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HomeMy WebLinkAbout20190304_EDA_Minutes ECONOMIC DEVELOPMENT AUTHORITY (EDA) MINUTES OF THE MEETING OF MARCH 4, 2019 The meeting was called to order at 6:00 pm by Vice President Murzyn. Members Present: Murzyn, Schmitt, Buesgens, Williams, Novitsky, and Herringer. Members Absent: Szurek Staff Present: Kelli Bourgeois, Keith Dahl, Mitch Forney, Elizabeth Hammond, and Shelley Hanson PLEDGE OF ALLEGIANCE- RECITED CONSENT AGENDA 1. Approve minutes of February 4, 2019. 2. Approve Financial Report & Payment of Bills for January 2019–Resolution 2019-02 Questions from Members: There were no questions. Motion by Williams, seconded by Novitsky to approve the minutes of February 4, 2019. All ayes. Motion Passed. Motion by Buesgens, seconded by Novitsky, to approve the Financial Report and Payment of Bills as presented. All ayes. MOTION PASSED. RESOLUTIONNO.2019-02 AResolution of theEconomic Development Authorityof Columbia Heights, Minnesota, Approving theFinancial Statements for the Month of January, 2019 and the Payment of the Bills for the Month of January 2019. 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 Resolutionand enter the Resolution in its records; and WHEREAS, the financial statement for the month of January 2019 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 20190304_EDA_Minutes EDA Minutes Page 2 March 4, 2019 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, 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 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 historyas 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 OFECONOMIC DEVELOPMENT AUTHORITY Passed this __4th____ dayof ___March_____, 2019 Offered by: Buesgens Seconded by: Novitsky Roll Call: All ayes PUBLIC HEARING 1. Business Subsidy Policy and Criteria Forney told members that in 1999 the State of Minnesota adopted Statutes 16J.993 and 16J.994 to define and create universal regulations for local and state business subsidies. The Policy (Exhibit A) is the Community Development Departments recommended policy to bring the Columbia Heights Economic Development Authority (EDA) into compliance with state law. Minnesota statute considers grants, contributions of property, infrastructure, and any reduction of taxes or deferrals as business subsidies. In general, Minnesota Statute 116J.994 develops the regulations by which a local government or agency must comply. This includes but is not limited to: (1) requiring cities to develop universal criteria, (2) establishing Subsidy agreements and reporting requirements, and (3) Presenting public hearing and failure to comply regulations. The Community Development Department sought to create a policy which brought the EDA into compliance with State Statute and allowed the EDA to utilize subsidies to accomplish its economic and community development goals. This policy was drafted by referencing 9 other cities policies and tailoring their ideas to best fit the cities goals. The three most important pieces of the policy are the Public Purpose, Criteria, and Wage and Job growth requirements. These sections shape the future economic development of the City, and were composed consulting the comprehensive plan. 20190304_EDA_Minutes EDA Minutes Page 3 March 4, 2019 In accordance with State Statute, all business subsidies must be used to assist a public purpose. The public purpose section details objectives in which the EDA will consider using subsidies. This section contains specific objectives along with statements that give commissioners flexibility in approaching unforeseen objectives in the future. The minimum criteria section combines criteria established in Minnesota Statute along with local criteria meant to maximize the success of a subsidy agreement. Last, the wage and job requirements are variable but mandated by state law. The EDA has the choice of setting these criteria but is required to apply them consistently to all subsidy agreements. If the EDA wants to alter any criteria in a certain situation the EDA has to report the variation within the yearly reporting process. Questions/comments from members: Dahl reminded members that this is a Public Hearing so anyone present who wishes to comment on this matter can. Public Hearing Opened. No one was present to speak on this matter. Public Hearing Closed. Motion by Buesgens, seconded by Williams, to waive the reading of Resolution 2019-03, there being ample copies available to the public. All ayes. MOTION PASSED. Motion by Buesgens, seconded by Williams, to adopt Resolution 2019-03, a resolution adopting the Business Subsidy Policy. All ayes. MOTION PASSED. RESOLUTION NO. 2019-03 RESOLUTION OF THE COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY ADOPTING THE BUSINESS SUBSIDY POLICY. BE IT RESOLVED BY the Columbia Heights