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05/11/2004 - City Council Finance Committeet AGENDA FINANCE COMMITTEE MEETING TUESDAY MAY 119 2004 4:30 P.M. CONFERENCE ROOMS 2A & AB I. ROLL CALL AND AGENDA ADOPTION II. REVIEW CEDAR GROVE TIF FINANCING o Discussion re: Project 759R is to be included III. OTHER BUSINESS IV. ADJOURNMENT MEMO City of Eagan TO: HONORABLE MAYOR GEAGAN AND COUNCILMEMBER CARLSON FROM: CITY ADMINISTRATOR HE, DATE: MAY 7, 2004 SUBJECT: FINANCE COMMITTEE MEETING / MAY 11, 2004 Per the direction of the Finance Committee at their April 20 meeting, a Finance Committee meeting was originally scheduled for Tuesday, May 18; however, with the consensus of the Committee, the meeting was changed and scheduled for Tuesday, May 11. The change in meeting dates will allow the Finance Committee to address the proposed special assessment hearing for Project 759R that is scheduled for consideration as a Consent Agenda item at the May 18 City Council meeting. REVIEW CEDAR GROVE TIF FINANCING At the March 9, 2004 City Council Workshop, the City Council directed that the discussion regarding the Cedar Grove TIF financing be directed to the City Council's Finance Committee for further review. Enclosed on pages throughaq are the minutes from the March 9, 2004 City Council Workshop along with the information that was sent to the City Council in advance of the March 9 meeting and reviewed by the Finance Committee at the April 20 meeting. Also enclosed is a copy of minutes and packet material from the March 12, 2002 City Council meeting, enclosed on pages through LJ1jAg which Councilmember Carlson asked the Finance Committee to review at their April 20 meeting. Since the scheduled May 11 meeting is a continuation of discussion that was held at the April 20 meeting, there is no new information relative to the overall Cedar Grove TIF financing included in this packet. However, there were questions raised as to why Project 759R would be assessed to properties in the Cedar Grove Redevelopment Area when there has been some public policy discussion about not assessing the redevelopment area for certain road improvements. The City Council continued consideration of Project 759R to schedule the special assessment public hearing at the May 4 meeting to allow the Finance Committee to perform a fact finding and include some recommendations for the May 18 City Council meeting. For a copyof updated information relative to the proposed assessments under Project 759R, refer to page . /s/ Thomas L. Hedges City Administrator MINUTES SPECIAL CITY COUNCIL MEETING MARCH 9, 2004 5:30 P.M. EAGAN ROOM e EAGAN MUNICIPAL CENTER City Councilmembers present: Mayor Geagan, Councilmembers Carlson, Fields, Maguire and Tilley. City staff present: City Administrator Hedges, Assistant to the City Administrator Lord, Director of Administrative Services VanOverbeke, City Planner Ridley, Director of Community Development Hohenstein, Director of Communications Garrison and Chief Financial Officer Pepper. I. ROLL CALL & AGENDA ADOPTION The City Council discussed the meeting date for the first meeting in April. Councilmember Tilley moved; Councilmember Fields seconded a motion to change the first meeting in April to Wednesday, April 7. Aye: 5 Nay: 0 City Administrator Hedges distributed correspondence from the CEO of EcoLab Inc. which. made known the move of EcoLab's Research, Development, and Engineering division to Eagan." Councilmember Maguire moved; Councilmember Tilley seconded a motion to adopt the agenda. Aye: 5 Nay: 0 II. VISITORS TO BE HEARD There were no visitors to be heard. III. BECT 5 -YEAR PLAN & CIP City Administrator Hedges introduced the item stating that Burnsville/Eagan Community Television (BELT) has been supplying community programming since 1984. Hedges noted that the Burnsville City Council asked for a 5 -year BECT financial plan including a first ever Capital Improvement Plan modeled after the way both cities do their CIF's. Hedges added that the Finance and Communication staff from both cities have met for the past several months to develop the plan in consultation with a technical expert and H.R. staff. City Administrator Hedges introduced Mark Hotchkiss, Community Programming Specialist, Will Craig of Ehlers & Associates, and Jim Skelly, Communications Director for the City of Burnsville. Together with Communications Director Garrison, a presentation was provided on BECT's four main areas of responsibility: 1.) government M Special City Council Minutes March 9, 2004 Page 2 of 5 meetings, 2.) public access, 3.) community news and events, and 4.) operations. Will Craig of Ehlers & Associates provided a presentation on the findings of the study regarding equipment replacement needs at BECT, including the need for digital technology in a cost effective manner. The City Council discussed revenue opportunities and the need for equipment replacement at BECT. There was City Council consensus that the equipment needs to be replaced in order to maintain volunteers and a level of service currently being provided to both Burnsville and Eagan. The City Council provided direction that the BECT budget should be adjusted downward to 8.0 FTE to keep the positive fund balance and address critical equipment replacement needs. The Council requested that staff and a plan be put in place for the Council's review. The Council also noted that they are comfortable with more aggressively pursuing sponsorships and revenue opportunities. Lastly, the Council asked that the Telecommunications Commission and staff prepare recommendations on a policy regarding what type of commercial messages the City will accept. The Council asked that the policy be brought back for the City Council's review. The City Council requested that when the Operating Budget and Capital Plan are brought back to the City Council, that the information also include the effects of the staffing reductions. The City Council asked that the Operating Budget not be placed on the Consent Agenda until the Council has had the opportunity to review it. IV. DEVELOPMENT PERFORMANCE STANDARDS City Administrator Hedges introduced the item noting that at the January 22, 2004 Council Retreat, the City Council directed that Development Performance Standards be placed on a future workshop agenda for further discussion. At that time, Hedges added, the Council discussed the concept of being a "Community of Choice". Director of Community Development Hohenstein lead a discussion with the City Council on the following performance standards: 1.) finish material and architectural standards; 2.) closer controls on general signage, temporary signage, and window signage; 3.) required roof -top mechanical screening; 4.) site lighting standards; 5.) other performance standards as directed by the City Council. Community Development Hohenstein noted that per the Council's direction, the APC is currently addressing window signage. The City Council agreed with staff's recommendation to require roof -top mechanical screening and site lighting standards. The City Council discussed the Performance Standards and noted that staff should work with the business community to address the issues. It was also noted that the City has trails/sidewalks that do not connect well and backs of parking lots are often empty. The Council asked for ways in which pedestrian traffic could be more easily moved. The Council also discussed use of landscaping that results in more textured landscaping with higher filtration. The Council encouraged more creative parking layouts. The City Council directed staff to explore the performance standards that are applied in other demand communities for possible consideration in the future. The Council also added that they have a concern about excessive signage and painted window signage. 3 Special City Council Minutes March 9, 2004 Page 3 of 5 V. PERFORMANCE ZONING CONCEPTS City Administrator Hedges introduced the item noting that at the City Council Retreat on January 22, 2004, the Council asked staff to research performance zoning concepts, including density bonuses, as a means of encouraging high quality, higher density developments or other desirable development characteristics without shifting the market for all properties by simply rezoning to higher densities or reducing other standards or requirements. Hedges noted that staff is looking for direction with respect to further investigation of additional performance zoning concepts to encourage innovative and desirable development alternatives for build out, in -fill and redevelopment within the community. „ Community Development Director Hohenstein and'City Planner Ridley provided definitions of performance zoning, noting that under performance zoning, land development and use is regulated by a series of performance standards that mitigate undesirable specific impacts of any proposed development. It was noted that due to its complexity, labor intensiveness and the question of control, the appeal of performance zoning is somewhat waning. However, elements of performance zoning can be blended with traditional zoning. The City Council discussed the benefits and consequences of performance zoning concepts, including its relationship to plan developments. The City Council also noted that better control is needed, such as what types of specific criteria the Council would want to target (housing type, amenities, housing value, etc.) and what standards would the Council be willing to consider adjusting for those criteria. The City Council directed staff to bring back a list of desirable features that could be available to developers for further discussion by the. City Council. VI. CEDAR GROVE REDEVELOPMENT DISTRICT FUNDING DISCUSSION City Administrator Hedges introduced the item, noting that the City Council previously gave direction to staff to prepare a summary of the financial information associated with the Cedar Grove . Redevelopment District. Community Development Director Hohenstein provided the City Council with a presentation on the background of the Cedar Grove Redevelopment Area financing. Hohenstein added that the current development finance model for the Cedar Grove area projects the tax increment may be able to support about $3 million of the public improvement costs, and added that it will be necessary to find other sources to fund the balance of the project costs. Hohenstein then provided