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Home My WebLink About2007 [02] Feb 12 {Book 39} CITY Of ST. JOSEPH www.cityofstjoseph.com Joint St. Joseph City Council and St. Joseph Planning Commission February 12, 2007 7 :00 PM Administrdtor I udy Weyrens 1. MdYor 2. Richdrd Cdrlbom Councilors 3. Steve Frdnk AI Rdssier 4. Renee Symdnietz Ddle Wick Call to Order 7:00 PM Collegeville Development Group, Concept Plan Millstream Shops and Lofts Development Update Adjourn 00000000000000000000000000000000000000 St. Joseph City Council February 12, 2007 7:45 PM* 1. Call to Order 2. Review request for Tax Increment Financing Millstream Shops and Lofts 3. Wine License Request - Local Blend 4. Adjourn * Time is approximate, the Council meeting will immediately follow the Joint Council and Planning Commission meeting. '----; 2.) College Avenue North. DO Box bb8 . Sdint. Joseph, 'Minnesotd )6)74 Phone j2.0.j6-,.72.01 FclX j2.0.jOj.Oj42. Memo ..................-.. Date: FebI1,lary 9, 2007 To: Honorable Mayor Richard Carlbom and Members of the City Council Planning Commission Chair Bob Loso and Members of the Commission From: Judy Weyrens Re: Joint Council and Planning Commission meeting The joint meeting with the Council and Planning Commission was scheduled to discuss the concept plan for project entitled Millstream Shops and Lofts. The purpose of this memo is to provide both the City Council and Planning Commission with some background infonnation. PROJECT DESCRIPTION Developer: Development Site: Type of Development: Current Zoning: Anticipated Start Date: Collegeville Communities, LLC Former Krebsbach Property and the S1. Joseph Laundromat PUD - Mixed Residential and Commercial B 1 Business May 2007 PROJECT STATUS The Staff has been meeting regularly with representatives of Collegeville Communities to review and discuss the proposed development. At this stage of development, staff is looking at the broad picture assuring that the proposed development meets the requirements of the Zoning District and Comprehensive Plan. While details are part of the discussion, Ordinance compliance is not completed until detailed drawings are made available. Concept approval provides the developer with direction as to whether or not to proceed and what concept changes are needed. For example, if the concept plan for Collegeville Communities did not include a commercial component, the City would require the plan be amended to reflect such since residential is only allowed in B 1 with a commercial component. The proposed concept plan entitled Millstream Shops and Lofts has been reviewed in relation to the Zoning District and Future Land Use components of the Comprehensive Plan. Staffhas determined that the use is consistent with both and recommend the City Council and Planning Commission accept the concept plan. PLANNING COMMISSION ACTIONS NEEDED iil Accept the Concept Plan (February 12, 2007) iil Support a Resolution establishing the Tax Increment Financing District based on compatibility with the Comprehensive Plan. (April 2007) iiI Review and recommend on Zoning matters such as platting and site plan approval (April 2007) CITY COUNCIL ACTIONS NEEDED ILiiI Accept the Concept Plan (February 12,2007) ILiiI Accept the final Tax In.crement Financing Plan for Collegeville Communities LLC, Authorize the Services of Northland Securities and call for a public hearing on the TIP Plan following completion. (February 12, 2007) ILiiI Conduct public hearing for the TIP Plan (March 2007) ILiiI Conduct public hearing for vacation of the north/south alley (March 2007) IiiiI Formalize and execute Development Agreement for the Tax Increment Financing (April 2007) IiiiI Review Land Use recommendations of the Planning Commission (April/May 2007) PROCEDURAL MATTERS - JOINT MEETING The Planning Commission and City Council can act together on approving the concept plan. Once the concept plan is approved the Joint Planning Commission and City Council meeting will be adjourned. The Planning Commission is certainly welcome to stay for the City Council Meeting. PROCEDURAL MATTERS - CITY COUNCIL MEETING Immediately following the Planning Commission meeting the City Council will convene to discuss the Tax Increment Financing Plan. The S1. Joseph Economic Development Authority is the first stop for the TIP application. The Preliminary and Final TIP application has been reviewed and accepted. The EDA has recommended the City Council accept the final application. This acceptance is a recognition that the project qualifies for TIP and the application should move forward. The TIP application includes proprietary information. Therefore, it will be distributed at the Council meeting and collected again after the meeting is adjourned. Please see memo from Municipal Development Group. As stated in the memo the Council must make the