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4.1. DRAFT HRA MIN (2 SETS) 10-05-2020 City of Elk Regular Meeting of the Elk River River Housing and Redevelopment Authority Held at the Elk River City Hall Monday, September 8, 2020 Members Present: Chair Larry Toth, Commissioners Denny Chuba, Michelle Eder,Nate Ovall, Jayme Swenson Members Absent: None Staff Present: Economic Development Director Amanda Othoudt and Economic Development Specialist Colleen Eddy -- or 1, I. 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 5:31 p.m. by Chair Toth. 2. Pledge of Allegiance The Pledge of Allegiance was recited, 3. Consider September 8, 2020, Agenda,,: Motion by Commissioner Chuba and seconded by Commissioner Eder to approve the September 8, 2020, HRA agenda. Motion carried 5- 4. Consent Agenda Commissioner Eder asked for clarification about item 4.5 and if holding 3rd subordinate position was allowed in the policy. She wasn't aware the HRA approved a loan being in 3"' position and would that be allowed in future loan approvals. She asked for clarification that the home equity line of credit would remain open even at a zero balance. Ms. Othoudt stated it was allowed in the policy and the city was currently in 3rd position. The loan was approved prior to CEE administering the loan program. Ms. Othoudt stated it would not be likely that the HRA would be in any future loan approvals in 3rd subordinate position. Moved by Commissioner Eder and seconded by Commissioner Swenson to approve the September 8, 2020, consent agenda as follows: 4.1 August 3, 2020, minutes. 4.2 Check Register as outlined in the staff report. Housing and Redevelopment Minutes Page 2 September 8,2020 ----------------------------- 4.3 Balance Sheet as outlined in the staff report. 4.4 Revenue/Expenditure Report as outlined in the staff report. 4.5 Cunningham Subordination Request. Motion carried 5-0. S. Open Forum No one appeared for Open Forum. 6. Public Hearings There were no public hearings. 7.1 HRA Housing Rehabilitation Loan Program Update Ms. Othoudt presented the staff report. Chair Toth asked what the loan modification would do`*6re past due homeowner. Ms. Othoudt stated it would incorporate their unpaid principal,interest, and late fees and roll them back into the loan, extending e t to allow.;current payment to remain the same, and bring their loan current. 9Commissioner Ovall asked if they alwedto be n oreclosure proceedings yet. Ms. Othoudt stated the HRA is still restricted due to COVM19. The homeowners are cooperating. 7.2 Blighted Properties Residential Forgivable Loan Program and Policy Ms. Othoudt presented the staff report. ft Bair Toth asked if the council was required to review and approve before it could be started. Ms. Othoudt stated the council could review and approve the policy on the consent agenda but it was not a requirement. Commissioner Swenson asked about page 7of the policy,under Site Evaluation—Question 6, and wondered how an applicant would find out that information. Ms. Othoudt stated the county assessor could be contacted to provide that information. Housing and Redevelopment Minutes Page 3 September 8,2020 ----------------------------- Motion by Commissioner Eder and seconded by Commissioner Chuba to approve the Blighted Properties Residential Forgivable Loan Program and Policy as outlined in the staff report. Motion carried 5-0. 7.3 2021 HRA Budget and Resolution Establishing HRA Levy Ms. Othoudt presented the staff report. Motion by Commissioner Swenson and seconded by Commissioner Ovall to approve Resolution 20-04 establishing the HRA Tax Levy for 2021 and the 2021 HRA Budget as outlined in the staff report. Motion carried 5-0. 8. Adjournment Chair Toth adjourned the meeting at 5:43 p.m. Minutes prepared by Jennifer Green. Tina Allard, City Clerk Larry Toth, Chair I,�: Housing& Redevelopment Authority City of Elk Special Meeting of the Elk River City Council River and the Housing and Redevelopment Authority Held at Elk River City Hall Monday, September 8, 2020 Council Present: Mayor Dietz, Councilmembers Garrett Christianson,Matt Westgaard,Nate Ovall, and Jennifer Wagner (5:50 p.m.) HRA Present: Chair Larry Toth, Commissioners Michelle Eder,Jayme Swenson, and Denny Chuba City Staff Present: City Administrator Calvin Portner,Economic Development Director Amanda Othoudt,and Planning Administrate Assistant/Recording Secretary Jennifer Green Others Present: Jesse Hartung, President of Modern Construction Call Meeting to Order Pursuant to due call and notice thereof the meetin w s called to order at 5:46 p.m. 2. Modern Construction — Development Concept Proposal Ms. Othoudt presented the staff report and introduced Jesse Hartung of Modern Construction,who outlined a presentation called The Ecology Project, a 127-unit mixed-use development project in downtown Elk River. He