HomeMy WebLinkAbout10-23-2023 EDA Minutes
ECONOMIC DEVELOPMENT AUTHORITY
City Hall—Shared Vision Room, 3989 Central Ave NE
Monday, October 23, 2023
5:00 PM
MINUTES
CALL TO ORDER/ROLL CALL
Members present: Connie Buesgens; Kt Jacobs; Rachel James; Amada Márquez-Simula; Justice Spriggs;
Marlaine Szurek.
Staff Present: Chirpich, Community Development Director / Acting City Manager; Joe Kloiber, Finance
Director; Sara Ion, City Clerk; Mitchell Forney, Community Development Coordinator.
Others Present: Jonathan Tholen, City Resident; Steve McAlpin, City Business Owner.
PLEDGE OF ALLEGIANCE
CONSENT AGENDA
1. Approve September 5, 2023, Regular EDA Meeting Minutes (pg. 3)
2. Approve Financial Reports and Payment of Bills of August and September 2023 (pg.13)
Motion by Márquez-Simula, seconded by Jacobs, to approve the Consent Agenda as presented. All ayes
of present. MOTION PASSED.
RESOLUTION NO. 2023-25
A RESOLUTION OF THE ECONOMIC DEVELOPMENT AUTHORITY OF COLUMBIA HEIGHTS, MINNESOTA,
APPROVING THE FINANCIAL STATEMENTS FOR THE MONTHS OF AUGUST AND SEPTEMBER 2023 AND
THE PAYMENT OF THE BILLS FOR THE MONTHS OF AUGUST AND SEPTEMBER 2023.
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 outstand ing 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 months of August and September 2023 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
City of Columbia Heights MINUTES October 23, 2023
Economic Development Authority Page 2
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, financial 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 as part of the permanent records of the Columbia
Heights Economic Development Authority.
ORDER OF ECONOMIC DEVELOPMENT AUTHORITY
Passed this 23rd day of October 2023
Offered by: Amada Márquez-Simula
Seconded by: Kt Jacobs
Roll Call: All ayes of present. MOTION PASSED.
Vice President
Attest:
Secretary
BUSINESS ITEMS
3. 4300 Central Avenue – TIF Pledge for General Obligation TIF Revenue Bonds Amended (pg.48)
Acting Executive Director of the EDA Aaron Chirpich began with a review of the property being
discussed and stated that during the summer of 2021 the City received word that Hyvee was interested
in selling the property located at 4300 Central Ave (also known as the “Rainbow Site”). The City moved
to gain control over the site by working with Alatus in having the developer purchase the property. In
order to support the developer, the city provided funding in the form of a loan for the purchase and
predevelopment costs related to the project. Alatus requested a total loan of $6,000,000 with which
they would use the money for the items listed below. Rather than write a $6,000,000 check the City
decided to fund the loan using borrowed funds from general obligation tax increment financing (TIF)
bonds. Under this scenario, the City issued the debt necessary for Alatus to purchase the property
directly from Hy-Vee with the City acting as interim lender. Alatus is set to pay off the City’s loan when
City of Columbia Heights MINUTES October 23, 2023
Economic Development Authority Page 3
the project is ready to close with permanent financing. Alatus’s current timeline will not afford the
repayment of these bonds.
Chirpich stated that due to these concerns the City is bringing forth the issuance of a new set of bonds
which will pay off the previous set of bonds and extend the bond timeline. The new bonds are
temporary, just like the first set of bonds, and reissuing a new set of bonds will afford the City and
Alatus more time to develop the project plans and close on financing for the first phase of
development.
Chirpich stated that upon payment of the first set of bonds there will be $441,944.58 left over from the
first bond issuance. The City will keep these funds in escrow and allow Alatus to use them for eligible
project costs. All the bond funds from both series will be repaid at the closing of the first phase of the
project.
