03-08-2021 EDACHANHASSEN ECONOMIC
DEVELOPMENT AUTHORITY
MINUTES
MARCH 8, 2021
Mayor Ryan called the meeting to order at 7:19 p.m.
COUNCIL MEMBERS PRESENT: Mayor Ryan, Councilman Campion, Councilwoman
Rehm, Councilwoman Schubert, and Councilman McDonald.
Councilwoman Rehm joined via Zoom.
COUNCIL MEMBERS ABSENT: None.
STAFF PRESENT: Kate Aanenson, Community Development Director
PUBLIC PRESENT:
Nick Anhut Senior Municipal Advisor, Ehlers
APPROVAL OF MINUTES: Councilman McDonald moved, Councilman Campion
seconded to approve the verbatim Minutes of the Economic Development Authority
meeting dated August 10, 2020 as presented. All voted in favor and the motion carried
unanimously with a vote of 3 to 0. Councilwoman Rehm and Councilwoman Schubert
recused themselves from this item.
RESOLUTION #2021-XX: CONSIDER RESOLUTION TO ADOPT TIF PLAN
DOCUMENTS
Community Development Director Kate Aanenson gave an overview of the Lakes of Chanhassen
project and introduced Nick Anhut, Senior Municipal Advisor at Ehlers.
Mr. Anhut explained the use of Tax Increment Financing (TIF) for this project. The EDA will
create and administer the TIF district.
TIF is the ability to capture and utilize most of the increased local property tax revenue from new
development. Property in a TIF district pays property taxes just like any other property; however,
a significant portion will be captured and remitted to EDA for use in assistance for the project.
Notice was provided to the County and School District. The Planning Commission reviewed the
TIF document to attest that it complies with the City’s Comprehensive Plan. The EDA, serving
as the administrative body, will provide recommendation to the City Council and oversee how
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funds are expended. A public hearing will be held as part of the March 22, 2021 City Council
meeting.
TIF can be used to support affordable housing. There is a statutory maximum of 25 years after
TIF revenue is received (26 years total). Mr. Anhut stated he doesn’t believe 26 years will be
necessary and estimates closer to 16 years.
To qualify for TIF, housing must include 40% of units at 60% of the area median income. The
proposed project will include 45% of units and these units will be designated as such as long as
the TIF district is out and generating revenue. The revenue generated can only be used to assist
affordable housing projects that qualify throughout the city.
The $23.5 million Lakes of Chanhassen project will not proceed without public assistance and
the level of costs are not generated solely by the rents. There’s a need for an additional source of
revenue for mortgage, financing and equity to pay for this project. A TIF district has been
requested to fill that gap.
Using information from Carver County, Mr. Anhut anticipates $18.7 million taxable amount
generating $5.6 million TIF revenue over 26 years. The TIF plan will include 90% for assisting
affordable housing needs and 10% will be set aside for EDA administration and reporting costs.
The EDA will be able to negotiate the actual terms of use. The EDA agrees, if the developer goes
ahead, that they will administer the TIF district, and issue a pay-as-you-go $5.3 million TIF note.
The City will not be held accountable to provide any additional revenue; all revenue will come
from the TIF district and project. The developer is at risk to generate revenue to service the note.
If approved, the first increment of construction will happen in 2021.
Following the TIF being paid off, the EDA can decide whether to terminate the TIF district. The
property would then revert onto the tax rolls. Or, the EDA could decide to use the revenue to
assist in other affordable housing-related projects within the City of Chanhassen.
Councilman Campion asked at what point would the EDA have to decide how the funds are
designated? Is it during the 16-17 years of or at the end of the time period?
Mr. Anhut clarified that 10% is retained within the TIF fund. Any amount not needed for
administration could be used for other types of affordable housing. This amount would be
roughly $15,000 a year. 90% will go to service the TIF note and the bulk of the money would not
be accessible until after the TIF note obligation is satisfied, which could be 16 or more years.
Mr. Anhut added, if no action is taken to utilize the funds, and the TIF note is paid off, the
district will be required to be terminated and revert to the tax rolls automatically.
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Mayor Ryan clarified that the funds may only be used toward affordable housing.
Mr. Anhut confirmed the funds must be used for affordable housing - either new housing
projects or for existing buildings that need rehabilitation.
Councilman Campion asked if the affordable housing project needed to be located within the
geographic bounds of the TIF district or within the City of Chanhassen.
Mr. Anhut stated that the TIF district is the parcel that the Lakes of Chanhassen building
occupies. As long as a project meets affordability requirements, the City can use the revenue for
any affordable project within the City of Chanhassen boundaries.
Councilwoman Rehm asked that, during the March 22, 2021 public hearing, the TIF information
be presented in a simple and understandable way. There may be questions from the community
on how a TIF works.
Councilman McDonald stated that, when a TIF district was created to assist in financing the Aldi
and nearby apartments, the City was allowed to use extra money for projects that would touch
that TIF district.
Mr. Anhut stated the City has an existing TIF District, a redevelopment project which falls under
a different statutory provision. With a redevelopment TIF district, funds can be used to assist in
preparing the site and provide supporting infrastructure in and around the boundaries of the
property. Revenue that is generated from the Lakes of Chanhassen property can potentially be
“pooled” to assistant other like projects. This project does not require adjacent improvements.
“Pooling” is not restricted within the geographic boundaries of the TIF district as long as it is
used for qualifying affordable housing projects within the City of Chanhassen.
Councilwoman Schubert asked if it would be possible to pass the TIF without the “pooling” so,
when it is paid off, there isn’t residual that needs to be paid off.
Mr. Anhut stated it could be one of the conditions added to the resolution to limit assistance to
solely this project. Unless the EDA decides to use the funds the TIF will automatically terminate.
Councilman Campion clarified that the $2.1 million does not begin “pooling” until years 17-26.
Mr. Anhut stated that revenue is going to come in as taxes are paid. The project is requesting
90% to finance and pay their mortgage. Only when the obligation is satisfied will the City
receive the full brunt of this tool to help finance another project or allow it to terminate.
Councilman Campion clarified that 16 years was an estimate and that the time period could be
greater or less.
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Mr. Anhut stated that the TIF note is issued which carries an amount of $3 million. This is the
gap in the financing that is needed for the project. Once $3 million is reached, it will be satisfied
and cut off. Information from the Carver County Assessor suggests a repayment period of less
than 26 years but it will fluctuate as the County, School District, and City adjust their tax rates.
Ehlers estimates reaching the $3 million in 16 years.
Resolution No. 2021-01 EDA: Councilman McDonald moved, Councilman Campion
seconded, to adopt the resolution making a modification to the Redevelopment Plan for the
Downtown Chanhassen Redevelopment project area and a Tax Increment Financing (TIF)
Plan for Tax Increment Financing District No. 12. All voted in favor and the motion
carried unanimously with a vote of 5-0.
Councilman Campion moved, Councilman McDonald seconded to adjourn the meeting.
All voted in favor and the motion carried unanimously with a vote of 5 to 0. The Economic
Development Authority meeting was adjourned at 7:58 p.m.
Submitted by Heather Johnston
Interim City Manager
Prepared by Kim Meuwissen