72nd & France #3 TIF District

Barry Rosenthal. Scotia Drive. I support establishing this TIF district. We need to continue to invest in the city. This development will create a livelier, more sustainable city and France Avenue.

Just finished watching the Planning Commission and City Council meetings regarding TIF for 7235 France. Disappointed that Edina is so far down the approval path for one of the city’s largest developments, of a prime piece of property, in such a disorganized manner. Relieved that two City Council members and three Planning Commissioners also question what is going on.

Yes, we need clarity and data to make such a big decision. Members of the Council and Planning Commission expressed frustration with the lack of both. The city representative said that EVERY TIME he presents information on TIF everyone is confused. Yet he doesn’t see that he’s the one constant in the confusion. As the Planning Commissioner stated, “Words matter.”

A Council Member and citizen suggested that without TIF the project could right-size itself. AMEN.

I am very concerned with the expanded usage of TIF in Edina. Coupled with rising tax levys, it creates an additional burden on taxpayers. Look at the current need for additional fire and police which comes along with expanded housing and development. While any single project may not stress current staff, the cumulative impact cannot be ignored.
I believe TIF should be used sparingly. My simple litmus test is: does the project achieve critical City goals that otherwise could not be realized? You can get consultants to say anything you want them to about meeting minimum qualifications for TIF. We are fortunate to have some of the best real estate in the metro area. Developers should be falling over themselves to build here. We don’t need to reward them above market parameters. Centennial Lakes? Sure. 50 th and France? Yes. Dayton’s? This seems like a solid no. It will be interesting to see what the developers come back with, but they will likely paint a bleak picture. Just positioning and negotiating.

I support the creation of the proposed TIF district at 72nd and France. I appreciate judicious use of TIF and it makes a lot of sense to use it for site redevelopment at this location.

At the Sept. 17 City Council Meeting, the representative from Enclave said that without TIF, the current project cannot work; and with nearly 45% of the proposed site redevelopment having public benefits, that seems logical and reasonable to me. While something could be built on the site without TIF, having gotten a taste of the exciting redevelopment possibilities that go beyond just another office building or strip mall, I think that scaling back the project and staring the development process all over again is ill advised.

I appreciate the work City staff does to try to distill complex issues and help make them accessible to those residents (like me!) who don’t eat, sleep, and breathe development and planning on a daily basis — more importantly, I trust the work they do. The Sept. 4 memo from staff outlines the anticipated property tax benefit to our community that will be realized by creating an active TIF district at 72 and France. To the best of my knowledge we don’t have a long (or even short) line developers eager to take on a project of the scope and complexity that is envisioned for the site without TIF. And failure to utilize TIF at the site sounds like it would present more challenges when it comes to creating community connections and public benefits that integrate into our Comprehensive Plan and the Greater Southdale Plan. I like the bold plan that’s being considered for the Macy’s site — it’s a thoughtful, informed example of a project that makes Edina attractive as a place to live, play, work, and shop! I support the use of TIF to make it happen.

Some of my family’s favorite places — the tranquil and inviting paths and public amenities at Centennial Lakes and the dynamic hub of 50th and France where performances and gatherings bring people together for small town-feeling community in the midst of a vibrant urban area — were made possible through TIF. Having read the materials and watched the meetings on this topic, I feel confident that the use of TIF at the Macy’s site is reasonable and judicious.

I support the creation of the proposed TIF district at 72nd and France. I appreciate judicious use of TIF and it makes a lot of sense to use it for site redevelopment at this location.

At the Sept. 17 City Council Meeting, the representative from Enclave said that without TIF, the current project cannot work; and with nearly 45% of the proposed site redevelopment having public benefits, that seems logical and reasonable to me. While something could be built on the site without TIF, having gotten a taste of the exciting redevelopment possibilities that go beyond just another office building or strip mall, I think that scaling back the project and staring the development process all over again is ill advised.