following motion for the project to move forward: Accept the final TIF Application for Collegeville Communities LLC, for a development entitled Millstream Shops and Lofts and authorize Northland Securities to prepare the TIF Plan including the setting of the public hearingfor the TIF Plan upon completion. TAX INCREMENT FINANCING AND ST. JOSEPH The City of St. Joseph only authorizes the use of "pay as you go" TIP. That is, after the property taxes are paid, 90% of the recaptured tax is paid back to the developer. For example: If the property taxes before development are $ 10,000 and after development they are $ 100,000. The amount oftax that would be recaptured is $ 81,000. $ 100,000 10,000 90,000 9,000 Post Development Tax Less: Predevelopment Tax Eligible tax for recapture Less: 10% Retainage $ 81,000 Tax Increment returned to developer . It is also important to understand that the City of 81, Joseph does not issue Tax Increment Financing Bonds. Rather, the developer secures a loan or financing from a financial institution and the TIP Agreement is the security for the loan. The increment paid back is sent directly to the bank. The City does not incur any risk with a "pay as you go" TIP. In order for a developer to secure TIP a demonstrated need must be present Part of the application includes a "but/for" test That is, the project cannot move forward without TIP assistance. Each project is rated on its own merit and must have the financial depth and need for assistance. II CoIlegeviIle Development Group, LLC ('. ,i,rve, Judy Weyrens City Administrator City of St. Joseph February 5, 2007 Dear Judy, Attached are the Mill Stream Shops and Lofts elements of information for the Planning Commission meeting. Please contact us with any questions you may have. Jim Degiovanni Chief Corporate Officer Collegeville Development Group 1015 IVest St. C';ernlilin Street i Sf. Clotld, MN 5h301 : 320.654.0762 phone I 3206.54,0790 fax I coIlegcvilJedevelopment.com Revised 2/5/2007 ~ April 19, :2006: ~ May 15, 2006: ~ July 24,2006: ~ Aug 1, 2006: ~ Oct 15, 2006: ~Jan 15, 2007: ~ Jan 15,2007: ~ Jan 15,2007: ~Jan 15,2007: ~ Feb 5,2007: Feb 25, 2007: March 1,2007: March 1,2007: March 1, 2007 March 5, 2007: April 1,2007: April 15,2007: April 25, 2007: April 25, 2007: May 1, 2007: Sept 1, 2007: April 15, 2009: Oct 15, 2009: Page I Millstream Lofts & Shops Project Timetable Presentation to St Joseph EDA Presentation to the City Council. \V'ork on marketing materials. GLT Architects provides preliminary specs and plans. Work on obtaining non-binding Letters of Intent. Submit final TIF Application to City together with $17,000 application fee. Selection of General Contractor (W. Gohman has been selected). Authorize Architect to proceed to Construction Documents. Submit written loan request to 3 banks. Submit Concept Plan to City of St Joseph. Select a Bank for Construction Loan. Order Project Appraisal for Construction Loan. Completion of CIC Documents including Rules. Enter into Construction Contract. City Plan Commission Action on Concept Plan. Convert Letters of Intent to Binding Purchase Agreements and Leases. Obtain Final Approvals from City of St. Joseph on TIF Contract, Alley Vacation, Site Plan, Building Permits, and Special Use Permit and other Zoning Matters. Finalize TIF Contract with City. Closing on Construction Loan and Acquisition of Laundromat. Ground Breaking on Phase One of Project. Certificates of Occupancy on Phase One. Ground Breaking on Phase Two of Project. Certificates of Occupancy on Phase Two. F:\Shared - Mill Sream Lofts & Shops\Timelines\Timetable submitted to City Feb 5 2005d, FOR SALE OR LEASE Mill Stream Shops & Lofts Downtown St. Joseph, Minnesota Commercial/ Retail Condominiums 2.1.2007 Mill Stream Shops and Lofts iSi a proposed residential and commercial development in the heart of downtown St. Joseph, MN, li college town hosting the College of Saint Benedict. This development is designed to create an urban sense of place by offering street level retail and commercial shops with residential loft condominiums above. Particular consideration is being given to architectural design tlD blend contemporary living with a traditional downtown storefront appearance. · ELEMENTS OF STYLE: A striking two-story far;ade that includes 6-foot overhanging balconies from the residential level. These overhangs will create a covered, protected walkway for pedestrians at the retail level. · Traditional styling that includes clapboard siding, large windows, and architecturally appealing structural columns supporting the second story balconies. · FUNCTIONALITY: Private restroom within each condominium. Building to be of quality, low maintenance construction with built-up rubber membrane roof. Overall ceiling height will be 11 or 12 feet. Ample on-street parking. · VALUE: Condominiums will include: perimeter walls and ceiling to be dry-walled and "fire" taped, electrical outlets on perimeter walls, forced air I-NAC system, trunk line duct, electrical panel, water meter. · Units will be approximately 616 -2,410 sq. ft. (May be combined). Each retail condominium will be metered separately for electrical, natural gas, water, and sewer. PRICING Purchase: $135.00/sq. ft. Association fees approx. $1.58/sq. ft. annually; property taxes approx. $2.79/sq. ft. Lease: Triple net lease rate of approx. $11.50 to $13.00/sq. ft. annually; CAM and operating expenses approx. 