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05-03-2021 HRA MINCity of Elk River Members Present: Members Absent: Regular Meeting of the Elk River Housing and Redevelopment Authority Held at the Elk River City Hall Monday, May 3, 2021 Chair Larry Toth, Commissioners Denny Chuba, Nate Ovall, Jayme Swenson, and Jennifer Wagner None Staff Present: City Administrator Cal Portner, Economic Development Specialist Colleen Eddy, Planning Manager Zack Carlton, and Recording Secretary Jennifer Green 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 5:30 p.m. by Chair Toth. 2. Pledge of Allegiance The Pledge of Allegiance was recited. 3. Consider May 3, 2021, Agenda Ms. Eddy added item 7.6, The Delta Apartments Housing TIF Application. Moved by Commissioner Wagner seconded by Commissioner Swenson to approve the May 3, 2021, HRA meeting agenda with the addition noted above. Motion carried 5-0. 4. Consent Agenda Moved by Commissioner Chuba and seconded by Commissioner Swenson to approve the consent agenda as follows: 4.1 February 25, 2021, meeting minutes. 4.2 Check register as outlined in the staff report. 4.3 Balance sheet as outlined in the staff report. 4.4 Revenue/ expenditure report as outlined in the staff report. Motion carried 5-0. Housing and Redevelopment Minutes May 3, 2021 S. Open Forum No one appeared for Open Forum. 6. Public Hearings There were no public hearings. 7.1 Proclamation for Elk River Meats Page 2 Chair Toth presented the Robecks with a proclamation for May 3, 2021, as Elk River Meats Day. The HRA thanked the Robecks for their presence in the community for the past 50 years. 7.2 Downtown Beautification Ms. Eddy presented the staff report on behalf of Suzanne Fischer. She reported DERBA will be purchasing 24 baskets for the 2021 season at $90/basket for a total of $2160. Staff is also recommending securing a professional services contract for seasonal maintenance including daily water, maintenance, fertilizer and deadheading. The two proposals they received weren't available in time for tonight's packet and they were $16,673 from Yardworx Outdoor Services and $20,790 from Speedcutters Outdoor Maintenance LLC with a seasonal date range from May 1 to Sept. 30. She noted these proposals were not received in time for the packet and if the HRA wishes, and the amounts were higher than anticipated so they could request additional proposals again. Finally, she stated when DERBA orders the 2022 flowers this September, the HRA will purchase 26 — 23" H2O Saver Baskets at $89/pot for a total of $1950 and take them to the nursery this September to be used for next year's flowers. Commissioner Ovall asked for clarification about Ms. Fischer mentioning she would try out one or two flower baskets using the new pots during the 2021 display season to ensure they would work well this year as well as feedback on what is viable for the flowers in the pots. He thought that was what was discussed at the last meeting. Commissioner Swenson asked if there was a deadline for purchasing for 2021. Ms. Eddy was not aware of a deadline. Chair Toth asked about direction for this year's flower purchases. Commissioner Wagner explained at the April DERBA meeting, the group approved to purchase of the flowers for 2021 at a cost of $95 per pot. She understood that Ms. Fischer was going out for bid to see what the cost would be for annual flower maintenance, and it seems the cost is double what could be done with city staff with a cost of $8200 for staff. She felt the pots don't have to be purchased today but the HRA does need to determine who will be taking care of the flowers DERBA is in the process of purchasing. Housing and Redevelopment Minutes Page 3 May 3,2021 Chair Toth asked if the pots Suzanne purchased can be used downtown this year to see if they work. Commissioner Wagner indicated she thought the test pots would be tried out downtown this year. She noted she grew up in Benson which is one of the cities listed who have used the H2O pots and will find out from the mayor how they are working out. She indicated she is not interested in purchasing the H2O pots until the HRA receives feedback on how well they work in Minnesota. She felt more importantly, the HRA needs to determine how the pots the DERBA is purchasing will be maintained this year. Commissioner Ovall stated he recommends not going out to bid again and using city resources to ensure the baskets get watered properly. Commissioner Chuba stated he felt the cost of the bids were too much money and would recommend city staff to maintain the flowers. Commissioner Swenson agreed. Commissioner Wagner asked if there was any feedback from Tim Sevcik. Mr. Portner stated the recommendations he had received were changing the types of plants used, only having