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HomeMy WebLinkAboutEDA MIN 03-23-10ECONOMIC DEVELOPMENT AUTHORITY (EDA) MINUTES OF THE REGULAR MEETING March 23, 2010 The meeting was called to order at 7:00 pm by President-Gary Peterson. Members Present: Bruce Nawrocki, Marlaine Szurek, Tammera Diehm, Gary Peterson, Gerry Herringer, Bobby Williams, and Bruce Kelzenberg. Staff Present: Walt Fehst, Scott Clark, Sheila Cartney, and Shelley Hanson. Also present were: Jack Boarman and John Gould from BKV, Sam Newberg from Joe Urban Inc. who did the market study, and residents Grace Lee and Mary Tholkes. 2. PLEDGE OF ALLEGIANCE- RECITED 3. CONSENT AGENDA Nawrocki referenced a letter sent to residents to notify them of this meeting regarding the presentation of the Market Study for the Grand Central Proposed Project. He took offense to the wording of the letter. It is his opinion that because it is a Public Meeting, anyone should be allowed to speak on an issue. He doesn't differentiate between a Public Meeting and a Public Hearing. 1. Approve the Minutes of February 23, 2010. Nawrocki asked if staff had checked whether GMHC had proper Insurance as referenced in the minutes from the February 23rd meeting. Clark said they had checked, and GMHC has the proper Insurance. Nawrocki then asked if the Phase 1 environmental assessment was done on the Root property. Clark responded that Phase 1 was done in November but the City has not received a copy of the report as of this time. He said the issue he addressed with a representative of the owner was that they have not provided adequate documentation for reimbursement from the DEED Grant. Nawrocki asked if the site has contamination. Clark again stated he has not seen the report so he doesn't know if the site is contaminated, and therefore, staff has not honored a request for reimbursement for the assessment. Motion by Diehm, seconded by Szurek to approve the minutes from the meeting of February 23, 2010, All ayes. MOTIONPASSED. 2. Approve the Financial Report and Payment of Bills for February 2010 per Resolution ~~1 ~-~5 Questions from members: Nawrocki questioned expenses from the February list of payments made as follows: Page 4-He questioned payment to Ehlers. Clark told him it was the fee for the Financial Seminar. There was a discussion regarding the list of bills paid and the financial statements that were enclosed in the agenda packets. It was noted that the first part of the report is the checks issued and the second part is the financial statements that indicate what fund the payments were applied to and how it relates to the budget overall. EDA MINUTES PAGE 2 March 23, 2010 Motion by Szurek, seconded by Diehm, to waive the Reading of Resolution 2010-OS, there being ample copies available to the public. All ayes. MOTIONPASSED. Motion by Williams, seconded by Diehm, to adopt Resolution 2010-OS, approving the Financial Report and payment of bills for February 2010. All ayes. MOTIONPASSED. EDA RESOLUTION 2010-OS RESOLUTION OF THE COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA) APPROVING THE FINANCIAL STATEMENT FOR FEBRUARY 2010 AND PAYMENT OF BILLS FOR THE MONTH OF FEBRUARY 2010. WHEREAS, the Columbia Heights Economic Development Authority (EDA) is required by Minnesota Statutes Section 469.096, Subd. 9, to prepare a detailed financial statement which shows all receipts and disbursements, their nature, the money on hand, the purposes to which the money on hand is to be applied, the EDA's credits and assets and its outstanding liabilities; and WHEREAS, said Statute also requires the EDA to examine the statement and treasurer's vouchers or bills and if correct, to approve them by resolution and enter the resolution in its records; and WHEREAS, the financial statement for the month of February 2010 and the list of bills for the month of February 2010 are attached hereto and made a part of this resolution; and 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 proper funds; and BE IT FURTHER RESOLVED this resolution and attachments are to be made a part of the permanent records of the Columbia Heights Economic Development Authority. Passed this 23rd day of March, 2010. MOTION BY: Williams SECONDED BY: Diehm AYES: All ayes Attest by: President Shelley Hanson, Recording Secretary EDA MINUTES PAGE 3 MARCH 23, 2010 4. BUSINESS ITEMS Community Gardens- Cartney explained that two individuals are interested in starting a community garden and have approached the City. In both cases they have requested the use of a City/EDA owned parcel. One of the individuals is Grace Lee who lives on the 4200 block of Washington Street. She is interested in starting a SO1C3 non-profit and would do community gardens as part of this non-profit. The other is Mary Tholkes who lives on the 3900 block of Reservoir Blvd. and works for Wells Fargo. Mary is interested in community gardens as part of the Wells Fargo community outreach program. Ideally staff would like both parties to work together on this effort and use one lot, especially since this is the first attempt at a"private community garden." Based on the collective discussions with