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