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HomeMy WebLinkAboutEDA MIN 08-25-09ECONOMIC DEVELOPMENT AUTHORITY (EDA) MINUTES OF THE REGULAR MEETING August 25, 2009 The meeting was called to order at 7:00 pm by President-Gary Peterson. Members Present: Bruce Nawrocki, Marlaine Szurek, Gerry Herringer, Tammera Diehm, Bobby Williams, Gary Peterson, and Bruce Kelzenberg. Staff Present: Walt Fehst, Scott Clark, Sheila Cartney, and Shelley Hanson. 2. PLEDGE OF ALLEGIANCE- RECITED 3. CONSENT AGENDA 1. Approve the Minutes of June 23, 2009. 2. Approve the Financial Report and Payment of Bills for June & July 2009 per Resolution 2009-20 Nawrocki questioned what the payment to Realty House was for. Clark said it was an escrow for the purchase of one of the properties we just acquired. He also asked who prepared the financial reports as he found them difficult to understand. Clark told him the Finance Dept. prepares the reports and if he has questions regarding the format or coding, to see the Finance Director. Herringer asked what the payment to Carlson Professional Services was for. Clark explained that company is the old Pro Source and the payment was for environmental fees for the Huset Park development area. Approve Desertification A3/C7 per Resolution 2009-21 Statutorily TIF Districts A3/C7 expired on August 1, 2009. As advised by the City's EDA attorney a resolution should still be passed according to Office of State Auditor (OSA) policy. The Resolution is provided below. Approve City Council to negotiate purchase agreements for the Scattered Site project per Resolution 2009-25 On Apri128, 2009 the EDA approved a"Scattered Site Housing Program" in which the EDA buys mostly foreclosed hoines for the purpose of demolition. Staff previously recommended the City enter into the purchase agreements and purchase the homes on behalf of the EDA, and then do a quitclaim deed baclc to the EDA. Because time is of the essence in negotiating these purchases, it is advantageous to have the City enter into these agreements due to their more frequent meetings. Economic Development Authority Minutes Page 2 August 25, 2009 Nawrocki asked what costs are involved to follow this recommended process. Clark stated the cost of preparing the Quitclaim Deed and filing it is approximately $200: Nawrocki then replied he thought maybe Anoka County should take over purchasing the properties and handling the transactions. He thought it would streamline the process to have one entity doing this. Clark explained that the County doesn't have the staff to handle transactions on behalf of the City. They are currently buying properties using CDBG funds and NSP monies in addition to what the City is buying. The County has to follow federal guidelines and the process is more cumbersome than ours. Once the properties are demolished or re-habbed they must be sold to low or moderate income people to meet the federal guidelines. The City is purchasing properties that have a total price of purchase and demo for under $50,000 and the city is under no obligation to re-sell the properties based on income restrictions. If we find properties that are above our target price, or that would be good candidates for re-hab, we are referring them to Anoka County. Clark said we are working closely with the County and that between us we are hoping to acquire 40-45 properties. Anoka County is purchasing properties in Columbia Heights because of the low price points in our city compared to other cities in Anoka County. He went on to say that having Anoka County take over purchase and demo of properties would not save the city any money. Staff reminded the EDA Board that Anoka County takes 15% administration fee for handling the Anoka County HRA Levy account on behalf of the City. Motion by Diehm, seconded by Szurek, to waive the Reading of Resolution 2009-20, 2009-21, and 2009-25 there being ample copies available to the public. All ayes. MOTION PASSED. Motion by Diehm, seconded by Szurek, to approve the Minutes and Resolutions 2009-20, 2009- 21, and 2009-25 approving payment of bills for June and July, Desertification of TIF Districts A3/C7 and approving City Council to negotiate purchase agreements for the scattered site housing project. All ayes. MOTION PASSED. EDA RESOLUTION 2009-20 RESOLUTION OF THE COLUNIBIA HEIGHTS ECONOMIC DEVELOPMENT AUTAORITY (EDA) APPROVING THE FINANCIAL STATEMENT FOR JUNE AND JULY 2009 AND PAYMENT OF BILLS FOR THE MONTHS OF JUNE AND JULY 2009. WHEREAS, the Colmnbia Heights ~couoinic Developinent Authority (EDA) is rcquired by Minnesota Statutes Section 469.096, Subd. 9, to prepare a detailed financial statement which shows all receipts and disbursements, their nature, the inoney on hand, the purposes to which the inoney on hand is to be applied, tl~e EDA's credits and assets and its outstanding liabilities; and WH~REAS, said Statute also requires the EDA to exainine the stateinent and treasm~er's vouchers or bills and if correct, to approve them by resolution and enter the resolution in its records; and WH~REAS, the financial statement for the months of June and July 2009 and the list of bills for the months of June and July 2009 are attached hereto and made a part of this resohrtion; and Economic Development Authority Minutes Page 3 August 25, 2009 WHEREAS, the EDA has examined the financial statement and the list of bills and finds them to be acceptable as to both form and accuracy. NOW, THEREFORE BE IT RESOLVED by the Board of Commissioners of the Columbia Heights Economic Development Authority that it has examined the attached financial statements and list of bills, which are attached hereto and made a part hereof, and they are found to be correct, as to form and content; and BE IT FURTHER RESOLVED the financial statements are acknowledged and received and the list of bills as presented in writing are approved for payment out of pro~er funds; and BE IT FURTHER RESOLVED this resolution and attachments are to be made a part of the pennanent records of the Columbia Heights Economic Development Authority. Passed this 25th day of August, 2009. MOTION BY: Diehm SECONDED BY: Szurek All ayes. Attest by: President Shelley Hanson, Recording Secretary COLUMBIA HEIGI3TS ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. 