Call this meeting of the city council regular meeting Monday, April 6, 2026 at 6:30 p.m. to order. I'll rise for the pledge of allegiance. I pledge algiance to the flag of the United States of America and to the
republic for which it stands. One nation under God, indivisible, with liberty and justice for all. >> Item three, roll call. Administer Pulus. >> Council member Ball, >> present. >> Council member Jensen, >> present. >> Council member >> present. >> Mayor Rogen,
>> present. and council member Scott is absent. >> Thank you. >> Number four, open forum. The city council invites residents to share new ideas or concerns related to city business not already on the agenda. However, individual questions and remarks are limited to three minutes per
speaker. No city council action will be taken, although the council may refer issues to staff for followup or for consideration at a future meeting. The mayor may use discretion if speakers are repeating views already expressed or ask for a spokesperson for groups or individuals with similar views. Speakers
should state their name and home address at the podium before speaking. With that, I'll now open for open form. Is there anybody that wishes to address the council in open form? Again, is there anybody who wishes to address the council in open form?
One final time. Is there anybody who wishes to address the council in open form? Hearing none, open forum is closed. Moving on, item five, consent agenda. 5 A, approve city council meeting minutes from March 2nd, 2026. 5B,
approved list of claims totaling 88,38864 that include checks 14985 to141053 and e checkeks 4105. 5 C approve appointment of Ronda Swanson
as the cemetery commissioner. 5 D approve rescheduling May 4th, 2026 city council meeting to April 30th, 2026. 5E approve scheduling joint planning commission meeting for June 9th, 2026 at 5:00 p.m. 5 F approve preliminary plat
for Eagle View Storage. 5G, resolution number 13-2026, approve budget transfers for 2025. 5H, resolution number 14-2026, ratifying prior actions regarding
bidding process for 2026 street improvement project. And 5, resolution number 18-2026, accept donation for Pelicanwood Cemetery. Having read consent agenda, is there anything or comments from the council?
>> Hearing none, do I have a motion to approve the consent agenda? >> So move. >> I have a motion from council member Ball. Do I have a second? >> Second. >> A second from council member Jensen. Any discussion? Hearing none. All those in favor signify by saying I. >> I.
>> I. Opposed. Abstension. Motion carries. Moving on to items six in the agenda. Business item 6A, consider personnel committee recommendations. Administrator Pulus. >> Yes, thank you. Um, in the fall of last
year, the city council approved a continuation of a temporary wage increase for the finance specialist and deputy city clerk through April 2026. Additionally, at the strategic planning session on February 3rd, staff and council identified organiz
organizational structure adjustments as a priority for the upcoming year. The personnel committee committee met on February 10th to discuss a more long-term sustainable path to address the structural changes needed in the administration and public works department. There are adjustments
necessary to address evolving job duties, position titles to reflect current operations and compensation. As a part of this process, we thought it was important to get a third party opinion. So I consulted with an adviser from David Drown and Associates to help gather data, evaluate the existing
structure and pay and propose alternative options to better improve the organization. The personnel committee uh met again on March 17th to review various alternatives and discuss the proposed changes in depth to better reflect current operations and ensure long-term
sustainability. The personnel committee recommends the following actions. Retitle the city administrator clerk treasurer to city administrator. Retitle public works supervisor to public works director. Reclassify finance specialist to finance director and approve pl
placement into the pay structure. Reclassify deputy city clerk office manager to city clerk and approve placement into the pay structure. And reclassify assistant public works supervisor to public works supervisor and approve placement into the pay
structure. The above actions uh better reflect the current operations and will help the city grow into the future. It is proposed that the pay adjustments are implemented by the first pay period following approval. The total budget in impact for 2026 is approximately
$10,000. Um Michael, Rebecca, and myself are here to answer any additional questions. >> Thank you, Administrator Popus. Any questions? Follow up. Does the personnel committee have anything to add? No, I think it was laid out uh really well uh by Ally. So, thank you.
>> I think she did a good job of outlining kind of why and >> perfect. >> What changes we we agreed upon. >> Okay. >> Recommend, I should say. >> All right. Sounds good. Anything. Council member J. >> Um I fully agree with the personnel committee's recommendation. I think the
staff has been working above their current titles for quite some time and are deserving of this and fully supported. >> I agree 100%. So with that having been said, do I have a motion to approve uh these recommendations? >> Also move.
>> I have a motion from Council Member Moroni. Do I have a second? >> Second. >> Second from Council Member Jensen. Any further discussion? Hearing none. All those in favor signify by saying I. >> I. I opposed abstensions. Motion carries. And congrats to the staff and
and great job. They just continue to knock it out of the park. I'm so appreciative of the staff that we have here in Breezy Point and thank you guys for all your hard work and efforts that you do all the time. So, thank you. All right, moving on. Item 6B, resolution number 15-2026,
order reassessment and public hearing on proposed reassessment for 2025 Edgewater Circle project. Administrator Pulus. Yes, thank you. Um, at the January 5th, 2026 uh, council meeting, the council directed staff to proceed with a reassessment process on the 2025
Edgewater Circle project completed last summer. If you remember, it was determined that the city cannot assess the total $10,000 to the association itself as a single entity. Hence, the city will initiate a reassessment process to assess the 13 individual um,
owners pursuant to state statute. The first step of that process is approving the resolution tonight to call for a hearing. It should be noted that this reassessment does not alter the overall approved assessment amount in total of the 10 grand and per part per property
owner. The change is administrative in nature. So we propose the hearing is scheduled on April 30th. >> Okay. Thank you, Administrator Pus. Any comments or questions from the council? >> It's pretty straightforward. We know what we need to do here and we got to
get it done. So, do I have a motion to approve the resolution? >> So, moved. >> I have a motion from Council Member Jensen. Do I have a second? >> Second. >> Have a second from Council Member Moroni. >> Any further discussion? Hearing none. All those in favor signify by saying I. I
>> opposed. Abstensions. Motion carries. Thank you. Item 6 C, resolution number 16-2026, declaring cost to be assessed, ordering preparation of proposed assessment and calling for the hearing on proposed
assessments for the 2026 street improvement project. Nick, and give us a report. >> Good evening, council. Um, we held the bid opening for the 2026 street improvements project on April 2nd. Uh the bid we received four bids uh all of
which were competitive and everyone supplied all the necessary documents. Um the lowest uh bid was ideal construction out of Staples. Our engineers estimate was about 433,000 and they came in at 354,000.
