I pledge Ali to the flag of the United States of America and to the Republic for it stands one na under God indivisible with liy and justice for all all right uh the next item on the agenda is the approval of the regular agenda um does anybody have any so move tws is there a second I'll second there's been a motion by Rick second by Sean um any other discussion hearing none all in favor say I I I oos motion carries all right uh the next item is the consent agenda any questions otherwise I take a motion to approve so moved okay Sean made the motion is there a second go Ahad go ahead Rick second okay Rick made the second um any other discussion hearing none all in favor say I I opposed MO carries all right next item is the public is invited to speak on matters not on the agenda and the speakers are limited to five minutes so I know we have one Gentleman Just state your name and your address please my name is Gary whus I live at 1406 9th Street Southeast of new pre been a resident here for 15 years I don't always attend Council meetings because you make it too easy now I could just watch the Stream live and that's what I was doing two weeks ago tonight during that meeting there were accusations made about uh several members of our Police Department Mr Mayor I think you stated several times that it would be looked into yes my assumption was then no investigation had taken place at that point correct okay that's what I thought later in the meeting when it went to the going around the room uh I believe our chief was called called on and he had a few things to comment on at that time Councilman Ryan asked the chief if the county or the state provides diversity training for the police officers excellent question and very appropriate for the time Chief appan responded that not only do they take diversity training but they've exceeded the state's requirements I believe that's what was said by the chief at that time councilman sailor said and I quote because I wrote it down sounds like you might need to do more sounds like you need to do more almost as if he's already reached a judgment I was very insulted by that I would imagine our chief of police was very insulted by that comment and I got to believe members of our Police Department were very insulted by that comment it's already hard enough to get people into the law enforcement IND business in the state right now and when you have a member of the council making comments like that it's absolutely uncalled for and I believe councilman sailor you owe an apology to our police department and our chief of police thank you very much thank you okay the next item on the agenda or is there anybody else that wants to speak next item on our agenda is the city engineer projects update do we have anything Matt Chris is on okay I am here you can hear me okay we can hear you that's all we can do we can't see you there you are well screens yeah okay okay so um the project update I won't get into that too much here unless there are questions on it the the final item on here I do have a change order in relation to so um on the 20232 24 for the agip projects if there are any questions please let me know otherwise I'm going to move into the next item here so with that um on the Main Street th9 reconstruction project it's been off the agenda for a while but it's back up uh we are uh I do have a uh change order uh included in your packet today and that would be for um accepting the project uh reducing the warranty on landscape planting and having a small deduction on that uh on that item so the reason why that project has not been closed out is that there is a warranty period on landscape plantings that exceeds what the warranty is on the rest of the work um so the contract was held open um for for this time and the contractor has agreed to u a reduction in payment so we can reduce that warranty and get the project closed out so U with that I do have a change order included in your packet today um just so we can get that all formally done um with this uh change order there would be a reduction in payment to the contractor in amount of $1,446 and it would also uh require the contractor to wave their um rights to incentive payments on the project um which would have actually increased the price on the project so uh with this uh change order um if approved we would just move straight into CL out on the project um hopefully with the final payment the next meeting or two okay so if you any questions for me just a refresher on my part uh I know we talked about this before so are we just assuming the responsibility for it and to finish up the landscaping or just to take responsibility for whatever needs to be done then yeah the city would be taking ownership of the landscape planting they did do a a a run through last summer and there were only a handful if maybe a that can chime in here too but I think there's only a handful of plants that required replacement they would have met the um requirements for getting that incentive payment based on the number of plantings that did not make it that first winter um but yeah at this point uh the city would essentially taking ownership of all the planting and then seeing that they're replacing them or growing them or whatever we need to do then yes y y so you'd have with this reduction in payment at least you have that money put towards it I guess but uh but yes it's it's all on the city now to maintain replace and do anything in the future at these plantings okay thank you I make a motion to approve the change order as it's presented okay there's been a motion by Bruce is there a second oh second Magie seconds it any other discussion or questions of the engineer hearing none all in favor say I I I opposed motion carries anything else Chris that should be it I'll see you probably in two weeks here okay sounds good this monitor yeah you too this monitor isn't on or something was it on ever no no it doesn't so it I don't know if it's not plugged in or just not turned on or you to go turn that one off though if the Twins were on or something no that'd be night no Thursday right yeah there we go thank you Ken thank you okay the next item on the agenda is um the mhfa workforce housing program all right I'll uh provide a brief overview here about the couple of topics actually three different topics we'll be talking for here tonight um we have a developer that has proposed uh kind of a Cooperative uh project with Marv Deutsch who's a property owner of the lot south of Walgreens if you remember back in 2020 we had a uh compl plan Amendment and rezoning and then some variances to approve what uh at the time was a 43 unit apartment building on that property the developer um that has come forward now at this point is eert construction um and you would have seen the name in the memo in the packet um they're looking at a 54 unit apartment building um at Planning Commission on Wednesday night this week we're actually going to be looking at a uh possible variance that they would would apply for probably at the end of the month here but the footprint of the building from what uh Mr deuts had proposed from the 43 unit building to the 54 unit building would be no different it's just a matter of their units being a little smaller than what uh Marv had been looking at initially um as part of the due diligence from the developer in looking into making a project financially uh feasible and obviously provide a return on their investment they asked about uh any local incentives that we could provide to them um we looked into obviously uh you know if there's the option of T Tiff and tax payment and then if there are any other state programs we U talked with them about the workforce housing development program which is from uh the Minnesota Housing Finance Agency and they have a deadline for uh the end of April for a program that would allow the city to apply for funds that could then um help we'll just say basically bring the cost down for the development of the uh uh market rate Apartments not looking at subsidized uh apartments or lwi income uh these would be market rate and um this would just help them provide a better return on investment for their um going through and actually providing the housing units in town here um so we do qualify for that program as an outstate uh Minnesota