HomeMy WebLinkAbout11/19/1992 TENTATIVE AGENDA
SHAKOPEE, MINNESOTA
COMMITTEE OF THE WHOLE NOVEMBER 19, 1992
Mayor Gary Laurent presiding
1] Roll Call at 7: 00 p.m.
2] Approval of the Minutes of October 26, 1992
3] Downtown Redevelopment Analysis
4] The City's Position on CR-18
5] 1993-1997 Capital Improvement Program
6] Other Business
7] Adjourn
Dennis R. Kraft
City Administrator
OFFICIAL PROCEEDINGS OF THE CITY COUNCIL
COMMITTEE OF THE WHOLE SHAKOPEE, MINNESOTA OCTOBER 26, 1992
Mayor Gary Laurent called the meeting to order at 7 : 05 P.M. with
Councilmembers Lynch, Sweeney, Vierling, and Beard present. Also
present: Dennis R. Kraft, City Administrator; Gregg Voxland;
Finance Director, Dave Hutton, Public Works Director/City Engineer;
and Lindberg Ekola, City Planner.
Lynch/Vierling moved to approve the minutes of the October 13 , 1992
Committee of the Whole. Motion approved unanimously.
Four announcements were made by the City Administrator. The first
was on the 2nd Avenue property assessments informational meeting
scheduled for Monday, November 9, 1992 . The public hearing will be
held Tuesday, November 10, 1992 at the Scott County Courthouse.
Discussion followed on the informational meeting concept for
assessment projects.
The second announcement was on the $5000. 00 gift from Rahr Malting
Company. The cash gift will be used to pay for new carpet in the
Library.
The third announcement was on Roji Okada's invitation to tour the
Tsumura Plant. It was decided that a tour would be scheduled for
those Council members wishing to attend.
The fourth announcement noted the upcoming AMM meeting on November
5, 1992 .
Cncl. Beard noted that the School Board was also meeting this night
and was intending to set the referendum bond issue amount.
Mr. Kraft noted that the selected appraiser for the land in the
interim ordinance area, Patchin & Associates, the appraiser has
informed the City of Shakopee of a conflict of interest and could
not perform the appraisal service for the City. A different
appraiser, Mr. Richard Marks, was identified as the next choice to
perform the appraisal.
Staff presented the draft 1993-1997 Capital Improvement Program
(CIP) . Staff gave an overview of the life of a capital project as
being; (a) project identification, (b) adding to the 5 year CIP,
(c) being prioritized to the 1 year Capital Improvement Budget
(CIB) , (d) making the City Engineer's short list which is sent to
the City Council, (e) preparing a feasibility report, (f) project
public hearing, (g) City Council ordering project, and (h) design
and construction. Mr. Ekola noted that the specific funding
sources for projects in years 1994 through 1997 (2 to 5 years) had
not been prepared and are typically done only for the one year
capital budget.
Official Proceedings of the October 26,
Committee of the Whole Page -2- r.
Discussion ensued on the long range budgeting impacts of listed
capital projects in years 2 to 5 of the CIP. Debt service levies
historically have been approximately $300, 000 per year while the
amount required by the listed capital projects would result in
$900, 000 debt service bonds. Cncl. Sweeney suggested that the debt
service levies be maintained at a reasonable level with respect to
past levies. Two projects were identified as having a large impact
on the future debt service levies. The proposed fire station (1995
- $1. 2 million) and the proposed community center (1995 - $6
million) result in line D being shifted upward more dramatically.
Mayor Laurent noted that the projects listed in the 5 year CIP are
more of a wish list whereas those in the 1 year CIB or capital
budget are more specific in nature in terms of funding. Mr. Hutton
concurred with the Mayor's comments and added that several of the
projects in the 1 year CIB are not built within the next year due
to limited funding.
It was determined that the basic approach to the CIP process of a
5 year CIP and the 1 year CIB budget should be continued. A five
year budget should not be prepared but emphasis on the impact of
projects in years 2 through 5 should be leveled across the time
frame and consistent with historical levels. The 1 year CIB should
be looked at as a short term and the 5 year CIP as a long term
financial planning document. Line D on Page 19 should serve as a
warning guide.
Mr. Hutton presented the State Aid System Map. He explained some
of the proposed changes to the system that had been presented to
the City Council approximately one year ago. Since 4th and 6th
Avenues function more like City streets due to existing utilities,
staff is recommending that these two streets be returned to the
City from the County. Concerns about which County roads should be
returned to the City were raised. Discussion on 10th Avenue
becoming a County Road continued.
Sweeney/Vierling moved to direct staff to contact the County
Engineer to turn back the portion of Spencer Street from 9th to
10th Avenues and place Spencer Street from 1st to 10th Avenues on
the State Aid System.
Mr. Hutton presented the street reconstruction projects listed in
the CIP. He is proposing a zonal system to avoid multiple year
assessments to property owners. The Committee of the Whole
concurred.
The Committee of the Whole reviewed four of the eight CIB
categories. For Category A, Street and Highway Projects, the
following changes were made:
Official Proceedings of the October 26, 1992
Committee of the Whole Page -3-
1. Delete projects A7 (Maras Street) and A8 (Harrison Street) .
2 . Change the funding for project Al (Spencer Street) to the
appropriate State Aid funds.
3 . Change the funding for project A9 (Vierling Drive - Polk to
Mall) to appropriate State Aid funds.
For Categories C ( Sanitary Sewer) , D (Storm Drainage) and H
(Other) no changes were made.
The Committee of the Whole tabled review of Categories B (Sidewalks
and Trails) , E (Parks) , F (Municipal Buildings) and G (Fire) to the
next meeting scheduled for Thursday, November 19, 1992 starting at
7 : 00 p.m.
The meeting was adjourned at 9 :50 p.m.
alW inttiO ,a)G
•ith S. Cox
( i Clerk
Lindberg Ekola
Recording Secretary
BLOCK 4 REVITALIZATION
DOWNTOWN SHAKOPEE
COMMUNITY DEVELOPMENT COMMISSION
FINAL REPORT
NOVEMBER 17, 1992
MEMO TO: Shakopee Housing & Redevelopment Authority (HRA)
FROM: Barry A. Stock, Assistant City Administrator
RE: Community Development Commission Downtown Analysis -
— Final Report
DATE: November 13 , 1992
INTRODUCTION:
At the request of the Shakopee HRA, the Shakopee Community
Development Commission (CDC) and staff have been analyzing the
development potential for Block 4 in downtown Shakopee. The
following report summarizes the process utilized by the CDC in
evaluating several redevelopment options.
BACKGROUND:
Shown in Attachment #1 is the evaluation process utilized by
the CDC in reviewing the redevelopment potential for Block 4 in
downtown Shakopee.
On Thursday, November 19 , 1992 the CDC will be prepared to
present their recommendation regarding the future redevelopment
potential for Block 4 in downtown Shakopee. The CDC had a
difficult time narrowing the list of development options down to
something that was feasible in terms of an analysis. There are a
number of variables that could be changed in each of the
development options that could greatly effect the financial
feasibility of the options as presented.
Following is a listing of the redevelopment options being
presented by the CDC:
Option #1 - City acquire property and demolish existing
buildings with private sector investment in new
construction.
Option #2 - Private sector rehabilitation of existing buildings
within quasi historic parameters; including
selective demolition or refurbishing of out of
place (modern) buildings with new construction
complementary to historic downtown theme including
rear building improvements.
Option #3 - Private sector rehabilitation within present code
and storefront guidelines, preserving historic
building fronts without necessarily restoring them;
make rear sector of buildings attractive from the
mini by-pass.
Option #4 - Do nothing to existing storefronts but expend
considerable effort in making rear of buildings
attractive to those traveling on the mini by-pass.
Option #5 - City acquire and rehabilitate Block 4 in owner/
manager capacity.
Option #6 - City buys Block 4 , demolishes the buildings,
"green" up the area, and holds the land until
market conditions improve.
The CDC favors Option #2 as the preferred development choice
for Block 4 in downtown Shakopee. Option #2 is primarily a status
quo position. However, the option does call for the encouragement
of private sector rehabilitation of the existing buildings and
property. Option #2 also addresses the rear side of the buildings
and those buildings that do not presently fit the historic image
portrayed by the majority of the buildings in Block 4 . Option #2
does not call for any outright investment of public dollars in the
Block 4 rehabilitation process other than perhaps the existing
Rehab Grant Program.
During the evaluation process, the CDC discovered that
existing market conditions do not favor complete demolition and/or
new construction. Commercial/Retail space in the Shakopee trade
area has been saturated beyond existing building capacity.
_ Additionally, financing for commercial development projects is
difficult to obtain. Finally, there appears to be hesitancy among
perspective developers regarding downtown' s retail potential given
the uncertainty surrounding traffic patterns following the
completion of the mini by-pass project.
The CDC felt that if market conditions change and supportive
traffic data can be obtained that in the future there may be
developer interest in Block 4 . The CDC felt that if conditions
change in the future a public/private development ventured could
always be pursued at that time. In the interim, the CDC is
recommending that the HRA and City of Shakopee pursue public
improvements that will beautify the downtown area as a whole and
hopefully encourage both retail and developer interests in
revitalizing the existing properties.
The CDC has identified several items that they feel would
_ stimulate retail and developer interest. The CDC' s Pre-Development
Plan is shown in Attachment #2 . Note that cost estimates have been
assigned to each of the items identified in the Pre-Development
Plan. Please note that these estimates are very rough.
Undoubtedly, the number one question that the HRA and City
Council will need to address is the possible funding sources for
the improvements identified in the Pre-Development Plan. The CDC
would like the HRA and City Council to consider the following
possible funding sources:
1. Tax Increment Trust Fund Balance - November 1992 - $3 Million
- 2002 - $6 Million.
