Planning Commission

Spearfish Planning Commission Agenda Tuesday, August 18, 2020 - 3:00 PM Meeting Location: City Hall City Council Chambers, 625 N Fifth Street, Spearfish SD 57783 A. Call To Order B. Roll Call C. Approve the Minutes from August 4, 2020 D. Declaration of Conflicts of Interest E. Items for Action 1. Request: Approve the project plan for Tax Increment Financing district #6 Location Tract V-1 of Sky Ridge Subdivision a Part of Tract V of Elkhorn Ridge Addition to the City of Spearfish, located in the NW1/4 of Section 22, T6N, R3E, BHM, Lawrence County, South Dakota as shown on the recorded plat in the office of the Lawrence County Register of Deeds The South 17 feet of the North 50 feet of the NW1/4NE1/4, Section 21, T6N, R3E, B.H.M., Elkhorn Ridge Addition, City of Spearfish, Lawrence County, South Dakota The South 17 feet of the North 50 feet of the NW1/4 except Lot H2, Section 21, T6N, R3E, B.H.M., Elkhorn Ridge Addition, City of Spearfish, Lawrence County, South Dakota The public right of way and section line easements immediately adjacent to the above legal descriptions, except Lot H2, Section 21, T6N, R3E, B.H.M., Lawrence County, South Dakota Applicant: City of Spearfish Action: Make a recommendation to the City Council 2. Request: Initiate a change to Appendix A Zoning, Article I. Definitions and Article V. Supplementary Regulations, Section 3. Minimum off-street parking requirements, to define and add a parking rate for studio/efficiency apartments Location: Citywide Applicant: City of Spearfish Action: Set a public hearing for September 8, 2020 ADA Compliance: The City of Spearfish fully subscribes to the provisions of the Americans with Disabilities Act. If you desire to attend this public meeting and are in need of special accommodations, please notify the Building and Development Office at 642-1335 and 24 hours prior to the meeting so that appropriate auxiliary aids and services are available.  Spearfish Planning Commission Agenda (continued, page 2) 3. Discussion Zoning changes to accommodate conversion of garages to apartments Item: F. City Council Update G. Public Comment Public comments are welcome at this time, however, no action will be taken. H. Adjournment  Spearfish Planning Commission Regular Session Minutes August 4, 2020 The Spearfish Planning Commission met in regular session on Tuesday, August 4, 2020 at 3:00 p.m. in the Council Chamber. Chairman Kruskamp called the meeting to order at 3:00 pm. Roll call was taken with the following members present: Toby Bordewyk , Larry Vavruska, Barbara Zwetzig, Greg Kruskamp, Meghan Byrum, Drew Skjoldal, and Bob Meyer. Also present: City Planner Jayna Watson, City Attorney Ashley McDonald, and Assistant City Planner Daniel Van Holland. APPROVAL OF MINUTES: Byrum moved, Vavruska seconded, and all present voted to approve the minutes from July 21, 2020. DECLARATIONS OF CONFLICTS OF INTEREST: Kruskamp called for any potential conflicts of interest to be identified. No conflicts were expressed. 1. Request: Approve a change to Appendix A Zoning Article V. Supplementary Regulations, Section 6. Sign Regulations Location: Citywide Applicant: City of Spearfish Action: Hold a public hearing and make a recommendation to the City Council Watson presented the proposed changes to the Commission. Chairman Kruskamp opened the public hearing. No comments were received. Chairman Kruskamp close the public hearing. Skjodal moved, Vavruska seconded, and the Planning Commission voted 6-0 to recommend approval to the City Council. 2. Request: Approve a change of zoning from County Agriculture to City Agriculture Location: The South 17 feet of the North 50 feet of the NW1/4NE1/4; and the South 17 feet of the North 50 feet of the NW1/4 except Lot H2 all Located in Section 21, T6N, R3E, B.H.M., Lawrence County, South Dakota Applicant: City of Spearfish Action: Hold a public hearing and make a recommendation to the City Council Watson presented the proposed zoning change. Chairman Kruskamp opend the public hearing. No comments were received. Chairman Kruskamp closed the public hearing. Zwetzig moved, Byrum seconded and the Planning Commission voted 6-0 to recommend approval to the City Council. 3. Discussion Zoning changes to accommodate conversion of garages to apartments Item: Van Holland presented the matter. Commissioners discussed possible public relations, previous reactions to allowing a second dwelling in R1 districts, the purpose of setback requirements, the potential for using this as a way of getting around setbacks, possible issues with density and impact, where the building footprint should be for this kind of project, occupancy limits and owner/occupied requirements, and the applicability of the conditional use process. Watson and Van Holland stated they will do more research into similar changes and report back to the Planning Commission on their findings.  Spearfish Planning Commission Page 2 Regular Session Minutes August 4, 2020 PUBLIC COMMENT No public comment received CITY COUNCIL UPDATE: Watson updated the Commissioners on City Council business, including Exit 17 and airport capital projects, and department budget presentations. Commissioners asked for more information on the status of 7th street. ADJOURNMENT: There being no further business to come before the commission, Kruskamp adjourned the meeting at approximately 3:50 p.m.  Spearfish Planning Commission Staff Report Meeting Location: City Council Chamber, 625 Fifth Street, Spearfish SD 57783 Meeting time Tuesday August 18, 2020; 3 pm and date: Applicant: City of Spearfish Request: Approve the Tax Increment Finance (TIF) District 6 Project Plan Make a recommendation to City Council Action: Zoning: Development Review District Location: 1. Tract V-1 of Sky Ridge Subdivision a Part of Tract V of Elkhorn Ridge Addition to the City of Spearfish 2. South 17 feet of the North 50 feet of the NW1/4NE1/4, Section 21, T6N, R3E, B.H.M., Elkhorn Ridge Addition to the City of Spearfish 3. South 17 feet of the North 50 feet of the NW1/4 except Lot H2, Section 21, T6N, R3E, B.H.M., Elkhorn Ridge Addition to the City of Spearfish 4. The public right of way and section line easements immediately adjacent to the above legal descriptions, except Lot H2, Section 21, T6N, R3E, B.H.M., Lawrence County, South Dakota Colorado Blvd Page 1 Spearfish Planning Commission Staff Report Meeting Date: August 18, 2020  BACKGROUND AND HISTORY February 2020 - City Council approved the development of a workforce housing project and with tax increment financing, the costs of public improvements would be reimbursed to the city. April 2020 – Planning Commission recommended on the creation of the Tax Increment District 6 Boundary, followed by City Council approval of the same boundary in August of 2020, minus Tract H in the northeast corner of the district (location of the new storage building property). PROPOSAL DETAILS and EXECUTIVE SUMMARY State law requires that the Planning Commission forward a recommendation to the City Council on the Tax Increment District Project Plan. The Planning Commission’s scope of review is to evaluate if the plan addresses the primary topics contained in state law, and to comment on components within the plan. The table of contents contains an overview of all the plan requirements as required by state law. A public hearing is not required to make the recommendation. This plan outlines the total costs of the project, the amounts of project costs to be reimbursed by the tax increment district, and financial impacts to the City, County, and School District while the TIF revenues are paying back the debts of the project. The repayment of TIF debt is authorized for up to twenty years after the district is created. This proposal includes the following TIF eligible project expenses, all of which are associated with improvements. As noted below, some costs are TIF eligible, but will not be reimbursed and are to be carried by the City over the next 5 years Project Description/Cost TID Spending Category Project Cost TIF Eligible TIF Requested City Equity Contribution Sports Field Capital Cost $ 8,000,000.00 $ 8,000,000.00 0 $ 8,000,000.00 Infrastructure Capital Cost $ 9,281,901.00 $ 9,281,901.00 $ 9,281,901.00 Colorado Boulevard Capital Cost $ 4,000,000.00 $ 4,000,000.00 $ 2,000,000.00 $ 2,000,000.00 Real Property Real Property Assembly Cost $ 1,501,000.00 $ 1,501,000.00 $ 1,000,000.00 $ 501,000.00 Financing Interest and Fees Financing Cost $ 4,483,018.00 $ 4,483,018.00 $ 4,483,018.00 Engineering & Design Professional Service Cost $ 2,000,000.00 $ 2,000,000.00 $ 1,000,000.00 $ 1,000,000.00 Administration of TIF Imputed Administrative Cost $ 20,000.00 $ 20,000.00 0 $ 20,000.00 $ 29,285,919.00 $ 29,285,919.00 $ 17,764,919.00 $ 11,521,000.00 Conservative revenue estimates show that the project will generate approximately $12.6 million over the life of the district. It is not required that revenues equal the expenditures, and this plan shows a difference of five million in that regard. Many factors could increase the revenues but have not been included such as: homes valued higher than what was modeled, changes in mill levy, South Dakota Housing and Development Authority could re-set the price Page 2 Spearfish Planning Commission Staff Report Meeting Date: August 18, 2020 point for affordable housing, etc. On the expense side, actual bids for the improvements could be lower, and preliminary market data shows that the expected interest rate for borrowing (city will likely issue bonds to fund the project) could be closer to 2 percent, not 4 