HomeMy WebLinkAbout1974-06-04 HRA Regular Meeting AGENDA
Housing and Redevelopment Authority of Edina, Minnesota
Tuesday, June 4, 1974, at 7:30 P.M.
Edina City Hall
1. Roll Call.
2. Approval of the Minutes of the Previous Meetings held May 7, 1974,
and May 23, 1974.
3. Recommendations and Reports.
A. Presentations Regarding Tax Increment Financing
1. 7:30 P.M. Don Pryor, Edina Public Schools
2. 7:50 P.M. Pat Lucas, State League of Women Voters
3. 8:10 P.M. Wayne Johnson, Hennepin County
4. 8:30 P.M. Dave Hegg, St. Cloud H.R.A.
5. 8:50 P.M. John Palmer, Attorney for NAHRO
B. Flow Chart of Activities for the 50th and France Project,
including Table of Contents of Feasibility Plan.
4. Adjournment.
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MINUTES OF THE SPECIAL MEETI?iG OF THE
HOUSING AND REDEVELOPMENT AUTHORITY
EDINA, 14IIINESOTA
HELD THURSDAY, MAY 23, 1974
EDINA CITY HALL
1. Roll Call: Charles W. Freeburg, Chairman
Gary B. Lyall
James W. Nelson
William F. Greer
Staff Present: Greg Luce, Executive Director
Lynnae Nye, Secretary
2. Approval of the Minutes of the Previous Meeting, held Tuesday, May 7, 1974.
All generally agreed approval of the minutes of the previous meeting
should be continued to the next regular H.R.A. meeting, June 4, 1974.
3. Recommendations and Reports.
A. Summary of Goals Statements as Presented May, 7, 1974.
Mr. Luce reviewed the "SUMMARY OF GOALS STATE14EITTS FOR THE 50TH AND
FRANCE STUDY AREA AS PRESENTED TO THE HOUSING AND REDEVELOP14ENT AUTHORITY 0 14AY 7,
1974" by the Edina Chamber of Commerce, the 50th and France Businessmen's Association,
and the Wooddale and White Oaks neighborhood associations (attached).
B. Resolution Determining Need to Study 50th and France Area.
C. Flow Chart of Activities for 50th and France Project.
Mr. Luce read the proposed resolution determining a need to study the 50th
and France area, and briefly explained the flow chart of activities for the 50th and
France project. Lengthy discussion was held regarding the flow chart, the Council's
determination of blight, the need to freeze the taxes by the end of this year, the
staff's available resources, the contents of the feasibility plan, etc. Mr. Lyall
questioned the practicality of the timetable and felt the Authority must establish
some criteria and project goals before a feasibility plan could be started. Mr.
Greer felt a feasibility plan would define the problems so that goals could be
established. Mr. Luce explained the problems perceived by the businessmen and city
are public facility problems (inadequate storm and sanitary sewer, insufficient
parking, deteriorating curbs and sidewalks, etc.), payment for which can no longer
be absorbed by the area businesses through direct assessments. He clarified the
feasibility report should include an inventory of existing property boundaries and
ownership and other conditions, an opinion from Jerry Dalen regarding bonds, an
opinion from the Engineering Department regarding the public works aspects, an
opinion from the Building Inspector regarding the structural elements, and a cost
determination. Mr. Lyall suggested a determination of the expected tax increase
might also be included.
Mr. Dick Wiltz (4400 West 50th Street) , Air. Tom O'Connell (4515 Moorland
Avenue), Mr. George Adamovich (4610 Bruce Avenue) , and Mr. Allen Horovitz (5002 Arden
Avenue) of the Wooddale Neighborhood Association felt the flow chart does not allow
sufficient time for a thorough and accurate study and questioned whether the area
landowners and businesspeople are informed of and support the proposed redevelopment
5-23-74 H.R.A. Minutes
Page 2
via tax increment financing. Mr. Horovitz suggested a detailed survey of the 50th
and France businesspeople be undertaken.