Economic Development Authority (EDA) that it is in the interest of the EDA to provide business subsidies to increase the tax base, create or retain jobs, enhance economic diversity, stimulate economic development, encourage investment in redevelopment areas or to facilitate the reuse of substandard buildings or blight, environmental clean-up or the relocation of uses that are not in conformity with the City’s Comprehensive Plan or Zoning Ordinances; and BE IT FURTHER RESOLVED that prior to granting business subsidies, the State of Minnesota requires cities to adopt a Business Subsidy Policy after a public hearing has been held; and BE IT FURTHER RESOLVED a public hearing, for which proper notice was published in the City’s Newspaper of record ten days in advance of the hearing, was held on March 4, 2019; and BE IT FURTHER RESOLVED the Business Subsidy Policy will serve as a guide in processing and reviewing applications requesting business subsidies. 20190304_EDA_Minutes EDA Minutes Page 4 March 4, 2019 NOW, THEREFORE BE IT FINALLY RESOLVED that the Columbia Heights Economic Development Authority hereby approves and adopts the Business Subsidy Policy as shown in EXHIBIT A. ORDER OF ECONOMIC DEVELOPMENT AUTHORITY Passed this _4th_______ day of ___March___________________, 2019 Offered by: Buesgens Seconded by: Williams Roll Call: All ayes Vice President Attest: Assistant Secretary EXHIBIT A City of Columbia Heights And Columbia Heights Economic Development Authority Business Subsidy Policy Adopted: 20190304_EDA_Minutes City of Columbia Heights Community Development Department 590 40th Avenue NE Columbia Heights, MN 55421 (763) 706-3670 Table of Contents I. Purpose II. Authority III. Definitions IV. Public Purpose V. Minimum Criteria VI. Job and Wage Requirements VII. Subsidy Agreement and Reporting 20190304_EDA_Minutes I. Purpose A. The purpose of this policy is to establish criteria in regards to the use of business subsidies by the City of Columbia Heights (the “City”) and the Columbia Heights Economic Development Authority (the “EDA”) under the general Business Subsidy Act pursuant to Minnesota Statute, Sections 116J.993 to 116J.995 (the “Business Subsidy Act”). This policy shall be used as a guide in processing, evaluating and reviewing business subsidy requests. II. Authority A. The City and EDA’s ability to grant business subsidies is subject to the limitations established in the Business Subsidy Act. B. Unless specifically excluded by the Business Subsidy Act, a business subsidy may include grants by a state or local government agency, loans, forgivable loans, contributions of property or infrastructure, tax increment financing, tax abatement, or any preferential use of government facilitates given to a business. C. The City and EDA retain absolute authority and discretion, and reserve the right to amend or waive sections of this policy when necessary or appropriate. Minnesota Statute, Section 116J.994, Subd. 2, allows the City or EDA to deviate from its criteria by documenting in writing the reason for the deviation and attaching a copy of the document to its next annual report to the Department of Employment and Economic Development (the “Department”). D. Minnesota Statute, Section 116J.993, Subd. 3 exempts certain forms of financial assistance from the requirements of the Business Subsidy Act. E. Incentives will be offered based on the nature of the project and the benefits to the community. Meeting all or a majority of the criteria does not mean that a business subsidy will be approved by the City or EDA. The City and EDA maintain the ability to approve or deny a business subsidy at their discretion, based on the merits of the project and the overall benefit to the community, using the criteria as a means of measuring the overall benefit. Furthermore, the approval or denial of one project is not intended to set precedent for approval or denial of another project. III. Definitions A. The City and EDA hereby adopt the definitions pursuant to Minnesota Statute, Section 116J.993. IV. Public Purpose Objectives A. In accordance with the Business Subsidy Act, all business subsidies shall meet a public purpose, and have a measurable benefit to the community as a whole. The City or EDA will consider the following public purpose objectives: 1. Diversification of the local economy; 2. Create high quality and diverse jobs; 3. Retention of local jobs, provided that the job retention is only used as a public purpose in cases where job loss is specific and demonstrable; 4. Removal of blight and/or encouraging redevelopment within the community to obtain high levels of property maintenance and private reinvestment; 5. Encourage additional unsubsidized private development within the community, either directly, or indirectly; 6. Facilitate and promote development on property that could not be developed without assistance; 20190304_EDA_Minutes 7. Meet other uses of public policy, as adopted by the City or EDA from time to time, including but not limited to the promotion of quality urban design, quality architectural design, energy conservation, sustainable building practices, and decreasing the capital and operating costs of local government. V. Minimum Criteria A. In order to be eligible for a business subsidy, all business subsidy requests shall meet the following minimum criteria. 