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HomeMy WebLinkAboutMay 1, 2017ECONOMIC DEVELOPMENT AUTHORITY (EDA) MINUTES OF THE MEETING OF MAY 1, 2017 The meeting was called to order at 6:38 pm by President Szurek Members Present: Williams, Buesgens, Murzyn, Herringer, Schmitt, and Szurek Staff Present: Walt Fehst, Keith Dahl, and Shelley Hanson. Also present was newly appointed Councilmember Nick Novitsky. PLEDGE OF ALLEGIANCE- RECITED CONSENT ITEMS Approve the Minutes from April 3, 2017 Approve the Financial Report and Payment of Bills for March 2017 on Resolution 2017- 10. Questions by Members: Dahl reported to members that another invoice from Centerpoint Energy was paid this month for the old Library property. Dahl said he has confirmed with both Centerpoint and Xcel that there won’t be any more invoices billed to the City. He told members that the 420 fund will be reimbursed for approximately $3,500. Motion by Murzyn , seconded by Schmitt, to waive the reading of Resolution 2017-10 there being an ample amount of copies available to the public. All ayes. MOTION PASSED. Motion by Murzyn , seconded by Schmitt, to approve the Minutes of April 3, 2017, and the Financial Report and Payment of Bills for March, 2017 as presented. All ayes. MOTION PASSED. RESOLUTION NO. 2017-10 A Resolution of the Economic Development Authority of Columbia Heights, Minnesota, Approving the Financial Statements for the Month of March, 2017 and the Payment of the Bills for the Month of March, 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 EDA Minutes Page 2 May 1, 2017 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 March, 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 1st day of May, 2017. Motion by: Seconded by: BUSINESS ITEM 1. NORTHEAST BUSINESS CENTER BUILDING REMODEL UPDATE Nancy Aleksuk from Swervo Development was present along with the Architects to show EDA members their proposed plans and renderings for the Northeast Business Center Building located at 3989 Central Avenue. Fehst said this presentation is informational only and that members are free to ask questions. However, members should hold their opinions to themselves as this will come before the Planning & Zoning Commission and City Council in June. Dean Devolis, Architect, stated they had submitted their Site Plan and CUP applications to the City earlier in the day. He reviewed their plan to use the majority of the building as a Science and EDA Minutes Page 3 May 1, 2017 Technology Charter School K-12, along with moving the Adult Education Center to the top floor, and to establish retail and a coffee shop on the first floor near the front entrance. They plan on creating a two level playground along the 40th Avenue side and to add an outside patio area along the Central Avenue side near the coffee shop. New landscaping would be planted to improve the appearance all around the building. Fehst asked if the Charter school would be the major tenant. Devolis stated that the Charter school would use about 65-70% of the space. Herringer asked what Charter School is moving into this space. Aleksuk stated that the Charter School is presently located in south Minneapolis and will be combining with another one that is just starting up. They will work together under one management team. She said the Adult Education Center is the one serving Fridley and Columbia Heights that is presently located in the 4111 Central Avenue building. Their lease ends at the end of June at that site. Aleksuk went on to tell members that the Adult Education Center and the businesses on the first floor will use the front entrance on the southwest corner of the building. The Charter school will use the back entrance. Buesgens questioned whether they had tried to find businesses interested in leasing the space instead of a school. Aleksuk said she worked at leasing to a large office use such as a call center or something similar, but was unable to secure this type of tenant. She said they need a high density user in order to keep the building viable. Herringer asked how this would affect the property taxes this building should generate. He was concerned that it would become tax exempt if used as a school. Devolis stated the building remains on the tax rolls and would pay the same as any other office use. Charter Schools do not own property and are required to lease their space so that they don’t become tax exempt like property owned by Public School Districts. Devolis then reviewed the traffic plan including buses and drop off areas. He said the high school students will use public transportation and the younger students will be bused. He said he estimates 8 buses and they have the room to stack them according to the study they had done. The parent drop off area will be located on the 2nd level of the parking ramp so congestion on the lower level will not be an issue. Schmitt said she had concerns about playground equipment such as balls going over the side of the upper level and hitting vehicles on the streets. Devolis said there will be an 8 foot high fence surrounding the upper level play area