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Home My WebLink About[05b] Public Hearing, Tax Abatement, CM of St. Joe 11 Council Agenda Item 5b urry 01 S-ri JoSE"'10Ei MEETING DATE: June 20, 2016 AGENDA ITEM: Economic Development—Business Subsidy b. Tax Abatement—CM St. Joe SUBMITTED BY: Administration BOARD/COMMISSION/COMMITTEE RECOMMENDATION: The EDA has reviewed the application for Tax Abatement for CM St. Joe, accepting their application and recommending the Council authorize utilization. PREVIOUS COUNCIL ACTION: In a joint meeting with the EDA on May 16, 2016 the Council accepted the recommendation of the EDA and authorized CM St. Joe to continue with the process for securing Tax Abatement for the construction of a senior complex with services. The Council authorized CM St. Joe to work with the City Financial Advisor, Jason Aarsvold of Ehlers, bringing the matter back to the Council for public hearing. On June 1, 2016 the City Council authorized execution of a Term Sheet identifying the amount and term of Tax Abatement that was supported based on the analysis. BACKGROUND INFORMATION: Unlike Tax Increment Financing, Tax Abatement leave participation by the County and School District as discretionary. The City approached both entities and requested participation. After discussion Stearns County declined to set the matter to a public hearing; thereby not participating. Their response indicated that there are other facilities around the area and they did not participate in financing and did not want to set precedence and since CM St. Joe could not guarantee 20% of the units would be designated for LMI they would not meet their policy. District 742 is still in the process of considering the request and staff is waiting to hear if they will bring the matter to a public hearing. At this time the hearing is based on only the City participating so final action is not being taken at this meeting. The Tax Abatement request is formulated so that the City will still receive a tax benefit from the construction, receiving 25% of the tax. Jason Aasvold will be at the meeting and present an overview of the project and process BUDGET/FISCAL IMPACT: To be determined ATTACHMENTS: Request for Council Action Memo—Jason Aarsvold Hearing Notice Executed Term Sheet REQUESTED COUNCIL ACTION: Conduct the public hearing and delay action to the next Council meeting. Memo To: Judy Weyrens, City of St. Joseph City Administrator From: Jason Aarsvold, Ehlers Date: June 17, 2016 Subject: Country Manor Tax Abatement— Public Hearing The City of St. Joseph received a proposal from of CM of St. Joe LLC and Country Manor of St. Joseph, LLC (the "Companies") to construct a senior housing facility containing 60 independent living units with available services and 24 memory care units. The Companies requested tax abatement in the amount of $1,400,000 citing the need to make this project financially feasible. Through Ehlers' analysis, and negotiations with the developer, we determined that tax abatement totaling $650,000 would be sufficient to make the project work. On June 1, 2016, the City Council approved a Term Sheet with the Companies to provide, among other things, tax abatement totaling no more than $650,000. Each taxing jurisdiction can choose whether or not it wants to participate in a tax abatement project and must hold a public hearing and pass a resolution stating the amount of the abatement. The City already determined Stearns County will not participate in this project through tax abatement. As of the date of this memorandum, however, St. Cloud School District #742 is still considering participation. Because of this, it is still unknown exactly how much each jurisdiction might abate to reach the $650,000 total needed for the project. In an effort to keep the project moving forward, the City can hold its required public hearing using the maximum abatement amount of $650,000. The City published the required notice (attached) and may hold its hearing on June 20th, 2016. Once more is known about the School District's participation, the City can pass its tax abatement resolution with the actual abatement amount at a subsequent meeting. At this same meeting, the City Council can consider acting on a development agreement modeled after the previously approved Term Sheet. At this time, Ehlers will also provide a full analysis of the project detailing the project's need for assistance as well as the actual amount and expected terms of the abatement. Please contact me at 651-697-8512 with any questions. www.e'hlers-inaeem E H L E ■R S Minnesota phone 651-697-8500 3060 Centre Pointe Drive LEADERS IN PUBLIC FINANCE Offices also In Wisconsin and Illinois fax 651-697-8555 Roseville,MSV 55113-1122 toll free 800-552-1171 NOTICE OF PUBLIC HEARING CITY OF ST.JOSEPH STEARNS COUNTY STATE OF MINNESOTA NOTICE OF PUBLIC HEARING REGARDING PROPOSED PROPERTY TAX ABATEMENTS FOR THE COUNTRY MANOR SENIOR HOUSING PROJECT NOTICE IS HEREBY GIVEN that the City