Imp. Proj. #484COUNCIL
I' Will • •
Originating Department
City Manager
Kirk McDonald
By: Management Assistant
CITIZENS ADVISORY 1
COMMUNITY CENTER
Approved for Agenda
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Planning
Item No.
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REPORT /RECOMMENDATION ON NEW HOPE
Several members of the New Hope Citizens Advisory Commission will be present at the June
28th Council meeting to present the Council with a brief report/recommendation on the
construction of a Community Center. Based on input received from residents, the Commission
is recommending that a Community Center not be constructed at this time. The report is
intended to summarize a three year study by the Commission on this issue.
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CITY OF NEW HOPE
MEMORANDUM
DATE: June 22, 1993
TO: New Hope City Council
FROM: New Hope Citizens Advisory Commission
SUBJECT: Report /Recommendation on New Hope Community Center
This brief report is intended to summarize a three year study by the Citizen Advisory
Commission on the need for a Community Center in the City of New Hope and to
make a recommendation on this issue.
The idea for the Community Center actually began with the construction of the new
fire station in the fall of 1991. The old fire station was over 30 years old and had
poor lighting and heating, a number of building code violations, no air conditioning and
lacked adequate training and storage space; and no longer met the needs of the
community. The completion of the new fire station prompted discussions about the
reuse /redevelopment of the old fire station as a possible community center.
Bernard Herman Architects, Inc. performed an evaluation of the old station building
in 1989. That evaluation stated that the existing fire station building was constructed
with concrete block and brick exterior walls. The building is deteriorating and in need
of significant maintenance and repair work. An on -site review of the existing fire
station has revealed a long list of building code violations and issues that should be
resolved in order that this building conform with the applicable codes, ordinances, and
reasonable standards of construction. The quality of the interior materials, finishes,
and colors are outdated and unattractive and the building is in a state of overall
deterioration. The summary of the evaluation stated that the existing fire station
facility is obviously undersized and inadequately equipped to properly serve the current
needs and programs of the New Hope Fire Department. The building is deteriorating
and in need of substantial repairs and maintenance. However, building code violations
will be more difficult, if not impossible, to totally resolve due to limitations of space
and nature of existing construction. In order for this building to be brought up to
code, extensive remodeling will be required including redesign of the mechanical and
electrical systems. The advisability of spending a significant amount of money to
upgrade a building that will remain functionally deficient is questionable.
- 1 -
On February 26, 1990, the community center was discussed from a needs
perspective. The estimated cost of renovating and bringing building up to code is
$500,000. It was determined that a public meeting would be held in March and
leaders from the community would be invited to give their input on the community
center idea and their perception of features needed. A public hearing was conducted
on March 19, 1990 and representatives from the Senior Citizen Club, the NHPAA and
City staff were present and gave their statements as to what they felt were the most
needed features in a new or rebuilt community center. Needs discussed included a
place for senior meetings and recreation, more gym space discussed included a place
for senior meetings and recreation, more gym space discussed included a place for
senior meetings and recreation, more gym space needed for adult sports and
basketball, youth basketball practice, gymnastics and aerobics. It was the general
consensus that both additional meeting space and gym space were needed in the City.
On April 16, 1990 the Citizen Advisory Commission toured the Fire Station. The
commissioners discussed the idea of remodeling the old fire station into a Community
Center. After reviewing all information, touring the facility, reviewing the finances
available, and discussing with "experts" the feasibility of retaining or remodeling the
building, the "opinion of the Citizen Advisory Commission [is] that the current fire
station not be considered for remodeling for a community center. However, the site
of the current fire station should be considered for future use of a community center
for the City of New Hope.
In the spring /summer of 1991, City staff met with architects to develop preliminary
concept plans for a community center complex. Staff also toured a number of
community centers throughout the metro area to gather ideas. The concept plan calls
for a new free - standing building that would be constructed at the west end of the
existing municipal parking lot, with architecture blending with the other municipal
buildings on the campus. The plans show buildings that would range in size from
27,000 - 37,000 square feet, depending on the amount of gym space initially
constructed. The main floor would consist of two primary areas; (1) a community
room, and (2) a gymnasium with an elevated walkway. There is space for a stage on
one end of the gym. There is a kitchen with serving windows that open to both the
community room and gym. also, on the main floor is a dance /aerobics room, youth
room, public rest rooms, locker rooms, and a warming room (to replace the warming
house that would be removed. Upper floor area which consists of storage, the
elevated walkway, and a mezzanine space which would be unfinished space for future
use. Access to the facility would be entirely off of Xylon Avenue. Existing tennis and
basketball courts would be relocated along Zealand Avenue so that the parking area
for the community center could be expanded south.
On October 21. 1991, a public hearing was held at the Citizen Advisory Commission
meeting on a number of city - related improvements, including the construction of a
new community center, to gain input from residents. There were two main needs
identified.
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(1) large meeting rooms (with space available for community events and
weddings) and
(2) additional gym space for both youths and adults.
Other, more specific needs identified were:
-more meeting space for community organizations,
- meeting space for Athletic Association,
-more gym space needed for youth basketball, and
-more space needed for senior citizens' clubs to meet.
The City Hall campus, including the area where the community center would be
constructed, is located in a "tax increment financing district" and the City is
investigating the use of tax increment funds to finance the construction of a
community center. The estimated cost of constructing a community center is $2.5 -
$3 million. That would be a basic functional building without many amenities. It is
estimated that there would be at least $3 million in the TIF District by the end of the
life of the district in 1997. State law says that excess revenues in a TIF district can
be used for a community center. The important thing to remember is that tax
increment revenues, not general tax dollars, would pay for construction of the center.
While the construction of a community center could be funded with TIF dollars, the
on -going operating budget could not. The operating budget most likely would be
funded through the general or enterprise funds. It is anticipated that the annual cost
of staffing and operating the community center would be about $150,000. It is not
anticipated that revenues derived from the rental of the facility, etc. would equal the
operating expenses.
