HomeMy WebLinkAboutEDA MIN 11-22-11ECONOMIC DEVELOPMENT AUTHORITY (EDA)
MINUTES OF THE MEETING OF
NOVEMBER 22, 2011 IN CONFERENCE ROOM 1
The meeting was called to order at 7:00 pm by President-Gary Peterson.
Members
Present: Bruce Nawrocki, Bobby Williams, Gary Peterson, Donna Schmitt, Gerry Herringer, and Marlaine Szurek. Tammera Diehm arrived at 7:28 pm.
Staff Present: Walt Fehst, Scott Clark,
Sheila Cartney, and Shelley Hanson.
2. PLEDGE OF ALLEGIANCE- RECITED
3. CONSENT ITEMS
Approve the Minutes from September 6, 2011 (2), and October 10, 2011.
Approve the Financial
Report and Payment of Bills for August, September, and October 2011 on Resolution 2011-17.
Questions from members:
There were no questions at this time.
Motion by Williams, seconded
by Schmitt, to waive the reading of Resolution 2011-17, there being an ample amount of copies available to the public. All ayes. MOTION PASSED.
Motion by Szurek, seconded by Williams,
to approve the minutes and adopt Resolution 2011-17 approving the payment of bills for August, September, and October 2011. All ayes. MOTION PASSED.:
EDA RESOLUTION 2011-17
RESOLUTION
OF THE COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA) APPROVING THE FINANCIAL STATEMENT FOR AUGUST, SEPTEMBER, AND OCTOBER 2011 AND PAYMENT OF BILLS FOR THE MONTHS OF AUGUST,
SEPTEMBER AND OCTOBER 2011.
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
outstand ing 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
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November 22, 2011
WHEREAS, the financial statement for the months of August, September and October 2011 has been reviewed by the EDA Commission; and
WHEREAS, the EDA has
examined the financial statements and finds them to be acceptable as to both form and accuracy; and
WHEREAS, the EDA Commission has other means to verify the intent of Section 469.096,
Subd. 9, including but not limited to Comprehensive Annual Financial Reports, Annual City approved Budgets, Audits and similar documentation; and
WHEREAS, financials statements are
held by the City’s Finance Department in a method outlined by the State of Minnesota’s Records Retention Schedule,
NOW, THEREFORE BE IT RESOLVED by the Board of Commissioners of the
Columbia Heights Economic Development Authority that it has examined the referenced financial statements including the check history, 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 check history as presented in writing is approved for payment out of proper funds;
and
BE IT FURTHER RESOLVED this resolution is made a part of the permanent records of the Columbia Heights Economic Development Authority.
Passed this 22nd Day of November 2011
MOTION
BY: Szurek
SECONDED BY: Williams
AYES: All ayes __________________________________
Gary Peterson, President
Attest By:
______________________
Shelley Hanson, Secretary
BUSINESS
ITEMS
4. Fourth Amendment to Huset Park Development per Resolution 2011-18-BNC Bank
Cartney reminded members that on October 25, 2004 the City, EDA and Huset Park Development Corporation
entered into 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 Redevelopment,
and on February 9, 2009 the same parties entered into an Amended and Restated Contract for Private Redevelopment changing commencement and completion dates for development.
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November 22, 2011
The “Minimum Improvements” in the contract is broken out into phases and includes three different housing types and one commercial space. According to the
contract there are to be a total of 277 townhouse units, 50 senior units, and 183 condominium or cooperative housing units and 11,650 square feet of commercial space.
Due to the down
turn in the housing market and economic conditions, Schafer Richardson has since foreclosed on this project and BNC Bank has taken over the Contract for Private Redevelopment. BNC Bank
requests additional completion date amendments to the development contract for Section 4.3 Phase III A. Section 4.3(c) states “if the Redeveloper is making substantial progress with
respect to the redevelopment project, and is unable to meet one or more of the above-referenced deadlines, the Authority and Redeveloper shall negotiate in good faith for a reasonable
period to extend the time in which necessary action(s) must be taken or occur, the lapse of which time would otherwise constitute a default of this Agreement.”
The following table represents
the second amendments dates and the new proposed Request:
Phase
Amended Date
Proposed Date
IIIA Housing and Commercial
Commence by 12/30/2011
Complete by 12/30/2013
Commence
by 12/30/2012
Complete by 12/30/2014
IB
80% October 31, 2011
80% Complete October 31, 2012
Staff recommends the EDA amend the development contract as requested to change commencement
and completion dates.
Questions from members:
Cartney stated that BNC has hired Cassidy and Turley to market this property to developers on their behalf. Jim McCaffrey, Sr. Vice President,
was present at the meeting to answer questions.
Nawrocki asked about the financial arrangements on this project. He wanted to know the amount of TIF funds they have received thus
far. Clark answered that Revenue Bonds were obtained for which there is no obligation back to the City. The amount of the bonds total approximately 8.7 million dollars. In addition,
there is a B note. The TIF District generates enough funds to pay the bond and any residual goes to pay off the B note. The B note payment has been averaging $80,000. Nawrocki asked
how long the bond runs. Clark answered 25 years. Nawrocki asked how much TIF has been raised thus far. Clark said he would not guess at the figure, but would get the number to Mr.
Nawrocki.
Schmitt asked if just the dates are changing, or are they planning on changing the type of construction from the original plan also. Cartney stated they are just changing
the dates now. Plans on how to finish the project will be discussed in 2012 once a Developer is found that has a
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November 22, 2011
plan to finish the project that would work according to the market conditions today and that would be acceptable to the Board. Clark explained that BNC just
recently retained the services of Cassidy/Turley and they are investigating ideas that may work on these sites.
Jim McCaffrey told members they are contacting developers who specialize
in Senior Complexes such as, coops, assisted living buildings, townhouses, as well as office/retail designed space. He said the commercial piece with condos on top design, that originally
was proposed, is no longer a viable option. The market on condos has changed drastically in the last five years.
