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2024-08-15 HRA Regular Meeting Packet
Meeting location: Edina City Hall Council Chambers 4801 W. 50th St. Edina, MN Participate in Community Comment Call 312-535-8110 Enter access code 2631 040 9929 Password is 5454 Press *3 on your telephone keypad when you would like to get in the queue to speak A staff member will unmute you when it is your turn Housing & Redevelopment Authority Meeting Agenda Thursday, August 15, 2024 Accessibility Support: The City of Edina wants all residents to be comfortable being part of the public process. If you need assistance in the way of hearing amplification, an interpreter, large-print documents or something else, please call 952-927-8861 at least 72 hours in advance of the meeting. 1. Call to Order 2. Roll Call 3. Pledge of Allegiance 4. Approval of Meeting Agenda 5. Community Comment During "Community Comment," the Mayor will invite residents to share issues or concerns that are not scheduled for a future public hearing. Items that are on tonight's agenda may not be addressed during Community Comment. Individuals must limit their comments to three minutes. The Mayor may limit the number of speakers on the same issue in the interest of time and topic. Individuals should not expect the Mayor or Council to respond to their comments tonight. The City Manager will respond to questions raised during Community Comments at the next meeting. 6. Adoption of Consent Agenda All agenda items listed on the Consent Agenda will be approved by one motion. There will be no separate discussion of items unless requested to be removed by a Council Member. If removed the item will be considered immediately following Page 1 of 174 the adoption of the Consent Agenda. (Favorable roll call vote of majority of Council Members present to approve, unless otherwise noted in consent item.) 6.1. Draft Minutes of Regular Meeting on July 25, 2024 7. Reports/Recommendations: (Favorable vote of majority of Council Members present to approve except where noted) 7.1. Tax Increment Financing: Impact on School Financing in Edina 7.2. 7235 France Avenue - Recommended Terms of Tax Increment Financing 7.3. Resolution 2024-06: Requesting that the City Council convene a Public Hearing to consider establishing the 72nd and France #3 TIF District. 8. Executive Director Comments 9. HRA Member Comments 10. Adjournment Page 2 of 174 Page 1 MINUTES OF THE REGULAR MEETING OF THE EDINA HOUSING AND REDEVELOPMENT AUTHORITY JULY 25, 2024 7:30 A.M. I. CALL TO ORDER Chair Hovland called the meeting to order at 7:34 a.m. then explained the processes created for public comment. II. ROLLCALL Answering rollcall were Chair Hovland, Commissioners Agnew, Jackson, Pierce, and Risser. Absent: None. III. PLEDGE OF ALLEGIANCE IV. MEETING AGENDA APPROVED – AS PRESENTED Motion by Commissioner Jackson, seconded by Commissioner Agnew, approving the meeting agenda as presented. Ayes: Agnew, Jackson, Pierce, Risser, and Hovland Motion carried. V. COMMUNITY COMMENT No one appeared. V.A. EXECUTIVE DIRECTOR’S RESPONSE TO COMMUNITY COMMENTS Executive Director Neal responded there were no past Community Comments. VI. ADOPTION OF CONSENT AGENDA AS PRESENTED Motion by Commissioner Jackson, seconded by Commissioner Pierce, approving the consent agenda as presented: VI.A. DRAFT MINUTES OF REGULAR MEETING OF JUNE 13, 2024 Ayes: Agnew, Jackson, Pierce, Risser, and Hovland Motion carried. VII. REPORTS AND RECOMMENDATIONS VII.A. FRANCE AVENUE PEDESTRIAN CROSSING: CONCEPT UPDATE – RECEIVED Mike Fischer, Brad Reifsteck, planners, and engineers with LHB presented a progress update on the concept idea for the pedestrian crossing, including the engineering layout, street profiles, typical sections of the underpass, lighting study, and circulation diagrams. Economic Development Manager Neuendorf updated that the rough estimated cost falls between $15-20 million which will cover the roadway improvements, underpass improvements, all the approaches, utilities, retaining walls, and hardscape. He noted that most of the funding would come from the private development sites that are on either side of the underpass and that the City / HRA would investigate additional sources of funding if this project is authorized to be constructed. The Board asked questions and provided feedback regarding ease of cleaning from grime and graffiti, bike traffic, funding, excitement from all parties involved, and timing. VII.B. 7235 FRANCE AVENUE – RECOMMENDED TERMS OF TAX INCREMENT FINANCING – TABLED Page 3 of 174 Minutes/HRA/July 25, 2024 Page 2 Economic Development Manager Neuendorf presented information on the project location, existing conditions, development team, preliminary site plan, public benefits, financing, and the recommended terms for the project. He stated that the staff recommends the Board initiate the process to consider the 25-year TIF Redevelopment District, approve the proposed Term Sheet, and authorize staff to prepare full legal agreements based on the Term Sheet. Jay Lindgren, Dorsey & Whitney, provided information on the realistic marketplace timeline. Nick Anhut, Ehlers & Associates, provided further details concerning the TIF district and tax capacity. The Board asked questions and provided feedback regarding taxing entities, TIF district impact on the Richfield school district, lack of setbacks, parking concerns, compliance with labor standards, and fixed vs floating affordable housing. The Board also raised concerns about ADA compliance, wind study, and elements of the term sheet. The Board decided to table further discussion regarding the term sheet until the next meeting to allow the Staff to answer questions and make edits that the Board stated. VII.C. RESOLUTION NO. 2024-06; CALL FOR PUBLIC HEARING FOR 72ND & FRANCE #3 TIF DISTRICT – TABLED The Board decided to table this discussion to the next meeting. VIII. EXECUTIVE DIRECTOR’S COMMENTS – None IX. HRA COMMISSIONER COMMENTS – None X. ADJOURNMENT Motion made by Commissioner Agnew, seconded by Commissioner Pierce, to adjourn the meeting at 9:23 a.m. Ayes: Agnew, Jackson, Pierce, Risser, and Hovland Motion carried. Respectfully submitted, Scott Neal, Executive Director Page 4 of 174 d ITEM REPORT Date: August 15, 2024 Item Activity: Information Discussion Meeting: Housing & Redevelopment Authority Agenda Number: 7.1 Prepared By: Bill Neuendorf, Economic Dev Mgr Item Type: Report & Recommendation Department: Community Development Item Title: Tax Increment Financing: Impact on School Financing in Edina Action Requested: No action required; for informational and discussion purposes only. Information/Background: From time-to-time, questions arise regarding the impact to local school districts when a TIF District is established. A special report has been prepared to address the impact of Tax Increment Financing (TIF) on School Finances in Edina.The presentation will be delivered by staff from Ehlers Associates. Ehlers is the public finance advisor to the City of Edina and Edina HRA. Ehlers is also a financial advisor to the Edina, Hopkins and Richfield School Districts. The Ehlers report will be rooted in the fundamentals of Minnesota statutes governing school finance and will include an example from Edina to demonstrate the short-term and long-term impact of TIF. Representatives from the Edina, Hopkins and Richfield School Districts have been invited to attend this HRA Board meeting. Resources/Financial Impacts: The cost of this work will be paid from HRA funds. Relationship to City Policies: List policies, strategic plans, work plans, etc related to this item. i.e. Comp plan, CAP, CIP Supporting Documentation: 1. TIF - Impact to School Finance staff report 8-15-2024 2. Edina TIF and Minnesota School Finances - Ehlers 8-12-2024 3. Edina - EPS projections 08.22.2023 Page 5 of 174 August 15, 2024 Chair and Commissioners of Edina Housing & Redevelopment Authority Bill Neuendorf, Economic Development Manager Tax Increment Financing: Impact on School Financing in Edina Information / Background: From time to time, questions arise about the impact of tax increment financing (TIF) on the School Districts that serve Edina residents. Due to the complexity of municipal and school financing, this topic can be confusing. Staff commissioned Ehlers Associates to provide an overview of public school finance in Minnesota and information about the impact of TIF on school financing. The overview of Minnesota legislative rules will be supplemented by real-world examples to demonstrate how the legislation applies in Edina. Ehlers Associates is a private company specializing in public finance. Ehlers serves only governmental agencies and does not work for private sector entities. Ehlers has a division that specializes in municipal finance and a division that specializes in school finance. The City of Edina and Edina HRA use Ehlers to inform and guide municipal financing decisions. The Edina, Richfield and Hopkins School District also use Ehlers to inform and guide their financial policies as well. Representatives from Ehlers’s municipal finance division and school finance division will attend the HRA meeting to present an overview of the impact of TIF on school districts. Representatives from the Edina, Richfield and Hopkins School Districts have been invited to attend the HRA meeting. This information is presented for informational purpose only. No formal action from the HRA Board is required. Housing and Redevelopment Authority Established 1974 Page 6 of 174 STAFF REPORT – TIF: Impact on School Financing in Edina Page 2 Summary In Minnesota, school district boundaries rarely align with municipal boundaries. Portions of the City of Edina are located in five different school districts – Edina #273, Richfield #280, Hopkins #270, Bloomington #271 and Eden Prairie #272. The areas located in Bloomington and Eden Prairie Districts are used for commercial, industrial or natural purposes that do to generate residents or school aged children. Over the 50 years that TIF has been used in Edina, the City and HRA have created TIF Districts that include property in Edina, Richfield and Bloomington School Districts. To date, Edina has not created a TIF District that is located in the Hopkins, or Eden Prairie School Districts. The legislation governing finance of school districts is much different than that governing municipal finance. While the primary source of municipal funding is local property taxes, the primary source of school funding comes from the State of Minnesota and is primarily based on student enrollment. The City of Edina and Edina Schools worked together to understand and project future enrollment. The latest projection study was completed by Hazel Reinhart in August 2023. That report is attached. This study identifies three notable facts that are relevant to redevelopment efforts: •The generation of school-aged children in Edina is expected to decline in the future (based on general demographic trends). •Approximately 18% of students currently enrolled in Edina #273 schools do not reside in the school district and attend due to “open enrollment” policies, •Edina residents (of child rearing age) that live in single-family homes create school-age children at a much higher rate than similar residents who live in multi-family housing (condominiums or apartments). In Minnesota, both school districts and municipalities levy an annual budget amount that is then distributed amongst the available tax base to be collected. The total amount of property taxes levied (and collected) by each taxing agency is not impacted when a property is located within a TIF District. Tax increment financing has been used in Minnesota for more than fifty years. Over the years, state legislation of TIF and other government financing has evolved to ensure that there is no negative impact when a City or HRA chooses to create a TIF District. Since Edina has used TIF to achieve strategic goals for 50 years, there are several redevelopment projects that can be referenced to illustrate the real world impact of tax increment financing on school districts. # # # Page 7 of 174 TIF & Minnesota School Finances City of Edina HRA Meeting August 15, 2024 Page 8 of 174 •Primary funding source for operating costs is state aid •Maximum authorized property tax levy authority is determined by state funding formulas •Districts can levy less, but not more than amount authorized by state, unless approved by voters 2 School District Funding Local $44,158,219 32.9% State $86,342,099 64.4%Federal $3,556,818 2.7% Other $40,000 0.0% Page 9 of 174 3 •School finance and property tax systems in Minnesota are complex Revenue primarily based on enrollment (not driven by tax base*) Property values increase = school district tax levy authority increase One exception – voter approved capital project/technology levies are based on tax rate Overview – School Property Tax Levy Authority / Page 10 of 174 4 •Referendum Market Value (RMV): Taxable market value of all taxable property in school district excluding seasonal recreational & agricultural lands School taxes for local share of a few categories of funding (including voter-approved operating referendum) are spread against RMV •Net Tax Capacity (NTC): Value of property in which property taxes will be levied against for all other school funding formulas Calculated by multiplying a property’s taxable market value by its assigned classification rate (as determined by the Legislature) Tax Base Definitions Page 11 of 174 5 Tax Base Composition Market Value Percent of Total Referendum Market Value Percent of Total Net Tax Capacity* Percent of Total Totals 12,589,471,841 100.0%12,558,628,168 100.0%151,694,205 100.0% Residential Homestead 8,834,190,366 70.2%8,824,161,568 70.3%95,940,723 63.2% Other Residential 2,257,223,275 17.9%2,236,835,500 17.8%25,991,304 17.1% Commercial / Industrial 1,497,631,100 11.9%1,497,631,100 11.9%29,762,178 19.6% Non Qualifying Agricultural - 0.0%- 0.0%- 0.0% Qualifying Agriculture - 0.0%- 0.0%- 0.0% Seasonal Recreational 427,100 0.0%- 0.0%4,271 0.0% - Operating Referendum - Local Optional Revenue - Transition and Equity Capital Project Levy 40% of Total Levy 60% of Total Levy School District: Edina Assessment Year 2022 (Taxes Payable 2023) Tax Base by Property Type All other school taxes including building bonds Page 12 of 174 6 Tax Base Composition Market Value Percent of Total Referendum Market Value Percent of Total Net Tax Capacity* Percent of Total Totals 15,077,969,702 100.0%14,912,930,460 100.0%192,159,420 100.0% Residential Homestead 7,829,360,191 51.9%7,805,889,849 52.3%79,893,484 41.6% Other Residential 3,671,094,011 24.3%3,556,241,011 23.8%41,816,956 21.8% Commercial / Industrial 3,550,799,600 23.5%3,550,799,600 23.8%70,447,935 36.7% Non Qualifying Agricultural - 0.0%- 0.0%- 0.0% Qualifying Agriculture 104,500 0.0%- 0.0%1,045 0.0% Seasonal Recreational 26,611,400 0.2%- 0.0%282,929 0.1% - Operating Referendum - Local Optional Revenue - Transition and Equity Capital Project Levy 32% of Total Levy 68% of Total Levy School District: Hopkins Assessment Year 2022 (Taxes Payable 2023) Tax Base by Property Type All other school taxes including building bonds Page 13 of 174 7 Tax Base Composition Market Value Percent of Total Referendum Market Value Percent of Total Net Tax Capacity* Percent of Total Totals 6,661,885,693 100.0%6,599,038,094 100.0%82,561,861 100.0% Residential Homestead 3,332,732,423 50.0%3,309,047,749 50.1%32,004,431 38.8% Other Residential 1,853,751,070 27.8%1,820,435,045 27.6%21,354,685 25.9% Commercial / Industrial 1,469,555,300 22.1%1,469,555,300 22.3%29,202,745 35.4% Non Qualifying Agricultural - 0.0%- 0.0%- 0.0% Qualifying Agriculture - 0.0%- 0.0%- 0.0% Seasonal Recreational 5,846,900 0.1%- 0.0%58,469 0.1% - Operating Referendum - Local Optional Revenue - Transition and Equity Capital Project Levy 39% of Total Levy 61% of Total Levy School District: Richfield Assessment Year 2022 (Taxes Payable 2023) Tax Base by Property Type All other school taxes including building bonds Page 14 of 174 8 •City / HRA creates a TIF district that results in new development & an increase in tax base with no change in enrollment… For RMV-based levies, there is an immediate impact of growth in RMV as the TIF property takes on a greater share of RMV levies Result to School District is revenue neutral,either: District will receive less from state aid and more from property taxes, or District will receive same state aid with a lower tax rate for existing taxpayers Impact of TIF on School Districts Page 15 of 174 9 •City / HRA creates a TIF district that results in new development & an increase in tax base with no change in enrollment… For capital project/technology levies, growth in NTC will cause an increase in revenue, but increase is deferred until TIF district is decertified For other NTC-based levies, effect on school district is deferred until TIF district is decertified. Then, result is revenue neutral. Either: District will receive less from state aid and more from property taxes, or District will receive same state aid with a lower tax rate for existing taxpayers Impact of TIF on School Districts Page 16 of 174 10 •Hypothetical Example: HRA returns unused tax increment during or upon decertification of a tax increment district County redistributes the amount to the City, County and School District according to their respective shares of the total local NTC tax rate •Per M.S. 127A.49 subdivision 3: School district’s aid and levy limitations are reduced for the fiscal year in which the excess tax increment is paid Applies to total amount of excess increments received by a school district for a calendar year that exceeds $25,000 In general, school funding formulas strive to maintain equity and are based on enrollment Excess Tax Increment Page 17 of 174 11 •School districts realize no loss of revenue as a result of a TIF district because state formulas are based on student enrollment •Tax base growth as result of TIF will reduce school tax rates for existing property owners TIF and School Funding Summary Page 18 of 174 12 •Financing tool to help HRA enable redevelopment and support affordable housing Interim use of incremental property tax revenue from an improved site Property taxes attributable to the original value, State and Fiscal Disparities, and Referendum Market Value are not captured Funds can be used to reimburse private redevelopment costs or fund public infrastructure supporting the development •Requires a Public Hearing process Prior notifications to County and School Boards HRA Tax Increment Overview Page 19 of 174 13 Example Property Tax Distribution Page 20 of 174 14 Edina TIF Example – Eden / Willson Entity Tax Base Type Pay 2024 Site Value % of Tax Base Value Increase % of Tax Base Tax Base Impact City of Edina Net Tax Capacity 185,733,490 39,778 0.02%845,810 0.46%Deferred until TIF Decertification Hennepin County Net Tax Capacity 2,649,525,401 39,778 0.00%845,810 0.03%Deferred until TIF Decertification Net Tax Capacity 150,599,269 39,778 0.03%845,810 0.56%Deferred until TIF Decertification Referendum Market Value 13,562,631,575 3,079,600 0.02%67,740,400 0.50%Immediate Impact Property Tax Base Impacts - Eden / Willson Redevelopment Edina Schools Pre-TIF TIF Project •Redevelopment of aging building (Perkins Restaurant and regional offices) Was: $3 million of declining tax value (equivalent to 0.02% of Edina’s tax base) Is Now: Mixed-use apartment and retail building at $70 million tax value TIF District is funding $5.1 million redevelopment and $6 million public roadway costs Property now expected to represent 23x greater share of School RMV tax base in 2025 Page 21 of 174 15 Edina TIF Example – Eden / Willson (continued) Pre-TIF: Contributing $88,914 in total property taxes $45,835 toward local levies $17,560 to school levies Estimated during TIF: $184,926 toward local levies $156,651 toward school levies (892% increase) $840,151 as TIF to fund TIF Note and Roadway costs After TIF Decertifies: $1,025,077 toward local levies Page 22 of 174 16 •Edina HRA uses TIF strategically as a tool to achieve growth Helped deliver projects that aligned with City priorities for public realm spaces, urban design, affordable housing, and sustainability Incentivized private investment in public realm improvements that enhance appearance, vibrancy/desirability, and connectivity within its built environment Sparked private investment to transform vacant, outdated and under- utilized land in commercial/industrial districts Provided funding for direct investment in public infrastructure and affordable housing Insights Page 23 of 174 17 Insights (continued) Edina Housing and Redevelopment Authority TIF Captured Tax Capacity Original Percentage 2022 2023 2024 Tax Capacity Increase Pentagon Park Redevelopment 504,115 531,009 1,179,006 691,608 170.5% Grandview 2 Redevelopment 544,061 613,247 815,730 39,890 2044.9% 66 West Housing 15,179 14,482 16,141 15,315 105.4% 50th & France 2 Redevelopment 570,589 733,711 831,948 57,986 1434.7% 44th & France 2 Renovation & Renewal 206,181 236,105 256,888 29,735 863.9% W. 76th Street Housing - 37,350 56,235 16,364 343.7% Amundson Housing 21,327 51,435 55,569 6,637 837.3% 4040 W. 70th Street Housing - - 10,105 69,270 14.6% 70th & France Renovation & Renewal - - - Eden / Willson Redevelopment - - - 72nd & France 2 Redevelopment - - - Total Captured TIF Tax Capacity 1,861,452 2,217,339 3,221,622 926,805 347.6% Total City Tax Capacity (Gross)169,928,228 190,473,325 205,645,781 Percentage of Tax Base in TIF 1.1%1.2%1.6% Actual TIF District District Type TBD TBD TBD TIF helps grow the tax base Page 24 of 174 18 AQ & Page 25 of 174 19 Ehlers is the joint marketing name of the following affiliated businesses (collectively, the “Affiliates”): Ehlers & Associates, Inc. (“EA”), a municipal advisor registered with the Municipal Securities Rulemaking Board (“MSRB”) and the Securities and Exchange Commission (“SEC”); Ehlers Investment Partners, LLC (“EIP”), an SEC registered investment adviser; and Bond Trust Services Corporation (“BTS”), a holder of a limited banking charter issued by the State of Minnesota. Where an activity requires registration as a municipal advisor pursuant to Section 15B of the Exchange Act of 1934 (Financial Management Planning and Debt Issuance & Management), such activity is or will be performed by EA; where an activity requires registration as an investment adviser pursuant to the Investment Advisers Act of 1940 (Investments and Treasury Management), such activity is or will be performed by EIP; and where an activity requires licensing as a bank pursuant to applicable state law (paying agent services shown under Debt Issuance & Management), such activity is or will be performed by BTS. Activities not requiring registration may be performed by any Affiliate. This communication does not constitute an offer or solicitation for the purchase or sale of any investment (including without limitation, any municipal financial product, municipal security, or other security) or agreement with respect to any investment strategy or program. This communication is offered