Loading...
HomeMy WebLinkAboutEDA MIN 02-04-2013ECONOMIC DEVELOPMENT AUTHORITY (EDA) MINUTES OF THE MEETING OF FEBRUARY 4,201.3 IN CONFERENCE ROOM I The meeting was called to order at 7:00 pm by Chair Peterson. Members Present: Bruce Nawrocki, Gary Peterson, Donna Schmitt, Marlaine Szurek, Tammera Diehni, Gerry Herringer. and Bobby Williams. Staff Present: Walt Fehst, Scott Clark, Sheila Cartney, and Shelley Hanson. '['he Oath of Office was administered to Gary Petersen, Bruce Nawrocki, and Bobby Williams. 2. PLEDGE OF ALLEGIANCE- RECITED 3. ELECTION OF OFFICERS: Motion by Diehm, seconded by flerringer, to elect officers as follows: ].'resident- Peterson Vice President- Williams Secretary/Treasurer- Nawrocki All ayes. MOTION PASSED, 4. CONSENT ITEMS 1. Approve the Minutes from December 3, 2012, 2. Approve the Financial Report and Payment of Bills t"or October, November, and December 2012 on Resolution 2013-01. Questions by Men-ibers. Schmitt asked about the funds still in the Makes 1--lei( hts Your Horne account. Clark told her the Board had previously taken action to re-allocate the funds to the Mady purchase. It will be moved to the proper fund accordingly. Motion by &urek, seconded by Schmitt, to ivaive the reading qf Resolution 2013-01, there being an ample ainount oj'eopies available to the public. All ayes. 1140 770N PASSED. 116tion hySzurek, seconded by Schmitt, to aj,)I�rove the Ininutes, and adopt Resolution. 2013-01. rill ayes. A10TION PA SSED, EDA Minutes Pao-Z' e 2 February 4, 2013 EDA RESOLUTION 2013-01 RESOLUTION OF THE COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA) APPROVING THE FINANCIAL, STATEMENT FOR OCTOBER NOVEMBER AND DECEMBER 2012 AND PAYMENT OF BILLS FOR THE MONTHS OF OCTOBER NOVEMBER AND DECEMBER 20�12. 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 oil hand, the purposes to which the tiloncy oil hand is to be applied, the EDA's credits and assets and its outstanding liabilities; and WHEREAS, said Statute also requires the FDA to examine the statement and treasurer's vouchers or bills and if correct, to approve therm by resolution and enter the resolution in its records; and WHEREAS, the financial statement for the months of October, November and December 2012 has been reviewed by the FDA 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 FDA Commission has other means to verify tile intent of Section 469,096, Subd. 9, including; but not limited to Comprehensive Annual Financial Reports, Annual City approved Budgets, Audits and sijii�ilardocLij�i,iejitatioii-I and C� WHEREAS, financials statements are heid 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 Roard of Commissioners of the Columbia I leights Economic Development Authority that it hasexamifled 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 tile 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 licights Economic Development Authority, Passed this 4"' Day of February 201 a BUSINESS ITEMS S. Scattered Site Realtor Interviews Szurek asked if stall" had an opinion on who they think would be the best option for the City to use for this protect. Clark said there are basically two approaches being proposed—a plan to just sell the lots (applicant to be the broker), and a plan for the broker to partner with a builder to bUild on the lots and to sell the homes as they are constructed, EDA Minutes Page 3 February 4, 2013 1) Eric Young — Edina Realty/Young Real :state Inc., licensed since 2004 • Worked with a builder who has built and sold 4 new single family homes in the last five years in Columbia Heights • Realtor for Grand Central Lofts and P,arkside Village • Past experience working with governmental entities *Marketing Plan • NILS listing • www,columbialkej, • Listing on other webpages *Fee Schedule 0 4.7% of sales price of the lot Discussion with Board: Young stated that he generally works with Ryan Van Nurden and showed examples of some of the houses lie has constructed in Columbia Heights during the last couple years. The price points of these houses were $199,000-$239,000. They were constructed on 40-80 ft lots. He Suggested that some of the lots would be grouped for purchase. Herringer asked Young what fie meant by "grouping the lots". Young said that fie would expect to purchase the more desirable lots and to have some of the less desired lots thrown into the deal. Peterson asked him if an individual wanted a particular lot to build their own home on, if lie would be willing to work with them. Young said that person would probably still need a builder that could provide the construction loan, and hopefully they would be willing to use the builder fie is partnered with. Herringer asked him what his commission rate was. Young stated it is 4.7% for the lot itself. Any other commission for the sale of the completed house would be responsibility of the builder to pay. Peterson asked him how he would market the lots. Young stated he would use signs that included his website address with a list of all of the available lots, fie would also show drawings of possible homes that could be constructed on the lots. Dielmi asked him