Herringer asked what happened to Ryland Homes and wondered why they
pulled out of the project. McCaffrey responded that with the downturn in the market, it became too costly for Ryland because of the amount they had to put into purchasing each site,
the amount needed for sewer and water work and the amount to re-grade the site to make it suitable for building. Ryland may still be a viable option and Cassidy/Turley is still pursuing
this if acceptable terms can be reached for all parties. He noted that BNC has already lost several million dollars on this project.
Herringer then asked if the TIF district is solid
enough to continue covering the Bond in the future. Clark said he believes it is, but cautioned that the amount paid on the B Note could drop because of changes in the Homestead Tax
Valuation that recently took effect.
Nawrocki asked if Shafer-Richardson had borrowed other money for this project. Clark said there were a significant number of junior partners in
this project and that there was a significant mortgage on this property. Tax Increments and land sales were supposed to be enough to cover the mortgage payments, but when the market
changed and revenues dropped due to several factors, including adjustments in the Agreements, the payments could no longer be met.
Motion by Szurek, seconded by Schmitt, to waive
the reading of Resolution 2011-18, there being ample amount of copies available to the public. All ayes. MOTION PASSED.
Motion by Szurek, seconded by Schmitt, to adopt Resolution
2011-18, a Resolution approving the Fourth Amendment and Restated Contract for Private Redevelopment by and between Columbia Heights EDA and BNC Bank as Successor to Huset Park Development
Corporation. Roll call:
COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY
RESOLUTION NO. 2011-18
RESOLUTION APPROVING A FOURTH AMENDMENT TO AMENDED AND RESTATED CONTRACT FOR PRIVATE
REDEVELOPMENT BETWEEN THE COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY, THE CITY OF COLUMBIA HEIGHTS AND BNC NATIONAL BANK AS SUCCESSOR TO HUSET PARK DEVELOPMENT CORPORATION
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November 22, 2011
BE IT RESOLVED By the Board of Commissioners ("Board") of the Columbia Heights Economic Development Authority ("Authority") as follows:
Section 1. Recitals.
1.01. The
Authority has determined a need to exercise the powers of a housing and redevelopment authority, pursuant to Minnesota Statutes, Sections. 469.090 to 469.108 ("EDA Act"), and is currently
administering the Downtown CBD Redevelopment Project ("Redevelopment Project") pursuant to Minnesota Statutes, Sections 469.001 to 469.047 ("HRA Act").
1.02. The Authority, the City
of Columbia Heights (“City”) and Huset Park Development Corporation (the “Redeveloper") entered into a into An Amended and Restated Contract for Private Redevelopment dated as of August
1, 2007, as amended by a First Amendment thereto dated June 16, 2008 and a Second Amendment thereto dated as of February 9, 2009 and a Third Amendment Thereto dated as of September 28,
2009 (the “Contract”), setting forth 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. BNC National Bank (the “Lender”) is the successor in interest to Redeveloper under the Contract.
1.04. The Lender has requested the Authority and
City to modify the Contract in certain respects, and the Authority has caused to be prepared a Fourth Amendment to Amended and Restated Contract for Private Redevelopment between the
Authority, City and Lender (the “Fourth Amendment”).
1.05. The Board has reviewed the Fourth Amendment 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. Authority Approval; Further Proceedings.
2.01. The Fourth Amendment 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 Fourth Amendment and any documents referenced therein requiring execution by the Authority, and to carry out, on behalf of the Authority its obligations thereunder.
Approved by
the Board of Commissioners of the Columbia Heights Economic Development Authority this 22nd day of November, 2011.
Gary Peterson, President
ATTEST:
Shelley
Hanson, Secretary
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November 22, 2011
Diehm arrived at the meeting.
5. 37th and Central Amended Contract-Resolution 2011-19
Clark reminded members that on May 2, 2011 the EDA approved a new Development
Agreement with 37th and Central LLC (Chris Little) that allowed the reduction of the Minimum Improvements to 7,500 sq.ft. Based on this, the EDA eliminated $30,000 of assistance that
was programmed for turn lane construction costs. The Agreement also had an October 1, 2011 deadline date for construction start but due to the amount of due diligence by O’Reilly, that
start date could not be met. At this time O’Reilly has established a closing date with 37th and Central LLC for December 12, 2011 and a construction start date of May 1, 2012.
Actions
for the EDA:
Agreement to assign the original development agreement and the obligations to O’Reilly. Attached is an Assignment Agreement with the change from the May 2, 2011 Agreement
regarding construction start (Section III- 3.1. 4.3). The new dates are a construction start date on or before May 1, 2012 and a completion date of November 1, 2012
The policy discussion
for the EDA concerns the level of assistance being given to this project. As stated previously, the EDA eliminated $30,000 of assistance due to the reduction in size of the original
minimum improvements. Since that time, O’Reilly has done soil investigation work on the property, and has determined that substantial soil corrections will be needed at a cost of up
to $80,000 (report was included in the agenda packet). The issue, in part, is that City demolitions (which included all four previous buildings on this redevelopment site) replaced soils
with organic free materials which are not compacted. These lots were sold “as is” with the intention that the type of building constructed would dictate the level of soil compaction
needed. Since this cost was not assumed by the developer he is seeking that the $30,000 be reinstated and, in turn, that he will absorb the remaining cost through a reduced acquisition
cost to O’Reilly, since O’Reilly wants the price reduced by the $80,000 figure, or they have threatened to walk away from the project.
Staff recommends approval of the Assignment as
written.
Questions from members:
Kevin Hansen, City Engineer, reviewed O’Reilly’s report and submitted his opinion regarding the soils report and Clark verbally reviewed this with the
commission members. He stated that the report indicated that 5 of the 6 soil borings were not done where the buildings were demolished. Therefore, the soil conditions noted were not
from the demolition of the buildings. The O’Reilly report said it will cost approximately $55,000 to take out soil, bring in new fill and compact the site, with an additional $25,000
needed to stabilize the gravel area that will be used for their parking lot. The City Enegineer doesn’t feel this amount is justified since it will not be supporting
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November 22, 2011
a structure of any kind. Kevin went on to state, that although this is an issue between O’Reilly and Mr. Little, his opinion is that the price reduction O’Reilly
is asking for is inflated and unjustified. It is his experience that some of these costs are normal development costs that would be incurred by the builder to ready the site for construction.
