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HomeMy WebLinkAboutEDA MIN 06-02-14 ECONOMIC DEVELOPMENT AUTHORITY (EDA) MINUTES OF THE MEETING OF JUNE 2, 2014 IN CONFERENCE ROOM 1 The meeting was called to order at 6:30 pm by Chair Peterson. Members Present: Bruce Nawrocki, Donna Schmitt, Bobby Williams, Marlaine Szurek, Gary Peterson, and Tami Diehm. Members Absent: Gerry Herringer Staff Present: Walt Fehst, Joseph Hogeboom, and Shelley Hanson. 2. PLEDGE OF ALLEGIANCE- RECITED 3CONSENT ITEMS . 1.Approve the Minutes from May 5, 2014. 2.Approve the Financial Report and Payment of Bills for March and April 2014 on Resolution 2014-03. Questions by Members: There were no questions from members. Motion by Williams, seconded by Schmitt, to waive the reading of Resolution 2014-03, there being an ample amount of copies available to the public. All ayes. MOTION PASSED. Motion by Williams, seconded by Schmitt, to approve the consent agenda items as presented. All ayes. MOTION PASSED. EDA RESOLUTION 2014-03 RESOLUTION OF THE COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA) APPROVING THE FINANCIAL STATEMENT FOR MARCH AND APRIL 2014 AND PAYMENT OF BILLS FOR THE MONTHS OF MARCH AND APRIL 2014 . 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 months of March and April 2014 has been reviewed by the EDA Commission; and EDA MINUTES Page 2 June 2, 2014 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. nd Passed this 2 day of June, 2014 MOTION BY: Williams SECONDED BY: Schmitt AYES: All ayes __________________________________ President Attest By: ______________________ Shelley Hanson, Secretary NEW BUSINESS 4. Property Sale Request- 4647 Polk St. NE Hogeboom explained that Katherine and Steven Pepple, 4649 Polk Street, have contacted the City and requested to purchase the adjacent property to the south (4647 Polk Street). The property to the south of the Pepple home was acquired by the City in 2008 as part of an effort to remove blighted and defunct housing from the Heritage Heights neighborhood. The house was removed, and the lot currently sits vacant. The Pepple family would like to construct a new home on the lot at 4647 Polk Street, and ultimately sell their existing home. Although the subject property is not a part of the Scattered Site Lot Program, there are currently no immediate or long term plans for the site. The Pepple’s have indicated that their family has a long history in the Heritage Heights neighborhood, and that they would like to invest in the future of the neighborhood. EDA Minutes Page 3 June 2, 2014 A Purchase Agreement has been drafted for this proposed sale. The Agreement has been devised to reflect many of the terms and conditions found in the Scattered Site Lot Program. Consistent with the Program, staff is recommending that the subject property be sold for $7,500 to the Pepple’s, subject to construction standards and a defined construction timeframe. In order to determine the details of the contract, staff would have to meet and negotiate with the Pepple’s. In order to proceed with discussions with the Pepple’s, the EDA must direct staff to move forward with Purchase Agreement negotiations. If the EDA gives this direction, the Purchase Agreement would have to be approved by the EDA at a later date. Staff recommends that the EDA direct staff to move forward with Purchase Agreement negotiations with Katherine and Steven Pepple for the sale of the property located at 4647 Polk Street NE. The Pepples were not present at the start of the meeting so Hogeboom suggested the matter be tabled until later in the meeting. Motion by Nawrocki, seconded by Williams to table this issue until later in the meeting to allow time for the Pepples to arrive. All ayes. MOTION PASSED. Later in the meeting the matter was considered. Katherine Pepple showed the members a picture of a house similar to the one they wish to build on the site. Nawrocki questioned the price the lot is being sold for. He thought it was too low. Hogeboom explained it is the same price as the scattered site lots being sold. Motion by Diehm, seconded by Szurek, to direct staff to initiate Purchase Agreement negotiations with Katherine and Steven Pepple for the sale of the property located at 4647 Polk Street NE. Roll Call: All Ayes. MOTION PASSED. EDA Minutes Page 4 June 2, 2014 5. Huset Park Contract for Private Development – Sixth Amendment 1)Amendment to Proposed Development Schedule 2)Townhome Proposal (Phase 1B) BNC Bank, the current owner of the undeveloped parcels at the Huset Park development, has requested to amend the Contract for Private Development that regulates land use for Huset Park. This proposed amendment would revise the development completion schedule, as well as amend the “Minimum Improvements” definition for Phase 1B to accommodate Habitat for Humanity’s proposal to construct 16 townhomes on the site. The Minimum Improvements definition was last amended in June 23, 2008 to accommodate 80 units of multi-family senior