EDA 10/28/02OFFICIAL FILE COPY
CITY OF NEW HOPE
EDA MEETING
City Hall, 4401 Xylon Avenue North
October 28, 2002
President W. Peter Enck
Commissioner Sharon Cassen
Commissioner Don Collier
Commissioner Mary Gwin-Lenth
Commissioner Pat LaVine Norby
1. Call to Order
2. Roll Call
3. Approval of Regular Meeting Minutes of September 23, 2002
4. Update on Navarre Project and Discuss Revised Terms of Agreement (Improvement
Project No. 728)
5. Adjournment
CITY OF NEW HOPE
4401 XYLON AVENUE NORTH
NEW HOPE, MINNESOTA 55428
Approved EDA Minutes
Regular Meeting
September 23, 2002
City Hall
CALL TO ORDER
ROLLCALL
APPROVE MINUTES
POTENTIAL
REDEVELOPMENT
OF 5620 WINNETKA
IMP. PROJECT 733
Item 4
New Hope EDA
Page 1
President Enck called the meeting of the Economic Development Authority to order
at 8:01 p.m.
Present:
W. Peter Enck, President
Mary Gwin-Lenth, Commissioner
Sharon Cassen, Commissioner
Don Collier, Commissioner
Pat LaVine Norby, Commissioner
Motion was made by Commissioner Gwin-Lenth, seconded by Commissioner
Collier, to approve the Regular Meeting Minutes of September 23, 2002.
Voting in favor: Cassen, Collier, Gwin-Lenth, Norby; Voting Against: None;
Absent: None; Abstained: Enck. Motion carried.
President Enck introduced for discussion Item 4, Discussion Regarding Request by
Armory Development II LLC, to Coordinate with City Staff and Financial
Consultant on Potential Redevelopment of Frank's Nursery Site at 5620 Winnetka
Avenue North.
Mr. Kirk McDonald, Director of Community Development, stated staff has been
conducting discussions with Armory Development on a periodic basis since the
spring of 2002 regarding the potential redevelopment of the Frank's Nursery site.
Armory Development would like to move forward and present the proposed project
to the Economic Development Authority at this time. He shared that Armory
Development is prepared to introduce their team and proposed project.
The project that Armory Development has planned is comprised of 56 townhomes
on the site. The units will be two or three stories tall and will range between 1,100 -
1,400 square feet. The sales plan calls for the units to be marketed between
$150,000 - $190,000 depending on final development costs. The target demographic
will be the young professional and fu'st-time homeowner.
At this time, Armory Development has come to an agreement on the land purchase
price with the owner, a large insurance company in Iowa. Negotiations are ongoing
with Frank's Nursery on the buy-out of their lease. If successful, construction could
occur next spring.
Because this is a redevelopment site, there will be additional costs in the demolition
of the site, refitting of the infrastructure to meet the new development, as well as
costs associated with watershed issues. Armory Development expects these
additional costs to be approximately $350,000. They are requesting that the City
include this site in the TIF District in order to offset this cost.
Mr. McDonald indicated that staff started meeting with the developers prior to the
time that the Developers' Roundtable was conducted in June for the Livable
Communities Task Force, although the developers agreed to participate in that
process. Their redevelopment proposal for the Frank's site was reviewed by the
Livable Communities Task Force at the August 21 task force meeting and the task
September 23, 2002
ADJOURNMENT
force was very supportive of the proposal. Due to the fact that work on this project
started prior to the roundtable, staff and the developer are requesting to move this
project along to the EDA for consideration. It is anticipated that the proposals for
the remainder of the Livable Communities sites will be presented to the City
Council by the end of the year.
Staff has requested that the financial consultant review this request on a preliminary
basis and that analysis shows that the project could generate enough revenue that
the City could provide some assistance for site development. Staff is requesting
EDA approval to move forward in working with the developer and financial
consultant to develop more definitive numbers, discuss the type of assistance and
develop potential terms of agreement. Owner-occupied townhomes are a specific
type of housing that are needed in the City, according to both the Comprehensive
Plan and the Life Cycle Housing Study.