Chris
Little said that he contacted Frattalone Excavation as they were the ones who did the demolition work on the sites previously. They reviewed the report and came back with a similar
response as Kevin Hansen.
Diehm asked if he thought O’Reilly’s would walk away from the project if concessions were not made on the price point, and Chris responded that they have indicated
they would. Diehm then asked when their lease was up at their current location. Chris thought it was in April.
Herringer asked where the borings were done, and how many were done where
the building will be placed. Clark said that only 2 of the 6 borings were taken where the building will be constructed. Herringer and Peterson both felt that the borings should have
been taken around the perimeter of the building. They also felt the price reduction to make corrections was too high based on the findings. Szurek agreed.
After further discussion,
the Board was not willing to make any concessions, and encouraged Chris Little to inform O’Reilly’s that their request was out of line for many reasons. Williams stated that they already
have a lot of money invested in the project and that this is a good location for them, so he didn’t think they would back out of the deal over this. Most of the members felt the amount
of soil work and expense for such, was overstated and could be reduced if they separated the corrections needed for the building site from the corrections needed for the parking or green
space, and that these are normal development costs that should be bore by them.
Motion by Szurek, seconded by Williams, to waive the Reading of Resolution 2011-19 there being ample
copies for the public. All ayes. MOTION PASSSED.
Motion by Williams, seconded by Szurek, to adopt resolution 2011-19 approving agreement for assignment and release of obligations,
and amendment of amended and restated contract for private redevelopment by and between Columbia Heights Economic Development Authority and the City of Columbia Heights Minnesota and
37th and Central LLC. Roll call:
COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY
RESOLUTION NO. 2011-19
RESOLUTION APPROVING AGREEMENT FOR ASSIGNMENT AND RELEASE OF OBLIGATIONS, AND
AMENDMENT OF AMENDED AND RESTATED CONTRACT FOR PRIVATE REDEVELOPMENT BY AND BETEWEEN COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY COLUMBIA HEIGHTS MINNESOTA AND THE CITY OF COLUMBIA
HEIGHTS MINNESOTA AND 37th AND CENTRAL LLC
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November 22, 2011
BE IT RESOLVED By the Board of Commissioners ("Board") of the Columbia Heights Economic Development Authority ("Authority") as follows:
Section 1. Recitals.
1.01.
The Authority, the City of Columbia Heights and 37th and Central LLC (the “Redeveloper") entered into a Contract for Private Redevelopment dated June 24, 2008, as amended by a First
Amendment thereto dated April 28, 2009, and as amended by the Second Amendment thereto dated May 25, 2010 (collectively, the “Contract”).
1.02. The Redeveloper has concluded negotiations
with O’Reilly Automotive Stores, Inc. a Missouri corporation (“O’Reilly”) for the purchase by O’Reilly of all of the Redeveloper’s interest in the Contract.
1.03. The Board has reviewed
the “AGREEMENT FOR ASSIGNMENT AND RELEASE OF OBLIGATIONS, AND AMENDMENT OF AMENDED AND RESTATED CONTRACT FOR PRIVATE REDEVELOPMENT BY AND BETEWEEN COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT
AUTHORITY COLUMBIA HEIGHTS MINNESOTA AND THE CITY OF COLUMBIA HEIGHTS MINNESOTA AND 37th AND CENTRAL LLC” (the “Assignment”) providing for the assignment of the Contract to O’Reilly,
the release of the Redeveloper from its remaining obligations under the Contract, and the amendment of the Contract as stated therein, 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. Authority Approval; Further Proceedings.
2.01. The Assignment 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.
The President and Executive Director are hereby authorized to execute on behalf
of the Authority the Assignment of the Contract and any documents referenced therein requiring execution by the Authority, and to carry out, on behalf of the Authority its obligations
thereunder.
Approved by the Board of Commissioners of the Columbia Heights Economic Development Authority this 22nd day of November, 2011.
Gary Peterson, President
ATTEST:
Shelley Hanson, Secretary
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November 22, 2011
The Agreement and Amendment is as follows:
AGREEMENT FOR ASSIGNMENT AND RELEASE
OF OBLIGATIONS, AND AMENDMENT
OF
AMENDED AND RESTATED CONTRACT FOR PRIVATE
REDEVELOPMENT BY AND BETEWEEN COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY COLUMBIA HEIGHTS MINNESOTA AND THE CITY OF COLUMBIA HEIGHTS MINNESOTA AND 37th AND CENTRAL LLC
Recitals.
The
Effective Date of this Agreement is December ___, 2011.
The Parties to this AGREEMENT FOR ASSIGNMENT AND RELEASE OF OBLIGATIONS, AND AMENDEMENT OF AMENDED AND RESTATED CONTRACT FOR PRIVATE
REDEVELOPMENT BETWEEN COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY COLUMBIA HEIGHTS MINNESOTA AND THE CITY OF COLUMBIA HEIGHTS MINNESOTA AND 37th AND CENTRAL LLC (the “Agreement”),
are the COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY, a public body corporate and politic under the laws of Minnesota (the “Authority”), the CITY OF COLUMBIA HEIGHTS, a Minnesota
municipal corporation (the “City”), 37th and CENTRAL LLC., a Minnesota limited liability company (the “Redeveloper”) and O’REILLY, a ______________________ (“Successor Redeveloper”).
The
Authority, City and Redeveloper are parties to that certain Contract for Private Redevelopment dated June 24, 2008, as amended by a First Amendment thereto dated April 28, 2009, and
as further amended by a Second Amendment thereto dated May 25, 2010, all as recorded in the Office of the Anoka County Recorder (collectively, the “Contract”).
