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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 Another piece, which is no longer valid, was a first option agreement given to Nedegaard for the commercial piece, essentially for where Buffalo Wild Wings is to the norlh.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 Economic Development Anthority Special Meeting Minutes Augnst 11,2008 Page 2 of3 /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 Economic Development Anthority Special Meeting Minutes August 11,2008 Page 3 of3 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 H:\EDAminutes2008\8-11.2008 Special