Mr. Robert Sykes (3924 West 50th Street), representative of the 50th and
France Businewsmen's Association, indicated that all of the businesses and landowners
are aware of the proposed redevelopment project, and all of them, except Mr. Lund
and his partner, are in favor of the tax increment finance program and are prepared
to increase their responsibilities.
Following considerable discussion, Mr. Lyall moved the resolution determining
a need to study the 50th and France area be approved, written as follows:
BE IT RESOLVED, that the Director and Executive Director be and they hereby
are authorized and directed to study the 50th and France commercial area for the
purpose of obtaining such information as is necessary for this Authority to determine
whether a ro
redevelopment project should be undertaken in such area which stud shall
P P � Y
include a recommendation of the boundaries of the project, a plan of redevelopment,
and the method of financing the project.
BE T 'v Director I FURTHER RESOLVED that the Director and Executive it for hereby are
authorized and directed to employ such consultants as they deem necessary for the
purpose of such study, subject to the approval of such employment and the terms thereof
by this Authority, and that the results of such study be reported back to the Authority
by not later than September 3, 1974.
Mr. Greer seconded the motion, and upon roll call the following voted:
Ayes: Mr. Lyall, Mr. Greer, Mr. Freeburg, Mr. Relson.
Nays: None.
Motion carried.
Mr. Luce agreed to prepare a table of contents of the feasibility plan.
Discussion of the flow chart was continued to the next H.R.A. meeting, June 4, 1974.
D. Recommendation for Citizen's Advisory Commission.
Mr. Luce stated that if a citizen's advisory commission is to be established,
it should evolve from a concurrence of people who want to be involved; full repre-
sentation should then be added. He suggested the Wooddale Neighborhood Association
might act as the CAC; Mr. Adamovich stated the Wooddale Neighborhood Association
would oppose that in that the neighborhood association is an information developing
and disseminating vehicle and therefore does not speak for the entire Wooddale
neighborhood population. Considerable discussion followed.
Mr. Nelson then moved the following resolution be written and approved:
BE IT RESOLVED that the Housing and Redevelopment Authority of Edina,
Minnesota, create an advisory commission to give advice on the 50th and France
project. Further, that such advisory commission be governed by a nucleus of seven
members but that all persons interested and in attendance at any 50th and France
Advisory Committee meeting may have equal participation and equal vote.
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5-23-74 H.R.A. Meeting Minutes
Page 3
Mr. Freeburg seconded the motion, and upon roll call the following voted:
Ayes: Mr. Lyall, Mr. Greer, Mr. Freeburg, Mr. Nelson
Nays: None.
Motion carried.
Following additional discussion, Mr. Freeburg moved the Executive Director
be directed to make a mailing to the 1,000 Edina homes nearest the 50th and France
business area, to be paid for out of the H.R.A. budget. Mr. Lyall seconded the
motion, and upon roll call the following voted:
Ayes: Mr. Lyall, Mr. Greer, Mr. Freeburg, Mr. Nelson
Nays: None.
Motion carried.
4. Adjournment.
Mr. Lyall made a motion to adjourn the meeting. Mr. Greer seconded the
motion and upon roll call the following voted:
Ayes: Mr. Lyall, Mr. Greer, Mr. Freeburg, Mr. Nelson.
Nays: None.
Motion carried. Meeting Adjourned.
Respectfully submitted,
A -
Greg Luce, Executive Director
GL:ln
SVMMIARY OF GOALS STATEMENTS FOR THE 50TH AND FRANCE STUDY AREA AS PRESENTED TO THE
HOUSING AND PFDF.VELOPMFNT AUTHORITY ON NAY 71, 1974
By the Edina Chamber of Commerce
--Don't limit activities to 50th and France area, but rather practice
"preventive planning".
By the 50th and France Business and Professional Association
--Solve the traffic and parking problem, including circulation.