• Land Acquisition - $4,500,000
• Closing Costs - $105,200
• City Fees - $50,000
• Demolition - $671,686
• Environmental Testing and Reports - $42,156
• Geotechnical Testing and Reports – 35,000
Chirpich further clarified that the City Council holds the authority to issue general obligation TIF bonds
and will be taking up the issuance of these bonds at tonight’s council meeting. The EDA administers TIF
districts for the City, and therefore the County remits increment generated from TIF districts directly to
the EDA. Because the general obligation bonds being issued are tax increment bonds, the City will be
pledging tax increment for the payment of the bonds. Therefore, the EDA is being asked by the City to
pledge increment to the City from the Alatus TIF district, so the City can use the increment to pay debt
service on the bonds. The formal way to create this arrangement is through a TIF Pledge Agreement.
On tonight’s docket is the amendment of the previous TIF Pledge Agreement bringing it in line with the
issuance of the new bonds. Kennedy and Graven have prepared the attached pledge agreement and
resolution for review and approval by the EDA.
Questions/Comments from Members and Attendees:
Resident Tholen clarified what the interest rate would be on the bonds.
Finance Director Kloiber reviewed the current rate and indicated that because of chan ges in the
financial market the new rates would be higher .
Commission President Szurek inquired when ground would be broken on the site, and if there was still
a potentially confirmed grocer for the space.
Chirpich clarified that the site demolition has occurred, and that ground would be broken on the first
phase likely in the late summer or fall of 2024. He further confirmed that there was a potential grocer
that is being sought for the location. There was additional discussion from the commission if this was
City of Columbia Heights MINUTES October 23, 2023
Economic Development Authority Page 4
confidential information.
Motion by Jacobs, seconded by James, to waive the reading of Resolution No. 2023-26, there being
ample copies available to the public. All ayes. MOTION PASSED.
Motion by Jacobs, Seconded by Buesgens, to adopt Resolution 2023-26, a resolution authorizing
execution of an amended and restated tax increment pledge agreement with the City of Columbia
Heights relating to taxable general obligation temporary tax increment refunding bonds, series 2023a,
to be issued in the proposed aggregate principal amount of $6,675,000. All Ayes. MOTION PASSED.
COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY
RESOLUTION NO. 2023-26
A RESOLUTION AUTHORIZING EXECUTION OF AN AMENDED AND RESTATED TAX INCREMENT PLEDGE
AGREEMENT WITH THE CITY OF COLUMBIA HEIGHTS RELATING TO TAXABLE GENERAL OBLIGATION
TEMPORARY TAX INCREMENT REFUNDING BONDS, SERIES 2023A, TO BE ISSUED IN THE PROPOSED
AGGREGATE PRINCIPAL AMOUNT OF $6,675,000
BE IT RESOLVED by the Board of Commissioners (the “Board”) of the Columbia Heights Economic
Development Authority (the “Authority”) as follows:
Section 1. Recitals.
1.01. The City of Columbia Heights, Minnesota (the “City”) has established, and the Authority
administers, the Alatus TIF District (the “TIF District”), a redevelopment district within the Downtown
Central Business Redevelopment Project (the “Redevelopment Project”) within the City, pursuant to
Minnesota Statutes, Sections 469.174 through 469.1794, as amended (the “TIF Act”), and adopted a
tax increment financing plan for the TIF District (the “TIF Plan”).
1.02. Pursuant to the authority conferred by Section 469.178, subdivision 5 of the TIF Act and
Minnesota Statutes, Chapter 475, as amended (the “Municipal Debt Act”), including Section 475.61,
subdivision 6, the City issued its Taxable General Obligation Temporary Tax Increment Bonds, Series
2021A (the “Series 2021A Bond”), dated July 29, 2021, in the original aggregate principal amount of
$5,935,000, to pay all or a portion of the public redevelopment costs incurred or to be incurred within
the Redevelopment Project as identified in the TIF Plan, including but not limited to a bridge loan
provided to Alatus Columbia Heights II LLC, a Delaware limited liability company (the “Developer”), for
land acquisition, demolition, and related costs (the “Project Cost s”), and the Developer agreed to pay
the City’s financing and other related costs related to issuing the Series 2021A Bond.