I appreciate the work City staff does to try to distill complex issues and help make them accessible to those residents (like me!) who don’t eat, sleep, and breathe development and planning on a daily basis — more importantly, I trust the work they do. The Sept. 4 memo from staff outlines the anticipated property tax benefit to our community that will be realized by creating an active TIF district at 72 and France. To the best of my knowledge we don’t have a long (or even short) line developers eager to take on a project of the scope and complexity that is envisioned for the site without TIF. And failure to utilize TIF at the site sounds like it would present more challenges when it comes to creating community connections and public benefits that integrate into our Comprehensive Plan and the Greater Southdale Plan. I like the bold plan that’s being considered for the Macy’s site — it’s a thoughtful, informed example of a project that makes Edina attractive as a place to live, play, work, and shop! I support the use of TIF to make it happen.

Some of my family’s favorite places — the tranquil and inviting paths and public amenities at Centennial Lakes and the dynamic hub of 50th and France where performances and gatherings bring people together for small town-feeling community in the midst of a vibrant urban area — were made possible through TIF. Having read the materials and watched the meetings on this topic, I feel confident that the use of TIF at the Macy’s site is reasonable and judicious.

TIF Economics 101
Does or does not Tax Increment Financing (TIF) unduly burden current tax payers?

Let’s look at the case where TIF is used to promote the replacement of office/commercial property into high density housing. In spite of the change in use, City staff time and time again makes the case that TIF does no harm to current residents. Consistently, City staff argues that there would be no need to add additional police, fire, or paramedic staff. Further, that service levels would not decrease outside of the TIF district. As a result, City staff concludes that there is no harm to current residents. This claim is uncompelling because it looks at each project in isolation. More importantly, the claim of no harm is uncompelling because it views costs solely as a step function --- i.e. costs only go up when you add staff. And, given the micro view of each project in isolation…………. But still, is City staff incorrect in their thinking?

An alternative view, one that aligns more closely in how the world actually works, is to realize that costs increase both as a step function and as a recurring base level of ever rising spending. Consider this simple example: The City has just one employee who currently earns a $130,000 salary on which the City incurs another 20% or $26,000 for healthcare, retirement, and employer payroll taxes. Therefore, the year-one cost for this employee is $156,000. But, what happens to that cost during the 25-year life of a TIF district? Assuming just a 3.5% inflation rate the annual cost for that one employee rises to $368,000 --- a $212,000 increase. If you assume a 5.0% inflation rate the annual cost rises to $528,000 --- a $372,000 increase. Assume any reasonable inflation rate and apply its impact across all types of City spending, not just staffing, and the increase is huge --- even if not a single new officer, fireman, or paramedic is hired. So, who pays for this ‘increment’ in total City spending? Not the TIF site --- its property taxes remain ‘frozen’ at their year-one level --- leaving what will be millions and millions of additional dollars to be divided up and paid by each resident.

So, the answer is “Yes”, TIF does do financial harm to residents --- today and especially in the future.
Ralph Zickert

With respect to the $29,530,000 earmarked for the tunnel, the cart is way before the horse. Where is the neighborhood survey indicating a majority of neighbors west of France support the concept? Where is the city-wide survey indicating a majority of the residents support a $30 million spend? Where is the projected seasonal usage data of the three alternatives: do nothing, tunnel/overpass, improved crosswalk? If it is such a good idea, why is it not brought forward in the light of day as a bonding issue rather than in the dark of night buried in a TIF proposal where even the public hearing presentation failed to call out a specific dollar amount associated with the initiative?
Ralph Zickert

Mayor Hovland and Council Members,

I believe TIF should be used very carefully and judiciosly by the City to support development efforts.

If the Macy's developer says they need TIF to redevelop the site as planned, and the Council approves the development plan as is, it seems to me the Council has approved TIF for this project.

What would the Macy's development plan look like without TIF? Why not explore this option before approving the plan?