Staff supports this proposal and recommends that the EDA authorize staff to move
forward with this request.
Mr. Charlie Nestor, GSR Real Estate Services, was recognized. He explained their
objective to locate sites similar to Frank's Nursery within inner-ring suburbs. He
noted the largest hurdle has been negotiations with Frank's Nursery. Mr. Nestor
explained that some units would be two bedrooms and some would be two
bedrooms plus a den.
The EDA expressed support of the concept. President Enck requested the following
information be presented at a later date: amenities of structure, quality of
construction (to reduce maintenance costs), and history on past projects as well as a
list of prior projects. The EDA asked the developer to consider inclusion of
playground equipment within the plan.
Commissioner Gwin-Lenth questioned the storm water drainage issues.
Mr. Vince VanderTop, Assistant City Engineer, stated water quality is a
consideration with any redevelopment. He stated one option being considered is a
financial contribution for construction of a regional pond downstream. He noted
property is available north of the site which could be modified to handle drainage
fi.om multiple properties.
Commissioner Cassen cautioned that the City needs to limit its liability and consider
the timeframe it would take to recoup any fmancial assistance.
The EDA directed staffto proceed to meet with the developer on preliminary plans.
Motion was made by Commissioner Collier, seconded by Commissioner Norby, to
adjourn the meeting. All present voted in favor. Motion carried. The New Hope
EDA adjourned at 8:21 p.m.
Respectfully submitted,
Valerie Leone
City Clerk
New Hope EDA
Page 2
September 23, 2002
EDA
REQUEST FOR ACTION
Originating Department Approved for Agenda Agenda Section
Community Development 10-28-02 EDA
Item No.
By: Kirk McDonald By: 4
UPDATE ON NAVARRE PROJECT AND DISCUSS REVISED TERMS OF AGREEMENT
REQUESTED ACTION
For the last several weeks, staff and the financial consultant have been meeting and negotiating with Navarre
Corporation regarding its expansion project and city financial assistance. Revised terms of agreement have
been prepared and are attached. Staff and the financial consultant request to discuss the revised terms with
the EDA.
POLICY/PAST PRACTICE
The EDA has provided financial assistance to companies for major expansions in the past to promote
economic development and business retention in the City.
BACKGROUND
At the September 9 Council and EDA meetings, the Council and EDA approved a number of agreements
regarding the Navarre expansion/Ahrens Trucking relocation projects. As the Council is aware, since that time
the bids came in very high on the Ahrens Trucking relocation project. Staff and financial consultant have been
coordinating with Navarre Corporation in the interim to determine if it is possible for its portion of the project to
~roceed. Revised terms of agreement have been agreed to by Navarre Corporation, and staff and financial
consultant request to review these revised terms with the EDA. Jim Casserly from Krass Monroe will be
~resent at the EDA meeting.
ATTACHMENTS
* Revised Term Sheet
MOTION BY SECOND BY
10/25/02 FRI 10:$7 FAI 952 885 5969 KRASS ~ON~OE ~uu~'
KRASS MONROE, P.A.
ATTORNEYS AT LAW
James R. Casserly, Esq.
£mail jum~,¢f~,/o.a~monroe.
Yoiee Mail (952) 88.~-/ 29d
MEMORANDUM'
City of New Hope
Attn: Kirk McDonald, Comm. Dev. Dir.
Attn: Daniel Donahue, City Manager
Attn: Daryl Sulander, Finance Director
From: James R. Cassedy, Esq.
Date: October 25, 2002
Re:
New Hope: Navarre - Term Sheet dated October 21,2002
Our File No. 10048-8
Attached is a Term Sheet which reflects the recent negotiations between Navarre and
the City. Bob Glasgow has informed me that Navarre has agreed to the provisions
contained in this Term Sheet.
