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HomeMy WebLinkAboutEDA MIN 11-28-06 ECONOMIC DEVELOPMENT AUTHORITY (EDA) REGULAR MEETING MINUTES November 28, 2006 CALL TO ORDERIROLL CALL President, Murzyn, Jr. called the meeting to order at 7:08 p.m. Present: Don Murzyn Jr., Patricia Jindra, Bobby Williams and Bruce Nawrocki, Tammera Diehm, Gary L. Peterson and Bruce Kelzenberg PLEDGE OF ALLEGIANCE CONSENT AGENDA Approve Minutes of October 24, 2006 regular meeting and the Financial Report and Payment of Bills for the month of October on Resolution 2006-09. Motion by Williams, second by Diehm, to approve the consent agenda Items #3 and #4 as listed. All ayes. Motion Carried. BUSINESS ITEMS Resolution 2005-10 and 2006-11. 2007 Budqet and Levv Streetar stated on November 6 at the joint City Council and EDA budget work session the budget was presented. Commissioners Jindra and Murzyn weren't present, but he has talked with them about it, so since there is no further discussion by commissioners tonight staff is recommending board approval of the resolutions. Nawrocki stated the current levy for the EDA and HRA are $84,969 and $161,366, the increase for the EDA is a 66% increase and the property tax levy and a 9% increase in the HRA levy. Fehst stated this is part of the overall 2.1 % levy. Nawrocki asked why we are acting on this tonight. Fehst stated we pass this along to the City Council for approval. Streetar the only additional costs we have are related to labor, which is about $23,000 and $50,000 for the Comprehensive Plan, otherwise it is all the same. Nawrocki stated we have approximately $155,892 cash balance at the end of 2005, according to the report he received from finance, there should be a significant balance left over this year, we should give the taxpayers the benefit of not charging them as much. Streetar stated taxes are the lowest they can be on the median value homes in the metropolitan area with the exception of two cities. Nawrocki stated I beg your pardon, I think you gave to the mayor the 168,931, if you take out of that the 21 communities in Anoka County, fifteen of them have lower levies for that value of the home. Streetar stated the reason they have a lower rate is because they have a tax base 25 to 35% higher than ours, our spending is average or a little bit below, our tax base has been anemic for 30 years. Nawrocki stated you may call it anemic, but the fact is you should go out and tell the people taxes are anemic. Murzyn Jr., Fehst, Diehm, and Kelzenberg stated their taxes went down. Fehst stated what is more disturbing is that his housing value went down for the second year in a row. Economic Development Authority Meeting Minutes November 28,2006 Page 2 of9 Streetar stated in Columbia Heights we have 41 foreclosures, 67 vacant properties and 114 houses for sale right now. Nawrocki stated he is worried about the market of homes in the City. Fehst stated we have explained why the increase is there, Mr. Nawrocki's concern about eating into the fund balance is a valid one, and I know that we will made that at the public meeting that we have next Monday night, but we feel the budget is necessary, we have shown the leverage that we can bring to bear on redevelopment in this town through 24 successful grant applications, through projects that will end up increasing the assessed market value in this City by about 15% and we should have been doing it 10, 15 or 20 years ago and we didn't, so we can either do it or not do it. Nawrocki stated well you shake your head, that is the buracratic response, they say that politicians look at what happened before, when nothing happened to Lincoln, and then the world supposedly gets turned around, while staff, for better or worse does this like the so called politicians and to justify their existence. Fehst stated the evidence is there Bruce, for inner ring suburbs, we are the last to get going. Murzyn Jr. stated the question before us is the budget, are there any questions regarding our budget. Nawrocki stated we do a lot of inter-fund borrowing, but the fact of the matter is we have some pretty high reserves, more than we need. ' Motion by Williams, second by Diehm, to Adopt Resolution 2006-10, being a Resolution of the Columbia Heights EDA Adopting the 2007 Budget of $317,228 and a levy of $140,898 and recommending approval of the same to the City Council. Nawrocki asked what is the special benefit levy. Streetar stated the EDA has two levies, the EDA is levied at .1813 and the HRA is levied at .1440, and all of the funding is used to fund the EDA, which is his, Randy, and Cher's time and the associated supplies. Nawrocki stated there isn't any levy called special benefit levy, it is the HRA levy, which is the other on your tax statement. Streetar stated in the State Statue it is called special benefit levy. Amended Motion by Nawrocki, that the EDA levy be reduced from the $140,898 to its current levy of $84, 965. Motion dies for a lack of a second. Upon Vote: Nawrocki-nay, Jindra-aye, Kelzenberg-aye, Peterson-aye, Diehm-aye, Williams-aye, Murzyn-aye. Motion Carried. Motion by Diehm, second by Peterson, to Adopt Resolution 2006-11, being a Resolution of the Columbia Heights EDA approving a special benefit of $176,330 and recommending approval of the same to the City Council. Amended motion by Nawrocki, that the special benefit of $176,330 be reduced to $161,366. Motion dies for a lack of a second. Economic Development Authority Meeting Minutes November 28,2006 Page 3 of9 Upon Vote: Nawrocki -nay, Jindra-aye, Williams-aye, Kelzenberg-aye, Peterson-aye, Murzyn-aye, Diehm-aye. Motion Carried, Murzyn Jr, stated the county has been saying for years they are holding the line on taxes, we aren't going to raise your taxes, but your property taxes go up each year, so now when property values are dropping, they are going to raise taxes aren't they. Nawrocki stated he tried to ask that last night, he felt a lot of values went down and the rest of the homes went up, Streetar stated the presentation he gave in September, comparing us to 13 other cities, we are growing slower than the 12 others that we work with, so while our values did go up, they aren't going up at the same rate as the others, and we are the lowest on a per household basis, Nawrocki stated if your wondering what happened with property values you might ask yourself how many of these assisted living homes we have built in this city, compare that to what has been done in other communities, how many of the habitat for humanity homes do we have in this city. Streetar stated we have 21 in this city. Murzyn Jr. stated Nawrocki don't mean assisted living but low income, Nawrocki stated that was correct. Murzyn Jr, stated you could look at it as what did those homes replace. Streetar stated the issue is that we have a lot of two and three bedroom ramblers that are 1200 square feet, that were built before 1950, he lives in one in northeast Minneapolis, the difference is his value is $40,000 to $50,000 higher than the same house in Columbia Heights. Williams stated the old Hemak home on 44th that Habitat built two new ones on, that was a great improvement, Peterson stated none of our Habitat Homes have been a problem, Resolution 2006-12. Contract for Private Development with Pratt Ordway. LLC Schumacher stated the EDA entered into a Preliminary Development Agreement with Pratt Ordway Properties in March of this year to construct a senior assisted living project. At this time, Pratt Ordway, the developer, and Comforts of Home, the builder have prepared a redevelopment concept plan for the Apache Theatre property that consists of 58 units of assisted living, an attached Montessori School and a 1,06 acre commercial lot proposed for the new municipal liquor store, The Planning Commission has approved: 1) a comprehensive plan amendment to re-guide a portion of the subject property from commercial to high-density residential; 2)a rezoning amendment to rezone a portion of the subject property from GB, General Business to R-3 Limited Multi Family Residential; and 3) a preliminary plat approval. The City has received approval of an $115,000 Community Development Block Grant from Anoka County to assist in the demolition of the vacant Apache Theatre, The developer is obligated to reimburse the authority for any costs incurred in reviewing the developers proposed plans for this project and has already provided the initial deposit of $5, 000. If this agreement was approved, demolition of the theatre would happen sometime this winter with construction start up on May 1SI, 2007, Tonight we have Lenn Pratt, Pratt Ordway; Daryl Gemer, who he has been working with for the past few months on this project and Brian Wingus from Comforts of Home and Steve Bubul, the EDA Attorney to answer Economic Development Authority Meeting Minutes November 28, 2006 Page 4 of9 any questions the board may have. Nawrocki asked what happens if the Met Council doesn't approve the change. Streetar stated their approval is purely administrative, they have reviewed it, and don't have any problems with what the City wants to do with that location. Nawrocki asked then why do they approve it. Streetar stated they are required to take certain steps in terms of getting feedback from adjacent cities, which we already went out and got, before they even starting looking for the approvals, as it is a new requirement, we already know the responses from the other cities, they are very favorable, they don't have any problems Murzyn Jr. asked what cities would that be. Streetar stated it was Minneapolis, New Brighton, St. Anthony, Hilltop, and Fridley, if you touch them you have to get their feedback. Nawrocki asked what we are going to pay for this property. Streetar stated would be $11.00 per square foot, or about $506,000. Nawrocki asked what we sold the little one-acre land for the Sarna's bar and grill for, less than a $1 per acre. Streetar stated it was and if that property were as clean as this one, we would have got the same price. Nawrocki asked how much we used of public dollars to clean up that property. Streetar stated $120,000. Williams asked how does the property taxes stack up from what the theatre is paying know and what they would be with this development. Streetar stated the theatre was valued at $600,000, so you will have closer to $8 million, with no tax increment district. Motion by Peterson, second by Kelzenberg, to Adopt Resolution 2006-12, a Resolution approving the contract for private development agreement between the Columbia Heights Economic Development Authority and Pratt Ordway, LLC for the redevelopment of 2101 3ih Avenue; and furthermore, to authorize the President and Executive Director to enter into