091117 EDA Meeting Packet
EDA MEETING
City Hall, 4401 Xylon Avenue North
Monday, September 11, 2017
President Kathi Hemken
Commissioner John Elder
Commissioner Andy Hoffe
Commissioner Eric Lammle
Commissioner Jonathan London
1. Call to order – EDA Meeting of September 11, 2017
2. Roll call
3. Approval of Minutes:
August 28, 2017
4. Resolution authorizing the proposed levy of a special benefit levy pursuant to
Minnesota Statutes, Section 469.033, subdivision 6 and approval of a preliminary
budget for fiscal year 2018
5. Adjournment
EDA Meeting
Page 1 August 28, 2017
City of New Hope
4401 Xylon Avenue North
New Hope, Minnesota 55428
EDA Minutes August 28, 2017
Regular Meeting City Hall
CALL TO ORDER President Hemken called the meeting of the Economic Development Authority to
order at 9:05 p.m.
ROLL CALL Present:
Absent:
Kathi Hemken, President
John Elder, Commissioner
Andy Hoffe, Commissioner
Jonathan London, Commissioner
Eric Lammle, Commissioner
Staff Present:
Kirk McDonald, City Manager
Aaron Chirpich, Community Development Specialist
Scott Crocker, Police Captain
Tim Fournier, Police Chief
Rich Johnson, Director of HR/Admin. Services
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
APPROVAL OF
MINUTES
Item 3
Motion was made by Commissioner Hoffe, seconded by Commissioner London,
to approve the minutes of August 14, 2017. All present voted in favor. Motion
carried.
IMP. PROJECT 1006
Item 4
President Hemken introduced for discussion EDA Item 4, Resolution approving
contract for private redevelopment with The Lodge of New Hope, LLC and
awarding the sale of, and providing the form, terms, covenants and directions for
the issuance of its Tax Increment Revenue Note, Series 2017, and resolution
approving an assignment and subordination of development agreement between
the Authority, The Lodge of New Hope, LLC, and Charter Bank (improvement
project no. 1006).
Mr. Jeff Sargent, director of community development, explained that at the August
14, 2017 City Council and EDA meetings, the EDA approved the TIF plan and the
interfund loan for the Good Samaritan TIF District. He stated the City Council
held a public hearing and approved the TIF plan for Good Samaritan. He stated
typically the EDA would have also taken action on a TIF agreement to set the
terms of the Good Samaritan TIF District at the same meeting, but the developer’s
legal counsel requested additional time to review the terms. He stated staff agreed
to bring the terms back to the EDA at the August 28 meeting.
EDA Meeting
Page 2 August 28, 2017
Mr. Sargent reported that Ehlers, the city’s redevelopment financial consultants,
conducted a thorough review of the developer’s budget and operating pro forma
to ensure that all development costs, anticipated revenues and expenditures were
represented appropriately. Based upon the review of the developer’s pro forma
and the current market conditions, Ehlers concluded that the proposed 31‐unit, 3‐
story assisted living facility would not reasonably be expected to occur solely
through private investment within the near future. Due to costs associated with
developing a small project and providing units at an affordable rent and service
fee, the proposed development is only feasible through financial assistance
provided by the city by creating the TIF district. Ehlers recommends the following
terms within the TIF Agreement:
1. Contract is between the EDA and Community Asset Development Group,
LLC (“the Redeveloper”).
2. City create a housing district for the project.
3. Provide the redeveloper a PAYGO TIF Note for $534,000 for 15 years at 3.9%
and paid with 90% of the tax increment (EDA retains 10% for administrative
costs). Payment dates are expected to be August 1, 2019 through February 1,
2034. Note may be assigned to a third party and EDA consents to the
assignment conditioned upon receipt of an investment letter from the third
party.
4. Commence construction by December 31, 2017 and be completed by June 30,
2019.
