The video story above includes an interview with Cold Spring City Administrator Larry Lahr. Larry digs into the Cold Spring Granite Downtown Project where the city is being asked to consider millions of dollars of Tax Increment Financing. Larry's video explanation of the proposal is intermingled with scenes from the old plant site where a massive demolition project is underway. This includes views from all sides of the project.
In this video Larry addresses:
- Cold Spring Granite has talked about making this move for over 7 years.
- For the past 6 months the company has approached the city about TIF.
- A short explanation of how Tax Increment Financing works.
- Cold Spring's History in approving and using TIF.
- What makes this project unique from other recent requests?
- Is it fair to allow this TIF to be approved?
- What about other businesses in town outside the TIF district?
- How does it affect the residents of Cold Spring?
- What is the council's position to date?
PRESS RELEASE: City Of Cold Spring
On February 21st a historic meeting was held between the City Council and Cold Spring Granite Company officials. The topic for the evening was the Granite Company’s proposal to redevelop nearly 30 acres in Cold Spring’s downtown. Because of the Company’s recent efforts to increase the public’s awareness of their plans through the media and presentations to the City Council and Chamber of Commerce, this meeting was dedicated to what it would take to make the project work, and about what impacts should be expected by residents, and the business community in particular.
Much of the conversion centered around the request for the use of Tax Increment Financing (commonly referred to simply as TIF) to help fund the project. TIF is a property tax assistance tool that has been in existence for more than several decades in Minnesota. TIF utilizes the new tax base generated by the contruction of a new building or addition to help fund the expenses related to that construction. To explain how this tool works, assume that the assessor has a total value on the Granite Company’s downtown site of $2,000,000 in its current blighted condition, and that that is generating about $50,000 per year in property taxes that are shared between the school district, the county and Cold Spring. Now assume that the City Council accepts the Company’s request to establish a TIF district, and that over time the property is redeveloped. As new buildings are contructed, the value climbs beyond $2,000,000, and the annual taxes paid increases along with it. The difference between the “base tax” of $50,000 and the new amount is what is referred to as the tax “increment”, that amount is diverted instead to repay the expenses associated with redeveloping the property.
So often propents of TIF will argue that local governments are no worse off, because of the fact they continue to receive the same amount of property taxes from a property even though the TIF district was established there. Proponents also argue that were it not for the use of TIF a property would not develop (or redevelop, as the case may be), or would not develop as extensively, were it not for the financial assistance provided by TIF.
The City Council has complete discretion in determining whether or not to award TIF to a project, what maximum amount of assistance the City is willing to pledge, and the maximum number of years the TIF district will remain in order to generate the anticipated amount of assistance.
The Board of Directors for the Cold Spring Area Chamber of Commerce has formed a sub-committee to participate in the decision-making process for this project. The sub-committee sees its purpose being to fulfill two objectives: to ensure that decisions related to the project also account for the well-being of their business members; and to serve as an objective source of communication between Chamber members and the City Council. Sub-committee members have been present at the two City Council meetings where the project has been discussed, and are working with the City first to provide information to the public on what has transpired thus far, and what decisions lie ahead.
Let Your Opinion and Comments Be Heard
TAKE 5 MINUTE CHAMBER SURVEY
There was general consensus on a number of very key concepts during the meeting held on February 21st, which were based upon some fundamental facts. The following is a summary of the findings thus far:
- It is apparent that to do the project well, it will be necessary for the City to assist financially to some degree.
- The City has already applied for grants and has a request alive in the Legislature for State Bonding money for the projects, but “TIF” will be needed to provide most of the public assistance.
- The City has had six TIF districts in its history, though it has not created any new ones in a decade. The total assistance for all of these project combined is estimated to be about $2,500,000. Completing this project successfully will likely require at least twice that amount in TIF.
- 4. The current financial projections indicate that approximately $7,200,000 of TIF would be needed to do the project successfully, but the City and Company are studying the extent to which that amount can be reduced.
- 5. It is likely that there will be both positive and negative impacts of this project on the community, and existing businesses specifically. There was strong consensus on the goal of ensuring that the positive impacts far outweigh the potential adverse impacts.
- There was strong agreement that the City needs to be careful in how this project is planned and financed. But also, that time is of the essences, and it would be prudent to have the broad decisions made before the end of May, and sooner than that if possible.
- Even with the City assisting with the project, there is a significant amount of risk associated with a project of this size; accordingly, the Granite Company is entitled to a reasonable profit at the conclusion of the project. The City Council has an obligation to base their decision on how much TIF to contribute to the project to some degree on the amount of profit that is reasonable.