Tom Tessman
Edina resident

Mayor and Council Members, Residents of Edina
1) As Member Pierce has so aptly called out --- “What would this site look like without TIF?” At no point has this developer or any other TIF district shared this information. But for knowing that, how can the Council, let alone residents, make an accurate cost / benefit determination of the public benefit.
2) Staff has identified the development costs that are “eligible” to be funded by TIF ---- but that is a list of eligible costs NOT the public benefit. Benefit to the developer yes. Benefit to the public no. In addition to what would the site look like without TIF --- “Where is the tally sheet on the other side which details the developers cost to provide each so-called public benefit?” Of course, this is a question City staff has never answered with respect to its own budget, so why hold developers to a higher standard.
3) As for what the City staff has represented as “public” benefits, they are few and temporary. The most glaring of which is the sunset clause on public housing. I could only hope you’d be there 25 years from now when these residents are again ‘out on the street’ looking for housing.
4) As for the division of the parcel into ‘sub-blocks’, it represents a clear benefit to the developer which in turn drives the need for mid-block roadways. If not a benefit, why create three different entities to finance the project(s)?. Smaller project equals lower risk.
5) As for the ‘public’ roadways. Yes, there is a public easement but the overwhelming use will be private. To say otherwise is just a bald face lie.
6) As for the “green / sustainable” construction --- One has to scratch their head as to why Edina jumps through hoops to re-zone and toss TIF dollars to a development firm that is not best in class with regards to “green & sustainable” as it’s not their normal course of doing business.
7) As for underground / covered parking --- please name a single recent residential development of this size in Edina that does not include covered parking. And 140 ‘public’ spaces. Give me a break. Maybe five cars currently park at Macy’s and given the overflow street parking by the Maison Green tenants, it’s clear ‘public’ spaces at 7235 will quickly be filled by residents or remain vacant.
The lack of transparency with residents has been shameful --- with presentation after presentation not including a) TIF note interest cost or b) the additional $30 million, earmarked for the France Avenue underpass. All of the above wouldn’t make any sense in the private sector except this is not the private sector. Nor does private enterprise get to sequester cash in a separate account for spending on pet projects.
Regards,
Ralph Zickert

During the September 25th Planning Commission meeting, members wrestled with resolution B-24-09 which asked for their vote of approval for the 72nd & France #3 TIF Plan --- aka the Macy’s site redevelopment. I’d like to share what I believe to be some important background NOT presented to the Planning Commission, some of which has had almost NO public exposure.

First some history. In two previous HRA meetings (July 25th and August 15th) the city staff presentations leading up to 72nd & France #3 TIF Plan were shared. In each of those presentations funding of $22,874,000 of TIF Notes, was referred to. That $22.9M was earmarked for specific costs within the TIF district. Neither of the presentations in those two HRA meetings made any reference to the additional interest cost on the $22.9M of notes. Subsequently, as the result of a question posed by a resident during August 20th public comment, Manager Neal posted to “Responses to Community Comment” that $28,497,154 of interest cost was anticipated on those notes resulting in $51.4M of future tax revenues ($22.9M + $28.5M) to be sequestered for the Macy’s site redevelopment.

Subsequently, in September, an additional $29.5M of tax revenues was, for the FIRST time, conveyed to the public via Better Together Edina. As a result, the sequestered property tax revenues and total TIF spending totals $80.9M for what is now called the 72nd & France #3 TIF District. This additional $29.5M is why, at the bottom of page 61 of 62 of the TIF Plan, it now references “a non-motorized crossing of France Avenue”.

Mr. Neuendorf’s comment at the 2:05:15 mark of the September 25th Planning Commission meeting was quite clear --- the HRA committee DOES have the green light to spend the additional $29.5M within the boundaries of “the private parcel as well as the adjacent public right of way adjacent to that parcel”. Given the public easements already in place, a tunnel/overpass falls within that purview and it would seem that it would not need Planning Commission approval. Further, wording within final TIF documents typically includes the ability to “pool” TIF funds enabling the City to spend / transfer funds out TIF districts to other districts or to other City funds. In 2022, some $9m was transferred OUTof TIF districts to the City’s SPARC fund. Tens of millions has been transferred between districts. Therefore, Mr. Neuendorf’s comments at the 2:06:00 mark --- “to pull monies out and spend it further away, I don’t think that would pass legal muster” --- is FALSE.

Finally, according to information as presented by the City and confirmed in public e-mails, the ‘Macy’s’ project is NOT financially viable even with the $51M of TIF offered by the City. To date, the City has still not provided an answer to that question. However, using their numbers, I believe that at least another $35M of public benefit is needed for the project to be viable.