1.03. The City and the Authority entered into a Tax Increment Pledge Agreement, dated July 29,
2021 (the “Original Pledge Agreement”), relating to the payment of principal of and interest on the
Series 2021A Bond and providing for the pledge of tax increment revenues generated from the TIF
District to secure the payment of principal of, premium, if any, and interest on the Series 2021A Bond.
City of Columbia Heights MINUTES October 23, 2023
Economic Development Authority Page 5
1.04. The Series 2021A Bond matures on February 1, 2024 and is payable on such date from tax
increments resulting in increases in the taxable value of real property in the TIF District and/or from
proceeds of definitive bonds or additional temporary bonds to be issued by the City prior to such
maturity.
1.05. The City has determined the need to issue an additional temporary bond to refinance the
Series 2021A Bond. To that end, on the date hereof, the City Council of the City will consider a
resolution providing preliminary approval to the issuance and sale of the City’s Taxable General
Obligation Tax Increment Refunding Bonds, Series 2023A (the “Bond”), in the proposed aggregate
principal amount of $6,675,000, pursuant to the TIF Act, including Section 469.178, subdivision 5, and
the Municipal Debt Act, including Sections 475.61, subdivision 6 and 475.67, subdivision 3. The
proceeds of the Bond will be used to refund the Series 2021A Bond prior to maturity and provide
additional temporary financing for the Project Costs.
1.06. There has been presented to the Board an Amended and Restated Tax Increment Pledge
Agreement (the “Pledge Agreement”) between the Authority and the City, which amends and restates
the Original Pledge Agreement, relating to the payment of principal and interest on the Bond and
providing for the pledge of tax increment revenues generated from the TIF District to secure the
payment of principal of, premium, if any, and interest on the Bond.
Section 2. Approval.
2.01. The Board hereby approves the pledge to the City of tax increment revenues attributable
to the TIF District for the payment of principal of, premium, if any, and interest on the Bond.
2.02. The President and Executive Director of the Authority are hereby authorized to execute
and deliver the Pledge Agreement substantially in the form on file with the Board, providing for the
pledge of tax increment derived from property in the TIF District for the payment of the principal of,
premium, if any, and interest on the Bond.
2.03. This resolution shall be effective as of the date hereof.
Approved this 23rd day of October, 2023, by the Board of Commissioners of the Columbia Heights
Economic Development Authority.
__________________________________
President
ATTEST:
_________________________________
Secretary
City of Columbia Heights MINUTES October 23, 2023
Economic Development Authority Page 6
4. Approval of Demolition Contract for 841 49th Ave and 4243 5th St (pg. 58)
Community Development Coordinator Forney clarified for the commission that earlier this year the
EDA purchased the properties located at 841 49th Ave and 4243 5th St in preparation to redevelop both
sites. 4243 5th St is set to be sold to Habitat for Humanity which will look to redevelop a single -family
home on the site in 2024. While 841 49th, was more of a strategic acquisition which will be
redeveloped at a future date. Throughout the summer the Columbia Heights Fire Department was able
to utilize both structures for a variety of training. Ultimately burning down 841 49th in a training burn
on October 7th, 2023. The next step in the redevelopment of these properties is to demolish the
remaining structures on the property.
Forney further informed the commission that Staff prepared bid sheets and submitted bid requests to
a multitude of contractors, receiving 6 bids in return. To make the project easier to bid, the EDA had
taken on the environmental testing and removal of all personal items and hazardous materials from
the buildings. As part of the demolition bid the contractor is responsible for the removal of all
outbuildings and site improvements on the properties. This also includes the removal of water and
sewer lines to the property line in order to prepare the sites for redevelopment. Below is a chart
outlining the bids and bid amounts received.
Forney indicated that Staff recommend awarding the project to Semple Excavating for the amount of
$47,275.00.
Questions/Comments from Members and Attendees:
Councilmember Jacobs inquired as to why Staff was proceeding with the lowest bid.
Commissioner Márquez-Simula clarified to Forney and Chirpich that this was the lowest responsible bid
and both confirmed. Forney further clarified that there was only a slight amount of difference between
the bids, and this was the best option.
