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CC Minutes 03-22-21City Council Minutes – March 22, 2021 4 Fire Chief Johnson stated that the most current information about recreation fires and open burning was available on the City website. If any major changes are necessary, the applicable fire conditions and restrictions as they change will be updated. LAW ENFORCEMENT UPDATE Lieutenant Lance Pearce gave an update on law enforcement activities which included 720 patrol calls, 38 of which were Felony (Group A) calls, 12 were misdemeanors, 318 were non-criminal, and 352 were traffic related. Theft dominated the Group A activities with Medical and Alarms highest in Group B activities. Traffic-related activity included 17 driving complaints, 215 traffic stops, 30 crashes, and 107 citations. February is historically the least busy month for law enforcement in Chanhassen. According to the data, domestic calls are down from January 2021, arrests are slightly up, and mental health is trending down and returning toward the average. OLD BUSINESS. None. PUBLIC HEARING. RESOLUTION NO. 2021-11: MODIFICATION TO THE DEVELOPMENT PROGRAM FOR THE DOWNTOWN CHANHASSEN REDEVELOPMENT PROJECT AREA AND ESTABLISHMENT OF TAX INCREMENT FINANCING DISTRICT NO. 12 Ms. Aanenson gave an overview of the proposed Lakes of Chanhassen project and addressed questions asked by the Economic Development Authority (EDA) during their March 8, 2021 meeting regarding the development of a Tax Increment Financing (TIF) district. The EDA had asked about other senior housing projects in Chanhassen. There has not been a senior housing project since 2002. There are currently six projects including Moments of Chanhassen, which is pending. Some of these senior housing developments are focused on memory care, assisted living, and affordable housing. The developers of Lakes of Chanhassen performed a market study and found there is a demand for affordable senior housing in Chanhassen. The Lakes of Chanhassen developers is seeking a density bonus by designating 50 of their 110 units as affordable housing - housing designated at 60% of the median income. Ms. Aanenson reviewed that these income limits were $43,440 for a single household, $49,460 for two-person household, and $55,860 for a three-person household. Ms. Aanenson introduced Ehlers Senior Municipal Advisor Nick Anhut. Mr. Anhut discussed the use of TIF for the Lakes of Chanhassen project. City Council Minutes – March 22, 2021 5 TIF is a financial tool to capture and utilize most of the increased property tax revenue from new development to create a new tax revenue. The tool uses a portion to help finance construction of the building and is used to encourage certain types of development which may not reasonably occur without assistance - such as development of affordable housing. A property within a TIF district does not have a difference in taxes paid; however, taxes are separately remitted for a specific use. Taxes derived from a school operating referendum, fiscal disparities or state property taxes are not remitted as TIF. The process to create a TIF district includes preparation of a TIF plan which identifies the use of financial resources, a budget, the property, and a document which is circulated to the County and local School District. To date, there have not been any comments received from Carver County or the School District. The Planning Commission reviewed the plan attesting that it complies with land use regulations and the EDA recommended the plan and serves as the administrative arm to administer financial resources. The public hearing portion of the process is an opportunity to receive public comment and feedback. Should the Council choose to move forward with a resolution the plan will go back to the EDA to administer over the life of the TIF district according to the terms negotiated by the EDA. The proposed TIF district is designed to assist in providing affordable housing. A TIF district lifespan is 26 years total and requires that at least 40% of the units must be restricted for occupancy at affordable levels. This will be tested annually. Revenues are limited to assist affordable housing projects within the TIF district but also as “pooling” to assist throughout Chanhassen, subject to EDA approval. The TIF plan for District 12 specifies the purpose, geography, maximum term, timing, and the number of affordable units is 45% of the available units. The recommended term is from 2023 to 2048. Carver County assessors estimate an $18.7 million value for the property once it is built, which equates to $5.6 million in TIF revenue over a 26-year life span. 90% will be budgeted for affordable housing projects with up to 10% retained for potential administrative and reporting costs incurred by the City. Any unused