Loading...
022717 EDA Meeting Packet    EDA MEETING  City Hall, 4401 Xylon Avenue North  Monday, February 27, 2017    Commences upon adjournment of the City Council Meeting  Agenda    President Kathi Hemken  Commissioner John Elder  Commissioner Andy Hoffe  Commissioner Eric Lammle  Commissioner Jonathan London      1. Call to order – EDA Meeting of February 27, 2017      2. Roll call      3. Approval of Minutes:   February 13, 2017      4.  Motion to approve an amendment to the Alatus Development Agreement in  relation to terms concerning the financing of a Variable Refrigerant Flow system  for the building (project no. 964)      5. Adjournment        EDA Meeting   Page 1 February 13, 2017  City of New Hope  4401 Xylon Avenue North  New Hope, Minnesota 55428    EDA Minutes February 13, 2017  Regular Meeting City Hall      CALL TO ORDER President Hemken called the meeting of the Economic Development Authority  to order at 8:36 p.m.    ROLL CALL Present:          Absent:  Kathi Hemken, President  Andy Hoffe, Commissioner  Eric Lammle, Commissioner  Jonathan London, Commissioner    John Elder, Commissioner     Staff Present:      Kirk McDonald, City Manager  Aaron Chirpich, Community Development Specialist  Tim Fournier, Director of Police  Valerie Leone, City Clerk  Chris Long, City Engineer  Jeff Sargent, Director of Community Development  Bernie Weber, Acting Director of Public Works  Stacy Woods, Assistant City Attorney    APPROVAL OF  MINUTES  Item 3  Motion was made by Commissioner Hoffe, seconded by Commissioner London,  to approve the minutes of January 23, 2017. All present voted in favor. Motion  carried.    IMP. PROJECT 997  Item 4  President Hemken introduced for discussion EDA Item 4, Resolution approving  Purchase Agreement for the acquisition of 3984 Zealand Avenue North.    Mr. Aaron Chirpich, community development specialist, explained that the  market for distressed properties has become more competitive and the prices for  acquisition of homes has increased. He commented that homes that are “flipped”  by investors may have interior improvements but lack in exterior improvements  that are more costly such as roof, siding and windows.     He requested authority to enter into a purchase agreement for the acquisition of  3984 Zealand Avenue North, for a purchase price of $165,000 plus any associated  fees. He noted the closing would take place within 30 days.    Mr. Chirpich reported the home is a vacant and foreclosed property that was  part of an estate. The home was constructed in 1964 and is in need of general  maintenance. He stated improvements are estimated at $65,000 and would  include a new roof, siding, windows, overhead garage door, new kitchen, re‐ conditioning of existing hardwood floors, remodel the master and main bath,  new interior doors and trim, interior painting and new carpet in the lower level.  Staff recommends purchasing, renovating and reselling the property. He  EDA Meeting   Page 2 February 13, 2017  explained EDA funds will be used for the acquisition and remodeling costs. He  pointed out there will be no income restrictions as CDBG funds are not proposed  for the project.    City Manager McDonald inquired regarding the owner‐occupant requirement.  Assistant City Attorney Stacy Woods indicated the city can require the property  to be owner‐occupied by its first owner.    Commissioner London commented that properties that have been “flipped” and  put on the market for less than $300,000 are in high demand. He noted the vast  majority of rehab work in the private sector is not high quality. He supported  the city’s endeavor for rehabilitation of distressed properties.    Commissioner Lammle inquired of the process undertaken for remodeling  work.     Mr. Chirpich explained the city would solicit bids from multiple contractors for  each rehab project.     RESOLUTION 2017‐02  Item 4  Commissioner Lammle introduced the following resolution and moved its  adoption “RESOLUTION APPROVING PURCHASE AGREEMENT FOR  THE ACQUISITION OF 3984 ZEALAND AVENUE NORTH”. The motion for  the adoption of the foregoing resolution was seconded by Commissioner Hoffe,  and upon vote being taken thereon, the following voted in favor thereof:  Hemken, Hoffe, Lammle; and the following voted against the same: None;  Abstained: London; Absent: Elder; 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 Hoffe,  to adjourn the meeting. All present voted in favor. Motion carried. The New  Hope EDA adjourned at 8:50 p.m.    Respectfully submitted,    Valerie Leone, City Clerk    I:\RFA\COMM DEV\Development\EDA ‐ Amended to Alatus Dev Agr ‐ VRF System 2‐27‐17.docx   Request for Action February 27, 2017    Approved by: Kirk McDonald, City Manager  Originating Department: Community Development  By: Jeff Sargent, Director   Agenda Title  Motion to approve an amendment to the Alatus Development Agreement in relation to terms concerning the  financing of a Variable Refrigerant Flow system for the building (project no. 964)  Requested Action  Staff and the city’s redevelopment consultant from Ehlers requests that the Economic Development Authority  (EDA) approve a motion to amend the Development Agreement between the EDA and Alatus, LLC in relation  to terms concerning the financing of a Variable Refrigerant Flow (VFR) system for the building.  