rental housing for Phase 1B. The real estate broker for the property has stated that there is currently no interest in that site by senior housing developers. Allowing 16 townhome units to be constructed in this area is consistent with land use and zoning regulations. If the EDA were to amend the Contract for Private Development to allow the townhomes as an acceptable use on the site, the developer would have to still obtain Site Plan approval for the project by the Planning and Zoning Commission and the City Council. If the EDA chooses to deny the request to revise the Minimum Improvements to accommodate townhomes on Phase 1B, the EDA must make findings that support retaining the current plan for 80 units of multi-family senior rental housing. Staff recommends the EDA approve the Sixth Amendment to the Contract to change commencement and completion dates. Hogeboom went on to say that if the EDA believes that developing 16-20 townhomes at the southwest corner of Huset Parkway and Jefferson St. is an acceptable land use, staff recommends the EDA modify the “Minimum Improvements” definition to reflect the new use. It was noted that a representative from Habitat for Humanity, the Real Estate Broker, and residents and Board members from the Huset Park HOA were present. EDA Minutes Page 5 June 2, 2014 Questions/Comments from Members: Diehm said she remembers there was a spirited discussion regarding the Habitat project being proposed at the February meeting. She asked Hogeboom to refresh members on that discussion. Hogeboom explained the process that needs to be followed prior to them being able to submit a Site Plan. The change in concept is what is being considered tonight (changing from the current stated use of 80 units of Senior Housing to additional townhouses). The actual Developer shouldn’t be a deciding factor at this point. Nawrocki questioned what would happen if no action is taken tonight. Hogeboom said that only Sr. Housing could be considered as an acceptable use and the Agreement would remain in default since the completion schedule has not been met. That is why BNC is asking for two changes in the amendment being considered. One, being the extension of the time on the completion schedule and the second, is the change in definition of “Minimum Improvements” to allow a different use. Martha Ingram, Legal Counsel from Kennedy & Graven said if the Amendment is not approved BNC would remain in default. The City has already notified them they are in default. In theory the city could terminate the contract, however there are TIF Bonds outstanding to consider. It can’t terminate the bonds, so the bonds would still be owing on the developed parcels. It would free the EDA to open it up to any kind of development, but BNC would still retain ownership. The bond obligation will continue for another 15 years or until the note is paid. This amendment releases them from the requirement of constructing Sr. Housing to allow owner occupied townhomes similar to what is in the area already. It doesn’t lock us into a certain developer necessarily, but there is one who has a plan ready to submit. Diehm asked is we could approve, but not specify the new use as “townhomes”. If the Board is leaning toward detached cottage homes or some other similar use then Ingram suggested the language of “16-20 units of owner occupied housing” which would allow many options. Hogeboom told members a developer is possibly interested in constructing detached th townhouse style houses on the remaining parcel at 37 and University. Gary thought we should amend the agreement but from what he has heard, he doesn’t think the Board and the community residents want Habitat to develop this site. By amending the agreement it does open it up to other developers and he is in favor of that. He doesn’t feel more low-income housing is in the best interest of the community, however he would favor a market rate development. EDA Minutes Page 6 June 2, 2014 Diehm asked Hogeboom to clarify for the Board that if the language were amended to allow townhouses, what the process is for a developer and for the City from that point. Hogeboom responded that if the language were changed to allow townhouses that a developer could bring a proposal for Site Plan approval to the Planning & Zoning Commission and City Council. The City wouldn’t have the right to deny a plan if it met the requirements and zoning code. The Site Plan looks at architectural style, facades, landscaping, setbacks, building heights, etc. Chad Dipman who represents Habitat for Humanity told members they were walking a fine line talking about a particular developer or potential residents of the proposed properties. He pointed out that this plan is consistent with #4 of the goals established by the City Council. Dipman also stated that our Comprehensive Plan also mentions partnering with Habitat for affordable housing. Habitat has been working very hard on improving their plan to make it more attractive to