without charge to clients, friends, and prospective clients of the Affiliates as a source of general information about the services Ehlers provides. This communication is neither advice nor a recommendation by any Affiliate to any person with respect to any municipal financial product, municipal security, or other security, as such terms are defined pursuant to Section 15B of the Exchange Act of 1934 and rules of the MSRB. This communication does not constitute investment advice by any Affiliate that purports to meet the objectives or needs of any person pursuant to the Investment Advisers Act of 1940 or applicable state law. Important Disclosures Page 26 of 174 RESIDENT ENROLLMENT PROJECTIONS Hazel H. Reinhardt August 22, 2023 Page 27 of 174 COVID -19 AFFECTS Minnesota public school enrollment in 2020-21 Kindergarten classes smaller as students were homeschooled, attended nonpublic schools or were “redshirted” Other elementary grades also lost students to home schools or nonpublic schools Middle school and high school enrollment less affected 2022-23 marks the third year that Minnesota (and U.S.) public school enrollment is below pre-Pandemic numbers Page 28 of 174 COVID -19 AFFECTS Edina Public Schools 2020-21 resident kindergarten slightly smaller than its “expected” size. However, since the Pandemic, kindergarten is at its “expected” size Students shifted to other education options Pandemic stimulated a substantial increase in residents attending nonpublic schools Resident nonpublic enrollment has been increasing for some time Since Pandemic, resident nonpublic enrollment has continued to increase There is a substantial increase in nonresidents; however, may not be Pandemic related Page 29 of 174 PROJECTION ENVIRONMENT Low fertility Number of births decreasing in U.S. and Minnesota Consensus among demographers that Pandemic will result in fewer births 2020 U.S. births lowest since 1979 but births up 1% in 2021; flat in 2022 Fertility varies by race/ethnicity Population aging Housing mix different; more apartments, condos, and townhomes Smaller percentage of households have children Population growing very slowly Page 30 of 174 PROJECTION ENVIRONMENT Less mobility U.S. fewer than 10 percent (8.4 percent) moved last year Was 20 per cent per year since WWII Immigration from abroad slowed Minnesota population back to pattern of net out migration Competition for students increasing Page 31 of 174 RESIDENT ENROLLMENT HISTORY From 2012-13 to 2022-23—Resident enrollment decline; more competition Resident enrollment (excluding Early Childhood) decreased by 476 students or -6.8% Estimated school-age population in district increased by 295 students or 3.5% (overstated) Total enrollment (excluding Early Childhood) increased by 188 students or 2.3% Nonresidents make up 22.5% of enrollment in 2022-23 Excluding tuition agreement students, the Edina Public Schools had a net gain of 1,395 students from other public options in 2022-23 Market share is 75.3% Competition for students increased since the Pandemic Page 32 of 174 EDUCATION CHOICES 2021-22 Minnesota Edina Public Schools Nonpublic settings 10.1%19.1% Traditional schools 7.2%18.7% Home schools 2.9%0.4% Public Options Open enrollment 9.0% In 22.0% Out 2.2% Charter schools 6.9%1.6% Capture Rate 74.0%75.3% Page 33 of 174 CHANGES SINCE 2012-13 ESTIMATED ENROLLED SCHOOL AGE POPULATION IN DISTRICT #191 Year Number 2012-13*8,433 2022-23 8,728 2012-13 overstated Page 34 of 174 ENROLLMENT Year Total Resident Nonresident 2012-13 8,290 7,047 1,243 2013-14 8,342 7,081 1,261 2014-15 8,404 7,082 1,322 2015-16 8,249 6,983 1,266 2016-17 8,474 7,195 1,279 2017-18 8,477 7,218 1,259 2018-19 8,390 7,085 1,305 2019-20 8,329 6,938 1,391 2020-21 8,244 6,639 1,605 2021-22 8,376 6,537 1,839 2022-23 8,478 6,571 1,907 Excludes Early Ch1ldhood Page 35 of 174 COMPONENTS OF RESIDENT ENROLLMENT CHANGE Fall to Fall Total Natural Increase/Decrease Net Migration#% 2012 to 2013 34 0.5 -2 36 2013 to 2014 1 0.0 -31 32 2014 to 2015 -99 -1.4 -123 24 2015 to 2016 212 3.0 30 182 2016 to 2017 23 0.3 -14 37 2017 to 2018 -133 -1.8 -46 -87 2018 to 2019 -147 -2.1 -78 -69 2019 to 2020 -299 -4.3 -76 -223 2020 to 2021 -102 -1.5 -71 -31 2021 to 2022 34 0.5 -9 43 Total -476 ----420 -56 Excludes Early Childhood Page 36 of 174 RESIDENT ENROLLMENT Grade 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 K 476 516 490 415 524 523 505 500 469 478 504 1 482 501 549 499 481 553 525 523 495 488 504 2 557 505 511 573 527 497 551 527 494 509 508 3 548 574 517 526 588 528 507 545 503 500 510 4 579 550 587 523 529 598 537 499 520 502 502 5 557 592 559 591 534 529 589 550 477 534 508 6 570 559 589 576 593 536 542 570 523 468 533 7 584 571 567 609 575 579 515 523 541 502 458 8 550 577 572 568 599 581 565 516 504 529 512 9 548 540 550 577 576 585 542 551 500 495 524 10 558 538 529 523 577 580 582 535 534 496 494 11 520 537 524 509 555 578 547 554 530 523 495 12 518 521 538 494 537 551 578 545 549 513 519 Total 7,047 7,081 7,082 6,983 7,195 7,218 7,085 6,938 6,639 6,537 6,571 Excludes Early Childhood Page 37 of 174 ENROLLMENT PROJECTIONS Both simple and complex Cohort Survival Method Students added Incoming kindergarten Students moving into the district or district residents transferring from other education options to the district’s schools Students subtracted Graduating seniors Students leaving the district’s schools either by moving out of the district or opting for a different education option Page 38 of 174 COHORT SURVIVAL METHOD PROJECTIONS Ages each grade by moving it to the next higher grade in the following year Must make kindergarten projections Resident births are a proxy Must make assumptions about net migration Survival rates Page 39 of 174 PROJECTIONS Assumptions underlying these projections The decline in resident births in Minnesota and Suburban Hennepin County will result in smaller kindergartens in the next several years Suburban Hennepin County’s share of Minnesota resident births likely to remain at current level or increase Edina Public Schools’ resident share of Suburban Hennepin County resident births will remain near its current level or decrease in the next five years Competition likely to increase Page 40 of 174 RESIDENT LIVE BIRTHS Year Minnesota Hennepin County Suburban Hennepin County 2006 73,515 16,780 10,223 2007 73,675 16,848 10,532 2008 72,382 16,566 10,212 2009 70,617 16,334 10,017 2010 68,407 15,955 9,854 2011 68,416 15,943 9,894 2012 68,783 16,345 10,294 2013 69,183 16,584 10,468 2014 69,916 16,770 10,536 2015 69,835 16,829 10,626 2016 69,746 16,485 10,400 2017 68,603 16,333 10,451 2018 67,348 15,844 10,152 2019 66,033 15,430 9,908 2020 63,451 14,835 9,541 2021 64,398 n.a.n.a. Page 41 of 174 DECLINE IN RESIDENT LIVE BIRTHS 2006-2020 -13.7% Minnesota -11.6% Hennepin County -6.7% Suburban Hennepin County 2021 U.S. up 1%. Minnesota up to 64,398 resident live births, no county data to date 2022 U.S. births flat; Minnesota likely to follow this pattern WHY? Decline in fertility rates Aging of the population Page 42 of 174 PROJECTED MINNESOTA 0-YEAR OLDS Year Projected Number Adjusted Number 2017 70,312 2017 Actual 68,603 2018 70,395 2018 Actual 67,348 2019 70,373 2019 Actual 66,033 2020 70,325 65,965 2020 Actual 63,451 2021 70,274 65,917 2021 Actual 64,398 2022 70,227 65,873 2023 70,191 65,814 2024 70,164 65,811 2025 70,161 65,811 Adjusted number is 93.8 percent of projected number Page 43 of 174 KINDERGARTEN AS A PERCENTAGE OF THE SUBURBAN HENNIPEN COUNTY KINDERGARTEN POOL Birth Years Pool Percentage Kindergarten Year 2006; 2007 10,430 4.56%2012-13 2007; 2008 10,318 5.00%2013-14 2008; 2009 10,081 4.86%2014-15 2009; 2010 9,908 4.19%2015-16 2010; 2011 9,881 5.30%2016-17 2011; 2012 10,162 5.15%2017-18 2012; 2013 10,411 4.85%2018-19 2013; 2014 10,513 4.76%2019-20 2014; 2015 10,596 4.43%2020-21 2015; 2016 10,475 4.56%2021-22 2016; 2017 10,534 4.78%2022-23 2017; 2018 10,251 2023-24 2018; 2019 10,037 2024-25 2019; 2020 9,662 2025-26 Page 44 of 174 RESIDENT KINDERGARTEN/BIRTH RATIOS Resident kindergarten assumptions Resident kindergarten/birth ratios Low is 4.77% (average of the past eleven years) High is 4.80% (average of the past eleven years omitting the Pandemic year) Longer -term—2026-27 through 2032-33 In past 15 years, Suburban Hennepin County resident births fluctuated but increased from 13.91% to 15.04% of Minnesota resident births. Assumed Suburban Hennepin County’s share would be 15.04 percent (average of past three years) in the next five years Page 45 of 174 RESIDENT KINDERGARTEN PROJECTIONS Year @4.77%@4.80% 2022-23 504 504 2023-24 489 492 2024-25 479 482 2025-26 461 464 2026-27 467 470 2027-28 473 476 2028-29 472 475 2029-30 472 475 2030-31 472 475 2031-32 472 475 2032-33 472 475 Total 4,729 4,759 Past ten years 4,989 resident kindergarten students Page 46 of 174 RESIDENT NET MIGRATION Resident net migration Positive pre-2017-18 and again this past year Most years a large inflow between K and Grade 1 and Grade 1 and Grade 2 No consistent net inflow at the beginning of middle school or high school. Atypical in Minnesota Beginning in 2016-17, net out migration between Grade 6 and Grade 7 and Grade 7 and Grade 8 Page 47 of 174 RESIDENT NET MIGRATION YEAR TO YEAR Grade 12 to 13 13 to 12 14 to 15 15 to 16 16 to 17 17 to 18 18 to 19 19 to 20 20 to 21 21 to 22 K to 1 25 33 9 66 29 2 18 -5 19 26 1 to 2 23 10 24 28 16 -2 2 -29 14 20 2 to 3 17 12 15 15 1 10 -6 -24 6 1 3 to 4 2 13 6 3 10 9 -8 -25 -1 2 4 to 5 13 9 4 11 0 -9 13 -22 14 6 5 to 6 2 -3 17 2 2 13 -19 -27 -9 -1 6 to 7 1 8 20 -1 -14 -21 -19 -29 -21 -10 7 to 8 -7 1 1 -10 6 -14 1 -19 -12 10 8 to 9 -10 -27 5 8 -14 -39 -14 -16 -9 -5 9 to 10 -10 -11 -27 0 4 -3 -7 -17 -4 -1 10 to 11 -21 -14 -20 32 1 -33 -28 -5 -11 -1 11 to 12 1 1 -30 28 -4 0 -2 -5 -17 -4 Total 36 32 24 182 37 -87 -69 -223 -31 43 Page 48 of 174 PROJECTEDRESIDENT SURVIVAL RATES Grade Low (Past 5 Years Omitting Pandemic Year) High (Past 4 Years Omitting Pandemic Year) K to 1 1.034 1.044 1 to 2 1.017 1.024 2 to 3 1.006 1.001 3 to 4 1.001 0.995 4 to 5 1.012 1.021 5 to 6 0.993 0.982 6 to 7 0.966 0.968 7 to 8 0.994 1.000 8 to 9 0.970 0.983 9 to 10 0.993 0.992 10 to 11 0.968 0.976 11 to 12 0.989 0.985 Page 49 of 174 EFFECT OF SURVIVAL RATES IN TEN YEARS WITH LOW K ASSUMPTION Survival Rates Total K-5 6-8 9-12 Past 5 Years Omitting Pandemic Year 6,325 2,962 1,460 1,900 Past 4 Years Omitting Pandemic Year 6,401 2,991 1,470 1,940 Page 50 of 174 RESIDENT ENROLLMENT PROJECTIONS In ten years (2032-33) Resident enrollment projected to decrease 2022-23 6,571 2032-33 6,323 to 6,432 or -3.8% to -2.1% Resident kindergarten projected to be larger than the previous year’s Grade 12 (natural increase). Projected natural increase a change from the recent past Resident net out migration projected to continue. Less than in the recent past Page 51 of 174 RESIDENT ENROLLMENT PROJECTIONS Year Low K Low Mig High K Low Mig Low K High Mig High K High Mig 2022-23 6,571 6,571 6,571 6,571 2023-24 6,512 6,515 6,525 6,528 2024-25 6,473 6,479 6,503 6,509 2025-26 6,433 6,442 6,473 6,483 2026-27 6,374 6,387 6,426 6,438 2027 -28 6,347 6,362 6,404 6,419 2028-29 6,370 6,389 6,431 6,450 2029-30 6,341 6,363 6,403 6,425 2030-31 6,337 6,362 6,406 6,432 2031-32 6,333 6,362 6,406 6,434 2032-33 6,323 6,354 6,401 6,432 Page 52 of 174 RESIDENT ENROLLMENT PROJECTIONS K-5 6-8 9-12 Total 2022-23 3,036 1,503 2,032 6,571 2027-28 Low K/Low Mig 3,005 1,508 1,833 6,347 High K/Low Mig 3,021 1,508 1,833 6,362 Low K/ High Mig 3,035 1,499 1,870 6,404 High K/High Mig 3,050 1,499 1,870 6,419 2032-33 Low K/Low Mig 2,962 1,460 1,900 6,323 High K/Low Mig 2,981 1,470 1,903 6,354 Low K/ High Mig 2,991 1,470 1,940 6,401 High K/High Mig 3,010 1,479 1,943 6,432 Excludes Early Childhood Page 53 of 174 ENROLLMENT PROJECTIONS What could make these projections Too high Projected kindergarten is too high More students opt for nonpublic schools Too low Projected kindergarten is too low Page 54 of 174 RESIDENT K-5 PROJECTIONS BY SCHOOL Background From 2017-18 to 2022-23, resident K-5 decreased by 192 students or -5.9 percent Dual Spanish Immersion at Countryside Two sections of resident kindergarten added in 2022-23. Will ramp up to Grade 5 Increases enrollment at Countryside Normandale resident kindergarten not held at a constant number Page 55 of 174 COHORT SURVIVAL METHOD PROJECTIONS RESIDENT K-5 High Kindergarten/High Migration School 2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 Concord 558 546 531 518 513 509 Cornelia 453 444 439 430 419 411 Countryside 431 470 512 543 582 621 Creek Valley 505 525 535 540 527 534 Highlands 437 431 428 416 420 413 Normandale 636 631 623 612 593 566 Edina Virtual Pathways 16 Sum 3,036 3,047 3,068 3,059 3,054 3,054 District-wide 3,036 3,063 3,075 3,063 3,058 3,050 Difference 0 -16 -7 -4 -4 4 Page 56 of 174 NEW HOUSING Relationship between housing and K-12 enrollment is complex Unit type affects school age child per unit yield Newer single-family detached units yield more students per unit than older single-family detached units As single-family detached units sell, student yield usually increases in the new units. In older units, yield is likely to decrease Market value of single-family detached units affect yield. Moderately to higher priced units have higher per unit yield Senior units—no students Page 57 of 174 YIELD PER UNIT TYPE Results of studies in four states—Minnesota, Wisconsin, Illinois, and Colorado Single family detached K-12 yield varies by school district and by attendance area within school districts Townhome yield is very consistent across all school districts across states —0.22 Apartments yield is very consistent across all school districts across states —0.11 to 0.15 Condominiums yield almost no school age children— 0.02 to 0.05 Page 58 of 174 d ITEM REPORT Date: August 15, 2024 Item Activity: Action Meeting: Housing & Redevelopment Authority Agenda Number: 7.2 Prepared By: Bill Neuendorf, Economic Dev Mgr Item Type: Report & Recommendation Department: Community Development Item Title: 7235 France Avenue - Recommended Terms of Tax Increment Financing Action Requested: Authorize staff to engage Dorsey & Whitney and Ehlers Associates to draft a TIF Redevelopment Agreement (based on the Term Sheet) for the 7235 France Avenue site to be presented to the HRA Board and City Council for consideration after the pending site plan secures final approval. Information/Background: This item pertains to the potential redevelopment of commercial property located at 7235 France Avenue. The development proposal from Enclave Companies and Lifestyle Communities received preliminary rezoning approval on June 18, 2024 with final rezoning approvals scheduled for consideration on September 17, 2024. The developer has requested that the City and HRA consider the use of Tax Increment Financing to provide a supplemental revenue source for over $20 million of public improvements and other site improvements that yield substantial benefit to the general public. After evaluation of the financial pro formas by City staff and Ehlers Associates, it is confirmed that "but for" the use of TIF, the proposed project will not yield minimum market returns and will not be financed or built. The use of TIF could attract nearly $300 million of private investment to this site which is a tremendous enhancement to the tax base. The general terms and conditions under which TIF is recommended to be used on this site are outlined in the Term Sheet. The Term Sheet has been prepared by City staff with guidance and expertise from Dorsey & Whitney and Ehlers Associates. Several additions have been made to the previous version of the Term Sheet. The recommended changes are shown in the strike-out and underline format. The developers are agreeable to the revised Term Sheet. Staff recommends that the Term Sheet be approved and seeks authorization to engage Dorsey & Whitney and Ehlers Associates to draft a TIF Redevelopment Agreement for the 7235 France Avenue site. After the project secures final zoning approvals, the TIF Redevelopment Agreement will be presented to the HRA Board and City Council for consideration. Resources/Financial Impacts: This item has no direct cost to the City or HRA. The cost of the third-party work will be borne by the developer. Relationship to City Policies: Affordable Housing Policy, Sustainable Buildings Policy, Tax Increment Financing Policy Page 59 of 174 Supporting Documentation: 1. 7235 France TIF Term Sheet Staff-Report 8-15-2024 2. 7235 France - Term Sheet presentation 8-15-2024 3. TIF Term Sheet - 7235 France Avenue updated 8-15-2024 4. 7235 France - HRA background info 8-15-2024 5. 7235 France Av Enclave final proposal excerpts 8-9-2024 for reference only 6. Edina TIF Policy - approved 12-20-2022 Page 60 of 174 August 15, 2024 Chair and Commissioners of Edina Housing & Redevelopment Authority Bill Neuendorf, Economic Development Manager 7235 France Avenue – Recommended Terms of Tax Increment Financing Information / Background: Introduction This Report and Recommendation was previously discussed by the HRA Board on July 25, 2024. This staff report and the attached Term Sheet has been modified to address questions and concerns raised by the HRA Board. Information has been added to address general HRA policy regarding Tax Increment Financing (TIF) and changes have been made to the Term Sheet. Background Information about the Development Proposal Enclave Companies and Lifestyle Communities are the developers for the 8-acre commercial site located at 7235 France Avenue. The site is currently occupied by the Macys (formerly Daytons) Furniture Store which was constructed in 1977. Nearly half of the site is paved as a surface parking lot. Prior to the furniture store, the site was part of a gravel & sand pit operation. The developers have the property under contract to purchase from the current owner. They successfully secured preliminary approval (June 18, 2024) to rezone the property to allow four separate buildings to be constructed on the site. This plan will subdivide the “super block” into three parcels (and four building pads) that are rescaled to create a more traditional grid layout that encourages walkability and a more connected sense of community. After the furniture store relocates into an updated facility, the existing building will be razed and the site prepared for new construction. The site will be subdivided. New roads, sidewalks and bicycle trails will become the transportation backbone of the project. This new infrastructure will retain and create internal routes for cars, trucks, pedestrians and bicyclists. The new roadway will create a new alternative for local traffic that could relieve some of the pressure on busy France Avenue. After the site is cleared and prepped, four new building pads will be constructed. Housing and Redevelopment Authority Established 1974 Page 61 of 174 STAFF REPORT – 7235 France - Recommended TIF Term Sheet Page 2 •The northwest pad of the property is intended to be redeveloped with a 7-story building with new office space, new retail space, and new apartments. •The east parcel is intended to be occupied by two separate buildings. The northeast pad is intended to become a new 7-story apartment building and the southeast pad is intended to become a separate 7-story apartment building with commercial space for a restaurant. •The southwest pad is intended to be an 11-story condominium building with Class A office space, street level commercial space and residential condominiums. Upon completion, this project will completely transform the outdated 1970’s commercial site into a modern mixed use destination. The final project is expected to achieve many community goals and deliver many benefits to the general public. It should be noted that the City’s expectations and policies applied to Planned Unit Development (PUD) rezonings increase the developers costs to build and operate the project. The requirements for new public realm space, affordable housing and improved sustainable design compounds the project cost in a marketplace where construction and financing costs are already very high. While the PUD process allows for flexibility in the site plan, height and density to accommodate modern development trends, this increased density does not fully counterbalance the costs to deliver the project. Additionally, this project, like nearly all redevelopment projects in Edina require millions of dollars to clear the site and prepare it for new construction. The site also poses challenges due to unsuitable backfill from the former use as a gravel and sand pit. Two neighboring commercial properties also hold private easements to travel through portions of the site. Accommodation of those existing conditions also adds cost to the project. At this time, all these costs hinder the ability of the developer to finance the project. But for the pledge of TIF, the developer will be unable to finance and deliver the project. As the HRA Board considers the Term Sheet and use of TIF to enable this project, it might be useful to frame your decision in light of the following: Does the completed project deliver a level of public benefits as defined by City standards and policies that warrant the use of Tax Increment Financing? The public benefits are summarized in the staff presentation and will be fully articulated in a future Redevelopment Agreement. TIF Policy in Edina Edina’s policy on the use of tax increment financing was updated in December 2022. A copy of the policy is attached for reference. Page 62 of 174 STAFF REPORT – 7235 France - Recommended TIF Term Sheet Page 3 This policy was intentionally written to coincide with the City’s typical development review process. Consideration of a Term Sheet should occur after preliminary zoning approvals. Execution of a TIF Redevelopment Agreement should occur after final zoning approvals. Of course, the use of TIF is subject to the ‘but for’ test. The TIF policy is strategically written to avoid creating prescriptive programs. This is done so that the City and HRA avoid creating the illusion that all development projects will be supported with TIF. Edina strives to use TIF sparingly and strategically to enable private investment to occur that otherwise would not. The TIF policy is also written to provide a wide range of flexibility to the City and HRA so that a variety of public benefits can be delivered. Flexibility is important since development sites and projects can vary dramatically and to be responsive to the constantly changing financial marketplace. Final Rezoning Scheduled for September 17, 2024 The developer submitted updated plans and related documents to the City in support of their request to achieve “final rezoning”. These documents will be available online at www.BetterTogetherEdina.org . Excerpts from the updated plans are attached for reference. Action on the final rezoning by the City Council is scheduled for September 17, 2024. If the City Council grants the “final rezoning”, staff recommends that a public hearing be held to consider establishing a new TIF District to enable the project to be financed. If final zoning approvals are denied, there is no need