Tax Exempt Review Committee - February 22, 2022 Minutes

ECONOMIC AND DEVELOPMENT INCENTIVE COMMITTEE
Fargo, North Dakota

Regular Meeting Tuesday, February, 2022

The February meeting of the Economic and Development Incentive Committee of the City of Fargo, North Dakota was held in the City Commission Room at City Hall at 1:00 p.m., Tuesday, February 22, 2022.

The committee members present or absent are:
Present: Dave Piepkorn, Mayor Tim Mahoney, John Cosgriff, Jessica Ebeling, Jim Gilmour, Deb Mathern, Arlette Preston, Prakash Mathew, Michael Splonskowski

Absent: Jim Buus, Levi Bachmeier, Bruce Grubb, Kent Costin, Erik Johnson, Jackie Gapp, Joe Raso, Robert Wilson, Dean Brescani, Chad Peterson, Steve Swiontek, Reid Middaugh, and Nancy Morris.

Commissioner Piepkorn called the meeting to order at 1:00 p.m.

Economic Incentive Program White Paper

• Collin McAweeney (TischlerBise)
• 4 Tasks
o Task 1: Project Initiation
o Task 2: Preparation of a White Paper on Economic Development Incentives
o Task 3: Develop Economic Impact Model
o Task 4: Implement Develop Economic Impact Model
• Focused on Task # 2
• Current Policies
o Renaissance Zone
 5 1/2 % in property value
 28 future sites, potential over 1 million square feet of development
• Special Assessment Finance
o Unique public strategy
o Capital burdens shifted to city
o Allows builders to not front load costs.
• Case Studies/Comparable Cities
o Dubuque, Iowa- Waterfront Development
o Paducah, Kentucky- Targeting Talent and Land Banking
o Fargo has a more comprehensive incentive program
• Recommendations
o Fargo has a robust and thoughtful incentive program
o Continue Renaissance Zone and Special Infrastructure Financing programs
o Target high multiplier, sales tax generators
o Time limitations for incentive programs
o Remove new construction residential housing exemption (2 year exemption)
o Explore new parking opportunities, land banking and waterfront development programs.
• Questions:
o Mayor Tim Mahoney: Fargo drops 2 year exemption, can Fargo lose out on market share?
 The market for Fargo drives these incentives and people want to be in Fargo.
o Jessica Ebeling: How much of this project was done with prime vs. secondary research?
 50/50
• Steps going forward
o Receive & file report
o Train on how on the TischlerBise Economic Model
o Implement
• Commission will receive and file at 5:00pm

No motion

419 3rd St North
• 2 proposals for this site from Authentic Housing and Kilbourne Group
• Old Health Department Building
• Fred Eoff- from PFM
o Multi-housing project constructed without dedicated parking
o Low-income tax credit- element of 1986 Tax Act
o 90% of the newly constructed lower income building nationwide
• Authentic Housing
o What this did not give the city:
 Did not produce a preliminary commitment from a lender
 Companion preliminary letter from equity lender/investor
 Market study that identifies how this property fits into market place.
• Questions:
o Mayor Mahoney: if we were getting a housing study done this year would that answer the elements that they would have to request on the housing analysis?
 Yes, it would fill that need.
o Arlette Preston: In experience with other communities without dedicated parking, does it get to be a big issue?
 A building like this without dedicating parking is unusual.
 Other projects are done in an area with a major hub.
 Readily available mixed transportation usually surrounds these projects. Mass transit is usually available too.

A motion was made by Mayor Mahoney to draft Authentic Housing Authority to work with the Housing Authority to work on the Barel Project to which both parties would be able to come forward. John Cosgriff seconded motion.

4 YES / 3 NO. Motion approved.

A motion was made by Mayor Mahoney moved to a 3 week delay for Authentic Housing Authority to respond to a request. Deb Mathern seconded, the motion.

5 YES / 1 NO. Motion passed. A meeting will be set in 3 weeks to discuss this.

A motion was made by Dave Piepkorn to approve the minutes from January 25, 2022. John Cosgriff seconded, motion carries.

Dakota Specialty Milling

• Bryan Hendricks
• $8 million investment. $4 million building. $4 million equipment (Large oven equipment)
• 5 year exemption request at 100% on the extra 40,000 square feet expansion
• Approved for PILOT exemption in 2016
o Exemption expired and is now reapplying
o Still the same project but would add value.

A motion was made by Jessica Ebeling to approve the Dakota Milling Property Tax Incentive for Dakota Specialty Milling. John Cosgriff seconded, motion carries.

J Street Properties

• Matt- PFM Recommendation
• 1418 1st Ave & 19 14 ½ St N
• 90 units, 4-story unit multi-family project with enclosed parking for 92 vehicles plus additional parking for 21 vehicles
• $1.25 million TIFF over 10 years
• Developer investing 20% about $3 million
• Internally Rate of Return with TIFF is 9%. Without TIFF is 5.58%
• For a project of this size a reasonable rate of return is 10-15%
• Project to begin in Spring of this year
• Mark Bjornstad- now owns property as of 12/3/2021 stated clean up with start when TIFF is approved and when the weather warms up.
A motion was made by Mayor Mahoney to approve. John Cosgriff seconded, motion carries.

The meeting was adjourned at 2:52 pm.