Um so we're pretty happy with the bids. Uh we do have a letter of recommendation for that, but due to the project timeline and uh the city uh previously decided to wait until the end of the um assessment period to award the project
just in case there was any appeals um which isn't uncommon. Um we will we'll get you that letter. Well, the city actually has the letter right now, but we'll we'll take action on that at the June council meeting. So, uh, looking forward, we'll get some, um, notices in
the paper and or notices sent out to residents and publication in the paper and then we'll be holding the assessment hearing with this resolution on April 30th. So, >> excellent. Thank you. Any questions to Nick from the council? >> Again, another pretty straightforward. Great to see those bids come in on what
they did. >> Yeah, >> that gives me hope for another big project that we have on the horizon. So, um, we'll we'll see how that turns out. But, all right. So with that, uh, do I have a motion to approve resolution number 16-2026? >> So move. >> I have a motion from council member
Ball. Do I have a second? >> Second. >> A second from council member Jensen. Any further discussion? Hearing none. All those in favor signify by saying I. >> I. >> Opposed. Abstensions. The motion carries. Moving on to 6D. Resolution
17-20226 accepting local road improvement program grant for the Bushman Road Reconstruction Project. Administrator Pulus. >> Yes, thank you. Um, as the council was informed, the city of Breezy Point has received the LRIP grant through MDOT for up to 5.5
1.5 clarify 1.5 uh million dollars for the Bushman Road project. The resolution is to formally accept the grant and authorize necessary parties to act on behalf of the council to ensure their proper processes are followed. We are excited the city has received the grant and thank our representatives at the
state and the county level for supporting the project along with the 11 other letters of support received from our neighboring organizations, cities um and schools. And then staff will begin conversations with the finance committee on what that means as far as um
proceeding with bonding and funding. So, we'll be having those conversations on the back end, too. >> Excellent. Thank you, Administrator P. It was outstanding news. Uh was exciting to get that when the administrator called me and let me know. Was super excited. And I do want to publicly thank to all the people that support us.
Representative, Senator, both representative Henman and Senator Hinsman wrote letters of support. Commissioner Lubkey who also wrote a letter as well as went down to the state capital and talked on our behalf for that grant. all the work that Nick and all the other people that did.
Administrator Pulfus and everybody um I know public works was involved. There was a lot of people behind the scenes that put all this together to make it possible. So, I want to thank everybody for this. This is a tremendous win for the city of Breezy Point to get this grant and it makes a huge amount of difference of how we're going to look at
our our bonding and our debt. Uh it's just it's amazing. So, was super excited to hear about it and super pumped. I do believe, if I remember, there was some type of press release that went out as well, kind of letting >> It's going out this week. >> Perfect. Yep. To let the public know about it, which I'm super excited about
as well. So, and we'll continue to do that as well so that people know and understand how this is going to be positive for them and the taxpayers of the city. So, I don't know if any of the council members have any other comments. >> Nothing further to add. It's great work by all. Yeah.
>> Yeah. Outstanding. So, great. All right. Do I have a motion to approve resolution 17-2026? >> So moved. >> I have a motion from uh from council member Ball. Do I have a second? >> Second. >> Second from council member Jensen. Do I
have any further discussion? Hearing none. All those in favor signify by saying I. >> I. >> Opposed abstensions. The motion carries. 6E Shore View Lane maintenance recommendation. Nick, what you got for us? >> Good evening, council. uh met with city
staff out on Shore View Lane. Uh so this is the second year the rip wrap's been installed. The first year we saw, you know, the rip wrap fared very well. There was no damage out there. Uh last year, last winter before ice up, sorry, last fall. Um we had very low water
levels. I think that kind of contributed to a little bit more of the movement we're seeing out there. Um likely the movement's not done either. Uh we still have some frost in the ground. The ice is still in the lake. Uh so we're recommending waiting, you know, 30 days from uh March 31st when this memo was
written. Uh we'll go back out there, look at it again when when all the ice is gone and the frost is out and get a better recommendation. You know, for now we're uh if nothing changes, we're just recommending regrading, pushing things back down. Um everything in that area is
pretty disturbed as well. You know, all the private shorelines and everything took quite a beating this year. Uh that didn't happen last year. So I I think it's you know it might just been a more active ice year. Um the utilities and the roadway are for the most part still
protected. So I think I think the rip wrap for the most part did its job there. So >> great. Thank you for the update. Any comments or from the council? I have one and that's this. I talked to the administrator about this
a little bit and that road has long been a one that we've worked with a lot over the years and I know that and I don't know where it sits within our road improvement plan or anything like that but I think it's something that long term that's something we need to think about.