both parties, the objectives of the community garden would be to teach people about gardening, provide fresh produce to SACA, and providing youth with garden experience opportunities. If the EDA would allow temporary use of a parcel, staff suggests using the city owned lot at the SE corner of 40th Avenue and Jackson Street (828 40th Ave). The lot is vacant and has a hydrant located on the lot. The hydrant can be used as a watering mechanism for the gardens, as is the case for the Reservoir Blvd. City owned community garden. Clark stated none of the other lots have hydrants located in a place where they could be used without having to go across a street or sidewalk. Mary has requested that in addition to allowing use of the lot, that city prepare the site with tilling, adding black dirt and mulch. In discussions with Public Works it is our estimate that this will cost $1,000 in materials and staff time. In addition to site preparation, a meter with a back flow preventer must be installed on the fire hydrant with a cost estimated at $1,000. Total site preparation is estimated at $2,000. Mary is requesting the EDA help cover these costs. Her plan is to partner with SACA and have those clients that are interested in a garden plot to help work the site. Grace Lee wants to introduce youth groups or neighbors that are interested in learning about gardening and working the site to be involved with her project. Four separate requests are before the EDA: (1) Allow the use of community garden on a City/EDA owned lot; staff suggests the vacant lot at 828 40th Ave. (2) To help pay for site preparation in an estimated amount of $1,000 (3) To help pay for the hydrant equipment at an estimate of $1,000 (4) Cost of water used at the site for the gardens. Staff recommends the EDA approve the use of a community garden at 828 40th Avenue, and that the users enter into an agreement with the EDA regarding the use. The EDA should discuss whether they want to have any financial investment, other than the lot, for this project. If the EDA does agree to provide some financial assistance for this project, a motion will be necessary. Questions from Members: Peterson said when he received the letter he thought it was a good idea and that staff is recommending a good site to work with. However, he thinks the City's only responsibility should be to provide the lot and water. The tilling and seeding should be done by the volunteers themselves. EDA MINUTES PAGE 4 MARCH 23, 2010 Nawrocki agreed with Peterson. He asked if anyone had checked to see if there is any room left at the Community Gardens site on Reservoir Blvd. Clark stated the City is in charge of the gardens at that site and that the individual plots are rented out for a small fee to cover the water and tilling expenses. He went on to explain there are only 2-3 small plots on that site that may be available. Diehm was looking at this issue as a community project that would provide a place for neighbors to gather and work together for a common goal. She knows others are interested in this as well as Grace and Mary. She also understands staff's concerns and recommends a policy be established regarding use of the City owned lots. One idea would be to use grant money received by the non-profit organization or from donations, for the expense of the water. Clark stated water is the major issue with using the City lots. The water and sewer have been cut at the street and capped, therefore there is no easy way to provide water to the gardens. That is why they had chosen the site at 828 40th Avenue. Herringer agreed a policy should be established. He stated it must be understood that if the opportunity should arise to sell the lot for re-development, that would take precedence over the use for garden space. Peterson asked if the lots would need to be tilled and have mulch added to make them workable. Tholkes said they would. Peterson said he would be willing to use the City's equipment to till the lots if he could get other volunteers to help with the process. He believes they should pay for the water usage. Roseanne Rivers, 4224 Jefferson St, would like to expand her garden space, and share with other neighbors who are also interested in having a garden space. She wants to use the lot at 4235 Washington St. She suggested putting a rain barrel on the site to provide water to the garden spaces. Grace Lee said she has gone to meetings of the non-profit group "Gardening Matters", an organization that helps people start these types of neighborhood projects. She stated they recommend having at least 10 committed people for each lot to make them successful. Mary Tholkes stated she has over 30 interested parties from SACA, so she figures out of that group, she can get at least 15 committed people. Fehst thought we should allow the use of the lots, provide the tilling and mulch and provide water to them. Nawrocki stated the City bought the lot at 828 40th Ave for possible use by the Library for additional parking. He suggested sending this matter to the Library Board for their approval to use the lot in this manner. Nawrocki again suggested using space on