4.46/sq.ft; (includes estimated "fully assessed" property taxes of $2.79/sq.ft). Build Out: Negotiable , i ! i \ \ ; \ ,"""_...'."'--,--:"..-<<:-- The view from the corner of Minnesota Street and College Avenue (Artist's rendering-not actual photo) Information provided herein deemed reliable, howev,er Collegeville Development Group, LLC cannot guarantee its accuracy. Prices and building specifications subject to change. Offered by C:ollegeville Communities, LLC. www.millstreamshops.com Nathan Woodworth, Agent. nwoodworth@colleqevillecommunities.com 320.654.0762 ext.21 866.654.0762 ext.21 RESIDENTIAL LOFTS FOR SALE OR LEASE Mill Stream Shops & Lofts Downtown 81. Joseph, Minnesota Residential Lofts Mill Stream Shops & Lofts is a proposed residential and commercial development in the heart of downtown St. Joseph, MN, a college town hosting the College of Saint Benedict. This development is designed to create an urban sense of place by offering street level retail and commercial shops with residential loft condominiums above. Particular consideration is being givun to architectural design to blend contemporary living with a traditional downtown storefront appearance. 2.1.2007 · Elements of Style: A strikin!~, two-story facade with deep overhangs on large balconies. Hardwood floors. Granite bar-top included in preconstruction pricing. · Building will feature traditional styling including clapboard siding, vertically oriented windows, and architecturally appealing structural columns supporting the second story balconies. · Airy, open floor plan capitali2:ing on natural light and featuring high ceilings. · Amenities: Breakfast bar, full baths. Individually controlled heating and cooling, in-unit laundry, generous closet space. Low maintenance living, appliances included. · Garages available, or off-strelet parking. WelHit and controlled entry areas. Association fees will include: Building management, exterior insurance, common area maintenance, landscaping, snow removal, common area lighting, a replacement reserve & refuse service. PRECONSTRUCTION PRICING One Bedroom, approx. 695 sq. ft: from $99,700, including 90 sq. ft. deck. Two bedroom, approx. 925 sq. ft: from $121,300, including 90 sq. ft. deck. Garage Package $4,900 Association Fee approx. $75/month. I I \ \ I, ........-.c--...,.;;-.......-.. _.,-~ .-_...::~:.:::-::::::..:=:...-.~../......~..-._.~ - - ~ - The view from the corner of Minnesota Street and College Avenue (Artist's rendering-not actual photo) Offered by Collegevi/le Communities, LLC. Nathan Woodworth, Agent. nwoodworth@colleQevillecommunities.com 866.654.0762 320.654.0762 Buyer Broker Comp 2.7% - See reVE~rse for floor plans or visit www.millstreamshops:com. _ Information provided herein deemed reliable, however Collegeville Development Group, LLC cannot guarantee its accuracy. 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DATE: MEMO TO: January 24 2007 Honorable Mayor Carlbom City Council Members Administrator Weyrens FROM: RE: Cynthia Smith-Strack, Municipal Development Group Request for Tax Increment Financing Assistance - Collegeville Communities Request~ Collegeville Communities, LLC previously submitted a pre-application for the use of tax increment financing in conjunction with a redevelopment project within the Central Business District. Following EDA recommendation the City Council accepted the preliminary application and authorized the preparation/submittal of the final application. Collegeville Communities has now submitted the final application and fee requesting Tax Increment Financing assistance for the construction of a 21,518 square foot mixed-use condominium facility. The proposed project site includes the former Krebsbach Chevrolet property and the current laundromat/tanning site. A CODY of the TIF ADDlication will be distributed at the City Council meetina due to the DroDrietarv nature of the data. Collegeville Communities is requesting a total of $467,000 (net present value) in pay-as-you-go TIF assistance for a term not to exceed 25 years. The final TIF application was reviewed by the EDA at their regular meeting of January 17, 2007. The EDA recommended the City Council accept the final application with the following contingencies: 1. Total benefit not to exceed a net present value of $467,000. 