City Officials and the neighboring residents. He said the proposed townhomes will blend well with the neighboring ones and that they will have 4 BR units on the end of each building, and 3 BR units in the middle of the buildings. He told members that Habitat has executed a Purchase agreement with BNC for the property contingent upon approval from the City. A neighborhood meeting was held at Murzyn Hall to discuss the proposed project. He admitted there is still some opposition among residents of the Huset Park Townhomes. Dipman said the issue wasn’t the design of the townhouses, but rather more about the concept of Habitat for Humanity housing and how it would affect the surrounding properties. Nawrocki asked him if any of the residents expressed that they were in favor of the project, and Dipman told him no. Szurek stated they have done plenty of projects in conjunction with Habitat and wants to see construction of market rate units throughout the City. She stated we already have the reputation of being a community of low income housing and we need to change the direction of future construction projects. Schmitt asked if additional bathrooms were added. Dipman said that there will be two bathrooms in each unit. She also asked how they compare in size to the existing. Dipman told her they would range from 1,400-2,000 of finished sf. which is similar to the ones constructed by Ryland. Some of the three story townhouses are in excess of that, however. EDA Minutes Page 7 June 2, 2014 Hogeboom asked what the valuation of these units would be. Dipman said he didn’t have the figures yet, but he estimated $190,000-$200,000. He is hopeful these units would be available by the spring of 2016. He told members that the units would be owner occupied homes and st that if the units are sold within the first 5 years, then Habitat has the 1 right to re-purchase. Dipman said there is still a need for affordable housing in Columbia Heights even though 28 homes have been built by Habitat already. Nawrocki stated he is not happy with the fact that Habitat made a lot of promises when they initially built houses in this City years ago, and then did not keep those promises. In particular, they promised to make the homes available to Columbia Heights residents and that did not happen. Dipman said he cannot speak on that, but they do try to locate people better now according to where they want to live, have lived, or close to where they work. Diehm asked how many rental properties there are in Columbia Heights. Hogeboom told her about 26% of the housing in Columbia Heights is rental property. Diehm then stated that we need to protect property values and the best way to do that is to have owner occupied homes. This particular project would require just that. She said the price range of the existing Ryland townhomes seem to be in the range of $165,000-$175,000 and the proposed Habitat townhomes will have a similar value. She pointed out that no one gets to choose their neighbors or who the owner may rent to. Diehm stated the question to decide now is “does it make sense to go from 80 Sr. Housing units to 16-20 townhouse units”? Fehst pointed out that due to changes in the market, developers and The City have had to re- assess decisions that were made 8-10 years ago before the market crash. It would be ideal if the Grand Central project or the Huset Park project could be completed as planned, but that may not happen. Hogeboom pointed out that Habitat is not asking for any City assistance. He asked Dipman if any of these units could be rented out. Dipman responded that there is language in their mortgages which prohibits the owners from renting their units out. Diehm asked if they would be part of the existing HOA. She was told that would depend on the association. EDA Minutes Page 8 June 2, 2014 The Public Hearing was Opened. Chris Little from 552 Lomianki Lane stated he is a resident and Board member of the Huset Park Townhouse Association. He stated that he realizes no one has control over who their neighbors will be, and that the statement was made, if you don’t like your neighbor, you could move. He said that is not an option for most of the residents in the Huset Park area. Most of them are underwater in their mortgages because of when they purchased and that property values have dropped so drastically. The other issue is they can’t rent their units either because of the restrictions that limit the number of rental units. Little went on to say this is not a “user” issue, or who is doing the building, or who will be moving in. It is the concept itself that promotes the “low income” aspect of the housing and the stigma or reputation that goes hand in hand with it. He said most in the association believe it will have a negative impact on their property values to have a development of this sort so close to them. He said the homeowner’s association would like to buy it so they had some control over what would be built there. They want something