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HomeMy WebLinkAbout1999-10-19 HRA Regular Meeting MINUTES OF THE EDINA HOUSING AND REDEVELOPMENT AUTHORITY HELD AT CITY HALL OCTOBER 19, 1999, - 7:00 P.M. ROLLCALL Answering rollcall were Commissioners Faust, Hovland, Johnson and Chair Maetzold. Commissioner Kelly entered the meeting at 7:05 P.M. CONSENT AGENDA ITEMS APPROVED Motion made by Commissioner Hovland and seconded by Commissioner Johnson approving the Housing and Redevelopment Authority Agenda as presented. Rollcall: Ayes: Faust, Hovland, Johnson, Maetzold Motion carried. *MINUTES OF THE REGULAR MEETING OF THE EDINA HOUSING AND REDEVELOPMENT FOR OCTOBER 5. 1999, APPROVED Commissioner Hovland made a motion seconded by Commissioner Johnson, approving the Minutes of the Edina Housing and Redevelopment Authority for October 5, 1999. Motion carried on rollcall vote - four ayes. PUBLIC HEARING HELD ON KUNZ/LEWIS REDEVELOPMENT Chair Maetzold said . the HRA has had some interest for a long time in developing the Kunz/Lewis site. The HRA earlier in the summer advertised for interested developers to come forward with their proposals. Eleven proposers came forward and following a HRA/Council work session in September, the number stood at four possible developers of the site. Staff has met with the developers and worked with a consultant to analyze the financial impact of each proposal presented by the developers. Staff has worked as well with a consultant on traffic issues in the area. At the public hearing two components will come forward, 1) staff will present on findings and, 2) public testimony will be taken. Since an inordinate amount of time has been spent with the developers, no public testimony from them will be taken. If a developer wishes to comment on the presentation, Chair Maetzold asked the comments be submitted in writing. The HRA will meet at 6:30 P.M. on October 26, 1999, at the Park Centrum at Centennial Lakes to deliberate on the proposals. Public testimony will not be taken but explanations could be sought from the developers. Following that meeting, a final developer should be approved. Chair Maetzold said the next regularly scheduled HRA/Council meeting, is Monday, November 1, 1999. The selection process should be based on five criteria: 1. Land Use Proposed Under Each Plan 2. Size of the Proposed Project 3. Public Objective Being Satisfied Under Each Plan 4. Financial Projections 5. Credit Worthiness of Each Developer Director Hughes said since the last meeting the opportunity has been afforded to meet with each developer. Mr. Hughes provided an overview of the analysis conducted with respect to each proposal: 1 OBJECTIVES • Preliminary Review of the Financial Proposals • Discussion of City Risks Affordable Housing • Overview of Traffic Issues FINDINGS SIMILARITIES OF PROPOSALS: • Method of Property Acquisition • Inclusion of Senior Center and Library • Use of Tax Increments • Developer Flexibility OVERVIEW OF HRA/CITY RISKS • HRA Signs Letter of Intent - Developer Fails to Perform er Fails to Perform - Develo • HRA Incurs Costs p • HRA Incurs Costs - Insufficient Tax Increment Generated • Property Acquisition Delayed AFFORDABLE HOUSING LIVABLE COMMUNITIES ACT STANDARDS: Ownership Housing $134,250 • Rental - 2 Bedroom $715/month • FRAUENSHUH: - Condominiums $190,000 - $210,000 - Townhouses $395,000 - $425,000 • J ERRY'S/LAU KKA-JARVI S/NAM RON - Condominiums $150,000 - $200,000 - Rentals $600 - $2,000/month • OPUS/CLARK - Condominiums $190,000 - $350,000 • STUART - Rentals $1,000 - $2,000+/month TRAFFIC: • All proposals are acceptable • Three lane operations of Eden is desirable • Driveway turn restrictions on Link necessary • Extension of west bound turn lane on Vernon necessary • Second means of access to Richmond Hills recommended BUS GARAGE • Board of Education Resolution • Financial and Land Use Issues • Implications of Omitting Bus Garage Property 2 r • Board of Education Resolution • Financial and Land Use Issues • Implications of Omitting Bus Garage Property Mr Hughes then introduced Rusty Fifield, Ehlers and Associates, who continued with the presentation as follows: FINANCIAL ANALYSIS OF PROPOSALS OBJECTIVE • Assist City Council with initial review of proposals • Seek "apples to apples" comparison • Avoid "negotiated" changes - Many variables - Opportunities to improve and worsen each proposal FOCUS OF ANALYSIS • Property valuation and tax increment revenue created by the proposed development • Public costs and TIF eligible development