1. The business subsidy request shall be in compliance with the Business Subsidy Act. 2. The project must be consistent with the applicable provisions of the Comprehensive Plan, Zoning Ordinances, Design Guidelines, and any other land use document applicable to the project. 3. All projects must contribute to one or more of the City’s goals and policies outlined in the Comprehensive Plan. 4. A business, non-profit, or developer requesting a business subsidy shall complete and submit a Business Subsidy Application, along with an application fee and escrow deposit determined by the City or EDA. 5. For the purposes of evaluating the request, the applicant shall provide all requested market and financial feasibility studies, appraisals, environmental data, private lender commitment and information provided to private lenders regarding the project, and other information requested by the City, EDA or its consultants, in order for the City or EDA to evaluate the proposal and determine whether the request is consistent with this policy. 6. The applicant shall proactively attempt to minimize the amount of public assistance needed through the pursuit of grants, innovative solutions in structuring the deal, and other funding mechanisms. 7. The applicant shall provide adequate financial guarantees to ensure completion of the project and repayment of any business subsidy (if repayment is required), unless an exception is granted by the City or EDA. These may include, but are not limited to, assessment agreements, letters of credit, personal deficiency guarantees, and mortgages. VI. Job and Wage Goals A. Specific job and wage goals shall be determined by the City or EDA, and shall be given consideration based upon the particular form of the business subsidy requested, nature of the development, purpose of the business subsidy, local economic conditions and other similar factors. B. The minimum wage for a job to be considered a new or retained job shall not be less than 120% of the State of Minnesota’s Minimum Wage, exclusive of benefits. C. Wage goals may be set to enhance existing jobs through increased wages, which increase shall result in wages higher than the minimum under this Section. D. In cases where the objective is the retention of existing jobs, the applicant of the business subsidy request shall provide evidence that demonstrates the loss of jobs is imminent. E. The jobs to be created or retained by the applicant shall result in job creation or retention within the City. F. In addition to other specific time frames, the job and wage goals shall contain specific requirements to be attained within two (2) years of the benefit date, unless an exception is granted by the City or EDA. 20190304_EDA_Minutes G. The project shall result in a minimum of six (6) Full Time, or Full Time Equivalent (FTE) jobs created or retained. For purposes of this policy, FTE jobs must be permanent positions with set hours, and eligible for benefits. Part-Time Equivalent jobs may be counted toward the job goals. H. I. After a public hearing, if the creation or retention of jobs is determined not to be a goal, the wage and job goals may be set at zero (0). VII. Subsidy Agreement and Reporting A. In accordance with the Business Subsidy Act, a recipient shall enter into a subsidy agreement with the City or EDA. The subsidy agreement shall include, but is not limited to, the following: 1. A description of the subsidy, including the amount and type of subsidy, and the type of district if the subsidy is tax increment financing; 2. A statement of the public purpose(s) of the subsidy; 3. Measurable, specific and tangible goals for the subsidy; 4. A description of the financial obligation of the recipient if the goals are not met; 5. A statement of why the subsidy is needed; 6. A commitment to continue operations in the jurisdiction where the subsidy is used for at least five (5) years after the benefit date; 7. The name and address of the parent corporation of the recipient, if any; 8. A list of all financial assistance by all grantors for the project. B. A recipient that fails to meet the terms of a subsidy agreement: 1. Must repay the assistance provided with interest, which is set at no less than the implicit price deflator as defined in the Business Subsidy Act, Minnesota Statute, Sections § 116J.993 to 116J.995. Repayment may be prorated to reflect partial fulfillment of goals. 