Um and from that perspective I know that we keep repairing it. It works. Some years it works. Some years it doesn't. And it's because of the lake and the lake's never going to change. We're always going to have those challenges with it. So, I would just encourage uh public works to just take a look at that along with the roads committee to kind
of see where that is. And again, a long-term thought process behind what do we do with that road. Um because it's not out of the realm to get a really really bad year. And I've seen ice on Pelican push in certain years. Having
grown up on the lake, it can be very damaging and and and can can really do some things. So, anyway, I just wanted to point that out. maybe something we can think about in the future. But I think for now it's good that we're doing what we need to do and we're keeping the road, you know, uh, structurally sound
and things are protected, but ultimately I think somewhere down the line that's probably one that's going to have to be looked at because I just think we're going to keep dealing with it. The lake's never going to change or go away. So, we'll always have that with that road there. So, >> well, and I think part of it living on
Shore View Lane, I thought back there, you know, a few years ago there was a major drought year, right? >> It wasn't that long ago. nothing happened, >> right? >> And you know, this year it was just constant hydraulic pressure on there and >> yeah, it's a struggle.
>> So, I think ultimately maybe it's something where, you know, a major project is undertaken somewhere down the road to change that road. So, with that, I just wanted to point that out. Um, >> I do have one thing to add about that too. We discussed internally about
long-term looking at that road. um if that's something the city would be interested in doing to kind of reduce some yearly maintenance, undertaking a larger project. Um the the biggest thing, the biggest battle there is going to be the DNR. Obviously, it was for
what we even did. We we did the extent of what we were allowed to do. >> Well, and that'll be a bridge that, >> no pun intended, we'll cross when we get there with them and you know, maybe maybe we'll have a discussion with them. But it's just something I think that I look at it from the perspective that
we're getting by okay, but one of these years we might might not be getting by okay. >> Mhm. >> And be looking at a major major issue. So anyway, that just comes to from a long time of living here in the area and having seen that road for decades and known what it's gone through over time
and it's heck of a lot better than what it used to be, but I can just see that we could continue to have some major problems there. So, it's it's things to look at in the future. It's a futuristic thing. So, um thank you for the update, Nick, on that 6F tax increment. Are we
Is he Ian? >> Yes. Do you mind just giving me and Deb like two minutes to get him in? >> Yeah. Is if he's sitting there waiting? >> I believe he is. So, yeah. >> Okay. So, why don't you go ahead and do that and I'm going to jump off to 7A and I'll talk a little bit about my my uh my state of the city address here. So, um,
we're getting Todd Aaylor's hooked up and in so that we can listen to the presentation on tax increment financing. But while the staff do that, I'll just jump to 7A and, uh, state of a city address. So, what I've talked to administer Puffus about is potentially
having um, in June sometime, uh, basically a opportunity for people to come into the council chambers like an open house, but for me to give a state of the city address to the public. uh uh of what's going on and what we've been doing and what we're up to, but then
also have potentially maybe staff available to be able to have uh constituents talk to them specifically about certain things they may have. Could be with public works, it could be with um parks and Iraq, could be any number of things. So, um I'm working with the administrator on it, but the
idea is to have that set up so that people can come in and have an opportunity to interact with us. uh and for me to be able to give a uh just the state of where we're at as a city and where as council we're at and what work we're working on and what are some of the challenges we see but yet what are
some of the successes we had and what we're working toward. So that's kind of so you know a little different than a town hall meeting um but along those same lines but again giving the constituents an opportunity to come and interact with us interact with staff and for me to be able to present to them uh
an overall uh solidified statement of where we're at as a city and where we're going. So that's kind of where where I'm looking at and I think we were thinking sometime in June if I remember we were talking. So, we'll have more information as that gets closer and keep the council informed and updated, but I just wanted to put it on your radar so that you guys
are aware of it. Once we get a date set, of course, encourage you guys to come and be a part of that as well. So, um, is he ready? >> I think so. >> Okay, >> let's see if we can hear him. >> Can you hear us? >> Yeah, sounds good. Can you hear me? Am I coming in? >> Yep. >> Yes. Loud and clear, Todd.
