HomeMy WebLinkAboutEDA MIN 07-26-05
ECONOMIC DEVELOPMENT AUTHORITY (EDA)
REGULAR MEETING MINUTES
JULY 26, 200S
CALL TO ORDER/ROLL CALL
Vice President, Jindra called the meeting to order at 7:04 p.m.
Present: Patricia Jindra, Bobby Williams and Bruce Nawrocki, Tammera Ericson Diehm,
Gary L. Peterson and Bruce Kelzenberg
Absent: Don Murzyn Jr.
PLEDGE OF ALLEGIANCE
CONSENT AGENDA
Approval of Minutes
Financial Report and Pavment of Bills
Motion by Ericson Diehm, second by Kelzenberg, to adopt the consent agenda items as listed.
All ayes. Motion Carried. '"
PUBLIC HEARING
Resolution 2005-11. Authorizinl! the Sale of Proper tv to Huset Park Development
Corporation
Schumacher stated the Columbia Heights EDA is the owner of the Steel Tech property in the
Industrial Park through eminent domain. The City needs to hold this public hearing to meet the
requirements of the agreement to transfer the property to the developer.
Nawrocki asked how much money is in escrow and does the developer get reimbursed.
Schumacher stated there was approximately $477,000for the appraisal of the property and
equipment in the building, which the developer will reimburse to the City. City Attorney, Steve
Bubul, stated the reimbursement to the developer is a part of the TIF agreement in an amount
not to exceed 17.9 million, which could be subject to adjustment in the end depending on how the
final costs come out.
Motion by Williams, second by Kelzenberg, to open the Public Hearing. All ayes. Motion
Carried.
There were no public comments.
Motion by Williams, second by Ericson Diehm, to close the Public Hearing. All ayes. Motion
Carried.
Motion by Williams, second by Ericson Diehm, to Adopt Resolution 2005-11, Authorizing the
Sale of Property to the Huset Park Development Corporation; and furthermore, to authorize the
President and Executive Director to enter into an agreement for the same.
Upon vote: Jindra- aye, Kelzenberg- aye, Nawrocki- nay, Williams-aye, Ericson Diehm-aye,
Peterson- aye. Motion Carried.
ITEMS FOR CONSIDERATION
Approval and Modifications to the Schafer Richardson Contract for Private Development
Schumacher stated under Section 8.2 of the Development Agreement, Schafer Richardson is
allowed to transfer portions of the redevelopment property to qualified sub-developers upon
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July 26, 2005
Page 2 of6
approval of the EDA board and may assign certain rights and obligations to the sub-developers
in connection with such a transfer. At this time, Schafer Richardson is proposing a transfer of a
portion of the redevelopment property to Ryland Homes Inc. and proposes to assign some of it's
rights and obligations. The City's legal counsel, Steve Bubul has reviewed the documents and is
here to answer any questions the board may have.
Steve Bubul stated the refinancing note works by: 1) EDA issuing TIF notes to the developer,
which will be paid back to the City over the period of time after the development is finished; 2)
Tax Increment Revenue Bonds will be issued through the bank, payable only with the tax
increment coming in; and 3) the interest on taxes will be lower for the financing.
Bubul stated Ryland will put money forth, the developer can take the TIF note from the city to the
bank stating that the City will reimburse them in future years through the Tax Increment Note.
There is a provision in the contract states the 17.9 amount will be looked at.pnd if that amount is
higher than expected, the dollar amount for the note will be adjusted to fit. This would be all of
the development costs, but excluding the building. Nawrocki asked how much of the 17.9 will
Ryland get. Evan Rice, Faegre and Benson stated it was approximately 7.9%.
Nawrocki stated on page two, completion date, are we talking about the individual lots or the
overall development. Bubul stated the board just needs to be a signatory to Schafer Richardson
transferring approx. 60 percent over to Ryland, which is in the contract the EDA has with
Schafer Richardson.
Rice stated Schafer came to the city with the notion of compiling the various properties, came to
the city to develop a contract to help obtain the properties and develop what the city wants on
the site. It was contemplated from the beginning that Schafer Richardson would possibly build
some or all of the property in that area, tonight we are coming to the EDA to approve the sale of
a portion of the development property to Ryland for development, the contract between Schafer
Richardson and Ryland states they will comply with all of the development agreement
specifications. Ryland is basically buying a pad from Schafer Richardson that has already been
flattened for development of the site. The agreement changes the DEED grant specifications
from a 20% requirement to a 10% requirement, which is what the City was lookingfor in the
development agreement, to make sure not only one developer uses the land for development and
the City can specify what type of development they want on the site.
Nawrocki asked who would be responsible for the utilities and street costs. Streetar stated it
would be Schafer Richardson per the development agreement.