how long of a listing agreement lie was looking at. Young responded 6-12nionths is the typical listing period. Peterson asked him how lie thinks they would sell. fie thinks they would sell quickly. Peterson asked him about price points of the lots and of the house that would be built on them. Young stated lie thought the majority of the 40 ft lots would be worth about $20,000/ea., with the larger ones being worth about $35,000. He thought the listing price of $50,000 for the Reservoir Blvd. lot was a bit too high. The price range of the houses once constructed would be around $200,000. On the smaller lots lie would Suggest building a split entry or smaller rambler as depicted on the examples lie provided. EDAMiomtca Page February 4,2Ql3 J) Chris Kimball & Bert'HmrdNe— Bem Value Real Estate Ioc./VundmrhQNHoomew licensed since l907 *Cm|ombiu Heights resident for 25 years e Owner and Vice President of Vanderbilt Homes Inc., a licensed home builder *PuSt experience working with Smvcrncocmtm] umdkiem • Marketing Plan • MLS/inti,`g • Sign installation •[ee Schedule • Using uco-op hrmker, a commission of 5% would he charged, Best Value to offer 2.7% buyer-broker commission and retaining 23% • Not n co-op transaction and Best l/m]ue represents bmdi buyer and seller, a4Y6 commission would be applicable. Discussion with Board: BmttyexpKaimcdkbm1ahei»amcmoberofdbcBniKderm/\xxouiu1iomsoind`cro0orm,canmectedtuscvnnalhu[ldsre that do construction in the "oebm area. She stated that she is familiar with tile city since she lives here and has built bwnnes hcn: and is aware that there are soil issues in punsnf the city. She said it is important to komvv vvbod will sell, ]low to prepare the lots for constrUCtiOn, ]low to list the properties and have some knowledge of legal issues regarding n:ml estate. She said she splits the commission to the sellers advantage to get more interest. Felist asked her if her conirnission rate is 4% if she handles both sides of tile transaction. She stated it was. Cartney asked her bow she would market the lots. She said She Would determine what to place oil tile lots and ]low Much She ouuk1 mcU something for on m namiCular|ot. Them she would call m builder who could build that type mfhome. She said she has connections to get the loans necessary for the construction. Febst asked her kfshe Would work Out agreement with the builder to sell the homes once constructed. She said she would if they vvmn1od her to sell the bmmo^ but most builders have reoXnoon they work with. He asked her how long she vvmu|d want the |is/ingngnmerneo<. She said it is usually mmaotbs. Nawrncki asked her what value homes she envisioned oil the lots We Currently have listed. They weren't aware ofvvbicb lots the City currently have listed. Ile gave her the example uf43, a ' and Reservoir Blvd (Y7,000mfyoA. She said she would look u1something in the area mf$25O"0O04300,00D. Clark asked her if she thought she could get that price since the top price in tile neighborhood iu currently ut$160,O80. She said she would have tV look closer at tile site and area To give u more defioite price runge. Hemr[nger asked what pcnucmT in land value vs. o&ructuro vaimc. She said it used to he about 20% oCtbo1ota| value for the land, but feels it is now,closer to 25%-30%. This would mean the lot prices Would be higher in her opinion as compared |n the opinion of the other proposals being considered. 3} IycmmmMunnowom — Edbma Realty, licensed rcm&)r since 2005. 9 Flua lived imCmlomhim Heights for 42 years and has participated in several civil activities. *Sold 15 properties in Columbia liciglits eMagnUson is also collaborating with a developer to purchase the lots for development Marketing Plan • 8&LS listing • Sign imsrmOpniun • Lioiiuc, oil Fucehmak and CnaigsList • Listing on EdinuReu[ry.ounuthcm fed to oihervvebaites • Wcbsi(o ytuta emmi|cd to wr]|er • Review trends in marketplace EDA Minutes Page 5 February 4, 2013 *Fee Schedule 0 7.3% per lot 0 2.7% to selling broker 0 10% Total Proposal Homes Plus builds a model home on one of the scattered site lots. Witb these terms and conditions: A.City subordination of the cost of the home site and permit fees B. City assistance of construction costs and holding costs C. Any down payment assistance or other programs would be available for the buyer If these can be agreed to, the builder will construct a model home oil one of the lots. The horric will be marketed by Bruce Magnuson. He will have a tearn of agents working in the model and having it available during the weekend and by appointment for buyers to meet and see the quality of the home. Here are other items that will be done by the builder and agent to fal-ther the sale of the lots and homes: A. Construct a model B. Prepare custom marketing materials C. Have plat maps and lot details in the model D. Show points of interest; schools, public works, restaurants etc. E. Demographics of City of Columbia Heights F. Standard features of the model that will. be used in the base price G� Have the model open for buyers to stop in H. Have the signs installed in all properties 