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HomeMy WebLinkAboutEDA MIN 04-01-2013ECONOMIC DEVELOPMENT AUTHORITY (EDA) MINUTES OF' THE MEETING OF APRIL 1, 2013 IN CONFERENCE ROOM I The meeting was called to order at 6.30 pinto by Chair Peterson, Members Present: Bruce Nawrocki, Gary Peterson, Donna Schmitt, Tarnmera Diehm, Gerry Herringer. and Bobby Williams. Members Absent: Marlaine Szurek Staff Present- Wait Felist, Scott Clark, Sheila Cartney, and Shelley I-Janson. 2. PLEDGE OF ALLEGIANCE- RLCITED 3. CONSENT ITEMS 1. Approve the Minutes from February 4, 20�13, 2. Approve the Financial Report and Payment of Bills for January and February, 2013 on Resolution 2013-03. Questions by Members. Nawrocki asked what the amount paid to Elaine Norman for $955.00 was for. Cartney told him it was a Housing Program rebate, Herringer asked about the payments to Kurth Surveying and Metro Utilities. Clark stated those were expenses for the Mady's property. Schmitt asked if the payment to Kelly Dunn was another rebate payment, and if it had anything to do with the flooding she had at the property. Cartney said it was a rebate payment for a roofing project she did, and was unaware of any flooding issues. Motion by Williams, seconded by Naivrockil to ii,,aive the reading of Resolution 2013-03, there beh? ,, (in anqde a.m.ount,(#'copies available to the public. II ayes. 110TION 1?4SVD. Motion lay Williams, seconded by Naivrocki, to cyy)rove the n7inules and adop Resolution 2113-03. All ayes. A10TIONPASSEL). EDA Minutes 1.)age 2 April 1, 2013 EDA RESOLUTION 2013-03 RE, SOLUTION OF THE COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA) APPROVING THE FINANCIAL STATEMENT FOR JANUARY AND FEBRUARY 2013 AND PAYMENT OF BILLS FOR THE MONTHS OF JANUARY AND FEBRUARY 2013. 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 disbLlrSCMCl1tS, their nature, the money oil ]land, the purposes to which the money on ]land is to be applied, tile: ERA's credits and assets and its outstanding liabilities; and WHEREAS, said Statute also requires the EDA to examine tile 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 months of January and February 2013 has been reviewed by tile EDA Commission; and WHEREAS, the EDA has examined the financial statements and finds them to be acceptable as to both 1"onil 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 arid 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 13F IT RESOLVED by the Board of Commissioners of the Columbia Heights, Econoinic Development Authority that it has examined the referenced financial statements including tile check history, and they are found to be correct, as to form and content; and BE tTFURTHER RESOLVED the financial statements are acknowledged and received and tile 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 April 2013 EDA Minutes Page 3 February 4, 2013 BUSINESS ITEMS 4. Consider Sale of 4502 Washington Street Cartney explained that at the August 6, 2012 meeting the EDA directed staff to list four of the Scattered Site lots for sale on the City's webpage and to post signs on the lots. Included in the four lots was 4502 Washington Street. In the meantime staff was directed to seek professional services from realtors to list all the scattered site lots for sale (while keeping the four lots listed on the webpage and with signs for sale). In February 2013, the EDA interviewed Real Estate teams and narrowed it down to one team to sell the lots, to date a formal agreement is not in place with said Real Estate team, that is why this is being considered. Cory Mattson owner of 4500 Washington Street has proposed to purchase 4502 Washington Street from the EDA for $13,000,00. Mattson's backyard abuts the subject lot, he proposes to expand his backyard with this lot and combine the lots into one lot, The EDA purchased the 4502 Washington Street property in 2009 , as part of the Scattered Site program for $35,000. The lot is 5,160 square feet. Overall the EDA has spent $46,086 on this property including the purchase, demo prep, and dernolition. Staff seeks direction from the EDA on the proposed safe of this lot; it is a policy discussion for the EDA whether to sell this lot for $13,000 now and have the lot joined with the adjacent lot or to wait and list the lot for sale with the Real Estate Teani for future development. If the EDA agrees to sell the lot to Mattson, a public hearing is required. Questions/comments from members: NawroQki said he looked at the lot and noted it is a level lot that could easily be built on. 