2009-21 RESOLUTION DECERTIFYING 1977 CBD REVITALIZATION PLAN (DOWNTOWN R~DEVELOPMENT) TAX INCREMENT FINANCING DISTRICT Recitals Section 1. 1A1. The Authority and the City of Columbia Heights, Minnesota (the "City") previously established the 1977 CBD Revitalization Plan Tax Increment Financing District (Downtown Redevelopment) (the "TIF District") and adopted a Tax Increment Financing Plan therefore (the "TIF Plan"), pursuant to Mimlesota Statutes, Sections 273.71 through 273.78, since recodified as Sections 469.174 through 469.1799 (the "TIF Act"). The TIF Plan was adopted by the City Council of the City on March 2, 1977. 1.02. Pursuant to Section 469176, Subdivision lc of the TIF Act, for tax increment financing dist~icts created prior to August 1, 1979, such as the TIF District, tax increment revenues sliall not be paid to an authority after August l, 2009. 1.03. The Board has determined that it is in the best interests of the Authority to recognize the expiration of the TIF District and to formally decertify the TIF District as of August 1, 2009. Section 2. TIF District Decertified; Filin~. 2.01. The TIF District is hereby deemed decertified as of August 1, 2009. Economic Development Authority Minutes Page 4 August 25, 2009 2.02. Authority staff is authorized and directed to transmit a copy of this Resolution to the Director of Property Records and Taxation of Anoka County with instructions to recognize the expiration of the TIF District, it being the intent of the Authority that no collection of tax increment revenues from the TIF District will be distributed to the Authority after August 1, 2009. 2.03. Authority staff is directed to return any remaiiiing tax increment in the accounts established for the TIF District to the Director of Property Records and T~ation of Anoka County for distribution to the taxing jurisdictions within the TIF District. Passed this 25~' day of August 2009. Motion By: Diehm Second By: Szurek Roll Call: All ayes ~ ~ ~ President Gary L. Peterson ATTEST: Secretaiy Shelley Hanson COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. 2009-25 RESOLUTION DELEGATING TO THE CITY OF COLUMBIA HEIGHTS AUTHORIZATION TO NEGOTIATE PURCHASE`AGREEMENTS FOR CERTAIN PROPERTIES LOCATED WITHIN THE DOWNTOWN CBD REDEVELOPMENT PROJECT RECITALS Section L lAl. The Authority administers the Downtown CBD Redevelopinent Project (the "Project") within the City of Columbia Heights, Miimesota (the "City"), which Project was established pursuant to Minnesota Statutes, Sections 469.001 through 469.047, as amended (the "HRA Act"). . 1.02. The Authority has undertaken a program to acquire hoines located in the Project to address foreclosure problems and remediate and prevent the emergence of blight (the "Scattered Site Housing Program"). 1.03. The City, as a"state public body" under Section 469.041 of the HRA Act; is authorized to make contributions to the Project. 1.04. In order to acquire certain properties in a timely fashion, the Authority has detennined to request that the City assist with such acquisitions by negotiating with sellers and entering into purchase agreements (the "Purchase Agreements") on befialf of the Authority. Econoinic Development Authority Minutes Page 5 August 25, 2009 Section 2. Annrovals. 2.01. The Authority hereby requests the City, using its powers as a"state public body" under the ~IlZA Act, to negotiate Purchase Agreements for properties located in the Project that are consistent with the criteria for the Scattered Site Housing Program, as approved by the Authority on Apri128, 2009. 2.02. The City Council of the City is authorized and directed to approve and enter into Purchase Agreements, provided that the City's rights in each Purchase Agreement shall be assigned to the Authority. 2.03. The Board hereby accepts and approves each Purchase Agreement entered into by the City and assigned to the Authority, provided that the Purchase Agreements are consistent with the criteria for the Scattered Site Housing Program. Passed this 25t1i day of August 2009 Offered by: Diehm Second by: Szurek Roll Call: All ayes ATTEST: President, Gaiy L. Peterson Secretaiy, Shelley Hanson 4. BUSINESS ITEMS Resolution 2009-22-Schafer Richardson Amendment Cartney explained that on October 25, 2004 the City, EDA, and Huset Park Development Corp entered into a contract for private redevelopment of the "Industrial Park". On August 1, 2007, the same parties agreed and entered into an amended and restated contract for private development, and on February 9, 2009 the same parties entered into an amended and restated contract for redevelopment changing commencement and completion dafes for development. The "minimum improvements" in the contract is broken out into phases and includes three different housing types and one commercial space. The contract included 277 townhouse units, 50 senior units, 183 condominium units, and 11,650 square feet of commercial space. Due to the down turn in the housing market and economic conditions, Shafer Richardson is requesting additional completion date amendments to the development contract and a reduction in lot price from $39,000 to $22,SOQ per townhouse. Economic Development Authority Minutes Page 6 August 25, 2009 The following table represents the second amendments requested per phase and the new proposed Request: Phase Original Date Amended Date (Feb 2009) Proposed Date IB Housing Complete by 12/31/2008 Complete by 4/30/20ll Complete by 10/31/2011 