Nawrocki stated on page 9, letter E real estate taxes against the property, would this be based on
the sale of individual lots. Rice stated as a example that Schafer buys properties today from
Ryland, so Schafer would be responsible for the taxes up until today and Ryland would be
responsible for taxes starting tomorrow.
Ericson Diehm stated she didn't know why we don't know what we are getting, it was in the
development agreement that we approved, Mr. Nawrocki you are the one that went out and
looked at some of their properties and brought them to our attention. Nawrocki stated he
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July 26, 2005
Page 3 of6
doesn't know what we are getting. Williams stated he understood what we approved, wasn't
concerned with the agreement between Schafer and Ryland as Schafer will be responsible for
this, and that we should only be concerned with the money coming into the City. Bubul stated
that is the main thing, the TIF funds coming in.
Williams stated we could go over the agreement 100 times with Schafer Richardson and Ryland
and it still wouldn't make a difference with the funds that the City will receive and that they are a
big company and have 'built all over the United States, therefore we shouldn't worry about this.
Nawrocki stated on page 12, moratorium, we have 2 moratoriums in the City currently, twin
homes and car sales, does this affect this housing. Streetar stated it does.
Nawrocki stated under A-1legal description of property, is there some kind of description to be
added to the document. Bubul stated it would be added.
..
Nawrocki stated under C-1 site plan is 5th street going to continue to go through or not. Kevin
Hansen, Public Works Director stated it goes from 3th to 38h, and that it will connect to Huset
Parkway from the north.
Nawrocki stated he has brought it up in the past whether this project could be specified as owner
occupied and was told they couldn't do it. He has talked to Fridley and they stated there is a
way to do it. Streetar stated in Fridley the developer did that on his own and that Ryland could
also put this in the homeowner agreement. Fehst stated he talked to the City Manager of Fridley
and verified that the developer put this in their agreement with the homeowners and that he felt
this was a good issue and was glad Nawrocki brought this up.
Ericson Diehm statedfor the record that thefirm she works for does represent Ryland homes,
but she doesn't have any direct affiliation with them.
Motion by Williams, second by Kelzenberg, to Approve the letter for Modifications to the
Schafer Richardson Contract for Private Development dated July 8,2005, and authorize the
authorities representative to execute same.
Upon Vote: Jindra-aye, Williams-aye, Kelzenberg-aye, Nawrocki-nay, Ericson Diehm-aye,
Peterson-aye. Motion Carried.
Sarna Development Al!reement- 40th & University
Schumacher stated as of April 26th EDA meeting Jim Sarna and the Solz brothers presented a
concept plan for 4dh & University, the board approved the Preliminary Development agreement
on June 28h and directed staff to work with the Sarna's to prepare a Development agreement.
Staffis recommending the following business points be discussed: 1) Purchase price- of$75,000
cash upon closing; 2) platting- would be required on all property and would go before the
Planning Commission; 3) Lookout Place- the City would use administrative action to vacate
Lookout Place, along with physical removal of the street section and when the City vacates the
property we would be required to give the adjacent property owner 3.5 feet; 4) 322 4dh Ave, the
old MGS building- the developer would be responsible for the removal of the building and
clearing of the land; 5) the alley- the developer requested bringing it to the easterly portion,
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July 26, 2005
Page 4 of6
when the City sold the property at 325 summit to Mr. Gondek he was aware the portion was
broke off to be used for redevelopment; 6) Ponding- the City's storm water management
ordinance allows a monetary fee to be paid in lieu of providing the system. Kevin Hansen stated
the problem with the existing pipe is that it isn't large enough to handle the amount of water
generated from this development, so the pipe would need to be replaced with a larger one; 7)
University Avenue turn-back- staff is working with MNDOT to vacate the east 30 feet of
University Avenue, which would we would turn back over to the adjacent property owners
abutting this roadway at no cost to the City for removal of the bituminous or any landscaping; 8)
New accessfor 3901 Lookout Place (ME Global)- it would be the responsibility of the developer
to provide an alternative access point onto Lookout Place; 9) sidewalk- would be at the
developers expense and meeting all city requirements; 10) 334 4dh Avenue (Gondek property)-
the developer would agree to enter into an easement to grant access through the development
property to access their existing driveway/garage; 11) design guidelines- the developer must
meet all existing requirements; and 12) Variance-the parking set back on tl1# site plan adjacent
to University Avenue shows 5 feet, our City Ordinance requires 15 feet, Sarna is requesting a
variance as there will be an additional 30 foot green area between the parking lot and University
Avenue with the vacation of the frontage road.
