02/17/2021 - City Council Finance Committee
FINANCE COMMITTEE MEETING
WEDNESDAY, FEBRUARY 17, 2021
1:30 P.M.
CITY HALL
COUNCIL CHAMBERS
AGENDA
I. AGENDA ADOPTION
II. REGIONAL PONDING
III. PROPERTY TAX REVENUE COMPARISON
IV. OTHER BUSINESS
V. ADJOURNMENT
Agenda Information Memo
February 17, 2021, Finance Committee Meeting
II. LEXINGTON LOGISTICS
DIRECTION TO BE CONSIDERED:
To provide direction on property tax revenue generated by Lexington Logistics located
at 3130 Lexington Avenue.
FACTS:
In 2018 3M announced the pending closure of its manufacturing facility located
at 3130 Lexington Avenue. The 127,561 square foot building was constructed in
1973, and marketing of the site began in late 2018. Feedback from the broker
indicated that the building’s 22-foot clear height was a barrier to many users
seeking a higher clear height required by current racking systems.
In October 2019 R.J. Ryan Construction on behalf of WPT Industrial REIT applied
for a Conditional Use Permit for outdoor storage of 43 tractor trailers at 3130
Lexington Avenue. The project narrative indicated that the applicant proposed
to raze the 3M building and construct a new 205,920 square foot industrial
building. Other than needing a CUP, the proposal conformed to the I-1 Limited
Industrial zoning district and required no variances. Somewhat atypical for
redevelopment projects of this scale, the applicant did not request public
financing assistance for redevelopment costs including site acquisition,
environmental remediation, or demolition. The City Council approved the CUP
on December 3, 2019.
New building construction was completed in 2020, and the developer negotiated
a tentative lease with Amazon for the use of the entire building as a last-mile
warehouse. In December 2020, the developer applied for a CUP to allow
outdoor storage of delivery vans. Because of the outdoor storage and parking
required by Amazon, the developer proposed razing the adjacent 37,398 square
foot building constructed in 1987 located at 1045 Gemini Road and using that
site for parking. The developer also intended to construct an 8,500 square foot
mezzanine which would increase total floor area to 214,420 square feet.
At the February 2, 2021 City Council meeting, Councilmembers expressed
concern of the loss of tax revenue caused by the demolition of the building at
1045 Gemini Road and directed the matter to the Finance Committee for further
evaluation.
The attached spreadsheet compares tax revenues generated by 3130 Lexington
Avenue and 1045 Gemini Road.
The before-Amazon data is from the 2020 (payable 2021) assessment. The 3M
building was not demolished until after the 2020 valuation was established, and
the before-Amazon data reflect pre-redevelopment conditions.
The post-Amazon estimates are based on the following:
o Staff contacted the County Assessor to inquire about the value of 1045
Gemini once the existing building was razed and a parking lot
constructed. The Assessor indicated that the land value would not
change, and the parking lot would have an assessed value of
approximately $175,000.
o The building value of 2811 Beverly Drive was used to estimate the post-
Amazon building value of 3130 Lexington Avenue due to the similarities
in size and use.
Current City taxes including fiscal disparities on the two properties combined
amount to $51,520. Based on the estimates outlined in this memorandum and
the information received from Dakota County, should the project proceed, the
total City taxes including fiscal disparities on the two properties are projected to
be $90,900.
Attachments: (1)
FCII-1 Property Tax Revenue Comparison
Property Tax Revenue Comparison
3130 Lexington & 1045 Gemini Road
February 2021
Total
Square Land Building Assessable Total City Taxes
Feet Value Value Value Taxes (incl FD)
3130 Lexington Ave (1973)127,561 612,200 2,258,200 4,861,100 139,296 34,015
1045 Gemini Road (1987)37,398 2,602,900 1,981,600 2,593,800 71,686 17,505
Total 164,959 3,215,100 4,239,800 7,454,900 210,982 51,520
Total
Square Land Building Assessable Total City Taxes
Feet Value Value Value Taxes (incl FD)
3130 Lexington Ave (2020)214,420 612,200 10,394,300 12,997,200 347,600 84,900
1045 Gemini Road (2021)- 2,602,900 175,000 787,200 23,000 6,000
Total 214,420 3,215,100 10,569,300 13,784,400 370,600 90,900
Total
Square Land Building Assessable Total
Feet Value Value Value Taxes
2811 Beverly Dr (2007)
Amazon/Alexander Moving 227,200 2,672,800 10,394,300 13,067,100 349,516
Pre-2020/3M Building
Post 2021/Amazon
Comparable