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Economic Development Report 2018ECONOMIC DEVELOPMENT REPORT CITY OF NEW HOPE, MINNESOTA SEPTEMBER 1, 2018 The city of New Hope Economic Development Report highlights redevelopment projects throughout the city from the previous year and the tools that are in place to promote development activity. The city’s Economic Development Authority promotes and facilitates business development and housing redevelopment activities. OVERVIEW & HISTORY CITY OF NEW HOPE OVERVIEW & HISTORY LOCATION The city of New Hope is a suburb located northwest of Minneapolis with strong neighborhoods, an abundance of parks and recreational opportunities, excellent schools, and great shopping nearby. The city has easy access to the entire Twin Cities area with major arterials of Highway 169, Highway 100, Interstate 694, and Interstate 394 all nearby. POPULATION (2010 CENSUS)SIZE/AREA YEAR FORMED 20,339 5.1 square miles 1953 BUSINESSES JOBS SHOPPING CENTERS 480 11,080 5 SCHOOL DISTRICT SCHOOLS PARKS/ACREAGE Robbinsdale Area (281)5 18/200 HISTORY In the early 1900s, New Hope was a farming-rich community. The area was settled as part of Crystal Lake Township and became the home for many family farms. As housing developments spread west from Minneapolis in the 1930s, the residents of Crystal Lake Township began the movement to incorporate the township. In 1936, the city of Crystal was incorporated. Forming a city, though, was not supported by all residents in the township. The rural residents in the western half of the township broke away from the city of Crystal and formed their own township. The resistant residents, mostly farmers, were unhappy about paying taxes for projects such as street lighting and sanitary sewer. The name the farmers selected for their new township was a reflection of the time, New Hope. Many residents along the New Hope-Crystal border formed groups and requested to be annexed by Crystal in order to receive what were the most modern city services at the time. Others, however, were happy to be part of New Hope township and remained separate from Crystal. Therefore, pockets of New Hope residents were created along the eastern boundary. By the early 1950s, the rapidly developing township of New Hope chose the fate it had eluded just over 15 years earlier. In 1953, New Hope incorporated as a city to prevent losing more of its land and residents to Crystal via annexation. This move was again opposed by the farming community of New Hope, but housing developments between 1936 and 1953 had made farmers a minority in New Hope. When the township was incorporated, it had 600 residents. The city grew rapidly and was home to over 2,500 people by 1958. This rapid population growth continued through the 1960s, and by 1971, there were 24,000 residents in New Hope. The population of the community has declined slightly since 1971. PAGE 2 SUMMARY OF ACTIVITY CITY OF NEW HOPE ECONOMIC DEVELOPMENT REPORT The city of New Hope’s Economic Development Authority (EDA) promotes and facilitates business development activities. It considers proposals on a case-by-case basis and utilizes a broad base of public financing options. Membership of the EDA is identical to that of the New Hope City Council. Council members are appointed to the commission for terms concurrent with the City Council terms and the mayor acts as president of the authority. The city manager serves as the executive director. The city employs various resources to help businesses grow and reach their goals. BUSINESSES & ASSISTANCE PROGRAMS Local commercial and industrial businesses are extremely important to the city. The City Council has undertaken programs and initiatives to address both commercial and industrial properties. These programs focus on: • Retaining existing businesses. • Assisting with expansions. • Attracting new businesses to vacant available buildings. • Attracting new construction to a limited number of available vacant sites. • Improving communication with businesses and responding more effectively to business concerns and inquiries. BUSINESS SUBSIDY PROGRAM The city’s Business Subsidy Program addresses policies related to the use of Tax Increment Financing (TIF), tax abatement, and other business assistance programs for private development. It serves as a guide in reviewing applications requesting business assistance. All projects must meet mandatory minimum approval criteria and the level of assistance is evaluated on a case-by-case basis. Assistance can cover project costs as allowed for under Minnesota Statutes. The EDA considers using a business assistance tool to assist private developments in circumstances in which the proposed private project meets one of the following uses: • Provides a diversity