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HomeMy WebLinkAbout[08a] Preliminary App: TIF/Abatement CMCU CITY OF ST. JOSEPH www.cityoistioseph.com DATE: January 14, 2015 Administrator Judy Weyrens MEMO TO: Chairperson Wick Members of the Economic Development Authority Mayor Administrator Weyrens Richard Schultz FROM: Cynthia Smith-Strack, Municipal Development Group Councilors Matt Killam RE: Consideration of TIF Pre-Application: Central Minnesota Credit Union Bob Loso Renee Symanietz Request: Dale Wick Central Minnesota Credit Union has submitted a pre-application for tax increment financing assistance in conjunction with a$4.2M office building at 1140 Elm Street East. EDA Doug Danielson The following are attached to this memo: Larry Bosch Gary Osberg • Proposed schedule for TIF review Rick Schultz • TIF run Dale Wick • Proposed municipal development district • Jobs schedule • Written project narrative • Project area map • Conceptual design illustrations • Background on key leadership at CMCU The project involves the construction of a one story professional office building which will house a call center, information technology support/equipment, and other administrative and support staff.The office is expected to house a minimum of 30 workers initially but is designed to accommodate up to 80 employees. A total of 11 to 16 jobs will be retained in St. Joseph and 40 to 68 new full-time equivalent positions will be added over five years following project completion. CMCU will provide FTE employees a full complement of benefits including, but not limited to, medical insurance, dental insurance, term life insurance, short term disability, long term disability, 401K, flexible spending accounts, paid time office and holiday leave.Wage and benefit packages range from $19.35 to$43.30 per hour for jobs created/retained. The proposed structure will complement and harmonize with the existing CMCU financial facility across CR 133 creating quality buildings which will 'book end' expanding developments at a key intersection. The development is proposed for an infill site and, as such, will maximize the public's previous investment in infrastructure including municipal water, sanitary sewer, and storm water facilities/services. The Applicant reports a financing gap of$125,257.01; the gap is indicative of building costs for the exact structure on a similar sized lot in a different community. The Applicant is a financial entity and,as such,will self-finance the project making a requirement for a lead lender non-applicable. l Economic development TIF is available for the project. Maximum term of the applicable district is nine years. 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. The proposed district is an economic development district. Term of TIF Agreement The maximum term of an economic development TIF district is nine years, however, the term of any TIF agreement usually reflects the amount needed to close a demonstrated 'gap' in financing. Pay as you qo TIF TIF assistance may be structured as a TIF bond or pay as you go arrangement. The City's TIF policy highly discourages the issuance of a TIF bond. Therefore, pay-as-you-go (i.e. reimbursement of eligible costs as taxes are paid)TIF is requested. Requirements: Preliminary TIF Application: The following are required to be submitted with the preliminary application for TIF assistance. All required items have been submitted: 1. A map showing the exact boundaries of the proposed development. A map of the subject properties is attached. 2. A General description of the project is included in the project narrative submitted with the application as attached. A projected market value from the Stearns County Assessor's Office is pending. 3. The existing Comprehensive Plan land use designation and zoning of the property. The comprehensive plan guides the subject parcel to continued commercial development. The property is zoned appropriately for the intended use with is permitted within the applicable zoning classification. 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. A sources/uses statement is included in the pre-application. 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. The project will result in the retention of 11-16 jobs in St.Joseph and the creation of an additional 40- 68 jobs within the next five years. 6. A written perspective of the company (i.e. corporation, principals, history, past projects, etc.). Profiles of CMCU Executives is included in the application. CMCU is a member- owned financial cooperative with 17 locations,262 employees,and$863M in assets.CMCU is a national leader in commercial and agricultural lending. CMCU was formed in 1939. TIF Policy: A copy of the City's TIF policy is attached. The policies for the use of TIF include the following: 1. 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 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: a. To retain local jobs and/or increase the number and diversity of quality jobs(i.e. stable employment and/or attractive wages and benefits. b. 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 eligible development costs not including 'brick and mortar'costs. 