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12-06-2004 HR MIN MEETING OF THE ELK RIVER HOUSING AND REDEVELOPMENT AUTHORITY • HELD AT THE ELK RIVER CITY HALL MONDAY, DECEMBER 6, 2004 Members Present: Chair Wilson,Commissioners Thompson,Toth,Lieser,and Motin Staff Present: City Administrator Pat Klaers,Finance and Administrative Services Director Lori Johnson,Director of Economic Development Catherine Mehelich,Assistant Director of Economic Development Heidi Steinmetz, Director of Planning Michele McPherson,and Recording Secretary Jessica Miller 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 December 6,2004 HRA Agenda Consider joint HRA,EDA,and HPC meeting for January or February 2005 was added to the agenda. MOVED BY COMMISSIONER MOTIN AND SECONDED BY COMMISSIONER TOTH TO APPROVE THE DECEMBER 6,2004,HRA AGENDA AS AMENDED.MOTION CARRIED 5-0. 3. Consider Consent Agenda MOVED BY COMMISSIONER TOTH AND SECONDED BY COMMISSIONER THOMPSON TO APPROVE THE CONSENT AGENDA AS FOLLOWS: 3.1. CONSIDER NOVEMBER 1,2004 3.2. CHECK REGISTER 3.3. OCTOBER 2004 REVENUE/EXPENDITURE REPORT 3.4. OCTOBER 2004 BALANCE SHEET 3.5. NOVEMBER 2004 REVENUE/EXPENDITURE REPORT 3.6. NOVEMBER 2004 BALANCE SHEET MOTION CARRIED 5-0. 4. Open Mike There was no one present for Open Mike. 5. Downtown Revitalization Project Update 5.1. Consider Recommendation to City Council on Development Agreement Director of Economic Development Catherine Mehelich provided background on the • history of the Downtown Revitalization Project. Housing&Redevelopment Authority Page 2 December 6,2004 Ms.Mehelich indicated that MetroPlains has accepted the development agreement that was • drafted based on the key points identified by city staff,the HRA,and the City Council.Ms. Mehelich introduced Mary Ippel of Briggs and Morgan,the attorney who drafted the development agreement for the city.Ms.Ippel summarized the final agreement as follows as it relates to the key points identified. Linkage between the Jackson project and the Bluff project Ms. Ippel stated that the HRA and City Council have directed staff and the developer that the completion of both the Jackson and Bluff projects together are desired elements of the Downtown Revitalization Project.She also stated that the project meets the city's goals and objectives and that the development agreement provides for the City Council to formally approve the construction plans and parking plans prior to any construction.Ms.Ippel indicated that the development agreement includes several activities that must be completed by MetroPlains prior to any construction on the Jackson Block property,including MetroPlains'payment of the King Avenue parking lot improvement. Amount of Tax Increment Financing Assistance Ms.Ippel stated that the development agreement defines "Pledged Tax Increment"that the developer would receive up to 89% of the actual tax increment through a pay-as-you-go note for the purpose of reimbursing MetroPlains for TIF eligible costs.Ms. Ippel also stated that MetroPlains will receive 6%of the annual tax increment for the purpose of reimbursing the cost of the King Avenue parking lot and the city will receive the remaining 5%for reimbursement of administrative costs of the project.She noted that there is a"look back" procedure outlined in the agreement in order to ensure that the developer does not receive any more assistance (via TIF,SAC/WAC,and Jackson Land)than is necessary to make the project financially feasible.Ms.Ippel stated that in addition to the TIF,it is estimated that the city will be providing Jackson Land,SAC,and WAC as additional forms of assistance. SAC/WAC/Park Dedreation/BuildingPermit Fees Ms.Ippel indicated that the city is approving a reduction of the entire SAC and WAC fees in the development agreement.In return,the city will capture 100% of any annual inflation over the 25-year TIF district period and at 4%interest rate to reimburse itself for the SAC, WAC,and Jackson Land. She noted that the park dedication fee paid by the developer will be dedicated to park improvements in the downtown area. Cost of the Jackson Block Ms. Ippel stated that the development agreement identifies $500,000 as the estimated value of the Jackson Block property.She indicated that the property will be sold to MetroPlains for$1.00.She stated that the inflation that the city may capture over the life of the TIF district will reimburse the city for the Jackson land. Issuance of City Tax Increment Bonds Ms. Ippel stated that the development agreement outlines a number of conditions that would need to be met in order for the developer to request the city to issue tax increment bonds to refund the tax revenue note. Purchase of Bluff Block Properties Ms. Ippel explained that the sale of the Jackson Block property is conditioned,among other things,upon the developer having fee title to all of the Bluff Block property.The development agreement outlines the conditions and process that the city would undertake at • its own discretion and under limited circumstances for the acquisition of the Bluff Block property through the use of its powers of eminent domain.She noted that staff does not currently anticipate that this will be necessary. Housing&Redevelopment Authority Page 3 December 6,2004 • Type of Bluff Block Pmject Ms. Ippel stated that there is no discussion of this in the final development agreement due to the fact that MetroPlains has decided the Bluff Block condos and commercial units will be for-sale only. Ms.Mehelich indicated that staff