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HomeMy WebLinkAboutApril 3, 2017ECONOMIC DEVELOPMENT AUTHORITY (EDA) MINUTES OF THE MEETING OF APRIL 3, 2017 The meeting was called to order at 6:30 pm by Vice-President Schmitt Members Present: Williams, Buesgens, Murzyn, Herringer, and Schmitt Members Absent: Szurek Staff Present: Walt Fehst, Joe Hogeboom, Keith Dahl, Joe Kloiber, Kelli Bourgeois PLEDGE OF ALLEGIANCE- RECITED CONSENT ITEMS Approve the Minutes from March 6, 2017 Approve the Financial Report and Payment of Bills for February 2017 on Resolution 2017- 07. Questions by Members: Commissioner Herringer requested more details concerning a payment to Xcel Energy on February 2, 2017 and a payment to CenterPoint Energy on February 8, 2017. Commissioner Herringer also requested more information regarding a credit card payment made. Hogeboom and Dahl will research the matter, and provide follow-up information to the EDA. Motion by Williams, seconded by Herringer, to waive the reading of Resolution 2017- there being an ample amount of copies available to the public. All ayes. MOTION PASSED. Motion by Williams, seconded by Herringer, to approve the Minutes of March 6, 2017, and the Financial Report and Payment of Bills for February, 2017 as presented. All ayes. MOTION PASSED. RESOLUTION NO. 2017-07 A Resolution of the Economic Development Authority of Columbia Heights, Minnesota, Approving the Financial Statements for the Month of February, 2017 and the Payment of the Bills for the Month of February, 2017. 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 month of February, 2017 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 3rd day of April, 2017. Motion by: Williams Seconded by: Herringer BUSINESS ITEM 1. SINGLE FAMILY HOME LOT SALES PROGRAM-FINAL SALE APPROVEAL OF 4647 POLK ST-RESOLUTION 2017-08 Dahl reminded members that on March 6, 2017, the Columbia Heights Economic Development Authority (the “EDA”) approved the concept application submitted by Tollberg Homes offering to purchase the property located at 4647 Polk Street NE (the “Property”) for $25,000. The Property is approximately 0.23 acres and is part of the Single Family Home Lot Sales Program, which was established by the EDA in 2015 to stabilize and increase property values in the Heritage Heights Neighborhood. The program’s lot prices are based upon the estimated market land value for each individual property. However, the EDA has the right to review and adjust lot prices periodically provided that sufficient evidence supports the lots price reduction. The 2017 Estimated Market Land Value for the Property is $51,300. However, in speaking with various home builders and realtors, staff received comments that the lots located in the Heritage Heights neighborhood, are generally lower in value than other properties throughout the City. Tollberg Home’s offer of $25,000 is around what the EDA can expect to sell this property for. Staff requests consideration of the EDA for final sale approval of the Property. The Purchase and Redevelopment Agreement for the sale of the Property, which was drafted by Kennedy & Graven was included in the agenda packets, as well as the specific house plans. The proposed house plan submitted by Tollberg Homes meets the building requirements set forth by the Single Family Home Lot Sales Program Guidelines. Staff received the earnest money in the amount of $2,000 and a partially executed Purchase and Redevelopment Agreement. If the EDA approves the final sale tonight, the earnest money will become non-refundable and staff will obtain the necessary signatures at the EDA meeting to fully execute the Purchase and Redevelopment Agreement. If the EDA denies the final sale approval, staff will reimburse the earnest money to Tollberg Homes. A representative from Tollberg Homes will be present at the EDA meeting to discuss their proposal, as well as answer any questions EDA commission members have regarding their proposal. Staff recommends final sale approval of 4647 Polk Street NE, Columbia Heights, MN 55421. Wade Tollefson, representing Tollberg Homes, thanked the Economic Development Authority for the opportunity to purchase this property, and discussed the other homes that the company recently built in Columbia Heights Questions from members: None. Motion by Herringer, seconded by Buesgens, to open the public hearing regarding the proposed sale of certain EDA owned property located at 4647 Polk Street NE, Columbia Heights, Minnesota to Tollberg Homes, LLC for purposes of construction of a single-family home. All ayes. MOTION PASSED. Public Hearing Opened. Seeing and hearing no one wishing to speak, Vice President Schmitt closed the public hearing. Public Hearing Closed. Motion by Williams, seconded by Herringer, to waive the reading of Resolution 2017-08, there being ample copies available to the public. All ayes. MOTION PASSED. Motion by Williams, seconded by Herringer, to adopt Resolution 2017-08, Resolution Approving the Purchase and Redevelopment Agreements with Tollberg Homes, LLC for the acquisition of 4647 Polk Street NE, Columbia Heights, MN 55421. All ayes. MOTION PASSED. COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. 