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HomeMy WebLinkAbout10-05-2020 EDA Packet ECONOMIC DEVELOPMENT AUTHORITY AGENDA October 5, 2020 5:00 pm Columbia Heights Library Community Room 3939 Central Avenue NE Columbia Heights, MN 55421 NOTICE THAT THIS MEETING MAY BE CONDUCTED 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, this meeting may, pursuant to Minn. Stat. § 13D.021, occur by a combination of in-person and electronic means. In all meeting formats whether solely in-person or a combination of in- person and electronic means, members of the public who wish to attend may do so by attending in-person or by calling 1-312-626-6799 and entering meeting ID 881 1056 7645 at the scheduled meeting time. If there are any questions about this notice or attending/calling in to the meeting, please contact the City Clerk at (763) 706-3611. 1. Call to Order 2. Roll Call 3. Pledge of Allegiance CONSENT AGENDA 4. Approve Special Meeting Minutes of September 21, 2020. Motion: Move to approve the Consent Agenda as presented. BUSINESS ITEMS 5. Approve Demolition Contract for 4441 Central Avenue NE. Motion: Move to approve the proposal from JACON LLC, in the amount of $21,988 for the demolition of all site improvements, site grading, and utility disconnect work for the property located at 4441 Central Avenue NE; and furthermore, to authorize the President and Executive Director to enter into an agreement for the same. OTHER BUSINESS 6. Adjourn ECONOMIC DEVELOPMENT AUTHORITY (EDA) MINUTES OF THE MEETING OF September 21, 2020 The meeting was called to order at 6:07 pm 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). Others Present: Martha Ingram (via Zoom), legal counsel from Kennedy & Graven PLEDGE OF ALLEGIANCE- RECITED CONSENT AGENDA 1. Approve the minutes from the meeting of September 14, 2020. 2. Approve Financial Report and Payment of Bills for August 2020, Resolution 2020-14. Questions from Members: Herringer asked about the $330k payment for Friends of Prodeo Inc on page 6 of the August financials. Chirpich said that Friends of Prodeo were the developer of the new charter school. They had put a cash escrow on deposit with the City for the development contract, so that if any of the improvements in the public domain did not get completed, the City had funds to complete the work. This payment reflects that escrow being returned to them. There is a retainer of the original amount that is still held for landscaping over the next 2 years, but the majority of it was returned to Friends of Prodeo. Buesgens asked about the $91,500 payment for Cap Improvement Development on page 27. Buesgens wondered if this has to do with 3989 Central Ave and what it includes. Chirpich said this is the deposit that the City took from Fairview Health for the capital improvements at the Fairview Ramp. Motion by Novitsky, seconded by Murzyn, to approve the consent agenda as presented. All ayes. MOTION PASSED. Business Items: 1. Public Hearing – Approve Land Sale to BPOZ Columbia Heights, LLC for Redevelopment of EDA Owned Property, Approval of TIF Agreement, and Interfund Loan for Same – Resolutions 2020-15, and 2020-16 BACKGROUND: Chirpich said that on July 22, 2019, the EDA approved the acquisition of the vacant six-story office building located at 3989 Central Avenue NE, and the closing for the purchase occurred on July 31, 2019. The EDA acquired 3989 Central Avenue to facilitate redevelopment of the property along with the adjacent City owned parking ramp. Simultaneous to the acquisition of the property, the City and EDA were working with Alatus LLC as the preferred partner for redevelopment of the entire site. The initial Alatus redevelopment concept included the following base elements: • 200-270 market rate apartments with underground parking • 20,000 square foot city hall condominium space • 3,000+ square feet of retail/commercial space Chirpich said in August of 2019, the EDA entered into a preliminary development agreement with Alatus LLC, for the redevelopment of the 3989 Central Avenue site based upon the project elements listed above. The preliminary development agreement committed the EDA to working with Alatus to assess the viability of the project, complete the entitlement process, and finalize the terms of an agreement for the sale of the property. The agreement also committed the EDA to evaluate a request made by Alatus for tax increment financing to help fund the project. As part of the project assessment process, the City was also required to review the project proposal and determine if the site was desirable as the location for a new City Hall as proposed by Alatus. In September of 2019, the City formally designated the site as the preferred location for a new City Hall and directed staff to work with Alatus to further the plans for redevelopment. Chirpich said in September of 2019, the EDA also approved the establishment