4. Minimum Qualifications: a. TIF would facilitate development that would not occur without the assistance. The Applicant has provided analysis illustrating the project will not move forward in St. Joseph without the requested assistance. This would result in the loss of 16 employment positions in St. Joseph. 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 has illustrated the project will not move forward in St. Joseph if the gap is not closed. c. Comprehensive Plan/Zoning. The project is consistent with the Comprehensive Plan and the applicable zoning district. d. Financial Credentials. Not applicable—financial institution is applicant. 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 parcels combined equal$8,962 (payable 2015). Projected taxes payable after project completion are$64,623, equating to a 7:1 ratio. b. TIF should not be used for speculative projects. CMCU was organized in 1939 and has been increasing assets including being a national leader in commercial and agricultural lending. Pay as you go TIF is requested. c. TIF should not be used to pay for overpriced land. The Applicant owns the subject parcel, as such, land cost is not included in the TIF project. 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 administrative, call center,and technical assistance office space. The site is serviced by existing facilities. Existing facilities were sized to accommodate the intended use. 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 all of the aforementioned. The Developer and the City's TIF Consultant will be present to answer questions and provide 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 application is an action analogous to approving the conceptual use of TIF for this project. Action: If the EDA is supportive of utilizing TIF for this project, a MOTION is in order to recommend the City Council approve the pre-application and authorize submittal of the final application and fee. City of St.Joseph Tax Increment/Tax Abatement Schedule Central Minnesota Credit Union Office Project January 2015 The following is the schedule for the proposed creation of TIF District No. 3-1— Economic Development TIF District for the Central Minnesota Credit Union Office Building Project. This process will require the creation of a new TIF District and Development District if TIF is used. As an option, I am also including a schedule for Tax Abatement. EDA Accepts Pre-App— Discussion of TIF v. Abatement January 28, 2015 Council Considers EDA Recommendation & calls for public hearing to create TIF District or proceed with the process to authorize Tax Abatement February 2 IF TIF: Draft Plan & Notice to County and School February 13 Deadline for Hearing Notice to Newspaper February 24 Publication -St. Joseph Newsleader February 27 (published weekly on Friday.Deadline for legal submittal is the Tuesday before publication of weekly issue at 5 p.m). TIF Resolution/Development Agreement complete for Council packets March 11 Public Hearing Date March 16, 2015 @ o'clock p.m. Certification by July 2015 IF ABATEMENT: Council Calls for Public Hearing on Abatement February 2, 2015 Deadline for Hearing Notice to Newspaper February 3 Publication - St.Joseph Newsleader February 6 (published weekly on Friday.Deadline for legol submittal is the Tuesday before publication of weekly issue at 5 p.m). Abatement resolution/agreement complete for Council packets February 11 Public Hearing Date February 16 @ o'clock p.m. M t mD .. N M a Io tD N 00 m = n 8 a 0 000 i' O W u M al N N ' N "Ili o . yuia tD C wNen. 0 1_46 N N N N N N N V M n n Yl jp N Ol In M O1 tD Vl N Ol a 00 Ol tD 00 Z N Vl O O0 M en In Ol N . WO 00 er a ' In 00 e m 0 N .. O m m .J N ID tD tp Ol d E C N e+.-i c m tD N ID O M M ID m ,I < N Ol N 0 . . . .. . m E d• c O W H .-I .-I N c N a u 0. 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O • 0 fD y .2 X City of St. Joseph TIF/Tax Abatement Preliminary Application Genet-Al Information Legal Name of Property Owner and/or Applicant: Central Minnesota Credit Union Name of Operating Entity (If Different than Applicant): — Address: 20 4th Avenue SE, PO Box 10, Melrose, MN 56352 Telephone: 320-256-3669 Email: bernieb@mycmcu.org Name of Contact Person: Bernie Brixius Information Checklist The following information must be presented to the St. Joseph EDA Office as soon as possible after the initial request for consideration of tax increment or tax abatement. The information will be evaluated to determine if the proposed project conforms to the City's goals and objectives. 1. Attach a map illustrating the exact boundaries of the proposed development. 2. Attach a general written description and drawings of the project illustrating: Size and location of existing and proposed buildings Building concept plans including a site plan, building elevations, building openings, plumbing and HVAC systems, number of stories, square footage per use, construction type, building materials, and cost estimate. Proposed use of property and type of development, estimated traffic to be generated by the project per day. Off-street parking and site access information. Project schedule. Estimated market value of the project when complete (City will work with the Stearns County Assessor's Office to obtain this). 