25 779,581.25 -779,581.25 839,162.50 08/01/2027 --49,861.25 49,861.25 -49,861.25 - 02/01/2028 750,000.00 2.800%49,861.25 799,861.25 -799,861.25 849,722.50 08/01/2028 --39,361.25 39,361.25 -39,361.25 - 02/01/2029 480,000.00 2.900%39,361.25 519,361.25 -519,361.25 558,722.50 08/01/2029 --32,401.25 32,401.25 -32,401.25 - 02/01/2030 495,000.00 3.000%32,401.25 527,401.25 -527,401.25 559,802.50 08/01/2030 --24,976.25 24,976.25 -24,976.25 - 02/01/2031 515,000.00 3.050%24,976.25 539,976.25 -539,976.25 564,952.50 08/01/2031 --17,122.50 17,122.50 -17,122.50 - 02/01/2032 530,000.00 3.150%17,122.50 547,122.50 -547,122.50 564,245.00 08/01/2032 --8,775.00 8,775.00 -8,775.00 - 02/01/2033 540,000.00 3.250%8,775.00 548,775.00 -548,775.00 557,550.00 Total $9,390,000.00 -$1,897,736.61 $11,287,736.61 (38,144.94)$11,249,591.67 - Significant Dates Dated 5/30/2018 First Coupon Date 2/01/2019 Yield Statistics Bond Year Dollars $68,741.08 Average Life 7.321 Years Average Coupon 2.7607022% Net Interest Cost (NIC)2.8973017% True Interest Cost (TIC)2.8981032% Bond Yield for Arbitrage Purposes 2.7416741% All Inclusive Cost (AIC)3.0451299% IRS Form 8038 Net Interest Cost 2.7607022% Weighted Average Maturity 7.321 Years Series 2018A GO Bonds - # | Issue Summary | 3/16/2018 | 9:22 AM Study Session Meeting of March 26, 2018 (Item No. 3) Title: 2018 Bonding Review and Westwood Hills Nature Center Financing Update Page 6 St Louis Park, Minnesota $9,390,000 General Obligation Bonds, Series 2018A Issue Summary Assumes Current Market BQ AAA rates plus 25bps Debt Service Schedule Date Principal Coupon Interest Total P+I CIF Net New D/S 105% of Total 02/01/2019 695,000.00 1.600%155,634.11 850,634.11 (38,144.94)812,489.17 853,113.63 02/01/2020 625,000.00 1.750%221,362.50 846,362.50 -846,362.50 888,680.63 02/01/2021 640,000.00 1.900%210,425.00 850,425.00 -850,425.00 892,946.25 02/01/2022 650,000.00 2.050%198,265.00 848,265.00 -848,265.00 890,678.25 02/01/2023 660,000.00 2.200%184,940.00 844,940.00 -844,940.00 887,187.00 02/01/2024 680,000.00 2.300%170,420.00 850,420.00 -850,420.00 892,941.00 02/01/2025 695,000.00 2.450%154,780.00 849,780.00 -849,780.00 892,269.00 02/01/2026 715,000.00 2.600%137,752.50 852,752.50 -852,752.50 895,390.13 02/01/2027 720,000.00 2.700%119,162.50 839,162.50 -839,162.50 881,120.63 02/01/2028 750,000.00 2.800%99,722.50 849,722.50 -849,722.50 892,208.63 02/01/2029 480,000.00 2.900%78,722.50 558,722.50 -558,722.50 586,658.63 02/01/2030 495,000.00 3.000%64,802.50 559,802.50 -559,802.50 587,792.63 02/01/2031 515,000.00 3.050%49,952.50 564,952.50 -564,952.50 593,200.13 02/01/2032 530,000.00 3.150%34,245.00 564,245.00 -564,245.00 592,457.25 02/01/2033 540,000.00 3.250%17,550.00 557,550.00 -557,550.00 585,427.50 Total $9,390,000.00 -$1,897,736.61 $11,287,736.61 (38,144.94)$11,249,591.67 $11,812,071.25 Significant Dates Dated 5/30/2018 First Coupon Date 2/01/2019 Yield Statistics Bond Year Dollars $68,741.08 Average Life 7.321 Years Average Coupon 2.7607022% Net Interest Cost (NIC)2.8973017% True Interest Cost (TIC)2.8981032% Bond Yield for Arbitrage Purposes 2.7416741% All Inclusive Cost (AIC)3.0451299% Series 2018A GO Bonds - # | Issue Summary | 3/16/2018 | 9:22 AM Study Session Meeting of March 26, 2018 (Item No. 3) Title: 2018 Bonding Review and Westwood Hills Nature Center Financing Update Page 7 St Louis Park, Minnesota $1,330,000 General Obligation Bonds, Series 2018A Sidewalks/Trails Assumes Current Market BQ AAA rates plus 25bps Debt Service Schedule Date Principal Coupon Interest Total P+I CIF Net New D/S Fiscal Total 05/30/2018 ------- 02/01/2019 130,000.00 1.600%20,054.88 150,054.88 (20,054.88)130,000.00 130,000.00 08/01/2019 --13,938.75 13,938.75 -13,938.75 - 02/01/2020 125,000.00 1.750%13,938.75 138,938.75 -138,938.75 152,877.50 08/01/2020 --12,845.00 12,845.00 -12,845.00 - 02/01/2021 125,000.00 1.900%12,845.00 137,845.00 -137,845.00 150,690.00 08/01/2021 --11,657.50 11,657.50 -11,657.50 - 02/01/2022 125,000.00 2.050%11,657.50 136,657.50 -136,657.50 148,315.00 08/01/2022 --10,376.25 10,376.25 -10,376.25 - 02/01/2023 130,000.00 2.200%10,376.25 140,376.25 -140,376.25 150,752.50 08/01/2023 --8,946.25 8,946.25 -8,946.25 - 02/01/2024 135,000.00 2.300%8,946.25 143,946.25 -143,946.25 152,892.50 08/01/2024 --7,393.75 7,393.75 -7,393.75 - 02/01/2025 135,000.00 2.450%7,393.75 142,393.75 -142,393.75 149,787.50 08/01/2025 --5,740.00 5,740.00 -5,740.00 - 02/01/2026 140,000.00 2.600%5,740.00 145,740.00 -145,740.00 151,480.00 08/01/2026 --3,920.00 3,920.00 -3,920.00 - 02/01/2027 140,000.00 2.700%3,920.00 143,920.00 -143,920.00 147,840.00 08/01/2027 --2,030.00 2,030.00 -2,030.00 - 02/01/2028 145,000.00 2.800%2,030.00 147,030.00 -147,030.00 149,060.00 Total $1,330,000.00 -$173,749.88 $1,503,749.88 (20,054.88)$1,483,695.00 - Significant Dates Dated 5/30/2018 First Coupon Date 2/01/2019 Yield Statistics Bond Year Dollars $7,050.36 Average Life 5.301 Years Average Coupon 2.4644111% Net Interest Cost (NIC)2.6530539% True Interest Cost (TIC)2.6618663% Bond Yield for Arbitrage Purposes 2.7416741% All Inclusive Cost (AIC)2.8561575% IRS Form 8038 Net Interest Cost 2.4644111% Weighted Average Maturity 5.301 Years Series 2018A GO Bonds - # | Sidewalks/Trails | 3/16/2018 | 9:22 AM Study Session Meeting of March 26, 2018 (Item No. 3) Title: 2018 Bonding Review and Westwood Hills Nature Center Financing Update Page 8 St Louis Park, Minnesota $1,330,000 General Obligation Bonds, Series 2018A Sidewalks/Trails Assumes Current Market BQ AAA rates plus 25bps Debt Service Schedule Date Principal Coupon Interest Total P+I CIF Net New D/S 105% of Total 02/01/2019 130,000.00 1.600%20,054.88 150,054.88 (20,054.88)130,000.00 136,500.00 02/01/2020 125,000.00 1.750%27,877.50 152,877.50 -152,877.50 160,521.38 02/01/2021 125,000.00 1.900%25,690.00 150,690.00 -150,690.00 158,224.50 02/01/2022 125,000.00 2.050%23,315.00 148,315.00 -148,315.00 155,730.75 02/01/2023 130,000.00 2.200%20,752.50 150,752.50 -150,752.50 158,290.13 02/01/2024 135,000.00 2.300%17,892.50 152,892.50 -152,892.50 160,537.13 02/01/2025 135,000.00 2.450%14,787.50 149,787.50 -149,787.50 157,276.88 02/01/2026 140,000.00 2.600%11,480.00 151,480.00 -151,480.00 159,054.00 02/01/2027 140,000.00 2.700%7,840.00 147,840.00 -147,840.00 155,232.00 02/01/2028 145,000.00 2.800%4,060.00 149,060.00 -149,060.00 156,513.00 Total $1,330,000.00 -$173,749.88 $1,503,749.88 (20,054.88)$1,483,695.00 $1,557,879.75 Significant Dates Dated 5/30/2018 First Coupon Date 2/01/2019 Yield Statistics Bond Year Dollars $7,050.36 Average Life 5.301 Years Average Coupon 2.4644111% Net Interest Cost (NIC)2.6530539% True Interest Cost (TIC)2.6618663% Bond Yield for Arbitrage Purposes 2.7416741% All Inclusive Cost (AIC)2.8561575% Series 2018A GO Bonds - # | Sidewalks/Trails | 3/16/2018 | 9:22 AM Study Session Meeting of March 26, 2018 (Item No. 3) Title: 2018 Bonding Review and Westwood Hills Nature Center Financing Update Page 9 St Louis Park, Minnesota $255,000 General Obligation Bonds, Series 2018A Fiber Assumes Current Market BQ AAA rates plus 25bps Debt Service Schedule Date Principal Coupon Interest Total P+I CIF Net New D/S Fiscal Total 05/30/2018 ------- 02/01/2019 25,000.00 1.600%3,834.24 28,834.24 (3,834.24)25,000.00 25,000.00 08/01/2019 --2,663.75 2,663.75 -2,663.75 - 02/01/2020 25,000.00 1.750%2,663.75 27,663.75 -27,663.75 30,327.50 08/01/2020 --2,445.00 2,445.00 -2,445.00 - 02/01/2021 25,000.00 1.900%2,445.00 27,445.00 -27,445.00 29,890.00 08/01/2021 --2,207.50 2,207.50 -2,207.50 - 02/01/2022 25,000.00 2.050%2,207.50 27,207.50 -27,207.50 29,415.00 08/01/2022 --1,951.25 1,951.25 -1,951.25 - 02/01/2023 25,000.00 2.200%1,951.25 26,951.25 -26,951.25 28,902.50 08/01/2023 --1,676.25 1,676.25 -1,676.25 - 02/01/2024 25,000.00 2.300%1,676.25 26,676.25 -26,676.25 28,352.50 08/01/2024 --1,388.75 1,388.75 -1,388.75 - 02/01/2025 25,000.00 2.450%1,388.75 26,388.75 -26,388.75 27,777.50 08/01/2025 --1,082.50 1,082.50 -1,082.50 - 02/01/2026 25,000.00 2.600%1,082.50 26,082.50 -26,082.50 27,165.00 08/01/2026 --757.50 757.50 -757.50 - 02/01/2027 25,000.00 2.700%757.50 25,757.50 -25,757.50 26,515.00 08/01/2027 --420.00 420.00 -420.00 - 02/01/2028 30,000.00 2.800%420.00 30,420.00 -30,420.00 30,840.00 Total $255,000.00 -$33,019.24 $288,019.24 (3,834.24)$284,185.00 - Significant Dates Dated 5/30/2018 First Coupon Date 2/01/2019 Yield Statistics Bond Year Dollars $1,340.71 Average Life 5.258 Years Average Coupon 2.4628205% Net Interest Cost (NIC)2.6530185% True Interest Cost (TIC)2.6616057% Bond Yield for Arbitrage Purposes 2.7416741% All Inclusive Cost (AIC)2.8574729% IRS Form 8038 Net Interest Cost 2.4628205% Weighted Average Maturity 5.258 Years Series 2018A GO Bonds - # | Fiber | 3/16/2018 | 9:22 AM Study Session Meeting of March 26, 2018 (Item No. 3) Title: 2018 Bonding Review and Westwood Hills Nature Center Financing Update Page 10 St Louis Park, Minnesota $255,000 General Obligation Bonds, Series 2018A Fiber Assumes Current Market BQ AAA rates plus 25bps Debt Service Schedule Date Principal Coupon Interest Total P+I CIF Net New D/S 105% of Total 02/01/2019 25,000.00 1.600%3,834.24 28,834.24 (3,834.24)25,000.00 26,250.00 02/01/2020 25,000.00 1.750%5,327.50 30,327.50 -30,327.50 31,843.88 02/01/2021 25,000.00 1.900%4,890.00 29,890.00 -29,890.00 31,384.50 02/01/2022 25,000.00 2.050%4,415.00 29,415.00 -29,415.00 30,885.75 02/01/2023 25,000.00 2.200%3,902.50 28,902.50 -28,902.50 30,347.63 02/01/2024 25,000.00 2.300%3,352.50 28,352.50 -28,352.50 29,770.13 02/01/2025 25,000.00 2.450%2,777.50 27,777.50 -27,777.50 29,166.38 02/01/2026 25,000.00 2.600%2,165.00 27,165.00 -27,165.00 28,523.25 02/01/2027 25,000.00 2.700%1,515.00 26,515.00 -26,515.00 27,840.75 02/01/2028 30,000.00 2.800%840.00 30,840.00 -30,840.00 32,382.00 Total $255,000.00 -$33,019.24 $288,019.24 (3,834.24)$284,185.00 $298,394.25 Significant Dates Dated 5/30/2018 First Coupon Date 2/01/2019 Yield Statistics Bond Year Dollars $1,340.71 Average Life 5.258 Years Average Coupon 2.4628205% Net Interest Cost (NIC)2.6530185% True Interest Cost (TIC)2.6616057% Bond Yield for Arbitrage Purposes 2.7416741% All Inclusive Cost (AIC)2.8574729% Series 2018A GO Bonds - # | Fiber | 3/16/2018 | 9:22 AM Study Session Meeting of March 26, 2018 (Item No. 3) Title: 2018 Bonding Review and Westwood Hills Nature Center Financing Update Page 11 St Louis Park, Minnesota $435,000 General Obligation Bonds, Series 2018A Softball Fields Assumes Current Market BQ AAA rates plus 25bps Debt Service Schedule Date Principal Coupon Interest Total P+I CIF Net New D/S Fiscal Total 05/30/2018 ------- 02/01/2019 45,000.00 1.600%6,562.23 51,562.23 (6,562.23)45,000.00 45,000.00 08/01/2019 --4,541.25 4,541.25 -4,541.25 - 02/01/2020 40,000.00 1.750%4,541.25 44,541.25 -44,541.25 49,082.50 08/01/2020 --4,191.25 4,191.25 -4,191.25 - 02/01/2021 40,000.00 1.900%4,191.25 44,191.25 -44,191.25 48,382.50 08/01/2021 --3,811.25 3,811.25 -3,811.25 - 02/01/2022 40,000.00 2.050%3,811.25 43,811.25 -43,811.25 47,622.50 08/01/2022 --3,401.25 3,401.25 -3,401.25 - 02/01/2023 40,000.00 2.200%3,401.25 43,401.25 -43,401.25 46,802.50 08/01/2023 --2,961.25 2,961.25 -2,961.25 - 02/01/2024 45,000.00 2.300%2,961.25 47,961.25 -47,961.25 50,922.50 08/01/2024 --2,443.75 2,443.75 -2,443.75 - 02/01/2025 45,000.00 2.450%2,443.75 47,443.75 -47,443.75 49,887.50 08/01/2025 --1,892.50 1,892.50 -1,892.50 - 02/01/2026 45,000.00 2.600%1,892.50 46,892.50 -46,892.50 48,785.00 08/01/2026 --1,307.50 1,307.50 -1,307.50 - 02/01/2027 45,000.00 2.700%1,307.50 46,307.50 -46,307.50 47,615.00 08/01/2027 --700.00 700.00 -700.00 - 02/01/2028 50,000.00 2.800%700.00 50,700.00 -50,700.00 51,400.00 Total $435,000.00 -$57,062.23 $492,062.23 (6,562.23)$485,500.00 - Significant Dates Dated 5/30/2018 First Coupon Date 2/01/2019 Yield Statistics Bond Year Dollars $2,311.21 Average Life 5.313 Years Average Coupon 2.4689349% Net Interest Cost (NIC)2.6571482% True Interest Cost (TIC)2.6660142% Bond Yield for Arbitrage Purposes 2.7416741% All Inclusive Cost (AIC)2.8599943% IRS Form 8038 Net Interest Cost 2.4689349% Weighted Average Maturity 5.313 Years Series 2018A GO Bonds - # | Softball Fields | 3/16/2018 | 9:22 AM Study Session Meeting of March 26, 2018 (Item No. 3) Title: 2018 Bonding Review and Westwood Hills Nature Center Financing Update Page 12 St Louis Park, Minnesota $435,000 General Obligation Bonds, Series 2018A Softball Fields Assumes Current Market BQ AAA rates plus 25bps Debt Service Schedule Date Principal Coupon Interest Total P+I CIF Net New D/S 105% of Total 02/01/2019 45,000.00 1.600%6,562.23 51,562.23 (6,562.23)45,000.00 47,250.00 02/01/2020 40,000.00 1.750%9,082.50 49,082.50 -49,082.50 51,536.63 02/01/2021 40,000.00 1.900%8,382.50 48,382.50 -48,382.50 50,801.63 02/01/2022 40,000.00 2.050%7,622.50 47,622.50 -47,622.50 50,003.63 02/01/2023 40,000.00 2.200%6,802.50 46,802.50 -46,802.50 49,142.63 02/01/2024 45,000.00 2.300%5,922.50 50,922.50 -50,922.50 53,468.63 02/01/2025 45,000.00 2.450%4,887.50 49,887.50 -49,887.50 52,381.88 02/01/2026 45,000.00 2.600%3,785.00 48,785.00 -48,785.00 51,224.25 02/01/2027 45,000.00 2.700%2,615.00 47,615.00 -47,615.00 49,995.75 02/01/2028 50,000.00 2.800%1,400.00 51,400.00 -51,400.00 53,970.00 Total $435,000.00 -$57,062.23 $492,062.23 (6,562.23)$485,500.00 $509,775.00 Significant Dates Dated 5/30/2018 First Coupon Date 2/01/2019 Yield Statistics Bond Year Dollars $2,311.21 Average Life 5.313 Years Average Coupon 2.4689349% Net Interest Cost (NIC)2.6571482% True Interest Cost (TIC)2.6660142% Bond Yield for Arbitrage Purposes 2.7416741% All Inclusive Cost (AIC)2.8599943% Series 2018A GO Bonds - # | Softball Fields | 3/16/2018 | 9:22 AM Study Session Meeting of March 26, 2018 (Item No. 3) Title: 2018 Bonding Review and Westwood Hills Nature Center Financing Update Page 13 St Louis Park, Minnesota $510,000 General Obligation Bonds, Series 2018A SWLRT Assumes Current Market BQ AAA rates plus 25bps Debt Service Schedule Date Principal Coupon Interest Total P+I CIF Net New D/S Fiscal Total 05/30/2018 ------- 02/01/2019 50,000.00 1.600%7,693.59 57,693.59 (7,693.59)50,000.00 50,000.00 08/01/2019 --5,346.25 5,346.25 -5,346.25 - 02/01/2020 45,000.00 1.750%5,346.25 50,346.25 -50,346.25 55,692.50 08/01/2020 --4,952.50 4,952.50 -4,952.50 - 02/01/2021 50,000.00 1.900%4,952.50 54,952.50 -54,952.50 59,905.00 08/01/2021 --4,477.50 4,477.50 -4,477.50 - 02/01/2022 50,000.00 2.050%4,477.50 54,477.50 -54,477.50 58,955.00 08/01/2022 --3,965.00 3,965.00 -3,965.00 - 02/01/2023 50,000.00 2.200%3,965.00 53,965.00 -53,965.00 57,930.00 08/01/2023 --3,415.00 3,415.00 -3,415.00 - 02/01/2024 50,000.00 2.300%3,415.00 53,415.00 -53,415.00 56,830.00 08/01/2024 --2,840.00 2,840.00 -2,840.00 - 02/01/2025 50,000.00 2.450%2,840.00 52,840.00 -52,840.00 55,680.00 08/01/2025 --2,227.50 2,227.50 -2,227.50 - 02/01/2026 55,000.00 2.600%2,227.50 57,227.50 -57,227.50 59,455.00 08/01/2026 --1,512.50 1,512.50 -1,512.50 - 02/01/2027 55,000.00 2.700%1,512.50 56,512.50 -56,512.50 