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HomeMy WebLinkAbout20170403_EDA_Packet ECONOMIC DEVELOPMENT AUTHORITY AGENDA April 3, 2017 6:30 pm City Hall Conference Room 1 th 590 40 Avenue NE Columbia Heights, MN 55421 1.Call to Order 2.Roll Call 3.Pledge of Allegiance CONSENT AGENDA 4.Approve minutes of March 6, 2017 5.Approve Financial Report and Payment of Bills for February 2017 - Resolution 2017-07 Motion: Move to approve Consent Agenda as presented. PUBLIC HEARING 6.Single Family Home Lot Sales Program Final Sale Approval of 4647 Polk Street Resolution 2017-08 Motion: Move to waive the reading of Resolution 2017-08, there being ample copies available to the public. Motion: Move 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. BUSINESS ITEMS 7.Fourth Amendment ACCAP Purchase Agreement for City Acquisition of 4641-43 Polk Street Resolution 2017-09 The next regular EDA meeting will be aĂŦ ƳℓĊẽ ƴƲƳƹ at City Hall. Motion: Move to waive the reading of Resolution 2017-09, there being ample copies available to the public. Motion: Move 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. OTHER BUSINESS 8.Redevelopment Discussion of 828 40th Avenue 9.Columbia Heights Economic Development Authority 2017 Levy Discussion 10.Adjourn [Type text] 1 ECONOMIC DEVELOPMENT AUTHORITY (EDA) MINUTES OF THE MEETINGOF MARCH6, 2017 The meeting was called to order at 6:30pm by PresidentSzurek Members Present:Schmitt, Williams, Buesgens, Murzyn, Herringer, and Szurek Staff Present:Kelli Bourgeois,Keith Dahl, and Shelley Hanson PLEDGE OF ALLEGIANCE- RECITED CONSENT ITEMS 1.Approve the Minutes from February 6, 2017 2.Approve the Financial Report and Payment of Bills for January 2017on Resolution 2017-06. Questions by Members: No questions or comments. Motion byWilliams,seconded bySchmitt,to waive the reading of Resolution 2017-06 there being an ample amount of copies available to the public. All ayes. MOTION PASSED. Motion byWilliams, seconded bySchmitt, to approve the Minutes of February 6, 2017, andtheFinancial Report and Payment of Bills forJanuary, 2017as presented.All ayes. MOTION PASSED. RESOLUTION NO. 2017-06 A Resolution of the Economic Development Authority of Columbia Heights, Minnesota, Approving the Financial Statements for the Month ofJanuary, 2017and the Payment of the Bills for the Month of January, 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, thepurposes 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 2 EDA Minutes Page 2 February 6, 2017 WHEREAS, the financial statementsfor the month ofJanuary, 2017has 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, NOW, THEREFOREBE 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 6thday ofMarch, 2017. Motion by: Seconded by: BUSINESS ITEM 1.Single Family Home Lot Sales Program-Concept Application Approval for 4647 Polk Street has received a completed concept application from Tollberg Homes offering $25,000 for the roperty 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. Dahl reminded members this is the parcel we just purchased back from the Pepples. property. However, the EDA has the right to review and adjust lot prices periodically provided that sufficient evidence supports the lots price reduction. 3 EDA Minutes Page 3 March 6, 2017 The 2017 Estimated Market Land Value for this particular 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 sell this property for. Dahl told members the lot was sold for $7,500 a few years back to the Pepples. market. The new price will cover any legal fees we incurred during the reverter process. Along with a completed concept application, Tollberg Homes has submitted a written letter of intent and an example house plan. The example house plan is only a representation of what Tollberg Homes intends to construct on the Property.For consideration tonight is the concept approval of the submitted application by Tollberg Homes. If the EDA approves the concept approval, staff will work with Tollberg Homes to determine specific house plans and to prepare a Purchase and Redevelopment Agreement for the next EDA meeting on April 3, 2017. Staff recommends approval of the conceptapplication submitted by Tollberg Homes as presented. Questions by members: Herringer asked if there have been any problems with Tollberg Homes during the construction of ms. He went on to explain that the language in the Purchase and Redevelopment Agreement has been changed and -refundable regardless if there are any problems with soil conditions. Szurek asked what the proposed home will sell for. Dahl said that Tollberg estimates it will sell for $230,000. Dahl said the four he has built thus far have sold for $190,000-$210,000. Schmitt noticed the example plan only had two bedrooms and she wanted to make sure the EDA lanat this meeting. Dahl told her that was correct, and that the actual plan will be considered at the next meeting. Herringer asked how we make sure these properties remain owner occupied which is a requirement of the program. Dahl said that staff has made special notations in permit works which flags the property for 10 years to make sure that no one can come in toobtain a rental license. 