2. Term to expire at time of maximum net present value attained or 25 years whichever is less. 3. TIF benefit on a pay-as-you-go basis (TIF bonds will not be issued). 4. All properties subject to the scope of the TIF Plan will retain status as taxable property. The EDA also recommended the City Council authorize and direct the EDAlstaff to work with the City's financial advisor and bond counsel to develop the TIF Plan and agreement. Representatives of the company will be present to answer questions regarding the application: Background: A copy of the following are attached for the Council's information. It is noted that due to the proprietary information included in the final application it will be distributed at the Council meetina. MEM_CDG_ TIF _01.24.07 1. A memo completed for Council information in conjunction with the preliminary TIF application, and 2. A copy of the TIF report card for the project. The preliminary TIF memo will refresh your memory on the purpose/structureof redevelopment TIF and the application process employed by the City/EDA. The final application will be referred to throughout this memo. The project will rehabilitate an under-utilized parcel within the Downtown. The redevelopment project consists of the construction of a 21,518 s.f. commercial/residential mixed-use structure within the Downtown. The two-story structure will consist of stick built construction with hardiplank siding. Construction cost is estimated at $2.089 million in addition to $550,000 in land acquisition and site preparation costs. With soft costs and contingencies the total project cost is estimated at $3.5 million. The Company has provided the EDAlCity with pro-forma analysis illustrating a $204,519 gap in funding following an injection of equity (6%) and a conventional loan (82%). The pro-forma demonstrates that without redevelopment TIF assistance, the project will not occur due to financial infeasibility. TIF assistance is requested in order to help the project move forward. It is noted the project may consist of two phases. The first phase would start at the comer of Minnesota St. and College Ave. and consist of 8 residential lofts and lower level commercial. Should the project be phased, the TI F plan and associated agreement will be drafted to accommodate the phasing of construction. MEM_CDG_TIF _01.24.07 2 TIF Policy: The policies for the use of TIF include the following: 1. General Policy - The project should serve to accomplish the goals for economic development including the attraction, retention, and expansion of business and housing options in the City. The request meets the policy criteria. 2. Objectives: The project meets the objectives of: a. Removing blight and/or encouraging redevelopment in. the commercial areas of the City in order to encourage high quality development or redevelopment and private reinvestment in those areas, and, b. Providing for a balanced and sustainable housing stock to meet diverse needs both today and in the future. 3. Costs that qualify for TIF assistance: The TIF would be used to offset land acquisition, site demolitionlpreparation and utility installation costs. 4. Minimum Qualifications: a. TIF would facilitate development that would not occur without the assistance. b. But-For Test. The application 'includes a sourcesluses statement and pro-forma analysis demonstrating the project is not financially feasible without TIF assistance. In addition, the application includes the following statements: "A critical piece of this project is the acquisition and demolition of two parcels that are occupied by deteriorating and substandard buildings. Those buildings are located on the most important part of the site to be developed: that is the comer of Minnesota Street and College Avenue. The cost of the substandard buildings is $324,000 which translates into a cost of approximately $60/square foot. The buildings include a laundromat and tanning salon and a vacant wood frame building. The approximate size of the underlying real estate is 5,404 square fefJt. That cost compares to a price of approximately $2.73 per square foot for the balance of the property purchased by the developer in 2005 from a third party ($153,000 divided by 56,100 sf is $2. 