IIA Housing Complete by 4/30/09 Complete by 6/1/2010 Complete by 6/30/2011 IIB Housing Complete by 12/31/09 Complete 7/1/2012 Complete by 4/30/2013 IIIA Housing and Commercial Commence by 12/31/08 complete by 12/31/2010 Commence by 4/1/2010 Complete by 4/1/2012 Commence by 12/30/2011 Complete by 12/30/2013 IIIB Housing Commence by 12/31/2010 complete by 12/31/1012 Commence by 12/31/2012 complete by 12/31/2014 Commence by 6/30/2013 Complete by 6/30/2014 IIIC Housing Commence by 12/31/2012 complete by 12/31/2014 Commence by 12/31/2014 complete by 12/31/2016 Commence by 12/31/2014 Complete by 12/31/2016 The following table represents the first amendment requested and the new proposed request for townhoine uuits sales price: Original Amended 2007 Pro osed Chan e $38,500 $39,000 $22,500 The development contract states the minimum improvements (stated above) but does not specifically determine the size of the units; however, an approved site plan does. The approved Site Plan for the development dictates the type of unit and where they are placed; therefore, the unit types and sizes should remain the same as what was originally approved. Staff recommends the EDA amend the development contract as requested to change commencement and completion dates and to reduce the lot prices to $22,500 per townhouse for the Huset Park/Parkview Redevelopment. Brad Shafer and Maureen Michalski from Shafer Richardson were present to answer questions. Szurek wanted to know if this would affect the size, style or location of any new townhouses. Maureen explained that the design, size, and the location of the townhouse on the site will not change. Those items are part of the site plan that was already approved through the planning process. It will allow for profit margin ranges to remain the same, and Ryland will be inodifying their sales approach by having more interior upgrade options. With the decrease in inarket values, Ryland can't make money if they are required to pay $39,000 for each lot. Nawrocki asked if the utilities are in for the remainder of the residential sites. Shafer said that all the utilities, sewer and water, and streets are in. Nawroclci then asked why the EDA is involved in determining the sales price of each lot. As a point of information, he said Anoka County has the lot value at $23,000 on one of the units. Clark explained that the City Council set up in the Developmerit Agreement minimum sales price, so any change to the agreement must be approved by the EDA. Economic Development Authority Minutes Page 7 August 25, 2009 Nawrocki said if the market value on these lots are dropping to $22,500 that would also mean the lot prices of the properties we are purchasing for the scattered site program would also be dropping. He questions whether the lots will be worth $30,000-$35,000 as staff claims. Clark responded that the price of a lot for a single family home is different from the smaller townhouse lot. He also reminded members that he estimated that we would recover about 70% of our expenses and that we may have to sit on these lots for 5 years until things in the housing industry improve. Szurek asked how many units are being rented? Clark said the wasn't sure of the exact number, but that the Association is adhering to the 5% limit. The Association has to approve each rental license application to ensure the number of rentals is within the parameters established. Gary Peterson stated he thinks the project has been a great addition to the city and that it is neat and clean looking, including the construction site. Diehm said she appreciates that the project continues to move forward, even if it is slowly. Shafer thanked the Board and said he would pass the comments along to Ryland Homes. Motion by Diehm, seconded by Kelzenberg, to waive the reading of Resolution 2009-22, there being ample copies available to the public. All ayes. MOTION PASSED. Motion by Diehm, seconded by Kelzenberg, to adopt Resolution 2009-22, a Resolution approving the third amendment to Amended and Restated Contract for Private Redevelopment by and between Columbia Heights Economic Development Authority and Huset Park Development Corporation, approved on August l, 2007; and furthermore, to authorize the President and Executive Director to enter into an agreement for the same. All ayes. MOTION PASSED. COLUIVIBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. 2009-22 RESOLUTION APPROVING A TIIIl2D AMENDMENT TO AMENDED AND RESTATED CONTRACT FOR PRIVATE REDEVELOPMENT BETWEEN THE COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY, THE CITY OF COLUMBIA HEIGHTS AND HUSET PARK DEVELOPMENT CORPORATION Recitals Section 1. 1A1. The Authority has detei-~nined a need to exercise the powers of a housing and redevelopment authority, pursuant to Minnesota Statutes, Sections. 469.090 to 469108 ("EDA Act"), and is currently adininistering the Downtown CBD Redevelopment Project ("Redevelopment Project") pursuaut to Minnesota .Statutes, Sections 469.001 to 469.047 ("IIRA Act"). 1.02. The Authority, the City of Coluinbia Heights ("City") and Huset Park Development Coiporation (the "Redeveloper") entered into a ulto An Amended and Restated Contract for Private Redevelopment dated as of August 1, 2007, as amended by a First Ainendment thereto dated June 16, 2008 and a Second Ainendment thereto dated as of Februaiy 9, 2009 (the "Contract"), setting foi~th the terms and conditions of redevelopment of certain property within the Redevelopment Project, generally located east of University Avenue and south and west of Huset Park . 1.03. The parties have detenniiied a need to modify the Contract in certaui respects, and have caused to be prepared a Third Amendment to Ainended and Restated Conh~act for Private Redevelopment (the "Amended Contract"). Economic Development Authority Minutes Page 8 August 25, 2009 1.04. The Board has reviewed the Ainended Contract and finds that the execution thereof and performance of the Authority's obligations thereunder are in the best interest of the City and its residents. Section 2. Authoritv A~proval; Further Proceedings. 