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HomeMy WebLinkAbout4. Approval of Minutes: February 04, 2003 OFFICIAL PROCEEDINGS OF THE ECONOMIC DEVELOPMENT AUTHORITY SHAKOPEE,NllNNESOTA REGULAR SESSION February 4, 2003 Members Present: Link, Joos, Mars, Helkamp and Chair Lehman. . .... . Members Absent: None Staff Present: Mark McNeill, City Administrator; Judith S. Cox, City Clerk; R. Michael Leek, Community Development Director; Bruce Loney, Public Works Director/City Engineer; Paul Snook, Economic Development Coordinator; Jim Thomson, City Attorney; Mark Themig, Facilities and Recreation Director; Dan Hughes, Chief of Police and Tracy Schaefer, Assistant to the City Administrator. I. Roll Call: Chair Lehman called the meeting to order at 8:08 p.m. Roll was taken as noted above. II. Approval of the Ae;enda: Link/Joos moved to approve the agenda as presented. Motion carried 5-0. III. Approval of the Consent Ae;enda: Joos/Mars moved to approve the Consent Agenda as written. Motion carried 5-0. IV. Approval of Minutes for November 6, 2002: There were . none V. Financial: A. Approval of the Bills: Joos/Mars moved to approve the EDA bill list in the amount of $34,482.95. (Motion carried under the Consent Agenda). VI. Recommendation from Economic Development Advisory Committee ree;ardine; Tax Abatement Request by Ryan Companies US, Inc. for the proposed West Dean Lake Mixed-Use Development. Chair Lehman gave a brief history on the proposed West Dean Lake Mixed-Use Development. He noted that the Economic Development Authority (ED A) had been asked to consider a request from Ryan Companies for possible tax abatement on the project they were considering for west of Dean Lake bounded by 169 and County Road 16/83. Chair Lehman noted that the City Council appointed him and the late Cncl. Sweeney (replaced by Commissioner Joos) to study this issue looking at is merits, benefits, impacts and justifications of the actual request. Chair Lehman noted that he and the late Commissioner Sweeney had asked permission to use Springsted, Inc., the City's Financial Consultant. Springsted has been used immensely in studying this issue. There Official Proceedings of the February 4, 2003 Economic Development Authority Page -2- have been seven months of study on this issue by the Task Force and others among the City. Chair Lehman noted that there would be some presentations to explain, clarify and perhaps correct some misconceptions from the Shakopee Valley News. Mr. Snook, Economic Development Coordinator, approached the podium and noted that the EDA had been asked to give concept approval of a proposal that would provide economic development financing to a mixed-use development being proposed by Ryan Companies US, Inc. Mr. Snook stated January 22, 2003 the Economic Development Advisory Committee (EDAC) unanimously passed a motion to recommend that the EDA and the City Council receive an application for a business subsidy for Ryan Companies and contingent upon Scott County's approval and involvement to initiate negotiation ofa master development agreement with Ryan Companies and Scott County which would specify the terms under which tax abatement would be utilized to finance, in part, the West Dean Lake development. Mr. Snook noted that once the provisions of the Master Development Agreement are determined this would be presented again to the EDA for approval. Tonight the concept plan is being dealt with and any Master Development Agreement would come before the EDA in the future. Mr. Snook stated the mixed-use consists of approximately 78 acres of residential and 79 acres of commercial, 65 acres of parkland and open space as well as an abundant setback from Dean Lake and other conservation features. Mr. Snook noted that the Task Force consisting of: City officials and the late Cncl. Bob Sweeney; Cncls. Joos and Lehman; Administrator, Mark McNeill; EDAC, Chair Jeff Jansen; Steve Bubul, Kennedy and Graven, City's Legal consultant; and Paul Steinman, ofSpringsted Inc., City's Financial Consultant and Paul Snook, EDA Coordinator recommended the EDA receives Ryan's application for a business subsidy for Ryan Companies to initiate negotiation of a master development agreement with Ryan Companies and Scott County. Mr. Snook noted that Springsted, Inc has analyzed Ryan Companies proforma. Springsted noted that the combined cost of the site development couldn't be economically absorbed by the project without assistance based on limited development density that is required by a conservation development approach. Mr. Snook noted that the density of a conservation approach development is about 60% of a typical development. Mr. Snook stated the basis for requesting tax abatement is due to the cost of the infrastructure of internal roads, County Road 16 and County Road 83 improvements and the cost relating to the restoration of the maintenance of the conservation area park and trail ways. Using the conservation development approach would make this particular development more expensive per foot than other commercial