5. Developer has deposited $10,000 with the EDA to pay costs associated with
analyzing their TIF request, creating the TIF district and development of the
TIF agreement. The Redeveloper will replenish the deposit as needed to pay
100% of the EDA’s costs.
6. 20% of the units (7) must be affordable to persons at or below 50% of the AMI.
Redeveloper is required to submit required documentation to the EDA by
February 2nd an annual basis, in order to receive TIF payments.
Mr. Sargent stated Stacie Kvilvang of Ehlers (financial consultant) and Martha
Ingram of Kennedy and Graven (redevelopment attorney), are in attendance to
help answer any questions from the EDA.
Ms. Stacie Kvilvang, Ehlers, apologized to Commissioner London for not
reporting the financial information he previously requested regarding the
proposed development. She stated the cash on cost return on investment is 4.33%
without assistance (TIF) and 5.11% with assistance. She stated developers typically
seek a cash‐on‐cost return between 6.5 and 7.5 percent. She noted even with the
requested assistance, the project still falls below the typical industry threshold for
desired return on investment. She pointed out the contractor and developer are
assuming risks as their fees are being deferred to be paid out of cash flow (it is
anticipated the contractor will be repaid within nine years and payments to the
developer will begin in year nine and are expected to be paid in full by year 12).
EDA Meeting
Page 3 August 28, 2017
Mr. Dave Pokorney, Community Asset Foundation, spoke of the financial aspects
of the development. He stated according to their 10‐year forecast without TIF
assistance and with 90% occupancy, they would have a negative cash balance at
the end of 10 years. He stated with the financial assistance the forecast is only
$400,000 to $500,000 at the end of 10 years which is very minimal for a $6.5 million
project. He noted the mission of the foundation is to provide quality service in a
financially prudent manner. He also stated the pro forma is based on rents in the
range of $3,500 per month (compared to $4,000 to $4,500 per month charged by
other companies) and the assumption that 20% of the units will be occupied by
elderly waivers (seniors without private funds). Mr. Pokorney noted the savings
realized by being eligible for tax‐exempt financing goes back into the projects. He
stated the New Hope project is the foundation’s fifth project for Good Samaritan.
Mr. Pokorney referenced Good Samaritan’s quality care center. He stated the
foundation has entered into a long‐term management agreement with Good
Samaritan but the facility’s signage will reflect Good Samaritan as it is important
for residents to feel they are residents of the Good Samaritan campus.
Commissioner Elder noted Good Samaritan is a strong corporate citizen and the
assisted living facility will be a welcomed addition.
President Hemken disclosed that she serves on the board for Ambassador but
receives no financial advantage and therefore will not abstain from voting.
Commissioner London commented that he is not against the project but is
opposed to the TIF assistance.
RESOLUTION 2017‐14
Item 4
Commissioner Elder introduced the following resolution and moved its adoption
“RESOLUTION APPROVING CONTRACT FOR PRIVATE
REDEVELOPMENT WITH THE LODGE OF NEW HOPE, LLC AND
AWARDING THE SALE OF, AND PROVIDING THE FORM, TERMS,
COVENANTS AND DIRECTIONS FOR THE ISSUANCE OF ITS TAX
INCREMENT REVENUE NOTE, SERIES 2017”. 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;
and the following voted against the same: London; Abstained: None; Absent:
Lammle; whereupon the resolution was declared duly passed and adopted,
signed by the president which was attested to by the executive director.
RESOLUTION 2017‐15
Item 4
Commissioner Hoffe introduced the following resolution and moved its adoption
“RESOLUTION APPROVING AN ASSIGNMENT AND SUBORDINATION
OF DEVELOPMENT AGREEMENT BETWEEN THE AUTHORITY, THE
LODGE OF NEW HOPE, LLC, AND CHARTER BANK (IMPROVEMENT
PROJECT NO. 1006)”. 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; and the following voted
against the same: London; Abstained: None; Absent: Lammle; whereupon the
resolution was declared duly passed and adopted, signed by the president which
was attested to by the executive director.
