062617 EDA Meeting Packet
EDA MEETING
City Hall, 4401 Xylon Avenue North
Monday, June 26, 2017
Commences upon adjournment of the City Council Meeting
President Kathi Hemken
Commissioner John Elder
Commissioner Andy Hoffe
Commissioner Eric Lammle
Commissioner Jonathan London
1. Call to order – EDA Meeting of June 26, 2017
2. Roll call
3. Approval of Minutes:
May 22, 2017
4. Resolution requesting that the City Council of the City of New Hope call for a
public hearing on the modification of redevelopment project no. 1 and the
establishment of the Good Samaritan Tax Increment Financing District (a housing
district)
5. Resolution approving reimbursement of Regal Homes, LLC for costs associated
with removal of buried foundation at 4417 Nevada Avenue North (improvement
project no. 965)
6. Adjournment
EDA Meeting
Page 1 May 22, 2017
City of New Hope
4401 Xylon Avenue North
New Hope, Minnesota 55428
EDA Minutes May 22, 2017
Regular Meeting City Hall
CALL TO ORDER President Hemken called the meeting of the Economic Development Authority to
order at 8:01 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
Tim Fournier, Police Chief
Valerie Leone, City Clerk
Chris Long, City Engineer
Jeff Sargent, Director of Community Development
Bernie Weber, Director of Public Works
Stacy Woods, Assistant City Attorney
APPROVAL OF
MINUTES
Motion was made by Commissioner Elder, seconded by Commissioner Hoffe, to
approve the minutes of May 8, 2017. All present voted in favor. Motion carried.
IMP. PROJECT 993
Item 4
President Hemken introduced for discussion EDA Item 4, Resolution approving
contract with J&J Contracting, LLC for hazardous material abatement and debris
removal at 3751 Louisiana Avenue North (project no. 993).
Mr. Jeff Sargent, community development director, stated the city acquired the
single‐family home at 3751 Louisiana Avenue North as part of the scattered site
housing program. He stated before demolition can occur, abatement and debris
removal must take place. He stated bids were obtained by three contractors for
hazardous material abatement and debris removal and the low bidder is J & J
Contracting, LLC for $5,835.
Commissioner Elder inquired of past history with the contractor.
Mr. Sargent stated although the city has not worked directly with J & J
Contracting, they were recommended by Nitti Rolloff Services, which is a
contractor the city has had good experience with in the past.
Commissioner Elder recommended obtaining municipal references for J & J
Contracting.
The EDA thanked city staff for their work on the project. Mr. Sargent
acknowledged staff’s efforts as well as the city attorney’s office for their legal
assistance.
EDA Meeting
Page 2 May 22, 2017
Commissioner London inquired of the timeline for putting the property on the
market.
Mr. Sargent reported it will be completed as soon as possible. He stated the city’s
scattered site housing program has specific criteria that must be met for
contractors who wish to bid on the construction of a single‐family house. He stated
it is a public process and the proposals will be shared with the EDA at a later date.
RESOLUTION 2017‐07
Item 4
Commissioner Elder introduced the following resolution and moved its adoption:
“RESOLUTION APPROVING CONTRACT WITH J&J CONTRACTING, LLC
FOR HAZARDOUS MATERIAL ABATEMENT AND DEBRIS REMOVAL AT
3751 LOUISIANA AVENUE NORTH (PROJECT NO. 993)”. 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,
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 8:06 p.m.
Respectfully submitted,
Valerie Leone, City Clerk
I:\RFA\COMM DEV\Development\Q & R‐ Call for Public Hearing Good Samaritan TIF 6‐26‐17 EDA.docx
Request for Action
June 26, 2017
Approved by: Kirk McDonald, City Manager
Originating Department: Community Development
By: Jeff Sargent, Director
Agenda Title
Resolution requesting that the City Council of the City of New Hope call for a public hearing on the
modification of redevelopment project no. 1 and the establishment of the Good Samaritan Tax Increment
Financing District (a housing district).
Requested Action
Staff requests the EDA approve the attached resolution requesting that the City Council of the City of New
Hope call for a public hearing on the modification of redevelopment project no. 1 and the establishment of
the Good Samaritan Tax Increment Financing District.
Policy/Past Practice
Policy requires that the City Council make the official call for a public hearing on any TIF modification plan.
Background
For several months, staff has been meeting with representatives from the Good Samaritan Society about the
potential for them to construct an addition to their campus. They have recently purchased the property at 2773
and 2765 Virginia Avenue (adjacent to their current building) in anticipation of future development. The
proposed developer, Community Asset Development Group, would construct and own the new building, and
Good Samaritan would conduct the operations. Good Samaritan Society would make payments to Community
Asset Development Group over time, so that they would eventually own the building as well.