58,025.00 08/01/2027 --770.00 770.00 -770.00 - 02/01/2028 55,000.00 2.800%770.00 55,770.00 -55,770.00 56,540.00 Total $510,000.00 -$66,706.09 $576,706.09 (7,693.59)$569,012.50 - Significant Dates Dated 5/30/2018 First Coupon Date 2/01/2019 Yield Statistics Bond Year Dollars $2,706.42 Average Life 5.307 Years Average Coupon 2.4647384% Net Interest Cost (NIC)2.6531794% True Interest Cost (TIC)2.6619639% Bond Yield for Arbitrage Purposes 2.7416741% All Inclusive Cost (AIC)2.8560464% IRS Form 8038 Net Interest Cost 2.4647384% Weighted Average Maturity 5.307 Years Series 2018A GO Bonds - # | SWLRT | 3/16/2018 | 9:22 AM Study Session Meeting of March 26, 2018 (Item No. 3) Title: 2018 Bonding Review and Westwood Hills Nature Center Financing Update Page 14 St Louis Park, Minnesota $510,000 General Obligation Bonds, Series 2018A SWLRT Assumes Current Market BQ AAA rates plus 25bps Debt Service Schedule Date Principal Coupon Interest Total P+I CIF Net New D/S 105% of Total 02/01/2019 50,000.00 1.600%7,693.59 57,693.59 (7,693.59)50,000.00 52,500.00 02/01/2020 45,000.00 1.750%10,692.50 55,692.50 -55,692.50 58,477.13 02/01/2021 50,000.00 1.900%9,905.00 59,905.00 -59,905.00 62,900.25 02/01/2022 50,000.00 2.050%8,955.00 58,955.00 -58,955.00 61,902.75 02/01/2023 50,000.00 2.200%7,930.00 57,930.00 -57,930.00 60,826.50 02/01/2024 50,000.00 2.300%6,830.00 56,830.00 -56,830.00 59,671.50 02/01/2025 50,000.00 2.450%5,680.00 55,680.00 -55,680.00 58,464.00 02/01/2026 55,000.00 2.600%4,455.00 59,455.00 -59,455.00 62,427.75 02/01/2027 55,000.00 2.700%3,025.00 58,025.00 -58,025.00 60,926.25 02/01/2028 55,000.00 2.800%1,540.00 56,540.00 -56,540.00 59,367.00 Total $510,000.00 -$66,706.09 $576,706.09 (7,693.59)$569,012.50 $597,463.13 Significant Dates Dated 5/30/2018 First Coupon Date 2/01/2019 Yield Statistics Bond Year Dollars $2,706.42 Average Life 5.307 Years Average Coupon 2.4647384% Net Interest Cost (NIC)2.6531794% True Interest Cost (TIC)2.6619639% Bond Yield for Arbitrage Purposes 2.7416741% All Inclusive Cost (AIC)2.8560464% Series 2018A GO Bonds - # | SWLRT | 3/16/2018 | 9:22 AM Study Session Meeting of March 26, 2018 (Item No. 3) Title: 2018 Bonding Review and Westwood Hills Nature Center Financing Update Page 15 St Louis Park, Minnesota $3,060,000 General Obligation Bonds, Series 2018A Water Treatment Plant #4 Filter Assumes Current Market BQ AAA rates plus 25bps Debt Service Schedule Date Principal Coupon Interest Total P+I Fiscal Total 05/30/2018 ----- 02/01/2019 200,000.00 1.600%52,389.05 252,389.05 252,389.05 08/01/2019 --37,528.75 37,528.75 - 02/01/2020 175,000.00 1.750%37,528.75 212,528.75 250,057.50 08/01/2020 --35,997.50 35,997.50 - 02/01/2021 180,000.00 1.900%35,997.50 215,997.50 251,995.00 08/01/2021 --34,287.50 34,287.50 - 02/01/2022 180,000.00 2.050%34,287.50 214,287.50 248,575.00 08/01/2022 --32,442.50 32,442.50 - 02/01/2023 185,000.00 2.200%32,442.50 217,442.50 249,885.00 08/01/2023 --30,407.50 30,407.50 - 02/01/2024 190,000.00 2.300%30,407.50 220,407.50 250,815.00 08/01/2024 --28,222.50 28,222.50 - 02/01/2025 195,000.00 2.450%28,222.50 223,222.50 251,445.00 08/01/2025 --25,833.75 25,833.75 - 02/01/2026 200,000.00 2.600%25,833.75 225,833.75 251,667.50 08/01/2026 --23,233.75 23,233.75 - 02/01/2027 205,000.00 2.700%23,233.75 228,233.75 251,467.50 08/01/2027 --20,466.25 20,466.25 - 02/01/2028 210,000.00 2.800%20,466.25 230,466.25 250,932.50 08/01/2028 --17,526.25 17,526.25 - 02/01/2029 215,000.00 2.900%17,526.25 232,526.25 250,052.50 08/01/2029 --14,408.75 14,408.75 - 02/01/2030 220,000.00 3.000%14,408.75 234,408.75 248,817.50 08/01/2030 --11,108.75 11,108.75 - 02/01/2031 230,000.00 3.050%11,108.75 241,108.75 252,217.50 08/01/2031 --7,601.25 7,601.25 - 02/01/2032 235,000.00 3.150%7,601.25 242,601.25 250,202.50 08/01/2032 --3,900.00 3,900.00 - 02/01/2033 240,000.00 3.250%3,900.00 243,900.00 247,800.00 Total $3,060,000.00 -$698,319.05 $3,758,319.05 - Yield Statistics Bond Year Dollars $24,658.50 Average Life 8.058 Years Average Coupon 2.8319608% Net Interest Cost (NIC)2.9560559% True Interest Cost (TIC)2.9575883% Bond Yield for Arbitrage Purposes 2.7416741% All Inclusive Cost (AIC)3.0928419% IRS Form 8038 Net Interest Cost 2.8319608% Weighted Average Maturity 8.058 Years Series 2018A GO Bonds - # | Water Treatment Plant #4 | 3/16/2018 | 9:22 AM Study Session Meeting of March 26, 2018 (Item No. 3) Title: 2018 Bonding Review and Westwood Hills Nature Center Financing Update Page 16 St Louis Park, Minnesota $3,060,000 General Obligation Bonds, Series 2018A Water Treatment Plant #4 Filter Assumes Current Market BQ AAA rates plus 25bps Debt Service Schedule Date Principal Coupon Interest Total P+I 105% Overlevy 02/01/2019 200,000.00 1.600%52,389.05 252,389.05 265,008.50 02/01/2020 175,000.00 1.750%75,057.50 250,057.50 262,560.38 02/01/2021 180,000.00 1.900%71,995.00 251,995.00 264,594.75 02/01/2022 180,000.00 2.050%68,575.00 248,575.00 261,003.75 02/01/2023 185,000.00 2.200%64,885.00 249,885.00 262,379.25 02/01/2024 190,000.00 2.300%60,815.00 250,815.00 263,355.75 02/01/2025 195,000.00 2.450%56,445.00 251,445.00 264,017.25 02/01/2026 200,000.00 2.600%51,667.50 251,667.50 264,250.88 02/01/2027 205,000.00 2.700%46,467.50 251,467.50 264,040.88 02/01/2028 210,000.00 2.800%40,932.50 250,932.50 263,479.13 02/01/2029 215,000.00 2.900%35,052.50 250,052.50 262,555.13 02/01/2030 220,000.00 3.000%28,817.50 248,817.50 261,258.38 02/01/2031 230,000.00 3.050%22,217.50 252,217.50 264,828.38 02/01/2032 235,000.00 3.150%15,202.50 250,202.50 262,712.63 02/01/2033 240,000.00 3.250%7,800.00 247,800.00 260,190.00 Total $3,060,000.00 -$698,319.05 $3,758,319.05 $3,946,235.00 Significant Dates Dated 5/30/2018 First Coupon Date 2/01/2019 Yield Statistics Bond Year Dollars $24,658.50 Average Life 8.058 Years Average Coupon 2.8319608% Net Interest Cost (NIC)2.9560559% True Interest Cost (TIC)2.9575883% Bond Yield for Arbitrage Purposes 2.7416741% All Inclusive Cost (AIC)3.0928419% IRS Form 8038 Net Interest Cost 2.8319608% Weighted Average Maturity 8.058 Years Series 2018A GO Bonds - # | Water Treatment Plant #4 | 3/16/2018 | 9:22 AM Study Session Meeting of March 26, 2018 (Item No. 3) Title: 2018 Bonding Review and Westwood Hills Nature Center Financing Update Page 17 St Louis Park, Minnesota $2,650,000 General Obligation Bonds, Series 2018A Water Rehab/Infrastructure Assumes Current Market BQ AAA rates plus 25bps Debt Service Schedule Date Principal Coupon Interest Total P+I Fiscal Total 05/30/2018 ----- 02/01/2019 170,000.00 1.600%45,396.70 215,396.70 215,396.70 08/01/2019 --32,546.25 32,546.25 - 02/01/2020 150,000.00 1.750%32,546.25 182,546.25 215,092.50 08/01/2020 --31,233.75 31,233.75 - 02/01/2021 155,000.00 1.900%31,233.75 186,233.75 217,467.50 08/01/2021 --29,761.25 29,761.25 - 02/01/2022 160,000.00 2.050%29,761.25 189,761.25 219,522.50 08/01/2022 --28,121.25 28,121.25 - 02/01/2023 160,000.00 2.200%28,121.25 188,121.25 216,242.50 08/01/2023 --26,361.25 26,361.25 - 02/01/2024 165,000.00 2.300%26,361.25 191,361.25 217,722.50 08/01/2024 --24,463.75 24,463.75 - 02/01/2025 170,000.00 2.450%24,463.75 194,463.75 218,927.50 08/01/2025 --22,381.25 22,381.25 - 02/01/2026 175,000.00 2.600%22,381.25 197,381.25 219,762.50 08/01/2026 --20,106.25 20,106.25 - 02/01/2027 175,000.00 2.700%20,106.25 195,106.25 215,212.50 08/01/2027 --17,743.75 17,743.75 - 02/01/2028 180,000.00 2.800%17,743.75 197,743.75 215,487.50 08/01/2028 --15,223.75 15,223.75 - 02/01/2029 185,000.00 2.900%15,223.75 200,223.75 215,447.50 08/01/2029 --12,541.25 12,541.25 - 02/01/2030 190,000.00 3.000%12,541.25 202,541.25 215,082.50 08/01/2030 --9,691.25 9,691.25 - 02/01/2031 200,000.00 3.050%9,691.25 209,691.25 219,382.50 08/01/2031 --6,641.25 6,641.25 - 02/01/2032 205,000.00 3.150%6,641.25 211,641.25 218,282.50 08/01/2032 --3,412.50 3,412.50 - 02/01/2033 210,000.00 3.250%3,412.50 213,412.50 216,825.00 Total $2,650,000.00 -$605,854.20 $3,255,854.20 - Yield Statistics Bond Year Dollars $21,389.03 Average Life 8.071 Years Average Coupon 2.8325467% Net Interest Cost (NIC)2.9564420% True Interest Cost (TIC)2.9579130% Bond Yield for Arbitrage Purposes 2.7416741% All Inclusive Cost (AIC)3.0929601% IRS Form 8038 Net Interest Cost 2.8325467% Weighted Average Maturity 8.071 Years Series 2018A GO Bonds - # | Water Rehab/Infrastructur | 3/16/2018 | 9:22 AM Study Session Meeting of March 26, 2018 (Item No. 3) Title: 2018 Bonding Review and Westwood Hills Nature Center Financing Update Page 18 St Louis Park, Minnesota $2,650,000 General Obligation Bonds, Series 2018A Water Rehab/Infrastructure Assumes Current Market BQ AAA rates plus 25bps Debt Service Schedule Date Principal Coupon Interest Total P+I 105% Overlevy 02/01/2019 170,000.00 1.600%45,396.70 215,396.70 226,166.54 02/01/2020 150,000.00 1.750%65,092.50 215,092.50 225,847.13 02/01/2021 155,000.00 1.900%62,467.50 217,467.50 228,340.88 02/01/2022 160,000.00 2.050%59,522.50 219,522.50 230,498.63 02/01/2023 160,000.00 2.200%56,242.50 216,242.50 227,054.63 02/01/2024 165,000.00 2.300%52,722.50 217,722.50 228,608.63 02/01/2025 170,000.00 2.450%48,927.50 218,927.50 229,873.88 02/01/2026 175,000.00 2.600%44,762.50 219,762.50 230,750.63 02/01/2027 175,000.00 2.700%40,212.50 215,212.50 225,973.13 02/01/2028 180,000.00 2.800%35,487.50 215,487.50 226,261.88 02/01/2029 185,000.00 2.900%30,447.50 215,447.50 226,219.88 02/01/2030 190,000.00 3.000%25,082.50 215,082.50 225,836.63 02/01/2031 200,000.00 3.050%19,382.50 219,382.50 230,351.63 02/01/2032 205,000.00 3.150%13,282.50 218,282.50 229,196.63 02/01/2033 210,000.00 3.250%6,825.00 216,825.00 227,666.25 Total $2,650,000.00 -$605,854.20 $3,255,854.20 $3,418,646.91 Significant Dates Dated 5/30/2018 First Coupon Date 2/01/2019 Yield Statistics Bond Year Dollars $21,389.03 Average Life 8.071 Years Average Coupon 2.8325467% Net Interest Cost (NIC)2.9564420% True Interest Cost (TIC)2.9579130% Bond Yield for Arbitrage Purposes 2.7416741% All Inclusive Cost (AIC)3.0929601% IRS Form 8038 Net Interest Cost 2.8325467% Weighted Average Maturity 8.071 Years Series 2018A GO Bonds - # | Water Rehab/Infrastructur | 3/16/2018 | 9:22 AM Study Session Meeting of March 26, 2018 (Item No. 3) Title: 2018 Bonding Review and Westwood Hills Nature Center Financing Update Page 19 St Louis Park, Minnesota $1,150,000 General Obligation Bonds, Series 2018A Sanitary Sewer Assumes Current Market BQ AAA rates plus 25bps Debt Service Schedule Date Principal Coupon Interest Total P+I Fiscal Total 05/30/2018 ----- 02/01/2019 75,000.00 1.600%19,703.42 94,703.42 94,703.42 08/01/2019 --14,116.25 14,116.25 - 02/01/2020 65,000.00 1.750%14,116.25 79,116.25 93,232.50 08/01/2020 --13,547.50 13,547.50 - 02/01/2021 65,000.00 1.900%13,547.50 78,547.50 92,095.00 08/01/2021 --12,930.00 12,930.00 - 02/01/2022 70,000.00 2.050%12,930.00 82,930.00 95,860.00 08/01/2022 --12,212.50 12,212.50 - 02/01/2023 70,000.00 2.200%12,212.50 82,212.50 94,425.00 08/01/2023 --11,442.50 11,442.50 - 02/01/2024 70,000.00 2.300%11,442.50 81,442.50 92,885.00 08/01/2024 --10,637.50 10,637.50 - 02/01/2025 75,000.00 2.450%10,637.50 85,637.50 96,275.00 08/01/2025 --9,718.75 9,718.75 - 02/01/2026 75,000.00 2.600%9,718.75 84,718.75 94,437.50 08/01/2026 --8,743.75 8,743.75 - 02/01/2027 75,000.00 2.700%8,743.75 83,743.75 92,487.50 08/01/2027 --7,731.25 7,731.25 - 02/01/2028 80,000.00 2.800%7,731.25 87,731.25 95,462.50 08/01/2028 --6,611.25 6,611.25 - 02/01/2029 80,000.00 2.900%6,611.25 86,611.25 93,222.50 08/01/2029 --5,451.25 5,451.25 - 02/01/2030 85,000.00 3.000%5,451.25 90,451.25 95,902.50 08/01/2030 --4,176.25 4,176.25 - 02/01/2031 85,000.00 3.050%4,176.25 89,176.25 93,352.50 08/01/2031 --2,880.00 2,880.00 - 02/01/2032 90,000.00 3.150%2,880.00 92,880.00 95,760.00 08/01/2032 --1,462.50 1,462.50 - 02/01/2033 90,000.00 3.250%1,462.50 91,462.50 92,925.00 Total $1,150,000.00 -$263,025.92 $1,413,025.92 - Yield Statistics Bond Year Dollars $9,284.86 Average Life 8.074 Years Average Coupon 2.8328471% Net Interest Cost (NIC)2.9567046% True Interest Cost (TIC)2.9582563% Bond Yield for Arbitrage Purposes 2.7416741% All Inclusive Cost (AIC)3.0932702% IRS Form 8038 Net Interest Cost 2.8328471% Weighted Average Maturity 8.074 Years Series 2018A GO Bonds - # | Sanitary Sewer | 3/16/2018 | 9:22 AM Study Session Meeting of March 26, 2018 (Item No. 3) Title: 2018 Bonding Review and Westwood Hills Nature Center Financing Update Page 20 St Louis Park, Minnesota $1,150,000 General Obligation Bonds, Series 2018A Sanitary Sewer Assumes Current Market BQ AAA rates plus 25bps Debt Service Schedule Date Principal Coupon Interest Total P+I 105% Overlevy 02/01/2019 75,000.00 1.600%19,703.42 94,703.42 99,438.59 02/01/2020 65,000.00 1.750%28,232.50 93,232.50 97,894.13 02/01/2021 65,000.00 1.900%27,095.00 92,095.00 96,699.75 02/01/2022 70,000.00 2.050%25,860.00 95,860.00 100,653.00 02/01/2023 70,000.00 2.200%24,425.00 94,425.00 99,146.25 02/01/2024 70,000.00 2.300%22,885.00 92,885.00 97,529.25 02/01/2025 75,000.00 2.450%21,275.00 96,275.00 101,088.75 02/01/2026 75,000.00 2.600%19,437.50 94,437.50 99,159.38 02/01/2027 75,000.00 2.700%17,487.50 92,487.50 97,111.88 02/01/2028 80,000.00 2.800%15,462.50 95,462.50 100,235.63 02/01/2029 80,000.00 2.900%13,222.50 93,222.50 97,883.63 02/01/2030 85,000.00 3.000%10,902.50 95,902.50 100,697.63 02/01/2031 85,000.00 3.050%8,352.50 93,352.50 98,020.13 02/01/2032 90,000.00 3.150%5,760.00 95,760.00 100,548.00 02/01/2033 90,000.00 3.250%2,925.00 92,925.00 97,571.25 Total $1,150,000.00 -$263,025.92 $1,413,025.92 $1,483,677.22 Significant Dates Dated 5/30/2018 First Coupon Date 2/01/2019 Yield Statistics Bond Year Dollars $9,284.86 Average Life 8.074 Years Average Coupon 2.8328471% Net Interest Cost (NIC)2.9567046% True Interest Cost (TIC)2.9582563% Bond Yield for Arbitrage Purposes 2.7416741% All Inclusive Cost (AIC)3.0932702% IRS Form 8038 Net Interest Cost 2.8328471% Weighted Average Maturity 8.074 Years Series 2018A GO Bonds - # | Sanitary Sewer | 3/16/2018 | 9:22 AM Study Session Meeting of March 26, 2018 (Item No. 3) Title: 2018 Bonding Review and Westwood Hills Nature Center Financing Update Page 21 1 Kennedy Offices in Minneapolis Saint Paul St. Cloud 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis MN 55402 (612) 337-9300 telephone (612) 337-9310 fax www.kennedy-graven.com Affirmative Action Equal Opportunity Employer Graven CHARTERED DRAFT MEMORANDUM TO: Tom Harmening, City Manager Tim Simon, Chief Financial Officer Members of the City Council, St. Louis Park, Minnesota FROM: Martha Ingram, Kennedy & Graven, Chartered DATE: February 6, 2018 RE: Financing Options for Proposed Nature Center ________________________________________________________________________ The City of St. Louis Park (the “City”) is proposing to construct and equip a new nature center facility (the “Nature Center”). The City has requested a description of the different types of bonds that could be issued to finance this type of project. Three options for financing the Nature Center without