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072318 EDA Meeting Packet EDA MEETING City Hall, 4401 Xylon Avenue North Monday, July 23, 2018 President Kathi Hemken Commissioner John Elder Commissioner Andy Hoffe Commissioner Eric Lammle Commissioner Jonathan London 1. Call to order – EDA Meeting of July 23, 2018 2. Roll call 3. Approval of Minutes:  June 25, 2018 4. Resolution approving the purchase agreement for the acquisition of 3856 Maryland Avenue North (improvement project no. 1024) 5. Adjournment EDA Meeting Page 1 June 25, 2018 City of New Hope 4401 Xylon Avenue North New Hope, Minnesota 55428 EDA Minutes June 25, 2018 Regular Meeting City Hall CALL TO ORDER President Hemken called the meeting of the Economic Development Authority to order at 8:35 p.m. ROLL CALL Present: Absent: Kathi Hemken, President John Elder, Commissioner Andy Hoffe, Commissioner Jonathan London, Commissioner Eric Lammle, Commissioner Staff Present: Kirk McDonald, City Manager Aaron Chirpich, Community Development Specialist Valerie Leone, City Clerk Chris Long, City Engineer Jeff Sargent, Director of Community Development Steve Sondrall, City Attorney Stacy Woods, Assistant City Attorney APPROVAL OF MINUTES Item 3 Motion was made by Commissioner Hoffe, seconded by Commissioner Elder, to approve the minutes of June 11, 2018. All present voted in favor. Motion carried. IMP. PROJECT 1023 Item 4 President Hemken introduced for discussion EDA Item 4, Resolution approving the purchase agreement for the acquisition of 7215 62nd Avenue North (Improvement Project No. 1023). Mr. Aaron Chirpich, community development specialist, reported on the opportunity to purchase the property at 7215 62nd Avenue North for $138,000 as part of the city’s scattered site housing program. He recommended demolishing the house to allow for construction of a new single-family home. He reviewed the proposed budget of $162,750 and recommended the use of EDA funds for the project. RESOLUTION 2018-09 Item 4 Commissioner London introduced the following resolution and moved its adoption “RESOLUTION APPROVING THE PURCHASE AGREEMENT FOR THE ACQUISITION OF 7215 62ND AVENUE NORTH (IMPROVEMENT PROJECT NO. 1023).” The motion for the adoption of the foregoing resolution was seconded by Commissioner Elder, and upon vote being taken thereon, the following voted in favor thereof: Hemken, Elder, Hoffe, London; and the following voted against the same: None; Abstained: None; Absent: Lammle; whereupon the resolution was declared duly passed and adopted, signed by the president which was attested to by the executive director. EDA Meeting Page 2 June 25, 2018 IMP. PROJECT 973 Item 5 President Hemken introduced for discussion EDA Item 5, Resolution approving amendment to purchase and redevelopment agreement for construction of new home by Great Buy Homes, Inc. at 6065 Louisiana Avenue North (Improvement Project No. 973). Mr. Aaron Chirpich, community development specialist, provided the background regarding the two side-by-side lots on Louisiana Avenue that were sold to Great Buy Homes in October of 2016. He stated the builder addressed Council at the June 18 work session requesting authorization to construct a split entry style home at the scattered site lot instead of the two-story style home that was agreed upon in the development contract. Mr. Chirpich stated the builder believes a split-entry style home would be more marketable for the location as the two-story house on the north lot took several months to sell . Mr. Chirpich stated the assistant city attorney has prepared a resolution approving an amendment to the purchase and redevelopment agreement. Commissioner London reiterated his comments made at the work session that he would prefer the builder to abide by the terms of the original agreement and if the house does not sell within six months, the city could compensate the builder if the asking price has to be lowered in order to sell the property . He noted this would allow a higher valued property to be built in the city with a greater tax impact. Mr. Jeff Sargent, director of community development, acknowledged Commissioner London’s concerns. He noted when the builder first approached staff requesting a different style of house, he also believed the builder should be required to fulfill the terms of the original agreement. He pointed out the difficulty in knowing future market conditions. He explained that the city could buy the property back from Great Buy Homes for resale to another builder. He reported after reviewing the split-entry home designs initially offered by the other builders, staff believes that Great Buy Homes will provide a better final product with quality materials and high-end finishes. Commissioner Elder noted he agreed with many comments made by Commissioner London. Director Sargent stated the city must preserve the integrity of the scattered site housing program and in the future, staff will ensure the terms of the development contract are met. Mr. Kirk McDonald, city manager, stated this performance issue will be taken into consideration if Great Buy Homes bids on future scattered site housing projects. RESOLUTION 2018-10 Item 5 Commissioner Hoffe introduced the following resolution and moved its adoption “RESOLUTION APPROVING AMENDMENT TO PURCHASE AND REDEVELOPMENT AGREEMENT FOR CONSTRUCTION OF NEW HOME BY GREAT BUY HOMES, INC. AT 6065 LOUISIANA AVENUE NORTH (IMPROVEMENT PROJECT NO. 973).” The motion for the adoption of the foregoing resolution was seconded by President Hemken, and upon vote being taken thereon, the following voted in favor thereof: Hemken, Elder, Hoffe; and the following