HomeMy WebLinkAbout[06a] Preliminary TIF Application, St. Joe Meat MarketJkA�"
Crry of S1: JosFPH
MEETING DATE: February 17, 2011
Council Agenda Item W
AGENDA ITEM: Preliminary TIF Application: St. Joe Meat Market
SUBMITTED BY: Cynthia Smith - Strack
BOARD /COMMISSION /COMMITTEE RECOMMENDATION: EDA recommends approval of
Preliminary TIF application and submittal of final application for St. Joe Meat Market.
PREVIOUS COUNCIL ACTION:
BACKGROUND INFORMATION: Please see attached memo.
BUDGET /FISCAL IMPACT:
ATTACHMENTS: Staff memo and expansion plans.
REQUESTED COUNCIL ACTION:
. CITY OF ST. JOSEPH
VVV.cityof stjoseph.com
Administrator DATE: February 9, 2011
Judy Weyrens
MEMO TO: Honorable Mayor Schultz
Mayor Members of the City Council
Richard Schultz Administrator Weyrens
Councilors FROM: Cynthia Smith - Strack, Municipal Development Group
Steve Frank
Bob Loso RE: Request for Tax Increment Financing Assistance:
Renee Symanietz Pfannenstein, St. Joe Meat Market
Dale Wick
Request:
EDA Mr. Harvey Pfannenstein has submitted a pre - application for tax increment financing and
Carolyn Yaggie- potentially tax abatement assistance in conjunction with a $354,000 (construction cost)
Heinen expansion to the St. Joe Meat Market retail facility at 26 1St Avenue Northwest. A copy of the
Steve Frank expansion plan is attached to this memo.
Chad Davey
Tom Skahen The expansion includes a 1,898 sf addition to the retail space and an additional 1,104 sf of
Dale Wick new cooler space. Total expansion is 3,002 s.f. and will bring the existing 4,222 sf structure to
7,224 s.f. The expansion will allow the facility to process meat products at the retail shop
versus the location on Minnesota Street resulting in productivity gains. In addition, investment
in new equipment will provide increased operational efficiencies. The goal of the expansion is
to ensure long -term viability of the establishment and to retain jobs within the community.
The Applicant is reporting a $70- 80,000 gap in funding (details will be available for the
meeting) and requesting assistance from the City to close the gap. The project to increase
operational efficiency and increase productivity will not occur without gap financing. The
Applicant has noted that if the gap in financing is not filled and operational /productivity
efficiencies implemented the operation will likely close or leave the City. The Applicant has
submitted a pre - application for TIF /ABATEMENT for the EDA's consideration and
recommendation to the Council.
Information regarding the projected estimated market value, potential sources and uses of
financing, and financial pro forma analysis will be available for the meeting. Please note this
information is not public until the financing is finalized, however, a copy of the information may
be released to those needing reasonable access to said data provided it is again collected
following its use.
Background:
TIF
Tax increment financing is a tool which allows the City /EDA to reimburse a company or land
owner a portion of the new property taxes generated as a result of a development project.
The amount of financial assistance available (TIF) is dependent upon a number of factors
including but not limited to the assessed market value of the building and the financial need of
the company. There are several types of tax increment financing districts, each of which has a
maximum increment period established by state law. Mr. Pfannenstein is requesting
assistance in the form of economic development TIF.
Term of TIF Agreement
The maximum term of an economic development TIF district is nine years, however, the term
of any TIF agreement should only reflect the amount needed to close a demonstrated 'gap' in
financing. In this case the projected TIF generated by the project is NOT sufficient to close the
financing gap. Therefore, the Applicant is requesting the City consider either using excess TIF
revenue from an existing district or tax abatement to fill remaining gap.
Pay as you go TIF
State law allows the City /EDA to proceed with two types of TIF financing mechanisms. The
first is the issuance of a TIF bond by the City /EDA. In this arrangement the proceeds of new
tax increments are immediately available to the developer in the form of cash. With this type of
mechanism the City /EDA bear significant risk in that if the project isn't completed and /or taxes
are not paid, the City is responsible for making the bond payment.