3. Project financing information including: Proposed project funding sources and uses statements. Project financial proforma analysis/cash flow analysis demonstrating a gap in financing. A statement illustrating why the project doesn't cash flow without TIF/Abatement. St. Joseph TIF/Abatement Pre-Applicatio.. q 4. A statement identifying the public benefit of the proposed project in terms of number of jobs created, number of jobs retained, increase in property value, redevelopment impact, economic development impact, etc. 5. A written perspective of the Developer and/or Development Company including background and experience of the business entity, company leaders, company history, past development achievements, etc. I certify the statements contained in this Application and supplemental materials are true, complete, and correct to the best of my knowledge, and are made by me in good faith. I understand that any falsifications, misrepresentations, or omission of facts in this Application shall be sufficient cause for disqualification and/or ineligibility for tax increment financing and/or abatement a'.roval, regardless of the time that elapses before such false information is discov ��/�� / J Applicant Signature: Date: /O► /51 Co-Applicant Signature: / 11 St .Iosenh TIF/Abatement Pre-Application Pg. 2 30 CENTRAL MINNESOTA CREDIT UNION OFFICE BUILDING PRELIMINARY TIF APPLICATION SUBMITTAL CHECKLIST 1. A map illustrating the exact boundaries of the proposed development is attached. The map is as required under the TIF Preliminary Application"Information Checklist"item '1'. See Exhibit A. 2. General description of the project as required under the TIF Preliminary Application"Information Checklist" item 2: Central Minnesota Credit Union proposes a development project for property it currently holds at 1140 Elm Street East, St. Joseph, MN 56374. The project includes construction of a one story professional office building which will house a call center, information technology support/equipment, and other administrative and support staff.The office is expected to house a minimum of thirty(30)workers initially but is designed to accommodate up to 80 employees. The structure is proposed as a 13,900 square foot single story facility of slab on grade, steel column and beam and load bearing studs, metal joists and deck for the interior. The exterior will be a combination of brick, architectural precast concrete and metal panels. The facility will include 360 square feet of private office space, 5,225 square feet of open office space, 715 square feet of conference rooms, 460 square feet of health and wellness areas, and 50 square feet for information technology equipment. The construction cost of the project is budgeted at$4.2 million. The proposed structure will complement and harmonize with the existing CMCU financial facility across the street, creating quality buildings, which will'book end' expanding developments at a key intersection. Additional information follows: a. Size and location of building:A one story 13,900 square foot professional office structure to house a call center, other administrative staff, and information technology resources. The structure will be located at 1140 Elm Street East. The building footprint will be 134 feet by 154 feet. The new construction will be located on two parcels owned by CMCU legally described as Lots 2 &3, Block 1 of the St. Joseph Professional Plat. The subject parcels are illustrated on the attached site map.The properties combined are approximately 2.5 acres in land area. Lot 2, Block 1 (northern lot) is approximately 59,000 sf in area; Lot 3, Block 1 (southern lot) is slightly smaller at approximately 52,450 sf in area. The properties are numbered as 84.53798.0571 (northern lot)and 84.53798.0572 (southern lot) under County data records. The two lots were combined in December and now exist as parcel number 84.53798.0574, with a combined square footage of approximately 111,450 square feet. b. Construction concept: Building concept plans including a site plan, building elevations, plumbing/HVAC preliminaries, building dimensions, interior layout and square footage per use, building materials and cost estimate. See Exhibit B. c. Proposed use of property/traffic generation: The subject property is within the B-2 Highway 75 Business District. The proposed use is classified as a permitted use within the B-2 District. 