of the NE Business Center Tax Increment Financing District and adopted the tax increment financing plan for the project. Approval of the TIF plan did not obligate the EDA to provide TIF assistance to the project. Rather, the plan established limits for assistance and qualified the site and buildings as eligible for the creation of a redevelopment TIF district per state law. Following establishment of the TIF district and TIF plan, the land use approvals were completed in January of 2020 when the City Council reviewed and approved the Planned Unit Development District Plan for the site. Chirpich said now that the entitlements are in place and the land sale terms have been negotiated, it is time to finalize and execute the purchase and redevelopment agreement for the project. This agreement achieves two primary objectives. First, it sets the terms of payment for the land conveyance. Secondly, it provides the terms for the final TIF agreement and associated TIF note that will be issued the developer. The primary provisions of each objective are listed below. Primary Components of the Land Sale: • Simultaneous to the closing, the City will convey its parcels to the EDA. • The purchase price for all redevelopment parcels, both City and EDA owned is $4,800,000. • The City will receive $2,000,000 from sale proceeds for its land holdings. Roughly $500,000 of this amount will be held in escrow to pay for City Hall upgrade costs. • The EDA will receive $2,800,000 for the sale of its land holdings. Approximately $1,002,000 of this will be used to pay the City back for a loan that was provided to acquire the building. • The City will be reimbursed for all demolition related expenses. Funds will be placed in escrow by Alatus at closing to reimburse the City, as demolition work will continue after closing. • The sale is contingent upon City Council approval of the City Hall condo transfer agreement. • The completion deadline for the project is set at December 31, 2022. Primary Components of the TIF Agreement: • Alatus will be reimbursed for TIF eligible expenses only. • The maximum principle amount of the TIF note has been set at $9,550,000. • The expected duration of the TIF district is 25 years. • The current assessed value of all property in the district is approximately $2,893,500. This value generates approximately $99,500 in taxes annually across all parcels. • The estimated future value of all taxable property in the district is approximately $48,372,000. This value will generate approximately $833,700 in taxes annually. • The estimated annual tax increment generated is $734,200. • When the district decertifies and the taxes return to all jurisdictions, the City will receive an estimated $389,000 in taxes annually. • The EDA will be reimbursed by Alatus for all costs associated with establishing the TIF district. • The EDA will retain 5% of the available tax increment for administrative costs. This amount is estimated at $34,000 annually. • Any excess increment held by the EDA after paying administrative costs will be used to reimburse the EDA for eligible redevelopment expenses associated with the relocation of cell antennas from the rooftop of 3989 Central. • The EDA will authorize an interfund loan to establish the reimbursement of the relocation expenses mentioned above. The maximum principle amount of the interfund loan will be $1,300,000. Other Related Agreements: Chirpich said in conjunction with the land sale and redevelopment contract, there are additional agreements that relate to the conveyance of the new City Hall condominium. These agreements will be approved by the City Council separately. These agreements are summarized below. Transfer Agreement: The transfer agreement is the mechanism by which the new City Hall condo will be conveyed to the City once the condo is complete. The land sale approval is contingent upon Council approval of the transfer agreement. The expected approval date is September 28, 2020. Condominium Declarations and Bylaws: The declarations and bylaws dictate the management and cost sharing structure for the condominium association. These documents are very close to being complete, and staff expects that they will be 98% finished before final approval of the transfer agreement. These documents will not actually be formally adopted and recorded until the condo units are built. Parking License Agreement: As part of the land use approvals, the City approved a shared parking arrangement between the multifamily condo unit and the City Hall condo unit. Under this arrangement, City staff will park in the main level multifamily parking area during normal business hours, and apartment residents will park in the same spots at all other times. There will be a fee associated with the rental of these spaces. Staff expects that this agreement will be 98% complete before final approval of the transfer