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032805 EDA CITY OF NEW HOPE 4401 XYLON AVENUE NORTH NEW HOPE, MINNESOTA 55428 EDA Minutes March 28, 2005 Regular Meeting City Hall CALL TO ORDER President Opem called the meeting of the Economic Development Authority to order at 10:40 p.m. ROLL CALL Present: Martin Opem Sr., President Mary Gwin-Lenth, Commissioner Andy Hoffe, Commissioner Karen Nolte, Commissioner Steve Sommer, Commissioner APPROVE MINUTES Motion was made by Commissioner Gwin-Lenth, seconded by Commissioner Sommer, to approve the Regular Meeting Minutes of February 28, 2005. All present voted in favor. Motion carried. IMP. PROJECT 740 President Opem introduced for discussion Item 4, Discussion and update Item 4 regarding concept plans for the proposed development of city-owned property at 7500-7528 42 Avenue North, the former Electronic Industries nd site (improvement project no. 740). Mr. Shawn Siders, community development specialist, stated staff is seeking direction regarding the proposed office/condominium/restaurant and ancillary retail development on the city-owned property at 7500-7828 42 nd Avenue North. Over the past ten years, the city has acquired and demolished all three industrial parcels at the intersection of 42 and Quebec nd Avenues to promote community development and clean up the contaminated former Electronic Industry site. The properties were acquired and demolished with tax increment finance funds. In order to expedite the contaminated site clean up, the city made a successful application to the State of Minnesota and Hennepin County to fund the clean-up of the ground water. He noted Electronic Industries covered the cost sharing portion of that grant and to date, the environmental remediation efforts are complete and development can commence. In order to receive a “close out” letter from the Minnesota Pollution Control Agency (MPCA), the city must submit the proposed redevelopment site plan to MPCA to ensure it conforms to the Declaration of Environmental Restriction Covenants agreement that was approved by the city and MPCA. Mr. Siders reported that monitoring of the ground water will be permanently required and the costs will always be the responsibility of Electronic Industries. He stated in November of 2003, the city approved a purchase agreement with JCS Development and Frey Development for the redevelopment of the property. The proposal included a Culver’s restaurant on the western portion of the property and Frey Development had proposed to develop EDA Meeting Page 1March 28, 2005 eight office condominium units on the eastern half of the property. The total purchase price for the two sites was $510,000 plus brokerage fees. In April of 2004, JCS Development notified the city that it was canceling the approved purchase agreement for the western half of the property. JCS identified the close proximity of this site to other Culver’s Restaurants as the principal reason for canceling the purchase agreement. He stated when JCS Development withdrew from the approved purchase agreement; the city council approved an exclusive representation agreement with Retail Site Development Services (RSDS) to assist in securing a suitable restaurant for the western half of the site. That agreement expired in November of 2004, and there is a six month provision which lists Frey Development as a “protected developer” by RSDS. Because of that status, the brokerage fees for this developer will apply and Frey Development will pay the brokerage fees. Further, he stated Frey Development will issue the city an indemnification letter against any brokerage fees in the future for this site. In January of 2005, Frey Development and Manly Land Development submitted a redevelopment proposal to construct eight office condominium units on the easterly half of the site and to construct an approximate 9,000 square foot restaurant/retail use on the western half of the site. He stated Viva Italia is the restaurant use that is expected to occupy 5,000 to 6,000 square feet. He stated Frey Development will work with the city to identify suitable tenants for the remaining 3,000 square feet of retail space. Mr. Siders illustrated the proposed site plan. He noted the mayor, city manager, and director of community development recently visited the Viva Italia restaurant in Eagan. He stated Viva Italia has expressed its desire to apply for an on-sale liquor license. Mr. Siders stated if the council is supportive of the concept, the next steps involve preparation of a term sheet with the developer. He stated the proposed purchase price of $510,000 is the same price previously approved with JCS Development and Frey Development. He stated the property acquisition will be contingent upon the development being able to secure planning approval. He emphasized that the redevelopment must conform to the Declaration of Environmental Restrictive Covenants as approved by MPCA. Once the term sheet is approved, the city attorney will prepare a purchase agreement and a public hearing will be scheduled. He introduced Bernie Frey (Frey Development) and Kurt Manley (owner of Viva Italia). Mr. Frey was recognized and welcomed