2017-08 RESOLUTION APPROVING PURCHASE AND REDEVELOPMENT AGREEMENT WITH TOLLBERG HOMES, LLC. BE IT RESOLVED BY the Board of Commissioners ("Board") of the Columbia Heights Economic Development Authority (the "Authority") as follows: Section 1. Recitals. 1.01. The Authority has previously adopted a program called the Single Family Home Lot Sales Program (the “Program”), and has adopted guidelines in connection with the Program (the “Guidelines”). 1.02. The Authority has received an offer from Tollberg Homes, LLC (the “Buyer”) to purchase certain property included in the Program (the “Property”), described as attached hereto as Exhibit A, and the parties have negotiated a Purchase and Redevelopment Agreement (the “Agreement”) which provides for the conveyance of the Property to the Buyer and the construction by the Buyer of a single-family home on the Property, all pursuant to the Guidelines. 1.03. On October 21, 2015, the Planning Commission of the City reviewed the proposed Program and found that the conveyance of property pursuant to the Program is consistent with the City’s comprehensive plan. 1.04. On the date hereof, the Authority conducted a duly noticed public hearing regarding the conveyance of the Property to the Buyer, at which all interested parties were given an opportunity to be heard. 1.05. The Board has reviewed the Agreement in the form on file at the office of the Executive Director and finds that the execution thereof and performance of the Authority's obligations thereunder, including the conveyance of the Property to the Buyer, are consistent with the Guidelines and in the best interest of the City and its residents. Section 2. Approval and Authorization of Agreement and Conveyance 2.01. The Agreement as presented to the Board and the conveyance of the Property provided for therein are 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 Agreement by such officials shall be conclusive evidence of approval. 2.02. Authority staff and officials are authorized to take all actions necessary to perform the Authority’s obligations under the Agreement as a whole, including without limitation execution of any documents to which the Authority is a party referenced in or attached to the Agreement, and any deeds or other documents necessary to convey the Property to the Buyer, all as described in the Agreement. Section 3. Effective Date. This resolution shall be effective upon approval. Approved by the Board of Commissioners of the Columbia Heights Economic Development Authority this 3rd day of April, 2017. President ATTEST: Secretary EXHIBIT A Property Lot twenty-five (25) and Lot Twenty-six (26), Block One (1), Sheffield’s Second Subdivision as shown by the plat now on file and of record in the office of the Register of Deeds at Anoka, Anoka County, Minnesota. BUSINESS ITEM 1. FOURTH AMENDMENT-ACCAP PURCHASE AGREEMENT FOR CITY ACQUISITION OF 4641-43 POLK ST- RESOLUTION 2017-09 Dahl explained that the Columbia Heights Economic Development Authority (EDA) previously approved a Third Amendment to the Purchase Agreement on February 6, 2017, which extended the closing date to March 31, 2017. However, due to more unanticipated delays, ACCAP is requesting the closing date be extended again. For the EDA consideration tonight is a Fourth Amendment to the Purchase Agreement, which extends the closing for the sale of the Property to take place on or before May 31, 2017. ACCAP needs to obtain another MHFA approval, which will take at least three weeks. ACCAP intends to close at the end of April or beginning of May. Staff recommends the approval of Resolution 2017-09, a resolution approving the Fourth Amendment of a Purchase Agreement that will extend the closing date of the Property to take place on or before May 31, 2017. Questions from Members: none Motion by Williams, seconded by Buesgens, to waive the reading of Resolution 2017-09, there being ample copies available to the public. All ayes. MOTION PASSED. Motion by Williams, seconded by Herringer, to adopt Resolution 2017-09, a resolution approving a Fourth Amendment of a Purchase Agreement between the Columbia Heights Economic Development Authority and Anoka County Community Action Program. All ayes. MOTION PASSED. COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY EDA RESOLUTION NO. 2017-09 RESOLUTION APPROVING A FOURTH AMENDMENT TO A PURCHASE AGREEMENT BETWEEN THE COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY AND ANOKA COUNTY COMMUNITY ACTION PROGRAM, INC. BE IT RESOLVED BY the Board of Commissioners (“Board”) of the Columbia Heights Economic Development Authority (the “Authority”) as follows: Recitals. 