Community Development Authority - Regular Meeting

And we've got the recording started. So I will call to order the April 17th meeting of the community development authority. Uh it looks like our chair person is not here today. So I will step in and run the meeting. Uh we have five items on the agenda. The first is to uh approve the minutes of the meeting held March 17th, St. Patrick's Day. Any comments, concerns about the minutes? Otherwise, I would entertain a motion to approve. So move. Thank you. And then second by Mike. Uh any further questions? Hearing none. All those in favor say I. Any opposed? Motion carries. Thank you. Uh next is the public hearing regarding the proposed creation of the tax incremental district number three, the proposed boundaries of the district, and the proposed project plan for the district. Um we can do this one of two ways. We can either see if there's any members of the public who are here for that public hearing. Are you here for that and wanted to make some comments just interested? So you weren't okay. Um why don't why don't you tee us up anyways? I think Kelsey or is it going to be Kelsey or is it Yeah, sure. happy to introduce um so our financial consultant uh for debt issuance as well as um for districts and sellers and of course most of you know Paul um as the previous village manager and then also Joe Murray is here this evening so they're really the ones that have been doing a lot of the leg work on this um and are the experts so they'll be guiding us through the presentation this evening so I'm happy to hand it over to you Paul All right thank you Kelsey Anna is going to share the project plan on the screen. Um I know all of you received a copy in your packet as well, but it is nice to have have the visual in a in a larger format. All right. Um we will start with looking at a a map of the district which

is found on page seven of the project plan. Of course, this CDA is very familiar with the Silver Spring District, so I don't have to go in depth about the uh the boundaries. The entire area surrounded in yellow is the proposed uh TID 3 area. You will notice that the existing uh Sendex parcel is is carved out and that is uh done strategically because the value of the existing grocery store building if it were to be included at the onset of the district and then demolished um within a year or two that uh that value would be removed from the district. So by not including it in the um in the initial boundary that um that decrement is not um does not negatively affect the district. Uh any questions about that boundary before we we move on. Okay. Uh then then going back to the start of the project plan just a summary of the district. Again this is TID number three. The village has two existing TIDs. Uh this district is classified as a in need of rehabilitation district uh comprising approximately 7.13 acres and the uh district is is being created to facilitate redevelopment of the vacant Fox Bay theater into the Argo uh multi-purpose live entertainment venue and also to facilitate redevelopment of the Sendex food market site. Um again the uh the location is is along Silver Spring Drive and this district does overlay um part of TID 1. In fact um all but two of the parcels are currently located in TID 1. Uh the only parcels that are included that are not in TID 1. Uh I'm sorry. Um the only parcel that's not in TID 1 is the uh Consul Commons parcel in the in the middle of the proposed district. Uh this project plan entails a total of approximately 2.6 66 million in project costs which we will

uh look at in a in a bit. Uh those costs primarily include development incentives and public infrastructure improvements. The incremental valuation the village projects that the the new land and improvements value um resulting from the projects will total 11.3 million. And again we will uh look at a breakdown of that as well. And with regard to expected termination of the district as a district in need of rehabilitation, the maximum uh life of this district uh under state law is 27 years. Based on the cash flow that we've included in the project plan, um at this time we we estimate the village uh the district will generate sufficient tax increment to pay all project costs within 17 of those allowable 27 years. So again, as currently projected, the uh the district could potentially close earlier than than allowed under state law. Uh moving on to page four. Um this is basically an outline of the um of the various reasons as to how this district would meet the what's known as the but for test under state law. And essentially that uh that um the but for test means that but for the creation of this district uh the development projected to occur as detailed in this plan would number one either not occur uh or two would not occur in the manner at the values or within the time frame desired by the village. And in consideration of reaching that determination, uh the village has uh considered a number of things including the potential e economic benefits of the district. Uh the fact that the benefits of the proposal outweigh the anticipated uh tax increments to be paid by the owners of property in the property in the overlying tax jurisdictions. Also that not less than 50% of the area of real property within the district is in need of

rehabilitation. Um per our calculation and based on information from the village uh we calculate that um 54.3% of the area is in need of rehabilitation. So we um the the project plan does meet that 50% requirement. Um the the project costs um included in this project plan. Another determination is that those costs relate directly to the rehabilitation of property and improvements in the district and that those improvements are likely to significantly enhance the value of substantially all the other property within the district boundary. The equalized value of taxable property in the district plus the incremental value of all existing tax incremental districts within the village uh does not exceed 12% of the total equalized value of taxable property. Um in fact uh based on the calculation which we'll we'll take a peek at in a bit um even with the creation of a of a new TID only 1.74% of the uh village's total equalized value uh would would be located within a a TID. Um so obviously a lot of um it leaves a lot of uh wiggle room for the village should other opportunities arise that the village may want to consider a tax increment district. Couple other findings. The village estimates that more than 75% of the territory within the district will be devoted to retail business. Uh those uses are primarily already in place. Uh there are no parcels included in the district that were enexed by the village within the preceding 3-year period. And finally, the uh village has determined that the plan for the district is feasible and is in conformity with the master plan of the village. Uh any questions or um uh comments about any of those um provisions? Okay. Again, we've already

