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HomeMy WebLinkAbout09/09/2004 EDAC MinutesAPPROVED CITY OF LINO LAKES ECONOMIC DEVELOPMENT ADVISORY COMMITTEE MINUTES DATE: Thursday, September 9, 2004 MEMBERS PRESENT: D. Gorowsky, H. Juni (part), F. Chase, T. Vacha, S. Rymer, K. Hansmann, J. Helgemoe MEMBERS ABSENT: , J. Schwartz OTHERS PRESENT: M. Divine, P. Steinman, Springsted, M. Grochala (part) GENERAL/MINUTES Minutes of July 1, 2004 were approved. Ms. Divine stated that she had received a letter of resignation from Harvey Karth from the committee. Mr. Juni stated it seemed reasonable to wait until the end of the year to replace his position. He asked members to consider other candidates for the position. LEGACY AT WOODS EDGE REDEVELOPMENT CONTRACT Ms. Divine introduced Paul Steinman from Springsted, the city’s consultant on the Woods Edge project. Members discussed the presentation made to the city council and EDAC. Mr. Gorowsky asked for two clarifications: 1) the opportunity to improve the 35W bridge, and the timing, since it would impact the development; and 2) the generation of funds from the land sale, and using the funds as a source for the loan. Mr. Steinman said Woods Edge wouldn’t be wholly constructed until 2009, so the massive transportation need won’t be there at the beginning. Ms. Divine stated the best case for bridge reconstruction is 2006. The issue is whether the bridge is closed for one season, or leaving it passable, which requires two construction seasons. The second option costs more. It is an issue with Woods Edge just under development. Mr. Vacha said transportation is a major issue for other businesses also and the grant is unknown. He added the 16-year payback and the senior housing being unknown are other issues. Mr. Chase stated the transportation issue will not go away, and this project provides a funding source. Mr. Juni said the options are just doing Lake Drive improvements, or using those improvements as a part of the bridge construction. Mr. Gorowsky said the logistics seem like a challenge. What is the cost of shutting off the efficiency of local business? 1 Mr. Steinman explained the details of the financial package to the committee. The sale of the city land is $2.2 million as an unrestricted source of funds. The developer will purchase the Tagg property and the city land likely in December. When the land is sold, the Village fund will be paid off, and then the project will make an internal loan to the developer, and that loan will be paid off by TIF. There is a small profit in the land sale. Mr. Steinman said the Met Council grant decision is possibly within the next month or so. Ms. Divine said we’d know soon if we are not going to get the grant. The gap is more comfortable with the grant. This project is ready to go, which is what the Met Council wants. You don’t get all the way to that point without having alternatives to completing the project. The Taggs have stated that they are not interested in continuing this project longer than their purchase agreement deadline in December. Mr. Steinman said a worse case scenario is 16 years of TIF. He explained that the upfront $1.7 million (without the grant) would be distributed when buildings are demolished and the preliminary plat is approved, likely in June 2005. The money goes into escrow until the developers pull a building permit on the townhome project. The value in the ground is necessary to ensure payback of the upfront TIF. By this time the developer has $8 million in land costs, and has graded the property. An internal loan of $1 million note to the developer is pay-as-you-go. The site improvements will be all be done at once. Mr. Helgemoe asked about the strength of the developer. Mr. Steinman said they have a banking relationship; the bank is really the developer. Springsted has done due diligence on this developer, and they have a track record with successful performance. If they can secure financing, they have demonstrated ability. Mr. Helgemoe said some banks will take greater risks. Ms. Divine stated the townhomes are the least speculative and are in the TIF district. Mr. Steinman said distribution of TIF funds will go first to the debt service on the TIF bonds. The remainder will be distributed on parity between the $1.7 million that is owed to the city and $1 million that is owed on the development note. Mr. Gorowsky stated a significant joint effort has occurred to arrive at a package that is the best scenario. This is not just the developer saying it’s what they need to have. This was a negotiated tentative conclusion that accomplishes both side’s goals. It would be inappropriate for EDAC to discuss carving it back. Mr. Steinman said the developer’s cost is approximately $17 million, with $5.5 million in assistance. Mr. Vacha asked about the amount of tax base the city will get outside the TIF district. About half the value is generated outside the TIF district. The whole development would generate about $554,000 in city share of taxes, so about ½ of that is in non-TIF portion. Ms. Divine stated that if the entire project were in the TIF district, the pay-off would be 8 years. Mr. Steinman said it is phenomenal that this project is getting paid off in 16 years 2 in a 25-year district. Mr. Chase pointed out that tax changes also limited the amount of TIF available to projects. Members discussed senior housing. Mr. Gorowsky said the market will decide the actual number of units, and we have ranges to work within. Mr. Chase said he agrees that the market is saturated, but if we don’t grab it now in this project, where will we put it when the market comes back. Mr. Grochala said they would go back and push on senior uses. Ms. Divine noted that there are options being provided that seniors can take advantage of including rental and owner-occupied multi-family. Members don’t want to hamper the developer by demanding something the market can’t support because the tax base is needed to pay off the debt. Mr. Gorowsky moved to approve the proposal and recommend to the council that it is acceptable by EDAC. Mr. Rymer seconded the motion. Motion passed unanimously. Mr. Gorowsky moved to recommend the city pursue addressing the bridge replacement scenario to take best advantage of the $2.4 million for improvements as the city’s contribution. Mr. Rymer seconded the motion. Motion passed unanimously. Gorowsky said the steps and timing of the bridge replacement is very critical and needs to be studied. EDAC needs feedback from businesses regarding the effect. Mr. Vacha moved to recommend that the city continue to pursue senior housing as a part of the project. Ms. Hansmann seconded the motion. Ms. Divine asked for clarification if EDAC meant senior housing beyond what is already being proposed. Members want to encourage senior rental, but not tie the developer to something the market doesn’t support. Motion passed unanimously. Next meeting is October 7. Members discussed a tour of Lake Drive. It was decided that maps would be brought to the meeting for discussion of Lake Drive and opportunities for redevelopment. Meeting adjourned. 3