explained the components of the project, addressing improvements to parking, street,pedestrian, and trail traffic, outlining ways to support small business owners during and after the proposed construction,and his proposed project timeline. He stated he is working on financing partnerships and lenders who would like to support this project. He felt once contractors and permits were in place,a January 2023 project completion is feasible. Mr. Hartung reviewed the specific amenities, buildings, building features and outlined millions of dollars in public improvements proposed by private parties. Amenities included: bicycle lockers, a public terrace,public restrooms,pedestrian walkway, hotel,banquet hall, a retractable glass rooftop restaurant, a public lobby showcasing green building construction and sustainability of buildings and include information kiosks showcasing the use of solar panels, rainwater runoff treatment collection that's used for irrigation, and how waste is recycled. He stated this project overall would be a $40 million dollar investment and is partnering with Shawn Carlson of Carnegie Commercial Lending to broker the deal. Mr. Carlson is reviewing the proforma costs and plans associated and stated there would be many lenders who would want to get involved into this development project. Mr. Hartung outlined how he proposed the city would play in this project and proposed: City Council Minutes Page 2 September 8,2020 ----------------------------- - Private Equity—20-30% equity supplied by very small group of investors (himself and a few others) - Bank Mortgage—mortgage financing will take over after occupancy (construction financing will convert over to mortgage at a point of a certain occupancy level, slating to be a 20-year mortgage) - Incentive—public incentives to offset some costs of public improvements Mr. Hartung outlined the public incentives and proposed a trade in-kind improvement of land and all permits,utilities, and related fees in return for the public improvements being made to parking,restrooms, street/sidewalks, greenspace,and informational lobby. Mr. Hartung stated he wants the city and the taxpayers to win on this project and stated for every$3 of public improvements,$1 is credited towards fees. He feels this partnership would greatly benefit the city because taxpayers would receive an instant 300%return on their money. He explained in addition to the expansion of public amenities and services,the city will save millions in cash,labor hours, and equipment time for the long-term upkeep of the existing lot. He stated if this project does not happen,the city will have the same parking problems,lack of additional public amenities, and pass over a wealth of economic activity and population growth.He then outlined the project against the Comprehensive Plan and stated he felt this project fulfills many of the plan's goals and objectives. Mr. Hartung asked the City Council and the HRA to consider the following: 1. To agree in principle to the incentives with the final decision and dollar amounts based on 3 party ROI determinations. 2. To accept parking quantities proposed as a worst-case minimum,with an understanding that additional improvements may be possible. 3. Have a willingness to consider alternate street and traffic flows downtown if studies indicate improvements are possible. 4. Offer a commitment that the city=will work as fast as Mr. Hartung can to get final documents back to the city council for review and approval. r. Hartung stated his original request was going to be to merge the Planning Department with the Street Department as he felt those departments are good at putting up roadblocks but felt that request was bold. He stated he simply wants the council to direct Mr. Portner to direct city staff to say,let's make this thing happen, let's not put up roadblocks,let's not fight along the way. Chair Toth asked how many feet down the proposed parking levels go. Mr. Hartung stated each level would be 11' so approximately 22' below. He stated Bogart and Peterson are providing historical site data as he has heard there is a stream running underneath the proposed area,but they did not feel it would be a huge concern. He stated before spending money on drilling,he would await their findings. Chair Toth asked where the Farmers Market would be held. UREJ City Council Minutes Page 3 September 8,2020 ----------------------------- Mr. Hartung stated he met with Karen Wingard who manages the Farmers Market and felt they came up with some great ideas on keeping the market downtown,and where to hold it in the new development as well as provide a space for a winter market. Chair Toth asked about the proposal for a one-way Main Street and where would the traffic exit. Mr. Hartung explained a traffic study would reveal more details about the best traffic