Ed082701
CITY OF NEW HOPE
4401 XYLON AVENUE NORTH
NEW HOPE, MINNESOTA 55428
Approved EDA Minutes August 27, 2001
Regular Meeting City Hall
CALL TO ORDER
President Enck called the meeting of the Economic Development Authority to order
at 7:16 p.m.
ROLL CALL
Present: W. Peter Enck, President
Sharon Cassen, Commissioner
Don Collier, Commissioner
Mary Gwin-Lenth, Commissioner
Pat LaVine Norby, Commissioner
APPROVE MINUTES
Motion was made by Commissioner Gwin-Lenth, seconded by Commissioner
to approve the Regular Meeting Minutes of July 23, 2001
Collier, . All present
voted in favor. Motion carried.
OPPORTUNITY President Enck introduced for discussion Item 4, Discussion Regarding PILOT
PARTNERS Agreement with Opportunity Partners.
Item 4
Mr. Dan Donahue, City Manager, explained that Opportunity Partners is a
Minnesota nonprofit operation that owns and operates 17 group homes in Hennepin
County for mentally and physically disabled persons. One of the homes is located in
the City of New Hope at 2705 Ensign Avenue North. The company originally
purchased the group homes with conventional bank financing and secured the
various homes with mortgages. Opportunity Partners has requested that the
Hennepin County Housing and Redevelopment Authority (HRA) issue its tax
exempt revenue bonds and loan the proceeds of such bonds to the borrower so that
the outstanding mortgage loans may be consolidated into a single loan and to
refinance the debt on a tax exempt basis.
Minnesota Statutes state that the Hennepin County HRA may exercise powers of a
housing and redevelopment authority within the territorial boundaries of the
County. The statutes also provide that before the County HRA may participate in a
project that lies within a territory governed by a separate municipal HRA, the
Hennepin County HRA must notify and obtain the consent of the municipal HRA to
its activities within such territory. The New Hope Economic Development
Authority, which has the powers of a housing and redevelopment authority, was
requested to approve a resolution supporting this action.
Mr. Donahue stated at its July 23 EDA Meeting, the EDA adopted a resolution
consenting to financing of a project by Hennepin County HRA subject to the
inclusion of a PILOT agreement.
He stated Opportunity Partners desires to negotiate the PILOT payment. Staff
estimates that the amount of city taxes payable for 2002 is approximately $700.
Opportunity Partners has proposed an amount of $385 for the police and fire portion
of the city tax base.
President Enck expressed the need to create a standard policy for these type of
request made by tax-exempt properties. He pointed out that city services such as
street maintenance, park and recreation, police, and fire services are provided to all
properties, and the city relies on payment of property taxes to fund city services.
New Hope EDA August 27, 2001
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Commissioner Gwin-Lenth expressed concern regarding setting a precedent.
President Enck noted the EDA's action should not set a precedent.
The EDA acknowledged the need for group home operations and the valuable
service they provide to the community. It was also noted that non-profit
organizations must be responsible and pay their fair share of city taxes.
Mr. Jon Thompson, President of Opportunity Partners, was recognized.
President Enck commented on the August 15 letter from Jon Thompson that
indicated for the six months ending June 30, there was a room and board loss of
$782. Mr. Thompson clarified that this was an overall loss, not a loss at the New
Hope facility. President Enck noted the New Hope home has not yet incurred any
vacancies. He questioned the means to maintain properties if there are substantial
vacancies resulting in great financial loss.
Mr. Thompson stated Opportunity Partners has entered negotiations with Hennepin
County for potential changes in other homes which are incurring fairly large losses.
He noted if they are successful, it will assist in a financial allocation across all 14
homes in Hennepin County. He also pointed out that the refinancing will result in an
improved cash flow. Mr. Thompson stated if they cannot raise money to make up
the financial shortfall, it is possible that they would need to close a home. He
pointed out that they have not closed homes previously, but it has been done by
other providers. He also noted that they would try to achieve other operating
efficiencies.
Mr. Thompson stated the first option to change the interest rate on the bond comes
up in seven years, and they have the option to pay off a percentage of homes each
year. He stated it could be possible that parents could purchase a home for their
child/children.
Mr. Thompson explained the program rates and budget calculations. He also
pointed out that any past increases made by the legislature have restrictions on their
usage. He stated fundraising accounts for a large portion of revenue.
Commissioner Collier questioned the building depreciation calculations outlined in
the financial report.
Mr. Thompson stated the depreciation category is for the principal (mortgage
payment) and property maintenance.
Discussion ensued regarding the other participating cities. Mr. Thompson stated the
cities of Plymouth, Richfield, Bloomington have approved the tax exempt bond
issue without a PILOT payment. He noted Crystal may be requiring a PILOT
similar to New Hope and Elk River has requested a one-time fee to cover legal
expenses.
Commissioner Norby reported of her intent to abstain from the vote as one
Opportunity Partners property in Elk River was named after father.
Commissioner Collier pointed out that this financing vehicle will allow Opportunity
Partners to achieve a better interest rate. He noted the situation will likely change as
conditions change (interest rates); and a re-negotiation would be beneficial so that
Opportunity Partners could update the EDA on several factors concerning the
property.
MOTION
to
Motion was made by Commissioner Cassen, seconded by Commissioner Collier,
Item 4
establish a PILOT for the life of the bonds and set the payment at $500/year
for the first seven years. Prior to expiration of the seventh year, Opportunity
Partners must address the New Hope EDA to re-negotiate the PILOT.
Voting
New Hope EDA August 27, 2001
in favor: Enck, Cassen, Collier, Gwin-Lenth; Abstained: Norby; Absent: None.
Page 2
Motion carried.
Partners must address the New Hope EDA to re-negotiate the PILOT.
Voting
in favor: Enck, Cassen, Collier, Gwin-Lenth; Abstained: Norby; Absent: None.
Motion carried.
Mr. Thompson agreed to the conditions. He questioned whether the EDA would
release the PILOT in less than seven years if substantial legislative changes take
place or if the property is removed from the bond issue.
It was noted that the PILOT agreement would cease if the bonds are paid off early
or if the 2705 Ensign property is removed from the financing package.
Commissioner Collier advised Mr. Thompson that if circumstances drastically
change during the seven-year period, Opportunity Partners can re-address the EDA
to request an amendment to the agreement.
Mr. Steve Sondrall, City Attorney, indicated he will draft an agreement to
incorporate the EDA's intent.
The EDA thanked Mr. Thompson for his patience during the negotiations.
ADJOURNMENT
to
Motion was made by Commissioner Collier, seconded by Commissioner Cassen,
adjourn the meeting
. All present voted in favor. Motion carried. The New Hope
EDA adjourned at 8:05 p.m.
Respectfully submitted,
Valerie Leone
City Clerk
New Hope EDA August 27, 2001
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