EDA Meeting Date: April 22, 2024
To: Members of the Economic Development Authority
From: Ben Martig, City Administrator
Jake Reilly, Community Development Director
Nate Carlson, Economic Development Coordinator
David Bennett, Director of Public Works/City Engineer
Title
Information and Discussion Related to Facilitating Orderly Growth and Development for Economic Vitality.
Body
Action Requested:
Discuss potential policy directions related to growing the City’s commercial/industrial tax base.
Summary Report:
Growing the City’s commercial/industrial tax base by focusing on new industrial growth is a City priority. The priority is reflected in multiple Strategic Plan documents and is foundationally supported by the City’s 2008 adopted Comprehensive 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 Shovel Ready Site Certification and Marketing & Recruitment Process the City is currently an active participant.
In 2018, the City Council established a committee comprised of members from the EDA, HRA, Planning Commission and City Council. The committee’s charge was to provide a recommendation to City Council regarding a process to facilitate growth in the Northwest Area of Northfield. See the resolution and findings attached. After careful consideration of multiple approaches to planning for development in the area, including a master plan, the committee recommended an incremental approach to development in the area.
The City currently has capacity for immediate development in the area with sewer, water, and road infrastructure readily available. Additionally, the City has, and continues to plan, to add additional water and wastewater infrastructure capacity to serve light industrial growth in in AUAR area. A study is underway to determine the full capacity of the wastewater collection and other plans continue for water distribution expansion. The wastewater treatment plant has capacity to handle roughly 3 million gallons per day additional flow. The water treatment plant in final construction designs also will accommodate current and future growth.
Staff and development advisors believe that light manufacturing, research and development, agri-business, and data centers are likely to be interested in this area. This has been a particular focus of recruitment by Xcel Energy and the City of Northfield.
Minnesota is experiencing a data center boom. This type of development has the potential to add a tremendous amount of taxable value to the community. Additionally, data centers require limited numbers but higher paying jobs for employees which is favorable in a highly competitive and low unemployment environment. As technology develops, water usage has become less for data centers as well and continues to become more efficient and technology advances, which has been a heavy water user industry in the past (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 more resilient to severe storms, and robust telecommunications that make Minnesota attractive to this industry. Electronic waste is a component of data center development that can 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 impact of a similar project could net typical households a 32-percent reduction in property taxes by year 2027. This could save homeowners more than $800 in annual property taxes.
The EDA has a significant role in this future growth area. The City Council’s adopted strategic plan stresses the importance of future tax base growth, and the EDA has made efforts to achieve that goal. There is growing interest from private development following the adoption of the AUAR and continued demand for tax base growth, and the EDA has additional opportunity for significant influence and support for development efforts.
In February, the Planning Commission adopted the attached Resolution recommended to the City Council that would prohibit development in the AUAR Area for an undefined period of time until a new Comprehensive Plan is adopted and official controls are revised (e.g. re-zoning, etc.).
The primary purpose of this meeting is an update on background of development planning for this important area identified to grow the City’s tax base.
Alternative Options:
The EDA will be brought back more information to consider in May related to taking
Financial Impacts:
The Economic Development Authority may be asked to dedicate a portion of the budget to Northwest Area development initiatives.
Tentative Timelines:
• May 2024 EDA Meeting - Discuss EDA Position to City Council Related to Resolution Relating to Planning Commission Recommended Interim Ordinance that would Prohibit Development in the AUAR Area (this entire area) for a Period of Time.
• Other to Be Determined.
• June - July 2024 - Present Information to City Council Related to Planning Commission Resolution.
• August 2024 - Council Response to Planning Commission & Other Related Resolutions.