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HomeMy WebLinkAbout06-08-2020 EDA Packet Special MeetingCOLUMBIA HEIGHTS EDA NOTICE OF CONDUCTING MEETING BY A COMBINATION OF IN-PERSON AND ELECTRONIC MEANS Following a determination by City Manager Kelli Bourgeois, and emergencies declared by the United States, The State of Minnesota, and the Columbia Heights Mayor & City Council, the Columbia Heights Special EDA Meeting Scheduled for Monday, June 8, 2020 at 6:00 pm will, pursuant to Minn. Stat. § 13D.021, occur by a combination of in-person and electronic means. Members of the public who wish to attend may do so by attending in-person in the Council Chambers at the Columbia Heights City Hall or by calling 1-312-626-6799 and entering meeting ID 858-1068-6995 and password 790116 at the scheduled meeting time. Comments can be submitted ahead of the meeting to achirpich@columbiaheightsmn.gov or by calling (763) 706- 3672. If there are any questions about this notice or attending/calling in to the meeting, please contact the Community Development Department at (763) 706-3670. The meeting location for this meeting is the Council Chambers at Columbia Heights City Hall located at 590 40th Ave NE, Columbia Heights, MN 55421. ECONOMIC DEVELOPMENT AUTHORITY AGENDA SPECIAL MEETING June 8, 2020 6:00 PM City Hall Council Chambers 590 40th Avenue NE Columbia Heights, MN 55421 1. Call to Order 2. Roll Call 3. Pledge of Allegiance CONSENT AGENDA 4. Approve regular meeting minutes of May 4, 2020 Motion: Move to approve the Consent Agenda as presented. BUSINESS ITEMS 5. Public Hearing – Approve Land Sale to Alatus LLC for Redevelopment of EDA owned Property and Approval of TIF Agreement for Same Motion: Move to open the public hearing and continue the hearing until June 22nd. OTHER BUSINESS 6. Adjourn ECONOMIC DEVELOPMENT AUTHORITY (EDA) MINUTES OF THE MEETING OF MAY 4, 2020 The meeting was called to order at 6:01pm by Chair Szurek. Members Present: Novitsky, Buesgens, Schmitt, Herringer, Murzyn, Williams and Szurek. Staff Present: Aaron Chirpich (Community Development Director), Kelly Bourgeois (City Manager) and Christy Bennett (Recording Secretary). PLEDGE OF ALLEGIANCE- RECITED CONSENT AGENDA 1. Approve the minutes from the meeting of March 23, 2020. 2. Approve Financial Report and Payment of Bills for March-Resolution 2020-06 Questions/comments from members: Herringer asked what the payment to Center for Energy and Environment on page 4 of March financials was for. Chirpich explained that the $550 was for the energy audits that the EDA participates in by covering half the cost of, which is $50. Buesgens asked how many residents this was for. Chirpich said it was for 11 residents and he believes this is for audits done in 2020 thus far. He stated that we are still not near the full $5k that was budgeted for this. Herrringer questioned the payment to Orb LLC for $5k on page 10 of the March financials. Chirpich said this was a façade grant improvement reimbursement for a business that is next door Roman’s Cafe on 40th Ave. Herringer asked about the Shenehon Company payment on the same page for $5k. Chirpich said this was for the cell tower appraisal. Motion by Buesgens, seconded by Murzyn, to approve the consent agenda as presented. All ayes. MOTION PASSED. RESOLUTION NO. 2020-06 A RESOLUTION OF THE ECONOMIC DEVELOPMENT AUTHORITY OF COLUMBIA HEIGHTS, MINNESOTA, APPROVING THE FINANCIAL STATEMENTS FOR THE MONTH OF MARCH 2020, AND THE PAYMENT OF THE BILLS FOR THE MONTH OF MARCH 2020. WHEREAS, the Columbia Heights Economic Development Authority (the “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 statements for the month of March, 2020 have 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, 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 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 4th day of May, 2020 Offered by: Buesgens Seconded by: Murzyn Roll Call: All Ayes BUSINESS ITEMS 1. Alatus Preliminary Development Agreement Renewal – Resolution 2020-07 Chirpich explained that in August of 2019, the EDA executed a preliminary development agreement with Alatus LLC, for the redevelopment of the EDA owned property located at 3989 Central Avenue NE. The purpose of the agreement was to formalize a working relationship and negotiation framework for the project partnership. The concept redevelopment plans outlined in the original agreement included:  250-270 High Amenity Market Rate Apartments  20,000 square foot City Hall space  3,000+ square feet of retail/restaurant space Since execution of the preliminary development agreement, Alatus and the City have worked together to refine the development plans for the site, and the project has moved through the entitlement process. Land use approvals are in place to deliver on the project components listed above, and the project team is close to presenting the EDA with the final development agreement for formal approval. However, due to the complex nature of the project, the due diligence process has taken longer than originally anticipated and the current preliminary development agreement is set to expire on May 31. Therefore, a renewal of the agreement is necessary. The project team is working to close on the project by the end of June. The renewal agreement outlines the same general terms as the original agreement, and contains the following key provisions:  The termination date of the renewal agreement is July 31, 2020.  Alatus is designated as the sole developer for the property during the term of the agreement.  The concept plans and core elements are confirmed and updated.  Alatus will reimburse the EDA for predevelopment planning costs. Staff recommends that the EDA Board approve the predevelopment agreement renewal with Alatus LLC. Comments from Members: There were no questions or comments from the members. Motion by Schmitt, seconded by Novitsky, to waive the reading of Resolution 2020-07, there being ample copies available to the public. All Ayes. MOTION PASSED. Motion by Schmitt, seconded by Novitsky, to adopt Resolution 2020-07, a resolution approving preliminary development agreement renewal between the Columbia Heights Economic Development Authority and Alatus LLC. All Ayes. MOTION PASSED. COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. 2020-07 APPROVING PRELIMINARY DEVELOPMENT AGREEMENT BETWEEN THE COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY AND ALATUS LLC BE IT RESOLVED by the Board of Commissioners of the Columbia Heights Economic Development Authority (“Authority”) as follows: 1. Background. 1.01. Alatus LLC (the “Developer”) desires to acquire certain property (the “Property”) owned by the Authority and by the City of Columbia Heights (the “City”), which Property has been the subject of certain preliminary negotiations with the Authority for purposes of constructing a multi-use development on the Property (the “Development”). 