Due to the amount of risk involved, the City of St. Joseph's TIF policy highly discourages the
issuance of TIF bonds. Instead an arrangement known as 'pay as you go' is the standard
mechanism embraced by the City /EDA. With 'pay as you go' TIF, the City does not issue
debt, instead the City enters into an agreement with the Developer pledging to 'rebate' a
portion of the tax increment provided property taxes are paid. In this kind of arrangement, the
Developer may use the TIF agreement to leverage a note from a conventional lender but the
City is not incurring risk if taxes aren't paid or the project not completed. The Applicant is
requesting pay as you go TIF.
Requirements: Preliminary TIF Application:
The following are required to be submitted with the preliminary application for TIF assistance:
1. A map showing the exact boundaries of the proposed development. A site plan is
attached.
2. A General description of the project including the following:
• Size and location of building(s); The proposed single story structure will be
utilized for commercial retail and product storage space. The building
design matches the existing structure.
• Business type and use; Retail.
• Traffic information, including parking; Parking facilities are proposed to the
south and east of the building, as is existing. The site plan must be
approved administratively by the City, including parking requirements. The
EDA does not have jurisdiction over parking lots.
• Timing of project; The Applicant wishes to proceed with the expansion in May
of this year.
• Estimated market value following project completion. MDG has consulted with
the County Assessor regarding a projected EMV. The review is pending at
this time, however, a report is expected in time for the meeting. The
Applicant's contractor has placed the construction cost at $354,000.
3. The existing Comprehensive Plan land use designation and zoning of the property. The
comprehensive plan guides the subject parcel to continued downtown (Central
Business District) use. Current zoning class is B -1. Retail facilities are permitted
within said zoning class.
4. A statement identifying how the increment will be used and why it is needed to complete
the project. The increment will be used to assist with eligible expenses associated
with the development.
Thorough sources /uses will be included with the final application for TIF, the
company will be required to disclose financial information in conjunction with the
final application. Preliminary sources /uses will be available at the meeting.
5. A statement identifying the public benefits for the proposal including estimated increase in
property valuation, new jobs to be created and other community assets. TIF assistance
is requested to provide for increased operational efficiency and productivity
increases by consolidating processing and taking advantage of new technology
and equipment. The project will result in retaining 26 jobs within the community and
a projected increase in market value for the structure within the Downtown.
6. A written perspective of the developers company (i.e. corporation, principals, history, past
projects, etc.). St. Joe Meat Market has long been a fixture within the City. In fact in a
comprehensive plan visioning session in 2002 when asked what made St. Joseph,
St. Joseph the St. Joe Meat Market was often mentioned. The family owned
business has been operated by the Pfannensteins for 50 years. Current owners and
operators are Harvey and Carol Pfannenstein.
TIF Policy:
A copy of the City's TIF policy is attached. The policies for the use of TIF include the
following:
General Policy - The City of St. Joseph and EDA shall consider Tax Increment
Financing for projects that serve to accomplish the City's goals for housing and
economic development as they may change over time. The goals include facilitating
projects that would result in the creation of quality jobs(i.e. stable employment and /or
attractive wages and benefits) and the attraction, retention, and expansion of business
and housing options in the City. The request appears to meet this policy criteria.
2. Objectives: As a matter of adopted policy, the City of St. Joseph and EDA will
consider using tax Increment Financing (TIF) to assist private development projects to
achieve one or more of the following purposes: The project appears to meet
objectives as outlined in (c)and (t) below.
a. Remove blight and /or encourage redevelopment in the commercial
and industrial areas of the City in order to encourage high quality
development or redevelopment and private reinvestment in those
areas.
b. To provide for a balanced and sustainable housing stock to meet
diverse needs both today and in the future.
c. To retain local jobs and /or increase the number and diversity of
quality jobs (i.e. stable employment and /or attractive wages and
benefits.
d. To encourage additional unsubsidized private development in the
area, either directly, or through secondary "spin -off' development.
e. To offset increased costs of redevelopment (i.e. contaminated site
clean -up, demolition of existing building), over and above those costs
that a developer would incur in normal urban and suburban
development.
f. To facilitate the development process and to achieve development on
sites which would not be developed without this assistance.