looked at the proposed district map on page seven. Um another map on page eight. Uh the map on page eight just gives a full picture of the uh where TID one is located as well as TID 2 in relation to the proposed TID 3 boundary. Uh the map on page 10 is just color-coded um illustration of the existing uses of those properties. Again, primarily commercial. It's an existing commercial district. Page 11 is a full uh listing of the parcels that are proposed to be included within TID 3 um along with details of those parcels, acreage um acreage of the parcels in need of of rehab and then the um the the rationale for uh why those parcels are are designated as such. on page 12, uh, another another listing of of the parcels. But, uh, what I want to, uh, point out on this again is that all but one of the parcels is already is located within TID 1. The only one that's not is Console Commons. And, um, the parcel sort of little little further down than the middle, the tax key number is 165 uh,-303-0000. Uh that is the um that is the existing Sendex office building that is located on on Lake Drive has been vacant for uh a number of years. And I just wanted to point out that that third footnote that um per information provided to us from the village um their discussions with Sendix's attorney is that based on the classification of that building, the fact it's it's vacant and that it's planned to be demolished, um that attorney has provided a um a a legal opinion that the value of that office building as of125 will be uh 0. So, um,

uh, we we included the the value of of the building as it currently stands, but again, we wanted to point out that that footnote based on that that legal opinion. On the next page, page 13, uh, is just some, uh, further information about that equalized value test I I referenced in the intro. Again, even with the creation of a new district, the village will be far below its maximum 12% of uh, allowance of total equalized value of taxable property. um being located within a TID. Uh if you look at the calculation in that table, uh the two numbers that I I want to point out are at the bottom of that table. Again, even with a new TID, the village will only be at 1.74% um and would leave um uh quite a bit of residual value capacity of in equalized value to the tune of 355 uh million dollars. again that um that's that would give flexibility should other opportunities arise in the future to consider another district. Uh the next number of pages are just a breakdown of the various type of improvements that are uh permitted under state law to occur within the district. So uh think of this sort of as the the kitchen sink. This is um everything that potentially could uh could be eligible. So for the benefit of a project plan, always you always want to um uh you don't want to handcuff yourselves going forward. So you really want to make sure you include the various categories even if there's no immediate plans to to do uh certain type of improvements that are are listed. Uh for example, utility improvements are not currently anticipated, but um down the road there may be the need for some sanitary sewer, water work, etc. within the district. So you want to include it in the project plan to to allow that flexibility. Uh moving ahead on on page 18, uh I just want to point out two categories of uh

project costs that that are anticipated. Uh one of them being street improvements. Um specifically the village anticipates making improvements to uh Lake Drive and Bowmont Avenue and then also to Santa Monica and and Bowmont Avenue as as part of this project. The next category, streetscaping and landscaping. Uh the village intends to make bike pedestrian improvements uh both within the district and within 1 half mile of the district. Uh so that um that is a key category as well. The next category, cash grants, development incentives. The CDA is is very familiar with that category. Very successful uh grant program in in TID one. And again the within this district there uh the two known projects both the Argo and Sendix uh do include incentives. So those categories are are pertinent. Moving on to page 19 uh we have uh we have a a more detailed breakdown of the the two project incentives. Um, specifically the uh the Fox Bay Theater incentive calls for uh the village providing a $500 development incentive for that project. Um, that is that is uh what is known as a a pay go arrangement because the the value that is expected to be generated from that redevelopment is $3 million, which will then lead to a tax increment coming into the district. And it will be that tax increment that is utilized to um to offset that that development incentive. And the Sendex incentive, same thing, also a payo arrangement. Uh in the case of the Sendex incentive, this is an incentive tied to the public improvements. Again, bike and pedestrian improvements as well as uh street improvements. And the PGO arrangement is