Various real estate parcels
are subject to redevelopment under the Contract. The Successor Redeveloper has entered into that certain “Purchase Contract” with 37th and Central LLC, to purchase all of the parcels
subject to the Contract and described as the “Redevelopment Property” in the Contract for the purpose of developing the “Minimum Improvements”, also as defined in the Contract. The
Redevelopment Property is more fully described on Schedule A, attached hereto.
Among other obligations of the Redeveloper under the Contract, the Redeveloper entered into that certain
“Loan Agreement” and executed that certain “Promissory Note” in the principal amount of $43,600, with Redeveloper as Maker and the Authority as Holder, each dated as of July 2, 2008,
in order to provide additional financing for the Project. The Loan Agreement and Promissory Note by their terms require Redeveloper to pay off the Note upon the sale of the Minimum Improvements.
In
connection with the sale of the Redevelopment Property the Redeveloper has requested an assignment of, and a release from, the terms and conditions of the Contract, and as to the Redevelopment
Property pursuant to Article VIII of the Contract.
Redeveloper desires to assign, and Successor Redeveloper desires to assume Redeveloper’s rights and obligations under the Contract,
and with respect to the Redevelopment Property.
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November 22, 2011
The Authority and City have approved certain grant funding for use consistent with the proposed development of the Minimum Improvements as described in § 3.7
Grants., of the Contract. The Redeveloper has received certain grant funding to date, leaving a balance of $100,000 available to be awarded to Successor Redeveloper upon its commencement
of construction of the Minimum Improvements.
The City has approved the Redevelopment Property for use consistent with the proposed development of the Minimum Improvements. On that
basis, the City and the Authority are willing to approve an assignment of the Contract to Successor Redeveloper and release Redeveloper from the terms and conditions of the Contract
subject to the terms and conditions of this Agreement.
THEREFORE, IT IS AGREED AS FOLLOWS:
Agreement.
The Recitals in Section I are incorporated into this Agreement by reference.
Redeveloper
hereby assigns, and Successor Redeveloper hereby expressly assumes all of the rights and obligations of Redeveloper under the Contract with respect to construction of the Minimum Improvements
on the Redevelopment Property.
The Authority and the City hereby consent to and approve the assignment in section 2.2 above.
From and after the effective date set forth above, Redeveloper
is released from its obligations under the Contract, and as to the construction of the Minimum Improvements on the Redevelopment Property, subject to the following:
Redeveloper and
Successor Redeveloper completing negotiation and execution of that certain “Purchase Contract”, transferring Redeveloper’s interests under the Contract and the Redevelopment Property
to Successor Redeveloper.
(b) Redeveloper and Successor Redeveloper executing this Agreement.
(c) Redeveloper paying off the Promissory Note ($43,600) in favor of the Authority at
or before closing with Successor Redeveloper.
The parties agree that upon issuance of a Certificate of Completion for the Minimum Improvements, that the Contract will no longer affect
the Redevelopment Property, the Successor Redeveloper or its successors or assigns, and no further documentation will be required to remove the Contract or this Agreement from the real
property records of the Redevelopment Property. Notwithstanding the foregoing, if it is reasonably determined that any additional documentation is necessary or beneficial to remove
the Contract and this Agreement from the real property records of the Redevelopment Property, the parties agree to execute any and all reasonable documentation to remove the Contract
and this Agreement from the real property records of the Redevelopment Property without any condition or delay.
III. Amendments to Contract.
3.1 Section 4.3 of the Contract states
that the Redeveloper must commence construction of the Minimum Improvements by May 1, 2011, and must substantially complete construction of the Minimum Improvements by January 1, 2012.
The parties agree the Redeveloper is not in default under Section 4.3 of the Contract. Section 4.3 of the Contract is amended as follows:
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November 22, 2011
Section 4.3. Completion of Construction. (a) Subject to Unavoidable Delays, the Redeveloper must commence construction of the Minimum Improvements by May
1, 2011 May 1, 2012, and must substantially complete construction of the Minimum Improvements by January 1, 2012 November 1, 2012. All work with respect to the Minimum Improvements
to be constructed or provided by the Redeveloper on the Redevelopment Property shall be in substantial conformity with the Construction Plans as submitted by the Redeveloper and approved
by the Authority and the City. If the Redeveloper is making substantial progress with respect to the redevelopment project, and is unable to meet one or more of the above-referenced
deadlines, the Authority and the Redeveloper shall negotiate in good faith for a reasonable period to extend the time in which necessary action(s) must be taken or occur, the lapse of
which time would otherwise constitute a default under this Agreement.
3.2 Successor Redeveloper shall be eligible to receive the remaining $100,000 in grant funds from the Authority
authorized by § 3.7 of the Contract upon being issued a building permit for construction of the Minimum Improvements. Section 3.7 of the Contract is amended by adding a new sub-section
(j) to read as follows:
(j) Redeveloper shall conduct a wage survey at the direction of Authority staff for compliance with CDBG grant funding received for the construction of the
Minimum Improvements.
3.3 Section 10.6 (a) of the Contract is amended to read as follows:
(a) in the case of the Redeveloper, is addressed to or delivered personally to the Redeveloper
at 522 Lomianki Lane, Minneapolis, MN, 55421 O’Reilly Auto Parts, Charlie Downs, Vice President Real Estate, 233 S. Patterson, Springfield, MO 65801;and
3.4 Upon final execution and
approval of this Agreement, the “Successor Redeveloper” as described in this Agreement shall be described as the “Redeveloper”.
3.5 This Agreement may be executed in any number of
counterparts, each of which shall constitute one and the same instrument.
3.6 All other terms and conditions of the Contract, as amended herein, shall remain in full force and effect
unless modified by the parties pursuant to the requirements of the Contract.