Policy/Past Practice  It is a practice of the EDA to approve amendments to Development Agreements when conditions change that  warrant the amendment.  Background  Bob Lux, Principal of Alatus, LLC, approached the city with an idea to incorporate a state‐of‐the‐art heating  and cooling system for the project in New Hope. Instead of incorporating individual “MagicPak” systems in  each apartment unit, Alatus is looking to utilize a VRF system for the building. VRF systems achieve extremely  high efficiencies by modulating the flow of the refrigerant according to the exact demands of specific areas  throughout the building. By coupling the boiler/chiller VRF system with solar power, the new apartment  building in New Hope would be able to achieve close to zero emissions, meaning that the building would  generate no carbon footprint. This would allow the building to achieve LEED certification, making it a model  project for the future of heating and cooling needs of similar buildings in the metro area. Support of this project  would also align with the city’s goals of striving for a “green” environment, as it does with the GreenStep  Program.    The benefits of the VRF HVAC system include the nearly 100% efficiency rating, the fact that there will be no  carbon footprint for the building, as well as better control of heating and cooling needs throughout the  development. The VRF system uses roughly 50% of the energy that the MagicPak systems use, saving an  equivalent in emissions of 615,000 gallons of gasoline over a 20‐year period. Each apartment unit would have  its own meter to monitor heating and cooling usage, but would no longer need to have individual MagicPak  systems in each unit, adding to the aesthetics of the building as well. Having a LEED certified building within  city limits is also beneficial to the city.    The challenge facing Alatus to incorporate the VRF system is the cost. Alatus received a quote of $688,000 for  the installation of the VRF HVAC system. Mr. Lux is excited to install the VRF system because of the positive  impacts it would have on the building and the city, however he stated that the cost would be too prohibitive  for Alatus to pursue on its own. He has asked if the City Council would be amenable to cover half the cost of  the system (up to $350,000) to help with the project. This proposal was brought to the City Council’s attention  at the February 21, 2017 work session meeting.       Agenda Section EDA Item Number 4    Request for Action, Page 2    Funding  Ehlers conducted a TIF analysis of this proposal, and has indicated that if the Council would like to pursue this  project, TIF generated from the project could be used to help pay for the VRF system. The effect on the TIF note  would be an increase to the agreed upon terms from 23 years of assistance to 23.5 years.    Another option would be for Alatus to agree to accept a monetary contribution from the city in the form of a  loan. Terms and conditions of the loan would be worked out and presented to the EDA when a resolution  approving the amendment to the Development Agreement would be considered.    Attachments   VRF System Benefits Memo provided by Alatus, LLC    VRF System Benefits 8400 Bass Lake Road, New Hope MN - 2 - Memo To: Jeff Sargent, Director of Community Development City of New Hope From: Robert Lux Ashley Bisner Alatus LLC Date: February 15, 2017 Re: VRF System Benefits Alatus’ goal for 8400 Bass Lake Road Apartments (“8400 Bass Lake”) is to create an exceptional experience not only for the building’s residents, but also for the citizens of New Hope and the citizens of the surrounding area; every aspect of the building has been designed with this goal in mind. Alatus strives to set the new standard when developing buildings – specifically, to incorporate designs and features that others are compelled to emulate. One way Alatus seeks to achieve this goal at 8400 Bass Lake is with the building’s mechanical system. There are currently three mechanical systems utilized in apartment buildings: (1) MagicPak, (2) Water sourced heat pumps, and (3) Variable Refrigerant Flow (VRF). A vast majority of apartment buildings use separate gas-fired MagicPaks in each individual unit for heating and cooling because the system has the lowest up-front investment cost and the technology is familiar (it has been around for over 40 years). Fortunately, there is a better option. A VRF system presents an opportunity to utilize and benefit from the newest and highest efficiency technology. The VRF system requires a larger up-front investment cost compared to the other options, but significantly reduces environmental impact and improves the resident experience. The system also allows the building to achieve LEED certification and positions it to reach close to a net zero emissions, making it a model project for future developments in the Twin Cities metro area. Key Benefits: 1) VRF currently leads the industry as the most energy efficient heating and cooling system available. 2) A VRF system will vastly improve tenant comfort, system controllability, and building aesthetic compared to traditional MagicPak systems. 