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06-06-2006 HRASPECIAL MEETING OF THE ELK RIVER HOUSING AND REDEVELOPMENT AUTHORITY HELD AT THE ELK RIVER CITY HALL MONDAY, JUNE 6, 2006 Members Present: Chair Wilson, Commissioners Kuester, Toth (5:40 p.m.), Lieser, and Motin (5:20 p.m.) Staff Present: Community Development Director Scott Clark, Director of Economic Development Catherine Mehelich, Assistant Director of Economic Development Heidi Steinmetz, and Deputy Clerk Tina Allard 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 June 26.2006 Agenda MOVED BY COMMISSIONER KUESTER AND SECONDED BY COMMISSIONER LIESER TO APPROVE THE JUNE 26, 2006, HRA AGENDA AS PRESENTED. MOTION CARRIED 3-0. Consider Consent Agenda MOVED BY COMMISSIONER LIESER AND SECONDED BY COMMISSIONER KUESTER TO APPROVE THE CONSENT AGENDA AS FOLLOWS: 3.1. MAY 1, 2006 HRA MINUTES 3.2. CHECK REGISTER 3.3. APRIL 2006 REVENUE/EXPENDITURE REPORT 3.4. APRIL 2006 BALANCE SHEET 3.5. MAY 2006 REVENUE/EXPENDITURE REPORT 3.6. MAY 2006 BALANCE SHEET MOTION CARRIED 3-0. 4. Open Mike There was no one present for Open Mike. 5. Downtown North of Hihwa 10 Redevelopment Plan Update Ms. Steinmetz stated the HRA is working on redevelopment planning of four core areas downtown north of Highway 10. She reviewed the purpose of the redevelopment plan, financial modeling, and provided a preliminary redevelopment gap analysis as outlined in her staff report. Ms. Steinmetz noted that the financial modeling template is a concept developed by staff as a starting point in the land use planning process and will most likely change many times before a final concept is reached. She asked the HRA for input on areas they think should be removed or added to the financial modeling template Housing & Redevelopment Authority Page 2 June 26, 2006 ( Ms. Mehelich explained the four gap levels on the spreadsheet in the staff report. Commissioner Wilson questioned why the land use for Area B is high density housing and not office or retail space. He noted Area B (Area 2 on the Gap Analysis sheet) has the highest acquisition estimate but the smallest gap. Ms. Steinmetz stated this is a very preliminary concept drafted in order for staff to generate some financial feasibility models as a base starting point for the Commission to begin working with. She stated concepts can be changed around in order to plug in different land uses and financial modeling scenarios to make each area more feasible. Mr. Clark stated this first concept is a template and staff can change the land uses around to determine value and to different financial scenarios in order to make each area more marketable. Mr. Clark stated Area B has the smallest gap because condo projects tend to have a high value on a small section of land. Commissioner Kuester questioned if road configurations were considered and if they would affect the financial feasibility. She questioned if the estimated land costs were high due to eminent domain. Ms. Steinmetz stated road configurations would be determined during the land use concept stage of the planning process. Mr. Clark stated approximately 20 percent of the buildings in each area could probably be f' rehabilitated rather than redeveloped but the issue is how to attract the private development market and let them know the city is committed to completing a whole project rather than piecemealing it. He stated this is a policy decision the city needs to make. Commissioner Kuester expressed concerns with the new eminent domain laws and questioned the city's ability to use it. Mr. Clark stated this is not an economic development but rather a redevelopment issue and the question is if the city can meet the redevelopment test of the eminent domain law. He stated the most likely scenario to happen is that private development companies will purchase the land and then come back to the city requesting TIF funds. Commissioner Motin stated concerns with redevelopment near Highway 10 due to future Mn/DOT redesign of TH 10 and concerns with eminent domain laws. Mr. Clark stated Area 4 near the railroad tracks is in the most need of redevelopment. He questioned how long the city should wait for TH 10 to be redesigned when no one knows when or if it will really happen. He reiterated that if private development companies would go out and buy these properties; thereby the city would not need to use eminent domain. Commissioner Motin questioned if an area would be redeveloped if a developer can only acquire 90 percent of the homes in a specific area. Mr. Clark stated most likely not. Ms. Steinmetz stated these financial modeling templates are guiding documents for future land use. She suggested more financial modeling with Area 3. Housing & Redevelopment Authority June 26, 2006 Page 3 Commissioner Kuester question I.A on the Work Plan Outline (whether Area 4 is part of the core downtown or should remain separate). She further stated the Heritage Preservation Commission might want to save some of these properties due to historical significance. Ms. Steinmetz stated the HRA and Council decided this area would be part of the core downtown. Ms. Mehelich stated the land use concept will be changing quite a bit in order to find the most realistic land use based on financial feasibility. Ms. Steinmetz stated the purpose right now is to narrow everything down to the most feasible concept before bringing it forward to other boards and commissions and the public for further comment. Commissioner