of housing not currently provided by the private market. • Provides a variety of housing ownership alternatives and housing choices. • Promotes affordable housing for low- or moderate-income individuals. • Promotes neighborhood stabilization and revitalization by the removal of blight and the upgrading in existing housing stock in residential areas. • Removes blight and encourages redevelopment in the commercial and industrial areas of the city in order to encourage high levels of property maintenance and private reinvestment in those areas; including façade improvement. • Increases the tax base of the city to ensure the long-term ability of the city to provide adequate services for its residents, while lessening the reliance on residential property tax. • Retains local jobs, increases the local job base, and provides diversity in that job base. • Increases the local business and industrial market potential of the city. • Encourages additional unsubsidized private development in the area, either directly or through secondary “spinoff” development. • Offsets increased costs of redevelopment over and above the costs that a developer would incur in normal development. • Accelerates the development process and achieves development on sites that would not be developed without this assistance. PAGE 3 CITY OF NEW HOPE ECONOMIC DEVELOPMENT REPORT PAGE 4 LOAN PROGRAMS The city has partnered with the Lending Center at the Center for Energy and Environment (CEE) to offer a convenient one-stop service that provides commercial and non-profit property owners in New Hope access to a comprehensive array of financing and rehabilitation services. The CEE Loan Program provides financing to New Hope businesses making cost-effective, energy efficiency improvements. Nonprofit organizations that are interested in reducing their energy costs are eligible to apply for funds through the CEE to help finance energy-efficient projects implemented in properties owned and/or occupied by nonprofit entities. OUTSTANDING BUSINESS AWARD PROGRAM The city’s Outstanding Business Award Program was initiated in 2006 to recognize the city’s businesses’ contributions to the local community. The purpose of the award program is to recognize businesses for noteworthy accomplishments such as expanding or improving a building or property, creating new jobs for New Hope residents, reaching a milestone year in business, or providing outstanding community service. Nominations are accepted quarterly for the award. BUSINESS NETWORKING GROUP The New Hope Business Networking Group was started by New Hope business owners in 2010 to create an open forum for networking within the city. The group is open and free to all New Hope business owners. The Business Networking Group meets regularly at one of the participating businesses. The city is also a long-time member of the TwinWest Chamber of Commerce. OPEN TO BUSINESS The city has partnered with Hennepin County and Open to Business, a company that provides free business advice and gap financing. Open to Business is a partnership between Golden Valley, New Hope, and the Metropolitan Consortium of Community Developers (MCCD), an association of nonprofit community development organizations serving the Twin Cities. With the help of a matching grant from Hennepin County, the two cities work with MCCD to provide business consultation services and financial advice to small local business owners and aspiring business owners. MCCD staff hold open office hours every other month at New Hope City Hall. The program offers help in several areas, including: • Business plan assistance. • Financial management. • Bookkeeping set-up and training. • Loan packaging. • Real estate analysis. • Marketing assistance. • Strategic planning. • Professional referrals. Open to Business facilitated one loan of $105,000 and one credit building loan of $240 in 2013, one credit building loan of $240 in 2014, one direct loan of $12,035 in 2016, and two direct loans of $100,000 and $25,000 leveraging over $1,000,000 in outside capital in 2017. CITY OF NEW HOPE ECONOMIC DEVELOPMENT REPORT PAGE 5 EMPLOYMENT There are approximately 480 commercial/industrial/service businesses in the city, 31 of which opened in 2016 and 26 of which opened in 2017. These businesses account for 10,360 jobs in the city. The city’s 15 largest employers, which are listed as follows, account for nearly 4,700 of those jobs. MAJOR EMPLOYERS Employer Products/Services New Hope Based Employees (Total Employees) Independent School District 281 Education 791 (1,852) Hy-Vee Grocery & convenience store 632 Minnesota Masonic Home/ North Ridge Care Center Skilled nursing care facility 560 St. Therese Home of New Hope Skilled nursing care facility 544 (1,117) Horwitz Mechanical contractor 