The City Hall facilities and the proposed community center are located in an R -1 single
Family Residential Zoning District. Public buildings and neighborhood or community
centers are conditionally permitted uses, which means that the Planning Commission
and City Council would need to approve a conditional use permit for the facility. One
major concern would be shielding the single family homes on Zealand Avenue from
the impact of a community center (landscaping, berm, no major access of Zealand,
etc.). A parking analysis has been completed and it is felt that parking needs could
be met by providing additional parking on the site, developing some "proof of parking"
areas, signing an "off- site" parking agreement with K -Mart and through complimentary
uses of City facilities.
In the fall of 1992, the Citizen Advisory commission started planning other strategies
(besides public hearings and meetings at City Hall) to gather citizen input on a
community center. It was determined that the committee would conduct "town
meetings" throughout the City at a variety of locations in the months of February and
March and take the issue to the citizens. This strategy was developed to inform
-3-
citizens first, and then follow -up with a survey in the City newsletter. The City spent
several months becoming well- versed on the subject and a model of the community
center was constructed to show citizens what the building would look like. town
meetings were conducted at the following locations this past winter.
Meadow Lake School
February 9th
North Ridge Apartments
February 16th
Holy Nativity Church
February 23rd
St. Joseph's Parish
March 3rd
North Park Plaza
March 15th
Attendance at most of the meetings was low and those attending generally were not
in favor of the construction of a community center at this time.
In March, 1993, a "Community Center Survey" was included in the City Report to
seek further input from residents on this issue. Out of 9,600 households and
businesses, 296 responses were received (or a response rate of 3.5 %). Of those
responding, 264 or 89% indicated that they were opposed to the construction of a
community center; 11 % or 32 responses were in favor of the construction of a
community center.
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Based upon all of the information gathered to date and based upon the input received
both through the "town meeting" and survey process, the Citizen Advisory
Commission makes the following recommendations to the New Hope City Council
regarding the construction of a new community center:
1. The Commission originally decided that they did not want to make the decision
to build a community center, but rather wanted the citizens of New Hope to
make the decision.
2. As a result of that decision, five town meetings were held and a survey sent
out in the City Newsletter. The Commission's findings are based on the results
of town meetings and survey.
3. The Commission' recommends that based upon the input received, a
community center not be constructed at this time.
4. The Commission recommends that City staff work with North Ridge Care
Center to see if meeting space can be incorporated into the proposed Adult Day
Care Center to solve the need of senior meeting space.
5. The Commission recommends that the Parks and Recreation Department
continue to work with the School District to see if the district can give the
department and NHPAA suitable gym space at reasonable rates.
6. The Commission recommends that the TIF funds be utilized for improvements
to Civic Center Park, including ballfields, tennis courts, volleyball courts, theater
building, and demolition of the old fire station.
Attachments: Town Meetings Attendance Sheets and Minutes
Tabulation of Survey Responses
Comments from Surveys Supporting Community Center
Comments from Surveys Opposing Community Center
Letters Attached to Community Center Surveys
Miscellaneous Letters, Phone Messages and News Articles re:
Community Center
Public Hearing Minutes
Community Center Plans /Cost Estimates
Fire Station Evaluation
CITY OF NEW HOPE
DATE: November 10, 1992
TO: Shari French and Citizen Advisory Commission
FROM: Kirk McDonald, Management Assistant/ Community Development
Coordinator
SUBJECT: November 16th CAC Meeting
Proposed New Hope Community Center
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At the August 17th Citizen Advisory Commission meeting I
distributed a report that attempted to summarize the issues that
impact the community center project, provide a chronology of what
has happened on the project to date, and provide factual data so
that CAC members would have a reference tool for their town meeting
discussions with residents. The CAC requested that the report be
condensed into outline format for quick reference purposes and I
have attached a draft outline (along with the original report) for
your review at the November 16th CAC meeting. I have also enclosed
some background information on the concept of tax increment
financing for those members who desire to become more familiar with
this financing tool. As you are aware, the City Manager will be
present at Monday's meeting to answer the commissioners' questions
on TIF and I will be present to review the attached outline. If
you need further information please let me know.
cc: Dan Donahue, City Manager
Project File #484
BACKGROUND INFORMATION OUTLINE
PROPOSED NEW HOPE COMMUNITY CENTER
1. Construction of New Fire Station
A. Old fire station no longer met needs of the community
B. Facility over 30 years old and had poor lighting and
heating, a number of building code violations, no air
conditioning and lacked adequate training and storage
space.
C. The City of New Hope conducted a fire facility referendum
in November, 1989, asking residents to approve the
issuance of general obligation bonds for the construction
of a new 1.8 million dollar fire facility. The referen-
dum was approved, with he new facility completed in the
Fall of 1991.
D. The completion of the new fire station prompted dis-
cussions about the re- use /redevelopment of the old fire
station as a possible community center.
2. Evaluation of Old Fire Station Building
Bernard Herman Architects, Inc. performed an evaluation of the
old fire station building in 1989.
A. Introduction:
The original fire station was constructed in 1961 with
additions in 1967 and 1970.
B. Maintenance and Repair Requirements:
The existing fire station building is constructed with
concrete block and brick exterior walls. The building is
deteriorating and in need of significant maintenance and
repair work.
C. Building Code Analysis:
An on -site review of the existing fire station has
revealed a long list of building code violations and
issues that should be resolved in order that this
building conform with applicable codes, ordinances, and
reasonable standards of construction.
D. Inventory of Existing conditions:
General Comments on Entire Building:
1. Quality of interior materials, finishes, and colors
are outdated and unattractive.
2. The building is in a state of overall
deterioration.
3. Furniture and equipment is outdated and
unattractive.
4. Building does not have a vestibule or main entrance
lobby. There is "no sense of entry" or front door
to the building.
CM
E. Summary:
The existing fire station facility is obviously
undersized and inadequately equipped to properly serve
the current needs and programs of the New Hope Fire
Department. The building is deteriorating and in need of
substantial repairs and maintenance. However, building
code violations will be more difficult, if not
impossible, to totally resolve due to limitations of
space and nature of existing construction. In order for
this building to be brought up to code, extensive
remodeling will be required including redesign of the
mechanical and electrical systems. The advisability of
spending a significant amount of money to upgrade a
building that will remain functionally deficient is
questionable.