>> Great. Great. I I may pause a little bit as I go through it. Looks like sometimes it cuts in and out. So, I don't want to talk too long and you're not hearing me. So, >> he's doing it. >> Okay. >> See what happens. >> Okay, that sounds good. Todd, we just go
go to it and if we have any issues, >> go with the show. >> Yep, we're ready. >> Can you hear me? Okay. >> Yes. >> All right. Great. Um, I'll get started here. here. I just want to um go through some of the the basics and concepts of
tax increment financing and again stop me if I'm cutting out and then I can kind of wait a little bit till the internet catches up. So, thanks for having me remotely. I appreciate it. Kind of double booked a little bit tonight and we wanted to get this um
concept in front of the council um before we get any applications for tax increment financing in the city. And so, um, you know, Ellers and Associates does put on a public finance seminar every February. And so, this was like one of
the sessions that we, um, we had we had offered. So, you're getting the benefit of of tax increment 101, you know, from creation concept to creation. Um, and I really it's it's really a obviously an
educational kind of presentation right now. And you know, I I'm not pushing either way. Um really, I'm your public finance advisor, work for the city, right? So, what we want to do is make sure that you understand um just the basic concepts of tax increment
financing. Again, in case there's a application that comes your way and it's something for us all to look at. Um so, again, Todd Hagen from Ellers and Associates and um so we'll get started here. Um so first slide is really about
economic development right and I know um you know breezy points you know got the resort and and other um other businesses in the area as well as housing and and and all that um whether it be for sale
or multifamily rental uh or what have you. Um so economic development obviously in general um what's good about that is um you know there could be some job creation right that comes out of um you know um actually building a
facility or what have you on a on a piece of property right um so it could be it could be manufacturing uh warehousing distribution um could create some jobs right more more kids in that area. Um you know more
money into the economy. Um you know the tax base right could grow um get some dis diversification. Um you know kind of in the area as well. Um economic development is also could be in the form of redevelopment. So, a lot
of cities that need some uh help uh revitalizing, right, a parcel or a piece of property or an area um you know, would want you'd want to redevelop it, right, to take it out from um sort of a maybe a more blighted situation
um and get it back kind of u onto the tax roles a little bit better and get uh and get folks like working in that in that building. um neighborhood preservation. Um you know, maybe more so in in a larger city. Um but also what we
mean by that is is to um is to make sure that you know, housing stays habitable. Um and it's and it's good and it uh and it, you know, it's good enough for to sell and to buy. Um you know, we want to make sure that our neighborhoods stay
the way we would like them as a city. Um and and that's another reason for economic development. U develop infrastructure, sewer, water, right? Um move that kind of in the area as well. Maybe if it needs some help, it's already there existing rehab it or to
run new utility lines out to new developments. Um and then improve housing availability and choice, right? So maybe new apartments, uh maybe new single family homes. um a mixture of the two sort of where you'd like to see them
um could be um an incentive for uh economic development. Pollution cleanup in an area right that's um in need of some help um to clean up the pollution right into the in the ground to make it
um more viable for uh inhabitants right whether it's business or or or housing. Um that's another reason for economic development and quality of life, right? We want to make sure sort of our community is um up to a level that, you know, we'd like to see it and maintain
it and grow it, right? Basically, so uh next slide on that, Ally, and uh tax increment. Um why might tax increment be necessary? And I just want to kind of uh talk about what that is quickly here. Basically, it's it's the
difference between, and we're going to get to it, but um I don't want you to be confused right now. It's the difference between the base value that's on the property right now and then the new developed value uh that's um that will
be there from construction. County assesses that at obviously right at the new market value and so the difference between the two is is tax increment and it comes from the county, the school and the city and it's uh driven by the city
but we notify the other two taxing jurisdictions of what's going on and kind of the plan for using um this tool and um and basically the use of Tax
increment financing is to um help a developer or you know a new business owner or a development of housing or manufacturing um to get a more marketbased return on their investment ROI like return on
investment uh from their equity investors. uh and lenders, banks also provide uh and and those providers have limitations on those requirements, certain sort of um thresholds that need to be hit in
order to get a loan. And the city also may have goals, right, to um uh that might inhibit um the the building of a structure, right? or um
like maybe redevelopment, right? So maybe there's an old building uh in the uh on that site that needs some help and and that tax increment could be used to kind of level the playing field, so to speak. So those are are some uh reasons
for site or market value uh condition limitations. Next slide. And another reason why tiff might be necessary is um public financing right to fill a gap and obviously this is what we mostly see right so it helps provide
uh the project to move forward that wouldn't otherwise u move forward under current market conditions I wouldn't say that um it would uh it would not occur but it might occur less quickly right so
and sort of this the slower more that activity uh takes place, the um the higher the cost might be, right? And or interest rate uncertainty or what have you. Um and you know, uh may provide
upfront or over time and we'll get to that too. So tax increment um can be provided upfront or it can be uh provided over time and we recommend over time is is what is what is how the tax
increment would be facilitated uh to the developer. Uh and the goal really is to provide a positive cash flow with a reasonable return on investment uh to the equity investor. Um, and that's really kind of where and
why uh the ask is is out there usually from from the developer or the builder is they're having trouble um cash flowing the project for a certain period of time. Next slide. And we talked about what is tax
increment financing. So, um, we follow the statute and I talked about this earlier is, um, it's the ability to capture or use most of the increased property tax revenues from a new development
and it's within a geographical area. So, it's just on a site or a couple sites or parcels depending where the activity is going to be for a defined period of time that's measured
uh by state law or limited by state law. And like mentioned earlier, for tax increment financing, we only need the city city's approval. the other two taxing jurisdictions, the county and the school,
um, automatically come along, they can comment on on the use of it. They can come to the public hearing in writing, you know, the orally, what have you, and and can comment, but it's really driven
by uh the city council in this case. Next slide. So we talked about kind of yeah the development might come but it might come slower. Um I know a lot of the test is that the development would not occur but
for and we'll get to the but for test but for the use of tax increment financing. Um but here's kind of the graphic of how this sort of works and what the benefit might be sooner rather than later. Right? So, we're hitting
this kind of keep hitting on this topic of base baseline property value. Um, they build the project over time. We're able to capture that new value called tax increment from all three taxing jurisdictions for a period of
time, not necessarily going the full statutory term. and we'll talk about how to shorten that up and how Ellers likes to do that um in every case just by looking at market conditions and what we see out
there for for building and perform analysis from the developer and then it terminates right so the the goal here is to terminate the taxing grid district as soon as possible so the value then is
spread out over the city the school district and the county uh like normal. But in the meantime, that captured value is that new value is captured for a period of time and that gets redirected
to the developer. Uh and and that's why we want to and it's and it's revenue neutral, right? So it's not in anybody's budgets. It was never there before. Um but it's there now and it's captured and it's going in that direction for a
period of time. Then then we try to terminate it as soon as possible when the need is is done. Next slide. And also like a developer will ask, well, I pay X amount of property taxes. How come I'm not getting X amount back?