Motion by James, seconded by Spriggs, to accept the proposal from Semple Excavating, in the amount
of $47,275.00 for the demolition of all site improvements, water/sewer line removal, and the regrading
of the lots located at 841 49th Ave and 4243 5th St; and furthermore, to authorize the Presi dent and
Executive Director to enter into an agreement for the same. All Ayes. MOTION PASSED.
5. 3988 Central Ave Fire Suppression Grant Application, H -M Properties LLC (pg. 95)
Coordinator Forney gave an overview of the history of the Fire Suppression Grant program. He stated
that In 2022, the City of Columbia Heights Economic Development Authority (EDA) established the Fire
Suppression Grant Program ("Program") to aid local businesses in addressing the financial challenges
associated with installing fire suppression systems within commercial buildings. This initiative is
particularly important, given that many commercial properties in Columbia Heights lack fire
suppression systems, and the cost of retrofitting these systems can be a significant burden, especially
for small businesses. Certain business activities and changes in use necessitate the installation of fire
suppression systems to ensure public safety.
Forney indicated that Staff is excited to present an application from H-M Properties LLC, represented
by Steve McAlpin, the owner of the property located at 3988 Central Ave NE. Currently, 3988 Central is
City of Columbia Heights MINUTES October 23, 2023
Economic Development Authority Page 7
going through the process of being sold to a small business from NE Minneapolis called Klash Drums.
Klash Drums is looking for a more permanent location after being forced out of their lease in NE
Minneapolis. As part of the sale of the building the current owner has agreed to complete the fire
suppression work as the sale is going through. The new business i s required to sprinkle the building
due to the change of use. MN state fire code outlines which change in use trigger the requirement for a
fire suppression system to be added.
Forney further clarified that the location of the water main feeding 3988, the cost of installing a fire
suppression system has increased dramatically. As we have seen in the past from the EDA’s
perspective, just disconnecting the water line for 3841 Central Ave cost the EDA a little o ver $15,000.
Any work that needs to be done within Central Ave significantly increases the price of the project due
to MNDOT coordination, road safety measures, and permit costs. The lower of the two bids to run a
separate main line and complete all interior fire suppression work came in at $105,625. The EDA has
recently considered applications ranging from $83,360 for Ruff Love Dogs, and $48,871 for Rail Works
Brewing. Due to these exigent circumstances staff are recommending making an exception for H-M
Properties by offering them a grant of 50% up to $50,000.
Forney additionally clarified that Staff has confirmed with the City Attorney that the EDA can grant
applicants whatever amount they see fit as long as it is covered in the approving resolution and meets
the program’s preset budget. While this may or may not be a onetime thing, future applicants along
Central Ave could be given the same treatment depending on the work that they need to complete.
Ultimately, 3988 Central is the posterchild of why the EDA created the fire suppression program. The
city is trying to attract new businesses, especially ones that have found success in neighboring
communities. To attract these new businesses, without sticking them with a $100,000 buildout cost,
the city sought to ease the burden of moving into an older space. The building at 3988 Central has
been a cornerstone of the City’s central business district, and while we a losing a few amazing small
businesses, the EDA can directly contribute to filling that void.
Additionally, Forney clarified the funding availability. He stated that in 2022, the EDA allocated $45,000
for the establishment of the Fire Suppression Grant Program and budgeted an additional $60,000 for
2023, resulting in a total balance of $105,000. With the approval of the application for Ruff Love Dogs',
which was awarded $30,000, and the application for Rail Works Brewing, which was awarded $24,436,
The EDA has $50,564 remaining for 2023. Since there were no changes to next year’s budget, the EDA
will start 2024 with $60,000 set aside for fire suppression applicants.
Chirpich also reviewed the status of the applications to the program and stated that while it has proven
challenging to find businesses eligible to apply for the Fire Suppression Grant Program, Staff believes
that the application from H-M Properties LLC aligns with the program's primary intent. By supporting
this project, the EDA can facilitate the establishment of a desirable business in the City of Columbia
Heights. The installation of a fire suppression system in 3988 Central Ave location not only enhances
public safety but also contributes to the economic development and diversity of businesses within the
city. He recommended that the Economic Development Authority consider approving the application
from H-M Properties LLC and allocate the requested grant of $50% up to $50,000.
