7.4.
CC Regular Session
- Meeting Date:
- 04/24/2018
- Submitted For:
- Patrick Brama
- By:
- Patrick Brama, Administrative Services
Information
Title:
Affinity Apartment Project: Resolution #18-061 Approving a TIF Agreement
Purpose/Background:
PURPOSE
The purpose of this case is to consider approving the attached Resolution #18-061 authorizing the use of Tax Increment Financing (TIF) to reimburse public infrastructure improvements costs related to the proposed Affinity Living apartment project located in The COR. This action is generally consistent with attached and previously approved MOU and PA.
BACKGROUND, Project
CAP Acquisitions LLC entered into a purchase agreement with the City of Ramsey for a roughly 3.3 acre piece of city-owned land located in The COR on September 26, 2017. CAP Acquisitions is proposing a new 174-unit, senior, independent living, market rate, high amenity, apartment complex called Affinity Living. Attached is the purchase agreement. Affinity Living is proposed to begin construction in July 2018, and will take 12-18 months to complete.
BACKGROUND, Infrastructure Improvements
The proposed Affinity Living project will trigger the construction of new public infrastructure. Please see attached Bolton & Menk Infrastructure Study for details on public infrastructure located near the proposed Affinity project (reference page 8 and Figure 2). NOTE: not all of the infrastructure shown in the Bolton & Menk report will be constructed as a result of this project. It's staff's recommendation, that Road Segments A1, C1, and C2 be constructed as a result of this project. It is also staff's recommendation that Affinity be responsible for paying a share of Road Segments C1, A1, and B--as these road segments are located adjacent to their site.
BACKGROUND, Cost Share for Infrastructure
The attached PA and MOU with CAP Acquisitions indicates that the developer will pay for 40% of all public infrastructure costs. If the developer is only located on one side of a new road, they would pay for half of the 40% share, or 20%. This arrangement is consistent with past practice in Ramsey and recent projects (Bunker Lake Industrial Park, Stone Brook).
Staff is recommending Affinity pay 100% of all public infrastructure costs upfront (including the city's portion), for to Affinity design/ plan the public infrastructure work, and for Affinity administer the construction of said work. In return, staff is recommending the city pay back Affinity over time, with interest, via the existing COR TIF District #14. It's expected the repayment period would be about 8-9 years (i.e. the city would pay back their portion of public infrastructure costs over the course of about eight years via TIF). This arrangement is ideal for the city as it eliminates the risk of issuing a bond or upfront financing, and is paid on performance (i.e. we only pay TIF after property taxes are collected).
BUSINESS SUBSIDY?
Based on discussions with the city's financial advisor, Ehlers, this arrangement is not considered a formal business subsidy. This cost share arrangement is based on past practice and informal city policy (i.e. the 60/40 split). TIF is being used to fund the city's portion of costs only--not the developers portion. Attached is the city's business subsidy policy for reference. As outlined in Section E on page 5, items #2, #3, and #7 apply here. This means this project (i.e. TIF Agreement) doesn't require a formal public hearing, formal underwriting (i.e. reviewing the developers pro-forma), and no formal application from the developer (i.e. no fee).
The purpose of this case is to consider approving the attached Resolution #18-061 authorizing the use of Tax Increment Financing (TIF) to reimburse public infrastructure improvements costs related to the proposed Affinity Living apartment project located in The COR. This action is generally consistent with attached and previously approved MOU and PA.
BACKGROUND, Project
CAP Acquisitions LLC entered into a purchase agreement with the City of Ramsey for a roughly 3.3 acre piece of city-owned land located in The COR on September 26, 2017. CAP Acquisitions is proposing a new 174-unit, senior, independent living, market rate, high amenity, apartment complex called Affinity Living. Attached is the purchase agreement. Affinity Living is proposed to begin construction in July 2018, and will take 12-18 months to complete.
