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05-02-2005 HR MINMEETING OF THE ELK RIVER HOUSING AND REDEVELOPMENT AUTHORITY HELD AT THE ELK RIVER CITY HALL MONDAY, MAY 2, 2005 Members Present: Chair Wilson, Commissioners Kuester, Lieser, Toth, and Motin Members Absent: None Staff Present: Director of Economic Development Catherine Mehelich, Assistant Director of Economic Development Heidi Steinmetz, and Recording Secretary Jessica Miller 1. 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 May 2, 2005 HRA Agenda MOVED BY COMMISSIONER KUESTER AND SECONDED BY COMMISSIONER TOTH TO APPROVE THE MAY 2, 2005 HRA AGENDA. MOTION CARRIED 5-0. 3. Consider Consent Agenda MOVED BY COMMISSIONER MOTIN AND SECONDED BY COMMISSIONER LIESER TO APPROVE THE CONSENT AGENDA AS FOLLOWS: 3.1. CONSIDER APRIL 4, 2005, REGULAR MEETING MINUTES 3.2. CHECK REGISTER 3.3. MARCH 2005 REVENUE/EXPENDITURE REPORT 3.4. MARCH 2005 BALANCE SHEET MOTION CARRIED 5-0. 4. Open Mike There was no one present for Open Mike. 5. Downtown Revitalization Project Update Director of Economic Development Catherine Mehelich provided some background information on the project. Kzng Az~nue parking Lot br,~rrozsraents Ms. Mehelich stated that staff continues to work closely with the King Avenue Parking Lot Taskforce to discuss parking lot design and enforcement options. Mr. Mehelich indicated that the taskforce will meet again on May 5 to finalize recommendations for the HRA and City Council regarding parking enforcement. Ms. Mehelich stated that the award of the King Housing & Redevelopment Authority May 2, 2005 Page 2 Avenue parking lot bid has been postponed until the May 16 City Council meeting until all of the contingency requirements of the development agreement are resolved. Chair Wilson questioned what the HRA's role is in parking enforcement. Ms. Steinmetz indicated that the taskforce will provide their enforcement recommendations to the HRA in June and the HRA will then make their recommendations to the City Council. 1'~j~rt Constrcrct~ion Ms. Mehelich stated that the Jackson Block property will be transferred to the developer following the substantial completion of the parking lot improvement and a number of contingencies outlined in the development agreement. Ms. Mehelich indicated that one of the conditions of the sale is the City Council review and approval of the project construction plan which includes the parking plans for the construction staging period and post construction period. Ms. Mehelich noted that the review and approval of these plans is a requirement of the development agreement and the normal reviews required of the city's planning and zoning process will be dealt with during the plat review process. Staff anticipates the Council's consideration of the construction plans at their May 16 meeting. Canrrnmzcations Ms. Mehelich stated that the City Engineer will be distributing information relating to the upcoming parking lot construction by visiting businesses door to door in the downtown area. She indicated that staff is preparing the next edition of the Downtown Revitalization Q&A Newsletter for distribution in June. Ms. Mehelich also indicated that MetroPlains has erected a sign at each project site that includes an image description of the project and contact phone numbers. She noted that these signs have generated several calls on the condo units. Commissioner Motin indicated that the City Council approved an ordinance change allowing drycleaners in the downtown area at their April 4, 2005 meeting but Mr. Nadeau has decided not to continue his drycleaning business in Elk River. 5.1. Consider Small Cities Development Program Loan Agreement Assistant Director of Economic Development Heidi Steinmetz stated that a key component of the Downtown Revitalization Project financing includes a Small Cities Development Program (SCDP) grant that was awarded to the city from the MN Department of Employment and Economic Development (DEED) in 2004 specifically for the Jackson Block rental housing new construction component. Ms. Steinmetz indicated that the grant application proposed that the HRA would loan MDI Limited Partnership #70 (asset manager for MetroPlains Development, LLC) $400,000 to help fill in the financing gap that results from the disconnect between the cost of constructing affordable rental housing and cash flows available to repay debt. Ms. Steinmetz stated that the loan is proposed to be paid back in full at 1% interest at the end of 30 years, which is consistent with MN Housing Financing Agency financing. Ms. Steinmetz stated that staff is asking the HRA to consider the general terms of the loan agreement between the city and MetroPlains. Ms. Steinmetz reviewed the following key components of the loan agreement: ^ MetroPlains must construct 32 units of affordable rental housing. This means that the rental rates of these units must be affordable to households earning