2. May not receive a business subsidy from any grantor for a period of five (5) years from the date of failure or until a recipient satisfies its repayment obligation, whichever comes first. 3. A recipient may be authorized to move from the City within five (5) years of the benefit date (as defined in the Business Subsidy Act) only if, after a public hearing, the City or EDA approves the request to move. The City or EDA reserves the right to discontinue the business subsidy if the recipient moves from the City. C. The applicant and City or EDA shall comply with the reporting requirements set forth in Section 116J.994, Subd. 7 and 8 of the Business Subsidy Act. The City or EDA shall file a report by April 1 of each year with the Department regardless of whether or not they have awarded any business subsidies. 20190304_EDA_Minutes EDA Minutes Page 9 March 4, 2019 BUSINESS ITEMS 1. Exclusive Right for Representation Agreement Forney explained this item is in regards to restoring the Exclusive Buyer Representation Contract with John M. Rockwell of RE/MAX Synergy, who has been representing the EDA since the initial contract was approved back in July 2017. The EDA has historically utilized realtors to purchase property for multitudes of reasons and for various programs like the Single Family Home Lot Sales Program, Scattered Site TIF District Program, and now the Commercial Revitalization Program. In the updated Contract, the only things that have changed are the dates and contact information. Staff recommends approval of the Buyer Representation Contract with John M. Rockwell from RE/MAX Synergy as presented. Question by members: Herringer asked if there have been any issues with these Realtors. Dahl responded that there haven’t been any problems or issues. He told members that these particular realtors have knowledge and experience working with municipalities and understand the limitations we have acquiring properties. Motion by Novitsky, seconded by Buesgens, to waive the reading of Resolution 2019-04, there being ample copies available to the public. All ayes. MOTION PASSED. Motion by Buesgens, seconded by Novitsky, to adopt Resolution 2019-04, a resolution approving the buyer representation contract with Re/MAX Synergy. All ayes. MOTION PASSED. COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. 2019-04 RESOLUTION APPROVING BUYER REPRESENTATION CONTRACT WITH RE/MAX SYNERGY Section 1. Recitals. 1.01. The Board of Commissioners (“Board”) of the Columbia Heights Economic Development Authority (the “Authority”) is authorized under Minnesota Statutes, Sections 469.090 to 469.1081 (the “EDA Act”) to purchase and convey property within its area of operation for economic development purposes. 1.02. The Board has determined that it is necessary and desirable to retain the services of a real estate broker for purposes of monitoring properties within the City of Columbia Heights (the “City”) that are nonconforming under the current City zoning code and that may become available for sale from time to time, in order to potentially make offers for such property based on then-current market values. 1.03. The Board has determined to enter into the Buyer’s Representation Contract (the “Broker’s Agreement”) with Re/Max Synergy (the “Broker”). 1.04. The Board expressly finds and determines that authorizing the Broker to respond to active listings and develop offers pursuant to the Broker’s Agreement does not imply any exercise any power of eminent domain that may be available to the Authority pursuant to the EDA Act, and that the EDA will not exercise such power in pursuing the acquisition of any nonconforming property under the Broker’s Agreement. 20190304_EDA_Minutes EDA Minutes Page 10 March 4, 2019 Section 2. Approval of Broker’s Agreement. 2.01. The Authority hereby approves the Broker’s Agreement in substantially the form presented, 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 Broker’s Agreement by such officials shall be conclusive evidence of approval. 2.02. Authority staff and officials are authorized to take all actions necessary to perform the Authority’s obligations under the Broker’s Agreement as a whole, including without limitation execution of any documents to which the Authority is a party referenced in or attached to the Broker’s Agreement. 