I Any opposed, say nay. Motion carries. I'll now call to order the Rochester Economic Development Authority meeting for 02/19/2025. Before we get started, I'm gonna recommend that we adjust our agenda to handle item five a, which is the appointment of EDA officers first up under, organizational business. So is there a motion to do this? I'll I'll I'll second. Motion made by council member Miller, seconded by council member Keane.
So, we are at organizational business, and I'll have, mister, Brett Svend be talk about our import, appointment of officers, for the EDA. Yep. So the council serves as a Rochester economic development authority and based on the bylaws for the EDA, The bylaws requires that the officers be established each year. So, there's five officers involved with the EDA. One is a president, vice president, the treasurer, assistant treasurer, and secretary. And typically, the secretary is a city clerk.
The assistant treasurer is a finance director, and typically, the president of the council is also the president of the EDA. So we're looking for some discussion with the EDA in regards to the president, vice president, secretary, treasurer, and assistant treasurer. Alright. Make a motion to those offices. Are there any is there, nominations for these offices? I'd like to make a motion to nominate our twenty twenty five EDA officers as president Schoebring, vice president Palmer, treasurer Keane, assistant treasurer of the city finance director,
and the secretary of the city clerk. Second. Are there any other nominations? Seeing no other nominations, all in favor of this slate presented by other nominations, all in favor of this slate presented by, council member Fredericks, please say aye. Aye. Any opposed, say nay. Thank you. Congratulations officers. And we will move on to our consent agenda. There's one item on our consent agenda. It is the minutes for the RDA for 12/09/2024. Is there a motion to approve this consent agenda?
So moved. Second. Moved by Councilmember Palmer, seconded by Councilmember Doering. All in favor say aye. Aye. Opposed say nay. Moving on to our public hearings, we have one public hearing. It's establishment of the, Economic Development District Number 84 and the the DMC redevelopment tax Increment Financing District Number 841, and this is being presented by mister Svenvi. So before you this evening is a public hearing,
for the establishment of tax Increment Financing District Number 84 Dash 1, which is labeled as a West Transit Village project. The West Transit Village project is a Wesley Terminus Of The Link, which is city's BRT project. So the vision there is not just for a parking ramp, but also to have housing and retail uses, etcetera, on the site. So we're before the e e d a this evening, holding this public hearing to establish the TIF District that would allow us to it's
important for us to establish this TIF District now before any permits are pulled for any types of structures within the West Transit Village, so that's why we're here before you this evening. So the city team continues to work with DMC team and also the potential developers of the housing developments, for the site. So in the vision, it's approximately about 300 market rate units on the site and about 200 affordable units on the site. So by establishing this,
TIF District now, it will allow us to capture increment tax increment from the various projects, within the site itself. So just a reminder to the EDA that, TIF is a financing tool established by the state, that is available to support local economic development, redevelopment, and housing development. TIF is not a tax reduction. Taxes are continued to be paid on the property. It's where this the increase in the taxes are captured, and that could be paid to the developers to help fill
a financial gap in their projects. So at this time, we're just asking that the, district be established. We will continue to work with the developers for the housing developments within the site itself, and, eventually, we'll be back for the EDA for approval of development assistance agreements, which we'll lay out in detail the developments themselves in regards to the housing mixture and the amount of public district. Thank you, Mr. Senvi. At this time, I'll open the public hearing. If anyone wishes to be heard on this item,
please step forward and, identify yourself. You have five minutes. If anyone wishes to be heard on this item, seeing none, I will close the public hearing and invite my colleagues to, for any questions that they may have on this item. Seeing none, is there a motion to approve this item? I move to adopt a resolution establishing a tax increment financing district through the approval of Economic Development District Number 84 and the Destination Medical Center redevelopment tax increment Financing District Number 84 Dash 1 for the West Transit Village project.
Second. Moved by, council member Dohring and seconded by council member Palmer. All in favor, say aye. Aye. Any opposed, say nay. Passes. Thank you. Moving on to reports and recommendations. Five b is the twenty twenty five designation of depositories for the, for the Rochester EDA public funds and this is mister Brian Anderson. Thank you President Schubert. So for this particular item, we it is routine in nature. It is a resolution designating the US Bank Rochester and Wells Fargo Bank Rochester as
depositories of public funds for the economic development authority twenty twenty five. Five. We have to do this requirement as per state statute one eighteen a dot o two subdivision one. And this is very similar to the one that you did last month on behalf of the city council, something that has to be done on an annual basis. And the reason why we have two depositories listed on here is because Wells Fargo is our, primary banker on a daily basis and then the US Bank does have the four, debt issuances that we will go over in the budget. So making that clear. Any questions, council members?