city um obviously new pra is Exempted from the Met Council and we're considered outstate so that's why we qualify for this program um one of the ways that we would have to participate if we make an application for um what is ultimately a forgivable um deferred uh loan um that obviously would uh benefit the developer is we would have to have a local match and that's where the tip or tax payment comes into play here and we do have Michaela huitt from Baker Tilly that I'll turn it over to in a minute here to provide a little background on tax abatement in general and then specifically about um the uh General ask um that could help this project happen here in new prag um obviously everybody in the council knows we have not had any um larger scale Apartments other than the praha village which is obviously age uh restricted um we haven't had any we'll just say market rate Apartments of any size built since early 1990s so you see them popping up everywhere and um you there's a number of factors for that but um in order for developers to obviously have um the project work for them they have to have some um Financial incentive to do so and um this would help them make that financially feasible um as far uh part of the application if the city and the council War to agree to apply for the funds um as I said we would have to provide for every $2 we would have to provide $1 match and that's what Tiff can be used for that match so uh you'll note a draft resolution we're not looking for any action on anything tonight but a draft resolution that the council would have to uh approve that we would submit with the application for the workforce housing program uh we would intend to do that if you would like to move forward obviously we would do that at the April 15th meeting uh which basically would commit the city to that local match of whatever the Final Mix of funding we would be applying for uh from the state um so that gives hopefully a little background on on the program uh the workforce housing basically we we have to provide um local employment um need uh for the housing units and we've already got a letter of support from mayo and a letter of support from the new prary school district actually no only need to have one for the program but we um have asked for that from our larger employers and I expect to have uh probably five letters in total including charts SC equipment and um and the like so um I just want to note that as well there is support from the um employment or employer Community as well in new prag uh for some more uh market rate apartment units in town um maybe with that Michaela I can turn it over to you on generally you know what tax batement is for housing and um a little bit of detail on uh what we're looking at here specifically good evening Mr Mayor members of the council um as Ken did a great introduction into kind of the purpose for the discussion tonight um I'll give you a little bit more information on tax abatement what it is and how um the developer has requested it be used for this proposed project um Economic Development tax abatement is really more of a tax rebate it is a tool um that communities use to provide um additional cash flow um savings to a a project in this case with with it being a tax um abatement it's really more of a rebate um the project as proposed is about a 12.7 million project um preliminary estimates from the county have provided a taxable value of about 6.2 million the tax abatement um is generated by the city's share of the taxes on that new developmental increase current value is about 93,000 with the with the increase value of about 6.2 million the city share of um The increased taxes would be provided as a tax rebate back to the developer um an economic development tax abatement is a tool that has a lot of flexibility in the structure of it uh meaning that it it um if you're familiar with tax increment financing which you're capturing the incremental taxes from that new project and um financing some a portion of the Tiff eligible expenses with tax abatement it's structured similarly where um you're essentially redirecting a portion of the increased taxes to repay um the developer obligation the $12.7 million project um as proposed by the developer would be financed traditionally through private equity and debt um and the um debt is limited based on the the operating revenues um and operating expenses of the project upon completion and um the developer did provide some preliminary tax or preliminary um Financial of the project both with and without the tax abatement and essentially um as kened said is ask asking for the tax abatement assistance as a means of providing additional cash flow to the project to uh both support the debt coverage on the um debt repayment as well as provide additional cash flow for the equity uh repayment to the um to the investors um in order to provide tax abatement um the city needs to make a finding that the uh benefits of the abatement equal or exceed the cost of the abatement and that the abatement is in the uh public um interest because it will either in increase or preserve the tax base provides employment opportunities um helps renew um certain areas provides access services or finances or provides for public infrastructure the use of tax abatement um uh dollars is is very flexible and it's essentially can be used for um improvements to private property um infrastructure um improvements or other public um facilities within the city so the way that it's being requested in this case case uh would be an eligible use um it would require finding by the city that the um the benefits of the abatement exceed the um the cost of it meaning that there is increased um tax or increased revenues generated by the new project um and the other uh point with the way that it's being requested is again as re as uh re rebate it's reimbursement there's no upfront financing request of the city um it would be again uh based on the actual taxes that are generated um using that preliminary estimate of the 6. um2 million of value um is what is um has been used to generate the the um initial tax abatement estimates um if we're looking at the city share only of those tax abatement um uh revenues we're estimated about 32,000 per year again that's based on the incremental value of the 6.2 million and in the preliminary uh memo that is in your packet um we Illustrated both a 15 and a 20 year um term of tax abatement and that is assuming 100% of the city share of taxes that would provide a range of 485,000 um for 15 years up to 647 th000 for 20 years um one thing to point out is again the purpose of tonight is simply to introduce the the request the concept of providing tax abatement um and to um um understand the the council's desire for supporting this project um the actual amount uh the recommend amended amount of tax abatement um you know the the application to Minnesota housing is a million the the match would be about 500,000 um and in that scenario it would take about 15 years to repay that um and of course they uh the actual abatement would be based on the Gen the the the actual abatement amounts would be based on um the value that's created upon um completion of the project that it should it proceed and then the terms of the abatement assistance would be um find in a later term um subject to approval of the tax abatement um the reason why I bring that up is you know initially looking at the developers proforma and um doing a review of IT the annual tax abatement does provide additional um cash flow to the project does bolster the um the uh return to the developer and supports the debt coverage for the the private financing however um additional uh review Into the assumptions related to the operating income and the expenses um would occur to confirm what the actual recommended abatement amount would be um based on the the need maybe the last thing I'll I'll say before um pausing for any questions is um again if you're familiar with tax increment financing where it is um for specific types of development or specific areas of development um there's also the required but for test and that but for the use of tax increment financing would that project proceed with tax abatement there's not a but for test it's really more based on does the project project meet the public needs