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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