081400 EDAOfficial
File
Copy
CITY OF NEW HOPE
EDA MEETING
City Hall, 4401 Xylon Avenue North
August 14, 2000
President VV. Peter Enck
Commissioner Sharon Cassen
Commissioner Don Collier
Commissioner Pat LaVine Norby
Commissioner Mark Thompson
1. Call to Order
2. Roll Call
3. Approval of Regular Meeting Minutes of July 24, 2000
4. Discussion Regarding Request for Tax Increment Financing Assistance for Avtec
Building Expansion and Regional Stormwater Pond Improvements, 9101 Science Center
Drive (Planning Case No. 00-11)
5. Adjournment
CITY OF NEW HOPE
4401 XYLON AVENUE NORTH
NEW HOPE, MINNESOTA 55428
Approved EDA Minutes
Regular Meeting
July 24, 2000
City Hall
CALL TO ORDER
ROLLCALL
APPROVE MINUTES
TAX INCREMENT
FINANCING
ASSISTANCE
Item 4
New Hope EDA
Page 1
President Enck called the meeting of the Economic Development Authority to order
at 9:13 p.m.
Present:
W. Peter Enck, President
Sharon Cassen, Commissioner
Don Collier, Commissioner
Pat LaVine Norby, Commissioner
Mark Thompson, Commissioner
Motion was made by Commissioner Thompson, seconded by Commissioner Norby,
to approve the Regular Meeting Minutes of June 26, 2000. All present voted in
favor. Motion carried.
President Enck introduced for discussion Item 4, Discussion Regarding Request for
Tax Increment Financing Assistance for Artec Building Expansion and Regional
Stormwater Pond Improvements, 9101 Science Center Drive (Planning Case No.
O0-1 I).
President Enck noted the issue of Avtec's building expansion was on the Council
Meeting agenda. The item before the EDA is regarding tax increment financing
assistance.
Mr. Kirk McDonald, Director of Community Development, stated Wilson
Development Services, representing Artec Finishing Systems, is in the audience.
Mr. McDonald stated the major issues discussed during the development review
process was storm water quality improvements. Avtec's property includes a
triangular-shaped piece of property southeast of the existing building and east of the
rail spur. The building expansion requires storm water ponding improvements to
meet the property owner's current expansion plans and the plans denote a pond in
the area which has been approved by the City Engineer and Watershed District.
However, the City Engineer has discussed the need for a larger regional pond in this
area that would address water quality issues from adjacent and surrounding
properties with expansion in the future. There has been some discussion of having
Avtec place funds in escrow and deferring their ponding improvements to allow
time for the City to coordinate with other properties in the area on regional pond
issues, with the City potentially acquiring the property for ponding purposes. The
Watershed District favors the regional pond approach.
He stated Avtec is requesting the City to consider creating an Economic
Development Tax Increment Financing District to assist them with extraordinary
development costs and to assist the City with the future construction with a regional
NURP pond including property acquisition and trail access. It is estimated that the
proposed building expansion would generate between $150,000 and $185,000 in
TIF funds over the next eight years (after the 40% fiscal disparity allocation is
paid). The TIF statutes also provide for a loss in local government aid and require
that the City participate in the project by making a 10% annual contribution. If the
July 24, 2000
BUSINESS SUBSIDY
CRITERIA
Item 5
EDA RESOLUTION
00-03
Item 5
ADJOURNMENT
City proceeded with this project, it is anticipated that the 10% would be contributed
from the Storm Water Fund or other non-general fund tax sources used for pond and
trail improvements. Artec is requesting that they be paid $125,000 of the TIF
proceeds for a portion of the TIF eligible expenses and sale of the land (for the
pond) to the City under a "pay-as-you-go" arrangement. The additional $25,000 -
$50,000 in TIF generated funds would be available to the City for administrative
expenses and public improvements associated with the project.
Mr. McDonald stated if the EDA is interested in pursuing this request, the first step
recommended by the City Manager is to bring in a financial consultant to review the
figures.
City Attorney Sondrall noted this type of contribution may be subject to the
business subsidy laws.
Mr. Daniel Wilson, Wilson Development Services, was recognized. He stated the
tax increment mechanism is a viable way to acquire ponding and trail
improvements. He noted there are extraordinary development costs for the site due
to unstable soil conditions and configuration as well as the construction of a NURP
pond. Mr. Wilson stated timing is a critical factor for Artec.
Mr. Wilson commented that the business subsidy criteria would apply as an
additional 12 jobs would be generated.
President Enck noted that pond maintenance is a long-term obligation for the City.
The EDA directed staff to utilize services of a financial consultant and present a
preliminary report at its next meeting of August 14, 2000. Mayor Enck emphasized
the need to consider development costs as well as maintenance costs for the pond.
President Enck introduced for discussion Item 5, Resolution Establishing a Business
Subsidy Criteria Pursuant to Minn. Stat. 116J.993 - 116J.995.
Commissioner Cassen introduced the following resolution and moved its adoption:
"RESOLUTION ESTABLISHING A BUSINESS SUBSIDY CRITERIA
PURSUANT TO MINN. STAT. 116J.993 - 116J.995". The motion for the
adoption of the foregoing resolution was seconded by Commissioner Collier, and
upon vote being taken thereon, the following voted in favor thereof: Enck, Cassen,
Collier, Norby, Thompson; and the following voted against the same: None;
Abstained: None; Absent: None; whereupon the resolution was declared duly
passed and adopted, signed by the president which was attested to by the executive
director.
