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HomeMy WebLinkAboutEDA MIN 04-27-10ECONOMIC DEVELOPMENT AUTHORITY (EDA) MINUTES OF THE REGULAR MEETING Apri127, 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. 2. PLEDGE OF ALLEGIANCE- RECITED 3. CONSENT AGENDA Approve the Minutes of March 23, 2010. Motion by Szurek, seconded by Williams, to approve the minutes from the meeting of March 23, 2010, All ayes. MOTIONPASSED. 2. Approve the Financial Report and Payment of Bills for March 2010 per Resolution 2010- 06 Questions/Comments from members: Nawrocki stated he had a problem with how action is taken approving the expenditures and the Financial Statements. He referenced the minutes whereby he wants more detailed information on the financial reports provided from the Finance Dept. He spoke with the Assistant Finance Director regarding this issue since he has a hard time following the expenditures of some of the City funds, especially the 420 accounts and the account involving the Anoka County Levy monies. Clark said there are two issues. The first issue is the language in the Resolution. The second is the format of the Financial Statements. He asked the members if they wanted to expend funds in order to have the EDA attorney review the language. Nawrocki didn't feel that was necessary, and that both issues should be able to be handled administratively or by the Finance Director and/or auditor. Clark will amend the language of the Resolution for the ne~t meeting, and he will try to provide additional language for Mr. Nawrocki in reference to the accounts he mentioned. However, the format of the Financial Reports or how the information is detailed is not in his power to change. Motion by Szurek, seconded by Williams, to waive the Reading of Resolution 2010-06, there being ample copies available to the public. All ayes. MOTIONPASSED. Motion by Szurek, seconded by Williams, to adopt Resolution 2010-06, approving the Financial Report and payment of bills for March 2010. All ayes. MOTION PASSED. EDA MINUTES PAGE 2 APRIL 27, 2010 EDA RESOLUTION 2010-06 RESOLUTION OF THE COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA) APPROVING THE FINANCIAL STATEMENT FOR MARCH 2O10 AND PAYMENT OF BILLS FOR THE MONTH OF MARCH 2O10. 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 March 2010 and the list of bills for the month of March 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 27th day of April, 2010. MOTION BY: Szurek SECONDED BY: Williams AYES: All ayes President Attest by: Shelley Hanson, Recording Secretary EDA MINUTES PAGE 3 APRIL 27, 2010 BUSINESS ITEMS 4. Community Gardens- At the March meeting the EDA approved two community gardens that will be privately operated. The first garden approved was at 828 40th Avenue that will be managed by Mary Tholkes and the second garden approved was located at 4235 Washington Street and will be managed by Roseanne Rivers. Cartney explained that Grace Lee who was present at the last meeting, is requesting permission from the EDA to use 4147 7th St for a community garden. Cartney told members that this is an unbuildable lot (due to the size) and that it was donated to the City. Grace will be the garden manager and she has about 10 families who are interested in using this lot. Rain barrels will be used for watering. Cartney said she was told that the City has already switched over the tractor equipment from the tiller to the mower; therefore, the city will not be able to till this site. Staff recommends allowing Grace Lee to manage and use 4147 7th St as a community garden for the year 2010. Questions from Members: Nawrocki said he thought the lot looked like it had been tilled. Cartney explained that the Contractor seeded the lot, even though he was told not to, with no e~tra cost to the city. The discussion then turned to the lot at 4235 Washington St. Roseanne Rivers was present and said that they City crews came out and tilled the lot today. She was told two different things from City staff regarding what portion of the lot would be tilled. She was first told the entire lot would be tilled with a five foot buffer for the neighbor to the north. Then she was told just the back'/z would be tilled so she prepared mulch in that area. When the crews came out, they tilled the front'/z of the lot, not the back'/z. Cartney said she would check into this and get the entire lot tilled as originally planned. She would also talk to Public Works to request they till the 7th Street lot since they evidently still have tilling equipment available. Grace Lee told members that Coca Cola donated some barrels to be used for watering, and if the lot could be tilled they will be set. Nawrocki asked if the City is charging $15/space like they do for the Community Gardens on Reservoir Blvd. Fehst explained that we are not since