Good evening and welcome to the Maple Plane public hearing for the TIFF district. It is February 9th at 7 p.m. Please stand for the pledge of allegiance if you are able. I >> aliance to the flag of the United States of America and to the republic for which it stands. One nation under God, indivisible, with liberty and justice for all. >> Looking for a motion to adopt this evening's agenda. >> I'll make that motion. >> Moved by Bureak. >> Second. >> Second by Francis. Any further discussion or question? Hearing none. All in favor, please signify by saying I. >> I. I. >> Oppos. Same sign. The eyes have it. four to zero. First item of business and only item of business this evening is the development program for the development district 2 and tiff for district 21. And I'm going to turn that over to our planner, Mr. Cus. >> Thank you, honorable mayor, councel. >> Thank you, honorable mayor, councel. Uh tonight, uh the purpose of tonight's meeting is to hold a public hearing related to uh the um tax increment fin the creation of of a tax increment financing district. uh 2-1 um and development district two for the for the city of Maple Plane. City has been working on the re uh development of a new project for a 95 unit apartment building that would be located on property currently owned by the city. And as a part of that process, it was identified that um the um or the developer I should say made application seeking tax increment financing from the city uh uh to help make that project go. Um and so after um quite a bit of negotiation on the project um and putting together uh plans and specs, the city is now at a point where it could consider the adoption of uh the tax increment financing district as well as the tax increment financing that's being requested um by the applicant. And so, um, we're here to just, uh, take public comment tonight, not act on this. Um, I will go over just kind of high level what is being considered as it relates to the, uh, district creation and then as it relates to the actual, uh, project. And so, uh, currently, um, what's being contemplated is that the city would establish a new tax increment financing district, district 2-1, that would be comprised, uh, essentially of what we know as a city hall block, um, minus one of those properties, the corner property at 52 main, but all other properties would be included in that 2-1 uh, district. And so that would be created as a redevelopment district. And with that uh the developer is asking for tax increment financing uh in the form as uh in the form of pay as you go tax increment financing. um for everybody's um knowledge pay as you go means that the tax increment financing uh would only be um given to the developer if the developers project uh was able to pay the taxes um or the incremental taxes but in this case the taxes on the project and the uh revenue that's being projected was actually collected on the project and I can talk about that in in as much detail um or as little detail as as the council wants. So with that, um the project cost that the developer has estimated for this uh project is 21.7 million. Uh that that's based on the developers proforma Northland um Northland Securities which does the TIFF consulting uh for the city on on behalf of the city for this project reviews that and they review it to see if the projected proforma um is what they would be considered reasonable and then would be um such that uh tax increment financing would be necessary in order for the project to proceed. And so in this case, Northland did find it reasonable that the city uh would consider financial assistance through tax increment financing uh for this project and noted that the project uh could not occur with solely private investment um in the even in the foreseeable future. And so with that um the city is looking at a the establishment of a 26-year redevelopment district. That's the maximum length that the city can establish uh redevelopment. The tiff that would be sought by the applicant would be pay as you go or pay go they call it. It would be in the form of a tiff note that would be issued for the amount of $2,889,000. Um, in order for the developer to get reimbursed on that, they would one have to pay their taxes and two, they would have to show that there were eligible expenses uh or qualified costs for the project that were incurred by the developer. And so um the the total estimated uh 26 uh year tax increment financing for the developer is 2.8 uh 8889 as I noted. um over the c over the life of the district. Um and that that's a by the way an present value number. That means that's what um that's today's dollars projected out. So it's a net it's a present value that we're estimating that 2.889 the um over the life of the district the district would actually uh generate additional um uh revenue almost uh 8 uh.8 8 8.7 million in overall revenue would be generated as a result of that tax increment financing district. Um as I noted uh 2.8 8 go to the developer. That leaves the city with uh approximately 1.7 million um that would be retained by the city and you and then usable for uh eligible project costs also associated with the redevelopment of that area including any of the infrastructure