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HomeMy WebLinkAboutEDA MIN 09-02-14 ECONOMIC DEVELOPMENT AUTHORITY (EDA) MINUTES OF THE MEETING OF SEPTEMBER 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, Gary Peterson, Gerry Herringer and Marlaine Szurek. Bobby Williams arrived at 6:38 pm. Members Absent: Tammi Diehm Staff Present: Walt Fehst, Loren Wickham, and Shelley Hanson. 2. PLEDGE OF ALLEGIANCE- RECITED 3CONSENT ITEMS . 1.Approve the Minutes from August 4, 2014. 2.Approve the Financial Report and Payment of Bills for July 2014 on Resolution 2014-011. Questions by Members: Nawrocki questioned the bill to A.M.E. North Inc. Wickham told members that was the payment for the Mady’s demolition. Motion by Szurek, seconded by Schmitt, to waive the reading of Resolution 2014-11, there being an ample amount of copies available to the public. All ayes. MOTION PASSED. Motion by Szurek, seconded by Schmitt, to approve the consent agenda items as presented. All ayes. MOTION PASSED. EDA RESOLUTION 2014-11 RESOLUTION OF THE COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA) APPROVING THE FINANCIAL STATEMENT FOR JULY 2014 AND PAYMENT OF BILLS FOR THE MONTH OF JULY 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 month of July 2014 has been reviewed by the EDA Commission; and EDA MINUTES Page 2 September 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. Passed this 2nd day of September, 2014 MOTION BY: Szurek SECONDED BY: Schmitt AYES: All ayes __________________________________ President Attest By: ______________________ Shelley Hanson, Secretary NEW BUSINESS 4. Support for Livable Communities Transit Oriented Development Funding for Affordable Senior Housing at 3989 Central Avenue NE Fehst explained that on May 5, 2014, The Economic Development Authority endorsed a plan by the Schuett Companies, Inc. (the Developer) to develop approximately 80 units of affordable senior housing on floors two through six at the Northeast Business Center, located at 3989 Central Avenue NE. To finance this proposal, the Developer is seeking to obtain funding from a number of sources, including “Transit Oriented Development” (TOD) funding that is administered by the Metropolitan Council. There is 2 million dollars available from this funding source that the Met Council will award to projects they feel best meet the criteria. Fehst explained that Schuett may or may not get this funding, and if they do, they may not get the entire amount. EDA Minutes Page 3 September 2, 2014 In order to be considered, the Metropolitan Council has stated that it requires a Resolution of Support for the project in order to proceed. At the August 4 Economic Development Authority (EDA) meeting, the EDA voted to table the request until more members were present and until there was a better understanding of the current status of the Northeast Business Center building. Since the August 4 EDA meeting, the Metropolitan Council issued a letter requesting that the TOD funding application be withdrawn. However, the Developer has contacted the Metropolitan Council, and believes there is a willingness to continue the application process if the EDA will approve a Resolution for the project. The Developer has requested that the EDA reconsider its support for this project. The Northeast Office Center is currently owned by Venture Bank. The Developer and Venture Bank have confirmed that there is purchase agreement in place for the property. The Developer has stated at the August 25, 2014 City Council meeting that he intends to allow Northeast Bank to remain in its current location at least until construction would begin for the senior residential project, which would likely occur in spring, 2015. Northeast Bank has indicated that it is looking for an alternate location, possibly closer to Interstate 694, but it would need to remain in the Northeast Business Center until March, 2015. By approving this resolution, the EDA is confirming its earlier endorsement of an affordable senior housing development to be located at 3989 Central Avenue NE. Assuming that the first level of the building is retained for commercial purposes, this proposal is consistent with the zoning requirements for the Central Business District. If the grant is approved, the funds would be allocated directly to the City, and city staff would have to assume the responsibility of managing the funding. If the EDA chooses to endorse this project and the concept of introducing additional housing units into the Central Business District, then it is recommended that it adopt Resolution No. 2014-12 and direct staff to request the Metropolitan Council to reconsider the grant application. Fehst said there are advantages and disadvantages to the project. Venture Bank intends to close the building down by the end of the year unless Schuett closes on the property prior to that time. If the Resolution is approved and forwarded to the Met Council, there still is no guarantee they will consider it for this year’s funding. Fehst said if Schuett is awarded the tax credits, and not this TOD funding, he still may proceed, if he can get enough from the sale of the tax credits. Fehst said he did speak to Tonya Orr from MHFA Human Services Division, and she gave a good recommendation of Schuett’s other projects as a whole and that they had a good business model as related to her department’s oversight. Tom Schuett was present at the meeting to answer questions. He gave a brief overview of his company and other properties he has developed. He explained that the previous owner of this property let it go into voluntary foreclosure. Venture Bank then went through the Sheriff’s Sale in order to terminate the leases for the occupants of the building. Schuett stated that after the Met Council decided not to consider his application he contacted them to see if they would reconsider the application if they did get EDA Minutes Page 4 September 2, 2014 a copy of the Resolution showing support of the project. It is his understanding that they will still take it into consideration for this year’s allocation of funds. Schuett said there is no real downside to the City, and the City will have control of reimbursing the development costs as the