a referendum are described below. In addition, a summary of these options is attached to this memo as Exhibit A. City Charter Bonds Section 6.15(b) of the St. Louis Park City Charter provides that the City may issue bonds without an election “for any purpose permitted by state law” by a vote of at least six of its Councilmembers to authorize such bonds. Minnesota Statutes, Chapter 475 expressly authorizes statutory and home rule charter cities to issue bonds for purposes including public buildings, schools, parks, playgrounds, and the like, so the issuance of bonds for the Nature Center is permitted by state law. Thus, Section 6.15(b) of the City Charter gives the City a choice between issuing bonds under typical state law authority granted to all cities in Minnesota, which, depending on the purpose, may require the City to meet specific legal or procedural requirements before such bonds can be issued, or issuing bonds under the authority of the City Charter, which only requires a 6-vote supermajority authorization. The City has frequently issued bonds under its City Charter to take advantage of this comparatively simple process. Projects financed through City Charter bonds are generally secured by a pledge of the City’s full faith and credit and taxing power (i.e. these are general obligation, or G.O. bonds), with principal and interest paid through a City-wide ad valorem property tax levy. General obligation bonds benefit from a high degree of marketability and low interest rates, making them an attractive financing option. Recent City Charter bonds have included bonds issued for improvements to the Recreation Center, for the citywide sidewalk network, for improvements to the fire station, and for improvements to the municipal service center building. & Study Session Meeting of March 26, 2018 (Item No. 3) Title: 2018 Bonding Review and Westwood Hills Nature Center Financing Update Page 22 2 Tax Abatement Bonds Under Minnesota Statutes, Sections 469.1813 to 469.1815 (the “Abatement Act”), the City may issue general obligation abatement bonds, to finance capital projects that have a public purpose. Public purposes under the Abatement Act include providing public facilities and helping to provide access to services for City residents. Abatement bonds are still a relatively new form of financing, but have become increasingly popular over the past ten years, particularly in the context of financing municipally-owned public amenities. A list of projects similar to the Nature Center and financed through G.O. abatement bonds is attached to this memo as Exhibit B. The Nature Center would qualify as a project meeting authorized public purposes under the Abatement Act, and it should be noted that any of the projects financed by the City in recent years through City Charter bonds would have been equally authorized under the Abatement Act. The City may issue G.O. abatement bonds without an election, but is required to hold a public hearing on the abatement and the issuance of the bonds. After the public hearing, the City Council could authorize the issuance of the bonds by simple majority vote (i.e. 4 votes). The principal amount of abatement bonds is limited to the estimated abatements to be collected. The total amount of property taxes abated each year by the City cannot exceed the greater of 10% of the net tax capacity of the City or $200,000. For 2018, 10% of the City’s net tax capacity is $83,100,000, such that annual abatement payments may not exceed $8,300,000. To finance the Nature Center, City finance staff and consultants estimate that the City would need to issue bonds in the principal amount of approximately $11,165,000. Based on this estimated amount, the City’s principal-only tax abatements would be approximately $558,000 per year. Like the debt service levy for City Charter bonds, the debt service on abatement bonds would be payable from a City-wide ad valorem property tax levy. The City also has the option of requesting participation in the abatement by other political subdivisions such as Hennepin County or the St. Louis Park School District. This would allow the County and School District to abate their share of property taxes, usually on the same parcels selected by the City, and to contribute their share of tax abatement toward payment of debt service on the City’s bonds. It is relatively uncommon for multiple political subdivisions to participate in tax abatement, but if the project to be financed through tax abatement has value to residents throughout the county, these entities may be willing to consider participating. If the City makes a strong case that the Nature Center benefits other cities and/or school districts within the County, it is possible that other political subdivisions would consider participating in the abatement as well. EDA Lease-Purchase Revenue Bonds (City Owned Facility) Pursuant to Minnesota Statutes, Section 465.71, the City may lease real property with an option to purchase under a lease-purchase transaction. A typical lease-purchase transaction includes a ground lease from the City to the City’s Economic Development Authority (“EDA”) and a lease- purchase agreement between the EDA and the City, under which the City leases back the property subject to the ground lease. The EDA then issues the bonds, and pledges the City’s lease payments as security. The transaction is structured this way because debt service paid by one political subdivision to another is a special levy under state law, and is therefore not subject to levy limits when such limits are in place. If the amount of the lease-purchase agreement is $1,000,000 or more, however, the lease itself is subject to the City’s net debt limit. Lease-revenue bonds do not require an election or any public hearings. These advantages are offset by a couple of other considerations, however. First, lease-revenue bonds are not general obligations of the City, and debt service may only be paid from the City’s annual appropriation of funds. Second, lease-purchase bonds generally include more documents and more parties (in Study Session Meeting of March 26, 2018 (Item No. 3) Title: 2018 Bonding Review and Westwood Hills Nature Center Financing Update Page 23 3 addition to the ground lease and lease-purchase agreement mentioned above, a trust indenture with a trustee is typically required). Finally, federal tax law and state law require that each year the bonds are outstanding, the City must have the authority to determine not to appropriate funds for lease payments for a subsequent year. If the City decides that it will not appropriate funds, the lease terminates and the City relinquishes the leased project to the EDA (or more typically, to the trustee pursuant to the indenture). Due to the fact that the pledge of payment on the bonds is limited to annually-appropriated lease payments, which may be legally discontinued at the end of any fiscal year, lease-revenue bonds are typically more difficult to market and sell, and attract higher interest rates, than general obligation bonds. Please contact me at your convenience with any questions regarding the foregoing. KENNEDY & GRAVEN, CHARTERED Martha Ingram Study Session Meeting of March 26, 2018 (Item No. 3) Title: 2018 Bonding Review and Westwood Hills Nature Center Financing Update Page 24 4 EXHIBIT A NATURE CENTER BONDING OPTIONS City Charter Bonds Abatement Bonds Lease-Revenue Bonds General Obligation Yes Yes No Interest/Financing Cost Low: tax-exempt, excellent security, highly marketable Low: tax-exempt, excellent security, highly marketable Moderate: tax-exempt, disfavored and limited security, decreased marketability, higher costs of issuance due to need for trustee Debt Limit Would count toward debt limit (currently no statutory debt limit in place) Would not count toward debt limit Amounts over $1 million would count (currently n/a) Legal/Procedural Requirements Authorization by 6/7 supermajority of Council Public hearing by each participating entity, authorization by 4/7 majority Preparation of ground lease and lease-purchase agreements, authorization by 4/7 majority of EDA and Council Complexity Low Low High Maximum Term 30 years 20 years if county or school district decline to participate, 15 years if all three participate 30 years Study Session Meeting of March 26, 2018 (Item No. 3) Title: 2018 Bonding Review and Westwood Hills Nature Center Financing Update Page 25 5 EXHIBIT B RECENT PROJECTS FINANCED THROUGH GO ABATEMENT BONDS City Use Amount Year Big Lake Industrial Park Land acquisition from EDA & Library purchase $2,220,000 2013 Big Lake Liquor store acquisition from EDA $1,085,000 2014 Buffalo Trailblazer Transit Facility construction $3,400,000 2015 Buffalo Acquisition of Wild Marsh Golf Course from HRA $3,250,000 2016 Burnsville Performing Arts Center construction $16,800,000 2008 Chisago City Camp Ojiketa land acquisition $1,550,000 2008 Eden Prairie Aquatics Center expansion $17,155,000 2014 Forest Lake YMCA construction $8,895,000 2014 Hopkins Park and parking ramp improvements $1,630,000 2016 Hopkins Burns Park improvements $1,735,000 2017 Litchfield Golf Course improvements $365,000 2007 Mound Refinance City-Owned Transit Center from HRA Limited Tax Pledge Bonds $2,590,000 2015 Rogers Refinance Ice Arena improvements from gross revenue bonds $2,390,000 2015 Sartell Community center construction, parks & other public improvements $9,950,000 2016 Sartell Community center construction, parks & other public improvements $3,420,000 2017 Savage Indoor sports facility $4,915,000 2012 Shakopee Community Center improvements $29,500,000 2016 St. Anthony Emerald Park improvements $1,335,000 2009 St. Cloud Civic Center expansion $22,315,000 2010 Tracy Aquatics Center improvements $925,000 2007 Victoria Bury power lines & refinance gross revenue recreational facility bonds $6,360,000 2016 West St. Paul Sports Dome construction $5,080,000 2012 West St. Paul Harmon Park improvements $4,845,000 2014 Woodbury Bielenberg Sports Center $16,015,000 2013 Study Session Meeting of March 26, 2018 (Item No. 3) Title: 2018 Bonding Review and Westwood Hills Nature Center Financing Update Page 26 S & P's Seven Rating Factors City Score Weighting Weighted Score Institutional Framework 2.00 10%0.20 Economy 1.00 30%0.30 Management 1.00 20%0.20 Financial - Budgetary Flexibility 1.00 10%0.10 Financial - Budgetary Performance 2.00 10%0.20 Financial - Liquidity 1.00 10%0.10 Debt & Contingent Liabilities 1.00 10%0.10 Total Weighted Score 1.20 Memo To: Tim Simon, City of St, Louis Park From: Jason Aarsvold and Stacie Kvilvang, Ehlers Date: January 31, 2018 Subject: Future Debt Plans and S&P Rating Implications You requested that we evaluate any potential impact on the City’s credit rating based on your planned debt issuance between 2018 and 2023 totaling approximately 56,270,000. This memorandum examines and quantifies the Standard and Poor’s (S&P) rating report dated June 16, 2017, assigning numerical values to each rating factor to understand the city’s “score” within the S&P methodology. The table below depicts St. Louis Park’s rating score based on the information presented in the rating report: The June 16, 2017 rating report indicates the city’s total score is 1.20. Within S&P’s criteria, lower scores are better and cities with AAA ratings generally have scores of less than 1.64. St. Louis Park’s score improved from 1.40 to 1.20 when the City was rated in 2016. This improvement is the result of a change in the Management score. We noted in 2014 that there was an opportunity to improve the City’s Management score by formalizing financial policies and practices, as well as creating a long term financial management plan. The City followed through on these recommendations and, in 2016, S&P recognized improvement by assigning a "Very Strong" rating to the Management factor, thereby improving the City’s Management score from a 2.0 to a 1.0. Since the management score is weighted as 20% of the overall rating, the City’s overall score improved by 0.20. Study Session Meeting of March 26, 2018 (Item No. 3) Title: 2018 Bonding Review and Westwood Hills Nature Center Financing Update Page 27 City of St. Louis Park Future Debt Plans and S&P Rating Implications January 31, 2018 Page 2 Debt & Contingent Liabilities Score City Total Score 1.00 1.20 2.00 1.30 3.00 1.40 4.00 1.50 5.00 1.60 2018 2019 2020 2021 2022 2023 2024 12,640,000 20,915,000 5,080,000 3,445,000 6,600,000 7,590,000 0 Revenues - Governmental Funds1 57,046,793 58,204,247 60,119,449 60,584,628 60,900,089 61,504,456 62,199,478 Net Direct Debt2 56,230,000 73,280,000 74,385,000 73,745,000 76,150,000 79,420,000 74,965,000 Net Direct Debt As % of Total Gov't Fd Rev.98.57%125.90%123.73%121.72%125.04%129.13%120.52% Expenditures - Governmental Funds3 67,283,681 68,441,135 70,356,337 70,821,516 71,136,977 71,741,344 72,436,366 Total Governmental Funds Debt Service4 3,973,835 5,131,289 7,046,491 7,511,670 7,827,131 8,431,498 9,126,520 Total Gov't Fund Debt Service % of Exp.5.91%7.50%10.02%10.61%11.00%11.75%12.60% S&P Indicative Score (raw)3.00 4.00 4.00 4.00 4.00 4.00 4.00 S&P Indicative Score (net adjusted)1.00 2.00 2.00 2.00 2.00 2.00 2.00 1Assumes governmental funds revenue from 2016 audit plus revenue for new debt service 2Includes new issuance, less annual repayment of existing debt 3Assumes governmental funds expenditures from 2016 audit plus expenditures for new debt service 4Assumes new debt has an average term of 14 years Debt Issuance The S&P rating factor most directly impacted by the issuance of additional debt is “Debt and Contingent Liabilities”. The table below calculates the impact of an increasing Debt and Contingent Liabilities score on the City’s overall score, assuming all other factors remain constant. As the table demonstrates, the city’s score within the Debt and Contingent Liabilities factor could increase to 5.00 (the highest score) and the City’s overall score would still be 1.60, which is within the AAA range that caps at 1.64. To safely maintain the City’s AAA rating, however, we do not advise pushing the Debt and Contingent liabilities score this high. Based on the City’s future debt plans, we do not believe this will be a concern. The table below shows the estimated impact on the City’s Debt and Contingent Liabilities Score based on the City’s debt issuance plans. As the table indicates, the City’s raw debt score could increase to 4.0 with planned debt issuance. For this factor, S&P calculates a raw score and provides for some qualitative adjustments. These adjustments can help or hinder a city’s net score. St. Louis Park is currently being given credit for two positive adjustment factors. The first is that all debt (including overlapping debt) is less than 3% of market value. The second is t hat more than 65% of the city’s existing debt will be amortized within 10 years. Study Session Meeting of March 