because in this case the new grocery store is estimated to bring in um an additional 8.31 million in incremental value. 8 million of that is estimated to uh will result from the development of a new grocery store and 310,000 by returning uh village owned property to the tax role. There's currently um two very narrow village parcels behind the existing grocery store that are because they're village owned, they're currently have no assessed value and are taxexempt as part of this project. Um that property will uh become property of Sendex and will then uh be returned to the tax role generating that additional 310,000 in in uh value. On page 20, I want to highlight uh we we do have a provision in here regarding um potential payments to the the business improvement district. Again, something the CDA is is familiar with. Uh it's included in the plan again to um to make sure that um uh the village has that ability if if uh if it chooses to um utilize it. And at the bottom of the page, we have a section regarding projects outside the tax increment district. The uh the the project plan is required to to note any anticipated project costs and projects that would occur outside of the district boundary. In this case, the Lake Drive and Bowont improvements as well as the Santa Monica and Bowmont improvements are um just outside of the district. they're within one half mile, but because they're they're outside of the district, we do have to call them out as such. And then also some of the bike and pedestrian improvements are proposed to occur again just outside of the district 50%. On page 21, two more categories I'll

I'll point out quickly. Administrative costs, uh, which we'll look at in the cash flow. Those are related to um village employee costs related to administering the district um work done in the district etc. And then um potential financing costs related to the uh the municipal revenue obligations for both the Fox Bay Theater redevelopment and the Sendix grocery store project. Uh any any questions about any of those categories or specific projects I mentioned? Again, we'll we'll look at those a little little more in detail. But before I go on, any any questions? Particularly any questions from members of the public because this is still the public hearing aspect, but members of Okay. All right. Uh a few few additional maps beginning on page 23. um don't need to really dwell on the Babon 23 just shows a nice visual of of both the location of the Fox Bay Theater as well as the potential uh Sendex redevelopment. Page 24 is a visual that uh essentially is an illustration of the the project cost categories that are known both within and outside of the district, which is why you will see those callouts both um pointing to the within the district boundary and just outside of of the district boundary. page 25 because there will be some improvements within one half mile of the district. The map on page 25 is just an illustration of of where that half mile area is. But again, the the known um the known project costs um are just outside of that yellow area, even though the the circle is um shows just how far a half mile really stretches uh beyond the boundary. On page 26, uh this is the detailed list of of project costs. So essentially the

uh a table that that shows the um the narrative that we've we've already reviewed um as well as the the corresponding costs were known as well as the the estimated timing. And again, the the key here which aligns to what we've uh what we've already looked at is that in total the the known costs at this time um amount to about 2.7 million. And then that that number is found on the lower right at the very bottom of the the totals column. Uh moving ahead on page 28 is the is a table showing the development assumptions. And again at this time the uh the development assumptions that that the village is aware of include the the theater redevelopment, the Sendix grocery store and again the return of the the currently um um untaxed unassessed land to to the tax role. Uh those three amounts uh again 3 million is the value expected to be generated from the theater redevelopment, 8 million from the new grocery store, 310,000 from that land, and in total that um they they equal 11.3 million. That 11.3 million carries over into the next couple tables we're going to look at. And again, this is based on the information known today. in future years if there's redevelopment um in any lo, you know, of any of the other buildings or parcels included in the district, then um then then that uh those developments would result in additional uh value as well. But this is based on what we know as as we sit here tonight. Page 29 is a tax increment projection worksheet. So, what this does is it takes that 11.3 million and um applies the village's current TID tax

rate, which is $154 per thousand. And what it does is it forecasts for each year in in uh going all the way through um construction year 20 what the resulting tax increment would be. In other words, the uh the taxes the village collects uh the revenue that can be utilized for the betterment of the district. And again, uh you'll see in years 20 uh construction year 2027 and beyond, we we we don't have any value in there because we don't know um of any other potential development projects on the horizon. Each year when uh when we update the financials um and present it at um uh in the fall we we do a look um we we include actual numbers. So this will be a working document in the years ahead but as of right now it's it's got the known uh the known increment projections um forecasted. Any questions about those numbers or table? Okay. All right. Page 31, the the cash flow. This is really in in one page, this would be essentially this the snapshot of of the district and and and what is anticipated. You've got projected revenues on the very left. Uh those revenues include tax increments. Um in the first year, there is a a village advance related to some of the the startup costs to create a district. So that's um that's typical when it comes to to district creation. And again, based on the anticipated uh value of the district with that 11.3 million that we're aware of and the current tax rate uh from uh from revenue year 2028 and beyond the uh the anticipated tax increment to be collected by the village is a little over 170,000. That will of course change based on any other development that occurs based on the actual tax rate. uh