EDA Meeting
Page 4 August 28, 2017
IMP. PROJECT 997
Item 5
President Hemken introduced for discussion EDA Item 5, Resolution awarding
the contract for rehabilitation work in association with the EDA owned property
located at 3984 Zealand Avenue North (improvement project no. 997).
Mr. Aaron Chirpich, community development specialist, stated the EDA recently
purchased 3984 Zealand Avenue North with the intent to rehabilitate the home.
He reported bids have been obtained for the rehab work and staff recommends
awarding the contract to the low bidder, Day Construction. He reviewed the base
bid and recommended alternates for a total contract of $94,650. He commented
based on a sales price of $275,000 the EDA would incur a loss of $8,765. He noted
funds for the project are available in the EDA budget.
Mr. Chirpich reported Day Construction has not performed work for the city in
the past but they have constructed projects in Crystal. He stated he has contacted
references but not spoken with them yet.
Commissioner Elder recommended performing due diligence by obtaining
reference checks. Assistant City Attorney Woods noted a contract would not be
entered if the reference checks are unfavorable.
Commissioner London indicated his intention to abstain from the vote as the
property is in his neighborhood.
RESOLUTION 2017‐16
Item 5
Commissioner Elder introduced the following resolution and moved its adoption
“RESOLUTION AWARDING THE CONTRACT FOR REHABILITATION
WORK IN ASSOCIATION WITH THE EDA OWNED PROPERTY LOCATED
AT 3984 ZEALAND AVENUE NORTH (IMPROVEMENT PROJECT NO. 997)”.
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; and the following voted against the same:
None; Abstained: London; Absent: Lammle; whereupon the resolution was
declared duly passed and adopted, signed by the president which was attested to
by the executive director.
IMP. PROJECT 1007
Item 6
President Hemken introduced for discussion EDA Item 6, Resolution approving
purchase agreement for the acquisition of 7303 62nd Avenue North (improvement
project no. 1007).
Mr. Aaron Chirpich, community development specialist, stated the property
owner of 7303 62nd Avenue North is willing to sell the property to the EDA for
$132,900. He illustrated the property’s location near Compass Pointe apartments
and noted the structure’s foundation is failing.
Mr. Chirpich requested the EDA’s approval to purchase the home for $132,900
plus any associated fees. He explained the intent to demolish the 700 sf house to
facilitate construction of a new single‐family home and indicated the EDA will be
reimbursed with CDBG funds for eligible expenses. Mr. Chirpich stated the lot is
65‐feet wide which is slightly narrower than the average 75‐foot New Hope lot.
He stated it is sufficient to accommodate a variety of new home designs. He stated
the offer was made contingent upon EDA approval and environmental clearance
by Hennepin County. Mr. Chirpich stated the environmental review by Hennepin
EDA Meeting
Page 5 August 28, 2017
County is a broad overview required by the federal government and takes into
consideration such items as flood plain and overall site. He noted the city will
obtain a demolition survey which will reveal whether the home contains asbestos
or any other hazardous materials.
RESOLUTION 2017‐17
Item 6
Commissioner London introduced the following resolution and moved its
adoption “RESOLUTION APPROVING PURCHASE AGREEMENT FOR THE
ACQUISITION OF 7303 62ND AVENUE NORTH (IMPROVEMENT PROJECT
NO. 1007)”. 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, London; and the following voted against
the same: None; Abstained: None; Absent: Lammle; 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 9:52 p.m.
Respectfully submitted,
Valerie Leone, City Clerk
I:\RFA\FINANCE\Budget\2018\q‐EDA property tax levy 9.11.17.docx
Request for Action
September 11, 2017
Approved by: Kirk McDonald, City Manager
Originating Department: City Manager
By: Kirk McDonald, City Manager
Agenda Title
Resolution authorizing the proposed levy of a special benefit levy pursuant to Minnesota Statutes, Section
469.033, subdivision 6 and approval of a preliminary budget for fiscal year 2018
Requested Action
Staff requests the EDA to adopt the attached resolution establishing the EDA levy for the 2018 budget.