2A1. The Amended Contract as presented to the Board is hereby in all respects approved, subject to modifications that do not alter the substance of the transaction and that are approved by the President and Executive Director, provided that execution of the documents by such officials shall be conclusive evidence of approval. 2.02. The President and Executive Director are hereby authorized to execute on behalf of the Authority the Ainended Contract and any documents referenced therein requiring execution by the Authority, and to carry out, on behalf of the Authority its obligations thereunder. Passed this 25tli day of August 2009 Offered By: Diehtn Second By: Kelzenberg Roll Call: All ayes President Gary L. Peterson ATTEST: Secretary, Shelley Hanson This is a copy of the Amendment to be executed. THIIZD AMENDMENT TO AMENDED AND RESTATED CONTRACT FOR PRIVATE REDEVELOPMENT THIS AGREEMENT, made on or as of the day of , 2009, by and between COLiJNIBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY, COLUIVIBIA HEIGHTS, MINNESOTA, a public body coiporate and politic (the "Authority"), established pursuant to Minnesota Statutes, Sections 469.090 to 469.1081 (hereinafter referred to as the "Act"), the CITY OF COLiJ1VIBIA HEIGHTS, a Minnesota municipal corporation {the "City") and HUSET PARK DEVELOPMENT CORPORATION, a Minnesota corporation (the "Redeveloper"). WITNESSETH: WIIEREAS, the parties hereto entered into that certain Amended and Restated Coirtract for Private Redevelopment dated as of August 1, 2007, as amended by a First Amendment thereto dated as of June 16, 2008, as fiirther amended by a Second Amendment thereto dated as of February 9, 2009 (the "Contract"), providing for redevelopment of certain property in the City described as the Redevelopment Property; and WI~REAS, the parties have determined a need to amend the Contract in certain respects, ui light of changing market conditions and extension of the so-called five-year rule under Miimesota Statutes, Section 469.1763, subd. 3 as amended by Minnesota Laws 2009, Chapter 88, Article S, Section 8; NOW, THEREFORE, in consideration of the premises and the mutual obligations of the parties hereto, each of them does hereby covenant and agree with the other as follows: Section 4.3 of the Contract is modified as follows (italicized language shows revision): Section 43. Completion of Constiuction. (a) Subject to Unavoidable Delays and the provisions of paragraphs (b), (c) and (d) below, the Minimmn I~nprovements must be constructed in accordance with the following schedule: Economic Development Autharity Minutes Page 9 August 25, 2009 Phase L• As of the date of the Amended and Restated Contract, the intenial site improvements and at least 80 percent of the required nuinber of units for Phase IA are complete. Redeveloper inust substantially .complete all internal site improvements for Phase IB, including roads, and at least 80 percent of required number of housing units for Phase IB, by October 31, 2011. Phase II: As of the date of the Amended and Restated Contract, Phase IIA is under construction. Redeveloper inust substantially complete all internal site iinprovements, including roads, together with at least 80 percent of required number of housing units for Phase IIA, by June • 30, 2011. Redeveloper must substantially complete all internal site improvements, including roads, together with at least 80 percent of required number of housing units for Phase IIB, by April30, 2013. Phase IIL• Redeveloper must construct and complete all internal site ixnprovements, including roads, and at least 80 percent of the required number of housing units, according to the following schedule: Phase IIIA: Commence by December 30, 2011; complete by December 30, 2013. Phase IIIB: Coinmence by June 30, 2013; complete by June 30, 2014. Phase IIIC: Commence by December 31, 2014; complete by December 31, 2016. 2. Section 3.1(d) is modi~ed as follows (italicized language shows the revision): (d) The Redeveloper shall not Transfer any portion of the Redevelopment Property to any Subdeveloper (or to itself or an Affiliate for any Phase or portion thereof retanled and constructed by Redeveloper) at price less than the following: $ 22, S00 per townhome (As an2ended August 25, 2009) $ 18,000 per condominium or cooperative unit $300,000 for the commercial portion of Phase III $10,000 per seniar rental unit (as amended June 16, 2008) The aUove amounts are payable at closing on any such Transfer, provided that if the Subdeveloper undertakes site improvements, any portion of such payment attributable to the cost of site improvements on the transfeired Parcel may be deducted and paid by the Subdeveloper as those costs are incurred. I~i addition, each Subdeveloper shall pay to the Redeveloper at closing on such land sale the net present value of Projected Tax Increment from the transfened Parcel (calculated as described in Section 3.8(b) hereo~. Upon such payment, the Authority shall issue the Initial Note for such amount, subject to all the tenns and conditions of Section 3.8. 