percent as was modeled. Staff recommends authorizing up to $17,764,919 to be reimbursed. PUBLIC COMMENTS The project plan was forwarded to Lawrence County and Spearfish School District for their comment. STAFF RECOMMENDATION: Approve STAFF CONTACTS: Jayna Watson, City Planner 605-717-1122; jayna.watson@cityofspearfish.com Daniel Van Holland, Assistant City Planner 605-717-1126; daniel.vanholland@cityofspearfish.com ATTACHMENTS: Page 4 – Tax Increment District 6 Project Plan Page 3 Spearfish Planning Commission Staff Report Meeting Date: August 18, 2020  Tax Increment Finance District #6 Project Plan Sky Ridge Prepared by: City of Spearfish September 2020 TAX INCREMENT FINANCE DISTRICT #1 TAX INCREMENT FINANCE DISTRICT #1 Tax Increment Finance District #6 Project Plan Page 1 TAX INCREMENT FINANCE DISTRICT #1  TABLE OF CONTENTS TAX INCREMENT FINANCE DISTRICT #6 PROJECT PLAN INTRODUCTION 3 PROJECT OVERVIEW 5 PROPERTY WITHIN TAX INCREMENT DISTRICT 6 5 COSTS OF PUBLIC WORKS AND IMPROVEMENTS 7 ELEMENTS OF THE PROJECT PLAN 8 (1) KIND, NUMBER, LOCATION OF ALL PUBLIC WORKS AND IMPROVEMENTS 9 (2) ECONOMIC FEASIBILITY STUDY 9 (3) LIST OF ESTIMATED PROJECT COSTS 12 (4) FISCAL IMPACT STATEMENT 16 (5) FINANCING METHOD 18 (6) PROPOSED METHOD FOR RELOCATION OF PERSONS TO BE DISPLACED 19 CONCLUSION 19 LIST OF EXHIBITS EXHIBIT A - RESOLUTION CREATING TAX INCREMENT FINANCE DISTRICT #6 20 EXHIBIT B - TAX INCREMENT FINANCE DISTRICT BOUNDARY AND ZONING MAP 23 EXHIBIT C - KIND, NUMBER, AND LOCATION OF IMPROVEMENTS 24 EXHIBIT D - PUBLIC IMPROVEMENTS OF COLORADO BOULEVARD, WATER AND 25 SEWER MAINS EXHIBIT E - AERIAL MAP – EXISTING LAND USE 26 EXHIBIT F - PRELIMINARY CLASSIFICATION OF TAX INCREMENT 27 DISTRICT 6 EXHIBIT G - ENGINEER’S COST ESTIMATE FOR INFRASTRUCTURE AND SPORTS 28 COMPLEX EXHIBIT H - ADDITIONAL CONTENTS OF PROJECT PLAN 29 Tax Increment Finance District #6 Project Plan Page 2  INTRODUCTION Tax Increment Financing (TIF) is an incentive utilized by local governments to attract private development and investment. New investment equals new jobs, more customers, and in turn, more investment opportunity. The incentive can also help attract and retain existing businesses and workers that might otherwise find more attractive options elsewhere. The jobs and additional investment, both private and public, mean more money for the community. Tax Increment Financing helps to overcome costs that often prevent redevelopment and private investment from occurring in the community. As a result, the TIF area itself improves and property values increase. Specifically, money for improvements and other incentives comes from the growth in property valuations and the corresponding property tax revenues — the tax increment. A tax increment is the difference between the amount of property valuation present within the TIF district before TIF district designation and the amount of property valuation increase due to the creation of a TIF district. Property taxes collected on the original valuation existing in the TIF at the time of its designation continue to be distributed to the city, school district, county and all other taxing districts in the same manner as if the TIF district did not exist. Only property taxes collected because of the incremental increase in the value of these properties after formation of the TIF district are available for use by the counties or cities to fund projects costs in the TIF district. In addition to increasing property valuation, creating a Tax Increment District for the benefit of affordable housing can mean retaining and creating more jobs. Today’s business climate allows corporations the flexibility to call any state in the union their home. It is up to local communities to attract and retain companies to their communities. Using Tax Increment Financing is one of the most powerful economic development tools to help communities achieve their goals. A local government, per South Dakota Codified Law, Chapter 11-9, can designate a specific area within its boundaries as appropriate for a TIF district and prepare a plan for development. TIF projects must be recommended for approval by the City Planning Commission and the City Council. The intention of this TIF project is to provide affordable housing in City of Spearfish for workforce housing. The project will consist of increasing the availability of affordable housing, including providing the necessary infrastructure for the development. Tax increment financing is a method of reimbursing the cost of public improvements within a specially designated area of the city which has been determined to meet criteria for blight according to the criteria set forth in SDCL 11-9. Commonly referred to as the TIF District or the District in this plan, the property tax revenues paid within the District are used to repay the costs of constructing public improvements within the District. These tax revenues are the usual and ordinary taxes due on improved property within the District and instead of forwarding these revenues to the City of Spearfish, Spearfish School District, and Lawrence County, they are temporarily directed toward the City of Spearfish to pay back the debt owed on the public improvements. Once the debt is paid, the District is closed out and tax revenues flow to the usual taxing entities as they normally would. According to 2019 Census estimates, the City of Spearfish had 11,756 residents. Tax Increment Finance District #6 Project Plan Page 3  35 29 28 30 25 19 20 15 14 15 10 7 5 5 5 3 1 0 2015 2016 2017 2018 2019 Homes under $275,000 Homes Under $225,000 Figure 1. Affordable Housing from 2015-2019 From 2000-2010, Spearfish saw a population growth rate of 21.9%. From 2010 to 2015, the city has seen the largest demographic growth in the 25-34, 55-64, and 65-74 age brackets. Per the American Community Survey in 2018, of the 4,947 occupied housing units in Spearfish, 2,667 are owner occupied and 2,280 are renter-occupied. Around 38.7% of all occupied homes have only a single occupant, with over half of all renters and around a fourth of all owners living alone. The median household income was $47,466 for all occupied units: $78,472 for owner-occupied homes and $27,849 for renter-occupied units. Only 10.2% of householders under 35 own their home. These data show that Spearfish has two growing demographics: an older, wealthier demographic who own their homes and a younger, mid- to lower-income demographic who overwhelmingly rent. The local housing market is heavily slanted in favor of the former. A housing study in 2016 recommended the city build 16-20 affordable homes per year. However, as shown in Figure 1, from 2015-2019 fewer and fewer affordable homes have been brought to market each year. This trend shows a declining number of affordable homes within the Spearfish housing market. While this trend may serve one of the growing demographics, it does not serve all members of the public, particularly members with lower purchasing power. To remedy this and meet the unmet demand, the City of Spearfish believes it is necessary to utilize tax increment financing to build the infrastructure for a development of 150 homes, all under the $275,000 price point, with 80% at or under $225,000. In December of 2019, the city coordinated a competitive request for proposal process to partner with a private developer for this project. The city’s chosen homebuilder is obligated to build 30 affordable homes over the next five years and must sell 40% of the homes at $175,000 or lower, another 40% at $225,000 or lower, and 20% at $275,000 or lower. The site plan and financial analysis includes an additional 41 homes over the 5-year period to be sold at the $275,000. Income restrictions exist for the buyers and restrictive covenants will be in place to prohibit renting the units. These requirements ensure that the homes will be purchased by members of the underserved demographic and that speculative behavior will be restricted for the immediate future. Tax increment financing will allow the city to finance the infrastructure and recreational amenities of the development. The two key steps in using tax increment financing are the creation of the boundary and the creation of this document, the project plan, referred to as the Plan. Tax Increment Finance District #6 Project Plan Page 4  PROJECT OVERVIEW This Plan is for the creation of a new workforce housing project known as Sky Ridge. The following are key milestones to date and have led to the creation of this Plan: December 2019 – Three area homebuilders respond to the city’s request for proposals to construct affordable housing. February 2020 - City signs a development agreement with Dream Design International (DDI) as the chosen builder of 150 homes, and the City commits to acquiring the project site, funding, and constructing of infrastructure to be reimbursed by TIF revenue. April 2020 – Planning Commission makes a recommendation to approve the boundaries for TIF District #6. City purchases 156 +/- acres for the project site that will be the location of the affordable housing neighborhood and sports fields. August 2020 – City Council approves the boundaries of Tax Increment Finance District 6, per Resolution 2020-18 as illustrated on Exhibit A. Planning Commission makes recommendation regarding the Project Plan. September 2020 – City Council approves the Project Plan. Property Within Tax Increment District #6 The real property to be located within the Tax Increment District is within the boundaries of the City of Spearfish as shown on Resolution 2020-18, Exhibit A