that would be associated with that project. So, um the uh this the city's considering um the establishment of the the 26-year district. The city is establishing um the $2.889 million would go to the developer in the form of pay as you go. Um and so with that, you can see in the report we did break down what it's estimated um for the valuations that we're um using to to do the estimates for um kind of the revenue that's being generated or the tip that's being generated for this project. It's all based off of estimated market value. And so right now the project is uh we're estimating about $228,000 per unit for the 95 units that are being proposed. That's an average um for those units. Um so with that, um I'd be happy to go into as much detail or as little detail on the tax increment financing or any questions specifically related to how that works, um or or the project itself. Right. Questions member. >> Um, yes. Thank you. Very thank you, Mark. Um, so for the record, can you or can you explain how uh the impact residents and the city budget? any possible impact to taxpayers if anything goes like upside down with the business or any upside or how it affects our city budget and let me start this over again. Sorry. Can you provide a would you provide is pretty clear but more of a explanation of how it resed impacts to the city's budget any possible impacts to taxpayers that could occur. So, what is the actual risk of increased taxes for any resident or businesses? >> Sure. Yeah, great question. The um so when we're looking at this project, we looked at the project to see if the project could fund itself solely with private investment and it was determined it cannot. So, with that, it has to. So, that kind of passes the first test, which is um but for the city uh being able to provide tax increment financing, the project could not occur with tax increment financing. What's uh what's good about the tool and why cities uh choose to use it um and es especially this paygo tax increment financing if the um in the before condition or the existing condition of that property um the property is generating a certain amount of taxes or in this case not generating any taxes but there is a base level of taxes that are determined for today's property and then in the after condition after the property is improved. Uh there's a new um level of taxes or there's a there's a new capture that's going to be made by um all entities that have taxing authority. So not just the city, the city, the county, the school district, and then there's the other um districts that we have, park district, mosquito district, things like that. So with that um the the before condition or as it is today whatever's established for the taxes that are being generated that level of taxing still is maintained throughout the life of the district. Meaning that the taxpayers for all of those entities school, county, and city um are not losing any taxes. They're not giving away any taxes because whatever that property was generating today, it's going to continue to generate through the life of the district and those taxes are going to get paid to those entities. What tax increment financing is doing is then capturing the incremental difference between what it's what it is today and what it w will be in the improved condition. So, if you go back to the butt four test and you say the property uh couldn't be developed without these tax increment financing, then you would then you would say to yourself um the taxes that are being generated um and then essentially captured by the city would otherwise not be there at all. And so the the taxpayers I think kind of in the in the short term there's no change to the tax base. In the long term, there's a significant change because after the u eligible expenses or the qualified costs are reimbursed by this district, then the building goes back on the tax roles and that goes then to generate kind of significant increases in city taxes, school taxes and county taxes. The one thing I would tell you and in and kind of that question that second part of that question you asked which related to um what happens if it underperforms with a pay as you go tax uh increment financing district. The city only reimbures the developer for taxes that come back into the city. Meaning if the project underperforms the city only will reimburse the developer the amount of money that's generated by the tax increment. So, if the if the building's market value uh crashes significantly or market values in general, um the city would not be paying more money, um we don't have a guaranteed amount of money. We have an up to amount of money that we're willing to reimburse the developer and that's that 2.8. If this project comes in and the county and and market rates uh compress and everything goes bad, then the developers are not going to be paying the same amount of taxes because their market levels down. Well, we're only going to be reimbursing them um on that incremental difference. So, they're going to get less money. Now, that does mean the city would get less money against our project, but that's kind of a different scenario. We're not actually taking taxpayer money and giving it to the developer. And