2 . HRA Administrative proceeds generated by the FMG Tax Increment
Project - $60, 000.
3 . HRA Fund Balance - 12/31/92 - Estimate $300, 000.
4 . Proceeds generated from the sale of the parking lots behind
City Hall - $270, 000.
—
The CDC recognizes that the Tax Increment Trust Fund Balance
is the most attractive funding source for the suggested
improvements. The CDC also recognizes that the Tax Increment Fund
Balance is the most volatile in terms of its future certainty.
The CDC believes that the City of Shakopee needs to take a
— more aggressive position in terms of stimulating retail/commercial
and industrial activity within our community. The CDC would like
the City Council and/or HRA to consider hiring a full time Economic
— Development Specialist who could not only develop programs that
would encourage downtown revitalization but work to attract new
commercial/industrial activity to our community. The individual
could also assist the Planning Department in major development
projects that require comprehensive plan changes and Met Council
review and comment. Other issues that could be handled by such a
person would include annexation and metropolitan urban service area
— extension requests.
Funding for a person of this nature could either be
_ accomplished by utilizing the HRA Fund Balance and/or the creation
of an Economic Development Authority (EDA) with levy authority
similar to the HRA. A number of communities are creating Economic
Development Authorities to specifically address economic
— development issues in their community' s that are not being
satisfied given current staff limitations.
— SUMMARY:
The CDC is recommending the following course of action in
regard to downtown redevelopment:
—
1. Do not pursue the acquisition of the property located in Block
4 at this time. However, continue to support and encourage
— private sector rehabilitation.
2 . Adoption of the proposed Pre-Development Plan.
3 . Hiring a full time Economic Development Specialist through a
rejuvenated HRA and/or newly established Economic Development
Authority or Port Authority.
—
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ATTACHMENT #2
SHAKOPEE DOWNTOWN PRE-DEVELOPMENT PLAN
1. Work with MnDOT to ensure that the following occur:
50K a. Re-design proposed parking lot north of bebow so that it
is aesthetically appealing. Utilize terrace concept,
— plantings and lighting elements.
100K b. Construct ornamental rail along east side of bridge and
by-pass to match character of ornamental lighting.
NC c. Work wit MnDOT to ensure that additional lighting is
installed under the bridge on Levee Drive.
2 . Approve appearance of buildings facing mini by-pass.
NC? a. Secure conservation easements, acquire or negotiate
access to property from rear building face to alley in
Block 4 .
50K b. Resurface area secured by easement and develop masking
device.
50K c. Utilize rehab grant program increasing grant percentage
amount for priority development zones.
2K d. Work with the City to ensure that the City Hall building
is repainted. (Earth tones)
NC 3 . Adopt regulatory standards to insure consistent aesthetic
building improvements in the downtown area.
S..iK Block4 . Underground overhead utility lines within alleys downtown.
(Blocks 22 , 23 , 24 & 25) .
1...:/Block 5. Reconstruct alleys within downtown area (Blocks 22 , 23 , 24 &
25) .
: 30K 6. Identify parking lot locations downtown and construct said
parking lots.
Million7 . Complete Phase II of the downtown redevelopment plan.
100K 8 . Develop critical entry points.
a. Bebow - west side.
b. Bridge head - mall/fountain/tower.
c. Structure - east side.
BLOCK 4 REVITALIZATION, DOWNTOWN SHAKOPEE
Chapter 1
Description of Revitalization Area:
Although the initial focus of this study is Block 4 in downtown
Shakopee, the area bounded by Sommerville Street on the East,
Atwood on the West, City Hall' s alley on the North and 2nd Avenue
'— on the South should also be considered in this analysis, since the
success of Block 4 depends upon the success of the area adjacent to
it.
_ 1
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.
— Appearance
Within the last five years, walkways have been refurbished and
streetlights installed to create a more welcoming environment
— downtown. The City is investigating the feasibility of burying
utility lines which presently mar the streetscape. Although
traffic, particularly trucks, currently constitute a nuisance and
— danger to pedestrians, the proposed southerly bypass in conjunction
with the Mini-Bypass should reduce traffic to a reasonable volume,
providing an opportunity for reinvestment and redevelopment in the
Downtown.
—
Storefronts in the area vary from glaringly inappropriate metal and
glass through welcoming earth hues to deteriorating, un-maintained
— wood and brick. Although there are solid businesses in the area a
number of vacancies exist, particularly on Block 4 .
— Streets are wide enough to permit parallel parking on each side of
the street. Phase I of the Downtown Revitalization Project created
an alternating parallel/angle-in parking scheme on several side
streets and Phase II of the project calls for the development of
— angle parking along 1st Avenue between Holmes and Sommerville
Streets.
— A major problem with the appearance of Block 4 and the downtown is
that there is no indication upon approaching from Highway 101 that
one is entering one of the social and psychological centers of
Shakopee. An image for downtown must be created and maintained.
—
Buildings
Most downtown buildings are brick, circa 1890 - 1920. Many of them
have facades typical of the era, with brickwork arches and brick or
wooden cornices. Unfortunately almost all of the storefronts have
been cosmetically built over so that the facade is visible only on
the upper stories.
There are several examples of modern buildings. At least one of
— these, located on the southwest corner of Lewis and 1st Avenue, may
be an unalterable component of downtown. Another, a block building
located on the northeast corner of Lewis Street and 1st Avenue
— could be cosmetically altered to better conform with the historic
nature of the rest of the downtown.
— Shown in Exhibit A is a list of the property ownership patterns
for Blocks 3 and 4 and accompanying pay 92 property tax data.
Relationship to Adjoining Area
The area under study is located in the Central Business District of
— Shakopee, Minnesota, the seat of Scott County. Close to downtown
are located an alternative care residence for older citizens, the
St. Francis Regional Medical Center and relevant professional
services, and County government offices. Just to the north is the
Minnesota River, which may be an asset to downtown revitalization
because there is a well used regional trail along the river and the
potential for recreation-based development.
Chapter 2
—
Similar Development Situations:
— Several cities in the Twin Cities area have successfully
implemented plans for revitilization downtown. Chaska and
Stillwater and Red Wing are small municipalities located on rivers;
like Shakopee, their downtowns consist mostly of turn of the
century brick or stone buildings, some sharing walls with their
neighbors. Before revitalization, signage was not consistant and
storefronts were a hodge podge of styles.
Chaska
-. In Chaska, vacancy of buildings on Main Street was a problem.
Chaska' s redevelopment efforts focused on rehabilitating buildings
and enhancing street amenities, including creation of a Public
Square in which all manner of social activities take place.
—
The primary factor for success in Chaska has been attributed to the
willingness of the City to invest in the Downtown. The Public
— Square is an example of an amenity that has paid off. Chaska
utilized TIF financing and FDA loans to finance their public
improvements. The City also creatively utilized TIF to construct
a new City Hall in the Downtown.
Future plans for Chaska include implementing a flood control plan
to protect buildings threatened by the river adjacent to downtown,
—
and the possible development of condominiums overlooking it.
Stillwater
On August 17 , 1992 , representatives from the Chamber of
Commerce and City staff had the opportunity to tour Downtown
—
Stillwater. Stillwater is situated on the St. Croix River.
Historically speaking, Stillwater was one of the first City' s to be
incorporated in the State and was a major lumber producing site in
— the late 1800 ' s. Today Stillwater has a population of 13 , 000 and
is essentially a bedroom community much like Shakopee. Stillwater
also caters to a significant tourism industry that attracts
— visitors from the five state area and Canada. Much of Stiliwater's
tourism base is focused around the St. Croix River and the
amenities that it has to offer. Stillwater also has a strong
specialty shop market and is noted for its many fine antique shops.
—
Approximately two years ago the City of Stillwater completed
— a downtown renovation project. The project primarily consisted of
infra-structure improvements comparable to what the City of
Shakopee embarked on during Phase I of the Downtown Redevelopment
Plan. Financing for the infra-structure improvements was split
—
between assessments (25%) and tax increment financing (75%) .
— Prior to proceeding with the improvement project, the City
worked with the Chamber of Commerce to address many of the concerns
raised by the business owners. Business owners feared that the
construction project would have an adverse impact on traffic and
— result in reduced business. To help rest the fears of the downtown
business owners, the City of Stillwater included as a project cost
$10, 000. 00 to help market the downtown area during the project
construction. The funds were used for such things as neighborhood
block parties celebrating completion of certain parts of the
project and also advertising to attract residents downtown during
project construction.
Initially, the Stillwater downtown improvement project was to
include streetscape elements such as street lights, planter, s
— benches, trees, etc. However, once construction commenced it was
determined that there were not adequate funds to complete all the
streetscape elements as originally proposed. The only streetscape
— element that was actually included in the project included a stripe
of red concrete pavers along the edge of the sidewalk.
The vast majority of the downtown business owners whom we
contacted were very disappointed that the City did not at least
install the historic lighting. Most of the business owners we
contacted experienced a significant dip in sales in 1991 as a
— result of the construction project. However, both Chamber
officials, business owners and City officials reported that while
several businesses closed during the construction project and did
not reopen, the majority of those that closed were on the edge in
—
terms of their future operation potential.
From a physical building improvement standpoint, the City of
— Stillwater does not have any programs that assist property owners
in redeveloping building exteriors and/or interiors. The City has
taken a more aggressive regulatory approach to rehabilitation. The
— City has created a historic district that is on the National
Register of Historic Places. The City also has an active Historic
Preservation Committee that reviews building permits to be issued
within the Historic District. Building improvements must comply
—
with the strict building guidelines imposed by the National
Register.
— Red Wing
On August 31, 1992 , Chamber officials, City staff and a
representative from City Council had the opportunity to visit Red
Wing. We had the opportunity to speak with downtown business
owners, Chamber and City officials.