attached. The legal boundaries are the following: Tract V-1 of the Sky Ridge Subdivision of Tract V of the Elkhorn Ridge Addition in the NW1/4 of Section 22, T6N, R3E, BHM, City of Spearfish, Lawrence County, South Dakota as shown on recorded plat in the office of the Lawrence County Register of Deeds. The South 17 feet of the North 50 feet of the NW1/4NE1/4, Section 21, T6N, R3E, B.H.M., Elkhorn Ridge Addition, City of Spearfish, Lawrence County, South Dakota The South 17 feet of the North 50 feet of the NW1/4 except Lot H2, Section 21, T6N, R3E, B.H.M., Elkhorn Ridge Addition, City of Spearfish, Lawrence County, South Dakota The public right of way and section line easements immediately adjacent to the above legal descriptions, except Lot H2, Section 21, T6N, R3E, B.H.M., Lawrence County, South Dakota Per SDCL 11-9-7. Maximum percentage of taxable property in municipality permitted in district: In order to implement the provisions of this chapter, the resolution required by § 11-9-5 shall contain a finding that the aggregate assessed value of the taxable property in the district plus the tax incremental base of all other existing districts does not exceed ten percent of the total assessed value of taxable property in the municipality. Tax Increment Finance District #6 Project Plan Page 5 The value for taxable property in 2019 for the City of Spearfish was $951,201,201, and preliminary numbers for 2020 shows taxable property at $972,098,830. The base value of the taxable property for inclusion into this Tax Incremental District #6, as estimated but not yet verified by Lawrence County Director of Equalization, is $92,800. The table below illustrates the base valuations of the existing tax increment finance districts according to the State of South Dakota Department of Revenue. Tax Increment Year Base Value District Number 1 2005 222,785.00 2 Dissolved 3 Dissolved 4 2014 1,779,105.00 5 Dissolved 6 2020 92,800.00 Total Base Value All Tax Increment 2,094,690.00 Districts Tax Increment Finance District #6 Project Plan Page 6  ELEMENTS OF THE PROJECT PLAN To implement the provisions of SDCL Chapter 11-9, the following are Project Costs and expenditures made or estimated to be made and the monetary obligations incurred or estimated to be incurred. The Project Costs include capital costs, financing costs, real property assembly costs, professional fee costs, imputed administration costs, relocation costs, organizational costs, discretionary costs, and grants, plus any costs incidental thereto. All Project Costs are found to be necessary and convenient to the creation of the Tax Incremental District and its implementation. The project constitutes economic development which is a proper public purpose of the City. The City exercises the powers expressly stated in and reasonably inferred by SDCL §11-9-15 and Chapter 9-54. The City shall enter into all contracts in accordance with South Dakota Law. Costs of Public Works and Improvements In accordance with SDCL § 11-9-14 the following is the kind, number, location and dollar amount of estimated Project Costs, costs of public works and improvements. Specific descriptions of each category are provided later in the Plan. Kind of Project Location1 Amount Reference2 Capital Costs District 11-9-15(1) Financing Costs District 11-9-15(2) Real Property Assembly District 11-9-15(3) Professional Fees District 11-9-15(4) Administrative Costs District 11-9-15(5) Relocation Costs District 11-9-15(6) Organizational Costs District 11-9-15(7) Discretionary Costs and District 11-9-15(8) Grants TIF Requested Project Costs $17,764,919 The cost estimates of this Plan are not the actual bid amounts, since bidding will take place after the adoption of this Plan. The total authorized TID costs are expected to be $17,764,919. This amount is the controlling value with respect to authorized TID Project Costs rather than the particular line item amounts contained in the above previous chart. The line item categories proposed are for guidance only, and actual costs will be determined upon completion of the improvements. 1District shall mean the Tax Increment District. Tax Increment Finance District #6 Project Plan Page 7  2SDCL §11-9-15 (1) Capital costs, including the actual costs of the construction of public works or improvements, buildings, structures, and permanent fixtures; the demolition, alteration, remodeling, repair, or reconstruction of existing buildings, structures, and permanent fixtures; the acquisition of equipment; the clearing and grading of land; and the amount of interest payable on tax incremental bonds or notes issued pursuant to this chapter until such time as positive tax increments to be received from the district, as estimated by the Project Plan, are sufficient to pay the principal of and interest on the tax incremental bonds or notes when due; (2) Financing costs, including all interest paid to holders of evidences of indebtedness issued to pay for Project Costs, any premium paid over the principal amount thereof because of the redemption of such obligations prior to maturity and a reserve for the payment of principal of and interest on such obligations in an amount determined by the governing body to be reasonably required for the marketability of such obligations; (3) Real property assembly costs, including the actual cost of the acquisition by a municipality of real or personal property within a tax incremental district less any proceeds to be received by the municipality from the sale, lease, or other disposition of such property pursuant to a Project Plan; (4) Professional service costs, including those costs incurred for architectural, planning, engineering, and legal advice and services; (5) Imputed administrative costs, including reasonable charges for the time spent by municipal employees in connection with the implementation of a Project Plan; (6) Relocation costs; (7) Organizational costs, including the costs of conducting environmental impact and other studies and the costs of informing the public of the creation of tax incremental districts and the implementation of project plans; and (8) Payments and grants made, at the discretion of the governing body, which are found to be necessary or convenient to the creation of tax incremental districts or the implementation of project plans. Expenditures Exceeding Estimated Cost Any expenditures, which in sum would exceed the total amount of the TID authorized amount of $17,764,919 will require an amendment of this Plan. All amendments would be undertaken pursuant to SDCL §11-9-23. When the expenditures within the Plan are increased more than more than 35 percent of the total above, the Department of Revenue will be required to reset the base, in accordance with SDCL §11-9-23. Tax Increment Finance District #6 Project Plan Page 8 (1) THE KIND, NUMBER, AND LOCATION OF ALL PROPOSED PUBLIC WORKS OR IMPROVEMENTS WITHIN THE DISTRICT ARE ILLUSTRATED ON EXHIBIT C. Earthmoving The property within the district has rolling terrain with locally steep slopes. The majority of this land must be graded to enable the development of the recreational and residential uses of this project. Water and Sewer Systems The sports fields and each residential lot requires connection to water and sewer infrastructure. These will be constructed within the local street system. Upgrades to existing systems within the Colorado Boulevard right of way are possible as recommended by the civil engineer to accommodate the projected demands of development on the parcel. Street Improvements Collector and local streets with curb/gutter, sidewalks, and streetlights will be built to serve the residential and sports field uses. Upgrades to Colorado Boulevard may be required as recommended by the design engineer and may include intersection upgrades, widening, signalization, pedestrian safety enhancements, etc. Sports Fields, Mountain Bike Park/Walking Paths and Storm Water Detention Area The amenities of this project will include soccer and softball fields, restroom, storage building(s), playground equipment, related appurtenances, and parking lots. An unpaved trail system at the north-central portion of the property will be utilized for mountain biking trails, walking paths and storm water detention. (2) ECONOMIC FEASIBILITY STUDY Tax Increment District #6 has been created in accordance with SDCL 11-9-2 to 11-9-11. The certified base valuation of property in TIF #6 is projected to be $92,800. The future valuation is estimated to be $118,819,632 at the end of the 20 years when revenues are no longer collected for TIF debt service purposes. Revenue Estimates from Tax Increments This plan anticipates annual payments for a maximum of 20 years after the district boundary was created, ending in 2040. Property tax revenues are expected to flow into the TIF account as early as 2024. Based on the projected growth which is to occur within the district and the anticipated cost of funds, all project costs identified within this plan will be paid for using property tax revenue generated from the District. Tax Increment Finance District #6 Project Plan Page 9  2020 “Owner Occupied” Tax Levy – Affordable Housing Development Taxing Entity Tax Levy ($ per thousand valuation) Spearfish Area School District 7.856 City 2.707 County 4.000 Total Mill Levy 14.563 The estimated tax increment income available to pay the project costs can be calculated by multiplying the increment valuation by the anticipated tax rate. This calculation results in the following tax increments, which become available as taxes are paid for the