3. Chronological Summery of Citizen Advisory Commission
Discussions Regarding Renovation of Old Fire Station
A. February 26, 1990 - Community center discussed from a
needs perspective. Estimated cost of renovating and
bringing building up to code is $500,000. Public meeting
held in March and leaders from the community invited.
B. February 27, 1990 - Letter was sent to community leaders,
to invite them to attend the March 19th meeting and give
their input on the community center idea and their
perception of features needed.
C. March 19, 1990 - Representatives from the Senior Citizen
Club, the NHPAA and City staff were present and gave
their statements as to what they felt was most needed as
far as features go in a new or rebuilt community center.
Needs discussed included a place for senior meetings and
recreation, more gym space needed for adult sports and
basketball, youth basketball practice, gymnastics and
aerobics. It was the general consensus that both
additional meeting space and gym space were needed in the
City.
D. April 16. 1990 - The Citizen Advisory Commission toured
the Fire Station. The Commissioners discussed the idea
of remodeling the old fire station into a Community
Center. After reviewing all information, touring the
facility, reviewing the finances available, and
discussing with "experts" the feasibility of retaining or
remodeling the building, the "opinion of the Citizen
Advisory Commission [is] that the current fire station
not be considered for remodeling for a community center.
However, the site of the current fire station should be
considered for future use of a community center for the
City of New Hope.
-3-
4. concept Plans for Community Center
A. In the spring/summer of 1991, City staff met with
architects to develop preliminary concept plans for a
community center complex. Staff also toured a number of
community centers throughout the metro area to gather
ideas.
B. The concept plan (Attachment #2) calls for a new free-
standing building that would be constructed at the west
end of the existing municipal parking lot, with
architecture blending with the other municipal buildings
on the campus. The plans show buildings that would range
in size form 27,000 - 37,000 square feet, depending on
the amount of gym space initially constructed.
C The main floor would consist of two primary areas: (1) a
community room, and (2) a gymnasium with an elevated
walkway. There is space for a stage on one end of the
gym. There is a kitchen with serving windows that open
to both the community room and gym. Also, on the main
floor is a dance/aerobics room, youth room, public rest
rooms, locker rooms, and a warming room (to replace the
warming house that would be removed).
D. Upper floor area which consists of storage, the elevated
walkway, and a mezzanine space which would be unfinished
space for future use.
E. Access to the facility would be entirely off of Xylon
Avenue, with the only exception being the service
entrance on Zealand Avenue.
F. Existing tennis and basketball courts would be relocated
along Zealand Avenue so that the parking area for the
community center could be expanded south.
5. Public Hearing on Improvements
On October 21, 1991, a public hearing was held at the Citizen
Advisory Commission meeting on a number of city-related
improvements, including the construction of a new community
center, to gain input from residents.
A. Comments:
-Two main needs identified as a large meeting (with space
available for community events and weddings) and addi-
tional gym space for both youths and adults
-City needs more meeting space for community
organizations
-Meeting space for Athletic Association
-More gym space needed for youth basketball
-More space needed for senior citizens' clubs to meet
-4-
6. Financing
A. The City Hall campus, including the area where the
community center would be constructed, is located in a
"tax increment financing district" and the City is
investigating the use of tax increment funds to finance
the construction of a community center.
B. The estimated cost of constructing a community center is
$2.5 - $3. million. That would be a basic functional
building without many amenities. It is estimated that
there will be at least $3 million in the TIF District by
the end of the life of the district in 1997.
C. State law says that excess revenues in a TIF district can
be used for a community center. The important thing to
remember is that tax increment revenues - not general tax
dollars - would pay for the construction of the community
center.
D. While the construction of a community center could be
funded with TIF dollars, the on -going operating budget
could not. The operating budget most likely would be
funded through the general or enterprise funds. It is
anticipated that the annual cost of staffing and
operating the community center would be about $200,000.
It is not anticipated that revenues derived from the
rental of the facility, etc. would equal the operating
expenses.
7. Planning /Zoning
A. The City Hall facilities and the proposed community
center are located in an R -1 Single Family Residential
Zoning District. Public buildings and neighborhood or
community centers are conditionally permitted uses, which
means that the Planning Commission and City Council would
need to approve a conditional use permit for the
facility.
B. Shield the single family homes on Zealand Avenue from the
impact of a community center (landscaping, berm, no major
access of Zealand, etc.).
C. A parking analysis has been completed and it is felt that
parking needs can be met by providing additional parking
on the site, developing some "proof of parking" areas,
signing an "off- site" parking agreement with K -Mart and
through complementary uses of City facilities.
PROPOSED NEW HOPE COMMUNITY CENTER
1. Construction of New Fire Station
In 1988, the Fire Strategic Planning Committee, in conjunction with
the New Hope City Council, undertook an evaluation of the needs of
the New Hope Fire Department. After detailed exploration, it was
determined that the old fire station no longer met the needs of the
community. The facility is over 30 years old and has poor lighting
and heating, a number of building code violations, no air
conditioning, and lacked adequate training and storage space. The
City of New Hope conducted a fire facility referendum in November,
1989, asking residents to approve the issuance of general obligation
bonds for the construction of a new 1.8 million fire facility. The
referendum was approved, with the new facility completed in the fall
of 1991. The completion of the new fire station prompted discussions
about the re- use /redevelopment of the old fire station as a possible
community center.
2. Evaluation of Old Fire Station Building
Bernard Herman Architects, Inc. performed an evaluation of the old
fire station building in 1989, with sub - sections regarding mainten-
ance /repair requirements, building code analysis, inventory of
existing conditions, cost estimates and summary (a complete copy of
the report is enclosed as Attachment #1) . A brief summary of the
evaluation follows:
A. Introduction:
The original fire station was constructed in 1961. In 1967, a
single story addition was added to the north end of the building
for a dormitory and squad room. In 1970, a second addition was
added to the south end of the building for expansion of the
Apparatus Room.
B. Maintenance and Repair Requirements:
The existing fire station building is constructed with concrete
block and brick exterior walls. The roof structure of the
original building (1961) and the south addition (1970) is
laminated wood beams, wood deck and composition shingles.