this is not the same. He said we are not maintaining these lots, we are not sectioning them off, and we are not watering them, with the exception of 828 40tn Avenue-whereby the EDA approved the use of the hydrant at the last meeting. Nawrocki then asked why 4147 7th Street was considered unbuildable. Clark stated that is only a 30 foot lot, so the square footage does not meet requirements. Nawrocki thought there was an exception in our Zoning Code to allow a platted lot to be built on if it had been used in that capacity previously. Clark stated the Code does allow for some deviation, but this lot does not meet the criteria. Nawrocki wanted to know the specifics of this language and when it was passed. Herringer stated that as referenced in the minutes, a policy should be established regarding the use of City property for these types of gardens since this has grown from the original intent of using one parcel. Clark said that staff would work on that and have something in place before the end of the year. EDA MINUTES PAGE 4 APRIL 27, 2010 Cartney told Lee she has prepared an agreement that will need to be signed by all participants using the lots. Motion by Diehm, seconded by Williams, to approve a community garden privately maintained and operated by Grace Lee at 4147 7`h Street, and authorizes staff to enter into an agr~eement for the same for the year 2010. All ayes. MOTIONPASSED. 5. 37t'' and Central-New Proposal Discussion Cartney explained that on June 24, 2008 the City of Columbia Heights and the EDA entered into a Contract for Redevelopment with 37th and Central LLC to redevelop the southwest corner of 37tn Avenue and Central Avenue. The redevelopment plan included a 9,000 square foot commercial building. This project has had public financial assistance. The following assistance was approved as part of the Development Contract: $100,000 Anoka County EDA Levy for land acquisition costs $ 75,000 CDBG for land acquisition costs -$30,000 CDBG demolition $ 30,000 State Aide Road funds for turn lane $133,198 Land Value Write downs -$21,800 interest write down for loan Total in grant and in-kind assistance $389,998. On May 11, 2009 the EDA amended the contract to change the commencement date from May 1, 2009 to May 1, 2010 and to change the completion date from January 1, 2010 to January 1, 2011. These dates will need to be amended again. Chris Little was present to discuss a new proposal with the EDA for 37th and Central. The new concept would include affordable senior rental apartments located above retail space. Chris also wanted to discuss any bonds that may be available for this proposal and any development contract amendments that are necessary. Questions from Members: Chris Little was present and told members he has hired a broker, Upland Real estate, to help develop a plan this site. He explained he has tried to obtain pre-leases from various retailers, but with the economy in the state it's in, he has pretty much exhausted his options. They have, therefore, collaborated with Shirley Barnes and obtained a market study from Maxfield Research in hopes of changing the plan for the site by combining Affordable Senior Rental Housing with some RetaiUOffice space. Depending on the feedback he gets from the EDA, his plan is to construct a three story building with the retail/office space on the street level. His plan is to have Crestview manage the site once it is built. The market study indicates acceptable results for a need for this type of housing looking a few years into the future. The idea would be to build approximately 55-60 units by 2012 that would hopefully be fully occupied by 2014. Little stated he would need to obtain an e~tension to the development agreement to complete the project. EDA MINUTES PAGE 5 APRIL 27, 2010 Little said he intends to build the retail space and fill it, rather than to pre-lease the space which is considered speculative. Fehst asked how much would be retail? Little stated he plans for about 8,000 square feet of retail and some additional space is planned as office use. Members asked what the definition of "affordable" meant. Barnes reviewed the figures listed on page 16 of the Market Study indicating 60% of the area median income. The rents would vary according to size and would be comparable to the structure used at the Boulevard Apts at Crestview. She explained that Columbia Village is a HUD 202 project, so is different from this, as rents are based on 1/3 of a person's income. Diehm asked what the occupancy rate is currently at the Boulevard Apts. Barnes said there are 25-30 vacant units out of 74 due to how the economic stress has affected the rental market. This is a higher rate than they have experienced in the past. Nawrocki asked what the definition of "adult" used in the study meant. Barnes said it would mean