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HomeMy WebLinkAbout[02] Tax Abatement/TIF Projects Council Agenda Item 2 urry 01 S-ri JoSE"'10Ei MEETING DATE: June 1, 2016 AGENDA ITEM: Tax Abatement/TIF Projects SUBMITTED BY: Administrator BOARD/COMMISSION/COMMITTEE RECOMMENDATION: On May 18, 2016 the EDA was presented the final analysis by City financial consultant Jason Aarsvold. The EDA recommended the City Council accept the Term Sheet as prepared. PREVIOUS COUNCIL ACTION: The City Council and EDA met in joint session on April 20, 2016 to consider the preliminary Tax Abatement request of Country Manor and the preliminary Tax Increment Financing (TIF) of Fortitude Senior Housing. The EDA recommended and the City Council approved the preliminary applications and the utilization of Tax Abatement for Country Manor and TIF for Fortitude Housing with the amount of assistance based on the financial need to be determined. BACKGROUND INFORMATION: Since April 20, 2016 the City Financial Consultant(Jason Aarsvold) has reviewed the two applications for assistance. The following is a summary of each project: Country Manor Requested Tax Abatement CM Financial Request S 1.4 M Determined Gap $ 650,000 Term 20 years with City receiving 25% during the 20 years As a reminder, Tax Abatement does not require participation of the County and School District. The City did approach the County and requested they participate and they have declined. The School District is still considering. The City can either abatement 100% of the taxes and shorten the term by an estimated four years or collect 25% of the taxes and extend the abatement for the full 20 years. I am recommending that the City collect 25% throughout the duration of the tax abatement to increase the tax base from the beginning. A public hearing is required for the utilization of tax abatement and the hearing has been scheduled for June 20, 2016. Country Manor is in the planning process. The City Council has authorized the AUAR update with the comment period ending on May 25, 2016. The Planning Commission conducted a public hearing for the preliminary plat, land use amendment, and PUD and tabled action on the plat until the AUAR is accepted by the Council. Is anticipated that the City Council will consider the plat, both preliminary and final on June 20, 2016. With Tax Abatement the project can begin after the application has been received and CM is anticipating a construction start date of July 11. Fortitude Senior Housing Requested Tax Increment Financing Term Requested 25 Years Determined Gap $ 526,824 Term 14 Years TIF required participation by both the County and School District and they have been notified already of project as required by MN Statute. TIF is allowed for housing if at least 20% of the units meet the low income thresholds. In the Fortitude Housing a minimum of 10 units will be dedicated as such and will remain the same during the duration of the TIF District. A public hearing is required for the use of TIF and that has been scheduled for June 20, 2016. Fortitude is in the process of submitting their application for PUD Amendment, Land Use Amendment and PUD. It is anticipated that the Planning Commission will consider their applications in June with the Council receiving the recommendation of the Planning Commission in either late June or early July. They too anticipate a July start date. Term Sheets Jason Aarsvold has prepared a Term Sheet for each of the projects, while we have not seen these in the past, it is a good method to outline the understanding of the financial assistance being offered by the City. The execution of the Term Sheets are not binding; rather they define the project and the assistance so that the developer know what they can expect and plan accordingly. As stated above, both projects require a public hearing and it is at that time that the incentives are finalized. ATTACHMENTS: Request for Council Action Term Sheet—Country Manor Term Sheet—Fortitude Housing REQUESTED COUNCIL ACTION: Authorize execution of the Tax Abatement Term Sheet between CM St. Joe LLC and the City of St. Joseph and of the TIF Term Sheet between Fortitude Senior Housing and the City of St. Joseph.