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Ed031003.docCITY OF NEW HOPE 4401 XYLON AVENUE NORTH NEW HOPE, MINNESOTA 55428 EDA Minutes March 10, 2003 Regular Meeting City Hall CALL TO ORDER President Enck called the meeting of the Economic Development Authority to order at 8:22 p.m. ROLL CALL Present: W. Peter Enck, President Sharon Cassen, Commissioner Don Collier, Commissioner Mary Gwin-Lenth, Commissioner Steve Sommer, Commissioner APPROVE MINUTES Motion was made by Commissioner Sommer, seconded by Commissioner Cassen, to approve the Regular Meeting Minutes of February 24, 2003 . All present voted in favor. Motion carried. IMP. PROJECT 743 President Enck introduced for discussion Item 4, Discussion Regarding Updated (formerly #597) Proposal and Continued Interest by Quest Real Estate, Inc./Plymouth Heights Pet th Item 4 Hospital on City-Owned Property at 9200 49 Avenue North (Improvement Project No. 743). Mr. Kirk McDonald, Director of Community Development, stated in follow up to th the February 10 discussion staff and consultants have met again with representatives of the Plymouth Heights Pet Hospital. He stated they have submitted a more detailed proposal. Staff requests that the EDA provide direction to staff as to how to respond to this updated proposal and to Plymouth Heights Pet Hospital’s th continued interest in the city-owned property at 9200 49 Avenue. Mr. McDonald stated the other potential development for this property was Amcon Construction, but they have not pursued the matter further as of this date. Mr. McDonald cited the most recent correspondence submitted by Quest Real Estate, Inc., on behalf of Plymouth Heights Pet Hospital, which states that “This letter shall serve to express the continued interest of my client: Mr. Fleming, in th purchasing the parcel of land at 9200 49 Avenue North in New Hope for construction of a pet hospital. We were pleased to learn the EDA and City Council members of New Hope have indicated an interest in our initial development proposal and would like to pursue the matter in more detail.” Mr. McDonald stated the applicant has submitted a background narrative on Plymouth Heights Pet Hospital, a proposed site plan prepared by Paul Meyer Architects, Inc., and a proposed image sketch, an estimate from Dobszenski & Sons, Inc. for soil correction and site preparation work at the subject property. Mr. McDonald stated Plymouth Heights Pet Hospital is seeking to acquire the property “as is” from the City of New Hope for $61,500 ($4.00/square foot for the property less soil correction costs). He noted the city would retain one-third of the site for a storm water pond. He commented that Plymouth Heights Pet Hospital currently serves over 6,000 active patients including more than 700 New Hope families and represents a valuable asset to the community. Mr. McDonald expressed support for the project as the applicant, Mr. Fleming, is prepared to move expeditiously on the development plans. He stated if the EDA is interested in pursuing Mr. Fleming’s proposal for purchasing and developing the subject property, they would provide an “Option Agreement” on the property for a New Hope EDA March 10, 2003 maximum term of no more than ninety days. This would allow sufficient time for Page 1 them to review documents, prepare plans and obtain the necessary approvals before closing on the property. Mr. McDonald stated the developer would like a tentative agreement from the EDA at this time before they incur additional expenses. property, they would provide an “Option Agreement” on the property for a maximum term of no more than ninety days. This would allow sufficient time for them to review documents, prepare plans and obtain the necessary approvals before closing on the property. Mr. McDonald stated the developer would like a tentative agreement from the EDA at this time before they incur additional expenses. Mr. McDonald stated staff is supportive of the development and recommends meeting with the city’s financial consultant to discuss the financial implications of the project and taxes that would be generated by the project. He stated representatives of the Plymouth Heights Pet Hospital are in attendance and are available to answer questions. President Enck questioned whether the developer could use the pond for part of their green space requirements. Mr. McDonald responded affirmatively. The EDA expressed support for the project. Commissioner Cassen disclosed that she has had past business experiences with Mr. Ludovissie of Quest Real Estate. She also mentioned that she is a pet hospital customer, but there is no conflict of interest. Commissioner Cassen questioned the accessibility of the pond by the city. Mr. McDonald stated the city would require a 20-foot wide access easement between th 49 Avenue and the pond. Mr. McDonald pointed out that the property is zoned I-1, Industrial, and pet hospitals and veterinary clinics are not currently listed as permitted or conditional uses in the I District. However, staff and consultants are currently working on a modification to the code to allow animal day cares in the I District and the Planning Consultant believes this use would also be appropriate for that Zoning District. Commissioner Sommer expressed support for the project but acknowledged concern regarding the sales price. He mentioned the city purchased the property six years ago for $195,000, and a higher sales price would recoup some of the city’s expense. President Enck pointed out that tonight’s action is only the beginning of the process. The EDA unanimously expressed support for the project and directed staff to work with Quest Real Estate on behalf of Plymouth Heights Pet Hospital. IMP. PROJECT 740 President Enck introduced for discussion Item 5, Discussion Regarding Joint nd (formerly #665) Development Proposal for City-Owned Property at 7500-7528 42 Avenue North, Item 5 the former Electronic Industries Site (Improvement Project No. 740). Mr. Ken Doresky, Community Development Specialist, stated staff is requesting EDA discussion and direction regarding a joint development proposal from Retail nd Site Development Services for the city-owned site at 7500-7528 42 Avenue North. The development proposal is for two uses: a Culver's restaurant on the western portion of the site and three office condominium buildings (with seven separate ownership units) on the eastern portion of the site. He stated the intention of the presentation is to inform the EDA of the proposal and to seek direction for further action. He stated representatives from both parties are in the audience. Mr. Doresky