and public purpose um and uh are there eligible uses of the abatement and this type of project again would fit within those qualifications and is really based on the kind of the the the financial need and the public purpose of that project so with that I would um entertain any questions that you might have on the the um the tool or the um proposed tax abatement numbers um so what's what's the difference between what did we do with chart that time we did a tax debate one chart I believe Michaela you were actually involved with that one what what's the difference here between that one and because I know that there was some clawback because they didn't job creation job creation it didn't meet one of the one of the things so so when a city provides um assistance to a project or to a developer um the type of project and the amount of assistance will trigger if it's considered a business subsidy um the with the with the chart project um if we're providing assistance greater than 150,000 it requires a public hearing and then there are um business subsidy requirements for the city's um subsidy policy goals um housing is an exemption from the business subsidy um requirements so in this case um you wouldn't necessarily have um any of the the clawbacks related to job creation or wage goals for this project although certainly whenever um your entering into an agreement with a developer on a proposed project um the terms of the agreement you know can be negotiated um so while it's not considered a business subsidy if there's other goals or public benefits that the city wants to achieve um those are all negotiated terms that can be um included within it so in this case if the city did choose to participate in a tax abatement it would require a public hearing um and but it a public hearing to consider creation of the tax abatement but not a separate an additional business subsidy component oh okay okay thank you what is the percentage of developers who get this kind of tax on projects I'm just kind of curious um it's it's a good question that you know I would say in this case um you know tax abatement for housing is used um it's it's not probably as common as if it qual if a project qualifies um for a a tax increment District um then you it's either for affordable housing or to remove blight um or to create jobs through an economic development District so tax abatement really is um I keep going back to Tiff because that's the more commonly used tool that communities use um but tax abatement is provides more flexibility as far as structuring um how much assistance is provided to the developer um what the Gap is um the process for creation is simpler um and I think in this market given that it is a it's a Workforce housing project there's no um there's no reduced rents or affordability requirements it really is is based on trying to close a financial gap and that's where I said there would be additional due diligence to really understand what the the ma the the minimum amount that the developer needs to still create a project that would uh work and meet the city's objectives um the other issue that we're dealing with and seeing more of these requests is Rel to the market um the developers uh financing right now typically um you know there's there's still even if a market rate project there's still going to be um a maximum amount of rent that can be charged based on the construction cost of the project um and so two variables that we see that are that are causing larger gaps in projects and making them infeasible without assistance is um construction costs still being higher and market rate meaning that interest rates are higher than they used to be um and those are those are both those factors are um causing more gaps than we would have seen in this type of project say um three to five years ago um so given the nature of where we are in the economy between those two factors um and the city's desire for this type of project um based on the components that have been presented um we are seeing a shift to um I can't give you a percentage but we are seeing um more projects that are requiring um more assistance than used to be and even in some cases more than even what the project would generate which is why this this housing fund program had been created last year as a way to try to provide additional funds to projects well there's no way to know that even without this that that project wouldn't go on CU we've talked with the developer when he purchased it and we allowed him to build a stub Street and to our specs and I think there was even plans drawn up I think I saw some initial plans or something for the 43 unit building we pretty much had everything ready to go at that point now the original developer still owns the property and it's kind of a joint venture at this point so he would not be the constructing entity it would be as I mentioned Ebert construction as the actual you know entity taking on that risk and and financing it and constructing it and then ultimately you know renting the units out so well here's my concern and I have been on record with it you know I was thinking that when that first came out I wanted to see bigger apartments that could bring single family people in and I think there was some people on the council that thought there should be a wide range of different units there and that was at the 43 and I can't remember off the top of my head but 10 or 12 of them are going to be of this size and 20 were this and 20 were that so there was a wide range and very diverse family unit that could utilize those spots now I see that we're going up to 56 um and they're going to be a lot smaller so are we going to start excluding a perhaps a single mom with three kids because it's a th 1100 square feet less uh because we've added more units to this that can be rented out and it's I see where it's good for the developer and you know good for Workforce whatever but um so no very good question I don't have an exact um number of unit mix and what you know what would be two-bedroom versus studio um I can likely get those before April 15th if this looks like it's going to move forward um I know on the developer and talking with them about uh the unit they felt that the units at Marv had proposed were just too large for what the market could bear so that's why they thought with that same footprint they can get you know some more units that they think are more rentable um and they just have experience obviously and some other communities that they believe that those larger units would not rent as well um just from their experience and in their other projects so okay so then we go from a 43 unit to a 54 unit we done a parking study and whatever else let's assume two cars per cuz we've run into other projects here where so people are forced into the street to park they're forced over into the coburns lot to Park walk over so we'll we'll we'll actually be talking about that more at our Planning Commission meeting on Wednesday if you'll be there Sean I will be there be looking at potentially a parking variance from uh roughly two parking spaces per unit to about 1.75 I believe was the number so not a huge difference no but unless you're the 025 that can't find a parking spot and you have to walk across the street and that all goes into the the unit mix again so again we're just introducing things here we're not looking for any final decision but uh no all all good good questions don't you think this should go before the Planning Commission before we approve the well well and nothing's being approved tonight we're we're kind of just introducing the idea but the work's going to start because you want to have it ready for the 15th what what we're trying to do is just get uh if you have a des ire to apply for the mhfa workforce Housing Development Grant at this point if if there isn't then I don't know if the project happens or not but likely everything else wouldn't have to happen either so what's it going to cost of taxpayers over of new PR over 15 years I'm sorry so that becomes part of the discussion tonight is if knowing that some sort of match has to go along that that match could be cash upfront the match could also be tax abatement um um I know in the memo it talks 100% we have control over how much tax like we we tax one like 1% of