Exterior roof soffits at overhangs are painted wood. The north
addition (1967) is single story with wood beams, wood deck and
a built -up roof. The building is deteriorating and in need of
significant maintenance and repair work.
C. Building Code Analysis:
An of -site review of the existing fire station has revealed a
long list of building code violations and issues that should be
resolved in order that this building conform with applicable
codes, ordinances, and reasonable standards of construction. A
partial list of code relation issues of violations that should
be corrected if the building is to be utilized are outlined in
the report.
D. Inventory of Existing Conditions:
This inventory of existing conditions was conducted with the
intention of identifying functional, mechanical and electrical
deficiencies of the existing building. Building code analysis
and maintenance repair requirements are defined separately.
General Comments on Entire Building:
1. Quality of interior materials, finishes, and colors are
outdated and unattractive.
2. The building is in a state of overall deterioration.
3. Furniture and equipment is outdated and unattractive.
4. Building does not have a vestibule or main entrance lobby.
There is "no sense of entry" or front door to the building.
A list of functional, mechanical and electrical deficiencies of
each room in the facility is listed in the attached report.
E. Summary:
The existing fire station facility is obviously undersized and
inadequately equipped to properly serve the current needs and
programs of the New Hope Fire Department. The building is
deteriorating and in need of substantial repairs and
maintenance.
There are numerous repair and maintenance items described in
this report, most of which can be take care of, some at great
expense. However, building code violations will be more
difficult, if not impossible, to totally resolve due to
limitations of space and nature of existing construction. In
order for this building to be brought up to code, extensive
remodeling will be required including redesign of the mechanical
and electrical systems. The advisability of spending a signifi-
cant amount of money to upgrade a building that will remain
functionally deficient is questionable.
3. Chronological Summery of Citizen Advisory Commission Discussions
Regarding Renovation of Old Fire Station
February 26, 1990 - Community center discussed from a needs perspec-
tive. Architect stated that old fire station had a number of code
violations and is deteriorating rapidly, but basic structure is in
good shape and it has potential. New mechanical and air conditioning
would be needed. Estimated cost of renovating and bringing building
up to code is $500,000. It was decided that a public meeting would
be held in March and leaders from the community would be invited.
February 27, 1990 - Letter was sent to community leaders, i.e. presi-
dents of clubs, service organizations, etc. to invite them to attend
the March 19th meeting and give their input on the community center
idea and their perception of features needed.
-3-
March 19, 1990 - Representatives from the Senior Citizen Club, the
NHPAA and City staff were present and gave their statements as to
what they felt was most needed as far as features go in a new or
rebuilt community center. Needs discussed included a place for
senior meetings and recreation, more gym space needed for adult
sports and basketball, youth basketball practice, gymnastics and
aerobics. It was the general consensus that both additional meeting
space and gym space were needed in the City. At the end of the
discussion, the Commissioners asked that they be given a tour of the
Fire Station at their April meeting, be sent a copy of Bernie
Herman's report on the facility "PART III, EVALUATION OF FIRE STATION
BUILDING ", and be given financial information on funds available.
April 16, 1990 - The Citizen Advisory Commission toured the Fire
Station with Chief Smith as tour guide. He answered questions as to
the facility and problems his department has experienced in the
facility. Upon returning from that tour, the Commissioners discussed
the idea of remodeling the old fire station into a Community Center.
After reviewing all information, touring the facility, reviewing the
finances available, and discussing with "experts" the feasibility of
retaining or remodeling the building, the "opinion of the Citizen
Advisory Commission (is) that the current fire station not be
considered for remodeling for a community center. However, the site
of the current fire station should be considered for future use of a
community center for the City of New Hope with this Commission being
advised and consulted regarding the potential construction of a
community center ".
4. Concept Plans for Community Center
In the spring /summer of 1991, City staff met with architects to
develop preliminary concept plans for a community center complex.
Staff also toured a number of community centers throughout the metro
area to gather ideas, including Shoreview, Golden Valley, Brooklyn
Park, Crystal, and Apple Valley.
The concept plan (Attachment #2) calls for a new free - standing
building that would be constructed at the west end of the existing
municipal parking lot, with architecture blending with the other
municipal buildings on the campus. The plans show buildings that
would range in size form 27,000 - 37,000 square feet, depending on
the amount of gym space initially constructed.
The main floor would consist of two primary areas: (1) a community
room, which is dividable by folding doors into 3 separate areas, with
southern exposure and access to a patio overlooking the pool, and
(2) a gymnasium, which is planned around a typical basketball gym,
but also has an elevated walkway that is accessible from the upper
level by stairs or elevator. There is space for a stage on one end
of the gym and storage on the other end. There is a kitchen with
serving windows that open to both the community room and gym, and a
service area that leads to the gym. Also, on the main floor is a
dance /aerobics room, youth room, public rest rooms, locker rooms, a
warming room (to replace the warming house that would be removed),
and an office area for recreation staff.
-4-
There is also an upper f lcor area which consists of storage, the
elevated walkway, an area for additional rest rooms, and a mezzanine
space which would be unfinished space for future use. Access to the
facility would be entirely off of Xylon Avenue, with the only excep-
tion being the service entrance on Zealand Avenue. Existing tennis
and basketball courts would be relocated along Zealand Avenue so that
the parking area for the community center could be expanded south.
5. Public Hearing on Improvements
On October 21, 1991, a public hearing was held at the Citizen
Advisory Commission meeting on a number of city-related improvements,
including the construction of a new community center, to gain input
from residents. The hearing was publicized on Cable TV and on the
front page of September City Report. The hearing was not well
attended, however, the following comments were received:
-Two main needs identified as a large meeting (with space available
for community events and weddings) and additional gym space for both
youths and adults
-City needs more meeting space for community organizations (Woman of
Today, Girl Scouts, etc.)
-Meeting space for Athletic Association
-More gym space needed for youth basketball
-More space needed for senior citizens' clubs to meet
The majority of the comments that were received at the hearing and
that have been received on the "comment line" since the hearing have
been supportive of a community center.