3) VRF technology is built to last. 8400 BASS LAKE ROAD APARTMENTS - 3 - 1) Energy Efficiency and Lifetime Cost of Energy The most recent energy survey by the U.S. government (conducted in 2012) shows a use of 6,963 trillion BTUs of energy each year to operate commercial buildings.1 Almost seven quadrillion BTUs is an enormous amount of energy and clearly indicates that developers and City officials need to work to ensure future buildings are built to be more efficient. The easiest and most significant way to improve energy usage is to invest in high efficiency heating and cooling systems because these systems account for almost 40% of the energy used by commercial buildings. VRF technology is a full building heating and cooling system solution that currently leads the industry in energy efficiency and would significantly reduce the lifetime energy use at 8400 Bass Lake. VRF systems include the most recent advancements in controls, energy recovery, and heating and cooling technology. Through these advancements, the VRF system proposed for 8400 Bass Lake will use 50% less energy than the baseline MagicPak system. To put this into perspective, the proposed VRF system will save the equivalent of 615,000 gallons of gasoline over a 20 -year period; that is enough gasoline for a car to drive around the entire globe 617 times. MagicPak Units VRF Potential Savings by Using VRF Lifetime Equivalent CO2 Emissions (metric tons) 14,054 8,588 5,466 (39%) Lifetime Equivalent gasoline consumed (Gallons) 1,581,418 966,356 615,063 (39%) Based on a full-scale energy model completed by LG Electronics USA to compare a VRF heat recovery system to a baseline gas fired MagicPak system, the VRF system will cost $66,000 less per year to operate than a MagicPak system at 8400 Bass Lake (using current rates). This equates to a heating and cooling savings of roughly $400 per unit per year. Additionally, VRF systems only use electricity for both heating and cooling, thus completely replacing unsustainable energy sources with renewable energy. 2) Improved Tenant Comfort, System Controllability, and Building Aesthetic VRF systems utilize variable speed technology, which is a significant reason the system leads the industry in energy efficiency. While MagicPak units have two speeds, 100% on or 100% off, the VRF system has the ability to vacillate between 10% and 100% in order to exactly ma tch the heating or cooling load a space requires at any given moment. The variable speed technology allows the VRF system to more accurately maintain space temperature compared to a MagicPak unit. With a VRF system, each resident can maintain the exact temperature setting they desire using the precise amount of energy necessary to do so. Comparatively, MagicPak systems have to constantly cycle on and off in attempts to maintain a desired temperature. The VRF system’s variable speed blower fan that circulates air in each apartment also provides an additional level of comfort for residents and produces significantly less noise compared to a MagicPak fan. 1 https://www.eia.gov/consumption/commercial/reports/2012/energyusage/ - 4 - Figure 1 - Flux Apartments in Uptown, Minneapolis. Picture from: http://bkvgroup.com/wp- content/uploads/2015/01/flux_img3.jpg VRF systems use a centralized plant of equipment located in a mechanical room that feeds the terminal units in each apartment. When compared to a decentralized MagicPak system, the three major benefits include (1) ease of maintenance, (2) system controllability, and (3) building aesthetic. By centralizing all of the major equipment in a maintenance room, any service or routine maintenance can be completed without requiring access to tenants’ apartments. A centralized VRF system includes a central controller that monitors the entire building and allows the building service personnel to proactively maintain the system. Lastly, the VRF central plant eliminates the need for the wall penetration a MagicPak unit requires on the exterior wall of each apartment (see example in Figure 1 below). The large opening required to install a MagicPak unit detracts from the overall aesthetic of a building and has a tendency to both rust and allow moisture into the building envelope. 3) Cost implications of utilizing VRF Technology As outlined above, there are many benefits of utilizing a VRF system. As stated, Alatus’ goal for 8400 Bass Lake is to position the development to be the most advanced suburban apartment product in the marketplace. As is the case with most leading-edge technology, the up-front costs associated with the system’s implementation is often times a deterrent to making the better long-term choice. The additional initial cost of the VRF system as programmed in the building compared to a MagicPak system is $688,000. Alatus would like to join with the City of New Hope in bringing this technology to 8400 Bass Lake and would like to propose sharing this additional expense 50% / 50% with the City by reducing the purchase price on the land by $344,000. We view this as a joint partnership between Alatus and the City of New Hope to achieve a truly best in class product that demonstrates our values and will serve residents and citizens into the future.