1.02. The Authority and the Developer have determined to enter into a preliminary development agreement (the “PDA”), providing for negotiation of a definitive purchase and development contract that will address (among other things) terms under which the Developer will acquire the Property from the Authority and construct the Development on the Property, and the Authority may provide certain financial assistance if warranted to make development by the Developer financially feasible. 1.03. The Board has reviewed the PDA, and has determined that it is in the best interests of the Authority to approve and execute the PDA. 2. Approval of PDA. 2.01. The Authority approves the PDA, and authorizes and directs the President and Executive Director to execute same in substantially the form on file, subject to modifications that do not alter the substance of the transaction and are approved by the President and Executive Director, provided that execution of the PDA by such officials will be conclusive evidence of their approval. 2.02. Authority officials and consultants are authorized to take any other actions necessary to carry out the Authority’s obligations under the PDA, and to bring a proposed definitive purchase and development contract before the Authority. Approved this 4th day of May, 2020, by the Board of Commissioners of the Columbia Heights Economic Development Authority. _________________________________________ President ATTEST: _________________________________ Secretary PRELIMINARY DEVELOPMENT AGREEMENT RENEWAL (NE Business Center Project) THIS AGREEMENT, dated this ___ day of May, 2020, by and between the Columbia Heights Economic Development Authority, a body politic and corporate under the laws of Minnesota (the “Authority”) and Alatus LLC, a Minnesota limited liability company, or permitted successors or assigns (the “Developer”): WITNESSETH: WHEREAS, the Authority desires to promote redevelopment of certain Authority-owned property within the City of Columbia Heights (the “City”), which property is legally described in Exhibit A attached hereto (the “Authority Property”), as well as certain other property owned by the City and legally described in Exhibit A attached hereto (the “City Property”, and together with the Authority Property, the “Property”); and WHEREAS, the Developer desires to acquire the Property for purposes of constructing a mixed-use (multi-family residential and commercial) development on the Property (the “Development”), and has submitted a proposal outlining its general development terms and goals, a portion of which is attached hereto as Exhibit B; and WHEREAS, the Authority has determined that it is in the Authority’s best interest that the Developer be designated sole developer of the Property during the term of this Agreement; and WHEREAS, the Developer has requested the Authority to explore the use of tax increment financing under Minnesota Statutes, Sections 469.174 to 469.1794, as amended (the “Tax Increment Act”) or other public financial assistance to offset a portion of the public costs of the Development; and WHEREAS, the Authority and the Developer are willing and desirous to undertake the Development if (i) a satisfactory agreement can be reached regarding the Authority’s commitment for public assistance necessary for the Development; (ii) satisfactory mortgage and equity financing, or adequate cash reso urces for the Development can be secured by the Developer; and (iii) the economic feasibility and soundness of the Development and other necessary preconditions have been determined to the satisfaction of the parties; and (iv) the parties reach a satisfactory resolution of zoning, land use, site design, and engineering issues; and WHEREAS, the Authority is willing to evaluate the Development and work toward all necessary agreements with the Developer if the Developer agrees to reimburse the Authority for its costs relating to the Development even if the Development is abandoned or necessary agreements are not reached under the terms of this Agreement. NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and obligations set forth herein, the parties agree as follows: 1. During the term of this agreement, the Authority agrees to negotiate solely with the Developer relative to the acquisition and development of the Property by the Developer, in an attempt to formulate a definitive purchase and development contract (“Contract”) based on the following: (a) the Developer’s proposal (when submitted) together with any changes or modifications required by the Authority; (b) such documentation regarding economic feasibility of the Project as the Authority may wish to undertake during the term of this Agreement; and (c) other terms and conditions of this Agreement. 2. It is the intention of the parties that this Agreement: (a) documents the present understanding and commitments of the parties; and (b) will lead to negotiation and execution of a mutually satisfactory Contract for the Development prior to the termination date of this Agreement. The Contract (together with any other agreements entered into between the parties hereto contemporaneously therewith) when executed, will supersede all obligations of the parties hereunder. 3. During the term of this Agreement, the Developer shall: (a) Submit a proposal to the Authority, which proposal must show the location, size, and nature of the proposed Development, including sample floor layouts, renderings, elevations, and other graphic or written explanations of the Development. The proposal shall be accompanied by a preliminary schedule for the starting and completion of all phases of the Development. (b) Submit an over-all cost estimate for the design and construction of the Development. (c) Submit a final time schedule for all phases of the Development. (d) Undertake and obtain such other preliminary economic feasibility studies, income and expense projections, and such other economic information as the Developer may desire to further confirm the economic feasibility and soundness of the Development. (e) Submit to the Authority the Developer’s financing plan showing that the proposed Development is financially feasible. (f) Furnish satisfactory, financial data to the Authority evidencing the Developer’s ability to undertake the Development. 