to consider a new TIF District. Summary of Recommended Term Sheet Overview - A Term Sheet has been prepared to articulate responsibilities and expectations from both parties. This Term Sheet is intended to identify essential criteria and key topics related to redevelopment of this site. The Term Sheet is not intended to include every detail. If the HRA Board is generally supportive of the Term Sheet, staff will engage external advisors to draft a complete Redevelopment Agreement. This future Agreement will contain much more detail than the Term Sheet. The Redevelopment Agreement is anticipated to be presented for consideration by the HRA and City later this fall so that the developer can proceed with acquiring the real estate. An updated Term Sheet is included in the packet. The strikeout and underline format has been used to clearly identify the changes since the previous discussion on July 25, 2024. A high level summary of the fundamental criteria and expectations follow: Three Projects on One Large Site - Redevelopment of each of the three parcels will be financed and constructed as independent projects. While work on all parcels is intended to move as quickly as possible, after the land is acquired and the site is cleared, phased construction may be necessary for such a large site. The financing and construction of each of the three projects is subject to market conditions. Page 63 of 174 STAFF REPORT – 7235 France - Recommended TIF Term Sheet Page 4 Private Financing for Construction - The developers intend to invest approximately $298 million of private debt and equity to fully transform the site. The capital stack includes outside equity, internal equity and traditional debt. Each developer has tentatively identified their likely equity investors. And each developer has strong business relations with financial institutions that are willing to provide the debt to construct the projects. This private investment, however, is subject to expectations for market-rate returns. Due to the lack of public infrastructure on the site and high cost to build the projects, the use of Tax Increment Financing appears necessary to achieve market returns. The developers alerted staff to the high costs early in the planning process. They formally requested that TIF be considered as the proposal moved through the regulatory review process. In recent months, staff has met with the developer to understand the financing strategy for each of the buildings. Staff has engaged legal and financial advisors at Ehlers Associates and Dorsey & Whitney to scrutinize the financial pro forma and prepare terms and conditions by which TIF could be used to support the redevelopment of this site. While these advisors work for the City and HRA, the cost of this work has been borne by the developers. Changes to Term Sheet – Several changes and clarifications are included in the updated Term Sheet. These include: •Clarify purpose and intent of Term Sheet •Clarify the pending nature of ‘final” zoning approvals •Clarify the application of the ‘but-for’ test •Clarify the ‘placeholder’ nature of the preliminary site plans in the Attachment •Increase term of affordable housing •Include provisions to avoid “flipping” affordable condominiums by first owner •Improve access to / from the public parking •Amplify the importance of securing grants •Address fair labor standards •Address design standards for handicapped accessibility Evaluation by HRA Public Finance Advisor - Ehlers has scrutinized the financial pro formas for each building and the total project. Based on current estimates, Ehlers has determined that the financial gap is approximately $22.87 million. This amount may change slightly as the project costs are fine- tuned. Ehlers also confirmed that “but for” the use of TIF, a project of this scale and caliber will be unable to secure private financing and would not proceed. Ehlers has also evaluated the anticipated change in property tax capacity of this transformational redevelopment project. The taxable valuation is anticipated to increase by a factor of 20x. The actual property taxes paid upon stabilization of all buildings are anticipated to increase by a factor of 10x. In addition to the sheer amount of new taxes paid, the change from commercial to multi-family creates a dramatic shift to benefit local taxing agencies (primarily school district, city and county). This change in land use proportionally reduces the amount of taxes paid into the regional fiscal Page 64 of 174 STAFF REPORT – 7235 France - Recommended TIF Term Sheet Page 5 disparity pool and increases the proportional amount paid to local taxing agencies. While this shift is initially deferred for the City and County, the School District will receive more tax value immediately after the projects stabilize. When the TIF District terminates, all of the deferred value will be shifted to the local taxing agencies. Drafting by HRA Legal Advisor - Dorsey has prepared a Term Sheet that abides by applicable Minnesota Statutes that govern Tax Increment Financing. These terms also follow Edina’s TIF policy and practice which is typically more limited than allowed by Minnesota Statute. The Term Sheet articulates the fundamental structure of public financing for this redevelopment site. The developers and City staff are mutually supportive of the terms and conditions expressed in this Term Sheet, including the recent changes. Both parties recognize that the Term Sheet is based on current estimates and assumptions. Some of these estimates may change due to ongoing changes in the project design and constant change in the construction and financing industries. All parties understand that several financing details will need to be refined and reevaluated in order to craft an effective Redevelopment Agreement. The Term Sheet follows the general format and strategic approach typically used by Edina for redevelopment projects that include a mixture of uses and a wide variety of public benefits. Financial Risk Borne by Developer - The structure of the Term Sheet maintains all financial risk with the developer. The developer will provide up front financing. TIF will only be used to reimburse the project for pre-determined eligible costs after each phase of the project is successfully completed. Potential funding for Bicycle and Pedestrian Crossing - One unique benefit of this proposal is the creation of a funding source for new City infrastructure. Up to 25% of the tax increment could be retained by the City to cover administrative expenses and to be pooled for construction of infrastructure (potentially the France Avenue pedestrian crossing). If the HRA declines to fund that project, the funds could be available for other eligible infrastructure projects or to fund additional affordable housing. In conclusion - Staff recommends that the Term Sheet be approved. Staff also seeks authorization to continue to work with Ehlers Associates and Dorsey & Whitney to draft a TIF Redevelopment Agreement based on the approved terms. The Agreement will be presented to both the City and HRA for future consideration after the proposal receives its final zoning approvals and concurrently with a proposal to establish a new TIF District. Recommended Action: Approve the Term Sheet and authorize staff to work with legal and financial advisors to draft a TIF Redevelopment Agreement based on the approved term with the understanding that the draft Agreement will be presented to the City and HRA for consideration in the future. # # # Page 65 of 174 7235 France Avenue Recommended Terms of Tax Increment Financing Report to Edina Housing & Redevelopment Authority August 15, 2024 Prepared by: Bill Neuendorf, Economic Development Manager Page 66 of 174 Project Location Cedars Apartments YMCA Galleria Target Lunds / Byerlys Cornelia Elementary Southdale Library 7235 France Centennial Lakes School District 280 2 School District 273 _____________________ Housing & Redevelopment Authority Page 67 of 174 Existing Conditions •8-acre site •Constructed 1977 •Occupied commercial building •Deemed ‘sub-standard’ and eligible for TIF designation per MN Statute •Under contract for sale by Macy’s 3 _____________________ Housing & Redevelopment Authority Page 68 of 174 Essential Ingredients for Successful Redevelopment Project Current Status – July / August 2024 1) Property ownership Active contract to purchase land 2) Regulatory approvals Zoning entitlement Preliminary zoning approved; final zoning pending Fall 2024 3) Financing Equity investors In progress - multiple interested parties Construction debt In pro gre ss - multiple interested parties HRA, EDA and/or grant support Recommended by staff; Under consideration by HRA Board 4 _____________________ Housing & Redevelopment Authority Page 69 of 174 Development Team •Fargo ND based •Established 2011 •Unified real estate investment firm with in-house development, construction & management •150+ projects; 34 in Minnesota •www.EnclaveCompanies.com •Edina MN based •Established 2008 •Focus on active-adult cooperatives and condominium development •45 completed projects •www.ThisLifestyle.com 5 _____________________ Housing & Redevelopment Authority Page 70 of 174 Preliminary Site Plan •Submitted for Rezoning Consideration March 2023 •Proposal modified to reflect input received during 15-month review process •Recommended for Approval by Planning Commission May 22, 2024 •Submitted Request for Tax Increment Financing May 30, 2024 •Preliminary Rezoning Approved by City Council June 18, 2024 with conditions •Final Rezoning and Site Plan Approval anticipated September/October 2024 Preliminary 6-18-2024 Site Plan, pending final approval 6 _____________________ Housing & Redevelopment Authority Page 71 of 174 Preliminary Renderings Preliminary Rendering 6-18-2024, pending final approval 7 _____________________ Housing & Redevelopment Authority Page 72 of 174 Preliminary Renderings Preliminary Rendering 6-18-2024, pending final approval 8 _____________________ Housing & Redevelopment Authority Page 73 of 174 Preliminary Renderings Preliminary Rendering 6-18-2024, pending final approval 9 _____________________ Housing & Redevelopment Authority Page 74 of 174 Preliminary Renderings Preliminary Rendering 6-18-2024, pending final approval 10 _____________________ Housing & Redevelopment Authority Page 75 of 174 TIF can be used to Leverage Private Investment and Achieve Public Benefits •Proposal is responsive to Southdale Design Guidelines •Subdivide ‘superblock’ •Prioritize ‘public realm’ •Integrate mixed uses •Minimize surface parking •Implement Sustainable Buildings Policy •Implement Affordable Housing Policy •Structured parking for shared visitor use •New public realm spaces with sidewalks, plazas and outdoor spaces •Facilitate future grade-separated pedestrian crossing •Retain Nine Mile Creek Bike Trail •Other fiscal contributions •Property tax base •Park dedication fees •SAC/WAC fees 11 _____________________ Housing & Redevelopment Authority Page 76 of 174 Public Benefits can be Achieved – Multi-modal Transportation Improvements •Permanent easements for new roadways, bike routes and sidewalks •Privately owned and maintained •Increases level of connectivity •Distributes traffic among multiple routes •Reduce congestion on France Avenue •Provides access within the site •Enhances access for adjacent parcels 12Preliminary Image from June 18, 2024 for Reference Only _____________________ Housing & Redevelopment Authority Page 77 of 174 Public Benefits can be Achieved – Public Art •Public art on each building site •Combination of mural and sculptures •Privately owned and maintained •Secured with covenant •Selected with community input •$540,000+ budget 13Preliminary Image from June 18, 2024 for Reference Only _____________________ Housing & Redevelopment Authority Page 78 of 174 Public Benefits can be Achieved – Public Realm Spaces •Roadways •Sidewalks •Bike routes •Landscape & seating areas •Promenade extension •Access to future France Avenue Ped. Crossing •Nearly 50% of site 14Preliminary Image from June 18, 2024 for Reference Only _____________________ Housing & Redevelopment Authority Page 79 of 174 Public Benefits can be Achieved – Opportunity for France Ave. Pedestrian Crossing incremental taxes set aside for City administrative and infrastructure expenses such as Pedestrian Crossing 25% 15 _____________________ Housing & Redevelopment Authority Page 80 of 174 Public Benefits can be Achieved – Affordable Housing Policy NW Element (Lot 1) •13 rental units •Mix of studio, 1- and 2-bedroom units •Priced to 50% AMI households •20-25 year term, minimum East Element (Lot 2) •23 rental units in NE •18 rental units in SE •Mix of studio, 1-bed and 2-bedroom units •Priced to 50% AMI households •20-25 year term, min. SW Element (Lot 3) •5 condominium units •1-bedroom units •Priced to 80% AMI households 16 _____________________ Housing & Redevelopment Authority Page 81 of 174 Public Benefits can be Achieved – Public Parking •Zero public parking currently available •Approx 140+ stalls •Identified as ‘public parking’ 17Preliminary Image from June 18, 2024 for Reference Only _____________________ Housing & Redevelopment Authority Page 82 of 174 Public Benefits can be Achieved – Sustainable Buildings Policy 18Preliminary Image from June 18, 2024 for Reference Only _____________________ Housing & Redevelopment Authority Page 83 of 174 Public Benefits can be Achieved – Advancing Diversity and Equity Goals •Goals identified for each Lot •Portion of work awarded to qualified MBE and WBE companies •Portion of total job hours filled by BIPOC •Portion of total job hours filled by women •Good faith efforts required •Developers must submit and abide by “Equity and Outreach Plan”, monitor progress and report results •Penalty only if no effort made Image Source: Commercial Construction and Renovation 19 _____________________ Housing & Redevelopment Authority Page 84 of 174 Staff Evaluation – Potential Tax Base Growth Current conditions (2024) Estimate after redevelopment (2030) Estimated Growth Estimated Market Value $12.1 M $244.43 M 20x Annual Property Taxes Paid $348,609 $3,640,000 10x •Over 25 years, approximately $68 million of incremental taxes could be generated •This cash flow has net present value of approx. $30 million that could be split among City and developer to pursue goals identified in a TIF Plan •This degree of growth would not happen if the site was kept “as is”, remodeled or rebuilt as a series of commercial buildings •Transformational redevelopment projects of this scale and caliber deliver a tremendous boost to the tax base 20 _____________________ Housing & Redevelopment Authority Page 85 of 174 Staff Evaluation – Potential Tax Base Growth Taxing Authority Current Tax Collection (Pay 2024) Projected Tax Collection Active TIF District Post-TIF District City of Edina $45,206 13%$45,206 $858,563 24% Hennepin County $57,739 17%$57,739 $1,096,605 30% Richfield Schools #280 -Market Value Levy -Tax Capacity Levy $62,752 18%$443,375 $1,201,452 33% State of Minnesota $70,302 20%$123,056 $123,056 3% Fiscal Disparities Pool $103,177 30%$181,798 $181,798 5% Other Taxing Authorities $9,432 3%$9,432 $179,149 5% TIF District -TIF Note reimbursement, (75%) and -City-commissioned public infrastructure (25%)- $2,780,017 - Estimated Total = $348,609 $3,640,624 $3,640,624 21 NOTE: For discussion purposes only; presumes tax rates hold steady and does not include inflation _____________________ Housing & Redevelopment Authority Page 86 of 174 Staff Evaluation – Sources and Uses Lot 1 – NW parcel by Enclave Source of Funds Amount First mortgage $ 33,960,000 60% Investor cash Grants $ 22,640,000 $ TBD 40% Total $56.6 M Uses of Funds Amount Land acquisition $ 4.6 M 8% Hard Costs / Construction $ 41.4 M 73% Permits/fees $ 1.75 M 3% Soft Costs $ 2.93 M 5% Financing Costs $ 2.5 M 4% Developer Fee $ 2.28 M 4% Escrows / Reserves $ 1.18 M 2% Total $ 56.6 M •Internal and external investors are prepared to contribute equity •Banks showing solid interest in providing construction financing 22 _____________________ Housing & Redevelopment Authority Page 87 of 174 Staff Evaluation – $56.6 Million Investment Pro Forma Lot 1 – operating expenses and investment returns Lot I (NW mixed use site)Upon Stabilization Residential Income (124 units) Commercial Income (22,500 sq ft) Effective Gross Income = $ 3,436,992 $ 867,510 $ 4,304,502 Operating Costs, Management Costs, Taxes Total Expenses = $ 1,188,207 Net Operating Income (NOI) + TIF Note Payment NOI (with TIF Assistance) = $ 3,116,294 $ 317,006 $ 3,433,300 Total Development Cost = $ 56,600,000 Cash on Cost Annual Return (without TIF) = 5.51% BELOW MARKET Cash on Cost Annual Return (with TIF) = TBD NEED TO REACH MARKET RETURN Without TIF support, the NW Element does NOT appear to be viable 23 Concept Rendering ONLY _____________________ Housing & Redevelopment Authority Page 88 of 174 Staff Evaluation – Sources and Uses Lot 2 – NE and SE parcel by Enclave Source of Funds Amount First mortgage $ 88,440,000 60% Investor cash Grants $ 58,960,000 $ TBD 40% Total $147.4 M Uses of Funds Amount Land acquisition $ 14.68 M 10% Hard Costs / Construction $ 105.53 M 71% Permits/fees $ 5.6 M 4% Soft Costs $ 5.5 M 4% Financing Costs $ 9.7 M 7% Developer Fee $ 4.75 M 3% Escrows / Reserves $ 1.68 M 1% Total $ 147.4 M •Internal and external investors are prepared to contribute equity •Banks showing solid interest in providing construction financing 24 _____________________ Housing & Redevelopment Authority Page 89 of 174 Staff Evaluation – $147.4 Million Investment Pro Forma Lot 2 – operating expenses and investment returns Lot 2 (NE and SE mixed use site)Upon Stabilization Residential Income (399 units) Commercial Income (4,100 sq ft) Effective Gross Income = $ 12,292,757 $ 81,047 $ 12,373,804 Operating Costs, Management Costs, Taxes Total Expenses = $ 4,277,393 Net Operating Income (NOI) + TIF Note Payment NOI (with TIF Assistance) = $ 8,096,411 $ 1,129,732 $ 9,226,143 Total Development Cost = $147,400.000 Cash on Cost Annual Return (without TIF) = 5.49% BELOW MARKET Cash on Cost Annual Return (with TIF) = TBD NEED TO REACH MARKET RETURN Without TIF support, the East Element does NOT appear to be viable 25 Concept Rendering ONLY Concept Rendering ONLY _____________________ Housing & Redevelopment Authority Page 90 of 174 Staff Evaluation – Sources and Uses Lot 3 – SW parcel by Lifestyle Communities Source of Funds Amount Commercial mortgage Residential mortgage $ 19,718,400 $ 40,129,469 63% Commercial equity Residential equity Grants $ 13,145,600 $ 21,608,176 $ TBD 37% Total $94.6 M Uses of Funds Amount Land acquisition $ 6.43 M 7% Hard Costs / Construction $ 68.0 M 72% Permits/fees $ 1.2 M 1% Soft Costs $ 5.8 M 6% Financing Costs $ 8.4 M 9% Developer Fee $ 4.8 M 5% Total $ 94.6 M•Internal and external investors are prepared to contribute equity •Banks showing solid interest in providing construction financing 26 _____________________ Housing & Redevelopment Authority Page 91 of 174 Staff Evaluation – $94.6 Million Investment Pro Forma Lot 3 – operating expenses and investment returns Lot 3 (SW mixed use site)Upon Stabilization Residential Income (49 units) Commercial Income (48,320 sq ft) Effective Gross Income = $ 236,904 $ 2,498,819 $ 2,735,723 Operating Costs, Management Costs, Taxes Total Expenses = $ 563,964 Net Operating Income (NOI) + TIF Note Payment NOI (with TIF Assistance) = $ 2,171,759 $ 415,759 $ 2,587,518 Total Development Cost Residential Unit Sales Adjusted Development Cost = $ 94,601,645 - $ 52,943,114 $ 41,658,531 Cash on Cost Annual Return (without TIF) = 5.21% BELOW MARKET Cash on Cost Annual Return (with TIF) = TBD NEED TO REACH MARKET RETURN Without TIF support, the SW Element does NOT appear to be viable 27 Concept Rendering ONLY _____________________ Housing & Redevelopment Authority Page 92 of 174 Staff Evaluation – Project Costs eligible for TIF Reimbursement •More than $100 M of project costs are TIF qualified per MN LAW •Edina’s TIF policy is more restrictive and allows only expenses that are uniquely burdensome to the site and expenses that deliver public benefit to be reimbursable with incremental tax payments Expenses Eligible for Reimbursement via TIF Notes Estimated Costs Total Lot 1 NW Lot 2 E Lot 3 SW 1. Demolition and site preparation $5.49 M $1.0 M $2.9 M $1.2 M 2. Site improvements (public realm)$6.67 M $1.2 M $3.9 M $1.6 M 3. Public parking $4.65 M $0.5 M $2.6 M $1.6 M 4. Affordable housing $8.60 M $1.67 M $5.70 M $1.23 M 5. Professional fees, TIF $200k $38k $112k $50k 6. Professional fees, public use items $1.20 M $241k $629k $331k 7. Private parking, structural foundations, land acquisition (see notes below) $0 $0 $0 $0 Total =$26.82 M $4.67 M $15.79 M $6.02 M Anticipated Maximum TIF Note Amount $22.874 M $4.56 M $12.34 M $5.97 M 28 _____________________ Housing & Redevelopment Authority Page 93 of 174 Recommended Terms – Developer secures up front funding Developer is required to … 1)Secure all entitlement and zoning approvals 2)Bear ALL financial risk •Incur all cost of City / HRA advisors 3)Acquires land from seller 4)Secure private debt and equity •Lot 1 = $56.6 M by Enclave •Lot 2 = $147.4 M by Enclave •Lot 3 = $94.6 M by Lifestyle Communities 5)Pursue grants from DEED, Met. Council & Hennepin County 6)Finance and construct as three distinct assets 7)Issue public easements upon completion at no cost 8)Maintain the site including private and public portions 29 _____________________ Housing & Redevelopment Authority Page 94 of 174 Recommended Terms – Additional deliverables for Developer Developer to convey all public benefit site improvements with binding easements and covenants 1)Public parking stalls •Located on street level of all three lots 2)Affordable Housing •Located on all three lots 3)Public Realm Spaces •Internal roadways •Nine Mile Creek bike trail •Sidewalks •Landscaped and streetscaping areas •Public art •Extension of Promenade Plaza between buildings •Connection to future Pedestrian Crossing, if approved by City/HRA 30 _____________________ Housing & Redevelopment Authority Page 95 of 174 Recommended Terms – HRA / City Public Financial Participation 31 1)Establish 25-year Redevelopment TIF District (after mandated process) 2)Pledge adequate reimbursement to secure private financing without over-subsidizing •Pledge up to $4.56 million Pay Go Note for Lot 1 (8% of TDC) •Pledge up to $12.34 million Pay Go Note for Lot 2 (8% of TDC) •Pledge up to $5.97 million Pay Go Note for Lot 3 (6% of TDC) •Total pledge not to exceed approximately $22,874,000 •Final amount based on actual demonstrated costs and not to exceed a reasonable market return •Pay Go Notes bear interest 3)City to retain 25% of incremental taxes for administration and infrastructure 4)City and HRA to bear NO financial risk on Pay Go Notes •Notes payable AFTER completion of each lot •Notes payable only from incremental taxes collected from each lot _____________________ Housing & Redevelopment Authority Page 96 of 174 Recommended Terms – Lookback and Clawback Safeguards Lots 1 & 2 (Enclave) 1)Lookback upon sale or 20 years after issuance, whichever is first 2)Note payments terminate and clawback applies if excessive returns realized 3)Clawback not to exceed value of TIF payments made Lot 3 (Lifestyle Communities) 1)Lookback upon sale 2)Note payments terminate and clawback applies if excessive returns realized 3)Clawback not to exceed value of TIF payments made 32 In accordance with Edina’s TIF Policy, lookback conditions will be identified in the Redevelopment Agreement. Typical lookback and clawback conditions include: _____________________ Housing & Redevelopment Authority Page 97 of 174 Summary •The redevelopment proposal has been recommended to be approved by Planning Commission and granted preliminary zoning approval by City Council; final approval is pending •The proposal yields many public benefits that would not otherwise be achieved on this site •Sufficient revenue generated to make the project viable while retaining 25% for City infrastructure improvements •Independent review of the budgets and pro formas confirm the “but for” test •The proposal is unable to be privately financed without a pledge of TIF assistance •The site qualifies as a substandard or blighted property that qualifies for TIF designation •Term Sheet has been negotiated in accordance with Edina’s TIF Policy and in the best interest of the community 33 _____________________ Housing & Redevelopment Authority Page 98 of 174 Questions to Consider 1)Does the proposed Enclave redevelopment project deliver a suitable degree of public benefits? 