applicable periods. The analysis below represents a simple amortization of an unpaid balance at the beginning of the revenue year with interest calculated on that amount for the entire year and paid with the valuation increment at the end of the year. A different accounting method will yield different results however this method is used to provide the analysis necessary for this plan. PROJECTED INCREMENT REVENUE Annual Cumulative year Value of homes Taxable amount Increment Increment 2020 2021 $ 3,075,000.00 2022 $ 8,865,250.00 $ 2,613,750.00 2023 $ 17,920,567.50 $ 7,535,462.50 $ 38,064.04 $ 38,064.04 2024 $ 27,204,439.73 $ 15,232,482.38 $ 109,738.94 $ 147,802.98 2025 $ 36,504,310.78 $ 23,123,773.77 $ 221,830.64 $ 369,633.62 2026 $ 46,080,301.75 $ 31,028,664.16 $ 336,751.52 $ 706,385.14 2027 $ 49,305,922.88 $ 39,168,256.49 $ 451,870.44 $ 1,158,255.58 2028 $ 52,757,337.48 $ 41,910,034.45 $ 570,407.32 $ 1,728,662.90 2029 $ 56,450,351.10 $ 44,843,736.86 $ 610,335.83 $ 2,338,998.73 2030 $ 60,401,875.68 $ 47,982,798.44 $ 653,059.34 $ 2,992,058.07 2031 $ 64,630,006.98 $ 51,341,594.33 $ 698,773.49 $ 3,690,831.56 2032 $ 69,154,107.47 $ 54,935,505.93 $ 747,687.64 $ 4,438,519.20 2033 $ 73,994,894.99 $ 58,780,991.35 $ 800,025.77 $ 5,238,544.97 2034 $ 79,174,537.64 $ 62,895,660.74 $ 856,027.58 $ 6,094,572.55 2035 $ 84,716,755.27 $ 67,298,356.99 $ 915,949.51 $ 7,010,522.06 2036 $ 90,646,928.14 $ 72,009,241.98 $ 980,065.97 $ 7,990,588.03 2037 $ 96,992,213.11 $ 77,049,888.92 $ 1,048,670.59 $ 9,039,258.62 2038 $ 103,781,668.03 $ 82,443,381.14 $ 1,122,077.53 $ 10,161,336.15 2039 $ 111,046,384.79 $ 88,214,417.82 $ 1,200,622.96 $ 11,361,959.11 2040 $ 118,819,631.73 $ 94,389,427.07 $ 1,284,666.57 $ 12,646,625.68 The increment revenue amount can be obtained by the following calculation: Taxable value x owner occupied mill levy = revenue amount Tax Increment Finance District #6 Project Plan Page 10 The values in the previous table are calculated based on these assumptions: • 30 homes built each year starting in 2022 for 5 years per the agreement with DDI • 40% of the homes are taxed $148,750 • 40% of the homes are taxed at $191,250 • 20% of the homes are taxed at $233,750 • An additional 41 homes are built each year from 2022 to 2026 and taxed at $233,750 • Market appreciation is 7% annually, which represents the average market change in Spearfish from 2015 to 2020 as confirmed by an analysis of past sales prices. A major caveat must be understood in viewing these numbers. The development agreement between the City and DDI identifies that 30 residences will be completed per year for five years with the first homes starting construction in 2021-22. Unforeseen economic conditions may affect the overall revenue projection in a positive or negative way. Although the TIF revenue will not recover all of the estimated costs of construction, it is the City’s opinion that there is great value in constructing a sports complex to complement an affordable housing development to help ensure success of that development. DDI has agreed to pay $20,000 for each lot to help ensure that the homes are affordable and will be under the current South Dakota Housing Development Authority’s First Time Home buyer’s price of $275,000. The development will benefit many residents financially. Per data from the Lawrence County Equalization Office, there were 1,196 residential sales from 2015-2020 with the weighted average of homes prices at $240,302.88. This development, with 80% of the homes contracted to be built under $225,000 and the remaining 20% under $275,000, has a weighted average of home prices at $215,000, for a $25,302.88 difference per home. Multiply this by all 150 homes and we see a total of $3,795,432.57 in resident dollars saved. Another 41 homes are also planned for construction. The price of these additional homes is not known yet but will be at or under the affordable price point defined by the South Dakota Housing and Development Authority, currently at $275,000. Even though the TIF district will not recapture the entire cost, between the new perpetual revenue sources created and the estimated savings residents will receive from these homes being available on the market, the City of Spearfish believes the net benefits of this project exceed the net costs. Tax Increment Finance District #6 Project Plan Page 11 (3) LIST OF ESTIMATED PROJECT COSTS The total estimated construction costs are $29,286,919. This includes amounts paid by the City of Spearfish that will not be reimbursed by the TID. The total authorized TID Project Costs are expected to be $17,764,919. This amount is the controlling value with respect to authorized TID Project Costs rather than the particular line item amounts described below. The costs associated within each line item below may change based on final cost of the completion of the improvements. 1. Capital Cost - Infrastructure to Serve Residential Lots and Sports Fields $9,281,901 – TID Project Cost • Water mains • Sewer mains • Earth moving and excavation • Dry utilities • Upgrades to existing water/sewer systems • Storm drainage improvements (storm sewers, detention basins, etc.) • Paved streets with curb/gutter/sidewalk and streetlights 2. Capital Cost – Colorado Boulevard Upgrades $2,000,000 – TID Project Cost • Lane widening and shoulder upgrades • Right/left turn deceleration lanes • Striping, signage, and signalization • Drainage improvements • Pedestrian path/sidewalk 3. Financing Cost – $4,483,018,000 – TID Project Cost Tax Increment Finance District #6 Project Plan Page 12  • Capitalized interest • Debt service interest • Bank charges • Bond admin and legal fees • Interest rate to be charged – 4% 4. Real Property Assembly Cost – Acquisition of Tract V of Elkhorn Ridge Addition $1,000,000 - TID Project Cost • 191 residential lots • Sports fields and recreation area 5. Professional Services Cost – 1,000,000 – TID Project Cost • Design fees (engineer, architect, landscape architect, and other design professionals) • Construction observation/administration, field testing and exploration studies • Legal fees • Professional services other than design fees The following costs are City equity contributions to the project and are not requested for reimbursement by TID revenues: Capital Cost • $8 Million for sports complex to include soccer and softball fields, parking, playground, support structures and buildings. • $2 Million for Colorado Blvd. upgrades. Real Property Assembly Cost • $501,000 acquisition of Tract V. Professional Services Cost • $1 Million for engineering, architectural, landscape architectural, testing, field observation, legal, and other professional services. Imputed Administrative Cost • $20,000 for the internal city administration of the TID. SUMMARY OF PROJECT COSTS The table below represents the Project Costs that will be reimbursed by the district and those that will be carried by the city over the next 5 years. Tax Increment Finance District #6 Project Plan Page 13 Project Description/Cost TID Spending Category Project Cost TIF Eligible TIF Requested City Equity Contribution Sports Field Capital Cost $ 8,000,000.00 $ 8,000,000.00 0 $ 8,000,000.00 Infrastructure Capital Cost $ 9,281,901.00 $ 9,281,901.00 $ 9,281,901.00 Colorado Boulevard Capital Cost $ 4,000,000.00 $ 4,000,000.00 $ 2,000,000.00 $ 2,000,000.00 Real Property Real Property Assembly Cost $ 1,501,000.00 $ 1,501,000.00 $ 1,000,000.00 $ 501,000.00 Financing Interest and Fees Financing Cost $ 4,483,018.00 $ 4,483,018.00 $ 4,483,018.00 Engineering & Design Professional Service Cost $ 2,000,000.00 $ 2,000,000.00 $ 1,000,000.00 $ 1,000,000.00 Administration of TIF Imputed Administrative Cost $ 20,000.00 $ 20,000.00 0 $ 20,000.00 $ 29,285,919.00 $ 29,285,919.00 $ 17,764,919.00 $ 11,521,000.00 The table on the following page illustrates an example of how interest amortization would occur for the project. Tax Increment Finance District #6 Project Plan Page 14  Example of Interest Amortization SPEARFISH TIF AMORTIZATION SCHEDULE TIF Semi-Annual Amortization Schedule 7/15/2020 Rate Payment 4.000% $357,075.83 Original Amortization Schedule Payment Principal Payment Date Balance Days Interest Payment Paid Number (1) (2) (3) (4) (5) (6) (7) 1/1/2020 $9,800,000 6/1/2020 9,606,257.50 150 163,333.33 357,075.83 193,742.50 1 12/1/2020 9,441,306.82 180 192,125.15 357,075.83 164,950.68 2 6/1/2021 9,273,057.13 180 188,826.14 357,075.83 168,249.70 3 12/1/2021 9,101,442.44 180 185,461.14 357,075.83 171,614.69 4 6/1/2022 8,926,395.45 180 182,028.85 357,075.83 175,046.98 5 12/1/2022 8,747,847.53 180 178,527.91 357,075.83 178,547.92 6 6/1/2023 8,565,728.65 180 174,956.95 357,075.83 182,118.88 7 12/1/2023 8,379,967.39 180 171,314.57 357,075.83 185,761.26 8 6/1/2024 8,190,490.91 180 167,599.35 357,075.83 189,476.48 9 12/1/2024 7,997,224.89 180 163,809.82 357,075.83 193,266.01 10 6/1/2025 7,800,093.56 180 159,944.50 357,075.83 197,131.33 11 12/1/2025 7,599,019.60 180 156,001.87 357,075.83 201,073.96 12 6/1/2026 7,393,924.16 180 151,980.39 357,075.83 205,095.44 13 12/1/2026 7,184,726.81 180 147,878.48 357,075.83 209,197.35 14 6/1/2027 6,971,345.52 180 143,694.54 357,075.83 213,381.30 15 12/1/2027 6,753,696.60 180 139,426.91 357,075.83 217,648.92 16 6/1/2028 6,531,694.70 180 135,073.93 357,075.83 222,001.90 17 12/1/2028 6,305,252.76 180 130,633.89 357,075.83 226,441.94 18 6/1/2029 6,074,281.98 180 126,105.06 357,075.83 230,970.78 19 12/1/2029 5,838,691.79 180 121,485.64 357,075.83 235,590.19 20 6/1/2030 5,598,389.79 180 116,773.84 357,075.83 240,302.00 21 12/1/2030 5,353,281.76 180 111,967.80 357,075.83 