Loading...
HomeMy WebLinkAboutEDA MIN 07-28-08 Special ECONOMIC DEVELOPMENT AUTHORITY (EDA) SPECIAL MEETING MINUTES JULY 28, 2008 CALL TO ORDERIROLL CALL President, Gary L. Peterson called the meeting to order at 6:17 p.m. Present: Gary L. Peterson, Bruce Nawrocki, Gerry Herringer and Bruce Kelzenberg And Bobby Williams arrived at 6:22 pm Absent: Walt Fehst, Marlaine Szurek and Tammera Diehm PLEDGE OF ALLEGIANCE Resolution 2008-08, First Amendment to Contract for Private Redevelopment Scott Clark stated you have a new resolution in front of you in terms of what the title is. The Original document delivered with the packets stated the contract was with New Perspectives Fund LLC and that has been changed it to the Lighthouse Acquisition Group, LLC. Todd Novacyzk is here from New Perspectives to answer any questions you may have. On May 28t/1 the EDA heard a presentation from New Perspectives and their interest in taking over the Comforts of Home Project, which was in the process of going into foreclosure. New Perspectives was seeking assistance in the form of tax abatement. Staff was directed by the board to start negotiations with New Perspectives and Ehlers and Associates to provide you with a business point memorandum that you reviewed on June 161/1. Essentially, what this abatement does is to provide an insurance ledge if taxes exceed a given indexed amount. If the amount of taxes exceeds a given number starting in the year 2011, which is inflated at 3 percent for five-years through 2015, the City would pay the difference from the target amount of aggregate taxes and whatever the new number is, up to the amount of dollars that the City retains. The reason for the First Amendment is explained under 3. 7 (a) and (b). The aggregate tax index we are looking at is $80,000,2011. When we did the original performa analysis, we were looking at taxes in 2011 in the amount of $65,000 to $75,000. The way the formula works is that the amount of City contribution, in terms of what we would pay above the aggregate taxes, is reduced from the current property base tax. In rough numbers, for the year 2009 the City's base tax is around $10,000. For an example: If aggregate taxes in the first year would go up to $90,000, the abatement for that year would then be the $10,000, ($80,000 minus the $90,000). The City's contribution pool would be $36,000 (approximate amount of City taxes based on $90,000 of taxes) minus our original $10,000. We view it is highly unlikely that we would see the amount go above the $10,000 per year. Over the five-years it is capped out at $150,000, which is spelled out in the City Council resolution. Nawrocki asked if the Lighthouse Acquisition Group, LLC Corporation has been formed. Todd Novaczyk stated it has been. Nawrocki asked what the City has paid out for demolition. Clark stated we paid approximately $126,616. Economic Development Authority Special Meeting Minutes June 16, 2008 Page 2 of4 Herringer asked if they are purchasing this from Comforts of Home or the bank Novaczyk stated it was Comforts of Home, which has started the foreclosure process. What they have done is to go to all of the partners that have money invested in this project and reached agreements with them. VSI has indemnified for them that if one of the partners doesn't sign the agreement they would cover those costs. Motion by Kelzenberg, second by Nawrocki, to waive the reading of Resolution 2008- 08, there being an ample amount of copies available to the public. All ayes. Motion Carried. Motion by Kelzenberg, second by Nawrocki, to Adopt Resolution 2008-08, a Resolution Approving a First Amendment to Contract for Private Redevelopment between the Columbia Heights Economic Development Authority, the City of Columbia Heights, Minnesota and Lighthouse Acquisition Group, LLC; and furthermore, to authorize the President and Executive Director to enter into an agreement for the same. All ayes. Motion Carried. Novaczyk stated they are working to get the Development Agreement ready for approval. Clark stated they are looking at providing it at the September meeting. RESOLUTION NO. 2008-08 RESOLUTION APPROVING A FIRST AMENDMENT TO CONTRACT FOil PRIVATE REDEVELOPMENT BETWEEN THE COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY, THE CITY OF COLUMBIA HEIGHTS, MINNESOTA AND NEW PERSPECTIVE FUND lll, LLC BE IT RESOLVHD By the Board ojCollllllissioncl's (the "Board") of the Columbia Heights Economic Del'elopmcnl Authority (Ihe "Authority 'J as follows: Sec/ionI. Recilals. 1.01. The Authority and Prall Ordway, LLG dba Frat( Ordl1'ay Properties (the "Original Redeveloper'') entered il1(O a Contractfor Private Redevelopment dated as of November 28,2006 (the "Original COIl/ract'j providing for redevelopment of certain property (as defined in/he Original Gourmet, the "Redevelopment Property") located in the City ojColulIlbia Heights, Minneso/a (the "City"). J.02. The Original Redeveloper assigned all of its rights and interests ill the Original Contract to Columbia Heights COH, LLC ("COH") ul/der an assignment and assumption agreement, dated as oj Janlfaty 26, 2007. 