someone 55 and older, or 62 and older depending on the programs used by the developer or requirements for the financing. She went on to say that the majority of the tenants tend to be in their 70's or 80's. Nawrocki wanted to know if it would be subsidized rental. Barnes stated that it would be considered subsidized housing, but that is not the same as Public Housing such as Parkview Villa. She explained to the members the differences between the various programs including HUD 202, Section 8- individual based versus project based, and public housing through HUD. Nawrocki asked how much help has actually been given to the Developer thus far, and who owns the land. Cartney explained what funds had been expended to date and that Chris Little has fee title to all the property. However, if the agreement goes into default, then'/z the land (the lots the City previously owned) would revert back to the City. Nawrocki questioned the floor plan and thought the neighbors should be consulted. He also thought the proposal did not have enough parking. Cartney reminded the members this is only a concept, not the actual plans. Chris Little is only looking for the EDA's opinion on whether they would generally be open to such a project. Diehm stated she had recently been to a seminar where vertical mixed use projects were discussed. She said many cities and developers have tried these types of projects and that most of them are struggling. She gave Little the names of a couple people to call for feedback on this type of project. Fehst also told him to contact the City of Robbinsdale since they have one similar to this proposal, and they have had a hard time keeping it full. Walt said another issue was getting the financing for a mixed use building. He asked if Little had talked to anyone regarding the financing, and he responded that he hadn't done so yet. EDA MINUTES PAGE 6 APRIL 27, 2010 Herringer said he had no problem granting an e~tension due to the tough economic times. He also stated he was pleased to hear that it wouldn't be a five story high building. He questioned why Heights Manor wasn't included in the vacancy rate portion of the market study. Diehm agreed with Herringer to grant an e~tension to give the developer more time to work on a plan and for the market to improve. She said she would keep an open mind, but does have some concerns regarding the viability of this concept. Little said he would check into this concept further and he would contact the referrals he had been given at this meeting. Peterson said he also had no problem granting an e~tension. He doesn't see the need to rush into anything. He likes the proposed concept. Kelzenberg agreed with Nawrocki that parking may be a problem on the conceptual plan provided. Little said that he planned for one stall per unit, but agreed the retail space may be underserved. However, if the plan is reduced from five stories to three stories, that would open up additional spaces. The general consensus was to grant the e~tension, but they encouraged him to check out his options further, so that whatever concept he goes with will be a successful project. They also agreed, if he moves forward with this plan, a smaller structure is more favorable. Fehst said he understands there must be a certain number of units to make it viable. Cartney will bring back the amendment to the Development Agreement with new start and completion dates to the May meeting and that it would be a one-year e~tension period. 6. Mady's Appraisal At the March 23, 2010 EDA Meeting staff presented a summary of 1) preliminary cost estimates associated with the purchase of the Mady property and 2) A summary of related acquisition issues including relocation and leasehold interest concerns. A copy of the March 23, 2010 EDA letter was handed out at the meeting for review of the aforementioned items. After review of this information, the EDA authorized staff to enter into an agreement for a formal appraisal of the property. The complete appraisal showed a value of $1,028,000 for the improved property and $925,000 for land- only, albeit that the value was for "clean property". Clark stated that similar to the March 23, 2010 action staff seeks direction from the EDA as to whether negotiations should proceed. He noted cities no longer have rights to property through eminent domain so to redevelop this site we would need to negotiate the purchase from the owners if a price can be agreed to, the funding could be arranged, and if a developer could be found to work with. Staff's concern is this site will go on the market and could be bought by someone who will continue renting the site out and letting the property deteriorate further. EDA MINUTES PAGE 7 APRIL 27, 2010 Clark acknowledged that contamination exists and clean up costs will result in a negative