Motion was made by Commissioner Thompson, seconded by Commissioner
Cassen, to adjourn the meeting. All present voted in favor. Motion carried. The New
Hope EDA adjourned at 9:42 p.m.
Valerie Leone
City Clerk
New Hope EDA
Page 2
July 24, 2000
EDA
REQUEST FOR ACTION
Originating Department Approved for Agenda Agenda Section
EDA
Community Development & August 14, 2000
Finance Departments
Item No.
By: Kirk McDonald/Dali Sulander B~:
DISCUSSION REGARDING REQUEST F/OR TAX INCREMENT FINANCING ASSISTANCE FOR AVTEC
BUILDING EXPANSION AND REGIONAL STORMWATER POND IMPROVEMENTS, 9101 SCIENCE
CENTER DRIVE (PLANNING CASE 00-11)
REQUESTED ACTION
At the July 24 EDA meeting, the EDA discussed a proposal/request from Wilson Development Services, on
behalf of Avtec Finishing Systems, Inc., 9101 Science Center Drive, requesting that the City consider tax
increment financing assistance to facilitate extraordinary development costs with a building expansion project
and to facilitate the construction of a regional storm water pond and trail improvements in Science Industry
Center. The EDA directed staff to review the proposal with a financial consultant and report back to the EDA
with a preliminary recommendation. Staff met with Jim Casserly from Krass Monroe to discuss the request and
Krass Monroe has prepared the attached report for the EDA Staff requests to review the report with the ED/~
to determine if the EDA has an interest in staff pursuing this request with the developer.
POLICY/PAST PRACTICE
The City considers requests for financial assistance for business expansions when written proposals are
submitted to the City. The City has not created any new Tax Increment Financing districts for the past 10+
years due to the restrictions that are imposed on cities by the state for creating new districts. Staff does find
that this request may merit special consideration due to the regional storm water quality issues that could be
constructed in conjunction with this development.
.BACKGROUND
Avtec Finishing Systems, Inc. is a metal finishing business that has been located at 9101 Science Center
Drive since 1981. The company employs 120 employees over three shifts. The existing building is 36,000
square feet in size and the company is proposing to construct an 18,000 square foot addition on the front
(north side) of the building. The soils in this area are marginal and will require some correction and the building
will require spread footings. It is anticipated that the expansion will add from 5 to 25 additional employees to
the business. The City Council approved the expansion plans at the July 24 Council meeting.
I:RFA\ Q-pc 00-11 Avtec TIF reeue~t
Request for Action
Project 00-11 Avtec TIF Request
August 14, 2000
Page 2
One of the major issues discussed during the development review process was storm water quality
improvements. Avtec's property includes a triangular-shaped piece of property southeast of the existing
building and east of the rail spur. The building expansion requires storm water ponding improvements to meet
the property owner's current expansion plans and the plans denote a pond in the area, which has been
approved by the City Engineer and Watershed District. However, the City Engineer has discussed the need for
a larger regional pond in this area that would address water quality issues from adjacent and surrounding
properties with expansions in the future (see Engineer's sketches). There has been some discussion of having
Avtec place funds in escrow and deferring their ponding improvements to allow time for the City to coordinate
with other properties in the area on regional pond issues, with the City potentially acquiring the property for
ponding purposes. The Watershed District favors the regional pond approach and the Planning Commission
recommended that the Council consider improvements on a regional basis. The City's trail plan also shows a
future trail connection through this site.
Based on the above-stated information, Avtec is requesting that the City consider creating an Economic
Development Tax Increment Financing District to assist them with extraordinary development costs and to
assist the City with the future construction with a regional NURP pond including property acquisition and trail
access. In the petitioner's original proposal, it is estimated that the proposed building expansion would
generate between $150,000 and $185,000 in TIF funds over the next eight years (after the 40% fiscal disparity
allocation is paid). The TIF statutes also provide for a loss in local government aid or require that the City
participate in the project by making a 10% annual contribution. If the City proceeded with this project, it is
anticipated that the 10% would be contributed from the Storm Water Fund or other non-general fund tax
sources used for pond and trail improvements. Avtec is requesting that they be paid $125,000 of the TIF
proceeds for a portion of the TIF eligible expenses and sale of land (for the pond) to the City under a "pay-as-
you-go" arrangement. The additional $25,000 - $50,000 in TIF generated funds would be available to the City
for administrative expenses and public improvements associated with the project.
If the EDA is interested in pursuing this request, the first step would be for the EDA to direct staff to coordinate
with the developers on the preparation of a TIF Plan and Development Agreement. The City Manager is
recommending that the City utilize one of its financial consultants to assist City staff in coordinating with the
developers on this request. The applicant has provided a proposed TIF Approval Process Schedule in their
attached proposal.
ATTACHMENTS
Krass Monroe Report
TIF Proposal
City Engineer Correspondence and Sketches
08/03/00 THU 16:56 FAX 612 885 5969 KRASS MONROE ~001
KRASS MONROE, P.A.
ATTORNEYS AT LAW
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FACSIMILE TRANSMITTAL SHEET
ITCh' FAX'NUMBEI~ --
Kirk McDonald 763-531-5136
COMPA~,,'y; DATE:
City of New Hope August 3, 2000
~ROM:
TOTAL NO. OF PAGES INCLUDING COVE.R:
Pam Frantum 10
RE: 5EN'DER'S REFERF._NCE N'I.lk~ER:
Avtec Expansion 10048-3
[] URGENT r'l FOR REVIEW
[] PLEASE COMMENT/REPLY
ORIGINAL BEING SENT VIA [] REGULAR MAIL ,'"10VEI:~IIGHT IVlAJL [3 OTHER
Nu I hS/COMMENTS:
There appears to be enough tax increment revenue available from the proposed
district to pay Avtec $40,000 for the land, do the ponding, including Avtec's portion,
as well as do the trail. The bottom line would be that Avtec would get $76,000 and
the City would do the improvements.