project proceeds. Schuett told members that it will take about 19 million dollars to renovate the building for the 80 unit project. He explained that as the baby boomers continue to age, this type of facility will be in high demand. Not everyone has saved for their retirement years and the trend is to keep people in their homes/apartments and to provide services to them there. He feels these services can be provided for an average cost of $2,000-$2,500 per month in his facility as compared to $5,000-$6,000 per month for a nursing home or assisted living facility. He went on to tell the members that he is open about the plans for the first floor. He has met with Tom Beck from NE Bank to see if they can work out an arrangement to keep them there if he moves forward with purchasing the building from Venture Bank if he gets all the financing he needs. Questions/comments from members: Nawrocki asked if they would re-apply for this funding next year if they don’t get any funds this year. Schuett responded that Venture Bank won’t hold the building indefinitely and they had an agreement to close in early 2015. He will need to find other funding or negotiate with others (including the City, if they are interested) for the use of the first floor in order to proceed. Nawrocki asked where he was getting 19 million from. Schuett said he expects to raise about 12 million from the sale of the low income tax credits that would be sold to Investors. He is hoping for 2 million from the Met Council TOD Funds, Anoka County HOME funding of $300,000 and the rest would come from Housing Infrastructure Bonds through MHFA. Nawrocki asked if he would be investing any of his own money into this project and he told the members that he would not. Schmitt asked what the term “affordable” meant and how is this different from Parkview Villa. Schuett responded that it isn’t drastically different as far as who would qualify to live in this project. The difference is that PVV is a HUD project and in 1982 HUD passed rules that prohibited the building from being used strictly by seniors, and opened it up for those with disabilities. He can limit his project to just those 62 and over because it is subsidized differently than PVV by reducing the mortgage up front rather than funding through Section 8. Szurek asked what he expects the rents to be. Schuett said those that meet the 30% median income levels would pay approximately $455 for 1 BR units and $560 for 2 BR units. If they meet the 50% median income level they would pay $700 for 1 BR units and $850 for the 2 BR units. She asked if he would rent to anyone on Section 8 and he said he would not. Fehst said it will probably increase requests for our Fire/Medical Services. Schuett, however, disagreed with this. He said he would be congregating seniors into one location rather than having them dispersed throughout the community and they would still have the same number of calls no matter where they lived. Nawrocki pointed out that would only be true if all the residents were from Columbia Heights in the first place. Fehst then reviewed the tax ramifications if this project goes through. EDA Minutes Page 5 September 2, 2014 Fehst stated that the best use of the building is to be used as commercial/office space, but owners have always struggled to keep it filled as this type of use. He said this may be a solution rather than having the building sit empty for an extended period of time. Fehst stated that if there was a way to covenant or ensure the fact that it would be used for “Senior Housing” for 30 years, that would also alleviate some of his concerns regarding the project. He questioned whether it would be used later as “affordable housing” based on documents he has seen, and that is different than what is being proposed by Schuett at this meeting. Schuett stated that a condition for the MHFA funding application required that it be used as a “62 or older-senior building” for 30 years. Fehst told members they have to decide if this is an acceptable use of the building. Szurek asked why the Met Council is now requiring a Resolution of Support rather than the Letter of Support that was previously approved. Fehst said that since the City is the responsible party for administering the funds to the Developer they wanted a more formal document showing support. Szurek asked if the Met Council is even going to re-consider this application. Fehst said they might, he has no way of knowing that for sure. Szurek said she is in favor of providing housing to seniors as long as this project won’t have to follow HUD’s rules. Herringer said he is sure it will increase the need for City services, and not just for Fire/Medical calls. He asked how much oversight will be required to administer the grant money to the Developer and for other staff time in relation to the construction process. Peterson stated that Building Permit fees would cover staff’s time as far as the construction/inspection process goes. And Joe Kloiber stated that it shouldn’t have a huge impact on staff to review and process the claim form to allocate the funds for the construction cost reimbursements. Peterson stated he thought there is a need for affordable places for senior to live. Not all seniors can afford rents of $1,200/month or more for a market rate apartment. Nawrocki stated that he doesn’t think it will be primarily Columbia Heights residents moving into this building based on the occupancy of Parkview Villa, Heights Manor, and the Crestview facilities. Everyone who contacted him was against more affordable housing projects such as this. They all felt we have provided enough affordable housing, and need to look at projects that will attract businesses to locate here. Williams doesn’t think there are many options for this building. Motion by Williams, seconded by Szurek, to waive the reading of Resolution 2014-12, there being ample copies available to the public. All ayes. MOTION PASSED. Motion by Williams, seconded by Szurek, to approve Resolution 2014-12, Resolution of the Columbia Heights Economic Development Authority (EDA) identifying the need for Livable Communities Transit Oriented Development (TOD) funding and authorizing an application for grant funds