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101104 EDA ---- Official CITY OF NEW HOPE EDA MEETING City Hall, 4401 Xylon Avenue NOrth October 11, 2004 File Copy President Don Collier Commissioner Doug Andersen Commissioner Sharon Cassen Commissioner Mary Gwin-Lenth Commissioner Steve Sommer 2. 3. 4. Call to order Roll call Approval of regular meeting minutes of September 27, 2004 Discussion and update regarding development proposal for the city-owned property located at 7819 Angeline Drive (improvement project no. 603) Adjournment CITY OF NEW HOPE 4401 XYLON AVENUE NORTH NEW HOPE, MINNESOTA 55428 EDA Minutes Regular Meeting September 27, 2004 City Hall CALL TO ORDER ROLL CALL APPROVE MINUTES IMP. PROJECT 773 Item 4 EDA Meeting Page 1 President Collier called the meeting of the Economic Development Authority to order at 8:17 p.m. Present: Don Collier, President Doug Andersen, Commissioner Sharon Cassen, Commissioner Mary Gwin-Lenth, Commissioner Steve Sommer, Commissioner Motion Was made by Commissioner Sommer, seconded by Commissioner Andersen, to approve the Regular Meeting Minutes of September 13, 2004. All present voted in favor. Motion carried. President Collier introduced for discussion Item 4, Resolution regarding execution and delivery of a contract for private redevelopment by and between the New Hope Economic Development Authority and the Ryland Group, Inc. (Winnetka Green Phase III) (improvement project no. 773). Mr. Kirk McDonald, director of community development, stated staff is requesting that the EDA approve a resolution affirming support of the Winnetka Green Phase III expansion and authorizing staff to proceed with appraisals and relocation estimates and to continue to work on the studies necessary to determine eligibility of the eight Phase III parcels for inclusion in the tax increment district. He stated a representative of Krass Monroe, the city's financial consultant, and a representative from Ryland Homes is present if the council has questions. Mr. McDonald stated the proposed expansion of this development has been under discussion since June of 2004. There was a term sheet approved by the city council in July. Staff updated the EDA on the proposal on August. 9, a neighborhood meeting was held August 25, and a special council meeting was held on September 23 devoted specifically to discuss the proposed expansion. He stated staff is requesting the EDA to make a determination of whether the project will proceed or not. Mr. McDonald reviewed contents of the resolution: Section 1.02: The EDA is considering the addition of a proposed Phase III to Winnetka Green which would be constructed on the following parcels: 5509 Sumter, 5510 Sumter, 5501 Sumter, 7708 55% 7700 55% 7624 55% 7616 55th, and 7608 55th Avenue North. September 27, 2004 EDA Meeting Page 2 Section 1.03: It has been proposed that the EDA enter into a contract for private redevelopment with Ryland Group relating to the Phase III parcels. Section 2: Assuming that the findings can be made that this area would qualify as a TIF District, the city would approve the contract with Ryland Homes if the terms are in the same form as approved on July 26. Section 3: Authorizes city staff to obtain appraisals for the eight properties in phase III, authorizes city staff to engage Evergreen Land Services to obtain relocation estimates for the eight properties, and authorizes city staff to continue to work with Short Elliott Hendrickson to complete the building eligibility reports. Mr. McDonald explained that in compliance with the term sheet approved on July 26, 2004, Ryland Homes deposited $25,000 with the city to cover initial expenses related to the Phase III expansion. The costs associated with the appraisals, relocation estimates; and TIF eligibility would be funded with that money. Mr. McDonald stated staff is seeking direction from the EDA on whether to proceed or not with phase III. President Collier pointed out that the resolution as presented is written in the affirmative. He asked the city attorney to clarify the outcome if no motion is made on the item. Mr. Steve Sondrall, city attorney, advised that there would be no authorization to proceed if the resolution supporting Phase III does not pass by a majority vote. He also stated if the EDA fails to introduce the resolution, in essence, the phase III development is not approved. President Collier entertained a motion on the resolution. No motion was introduced by the EDA; therefore, the development of Phase III was determined as denied. Members of the EDA presented explanations for their position on the proposed Phase III development. It was emphasized that the Winnetka Green development will be a successful housing development in its current configuration. The EDA thanked those involved with Phase III discussions for their input including Ryland Homes, the neighborhood, and members of the Livable Communities Task Force. The EDA directed staff to facilitate discussions between Ryland Homes and the property owners interested in purchasing Outlot A. Staff was also asked to work with the property owner adjacent to the park regarding the sanitary sewer issue. A suggestion was made to utilize the scattered site housing program to assist property owners of the former phase III area that may be experiencing water problems and may be interested in relocation. September 27, 2004 IMP. PROJECT 603 Item 5 EDA Meeting Page 3 President Collier introduced for discussion Item 5, Discussion and update regarding development proposal for the EDA owned property located at 7819 Angeline Drive (improvement