value figure (cost of land acquisition minus clean-up costs) if the City does obtain it. He said staff would work with DEED or other agencies to obtain funds for clean-up. He went on to explain, the costs for this clean up cannot be determined yet because it would vary depending on the type and size of the new development. However, staff will work with Carlson Services to obtain a generalized number. He said the EDA must decide if it wants to purchase the site and have some control over the re- development, or to let it go on the private market. Either situation has its risks. Questions from Members: Szurek asked if the City had received a price from Mady/Foss yet. Clark stated that they came in with a price of $1.1 million. She then asked if we purchased the property, would we become the landlords and set rent rates. Clark said that designation of "landlord" would be part of the negotiations, but rates are set by existing leases. He said the City would need to purchase it on a 3 year Contract for Deed and landlord rights would be part of the negotiated agreement. Mady's may continue to operate until the 3 year period is up. Salvation Army is operating on a month to month lease, and the grocery store has a lease option unti12015. We may have to buy out that lease if a developer would come forth before 2015. Fehst said the City was criticized when it purchased the Burger King site, and we would most likely be criticized if we purchase this site also. Nawrocki stated he wanted staff to meet with the owner to find out what they would be asking for the property. He wasn't suggesting we necessarily purchase it. He is concerned with the contamination of the site, the amount it will cost to clean up the site. He also wondered why they would enter into a four year lease agreement with a tenant if they are serious about selling it. He believes the owners are asking too much for the site, considering all the costs that would be incurred was it is purchased. Nawrocki also wanted an idea of the price to do the minimal correction and cap the site, and whether this would limit the redevelopment to a one story structure. There was a discussion regarding possible funding sources as detailed in the memo dated March 23, 2010, if the EDA decides to move forward with negotiations. Herringer said another key piece to keep in mind is the Heights Rental site on the corner. We would need to obtain that piece also in order to re-develop the site. For this to succeed, the City and/or developer would need to get it, and that may not be possible. Diehm asked if there were any funds available to acquire contaminated property. Clark stated he had asked Jim Crowl from Carlson Technologies that question. DEED used to have monies available for that, but doesn't know if there are any available now. Crowl will check on that and let Clark know. Peterson said he doubts a developer will buy the property, pay for the clean up and then construct a new building. He thinks it is more apt for someone to buy it and use it for investment income without putting much back into the property. EDA MINUTES PAGE 8 APRIL 27, 2010 Herringer asked what type of relationship there was between Mady/Foss and Mark from Heights Rental. He would like staff to approach the owners of Heights Rental and see if they would be willing to sell their parcel for a"fair" amount. If not, he doesn't see the point of pursuing the rest of the property for the terms given thus far. Clark said he understands the consensus is to move forward with the negotiation process and to open a dialogue with Heights Rental and see if any terms can be agreed to. He made it clear that to move forward with this is not a commitment to buy, just to gather information and negotiate price points that the EDA can use to make their decision. 7. First Look Users In February of this year the EDA agreed to participate in the Twin Cities Community Land Bank (TCCLB) "First Look" program. This program allows the City to have the "first look" at any REO properties and determine our interest. If we are not interested then the ne~t look goes to GMHC and if they are not interested the listing goes to the open market. It is set up this way because GMHC requested access to our city and the EDA approved them as users. In addition to GMHC four other entities have requested to be part of Columbia Heights first look If approved these entities would be listed after GMHC in the first look order. A lottery system would be set in place if more than one entity is interested in purchasing. A small profile of each entity and the TCCLB criteria is attached. The four entities requesting first look access are: Everwood Company (EC) is a for-profit corporation. Robert Engstrom is a preferred developer in Brooklyn Park, MyHomeSource is a well respected for profit developer who works