[Remainder of page intentionally left blank, separate signature pages to immediately follow]
[Separate
Signature Page to Approval of Assignment and Release of Obligations Under Contract For Private Redevelopment]
COLUMBIA HEIGHTS ECONOMIC
DEVELOPMENT AUTHORITY
By________________
_________________
Its President
By_________________________________
Its Executive Director
Page 12
November 22, 2011
STATE OF MINNESOTA )
) ss.
COUNTY OF ANOKA )
The foregoing instrument was acknowledged before me this ____ day of November, 2011, by Gary L. Peterson
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.
Notary Public
[Separate Signature Page to Approval of Assignment and Release of Obligations Under Contract For Private Redevelopment]
CITY OF COLUMBIA HEIGHTS
By___________________
______________
Its Mayor
By_________________________________
Its City Manager
STATE OF MINNESOTA )
) ss.
COUNTY OF ANOKA )
The foregoing instrument
was acknowledged before me this ____ day of ____________, 2011, by Gary L. Peterson and Walter R. Fehst, the Mayor and City Manager of the City of Columbia Heights, a Minnesota municipal
corporation, on behalf of the City.
Notary Public
[Separate Signature Page to Approval of Assignment and Release of Obligations Under Contract For Private Redevelopment]
37TH
AND CENTRAL LLC
__________________________________
By Christopher Little
Its _______________________________
Page 13
November 22, 2011
STATE OF MINNESOTA )
) ss.
COUNTY OF __________ )
The foregoing instrument was acknowledged before me this _____ day of _____________, 2011 by
Christopher Little, the _____________________of 37th and Central LLC, a Minnesota limited liability company, on behalf of the company.
Notary Public
[Separate
Signature Page to Approval of Assignment and Release of Obligations Under Contract For Private Redevelopment]
O’REILLY AUTOMOTIVE STORES, INC.
______________________________________
By
Its____________________________________
STATE OF ____________ )
) ss.
COUNTY OF __________ )
The foregoing instrument was acknowledged before me this _____ day
of _____________, 2011 by __________________, the _____________________of O’Reilly Automotive Stores, Inc, a Missouri corporation, on behalf of the corporation.
Page 14
November 22, 2011
SCHEDULE A
REDEVELOPMENT PROPERTY
City Parcels
Address
PIN
Former Use
Property Description
3710 Central
35-30-24-44-0119
Beecroft building
(demolished)
COLUMBIA HEIGHTS ANNEX TO MINNEAPOLIS, ANOKA COUNTY, MINNESOTA LOT 16 BLK 87 COL HTS ANNEX
3718 Central
35-30-24-44-0118
Non-conforming single-family home (demolished)
COLUMBIA
HEIGHTS ANNEX TO MINNEAPOLIS, ANOKA COUNTY, MINNESOTA LOT 15 BLK 87 COL HTS ANNEX
3722 Central
35-30-24-44-0117
Non-conforming single-family home (demolished)
COLUMBIA HEIGHTS
ANNEX TO MINNEAPOLIS, ANOKA COUNTY, MINNESOTA LOT 14 BLK 87 COL HTS ANNEX
Redeveloper Parcels
Address
PIN
Former Use
Property Description
3700 Central
35-30-24-44-0121
Chutney
restaurant
THE S 50 FT OF LOT 18 BLK 87 COLUMBIA HEIGHTS ANNEX, SUBJ TO EASE OF REC
3706 Central
35-30-24-44-0120
Chutney parking lot
LOT 17 BLK 87 COLUMBIA HEIGHTS ANNEX, TOG/W
THAT PRT OF LOT 18 SD BLK LYG N OF S 50 FT THEREOF, SUBJ TO EASE OF REC
6. 3805 2nd Street-GMHC
Clark explained that in 2007 the Greater Metropolitan Housing Corporation (GMHC)
partnered with the City and purchased a blighted property at 3805 2nd Street. The original concept was that GHMC would acquire and demolish the property (this cost to GHMC was a total
of $122,327) and in turn they would split the lot and construct two new homes. In order to do this their pro forma showed a total financial gap of $86,646 ($43,323 per lot), which the
City agreed to give with the source of funding being the Anoka County Levy. After the purchase by GHMC, the economy failed and no
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November 22, 2011
homes were built, and based on information attached in a letter from GHMC, dated November 16, 2011, they have $146,081 invested in the project including
the original purchase, demolition, taxes, interest carry, etc. The second part of the financial equation, which is new, is that GHMC had received previously a rehabilitation grant from
the Minnesota Housing Finance Agency that they used for two rehabs in our community. They have $29,000 left over from the original $105,000 grant and this amount is part of their “solution”
for the large and new amount of gap financing (they have a gap financing need of around $200,000 if both homes are constructed since their expenditure costs have gone up due to the carry
costs and their revenue has decreased due to the level and type of home they could construct).
GHMC’s letter has three different solution options for the EDA to consider:
The EDA to
buy the two potential lots for their $146,081 of investment. Staff views that is excessive. GHMC, like all developers, partnered with the City and their desire to be made whole goes
against all previous EDA policy actions.
If the EDA buys the lots at the $146,081 price GHMC would like the EDA to also contribute up to $20,000 to match with the MHFA’s grant residual
of $29,000 to allow another rehab in the City. Based on the letters submitted to the EDA, the average gap from the last two rehabs was $38,000 so the $20,000 seems excessive.
The third
option, letter #2 dated November 16, 2011, is that the City amends its contract to allow all of the original $86,646 gap financing funds, plus the MHFA’s $29,000, to be used as the gap
financing for one lot and one house. According to GMHC’s pro forma this would provide a break even on one lot but would leave an outstanding debt of $77,000 against the second lot, with
that financing to be figured out at a later date. Again, this seems like a solution that doesn’t solve a problem, only delays it.
All of these solutions do not involve, in the long
run, GHMC taking a piece of the incurred losses, but the EDA potentially assuming all of the increased costs from the original $86,646. Staff recommends none on these options. Representatives
from GHMC were present to discuss this.
