2021.09.14 CC Minutes - Laserfiche WebLink

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September 14,2021 Page 3 of 9 tax increment-financing district, located in Development District No. 1 Staff explained Michaela Huot with Baker Tilly had a presentation for the Council. Michaela Huot, consultant with Baker Tilly, discussed the TIF District 35 in further detail with the Council. She provided the Council with an introduction on the fundamentals of tax increment financing. She reviewed the types of improvements that could be funded by TIF. The common methods for financing costs was described which included tax increment bonds, pay-as-you-go notes, and revenue bonds. It was noted the developer was requesting a pay-as- you-go note. She gave a definition of TIF pooling and detailed the specifics from the US Bank redevelopment project. She commented further on the main findings the Council was being asked to make at this time and recommended approval of the Modification Development District No. 1 and to establish TIF District No. 35. Mayor Niedfeldt-Thomas asked what was included in soft-costs. Community Assets and Development Director Schlichting reported this included engineering fees, architectural fees, or other extraordinary costs. Councilmember Allen discussed the pooling component within TIF districts and how this helps pay off debts in the future. He questioned if there have been TIF districts in New Brighton that don't allow for pooling. Ms. Huot reported the majority have some pooling element. Mayor Niedfeldt-Thomas inquired what would happen in Northshore were not to finish this project. Ms. Huot explained with a pay-as-you-go note, there would be no risk to the City. She stated if the project were completed and then sold,there would be terms within the agreement to address the obligation and the City would not be responsible. Councilmember Abdulle requested further information regarding the affordability factor within this development. Ms. Huot indicated the developer would be using $1.9 million in funding in order to have 10% of the units affordable. This extraordinary expense would be covered by the developer and a portion of eligible expenditures would be covered by TIF. Mayor Niedfeldt-Thomas asked for additional information on the blight study. Ms. Huot discussed the substandard building assessment that was completed by LHB and noted more than 50% of the building was declared to be substandard. Councilmember Allen questioned how long the developer would be committed to keeping 10% of the units affordable. Ms. Huot stated these terms were being discussed with the developer and noted the term of the affordability would meet the City's objectives. She noted there would be language within the agreement that both parties agree to and meet the objectives for the provisions of the TIF assistance. Councilmember Abdulle asked how the percentage of affordable housing could be increased. He commented he would be interested in having some flexibility with the number of affordable units. Ms. Huot stated the number of affordable units was provided by the developer and additional affordable units within this development would not be feasible. Todd Arness, Northshore Development representative, explained he owns a fair amount of affordable housing and stated he was trying to create diversity within the housing stock. He indicated the challenge with increasing this further would be the impact it would have on overall rental rates. Councilmember Allen inquired what the rental rates would be for the market rate units. Mr. Arness estimated the rental rates would be $1,500 to $2,200. Councilmember Allen requested further information on what AMI would be chosen for the affordable units. Mr. Arness stated at this time the affordable units would be 60%AMI. Mayor Niedfeldt-Thomas discussed how higher end rental projects allow for pooling that assist with affordable housing. City Manager Massopust discussed how the City works to develop and maintain affordable units through TIF. Ms. Huot explained the City was in the initial stages and the dollars would remain within the TIF fund until there was a use. Councilmember Abdulle questioned if there were limitations on when pooled TIF dollars could be used. Ms. Huot commented further on the timing restrictions and pooling rules.