Consider Recommendation on Cost Share Alternatives for Riverdale Drive Development Initiated Expansion and Safety Improvement Project

The purpose of this case is to consider a recommendation to the City Council on acceptable funding alternatives for the Riverdale Drive Development Initiated Expansion and Safety Improvement Project.

The need for this project is being driven by a development proposal known as Riverstone South by Capstone Homes located on property owned by Pearson Properties of Ramsey on the south side of Highway 10.

This topic was discussed at the February 11, 2020 Work Session with the City Council and Planning Commission. Consensus at that meeting was that this improvement was necessary and that a general cost-share model of an even split between 1) Capstone, 2) the Future Commercial/Industrial Development between the Riverdale Extension and Highway 10 and 3) the City was desired. These are very preliminary discussions, and high-level direction is sought. 

20 minutes. 

Assessment Method

All parties involved have verbally agreed to an even split of the assessment between Capstone's residential development and the Pearson's future commercial/industrial development along Highway 10. The assumption is that all parties will agree to these terms in a future Assessment Agreement that eliminates any risk and/or liability from deviating from the 'net developable acreage' method of assessment used on Puma Street on the north side of Highway 10. 

City Contribution to Collector Road

At the February 11, 2020 Joint Work Session with the Planning Commission, consensus was that a general City contribution (Municipal Contribution) was appropriate given the status as a collector road. Direction was given that an approximate 33% contribution was desired.

A key component to the success of this project is a potential grant award from MnDOT in the amount of $710,000. While Staff feels confident that this project will score well in the next application round, there is no guarantee of this award. This project is listed in MnDOT and Anoka County's 2014 Highway 10 Access Planning Study. 

A portion of the full Riverdale Drive project is located on real property owned by Anoka County. This corridor was originally planned for a river crossing across the Mississippi River to the City of Dayton. At this time, Anoka County does not have funding available to contribute to this project.

As a sidebar, the City still desires to plan for a river crossing, the alignment simply has changed to coincide with Armstrong Boulevard. 

When considering all the variables above, Staff used the following filters to arrive at our recommendation.

• Even split of costs on the Pearson Frontage (excluding Anoka County frontage)
• Cap public contributions (City, County, State) to 60% of total project costs (Pearson + Anoka County Frontages), based on past practice in similar projects

Total Assessment Amount and Preliminary Assessment Amount

Attached to this case is a detailed breakdown of the proposed Project Proforma.

Timelines

Capstone Homes has expressed a desire for subdivision approval for Riverstone South by the end of October, 2020. If the City Council is comfortable with the proposed cost share agreement, this timeframe is feasible. If the Council desires to consider a higher contribution with traditional funds or introducing an eligible Tax Increment Financing (TIF) economic development project on the commercial/industrial parcels along Highway 10, review and approval will likely spill into 2021. Capstone has noted a desire to receive project approval by August, 2021 in this scenario, otherwise the project will slide into 2022.

At the end of the day, the City is not obligated to contribute to any portion of this project at any given time, although there would be value in doing so. The question at hand is to better determine what funding sources can be secured and at what timeframes. The City may be able to assemble additional funding sources (both internal and external) to increase our participation, but that will take time. Staff feels the current proposal is a reasonable compromise. 

Future Discussions

This case is intended to serve as high-level policy direction. Next steps including, but not limited to Feasibility Report, Approving Plans, Awarding Contract and holding Assessment Hearing will provide additional levels of detail. The intent of this step is to limit the number of alternatives Staff should explore.

Alternatives

Alternative 1 - Recommend that the City Council proceed forward with funding discussions as proposed (Contribute $205,000 of City dollars and allocate $188,000 of the MnDOT Grant to the Pearson Frontage) to the Collector Road and assess remaining balance using the per acre method).

Alternative 2 - Recommend that the City Council proceed with a Cost Share as outlined above, but with modifications.

1. Collector Road Contribution Amount
2. Assessment Method (linear frontage vs. net developable acreage)

Alternative 3 - Recommend that the City not proceed with the project.

The funding for this project is proposed to be a combination of City Contributions and Developer Assessments as outlined below. As it pertains to the City's Cost Share (Municipal Contribution to Collector Road + Assessment Amount for Ownership of Real Property), several funding sources are available.

1. City's Public Improvement Revolving (PIR) Fund (generated from local property tax revenue)
2. Anoka County Redevelopment Authority (ACHRA)
3. State of Minnesota Municipal State Aid (MSA) Account
4. MnDOT Local Partnership Program (LPP - competitive grant up to $710,000)
5. Tax Increment Financing (for qualifying projects in the Commercial/Industrial District)

Staff recommends that the City Council confirm direction to continue funding discussions with the City offering to pay up to 1/3 the project costs on the Pearson Properties Frontage (excluding Anoka County Parcel). 

Note - Capstone Homes is recommending that the City contribute 50% of the cost of the Pearson Properties Frontage (excluding Anoka County Parcel). Staff will have scenarios available at the meeting that demonstrate this pro-forma. 

Motion to recommend that the City Council confirm direction to continue funding discussions with the City offering to pay up to 1/3 the project costs on the Pearson Properties Frontage.