--Encourage beautification by re-writing ordinances and by adding green areas. t
--Piece-meal solutions have not worked and a comprehensive solution is needed.
--Work with City of Minneapolis.
By Wooddale Tleighborhood Council (Adamovich)
--Do not encroach into residential neighborhoods.
--Do not widen streets or cause an increase of traffic.
--Involve neighbors actively throughout planning and implementation.
By Wooddale Neighborhood Council (Wiltz)
--Detailed study of financial aspects.
--Do not become an administrative staff-dominated comm-ssion.
t --Do not assume there is a need for anv redevelopment until that need is
properlw documented.
By Wooddale Neighborhood Council (O'Connell)
--Provide better traffic flora but not at expense of surrounding areas. Improve
circulation.
--Require the merchants to be the initiating force for redevelopment.
--Keep the area neighborhood serving, not a regional or community level area.
--Encourage non-motorized facilities.
--Do not allow commercial areas to encroach Into residential areas. Provide
a natural (oven space or preen belt) buffer not a ph•.,s_cal buffer.
--Work with flinneapolis and Metropolitan Counc il.
--Do not subsidize commercial areas with property tax r.onev.
By Others
--Consider relocating the post office.
GI,:In
5/23/74
THE EFFECT OF TAX INCREMENT FINANCING UPON
THE TAX DISTRICTS OF EDINA
Tom Melena
Administrative Assistant
City of Edina
May 30, 1974
THE EFFECT OF TAX INCREMENT FINANCING UPON
THE TAX DISTRICTS OF EDINA
At the present time the Edina tax area is comprised of 20 different
taxing units. Of these 20, 11 are listed and collected by the County, and in
fact are just subsections of the County tax department. Of the remaining, 5
are listed under miscellaneous, which is also responsible to County collection.
The remaining four, Watershed District #3, School District #273, Vocational
School District and the City of Edina, remain as independent from the County
as possible.
The following, Table #1, shows the breakdown of the tax mill rate, the
taxes generated county and district wide, and the taxes generated in the study
area. Also shown in the percent of each department's demand on total taxes.
Last of all is the percentage the study area contributes to the total various
governmental unit taxes. As can be seen, all districts are affected one way
or another, but it is very interesting to note who and how areas are affected.
For example, by using the study area assessed valuation of $3,870,000 and
computing the county's 26.289 mill rate into this, we find that $101,619 of
taxes are generated out of the study area for strictly county use. Please
note that this $101,619 comprises only 31.50 of the taxes of the area. What
is even more interesting is that this $101,619 comprises less than 12/100 of
a percent ( .1120) of the total $90,731,797 of taxes generated for Hennepin
County use, a very very minimal amount when looked at objectively. Yet what
is being asked of this taxing unit is not to give this amount up but just to
freeze it until the H.R.A. project is paid for. Here is where the big question
lies: how much for each taxing unit?
First we must make some basic decisions on how to approach the subject.
If no H.R.A. were attempted, what would happen to the area? To be very
realistic, there would in all probability be a 30 - 5% increase in valuation
because of inflation and minor property improvements. To be on the safe side
the computations in this report have been based on a 3% increase. With the
above assumption, what then is the cost to the various taxing units? By
picking out the projected 3o increase valuation of four different years, 1978,
19832 1988, and 1993, we can come up with a pretty good picture of actual cost.
It must be remembered that these are sample years; for the entire year by year
breakdown, please refer to Table No. 2 and Table No. 3.
In 1978 the county unit would be generating taxes of $116,227; if the
area were frozen in 1973, this would mean that $14,608 would be unavailable
for county use and instead made available for the H.R.A. In 1983 the amount
of taxes generated would be $134,698 or $33,079 for the H.R.A. In 1988 the
taxes generated would be $156,209 or $54,590 for the H.R.A. , and in the final
year of the H.R.A. project, 1993, the taxes would be $180,986 or $79,367 for
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The Effect of Tax Increment Financing
Page 2
the H.R.A. These figures are the money that would not be collected if a freeze
were placed on the taxes as of 1973. But in the same area, if a project was
then developed, we can see that in the year 1994, one year after projects end,
the taxes now received by the County would be $293,385, a bonus of better than
$100,000 per year over the original growth rate, money it would not receive
if the project were not done.