the tax share 50% 100% that that's really up to us at that point and it really is just coming off of the future earnings and so right but wa how many tiffs do we have going on right now that are costing the taxpayers money I think the only Tiff we have is we have pra Village I think praha is the only one that's still on the books that's still on the books the chart project isn't no no okay and and and I guess and what happens and I guess in terms of costing the taxpayers money we are only paying out to praha what we collect but we're what's collected above and beyond if that project never would have happened that it's not like we're paying out money that we didn't have before right and I'm not saying I'm against or for that but I just want to I think to be upfront because you know I've gone through this many times and I'm still confused with Michael like laying it all out because it's a complicated process you know was your presentation it's just enormous yes get your hands around yep so if if you look at her memo on page two she has the the chart that kind of lays out the estimated 100% share for the city would be 32 roughly $32,000 and so if if the city decided to go 100% it's just how many years then would we opt to pay that out and that would that would be the number that would get paid out obviously we say the city opt to do 50% you'd be looking at half of that number or if you change the number of years and so it's just a matter of kind of just doing Simple Math once the city decides what would be interested if it is interested in going forward well I guess it goes back to the fact that you know we're going down this trail of handing out money to developers that for projects that we don't know that might not that still might take effect that still might be done without this project without this extra money 100% I mean I think we could say that about any project and I'm just thinking of things coming down the in the future here with you know you talk about blight I mean it's only going to be a few more years before that Mill people are going to want to tear that Mill down and use this type of money for blight and that's going to be more Tiff money and we're still paying off several other projects and eventually that starts hitting the budget and it becomes money that should be coming into the coffers that isn't and and we want a $12 million police station and we want second sheet of ice and all this leads into see what I think the counter argument could be let's say we don't do this and they decide not to build a project now we don't have the units or tax money rolling in if we opt to say 50% instead of 100 well now we potentially get the units and we have more than we had rolling in before to help us out and we're helping subsidize a little bit and eventually that then comes off the books and we're getting all of it but I I I you have to Way Apartments having early 990s you said was the last time like they haven't been getting done and so at some point if you see that there's a need for housing maybe the city has to step in I know when I was hired um and this is kind of going slightly a different direction we talked about well how do we somehow bolster the commercial to help take take the weight off a little bit well part of doing commercial is providing housing I know as we do these Eda visits over and over and over again we hear that we just can't find people well how do we get the people here and we've talked about it I had to buy a house it was extreme I got extremely lucky that one happened to fall into my lap basically but um how many other people have we heard from other businesses that have said we just can't find housing for our our people to work here when we try to hire them and so is this an opportunity where the city can step in and say okay we can provide a little bit to help you kind of fund your project a little bit as well as we get the benefit of getting the the housing for future residents I'm not saying do it 100% I'm not saying doing zero but there might be a mix in there that we can look at that Best of Both Worlds for everybody okay so with a yes vote tonight we're gonna walk me through that we're gonna not looking for any vote tonight what we would like is some direction to continue to work towards what could be a future applica or a future tax abatement in order to pass ultimately a resolution which we would need to do at the April 15th meeting to allow us to submit an application aiming for a certain dollar amount that would be our match for that um application and then at that time we'd review the total project and you'd have some of those answers the actual tax batment would come at a later date if we knew we got the program funding from the state then we would go through with the public hearing and like Michaela said the further due diligence on you know really digging into their financials and everything because we can get awarded the funding from the state and if everything looks kind of funny at that point you can still say no we're we're gonna walk from that this just says if we go forward and want to use that funding we have to have a match so there's still some more steps to go but we do want to if you're comfortable with this and if you are what is that dollar amount potentially that you would be amenable because I think part of it is too is I mean if we had whole Council came back and said no we're just not interested well then we know to stop spending time on this if we you guys say yes we are interested and we think that this may be kind of where we want to land then it gives us something more that concrete that we can work with any of the housing stuff that's up in front of the legislature right now um would that interfere with this process or we'd have to redo everything I think the interference re that a certain amount of the goes to a a HUD facility no I mean I think that that would deal more with more backend stuff of how much parking are we required to get out of them or what sort of building facade did it'd be more of the the actual building of the unit itself and not so much the funding is is my understanding and I don't know if you've been following it all Michaela no I think this is probably this is already fun this is already a program that that the deadline for application is April 30th so I I think the biggest challenge is um developers understanding how competitive this program is and and having these this this pledge this resolution of support Bol ERS um their their application um and their need but I think the biggest issue is if it's going to be over subscribed if projects don't receive it or don't aren't awarded funding or in the amounts that they're requesting um what's going to be the fallback plan to that um and so I think that's where part of this is trying to find an amount that the council can can accept being able to provide or pledge up to knowing that if the project does receive an award we know what that award amount is then that's when the due diligence and the actual establishment of the tax abatement would um would take place it it maybe just one thing to point out with tax abatement um the the request of the city is only the city share of taxes so the county and the school are not being asked to participate um in this tax abatement so while the city's um share from percentage all the way up to or from A reduced percentage all the way up to 100% would be pledged to the developer if you choose to proceed the the overlying um overlapping um taxing jurisdictions are not being asked participate so still the average resident should see an overall benefit to this project um subject to and of course it's always hard to say the the overall impacts but we're not looking at abating 100% of the tax increase which we're estimated approximately 83,000 just the city share of it which means that the other um entities would still have the increased um value values which is a benefit to the residents overall with the overlapping districts the um the this is pretty consistent with what we've done for years uh we see it more in the industrial park where we're providing incentives the incentives are in a different way with uh the price of the land that we're selling and other things but we're trying we go through the same but four kind of scenario what's what's