that's what's unique about that pay as you go because rather than us issuing like debt or a bond and then saying we're going to issue that up front and then we're going to rely on this increment coming back. We're not doing we're not issuing any debt against this. We're saying whatever your project generates up to this 2.89 that's what we'll reimburse you. Sometimes in these um in the life of these districts, and you honestly see it quite often because we try to be conservative in estimating um you'll see these 26-year districts get closed at 20 years or at 18 years or at 17 because as soon as we hit the obligation in the TIFF note at 2.889, um we can close the district and put it back on the tax roles. We don't have to keep it open. um unless the city chooses to do that and there are some benefits to the city thinking about that but anyway so hopefully that answered >> it does but uh my I guess tail on that question then with the 1.7 million that would come back to us can we when will we have access would we have access to that like before the t district closes or would that have to wait until district closes? I mean when will we see that kind of >> ability to use those funds as a city? >> So another good question. Um so what we've offered the developer in this particular case is we've offered them 70% of the tax increment finance or tax increment generated by this project and we said the city wants to retain 30% in this deal. So some deals are structured where the developer might get 95% and paid out and then the city gets their revenue on the back end of the district. In this case, we didn't we we didn't want that because we knew we were actively talking about issuing debt to try to do some of these public improvements. And so, the way that we structured this deal is 70% goes to the developer, 30% goes to the city. What that means is um in year two, year one's um not a full year because we're assuming that the value of the building isn't fully um fully captured. So just if you were to look at year two um what we're projecting is that the um developer would get about 210,000 and the city would get 90,000. Now, that means that the city could issue debt or they could pay itself back up to that amount and then it, you know, it varies, but it it's right in that like 90 to 100,000 for the life of the district um that the city would have eligible to either issue debt and pay bonds off with or pay debt off or to use for project costs or reimburse itself. So, so the city's going to realize money or revenue immediately um with this project. We don't have to wait. >> Okay. And other question I had that kind of came to me but it may not apply here. So you know as you own a home sometimes a mortgage company's call says hey we got a better mortgage rate a better percentage. Could that happen with this kind of instance with a tiff like um we could get a better rate and then if that happen but it can't. >> No. So when we issue so the tax increment financing isn't it's it's based solely on the taxes generated on the project good or bad. Uh, I mean it goes up or down depending on how the project is valued ultimately and how the assessor assesses the building. Um, and so the revenue generated off of that is going to be um based on an annual uh assessment. So whatever the the assessed value of that property is, that's what it's going to generate. Um, that's good for the city from the standpoint of the developer. If the city issues debt, there could be some variability in that um in the repayment of that debt or what you're relying on. But your your piece is um the city's piece is, you know, only 30% of that. So, it's not as it's not as volatile probably as what the developer is taking risk on. >> Sure. >> Because if their if their market value goes down, now other things change with their model, but um their taxes go down and then their reimbursement amount goes down. Okay, perfect. Uh, another question I have also, this is my final question. I apologize. Uh, how will it affect property values of the homes around the developments proposed to be taking place? How will that be? Will it affect them? How will that affect them? >> So, as it relates to tax increment financing, there would be no no effect, right? um the I mean you could say that um dep depending on the project you could say that there's um an impact because the city's capturing some of the tax increment financing. So um if the city weren't to do this project the city would have to pay for streets, utilities, sidewalks, whatever we wanted to do because we're we're talking about upgrading. We've been trying to hold off on upgrading, but at some point you've got to upgrade the streets regardless if we have a project or not. And so, um, you wouldn't have gotten the 1.7 million if, um, this project didn't come to fruition. And so, if you were to have said, we can't wait for another one, and we went in and just did our project, you'd be subject to, um, maybe not maybe it's not 100% of the 1.7, but a pretty big chunk of that 1.7 would have to be done either way. >> Well, you're talking about assessments. I'm actually asking about home values. >> Well, I mean, you may not be in a position to answer that question. Yeah, I couldn't