and that netting may also be added to prevent this from happening. Williams asked when they hoped to have the building occupied. Aleksuk said construction would happen fast and all at once. The Adult Education Center needs a new location by July 1st and the Charter School would like to be open by September when the new school year starts. Fehst asked EDA Minutes Page 4 May 1, 2017 how many students they expected. Devolis said the Charter School expects about 350 students and the Adult Education Center varies. Schmitt asked Aleksuk if she was aware there are several other coffee shops in town now. She noted that Starbucks will be locating at the new development at 47th and Central Ave as well as the existing one at 53rd and Central. There also is the new one on 40th Avenue by City Hall. Aleksuk said she thinks the coffee shop will do well since the Adult Education Center will be located in the same building so it will be convenient for those attendees. Schmitt then asked where lunches will be served. Devolis said the lunches are catered in as there is not a kitchen facility. They will be served on the 1st floor in the gymnasium area. Schmitt said the school may be able to partner with the Methodist Church or the Heights Theater for their auditorium space. She noted the Dairy Queen will probably see an increase in business also. 2. CENTRAL AVENUE-SINGLE FAMILY HOMES ACQUISITION DISCUSSION Dahl passed out a letter that staff prepared to be sent out to owners of properties along Central Avenue, informing them that the City may be interested in purchasing their property if and when they decide they want to sell. Staff suggests reaching out to Real Estate Agents to alert us of owners who wish to sell. Buesgens asked if should mention Right of 1st Refusal in the letter. Dahl said he would like to run that by a Real Estate Agent as it may be expensive to pursue that. He said the best bet may be to be notified when properties become available and then to make an offer. Some of these properties have recently been sold without officially going on the market so it is hard for the City to take any action. He said that agents have networking capabilities that may help us in this effort. The Board was in agreement for staff to reach out to Real Estate Agents. 3. GRAND CENTRAL LOFTS DEVELOPMENT UPDATE Dahl passed out a memo prepared by Martha Ingram, Legal Counsel from Kennedy & Graven regarding the provisions of the Master Declaration for Grand Central Master Association and the rights the association may have related to the sale and development of the remaining property. Ingram’s memo states that an amendment was executed and recorded by the Master Assoc in 2010 with the consent of the Master Declarant, and modifies the Declaration in several ways. Most relevant to the question of the Master Association’s rights with regard to development of the Development Area is the fact that the Amendment releases Lots 1 and 2, Block 1, Grand Central Lofts, as well as Outlot A, Grand Central Lofts (the “Released Property”), from the Master Declaration. Section A of the Amendment provides in relevant part as follows: EDA Minutes Page 5 May 1, 2017 Effective upon recording this Amendment, the Released Property shall be and hereby is released from the lien of the Master Declaration and de-annexed from the Property, and the Released Property shall no longer be subject to or benefited by the covenants, restrictions, easements, charges, liens, rights and benefits provided for in the Master Declaration. The Amendment was recorded with the Anoka County Recorder, and has therefore taken effect. The Amendment is significant because by releasing the Released Property from the Declaration, the Association and the ARC no longer have the right to approve or disapprove any proposed development on the Released Property. The Released Property is therefore subject only to the usual City planning and zoning requirements. Dahl said they have no real say except as any resident in a public hearing forum. It is important to note that under the Amendment, the Master Declarant retains the right, but not the obligation, to add all or a portion of the Released Property to the Development Area, but that otherwise the Master Declarant “may develop it for any purpose consistent with applicable governmental requirements.” Though not expressly stated, presumably the Master Declarant’s right to develop the Released Property includes the right to sell the Released Property to a third party for development. Dahl told members there is an interest in developing the property with rental buildings. The plan is to construct “work force” affordable housing. The City may receive plans for the July meetings for consideration. Questions/Comments from members: Herringer asked how the amendment in 2010 got passed. Dahl said the Owner/Developer brought it to the HOA Board for consent and the homeowners association approved it. It is possible that they weren’t aware that they were giving up these rights. Dahl told members the proposed plan is to construct 1, 2, and 3 BR apartments which will look similar to