032204 EDA
CITY OF NEW HOPE
4401 XYLON AVENUE NORTH
NEW HOPE, MINNESOTA 55428
EDA Minutes March 22, 2004
Regular Meeting City Hall
CALL TO ORDER
President Enck called the meeting of the Economic Development Authority to order
at 8:11 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 Cassen, seconded by Commissioner Gwin-
to approve the Regular Meeting Minutes of March 8, 2004.
Lenth, Voting in
favor: Enck, Cassen, Collier, Gwin-Lenth; Voting Against: None; Abstained:
Sommer; Absent: None. Motion carried.
IMP. PROJECT 749 President Enck introduced for discussion Item 4, Update regarding development
Item 4 proposal for city owned property at 5501 Boone Avenue North and direction to
proceed with preliminary terms of agreement (improvement project no. 749).
Mr. Ken Doresky, Community Development Specialist, explained that the
development proposal is for two separate residential buildings on the site, one 41-
unit condominium building and one 35-unit affordable rental apartment building.
He stated in October of 2003, the EDA expressed support for the proposed project
and directed staff to coordinate with PPL and Krass Monroe, the city’s financial
consultant to complete a tax increment financing analysis for the project. Krass
Monroe has prepared a financial analysis and determined that the site will generate
approximately $1.6 million of increment. PPL is requesting approximately $1.4
million (dependent on soil correction estimates). The city’s initial investment of
$276,764 would be reimbursed with the generated increment. The market value of
the property is determined to be $252,100 (market value $760,000 less soil
stabilization estimate of $507,900).
Mr. Jim Casserly, Krass Monroe, was recognized. Mr. Casserly stated their analysis
of the proposed project has determined that the project is feasible. He stated
revenues from the increased taxes are sufficient to reimburse the city for its
investment in the land and to allow revenues to be invested in the project.
He stated the next phase would be preparation of a term sheet for presentation to the
EDA.
President Enck inquired whether the city would be guaranteed reimbursement of its
investment if all or part of the property becomes tax-exempt in the future.
Mr. Casserly indicated such a guarantee is a normal provision included in the
agreement in order to protect the city.
President Enck expressed his appreciation to Mr. Casserly and his staff for their
assistance to the city over the years.
EDA Meeting March 22, 2004
Page 1
Commissioner Sommer inquired regarding the city’s reimbursement costs. He asked
whether the city would retain $200,000 if it provides TIF bonds for $1.6 million and
$1.4 million to PPL.
Mr. Casserly explained that the financing could occur as Commissioner Sommer
outlined; however Krass Monroe is recommending that the city take a note back to
subordinate its position to debt that would be issued. The city would be reimbursed
with interest. This would build in added protection. He stated calculations would be
based on the city’s land costs plus interest to cover carrying costs. Then a note
would be created so the city can reimburse itself from increased taxes after the
payment of debt service on any bonds that were issued.
Commissioner Sommer expressed disappointment that PPL has changed its position
from its original proposal of purchasing the property outright from the city.
Mr. Casserly indicated the city can sell the land but the project would need that
added cost so the issue becomes whether the city wants to sell debt upfront to
provide write down at the beginning of the project and reimburse itself upfront or if
the city is comfortable with taking a note to itself and repaying it over time.
Discussion ensued regarding the price of the condominiums and the impact that
sales prices will have on the outstanding debt and recovery of land costs. Mr.
Casserly commented that over $4 million of increment will be generated and it is
possible that the TIF district could be closed prior to the 25-year projection.
Commissioner Gwin-Lenth questioned the changes in the site plan and soil analysis.
Mr. Chris Wilson, Project for Pride in Living, responded to design changes. He
stated the size and footprint of the project has not changed. Based on marketing
advice the larger three or four bedroom units have changed to one or two bedroom
units. The buildings were moved closer to Boone Avenue to raise their presence and
the rear of the property (with the pond) will be more private. The side will face the
public works building to minimize its impact. The playground and bus stop will be
located near the rental building and the path and gardens will be near the
condominium property.
The estimated soil correction costs are based on both buildings.
Commissioner Cassen questioned the tax status of the property since PPL is a non-
profit organization.
Mr. Wilson stated both the rental building and the condominium building will be
taxable properties. He clarified that 15 of the 41 for sale units would have income
restrictions.
President Enck asked Mr. Wilson to elaborate on the tenant screening process. Mr.
Wilson stated PPL has a stringent selection criteria in order to ensure the efficient
use of the public’s money. It was noted that owners of the condominiums would
have private financing and if an owner defaulted, the financial institute would
intervene. Commissioner Cassen pointed out that private mortgage insurance is
required by the lender to be placed on the property if the value is less than 80% loan
to value.
Mr. Steve Cramer, PPL, confirmed that Morris Manning, Property Director, has
committed to the employment of a full-time property management position for the
New Hope properties to office at Boone Avenue Apartments.