the Reservoir Blvd site to accommodate their needs. Both Tholkes and Lee said the 2 or 3 remaining plots are not big enough for what they want to do. EDA MINUTES PAGE 5 MARCH 23, 2010 Diehm questioned if there would be any matching funds from non-profits for retro-fitting the hydrant and providing water to the site. Lee said they wouldn't qualify for funding at this time since they haven't estabalished themselves as a SO1C3 yet. The discussion turned to use of rain barrels. Tholkes said it is possible to use them, but wondered whether they would attract kids and vandalism. Diehm then asked if we could handle these as an Interim Use Permit and have the requests go through the Planning Commission. Clark said we could, but the struggle this year is the timeframe. They want to start planting by the end of April. Therefore, staff recommends trying it for one season only so we can evaluate costs involved and whether it is a success for one or two lots only. Kelzenberg asked what the liability to the City would be to allow residents to use these City owned lots. Cartney explained the League of MN Cities said the City's Insurance would cover the lots. Herringer asked if the expense for the backflow preventer is an annual expense, or a one-time cost. Clark stated it is a one time cost. Peterson asked why a meter is needed. Clark said it is only for tracking purposes and that one is used at the site on Reservoir Blvd also. Nawrocki asked what the purpose was for setting up a SO1C3 non-profit. Grace Lee said it would be necessary in order to qualify for future grant money. You don't need to be a non-profit to start a community garden, but you would if you seek funding assistance in the future if this project is successful. Fehst said he thinks a list of people who wish to help with these sites should be provided to the City to ensure there is enough help to maintain the gardens. Cartney said a list would be required for those having a right to access the gardens as part of the agreement signed with the City. Motion by Diehm, seconded by Kelzenberg, to approve a community garden privately maintained and operated by Grace Lee and/or Mary Tholkes and authorizes staff to enter into an agr~eement for the same for two City owned lots. The principals will come in and sign an agr~eement for one season. All ayes. MOTIONPASSED. The consensus was the City would provide two lots, one being 828 40th Avenue and the other at 4235 Washington Street. Water would be provided to 828 40th Avenue by the hydrant on site. The City will install a meter and back flow preventer. The other lot would need to use rain barrels. Mayor Peterson said he would volunteer to help till the lots if needed. EDA MINUTES PAGE 6 MARCH 23, 2010 Market Study for 47t'' and Central Ave Rental Proposal- The development team for the rental proposal at 47th and Central Avenue commissioned a limited market study. The creation of this document was based on the desire of the EDA to corroborate the ability to construct the proposed development and what level of rent structure is achievable. Clark explained the purpose of the meeting is to give the EDA a chance to informally discuss (meaning that this is not a published public hearing but notifications were sent out to all individuals that have been involved to date, including parties on the 350ft. notification list) this proposal and to have a question and answer period. This proposal, along with the Site Plan and Minor Subdivision (which was approved by the Planning Commission on a vote of 3 to 2) will be presented to the City Council at their April 12, 2010 meeting. Clark also told members that the changes were made to the Fourth Amendment to the Development Agreement removing the "rental language" as discussed at the last meeting. He informed members that Mr. Klober has signed the agreement. Jack Boarman made a brief presentation regarding the results of the limited Market Study that was done. He said the market study indicated that a rate of $1.20/sf to $1.45/sf could be supported in this area. He said the surrounding area has sufficient employment to attract the right age group. Within a five mile radius there are 50,000 employees to draw from. Clearly there would be a market for this type of housing which currently is unavailable. The study indicated the project has the right number of units, the right rate range, sufficient people to draw from, and the right location with nearby freeway access. He is confident from the information gathered that with good marketing, these rates would be on the low end, and could be higher. Sam Newberg from Joe Urban Inc. was present to answer questions. Diehm said she understands why the basic concept should work well. However, she had a problem with some of the statistics in the report. She said the vacancy rates for the surrounding area from 2008 to 2009 went from 4.9% to 7.3%. During that same time, Columbia Heights' vacancy rate went from 4.7% to 9.1%. Our vacancy rates are higher even though our rents are lower. When comparing this project to the other five projects used in the study, she questions how they think people will pay higher