an agreement for the same. All ayes. Motion Carried. Subordination Aqreement for Parkview Homes LLC Schumacher stated this is dealing with the building in Phase I of the Industrial Park, Ryland is developing all of the units except this last one. What we are talking about tonight is a subordination agreement, because Schafer Richardson is building this one, not Ryland, the unit looks exactly like the other ones, they are borrowing about a million dollars from the bank and this is the agreement, which Steve Bubul has reviewed and he is here to answer any questions you might have. Nawrocki stated under recitals the contract for private development, what have we agreed to with the developer. Bubul not much, the original contract of which Schafer Richardson is responsible for the redevelopment, the bank wants the EDA to ... Nawrocki asked what is the recourse if the developer goes belly up, would the borrower be able to come back to the City to get the T1F. Bubul stated there is none, neither party has the right to come back to the City to get any more T1F, they are on their own, they potentially could asked for it, but legally it isn't a T1F qualifying cost. Nawrocki stated under number 3, Notice and Cure Rights, the last sentence; "In the event there is an event of default under the Development Agreement, the Authority will Economic Development Anthority Meeting Minntes Novemher 28, 2006 Page 5 0[9 transmit to the Lender a copy of any notice of default given by the Authority pursuant to Article IX of the Development Agreement", what does that mean. Bubul stated if this borrower defaults on the loan, you would get notification of the default, but would have no obligation to pay. Williams asked if Schafer Richardson is building this because of the contamination. Schumacher stated there was a lot of contamination on the site, Ryland decided to step away from it, so Schafer Richardson is going to build this one. Motion by Kelzenberg, second by Jindra, to Approve the Subordination Agreement between the Columbia Heights Economic Development Authority (EDA), Parkview Homes, LLC, and M & I Marshall & IISLEY Bank; and furthermore, to authorize the President and Executive Director to enter into an agreement for the same. All ayes. Motion Carried. REDEVELOPMENT UPDATE Activitv Center Partenheimer stated the ACAC met on September 13th to prioritize a list of amenities and potential sites to be included for further study, which included the former NEI site, Heritage Heights neighborhood, and adjacent to the high school. The information was passed on to an architectural team from BKV Group, who came back at the November 9th meeting with a draft feasibility report. It was clearly stated that these are not the proposed plans, but simply options and a means for discussion by the group. Nawrocki asked when the next meeting is set for. Partenheimer stated it has not be set up, but hoping for sometime in December. Diehm stated we have seen the three sites, but is there other sites being talked about. Partenheimer stated at the moment they are only looking at those three sites as far as the feasibility report goes, that is what the architect has given us to review, they do have a long way to go, so there is a possibility as a group they may look at other sites, but not at this time. Murzyn Jr. stated he would like to see them review the Huset Park site. Diehm stated she agreed. Streetar stated he talked with the YMCA today, who said may come in and possibly run it for us. They have had an on-going dialog with the City of Minneapolis for a couple of years, initially the Mayor and Paul Ostrow said down by the lupine water park that the Cities donation would not be in cash but in land and the water park and adjacent land would be conveyed to the YMCA to build there. The City changed their mind and said you can have some land west of that, closer to Central and the YMCA doesn't feel that is a good location. Our staff has been in discussions with the YMCA for a while now and as the meeting today they will be bringing a letter to potentially partner this project with you. With their reputation, programming, ability to fund raise and run the facility, they could do a better job than we could every do. Economic Development Authority Meeting Minutes November 28,2006 Page 6 of9 Jindra stated the YMCA project in Andover is always busy and thinks this is a wonderful idea to get involved with them. Nawrocki stated they have some experience raising funds in Columbia Heights, they were looking at the site adjacent to Sullivan Lake, they raised money, did not make promises, but never built. Grand Central Lofts Partenheimer stated as you seen in the article attached to the packet in July staff applied for a Livable Communities Demonstration Account grant for funding of a parking ramp to serve 47,698 feet of proposed commercial development. The City is expected to know as early as mid December whether it has received this funding. Parkview Partenheimer stated Veit companies received the bid of demolition of the Grief, Steel Tech and associated outbuildings in Phase III. Abatement of asbestos and other contaminants began this week, with building demolition proposed to begin the first week in December. 