1.03. Lighthouse Acquisition Group, LLC will purchase the Redevelopment Property and assign all ofils rights al/d interests ill the Redevelopment Properly and the Original Contract to New Perspective Fund Ill, LLC (the "Redeveloper"). J.04. The Original Redeveloperjailed to complete cOllstruction oj a senior rental housingjacility (as defined ill the Original Contract, the "Minimul/1 Improvements 'j on the Redevelopment Property and the Redeveloper has requested certain assistance fi'om the City in order to complete sllch ill/provenlents. J.05. The Original Contract is being amended (the "First Amendment 'j to, among other items, il/c/ude the City as a party to the Original Contract, as well as to provide jor a property tax abatement to the Redeveloper. Section 2. Authoritv A/)/Jroval' Further Proceedinf!s. 2. OJ. The First Amendment as pl'esented to the Board is hereby ill all respects approved, subject to modifications that do not alter the substance of the transaction and that are approved by the Cilyand the President and Executive Director of the Authorily, provided that execution oj the documents by sllch officials shall be cOIlc/usive evidence of approval. 2.02. The President and the Executive Director are hereby authorized to execute on behalf oj the Authority the First Amendment and any documellts referenced therein, requiring execution by the Authority, and fa cany Ollt, on behaljofthe Authority, its obligations thereunder. Approved by the Board ofCollllllissioners of the Columbia Heights Economic Development Authority this 28th day of July, 2008. Economic Development Authority Special Meeting Minutes June 16,2008 Page 3 of 4 Resolution 2008-09 and 2008-10, 2009 Budaet and Special Benefit Levv Clark stated each year the EDA has to approve both an EDA Levy and a Special Benefits Levy as part of the over all Community Development Budget. Staff is proposing a budget total of $347,561, which is raised by: 1) an EDA levy of $80,000, which is the same as 2008; and 2) a Special Benefit Levy authorized under the HRA Statutes in the amount of $267,561. The HRA levy is an increase of $71,000 from 2008 and represents an increase in the new levy amount authorized by State Statutes, at 100%. Because of the new rules we are able to levy an additional $267,561 for 2009. The reason this increase is necessary is because the EDA's budgeted revenue is combined with the Community Development Departments' other revenue sources (permits and licensing) to make up the total department budget. The HRA increase is necessary to balance the overall departments' budget due to a projected $60,000 to $70,000 decrease in building permit fees that are projected in 2009. We have three major projects that permits will be coming into the department this fall: 1) the Public Safety building, which we are receiving no permit fees; 2) 4ih & Central-the commercial piece from the Nedegaard project; and 3) the New Perspectives project. Nawrocki stated if we approve this we would be making liars out of the Governor and the Legislature, which pertains to trying to keep property taxes under some kind of control and doing it with the levy limits. This is outside the levy limits, but for the property owner this creates a tax increase. We need to find ways to reduce expenditures, not concentrate on increasing taxes. I could not support the increase in the HRA Levy. We should not pass the budget until we see the entire Citys' budget. Herringer stated he was looking at the income side of it, and asked what is the $30,000 for. Clark stated that is revenue that would come from the RIBS program. We would have an expenditure of $20,000, so we are budgeting $10,000 to run that program. Peterson asked when the next regular meeting would be. Clark stated it would be on August 26, 2008. Peterson asked for a motion to table this item until the August meeting when the rest of the EDA board members would be present. Motion by Williams, second by Herringer, to table this item until the August 26, 2008 regularly scheduled EDA meeting. All ayes. Motion Carried. Verbal Status of 47th & Central Clark stated staff has received a draft of the development agreement as of today. Essentially there is going to be some pretty complicated pieces to this. With the Nedegaard agreement there is a section in that, which states the City will negotiate in good faith for tax increment for the commercial piece. We are hoping to get something to you on August 11th Khoyratty has the actual building plans in for review by the Planning Commission at their meeting next week. The sewer expansion that needs to be built on Central Avenue is out for bids, but hasn't been given to Kevin Hansen yet. We will have to approve the Development Agreement with Khoratty for the commercial piece. But there will also need to be some policy discussions on the housing piece, because on phases two and three there aren't going to be built until after the T1F note is actually over with due to the current market. Economic Development Authority Special Meeting Minutes June 16,2008 Page 4 of 4 EstablishinQ Next MeetinQ Date of AUQust 11, 2008 Clark stated he would like to request a special EDA meeting on Monday, August 11, 2008, at 6:15 pm, as staff would be ready to bring the development agreement for 4ih & Central to the board. Motion by Herringer, second by Williams, to hold a Special EDA meeting on Monday, August 11, 2008 at 6:15 pm in Conference Room 1 to discuss the 4ylh & Central Development Agreement. All ayes. Motion Carried. ADJOURNMENT President, Peterson, adjourned the meeting at 6:58 p.m. Respectfully submitted, rv-/ dt.LL- Cheryl tfakken Community Development Secretary H:\EDAminutes2008\7-28-2008 Special