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3.1. DRAFT HRA MINUTES 05-02-2011MEETING OF THE ELK RIVER HOUSING AND REDEVELOPMENT AUTHORITY HELD AT THE ELK RIVER CITY HALL MONDAY, APRIL 4, 201 I Members Present: Chair Wilson, Commissioners Kuester, Lieser, Motin and Toth Members Absent: None Staff Present: Economic Development Director Catherine Mehelich, Finance Director Tim Simon, Recording Secretary Debbie Huebner Call Meeting To Order Pursuant to due call and notice thereof, the meeting of the Elk River Rousing and Redevelopment Authority was called to order at ~:3? p.m. by Chair ~ti~ilson. 2. Consider Apri14, 2011 HRA Agenda MOVED BY COMMISSIONER TOTH AND SECONDED BY COMMISSIONER KUESTER TO APPROVE THE APRIL 4, 2011 HRA AGENDA AS PRESENTED. MOTION CARRIED 5-0. 3. Consider Consent~~gcnda MOVED BY COMMISSIONER MOTIN AND SECONDED BY COMMISSIONER LIESER TO APPROVE THE CONSENT AGENDA AS FOLLOWS: 3.1. MARCH 7, 2011 HRA MINUTES 3.2. FEBRUARY 17, 2011 SPECIAL JOINT MEETING MINUTES 3.3. CHECK REGISTER 3.4. BALANCE SHEET 3.5. REVENUE/EXPENDITURE REPORT MOTION CARRIED 5-0. 4. Onen Mike - No one appeared for Open Mike. 5. Discuss Long Term Intentions for HRA Properties - 716 and 720 Main Street Ms. Mehelich provided background information regarding the HRA's acquisition of the 716 and 720 Main Street properties, maintenance issues, and long term options for the property, as detailed in the staff report to the HRA dated April 4, 2011. Chair Wilson stated that purchasing the buildings served a purpose and has provided a benefit to the downtown by having the Arts Alliance occupy one of the spaces. He explained that the buildings were initially acquired for future parking needs. He felt some Housing & Redevelopment Authority Apri14, 2011 discussion was warranted regarding whether or not the reason for acquiring the properties was still valid and what their options were. Commissioner Lieser asked if anyone has been able to determine if the wall between 720 Main and Elk River Meats is a shared wall. She asked if the buildings could be demolished without damaging Elk River Meats. Ms. Mehelich stated that determination would need to be made by a structural engineer, but staff believes there is at least a portion of the wall that is shared. Commissioner Toth asked if the Robecks (owners of Elk River Meats) know if the wall is shared. Ms. Mehelich stated that staff has not discussed this with them. She noted that there is a parry wall agreement that came up in the rifle work when the HRA purchased the property. Chair Wilson stated it seemed prudent to find out this information. Commissioner Moon stated that he would not be in favor of selling the properties or allowing a long term lease, since he felt there will be parking needs in the future. Commissioner Toth agreed that the property will likely be needed for parking in the future. Chair Wilson stated he would like to know if the buildings could be removed without damaging Elk River Meats. Commissioner Motin agreed that it will be necessary to find out at some point, but he did not feel the time was an issue now. Ms. Mehelich explained that it is the Arts Alliance intention at this time to continue their lease another year, and that the agreement provides that repairs over X1,000 will be split 50 - 50. Commissioner Toth stated that at one point the Arts Alliance expressed a desire to expand into the 720 Main Street space. Ms..Mehelich stated that the ~~rts Alliance did look at costs to do that, but given the HRA's desire for. ~ short term lease,. they did not find the expenditure feasible. She stated that if the HRA were to consider a longer lease, they might be interested. Commissioner Toth stated that since they did not know what the future parking needs will be in the downtown when the economy picks up and"spaces in the downtown begin m till. Commissioner Motin stated he would not support a long term lease, since the HR,~~ may necd to act quickly ul creating parking. Chair Wilson stated that they also need to consider being proacrive with maintenance issues. Commissioner Toth asked if any problems are anricipated. Ms. Mehelich reviewed the history of issues and repairs for the building since 2009, including the age and condirion of the roof and HVAC units. Commissioner Kuester asked what the estimated cost of removal of the buildings might be. Ms. Mehelich stated that the cost was previously estimated at $50,000 and this number did not include any costs for environmental issues or shoring of the adjacent building. Commissioner Kuester stated that she understood the concern for ongoing maintenance costs, but that the HRA will also have expenses if the buildings are taken down. Commissioner Kuester asked what the HRA considers a "long term" lease. Commissioner Motin stated that he felt anything over 12 months would be long term. Commissioner Toth quesrioned if the Arts Alliance would have adequate parking if they were to move into the former First Narional Bank building. A comment was made that they .likely would not have adequate parking. Commissioner Kuester asked if the parking behind the businesses would