26, 2018 (Item No. 3) Title: 2018 Bonding Review and Westwood Hills Nature Center Financing Update Page 28 City of St. Louis Park Future Debt Plans and S&P Rating Implications January 31, 2018 Page 3 Maintaining these positive adjustments will depend on continued growth in the City’s market value as well as the term of future debt issuance. Based on our review, we would expect the City to continue receiving these adjustments and have assumed this in projecting the City’s actual score for the Debt and Contingent Liabilities factor. As a result, we expect the City’s net Debt and Contingent Liabilities score will increase to 2.0. This means the City’s overall score would increase to 1.30, which is still well within the AAA range and below the overall score for the City in 2014. Other Rating Considerations Reserves – If more debt is issued, the City’s general fund reserves and governmental reserves would need to increase proportionately in order to keep the reserves as a percentage of expenditures the same as they are today. Financial – Liquidity – This factor can also be influenced by the i ssuance of additional debt. St. Louis Park currently scores 1.00 in this category, as do many MN cities. Based on our assessment, this factor will not be affected by any realistic amount of debt issuance. Overriding Factors – Once a city’s raw score is determined, S&P will also consider several positive and negative overriding factors that could lead to a n adjustment in the rating. St. Louis Park does not appear to be at risk for any negative overriding factors. One positive overriding factor to be aware of is that S&P may provide a one notch increase if the city’s general fund balance is greater than 75 percent of general fund expenditures. This means that even if the City’s overall score went higher than 1.64, a high cash balance may keep the City at a AAA. This cash balance generally must be maintained through at least three audit periods. S&P Rating Evaluation Service – S&P will provide a confidential assessment of the potential impact on credit quality of proposed strategic initiatives, such as issuance of additional debt. If the City wanted to get some additional assurance that its credit rating would not be impacted by current debt issuance plans, then this service may be something to consider. The fees are calculated on a case-by-case basis and reflect the complexity of the security structure, the sector, and the number of scenarios. Please contact us with any questions you may have. Study Session Meeting of March 26, 2018 (Item No. 3) Title: 2018 Bonding Review and Westwood Hills Nature Center Financing Update Page 29 St. Louis Park City Hall • 5005 Minnetonka Blvd., St. Louis Park, MN 55416 www.stlouispark.org • Phone: 952.924.2500 • TTY: 952.924.2518 FAQs about G.O. tax abatement financing for Westwood Hills Nature Center What is the project being proposed? The city is proposing to replace the nearly 40-year-old Nature Center at Westwood Hills. What are tax abatement bonds? Minnesota law allows cities to designate all or a portion of City property taxes (“abatement”) to be used for a given project, such as public improvements, and to issue general obligation (G.O.) bonds to finance the project. The bonds are paid for through the abated City property taxes from selected parcels. How are the identified parcels selected? The parcels will be selected based upon a variety of criteria, including but not limited to, those that are not currently or anticipated to be located in a TIF district over the term of the abatement, larger tax paying parcels to limit the number of parcels for the abatement and/or a parcel’s proximity near Westwood Hills Nature Center. How does this affect me as a tax payer? If the Nature Center project is financed with G.O. tax abatement bonds, the City will levy annually for debt on the bonds. All SLP taxpayers will pay an equal percentage, based on their property value, toward the project just like any other G.O. bond. It makes no difference whether your property is included or not included in the parcels identified for tax abatement. Why would the City finance through bonds? It is common for a city with a significant capital reinvestment to issue bonds. The bonds are anticipated to be 20 years which allows the costs to be spread out over time. With our AAA credit rating we will receive the lowest interest rate in the market at the time of sale. In summary, this would be 20-year financing for a building expected to last for 40-50 years. Do G.O. tax abatement bonds have higher interest rates than other City G.O. Charter Bonds? No, because these bonds are general obligations of the City, just like other bonds the City issues for other public improvments (i.e. public facilities, utilities, roads, parks, sidewalks, etc.), the rates will be determined at a competitive sale and based upon the current rate environment, the City’s high credit rating, term of the bonds and the overall market for G.O. Tax Exempt bonds. Have other cities used tax abatement bonds for recreation type facilities? (Here are a few examples) •In 2008, the City of Burnsville issued $16.8m in tax abatement bonds for construction of its performing arts center. •In 2014, the City of Eden Prairie issued $17.1m in tax abatement bonds for its Aquatics Center expansion. •In 2016, the City of Shakopee issued $29.5m in tax abatement bonds for improvements to its Community Center. •In 2010, the City of St. Cloud issued $22.3m in tax abatement bonds for an expansion of its Civic Center. •In 2012, the City of West St. Paul issued $5m in tax abatement bonds for its Sports Dome construction. •In 2013, the City of Woodbury issued $16m in tax abatement bonds for construction of the Bielenberg Sports Center. Study Session Meeting of March 26, 2018 (Item No. 3) Title: 2018 Bonding Review and Westwood Hills Nature Center Financing Update Page 30 Meeting: Study Session Meeting Date: March 26, 2018 Discussion Item: 4 EXECUTIVE SUMMARY TITLE: 2018 Market Value Overview RECOMMENDED ACTION: No action needed. This summary report is provided for informational purposes to update Council on the local real estate market dynamics and preparing for the Local Board of Appeal and Equalization process that begins in April. POLICY CONSIDERATION: None at this time. SUMMARY: The assessed market valuation and classification for each property determines their individual tax capacity and thus the overall tax capacity of the community. In addition to fiscal budgeting and property tax implications, the composition of value and trending are important for Council to understand as they focus on overall governance of the community. This review is being provided to give the Council additional information on how the community’s real estate is reacting to the significant evolution of the housing stock (single-family, condo, cooperatives, townhomes and apartment complexes), market performance trends for commercial- industrial space, thoughts on the current market cycle, and the foundation to look forward. The appeal process will also be reviewed briefly with additional outline of the Board duties to be published in the packet for the April 9 Board convene date. The Department of Revenue has directed changes to the adjustment of sales (time) as well as procedures for the Local Board of Appeal and Equalization. The St. Louis Park Local Board of Appeal and Equalization convenes its organizational meeting on Monday April 9, 2018 with the follow-up meeting scheduled for April 23. FINANCIAL OR BUDGET CONSIDERATION: Not applicable. VISION CONSIDERATION: Not applicable. SUPPORTING DOCUMENTS: Discussion Prepared by: Cory Bultema, City Assessor Reviewed by: Nancy Deno, Deputy City Manager/HR Director Approved by: Tom Harmening, City Manager Study Session Meeting of March 26, 2018 (Discussion Item No. 4) Page 2 Title: 2018 Market Value Overview DISCUSSION Overview of the Minnesota Property Tax System Minnesota law establishes a specific process and timeline for the entire property tax system, including the assessment of property. The system is summarized as follows: 1.All real property is valued at market value annually and classified according to usage. In addition, there are a multitude of sub-classifications which are applied administratively. The owners are notified, generally in March, with multiple options for discussion and appeal. 2.State law defines how the value and class rate are translated into tax capacity and refined via subsidies, exclusions and credits (i.e., homestead, veteran exclusion, et al, etc.). 3.Budgets for each taxing jurisdiction are set annually. Funding sources include the property tax levy, voter approved market value referendums, bonding, special assessments, programs/grants and other sources such as user fees from a variety of operational sources. 4.The total property tax levy is divided by the total capacity of each jurisdiction (city, county, school district and others) to determine the total levy extension multiplier. The multiplier is applied to each individual property to calculate property taxes. It is essential to understand that the property tax “rate” is only a math equation as used in the Minnesota system. The Assessing function deals with the first step above as staff renders an opinion of market value and classification annually for 17,000+ parcels in St. Louis Park as of January 2 each year. The assessment must comply with standards established by the Minnesota Department of Revenue, Minnesota statutes and with review/approval by the Hennepin County Assessor’s Office. Market value is defined in Minnesota Statute 272.03 subd 8 as “the usual selling price at the place where the property to which the term is applied shall be at the time of assessment; being the price which could be obtained at a private sale or an auction sale, if it is determined by the assessor that the price from the auction sale represents an arm's-length transaction. The price obtained at a forced sale shall not be considered.” Classification of the property use is also defined by Minnesota statute. The rationale for this requirement is that the Minnesota property tax system applies differing classification rates in determining how the value is translated into tax capacity. The following table presents a summary example of the two dominant property types and their associated class rates: Base Homestead Non-Homestead e.g. Tax Capacity at Taxable Values Property Type Value Base Over-Base Base Over-Base 250,000 500,000 1,000,000 Comm & Industrial 150,000 N/A N/A 1.50% 2.00% 4,250 9,250 19,250 Residential 500,000 1.00% 1.25% 1.00% 1.25% 2,500 5,000 11,250 As can be seen above, the class system greatly favors residential properties in translating the assessed market value into initial tax capacity. This difference widens further as commercial properties are subject to fiscal disparities and state based levies while residential properties are reduced by subsidy factors such as the homestead value exclusion. Voter approved referenda levies are more commonly market based and taxed equally on each dollar of property value. Study Session Meeting of March 26, 2018 (Discussion Item No. 4) Page 3 Title: 2018 Market Value Overview The Assessment Process The purpose of the assessment process is to annually render an accurate and equitable opinion of market value of each parcel of property. Doing so requires current information about the properties being assessed and the local real estate market. In addition to the economic market forces at work, the individual property location, use and physical characteristics play a significant role in the valuation. The St. Louis Park Assessing division maintains a record of every property in the city including its size, location, physical characteristics and condition. As there are 17,000+ taxable parcels in the city, it is virtually impossible to have complete knowledge of each property, which may or may not sell in a given year. The Minnesota property tax system therefore requires periodic inspections. The current cycle of inspection is on a five year rotating schedule (known as the quintile) which may be altered due to physical change of the property due to new construction, renovations, additions and damage. The goal of the periodic and interim inspection process is to assess the characteristics and corresponding market value of each property as closely as possible versus the property’s competitive position. It is important to know that the valuation process for residential properties in the State of Minnesota is based on mass appraisal. The valuations are modeled by the use of a computer assisted mass appraisal (CAMA) methodology. To summarize, the physical characteristics for each property are maintained in a large database which calculates the individual valuations based upon the location, style and physical characteristics for each property. While often seen by the public as a mathematical equation to be manipulated, a truly functional CAMA system is not linear math but instead is focused on modeling selected individual parcels and their competitive niche for valuation movement. The purpose of modeling is to produce a mirror image of market performance using the competitive properties that have sold during the comparison time period (fact based modeling). Minnesota requires almost all sales to be recorded in an electronic Certificate of Real Estate Value (e-CRV) data system. In all cases, the sales information is scrutinized and qualified. Initial clerical screening occurs at the city and county level. The sale information is then frequently augmented with more detail from a variety of professional data services and staff may follow-up with direct buyer/seller verifications and re-inspections in the case where the sale indicates that we may have imperfect information. Evidence suggesting anything but an arms-length transaction (a forced sale, foreclosure, a sale to a relative, etc.) results in the sales information being excluded from study. This is important as the market information constitutes the measurable database for the statistical comparisons necessary to make the property assessment. The mass appraisal process is different from the individual appraisal system used by banks, mortgage companies and others. For example, the mass appraisal system for residential properties involves the comparison of thousands of properties with the fact-based market transactions from the same or closely competitive neighborhoods, and market sales of the same quality and type of property throughout the city. In the appeal process, the assessing staff looks to both the mass valuation models and a current individual appraisal analysis for further review. Study Session Meeting of March 26, 2018 (Discussion Item No. 4) Page 4 Title: 2018 Market Value Overview The Appeal Process We receive inquiries and questions about market value, the assessment process