- The City Council seemed to agree that, without TIF, the property would likely redevelop at some point but that it would take much longer, the property would probably not be used to its greatest potential, and the ultimate tax base would likely be substantially less than if the City assisted with TIF.
- It is estimated that it will take approximately twenty years for the project to fully redevelop, and to the extent that it occurs faster, the project will be easier to finance.
- If a significant amount of TIF is contributed, the agreements between the City and Company will likely provide that the City has considerable involvement in the implementation of the development plans. It is hoped that this would increase the potential benefit and minimize potential adverse impacts to the community.
- The City will need to explore what improvements may be made (streetscaping primarily) to Downtown, and outside of the project area in order to provide a consistent appearance between new and existing commercial areas.
- Out of fairness, the City will want to explore what types of financial assistance could be provided to the business community outside of the project area, though it is recognized that such assistance will likely not be nearly as extensive as TIF.
- The Company’s current proposal contians very little financial risk to the City. This is not always the case, as a city is often asked to issue the debt and take responsibility for those loan repayments using TIF. Under such a scenario, if the tax payments are not made, the City is forced to make the loan repayments from its normal operating funds. This proposal does not propose to have the City responsible for any repayments on debt.
- The City will soon need to identify what the possible negative impacts of the project may be, and develop solutions on how to best address such concerns.
The City will do its best to disseminate information as much as possible. Now is the critical period in the process of planning this project. The next meeting on this topic has not yet been scheduled, but the City Council is anxious to see the public get involved, and is committed to accepting comments at each step along the way. This project will not be successful if it is not done with the support and input from the businesses and residents of Cold Spring. You may get information or share your input by contacting city hall at 685-3653, or via the internet by logging on to www.ColdSpring.GovOffice.com.
Let Your Opinion and Comments Be Heard
TAKE 5 MINUTE CHAMBER SURVEY
FROM THE COLD SPRING AREA CHAMBER OF COMMERCE:
To All Cold Spring Business and Non-Profit Organizations,
Recently you may have read information or attended meetings regarding the proposed development of Cold Spring Granite Company’s property located along the Sauk River in Cold Spring. The current proposed development involves converting property used as industrial use to commercial and residential use, along with public gardens and access to the Sauk River and public parks. Since this is such a large development, Cold Spring Granite Company has requested financing to help fund the development and expenses incurred.
The proposed development would be the largest transformation of industrial to commercial/ residential use in outstate Minnesota, and will give the 30 acres of property involved in the development a very different look, with potential growth to businesses, residents and tourism to our area. A development of this type has the potential to greatly enhance the business community, bring new residents to the area, and increase potential tourism to Cold Spring and the surrounding communities. This proposed development may have an effect on some of the current businesses who may be located outside of the new development area, as well as potential increased competition as the business community grows.
At our February 2008 Board of Directors meeting, the board voted in favor of the Chamber getting more involved in the project so that we can better represent all of our members. Our primary goal is serve as a liaison between the City Council and the business community, and help develop plans to minimize any negative effects of the development. A sub-committee was formed, and the first project undertaken was to facilitate a survey and a feedback session for businesses.
Use the following link to take a quick survey, the results of which will be made public at the Chamber Luncheon meeting this Thursday, March 13th, 2008.
RESULTS OF THIS SURVEY WILL BE DISCUSSED AT THE CHAMBER LUNCHEON ON THURSDAY MARCH 13, 2008. The Cold Spring Area Chamber of Commerce will host their monthly luncheon at the American Legion at 11:30 am. Fireside Cafe will be providing lunch for $6.00 per person or if you have more than one person from an office the second lunch will be $5.00. Please call 685-4186 or email the chamber office at firstname.lastname@example.org for reservations by Tuesday afternoon.
The luncheon topic will be: "Future Development for Cold Spring Businesses." We encourage you to read the materials that were sent to you as well as returning your response to the survey, as the results will be shared at the luncheon. You will also be given an opportunity to ask questions.
Please plan to attend this meeting. There will be opportunities for attendees to ask questions and express ideas, comments and concerns. Please return survey no later than TUESDAY, MARCH 11th, 2008.
Fax to 685-4186 or complete the survey online at www.coldspringmn.com, www.coldspring.govoffice.com, or www.digelogrocori.com.
If you have any questions about this survey please contact the Chamber at 685-4186. If you have any questions about the project, you’re encouraged to call either City Hall at 685-3653 or the Chamber for more information.