Jim and Para.
~\WPDATAMNr~IEI~ HOPEk03~FAXM~ TO M/X)ONAID, DOC
Please call Parn Frantum at (612) 885-5999 if you have any trouble receiving fhis transmission.
SUITE 1100 SOUTHPOINT OFFICE CENTER · 1650 WEST 82ND STREET · MINNEAPOU$, MINNESOTA 55431-1447
TELEPHONE 612/885-5999 · FACSIMILE 612/885.5969 www. krassmonroe.com
08/03/00 THU 16:57 FAX 612 885 5969 KRASS MONROE [~002
I
KRASS MONROE,
ATTORNEYS AT
· Pameta Frantum
Emailpamf~lo'assmonn~ com
oim~t O~! 0}$2) aa$4as2
II
LAW
I
MEMORANDUM
Fi-owE
Date:
R~:
City of New Hope
Atto: Kirk McDonald, Community Development Director
Pamela Frantmn, Development ~h/[l~\
James P,. Casserly, Esq. /ir %'~
August 3, 2000
Proposed Tax Increment District for Avtec
Our File No. 10048-3
~'~'g Expansion
Enclosed please find cash flows we have prepared showing estimates of the amount of mx
increment revenue which could be generated fi.om thc 18,000 square foot building expansion
expected to be undertaken by Artec Finishing Systems, Inc. ("Avtec"), if thc property were to be
included within an economic development type of tax increment district.
Dung the last few years the Legislature has amended the Tax Increment Financing Act
specifically with respect to economic development types of tax increment districts. The inflator
factor applied to the original base value has been eliminated and the term of the district has been
extended so tax increment revenues can be collected for nine years, resulting in the receipt of
more tax increment revenue, but in the meantime, districts located in the metropolitan must have
the fiscal disparities contn'bution deducted from within the district.
Cash Flow A assumes a class rote of 3.4% and no inflation, which results in total tax increment
revenues of $210,476, or a present value $137,726. Cash Flow B assumes a class rote of 3.4%
and two percent inflation, which results in total tax increment revenues of $235,786 or a present
value of $151,749. There has been discussion at the Legislature of a reduction in the commercial-
industrial rate to 3.0%, so Cash Flow C assmnes a class rate of 3.0% and two percent inflation,
which results in total tax increment revenues of $208,047 or a present value of $133,897.
SUITE t100 SOUTHPOINT OFFICE CENTER · 1650 WEST 82ND STREET · BLOOMINGTON, MINNESOTA 55431.1447
TELEPHONE 612/8~5999. FACSIMILE 612/8~5969
08/03/00 THU 16:57 FAX 612 885 5969 KRASS MONROE ~003
The maximum fiscal disparities contribution is 40%. The fiscal disparities contribution for the
City was 31.7366% in 1999 and 31.6542% in 2000. We have used the 2000 contribution rate for
our analysis.
In order to avoid a reduction in LGA/HACA receipts, we would recommend the City consider
mak/ng a local conm~bution to the project The local contribution must equal ten percent of the
tax mcrernent revenue generated each year. The contribution must be made fi:om unrestricted
funds of the City and may be contributed to the project up fi'~nt or on an annual basis. Amounts
paid by the City for the storm water pending improvements in excess of the tax increment
revenue would qualify as a local contribution as long as the funds are "unrestricted" funds. Tax
increment revenue and special assessments are not "unrestricted." funds.
The item we found the most disconczrting in our analysis was the market value of the current
building ($22 per square foot) versus the market value of the expansion ($52 per square foo0. We
have conferred with Dan Wilson of Wilson Development Services, who represenis Artec with
respect to this issue. The expansion is an extension of the existing manufacturing facility rather
than office space and includes a mezzan/ne to be used for storage. In Wilson's opinion, the
estimated market value of the expansion is a valid number and that the current building is under
valued. It may be helpful to discuss this issue with the county assessor.
In the event the county assessor determines to increase the market value of the existing building
and the district is established this year, the increased market value would pass through as tax
increment revenue. If the City is to issue any debt then some additional assurance on market
value from the asse~or is necessary. In our conversations with Wilson he made it clear that Avtee
would not consid~ entering into an assessment agreement which would establish a minimum
market valuation for the property.
In the event the City Council and the Economic Development Authority (the "Authority') decide
to proceed with the establishment of a tax increment dimrict the following timetable could be
considered:
Monday, August 14:
Friday, August 25:
Tuesday, September 5:
Monday, September 25:
Tuesday, September 26:
Council and Authority review plans; Council
calls for public hearing
Plans dism'outed.to County and School District
Planning Commission reviews plans
Council holds public hearing:, Authority and
Council approve plans
Building permit may be issued.
If the Council and Authority determine to proceed with this project, we will prepare a more
detailed ctn~nology for the establishment of the district and approval of the development
agreement. The preparation of the development agreement can be completed so thc Authority can
consider approval of the agreement after its comideration of the plan on September 251
· Page 2
08/03/00 TItU 16:58 FAX 612 885 5969 KRASS MONROE ~004
C_viv~n thc amount of tax increment revenue available and the various costs involved, we need to
discuss our options with you as soon as possible. Please review and give us a cai1.
PJF/
Encl.