and how the property tax system operates throughout the year. An open dialogue between staff and the property owner is a key aspect of the mass appraisal system. We recognize that some properties receive statistic-based adjustments to market value and owners may have differing degrees of knowledge and perspective on both their own real estate and market performance. Three important points are stressed in the informal and formal appeal processes: • By statute, the assessing staff utilizes the traditional market in setting valuations. We do not disregard the impact of the distressed sub-market or value-in-use transactions, but we do emphasize the use of open market and arm’s length sales. This is not only by legal precedent but also good appraisal methodology. All assessed market values are set on a similar competitive basis which allows for a better understanding of the nuances of (often) highly localized sub-markets. • Transactions are the facts which define the market. Appeals on the basis of comparative assessment can be problematic. While a valid rationale from the owner perspective, the neighbor’s assessment is (also) an opinion. Assessment equity via the mass assessment is measured with distinct performance metrics as published by the Minnesota Department of Revenue. The post assessment “report cards” are relied upon by the Tax Court. • The mass assessment is time adjusted. When re-appraising individual properties for an appeal review, we apply similar time trends to the comparable sales. This allows a look forward ability up to the date of assessment (January 2) and slightly beyond. Questions are common during informal appeals. The assessing staff will check the last date of interior inspection as condition can evolve over time. Inspections are often requested to re-verify property attributes and public record sales information is often discussed. A very large majority of property owner concerns can be resolved through this informal review. Assessing staff will review and adjust the assessed market value as warranted prior to the Boards during the informal review process. If needed, the next step is the appeal process. Formal appeal steps are summarized as: 1. Local Board of Appeal and Equalization: The St. Louis Park Board is set to have its organizational meeting on April 9, 2018. The owner is the appellant and is notified of the Board process including the need to present information to the Board. The assessing staff serves as the respondent and prepares a report of sales and related market information to be presented at the re-convene meeting. The Board hears the respective points and makes the determination on value and/or classification. 2. County Board of Appeal and Equalization: To be eligible, the owner must first appeal at the Local Board. An application to appeal at the Hennepin County Board is required by May 16 and this Board convenes in June. The process is similar as the owner makes their case and county staff serves as the respondent and the Board makes the determination. 3. Tax Court: Property owners may appeal directly to the Minnesota State Tax Court. Petitions regarding the 2018 Assessment may be filed until April 30, 2019. This method of appeal is more formal and often takes a lengthy period of time to resolve. This avenue of appeal is much larger in the number of cases, their complexity and the valuations/classifications in dispute. The average volume of appeals resolved at this level has been $800+ million annually over the past decade (sense of scale – this represents 10% to 15% of the total valuation). Study Session Meeting of March 26, 2018 (Discussion Item No. 4) Page 5 Title: 2018 Market Value Overview Big Picture of the Residential Market – Realtor Perspective Before discussion of the 2018 assessment, we want to provide a big picture overview from the perspective of Realtors. The broad spectrum of residential real estate peaked in 2006-2007 and bottomed out around 2011. The market fully rebounded by (circa) 2016 and continues to advance to the present time. The following chart is an aggregate of single-family homes, condos and townhomes from 2010 through 2017. This provides a comparative reference for St. Louis Park and our immediate neighbors through the roller coaster ride of recent history. Historic Median Sale Price – Aggregate of Single-Family Homes, Condos and Townhomes % Change 2010 2011 2012 2013 2014 2015 2016 2017 11-to-'17 St. Louis Park 213,250 185,600 198,950 219,000 230,000 239,700 245,000 265,000 42.8% Edina 345,000 345,000 349,000 351,000 380,000 399,900 441,500 465,000 34.8% Golden Valley 235,500 199,450 218,000 247,700 248,700 264,200 290,725 308,950 54.9% Hopkins 149,500 126,250 160,500 181,500 182,000 213,500 215,000 217,900 72.6% Minnetonka 266,000 233,750 255,400 280,000 273,984 300,550 310,000 335,000 43.3% Source: Minneapolis Association of Realtors Sales Data (MAAR) In contemplating the historical figures above, all of the owner-based housing options are included. This aggregate price structure gives an interesting but incomplete perspective for each community. The sales will vary from year-to-year depending on which market segment has more sales and especially tends to ride high for single-family new construction/major renovations. Being curious on the mix of options available, the chart below breaks out the annual performance in the past year. Annual 2017 Market Performance: Sale Volume – Median Sale Price – Days on Market Single-Family Condominiums Townhomes # Median Days on # Median Days on # Median Days on Sales Sale Price Market Sales Sale Price Market Sales Sale Price Market St. Louis Park 660 291,800 18 215 139,400 20 78 210,000 16 Edina 701 565,000 41 266 170,000 33 41 335,000 57 Golden Valley 357 331,000 27 27 155,000 37 40 179,950 45 Hopkins 133 267,450 18 73 79,719 22 73 165,000 25 Minnetonka 605 385,500 31 157 161,000 26 173 236,950 26 Source: Minneapolis Association of Realtors Sales Data (MAAR) Several facts in the above table are notable. First and often surprising (to outsiders) is that our annual transaction volume is generally high in terms of turnover rate. This is due in part to our pricing structure, the housing options available, the mix of options available, and the balance between single-family, condo and townhome stock. The most significant fact in the table above, however, is timing of market exposure (Days on Market). All of the local communities are clearly showing short exposure times with limited inventory available. The move to a seller’s market has been particularly emphasized in the lower bracket stock. While prior value appreciation has been modest and relatively stable, the current market is poised to advance at a more rapid pace than in years past. Whether that supply/demand equation is influenced by increasing interest rates and a continued stable (jobs) economy remains to be seen. Study Session Meeting of March 26, 2018 (Discussion Item No. 4) Page 6 Title: 2018 Market Value Overview Summary of the St. Louis Park 2018 Assessment Roll The Notice of Valuation and Classification commence mailing in March of each year. Each notice reflects the property value and classification for a two year period with the format as required by the MN Department of Revenue. As of January 2, 2018, the total valuation of the city stands at $7.17 billion versus 2017 ending at $6.64 billion. Further understanding of the value composition and year-over-year trending is explored in the following chart. Assessed Market Value Change for Dominant Sectors (Comparison of 2018 versus 2017 Assessment) Single-Family Residential + 6.9% Static Basis versus + 7.7% with Improvements Condominium + 9.0% Static Basis versus + 9.1% with Improvements Townhomes + 8.4% Static Basis -same- + 8.5% with Improvements Apartments + 7.8% Static Basis versus +13.6% with Improvements Commercial + 6.8% Static Basis versus +10.0% with Improvements Industrial + 1.1% Static Basis versus + 3.0% with Improvements St. Louis Park Total + 6.2% Static Basis versus + 8.1% with Improvements The above changes are within property types. The “Total” line is subject to +0.7% refinement as the state assessed rail and utility values were not available at report writing. Value change on a static basis reflects market driven change on an apple-to-apple comparison. The static change figure is inherently the primary focus for the mass appraisal methodology. The (total) value change with improvements reflects the value-add economic activity related to new construction, additions and major renovations and/or re-positioning. The total value change also reflects any related tax capacity shifts about to occur for the tax period payable 2019. Each of the above categories will be explained at further length in the following report sections. We begin our review of the overall residential sector by breaking it down into the three dominant categories: low density (single-family homes); mid-to-high density ownership based (condos and townhomes) and apartment units. Housing Unit Composition – St. Louis Park for the 2018 Assessment 11,613 9,310 3,572 430 114 Single-Family Apartments Condo & Townhome Duplex Cooperatives Study Session Meeting of March 26, 2018 (Discussion Item No. 4) Page 7 Title: 2018 Market Value Overview Single Family Homes: Just under one-half of the total housing units are single family homes. The city of St. Louis Park is broken down into 35 distinct neighborhoods which are configured to local history rather than cohesive competitive influences. Of the 32 neighborhoods with single-family properties, all are stable or increasing in valuations for the 2018 assessment. The neighborhood adjustments ranged from 0.0% to +12.2% with most neighborhoods between +4.0% to +8.0%. Setting the assessment is based on a mirror image of the market. It has included the traditional sales review, extensive qualification review, on-market listings at multiple points throughout the year, accessing listing data, quintile inspections (approximately 20% of the stock is reviewed each year) and new construction and renovation permit reviews. Much of our attention has been on reviewing the price brackets (stratifications). Our single-family stock is normally a tall bell curve style of pricing with heavy emphasis currently moving into the $225,000 to $325,000 range. When combining market appreciation, a low volume of distressed properties, an active renovation/addition sub-market and the sales, there would normally be an indisputably wider degree of variation in the stratifications over the past year. This is relatively healthy in an advancing market as it reflects a growing array of housing options. The market movements are not fully balanced, however, as the lower priced brackets are proceeding at a faster rate of appreciation which is shown as the median (mid-point) assessed value advanced at 8.1% while the total stock value increased at 7.7%. Condominiums: There are 46 distinct condominium complexes in the community. The complexes are a decidedly diverse stock in terms of structural vintage, design format (apartment conversions, row-house, lo-rise, hi-rise and most everything in between). As noted in prior years, condos and townhomes tend to be considerably more volatile in valuations. This is generally due to four major factors: condos tend to have an in-complex sub-market which can swing quickly; the complexes compete locally and into nearby cities; perceptions of value differ between the owner-occupant buyer versus the investor/rental buyer; and sale pricing can be affected in a significant manner by association assessments. The local market exhibits a very wide pricing structure. Time reference on the market adjustments can be illustrative: the 2013 assessment was at -7.5%; the 2014 assessment was at +7.8%; the 2015 assessment was at +8.5%; the 2016 assessment was at +8.2%; the 2017 assessment was at +5.8% and the 2018 assessment stands at +9.1%. There are considerable variations among the complexes with none moving down while eight complexes were adjusted upward at 15+% this year. Townhomes: There are 19 distinct townhome complexes in the community. About one-half of them are relatively small with fewer than 20 units in the complex. The other half are predominantly in the 20-50 unit count bracket with three larger complexes. In general, the market forces at play in this property type are similar to that of the condos with several mitigating factors. They include a higher average unit value which seems to be more economically durable. It is also our perception that the physical designs tend to be less problematic with few exceptions, while the rate of distressed transactions and on-market listings have tended to be less dramatic. The following charts provide additional overview for the 2018 assessment. The first page reflects the single-family neighborhoods over the past five years. The second page provides a complex breakdown of the condos and townhomes by unit count and median market value (the five year history is multiple pages and not included with this report; it can be provided to Council upon request). Study Session Meeting of March 26, 2018 (Discussion Item No. 4) Page 8 Title: 2018 Market Value Overview St. Louis Park -- Single Family Residential Properties Historical Change of Assessed Market Values (Quintile Cycle) Year of Assessment 2014 2015 2016 2017 2018 a. Median Assessed Value: 217,600 227,500 240,100 254,200 274,900 b. City-Wide Static Change: 4.8% 4.0% 4.4% 5.0% 6.9% Neighborhood Reference 2014 2015 2016 2017 2018 Parcels Median 1 Shelard Park N/A N/A N/A N/A N/A 0 N/A 2 Kilmer 2.4% 3.8% 0.8% 8.3% 6.4% 243 235,950 3 Crestview 2.2% 9.4% 4.3% 6.9% 0.2% 69 375,700 4 Westwood Hills 1.5% 4.9% 5.6% 4.9% 11.6% 292 447,150 5 Cedar Manor 2.2% 2.9% 6.5% 7.5% 7.9% 573 272,400 6 Northside (x) Willow Park 8.9% 3.0% 5.3% 10.4% 12.2% 302 298,000 7 Pennsylvania Park 4.5% 8.6% 2.2% 5.4% 0.0% 304 239,550 8 Eliot 8.3% 0.0% 5.6% 7.9% 6.9% 509 250,500 9 Blackstone 2.0% 1.9% 6.8% 1.5% 4.2% 95 192,800 10 Cedarhurst 6.0% 2.1% 4.1% 1.3% 4.2% 48 223,300 11 Eliot View 1.0% 9.6% 6.0% 6.8% 8.5% 165 253,000 12 Cobblecrest 11.3% 6.2% 5.6% 2.9% 7.2% 382 305,600 13 Minnehaha 10.6% 0.6% 8.8% 0.6% 4.9% 128 371,800 14 Amhurst N/A N/A N/A N/A N/A 0 N/A 15 Aquila 4.5% 6.3% 6.7% 4.5% 10.7% 504 227,800 16 Oak Hill 5.2% 8.4% 4.5% 7.5% 6.8% 636 241,250 17 Texa Tonka 8.1% 8.7% 2.9% 9.6% 7.8% 385 239,800 18 Bronx Park 8.4% 7.7% 4.0% 3.4% 7.2% 991 256,150 19 Lenox 7.9% 2.0% 5.0% 5.4% 8.1% 831 253,800 20 Sorenson 9.6% 0.0% 6.4% 2.4% 11.5% 451 276,600 21 Birchwood 0.4% 4.6% 4.5% 3.7% 11.5% 630 277,450 22 Lake Forest 3.6% 4.7% 3.6% 0.7% 5.9% 195 626,100 23 Fern Hill 2.4% 3.1% 3.2% 2.9% 5.2% 959 406,000 24 Triangle 3.6% 0.0% 0.7% 7.0% 5.7% 102 241,300 25 Wolfe Park 5.4% 6.7% 5.0% 5.1% 10.5% 18 277,100 26 Minikada Oaks 6.9% 8.7% 0.9% 11.1% 0.9% 76 392,000 27 Minikada Vista 1.9% 2.7% 2.9% 5.4% 3.9% 798 441,100 28 