The ONLY way to have known these figures is to have followed the entire process through the above chain of events, is something well beyond the duties of the Planning Commission. However, one might rightfully ask: Why are developers not required to present two sets of plans to the Planning Commission at the front end of the process --- one, which details the project without public funding and a second plan with public funding and exactly how much and why that funding is needed?

Regards,
Ralph Zickert, 34 year resident
PS My apologies for the ALL CAPS, the City’s website does not allow bold, italics, or underline.

On September 23rd Ms. Swenson posted on Next Door Mr. Hovland’s rebuttal to Mr. Anderson’s September 6th Star Tribune article. The points below are in reply to Ms. Swenson’s posting.

Yet again, Mr. Hovland continues to misrepresent the use of TIF at the Macy’s site and now mischaracterizes much of what Mr. Anderson said.

Mr. Anderson is not against all uses of TIF. Mr. Anderson’s four-year voting record on the council shows that there are situations where TIF makes sense and situations where it does not. One is left to ask, how often has Mr. Hovland voted “nea” on any TIF proposal.

To quote Mr. Hovland, Edina uses TIF in “10% of the projects we approve” and he goes on to say it equates to a small percentage of the overall tax base. While true statements, the reality is that over the last four reporting years, Edina has added five TIF districts, an increase of 50%, and not closed a single one --- two trends that contrast vividly with state-wide trends. Per the OSA (Minnesota Office of the State Auditor), the number of TIF districts has declined 25% since 2004 and over 75% of the districts are now being decertified before their end date by an average of 10 years! So, it would appear that Mr. Anderson accurately calls to task Edina’s “increasing frequency and size of concessions” related to TIF. Mr. Hovland’s claim that TIF projects represent very little of Edina’s tax base is like saying --- “I’m only a little bit guilty because I only take money from my son’s piggy bank on Tuesdays.” Bad behavior is bad behavior. Bad development is bad development.

Mr. Hovland referenced Mr. Anderson’s tenure on the council, but failed to share that Mr. Anderson voted “nea” to the 7001 France Avenue TIF district, which remains a vacant lot some four years after its approval. As for the 7200/7250 France Avenue TIF district, which is now an empty hole, Mr. Anderson was no longer on the council. With respect to the Macy’s site, the developer and Scott Neal have already conveyed that Edina’s $51M of TIF is some $35M short of what the developer needs, if one only does the math --- something City staff has refused to do. So, déjà vu. Yet another parcel that is not a true “district”, trundling down the path of becoming yet another eye sore along Edina’s main artery.

Mr. Hovland is likely correct, that the Richfield school system would see an increase in assessed taxes from $60,000 to some $400,000, thereby slightly lowering the burden on all Richfield residents. However, just how long the additional benefit would last is unclear, as it is contingent on what special voter referendums are in place and those details have not been shared with the public. In any event, Richfield schools would still have to wait 25 years to see the additional $700,000 benefit ‘promised’ by this development.

Meanwhile, Mr. Anderson’s main point was that Edina’s general tax levy would see zero benefit over those 25 years. A point confirmed by Staff presentations. Mr. Hovland’s counterpoint is that there will be no additional services. Yes, this one development may not tip the scales. Can the same be said if all three France Avenue TIF districts are considered as one? I doubt it. What’s not in doubt is that the rush towards density by this administration has driven a need for additional police, fire, and paramedic support to name just the more visible of the incremental costs. Meanwhile, City staff continues to look at development through a ‘one and done’ perspective and like the proverbial frog, at some point the water gets too hot --- and you need another ‘sales’ tax.

Contrary to Mr. Hovland’s claim, Mr. Anderson does not “ignore” the fact that there is development within Edina that happens without TIF, rather Mr. Anderson’s focus was on the Macy’s site. A site that Mr. Hovland has called “one of the best pieces of property in Edina”. Mr. Anderson, like many residents, rightfully wonder why Edina has to offer $51M of incentives to develop such a site. Not to mention the additional $30M of property tax revenues projected to be captured in the district for use by the HRA --- a number that has only been shared on BTE and not included in any presentation to the council or residents.