for the Schuett Companies, Inc.’s affordable senior residential development proposal. EDA Minutes Page 6 September 2, 2014 Herringer said we just spent 1 million dollars to take down a building on Central Avenue in hopes of re- developing our main corridor. He said the highest and best use of this property is as a commercial/office use. Herringer is concerned about losing whatever commercial businesses we have. This is currently a “class c” office space, and he believes that eventually a developer will pick it at a reduced rate and re-develop it. He stressed that sometimes you need to be patient and not settle for a less desirable use. He also doesn’t think this is the time to approve another facility that would be competing with AEON who is taking over PVV (Parkview Villa) from us directly across the street. Herringer went on to say that presently the building is not very attractive and Schuett’s proposal doesn’t indicate much change to the outward appearance. He stated that Schuett isn’t investing any funds into this project himself, and that there are a lot of promises and ideas that may or may not come to fruition. There are a lot of fuzzy thoughts being tossed about, but no real commitments are on the table as part of this deal. He believes there is a better use for this building if the City would set their sights on something better for that location. He suggested Schuett look at other sites in the City that are available for this type of housing project. Peterson asked who would be responsible for maintaining the building if it goes vacant. Fehst told him the owner, Venture Bank, would be responsible for maintenance. Peterson said when buildings sit empty they tend to be neglected and go into a state of disrepair. He thought that sometimes we over estimate what we can get here. Herringer responded that the City is in the process of trying to re-brand itself and now is certainly the time to set higher goals for ourselves. Nawrocki agreed with Herringer. Schmitt stated that if PVV was strictly a senior building then she would say we had enough senior housing. But if there is a guarantee this will stay a senior building along with commercial space on the first floor she can go along with the proposed concept. Roll call vote on the above motion. Ayes-Szurek, Williams, Schmitt, Peterson Nays- Herringer and Nawrocki MOTION PASSED to approve Resolution of Support. COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. 2014-12 RESOLUTION IDENTIFYING THE NEED FOR LIVABLE COMMUNITIES TRANSIT ORIENTED DEVELOPMENT FUNDING AND AUTHORIZING AN APPLICATION FOR GRANT FUNDS WHEREAS, the City of Columbia Heights (“City”) is a participant in the Metropolitan Livable Communities Act (“LCA”) Local Housing Incentives Program for 2014 as determined by the Metropolitan Council, and is therefore eligible to apply for LCA Livable Communities Demonstration Account and Tax Base Revitalization Account Transit Oriented Development (collectively, “TOD”) funds; and EDA Minutes Page 7 September 2, 2014 WHEREAS, the City has identified a proposed project within the City that meets TOD purposes and criteria and is consistent with and promotes the purposes of the Metropolitan Livable Communities Act and the policies of the Metropolitan Council’s adopted metropolitan development guide; and WHEREAS, the City has the institutional, managerial and financial capability to adequately manage a LCA-TOD grant; and WHEREAS, the City certifies that it will comply with all applicable laws and regulations as stated in the grant agreement; and WHEREAS, the City acknowledges TOD grants are intended to fund projects or project components that can serve as models, examples or prototypes for TOD development or redevelopment elsewhere in the Region, and therefore represents that the proposed project or key components of the proposed project can be replicated in other metropolitan-area communities; and WHEREAS, only a limited amount of grant funding is available through the Metropolitan Council’s Livable Communities TOD initiative during each funding cycle and the Metropolitan Council has determined it is appropriate to allocate those scarce grant funds only to eligible projects that would not occur without the availability of TOD grant funding. NOW THEREFORE BE IT RESOLVED that, after appropriate examination and due consideration, the governing body of the City: 1. Finds that it is in the best interests of the City’s development goals and priorities for the proposed TOD Project to occur at this particular site and at this particular time. 2. Finds that the TOD Project component(s) for which Livable Communities TOD funding is sought: (a) will not occur solely through private or other public investment within the reasonably foreseeable future; and (b) will occur within the term of the grant award (two years for Pre-Development grants, and three years for Development grants, one year for Cleanup Site Investigation grants and three years for Cleanup grants) only if Livable Communities TOD funding is made available for this project at this time. 3. As a participant in the Metropolitan Council’s Livable Communities Local Housing Incentives Account program, supports the application, and any resulting funding award, for the Columbia Heights Senior Development being submitted by the Columbia Heights Economic Development Authority. nd Approved by the Board of Commissioners of the Columbia Heights Economic Development Authority this 2 day of September, 2014. President ATTEST: Secretary EDA Minutes Page 8 September 2, 2014 5. Administrative Report “Navigating the New Normal” is a discussion panel that will take place Thursday, September 11, 2014, at Murzyn Hall from 5-7 pm. This meeting will be held by the Urban Land Institute. The City Council, City Staff, EDA Members, and Planning & Zoning Commission members are all invited to attend this discussion about re-development trends and a realistic outlook about the possibilities particular to our community due to demographics, transportation, and the overall real estate market. The next regular EDA meeting will be Monday, October 6, 2014 at City Hall at 6:30 pm. The meeting was adjourned at 8:08 pm. Respectfully submitted, Shelley Hanson Secretary