Wilson stated he would like PID# 75-405-1960 included as part of Area C. Commissioner Toth questioned why two parcels near the clinic are not included in any of the redevelopment areas. Ms. Mehelich stated at least one of the properties has been acquired by the nearby clinic for a future parking lot and the city does not want to land lock them from any future expansion. The Commission concurred that they would like to see the block between Jackson Avenue, Irving Street (south of the water tower), 4th Street, and 5th Street included in the Area 4 financial modeling template. Downtown Revitalization Project Update Ms. Mehelich provided an update of the Downtown Revitalization Project. She stated the Jackson Place project had a successful closing on the transfer of property and construction will begin in a few weeks. She further stated information will be disseminated to the public regarding the closing of the Jackson Square parking lot and Jackson Avenue becoming a one-way during the construction process. Commissioner Toth stated the flower barrels in Rivers Edge Park need maintenance. Ms. Mehelich stated she would notify the Parks Department. Ms. Steinmetz provided a marketing update for the downtown project. A video promo was played for the Commission. Ms. Steinmetz noted that the video was playing frequently on the cable channel and thanked employee Jake Pace for a great job on the production. Commissioner Toth questioned if staff received any feedback from downtown business owners on the impact of the Main Street reroute and the construction work downtown. Ms. Steinmetz stated she received a few verbal comments and asked those individuals to submit a letter to the city but never received anything. Commissioner Motin stated he received a few comments from the Olde Main Eatery. 0 Housing & Redevelopment Authority June 26, 2006 Page 4 Commissioner Wilson stated he has visited downtown a few evenings and noted it was difficult to find parking due to the amount of cars parked there. He hopes the businesses are doing well. Consider Acquisition of Properties Described as 716 and 720 Main Street Ms. Mehelich stated Houlton Investment Company contacted staff to discuss the IRA's interest in purchasing the properties at 716 and 720 Main Street. She reviewed the parcel and building sizes, county market values, property taxes, and additional unique features of the two sites. Ms. Mehelich stated the city could use this land in the future for additional downtown parking. Mr. Clark provided a current and future parking analysis. He stated there is currently a shortfall of 96 stalls and after downtown construction is complete there will be a shortfall of 53 stalls. He stated current parking needs are not being met and expressed concern over bank employees crossing TH 10 from their parking lot. Ms. Mehelich noted there is competition between employee and customer parking. She stated the city needs to develop a long term strategy for parking and it would be advantageous to purchase these parcels now due to this offer being a non -leveraged sale, changes in eminent domain laws, and avoidance of relocation costs. Commissioner Motin stated it would be appropriate to consider the acquisitions at this time. He questioned financing. He stated the amount being requested by Houlton Investment Company seems high. Commissioner Toth stated concerns with public perception of the city purchasing these properties for a parking ramp when the city is supposed to be drawing new business to the downtown rather than removing them. Commissioner Kuester stated a parking lot should make business owners happy because parking is an issue in the downtown and this would provide relief. Ms. Mehelich stated the city is adding 20,000 square feet of new commercial space to the downtown. She stated these two parcels have been difficult for the property owner to lease out due to the size of the space in them. Commissioner Motin stated the city needs to be proactive and consider future parking needs. He stated if the city doesn't consider buying these parcels, the downtown business owners might question why the city is bringing in more business when they haven't been able to provide enough parking. Commissioner Motin stated he is interested in a contract for deed situation and is not inclined to remove the buildings for parking immediately. Commissioner Toth stated the city should start planning for a future parking ramp. Commissioner Motin stated if a parking ramp is built some of the costs should be assessed to business owners because they would benefit from the additional parking Commission Lieser stated the city should purchase these two lots. She stated it would open up the visibility to the existing parking lot and the downtown area. She stated it should be leased for awhile and then the city could consider building a ramp in the future. Housing & Redevelopment Authority June 26, 2006 Page 5 ---� MOVED BY COMMISSIONER LIESER AND SECONDED BY + COMMISSIONER KUESTER TO AUTHORIZE STAFF TO COMMISSION AN INDEPENDENT APPRAISAL OF THE PROPERTIES AND FOR STAFF TO BEGIN NEGOTIATIONS WITH THE PROPERTY OWNER. MOTION CARRIED 5-0. Commissioner Motin expressed concern with the city being able to find an independent appraisal due to Houlton Investment Company's connections. 8. Other Business There was no other business. 9. Adjournment The meeting of the Elk River Housing and Redevelopment Authority adjourned at 6:50 p.m. 1,41,1�eo Tina Allard Recording Secretary j