Loading...
HomeMy WebLinkAbout10/06/2014 Council Work Session October 6, 2014 4:10 p.m. Harold E. Getty Council Chambers Roll Call. Approval of Agenda, as proposed or amended. 1. Expansion of the Martin Road Development Plan Tax Increment Financing (TIF) District-Submitted by Noel Anderson, Community Planning&Development Director ADJOURNMENT Carol Nemmers Deputy City Clerk Eke, 6 201if Martin -originally approved in 1996. 1. For Fahr Beverage—built in 1981 at 48,000 sq. ft.,with additions—16,000 sq.ft. in 1998, 11,000 sq.ft in 2002, and 12,000 sq. f. in 2007. Fahr is currently over$4.1 million in value, paying over $162,000 in taxes per year. 2. O'Neal Steel—built in 1990 at 91,000 sq.ft., with addition in 1994 of 5,000 sq. ft. O'Neal is currently valued at about$2.5 million, paying over$98,000 per year in taxes. The TIF District was established to allow the City of Waterloo to pave Martin Road from Highway 63 to Ridgeway Avenue, and be paid back with incremental tax revenue. The costs for paving were$186,000. Note—the last bond payment on this road project was just paid in FY 2013. In 2004, Denso International chose this site over sites in Cedar Falls, due to proximity to Deere PEC and due to City of Waterloo tax incentives being comparable to those offered in Cedar Falls—free land and tax rebates. Denso had been located in Cedar Falls for years, and was looking expand for the 3ra time in about 6 years. The City of Waterloo bought land from Harold Brock,within the existing TIF District, to provide land to Denso to locate to Waterloo. The land cost was $329,650 for 26 acres of land ($12,675 per acre). There were also costs to get infrastructure to the site for the City to compete with a developed lot in Cedar Falls, so the total city debt was$435,000. The Denso building is approx. 37,000 sq.ft. and over$1.3 million in taxable value—paying over$52,000 in taxes per year. At this point, before 2004, over 16 Waterloo businesses had relocated from Waterloo to Cedar Falls Industrial Park to get free land and tax incentives for their smaller business developments. Note -at this point, private commercial lots were created along Marnie Avenue (plat approved to create lots in 1999) - but no development—the only things there were the hotel and restaurant (Highway 63 Diner)which were both built in 1989 to take advantage of the Greyhound Dog Track Racing facility. The entire area is located within close proximity to free lots in the Cedar Falls Industrial Park-just 2.2 miles west on Ridgeway Avenue. Difficult to get lots sold by private developers when Cedar Falls gives lots in same general vicinity of metro area for$1.00. In 2004, working with Rick Young,the TIF District is expanded. Miraculously,the City is able to keep Waterloo businesses from relocating to Cedar Falls, and build in Waterloo: - 2005: Wilbert Burial Vault expansion and relocation—24,000 sq.ft.valued at$770,990 and paying over $29,000 per year in taxes -2005: Rainsoft relocated and expanded from Oelwein area—3,120 sq.ft. and valued at$404,520 and paying over$14,912 in taxes per year - 2007: Riley's Floors relocated and expanded from Downtown for EXPO Plaza development-8,652 sq. ft. and valued at$470,000 and paying over$17,000 per year in taxes. -2007: Country Estates Fence—9,600 sq. ft.valued at$450,000 and paying over$16,700 in taxes per year -2008—United State Postal Service invests in area, versus sites in other communities. -2011 Failor Hurley Construction—2,400 sq.ft.valued at$260,000 and paying over$9,226 per year in taxes -2013: Dizdarvevic Construction—5,200 sq. ft. and valued at$186,960 paying over$6,833 in taxes per year(note this is a partial value) Back to 2004-The land around Greyhound Park-- languishing for years after the demise of the dog racing went under...was owned by the Ralph Russell Trust in California. With over 100 acres at a highway to highway interchange, it was an excellent infill development site, and highly visible and desirable site for businesses. In speaking with the Trust,they had acquired site with visions of restaurants and hotels swinging in their heads from the development that would follow the Greyhound Dog Track Racing facility. The site continued to sit vacant, paying only agricultural tax values. Harold Youngblut had visions for development of the land. He asked for help. The TIF District could help compete for development with other communities for Waterloo businesses. In 2004,the City rescinded the 1980's agreement. The agreement was that the City of Waterloo would fund and construct the Greyhound Drive to serve this development area. As the area developed on the adjoining land,the costs of the road construction would be paid back to the City of Waterloo on a proportionate basis. With the failure of the Greyhound Park,this land was never developed. The agreement rescinded was with the Ralph Russell Trust and Cattle Congress. The bonds had already been paid back. The City entered into an agreement with Mr.Youngblut to help bring infrastructure to the site, with repayment through the future proceeds of the TIF development. Sewer had to come from the south, water from the north, roads had to be built to accommodate new lots to be created. This type of partnership with private investors, like Mr. Youngblut, helped the City to continue to prioritize bonds funds for other City projects, while developing new business park locations for new businesses in Waterloo. The result: - Mauer Eye Clinic relocated and expanded in the area. Having run out of room at their previous Kimball Avenue site,they had been working with Cedar Falls-even buying land their-to build their new facility in Pinnacle Prairie Medical Park area. Mr.Youngblut gave them free land to kickstart his development. -2008: Mauer is a 25,650 sq.ft. building valued at$3.6 million, and paying over$140,000 in taxes per year. -2009: the Social Security Office - under new regulations for finding a new location, located in this area after looking at several sites outside of Waterloo, due to its central location (the building was built by a private developer and rents to SSA, so it pays taxes—it is a 12,690 sq. ft. office,valued at$1.3 million and paying over$51,000 in taxes per year -2010: Financial Decisions Group expanded and relocated to the site, in a shared building with Turnkey Architects-originally a Downtown Regional Business Incubator tenant who was ready to grow and expand to a new business park site. Total building is 15,182 sq.ft. and valued at$1.41 million, paying over$53,400 