1 it CENTRAL MINNESOTA CREDIT UNION OFFICE BUILDING PRELIMINARY TIF APPLICATION SUBMITTAL CHECKLIST The existing Comprehensive Plan guides the subject parcels to continued Highway 75 Business District(B-2) use. The proposed use is consistent with the 2008 Comprehensive Plan Future Land Use Map and Land Use District 12 proposed future uses which are defined as: "commercial clusters at meaningful intersections"which "provide for the development of cohesive commercial entities capable of creating and sustaining compatible design elements, shared parking, and/or shared storm water management facilities". The City Engineer estimates 11.75 vehicle trips per day for each 1,000 square feet of office space(or 436 per employee). d. Off-street parking and site access information:The volume of parking needed is dependent on the square footage of each type of use. There is abundant area on site to provide parking for the proposed volume of employees working within the office space and storage space. The site will be accessed directly from Elm Street. Elm Street is an existing public roadway and presumed access is via an existing curb cut. e. Project schedule: planning, zoning, and TIF approval is requested by the close of January. Construction to begin in April/May 2015. Construction is anticipated to take six to eight months with building occupancy in January 2016. f. Estimated market value following completion: City consulting staff will work with Stearns Co.Assessor's Office to obtain a projected EMV will be requested when plans are provided. 3. Project financing information as required under the preliminary TIF application"Information Checklist" item 3: a. Tax increment proceeds will be used to fill a gap in financing and assist in offsetting costs associated with land acquisition, site preparation, relocation of utilities,and public improvements/services, as well as, costs associated with relocating existing staff currently located at other CMCU facilities. TIF is proposed(as limited by City policy)on a pay-as-you-go basis. CMCU certifies the project will not occur in St. Joseph if the development is cost prohibitive. In the event the project is built in a different location the City will lose a minimum of sixteen (16)existing jobs now currently located in the existing CMCU financial facility. The project cost is estimated at$4.2 million. b. Sources and uses are identified in the Table below: Sources of Funds Amount Developer Equity $0 Loan Proceeds $0 Rent/Lease Revenue $0 Grants $0 Other $0 TOTAL SOURCES $0 Uses of Funds Amount Land/Building Acquisition $3,899,062.45 2 32 CENTRAL MINNESOTA CREDIT UNION OFFICE BUILDING PRELIMINARY TIF APPLICATION SUBMITTAL CHECKLIST Site Improvements&Prep $120,000 Installation of Public Improvements $25,000 Parking Facilities $126,000 Streets and Sidewalks $22,500 Loan Principal $0 Loan Interest $0 Other $0 TOTAL USES $4,192,562.45 c. Project financial proforma analysis/cash flow analysis demonstrating a gap in financing. The construction of a 13,900 square foot single story facility of slab on grade, steel column and beam and load bearing studs, metal joists and deck for the interior and a combination of brick, architectural precast concrete and metal panels for the exterior on 2.5 acres of improved property in various communities has been examined. The proposed project cost in the St. Joseph equates to$303.64 per square foot(including land cost, site improvements/assessments, public improvements/assessments, installation of parking to City standards, building construction, and associated review/development fees). The proposed project cost for the exact building on 2.5 acres of improved property at an alternate location in Sauk Centre is$294.63 per square foot. The project will not move forward in St. Joseph unless$125,257.01 in financial assistance is available to offset increased development costs in St. Joseph. The information used to calculate the aforementioned costs is included in the attached spreadsheets. See Exhibit C. 4. Public benefits of the project as required under the preliminary TIF application"Information Checklist" item 4: a. The project will result in the retaining of at least sixteen (16)full-time equivalent jobs and the addition of forty(40)additional FTE jobs over the next five(5)years. Job classes include call center employees, information technology support/equipment, and other administrative and support staff. CMCU provides FTE's with a full complement of benefits including, but not limited to: medical insurance, dental insurance,term life insurance, short term disability, long term disability, 401K,flexible spending accounts, PTO, and holiday leave.The benefit package carries an estimated value of$6.50 per hour. b. In addition to retaining and increasing quality jobs within the City, the project will also increase the tax base and maximize the public's previous investment in infrastructure as the lots feature a full complement of urban services at this time. 5. Background information on the Developer as required under the preliminary TIF application "Information Checklist"item 5: a. CMCU is a member-owned financial cooperative with locations in Albany, Avon, Belgrade, Cold Spring, Freeport, Grey Eagle, Little Falls, Long Prairie, Melrose, Moorhead, New York Mills, Paynesville, Perham, St. Joseph, Sauk Centre and Wadena. CMCU offers services such as personal and business checking accounts, savings accounts, money market accounts,youth checking and savings, Internet and mobile banking,online bill payer, auto and recreational vehicle loans, mortgage loans, home 3 33 CENTRAL MINNESOTA CREDIT UNION OFFICE BUILDING PRELIMINARY TIF APPLICATION SUBMITTAL CHECKLIST equity loans,farm and business loans, remote deposit for businesses and individuals, Health Savings Accounts, retirement accounts, financial planning and more. Central Minnesota Credit Union was built from the ground up by its members since 1939. The credit union was chartered in Melrose under the philosophy of'people helping people'. CMCU currently has 17 locations, 262 employees, and $863 million in assets at this time. CMCU is a national leader in commercial and agricultural lending. Along with the many financial services CMCU offers, community involvement is a big piece of who they are. 