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08 12 19 EDA MinutesEDA Meeting Page 1 August 12, 2019 City of New Hope 4401 Xylon Avenue North New Hope, Minnesota 55428 EDA Minutes August 12, 2019 Regular Meeting City Hall CALL TO ORDER President Hemken called the meeting of the Economic Development Authority to order at 7:52 p.m. ROLL CALL Present: Kathi Hemken, President John Elder, Commissioner Cedrick Frazier, Commissioner Andy Hoffe, Commissioner Jonathan London, Commissioner Staff Present: Kirk McDonald, City Manager Jeff Alger, Community Development Specialist Tim Fournier, Police Chief Valerie Leone, City Clerk Jeff Sargent, Director of Community Development Stacy Woods, Assistant City Attorney APPROVAL OF MINUTES Item 3 Motion was made by Commissioner Elder, seconded by Commissioner Frazier, to approve the minutes of June 10, 2019. All present voted in favor. Motion carried. IMP. PROJECT 1025 Item 4 President Hemken introduced for discussion EDA Item 4, Resolution approving purchase and redevelopment agreement with Novak-Fleck Incorporated for the sale of 5212 Pennsylvania Avenue North (Improvement Project No. 1025). Mr. Jeff Alger, Community Development Specialist, requested the EDA to conduct a public hearing to consider the sale of the city-owned property at 5212 Pennsylvania Avenue North to Novak-Fleck, Inc. He explained that Requests for Proposals marketing the lot were sent to a number of builders and the city received four proposals from three builders. The city manager and staff reviewed the proposals and selected Novak-Fleck as the preferred proposal as the proposal contained more finished square footage and a higher lot purchase price. He reviewed the proposals submitted by Novak-Fleck, Houston Homes, and Great Buy Homes. He stated the RFP criteria included a non- negotiable minimum sales price of $60,000 and that the new home be owner- occupied for at least two years. Mr. Alger stated Novak-Fleck’s projected sales price is $401,600. He noted the city has worked with Novak-Fleck on five past projects and the builder has demonstrated they can meet their targeted sales price. He reviewed financial details including the project budget and tax revenue. He pointed out the primary focus of the scattered site program is to target distressed single-family properties throughout the city, with the goal of improving residential neighborhoods. It is EDA Meeting Page 2 August 12, 2019 understood that potential losses are incurred on each project, as the cost to acquire the distressed properties and redevelop often exceeds the value of the new vacant lot or rehabilitated home. Mr. Alger stated staff is working with AEM on a template that can be used to calculate internal rate of return for future scattered site housing projects and the topic will be discussed at the August 19 work session. Mr. Alger stated a purchase and redevelopment agreement has been prepared with a lot sales price of $65,000 and assurance that the provisions set forth in the RFP will be met. Staff anticipates that closing of the lot sale will take place in September, 2019. Mr. Dale Anderson, Novak-Fleck’s realtor, was recognized. He responded to questions from the EDA and indicated there is no pre-arranged buyer for the home but he does not anticipate any difficulty in selling the property. President Hemken thanked Mr. Anderson and asked him to relay the EDA’s appreciation to Novak-Fleck. CLOSE HEARING Item 4 Motion was made by Commissioner Elder, seconded by Commissioner Frazier, to close the public hearing. All present voted in favor. Motion carried. RESOLUTION 2019-03 Item 4 Commissioner Elder introduced the following resolution and moved its adoption “RESOLUTION APPROVING PURCHASE AND REDEVELOPMENT AGREEMENT WITH NOVAK-FLECK INCORPORATED FOR THE SALE OF 5212 PENNSYLVANIA AVENUE NORTH (IMPROVEMENT PROJECT NO. 1025)”. The motion for the adoption of the foregoing resolution was seconded by Commissioner Frazier, and upon vote being taken thereon, the following voted in favor thereof: Hemken, Elder, Frazier, Hoffe, London; and the following voted against the same: None; Abstained: None; Absent: None; whereupon the resolution was declared duly passed and adopted, signed by the president which was attested to by the executive director. IMP. PROJECT 1020 Item 5 President Hemken introduced for discussion EDA Item 5, Resolution awarding the contract for rehabilitation work in association with the EDA-owned property located at 3924 Utah Avenue North (Improvement Project No. 1020). Mr. Jeff Alger, Community Development Specialist, explained the EDA purchased the property for $190,100 as part of the city’s scattered site housing program. He stated the house is in disrepair and substantial exterior and interior work is needed in order to make it habitable and desirable. Mr. Alger illustrated the condition of the property and reviewed the proposed scope of work (interior and exterior). He stated bids were sought for the rehab work and only one contractor, Day Construction, submitted a bid for the work. The base bid is $158,794 and there were two alternate bids. Staff recommends awarding the base bid and alternate number 1 for $14,877 for a master suite to increase marketability. He stated alternate number 2 was $7,128 for cultured stone accent wall on the front of the home. He stated the total cost (base bid and alternate 1) is $173,671. He stated the proceeds from the sale of the property will cover the majority of the costs and funding for the EDA Meeting Page 3 August 12, 2019 gap would be covered by the EDA budget. Factors include the housing market, any unforeseen expenses, and whether the property can be sold without realtor fees. It was noted the city will benefit from an increased property value and corresponding taxes. The EDA discussed the fact that Day Construction completed a very nice rehab at 3984 Zealand Avenue North which sold quickly. Mr. Matthew Day of Day Construction was recognized. He addressed questions from the EDA. He noted the cost of the project is approximately 50 percent materials and 50 percent labor. The EDA expressed support for the project. RESOLUTION 2019-04 Item 5 Commissioner Frazier introduced the following resolution and moved its adoption “RESOLUTION AWARDING THE CONTRACT FOR REHABILITATION WORK IN ASSOCIATION WITH THE EDA-OWNED PROPERTY LOCATED AT 3924 UTAH AVENUE NORTH (IMPROVEMENT PROJECT NO. 1020)”. 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, Frazier, Hoffe; and the following voted against the same: None; Abstained: London; Absent: None; 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 Frazier, seconded by Commissioner Elder, to adjourn the meeting. All present voted in favor. Motion carried. The New Hope EDA adjourned at 8:27 p.m. Respectfully submitted, Valerie Leone, City Clerk