Nawrocki asked where would the pond be placed and why doesn't MNDOT want to let that
property go. Kevin Hansen stated the pond would be a part of the Phase I plat of Huset Park.
Schumacher stated MNDOT couldn't answer that question, but did say they may want to use it
someday.
Williams stated the Sarna's could get a lease on the property from MNDOT, as he leases
property at one of his gas stations, you can't put any structures on it, but could rent it and put in
shrubs or trees.
Resident, Joyce Shellito, 403 Summit Street, asked where the stormwater drain in the alley
behind her house goes, and if they change the size of the pipe who would be responsible to pay
for it. Hansen stated it goes through part of the alley, down through her property, then to the
East down Summit to 5th Street, which the developer would be responsible for all costs incurred.
Williams asked Gondek why he doesn't give the developer a first right of refusal agreement.
Gondek stated he has already signed one with someone else that is interested in his property,
when he is ready to sell. He has 5,000 ft of space in the basement of his building that would be
no good to anyone if he can't get into that garage door, that he has been trying to meet with the
Sarna's for the past couple of months and has always been told that they would call him and this
never happened, Schumacher stated the alley would be 6.8 ft away from the house, which
reduces the value of his property. Sarna stated he is willing to meet with Mr Gondek and would
talk to him after the meeting to make arrangements.
Williams stated Gondek new when we sold him the property that we would be using that area for
development and asked what the City Ordinance states the requirements are for easement are.
Schumacher stated this would all be addressed at the Planning and Zoning Commission meeting
at a later date.
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July 26, 2005
Page 5 of6
Streetar stated in regards to the parking, there is more than enough parking and can be shared
through a shared parking arrangement, rather that try to split it.
Streetar stated staffis really lookingfor direction from the board on: 1) is the restaurant what
you want on this corner; 2) does the development agreement meet your requirements; and 3) is
there any more information that you want.
Nawrocki stated his concerns are: 1) it isn't a restaurant, it's a sports bar; 2) they are talking a
6,000 sq foot building, and in the future making the basement available for rental, which would
require more parking spaces, then between the deck and regular restaurant, there wouldn't be
enough parking spaces; 3) he heard they offered approx. $550,000 for the Mr. Steak property
and now we are talking about selling the property for $ 75,000, which is a steal, we need a better
appraisal for the land; and 4) need an agreement for the ponding space.
.
Nawrocki asked if the access would be coming off of 4dh and ifso, is that the only access and
would the sidewalk be adjacent to the street line. Hanson stated the access would be on 4dh and
it would be the only one and the sidewalk would be 5 feet so it would meet up with the rest of the
side walking on 4dh.
Peterson stated these issues are apart of the design guidelines the planning commission will
address, we had a study (the McComb study) done, which stated a restaurant was the type of
facility that would profit at that site. Back when he was going to purchase the property, he was
going to pay $75,000 but wasn't going to pay for the curb costs, ponding, demolition of the
building, and sidewalk changes. It is not a real good buildable site, and we won't get another
builder to look at this site ifwe let this agreement go.
Gondek asked the board to remove the termination clause for the easement. Williams stated this
is just an agreement to develop, and that the Planning and Zoning Commission would be
addressing the easement issue. He measured a total of 35 feet that he needs to access his garage
door. Schumacher stated the developer needs to move ahead and need this agreement signed in
order to assure them spending a lot of money on this development.
Williams felt we need to abide with the commitment that they made with Gondek for the easement
and he would support the motion.
Ericson Diehm stated we should have a meeting with staff, Mr. Gondek and the developers.
Motion by Peterson, second by Kelzengerg, to Approve a Development Agreement with David
M. Sarna, James A. Sarna and James J. Sarna for the redevelopment of the City owned property
at 40th & University area as outlined in the business points ofthe staffmemo, subject to EDA
Board amendments and modifications, and furthermore; to authorize the President and Executive
Director to enter into an agreement for the same.
Upon Vote: Jindra-aye, Nawrocki-nay, Ericson Diehm-aye, Kelzenberg-aye, Williams-aye,
Peterson-aye. Motion Carried.
Amendment to motion by Williams, second by Nawrocki, to strike the clause for the easement.
All ayes. Motion Carried.
Economic Development Authority Meeting Minutes
July 26, 2005
Page 6 of6
Gordy Solz stated they could work with Mr. Gondek, but the Sarna's would like to talk to their
attorney on this issue.
Other Business
Nawrocki objects to having public meetings without finding out if all of the members of the
board can attend the meeting, and common sense is that we should insure this.
ADMINISTRATIVE REPORTS- None
ADJOURNMENT
Vice President, Jindra, adjourned the meeting at 9: 16 p.m.
Respectfully submitted,
~~
Cheryl Bakken
Community Development Secretary
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