— Red Wing is a community of 14 , 000 persons, located
approximately 30 miles southeast of downtown St. Paul on the
Mississippi River. Like Stillwater and Shakopee, Red Wing' s
— original existence was due to the river traffic along the
Mississippi River. Red Wing has a distinct downtown area that
caters to a residential base that primarily does business within
the City proper. This being the case, the downtown Red Wing area
consists of a much larger area as compared to Shakopee
(approximately 12 blocks of intense commercial retail development) .
Red Wings downtown area is also within close proximity to the city
_ and county offices.
Approximately ten years ago, the City of Red Wing began to
work on a plan for stimulating redevelopment within their downtown
area. Approximately five years ago, the Red Wing Shoe Co.
purchased the St. James Motel in downtown Red Wing. This ten
million dollar improvement project served as the impetus for
additional redevelopment activity in the downtown area. The Red
Wing Port Authority captured the increment from the motel
redevelopment project. The increment from the motel was used to
retire bonds that were sold for acquiring and clearing additional
property in the downtown area and also constructing a parking ramp
and park area. The Red Wing Shoe Co. subsequently bought from the
City the property that they had acquired. The Red Wing Shoe
Company then redeveloped this property to the tune of approximately
ten millon dollars. The Red Wing Port Authority also captured the
increment from this redevelopment project.
The significant contributions made by Red Wing Shoe Co. in
stimulating redevelopment activity in downtown Red Wing and the
City' s aggressive use of tax increment financing to capture tax
dollars from the improvement project have set Red Wing on a very
progressive downtown redevelopment track. Once the two major
improvements were made by Red Wing Shoe Co. , many of the other
downtown business owners, on their own accord, initiated building
improvement projects. The City of Red Wing did not develop any
special incentive programs to encourage private development of
building exteriors. The City has used the captured tax increment
for acquisition of an old railroad depot. The City then attracted
a developer via a land and building right down to redevelop the
property. The Port Authority once again captured the increment
from this project.
The City has also used tax increment financing dollars to
improve the riverfront area and also major thoroughfares which
connect the downtown area to their institutional area. Red Wing
has recently begun promoting a trail system adjacent to the river
running from Cannon Falls to downtown Red Wing.
An interesting part of Red Wing' s approach to downtown
redevelopment was also the strategic use of the Housing and
Redevelopment Authority to construct several senior housing
projects within close proximity to the downtown area. These
housing projects were done several years in advance of the Red Wing
_ Shoe Company' s investments.
The City of Red Wing has a totally separate Housing and
Redevelopment Authority and Port Authority with full time staff
that promote economic development within their city. This has been
one of the primary factors relating to their success. Obviously,
the major private investment made by Red Wing Shoe Co. in their
community has also significantly added to their success.
SUMMARY
In reviewing the development activities pursued in other
— communities, one thing became apparent. That is, each community
has different needs and different social/economic situations that
impact the financial viability of their downtown areas. What might
— work in one community will not necessarily work in another
community. Chaska and Stillwater aggressively used tax increment
financing to stimulate redevelopment activity. Both Chaska and Red
— Wing have also encouraged and financially supported the development
of multi-family residential adjacent to their downtown areas.
The impact of tourism on communities, such as Stillwater and
— Red Wing, have significantly increased the economic viability of
their downtown areas. Chaska, on the other hand, has utilized
their town square concept to attract people to their downtown area
— for many special events.
Chapter 3
City Goals and Objectives:
To promote a healthy, attractive, and thriving downtown that serves
the needs of local residents, attracts tourists and enhances the
image of Shakopee as a desirable place to live.
Preferred uses would be small businesses such as shops,
restaurants, and professional services in a coherent physical
environment that promotes the downtown as a "place" . People should
feel welcome here.
The Comprehensive Plan (Pages 18 . 2 to 18. 3) outlines these goals
for downtown Shakopee:
_ LU-e Downtown Shakopee should continue to function as the
social and psychological center of Shakopee.
LU-f The downtown will be designed to be attractive to
pedestrian and vehicular traffic and act as a connection
between the older residential neighborhoods and the
Minnesota River. To this end, the City will support the
Mini-Bypass and work to improve local and regional parks
and open space along the river.
LU-g The City will participate financially in the evolution of
downtown Shakopee but on a selective basis, providing and
maintaining public facilities such as streets, utilities,
street lighting, street landscaping and assisting in
redevelopment when it is clear that the private sector
cannot accomplish a publicly desired change on its own.
LU-h The City will work with the private sector to gradually
revive downtown Shakopee according to the mixture of
activities recommended by the Economic Market Analysis
chapter of this plan so that the downtown complements but
does not necessarily compete directly with preferable
shopping areas.
LU-i A Downtown business organization will be revitalized by
the City to strengthen itself and act as a marketing
agent and development catalyst for downtown. The
_ organization will help downtown merchants unite their
marketing strategy.
LU-j The land use pattern along the length of 1st Avenue
should be encouraged to complete its evolution to
businesses.
LU-k The appearance of the 1st Avenue corridor should be
improved through private development, enforcement of
maintenance standards, reasonably tight design standards
for signage, and improved public landscaping and
lighting.
LU-1 The City will use signage and landscaping to announce
entry into the town site and both ends of 1st Avenue. A
graphic symbol for the City will be designed and used on
_ such signage and other official signs, stationary,
publications, etc.
Chapter 4
Description of Major Assets and Constraints:
— Shakopee is approximately 30 minutes southwest of Minneapolis, and
is easily accessible by car. The Minnesota River to the north has
been a major constraint on development in the greater Shakopee area
— but holds potential as a recreational area close to downtown.
Highway 101 has been a source of congestion and pedestrian
endangerment but with construction of the Shakopee Bypass and Mini-
- Bypass, these problems should lessen dramatically.
A major asset to downtown is the potential for customers generated
by the tourist attractions in the area. The downtown should
— capitalize on these tourists by offering them a unique, pleasant
and convenient shopping and entertainment experience.
— The presence of professionals working nearby at the County office
building and at St. Francis Regional Medical Center and of retirees
living in Shakopee' s Senior Citizen housing is also an asset.
These people could enjoy lunch time shopping as well as early
—
evening entertainment and could contribute to the existence of a
year-round market for merchants downtown.
— Development of the Minnesota River as an all-season recreation area
would further ensure a year-round source of income, especially if
attractive and affordable overnight accommodations were made
available within walking distance.
The completion of the Minnesota River Valley Trail will is also an
asset that the City should take advantage of. Walking and biking
— trails are increasing in popularity and in some communities have
become major tourist attractions.
— The historic nature of buildings on 1st Avenue, Shakopee' s Main
Street, is both an asset and a constraint since capitalizing on
this aspect of the downtown will require considerable expense on
the part of the City and the merchants.
Chapter 5
Regulatory Constraints Opportunities:
The downtown area including Block 4 is zoned B-3 , a designation
which allows for varied uses, including general retail businesses,
office, banks and restaurants. The height limit is 45 feet.
However, under a Conditional Use Permit a multiple dwelling use or
a height over 45 feet may be allowable.
In addition to zoning regulations, the City has adopted a list of
fix-up specifications which is tied to loan and grant financing
programs for storefront renovation.
It is to be noted that regulations can and do change with the
conditions that prompted them. In the case of downtown
revitalization, changes could accommodate market demand or
revitalization strategies.
Chapter 6
Existing Proposals for Downtown:
An important proposal which is close to implementation is the
Highway 169 Mini Bypass that will relieve the dangerous amount of
traffic on 1st Avenue and provide a definite boundary for the
.- downtown area. This bypass will enable shoppers downtown to pay
more attention to window displays and will allow easy conversation
between people on the walkways. Persons entering the Downtown area
by automobile will find it far easier to maneuver and find parking
without the continual threat of traffic mayhem. A drawback of the
bypass is that with the exception of a pedestrian and bicycle
underpass, it will cut the downtown off from the river.
Not a proposal, but a possibility the City is considering is
burying the existing utility lines that presently mar the
streetscape underground and reconstructing downtown alleyways.
Advantages of this would be a downtown with a more welcoming
pedestrian scale, less chance of interruption of utilities service
due to weather or traffic factors, and lower-cost routine line
maintenance. The obvious disadvantage is the initial burial cost
to the City of Shakopee and the cost associated with underground
connection borne by individual property owners. There may be
potential for the City to submit a Small Cities Development Block
Grant to assist in financing underground utility costs. However,
staff time allotment to this type of project is prohibitive given
current staffing levels.
The City is also considering conversion of existing parallel
parking spaces on side streets between Sommerville Street and
Fuller Street to angled head in parking. This option would be more
easily accomplished after construction of the Mini Bypass. In
addition, the Comprehensive Plan suggests that the Mini Bypass will
create an opportunity for improving the approach to downtown from
across the river by creating new park and plaza sites.
Chapter 7
Possible Rehabilitation/Redevelopment Options:
— There is a full spectrum of options for revitalization downtown.
What follows is only an inventory of some possibilities relating to
Block 4 . Inclusion of an option in the outline does not signify
City endorsement or even serious consideration.
Option 1:
—
City acquire property and demolish existing buildings with private
sector reinvestment in new construction.
— Advantages
Appearence of block improved. Absolute conformity of every building
— is insured. Buildings completely up to code. Ability to capture
tourist customer enhanced. Increased tax base.
Disadvantages
—
Every business and resident within block displaced during the
demolition/construction. Cost of demolition/construction extremely
— prohibitive.
Option 2 :
—
Private sector rehabilitation of existing buildings within quasi-
historic parameters; including selective demolition or refurbishing
of out-of-place (modern) buildings with new construction
complementary to historic downtown theme including rear building
improvements.
— Advantages
Most of the building stock exists already; sense of "place" for
downtown insured; ability to capture tourist customers enhanced;
cost likely to be dramatically lower than Option 1; necessary work
(and its cost) could be spread over several years; businesses and
residents not displaced.