245,108.04 22 6/1/2031 5,103,271.56 180 107,065.64 357,075.83 250,010.20 23 12/1/2031 4,848,261.16 180 102,065.43 357,075.83 255,010.40 24 6/1/2032 4,588,150.55 180 96,965.22 357,075.83 260,110.61 25 12/1/2032 4,322,837.73 180 91,763.01 357,075.83 265,312.82 26 6/1/2033 4,052,218.66 180 86,456.75 357,075.83 270,619.08 27 12/1/2033 3,776,187.20 180 81,044.37 357,075.83 276,031.46 28 6/1/2034 3,494,635.11 180 75,523.74 357,075.83 281,552.09 29 12/1/2034 3,207,451.98 180 69,892.70 357,075.83 287,183.13 30 6/1/2035 2,914,525.19 180 64,149.04 357,075.83 292,926.79 31 12/1/2035 2,615,739.86 180 58,290.50 357,075.83 298,785.33 32 6/1/2036 2,310,978.83 180 52,314.80 357,075.83 304,761.03 33 12/1/2036 2,000,122.57 180 46,219.58 357,075.83 310,856.26 34 6/1/2037 1,683,049.19 180 40,002.45 357,075.83 317,073.38 35 12/1/2037 1,359,634.34 180 33,660.98 357,075.83 323,414.85 36 6/1/2038 1,029,751.20 180 27,192.69 357,075.83 329,883.14 37 12/1/2038 693,270.39 180 20,595.02 357,075.83 336,480.81 38 6/1/2039 350,059.97 180 13,865.41 357,075.83 343,210.42 39 12/1/2039 (14.66) 180 7,001.20 357,075.83 350,074.63 40 $9,800,000 4,483,018.60 Tax Increment Finance District #6 Project Plan Page 15 LIST OF ESTIMATED NON-PROJECT COSTS The following is a list of the non-Project Costs per SDCL § 11-9-16(5). Statute does not define this term however it is the considered to be the other amounts of actual costs incurred in the project. The following represents an average of all home prices. (4) FISCAL IMPACT STATEMENT The impact on taxing entities can be derived from determining the tax increment anticipated during the life of the district. The true impact on taxing entities of the Plan is based on the increase in valuation of the property within the District. The revenues generated from the base valuation continue to flow to the taxing entities while the District is actively paying off debt. As the debt from the project costs described in the Plan is retired, the entire amount of tax dollars flows to the following entities. The current estimated base valuation of $92,800 has an approximate taxable value of $78,880 and will generate the following annual revenue for the following while the TIF District is active: 2020 “Owner Occupied” Tax Levy – Affordable Housing Development Tax Levy Taxing Entity ($ per thousand valuation) Annual Tax Revenue Spearfish School District 40-2 7.856 $620 City 2.707 $214 County 4.000 $316 The site will generate taxes to the local jurisdictions at or above the assessed value of the base. All taxing districts shall receive the taxes from that base which will be the value set for the 2020 assessment year for taxes payable in 2021. The tax increment will be available to the taxing jurisdictions after dissolution, which is at or before twenty years after the creation of the District. After the repayment of all bonds and monetary obligations, taxing entities will receive their proportionate share of tax dollars for the base value and the tax incremental values. SCHOOL DISTRICT GENERAL FUND Mechanisms are built within State Codified Law to ensure that school districts do not have to raise funds to make up for the missing revenue while the TIF pays off debt. This is commonly is referred to as the District being “held harmless" for their General Fund. For these purposes, law (SDCL 13- 13-10.2) defines three classifications of TIFs: • Economic Development - Any area where there is or will be one or more businesses engaged in any activity defined as commercial or industrial by the governing body that has zoning authority over the land contained within the tax incremental district Tax Increment Finance District #6 Project Plan Page 16  • Industrial – Any factory or any business engaged primarily in the manufacturing or assembly of goods, the processing of raw materials, and the wholesale distribution of products for resale • Affordable Housing – Includes an area where: 1. The original selling price of any house in the district will be at or below the first-time homebuyer purchase price limit being used by the South Dakota Housing Development Authority as of the date the house is sold; OR 2. The monthly rental rate of all multifamily housing units in the district will be at or below the calculated rent for the state's eighty percent area median income as of the date the district is created, for a minimum of five years following the date of first occupancy. • Local – Any tax incremental districts that do not fall under Economic Development or Industrial Public school districts are generally funded through the State Aid to Education formula. The two primary channels of the formula are State Aid and Local Effort. Multiple agencies of the State of South Dakota calculate the amount of General Fund monies to be distributed to school districts each year through the State portion. Local effort is considered the amount of revenue that is generated by local property taxes at maximum levies. If a TIF is classified as Economic Development, Industrial, or Affordable Housing, the school funding that would be generated by the increment valuation is considered lost local effort and is paid through the State Aid side of the formula. If a TIF is classified as Local, the affected school district funding must be recouped through local effort in the form of an additional levy added to the General and Special Education Funds. In either scenario, the school district receives the financial need associated with the increment valuation. City of Spearfish TIF 6 will be classified as Affordable Housing; therefore, any lost local effort of the General Fund will be covered through the State Aid to Education Formula. CAPITAL OUTLAY FUND The impact of a TIF to the Capital Outlay Fund is minimal. Starting on July 1, 2020, a school district is limited to the amount of capital outlay dollars they can receive by either: A. the previous year’s maximum allowable can be increased by a growth factor plus 3% or B. a per student amount. The primary impact would be to the first scenario; a TIF would delay annual growth until the TIF is completed. However, once the TIF is dissolved, all increment value would be considered new growth for the school district. If a school district falls under a per student limitation, they will see no impact to their funding due to the TIF. SPECIAL EDUCATION FUND The Special Ed Fund has the potential to see the greatest negative impact from the creation of a TIF district. Tax Increment Finance District #6 Project Plan Page 17 If the school district requests their special education monies in the form of a levy, then the exclusion of the TIF increment in the tax base would mean the school district is not receiving as much as it could. The approximate mill levy is currently $1.684 per $1,000 of valuation. If the school district submits their request in a dollar amount, then the fund would see no impact from a TIF district. BOND REDEMPTION FUND The school district is always able to ask for the needed money for the principal and interest of their bond repayment. The only impact a TIF would have on this fund is by holding back the increment value, lowering tax base for the spreading of the tax burden, and creating a slightly higher levy for the local taxpayers. LAWRENCE COUNTY GENERAL FUND The County’s portion of property taxes from within city limits provides funding for a variety of county functions. County highway maintenance and law enforcement/public safety are two of the largest county budgets that receive funding via city property tax dollars. Both Colorado Boulevard and the internal street systems are/will be owned and maintained by the City and therefore no financial impact will result to the County highway department. Likewise, law enforcement is provided by the City and will minimally impact County law enforcement budgets. The County provides funding for the Grace Balloch Library, however those dollars are provided on behalf of County residents not within city limits. (5) FINANCING METHOD The City will provide the upfront funding for all projects outlined in this plan through property tax, sales tax, enterprise funds, available grants, community donations, and lending if advantageous or necessary. The City Finance Officer will establish specially designated TIF District #6 accounts and procedures to manage both the incoming revenue and disbursements from the fund in accordance with this Plan. According to SDCL 11-9-25, positive tax increments will be allocated to that fund until the debt from the project costs is retired or twenty years following the date the District boundary was created, whichever comes first. It is expected the debt will be repaid for the entire 20 years. Constitutional Debt Limit It is specifically a condition of the Tax Increment District that the City's obligation to pay is limited to the proceeds of the positive tax increment from the TID receipted into the TIF Fund. The obligation of the City to pay pursuant to the proposed District does not constitute a general indebtedness of the City or a charge against the City's general taxing power. The provisions of SDCL 11-9-36 are specifically incorporated within the District by reference. It is also is to be specifically agreed that the City has made no representation that the proceeds from such Fund shall be sufficient to retire any indebtedness. The City further acknowledges that SDCL 11-9-25 limits the duration of allocation of the positive tax increment payments and the fund created by the TID. Tax Increment Finance District #6 Project Plan Page 18 Additionally, the City’s obligations to make the