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Home My WebLink About2017-02-22 HRA Work Session PacketAgenda Housing and Redevelopment Authority Work Session Meeting City of Edina, Minnesota Edin a City Hall Cou n cil Cham be rs Wednesday, February 22, 2017 5:30 PM I.Call to Order II.Roll Call III.49-1/2 Street Redevelopment - Update IV.Adjournment The Edina Housing a nd Redevelopment Authority wants all pa rticipants to be comforta ble being pa rt of the public process. If you need assistance in the way of hearing ampli*cation, an interpreter, large-print documents or something else, please call 952-927-8861 72 hours in advance of the meeting. Date: Feb ruary 22, 2017 Agenda Item #: III. To:Chair & Commissioners of the Edina HRA Item Type: Ad visory Co mmunication From:Bill Neuendorf, Econo mic Development Manager Item Activity: Subject:49-1/2 S treet Red evelopment - Update Dis cus s ion Edina Housing and Redevelopment Authority Established 1974 CITY O F EDINA HOUSING & REDEVELOPMENT AUT HORITY 4801 West 50th Street Edina, MN 55424 www.edinamn.gov ACTION REQUESTED: No action required; for discussion only. INTRODUCTION: T his discussion pertains to the potential sale of real estate to enable new investment on W. 49-1/2 Street. For the last two months, staff has been meeting with the P referred Development P artner to prepare terms of a potential real estate transaction. T hese meetings have been responsive to the selection of the Buhl Investor/Saturday P roperties team after interviewing three potential partners in late 2016. Staff will present the current status of the project and real estate negotiations. T here are several aspects of the negotiations where general direction would be helpful to staff. Representatives from Buhl Investors and Saturday P roperties will attend to answer questions. Representatives from HRA Special Council, Dorsey & Whitney and HRA P ublic Finance Advisors (Ehlers Associates) will also attend to answer questions. ATTACHMENTS: Description W 49-1/2 Redevopment Update Feb 2017 Edina Collaborative Potential Redevelopment of 3925 and 3930-3944 W. 49-1/2 Street Progress Update to Edina HRA Work Session Discussion February 22, 2017 Executive Summary •Weekly meetings with staff, advisors, consultants & development partner •Very complex public/private project •Ongoing refinements to concept •Strategy determined for project financing •Direction needed to continue negotiations –7 topics to discuss Progress Update - February 22, 2017 2 Background •HRA acquired property and constructed public parking structures to enable business growth •HRA acquired 3930 and 3944 parcels for parking expansion/redevelopment •RFP issued to pursue parking improvements while simultaneously improving vitality on W. 49-1/2 St. •Full expansion of the North Ramp enables transformational change on both sides of W 49-1/2 St. –Eastern and western expansion –Add one additional level Progress Update - February 22, 2017 3 Project Overview •300+ new public parking stalls •new public plaza •30,000 Sq. Ft. new commercial space •108 new luxury apartments (37/acre) Progress Update - February 22, 2017 4 Project Overview Progress Update - February 22, 2017 5 D’Amicos Spalon Montage Bespoke Salon Talbots Dana’s Project Overview Progress Update - February 22, 2017 6 D’Amicos Spalon Montage Bespoke Salon Talbots Dana’s Concept Refined with Collaborative Input •Two large-scale neighborhood meetings •Small-scale neighborhood meeting •Dozens of one-on-one meetings with various stakeholders •50th & France Business Association •Public Art Edina •Planning Commission sketch plan review •City Council sketch plan review Progress Update - February 22, 2017 7 Project Benefits •Additional public parking •Returns tax-exempt properties to tax rolls •Enables new business opportunity •Creates new housing opportunities –Brings more customers to local businesses •Creates a new public plaza –Builds upon the pedestrian-nature –Expands public art opportunities •Adds vitality and excitement to W 49-1/2 St. –Removes lifeless and vacant sites –Addresses storm water –Cleans up environmental contamination •Limits impact to residential parcels to north Progress Update - February 22, 2017 8 Parking – 3944 Parking – P4 Retail 3944 Existing North Ramp Parking – 3930 Retail 3930 North