G:~WPOATA~,I~NEW ~OR'~F MC3:)ON,N.D W-C, ASH FLOW. DOC
· P~e3
08/03/00 THU 16:58 FAX 612
885 5969
KRASS MONROE
CITY OF NEW HOPE
Avtec Addition
ASSUMPTIONS
Market Value - 2000
07-118-21-21-0004 Avtec Properties
TOTALS
Land Area
(Sq. Feet) Percent
236,200 100.0%
,. 236,200 100.0%i
Building
(~Sq. Feet)
36,000
__36,000
Original Tax Capacity
Estimated Market Value Upon Completion
Land
Original Building
Expansion
Estimated Tax Capacity Upon Completion
Land
Origina! Building
Expansion
3.40% ** (CJass Rate)
236,200 sq. ft.@
36,000 sq. ff.@
18,000 sq. ff.@
3.40% ** (Class Rate)
Land
Value
'$ 478,000
Estimated Taxes
Land
OdginaJBuilding
Expansion
Estimated Captured Tax Capacity
236~00 sq. fl.@
36,000 sq. fL@
18,000 sq. fL@
$478,000
Fiscal Disparities Impact
Estimated Adjusted Captured Tax Capacity
Estimated Available Tax Increment Upon Completion
Construction 50% 2000
Construction 100% 2001
Valuation 2002
Taxes Payable 2003
Administrative I Program Fees (net) 10.00%
Present Value Rate 12/1/2000 7.50%
Fiscal Disparities (Payable 2000) 31.6542%
inflation 0.00%
1.268
005
Building
Value
$ 786,000
$786,000
Original Market Value Used
2.02 per sq. ft. = 478,000
21.83 per sq. fi. = 786,000
51.88 per sq. ff. = 933,750
0.40
0.94
2.24
Tota I
Market
Value
(Local Tax Rate)
$1,264,000
~$1,264,000
1,264,000
42,976
2,197,750
16,252
26,724
31,748
74,724
94,749
per sq. fL =
per sq. fL =
per sq, It. =
20,608
33,886
40,256
31,748
10,049
21,698
27,513
Avtec3.xls
Prepared by Krass Monroe, P.A. 8/3/2000
CITY OF NEW HOPE
Avtec Addition '
CASH FLOW AND PRESENT VALUE ANALYSIS
< ...... ANNUAL ..... > ' < ....SEMI - ANNUAL ........... >
(a) (b) (c) (d) (e) (f) (g) (h) (i) 0) (k) (I)
Original Estimated Captured Fiscal Adjusted Estimated Less: Available Cumulative <~ Present Value ..... >
Tax Tax Tax Disparities Captured Tax Admin Tax Avail. Tax Semi Annual Cumulalive
Date Capacity Capacity Capacity Impact Tax Cap. Increment Fees Increment Increment Balance Balance
(see assumptions) (c) - (b) (d) x (d). (e) (f) x (g) x (g) - (h) Total of (i) P.V, of (i) Total of (k)
Inflation 0.0% (prey. year) 31.6542% 1.268 10.00% 7.50% 1210t100
06/01/00 42,976 42,978 0 0 0 0 0 0 0 * 0
12/01/00 42,976 42,976 0 0 0 0 0 0 0 0
06/01/01 42,976 58,850 0 0 0 0 0 0 0 0 0
12/01101 42,976 58,850 0 0 0 0 0 0 0 0 0
06101/02 42,976 74,724 15,874 (5,025) 10,849 6,878 688 6,190 6,190 5,543 5,543
12/01/02 42,976 74,724 15,874 (5,025} 10,849 6,878 688 6,190 12,381 5,343 10,886
06/01103 42,976 74,724 31,748 (10,049) 21,698 13,757 1,376 12,381 24,762 10,299 21,185
12101/03 42,976 74,724 31,748 (10,049) 21,698 13,757 1,376 12,381 37,143 9,927 31,113
06101/04 42,976 74,724 31,748 (10,049) 21,698 13,757 1,3.76 12,381 49,524 9,568 40,681
12/01/04 42,976 74,724 31,748 (10,049) 21,698 13,757 1,376 12,381 61,905 9,222 49,903
06/01/05 42,976 74,724 31,748 (10,049) 21,698 13,757 1,376 12,381 74,286 8,889 58,793
12/01105 42,976 74,724 31,748 (10,049) 21,698 13,757 1,376 12,381 86,666 8,568 67,360'
06/01/06 42,978 74,724 31,748 (10,049) 21,698 13,757 1,376 12,381 99,047 8,258 75,619
12/01/06 42,976 74,724 31,748 (10,049) 21,698 13,757 1,376 12,381 111,428 7,960 83,578
06/01/07 42,976 74,724 .31,748 (10,049) 21,698 13,757 1,376 12,381 123,809 7,672 91,250
12/01/07 42,976 74,724 731,748 (10.049) 21,698 13,757 1,376 12,381 136,190 7,395 98,645
06/01/08. 42,976 74,724 31,748 (10,049) 21,698 13,757 1,376 12,381 148,571 7,127 105,772
' 12/01/08 42,976 74,724 31,748 (10,049) 21,698 13,757 1,376 12,381 160,952 6,870 112,642
06/01/09 42,976 74,724 31,748 (10,049) 21,698 13,757 1,376 12,381 173,333 6,621 119,264
12/01/09 42,976 74,724 31,748 (10,049) 21,698 13,757 1,376 12,381 185,714 6,382 125,646
06/01/10 42,976 74,724 31,748 (10,049) 21,698 13,757 1,376 12,381 198,095 6,151 131,797
12/01/10 42,976 74,724 31,748 (10,049) 21,698 13,757 1,376 12,381 210,476 5,929 137,726
233,862 23,386 210,476 210,476 137,726 137,726
Avtec3.xls