Council of the City of St. Joseph, Stearns County, State of Minnesota, will hold a public hearing on June 20, 2016, at approximately 6:00 P.M. at the City Council Chambers in City Hall, 25 College Ave N, St. Joseph, Minnesota, relating to the request of CM of St. Joe LLC and Country Manor of St. Joseph, LLC (the "Companies") to have the City abate to the Companies a portion of the property taxes to be levied by the City on tax parcel numbers: 84.53494.0200 84.53494.0201 84.53494.0202 84.53494.0203 84.53494.0214 The proposed term of the abatement will be for up to 20 years in an amount not to exceed $650,000. The City Council will consider granting property tax abatement in response to the request. All interested persons may appear at the Monday, June 20t1i, 2016 public hearing and present their views orally or in writing. Anyone needing reasonable accommodations or an interpreter should contact City Hall, telephone 320-363-7201. ( __. _ .. _ .. . . __ . ._.._------- - x I Term Sheet This Term Sheet is executed as af this day of � , 2016 by and between Developer and the City of St. loseph (the "City"� and is intended to set forth the terms upan which the parties hereto may be willing to enter into a Deve(opment Agreement. Except for � Section 9 below (which shall be binding upon the Developer), This Term Sheet shall not be deemed conclusive or legaily binding upon either party and neither party shall�have any � abligations regarding the property defined below unless and unti4 a de�nitive Development Agreement is approved by the City and executed by both parties. � 1. Developer: CM St.Jae LLC and Country Manor of St.Joseph LLC 2, Pro e : Outlot A, Rivers Bend-84.53494.0200 Outlot B, Rivers Bend-84.53494.OZ01 Outlot C, Rivers Bend-84.53494.0202 Outlot D, Rivers Bend-84.53494.0203 Outiofi O, Rivers Bend-84.53494.0214 3. KeY Business 7erms—Owner: a. Execution of Development Agreement ' b. Preparation and Submittal of Construction Plans 4. Cit�r Conditions: a. Approval of Tax Abatement b. City approval of Canstruction Pians � c. Execution of Development Agreement - d. City determination that Developer has sufficient financial means to construct Minimum Improvements 5. Mir►imum lmprovements: improvements to the property wiii include the construction af senior housing facility containing 60 independent llving units wifih available services and 24 memory care units. 6. C�nstruction Schedule: Commence construction by September 1, 2016, and complete by January 1, 2018. Far the purpose hereof, "Commence" shall mean beginning of physical improvement to tf�e Property, including grading, excavation, or other physical � site preparation work; and "Completed" sha(I mean that the Minirnum lmproveme�ts are sufficiently compiete for the issuance of a Certtficate of'Occupancy. 7. Pubiic Assistance: Subject ta all terms and conditions af the Devefopment Agreement, the �ty will reimburse the Developer through property tax abatement fo�up to a total of $650,000 (future value} of Qualified Costs relafied to the Minimum Improvements (out of an estimated total of $17,950,000}. "Qualified Costs" shali mean alf cosCs Incurred ln connection with the canstruction of the Minimum Improvements. Payments � will be issued on a pay-as-you-go basis. The finai amount and term uf the assistance is � subject ta change depending on the participation of other taxJng jurisdictions. ; ' . { ' I in addition, the City may consider reducing or delaying payment of certain City fees associated with the development. . � 8. Buildin�Value:The building to be constructed upon the Property is anticipated to have i an assessed value of approximately$86,000 per unit,or a total of$7,224,000. . . � 9. Fees:The City acknowiedges that the Developer submitted a $7,500 deposit to pay for � the reasonable out-of-pocket legal, financial consultant, abatement creation, and ; administrative fees assaciated with this transaction. The developer will be required to deposit additionai funds if the initial deposit is fully drawn. Upon execution of this proposed Term Sheet, the developer wilt make this deposit to the City. Any funds deposited by developer and not expended 6y the City for its legaf,financial advisor, or other consultant fees on or before the date of execution of the devefopment contract will be returned to the developer without interest. The developer shall pay alf other normal and customary City fees and expenses, unless otherwise specified in the development agreement,for the approval and construction of the Minimum Improvements. 10. Miscelfaneous: a. No transFer of Property or Development Agreement without City consent. b. Developer covenants td pay properly taxes and mafntain customary insurance. IN WITl�ESS WHEREOF,the parties have execut�d this Agreement as of the date first'set forth above. CM ST.JOE LC � By: I � � . . ' . COUNTRY MANOR OF ST.JOSEPH LLC By; � G. Its: �v�W� • C1TY OF ST.JOSEPH . B . � its: it Adm' istrator ; . , . . i ! l � I i � � � � � �� . .