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01-03-2022 CCMMembers Present: Members Absent: Meeting of the Elk River City Council Held at the Elk River City Hall Monday, January 3, 2022 Mayor John Dietz, Councilmembers Garrett Christianson, Mike Beyer, Matt Westgaard, and Jennifer Wagner None Staff Present: City Administrator Calvin Portner, Planning Manager Zack Carlton, Economic Development Director Brent O'Neil, Senior Planner Chris Leeseberg, and City Clerk Tina Allard I. Call Meeting to Order Pursuant to due call and notice thereof, the meeting of the Elk River City Council was called to order at 6:39 p.m. by Mayor Dietz. 2. Pledge of Allegiance Pledge of Allegiance was recited. 3. Consider Agenda Moved by Councilmember Wagner and seconded by Councilmember Christianson to approve the agenda. Motion carried 5-0. 4. Consent Agenda Moved by Councilmember Westgaaard and seconded by Councihnember Beyer to approve: 4.1 December 20, 2021, regular and closed minutes. 4.2 Check register as outlined in the staff report. 4.3 Designate use of City of Elk River website, ElkRiverMN.gov as the location where transportation project bids will be advertised. 4.4 Designate Star News as city's official newspaper. 4.5 Resolution 22-01 authorizing the city's official depositories for 2022 and delegating authority for electronic funds transfers. Accept policy for safe electronic transfers and payments. 4.6 Appoint Mayor John Dietz and Finance Director Lori Ziemer to the Fire Relief Association Board with term expiration of December 31, 2022. 4.7 Resolution 22-02 accepting bid and authorizing execution of contract in the matter of Nature's Edge Business Center Phase 3. 4.8 The 2022 City Council meeting calendar. City Council Minutes Page 2 January 3, 2022 ----------------------------- 4.9 The Multipurpose Facility Advisory Commission meeting schedule as outlined in the staff report. Motion carried 5-0. S. Open Forum No one appeared for Open Forum. 6. Presentations, Awards, and Recognition There were no presentations, awards, or recognition. 7.1 Easement Vacation: Public Utility & Drainage, Bruce Rahn, 13665 185"' Avenue Mr. Leeseberg presented the staff report. Mayor Dietz opened the public hearing. Jerry Waite, 13679 185t' Avenue, stated he lives next to this property and the Rahn's are aware of the easement and its daily use as a driveway for years. He stated he purchased his lot with the intention of subdividing it and needs the access for the new lots. He is willing to purchase the property or have the easement narrowed to thirty -three-foot wide. He thought there was an easement across his property, but it has not been located and once this matter is settled, he will grant easement to the property (13701 185`' Avenue) on the other side of him so they can use it as for access as well. Mayor Dietz directed staff to investigate the option of narrowing the easement to thirty -three-foot. Councilmember Westgaard questioned the length requirements of an easement if the City would be installing a public right-of-way that is going to access multiple lots, noting a thirty -three-foot easement is typically provided only to one property owner for single use access. Mr. Leeseberg stated city standards for right-of-way width are typically in the sixty -foot range to accommodate road width, drainage and utilities, and snow storage for a public road. Alice Waite, 18560 Naples Street, questioned how much land she would lose if the city installed a street. Mr. Leeseberg stated Ms. Waite would not lose any land as the easement is not on property. Pat Briggs, 19022 Freeport Street, questioned if the surrounding properties would be landlocked by the vacated easement. Staff stated no. P i I E l E l r r NA TURF City Council Minutes January 3, 2022 Page 3 Moved by Councilmember Christianson and seconded by Councilmember Beyer to continue the public hearing to January 18, 2022. Motion carried 5-0. 7.2 Tax Increment Financing: 28 Jackson Hills Residential Suites 2"d Mr. O'Neill presented the staff report. Micaela Huot, Baker Tilly, discussed the applicant's request for assistance, his qualifications, financing, tax increment assumptions, and the but -for analysis as outlined in her report. She further noted significant development and soil correction costs needed to allow development of the site. Mayor Dietz opened the public hearing. Pat Briggs, 19022 Freeport Street, stated he is required to raise the site up an extra foot because the ground water levels have changed. He stated the peat runs 8-14 feet below ground and this has increased his project cost, so he is requesting $1.62 million plus 4%, which comes just under the 90% request. Ms. Huot stated the total level of tax increment assistance hasn't been determined at this point because the TIF contract will come later; however, the TIF Plan and the TIF District allows for a budget of $1.4 million as a 90% of TIF available. } Mr. Briggs stated this TIF District would be tied only to this specific parcel/project. U Ms. Huot clarified the boundaries of the TIF district include the entire 6-acre site. Mr. Briggs project is on a 2-acre site within the district. She stated there could be an amendment by resolution in the future which could reduce the district size if the area were to be made smaller. Mr. Briggs stated he is requesting the TIF funds only based on the forty-four units proposed. He stated he may want to increase the size of the project to make it feasible so he's requesting that if this TIF were to be approved, he'd only apply the TIF to this specific project within the six acres. Mayor Dietz closed the public hearing. Councilmember Westgaard questioned what would happen with the remaining four acres of the TIF District if all the money is used for this 2.5-acre project. Ms. Huot discussed the options available to Council. Councilmember Wagner stated she previously asked about city liability if there were building structure failure down the road due to poor soil conditions and was told the City could potentially have a hold harmless agreement in place. P0IfEI[1 11 NATURE City Council Minutes January 3, 2022 Page 4 Ms. Huot stated she could research