Prepared by Krass Monroe, P.A. 8/3/2000
08/03/00 THU 16:59 FAX 612 885 5969
KRASS MONROE
CITY OF NEW HOPE
Artec Addition
ASSUMPTIONS
~oo7
Market Value - 2000
07-118-21-21-0004 Avtec Properties
TOTALS
Land Area
(Sq. Feet) Percent
236,200 100.0%
236,200 100.0%
Original Tax Capacity
3.40% '* (Class Rate)
Estimated Market Value Upon Completion
Land
O~ginal Building
Expansion
Estimated Tax Capacity Upon Comp~tion
Land
OdginalBuilding
Expansion
236,200 sq. ft.~
36,000 sq. ft.@
18,000 sq. ff@
3.40% ** (Class Rate)
Estimated Taxes
Land
Original Building
Expansion
Estimated Captured Tax Capacity
236,200 sq, fL@
36,000 sq. ff@
18,000 sq. ft.@
Fiscal Disparities Impact
Estimated Adjusted Captured Tax Capacity
Estimated Available Tax Increment Upon Completion
1.268
Construction '*
50% 2000
Construction 100% 2001
Valuation 2002
Taxes Payable 2003
Administrative I Program Fees (nat)
Present Value Rate
Fiscal Disparities (Payable 2000)
Inflation
12/112000
10.00%
7.5O%
31.6542%
2.00%
Building
(Sq. Feet)
36,000
36,000
Land
Value
478,000
Total
Building Market
Value Value
$ 786,000 $ 1,264,000
$478,000 $786,000
Original Market Value Used
2.02 persq, ff.= 478,000
21.83 persq, ff.= 786,000
51.88 persq, ff.= 933,750
0.40
0.94
2.24
(Local Tax Rata)
,264,000
1,264,000
42,976
2,197,750
16,252
26,724
31,748
74,724
per sq. ft. =
per sq. ff. =
per sq. ff. =
20,608
33,886
40,256
94,749
31,748
10,049
21,698
27,513
Avtec4.)ds
Prepared by Krass Monroe, P.A. '8/3/2000
CITY OF NEW HOPE
Avtec Addition
CASH FLOW AND PRESENT VALUE ANALYSIS
< ANNUAL i ..... > < .... SEMI - ANNUAL ......
(a} (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (I)
Original Estimated Captured Fiscal Adjusted Estimated Less: Available Cumulative <--- Present Value --->
Tax Tax Tax Disparities Captured Tax Admin Tax Avail. Tax Semi Annual Cumulative
Date Capacity Capacity Capacity Impact Tax Cap. Increment Fees Increment Increment Balance Balance
(see assumptions) (c) - (b) (d) x (d) - (e) (f) x (g) x (g)- (h) Total of (i) P.V. of (i) Total of (k)
Inflation 2.0% (prev. year,) 31.6542% 1.268 10.00% 7.50% t2101100
06/01/00 42,976 42,976 0 0 0 0 0 0 0 0
12/01/00 42,976 42,976 0 0 0 0 0 0 0 0
06/01/01 42,976 58,850 0 0 0 0 0 0 0 0 0
12101/01 42,976 58,850 0 0 0 0 0 0 0 0 0
06/01/02 42,976 74,724 15,874 (5,025) 10,849 6,878 688 6,190 6,t90 5,543 5,543
12101/02 . 42,976 74,724 15,874 (5,025) 10,849 6,878 688 6,190 12,381 5,343 10,886
06/01/03 42,976 74,724 31,748 (10,049) 21,698 13,757 1,376 12,381 24,762 10,299 21,185
12101/03 42,976 74,724 31,748 (10,049) 21,698 13,757 1,376 12,381 37,143 9,927 31,113
06/01/04 42,976 76,218 31,748 (10,049) 21,698 13,757 1,376 12,381 49,524 9,568 40,681
12/01104 42,976 76,218 31,748 (10,049) 21,698 13,757 1,376 12,381 61,905 9,222 49,903
06/01/05 42,976 77,742 33,242 · (10,522) 22,719 14,404 1,440 12,964 74,868 9,308 59,211
12/01/05 42,976 77,742 33,242 (10,522) 22,719 14,404 1,440 12,964 87,832 8,971 68,182
06/01106 42,976 79,297 34,766 (11,005) 23,761 15,065 1,506 13,558 101,390 9,043 77,226
12/01/06 42,976 79,297 34,766 (11,005) 23,761 15,065 1,506 13,558 114,949 8,717 85,942
06101/07 42,976 80,883 .. 36,321 (11,497) 24,824 15,738 1,574 14,165 129,113 8,777 94,719
12/01/07 42,976 80,883 "36,321 (11,497) 24,824 15,738 1,574 14,165 143,278 8,460 103,179
06~01/08. 42,976 82,501 37,907 (11,999) 25,908 16,426 1,643 14,783 158,061 8,510 111,690
12/01/08 42,976 82,501 37,907 (11,999) 25,908 16,426 1,643 14,783 172,84¢, 8,203 119,892
06/01/09 42,976 84,151 39,525 (12,511) 27,014 17,127 1,713 15,414 188,258 8,244 128,136
t2/01/09 42,976 84,151 39,525 (12.511) 27,014 17,127 1,713 15,414 203,672 7,946 136,081
06/01/10 42,976 85,834 41,175 (13,034) 28,141 17,842 1,784 16,057 219,729 7,978 144,060
12/01/10 42,976 85,834 41,175 (13,034) 28,141 _ 17,842 1,784. 16,057 235,786 7,690 151,749
261,985 26,198 235,786 235,786 151,749 151,749
Avtec4.xls
Prepared by Krass Monroe, P.A.
