061118 EDA Meeting Packet
EDA MEETING
City Hall, 4401 Xylon Avenue North
Monday, June 11, 2018
President Kathi Hemken
Commissioner John Elder
Commissioner Andy Hoffe
Commissioner Eric Lammle
Commissioner Jonathan London
1. Call to order – EDA Meeting of June 11, 2018
2. Roll call
3. Approval of Minutes:
May 14, 2018
4. Resolution approving the final payment request to Day Construction, LLC for the
rehabilitation of the single-family home located at 3984 Zealand Avenue North
(improvement project no. 997), in the amount of $10,280
5. Adjournment
EDA Meeting
Page 1 May 14, 2018
City of New Hope
4401 Xylon Avenue North
New Hope, Minnesota 55428
EDA Minutes May 14, 2018
Regular Meeting City Hall
CALL TO ORDER President Hemken called the meeting of the Economic Development Authority to
order at 7:42 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
Steve Sondrall, City Attorney
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 April 9, 2018. Voted in favor thereof: Hemken, Hoffe,
Lammle, London; and the following voted against the same: None; Abstained:
Elder; Absent: None. Motion carried.
IMP. PROJECT 997
Item 4
President Hemken introduced for discussion EDA Item 4, Resolution approving
sale of 3984 Zealand Avenue North (Improvement Project No. 997).
Mr. Jeff Sargent, director of community development, stated a public hearing has
been scheduled to consider the sale of 3984 Zealand Avenue North.
Mr. Sargent explained last year the city acquired the single-family house at 3984
Zealand Avenue North as part of the scattered site housing program, and the
home was rehabilitated by Day Construction. He reported that Adam Fanberg and
Danielle Anderson approached the city after seeing the city’s scattered site
housing project sign placed in the front yard and offered to buy the home for the
full asking price of $295,000. Mr. Sargent stated the house was in need of a new
roof and because no realtor fees were incurred, the city agreed to a full roof
replacement.
Mr. Sargent commented that originally staff expected a small loss with the rehab
project but due to improved market conditions and the absence of real -estate sales
commissions, the actual final numbers of the project revealed a small profit
(approximately $2,500). He pointed out the goal of the scattered site housing
EDA Meeting
Page 2 May 14, 2018
program is to add value back into the neighborhood. He stated staff was very
pleased with the workmanship performed by Day Construction.
Council Member London asked Mr. Sargent to report on the number of scattered
site housing projects completed to date.
Mr. Sargent estimated that the city has acquired nine properties and constructed
12 homes. He commented the scattered site program yard signs have prompted
prospective sellers to contact the city. He speculated that staff may present five or
six more properties to the EDA during 2018. He reported that staff continually
explores funding resources and will be soon be discussing the Council’s objectives
for the 2019 budget year.
Commissioner Lammle recommended discussing the scattered site housing
program at a future work session.
Mr. Kirk McDonald, city manager, stated the Council may want to consider
increasing the EDA levy to support the scattered site housing program.
President Hemken opened the floor to comments. There was no one in the
audience desirous of addressing the EDA for the public hearing.
CLOSE HEARING
Item 4
Motion was made by Council Member London, seconded by Council Member
Hoffe, to close the public hearing. All present voted in favor. Motion carried.
RESOLUTION 2018-05
Item 4
Commissioner Elder introduced the following resolution and moved its adoption
“RESOLUTION APPROVING SALE OF 3984 ZEALAND AVENUE NORTH
(IMPROVEMENT PROJECT NO. 997)”. 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, Hoffe,
Lammle, Elder; and the following voted against the same: None; Abstained:
London; Absent: None; whereupon the resolution was declared duly passed and
adopted, signed by the president which was attested to by the executive director.
IMP. PROJECT 1022
Item 5
President Hemken introduced for discussion EDA Item 5, Resolution approving
purchase agreement for the acquisition of 7311 62nd Avenue North (Improve-
ment Project No. 1022).
Mr. Jeff Sargent, director of community development, stated this item approves a
purchase agreement for the acquisition of 7311 62nd Avenue North for $130,000
for redevelopment as part of the city’s scattered site housing program. He noted
the property owner contacted the city after observing the scattered site housing
program yard sign that was placed in the yard of a nearby EDA-owned property.
He indicated the house was constructed in 1952 and contains 900 s .f. of living
space. He stated staff recommends demolishing the home and constructing a new
single-family home with a double garage on the site. He stated the lot is 60 feet
wide and narrower than the average 75 -foot New Hope lot. He stated the budget
is $152,750 and funding sources include CDBG funds, lot sale proceeds and EDA
reserve funds for the $42,750 value gap.
EDA Meeting
Page 3 May 14, 2018
Commissioner London emphasized the importance of adequate garage space to
prevent outdoor storage. He recommended constructing a deeper two-stall garage
since the lot is too narrow for a three-stall garage.
Mr. Kirk McDonald, city manager, complimented Stacy Woods, assistant city
attorney, for her assistance with property purchases and ensuring completion of
all the necessary paperwork.
RESOLUTION 2018-06
Item 5
Commissioner London introduced the following resolution and moved its
adoption “RESOLUTION APPROVING PURCHASE AGREEMENT FOR THE
ACQUISITION OF 7311 62ND AVENUE NORTH (IMPROVEMENT PROJECT
NO. 1022)”. 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, 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.
IMP. PROJECT 971
Item 6
President Hemken introduced for discussion EDA Item 5, 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).
