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Financing Rural And Small Mtero Infrastructure
 

Financing Rural And Small Mtero Infrastructure

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    Financing Rural And Small Mtero Infrastructure Financing Rural And Small Mtero Infrastructure Presentation Transcript

    • Financing Rural and Small Metropolitan Infrastructure Dale R. Powers, AICP Zia Planning Consultants Clear Lake, Minnesota www.ziaplanning.com 2008 NRT Peer Learning Conference - Duluth, MN 1 8/21/2008
    • Step One Is your community a Buyer or Seller of Development? Stagnant communities – or those with decreasing population – are considered BUYERS of residential development. Growing communities are considered SELLERS of residential development. 2008 NRT Peer Learning Conference - Duluth, MN 2 8/21/2008
    • Supply and Demand SELLING communities have more demand than supply. BUYING communities have more supply than demand. The “supply” in this case is as much relational jurisdiction and political will as it is location or acreage. The “demand” is this case is from developers who want to develop land – residential, commercial, or industrial. 2008 NRT Peer Learning Conference - Duluth, MN 3 8/21/2008
    • For “selling” communities Lack of competing jurisdictions can give these communities a distinct negotiating advantage. If you have it, use it! Do NOT be afraid to walk away from the table – and DO NOT “fall in love” with a development proposal. 2008 NRT Peer Learning Conference - Duluth, MN 4 8/21/2008
    • Case Study: Hunter Lake Bluffs Residential Development – Clear Lake, Minnesota 1998: Clear Lake, MN – population 266 with 84 total housing units in the city. Location: 50 miles NW of Minneapolis; 11 miles SE of St. Cloud, MN – in the fast- growing I-94/US 10 corridor. 2008 NRT Peer Learning Conference - Duluth, MN 5 8/21/2008
    • Hunter Lake Bluffs Residential Development – Clear Lake, Minnesota 155 residential lots proposed – effectively tripling the size of the city. In addition to Clear Lake’s strategic location, the proposal involved annexation of 75% of the land proposed for the development. Finally, the developers were experienced in rural subdivisions with individual well and septic, but lacked knowledge about municipal sewer and water development. Conclusion: LEVERAGE PLUS for the City. 2008 NRT Peer Learning Conference - Duluth, MN 6 8/21/2008
    • Hunter Lake Bluffs Residential Development – City financial “extractions” from the developer Rewrite of City comprehensive plan, zoning ordinance, and subdivision ordinance. Installation of trunk sewer and water mains – through intervening properties – without a recapture agreement. Installation of infrastructure inside the development area. Installation of a park to be maintained by the homeowners association, but open to the public. Duluth, MN 7 2008 NRT Peer Learning Conference - 8/21/2008
    • Hunter Lake Bluffs Residential Development – City financial “extractions” from the developer Shifting of cost to maintain street signs and lighting to homeowners association. Limit of 15 new construction residential building permits per year. In exchange, the City set aside sewer capacity for the entire 155 residential units – and agreed to plow and maintain the local street network. 2008 NRT Peer Learning Conference - Duluth, MN 8 8/21/2008
    • Step Two – a community can be a BUYER of residential development and a SELLER of commercial development Commercial development is more sensitive to traffic counts and crossroads locations than residential development. Strategy is to SELL the commercial development first, then use the proceeds to BUY residential development – if you desire. 2008 NRT Peer Learning Conference - Duluth, MN 9 8/21/2008
    • Step Three: Planning Strategies - SELLING Amend the comprehensive plan (master plan, general plan) to indicate the most restrictive land use possible. Changes to this plan are almost always legislative, not quasi-judicial. This gives the governing body the LEVERAGE to negotiate with developers and extract every possible financial concession from them. 2008 NRT Peer Learning Conference - Duluth, MN 10 8/21/2008
    • Zoning Strategies - SELLING Change the zoning designation for all vacant property to the most restrictive (in most case, agricultural) Like changing the plan, changing the zoning designation is almost always legislative. Make any changes to the plan and the zoning AFTER the deal is cut. 2008 NRT Peer Learning Conference - Duluth, MN 11 8/21/2008
    • Financial Strategies - BUYING If your community is a BUYER of development, make sure you are getting what you are paying for. Cost-Benefit Analysis: Will the purchase of this development pay for itself in “spin-off” development? Be especially wary of buying residential development – very rarely does it pay of itself. 2008 NRT Peer Learning Conference - Duluth, MN 12 8/21/2008
    • Financial Strategies – BUYING In limited situations, a community may have to buy residential development (e. g. a business may need “affordable” housing for its employees) If this is the case, it is essential that a contract with the employer be entered into that ensures that the employer does not leave the community for X number of years. 2008 NRT Peer Learning Conference - Duluth, MN 13 8/21/2008
    • CASE STUDY – Cabela’s Sporting Goods, Rogers, Minnesota Rogers, MN (pop. 3500) is located 30 minutes NW of downtown Minneapolis at the heavily- traveled crossroads of I-94 and MN 101. Rogers has one of the highest percentages of commercial/industrial tax base of any community in Minnesota – at one time over 50% of its tax capacity was C/I. Rogers desired to create a retail corridor along the north side of I-94, and needed an anchor that would attract “spin-off” development. 2008 NRT Peer Learning Conference - Duluth, MN 14 8/21/2008
    • CASE STUDY – Cabela’s Sporting Goods, Rogers, Minnesota Cabela’s has a national footprint with 33 stores in 23 states and 1 Canadian province, and has strict locational requirements for their retail operations. Cabela’s previously required 250 miles between stores. In recent years, Cabela’s has relaxed that requirement. Based on that, the City of Rogers (90 miles from the Owatonna Cabela’s) decided to recruit Cabela’s to town. 2008 NRT Peer Learning Conference - Duluth, MN 15 8/21/2008
    • CASE STUDY – Cabela’s Sporting Goods, Rogers, Minnesota The City of Rogers, in addition to establishing a 5-year TIF, also granted Cabela’s a 15-year tax abatement, valued at $2,000,000, to pay for infrastructure improvements. 50% reduction of the building permit fee. Waiver of zoning, subdivision, site plan approval, park dedication fees. Specific dedication of SAC and WAC to site utility improvements. 2008 NRT Peer Learning Conference - Duluth, MN 16 8/21/2008
    • CASE STUDY – Cabela’s Sporting Goods, Rogers, Minnesota The “purchase” created political implications for the City Council. The Mayor was defeated for re-election, and one Councilman chose not to run. In 2007, the long-tenured (22 years) city administrator was fired. 2008 NRT Peer Learning Conference - Duluth, MN 17 8/21/2008
    • CASE STUDY – Cabela’s Sporting Goods, Rogers, Minnesota While the “spin-off” development did occur (Best Buy), it can’t be determined whether it would have occurred “but for” the deal with Cabela’s. Given Rogers’ locational advantages, it should have considered itself a SELLER of retail and not a BUYER of retail. 2008 NRT Peer Learning Conference - Duluth, MN 18 8/21/2008
    • CONCLUSION The determination on whether a community is a BUYER or a SELLER is as much POLITICAL as it is SITUATIONAL. It is not enough to have the facts on your side – you need the politics, as well. Finally, you need public support for the project and your approach. Without it, the politics can change very quickly – as the city administrator of Rogers found out. 2008 NRT Peer Learning Conference - Duluth, MN 19 8/21/2008
    • QUESTIONS? Dale R. Powers, AICP Zia Planning Consultants Clear Lake, Minnesota 320-493-8930 www.ziaplanning.com 2008 NRT Peer Learning Conference - Duluth, MN 20 8/21/2008