Ms. Juanita Hoffe, 4632 Flag Avenue North, was recognized. She asked the
financial consultant to clarify the funding options.
EDA Meeting March 22, 2004
Page 2
Mr. Jim Casserly, Krass Monroe, stated the EDA purchased the property several
years ago and borrowed from available funding. So, the EDA has the right to
reimburse those funds through two different mechanisms: 1) pledge future taxes and
pay increments each year until the amount is fully repaid or 2) the city has the
option of selling a bond and including in the bond proceeds enough to reimburse
itself for the same investment. Both options will be examined as the project
proceeds.
MOTION
Motion was made by Commissioner Gwin-Lenth, seconded by Commissioner
Item 4
to proceed with preparation of preliminary terms of agreement based
Collier,
on the financial/tax increment financing analysis completed by Krass Monroe.
Voting in favor: Enck, Cassen, Collier, Gwin-Lenth; Voting Against: Sommer;
Abstained: None; Absent: None. Motion carried.
IMP. PROJECT 734
President Enck introduced for discussion Item 5, Discussion and direction to
Item 5 proceed with a purchase agreement for the NCRC development proposal, 4301 and
4317 Nevada Avenue North (improvement project no. 734).
Mr. Kirk McDonald, Director of Community Development, stated staff is
requesting authorization to proceed with a purchase agreement for the sale of 4317
Nevada Avenue North to the Northwest Community Revitalization Corporation
(NCRC) Community Housing Development Organization (CHDO). He stated the
property would be incorporated into their proposal to replace two blighted single
family properties with six owner-occupied twinhomes (one accessible unit).
Mr. McDonald illustrated the sites and stated the NCRC owns 4301 Nevada and the
city owns 4317 Nevada. He stated the property was designated in the
comprehensive plan for redevelopment with medium density residential use. The
EDA previously declined a proposal for development of 12 units primarily due to
the density and financial assistance being requested.
Mr. McDonald explained that CDBG funds of $83,000 were originally used to
purchase the property. Staff recommends demolition of the house at 4317 Nevada
utilizing CDBG funds (total CDBG contribution estimated at $100,000). The EDA
would sell the property to the NCRC for $1 and permit the NCRC to construct six
owner occupied twinhome units on the site. In return, the city will realize a
significant increase in taxes at the site. He stated a portion of the CDBG funds
invested in the project would also be returned to the city as program income upon
the sale of the units, and the program income could be utilized for future CDBG
eligible projects.
He introduced Kristine Madsen, Executive Director, and Julie Dunkle, Associate
Director, of NCRC.
Ms. Madsen explained that both properties (4301 and 4317 Nevada) are
uninhabitable. The concept is for 12 owner-occupied units (six twinhomes) targeted
at $180,000 or less. She noted they have applied for several grants and are having
conversations with the West Hennepin Affordable Land Trust. Driveways and
garages would face the rear rather than the front of the property.
Discussion ensued regarding the implications of a land trust. It was noted that there
would be no issues relating to city ordinances with a land trust owning the property
and an individual owning the structure.
Commissioner Cassen expressed support for the project. She pointed out the need
for one-level homes in New Hope. Ms. Madsen stated the property has a slope and
they will keep the need for one-level homes in mind during the design process.
Commissioner Sommer reiterated the need for one-level homes and requested that
EDA Meeting March 22, 2004
Page 3
at least two of the six structures be one-level housing.
President Enck asked that NCRC document who is responsible for maintenance of
the property. Ms. Madsen acknowledged that this issue has been part of their
discussions.
Mr. McDonald indicated the next step would be preparation of a purchase
agreement and development proposal for review by the EDA. He stated the NCRC
would be required to participate in the planning application process for rezoning and
platting, and NCRC would pay all associated fees (building permit, park dedication
fees, etc).
MOTION/PROCEED
Motion was made by Commissioner Collier, seconded by Commissioner Gwin-
Item 5
directing staff to proceed with preparation of a purchase agreement and
Lenth,
development proposal.
All present voted in favor. Motion carried.
IMP. PROJECT 723 President Enck introduced for discussion Item 6, Discussion regarding 7615 Bass
Item 6 Lake Road (New Hope Alano), gap request and appraisal proposal (improvement
project no. 723).
Mr. Kirk McDonald, Director of Community Development, stated staff is seeking
direction regarding a gap financing request (7615 Bass Lake Road) and appraisal for
the property at 7550 Bass Lake Road. He stated it is proposed that the cost of the
appraisal (estimated at $3,000) be shared equally among the city, Alano, and AC
Carlson. Previously the city directed staff to coordinate with Alano regarding their
relocation needs. He explained that one of the buildings that would meet their
needs is the AC Carlson site at 7550 Bass Lake Road. AC Carlson is planning to
relocate to the corner of Science Center Drive and International Parkway. One of
the reasons for the gap request is due to the $695,000 asking price. An appraisal
could determine if the asking price is accurate.
