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01-03-2006 HRAMEETING OF THE ELK RIVER HOUSING AND REDEVELOPMENT AUTHORITY HELD AT THE ELK RIVER CITY HALL MONDAY, JANUARY 3, 2006 Members Present: Chair Wilson, Commissioners Kuester, Lieser, Motin, and Toth Staff Present: Director of Economic Development Catherine Mehelich, Assistant Director of Economic Development Heidi Steinmetz, and Recording Secretary Jessica Miller 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 5:02 p.m. by Chair Wilson. 2. Consider. T anu'. ry 3, 2006 HRAA-,enda MOVED BY COMMISSIONER KUESTER AND SECONDED BY COMMISSIONER MOTIN TO APPROVE THE JANUARY 3, 2006, HRA AGENDA. MOTION CARRIED 5-0. 3. Consider Consent Agenda MOVED BY COMMISSIONER TOTH AND SECONDED BY COMMISSIONER MOTIN TO APPROVE THE CONSENT AGENDA AS FOLLOWS: 3.1. DECEMBER 5, 2005 REGULAR MEETING MINUTES 3.2. CHECK REGISTER 3.3. NOVEMBER 2005 REVENUE/EXPENDITURE REPORT 3.4. NOVEMBER 2005 BALANCE SHEET MOTION CARRIED 5-0. 4. Open Mike There was no one present for Open Mike. Annual Meeting Business a. Election of Officers MOVED BY COMMISSIONER LIESER AND SECONDED BY COMMISSIONER KUESTER TO NOMINATE STEWART WILSON AS CHAIR OF THE HRA FOR 2006. There being no further nominations, MOTION CARRIED 5-0. Housing & Redevelopment Authority January 3, 2006 VICE CHAIR Page 2 MOVED BY COMMISSIONER KUESTER AND SECONDED BY COMMISSIONER LIESER TO NOMINATE LARRY TOTH AS VICE CHAIR OF THE BRA FOR 2006. There being no other nominations, MOTION CARRIED 5-0. SECRETARY MOVED BY COMMISSIONER MOTIN AND SECONDED BY COMMISSIONER KUESTER TO NOMINATE JEAN LIESER AS SECRETARY OF THE BRA FOR 2006. There being no other nominations, MOTION CARRIED 5-0. b. Appoint Executive Director MOVED BY COMMISSIONER TOTH AND SECONDED BY COMMISSIONER LIESER TO APPOINT CATHERINE MEHELICH EXECUTIVE DIRECTOR OF THE HOUSING AND REDEVELOPMENT AUTHORITY FOR 2006. MOTION CARRIED 5-0. Designate Official News)aper MOVED BY COMMISSIONER MOTIN AND SECONDED BY COMMISSIONER TOTH TO DESIGNATE THE STAR NEWS AS THE OFFICIAL NEWSPAPER FOR THE HRA FOR 2006. MOTION CARRIED 5-0. d. Designate Official Depositories MOVED BY COMMISSIONER MOTIN AND SECONDED BY COMMISSIONER LIESER TO DESIGNATE THE FOLLOWING OFFICIAL DEPOSITORIES FOR THE BRA FOR 2006: • FIRST NATIONAL BANK OF ELK RIVER • 4M FUND • WELLS FARGO BANK • THE BANK OF ELK RIVER • US BANK • RIVERVIEW COMMUNITY BANK OF OTSEGO MOTION CARRIED 5-0. e. Discussion of Bylaws and any Suggested Amendments Director of Economic Development Catherine Mehelich indicated that it is standard for the Housing and Redevelopment Authority to review the HRA bylaws annually to see if any changes are necessary. Ms. Mehelich stated that staff has no suggestions or recommendations for changes for 2006. Chair Wilson questioned if any member Housing & Redevelopment Authority Page 3 January 3, 2006 ---------------------------- of the HRA has any suggestions or recommendations for changes to the bylaws. There were none. 6. Consider Tax Rebate Financing for The Bank of Elk River Expansion Project Chair Wilson explained that he will be will be abstaining from any discussion or vote on this issue as he has very strong ties to The Bank of Elk River. Vice Chair Toth facilitated the HRA discussion. Director of Economic Development Catherine Mehelich explained that The Bank of Elk River submitted an application for Tax Rebate Financing ('7) assistance for the expansion of 20,000 square feet to their existing facility downtown. Ms. Mehelich indicated that The Bank of Elk River is requesting the city rebate up to $300,000 of its portion of the new property taxes generated from the project and the County rebate a matching share for a combined total of $600,000. Ms. Mehelich stated that normally, the city has provided tax abatement to manufacturing businesses but under the city's TRF Policy, Section V, Project Qualifications "commercial redevelopment or rehabilitation" proposals can be considered for the use of TRF. She stated that it is appropriate for the HRA to review and provide recommendation to the City Council on this request since the project involves significant redevelopment in the downtown area. Ms. Mehelich explained that normally a financial but for analysis would be completed to determine the amount of public assistance necessary for the project to proceed