And moving to our uh EDA meeting, uh, I will call the meeting to order.

We have no organizational business on our consent agenda.

Uh we have the minutes from uh the August 11th meeting.

Is there a motion to adopt the consent agenda?

I'll move approval.

Second, move uh by council member Keene, seconded by Councilmember Palmer.

All in favor, all in favor say aye.

Aye.

Any opposed, say nay.

Uh moving on to our public hearings.

We have one public hearing, which is establishing development district number 86 and tax increment financing district number 86 one and entering into a development assistant agreement with Rochester Lower Town Apartments LLC.

Uh, Mr.

Svenby.

And again, I guess I get to bookmark the public hearings this evening.

So what we have before you this evening is the establishment of a tax increment financing district and asking for the EDA council approval to enter into a development assistance agreement for the lower town project.

So here's the slide before you kind of show some pictures of the the block.

Um there we go.

Um the slide before you show the bottom is a rendering of the potential project to be located on the site with the pictures above showing what the block used to look like before the homes were removed in 2024.

The project details on the developer is Rochester Lower Town Apartments LLC, located between 8th and 9th Street Northeast, west of First Avenue Northeast.

The development is a five-story 133 unit apartment building with 66 of the units restricted to individuals at below the income area media income of 120 percent.

Um amenities include below grade and surface grade parking, fitness room, club rooms, and roof deck rooftop deck.

Um the building on the east side along first avenue does have some walk-up units, as you can see in the rendering in the upper right hand corner.

The timeline for the project would um would begin construction by June of 2026 and completed by December 30th of 2027.

This is um this is a redevelopment TIFF district, so it's not a housing TIFF district.

Um the city uses three house three TIFF districts.

So the city typically uses one is a redevelopment district, the other one is a housing TIFF district, and the other one is the economic development district.

This one is being done as a redevelopment district since the properties on the site were blighted.

And last year the EDA adopted a blight study for the for the site itself.

The area shown on the slide, the area in red is the approximate location of the um TIFF district boundary.

That's where the apartment building would fall.

And then just to the north of that red line, the developer is proposing to build 10 units of townhouses on that area.

The current estimated property value within that TIFF district is about 1.3 million dollars.

And um, upon completion of the project, the county assessor's office has estimated that the project will have a market value of about 24 point 27.4 million dollars.

So it's important to note out that when the TIFP district is created, the taxes that the property is generating today still collected and um distributed to the school, the county, and the school, the city, the school, and the county, and then the increment that the project generates based off the project being built there, that difference is collected and um generally goes back to the developer.

Um in this case, the city would collect 5% to cover administration expenses of the district.

90% would go to the developer, and 5% would go into our pool TIFF bucket that we would pool the increment over the life of the district, and that the city could use those dollars for affordable housing measures within the community.

The last time the city used pooled increment through this would be for the restoration Glen project, um, which is off of Midwhead Road.

This would be as a um as a TIFF note would be a pay as you go TIF note.

Basically, the burdens is on the developer to pay the taxes, and basically those taxes gets rebated back to the developer, minus the current valuation that's existing there now for taxes, and then minus the 5% and 5% for admin and the 5% for the affordable housing.

Um based on the development assistance agreement for the project.

Um staff is proposing that the uh the amount of assistance is just about 3.9 million dollars in principle.

Um it's estimated that it would take about 20 years to pay back that TIFF note.

Um that is in principle, and so include principal and interest over that 20-year life of the TIFF district.

Some of the projects of our benefits of the project, um, it would be a kind of a mixed income housing project where um six to six of the units would be um restricted to individuals earning at or below 120% of the AMI.

Um, it advances multiple goals.

Um, it's we redeveloping a bladder property.

Um, is council members correctly and those pictures of what the block used to look like, a number of homes were were boarded up and with number of complaints about this properties.

Um it's increasing density in the lower town neighborhood, especially along a primary transit network along um North Broadway, it's strengthening neighborhood safety, and then the tax base is growing.

Um granted that the taxes would be captured during the life of the TIFS district, but once that this district is decertified, um the city is capturing all that um increase in tax base, not just for the city, but also for the county and the school district.

As previously mentioned, half the or sixty six of the units would be restricted to a 120% AMI.

That's through the slide in here to show you what that um is.

Um so basically a one person that is about 105,000.

Um point out like a two-person family is about 120,000.

So if you think about professionals, teachers, nurses, police officers.

If you have a married couple, um, they're probably pretty close to that 120% AMI level for a two-person family.

So uh request action this evening is the adoption of a resolution that establishes a TIFF district and then authorizing the execution of the development assistance agreement for the project.

The developer is in the audience, and I believe he will speak during the public comment period.

Thank you, Mr.

Svendi.

Uh is the uh applicant or representative of the applicant here.