payments set forth in the proposed District shall be lawfully made from funds to be budgeted and appropriated on an ANNUAL BASIS for that purpose during the City's then current fiscal year, thus not counting towards Constitutional Debt. If at any time during the term of this Agreement, the governing body of the City shall fail or refuse to approve or authorize the funds due hereunder, then the District shall terminate upon the end of the fiscal year for which funds were approved or authorized, without penalty to the City. The City's obligation hereunder shall not in any way be construed to be a debt of the City in contravention of any applicable constitutional or statutory limitation or requirement concerning the creation of indebtedness by the City, nor shall anything contained herein constitute a pledge of the general credit, tax revenues, funds or moneys of the City. It is further understood that the amount of $17,764,919 will be the maximum amount the City will ever pass on for TIF #6. This amount will include all interest associated with the debt and the controlling value of the TIF will never pay more than $17,764,919 The payment of tax increment funds under this District is a grant under Chapter 11-9 of the South Dakota Codified Laws (the “Grant”). The Grant is a personal property right vested with the City on the effective date of this District. The City will grant this amount to the City and thus not have to account for any assets on the City’s financial statement. (6) PROPOSED METHOD FOR THE RELOCATION OF PERSONS TO BE DISPLACED There are no residences or businesses currently existing on the property therefore, no relocation methods must be identified CONCLUSION TIF District #6 has been created for the purposes of economic development in order to support the ongoing growth and development of the community. Its purposes will be to fill a need for affordable housing, and public infrastructure connectivity. Tax Increment Finance District #6 Project Plan Page 19  EXHIBIT A – RESOLUTION CREATING TIFD #6 Prepared By: City of Spearfish 625 Fifth Street Spearfish, SD 57783 605-717-1122 RESOLUTION NO. 2020-18 A RESOLUTION ESTABLISHING THE BOUNDARIES OF TAX INCREMENT FINANCE DISTRICT NUMBER SIX, CITY OF SPEARFISH, FOR THE LAND AREA MORE SPECIFICALLY DESCRIBED HEREIN. WHEREAS, per SDCL 11-9-8 the City of Spearfish has found that (1) not less than fifty percent, by area, of the real property within the district will stimulate and develop the general economic welfare and prosperity of the state through the promotion and advancement of industrial, commercial, manufacturing, agricultural, or natural resources development. Per SDCL 13-13-10.8 through SDCL 13- 13-10.10 inclusive, the use of tax increment financing for affordable housing purposes is authorized and in equal standing with industrial and economic development in the calculation of school funding, and (2) the improvement of the area is likely to significantly enhance the value of substantially all other real property in the district because the existing use of the land is open space but will be developed as a residential community with recreation amenities. WHEREAS, The City of Spearfish desires to create a Tax Increment Finance District for the purposes of stimulating the general economic welfare to the state and to the citizens of Spearfish, and to significantly enhance the value of substantially all other real property in the district. WHEREAS, on the 17th day of August, 2020, a tax increment district was formed and shall be known as Tax Increment District Number Six, City of Spearfish. NOW, THEREFORE BE IT RESOLVED by the Common Council of the City of Spearfish, Lawrence County, South Dakota, that the following described territory be and the same is hereby included Increment District Number Six and the boundaries of the same are as set forth in Exhibit A and Exhibit B attached hereto. Dated this 17th day of August, 2020 CITY OF SPEARFISH By:__________________________ Dana Boke, Mayor ATTEST: ________________________________ Michelle DeNeui, Finance Officer (SEAL) Adopted: August 17, 2020 Tax Increment Finance District #6 Project Plan Page 20 Published: August 18, 2020 Effective: August 28, 2020 EXHIBIT A CITY OF SPEARFISH RESOLUTION 2020-18 Tax Increment Finance District #6 Boundary Legal Descriptions 1. Tract V-1 of Sky Ridge Subdivision a Part of Tract V of Elkhorn Ridge Addition to the City of Spearfish, located in the NW1/4 of Section 22, T6N, R3E, BHM, Lawrence County, South Dakota as shown on the recorded plat in the office of the Lawrence County Register of Deeds. 2. The South 17 feet of the North 50 feet of the NW1/4NE1/4, Section 21, T6N, R3E, B.H.M., Elkhorn Ridge Addition, City of Spearfish, Lawrence County, South Dakota 3. The South 17 feet of the North 50 feet of the NW1/4 except Lot H2, Section 21, T6N, R3E, B.H.M., Elkhorn Ridge Addition, City of Spearfish, Lawrence County, South Dakota 4. The public right of way and section line easements immediately adjacent to the above legal descriptions, except Lot H2, Section 21, T6N, R3E, B.H.M., Lawrence County, South Dakota See attached map Tax Increment Finance District #6 Project Plan Page 21 Tax Increment Finance District #6 Project Plan Page 22  EXHIBIT B – TAX INCREMENT FINANCE DISTRICT BOUNDARY AND EXISTING ZONING MAP TAX INCREMENT FINANCING DISTRICT 6 BOUNDARY Rainbow Road Colorado Boulevard Zoning Legend County AG-1 = Red Crosshatch City AG = Green Development Review District = Gray Black Line = City Limits Black Dashed Line – TIF #6 Boundary (see Resolution 2020-18 for full description) Tax Increment Finance District #6 Project Plan Page 23 EXHIBIT C– KIND, NUMBER, AND LOCATION OF IMPROVEMENTS Sports fields parcel - Softball fields - Soccer fields - Parking - Support facilities and structures Residential parcel - Paved streets with curb/gutter, sidewalk, & street lights - Underground water, sewer, storm drains - Dry utilities, i.e cable, gas, internet Park -unpaved paths/trails -mountain bike riding areas -stormwater detention Tax Increment Finance District #6 Project Plan Page 24  EXHIBIT D – PUBLIC IMPROVEMENTS OF COLORADO BOULEVARD, WATER AND SEWER MAINS Location of Improvements Map See “Exhibit C” for project locations within Tract V-1 Colorado Boulevard Water Main Colorado Boulevard Sewer Main TIF Boundary (see Resolution 2020-18 for exact boundary. Colorado Boulevard boundary is exaggerated to show locations of water and sewer mains) Intersections where widening/deceleration lanes are possible Tax Increment Finance District #6 Project Plan Page 25  EXHIBIT E – AERIAL MAP – EXISTING LAND USE Aerial Map of Property in TIF 6 Boundary All Locations include the Colorado Boulevard Public Right of Way Colorado Boulevard Property within the TIF 6 District Tract V-1 is undeveloped open space as of the adoption date of this plan. Property within the 17-foot-wide strip along Colorado Boulevard is undeveloped open space and the location of city owned and operated water and sewer mains. Boundary of TIF 6 District Tax Increment Finance District #6 Project Plan Page 26 EXHIBIT F – PRELIMINARY CLASSIFICATION OF TAX INCREMENT DISTRICT 6 Tax Increment Finance District #6 Project Plan Page 27 EXHIBIT G – ENGINEER’S COST ESTIMATE FOR INFRASTRUCTURE AND SPORTS COMPLEX Tax Increment Finance District #6 Project Plan Page 28  EXHIBIT H – ADDITIONAL CONTENTS OF PROJECT PLAN According to SDCL 11-9-16, the following are expressly included in this plan as additional contents: (1) A map showing the existing uses and conditions of real property in the district has been provided in the exhibits of this plan. (2) A map showing the proposed improvements and uses has been provided in the exhibits of this plan. (3) A map showing the proposed changes of zoning ordinances is not required since the zoning approvals all exist that will enable the implementation of this plan. A current zoning map has been provided in the exhibits of this plan. (4) A statement listing changes needed in the master plan, map, building codes, and municipal ordinances is not required since the plan is consistent with the community master plan/comprehensive plan, and future development will follow the current building code and municipal ordinances. (5) A list of estimated nonproject costs has been described in this plan. (6) A statement of a proposed method for the relocation of persons to be displaced has been described in this plan. Tax Increment Finance District #6 Project Plan Page 29  Spearfish Planning Commission Staff Report Meeting Location: City Council Chamber, 625 Fifth Street, Spearfish SD 57783 Meeting time August 18, 2020 at 3pm and date: Applicant: City of Spearfish Initiate a change to Appendix A Zoning Article II. Definitions and Article V. Request: Supplementary Regulations, Section 3. Minimum off-street parking requirements, adding a parking rate for studio apartments. Action: Set a public hearing for 9/8/2020 Location: Citywide Proposal This action would create a definition for studio/efficiency apartments and Summary: assign a parking space requirement for such structures. BACKGROUND AND HISTORY: • There is increasing interest in increasing the inventory of small, affordable rental units within the City • Many lot sizes within several subdivisions and in the commercial downtown core zoned to accommodate this trend are small and have difficulty meeting off-street parking requirements, thereby hindering redevelopment plans. • Currently, all apartments regardless of bedroom or square footage have a 2.25 off-street parking requirement – senior homes have a 1.5 space requirement, one-family and two-family homes have a 2 space requirement; and hotels, motels, rooming houses have a 1 space requirement • This change will define what a small, studio apartment is and set its off-street parking requirement to 1 space. REVIEW CRITERIA AND STAFF ANALYSIS: This ordinance revision is guided by the City of Spearfish Revised Code of Ordinances, Appendix A- Zoning, Article VI. Administration and Enforcement, Section 5 Amendments. Staff’s analysis follows each statement in italic text. A. Standards for amendments. A proposed amendment shall be considered on its own merits using the following criteria as a guide. 