a list of options that the City Council may wish to consider, including: 1.) improvement bonds, 2.) major street fund, 3.) tax increment, and 4.) tax increment bonds. The City Council discussed the options and,noted that they had some questions on the assessments. Council provided direction to refer the discussion on the Cedar Grove financing to the Finance Committee. The City Council recessed at 7:25 p.m. Special City Council Minutes March 9, 2004 Page 4 of 5 VII. RECOMMENDATIONS / FINDINGS FROM THE PUBLIC WORKS COMMITTEE RE: ALUM DOSING City Administrator Hedges introduced the item noting that per the direction of the City Council at the December 8, 2003 Council Workshop, the Public Works Committee, consisting of Councilmember Fields and Maguire, met on two occasions (January 27, 2004 and February 10, 2004) to review research and costs associated with alum as well as review alternatives and a proposed implementation timeline for the use of alum on Fish Lake. Hedges added that the Council is asked to consider the short and long-term recommendations of the Public Works Committee, including: 1.) the reintroduction of alum dosing at Fish Lake; 2.) the formation of a water quality task force; and 3.) determine whether to formulate a public information process to formally consider whether to resume alum dosing at Fish Lake. City Administrator Hedges thanked the Public Works Committee for all of their work on this issue and noted that in the audience was Eric Macbeth, Water Resources Coordinator, and Jay Riggs, Urban Conservationist from Dakota County. The City Council discussed the recommendations of the Public Works Committee including short-term and long-term options and the potential need for a water quality task force. Councilmember Maguire provided an overview of the information and recommendations that came out of the Public Works Committee. It was also noted that 159 residents were noticed about the March 9 workshop, at which time alum dosing would be discussed. Water Resources Coordinator Macbeth, at the request of the Public Works Committee, provided a Power Point presentation showing alternatives to alum. Following the presentation, Councilmember Maguire noted that staff has done a commendable job in acquiring information about alternatives to alum. It was noted that while alum dosing is not necessarily a good long-term strategy, it is an effective short-term strategy. The City Council discussed the need for a task force to look at the long-term water quality needs of the community. The City Council discussed the need for JP -47.2, the settlement basis that would be used for alum dosing. The Council discussed the access options on to Mr. McCarthy's property should the project proceed a head. The City Council directed the City Attorney to continue working with Mr. McCarthy's attorney in order to get a comfort level with Mr. McCarthy regarding potential easements and the need for a construction road. At the recommendation of the Public Works Committee, the Council directed that a public hearing be scheduled at an upcoming regular City Council meeting to consider the reintroduction of alum dosing at Fish Lake and the formation of a water quality task force. The City Council thanked Water Resources Coordinator Macbeth and Jay Riggs of Dakota County, as well as Councilmember Fields and Maguire who spent a considerable amount of time as a Committee on this issue. �i Special City Council Minutes March 9, 2004 Page 5 of 5 VIII. OTHER BUSINESS City Administrator Hedges noted that Director Garrison returned from his meeting with Bumsville, and the City of Burnsville endorsed the same recommendations as the Eagan City Council in regard to the BECT 5 -year plan and CTP. IX. ADJOURNMENT The City Council meeting adjourned at 8:30 p.m. I AGENDA SPECIAL CITY COUNCIL MEETING MARCH 9, 2004 5:30 PM EAGAN ROOM-EAGAN MUNICIPAL CENTER I. ROLL CALL AND AGENDA ADOPTION H. VISITORS TO BE HEARD • III. BELT 5 -YEAR PLAN & CIP IV. DEVELOPMENT PERFORMANCE STANDARDS LOS V. PERFORMANCE ZONING CONCEPTS 50 VI. CEDAR GROVE REDEVELOPMENT DISTRICT FUNDING PLAN 7:30 P.M. VII. RECONEYIENDATIONS / FINDINGS FROM THE PUBLIC WORKS COMMITTEE RE: ALUM DOSING VIII. ADJOURNMENT .1 Agenda Memo March 9, 2004 Special City Council Meeting VI. CEDAR GROVE REDEVELOPMENT DISTRICT FUNDING DISCUSSION DIRECTION TO BE CONSIDERED: To provide staff direction with respect to the preparation; of a permanent funding plan for the Cedar Grove Redevelopment District using one of the ALTERNATIVES outlined below. FACTS: _ • The City Council previously gave direction to staff to prepare a summary of the financial information associated with the Cedar Grove Redevelopment District. The purpose of this discussion item is to provide a discussion of the current financial status of the district and long term financing alternatives. The long term financing question involves confirmation of a funding plan for expenditures made to date to establish a base line for moving forward with additional property acquisition and redevelopment negotiations with prospective developers. • The. Cedar Grove Redevelopment Project is the culmination of discussions and planning activities that date back many years. In order to facilitate the redevelopment, the City of Eagan has taken two significant steps that are at critical points and should be addressed before additional redevelopment activity can be undertaken. • ` The'first step was the implementation of a series of road and right of way improvements to increase traffic capacity, ease access to and through the area, provide for storm water management and treatment and enhance the appearance of the streetscape in the area. Certain funding sources were identified as a part of the feasibility study process for these projects, but an ultimate funding plan was not finalized. The improvement projects are now at the point at which final funding would ordinarily be addressed by the City Council. • The second step was to create a tax increment financing district to permit new development in the area to offset costs of certain improvements and the acquisition and assembly of certain properties for redevelopment purposes. From the outset, it was noted that the tax increment district could only generate a portion' of the funds necessary to support the improvement and redevelopment activities and that the generation of funds was contingent upon certain assumptions regarding the timing and intensity of development and the actual costs of acquisition, demolition, land preparation, land write down and return on investment for private development partners. The original requests for proposal and property owner negotiations resulted in the project's first two developments, Keystone and Nicols Ridge, which are tracking with the original development timelines. It also resulted in a development relationship with United Properties for the Class A project on the north side of Hwy 13. The next phase of redevelopment activity through the second RFP process will determine the extent to which TIF funds will be generated and required for implementation. • The primary project financing issue relates to the cost of public improvement within this area including Project 800 and 759R. The original cost of public improvements was estimated at $3 - $4 million. The current estimated cost is. approximately $12 million including property acquisition. A number,of factors have increased the costs including: ❑ In order to avoid duplicating the cost of acquiring land for redevelopment the; City has acquired entire parcels required for roadway development even if only portions of the parcels were needed and the property owner, was agreeable to the acquisition - $4.7 million (Amount also. includes_ other properties acquired for redevelopment purposes.only) ❑ Streetscape elements have been added to the original project:- $1.6 million. ❑ Additional improvements have been added to increase capacity at the;' intersection of Highway 13 and Beau d'Reau Drive - $1 million. ❑ Fly Ash Removal and Other _ $1.7 million. • The issue to be resolved is how this project will be financed in the long term.. Initially, the plan was to assess a portion of the public improvement cost for the new development. If available, tax increment would also be used to pay a portion of this cost. The current development finance model for; this ,area projects that tax increment may be able to support about $3. million of the public ,improvement cost. It will be necessary to find other sources to fund the balance.of project costs. It is also possible that new developments will demand more assistance than the assumptions have identified. Options that have been considered include: l . hnbrovement Bonds. This option was presented to the City. Council. at a meeting in February of 2002. At that time the recommendation was to assess about $2 million of project cost to the development and finance, the balance as part of an improvement bond debt levy that would be paid from the City as a whole, At that time the Council chose not to proceed with this option. Subsequent to this discussion, the City Council also determined that current property owners within this area should not be assessed through.the normal Chapter 429 process. Since an improvement bond requires at least 20% of a project to be assessed, this option is no longer viable.. _ 2. Major Street Fund. Allowing for projects approved in the current. capital improvement program, the Major Street Fund has a projected of approximately $ 7.4 million at December 31, 2004. The Fund..was established early in Eagan's high growth period to assist in landing street reconstruction projects and assist with selected new roadway projects, primarily by financing oversizing and collector costs. This fund could pay for a greater portion of the Cedar Grove improvements if the Council were to apply it to other project costs. Use of y Agenda Memo -3- March 9, 2004 Special City Council Meeting Cedar Grove Financing ' these funds without a predictable repayment plan and schedule would jeopardize currently scheduled or potential future city roadway projects. 