planters on one side of the street due to extreme heat and hiring seasonal staff to maintain the flowers. He indicated there is a challenging to hire seasonal employees and this maintenance would more than likely be done by regular maintenance staff. Commissioner Wagner disagreed with having flowers on one side of the street and felt professionals would provide the right kind of plant. Mr. Portner stated the numbers that staff presented last month is what they have to allocate. He's hopeful the plants will be hardier, and staff is trying to find a way to be more successful. He noted the H2O planters presented is only to ensure the flowers are watered and bridge the timing between when they could be watered. He stated this is for informational purposes only, the larger pots can be used on the poles, and discuss during budget talks a contract for next year. Commissioner Swenson asked about lights as an option in the future. Mr. Portner stated Ms. Fischer apologized not being able to present the information herself to explain pricing for the lights,but she will present that information at a future meeting. The HRA discussed either directing staff to maintain the flowers or approve one of the two maintenance proposals received and adjusting their quote to fit when the flowers arrive. Commissioner Wagner stated the flowers were being ordered by DERBA but was not sure when they are being delivered. Commissioner Swenson asked if staff had a recommendation for which company to choose. Ms. Eddy stated both businesses met the qualifications, and the cost shows how labor intensive this type of work is. Housing and Redevelopment Minutes Page 4 May 3, 2021 Ms. Eddy stated both businesses met the qualifications, and the cost shows how labor intensive this type of work is. Moved by Commissioner Ovall seconded by Commissioner Chuba to approve the engagement of city staff and maintenance crews to maintain the downtown flower baskets for the 2021 season at a cost not to exceed $8200.00. Motion carried 5-0. Chair Toth asked about making a decision on purchasing the string lights. Commissioner Swenson indicated it could be discussed at a future meeting. 7.3 Downtown Discussion Mr. Carlton presented the staff report. He stated they received two quotes, the proposals came in late Friday and earlier today, and he recommended proceeding with SFR for a total cost of $27,500 for the following: traffic study for $10,000; $2500 high level parking assessment for a needs -analysis downtown, and $15,000 pedestrian feasibility study for a grade -separated crossing at either above or below grade. Chair Toth asked Mr. Carlton if he thought it was advantageous to do all 3 studies now rather than splitting them up. Mr. Carlton recommended proceeding with the traffic and parking study now and was a great place to begin. He noted due to the Comprehensive Plan update coming in the next six months, he felt it best to complete the pedestrian feasibility study after the Comprehensive Plan changes are finalized because the dialogue and language received in the downtown, which will not be presented to everyone until next month. Commissioner Ovall stated he concurred. Commissioner Wagner asked for clarification. Mr. Carlton recommended waiting to proceed with the pedestrian feasibility study due to changes being presented to the scope of the downtown and land use guidance that came will be coming out of the Comprehensive Plan update. He suggested allowing the plan updates to be adopted and finalized before proceeding with the pedestrian feasibility study. Commissioner Ovall noted the parking and traffic study results may reveal different pedestrian movement routes, allowing even more flexibility, which is why it that makes sense to wait to proceed with the pedestrian bridge study. Chair Toth agreed with Commissioner Ovall. Mr. Carlton commented another unknown is the traffic flow once Highway 169 is completed in five years and the long-term impacts. Housing and Redevelopment Minutes May 3, 2021 Page 5 Commissioner Wagner stated she really dislikes making a decision on this when the information is verbally presented. She stated this seems different than she anticipated. She is surprised to not include the pedestrian bridge study. She requested in the future to present items when they are received before the meeting. Mr. Carlton stated he understood and stated there is nothing that says they can wait until another meeting. Chair Toth asked the impact of waiting to do the pedestrian study. He wasn't sure if the council had a specific timeline for the HRA to complete these items. Mr. Carlton stated he did not believe waiting would impact the results of the transportation assessment and the parking assessment. Commissioner Wagner stated she personally felt there