the benefit of it and then secondly what is what is the community getting out of it in the industrial park we're pretty much focused on job creation and tax capacity growth um in that area in this scenario it's similar thought process but we're really looking at are we serving the needs of the community in the housing area so but the butt four test would still need to take place so it's it's really nothing as far as the construct of it it's not anything different than we've done before in in my mind but um I just want to clarify a couple things you mentioned a million dollars is that assuming uh the 15-year scenario and and roughly being $900 some th000 total then or the um the the the anticipated amount that the developer would ask or um request of mhfa is a million the local match would be about 500,000 which would be roughly 15 years of tax abatement assuming the 32,000 per year so I think what we're looking at is you we had shared in the in the packet just to show um kind of the maximum tax abatements assuming 100% of um City participation for both 15 years and 20 years because those are the maximum abatement terms that um a city can do 15 years with with all three entities and up to 20 years if one of the other taxing entities um declines participation so we simply wanted to illustrate what the maximum tax abatement amount could be um but I think you know the maximum that we would be initially looking at would be the 15 years or the just under 500,000 with the anticipation that that number um with additional due diligence review of their cash flow assumptions knowing that um the structure of their financing is is not based on um you know this is cash flow savings it's not an additional financing that they would be relying on this Revenue stream um and that kind of gets into the minutia of the financing itself but it does also allow some flexibility in what the recommended and actual amount would be that they would need so I think in in reality what we' be looking at is up to 15 years um based on the current tax amounts with the idea that um that could be reduced with their actual finances and what the actual award would be um should they get funded through the state and just understanding right if we're looking at your your assumptions on on that tax rate if the tax rate goes goes up then that dollar Moss locked in and then we we're getting the taxes above that percentage that would be structured so right the the question is you know as future um values change tax rates change um I think you could have in your agreement that if if you if it were silent essentially every year tax abatement is calculated based on um whatever the the value is multiplied by the the tax rate um and then multiplied by the the current year tax um capacity rate of the city so um each year that could change but you could certainly have in the agreement if values go up do you pay them off sooner or do you cap it you know do you cap it based on if rates go up or values go up they only get a flat amount um or do you allow them to be paid off and you would pay off the obligation sooner so those are all that's the benefit of tax AB is you have a lot of flexibility in how you want to structure it um and you can also we said you know what common to see in tax abatement might be 100% for the first five years to help with cash flow we know those are the hardest years when a Project's trying to stabilize um meet their minimum um coverage requirements then what it's pretty common to see is you can drop it off to you know reduce percentage for say the next five or 10 years to eventually where it's down to zero a little bit more administrative of that of what you year you in but that's probably the most common way we'll see it is is trying to taper down that percent so that you get to a blended percent that you're essentially providing to them um um and and generally that works well with their overall 10 to 15E cash flow um assumptions too of of what their debt coverage and their their um Equity returns look like in your uh narrative your your um um memo you reference City's adjusted taxable net adjusted taxable net tax capacity I'm just not familiar with how you how do you are tax capacities 11 million something and is it just a percentage of that number so the when you create a tax abatement or there I didn't get into all the um restrictions on tax abatements um like I said there's a duration there's a duration limit for the maximum number of years there's a maximum amount of abatements that cities can participate in and that's essentially 10% of your um um 10% of the annual 10% of the net tax capacity or 200,000 whichever is greater city has no abatement so you have no mment capacity limits um so those those are all the parameters that if if you're looking at kind of opportunity cost for participating in projects there are some communities that run up against what that 10% limit is and then it becomes a priority of which projects you want to um um provide assistance to or how you want to finance projects um but in this case there's no limits to the or there's no limits that the city would be um concerned about regarding the statutory authority to use tax abatement it's really more on the need for the project and the city's willingness to want to participate yeah I see that we have no issue with um meeting that but I'm just wondering how how is that 4,492 252 calculated how do you what is that a percentage of the total tax capacity that is um and that might number might that's just that's not related to the tax abatement itself no what it must be related to the our tax capacity correct is it a percentage of total tax capacity um I think just asking like how that 44 million was calculated yeah I would have to double check that number is our tax Capac capacity is 11 million something isn't it okay yeah so that all right yeah I just was not familiar with that number um in the Covenant for the resolution it talks about meeting a vacancy rate requirements do we feel we're going to meet that requirement yeah I got some information from um Skyy CDA and they'd have obviously our housing study for the area which is a couple years old now but then they also had other information that they have from their own units and yes we believe we meet that so that that information is enough information to provide on the liser county side as well correct okay and I I understand you're just planning or just assumption is just the city doing it and I only mentioned ler County because they seem to be starting to be active in ed8 types of things and who knows they might want to participate in some way maybe it's not the abat part of it maybe they would want to since what do you think Josh sorry what was that do you think liser county has any interest in participating in this in any way was it worth an ask I mean I can certainly reach out to the County Administrator and and and just get his thoughts on it I'm not sure because obviously they would benefit from it corre but when you talking about projections as a city council are we going to be able to see any or at least understand any of that uh work that you've looked at if if you're referencing um two aspects one you know additional details on the calculation of the tax abatement and you can see kind of the the total taxes the city share County and school but we can also share on the we'll have to confirm with the developer what um but if it's regarding details on our financial analysis and kind of the needs analysis um we can certainly like we said we we did kind of a high level review of of the financial information they shared um there were that specifics on the unit mix just the overall kind of high level of the total net operating income operating expenses debt coverage assumptions um tied out to our analysis but if you're looking for additional details on kind of that financial needs analysis um we can certainly share that as well as far as you know the metrics that we look at from the the debt coverage the uh return on Equity you know we we look at it from a um both the with and without the assistance to really try to um answer two questions one do they need the assistance and if so what's a recommended level of assistance um and so that is additional financial review that we that we would do and um would share based on