The differences between terms in the Development Agreement approved by the City on
September 9, 2002 and this Term Sheet are as follows:
City Property. The City property will not be conveyed to Navarre for
construction of a new Ahrens trucking facility. The City/EDA will continue
in their efforts to sell the property.
o
Ahrens Truckinp,. Navarre will not construct a new Ahrens trucking facility.
Navarre is continuing its efforts to acquire the Ahrens property. If Navarre
is not successful, then the EDA will proceed with an eminent domain
proceeding to acquire the property.
3. _Security. The EDA is no longer conveying the City property to Navarre.
Navarre will either purchase the Ahrens trucking property site or will
advance all funds necessary to do so to the EDA. Navarre (the actual
SUITE t100 SOIJTHPOINT OFFICE CENTER. 1650 WEST 82ND STREEr · MINNEAPOLIS, MINNESOTA ,~431.1447 TFI ;:PHONE 952/88,%5999 · FACSIMILE 952/8~
· 10/25/02 FRI 10:58 FAX 952 885 5969 KI~SS ~O~OE ~oo~
redeveloper is New Hope LLC) will receive a revenue note for agreed
upon expenses but only after it has completed construction of the
expanded Navarre facility.
4. Revenue Note Payment.~. Tax increment will be pledged for the payment
of the revenue note through June 1,2011. Because of the reduced market
value (the new Ahrens trucking facility will not be built on the City property),
the full principal of $450,000 is not estimated to be actually paid until
December 1, 2011. However, Navarre has agreed to the June 1, 2011
payment date which is estimated to provide a principal amount of
$425,000. A cash flow illustrating the current transaction is attached.
Column 0) on page 3 shows the principal being paid through June 1,2011.
The EDA will receive the remaining revenues generated by the TIF district.
If the City/EDA approves the Term Sheet, then a revised contract for redevelopment will
be prepared and will be submitted to the EDA for its approval.
JRC/trg
Attachments
CC:
Jensen & Sondrall, P.A.
Attn: Steve Sondrall, Esq.
Glasgow Advisory Services, Inc.
Attn: Robert R. Glasgow, President
Winthrop & Weinstein
Attn: Jon L. Peterson, Esq.
Krass Monroe, P.A.
Attn: Clarissa M. Klug, Esq.
G;~WPDATAW~IE~N HOPE"'~01~'ORR~CDONALD.DONN. iUE SLILANDER JRC Q3J:)OC
· Page 2
10/25/02 FRI 10:58 FA/ 952 865 5969 IQ~SS ~iONROE ~004'
TERM SHEET
Navarre
(Octobgr 21,2002)
Redeveloper:
New Hopc LLC, a limited liabil/ty company.
City:
City of New Hope, Minnesota.
EDA:
New Hope Economic Development Authority.
Redevelopment Property: The Redcvelopcr's Property, and Ahrens Trucking Property.
Redeveloper's Property:
Aln-en$ Tmcldng Proporty:
The approximately 4.7 acres shown on the attached Site Plan and
currently owned by the Redeveloper or Navarre Corporation.
Thc approximately l.O acres shown on the attached Site Plm~ and
currently owued by Ahrcns Trucking.
Minim'urn Improvements:
Timing:
Rcdcvclopment Costs:
The Redevclopcr shall construct or cause to be constructed the
following mi~imum improvements to the Redevelopment Property:
A warehouse of approximately 100,000 square feet on the
Rcdeveloper's property and Alu'cas Trucking Property to
accommodate the expansion of Navarre Corporation.
Navarre Warehouse: Begin on or about April 1, 2003;
Complete on or about December 1, 2003
The Redeveloper shall pay for all environmental rcmediation, site
preparation including soil correction, public improvements,
demolition, relocation, plat and plat amendment, survey, PUD and
other development costs. This includes the utility relocation costs
needed for comtmction of the Navarre warehouse. In the event
environmental rcmcdi~on is mquireA, the City will diligently
pursue any eligible programs for reimbursement of such costs.