the matter further with the attorney and bring forward contract language. Mayor Dietz asked about the city's TIF policy and whether need is taken into consideration. He noted there are currently a lot of multifamily housing projects being built and questioned if we are at capacity with apartment type housing. He felt need should be taken into consideration if using TIF funding. He expressed concern with future phases at this location and more TIF requests coming forward. Mr. O'Neil stated multifamily housing need is based on studies completed by the city and Sherburne County. He stated these two studies identified the type and quantity of units specifically needed in Elk River. He stated the current project fits into the category of an identified need for the community to meet its housing demand through 2024. He stated a housing TIF district is a Council policy question. Mayor Dietz expressed concerns with building apartments on property that needs a million dollars' worth of assistance when apartments are currently being built all over the city and they are not asking for any city funding assistance. He feels the main purpose of TIF funding is economic development and not housing. He is not against this project but expressed concerns with the shift in philosophy and would like to see more businesses, who generate more tax money, coming to the city versus creating subsidized housing. He stated this project has a long payback period and he is concerned with the applicant coming back in the future for additional similar projects. He stated this project will cost the city $25,000 per unit. Councilmember Westgaard questioned the Housing and Redevelopment Authority's (HRA) discussion. Councilmember Wagner stated overall the HRA was supportive of the project but did have questions about soil viability and future phases. She noted the city can't look at the future phases, but only the project currently before them. She supports the project based on a shortage of workforce housing in the area. She stated it is a necessity within the business community, noting people have gotten jobs, but can't take them because they can't find affordable housing in the area. She further stated she would like to see a summary of the city and county housing studies in reference to the current inventory and the levels of market rate, affordability, and the number of units verses population. Councilmember Christianson agreed on a review of the studies and suggested a future discussion regarding the direction Council would like to see for housing. Larry Toth, HRA Commissioner, stated the peat drops deeper the further north you travel on the site and the city may not have an interest in supporting future projects. Councilmember Beyer stated he understands the mayor's concerns and has the same concerns and further understands how it supports the business community. 1 I I I I F I I T NATUREI City Council Minutes Page 5 January 3, 2022 ----------------------------- Mr. Briggs stated TIF is used to take a non -productive site with no value to create a new building and add it to the tax rolls and there will be economic benefit with added population paying taxes and visiting local business. Councilmember Beyer also expressed concerns for city liability and the soil. Mr. Briggs explained how they remove the unbuildable soils and perform density tests before construction begins. Moved by Councilmember Wagner and seconded by Councihnember Christianson to adopt Resolution 22-03 adopting a modification to the development program for Development District No. 1 and establishing Tax Increment Financing (Housing) District No. 28 (Jackson Hills Apartment Phase II Housing Project) therein and adopting a Tax Increment Financing Plan therefor. Motion carried 5-0. 8.1 Appoint Acting Mayor Moved by Councilmember Westgaard and seconded by Councilmember Christianson to appoint Councilmember Beyer as acting mayor for 2022. Motion carried 5-0. 8.2 MHA Workforce Housing Development Program Grant Mr. O'Neil presented the staff report. Councilmember Wagner asked for clarification in language between the grant and application. She asked if the TIF amount could be lowered if the grant is received noting the applicant has indicated the project could become larger if the TIF is awarded and the Council has expressed policy concerns for the amount of TIF it wants to use. She also questioned the resolution language and if the city is committed to the $850,000. Mr. O'Neil stated if the grant is approved as a new source of funding for this project the city would be obligated to re -analyze the project with the new figures and could consider the TIF amount at that time. Ms. Huot stated this application included a commitment from the city up to $850,000 in order to show a serious application. It would be evaluated and is also why a contract is being proposed to come back later. There was discussion regarding a discrepancy in the resolution regarding whether the amount is $850,000 or "up to" $850,000. There was further discussion about the TIF process. Councilmember Wagner stated she'd like to ensure there will be the ability to review this project again if the project or figures change and wants the applicant to p0■EIEI II NATURE City Council Minutes January 3, 2022 Page 6 understand that the dollar amounts have not been finalized and won't be until all the budget numbers have been submitted. She stated she is in support of applying for the grant, but the resolution needs to be adjusted to state the grant loan will be matched up to $850,000. Mr. Briggs stated when he met with the Joint Finance Committee he discussed how the project would be extremely difficult to complete due to the costs to remedy the soil conditions. He discussed the competitive bidding environment and banking requirements and how he's looking for additional subsidies to get his project off the ground. He stated his project will likely increase in size (increasing number of units and footprint to bring his costs down) if this grant is not approved. Mayor Dietz questioned Mr. Briggs if he would be asking for more TIF funding at a later date. Mr. Briggs stated yes, he would increase