051418 EDA Meeting Packet
EDA MEETING
City Hall, 4401 Xylon Avenue North
Monday, May 14, 2018
President Kathi Hemken
Commissioner John Elder
Commissioner Andy Hoffe
Commissioner Eric Lammle
Commissioner Jonathan London
1. Call to order – EDA Meeting of May 14, 2018
2. Roll call
3. Approval of Minutes:
April 9, 2018
4. Resolution approving sale of 3984 Zealand Avenue North (improvement project no.
997)
5. Resolution approving purchase agreement for the acquisition of 7311 62nd Avenue
North (improvement project no. 1022)
6. Resolution approving assignment of tax increment note from Industrial Equities,
New Hope, LLC to trustees of John N. and Rebecca B. Allen 2012 family trust
(improvement project no. 971)
7. Adjournment
EDA Meeting
Page 1 April 9, 2018
City of New Hope
4401 Xylon Avenue North
New Hope, Minnesota 55428
EDA Minutes April 9, 2018
Regular Meeting City Hall
CALL TO ORDER President Hemken called the meeting of the Economic Development Authority to
order at 7:56 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, 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
Item 3
Motion was made by Commissioner Hoffe, seconded by Commissioner London,
to approve the minutes of March 12, 2018. Voted in favor thereof: Hemken,
Hoffe, London; and the following voted against the same: None; Abstained:
Lammle; Absent: Elder. Motion carried.
IMP. PROJECT 1018
Item 4
President Hemken introduced for discussion EDA Item 4, Resolution approving
purchase agreement for the acquisition of 5355 Oregon Avenue North
(improvement project no. 1018).
Mr. Aaron Chirpich, community development specialist, stated the requested
action approves a purchase agreement for the acquisition of 5355 Oregon Avenue
North for $170,000 for redevelopment as part of the city’s scattered site housing
program. He illustrated and described the home as a 900-square-foot, single-story
rambler that was built in 1952 and sits over a dirt floor crawlspace. He stated ,
although the home has had cosmetic updates, it has not been substantially
improved since built and does not meet the expectations of many buyers in the
market. Mr. Chirpich stated rehabilitation of the home does not make economic
sense, and based on the home’s age and functionally obsolete floor plan, staff
views the home as a candidate for demolition to facilitate the development of two
new single-family homes.
EDA Meeting
Page 2 April 9, 2018
Mr. Chirpich explained that the lot could be subdivided to accommodate two new
homes and they would meet the setback requirements. He stated although the
proposed lots are sufficient size to construct two homes, the south lot would
require a 464-square-foot variance for lot size. He stated the potential subdivision
of the subject property will be fully reviewed by the Planning Commission and
their recommendation will be forwarded to the City Council for final action. He
emphasized the purchase of 5355 Oregon Avenue North by the EDA is not
contingent on a variance being approved.
Mr. Chirpich stated the bank accepted the city’s offer of $170,000. He pointed out
that because the house is in relatively good condition, it will not qualify as a
blighted property. Therefore, CDBG grant funds cannot be used for the project
and a value gap of $105,000 will need to be covered by EDA reserve funds. He
reviewed the proposed costs and noted despite a projected value gap of $105,000
on this project, the long-term benefits of securing a double-lot opportunity are
substantial. He indicated the site could support two new single-family homes
valued in the $350,000 range per home, thereby increasing the value of the
property by $550,000. He explained this type of increase would achieve the
broader goal of growing the city’s overall market value on a lot-by-lot basis and
bring new construction to a neighborhood that is located in a distressed census
tract. He recommended approval of the resolution authorizing the purchase of the
property and noted the closing could occur by the end of April.
Mr. Jeff Sargent, community development director, commended Mr. Chirpich for
exploring the purchase and devising a lot subdivision proposal for the uniquely
shaped parcel. He emphasized the city is not obligated to approve any variances,
as the property can be re-sold if needbe.
Council Member Lammle stated he would support a variance due to the unique
shaped lot of 5355 Oregon Avenue North.
Mr. Kirk McDonald, city manager, conveyed his appreci ation to the community
development staff for working towards the overall long-term goal to raise the
city’s tax valuation.
RESOLUTION 2018-04
Item 4
Commissioner Lammle introduced the following resolution and moved its
adoption “RESOLUTION APPROVING PURCHASE AGREEMENT FOR THE
ACQUISITION OF 5355 OREGON AVENUE NORTH (IMPROVEMENT
PROJECT NO. 1018)”. 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, London; and the
following voted against the same: None; Abstained: None; 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 8:20 p.m.
EDA Meeting
Page 3 April 9, 2018
Respectfully submitted,
Valerie Leone, City Clerk
I:\RFA\COMM DEV\Development\Housing\3984 Zealand\Q&R Sale of 3984 Zealand Avenue 5-14-18.docx
Request for Action
May 14, 2018
Approved by: Kirk McDonald, City Manager
Originating Department: Community Development
By: Aaron Chirpich, CD Specialist
Agenda Title
Resolution approving sale of 3984 Zealand Avenue North (improvement project no. 997).