Please step forward, state your name, and 10 minutes to discuss your project.

Awesome.

Thank you.

Good evening.

Uh, my name is Dirk Erickson with Staff Development.

Uh, we are excited to bring this project to our second project to Lower Town.

Um, we feel that's going to be a great asset for the community for the lower town neighborhood, be on the TOD corridor.

Um, bring new housing, bring in different types of housing that were there and add additional multifamily properties to the city.

I have the architect here as well.

Uh, if there are any additional questions for that.

We may have questions after the public hearing unless you have a statement to make at this point.

Yeah.

Uh you may be seated.

We'll call you back after the public hearing.

Thank you, Councilmember Fredericks for turning my mic on.

Uh this is a public hearing.

Anyone wishing to be heard on this item, please step forward.

Uh uh, please state your name and uh you have five minutes.

Hello, thank you.

Uh Council President Schubering.

Um, my name is Benjamin Zastro, I'm president of the Lower Town Neighborhood Association.

Uh, and I support uh this ask tonight.

This looks like a fantastic project for the neighborhood.

Um, as you know, it was a very troubled area before.

Uh it was was quite miserable, I would say.

Uh, the developer stack has been fantastic so far.

Um, even uh going so far as to leave the trees up on that that lot, uh, giving us kind of a year, year and a half of some serenity, some peace to kind of recover from what was going on.

Uh they've been fantastic.

Umchors in the neighborhood on the south end with BRIC, their other project.

So I just I really support this.

I think it has a lot of positive externalities as well.

Um, we'll see probably 100 plus workers that will shop at our businesses.

They'll buy ice cream cones, Philly cheeses steaks, Bon Mi's, uh, all the great things going on in the neighborhood.

Um, hopefully fill up at uh the gas station there, and then 133 households that will shop in the neighborhood and also uh be within walking distance to the new Silver Lake pool facility.

So I just see a lot of positive upside here in this uh the the potential deal to support this project.

So thank you.

Thank you, Mr.

Zastro.

This is a public hearing.

Anyone wishing to be heard on this item, please step forward.

This is a public hearing.

Anyone wishing to be heard on this item, please step forward.

Seeing uh no one, I will close the public hearing and invite our applicants back up to uh make any closing comments.

Uh no real closing comments, but I appreciate you guys taking the time to look at this and look forward to the outcome.

Thank you.

Uh I'll open it up to council members for questions.

Councilmember Keene.

Uh first question just for staff.

I'm I'm a little surprised that maybe I don't have the numbers right, but it appears that there is a 40 million dollar project that's going to assess at about 70% of that value when it's built.

Is that common?

That's common.

Yep.

If you yeah, it's pretty common that the it's the projects are being assessed at about 70 to 75% of construction cost.

Okay.

All right.

Thank you.

Uh, and then again, I just wanted to go back to the uh you brought your architect with is I just want to give her a chance in case there's anything that is unique that we should take into uh an advisement on this project.

And please state your name uh before you speak.

Yeah, Mary Barnett um with Urban Marks Architecture.

Um, you know, we we've had a great joy working on this project with Stack.

It is our first project with them.

Um we feel that they bring a really good light and a good refreshing feel to multifamily housing.

Um they they truly care about what they're putting in here.

Um that was one of the first things that we were we were that we talked about when we met.

Um, was how can we bring a building to this neighborhood that really reflects a healthy living environment, giving back to our community?

Um, it's not something we hear from all the developers that we work with.

Um so yeah, we're we're very excited for the project as well.

Um 133 units, varying from studios to one bedrooms to one bedroom plus dens, two bedrooms.

Um, I think it's giving the neighborhood a good variety.

Um 114 parking stalls.

We don't always get that 85% rate of parking.

Um, again, we work with a lot of people that are trying to minimize that as much as possible and not give that back to their residents.

Um, and then a great, you know, a great amenity package for the people living here and really, you know, giving them a healthy place to live, um, fitness centers, bike spaces, um, you know, uh a winter garden has been discussed of you know, how can we bring that the support our cold Minnesota winters um into a place inside?

Um, so okay, those are kind of some of my main features.

If there's anything else, I'm happy to uh uh answer.

Thank you.

Yeah.

Councilmember Wall.

Thank you.

My uh question is from Mr.

Svenby, and you were on the precipice, I think, of uh helping to dispel some kind of community notion about TIFF, which is not an uh easy concept, I think, for a lot of people.

Um, how would you uh answer someone who says, why is the city giving 3.9 million dollars to a developer and raise my property taxes?

But first of all, it's not raising property taxes because this the taxes that the property is currently generating is still captured and still gets distributed to the three entities.

Um the taxes that the property will pay once the property is developed is being paid by the developer, and those property taxes are being rebated back to the developer.