the the analysis and the results who pays that the city or does the develop pay that fee typically the developer um in both the correct me if I'm wrong but typically the way we structured is that there's um an application fee developer pays and then um um typically the cost uh related to establishment of of whether it's a tax increment or tax abatement area um I think is typically covered by the developer or at least negotiated term the agreement so you you're working for the developer essentially when you put put this process together no uh no as a city's Municipal adviser um we review the developers information um and our client is our is the city um but we the developer it's not uncommon and pretty much in all cases that well never say all but in most cases a developer does provide an application to offset the city's um outof pocket cost for both financial and legal um because as related to this agreement is both the financial analysis that we prepare as well as any the legal documents um whether it's tax abatement agreement or sub whatever the type of agreement is there is legal time and cost into that as well um and it's it's um it's it's the review of their information they're covering the city's out of pocket cost Sean it'd be very similar I know we even have it in our fee structure that if for some reason we have we call a special meeting just for a development project that the developer will reimburse us the cost of having to call that special meeting contracts we had with chart every one of them had chart paying an escrow to cover all your costs oh they did okay all right okay thank you the the construct of the agreement with Minnesota housing is that a it's unsecured is that correct there's no they're not putting a lean on the property are they no there is I don't believe though no I don't believe there is so that if they would it's actually a deferred threee and then it's deferred completely okay yeah but okay it depends on the progr until that time they do have clawback and and typically some requirements if they don't meet them so it depends on the ultimate agreement I haven't worked on one of these I've worked on the side of Workforce housing and tax increment but this is different it's it's a dedicated fund which is a little bit different than a number of the projects that have gone through the last few years but typically there is a tieback in some form they're not getting a mortgage in the same way you normally would do but um if they don't perform in certain capacities there is a an ability to get monies back up until the time that the Deferred or forgivable loan status is is active and that's why I'm just kind of trying to explore is there anything that they would do as far as their collection activities that would interfere Us in any way from our yeah I mean that's possible and you know typically on any types of development funding you do you are not taking a first priority on any of these um the reality is it still leaves the abatement subject to compliance with any terms and conditions we have with that so if they don't perform they don't get the abatement typically so that I guess that was my next question are we are we U um putting together a formal separate abatement agreement then I'm assuming we would have a separate abatement agreement you're going to have a specific document tied to this program which you you've got yeah they're calling it a in there it's exhibit a to the resolution is just the draft we'll just call it template that's what even if we move forward to the resolution you wouldn't actually have this filled in yet at this point when I talked to mhfa staff they said no that would actually come at a later date we just want to have the council say that's the form and we're okay with that all the specifics would come later I thought that form was dealing with the Minnesota housing end of it that there is there'd be two separate agreements be a separate there be one the developer of agreement Minnesota housing deferred loan agreement there would be a tax abatement agreement between the city and and the developer that would include all the terms of the tax abatement including what were the um eligible expenses what the repayment term would be any of the other Provisions that the city wanted include wanted to include there so it would be a separate agreement um but it it would they would talk to each or this one could acknowledge that there's other funding to the program that's typically how we um structure it they they'd be they'd be interrelated and tied together and if one goes wrong the other one has an impact as well and as far as the funding of it then it can go to any purpose it doesn't have to go to infrastructure or dirt work or the the tax abatement or the Minnesota housing uh well tax abatement is going to go just into their po or it's not going to be paid but the initial money for Minnesota housing that can go in it could be us for land acquisition it could be to offset our whack and Sack fees okay yeah it does have a line in here for the use of the the program funds um but I think it's pretty as long as it's related to the qualifying project um meaning the the the market rate or the you know the workforce market rate residential property and then we do have an answer that the abatement would qualify as a matching then yes it does okay that's all very interesting to and I know it's Unique that we're bringing this forward and really we're only looking for the application you know two weeks from now to be submitted and then all these agreements would have to be put in place including like all the due diligence and public hearing for the tax payment at a later date so you're really you're committing but you're not you know having the final information on everything at this point so creating interest yes trying to gauge interest you're taking an initial step and a lot of agreements will follow that you still have control and approval over okay those are all my questions at least for now but I reserve the right to ask thank you k okay any other questions with that um I would take a motion to approve the resolution that not looking for any approval what the heck saw the resolution positive attitudes positive attitudes of the council that you want staff to continue to work on this okay I'll say yes I have a lot of questions but at what level of funding and can you give us any direction on that so you're asking for a dollar amount tonight a dollar or percentage or like just and and I don't know like I said we don't need concrete we definitely want it to be 28,43 we just need to so we can work towards something to bring back to you at the next meeting so like the 50-50 match inste of 100% instead 100% with the council say yeah we we all kind of would land around 50% or 75% I'm not sure you really need it but you need to have some flexibility on what the percentage will be based on what Michaela works out and what works out it's really to get the step to get an application in you may you you're successful it comes back you guys run the numbers and figure out what works or doesn't work because the developer is going to say either works or doesn't so can we say up to 100% yes yes yes I would I would say whatever you can live with because if they apply with that amount and when we do the due diligence say it's less that's great but if due to the due diligence and say they need it some other project cost went up or they can't do number units then it is up to that amount that you are agreeing to with the idea that we'll try to reduce it sort of like what we do with our budgets set the higher amount yeah tax levy well I support the 100% up to the 15 years at this point in time I I do think that we can certainly make the case that about our shortage and housing and we can see our our housing permits just not happening and we don't see at least I don't see a big increase in housing permits in the next year or two either and our residential lot inventory is so low that even if we had a new development it's not going to happen that quickly correct so and you can see it in the school district with enrollment declining so and their support letter actually referenced that exact issue that this would help not only employees but families potentially that would have another option so it it's it