Mr. Jeff Sargent, director of community development, explained in 2015 Industrial
Equities purchased 9449 Science Center Drive for redevelopment. He stated the
EDA agreed to provide $370,000 in TIF assistance. He explained that the building
was completed in January of 2017 and has been vacant. He explained the
developer has recently reached an agreement with Twin Cities Acoustics to lease
2/3 of the 48,000 s.f. building, and as part of the agreement, Twin Cities Acoustics
will acquire a partial ownership stake in the building. He stated the 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.
Mr. Sargent stated the assignment will transfer future TIF payments to a trust fund
rather than the corporation that was originally designated in the redevelopment
agreement. He indicated the requested action is allowed per the terms of the
original note, and the city’s finance attorney has reviewed the request and
recommends approval.
Mr. Sargent reported that staff is pleased to have Twin Cities Acoustics expand
into New Hope and occupy the majority of the building at 9449 Science Center
Drive. He stated it is a reputable company.
The EDA discussed the developer’s request and whether the change has a
detrimental impact to the city. Mr. Steve Sondrall, city attorney, stated it is a
permitted action per the terms of the TIF agreement. He commented that
developers and owners are often the same entity and changes occur at a later date
based on ownership or tenant arrangements.
EDA Meeting
Page 4 May 14, 2018
Commissioner London welcomed Twin Cities Acoustics to the city. He
commented that he opposed the city’s financial assistance to Industrial Equities
back in 2015.
RESOLUTION 2018-07
Item 6
Commissioner Elder introduced the following resolution and moved its adoption
“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)”. 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; 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
Lammle, to adjourn the meeting. All present voted in favor. Motion carried. The
New Hope EDA adjourned at 8:15 p.m.
Respectfully submitted,
Valerie Leone, City Clerk
I:\RFA\COMM DEV\2018\Council Meetings\6-11-18\3984 Zealand Final Payment RFA.docx
Request for Action
June 11, 2018
Approved by: Kirk McDonald, City Manager
Originating Department: Community Development
By: Aaron Chirpich, CD Specialist
Agenda Title
Resolution approving the final payment request to Day Construction, LLC for the rehabilitation of the single-
family home located at 3984 Zealand Avenue North (improvement project no. 997), in the amount of $10,280.
Requested Action
Staff requests that the city council approve a resolution authorizing the final payment to Day Construction,
LLC in the amount of $10,280. The final payment will conclude the rehabilitation process for the EDA
Scattered Site Housing project located at 3984 Zealand Avenue North.
Policy/Past Practice
It is the practice of the city to require the approval of resolutions authorizing the final payment for contracted
services as part of substantial redevelopment projects.
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.
In total, six change orders were approved after being reviewed by the city manager. A summary of the
change orders can be found in the table below.
Change
Order
No.
Change Order Description
Amount
1 Install central air conditioning unit, and kitchen appliances. $5,551.76
2 Relocate washer and dryer, install sidewalk from garage access door to
driveway, install timber retaining wall for new sidewalk, and final
professional cleaning.
$2,985
3 Replace water heater. $1,320
4 Re-roof house. $5,735
Agenda Section
EDA
Item Number
4
Request for Action, Page 2
5 Remove pine tree. $660
6 Grading and landscaping to improve rear yard drainage. $2,329
Total = $18,580.76
When the total amount of change orders is added to the original contract amount of $94,650, the revised total
contract equals $113,230.76. At this time, $102,950.76 has been paid to Day Construction leaving a contract
balance of $10,280.
Recommendation
Staff recommends approval of the resolution approving final payment to Day Construction, LLC.
Attachments
Resolution
Day Construction, LLC invoice ($10,280)
Revised project budget
Change orders
I:\RFA\COMM DEV\2018\Council Meetings\6-11-18\Resolution for Final Payment.docx
City of New Hope
Economic Development Authority
EDA Resolution No. 2018-
Resolution approving final payment request to Day Construction, LLC for the rehabilitation of the single-
family home located at 3984 Zealand North (improvement project no. 997), in the amount of $10,280
WHEREAS, the Economic Development Authority in and for the City of New Hope (“EDA”) entered into a
contract with Day Construction, LLC dated September 18 2017, for the rehabilitation of the
single-family home located at 3984 Zealand Avenue North (“Contract”); and,
WHEREAS, pursuant to the terms of the Contract, the EDA approved six (6) separate change orders which
arose during the course of the rehabilitation work and which were all within the general scope
of the Contract; and,
WHEREAS, staff is recommending that the EDA adopt a resolution to accept the completion of the
rehabilitation work (improvement project no. 997) and approve final payment to Day
Construction LLC in the amount of $10,280; and,
WHEREAS, staff has reported that all work has been satisfactorily completed and recommends that final
payments be made.
NOW, THEREFORE, BE IT RESOLVED, by the Economic Development Authority in and for the City of New
Hope, Hennepin County, Minnesota:
1. That the EDA accepts the rehabilitation improvement project at 3984 Zealand Avenue
North, improvement project no. 997 from Day Construction, LLC, including the change
orders approved by the EDA.
2. That the Executive Director is hereby directed to authorize the final payment of $10,280 to
Day Construction, LLC.
Adopted by the Economic Development Authority in and for the city of New Hope, Hennepin County,
Minnesota, this 11th day of June, 2018.
Kathi Hemken, President
Attest: ___
Kirk McDonald, Executive Director