'fie stated that if this vacant lot is allowed to be combined with the corner lot it will generate less tax revenue for the city. He said if we sell the lot on the scattered site contract we would get approximately $10,000 for the lot, which he doesn't think is a good price either. Fie told the other members that the County has placed an estimated market value of $29,200 on the lot. Schmitt asked about the size of the lot. Cartney responded that it is a 40 x 129: lot, or 5,160 sf. It can be built on because it is an existing platted lot. If newly platted, the 1111niniuril size for a buildable lot would be 70 feet wide or 6,500 A. Peterson asked if Mattson corribined the property with his own and later decided to split them again, could someone then build on the lot. Cartney stated that he would not be able to do so. Felist stated the purpose of the scattered site district was to re-develop the properties. He stated that everyone knew going into this program that we Wouldn't recoup our expenses on the sale of the lots, but on the future tax revenue generated by the new construction over tine. Ile said the City has considered requests such as this in the past and have denied them .for the carne reasons. fie noted the loss of $33,000 on this particular lot would never be made up with the taxes oar the vacant piece once combined with the adjacent lot, fie understands by joining the lots it would make the comer property iriore attractive and improve the neighborhood, but he pointed out, so would another new home in the neighborhood. EDA Minutes Page 4 April 1, 201 3 Peterson wants to eliminate blight and improve neighborhoods, and this would make an attractive property. Cory Mattson was present and stated his house and fence are less than 5 years old and he plans on staying there long term to raise his family, and he is vested in the community as a member of the Fire Dept. He told the menibers he understands the profits to the City are less, but in the long run his investment and the improvements lie has made are more beneficial to the neighborhood than another home that could be turned into rental like most of the neighborhood. Ile assured the Board he has no intention of building on that site and plans on using it as green space only. Williams asked how this Would affect the price points of the other lots if we agree to this offer. Ile said in hindsight that lie wouldnt have agreed to spend $46,000 to get $13,000 in return. fie didn't think we should accept this offer as we would lose too much money and it is not fair to the other taxpaying citizens, Schmitt noted that other lots in that block are larger lots. She said Mattson's lot is small and he has no room to expand at all. She asked if it would affect the deal with the scattered site contract, that will be discussed later if we took this particular lot off the list. If it doesn't affect that contract, she was in favor of the sale to Mattson. Diehrn stated that at one time the Board discussed the option to contact neighbors to see if the lots could be split and sold to them to create larger lots. She asked if the owners of 4504 Washington St would be interested in purchasing part of this lot. Mattson said 4504 is currently vacant and investors Just purchased it and plan to rent it out. Cartney stated those investors did call about the lot (4502) and wanted to purchase it to construct a duplex on it. She stated the lot does not meet the requireirients for construction of a duplex. Peterson knows we will lose money on all of the lots, but lie sees it as an iniprovement to the neighborhood and he is in favor of the sale to Mattson. Herringer questioned how much tax would be generated for the city on a house that is valued at $160,000. There was some discussion on that estimate. He stated lie understands Mattson's Situation and he would make the same request in his position. Nawrocki said he knows improving neighborhoods is important, but notes that a new house will also improve the area, and generate more revenue at the same time. Diehm, asked if we could exclude this property from the scattered site contract for the time being and make a decision on this at a later time. Cartney said out of respect to Mattson, a decision should be made as lie has obtained financing to move forward with this. A16tion kv N nvrocki, secomled by TVilliams, to (16 11 the request qfllfauson to purchase the lotfin- S13, 000, Roll call: ai,es: kf'illiains, Nawrocki Ala))s: &-hnfitt, Diehni, llerringer, Peterson. Motionfidled EDA Minutes Page 5 April 1, 2013 Fehst asked Clark what the Count owned lots recently sold for. Clark stated they sold I.Ior $19,500, The properties were located at 38" and Jackson, one on 5"' Street, and one on Madison St. He told members that a local builder, Value Homes, purchased the properties. He stated that they haven built anything in the City before so we have no idea what they have planned for the lots. He said they can build any type of home they choose on the lots, as long as they meet minimum zoning and building ,code requirements, but We have no real control over the style or finishing, These lots were also valued in the $29,000 range. iWotion by Williams, seconded ky Nau ocki to sj lit the loss and to sell the lotfio• S29,500, Roll Call: Ayes-Williams, N,-nr ,rocki Arays—Schmitt, Diehin, [krringer, Peterson. Afotion Periled Ilerringer would like to see a negotiation between the two prices of $13,000 