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
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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.
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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.
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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.
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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.
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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.
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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.
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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
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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.
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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.
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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.
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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