part of the 10% may also be budgeted for the affordable housing projects. The TIF plan finds that “but for” the use of public assistance this project would not be reasonably expected to occur and would not proceed through private investment. Anticipated rents, operating expenditures, and costs were reviewed and it was affirmed that this project demonstrates a gap in financing. TIF will replace potential lost revenue to support the level of mortgage necessary to build the $23 million development. City Council Minutes – March 22, 2021 6 The Chanhassen EDA serves as an administrative arm and requires the build to meet a certain standard. The City does not contribute funds to create the development. If the developer provides 50 out of 110 units as affordable housing, the City of Chanhassen will administer the TIF district and issue a $3 million pay-as-you-go TIF note. The TIF note is a promise that, should the developer come through, the EDA will reimburse for up to $3 million of construction. This $3 million is generated from the 90% and there is no upfront funding required. Anticipated first revenue should be received in 2023 with an estimated 16 years of collection before the note is paid off. After the $3 million is taken out, an anticipated $2 million is “pooled” and can be used for affordable housing needs. This money is available after year 17. Councilwoman Schubert asked if the $2 million in additional funding would require another public hearing to use those funds. Mr. Anhut stated that there was no requirement for a public hearing as long as the project met the qualifications of affordable housing. Councilwoman Schubert clarified that it just needs to be affordable housing but not necessarily senior affordable housing. Mr. Anhut confirmed that it needs to meet statutory requirements as affordable housing. Councilwoman Rehm asked about the process of determining TIF boundaries. Mr. Anhut stated that the boundaries are based on existing lot lines and are not combined with property or subdivisions. The lines are consistent with County tax lines. Councilwoman Rehm asked if the development is no longer required to have affordable housing after the TIF note has been paid off. Mr. Anhut confirmed that the project is required to provide affordable housing as long as it is receiving assistance. Mayor Ryan asked about the larger TIF map and what the boundary lines represented. Mr. Anhut stated that the EDA has established an area signified by darker black lines surrounding the Downtown Redevelopment project area - a specific area for redevelopment and housing tools such as TIF. This project will not change the boundaries of that area. Mayor Ryan opened the public hearing. No comments were received prior to or during the meeting. City Council Minutes – March 22, 2021 7 Mayor Ryan closed the public hearing. Resolution #2021-11: Councilman Campion moved, Councilwoman Rehm seconded that the City Council approves the attached resolution adopting a modification to the Redevelopment Plan for the Downtown Chanhassen Redevelopment Project area and approves a Tax Increment Finance Plan for Tax Increment Financing District No. 12. All voted in favor and the motion carried unanimously with a vote of 5 to 0. NEW BUSINESS. COMMISSION APPOINTMENTS Mayor Ryan acknowledged the 24 applicants who interviewed for the open Commission seats. Councilwoman Schubert moved, Councilman McDonald seconded to appoint the following commissioners: For the Planning Commission, Erik Johnson and Kelsey Alto for three- year terms ending March 30, 2024. For the Park and Recreation Commission, Scott Fischer for a two-year term ending March 30, 2023, and Heather Markert and Don Vasatka for three-year terms ending March 30, 2024, and Chaehyun Lee for a one-year term youth position. For the Environmental Commission, Leslie Elhadi for a two-year term ending March 30, 2023, and Kristin Fulkerson, Greg Hawks, and Scot Lacek for three-year terms ending March 30, 2024. For the Senior Commission, Dorina Tipton, Susan Kibler, and Jim Camarata for three-year terms ending March 30, 2024. All voted in favor and the motion carried unanimously with a vote of 5 to 0. COUNCIL PRESENTATIONS. None. Councilwoman Rehm gave a presentation on Women’s History Month including the eight female firefighters who worked for the City of Chanhassen, eight licensed peace officers in the Sheriff's office, past and current Mayors, and past Councilwomen. ADMINISTRATIVE PRESENTATIONS. None. CORRESPONDENCE DISCUSSION. 2021 BUILDING PERMIT ACTIVITY FEBRUARY YEAR TO DATE REVIEW OF CLAIMS PAID 03-22-2021 Councilman McDonald moved, Councilwoman Schubert seconded to adjourn the meeting. All voted in favor and the motion carried unanimously with a vote of 5 to 0. The City Council meeting was adjourned at 8:19 p.m.