in Minneapolis, Brooklyn Park and Brooklyn Center, and Sarah Huss is a for profit developer. Robert Engstrom and Everwood Company are part of the TCCLB loan program while MyHomeSource and Sarah Huss use private non-subsidized funds. The entities listed above have been approved by TCCLB as users and are also users in several other cities that participate in the "first look" program. All users approved by TCCLB have a set criterion for their participation (attached). Each house that is purchased must be rehabbed according to HUD standards and be sold for homeownership (homeowners must sign an agreement to own and occupy the home for five years) to people meeting 115% Area Medium Income which is $96,500. Adding these users to our "first look" program would provide additional homeownership in addition to rehabilitation to some of housing stock As of right now our "first look" users are the City and GHMC--if neither of us are interested in the house it then goes to the open market which will allow investors to purchase and potentially increase rental units in our single family neighborhoods. If we add these four users we reduce that potential and get better rehabs. Staff recommends approval of the four entities listed above as part of the Columbia Heights First Look program. EDA MINUTES PAGE 9 APRIL 27, 2010 Questions from Members: Szurek asked Cartney if she was comfortable with these entities. She said yes, and she has met with a couple of them and seen their work She also said that each of these entities is already approved by The LandBank, before they can be placed on our list. She told members that if any of these entities decide to purchase a home, they must renovate it and then sell it to someone who will own and occupy the home for at least five years. This program is one way the City can insure that homes are being fixed up, and are being sold to owners who will occupy them which prohibits them from being turned into rental. Clark told members that at least 55 foreclosed single family homes have been converted to rental in the last couple of years. This program, hopefully, will reduce the number being sold to investors who put little into the property, but want to collect the rent revenue. Peterson asked if any local contractors are on our list. Cartney said not at this time, but any interested company can be added to the list if they go through the LandBank approval process. Motion by Diehm, seconded by Williams, to approve Evenvood Company, Robert Engstrom, MyHomeSource and Sarah Huss as part of the Columbia Heights first look progr~am. All ayes. MOTION PASSED. 8. ADMINISTRATIVE REPORT May 3rd a work session will be held with Minneapolis regarding a possible Trolley Car System for Central Avenue. May l lth Staff from Fire and community Development will meet with representatives from DEED, MPCA, the EPA, the bank, and the owners and attorney of the Root Property at 40th and University Avenue to develop a Master Plan to get the structures demolished and the site cleaned up. The Commercial Development for 47th and Central is dead. Ehetshem hired Bruce Carlson, a broker, to help him find another plan for the site. Clark said he has sent them two referrals to date in hopes of resurrecting a project for the site. In 2008 the EDA passed a tax abatement agreement for the New Perspectives Lighthouse Project. Staff is investigating whether there is a need for assistance, per the agreement, as the first year of potential subsidy is 2011. Clark will report back. Herringer noted that Buffalo Wild Wings' lease is up at the end of the month. It appears they may be closing this site. Diehm stated that several years ago the Council/Commission held a goal setting session to set priorities for the City. She said since the CounciUCommission has been receiving various proposals lately, she thought it may be helpful if goals and priorities were re-set so they may better analyze the projects. She said it would give everyone a better idea of possible funding sources, community needs, and would provide a focus for the decisions to be made. EDA MINUTES PAGE 10 APRIL 27, 2010 Clark asked if inembers wanted someone from the outside brought in to facilitate this process. It was the consensus to just have staff do it at an upcoming meeting that doesn't have a large agenda. Nawrocki asked for an update on the foreclosure numbers. Clark said the city is down about 12-14% from the same time last year, but that foreclosure rates are still very high. He said there are approximately 420 active foreclosures and about 320 foreclosures that have sold, totaling about 740 homes affected by the process in the last couple years. 6. OTHER BUSINESS The ne~t regular EDA meeting is scheduled for May 25, 2010. The meeting was adjourned at 9:15 pm. Respectfully submitted, Shelley Hanson Secretary