project no. 603). Mr. Shawn Siders, community development specialist, stated staff requests EDA discussion and direction regarding the proposed development of the EDA owned parcel located at 7819 Angeline Drive. The property is vacant and has never been developed. The city recently received an inquiry for a private market sale of the property for the development of a single-family home. The EDA acquired the tax-forfeited parcel for approximately $7,053 which included the sales price of $5,000, $223.70 for incidental expenses as well as special assessment fees in the amount of $1,830. The lot was appraised in 2002 for $46,000. At that time SLP Investments, Inc. was interested in the property as well as the lot at 7813 Angeline Drive. The sale did not occur as an agreement could not be reached for the 7813 Angeline Drive property. On September 21, 2004, Kingsman, LLC submitted a development proposal for the purchase and development of a single family home on the property located at 7819 Angeline Drive. City staff has reviewed the proposal and it is in substantial compliance with the city's Zoning Ordinance. The developer has indicated that a purchaser has been identified and they would like to move into the home on or around December 1, 2004. The proposed single- family unit will have three bedrooms and two bathrooms with 1,225 square feet of finished space. The main level would be 970 square feet. There will be a two-car garage constructed to the front of the home. Mr. Siders illustrated photographs of the proposed home. He noted the developer has constructed numerous homes on sites with environmental and other site constraints. The developer has offered to purchase the lot for $35,000. The applicant calculated the offer of $35,000 for the lot based on the proposed site improvements and what the potential purchaser could afford. Mr. Siders stated the $35,000 offer is significantly greater than the original purchase price of $7,053.70, however, it is $11,000 less than the value determined by the appraisal. Because there were no soil borings conducted, city staff cannot reasonably determine what costs may be associated with corrective soils measures that may need to be completed. Mr. Siders stated the city has not been actively marketing this property. Information regarding the availability of this vacant parcel has been provided upon developer inquiries. It was noted that the property is currently vacant and tax exempt. The. property would generate between $2,500-3,000 in annual property taxes if a house valued at $180,000 - 200,000 is constructed at the site. Mr. Donahue, city manager, mentioned the property was previously unbuildable due to railroad restrictions that have since been removed. He September 27, 2004 ADJOURNMENT also noted that the property has a reduced value due to its close proximity to the railroad tracks. Commissioner Sommer expressed support for the sale of the lot for $35,000. He commented that the $35,000 price may be a fair price considering the necessity of soil correction costs. The EDA expressed support for the sale of the lot. Discussion ensued regarding the $35,000 offer. Commissioner Cassen pointed out that the lot value of $46,000 has likely increased since the 2002 appraisal. The EDA did not believe it would be prudent to incur additional costs for an updated appraisal or a soil correction analysis. Staff was directed to consult the developer regarding the proposed soil boring costs and to utilize the $46,000 appraisal as a basis for negotiation on the lot price. Motion was made by Commissioner Gwin-Lenth, seconded by Commissioner Sommer, to adjourn the meeting. All present voted in favor. Motion carried. The New Hope EDA adjourned at 8:50 p.m. Respectfully submitted, Valerie Leone City Clerk EDA Meeting Page 4 September 27, 2004 EDA j. . REQUEST FOR ACTION Originating Department Approved for Agenda Agenda Section Community Development ~ / 10-11-04 EDA Item No. By: Kirk McDonald, Director of CD By: Shawn Siders, CD Specialist DISCUSSION AND UPDATE REGARDING DEVELOPMENT PROPOSAL FOR THE CITY OWNED PROPERTY LOCATED AT 7819 ANGELINE DRIVE (IMPROVEMENT PROJECT FILE NO. 603). REQUESTED ACTION Staff requests EDA discussion and direction regarding the proposed development of the city owned parcel located at 7819 Angeline Drive. The property is vacant and has never been developed. At its meeting of September 27, 2004, city staff provided an overview of the proposed development of a single family, market rate, owner occupied housing unit on that parcel. As directed, city staff has met with the proposed developer to discuss a revised purchase price and Seek further direction with respect to whether or not the original offer of $35,000 is acceptable. POLICY/PAST PRACTICE City goal #2 is to emphasize the maintenance and redevelopment of commercial and residential properties within the city. The council has been addressing the residential portion of this goal through the city's many housing activities. In the past, the city has sold property based u. pon appraised values and acceptable development proposals. BACKGROUND On September 27, 2004, city staff provided the EDA with an overview of a development proposal submitted by Kingsman, LLC. At that time, staff indicated that Kingsman, LLC made an offer to purchase the lot from the i EDA for $35,000 and develop a market rate, owner occupied, single family home. Staff advised the EDA that soils corrections may be necessary and because no soil boring tests have been conducted, it is impossible to speculate what remediative actions may be necessary. Staff