Questions/Discussion:
Carolyn Olson and Bill Buelow from GMHC were in attendance. There was a discussion regarding the various options GMHC
had proposed for both the property they own at 3805 2nd Street and a funding match for the rehab of another property in Columbia Heights.
One of their suggestions was for the City to
purchase 3805 2nd Street from them for the amount they have into the lot(s) which would be $146,081. This amount covers the purchase price, demo costs, and taxes paid on the property
thus far. It was noted that this property could be divided into two lots but that new sewer and water lines would be needed to the properties. There was a discussion on whether the
City is interested in purchasing this site for the scattered site district. Clark said these properties are already included in the district. The Board was in agreement that they were
not interested in purchasing the properties for $146,081.
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November 22, 2011
Nawrocki asked if we have expended any funds on this site yet. Clark told him that we haven’t to date, but that $86,000 has been obligated through the
Anoka County Levy Funds.
Diehm stated that she was happy with the City’s past experience with GMHC and that they had proven to be good partners in the redevelopment of some of the properties
in Columbia Heights. She wants to continue that relationship, but we need to consider other options since we can’t re-purchase the lot from them for that amount. There was a discussion
about possibly offering to purchase the properties for the $86,000 that had been allocated. The majority of the Board was not in favor of doing that either.
Motion by Nawrocki, seconded
by Schmitt, to deny all three of the options that were suggested in the agenda packet. Ayes: Nawrocki, Schmitt, Szurek, Peterson, Herringer. Nays: Diehm and Williams.
Motion Passed.
Diehm asked if there was a purchase point Nawrocki would consider. Nawrocki was not in favor of what had been suggested so far, and thinks the City is sitting on enough properties
now. Carolyn Olson said they may have to consider letting the property go into tax forfeiture.
Schmitt then stated she is in favor of approving a $20,000 match to their MHFA grant
funds which would enable them the rehab another property. Buelow was asked what the timeline was for them to use the money from MHFA so they didn’t lose it. He told members they have
a couple months in order to find a property and start the rehab.
Motion by Schmitt, seconded by Williams, to allow up to $20,000 of Anoka County Levy funds to match the MHFA grant
monies GMHC has for the rehab of a property in Columbia Heights.
Herringer asked if there were any restrictions to the new buyers if this happened. Olson responded that they must qualify
for the mortgage and have an income up to 115% of the metro area median income. He then asked if approving this motion allows GMHC to proceed with obtaining another property. He was
told, yes, they would then proceed. He stated he has confidence that they will do a good job based on their past performance.
Diehm supported the motion, but encouraged them to keep
the City’s portion at a minimum.
Nawrocki opposes the motion until GMHC has a specific property in mind. He would like to wait until he has some concrete plans to review before allocating
funds for this.
Roll call vote on Schmitt’s motion: Ayes: Diehm, Schmitt, Szurek, Peterson, Herringer, and Williams. Nays: Nawrocki. MOTION PASSED.
EDA Minutes
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November 22, 2011
7. Liquor License Discussion
Staff is of the opinion that one of the economic development opportunities for the city to capitalize on is the
success that Northeast Minneapolis has been able to capture as an entertainment venue for restaurants and their art district branding. It is Staff’s opinion that one of the large impediments
to securing restaurants in this community is the current strong beer and wine license requirement for restaurants that demands a minimum of 75 seats and a distance requirement of 300
feet from schools or churches ( See attached City Ordinance, in part, Section 5.505). This type of license requires that at least 60% of the gross receipts be generated by food.
The
State requirement is 25 seats with no distance restraint and staff is recommending an Ordinance change to match the State minimum of 25 seats. Staff is not aware of the rationale for
the City’s policy to triple the requirement, but both the City Attorney and Chief of Police view that the change to 25 seats are not a problem from their individual discipline perspectives
and support the change.
Staff already had this item on our annual internal work plan but a real life example has presented itself. Attached is a letter, dated November 15, 2011, from
Pat Sukhtipyaroge, who is opening the Royal Orchard at 4022 Central Ave NE. This location will have around 40 seats, and as such, is not eligible for a strong beer and wine license.
As additional information, attached is a chart that illustrates how ten other cities handle this type of license.
Staff views that by changing the licensing requirements that the city
creates an additional opportunity for restaurant development and that there is not a down side for this amendment to the Ordinance. Staff seeks a discussion on this topic with the EDA
and if there is a consensus to proceed, the City Council would be the acting agent for the license amendments.
Questions from members:
Peterson said he has no problem with changing
the Ordinance. Diehm stated she also has no problem with changing it. She said the small establishments are less troublesome than large venues most often.
Motion by Schmitt, seconded
by Szurek to have the City Council consider a license change for hard beer and wine license requirements reducing the seating requirement from 75 to 25 seats, with no distance requirements.
Roll Call: Ayes-Diehm, Schmitt, Szurek, Peterson, Herringer, and Williams. Nays: Nawrocki
8. Potential CDBG Application
Cartney explained that Community Development Block Grant
(CDBG) applications are due in January 2012 and require a Resolution of support by the City Council. At this time staff would like to discuss the option of applying for funds to create
a Business Loan for our community. The rational for this type
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November 22, 2011
of application is that within the City there is a significant number of small, vacant commercial buildings.
The ability for the City to provide gap financing
may provide the opportunity for future sales to occur. The range of acceptable CDBG eligible activities has been greatly reduced over the past ten years.
Staff contacted the Anoka County
Community Development Department to see what types of loans could be used with CDBG funding. A revolving loan for gap financing for real estate transactions or equipment purchases can
be used for new businesses through CDBG funds. The applicant must occupy at least 50% of the building and hire one low-moderate income person for every $35,000 they borrow. The interest
rate and term of loan are all things that would need to be determined, but typically cities have a fixed rate at or below prime and 5-20 year terms. The cities of Blaine and Brooklyn
Park have a long history of using CDBG for these loans and have been successful. Clark told members that the Columbia Heights used to have a similar program, but discontinued it when
housing issues became more of a priority.
