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HomeMy WebLinkAbout2004 03-01 CCP Work Session AGENDA CITY COUNCIL WORK SESSION March 1, 2004 6:00 P.M Council Commission Conference Room 1. Tax Increment Financing Review and Discussion 2. Miscellaneous 3. Adjourn N i City of Brooklyn Center A Millennium Community To: Mayor Kragness and Council Members Carmody, Lasman, Niesen, and Peppe From: Michael J. McCauley City Manager Date: February 27, 2004 Re: Tax Increment Financing Planning for TIF District #3 The March 1 S Council Work Session will be the first of several work session discussions to develop a focus and direction for economic development in Tax Increment Financing District #3. The March 1" meeting will be an overview of: 1) Tax Increment Financing a. Uses b. General requirements 2) The City's TIF districts a. TIF Districts 1& 2 b. TIF District 3 c. TIF District 4 The main focus of the meeting will be an update on TIF District #3 and the issues we are working on to identify potential directions that could be taken. TIF OVERVIEW Tax increment is generally used to provide a source of funds for development, redevelopment, soil correction, and or housing. Tax increment is used within a tax increment district that is classified by a type such as development, redevelopment, etc. There are different rules as to the length of a district based on the type of district created, as well as different standards to qualify a tax increment district. Districts created before certain dates also may be grandfathered and thus exempt from recent legislative changes limiting the ability to incur debt or make expenditures unless undertaken within 5 years of the certification of the district for a redevelopment district. In a redevelopment district (3), of funds may be used, among a few other things, to: i P Acquire property q P P Y Demolish structures Make soil corrections Utility work or construction Road construction 6301 Shingle Creek Parkway Recreation and Community Center Phone TDD Number Brooklyn Center, MN 55430 -2199 (763) 569 -3400 City Hall TDD Number (763) 569 -3300 FAX (763) 569 -3434 FAX (763) 569 -3494 www.cityofbrooklyncenter.org ,t Sidewalks Parking facilities Administration, including preparation of action response plans TIF funds may NOT be used for: Government buildings Primarily aesthetic of decorative purposes o Statute defines this as us of materials or design that results in cost 100% of more than commonly used materials or designs Common area used as a public park Facility for social, recreational, or conference purposes (doesn't apply to parking structures or privately owned conference facility) {This law occurred after EBHC project.) Acquisition of property in excess of 25% of the acreage within the district without a development agreement with recourse if redevelopment does not occur TIF Districts 1 2 TIF District 1 was created for the housing project along Lilac Drive shown in red in the TIF Districts 2100 2101 map. TIF District 2 was created for the redevelopment of the Earle Brown Heritage Center, the creation of housing adjacent to the EBHC, and general commercial development and street improvement in the purple area on the map. TIF District 1 was merged into TIF District 2 to finance the activities in TIF District 2 after the obligations for TIF District 1 were retired. After class rate compression reduced commercial industrial tax rates, TIF 1 2 went from a positive net cash flow to a deficit. The debt service on bonds issued for TIF District 2 exceeded net tax increment due to that class rate drop. Issues in TIF District 2 1) Accounting a. For the bond payment deficit i. Bond Counsel is reviewing the Plan for TIF 2 relative to dealing with repayment of the monies used to cover the deficits. b. Bonds for this district are retired 2) EBHC