We are seeking your approval on resolution 2025-08 which of course is in your packet. Um I have prepared a um uh a PowerPoint presentation to review this. Uh we are seeking to amend a spending plan uh that guides fund the use of funds from three uh existing uh tax increment financing districts.

The state of Minnesota passed additional new legislation that would slightly modify uh the terms of how those monies could be spent... the new legislation allows us to use the interest earnings on those monies. before they were spent they accumulated interest but the previous tax laws did not allow those interest earnings to be spent.

These are local tax dollars that I feel are best expended here in our community. So, if we do extend the program, I would recommend re uh retaining the same process as we've used the last couple years when it comes to deciding how to use those monies.

I have concerns about TIFF being used on top of TIFF. And that happened with the settings. Um, it happened with the Macy's site... I'm very concerned about that in part because it financed very small rental units and it's possible those 15 very small rental units might even be reduced to 13 or whatever. We don't really have any control over that... I'm looking at this list and I'm looking at TIFF financing in general and I can't help but think about how, you know, we really need to be analyzing these tiff investments and keeping in mind the impact on the levy.

The innovation lab it didn't succeed it involved moving to another building. It involved our lodging tax revenue compensating for the rent that the innovation lab was supposed to pay. And so I I'm looking at this list and I'm looking at TIFF financing in general and I can't help but think about how, you know, we really need to be analyzing these tiff investments.

What we're approving today... is to move this to the city council to allow a public hearing. And I I just want to put that out there that that will give us the opportunity to hear from the community and that's another source of information besides um, manager newendorf if we move forward.

Whenever the city and HA uses TIFF monies, uh, we pledge them, uh, and require the developer to do the work first... once we pledge that, those monies are uh, removed from our budget as available because they've already been pledged... We pledged it back in 2022 2023. It was kind of in limbo for several years and we just wrote them the check uh in the last 60 days.

With the tiff district at 72nd or 7200 France um uh we ple as a community we pledge the use of spark in lie of tiff dollars to the apartment. So the tiff district itself is going to run for 25 years I believe. Um, so those tax dollars will still be collected... my best estimate is the return of those funds could be considered in about 25 years.

If we could have more information about the affordable apartment units that we're getting in the setting, including the size, the number, all of that, that would be really great... I believe that was all included in the planning commission packet and the city council when the project was approved. Um, and there is the contract that binds the developer to build whatever was approved, but we're happy to get that for you.

If we didn't move forward and there were the 900,000 redistributed, one-third came to the city, would that or could that have any impact on our preliminary levy for the 2026 calendar year or would that have to be a 2027 impacting amount?... It wouldn't we wouldn't be able to count on it when we're making a decision about setting that levy, but we may be able to count on receiving it in 2026, certainly for 2027.

I really appreciate what Commissioner Pierce just said and I think that really is very confusing and um so anything you can do to clarify that that is not the case would be much appreciated. The other thing I do really appreciate Commissioner Agnu's um question about public hearings and tiff money and there aren't public hearings and I did just watch the I think it was um the June 24th 2021 um H meeting where funds were allocated for the pedestrian bridge and just seeing our process for spending tiff money. Uh I feel like our process is not necessarily rigorous enough.

When a tiff district is created and the budget is created for that district there's a whole sequence of actions and events that happens uh visits to the planning commission uh visit to the to this board, the H. Uh as public meetings, uh input in community comment and other sources is always welcomed. Um but then a public hearing is held at the city council... the the actual individual spending out of that TIFF budget then is still brought to the H and the city council at a public meeting but without a public hearing.

Adina has used uh TIFF since the early 1970s. We've delivered a lot of amazing improvements to the community um for the community. Sometimes those projects are led by the city, sometimes they're led by private developers. Depends on the times and the opportunity. Uh but we do keep the community interest in mind whenever we use these.

In 2022, based on direction from this group, uh we were uh uh advised to redo that policy to be a little bit more thoughtful, intentional, and focused. So, in 2022, we completely rewrote the policy, still retaining all of the best practices that we've always been using, but that TIFF policy expanded from half a page to 11 pages. Um, and what we wanted, one of our go biggest goals there was to put down in writing some of the things that we do on every single project because there's always questions.

Material costs, the availability of labor, um taxes, regulations, like they've gotten increasingly more difficult. Uh in Adina, we are also stymied by the high cost of land. Um even a vacant property in Adina will sell for millions. Other communities don't have that burden. Um, but that is one of the biggest challenges to development in Adina is getting the land and then getting it together at a price that's manageable.