the entire scope of the project. Ms. Huot stated a project would come back for analysis with any awarding of grant funds. She stated the amount of TIF would be subject to the viability of the project. Councilmember Wagner clarified there could be two scenarios: the TIF amount could be reduced or increased based on changes in the project scope. Mayor Dietz clarified that if Mr. Briggs doesn't get the grant, he stated he will increase the project scope. Mr. Briggs stated he searched for this additional grant money because the current financials for the project are not bankable. Councilmember Wagner questioned Mr. Briggs if his goal is to have a larger project then what had been reviewed previously. Mr. Briggs stated his goal is to get forty-four units with 15 years of TIF and searching for additional funding sources in order to have a bank approved project. Councilmember Wagner noted legally the Council can only make recommendations based on what is provided to them. She clarified to the applicant she doesn't like the project changing and their being funding expectations from Council based on a different project. She felt everything should be finalized before discussing a TIF district. Councilmember Beyer asked why this project is under discussion before there is TIF. Mr. O'Neil stated this demonstrates the difficulty of putting a project together and the variables that can occur. He stated he was asked to consider the project on a helpful timeline to the applicant. F I I t I E I I i NAE City Council Minutes Page 7 January 3, 2022 ----------------------------- Councilmember Westgaard concurred with Councilmember Wagner noting Council is asked to evaluate a TIF district of a 44 unit building on two acres with poor soil conditions. He stated any project change will be re-evaluated and the variables are the risk of the developer. He noted the question on the floor is whether to pursue this grant opportunity and it's a waste of time to discuss unknowns until the outcome of the grant has been determined. Mayor Dietz wanted to make it clear that the resolution under consideration doesn't commit the Council to specific TIF dollars if the grant money is approved and the Council will have the ability to change the TIF amount based on any changes to the project. Moved by Councilmember Wagner and seconded by Councihnember Beyer to adopt Resolution 22-04 authorizing an application to the Minnesota Housing Finance Agency under its workforce Housing and Development Grant and Loan program with the edit on page 2 paragraph 2 to say grant loan match up to $850,00. Motion carried 5-0. 8.3 Discuss Work Session Items Mr. Portner presented the staff report. Councilmember Wagner requested a presentation on the housing studies. 9. Council Liaison Updates Councilmembers provided updates as outlined in the respective advisory board's minutes. Council recessed at 8:39 p.m. and reconvened in worksession at 8:45 p.m. 10.2 Concept Review: Ryan Kostreba, 19645 Evans Street Mr. Leeseberg presented the staff report. Ryan Kostreba, applicant, explained the difference between Class A storage and the more typical mini storage people are familiar with. He stated they need a high visibility location and Class A storage is not a great fit within the I-3 Zoning District due to its fringe city locations. He outlined the following benefits of Class A storage: ■ professional office building feel ■ condenses storage into a condensed space ■ better utilization of land use ■ most business interaction takes place inside the building ■ not a requirement of extreme lighting on the exterior ■ no ugly fences Discussion points mentioned were: l/1EIEI /1 NAJURE City Council Minutes January 3, 2022 ■ Number of levels ■ Number of units in the facility ■ Security/code access ■ Number of employees ■ Customer traffic Councilmembers expressed some of the following concerns: ■ Is location being considered appropriate ■ Buffering of neighbors " Setting precedent for storage in other city locations • Building height Page 8 Ryan Kostreba stated their goal would be to maintain as much of the existing tree line as possible but there would be some cleanup of the woods. Council consensus to direct staff to move forward with an ordinance amendment. Council suggested the applicants meet ahead of time with surrounding neighbors if they get to a point of buying the property. 10.3 Elk River Nuisance Code Mr. Carlton presented the staff report. He questioned Council's desire to regulate soft -sided dumpsters. Councilmember Christianson noted there are limited locations the garbage contractors can access. Council expressed the following: ■ Check with other cities on their rules. ■ Distinguish between the two types of dumpsters. ■ Need to be careful of the timelines/have a complaint process/typically have used 14 days. ■ Resident needs to take care of the dumpsters, not city staff reaching out to the contractors. Council consensus was to direct staff to draft an ordinance amendment. Pat Briggs wanted to clarify some of the discussion from Item 8.2 above. He stated bringing in the additional grant application funding confused the matter. He stated he is not looking for an open-ended funding source and would like to find a happy medium where both sides are comfortable moving forward noting sometimes you must increase or shrink a project based on funding. City Council Minutes January 3, 2022 Page 9 Mayor Dietz stated the consultant will do a review and analysis again if the grant is approved. 10.1 Review Advisory Board Applicants Council reviewed and discussed applicants for advisory board vacancies. Multour�ose Facility, Advisory Commission Moved by Councilmember Westgaard and seconded by Councilmember Beyer to appoint Betsy Gulden to the Multipurpose Facility Advisory Commission. Motion carried 5-0. Planning Commission Moved by Mayor Dietz and seconded by Councilmember Christianson to appoint Tony Mauren to the Planning Commission. Motion carried 5-0. 11. Adjournment There being no further business, Mayor Dietz adjourned the meeting of the Elk River City Council at 9:41 p.m. Tina Allard, City Clerk U rI . 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