was interest to find out if a pedestrian bridge was feasible but was surprised others want to wait on the study and does understood the reasons for waiting and the cost was not cheap. She likes to be prepared to give an educated opinion. Commissioner Ovall stated to be fair, the HRA asked Mr. Carlton what his opinion was. He asked for Commissioner Wagner to explain her feelings and why she feels strongly for proceeding now instead of waiting. Commissioner Wagner stated she wasn't aware the Comprehensive Plan meeting was being held the next day and understands the reasons suggested for waiting until after that meeting. Chair Toth stated because the council asked the HRA to take over the project to not rush part of it and doesn't propose waiting either but wants to make sure they receive accurate information. Mr. Portner asked for Mr. Carlton to explain when he recommends doing the pedestrian feasibility study. Mr. Carlton recommends doing the pedestrian feasibility study after the Comprehensive Plan is finalized. Mr. Portner also explained the federal government passing an infrastructure plan which could provide monies available to be in a better position to leverage those funds. He likened it to the chicken and egg planning, if you do not have a plan, you can't even ask for it. He noted having a plan would give the city a better position but also when you do the study would provide the most benefit. Commissioner Chuba stated he would like to see the traffic study and parking study done at this time and in the future, the pedestrian study done as soon as possible but after the Comprehensive Plan is finalized. Mr. Carlton noted if the HRA wants additional clarification, it can be discussed at the first meeting in June, or the HRA could proceed with moving forward tonight. Housing and Redevelopment Minutes Page 6 May 3, 2021 Chair Toth asked if the studies should wait until after tomorrow's Comprehensive Plan meeting. Moved by Commissioner Chuba seconded by Commissioner Ovall to approve the proposed presented by SRF for the traffic study and parking study as outlined in the proposal. Motion carried 5-0. 7.4 HRA Housing Rehabilitation Loan Program Update Ms. Eddy presented the staff report. Chair Toth commented that recent funding requests have been over the HRA's $25,000 threshold and wondered if the threshold be increased because the HRA has funds available to do so. Commissioner Swenson asked if residents were unable to receive financial help from the HRA; can still find alternative sources of aid. Commissioner Ovall noted CEE noted in their January presentation that the applicants, if they qualify, are still receiving funding someplace else so those dollars are still coming into our community for improvements. Ms. Eddy indicated most applicants are receiving funding, if not by the city, funding through other sources. 7.5 Main and Gates Redevelopment Update Ms. Eddy presented the staff report. Commissioner Chuba asked for clarification on the cost of dirt and seed that was presented at last month's meeting. Ms. Eddy stated city staff is providing the services. Commissioner Chuba stated that sounds reasonable to him but asked the city to put themselves in the developer's chair and provide the same courtesy the city receives, not using city staff but allowing a less costly way to achieve the desired outcome. He was in support of moving ahead with soil borings. He was somewhat underwhelmed with developer's forum and asked for an update. Ms. Eddy stated she has not heard much feedback from the forum, noting they are still marketing the promotional informational video on Linkedln. Commissioner Chuba noted the developer that was interested will like the results of the soil borings. Housing and Redevelopment Minutes May 3, 2021 Page 7 Moved by Commissioner Ovall seconded by Commissioner Chuba to approve the proposal from American Engineering Testing, Inc., in the amount of $3,000 for Geotechnical Exploration/soil borings at the Main and Gates Redevelopment site as outlined in the staff report. Motion carried 5-0. Councilmember Wagner addressed Commissioner Chuba's comment, stating all HRA members agreed that the quote the city received for reseeding was for work that was significantly more than what was needed or recommended. She stated this topic was discussed during the council work session; it was very clear that the city was held to the same standard as a private developer would be held. She noted the quotes were more than what was needed or required by ordinance and the city tries to be good stewards of city funds. Mr. Portner stated the goal of reseeding was miscommunicated. 