4. During the term of this Agreement, the Authority agrees to: (a) Commence the process necessary to undertake such public assistance as is necessary pursuant to the terms of the proposal. (b) Proceed to seek all necessary information with regard to the anticipated public costs associated with the Development. (c) Estimate the Authority’s level and method of financial participation, if any, in the Development and develop a financial plan for the Authority’s participation. (d) Grant to the Developer, its agents, employees, officers, and contractors (the “Authorized Parties”) a right of entry on the Property for the purpose of performing all due diligence work and inspections deemed necessary by the Developer to fulfill its obligations under this Agreement (the “Permitted Activities”). The Authorized Parties shall have access to the Property seven (7) days a week between the hours of 7:00 a.m. and 7:00 p.m. Developer hereby agrees to be responsible for any and all costs related to the Permitted Activities conducted on the Property, and to restore the Property to its original condition upon completion of the Permitted Activities. Developer agrees to indemnify, save harmless, and defend the City, the Authority, and their officers and employees, from and against any and all claims, actions, damages, liability and expense in connection with personal injury and/or damage to the Property arising from or out of any occurrence in, upon or at the Property caused by the act or omission of the Authorized Parties in conducting the Permitted Activities on the Property, except (a) to the extent caused by the negligence, gross negligence, willful misrepresentation or any willful or wanton misconduct by the City or Authority, their officers, employees, agents or contractors; and (b) to the extent caused by a “Pre-Existing Condition” as defined in this paragraph 4. “Pre-Existing Condition” shall mean any condition caused by the existence of hazardous substances or materials in, on, or under the Property, including without limitation hazardous substances released or discharged into the drainage systems, soils, groundwater, waters or atmosphere, which condition existed as of the date of this Agreement and became known or was otherwise disclosed or discovered by reason of the Authorized Parties’ entry onto the Property. 5. It is expressly understood that execution and implementation of the Contract shall be subject to: (a) A determination by the Authority in its sole discretion that its undertakings are feasible based on (i) the projected tax increment revenues and any other revenues designated by the Authority; (ii) the purposes and objectives of any tax increment, development, or other plan created or proposed for the purpose of providing financial assistance for the Development; and (iii) the best interests of the Authority. (b) A determination by the Developer that the Development is feasible and in the best interests of the Developer. 6. This Agreement is effective from the date hereof through July 31, 2020. After such date, neither party shall have any obligation hereunder except as expressly set forth to the contrary herein. 7. The Developer shall be solely responsible for all costs incurred by the Developer. In addition, the Developer shall reimburse the Authority for the following costs: (a) Upon execution of this Agreement, the Developer has deposited with the Authority funds in the amount of $11,000, receipt of which the Authority hereby acknowledges. The Authority may apply such deposit to pay any “Authority Costs,” which means: reasonable and necessary out-of pocket-costs incurred by the Authority from and after May 20, 2019, in each case based on actual time spent in connection with rendering assistance and advice to the Authority as evidenced by itemized bills and invoices for (i) the Authority’s financial advisor in connection with the Authority’s financial participation in redevelopment of the Property , (ii) the Authority’s legal counsel in connection with negotiation and drafting of this Agreement and any related agreements or documents, and any legal services related to the Authority’s or City’s participation in redevelopment of the Property; (iii) any appraiser retained by the Authority in connection with conveyance of any portion of the Property by the Authority to the Developer or in connection with determination of the level of public assistance; and (iv) consultants retained by the Authority for planning, environmental review, and traffic engineering for development of the Property. At Developer’s request, but no more often th an monthly, the Authority will provide Developer with a written report on current and anticipated expenditures for Authority Costs, including invoices or other comparable evidence. (b) If at any time during the term of this Agreement the Authority determines that the amounts deposited by Developer are insufficient to pay Authority Costs, the Authority may notify the Developer in writing as to any additional amount required to be deposited. The Developer must deposit such additional funds within 20 days after receipt of the Authority’s notice. (c) Upon termination of this Agreement in accordance with its terms, the Authority will return to the Developer the balance of any funds deposited under this section that are on hand as of the date of receipt of the notice of termination, less $1,000 representing a nonrefundable application fee, and less any Authority Costs incurred through the date of receipt of the notice of termination. For the purposes of this paragraph, Authority Costs are considered to be incurred if they have been paid, relate to services performed, or are payable under a contract entered into, on or before the date of receipt of the notice of termination. This Section 7 shall survive termination of this Agreement and shall be binding on the Developer regardless of the enforceability of any other provision of this Agreement. 8. This Agreement may be terminated upon 5 days written notice by the Authority to the Developer if: (a) an essential precondition to the execution of a contract cannot be met; or (b) if, in the sole discretion of the Authority, an impasse has been reached in the negotiation or implementation of any material term or condition of this Agreement or the Contract; or (c) The Authority determines that its Administrative Costs will exceed the amount initially deposited for such purpose under Section 7(b), and the Developer does not deliver additional security to the Authority pursuant to Section 7(b) of this Agreement. If the Authority terminates the Agreement under this Section 8, the Developer shall remain liable to the Authority under Section 7(b) of this Agreement for Administrative Costs incurred by the Authority through the effective date of termination. 9. The Developer is designated as sole developer of the Property during the term of this Agreement. The Authority makes no representations or warranties as to control, access or ownership of any portion of the Property, but agrees that during the term of this Agreement the Authority will not enter into agreeme nts with any other party to facilitate redevelopment of the Property. 