but this TRF application is being processed under the premise that The Bank is incurring substantial additional construction costs by converting the existing facility. She noted that this project meets all of the commercial redevelopment objectives found in Section III of the city's TRF Policy. Ms. Mehelich indicated that staff reviewed the complete application submitted by The Bank for Tax Rebate Financing to measure the strength of the project against the city's goals and objectives for the use of TRF. She stated that the project scored 44 out of 50 possible points which equates to a "highly desirable" project. Ms. Mehelich stated that the Sherburne County Assessor recently reviewed the building plans for the proposed expansion and has estimated the total project market value upon completion to be $4,539,600. The estimated increase in market value as a result of the expansion project is $2,932,900. Ms. Mehelich reviewed a breakdown between existing and new estimated market value as a result of the project. Ms. Mehelich reviewed job and wage goals. She stated that a requirement of the financing assistance to The Bank will include a commitment for the creation of 20 new full-time positions as a result of the expansion project at a minimum hourly wage of $15.00 within two years of project completion. Ms. Mehelich reviewed the three options for consideration as outlined in her staff report. She explained that staff is recommending the third option which would provide up to $300,000 of TRF based on only the new market value. She stated that this option would require the city to extend the term of the abatement to 12 years in order to reach the full amount of assistance, but would allow the city to retain the existing tax base. Ms. Mehelich noted that the term of the abatement could likely be less based on inflationary increases in market value in Sherburne County. Housing & Redevelopment Authority January 3, 2006 Page 4 Commissioner Motin indicated that he doesn't expect market values in Sherburne County to go down and that the assistance should be completed in less than 12 years. He stated that the only way that it would not be completed in less than 12 years is if the market goes stagnant. Commissioner Toth questioned if assistance has been given to other financial institutions. Ms. Mehelich stated that no public financial assistance has been given to other financial institutions. She stated that in the `SOS, the HRA redeveloped a downtown site at a cost of about $400,000 for property acquisition, remediation, and other site costs. Ms. Mehelich stated that First National Bank purchased the property for the fair market value of the land at $175,000. She stated that because First National Bank purchased the property for the fair market value, staff is of the opinion that this does not constitute as assistance. Commissioner Lieser questioned if this request only applies to the City and if Sherburne County reviews the project separately. She also questioned if the School District will be involved. Ms. Mehelich indicated that the County will complete their own separate review process and that it is not customary to request this type of financing assistance from the School District. Commissioner Toth questioned if the County denies the request for TRF assistance, if the proposed expansion will still take place in Elk River. Pat Dwyer, Sr. VP & CFO The Bank of Elk River - stated that yes, the project would still take place if the County was to deny the project but that The Bank has met with both City and County officials and both have indicated they are in support of providing TRF assistance for the expansion. Mr. Dwyer explained that it was not until The Bank received this verbal support that they went ahead and had the architectural plans completed for the Elk River site. Mr. Dwyer indicated that the assistance that The Bank of Elk River will receive is pretty close to that of what First National Bank received if you figure in inflation. Mr. Dwyer stated that he would like to see either option two or three chosen and noted that either options' terms would end up being the same at approximately 10-years. Ms. Mehelich explained that the TRF agreements are written so that the agreement ends when the term reaches expiration or when the total amount of TRF assistance is