questions from the city council. Commissioner Sommer acknowledged that the plan hasn’t changed from the previous proposal except for the restaurant use. He expressed support for the owner-occupied office condominiums and the full service Viva Italia restaurant. Commissioner Nolte suggested that the developer consider occupying one of the retail spaces with a Panera Bread store. Mr. Manely noted he has EDA Meeting Page 2March 28, 2005 several proposed tenants in mind. Commissioner Gwin-Lenth pointed out that the parking lot’s traffic pattern has changed. She questioned whether the driveway locations will remain. Mr. Frey stated there are no other options for the driveway locations. He stated the traffic pattern may slightly change as the site plans are developed. He noted there may be a restaurant with a drive-thru window. Mr. Siders called attention to the site plan with parking in the center. He noted this layout is required so that it will comply with the MPCA requirements. He stated the area delineated as parking lot is the area with the greatest concentration of the contaminated soils. Commissioner Hoffe asked whether Electronic Industry has a permanent responsibility relative to the groundwater contamination and monitoring requirements. Mr. Siders responded affirmatively. He stated the MPCA will ensure that the site continues to be monitored forever. The EDA expressed support of the development and directed staff to prepare a term sheet. IMP. PROJECT 775 President Opem introduced for discussion Item 5, Discussion and direction Item 5 regarding redevelopment plans for 5207 Pennsylvania Avenue North (improvement project no. 775). Mr. Shawn Siders, community development specialist, stated his intention to discuss redevelopment of the site at 5207 Pennsylvania and to share a scattered site housing program (independent of block grant funding) that was modeled after the city of Crystal. Mr. Siders explained the proposed scattered site redevelopment program by outlining the program objectives, acquisition of property, property selection criteria, property evaluation procedures, establishment of fair market value, and the acquisition procedures. Mr. Siders reviewed specifications for construction of a single-family house at 5207 Pennsylvania Avenue North. He stated staff recommends a minimum target lot price of $75,000, and a minimum target value of the land and building after redevelopment at $300,000. He stated staff will work with the Hennepin County assessor’s office to determine the property value. Mr. Siders stated staff recommends that the EDA require the developer to complete the development within five months after property conveyance in order to avoid a land banking scenario. He reviewed the building standards and stated the house will be required to have three bedrooms and two bathrooms. The basement must have a “rough in” for a three-quarter bath, and the basement must have an egress window to allow for the expansion of living space. Mr. Siders also stated the house must include low maintenance exterior materials and fit in with the neighborhood. EDA Meeting Page 3March 28, 2005 Mr. Siders emphasized that with procedures in place, the EDA can attain its objectives of providing additional move up housing in the city of New Hope. Commissioner Hoffe inquired of whether the city would lose money on each project. President Opem noted that it will depend on the criteria established by the city. He noted the city of Crystal has been successful with a similar program. Commissioner Gwin-Lenth complimented Mr. Siders on the aspects of the program and for articulating that this is a program that the city can use to deal with a blighted property in a neighborhood. She emphasized the need to pay less attention to the dollar-for-dollar payback and to consider its use as an investment in neighborhoods and to improve property values. Commissioner Gwin-Lenth asked how the city determines the level of hazardous materials in a property prior to redevelopment. Mr. Siders stated there are non-evasive testing procedures available that are good indicators of hazardous materials such as asbestos. Commissioner Sommer pointed out that page two of the proposed program does make reference to conducting an investigation as to the existence of any hazardous materials. Commissioner Sommer explained that he views this type of program to improve a blighted property on a different level than some prior larger scale acquisitions made by the city that involved substantial money. He supported the scattered site redevelopment program as outlined by Mr. Siders. Mr. Siders stated if the EDA is receptive to the proposal, staff will prepare a formal policy for adoption at a future meeting. The EDA expressed support of the proposed scattered site redevelopment program and the specifications for 5207 Pennsylvania Avenue North. 