3. Costs that qualify for TIF assistance: The TIF would assist with building expansion
to accommodate operational efficiencies and productivity gains.
4. Minimum Qualifications:
a. TIF would facilitate development that would not occur without the assistance. The
Preliminary TIF application will be supplemented by source/use statements
including preliminary pro forma analysis which identify a gap in project
funding. The applicant has certified the development could not occur but for
the use of TIF.
b. But -For Test. The pre - application requires the developer to submit a statement
identifying how the increment will be uses and why it is needed to complete the
project. The applicant will demonstrate the project does not cashfiow
without TIF assistance.
c. The project is consistent with the Comprehensive Plan and zoning
ordinance. The subject parcel is zoned downtown commercial.
Prior to approval of the TIF Plan (at the time of final application), financial
guarantees and credentials will be required.
e. The Applicant owns the subject property.
5. Desired Qualifications:
a. Taxes paid before and after the development will be greater than a 2:1 ratio.
Current property taxes payable on the subject parcel equal to $12,708. I'm
currently working with Bob Lindvall at Stearns County to obtain a projected
market value and taxes payable. Following that preliminary TIF projections
will be created by Ms. Traci Ryan of David Drown Associates and available
at the meeting. Ms. Ryan will also be attending the February 9t' meeting.
b. TIF should not be used for speculative projects. Mr. Pfannenstein has been a
business owner for 14 years. St. Joe Meat Market has been in business for
50 years. Pfannenstein is a life -long resident of the area.
c. TIF should not be used to pay for overpriced land. The TIF assistance is
proposed to be used for costs associated with expansion of an existing
business within the original townsite (Central Business District) and not for
greenfield development. Since the site is within a dense, developed urban
area, specialized construction techniques must be employed. TIF is not
being used to pay for overpriced raw land.
d. TIF should be pay -as -you go. The request is for pay -as -you go assistance.
e. Preference is given to projects that do not cause extraordinary demands on City
services. The applicant is proposing retail space and energy and water
efficiency upgrades which will decrease demand on the utility systems.
f. Preference is given to projects that are consistent with the comp. 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 all of the aforementioned criteria in addition to furthering the City's
goal of revitalizing the Downtown with pedestrian friendly, human -scale
construction.
It is important to note that the process /criteria /guidelines /policy used for consideration of tax
abatement is the same as for TIF. Therefore, the aforementioned analysis applies equally to
the request for tax abatement.
The Developer and the City's new TIF Consultant will be present to provide answers to
questions and additional comment as requested. The concept of 'preliminary' as it pertains to
this request is similar to the concept of 'preliminary' in conjunction with a 'preliminary plat.'
Although the conventional definition of 'preliminary' describes activities preceding the main
discourse or business approval of the 'preliminary' TIF /abatement application is an action
analogous to approving the conceptual use of TIF /abatement for this project.
Recommendation:
The EDA approved a motion recommending the City Council approve the pre - application and
authorize submittal of the final application.
Action:
If the Council is supportive of utilizing TIF /abatement for this project, a MOTION is in order to
approve the pre - application and authorize submittal of the final application and preparation of
necessary documents.
i
El
Is
�00 i
r
F ° �
4 9 I ® Q
i
I eg
k
n
n n
00
OD
i
Q
^N
CL.
aL�
F U A
p
z
Y�
O1
n
G
c o
T
W
F tl
JZtl
ZZ
w
M
y
a
^
0
0
�
j
a
0 0 OI
0
W
N� a
�q
tl i
,/
U„ p N
o
C
n
N M
O-
0 5 a
J
••D+ ,
f-
q
�gdn"
O C
— o
w•
>
Z
i� to
n
oo
r� .0
.0
w c
^
n
L.
N eq o°
�• ai
io
no
L
O
TY
.� Y At •+
O
41
Cr,- 6
L
YJJ L
10 O
C
O
U
N O O T
O 1
Y C
VJ 1
O a^ 7
U) mO
L q
p
p
(n LO
p q
q
a
a T g 0
L^ L y'
o^
L
4012
.