Well, the reason um you're you're not doing that is is that the base values excluded from from tax increments. So all three taxing district still get the property taxes that are on that property
now. So that's where the revenue neutral is. You don't capture the statewide taxes which are the commercial industrial taxes that extra um that extra tax rate on that on those types of uh properties.
So, if it's apartments or housing, um that doesn't even come into play, but that that that does get subtracted off of there. And then market referendum taxes, which are like kind of school district um type referendum taxes, those do not get captured as well. So, it's not
dollar for dollar to the developer. Next slide. Uh getting into the weeds a little bit on how you calculate tax increment. Uh next slide on that. And uh it's just kind of nice to know
how how we come up with property taxes, right? So um all property taxes have a value today that's uh funding local units of government, right? It's in our budgets and that's the base value. So this portion still goes to each taxing jurisdictions. That's where the revenue
neutral is. We're not taking anything away from from anybody. Um and then the base value tax is um how they're calculated, right? It's the base value, which is a market value of of the of the land, let's say, times the tax
classification rate. And that's that's um that's that's determined by the state of Minnesota. What that multiplier is, whether it be uh commercial, industrial, residential, seasonal, recreational,
cabins, um or uh or apartments, right? So every every there's different classifications for different uses of property and then what what comes out of that is called tax capacity. So that's the original tax capacity rate on that
and that is a percentage of market value. So that's how we get to a tax capacity. And then next slide >> try to >> and then and then so the original next tax capacity let's say is 7,38.
That's the base. So this is pretty basic math. Um so that's the base value. And then let's say we've got a a total value with the new development on it of 90,338 which is the development value. So we
subtract those two out and we get 82,000 let's say 500 of captured tax capacity. And so that's the increased value. Next slide. And then it's again simple math. So it's the total of 90 minus the original base
value tax capacity gets us the captured tax capacity. And then to find out what the taxes are that gets multiplied by the cities a cities in this case a fictitious city tax rate of 153%.
Um that's the annual tiff or um you know property taxes so to speak. So that's kind of how we figure out the property taxes and and tax increment. So it's a factor of market value times the class
rate and then times the tax rate of the city itself and then that gets us to a property tax and that would be the what the tax increment plays off of. Next slide. And so we talked about the butt four
test, what that is, the next slide on that. And so this doesn't apply to housing um districts, which is interesting. But under state statute, the finding is under law is is
that the finding would be that the new market value um minus the current market value the difference there multiplied or m subtract subtracting out the present value of the tax increment
uh which is uh the benefit let's say let's call that the benefit right um the value likely to occur without tax increment in in this case would be less than $20 million. So that's all um we could put on that
site for value without the use of tax increment financing. And that's just this is just a statutory test, but you know, we take this farther in a performant analysis to make sure that the developer um only gets what they need to fill the gap. So
this is just a basic concept of of what we think that value would be without the use of tax increment financing. So like I said, maybe it would be built anyway, but it would take five years longer, maybe more than that, maybe 10 years.
Um, and then that, you know, would just kind of deteriorate over time, right? this test with. So it gets a project online faster than than waiting for it. Next slide. And I talk about the butt four test as
kind of just that statutory test, but we kind of go beyond the butt for test is what I call this. And we only want to provide the minimum level of public assistance to make the project feasible. and and that's not necessarily that
statutory test that was in that prior slide, but it's moving forward with a review of the developer's um application. We look at their financial information and then um which is their performance
analysis and try to find the appropriate level of public assistance. Now, it could be that they're kind of uh asking for and we do the analysis just the the basic tiff cash flow analysis to see what it might generate and looking at
their application of what their ask is. And it might be that they're sort of in what I call the sweet spot anyway, which used to be between on a housing project, let's say an apartment or something around 13 to 15 years. and now we're seeing it
between 13 and 18 years because the costs have gone up a little bit and interest rates have gone up. Um, so that's kind of where we're seeing like where most cities kind of land anyway and feel okay about it. But if there's a need to go
any farther with the analysis um and you're we're all kind of wondering if the project is feasible anyway with more years right of assistance then we'll go through next slide we'll go through what we call a
performant analysis and I've got two of these going on right now one for the city of Rochester and one for the city of Detroit Lakes where they're big apartment complex projects and um you know, they want more than what the
city's willing to normally uh give them as far as a term, not necessarily the amount, but how long we want it to run. So, so we do kind of go through and compare the developers numbers against the industry standards because we've got a pretty good group
here at Ellers that knows um what some of these um items might or are are most commonly what some of the numbers are what we're seeing out in the industry basically for land acquisition, construction cost, a developer fee, um
debt assumptions. sometimes they're a little off on that. And then the return on investment, what's appropriate, right, for the equity investor that invests in a project like this. Um, and just to ensure that development components are accounted for uh
correctly. And we're running running into one of them that um things are a little bit um uh incorrect or it's a developer that doesn't do this very often and gives us the right numbers in a spreadsheet but they're off a little
bit. And so we help each other to try to find um you know where those numbers where they're coming from um you know where they're landing and what's appropriate as far as revenues expenditures you know and even even debt
service because a lot of times there's an interim construction loan uh that could be higher than the long-term loan right after they're done with the project. So, we want to make sure that we're, you know, if they're looking for long-term assistance, you know, we're looking for that we're looking at the long-term loan, right? Um, and then
there's even um ways to kind of do some check checks and balances afterwards because this is all um under estimates at this point, right? So, nothing's been built. You know, everybody's looking at estimates and and thinking that that's
going to happen. So, um I can't remember if I got a slide uh down a ways too, but if we if we don't here, I can kind of talk about sort of, you know, what we look at um as far as as uh you know, where these where these assistances
land. So, next next slide. Um how to monetize it. That means how to turn the tax increment into cash for somebody, right? So the next slide here shows kind of the most common forms of assistance to to
the developer. And when I say that's to the company, right, that's building the the facility. So we call the first one payo. And that's pay as you go assistance. It's the most common. There's really no risk to the city. Um it's basically um and it's the least
expensive, right? So, we're basically just doing, you know, the developer uh pays their property taxes, you know, the owner pays their property taxes twice a year. Um, and then we, you know, the county auditor calculates the tax increment. We keep some for ourselves,
