Public Hearing: Eden / Willson Tax Increment Financing (TIF) District .

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On November 3, 2021 the Edina City Council approved the creation of a new Tax Increment Financing (TIF) District to support a combination of public and private improvements near the intersections of Eden Avenue and Willson Road.


Reuter Walton https://www.reuterwaltondevelopment.com/, a Twin Cities based real estate developer has secured preliminary zoning approvals to raze the existing restaurant at 4917 Eden Ave and reconstruct the site with new housing with commercial space on a portion of the street level. Most apartments will be leased at market rates. Ten percent of the apartments will be leased at reduced rates to households of moderate incomes. A portion of the site will be left unbuilt to accommodate a future roadway or other public improvement adjacent to Highway 100.


The City has reviewed the developer’s financial pro forma and confirmed a financial gap exists. TIF monies could be pledged to fill this financial gap and allow the project to proceed.


This new TIF District could also provide funding for several public improvements to the surrounding roadway networks that serve the site and the community. Pedestrian, bicyclist and vehicle improvements are conceived for several roadways east of Highway 100 – including Eden, Willson, Grange & 50th Street. These types of improvements were deemed vital to the area as the zoning proposal was considered by the Planning Commission and City Council.


The proposed TIF Plan describes the financing strategy. Maps of the proposed district boundaries and the conceptual roadway improvements are also available.


Input has been solicited from Hennepin County, Edina Public Schools and other stakeholders as the TIF Plan was prepared. A Public Hearing will be held to collect additional input prior to the City Council’s decision whether or not to establish the new District.




On November 3, 2021 the Edina City Council approved the creation of a new Tax Increment Financing (TIF) District to support a combination of public and private improvements near the intersections of Eden Avenue and Willson Road.


Reuter Walton https://www.reuterwaltondevelopment.com/, a Twin Cities based real estate developer has secured preliminary zoning approvals to raze the existing restaurant at 4917 Eden Ave and reconstruct the site with new housing with commercial space on a portion of the street level. Most apartments will be leased at market rates. Ten percent of the apartments will be leased at reduced rates to households of moderate incomes. A portion of the site will be left unbuilt to accommodate a future roadway or other public improvement adjacent to Highway 100.


The City has reviewed the developer’s financial pro forma and confirmed a financial gap exists. TIF monies could be pledged to fill this financial gap and allow the project to proceed.


This new TIF District could also provide funding for several public improvements to the surrounding roadway networks that serve the site and the community. Pedestrian, bicyclist and vehicle improvements are conceived for several roadways east of Highway 100 – including Eden, Willson, Grange & 50th Street. These types of improvements were deemed vital to the area as the zoning proposal was considered by the Planning Commission and City Council.


The proposed TIF Plan describes the financing strategy. Maps of the proposed district boundaries and the conceptual roadway improvements are also available.


Input has been solicited from Hennepin County, Edina Public Schools and other stakeholders as the TIF Plan was prepared. A Public Hearing will be held to collect additional input prior to the City Council’s decision whether or not to establish the new District.




Questions?

This forum is open for questions to City staff related to the project. Submit your question and staff will get back to you.

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    Page 24 of the proposed TIF states "Finding that the proposed development, in the opinion of the City Council, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future and that the increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of Eden / Willson Redevelopment Tax Increment Financing District permitted by the TIF Plan. The proposed development, in the opinion of the City, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future: This finding is supported by the fact that the activities proposed in the TIF Plan meets the City's objectives for redevelopment. The existing property contains substandard buildings whose renovation requires high costs related to demolition, remediation and reconstruction of infrastructure. The redevelopment also requires substantial investment toward public improvements such as local transportation and utility infrastructure and shared public parking. The combination of limited amounts of property available for expansion adjacent to the existing redevelopment site, height/density limitations, and the public and private cost of financing the proposed improvements which Edina Housing and Redevelopment Authority Eden / Willson Redevelopment Tax Increment Financing District 18 are essential to the comprehensive redevelopment of the area, this project is feasible only through assistance, in part, from tax increment financing. The developer provided a proforma outlining project sources and uses as well as projected rent, vacancy and financing assumptions. City staff and the City’s financial advisor reviewed the information and have determined that the project is not feasible without assistance due to anticipated rent levels and market returns not supporting the redevelopment costs for this site. The term of assistance for the redevelopment project is expected to be less than the maximum 26-year term of a redevelopment district. The increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the District permitted by the TIF Plan: This finding is justified on the grounds that the development intensity and tax base created on currently underutilized and declining property requires site and public improvement costs that are improbable without public assistance. Specifically, the cost of site preparation, demolition, remediation, and public improvements to include transportation and utility infrastructure will add significantly to the total redevelopment cost of any development in this area. Site and public improvements costs necessary to sustain the approved density have made redevelopment infeasible without tax increment assistance. The City reasonably determines that no other redevelopment of similar scope is anticipated on this site without substantially similar assistance being provided to the development. A few questions: 1. who or what department is the City Staff the reviewed Reuter Walton's proforma financials? 2. similar to 1. who are the City's financial advisor that reviewed Reuter Walton's proforma financials? 3. What are the competencies of the evaluators in 1. and 2. above? 4. How are the evaluators in 1. and 2. above independent from the actual bodies that have to approve a new TIF district?