2.03. The Board hereby authorizes the Broker to respond to active listings within the City, and to make fair market value offers of up to $200,000 on the Authority’s behalf without prior formal approval of such offers by the Board, subject to ratification of such offers by the Authority if accepted by the seller of the property. Adopted by the Columbia Heights Economic Development Authority this 4th of March, 2019. __________________________________ President ATTEST: ______________________________________ Assistant Secretary OTHER BUSINESS 1. Review and Discuss a Conceptual Proposal from Lupe Development Partners Dahl told members that on January 28, 2019, staff met with representatives from Lupe Development Partners (referred to as “Lupe”) in regards to their interest in the Northeast Business Center and partnering with 500, LLC (commonly referred to as “Swervo”) to construct a mixed use, workforce housing project on the corner of 40th and Central. Lupe has submitted preliminary renderings of their proposed redevelopment project for review and discussion with the Columbia Heights Economic Development Authority (the “EDA”). The proposed redevelopment project would consist of 83 units of affordable workforce housing and approximately 16,000 square feet of commercial space. Swervo would own and renovate the first floor commercial space, whereas Lupe would own and renovate the remaining floors into new residential units made up of one, two and three bedroom units. Lupe has indicated that they would request public financial assistance from the EDA as well as the City of Columbia Heights to finance the acquisition, rehab, and development of their proposed redevelopment project. Steve Minn, Jackie Cherryhomes, and Cameron, from Lupe were present at the meeting to discuss their proposed redevelopment project in greater detail and further elaborate on their public financial assistance request. The goal of the discussion was to allow Lupe the opportunity to introduce themselves and gage the EDA’s interest in this type of redevelopment project. 20190304_EDA_Minutes EDA Minutes Page 11 March 4, 2019 3989 Executive Summary-submitted by Lupe Overview: Central Avenue Housing, LLC proposes to rehabilitate a vacant and blight-inducing former office building into 83 units of affordable workforce housing and approximately 16,141 SF of commercial space along Central Avenue in Columbia Heights. The project will retain the grade parking, adjacent parking structure, and existing commercial space. The th first floor will have restored commercial frontage along Central and at the prominent NE corners @ 40 and the SE corner @ Gould. th We propose to have a new housing lobby along 40 with residential amenities to further activate the street (such as fitness, bike repair, dog washes, community room, etc.) Floors 2-6 will have new residential units, along with an outdoor amenity space on the second-floor deck. The entire exterior façade of the building will be re-skinned for an updated look. Affordable Housing: Our proposal offers quality, affordable, workforce housing in an employment region experiencing increasing demand for workforce candidates. This is a diverse area with a high percentage of minority residents seeking quality housing. 100% of the units would be affordable at 50%-60% of area median income. Not only is the region experiencing urgent job growth, but also experiencing very low vacancy rates. Proximity and access to mass transit on Central Avenue is a critical component of addressing employer needs in the area. This development adheres to, and is located in the heart of, the “Central Business District” cooperatively developed neighborhood plan, and it adheres to City of Columbia Heights’ and regional agency housing goals. Cost: We expect the project to cost roughly $20 Million. We expect rental revenues to support 50% of such cost through private debt. We expect private equity to provide 25% of such cost through the tax credits. The remaining 25% of the project cost must come from government partnerships in the form of soft debt or grants. These are typical ratios in the affordable housing industry. Management: The project will be professionally managed by Pinnacle Property Management, which provides the development team management services for over 1000 units of similar housing in the metropolitan area. Pinnacle manages over 150,000 units nation-wide. There will be one full time property manager and one full time maintenance supervisor, with additional rotating leasing and maintenance support staff. During lease-up/stabilization we will have additional leasing agents assisting the property manager. Project Time Line: • Financing: Financing sources secured by October 2019. • Site Plan Approval: Subject to Columbia Heights EDA and Council support, we would make land use applications by May 2019. • Acquisition of Property: Late Summer 2019 • Construction Start: winter 2019/Spring 2020, depending upon MHFA • Construction completion: Spring 2021 • 100% Lease-up: December 2021 20190304_EDA_Minutes EDA Minutes Page 12 March 4, 2019 Public Financial Participation: 1. Anoka County CDBG. We have applied for $300,000. We are adjusting our timing of the acquisition to coincide with their Program Year 2019. 