Requested Action
Staff requests that the EDA approve a resolution approving the sale of the EDA-owned property located at
3984 Zealand Avenue North.
Policy/Past Practice
The sale of EDA-owned property must be reviewed and approved by the EDA through the public hearing
process.
Background
The EDA purchased the foreclosed single-family home located at 3984 Zealand Avenue North on April 26,
2017 as part of the Scattered Site Housing Program. The purchase price was $165,000, and the intent of the
purchase was to rehabilitate the house and create the highest value end product possible. The EDA hired Day
Construction and initially approved a contract for $94,650, which covered a broad scope of work for the
entire property and assumed a post-rehab sales price of $265,000. Under the original budget assumptions,
staff expected that the EDA would incur a loss of $10,000 upon project completion. However, as the project
progressed, staff observed an increase in sales prices for single-family homes across the city and comparable
sales indicating that the EDA could sell 3984 Zealand Avenue for more than originally expected. Under the
improved market conditions, staff was comfortable adjusting the anticipated sales price to $295,000. As a
result of the improved market and more budget flexibility, staff felt that it was appropriate to complete
additional projects on the property and expand the scope of work to further increase the value of the home,
while keeping a budget that would allow the EDA to break even.
As the project was nearing completion, staff was approached by an interested buyer that had observed the
city’s Scattered Site Housing Program sign in the front yard of the home. Staff agreed to show the home to the
prospective buyers without representation from a relator in an effort to save both parties from paying a
brokerage fee or listing commission. After showing the home and conveying an asking price of $295,000, the
interested buyers expressed their desire to purchase 3984 Zealand Avenue for the full asking price. Therefore,
the city attorney prepared a purchase agreement, and staff arranged a meeting with the family to execute the
agreement. Due to an absence of a real-estate sales commission as part of the transaction, staff agreed to
include a full replacement of the roof as part of the contract terms. In the end, staff expect that the proceeds
from the sale will cover all costs associated with the project and generate a small profit. For more details, a
copy of the revised project budget is attached for review.
Recommendation
Staff recommends the EDA approve the attached resolution prepared by the City Attorney and the terms of
the attached purchase agreement, thereby authorizing the sale of 3984 Zealand Avenue North.
Agenda Section
EDA
Item Number
4
Request for Action, Page 2
Attachments
Resolution
Project Budget
Public Hearing Notice
Purchase Agreement
I:\RFA\COMM DEV\Development\Housing\7311 62nd Avenue\Q & R - 7311 62nd Ave Acquisition 5-14-18.docx
Request for Action
May 14, 2018
Approved by: Kirk McDonald, City Manager
Originating Department: Community Development
By: Aaron Chirpich, CD Specialist
Agenda Title
Resolution approving purchase agreement for the acquisition of 7311 62nd Avenue North (improvement
project no. 1022)
Requested Action
Staff requests the EDA to authorize entering into a Purchase Agree ment for the acquisition of 7311 62nd
Avenue North, for $130,000 (purchase price) plus any associated fees.
Policy/Past Practice
In the past, the EDA has successfully acquired vacant distressed properties as part of the city’s scattered site
housing program.
7311 62nd Avenue
The EDA has directed community development staff to pursue the acquisition of distressed and functionally
obsolete single-family homes as part of the city’s scattered site housing program. 7311 62nd Avenue is located
in one of the EDA’s priority redevelopment neighborhoods, just east of the EDA’s recent scattered site
demolition project at 7303 62nd Avenue. The homes in this area are some of the smallest and oldest in city,
and 7311 62nd Avenue is no exception, as it was built in 1952 with just over 900 square feet of living space on
the main floor.
The home has not seen many upgrades since built, and does not meet the expectations of many buyers in the
market. Rehabilitation of the home does not make economic sense, as adding on to the home would prove
cost prohibitive. Staff feels that the best use of the home and site would be demolition to facilitate the
construction of a new single-family home. The lot is 60 feet wide, and therefore narrower than the average 75-
foot New Hope lot. The lot is big enough to fit a variety of the new home designs that the EDA has seen in
recent proposals for the sale of EDA owned lots. However, it is likely that the lot will only accommodate a
two-car garage.
Staff became aware of the opportunity to purchase 7311 62nd Avenue when the owner contacted the city after
observing the Scattered Site Housing Program yard sign that was placed in the yard of the EDA owned
property just down the street at 7303 62nd Avenue. After a conversation with the seller, an appraisal was
ordered for the property and the appraised value came in at $137,000. The 2018 tax assessed value has been
set at $124,000 by Hennepin County. Staff discussed the project budget with the city manager and decided to
offer $130,000 to purchase the home. This offer was accepted by the seller on the following day. The offer was
made contingent upon EDA approval and environmental clearance by Hennepin County.