When discussing the financing options with the developer, it became clear that the only option they would
have would be for the city to aid in the financing of the construction through the creation of a TIF District.
Initially, the applicant stated that the only way this option would work would be for them to receive an up‐
front payment from the city, which would be paid back over time through the tax increment generated by the
development. Representatives from Ehlers, along with city staff, informed the applicant that the city does not
support this type of TIF arrangement, but would support a pay‐as‐you‐go method if the development truly
qualified for TIF assistance. After some discussion, the applicant agreed to this type of arrangement if the
Council agreed to create the district.
Ehlers has reviewed the pro forma and has concluded that the project is TIF eligible. The developer is looking
to construct a 31‐unit, 3‐story addition to the north of the existing building, and the two buildings would be
connected via a breezeway for access reasons. The addition would be an assisted living facility, a service that
Good Samaritan Society does not currently provide. Market research has been conducted, and it has been
determined that there is a demand for these services in the area. Assisted living facilities are required to pay
taxes, which enables the project to be TIF eligible. The City Council reviewed this request at the June 19, 2017
work session meeting, with a majority of the Council members supporting the motion.
Agenda Section
EDA
Item Number
4
Request for Action, Page 2
TIF Timeline
The proposed TIF schedule is attached for review. The applicant would like to begin construction of the
development in early September and would need to have all financing in place beforehand. The TIF timeline
calls for the Planning Commission to review the proposed TIF District at their August 2 Planning Commission
meeting, and for the City Council to consider the creation of the TIF District at the August 14 meeting. The
application would concurrently apply for the needed land use approvals and would seek final approval for
those items at the August 28 City Council meeting.
Recommendation
Staff recommends that the Economic Development Authority should request the City Council to agree to call
for a public hearing on the modification of redevelopment project no. 1 and the establishment of the Good
Samaritan Tax Increment Financing District for the August 14, 2017 City Council meeting.
Attachments
Resolution
Memo from Ehlers
TIF Schedule
Draft Site Plan
NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY
CITY OF NEW HOPE
HENNEPIN COUNTY, STATE OF MINNESOTA
RESOLUTION NO. ______________
RESOLUTION REQUESTING THAT THE CITY COUNCIL OF THE CITY OF NEW
HOPE CALL FOR A PUBLIC HEARING ON THE MODIFICATION OF THE
REDEVELOPMENT PLAN FOR REDEVELOPMENT PROJECT NO. 1 AND THE
ESTABLISHMENT OF THE GOOD SAMARITAN TAX INCREMENT FINANCING
DISTRICT (A HOUSING DISTRICT).
BE IT RESOLVED, by the Board of Commissioners (the "Board") of the New Hope Economic
Development Authority, Minnesota (the "EDA") as follows:
WHEREAS, the City Council (the "Council") of the City of New Hope, Minnesota (the "City")
established Redevelopment Project No. 1 pursuant to Minnesota Statutes, Minnesota Statutes, Sections
469.174 to 469.1794, inclusive, as amended, in an effort to encourage the development and redevelopment of
certain designated areas within the City; and
WHEREAS, the EDA is proposing the modification of the Redevelopment Plan for Redevelopment
Project No. 1 and the establishment of the Good Samaritan Tax Increment Financing District, pursuant to, and
in accordance with, Minnesota Statutes, Sections 469.174 to 469.1794 and Sections 469.090 to 469.1082,
inclusive, as amended;
NOW, THEREFORE BE IT RESOLVED by the Board as follows:
1. The EDA hereby requests that the Council call for a public hearing on August 14, 2017 to consider the
proposed adoption of the Modification to the Redevelopment Plan for Redevelopment Project No. 1 and
the proposed adoption of the Tax Increment Financing Plan for the Good Samaritan Tax Increment
Financing District (collectively, the "Plans") and cause notice of said public hearing to be given as
required by law.
2. The EDA directs the Executive Director to transmit copies of the Plans to the Planning Commission of the
City and requests the Planning Commission's written opinion indicating whether the proposed Plans are in
accordance with the Comprehensive Plan of the City, prior to the date of the public hearing.
3. The Executive Director of the EDA is hereby directed to submit a copy of the Plans to the Council for its
approval.
4. The EDA directs the Executive Director to transmit the Plans to the county and the school district in which
the Good Samaritan Tax Increment Financing District is located not later than July 14, 2017.
5. Staff and consultants are authorized and directed to take all steps necessary to prepare the Plans and
related documents and to undertake other actions necessary to bring the Plans before the Council.
Approved by the Economic Development Authority on June 26, 2017.