The following will show the same results for each of the Edina tax
districts. The City would have its taxes frozen at $24,209 for the study area,
at a 3% increase valuation these taxes would grow to $27,673 in 1978 or
$39464 to the H.R.A. In 1983 the taxes generated would be $32,070 or $7,861
to the H.R.A. In 1988 the taxes would be $37,192 or $12,983 to the H.R.A. , and
in 1993 the taxes generated would be $43,092 or $18,883 to the H.R.A. However,
in the year 1994 the city would now receive $69,853 in yearly taxes because of
increase valuation due to an H.R.A. project. This is close to a $25,000 yearly
bonus because a project was done in the study area.
The miscellaneous tax districts which receive 3.2% of all taxes generated
in the area. This amounts to $10,334. In 1978 the taxes collected for this
item would be $11,807 with a difference of $1,473 going to the H.R.A. In
1983 this figure would be $13,683 with the difference of $3,349 going for the
project. In 1988 we would have collected $15,868 with a difference of
$5,534 going for the project. The last year, 1993, would find $18,385 in
taxes with the difference of $8,051 to go to the H.R.A. project. In the year
19941% with the project paid for, the tax now generated would be $29,804, all
of this would be because of increased valuation over the 20 year period.
Because of the project being done, there would be a $11,500 bonus per year,
where without the project you would have just your standard valuation.
The Hennepin County Vocational School system would be the next item to
look at. The freeze level for this would be $11,877 in tax from the study area.
In 1978 $13,652 would be collected with a difference of $1,775 going to the
project. In 1983 the amount would be $15,821 with the H.R.A. difference being
$39,994. 1988 would be $181348 with a difference of $6,471, and 1993 would be
$21,258 with a difference of $9,381 going to finance the project. In the year
1994 the vocational schools would now receive $34,461 instead of $22,000 if
the project had not been done, or a bonus of $12,500 per year from then on.
Watershed District #3 is so inconsequential that it is better explained
by referral to Table Pros. 2 and 3. It is found that the amount being dealt
with is 7/100 of 1 percent which works out to be $220. By 1994, this means that
$651 would be collected or a $200 bonus, year by year for doing a project as
outlined.
The last area to look at is one of the most important. The effect of a
tax increment financing plan on the Edina School District. At the present time
the School District #273 receives 53.8% of all taxes collected in the general
area known as the City of Edina. In a dollar amount this is $11,902,989.
The Effect of Tax Increment Financing
Page 3
Breaking this down even further we find that the study area of 50th and France
contributes, as of 1973, $172,869 to the taxes collected from the city for
school purposes. This means that 1.4540 of the school taxes come from this
study area. On Table No. 3 it has been shown the difference, year by year,
between the frozen level and the tax level of a 3% valuation increase. For
a brief example I will again use the years 1978, 1983, 1988, and 1993. The
base level for the school district would be $1721869 in generated taxes. With
a 3% valuation increase the area would in 1978 generate $198,510 in taxes.
The difference of $251641 for that year would be unavailable for school use
and set aside for the H.R.A. project. In 1983 the taxes normally generated
would be $230,056 or a difference of $57,187 for the project fund in that year.
In 1988 the taxes generated would be $266,796 (again at a 3% annual valuation
increase) or a difference of $935927 for the H.R.A. In the year 1993 the
figure would run $309,114 or a difference of $136,245 for the H.R.A.
After this brief look one thing comes out very vividly: this is a lot of
money, and with the school budget being tight, they cannot afford to lose it.