4 EDA Minutes Page 4 March 6, 2017 Motion by Buesgens, seconded byWilliams,to approve the concept application submitted by Tollberg Homes for the property located at 4647 Polk Street NE, Columbia Heights, MN 55421. All ayes. MOTION PASSED. Motion by Williams, seconded bySchmitt,to authorize staff to work with Tollberg Homes to determine specific house plans for the construction of a single-family home and to prepare a Purchase and Redevelopment Agreement for consideration at the next EDA meeting on April 3, 2017.All ayes. MOTION PASSED. OTHER BUSINESS: MEMBERSHIP OF THE EDA Dahl reminded members that on February 6, 2017, the Columbia Heights Economic Development Authority (EDA) discussed information about membership requirements, vacancies, appointments, and term lengths for EDA commissioners. Legal counsel was present to address questions and/ or concerns EDA commissioners had pertaining to requirements set forth by Minnesota State Statutes, Sections 469.090 to 469.1081 (EDA Act). One question raised by EDA Vice President, Schmitt was in regards to the number of commissioners constituting the EDA. Legal counsel stated that the maximum number of EDA commissioners may not exceed a nine-member authority; however, this is incorrect as the EDA Act states an EDA shall consist of a three, five, or seven-member authority. Thus,Dahl told members thatthe EDA may not increase the number of commissioners constituting it. If the EDA still desires to make any structural change to its current membership, it is not necessary to make any formal changes to either the enabling resolution or the bylaws of the EDA; rather changes may simply be made by appointments of different commissioners when terms expire. The following list is for reference to when terms expire for EDA commissioners: 2017 EDA CommissionersTerm Ends Herringer, Gerry January 2, 2018 Szurek, MarlaineJanuary 2, 2018 Murzyn Jr., John January 7, 2019 Schmitt, Donna January 7, 2019 Buesgens, Connie January 4, 2021 Williams, Bobby January 4, 2021 Therefore, 5 EDA Minutes Page 5 March 6, 2017 SINGLE FAMILY HOMES ALONG CENTRAL AVE-DISCUSSION On February 6, 2017, the Columbia Heights Economic Development Authority (EDA) reviewed accomplished projects in 2016, but also discussed several projects, programs, and objectives commissioners desired to see initiated and/ or completed in 2017. One of the proposed objectives mentioned by EDA commissioner, Buesgens and EDA Treasurer, Williams was related to the property acquisition of legal non-conforming, single-family homes and/ or properties that have the potential to become illegal non-conforming, single-family homes along Central Avenue. A non-conforming, single-family home is a residential dwelling that is located within a commercial zoning district that has been grandfathered in to the commercial zoning designation. Whereas, an illegal non-conforming, single-family home is a residential dwelling that converted into a commercial use before it converted back into a residential use. Previously, staff mapped out twelve (12)properties in the Central Business District that were either a non-conforming, single-family home or a property that had potential to become an illegal non-conforming, single-family home. However, the EDA requested more information about all instances along Central Avenue. Dahl provided members with aspreadsheet thatidentified all twenty-two (22) instances where single-family homes were located in commercial zoning districts along Central Avenue. These properties where identified by inventorying Central Avenue, as well as reviewing their 2016 tax classification. There were fourteen (14) instances of a non-conforming, single-family home and nine (9) instances of a property that has potential to become an illegal non-conforming, single- family home. Since the existing homes have a lower tax base than if they werecommercial sites, the EDA may want to consider purchasing these as they become available. Staff has determined that if the EDA purchased every property at the 2017 estimated market value,the EDA could expect to pay will take several years to accomplish, but staff will continue to keep the EDA apprised of any properties that become available from the list. Questions/comments from members: st Herringer asked if we could attempt to enter into 1Right of Refusal Contracts with those owners willing to do so. He said this may help owners there is an interested party, and it would help prevent us missing any properties that go on the market. 