management a. More options with retirement of bonds 3) Hotel Development a. Use of TIF to assist is a potentiality from TIF 2 or from TIF 3 as part of the 25% out of district allowance b. Connection of hotel to conference center i. Not eligible for TIF on public part 1. Privately Y owned may be different TIF District 4 Joslyn TIF District 4 is a soils district. The projects in 4 are completed for all practical purposes. The district will terminate upon retirement of the notes. The notes for phases 1 2 each terminate 10 years after their l" year of full increment or full payment of the notes, whichever occurs first. TIF 3 contributed funds for Phase III so that the length of the district would not exceed the 10 years of full increment. TIF District 3 TIF District 3 (District 2102) is a redevelopment district. This district was created as a redevelopment tool with Brookdale as it center point. The areas in teal blue on the TIF District 2102 map are contained in TIF District 3. TIF District 3 history: Established in December, 1994 Certified in the 1 st half of 1995 Bonds were issued in 1995 for $4.56 Million 25 year maximum life for the district Created with special legislation P g o Requires 15% expenditure of of proceeds on housing for low /moderate income qualified projects Housing may be located anywhere in City of Brooklyn Center Projects in TIF District 3: o Acquisition and demolition of blighted properties east of 252 where current housing development is occurring o 69 Brooklyn Boulevard acquisition and demolition of properties and storm water improvements o Outside District: $1 Million to Joslyn Phase 3 o Water main relocation for Country Inn Suites o Soil correction for Sunlite warehouse behind Hilton in the industrial park o Development agreement with Talisman for Brookdale: pay as you go note for $2.9 Million that has not been issued pending full compliance with the agreement based on valuation on January 2, 2005 and all other terms of the agreement TIF District 3 requirements Can spend no more than 25% outside the district Current budget $31,900,000 o Rough estimate would be in $20 Million range of unspent budget capacity that would be supported by projected future TIF and current fund balance without an amendment of the budget o District has potential to provide more than a total of $31.9 Million with a budget amendment Current deadline for qualified expenditures is early 2005 o May be possible to issue bonds prior to 2005 and obtain up to 3 year window to expend proceeds Must expend proceeds within that window if issued TIF District 3 Issues: Special legislation in 2004 session o Would allow qualified expenditures into 2008 Re- zoning to facilitate synergy in the opportunity site portion of the district Acquisition Before actual development in hand To facilitate eventual development OPPORTUNITY SITE STUDY Attached are copies of the illustrative plans from the study. The report suggests creating a town center with mixed use and a developed retail core that creates a synergy that is lacking between the Brookdale area and the Target, Best Buy etc. areas. That concept would develop the retail core in the area identified on the maps west of Shingle Creek Parkway and the mixed use town center north of Bass Lake Road and east of Shingle Creek Parkway. Among the recommendations in the report would be the elimination of the ramp at Summit Drive, creation of parking ramps, and blending a replacement of Summerchase housing units into a market rate housing development in the town center, thus changing Summerchase into a retail area across form Brookdale. Staff Work Staff is working to: Effect an accounting for TIF expenditures Obtain bond counsel review and opinions regarding plans, budgets, and potential options for projects Identify plan budget amendments