Ramp Overview Long Term Outcome 1)Edina HRA retains ownership of land and parking ramp 2)Developer purchases two commercial parcels on street level 8 Private Parking – P2 Easement for Public Parking – P1 Retail – 1B Retail – 1C Street Level Center Ramp Overview Long Term Outcome 1)Edina HRA sells land and retains public easement over Level P1 and street level plaza 2)Developer purchases the site and owns new commercial/residential building Residential – 2 thru 6 Retail – 1A 9 W 49-1/2 St Hali fax Ave. W. 50 th St. At Home, etc Spalon, etc Mozza Mia, etc D’Amicos, etc Retail A Retail B Retail C Private property with public easement Public right-of-way Private property Center Ramp Overview, continued Long Term Outcome: Same as previous page 10 Estimate of Project Costs $6 M Land Acquisition $50.7 M Private Improvements (apartments, commercial and basic streetscape) -Design -Construction -Interest $1.6 M Lost revenue due to affordable units $22.2 M Public Improvements (public parking, plaza, etc) -Design -Construction -Interest $80.5 M Total Estimated Budget Four Revenue Sources •Developer Equity •Developer Debt •Public Financing •Grants Progress Update - February 22, 2017 12 Project Costs & Revenue Sources Much higher than a typical real estate project Anticipated Revenue Sources* $19M Investor Equity $38.3 M Long-Term Debt $19.6 M Public Investment $1 M Grants TBD $2.6 M Gap (to be closed through value-engineering and grants) $80.5 M Total This concept includes far more public components than a typical real estate project – 20-30% of total costs. Public investment will be needed for the major public elements: -North Ramp expansion -Center Ramp underground -Public Plaza Elements -Affordable Housing Units Large funding gap exists without public investment Progress Update - February 22, 2017 13 Financing Gap w/o Public Investment *All figures are estimates only. Public Finance Toolbox MN Statutes provide some options to consider: •Tax abatement •Tax increment financing •Contribute or write-down land •Remediate environmental contamination •Public Contributions •Special assessments •Debt (taxable or tax-exempt bonds) Progress Update - February 22, 2017 14 Public Finance Toolbox Four tools are suggested for discussion: •Tax increment financing (TIF) –Invest monies from Cent. Lakes District –Create new district •Contribute or write-down land –Reduce land price or –Invest land proceeds into public elements •Public contribution –Direct some monies from new Affordable Housing Fund •Remediate environmental contamination –Clean the 3944 parcel and seek future reimbursement Progress Update - February 22, 2017 15 Public Finance Toolbox Progress Update - February 22, 2017 16 Potential Public Revenue Sources for Discussion New TIF District ($650,000 new incremental taxes , annually) $8.0 million (maximum) Cent. Lakes TIF monies (intended for public parking in 2015 CIP) $4 million Reinvest Land Proceeds for parking $6 million Affordable Housing Fund - Use monies from Lincoln Dr. project $1.6 million (maximum) Remediate 3944 parcel - use Cent. Lakes TIF monies and wait for partial reimbursement $400k (estimate) TOTAL = $20 million Potential Public Revenue Sources for Discussion New TIF District ($650,000 new incremental taxes , annually) $8.0 million (maximum) Cent. Lakes TIF monies (intended for public parking in 2015 CIP) $4 million Reinvest Land Proceeds for parking $6 million Affordable Housing Fund - Use monies from Lincoln Dr. project $1.6 million (maximum) Remediate 3944 parcel - use Cent. Lakes TIF monies and wait for partial reimbursement $400k (estimate) TOTAL = $20 million Public Finance Toolbox Progress Update - February 22, 2017 17 1)Does this concept still achieve the desired goals? 2)Should negotiations continue to sell: a.North Ramp commercial spaces? b.Center Ramp and retain public easements? 3)Should a new TIF District be considered? 4)Should monies from Cent. Lakes TIF be invested in new Public Parking expansion? 5)Should land proceeds be re- invested in Public Ramp expansion? 6)Which option should be pursued for affordable housing units? a)Fee-in-lieu? b)Contribution from Affordable Housing Fund? 7)Are there other concerns to investigate? Or other suggestions to pursue? Progress Update - February 22, 2017 18 Summary of Discussion Topics