10. In the event that the Developer, its heirs, successors or assigns, fail to comply with any of the provisions of this Agreement, the Authority may proceed to enforce this Agreement by appropriate legal or equitable proceedings, or other similar proceedings, and the Developer, its heirs, successors or assigns, agree to pay all costs of such enforcement, including reasonable attorneys’ fees. 11. If any portion of this Agreement is held invalid by a court of competent jurisdiction, such decision shall not affect the validity of any remaining portion of the Agreement. 12. In the event any covenant contained in this Agreement should be breached by one party and subsequently waived by another party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent breach. This Agreement may not be amended nor any of its terms modified except by a writing authorized and executed by all parties hereto. 13. Notice or demand or other communication between or among the parties shall be sufficiently given if sent by mail, postage prepaid, return receipt requested or delivered personally: (a) As to the Authority: Columbia Heights Economic Development Authority 590 40th Avenue NE Columbia Heights, MN 55421 Attn: Community Development Director (b) As to the Developer: Alatus LLC 800 Nicollet Mall, Suite 2850 Minneapolis, MN 55402 Attn: Director of Development 14. This Agreement may be executed simultaneously in any number of counterparts, all of which shall constitute one and the same instrument. 15. This Agreement shall be governed by and construed in accordance with the laws of the state of Minnesota. Any disputes, controversies, or claims arising out of this Agreement shall be heard in the state or federal courts of Minnesota, and all parties to this Agreement waive any objection to the jurisdiction of these courts, whether based on convenience or otherwise. 16. The Developer hereby agrees to protect, defend and hold the Authority and its officers, elected and appointed officials, employees, administrators, commissioners, agents, and representatives harmless from and indemnified against any and all loss, cost, fines, charges, damage and expenses, including, without limitation, reasonable attorneys fees, consultant and expert witness fees, and travel associated therewith, due to claims or demands of any kind whatsoever arising out of (i) the development, marketing, sale or leasing of all or any part of the Property, including, without limitation, any claims for any lien imposed by law for services, labor or materials furnished to or for the benefit of the Property, or (ii) any claim by the state of Minnesota or the Minnesota Pollution Control Agency or any other person pertaining to the violation of any permits, orders, decrees or demands made by said persons or with regard to the presence of any pollutant, contaminant or hazardous waste on the Property; and (iii) or by reason of the execution of this Agreement or the performance of this Agreement. The Developer, and the Developer’s successors or assigns, agree to protect, defend and save the Authority, and its officers, agents, and employees, harmless from all such claims, demands, damages, and causes of action and the costs, disbursements, and expenses of defending the same, including but not limited to, attorneys fees, consulting engineering services, and other technical, administrative or professional assistance. This indemnity shall be continuing and shall survive the performance, termination or cancellation of this Agreement. Nothing in this Agreement shall be construed as a limitation of or waiver by the Authority of any immunities, defenses, or other limitations on liability to which the Authority is entitled by law, including but not limited to the maximum monetary limits on liability established by Minnesota Statutes, Chapter 466. 17. The Developer, for itself, its attorneys, agents, employees, former employees, insurers, heirs, administrators, representatives, successors, and assigns, hereby releases and forever discharges the Authority, and its attorneys, agents, representatives, employees, former employees, insurers, heirs, executors and assigns of and from any and all past, present or future claims, demands, obligations, actions or causes of action, at law or in equity, whether arising by statute, common law or otherwise, and for all claims for damages, of whatever kind or nature, and for all claims for attorneys’ fees, and costs and expenses, including but not limited to all claims of any kind arising out of the negotiation, execution, or performance of this Agreement between the parties. IN WITNESS WHEREOF, the Authority has caused this Agreement to be duly executed in its name and behalf and its seal to be duly affixed hereto and the Developer has caused this Agreement to be duly executed as of the day and year first above written. ALATUS LLC By Chris Osmundson Its Director of Development COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY By Kelli Bourgeois Its Executive Director EXHIBIT A Description of Property AUTHORITY PROPERTY: PARCEL 1 (Abstract and Torrens Property): Lot 32, Block 6, Reservoir Hills, Anoka County, Minnesota. Lots 25 through 28, Block 1, Walton's Rearrangement of Lots 33 and 34, Block 6, Reservoir Hills, Anoka County, Minnesota. The vacated alley adjacent to Lots 25 through 28, Block 1, Walton's Rearrangement of Lots 33 and 34, Block 6, Reservoir Hills, Anoka County, Minnesota. Those parts of Lots 28 through 31, Block 6, Reservoir Hills; Lots 23. and 24, Block 1, Walton's Rearrangement of Lots 33 and 34, Block 6, Reservoir Hills; and of the vacated alley adjacent to Lot 24, Block 1, Walton's Rearrangement of Lots 33 and 34, Block 6, Reservoir Hills; lying southwesterly and westerly of the following described line: Beginning at a point on the south line of Block 1, Walton's Rearrangement, said point being 18.00 feet West of the southeast corner of Lot 23, of said Block 1, Walton's Rearrangement; thence Northerly on a line 18.00 feet West of and parallel with the east line of Lot 23 a distance of 87.00 feet; thence on a straight line to a point on the north line of Lot 30 of said Block 6, Reservoir Hills, said point being 47.23 feet Easterly of the northwest comer of said Lot 30 and there terminating. The following portion of the above description being registered land: That part of Lot Twenty-three (23), Block (1), Walton's Rearrangement of Lots Thirty-three (33) and Thirty-four (34), Block Six (6), Reservoir Hills, lying southwesterly and westerly of the following described line: Beginning