2)Is the use of TIF Pay Go Notes warranted to allow these public benefits to be delivered? If not … •Should the City’s policies and standards be relaxed to allow the redevelopment to be financed without TIF? •Should other public financing alternatives be considered to make the proposal feasible? 34 _____________________ Housing & Redevelopment Authority Page 99 of 174 Recommended Actions Staff recommends that the HRA take the following actions: 1)Authorize staff to draft a complete TIF Redevelopment Agreement based on the attached Term Sheet. •Draft TIF Agreement to be presented to the HRA Board and City Council for discussion and final consideration in Fall 2024. •Approval of the TIF Agreement is contingent upon City Council granting final rezoning and site plan approvals. Also contingent upon approving new TIF District. - A verbal authorization to proceed is sufficient 2) Initiate the 2-3 month process to consider a new 25-year TIF Redevelopment District - Resolution 2024-06 will follow as a separate action. Staff, City advisors & developers are available for any questions. 35 _____________________ Housing & Redevelopment Authority Page 100 of 174 7235 France Redevelopment Proposed Term Sheet – Tax Increment Financing DRAFT FOR HRA 7.25.24AUGUST 15, 2024 HRA BOARD DISCUSSION NOTE: The initial Term Sheet has been revised in “strikeout and underline” format. Changes and clarifications have been made to reflect the questions and concerns expressed at the July 25, 2024 HRA Board Meeting. 1) Purpose and Scope a.Purpose of Term Sheet - This Term Sheet identifies basic business points that establish the framework of the potential use of tax increment financing (“TIF”) to support the private redevelopment of underutilized property (as shown on the attached site plan, the “Project”) within the City of Edina (the “City”) and to provide certain public benefits. This document is intended to serve as the general framework for one or more definitive redevelopment agreements (each a “Redevelopment Agreement”) to be executed by Developer (or Developer’s approved assignees, which may be Lifestyle Communities or its affiliate), the City and the Edina Housing and Redevelopment Authority (the “HRA”). b. Intended for Discussion Purposes- This document is intended for discussion purposes with the Board of the HRA. Based on the response and direction provided by the HRA Board, the City staff is prepared to engage third-party legal and finance professionals to assist with preparation and creation of the TIF districts, the drafting and negotiation of the Redevelopment Agreement(s), and related assistance for the Project. b.c.Preparation of Binding Agreements – Upon consent of the HRA Board, the proposed TIF District Plan, proposed Redevelopment Agreement and other related documents will be drafted and presented to the City Council and HRA Board for consideration using the City’s typical public engagement processes. Each of these future documents will not be enforceable until approved and executed by all parties. d.City and HRA Out of Pocket Costs – Developer has completed the City’s TIF Policy Form and agreed to pay for the City’s staff and out-of-pocket costs in evaluating this request for Tax Increment Financing. The City has engaged Dorsey & Whitney, Ehlers Associates, and LHB (collectively, “Third Party Consultants”) to provide assistance in preparing the necessary studies and evaluations. Developer has submitted $30,000 in advance to be held in escrow by the City. Developer shall provide additional funds as necessary. These funds will be used to pay the Third Party Consultants. Any excess / un-used funds will be returned to Developer. City agrees to provide copies of expenses paid from the escrowed funds upon request by Developer. 2) Developer; Project Ownership a. The lead Developer for Lots 1 and 2 is Enclave Companies, 1660 South Highway 100, St. Louis Park, Minnesota 55426 (“Enclave”). b. An affiliated developer for Lot 3 is Lifestyle Communities LLC, 4938 Lincoln Drive, Edina, Minnesota 55436 (“Lifestyle”). Page 101 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 2 c. As used in this Term Sheet “Developer” includes Enclave, its approved assignee Lifestyle and their directly controlled business entities created to deliver the Minimum Improvements. Enclave will form a separate joint venture entity or entities for development of Lots 1 and 2. Lifestyle will form a separate joint venture entity or entities for development of Lot 3. d. Transfer of Ownership – At this time, Enclave and Lifestyle are pre-approved developers/owners. Any other transfer where Enclave and/or Lifestyle does not retain controlling interest is subject to review and consideration by the HRA. 3) Project Description a. Location – The Project site is currently occupied by the Macy’s Furniture Store with the historic associated address of 7235 France Avenue. The Project site is approximately 8 acres in area and will be re-platted into three (3) new separate legal parcels as part of the Project (referred to below as Lots 1, 2 and 3, as shown on the attached Project Site Plan and legal description. Four separate buildings are intended to be constructed on the three lots. b. Existing Conditions – The Project site is currently improved with a 89,782 square foot retail building and associated surface parking. The Project site has been inspected by LHB and found to be in a condition that potentially qualifies it as a “Redevelopment” TIF District as defined under Minnesota Statutes. c. Project – The overall Project is described in the planning documents submitted to the City and approved through granted preliminary approval as a Planned Unit Development (“PUD-25”) zoning ordinance and Preliminary Development Plan on June 18, 2024 and a Final Development Plan anticipated to be approved Fall 2024. The Project is generally depicted on the attached site plan in Attachment A, and consists of the following elements as will be finalized in the Final Development Plan (each an “Element”).:. It is recognized that the Final Development Plans and related materials submitted to secure final zoning and site plan approvals will serve as the basis for the forthcoming Redevelopment Agreement. i.NW Element, Lot 1: A 7-story (approximately 85-foot tall) mixed use building containing approximately 20,825 square feet of office/lobby/conference, 124 apartment units and approximately 7,594 square feet of retail, and an approximately 282-stall parking garage including approximately 15 public parking stalls. (as described further herein) (the “NW Element”). The NW Element will be developed by Enclave. ii.East Element, Lot 2: A pair of 7-story (82-foot tall) apartment buildings with 223 units and an approximately 346-stall parking garage including approximately 41 public parking stalls in the Northeast portion of the lot (“NE Building”) and a 7-story (82-foot tall) apartment with 176 units and approximately 4,141 square feet of retail/restaurant and an approximately 380-stall parking garage including approximately 42 public parking stalls in Southeast portion of the East Lot (“SE Page 102 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 3 Building”). The NE Building and the SE Building he “East Element”). The East Element will be developed by Enclave. iii.SW Element, Lot 3: An 11-story (155-foot tall) mixed use building containing approximately 47,236 square feet of office, 49 senior resident-owned units, approximately 9,549 square feet of retail/restaurant and an approximately 280- stall parking garage including approximately 45 public parking stalls (the “SW Element”). The SW Element will be developed by Lifestyle. 4) Minimum Improvements and Public Benefits of Project a. Minimum Improvements – The NW Element, the East Element, and the SW Element (along with all other required respective improvements under the Final Development Plan) are referred to herein collectively as the “Minimum Improvements.” The Redevelopment Agreement will contain additional detail on Enclave’s and Lifestyle’s respective obligations to build their respective portions of the Minimum Improvements (including public realm spaces diagram included in Attachment B-4). All required Minimum Improvements for an Element will be completed prior to issuance of a Certificate of Completion for such Element. Any TIF assistance is conditioned on Developer’s completion of the portion of the following Minimum Improvements by Element as specified elsewhere in this Term Sheet and associated with the future Redevelopment Agreement and applicable TIF Note. Each Element is described herein and depicted on the Project Site Plan attached hereto: i. “ NW Element (Lot 1) Minimum Improvements:” 1. The mixed use building on the NW Lot as described within 3C(i) of this Term Sheet. 2. 10% of total units of affordable housing in the NW Element; subject to restrictive covenants that mandate affordable rates and income-qualified tenants as described in the Final Development Plan and elsewhere in this document. 3. Public realm improvements illustrated within the attached Attachment B (Public Realm– All Elements) and Attachment B-1 (Public Realm – NW Element) and generally described as follows: a. The east-west promenade located on the southern portion of the NW Lot secured with a permanent public easement. b. The north-south roadway located on the eastern portion of the NW Lot secured with a permanent public easement. c. Graded and landscaped frontage along France Avenue that is graded to accommodate the France Avenue Pedestrian Crossing Page 103 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 4 (if proper notice is given from HRA) or graded as shown in the Final Development Plan. d. The east-west roadway, street parking, public sidewalk and landscaping located on the northern portion of the NW Lot and secured with a permanent public easement. e. Public art as described herein. ii. “East Element (Lot 2) Minimum Improvements:” 1. Buildings located on the East Lot of the site as described within Section 3C(ii) of this Term Sheet. 2. 10% of total units of affordable housing in the NE Building of the East Element and 10% of total units of affordable housing located in the SE Building of the East Element; both subject to restrictive covenants that mandate affordable rates and income-qualified residents as described in the approved Plans and elsewhere in this document. 3. Public realm improvements illustrated within the attached Attachment B (Public Realm – All Elements) and Attachment B-2 (Public Realm -- East Element) and generally described as follows: a. The east-west promenade located through the center of the East Lot separating the NE Building and the SE Building and secured with a permanent public easement. b. The north-south roadway located on the western portion of the East Lot and secured with a permanent public easement. c. Graded and landscaped frontage along Promenade Park located on the eastern portion of the East Lot. d. The east-west landscaped area fire access route and public sidewalk and landscaping located on the northern portion of the East Lot and secured with a permanent public easement. e. The east-west landscaped area fire access route, bicycle trail, public sidewalk and landscaping located on the southern portion of the East Lot and secured with a permanent public easement. f. Public art as described herein. iii. “SW Element (Lot 3) Minimum Improvements:” 1. The SW Element of the site as described within Section 3C(iii) of this Term Sheet. Page 104 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 5 2.10% of total residential units of affordable housing in the SW Element; subject to restrictive covenants that mandate affordable purchase prices and income-qualified residents as described in the approved Plans and elsewhere herein. 2.3.Public realm improvements illustrated within the attached Attachment B (Minimum Improvements – ALL Elements) and Attachment B-3 (SW Element – Public Realm) and generally described as follows: a. The north-south roadway located on the eastern portion of the SW Lot secured with a permanent public easement. b. Graded and landscaped frontage along France Avenue (running north-south) and Gallagher Drive (running east-west) that is graded to accommodate the Pedestrian Crossing (if proper notice is given from HRA) or graded as shown in the final approved plans. c. The east-west pedestrian connection along the southern portion of the SW Lot graded and landscaped to connect with the Pedestrian Crossing (if elected to be constructed by the HRA or City) secured with a permanent easement. d. The east-west bicycle trail, public sidewalk and landscaping located on the southern portion of the Southwest Lot and secured with a permanent public easement. e. Public art as described herein. b. Public Benefits – This Project addresses several of the goals identified in the Southdale Experience Guidelines and other applicable City policies including: i. Remove obsolete building from a prominent site. ii. Subdivide the existing large parcel into grid blocks with private roadway and pedestrian routes subject to perpetual public access rights iii. Construct a mixed-use development whose scale and mass is generally consistent with the Southdale Experience Guidelines with little or no surface parking. iv. Improve the public sidewalk and streetscape along France Avenue. v. Relocate the existing sanitary sewer line. vi. Improve stormwater treatment and on-site retention as required by City engineering standards and Watershed District standards. vii. Provide public parking, as more particularly described below. Page 105 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 6 viii. Provide outdoor public realm spaces for use by the community, as more particularly described below. ix. Provide public art on each quadrant of the property, as more particularly described below. x. Comply with City Sustainable Buildings Policy, including (but not limited to) on- site Solar, EV chargers and LEED/NGBS certification as more particularly described below. xi. Create new affordable housing units, including rental and ownership units, in accordance with Edina’s Affordable Housing Policy; secured by restrictive covenants described herein. 5) But For Test a. The staff and the City/HRA advisors at Ehlers Associates have reviewed and evaluated the preliminary financial information for the Project. This evaluation indicates that the Project (in the form granted preliminary approval on June 18, 2024 with numerous conditions added by staff and City Council) is not financially viable and will not be constructed without financial intervention. In short, but-for the use of tax increment financing, the Project will not be constructed. b. Based on confirmation of a financial gap, this Term Sheet is prepared in order to identify terms by which incremental property taxes can be used to bridge the financial gap to make the project financially viable. 5)6)Minimum Improvements Timeline a.This timeline identifies the general time frame envisioned for the Minimum Improvements. Deadlines will be included in the future Redevelopment Agreement(s) based on this Term Sheet, subject to extension for force majeure events including, without limitation, reasonable delays due to unavailability of or delays in procuring materials or labor. The actual dates may be slightly modified in the Redevelopment Agreement. Failure to meet the ‘no later than’ deadlines will be considered a default of the applicable Redevelopment Agreement(s), subject to notice and cure rights of the Developer set forth in the Redevelopment Agreement(s). Completion will be evidenced by the HRA issuing a “Certificate of Completion” to Developer for the applicable Element. In order to satisfy the 5-year rule under the TIF Act, all Elements must demonstrate expenditure of all TIF eligible reimbursable costs consistent with the TIF Act prior to the 5-year anniversary of the TIF District (such anniversary anticipated to be June 30, 2030). The HRA’s Executive Director may, in his reasonable discretion, change the sequencing order shown below. Page 106 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 7 (NW Element) Commencement Date Completion DateDescription of Work Anticipated No Later Than Anticipated No Later Than Final Zoning Approvals NA NA 11/06/2024 11/06/2025 Real Estate Land Closing NA NA 12/15/2024 03/30/2025 Demolition 09/01/2025 11/01/2025 10/01/2025 12/31/2025 Site Remediation 10/01/2025 01/15/2026 12/15/2025 06/15/2026 Site Preparation 11/01/2025 02/15/2026 01/15/2026 06/15/2026 Foundation 12/15/2025 06/15/2026 NA NA Construction NA NA 11/01/2028 11/01/2029 Certificate of Occupancy (shell building)NA NA 10/01/2028 10/01/2029 (SW Element) Commencement Date Completion DateDescription of Work Anticipated No Later Than Anticipated No Later Than Real Estate Land Closing NA NA 12/15/2024 03/30/2025 Site preparation 11/01/2025 02/15/2026 01/15/2026 06/15/2026 Foundation 12/15/2025 06/15/2026 NA NA Construction NA NA 11/01/2028 11/01/2029 Certificate of Occupancy (shell building)NA NA 10/01/2028 10/01/2029 (East Element) Commencement Date Completion DateDescription of Work Anticipated No Later Than Anticipated No Later Than Real Estate Land Closing NA NA 12/15/2024 03/30/2025 Site preparation 11/01/2025 02/15/2026 01/15/2026 06/15/2026 Foundation 12/15/2025 06/15/2026 NA NA Construction NA NA 11/01/2028 11/01/2029 Certificate of Occupancy (shell building)NA NA 10/01/2028 10/01/2029 Page 107 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 8 6)7)Minimum Improvements Budget a. The total Minimum Improvements are currently estimated to attract private investment of approximately $298,600,000, including land assembly, soft costs and hard costs. The estimated cost of the minimum improvements on each Lot are as follows: i. NW Element - $56,600,000 ii. SW Element - $94,600,000 iii. East Element - $147,400,000 b. The Developer Fee for each Element will be specified in the financial proforma reviewed and approved by the HRA for each Element and as shown in Attachment C. c. Preliminary estimates of financial sources and uses for the Minimum Improvements to be delivered on each Lot are shown in Attachment C. d. Developer must provide the HRA access to a complete (line item) Minimum Improvements budget for each Element at several stages of the Project including: during the preparation of the Term Sheet and preparation of the Redevelopment Agreement, with the submission of the Go-Ahead Letter, upon the completion of each Element and at other times upon request by the HRA. To the extent allowed under the Minnesota Government Data Practices Act, “trade secret” information will not be publicly available. e. Developer shall provide to the HRA a complete accounting of the use of all contingency funds. Anticipated uses to be identified simultaneously with delivery of the “Go Ahead Letter” (as described below). An updated accounting of actual contingency uses will be provided to the HRA prior to issuance of a Certificate of Completion for each Element. Contingency funds shall be used only for costs related to increased material and labor costs and other costs that contribute to the public benefit items. 