to correspond with o Changed circumstances Conduct sensitivity analysis on assumptions for future increment Real estate tax class rate prediction Impacts of removal of properties from district Either due to no qualifying improvement This is low impact issue Acquisition with a development in hand PROJECT FOCUS There are a number of potential redevelopment projects in TIF District 3 that need to be prioritized by the City Council. One of the issues in that prioritization is the issue of acquisition without a development agreement. We have undertaken projects where we have acquired without a development agreement: 252 69 We have also not gone forward to remove property without an agreement: Northbrook etc. Within TIF 3 there are a number of potential projects: Acquisition and demolition of Northbrook Acquisition of Brookdale Ford property (with or without Little Asia) o Associated potential developments north of that property would fit into Opportunity Site study recommendation, but are outside TIF district 25% rule might provide some funds, but development would not unless a 5th district was created (this would have issues with amount of tax base not contributing to growth in cost of operations unless corresponding property removed from TIF 3 to replace lost growth) 69 Brooklyn Blvd. NW quadrant Additional improvements at Brookdale Improvement of Xerxes from Highway 100 to Sumerchase area 70 Brooklyn Blvd. acquisition of houses (there is a current option on our property with a developer) SUMMARY An overview of a development view in the Opportunity Site area must be developed through Council direction and a prioritization of potential development. As the accounting for past expenditures and current budgets is completed, we can discuss specific amendments to implement the directions taken by the Council. One of the most important issues is whether we will proceed only with a firm development in hand or act in anticipation of development potential. LEGEND TRANSIT CENTER JOINT DEVELOPMENT RETAIL CIVIC EDUCATIONAL MIXED USE OFFICE RETAIL S U OFFICE MIXED USE RESIDENTIAL RETAIL t£ f PARKS OPEN SPACE EMBEDDED GARAGE HOUSING PODIUM HOUSING TUCKUNDER HOUSING 0 MANSION HOUSING a LIVE /WORK TOWNHOUSES TOWNHOUSES``` I PUBLIC PARKING GARAGE D R 0 .E Li 0 EC�� :moo P z, I i B A S S L A K E R O A D BROOKLYN CENTER PRELIMINARY LAND USE MAP Smart Growth Twin Cities T 0 400' 800' Metropolitan Council Calthorpe Associates St. Paul, Minnesota July 22, 2002 Version 2a Berkeley, California 1 glossal ■111 aanunu� a I Val n CIII /1111: i'u C 3r 3 u►Ihuuni i� gE mm MC ME 3 0 ■b P C; 1111 ■uun.P. �l Ulllla s C ■C 3 3. 12. :11/1!1 !11 /Q j K onus ■.0 iiiji�� �'1�11���111111111111. y 't +1 .UI► i� 11 \111 \l \1111110111/ IIIILq .I t 1011111. \1111111101 111...E •I! ,.5, utlU11� 101001111/1000. 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If In- lunlllit 11 M. -i TIF Dis 2100 2101 TIFDistricts2 -12 2100 2101 2102 Lakes Streams Parcel s Rightsof way N R3 1 W R7 V i..�... 1 Exhibit E 2 -28 -96 CONCEPT PLAN DEVELt )PM E,N i IATAI L :a yr Ob Tads y L.A. t LEGEND r, Study Are, Boundary 1 u Y Rrglonrl T,11 toll -OI t ponlonl Ai N— Tmll bN•rtrtetl Enh.n<rd Prdr,tri.n C'roaing CANU USE CivlrlFJ—i— Rruil Fig.,, 2.95: F I I. CONCEPT PLAN Jor the Brooklyn Center oppwunity site. The final concept plan envisions a new mixed•m re town confer and a reoilalif ed and infflled retail core. Pedestrian friendly streets conned the area f shopr. o(i.es and amenities to residence; both within and without the stud) area, and a new Muliil.milr Uwrlling. lantsi! Tenter ronneiU the areas to the region. •Mwiun'fmvung 1 1 w a n.wnbmnr. rownbom O Puking Grmp Callhorpe Asrodates 42 J anuary 2003 r m v 7; s. w s °,.'rr r.X. •vre 4 .1� n i W- r. i N t III♦ 3 fi I. e ti` �a•I► -ti.li ■k ^t.• a i i z 1 e t as 4� 6 a .