3. Tax Increment. The EDA has established a tax increment district for the Cedar Grove area. Public improvements are a qualified tax increment expense. Therefore, the City could use tax increment to pay for the public improvements. The City has previously directed Ehlers to prepare a projection of financial performance for this project. This projection indicates that the development will be able to support a maximum of about $3 million in public improvement costs. The balance of revenue from increment and developer land payment will be needed to pay for land assembly (land costs, relocation, demolition and environmental remediation). Until these funds would be collected, it would be necessary to continue to temporarily finance costs to date, until new development results in the creation of increment revenues. 4. Tax Increment Bonds.. State statutes permit the issuance of tax increment bonds if at least 20% of the debt service will be paid from increment. The balance of the debt service may be paid from the City's debt levy (from the City's entire tax base). Given current projections, tax increment bonds could be issued to cover the project costs, however it is projected that some portion of thebonds would need to be supported by the City's general debt levy. To the extent that, increment was not needed for direct assistance to redevelopment projects, it could be applied to reduce the debt levy. • Resolving the long term funding issue is important for two reasons. First, the method of paying for public improvements impacts redevelopment financing. Developers will want this information when preparing development proposals. Second, the City continues to express interest in purchasing land within the redevelopment area to assist with redevelopment and business relocation. In addition to addressing the long-term project funding issues, the Council directed staff to analyze the potential cost for acquiring the remaining private property within the redevelopment area and to prepare an updated project timeline to establish redevelopment expectations for the property owners, the community and interested developers. • Without doing professional appraisals of the properties, an estimate of acquisition cost is extremely speculative. As a surrogate, staff developed a methodology under. which two known values were compared — the total cost of acquisition for individual properties.to date and their market value for tax purposes. By extrapolating that multiplier to the market values of other properties, a very rough estimate can be generated. The actual cost of future acquisitions will depend on a variety of factors, including the actual costs of relocation of the occupant businesses, which depend upon the nature of the business, the scale and ease of IL Agenda Memo March 9, 2004 Special City. Council Meeting Cedar Grove Financing 4m relocation of their equipment and other business specific factors.: Therefore the assumptions from this type of analysis must be heavily qualified. • The original project timelines developed as part of the Cedar/13 Study anticipated redevelopment in five-year blocks over a period of twenty years. An updated timeline will depend upon the responses of proposing development firms as to their perceptions of the market, their capacity to meet it and the willingness of the City to adhere to or adjust its vision in response to the market perceptions. Therefore, staff is providing a timeline through the negotiation of updated pre - development agreements with the selected developer(s); with the understanding that the redevelopment timeline from that point forward will be dependent upon the developer selection process. ISSUES: • The scope of the public improvements and associated property acquisitions to improve access to and through the area and to enhance the streetscape in the area was expanded beyond the original assumptions for the project. While the City has pursued additional funding sources including CDBG and State Cooperative Agreement, the other potential revenue sources, including projected TIF proceeds have remained flat and the collectability of assessments have been limited. While active redevelopment has begun and momentum appears to be building to begin the redevelopment of the retail core of the area, updated TIE projections indicate that approximately $3 million in TIF proceeds may be available for public improvement costs to date. • A number of alternatives are outlined below to permanently finance the project balance. To the extent that an alternative is selected that diminishes the reliance on TIF revenues to cover expenditures to date, the City will be better positioned to actively pursue additional property acquisitions. The City will be in a better position to negotiate redevelopment agreements with prospective. developers and pursue higher quality projects, if a large proportion of the tax increment they may generate can be committed to acquisition, relocation, demolition and other means of controlling land costs. • A fixed timeline is available for the sale of TIF bonds for the expenditures to date. If this alternative is to be pursued, it will be important to take steps in that direction in the near future. • As a part of the Council's direction, staff is to develop a revised project timeline. In addition, the Council has authorized the preparation of new requests for. proposal to permit consideration of updated proposals for the sub -districts and, hopefully, attract a master developer who will be able to coordinate and phase redevelopment of the entire area. These two directions are closely linked in that the schedules included in the proposals will define the timeline from the RFP process forward. While we had hoped to have the draft RFP available as a part of relocation of their equipment and other business specific factors.: Therefore the assumptions from this type of analysis must be heavily qualified. • The original project timelines developed as part of the Cedar/13 Study anticipated redevelopment in five-year blocks over a period of twenty years. An updated timeline will depend upon the responses of proposing development firms as to their perceptions of the market, their capacity to meet it and the willingness of the City to adhere to or adjust its vision in response to the market perceptions. Therefore, staff is providing a timeline through the negotiation of updated pre - development agreements with the selected developer(s); with the understanding that the redevelopment timeline from that point forward will be dependent upon the developer selection process. ISSUES: • The scope of the public improvements and associated property acquisitions to improve access to and through the area and to enhance the streetscape in the area was expanded beyond the original assumptions for the project. While the City has pursued additional funding sources including CDBG and State Cooperative Agreement, the other potential revenue sources, including projected TIF proceeds have remained flat and the collectability of assessments have been limited. While active redevelopment has begun and momentum appears to be building to begin the redevelopment of the retail core of the area, updated TIE projections indicate that approximately $3 million in TIF proceeds may be available for public improvement costs to date. • A number of alternatives are outlined below to permanently finance the project balance. To the extent that an alternative is selected that diminishes the reliance on TIF revenues to cover expenditures to date, the City will be better positioned to actively pursue additional property acquisitions. The City will be in a better position to negotiate redevelopment agreements with prospective. developers and pursue higher quality projects, if a large proportion of the tax increment they may generate can be committed to acquisition, relocation, demolition and other means of controlling land costs. • A fixed timeline is available for the sale of TIF bonds for the expenditures to date. If this alternative is to be pursued, it will be important to take steps in that direction in the near future. • As a part of the Council's direction, staff is to develop a revised project timeline. In addition, the Council has authorized the preparation of new requests for. proposal to permit consideration of updated proposals for the sub -districts and, hopefully, attract a master developer who will be able to coordinate and phase redevelopment of the entire area. These two directions are closely linked in that the schedules included in the proposals will define the timeline from the RFP process forward. While we had hoped to have the draft RFP available as a part of Agenda Memo -5- March 9, 2004 Special City Council Meeting Cedar Grove Financing the background for this meeting, other priorities have prevented staff from completing that item. The attachments include an outline of a timeline for the approval.. and distribution of the RFP, evaluation of the proposals and implementation of new predevelopment agreements with a developer or developers ALTERNATIVES:- To. LTERNATIVEScTo. date, the expenditures associated with the Cedar Grove Redevelopment District and the related public improvement projects have been financed internally through the City's investment fiend: This is roughly equivalent to the interim financing that is used during a construction project. The essential question is how can the Cedar Grove Redevelopment District be. fun ded in theJong term in away that best serves the community's interests and preserves the City's options for financing and funding other projects in the future? The following` alternatives have been identified as possible means of permanently financing or funding these expenditures: Confirm Existing Dedicated Funding Sources and Finance the Remainder through TIF ,. Dedicated funding sources to date totaling $3,756,679 come from CDBG, redeveloprinent land sales, the Major Street Fund (at levels identified in feasibility studies) and State Cooperative Agreement Funding. If no other funding sources are identified, the remaining $9,041,891 would need to funded by tax increment financing proceeds. In the hearings regarding the road improvement projects, adjustments to the preliminary assessment rolls were adjusted down to $3,857,732 and the Council committed to the assessments only being collected from new development; not from existing property owners. To date, the primary source for the collecting the assessments in redevelopment projects has been through the TIF development agreements (Under the Nicols Ridge Development Agreement, $1,065,986 of the assessment total is being paid from tax increment proceeds). Therefore,'while