HomeMy WebLinkAboutEDA AGN 06-06-14 EXECUTIVEECONOMIC DEVELOPMENT AUTHORITY (EDA)
MINUTES OF THE EXECUTIVE SESSION
JUNE 6,2011 IN CONFERENCE ROOM 1
The meeting was called to order at 7:10 pm by President -Crary Peterson,
Members Present: Bruce Nawrocki, Gary Peterson, Donna Schmitt, Tammera Diehm, Gerry
Herringer, and Marlaine Szurek.
Members Absent: Bobby Williams
Staff Present: Walt Fehst, Scott Clark, Sheila Cartney, and Shelley Hanson,
The purpose of the meeting was to consider the sale of the lot located at 828 40"' Avenue,
Clark explained that at the EDA meeting of May 2, 2011 a general discussion was held regarding the
sale of 828 40th Ave North. This is a vacant 6,750 sq.ft lot that the EDA has owned since 1999. The
purpose of the initial meeting was to gain a direction from the EDA regarding a proposal that was
submitted by a potential purchaser of the buildings located immediately east of the subject lot, at 834
and 836 40'1' Ave. This proposal included purchasing the 828 40"' lot for $1 0,000; constructing a
parking lot and entering into some type of lease with the Library for a partial use of the property. Due
to the limited amount of tirne given to staff between the receipt of a preliminary proposal and the
meeting, full due diligence was not completed. Clark noted that One of the buildings had gone into
foreclosure this week and that was one of the reasons the purchasers were anxious to get an answer to
their off'er.
The key issue on the EDA property is that the total acquisition and demolition was paid for through
Community Development Block Grant (CDBG) funding. All funded CDBG projects, must meet a
national objective and in this case, it was the removal of slum and blight. However, any new use must
meet a new national objective. If a new national objective can't be met then the EDA, upon the
construction of a new use, must pay back the fair market value of the lot (not the total amount of
original CDBG funding). A parking lot does not meet a national objective (this subject has been
discussed at least five times with the County), even if it is associated with a city library. If the lot is
purchased privately, it is possible that the new business use could meet certain economic growth
parameters, with no pay back being necessary. However, in this case, the interested buyer's business
C�
will remain the same regarding employee numbers, meaning that the EDA would remain liable for
the fair market payback (obviously the EDA can remain whole by receiving the fair market price
from the subject purchaser and returning this to the County). In addition to this, a number of
discussions have been held regarding the need for this property to be held by the Library itself which
is a complicating factor.
Based on this information, there appears to be three options for the EDA:
1) Do nothing and allow the property to be used as is (corriniunity garden Currently)
2) Reject the offer to purchase and give the lot to the Library for its use. This solution
would require the City to identify funds that would be used to pay back the County for
the lot's fair market value (2012 value is $35,100 but staff believes that an appraisers
opinion of value would be less) and for the City to construct and maintain the
property.
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Jutie G, 201.1
3) Enter into all agreement that would sell the property to the purchaser with the EDA
establishing the pararneters for the sale, which at a rnininium would include:
a. A purchase price that meets fair market value and satisfies the CDBG payback
requirernents
b. Establishes a lease agreement with the Library ( at this time it appears that this
would be for the majority of the year, except for January/February through
April
c. An agreement on maintenance. At this time the subject purchaser has not
committed to full maintenance responsibility, but it seems prudent for the City
to commit to some small contribution annually or a surn total every five years
to ensure upkeep.
d. A lease that is long term in nature.
One of the questions asked at the last meeting was the tax value of this property if it goes to private
ownership. The following table reflects tax values if a parking lot (essentially vacant land) is
constructed and the second assumption is the construction of 2,000 sq.ft. building (the lot is 6,750
sq.ft.) The values are taken from the League of Minnesota Cities property tax calculator,
Use
Assumed Value
To,lal Tax
00) Porlion ql'Tolal
Parking Lot
$40,000
$1,066,
$341
2,000 sq. ft. Building
$380,000
$12,051
$3,896
Staff seeks direction from the EDA on how to proceed.
Discussion by rnembers:
Fchst told members that originally CDBG funds were given out with less strings attached than now.
Additional standards have been attached to receiving these funds during the last few years. He said in
order to avoid the payback to the County, the purchaser of the buildings and lot would need to hire the
equivalent of one more Full time person at a certain salary level, than they currently have on staff. They
cannot meet this requirement.
So if the City intends on constructing a parking lot for the Library or if it is sold to the Kewatt's I"or a
parking lot, the CDBG funds would have to be re-paid to Anoka County based on the current fair
market value. This value could be established by using the County's Estimated Market Value which is
535,100 or an Appraiser's Opinion of Value would also be acceptable, which may be somewhat lower
than the EMV placed by the County. Clark stated that it would be LIP to the purchaser and the bank to
work the figures in order to include the amount the City would require: to sell the lot.
Dielim asked if it meets the National Objective to construct a building on the site. Clark said it does if
there are enough employees. She then asked if the same requirements would be in effect for the 37"'
and Central site. Clark told her they are, but that O'Reilly's has enough employees to meet the
objective. Diehin then asked about the Public Safety Building site. Fehst told her that site received a
waiver because it was being used as a Public Safety Building. Dielun asked how tile properties we've
IUD A COMMISSION EXECUTIVE SESSION MINUTES
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JUNE 6, 2011
purchased in the Slieffield area and in the scattered site district would be affected by this requircinent.
Cartney told her that different criteria will have to be met since these are residential properties, not
commercial. Dielirn said she favors getting it back on the tax roles, but that the City shouldn't lose any
money on this property.
Schmitt said several lots owned by Anoka County are for sale for $20,000, so she feels this lot should
have a similar value. She understands the Library needs more parking, but it would cost the City
approximately $60,000 to pay back Anoka County �for the CDBG funding, and to construct the parking
lot. She is in favor of letting someone else incur those expenses if we can then use the lot for the
majority of the year.
Peterson said the value may not be as low as $20,000 since it is a commercial lot and not a residential
one. If the Library needed more parking, why hasn't the issue collie up before this?
Nawrocki said lie believes the lot was purchased for additional parking for the Library, not for
development. He has noted ]low crowded the lot and street parking is when he has attended meetings
there. Ile also thinks that Commissioner Kordiak could maybe get the amount of payback reduced for
the City if we choose to use it for the Library.
Fellst responded that the property was purchased in 1999 because it was blighted and needed to be
removed, not necessarily for a Library parking lot.
Szurek and Dielim, both thought the Library's use of the lot would be limited if the Kewatts purchase it
since their employees will take up several of the spots. We would have no control over the use of the
lot and there are only 12 spots available in the first place.
Herringer stated that if a new Library is built, that the City would have no need for that extra lot.
Diehm said it could be sold with the vacated Library building to a new business and it might make it
more attractive with the additional parking space.
Febst and Peterson both felt that we should establish a minimum price the City would take for the lot,
and see if the purchasers would commit to that, before moving fiorward with obtaining an appraisal on
the property. They felt a minimum price of $25,000 would be fair, with a higher price possible if the
appraised value came in higher. Peterson stated lie wants to see 401"' Avenue improved, but since they
don't plan to make any exterior improvements, lie doesn't necessarily see the parking lot as an
improvement.
On a roll call vote on the issue, it came down to: Nawrocki, Herringer, Szurek, and Dielim voting for
option 41 and Schmitt and Peterson voting for option 43. Therefore, the offer will be rejected.
The meeting and Executive Session were adjourned at 7:53 pin.
Respectfully submitted,
Shelley Hanson
Secretary