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O O O 0 O o O 0.0 o C f LO LD N ` U •I fD fp t? t/? a U- o O o 0 O c o o • CU 0 0 o E Ln vi + G) N N I0 > t/? in- t.) 0 (0 _ I- N -0 0. CV) E o o o o c o 0 N O O E o ui N (**4 -I > O t/, t/} a) a E v v o tai U • O CO N O cap U Cr) 0 Cr) N -0 M M t/} Un C L} to 3 f0 VI J 0 O O. h NJ U 0 0 OE0 0 0 'O u) V) M M C m V? t/? 0 o a) Y ++ U C) Q C a) N co n U • .0 U) T O 3 W lJ v) (13 in 4/ Exhibit D Executive Profiles Richard J. Odenthal President/CEO — Richard is currently the President/CEO of Central Minnesota Credit Union (Central Minnesota) and has served in his position since 2000. Under his direction, CMFCU has grown from 5 branch locations with $200 million in assets to 17 branch locations with over $850 million in assets. He has also added a call center, an Administration Center and increased staffing from 75 to 260 plus employees. He oversaw two successful field of membership expansions while increasing credit union membership by 18,000 members to over 55,000. He has over 27 years of banking and financial industry experience. He is a 1987 graduate of St.John's University with a Bachelor of Science Degree and a 1999 graduate of the Graduate School of Banking, Madison WI. Richard remains active in national, state and local trade associations, civic and community organizations. Bernard N. Brixius, Chief Administrative Officer—Bernard joined Central Minnesota as a Branch Manager/Assistant Manager in 1981. During the past 33 years he has held positions with progressively increasing management and strategic responsibilities covering all areas of credit union operations. Prior to his holding his current position he served as the Chief Operations Officer for 5 years and Chief Financial Officer for 15 years. His current responsibilities include ensuring the financial and operational strength and efficiency of Central Minnesota's Deposit Support, Information Technology and Electronic Services functions. Michael G.Wehlage, Chief Credit Officer—Michael has held the position of Chief Credit Officer since April 2005. His responsibilities include overseeing the credit union's loan growth strategies, loan production and underwriting, administering the loan risk analysis systems, chairing the Loan Committee and participating in overall organizational budgeting and planning. In addition to his own $26 million loan portfolio, he oversees the credit union's $695 million loan portfolio. Central Minnesota has one of the largest agricultural loan portfolios among credit unions in the United States. Michael joined Central Minnesota in 1986 as a retail loan officer with a degree in Finance and Credit from St Cloud Technical and Community College. He helped create the Central Minnesota's member business lending program and became the Vice President of Ag Lending. He is a certified Farm Risk Management Consultant and holds an Insurance Producer's License. Michael was appointed to the Feedlot Review and Dairy Advisory Committees by the Stearns County Commissioners and has served on them for several years. Charles B. Friederichs, Chief Operations Officer—Charles joined Central Minnesota Credit Union in June of 2008. Prior to his role of Chief Operations Officer, Charles was the Chief Financial Officer for 5 years. In his current role, he is responsible for branch operations and lending. Chuck has worked in the financial institution field for 26 years. During those years he served as an FDIC examiner, commissioned as both a safety and soundness and compliance examiner, working at both the regional and national level. He also served in a savings bank and a commercial bank as Senior Vice President and Chief Information Officer with primary focus on risk management, operations,technology, and strategic planning and budgeting. Charles has helped all of the institutions he has worked for pass the $500 million asset mark. w7 • CITY OF ST. JOSEPH www.cityof stjoseph.com Date: January 21, 2015 Memo To: Members of the EDA Administrator City Administrator Weyrens Judy Weyrens Memo From: Cynthia Smith-Strack-MDG, Inc. Mayor Rick Schultz RE: Annual Report to City Council Councilors Matt Killam BACKGROUND Bob Loso The EDA is required to submit an annual report to the City Council. Please find attached a draft Renee Symanietz report for the calendar year 2014. Dale Wick ACTION EDA Review, discussion, and comment on the report. If the EDA is comfortable with accepting the Doug Danielson report and submitting it to the City Council a MOTION to do so is in order. Richard Schultz Larry Bosch Gary Osberg Dale Wick (-77 THIS PAGE INTENTIONALLY LEFT BLANK %(§