they can be shown as two separate line items, TIF assistance on a project -by -project basis is the most likely source of payment of the remaining assessments: As a consequence the two numbers have been combined to simplify this alternative. For this approach to be viable, it will require future redevelopment projects to generate at least $6 million more increment than is currently projected for the district and that TIF assistance to the individual projects break even on any revenues above that amount. ® Confirm Existing Dedicated Funding Sources and Make an Additional Contribution from the Mayor Street Fund or Other City Revenue Sources The City could reallocate fiords to cover the $9 million difference and permit TIF revenues to be committed to redevelopment project assistance. This would place the Cedar Grove project on a positive financial footing, but would substantially reduce or require additional borrowing to support the number of major road Agenda Memo 6- March 9, 2004 Special City Council Meeting Cedar Grove Financing projects or other capital improvement that the City could undertake in, the. years ahead. y • Confirm Existing Dedicated Funding Sources and Sell a Tax Increment Bond m' the Range of $9-10 Million — The TIF bond would become a part of the City's. bonded indebtedness, primarily funded through the -City's annual debt service. The debt service for the bond would be reduced by available tax increment and all . other funding sources that may be secured in the future including increment in excess of projections, proceeds from land sales for property already acquired, eligible CDBG allocations and redevelopment grants. This alternative would insure the permanent funding of the balance through.the debt levy, but would permit the maximum levy to be reduced to the extent that the redevelopment.out- performs projections or additional funding sources are secured. :While.it spreads the cost of debt service over the entire City's tax base, it appears to offer: lie most `. flexibility of the alternatives identified. • Some Combination of the Above _ Aspects of each alternative could be blended to reduce the reliance on any one of them. For examplea,higher"contribution from City funding sources could permit the issuance of a smaller TIF bond. `This may present a more diverse approach to the situation, but would,still: be , : :. accompanied by the qualifications associated with each. This option also remains if the Council determines to sell the maximum possible bond at this time and later concludes that the debt should be served by other means, including a higher contribution from other City funds. • Other — While this list frames the range alternatives that appears to, be available to address the permanent funding issue, Council discussion may identify further alternatives or variations that may be viable as well. ATTACHMENTS • Project Cost Summary to date on page • City Attorney brief regarding assessment collections on pages t6 -J,7— • — • Potential property acquisition cost summary on pages • Redevelopment project timeline on page • Analysis of cost of potential bond issue on pages , U) CL o n N O U m cl 0 U Q CO ON N NmVO' O V m p n m 0 V coLO O Q 7 1 9 M cD N fU O U � 10 y>o, � •d• c07• 1� a7� m n• a, U v CO N T O N M m V � J x co w M M o tin m ❑ 7 N W LL_7 F. m O c CC N7 O CN m N r � r N U Soo N M O N �Cyy CD O O ro O U) Y 9 CD c0 N m 7 M 5 e� ED m O ro ,t rn room OCf)O 7 Y O m O C Cl M co C N ~ N - I- cli r to w 1L VY ° E c U. m n N O 7 N � O O1 O r ' U) CL o n N O U m cl 0 U Q CO ON N NmVO' O V m p n m 0 V coLO O Q 7 1 9 M cD N fU O U � 10 y>o, � •d• c07• 1� a7� m n• a, U v CO N T O N M m V � J x co w M M o tin m ❑ 7 N W LL_7 F. m O c CC N7 O CN m N r � r N U Soo N M O N �Cyy CD O O ro O U) Y 9 CD c0 N m 7 M 5 p O O0'11•) O O O •'Si::;M O o o:�ao o r o r� r Cn NO V! 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N� ❑Y C .o Cri o W R 7 m ❑ O CL1 ::C:;m Ep? m >:t3 w Y M r m ami �y :::::> N �, 2 N 16 y d C mLu CL °mcD 12 0 `m m D a E rt.• �. V >m E v❑ a '0 n W y p O r C J a LL r O i...' O 3 w O at Z ly LL :: >:•': n .#. A ' = D. . a� c ti WU❑> , CLl nX = W r H o w a a o o RE❑ U {-- Z N 7 U J J Z d R Z CL D. Q. lL a m E IL U J J A. CA Y N M7w co n w 01 0aY-NaM-e7-tp- --GOrr NNN N N N N N CO N m M M CM V9Cl)opiMM co M � N n 0 N O N CD m 070 fM�1 O co O CDC O OCD Oro lf] OCD . 7 O O 7 In M or coM ti r M CD CO v c n M t,t CJ r M SEVERSON, SHELDON, DOUGHERTY & MOLENDA, P.A. TO: Jon Hohenstein, Community Development Director FROM: Michael G. Dougherty, City Attorney DATE: February 19, 2004 RE: Assessments in Connection with Cedar Grove Redevelopment Area The potential with regard to the issues surrounding the Cedar Grove Redevelopment Area assessments and financing for the installed public improvements continue to dominate the discussion regarding the funding of the Cedar Grove Redevelopment Area's improvements. The following is an attempt to address the issue of assessments and to place the discussion in a historical context. It is my understanding that there are four City projects that comprise the Cedar Grove Redevelopment improvements with an aggregate cost of approximately $6,824,072 excluding right of way acquisition. These improvements have now been completed and following completion the City could act to levy any assessments against the benefited property owners and certify the same to the County for collection. A. Project 80OR and Project 866 On April 2, 2002, the City Council, following a public hearing, approved project 800R, which included local streets and utilities and streetscaping (the streetscaping improvements are those that were ordered and approved with Project 866); but delete the six -lane expansion and the dual left turn lanes on Highway 13. The Feasibility Report estimated the cost for Project 800R, including the streetscaping now under Project 866, to be $10,080,400 with the deletion of the six -lane expansion and dual left turn lanes on Highway 13, the estimated cost of the improvements was reduced by $2,520,400 to a total estimated cost of $7,560,000. The total cost of Project 80OR was intended to be spread as assessments against the properties within the area depicted in the Feasibility Report prepared by SRF Consulting Group, Inc. dated March 25, 2002. Following the public hearing, the Council noted that the pending assessment roll should be reduced to $3,428,267. The pending assessment roll was reduced by the Council on May 7, 2002, to reflect an assessable amount of $3,428,267. Following the completion of the improvements under Project 800R and Project 866, the estimated cost for the improvements is $3,568,310 and $1,566,523 respectively for a total of $5,134,833. On March 20, 2001, the City held an informational neighborhood meeting with respect to Project 800R. During the meeting, staff was asked how long the pending assessments would be attached to the parcels and how would the project get paid for if redevelopment does not occur. City staff responded that it is unknown how long the assessment roll could be pending and that there was no plan to hold an assessment hearing. Further, staff stated that the Council plans to reimburse street improvement costs with development agreements as redevelopers submit plans. Staff suggested that the property owners l6, might ask the Council to reduce or remove the pending assessments if their property is not expected to be redeveloped. On page 14 of the Feasibility Report, it is noted that the preliminary assessments for Project 800R have been developed for properties within the project area. "However, it is recommended that the proposed assessments be collected as a Traffic Mitigation. Improvement Fee with each development agreement approved by the City as impacted properties are redeveloped:' Similarly, on page 15 of the Feasibility Report, it is stated that: IV. Revenue Sources It is anticipated that funds to cover the cost of City Project No. 800R would be provided by the City of Eagan Major Street Fund. City staff has concerns about the impact that the significant cost of the project may have on the major street fund. Due to the nature of the improvements being primarily for the redevelopment of the area, consideration should be given to the reimbursement of the Major Street Fund, by funds collected through a Traffic Mitigation Improvement Fee established within the redevelopment area. As development agreements are prepared for new developments within the Cedar Grove Redevelopment Area, the preliminary assessment of the impacted parcels could be included as Traffic Mitigation Improvement Fees. Payment of such fees should directly reimburse the Major Street Fund. Since the timing of any redevelopment of the area is difficult to predict, as is the ability of the City to substantiate full benefit of the Traffic Mitigation Improvement Fees, the collection of less than fifteen percent (15%) of the related project costs over the next ten years may be a realistic expectation. The language cited above is consistent with the discussion by the City Council at the April 2, 2002 meeting. In response to concerns raised by affected property owners, individual Council members, though not including their sentiments in a motion, indicated that the existing property owners would not be assessed, but rather the assessments would be collected from the redevelopers. B: Project 759R — Beau d' Rue Drive Street Improvements On December 11, 2001, following a public hearing, the City Council approved Project 759R consisting of street reclamation, median construction, concrete curb and gutter repairs, storm sewer improvements, sanitary sewer improvements and a bituminous trail as set forth in the Feasibility Report prepared by SEH dated November 8, 2001. The Council's motion for approval included that a trailway be included along the entire length of Beau d' Rue Drive, that the name of Beau d' Rue Drive be changed to Cedar Grove Parkway, and that the median be shortened. The anticipated cost of the project was $901,500.00. Property owners within the area of Beau d' Rue Drive as shown in the Feasibility Report were included in the assessment area. The Feasibility Report noted that only the street reclamation and median construction would be assessed against benefited property owners with a preliminary assessment roll totaling $429,465. As noted on pages 158 through 161 of the Feasibility Report, properties would be assessed different rates based on land use. It is my understanding that the cost estimated for the Cedar Grove Parkway improvements totals $829,639. From the information provided, it is unknown as to how much of cost relates to the street reclamation and median construction, the items that were anticipated to' be assessed. 