6. Financing
The City Hall campus, including the area where the community center
would be constructed, is located in a "tax increment financing
district" and the city is investigating the use of tax increment
funds to finance the construction of a community center. The
estimated cost of constructing a community center is $2.5 - $3.
million. That would be a basic functional building without many
amenities. Funds have been accumulating over the years in the TIF
district so there is money available that could be expended for a
community center. It is estimated that there will be at least $3
million (and probably more) in the TIF District by the end of the
life of the district in 1997. State law says that excess revenues in
a TIF district can be used for a community center. The concept plan
being considered could be funded from the excess revenues from the
tax increment district. The fund are not available at this time, but
by the end of the district's life there will be sufficient revenue to
pay for the facility. The project could be initiated almost anytime,
with the City doing some internal funding by borrowing from one fund
and paying it back in the future. The important thing to remember is
that tax increment revenues - not general tax dollars - would pay for
the construction of the community center. The enclosed cash flow
projection (Attachment#3) shows that if $2.9 million were expended
for a community center in 1993, the TIF district would still have a
fund balance of $250,000 in 1997.
-5-
While the community center could be funded with TIF dollars, the on-
going operating budget could not. The operating budget most likely
would be funded through the general or enterprise funds. It is
anticipated that the annual cost of staffing and operating the
community center would be about $200,000 (Attachment #4). It is not
anticipated that revenues derived from the rental of the facility,
etc. would equal the operating expenses.
7. Planning
The City Hall facilities and the proposed community center are
located in an R-1 Single Family Residential Zoning District. Public
buildings and neighborhood or community centers are conditionally
permitted uses, which means that the Planning Commission and City
Council would need to approve a conditional use permit for the
facility. A considerable amount of thought has already gone into the
planning process to try and shield the single family homes on Zealand
Avenue form the impact of a community center (landscaping, berm, no
major access of Zealand, etc.). A parking analysis has been
completed by staff and the City's Planning Consultant (Attachment #5)
and it is felt that parking needs can be met by providing additional
parking on the site, developing some "proof of parking" areas,
signing an "off-site" parking agreement with K-Mart and through
complementary uses of City facilities.
Tax
Ineremartt
Financing
m
Minnesota
Communities
This is the first in a series of reports
dedicated to the improvement of the
small community's ability to cope
with an ever changing array of
problems and needs in the world of
today.
It is our intent that future reports will
be drawn from a wide range of topics
that are of current interest to Minne-
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Office of Local and Urban Affairs
MINNESOTA STATE PLANNING AGENCY • CAPITOL SQUARE BUILDING • ST. PAUL, MINNESOTA 55101
INTRODUCTION
The State Housing and Redevelopment Act,
Minnesota Statutes 462.411 et. seq., describes a
method of renewal known as Tax Increment Fi-
nancing whereby a local Housing and Redevelop-
ment Authority can conduct redevelopment
activities on a locally financed basis without federal
assistance.
To implement a tax increment financing program,
the housing authority must first prepare a redevel-
opment plan based on a survey and analysis of
community needs, problems, and redevelopment
opportunities. The redevelopment plan is reviewed
by the planning commission and submitted to the
municipal council for review and approval. Follow-
ing a public hearing held by the council, permanent
financing is provided through the sale of general
obligation bonds that will subsequently be repaid
with tax increments from the redeveloped pro-
perties. Those properties identified for redevelop-
ment are acquired and cleared by the housing
authority and resold to private owners for redevel-
opment. The difference between the amount of the
property taxes before and after redevelopment are
referred to as tax increments. Tax increments are
pledged by the housing authority to redeem the
general obligation bonds that were initially sold to
finance the project. The result of a redevelopment
program is an improved tax base that will benefit
the entire community.
This bulletin contains a useful explanation of the
tax increment process and explains in detail the
procedure used to facilitate a community redevel-
opment program on a locally financed basis.
THE NEED FOR REDEVELOPMENT
The existence of blight and deterioration is a
generally accepted fact -of -life in many urban and
rural communities in Minnesota. Residential and
commercial buildings that have been serviceable for
decades are sitting vacant or deteriorating because
repairs and remodeling are too expensive or are
regarded as poor investments by the owners.
Deterioration not only affects the appearance and
pride of a community, it also results in loss of
assessed valuation and tax receipts at a time when
the costs for municipal services are increasing. The
business district on Main Street is still the heart of
the community, even though the new mode of
community development focuses on modern
shopping centers, planned industrial parks, and
clustered residential subdivisions. The downtown
area is a functional and necessary part of the com-
munity that should be kept alive for future genera-
tions to enjoy.
In many cases the action needed to restore com-
munity vitality is some form of redevelopment
program. Redevelopment and revitalization can be
accomplished in many different ways. The ef-
fectiveness of a redevelopment program depends on
the local situation. A redevelopment program does
not necessarily mean a full -scale urban renewal, or a
demolition and relocation project.
Redevelopment does mean planning. The basic
objective of any redevelopment program is to renew
an area according to an approved plan and at the
same time avoid or eliminate the unplanned factors
that may have contributed to the deterioration in
the first place.
Redevelopment also means renewal. Essentially,
renewal is the elimination of buildings or facilities
that are structurally substandard or economically
obsolete in order to permit the construction of a
replacement building that will constitute a positive
contribution to the community. Along with the
new construction, a change in traffic patterns or
parking areas may create the economic impetus that
will spur revitalization in other areas of the com-
munity.
Renewal takes place whenever an old residential or
commercial building is torn down and replaced by a
new structure. Redevelopment, renewal and plan-
ning are constructive tools that can be used to
restore community vitality, enhance community
appearance, and at the same time develop and
maintain a stable tax base.
FEDERALLY FINANCED REDEVELOPMENT
In recent years the federal government has played a
large role in the execution of urban renewal pro-
grams. The United States Department of Housing
and Urban Development (HUD) has provided
technical assistance and financial support for over
1,000 urban renewal projects through its grant -in-
aid programs. Through HUD programs, funds were
made available to local housing and redevelopment
authorities to plan urban renewal projects and to
cover the capital costs involved in redevelopment.
Following approval of the Renewal Plan, the local
housing authority acquired the land by purchase or
condemnation, cleared the buildings, and resold the
land to private developers at a reduced price or
"write down" to set the stage for new development.