1. Text or map amendments. Proposed amendments shall: a) Be necessary because of substantially changed or changing conditions of the area and district Page 1 Spearfish Planning Commission Staff Report Meeting Date: 8/18/2020  affected, or in the ordinance generally. There is an increased interest in providing small unit apartments within the city. Some of the fastest growing areas in town are, and remain, subject to the off-street parking requirements but lot sizes in these areas can hinder these developments. This change would allow for the construction of smaller studio apartments by allowing an off-street parking requirement reflective of the fact that most studios are occupied by one person b) Be consistent with the intent and purposes of the ordinance. The parking ordinance exists to prevent excessive vehicles parked on city streets. This change still requires off-street parking for studio/efficiency apartments but allows that number to be more tailored to this type of dwelling. c) Not directly or indirectly adversely affect any other part of the ordinance. This change does not waive any parking requirements; it creates a new category of dwelling with a new parking requirement. This change could build on the recent C-1 Redevelopment Incentive Plan by lowering studio/efficiency apartment parking requirements and allowing developers to designate less space for parking and build more units on a single lot. Be consistent with and not in conflict with the Spearfish comprehensive plan. Strategy for the Contiguous City # 3 Encourage the adaptive re-use of existing structures and under- utilized lands to raise the visual quality and vitality in the community, reduce sprawl, and make efficient use of existing community infrastructure– this change allows developers of studio apartments to devote less land to parking spaces, increasing efficiency, and allows for more homes to be built within exiting city boundaries, reducing sprawl. Strategy for the Contiguous City #7 Support the redevelopment of property to more intense land uses when compatibility to the surrounding area is achieved by creative design solutions that mitigate potential impact – allowing studio/efficiency apartments allows for more diverse and efficient use of existing assets, allowing for a more overall intense land use, while this change ensures that the parking impacts of these new dwellings is mitigated and, thus, compatible with the surrounding area. SUMMARY OF PROPOSED CHANGES: Current Text Proposed Text The following words, terms and phrases are The following words, terms and phrases are defined and shall be interpreted as such throughout defined and shall be interpreted as such throughout this ordinance. Terms not defined shall have the this ordinance. Terms not defined shall have the meaning customarily assigned to them. meaning customarily assigned to them. […] […] Structure means a combination of materials to form Structure means a combination of materials to form a construction that is safe and stable. a construction that is safe and stable. Temporary shelter means a facility that provides Studio/Efficiency Apartment means a dwelling unit in housing and support services to persons with no which the normal functions of several rooms – ordinary or regular residence as a result of domestic excluding the bathroom - are combined into one violence, unemployment, or other social or room and does not exceed a total of 900 square economic hardship. This definition excludes feet per dwelling unit. treatment centers. Temporary shelter means a facility that provides housing and support services to persons with no ordinary or regular residence as a result of domestic Page 2 Spearfish Planning Commission Staff Report Meeting Date: 8/18/2020  violence, unemployment, or other social or economic hardship. This definition excludes treatment centers. Article V. Supplementary Regulations, Section 3. Article V. Supplementary Regulations, Section 3. Minimum off-street parking requirements: Minimum off-street parking requirements: 3. Minimum amounts of off-street parking facilities 3. Minimum amounts of off-street parking facilities required. The following minimum amounts of off- required. The following minimum amounts of off- street parking facilities shall be provided. The street parking facilities shall be provided. The classification of uses shall be deemed to include classification of uses shall be deemed to include and apply to all uses and if the classification is not and apply to all uses and if the classification is not readily determinable it shall be fixed by the zoning readily determinable it shall be fixed by the zoning administrator. administrator. […] […] b. Dwellings, multi-family. 2.25 spaces per b. Dwellings, multi-family. 2.25 spaces per dwelling dwelling unit except for senior citizens housing unit except for senior citizens housing which will which shall provide 1.5 spaces per unit. shall provide 1.5 spaces per unit and for studio/efficiency apartments which will provide 1 space per unit. STAFF RECOMMENDATION: Set a public hearing for September 8, 2020. PUBLIC COMMENTS: Notice of a public hearing will be published on August 29, 2020. STAFF CONTACTS: Jayna Watson, City Planner, 605-717-1122; jayna.watson@cityofspearfish.com Daniel Van Holland, Assistant City Planner, 605-717-1126; daniel.vanholland@cityofspearfish.com Page 3 Spearfish Planning Commission Staff Report Meeting Date: 8/18/2020  PLANNING COMMISSION UPDATE MEMORANDUM Date: 8/18/2020 TO: Planning Commission FROM: Jayna Watson, City Planner Daniel Van Holland, Assistant City Planner RE: Garage Apartments Discussion #2 Last meeting, Planning Commission and staff discussed the possibility of updating the code to allow for garage apartment/accessory dwelling units (ADUs). Staff has researched the Rapid City provisions for this same topic. Rapid City’s rules address many of the concerns Commissioners expressed at the last meeting. Staff is seeking to address previous concerns and continue the discussion on whether the City of Spearfish should implement a similar code provision. Please find attached, a copy of the Rapid City ordinance and staff’s current findings on the topic. ATTACHMENTS: Staff Update and Copy of Rapid City Ordinance  Update and Discussion: Setbacks: The central question here is whether the existing accessory structure setbacks can remain once the structure has been converted to a primary use. Setbacks are utilized for: • Creating a uniform building line in a neighborhood • Protecting public rights-of-ways and utility easements • Creating a buffer between properties Per Rapid City’s Ordinance (G.1) ADUs are not allowed in a front yard. This retains the uniform building line and provides a buffer between the adjacent right-of-way. Currently, accessory structures must meet 5 foot side and rear setback. Every property in the City has a 5 foot utility easement on along all property lines – the accessory setback requirement still protects this easement, though offers no additional buffer. The City’s R-3, R-2, and commercial districts already allow for minimal buffering between property lines. However, R-1, AG, and RLS do not. Particularly with R-1, a minimal buffer poses a problem – high density neighborhoods are not in-line with that districts aesthetic goals. Headings G.2 – G.4 of Rapid City’s ordinance limit the size of each ADU. These regulations prevent minimal buffering and higher density from becoming aesthetically incompatible with the neighborhoods. Per Spearfish zoning code, a second dwelling currently requires a CUP with the R-1, AG, and RLS zoning districts. If Spearfish were to follow the Rapid City model, two of the three goals of setbacks are still met. The third, “creating a buffer between properties” may not be, as the buffer is lowered from 16 feet to 10 feet (8 feet on both sides of the lot line to 5 feet). The restrictions on the size of an ADU may remedy that, however. Size Considerations: Size of proposed ADUs was brought up last meeting. Concerns were raised over ADUs meeting or superseding the primary structures in size and with future expansions of ADUs. Rapid City’s ordinance lays out regulations that solve both problems: • Heading G.3 and G.4 specifically state that the ADU must be smaller than the primary unit and that small lots may not have detached ADUs • Heading G.2 states that the ADU may not push the parcel over the max lot coverage and that the ADU itself may not exceed 10% of total lot coverage. • Heading N states that ADUs exceeding 500 square feet shall have a “residential look” These regulations ensure that the ADU will remain accessory to the primary structure, even if expanded, and that large ADUs blend in with the surrounding neighborhood. Staff does believe that G.3 and N are a bit vague; a Spearfish ordinance would need to specify size comparisons Possible Regulation – An ADU may not exceed 10% lot coverage or 50% the size of