1 le C. Project 880 — Trunk Highway 13 Turn Lanes On February 6, 2001, the Council approved Project 800R; however, due to a lack of approved State funding for the addition of dual left turn lanes on north and south bound Trunk Highway 13 at Silver Bell Road, that portion of the originally proposed improvements were deleted. On August 4, 2003, the City Council approved a cooperative agreement with the Minnesota Department of Transportation that would direct the City of Eagan as the lead agency in the reconfiguration of the intersection of Silver Bell Road and Highway 13. The cooperative agreement provided for cost participation in the amount of $540,000 from MNDoT for the proposed improvement. No notices were sent to adjacent property owners indicating that the City intended to specially assess any portion of the costs for the improvements. It is our understanding that the estimated cost of the improvement is $859,600, of which no portion may be assessed against any benefiting properties. In summary: Project 880 - is not assessable Project 759R — additional information is needed to identify the cost of the items that were anticipated to be assessed, pursuant to the Feasibility Report. Secondarily, a benefit analysis would need to be done to determine whether the anticipated assessments can be sustained. Project 800R and Project 866 — it appears that the Council, at the time that it ordered the Project, did not intend to certify the assessments against the existing property owners, but rather expressed an intent to collect the potential assessments with redevelopment. While the term "assessments" is used in the Feasibility Report and in the discussion in connection with the projects, it appears that the Council did not intend the term to represent the type of assessments associated with Chapter 429 projects. That would include public hearings regarding assessment rolls and the certification to the ,County for collection. If this expression matches the Council's current direction, the Council may wish to establish a policy that when tax increment financing is being- made available in connection with the redevelopment of the Cedar Grove area that a portion of the increment or the first dollars available from the increment, be made available to the City for reimbursement of the cost associated with these projects. As necessary, the policy can be varied or amended based upon the particulars of the proposed redevelopment. MGD/jlt 1� Agenda Memo March 9, 2004 Special City Council Meeting Cedar Grove Financing -2- The primary project financing issue relates to the cost of public improvement within this area including Project 800 and 759R. The original cost of public improvements was estimated at $3 -.$4 million. The current estimated cost is approximately $12 million including property acquisition. A number of factors have increased the costs including: ❑ In order to avoid duplicating the cost of acquiring land for redevelopment the City has acquired entire parcels required for roadway development even if only portions of the parcels were needed and the property owner was agreeable to the acquisition - $3 million (Amount also includes other properties acquired for redevelopment purposes only). ❑ Streetscape elements have been added to the original project - $1 million. ❑ Additional, improvements have been added to increase capacity at the intersection of Highway 13 and Beau d'Reau Drive - $1 million. ❑ Fly Ash Removal and Other — $4 million. The issue to be resolved is how this project will be financed in the long term. Initially, the plan was to assess a portion of the public improvement cost for the new development. If available, tax increment would also be used to pay a portion of this cost. The current development finance model for this area projects that tax increment may be able to support about $3 million of the public improvement cost. It will be necessary to find other sources to fund the balance of project costs. It is also possible that new developments will demand more assistance than the assumptions have identified. Options that have been considered include: 1. Improvement Bonds. This option was presented to the City Council at a meeting in February of 2002. At that time the recommendation was to assess about $2 million of project cost to the development and finance the balance as part of an improvement bond debt levy that would be paid from the City as a whole. At that time the Council chose not to proceed with this option. Subsequent to this discussion, the City Council also determined that current property owners within this area should not be assessed through the normal Chapter 4�9 process. Since an improvement bond requires at least 20% of a project to be assessed, this option is no longer viable 2. Major Street Fund. Allowing for projects approved in the current capital improvement program; the Major Street Fund has a current balance of about $ million. The Fund was established early in Eagan's high growth period to assist in funding street reconstruction projects and assist with selected new roadway projects, primarily by financing oversizing and collector costs. This fund could pay for a greater portion of the Cedar Grove improvements if the Council were to apply it to other project costs. Use of - city of eagan TO: TOM HEDGES, CITY ADMINISTRATOR MEMO FROM: JON HOHENSTEIN, COMMUNITY DEVELOPMENT DIRECTOR DATE: MARCH 5, 2004 SUBJECT: CEDAR GROVE REDEVELOPMENT LAND ACQUISITION COST STUDY The following information regarding potential acquisition costs for the remaining Cedar Grove Redevelopment District properties was previously distribute in the summer of 2003. Director of Administrative Services VanOverbeke, has completed the assembly of costs incurred to date to acquire the 13 properties by the City and projected that information to the other parcels in the TIF district. The attachments include: 1) a map identifying the TIF district and each of the individual parcels, 2) a spreadsheet illustrating the actual costs to date on the 13 parcels that had been purchased by the City at that time, 3) a spreadsheet illustrating the potential projected costs for the 62 parcels that are in the district under private ownership that are presumably to be acquired for redevelopment at some future time (those costs are projected at both 2.0 and 2.5 times the Payable 2004 Estimated Market Value to establish a likely range of costs), 4) a summary parcels previously owned by the City, under the ownership of the developer, or not expected to be acquired, 5) combined information for all 83 parcels that cari be aggregated as desired and 6) a summary of the projected potential cost of acquisition for the properties between Nicols Road and Rahn Road. This information is based on projections from the costs of properties already acquired. 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N EHLERS & ASSOCIATES INC Per your request, the following is a tentative timeline for the RFP Process for the Cedar Grove Redevelopment Area. This timeline estimates the process through signing a pre -development agreement with the master developer. The master developer will provide the timeline for the development of the area. - _ M_�.--__n.��;----•-e�_��.��-...z ---.. r�.-8 FG. ae��F' � y_� •N.k`��d4 �'�� Jon Hohenstein, City of Eagan oTo: nFrom: Jim Prosser, Ehlers & Associates W Rebecca Kurtz, Ehlers & Associates Date: March 5, 2004 Subject: Timeline for RFP Process for Cedar Grove Redevelopment Per your request, the following is a tentative timeline for the RFP Process for the Cedar Grove Redevelopment Area. This timeline estimates the process through signing a pre -development agreement with the master developer. The master developer will provide the timeline for the development of the area. - _ M_�.--__n.��;----•-e�_��.��-...z ---.. r�.-8 FG. ae��F' � y_� •N.k`��d4 �'�� - - _ � _ __�:- kip �'°Sixf"'�-5�+. �� •Lu� �'y+�� Z �� n Draft Request for Proposals due for distribution April 1, 2004 to City Council City Council reviews RFP and authorizes April 8 or 13, 2004 distribution Revisions made to RFP and RFP is issued Aril 15, 2004 Developer Information Session Aril 27, 2004 RFP Due to City May 21, 2004 Evaluation and Summary of Responses due for June 24, 2004 City Council packets EDA/City Developer Review June 29, 2004 EDA/City select firms to interview July 6, 2004 EDA/City interviews with selected firms July 26, 2004 Approval of Master Developer August 17, 2004 Sign pre -Development Agreement September 21, 2004 LEADERS IN PUBLIC FINANCE 3060 Centre Pointe Drive TPhone: 651-697-8500 Fax: 651-697-8555 Roseville, MN 55113-1105 $10,000,000 City of Eagan, Minnesota General Obligation Tax Increment Bonds, Series 2004 Sources & Uses Dated 08/0112004 i Delivered 08101/2004 Sources Of Funds ParAmount of Bonds......................................................................................................................................................... $10,000,000.00 TotalSources................................................................................................................................................................... $10,0D0,0DD.00 Uses Of Funds Depositto construction Fund............................................................................................................................................. 9,843,625.00 Total Underwriter's Discount (1.300%).............................................................................................................................. 130,00D.0D Costsof Issuance.............................................................................................................................................................. 28,375.0D TotalUses........................................................................................................................................................................ $10,DDD,DDD.DD Series ZW Go TIF Bonds I SINGLE PURPOSE I 211"W4 18;31 AM SPRINGSTED Adrinr. m lb -P. r.5— MOi Page 1 000 NM CMoo C~om t'.O r O r CO CD 1� CX.1 C7� M�1iOhCOt�0UgCt TZ C7 Un ti 0 0 0 0 0 0 0 0 0 000000000 000000000 66000006C] 000000000 r r N N M tL� C7 lC? 