Browndale 5.0% 2.9% 3.7% 4.2% 6.2% 549 399,100 29 Brookside 3.3% 0.0% 6.7% 9.2% 7.6% 328 280,000 30 Brooklawns 0.9% 0.0% 5.0% 12.1% 6.2% 149 292,800 31 Elmwood 3.6% 6.0% 6.4% 7.1% 7.8% 267 308,900 32 Meadowbrook N/A N/A N/A N/A N/A 0 N/A 33 South Oak Hill 10.2% 2.5% 4.9% 1.9% 2.9% 291 217,900 34 Westdale 0.4% 10.2% 1.3% 4.5% 7.0% 106 253,550 35 Creekside 9.7% 3.6% 7.6% 2.3% 8.1% 170 329,000 Quintile Counts 2,552 2,278 2,463 2,902 1,350 11,546 a: Median assessed market values for all single-family parcels - including improvement values. b: The % change is market driven value change and does not include improvement values. Source: Annual Compilations by the St. Louis Park Assessing Office Study Session Meeting of March 26, 2018 (Discussion Item No. 4) Page 9 Title: 2018 Market Value Overview St. Louis Park – Condominiums & Townhomes (Assess 2018) Dist Condominium # Median Dist Townhomes # Median Code Complex Name Units Mkt Value Code Complex Name Units Mkt Value AC Aquila Commons Coop 106 207,600 BG Brunswick Gables 7 239,400 MO Monterey Coop 8 92,700 DB Dan-Bar 4 192,000 BR Bridgewalk 92 109,600 EW Excelsior Way 38 176,700 BK Brookside Lofts 41 214,000 GR2 Greensboro 96 173,900 CA Calhoun Hill 7 332,500 HE Hampshire Estates 8 160,800 CT Cedar Trails 280 126,800 HH Hampshire House 13 156,000 CS Cedar Trails South (TH) 32 180,900 LL Lamplighter Park 5 381,000 CW Cedar Trails West (TH) 48 185,050 LA Lohman's Amhurst 276 194,400 CH Coach Homes 128 124,800 ME Medley Row 22 288,000 EV Elmwood Village 77 310,600 MP Monterey Park 18 377,600 EL Excelsior Lofts 86 251,700 PC Princeton Ct 14 432,700 55+ 55+ Sr Condos 60 183,150 QC Quentin Ct 10 416,850 FH Fern Hill 30 192,500 SH Shamrock 16 152,900 TG Grand Northwest 96 438,850 SK Skyehill 31 254,000 GW Grand Way 124 337,850 SW Sungate West 48 164,000 GR Greensboro 164 89,900 VP Victoria Ponds 72 376,800 HV Harmony Vista 74 201,500 WT Westwood Townhmes 38 189,000 IB Inglewood Boutique 6 356,600 ZA Zarthan Apt 18 193,900 LN Lynn Ave Condos 12 187,700 ZP Zarthan Park 16 201,400 LY Lynnwood Condos 11 152,400 MC Monterey Place 30 246,300 MW Monterey West 7 241,500 MR Murphy Ridge 4 163,900 Outlined complexes have active Housing Improvement NP Natchez Place 26 153,600 Associations (HIA's); balance information may be OX Oxford Gardens 12 91,500 obtained by calling 952-924-2511. The general info P0 Parkside U.L. (460) 24 311,800 number for special assessments and delinquent P2 Parkside U.L. (462) 22 278,300 utilities is 952-924-2111 (Utility Billing/Finance). P4 Parkside U.L. (464) 22 278,250 PW Pointe West 86 305,000 PP Pondview Park 30 121,400 S1 Sungate I 20 133,000 S2 Sungate II 26 153,100 S3 Sungate III 14 201,400 SR Sunset Ridge 240 127,400 TF Twin Fountains 88 117,700 VL Village Lofts 60 186,300 WM Westmarke 64 196,000 St. Louis Park Universe Units Mkt Value WE Westmoreland 72 93,300 WO West Oaks 75 238,000 Condominium Median 2018 2,822 153,100 WV Westwood Villa 66 94,600 Condominium Average 2018 2,822 189,880 WL Wolfe Lake 131 176,100 WF Wooddale Flats 34 467,900 Townhome Median 2018 750 190,200 WY Wynmoor 56 109,900 Townhome Average 2018 750 221,470 33 3300 On The Park 128 157,700 35 35th St Condos 11 125,200 Source: St. Louis Park Assessing Office Study Session Meeting of March 26, 2018 (Discussion Item No. 4) Page 10 Title: 2018 Market Value Overview Apartments: This sector is largely driven in the historic sense by income stream and the basic equation of supply and demand. To begin, a brief review of recent market adjustments with reference to total value change including new construction: - For 2012 – market change at + 4.9% which included very little new construction value. - For 2013 – market change at + 8.2% and +13.9% including new construction. - For 2014 – market change at + 8.2% and +20.2% with multiple new complexes on-line. - For 2015 – market change at +12.1% and +13.3% for the next phase of new complexes. - For 2016 – market change at +12.0% and +17.8% including new construction. - For 2017 – market change at + 6.4% and + 9.5% including new construction. - For 2018 – market change at + 7.5% and +13.3% including new construction. Looking at the above historical pattern from the perspective of both market appreciation and new value arising from multiple new construction projects presents a clear picture of robust growth in the multi-family stock. This can be attributed to our location and proximity to downtown Minneapolis as well as major employers in the west metro area. This value appreciation was been seen throughout all classes of apartments, from Class A to Class C. The economy in general has been strong for an extended period with additional people having a desire to reside in multi-family dwellings throughout the metro. St. Louis Park has seen a number of new projects including Ellipse, E-2, Siena Apartments, the Verge, Millennium at West End, The Curtis, The Shoreham and Parkway 25 to name the most recent. There are also a number of new units still in the construction phase and set to come on line this year and beyond. These new projects are adding to what has been the under-built sector of Class A and B stock as this sector last saw a boom in construction in the mid-1980 to mid-1990 time period. The expansion of Class A units has helped to diversify our housing stock in that the total units are now distributed with approximately half on the units being class C stock (typically less than 3 stories, built circa 1960-1975) and half being Class A and B stock. While new construction is expected to continue into the short term future, there are signs of the multi-family sector being very late in the expansion cycle for both valuation appreciation and new construction. A number of sales transactions have occurred over the last sales period setting record setting unit values. These have been seen in all classes. Capitalization rates (yield rates) continue to compress with investors willing to accept a lower annual return on their investment. For the Class A and B (typically institutional) investor this is due to the fact that the lower yield rate here is still better than what they could get on properties in other parts of the country (the coasts). The Class C market is also seeing capitalization rate compression which can be attributed to the lower interest rates as well as an owner perspective of completing value-add projects increasing their return over time. In conclusion, the apartment market has been and is still strong. Vacancy rates continue to be at all-time lows. It is also noted that this sector appears to be late in the cycle meaning that market appreciation slowing to a more “normal” rate is expected. St. Louis Park’s location as well as other factors (employment, schools, community, etc.) should continue to be a competitive advantage in this sector. Study Session Meeting of March 26, 2018 (Discussion Item No. 4) Page 11 Title: 2018 Market Value Overview Commercial and Industrial: This sector has been relatively stable over the past five years in terms of value growth. While these properties only account for approximately 4.6% of the total parcel count in the city, they comprise over 22% of the taxable value and almost 34% of the tax capacity. Value changes year over year are dependent on how these uses are performing. Major use categories in the commercial sector include auto (dealerships, gas stations, auto centers), restaurants (quick services as well as stand-alone), grocery stores, hotel/motel, office (stock and medical/dental) and retail. Major sectors in the industrial sector include light, heavy, flex, storage cross-over and industrial condos. Commercial and industrial properties are valued across jurisdictional boundaries to a significant extent with the specific use dictating how large of an area the competitive market occupies. The overall market adjustment for the 2018 valuation on the commercial properties was 10.0% inclusive of new construction and 6.8% net of improvements. This represents a continued trend of extended growth above metro norms. This is largely attributed to our location, the strong economy, and the pace and volume of redevelopment. The overall market adjustment for the industrial stock was 3.0% inclusive of new construction and 1.1% net of improvements. Looking at these figures brings three observations to mind. The first is that value changes in individual use categories becomes tricky as a property that was used as a light industrial building for the 2017 valuation may have been converted to a self-storage property for the 2018 valuation, therefore you are not comparing apples to apples. The second is that the total value of this sector was artificially affected by the border shift with Hopkins (they gained slightly more value while we gained the gratitude of a large employer). The final observation on industrial relates to under-lying land values. As an inner ring predominantly built-up suburb – also actively engaged in redevelopment – our land value is frequently a limiting factor for industrial users. The reason being that industrial uses are land intensive and low-rise while our location and associated land values are a self-reinforcing geographic premium driven by density. To close, both the commercial and industrial sectors are at or near record high level with multiple signs that the metro market is beginning to slow the growth curve. While the fundamentals remain sound it is a reasonable expectation that commercial expansion will continue locally as redevelopment projects are contemplated in the market. Meeting: Study Session Meeting Date: March 26, 2018 Written Report: 5 EXECUTIVE SUMMARY TITLE: 2040 Comprehensive Plan Update RECOMMENDED ACTION: None at this time. This report is to inform the City Council of activities related to the city’s update of the Comprehensive Plan. POLICY CONSIDERATION: None at this time. Please inform staff of any questions. SUMMARY: The process of updating the city’s Comprehensive Plan for 2040 continues. The current Comprehensive Plan is located on the city’s website at: https://www.stlouispark.org/government/departments-divisions/community- development/previous-comprehensive-plan-efforts Attached is an outline for the 2040 Comprehensive Plan Update. It includes additional information including a brief description of what each section will include. The Planning Commission has discussed several sections of the plan; attached is the 2040 Comprehensive Plan Tentative Planning Commission Schedule. Council Members are invited to attend these meetings to share in the discussion. City Council is currently scheduled to review the draft Plan in more detail on April 16th and May 14th, prior to being asked to approve the draft plan in June for distribution to adjacent jurisdictions for review. The next Planning Commission meeting is on April 4, 2018; the Planning Commission is hosting the Parks and Recreation and Environment and Sustainability Commissions to share and discuss the various section of the Plan together. Staff has met with these groups as shown on the list in the Discussion section of this report. Minutes from the meetings are available on the city’s website. Additional community engagement opportunities are being designed for the April-May timeframe. The updated Comprehensive Plan is to be sent to adjacent communities and agencies for review on July 1, 2018. Following the 6-month review period, the Plan will be submitted to the Metropolitan Council for formal review. Staff has been working with the Metropolitan Council over the past year on data needs and requirements for the Plan; the city is on track to provide all of the necessary information needed for review. FINANCIAL OR BUDGET CONSIDERATION: The funding for this has been allocated in the 2017 and 2018 community development budgets. VISION CONSIDERATION: St. Louis Park is committed to being a connected and engaged community. SUPPORTING DOCUMENTS: Discussion 2040 Comp Plan Tentative Planning Commission Schedule 2040 Comp Plan Outline with Section Descriptions Prepared by: Meg J. McMonigal, Principal Planner Reviewed by: Karen Barton, Community Development Director Approved by: Tom Harmening, City Manager Study Session Meeting of March 26, 2018 (Item No. 5) Page 2 Title: 2040 Comprehensive Plan Update DISCUSSION Staff has been working with various Boards and Commissions in the city as follows: Comprehensive Plan Meetings with Boards and Commissions Planning Commission: •June 7, 2017 – Review of current plan •December 6, 2017 – Introduction of consultant and schedule •February 21, 2018 - Land Use •March 7, 2018 - Housing •March 21, 2018 - Mobility and Land Use Park and Recreation Advisory Commission: •October 2, 2017 •November 29, 2017 •January 29, 2018 Environment and Sustainability Commission: •November 1, 2017 •January 3, 2018 •March 7, 2018 St. Louis Park School Board: •February 12, 2018 Comprehensive Plan 2040 - Tentative Planning Commission Schedule Date Topics for discussion Feb 21 Land Use March 7 Housing March 21 Land Use and Mobility -City Council invited April 4 Climate and energy Parks and Recreation Solid Waste -Parks and Recreation Advisory Commission and Environment & Sustainability Commission invited April - May Additional Community Engagement to be scheduled April 18 Surface Water Water Supply Sanitary Sewer May 2 Public Safety Health May 16 Plan by N’hood and remaining sections May 30 Extra date if needed June 6 Planning Commission recommendation to send out for review June 18 City Council action to send out for review Study Session Meeting of March 26, 2018 (Item No. 5) Title: 2040 Comprehensive Plan Update Page 3 2040 Comprehensive Plan Update St. Louis Park March 26, 2018 St. Louis Park 2040 Comprehensive Plan Outline CHAPTER Req’d elements SECTION DESCRIPTION I.Vision 3.0 St. Louis Park A.Key Themes for Comprehensive Plan: •Equity •Health •Livability •Resilience •Vitality Vision provides guidance for the city’s specific plans. The key themes have been developed from vision and all of the important thematic directions the city is working towards for the future. These themes are addressed throughout the plan, and will be shown by icons in the goals of each chapter as pertinent. II.Who We Are - Demographics X Provides both city’s projections from Met Council and other pieces of demographic information important to the overall plan. III.A Livable Community A.Planning Context Provides historical background of planning and development of the community. B.Land Use Plan X Sets out land use plan for the future by showing existing and future land use categories descriptions and maps. Land uses on map show the types of uses allowed and density ranges. C.Economic and Redevelopment X Provides guidance for future economic development and redevelopment in city. Includes employment, economic development assistance and redevelopment objectives. D.Housing Plan X Provides a description of housing in