HomeMy WebLinkAboutEDA MIN 08-11-08
ECONOMIC DEVELOPMENT AUTHORITY (EDA)
SPECIAL MEETING MINUTES
August 11, 2008
CALL TO ORDERIROLL CALL
President, Gary L. Peterson called the meeting to order at 6: 15 p.m.
Present: Gary L. Peterson, Bruce Nawrocki, Tammera Diehm, Marlaine Szurek, Gerry
Herringer and Bruce Kelzenberg
Bobby Williams arrived at 6:45 pm
Staff: Scott Clark, Walter R. Fehst, and Cher Bakken
PLEDGE OF ALLEGIANCE
BUSINESS ITEMS
4ih & Central Redevelopment Aqreement for Retail and Office Construction
Scott Clark stated he has been working on the Grand Central Commons project for the
past six or seven months. This project is 51,000 sq. ft.; half retail and half office. The
developer is moving along on the project. It has been approved on the Planning
Commission level. The building plans have already been submitted to us. The
developer has also done all of the bid work as far as the sanitary sewer work is
concerned. The last parl of this is to come up with a Development Agreement. It is our
understanding that he would like to starl construction sometime in September. What is
imporlant tonight is to talk about some general policy issues that need to be agreed
upon.
Clark went over the history of the project. In 2003 the original agreement was in place
with Bruce Nedegaard for Grand Central Lofts, which included 218 units of housing to
be done in three different phases and a minimum of 10,000 sq. ft of commercial
properly. Another piece, which is no longer valid, was a first option agreement given to
Nedegaard for the commercial piece, essentially for where Buffalo Wild Wings is to the
norlh. Parls of this agreement stated: 1) $700,000 of T1F funding to the developer
would not be released until all of the various phases and the commercial piece was
completed. The other obligation was a sewer expansion on Central A venue. The
agreement said that phase one could happen plus, 10 townhouses, but before phase
two, three and the commercial could be built, there was to be sanitary sewer expansion
on Central. Between 2003 and today there have been three different amendments.
Amendment one and two were regarding roadway easements, which the City had to
formally step in and do a condemnation in order to make that happen. The third
amendment moved the developer of the commercial properly from New Heights LLC to
Grand Central Properlies. The issue that has come up between the housing and
commercial developer was who is going to pay for the sewer expansion. The new
agreement in front of the EDA states we allow the housing developer would divide the
$700,000 in T1F funding. The T1F note between the two developers would be divided
and the commercial developer would be responsible for the sewer expansion. We
would also recommend the obligation be removed so that it wouldn't state that Phases
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Augnst 11,2008
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/I and /II would have to be finished before the T1F funding was released. Therefore, the
Fourth Amendment to Contract for Private Redevelopment changes would be: 1)
releasing $700,000 T1F for housing development without completing the remaining
housing phases; 2) the $700,000 would be divided between the housing and the
commercial developer, with the latter using the proceeds to pay for the construction
costs for the sewer expansion; 3) modifies the time line for the housing developers; 4)
establishes the sanitary sewer obligations to the commercial developer and creating a
new letter of credit; and 5) establishes a good faith effort for future housing phases.
The Contract for Private Redevelopment between the EDA and Grand Central
Commons, LLC has some key provisions. They are: 1) establishing the TIF amount,
which is anticipated to be $450,000; 2) establishes a look-back provision; 3)
memorializes the Met Council Grant of $974,369 and the process of reimbursement for
the ramp expenditures; 4) payment of administrative costs; 5) creates a completion of
improvement date of December 31, 2009; and 6) establishes a minimum assessment
agreement. Staff did check with Met Council to verify the funding could be used for the
ramp, if the ramp would be privately owned.
Nawrocki asked how much TIF has been generated from the project up to today.
Clark stated at the August 26th meeting we would have the information available to the
board.
Herringer stated in one of the agreements it said the housing condominiums should be
owner occupied. Nawrocki stated when the Industrial Park project started, he brought
up the question could we require no rentals. Diehm stated her understanding was that
we asked the developer and they voluntarily agreed to put a rental cap on the project.
But we had no legal way to force them to keep it. Then they followed a certain
procedure and got votes from a number of people, that they were allowed to change
that. All the association has to do is change their own rules. Staff is to look into how
rentals are being handled on the condominium project.
Szurek stated her fear is if they build another residential building, what is there to stop
them from becoming rental. Is Met Council planning on using some of the parking for a
"Park and Ride"? Clark stated no, when you look at the size of the parking and the size
of the buildings, there isn't enough capacity. In the beginning Met Council told staff that
the City would have had to be owners of the ramp and what they are saying now is that
this could be used privately.
Diehm asked what is the time line to obtaining the grant funding and what would
happen if they don't finish it in time. Clark stated the deadline is the end of the year and
we need to verify with Met Council the need for extensions.
Diehm stated she was uncomfortable with the language in the draft agreement where it
just says they'll use "best efforts". I would prefer having deadlines. We understand we
have to be flexible, that we may have to revisit it with another amendment, but at least
we have something to hold onto. We need to say if by May 1, 2010, this isn't done, you
are going to fall into default under this agreement. Clark asked what would she like the
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August 11,2008
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deadlines to be. Diehm stated we would have to talk to the developer about what is
realistic.
Diehm asked if the sewer expansion would be done prior to the commercial project.
Clark stated we would not release the commercial permit until the contract has been
finalized for the sewer expansion. So both the sewer expansion and the commercial
piece would be built at the same time. Diehm stated she would like to see that in
writing in the contract.
Clark stated there is another option, we could give more T1F money to Khoratty to build
the sanitary sewer expansion and basically say to Kloeber that we aren't going to
release the money until the time that phases two and three are done per the contract.
Szurek stated we have no dates, which erases the dates in the original agreement. We
should hold Kloeber to the original agreement. We need to put it into writing: 1) that he
will complete what he starled; or 2) I really can't finish this, but I will finish off the
properly and make it look nice. Fehst stated we still want him to pay half of the sewer.
Diehm asked what the TIF on the housing has to do with the commercial. Clark stated
the housing developer is giving half to the commercial developer. Diehm stated the
language says we are releasing you from our original agreement and we are giving you
the money for the sewer expansion. Clark stated we are trying to figure out how we are
going to split the T1F between the housing and commercial developers and we are
suggesting creating two notes.
Nawrocki asked when would the additional $450,000 come up. Clark stated that would
come up as a pay-as-you-go note.
Clark stated, just to clarify the EDA boards intent, that they don't want to release the
housing obligation, but would consider: 1) Some other dates or form to the obligation;
and 2) The need to clear the site. Board members agreed.
ADJOURNMENT
President, Peterson, adjourned the meeting at 7:09 p.m.
Respectfully submitted,
~~
Cheryl Bakken
Community Development Secretary
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