If the EDA supports this use of CDBG funds staff will make an application in January and will have a more detailed recommendation for the
City Council.
Staff is seeking direction from the EDA to apply for CDBG funds for a revolving business loan program, which would be approved by the City Council.
Questions from
members:
Nawrocki asked how many empty businesses we currently have. Clark said there are at least 6-10 that come to mind along 40th Avenue and Central Avenue. He listed a few that
came to mind:
500 40th Avenue, 834 40th Avenue, 836 40th Avenue, 4347 Central Ave, and others in the 3900 block of Central, the 4100 block of Central, and the 4800 block of Central.
Schmitt asked what would happen if the businesses defaulted on their loans. Cartney explained these loans would be recorded as subordinate mortgages of the property. There is some
risk involved since this loan would be secondary or tertiary to the original mortgage, but it should be minimal. She explained that each loan could be approved by the EDA Board or by
staff depending on how it is set up. Some members felt it should also be available to existing businesses who want to expand or grow their company. Cartney said she would have to
get more information on Criteria set by Anoka County for use of the funds if the Board is interested in approving the application.
Nawrocki asked how much money is available. Cartney
said the County would not tell her, and they have become very restrictive on how the funds are used. Nawrocki felt it should be used for housing programs. Cartney said housing has
been the priority for the last several years and the County is now looking at other venues for these funds to be used. Staff suggested the Business Loan Program because they thought
it may succeed with getting County approval.
Walt gave a historical review of CDBG monies and how restrictions have evolved and the competition for the funds has developed and that
projects are prioritized.
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November 22, 2011
Motion by Diehm, seconded by Schmitt, to move forward with a CDBG application for a Revolving Business Loan Program. All ayes. MOTION PASSED.
9. Scattered
Site Disposition
In 2009, The EDA directed staff to implement all necessary steps to create a Scattered Site Housing District. This district includes 23 parcels with the majority being
owned by the City. The increment from this district will replenish the old C8 Redevelopment district (the original source for the scattered site) to allow the city to have additional
funds for housing activities.
Now that the district is created a policy must be created on the disposition of the lots. There are three discussion areas for the EDA to consider 1)
The how 2) conditions of the sale 3) minimum price points.
1)Process options to sell/develop the lots
City staff market and work with EDA attorney to sell the lots
Hire a realtor to
market and sell the properties
Partner with Anoka County’s realtor to sell and market the properties
City keep 4 best lots and market and sell to one developer without the use of the
realtor
Request for Proposals from Developers, non-profit agencies for the lots
2) Conditions.
Not only does the EDA have to decide how to dispose of the scattered site properties,
a policy on any guidelines, restrictions, minimums etc. should be established. Other cities that have scattered site programs have established guidelines for the development of their
lots and have included them in the purchase documents. Even if the EDA chooses to use our current ordinances staff recommends creating guidelines so it is clear to everyone what the
expectations are. Below are some standards from our ordinance.
Minimum house width is 20 feet for all house styles. A one-story house is required to have a minimum floor area of 1,020
square feet plus an additional 120 square feet for every bedroom over three. There is an exception to reduce the minimum floor area to 960 square feet if the lot size is 6,500 square
feet or less.
A one and one half story and two story house is required to have a minimum floor area of 960 square feet plus 120 square feet for each bedroom over two. Split level homes
are required to have a minimum floor area of 1,020 square feet plus 120 square feet for each bedroom over three. Floor area may be reduced to 960 square feet if the lot is 6,500 square
feet or less. Setbacks for all these houses are Front 25 feet, side 5 feet, corner side yard 10 feet and rear 20% of lot depth.
Two detached accessory structures are allowed at a maximum
of 1,000 square feet and a three foot setback is applied. A minimum of a two-stall garage (20’x20’) is required. The entire lot has a maximum building coverage of 35% for lots under
6,500 square feet, lots over 6,500 square feet have a maximum building coverage of 30%. If a property is within a Shoreland District impervious surface is regulated to 35% . There are
no material requirements for building finishes (garages must match the house) or landscape requirements.
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November 22, 2011
Staff supports the current city ordinance requirements for building sizes but would remove the exception that the floor area can be reduced if the lot is
6,500 square feet or less as most of our Scattered Site lots are less than 6,500 square feet. The EDA should discuss the policy if landscape and building materials standards should be
established. Another thing to consider is if the EDA would like to approve the building plans for each house.
3)Minimum price
Anoka County has their Columbia Heights NSP lots listed
from $20,000 to $40,000. If the EDA decides to hire a realtor it is the realtor’s responsibility to provide a market study and price recommendations.
Staff has provided recommendations
to the scattered site disposition policy and seeks input and direction from the EDA. Staff believes the best option to pursue at this time is #4 which would be to seek proposals from
Contractors and non-profits directly and see what the interest is. Cartney said there have been inquiries over the last two years and she had been keeping a list of people to contact.
She pointed out that hiring a realtor would necessitate a commission being paid, and is skeptical of how much due diligence they would take in marketing the lots since the prices will
be relatively low compared to an already developed site.
Questions from members:
Nawrocki thinks we are wasting our time because no one is building yet and he thinks getting a Realtor
to market the properties would be the best option.
Diehm liked the idea to seek proposals. She said that way we don’t have to be pressured to accept an offer, and it provides us with
more flexibility. Williams and Schmitt agreed.
There was some discussion on the types of homes and the sizes they would like to see constructed.
Herringer thought we should consider
establishing some criteria for the building finishing.
Motion by Williams, seconded by Diehm to authorize staff to seek proposals from Developers, Contractors, and Non-Profits for development
of the lots with the minimum size home being 1,020 sf and the plans needing EDA approval. All ayes. MOTION PASSED.
It was suggested that staff contact GMHC to see if they would like
to have the 3805 2nd Street property included in the RFP list.