The "write down" was absorbed by the local
housing authority with the assistance of HUD
grants. After redevelopment had taken place, the
increased tax returns on the redeveloped land went
immediately and directly to all local taxing juris-
dictions. In recent years, however, federal urban
renewal funds have become more and more difficult
to obtain. Changes in HUD priorities, the keen
competition for renewal funds, and increased. red
tape meant that fewer federally funded urban
renewal projects were being started each year.
Then, in January 1973, the federal government
announced an 18 month moratorium for all new
federally financed urban renewal projects.
LOCALLY FINANCED REDEVELOPMENT
As an alternative to federally financed urban re-
newal a locally financed approach to redevelopment
known as tax increment financing has been incor-
porated in the Minnesota Housing and Redevelop-
ment Act. Tax increment financing is a unique
approach to redevelopment whereby the municipal
government can provide the financial support for a
Housing and Redevelopment Authority project
with local funds. Tax increment financing is
suitable for small scale redevelopment projects on a
single parcel of land as well as projects involving
multiple properties.
THE TAX INCREMENT APPROACH TO
FINANCING A REDEVELOPMENT PROJECT
By definition, tax increment financing deals only
with the increased property taxes that are generated
from within the redevelopment area. It does not
preempt the amount of property taxes currently
derived from the redevelopment area, nor does it
directly affect the amount or rate of general ad
valorem taxes levied in the municipality. The result
of a tax increment financing project is an increased
tax base that will benefit all local taxing jurisdic-
tions. For example, consider a property with a
dilapidated building that is now producing $500 per
year in property taxes. If this property were ac-
quired by the local Housing and Redevelopment
Authority, cleared and resold for private develop-
ment so as to produce $3000 property taxes per
year, there would be a tax increment of $2,500.
The funds to acquire the property and remove the
dilapidated building could be obtained through the
sale of general obligation bonds by the munici-
pality. After redevelopment, the original $500
property taxes would continue to go to the local
taxing jurisdictions, but the $2,500 tax increment
would be committed to a special bond redemption
fund until the bonds are retired. After the bonds
were repaid, the entire $3,000 property taxes
($2,500 tax increment plus $500 original taxes)
would go to all local taxing jurisdictions, assuming
the mill rate remains constant.
The fundamental difference between federally
funded urban renewal and tax increment financing
lies in the method of absorbing the "write down"
costs. In the federal program these costs were
partially covered by a HUD grant, while in a tax
increment financing program the costs are covered
by increased property taxes paid by property
owners. Clearly, the tax increment financing
method is only successful when redevelopment
results in higher taxable values that produce in-
creased property tax returns even though the tax
rate remains constant. To redevelop property that
would produce equal or lower taxes would violate
the basic economic concept of tax increment
financing.
LEGAL AUTHORITY
Under MSA 462.411 et seq. all cities and villages
are given the power to establish Housing and
Redevelopment Authorities (HRA's) and to
conduct redevelopment programs. Before the HRA
can be legally established, the village council must
hold a public hearing to determine if the need for
housing and /or redevelopment programs is suffi-
cient to require governmental action. Following the
public hearing and legal organization, the H RA may
initiate redevelopment projects, prepare redevelop-
ment plans, acquire, improve, and dispose of real
property, and undertake other activities that are
necessary to accomplish the objectives of Section
462.445 of the Municipal Housing and Redevelop-
ment Act. Local financing for renewal activities is
permitted under Section 462.581, which provides
that a municipality may furnish the proceeds of
bonds to an HRA for redevelopment projects. The
bonds may be repaid through pledges by the HRA
via the tax increment method described in Section
462.585. These are general obligation improvement
bonds that are not subject to net debt limits or
referendum requirements.
REDEVELOPMENT PLAN
The basic element in &tax increment financing pro-
gram is the redevelopment plan. Before any renewal
activities are conducted and before property is
acquired by the HRA, the redevelopment plan must
be submitted to the planning commission for
review, and to the municipal council for approval.
The redevelopment plan is the blueprint of the
project. It is prepared by the HRA to identify the
need for the project and to detail the methods that
will be used to implement the project. Section
462.515 permits an HRA to prepare a redevelop-
ment plan on its own initiative. A completed rede-
velopment plan should include these elements:
1. Need Statement - a narrative statement of the
purpose and intent of the project.
a. Overall description of the proposed project
b. Project management program
2. Real Estate Data
a. Identification of the redevelopment area
land parcels to be acquired
b. Site maps
c. Estimated costs of property
3. Site Preparation
a. Clearance activities
b. Public improvements
4. Land Marketing and Redevelopment
a. Real estate services to be used
b. Description of proposed redevelopment
activities
c. Selection of developer
d. Sale of land
5. Financing
a. Planning and administrative funds needed
b. Borrowing through municipal general obli-
gation bond issue
c. Determination of original taxable value of
land
d. Bond redemption fund through the tax in-
crement financing
PUBLIC HEARING
Section 462.515 stipulates that a redevelopment
plan must first be submitted to the planning
commission, if one exists, for review and comment.
Next, the redevelopment plan, along with com-
ments made by the planning commission, is sub-
mitted to the municipal council for approval. The
council must hold a public hearing on the plan to
consider the public need for the project and its
relationship to other plans for the municipality.
The redevelopment plan should be consistent with
the comprehensive plan, zoning and land use plans,
and other plans or development policies previously
adopted by the council and planning commission.
The H RA should not commit itself to any aspect of
the project until the council acts on a resolution
approving the redevelopment plan.
REDEVELOPMENT COMMITMENTS
In order to assure the success of a redevelopment
project and the marketability of the bonds, it is
important for the HRA to have reasonably firm
commitments on the resale and redevelopment of
the land at an early stage. With careful planning, the
redevelopment project will finance itself through
the use of tax increments. The obvious danger
would be that the anticipated increases in the value
of the redeveloped property would not produce
sufficient tax increments to make the bond pay-
ments. Tax data and real estate value estimates
should be obtained from the municipal and county
assessor's office to insure that the anticipated
taxable valuation of the proposed redevelopment
will balance with the bond redemption payments.