�1 `Y t k 4�I' t•. t i h v� i .t i :.iu� sr l S f` J c aw r.. �.J O `Y>rr. {Yr a r..- f 4 t a F. ---.r, e 9 i yi�a r r O y S 7 N_ A v e x V e. �x .�i i 'r x J .i. r i 1 1, r I.• S I r .l Yl a..t e•. V�., •T t.. 'R ri .4 S u r( t .gy p p f..'.9 Y I r rF r 4 f j 1 I BROOKLYN ..m� CENTER 6 5 T H A V E N U E N. i, M fiSiH AV F ILLUSTRATIVE BaTN A V E 6 A T H A V E PLAN OHENRT RD, a`_� 63RD AV i ��a�♦ W O C wk x191. M U M F O g D R D, PARR 6 t N D A V E. 6t ND AVEp S 4 61ST AVE. }�lY LEGEND e Study Area Boundary w 6 e T H w e rt t'0o v. Regional Trail (off- street portion) �Op o r A E New Trail (off street) ;t e o o oh is o w+� LAND USE PRr r. J e �Y� s r T H Ave Civic /Education #BMW= MM Retail W r.., Office 5 8 T H A V E N U E Mixed Use °1'P r ��ti 1 v E J IOftitt AN— c. !all 1 a u m t Mixed Use o I Aee•�err I j W 1Re,idenlia1 At C all 2 N T Y R O A D 1 Multifamily Dwellings 1 I! 1_• T I, R' T i L I 5 7 T H A V E N U E Live /Work Townhomes *fll -1 J j Townhomes o Inon..5 Parking Garage o j /s e r H A V E Parks Open Space o ff,` E R I C O N D R sen 3 S T N A V E u S S T H A V E O o ,VUrfll e� c�, r; B a r n w i£ Tiu o La k e 6] P D P L .I 6]RD AVE. Metropolitan Council S] R O A V E V Building communities that work 1 0 0' 12 300' 6000' rrtwin art owth C1ti es August 8, 2002 i '\4ar c 2004 TIF Wor.'1c. Session Purpose Staff Overview of TIF and Potential Projects TIF City's 4 TIF Districts in General TIF District 3 Boundaries Potential Projects Issues Opportunity Site overview Concepts Preparation for April 12th work session with City Council Direction Outcomes for Tonight 1. Review of '-'=F and districts 2. Discussion of broad potentia' projects 1. Sense of direction on Opportunity Study 1. Town Center &Retail Center groupings 3. City Counci' identification of of =ler potentia'- projects to review 4. Be a to _lave prioritization discussion on Apri'. 12th Ongoing Staff Work Accounting for TIF and projecting budget scenarios Bond counsel review and opinions Development of broad scenarios to consider Working with Dan Vang Northbrook environmental Phase II Potential Little Asia sites Car dealership Miscellaneous Tax Increment fax ncrement City's primary, if not on: y, effective too_ to redeve_op Uses increased taxes from redevelopment to fund activities necessary to facilitate that redevelopment Brook'-yn Center Districts City _1as 4 districts TIF 1 (2100) Housing Merged with #2 to assist in financing #2 activities TIF #2 (2101) Redevelop EBHC &surrounding area i Create housing KA Districts 2,100 2101 f FD str ds2 2101 Lakes& St reams Pa Rights of w Al CIA x 2 Brook'-yn Center District #3 #3 (2102) Redevelopment Large district Brookdale is focal point Largest financial impact 15% Housing requirement 25% outside district potential Established December 1994 25 year maximum life from certification in 1995 u w E �am f i i E 4tr all a S ou Rod Psi JILL District #3 Continued Specid Legis'. (2004) Would add 3 years to redevelopment expenditure window Bonds may add 3 years 'I Either 3 years to expend from issuance in 2004 Or 3 years from issuance 2005 -2007 with special legislation District #3 Continued Basic issues in District #3 Ability to expend funds Expires beginning of 2005 Except may be able to spend bond proceeds for up to 3 years following issuance Expires 2008 under same potential basic extension for bond proceeds if special legislation passes Vision for Opportunity Site Area Prioritization Development Requirements p q Development in hand and /or To create clear site for redevelopment Comp =eted TIF #3 Pro,.*ects Joslyn Piase 2. Country -nn &Suites utility :_ine re= ocation 3. S Ware soi:. correction 4. G S'__­1owroom warehouse soi= correction 5. 69th Brook_­yn B 6. Brookda'- 7. 