38th & Central Partenheimer stated in late spring the EDA entered into a preliminary development agreement with Sherman Associates to prepare a redevelopment plan for the area that includes the Burger King, Mady's Bowl and the Columbia Heights Rental property. ProSource Technologies has completed the draft phase two environmental assessment, the initial cost for clean up is estimated to be $2.8 million dollars, which is attributed to the asbestos roof shingles dumped in this area in the past. Staff is working with Sherman Associates to present a plan with some options for the EDA meeting in January. 39th & Central Streetar stated Pro Source has completed a draft Phase /I study, which is an estimated total cost for clean up between $2.8 and $3 million. That is using the type of technology that is the least expensive, he has relayed this information to Sherman Associates, who is putting this in their performa. We are having their performa and number reviewed by Ehlers. What we want to do is bring to the board something that works with options and will take a little time, because initially they were talking about 60 units of senior Housing, 10,400 square feet commercial space, 10,000 square foot restaurant pad, and 10 units of single homes. At the January EDA meeting we will have some concept ideas to present. Williams stated we should take note that with Sherman we have heard some negative comments at City Council meetings about this guy, but the article attached in the packet tonight says he won an award for the Sears building, we should remember that. Nawrocki stated you should look at the 19//1 & University to see the Botono project. Fehst asked what it is that bother him about that project. Nawrocki stated there are two things: 1) he has talked to some ofthe people in Minneapolis people who gave him some bad reports, that isn't right or wrong, but some information he has taken in from Economic Development Authority Meeting Minutes November 28,2006 Page 7 of9 someone that he does have some respect for; and 2) the low-income is rental, and he doesn't like the looks of it. Peterson stated it isn't Sherman's fault that it is low income, the design is nice, the structure looks fine, we don't want low income in Columbia Heights. Murzyn Jr. stated the problem is that our housing stock is all low-income housing. Williams stated the homes where Murzyn and Diehm live are in a nicer area and the lower income areas that we are now cleaning up will only help the property values, we are doing the right thing. New Business Streetar passed out and reviewed in detail, a "Healthy Homes, Strong Tax Base Initiative" item that was added to the agenda. Streetar stated this item he did not have ready for the packet, but is something that he has been thinking about for a while and you may want to take into consideration. When he gave a presentation back in September he made the remark that 90% of our tax base is residential, or about $1.1 billion, talked about the value of our property relative to other cities and he thought a little more about it, looked at the condition of our property, went back into some of the past surveys and comprehensive plans and felt you have a significant problem with some of the housing in this City. He thinks that if it isn't addressed, you will long for the days when you only had Sheffield. It is not to criticize of any past city effort, it is not to criticize the people, it is recognition of what he thinks is a serious issue facing this body. What is asking them to consider tonight is: 1) establishing long-term and substantial funding sources by extending the term of the A3- C7 downtown T1F district for an additional 25 years and use those funds to expand the Rehabilitation Incentive Program, currently administered by GMHC; and 2) establish a scattered site blighted acquisition program. He is recommending this because the tax base is the backbone of the City, 90% of it is residential property, $1.1 billion, about 70% of the property in this City is owner-occupied and 65% is single-family homes. Older and lower value homes, typically have a higher degree of deferred maintenance. The pictures in the back of the packet are just some examples of the boarded up properties in the City. Fehst stated the homes up on ii' street, with the back up of water problems, the homes were boarded up, as the city hasn't been able to get a hold ofthe owners and they have been deemed uninhabitable for health reasons, one is for sale, one is a drug bust house and another one is un-occupied for health reasons, due to the sewage backup in their basements, these pockets are developing everywhere around the city. Streetar stated the average estimated market value is residential property is $168,900, if you look at the fourth map in the packet you'll see most of the lower value properties are between 3ih and 45th on the west side of Central. If you look at the median year in which property was built in Columbia Heights, we are about ten years older than the metro area. If you look at the age of the property, at the west side the lighter the color the older the property, most of the properties built before 1940 are on the west side of Economic Development Authority Meeting Minutes November 28,2006 Page 8 of9 Central in Heritage Heights. The 1992 Comprehensive Plan did a residents survey, which stated 43 % of the respondents indicated the condition of housing in their neighborhood was a problem, 64% indicated the City should provide more assistance