032017 EDA SpecialEDA Meeting
Page 1 March 20, 2017
City of New Hope
4401 Xylon Avenue North
New Hope, Minnesota 55428
EDA Minutes March 20, 2017
Special Meeting City Hall
CALL TO ORDER President Hemken called the meeting of the Economic Development Authority to
order at 6:00 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
Rich Johnson, HR/Admin Services Director
Valerie Leone, City Clerk
Chris Long, City Engineer
Susan Rader, Director of Parks and Recreation
Jeff Sargent, Director of Community Development
Stacy Woods, Assistant City Attorney
Also Present: Stacie Kvilvang, Ehlers
ALATUS PURCHASE
& DEVELOPMENT
AGREEMENT
Item 3
President Hemken introduced for discussion EDA Item 3, Resolution authorizing
the execution of a purchase and development agreement with Alatus New Hope,
LLC (project no. 964).
Mr. Jeff Sargent, director of community development, thanked the EDA for
holding a special meeting to consider approval of a loan for the cost of a Variable
Refrigerant Flow (VRF) HVAC system as part of the development agreement for
Alatus for the project at 8400 Bass Lake Road. He stated at the February 27 EDA
Meeting the majority of the EDA supported the concept subject to the terms of the
loan being brought back to the EDA for approval. He asked Stacie Kvilvang of
Ehlers to review the terms and conditions.
Ms. Kvilvang stated the development agreement that was agreed to at the end of
last year has not yet been signed so the loan will be incorporated into the
agreement as section 3.11. She stated the loan is up to $344,000 for five years at 4%
interest. She noted 4% is reasonable as the EDA is earning less than 1% on its funds
in the bank.
Ms. Kvilvang also pointed out the necessity of storm water pond improvements
located on the city’s golf course (rip rap along the pond’s edge) that will be
undertaken by Alatus as part of their project but the city will be required to
reimburse them approximately $70,000. She stated this will be added to the
development agreement as Section 4.3(h).
EDA Meeting
Page 2 March 20, 2017
She also stated Section 4.3(d) of the agreement was updated to address other golf
course items: trash enclosure on the golf course property will no longer need to be
relocated, and Alatus will construct the joint entrance and some minor
modifications to the golf course’s parking lot.
Ms. Kvilvang stated the resolution before the EDA approves the updated purchase
and development agreement, authorizes the TIF note and allows the EDA to enter
into a loan agreement.
President Hemken inquired of the terms of the TIF note. Ms. Kvilvang stated it is
still 23 years and the principal note and term remains unchanged.
Commissioner London inquired whether the value of the building will be
increased by $700,000 for the alternate HVAC system. Ms. Kvilvang stated the
valuation will likely not be increased based on the HVAC system. She noted they
will have a marketable advantage and the energy savings will be passed on to the
tenants.
Commissioner London asked whether there are any federal tax incentives
available. Ms. Kvilvang stated she is not aware of any but there may be an Xcel
Energy rebate.
Commissioner London inquired of the return amounts to the developer. Ms.
Kvilvang stated the cash on cash return is 10%. She stated investors are putting
30% cash ($14 million) into the $43 million project, the annual return is the cash on
cash, and the industry standard is a minimum of 10%. She noted Commissioner
London was referring to a cash on cost return and in the metro area investors
typically want that figure to be between 6.5 and 7%.
EDA RESOLUTION
2017-17
Item 4
Commissioner Elder introduced the following resolution and moved its adoption
“RESOLUTION AUTHORIZING THE EXECUTION OF A PURCHASE AND
DEVELOPMENT AGREEMENT WITH ALATUS NEW HOPE, LLC”. 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; 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.
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 6:16 p.m.
Respectfully submitted,
Valerie Leone, City Clerk