345 Perrigo Company Pharmaceutical & medicine manufacturing 290 Intermediate District 287 Education 266 (943) Coborn’s Delivers Direct selling establishments 240 Liberty Diversified International Stationery supplies 200 Parker - Hannifin Oildyne Division Hydraulic component production 172 Dakota Growers Pasta Company Macaroni & spaghetti 159 Waymouth Farms, Inc.Salted & roasted nuts & seeds 150 Good Samaritan Society Skilled nursing care facility 136 Avtec Warehousing & metal finishing 102 Benjamin Franklin/ Blue Ox Heating & Air Plumbing/mechanical contractor 95 CITY OF NEW HOPE ECONOMIC DEVELOPMENT REPORT PAGE 6 PLANNING & DEVELOPMENT The city continues to see sustained growth and development as major redevelopment projects come to fruition. Overall development activity has increased annually since 2012 and the city anticipates that growth will remain steady over the next several years. DEVELOPMENT ACTIVITY From 2013-2017, $193,484,044 of reinvestment was approved in the city through construction permits. The city is striving to increase momentum to continually increase the tax base, while regularly providing the highest level of services delivered to residents, businesses, and property owners of the city. The city set a goal of increasing the total valuation of work for permits from 2013-2015 ($83,848,030) by 10% for 2016- 2018. Total valuation of work completed in city between 2016 and 2017 (2 years) was $109,636,014, which represents a 30.76% increase in total valuation of work between 2013 and 2015 (3 years). DEVELOPMENT ACTIVITY BY YEAR 2013 2014 2015 2016 2017 Permits issued 2,212 2,141 2,169 2,607 2,652 Fees collected $356,242 $485,371 $512,461 $602,391 $867,289 Valuation of work $17,069,459 $32,802,509 $33,976,062 $37,740,765 $71,895,249 VALUATION OF WORK 2013 2014 2015 2016 2017 $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 $70,000,000 $80,000,000 CITY OF NEW HOPE ECONOMIC DEVELOPMENT REPORT PAGE 7 The following planning and development activities occurred in the last year: Ironwood (under construction) Alatus, LLC is constructing a four-story, 182-unit luxury apartment building on the site previously owned by the city, adjacent to the New Hope Village Golf Course. The city completed a market feasibility study in the spring of 2015 to determine what type of redevelopment was best suited for the site and concluded that luxury apartments were the most viable option. The final plat and vacation of easements for the project were approved in February 2017 and construction of the $43 million building began in the summer of 2017. It is expected that the building will be completed in late 2018. Amenities include a pool deck with lounge chaises and grilling stations, an indoor/outdoor entertainment suite with rooftop grill, work-from-home spaces, create space/do-it-yourself workshops, panoramic views of the New Hope Village Golf Course, a 24/7 fitness center, studio, an indoor sauna, a resident coffee bar, and a pet spa. The city and developer negotiated a city-provided loan that will assist in adding a high-efficiency HVAC system, which will help the building achieve LEED Certification and result in no carbon footprint for the entire building. The city created a redevelopment Tax Increment Financing (TIF) District in conjunction with the project that authorized the expenditures for land/building acquisition, site improvements and preparation, utilities, administrative costs, and other qualifying improvements. In 2007, the city purchased five, 12-unit buildings. With land acquisition, relocation costs, and demolition, the city invested nearly $2.2 million into the project. In 2017, the city sold the property to Alatus, LLC to facilitate the construction of the building for $1.443 million. The TIF District allows the city to recoup the land write-down costs and administrative fees associated with the development. Good Samaritan (under construction) Good Samaritan is expanding its campus in New Hope with the construction of a three-story, 31-unit assisted living facility. Construction on the building, which is located at 2765 Virginia Avenue North, began in October 2017 and will be completed in the fall of 2018. Residents of the new $4.4 million facility will live on-site full time; however, the individual units will not include full kitchen facilities. There will be separate areas for dining, bathing, exercise, nursing care, activities, and administrative services. The current operations of Good Samaritan are conducted in a facility that has 77 beds and includes skilled care and rehabilitation services. The addition will be connected to the campus by an enclosed walkway. Good Samaritan acquired two parcels to the north of the property in 2012, where the assisted living facility is being constructed. The