recommends that the HRA recommend approval of the resolution authorizing execution of a development agreement to the City Council. She noted that the development agreement identifies the subsidy for each component of the project and the exemptions from the Business Subsidy Act,with the exception of the Jackson Block Commercial Subsidy.Ms.Mehelich stated that staff is also recommending that the HRA recommend approval to the City Council of the three resolutions approving the terms of internal loans in connection with Downtown Phase I Tax Increment Financing District No. 22 for SAC,WAC,and Land. Commissioner Motin indicated that he is concerned that sections of the development agreement do not specifically state that the parking lot must be usable prior to construction commencement of the Jackson block. Ms.Ippel stated that language could be added to the development agreement stating that parking lot construction must be substantially complete prior to conveyance of the Jackson property.It was the consensus of the HRA that this language be added under sections 3.6.b.and 4.3. Commissioner Toth questioned if the development agreement addresses the issue of MetroPlains selling the project. Ms. Ippel indicated that the development agreement states that MetroPlains cannot transfer or sell the project without the city's written consent prior to construction completion.Ms. Ippel stated that language could be added prohibiting MetroPlains from selling the entire project until the units in the project are sold.Ms.Ippel noted that the city has no obligation to construct or complete the project.Sid Inman of Ehlers and Associates stated that MetroPlains has identified that they plan to sell the commercial areas once the construction is complete so the selling of the property should not be prohibited in the agreement. Keith Holmes, owner of Kemper Drug building-stated that he is still concerned about how the businesses in downtown will be affected by the parking during the construction.He stated that he would like to see something added to the agreement addressing parking during construction. Vern Hanson,MetroPlains -indicated that MetroPlains has submitted a parking plan to the city that was moved to a future City Council agenda due to the length of the agenda.He stated that parking during and after construction is a high priority for MetroPlains. Commissioner Toth questioned if there is a plan for parking enforcement. Assistant Director of Economic Development Heidi Steinmetz stated staff is in the process of forming a King Avenue Parking Lot Task Force that will gather design and enforcement input regarding the King Avenue lot from property/business owner representatives from each downtown block.The task force meetings will be held monthly beginning in January 2005. Chair Wilson questioned if something could be added to the agreement regarding • construction traffic.Ms.Ippel indicated that a provision addressing parking staging could be added.Commissioner Motin stated that it already states in the agreement that plans must be submitted for City Council approval. Housing&Redevelopment Authority Page 4 December 6,2004 Commissioner Toth indicated that parking enforcement should be added to the agreement. Commissioner Motin stated rather than having it be added to the development agreement, that the parking could be part of the construction plans that are submitted to the Council. Ms. Ippel added that it does state in the agreement that if plans are not properly submitted, the developer does not receive TIF. It was the consensus of the HRA that language addressing the parking enforcement does not need to be added to the development agreement. Commissioner Lieser questioned if the HRA could have a copy of any parking plans that are approved by the City Council.Ms.Mehelich stated that a copy of the plans would be provided to the HRA. Cliff Lundberg,400 Jackson Avenue—stated that he has a problem with the city using their power of condemnation to take property from one private owner and give it to another private owner. Chair Wilson stated that the city will only use its power of condemnation as a last resort. MOVED BY COMMISSIONER MOTIN AND SECONDED BY COMMISSIONER THOMPSON TO RECOMMEND TO THE CITY COUNCIL APPROVAL OF THE FOLLOWING FOUR RESOLUTIONS: • RESOLUTION APPROVING DEVELOPMENT AGREEMENT AND BUSINESS SUBSIDY(WITH THE ADDITIONAL PARKING LANGUAGE ADDED TO SECTIONS 3.6.AND 4.3.OF THE 1111 AGREEMENT); • RESOLUTION APPROVING INTERFUND LOAN ON SEWER ACCESS CHARGE (SAC); • RESOLUTION APPROVING INTERFUND LOAN ON WATER ACCESS CHARGE (WAC);AND • RESOLUTION APPROVING INTERFUND LOAN ON JACKSON LAND MOTION CARRIED 5-0. 5.2. Project Communications Update Assistant Director of Economic Development Heidi Steinmetz stated that beginning in February 2002,communications for the Downtown Revitalization Project have included the following tools and distribution methods: city website,Q&A newsletter,City of Elk River newsletter The Current,Rivers Edge Downtown Business Association,Star News,direct mail, downtown property/business owner meetings,King Avenue Parking Lot Task Force,and open houses. Ms. Steinmetz stated that the King Avenue Parking Lot Task Force is something new to help improve project communications and more information will be provided at the January HRA meeting.Ms.Steinmetz indicated that the plan is to have two or three representatives from each of the downtown blocks meet once a month prior to and during the King Avenue parking lot construction. Housing&Redevelopment