City Council Meeting Date: August 5, 2024
To: Mayor and City Council
City Administrator
From: Ben Martig, City Administrator
Jake Reilly, Community Development Director
David Bennett, Director of Public Works/City Engineer
Nate Carlson, Economic Development Coordinator
Mikayla Schmidt, City Planner
Title
Consideration of Interim Ordinance No. 1065 Related to Development.
Body
Action Requested:
The Northfield City Council adopt an emergency interim ordinance to facilitate orderly and economic growth and development in the Northwest Area.
Summary Report:
Growing the City’s commercial/industrial tax base by focusing on new industrial growth is a stated City priority, reflected in first the Economic Development Plan (2006), the City’s adopted Comprehensive Plan (2008), and subsequently in the Council’s Strategic Plan documents beginning in 2018.
Background
The 2006 Economic Development Plan describes three priority strategies for the community:
• Diversify the economic base.
• Maintain Northfield’s sense of place.
• Attract and retain talent.
In the 2008 Comprehensive Plan the following policies apply to land development, economic development, and sustainability concerns associated with development opportunities:
• Community Identity:
o CI 1.4 Ensure that all development, redevelopment and expansion be compatible with the desirable features of the natural and man-made environment.
• Land Use
o LU 1.6 Annually monitor the land use of residential as compared to commercial and industrial land uses as shown in Table 4.1 and Map 4.1, as a means to accomplish the overall planning objectives of the city.
o LU 1.7 - The City Council should determine, through a process involving the Planning Commission, Economic Development Authority, and citizens, what would constitute an acceptable balance between residential and commercial/industrial uses. This balance could be measured by analyzing tax revenues, jobs in Northfield versus commuters, and other factors. Once the definition of acceptable balance is determined, the City Council should prepare policies and ordinances to bring about the desired balance.
o LU 2.1 Promote general merchandise retailers, financial institutions, office developments and entertainment uses within the downtown core. Create new opportunities for businesses by reinvesting in the infrastructure and public spaces in and around the downtown.
o LU 3 Encourage a compact development pattern, and support infill, redevelopment and land intensification.
§ LU 3.1Create incentives to encourage infill, redevelopment, and land intensification
§ LU 3.2 Work collaboratively to identify structures and sites for redevelopment, intensification or reuse.
§ LU 3.3 The Economic Development Authority (EDA), with the assistance of City staff, will prepare a marketing program for targeted structures and/or sites for infill, redevelopment, and land intensification.
§ LU 3.4 Establish priorities for capital improvements that are directed toward infill sites and mature neighborhoods.
§ LU 3.5 Facilitate redevelopment of uses that do not fit the development pattern of downtown (i.e. single story uses surrounded by parking), but which with better design could increase density and provide more commercial, office or housing opportunities.
o LU 6.3 Modify existing regulations and create new policies that mandate environmentally-sensitive and sustainable planning and building practices, as identified and defined in the City’s Natural Resources Inventory Final Report adopted in 2005.
o LU 8 Provide locations that facilitate economic development opportunities.
§ LU 8.1 Identify sites for commercial and industrial development.
§ LU 8.2 Identify sites for new office development.
§ LU 8.3 Facilitate the development of new business parks.
§ LU 8.4 Ensure land served by public infrastructure is available to accommodate future economic growth.
§ LU 8.5 Create architectural and site controls for development on Hwy 19 and Hwy 3, in order to present a high-quality image for the character of the city.
• Environmental Resources
o ER 2 Protect and enhance environmentally significant areas
o ER 3 Protect and enhance water quality.
o ER 4 Conserve energy in public and private sector development efforts.
o ER 5 Promote the reduction of solid waste generated.
o ER 8 Minimize negative noise impacts within the community.
• Sewer and Water Resources
o SW 1 Provide potable water, sanitary waste collection and treatment, and surface water management to existing and future development areas in the city in an environmentally sensitive, financially equitable and fiscally responsible manner.
o SW 2 Manage water resources so that the beneficial uses of wetlands, ponds and streams remain available to the existing and future community (sustainability).