building connection and site layout created the need for special zoning considerations and the property was rezoned to Planned Unit Development (PUD) to allow flexibility to accommodate the project. The city created a housing Tax Increment Financing (TIF) District in conjunction with the project that authorized the expenditures for site improvements and preparation, utilities, administrative costs, and other qualifying improvements. The TIF district facilitates the construction of the assisted living facility. CITY OF NEW HOPE ECONOMIC DEVELOPMENT REPORT PAGE 8 Police Department & City Hall (under construction) A new police department and city hall for the city of New Hope is under construction. The City Council approved a bid from Terra General Contractors for $14.78 million in December of 2017 for the new building. The sale of $18.435 in general obligation capital improvement plan bonds at the interest rate of 2.6339% was also approved to pay for project. The city began working with a consultant in 2013 to review the space needs of the police department and city hall, identify deficiencies of the existing building, and determine if an updated and expanded or new police station and city hall facility was needed. In September 2015, a space needs citizen’s task force recommended that a new police station and city hall be constructed to replace the existing facility. The task force evaluated several potential sites for the building and considered soil boring information. In September 2016, the task force recommended that the new municipal building be constructed on the civic center site where the existing swimming pool is located, due to the fact that the pool also needs to be replaced. In January 2017, the city entered into a five-phase contract for design and construction services with Wold Architects and Engineers for the new police station and city hall. In August 2017, the City Council approved design development phase plans and authorized Wold to proceed to the next phase of the design process – the preparation of construction documents. A ground breaking for the building took place on January 5, 2018, and it anticipated that the building will be completed in July of 2019. The pool that was previously located where the new police department and city hall is being constructed was demolished and will be reconstructed in the area of the current city hall. In June 2018, the City Council voted on a preferred pool concept and entered into an agreement with Stantec Engineering to provide the final planning and design. The preferred pool concept includes a current channel, two body slides, a shallow water area, and a 50-meter, 8-lane pool with diving boards. The original concept had a 25-yard pool, however during the 2018 legislative session; the city received $2 million in order to expand the 25- yard pool concept to 50-meters. City staff and Stantec Engineering are finalizing the concepts and will begin the design process shortly thereafter. Construction on the pool is expected to begin in August of 2019 with a June of 2020 opening. Parkview (completed) Parkview is a 60-unit housing development at 55th and Winnetka avenues completed by Centra Homes in 2017. The city purchased the 17-acre site in 2013 with a goal of diversifying available housing stock in the city. The residential subdivision consists of 29 single-family homes and 31 detached townhomes. The homes sold-out faster than expected for higher than anticipated prices. The two-story, single-family homes sold for an average price of $378,934, ranging between $314,178 and $438,676. The single- family homes range from 2,585 to 3,990-square feet, and include a variety of models and floor plans. Each model includes a two-car garage, with several models offering an option for a three-car garage. The detached townhomes sold for an average price of $309,706, ranging between $273,995 and $334,777. The detached townhomes range from 1,974 to 2,128-square feet and are association-maintained. There are four standard models, all of which include a full basement and space for a 12-foot deep deck or patio. CITY OF NEW HOPE ECONOMIC DEVELOPMENT REPORT PAGE 9 Northwest Church of Christ (under construction) A 5,400-square foot expansion is underway at the Northwest Church of Christ campus, located at 8624 50th Avenue North. The $1,495,000 addition includes a new assembly hall that will help accommodate the need for additional space for a growing congregation. The church purchased the adjacent parcel to the north of the property that contained a single-family home, which was razed in preparation for the expansion. Winnetka Storage (under construction) The previously vacant industrial building at 3216 Winnetka Avenue North is being converted into a self-storage