The Redeveloper shall also pay for all EDA/City costs associated
with the acquisition and relocation of the Ahrens Trucking
° 10/25/02 FRI 10:58 FA~X 952 885 5969 KRA$$ ~O~OE ~U~5
Revenue Note:
Security:
To defray the Redevelopment Costs the EDA will issue a Revenue
Note to the Redeveloper in the amount not to exceed $200,000 plus
the cost of relocating the utilities on the Redevelopment Property
in an amount not to exceed $250,000 for a total principal amount
of the Revenue Note not to exceed $450,000. The Revenue Note
shall be paid from tax increment generated through June 1, 2011
by the Minimuro Improvements on the Redevelopment Property.
In the event the use of eminent domain is necessary for thc
acquisition of the AMens Trucking Property, the EDA shall
proceed under the following conditions:
The required public purpose findings roust be made.
Eminent domain proceedings would not begin until the
Redeveloper had made a deposit of $25,000 to cover
legal, appraisal, etc. expenses.
At the time a deposit is required with the court, eminent
domain proceedings will continue only upon the
Redeveloper's deposit of' a sum equal to 120% of thc
EDA's total estimated acquisition costs, including
relocation costs, less the amount already advanced by
tho Redevcloper.
4. All eminent domain and relocation expenses would be
the Redev~loper's responsibility regardless of whether
the proceedings are successful.
This Term Sheet outlines the terms under which the parties are w/lling to enter into a Contract
for Private Redevelopment, which will follow the same format as the draft Contract dated
August 29, 2002, but does not constitute an offer or acceptance on either party's part. All rights
and obhgafions with respect to the Redevelopment Property shall only be as provided for in a
Contract for Private Redevelopment approved by the City Council and the Redeveloper.
Attachment
G:\WPDA't'A~N~,N~;W HOPE~0$~)OC~TERM ~I '~2ffl' 84}-02 CLRAN.I.,N~
2
10/25/02 FRI 10:59 FA/ 952 885 5969
]Q~J~SS M0~0E
CITY OF NEW HOPE
Navarre Expansion
ASSUMPTIONS
~O06'
I.
Original Market Values
Navarre
1 Navarre Parking lot 08.118-21-24.0005
2 Ahrens Trucking 08-118-21-23-0006
30utJot 08-118-21-23-0008
Totals
7550 49th Ave.
7600 49th Ave.
Original Tax Capacity
Navarre warehouse
<= 150,000 1.50%
> 150,000 2.00%
Estimated Market Value
Navarre warehouse
108,000 sq. ff.l~ $
50.00
Estimated Tax Capacity
Navarre warehouse
<= 150,000 1.50%
> 150,000 2.00%
Estimated Taxes
Navarre warehouse
108,000 sq.E@ $
Estimated Tax Increment - Annual
Area of Parcel 1/212001 Market Value(Pay 2002)
(Acres) (Sq. Feet) Land Building Total
0.98 42,675 108,000 - 108,000
1.00 43,570 109,000 42,000 151,000
3.73 162,280 186,000 186.000
5.71 248,525 $ 403,000 $ 42,000 $ 445,000