Disadvantages
Expense involved in reconstruction of modern buildings; cost
—
associated with storefront restoration and creation of rear aspect;
requires significant partnership development with a variety of
property owners or increased regulation of property. Issues
regarding building code compliance in terms of Handicapped
accessibilty may also add significant costs to redevelopment.
Option 3 :
_ Private rehabilitation of buildings within present code and
storefront guidelines, preserving historic building fronts without
necessarily restoring them; make rear sides of buildings attractive
from Mini-Bypass.
Advantages
Presumably lower costs than Options 1 or 2 ; work could be spread
over several years.
_ Disadvantages
Image downtown less historic (less of a tourist draw) ; storefronts
not necessarily coherent.
Option 4 :
Do nothing to existing storefronts, but expend considerable effort
in making the rear of the buildings attractive to those travelling
on the Mini-Bypass.
Advantages
Cost would be less than several Options listed above; potential
customers travelling on the Mini-Bypass could be favorably
impressed.
Disadvantages
Would not improve Block 4 storefronts or provide continuing draw
for Block 4 or Downtown.
Option 5:
City acquires and rehabilitates Block 4 in owner/manager capacity.
Advantages
City has complete control over project. Any return on investment
accrues directly to City.
Disadvantages
Considerable investment on part of the City would be required; City
would, as owner, lose tax revenues.
Option 6:
The City of Shakopee buys Block 4 , demolishes the buildings,
"greens" up the area, and holds the land in case market conditions
improve.
Advantages
City has control of project.
Disadvantages:
Cost to City is considerable: The City must buy the land, pay to
demolish the buildings and sod the area, and forfeit taxes
during the time the land is unproductive.
NOTE: These are generalized options. In the implementation of any
option more specific considerations would as a matter of course be
explored.
Chapter 8
Market Dynamics/Investment Climate Overview
The City has developed and distributed a Market Survey to regional
commercial development professionals. The purpose of the survey
was to gain a perspective on market dynamics and the investment
climate for development in the downtown. Cost factors prohibited
a full fledge market analysis of the development potential for
Downtown Shakopee. The survey results are shown in Exhibit B.
The investment climate is a combination of local and national
financial factors. It includes such national factors as capital
availability, interest rates, investment volumes and competion for
development.
Local investment factors include the area' s ability to attract
regional investment and the availability of local funds (public and
private) to execute development. Although basic market factors
contribute heavily to an area' s ability to attract national or
regional investment, the availability of local public incentives
and financing often garners a larger share of the national/regional
market than normal.
Current market conditions and the demand for commercial
office/retail space appears to be poor at this time. Tight
_ financing requirements from lending institutions are adversly
affecting private investment in new commercial/retail projects.
The impact of the Mega-mall on Shakopee remains unknown. We do
know that it has had a positive impact on the Hotel/Motel Industry
�- in Shakopee. Whether or not this trend will continue is uncertain.
The retail impact of the Mega-mall on Shakopee is expected to be
minimal, but it is to early to gauge at this time.
Area Competition for Funds
Competition for investment funds exists at all levels. Aside from
the financial incentives listed above, success in attracting funds
depends on relative risks and the existence of experienced local
lenders.
Some considerations in investment risk assessment are:
_ Land use options considered desirable in Block 4
redevelopment are not radically different from uses
currently in place. The project is intended to revitalize
a retail area, not replace retail with another category
of land use. Zoning designation would remain B-3 .
Surrounding land use on the Hwy 101 corridor is likely to
have an adverse impact if the ugly commercialism here is
left unmitigated. The scope of the project may warrant
City cooperation in countering this problem. The City
could provide incentives and coordinate private efforts
to de-uglify the approach to Downtown, and could design
and construct City symbols to mark the entry to Downtown
as the Comprehensive Plan suggests.
Area shopping centers are presently undertenanted,
possibly because of poor location and high rent. They do
— not pose a threat to success Downtown.
Development lenders do exist locally (within the Twin Cities Area) .
To be useful to the Block 4 project, these lenders should:
—
Be aware of the full range of public programs.
— Be acquainted with similar developments in the Twin
Cities area or elsewhere.
— Understand and participate in achieving City objectives
for development.
Chapter 9
Community and Developer Capabilities
Community Capabilities
The City of Shakopee includes within its staff capabilities for
land assembly and acquisition, land use planning, relocation,
disposition packaging,and developer negotiation.
_ Recently a loosely structured Downtown business association was
formed, primarily to look at mechanisms to improve business. This
group focuses on marketing, but is also concerned with related
issues such as asthetics and parking/circulation Downtown.
Developer Capabilities
Any developer the City considers for this project should have had
documentable experience in retail redevelopment, and considerable
skills in rehabilitation/recycling projects. The City should be
aware of the existence of other qualified developers to undertake
alternative develioments proposed in the course of the project
evaluation process.
Chapter 10
Social Concerns and Special Interests
— The Block 4 project has so far not inspired impassioned
confrontation between any special interest groups in Shakopee. The
project could displace of residents or businesses, but should not
—
harm retail in the surrounding area, since a thriving downtown
would encourage nearby development. There are two groups that have
a special interest in the project. The first group is the newly-
formed business association whose members will benefit by
additional customers and will also be likely to pay higher taxes as
a result of City expenditures on the project. The other group is
the Community Development Commission which exists in order to
— create and implement the Block 4 and other Downtown revitalization
projects.
— Recently the City completed a community survey to determine
residents feelings in regard to major community issues. The survey
results indicated that a majority of those responding are
interested in preserving the City Hall block.
In regard to Huber Park, there was no overwhelming support one way
or another in terms of development of this area. The survey
— results however, may be questionable since many residents may not
know where Huber Park is.
Chapter 11
Catalytic Potential
The rehabilitation of Block 4 and Shakopee' s Downtown is not an
isolated event. As the focus for Shakopee' s image and a draw for
tourists as well as local consumers, the Downtown will be the
— cornerstone of a thriving community. A visible source of pride, it
will encourage the perception of Shakopee as a desirable place to
live and work. Furthermore it could provide an incentive for
_ rehabilitation of such sections as the marina presently located on
the Minnesota River and the potential bed-and-breakfast strip of
historic frame houses along the river northeast of Downtown.
Excursion boats already in operation could land near Downtown,
— enabling tourists to make purchases at the specialty shops, enjoy
a good meal, or just stroll along the Main Street.
The rehabilitation of Block 4 could be seen as the first of an
— ongoing series of projects for the enhancement of Shakopee.
Surrounding areas would gain considerable appeal; further
investment would be encouraged; and land values should improve.
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Development options Matrix
Development Option 1: Demolish Option 2: Option 3:
Proposals Existing Buildings; Rehabilitate Rehabilitate
Rebuild Entirely existing buildings buildings within
within quasi- present code and
historic parameters; storefront
Selectively demolish guidelines,
or refurbish out-of- preserving historic
place (modern) buildings without
buildings and neccessarily
replace with restoring them; live
buildings with modern
complementary to an buildings that
historic downtown; present too much of
make rearof a challenge for
buildings attractive cosmetic alteration;
to those travelling provide masking wall
on the Mini-Bypass to make rear of
buildings attractive
from Mini-Bypass
Goals and Objectives Appearance of Block Sense of "place" for Storefronts not
4 improved. downtown assured. neccessarily
coherent.
lncresed tax bare. Ability to attract
tourists enhanced. Downtown image less
historic.
Historic structures
can be highlighted.
Businesses/residents
not neccessarily
displaced.
Assets/Constraints Cost could be One building on Same as Option 2.
prohibitive. Block 4 is "modern".
Storefronts are not
beyond
rehabilitation.
Need to create
appealling view from
Mini-Bypass.
Similar Developments Revitalization in Success of
Stillwater storefront
illustrates rehabilitation in
potential of Gardiner, Me.
rehabilitation of illustrates
historic buildings potential of such a
utilizing project in Shakopee.
regulations and Tax
Increment Financing.
�- Also illustrative of
potential: Chaska;
Red Wing, Mn;
rardiner,Me.
Regulatory Existing B-) Zoning Zoning could remain Existing D-1 Zoning
Opportunities/ may be adequete. B-1, or a Special • and present
Constraints District storefront
encompassing Block 4 guidelines may be
could be adequete; City
established. regulatory action
might be neccessary
to ensure
compliance.
Economic and Market F.xistance of slowly Tourist component Although this option
Overview expanding market might justify cost would require some
might discourage of this option; more City financial
this option since in-depth feasibility investment, less
costs would be more study could be would be required
extensive than some undertaken to than for Options 1
other options. determine. or 2.
Community/Developer City employs fairly City planning staff Same as Option 2.
Capabilities sophisticated exists.
planning staff.
Experienced
Developers with new rehabilitation
construction developers exist
experience in a within the Twin
revitalization Cities area.
context exist within
Twin Cities area. Federal tax
incentives exist for
buildings that meet
historic
preservation
guidelines.
Social Concerns/ Would destroy Would be a source of . Would provide a more
Special Interest buildings of pride to Shakopee coherent downtown.
possible historic residents.
significance. Could attract a more
Would draw specialty varied retail
Unless redevelopment retailers Downtown. assortment.
of block executed
with sensitivity, Businesses,
could extend residents of Block 4
unsightly not displaced.
commercialism of Hwy
..� 101 into Downtown.
Would displace every
business and
resident on Block 4.
Catalytic Potential Could precipitate Could precipitate Same as Option 1.
redevelopment in rehabilitative
adjacent areas of redevelopment in
Downtown. adjacent areas of
Downtown.
Could encourage
tourist specialties
such as bed-and-
break Casts,
restaurants, and
river recreation.
Development Options Matrix (Cont.)