at a point on the South line of said Block 1, Walton's Rearrangement, said point being 18.00 feet West of the southeast comer of Lot 23 of said Block 1, Walton's Rearrangement: thence Northerly on a line 18.00 feet West of and parallel with said east line of Lot 23, a distance of 87.00 feet; thence on a straight line to a point on the north line of Lot 30 of said Block 6, Reser voir Hills, said point being 47.23 feet Easterly of the northwest comer of said Lot 30 and there terminating. PARCEL 2 (Abstract Property): Those parts of Lots 27 through 31, Block 6, Reservoir Hills and those parts of Lots 23 and 24, Block 1, Walton's Rearrangement of Lots 33 and 34, Block 6, Reservoir Hills and of the vacated alley abutting Block 1, "Walton's Rearrangement of Lots 33 and 34, Block 6, Reservoir Hills", as dedicated in said plat, lying within the following described tract: Commencing at a point on the south line of said Block 1, Walton's Rearrangement distant 18.00 feet west of the southeast corner of Lot 23, said Block 1, Walton's Rearrangement; thence northerly on a line 18.00 feet west of and parallel with the east line of said Lot 23, a distance of 87.00 feet, to the actual point of beginning of the tract to be described; thence continuing northerly on the extension of said line to the north line of Block 6, Reservoir Hills; thence westerly along said north line of Block 6, to a point being 47.23 feet easterly of the northwest corner of Lot 30, Block 6, Reservoir Hills; thence southeasterly, to the point of beginning; Excepting therefrom Tract A, Registered Land Survey No. 250, Anoka County, Minnesota. PARCEL 3 (Torrens Property): Tract A, Registered Land Survey No. 250, Anoka County, Minnesota. CITY PROPERTY: Lots 24, 25, and 26, Block 6, Reservoir Hills. Lots 20, 21, and 22, Block 1, Walton’s Rearrangement of Lots 33 and 34, Block 6, Reservoir Hills, and all of the vacated alley adjacent to said Lots 20, 21, and 22. Those parts of Lot 7, Block 6, Reservoir Hills and of Lot 23, Block 1, Walton’s Rearrangement of Lots 33 and 34, Block 6, Reservoir Hills and of that part of the vacated alley abutting Block 1, “Walton's Rearrangeme nt of Lots 33 and 34, Block 6, Reservoir Hills”, as dedicated in said plat, which lies westerly of the northerly extension of the east line of Lot 23, said Block 1, lying easterly of the following described line: Beginning at a point on the south line of said Block 1, Walton’s Rearrangement, said point being 18.00 feet west from the Southeast corner of Lot 23 of said Block l,Walton's Rearrangement; thence northerly on a line 18.00 feet west of and parallel with the east line of said Lot 23, to the north line of said Block 6, Reservoir Hills. Reserving and subject to easement to the City of Columbia Heights for roadway purposes over the north 4.00 feet of the west 232.00 feet of said Block 6, Reservoir Hills. PID: 36-30-24-32-0262, 950 40th Avenue NE Lot 19, Block l, Walton's Rearrangement of Lots 33 and 34, Block 6, Reservoir Hills, according to the map or plat thereof on file or of record in the office of the Registrar of Deeds in and for Anoka County, Minnesota. PID: 36-30-24-32-0078, 961 Gould Avenue NE EXHIBIT B Development Plans OTHER BUSINESS 1. General Update Regarding the Redevelopment of 3989 Central Avenue NE Chirpich explained that staff has been working with Alatus LLC, Doran Companies, Leo A. Daly, and other partners for the past several months to refine the development plans for the EDA owned site at 3989 Central Avenue. The vertical mixed-use development project includes 265 market rate apartments, a new City Hall, and a restaurant/café space. Due to the complex nature of this project and the subsequent long-term partnership being created between the City and developer, there are several moving parts and many details to work through related to the sale of the property. Despite the complexity of the project, the development team is close to carving out a timeline for closing the deal. As such, staff would like to update the board on the significant project advancements that have been made in the last four months. The goal of this update is to prepare the board for the upcoming approval of the final development contracts that will take place during the next 60 days. The primary project advancements are detailed in the sections below. TAX INCREMENT FINACING: In September of 2019, the EDA approved the general TIF plan for the project and established the NE Businesses Center TIF District. At the time of approval of the TIF plan, the total amount of TIF assistance needed for the project, and subsequent duration of the TIF district had not been determined. These numbers have now been finalized. The total amount of TIF assistance being requested is $10.6M, to be recovered by the developer over a 25 year time horizon. TIF assistance can only be used to reimburse the developer for eligible expenses. The primary TIF eligible expenses for this project are as follows:  Land/Building Acquisition  Site Improvements and Preparation  Utilities  Underground Parking The TIF note will not be issued for the project until the expenditures are proven for all qualified expenses. For this project, it is anticipated that the TIF note will be issued in February of 2021. CELL ANTENNA LEASE TERMINATION When the EDA purchased the building at 3989 Central Avenue NE, it was known by the EDA that the rooftop of the building was occupied by active wireless communication antennas. As such, by acquiring the building, the EDA succeeded as the lessor in one or more agreements for the long-term lease of the building rooftop for the operation of antenna equipment. At the time of the EDA’s purchase there were two carriers operating from the site, Sprint and AT&T. Both carriers were sub-leasing antenna space under a master lease agreement held by a third-party broker, Crown Castle. The negotiations to remove the cell antennae from the rooftop and terminate the various lease hold interests have been ongoing for over a year. Currently, both carriers remain in operation on the rooftop, but staff has put together a framework for their removal and relocation. Through the negotiation process, it has been revealed that Sprint intends to decommission their equipment from the site and will not seek relocation. This decision by Sprint is related to the recent merger of Sprint and T-Mobile. T-Mobile currently has rooftop antennas on the Parkview Villa apartment building directly across the street from the EDA’s property. Therefore, the merger has made it unnecessary for Sprint to remain on the rooftop of 3989 Central Avenue. Staff have met with Sprint employees on site and discussed the timeline and process for removal of their equipment. Sprint has committed to