7)8)Minimum Improvements Financing a. Firm commitments from equity partners are pending. Information will be provided to the HRA when available and a financing Go Ahead Letter will be provided to the HRA prior to the closing on the purchase of the property indicating that the land sale will proceed. In addition, separate Go Ahead letters will be provided for each Element to indicate that each Element has secured full funding and will proceed. The future Redevelopment Agreement will include additional information about the Go Ahead letters. b. Prior to executing the Redevelopment Agreement, Developer will provide the HRA with available letters of interest from bona fide investors, subject to reasonable non-disclosure terms required by such bona fide investors. c. Firm commitments for construction loans are pending. Information will be provided to the HRA when available, and in any event prior to the issuance of the respective Go Ahead Letter for each Element. Prior to executing the Redevelopment Agreement, Page 108 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 9 Developer will provide the HRA with available letters of interest from bona fide lenders, subject to reasonable non-disclosure terms required by such lenders. d. Prior to delivery of information regarding firm financing commitment or delivery of a Go Ahead Letter, Developer will provide additional financing updates as requested by the HRA, whether by oral or written request, within two business days of the request. e. Developer has the option to arrange financing for the NW Element and the East Element combined or separately. Lifestyle will separately arrange financing for the SW Element. The Developer shall use its best judgment to establish project financing using a combination of debt and equity partners that deliver the entire Project when appropriate market conditions exist. The Developer shall inform the HRA whether joint financing or separate financing by Element will be utilized as soon as that decision is made by Developer. Completion of the Redevelopment Agreement is contingent upon such a determination being made. f. Multiple grants will be pursued by Developer jointly with the City. g. TIF assistance for the Minimum Improvements is being considered as described in this Term Sheet. h.TIF assistance is not intended to be used for or to encourage the Developer to make speculative investments with undue risk. 8)9)TIF Assistance a. Generally i. TIF assistance is conditioned upon the Minimum Improvements as a whole demonstrating satisfaction of the “but for” TIF test. Developer will provide all required information necessary to demonstrate that the Minimum Improvements satisfies the “but for” test in Minnesota Statutes. ii. Any TIF assistance issued will be in accordance with the City’s TIF policy as reflected in the definitive Redevelopment Agreement. iii. Creation of any TIF district and any TIF assistance provided shall comply with all applicable Minnesota Statutes. b. TIF Districts i. For the Minimum Improvements, the City and HRA will consider the creation of a new 25-year Redevelopment TIF district (tentatively called the “72nd and France 3 TIF District” and referred to as the “TIF District”) covering the NW Lot, the East Lot and the SW Lot. ii. The TIF District may be expanded or modified at the sole discretion of the City and HRA to achieve additional community goals provided that any TIF Note awarded to the Minimum Improvements can be satisfied per the terms of the applicable Redevelopment Agreement. Page 109 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 10 c. Reimbursable Costs i. Based on review of the initial pro forma, it appears that the overall project will include approximately $100,000,000 in expenses that can be deemed “TIF eligible expenses under the Minnesota TIF Act. These include: acquisition, demolition, remediation, site preparation, utilities, structured parking, and affordable housing. However, the costs recognized by the City and HRA as reimbursable are only a subset of those total costs. ii. Based on the initial pro forma for the Minimum Improvements, the following approximate costs associated with the Minimum Improvements are intended to be reimbursable from TIF. The actual amount will be defined at the time the TIF Notes are issued. Approximate Total CostsRedevelopment Costs Potentially Eligible for Reimbursement via TIF Notes All Elements NW Element (Lot 1) East Element (Lot 2) SW Element (Lot 3) 1. Demolition of existing obsolete structures and site preparation including: remediation of environmental contamination; vapor mitigation systems and soil corrections (including but not limited to: export, import, shoring) $5,494,671 $1,036,850 $2,888,521 $1,230,800 Page 110 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 11 Approximate Total CostsRedevelopment Costs Potentially Eligible for Reimbursement via TIF Notes All Elements NW Element (Lot 1) East Element (Lot 2) SW Element (Lot 3) 2. Site improvements to achieve four building layout with intervening roadways, sidewalks, plazas & other public realm elements, including but not limited to erosion control, domestic water, sanitary sewer, temporary dewatering, internal roadways, surface parking, driveways, curb and gutter, sidewalks, bicycle routes, street lighting, landscaping, irrigation, streetscaping, public art, on-site solar, and stormwater management with all site improvements in the public realm secured with perpetual public easements $6,674,339 $1,228,249 $3,890,630 $1,555,460 3. Structured public parking (approx 143 stalls) in each Element; secured with perpetual public easement $4,648,631 $465,000 $2,573,000 $1,610,631 4. Affordable housing - portion of net present value of foregone rent for 25 years and lost market value of condo sales; secured with restrictive covenants to ensure affordability $8,600,614 $1,665,690 $5,696,523 $1,238,400 5. Professional costs to prepare TIF study, TIF plan Term Sheet and Redevelopment Agreement; includes developers internal legal costs and third-party costs incurred by the City and paid for by developer $200,000 $38,000 $112,000 $50,000 Page 111 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 12 Approximate Total CostsRedevelopment Costs Potentially Eligible for Reimbursement via TIF Notes All Elements NW Element (Lot 1) East Element (Lot 2) SW Element (Lot 3) 6. Professional costs to prepare architectural and engineering designs TIF eligible items, including civil, site work, remediation, geotech, sustainability, public realm areas, & master planning $1,200,550 $240,500 $628,800 $331,250 Total = $26,818,805 $4,674,290 $15,789,474 $6,016,541 d. TIF Notes i. Up to four TIF Notes will be issued (subject to statutory procedural requirements) up to a maximum net present value principal amount of $22,874,000. The TIF Notes will be limited obligations of the HRA issued solely to aid in financing certain capital costs incurred to redevelop property within the TIF District and in conformity with the laws of the State of Minnesota, including the TIF Act. Each TIF Note shall not be assignable or transferable without the signed consent of the HRA, which will not be reasonably withheld as long as the Developer certifies that no market for the TIF Note is intended to be developed and it is not being assigned or transferred with a view for resale or granting participation in the TIF Note. Further the assignee or transferee must certify acknowledgement of the limits and terms imposed on the TIF Note payments by the Redevelopment Agreement. Notwithstanding the foregoing, the Developer may assign and pledge a TIF Note to secure a mortgage permissible for the Project, may transfer to any entity under common control with the Developer or any entity which the majority equity interest is owned by the parties that have a majority equity interest in the Developer or may assign the SW Element TIF Notes to Lifestyle in accordance with the terms of the Redevelopment Agreement. iii. The TIF Notes will be issued individually for each Element only after Developer demonstrates that (1) all Element-related Minimum Improvements related to the applicable TIF Note have been completed; (2) sufficient reimbursable costs have been expended; (3) public easements and covenants have been executed and recorded; and (4) all other requirements of the Redevelopment Agreement have been satisfied. The following terms and conditions apply: a. Up to four TIF Notes in the aggregate principal amount of up to $22,874,000 will be issued by the HRA: 1. A NW Element TIF Note in the maximum aggregate principal amount of up to $4.56 million (amount corresponding to the NW Element Page 112 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 13 Reimbursable Amounts) upon issuance of a Certificate of Completion for the NW Element Minimum Improvements. 2. A East Element TIF Note in the maximum aggregate principal amount of up to $12.34 million (amount corresponding to the East Element Reimbursable Amounts) will be issued by the HRA upon issuance of a Certificate of Completion for the East Element Minimum Improvements. 3. One or two SW Element TIF Notes in the maximum aggregate principal amount of up to $5.97 million (amount corresponding to the SW Element Reimbursable Amounts) will be issued by the HRA upon issuance of a Certificate of Completion for the SW Element Minimum Improvements. b. The sizing of each TIF Note is also subject to the return on cost limitations as specified in the Redevelopment Agreement. Each TIF Note will be subject to a lookback/clawback based on Developer financial returns, as will be specified in the Redevelopment Agreement. c. A TIF Note will be issued by Element upon the satisfaction of the following condition for each Element: 1. A Certificate of Completion has been issued for the Minimum Improvements within the relevant Element. 2. Developer has provided the HRA with access sufficient for HRA staff to confirm the actual Project (by Element) costs and returns and confirm satisfaction of the “but for” test. 3. Developer has executed and delivered all public easements and the acceptance of all public improvements (by City or County engineers, Three Rivers Park District and Nine Mile Creek Watershed District, as appropriate) required for the relevant Element by the City approvals and the Redevelopment Agreement. 4. Developer has executed and delivered binding covenants and right of first option regarding the affordable housing units required to be included in the for the NW Element and the East Element by the City approvals and the Redevelopment Agreement. 5. Developer has delivered to the HRA a final report and certificate detailing and certifying as to the Developer’s activities and final outcomes of Developer’s efforts to achieve the Equity and Inclusion goals for the Element as specified in the Redevelopment Agreement. 6. Developer has satisfied all terms and conditions of the Redevelopment Agreement(s) and is not in default under the Redevelopment Agreement(s), the City approvals, or any other agreement pertaining to the Project beyond any applicable notice and cure periods. Page 113 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 14 7. Developer has met all requirements of the City’s corresponding site improvement agreement for the Project, including no waiver or reduction of required park dedication fees. d. The TIF Notes shall bear interest at the demonstrated rate of debt financing obtained at the time of completion on the applicable Minimum Improvements as will be more particularly described in the Redevelopment Agreement. e. Payments on the TIF Notes will be made using standard procedures: two annual payments based on actual incremental property taxes generated only from the specific Element/Lot, paid and received by the City. Payments on TIF Notes are usually made February 1st and August 1st. The earliest that first TIF Note payments would occur is in 2028. f. The HRA may, in its sole discretion, retain up to 25 percent of the expected tax increment to pay for qualified administrative costs, payment of contractual obligations or debt to design and construct the Future Pedestrian Crossing and qualified pooling expenses. g. Any estimate of TIF cash flow projected by the City or HRA is hypothetical and there are no guarantees that such TIF proceeds will be available. 8) Other Terms and Conditions a. Affordable Housing i. The Project will comply with all City affordable housing policies and requirements. Developer will be responsible for the costs of assuring on-going compliance with the policies and requirements, as prescribed on the date of execution of the Redevelopment Agreement. 1. The NW Element and the East Element will each include at least 10 percent of units leased at 50 percent AMI affordable rates priced to households earning no more than 60 percent of area median income (as determined by HUD). 2. The SW Element will include at least 10 percent of units priced and sold to households earning no more than 80 percent of area median income (as determined by HUD). The Redevelopment Agreement shall include provisions that prevent affordably-priced condominium units from being “flipped” to the second owner at an unaffordable sales price. The Redevelopment Agreement shall also include provisions that retain the affordability of these units by subsequent buyers to the greatest extent practical. 3. In calculating the number of affordable units in each Element, any partial unit shall be rounded UP to a whole unit. Affordable rental units shall include a mixture of studios/alcoves, 1-bedroom and 2-bedroom units distributed in approximately the same ratio as the market rate units in Page 114 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 15 the particular Element. Affordable for-sale units are anticipated to include only 1-bedroom units. ii. Affordable units shall be affordable for at least 20 years following the occupancy of all affordable units by income-eligible occupants in the particular Element. The term of affordability shall extend beyond 20 years if payments on TIF Notes extend beyond 20 years. In that case, affordability shall continue until the TIF Note payments terminate. The term of affordability shall be applied to each Element separately. The term of affordability shall be extended to the greatest degree practical in the Redevelopment Agreement. iii. The Redevelopment Agreement Developer shall specify whether the affordable rental units will are anticipated to be fixed or floating. This shall be confirmed when the Go-Ahead letter is issued for each Element. iv. Excluding the SW Element which will include a residential condominium at inception, Developer to provide first right of refusal for the affordable housing units in the event that the property is converted to condominiums during the 26-year term of the Redevelopment TIF District. Developer and HRA agree to consider an extension of the initial 20-year term of affordability approximately 12-months prior to the conclusion of the initial term. The term of affordability will be extended only if the parties can mutually agree on a means to extend the affordability. b. Park Maintenance Fee i. Any Element to which a TIF Note is provided and which contains any individual residential units (excluding hotel units or similar transient lodging) shall pay a maintenance fee to the City for the purpose of maintaining the adjacent Centennial Lakes and Promenade Parks. Payments shall be collected from the owner/operator of each building contained in an Element. In the case of a condominium or cooperative facility, payment shall be collected from the association or management entity responsible for maintenance and operations of the common areas of the building. ii. A method will be included in the Redevelopment Agreement to require the owner of each Element to (a) contribute to park maintenance through a park maintenance fee not to exceed $15.00 per residential unit per month or (b) to demonstrate to the City that an equivalent demonstrable contribution is being made through maintenance of property adjacent to City park areas which will reduce the amount of the maintenance fee per month. iii. The fee shall begin on the first day of the month eighteen (18) months after the issuance of both a Certificate of Completion and TIF Note for an Element. Thereafter, fees shall be paid twice each year on January 1st and July 1st (unless other dates are mutually acceptable to the parties). Fees shall be remitted Page 115 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 16 directly to the City of Edina 4801 W. 50th Street, Edina MN 55424 Attn: Parks Department iv. This maintenance fee shall be paid to the City and is not deemed a waiver, replacement, alternative, or other impairment to the City’s right to collect park dedication fees in accordance with applicable Law. v. The obligation to pay park maintenance fees shall expire 30 years after the first payment is received. vi. In case of failure to pay, the City may take action to collect by assessing the fees to the property tax bill plus a surcharge of 50% of the amount due. Failure to pay shall not be considered a default that enables the City to withhold payments on the TIF Note. vii. This obligation shall be documented by means of an executed agreement recorded with Hennepin County on each Lot. c. Public Parking i. Only structured parking that is secured by means of a permanent public easement shall be considered eligible for TIF reimbursement. The public parking stalls in each Element are generally depicted in Attachment D. All public parking areas will comply with certification criteria outlined in Section 8G(i). Approximately 143 parking stalls incorporated into the NW element (15 stalls), the East Element (83 stalls) and the SW Element (45 stalls) will be perpetually available for public parking (through an easement in favor of the City or HRA). Developer will be fully responsible for the maintenance and operational costs of all public parking. All public parking will be available for no charge, unless an exception is approved by the City Manager that is based on industry standards. Examples of reasonable limitations and rules to be approved by the City Manager include; 1. 1 hour, 2 hour, 3 hour, and 4 hour time limitations; 2. longer time limits to allow for special event parking; 3. limitations on overnight parking or multi-day parking; 4. limitations on nighttime parking use; 5. limitations on vehicle repair; and 6. limitations on noises and nuisances. ii.All public parking facilities shall be designed to incorporate a high level of public safety features which might include: security cameras, emergency call systems, secured entry and exit points, blind spot mirrors, transparent walls and/or Page 116 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 17 doorways or combination thereof. HRA staff shall be given the opportunity to review and confirm these safety features. ii.iii.A doorway directly to the public realm areas must be provided from the public parking areas in each of the four buildings. These doorways must provide a direct and obvious route to and from the exterior public spaces, in a location subject to the approval of the HRA. Each of the doorways must be easily identified, well- lit and secure. iii.iv.Developer must include typical signage above or adjacent to main parking garage entrances that identify the “public parking” within. Signs visible from the exterior of the building near each garage entrance must also display whether or not public parking stalls are available in real time. Additionally, public parking wayfinding signage must be provided at strategic locations on the site. All parking signage must be provided to clearly delineate “private” stalls so that the general public can readily understand which portions of the parking structures are available for public use. iv.v.Developer will be responsible for all maintenance of the public parking in first class condition. v.vi.All public parking and related elements will be subject to the terms and conditions of the recorded Easement and Restriction Agreement governing the Project. Developer will provide the HRA with copies of all cross easements among the Lots required for public parking. d. Nine Mile Creek bicycle trail i. The Nine Mile Creek bicycle trail must be perpetually available for public use. If the trail is not usable on a regular basis during the construction of the Project, an alternate route must be provided by the Developer so that trail users can travel from the eastern curb of France Avenue to the western edge of the Edina Promenade as determined by the Three Rivers Park District. It is recognized that the alternative bike route may also require approval from by the Three- Rivers Park District. e. France Avenue Pedestrian Crossing (aka Public Crossing) i. City Right to Install Public Crossing. The City / HRA currently believes it is in the best interest of the public to construct a public underpass or bridge to allow pedestrians (and other non-motorized users such as bicyclists and people who use devices to travel due to a disability) to cross France Avenue (County Road 17) above or below the existing street level (the “Public Crossing”) located in the area of the Project. The City / HRA is currently analyzing the feasibility of and design options for any such Public Crossing. The City/HRA is committed to determining whether full funding to construct the Public Crossing will be pursued prior to execution of the Redevelopment Agreement. Page 117 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 18 ii. Subject to the terms and conditions of the Redevelopment Agreement, if the City elects to construct a Public Crossing, one end of the Public Crossing is anticipated to terminate on a portion of the NW Element (Lot 1) and the SW Element (Lot 3) (known as the “Crossing Easement Area”) and the City and Developer shall enter into a definitive, recordable agreement (the “Public Crossing Agreement”) to provide the City (and its agents, contractors, and employees) access to the Crossing Easement Area for purposes of constructing, maintaining, and operating the Public Crossing and to otherwise set forth the terms upon which the City, at its cost, will build and maintain the Public Crossing. iii. A form of the Public Crossing Agreement will be an exhibit to the Redevelopment Agreement and will contain a clear delineation of respective construction, repair, maintenance and replacement obligations between the Developer and the City. Developer’s execution of the Public Crossing Agreement shall be condition to issuance of the Certificate of Completion for NW Element Minimum Improvements and the SW Element Minimum Improvements, unless such condition is waived by City, which waiver may be granted by the City’s Authorized Representative. iv. Public Crossing Agreement. Promptly following the City’s election to pursue full funding for a Public Crossing to be located in the public easement area located along the southern and western portions of the SW Element (Lot 3) and the western portion of the NW Element (Lot 1), the City and Developer shall negotiate the Public Crossing Agreement and any required amendment or modification to the Public Crossing Agreement with all reasonable diligence and in good faith, and such agreements shall include terms and conditions acceptable to Developer and the City, in each of their commercially reasonable discretion, and including, without limitation, the following: 1. The City shall be responsible for the design, construction, maintenance, and operation of the Public Crossing, at its sole cost and expense, but Developer shall continue to be responsible for the maintenance of the Crossing Easement Areas on Lots 1 and 3 at no cost to the City or Authority. 2. Developer will be responsible for the maintenance of the Crossing Easement Area as will be specified in Public Crossing Agreement, all at no cost to the City or Authority and otherwise in accordance with the terms and condition of the Public Crossing Agreement. 3. Developer shall grant to the City permanent public access surface easement(s), permanent stormwater easement(s), and temporary construction easement(s) as necessary for construction, installation, use and maintenance, repairs and future improvements of the Public Crossing and other public access over the Project Area to allow public access to and from the Public Crossing, all at no cost to the City Page 118 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 19 4. The construction of the Public Crossing may involve customary construction noise, dust, vibration, and detours. The City (and its agents, contractors, and employees) shall not be liable to Developer or any of its Project tenants or other occupants for any such permitted disruptions. Neither the City nor its agents, contractors, and employees will make payments for any business interruptions which may arise from any such permitted disruptions. 5. The City shall make reasonable efforts to limit disruption during the construction of the Public Crossing, including, providing reasonable advance notice of construction activities to the building owners and building property managers in the Project Area, posting detours for through traffic, and expanding work hours beyond the typical 8 AM to 4 PM to endeavor to expedite construction and minimize interference. The City/HRA will engage with Developer (and other Project and public stakeholders) during the design phase of the Public Crossing to consider input to address the safety, security, durability, and usability of the Public Crossing. 