If this were the case the project would have to be scrapped, however, all the
money that the school "loses" is made up for in matching amounts. If, for
example, the school were to lose $25,000 in revenue in 1978 as project, this
money is matched dollar for dollar by the State who in turn directs the County
to turn these funds over to the school district.
In conversations and meetings with Dr. Lieber, Superintendent of Schools,
Donald Pryor, Assistant Superintendent for Business Services, and Jay
Willemssen, Chief Accountant for Edina School District #273, it has been
affirmed and reaffirmed that any money taken from the -school tax revenues
through this freeze will be replaced dollar for dollar by higher governmental
units, i.e. state and county. The formula for school aid is at the present:
$750 X Pupil Units - 30 mills X EARC. By freezing the area the 30 mills in the
above formula is not met so the state forces an increase in the EARC to make up
the remaining fund. The result is that all through the 20 year financing, the
school district receives just as much money as if nothing were done to the
area and just normal development were allowed to take place. But now to
top things off, in 1994 after the project is done the school district now
receives $501,083 in taxes from the study area. A end bonus of $190,000 per
year from then on. In essence this means the schools lost nothing during the
financing period and receive a gift of $190,000 at the end of the 20 year
period. .
With this in mind there is no way the school district can lose, be
whether a 3% or 5% or 7% figure is used for computations, the school will not
lose.
CONCLUSION
In conclusion, various things should be pointed out:
1. The school becomes a big winner as far as an H.R.A. project is concerned.
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The Effect of Tax Increment Financing
Page 4
2. The county contributes a large percentage of the money for the
project, be it through actual frozen funds or through aid to the school.
However, the amount is very small when compared to the overall budget--less
than 12/100 of 1 percent, and after a period of less than 10 years the county
has recouped its losses and is in fact better off than when it started.
3. The City of Edina loses some tax money during the financing period,
however, within 10 years this is also recouped.
4. Most important of all, is that a job is being done and financed
that needs to be done. All through this report we talked of a valuation
increase, but what if the confidence in the area fails and nothing is done,
could the area become, within the next 20 years, a run down Selby and Dale
area. If that were to happen, the City did not fulfill its responsibilities
to the people, and as a result would actually have an area bringing in not
$321,318 in generated taxes, but maybe less because of property devaluation.
TM:ln
5/30/74
CPREPARED __---
--_--_.__.AREA__.VALUATION__----__ _ _�_— _______._-___' ------_:-------_-----_._.__--- --
_ APPROVE
_ (3%__Increase._Valuation/Inflation) __.-._.--__ _ __..--__..._ _____.______
Running
0r_ gnal _Tax= —_Ta:x._Increment Total
1973 8,900,000 - - -- .3 56! 000 i 3 560 00 -- ---- -------
1974 9,970,000 3990 00 3 56:0 00 4 3,0 00 43'00 0
(800,000 Increase) _
.__1-275 11,07p000 _ _____4 43d_0_o Q._____3_ .6'x_09 A 70 0G r 139_00
I (800,000 Increase) ! !
1976 15,300,000 612,000 3 560001 25 6iio oo 386 000 -
(3,900,000 Increase)
1977
15,76o,000 63 1000 3 56Q-0o; 275,00 0 {__ 6611000 _
1978 16,300,000 64 5 000. 356o oo_ 293 000, - 9541000'
_
' f �
r
1979 16,720,000 6 69;0 0 0. 3 560 0
31 3000 12
� o� ._ 67'000
1980 --17 220,.000 ----- - — 689000 . 00
- o 3-5 6 - Q 3 3?OQ k 6_0 a'_q szo
1981 17,730,000 a 000 356{0 0 0 3 53;0 00 f _ 19530 00
f
82 18,270,000 _ _ 731.000 356- 000 375000 { __2328:000
19
1983 180820,000 753.0 00 3560 00 3 970 00 2 72500 0
1984 19,380,000 775000 356 D 00 4 190 00 3144 000
1985 19,960 000,
i
1986 20,560,000 8230 00 356000 467000 ! 4053.000
1987 21,180,000 847000 35 000 4 91000 __11 4544: 00 0
1988 21,810,000 8 730 00 '35 000 _ -:. 517000 5061`0 00
1989 22,46o,000 8990 00 3560 06 5 430 00 5604000
1990 23,140,000 926000 _:3_ __o o_Q.___.____5__70 0 0 0 6 T o 0 0 __
_. ._ _.