6 EDA Minutes Page 6 March 6, 2017 Buesgens asked what the tax difference is between residential and commercial. Dahl said he would have to check with Anoka County to see what that amount is. Buesgens then asked if we could go after Real Estate agents for falsely advertising property . She also suggested that it might be possible for us to purchase the houses, then to re-sell them so they can be moved off site. Dahl told members if they are interested in pursuing this idea that they will have to look at sources of revenue and to budget an amount every year in order to purchase these properties. He stated once. It is something that staff will have to monitor. There was a brief discussion about the re-zoning of these properties to commercial and whether we should re-zone them back to residential or create an ordinance preventing them from being used as commercial. Dahl told members the re-zoning was done to phase in these properties to commercial use over time as it was the long range plan the City wanted to happen. The consensus of the board was to look for funding and move ahead with trying to obtain these properties if, and when, we are able to do so. UPDATES Szurek asked if Hy-Vee was still on schedule to begin construction soon. Dahl reported that he spoke with representatives from Hy-Vee this week and they plan on starting remediation of the old Rainbow Store in late spring or early summer. They will also start construction of the new th convenience store/gas station on 47and Central at the same time. Dahl said they will put signs -2018. The meeting was adjourned at7:10pm. Respectfully submitted, Shelley Hanson Secretary 7 RESOLUTION NO. 2017-07 A Resolution of the Economic Development Authority of Columbia Heights, Minnesota, Approving the Financial Statements for 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 statement 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, 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. ORDER OF ECONOMIC DEVELOPMENT AUTHORITY Passed this _________ day of ______________________, 2017 Offered by: Seconded by: Roll Call: Vice President Attest: Assistant Secretary 8 Resolution 2017-07 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 AGENDA SECTION PUBLIC HEARING ITEM NO.6 MEETING DATE APRIL 3, 2017 CITY OF COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY ITEM: Single Family Home Lot Sales Program Final Sale Approval 4647 Polk Street DEPARTMENT: Community Development BY/DATE: Keith M. Dahl, March 24, 2017 BY/DATE: BACKGROUND: On March 6, 2017, the Columbia Heights Economic Development Authority (EDA) approved the concept application submitted by Tollberg Homes offering to purchase the property located at 4647 Polk Street NE (the 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. ices 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 commentsthat the lots located in the Heritage Heights neighborhood, are generally lower in value than other properties throughout the City. what the EDA can expect to sell this property for. Staff requests consideration of the EDA for final sale approval of the Property. Attached is the Purchase and Redevelopment Agreement for the sale of the Property, which was drafted by Kennedy & Graven. Specific house plans may be found in the Purchase and Redevelopment Agreement attached hereto in Exhibit B. 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 RECOMMENDATION: Staff recommends final sale approval of 4647 Polk Street NE, Columbia Heights, MN 55421. RECOMMENDED MOTION(S): Motion: Move 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. Motion: Move to close the public hearing. 47 City of Columbia Heights EDA Letter City of Columbia Heights - Council Letter Page 2 Motion: Move to waive the reading of Resolution 2017-08, there being ample copies available to the public. Motion: Move 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. ATTACHMENTS: 1.Resolution 2017-08 (3 Pages) 2.Purchase and Redevelopment Agreement (22 Pages) 48 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 1.02.The) to purchase certain propertyed hereto as Exhibit A, and the parties have negotiated aPurchase and Redevelopment Agreement (the sfor the conveyance of the Property to the Buyer and the construction by the Buyer of asingle-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 conveyanceof property pursuant to the Programis 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 Agreementin the form on fileat 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,areconsistent with the Guidelines andin the best interest of the City and its residents. Section 2.Approval and Authorization of Agreement and Conveyance 2.01.TheAgreement 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 Agreementby such officials shall be conclusive evidence of approval. 