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CD Ch O M h- r LO r V- >O N J NNNM �NNO� O ti 0 J O O C o Q 0 N ONo co 7 0 LO r V' .G 000 NM CMoo C~om t'.O r O r CO CD 1� CX.1 C7� M�1iOhCOt�0UgCt TZ C7 Un ti 0 0 0 0 0 0 0 0 0 000000000 000000000 66000006C] 000000000 r r N N M tL� C7 lC? O A N w O caJ N E >N IY N E m H C6 G G > X m Q N N a) > O Z C LO C a� �r , U CL a; o >N N U- t- U � U co C2 CU a' @' > CL Z U a @CA H E U= r- O I- W `�� N 000 NM CMoo C~om t'.O r O r CO CD 1� CX.1 C7� M�1iOhCOt�0UgCt TZ C7 Un ti 0 0 0 0 0 0 0 0 0 000000000 000000000 66000006C] 000000000 r r N N M tL� C7 lC? O U N N N E � U MINUTES OF A SPECIAL CITY COUNCIL WORKSHOP OF THE EAGAN CITY COUNCIL MARCH 12, 2002 FIRE ADMINISTRATION BUILDING 5:00 P.M. Present: Mayor Awada, Councilmembers Bakken, Carlson, Fields and Tilley, City Administrator Hedges, Director of Administrative Services VauOverbeke, Parks and Recreation Director Vraa, Superintendent of Recreation Asfahl, Superintendent of Parks Olson, Public Works Director Colbert, City Engineer Matthys, Assistant City Administrator Verbrugge, Senior Planner Ridley, and Intern to the City Administrator Lord. I. ROLL CALL AND AGENDA ADOPTION Councilmember Fields moved, Councilmember Bakken seconded a motion to approve the agenda as amended to include an item in regard to the celebration of Natalie Darwitz and Jenny Potter. Aye: 3 Nay 0 (Councilmembers Bakken and Tilley were not yet present) H. DARWITZ/POTTER DAY Councilmember Carlson announced that a celebration will be taking place Saturday, March 16, to honor Eagan Olympians Natalie Darwitz and Jenny Potter. A parade will take place at 1 PM, followed by a recognition ceremony at 2PM and an opportunity to skate with the Olympians at 2:30PM. The event is free to the public. Mayor Awada moved, Councilmember Fields seconded a motion to approve a proclamation to proclaim Saturday, March 16, 2002 as Natalie Darwitz and Jenny Potter Day in the City of Eagan, and to approve the costs of the gifts to be presented to the Olympians, including a plaque and a City water bottle. Aye: 3 Nay: 0 III. POST OFFICE Due to the many citizens that have voiced their concerns, the Council directed staff to send a letter to the Eagan Post Office, on behalf of the Council, asking that the Post. Office consider extending their hours in order to meet the high demand. IV. COMPREHENSIVE GUIDE PLAN AMENDMENT PROCEDURES The City Council discussed their policy that was created in the mid -1990's, whereby any Guide Plan Amendment request that would change the property from commercial to residential, or vice -versa, had to proceed as a stand-alone application. Senior Planner Ridley discussed with the Council the level of detail needed from potential developers when they are considered for a comprehensive guide amendment or rezoning request. 3/12/02 Special Council Minutes Page 2 It was the consensus of the Council to provide both developers and staff with clear direction as to their opinion of a given proposal, and the expectations the Council has for a developer before approving either comprehensive guide amendments or rezoning requests, in order that the developer does not have unnecessary expenses on a proposal that may not be approved. V. DISCUSS LANGUAGE FOR ACCESSORY BUILDINGS IN RESIDENTIAL ZONING DISTRICTS Following a deliberation on Conditional Use Permit applications at the March 4, 2002 City Council meeting, there was direction by the Council to discuss the process and dimensional standards for accessory buildings in residential zoning districts at the March 12 Council workshop. The Council discussed the current accessory standards, which allow for two accessories not exceeding 1,100 square feet. Per the direction of the Council, Senior Planner Ridley will prepare specific measurements requirement suggestions for the Council's review, including: 1) 500 square feet per house accessory limit; 2) specified maximum wall heights; and 3) specified roof pitch requirements. VI. DISCUSS STORM MITIGATION OPTIONS The Council discussed the storm mitigation contracts awarded to date, the costs incurred for home acquisitions and modifications, and the appropriate funding sources for these improvements. Public Works Director Colbert stated that $3.5 million in storm mitigation costs will need a funding source. The Mayor noted that additional State funding is unlikely this year due to budget shortfalls. The Council directed Public Works'Director Colbert to prepare the final contract bills for Project 844 (Gibraltar Trail), Project 843 (Beecher Drive), Project 844 (Forssa Way), and Project 842 (Beacon Hill Road). Once the final contract bills have been prepared, the Council's Finance subcommittee will consider the costs and explore funding options. Once the subcommittee has reviewed the bills, the four projects will be brought back to the Council this June for Council consideration. VII. REVIEW CIP FOR 2002 STREET CONSTRUCTION The Council discussed the street projects that are scheduled under the current CIP for construction in 2002 and discussed the feasibility of adding any additional street projects for consideration. '5l 3/12/02 Special Council Minutes Page 3 The Council directed that a survey be sent to property owners in the Cherrywood Knoll neighborhood to gauge .whether residents would be in favor of pushing construction ahead to 2002, rather than waiting to 2003, It was the consensus of the Council that the surveys must demonstrate that 60% of the property owners are in favor of 2002 construction before the Council will approve 2002 construction. The Council discussed the Northwood Drive Overpass and determined that since the Council will review the C.I.P. in May, they will make a determination at that time as to when they want to proceed ahead on the project. The Council discussed plans for extending Lone Oak Road into Inver Grove Heights. Inver Grove Heights has the extension programmed in their 2005 C.I.P. and the County has the project programmed in 2006. Due to the involvement of Inver Grove Heights and Dakota County, and recognizing their plans for the extension, the Council directed staff to extend utilities on Lone Oak Road prior to extending the roadway. VIII. DISCUSS MINNEOSTA VALLEY TRANSIT AUTHORITY— APPOINTMENT OF AN AT -LARGE COMMISSIONER AND ALTERNATE, AND UPDATE ON PROPOSED LEGISLATION The Council, at the request of Councilmember Tilley, discussed whether the at -large MVTA commissioner should be appointed by all five commissioners representing cities that are members of the MVTA, or whether the at -large commissioner should be appointed by the commissioners from Burnsville, Eagan, and Apple Valley, which is the current provision in the Joint powers Agreement. It was the consensus of the Council to have the at -large commissioner be appointed by all five commissioners representing cities that are members of the MVTA. Councilmember Tilley provided an update to the Council on the State lobbying efforts currently underway by MVTA. The Council encouraged Councilmember Tilley to speak of the City's support of the MVTA lobbying for new buses rather than refurbishing 12 - year old buses. IX. PRESENTATION OF 2002-2007 PARKS C.I.P. BY APrC The Advisory Parks and Recreation Commission (APrC) was present to discuss the 2002- 2007 proposed Parks C.I.P. Parks and Recreation Director Vraa and Superintendent of Parks Olson presented the C.I.P. document and were available for any questions of the Council. Following the discussion of the C.I.P. that was presented, Mayor Awada asked that the APrC look at the revenues that will be coming in 2002 from park dedication fees. 3/12/02 Special Council Minutes Page 4 Awada also challenged the APrC to give serious thought to the future, when parks dedication revenue ceases, taking into consideration the need for renewal and replacement. APrC member Margo Danner, asked the Council to involve the senior citizen community in the decision-making regarding programming, components, and layout of the future senior center at the Community Center. The Council directed that the seniors meet with the Council's Community Center operations subcommittee and appropriate City staff to discuss the uses for the Senior Center. On behalf of the seniors that attend the City's weekly senior gatherings, she thanked City staff for taking the time to attend the senior meetings in order to explain the workings of each of the City departments. X. DISCUSS SCOPE OF SERVICES FOR STREET SCAPING/ENTRANCE MONUMENTS The Council discussed the Scope of Services prepared by the consulting firm of SRF. It was the consensus of the Council that the costs for the entrance monuments were too high. It was the direction of the. Council for staff to contact cities that have entrance monuments in order to determine a more appropriate cost. Once staff has a better idea of an appropriate cost, staff can work with SRF to appropriately scale back costs of the entrance monuments should they find that the proposed entrance monuments are not in line with other cities' spending. The Council discussed the street scaping proposals put forth by SRF and asked Public Works Director Colbert to contact other contractors in order to gauge whether the costs are accurate. If staff finds that the costs are accurate, the Council directed staff to proceed ahead with the RFP process for street scaping. XI. REVIEW FINANCING OPTIONS FOR CEDAR GROVE REDEVELOPMENT The City Council, staff, and Jim Prosser, of Ehler's and Associates, discussed land use options within Cedar Grove, anticipated TIF revenues, and options for the financing of the redevelopment, including the possible use of improvement bonds. Prosser presented maximum versus reduced development scenarios based on reduced traffic generation requirements. The Council directed that market -rate senior housing be considered for Sub -Area 3B, The Council also directed staff to move expeditiously with the Delta proposal. Lastly, the Council directed that the Council Cedar Grove design subcommittee meet to look at design standards for the Cedar Grove area. 36 3/12/02 Special Council Minutes Page 5 XII. ADJOURNMENT The meeting adjourned at 10:30 PM. Date City Clerk If you need these minutes in an alternative form such as large print, Braille, audio tapes, etc., please contact the City of Eagan, 3830 Pilot Knob Road, Eagan, MN 55122, 651-681-4600, (TDD phone: 651-454-8535). The City of Eagan is committed to the policy that all persons have equal access to its programs, services, activities, facilities and employment without regard to race, color, creed, religion, national origin, sex, disability, age, sexual orientation, marital status or status with regard to public assistance. 