rates for smaller units, especially in Columbia Heights where we are already experiencing the higher vacancy rates and lower rents. She used St Anthony as an example where the rates are generally $.76/sf to $1.39/sf and are generally larger units. Newberg said the figures he indicated are in line with other developments. If the finishing is nice, smaller units can bring higher rates. People tend to look less at square footage of the unit, if it is designed well and has quality finishing. Diehm asked why someone would choose Grand Central over an apartment at St. Anthony for less money. Boarman said it would depend what is available at the time someone is looking. If St Anthony is full or doesn't have the size unit someone is looking for, they would naturally look at these. This project won't be done for a couple of years, and hopefully in that time, employment will improve, and new apartments will attract single young professionals, which we need in the area. Newberg estimates that 60% of these units will be occupied by single people. EDA MINUTES PAGE 7 MARCH 24, 2010 Diehm asked if the five used in the comparison are the closest to what our project would be like. Newberg thought they were and he was comfortable with the comparables used. Newberg said there are few comparisons available from the Fridley/Columbia Heights area. They tend to be smaller buildings and much older, so it is hard to compare to this type of project. New units, in large buildings, with amenities and security tend to draw young, single tenants. The older, lower priced, 2 and 3 bedroom units now available tend to draw families and income restricted tenants. Diehm asked if Springbrook Apartments in Fridley were used. He said they weren't as that complex is probably 15-20 years old already. Herringer asked if Newberg considered the Missisippi River as a natural barrier since he didn't use any comparisons to the west. Most of the ones used were to the east. Newberg said it is considered a barrier and there weren't as many comparables to the west to use, as they are mostly older also. He also picked comparisons that ran along the 694 corridor. Herringer also found it difficult to believe someone would pay more for less square footage. Newberg and Boarman said they will pay more for less if they are perceived to be nicer. Newberg said the median income within a 5 mile radius is higher than you think. He believes it would be about $50,000 since we draw from downtown, Medtronic, and the medical facilities in Arden Hills. With the present housing we have available, these people will not rent here because we have nothing to offer in the type of housing they wish to be in. Fehst asked if they could obtain financing with this limited market study. Boarman said no, the lender would need a more in depth analysis and more factors to be included in a study to satisfy their requirements. But the results of this study give them optimism that there is a market for this type of proj ect. Nawrocki said he understands the attraction of having a new unit. But what happens after ten years, when this would be considered an old building according to the current study. He said he believes size does enter into a decision to rent a unit or not. Boarman said the Commission needs to understand that this is a transition to the new urban life style that is happening in our society. When asked if this project were built in Arden Hills would it bring a higher price point. Boarman stated he didn't think it would because it would be further from downtown and from the freeway. He sees the location of this project being the big draw. Herringer asked whether smaller units make for more turn-over. Won't tenants in a studio apartment move out sooner than someone in a one or two bedroom unit? Boarman said it has more to do with an age group than the size of the unit. Tenants in these types of projects usually have leases for one or two years. The targeted age group of 25-35 year olds face life changes such as job changes, marriage, families, and they tend to move on because of those reasons, not the type of unit. Since most of these units will be rented by one tenant, there should be less problems. Bigger units with more people tend to be more of a problem than the single ones. EDA MINUTES PAGE 8 MARCH 24, 2010 Herringer asked who the developer is in this project. Boarman said BKV is the architect, and the current owner Dave Klober has partnered with Clark Gassen to develop the site. Generally they would form an LLC as part of their development agreement and may take on more partners to finance the project. He said it would take approximately 12 months to finance and design and another 12 months to build. He said one advantage this site has is that the site is construction ready. This is a tremendous savings to help move the project along faster. He was asked how soon the second building would be constructed. Boarman said a certain percentage of the first building must be rented in order to start the second building, but they would want to do this as soon as possible because the success of the project would require it to make it