voted against the same: London; Abstained: None; Absent: Lammle; EDA Meeting Page 3 June 25, 2018 whereupon the resolution was declared duly passed and adopted , signed by the president which was attested to by the executive director. ADJOURNMENT Motion was made by Commissioner London, seconded by Commissioner Elder, to adjourn the meeting. All present voted in favor. Motion carried. The New Hope EDA adjourned at 8:53 p.m. Respectfully submitted, Valerie Leone, City Clerk I:\RFA\COMM DEV\2018\Council Meetings\7-23-18 3856 Maryland\Q&R - Purchase of 3856 Maryland Avenue 7-23-18.docx Request for Action July 23, 2018 Approved by: Kirk McDonald, City Manager Originating Department: Community Development By: Jeff Sargent, Director & Aaron Chirpich, CD Specialist Agenda Title Resolution approving the purchase agreement for the acquisition of 3856 Maryland Avenue North (project no. 1024). Requested Action Staff requests the EDA to authorize entering into a purchase agreement for the acquisition of 3856 Maryland Avenue North, for $65,000 (purchase price) plus any associated fees. Policy/Past Practice In the past, the EDA has successfully acquired single-family development properties as part of the city’s scattered site housing program. Background At the June 18, 2018 Work Session meeting, the City Council discussed the possible acquisition of the property located at 3856 Maryland Avenue. The city of Crystal adopted a Park System Master Plan in 2017 that focused on the city’s park and recreation system. The plan identified approximately $20 million in needed capital improvements over the next 20 years. In the spring of 2018, the Crystal City Council identified the sale of surplus city-owned land as a way to raise some of the funds needed for those improvements. The property located at 3856 Maryland Avenue is a Crystal-owned parcel that is located within the New Hope jurisdictional boundaries. It is unclear how the city of Crystal became the owner of this lot, but this is one of the properties called out in their study. The city of Crystal mailed out notifications to affected property owners, including those in the city of New Hope, regarding the potential sale of the property. New Hope staff became aware of this property (and that it was owned by the city of Crystal) several months ago when possible Scattered Site Housing options were pursued. To that end, staff is interested in the purchase of this property. The property at 3856 Maryland Avenue is a vacant lot with several mature trees on it, with Kentucky Park, located in the city of Crystal, bordering to the east. The lot in question occasionally serves as a walk-through lot for residents to access both Kentucky Park in Crystal and Lions Park in New Hope. When considering the sale of this property, Crystal community development staff proposed a joint -city effort in securing a trail easement along the north side of the subject property in order to retain the access that residents currently have in order to get from one park to the other. Both New Hope and Crystal staff have met about the proposed trail easement, and agree that this should be established. Further communication regarding the trail easement will be provided to the City Council at the appropriate time. Lot Sale The city of Crystal has a Scattered Site Housing program, but it functions as a transaction-based program only. Crystal typically markets their properties on a first-come, first-serve basis, so their Economic Development Authority (EDA) does not choose the developer. This means that the developer who purchases a Scattered Site Housing parcel in Crystal can build any style of house on the lot. In order to better control the style of house Agenda Section EDA Item Number 4 Request for Action, Page 2 constructed on the lot, New Hope staff would recommend purchasing the property from the city of Crystal. Once purchased, the community development department would treat the property just like all other Scattered Site Housing properties, and would request proposals from developers that would be subject for review and approval by the EDA. The Crystal City Council met on July 17, 2018 to approve the sale of the property to the city of New Hope for $65,000, with the contingency that the city of New Hope would install the necessary storm piping and connections for the property. The original asking price for the lot was $75,000. Budget and Funding When considering the total project budget, it is important to note that the city of Crystal has agreed to pay for the construction of the entire trail connection out of proceeds from the sale of the lot, thereby taking responsibility for the most costly component of the project. The city of New Hope will have the responsibility of paying for the drain tile portion of the project which can be completed by city staff at an estimated cost of $5,000. When considering this cost, the effective acquisition price of the lot is $70,000. Staff believes the terms of the deal are fair, and feel confident that the lot can be resold for $65,000 following completion of the proposed improvements. It is important to note that the property is currently tax exempt, and therefore generates zero tax revenue. Staff believes that the site will support a home valued at a minimum of $385,000, thereby producing approximately $2,100 annually for the city. Funding for the acquisition of 3856 Maryland Avenue would be covered by EDA reserves. A copy of the full project budget is attached for review. Attachments  Resolution  Excerpt Work Session Minutes from June 18, 2018  Survey, Location and Layout Map  Project Budget  Draft Purchase Agreement