4415 NEVADA President Opem introduced for discussion Item 6, Discussion and direction Item 6 regarding proposed purchase of 4415 Nevada Avenue North. President Opem stated the property is an oversized lot located north of the Northwest Community Revitalization Corporation (NCRC) project involving three twin-homes. He stated the appraised value of 4415 Nevada is $109,000 to $124,000. He stated the property owner is asking $160,000 which is high based on its present condition. Commissioner Sommer suggested that the city contact NCRC to inquire of funding options and whether they would like to increase their current project by pursing a joint venture with the city to include this property. He EDA Meeting Page 4March 28, 2005 pointed out his desire to explore a potential project that would not result in a large expense by the city. Commissioner Nolte asked whether the owner of 4415 Nevada would consider purchasing a PPL condominium. Mr. Siders noted NCRC had previously inquired of the individual’s interest in one of the accessible twin- homes and was told that the property owner would like to move to the Buffalo area to be closer to family members. President Opem emphasized the need to negotiate the purchase price as it would not be fiscally responsible to the New Hope taxpayers to pay more than an appraised value. Commissioner Hoffe questioned available revenue sources such as grants that may be available to assist with the property acquisition. Mr. Siders noted that NCRC could pay the asking price for the property but would encounter problems based on the funding limitations set by HUD. He stated Commissioner Sommer’s suggestion of a joint venture may be an avenue to pursue. Commissioner Sommer concurred with President Opem that the city should not pay more than the appraised value when acquiring property. However, he stated this situation would involve a willing seller so there would be no relocation costs. He pointed out that a settlement and joint venture may be possible that could benefit both the city and another agency. Mr. Kirk McDonald, director of community development, asked the EDA if staff is authorized to negotiate for the purchase of 4415 Nevada Avenue North. The EDA directed staff to contact NCRC to inquire of their interest in the property or a larger project. Commissioner Nolte inquired whether the property owner would be eligible for funding or special programs to assist her with a relocation to Buffalo. She noted that the owner could reduce the asking price if there were other financial resources made available to her. Mr. Siders stated the asking price was based on what the property owner and her family have identified as suitable living arrangements in Buffalo. He stated he would inquire of any available programs or financial assistance. Commissioner Gwin-Lenth expressed support for the creative ideas and the recommendation to approach NCRC. President Opem stated he would not be opposed to purchasing the property if the price was closer to the appraised value. He noted the lot could be divided and would support two single-family homes. Commissioner Hoffe acknowledged that the NCRC obtained an appraisal EDA Meeting Page 5March 28, 2005 for $105,000. Mr. Siders stated NCRC had the property appraised at $105,000 and the property owner received an appraisal for $124,000. He noted both appraisals are subjective and are lower than the asking price. Commissioner Nolte requested that NCRC reconsider its twin-home design to include two bathrooms rather than one bathroom in the accessible units. Mr. Siders stated he has asked them to review the design. He reported that it is possible to include two bathrooms, but the disadvantage of adding a second bathroom is that the main bath and the entryway to the house are reduced in size. He also pointed out that smaller areas make it more difficult to navigate within the space. The EDA agreed with two options relating to the 4415 Nevada Avenue property: 1) consult NCRC regarding possible joint venture; or 2) undertake it as an EDA project if the asking price can be negotiated closer to its appraised value. IMP. PROJECT 770 President Opem introduced for discussion Item 7, Motion authorizing staff Item 7 to request engineering estimate from Xcel Energy for burial of overhead utilities from north side of Bass Lake Road to 58 Avenue North in th conjunction with Winnetka Townhomes redevelopment project (improvement project no. 770). President Opem stated the two options relating to the burial of overhead utilities along the east side of Winnetka Avenue, north of Bass Lake Road include: 1) to 5620 Winnetka Avenue North; or 2) 58 Avenue North. th Mr. Kirk McDonald, director of community development, stated the city needs to select one option so that a more detailed engineering estimate can be completed. MOTION/REQUEST Motion was made by Commissioner Sommer, seconded by Commissioner ESTIMATE Gwin-Lenth, authorizing staff to request engineering estimate on option 2 Item 7 from Xcel Energy for burial of overhead utilities from north side of Bass Lake Road to 58 Avenue North in conjunction with Winnetka th Townhomes redevelopment project (improvement project no. 770). All present voted in favor. Motion carried. ADJOURNMENT Motion was made by Commissioner Sommer seconded by Commissioner Nolte to adjourn the meeting. All present voted in favor. Motion carried. The New Hope EDA adjourned at 11:25 p.m. Respectfully submitted, Valerie Leone City Clerk EDA Meeting Page 6March 28, 2005