•
Development Option 4: Do nothing Option 5: City buys Option 6: City buys
Proposals to existing property and property and tears
storefronts; create rehabilitates Block down entire block;
masking wall to make 4 in manager City holds property
rear of buildings capacity. as temporary park
attractive from until market
Mini-Bypass. conditions improve.
Goals and Objectives Improved image from City would control City would control
Mini-Bypass. property. property.
Would not provide City would fund No new tax base.
continuing draw for entire project;
Block 4. availablility of Loss of tax income
funds could be an while City holds
Would not improve issue. property.
Block 4 storefronts.
Cost of purchasing
property and upkeep
of park could be an
issue.
Assets/Constraints Storefronts are Same as Option 2. Empty block could
deteriorating; some hurt nearby
clash. businesses.
Deteriorating rear Absence of buildings
of buildings visible on Block 4 would
from Mini-Bypass. allow traffic noise,
prescence to intrude
Downtown.
Similar Developments
Regulatory B-3 Zoning adequete
Opportunities/ with addition of
Constraints City regulation
regarding rear of
buildings.
Economic and Market Would require City Would require Would require
Overview investment; May not considerable City considerable City
— improve retail investment , both in investment in terms
income on Block 4. demolition/construct of
ion, and in demolition/construct
management costs. ion, loss of tax
income, and loss of
Block 4 businesses
for an indefinate
amount of time.
.� Community/Developer Same as Option 1. Same as Option 1. City employs
Capabilities knowledgable
planning staff.
Social Concerns/ Would provide a City would have Every business and
Special Interest buffer between complete control resident on Block 4
downtown buildings over all development would be displaced.
and the Mini-Bypass. on Block 4.
Noise and wind from
Would not Input from downtown Mini-Bypass would
neccessarily improve property owners intrude Downtown.
level of retail would be lost.
activity downtown. Cost to City with no
immediate return
Would project a 'more could result in
pleasing view to higher taxes to
travellers on the downtown property
Mini-Bypass than the owners.
present one of the
rear of Block 4
buildings.
Option 4 Option 5 Option 6
Catalytic Potential Depends upon City Could have negative
decisions regarding effect on adjacent
Block 4. blocks Downtown,
unless considerable
effort put into
creating and
maintaining green
space.
Chapter 12
Magnitude and Character of Development
Option 1: Demolish, Rebuild Option 2: "Historic" Rehab
(Approximate) Anticipated 2-story Block Building, Present Size
Size of New Development faced with brick;
300' long (facing Lewis
St.) ;
100' deep.
Anticipated Costruction Aquisition Cost: $ 700,000 Rehabilitation Costs:
Costs Demolition Cost: $ 100,000 Retail:
Retail Construction: 18,036 x $37.70 =$679,957
Existing Square Footage 30,000 x $65= Residential/ Office
Retail: 18,036 $1,950,000 7394 x $49.30 = $364,524
Office/ Res. : 7,394 Office/ Res. Const. Total Rehab Cost:$1,044,481
30,000 x $85=
Cost per Square Foot $2,550,000
New Construction: Total Costs: $5,300,000
Retail: $65.00
Office/ Res. : $85.00
_ Rehabilitation:
Retail: $37.70
Office/ Res. : $49.30
Percentage Mix of Uses Retail: 50% Same as Option 1
Office/ Res. : 50%
Expected Rental Rates Per Retail:$7.00 Same as Option 1
I Square Foot Office:$9.00
Option 3: Status Quo; Option 4: Build Masking
Masking Wall to Hide Rear of Wall
Buildings from By-Pass
Anticipated Size of New Same as Option 2. Wall between rear of
Development buildings on Block 4 and
Mini-Bypass.
Anticipated Construction (Approximate) Rehabilitation Masking Wall: $19,500
Costs of Storefronts: $35,000
(Approximate) Construction
of Masking Wall:
300 Square' x $65=
$19,500
Total $54,500
(Very Approximate)
Percentage Mix of Uses Same as Option 2 N/A
Expected Rental Rates per Same as Option 1 N/A
Square Foot
Option 5: City as Property Option 6: City Buys
Owner/Manager Property; Demolishes
Buildings; Holds as "Green
Space" Until Market
Conditions Improve
Anticipated Size of New See Options 1-4 Block 4
Development
Anticipated Construction See Options 1-4 Demolition: $100,000
Costs Creating Park
($2.25 x 3,333 sq yds)
$7.500
Total Cost $107,500
Percentage Mix of Uses See Options 1-4 Use is public space-a park.
Expected Rental Rates per Same as Option 1 N/A
Square Foot
Chapter 13
Financial Feasibility
After-Tax Cash Flows
Investors are attracted to real estate investment because of the
special tax advantages offered. Real property improvements decline
in value over time, and this depreciation can be claimed as an
expense and deducted from the cash flow of property when computing
taxable income. Deducting the depreciation allowed greatly reduces
the amount of taxable income and may even produce a "loss" which
may be used by the investor to offset income from other sources.
The following analysis shows the after-tax cash flows for each of
the first 10 years of a hypothetical development. Sale of the
project is assumed in the 10th year. When the ratio of cash flow
plus debt amortization divided by depreciation equals 1. 0, the
negative cash flow effect of amortization is no longer offset by
depreciation. At this point, the investor may want to sell or
refinance. This frequently occurs between the 8th and 12th years.
Present Value: Because money recieved tomorrow is worth less than
the same amount of money recieved today, cash flows from a future
year are discounted to give tham a present value. The discount rate
chosen equals the rate of return the investor desires on the equity
invested. If the sum of the present values plus the present value
of ther gain realized on the sale of the property is equal to the
amount invested, the desired rate of return will have been
achieved. If the sum of the present values is less than the amount
_ to be invested,the potential investor may decide not to invest in
the project.
In the example, an 11% discount rate was used. The investor expects
to sell the property at the end of the 10th year. The total present
value equals $1, 404, 000, which is greater than the $1, 221, 000
required for the equity investment; therefore, the project should
be fairly attractive to investors. The internal rate of return on
this project would be about 14 . 1% (the discount rate which will
make the sum of the present values equal to the required equity
investment) . Had the sum of the present values been less than the
required equity, the project would not be considered a profitable
investment. The rate of return required by an investor is
determined by the rates available on alternative investments.
L
L
L
L After-Tax Cash Flow
Year of Operation
(000's 5)
L Sale at
End of
1 2 3 4 3 6 7 8 9 10 10th year
L After-Tax Cash Flow Calculation
Net Operating,
r
Income v 316 494 509 535 551 568 553 603 621 640
L Less:
Debt Service 330 330 330 380 380 380 380 380 380 380
Pre-Tax
Cash Flow (64) 114 129 155 171 155 205 -i,3 2.1 260
Tax
Consequence 94 4 (3) (19) (25) (35) (45) (58) (69) (81)
1 After-Tax_ - -
IL
Cash Flow 30 118 12= 736 43 150 157 165 172 179 2,151
Discount Factor
(12%) .89256 .79719 .71178 .63552 .56743 .50663 .43235 .40388 .36061 .32197 .32197
Present Value 27 9"- SS 86 51 76 i1 67 63 58 693
Sul of present value = 51,404
Equity investment = 51,221
Taxable Income Calculation
— Pre-Tax
Cash Flow (64) 114 139 155 171 188 205 223 241 260
Plus:
Debt Service 380 380 380 3S0 350 380 380 380 380 3S0
— Less:
Interest 365 363 361 359 357 354 351 345 344 .34-0
Less:
L Depredation 139 139 139 139 159 139 139 139 139 139
Taxable Income (188) (8) 9 37 35 75 95 116 138 161
L Federal dr. State
Marginal Tax
Rate 50% 50% 50% 30% 50% 30% 50% 50% 50% 50%
L. (94) (4) 5 19 2S 35 48 58 69 Si
L
(Source: Economics of Revitalization,
L U. S . Department of the Interior,
Heritage conservation and Recreation Service)
I
Effects of Public Actions
In the example, the desired rate of return was achieved. If the
investor had required a higher rate of return, the project would
have required some public assistance to induce investment.
Following is a list of such tools, from Appendix C of Economics of
Revitalization (1981 , U. S . Dept. of the Interior, Heritage
Conservation and Recreation Service) .
LPublic/private cooperation is the key to urban revitalization efforts. Most
large-scale projects require some public investment, either direct or indirect,
to reduce risks and attract private investment. But communities will want to
use incentive tools that will result in the greatest benefit to the city in return
for its investment. Some of the financing tools available to a city or a local
development corporation can provide developer benefits with very little
long-term cost (in fiscal terms) to the public. Below are summaries of some
commonly used development tools:
• Tax increment financing is a popular redevelopment technique. Tax
assessments in a district are frozen and :axing jurisdictions receive
revenue equal to that generated at the i---e of the assessment freeze.
Because of the improvements, however. the assessed value of the
area will rise. Application of tax rates to this increase in assessed
value generates revenue that is used to finance the district's public
improvements. ?Most users of tax increment financing rely on in-
creases in valuation stemming from new development and not
simple appreciation of property value. Use of this technique circum-
, vents the municipality's debt limits.
About a dozen states presently permit tax increment financing in-
cluding California, Minnesota, Michigan. Kentucky, New York,
Iowa, Oregon, and Utah. In California. blight is the criterion used
for establishment of a tax increment district; the district is adminis-
tered by city or county redevelopment agencies.
• The special benefit assessment district is a financing mechanism in
L which properties receiving special services are assessed. Assessment
may be within a zone of influence, and thereby attempt to capture
all properties benefiting from a specific improvement, or may be
limited to abutting properties. Such districts may finance actions
L outside normal governmental channels via such techniques as prop-
erty taxation, benefit assessment taxation, tax increment financing,
and business license or sales-type tax overrides. Other techniques
L. include leasing of land, facilities or air rights to private businesses,
operation of revenue-producing activities, receipt of gifts and dona-
tions, use of local government funds, and/or sale of general obliga-
tion and revenue bonds and anticipation notes. The creation of spe-
L cial assessment districts may need to be authorized by state enabling
legislation.