2.02.Authority staff and officials are authorized to take all actions necessary to perform Agreementas a whole, including without limitation execution of any documents to which the Authority is a party referenced in or attached to the Agreement, and 496818v1 MNI CL205-52 49 any deedsor other documents necessary to convey theProperty 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 3rdday of April, 2017. Vice President ATTEST: Secretary 496818v1 MNI CL205-52 50 EXHIBIT A Property Lot twenty-five (25) and Lot Twenty- shown by the plat now on file and of record in the office of the Register of Deeds at Anoka, Anoka County, Minnesota. 496818v1 MNI CL205-52 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 AGENDA SECTION BUSINESS ITEM ITEM NO.7 MEETING DATE APRIL 3, 2017 CITY OF COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY ITEM: Fourth Amendment ACCAP Purchase Agreement for City Acquisition of 4641-43 Polk Street DEPARTMENT: Community Development BY/DATE: Keith Dahl, March 29, 2017BY/DATE: BACKGROUND: Previously, the Columbia Heights Economic Development Authority (EDA) 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 May31, 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 RECOMMENDATION: 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. RECOMMENDED MOTION(S): Motion: Move to waive the reading of Resolution 2017-09, there being ample copies available to the public. Motion: Move to adopt Resolution 2017-09, a resolution approving a FourthAmendment of a Purchase Agreement between the Columbia Heights Economic Development Authority and Anoka County Community Action Program. ATTACHMENTS: 1.Resolution 2017-09 (2 Pages) 2.Fourth Amendment to Purchase Agreement (2 Pages) 74 COLUMBIA HEIGHTSECONOMIC DEVELOPMENT AUTHORITY EDA RESOLUTION NO. 2017-09 RESOLUTION APPROVING A FOURTHAMENDMENT TOAPURCHASE AGREEMENTBETWEEN THE COLUMBIA HEIGHTSECONOMIC DEVELOPMENT AUTHORITYAND ANOKA COUNTY COMMUNITY ACTION PROGRAM, INC. BE IT RESOLVED ) of the Columbia Heights Economic Development Authority) as follows: Section 1.Recitals. 1.01.The Authority currently administers the Downtown CBD Redevelopment Project , pursuant to Minnesota Statutes, Sections 469.090 to 469.1082, as amended. 1.02.The Authorityand Anoka County Community Action Program, Inc. Seller executed a Purchase Agreement, dated as of May 26, 2016(the Agreementproviding for the conveyance by the Sellerto the Authorityof certainproperty within the Project and Citylegally describedas follows: That part of Lot 23 lying north of the South 20 feet of the SD Lot 23 and Lot 24, Block 1, nd Sheffields 2Subdivision, County of Anoka, State of Minnesota. 1.03.On August 31, 2016, the parties entered into a First Amendment to the Purchase 1.04.On October 28, 2016, the parties entered into a Second Amendment to the Purchase he deadline for conveyance of the Property. 1.05.On February 6, 2017, the parties entered into a Third Amendment to the Purchase 1.06.The parties have negotiated and propose to execute a FourthAmendment to the Purchase conveyance of the Property. Section 2.FourthAmendmentApproved. 2.01.The FourthAmendment as presented to the Boardis hereby in all respects approved, subject to modifications that do not alter the substance of the transaction and that are 1 496865v1 NKE CL205-62 75 approved by the Presidentand Executive Director, provided that execution of the Fourth Amendmentby such officials shall be conclusive evidence of approval. 2.02.The Presidentand Executive Directorare hereby authorized to execute on behalf of the Authoritythe FourthAmendment and any documents referenced therein requiring execution by the Authority, and to carry out, on behalf of the Authority, its obligations thereunder. 2.03.Authoritystaff 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 HeightsEconomic Development Authority this _____day of _______________, 2017. Vice President ATTEST: Secretary 2 496865v1 NKE CL205-62 76 FOURTHAMENDMENT TO PURCHASE AGREEMENT This Fourthis made this ____day of __________________, 2017by and between Anoka County Community Action Program, Inc., a WHEREAS, the Sellerand theBuyerentered into that certain Purchase Agreementdated as of May 26, 2016Agreementconveyance by the Sellerto the Buyerof certainpropertyat 4641/4643 Polk Street located in the City of Columbia Heights, Anoka County, Minnesota and 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, nd Sheffields 2Subdivision, County of Anoka, State of Minnesota ; and WHEREAS, on August 31, 2016, the parties entered into the First Amendment to Purchase WHEREAS, on October 28, 2016, the parties entered into the Second Amendment to Purchase Agreement in