252 remova: of mote_ etc. 1. Housing deve-' rep_acement Tax IncrementUses TIF 3 Increment can be used for Acquisition of property q P P Y Demolition of structures Soil corrections Utility work or construction Road construction Sidewalks Parking facilities Administration Prohibited Uses of TIF in #3 Can't do t- f wit: z '-=F in #3 Government bui'-dings Primari .y aesthetic or decorative construction Common areas used as a pub .ic park Socia recreational, or conference faci'ities (doesn't apply to private -y owned conference) Property acquisitions in excess of 25 of acreage without recourse development agreement Potentieay Pro %.R Acc uisition and demolition of Northbrook Acquisition of properties across from Northbrook Acquisition of Brookdale Ford NW quadrant of 69th &Brooklyn Blvd. Additional improvements at Brookdale Improvement of Xerxes from Hwy. 100 to Summerchase 70th &Brooklyn Blvd. acc uisition of houses St. Alphonsus housing Other Rough Acquisition Points Northbrook $4.6 Mi .:ion Across from Northbrook $1.8 Mil:_ion Summerchase $11 Mil ion NW corner 69th Brooklyn B .vd. $4.2 M 1. Brookda_.e Square $6 Mi_ -ion Brookda: e Ford $4.5 Million 1. K -Mart $5 Mi_lion Note Properties with numbers outside District Rough* Increment Ranges Nomina:_ Cash avai ab__e through end of district With Brookda_e $45 Million for general projects $10 Million for Housing Nomina_ Cash avai_ab_e through end of district Without Brookdale $35 Million for general projects $8 Million for Housing Amounts cannot be achieved with cash Expenditure limits would necessitate bonds or pay as you go notes Amounts are rough gross increments generated based on following assumptions Assumptions for Cash Current cash balance No change in valuation Increment increases /decreases in tandem with value No change in class rates Increment if highly sensitive to class rates No change in tax rates below certification year State takeover /elimination of a component of taxes could impact rates Opportunity Site Issues Potentia amendment of Compre'iensive P'-an To a ._ow housing Issue of definitions down Center Concept Repositioning a_ong Bass. Road Question is do we want to go forward in t- directions? f jot 5,r< tir ,,sgaz.",/i r s' r" r'�"� a lit" y "ix' t 's��✓' s� a r c� 1 b"� al l 4 s r l t g gNBYA y„! S s a �x r k 4 $ti *7 x >r ,a. �E: M ar Um iw'fz$vz ;3' l t3 ,32'�.1kak I' Sd.:d' s44k��isx{j Akk°'trt` #!iP'W s� ,t�`f y.. E ffi ,N #0ji ,4;`,€� 'r,r a� gfrr .i a� J.r�i" 1 f.4`.7 •;ta;'S$,[ f' F a 8 t, t .s Wniv IRMA OF So VGA Q pool 1 JAI �rw.:«i..+:.�.cs� -«ar ,.ws�� �'���f �`9:sw{ea tt:Jrs�.� ,a v z,, .:�tsi .d L:t =.i.,, ar.t.. :�Yta� .�x•.�5:'..�..r, rrr, ":l.. t, A as y ce 2YJ a ,g r }vim J s a it R I I, e: (jrs" -r i� y «�ra'` R,mm, •`bay �u ,+ua a. �:r st +z ?&,x ,a��'� a6s ;e,.q�rw �w�• c T OP FT NOW u il s r v tl- fy� e s r s rl UN x s l t r r Refinement of w s 7 m W '�i ate, s 3 �4 Fyn 5 AM i N Summary Next steps 1. fake broad scenarios &refine 1. Ba:: park cost scenarios developed for potentia. projects to be considered for prioritization 2. Budget Capacities 2. Deve'- range of funding options 1. Assumptions 1. Cash flows 1. Potential I Discussion 1. City Counci- Directiontor Apri- 12tH 1. Opportunity Site 1. Proceed or not on general outline of Town Center and Retail Center 2. Projects to be included in Apri_ 12tH prioritization 1. Will facilitate rough fiscal scenarios to be developed regarding capacities for projects I Acquisition and demolition of Northbrook 2. Acquisition of properties across from Northbrook 3. Acc uisition of Brookda:.e Ford 4. NW c uadrant of 69th Brook_yn B vd. 5. Additiona_ improvements at Brookda _e 6. Improvement of Xerxes from Hwy. .00 to Summerchase 7. 70th Brook_yn B:_vd. acc uisition of houses 8. St. Alphonsus Housing 9. Other Properties /Projects in District 10. Properties outside District related to Centra- District Impact Other Projects?