renovating deteriorating housing and 96% indicated the City should require owners to properly maintain their housings and apartments. Out of 5, 700 owner-occupied properties, 625 or 11 % were rated as poor, 1,100 or 67% were rated as fair. The Fire Department has had over 1,500 residential complaints, half were related to owner- occupied property and he felt Heritage Heights has been a challenge for 15 years. You have homeowners that cannot afford to replace the items that need to be replaced. What are the resources out there: 1) Federal resources, are the CDBG and HOME program, which have gone down 20% in the last five years, there is a residential rehab program, which isn't heavily subscribed, there is a fair amount of red tape that goes along with it, and there has been 20 or so homes that have participated in that program since 1994, which isn't a lot; 2) if you look at State and Regional resources are two types of/oans, where one you can't make over 18,000, mostly for senior citizens with a lot of wealth, but not much income, and secondly there was a "This Old House Program", in the early 90's through the county, which said if you do a value added project, like an addition, they would take the value of that and would not pay property taxes on it for five to ten years, the program was created specifically as an incentive to revive neighborhoods, but was stopped by the legislature in 2003. Lastly, the City has been put in $80,000 over the past five years to fund the Home Rebate program, which has been extremely successful. If you look at your Comprehensive Plan and Goal setting established in 2004 you said acquiring and demolishing the most seriously deteriorated single-family homes and working with private sector to develop appropriate replacement housing was a important, and upgrade property. So the reason he is recommending this is because he doesn't feel there is the resources out there at the Federal, the State or here in the City to invest what you need to do to make an impact on these properties in Columbia Heights, specifically the scattered site program. You appropriated about $900,000 towards the Heritage Heights program about a year ago, if you decided to buy the boarded up property, that money is gone and you would have no more money to do anything else. The A3, C7 TlF District, pre-1979 district, currently generates approximately $630,000 a year in tax increment financing, and if you extend that for approximately 25 years it would generate approximately $16 million, that you could use to buy property in Heritage Heights, invest in home rebate and home improvement programs through GMHC to help homeowners to protect their housing investment. To do this you would need to have special legislation, calling Satveer Chaudhary and Carolyn Lane to get this. He did this in Minnetonka, St. Louis Park, Fridley, Brooklyn Park, all of these have some form of special legislation. The City has a history of doing this as in the early 90's you extended the district by ten years, which paid for the construction of Parkview Villa South, or $6 million. So what he is suggesting is calling a special meeting in two weeks, pass a resolution and take this forward and work with Satveer and Lane to get this special legislation. Economic Development Authority Meeting Minutes November 28,2006 Page 9 of9 Murzyn Jr. stated this was very interesting and he is 100% behind it. Streetar stated if you allow the district to decertify, the tax payers would see their taxes go down $30 a year on a $168,000 home you loose tax dollars. Fehst stated we have read that when you decertify these districts you loose local government aid, so having Mark Ruff look into it. Fehst stated back in1996, when he first started here, Mel Colova went out and assessed these houses, we were buying these homes cheap, new homes were built, Robbinsdale did this too, it means a lot to the residents of the City. Streetar stated if you look at what has happened at 4828 5th, a house that GMHC bought and the City helped fund the gap and the homes built at Harold Hoium's properties are a great asset to the City. Nawrocki asked what is the value of the homes on the Hoium property site. Harold Hoium stated there isn't any yard or area to do anything on the property. Bs what he is suggestion, the session started on Jan. 3rd, would suggest a meeting in December to discuss this. Peterson stated we need to move forward with this community. Fehst stated present yourself a little better than maybe some other cities, it is an operational type of thing. Murzyn Jr. stated we should think about it, staff should get some more facts together, if everything looks good, we should hold a meeting a take a look at it. Nawrocki stated the City has been a gradual work in process, yes there is room for improvement. Peterson stated you should go up and talk to the people on Tyler, they aren't happy. Streetar stated he isn't saying it isn't a good place to live, but if you don't keep working on it~ One of the smartest things the city ever did was to build the two downtown parking ramps. Williams asked if Streetar talked to the people from Porky's. Streetar stated he has contacted them to relocate here. ADJOURNMENT President, Murzyn, Jr., adjourned the meeting at 8:39 p.m. Respectfully submitted, cY/ ~ Cheryl Bakken Community Development Secretary H:\EDAminutes2006\11-28-2006