facility. The $3,7580,000 project includes a 23,000-square foot addition to the second floor at the southwest corner of the building. Building improvements include several exterior modifications and improvements, including the second floor addition, fresh paint on the existing building, new roofing, additional windows, parking area improvements, and the construction of an outdoor storage area. McDonald’s (under construction) McDonald’s, located at 4201 Winnetka Avenue North, is undergoing a $450,000 renovation project. Improvements include modernizing the building’s facade, reconfiguring the site to accommodate a tandem drive-thru lane, new signage, and improvements to interior restaurant areas. The project will be completed in the fall of 2018. VIP Auto (approved) A 5,060-square foot gas station and 3,780-square foot car wash has been approved for construction at 7201 Bass Lake Road, the site of a previously underutilized retail building. The development will include several environmentally conscious improvements, including a stormwater collection system that retains all rainwater onsite and re-uses it for the car wash. A filtration system will recycle and reuse water that is used by the car wash. The gas station canopy will feature an integrated solar panel roof system that will supply approximately 50% of the electricity required to operate the convenience store. It is anticipated that demolition of the existing building will take place in the fall of 2018 with construction to begin shortly thereafter. CITY OF NEW HOPE ECONOMIC DEVELOPMENT REPORT PAGE 10 HOUSING LOAN PROGRAMS The city has partnered with the Lending Center at the Center for Energy and Environment (CEE) to offer a convenient one-stop service that provides residential property owners in New Hope access to a comprehensive array of financing and rehabilitation services. The Home Improvement Loan Program encourages and supports the preservation of existing housing by providing loans to improve the basic livability and/or energy-efficiency of the borrower’s home. The Low Interest Loan Program, Unsecured Loan Program, and Interest Subsidy Program provide loans and funds to homeowners to make improvements to their properties. An Emergency Deferred Loan is also available for homeowners that have emergency improvement needs but do not qualify for other home improvement loan or grant programs. The following loans/subsidies/leveraged funds have been issued since 2013: 2013 2014 2015 2016 2017 Loans/Subsidies/ Leveraged Funds 3 7 4 5 9 Amount $13,090 $99,487 $40,693 $46,096 $78,682 SCATTERED SITE HOUSING Over the years, the city has utilized its Economic Development Authority (EDA) to acquire several properties as part of the Scattered Site Housing Program. The primary focus of the program is to target distressed single-family properties throughout the city, with the goal of improving residential neighborhoods. The program currently emphasizes two primary activities, demolition, and rehabilitation. When homes are demolished, the vacant lot is sold to a builder for the construction of a new single-family home. Homes that are rehabilitated are sold on the open market with no income restrictions. The following scattered site housing projects were completed over the last year: Address Previously Assessed Value Sale Price/ New Value Percent Increase Project Type 3751 Louisiana Ave N $147,000 $380,000 158%Demolition 6067 Louisiana Ave N $92,000 $324,000 252%Demolition 3984 Zealand Ave N $187,000 $295,000 58%Rehabilitation 5400 Yukon Avenue $113,000 $297,000 163%Demolition In addition to the projects listed above, there are seven additional scattered site projects that were underway as of when this report was published. CITY OF NEW HOPE ECONOMIC DEVELOPMENT REPORT PAGE 11 SCATTERED SITE HOUSING PROJECTS 3751 Louisiana Ave N 6067 Louisiana Ave N 3984 Zealand Ave N 5400 Yukon Avenue $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 Previously Assessed Value Sale Price/New Value 3751 Louisiana Ave N - Before 3751 Louisiana Ave N - After 3984 Zealand Ave N - Before 3984 Zealand Ave N - After CITY OF NEW HOPE ECONOMIC DEVELOPMENT REPORT PAGE 12 PROPERTY VALUES 2013 2014 2015 2016 2017 Taxable market value $1,235,267,314 $1,334,517,728 $1,430,939,117 $1,535,054,114 $1,697,092,365 Percent change 0.93%8.03%7.23%7.28%10.56% PROPERTY VALUES 2013 2014 2015 2016 2017 $250,000,000 $500,000,000 $750,000,000 $1,000,000,000 $1,250,000,000 $1,500,000,000 $1,750,000,000 CITY OF NEW HOPE ECONOMIC DEVELOPMENT REPORT PAGE 13 MEDIAN HOUSEHOLD VALUES 2013 2014 2015 2016 2017 Median Household Value $168,000 $180,000 $188,500 $196,000 $213,000 Percent change 2.44%7.14%4.72%3.98%8.67% HOUSEHOLD VALUE 2013 2014 2015 2016 2017 $30,000 $60,000 $90,000 $120,000 $150,000 $180,000 $210,000