in taxes per year. -2102: Dr. Sundaram chose to open a second office at the site, again due to its centralized location, to better serve growing clientele. Office is 4,641 sq.ft. and valued at$952,300 paying over$25,826 per year in taxes. Without the TIF District- none of the area around Greyhound Park would be developed. I believe Rick Young's lots would still be vacant. That area has over$16.4 million in taxable value today. Staff would estimate over 300 employees working in area. After rebates,the total debt is at$3.5 million. The total being paid into the TIF District is$565,000 annually, and the total debt payments are $548,000 annually. Without the TIF District,the City would have had to try and bond for the improvements, and not have worked on other valuable public projects in the Capital Improvements Program. Or not have worked with other to develop it at all. The current expansion: The City always works to plan ahead. The last expansion area tried to include what we categorized as available industrial and commercial land in close proximity. Expansions must have legal descriptions to accompany them -and we cannot split parcels in such descriptions. As such,we did not attempt to legally describe the area around Highway 20, as it is difficult to follow lot lines, and we did not anticipate portions of the golf hitting range for development. Probably oversights in the last expansion, based on development whispers we hear now. There is a planned $1.8 million retail development on the golf range site. It currently sits just outside of the TIF District. The developers say the project will not move ahead with the TIF District tax rebates, which would be 5 years at 50%. Thus, even from day one of paying taxes,the City would gain $46,100 in new taxes for the TIF District. Note—the golf range has served as a nice buffer in this area for land use purposes—separating the residential from north and the industrial/office to south and west. This new retail center would work to grow that symbiotic land use relationship with the Golf Center expansion still utilizing the range and par 3 course. There is a new building constructed by A Line Striping down near Shaulis Road, near Pella Windows. This is building two of a three building phased development. Due to hanging Fire Code provisions, a water line was deemed necessary for fire safety purposes for the second building to be built of a previously approved three-phase development plan. The City partnered with the Waterloo Water Works for the infrastructure expansion of over$150,000. With the new A Line building, if expanded into the TIF District as proposed, the repayment of those funds will take 15 years. Without the TIF District, the bond funds used for the infrastructure would need to be repaid through the standard debt service levy by all citizens. The expansion from the current boundary north of Highway 20 to the Shaulis Road area was configured to utilize existing parcel lines and include commercial and industrial lots. The owners of Southland Park have commercial lots along Highway 63- but have been unable to compete for new projects along there with other area in TIF Districts. These area south would further include Schoitz Engineering, which has room to expand, land owned by PCI, a major commercial business in area, as well as Mid Country Machinery, Croel, etc. A key component of any community's economic development plan is to utilize existing infrastructure and help its existing business base. With Highway 63 as a major traffic corridor for industrial and commercial development,a good core base of businesses in this area, it would appear a good candidate to continue to offer options for the City to help businesses in the area. But what does TIF do? Do we have too much? Currently,the City has 27.04%of the City within a TIF District (which we have 8 TIF Districts). With the proposed expansion that number would go to 28.10%. The TIF gives the City options. The City has the ability to release funds from the TIF Districts if it has enough funds to repay debts outstanding in the TIF Districts. We have a small group of citizens against TIF because they believe it does not help contribute to taxes owed for City operations. From the information on the water line above, you can see there is more of a burden for tax payers without the benefits of TIF Districts where infrastructure improvements are needed to continue to develop land. Again, with the ability to release funds, I always believe it is in the City's best interests to give ourselves options. Is the Martin Road TIF District working? Without it, we would NOT have Denso, Wilbert, Rainsoft, Country Estates, Failor Hurley, Mauer, Social Security Office, or Dr. Sundaram's office, etc. Their alternative sites were all outside of Waterloo. That represents$16.4 in taxable value. That represents over$150,000 in permits that were paid (note - permit fees are paid into the general fund helping to ease any tax levy raises-- pretty good amount of funds for programs that do not help the general fund). Staff would state that the Martin Road TIF District has worked to create new taxable value, new jobs, new permit fees, new traffic, new population, and a new entryway into the Waterloo community--with more to come. We would continue to support the expansion of the Martin Road TIF District,to include the golf range land -as we believe some retail development is needed in this area of the community to serve Waterloo citizenry, and we continue to support the expansion of the District southerly along Highway 63-containing industrial and commercial vacant land and existing businesses,to continue to foster that development land, help those existing businesses, and help the City of Waterloo recoup water infrastructure costs through the TIF District tax generation, instead of having to pay it back through debt service levy paid from general taxes. Options. The TIF District gives the Council options. When there is revenue above the debt costs, it gives the City Council options to release funds. Without the TIF District,the City would have to bond, and have paid back by the general property taxes through the debt service levy. No options. Martin Road paving—1999-$186,000 in costs (payment just paid off in 2013) Sewer line—Denso-$50,000 Land acquisition-$385,000 Craft Cochran—$196,020 Failor Hurley-$80,000 FY 11 Ridgeway—Greyhound -$80,000 Ridgeway—Titan -$80,000 South Waterloo Commercial Park Lots platted in 1999 Youngblut- $980,000 so far—about$3.2 million