the existing condo building. He said there are several levels of affordable housing and the developer will explain this to the City Council at a later date. He said the “work force” affordable housing proposed requires that residents must meet the threshold of 60% of the median income. Section 8 housing would not be included or allowed according to the proposed plan. Dahl said the interested Developer is holding an informational neighborhood meeting at the Library on May 17th from 6:30-9:00 pm. to discuss the proposal. Buesgens wants all the residents from the Grand Central Development notified of the meeting. Fehst reminded members that the EDA previously turned down a plan about 5 years ago as the HOA was against this type of development. At that time the EDA decided to give the economy some time to see if the Condo Market would come back. However, Developers still are not pursuing the construction of condo buildings. Staff will keep the EDA apprised of any updates. EDA Minutes Page 6 May 1, 2017 4. COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY 2017 LEVY DISCUSSION. Dahl explained that on April 3, 2017, the Columbia Heights Economic Development Authority (EDA) discussed the 2017 EDA levy due to the increased capital that will be required to fund planned projects and programs in 2018. The three main projects and programs that commission members desire to see initiated in 2018 are as followed: acquisition of single-family homes and residential structures that used to be single-family homes along Central Avenue; implementation of a low- to no- interest loan program for home renovation improvements; and business retention & expansion program. At the end of the previous discussion, the EDA requested that staff prepare a scenario analysis to formulate different options of fund sources available. Therefore, a scenario analysis has been prepared to explain the three alternative funding options available for consideration. Please note: 2016 levies (Payable in 2017) have been used as a constant variable throughout the analysis to show similarities and differences between the three alternative funding scenarios. Scenario A – Maintain Current Fund Sources: Participate in the Anoka County Housing & Redevelopment Authority’s (ACHRA) economic development activities for another five (5) years Preserve the 2017 EDA levy at or around the previous year’s levy Scenario “A” would not alter, but maintain the current status of fund sources used by the EDA for housing and economic development activates. Currently, all EDA fund sources are used to cover operating expenses except the levy administered by the ACHRA. Thus, $137,977.10 was made available to the EDA for redevelopment projects. The EDA is able to access these funds through application to Anoka County requesting reimbursement for a project that qualifies as an economic development activity. The table below shows the current funds sources used by the EDA. HRA Levy EDA Levy ACHRA Levy  Levy Percentage .0185 % .0074188 % N/A  Levy Amount $ 209,468.00 $ 84,000.00 $ 137,977.10   Scenario B – Maximize Fund Sources: Participate in the ACHRA economic development activities for another five (5) years Increase the 2017 EDA levy to the statutory levy limit Scenario “B” maximizes the amount of EDA funds available for housing and economic development activates. The EDA would be able to maximize its fund sources by participating in the ACHRA for another five (5) years and increasing the EDA levy from .0074188% to the statutory levy limit of .0185%. Based on the numbers in the table below, the EDA would EDA Minutes Page 7 May 1, 2017 realize a fund increase in the amount of $125,468. Thus, bringing the total of annual funds available to the EDA for housing and economic development activates to $263,445.10. The impact to tax payers would account for a property tax increase of $20 - $25 annually for a resident who owns a property at an estimated market value of $200,000. HRA Levy EDA Levy ACHRA Levy  Levy Percentage .0185 % .0185 % N/A  Levy Amount $ 209,468.00 $ 209,468.00 $ 137,977.10  Amount of Change N/A $ 125,468.00 N/A   Scenario C – Optimize Fund Sources: Discontinue ACHRA economic development activities participation Increase the 2017 EDA levy to the statutory levy limit Scenario “C” optimizes the amount of fund sources to provide relief to tax payers, but decreases the overall total funds available to the EDA for housing and economic development activates. If the EDA determines to discontinue participation in the ACHRA economic development activities, the decreased amount realized by the absence of the ACHRA levy would be greater than the amount of an EDA levy increase to the statutory levy limit. Thus, the EDA would realize a fund source decrease in the amount of $12,509.10. The impact to the tax payers would account for a property tax decrease in the amount of $7 - $10 annually for a resident who owns a property at an estimated market value of $200,000. (Please note: the property tax decrease accounts for the 15% administration fee deducted by ACHRA from its levy. The ACHRA levy collected $162,326 from its 2016 levy payable in 2017, of which $137,977.10 was available to the EDA.) HRA Levy EDA Levy ACHRA Levy  Levy Percentage .0185 % .0185 % N/A  Levy Amount $ 209,468.00 $ 209,468.00 N/A  Amount of Change N/A $ 125,468.00 ($ 137,977.10)   STAFF RECOMMENDATION: No recommendation; however, staff would like to mention that the City will need to adopt a resolution stating the intentions to either participate for another five years or withdraw participation from the ACHRA. If the City decides to withdraw participation, a resolution will need to be adopted prior to the anniversary date of Resolution 2012-142, as well as provide notice to the ACHRA neither less than 90 days nor more than 180 days prior to November 13, 2012 (May 17, 2017 – August 15, 2017). No motions are required at this time, but staff would like direction from the EDA on which fund source scenario to pursue. EDA Minutes Page 8 May 1, 2017 Schmitt asked if we had utilized the full amount each year. Dahl said we haven’t always used the full amount, but funds from several years can be used toward a project such as the purchase and demolition of the Mady’s site. He reported that as of December 31, 2016 the remaining balance of ACHRA funds was $375,000 not including any amount collected in 2017. Schmitt asked if we decide not to participate in this program for another five years, does Anoka County send us the remaining funds so we can use them for re-development projects or do we have to go through the reimbursement process of projects to spend it down. Dahl said that is unclear as there is no joint powers agreement with Anoka County regarding this scenario. He is not aware of any other cities who also participate in ACHRA having established a joint powers agreement with the County. Fehst said it is something that could end up as a legal battle even though the money was collected from our residents. There was a discussion regarding the 15% administration fee that Anoka County charges to oversee the reimbursement program. Everyone on the Board thought this was an excessive amount. Dahl said it may be possible to try and negotiate the administration fees down to a more acceptable level. Herringer asked how long we have participated in the ACHRA program. Dahl said it started in 2007. Herringer then asked if we dropped out for one year, can we rejoin after one year or do we have to wait for 5 years since the renewal to participate is done for a five year timeframe. Williams thought it would be good to clarify that before dropping out of the program. There was more discussion about how to raise funds for re-development without participating in the ACHRA program. Each scenario presented was discussed at length as well as raising the EDA levy to the statutory limit and to also increase the General taxes in order to pay for re-development projects. This would avoid giving money to Anoka County paid for by our residents that should be used for development projects in our City. Buesgens thought we should go with Scenario B or raise a comparable amount through taxation to maximize our chance to make improvements while funds are available. It is an investment in our City and her supporters think the same. Schmitt clarified that the HRA and EDA funds are presently used to cover expenses, and we use the ACHRA funds for any re-development projects. If we raise the EDA levy to the amount allowed, then those excess funds can be used for development expenses. She asked if there were any other grant or funding programs available. EDA Minutes Page 9 May 1, 2017 Dahl said that most of the grant programs have strict requirements for the use of the funds. He noted that CDBG funding could be cut according to proposals on the Federal level. The Met Council has some funds available but they tend to be for transit oriented projects, or for affordable housing. There are some funds that we have utilized in the past for remediation and clean-up of sites. Dahl said he isn’t aware of any funds for streetscaping or town center type improvements. The grant funding tends to be for very specific parts of a project therefore, the City must have separate funds to complete an entire project. The overall consensus of the Board was as follows: *Schmitt favors Scenario C-she is opposed to paying the Administration Fee and losing our own money. *Buesgens favored Scenario B-It is a good time to maximize the funding for investing in our City. *Murzyn favored Scenario C-unless the County would negotiate a lower administrative fee *Szurek favored Scenario B if the administrative fee could be lowered. If not, then she favors “C”. *Herringer favored Scenario B-He wants to see the focus on Central Avenue and not worry about home improvement loan programs or business fix up funds for now. *Williams favored Scenario B-he agreed with Buesgens that we should maximize the funding for investing in our City. *Novitisky (not a voting member at this time) favored Scenario C-he is opposed to paying the administrative fee also. The meeting was adjourned at 8:10 pm. Respectfully submitted, Shelley Hanson Assistant Secretary