052316 EDA
City of New Hope
4401 Xylon Avenue North
New Hope, Minnesota 55428
EDA Minutes May 23, 2016
Regular Meeting City Hall
CALL TO ORDER President Hemken called the meeting of the Economic Development
Authority to order at 8:51 p.m.
ROLL CALL Present: Kathi Hemken, President
John Elder, Commissioner
Andy Hoffe, Commissioner
Eric Lammle, Commissioner
Jonathan London, Commissioner
Staff Present: Kirk McDonald, City Manager
Aaron Chirpich, Community Development Specialist
Tim Fournier, Police Chief
Valerie Leone, City Clerk
Chris Long, City Engineer
Jeff Sargent, Director of Community Development
Steve Sondrall, City Attorney
Stacy Woods, Assistant City Attorney
APPROVAL OF Motion was made by Commissioner Elder, seconded by Commissioner
MINUTES Hoffe, to approve the minutes of May 9, 2016. Voted in favor: Hemken,
Item 3
Elder, Hoffe, London; voted against: None; Absent: None; Abstained:
Lammle. Motion carried.
IMP. PROJECT 971 President Hemken introduced for discussion EDA Item 4, Resolution
Item 4
authorizing the execution of a first amendment to contract for private
redevelopment with Industrial Equities, New Hope, LLC (improvement
project no. 971).
Mr. Aaron Chirpich, community development specialist, stated in early
2015, Industrial Equities purchased the vacant and distressed industrial
building located at 9449 Science Center Drive with the intent of
redeveloping the site. He stated the city provided $250,000 in TIF
assistance to pay for demolition, abatement and soil corrections on the
site. He stated demolition of the building and clearing of all other site
improvements began in late February of 2016. Following the demolition
of the primary building, the excavating contractor discovered
unexpected poor soils beneath the building and around the perimeter of
the foundation. Engineers who have examined the site speculate the
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building was built in a natural depression in order to limit the amount of
excavation needed to accommodate the original basement. The footings
of the former building extended well below the basement slab. The
deeper than usual footings were built in an effort to compensate for the
poor soil conditions that were not remediated at the time of construction
in 1960. Because the poor soils were found beneath the building, it would
have been impossible to plan for such a find.
Mr. Chirpich stated the owner has notified staff there is an additional
$300,000 of soil correction work needed on the property due to poor soils
discovered underneath the building.
Mr. Chirpich stated the Industrial Equities Renewal and Renovation TIF
District has a maximum duration of 16 years. Based upon current
estimates, the repayment term for the original $250,000 TIF note is 10
years. The EDA can choose to extend the duration of the assistance to
include the full 16 years. Increasing the duration of the district could
provide the developer with an additional $120,000 to help pay for the
additional soil corrections. He indicated staff from Ehlers has assessed
the request for additional assistance and have found the request
reasonable. If additional assistance is provided, the projected cash on cost
return to the developer would actually decrease. Therefore, providing
additional funding will not unduly enrich the developer.
He indicated the Council reviewed the request for additional TIF
assistance at the April 18 work session and the majority of the Council
was supportive of the request. He stated staff was directed to draft an
amendment to the redevelopment contract. He stated it is not unusual to
find adverse soil conditions and amendments are common. He noted the
key provisions and outcomes of the amendment include:
The maximum amount of additional assistance (applied to the TIF
note principal) is capped at $120,000
The owner will have to certify all costs for additional soil correction
work
If the actual costs incurred by the owner for additional soil
corrections are less than the estimated $300,000, the amount of
additional TIF assistance provided by the city will decrease
proportionally.
The duration of the TIF district will be extended to the full 16 years
allowed by statute.
Commissioner London pointed out the transaction was a private sale,
and he believes the applicant negotiated a lower price based on the
property’s condition. He noted he does not support additional financial
assistance.
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Mr. John Allen of Industrial Equities was recognized. Mr. John Allen
explained the land value and purchase price. He confirmed his desire to
move forward with the development even though it is not highly
profitable. He emphasized a new building with higher end users will
create jobs in New Hope. He commented he does not believe the project
will require the full 16 years of tax increment financing. Mr. Allen
thanked the EDA for its cooperation and patience.
Commissioner Lammle reported there are several redevelopment sites in
New Hope with poor soils, and the Council/EDA has previously agreed
to offset costs to remediate adverse soil conditions on other projects such
as the Parkview development.
RESOLUTION 2016-Commissioner Lammle introduced the following resolution and moved
10 its adoption “RESOLUTION AUTHORIZING THE EXECUTION OF A
Item 4 FIRST AMENDMENT TO CONTRACT FOR PRIVATE
REDEVELOPMENT WITH INDUSTRIAL EQUITIES, NEW HOPE,
LLC (IMPROVEMENT PROJECT NO. 971)”. 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, Hoffe, Lammle; and the following voted against
the same: London; 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.