1. Advertising on the MLS as new construction J. Having a quick response from a mortgage person Discussion with Board: MagrIUS011 stated his goal would be to construct sornething that is affordable, will fit into the neighborhoods, and qualify for FHA Financing. He said FHA financing requires a. rnininiuni of 3.5% down payment and that the constructed hones would need to be FHA appraised. The appraised values out these new hones will be affected by the surrounding neighborhoods so it is important not to over-build for the area. He said the basic safe price of the constructed ]ionic wou id be about $155,000. This equates to the lot being priced at about $15,000. At this price point there would be sonic roorn for upgrades if the potential buyer wishes to add them, and thereby reaching a sales price of around $170,000. The basic design would be a 3 BR, 2 bath on one level with an open design, and include a 2-2.5 car garage He would partner with flonies Plus and NVOUld work with three other realtors within his company to niarket the homes as they are constructed, starting with tile: niodcl horne. MaglIUS011 said they Would construct the first model hotne and office in it as they take orders/sales on other sites based on what buyers like in the niodel hoine. I le thinks they will sell quickly as people tend to buy as long as they can visualize what they are ge(ting. Felist asked hire what size house he is looking at constructing. Magnuson said it Would probably be about 1,500 sf of finished space: on one level with an unfinished basement:. EDA Minutes Page 6 February 4, 2013 Dichrn asked if lie could provide a sketch and plans of an example. She stated they are looking for adesign that looks interesting from the Outside, not just a plain square house With small windows, She would also like addresses of some of the homes this builder has built. Nawrocki said lie thinks the price point of $155,0004170,000 for the Reservoir Blvd lot is too low. flerringer asked him what percentage lot value Would be of the total package. Magnuson said lie thought about 10% which is applicable for Columbia Heights only. That would make the lots worth about $15,000, In Blaine the percentage is about 20%-25'% making the lots worth about $100,000-$115,000 for houses selling at $400,000. He was asked what his commission rate is. Magnuson said he would lower his fee to 6% -and 2.7% for the buyer's agent. Felist asked him if the price point is $15,000 for all the lots. Magnuson said it could possibly vary a little depending on the size of the lot. For instance, the Reservoir Blvd lot may be more, but not the $50,000 it is currently listed for. Felist then asked how long he would want the listing agreement for. Magnuson replied that the standard is 6 months. fie thinks the model will sell immediately and it would be a continuous process until they are all sold. Fehst asked him if lie would be willing to do this if the parcels were split up and sold to two different parties. Magnuson said his builder is only interested if he gets all the parcels since he needs to maximize his profits in quantity to make it worth his while, Felist asked him if lie would be willing to give up one lot if someone came forward who wanted one. Magnuson said he would want first right of refusal. Schmitt is concerned about what happens if the market stagnates again or goes backwards some more and the model liorne doesn"t sell. Magnuson Said the builder has the bigger risk since lie would be financing the construction Costs. Schmitt pointed out that the City also would lose since he expects the lot price and permit fees to be subordinated till the sale of the house. 4) Pete Heryla/Remax Synergy-Realtor for 20 years and active in Columbia Heights Volunteer groups. Proposal Pete proposes, his team and company obtain exclusive right to market and sell all the residential scattered site lots. They will secure a builder, assist the builder in purchasing one of the lots for a model ]ionic, and then simultaneously market and sell the remaining lots. The builder would purchase one lot and agree to build a model home; he would then have exclusive right to build on the remaining lots. 'Il`he model home would be offered for sale immediately. Once the model home is sold, the builder would agree to purchase another lot. The overall goal would be to continuously have either a model home or a custom build fob in progress. The builder proposed is Two Rivers remodeling, LLC, out of Rogers MN. They have worked in the City of Columbia Heights for the past 10 years on various projects. The proposed housing would rneet the design guidelines established for the Scattered Site lots, and provide a variety of plans; the projected price range would be between $150,000 to $180,000. The Real Estate team has partnered with area mortgage companies to assist with providing linancing options for the potential buyers. EDA Minutes Page 7 February 4, 20 13 Discussion with the Board: Heryla stated their proposal is broken into two parts as described above. They would put up a model home on one lot to be sold and continue doing so, one