completing their decommission work by the end of May. AT&T is not in the same position as Sprint and they will require permanent relocation to a new site. To facilitate their move from the building within a timeline that works for the EDA’s redevelopment, the City has agreed to allow AT&T to construct a temporary tower on the vacant City owned lot located behind the library. The construction of this tower has already started and is scheduled to be completed by May 15th. Once the temporary tower is operational, AT&T can remove their equipment from the rooftop of 3989 Central Avenue. At this time, the likely permanent relocation site for AT&T is the rooftop of the adjacent Parkview Villa building. The City currently controls access to the Parkview Villa rooftop, as the City is the lessor for the T- Mobile antenna site previously mentioned. This position will allow the City an opportunity to broker the permanent relocation of AT&T’s equipment. The final piece of the puzzle regarding the lease termination equation relates to Crown Castle. Despite several attempts made by the City to work with Crown Castle on a solution for removal and relocation, Crown Castle has not presented the City with terms for an agreement that are suitable. The lack of cooperation by Crown has forced the City to assert its right of eminent domain. To this end, the City has ordered an appraisal of Crown Castle’s lease hold interest. The appraisal report was nearing completion at the time of this report and staff expects to have the appraisal in hand by May 4. Once the appraised value has been determined, the City can deposit the appraisal amount with the courts and file for a “quick take” of the lease(s) to clear title to the property and move forward with the sale to Alatus. Despite, having this option available to the City, staff remains interested in working out a deal with Crown Castle that avoids the formal court proceedings of eminent domain. To this end, staff is working to prepare a proposal that will offer Crown Castle a lump sum payment equivalent to the appraised value of their lease in exchange for voluntary termination agreements. Comments from Members: Szurek asked if the TIF payments would be pay as you go. Chirpich said that, yes, it would be pay as you go. The developer will be fronting all of this money on the front end and re-capturing the cost with interest over time during the 25 year term. They will front the cost, pay their taxes in full and then the re-imbursement will be made. Buesgens asked if Crown Castle agrees to move the AT&T tower to the Aeon building, would that mean the City wouldn’t have to pay out the remainder of the lease to Crown Castle? Chirpich said the way we look at it, there is one pool of funds: the appraised amount, which is what we would forfeit through eminent domain. This is what we would use to work out a deal with Crown Castle. He further stated, that this is an ongoing negotiation and that his intent this evening was to come to them with the framework, but he would be back at a later meeting with the actual terms. The City would be using the value determined by the appraisal amount to make the negotiation. Theoretically the City could approach Aeon and say, “Here is the money – would this buy Crown a 20-year lease on your rooftop?” This would afford Crown the ability to lease back to AT&T, while Aeon gets their money up front. Crown then has the potential to recapture more than they would in just a straight lump sum payment, which gives us a bit of leverage. Chirpich went on to say that we are trying to get this to the finish line in whatever way gets us there the quickest. Staff is open to a multitude of strategies and the City has assets that can be put into play. A solution is being narrowed in on. Without fully disclosing the appraisal amount until we have it, Chirpich stated that he can share that it is consistent with early projections of a worst case scenario amount. Once it is in hand, the report will be shared individually with members and a formal game plan will be brought to the EDA. Chirpich shared that staff has approached Anoka County and we have access to our ACHRA levy funds that are held by the county. Staff thinks this could be a potential good use of the funds for whatever buyout costs are associated with this project. Anoka County said this would be an eligible expense under this program. This would mean we wouldn’t have to pull from any other pool or budget for 2020. Chirpich brought up that we are at a critical point in this very complicated project. We have a desire to sell this property as quickly as possible and move the project along. Alatus is also ready to get going in a real way. Thus, staff is starting to formulate the framework for a plan that might consider the EDA demolishing the bank building while the EDA still owns it as a bridge between this eminent domain/negotiation process with Crown to get to the next level and provide us with a slightly longer buffer. We would lean in again on those same funds and those costs would be fully recaptured in the sale to Alatus. In staff’s estimation, the building needs to go either way, so this would be a way to buy a little over 2 months, if needed, to keep the construction timeline moving. This clears the way for the courts, given the unknown nature of the timeline. We don’t want to go to Crown and have them think we don’t have a backup plan and that we aren’t serious about eminent domain. We have a solution for the physical piece with Sprint and AT&T. Once we have the antennas off, it’s a lot easier to tear down the building. Buesgens asked if the council decides they want to tear down the building as a bridge, could we go ahead and tear those down while still dealing with Crown Castle, because there’s nothing physical tied to the roof? Chirpich said yes. Szurek asked if Crown Castle has anything on the roof. Chirpich said they do not. Szurek questioned what their connection is to AT&T. Chirpich explained that this is the root of the issue. Crown Castle’s business is providing space for actual providers; they’re a broker. Szurek clarified that if the antennas are gone and we want to move ahead with demoing the building, we can. Chirpich agreed and said it would just be the lease to workout still. Herringer asked if the EDA would be responsible for any of the costs for there are relocation costs for AT&Ts temporary relocation or to relocate to a permanent location. Chirpich said the answer is no. AT&T and Crown are aware that, from a legal perspective, there is one “basket” of funds. Crown doesn’t get paid for their asset of the lease and also for relocation costs for the carriers. That is not how eminent domain works in this type of situation. Chirpich