right, for administration um of the district. It shouldn't spill over to the general taxpayer. It's a business deal, right? It should kind of stay with the with the um project here. And then the rest of it typically 90% or so would go to the developer over time
over a certain period of time 13 years 15 18 you know wherever we think that is appropriate where wherever we've negotiated that term and that's um you know so whatever they generate you know they'd get 90% of it back every two
years. That's the most common a revenue bond where the developer wants to monetize through an underwriter like a broker dealer like you would a bond issue. Um we don't see that very often. maybe in the metro area on some very
very large deals, but that would be the city, you know, issues a tax exempt or taxable bond and then um and then that, you know, basically gets um sold out to a broker deal or underwriter like a bond would be for a discount, right? So they
take some profit and they turn around and they you know would give um us and then we give the developer um basically um bond proceeds right so we don't see that very often um that way a revenue bond and and a general obligation bond
um you know we you know is the least least common and we saw that a little bit more in popularity before uh the housing bubble burst right in 2008 9 and 10 um where things were just going up up up and everybody was riding the wave and
so it seemed like tax increment um would just kind of keep coming and businesses wouldn't close, right? Or or the development would would stop or only maybe be halfway done like on a housing development. It wouldn't be completed. And so so we've everybody's really
backed off on issuing a general obligation bond to um to help out these projects. And those two those number two and number three are the upfront financings. And I suppose a third could be like an interfund loan.
So some cities um you know like a monosel or whatever that has has a a bucket of money from land sale you know out in their industrial park over a number of years probably since the 70s and 80s. they might have like a a war
chest somewhere, some money that they could um upfront money to a developer and then they could get paid back from tax increment financing. Um but that's, you know, for a city that's just kind of starting out and has less risk as risk
adverse, right? We would go with just number one, pay as you go financing. I think that's what Breezy Point is most used to. uh when you had um we've got a tax increment district out there now that uh when you've every time you've had one is mostly pay as you go
obviously financing. So, next slide. The types of districts there are. And I kind of buzz through these. Um, next slide there, Ally. And so, you know, it's not one is right for everything, right? Types. So, what we do here, you
know, at Ellers with the attorney and the city is try to figure out what type of district we're looking at. And they have different term lengths and these are the maximum statutory term. So redevelopment 26 years renewal and re renovation which is like a
redevelopment where uh knocking down or rehab in a building there's a substandard structure on there um a little less uh statutory term on the renewal and renovation less buildings you know need to be on
the property. Um so less less term term limit on that. Housing um districts are with just kind of a blank piece of land. Um no no old buildings on it with certain limitations we'll talk about later here. That's a 26-year district.
And economic development is basically manufacturing warehousing distribution type projects and those are pretty short. really the economic development districts because they're so short don't really need that extra perform gap analysis that we talked about the beyond
but for uh nine years is pretty short and so most cities just kind of go with that and u move move on. So next slide. Oh, got it. Next slide. Yep. All right. redevelopment tiff districts. Again, kind of getting into the weeds here and
I talked about it. It's the cleanup blighted sites, remove substandard buildings. Maximum turn 25 years. It's 26 years total of increment. Um have to have a building on it. Um there's a coverage test. um have to have some
other um evidence that there was it was that parcel or or lot was developed at some point like um gravel parking lots and utilities and things like that on it. Um but it does have to have at least
one bladed building on it. Next slide. Renewal and renovation is just a less of a standard of a redevelopment tiff district. So, um still have to have a a building on it, but not all of them need to be blighted. Some maybe just in the wrong place. I had one of these in
Excelsier uh the old Christopher in and that was a renewal and renovation district and we had some old lighted buildings but other buildings were in pretty good condition just in the wrong spot. So they've turned that into that particular site
into a um an apartment complex. And so it's just a little bit less of a standard than a redevelopment district. Next slide. And like I say here, that's kind of you guys can take a look at this. This is kind of the what I was talking about there. It's just a little bit uh
different tests on there. And it really it's mostly just about um the buildings that require substandard renovation or clearance is kind of the difference between the two. And then the legislature says, you know, hey, because there's not a lot of blight on there,
we're going to limit these uh the renew and renovation district. We're going to bring that down, you know, 10 years on that. So, next slide. Then a housing tiff district. This is really where there's nothing on the site right now. It's kind of green space and
let's say apartment wants to go up on it or single family owner occupied housing uh could be on that site as well as those two redevelopment renewal and renovation. You can put anything you want on those sites. But this one here
um is really specific to rental and owner occupied housing and low and moderate income households. Um the reason that's in here is because um you have have to there are there are restrictions on um if you want to click
it right right now too. There's another click on your mouse would kind of talk about that they're each each one of these um establishment requirements uh are mostly well they're income related for the um
either the firsttime homeowner on owner occupied or rental. There's um income restrictions that have to be made for housing districts. And again, that's for a a a lot that doesn't have um anything on it. And here are kind of the tests on
that uh rental. We've done this a little bit breezy point to kind of um take a look and see what your uh AMI is. You know, your area median income and kind of figure out what that 20% that 50%
area median income or 40% of the units at 60% of the area median income. That's for rental for the entire term of the district. And owner occupied is a little bit different of a test and it's really just for the firsttime home buyers. And
that's another income test in order for them to qualify um those homes or whatever that are in those in in that particular housing district to be able to get assistance uh from tax increment. And there can be a little bit of commercial involved in
there, but only at 20% of the square footage of the buildings in the district. uh consists of commercial retail. Uh they really can't receive it, but they can generate the increment for the housing. So if it's like um apartments, you've got retail
underneath, you got apartment buildings up on top. That's kind of what that concept is. Little bit of commercial involved in that, which is okay. Next slide. Economic development tiff districts. Again, there's no old no buildings on
the site. It's green space, but instead of housing going on it, it would be uh manufacturing, warehouse, distribution type uh facilities for an economic development district. And like I said, they're short, so no really um big um
perform analysis needed on these. Typically, um again, they go by building use. Um if you click your mouse again um there are some different nuances to uh the building use for manufacturing.