routing design. Chair Toth asked about the future of the Elk River Meats building. Mr. Hartung stated he has had ongoing discussions with the owners of Elk River Meats and discussed mutual goals of enhancing their building and increase their business if they chose to remain in that location. He stated when the owners are ready to retire,he has designed a plan to offer them a premium for their land and building and incorporate the space into the project. He stated the owners are not ready to make any decisions at this time. Commissioner Swenson asked for clarification on the residential parking spaces for the 127 mixed units, and Mr. Hartung clarified one parking unit is proposed for each studio, 1- and 2- bedroom units,and two parking units for the townhouses and 3 bedrooms. He stated they could sell additional spots as they will have additional spots available. Several members of the audience spoke:'""' The owner of Olde Main Eatery expressed concerns with the lack of parking for his restaurant as well as other area businesses during the first six months of construction and how that would negatively affect his business, stating his business needs at least 30-40 parking spots for operation. Mr. Hartung stated the parking ramp would be open in a matter of months. He stated if the Council and HRA could come to an agreement tonight, and when he comes back for official vote, he could present some options to the affected businesses and seek ways to stage the project to minimize parking impacts. He stated he would like the local business' feedback. He discussed a creative marketing budget to include some incentives and assist in parking off-site. Frank Galli felt a six-month project of this size in a small community can be devasting and asked what could be done. Mr. Hartung provided a suggestion to mitigate the effect of decreased parking by making Jackson Avenue a one-way and doubling the parking along both sides of the street. He stated he hopes and will push for a shorter timeline and will guarantee that P 0 W I R I D 9 Y otmaA UREI City Council Minutes Page 4 September 8,2020 ----------------------------- contractually. He also asked what the effect of the 169 Redefine have on the downtown. He stated he recognizes this will impact the downtown businesses but will do his best to mitigate them. He again stressed feedback from business owners. Beth, owner of Antiques Downtown, stated the construction of this project would kill her business. She explained how her 50 vendors transport their wares into the building and with this proposed plan, their ability to do so would be taken away. She felt her vendors would disappear without the ability to access the building during construction. She felt she heard similar promises during the building of Granite Shores and Jackson Place. Mr. Hartung suggested a dedicated loading dock could be proposed and improvements can be made for an even better transport of vendor wares. Mr. Hartung stated he understood the fear of having the businesses affected during construction and looked forward to sitting down and helping business owners find ways to overcome these obstacles. He discussed marketing proposals and incentives to draw patrons into their businesses during and after construction. Chair Toth stated the meeting time limit had been reached and understood there would be many questions and concerns with a project proposed of this magnitude, stating the HRA and Council would need time to digest this project proposal. He stated at some point there would also have to be some J�ublic hearings to ask and ..:...... answer these questions. Mayor Dietz thane r Hartung' or his�time a rt into creating and presenting this proposal. He stated a formal decision or commitment would not be made that evening, stating there is a due diligence process to follow. He stated he heard a lot of great ideas and the Council will take everything from all affected parties very seriously before formal adoption would take place. He asked Mr. Hartung to be patient as this proposal needs to take the proper course. Mayor Dietz t aked for a detailed proposal from Mr. Hartung outlining all aspects of the project. r. Hartung asked the council and HRA to digest his project presentation and not allow it to get caught in a government gridlock. He felt there was a wealth of supporters of this project and he would love to have their voices heard. Mr. Hartung stated he would put together a detailed project outline. 3. Adjournment There being no further business,Mayor Dietz and Chair Toth adjourned the joint meeting of the Elk River City Council and Housing and Redevelopment Authority 6:54 p.m. Minutes prepared by Jennifer Green. l F 0 W I R 1 0 0 Y UREJ City Council Minutes Page 5 September 8,2020 ----------------------------- John J. Dietz,Mayor Tina Allard, City Clerk p 0 w I R 1 0 0Y UREJ