1.62--persq. A. ofLand
Phasing
Navarre warehouse BuiJt in 2003
Local Tax Rate, Pay 2002 1.41880 *
State Tax Rate - Pay 2002 estimate 0.57933
Combined Tax Rate - C/I Property Only 1.99813
· used for tax increment calculations
Admin Fees
10.00%
State Auditor Fee
Inflation (after 2 yrs of full value)
PV Rate. Rev. Note 12/1/2003
PV Rate. City 12/1/2003
Fiscal Disparities Rate
0.360%
2.50%
7.00%
5.00%
33.0385%
per sq. ft. = 5,400,000
8,150
107,250
1.98 per sq. ft. = 214,299
5,400,000
107,250
214,299
93,811
43.8% of total taxes p
(C/I only)
1
2
3
4
5
6
7
8
9
zo/25/o2
FRI 10:$9 FAX 952
(a) (b)
Original
Tax
Date Capacity
885 5969 lQ{ASS }[ON'ROE
CFTY OF NEW HOPE
Navarre Expansion
CASH FLOW AND PRESENT VALUE ANALYSIS
ANNUAL
(c) (d)
Estimated Captured
Tax Tax
Capacity Capacity
(see assumptions) (c)- (b)
2.5% Inflation
~007
06/01/02 8,150
12/01/02 8.150
06/01/03 8.150
12/01/03 8,150
06/01104 8,150
12/01/04 8,150
06/01/05 8,150
12/01/05 8,150
06101106 8,150
12/01/06 8,150
06/01/07 8.150
12101/07 8,150
06/01/08 8,150
12/01/08 8,150
06/01/09 8,150
12/01/09 8,150
06/01/10 8,150
12/01/10 8.150
06/01/11 8.150
12/01/11 8,150
06/01/12 8,150
12/01/12 8,150
(e)
Fiscal
Disparities
(d) x
(prev. year) 33.0385%
8.150 0
8.150 0
8.150 0 0
8,150 0 0
107,250 0 0
107,250 0 0
107.250 99.100 (32.741)
107.250 99.100 (32.741 )
109,931 99.100 (32.741)
109.931 99,100 (32,741)
112.680 101.781 (33.627)
112.680 101.781 (33.627)
115,497 104.530 (34.535)
115.497 104,530 (34.535)
118.384 107.347 (35.466)
118,384 107.347 (35,466)
121,344 110,234 (36,420}
121,344 110.234 (36.420)
124.377 113.194 (37,397)
124.377 113.194 (37,397)
127.487 116.227 (38.400)
127.487 116,227 (38,400)
SEMI- ANNUAL
(f) (g) (h) (i)
Adjusted Est. T.I. Less: Available Cumulative
Captured (f) x Aclmin Tax Avail. Tax
Tax Cap. 1,4188 Fees Increment Increment
(d) - (e) St. Aud. Fee (g) x (g)- (h) Total of (i)
0.360% 10,00%
0 0 0 0 0
0 0 0 0 0
0 0 0 0 0
0 0 0 0 0
0 0 0 0 0
0 0 0 0 0
66.359 46,905 4.691 42,215 42,215
66.359 46.905 4,691 42,215 84.430
66.359 46,905 4,691 42.215 126,645
66,359 46.905 4,691 42.215 168.860
68.154 48.175 4,817 43.357 212,217
68.154 48,175 4.817 43.357 255.574
69,995 49,475 4,948 44,628 300,102
69,995 49.475 4,948 44,528 344.630
71.881 50.809 5,081 45,728 390,358
71,881 50,809 5.081 45.728 436.085
73,814 52.175 5,218 46,958 483,043
73.814 52.175 5,218 46.958 530,001
75.796 53.576 5,358 48.219 578.220
75,796 53,576 5,358 48,219 626,438
77,827 55,012 5,501 49.511 675.949
77,827 55,012 5,501 49.511 725.460
806,066 80,607 725,460 725.460
~0~25/02
FRI 10:59 FA~ 952 885 5969
ERASS I~Oh'ROE
CITY OF NEW HOPE
N~varre Expansion
PRESENT VALUE ANALYSIS FOR CITY AND REVENUE NOTE
Ca) (b) (c) (d) (e) (0 (e) (h) (i) 0)
Available Available