2. Affordable Housing Tax Credits. Issued through MHFA. That application is subject to competitive application. The site is in a “qualified” census tract in an economic opportunity zone. As an acquisition/rehab, we should score well. 3. Tax Increment Financing. We will need Columbia Heights to provide tax increment for the project, but have negotiated a condition of sale with the current owner that the commercial first floor space will retain the majority of the existing tax base, leaving the housing to be completely new increment that ‘but for’ this development would not occur. 4. Metropolitan Council & DEED: The project is an ideal demonstration on repurposing a mixed-use building in a transit corridor and as such should score well in May & October applications from Metropolitan Council and DEED for infrastructure, site improvements, utilities and demonstration enhancements. 5. Qualifying Loan from Columbia Heights: A request for $ 200,000 to pay for municipal review, permitting and site improvement bonds is needed to establish a government loan connection to the project. Such a loan gives us an exception to the federal “ten-year” rule that a previous owner must own the property for ten years, to qualify for federal tax credits. Questions/comments from members: Dahl said their depiction of the proposed project looks similar to the Mill City Quarters project. He asked if the exterior would be similar. Minn said new walls would be added between the concrete floors, so new framing would be necessary in order to meet energy code requirements, and that new larger windows would be installed, so it would have a similar look. He went on to say that they would be removing the loading area on the SE corner and fill in the th old drive through area. The entrance to the residential units on floors 2-6 would be off 40 Avenue. There would be th several entrances for the commercial space on the first floor off 40 Ave, off the Central Avenue side and wrap around the building to the Gould side. Novitsky asked what the percentage of residential use versus commercial use there would be. Minn said it would be about 80% residential and 20% commercial (approx. 15,000 sf). Buesgens asked if there were any businesses that had committed to going into the commercial spaces yet. Minn responded that they have not pursued anyone yet. Buesgens stated that she has a problem with their request for a $200,000 loan from the City, plus TIF Financing. Minn explained that since they have not owned the property for 10 years, the $200,000 loan from the City qualifies them for the tax credits under “an exception” to the ownership rule. Dahl asked if the $200,000 figure was the minimum amount required as a loan. Minn said it was the amount suggested by his Financial Advisors, which is a percentage of the overall project. Herringer asked if this would be a short term loan. Minn said approximately a term that would run one year past the estimated date of completion and that the loan would accrue interest. 20190304_EDA_Minutes EDA Minutes Page 13 March 4, 2019 Schmitt asked if Minn has dealt with Swervo before. Minn said he has done several projects with Swervo before and knows Ned personally. Schmitt said she is not opposed to some residential in that building, but also thought it would be a good site for artist studio space. Whatever happens at this site, she wants it completed in a timely manner. Minn was asked if he would retain ownership of the residential project once it is completed. He said he does retain the ownership and that Pinnacle Property Management Co. will manage the building on his behalf. He told members that his application process is done according to laws in place. Buesgens asked him how long it usually takes to fill the building. He stated they are usually full within 6 months. He feels this one will fill up quickly since it is on the bus line and close to major thoroughfares. Herringer pointed out that the adjacent ramp is also a plus for his project as he won’t have to come up with a parking plan. Minn said it is a plus as it provides 369 parking stalls and that the present agreement states that on 7/31/2021 the ramp can be purchased for $1.00 which he plans to do. Schmitt asked how many 3 BR units would be part of this project. Minn stated there will be 3- 3 BR units per floor for a total of 15 in the building. Schmitt noted there is no play space for children. Minn stated that federal rules require a park or play area to be located within ¼ mile of the building and there are two parks close by, so he is not planning on providing any space for children on site. Schmitt noted that both the parks are located across busy streets, so access to them is an issue. She suggested that maybe a cross walk be added as part of the project. Buesgens asked what