sustainable. Boarman said if this project is voted down, a different developer may come in with another similar plan, and that project will have to be considered also. The Zoning Ordinance does not differentiate between rental and condo buildings. He said home ownership is reverting back to the same percentage as it was in the mid 60's. The shift has cycled and the number of people renting is increasing. Boarman said the current high vacancy rate in Columbia Heights is due to people leaving the community, the economy, job loss, and families doubling up. Availability of quality rental is not available here. People with median or higher incomes don't want the kind of housing we have available in the city at the present time. Fehst said that larger complexes of rental have less impact on city services than the single family/double bungalow rental units. Diehm asked that the Police Chief and Fire Chief be present at the April 12th meeting, or that they prepare an analysis on the impact they think this project would have on city services. She would like to hear their opinion on which types of rental cause more problems, larger rental complexes vs. smaller/single units. Kelzenberg is for this project and thinks the city needs this type of housing option. He likes the fact that underground parking is being provided and that they have done a good job meeting all the requests. He is apprehensive about the ability to fill the buildings, but feels this is the right move for the city. He would like to see more young professional people being drawn to the city to help revitalize it. Nawrocki said they have done a good job with design and construction, but note that the Architects will be gone after the project is done. It will come down to the owner and managers of the site to make it a success. He thinks it will be a struggle to keep the buildings full. If they can't maintain the occupancy, he is concerned they will drop the rent standards to keep them full. This is what can cause problems. He still believes ownership causes people to take better care of the property. A lot of effort was put into the previous plan and he thinks it was a mistake to separate out the commercial piece. He asked what the square footage of the land is for the two building sites? Boarman wasn't sure, as the site plan information was not present for this meeting. Fehst told Nawrocki that information would be included in the Planning & Zoning report going to the Council April 12tn EDA MINUTES PAGE 9 MARCH 23, 2010 Mady's Site Discussion- Clark stated that on November 24, 2009 the EDA gave direction to staff to investigate the possible acquisition of what is commonly referred to as "Mady's Bowling Alley Site" at 3919 Central Ave. Staff did not want to negotiate with Mr. Mady only as the property is held in a partnership, so any proposal would have to come from the Mady/Foss Partnership. Staff inet with Mady's legal representative in December and in turn, an initial offer was made to the City approximately three weeks ago. Staff has undergone an e~tensive analysis of all of the issues associated with acquiring this parcel, as agreeing to a given purchase price is only one of a number of items that need to be considered. Staff is not making recommendations regarding price points at this time, however the EDA needs to be aware of the following matters: 1) Acquisition of a property by a City entity, even if not done through eminent domain, triggers relocation benefits. Staff has secured a generalized estimate for these costs and is illustrated in the "Sources and Uses" budget located within this report. 2) The potential stumbling block for this acquisition is the existing lease at Dona Anita's (a Hispanic grocery store). The existing lease runs through 2011 with a four-year e~tension available unti12015. Any purchase agreement with Mady's would have to have a contingency that an agreement, acceptable to the EDA, would have to be secured with the owner's of Dona Anita regarding new lease provisions. They currently have 6,400 sf of space. 3) The initial offer is unclear about who would operate until the end of the three year contract period (including who is liable for taxes and receives rent revenue). 4) If the EDA is to proceed with this item a new appraisal on this property should be secured (an appraisal on this property was done in February of 2006). Staff has secured two bids for this work Patchin, Messner & Dodd gave a bid price of $3,500 and Nagell Appraisal and Consulting quoted $1,800. Both of these appraisals will complete a sales comparison approach and exclude doing an income approach valuation. 