City of Columbia Heights MINUTES October 23, 2023
Economic Development Authority Page 8
Questions/Comments from Members and Attendees:
Commissioner James clarified that this was Klash Drums, currently located on Lowry that was planning
on moving into the location.
Commissioner Spriggs inquired about the potential for these grants to be used for businesses on 40 th
Avenue.
Chirpich confirmed that these grants would be available for those businesses.
Motion by Márquez-Simula, seconded by Jacobs to waive the reading of Resolution 2023-27, there
being ample copies available to the public. All Ayes. MOTION PASSED.
Motion by Márquez-Simula, seconded by Buesgens to approve Resolution 2023-27, a resolution of the
Economic Development Authority of Columbia Heights, Minnesota, approving the form and substance
of the fire suppression grant agreement, and authorizing authority staff and officials to take all actions
necessary to enter the authority into the fire suppression grant agreement with H – M Properties LLC.
RESOLUTION NO. 2023-27
RESOLUTION OF THE ECONOMIC DEVELOPMENT AUTHORITY OF COLUMBIA HEIGHTS, MINNESOTA,
APPROVING THE FORM AND SUBSTANCE OF THE FIRE SUPPRESSION GRANT AGREEMENT, AND
AUTHORIZING AUTHORITY STAFF AND OFFICIALS TO TAKE ALL ACTIONS NECESSARY TO ENTER THE
AUTHORITY INTO THE FIRE SUPPRESSION GRANT AGREEMENT WITH H – M PROPERTIES LLC.
WHEREAS, the City of Columbia Heights (the “City”) and the Columbia Heights Economic Development
Authority (the “Authority”) have collaborated to create a certain fire Suppression Grant Program (the
“Program”); and
WHEREAS, pursuant to guidelines established for the Program, the Authority is to award and
administer a series of grants to eligible commercial property owners and/or tenants for the purposes
of revitalizing, rehabilitating, and restoring commercial buildings increasing business vitality, economic
performance, and public safety; and
WHEREAS, The Authority has recognized exigent circumstances related to the execution of water main
infrastructure activities along Central Avenue, resulting in a substantial increase in the cost associated
with the installation of a fire suppression system for H-M Properties; and
WHEREAS, the Authority recognizes that the increase in cost puts undue burden on the property
owner, and
WHEREAS, the Authority has thoroughly reviewed copies of the proposed form of the Grant
Agreement.
NOW, THEREFORE BE IT RESOLVED that, after appropriate examination and due consideration, the
Authority
City of Columbia Heights MINUTES October 23, 2023
Economic Development Authority Page 9
1. approves the increased grant amount of 50% up to $50,000 outside the terms of the original
grant guidelines due to the exigent circumstances of the project.
2. approves the form and substance of the grant agreement and approves the Authority entering
into the agreement with H-M Properties LLC.
3. establishes that the City Manager, as the Executive Director of the Authority, is hereby
authorized, empowered and directed for and on behalf of the Authority to enter into the grant
agreement.
4. establishes that the City Manager, as the Executive Director of the Authority, is hereby
authorized and directed to execute and take such action as they deem necessary and
appropriate to carry out the purpose of the foregoing resolution.
ORDER OF ECONOMIC DEVELOPMENT AUTHORITY
Adopted this 23rd day of October, 2023
Offered by: Amada Márquez-Simula
Seconded by: Connie Buesgens
Roll Call: All ayes of present. MOTION PASSED.
President
Attest:
Secretary
OTHER BUSINESS
The commission had a brief conversation about traffic control issues, and the MNDOT program that is
currently being tested on Central Avenue.
ADJOURNMENT
Motion by Buesgens, seconded by Jacobs, to adjourn the meeting at 5:49 pm. All ayes. MOTION
PASSED.
Respectfully submitted,
_______________________________
Mitchell Forney, Interim Recording Secretary