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HomeMy WebLinkAbout20170501_EDA_Packet ECONOMIC DEVELOPMENT AUTHORITY AGENDA May 1, 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 April 3, 2017 5.Approve Financial Report and Payment of Bills for March 2017 - Resolution 2017-10 Motion: Move to approve Consent Agenda as presented. OTHER BUSINESS 6.Northeast Business Center Building Remodel Update 7.Central Avenue - Single Family Homes Acquisition Discussion 8.Grand Central Lofts Development Update 9.Columbia Heights Economic Development Authority 2017 Levy Discussion 10.Adjourn The next regular EDA meeting will be Wĵ■ś ƷĊ╙ẽ ƴƲƳƹ at City Hall. ECONOMIC DEVELOPMENT AUTHORITY (EDA) MINUTES OF THE MEETINGOF APRIL 3, 2017 The meeting was called to order at 6:30pm by Vice-PresidentSchmitt Members Present:Williams, Buesgens, Murzyn, Herringer, and Schmitt Members Absent:Szurek Staff Present:Walt Fehst,JoeHogeboom, Keith Dahl, Joe Kloiber, Kelli Bourgeois PLEDGE OF ALLEGIANCE- RECITED CONSENT ITEMS 1.Approve the Minutes from March 6,2017 2.Approve the Financial Report and Payment of Bills for February2017on 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 onFebruary 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 byWilliams,seconded byHerringer,to waive the reading of Resolution 2017- there being an ample amount of copies available to the public. All ayes. MOTION PASSED. Motion byWilliams, seconded byHerringer, to approve the Minutes ofMarch6, 2017, andtheFinancial Report and Payment of Bills forFebruary, 2017as 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 ofFebruary, 2017and 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 1 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 statementsfor the month ofFebruary, 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. rd Passed this 3day ofApril, 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 to purchase the property located at 4647 Polk Street NE (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. 2 The progra 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 throughoutthe City. 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 byBuesgens, 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. PublicHearing Opened. Seeing and hearing no one wishing to speak, Vice President Schmitt closed the public hearing. Public Hearing Closed. Motion byWilliams, seconded byHerringer, towaive the reading of Resolution 2017-08, there being ample copies available to the public. All ayes. MOTION PASSED. 3 Motion byWilliams, 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 theSingle Family Home Lot 1.02.The as Exhibit A, and the parties have negotiated a Purchase and Redevelopment Agreement (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 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,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 Agreement by such officials shall be conclusive evidence of approval. 4 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 any deedsor other documents necessary to convey theProperty to the Buyer, all as described inthe 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- 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. 5 Questions from Members: none Motion by Williams, seconded byBuesgens,to waive the reading of Resolution 2017-09, there being ample copies available to the public.All ayes. MOTION PASSED. Motion byWilliams, seconded byHerringer,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 Commi) of the Columbia Heights ) 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 Authority and Anoka County Community Action Program, Inc. executed a Purchase Agreement, dated as of May26, 2016 (the providing for the conveyance by the Seller to the Authority of certainproperty within the Project and City legally 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 ty. 1.04.On October 28, 2016, the parties entered into a Second Amendment to the Purchase 6 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 Fourth Amendment to the rther extend the deadline for the 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 thetransaction and that are 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 this3rdday of April, 2017. VicePresident ATTEST: Secretary OTHERBUSINESS: th Redevelopment Discussion of 828 40Ave- sbeen sentto the City for the th purchase of the vacant lot located at 828 40Avenue. 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. Dahlsaid he believes they plan on constructing an office building that 7 would be two or three stories with parking in the rear. If the EDA is interested in entertaining 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 constantwith 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, 8 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 Cities within Anoka County are required to adopt a resolution electing toparticipate 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 re 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. 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 goingto 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. 9 Vice President Schmitt stated that she would be in favor of a mechanism that did not require 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 scenariosto the EDA at a future meeting. The meeting was adjourned at 7:35 pm. Respectfully submitted, Joe Hogeboom Assistant Director/ Acting Assistant Secretary 10 RESOLUTION NO. 2017-10 A Resolution of the Economic Development Authority of Columbia Heights, Minnesota, Approving the Financial Statements for 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 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 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, 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: President Attest: Secretary 11 Resolution 2017-10 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 47 48 49 AGENDA SECTION OTHER BUSINESS ITEMS ITEM NO. 9 MEETING DATE MAY 1, 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, April 27, 2017 BY/DATE: BACKGROUND: 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 development activities for another five (5) years Preserve 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 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 realize a fund increase in the amount of $125,468. Thus, 50 City of Columbia Heights EDA Letter City of Columbia Heights - Council Letter Page 2 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 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). RECOMMENDED MOTION(S): No motions at this time, but staff would like direction from the EDA on which fund source scenario to pursue. 51