3. Section 3.8(e) of the Contract is inodified as follows: (italicized language shows the revision): (e) Authorization and Delivery. ~ach I~iitial Note will bc issued in substantially the form set forth ui the Authorizing Resolution attached as Schedule D. Each Authorizing Resolution will be approved upon mutual detei7nination by the Authority and Redeveloper of the principal amounts of and payinent schedule for each I~litial Note ui accordance with the terms of this Section. The obligation to deliver each I~iitial Note is conditioned upon (i) the Redeveloper having delivered to the Authority an invesnnent letter for tlie Initial Note in a form reasonably satisfactoiy to the Authority; and (ii) the Redeveloper having delivered to the Authority, and the Authority having accepted, certification of Public Redevelopment Costs in accordance with paragraph (d) ui at least the principal amount of the Initial Note, or the Redeveloper having satisfied the conditions of paragraph ( fl below; and (iii) there being no uncured Event of Default by Redeveloper under this Agreement with respect to the relevant Phase. Notwithstand'uig anything to the contrary in this' Agreement, if the conditions for deliveiy of the any Initial Note are not met by .Ianuary 1, 201 S, which is ten years after the date of cei~tification of the TIF District by the County, the Redeveloper's rights and interest to receive such Initial Note tenninate. Economic Development Authority Page 10 August 25, 2009 4. The Contract remains in full force and effect and is not modified except as expressly provided herein. IN WITNESS WIIEREOF, the Authority has caused this Agreement to be duly executed in its name and behalf and its seal to be hereunto duly affixed and the Redeveloper has caused this Agreement to be duly executed in its name and behalf on or as of the date first above written. COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY By By Its President Gary L. Peteison Its Executive Director, Walter R. Fehst STATE OF MINNESOTA ) ) SS. COUNTY OF ANOKA ) The foregoing instrument was acknowledged before me this day of , 2009, by and Walter R. Fehst, the President and Executive Director of the Columbia Heights Economic Development Authority, a public body politic and corporate, on behalf of the Authority. STATE OF MINNESOTA ) ) SS. COUNTY OF ANOKA ) Notaiy Public CITY OF COLUMBIA HEIGHTS Bv Its Mayor Gary L. Peterson Bv Its City Manager, Walter R. Fehst The faregoing instrument was acknowledged before me this day of , 2009, by Gary Peterson and Walter R. Fehst, the Mayor and City Manager of the City of Coluinbia Heights, a Minnesota municipal corporation, oii behalf of the City. By STATE OF MINNESOTA ) ) SS. COUNTY OF ) Notary Public HUSET PAR.K DEVELOPMENT CORPORATION President and Chief Executive Officer The foregoing instrumeiit was acknowledged before me this day of , 2009 by Bradley J. Schafer, the President and Chief Executive Officer of Huset Park Developinent Corporation, a Minnesota corporation, on behalf of the corporation. Notary Public Economic Development Authority Minutes Page 11 August 25, 2009 CONSENT BY ASSIGNEE The undersigned, as assignee of certain rights of Redeveloper under the attached Amended and Restated Contract for Private Redevelopment (the "Amended Contract"), hereby consent to all tenns of the Amended Contract; provided that nothing in this consent will alter or affect the rights of undersigned under the Agreement of Purchase and Sale (Finished Lots) between The Ryland Group, I~ic. and Redeveloper dated April 18, 2005, as amended. THE RYLAND GROUP, INC. STATE OF MINNESOTA ) ) SS. COUNTY OF ) By Its The foregoing instrument was acknowledged before me this day of , 2009 by , the of the Ryland Group, Inc., a Maiyland corporation, on behalf of the corporation. Notary Public xxxxxxx~'r.~~xxxxxxxxxxxx~~~x~c~;xxxxxx~~Fk~F~~'r,xx~~zF~xx~Fxxxxxxxxx~c~Fxxx'r.xxx~~zB~x~~~c CONSENT BY ASSIGN~E The undersigned, as assignee of certain rights of Redeveloper under the attached Amended and Restated. Contract for Private Redevelopment (the "Amended Contract"), hereby consent to all terms of the Amended Contract. PARKVIEW HOMES, LLC STATE OF MINNESOTA ) ) SS. COUNTY OF ) By Its The foregoing instrument was acknowledged before ine this day of , 2009 by , the of Parkview Homes, LLC, a Miimesota limited liability company, on behalf of the company. Notary Public Economic Development Authority Minutes Page 12 August 25, 2009 5. DISCUSSION A. Rental -Clark explained that the City has implemented a wide variety of housing programs in 2009 to address issues with the housing crisis and how it affects our neighborhoods. He reviewed the various programs that have been initiated with cooperation between the Community Development Department, the Police Department, Anoka County, and GHMC. Although, these programs are a positive for the City, staff believes the City needs to continue discussions on housing and neighborhood issues, specifically: 1. Rental Property Issues 2. Code Enforcement, and 3. Vacant properties. The City currently has neighborhoods that are having critical issues. Some have over 15% foreclosure rates, most have experienced severe price point deflation, and the number of rental properties is rapidly increasing (especially single family homes). In early August the Community Development Department held a meeting with Police and Fire to discuss overall housing issues. The City has changed its past routine rental property inspection schedules for single family and duplex housing with the interior being inspected every four years (used to be every two years) and the exteriors being inspected annually. Apartment exteriors and common areas are inspected annually with individual units inspected every four years. The City has also experienced a severe increase in rental properties from 2006 to 2009 with over 200 net new rental licenses being issued. Over eighty new licenses have been issued since September 2008 (the month that the rental moratorimn went of~, with approximately 70 of these being single family. Staff feels it is important to discuss policy for two questions: 1) Does the City want to develop an Ordinance limiting single family rentals based on a percentage of area calculation, and 2) how often should rentals be inspected? Clark passed around a map showing the location and concentration of the rental properties. He said we have approximately 260 single family homes that have