and $29,500. Fie would be in favor of something in the rangeol'S16,000. Peterson asked Mattson if lie would be willing to purchase the lot for $16,000. Mattson said he would agree to $15,000 so lie would still have Funds to landscape and fence in the empty lot, iWation by Herringer, seconded by Diehin Io sell the pareel at 4502 a Washington St. jo M on fin, alt, - 'V price of S15, 000. Roll Call: Ayes,--- Schmitt, Diehn?, Iferringer, Peterson Nays-- d,Vjlliams, Naivrocki MO TIOAT I'A SMED. Clark reminded members they need to hold a Public Hearing to take formal action on the sale to Mattson. YUblion by Iferringer, seconded 1lySchinitt to call a l'ublic Ilearing.tbr May 0, 2013, at 6: 30 Inn in Coqfi?rence Room I to consicler the .sale (?f 4502 Washington Street NF. Roll Call: All ayes. M(,)7'ION NSSE D. 5. Scattered Site Contract Cartney introduced John and Pete of ReMax, and Peter from Timbercraft Homes, Sheila reminded members that in February the EDA interviewed four Real Estate teams in search of representation, for the Scattered Site lots. The EDA decided to go With Pete Fleryla and John Rockwell of Rerriax. Pete and John presented options with a builder for the lots where the builder would take down one lot and build a model home and then sell the lots with the options of the model home or someone could buy the ri-iodel home and the the builder would buy another lot and do the carne. ]'his ineeting is to review the process and what the builder is proposing for these lots. Pete and John have drafted a contract that the EDA attorney has reviewed. The EDA attorney also drafted a purchase agreement for the builder. The Program Guidelines that the EDA created are met with the builder's proposal, however with the two story model the floor area is not 1,020 square feet, but the finished area is. There are 5 items to discuss tonight in preparation for action at the May EDA meeting. EDA Minutes Page 6 April 1, 2013 1. Does the EDA have any questions/comments regarding the language in the drafted agreements and contracts`: Nawrocki wanted the contracts explained. Cartney explained the first one is the listing agreement to sell the lots to the builder. This is between the EDA and the realtors to broker the lots on our behalf. It is a standard listing agreement except for Addendum A which lists the price of the lots, with the exception of 4303 Reservoir Blvd., at $10,00O (which is what the Board needs to consider), along with the 10% commission fee and the broker fee if tile property sells. Nawrocki expressed his opinion he thought the price point of $10,000 was too low. Clark asked Pete and John how they arrived at the $1 0,0�00 figure. John stated they took numerous items into account including: I Criteria set by the EDA regarding size, style, the number or 13R, etc. 2. The need to meet price points that will sell oil small lots in existing neighborhoods surrounded by older homes for the most part. He said tliey arc aiii-iiiig,at$150,000- $160,000 selling price, 3. They took into consideration the overall economy of the residents and market values of the surrounding neighborhoods. He said they would like to build higher end homes, but they wouldn't sell in older neighborhoods. Herringer clarified that we are actually netting less than S10,000/lot. Clark stated that, at these figures we would actually net around S7,000/lot. Nawrocki asked when they would take title to the property. Clark responded at the tirrie the builder purchases the lot. Once the builder purchases the lot they Would then enter into the Purchase and Redevelopment Agreement which is an agreement between the EDA and the Builder. Ile also noted that the Builder is agreeing to buy these lots "as is". Diehm asked what the term of the listing agreement is for. Clark told members that it would be set at 24 months. 2. Does the EDA agree with the lot prices presented? a. Things to consider in lot pricing: 1) water availability 2) retaining wall work Schmitt questioned what this is regarding, Cartney explained that all the lots have water service in the street, but half the lots need to re-size the new service connection and the piping from the main.. She also said the two lots oil Tyler need retaining wall work. The cost of these items could be $5,000-$6,000 per lot. Clark stated the Realtor has agreed to a price of $ 10,000 across the board (except the Reservoir Blvd. lot) even though sore of the lots will result in extra costs to them. Clark noted that the County lots did not need these improvements, and therefore, the price points are somewhat closer taking this information into consideration. EDA Minutes Page 7 April 1, 2013 Herringer asked how they were going to handle the sale of the lots to make sure that the Builder doesn't `''cherry pick" the good lots and leave those needing extra work, then after the listing agreement runs out, we are left with those lots. Clark said that is why this is being discussed tonight and to get questions answered so that