• Tax incentives are another means of encouraging commercial revital-
L ization. In several states provisions exist for cities to grant property
tax abatements or exemptions for a predetermined period. The 1975
New York State Real Property Tax law allows tax abatements for
new or rehabilitated multiple dwellings in cities of one million popu-
L lation. Strict limitations regulate the type of eligible development
and the abatement period. A growth management program in New
Orleans includes up to 20% tax deductions for developers creating
public open space and plazas; the amount of deduction is a function
Lof the provided public space. In Missouri the 1949 State Urban Rede-
L
1
velopment Corporation ("353") law enables cities of over 350,000 to
create redevelopment corporations that may grant a 25-year partial
— tax abatement in blighted areas. Improvements are not taxed during
the first 10-year period and tax payments continue at a predevelop-
ment level; taxes duringthe next 15 years are based on a 50%valua-
tion of the developed poperty. This has been an effective tool in
6.- aiding redevelopment.
At the federal level, the Tax Reform Act of 1976 provided incentives
L of rapid amortization or accelerated depreciation for the rehabilita-
tion of historic structures; the program is administered by the Heri-
tage Conservation and Recreation Service. The 1978 Tax Act pro-
vided another incentive for rehabilitation by allowing a 10%invest-
ment tax credit on the rehabilitation of buildings that have been in
commercial use for over 20 years.
• Land banking is another development :mechanism. Cities may land
L bank parcels acquired through urban renewal clearance programs or
tax foreclosure proceedings. Rather than dispose of these properties
immediately through auction/tax sale or bidding, municipalities re-
L tain title to these properties indefinitely for a number of reasons. In
some cases, there is no market for parcels in high-risk locations. A
city may hold onto a few scattered lots, while hoping to ultimately
aggregate a large site suitable for major reinvestment. In addition,
L land banking foresta '.s small-scale incremental projects that preclude
more significant efIor ts.
Land banking is a relatively new concept that often requires enabling
L legislation. Cities are typically required by law to dispose of any
surplus real estate as quicklyaspossible. Land banking would be
illegal unless exceptions to this requirement are made. A meaningful
program should derive from a comprehensive long-range urban re-
L development strategy.
• Leaseback programs have two possible applications in commercial
business districts. In the first instance, the city uses its tax-exempt
borrowing power to build facilities that are then leased to private
operators. The interest rate advantages enjoyed by government
bodies result in lower annual operating costs for the private sector
and reduced service charges to consumers. Such arrangements are
common for parking garages built by the city or a public parking
Lauthority and leased to private operators. Lease proceeds pay off the
debt issued to build the structure.
In addition, benefits to the developer occur since leases are an indi-
rect method of financing. When a developer can lease, he does not
need to obtain debtor equity capital to finance. Leases improve the
developer's leverage. Leasing also has favorable tax implications
•
since the full amount of the lease is deductible for income tax pur-
poses. The impact is even more favorable if the developer can lease
an item such as land that would not otherwise be depreciable.
• Land writedowns occur when a public agency sells land at less than
L fair market value. In renewal projects this typically involves buying
blighted properties, removing the structures, and selling the cleared
land at less than its acquisition value or at a reduced appraisal value.
L Land writedowns reduce the total amount of capital a developer
needs to acquire and improve real estate, and also lessens the re-
spective components of equity and debt capital.
The cost of land writedown to local government is the cost of acqui-
tsition, demolition and relocation, less the disposition value received.
Land writedowns may also involve selling surplus public land at less
than fair market value. In this case, the cost of the subsidy device is
L the difference between what could have been received for the prop-
erty and what was in fact accepted.
L
• Industrial development revenue bonds (IDRs) are a subsidy device
with limited applications but one which allows local government to
pass the entire cost of the subsidy to the federal Treasury. Industrial
_ development revenue bonds are issues backed exclusively by a lease
or purchase agreement with a developer. IDRs are not restricted to
use only in redevelopment areas; they can be used to finance practi-
cally any industrial or commercial expansion.
In issuing IDRs, different rules apply to different uses but issues
generally must be limited to less than S10 million project financing
per individual user.
— As in the case of other government bonds, IDRs are tax exempt.
They should therefore bear a return of 1 to 2 percent below the
prevailing market rate. Issuance of IDRs is primarily negotiated
_ among the developer, a bond counsel, the Internal Revenue Service,
and the local government entity (usually a special purpose public
corporation) issuing the bonds.
• Revenue bonds can be issued for a specific project and the proceeds
from user charges for the project used to repay the debt.
• Direct loans to business are major inducements to investment. If a
local agency has discretionary funds w":h which to make direct
_ loans, it possesses perhaps the most flexible overall tool for promot-
ing development. An endless variety of loan types, terms and condi-
tions are possible. The city should tailor its loan terms to fit the
circumstances of any project. Among the useful variations to con-
- sider are the following:
— Construction Loans: Short-term loans at a low-interest rate dur-
ing the construction period which :educe overall construction
costs.
— Interest Only Loans: Loans on which :he borrower pays only
interest over the period the loan is , _.standing. The principal is
repaid in a lump sum at the end of :he term of the loan.
— Participation: Several lenders, including the local development
agency, may join together, each providing a portion of the bor-
rowed funds. This in turn reduces : e maximum loss each
lender could potentially incur if the _:oject fails.
— Balloon Repayment Loans: Borrower pays interest and principal
over the term of the loan but in amounts insufficient to retire the
debt before the term expires. The balance outstanding at the end
of the loan is then repaid in a lump _urn at expiration.
— Variable Interest Rate Loans: Loans on which the interest rate
changes over the term of the loan. For example, a loan to a new
business might be placed at a low rate in its early years and then
increased after operations stabilize.
— Secured Loans: A secured loan is a loan backed by a lien placed
upon an asset which gives the lender a direct claim against that
asset in the event of default.
— Collateralized Loans: A loan in which a lender requires the bor-
rower to deposit some cash amount that is held as security for a
portion of the loan. Tnis reduces the lender's risk, but also in-
- creases its return since the security deposit can be invested else-
where by the lender.
In most instances, even where a local development agency has sufficient
resources to provide all the loan funds a project might require, it is undesir-
able to do so as this limits its efforts to a relatively few projects.
• Technical assistance to developers and businesses includes a wide
range of activities such as market feasibility studies, management
assistance, loan servicing, and liaison between business and local
government to cut red tape.
• In-lieu payments can be used for property that is exempt from prop-
- erty taxes. A municipality may require payments in lieu of taxes that
are usually less than these taxes would normally be.
• Eminent domain (condemnation) is the power of government to ac-
- quire private property for a public use. Public uses are often liberally
construed as including economic development; consequently, land
can be assembled for private development. Eminent domain is often
used in conjunction with air rights development.
• Delegated eminent domain is the right of a private developer to act
as the city's agent in acquiring private property for public purposes.
This reduces developer risks by allowing the private sector to man-
- age land assembly directly.
• Demolition of strictures on acquired property can be undertaken by
local government to reduce the developer's costs.
• Leases for a building or land free a developer from the heavy cash
outlay needed at the beginning of a project.
• Subordinated leases are the leasing equivalent of a second mortgage.
The local development agency subordinates the land it leases to a
developer to the lender's first mortgage.
• Revenue bonds Locality can issue bonds for a specific project; pro-
ceeds from user charges for the project repay the debt.
• Air rights development includes the sale or lease of the legal right to
build above ground-level facilities. This is often coordinated with
public ownership of land.
Chapter 13
Financial Feasibility
Option 1: Demolish/Rebuild Option 2: "Historic" Rehab
Initial Costs: Initial Costs:
Financial Pro Forma: Acquisition $700,000 Acquisition: $700,000
Development Costs
Construction Costs: Construction:
Demolition: $100,000 Rehab: $1,044,481
Construction: $4,500,000 Indirect: $10,000
Indirect Cost: $10,000
Total: $1,754,481
Total $5,310,000
Financing Costs: $184,220
Financing Costs
(Total x 10.5%) : $557,550 Grand Total: $1,938,701
Grand Total: $5,867,550
Option 3: Status Quo; Build Option 4: Masking Wall
Masking Wall
Financial Pro Forma: Cost to City Construction Cost:
Development Costs $19,500
Initial Costs: Financing Cost: $2,047
Site Improvement Grand Total: $21,547
(Masking Wall) : $19,500
Construction:
-- Storefront Rehab
(25% of total rehab) :
$8,750
Total $28,250
Financing Costs:
Total x 10.5%: $2,966
Grand Total: $31,216
Cost to Property Owners
Storefront Rehab
(75% of total rehab) :
Total $26,250
Financing Costs:
Total x 10.5%: $2,756
Grand Total $29,006
Option 5: City as Owner/ Option 6: City Holds
Manager Property as Green Space
Financial Pro Forma: Costs remain the same as for Initial Costs
Development Costs other options, with the Acquisition: $700,000
exception of Option 3.
Construction Costs
For Option 3 Demolition: $100,000
Site Improvements Park Improvement: $7,500
(Masking Wall)
$19,500 Total: $$07,500
Construction
(Storefront Rehab) Assume City has financed;
$35,000 No debt service costs.