BACKGROUND, Infrastructure Improvements
The proposed Affinity Living project will trigger the construction of new public infrastructure. Please see attached Bolton & Menk Infrastructure Study for details on public infrastructure located near the proposed Affinity project (reference page 8 and Figure 2). NOTE: not all of the infrastructure shown in the Bolton & Menk report will be constructed as a result of this project. It's staff's recommendation, that Road Segments A1, C1, and C2 be constructed as a result of this project. It is also staff's recommendation that Affinity be responsible for paying a share of Road Segments C1, A1, and B--as these road segments are located adjacent to their site.
BACKGROUND, Cost Share for Infrastructure
The attached PA and MOU with CAP Acquisitions indicates that the developer will pay for 40% of all public infrastructure costs. If the developer is only located on one side of a new road, they would pay for half of the 40% share, or 20%. This arrangement is consistent with past practice in Ramsey and recent projects (Bunker Lake Industrial Park, Stone Brook).
Staff is recommending Affinity pay 100% of all public infrastructure costs upfront (including the city's portion), for to Affinity design/ plan the public infrastructure work, and for Affinity administer the construction of said work. In return, staff is recommending the city pay back Affinity over time, with interest, via the existing COR TIF District #14. It's expected the repayment period would be about 8-9 years (i.e. the city would pay back their portion of public infrastructure costs over the course of about eight years via TIF). This arrangement is ideal for the city as it eliminates the risk of issuing a bond or upfront financing, and is paid on performance (i.e. we only pay TIF after property taxes are collected).
BUSINESS SUBSIDY?
Based on discussions with the city's financial advisor, Ehlers, this arrangement is not considered a formal business subsidy. This cost share arrangement is based on past practice and informal city policy (i.e. the 60/40 split). TIF is being used to fund the city's portion of costs only--not the developers portion. Attached is the city's business subsidy policy for reference. As outlined in Section E on page 5, items #2, #3, and #7 apply here. This means this project (i.e. TIF Agreement) doesn't require a formal public hearing, formal underwriting (i.e. reviewing the developers pro-forma), and no formal application from the developer (i.e. no fee).
Notification:
Observations/Alternatives:
NA
Funding Source:
TIF District #14
Recommendation:
STAFF
This action is generally consistent with attached and previously approved MOU and PA. The attached TIF Agreement has been reviewed by the City's Real Estate Attorney Briggs & Morgan and Ehlers. Attached is a MEMO from Ehlers RE the agreement. Ehlers plans to attend this meeting and will be available to answer questions as needed.
EDA Review:
The EDA reviewed this case on 04/12 and recommended 6-0 for the City Council to approve. Please see QCTV video for details. No major discussion occurred. The EDA did ask for Ehlers to provide an overview of their attachment MEMO.
This action is generally consistent with attached and previously approved MOU and PA. The attached TIF Agreement has been reviewed by the City's Real Estate Attorney Briggs & Morgan and Ehlers. Attached is a MEMO from Ehlers RE the agreement. Ehlers plans to attend this meeting and will be available to answer questions as needed.
EDA Review:
The EDA reviewed this case on 04/12 and recommended 6-0 for the City Council to approve. Please see QCTV video for details. No major discussion occurred. The EDA did ask for Ehlers to provide an overview of their attachment MEMO.
Action:
Motion to:
Adopt Resolution #18-061 Approving a TIF Agreement with CAP Acquisitions LLC; subject to final review and amendments by the City Attorney.
Adopt Resolution #18-061 Approving a TIF Agreement with CAP Acquisitions LLC; subject to final review and amendments by the City Attorney.
Attachments
Form Review
| Inbox | Reviewed By | Date |
|---|---|---|
| Kurt Ulrich | Kurt Ulrich | 04/19/2018 09:33 AM |
- Form Started By:
- Patrick Brama
- Started On:
- 04/14/2018 10:25 PM
- Final Approval Date:
- 04/19/2018