8/3/2000
08/03/00 TtiU 17:00 FAX 612
685 5969
KRASS MONROE
CITY OF NEW HOPE
Avtec Addition
ASSUMPTIONS
[~]009
Market Value - 2000
07-118-21-21-0004 Avtec Properties
TOTALS
Land Area
(Sq, Feet) Percenl
236,200 100.0%
236,200 100.0%
Building
(Sq. Feet)
36,000
36,000
Total
Land Building Market
Value Value Value
$ 478,000 $ 786,000 $1,264,000
_ $478,000 $786,000 $1,264,000
Original Market Value Used 1,264,000
Original Tax Capacity
3.00% ** (Class Rate)
37,92O
Estimated Market Value Upon Completion
Land
OdginalBuilding
Expansion
236~00 sq. ~@
36,000 sq. ft.@
18,000 sq.[@
2.02 persq, fl.= 478,000
21.83 persq, ff.= 786,000
51.88 persq, ft.= 933,750
2,197,750
Estimated Tax Capacity Upon Completion
Land
Original Building
Expansion
3.00% ** (Class Rate)
14,340
23,580
28,013
65,933
Estimated Taxes
Land
OdginalBuilding
Expansion
236,200 sq. ff.~)
36,000 sq. ff.@
18,000 sq. ft.@
0.35
0.83
1.97
per sq. ft. =
per sq. ft. =
per sq. lt. =
18,183
29,899
35,520
83,602
Estimated Captured Tax Capacity
Fiscal Disparities Impact
Estimated Adjusted Tax Capacity
Estimated Available Tax Increment Upon Completion
Construction 50%
Construction 100%
Valuation
Taxes Payable
2000
2001
2002
2003
1.268 (Local Tax Rate)
28,013
8,867
19,145
24,276
Administrative i Program Fees (net)
10.00%
Present Value Rate
12/1/2000
7.50%
Fiscal Disparities (Payable 2000)
31.6542%
Inflation
2.00%
Avtec2.xis Prepared by Krass Monroe, P.A. 8/312000
CITY OF NEW HOPE
Avtec Addition
CASH FLOW AND PRESENT VALUE ANALYSIS
< ...... ANNUAL ... > <. sEMi.ANNUAL .....
(a) (b) (c) (d) (e) (f) (g) (h) (i) (J) (k) (I)
Original Estimated Captured Fiscal Adjusted Estimated Less: Available Cumulative <~ Present Value
Tax Tax Tax Disparities Captured Tax Admin Tax Avail. Tax Semi Annual Cumulative
Date Capacity Capacity Capacity Impact Tax Cap. Increment Fees Increment Increment Balance Balance
(see assumptions) (c) - (b) (d) x (d) - (e) (f) x (g) x (g) - (h) Total of (i) P,V, of (i) Total of (k)
Inflation 2.0% (prev. year) 31.6542% 1.268 t0.00% 7.50% 12/01100
06/01/00 37,920 37,920 0 0 0 0 0 0 0 0
12/01/00 37,920 37,920 0 0 0 0 0 0 0 0
06/01/01 37,920 51,926 0 0 0 0 0 0 0 0 0
12/01/01 37,920 51,926 0 0 0 0 0 0 0 0 0
06/01/02 37,920 85,933 14,006 (4,434) 9,573 6,069 607 5,462 5,462 4,891 4,89t
12/01102 37,920 65,933 14,006 (4,434) 9,573 6,069 607 5,462 10,924 4,714 9,605
06/01103 37,920 65,933 28,013 (8,867) 19,145 12,138 1,214 10,924 21,849 9,088 18,693
12/01/03 .37,920 65,933 28,013 (8,867) 19,145 12,138 1,214 10,924 32,773 8,759 27,452
06101/04 37,920 67,251 28,013 (8,867) 19,145 12,138 1,214 10,924 43,697 8,443 35,895
12/01/04 37,920 67,251 28,013 (8,867) 19,145 12,138 1,214 10,924 54,622 8,137 44,032
06/01105 37,920 68,596 29,331 (9,285) 20,047 12,710 1,271 11,439 66,060 8,213 52,245
12/01/05 37,920 68,596 29,331 (9,285) 20,047 12,710 1,271 11,439 77,499 7,916 60,161
06/01/06 37,920 69,968 30,676 (9,710) 20,966 13,292 1,329 t 1,963 89,462 7,979 68,140
12/01/06 37,920 69,968 30,676 ' (9,710) 20,966 13,292 1,329 11,963 101,425 7,691 75,831
06101/07 37,920 71,367 ; 32,048 (10,145) 21,904 13,887 1,389 12,498 113,923 7,745 83,576
12/01107 37,920 71,367 32,048 (10,145) 21,904 13,887 1,389 12,498 126,421 7,465 91,041
06/01/08. 37,920 72,795 33,447 (10,588) 22,860 14,493 1,449 13,044 139,465 7,509 98,550
12/01/08 37,920 72,795 33,447 (10,588) 22,860 14,493 1,449 13,044 152,5~9 7,238 105,787
06/01/09 37,920 74,251 34,875 (11,039) 23,835 15,112 1,511 13,601 166,110 7,274 113,061
12/01/09 37,920 74,251 34,875 (11,039) 23,835 15,112 1,511 13,601 179,710 7,011 120,072
06101/10 37,920 75,736 36,331 (11,500) 24,831 15,743 1,574 14,168 193,879 7,040 127,111
12/01/10 37,920 75,736 36,331 (11,500) 24,831 15,743 1,574 14,168 208,047 6,785 133,897
231,163 23,116 208,047 208,047_ 133,897 133,897
Avtec2.xls
Prepared by Krass Monroe, P.A.