Is there a motion on this? I'll move Go ahead. Go ahead. Go ahead. Council member Palmer? I'll make a motion to adopt the resolution that's letting, US Bank Rochester and Wells Fargo Bank Rochester's depositories of public funds for the economic development authority EDA for 2025. And as this treasurer, I'll second. Moved by the vice president and seconded by the treasurer. All in favor say aye. Aye. Any opposed say nay. Passes. Item 5c is the 2025 Rochester EDA budget. Mr.
Anderson. Yes, thank you. Again, routine in nature. Real quick the primary activity of the EDA to date is the ownership and debt obligation of both the Minnesota Bio Business Center and the development Minnesota Bio Business Center and the development service and infrastructure center, police station North Precinct. And, the proposed 2025 budget reflects the lease amounts to be paid by the city of the budget, you can see that there are revenues listed out there as far as the bio lease payments, the tax increment financing and the disc and station North leased in the amount of $3,021,283
And then you can see further down underneath the expenditures, it lists out the series 2,007 or 02/2007, '2 thousand '8, '2 thousand '9, and 2020 a, series debt obligations. Then there's supporting documentation on the following page for the Minnesota Minnesota Bio Business Center that was put together by staff. The following second to the last sheet is the EDA city relationship as it pertains to the EDA facilities. Some background on that as far as how the relationship works. And then the final, page on there is a resolution again for the EDA budget in the amount of $3,021,283
Any discussion on this item? Seeing none, is there a motion? I'll move to adopt a resolution approving the 2025 Rochester Economic Development Authority budget. Is there a second? Second. Moved by, Council Member Keane and seconded by Council Member Doring. All in favor say aye. Aye. All opposed say nay. Motion passes. Moving on to, item five d, which is the tax increment financing request evaluation matrix preview. Mr. Josh Johnson. Yeah. Thank you, mayor, president, council members. I'll keep this tight.
So the goal of tonight is to really so let me step back. So last May 2024, we approved the current TIF policy. It's been working great. We've had a lot of good feedback from it. We've sort of opened it up to more considerations. The goal of this is to utilize it as an internally facing document with the goal to check to see if some of our considerations are matching one with the council's considerations but also just working well. And then if if once we dial in sort of the the guard the guardrails and the parameters and and the, you know,
the other elements in here, we'll come back for a formal adoption and create it as a supplement to the TIP policy at a later date. So I'll just run through these categories, if, you know, just sort of nod of approval, of our general thoughts and considerate considerations here. Otherwise, any feedback is very welcome. So, we sort of outlined eight different criteria points to sort of filter down projects and categorize them in terms of the public benefits they achieve versus the benefits that we're willing to to provide to the development. So the first one is financial equity, important for developers to have skin in the game.
We also don't want our TIF assistance to be more than the amount of capital equity that they have in a project. So that's, like, the first consideration. I don't know if 15% equity in a project's the right number. It could be 10. It could be more than 15. But 15 seems sort of like a consistent number that we've we've benchmarked with other, CFOs. Hey, John. So can I stop you? Are we we're taking action on this. Aren't we? Not necessarily formal action. This is this is truly to to get comfortable with this as an internal document to utilize as we're weighing TIF projects as we have. Okay. So we're not looking for a motion on this?
No. Okay. Good. Thank you for that clarifying Yeah. Clarification. Yeah. Good question. So the next two categories are probably the most pertinent in this in this section. It really has to do with what types of projects would receive fifteen or years less in increment, potentially up to twenty years with additional benefits added. So in this category, we categorize, like, market rate housing. We consider that to probably have, you know, fifteen or less years of TIF duration. Hotels, unless convention focused, we put in that category. Projects without major mixed use components,
retail, you know, daycare facilities, other sort of neighborhood amenity type, features. Projects without significant public realm or sustainability elements, I'd also put in that. Going from twenty to twenty five years, you know, these are projects that if we're gonna go the full duration of a term, they should have substantial public benefits associated with them. So in this category, we we think of housing projects that have a considerable amount of affordable. I don't know if 20% is correct, but I'd say start with at least 20% of affordable housing components within the project. I would I also identify what affordable is.