10. Administrative Update
Work Plan Goals Update-
In August 2010 the EDA held a Goals and Objectives Workshop. The
purpose of the workshop was to establish (or re-establish) broad goals that serve not only as framework for future actions, but also as a set of values for the Council/EDA. A work plan
was established from the discussion at the Workshop. The purpose of the work plan is to identify the goals and objectives of the EDA and to describe strategies for implementation. Not
all
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November 22, 2011
programs/activities described in the work plan will be generated through the EDA. Some of the programs/activities described will require other approvals (such
as City Council and Planning Commission) and will require input and action from various departments. The report which was included in the agenda packets shall serve as an update on the
progress of the work plan.
Goal 1 Sustain Residential Neighborhoods
Community Gardens: The EDA identified six Scattered Site lots to be used as community gardens. Staff established
a policy for the use of the gardens that was approved by the EDA. These lots will continue to be used as community gardens until redevelopment occurs. The EDA should revisit the use
of 4235 Washington Street as a garden.
Code Enforcement Programs: Community Development staff continued to meet with Police, Fire and Public Works staff to discuss code enforcement
efforts in Sheffield and Circle Terrace neighborhoods. This group has been working collectively to communicate issues within these areas and to partner on clean-up efforts in these areas.
This group worked with the Circle Terrace neighborhood on adding a street light on Circle Terrace, which helps with patrol and other crime issues at night. As part of these efforts the
Police and Fire Department made Ordinance Amendments to help with enforcement issues. The Police added mandatory background checks for renters and landlords are required to keep the
background checks on file for the duration of the lease. The Police also amended the Crime Free/Drug Free language that if a tenant is removed from a property due to a lease violation
they cannot move into another unit within the city within one year of termination. The Fire Department made some changes to their method of notifying outdoor storage and garbage can
violations as well as grass violations. A policy change to grass cutting was made.
GHMC-Reevaluate programs: In early 2011 the EDA decided to end services with GHMC and have Community
Development staff administer the rebate and loan program; by doing this the service fee of $15,000 is saved. To date staff has received roughly 215 calls regarding home improvement programs,
69 rebate applications have been mailed, 31 received and 20 closed. Of the rebates approved $310,686.60 worth of improvements has been made and $36,833.14 in rebates has been approved.
There have been 41 loan applications mailed out and 8 received.
Grand Central lofts (47th and Central): worked extensively with property owner on site improvements. Staff continues
to be available to the commercial and residential developer.
Sheffield/Heritage Heights: Police and Fire continue their efforts in this neighborhood with weekly patrols and inspections.
Community Development has worked with ACCAP to purchase two four-plexes on Tyler Street. Tyler Street is a target area for enforcement efforts.
Scattered Site: Staff finished with the
demolition of the final 2011 scattered site house at the end of October. The EDA and City Council approved the scattered site tax increment district on October 10th and Ehler’s is working
on the certification of the district. In 2010 staff worked with Anoka County to reallocate CDBG money to this district for demolition. At the November EDA meeting staff plans to present
disposition options and marketing options.
Anoka County NSP Houses: We have continued to support the county’s efforts in Columbia Heights. Anytime staff views a house that is suitable
for rehab it is forwarded to the county. The County’s properties listed in Columbia Heights will be listed on the new city’s webpage and literature is available at city hall.
Census
Report and Housing Report: Staff prepared a summary of the census report information as it was released; and continues to update the information.
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November 22, 2011
Goal 2 Continue Efforts to Improve the Central Avenue Corridor
37th and Central: Continue to work with O’Reilly’s on amending contracts
Parking Ramp: Staff
worked with the property owner to secure a loan with CEE for parking light improvements.
Aldis: Staff worked to expedite building permits and site plans.
Market development/redevelopment
opportunities on City’s webpage: The new webpage will have available commercial real estate listed
Image Committee: The City’s new webpage should go live on November 30th Once the webpage
is up and running the Image Committee will regroup and start focusing elsewhere. In addition Staff is initiating a Citizen Academy in January.
Goal 4 Implement the approved goals of
the August 2010 City’s Comprehensive Plan
General Ordinance Amendments: Permits for driveways are now required to make sure setbacks are met and drainage is not affected. A liquor license
amendment proposal will be discussed at the November EDA meeting.
Continue Redevelopment Efforts and Business Development Huset Park: Continue to work with BNC Bank on contract amendments
and marketing concepts.
Medtronic: Phase II of building expansion is complete
Root Property: Since the work plan was written new events have taken place with this property and new “goals”
have been established for this site. The city is now working on securing a DEED grant to clean up the property. Since the establishment of this work plan this property has gone into
tax forfeit.
Nawrocki commented that he thought the Board should prioritize these goals and look for reductions in order to lower taxes.
Housing Report- The latest information on housing
was enclosed in the agenda packet. This report will also be distributed to the School District Superintendent and School Board members.
Tailor Shop 42nd & Central for Sale (Discussion
only)- Walt told members that Irene called him to tell him she wanted to sell her home/business located on the 4200 block of Central Avenue. She wondered if the City was interested
in purchasing it for $169,000. The Board decided it is not interested at this time.
Meeting dates discussion-Clark asked members if they wanted to continue with the short meetings
before the City Council work sessions or if they would like to stay with the 4th Tuesday of each month. The consensus was to keep meeting before the work sessions if the agenda is kept
short. For longer meetings, a special meeting date will be included in the by-laws for the 4th Tuesday of the month.
Motion by Williams, seconded by Schmitt to change the by-laws
to reflect the change of meeting dates to the first Monday of the month. All ayes. MOTION PASSED.
Other Updates-Clark updated members about the property at 4811 Central Avenue. He
told them Mr. BBQ is planning on moving his business into that location. Staff met with the owner and informed him that he will need to re-paint the building, or file for a variance
of the Design Guidelines or a site plan review. Given the time of year, he was given till spring to get this taken care of. Staff will monitor the site until that time.
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November 22, 2011
The meeting was adjourned at 9:40 pm.
Respectfully submitted,
Shelley Hanson
Secretary