order to WHEREAS, on February 6, 2017, the parties entered into the Third Amendment to Purchase Agreement in order to extend the closing date to WHEREAS, due to unanticipated delays, the parties have determined tofurtherextend the deadline for closing on the conveyance of the Property. NOW, THEREFORE, in consideration of the premises and the mutual obligations of the parties hereto, each of them does hereby covenant and agree with the other as follows: 1.Amendment to Paragraph 7of the Agreement. Paragraph 7of the Agreementis amended as follows: CLOSING DATE. The closing of the sale of the Property shall take place on or before May31, 2017unless otherwise mutually agreed by the parties. The closing shall take place at Columbia th Heights City Hall, located at: 590 40Avenue NE in Columbia Heights, Minnesota or such other location as mutually agreed upon by the parties. 2.Miscellaneous. Except as amended by this Amendment, the Agreementshall remain in full force and effect. 1 496860v1 NKE CL205-62 77 IN WITNESS WHEREOF, the parties have executed this Fourth Amendment to Purchase Agreementas of the date written above. SELLER ANOKA COUNTY COMMUNITY ACTION PROGRAM, INC. By: ________________________________ Its: _________________________________ BUYER COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY By:_________________________________ Its: President By:_________________________________ Its: Executive Director 2 496860v1 NKE CL205-62 78 AGENDA SECTION OTHER BUSINESS ITEMS ITEM NO.8 MEETING DATE APRIL 3, 2017 CITY OF COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY ITEM: Redevelopment Discussion of 828 40th Avenue DEPARTMENT: Community Development BY/DATE: Keith M. Dahl, March 29, 2017 BY/DATE: BACKGROUND: The Columbia Heights Economic Development Authority (EDA) has received a letter of intent to purchase the EDA owned property located at 828 40th Avenue NE (Property). Staff seeks discussion from the EDA to determine the level of interest for redevelopment of the Property. No action is needed at this time because the EDA is not actively marketing the Property to developers. ATTACHMENTS: 1.Letter of Intent 828 40th Ave. NE Redevelopment 79 City of Columbia Heights EDA Letter 80 81 82 AGENDA SECTION OTHER BUSINESS ITEMS ITEM NO.9 MEETING DATE APRIL 3, 2017 CITY OF COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY ITEM: Columbia Heights Economic Development Authority 2017 Levy Discussion DEPARTMENT: Community Development BY/DATE: Keith M. Dahl, March 24, 2017 BY/DATE: BACKGROUND: 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 aBusiness Retention & Expansion Program,will require arevenue source to achieve the results EDA commission members envision. Staff has identified one possible revenue source that has two opposite outcomes; one outcome wouldincrease the tax rate in the City asthe other outcome woulddecrease the tax rate in the City. 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 $84,000. Over the course of the past eight years, the EDA levy has remained relatively constant with minimal fluctuation up or down. If the EDA raised the levy to the statutory levy limit, the revenue realized would provide the EDA with the funds necessary to acquire properties for redevelopment when they become available, offer a low- to no-interest loan program for home renovations, but also to provide assistance programs to local businesses. The table below shows the comparison between the statutory levy limit and the 2016 EDA levy: Levy Limit EDA Levy 2016 Levy Percentage.0185 %.0074188 % 2016 Levy Amount$ 209,468$ 84,000 Potential Amount to IncreaseN/A$ 125,468 *The market value of properties in Columbia Heights for 2016 was $1,132,257,300 Based upon the information above, 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. For the past ten years, City Council has elected to participate in Anoka County Housing and Redevelopment conomic 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 83 City of Columbia Heights EDA Letter City of Columbia Heights - Council Letter Page 2 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 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. 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 table below shows the comparison between the 2016 levies of the ACHRA and the EDA. ACHRA LevyEDA Levy 2016 Levy Amount $ 162,326.00 $ 84,000.00 2016 Less 15% Admin Fee $ 24,348.90 N/A 2016 Net Levy Amount $ 137,977.10 $ 84,000.00 Potential Amount to Increase N/A $ 125,468.00 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. In summary, 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. No action is needed at this time, but levy discussion tonight will help facilitate budget discussion later this year. ATTACHMENTS: 1.Columbia Heights EDA/HRA Levy Schedule 84 85