Workshop Item - Erik Thorvig, Community Development Director
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City of Blaine Economic Development Authority Fund Balances
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Background
The City of Blaine established an Economic Development Authority (EDA) in 1988. An EDA is a legal entity created by a city to facilitate well-rounded programs for business assistance, development, and redevelopment. The Blaine EDA also has various programs to assist in maintaining a strong housing stock. Minnesota Statute 469 establishes EDA powers and laws related to those powers. The primary powers of an EDA are:
• Serve to promote business and to recruit new businesses.
• Issue revenue and general obligation bonds.
• Purchase and sell land for development and redevelopment.
• Serve as a financial partner through loans, tax increment financing (TIF), and other financial mechanisms.
• Carry out marketing and promotional efforts on behalf of the City.
Existing Funds
The Blaine EDA has several existing funds to carry out various economic development activities.
Redevelopment Pooled TIF: The City of Blaine has established several redevelopment TIF districts dating back to 1985. TIF laws have changed over the last 30+ years, with significant changes occurring in 1990. State law allows for districts established prior to 1990 more lenient use of excess TIF revenue to be pooled and used elsewhere in the City for development and redevelopment projects.
Several future projects have been identified from this fund.
• Admin Costs - $20,000
• Future Austin Street Improvements (Connecting Lexington Meadows to Pheasant Ridge Drive) - $550,000
• Pheasant Ridge Drive Landscape Improvements - $133,616
• Demolition of 10524 Nassau Street - $19,500
• Demolition of the NSC Maintenance Facility - $20,000
TOTAL: $743,616
The current balance of this fund is $769,586. After the listed projects have been completed, the fund will have $25,970. Once the funds are drawn down in this account, they do not have the ability to be replenished.
Housing Pooled TIF: Like the pre-1990 redevelopment TIF districts, several housing TIF districts were also established. Excess TIF revenue from pre-1990 housing districts have more strict requirements on how the funds can be used. Minnesota State Statute requires pooled housing TIF funds be used solely to finance the cost of housing projects which are defined as “a project, or a portion of a project, intended for occupancy, in part, by persons or families of low and moderate income.” For rental projects, 20 percent of the units shall be occupied by individuals whose incomes are 50% or less of the area median income; or 40 percent of the units are occupied by individuals whose incomes are 60 percent or less of the median are income. These requirements are taken from federal law. For example, the EDA provided $1.2M in housing pooled TIF for the Legends of Blaine project at 109th Avenue and Lexington Avenue.
Owner-occupied housing developments have higher income limits than rental developments. The general limit is 115 percent of the greater of either the area median income or statewide median income. For example, the EDA provided housing pooled TIF for the Habitat for Humanity project in Woodland Village, near the Lexington Athletic Complex.
The current balance of this fund is $1,130,234. Once the funds are drawn down in this account, they do not have the ability to be replenished.
EDA Wetland Bank: The EDA established a wetland bank for a portion of the Blaine Wetland Sanctuary. The intent of this bank is to sell wetland credits for projects within Blaine that encourage economic development. This bank is separate from the City wetland bank. The use of funds collected from wetland credit sales in the EDA bank is non-restricted and can be used for any type of economic development activity within the City.
The current balance of this fund is $2,070,441. The EDA has 24.2 acres of remaining credits to sell with a current value of $2.63 million for a total of $4.7 million. Once the funds are drawn down in this account, they do not have the ability to be replenished.
General EDA Capital Fund: This fund received its initial cash infusion when the EDA sold two senior rental buildings in 2014 that the EDA had owned and operated for senior, affordable housing. Use of this fund is intended for citywide economic development projects and has few limitations.
Several future projects have been identified from this fund.
• Developer reimbursement for 102nd Avenue TIF project - $850,000
*Note that these funds will be repaid to the EDA from TIF revenue.
• Purchase of 8839 Central Avenue - $230,000
• 105th Avenue Redevelopment Demolition - $200,000
TOTAL: $1,280,000
The current balance of this fund is $3,411,632. After the listed projects have been completed, the fund will have $2,131,632. This is a revolving fund as any future EDA land sales provide revenue to this fund.
Miscellaneous Funds: The EDA collected revenue from various land sales and projects not associated with previously mentioned funds. Use of this fund is intended for citywide economic development projects and has few limitations.
The current balance of this fund is $2,830,878. Once the funds are drawn down in this account, they do not have the ability to be replenished.
Land Assets: The EDA currently owns 28 different properties in the city. Most of these properties are in areas where redevelopment is anticipated. Based on the 2022 Anoka County Assessors value, the EDA has approximately $8.5 million in land assets. The actual value of the properties is difficult to determine as some properties may not be sold for several years and/or could be sold at a reduced price to off-set other redevelopment costs that a developer may incur.
The following is an overall summary of funds based on restriction.
Unrestricted Funds for General EDA Activity
• Redevelopment Pooled TIF - $25,970
• EDA Wetland Bank - $2,070,441 (Does not include value of existing credits to be sold)
• General EDA Capital Fund - $2,131,632
• Miscellaneous Funds: $2,830,878
TOTAL: $7,058,921
Restricted Funds for Housing Projects
• Housing Pooled TIF - $1,130,234
TOTAL: $1,130,234
Other Use of Funds
Recent discussions have occurred about how much financial commitment both the 105th Avenue Redevelopment Area and Northtown Area are going to require from the city. In addition, the EDA has discussed potential purchase of a site for a future fire station which the EDA would be reimbursed for from SBM.
105th Avenue Redevelopment Area
The draft master plan is going to be completed in May. A master developer will be selected sometime this summer which will guide the ultimate redevelopment plan. It’s anticipated that the EDA will be responsible for a portion of the public infrastructure costs including but not limited to roads, parks, and a public parking ramp. The EDA will also likely explore additional property acquisition. Potential funding sources could include creation of a new redevelopment TIF district, park dedication funds, unrestricted EDA fund balances and grants. Once a master developer is selected, an analysis will be completed which identifies the timing, cost and funding sources for the various activities described.
Northtown Area
The master planning document will be completed in June. The document will identify various public infrastructure projects in the “Short Term Phase” such as roadway and stormwater improvements which will catalyze private investment in the area. It’s also likely the EDA will need to financially assist in redevelopment efforts related to demolition, land write-down and potential workforce housing projects. Until private projects are proposed, it’s difficult to fully understand what that financial impact could be. For both public and private funding, potential sources could include creation of a new redevelopment TIF district, park dedication funds, unrestricted EDA fund balances, Housing Pooled TIF and grants.
Both redevelopment projects are going to require multiple funding sources and additional resources than what is currently available from existing EDA fund balances. Staff would not recommend exhausting all the existing EDA resources on these two areas and preserving some funds for other projects that will come up in the future. This will require looking at alternative funding sources for the two areas. Further analysis will be completed for both areas to identify sources and uses of funds.
The City Council is asked to receive this report and ask any questions. The purpose of the information is to better inform the City Council of existing funds available and how those funds can be utilized to assist in various projects.