_______________________________
Kathi Hemken, President
ATTEST:
______________________________
Kirk McDonald, Executive Director
I:\RFA\COMM DEV\Development\Q & R ‐ 4417 Nevada Soil Corrections.docx
Request for Action
June 26, 2017
Approved by: Kirk McDonald, City Manager
Originating Department: Community Development
By: Aaron Chirpich, CD Specialist
Agenda Title
Resolution approving reimbursement of Regal Homes, LLC for costs associated with removal of buried
foundation at 4417 Nevada Avenue North (improvement project no. 965).
Requested Action
Staff requests that the Council approve the attached resolution approving payment to Regal Homes LLC, for
costs associated with soil corrections at 4417 Nevada Avenue North. This property was sold by the EDA to
Regal Homes as part of the scattered site housing program. During excavation work for the new home, the
builder encountered an unexpected buried foundation and soils not suitable for construction. The builder has
requested reimbursement for costs associated with soil corrections and the removal of the foundation totaling
$13,455.25. The request and supporting documentation were reviewed at the June 19th Council Work Session,
and the Council was supportive of full reimbursement of the submitted costs.
Policy/Past Practice
In the past, the EDA has adjusted the sales price of vacant land to accommodate the cost of soil correction
work. The City has also provided financial assistance to development partners that have encountered
unexpected soil related issues during the excavation phase of construction. The most recent example is the
Industrial Equities project at 9449 Science Center Drive, where the City increased the amount of TIF
assistance for the project when the developer encountered poor soils beneath a building that was torn down.
Background and Recommendation
The EDA purchased the foreclosed property located at 4415 Nevada Ave N in July 2015. The home and all
other site improvements were cleared to prepare the property for redevelopment. In addition to the
demolition work, the entire site was regraded to remove a large berm that occupied the southern half of the
property. The base parcel was oversized at 130 feet wide, but not large enough to subdivide, as the standard
lot width in the R‐1 District is 75 feet. However, the EDA was successful in securing a variance for lot width
reductions and subdivided the property to create two 65‐foot wide lots. Both lots were offered for sale to
scattered site builders through a competitive RFP process, and Regal Homes was the selected builder for the
project.
The EDA sold both lots to Regal Homes for $110,000 in September 2016, and construction of the first home
started on the north lot in October. While completing the excavation work for the basement, the contractor
uncovered buried footings from an unknown structure. Staff had no knowledge of the former building, as the
footings were found in an area of the site that was not disturbed during the demolition and grading work
completed by the EDA. In addition to finding the footings, the excavation contractor encountered poor soils
in the area of the buried foundation. It was determined that when the former structure was torn down, the
foundation was backfilled with miscellaneous garbage, debris and organic soils. As a result, the contractor
had to excavate a large amount of unexpected soil to reach solid ground. The full impact of the extraordinary
work is as follows:
Agenda Section
EDA
Item Number
5
Request for Action, Page 2
The foundation walls for the new garage were built four feet taller than normal.
The footings, garbage and organic soils had to be hauled off‐site.
Engineering work was completed for the footing design of the new home.
The entire garage excavation area was backfilled with imported sand that required mechanical
compaction.
Regal Homes submitted costs for the work listed above totaling $13,455.25 and requested reimbursement.
Staff is supportive of full reimbursement of the summited costs for the following reasons:
The EDA sold the lot with the expectation that it was suitable for building.
Had the EDA known about the buried foundation, it would have been removed during the
demolition work completed by the EDA.
The EDA has CDBG grant funds available to cover the soil correction costs.
Regal Homes is considered a valued partner of the EDA, and their investment in this site is
substantial. The pre‐redevelopment value of the site was $46,000, compared to the projected end
value of $650,000 once both homes are sold.
Work Session Follow‐up
Regal Homes initially made a request for reimbursement of soil correction costs in October 2016. This request
was discussed at the October 17, 2016 work session, where the Council directed staff to explore how other
cities have responded to such requests. Staff was able to determine that the city of Crystal encountered a
somewhat similar situation where they elected to reimburse a builder that purchased one of their scattered
site lots. In the case of the Crystal project, there was no presence of a buried foundation. The site simply
contained bad soil that was not suitable for building. The builder removed a substantial amount of soil and
imported new soil to complete the project. The city of Crystal decided to split the cost with the builder and
pay for half of the soil corrections.
Funding
CDBG grant funds will be used to reimburse the EDA for all soil correction costs. No payment will be made
to Regal Homes LLC until they have produced documentation verifying that they have paid the contractors
involved with the soil correction work.
Attachments
Resolution
Draft Work Session minutes from 6/19/17
Site location map
1956 aerial photo of the site
Survey
Site layout
Buried foundation and debris photos
Before and after photos
Soil correction costs submitted by Regal Homes LLC