Uh the legislature also gave us uh what they call housing workforce housing uh latitude on these for folks that are making too much money to be in that uh income limited category for housing district uh
but still need help fill in the gap. Basically, it's called workforce housing. Um so there's really no income limitation there, but there's some other tests that need to be made. And then small city economic development districts are you can uh finance
commercial facilities um for a small city and that's that that's got some extra um sort of tests that need to be made. I think they're on the next slide here and you can kind of go through these as
well. So manufacturing um is the first one basically in the workforce housing. I had one of these in Detroit Lakes uh where um you know we had to look um at that 15 mile kind of radius um and take a look and see you know sort
of what the um vacancy is right for um for rental housing. Um and then uh we had to get a sign off from a a big um you know retailer or manufacturer whatever that sort of is having trouble
finding housing for their workforce, right? Um and so it's some nuances like that for workforce housing tax increment districts. And sort of the uh caveat on this one too and this is the only re one that you have also have uh school and
county approval as well. So it's a little harder to get done maybe um depending on you know sort of what the project is. So it could go smoothly or or may or maybe not because we have to go and get county and school approval on that one too. And I talk about the
commercial on this with this and typically commercial really can't be financed with tax increment financing without a old building on it, right? A redevelopment type district. But in this case it could be. So you know it has to
be in a city of 5,000 or less um located five miles or more from a larger city like with a population of 10,000 or more. And the building itself can only be up to 15,000 square ft on the first
floor. Um, could be office, retail, uh, restaurant or what have you. It used to be limited, the whole building used to be limited to 15,000 square feet, but the legislature now kind of changed that to just the first floor. So,
um, through the kindness of their heart, right? So, next slide. And creating a tiff district. So, I think this is kind of the home stretch here is um next slide. There's a process. Um most of the time
it's kind of a little bit um there's some of these get out of sequence a little bit, but we do try to collect a an application, right, from from the developer and and a deposit, right? And then you put that in escrow, right?
because this isn't supposed to cost any it's not supposed to cost you anything or your taxpayers anything. So, we get deposits to kind of help with the preliminary costs of this for staff time as well as my time. um we review the um perform check out where the gap is draft
a term sheet and the development agreement ahead of establishing the tiff district but I'll say establishing the tiff district probably goes in between um uh let's see probably the review
probably after the review of the performer and conduct the gap analysis um we would probably at the same time um start drafting the terms of the term sheet and the development agreement. So when we establish the tiff district,
maybe the deal kind of comes together as well as the statutory establishment of the district too. But the development agreement can also come after the establishment of the district. So there's no rush in trying to trying to get to that public hearing for the tiff
district if the deal is not set yet. If we're close, um, we can talk about it through a summary sheet at that hearing. But if it takes a little bit longer to actually do the deal part, which is the development, uh, financing agreement, that's fine. It can come a little bit
after the establishment of the district itself. Next slide. And just kind of buzz through this. The plan just kind of shows all just the basic kind of six things that just need to be in the plan. It's really a statutory
uh plan. Like I said, it's not the deal. It's everything that, you know, we need to put in it to to get to a public hearing. And um a lot of the times, uh the budget is set pretty high because we don't want to go back and do this again.