happens if the commercial space can’t be filled. Minn said he would draw up some type of agreement with Ned that if he can’t fill the space and decides to sell that part of the building, he would have first right of refusal. Minn asked if the City would consider putting their offices on the first floor of the building. He would be willing to broker that conversation with Ned if there is an interest, since they are trying to decide on where to locate a new City facility. Herringer asked him if he had considered building a market rate building. Minn explained that changes have been made to laws governing affordable housing, and that an average of 60% of the median income must be met for the entire building. This means that some units can be rented at 30-40% of the median income and some can be as high as 80%. Minn explained that HUD dictates what can be charged and that the rates for Hennepin County and Anoka County are currently the same. Minn told members that if tax credits are used, he cannot refuse Section 8 tenants. He pointed out that the majority of the residents in Columbia Heights would meet the income guidelines, therefore these apartments are “market rate” for Columbia Heights. Minn reviewed the rents that would be charged for these units. 1 BR unit rents would be approximately $1300 at 80%, $1100 at 60% and $900 at 50%. 2 BR unit rents would be approximately $1600 at 80% and $1400 at 60%. Buesgens asked how sound proof the building will be. Minn said he usually hires an acoustical specialist to deal with each building he renovates. This one has so much concrete that they will need to drop ceilings, add insulation, and probably use carpet instead of wood or tile floors. He said they would also offset the framing between floor plans which will help deter noise. Buesgens then asked if they would install charging systems for vehicles in the ramp. Minn said they would a charging system, but users would be charged. Dahl called for feedback from the members on whether they would be interested in this type of project. 20190304_EDA_Minutes EDA Minutes Page 14 March 4, 2019 Buesgens-said the proposal looked ok, but is not comfortable with the split ownership of the property and is not comfortable with giving a $200,000 loan, plus TIF Financing to the developer. Novitsky-asked how much TIF would be needed. Minn stated they would ask for $100,000 in TIF financing for a period of 25 years. Novitsky also was not comfortable with financing that much for this project. Williams-wants to keep an open mind and wants to see something occupy the building, as it is in a state of disrepair. Schmitt is not comfortable having two developers for the site. She asked Minn how long his other buildings have been open. He told her the ones on the flyer are his most recent ones. Broadway Flats has been open since August 2016 and about half of the units are Section 8. East Side Apts opened in Oct 2017, and Mill City Quarters opened in Sept 2016 and less than 4 units are Section 8. He said that really varies from building to building. All 3 of these buildings are considered “Affordable Housing”, not “Market Rate”. Murzyn-agreed with Schmitt and Buesgens about Swervo retaining the first floor, and there is no guarantee that he will find tenants. Swervo was sure they would fill the building when they purchased it, but they have let it deteriorate over the last four years, so he doesn’t feel obligated to help them financially now. Jackie Cherryhomes spoke on Ned’s behalf and told members that if this approved, they will be working as a team to make it successful, and they have made other projects work. 2. Home Energy Audit Program Discussion Forney reminded members that on February 4, 2019, the Columbia Heights Economic Development Authority (the “EDA”) directed staff to collaborate with Center for Energy and Environment (referred to as “CEE”), a nonprofit organization to develop a home energy audit program that would promote energy efficiency to residents within the City of Columbia Heights, including home owners and renters. Therefore, staff worked with CEE to develop the Home Energy Squad Program (the “Program”). The Program will offer two types of home energy audits; an installation visit or an enhanced visit. The installation visit simply includes the direct installation of energy-saving materials where possible, including high-efficiency showerheads, faucet aerators, door weather stripping, a water heater blanket, programmable thermostats and LED light bulbs. Whereas, the enhanced visit includes everything in an installation visit, but also a blower door test to check for air leaks, visual inspection of insulation levels with the use of infrared cameras as weather permits, and heating system/hot water heater combustion safety tests. After the visit, CEE will provide the homeowner