a policy can be established. Ile said staff is not making a recommendation one way or the other and the Board needs to set the policy and directiol�i they want this to go in. Pete fleryla stated the price points are critical. Ile said they would. probably start with a middle lot (not the most desirable and not one needing the most work). He said the plan would be to build a model home which he believes will sell quickly. When others that are interested would be able to choose a lot to build on, or the builder would construct another model that would most likely sell.. People tend to purchase something they can actually visualize for themselves, L� Clark asked if there was any validity to higher price points for the good lots and decrease the price of the lots needing extra work. in order to protect ourselves from being left with those lots if the plan doesn't work to get them all sold and developed. I-lerringer asked if we are requiring too much house. Clark said that is a policy question for the Board. If you want more for the lot, then less will go into the construction of the house. Clark and Cartney both stated they don't think it is too Much hOUSC. Most of the basics, such as square footage and garages, are already a requirement of our Ordinance. But they both felt a better constructed house with amenities to make it iriore attractive is more important and will make them sell better. Herringer, Williams, and Schmitt all agreed with this. Felist said the County lots went for $19,500 but the construction on those lots will not necessarily meet the same guidelines the E'DA has set for our lots. In our project we have some control over the square footage, the style of the home, the number of bedrooms, the number of windows, porches or other outside finishing that make them more attractive, etc. The homes built oil the other three lots could be a simpler style with fewer windows, cheaper finishing inside and out, and with fewer amenities. As long as these houses meet Our Minimum zoning and building code requirements we have no right to dictate the amenities they add or don't add to make them more appealing to the neighborhoods. EDA Minutes Page 8 April 1, 2013, 3. Does the ED A agree with the two/three model homes presented? The members liked the design concepts presented by the builder. The Builder said he will submit final plans at the next meeting that will be similar to those included in the packets. Fie noted that he plans full unfinished basements and detached garages that weren't depicted on the plans in the packets. Nawrocki said there wouldn't be much backyard if these houses and garages were constructed on these small lots. Clark said we are trying to build the most house on the property that we can to encourage others in the neighborhood to improve their homes also. Clark went on to .say this is not any different than the homes and garages that were previously on the sites. Many of the expansion homes or small ramblers exceed the square footage footprints of the houses proposed by the builder. This is something the City has had to deal with since the parcels were platted as 40 foot lots years ago. We are very limited as to what can be constructed on them and how much people will pay for homes, on these lots. Nawrocki asked again about the price points of the proposed homes. The realtor told him the first model will be built with a price around $150,000. This leaves $10,000 tor upgrades if buyers wish to make sorrie, or for the additional expenses that are necessary for some of the lot improvements that would raise the price to approximately $160,000. 4. Does the EDr agree that by approving the models each house will be administratively approved except for the house constructed at Reservoir Blvd.? The Board generally agreed they liked the designs presented and that administrative approval is authorized, with the knowledge that the plan for the lot on Reservoir Blvd will be brought back to the Board at a later time. 5. Does the EDA want to remove 3853 3'd Street from the 11'stim, as it is zoned GB? C, Cartney explained the north end of this parcel touches the south end of the Root property. She said the question is do we want to include this in the scattered site construction program and re- zone it to Use as residential or remove it frorn the prograrn and deal with it later. It can always Z::I be re-zoned and used as residential at a later time or could be combined with adjacent properties and used for a future business site. The general consensus was to leave it off the scattered site redevelopment contract for now. EDA Minutes Page 9 April 1, 2013 Clark, stated the contract will come back to the Board in May for action according to the direction they expressed at this meeting, 6. Administrative Report There was nothing further to discuss, The next regular ED A meeting will be Monday, May 6, 2013 at City Hall at 6.30 pm. The meeting was adjourned at 8:10 pin. Respectfully submitted, Shelley Hanson Secretary