There's a lot of estimates in here, a lot of talking about state law and statutory authorities and all that. So, um, that's it's kind of a uh drafting the plan and the hearing on the plan itself is kind of more of a
non-event that way. It's just to really get to the authority to uh do do the deal with the developer, right? So, everything will be um under way less than what the plan shows. So, it's more not to exceed numbers in the plan. Next
slide. And then notices, you know, you can kind of buzz through this. It's this just the stuff that we need to do to get this done. So, we need to, you know, kind of notify county commissioners and county and school district. Um, invite them to the hearing. Um, and we've got to
publish a notice with the map of where this is and um what type of district it is and um kind of at the public hearing itself, we just kind of talk about these things. Like I say, it could be a summary of the development agreement as well at that point. Like to have the
developer there uh at this public hearing to kind of talk about the project as I talk about um you know the the the statutory requirements and findings that you need to make um in order to approve the district. And then um yeah, if if the if the terms are all
ready to go and everything too, uh we we could even at this point um approve the the uh the deal the deal itself in the development agreement. Next slide. And then what happens after the district is uh created next slide on that is
certification. So, you know, we need to inform the county and the office of the state auditor, the OSA, and the Department of Revenue that the new district's been created so they can put it on the radar. And um we provide all the resolutions and everything to get that taken care
of. And um we try to get the district created on on a June 30th uh deadline by then on on any given year. Kind of just depends um what the value is. June 30th is kind of um determines what kind of uh
taxes payable rates that we use. So there is a little bit of a nuance to that as well. And um qualified cost for the tiff district um you know we tiff can only be spent on qualified cost. So
it's usually um at or below the footings and foundations of a building. So, you know, we're not really there to to build a building for them or help build a building, right? Finance-wise, it's mostly just kind of the footings and foundations and the ground and utilities
and and and and the site improvements and the public improvements, sort of what what that goes for. Next slide. And then, like I said, the collection of the increments. Um the counties calculate this for us. Yay. and um they
send us um the city, right, a check. Um we we have it um you know the June tax settlement, December tax settlement. There could be some cleanup in January. So our payments to the developer are typically on an August 1st and February
first payment day kind of like bonds are. Um and that just kind of reassures that um you know we're actually receiving the increment well ahead of well ahead of time for distribution uh not only to us right to take care of the
administration of the district but to the developer and then um again it's pay as you go and so it's the less risk to the city there is. So if the property taxes aren't paid, uh the increment uh isn't generated um and it doesn't go
anywhere, right? So and if they're in any kind of default under the devel development agreement, uh for for anything, right, that we put in there, uh we withhold those um tax increment payments until they correct that deficiency.
So um I'm here for any questions uh answer any questions you guys have. I know it's a lot to kind of digest, but I want to get this, you know, in front of you just so you get the basics of it. You know, we hopefully will do all the leg work for you and um explain what you
need to focus on uh well ahead of time so you can make an informed decision and um and the findings and sort of kind of, you know, we'll help prove it up for you. and um and kind of make sure again
that that that you know kind of what the path is as we move forward with the district. So I'll yield to you folks if you have any questions or comments at this point. >> All right. Thank you Todd for your presentation. That was very enlightening. I'll ask the council. Do
we have any questions at this time for Todd? >> At this time we don't have any questions. We may have some as we process all this and think it through and and and work on it. And then also um we could pass that along to Ally and she
can work with you on that too, Todd. So, thank you for your presentation tonight and and I I have no doubt we'll be back in touch with you soon. >> Yep. Thank you very much. I'm always here for you guys and and thanks for the business as always. We appreciate it here. So,
>> thank you. >> Yeah. Thank you, Todd. You have a good night now. >> Take care. Yep. >> You, too. >> All right. >> All right. Well, I'm gonna move right on to number seven, departmental updates and council reports. And it looks like
we have one from administrator Pulfus. So, I'll start with that. >> Yes. Um, so we posted the planning and zoning administrator position throughout the month of March. We received 13 applications and we will be interviewing five candidates next Wednesday. So,
we'll follow up with the personnel committee and council after those. >> Excellent. Good to hear. Exciting news. Well, we'll look forward to hearing what the final is on that. So, >> yes. Yes. It's TBD. If we're doing a second round of interviews, we'll see how the first ones go. >> Sounds good. Yep. >> Excellent. All right. Thank you for
that. Just running through the council. I'm looking I know fireboard didn't meet personnel committee. >> You guys want I mean, we kind of went over what you guys been working on. >> Yeah, we we met, we discussed, and we presented. Okay. Uh, streets committee. Did you guys meet cemetery commission
>> this month? Cemetery commission will as well. >> Okay. And you have a new member now. >> All right. And then, um, how about, uh, planning and zoning? >> PNZ met, but again, the issue came before us as a council to >> that was the piece. >> Y.
>> All right. That's good. And then I can speak for the finance committee. we have not met, but I think we'll be meeting soon with the with the new um with the grant now and we have to talk about how that's going to impact us for our bonding and things like that. So, our debt, I should say. So, we'll be looking
at that. And park and racks did not meet. Uh their meeting was uh postponed, I think, for this month. I know they'll be meeting next month. I think we're going to be looking at finalized plans and probably bringing something to the council. >> Yep. >> Uh for uh at least presentation to you.
So, um yeah. So, that pretty much wraps it up there. So, I don't see anything else on there. And we do have a couple offormational pieces, too. Um, we also received um police department offense summary, which thank you, chief, for providing that. That's always good to
see. Like the numbers were down compared to last year. So, that was good to see, especially in the traffic. So, people were paying attention to the speed limits a little better this year. Uh maybe it was the icy roads. And then uh also we have a update on cash and investment summary there too as
well provided by Janette. So um anytime you guys if you ever get those and you have questions about them you can ask them here or definitely follow up with Minister Pulus on those so that she can help you get those answered or chief in regards to any of our incidents. So all right having no other business at the
time I'm going to move to number eight adjurnn. Do I have a motion to adjurnn? >> So move a motion from council member Do I have a second? Second. Second from council member Jensen. All those in favor signify by saying I. I. Opposed. Abstensions. Motion carries.
Meeting is adjourned 7:36 p.m. Thank you for all coming.