8/3/2000
WILSON DEVELOPMENT SERVICES
"HELPING CITIES AND BUSINESSES GROW"
July 17, 2000
Kirk McDonald
Community Development Director
4401 Xylon Avenue N
New Hope, MN 55428-4898
RE:
AVTEC Expansion Project
TIF & NURP Pond
Dear Mr. McDonald:
I am wdting as a follow up to our meeting of July 14, 2000, at which time i met with Mr. Watts
and yourself to discuss the City's interest in a regional NURP Pond and AVTEC's request for
tax increment financing assistance.
Background
It became evident in the Design & Review meeting and subsequent Planning Commission
meeting that the City of New Hope is very conscious how storm water matters are addressed.
It was also apparent that staff have given considerable thought to a regional or area approach
to storm water run off problems in the vicinity of the AVTEC property.
The City also has interest in a trail easement across the property.
We have engaged in discussions and eventual recommendation from the Planning
Commission that AV'I'EC delay construction of its NURP Pond until next year, so that
additional time would permit the study of a potential larger area pond. A regional pond would
require the City gaining control of the site presumably through acquisition.
At issue is a portion of the AVTEC site east of the existing railroad spur. It is approximately .5
acres in size.
At the same time, AVTEC is experiencing extraordinary development costs due to unstable
soil conditions and configuration as well as the construction of a NURP pond.
Proposal
We are requesting that the City consider the use of tax increment financing to facilitate the
construction of a regional NURP Pond and obtain the trail access, while assisting AV'I'EC with
its extraordinary development costs.
510 Chestnut Street, Suite 200 · Chaska, MN 55318
Office: (952) 448-4630 · Fax: (952) 448-4676
Email: wilsondev@earthlink.net
The proposed building expansion will generate approximately $150,000 to $185,000 in TIF
funds over 8 years. Exhibit A calculates the potential real estate tax on the property. The
resulting tax rate of $2.42 per square foot appears high when compared to existing tax rates.
Hence, for this discussion, I have used a range of $2.00 to $2.48 per square foot.
Exhibit B demonstrates how the gross tax results in a net TIF. The TIF statutes now require
that the fiscal disparity allocation be paid directly before the TIF is calculated. Hence, 40% of
the gross tax is lost to the fiscal disparity pool.
The TIF statutes also provide for a loss in local government aids and homestead credits or
require that the City participate in the project by making a 10% annual contribution. The 10%
annual contribution can be dollars that the City were going to expend anyway for public
improvements (i.e., ponds and trails).
We are suggesting that an Economic Development Distdct be established that would provide
8 years of TIF collection. The first year would only be a partial collection due to only a partially
built building being taxed.
AVTEC is requesting that it be paid $125,000 over the 8 year TIF collection for a portion of its
TIF eligible expenses and sale of land to the City. This would be a "pay-as-you-go" project,
where TIF is only paid if the building is actually built and real estate taxes are paid in a timely
way. The City would build the NURP ponds.
There would be an additional $25,000 to $50,000 available to the City for administrative
expenses and public improvements.
Timing
Timing is a critical factor for AVTEC. The odginal goal was to start construction by August
15t~. That date is ddven by two factors. First, the additional space is needed for production
that will satisfy PCA requirements. AVTEC needs to demonstrate its ability to meet new
requirements. Second, we are trying to avoid the additional cost of winter construction,
estimated at $50,000.
TIF is typically a 45-60 day process. The following schedule coincides with the City Council's
scheduled meeting dates. This is the fastest that a project could be put together and meet the
statutory requirements.
TIF APPROVAL PROCESS
DATE
7-~
8-12
8-14
9-5
9-11
9-12
9-13
ACTION
City Coundl direct TIF Plan & Development Agreement preparation
Draft TIF plan & economic impact to County & School (30 Day Requirement)
City Council review TIF Plan and call public headng
Planning Commission review
City Council hold public headng; create TIF District; approve Development
Agreement
Certify TIF Distdct with County
Issue Building Permit
I will be on vacation beginning Tuesday thru Fdday. I Will be available to further discuss this
proposal with you on Monday, July 24th. I am planning on attending the July 24, 2000 City
Council meeting.
Daniel H. Wilson
Development Consultant
for AVTEC
cc: Kirk Lindgren, AVTEC
EXHIBIT A
POTENTIAL REAL ESTATE TAX CALCULATION
AVTEC EXPANSION 16,730 SQ. FT.
$1,075,588
982,895
95%
933,75O
.035
32,681
1.268
41,439
2.48
Gross Construction
Construction Without Fees
Sales Market Ratio
Assessor's Additional Market Value
Ind. Tax Class Rate
Tax Capacity
Local Tax Rate
Tax on New Construction
Tax Per Sq. Ft.
TIF ELIGIBLE EXPENSES
Earth Work & NURP Pond
Storm Water Drainage Pipe
Site Concrete
SAC WAC
Building Permit
Soil Engineer & Civil Engineer
$104,835
29,000
20.500
154,355
7,200
9,275
10.000
$180,830
EXHIBIT B
ARTEC
16,730 SQ. FOOT ADDITION
TIF CASH FLOW ESTIMATE
TAX RANGE TAX @ 2.00/SQ. FT.