Funding
Funding for the acquisition and all costs associated with demolition of this home will come from EDA
reserves. The EDA will be reimbursed with CDBG grant funds for a portion of eligible expenses at a later
Agenda Section
EDA
Item Number
5
Request for Action, Page 2
date. The EDA currently has $55,000 available of CDBG grant funds for 2018. This amount will not be
sufficient to cover the entire value gap on the project. Therefore, the remaining value gap of $42,750 will have
to be covered by EDA reserve funds. A copy of the full project budget is attached for review.
Recommendation
Staff is seeking approval of the acquisition of 7311 62nd Avenue. Staff recommends the EDA approve the
attached resolution prepared by the City Attorney and terms of the attached purchase agree ment.
Attachments
Resolution
Location Map
Project Budget
County Tax Information
Pictures of Home
Sample Lot Layout
Purchase Agreement
Form PICPIX.SR - "TOTAL" appraisal software by a la mode, inc. - 1-800-ALAMODE
Subject Photo Page
N/A
7311 62nd Ave N
New Hope Hennepin MN 55428
City of New Hope
Subject Front
Sales Price
Gross Living Area
Total Rooms
Total Bedrooms
Total Bathrooms
Location
View
Site
Quality
Age
7311 62nd Ave N
N/A
919
5
2
1.0
A;BsRd
A;Res/Sch/Apt
14,406 sf
Q5
66
Subject Rear
Subject Street
Borrower
Lender/Client
Property Address
City County State Zip Code
Form PICSIX2 - "TOTAL" appraisal software by a la mode, inc. - 1-800-ALAMODE
Photograph Addendum
N/A
7311 62nd Ave N
New Hope Hennepin MN 55428
City of New Hope
Living Room Kitchen
Foyer Bathroom
Bedroom Bedroom
Borrower
Lender/Client
Property Address
City County State Zip Code
Form PICSIX2 - "TOTAL" appraisal software by a la mode, inc. - 1-800-ALAMODE
Photograph Addendum
N/A
7311 62nd Ave N
New Hope Hennepin MN 55428
City of New Hope
Dining Basement Family
Basement Work Room HVAC
Oil Tank Basement Bath
Borrower
Lender/Client
Property Address
City County State Zip Code
Form PICSIX2 - "TOTAL" appraisal software by a la mode, inc. - 1-800-ALAMODE
Photograph Addendum
N/A
7311 62nd Ave N
New Hope Hennepin MN 55428
City of New Hope
Basement Den Basement Laundry
Subject Side Subject Side
Deck Shed
Borrower
Lender/Client
Property Address
City County State Zip Code
I:\RFA\COMM DEV\Development\Q & R Industrial Equities TIF Note Assignment 5-14-18 Project 971.docx
Request for Action
May 14, 2018
Approved by: Kirk McDonald, City Manager
Originating Department: Community Development
By: Aaron Chirpich, CD Specialist
Agenda Title
Resolution approving assignment of tax increment note from Industrial Equities, New Hope, LLC to trustees
of John N. and Rebecca B. Allen 2012 family trust (improvement project no. 971).
Requested Action
The developer of the Industrial Equities New Hope project has requested an assignment of the tax increment
note that was issued by the city as part of the agreement for the redevelopment of 9449 Science Center Drive.
The requested assignment will transfer future TIF payments to a trust fund established by the developer
rather than the corporation that was originally designated in the redevelopment agreement. Staff requests the
EDA approve a resolution approving an assignment of the tax increment note.
Policy/Past Practice
The terms of the tax increment note establish the right of Industrial Equities, New Hope, LLC to assign the
tax increment note. The request for assignment has been reviewed by Martha Ingram, the city’s public
finance attorney, and found appropriate.
Background
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. Shortly after acquisition, the owner approached
the EDA with a request for TIF assistance to pay for demolition, abatement, and soil corrections on the site. In
November of 2015, the EDA agreed to support the project by providing $370,000 of TIF assistance.
Subsequently, the Industrial Equities TIF district was established and the project was completed.
Since completion of the project in January of 2017, the building has sat vacant. However, the developer/owner
has recently reached an agreement with Twin Cities Acoustics to lease 2/3 of the 48,000 s.f. building. As part
of the agreement, Twin Cities Acoustics will actually acquire a partial ownership stake in the building. This
ownership stake has prompted the request for assignment of the tax increment note, as the current owner
would like to separate the note under the new ownership arrangement.
Twin Cities Acoustics is a family-owned and operated business that was established in 1972. The company is
currently located in Plymouth, and plans to locate their headquarters to New Hope while retaining their
location in Plymouth. The company is a provider and installer of acoustical materials for the construction
industry. The company has worked on many notable projects including:
Excel Energy Center
Minneapolis Convention Center
U.S. Bank Tower
University of Minnesota Molecular and Cellular Biology Building
MSP International Airport Concourse expansion
Agenda Section
EDA
Item Number
6
Request for Action, Page 2
Recommendation
Staff recommend that the EDA approve the attached resolution authorizing the assignment of the tax
increment note.
Attachments
Resolution
Assignment