Authority Page 5 December 6,2004 Ms. Steinmetz stated that since June 2003, staff has been mailing approximately 200 HRA • meeting notices out individually to downtown property owners,tenants,and citizens. Ms. Steinmetz asked the HRA for direction on whether or not these mailings should continue in 2005.She noted that meeting information is provided on the city website,at the monthly Rivers Edge meetings,and that the HRA meetings are rebroadcast three times a month on the city's cable channel. Commissioner Main stated that it may be better to only send out the notices when the downtown issue is coming back before the HRA.Chair Wilson questioned if other commissions are sending out direct mail notices.Ms. Steinmetz stated that they are not. It was the consensus of the Commission to discontinue the monthly direct mailing of HRA meeting notices.Ms.Steinmetz noted that the other forms of project communications will continue. 6. Refined Concept Option for Downtown North of Highway 10 Assistant Director of Economic Development Heidi Steinmetz presented the revised concept option for Downtown North of Highway 10 based on the HRA's November discussion.Ms.Steinmetz stated that at the November meeting,the HRA questioned what the condition of the utilities on Jackson Avenue were. She stated that Elk River Municipal Utilities General Manager Bryan Adams addressed the condition of the utilities and suggested enhancements in his letter to Ms. Steinmetz dated November 18,2004. Ms. Steinmetz reviewed the options available for moving forward on this project and asked for HRA direction. Commissioner Toth indicated that he would like clarification on the condition of the utilities located in the alley behind Jackson Avenue. Commissioner Main questioned whether the single-family rehabilitation would be straining the parking in the area with the west side of Irving being mixed use.Commissioner Main questioned if staff has looked at parking requirements.Ms. Steinmetz stated that staff had not. Commissioner Main stated that he is not interested in seeing Requests for Proposals (RFPs) at this time.Chair Wilson concurred.Chair Wilson noted that he would like to see this project keep moving forward.He questioned if Irving Avenue is scheduled for street improvements.Commissioner Main stated that Irving is not currently on the improvement schedule for the short-term but that it could get moved forward. Commissioner Toth questioned if staff could check the status of the former Arrow Building Center building that is for sale to see what sort of inquiries they have received. It was the consensus of the I-RA for staff to check into and report back next month on the following: the marketing of the former Arrow Building Center building,parking requirements for the downtown area north of Highway 10,and clarification of the condition of the utilities in the alley between Jackson and Irving. Cliff Lundberg,400 Jackson Avenue-indicated that he read in the paper that Jackson was going to be restriped to a center lane,turn lane configuration.Mr.Lundberg questioned how • that would affect the parking on the east side of Jackson.He stated that he does not believe a center lane would effectively move traffic.Commissioner Main stated that general discussion on that matter has taken place but nothing has been decided. Housing&Redevelopment Authority Page 6 December 6,2004 • 7. Update on City Council Feedback Regarding Greater MN Housing Fund Growth Corridor Initiative Assistant Director of Economic Development Heidi Steinmetz stated that at the November HRA meeting,the HRA discussed whether or not to submit a pre-application for the Greater MN Housing Fund Growth Corridor Initiative pilot program.She stated that it was the consensus of the HRA that the City Council consider this issue.Ms. Steinmetz indicated that the City Council considered this issue at their November 8,2004 meeting and it was the consensus of the Council that a pre-application not be submitted since staff is capable of performing the technical activities that the program assistance would entail. Councilmember Motin noted that applying for the program would have required the city to be more proactive in affordable housing issues and the Council did not believe that the work involved in that would have been worth the assistance that the grant would have provided. 8. Consider Joint HRA,EDA,and HPC Meeting for January or February 2005 Assistant Director of Economic Development Heidi Steinmetz indicated that the Heritage Preservation Commission(HPC)would like to have a joint meeting with the EDA and HRA on either Monday,January 10,2005 or Monday,February 14,2005 at 5:30 p.m.to discuss the creation of historic districts and financial incentives. It was the consensus of the HRA that they would prefer the meeting be held Monday, January 10,2005. Staff will forward this information to the HPC and the HRA will be • notified of the meeting date once set. Chair Wilson stated that Commissioner Thompson has chosen to not renew his term on the HRA due to time commitments.On behalf of the HRA,Chair Wilson thanked Commissioner Thompson for his years of service. Commissioner Thompson stated that it has been his honor serving the city for the last eight years,the last four of which he spent on the HRA.He indicated that the HRA should be proud of what they have accomplished. 9. Adjournment. There being no further business, MOVED BY COMMISSIONER TOTH 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 6:15 p.m. essica Miller Recording Secretary