Total $54,500
Financing Costs
(Total x 10.5%) : $5,722
Grand Total $60,222
Chapter 13
Financial Feasibility
Typical Year Pro Forma
Option 1: Demolish/Rebuild Option 2: Historic Rehab
Annual Gross Revenues Annual Gross Revenues
Retail: 30,000 Sq. Ft. @ $7/ Sq. Ft. Retail: 18,036 Sq Ft x $7
_ $210,000 $126,252
Office: 15,000 Sq. Ft. @ $9/ Sq. Ft. Office: 3,697 Sq Ft x $9 $33,273
$135,000 Res Units: $14,400
Res. Unit: 10 @ $400 x 12 $48,000
Total $173,925
Total $393,000 Minus 5% Vacancy Loss $8,692
Minus 5% Vacancy Rate $19,650 Adjusted Gross Revenue $165,233
Adjusted Gross Revenues $373,350 Minus Operating Costs, et al $74,354
Minus Operating Income and Taxes Net Operating income $90,879
(Assume 45% of AGR) $168,007
_ Minus Maximum Debt Service $69,907
Net Operating Income (Before
Debt Service) $205,343 Cash Flow Before Taxes $20,972
Minus Maximum Debt Service Maximum Mortgage $611,609
(NOI = Debt Coverage Factor
of 1.3) $157,956 Equity Required $432,872
Cash Flow Before Taxes $47,387 Return on Investment 4.8%
Maximum Mortgage
(Debt Service = Mortgage Constant of
.1143) $1,381,942
Equity Required (Development Costs
Minus Mortgage) $4,485,608
_ Return on Investment 1%
(Cash Flow = Equity)
Option 3: Status Quo; Masking Wall Option 4: Masking Wall
Annual Gross Revenues Annual Gross Revenues
Retail: 18,036 Sq Ft @ $7/ Sq Ft (Same as Option 4)
$126,252
Office: 3,697 Sq Ft @ $9/Sq Ft
$33,273
Residential Units: 3 @ $400 x 12
$14,400
Total $173,925
Minus 5% Vacancy Loss $8,696
Adjusted Gross Revenue $165,229
Minus Operating Expenses
and Taxes (45% of AGR) $74,353
Net Operating Income $90,879 $90,879
Minus Cost of Construction $36,376 Entire Cost of Construction $19,500
(Equity)
Cash Flow $54,500 Cash Flow $71,379
Mortgage Not Necessary Mortgage Not Necessary
Return on Investment 149% Return on Investment 366%
(Cash Flow = Equity)
- Option 5: City as Owner/Manager Option 6: City Holds Property as Green
Space
Return on Investment would be the same as Revenues: $0
for the development option chosen.
Costs to City:
Loss of Taxes: $12,517
Cost to Maintain:
(2 hours @ $20
x 20 weeks) $800
Yearly Cost to City $13,317
(Assume City will finance; No debt
service costs)
Return on Investment depends on future
development.
Chapter 14
Economic Impacts
The economic impact assessment examines the public costs and
benefits associated with development options.
Public Costs
Much of the public costs of a development project derive from
incentives used to attract development. Public assistance may range
from changing regulations to allow for different uses to direct
grants and subsidies. Some of the more common categories of
economic costs are discussed below.
_ Direct subsidies and financing assistance: One of the most common
forms of direct subsidies is the land cost write-down, in which the
City would buy Block 4 and sell it to an interested developer at
less than market value.
Direct grants for construction and other development costs are less
common, but could be a factor in rehabilitation of historic
structures. Buildings located in Historic Districts or listed on
the National Register of Historic Places are eligable for Federal
matching grants for rehab and restoration. Direct grants are also
being used to reduce front-end costs for both renovation and new
construction.
Interest Subsidies, in which the City would pay the difference
between an agreed-upon interest rate and the market rate charged
for a construction loan or offer financing through the sale of City
feneral obligation funds would cost the City some or all of the
cost of debt service.
Tax incentives in the form of tax credits may also be available for
rehabilitation projects meeting the National Register of Historic
Places guidelines.
Capital Improvements adjacent to Block 4 are included in the
present Downtown Revitalization Plan.
Services for Block 4 are already in place; additional service
provisions might be represented by a increased level, rather than
additional installation of service.
Other costs related to Block 4 revitalization might be the cost of
lost jobs and relocation of businesses during construction.
Economic Benefits
Economic benefits will accrue to the public via jobs created on
Block 4 and in revenues generated by revitalization.
The jobs created on Block 4 would include professionals occupying
newly-created or renovated office space, retail positions added via
new service and retail establishments, building maintenance jobs,
and the temporary jobs created by construction and renovation. 65%
of the cost of renovation is associated with labor; for new
construction, only 40% goes to jobs.
Revenues to the City from revitalization are likely to accrue in
the form of taxes on property. Creation of jobs will generate
income tax revenue for the State, some of which will come back to
the City.
Chapter 15
Social Impacts
Social costs and benefits involve elimination or creation of
opportunitues for certain segments of the population. Although
greatest impact will be on the residents and businesses on Block 4.
impacts may be felt City-wide.
The impacts of the various revitalization options discussed here
vary. If complete reconstruction, extensive rehabilitation, or City
ownership of the of the entire demolished block is the option
chosen,all residents and businesses will be displaced with no
guarantee that they will relocate in Shakopee. On the other hand,
if the status-quo storefront rehab or the masking wall only option
-- is chosen, no displacement will be required.
City offices are scheduled to move into another section of the CBD,
and there are few remaining service and retail establishments on
Block 4 . Revitalization could provide area residents with an
improved choice of options on Block 4 and may also spark
improvements in number, kind, and appearence of businesses nearby.
Chapter 16
The Resultant Environment
Any revitalization effort should attempt to enhance the City' s
overall attractiveness as a place to live, work, and visit. For
example, the preservation of historic buildings on Block 4 as well
as sensitive management of the nearby riverfront could benefit the
entire Downtown. Pedestrian activity will be encouraged by land use
accomodations and street amenities provided via implementation of
the present Downtown Redevelopment Plan.
Cultural Significance: In terms of the history of the City of
Shakopee, some of the buildings on Block 4 can be considered
historic, since they date from the youngest days of the City.
Unless these buildings are replaced with buildings of exceptional
-- quality, their demolition may be considered a public loss.
However, it can be noted here that the landmarks of tomorrow are the
new buildings of today, and the cultural value of buildings has to
do with design quality as well as other considerstions such as
historic value.
Design Quality: Design Quality is not a fringe concern; it also
contributes to the economic success of a project. A harsh,
aesthetically cold area that people avoid will not attract tenants
or customenrs. On the other hand, many new structures have been
instant landmarks because of their quality of design (the Chrysler
Building in New York and Sears Tower in Chicago, for instance) .
Activity: Deteriorating areas may still have a vitality that can be
either enhanced or eliminated by different development strategies.
Quality of design is closely related to use. With completion of the
Mini-bypass, Block 4 will become the edge as well as part of the
core of Shakopee' s Downtown. It is also a link between the Regional
Trail and the rest of the Central Business District. The
redevelopment design could enhance this link and increase
pedestrian activity in this area.
Chapter 17
Catalytic Potential
The catalytic potential of revitalization on Block 4 combined with
— construction of the Shakopee Bypass and the Hwy 169 Mini-bypass is
not easy to predict. It appears that the lessening of traffic,
increase of street amenities and parking, and the support of the
City in the revitalization effort would spark interest by business
leaders in improvement of and investment in the rest of Downtown.
Although Shakopee may seem at first glance to be a smaller
—
community serving a limited market, the fact of a moderately
expanding population and the presence of a busy tourist industry
here would suggest strong potential for a thriving, vital downtown.
1
Chapter 18
Opportunities Foregone
This evaluation considers six options for redevelopment of Block 4.
Each option presents opportunities, yet the choice of any option
precludes opportunities offered by the other five. In comparing
them, the potential costs and benefits of each option are weighed
against community goals and objectives for revitalization. By
outlining the opportunities foregone in choosing a particular
option, a more informed and encompassing decision can be reached.
In the following section, some of these opportunities are listed.
Chapter 19
-' Impact Assessment
Option 1: Demolish, Rebuild
— Development Magnitude:
Size: 2- story brick-faced block building, 300 ' long by
100 'deep;
Approximately 60, 000 sq ft. (30, 000 retail; 30, 000
office/residential) .
Total Development Costs: $5, 867, 550
Financial Feasibility:
Risk: Maximal.
— Return on investment: 1%
Public Costs:
_ Direct subsidies and financing assistance; tax incentives;
capital improvements; cost of lost businesses and jobs on
Block 4 .
Public Benefits:
Increased tax base; jobs created on Block 4 due to increased
retail/office space; temporary jobs created by construction.
Social Impacts:
Complete displacement of businesses and residents on Block 4.
Resultant Environment:
Buildings of local historic value lost.
Deteriorating buildings replaced.
Design quality of new buildings determines success of
resultant environment.
Catalytic Potential;
Improvement of Block 4 , along with lessening of traffic due to
bypass & mini-bypass could focus interest and further
investment downtown.
Opportunities Foregone:
— Opportunity to preserve historic buildings; opportunity to
promote Block 4 as an element of Shakopee' s historic downtown.
_ Relationship to Community Goals:
Increased jobs; appearance of Block 4 improved; Tax base
increased.
Impact Assessment
Option 2: Historic Rehab
Development Magnitude:
Size: Same as present;
Approximately 25, 430 sq ft. (18, 036 retail; 7 , 394 office/
residential) .
Total Development Costs: $1, 938, 701
Financial Feasibility:
Risk: Moderate.
Return on investment: 4 . 8%
Public Costs: Direct subsidies and financing assistance; tax
incentives; capital improvements; Federal historic
rehabilitation incentives possible.
Businesses could be dislocated and jobs lost during
construction.
Public Benefits:
Increased tax base; new jobs due to increased business;
temporary jobs during construction.
Social Impacts:
Possible displacement of businesses and residents on Block 4.
Resultant Environment:
Buildings of local historic value preserved;
"historic Shakopee" image enhanced.
Ability to creatively re-use buildings contributes to design
quality and the resulting environment.
Catalytic Potential:
Historic preservation of Block 4 , along with promotion of
a potential historic district, could focus tourist interest
and further investment downtown.
Opportunities Foregone:
This option does not preclude any of the other options for
future consideration.