Further, Mr. Hovland apparently does not understand the meaning of “conflates” nor does he come across as knowledgeable about the City’s “budgetary issues”. Mr. Hovland’s inference that Edina does not have budgetary issues seemingly ignores the 13% levy increase on top of the approved sales tax and yet there remains some $68M of unfunded 2025 & 2026 capital projects as well as an undetermined amount of pent-up operating spending. All of which represents a bolus of future spending that has piled up under Mr. Hovland’s tenure and yet he wants to spend $30M to build a tunnel under France!

Finally, Mr. Anderson and Mr. Hovland clearly have two different views of what represents “transformational” change. Mr. Anderson views “transformational” as creating a better Edina for all residents to enjoy, as the Centennial Lakes project did some 30 years ago, a time well before even Mr. Hovland’s tenure in office. Meanwhile, Mr. Hovland and city staff view “transformational” as how much property tax revenue can be diverted into special funds, which lack the public scrutiny of general levy spending. The basis for this last statement being OSA reports, which document the City’s accumulation of $18M of unspent property tax revenues in three TIF districts. Two of those districts should have been closed out decades ago. In addition, during the last two years, another $9M of property tax revenue from those districts was diverted to the city’s Special-Projects-And-Redevelopment-Capital (SPARC) fund. All of which amounts to some $27M available for spending on pet projects like the LID and the tunnel under France, neither of which had or have broad community support.

Ralph Zickert

Edina Residents ARE Concerned About TIF and Its Impact on their Quality of Life!

Mayor Hovland’s August 22nd Star Tribune editorial incorrectly notes that the redevelopment of the Macy’s site has had “extensive opportunity for public input”. His editorial was about Tax Increment Financing (TIF). All the ‘opportunities’ to date have been to comment about the size, the layout, and the proposed use of the buildings. The public has not yet been given a chance to comment on the $51 million TIF proposal. So much so, that when a resident tried to voice an opinion on the issue during the public comment portion of the August 20th City Council meeting, Mayor Hovland tried to shut him down.

Contrary to what Mr. Hovland claimed, the Macy’s project is not transformational. Yes, Centennial Lakes Park is transformational. It provides 24 acres of public space and venues that are 100% dedicated to residents and attracts visitors from well beyond Edina. Yes, the revival of 50th and France was transformational. TIF helped reenergize our downtown. The Macy’s TIF proposal falls well short of transformational.

The so-called 50% of public space at the Macy’s site will be roads and sidewalks, whose overwhelming use will be by the occupants of the four new buildings. The only portion of the project that should be considered ‘community’ benefit is the affordable housing. Unfortunately, with the diversion of $51 million of property tax revenues, each unit comes at a cost of almost $1 million. In addition, the public housing agreement has a sunset clause after 25 years, at which time those residents will be ‘back on the street’. A time line almost equal to the Mayor’s time in office.

Mayor Hovland correctly noted that the final vote for approval by the City Council has not yet occurred. However, Edina’s HRA Authority, of which the City Council members are the only voting members, did “ADVANCE” the process by voting 4 to 1 to approve the proposed financial terms with no significant edits. Therefore, it’s even harder to imagine the HRA Authority not advancing a final TIF proposal to the City Council. And, given the HRA’s previous 4 to 1 vote, final approval at the Council level would seem all but certain. So, for the Mayor to say it hasn’t been approved is disingenuous.

Mayor Hovland is not correct in saying TIF “delivers public improvements while SIMULTANEOUSLY enhancing the property tax base that supports the city, schools, and county”. Every city staff presentation has shown that the city and county see no increase in their tax base for some 25 years. However, during those years, there is an almost immediate surge in required services, for which the redeveloped Macy’s site would add zero additional dollars to the City and the County. Meanwhile, Edina’s 2025 budget levy increase stands at 13.1% with almost half of that increase associated with an increase for police and fire department services in large part due to development, where TIF has played a part.

One has to look no further than Mayor Hovland’s editorial and his rose-colored glasses to understand why residents are rightfully frustrated with the unbridled race towards density. His contention that $51 million of diverted property tax revenue is not an “incentive” is ludicrous. Under his leadership, the City’s Quality of Life survey has chronicled the 10-year decline in residents view of “the city acting in their best interests” and the “ability for their voices to be heard”.

Ralph Zickert, 34 year Edina resident