Background
Historically the amount of the EDA levy was included in the city’s proposed levy. At AEM’s
recommendation, beginning with the 2015 budget year, a separate resolution has been adopted by the EDA
for the EDA levy. The amount of the EDA levy was at $85,000 for several years and has since increased to
$200,000. No increase in the EDA levy is recommended for 2018.
2013 ‐ $85,000
2014 ‐ $150,000 (an increase of $65,000 to fund the CD assistant position)
2015 ‐ $150,000
2016 ‐ $150,000
2017 ‐ $200,000 (an increase of $50,000 for increased funding to scattered site housing program)
2018 ‐ $200,000
Attachments
EDA Resolution
Proposed Tax Levy
Agenda Section
EDA
Item Number
4
CITY OF NEW HOPE
ECONOMIC DEVELOPMENT AUTHORITY
RESOLUTION NO. 2017‐
RESOLUTION AUTHORIZING THE PROPOSED LEVY OF
A SPECIAL BENEFIT LEVY PURSUANT TO MINNESOTA STATUTES,
SECTION 469.033, SUBDIVISION 6 AND APPROVAL
OF A PRELIMINARY BUDGET FOR FISCAL YEAR 2018
WHEREAS, pursuant to Minnesota Statutes, Section 469.090 to 469.108 (the “EDA Act”), the City Council of
the City of New Hope created the City of New Hope Economic Development Authority (the “Authority”); and
WHEREAS, pursuant to the EDA Act, the City Council granted to the Authority all of the powers and duties
of a housing and redevelopment authority under the provisions of the Minnesota Statues, Sections 469.001 to
469.047 (the “HRA Act”); and
WHEREAS, Section 469.033, subdivision 6, of the HRA Act permits the Authority to levy and collect a special
benefit levy of up to .0185 percent of estimated market value in the City upon all taxable real property within
the City; and
WHEREAS, the Authority desires to levy a special benefit levy in the amount of up to .0185 percent estimated
market value of the City for taxes payable in 2018; and
WHEREAS, pursuant to Minnesota Statues, Section 275.065, the Authority is required to adopt a proposed
budget and a proposed tax levy and submit the same to the County Auditor by September 30; and
WHEREAS, the Authority has before it the amount of the proposed levy for collection in 2018, subject to any
adjustments in the final levy.
NOW THEREFORE BE IT RESOLVED by the members of the New Hope Economic Development Authority:
1. The proposed budget of $200,000 for the operations of the Authority in fiscal year 2018, as presented for
consideration by the City Council, is hereby in all respects approved, subject to final approval by the
Authority before certification of the tax levy under Minnesota Statutes, Section 275.07.
2. Staff of the Authority are hereby authorized and directed to file the proposed budget with the City in
accordance with Minnesota Statues, Section 469.033, Subdivision 6.
3. The proposed special benefit levy pursuant to Minnesota Statutes, Section 469.033, Subdivision 6, is
hereby approved in maximum amount equal to .0185 percent of estimated market value in the City of
New Hope, currently estimated to be $1,523,329,989 with respect to taxes payable in calendar year 2017,
subject to final approval by the Authority before certification of the special benefit levy pursuant to
Minnesota Statues, Section 275.07.
4. Staff of the Authority are hereby authorized and directed to seek the approval by resolution of the City
Council of the levy of special benefit taxes payable in 2018 and to take such other actions as are necessary
to bring before the Board the final budget and levy to be sent to the county auditor by December 29, 2017
(five working days after December 20, 2017).
Adopted by the Economic Development Authority on September 11, 2017.
___________________________________________
President
Attest:
Executive Director