shared that we signed a temporary lease agreement for the temporary site for one year. If it is there for more than one year, AT&T will be paying the City $75/day to keep their antenna at that location. Our olive branch was free use of the site on a temporary basis, but there is no built-in renewal if there is no agreement reached within that one year’s timeframe. We are not obligated to provide AT&T a new permanent home or solution. We are hoping to leverage the relationship with AT&T to find a solution; they need to work with the City to help us figure this out. We continue to be in limbo with many potential solutions, however we need to take the necessary steps to demolish the building. Schmitt asked if we have a timeline for when we might see something happen. She also wanted to verify who will authorize the teardown. Chirpich said he anticipates bringing some sort of framework for an agreement sometime in May. The decision to bridge would be a joint decision with the EDA and the City, as it would require city funds. There would be two layers of oversight; the EDA and Alatus agreeing to the terms and then the City partnering by allowing access to the ACHRA levy fund. Buesgens asked if there is a demolition company that Alatus has worked with that they would recommend or if we look for a company ourselves. Chirpich responded that we need to figure that out. We are bound by public bidding laws. We would contact their preferred contractor, who would be asked to submit a bid. We would have to figure out the details, and would not expect to pay more than their contract amount. He explained he doesn’t know the exact amount, but it would be less than one million dollars, and we have enough in the levy fund to cover. We would need to ramp up the bidding process quickly. Before the demolition can take palce, we also have to go through the abatement process to deal with any hazardous materials, which takes about 2 weeks. The demo process will take approximately 2 months to complete. 2. Tri-plex Proposal Discussion Chirpich shared that staff has been contacted by Terry Robertson from C-Alan Homes, LLC regarding his interest in working with the EDA to develop new tri-plex projects on scattered site lots owned by the EDA/City. Staff has reviewed the concept proposal presented by Mr. Robertson and believes it is worth consideration. The primary attributes of the concept from a staff perspective are as follows:  High quality amenities and good curb appeal.  Significant tax base growth when compared to a traditional single-family in-fill project.  The model could serve as a good solution to lots owned by the EDA along the University Avenue frontage road. The primary negative attributes from a staff perspective are as follows:  The tri-plex units would be rentals rather than owner occupied.  The City would have to provide flexibility on parking standards. Staff wanted to gauge the EDA’s interest in this type of redevelopment project before inviting Mr. Robertson to submit a formal proposal. The City and EDA currently own three lots that staff considers as potential options for the tri-plex model: 4833 and 4827 University Ave and 670 40th Ave. Chirpich asked Robertson and Curt Brekke to share some background with the commissioners. Robertson told the commission that both he and Brekke grew up in Brooklyn Center, MN. Robertson said he’s been in business for 29 years, 25 of those with Brekke. He shared that C-Alan Homes has the innate ability to build cheaper than other builders. They are custom home builders and their intent is not to bring the standard affordable housing to Columbia Heights. They started with this process two years ago. A lot of developers are looking for big bid projects in Minneapolis and surrounding cities. They are currently working on larger developments in St. Paul and Minneapolis for which they are receiving subsidies, but they also wanted to find a way to give back. They also wanted to start looking for some cities that don’t have a lot of developers approaching them as a way to give back. While their business model is not a super lucrative one, they do have some wiggle room. They don’t necessarily need the subsidy money they are receiving on other projects. Their goal is to build quality, sustainable homes with a luxury feel that will bring up tax values and bring in tax revenue for the City. They want to create housing that is both affordable and quality. Building the tri-plexes instead of single family homes means around 3 times the tax revenue, while also increasing the land value around it. They are just looking to get in the door here. Robertson also brought up that there is a big need for 3 bedroom places. The tri-plex plan has three 3 bedroom units – one in the basement, one on the main floor and one on the upper floor. Robertson talked about a couple of developments in Brooklyn Center. One is on a lot that is 420ft wide by 150ft in depth with a 25ft setback, where 8 tri-plexes are being put in and another that is 320ft by 120ft. Chirpich drew the comparison between Brooklyn Center where a lot of the projects are also “in-fill”, like on 40th, where we have a mix of commercial and residential lots that are shallow, residential-depth. This also might be a solution for some of the lots on University that the EDA owns. Comments from Members: Szurek asked what the rent would be. Robertson said that they want to keep the rent costs affordable. They looked at what Section 8 would charge, which is anywhere from $1700-2200/month for a 3 bedroom. Where the rent amount falls in that range will depend on a number of factors, including location and where the market is at, but the minimum would be $1700. Szurek asked if that was with subsidizing. Herringer responded that it would be without subsidies from the City. Buesgens stated that she was initially hesitant with the triplex idea, but after looking at their website, could tell they are high quality homes. Buesgens asked if they plan to hold onto the properties long term. Robertson replied that they plan to hold onto them as affordable rentals for a minimum of 15 years. Buesgens said that as someone who was a renter for a long time, she was wondering about the decision to have the basement bedrooms under the kitchen and living area rather than have the bedrooms stack, as they do on the main and upper levels. She expressed concern about the noise that can travel from the living areas to the bedrooms below. Brekke said that there is insulation in the floor, a sound channel, and sheet rock between floors, so noise between floors should be minimal. Chirpich questioned if the sound treatment is also between the main and upper levels. Robertson confirmed this and said that lots of thought went