businesses. Mr. Snook noted that Valley Green Business Park is being assessed the assessments for County Road 16 and COlmty Road 83 because the County did not include this project in its CIP and these improvements needed to get done. Official Proceedings of the February 4, 2003 Economic Development Authority Page -3- Mr. Snook noted that Brauer & Associates put together a Community Value Statement on the West Dean Lake area with a lot of community input and this document is a supplement to the West Dean Lake master plan. The objective defined in these documents was to maximize the values associated with the development that would exceed the guidelines already provided by City Ordinance. These values are: 1) maintaining an ecological protection zone and adjoining buffer zone along the lakeshore, 2) Preserving as much natural open space along the west side ofthe lake as feasible, 3) Providing a linear trail corridor along the west side of the lake that links to other trails, 4) Expanding natural open spaces and trails into and through the developIP,ent area in a meaningful way, 5) Using an ecologically-based approached to storm water management, 6) Reducing the extent of impervious surface to the extent possible; and 7) Establishing an ecological stewardship program. for natural areas. Mr. Snook noted that the total construction cost of the project would be approximately $243 million. It was proposed that the City utilize tax abatement dollars in the amount of approximately $923, 000 to help fund extraordinary costs of infrastructure relating to regional transportation improvements of the County Road 16/83 intersection and internal infrastructure in support of the Dean Lake mixed use development. The benefits of the development as shown in the application are the following: 1) A conservation development guided by the Dean Lake Master Plan and the relating Community Value Statement, 2) The County Road 16/83 assessments would be met, 3) Architecturally pleasing affordable housing within the development has been discussed and may be included 4) Tax base increase and the proposed abatement through a master development agreement will leverage future commercial development. Mr. Snook stated that without the abatement the West Dean Lake Conservation approached plan would not be developed. Mr. Snook noted that with this Tax Abatement, the commercial entities locating within this project could apply individually for Tax Increment Financing (TIF); if the TIF requirements were met the commercial entities would be positioned competitively within the Shakopee business community. Mr. Snook went through the tentative Master Development Agreement and he reiterated that the assistance would be "pay as you go" and parameters would be set for maximum assistance for community users. The City would cooperate with Ryan Companies in getting Scott County's approval for tins tax abatement. As far as the tax abatement was concerned the City's approximate abatement would be $923,000 and the County's abatement would be $3,988,200. Mr. Snook noted that the residential portion of this development would receive no public assistance except the residential property would be abated to fund the infrastructure improvements and the conservation approaches. If Ryan Companies did not fulfill their requirements then they would be required to repay the abatement. This abatement for the development was performance based and the City was not taking any risk. Official Proceedings of the Febmary 4, 2003 Economic Development Authority Page -4- Chair LeluTIall clal'ified a few points. He noted that the Master Agreement does not include guarantees of assistance to the commercial in this agreement. Chair Lehman also stated that abatement from residential does not mean that your taxes paid on a house in this proposal are less. The residential resident pays the same market rate of taxes as any other house in Shakopee and any future plans, if this abatement does go forward, would be required to go through the Planning Commission, the Environmental Advisory Commission the Park alld Recreation Advisory Board and various other Boards and Commissions set up in the City of Shakopee. Kent Carlson, representing Ryan Companies, approached the podium and stated Mr. Snook did an outstallding job presenting the overview. Mr. Carlson presented some background and how Ryan Companies got to where they are today with the project and talked about features incorporated into the plans. Mr. Carlson noted, because of the history of the site, they held mallY open houses; therefore, much input had been received from the COlTIlmmity on this project. He also noted that Ryan Company preferred to have a design theme and some companies did not have this approach. Through tins process of open houses Ryan Companies found out that Brauer & Associates had completed a Master Plan concept for this area. Mr. Carlson felt the plan being presented incorporated many of the community values wanted by the residents. He noted that the abatement being asked for tonight was exclusively