Market Street Mall Redevelopment July 14, 2015

Introduction Cal Brink, Economic Development Director Brian Pellowski, PBK Investments (overall developer). Eric Miller, Sambatek Introductory Project Background Actions This Evening: Resolution Granting Vacation of a Portion of Peterson Street Resolution Approving Marshall Square Addition Final Plat Consider & Approve Ordinance Amending Chapter 86 of the City Code of Ordinances relating to Planned United Developments Adopt Planned Unit Development (PUD) Agreement Resolution Approving Contract for Private Development Resolution Approving Reimbursement for TIF proceeds HRA Meeting Tonight Adopt Resolution

Project Summary Mall Demolition Development Site Plan 65,488 sf (45% of total) Mall Improvements $5.95M 84,070 sf Mall Retail Lots $1.96M 20,700 sf (4 bldgs.) Apartments $7.11M 72 units Hotel $4.28M 56 rooms Development Site Plan

Project Construction Schedule Mall and Retail 50% complete by December 31, 2016 and 100% complete by December 31, 2017. Apartments 25% complete by December 31, 2015 and 100% complete by December 31, 2016. Hotel Development Site Plan

What Is Tax Increment Financing (TIF)? A financing tool Used by local governments Finances qualifying costs of new development or redevelopment Uses the incremental increase in taxes Prequalification findings (complete) Redevelopment District “But for” TIF the project would not occur Conforms to City comprehensive plan Will afford maximum opportunity for redevelopment by private enterprise

Historical TIF In Marshall Industrial: Schwans (numerous), MCP (ADM), Heartland (Turkey Valley Farms), US Bank, Grillworks, Bend Rite, Action Sports, Beverage Wholesalers, Runnings Workforce Housing: Parkway Additions, Dano Addition Apartments (Taylor), Downtowner Apartment (including law office site) Assisted Living: Hill Street Place, Heritage Pointe Commercial Redevelopment: SuperValue, Downtown Block 11, Southwest Sanitation, Prairie Pride/N. Ambulance Facility, Memorial Park, Marshall Hotel (pending) Aviation Business Expansion: Airpark East

Sources of TIF Funds TIF District No. 1-13

TIF Revenue Illustration $29,156,382 Dollars Used for Project TIF Expenses Pay 2015 $5,634,200 Pay 2016 $4,910,100 25-Year Max

Uses of TIF Funds TIF Project Area No.1

TIF Redevelopment District Minn. Stat. 469.174, subd. 9 Tax Increment Financing (TIF) Market Street Mall TIF established for the purpose of financing “redevelopment” Tax increment generated in a defined district area Expenses eligible in defined project area Delineated in the TIF plan Approved by the HRA and City

TIF Redevelopment Example OAKDALE, MN

TIF Redevelopment Example Editorial: Mall site offers ample opportunity Feb 5, 2015 at 8:17 a.m. “…Rather than shake our heads and doubt such a vision, we should all do our part in getting behind it — and collaborating where we can as community members to make it come to fruition.” WORTHINGTON, MN

TIF Revenue Max term 25 years. “Pay as You Go” developer assumes risk/returns. April Max increment revenue $11,463,169 April Estimated max present value TIF $5,776,313

TIF Revenue Final Total Max increment revenue $8,797,827 Final Max present value TIF Note $4,140,837 plus interest at 4% of $3,175,598 City retains 15% administrative & redevelopment cost plus surplus $1,481,392 Initial Request was approximately $5.7M and was reduced to $4.14M based on the financials

Estimated TIF Eligible Costs Description Cost ($) TIF Revenue Note Principal (Public utilities, site improvements, demo, etc.) $4,140,837 TIF Revenue Note Interest (Payments @ 4%) $3,175,598 Administrative & Redevelopment Expenses (15% plus surplus) $1,481,392 Total $8,797,827

Agreement Eligible TIF Expenses Existing site parking demolition, mall structure demolition, reconstruction of north wall. Mall related reconstruction of watermain, sanitary sewer, stormsewer, sidewalks, new parking lot, curb & gutter, security lighting. Mall related electrical and plumbing rework. Current tenant relocation.

Agreement In-Eligible TIF Expenses No TIF (privately financed) mall interior remodeling, landscaping, site engineering, and architecture. No TIF (privately financed and separate developer) for apartment construction, site improvements and infrastructure connection lines directly benefitting the property only. No TIF (privately financed and separate developer) for hotel construction, site improvements and infrastructure connection lines directly benefitting the property only.

Developer’s Investment Description Costs Mall Redevelopment $12,928,875 Apartments $7,111,500 Hotel $5,676,500 TOTAL $25,716,875* * The proposed tax increment assistance amount of $4,140,837 is approximately 16.1% of the total project budget $25,716,875.

Existing Conditions

Existing Conditions

Mall Elevation Concept

Mall Elevation Concept

Mall Elevation Concept

Site Plan Approximate Demo Area 65,488 sf (45% building)

Existing Interior View

Utility Plan

Landscaping Plan

Apartment Elevation Sketch

Apartment Elevation Sketch

Grandstay Hotel Sketch

Grandstay Hotel Example

Recommendations Tonight Resolution Granting Vacation of a Portion of Peterson Street Resolution Approving Marshall Square Addition Final Plat Consider & Approve Ordinance Amending Chapter 86 of the City Code of Ordinances relating to Planned United Development Adopt Planned Unit Development (PUD) Agreement Resolution Approving Contract for Private Development Resolution Approving Reimbursement for TIF proceeds HRA Meeting Tonight Adopt Resolution.

Project Comments Cal Brink, Economic Development Director Brian Pellowski, PBK Investments, Inc. (Market Street Mall developer).

Peterson Street Vacation Public Hearing Council Initial Comment and Questions. Public Comment: Approach Podium to Address the Mayor and Council. (Please Refrain From Audience Comments) State Name and Residence Prior to Questions or Comments. Council Continue Discussion. Council Close Public Hearing. Further Discussion and/or action by the City Council After Public Comment Completed.