73/sf)." "The project is not economically feasible without TIF assistance. Given the cost of land acquisition, demolition and clearance other TIF eligible expenses; and taking into consideration a reasonable absorption rate based on current market conditions, the project would not result in a reasonable return for the developer without the assistance. " c. The project is consistent with the Comprehensive Plan and zoning ordinance. The proposed development meets the objectives of the Comprehensive Plan. The site is appropriately zoned (Central Business District) to allow mixed-use development at the density contemplated. d. Prior to approval of the TIF Plan (after final application is submitted), financial guarantees and credentials will be required. Credit references are included in the application but a credit check has not been conducted at this time. MEM_CDG_TIF _01.24.07 3 e. Ownership of the parcel will be. required by the applicant. The applicant has provided documentation certifying ownership of the former Krebsbach site and a purchase agreement relating to the laundromat/tanning salon site. 5. Desired Qualifications: a. Taxes paid before -and after the development will be greater than a 2:1 ratio. Current taxes on the combined sites are $3,403 on the laundromat site and a combined subtotal of $3,656 on the Collegeville Communities sites. Aggregate taxes paid on the combined sites total $7,059. Estimated aggregate taxes after the development as established by Stearns County (Senior Appraiser) are $75,459, a 10:1 increase. b. TIF should not be used for speculative projects. Collegeville Communities is an existing company with similar projects established in Northfield and Winona. The pro-forma analysis indicates two commercial units and five of the residential lofts are pre-sold. c. TIF should not be used to pay for overpriced land. TIF is not being used to pay for overpriced land. d. TIF should be pay-as-you go. The request is for pay-as-you go assistance, if taxes are not generated the increment will not be achieved. The applicant is expected to file an agreement with Stearns County relative to a minimum assessed market value. e. Preference is given to projects that do not cause extraordinary demands on City services. The proposed mixed commercial office/retail and residential loft units will not place extraordinary demands on City services. f. Preference is given to projects that are consistent with the Comprehensive Plan, improve surrounding land uses, provide new employment, are financially feasible and provide the highest and best desired use for the property. The project appears to meet these criteria. Appropriateness of TIF: Attached is the "Grading and Report Card forTIF". The proposed proj~ct received a composite score of '5' meaning it is an excellent use of TIF. Estimated TIF available: Stearns County has estimated an annual increment of $53,910 (minus state share of property taxes and 10.25% administrative/state auditor retainage) which could be available for the project based on building plans reviewed by the Senior Appraiser. A complete TIF plan with cash flow will be prepared upon the EDA and Council's approval of development of the TIF Plan for the district. To summarize the information, tax increments are based on three factors: . Estimated increase in market value - the difference between pre-project and post- project market value as determined by the County Assessor (this is not necessarily equal to project cost) . Tax capacity - Increase in market value multiplied by property tax class rate (Commercial/Industrial property taxed at a rate of 1.5% for the first $200,000 in value and 2% for portions of the value exceeding $200,000) . Net tax capacity multiplied by the eligible portions of property tax rate. The gross tax increment available is subject to a State Auditor reduction of 0.25% and a City administration fee of 10%. The net annual tax increment is available for use as a financial MEM_CDG_ TIF _01.24.07 4 incentive to development. The net annual tax increment is collected for a finite period of time and includes the school district, county and City portions of new taxes generated. Following is TIF analysis as generated by Stearns County: COLLEGEVILLE COMMUNITIES TAX ESTIMATES - STEARNS COUNTY Residential Portion Value $ City Tax $ County Tax $ School Tax $ Commercial Portion Value $ City Tax $ County Tax $ SChool Tax $ Subt. Res. & Comm. Tax* $ 10% retainage $ Potential Annual $ 1,532,300 10,000 9,100 4,800 1,550,700 14,800 14,200 7,000 59,900 5,990 53,910 25 year term $ 1,347,750 Total Estimated Annual Taxes Generated by Project $ Current Annual Taxes Paid by Existing Development $ New Taxes Generated by Project (Estimate) $ Total Estimated City Taxes Generated Annually $ Net New City Taxes Generated Annually $ *5tate Tax (not TIF eligible) $ 75,459 7,059 68,400 24,800 2,100 15,559 Collegeville Communities proposes to use the TIF agreement to secure a note from a private lender. The lender will likely not issue debt based on the total amount of TIF identified in the agreement but rather a percentage thereof. Action: If the Council is supportive of utilizing TIF for this project, a MOTION is in order to (1) approve the final application and authorize the services of Northland Securities, the City's Financial Advisor to prepare the TIF Plan and (2) call for a public hearing on the TIF Plan following completion. MEM_CDG_TIF _01.24.07 5