for the commercial side of the project. The residential component was not receiving any of the abatement. Mr. Carlson noted some of the features that were being proposed. These included: 1) Larger than normal setback areas from the lakeshore, 2) An ecological based storm water plan, 3) Large dollar amount of park dedication, 4) Extensive trail system and 5) Maintenance agreement to take care of trails and parks. Because of all these features, the density has been reduced, as well as, the traffic along with the land area that Call be developed. Mr. Cal'lson noted that because a conservation approach is being looked at, RYall Companies has been charged to eliminate all undesirable plantings on the lakeshore now and replant this undesirable vegetation with native plants. Mr. Carlson gave a quick overview of the financial picture. Mr. Carlson noted that the residential development would provide a real enhancement to the City's tax base in four years. The residential component would show more money initially to the City than the commercial component would. The residential would supply the spark to get the commercial at a high level of quality and competitiveness. Mr. Carlson anticipated there would be at least $80 million dollars worth of commercial along the 169 corridor and $140 million plus in the residential sector. He thought the residential may be built out in 5-7 years and the commercial build out would be approximately 10 years. Official Proceedings of the February 4, 2003 Economic Development Authority Page -5- Dave MacGillivray, Chairman of the Board of Springsted, Inc., approached the podium. Mr. MacGillivray noted that Springsted, Inc. worked only for cities and public entities and their best interests. He introduced Paul Steinman who did the actual numbers on this project for Springsted, Inc. Mr. Paul Steinman, of Springsted, Inc., approached the podium and gave a presentation addressing several issues regarding this project. Mr. Steinman noted the three issues he was asked to address are: 1) A but/for analysis, 2) An abatement analysis and 3) An impact analysis. The but/for analysis is a statutory test that is required by State law to make and meet prior to.apptovirig tax incremeritcrollars. Mr. Steinman stated that he recommended this high standard be applied to abatement dollars as well. He felt this was a good way to measure ifthere was need for this assistance. Mr. Steinman noted that a comparison of the developers project was done using a subsidy as well as not using a subsidy regarding the developments proofreads and projections. Mr. Steinman noted that criteria was meet and shown that Ryan Companies would need a tax abatement to be remain competitive with the commercial component of this development if a conservation approach was used. The abatement analysis (really a rebate) showed that that the abated dollars would be used to reduce the cost of the public infrastructure. Nine years is being looked at for the full term of the abatement need. The Economic Development Advisory Committee suggested that the total abatement be less than the cap dictated by state law so funds would remain available for other abatement requests. The impact analysis for only the City showed that the total taxes paid by the residential portion in the year 2007 would be approximately $525,000 (this was the City's Share only and this year was chosen because supposedly this would be the first year where the full market value of the residential would be on the tax rolls). The proposal for abatement in that year would be approximately $152,000. Mr. Steinman stated that there is no impact to the City share of taxes to the extent that services can be provided to this development. Mr. Steinman stated that Springsted, Inc did two scenarios on impact. Mr. Steinman noted that in one of the scenarios in the year 2007 there would be a hypothetical decrease in taxes of approximately $108 for a home of $300,000. The second scenario showed a decrease in taxes of a $300,000 home to be approximately $50.00. Mr. McNeill, City Administrator, approached the podium and addressed a few of the J. points addressed by Mr. Steinman. Mr. McNeill attempted to figure out what the service costs to the City would be for this new development in the year 2007. He took into consideration costs for: 1) Police, 2) Public Works, 3) Fire Department, 4) Schools, 5) Parks if not furnished by development (PRAB has not reviewed this yet) and 6) fixed costs. Mr. McNeill stated that it appeared that the cost to service this development would Official Proceedings of the February 4, 2003 Economic Development Authority Page -6- be somewhat less than what the unabated taxes would be. Mr. McNeill also noted that the County has not been approached with this tax abatement idea from Ryan Companies. The reason that the abatement for the County is three times as much asit is for the City is that the City put a 50% cap on the amount and the County has a much higher levy. Cncl. Link had many questions. Chair Lehman clarified an Article in the Valley News Paper regarding the Ryan Companies project and the abatement request. He noted the impact of the State Aid cuts is here now whether this project is here or not. Chair Lehman noted that there was no impact on the State Aid cuts. Chair Lehman also stated that for there to be an increase of $1 08.00 (as stated in the article he read) in property taxes for a $300,000 home there would need to be substantially more dollars abated than -<=" are being requested now. Commissioner Link stated that he called Springsted, Inc (Mr. .