into this over the past year. Sound suppression is done the same way as in multi-million dollar homes. Buesgens said she thinks this would be a great idea for University Ave, but questioned if there would be sound proofing for the exterior walls to account for the louder traffic noise. Robertson said that the soundproofing for exterior walls would be the insulation. Chirpich said a good example would be their building on Brooklyn Blvd in Brooklyn Center, which has similar dynamics. Schmitt asked for details on what parking flexibility would be needed. Chirpich said that the direction he’s given Robertson is that flexibility from staffs opinion would not be in amount required, but rather to remove the restriction for covered parking. In these districts, we have a requirement for two garage spaces inside of an enclosed garage, which could be not accommodated in infill development. We would still require the same total number of spaces in the case of the tri-plex, but staff would be willing to look at an alternate proposal for surface parking instead. The double lot on University might allow for the garages along the alley, but this has not been vetted. However, if flexibility was needed, it would be in type, not in number of spaces for off-street parking. Robertson said that it would be very similar to what they are doing in Brooklyn Center, where paved parking is right behind the unit, with six spots minimum. Robertson stated that they would love to have the commissioners come down to look at one of their model homes, so they can get a feel for the quality of homes that they build. Chirpich said he thinks that would be a useful road trip in staffs’ opinion. Szurek agreed. Chirpich said that staff were wanting to get impressions on whether the EDA likes this concept and if they would be willing to consider a proposal on one of our scattered site available lots. Novitsky said that he likes the tri-plex idea, but not the locations. He feels the lot on 40th would be too small. He also does not like the parking changes. They are pretty expensive units and he feels like the people looking to rent them would want covered parking available. The University lot was bought for business and he believes it should be kept for business. He does feel like there would be some locations in the City that would be perfect for this type of development. Szurek mentioned concern about the parking. She said she has two tri-plexes right near where she lives and they have a minimum of six cars, sometimes more. It’s packed in the parking lot. She thinks putting a three car garage in the back of the unit and having cars parking outside of it will be too much. She feels the depth of the lots is not deep enough to accommodate parking and still having green space. There is no green space in the tri- plexes near her; it is all paved for parking. Murzyn agreed with the comments from Commissioner Novitsky and Commissioner Szurek. Schmitt said that she likes the design and thinks it would fit well into the city. There is a concern when putting in a multi-family home into a single family area that they need to fit the area and she thinks these would. Her concern is adding additional garages. She does not want it to look similar to the duplexes on 44th Ave and University Ave, where everything you see is garage spaces facing the road. She questioned if adding six parking spots will be overwhelming on the lots. Chirpich said that he thinks staff should go back to the drawing board and look at some other locations; there are other lots that can be explored and staff can regroup with Robertson. Chirpich said perhaps the EDA can also take Robertson up on their offer to go see one of the model homes. Chirpich said they will take this feedback into consideration as they look at other options. 3. Discuss 2020 Facade Improvement Grant Program Chirpich stated that the 2020 EDA budget includes an allocation of $50,000 to support the activities of the Façade Improvement Grant program. Given the current COVID-19 crisis, many of the City’s small businesses have been forced to close temporarily. In light of the uncertainty facing many Columbia Heights businesses, improvement projects are likely not feasible this year. Therefore, staff asked if the EDA wished to proceed with the 2020 program. Szurek asked is there is a cost involved with keeping it available? We’ve sent out the information about it to people, so they know that the grant is available. Perhaps some businesses can’t do it right now, but they want to possibly apply. Chirpich said he thinks we could take a hybrid approach and carry any leftover funds to next year, while entertaining any applications that do come through this year. Chirpich said staff wanted to see if the EDA wanted to defer this year’s program in light of the current business environment. Szurek said she thinks we should keep it going. Buesgens agreed and said that businesses that are able to can still take advantage of it. It should be available to anyone who wants to do improvements. Murzyn said it should be kept open and that there might be businesses that weren’t able to do improvements last year that have been saving to do projects this year. There might be an option for small businesses to also get loans right now, along with façade money, and get more done. Chirpich said we have direction now and staff will regroup. Mitch Forney will hopefully be back soon to coordinate the program. Motion by Buesgens, seconded by Novitsky, to adjourn the meeting at 7:09pm. Respectfully submitted, Christy Bennett Secretary AGENDA SECTION PUBLIC HEARING ITEM NO. 5 MEETING DATE JUNE 8, 2020 CITY OF COLUMBIA HEIGHTS – ECONOMIC DEVELOPMENT AUTHORITY ITEM: Approve Land Sale to Alatus LLC for Redevelopment of EDA Owned Property and Approval of TIF Agreement for Same. DEPARTMENT: Community Development CITY MANAGER’S APPROVAL: BY/DATE: Aaron Chirpich, June 5, 2020 BY/DATE: BACKGROUND: The EDA is required to hold a public hearing to approve the sale of EDA owned land. The EDA is also required to hold a public hearing for the final approval of tax increment financing agreements. The redevelopment of the 3989 Central Avenue site includes both components. Therefore, to prepare for the land sale and final TIF approval, staff published a notice to hold a June 8th public hearing. However, due to the complex nature of the project, the final purchase, redevelopment, and TIF agreements are not ready for EDA review and approval. Rather than cancel the public hearing and republish for a new hearing, staff would like to convene the EDA to open the public hearing and continue the hearing to J une 22. RECOMMENDED MOTION: Motion: Move to open the public hearing and continue the hearing to June 22, 2020.