• Economic Development
o ED 1.4 Adopt a regulating policy that accommodates and provides incentives for infill and redevelopment opportunities
o ED 2 The City will make sufficient land resources available for the needs of existing and future businesses in line with the strategies outlined in the 2006 Economic Development Plan.
In 2018, the City Council established a committee comprised of members from the EDA, HRA, Planning Commission, and City Council. The committee was charged with determining a process to facilitate growth in the area northwest of downtown within the municipal boundary. See the resolution and findings attached. After careful consideration of multiple approaches to planning for development in the area, including a master plan, which is described as the desired outcome in the 2008 Comprehensive Plan, the committee recommended, instead, an incremental approach to development in the area.
When adopting the 2018-2020 Strategic Plan the Northfield City Council included “Climate Change Impacts” as one of the six strategic priorities. This simultaneously established a Climate Action Plan Advisory Board to help the city prepare a climate action plan for the future well-being of the town and its people. Adopted in November 2019, the plan states two main components:
1. Decreasing our greenhouse gas emissions through mitigation strategies.
2. Becoming more resilient to prepare for a changing climate.
Climate change impact mitigation continues to be a strategic priority for the City Council and was a consistent message during meetings with community members while preparing the adopted Riverfront Enhancement Action Plan (2020) and in the current long-range planning effort to develop and adopt an updated 2045-horizon Comprehensive Plan.
In 2023 the Planning Commission and Council engaged a consultant team to develop that Comprehensive Plan with staff, with an aim to adopt a new plan no later than December 2024. State Statute, in Chapter 462. Planning, Zoning, identifies municipal planning as a means to assist municipalities in, “developing lands more wisely to serve citizens more effectively, [will] make the provision of public services less costly, and [will] achieve a more secure tax base.” Sections 462.351 to 462.364 of Minnesota State Statutes provide municipalities, in a single body of law, with the necessary powers and a uniform procedure for adequately conducting and implementing municipal planning. The policy statement in Statute endorses municipal planning as a tool for, “guiding future development of land so as to insure a safer, more pleasant and more economical environment for residential, commercial, industrial and public activities, to preserve agricultural and other open lands, and to promote the public health, safety, and general welfare. Municipalities can prepare for anticipated changes and by such preparations bring about significant savings in both private and public expenditures.” Section 462.3535 Community-based planning states, “Each municipality is encouraged to prepare and implement a community-based comprehensive municipal plan.”
In the fall of 2023, the Northfield City Council adopted an Alternative Urban Areawide Review
(AUAR) for an area of approximately 787 undeveloped acres (530 acres in the city limits and the remainder in Greenvale Township) northwest of downtown and west of the Northfield Hospital complex. The AUAR is a unique-to-Minnesota environmental review process intended to evaluate cumulative impacts under multiple development scenarios, including the existing scenario described in the 2008 Comprehensive Plan, and consider mitigation strategies. By frontloading environmental review in this way, the AUAR may serve as a development incentive, in part by reducing uncertainty in the development process for prospective developers. The AUAR was funded by Xcel Energy as part of the existing Shovel Ready Site Certification and Marketing & Recruitment Process between the City and Xcel Energy.
The City currently has capacity for development in the area with sewer, water, and road infrastructure. For that infrastructure to be accessible to a large development proposal such as for a large data center, three years - and possibly up to five years - of capital improvement design and construction is necessary. This would coincide very well in conjunction with planning, approvals and construction for this type of large development proposal. The City has the ability to add additional water and wastewater infrastructure capacity to serve future light industrial growth in the AUAR area. A study is underway to determine the full capacity of the wastewater collection system and plans continue for water distribution expansion. The City owns land for a new water tower and the Capital Improvement Plan anticipates the ability to implement that infrastructure if and when a additional capacity is needed to accommodate new development. The existing wastewater treatment plant has capacity to handle roughly 3 million gallons per day additional flow and there is an ability to expand that capacity in the future by adding to the wastewater treatment plant’s physical plant. The planned water treatment plant will similarly be able accommodate future growth.