rental licenses. Staff is looking for direction from the Board to identify priorities. Herringer asked how we know a single family home is rental? He thinlcs there could be some out there that slip through the cracks. Clark said that may be true for a small number, but the Fire Dept tracks possible rentals through sales, homesteads, changes in water department billing, and complaints from neighbors. B. Code Enforcement-Due to staff cuts the Fire Department's working policy for code enforcement has changed. Currently there is approximately 1.75 FTE's devoted to inspections which are done on a complaint basis, except for major corridors and vacant properties. In addition to this, an internship position was created which enables more time to be devoted to code enforcement. The primary policy question for the EDA is "how critical is code enforcement to the City's overall community health" and what changes should occur. Consideration of this issue is iinportant to the 2010 budget discussion. Economic Development Authority Minutes Page 13 August 25, 2009 Nawrocki said he felt the routine exterior code enforcement that the Fire Dept. used to do is important as are inspecting the interior of rental units every two years rather than four years. He is_ aware they lost some clerical help, but he said they haven't lost any FT firefighters who were doing the inspections, so he doesn't understand why the policy was changed. Nawrocki felt it is especially important for multiple unit buildings. Other members felt that single family homes and doubles were more of a problem and should be inspected every two years. Often times owners of these properties have never rented property before and have issues with tenants and maintaining the property. There was a discussion regarding whether the city could legally inspect target areas more often than other areas. Fehst recommended checking with the City Attorney before deciding on a policy like that. Most members felt it should be a uniform policy whereby all rentals are inspected every two years, not four. Fehst said the policy was initially changed because of the increase in the number of rental properties. He also felt there may be some duplication of efforts in the record keeping that could be done more efficiently, and that maybe the fire personnel could get computers for the vehicles to help input information as the inspections are done. He also pointed out that even though the number of rental units has increased, the building inspector is doing the initial new rental inspections to alleviate some of the workload of the Fire Dept. Williams suggested going to a two year license cycle that would include a 2-year license and an inspection at the time of renewal. This would eliminate the need to re-issue the license annually, and free up time so the properties could go back to a two year inspection schedule. Other members thought this may be a good way of accomplishing the two year inspection goaL C. Vacant Building Registration-Clark reviewed the map depicting the number of vacant properties that have been created by the foreclosure inarket. Staff anticipates that the City could still have over 100 additional foreclosures by the end of 2010. The question for the EDA is whether the City should increase its review of these properties, by possibly implementing a registration program. These properties become a burden for the city and there are direct costs associated with monitoring them. These properties also have a greater level of deterioration since they are vacant for long periods of time. The EDA must decide whether to implement a registration prograin to increase our regulatory issues associated with these properties (similax to that recently instituted by the City of Crystal). Clark said the fee for this program would be miniinal, especially compared to other cities that require registration. It would prompt owners/banks/propei-ty managers/ to lceep the property maintained in order to avoid being posted as an abandoned/vacant property. It would also give us contact information in case there is an issue with the property while it is vacant. Economic Development Authority Minutes Page 14 August 25, 2009 Members questioned if there has been negative feedback on our vacant/abandoned inspection program. Cartney said that we have not received any negative comments and that we have received great cooperation from realtors and property managers. Szurek liked some aspects of the Crystal Ordinance. She wondered if it would eliminate vagrancy and vandalism that occurs at some of the vacant properties. Clark said we haven't had an issue with that yet. Diehm thought the concept of the vacant registration was fine, but thought the 30-day timeframe was unrealistic and the $500 fee too high. She felt 30 days was not sufficient time if a person were trying to sell a home and they had already moved into their new home. She thought there should be some type of exception for this situation. Nawrocki didn't feel we needed a vacant building registration, especially for those trying to sell a home, which sometimes takes a while. Herringer asked if we couldn't differentiate between an owner trying to sell a property and one that is being foreclosed. Clark sulnmarized the feedback he heard to the members. Staff should look into a two year rental license/inspection policy and go back to routine grid property code enforcement. The consensus was not to pursue a vacant property registration at this time nor limiting the number of rentals. 6. RESOLUTION 2009-23 HRA LEVY BUDGET and RESOLUTION 2009-24 EDA LEVY SUDGET Clark stated that two items should be noted in review of the 2010 budget for the Community Development Department. 