MSA 462.525, Subd. 7, permits the Housing
Authority to require a statement of intent and a
performance bond from the developer to guarantee
that the redeveloped land will be put to a higher use
that is consistent with the redevelopment plan and
will produce sufficient tax increments to finance
the project and retire the bonds. Throughout the
redevelopment project, close working relationships
must be established between the HRA and planning
and fiscal specialists to insure that the redevelop-
ment project is economically feasible and com-
patible with other community plans.
LAND ACQUISITION, PREPARATION,
AND RESALE
Acquisition of private property by a public agency
is one of the most sensitive aspects of a redevelop-
ment project. The HRA must be confident that
public ownership will be only temporary, lasting
only as long as it takes to clear the property and
make the necessary improvements for resale to a
developer. Land acquisition chronologically follows
project planning activities and the public hearing.
The HRA, however, may wish to obtain options
from owners during the planning process. MSA
462.521 permits the HRA to obtain control of the
property by option prior to the public hearing if it
does not unconditionally obligate the HRA to the
purchase. At least two appraisals of the property
should be obtained by the HRA in order to deter-
mine its fair market value. Using the appraisals and
comparable sales data, the HRA may negotiate a
purchase price with the owner. As a last resort, the
HRA can employ eminent domain procedures as
prescribed in Section 462.445. Condemnation
should be avoided, if possible, to enable the HRA
to maintain control of project costs,
Following acquisition, the HRA must make arrange-
ments for clearing the land and installing public
utilities, if needed, for redevelopment. If the land
contains small structures, municipal employees may
be able to accomplish the clearance work. The
availability of public utilities to the property should
be confirmed by the village engineer. Replacement
or installation of utilities can be handled in the
manner normally followed by the municipality. If
any business or residential occupants in the pro-
posed area are to be displaced by redevelopment
activities, relocation assistance must be provided by
the HRA in accordance with Section 462.445,
Subd. 1. Acquisition, clearance, utility replacement
and resale are individual elements of the redevelop-
ment program, but they must be handled in a single
effort as quickly as possible' in order to retain the
taxable status of the property.
PERMANENT FINANCING THROUGH
TAX INCREMENTS
As explained before, the key difference between
federally financed urban renewal and the tax
increment approach lies in the method of absorbing
the "write down" costs. In a federally assisted
renewal program, HUD grants help to cover these
costs. Under the tax increment approach, municipal
bonds are sold by the local governing body and
repaid with tax increment payments after the
property has been redeveloped.
Section 462.581 (9) gives the municipality author-
ity to sell bonds for redevelopment projects, and
Section 462.585 (4) provides that tax increments
may be pledged for repayment of these bonds.
These are general obligation bonds, backed by the
full faith and credit of a municipality. They are
considered the same as improvement bonds that are
reimbursable from special assessments and, there-
fore, are not subject to net debt limits or election
requirements.
A written agreement pledging the tax increments
for repayment of the bonds must be executed by
the HRA and municipal council and filed with the
county auditor. This will enable the county auditor
to segregate taxes derived from the original taxable
value of the land prior to redevelopment from taxes
derived from the increased taxable value of the land
following redevelopment. The taxes paid by the
property owner in excess of the original taxes are
the increments, and they are remitted to the
The net project cost can be estimated as follows:
housing authority to be used for bond redemption
payments. The original tax amount continues to be
distributed to all local taxing jurisdictions during
the pay back period. Tax increment bonds sold by
the municipality for the redevelopment project may
include the following expense items:
1. Capital Costs
a. Land acquisition
b. Clearance and site preparation
c. Utility placement
2. Administrative Costs
a. Planning
b. Legal
c. Consultant fees
3. Other costs necessary to carry out the program
The amount of the bonds sold should be equal to
the gross cost of items 1, 2 and 3 above less pro-
ceeds from sale of the land to developers. This
presumes that temporary financing is available
through short term (1 -5 years) notes or other funds
currently at hand. If short term financing is not
available, the tax increment bond sale should be for
the gross cost amount. The net project cost esti-
mate is needed in order to compute the amount of
the bond issue.
ESTIMATED PROJECT COST
Admin. Costs
Gross
Resale
Net
Capital Costs
(Est. 15 %)
Cost
Price
Cost
Lot 1
3,000
450
3,450
3,000
450
Lot 2
16,000
2,400
18,400
4,100
14,300
Lot 14
27,000
4,050
31,050
12,200
18,850
Lot 16
16,000
2,400
18,400
8,000
10,400
62,000
9,300
71,300
27,300
44,000
The bond
payment schedule must
be coordinated with
redevelopment plan
so that the
tax increment
payments balance with the bond redemption schedule.
ESTIMATED TAX INCREMENT AND BOND PAYMENT SCHEDULE
Tax
Total Taxes
Original
Ye ar
( all 4 l
Tax es
1972
1,590
1,590
1973
1,700
1,590
1974
3,200
1,590
1975
6,000
1,590
1976
6,300
1,590
1977
6,300
1,590
1978
7,000
1,590
1979
7,400
1,590
1980
7,400
1,590
1981
7,700
1,590
1982
7,700
1.590
1983
8,300
1,590
1984
9,530
1,590
Tax
Bond Payments
Increme
Intere
Princ
110
2,200
3,000
1,610
2,050
3,000
4,410
1,900
3,000
4,710
1,750
3,000
4,710
1,600
3,000
5,410
1,450
4,000
5,810
1,250
4,000
5,810
1,050
4,000
6,110
850
4,000
6,110
650
4,000
6,710
450
4,000
7,940
250
5,000
59,450
15,450
44,000
The bond payment schedule and tax increment
estimates should be included in the financial
agreement that is filed with the county auditor.
The actual marketability of the bonds will depend
on the following factors:
1. The economic feasibility of the project
2. That the redevelopment can be shown to
provide sufficient tax increments to repay the
bonds
3. That redevelopment commitments are firm
and redevelopment is imminent
Section 462.585, Subd. 2, provides that, upon
approval of the redevelopment plan by the
municipal council, the county will certify the
assessed value of the property within the
redevelopment area as most recently determined.