Um, and then eventually once that TIFF is or once the city's obligation is met and paid off, and then that full valuation comes on to the tax rolls, creating um additional taxes that is being captured by the three entities.

And there's actually a benefit to the community benefit to the built community, it's providing housing, much needed housing.

Um as shown by the um recent max flow study.

So this is helping filling that need in the community.

And something that's assessed at 27 million in 2028 is not likely to be assessed at 20 at uh 27 million in 2048.

No, it's it's projected to increase one would think over time.

Um the projection that I ran, I ran as a flat rate over 20 years.

So more than likely that this district or this district will be decertified before the 20 years is up.

So yeah, supposing that the value increases every year.

The real risk is uh, you know, if some uh magic developer came in and put in uh nine uh half million dollar houses uh with no ask of TIFF, of course that would add to the tax base in in year probably two, but that's not likely to happen.

Like they happen, and this is a much better use of the property by creating the density at that site to help support the businesses along North Broadway.

Thank you.

Very good answers.

Councilmember Palmer.

Yeah, uh go ahead, council member.

I'll make a motion adopting a resolution establishing a tax increment financing district through approval of economic development district number 86 in the tax increment financing district plan number 86-1.

Also authorized an execution of a development assistance agreement with Rochester Lower Town Apartments LLC for tax increment financing district number 86-1.

Second.

Move by council member Palmer, seconded by council member Keene, Councilmember Palmer.

Well, um I'll just kind of go off of what Mr.

Wall was saying.

And in the city of Rochester has used very little of their TIFF um ability.

It's a great wonderful program.

Sometimes people don't understand it.

Um if you had walked in that neighborhood um a year and a half ago, um, you would be dismayed at how bad it was.

And um the neighborhood um put up a lot of um grief that they shouldn't have had to do.

Um, but the buildings are down, and this developer has purchased this property and um has done a very good job of of working with the neighborhood.

So I'm I'm glad for that.

Councilmember Prodigy.

Just want to thank the family for your council member keen.

Yeah, I'll I'll stay.

I spent a little bit of time on this one because this is one where we are giving a fairly you know uh near 10% uh of the product development costs, and that idea of affordable housing, we're really getting workforce housing up to 12% AMI, which is a little different.

So it took a little bit, but I think the key thing here is this idea of we're uh redevelopment of a blighted neighborhood.

Um I I worry sometimes that this becomes a strategy to blight a neighborhood so that we can get the TIFF.

Um, I know that that wasn't the case here, but um, I think again, I'm I'm willing after hearing the different sides of this to support this tonight with the idea that it is that redevelopment of an area that was troubled and that contribution towards getting the density along our the that North Broadway corridor.

Council member Doring.

Uh this is going to be a tricky question, um, but I think it would be helpful for those in the community who might be watching at this point to understand uh what a rent would be for someone who whose rent is limited uh with uh having an income at 120% AMI as opposed to being market rent uh rate uh for a rental unit.

So is there any way that you could talk about the difference between those two just using general numbers?

I know it's really hard even for this particular property, right?

So uh say you're uh looking at a one bedroom apartment in this facility.

What would the rent be at 120 percent AMI as opposed to paying market rate for that same one bedroom apartment?

Well, we would look at their income.

So you would take um 30% of their income, yep, divide that by 12, and that would be their maximum rent that they would pay for their units.

So I've been that calculators I can figure this out.

I'm asking you to match, so I don't have to.

All right, I suppose we could ask Jerek Erickson, he probably knows off the top of his head, but we'll just do it quick.

About 2600 a month in rent.

Okay.

For it's so, and then what would a typical market rate in that same unit be?

That could be whatever it would whatever the developer could charge, that would be rentable.

I don't know what I mean.

Dirk's rents are probably somewhere in that 2600 a month rental range, maybe up to 2800.

I mean, okay I saw a market study one time that had various projects listed on the various rents for the units, and I think the the average was somewhere around 1900 a month, I believe.

So the reason I ask is I I like TIF as well.

I think it's an important tool to use.

I I'm a fan of using TIFF uh for deeply to for affordable housing.

And and I think that there's a perception that even if uh if someone is making above AMI that uh that housing is uh again not is is kind of a luxury, right?

And we'd be we'd be talking differently if if this was a housing TIFF district.

This is being done as a redevelopment district because it's moving blight so yeah any other questions uh there's a motion on the table all in favor say aye aye any opposed say nay motion passes unanimously thank you um uh moving on uh there we have no reports and recommendations no other business is there a motion to adjourn the EDA meeting to return to the city council meeting so moved moved by council member wall seconded by council member doring all in favor say aye aye any opposed say nay uh moving on to is there any other business for this evening seeing none is there a uh motion to uh to accept the findings of the Rochester EDA so second moved by council member miller and seconded by council member keen all in favor say aye aye any opposed say nay