Tax For P.V. Rate Available P.V. Rate Total Total
Increment Revenue Semiannual Cumulative For Semiannual Cumulative Semiannual Cumulative
Date {from Cash Note Balance Balance ; Authority Balance Balance Balance Balance
Flow (b) x P.V. of (c) Total of (d) (b) - (c) P.V. of (f) Total of (g) (d) + (g) (e) + (h)
Analysis) 100.00% 7.00% 0.00% 5.00%
06/01102 0 0 0 0 0 0 0 0 0
12/01/02 0 0 0 0 0 0 0 0 0
06/01/03 0 0 0 0 0 0 0 0 0
12101103 0 0 0 0 0 0 0 0 0
06/01/04 0 0 0 0 0 0 0 0 0
12/01104 0 0 0 0 0 0 0 0 0
06/01/05 42,215 42.215 38,075 38,075 0 0 0 38,075 38,075
12/01/05 42,215 42,215 36,788 74.863 0 0 0 36,788 74,863
06/01/06 42,215 42,215 35,544 110,407 0 0 0 35,544 110,407
12/01/06 42,215 42,215 34,342 144,749 0 0 0 34.342 144,749
06/01/07 43,357 43,357 34,078 178,827 0 0 0 34.078 178.827
12/01/07 43,357 43,357 32,926 211,753 0 0 0 32,926 211,753
06/01/08 44,528 44.528 32,671 244,425 0 0 0 32.671 244,425
12/01108 44,528 44,528 31,567 275,991 0 0 0 31,567 275.991
06/01/09 45,728 46,728 31.321 307,312 0 0 0 31,321 307,312
12/01/09 45,728 45,728 30.262 337,574 0 0 0 30,262 337.574
06/01/10 46,958 46,958 30,025 367,599 0 0 0 30.025 367,599
12/01/10 46.958 46,958 29,010 396,609 0 0 0 29,010 396.609
06/01/11 48,219 48,219 28.781 425,390 0 0 0 28,781 425,390
12/01/11 48.219 0 425.390 48,219 32.481 32,481 32,481 457,871
06/01112 49,511 0 425,390 49,511 32,538 65.019 32,538 4g0,410
12/01/12 49,511 0 425,390 49,511 31.745 96,764 31,745 522,154
725,460 578,220 425,390 425,390 147,240 96,764 96.764 522,154 522,154
~ ,
Utility Relocation Costs 250.000 0 0
Ahmns' Trucking Costs 200,000
Total Revenue Note 450,000
Navarre Expansion 2.x15
Prepared by Krass Monroe, P.A. 10/16/2002
10/25/02 FEI 10:59 FA[ 952 885 5969 I[AA$S MONROE ~uu~
CITY..OF NEW HOPE
Navarre Expansion
TAX INCREMENT REVENUE NOTE
Principal Amount
Interest Rate
Number of Payments
Payment Amount
Interest Start Date
Term of Note
450,000
7.00%
15 semi-annual payments
Available Tax Increment
12/01/03
7.5 years
Date
12/01/03
1 06/01/04
1 2/01/04
2 06/01/05
12/01/05
3 06/01/06
12/01/06
4 06/01/07
12/01/07
5 06/01/08
12/01/08
6 06/01/09
12/01/09
7 06/01/10
12/01/10
8 06/01/11
Capitalized
Interest
Payment Interest Principal
15,750 0
16,301 0
0 42,215 16,872
0 42,215 15,985
0 42,215 15,067
0 42,215 14,117
0 43,357 13,133
0 43,357 12,075
0 44,528 10,980
0 44,528 9,806
0 45,728 8,591
0 45,728 7,291
0 46,958 5,946
0 46,958 4.510
0 48,219 3,025
0
0
25,343
26,230
27.148
28,098
30,224
31 282
33 547
34 722
37 137
38.437
41 012
42,447
45,194
32,051
578,220 137,398
0
440,821
Balance
450,000
465,750
482,051
456,708
430,478
403,330
375,231
345,OO7
313,725
280,178
245,456
208,320
169,883
128,871
86,424
41.230
Navarre Expansion 2.xls
Prepared by Krass Monroe, P.A. 10/16/2002