agreement. Parking for the public as part of the City Hall is planned to be under control of the City. STAFF RECOMMENDATION: Staff recommends approval of Resolution 2020-15, and Resolution 2020-16, respectively. Questions from members: Herringer commented that he would feel more comfortable if Resolution 2020-15 section 1 paragraph (b) lines 5-6 had “market rate” added to “the construction by the Owner of a mixed-use rental housing and commercial/office facility”. Chirpich said that he would have to defer to the City’s re-development counsel, Martha Ingram, on the Zoom call. Due to the speakers not working, Chirpich had to relay messages from Ingram to the Commissioners. Chirpich asked Herringer for more detail around the request. Herringer said that his thinking was that this is the first market rate rental property that we would have in Columbia Heights, and he wants to be very sure that we really are talking about market rate and that it stays market rate. Chirpich said that the development plans are linked to this approval for a very specific project, and the EDA is protected through various contracts. Chirpich said if the EDA could allow the resolution as proposed, he would appreciate it, as there are multiple layers memorializing the exact project that is being delivered and the minimum improvements are defined per the plans; there can’t be a shift in housing type post-closing. The TIF would be at risk if the project that is proposed isn’t built. Chirpich shared that Ingram stated that it is baked into the various project layers: the entitlement, the approvals, the development contract itself, the product that has to be delivered before any assistance is provided. Beyond that, there is another layer of protection in that if the developer builds something lesser, it isn’t going to meet the increment generation capacity that they are proposing. Chirpich said that Ingram feels it is baked into many areas and she is comfortable with it as drafted with the protections that are provided elsewhere. Herringer asked what happens if the project and the rentals don’t come up to snuff and the developers start to get a little panicky about making their expenses and payments and they think about getting rid of market rate and start cutting some corners to try to get more activity? Can they do that? Chirpich asked if Chris Osmundson (director of development with Alatus) could provide some insight from the business side. Osmundson said that with the distinction between market rate and affordable, there is no way Alatus would get into a situation where it would be a benefit for them to reduce the amount of rent they are expecting to receive by an amount that would come into compliance with something like affordable housing. The biggest thing is that Alatus would not be generating the increments on the TIF that they have committed to, which would have huge repercussions to both Alatus and their investors. Changing it to those different income thresholds and corresponding rental levels would hurt Alatus more than help them, regardless of how the market is, because of the capital structure on the back side. Osmundson said he has no doubt that the apartments will be operated as market rate for the entire 25 year period of the TIF district. There are other affordable housing combinations in the area, which is why Alatus is moving forward with market rate. He said that Alatus has designed them to be competitive, not only with those properties, but also other adjacent developments in every direction of Columbia Heights. He can’t see any situation where that would play out, as there is such a distinction between market rate rent versus affordable, it would be catastrophic all around. Herringer said that he was thinking more workforce housing, rather than affordable. Osmundson said again, that would have such tremendous repercussions, as it would not generate the same amount in returns. This project is not designed to be workforce housing, due to the amenity spaces, efficiency ratios, and unit types. Workforce housing would be a lot more studios or micro units in the 400 sq. ft. range. Alatus’ reputation is to typically operate projects at and above a standard of market rate housing. There is no intention of turning this project into workforce housing. Some of the smaller units can be considered more workforce, as even though they are market rate, they will be more affordable. However, there will also be 2 and 3 bedroom units that can accommodate a family or a roommate scenario. Herringer said he is still a little leery, but this answered his question. Chirpich said he appreciated the fundamental desire. The project is not designed to function that way and he doesn’t know that changing the wording on the resolution would provide any further safeguards against catastrophic future changes to the business structure of the project. Buesgens asked about