!
1991 23,840,000 954000 35 000 598000 "! 677 20 00
1992 24,550,000 982000 356. 00 0 626 oo o 739 8000
2.993 25,290,000 1011000 356000 655.000 8053000
1994 26,050,000 1 042 0 00 356, 000 6 86000 8739.000
_._1995 26,830,000 1073000- 356'0 0 0 .7170 00 94-56000,
1996 27,630,000 1105 00 0 356 000 ' 7 49D 00 �10 205 000
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i �d C n n 8,0 nn ( -r n n ,n IQQ7 rll0_lAA0 n J0%J V G 1 1•VV 1n n n
-1L.0 V U
NAME DATE
{ PREPARED
APPROVED
(5 ' Increase Valuation/Inflation)-.--.--- ,_.___
Running--
-- _-----------------_---
---Taxes--at-4%--- Original.-Tax-Tax_,Inerement-�-__Tata1,_
356;000 3 56'10'
' �0 '
1973 8,90�,000 _ - -___ _ , ------ T -
1974: 10,145,000 - I 406000 3 5 60 0 0 :!
500 0 0 '- -- - --
(800,000 Increase)
1975__._. .11 453.,000 .8_O-0-0— -3-54D-0-0—'
(8000000 Increase)
1976; 15,925,000 - 6370 0 0 3 56000 281000 4330 00
(3,900,000 Increase) __-
_
1977, 16,720,000 ._ :669,0 0 0 3 56.0 0 0 _ 313 0 0 0 74 0 0 0
I
1978 17,76o,000
71 000 3 561000 3 550 00 1101 000
1979 18,44o,oco _ 73 §0 00 3 560 00 382,000 14 83 00 0
19go _ 19,-3 o�__-_ _ �7Z4000 356000 1 00_0 101000
1981 20,320,000 813000 3 56 o o o 45 l0 0 0 i__ 25 58 000 �-_.
1982 21,350,000 - 854,000 3 56,0 00 4 9 0 0 0 z 856 0 00
1983 22,420,000 - 89 .0.00 3 56'000 5470 00 .- 3 3 9?00 0
f
:
1984. 23,530,000 942000 356000 5860 o0 3 983000
1985 24171010001-____.-_.. 9 88000 35b,000 _ ._ ._b 2r0 00 ��
:
_-_- �_.4-61 000
1986.1 25,950,000 1038000 356000' 68 000 5297004 11 _
1987, 27,250,000 1090000 3561000 7340 00 ;L 6 03 000
1988 28,60o,0oo 1144 0 00 6 0 0 78 000 �. 6`814,000
c
1989 30,304,0, 12120 00 3 560 00 8560 o0 76750 00
1990. _-._ __31,540,000-------------__ .__ . -
__.lz_6 2,00 0 _3.5 b o0._.0 9_ob o 00. 8.5.8
f ,
' r
1991 33,113,000 1325,000 3500 00 9690 00 9 55d000
1992 34,770,000 1391-0 00 3560 00 1035000 10585000
1.993 36,507,000 14 000 00 356000 1104000 11689,000
1994 38,330,000 15330 00 356'0 o 1177000 12866 oo0
t
1995 40,250,000 _ __l 6.1 _0.-0 c .__ r& 0.00_ __._-_-12 4 0_c_0 3.4-1.2-0-0-0
� I
1996 42, z6o 000 1 6 90o oo 3 5 6 000 1334 000 : 154 5,400 0
14Vr1 e'i. '2111. rwin 'i 1T7 Cn nn, -3 &-�;nrz.n,