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HomeMy WebLinkAboutJan 3, 2017 minutesECONOMIC DEVELOPMENT AUTHORITY (EDA) MINUTES OF THE MEETING OF JANUARY 3, 2017 The meeting was called to order at 6:30 pm by Chair Gary Peterson Members Present: Donna Schmitt, John Murzyn, Marlaine Szurek,, Bruce Nawrocki , Bobby Williams, Gerry Herringer, and Gary Peterson. Others present: Connie Buesgens, newly elected Councilmember Staff Present: Walt Fehst, Joseph Hogeboom, Keith Dahl, and Shelley Hanson. PLEDGE OF ALLEGIANCE- RECITED CONSENT ITEMS Approve the Minutes from November 7, 2016– Approve the Financial Report and Payment of Bills for October and November 2016 on Resolution 2017-01. Questions by Members: No questions or comments. Motion by Nawrocki , seconded by Williams, to waive the reading of Resolution 2017-01 there being an ample amount of copies available to the public. All ayes. MOTION PASSED. Motion by Nawrocki, seconded by Williams, to approve the Minutes and Financial Report and Payment of Bills for October and November, 2016 as presented. All ayes. MOTION PASSED. RESOLUTION NO. 2017-01 A Resolution of the Economic Development Authority of Columbia Heights, Minnesota, Approving the Financial Statements for the Months of October and November, 2016 and the Payment of the Bills for the Months of October and November, 2016. 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 statements for the months of October and November, 2016 has been reviewed by the EDA Commission; and EDA Minutes Page 2 January 3, 2017 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 3rd day of January, 2017. Motion by: Seconded by: BUSINESS ITEM 1. Discuss Right of Reverter Execution for 4647 Polk St NE Dahl explained to members that on August 28, 2014, the Columbia Heights Economic Development Authority (the “EDA”) entered into a Purchase and Redevelopment Agreement (the “Agreement”) between Steve and Katherine Pepple (the “Pepples”) for a single-family, owner-occupied home to be constructed on 4647 Polk Street NE (the “Property”). The Agreement obligated the Pepples to substantially complete construction by January 30, 2016 or the EDA would have the right to re-enter and take possession of the Property. At the time the EDA sold the Property to the Pepples for $7,500, they indicated that their intentions were to ultimately sell their existing home and construct a new home on the Property. To date, the Pepples have not substantially constructed a single-family home on the Property. The City Building Official has reviewed two different sets of plans for the Pepples proposed home; however no permits have been issued for construction and no plan review fees have been paid. Since construction has not been substantially completed, the EDA may retake the Property and pay the Pepples the remaining balance of the purchase price after the EDA has reimbursed itself for all costs and expenses incurred in connection with the recapture, management, and resale of the Property. EDA Minutes Page 3 January 3, 2017 Staff sent out a letter to the Pepples informing them of their default to the Agreement and the pending actions that may be taken by the EDA. On November 28, 2016, staff received the attached letter from the Pepples requesting the EDA consider purchasing the Property back due to a financial hardship. For discussion tonight, Staff is seeking direction from the EDA on whether or not to proceed with the right-of-reverter to re-enter and take possession of the Property. And if the EDA chooses to do that, what amount of our expenses does the EDA expect to recoup. Dahl stated that if the EDA decides to re-enter and take possession of the Property, Tollberg Homes has communicated to staff that they would be interested in purchasing the Property to build a single-family home specific to the requirements of the Single Family Home Lot Sales Program. A copy of Tollberg Home’s letter of interest is attached. Staff recommends excursing the EDA’s legal right-of-reverter to reacquire the Property so that it may be added to the Single Family Home Lot Sales Program for sale to a developer. Questions/comments from members: Nawrocki asked what outstanding fees we have incurred thus far. Dahl stated there were legal fees for drafting the Purchase/Development Agreement, recording/transfer fees, plan review fees, and there will be fees incurred to process the Right of Reverter Clause. Dahl said the costs probably exceed the $7,500 purchase price. Dahl was asked why they decided not to build and