indicated that the EDA had purchased the property for $7,053 through a tax forfeiture sale. An appraisal that the EDA ordered in 2002 indicated that the property has a market value of $46,000. The EDA determined not have the appraisal updated. At the conclusion of that discussiOn, the EDA directed staff to enter into negotiations with Kingsman, LLC regarding the proposed purchase price. The EDA indicated its overall support of the project, however, the consensus indicated that the purchase price should be ~reater. MOTION BY ~"/'/,g/L-' SECOND BY I: \ RFA \ PLANNING \ Housing\ 7819 \ Q-7819 EDA Update 10-11-04.doc Request for Action Page 2 October 11, 2004 City staff met with Mr. Peter Long, President, Kingman, LLC regarding the proposed purchase price. After meeting with staff, it was determined that there will be approximately $11,000 in site preparation work, basement waterproofing as directed by the Building Official, extension of the driveway for additional on-site parking due to the proximity of the home near a busy intersection and a brick wainscote treat~'nent. The breakdown in additional development expenses is as follows: $5,000 to strip the topsoil, grade and compact the new soil brought to the property in order to elevate the site. It is expected that the fill dirt will be provided and hauled to the site, free of charge from other developments currently under construction in the city. · $2,000 to conduct two (2) soil boring tests $2,000 additional cost to waterproof the basement, if the water table is too high (water table will be determined by the soil boring tests) $2,000 for extending the driveway and the brick facade treatment Mr. Long has indicated that the potential purchaser is in a position to cover the additional expense related to the site preparation work as directed by the City Engineer and Building Official. Mr. Long also indicated that because of the additional site preparation costs, which were not anticipated in the original proposal his client is not in a position to increase the purchase price offer. Therefore, Mr. Long has submitted a revised offer to cover all expenses related to the site preparation work, and pay the EDA $35,000 for the land acquisition. This is the same purchase price that was discussed by the EDA at its meeting of September 27, 2004. Overall, the proposed development is in conformance with the City's Zoning Code. The developer was provided direction by the City's Planning Consultant, City Engineer and Building Official to ensure the proposed single-family house conforms to all applicable city building codes. In response to the City Engineer's request, the developer has agreed to provide the city with an additional ten- foot wide by forty-seven foot long (470 sq. ft.) drainage and utility easement to the rear (south end) of the property. This would allow for the future extension of the existing culvert which currently terminates on the east side of the property. This easement would be conveyed to the city during the closing, if approved by the EDA. REOUESTED ACTION City staff requests further direction with respect to the proposed purchase price. As previously stated, Kingsman, LLC will assume all responsibility with respect to conducting soil boring tests as well as take all corrective soil measures that may or may not be necessary. The developer will also be responsible for all site preparation work to elevate the site. City staff will work with the developer to find acceptable fill dirt that can be delivered to the site, free of charge. It is anticipated that other developments in the city have excess fill dirt and can distribute some of it to this site for its eventual elevation. NEXT STEPS If the EDA determines that the proposed purchase price is acceptable, the following is the proposed timeline to transfer the property to Kingsman, LLC: OctOber 25, 2004 - Resolution approving a purchase agreement with Kingsman, LLC Request for Action Page 3 October 11, 2004 November 8, 2004 - Public Hearing regarding the transfer of the property to Kingsman, LLC Resolution authorizing the property transfer to Kingsman, LLC FUNDING EDA funds would be used to pay for all costs necessary to transfer the property and would be repaid upon closing. Currently, the property is vacant and tax exempt. The applicant has indicated that the value of the house will be approximately $180,000 - $200,000. It is anticipated that this property would generate approximately $2,500 - $3,000 in annual tax revenue. ATTACHMENTS · Site Sketch Plan · Letter from Developer - October 7, 2004 / ! '// %. N 15.00 $ 27'00'40' / / \% ,/ I ! ; I I .I I I I / Page 1 of 1 Siders Shawn From: peterlong@comcast.net Sent: Thursday, October 07, 2004 3:46 PM To: Siders Shawn SubJect: 7819 Angeline Drive Shawn, Based on our meeting today October 7th, 2004 we went further in depth about what is the best way to add value to this property and neighborhood. Here is the summary of an estimate of costs that are associated in addition to the purchase price of the lot. $2000 for two soil borings. $5000 strip, grade, compact new soil brought on to property per Vincent Vander Top's recommendation. This price is assuming that the city will work with Kingsman in order to secure fill hauled to the site at no charge. $2000 additional cost for waterproofing if the water table is high. $2000 for extending driveway and putting brick on the front. By adding these additional costs to the existing plan my client is not willing to pay more than the initial offer of $35,000 for the price of the lot. thank you, Peter Long 612-382-9454 10/7/2004