reached, whichever occurs first. Mr. Dwyer noted that The Bank of Elk River needs more space and that the Otsego location would have been a cheaper option for an expansion but that The Bank is family owned and the family has a strong commitment to Elk River and would like to maintain their headquarters in Elk River. MOVED BY COMMISSIONER MOT1N AND SECONDED BY COMMISSIONER LIESER TO RECOMMEND TO THE CITY COUNCIL APPROVAL OF UP TO $300,000 OF TAX REBATE FINANCING TO THE BANK OF ELK RIVER BASED ON ONLY THE NEW MARKET VALUE WITH A TERM OF 12 YEARS WITH THE CONDITION ADDED THAT 20 NEW POSITIONS MUST BE CREATED WITH A MINIMUM WAGE OF $15.00 WITHIN TWO YEARS OF PROJECT COMPLETION. MOTION CARRIED 5-0. Housing & Redevelopment Authority Page 5 January 3, 2006 ---------------------------- 7. Call Special HRA Meeting for I anigxy 24 for Form Based ZopjLig Worksession Assistant Director of Economic Development Heidi Steinmetz indicated that form based zoning training is being offered at the January 24, 2006 Planning Commission Work Session and that the HRA is asked to call a special meeting for this date if they wish to attend the training. MOVED BY COMMISSIONER KUESTER AND SECONDED BY COMMISSIONER LIESER TO CALL A SPECIAL MEETING OF THE HOUSING AND REDEVELOPMENT AUTHORITY FOR JANUARY 24, 2006 AT 6:30 P.M. IN THE UPPER TOWN CONFERENCE ROOM FOR THE PURPOSE OF ATTENDING FORM BASED ZONING TRAINING. MOTION CARRIED 5-0. 8. Downtown Revitalization Project Update Director of Economic Development Catherine Mehelich indicated that staff continues to work with the developer on the amended development agreement and that both sides are very close to reaching an agreement on the language in the agreement. Ms. Mehelich indicated that the developer is also awaiting presales on the Bluff Block before closing can take place. She stated that the requirement is that there must be 23 presales prior to closing and as of three weeks ago, there were 19 and another four in process so the Bluff Block closing could take place very soon. Ms. Mehelich noted that both the Jackson and Bluff Block plats have been filed and recorded and the building permits for both projects are ready to be issued upon closing on the financing. Ms. Mehelich stated that the flagpole downtown was relocated December 27 and staff is in the process of developing a landscape plan for around the pole. She indicated that when staff was distributing information to the downtown businesses on the flag pole relocation they received many questions which reinforces the need to get communication back out to the community on the downtown project. Ms. Mehelich indicated that staff is drafting a new Downtown Q&A that is scheduled to be distributed as an insert to the Star News the end of January. Downtown North of Highway 10 Redevelopment Plan Update Assistant Director of Economic Development Heidi Steinmetz indicated that staff is in the process of drafting goals and strategies for the downtown North of Highway 10 Redevelopment Plan based on the HRA's December 5, 2005 Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis and that it is anticipated that the draft goals and strategies will be available for review at the February 6 HRA meeting. Commissioner Toth questioned if now that the Arrow Building site is being refurbished for the new rental company if there has been any activity on the current Eagles or the old Napa site. Ms. Mehelich stated that staff will check with the Eagles to see when they plan to move to their new location and if they are actively marketing their current location for sale. Ms. Mehelich noted that the Eagles current location was originally part of the purchase when Arrow Building Center planned to redevelop and expand their building which has since fell through as Arrow found the site too challenging to expand on. She stated that the Arrow site has been sold to an equipment rental company and the City Council recently approved some signage and access changes to the site. Housing & Redevelopment Authority Page 6 January 3, 2006 ---------------------------- 10. Other Business There was no other business. 11. Adjournment. There being no further business, Chair Wilson adjourned the meeting. The meeting of the Elk River Housing and Redevelopment Authority adjourned at 6:03 p.m. 4es,�ica Miller Recording Secretary