So in my mind, that 60% or under AMI. So we would add that. I've already added that, just not to this draft. Substantial adaptive reuse of underutilized buildings. So, you know, high vacancy or vacant offices or hotels or other or other properties that aren't currently being utilized. Adaptive reuse to something higher and better use like an apartment. Substantial public room, sustainability requirements. Thinking city owned land redevelopment, we put in there as well as mixed use projects, as I mentioned before, that have, a lot of city priorities included like daycares, could be nonprofitable space, equitable equitable development or entrepreneurship type programs,
or incubator spaces. Then going from there, TIF cap, that's just the sort of a general number that we don't want 50 any more than 50% of the total increase of market value to be, encumbered by by TIF. Land land assembly, we also don't wanna be incentivizing higher land prices in our downtown. So we don't wanna be, like, necessarily overpaying or providing subsidy for developers that are overpaying for land. Internal rate of return, a lot of investors are utilizing IRR IRR internal rate of return as their benchmark
in terms of what is their rate of return that's necessary for a project. We've got 25%. Once again, we'll we'll we'll see how that plays out when we're comparing it to projects that come in and if that's the right number. City funding, number seven, city funding will be the last money in. So any city funding should be the last funding in the capital stack. We don't wanna have developers come to us, say, well, can you provide a TIF and then they go out and try to find equity investors to to make the project work. We wanna be the last money in that make that to make that project work. And then number eight, eight the 80% rule, just a concept that we have that, you know,
if it's a market rate housing project, should we only provide 80% of the total increment available and then utilize the, you know, 80 to 95%, so the 15% increment, start pulling that to use for other affordable housing priorities, initiatives, 4,000 projects. So it sort of puts a cap on what a market rate housing project could get in terms of the percentage of increment. So that's sort of the quick rundown. Happy to hear any feedback. If you think we're in the general heading in the general direction, that'd also be good to know. Did you get any nods or anything?
I'm seeing a lot of nods. I don't know if it's sleeping nods or let me agree nods. Okay. Council members, feedback for mister Johnson. Council member Keane. I just start with a question so I understand. I I also think of I've heard other communities are have much higher TIF property in their community and Rochester is relatively low. But I don't know what those sort of numbers are. Is there any concept that we have as far as when we're looking at TIF that said we're getting overextended concepts like or is there any as I believe there's things always rolling off,
but in the last couple of years we've approved a lot of TIF projects too. Yes, that's a great question, Councilman McKean. That is something that we are going to be tracking more closely and we do plan to bring in bring to the council in the future for, just a general TIF update to benchmark where we're at, what's rolling off, when it's gonna roll off, what's the percentage it's gonna roll off in fifteen years or twenty years. And we've ran some of that analysis. I don't have it in front of me. Right now, we're at a healthy number. You know, there's really no, like, drop dead. It shouldn't be over your tax capacity this percentage.
But we're in the realm of, you know, with our peers. And that's something that I and I don't know how to get my head around that because if someone told me, you know, 4%, I'm not sure if I'd say, oh, that's getting dangerous or if that's really reasonable. So I'd like some sort of compares with that. The other sort of input when I when we go down and this is very much a TIF policy, which is good, but there's all these other things that come into it like city property or other things. And you end up with the scaffolding of other benefits other than TIF. And I don't know then if or I should say,
I would like to think that that impacts the amount of TIF that if we're already, you know, go to Sherman. It's already our property that's that's going in there. We're we're in a big longer term thing. There's lots of benefits for us. But when you look at TIF separately then you're going like, no, we're already into this project in a bigger amount. How do we how do we make that come to bear on our TIF policy or should we? Yeah. Another great question. So you look at the the the tools in the toolbox. You've got potential DMC funding with GSIA that we Yeah.
Approved a project earlier. We've got TIF, You know, parking subsidies are allowing, developments to Councilmember Palmer's point earlier, not to have to put in, structured parking in their project, but then they're utilizing city facilities to park. Well, that's a subsidy because it's a it's a cost benefit for them. So we have to weigh all those factors. It doesn't fit into here very neatly yet, but, I agree. I mean, I think you have to look at the entire what's the entire subsidy stack and what's the the right ratio of TIF when you're getting other forms of assistance. Okay. And then there was something and this goes back to,
I think, like, 2018 or so where I know there was a change of TIF policies that said, we don't need that anymore. Like, we have built enough hotels. Mhmm. Enough hotels. Mhmm. And and this is the one that it sticks in my mind. But maybe that could also apply to other things. Like, that I I heard your nuance with the idea of, like, it's one thing if it's a hotel. It's another if it's connected to, you know, a certain type of hotel. Policy allow for basically these other policy statements that said our our next five years, we're really focused on leveraging this sort of investments and that's and that would change
our policy or is that considered in our TIF policy? Yes. As part of the analysis with this, I mean, the Maxfield study is a great example. So we're getting our Maxfield study refresh that will give us better parameters of what we should be incentivizing for the types of housing that we need. You know, I think housing studies are very similar. Experience Rochester did a housing study last year or the year before and and, you know, determine the need for a convention style hotel that has room blocks for the convention. So, I think utilizing those studies to inform, you know,
what our market challenges are, demands are, you know, maybe potential oversupply is will help us inform these in the future. Okay. So that'd be my input, that idea of like the leveraging of other city things and then the one that I still can't get my head around is the whole affordable housing 60% where I still think some of our bigger problems are more that 80%. And it Mhmm. It's if you can't solve your problems at 30 and fifty and sixty, should you be worried about the other ones? And sometimes I think the the county,
their focus on HR, housing redevelopment could focus at the lower end of the city is more of work force housing. Mhmm. But I don't know how to work that into policy. I'll just make a statement here and see if anyone follows up. Thank you, council member Keane. Any other feedback? I just really and and I don't I'm not I just wanna say, I really appreciate the focus on childcare and using having that as a focus. We have to do something in this community and so being able to tie this to that is a simple way we can do it and address a problem that's a real need in the community.