YEAR TAXABLE/ PAYABLE BUILDING 40% FISCAL NET TIF LOCAL CITY
ADDITION DISPARITY CONTRIBUTION @
TAX 10%
20O0 2001
1 1 2 16,730 6,692 10,038 1,004
2 2 3 33,460 13,384 20,076 2,008
3 3 4 33,460 13,384 20,076 2,008
4 4 5 33,460 13,384 20,076 2,008
5 5 6 33,460 13,384 20,076 2,008
6 6 7 33,460 13,384 20,076 2,008
7 7 8 33,460 13,384 20,076 2,008
8 8 9 33.460 13.384 20.076 2.008
SUBTOTAL 250,950 100,380 150,570 15,060
TAX RANGE TAX @ 2.48/SQ. FT.
YEAR TAXABLE/ PAYABLE BUILDING 40% FISCAL NET TIF LOCAL CITY
ADDITION DISPARITY CONTRIBUTION @
TAX 10%
2000 ' 2001
1 1 2 20,719 8,287 12,432 1,243
2 2 3 41,439 16,576 24,863 2,486
3 3 4 41,439 16,576 24,863 2,486
4 4 5 41,439 16,576 24,863 2,486
5 5 6 41,439 16,576 24,863 2,486
6 6 7 41,439 16,576 24,863 2,486
7 7 8 41,439 16,576 24,863 2,486
8 8 9 41.439 16.576 24.863 2.486
SU~,OTAL 310,792 124,319 186,473 18,645
Bonestroo
Rosene
Anderlik &
Associates
Engineers & Architects
Employer and Employee Ownec~
Susan ~,~ EDerlI~ C PA
Micnae~ T Rautm~nn PE · ~e~ K F~e~ ~E · ~ennet~ ~ Anderson P~ · M,~,~
To'
From:
Subject:
Date:
Kirk McDonald
Vince Vander Top. Mark Hanson
Artec Finishing Systems
Our File No. 34-GEN E98-26
June 29, 2000
The following comments arc based on the plan set received June 26, as well as previous
submittals.
Grading and Drainage
All site drainage from existing hard surface and proposed hard surface is directed to the
SE portion of the property. It is collected via storm sewers and culverts and will be
treated in a proposed storm water pond east of the RR spur. Drainage calculations were
submitted previously. The proposed storm water collection and treatment prior to leaving
the site appears to be consistent with Shingle Creek Watershed and City requirements.
It is recommended that the proposed improvements be reviewed by Shingle Creek
Watershed.
B612 curb and gutter will be constructed along the east and south sides of the property.
This will improve storm water collection and control.
The proposed curb on the south side of the property has been configured to maximize
space for truck maneuvering near the loading dock. The configuration also appears to
account for the slope of the RR spur embankment.
The existing 18-inch RCP storm pipe on the south side of the property will be extended to
the west lot line. The improvements account for drainage from adjacent properties. This
storm sewer could be extended to the west by others in the future.
An existing 12" culvert below the RR spur will remain; although the drainage area served
will be reduced. The swale upstream of the 12" culvert must be bermed to maximize the
water directed to the proposed pond.
2335 ~/est Highway 36 · St. Paul, MN 55113 · 651-636-4600 · Fax: 651-636-1311
Other Items
All permits required to construct a culvert below the RR spur must be obtained by the
property owner. A copy of the permit should be provided to the City prior to
construction.
o
A bond in the amount of 150% of the site improvements should be issued prior to
construction.
A new drainage easement is shown over the proposed pond. The north easement line
should be moved 15 feet further north. The proposed HWL is 895.5+. The easement
must include all areas within the HWL plus an additional buffer strip. Moving the north
easement line 15 feet will include the proposed 896 contour.
Future Improvements
10. City staff has discuSsed the potential of future improvements including:
· Additional storm water ponding for water quality treatement for other properties
within the subwatershed.
· A regional pedestrian/biking trail including a crossing of the RR.
A sketch of existing easements and possible future improvements has been provided
previously.
These future improvements would require coordination between the City and adjacent
property owners. The City may consider delaying the proposed Avtec ponding
improvements to allow time for the evaluation of other regional improvements. Pending
the results of the evaluation, Artec and/or the City could construct the selected
improvements. It is recommended that the bond for the proposed ponding improvements
be maintained during the evaluation.
It is recommended that staff, Planning Commission, and Council discuss the feasibility of
future improvements.
End of Comments
Bonestroo
Rosene
Anderlik &
Associates
Engineers & Architects
To: Kirk McDonald
CC.'
Doug Sandstad, Guy Johnson. Shari French, Alan Brixius
From:
Vince Vander Top, Mark Hanson
Subject:
Avtec Finishing Systems
Our File No. 34-GEN E98-26
Date: June 15, 2000
We have completed the attached sketches relating to the ponding area on the Avtec property.
This is the southeast portion of the Artec property. The sketches are based on review comments
from staff during recent meetings and include the concept of regional storm water ponds and a
future trail.
The sketches include four Figures:
Figure 1 depicts the property line between Avtec, the property to the east, and the RR.
Figure 2 includes all easements in the area based on information submitted by the applicant
and other info in our office.
Figure 3 represents the area if Artec would construct the improvements as proposed in the
submittal.
Figure 4 represents the area if regional ponding and trail improvements are constructed.
As we discussed, the construction of regional ponds and the dedication of trail easements would
require coordination with the property owners an'd the City. City staff, the Planning
Commission, and City Council should discuss the potential of these improvements further.
2335 ~1[/est Highway 36 · St. Paul, MN 55113 · 651-636-4600 · Fax: 651-636-1311
14' /
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