expense requested by each proposal • Sources of revenues to cover the proposed costs • Feasibility of proposed TIF use • USE OF PUBLIC FUNDS • All proposals subject to same public costs - Library/Senior Center - Offsite Improvements - City Administration and Legal • Land and demolition costs set by City • Other development costs from proposals • Retire existing debt SOURCES OF PUBLIC FUNDS • Cash balance in Grandview TIF District • Sale of existing library • Land purchase by developer • New debt - Approach proposed by developer - Rates and structure assumed by Ehlers TAX INCREMENT PROJECTIONS • All existing Grandview tax increment • Primary information from developers - Type and quantity of development - Timing of development - Basis for property valuation • Key elements of financial feasibility 3 LAUKKA-JARVIS • Fully-funded with and without bus garage site - No land or construction for bus garage • All City bonds • Substantial construction in 2000 STUART • Fully-funded with no bus garage plus hotel - No construction funding for bus garage • Lowest land purchase revenue • All pay-as-you-go • Substantial construction in 2000 OPUS/CLARK • Funding gap - No construction funding for bus garage • No development on bus garage site - Drop $200,000 if no bus garage • Adds most new property value • Hurt by timing FRAUENSHUH • Funding gap • - Includes construction funding for bus garage • Additional use of City bonds • Hurt by timing HRA/Council comments Chair Maetzold inquired what if the valuation of the property would increase. Mr. Fifield said in the TIF projections, both the pro and the con of potential tax increment revenues are not taken into account because of three variables, 1) the value in place in 2002 will not be the same as 2010, 2) have not assumed any changes in legislative tax capacity rates, and 3) have not assumed any changes in the tax extension rate. Chair Maetzold asked if the bus garage site were developed, what impact would there be on the Opus/Clark development. Mr. Fifield said of the four proposals, only the Opus/Clark proposal does not include any tax increment revenue from the ultimate development of the bus garage site. It relocates the bus garage onto the site but does not take into account any value gleaned from that. If Opus/Clark were to be chosen, they deserve the opportunity to consider development on the site and receive increment from it. Commissioner Hovland asked Mr. Fifield to prioritize the proposals as far as risk. Mr. Fifield said they all have an element of risk. The smaller proposals have a degree of risk because less has to happen to bring those on line. The Stuart proposal has the least risk due to the pay-as-you-go proposal. The Laukka/Jarvis proposal works but requires issuing general obligation bonds. The Opus and Frauenshuh proposals being larger with different financial approaches all have different risks. Commissioner Hovland asked the pros and cons of using general obligation bonds versus pay-as-you-go financing. Mr. Fifield said it would become a balancing act between making a project 4 work and coming up with a position that is risk-acceptable to the Council. When bonds iare issued there is a commitment to pay the bonds back. Ultimately, the Council is pledging the full-faith and credit of the City of Edina. In financing the public uses, from a mechanical perspective, it makes great sense and achieves a lower cost of the project by virtue of the tax exempt bonds. The bonds are primarily supported by the existing tax increment revenue from the Grandview District. The City is not dependent upon new tax increment revenue to support the bond issue. As you go further into the project, it would be in the City's best interest to have more of the debt supported by a pay-as-you-go note because the risk is born by the developer. If tax increments are not available the City is not under any obligation to make up the gap. Commissioner Faust asked which proposed use of the site would produce the most taxes. Mr. Fifield said under the current statutory system, residential homestead properties produces one percent based on the first $76,000 of market value and 1.65 percent thereafter. The same massive residential homestead property will produce relatively less tax capacity and would depend on the density and the value of the property. Rental housing creates tax capacity at a rate of 2.4%; commercial industrial property creates tax capacity on 2.4% for the first $150,000 of estimated market value and 3.4 % thereafter. However, 40% of the