6. The City, its successors and assigns, may assign or otherwise transfer all or portions of its rights under the Public Crossing Agreement to any other public entity (including, without limitation, the Authority and/or any Hennepin County) to facilitate the construction, ownership, and operation of the Public Crossing, in each case, without the consent of Developer. 7. City/HRA and Developer will work cooperatively to ensure that all insurance and other risk management issues regarding the respective roles in the Public Crossing are properly addressed in the Public Crossing Agreement. v. If the City elects to proceed with the construction of the Public Crossing, construction of the Public Crossing shall occur after Developer completes construction of permanent Project improvements in the area of, or adjacent to, the Crossing Easement Area on Lot 1 and/or Lot 3. The phasing and sequencing of construction in the Crossing Easement Area will be refined in the Public Crossing Agreement. vi. Relationship to Minimum Improvements Design. As soon as reasonably practical, Developer, City staff, and their respective engineers shall coordinate and communicate in order for Developer to be able to cause the aesthetics and operations of the lower levels and foundations of the NW Element and the SW Element to be designed in consideration of, and to accommodate, the Public Crossing being directly connected to the Crossing Easement Areas that also serve as visual and usable reference points for the buildings on Lots 1 and 3. The City will endeavor to provide Developer with conceptual engineering information for any proposed Public Crossing before permits are issued for the Page 119 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 20 foundation for NW Element and the SW Element . The City shall be responsible for all documented and reasonable cost increases, including but not limited to design and construction, related solely to changes to the NW Element or the SW Element necessary to accommodate the Public Crossing if access points to the Public Crossing change after that time. Developer and City staff shall otherwise promptly and diligently communicate with each other regarding such design to endeavor to ensure that the City’s Public Crossing construction plans do not interfere with such foundations. vii. The City / HRA shall retain its right to use incremental property taxes generated from the TIF District and not obligated to repay a TIF Note to fund the Public Crossing and associated improvements. f. Public Realm Spaces i. Developer to provide public realm spaces around the perimeters of the NW Element, the East Element and the SW Element. These spaces are generally depicted on the attached Exhibit B. ii. The public realm spaces will consist of outdoor pedestrian corridor with landscaping, hardscaping, street scaping, public art, and other pedestrian amenities consistent with the City approvals. Public realm will include: 1. At least 4 medium-to-large scale sculptures or large-scale murals as permanent public art 2. placemaking process through a professional firm to enliven east-west portion of the public realm spaces on a day-to-day basis (after occupancy) 3. Lighting, security cameras and other public safety precautions in strategic locations iii. Developer will grant a permanent, public easement for access and use of the public realm spaces by the general public, subject to reasonable, nondiscriminatory limitations, rules and regulations governing its use adopted by Developer and subject to the approval of the City Manager or its designee. iv. Developer will be responsible for all maintenance and repair of the public realm spaces including permanent features, fixtures and landscaping, except for any maintenance, repair or replacement obligations by the City under the terms of the Public Crossing Agreement. v. The public realm spaces will be subject to the terms and conditions of the recorded Easement and Restriction Agreement governing the Project. g. Public Art i. The Project shall include at least four (4) public art features in the locations generally shown on the Approved Plans. Public art shall be large scale permanent sculpture, murals or similar art installations. Public art shall be lit to be visible during non-daytime hours. Page 120 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 21 ii. Developer shall engage a professional art consultant to establish and implement a vision for public art and interpretation, subject to a public engagement process approved by the City within 30 days after identification of the art consultant. Within such 30 day period, the City Manager may also designate up to three people to provide input and guidance to the art consultant. Developer will reasonably consider the recommendations of the consultant and the public engagement process in its final selection of art for the Project. Costs associated with the art consultant will be paid by Developer and will be an eligible TIF expense. iii. The installation of the public art (sculptures and murals) shall have a value of no less than $540,000 paid in artist commissions (including artist creative, materials, labor, and installation charges, directly supportive footings/ foundations/ utilities but excluding fees paid to a professional art consultant, costs related to the public engagement process and improvement costs). iv. The investment in public art shall be approximately as follows: 1. NW Element (sculpture which might be a decorative placemaking archway subject to HRA staff review and approval) $200,000 2. SW Element (two murals located on two sides of the building) $180,000 3. East Element (NE building) (mural) $80,000 4. East Element (SE building) (mural or sculpture) $80,000 5. HRA Executive Director shall be authorized to make changes in the cost distribution provided that a total investment in public art exceed $600,000. v. Developer will be responsible for all maintenance and repair of the public art in a first-class manner. vi. A covenant shall be included in the Redevelopment Agreement to establish maintenance expectations for the public art. h. Environmental sustainability i. As a condition of TIF financing, every building contained within each Element must be designed and certified with appropriate standards that provide a greater degree of sustainability than applicable MN Building Code, as generally described below. All sustainability features are also subject to the final conditions of City Resolution 2024-40. 1. LEED or National Green Building Standard (NGBS) Certified or equivalent meeting these standards: a. NW Element: NGBS Silver b. SW Element 2: LEED Silver c. East Element 3: NGBS Silver. Page 121 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 22 ii. On-site solar array shall be provided on both buildings within the East Element to the greatest degree practical based on the available pricing at time of construction. The HRA staff shall be given the opportunity to review size and output of solar arrays prior to submission by the Developer to the City of plans for final City approval. The Developer shall be responsible for the repair and maintenance of the solar arrays throughout at least the term of the TIF District. At the time of the Term Sheet, Developer is anticipating two (2) approximately 150kWh systems; one (1) located on each of the two East Element buildings. iii. Some of the required EV chargers shall be located in the Public Parking portions of each Element. Specific locations to be clarified in the future Redevelopment Agreement. i. Equity and Inclusion – Developers shall use good faith efforts as defined by Minnesota Department of Human Rights to include businesses that are majority owned by under- represented groups including minorities, women, veterans and people with disabilities in the development and construction of the Project. Developers shall also cause its general contractors to use, good faith efforts to employ under-represented people on the construction site. The definition of “good faith efforts” will be specified in the Redevelopment Agreement to include details on (1) posting of opportunities, (2) recruiting efforts, (3) selection, hiring and termination procedures, (4) employee files and record keeping, and (5) reporting mechanisms. The Developers will prepare a “Equity and Inclusion Outreach Plan” or similar strategy for each Element of this Project and, through which, the Developers are committed to ensuring the community has a sincere opportunity to participate in the Project’s construction through meaningful employment and subcontracting opportunities. i.The future Redevelopment Agreement will contain the Developers specific commitment to minimum workforce goals to maximize employment opportunities for the local workforce, including women and minorities. The future Redevelopment Agreement will also contain the Developer’s specific commitment to minimum subcontracting goals to maximize business and employment opportunities for disadvantaged businesses, including women, minority and veteran owned business enterprises. i.ii.The Redevelopment Agreement shall also include provisions that ensure that the developers and general contractors comply with applicable fair labor standards, including provisions to guard against wage theft. j. Other Easements - In addition to other easements specified herein, Developer has or will grant a permanent, public easement for access and use of the perimeter and internal roadways, sidewalks, streetscape areas, and seating areas by the public, subject to reasonable, nondiscriminatory limitations, rules and regulations governing its use adopted by Developer and subject to the approval of the City Manager or its designee. Page 122 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 23 i.Future Transit Easements - Developer agrees to grant specific easements, if necessary, within public easement areas for future mass transit stops along portions of France Ave at no cost to City or transit operator (land only – cost to build is not Developer’s responsibility), subject to the responsible transit agency being responsible for maintenance of the surface improvements in these future easement areas. Public transit may include regional operators such as Metro Transit or local operators like City of Edina. k.Accessible Design – The site and each Element shall be designed and constructed in accordance with the Americans with Disabilities Act (ADA) Standard for Accessible Design, the Minnesota Accessibility Code, Public Right of Way Accessibility Guidelines (PROWAG) and other related standards as applicable. 9) Grants – Developer must make good faith effort to pursue grants for the Project as selected by Developer and the City; provided, however, that any application for grants may take into account whether any additional costs are to be included in the Developer’s pro forma due to the requirements of any such grant. . The City/HRA agrees to sponsor grant applications that provide financial support for the Projects. Upcoming application deadlines are in Fall 2024 and Spring 2025. If grants are not awarded as a result of these initial applications, the developer should re-apply in future years, if the project remains eligible for the grant programs. Costs of preparing the grant applications shall be borne by Developer. City staff shall have the final authority to review and submit the grant applications to Metropolitan Council, Minnesota Department of Employment and Economic Development and Hennepin County per the terms of the grant programs. Any grants received for the Project will be included in the Project pro forma for determining the Project’s return on cost and the Initial Lookback and future lookback/clawback and determining satisfaction of the “but for” TIF test. Following is the list of grants which may should be applied for by City or Developer (as required by the particular grant program): a. Met Council Livable Communities Demonstration Account (LCDA); b. Met Council Tax Base Revitalization Account (TBRA); c. DEED Redevelopment Grant; d. DEED Contamination and Cleanup Grant; e. Hennepin County Environmental Response Fund f. Other grants as applicable. 10) City Administrative Costs – The City/HRA to retain standard 10% of TIF proceeds per Minnesota statute. The use of these funds is at the sole discretion of the City/HRA. 11) Fiscal Disparities – The City’s ‘fiscal disparity’ obligation for the redevelopment site will be paid for from property taxes generated from the Project. This will be included in the calculation of available TIF to pay off the TIF notes. 12) City and HRA Approval of Significant Changes – Changes to the Project that impact scope or design are subject to City review using the typical City procedure. Page 123 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 24 13) Performance Bonds – Bonds or other security will be required for work in public rights of way and for the elements with a public easement. 14) Default and Cure – Standard default provisions will apply. Each default will have a notice and cure period, subject to extension for force majeure delays. 15) Anticipated Redevelopment Agreement Exhibits The Redevelopment Agreement is anticipated to contain several Exhibits including but not limited to: Exhibit A Legal Description of the Project Area Exhibit B Public Realm Diagram – All Elements Exhibit B-1 NW Element Public Realm Exhibit B-2 East Element Public Realm Exhibit B-3 SW Element Public Realm Exhibit B-4 Public realm spaces – public access easement area Exhibit C Project Plans Exhibit D Operating Pro Forma and Project Sources & Uses Exhibit E Form of Go-Ahead Letter(s) Exhibit F Form of Certificate of Completion with Completion Checklist for each Element Exhibit G Memorandum of Redevelopment Agreement Exhibit H Form of TIF Note Exhibit I Project TIF Adjustment / Lookback Calculation for each Element Exhibit J Form of Parking Easement Agreement Exhibit K Forms of Restrictive Covenant for Affordable Housing (rental and for-sale) Exhibit L Form of Right of First Option for Affordable Housing Exhibit M Equity and Inclusion Outreach Plan Exhibit N Form of Equity and Inclusion Report Exhibit O Public Crossing Concept Exhibit P Form of Park Maintenance Fee Agreement Exhibit Q Form of Public Art Covenant Page 124 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 25 Attachment A Project Site Plan NOTE: This Attachment is for reference only. This is the Site Plan that was granted preliminary re- zoning approval by City Council on June 18, 2024 subject to stated conditions. The Site Plan that is granted “final” approval will be used in the forthcoming Redevelopment Agreement. Page 125 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 26 Attachment B Minimum Improvement – Roadway Boundaries All Elements NOTE: This Attachment is for reference only. This Attachment is based on the Site Plan that was granted preliminary re-zoning approval by City Council on June 18, 2024 subject to stated conditions. In the forthcoming Redevelopment Agreement, this Attachment will be replaced with an updated version that reflects the Site Plan that is granted “final” approval by City Council. Page 126 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 27 Attachment B-1 NW Element (Lot 1) Minimum Improvement Boundaries NOTE: This Attachment is for reference only. This Attachment is based on the Site Plan that was granted preliminary re-zoning approval by City Council on June 18, 2024 subject to stated conditions. In the forthcoming Redevelopment Agreement, this Attachment will be replaced with an updated version that reflects the Site Plan that is granted “final” approval by City Council. Page 127 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 28 Attachment B-2 East Element (Lot 2) Minimum Improvement Boundaries NOTE: This Attachment is for reference only. This Attachment is based on the Site Plan that was granted preliminary re-zoning approval by City Council on June 18, 2024 subject to stated conditions. In the forthcoming Redevelopment Agreement, this Attachment will be replaced with an updated version that reflects the Site Plan that is granted “final” approval by City Council. Page 128 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 29 Attachment B-3 SW Element (Lot 3) Minimum Improvement Boundaries NOTE: This Attachment is for reference only. This Attachment is based on the Site Plan that was granted preliminary re-zoning approval by City Council on June 18, 2024 subject to stated conditions. In the forthcoming Redevelopment Agreement, this Attachment will be replaced with an updated version that reflects the Site Plan that is granted “final” approval by City Council. Page 129 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 30 Attachment B-4 Public Realm Spaces – Public Access Easement Area NOTE: This Attachment is for reference only. This Attachment is based on the Site Plan that was granted preliminary re-zoning approval by City Council on June 18, 2024 subject to stated conditions. In the forthcoming Redevelopment Agreement, this Attachment will be replaced with an updated version that reflects the Site Plan that is granted “final” approval by City Council. The final Easement will have a more detailed map that ensures that there is a clear delineation of public space vs. private spaces (e.g. private patios and café seating). Page 130 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 31 Error! Unknown document property name. Attachment C Operating Pro Forma and Project Sources & Uses for each Element Page 131 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 32 Page 132 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 33 Page 133 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 34 Page 134 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 35 Page 135 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 36 Page 136 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 37 Attachment D Illustrative Diagram of Public Parking Page 137 of 174 7235 France Redevelopment Proposed TIF Term Sheet Page 38 NOTE: The images in this Attachment are for reference only. This Attachment is based on the plans that were granted preliminary re-zoning approval by City Council on June 18, 2024 subject to stated conditions. In the forthcoming Redevelopment Agreement, this Attachment will be replaced with an updated version that reflects the plans granted “final” approval by City Council. Page 138 of 174 Tax Increment Financing in Edina Background information for Edina Housing & Redevelopment Authority August 15, 2024 Prepared by: Bill Neuendorf, Economic Development Manager _____________________ Housing & Redevelopment Authority Page 139 of 174 Creating Places for People and Attracting Private Investment TIF has been used in Edina since the early 1970s to support and attract private investment and to create affordable housing and other desirable places that contribute to a strong tax base and high quality of life for Edina residents 2Grandview Square, former industrial site Edinborough Corporate Center, former gravel pit 50th & France, before and after TIF applied Centennial Lakes, former gravel pit _____________________ Housing & Redevelopment Authority Page 140 of 174 Eleven TIF Districts in Edina 3 _____________________ Housing & Redevelopment Authority Edina uses TIF to a lesser extent than neighboring communities Page 141 of 174 Hurdles to Affordable Housing •Persistent need for affordable housing; identified in 1974 Edina HRA Bylaws •High development costs •Limited financial resources •Limited incomes to pay rent •More households in need 4 _____________________ Housing & Redevelopment Authority Page 142 of 174 Hurdles to Redevelopment in built out locations •High land and remediation costs •Demolition and site preparation 5 _____________________ Housing & Redevelopment Authority Page 143 of 174 Industry-wide Hurdles to Redevelopment in 2024 •High land and remediation costs •Demolition and site preparation •High construction costs •materials and labor 6 _____________________ Housing & Redevelopment Authority Page 144 of 174 Industry-wide Hurdles to Redevelopment in 2024 •High land and remediation costs •Demolition and site preparation •High construction costs •materials and labor •High financing costs •Interest rates •Debt : Equity ratio •Limited capital 7 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% Historical Prime Rate Source: JPMorganChase.com Was 75 -80% LTV … Now 55-65% LTV _____________________ Housing & Redevelopment Authority Page 145 of 174 Hurdles to Redevelopment in Edina 8 •High standards for PUD zoning •Exterior materials •Exterior design and massing •Public realm spaces •Structured parking •Affordable Housing policy •Sustainability policy •Development Fees •Park Dedication Fee •SAC / WAC sewer fees HRA can partner to help alleviate financial hurdles and achieve City development objectives._____________________ Housing & Redevelopment Authority Page 146 of 174 Essential Ingredients for Successful Redevelopment Project Description 1) Property ownership Execute contract to purchase land 2) Regulatory approvals Zoning entitlement If project not allowed ‘by right’, seek zoning entitlements (preliminary and final approvals) 3) Financing Equity investors Identify firm and potential equity investors Construction debt Identify lenders to provide construction and/or long term deb HRA, EDA and/or grant support Seek grants and other sources of financing to supplement private investment 9 _____________________ Housing & Redevelopment Authority Page 147 of 174 Roles of City Council vs HRA Board City Council •Incorporated 1888 •Elected by Edina residents •Regulatory role •Provides municipal services, oversees general health and welfare •Enforces City Code; updates and modifies laws, as needed •Has taxing authority Housing and Redevelopment Authority •Established 1974 •Appointed by City Council •Financing and implementation role •Seeks to enable redevelopment and support affordable housing •Can lead projects independently, or •Can work with private sector to support projects •Applies contractual agreements (not local laws) •Has limited taxing authority 10 _____________________ Housing & Redevelopment Authority Page 148 of 174 Alternatives to secure Private Investment & Redevelopment •Edina HRA established 1974 to promote affordable housing and redevelopment •Minnesota Laws provide limited options for City’s, HRA’s, and EDA’s •But options do exist to support redevelopment and attract private investment Description Impact to Taxpayers Staff RecommendationFiscalRisk 1) Property Tax Abatement Loss None No – does not fill gap 2) Tax Increment Financing - Pay -Go TIF Notes None None Yes – fills gap, avoids risk, achieves public objectives 3) Implement local loan / grant / subsidy program Loss Medium to high No – too much risk, could impact City balance sheet 4) Land Acquisition and Sale with Write Down (TIF or GO debt) Loss Medium to high No – too much risk, impacts City balance sheet 5) Acquire minimal land to build all public roads & related improvements (TIF or GO debt)Investment High No – too much risk, impacts City