7.6 The Delta Apartments Housing TIF Application Mr. Portner along with Mikayla Huot with Baker Tilly presented the staff report. They explained the TIF application request, outlined in the staff report, by Stonewood Development, LLC's proposal to construct two 90 -unit residential apartment buildings on the former Saxon Auto site with underground parking. Phase 1 is expected to commence construction in 2021. The applicant intends Phase 2 shortly thereafter but has indicated construction could start 2-3 years after Phase 1. Ms. Huot explained the request is for assistance to include 90% of incremental tax revenues for up to 26 years. Consistent with the original application submitted by Sun Rae Apartments, LLC, the application includes an approximate $31.556 million project funded through a combination of debt and equity. The applicant's supporting financial information includes updated sources and uses of funds with a revised total development cost of $34.7 million with 80% as debt financing and 20% as private equity. She explained this financial assistance through pay-as-you-go TIF would provide additional revenues to support the required level of debt and project cash flow to repay annual debt service payments. Typical extraordinary redevelopment costs that cannot be supported solely by the project alone could justify the need for public financial assistance and allow the project to proceed as proposed to provide appropriate upfront funding and meet the minimum debt coverage requirements. The applicant indicated city financial assistance is necessary for the project to proceed. She stated because city policy limits redevelopment project assistance to 15 years it requires deviation from the policy. She said the Joint Finance Committee reviewed the request on February 23, 2021 and the committee consensus was to recommend HRA approval of a 20 -year TIF district for Phase 1 and 20 years for Phase 2 with an aggregate of 26 years. The group states that the deviation was due to exuberant circumstances that this project would not be completed with the maximum 15 years allowed per the policy. Chair Toth asked if they are approving this proposal without some of the final paperwork. Housing and Redevelopment Minutes May 3, 2021 Page 8 Ms. Huot stated the action requested tonight is the city council adoption of the TIF plan and creation of the TIF district. She indicated the appraisals, which have been received and will validate this need to increase the amount, will support and the final contract would come after that. Commissioner Wagner stated she would like to hear from those who sit on the Finance Committee as she feels this deviation from the policy is pretty significant and asked if the city has ever deviated from the 15 -year policy. Ms. Huot stated she could not speak for certain, but her recollection was there have been longer term districts, but the policy has been modified several times with one being term limits. Commissioner Ovall stated he is lacking all the context of the details of what was discussed. He stated the tone from the Finance Committee was there's a pecking order with TIF being job creation first and then redevelopment of old housing and industrial stock. He felt TIF is a good tool to facilitate redevelopment. Lastly is housing, market rate or affordable. She stated they have heard over the years that while the policy is 15 years, it is out of alignment with state guidelines. He felt that this proposal of pay as you go is attractive with these factors, along with the site itself. Chair Toth felt the appraisals being received are answering some of the final questions. He noted there may be another TIF district possibility with the Main and Gates redevelopment. He stated to him, the developer has made the efforts asked by the city. Ms. Huot stated TIF 24 was a 26 -year TIF, but it was redevelopment, not housing. Commissioner Ovall stated this proposal is somewhat of a hybrid with redevelopment and housing components. Commissioner Wagner also agreed there was a lot of attractiveness to this proposal and this area has been poised to be redevelopment for several years. She stated it's always in the back of her mind to ensure we don't find ourselves overcommitted in large TIF districts. Moved by Commissioner Ovall and seconded by Commissioner Chuba to recommend support for the application to establish a Phase 120 -year TIF district as requested by Stonewood Development, LLC, and 20 years for Phase 2 with an aggregate of 26 years for construction of two 90 -unit residential market -rate apartment buildings with underground parking on the former Saxon Auto site as outlined in the staff report. Motion carried 5-0. B. Adjournment Chair Toth adjourned the meeting at 6:35 p.m. Housing and Redevelopment Minutes May 3, 2021 Minutes prepared by Jennifer Green. Tina Allard, City Clerk I�rTo:hair Housing & Redevelopment Authority Page 9