I you'd have to Yeah. see what the assessor would say. >> Maybe I guess what the better question would be for the city as a whole for homeowners. How would thatffect eventually affect our tax properties then? >> Well, so I mean um building higher density projects with a higher value. This a market rate project and it's got a um you know potentially a$25 to $30 million market value. you're going to capture a high I mean you're going to capture a high amount of taxes on a small footprint that would hopefully help the city's tax base by growing your tax base. Um and so hopefully that would be something that uh you're not providing um the same level of service to a single building with 95 units as you would be to 95 residential homes, let's say, right? less road, less sidewalk, um less miles of pipe, less miles of sewer, right? All those things may be changed. So, um so I mean when we look when we would look at that, I would say to you that there's going to be a positive impact on the city's tax base along with you need rooftops to get more services, you need things like that. This is going to give you, you know, start giving you some of that. So, I think all those things, you know, tend to be positive on overall kind of tax base of the city. Um, but I don't know that I have there's not a a mathematical number on that. Yeah, >> run. Okay. I appreciate your time. Thank you. >> Any other questions for staff? >> All right. hearing none. Then at this time, I've been looking for a motion to open the public hearing for development district 2 in tax increment financing tiff district 2-1 for redevelopment of the downtown area. >> I'll make that motion. >> Moved by Francis. >> I'll second that motion. >> Second by. The public hearing is now open at 7:20. Is there anyone to speak for the public hearing? Is there anyone to speak for the public hearing? Is there anyone to speak for the public hearing? >> How is this going to impact? >> If if you're here to speak for the public hearing, you're going to need to come to the podium and please state your name and address. Thank you. >> Welcome. >> Deb Moore, 5665 Main Street West, Maple Plane. See a lot of traffic problems already. Like I try to get across to go to handover for grandkids and you can't get across the street. We've got streams of traffic coming from Delano and streams of traffic coming from the holiday. And how's a big mess like this going to impact that? Basically, I'd like to see a green space by the library for families more than high density buildings. Thank you, Miss Moore. Do you want to address that? >> Sure, honorable mayor council. Um, I mean, it's a good point and it's one of the things that we consider. There's a couple of things that are um being contemplated as a part of this project. One of which is closing Bud Avenue on the south side of Highway 12 so that it does not have a through traffic uh projection anymore. And um that's kind of it's one of the first safety items that the city's considering undertaking with the highway 12 corridor um to try to eliminate access points to try to con to reduce then the number of conflict points on the on the highway. >> I'm not talking about Bud. I'm talking about East Maine. You can't get across. >> Sure. So one of the things we have to do is start eliminating um um access points. So that that would be a part of this. Um the city has actively been trying to work with Henipin County Library um as a part of not only this redevelopment um but for years uh to see if the library would be a partner with the city in in potentially moving their space or combining their space with a city hall. One of the things that's really impacting that intersection at Maine and 12 is the sighteline because of the library. library. It's in a really bad location for being able to change that intersection. Um, so if we could get the library to to work with us and move, we potentially get one step closer to probably a signalized intersection at Maine and Highway 12. >> That sort of fixes it. Thank you. >> Thank you, Miss Moore. Administrator Schillinder. >> Thank you, Madame Mayor. And one thing I would just uh mention too uh with the crossing that you were talking about um is both a county road and state highway 12. Um I definitely encourage you to reach out to your uh state representatives. Um you know, we're we're part of the Highway 12 coalition and it's something that we talk about a lot. So it would help if you reached out to your your state representatives about that as well. Thank you. Anyone else to speak for the public hearing? Okay, with that, I'm looking for a motion to close the public hearing. >> I'll make that motion. >> Moved by Francis. >> I'll second that motion. >> Second by Berk. Any further discussion or questions? Hearing none. All in favor, please signify by saying I. >> I. >> Post same sign. The eyes have it. Four to zero. Is there and the public hearing is closed at 7:24? Is there any other business to come before us tonight, staff? Okay, with that, looking for a motion to adjurnn. >> I'll make that motion. >> Moved by Francis. >> I'll second that motion. >> Second by bureock. All in favor? I >> I opposed. The eyes have it. Four to zero. The meeting's journed at 7:24.