would be revenue for the school district cuz they're not part of this it's coming off the tax unless they want to participate we can ask them too yeah they did by the way participate in the chart which is which is pretty unusual um when we did that deal we've never had the school at in my history participate before but I think for Scott County I think that was I don't know if it was the first one but they said it was very unusual yeah they still don't like to question may maybe yeah let's assume that the county and the school district both want to participate on some level does that reduce the amount that we would need to give or does that just potentially increase the award that they would receive that make sense I think I'd want to confirm that but my first thought is it would reduce I mean at the very least if the developers looking for cash flow and everyone chose participate at the very least it would be the same amount they would receive the the developer but it would all be if they all participated if everyone if everyone produced equally we'd all participate a third instead of 100% right so some reduced amount which would still get them to the amount so I think we should clarify that local match means the entire but I would assume it would because if you did a tiff it'd be the same local match so I think to the and that might be kind of the spin-off soft recommendation is reach out to the other entities and see their level and then um if that would adjust any of the language but it's still cost cost the taxpayers money that's going to go to a to a developer essentially yes but money that but for for the development if you don't get the development you're not getting any of that right right well I am in support of up to 100% as well I can go with that if since it's preliminary and what yeah it's we don't if we don't look at it we'll never know okay you know so I agree okay okay thank you thank you thank you we'll be back in two weeks and and uh so now um the next item up on the agenda is uh talking about the uh bonds for the streak project for 2024 so that's you okay uh Mr Mayor members of the council Doug green with bger tyy pleasure to be here uh this evening the resolution in front of you is a resolution authorizing uh the sale of the bonds uh it's not a uh it's not something that's laid out in state statutes that we have to go through step it's just good practice to just make sure we're all on the same page um and uh that's basically it uh so we're we're looking to set the sale on May 6th um in your pack that Robin provided uh she laid out which you're probably very familiar with the projects that uh we are going to finance in the estimated power amount of 4,745 and on the second page of that memo we laid out the uh the various repayment sources and there's in as there typically is with Improvement bonds when when we're replacing Street and utilities uh there there's quite a number of repayment sources so there's a levy portion looking at around $85,000 per year the assessment revenue is decreasing over time because we uh we assess with level principle decreasing payments um I'll get to the equipment portion in a second sticking with the street projects uh the water is around 78,000 per year sanitary sewer is around 70,000 per year and storm is around 40,000 per year uh look looking at in the current interest rate environment uh looking at a true interest rate of around 3.6% um you know I I I wouldn't expect that to change that much over the next month it certainly could but with a project of this size even if we change you know a quarter uh percent you know up or down it's going to hurt or help a little bit but it's not going to really fundamentally change what the repayment uh what those amounts are um so over over the next month we'll finalize the preliminary official statement uh it's the offering document that we sent out uh to put out in the street and potential buyers will look at it and decide if they uh want to submit bids for it uh we'll uh prepare for a credit rating call I believe sometime around April 20 sometime April 23rd or so uh we'll get that back the next uh the next week I expect it to go well and then on the morning of May 6 we'll take bids and then bring them to your consideration that evening okay I hope that we can get it low lower than that 3.6% I can only cross our fingers just going to confirm the street Levy dollar mon that's the general what's coming out of our general fund then is that correct Josh okay yes and the equipment Levy is then for the that would charged back right and you see if you're looking at the uh the repayment sources on the second page of that memo you can see that we do we're we are able to advertise them at uh different time periods so that's they're advertis over five years looking at around 40,000 per year for that okay any questions otherwise I look for somebody body to offer the motion to authorize the resolution I'll make a motion that we approve resolution 24-4 01-1 providing for the issuance and sale of General obligation bonds bond series 2024a in the proposed agreat principal amount of 4,745 th000 and second and magy seconds it um any other discussion hearing none all in favor say I I opposed motion carries thank you right thank you okay the next item on the agenda is General business the police department policy manual update so I have one question okay yeah how long did it take everyone to read the 600 some OD pages I told you I read it all I'd be lying so I did a lot of scanning yeah I about fell over with the 700 or the whole pack of was 700 and something pages I thought we were going to go through it Page by Page go ahead you start and I think we' be best served if I readit Page by page is that maybe you could give us some of the highlights no stuff that changed there isn't a lot of changes uh what this policy does is in looking at our current policy right now it hasn't been updated in many many years so a lot of our policy was more procedure than it was policy so what this does is take out a lot of the procedure things a lot of the mandated state and federal requirements and applies these to essentially what we do every day in every capacity that we do it so part of part of lexip pole is they're always um monitoring legislation updates as they come out throughout the year and every legislative session and then they're applying those updates and as things change we get notified so we can kind of update our our policies real time rather than trying to go through and try to keep up with that so um a lot of really good resources it covers all of our mandates all the state and federal mandates that we're required to do along with our post license and certifications um everything that we're required to do is included in lexipol um they also have they're called daily tra training bulletins so part of that is officers are given one of these to do almost daily so they're reviewing some part of the policy on a daily basis to keep things because not everybody goes through and reads the policy every year so this gives you a different aspect of the policy weekly and almost daily and then it asks you you'll read through a small section and you'll answer one or two questions about that policy and then you can move on um a lot of agencies are are going to this I know that uh Scott's offices work with several agencies in in reviewing and I we did have um our city attorney's office did review this I worked with Scott and his staff to make sure that we were in alignment with what needs to be in there and what should be in there so I'm I'm excited to do this um as you alluded to earlier seven almost 700 Pages or whatever it is it was a lot of work right going from ground zero here and kind of going through everything that we do and it took some time to do but I'm I'm glad that we're where we are right now um even from the risk management standpoint this you know gives us our protection from the city standpoint that we're doing things the right way and so is each officer then um have access to this policy most likely online or yep okay yep and what we'll do is is you start to you start to roll this out kind of incrementally so you're not going to throw 700 Pages at them and expect them to so it kind of comes out in sections for them to review and then the next section