This is referred to as the "original taxable value." In
subsequent years only the original taxable value will
be used to determine mill rates for the taxing
jurisdictions, but the mill rates will be extended to
cover the entire valuation in the project area. Each
year following redevelopment and until the bonds
are retired, the county will return the taxes that are
in excess of those derived from the original taxable
59,450
value to the local housing authority. The original
taxes based on the original tax valuation will
continue to go to all local taxing jurisdictions.
When the bonds are retired, all the taxing
jurisdictions will receive the tax increments in
addition to the original taxes. It is important that
all local taxing jurisdictions are informed of the
redevelopment program and the tax increment
method of financing. The school district, county
board, and other taxing agencies should all be aware
of the way the tax increment financing program
operates.
HOW TO COMPUTE THE TAX INCREMENT
Before the tax increment method can be used in a
redevelopment project, the financing agreement
(part of the redevelopment plan) must be approved
by the municipal council and HRA and filed with
the county auditor. The HRA then requests the
county auditor to certify the assessed valuation of
all taxable property in the redevelopment area.
Following redevelopment, the increased valuation
will produce tax returns over and above those
derived from the original taxable value. This
increase is referred to as the "tax increment." It is
remitted by the county auditor to the HRA and
kept in a separate fund to repay the bonds sold by
the municipal council to finance the redevelopment
project.
SAMPLE PROJECT
Original Taxes Based - )n Original Taxable
on Property (1972) Valuation of $51,500
Acquisition, Capital Cost
Clearance $62,000
Administration 9,300
Total 71,300
Less sale of land 27,300
Net Project Cost (Bonds Sold) 44,000
Increased Taxes on Based on Taxable
Redeveloped Property Valuation of $133,000
(1974)
Tax Increment
Using the tax increment method, the $44,000 in
bonds could be amortized in 12 years at 5%
interest. During the bond pay back period (12
years), the original tax yield of $1,590 will
continue to be distributed to all local taxing
jurisdictions. After the bonds have been retired, the
tax increments will also be distributed to all local
taxing jurisdictions (school district, village, county
and special districts).
REPORTING
Throughout the planning and execution of a tax
increment redevelopment program, it is necessary
to make periodic reports to the State Housing
Commission whose powers are exercised by the
Office of Local and Urban Affairs. Section
462.445, Subd. 8, requires that housing authorities
submit to the Office of Local and Urban Affairs
certified copies of the redevelopment plan and
supporting project documents. The Office of Local
and Urban Affairs may, in an advisory capacity,
make recommendations and suggestions to the
housing authority in regards to the redevelopment
program.
CONCLUSION
While tax increment financing offers municipalities
an alternative method of redevelopment, it should
be carefully planned and used with caution. Munici-
palities and Housing and Redevelopment Authori-
ties that are interested in tax increment financing
are urged to work closely with legal and planning
and fiscal consultants.
$1,590
$6,500
$4,910
Technical assistance and information regarding tax
increment financing and other community develop-
ment programs are available upon request through
the Office of Local and Urban Affairs, 200 Capitol
Square Building, 550 Cedar Street, St. Paul, Minne-
sota 55101.
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Otto G. Bonestroo, P.E.
Howard A. Sanford, P.E.
Agnes M. Ring, A.LC,P.
Robert W, Rosene, PE'
Keith A. Gordon, P.E.
Thomas W Peterson, P.E.
Joseph C. Anderlik, P.E.
Robert R. Pfefferle, P.E.
Michael C. Lynch, P.E.
Marvin L. Sorvala, P.E.
Richard W. Foster, P.E.
James R. Maland, P.E.
Richard E. Turner, P.E.
David O. Loskota, P.E.
Jerry D. Pertzsch, P.E.
Glenn R. Cook, P.E.
Robert C. Russek, A.I.A.
Scott J. Arganek, P.E.
Thomas E. Noyes, P.E.
Jerry A. Bourdon, P.E.
Kenneth P. Anderson, P.E.
Robert G. Schunicht, P.E.
Mark A. Hanson, BE,
Mark R. Roll's, P.E.
Susan M. Eberlin, C.P.A.
Michael T. Rautmann, P. E.
Mark A. Seip, P.E.
*Senior Consultant
Ted K. Field, P.E.
Gary W. Morien. P.E.
Thomas R. Anderson. A.I.A.
Paul J. Gannon, A.I.A.
Donald C. Burgardt, P.E.
Daniel J. Edgerton, P.E.
Light Bulbs
Thomas A. Syfko, P.E.
A. Rick Schmidt, P.E.
30,000.00
Frederic J. Stenborg, P.E.
Philip J. Caswell, P.E.
Ismael Martinez, P.E.
Mark D. Wallis, P.E.
Michael P Rau, P.E.
Miles B. Jensen, P.E.
REPLACEMENT COST - BUILDING SYSTEMS
NEW HOPE COMMUNITY CENTER
Our File No. 34 Gen
L. Phillip Gravel, P.E.
Karen L. Wiemeri, P.E.
Gary D. Kristofitz, P.E.
F. Todd Foster, PE.
Keith R. Yapp, P.E.
Douglas J. Benoit, P.E.
Shawn D. Gustafson, P.E.
Cecilio Olivier, P.E.
Paul G. Heuer, P.E.
John P. Gorder, P.E.
Charles A. Erickson
Leo M. Pawelsky
Harlan M. Olson
James F Engelhardt
Assumes 3.5% annual inflation.
2335 West Highway 36 • St. Paul, MN 55113 a 612- 636 -4600
10 Years
15 Years
20 Years
Roof
120,000.00
Metal Roofing
10,000.00
Gymnasium Floor
Other Flooring
50,000.00
100,000.00
140,000.00
Wall Finish
45,000.00
100,000.00
Suspended Ceiling
9000.00
Plumbing
20,000.00
40,000.00
HVAC
195,000.00
Light Bulbs
15,000.00
30,000.00
Light Fixtures
200,000.00
Elevator
60,000.00
Gym Curtain
30,000.00
60,000.00
Lockers
10,000.00
Scoreboard
10,000.00
Kitchen Equipment
50,000.00
Plantings
20,000.00
Total
T$160,000.00
$100,000.00
$1,135,000.00
GRAND TOTAL $1,395,000.00
Assumes 3.5% annual inflation.
2335 West Highway 36 • St. Paul, MN 55113 a 612- 636 -4600