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05-03-2004 HR MIN MEETING OF THE ELK RIVER • HOUSING AND REDEVELOPMENT AUTHORITY HELD AT THE ELK RIVER CITY HALL MONDAY, MAY 3, 2004 Members Present: Chair Wilson,Commissioners Thompson,Toth,Lieser and Motin Staff Present: Director of Economic Development Catherine Mehelich,Assistant Director of Economic Development Heidi Steinmetz and City Administrator Pat Klaers 1. Call Meeting To Order Pursuant to due call and notice thereof,the meeting of the Elk River Housing and Redevelopment Authority was called to order at 5:00 p.m.by Chair Wilson. 2. Consider May 3,2004 HRA Agenda MOVED BY COMMISSIONER MOTIN AND SECONDED BY COMMISSIONER THOMPSON TO APPROVE THE MAY 3,2004,HRA AGENDA AS PRESENTED. MOTION CARRIED 5-0. 3. Consider Consent Agenda • MOVED BY COMMISSIONER THOMPSON AND SECONDED BY COMMISSIONER LIESER TO APPROVE THE CONSENT AGENDA AS FOLLOWS: 1. APRIL 5,2004 HRA MINUTES 2. CHECK REGISTER MOTION CARRIED 5-0. 4. Open Mike There was no one present for Open Mike. 5. Downtown Revitalization Project Update Director of Economic Development Catherine Mehelich stated that an agreement on the key points for a final development agreement on the Downtown Revitalization Project would be presented this evening. Ms.Mehelich introduced Sid Inman of Ehlers and Associates and Jennifer Boulton of Briggs and Morgan to provide background information on the key points. Mr.Inman stated that a Tax Increment Financing(TIF)District would need to be established before a final development agreement could be executed. Mr.Inman then proceeded to summarize the key points for a final development agreement,including MetroPlains'commitment to begin redevelopment of the Bluff Block,followed by the • development of the Jackson Block. Key points agreed upon include: Housing&Redevelopment Authority Page 2 May 3,2004 • MetroPlains is willing to commit that Bluff Block construction will commence prior • to or simultaneously with construction of the Jackson Block. • MetroPlains and the City agree to consider structuring the Tax Increment Financing (TIF)District(s)within limitations of the TIF law to achieve maximum flexibility. • The Development Agreement will contain a"look back"method for both the Bluff and Jackson projects. To the extent that final costs are less than those shown in the preliminary sources and uses statement increasing MetroPlains'return,the assistance for that portion of the project will be reduced. • The City will recommend to the Park and Recreation board that the park dedication fees are used for downtown river park improvements. The City is willing to request a reduction or waiver of the SAC and WAC fees,if necessary,to make the project feasible. • If necessary,to make the project feasible,the City is willing to reduce the cost of the Jackson Block in its entirety. The City can recapture the value of the Jackson Block and SAC/WAC from tax increments derived from inflation. • The City will consider,if necessary,issuing revenue or general obligation tax increment bonds to refinance the Bluff Block tax increment revenue notes under certain conditions. Commissioner Motin asked Mr.Inman if there was a timeline for when the final development agreement could be reached. Mr.Inman stated that a final development could not be approved until a TIF District was established but that the issue of MetroPlains' commitment to begin work on the Bluff Block will speed up the final development agreement process. Commissioner Motin also asked if there was a timeline for when the TII''District would be established. Mr.Inman explained that staff and Ehlers anticipate that a public hearing regarding the establishment of a TIF District downtown won't be held until July because then the increment would begin in 2005 rather than 2004. Commissioner Toth asked Mr.Inman if the Bluff Block could be financially feasible as a stand-alone project. Mr.Inman stated that Ehlers'initial financial review of the project indicates that the Bluff Block could stand alone,however those numbers are based on an estimated cost of the Bluff Block project,not the actual cost. Mr.Inman added that the presales of the Bluff Block housing units would provide an additional indicator that the Bluff Block could financially stand alone. Commissioner Toth stated that he believes Jackson Block is development and not redevelopment and asked if that could create a problem. Mr.Inman stated that both the Bluff and Jackson Blocks could be included in a TIF Redevelopment District since a certain amount of vacant land is allowed in a Redevelopment District as long as there is a certain amount of land in the district to be redeveloped. Mr.Toth asked if the Jackson Block rental housing units would be low-income housing. Ms. Boulton explained that certain percentages of the units must be considered low to moderate income in order for the project to qualify for certain types of financing,such as MHFA and DEED. Chair Wilson