Y G
fY
j
y I~0 ICOL
{y
M
�r
r
O M
O
L Z q 7
•.Gig C
0 0
O
C R
7 O)
J
q 0
o L
J
L q�.
O
Q
Zd
LY • •
.+.+p q
ML nZ
e
p
O JN
Y•_ o O
O w 4« C
w
O•►
\
.qri
^Q
w
L9
M C
0
Y O w o C
_TY
— L L p qp
r
p
^ CC
Y C
oq 7
O
4D
YP 2.—
w 6L
C
L
in w
f w
Y a
G a
Y
41 Y
O
PI U
O a O N
'•r
•Y
Z
fy
^
T(O� a M
o
J4, - O
qw
E
w
W
w
Y O
^ C O
L
O e L o G
O a
D
S
y Y
>
�.1 M Y
p r a
L •• w
q► O
Y Y
L E
Y
T
Z
p,o
L
n q L U M
~ N
>
Q
Y tl
�s C q
Y L ++ i C
q
L
2
,
L
q o
L
q a Y Y
L Y L o a+
f-Z*+F In
a Y L a 7
L L o c o
HrZ"'U
0 0
L
C y
a
,.
p
^
1.L
M O
< m
4 a
<
—/
a1
/ /
to
1
1
Lo
AL4EY
1
W
Y
1
41
m
/
r
V
/ /
1
f-
/
U
,�
/
_
d LO
N
`1
r
/
�a
OF Mn+
a U0
Ni
O
VI
1
L:
1
SOp"-
,'tttlll'''i
1
°
A
46T
1
i
i
00
OD
i
Q
^N
CL.
RESOLUTION NO. 2011 -005
CALLING PUBLIC HEARING ON
THE PROPOSED CREATION OF TAX INCREMENT FINANCING DISTRICT NO. 2-2
AND THE ADOPTION OF A TAX INCREMENT FINANCING PLAN RELATING THERETO
BE IT RESOLVED by the City Council (the "Council ") of the City of St. Joseph, Minnesota (the "City "), as
follows:
Public Hearing. At the request of the EDA of the City of St. Joseph, this Council shall meet
on Thursday, April 21, 2011, at approximately 7:30 p.m. at City Hall to hold a public hearing
on the following matters; (a) the proposed creation of Tax Increment Financing District No. 2-
2, and (b) the proposed adoption of the Tax Increment Financing Plan relating thereto, all
pursuant to and in accordance with Minnesota Statutes, Sections 469.174 through 469.1799,
inclusive, as amended (the "Act ").
2. Notice of Hearing. Filing of Program and Plan. The City Administrator is hereby authorized
to cause a notice of the hearing, substantially in the form attached hereto as Exhibit A, to be
published as required by the Act and to place a copy of the proposed Tax Increment
Financing Plan on file in the Administrator's Office at City Hall and to make such copies
available for inspection by the public.
Adopted this day of February, 2011.
Rick Schultz, Mayor
ATTEST
Judy Weyrens, Administrator
RESOLUTION 2011 -006
CALLING PUBLIC HEARING ON
THE ADOPTION OF A SPENDING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO 1-4
BE IT RESOLVED by the City Council (the "Council ") of the City of St. Joseph, Minnesota (the "City "), as
follows:
1. Public Hearing. This Council shall meet on Thursday, April 21, 2011, at approximately 7:15
p.m. to hold a public hearing on the proposed adoption of a Spending Plan for the use of funds for Tax
Increment Financing District No. 1 -4, pursuant to and in accordance with Minnesota Statutes, Section
469.176 Subd 4m.
2. Notice of Hearing. Filing of Program and Plan. The City Administrator is hereby authorized to
cause a notice of the hearing, substantially in the form attached hereto as Exhibit A, to be published as
required by the Act and to place a copy of the proposed Tax Increment Financing Spending Plan on file in
City Administrator's Office at City Hall and to make such copies available for inspection by the public.
Adopted this February, 2011.
Rick Schultz, Mayor
ATTEST
Judy Weyrens, Administrator