lot at a time. Heryla/Rockwell presented a market analysis they had prepared using properties in Fridley and Columbia Heights. Using the inar.ket data, they arrived at a maximum price point of around $24,389 for the lots. He said the package price for a constructed home on the lots would be in the range of $138,000- $162,000 based on two different approaches. Heryla said it will be difficult to construct a home meeting the specs the City wants (square footage, 4 of BR, baths, gar, etc) on the 40 ft lots. To meet those specs, it would cost approximately $150,000 to construct, and to stay within the $150,0004160,000 range means the lots are actually worth only about $,10,000. Heryla stated that Fridley is currently doing the same thing with some of their lots. They are selling their lots (which are larger) for $20,000. They believe it is more important to get the properties back on the tax rolls to recoup tax dollars quicker to make up for their loss since they also bought the properties for more than they are selling them for. He stated that Coon Rapids is also selling their lots for $5,000-$8,000/lot for the same reasons. F,ehst asked what sized homes they expect to construct for that money. Heryla stated they would be about 1,050 -1,200 sf on one level with potential for additional living space in lower levels. They would have two car garages and decent amenities. He thought the Board should be somewhat flexible with the 3 BR requirement, to offer various designs that may make them more attractive to buyers. They were asked what their commission fee would be. I leryla said the fee is 10% on lot sale only. The builder would buy the lots for $10,0001ea and construct each home, one at a time, till they are all sold. Ile feels these properties will sell if they are built in the price range suggested. Heryla reviewed the market analysis figures with the Board and examples of houses that could be built on the sites. Diehm requested pictures and addresses for houses that this builder has constructed, General Discussion after the Interviews Clark asked if any of the proposals were off the table at this point. Dielim stated that the Board needs to decide if they just want to sell the lots for the maximum aniount they can get or if they want some control over what is built on them. Nawrocki stated he wants, to do both. Ile wants to have the nicest homes possible built on the sites for the best price points we can attain. He supports the plan of the last group the most, but stated their price points need to be negotiated further. F'ehst said there was a big difference in the square footage being proposed between the last two L� proposals. Ile said these properties are already in a TIF District. He feels it is important to get them back on the tax rolls as quickly as possible, but thinks the price of the lot should be secondary to getting the type of house we think will be attractive to future buyers. ED Minutes Page 8 February 4, 2013 Peterson thought the price of the lots are too low, but he agreed that getting something that is attractive and that fits into the neighborhood is more important. He would like to have control over the styles of the houses being constructed. Herringer stated that he thought Heryla./Rockwell had the most professional and we] I prepared proposal/presentation. They had looked at all the lots available and prepared the market analysis to back up their price points. He stated that the Board knew they would lose money on these properties when we bought them, but it was a way to try and revitalize our neighborhoods while we had the opportunity. Herringer agreed with the others that we need to have some control over the type of house that is built. Ile also said that if the process takes some time, that lot prices may increase a bit. Peterson agreed he thought Heryla/Rockwell had the best presentation. He didn't like the proposal, to subordinate the lot cost, permit fees, and unknown construction costs in Magnuson's proposal. He didn't feel that Chris Kimball and Betty Hardle were very well prepared and hadn't looked at any of the lots. They didn't have any concrete plan to work with. Williams and Szurek agreed. Szurek thought fleryla/Rockwell had the most realistic proposal both in style of house that could be constructed and in the price points they discussed. She also thought it is important to have some input on the style of house constructed. Schmitt agreed with Szurek"s comments, Dichin suggested staff get more information from the I leryla/Rockwell group and bring back to the next meeting. 6. Resolution 2013-02 5 °h Amendment to Amended and Restated Development Contract for Huset Park and Park Dedication This issue was pulled from the agenda since staff had not received all the documents in time for the meeting. 'I"'his will come back to the Board at the next regular meeting. 7. Administrative Report There was nothing further to discLl ss. The next regular EDA meeting will be Monday., March 4, 2013 at City I lal.1 at 6:30 plil. The meeting was adjourned at 8:50 pm. Respectfully subinitted, Shelley Hanson Secretary