value will be contributed to the fiscal disparities program for the commercial industrial property. Commissioner Faust said she believes the projects are very different. She noted that Laukka/Jarvis did not include three of the properties which the others included so this did not seem like the • comparison was "apples to apples". Director Hughes said the other properties are included in the existing tax increment financing district which is already being taxed. Commissioner Faust asked how the funding gaps are closed. Mr. Fifield said don't look at the funding gap as the deciding criteria. The big picture must be the long term impact the development will have on the community. Commissioner Johnson inquired whether it was determined whether the groups had flexibility on 1) the scope of the project, 2) the specifics of the project or 3) the funding mechanism of the project. Would the proposers be willing to re-configure their proposal if it would be deemed necessary. Mr. Fifield said yes. Resident comments: John Menke, 5301 Pinewood Trail, noted he has no financial interest in any of the developers. Their Richmond Hills neighborhood has 46 households. Any development in the area will change the neighborhood. He noted there are two developers of the four that have dealt responsibly with the neighborhood in the past. Mr. Menke stated his preference of Jerry's/Laukka/Jarvis because of the least impact on the neighborhood. He said Frauenshuh would be a trusted entity as well. Stuart Company and Ron Clark were not acceptable in his opinion. Art Heiam, 5205 Richwood Drive, explained the neighborhood had met with the four developers. The neighbors concerns were different than the City's. The neighbors major concerns were 1) least impact in changing the area, especially with height of buildings and 2) traffic. He asked about a second means of ingress/egress into the Richmond 5 Hills neighborhood. Director Hughes noted that the BRW traffic study showed traffic • generations from each development. They did not get into site specific traffic operations but one suggestion was that during the traffic peak hour that the line of traffic at the LinkNernon intersection could back and close/obstruct the Sherwood/Eden intersection. Therefore, another link could be sought to exit the neighborhood. Mr. Heiam asked what a funding gap is. Mr. Fifield explained if you try to pay for all of the uses proposed with the revenue assumed to be available. The funding gap would be between the debt supported with the increment and the debt that is required to support all the proposed public uses of funds. Commissioner Johnson inquired whether some of the proposals didn't fund the gap and isn't the funding gap ultimately the responsibility of the City. Director Hughes explained their method of financing is predicated on the presumption that there was no funding gap. He believes the developers would say they need to find a way that there is no funding gap before proceeding with the project. Commissioner Johnson assumed that pay-as-you-go meant that the developer would pay as they went. Mr. Fifield said as a part of the developers agreement, the City would give the developer a note that would amortize all the costs of redevelopment that were supportable with tax increment funds that were paid back after the bonds were paid back. The note would be secured only if tax increment is available. No additional agreement would be worked out with the developer if increments fall short that is why it is called pay-as-you-go. Chair Hughes said a developer will not knowingly enter into a pay-as-you-go note with a funding gap. • Karen Roach, 5048 Richmond Drive, voiced concern with density, traffic, construction impact, and noise impact. She asked that the neighbors be kept informed of plans for the site and to keep in mind the important benefits to the community. Alison Ullom, 5229 Richwood Drive, voiced concern that the new development would take the existing small businesses that serve as a buffer in the area. She said traffic is a concern and that she likes the Jerry's proposal because the traffic is kept on Eden Avenue. She suggested removing the Amoco station and creating a better road system for the neighborhood. Darlene Roach Bastian, 5257 Richwood Drive, said she prefers a plan that uses all the land south of Eden Road and including the pet hospital, Noonan, and the hair salon. Anything less than that will give a chopped look to the area. The neighborhood is concerned with the height of the proposed development as well as traffic flow could be improved with a 3`d lane onto Eden. She suggested underground parking and a lot of additional landscaping be incorporated into the development. Steve Ullom, 5229 Richwood Drive, has been active with the neighborhood group and they try to look at the area in the big picture. He voiced concern with building height in the area and said he likes the small businesses in place that act as a buffer to the neighborhood. Traffic is a problem and needs to be closely examined. He voiced support with the Jerry's proposal and asked the neighborhood association to be involved in the process. 