developed that will positively affect the values of the surrounding properties. Members asked him if these were market rate townhomes, would he be ok with the proposal. Little said he probably would be as long as they were market rate and people had to qualify for their mortgages in a normal manner. He said the perception that a project like this has on the surrounding area is felt in many ways. It limits how many buyers will even look at units that may be for sale because of the stigma associated with a project like this nearby. Bill Bethel from 542 Huset Pkwy passed out a study that had been done that showed some positive effects from projects such as the one proposed, some negative effects, and some neutral items. He doesn’t think the city should take a risk at this point. He also said it is not about any particular person, it is about property values and what can be done that will have the most positive impact on those values. Peterson stated that maybe we need to change our opinions about this. The residents in attendance said “not at our expense”. Diehm asked the residents if they were more comfortable leaving it empty and to wait. Bethel and the others agreed it would be a better option for the owners to wait. Renee Gaughn of 542 Huset Pkwy said most of the residents that attended the neighborhood meeting were not in favor of this project. She felt that other development is starting to happen and thinks another project will come along that may be better suited to the area. She agrees EDA Minutes Page 9 June 2, 2014 that we already provide enough low income or affordable housing for a city our size. If we are going to improve the City and draw more businesses, we need to quit catering to that type of housing. We have to quit taking whatever comes along and wait for what is best for the community. There was some discussion whether this project would come under the umbrella of the current Huset Park Townhouse Association. Gaughn stated that to become part of the Association would require 67% approval from the members. Joyce Lipski of 3810 Gauvitte St also sits on the Board. She has lived in Columbia Heights her entire life. She has nothing against Habitat, but due to the fact that their values are so underwater, she believes it would be better to hold out for a Sr Housing project as it would have a better impact on property values. She accused the Board of looking strictly at the tax revenue that this could generate, rather than the people who actually live in the area and what they want. She said it is decisions like this that causes people to move away from this City. Hogeboom told the Board that once these properties are sold, Habitat is out of the picture from a property management standpoint. Property maintenance would be enforced under the City’s Maintenance code or if they become part of the Association, they would have to abide by their rules. There was a discussion about the HOA purchasing the site. However, since there is an active Purchase Agreement between Habitat and BNC, the EDA cannot interfere with that. The property has been for sale for some time and an offer could have been made prior to the one on the table now. It was noted that if the HOA did purchase the property they would be held to the same development requirements that are currently in place. Dipman also pointed out that by adding these 16 units consisting of 6-4 BR units and 10-3 BR units the maximum amount of new residents would be 108. If a Sr. Housing Building were constructed it would bring in between 80-120 new residents so the density would not be much different either way. And the fact that Habitat is the builder doesn’t have to be disclosed if neighbors are selling. Normal homes that are sold don’t disclose who built a house next door. Wade Felske from 347 Jolly Lane also a Board member said he would like to see Sr. Housing or some other market rate housing. EDA Minutes Page 10 June 2, 2014 Motion by Nawrocki, seconded by Szurek to take no action on the amendment at this time and leave in default. Ayes-Williams, Nawrocki, and Szurek Nays-Schmitt, Diehm, and Peterson MOTION FAILS Martha Ingram recommends the Board approve a timeline extension even if they don’t change the “Minimum Improvement” language. Schmitt asked those in attendance what would be a better vision for this area. She asked if the number of units were reduced, if that would make it more palatable for residents. She doesn’t envision a need for more Sr. Housing, especially on that site. But she also thinks that 16-20 townhomes on that site is too many. Fehst told members that BNC represents 18 other owners and they want to get the property sold and will entertain other options. They are not developers, and are having a hard time getting interested parties to come forward with offers. Motion by Diehm, seconded by Schmitt to approve the Sixth Amendment which will extend the Construction Schedule dates. Ayes-Schmitt, Diehm, Williams, and Szurek Nays- Nawrocki, Peterson. MOTION