The second biggest b hurdle today in construction is the cost of structured parking. So, especially in a commercial building, as a customer, we typically expect and demand free parking. Um, but the cost to build a structured parking stall can easily get to $50,000 for one stall. Where does that money come from?

There is a high cost of our regulatory compliance and our entitlement process here in Adina with our zoning code. We do the multi-step, the sketch plan, the preliminary, the final. We do public hearings, multiple of those. It can take months and months. That all costs a developer time, which is money. So, that is something it's a process we've created. We tend to like how that works. We like to scrutinize the projects. It does add cost and risk to the project.

Another city policy that adds a lot of uh uh hurdle is our affordable housing policy where we ask the developers to build a certain percentage of the units at the same price as every other unit they're building and then rent it for half of that price or whatever the precise number is. So that puts a huge drag on their project. But again, as a community, we've established a policy that says if the developer is going to build luxury or market rate housing, we expect that people that are not luxury apartment income can still live in our community.

Our current policy requires that zoning consideration and financing consideration be kept in two separate lanes. um when as a city council or as a planning commission when they make a decision about zoning they're prohibited by state law to consider the financing implications of those zoning decisions.

The order of the project is to have the preliminary zoning go first and if the preliminary zoning gets approved, if there's actually a project to talk about, then we talk about the financing second. Um, and we've we've chosen that process just out of a smart use of city resources. Our thought process has been if a if a zoning request is too big or not enough or, you know, doesn't pass muster from the zoning perspective, why spend weeks and months and thousands of dollars of time on a financing request that might be moot.

We could come to the H first with a very rough um term sheet knowing that they've got a financial gap. we wouldn't know what it is yet, but we knew that there'd be something... we could easily flip those conversations, come to H first and just see, is there any interest? If there's no appetite, I'd recommend we tell that to the developer upfront so they don't waste their time or our time, frankly.

How you apply that to TIFF could be a whole another workshop. Um, but as as staff puts together proposals and works with developers, just so you know, we do look at those values. We look at those pillars again to achieve the goals as have as have been defined in our plans, our policies and your direction.

I would just offer a bit of caution in in that every project is different and unique. And so if you set a policy saying we're never going to use it for parking, you might get a project the next month that if parking isn't somehow addressed, it'll die. So just a word of caution there. We keep the flexibility for a reason.

When you create TIFF programs, in my experience, you get more TIFF applications. When you declare, we're going to we've got a program. It's going to be TIFF for affordable housing, you're going to have a lot of developers coming in to build the project. Um, and they're all going to ask for TIF because we have a program. Why would we not use it?... every developer that walks in the door finds a way to meet those program rules and says, 'Hey, you've got a program. I've checked all these eight boxes. Let's see the contract.'

Can we include PUB and the of zoning in this analysis because oftentimes there is a commitment made in the PUD zoning that does, you know, carry financial costs for the developer and there's the assumption that um that is part of the PUD agreement and I think what we're missing from our analysis is acknowledging the financial benefits a developer gets when say They're able to go from like with Maison Green, it was a twotory limit and a fourstory limit on that site and they got to go seven stories. So what is the value of that?

I am very open to taking another look at the the Grand View design guidelines and the costs or excuse me, the greater Southdale area design guidelines and the cost that those impose on developers... that plan was a while ago. It pretty much put a grid on top of the Southdale area. Um, it's expensive. I question really the wisdom of dividing up our very few remaining larger lots.

If we were to kind of flip the preliminary zoning with the term sheet approval that we would have some ambiguity in the exact numbers like talk me through how exactly that would work. would would we be looking at maybe a range without the final numbers or what would we actually be approving because I don't think we could approve something that's like question mark right?

The city council having approved a PUD zoning does not obligate the HA to grant TIFF. In order to meet the but for test, they do have to come in on a TIFF application and indicate that the project will not go forward but for TIFF. But that does not mean that the HA is required to approve that TIFF... the fact that the city council has approved PUB zoning does not obligate or require the HA to grant TIFF and the reverse would also be true.

What I heard Commissioner Risser say is that when we first heard about the Southdale guidelines in particular that it would create so much new value um by using the PUD process and we've we have not been getting um a quantification of the value created by using PUD and I think that's what she's referencing... folklore or uh common understanding is that PUD does create value for the developer and I believe she's asking for is there a way to quantify what that value is.