the parking fees, since we are part owner. Will they be anything significant, with Alatus being the major owner and the City at only 5%? Chirpich said it is complicated. The area right outside City Hall is the City’s and there aren’t fees associated with that. It is the shared area where the fee structure is associated with. The City has the parking lot to serve City Hall customers and then has the shared parking employees will use that Staff is trying to find creative ways to limit as many stalls as possible, to also help minimize the cost associated with that. Public Hearing to consider the business subsidy by BPOZ, LLC consisting of TIF Note in the amount of $9,550,000 opened There were no questions/comments The EDA has determined that the business subsidy being requested by BPOZ, LLC is proper and there are not any job creations goals or requirements mandated as part of the subsidy approval. Schmitt asked about opportunity zone. Doesn’t that require employment? Chirpich said that is separate from TIF and that he is not prepared to talk about job requirements for opportunity zone, however it is not integrated into the TIF statutes. Osmundson said there is no MB or WB requirement; that typically falls to the registered government unit that it is for. Chirpich said no job creation requirements are being made as part of the approvals. He said this is also outside our approval purview, as well. The City does not get involved with underwriting the qualifications that relate to the opportunity zone. Public Hearing Closed Public Hearing to consider if the sale of EDA owned land to BPOZ, LLC is advisable opened There were no questions/comments The EDA has determined that the sale is advisable. Public Hearing Closed Motion by Buesgens, seconded by Novitsky, to waive the reading of Resolution 2020-15, there being ample copies available to the public. Motion by Buesgens, seconded by Novitsky, to adopt Resolution 2020-15, a resolution approving purchase and redevelopment contract and awarding the sale of, and providing the form, terms, covenants and directions for the issuance of its tax increment revenue note to BPOZ Columbia Heights, LLC. All Ayes. MOTION PASSED. Motion by Novitsky, seconded by Murzyn, to waive the reading of Resolution 2020-16, there being ample copies available to the public. All Ayes. MOTION PASSED. Motion by Novitsky, seconded by Murzyn, to adopt Resolution 2020-16, a resolution authorizing an interfund loan for advance of certain costs in connection with the NE Business Center tax increment financing district. All Ayes. MOTION PASSED. Other Updates Chirpich said that the City may need to bring the EDA in next Monday, September 28th. If so, the EDA members will be notified in advance. Motion by Murzyn, seconded by Novitsky, to adjourn the meeting at 6:47 pm. All Ayes. MOTION PASSED. Respectfully submitted, Christy Bennett Secretary AGENDA SECTION BUSINESS ITEMS ITEM NO. 5 MEETING DATE 10-5-2020 CITY OF COLUMBIA HEIGHTS – ECONOMIC DEVELOPMENT AUTHORITY Demolition Bid Approval ITEM: Approval of Demolition Contract for 4441 Central Avenue NE DEPARTMENT: Community Development CITY MANAGER’S APPROVAL: BY/DATE: Mitchell Forney, 9/29/2020 BY/DATE: BACKGROUND: This memo is in regards to approving the bid amount and contract for the demolition, site grading, and utility disconnect work for 4441 Central Ave NE. In April of 2020 the EDA purchased the property located at 4441 Central Ave NE through the commercial revitalization program. It was the ultimate goal of the EDA to demolish the single- family residential house on the property, and prepare the site for redevelopment. Community Development staff completed the bidding process for the demolition of site improvements, utility work, and the regrading of the lot. In response to the request for quotes, the EDA received 3 bids. The Bidding contractors and bid amounts are listed below. JACON, LLC $21,988 Drobnick’s Demolition $22,500 Nitti Rolloff Services Inc. $27,154 The quote submitted by JACON LLC, for $21,988 meets all of the project requirements outlined in the bid specifications. JACON LLC shall furnish the services and necessary equipment to complete all requirements specified in the scope of work. All work will be performed in accordance with OSHA regulations and any applicable Federal and State regulations. Staff expect the contracted work to be completed by the end of October 2020. STAFF RECOMMENDATION: Staff recommends awarding the contract for demolition, utility work, and regrading of 4441 Central Ave NE to JACON LLC. Staff expects the contracted work to be completed by the end of October 2020. RECOMMENDED MOTION(S): Motion: Move to approve the proposal from JACON LLC, in the amount of $21,988, for the demolition of all site improvements, site grading, and utility disconnect work for the property located at 4441 Central Avenue NE; and furthermore, to authorize