Staff and development advisors believe that light manufacturing, research and development facility, agri-business, and data center developers are likely to be interested in this area. This has been a particular focus of recruitment by Xcel Energy and the City of Northfield. This use also is consistent with the City’s adopted comprehensive plan. Staff expects the updated comprehensive plan to include updated information and further clarify and highlight this area as an imminent new growth opportunity for this use.
Minnesota is experiencing a data center industry boom. This type of development has the potential to add significant commercial/industrial tax base to the City’s portfolio, due to the construction of high-quality and high-value buildings. Data centers require relatively few employees; however, the jobs are considered to be both high-wage and high-skill. Data center water usage has become more efficient as technology advances (see attached article). The water needs have been one of multiple factors that make Minnesota attractive to data centers in addition to: cooler climate for natural cooling systems, favorable tax environment, highly educated workforce, geographic resilience to severe storms, and robust telecommunications infrastructure. Electronic waste is a component of data center development that should be addressed in development agreements or through complementary development.
Staff has provided a financial model showing the impact of a similar development to that of the Meta Platforms, Inc. project in Rosemount. See attachment labeled “Tax Growth Strategy.” The potential impact of a similar project could net a typical homeowner a 32-percent reduction in property taxes by year 2027. This could save homeowners more than $800 in annual property taxes. This model does not include consideration of any financial incentives or capital expenses by the municipality or Dakota County to support the development.
The City Council’s adopted 2020-2024 strategic plan stresses the importance of future tax base growth. There is growing interest from private development following the adoption of the AUAR and continued demand for tax base diversification and growth from the general public and the market.
In February, the Planning Commission adopted the attached Resolution recommending the City Council adopt an interim ordinance prohibiting development-related applications in the 530 acres in the city limits of the AUAR Area for an initial period not to exceed one year (as dictated by state statute) to allow for the completion and adoption of a 2045-horizon Comprehensive Plan, including adoption of updated official controls, such as the Land Development Code. Subsequent to forwarding Resolution 2024-001, the Planning Commission adopted a revised resolution (Resolution 2024-002, attached) that included additional background information associated with the 2018 Process Advisory Committee’s recommendation.
In June, the EDA approved EDA Resolution 2024-003 (Attached) recommending the City Council adopt an interim ordinance for the Northwest Area. During the discussion, Community Development staff and the City Administrator shared pros and cons of adopting an interim ordinance. The EDA members also expressed support for rezoning some or all of the Xcel Site Certified land in City limits to support industrial uses.
Staff and skilled land-use consultants with relevant experience regarding recruitment for and establishment of high-quality new industrial users are developing standards for industrial uses that would meet stated outcomes in the adopted 2008 comprehensive plan and the adopted 2019 Climate Action Plan. As the 2045-horizon Comprehensive Plan document continues to be drafted, the standards in development will also respond to information received during that ongoing process. Relevant infrastructure planning and new business recruitment materials are in process. Recruitment and marketing materials will target industries identified for recruitment in the Comprehensive Economic Development Plan (2006).
Alternative Options:
• Enact an interim ordinance limiting only applications for commercial solar field development;
• Take an alternative action not contemplated in this report.
• Take no action;
Financial Impacts:
Existing costs include staff and consultant time to craft and vet new land development code language addressing design standards, sustainability standards, and conditions associated with new industrial uses. Other potential financial impacts to the City’s general fund associated with development in the NW area include but are not limited to the cost to extend and enhance capacity for wastewater and water infrastructure to the site(s). Any developer may request financial incentives which may include tax abatement, tax increment financing, and potential bonding requests.
Tentative Timelines:
• August 2024 - Adopt emergency interim ordinance to protect the planning process and prepare standards that will more seamlessly facilitate a development application
• August - September 2024 - Craft and vet official land use controls to address standards and conditions for industrial uses that respond to existing adopted policy documents.
• September - October 2024 - Consider rezoning at least 50 of the 530 acres of land in the city limits in the northwest area from agricultural uses to an appropriate commercial/industrial use category
• December 2024 - Adopt 2045-horizon comprehensive plan document