    Mark Sparano asked 11 months ago

     Hi Mark , 

    1. Mr. Bill Neuendorf, the City’s Economic Development Manager leads the review and preparation of economic development projects in Edina. Mr. Neuendorf has more than 15 years of experience using public financing tools like TIF, BID & SSD to achieve community goals. Prior to his public sector work, Mr. Neuendorf had a successful career in the construction and development sector helping to secure municipal approvals for large-scale projects throughout the U.S. including shopping malls, entertainment centers, theaters, mixed-use buildings, mid-rise and high rise buildings and new urbanist developments.

     

    1. The City engages the public finance advisors at Ehlers Associates (https://www.ehlers-inc.com/) to evaluate requests for TIF and other projects regarding re-development and public finance. Mr. Nick Anhut serves as Edina’s primary Municipal Finance Advisor. Ehlers is unique in that they apply their knowledge of real estate development finance to only serve public sector clients. 

    The expertise provided by Ehlers is supplemented by legal expertise provided by Dorsey & Whitney (https://www.dorsey.com/services/real_estate_land_use).  Mr. Jay Lindgren serves as Edina’s primary special counsel for redevelopment financing projects. He is assisted by Mr. Alex Sellke.


    1. Career information about the City’s key advisors can be found on their company websites:

    Mr. Anhut https://www.ehlers-inc.com/team-members/nick-anhut-cipma/

    Mr. Lindgren https://www.dorsey.com/people/l/lindgren-jay-r

    Mr. Sellke https://www.dorsey.com/people/s/sellke-alex

     

    1. Mr. Neuendorf is an employee of the City of Edina. The staff members at Ehlers and Dorsey & Whitney are hired to supplement the staff expertise. City staff members like Mr. Neuendorf, provide recommendations for  the consideration of the elected officials of Edina and also carries out duties assigned by the City Manager that are relevant to the City’s mission and goals.

     

    Neither staff or hired advisors are empowered to take formal actions that are the responsibility of elected officials or the City Manager.


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    Is it possible for citizens to view the feedback you received on this new potential TIF district from key stakeholders such as Hennepin County and Edina Public Schools District #273?

    Mark Sparano asked 11 months ago

    Hi Mark, 


    The City contacted Hennepin County and Edina Public School District #273 officials on September 17, 2021 to notify them that the City would be considering the creation of this new TIF District. City staff also met with School District staff on September 20, 2021 to provide an overview of ALL current and pending redevelopment projects – including projects that may potentially use TIF.

     

    At this time, the City has NOT received any response or comment from the County or the School District regarding the proposed creation of the Eden/Willson TIF District.

     

    City correspondence is available for public review upon request according to the terms of Minnesota Statutes. Correspondence received from the general public on the Better Together Edina platform for this proposal will be published in the November 3, 2021 City Council packet. -Bill Neuendorf, Economic Development Manager

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    Exactly how much money is the developer saving with TIF?

    CyndiO asked 12 months ago

    The creation of the TIF District does not specify a particular funding level for the prospective developer.

     

    The TIF Plan under consideration would allow up to $22.7 million of NEW (incremental) property tax dollars to be invested in the private redevelopment and public improvements over a 26-year period. This amount does not include the current tax dollars that will continue to be distributed to the County, City and Schools.

     

    While not a part of this public hearing, the HRA has previously considered a $5.1 million TIF Note to the developer. The TIF Note would only be issued after successful completion of the $85 million project. “Completion” must include granting the easement for future public land, new public parking and new public streetscape as well as 20+ year commitment to provide affordable housing within the new building. Without the new private investment there is expected to be NO new property tax dollars generated from this site for many years. -Bill Neuendorf, Economic Development Manager

Page last updated: 04 Nov 2021, 10:31 AM