1) The budget goal has been based on past discussions between the Council and the City Manager/Finance Department whereby the goal of the overall City general fund budget is to be independent of LGA revenue by 2013. The model was based on freezing expenditures at the 20081eve1 with the exception of approved pay increases (this model establishes an EDA levy amount in 2010 at $83,971). It should also be noted that all other Community Development expenditures are outside of the General Fund Budget, but that the fina12010 expenditures meet the budget goals. 2) In order to provide a more direct nexus between the HRA and EDA Levy, staff created a new fund that more closely ties levy revenue back to actual expenditures. Note: Previous 2009 expenditure budget had Fund 201 (Community Development Fund) divided into Department's of Protective Inspections-42400 and Community Development Administration-46310. Community Development Adminsitration-46310 has now been eliminated with the creation of Fund 204-Economic Development Authority with a corresponding Department of Economic Development Authority-46314. Based on these new funds the comparison between the gross 2009 and 2010 budget follows: Economic Development Authority Minutes Page 15 August 25, 2009 Budget Year 2009 2010 Protective Inspection (42400) $329,584 $263,989 Community Development Admin. $295,725 $0 (46310) Economic Development Authority Not created $346,428 (46314) Total Budget ~625,309 $610,417 Clark reviewed the Analysis of the expenditures and revenues and what significant changes were made fxom the previous budget. He then went on to recommend two changes as follows: L Increase the minimum permit fees from $35 to $50 with the minimum fee value increasing from $800 to $1400. The last time the minimum fees were adjusted was in 1998. There are approximately 600 permits that fit into this category in a typical year, and these permits have at least 50% first inspection failure rate, meaning that on average, 1.5 inspections must be conducted per permit. 2. Readjust Planning Fees to a flat fee as shown on the attachment that was included in the packet. At this time, planning fees are extremely cumbersome, and expensive to administer. Clark described the process currently followed and recommends going back to a flat fee with the provision that an additional escrow can be posted for larger projects that may require outside expertise. Dielun said a lot of cities chasge a flat fee and an escrow account for any additional expenses. Staff recoirunends leaving the fee for the Abandoned Property Inspections at $250. He said the amount appears to be fair in terms of staff time. Nawrocki commented that raising building permit fees is counterproductive. By increasing them 50%, more people would try to avoid getting a permit. He thinks the tax increase proposed for the residents is already too high and that the TIF money should be going back to the taxpayers and shouldn't be spent on purchasing properties for the redevelopment of their neighborhoods. Clark explained the building permit fees haven't been raised for 11 years and that only the minimum fee is being raised. The minimuin fee would be charged for any project under $1400 in value. Currently it is $35 for anything under $800. The remainder of the fee schedule would stay the same. Nawrocki stated that if permit revenue is going down, then maybe the city should consider reducing staff if the workload is less. Clark stated that the worlcload hasn't gone down. The number of permits is constant, however it's just that projects being done are smaller in nature which means less revenue per inspection. The number of inspections also has not gone down based on the building inspector doing the initial rental inspections and the abandoned property inspections. Economic Development Authority Minutes Page 16 August 25, 2009 Nawrocki also asked that Clark get him the taxable market value figure for the city that is used for the calculation of the HRA levy amount. Motion by Williams, seconded by Kelzenberg, to waive the reading of Resolution 2009-23 there being ample copies available to the public. All ayes. MOTION PASSED. Motion by Williams, seconded by Kelzenberg, to adopt Resolution 2009-23 Authorizing the Levy of a Special Benefit Levy Pursuant to Minnesota Statutes, Section 469.033, Subdivision 6 and Approval of a Budget for Fiscal Year 2010. Kelzenberg, Diehm, Szurek, Herringer, Williams, Peterson-Aye Nawrocki- Nay. MOTION PASSED. COLiJiVIBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. 2009-23 AUTHORIZING THE LEVY OF SPECIAL BENEFIT LEVY PURSUANT TO MINNESOTA STATUTES, SECTION 469.033, SUBDIVISION 6 AND APPROVAL OF A BUDGET FOR FISCAL YEAR 2010 WIIEREAS, pursuant to Minnesota Statutes, Section 469.090 to 469.1081 (`BDA Act") the City of Coluinbia Heights ("City") created the Columbia Heights Economic Development Authority (the 'BDA"); and WI~REAS, pmsuant to City Resolution 2001-62 and Ordinance No. 1442, the City Council granted to the EDA all powers and duties of a housing and redevelopment authority under the provisions of Minnesota Statutes, Sections 469.001 to 469.047 (the "HRA Act"), except certain powers that are allocated to the Housing and Redevelopment Authority in and for the City of Columbia Heights (the "IIRA"); and WIIEREAS, Section 469.033, Subdivision 6, of the HRA Act permits the EDA and HRA, together, to levy and collect a special benefit le~y of up to A185 percent of ta~~able inarket value in the City upon all taxable real property within the City; and W f~REAS, the EDA desires to levy a special benefit levy in the amount of .0185 percent of taxable market value in the City; and WI~REAS, the EDA understands that the HRA does not expect to levy a special benefit tax for fiscal year 2010; and WHEREAS, the EDA has before it for its consideration a copy of a budget for its operations for the fiscal year 2010 and the asnount of the levy for collection in fiscal year 2010 shall be based on this budget. NOW, THEREFORE, Be It Resolved by the Board of Commissioners of the Columbia Heights Economic Development Authority: 1. The budget of $346,527 for the operations of the EDA presented for consideration by the Board of Commissioners of tlle EDA is hereby in all respects approved. Such budget includes the amount the EDA requests (by separate resolution) to be levied by the City under Mirulesota Stahrtes, Section 469.107, together with the ainount to be levied hereunder by the EDA under Minnesota Statutes, Section 469.033, subdivision 6. 