the community, including a variety of statistics. Describes housing programs by City and Housing Authority. Sets out future housing goals and direction for the city. E.Historic Describes historic preservation in the community and the St. Louis Park Historical Society and its work. F.Plan By Neighborhood Looks at each neighborhood individually, showing statistics and reflecting the desires of the local residents from the Neighborhood Planning Workshops Mobility in Our Community A.Highways and Streets X Describes the roadway system, predicts future traffic volumes and areas of future congestion, and recommends roadway improvements. B.Transit X Describes bus and light rail transit systems and city’s work with Metro Transit on services. C.Bicycles and Pedestrians X Analyzes bike and pedestrian networks and recommends improvements. Study Session Meeting of March 26, 2018 (Item No. 5) Title: 2040 Comprehensive Plan Update Page 4 2040 Comprehensive Plan Update St. Louis Park March 26, 2018 D.Freight Rail X Describes freight rail routes in city and issues related to rail routes. E.Aviation X Describes MSP airport impacts on the city, the city’s interactions with the Metropolitan Airports Commission, and required Federal Aviation requirements for building and noise mitigation. Where We Gather A.Parks, Open Space and Natural Resources X Shows the city’s park system and facilities, programs, and natural resources. Also addressed park design standards, improvements and maintenance and planning for the future. B.Public Art Describes efforts and accomplishments regarding public art in the community, including by city and Friends of the Arts. C.Social networks and organizations St. Louis Park has a number of unique community organizations, such as Children’s First. As these are essential to the community’s overall health and well- being, they will be described in this section. Environmental and Sustainability A.Climate Action and Energy Solar only The Climate Action Plan will be summarized and referred to in this section, as well as numerous other programs and plans the city is working on. A section on solar resources is required. B.Solid Waste The city has made important improvements and strides in solid waste programs and is continuing its efforts into the future. These will be described. C.Water Resources 1.Water System X A Water Supply Plan is being completed by consultants and will include detailed information on volume and capacities and plans for future improvements. Metropolitan Council and Minnesota Department of Natural Resources (MnDNR) set out specific requirements for these plans. 2.Sanitary Sewer X Met Council owns and operates the sewer systems in the Twin Cities Metro Area and the city owns and operates the local system that feeds into it. Growth projections are shown relating to sanitary sewer needs. Attention to preventing and reducing excessive inflow to the systems is also required. 3.Surface Water X A Surface Water Management Plan is being completed by consultants, and will meet detailed rules by various watershed and state agencies. The final plan will be completed in fall of 2018, as required by these agencies. Study Session Meeting of March 26, 2018 (Item No. 5) Title: 2040 Comprehensive Plan Update Page 5 2040 Comprehensive Plan Update St. Louis Park March 26, 2018 D.Other utilities + fiber This chapter notes various utility providers in the city and discussed the extension of fiber in the city. How We Govern A.City Government Describes the city government structure and organization. B.Public Health and Safety 1.Public Health 2.Emergency Services: Police and Fire 3.Emergency Plan Public health has become more important to the city and is being addressed on a number of fronts. This section will describe the work that has been completed as well as efforts for the future. Police and Fire service approaches and importance to health and safety in the city are described. A summary of the Emergency Plan is included. C.Race and Equity Description of the city’s past, current and future efforts related to race and equity. D.Communications Description of the communication methods the city uses to keep residents connected and informed. E.Schools Listing of schools and the city and school district’s joint efforts for the future. F.Implementation of the Plan Specific steps for implementing the Comprehensive Plan will be listed and described. APPENDICES: Water Supply Plan, Surface Water Management Plan, I & I Study, Climate Action Plan These plans will be referred to and available with the Comprehensive Plan. Study Session Meeting of March 26, 2018 (Item No. 5) Title: 2040 Comprehensive Plan Update Page 6 Meeting: Study Session Meeting Date: March 26, 2018 Written Report: 6 EXECUTIVE SUMMARY TITLE: February 2018 Monthly Financial Report RECOMMENDED ACTION: No action required at this time. POLICY CONSIDERATION: None at this time. SUMMARY: The Monthly Financial Report provides a summary of General Fund revenues and departmental expenditures and a comparison of budget to actual throughout the year. A budget to actual summary for the four utility funds is also included in this report. FINANCIAL OR BUDGET CONSIDERATION: At the end of February, General Fund expenditures are at approximately 14.7% of the adopted annual budget, which is about 2% under budget. VISION CONSIDERATION: Not applicable. SUPPORTING DOCUMENTS: Discussion Summary of Revenues & Expenditures – General Fund Budget to Actual – Enterprise Funds Prepared by: Darla Monson, Accountant Reviewed by: Tim Simon, Chief Financial Officer Nancy Deno, Deputy City Manager/HR Director Approved by: Tom Harmening, City Manager Study Session Meeting of March 26, 2018 (Item No. 6) Page 2 Title: February 2018 Monthly Financial Report DISCUSSION BACKGROUND: This report provides summary information of the overall level of revenues and departmental expenditures in the General Fund and a comparison of budget to actual throughout the year. A budget to actual summary for the four utility funds is also included in this report. PRESENT CONSIDERATIONS: General Fund Actual expenditures should generally be at about 17% of the annual budget at the end of February. General Fund expenditures are at 14.7% of the adopted budget in February. Revenues tend to be harder to measure in the same way due to the timing of when they are received, examples of which include property taxes, grants and State aid payments. A few comments on revenue and expenditure variances are explained below. Revenues: License and permit revenues are at approximately 30% of budget through February because nearly 90% of the 2018 business and liquor license revenue has already been received. This is typical of previous years. Permit revenue is at 13% through February. Intergovernmental revenues are at 21% due to the receipt of the first half DOT Aid Highway User Tax payment on January 31st. Expenditures: Organized Recreation expenditures are at 23.5% of budget because the full annual community education contribution in the amount of $187,400 was paid to the school district in February. Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Actual $2,609 $5,557 Budget $3,158 $6,316 $9,475 $12,633 $15,791 $18,949 $22,108 $25,266 $28,424 $31,582 $34,741 $37,899 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $ THOUSANDS Monthly Expenditures -General Fund Summary of Revenues & Expenditures - General Fund As of February 28, 2018 20182018201620162017201720182018Balance YTD Budget BudgetAuditedBudgetUnaudited BudgetFeb YTD Remaining to Actual %General Fund Revenues: General Property Taxes23,597,282$ 24,193,360$ 24,748,436$ 24,837,901$ 25,705,886$ -$ 25,705,886$ 0.00% Licenses and Permits3,496,177 4,320,078 3,745,736 3,994,612 3,924,648 1,174,167 2,750,481 29.92% Fines & Forfeits341,200 299,808 254,200 298,036 269,200 34,341 234,859 12.76% Intergovernmental1,419,017 1,656,072 1,631,669 1,899,437 1,864,877 385,571 1,479,306 20.68% Charges for Services1,956,593 2,063,241 2,027,637 2,055,522 2,162,410 151,511 2,010,899 7.01% Miscellaneous Revenue977,546 1,131,632 1,274,415 1,305,085 1,318,037 31,135 1,286,902 2.36% Transfers In1,872,581 1,881,274 1,899,927 1,889,927 1,929,090 319,848 1,609,242 16.58% Investment Earnings 140,000 114,957 140,000 - 160,000 - 160,000 0.00% Other Income27,450 20,440 30,450 52,368 40,950 1,733 39,217 4.23% Use of Fund Balance *254,891 - 58,541 - 523,835 - 523,835 0.00%Total General Fund Revenues34,082,737$ 35,680,861$ 35,811,011$ 36,332,888$ 37,898,933$ 2,098,306$ 35,800,627$ 5.54%General Fund Expenditures: General Government: Administration1,037,235$ 1,118,873$ 1,049,123$ 1,056,796$ 1,341,606$ 158,653$ 1,182,953$ 11.83% Finance933,624 869,759 957,275 924,652 978,752 158,614 820,138 16.21% Assessing641,038 607,443 707,139 652,015 759,865 124,803 635,062 16.42% Human Resources748,718 801,958 754,699 730,731 796,666 107,578 689,088 13.50% Community Development1,385,036 1,281,000 1,366,055 1,353,476 1,479,911 257,283 1,222,628 17.39% Facilities Maintenance1,115,877 1,099,973 1,132,774 1,128,339 1,162,342 156,214 1,006,128 13.44% Information Resources1,564,128 1,492,734 1,570,712 1,421,685 1,589,432 157,375 1,432,057 9.90% Communications & Marketing608,228 657,758 646,841 723,013 755,940 102,397 653,543 13.55% Community Outreach25,587 22,718 26,553 24,389 27,637 2,828 24,809 10.23% Engineering549,251 436,228 376,601 339,876 525,834 69,677 456,157 13.25%Total General Government8,608,722$ 8,388,443$ 8,587,772$ 8,354,972$ 9,417,985$ 1,295,420$ 8,122,565$ 13.75% Public Safety: Police8,698,661$ 8,754,092$ 9,217,988$ 9,266,343$ 9,930,681$ 1,528,319$ 8,402,362$ 15.39% Fire Protection4,030,153 3,939,435 4,407,656 4,319,386 4,657,973 696,631 3,961,342 14.96% Inspectional Services2,216,075 2,082,694 2,419,073 2,271,301 2,544,762 393,927 2,150,835 15.48%Total Public Safety14,944,889$ 14,776,220$ 16,044,717$ 15,857,030$ 17,133,416$ 2,618,877$ 14,514,539$ 15.29% Operations & Recreation: Public Works Administration241,304$ 240,497$ 266,249$ 245,942$ 230,753$ 22,481$ 208,272$ 9.74% Public Works Operations2,907,781 2,699,375 3,019,017 2,706,916 3,091,857 452,328 2,639,529 14.63% Organized Recreation1,431,260 1,396,737 1,472,996 1,470,613 1,582,490 372,629 1,209,861 23.55% Recreation Center1,602,935 1,687,724 1,744,651 1,852,777 1,860,755 205,879 1,654,876 11.06% Park Maintenance1,634,249 1,627,700 1,721,732 1,797,271 1,830,530 250,504 1,580,026 13.68% Westwood Nature Center576,173 555,887 602,400 572,942 622,346 89,880 532,466 14.44% Natural Resources479,408 362,094 550,235 430,995 559,662 37,234 522,428 6.65% Vehicle Maintenance1,358,946 1,130,622 1,384,038 1,146,881 1,253,367 205,865 1,047,502 16.42%Total Operations & Recreation10,232,056$ 9,700,637$ 10,761,318$ 10,224,337$ 11,031,760$ 1,636,799$ 9,394,961$ 14.84% Non-Departmental: General 30,351$ 63,648$ 31,909$ 31,859$ 43,422$ 5,582$ 37,840$ 12.86% Transfers Out- 1,873,000 - - - - - 0.00% Council Programs198,000 198,000 0.00% Contingency266,719 104,224 385,295 164,249 74,350 - 74,350 0.00%Total Non-Departmental297,070$ 2,040,871$ 417,204$ 196,108$ 315,772$ 5,582$ 310,190$ 1.77%Total General Fund Expenditures34,082,737$ 34,906,172$ 35,811,011$ 34,632,447$ 37,898,933$ 5,556,678$ 32,342,255$ 14.66%*Primarily related to E911 capital items from restricted fund balance.Study Session Meeting of March 26, 2018 (Item No.64) Title: February 2018 Monthly Financial Report Page 3 Budget to Actual - Enterprise FundsAs of February 28, 2018 Current BudgetFeb Year To DateBudget Variance% of BudgetCurrent BudgetFeb Year To DateBudget Variance% of BudgetCurrent BudgetFeb Year To DateBudget Variance% of BudgetCurrent BudgetFeb Year To DateBudget Variance% of BudgetOperating revenues: User charges6,177,384$ 749,813$ 5,427,571$ 12.14% 7,421,016$ 973,260$ 6,447,756$ 13.11% 3,590,500$ 519,319$ 3,071,181$ 14.46% 3,024,731$ 356,334$ 2,668,397$ 11.78% Other375,750 8,448 367,302 2.25% 30,000 3,307 26,693 11.02% 140,000 - 140,000 0.00%- -- Total operating revenues6,553,134 758,261 5,794,873 11.57% 7,451,016 976,567 6,474,449 13.11% 3,730,500 519,319 3,211,181 13.92% 3,024,731 356,334 2,668,397 11.78%Operating expenses: Personal services1,377,010 217,585 1,159,425 15.80% 689,225 109,744 579,481 15.92% 631,295 89,076 542,219 14.11% 796,527 88,167 708,360 11.07% Supplies & non-capital430,300 39,610 390,690 9.21% 65,550 19,040 46,510 29.05% 184,750 13,035 171,715 7.06% 31,600 23 31,577 0.07% Services & other charges1,704,224 106,812 1,597,412 6.27% 4,605,626 741,478 3,864,148 16.10% 3,014,442 207,988 2,806,454 6.90% 595,187 34,539 560,648 5.80% Depreciation * Total operating expenses3,511,534 364,007 3,147,527 10.37% 5,360,401 870,262 4,490,139 16.24% 3,830,487 310,099 3,520,388 8.10% 1,423,314 122,729 1,300,585 8.62%Operating income (loss)3,041,600 394,254 2,647,346 12.96% 2,090,615 106,305 1,984,310 5.08% (99,987) 209,220 (309,207) -209.25% 1,601,417 233,605 1,367,812 14.59%Nonoperating revenues (expenses): Interest income 15,172 - 15,172 2,391 - 2,391 0.00% 15,000 - 15,000 0.00% 14,800 - 14,800 0.00% Interest expense/bank charges(176,342) (142,133) (34,209) 80.60% (26,584) (17,436) (9,148) 65.59% (25,500) - (25,500) 0.00% (40,897) (9,123) (31,774) 22.31% Total nonoperating rev (exp)(161,170) (142,133) (19,037) 88.19% (24,193) (17,436) (6,757) 72.07% (10,500) - (10,500) 0.00% (26,097) (9,123) (16,974) 34.96%Income (loss) before transfers2,880,430 252,121 2,628,309 8.75% 2,066,422 88,869 1,977,553 4.30% (110,487) 209,220 (319,707) -189.36% 1,575,320 224,482 1,350,838 14.25%Transfers inTransfers out(601,985) (100,331) (501,654) 16.67% (823,637) (137,273) (686,364) 16.67% (234,046) (39,008) (195,038) 16.67% (322,459) (53,743) (268,716) 16.67%NET INCOME (LOSS)2,278,445 151,790 2,126,655 6.66% 1,242,785 (48,404) 1,291,189 -3.89% (344,533) 170,212 (514,745) -49.40% 1,252,861 170,739 1,082,122 13.63%Items reclassified to bal sht at year end: Capital Outlay(3,316,199) (175) (3,316,024) 0.01% (1,619,500) (175) (1,619,325) 0.01%- - - (2,688,977) (175) (2,688,802) 0.01%Revenues over/(under) expenditures(1,037,754) 151,615 (1,189,369) (376,715) (48,579) (328,136) (344,533) 170,212 (514,745) (1,436,116) 170,564 (1,606,680) *Depreciation is recorded at end of year (non-cash item).Water SewerSolid WasteStorm WaterStudy Session Meeting of March 26, 2018 (Item No.64) Title: February 2018 Monthly Financial Report Page 4 Meeting: Study Session Meeting Date: March 26, 2018 Written Report: 7 EXECUTIVE SUMMARY TITLE: Park Village – Planned Unit Development (PUD) Major Amendment RECOMMENDED ACTION: None at this time. The council is asked to contact staff with questions or feedback on the proposed major amendment to PUD. POLICY CONSIDERATION: None at this time. SUMMARY: Tower Place LLC applied for a major amendment to the Park Village PUD to renovate the former Mann Theater building at 5400 Excelsior Boulevard for new uses. The application proposes medical office use on the entire first floor of the