the primary structure footprint, whichever is smaller. Further, all structures, including the ADU, must remain under the designated max lot coverage Applicants “Gaming the System”: Garage Apartment Discussion Report A concern that someone may build a garage with the intention of converting it into an ADU to get around setback requirements was brought up at the last meeting. A conditional use permit could prevent this act in R-1, AG, and RLS districts. However, in R-2, R-3, and commercial lots this action may still be possible. Staff seeks further input from the Planning Commission as to whether this is would pose a substantial issue within R-2, R-3, and commercial lots as it would with R-1. Miscellaneous Issues: There was also concern that transient renters may become more common if ADUs are allowed. Currently, the City of Spearfish does not regulate vacation rentals and, thus, this concern already exists. The City has not sought to regulate this industry before. Rapid City does stipulate, in Heading M. that ADUs are not for short-term rentals or for sale. Staff seeks input for how the City of Spearfish should regulate the length or terms, if at all. Garage Apartment Discussion Report 17.50.219 Accessory dwelling units. A. Purpose and intent. The purpose and intent of this section is to protect the residential character of Rapid City and to provide for supplementary living accommodations in the community. These provisions are intended to support affordable and workforce housing options with reasonable limitations to minimize the impact on neighboring properties and neighborhoods, and to promote the health, safety, and welfare of the property owners and residents of accessory dwelling units. B. Definition of accessory dwelling unit. A subordinate permanent dwelling which has its own cooking, sleeping, and sanitation facilities and which is: 1. Within or attached to a single-family residential building; or 2. Within a detached accessory structure associated with a single-family dwelling that is smaller than the primary structure, on a permanent foundation, and is not a recreational vehicle. C. Owner occupied. No accessory dwelling unit shall be created, established, or occupied in a single-family dwelling unless the owner of the property occupies either a portion of the main dwelling or a detached accessory unit on the same single-family lot. For the purpose of this section, the term "owner occupied" shall be defined as full time residency within the home by the bona fide property owner(s) as shown on the Pennington County tax assessment rolls. D. Zoning districts. An accessory dwelling unit which meets ordinance requirements may be allowed in a single-family dwelling unit or in a detached accessory unit within the Low Density Residential-1, Medium Density Residential, High Density Residential, Low Density Residential-2, or General Agricultural Districts. An accessory dwelling unit which meets ordinance requirements may be allowed only as part of a single-family dwelling unit within the Park Forest District. E. Number of accessory dwelling units. A maximum of 1 accessory dwelling unit shall be allowed in each owner occupied single-family dwelling or in a detached accessory unit associated with a single-family dwelling. F. Location. Except as provided in subsections D. and G.4., accessory dwelling units may be located within the main residential dwelling or in a detached accessory unit. G. Area regulations. Each accessory dwelling unit shall comply with the area regulations for the zoning district in which it is located. In addition, accessory dwelling units shall comply with the following requirements. Any deviation from these regulations will require a variance from the Zoning Board of Adjustment. 1. Detached accessory dwelling units may not be located in the front yard. 2. Lot coverage shall not exceed the maximum lot coverage allowed in the underlying zoning district. A detached accessory dwelling unit shall not cover more than 10% of the lot area. 3. A detached accessory dwelling unit shall be smaller than the footprint of the primary dwelling unit. The footprint of the primary dwelling unit does not include any attached garage. 4. Accessory dwelling units on lots with a lot area of less than 6,500 square feet shall be located within the main structure only and shall not be located in a detached accessory unit. H. Dwelling unit occupancy. The occupants of an accessory dwelling unit shall be limited to a family as defined in § 17.04.250. I. Addresses. The principal dwelling unit and the accessory dwelling unit shall have different address numbers. J. Parking. A single-family dwelling with an accessory dwelling unit shall provide at least 2 off-street parking spaces for the main dwelling unit, and 1 off-street parking spaces for the accessory unit, for a minimum total of 3 off-street parking spaces. All parking shall comply with city ordinances and regulations, including the Infrastructure Design Criteria Manual. K. Living areas. An accessory dwelling unit must provide living areas for cooking, sleeping and sanitation facilities separate from the principal dwelling unit. L. City codes. All new construction and remodeling shall comply with all city ordinances, regulations, and requirements, including Title 15 Buildings and Construction and Chapter 8.24 International Fire Code, in effect at the time of construction or remodeling. If applicable, construction and/or remodeling shall comply with the procedures for historic preservation found in § 17.54.080. M. Not intended for sale or for short term rentals. The accessory dwelling unit shall not be sold or detached by deed and shall only be rented for a term of more than 28 days. N. Design standards for large units. Detached accessory dwelling units that exceed 500 square feet shall have a residential appearance. O. Existing accessory dwelling units. Accessory dwelling units constructed prior to December 2, 2019 may register under subsection P. even if they do not meet subsections G. ,I., and N. Any nonconformities with city regulations will be acknowledged and may not be made worse as a result of a renovation or expansion. Any renovation or expansion must comply with applicable area regulations, ordinances, codes, and design standards that are attributable to that renovation or expansion.  P. Accessory dwelling unit registration. Any person owning an existing accessory dwelling unit that has not previously been registered with the city, or any person constructing or causing the construction of a residence that has an accessory dwelling unit, or any person remodeling or causing the remodeling of a residence for an accessory dwelling unit, shall register the accessory dwelling unit with the Department of Community Development. In order to meet the requirements of the registration, the applicant shall: 1. Submit a fee set by resolution of the Common Council with a completed registration form including a site plan that shows property lines and dimensions, existing buildings and building entrances, proposed buildings or additions, dimensions from buildings or additions to property lines, parking stalls, garbage collection points, utility meters, and utilities (public and private), including water and wastewater services from mains to the building(s) being served; 2. Include floor plans with labels on rooms indicating uses or proposed uses and points of access; 3. Pay building permit fees, if applicable, for the construction of a new dwelling, or the remodeling of an existing dwelling, in accordance with the established fees and charges set by resolution of the Common Council; 4. For existing accessory dwelling units, demonstrate compliance with subsection O. For accessory dwelling units constructed after the adoption of this section, demonstrate compliance with all applicable city ordinances for accessory dwelling units; and 5. Provide additional information as requested by the Director of Community Development. Q. Denial of registration. City staff shall review registration forms for accessory dwelling units and accompanying information. Accessory dwelling units that are found to meet the standards of this section shall be registered with the Department of Community Development. Staff may refuse to register an accessory dwelling unit which does not meet any one of the requirements found in this section or elsewhere in the code by providing written notice of the denial to the property owner and the basis for the denial. R. Suspension or revocation of registration. The Director may suspend or revoke any accessory dwelling unit registration based on failure to adhere to applicable regulations or laws. The Director's decision to suspend or revoke may be appealed to the Common Council. A written notice of appeal shall be filed with the Director within 7 working days of the action taken. The Director shall timely notify the registration holder of the date and time of the Council hearing at which the appeal will be heard. S. Failure to complete registration. If the property owner does not complete the registration asoutlined in subsection P., the accessory dwelling unit shall not be considered approved permitted use. Failure to complete the registration of an existing accessory dwelling unit within 2 years of the passing of this section is a violation of the general penalty provision found in § 1.12.010. T. Home occupations. A home occupation business in an accessory dwelling unit shall be in compliance with §17.50.350 and shall be restricted to a use which creates no customer traffic. (Ord. 6363 (part), 2019)