be available to them. Commissioner Motin stated that the city is considering purchasing this property. Page 2 Housing & Redevelopment Authority April 4, 2011 Commissioner Kuester stated that under $10,000 in maintenance expenses was not unreasonable, given the costs of demolition. She stated that she sees the Arts Alliance as an asset in the downtown for the time being. Chair Wilson questioned whether or not it makes sense to put a lot of money into repairs, but he also could not support a long term lease with the Arts Alliance. Commissioner Motin stated that the former city engineer calculated 21 spaces could be built on the site, with a future plan to build a ramp. He stated he was concerned about how much money would need to be put into the buildings to keep it safe. He felt that an 18-month lease was the longest lease that he would consider acceptable with the Arts Alliance. He stated that if the former First National Bank building doesn't work out for them, they will need to look for another site. Ms. Mehelich noted that the lease agreement provides for asix-month notice to terminate the lease. She stated that she will bring back this issue ~~%hen more information is available. 6. Consider TIF 16 Fund Request -Elk River Pizza Ranch Ms. Mehelich provided background information regarding TIF District Na. 16. She presented the request by Robert McDonald for TIF District 16 funding, as described in the staff report to the HRA dated Apri14, 2011. The applicant is requesting HRA funds in the amount of $90,000 to be provided as a grant to pa`~ far X72,000 WAC/SAC and purchase of adjacent land necessary for parking. Chair Wilson asked if the HRA were to decertify TIF District No. 16, when the funding comes in. Mr. Simon stated that the first half would he ill dune and the 2nd have would be in December. Commissioner '1"oth qucsroned why the applicant felt the additional parking was needed. Mr. McDonald esplauled that his business plan requires 100 parking stalls for seating 220 people, so he would need additional 40 - 45 sp~~es. Commissioner Toth asked where the additional land would come from. Mr. hlcDanald stated it would be from the First National Bank property. Commissioner 'l'oth asked what would happen if the grant is denied. Ms. 1Lfehelich explained that the applicant has stated he would likely not locate in Elk River. Mr. McDonald noted that he is limited to the amount he can spend on the project in Elk River, since it is a smaller community. Commissioner Lieser asked why the applicant is not interested in a low interest loan. Commissioner Toth asked why Mr. McDonald was interested in building a project bigger than his investors «-ould allow. Ms. Mehelich explained the criteria for a low interest low versus a grant. Commissioner Motin stated that he felt the concept for the restaurant was good, but questioned having another pizza restaurant, since there are already a number of them. Mr. McDonald stated that he looked at other types of restaurants, but the dollars were just not there to support it. He stated he would also like to see a steak house type of restaurant in Elk River, but market studies just do not support it. Page 3 Chair Wilson stated he initially also had a concern for another pizza restaurant. He stated that after seeing Mr. McDonald's proposal, he felt the project was more suitable for a low Housing & Redevelopment Authority April 4, 2011 interest loan. He noted that he hated to see denial of the grant as a "deal breaker". Mr. McDonald stated that he would have to look at cutting down the size of the restaurant, as well as other items, in order to make the project work without the grant. Commissioner Kuester stated that she could see the restaurant as a good teen spot. She stated she also would support a low interest loan versus an outright grant. Commissioner Motin asked if Mr. McDonald had any idea of the tax revenue which would be generated by his project. Mr. McDonald stated the taxes are currently $12,000 a year and would likely double with his project. He stated that the valuation is currently $621,000 and would be over $1 million after completion. Commissioner Toth stated he would like to see the site occu~~d. commissioner Moon asked if there is any other interest in the building that staff is aware of. Ms. Mehelich stated no. Commissioner Motin asked if alcohol would be served in the restaurant. Mr. McDonald stated no. Commissioner Toth stated he would not want to see the project leave, but would prefer to offer a low interest loan. MOTION BY COMMISSIONER KUESTER AND SECONDED BY COMMISSIONER TOTH TO AUTHORIZE STAFF TO NEGOTIATE A LOW INTEREST LOAN FOR ELK'RIVER PIZZA RANCH UP TO $90,040, MOTION CARRIED 5-0. 7. Update on The Bluffs of Elk River Ms. Mehelich noted that a report regarding the rental of housing units in The Bluffs of Elk River will be provided at the May HRA meeting. 8. Other Business -None 9. rAdjournment The meeting of the Elk River Housing and Redevelopment Authority adjourned at 6:40 p.m. Minutes prepared b~~ Debbie Huebner. Tina Allard City Clerk Page 4 Stewart Wilson Chair, Housing and Redevelopment Authority