balance sheet 6) City to waive park, sewer and/or building fees Loss None No – negative impact to Parks Dept and Sewer Fund; does not fill gap 7) City to waive policy requirements like affordable housing, sustainable buildings None None No – fails to deliver community objectives; may not fill gap 8) City to disregard objectives of Small Area Plans and Design Guidelines None None No – fails to deliver community objectives; may not fill gap 11 _____________________ Housing & Redevelopment Authority Page 149 of 174 Sequence to consider TIF to achieve HRA & City objectives 12 (7) Approve Redevelopment Agreement (1) Preliminary zoning and site plan approval (public hearing) (10) Issue Cert of Occupancy (8) Issue construction permits (4) Final zoning and site plan approval (2) Consider financing Term Sheet (3) Draft TIF Plan & formal Agreement (11) Issue TIF Cert. of Completion (6) Approve TIF Plan to establish TIF District (9) Receive “Go Ahead” Letter Staff functions (Building Dept & Comm Dev Dept)Actions by Elected and Appointed Officials informed by public input (12) Issue Pay -Go TIF Note(s) 18-36 mos typ. 2-4 mos typ – see next Slide 3-6 mos typ.6-12 mos typ. _____________________ Housing & Redevelopment Authority 4-8 mos typ. 3-12 mos typ. (5) Review TIF Plan (public hearing) Page 150 of 174 Process to prepare and consider TIF District & TIF Agreements 13 Procedural steps after HRA Board authorizes preparation of TIF Plan and Redevelopment Agreement Managed and Prepared by 1) Inspect property to confirm TIF eligibility (blight test)Staff with Third Party Experts 2) Evaluate impact of proposed development on City services Staff 3) Prepare TIF Plan, including fiscal impact and legal review Staff with Third Party Experts4) Send advance notice to School District and Hennepin County 5) Set and publish date for Public Hearing 6) Publish TIF Plan (draft) on BetterTogetherEdina.com and accept feedback, comments, suggestions for several weeks Staff 7) Review of TIF Plan (draft) for compliance with land use regulations (after City Council grants final approvals) Planning Commission with staff support 8) Hold formal Public Hearing on TIF Plan for additional input City Council with staff support 9a) HRA Board & 9b) City Council to consider adoption of final TIF Plan after granting Final Zoning and Site Plan Approvals HRA Board and City Council with support from staff and third party experts10a) HRA Board & 10b) City Council consider TIF Redevelopment Agreement (and future Public Improvements) after TIF District established Process initiated at direction of HRA Board _____________________ Housing & Redevelopment Authority Page 151 of 174 File Location: N:\2023\23192_7235 France Avenue South\_WORKING\AUTOCAD\SHEETS\23192 L100 Layout Plan / SAVE DATE: 8/5/2024 4:44 PM BY: jcoryell / PLOT DATE: 8/5/2024 5:49 PM BY: Jake Coryell LANDSCAPE ARCHITECTCONFLUENCEwww.thinkconfluence.com901 North Third Street, Suite 225Minneapolis, MN 55401612.333.3702CONSULTANT ROLECONSULTANT FIRM NAMECONSULTANT ADDRESSCONSULTANT ADDRESSXXX.XXX.XXXXPRELIMINARYNOT FORCONSTRUCTIONNo. DateDescription0104/26/2024PUD SUBMISSION02 07/26/2024 LANDUSE APPLICATION SUBMISSIONRevision ScheduleProject NumberIssueDate23192000002024-04-26COPYRIGHT © 2024 BY CONFLUENCEENCLAVE MIXED-USE DEVELOPMENT ON FRANCE EDINA, MN 55435 CONSULTANT ROLECONSULTANT FIRM NAMECONSULTANT ADDRESSCONSULTANT ADDRESSXXX.XXX.XXXXCONSULTANT ROLECONSULTANT FIRM NAMECONSULTANT ADDRESSCONSULTANT ADDRESSXXX.XXX.XXXXCONSULTANT ROLECONSULTANT FIRM NAMECONSULTANT ADDRESSCONSULTANT ADDRESSXXX.XXX.XXXXMC Y K THE LINE SHOWN ABOVE ISEXACTLY ONE INCH LONG AT THISSHEET'S ORIGINAL PAGE SIZETHE SQUARES ABOVE ARE COLOR,WITH BLACK AND WHITE LETTERS,IF PRINTED CORRECTLY1 234ABCDOVERALL PLANINTENT RENDERINGLS200OVERALL PLAN INTENT RENDERING 1LS200Page 152 of 174 N.DN.EN.FN.JN.BN.AN.2N.0N.3N.4N.5N.6N.7N.8N.9N.10N.11N.12N.CN.1N.GN.HDN16' - 0"27' - 6"19' - 0"27' - 6"28' - 0"18' - 0"29' - 0"14' - 8"1' - 6"15' - 0"30' - 0"30' - 0"30' - 0"30' - 0"30' - 0"30' - 0"30' - 0"30' - 0"30' - 0"15' - 0"TRASH / RECYCLINGSTORAGETHE PROMENADE860.5863.0860.58' - 6"8' - 6"18' - 0"305' - 0"24' - 0"24' - 0"18' - 0"24' - 0"24' - 0"16,140 SFRESIDENTIAL31,363 SFPARKING7,467 SFAMENITYN.15'N.E.5'PET WASH777 SFRESIDENTIAL183' - 0"8' - 6"8' - 0"8' - 6"8' - 6"8' - 6"8' - 6"8' - 6"8' - 6"8' - 6"PROJECT NUMBERDRAWN BY CHECKED BYORIGINAL ISSUE:REVISIONS:KEY PLAN8/5/2024 5:44:40 PMA102-NELEVEL 1 FLOOR PLAN -NORTHEASTBUILDING223701.00ESG ESG03/28/24ENCLAVE MIXED-USEDEVELOPMENT ON FRANCEENCLAVEMIXED-USEDEVELOPMENTON FRANCEEDINA, MNPUD SUBMISSION8/5/243/32" = 1'-0"A102-NE1LEVEL 1 FLOOR PLAN - NORTHEAST BUILDINGNo. Description DatePage 153 of 174 UPS.3S.1S.4S.5S.6S.7S.8S.9S.10S.11S.DS.FS.KS.CS.AS.12'S.ES.HS.2S.BS.JS.GUPDNTRASH / REC1' - 6"15' - 0"30' - 0"30' - 0"30' - 0"30' - 0"30' - 0"30' - 0"30' - 0"30' - 0"15' - 0"30' - 0"15' - 0"28' - 0"15' - 0"29' - 0"14' - 0"30' - 0"15' - 0"194' - 0"275' - 0"8' - 6"8' - 0"8' - 6"18' - 0"24' - 0"24' - 0"24' - 0"24' - 0"8' - 6"8' - 6"8' - 6"18' - 0"THE PROMENADE30,139 SFPARKING3,778 SFRES LOBBY4,130 SFRETAIL4' - 0"209' - 0"19' - 0"75' - 2"10' - 3"66' - 3"36' - 4"24' - 0"24' - 0"5,838 SFRESIDENTIAL4,908 SFRESIDENTIALEVRETAIL PATIOPROJECT NUMBERDRAWN BYCHECKED BYORIGINAL ISSUE:REVISIONS:KEY PLAN8/6/2024 2:40:53 PMA102-SELEVEL 1 FLOOR PLAN -SOUTHEASTBUILDING221701.00ESG ESG03/22/24ENCLAVE MIXED-USEDEVELOPMENT ON FRANCEENCLAVEMIXED-USEDEVELOPMENTON FRANCEEDINA, MNPUD SUBMITTAL8/5/20243/32" = 1'-0"A102-SE1LEVEL 1 FLOOR PLAN - SOUTHEAST BUILDINGNo. Description DatePage 154 of 174 W.3W.4W.7W.8W.1W.9W.6W.2W.5RESIDENTIAL TRASH / RECYCLINGEXIT PASSAGEWAYFRANCE AVEDN14' - 0"30' - 0"16' - 0"14' - 0"30' - 0"29' - 0"29' - 0"16' - 0"+863.0'+860.5+860.5+860.5THE PROMENADE90' - 0"77' - 8"75' - 10"43' - 0"16' - 0"64' - 8"55' - 4"64' - 6"DN122' - 11"1,338 SFACTIVE USE/TBD4,529 SFLOBBY/AMENITY13,960 SFPARKING7,543 SFCOMMERCIALW.BW.CW.DW.EW.FW.GW.HW.JW.KW.MDN+859.67'ELECTRICALPOTENTIAL FIRE PUMP ROOM (VERIFY)123' - 0"30' - 0"30' - 0"29' - 0"30' - 0"30' - 0"30' - 0"29' - 0"29' - 0"15' - 0"8' - 6"18' - 0"8' - 6"18' - 0"8' - 6"8' - 6"8' - 6"18' - 0"PROJECT NUMBERDRAWN BY CHECKED BYORIGINAL ISSUE:REVISIONS:KEY PLAN8/5/2024 4:29:58 PMA102-NWLEVEL 1 PLAN -NORTHWESTBUILDING223701.00ESG ESG03/22/24ENCLAVE MIXED-USEDEVELOPMENT ON FRANCEENCLAVEMIXED-USEDEVELOPMENTON FRANCEEDINA, MNPUD SUBMITTAL8/5/20243/32" = 1'-0"A102-NW1LEVEL 1 FLOOR PLAN - NW BUILDINGNo. Description DatePage 155 of 174 Page 156 of 174 PROJECT NUMBERDRAWN BYCHECKED BYORIGINAL ISSUE:REVISIONS:KEY PLAN8/7/2024 3:22:29 PMA500AERIAL VIEWS223701.00ESG ESG04/05/24ENCLAVE MIXED-USE DEVELOPMENT ON FRANCE ENCLAVE MIXED-USEDEVELOPMENT ON FRANCE EDINA, MNPUD SUBMISSION8/5/2024 AERIAL - NW CORNER AERIAL - SW CORNER AERIAL - NE CORNER AERIAL - SE CORNERNo. DescriptionDatePage 157 of 174 PROJECT NUMBERDRAWN BY CHECKED BYORIGINAL ISSUE:REVISIONS:KEY PLAN8/7/2024 3:22:31 PMA501RENDERINGS223701.00ESG ESG03/29/24ENCLAVE MIXED-USE DEVELOPMENT ON FRANCE ENCLAVE MIXED-USEDEVELOPMENT ON FRANCE EDINA, MNPUD SUBMISSION8/5/2024FRANCE AVE AT NORTH ENTRY DRIVE FRANCE AVE AND GALLAGHER DRALONG FRANCE AVEEAST/WEST PEDESTRIAN SPACE - LOOKING WESTNo. DescriptionDatePage 158 of 174 PROJECT NUMBERDRAWN BY CHECKED BYORIGINAL ISSUE:REVISIONS:KEY PLAN8/7/2024 3:22:32 PMA502RENDERINGS223701.00ESG ESG03/29/24ENCLAVE MIXED-USE DEVELOPMENT ON FRANCE ENCLAVE MIXED-USEDEVELOPMENT ON FRANCE EDINA, MNPUD SUBMISSION8/5/2024 NORTH/SOUTH DRIVE LOOKING SOUTH NORTH/SOUTH DRIVE LOOKING NORTH EAST/WEST PEDESTRIAN SPACE - LOOKING WEST EAST/WEST PEDESTRIAN SPACE - LOOKING EASTNo. DescriptionDatePage 159 of 174 PROJECT NUMBERDRAWN BYCHECKED BYORIGINAL ISSUE:REVISIONS:KEY PLAN8/8/2024 4:19:38 PMA504RENDERINGS223701.00ESG ESG03/29/24ENCLAVE MIXED-USEDEVELOPMENT ON FRANCEENCLAVEMIXED-USEDEVELOPMENTON FRANCEEDINA, MNPUD SUBMISSION8/5/2024No. DescriptionDateAT THE PROMENADE - SE CORNER OF SITEAT THE PROMENADE - MIDDLE OF SITEAT THE PROMENADE - NE CORNER OF SITEPEDESTRIAN VIEWBIRDSEYE VIEW - SHOWING STEPPINGBIRDSEYE VIEW-SHOWING ARCHITECTUREPage 160 of 174 ☒City Council Approved: 2011 ☐City-Wide Revised: 12/20/2022 ☐Department City of Edina Policy Tax Increment Financing Policy BACKGROUND The City of Edina has statutory authority to use Tax Increment Financing (TIF) pursuant to Minnesota State Statutes Section 469.174-469.1799 (the TIF Act). TIF uses the increased property taxes generated by new real estate development within defined geographic districts to pay for certain costs associated with new development (including but not limited to affordable housing) as well as related public infrastructure and public realm spaces. The City’s mission is “…to provide effective and valued public services, maintain a sound public infrastructure, offer premier public facilities and guide the development and redevelopment of lands, all in a manner that sustains and improves the health and uncommonly high quality of life enjoyed by our residents and businesses.” (Source: 2015 Vision Edina). The land within the City boundaries has been substantially built-out for more than a decade and many of the older properties are in the “redevelopment” phase. In order to construct a new structure, an older structure that is unsound, outdated, or obsolete must typically be removed. In most cases, development projects in Edina are privately funded using traditional debt and equity sources. From time-to-time, however, the City has found it necessary to provide financial support for development projects that deliver outstanding benefits to the community and that could not be accomplished without public financial involvement. As early as the 1970s, the City used TIF to help deliver desired commercial and multifamily development served by public infrastructure elements including roads, sidewalks, utilities, public parking, and public realm spaces like parks and plazas. TIF was essential to construct the commercial, residential and public elements at Edinborough Park and Centennial Lakes Park (including affordable housing). TIF was also essential to fund public parking at 50th and France and to transform the Grandview District from an industrial area to a mixture of residential, commercial and civic uses with public parking. Historically, Edina has taken a more restrictive view on the use of TIF than allowed by Minnesota Statute. Page 161 of 174 City of Edina Tax Increment Financing Policy Page 2 PURPOSE OF POLICY While most redevelopment projects in Edina are privately financed, on certain occasions, the City may find it necessary to provide financial support in order to overcome unusual hurdles and to achieve extraordinary benefits to the general public. The purpose of this policy is to: • Limit the use of TIF to only projects that deliver permanent benefits to the general public that are better than the minimum established in City Code • Clarify that the use of TIF in Edina will be more limited than allowed by Minnesota Statute • Establish criteria and guidelines for where new TIF Districts are established and how incremental taxes are utilized in Edina. • Ensure that TIF is used in a transparent, consistent and equitable manner to provide value to the community. • Ensure that TIF is used to deliver both short-term and long-term improvements that are a benefit to the general public in Edina. This policy provides guidance to developers, property owners, staff, and the community at large regarding Edina’s use of Tax Increment Financing as a public finance tool to attract and support high quality development that contributes to a strong property tax base and to the high quality of life in Edina. For the purpose of this policy, the “City” shall also mean the Edina Housing and Redevelopment Authority (HRA), which assists in a variety of housing, redevelopment, and economic development activities for the City of Edina. PUBLIC BENEFITS PURSUED WITH TIF In addition to the Minnesota TIF Statutes, Edina applies an additional expectation that the use of TIF will deliver permanent benefits to the general public other than tax base growth. Edina’s Comprehensive Plan establishes guidance for the anticipated changes in land use and related systems for the next decade. Most land use changes are anticipated to occur in commercial and industrial areas. Many of the preferred outcomes identified in the Comprehensive Plan include changes to transform single use sites to mixed uses that provide a strong tax base, improved connectivity and access for drivers, bicyclists and pedestrians. When necessary, TIF can be used to achieve many benefits to the community, including: • Transformational change of properties in a manner compatible with Comprehensive Plan, Small Area Plans, Development Framework, Sustainability Policy, New Multifamily Affordable Housing Policy and other Guidelines adopted by the City • Improvements to the multi-modal transportation network, including roads and infrastructure for motor vehicles, pedestrians, bicyclists and transit Page 162 of 174 City of Edina Tax Increment Financing Policy Page 3 • Public realm improvements, including green space and placemaking elements including landscaping, streetscaping and public art • Public parking facilities that provide shared parking resources for more than one property • Improvements to public utility networks; including potable water, fire protection, storm sewer and sanitary sewer • Stormwater retention and detention systems that benefit more than one property • Removal of substandard buildings (as defined in MN Statute) that may have a blighting effect on the community • Preservation of buildings that are historically or culturally significant to the community • Remediation of environmental contamination • Creation and retention of long-term affordable housing at a variety of below-market price points • Creation and retention of permanent employment opportunities I. PROCEDURAL CONSIDERATION OF TIF 1) Authority rests with City Council. Consideration to establish a new TIF District shall be at the sole discretion of the City Council. Administration and determine of specific uses of incremental property taxes generated therein shall be at the discretion of the City Council or HRA. Since each development project is unique, the use of TIF shall be considered on a case-by-case basis. 2) Preparation of TIF documents. The Edina Housing and Redevelopment Authority shall provide initial direction regarding the potential use of TIF, shall review the Term Sheet that identifies the proposed use of TIF on each project and shall review and approve the contractual documents such as TIF Agreements. 3) Eligible Applicants. Only current property owners or developers that have site control are eligible to apply for TIF. Evidence of site control shall be provided in the TIF Application. 4) Negotiation of TIF terms. After the TIF Application is submitted, the developer shall negotiate financing terms only with the City Manager, HRA Executive Director or designee. The prepared terms and proposed contract shall then be presented to the HRA Board and the City Council as a whole. 5) Application Form. Developers that request TIF shall submit a completed application in a form approved by the City Manager or HRA Executive Director. The application shall identify the anticipated financing sources, including equity, type of debt, external grants/contributions, and the amount and type of TIF support requested to resolve the financing gap. A complete development sources and uses pro forma shall Page 163 of 174 City of Edina Tax Increment Financing Policy Page 4 be submitted, as well as an operating pro forma based on a stabilized project. The application shall include calculations that identify the financing gap. This information is required to determine the “but for” test required under the TIF Act. The application shall also identify extra-ordinary costs to develop the project in Edina and shall also identify the exceptional public benefits that could be delivered if the project is completed. The Application shall also address other criteria identified in this document. 6) Application Fee. The application fee shall be $10,000. Fifty percent (50%) of the fee shall accompany the initial application. The remaining fifty percent (50%) shall be due after the confirmation of a Term Sheet and prior to the preparation of full contractual documents. Application fees are non-refundable. 7) Use of Third-party Expert Advisors. Expert advisors shall be engaged by the HRA as necessary to ensure compliance with the TIF Act and to provide expertise to supplement the abilities and capacity of staff. Typical advisors have expertise in TIF law, public sector development finance, general development finance, property inspection as it pertains to TIF, and real estate valuation, among other redevelopment topics. All advisors shall be contracted to the HRA and shall uphold the interests of the HRA and the City while providing service. 8) Developer Responsible for Fees. The developer shall be solely responsible for the payment of third expenses pertaining to the developer’s request for TIF support from the time of the request to the delivery of the Certificate of Completion. Prior to preparation of the Term Sheet, the applicant shall submit to the City a deposit equal to the total estimated costs for legal and consultant fees. These funds will be held in a non-interest-bearing escrow and the City will draw upon these funds to pay all related expenses. Additional funds may be necessary if the scope of the work changes beyond the initial expectation. Any unused balance shall be returned to the developer upon completion of the process. The developer shall also be solely responsible for any costs related to requested amendments to the TIF District or TIF Agreements. 9) Initial Staff Response and Notification of HRA Board. City staff shall review and evaluate the Application for compliance with the City’s policies. Soon after receipt of a TIF Application, staff should advise the Edina HRA about the TIF request including the potential public benefits delivered if TIF would be provided. Staff will then seek approval to engage third party advisors to fully vet the merits of the TIF request. 10) Preparation of Term Sheet. Staff shall prepare a Term Sheet that summarizes the key terms by which TIF could be used for the project. The Term Sheet shall be submitted to the Edina HRA for review and consideration. The Term Sheet should generally be considered simultaneously or soon after preliminary zoning approval is obtained. The HRA should provide verbal indication whether they are agreeable to preparation of binding contracts (commonly known as TIF Agreements) based on the Term Sheet. 11) Creation of TIF District. After consideration of the Term Sheet, staff shall begin the process of establishing a TIF District to achieve the goals outlined in the Term Sheet. Page 164 of 174 City of Edina Tax Increment Financing Policy Page 5 12) TIF Agreement. Staff shall work with legal and financial advisors to prepare complete and binding legal agreements based on the Term Sheet. The TIF Agreement should be considered by the HRA Board and/or the City Council after final zoning approval is obtained. 13) Building and Zoning Approvals. The provision of TIF is contingent upon receiving all other necessary project approvals from the City. II. FINANCIAL REPORTING AND TRANSPARENCY 1) Mandatory Reporting. The City shall submit all required reports on the use of Tax Increment Financing to Hennepin County and the Minnesota Office of the State Auditor using the format provided by those agencies. 2) Year in Review Report. Each year, staff shall publish a report that summarizes the use of TIF written in plain English style. This report shall include the following information for each active TIF District: start and end dates, debt and contractual obligations, tax collection status, tax base status, and other pertinent information. This report shall also quantify outcomes when TIF is used to achieve public benefits. This report should be delivered to the Edina HRA in January and shall be made available to the applicable School District(s) and to the general public upon request. 3) Website. The City shall post general information on the use of TIF in Edina on the City website. III. ESTABLISHMENT OF TIF DISTRICTS 1) Preparation of TIF Plan. The HRA’s Financial Advisor shall prepare the TIF Plan to satisfy the requirements of Minnesota TIF Statutes. The TIF Plan should be written in plain English style. The TIF Plan should describe the intended redevelopment and/or housing outcomes and should identify how the use of TIF will help achieve community goals as defined in the Comprehensive Plan and related plans. 2) Type of District. The type of District established shall be determined by the City Council in accordance with the limitations contained in Minnesota Statute. 3) Boundaries and Term. The boundaries of each new district should be as small as necessary to achieve the development goals of the subject properties and adjacent public areas. When establishing a new TIF District, the shortest statutory term to achieve the desired outcomes should be considered. A longer term should be considered when pooling is desired. 4) Impact on Municipal Services. The impact of the proposed project on the City’s delivery of services, capital expenditures and operating expenditures shall be taken into consideration prior to the adoption of a TIF Plan. 5) Fiscal Disparities. Projects utilizing TIF are responsible for paying their share of the Fiscal Disparities contribution from the property taxes generated from the project and within the boundaries of the District. Page 165 of 174 City of Edina Tax Increment Financing Policy Page 6 6) Community engagement. The City shall follow standard protocol and processes for collecting community input on every proposed TIF district. At a minimum, this typically includes advance notice, online engagement and in person public meetings. 7) Input from School District and County. A draft of the TIF plan shall be provided to Hennepin County and to the school district where the district is located for review and comment prior to the public hearing. 