2. Staff of the EDA are hereby authorized and directed to file the budget with the City in accordance with Minnesota Statutes, Section 469.033, Subdivision 6. Economic Development Authority Minutes Page 17 August 25, 2009 3. There is hereby levied, subject to the approval of the City Council of the City, a special benefit levy pursuant to Mimlesota Statutes, Section 469.033, Subdivision 6, in the amourit equal to the lesser of a levy at a rate of .0185 percent of taxable market value in City, or $262,556 with respect to taxes payable in calendar year 2010. 4. Staff of the EDA are hereby authorized and directed to seek the approval by resolution of the City Council of the City of the levy of special benefit taxes in 2010 and to take such other actions as are necessary to levy and certify such levy. Motion by: Williams Second by: Kelzenberg Roll Call: Kelzenberg, Diehm, Szurek, Williams, Herringer, Peterson-Aye Nawrocki-Nay Motion passed this 25'~' day of August, 2009. Attest by: Walter R. Fehst, Executive Director Gary L. Peterson, President Motion by Szurek, seconded by Williams, to waive the reading of Resolution 2009-24 there being ample copies available. All ayes. MOTION PASSED. Motion by Szurek, seconded by Williams, to Adopt Resolution 2009-24 Resolution of the Economic Development Authority in and for Columbia Heights EDA adopting the 2010 Budget and Setting the EDA Levy. Kelzenberg, Szurek, Diehm, Herringer, Williams, Peterson- Aye Nawrocki-Nay. MOTION PASSED. ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF COLUMBIA HEIGHTS EDA RESOLUTION 2009-24 RESOLUTION OF THE ECONOMIC DEV~LOPMENT AUTHORITY IN AND FOR COLUMSIA HEIGHTS (EDA) ADOPTING THE 2010 BUDGET AND SETTING THE EDA LEVY. BE IT RESOLVED By the Columbia Heights Economic Development Authority (EDA) of Cohunbia Heights, Miimesota as follows: WIIEREAS, the Columbia Heights City Council established the Columbia Heights Econoinic Development Authority January 8, 1996 pursuant to Minnesota Statutes 469.090 to 469.1081; and WI~REAS, the City Council has given to the EDA the responsibility for all development and redevelopment projects and programs; and WHEREAS, the EDA is authorized mlder State Statutes, Section 469.107 to levy a tax on its area of operation for the purposes authorized under State Statues 469.090 to 469.1081, subject to consent by the City Council. Economic Development Authority Minutes Page 18 August 25, 2009 NOW, THEREFORE BE IT RESOLVED BY THE EDA FOR THE CITY OF COLUMBIA HEIGHTS, MiNNESOTA THAT: l. The EDA adopts and recommends to the City Council for approval a budget of $346,527 for year 2010. 2. The EDA adopts and recormnends to the City Council for approval a levy of $83,971 for year 2010. The Executive Director is instructed to transmit a copy of this resolution to the City Manager and Finance Director/City Clerk of the City of Columbia Heights, Minnesota. APPROVED THIS 25t'' DAY OF Au u~st, 2009. MOTION BY: Szurek SECONDED BY: Williams ROLL CALL: AYES: Kelzenberg, Szurek, Diehm, Herringer, Williams, Peterson NAYS: Nawrocki Attest by: Walter R. Fehst, Executive Director Gaiy L. Peterson, President 7. ADMIlvISTRATIVE REPORT Clarlc reported that staff is working to establish a Cable Show every two months highlighting new businesses in the community. Jeff Sargent, City Planner, will work with new owners to set up short interviews with them to promote their new business. Clark told members that New Perspectives Lighthouse Assisted Living Project is scheduled to open November 1, 2009. They have a 35-40% reservation rate already. It took them three years to fill their site in Waconia, so they are very happy with the progress thus far. Clark updated members on the latest news for the 47t1i and Central Ave commercial development. He informed them he had met with the developers and was told they have coinmitments from Aldi's and for about 50% of the 9,000 sf retail space. The bank is looking for 100% commitment of the retail space in order to process the funding for the project. Clark reminded meinbers that staff went before the Met Council this year in order to get an extension of the grant for the parking ramp/project. The Met Council at that time granted the extension for 70% of the original grant amount. The condition at that time was the project had to be done by December 31, 2009. Since this project won't be complete by that deadline, the only option left may be to go back to the Met Council and ask for another extension. Clark told the developer that in order to go back to the Met Council in October we would need signed leases in place for the project and a signed commitment from the bank for the funding, otherwise the city will not go back and ask for another extension. He will continue to update the members as necessary. The Developers from 37t1i and Central came back with another plan, but staff still was not satisfied with the proposed changes. The developer will continue to search for additional businesses. Economic Development Authority Minutes Page 19 August 25, 2009 Cartney reported that Anoka County purchased the property at 4522 Sth Street and the City now has ownership of the donated property located at 4147 7th Street. OTHER BUSINESS The next regular EDA meeting will be Tuesday, September 22; 2009. The meeting was adjourned at 8:50 pm Respectfully submitted, ~ ( ~ d~~~:~ ~ Shelley Hanson Secretary