the President and Executive Director to enter into an agreement for the same. ATTACHMENTS: 1. JACON, LLC Bid 2. Drobnick’s Bid 3. Nitti Rolloff Services Bid 4. Bid Specifications From: The Economic Development Authority in and for the City of Columbia Heights Subject: Request for quotes for demolition, site grading, and utility work at 4441 Central Ave NE. R E Q U E S T F O R Q U OT E / P R O J E C T S P E C I F I C AT I O N S Overview: The City of Columbia Heights EDA is the owner of the property addressed 4441 Central Ave NE (P.I.D. 36-30-24-22-0042 ). The EDA is requesting quotes for demolition of all building and site improve- ments, including utilities, at this location followed by re-grading of the primary excavation area. If you are interested in submitting a quote for this project, please review the enclosed speciffcations and in- spect the site. Please call Mitchell Forney in the Community Development Department with any ques- tions, 763-706-3674. Proposals must be completed on the enclosed bid form and submitted by 1:00p.m. on September25th 2020. Proposals may be submitted by U.S. Mail, e-mail or in person; please note the enclosed bid form must be used. City staff will review the submitted proposals and forward them to the EDA. City staff expect the EDA to select a demolition contractor at their next meeting. The timeline for completion of all work will be weather dependent before years end 2020. Submit proposals to the following: Attn: Mitchell Forney City of Columbia Heights Community Development Department 590 40th Ave, NE Columbia Heights, MN 55421 mforney@columbiaheightsmn.com B I D F O R M Property Owner: City of Columbia Heights EDA Property Address: 4441 Central Ave NE, P.I.D. = 36-30-24-22-0042 For a price of $________________, the contractor named below proposes to fully complete the work in accordance with the attached speciffcations for demolition, site grading, and utility work at 4441 Central Ave NE. Name of Contractor:___________________________________________________________________ License Number:_____________________________________________________________________ Address:______________________________________________________________________________ Telephone:______________________________ E-mail Address:______________________________ Contractor Signature:_________________________________________ Date:___________________ Title:__________________________________________ S P E C I F I C AT I O N S F O R D E M O L I T I O N A N D R E L AT E D WO R K A. Scope of Work 1. General a. Contractor shall furnish all labor, materials and equipment, and shall perform all service and work required to remove the; buildings, structures, and improvements from the site along with the post demolition grading of the site, in strict accordance with these speciffca- tions and in accordance with all applicable ordinances and laws pertaining to removal of buildings, structures, grading and erosion control. Before demolition, contractor is to install silt fencing around the entire perimeter of the disturbed area. Erosion control logs can be used at the site entrance only. b. Contractor shall thoroughly review these speciffcations and examine the site to evaluate existing and proposed conditions prior to making a quote. Failure to do so shall in no way relieve contractor from performing the work as required or be grounds for a claim for extra payment. 2. Demolition and Disposal of Buildings and Site Improvements a. All buildings and site improvements on the site shall be removed and properly disposed of. Demolition to include, but not limited to stairs, ramps, fences, retaining walls, ifoor slabs, equipment bases, driveways, aprons, foundation walls and footings, and other structure components, appurtenances and contents associated with each structure, unless noted otherwise. Include removal of all out-buildings and miscellaneous items included in the attached pictures. b. All demolition materials, substrates, debris, waste, or other materials shall be collected, stored, handled, managed, and disposed in accordance with currently accepted practices at an approved, licensed, or permitted facility in accordance with applicable federal, state, and local ordinances, rules, and regulations. 3. Backfill, Compaction and Grading a. No demolition material shall be left in, or placed in any excavation. All excavations unless otherwise noted, shall be back fflled with clean imported sand. Imported material shall be placed in 1 foot lifts and compacted to no less than 95% standard proctor density. Contractor shall provide the city with third party sampling, analysis and reports to demonstrate that 95% compaction has been achieved. S P E C I F I C AT I O N S F O R D E M O L I T I O N A N D R E L AT E D WO R K b. The ffnished grade shall be determined by matching the existing average grade of the excavation areas prior to demolition. The ffnal grade shall maintain pre demolition drainage patterns. c. Upon completion of the ffnished grade, contractor shall spread 3” of imported topsoil to all disturbed areas of the site and apply seed and blanket to the same. 4. Abandonment of Wells a. The city is not aware of any wells on the property. If a well is discovered: As part of this bid, the demolition contractor is to hire a well sealing company to properly seal the well and record the sealing with the Minnesota Department of Health. Contractor must provide records of the well sealing to the city upon completion. 