the next section the next section so um I think over the next couple of months we can get it incremented and out to the staff and have a good have a have a good grasp on it um another one of the the new mandates with the state is that we're required to post a certain the post mandated policies on our website so I will talk to our staff about this and and City staff as well but many agents agencies are publishing their entire policy manual right on their website just as a form of transparency and I'm not opposed to doing that at all because there's really nothing to nothing that we have in here there's we have nothing to hide so it's if somebody has a question but what we do or why we did it they can go right to our website and look at our policy and it's right there for everyone to have access to so that would be another benefit to having this implemented within our with our City here so so we do belong to Lexa Pro right now we do but we just haven't probably utilized or correct so does Lexa pole provide the the basic uh boiler plate policy areas and then we fill it in when when they started what they did is we did a we did the the package where they took our current policy and they took their boiler plate you know for to do that and they kind of Blended them into what we currently have and what is best practice and Blended those with state federal law so what we have here is kind of a combination of the two knowing that some of the things that we had were outdated and got removed and a lot of those were procedural based rather than policy based so we have we have everything now that it's we plate and specific to what we do I can can't imagine any City staff our size being able to be in fully compliance with creating a policy without support so are we relying on them to assure compliance with all state rules are we relying on the attorney over here to do that or or what yeah it would be a combination It's a combination It's a combination of the post board where you used to get most of your policies out of as well uh at the state level so it's a multifaceted approach the league of cities is also looking this and providing guidance as well that we use um you'll get certain policies that have more implications like Pursuit policies that change quicker with a court case coming down that's when Tim relies on us or the league or you know this group as well to say we've got to tweak this that or the other so yeah yeah it's it's it's a multifaceted it sounds great I'm just when when different hands are in the in the pot I'm just want to make sure that as a council we can be assured that someone has right as of today we're in compliance with all state federal best practice to try to do that but keep in mind even with the policies in our Police Department size you've got some police departments with two officers and one Chief and they still have to deal through this whole process as well so um it's a team approach um it's it's it's not absolutely perfect but I think we're in a very good position right now where we're at and what was done and and the review that was done I think Tim has put together a good policy so you're involved and it so a year from now can we be assured that lexip pole is still keeping us in compliance or do we have to kind of gather the wagons again and kind of look at it no as as legislation changes they have uh a team of attorneys that this is all they do is review legislation on a daily basis so as court cases Kamala Scott mentioned and new legislation comes out they are reviewing that and implementing that into their policy we'll get a notification if a legislation change is made and then it is sent to us with the change and it shows our current policy and it shows the the change in the policy and we can either accept or deny that as part of our our policy manual then and if it's a state mandate or a federal mandate we're obviously going to accept that change to be in compliance with state and federal law so what if you said no and you don't we we would Scott would uh that's not a good idea in so our ensure League of cities as city council how would we how would we know that happen uh or how do we you've got good staff to rely on who's saying and bringing those things to you could there be a situation where this is not caught the league doesn't catch it that's possible but that's why you have insurance as well to deal with certain aspects and make sure you have coverage the reality is the best practice is to keep this as updated as possible consistent with state federal law and all the court cases and that's the service you're paying for at this point in time plus you've got the league doing the same thing on the insurance side so there's no need in the future for us to do have someone audit it to make sure we're in complaints no that's I don't think so um in the past there may have not been as good of a process that I think we have in place now it's much better than say 20 years ago where you literally were getting postboard sample policies and cities will put them together as your police policies that's not what doing anymore you've got a much more robust robust system cover this well thank you for all the work that you've done to put it together he so do you need approval yeah I would just look for approval to to move forward with implementing this with the the police just a clerical thing the word model is used a lot here and I'm assuming that's the boiler plate from the software but these are no longer model documents are they they should be adopted now you're you're adopting in and mass it's no different than adopting an administrative policy I we'll have to decide whether you remove model or not but it is it is a model policy that we're starting with that you are adopting so I don't see any problem with the language having that in there at this point okay um that's typical of what other policies would have had in the past as well yeah I normally see that from a software provider says fill in the blank here's a model document to use yeah and sometimes they refer to it still as the model because it is a model policy that's based Bas on both state and federal law um so I'd have to look at what's specifically you're looking at but right now this is ready for you to say for adopting the police department policies at this point it's no different than any other administrative policy you would do so move okay Rick made the motion to accept the policy update is there a second I'll second it um has been presented in our packets so um any other questions or discuss question hearing none all in favor say I I opposed motion carries thank you all right um I'll start we'll go around the go around the horn here I'll start with you Chief rinda nothing Matt Tim okay Robin Ken nothing more okay Scott just for the next meeting yep okay and what about you I think so okay Maggie I do not have anything Sean I'm gonna say no because we're batting a thousand I can't believe it BR Bruce has his pen out sett yellow P Not Gon to make it around the hot corner I can see that I don't have anything right now I'm sorry I have a couple questions I just Cur Cur is the city center area the the parcel going to be used as staging area again for the street improvements is not going to be used this year for that no okay and then this just came at me with this the police policy but it refers to water lines and our water line the city responsibility um I understood it kind of changed it's only to the right away now isn't it water line Water Services have been approved to the house from the main to the house from the main to the house it used to be from the main to the road cve that the city's responsible for that's what it used to be now utilities is responsible forain all the way to the house into the okay about what year and a half ago yeah we approved that Bruce brought that to you year and well I know it changed I just couldn't remember the detail of it but in the police policy it talks about broken water lines I'm not sure that may be consistent with what we're actually doing but I found it interesting you had in the police policy but that's all I have I got nothing okay all right I take a motion to aurn so moved second there's and motion second all in favor say I I oppos motion carries now we got a special meeting after this Bruce