So I appreciate that. Thank you. That's what we needed. Great. If you have more feedback, you know where to find him. Moving on, don't move. Five e, amendment to exclusive negotiating rights agreement with BGD five Development LLC relating to the former Michaels restaurant site. Mister Johnson? Yeah. Thank you, council president. So this is amending some of the language that was approved with the exclusive negotiating rights agreement back in September ninth of twenty twenty four. So, at the time of the, when we adopted this agreement,
the developer, there's a lot of conversation do we do like a preliminary development agreement? Talking to our legal counsel, there's not we're not far enough along in the development process to even understand what's the project, what's the proforma, what's the gap, what what, you know, all the things that encompass it. So we landed on a preliminary sorry. A preliminary development agreement is too premature, so we landed on exclusive negotiation agreement. And, really, the intent was for both parties to work collaboratively, you know, try to get to a meeting of the minds, also signify to counsel what are the important objectives of the developer,
when we're negotiating for the development. So what also happened at that time is the one of the primary concerns of the developer is parking. So, you know, being able to, provide parking within our parking system based on availability and so forth, is something that we'll we'll work on as a development incentive tool. What we didn't realize in the in the agreement is that the term parking included the developer's property as well as our easement to the civic center. So what we're doing here is decoupling those.
There was just some confusion confusion around, like, what are we really negotiating. We're not negotiating anything on our Center Street ramp or the easement. It's really negotiating the the the property owned by the private entity that we're in the agreement with. So we changed the exhibit to decouple those, remove any mention of the, of of that component. And then throughout the exclusive negotiation rights agreement, it just says developer property to clear that up even more. And the other change was, there were some building statistics or,
you know, stories, square footage units. That's still being worked through, so we just thought it was probably not good to have anything, like, listed that's, like, uncertain in the in the agreement at this point, and that'll come in a subsequent agreement. Same thing with some of the other exhibits. There was an exhibit that showed the parking system. There's an exhibit that showed our skyway system. Just figured it was cleaner just to remove those at this point, to to create a more streamlined approach. So that's really the request is to adopt the amended exclusive negotiation rights agreement with BGD5 Development LLC. Thank you, Mr.
Johnson. Council Member Palmer. So when this came up to us and Mr. Keane had the question if I remember correctly, why are we doing this with property that they owned? But really and truly what you showed us was using somebody else's property to get to the Center Street ramp. Is that kind of what we goofed up on? There was, yeah, there was a connection of the term property throughout the development. So they wanted to their goal is like their priority is to have parking as close as possible to their development. But I guess my point,
just want to clarify that is, is that what we voted on in my mind on that day was on property that they owned and had control of and not the Michael site, and not the Pappas property. That was that was not what we were doing. So that reflects what we really have now. Is that what I'm getting at? That's a yes. Looking at The intent of the original vote was to do what you would be doing tonight. That's correct. Thank you. And you were right, Mr. Keane. So I'll make a motion to approve the action requested. I'll second.
Moved by Councilmember Palmer, seconded by Councilmember Keane. Any further discussion on this? Councilmember Keane? Just a question. I wanted to look I looked down through the red line in the other one. Has the other party already signed these? They haven't signed but they've approved this draft. So if this gets approved, we'll have them sign it and then go through our contract process. Alright. So usually I do see signatures on these before we agree to them, but I alright. But they've agreed to them, which is the critical part. Alright. Thank you. There's a motion on the table. All in favor,
say aye. Aye. Opposed say nay. Motion passes. Thank you. Thank you, mister Johnson. Having completed all items on our agenda, I'd entertain a motion to adjourn this meeting of the EDA. I move Second. Moved by, council member Fredericks, seconded by council member Doring. All in favor, say aye. Aye. All opposed, say nay. Now I will call back