5. Utilities a. Contractor shall be responsible for calling Gopher State One Call for the location of any underground utilities prior to commencement of demolition and site grading work. b. The city has completed the disconnection of electricity (Excel Energy), natural gas (Centerpoint Energy) services for the property. Contractor shall ffeld verify disconnections prior to demolition. Other private communication utilities such as telephone and cable may still be connected; if so, contractor shall roll them back and secure them at the pole prior to demolition. c. Contractor is to coordinate the shut off of water with Public Works to ensure that the water is off before termination of the water service. Contractor is to remove the water line all the way to the main and document and mark on-site, the location of the service termination. Inspection by the City will be required prior to backfflling of the trench. S P E C I F I C AT I O N S F O R D E M O L I T I O N A N D R E L AT E D WO R K d. Contractor is to coordinate the termination of the private sewer line with Public Works. The sewer line should be removed to the property line, if the sewer line is not in the street the sewer line should be removed to the main. Document and mark on-site, the location of the service termination. Inspection by the City will be required prior to backfflling of the trench. 6. Asbestos and Other Hazardous Materials a. The City has contracted with Angstrom Analytical for the completion of a demolition survey for the property. The survey is attached to this report. The City of Columbia Heights is currently in the bidding process to provide for the removal, and appropriate disposal of all asbestos and other hazardous items listed in the report prior to the demo. 7. Permits and Inspections a. Contractor will complete and submit the City of Columbia Heights demolition permit ap- plication. Contractor shall have the work inspected prior to backfflling the primary exca- vation. The private water and sewer service terminations will also be inspected by City Public Works staff. A separate water and sewer disconnection permit must be secured from the City. b. If any permits from other governmental agencies are required, contractor shall, at contractor’s own expense, secure such permits, pay any fees and complete any inspections required by same, and provide a copy of the permit to the City. c. Contractor shall submit “Notiffcation of Intent to Perform a Demolition” Form to the MPCA. S P E C I F I C AT I O N S F O R D E M O L I T I O N A N D R E L AT E D WO R K 8. Miscellaneous Provisions, and Notices a. Contractor shall erect and maintain all necessary barricades and warnings to adequately safeguard workers, adjacent property, and the public. b. The demolition and clearing of the site shall be carried out in such a manner to preclude damage to adjacent property or public right -of-way. c. Contractor is to provide dust control during demolition by watering the home. Water is available at no cost from the City by accessing adjacent hydrants. Please notify Columbia Heights Public Works one week in advance to coordinate hydrant connection. d. Submission of a proposal will constitute an incontrovertible representation by contractor that contractor has complied with every requirement of these speciffcations and attachments thereto; that without exception the proposal is premised upon performing and furnishing the work including but not limited to the speciffc means, methods, techniques, sequences, procedures or precautions expressly required by these speciffcations and attachments thereto; that contractor has received from City satisfactory written resolution of any conificts, errors, ambiguities, and discrepancies; and that these speciffcations and attachments thereto are generally sulficient to indicate and convey understanding of the terms and conditions for performing and furnishing the work. S P E C I F I C AT I O N S F O R D E M O L I T I O N A N D R E L AT E D WO R K S P E C I F I C AT I O N S F O R D E M O L I T I O N A N D R E L AT E D WO R K S P E C I F I C AT I O N S F O R D E M O L I T I O N A N D R E L AT E D WO R K S P E C I F I C AT I O N S F O R D E M O L I T I O N A N D R E L AT E D WO R K S P E C I F I C AT I O N S F O R D E M O L I T I O N A N D R E L AT E D WO R K