july 14, 2015. cal brink, economic development director brian pellowski, pbk investments (overall...

MARKET STREET MALL REDEVELOPMENT

July 14, 2015

Introduction

Cal Brink, Economic Development Director Brian Pellowski, PBK Investments (overall developer). Eric Miller, Sambatek

Introductory Project Background Actions This Evening:

Resolution Granting Vacation of a Portion of Peterson Street Resolution Approving Marshall Square Addition Final Plat Consider & Approve Ordinance Amending Chapter 86 of the

City Code of Ordinances relating to Planned United Developments

Adopt Planned Unit Development (PUD) Agreement Resolution Approving Contract for Private Development Resolution Approving Reimbursement for TIF proceeds HRA Meeting Tonight Adopt Resolution

Development Site Plan

Mall Demolition 65,488 sf (45% of total)

Mall Improvements $5.95M

84,070 sf Mall Retail Lots $1.96M

20,700 sf (4 bldgs.) Apartments $7.11M

72 units Hotel $4.28M

56 rooms

Project Summary

Mall and Retail 50% complete by December 31, 2016 and 100% complete by December 31, 2017.

Apartments 25% complete by December 31, 2015 and 100% complete by December 31, 2016.

Hotel 25% complete by December 31, 2015 and 100% complete by December 31, 2016.

Project Construction Schedule

Development Site Plan

What Is Tax Increment Financing (TIF)? A financing tool Used by local governments Finances qualifying costs of new

development or redevelopment Uses the incremental increase in taxes Prequalification findings (complete)

1. Redevelopment District2. “But for” TIF the project would not occur3. Conforms to City comprehensive plan4. Will afford maximum opportunity for

redevelopment by private enterprise

Historical TIF In Marshall

Industrial: Schwans (numerous), MCP (ADM), Heartland (Turkey Valley Farms), US Bank, Grillworks, Bend Rite, Action Sports, Beverage Wholesalers, Runnings

Workforce Housing: Parkway Additions, Dano Addition Apartments (Taylor), Downtowner Apartment (including law office site)

Assisted Living: Hill Street Place, Heritage Pointe

Commercial Redevelopment: SuperValue, Downtown Block 11, Southwest Sanitation, Prairie Pride/N. Ambulance Facility, Memorial Park, Marshall Hotel (pending)

Aviation Business Expansion: Airpark East

Sources of TIF FundsTIF District No. 1-13

25-Year Max

Pay 2015 $5,634,200

$29,156,382

TIF Revenue Illustration

Dollars Used for Project TIF Expenses

Pay 2016 $4,910,100

Uses of TIF FundsTIF Project Area No.1

TIF Redevelopment District

Minn. Stat. 469.174, subd. 9 Tax Increment Financing (TIF) Market Street Mall TIF established for the

purpose of financing “redevelopment” Tax increment generated in a defined

district area Expenses eligible in defined project area Delineated in the TIF plan Approved by the HRA and City

TIF Redevelopment Example

OAKDALE, MN

TIF Redevelopment Example

WORTHINGTON, MN

Editorial: Mall site offers ample opportunity Feb 5, 2015 at 8:17 a.m.“…Rather than shake our heads and doubt such a vision, we should all do our part in getting behind it — and collaborating where we can as community members to make it come to fruition.”

TIF Revenue

Max term 25 years. “Pay as You Go”

developer assumes risk/returns.

April Max increment revenue $11,463,169

April Estimated max present value TIF $5,776,313

TIF Revenue

Final Total Max increment revenue $8,797,827

Final Max present value TIF Note $4,140,837 plus interest at 4% of $3,175,598

City retains 15% administrative & redevelopment cost plus surplus $1,481,392

Initial Request was approximately $5.7M and was reduced to $4.14M based on the financials

Estimated TIF Eligible Costs

Description Cost ($)TIF Revenue Note Principal (Public utilities, site improvements, demo, etc.)

$4,140,837

TIF Revenue Note Interest (Payments @ 4%)

$3,175,598

Administrative & Redevelopment Expenses (15% plus surplus)

$1,481,392

Total $8,797,827

AgreementEligible TIF Expenses

Existing site parking demolition, mall structure demolition, reconstruction of north wall.

Mall related reconstruction of watermain, sanitary sewer, stormsewer, sidewalks, new parking lot, curb & gutter, security lighting.

Mall related electrical and plumbing rework.

Current tenant relocation.

AgreementIn-Eligible TIF Expenses

No TIF (privately financed) mall interior remodeling, landscaping, site engineering, and architecture.

No TIF (privately financed and separate developer) for apartment construction, site improvements and infrastructure connection lines directly benefitting the property only.

No TIF (privately financed and separate developer) for hotel construction, site improvements and infrastructure connection lines directly benefitting the property only.

Developer’s Investment

Description Costs

Mall Redevelopment $12,928,875Apartments $7,111,500Hotel $5,676,500TOTAL $25,716,875*

* The proposed tax increment assistance amount of $4,140,837 is approximately 16.1% of the total project budget $25,716,875.

Existing Conditions

Existing Conditions

Mall Elevation Concept

Mall Elevation Concept

Mall Elevation Concept

Site Plan

Approximate Demo Area 65,488 sf (45% building)

Existing Interior View

Utility Plan

Landscaping Plan

Apartment Elevation Sketch

Apartment Elevation Sketch

Grandstay Hotel Sketch

Grandstay Hotel Example

Recommendations

Tonight Resolution Granting Vacation of a Portion of Peterson

Street Resolution Approving Marshall Square Addition Final

Plat Consider & Approve Ordinance Amending Chapter 86 of

the City Code of Ordinances relating to Planned United Development

Adopt Planned Unit Development (PUD) Agreement Resolution Approving Contract for Private Development Resolution Approving Reimbursement for TIF proceeds HRA Meeting Tonight Adopt Resolution.

Project Comments

Cal Brink, Economic Development Director Brian Pellowski, PBK Investments, Inc. (Market

Street Mall developer).

Peterson Street Vacation Public Hearing

Council Initial Comment and Questions. Public Comment:

Approach Podium to Address the Mayor and Council.(Please Refrain From Audience Comments) State Name and Residence Prior to Questions or

Comments. Council Continue Discussion. Council Close Public Hearing.

Further Discussion and/or action by the City Council After Public Comment Completed.