existing Mann Theater building, and proposes to keep the second floor vacant in the near term. A future phase may include renovating the second floor. While the future use of the second floor is unknown at this time, it is likely to be some form of medical office. A major amendment to the PUD is necessary because the original PUD ordinance included a specific mix of uses that were allowed for the site. The movie theater requires large amounts of parking and relies on the mix of uses and shared parking to meet projected demand. The original approvals of Park Village was to construct a retail center with a mix of uses; however, it was contemplated that the site may convert to medical uses at some point in the future. This application proposes conversion of the first floor of the building to medical office now, and the application requests that future renovations to the second story be allowed to be approved administratively. Staff have met with representatives from Frauenshuh, the owner of the property, and Park Nicollet, the proposed tenant of the building, to discuss various aspects of the project, including parking, traffic, and phasing. Staff and outside consultants conducted analyses on the parking demand and trip generation of the proposal. Based on the analyses, the proposed new use will generate fewer trips than the previous uses, and the existing parking supply can accommodate the required parking amounts for the proposed use in the first phase of the project. Additional details regarding peak hour trip generation for both the current and future phases will be evaluated as part of the approvals process. The major amendment process includes rezoning the property from C-2 General Commercial to PUD and a zoning code text amendment. This application requires a public hearing at the planning commission and city council approval of an ordinance. An affirmative vote of four city council members is needed to approve the PUD. NEXT STEPS: Staff received an application on Monday, March 19, 2018. A neighborhood meeting will be scheduled in the next few weeks. The application is tentatively scheduled to go before planning commission on April 18, and city council consideration on May 21, 2018. FINANCIAL OR BUDGET CONSIDERATION: Not applicable. VISION CONSIDERATION: Not applicable. SUPPORTING DOCUMENTS: Building Renderings Prepared by: Jacquelyn Kramer, Associate Planner Reviewed by: Sean Walther, Planning and Zoning Supervisor Karen Barton, Community Development Director Approved by: Tom Harmening, City Manager EXTERIOR RENDERINGSA302DRAFTORIG. ISSUE DATE:REVISIONS:© 292 design group (2018)18106.00PARK NICOLLET HEALTH SERV.MANN THEATER: RENOVATION5400 EXCELSIOR BOULVEVARDSAINT LOUIS PARK, MN 5541603/13/183533 LAKE STREET MINNEAPOLIS, MINNESOTA 55406 612 767 3773Date:Reg. No: I hereby certify this plan, specification or report was prepared by me or under my direct supervision and that I am a duly Licensed Architect under the laws of the state of Minnesota 00.00.2018 44897 Thomas J. Betti SHEET FOR REFERENCE ONLY Sheet released for reference only in Bid Package #1 - Structural Steel. All drawing on this sheet are subject to change.PUDSUBMISSIONStudy Session Meeting of March 26, 2018 (Item No. 7) Title: Park Village – Planned Unit Development (PUD) Major Amendment Page 2 Meeting: Study Session Meeting Date: March 26, 2018 Written Report: 8 EXECUTIVE SUMMARY TITLE: Update on Rainwater Rewards Program RECOMMENDED ACTION: None at this time. The purpose of this report is to provide an update on the Rainwater Rewards Program activities completed in 2017, identify the 2018 initiatives, and to outline a new pilot program with Metro Blooms and the Conservation Corps of Minnesota for the Neighborhood Raingarden Program. POLICY CONSIDERATION: None at this time. SUMMARY: The Rainwater Rewards Program was approved by the City Council at the February 21, 2017 Council meeting. This program offers financial and technical assistance to homeowners who implement projects on their property. The types of projects that are eligible for funding through the program need to support one or more of the following: • Protect and restore stormwater by capturing pollutants in rainwater runoff; • Increase the watershed's ability to store water; • Preserve and restore native plant and wildlife communities; • Protect and preserve groundwater quality and quantity. This program was rolled out last spring. Information regarding the program was sent out using the following: the Park Perspective, direct mail to a specific watershed, emails to neighborhood groups, information on NextDoor, and other social media. The program was also highlighted in the June 28 edition of the Sun Sailor. The goal of the program is to encourage residents to implement stormwater management projects on their property to reduce the volume of stormwater runoff and pollutants entering the City’s storm sewer system. In addition to the cost share opportunities, the program will have an educational component for property owners regarding the importance of stormwater management and how Best Management Practices (BMPs) can protect and improve our surface waters. FINANCIAL OR BUDGET CONSIDERATION: Funding for this program in the amount of $25,000 is included in the Capital Improvement Plan annually and is paid for using storm water utility funds. VISION CONSIDERATION: St. Louis Park is committed to being a leader in environmental stewardship. We will increase environmental consciousness and responsibility in all areas of city business. SUPPORTING DOCUMENTS: Discussion Rainwater Rewards Program Information Prepared by: Erick Francis, Water Resources Manager Reviewed by: Debra Heiser, Engineering Director Approved by: Tom Harmening, City Manager Study Session Meeting of March 26, 2018 (Item No. 8) Page 2 Title: Update on Rainwater Rewards Program DISCUSSION BACKGROUND: The following outlines the Rainwater Rewards Program, including program publication, inquiries, and projects that were implemented in 2017 2017 Summary Outreach: • February 13: Program discussed with City Council at a Study Session • February 21: Program approved and funded by City Council • March 1: Program website goes live to provide residents detailed information on program • May 1: Park Perspective Article • May 18: Metro Blooms Resilient Yards Workshop • June 28: Park Perspective Article • June 15: Send direct mailing to residents of Bass Lake Watershed (2049 postcards) • June 28: Sun Sailor Article • Social media posts • Provide Handout materials at various city events, National Night Out, Police Open House, Parktacular, and Minnehaha Creek Watershed District Creek Clean Up Inquiries: • 24 Received calls • 28 Received emails • Inquiries included interest in bio-infiltration basins, rain barrels, trees, pervious pavement, and general drainage improvements Projects Implemented: • Rain Barrels - 8 o This is over and above the 156 sold as part of the Annual Rain Barrel Sale • Trees- 3 • Raingardens installed -1 • Total 2017 funding = $4,174 2018 Summary Staff was encouraged by the reception of this new program and has been working on ways to increase participation. What follows is a summary of what is in store for 2018. Outreach: • January 9: Surface Water Management Plan Update Open House- highlighted • February 1: Park Perspective Article • March 29: Metro Blooms Resilient Yards Workshop, held at City Hall- featured • May 1: Park Perspective Article • June 15: Send direct mailing to residents in the Minnehaha, Aquila and Cobblecrest neighborhoods. • Quarterly social media posts • Updated website to include Metro Blooms partnership (discussed below) Study Session Meeting of March 26, 2018 (Item No. 8) Page 3 Title: Update on Rainwater Rewards Program Changes to the Rainwater Rewards Program We received 56 inquiries regarding this program in 2017. The majority of the funds that we gave out were for easy projects such as rain barrels and trees. We had a number of inquiries for raingardens; however, only one was installed. Residents were excited about the opportunity to enter into a cooperative agreement with the city to help fund landscaping projects that would reduce stormwater runoff from their properties. However, when it came to implementing raingardens, residents expressed concern regarding the level of complexity associated with these projects. A successful raingarden project needs to be installed in the right place, have good draining soils, and the right plants. This can be accomplished by hiring design and construction assistance. Based on this input staff sought ways to make these improvements easier to implement by seeking ways to provide design and construction assistance directly to residents, instead of having the resident have to seek out a designer and contractor to hire on their own. Staff reached out to organizations that have experience with the design and construction of raingardens. One organization that has almost 50 years of experience working with residents is Metro Blooms. Metro Blooms is a private nonprofit that partners with property owners, other organizations, businesses, professional associations, local governments, and watershed districts to promote environmentally sound gardening and landscaping practices to improve the health of our land and water resources This summer we are collaborating with Metro Blooms on a pilot program in an effort to increase participation in our Rainwater Rewards Program. It is our goal to help more property owners install raingardens by lowering the cost and doing the most difficult job, design, excavating the gardens, and hauling away the soil. The pilot program will be available for up to 10 properties located within the Minnehaha Creek Watershed District. Each property will receive an on-site consultation and raingarden design assistance from Metro Blooms. Property owners only pay $50 for their consultation plus the cost of plants and mulch for their new raingarden averaging $200-$400 per raingarden. Property owners will be responsible for planting and mulching their raingarden. A breakdown of what Metro Blooms will provide to each participant: • Raingarden design • Installation including: labor, excavation and hauling away soil • Plant selection, ordering, and delivery • Mulch ordering and delivery This is a great opportunity for our residents to have a raingarden installed at a very low cost. For property owners participating in the program, the City will reimburse up to 75% of the resident’s direct cost consistent with the Rainwater Rewards guidelines, including the fee to use Metro Blooms. The total cost to the city for this pilot program is estimated to be $5,650. The remaining funding will come from Metro Blooms who has received a grant from Clean Water, Land and Legacy Amendment Funds. Study Session Meeting of March 26, 2018 (Item No. 8) Page 4 Title: Update on Rainwater Rewards Program From City’s Webpage https://www.stlouispark.org/government/departments-divisions/natural-resouces/rainwater-rewards- program Rainwater Rewards Program St. Louis Park’s Rainwater Rewards Program offers financial, educational and technical assistance to projects that effectively manage stormwater in the city. It may be used by residential landowners implementing projects that do one or more of the following: • Protect and restore stormwater by capturing pollutants in rainwater runoff. • Increase the watershed's ability to store water. • Preserve and restore native plant and wildlife communities. • Protect and preserve groundwater quality and quantity. Available Funds The city will accept applications year round until funds are gone. Applicants are encouraged to apply early in the year. Minimum amount available is $100. Funding percentages are based on specific criteria, including location in the watershed and type of project proposed. Eligible Expenses The city may offer to fund all of or a portion of the application. Funds are a reimbursement for a portion of the cost for materials and labor. An application must be approved by the city prior to starting any work. Projects started or completed when submitted are not eligible for funding. In-kind or free services will not be considered for matching contributions. Contracted engineering or consulting fees are eligible for reimbursement. Submitted projects must be for items above and beyond permit program requirements. TYPE OF BMP COST SHARE % MAXIMUM $ Rain barrels 50% $100 Tree planting 50% $500 Bio-filtration w/o hard surface drainage 50% $1,500 Infiltration w/o hard surface drainage 50% $1,500 Bio-filtration with hard surface 75% $2,000 Infiltration with hard surface drainage, pervious pavement & green roof 75% $3,000 Step One: Select a Stormwater Best Management Practice (BMP) The first step is to understand the types of stormwater BMPs that will be effective in reducing runoff and pollutants for your property. Learn more about stormwater BMPs. Study Session Meeting of March 26, 2018 (Item No. 8) Page 5 Title: Update on Rainwater Rewards Program Step Two: Select a Project Designer Several factors determine what BMP will be most effective and where it can be located on the property. To help make these critical decisions, we recommend working with a designer. Once a designer and BMP have been selected, a review and analysis of the site must be completed to determine the most effective BMP and location so that a design can be developed specifically for your site. Learn more about selecting a BMP designer. Step Three: Application, Review and Permitting Once a BMP has been selected and designed, the next step is to complete and submit a Rainwater Rewards Program application. The application should also include the BMP design. The application and design will be reviewed to determine the effectiveness and eligibility for grant funds. All applications will be reviewed for project feasibility and overall design characteristics. The application and funding will be on a first come first serve basis, while funds are available. Projects may be subject to some level of regulatory permitting authority. Review the Permit Guidance page for more information. Step Four: Contractor Selection and Construction Once permits have obtained, it’s time to select a contractor and construct the project. Learn more about selecting a contractor. Step Five: Funding Reimbursement and Ongoing Maintenance This is a reimbursement grant program. Upon completion of installation, the city will inspect the project to ensure that it was built according to plan and functions as intended. To ensure the BMP is effective over time, it must be routinely maintained and the property owner will need to enter into a maintenance agreement with the city. Review the city’s maintenance agreement for more information. The project must be completed within one year of initial approval. Contact Erick Francis, Water Resources Manager 952.924.2690 efrancis@stlouispark.org