3+ AGENDA SPECIAL CITY COUNCIL MEETING TUESDAY, MARCH 12, 2002 . 5:00 P.M. FIRE ADMINISTRATION BUILDING I. ROLL CALL AND AGENDA ADOPTION VII. COMPREHENSIVE GUIDE PLAN AMENDMENT PROCEDURES VIII. DISCUSS NEW LANGUAGE FOR ACCESSORY BUILDINGS IN RESIDENTIAL ZONING DISTRICTS 'fIV. DISCUSS STORM MITIGATION FUNDING OPTIONS V. DISCUSS SCOPE OF SERVICES FOR STREET SCAPING / ENTRANCE MONUMENTS. ✓VI. PRESENTATION OF 2002-2007 PARKS C.I.F. BY APrC XVII. REVIEW FINANCING OPTIONS FOR CEDAR GROVE y REDEVELOPMENT VIII. REVIEW CIP FOR 2002 STREET CONSTRUCTION V'IX. DISCUSS MINNESOTA VALLEY TRANSIT AUTHORITY - APPOINTMENT OF AT -LARGE COMMISSIONER AND ALTERNATE AND UPDATE ON PROPOSED LEGISLATION X. OTHER BUSINESS XI. ADJOURNMENT V1S7 ' - city of eagan MEMO TO: HONORABLE MAYOR AND CITY COUNCELMEMBERS FROM: CITY ADMINISTRATOR HEDGES DATE: . MARCH 4, 2002 SUBJECT: SPECIAL CITY COUNCIL MEETINGITUESDAY, MARCH 12 A Special City Council meeting is scheduled for Tuesday, March 12 at 5:00 p.m. at the Fire Administration Building. The meeting will be taped delayed for cable broadcasting. COMPREHENSIVE GUIDE PLAN AMENDMENT PROCEDURES Recently, a Comprehensive Guide Plan Amendment request was submitted and recommended for denial by the APC and, ultimately, withdrawn from Council consideration. This instance highlighted a recurring, issue with "stand alone" amendments or rezoning requests'where the City Council (and APC) has denied an amendment or rezoning because of a "lack of information" on what the ultimate development would provide. In the mid -1990's, the City Council established a policy whereby any Guide Plan Amendment request that would change the property from commercial to residential, or vice -versa, had to proceed as a stand alone application. As I recall, the purpose was to allow the Land Use question to be asked/answered before the developer was required to expend a significant amount of money on engineering, site design, natural resource inventory, etc. As you can imagine; particularly with in -fill development, providing the level of detail necessary for a rezoning and/or subdivision can easily result in an expense in the $30,000-50,000 range. It is understandable that the Council and APC desire a certain amount of detail on the finished product before a decision is made on a Comprehensive Plan Amendment or Rezoning. A policy discussion by the City Council would be very helpful as Planning staff deals with "level of detail" issues with potential developers considering Comp Guide Amendment and/or Rezoning requests. ACTION TO BE CONSIDERED: To provide staff policy direction regarding the level of detail and the process for Comprehensive Plan Amendments and/or Rezoning requests. DISCUSS NEW LANGUAGE FOR ACCESSORY BUILDINGS IN RESIDENTIAL ZONING DISTRICTS At the regular City Council meeting held on March 4, 2002, two (2) agenda items pertaining to a Conditional Use Permit to allow accessory building(s) that exceeded 1100 square feet on residentially 3(P !7,r.A,,� .•.{ zoned property were considered. Both of the requests were denied by the Advisory Planning Commission and City Council. Following a deliberation on each of the Conditional. Use Permit applications; there was direction by the':' ..44, City Council to discuss process and dimensional standards for accessory building(s) in residential zoning districts at the March 12 work session. ' ACTION TO BE CONSIDERED: To provide direction to City staff and City Attorney regarding any City code changes to the process and dimensional standards of accessory building(s) in residential zoning districts. DISCUSS STORM MITIGATION FUNDING OPTIONS Now that the Storm Mitigation Improvements are well under way addressing the Super Storm event of July 2000, the Council needs to define the appropriate funding sources for these improvements. Enclosed on pages �_ through is a memo from Public Works Director Colbert s -:u m an!"zi g the costs and funding options for Council's consideration. ACTION TO BE CONSIDERED: To provide staff direction regarding funding options for the balance of storm mitigation improvements that were authorized following the July 2000 storm. SCOPE OF SERVICES / STREETSCAPTING AND ENTRANCE MONUMENTS ' City staff has been working with the City Council Streetscaping & Gateway Signage subcommittee': (Awada & Fields) and the consulting firm of SRF. Staff is providing this informationas an update'tor . the full City Council. Based on discussion and direction provided by the sulicommittee" at the February 12, 2002, Special Council meeting, SRF has prepared a separate Scope of ServiceAocument far b6tli:, Beau D' Rue Streetscaping and Central Parkway. A Scope of Service for the Phase II Gateway Sigh project was also included as an alternate. An update memo that provides a summary of the Scope of Service proposals, associated timelines, and current status of these'projects is enclosed on page'' ..f ACTION TO BE CONSIDERED: To provide staff with "next step" direction for Streetscaping and Gateway Signage. PRESENTATION OF 2002-2007 PARKS C.I.P. BY APrC The Parks and Recreation Commission has completed work on their five (5) year C.I.P: (2003-2007). The APrC will be present at the meeting at 6:30PM to discuss the five-year plan, as well as im rovements ro osed for 2002. The APrC has held numerous ineetin `s and done' a' "'� ... , P P P g great.deal. of r�.' work in preparation of the C.I.P. They look forward to discussing the proposed plan 3-7- ACTION TO BE CONSIDERED: To provide direction to the APrC regarding improvement projects proposed for the remainder of 2002 and projects proposed for 2003-2007. REVIEW FINANCING OPTIONS FOR CEDAR GROVE REDEVELOPMENT Since the Special City Council Workshop held in late January, City staff and consultants have held several meetings to 1) determine a revised project scope/final assessment roll for Project 800; 2) review the Parranto Development Agreement; 3) consider cost alteinatives for the Project 759R Beau D'Rue proposed improvements; and 4) review estimated streetscaping costs and other related aesthetic improvement costs. In addition various financingoptions relating to both the infrastructure improvements 'and the Cedar Grove Redevelopment have been reviewed with particular emphasis on an improvement bond sale per the City Council direction. 02 Enclosed on pages _ through is a memo from Director of Administrative Services VanOverbeke summarizing construction projects, financing options and public policy issues for City Council consideration. ACTION TO BE CONSIDERED: To provide staff direction regarding the scope and financing of street and streetscaping improvements for the Cedar Grove Redevelopment Area. REVIEW CIP FOR 2002 STREET CONSTRUCTION Mayor Awada has asked that this item be placed on the agenda to review the. street projects that are scheduled under the current CIP for construction in 2002 and discuss the feasibility of adding anya ditional street projects, such as the Northwood Drive overpass for consideration. Enclosed on page -it— is a memo from Public Works Director Colbert providing some options for the Council's consideration. ACTION TO BE CONSIDERED: To provide direction to City staff regarding any modifications the City Council may desire to the 2002 street construction CIP. DISCUSS MINNESOTA VALLEY TRANSIT AUTHORITY — APPOINTMENT OF AT - LARGE COMMISSIONER AND ALTERNATE AND UPDATE ON PROPOSED LEGISLATION The Minnesota Valley Transit Authority (MVTA) membership has been working for some time to amend the Joint Powers Agreement and Bylaws for the MVTA. It appears that all items have been resolved except the process of appointing the at -large commissioner and alternate. The appointment issue is whether the at -large commissioner should be appointed by all five commissioners representing cities that are members of the MVTA, or whether the at -large commissioner should be appointed by the commissioners from Burnsville, Eagan and Apple Valley, which is the current provision in the Joint Powers Agreement. wai Enclosed on pages through is a copy of a letter from Barbara Ross, the MVTA ". attorney,which outlines this issue as well as the other proposed changes to the Joint Powers A ' eemerit y `' P Pgr and Bylaws. Based upon the direction from the City Council, consideration of the Joint Powers Agreement and Bylaws will be placed on a regular City Council Agenda for, formal action. , YF Councilmember Tilley, the City's MVTA Commissioner, would also like to update the City.Council on information from the transit lobbyist regarding proposed legislation requiring the refurbishment of busses rather than the purchase of new busses. Enclosed on pages&&. through is a copy of thee material provided by Councilmember ;,; Tilley as background information for this update. OTHER BUSINESS /s/ Thomas L. Hedges City Administrator r MEMO city of eagan (� TO: City Administrator Hedges FROM: Director of Administrative Services VanOverbeke DATE: March 7, 2002 SUBJECT: Financing Options For Cedar Grove Redevelopment As a follow up to the Special City Council meeting of January 17, 2002, staff has been working with Ehlers & Associates, Inc. and the consulting engineers to more definitively determine potential costs and a financing plan related primarily to the first construction phase of the Cedar Grove redevelopment. The scope of the infrastructure improvements has expanded significantly from the earliest plans and it is important from a public policy perspective that it is on course with the City Council vision and expectations for the area. Also, staff has been working to quantify the relationship between the proposed infrastructure improvements and the resulting gain in traffic capacity as a way of providing for a cost benefit analysis of this construction, especially as it relates to the increasing ' costs. Traffic considerations resulting from potential Blue Cross/Blue Shield development are also a factor and are being incorporated into the planning. For the purpose of developing a financing plan for the Cedar Grove Redevelopment, the