5) In order to understand the financial scope of this project staff has constructed a sources and uses budget. It should be understood that this is an estimate as a number of these items, especially the acquisition price, needs to be negotiated. Sources (Potential) $690,000 Three year income stream from FY 10, 11 and 12 - Anoka County levy $110,000 FY 09 - Anoka County levy $300,000 Housing Fund $100,000 Fund 420 $70,000 TIF T4 Poolable Allocation $50,000 Special projects fund $1,320,000 TOTAL EDA MINUTES PAGE 10 MARCH 23, 2010 Uses (Estimates-do not factor leasehold issues) $1,000,000 Acquisition $60,000 Interest $160,000 Relocation Benefits $50,000 Professional Services $50,000 Contingency $1,320,000 TOTAL Clark stated the relocation fees were less five years ago than they are now. Changes to State Law affected the cap on this figure from $10,000 to $50,000 per tenant. He stated this is an important parcel for the re-development of the south end of the main corridor of our city. Staff presented various ideas for the process that would be followed for development if this property is secured. Staff seeks direction on whether to proceed and to authorize the securing of an appraisal. Questions from members: Fehst asked if the estimates in the "Uses" chart included a buyout of the leases. Clark said they do not. Peterson asked if soil correction expenses were accounted for. Clark said no, because we don't know what that figure would be. Soil corrections would vary depending on what type of development would take place on the site. Clark said appraisals are established on the highest and best use of the property which is the present use, therefore an appraiser would not discount it for soil corrections. If the building is demolished and re-developed, the City would face soil correction costs at that time. Peterson said it could take a lot of money for soil corrections, and was concerned whether the City would ever be able to recoup those costs. Clark stated a RAP report is almost done on the site which would give us a better idea of what can be done on the site. Fehst said from previous dealings, we could possibly cap the site and develop for less if there aren't a lot of underground levels put in. If the EDA wants to obtain the site, we should start looking for a developer who would build something the City approves of, get DEED grants in place, and to do a performa for the project. Nawrocki asked who owns the property. Clark said the site is owned by the Mady/Foss partnership. He said Foss controls the upper floor of 14,000 sf and Mady controls the lower level. Nawrocki then asked who staff inet with. Clark said they met with Mady's attorney who was representing the Partnership. Diehm stated they may be willing to take less because there could be tax benefits to the seller if they accept less than the appraisal price, because the difference would be considered a gift/donation. Staff should keep this in mind when negotiating. EDA MINUTES PAGE 11 MARCH 23, 2010 Herringer asked if a tenant could sign away his relocation rights? Diehm said they could if properly written. Herringer asked if we re-assigned ownership to a developer would the developer then become responsible for relocation expenses. Clark said no, it would remain the City's responsibility. It was noted the Developer would also have to obtain the Heights Rental site in order to develop the entire site. This would be a separate issue from the one before the Commission now. Szurek thought we should get an appraisal first before we start negotiations. She noted the last one that was done was approximately six years ago. The members agreed. Clark stated he could get access to the building for the appraisal and will bring this back to the commission at a later meeting. Motion by Szurek, seconded by Williams, to authorize staff to enter into a contract with Nagell Appraisal and Consulting for an appraisal not to exceed $1800. Nawrocki wanted the appraisal to take soil corrections into affect. Clark said it can't as Appraisers aren't qualified to determine those costs and the extent of the corrections needed could vary depending on the project. The last appraisal done was not adjusted for soil corrections either. ALL AYES. MOTION PASSED. 5. ADMINISTRATIVE REPORT • Clark gave an update on the NHHI Senior housing project. He said HUD rejected the 202 proposal again. The appeals process also denied the project. Mike Bjerkesett said he will not re-submit a plan for this site again. • The grant for the parking ramp from the Met Council officially terminates April lst. Staff will send out a default letter to terminate the Development Agreement with Ehtashim Khoratty. • Staff inet with Developer Chris Little last week. He will bring a new proposal to the Commission at the ne~t meeting. • Habitat for Humanity has done two rehabs for Anoka County. They are now trying to purchase six lots from Anoka County to build new Habitat houses on. Clark is concerned about having a concentration of Habitat homes in a small area of our city. It defeats the purpose of what the City has been trying to accomplish. If the commission agrees, he will send a letter expressing concern about using NSP monies to have Habitat build houses on all these lots. The members all agreed this was a good idea. • Peterson would like staff to draft a letter to the Met Council thanking them for the e~tensions they granted, and to let them know we appreciate their efforts. EDA MINUTES PAGE 12 MARCH 23, 2010 6. OTHER BUSINESS The ne~t regular EDA meeting is scheduled for Apri127, 2010. The meeting was adjourned at 9:20 pm. Respectfully submitted, Shelley Hanson Secretary