no more Housing & Redevelopment Authority May 2, 2005 Page 3 than 50% of the Sherburne County Median Income, which is currently $77,000 per year. ^ The loan is secured by a subordinate mortgage. The loan is dispersed on a drawdown basis during the construction of the project which must be approved by DEED prior to the disbursement. ^ Management and operation requirements, i.e. that MetroPlains must provide a property manager and that the property will be sufficiently maintained. ^ The agreement includes Federal requirements, in addition to state requirements, to be monitored by Short, Elliot, Hendrickson (SEH) per the Grant Administration Contract the city has with SEH. Commissioner Toth questioned if this property will be subsidized. Ms. Steinmetz stated that the requirement of the grant is that the units must be affordable to households earning no more than 50% of the Sherburne County Median Income and that any details of subsidies would have to be confirmed with MetroPlains. Commissioner Lieser questioned why page 1 of the agreement states that the units must be affordable to renters earning no more than 50% of the Sherburne County Median Income and on page 7 it states that the borrower shall obtain a certification that the tenant's household income does not exceed 60% of the County Median Income. Ms. Steinmetz stated that page 1 relates to the fact that rental rates cannot exceed what is affordable to 50% of the Sherburne County Median Income and page 7 indicates that the tenants can make up to 60% of the Sherburne County Median Income. Conuiussioner Motin indicated that the units have always been referred to as "affordable", not "low income" and that the requirement that the rent does not exceed 50% of the Sherburne County Median Income makes the units affordable but the provision stating that the renters cannot make more than 60% of the Sherburne County Median Income makes the units low income. Ms. Steinmetz indicated that both requirements were part of the original grant application and must remain as part of the loan agreement. Commissioner Toth indicated that he was not aware that these requirements were part of the grant application. He stated that he is fine with the units being affordable but does not want to see them subsidized as the city has had problems with subsidized units in the past. Ms. Steinmetz indicated that it is appropriate for MetroPlains to address the HRA on these issues. It was the consensus of the HRA that they would like to meet with MetroPlains prior to approving the loan agreement. Director of Economic Development Catherine Mehelich indicated that staff will see if MetroPlains is available to meet with the HRA prior to the HRA's joint meeting with the City Council on May 9 and if they are not, they will schedule MetroPlains to come to the June HRA meeting. Chair Wilson questioned if the loan would be paid off when the property is sold prior to the mortgage maturity. Ms. Mehelich stated that it is not the city's intention for the property to be sold but if it is, there is a condition in the development agreement that requires the city to be notified and approve any sale at which time they could require the loan be paid in full. Housing & Redevelopment Authority May 2, 2005 Page 4 MOVED BY COMMISSIONER TOTH AND SECONDED BY COMMISSIONER MOTIN TO TABLE APPROVAL OF THE TERMS OF THE LOAN AGREEMENT WITH MDI LIMITED PARTNERSHIP #70 TO THE NEXT AVAILABLE SPECIAL MEETING BETWEEN THE HOUSING AND REDEVELOPMENT AUTHORITY AND METROPLAINS. MOTION CARRIED 5-0. 6. Call Special HRA Meeting for Joint Worksession with City Council Assistant Director of Economic Development Heidi Steinmetz indicated that staff is requesting the HRA call a special meeting on Monday, May 9, 2005, at 6:30 p.m. to meet jointly with the City Council to discuss the visioning process for Downtown North of Highway 10. Commissioner Motin indicated that the HRA should also call a special meeting for Monday, May 9, 2005 at 5:30 p.m. in the instance that MetroPlains is available to meet and if they are not, the 5:30 p.m. meeting could be cancelled. MOVED BY COMMISSIONER TOTH AND SECONDED BY COMMISSIONER KUESTER TO CALL THE FOLLOWING SPECIAL MEETINGS OF THE HOUSING AND REDEVELOPMENT AUTHORITY: ^ MONDAY, MAY 9, 2005, 5:30 P.M. FOR THE PURPOSE OF MEETING WITH METROPLAINS TO DISCUSS THE SMALL CITIES DEVELOPMENT PROGRAM LOAN AGREEMENT WHICH WILL BE RESCHEDULED IF METROPLAINS IS NOT AVAILABLE; AND • MONDAY, MAY 9, 2005, 6:30 P.M. JOINT MEETING WITH THE CITY COUNCIL TO DISCUSS THE REDEVELOPMENT CONCEPT FOR DOWNTOWN NORTH OF HIGHWAY 10. MOTION CARRIED 5-0. 7. Other Business There was no Other Business. 8. Adjournment. There being no further business, MOVED BY COMMISSIONER TOTH AND SECONDED BY COMMISSIONER KUESTER TO ADJOURN THE MEETING. MOTION CARRIED 5-0. The meeting of the Elk River Housing and Redevelopment Authority adjourned at 5:47 p.m. ~~ Jessica Miller Recording Secretary