1.01. The Authority currently administers the Downtown CBD Redevelopment Project (the “Project”) within the City of Columbia Heights (the “City”), pursuant to Minnesota Statutes, Sections 469.090 to 469.1082, as amended. 1.02. The Authority and Anoka County Community Action Program, Inc. (the “Seller”) executed a Purchase Agreement, dated as of May 26, 2016 (the “Agreement”), providing for the conveyance by the Seller to the Authority of certain property within the Project and City legally described as follows: That part of Lot 23 lying north of the South 20 feet of the SD Lot 23 and Lot 24, Block 1, Sheffields 2nd Subdivision, County of Anoka, State of Minnesota (the “Property”). 1.03. On August 31, 2016, the parties entered into a First Amendment to the Purchase Agreement (the “First Amendment”) to extend the deadline for conveyance of the Property. 1.04. On October 28, 2016, the parties entered into a Second Amendment to the Purchase Agreement (the “First Amendment”) to further extend the deadline for conveyance of the Property. 1.05. On February 6, 2017, the parties entered into a Third Amendment to the Purchase Agreement (the “Third Amendment”) to further extend the deadline for conveyance of the Property. 1.06. The parties have negotiated and propose to execute a Fourth Amendment to the Purchase Agreement (the “Fourth Amendment”) to further extend the deadline for the conveyance of the Property. Section 2. Fourth Amendment Approved. 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 Fourth Amendment 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. 2.03. Authority staff and consultants are authorized to take any actions necessary to carry out the intent of this resolution. Approved by the Board of Commissioners of the Columbia Heights Economic Development Authority this 3rd day of April, 2017. Vice President ATTEST: Secretary OTHER BUSINESS: Redevelopment Discussion of 828 40th Ave- Dahl explained to members that an “Intent to Purchase” letter has been sent to the City for the purchase of the vacant lot located at 828 40th Avenue. Mulata Associates has offered $35,000 for the site. Dahl told members that certain criteria must be met in order for this sale to be approved since the site was purchased using CDBG funds. Some of the criteria that must be met are that it be developed as a commercial use and that at least 3 Full Time positions must be created for that business. Dahl said he believes they plan on constructing an office building that would be two or three stories with parking in the rear. If the EDA is interested in entertaining this offer, the buyer will need to provide specific information so staff can ensure Anoka County’s criteria can be met. Commissioner Buesgens inquired about whether or not there are any requirements that exist for the property, due to federal funding being used to acquire the property and demolish the former building. Dahl stated that there is a requirement that a commercial entity be developed on the site that creates jobs. If this does not occur, Dahl explained that the City/EDA may need to reimburse the County for a portion of the land value. Commissioner Murzyn reminded the EDA that the City, at one point, had desired to construct a parking lot on the site to accommodate a need from the former Library building. Vice President Schmitt stated that, although that was an initial plan, the City later realized that there were certain development requirements associated with the federal funding used for the project. The EDA directed staff to receive more information from the party interested in purchasing the property before any offer can be entertained. Columbia Heights Economic Development Authority 2017 Levy Discussion- Keith Dahl explained that, to date, the Columbia Heights Economic Development Authority (EDA) has been discussing several projects, programs, and objectives commissioners have desired to see initiated, implemented and/or completed in 2017. Many of these projects and programs, specifically acquisition of Single-Family Homes along Central Avenue; implementation of a low- to no- interest loan program for home renovation improvements; and initiation of a Business Retention & Expansion Program, will require a revenue source to achieve the results EDA commission members envision. Staff has identified one possible revenue source that has two opposite outcomes; one outcome would increase the tax rate in the City as the other outcome would decrease the tax rate in the City. Dahl further explained that currently, the statutory levy limit is .0185% of the Market Land Value in the City or for 2016 the maximum amount the EDA could levy was $209,468. The 2016 EDA levy, payable in 2017, was .0074188% of the Market Land Value in the City or $84,000. Over the course of the past eight years, the EDA levy has remained relatively constant with minimal fluctuation up or down. If the EDA raised the levy to the statutory levy limit, the revenue realized would provide the EDA with the funds necessary to acquire properties for redevelopment when they become available, offer a low- to no-interest loan program for home renovations, but also to provide assistance programs to local businesses. Dahl explained that if the EDA raised the levy to the statutory levy limit, taxes would increase for businesses and residents. The amount taxes would increase per property is variable to several factors; however, staff has calculated that the tax increase for a resident who owns a property at an estimated market value of $200,000 would be about $20 - $25 annually. In the event EDA commissioners are unfavorable to raising taxes, the other possible outcome, explained below, would still increase the EDA levy to the statutory levy limit, but decrease taxes through the elimination of a different levy. Dahl discussed that for the past ten years, the City Council has elected to participate in Anoka County Housing and Redevelopment Authority’s (ACHRA) economic development activities. Cities within Anoka County are required to adopt a resolution electing to participate or withdraw participation every five years. City Council will need to determine later this year if participation for another five years from 2018-2023 is beneficial to the City. If City Council elects to participate, the city will have access to an additional source of revenue for economic development activities, but will also agrees to the following four conditions: (1) to participate for a minimum of five years, (2) the ACHRA may levy an additional property tax within the city, (3) the ACHRA may deduct a 15% administration fee from the levied property tax, and (4) the ACHRA would retain absolute authority and discretion in determining whether or not a fund reimbursement request meets the statutory objectives. Over the past ten years, the ACHRA levy has collected an estimated $1.5 million dollars, of which $1.245 million has been made available to the City for economic development activities as the remaining $255,000 has deducted by the ACHRA for administration fees. These funds have provided the City with essential gap financing assistance for land acquisition, site investigation, remediation, and building demolition within the City. The most notable project being the land acquisition of the Mady’s property located at 3927 Central Avenue where the ACHRA levy provided over $750,000. On average, the ACHRA levy collects about $170,000 annually, of which the City has access to about $140,000. In 2016, the City realized a net value of $137,977.10 from the ACHRA levy. The current total balance available to the City as of December 31, 2016 was $373,458.30, which does not include the levied taxes from this year. Based upon the information above, if City Council decided not to participate in ACHRA’s economic development activities this year, the EDA could raise its levy to the statutory levy limit without increasing City taxes because the ACHRA levy is greater than the amount the EDA levy may increase. The amount taxes would decrease per property is variable to several factors; however, staff has calculated that the tax decrease for a resident who owns a property at an estimated market value of $200,000 would be about $7 - $10 annually. Dahl summarized that the EDA will need to locate a revenue source if projects, programs, and objectives are going to be successful. The one possible revenue source identified would be to increase the 2017 EDA levy (Payable in 2018) to the statutory levy limit. There are pros and cons to both options, but staff seeks to facilitate discussion from the EDA to determine the course of action commission members desire to see taken. Dahl concluded that no action is needed at this time, but levy discussion tonight will help facilitate budget discussion later this year. Commissioner Buesgens stated that she would be in favor of increasing redevelopment funds to maximize project output of the EDA. Vice President Schmitt stated that she would be in favor of a mechanism that did not require payment of an “administrative fee” to Anoka County. Assistant Treasurer Kloiber stated that the EDA must consider other potential increases to the general tax levy for the City when discussing changes to EDA and HRA levies. Assistant Director Hogeboom stated that staff will bring back illustrations of possible taxing scenarios to the EDA at a future meeting. The meeting was adjourned at 7:35 pm. Respectfully submitted, Joe Hogeboom Assistant Director/ Acting Assistant Secretary