stated the City has been working for several years to initiate the environmental cleanup process and subsequent commercial redevelopment of this nd site. He reviewed costs of $500,000 for the 7540 42 Avenue property (purchase nd price of $450,000 plus demolition costs of $50,000); and $71,000 for 7516 42 Avenue (purchase price of $40,000 plus demolition costs of $31,000); and $482,000 New Hope EDA March 10, 2003 nd for acquisition of 7500 42 Avenue North. The total cost for the three properties Page 2 was $1.1 million. Mr. Dan Donahue, City Manager, clarified that these costs were not paid by property tax dollars but rather by the redevelopment tax increment district. Avenue (purchase price of $40,000 plus demolition costs of $31,000); and $482,000 nd for acquisition of 7500 42 Avenue North. The total cost for the three properties was $1.1 million. Mr. Dan Donahue, City Manager, clarified that these costs were not paid by property tax dollars but rather by the redevelopment tax increment district. Mr. Doresky stated in conjunction with cleanup funding grant applications submitted during the spring of 2002, the Council approved a Request for Proposal (RFP) process for the site. As a result of the RFP, the City received a proposal for the office condominium component of the current proposal. Using the office condominium proposal in the cleanup grant applications, the Department of Trade and Economic Development (DTED) rated New Hope’s application #1 in the State of Minnesota due to the economic development and job creation potential. DTED subsequently approved a fully funded grant in partnership with a Hennepin County approved grant. Culver’s Restaurant/Retail Site Development Services came later in the process and staff suggested they provide a joint development proposal with the office condominium developer. He reviewed a preliminary site plan showing a Culver’s Restaurant on the western portion of the site and the office condominiums along the railroad tracks on the east side of the property. He stated the proposal states: “RSDS will serve as the coordinator of the New Hope project with Dexter Marston acting as the contact person. Dexter Marston is a licensed real . estate broker in the State of MinnesotaRSDS’s fee will be $40,000 for the services related to the New Hope project. The services include: providing buyers for the site (JSC Development (Culver's) and Frey Development (Office Condominiums)) and overseeing the project through City approvals and closing. The City will be responsible for this fee and should include this cost with their other expenses when determining the value of the land. At this time I expect that the two prospective buyers will represent themselves in negotiations for the site. If either party chooses to have RSDS represent their interests during the negotiations, the City of New Hope will be informed of that change.” Mr. Doresky stated staff is supportive pursuing the redevelopment of this site with this development proposal, but has some concern about the fee being requested. Staff recommends that the EDA authorize staff to pursue this matter further and meet with the City’s financial consultant and the developer to discuss the financial implications of the project. Staff would propose that the City and the developer split the cost of the financial analysis 50/50 on this site, due to the fact that it is City owned. Staff will then return to the EDA for further direction. Discussion ensued regarding the RSDS’s proposed fee of $40,000. It was noted that the city has never paid this type of a fee in the past. President Enck expressed concern about three separate buildings. He also expressed his reluctance to approve a $40,000 real estate service fee. Commissioner Cassen pointed out if an agent is representing a buyer/developer, they typically are the ones to pay for the real estate commission; however, it is negotiable. She commented that the $40,000 fee should go into the project cost and if Mr. Marston is representing the developers then he could negotiate it with them. Commissioner Cassen was supportive of the development and layout with three separate buildings for office condominiums. Commissioners Collier and Sommer also expressed support for the project. Commissioner Sommer commented that he likes the ownership option for small businesses. New Hope EDA March 10, 2003 Page 3 President Enck acknowledged agreement to the concept but provided the following concerns regarding the configuration: excessive curbcuts, poor traffic circulation, the three office buildings back up to the railroad tracks with no access to the rear, and lack of green space. He also noted the need for a property owners association similar to a townhome association. The EDA was supportive of staff working with the developers, but clarified that the EDA objects to payment of a $40,000 fee. nd Mr. Donahue interjected that a current planning study of the 42 Avenue area includes an office analysis that will determine if there is a need for office space. Mr. McDonald stated the information may be available within two months. Commissioner Cassen noted that Frey Development may have already conducted a survey. Mr. Bernie Frey, Frey Development, was recognized. He stated the office condominiums are geared for smaller businesses that may desire to own rather than lease property and cannot financially afford to purchase property and construct a single user building. He stated a unit size can range from 1,300 to 3,000 square feet and the typical users are professional offices. He reported on the successfulness of past projects. He pointed out that a building with three units is the most appealing environment as the middle unit has a balcony and each of the side units has side windows. He stated the average price is $125-130 per square foot. There would be an office association similar to townhome association agreements. Mr. John Seibert, President of JCS Development Inc., was recognized. He stated they are very interested in the site for construction of a Culver’s Restaurant. He asked the EDA to reconsider its position on the realtor fee due to the uniqueness of the situation. He noted the city is selling the property and the seller normally pays a realtor commission. The EDA directed staff to proceed to work out issues with the developers. ADJOURNMENT Motion was made by Commissioner Collier, seconded by Commissioner Sommer, to adjourn the meeting . All present voted in favor. Motion carried. The New Hope EDA adjourned at 9:17 p.m. Respectfully submitted, Valerie Leone City Clerk New Hope EDA March 10, 2003 Page 4