PASSED. Diehm said that Habitat has a Purchase Agreement in place for 16+ units. She asked Dipman if there would be any interest in reducing the number of units. Dipman said they have to have at least 16 units to make it financially feasible to build them. He said the number is within the Zoning Code range and is similar to the density of the surrounding area. Fehst asked if Habitat has ever partnered with another entity to blend some market rate units with some Habitat units. Dipman said that idea would not work for this project. The financing they are obtaining has income restrictions for the proposed purchasers and this project is too small to deviate from that. Dipman wondered how the HOA would finance the development of this site. Little said they only want to negotiate the purchase of the site and then they could control the development of it which would be more acceptable to the City and the residents. Williams said he thinks we should leave it as is for the time being. Diehm said the bank is the asking for the language change. She agrees the market for Sr. Housing is not there. The Market tells us that townhomes are the best option, but there hasn’t been a lot of interest for this small site. She also thinks a more favorable number would be 12-16 townhomes, but definitely not 20. EDA Minutes Page 11 June 2, 2014 Motion by Nawrocki, seconded by Williams to go on to the next item. Ayes-Williams, Nawrocki, Szurek Nays-Schmitt, Diehm, Peterson MOTION FAILS. Motion by Diehm, seconded by Schmitt to schedule a Special Meeting at 6 pm on Monday, rd June 23 if Commission Member Herringer can be in attendance to address the language change request. Ayes-Schmitt, Diehm, Szurek, Peterson Nays-Williams, Nawrocki MOTION PASSED. 6. Community Branding and Communications Campaign-Designation of Consultant Staff received six proposals from consultant groups wishing to be considered for the Community Branding and Communications Campaign. A team of staff rated the proposals based on the following criteria: 1.Firm’s demonstrated understanding of the City’s needs. 2.Firm and individuals’ experience, qualifications and technical skills. 3.Firm’s stated ability to identify and collaborate with project stakeholders. 4.Firm’s proposed fees. Upon evaluation, three finalists were selected for interviews. The interview panel consisted of the Mayor/EDA President, a Council Member/EDA Commissioner, the City Manager, the Community Development Director and the Associate Planner. The firm, Replace, was selected as the preferred consultant. Replace is a local design firm that has extensive experience in working with both large corporations and small non-profits. Replace would perform its work with the City within an approximately 12-15 week timeframe. Replace emphasizes stakeholder engagement and the development of a community message. A copy of Replace’s proposal is attached. Hogeboom told members that they came in at our budgeted amount. Staff recommends the EDA designate ‘Replace’ as the consultant for the Community Branding and Communications Campaign. Questions/comments from members: Szurek said she hoped that they won’t do another survey of residents. She feels this method of gathering information has been exhausted. She expressed her feelings that this is something that should have been done 15 years ago. She said she thinks our community has the reputation of being a “whole community of affordable or low income housing”. She hopes they can spin something positive that will enhance our image. EDA Minutes Page 12 June 2, 2014 Nawrocki said he sat in on the interviews and thinks this project is a waste of money. He feels the $30,000 figure is just the beginning, and that more funds will be asked for in the future for the campaign to continue. Fehst said he was impressed with their enthusiasm and their ideas. We have to identify something within the community that draws people to our City as a place they want to live in and build on that. Peterson agreed that we have to try something to change or improve our reputation. Williams said he would like to do this in conjunction with the school district. He went on to say he thinks the fact that people have bought some of our distressed housing and invested money to fix them up is a positive for our community. He also thinks if the Library is built in the right location that it will also be a positive statement for our community. Motion by Diehm, seconded by Szurek, to designate “Replace” as the consultant for the Community Branding and Communications Campaign and authorize staff to proceed with the project. Ayes-Schmitt, Williams, Diehm, Szurek, and Peterson. Nays-Nawrocki. MOTION PASSED. ADMINISTRATIVE REPORT Hogeboom told members what cases were going before the Planning & Zoning Commission on rd Tuesday, June 3. The next regular EDA meeting will be Monday, July 7, 2014 at City Hall at 6:30 pm. The meeting was adjourned at 9:25 pm. Respectfully submitted, Shelley Hanson Secretary