first phase is considered to be the street infrastructure projects. The scope of these projects and resulting funding requirements raise certain significant public policy issues for the City Council as noted at the end of this memo. Phase I. Infrastructure Proiects Comaleted In Advance of New TEF Generated Revenues There are several public improvements that are either required to accommodate or desired to promote the proposed redevelopment of the Cedar Grove area. They are as follows: Project 800 (Silver Bell Rd. Access Reconfi rgu ationl • Roadway Impr. $6,704,750 (Includes $3,454,050 for Property Acquisition) • Add'1 Impvmnt* 1,800,000* (Expanding Hwy 13 to 6 lanes)* • Streetscaping 987,700 (Fountain, Fencing, Median Entry Sign, Pavers, Landscaping, etc. far Project 7598 & 800 areas) • Monument Sign 157.000 (Gateway Monument Signage) Subtotal $9,649,450 *This significant additional capacity improvement is necessary to maintain an acceptable congestion Level of Service (LOS) to accommodate the original proposed redevelopment, build -out scenario. If not constructed, a "traffic budget" will have to be imposed on each parcel, thereby limiting development potential to a trip generation level that can be handled by the remainder of the improvements proposed under Project 800. A summary of this trip reduction impact analysis will be distributed at the meeting. Proiect 759R Beau D' Rue Street Rehab and Redevelopment Unerade • Street Rehab $ 448,500 (Remove, Recycle and Re -Pave Street Surface) • Redev. Upgrade 453,000 (Center Median and Pedestrian Trail) Streetscaping -0- (Included under Project 800) Street Lights 300,000 (Decorative Street and'Pedestrian Lighting) Overhead Power 485.000 (Bury Existing Overhead Power Lines) - Subtotal $1,686,500 Grand Total $11,335,950 Although the upfront total cost of these projects could be reduced by a City Council -decision-to defer some project elements or to reduce the scope of the overall improvements, the financing recommendation consists of two components as follows: 1. Sell 20 year improvement bonds to finance the construction. To sell improvement bonds requires that at least 20% of the project cost be assessed ($2,267,190). The amount of the improvement bond sale could be reduced by a cash transfer from the Major Street Fund. However, any significant payments from the Major Street Fund will delay other priority projects within the City, would necessitate a tax increase to maintain the resources to complete other projects or require some combination of those two alternatives. Major Street Fund pro -formas will be provided, at the meeting on Tuesday. 2. Make debt service payments from: a) Special assessment collections: • By development agreement. Provides some flexibility as the City is not required to prove benefit although, the developer will typically factor the agreement into a request for TIF assistance. s Through the assessment hearing process. Requires the City to prove that there is an increase in market value at least as great as the assessment. b) Traffic mitigation fees collected from developers. May allow for additional resources to provide for future traffic mitigation improvements. From a developer's prospective, traffic mitigation fees may be seen as simply doubling up with the above referenced assessment agreements. c) Tax increment collections resulting from new development. This money may be required primarily for phase two funding as described below. d) Ad valorem tax levy. Will be responsible for all debt service not covered by any other defined source and could be as high as the 80% of the debt �_l service that is not assessed. The potential community wide tax impact is shown on the attachment to this memo.. ! e) Land sale proceeds. May more appropriately be dedicated to phase.two .: redevelopment costs outlined below. i State Grants. The City, applied for but did not receive funding for the current year. It is unlikely that any State money will be available'to assist with funding these projects as they are currently proposed. Note: This funding scenario for Project 800 (Access Improvements), Project 759 (Beau d' Rue) and the Streetscaping Project does not incorporate dollars for any other redevelopment activities such as property acquisition that is not related specifically to these three projects. All other Cedar Grove redevelopment is contemplated to be financed independently from these projects and will probably compete for the same tax increment revenue, if any of that funding source is used to retire the debt. Phase II. Cedar Grove Redevelopment Activities The Cedar Grove redevelopment costs primarily including land write down resulting from land assembly, relocation and demolition related to the second phase of actual Cedar Grove redevelopment is contemplated to be financed as follows:. 1. Financed up front by the developers with "Pay As You Go" Notes to. them This option will require some borrowing (probably internally) to carry the projects prior to development and a resulting tax increment stream. 2. Tax Increment Bonds sold by the City with debt service paid by increment and backed by the City's general taxing authority. Note: There will be competition between how the tax increment is shared or.used. The City will desire to cover its obligations and the developers will request incentives to make development more financially feasible. Public Policy Issues: Do these projects as currently contemplated provide the current and future level of improvements necessary to facilitate the City Council's vision for redevelopment? Issues relate to both traffic flow and capacity and aesthetics perspectives. What, if any, amount of this construction should be paid for by the Major Street Fund? Is it acceptable to provide debt service on the improvement bonds primarily from a tax levy? Is there enough benefit to the broader community to sippart this level of ad valorem tax levy for the debt service required by this redevelopment effort? OirdsAr of Administrative Services �a Citv Of Eaaan, MN Analysis of Tax Impact for Potential Borrowing March 8, 2002 Bond issue Size 511,735,000 Type of Debt G.O. Bonds Est. Tax Capacity Rates (debt only) Net Tax Capacity Value (Pay 2002) 52,452,658.00 Annual Levy Increase 768,000.00 Tax Rate For Debt Levy 1.464177% Taxable Estimated Increase in Taxes Estimated increase Per Add'I Type of Propedy Market Value for Debt Servipe Only $1,000,000 Debt Levy 100,000 $15 1.30 125,000 $18 1.63 Residential 150,000 $22 1.95 Homestead 175,000 $26 2.28 —2A0,000 $29 2.60 225,000 $33 2.93 260,000 $37 3.25 500,000 $135 12.04 Commercial/ 750,000 $209 18.54 Industrial 1,000,000 $282 25.05 1,500,000 $428 38.06 2,000,000 $575 51.07 Met t1, ?3S o00 a,, h • �e M' J ►cl.� a r �4 ss e 4,.+.$ t C. t a I d S ''�,,' C ktjuLo �t se Prepared by Ehlers & Associates, Ina CO a a 64 Mo. VoW/o /809, 43 sisr20o2 FINAL ASSESSMENT HEARING PROJECT HEARING DATES NUMBER - 759R ASSESSMENT - NAME - Cedar Grove Parkway AKA Beau D' Due Dr IMPROVEMENT- February 5, 2002 Street Reclamation IMPROVEMENTS INSTALLED AND/OR ASSESSED F.R.=Feasiblity Report CONTRACT NO.OF FINAL F.R NO. PARCELS TERMS RATE ASSESSED FINAL F.R $429,465 $472,035 F.R. RATE RATE UNITS $314,297.25 Total Cost RATE RATE UNITS Financing Sources SANITARY SEWER Major Street STORM SEWER Water Renewal 171,403.25 ❑ Trunk —Unplatted 29,829.20 ❑ Water Trunk 2,314.47 Utility Operations Trunk -Platted Water 3,041.88 Sanitary Sewer 2,307.54 ❑ Lateral- ❑ $314,297.25 ❑ Service 4 inch ❑ ❑ Service 8 inch ❑ Lat. Benefit/trunk WATER STREET ❑ ❑ Gravel Base ❑ 21 Reclamation ❑ Residential $31.13 $35.04 /F_F. Multi. Equiv. Includes Median 63.47 81.83 /F_F. ❑ WAC C/I Equiv. Includes Median 63.47 81.83 /F_F. ❑ Trail/Sidewalk SERVICES STREET LIGHTS ❑ Installation ❑ Energy Charge CONTRACT NO.OF INTEREST AMOUNT CITY NO. PARCELS TERMS RATE ASSESSED FINANCED $429,465 $472,035 F.R. 01-05 31 15 Year 4.50% $311,058.55 $314,297.25 Total Cost $625,355.80 Financing Sources Major Street $100,936.81 Water Renewal 171,403.25 Storm Trunk 29,829.20 Water Trunk 2,314.47 Utility Operations Water 3,041.88 Sanitary Sewer 2,307.54 Storm Sewer 4,464.10 Total $314,297.25 Meeting Notes Finance Committee Meeting May 11, 2004 Attendance: Mayor Geagan, Councilmember Carlson, City Administrator Hedges, Director of Public Works Colbert, Director of Community Development Hohenstein, and Director of Administrative Services VanOverbeke City Administrator Hedges summarized the purpose of the meeting to 1) determine whether an assessment hearing should be scheduled for Project 759R; 2) review the status of Projects 800R (Cedar Grove Access Modifications) and 866 (Cedar Grove Streetscape) and potential assessments for those projects: and 3) to review the overall funding of the Cedar Grove Tax Increment Finance District. Project 759R Director of Administrative Services VanOverbeke reviewed the nature of the project explaining that it was a part of the City's on-going pavement management program as provided for in the CIP similar to Silver Bell Road in that area and to other projects in the Community. No streetscaping costs or trail construction costs are proposed to be assessed with Project 759R. The general area of the properties included in the assessment roll in relationship to the Cedar Grove TIF District was reviewed. Staff also reviewed the cost summary for the various projects/activities in the Cedar Grove TIF District. After discussion, the Committee directed staff to proceed with the scheduling of the assessment hearing on the May 18 City Council Agenda. Projects 800R and 866 The nature of the pending assessments and a potential assessment hearing for the combined projects was discussed. The need for appraisals and the overall assessment process was considered and staff was directed to seek sample appraisals and to begin the process of preparing for an assessment hearing. Consideration was given to the need to develop a policy or policy parameters regarding the potential deferment by agreement of assessments on a parcel by parcel basis until actual redevelopment. Funding Cedar Grove Tax Increment Finance District Overall costs of infrastructure improvements and the financing sources including potential special assessments, and tax increment revenues were discussed. Additional information will be available after the assessment hearings are held and after redevelopment projects become more solidified.