whether they are current on the property taxes. Dahl explained they have experienced a financial hardship and are not comfortable moving forward with construction, but they have paid the taxes on the parcel. He said they have requested that the City buy the lot back. Under the current agreement the Pepples are not allowed to sell the lot to someone else themselves. Hogeboom told members that he had conferred with the Attorneys, and the City can’t just make them an offer to re-purchase, we must go through the Right to Revert process. Herringer asked if the Pepples still lived in Columbia Heights. Hogeboom stated they live next door to this lot and have been residents of this neighborhood for a long time. Fehst said it was an unfortunate set of circumstances that led to their request for the City to take the lot back. Hogeboom stated the Pepples would like to have the whole purchase price returned to them, however he suggested that we subtract the amount of the second plan review ($1,355.74) off the purchase price of $7,500 and refund them the difference. Herringer said the EDA should recoup some of the expenses and thinks a refund of $6,100-$6,200 is fair. EDA Minutes Page 4 Jan 4, 2017 Members generally agreed with that based on the fact that the lot will be re-sold at a higher price and that will help cover the other expenses we have incurred. Members asked Dahl what he thinks Tollberg would be willing to pay for the lot. Dahl said he expects to get $18,500-$25,000 for the lot once it is put back on the market. Motion by Nawrocki , seconded by Szurek , to direct staff to proceed with excursing the right-of-reverter, pursuant to the Purchase and Redevelopment dated August 28, 2014 between the EDA and the Pepples for the construction of a single-family, owner-occupied home at 4647 Polk Street NE for $7,500, minus plan review fees of $1,355.74 for a refund of $6,144.26 to the Pepples. All ayes. MOTION PASSED. Hogeboom said the next step will be to send them a written demand to fulfill their original agreement, and they will be given a 30 day timeframe to take action. If not, then the City will then proceed with the legal documents to take the property back. The Pepples are aware they will be issued the demand letter as the first step. OTHER BUSINESS: 1. CDBG APPLICATION- Dahl told members that staff has filled out a CDBG application for 2017 funding to purchase the Root property at 40th and University. The application will go to the City Council January 9th and must be submitted by January 13th. It will require extensive clean up if we get funding to purchase the property. Dahl said we would apply for clean- up funds through the Met Council and DEED. He estimated those costs to be $300,000 to $500,000. Hogeboom said this is a good time to move on this property since interest has increased in redeveloping this area due to the construction on the east side of University. Herringer asked what size the Root property was. Dahl said it was 1.19 acres which includes 3 accessory structures and the foundation of the primary structure. There was a discussion among members regarding the surrounding properties and the potential for future redevelopment of the whole west side of University. 2. HYVEE UPDATE- Hogeboom told members that Hyvee was turned down for the grant application for remediation costs so this put them behind schedule as they are trying to obtain financing elsewhere. He said they have purchased the property and the rumors that they are backing out are untrue. He did tell members that Hyvee plans on taking plans to the Planning & Zoning meeting in February for the construction of a gas station/convenience store on 47th Avenue and Central. They would like to start construction by spring and once that is started they will start the remediation process of the store itself located in the mall. EDA Minutes Page 5 Jan 4, 2017 3. NAWROCKI FAREWELL- Nawrocki said life has ups and downs, and that at the New Year he tries to put the negatives behind him and start fresh. He wished everyone the very best in the New Year, and hopes they all look forward to what lies ahead. The next meeting will be February 6 after the HRA meeting which is scheduled for 6:00 pm. The HRA will get an update from the Attorney regarding the by-laws, and changes to handle the financial obligations will be addressed. The attorney will also be present at the EDA meeting to answer any questions the Board may have. The meeting was adjourned at 6:45 pm. Respectfully submitted, Shelley Hanson Secretary