and/or tenant a report with recommended energy upgrades. The following is a source and use statement which provides an overview of the Program itself, but also the recommend amount of funds to be appropriated to this Program. HOME ENERGY AUDIT PROGRAM: CEE HOME ENERGY SQUAD USES STATEMENT On February 4th, 2019 the Columbia Heights Economic Development Authority (the “EDA”) directed staff to pursue a home energy audit program for the residents of Columbia Heights through the Center for Energy and Environment. The Center for Energy and Environment (CEE) is a non-profit organization whose mission is to 20190304_EDA_Minutes EDA Minutes Page 15 March 4, 2019 “promote energy efficiency to strengthen the economy while improving the environment.” CEE works towards their mission by conducting research, administering programs, maintaining a lending center, promoting engagement, education, and advocating policy. One program that CEE administers is the Home Energy squad program. This program offers two types of home energy audits the installation visit and the enhanced visit. An instillation visit simply includes the direct installation of energy-saving materials where possible, including high-efficiency showerheads, faucet aerators, door weather stripping, a water heater blanket, programmable thermostats and LED light bulbs. Whereas an enhanced visit includes everything in an installation visit while also conducting a blower door test to check for air leaks, visual inspection of insulation levels with the use of infrared cameras as weather permits, heating system and hot water heater combustion safety tests and a report to the homeowner on recommended energy upgrades. Through a partnership with CenterPoint Energy and Excel Energy CEE provides all Minnesotans with these home energy audit options. CEE also partners with cities to offer this program to their residents for a reduced price. If someone wants to complete a home energy audit in a non-partner city they would pay $70 for an installation visit and $100 for an enhanced visit. For residents in partner cities the city buys down the price tag according to the city’s needs. The majority of cities provide both home energy audits to residents for around $50 buying down the installation visit by $20 and the enhanced visit by $50. This promotes residents to utilize the full potential of the enhanced visit since you receive a more comprehensive service for the same price. When partnering with CEE cities also have the ability to limit the number of residents that receive discounted energy audits. In city’s similar to Columbia Heights about 50-150 residents utilize the program. CEE invoices the city quarterly for the amount of visits completed up to the yearly limit specified in the original agreement. An initial investment of $5,000 would provide 100 enhanced visits or 250 installation visits, and any variation of visits in- between. Since there are no administration fees and the amount of audits completed, up to the limit, would be the overall cost of the program. USES EXPENSES I. Buy Down Limit $5,000 TOTAL:$5,000 SOURCES STATEMENT The aforementioned expenses in connection with the home energy audit program will be paid through the EDA Redevelopment Project Fund 408. The following table provides a breakdown of the amount of funds that will be used from its respective source for project completion: SOURCES TOTAL BALANCE I. EDA Redevelopment Project Fund 408 $ 5,000 TOTAL SOURCE $ 5,000 FUNDS: Questions/comments from members: There was a discussion regarding whether the EDA wanted to buy down on both the basic ($70 fee and enhanced program $100) or just one of them. Forney said most cities pay for half of either program. Buesgens likes the idea of buying down $50 or $60 of the enhanced visit. She felt homeowners would have more incentive to make additional energy improvements if they had more information to go on. Novitsky agreed that he would be comfortable with $50 or $60 buy down. 20190304_EDA_Minutes EDA Minutes Page 16 March 4, 2019 Schmitt was good buying down $50. She felt residents should pay something. Herringer asked if it was mandatory they have to fix things if they agree to have the testing done. Forney said no, they give the owners the information, and make recommendations, then try to connect them to loan programs if they need financial assistance to make the improvements. Dahl said the EDA could also look at starting another rehab loan program that details the specific improvements that we want included in the program. Herringer then stated he thought a $50 buy down was good. Williams felt a $50 buy down was appropriate. Murzyn also agreed with that amount. Motion by Williams, seconded by Novitsky, to adjourn the meeting at 7:14 pm. All ayes. Respectfully submitted, Shelley Hanson Secretary 20190304_EDA_Minutes