6 Dick Peterson, 5236 Edenmoor Street, said his home abuts Sherwood park. He said a four story building would not be acceptable. Traffic is of great concern. He inquired whether the exit directly onto Vernon near the hair salon could be reopened but at an angle so no right hand turn could be possible off Vernon. Director Hughes noted that Vernon is a County Road and they regulate access to it. Pat Olk, 5315 Pinewood Trail, voiced concern with the proposed building height, impact on property values, and traffic. The neighborhood wants the development to be high- end type of development. He noted his choice for developer would be either Frauenshuh or Laukka/Jarvis. Mr. Olk said he would hate to see extending the road onto Vernon because of the incline of the road. Kay Bach, 6625 Dakota Trail, Chair of the Senior Advisory Council, said they are looking at this from a totally different aspect. They are excited and looking forward to visible adequate space and parking. She requested the Advisory Council be kept involved in the planning process. Ed Noonan, Noonan Construction, Inc. 5244 Eden Circle, thanked the Jerry's group for inviting him to their developers meeting. They were the only developer to do so. He said he is representing the seven businesses in the immediate area and in the act of humanism they should be included in negotiations. • Art Heiam, again voiced concern that affordable housing might not be the right mix for the neighborhood. Chair Maetzold noted that Centennial Lakes has a lot of affordable housing. John Menke, questioned whether the bus garage could be condemned. He has lived in the area for many years and realizes SD 273 is normally unreasonable with negotiations. If any property is to be condemned, the bus garage site would be the place to start. Dick Peterson voiced support for the Jerry's or Frauenshuh proposals. He stated that he wants the park to stay as well. Commissioner Kelly made a motion to close the public hearing on the Kunz/Lewis Redevelopment site. Commissioner Faust seconded the motion. Ayes: Faust, Hovland, Johnson, Kelly, Maetzold Motion carried. A letter dated October 5, 1999, was received from Reverend Robert T. Cassidy, Pastor of Our Lady Of Grace asking that the church be kept apprised of any new development proposals that may affect Our Lady of Grace. Commissioner comment Commissioner Faust said the process should not go any further until the size/scope of the project is decided upon. 7 Following a brief HRA discussion, Director Hughes said he would discourage the HRA from getting into a four-party negotiation in selecting a developer. The focus should be on 1) land use and neighborhood compatibility, 2) development team to carry-out the project, 3) can additional lands be acquired in a timely fashion, and 4) financial consequences to Te-pay the public costs. Attorney Gilligan said what is necessary by December 31, 1999, is a Letter of Intent for the Senior Center/Library for the TIF expenditures. The rest of the contract does not need to be in place by the end of the year. Director Hughes reminded the HRA/Council the Work Session will be held October 26, 1999, at 6:30 P.M. Centennial Lakes Park Centrum. No further Council action was taken. *50T" & FRANCE SOUTH RAMP WASTE MANAGEMENT IMPROVEMENT CONTRACT 99-2 TO BE RE-BID Motion made by Commissioner Hovland and seconded by Commissioner Johnson approving the re-bid of the waste management improvement contract 99-2 (South Ramp) for 50' & France. Motion carried on rollcall vote -four ayes. CLAIMS PAID Motion made by Commissioner Johnson approving the Check Register dated October 13, 1999, and consisting of one page totaling $175,148.47. • Commissioner Kelly seconded the motion. Rollcall: Ayes: Faust, Hovland Johnson, Kelly, Maetzold Motion carried. There being no further business on the HRA Agenda, Chair Maetzold declared the meeting adjourned. 1 j, Executive Director • 8