Relationship to Community Goals:
Increased tax base; appearance of Block 4 improved; Jobs added
to area; awareness of Shakopee ' s history enhanced.
Impact Assessment
Option 3: Status Quo; Masking Wall
Development Magnitude
Size: Same as present;
Approximately 25,430 sq ft. (18, 036 retail; 7, 394
office/residential) .
Total Development Costs: $29 , 006
Financial feasibility:
Risk: Minimal
Return on investment: 149%
Public Costs:
Cost of masking wall; Cost of grant program for property owner
— storefront rehabilitation.
Public Benefits:
Improved appearance of Block 4 could contribute to increased
retail revenue and more jobs.
Social Impacts:
— No serious social impacts.
Resultant Environment:
_ Improved appearance of Block 4 is almost guaranteed, provided
the City enforces its Storefront Guidelines. The City might
consider applying the Guidelines City-wide in the form of
regulations which apply to all storefronts in the central
— business district (CBD) .
Catalytic Potential:
— Improved appearance of Block 4 could spark interest by other
property owners in improving overall appearance of the CBD.
Opportunities Foregone:
This option does not preclude any of the other options for
future consideration.
— Relationship to Community Goals:
Appearance of Block 4 improved.
Impact Assessment
Option 4: Build Masking Wall
Development Magnitude:
Size: Masonry Wall 10 feet tall between rear of buildings on
Block 4 and Mini-Bypass.
Total Development Costs: $21, 547
Financial Feasibility:
Risk: Minimal.
Return on Investment: 366%
Public Costs:
Cost of wall.
Public Benefits:
Temporary construction jobs created.
_ Social Impacts:
None.
Resultant Environment:
Wall would fulfill requirement of masking rear of Block 4
buildings from view of travellers on Mini-Bypass.
Catalytic Potential:
No obvious catalytic potential.
Opportunities Foregone:
This option does not preclude any of the other options for
future consideration.
Relationship to Community Goals:
Appearance of rear of buildings on Block 4 from Mini-Bypass
improved.
Impact Assessment
— option 5: city as Property Owner/Manager
Development Magnitude:
Depends on development option chosen.
Financial Feasibility:
Risk depends on development option chosen; Return on
— investment could increase depending on City' s ability to self-
finance.
_ Public Costs:
Cost of entire development option chosen.
Businesses could be dislocated and jobs lost depending on
option chosen.
Public Benefits:
— Entire return on investment should accrue to City.
Increased number of temporary and permanent jobs, depending on
option chosen.
Social Impacts:
Depends on option chosen.
— Resultant Environment:
Depends on option chosen.
— Catalytic Potential:
As well as the catalytic potential inherent in each of the
individual development options, the existence of obvious City
involvement in Downtown revitalization may encourage private
investment in the CBD.
Opportunities Foregone:
— Depends on development option chosen.
Relationship to Community Goals:
_ City control of the Block 4 project would ensure that stated
City goals could be met.
Impact Assessment
Option 6: City Holds Property as Green Space
Development Magnitude:
Size: Entire block demolished. Sod planted in area; minimal
park furniture installed.
Total Development Costs: $807, 500
Yearly Cost to City: $13 , 317
Return on Investment: Depends on development option chosen.
Public Costs:
Cost of entire development project; loss of all Block 4
property taxes; cost of maintaining park.
Social Impacts:
Loss of all businesses and residences on Block 4 .
Creation of temporary construction jobs; creation of
park maintenance work.
Resultant Environment:
Depends on quality of green space created.
Catalytic Potential:
Removal of all buildings on the entire block may have a
negative effect on the surrounding CBD, depending on when
further development of Block 4 is undertaken.
Opportunities Foregone:
Opportunity to preserve historic buildings; opportunity to
promote Block 4 as an element in Shakopee' s historic downtown.
Relationship to Community Goals:
Appearance of Block 4 may or may not be significantly
improved. Overall number of jobs in CBD would be reduced.
Absence of businesses on Block 4 may adversely affect CBD.
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MARKET SURVEY
1. Downtown Shakopee can attract new development providing the City financially
supports it.
Strongly Agree
* Agree
Neutral
Disagree
Strongly Disagree
2. Given today's market conditions I feel there would be interest in a public/private
partnership for revitalization in downtown Shakopee.
Strongly Agree
Agree
-' Neutral
Disagree
— Strongly Disagree
3. Given the are tourist component and the success of revitalization efforts in Stillwater
and Red Wing, rehabilitation of historic structure in downtown Shakopee would
-' attract market interest.
Strongly Agree
Agree
�„ Neutral
/ Disagree
Strongly Disagree
4. The financial climate is more attuned to complete demolition and new construction
as opposed to rehabilitation downtown.
_ Strongly Agree
Agree
a Neutral
Disagree
Strongly Disagree
5. An option the City should consider is buying the buildings downtown and holding
them until market conditions improve.
_ Strongly Agree
_ Agree
Neutral
_a, Disagree
Strongly Disagree
6. At present Shakopee's downtown contains an uneven variety of small retail options.
With aggressive City support and marketing, a variety of retail options, including
convenience and specialty options would be viable.
_ Strongly Agree
Agree
Neutral
Disagree
Strongly Disagree
7. The City should focus development consideration on the factory outlet market.
Strongly Agree
3 Agree
7, Neutral
Disagree
/ Strongly Disagree
8. Given that the downtown may be able to capture part of the tourist traffic as well
as the local market, list five retail options which you feel would be most likely to
locate in downtown Shakopee.
is • . - ho . • ►41! . .. :. - to • . .l ireS '
; t r a ��.- _ c r. • on a.li o r\ i *
Southurt Strr -/ rr\ ,r+ore ; ,S ortir�r.+ Goods
'( ,s--kQurar\ts• CDr\rtnittnce i .3' cc � a�ty J 'R� toi�
.Ser1( C e LAsiane J,le .1"
9. List any family entertainment options that you feel might be successful in downtown
Shakopee.
Fc-to ReTtaur-Qrt-f-J.- G-cwe_ Louvt e ;
Jk La(y ,S Q i + �{mu rpt f -Qrt' fe R_r_
10. I Feel that revitalization in the downtown will increase the possibility of residential
development near the downtown area.
Strongly Agree
Agree
1 Neutral
3 Disagree
_ Strongly Disagree
11. I feel that revitalization of the downtown will increase the possibility of other retail
development there.
Strongly Agree
Agree
Neutral
2 Disagree
Strongly Disagree
12. I feel that an aggressively promoted and revitalized downtown will favorably effect
residential and industrial development in the greater Shakopee area.
Strongly Agree
Agree
1 Neutral
/ Disagree
_ Strongly Disagree
(Extra ro c due_ fd res do At o i r.i�& fk
t-d -tial l� r�n��+.-t vs-t) �� e �a�roru 6
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MEMO TO: Dennis R. Kraft, City Administrator
FROM: Lindberg S. Ekola, City Planner
RE: 1993 - 1997 Capital Improvement Program (CIP)
DATE: November 12 , 1992
INTRODUCTION:
At the October 26, 1992 meeting, the Committee of the Whole tabled
the review of the 1993 - 1997 CIP to the Thursday, November 19,
1992 Committee of the Whole meeting.
BACKGROUND:
The Committee of the Whole reviewed four of the eight Capital
Improvement Budget (CIB) categories. For Category A, Street and
Highway projects, the following changes were made:
1. Delete Projects A-7 (Maras Street) and A-8 (Harrison
Street) .
2 . Change the funding for Project A-1 (Spencer Street) to
the appropriate state aid funds.
3 . Change the funding for Project A-9 (Vierling Dr. from
Polk Street to the mall) to the appropriate state aid
funds.
The minutes for the October 26th Committee of the Whole meeting are
included with this agenda packet for reference purposes.
Based on the changes made by the Committee of the Whole at the
October 26 meeting, staff has updated portions of the draft CIP.
Attached to this memo are the following updated items:
1. Figures 1 through 5, Funding Sources, Pages 11 - 15.
2 . Figures 8 through 10, Debt Service Levies, Pages 18 - 20.
3 . Capital Improvement Budget, One Year Budget, Pages 21 -
29 .
4 . Summary Sheet Capital Improvement Program, 5 Year
Program, Page 30.
DISCUSSION:
Based on the changes made to the funding sources for projects in
the street and highway category, the impact on property tax levies
for 1993 have been reduced. The tax levy to support a $295, 000
bond issue would be approximately $40, 000 per year. The previously
proposed tax levy for the $630, 000 in general obligation bonds was
$82 , 000. The reductions in the use of general allocation bonds in
1993 and the corresponding tax levy is the result of the use of
state aid funds for the Spencer Street and Vierling Drive projects.
the annual tax levy now being proposed has been significantly
reduced. The impact on the average $80, 000 household in Shakopee
for this tax levy would be $5 per year approximately.
The Committee of the Whole needs to finish the review of the four
remaining categories in the One Year Budget. The remaining
categories include B (Sidewalks and Trails) , E (Parks) , F
(Municipal Buildings) , and G (Fire) . Staff will be available at
the November 19th meeting to answer questions on these four
categories for the appropriate capital budget projects.
ACTION REOUESTED:
Review and comment on the draft 1993 - 1997 CIP. Direct staff to
prepare the final 1993 - 1997 CIP for the City Council as
appropriate.
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City of Shakopee
General Fund Property Tax Levy
i99).195
1991/92 49-9±197
Gross Tax Levy 2,615,013 3,171,668 21.3%
Less State Aid (373,329) (417,232) 11.8%
Less Fiscal Disparities (295,665) (318,382) 7.7%
Net Levy 1,946,019 2,436,054 25.2%
Less Uncollectable (52,300) (63,433)
Budget 1,893,719 2,372,621 25.3%
TIF 04 Estimated Fiscal Disparities Effect -1.9%
23. 4%