~. Steinman) and Gregg V oxland, City Finance Director, and stated that was the number that he was given by both gentlemen. Mr. Steinman responded to this statement and clarified the information. Commissioner Link felt the abatement was because of the cost to the developer (Valley Green) for the upgrading of County Roads 16/83. Commissioner Link noted that County Roads 16/83 upgrades were done because Valley Green Business Park petitioned for the upgrade to the County Roads. $3,744,000 was the amount of assessments that Valley Green Business Park agreed to pay. Chair Lehman noted that the abatement to Ryan Companies was needed because the City residents wanted a conservation approach and not as much could be built using a conservation approach. Chair Lehman noted that the City had authorized a study be done using a conservation approach. Chair Lehman also noted some of the benefits using the conservation approach. The conservation element of the development was discussed. It was noted that wetlands could not be counted as park dedication. It was also noted that with Ryan Companies using the conservation approach in their concept plan, there were about 65 acres that included green space and parkland. These 65 acres was approximately 30% of the development. Mr. Kent Carlson noted that the active and passive park areas that were anticipated to be included in the plat were not included in the 65 acres of parkland and green space. Commissioner Link and Mr. Carlson talked about the density. Commissioner Joos noted there was a significant amount of commercial being lost because of the conservation approach. Mr. Carlson noted that the parking was located under the high power lines. Mr. Carlson noted that originally Ryan Companies wanted more assistance from the City on financing this development because of the extreme costs but the City said no to financing a higher percentage ofthe cost and a way to counter these costs needed to be found by Ryan Companies. Mr. Carlson noted one way to counter the high cost of the development was to insert residential housing in the development. Chair Lehman noted Official Proceedings of the February 4, 2003 Economic Development Authority Page -7- that if the density were higher with fewer amenities the cost of City services would also be higher. Commissioner Ioos noted that with the conservation approach West Dean Lake would have better protected parks, parks would be in good areas and a higher business class of jobs would be available, as well as possibly addressing some affordable housing issues. Commissioner Ioos also thought that having one master developer for the whole area was better thm.1 having the area all chopped up by several developers. Mayor Mars asked Mr. Carlson or Mr. Steinman, how much over the proposed abatement period would the total taxation to the residential component generate for the City. Mr. Steinman noted that the total taxes generated to the City from this residential component would be approximately $4.5 million. The amount abated would be approximately $1.5 million leaving the City approximately $3 million to service the City. Mr: Steinman noted that the commercial portion number relating to taxes and abatement was comparable to the residential. The abatement for the residential actually was turned back to buy down the cost of the commercial to bring in the high end commercial clientele. Curt Olson, 620 McDivitt, approached the podium and stated government was not about subsidizing private business. He felt this conversation approach was an over reaction to the strip mining of trees that was done in this area a few years ago. He felt the City was being threatened when it was stated so many times that "if there was no abatement there was no project". He stated if this project could not be built with its own money it should not be built. Mr. Olson stated that commercial should be built in the area; that is what that area was zoned for and commercial would generate just as much money for the City. He would like to see a commercial center developed like the OPUS development in Eden Prairie. Chair Lehman clarified a few points for Mr. Olson. Chair Lehman noted that Tax Increment Financing (TIF) was not in the proposal this evening. Commissioner Link addressed the Ryan Development jumping from 200 units to 700 units. Mayor Mars addressed this statement. Chair Lehman noted there were some residents opposed to an all commercial development and Brauer & Ass.ociates were hired by the City to help with a plan that the residents