8) Establishment of District. Unless unique circumstances apply, establishment of a TIF District should coincide with the execution of one or more TIF Agreements capable of satisfying the outcomes identified in the TIF Plan. 9) Early De-certification. Within one year after the 5-year statutory deadline, the City should consider early decertification of the District if no debts or contractual obligations for the incremental taxes remain. Within one year after all debts and obligations have been satisfied, the City should consider whether to de-certify the District early. Consideration should be given to the potential benefits from pooling available funds before the District is de-certified. IV. EXPECTATIONS FOR TIF SUPPORTED REDEVELOPMENT PROJECTS 1) Site Plan. The site plan for any project supported with TIF shall be designed to substantially follow the regulations and guidelines as adopted in Edina’s Comprehensive Plan, Small Area Plans, Development Framework and Southdale Design Experience Guidelines (where applicable). The expected quality and nature of site plan improvements is highest when TIF is contributed. Projects supported with TIF shall fully satisfy each of the following aspects as described in adopted plans and guidelines and as approved through the City’s typical zoning review / site plan review process: a. Subdivision of superblocks to establish a transportation grid with walkable, human-scale blocks appropriate for the size, length and width of the property b. Creation of new streets, sidewalks and trails to allow through traffic by the general public (recognizing that redevelopment of neighboring parcels may be necessary to complete the through route) c. Creation of new public realm spaces including streetscaping, lighting and public art d. Minimum building setbacks (such as 30 ft and 50 ft in the Greater Southdale District) should be considered “build to” lines e. Applicable street room typologies implemented f. Massing, recessed upper floors, building articulation, and fenestration provided g. Perimeter spaces that front a public street or similar route with public easement shall be occupiable and activated. Storage, parking, and utility spaces shall be kept to the bare minimum along public routes Page 166 of 174 City of Edina Tax Increment Financing Policy Page 7 The provisions of this policy are not intended to require an additional site plan review process. The City Council shall make the final determination of whether the site plans adequately abide by the Comprehensive Plan and other adopted codes, plans and guidelines to warrant the use of TIF. 2) Exterior Finish Materials. The types of finish materials on portions of the building directly visible from a street or other public realm space shall comply with Edina’s City Code. For TIF supported projects, a high degree of stone, brick and other natural materials is preferred. 3) Public Realm Experience. A vibrant and welcoming public realm experience is essential for every project supported with TIF. Examples of contributing elements include (but are not limited to): sidewalks wider than required by City Code, public plaza, public seating areas, integrated transit shelters, landscaping, hardscaping, commercial storefronts and residential walk-up units that directly engage the public realm areas. Under the TIF Act, reimbursement through TIF for public realm amenities will need to be reviewed on a case-by-case basis, but will be required even if not subject to TIF reimbursement. 4) Public Art. Projects supported with TIF shall incorporate permanent public art as an integral part of the public realm experience. Each public art installation shall be secured with an easement that provides for the maintenance and permanence of the art element by the owner. The public art elements shall be consistent with those contained in the approved site plans. Additional art elements may be required when TIF is contributed. Examples of additional art elements include but are not limited to: sculptures, murals, sidewalk poetry, water features, light and sound displays, and rotating art installations. City Council shall make the final determination of whether the quantity and type of public art elements warrant the use of TIF. Under the TIF Act, reimbursement through TIF for public art will need to be reviewed on a case-by-case basis, but public art will be required even if not subject to TIF reimbursement. Members from the Edina community shall be engaged as part of the artist-selection process and/or the art- selection process. The developer shall make the final art selection keeping in mind the recommendation and input from the community members. 5) Public dedication or public easements. All public benefits in TIF supported projects shall either be owned by the City or HRA, dedicated to the City or be secured with permanent easements (to the City) or restrictive covenants to ensure that the public has long-term access to and long-lasting benefits from the improvements. 6) Affordable Housing Units. Multi-family development projects supported with TIF should incorporate any required affordable units into the site, as opposed to providing the prescribed contribution to Edina’s Affordable Housing Trust Fund. 7) Public Parking. Only those parking stalls that are available to the general public throughout all times of the day and year shall be considered to be supported with TIF. Parking stalls that are dedicated for the exclusive use by residents or tenants will not be eligible for TIF support. The public parking stalls shall be easily identified as public parking with exterior signage near the entrance and wayfinding signage on the site. 8) Environmental Sustainability. Edina’s Sustainable Buildings Policy shall apply to all projects supported with TIF. For TIF-supported projects, the applicable Sustainable Building Rating System shall be LEED Silver or better. Additionally, electrification of heating systems and/or on-site renewable energy generation are preferred in TIF- Page 167 of 174 City of Edina Tax Increment Financing Policy Page 8 supported projects; projects should achieve at least 2 total LEED points between Grid Harmonization and Renewable Energy credits. Certification of the completed building(s) shall be required and compliance shall be renewed (by the owner) throughout at least the term of the TIF District at the frequency identified by the certifying agency. 9) Collaborative Partnerships. The developer should engage local neighborhood groups and other community and regional organizations to provide the highest reasonable level of collaboration to ensure a successful project. Community partners could include business and trade associations, private and non-profit groups and associations, governmental agencies and similar stakeholders and benefactors. Evidence of effective engagement should be provided in the TIF Application. This collaborative approach is also helpful to secure grants from other agencies. 10) Mitigation of Construction Disruption. As part of the Go-Ahead letter by which the developer commits to proceed with the project and prior to the site preparation and construction, a Construction Mitigation Plan (CMP) shall be submitted to the City that identifies the developer’s and general contractor’s strategies to address the inconveniences that occur to the neighbors and general public during the construction period. Topics to be addressed in CMP include: milestones and methods to provide advance notice to neighbors; off- street parking for contractors and suppliers; delivery routes for construction vehicles; queuing locations for large vehicles serving the construction site; temporary street, lane or sidewalk closures; temporary detours for vehicles, pedestrians, bicycles and transit vehicles; construction site security; and strategies to mitigate dust, vibrations and noise. The CMP must also identify the responsible person to be contacted by neighbors when questions or problems occur. Phone number and email address of the responsible job site person shall be made available. 11) Fair Labor standards. The developer and general contractor shall certify that all applicable state and federal labor laws have been satisfied and shall allow third party inspections or other means of confirming compliance. Failure to comply with applicable state and federal labor laws shall be considered a default with appropriate penalties. 12) Actions to Promote Diversity and Equity in Redevelopment. The development and construction of projects with TIF support shall include best efforts by the developer and general contractor to provide employment opportunities for people that are under-represented in the construction field, including women and people of color. Similar efforts shall be made to structure contracts so that businesses owned by people under- represented in the construction industry (including majority women-owned, majority minority owned, certified MBE, WBE and VBE) have a fair and realistic opportunity to provide goods and services to the project. The developer’s plan and strategy to achieve these goals (commonly referred to as Equity and Inclusion Outreach Plan or EIOP) shall be included in the TIF Agreement. The plan shall identify employment and contracting goals for women and people of color. The plan must also include an intentional strategy to pursue and achieve these goals to the greatest extent practical. The plan shall also include the developer’s and general contractor’s practices to pursue equity, including how they participate in workforce development programs and similar activities in the Twin Cities. Page 168 of 174 City of Edina Tax Increment Financing Policy Page 9 Standards and recommendations from State of Minnesota Department of Human Rights, Hennepin County and similar local and regional agencies and trade associations shall be considered as guidance when identifying these goals and strategies. As a condition of the Certificate of Completion, the developer shall report on the implementation of the plan as well as the outcomes. Penalties shall apply when the developer fails to make a good faith effort to implement this plan. V. USE OF TIF IN EDINA 1) TIF to deliver public benefits. TIF will only be used to enable a developer to complete a project that delivers exceptional public benefits. An increase in property tax base alone is not sufficient to warrant the use of TIF. TIF shall also be used as a means to finance public infrastructure improvements carried out by the City. 2) “But for” Test. Any use of TIF shall be subject to the “but for” test as prescribed in Minnesota Statute; meaning that “but for” the use of TIF, a project of the size, scale and quality proposed would not occur. The public benefits delivered by the project would also not occur on the site without the use of TIF. 3) Final Site Plan Approvals. Requests for TIF support after preliminary zoning has been granted may result in changes to the preliminary site plan to comply with this TIF policy. Any delays or costs due to a re-review are the sole responsibility of the developer. 4) Financial Gap. TIF should only be considered to fill a financial gap that is unable to be satisfied by traditional equity and debt sources. TIF assistance will not be provided to projects that have the financial feasibility to proceed without the use of TIF. TIF will not be provided solely to provide an excessive contingency to the project or broaden a developer’s profit margins on a project. 5) Developer’s Capital Stack. TIF should be considered the last money into the deal for market-rate projects provided with TIF support. This includes multi-family housing where 20% or fewer of the units are affordably priced in accordance with Edina’s multifamily affordable housing policy. 6) Pay as You Go TIF Notes. TIF should only be provided to developers of market-rate projects on a pay-as-you- go basis. In certain cases, up-front or other forms of assistance may be considered by the City but will be at the sole discretion of the City Council or HRA. Bonding or any other appropriate means of financing, supported with TIF revenue should be used by the City to carry out public infrastructure improvements within the TIF District. 7) Interest Rate. The interest paid on TIF Notes shall be consistent with the typical interest rate paid in the marketplace for the type of project. The interest rate paid on the TIF Note should not exceed the interest rate underwritten for the permanent financing. Page 169 of 174 City of Edina Tax Increment Financing Policy Page 10 8) Deviations from Policy. The City reserves the right to approve or reject the use of TIF, the amount of TIF, and the total term, on a case by case basis, taking into consideration established policies, project criteria, and demand on services in relation to the potential benefits from the project. Deviations from this policy shall be allowed if specifically approved by the City Council or HRA. 9) Impact on City Services. TIF will not be used to support development projects that place excessive demands on municipal services or other capital or operating expenditures of the City. 10) Financial Analysis. The applicant shall provide to the City and its financial advisor all information necessary to conduct a financial analysis of the proposed project. This information must be complete and accurate. Falsification or manipulation of the financial information shall be terms for immediate disqualification of consideration. 11) Financial Returns to Developer. The financial returns to the developer shall be within the typical industry norms for the type and scale of the project. The use of TIF shall be limited to increasing the returns to the lower level of the normal range. 12) Projections of Incremental Taxes. The Financial Advisor shall use realistic projections for the value of incremental taxes generated over time. The amount of TIF pledged shall not exceed the amount projected to be generated from the completed project. 13) Access to Complete Site and Project Information. Prior to approval of the Term Sheet, the developer shall provide any surveys, required market and financial feasibility studies, appraisals, environmental studies, soil boring information for the project, and other information or data that the City or its legal and financial consultants may require in order to proceed with an independent underwriting. Such information is subject to the Minnesota Government Data Practices Act and may be public information at the time of submission. Proprietary information will be kept non-public to the extent allowed by Minnesota statute. 14) Financial Guarantees. In the event that a type of TIF support other than Pay-as-you-go Note is used, the developer shall provide adequate financial guarantees to ensure completion of the project and the repayment of the tax increment financing in the event that the project fails to be completed. Types off guarantees may include, but are not limited to, assessment agreements, insurance, letters of credit, etc. 15) Developer experience and capacity. Any developer requesting TIF shall demonstrate past success in real estate development as well as specific capability in the type and scale of development proposed. As part of the TIF Application, the developer shall submit a list of critical members of the development team that identifies professional qualifications and references. 16) Inflated Fees not acceptable. The developer fees, soft costs and operating expenses included in the pro forma must be reasonable and typical for the industry. Inflated fees, unreasonable expense categories and excessive contingencies will not be accepted. Page 170 of 174 City of Edina Tax Increment Financing Policy Page 11 17) Look back. The TIF agreement will include “look back” provisions to ensure that the TIF was actually needed and shall include early termination of TIF Note payments and/or “claw back” provisions if it is determined that TIF was not needed at the level identified in the TIF Agreement. The clawback provision may be waived for tax- credit and similar affordable housing developments. 18) Real Estate Transactions. TIF shall not be used when land acquisition costs exceed market land costs. Acquisition costs shall be scrutinized to ensure that the purchase price is fair and reasonable in relation to recent comparable transactions. If deemed necessary by the City, a current real estate appraisal prepared by an independent appraiser selected by the City shall be provided to validate the fair market value of the land in as-is condition. A high purchase price alone is not sufficient to warrant the use of TIF. 19) New and Retained Job Opportunities. When jobs are created or retained, preference should be given to jobs that are not currently located within the City. TIF will not be used for projects that would give a significant financial advantage over similar businesses located in the City. 20) Maximum TIF contribution. The principal amount of TIF shall be justified by the “but for” evaluation and shall not exceed the value of exceptional public benefits delivered by the completed market rate project. 21) Delivery of TIF Note(s). TIF Notes shall only be delivered to the developer (and be interest-bearing and payable) after the completion of the full project, delivery of the public easements, issuance of Certificate of Occupancy, certification of final costs, documentation of final equity and inclusion outcomes and other key parameters identified in the TIF Redevelopment Agreement. A Certificate of Completion shall be issued by the City/HRA to confirm completion of all TIF related requirements. 22) Park Dedication Fees. When TIF is used to support development of new outdoor publicly available spaces such as public plaza, public courtyard or similar public space, the value of such spaces shall not be deducted from any Park Dedication Fees due from the market-rate redevelopment project. 23) Grant Funding. Grant funding from other agencies shall be pursued when TIF is used for a development project. The amount of TIF provided may be reduced depending on the amount of grant funding received. The total grant funding received shall be included in the pro formas when the “look back” is calculated. 24) Business Subsidy Laws. The City will require compliance with the State of Minnesota Business Subsidy Laws in Minnesota Statutes, Section 116J.993 through 116J.997, unless the project meets one of the business subsidy exceptions. 25) Pooling. When pooled TIF funds are available from a different TIF District, their use should be prioritized to provide affordable housing in a greater amount, longer term, or lower target income than what is usually achieved using other City policies. Other uses of pooled funds shall be at the direction of the City Council or HRA. # # # Page 171 of 174 d ITEM REPORT Date: August 15, 2024 Item Activity: Action Meeting: Housing & Redevelopment Authority Agenda Number: 7.3 Prepared By: Bill Neuendorf, Economic Dev Mgr Item Type: Report & Recommendation Department: Community Development Item Title: Resolution 2024-06: Requesting that the City Council convene a Public Hearing to consider establishing the 72nd and France #3 TIF District. Action Requested: Approve Resolution 2024-06 requesting that the City Council of the City of Edina call for a Public Hearing on the proposed establishment of the 72nd & France #3 Tax Increment Financing District (a redevelopment district). Information/Background: This item pertains to the potential redevelopment of commercial property located at 7235 France Avenue. The development proposal from Enclave Companies and Lifestyle Communities received preliminary rezoning approval on June 18, 2024 with final rezoning approvals tentatively scheduled for September 17, 2024. The developer has requested that the City and HRA consider the use of Tax Increment Financing to provide a revenue source for over $20 million of public improvements and other improvements that yield many types of benefits to the general public. The use of TIF on this site could attract nearly $300 million of private investment on this site. The general terms and conditions under which TIF is recommended to be used on this site are outlined in the Term Sheet. This Resolution is the first step in the multi-step formal process to consider the use of TIF. With the preparation of a TIF Plan, the City, HRA and other taxing authorities will be able to consider the fiscal merits of this proposal. Staff recommends that Resolution 2024-06 be approved. Resources/Financial Impacts: This Resolution has no impact to the City or HRA budget. Relationship to City Policies: TIF Policy, Affordable Housing Policy, Sustainable Buildings Policy, Greater Southdale Plan and Design Experience Guidelines Supporting Documentation: 1. HRA Resolution 2024-06 Public Hearing for 72 France #3 TIF District Page 172 of 174 RESOLUTION NO. 2024-06 REQUESTING THE CITY COUNCIL OF THE CITY OF EDINA CALL FOR A PUBLIC HEARING ON THE PROPOSED ESTABLISHMENT OF THE 72nd & FRANCE #3 TAX INCREMENT FINANCING DISTRICT (A REDEVELOPMENT DISTRICT) WHEREAS, the Board of Commissioners (the “Board”) of the Edina Housing and Redevelopment Authority (the “HRA”) and City Council ("Council") of the City of Edina, Minnesota ("City") previously established the Southeast Edina Redevelopment Project Area pursuant to Minnesota Statutes, Sections 469.001 through 469.047, inclusive, as amended, in an effort to encourage the development and redevelopment of certain designated areas within the City; and WHEREAS, the HRA is proposing the modification to the Redevelopment Plan for the Southeast Edina Redevelopment Project Area (“Redevelopment Plan Modification”) to include the establishment of the 72nd & France #3 Tax Increment Financing District and adoption of a Tax Increment Financing Plan therefor (the Redevelopment Plan Modification and Tax Increment Financing Plan are referred to collectively herein as the "Plans"), all pursuant to and in accordance with Minnesota Statutes, Sections 469.174 through 469.1794 and Sections 469.001 to 469.047, inclusive, as amended; and NOW, THEREFORE BE IT RESOLVED by the Board as follows: 1. The HRA hereby requests that the City Council call for a public hearing to consider the proposed Plans and cause notice of said public hearing to be given as required by law. The public hearing shall not precede the date on which the redevelopment proposal for property located at 7235 France Avenue secures final zoning approval. 2. The HRA directs the Executive Director to transmit copies of the Plans to the Planning Commission of the City and requests the Planning Commission's written opinion indicating whether the redevelopment described in the proposed Plans is in accordance with the general plans for redevelopment of the City, prior to the date of the public hearing. 3. The Executive Director of the HRA is hereby directed to submit a copy of the Plans to the Council for its approval. 4. The HRA affirms the transmission of the Plans to Hennepin County and Independent School District No. 280 in which the Southeast Edina Redevelopment Project Area is located no later than August 30, 2024. 5. Staff and consultants are authorized and directed to take all steps necessary to prepare the Plans and related documents and to undertake other actions necessary to bring the Plans before the Council. Approved by the Board on August 15, 2024. ATTEST: _______________________________ James B. Hovland, Chair _______________________________ James Pierce, Secretary Page 173 of 174 STATE OF MINNESOTA) COUNTY OF HENNEPIN) SS CITY OF EDINA ) CERTIFICATE OF EXECUTIVE DIRECTOR I, the undersigned duly appointed and acting Executive Director for the Edina Housing and Redevelopment Authority do hereby certify that the attached and foregoing Resolution is a true and correct copy of the Resolution duly adopted by the Edina Housing and Redevelopment Authority at its Regular Meeting of August 15, 2024, and as recorded in the Minutes of said Regular Meeting. WITNESS my hand and seal of said City this ______________ day of ___________________, 2024. Executive Director Page 174 of 174