President Enck thanked Alano for being a good community neighbor. He noted his
desire to find a suitable site for Alano’s relocation.
MOTION
Motion was made by Commissioner Gwin-Lenth, seconded by Commissioner
Item 6
authorizing the expenditure of $1,000 towards an appraisal of 7550
Cassen,
Bass Lake Road.
All present voted in favor. Motion carried.
IMP. PROJECTS President Enck introduced for discussion Item 7, Resolution approving purchase
761, 748, 768 agreements and relocation benefits for acquisition of three properties in the
Item 7 Winnetka East housing redevelopment area (5446 Winnetka, 5512 Winnetka, and
5519 Sumter (improvement project nos. 761, 748, and 768).
Mr. Ken Doresky, Community Development Specialist, stated staff is continuing to
coordinate the purchase of the remaining properties in the east Winnetka
redevelopment area. The resolution will approve purchase agreements for three
additional properties. He stated staff is negotiating the purchase of five remaining
properties.
EDA RESOLUTION
Commissioner Sommer introduced the following resolution and moved its adoption
04-13 “RESOLUTION APPROVING PURCHASE AGREEMENTS AND
Item 7 RELOCATION BENEFITS FOR ACQUISITION OF THREE PROPERTIES
IN THE WINNETKA EAST HOUSING REDEVELOPMENT AREA (5446
WINNETKA, 5512 WINNETKA, AND 5519 SUMTER (IMPROVEMENT
PROJECT NOS. 761, 748, AND 768).”
The motion for the adoption of the
foregoing resolution was seconded by Commissioner Collier, and upon vote being
taken thereon, the following voted in favor thereof: Enck, Cassen, Collier, Gwin-
Lenth, Sommer, and the following voted against the same: None; Abstained: None;
Absent: None; whereupon the resolution was declared duly passed and adopted,
EDA Meeting March 22, 2004
Page 4
signed by the president which was attested to by the executive director.
IMP. PROJECT 724 President Enck introduced for discussion Item 8, Resolution finding need to acquire
Item 8 title and possession of the Winnetka Avenue East area development properties prior
to the commissioner’s award, approving the appraisal of damages for each property
resulting from the taking and ratifying and authorizing all steps taken by staff to
acquire the properties (improvement project no. 724).
Mr. Steve Sondrall, City Attorney, stated the city started the legal time table in
December relative to the “quick-take” procedure. He stated there is a hearing
scheduled on April 6 for appointment of commissioners. He stated adoption of the
resolution does not prevent the city from continuing to negotiate with the owners to
acquire their property voluntarily. However, it does start the time period running
where both parties either have to agree on a purchase price or submit the issue of
valuation and damages to a commission of three persons appointed by the court.
The resolution approves the appraisal amounts that the city will pay into court to
satisfy the requirements of Minnesota Statutes chapter 117 that allows the city to
acquire the properties under eminent domain for the redevelopment project.
Ms. Juanita Hoffe, 4632 Flag Avenue North, questioned the number of unsold
properties.
Mr. Sondrall stated the resolution lists eleven properties for condemnation action;
however purchase agreements have been negotiated on six of the properties which
reduces the number to five properties. He noted the action does not prevent
negotiations on the remaining five properties, and the city hopes it will be
successful in acquiring all of the properties voluntarily.
EDA RESOLUTION Commissioner Cassen introduced the following resolution and moved its adoption
04-14 “RESOLUTION FINDING NEED TO ACQUIRE TITLE AND POSSESSION
Item 8 OF THE WINNETKA AVENUE EAST AREA DEVELOPMENT
PROPERTIES PRIOR TO THE COMMISSIONER’S AWARD,
APPROVING THE APPRAISAL OF DAMAGES FOR EACH PROPERTY
RESULTING FROM THE TAKING AND RATIFYING AND
AUTHORIZING ALL STEPS TAKEN BY STAFF TO ACQUIRE THE
PROPERTIES (IMPROVEMENT PROJECT NO. 724).”
The motion for the
adoption of the foregoing resolution was seconded by Commissioner Collier, and
upon vote being taken thereon, the following voted in favor thereof: Enck, Cassen,
Collier, Gwin-Lenth, Sommer, 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.
ENCK FAREWELL Prior to adjournment, the EDA recognized W. Peter Enck and wished him well in
his retirement. President Enck expressed his gratitude to colleagues and staff that he
has had the opportunity to work with over the past 33 years. He pointed out that the
School District honored him at its March 15 meeting.
to
ADJOURNMENT 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 9:50 p.m.
Respectfully submitted,
Valerie Leone
City Clerk
EDA Meeting March 22, 2004
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