PUBLIC HEARING President Hemken introduced for discussion EDA Item 5, Resolution
IMP. PROJECT 965
approving purchase and redevelopment agreement with Regal Homes
Item 5
LLC, for the sale of 4415 and 4417 Nevada Avenue North (improvement
project no. 965).
Mr. Aaron Chirpich, community development specialist, stated in mid-
April, Request for Proposals marketing city-owned lots at $55,000 per lot
were sent to 19 builders. He stated the EDA reviewed the proposals at its
May 9 meeting and selected Regal Homes LLC as the preferred builder
for 4415 and 4417 Nevada Avenue North. Also at the May 9 meeting the
EDA agreed to fund up to $5,000 for curb cut costs for the two lots.
Mr. Chirpich stated the city has not worked with Regal Homes in the past
but Columbia Heights provided a positive reference for the builder. He
reviewed the home design and noted the anticipated sales price is
between $315,000 and $325,000.
Mr. Chirpich stated a purchase and development agreement will be
executed and construction is anticipated in June.
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The EDA expressed its gratitude to staff for coordinating the property
redevelopment.
CLOSE HEARING Motion was made by Commissioner Hoffe, seconded by Commissioner
Item 5 Elder, to close the public hearing. All present voted in favor. Motion
carried.
RESOLUTION 2016-Commissioner Elder introduced the following resolution and moved its
11 adoption “RESOLUTION APPROVING PURCHASE AND
Item 5 REDEVELOPMENT AGREEMENT WITH REGAL HOMES LLC, FOR
THE SALE OF 4415 AND 4417 NEVADA AVENUE NORTH
(IMPROVEMENT PROJECT NO. 965)”. The motion for the adoption of
the foregoing resolution was seconded by Commissioner Lammle, and
upon vote being taken thereon, the following voted in favor thereof:
Hemken, Elder, Hoffe, Lammle, 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.
PUBLIC HEARING President Hemken introduced for discussion EDA Item 6, Resolution
IMP. PROJECT 975
approving purchase and redevelopment agreement with Novak-Fleck
Item 6
Incorporated for the sale of 4511 Boone Avenue North (improvement
project no. 975).
Mr. Aaron Chirpich, community development specialist, stated in mid-
April, Request for Proposals marketing city-owned lots at $55,000 per lot
were sent to 19 builders. He stated the EDA reviewed the proposals at its
May 9 meeting and selected Novak-Fleck as the preferred builder for
4511 Boone Avenue North. He reported the EDA has recently sold four
lots to Novak-Fleck and has been pleased with the quality of their work.
He reviewed the home design and noted the proposed home is pre-sold
to a New Hope resident for approximately $303,000.
Mr. Chirpich stated a purchase and development agreement will be
executed, and construction is anticipated in June.
CLOSE HEARING Motion was made by Commissioner Elder, seconded by Commissioner
Item 6 Lammle, to close the public hearing. All present voted in favor. Motion
carried.
RESOLUTION 2016-Commissioner Elder introduced the following resolution and moved its
12 adoption “RESOLUTION APPROVING PURCHASE AND
Item 6 REDEVELOPMENT AGREEMENT WITH NOVAK-FLECK
INCORPORATED FOR THE SALE OF 4511 BOONE AVENUE
NORTH (IMPROVEMENT PROJECT NO. 975)”. The motion for the
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adoption of the foregoing resolution was seconded by Commissioner
Hoffe, and upon vote being taken thereon, the following voted in favor
thereof: Hemken, Elder, Hoffe, Lammle, 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 986 President Hemken introduced for discussion EDA Item 7, Resolution
Item 7
approving purchase agreement for the acquisition of 5400 Yukon Avenue
North (improvement project no. 986).
Mr. Aaron Chirpich, community development specialist, stated as part
of the city’s scattered site housing program, staff recommends the
purchase of the vacant and distressed property at 5400 Yukon Avenue
North. He reported the original list price for the home was $109,900, and
the city’s offer of $105,000 was accepted. He noted the offer is contingent
upon EDA and county approval.
Mr. Chirpich stated staff recommends redevelopment of the property by
razing the existing structure. He stated EDA funds can be utilized to cash
flow the project and the EDA would be reimbursed by CDBG resources
and property sale.
Commissioner London inquired of the number of scattered site projects
to date.
Mr. Chirpich reported over the last two years the city has acquired six
properties and created a total of nine lots.
RESOLUTION 2016-Commissioner London introduced the following resolution and moved
13 its adoption “RESOLUTION APPROVING PURCHASE
Item 7 AGREEMENT FOR THE ACQUISITION OF 5400 YUKON AVENUE
NORTH (IMPROVEMENT PROJECT NO. 986)”. 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, Hoffe, Lammle, 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.
ADJOURNMENT Motion was made by Commissioner London, seconded by
Commissioner Elder, to adjourn the meeting. All present voted in favor.
Motion carried. The New Hope EDA adjourned at 9:26 p.m.
Respectfully submitted,
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Valerie Leone, City Clerk
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