we we of course can't predict those future tax rates because those are are set each fall. As we move to the right on the cash flow, we get into the expenditures and at this time the known expenditures include those two uh development incentives. So you'll see a full breakdown of of those payments by year, both the the principal and interest involved in in those um MRO's. Uh again, continuing on to the right, um you'll see a column that reads village MRO. Uh but you'll have to go down to the year 2038 to see an amount which is 310,000. Uh what that is is the the value of the land that the village will be uh collecting. Uh that that land is is village owned. So uh based on the the way the cash flow um flows in future years that is a year where uh there's expected to be a cumulative cumulative balance in the TID where the TID can essentially uh pay back the the village's general fund for the value of that land since it is um a village asset that is being transferred to a a private party. The other expenditure column is ongoing planning and administration. Again, those are numbers related to the work that uh village staff does to uh administer the district. Um um you know, uh future planning uh work that DPW does in the district, work that the uh finance director, assistant manager, village attorney do uh related to administering the the district. And the the final column which reads balances uh a couple components. You've got an annual column that shows from one year to the next, the anticipated um you know basically um what is the end result going to be for that year when you uh subtract the uh the revenues from the expenditures. You know what is left in

that year. The cumulative column is a running total of the of the anticipated fund balance in the district. So you'll see that this is um the way this district pans out financially is uh obviously positive. the the cumulative balance grows from uh basically year four on and I'll point out that the in the year 2043 the the three numbers that are are highlighted in green the reason we have those highlighted in green is because that is the year where um the villages liabilities the liabilities related to the development incentives um that is the year where that number is less than the cumulative balance in the district. So, should these numbers should this cash flow projection um pan out as as currently anticipated, that would uh potentially be a year the village could consider closing the TID early um in um year 17 out of the 27 allowable years. But again, uh this cash flow will will will change annually and be updated annually and and um and that projected closure year will will continue to um uh we'll continue to project you know how things look from one year to the next. Uh the other thing I want to point out uh within the footnotes um there's a dollar amount uh highlighted in yellow 67,895. Uh the reason we call that out is as currently projected um if the if the district were to um close there is a potential that there could be some unpaid principal balance related to Fox Bay uh the Fox Bay MRO uh simply because um the tax increments and the percentage related to that MRO just um would not um would not equate to the the total amount. So there would be a a shortfall as as currently projected. But again,

this is a uh this is a snapshot. This is a blueprint based on the best information available. So um that can of course change based on actuals and uh future tax rates. Just a point to m to make on that uh Paul for the benefit of the public and and of course for the CDA that $67,000 outstanding balance that would occur if it were to occur at that point in time would not end up being uh a responsibility of the village because it's pay as you go. The terms of that are such that the developer or in this case the Fox Bay would end up having to eat that amount, not the village. Yeah, that's that's a great point. The the the payo is based on the the the money available to the village and um if if the money isn't there to um to go to the developer as as projected, then yeah, Mike is absolutely right. That would not fall on the village. that um that would be laid out in the development agreement with the developer. Well, so firstly, uh this is part of the public hearing and so if there are any public comments that would like to be made by anybody any members in the audience going once, going twice, we'll even have another time we can do that. Um, I will now close the public hearing and then move on to item number three, which is consideration and possible action on the resolution establishing the boundaries of approving the project plan for tax incremental district number three. Do any of the members of the U CDA have any questions for our guests and any commentary on the the the project plan and the boundaries?

Mike, I think colors has done a usual excellent job in preparing the project plan. They've been well trained. Is that what you They got it. I think that the uh disclaimer that the document it it it does to their credit though it it captures all of the opportunities that uh could come up for expenditure within the district as Paul pointed out and I think uh you've seen how that's worked well for the village uh over the course of time for the existing tax increment district number one. So, uh, it's it's it's helpful. And for purposes of u if it would be in order just for discussion, I'd like to move approval of the resolution and uh see if there's further discussion that maybe could be generated if there are questions or concerns as part of that. Uh, let let's just see if there's a second for this. We're gonna still continue discussion, but second. Thank you, Tom. Dick. Okay, Ralph. No discussion. Uh, all right. Uh, any further? I fully um agree. One question. The the $660,000 of uh improvements on the Sendex side, uh what happens if costs are greater than that? Is that Sendex responsibility? and does it affect the MRL? Let's go with Joe. Good evening. I'm Joe Murray from Ellers as well. The the MRO will have a maximum dollar amount. It's based sized in the project plan based on the estimates for those projects. If the MR if it's set as