could be comfortable with. Commissioner Link also asked if an AUAR needed to be done again because the use was changing. Mr. Leek, Community Development Director, attempted to address this question. He noted in the revised AUAR it was acknowledged that really it was the traffic that was in question and a revision to residential from commercial was looked at as a positive (trip generations would actually be less). Kathy Gerlach, 4855 Eagle Creek Boulevard, approached the podium and stated she was one of the residents involved from the beginning with this project. She noted that the residents never objected to this development being a full commercial development. She Official Proceedings of the February 4, 2003 Economic Development Authority Page -8- corrected why Brauer & Associates were hired. She stated why some of the residents like the plan that had about 250 town home units on it. She stated the residents had come to terms that this area was going to develop. Ms. Gerlach noted the residents were concerned that the ordinances were followed regarding setbacks, open spaces and making sure that Dean Lake was not compromised. The residents were pretty well split 50/50 about the make up of the development. Ms. Gerlach also stated that Brauer & Associates stated when they first brought the idea of a conservation plan before the Council, that all of the extra costs of a conservation approach could be incorporated and absorbed into the plan. There would be no extra cost to the taxpayer. She would like to see a breakdown of the area. She would like the stewardship costs really looked at. The Dean Lake area residents were opposed to any tax abatement to Ryan Companies US, Inc. - John McDowell, 306 Sommerville, approached the podium and noted he was concerned about the analysis regarding the number of students that would be added to the school district. He felt a tax abatement to a developer was incorrect. A business and a developer were different. Jim Thomson, City Attorney, noted that the question tonight was just whether or not this application for a tax abatement for Ryan Companies US, Inc. was going to be accepted by the Economic Development Authority. He also noted because some ofthis property is zoned Commercia1lIndustrial; there would be milestones that the Ryan Companies would need to meet like the other companies needed to meet. Harry Weinandt, 1259 Maxine Circle, approached the podium, and had a couple of questions regarding taxes. Andy Olson, 619 West 151 A venue, approached the podium and stated he was opposed to the abatement for Ryan Companies US, Inc. Mary Pennington-Hoyt, 2031 Blue Jay Street, approached the podium and wanted to know who would manage any agreement between the City and Ryan Companies? Mr. Leek addressed this and stated right now this concept plan is not a formal plan under review by the City. Mr. Leek noted all City approvals for anything else would need to be received by Ryan Companies, Inc. also. She did not think that a developer should receive any breaks. John Schmitt, 1015 South Main, approached the podium and noted that most residents found out about this abatement request through the back door. He noted he was opposed to the abatement unless the City got something for it, i.e.: jobs. He stated this project was not limited to abatement in scope. He noted that use of TIF was encouraged for the commercial entities. Mr. Schmitt stated that industrial land really did not cost the Official Proceedings of the February 4,2003 Economic Development Authority Page -9- taxpayers money; it was a contributor. He felt there were ambiguities in the numbers. He would really like to see the EDA rethink this process. Growth was an issue for everyone. Chair Lehman stated that this piece of property has the potential to be a resource to the City in the future. If the City wanted to see it as a resource then it needed to be looked at as a resource. There is no easy answer. Mr. McNeill stated the EDA is asked to recommend to the City Council to direct staff to negotiate a master development agreement which would then come back to the EDA and then the EDA would determine whether or not to hold a public hearing. This is a very first step. Commissioner Link was concerned about going before the Planning Commission. -, Joos/Mars moved that the Economic Development Authority recommend to the City Council to receive an Application for Business subsidies (for tax Abatement) from Ryan Companies US, Inc., and contingent upon Scott County's approval of an abatement request by Ryan, direct staff to initiate negotiations of a Master Development Agreement with Ryan and Scott County which would specify the terms under which tax abatement would be used to finance, in part, the proposed West Dean Lake mixed use development. Motion carried 4-1 with Commissioner Link dissenting. VII. Other Business: There was no other business. VIII. Adjourn: Link/Joos moved to adjourn the meeting. The meeting adjourned at 10:49 p.m. Motion carried 5-0. ~:c:x, 81 EDA Secretary Carole Hedlund Recording Secretary