asked staff,Ehlers and Briggs&Morgan to provide clarity on the profile of the typical Jackson Block resident. Ms.Mehelich added that the minimum annual salary requirement of a resident is approximately$36,000 per year and that Section 8 vouchers would not apply. Ms.Mehelich referenced the Project Description handout,which states the • monthly rent payment for Jackson Square housing unit. Ms.Mehelich mentioned that the Housing&Redevelopment Authority Page 3 May 3,2004 • rent payments are comparable to current housing rental rates in the downtown. Chair Wilson stated that these units will not be low-income but instead be affordable and that the types of tenants that will be attracted to these units will be comparable to those who are already living downtown. Mr.Inman added that in similar projects around the state,many units are leased to senior citizens. Commissioner Thompson thanked city staff and MetroPlains for the work that has been put into the project thus far. Chair Wilson concurred. Ms.Mehelich stated that the action before the HRA is to consider the acceptance of the key points for a final development agreement. Chair Wilson asked the public/audience members if there were any comments. Cliff Lundberg,400 Jackson Ave.,asked the HRA if they would consider using eminent domain for this project. Ms Mehelich stated that the HRA and City Council are willing to consider eminent domain as a last resort. Gary Santwire,local developer-Mr.Santwire asked the HRA to consider delaying the project thirty days until the HRA has obtained the following: • Detailed financial numbers regarding the project • Letters of intent from the Bluff Block property owners • Letters of intent from the property owners adjacent to the Jackson Block for the 111) obtaining of deeds for the small portion of the site that may have underlying interests Ms.Mehelich stated that the HRA will consider a final development agreement to include the items being requested by Mr.Santwire at a later date and that the key points are being considered this evening. Chair Wilson concurred. MOVED BY COMMISSIONER MOTIN AND SECONDED BY COMMISSIONER THOMPSON TO APPROVE THE KEY POINTS OF THE FINAL DEVELOPMENT AGREEMENT WITH METROPLAINS DEVELOPMENT, LLC AS SET FORTH IN THE APRIL 29,2004 MEMORANDOM FROM CITY STAFF TO METROPLAINS. Commissioner Toth stated that the wording in the key points should state that the Bluff Block should occur first and not simultaneously with the Jackson Block. Commissioner Motin stated that the motion should remain as presented. MOTION CARRIED 5-0. 6. Arrow Building Center Redevelopment Project Update Assistant Director of Economic Development provided background information on the project and stated that Arrow Building Center has requested the project be delayed thirty days. • Housing&Redevelopment Authority Page 4 May 3,2004 Chair Toth asked if Arrow Building Center owns the Eagles building and former NAPA • building. Ms. Steinmetz stated that Arrow Building Center does not yet own the two buildings but is currently negotiating a purchase agreement with the property owner. Staff recommended that the HRA consider holding a visioning worksession for the area north of Hwy 10 downtown since there are currently no goals and objectives in place for the area. Chair Wilson asked if there was a suggested date for the worksession. Ms. Steinmetz stated that staff anticipates the Arrow Building Center project could be delayed longer than thirty days;therefore the worksession could be held within the next two months. Ms.Mehelich added that staff could put together date options and e-mail them to the HRA so that Chair Wilson could call a special meeting. Ms.Mehelich stated that the worksession would be scheduled for 1.5 to 2 hours in length and asked the HRA if they would be interested in utilizing a consultant to facilitate the worksession. Chair Wilson stated that the HRA should take advantage of the Arrow Building Center project delay. Commissioner Motin stated that the HRA should decide their own vision for the area north of Hwy 10 downtown before utilizing a consultant. Commissioner Toth asked that staff provide the HRA with a list of past inquiries for the area to the worksession. Commissioner Lieser asked that staff provide information on Mn/DOT's plans for Hwy 10 in Elk River. It was the consensus of the HRA that a worksession be scheduled. Chair Wilson mentioned that the 2003 Economic Development Department Annual Report was included in the HRA packet this month. Ms.Mehelich summarized the two HRA highlights in the 2003 Annual Report,which were the Housing Work Plan and the Downtown Revitalization Project. 7. Adjournment There being no other business,MOVED BY COMMISSIONER THOMPSON AND SECONDED BY COMMISSIONER LIESER TO ADJOURN THE MEETING. MOTION CARRIED 5-0. The meeting of the Elk River Housing and Redevelopment Authority adjourned at 6:03 p.m. Respectfully Submitted, Heidi Steinmetz Assistant Director of Economic Development