in the project plan and the project cost did come in over as it's written would be at the expense of Sendex. Okay. Yeah. I think I would also probably add that for example I think part of the project plan has $300,000 for bike and ped improvements along Silver Spring. And there's always an argument to be made that that benefits the entire village. And so if there was a massive cost overrun, um perhaps you you would be there'd be a good case to be made that the village would pay for some of some or all of that, for example. Um any further questions for our um staff or attorneys? probably a dumb question. Um, but do we not have the ability to adjust the MR or once this is in stone, we can't if if there are cost overruns, we can't approve. The project plan is just a plan. It's like a budget. The actual MRO's will be uh finalized with the development agreements. This is just based on the information we have and assumptions today. uh the final agreements still have not been approved by the village. So that number can go up and down and it would be ultimately reflected whatever that number turns out to be. So it could go up or down based on negotiations. So we wouldn't necessarily have to take away from bike ped. No, you these this is just a plan. you can negotiate higher amounts um based on if the project amount estimates come in higher or or you could renegotiate it later on if actually project cost you

you could if project costs came in excessive uh and you wanted to basically do a second onro for sendex uh you could you could do that for supplemental money for the over okay thank you we should point out though that uh one thing that's unlikely to change in either of those MRO's uh is the interest rate that those in that interest rate in 5% in each case have been negotiated uh and and uh probably aren't likely to be renegotiated. Okay. On on the subject of project costs, I point out on page 26 of the project plan, there's a paragraph right there that lays out very specifically that says all project costs identified in related costs are the best estimates available as of the date of the plan. These are preliminary estimates may increase or decrease. uh and so I think there's some flexibility here that is uh is identified in the context at least in the context of the overall budget you know the overall uh $2,732,000 I think there's certainly flexibility if something comes in under and something else goes comes up over you you're you know you have the ability to move those around okay thank you would you agree with that Sorry. Yeah. Yes, I agree. I I was just going to hit turn to the cash flow as as Paul talked about. You can see that it's projected that it'll have enough funds by 2043 um that there'll be a cumulative balance more than outstanding principal, but you could keep the district open all the way out. And you'll see that it the district is projected to generate another $1.2

million. That's capacity for any cost overruns. So you could keep the district and instead of the village as a whole paying for it, you could still say the district is going to pay for it. It's just not going to come out of the Sendex pocket per se. It'll come out of the district as a whole to pay for any cost overages. And yes, the dollar amounts can go up and down. Thank you. Yeah. Yeah. And I would I would also point out to that um to to that concept of potentially keeping the district open longer. Uh obviously there could be projects um that we aren't anticipating today that 10 15 years from now might might come to the forefront. So So yeah, that's also a benefit that the village will have if if there's available fund balance in the district to be able to do projects that maybe, you know, weren't fully anticipated. But again, the categories in the project plan allow that great deal of flexibility to um cover things that um that that come up. Any other comments or questions? Um, one piece that I want to make clear particularly for the members of the public that uh while we've only spent 34 minutes uh talking about this uh tiff district uh we have this is probably our fourth meeting or so. Uh staff has been working on this project for four or five months. Um we've obviously uh uh invested in consultants who have spent many hours creating uh this based on the conversations and meetings that we've had in public. And so uh today is just the culmination of many many dozens and scores of hours of time spent by members of this committee um a couple of trustees and staff and our consulting firm. With that, I I'll I'll give it up for

the the public if there's any other public comment that would like to be made on this particular subject. Sounds like that's not the case. We have a motion and a second to adopt the resolution establishing the boundaries of approving the project plan and for TID number three. Uh so then I will call a vote if there's no further discussion. All those in favor of approval say I. Any opposed? Motion carries. Thank you. We now have well, we have a recommendation to the village board. I think that's what it is. And so, we don't have a TID quite yet, but we will if this is passed. Uh the next option here is or item on the agenda is to convene into close session. Do we still want to do that regardless the fact that our uh our developer agreements have yet to be finalized? You're saying yes, we should go into close session. No, I I don't know that we should sort of be it's really up to you and Kelsey and there I have nothing specific to share, but if there's questions or wants update, I'm happy to provide. Are there members of the board that are interested in a close session to discuss any of the issues, going once, going twice, then I would say we would uh I guess not table item number four, but um avoid number four. And we're still in open session. So really the only thing left to do is adjourn our wonderful meeting. Uh by the way, we will have a closed session to address the agreement when it's ready. Just not today. Um all right. Government class, right? Uh that's the agreement, the development agreement only with respect to the new lands bay transact. Yes, we're not anywhere near we're still moving ahead on an agreement with Sundex. And do we have a estimated time

for the next meeting for the CDA? Hoping in two weeks. Two weeks. I'll send an email out to get it scheduled once we're far enough along. Okay. Well, in that case, all we need is a motion to adjurnn. Anybody like to So move. Thank you. Second and seconded by Sarah. Any further discussion? Hearing none. All those in favor say I. I. Any opposed? Motion carries. Thank you.