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HomeMy WebLinkAbout07-24-1997 Minutes of the Economic Development Commission City of Mounds View Ramsey County, Minnesota Regular Meeting July 24, 1997 City of Mounds View, Council Chambers 2401 Highway 10, Mounds View, MN 55112 1. Call to Order: The meeting was called to order at 7:35 a.m. by Vice Chairperson, Cindy Carlson. 2. Roll Call: Members Cindy Carlson, Rosemary Goff, Ron Schmidt, Brian Sjoberg and Delane Welsch were present. Dir. of Economic Development Cathy Bennett was present. Member Dan Nelson, EDA Liaison Duane McCarty and Alternate Liaison Gary Quick were absent 3. Approval Of Minutes: Motion/Second: Goff/Sjoberg moved approval of Minutes from May 22, 1997. Motion Carried 5 ayes 0 nays 4. Special Business No Special Business. 5. EDC BUSINESS A. Consideration of Tax Increment Request to Mounds View Family Apartments for the Rehabilitation of Red Oak Apartments (Silver Lake Commons). Director Bennett explained that the proposal has evolved over the past few months but the concept is relatively the same as when this item was presented at the May meeting. The major difference is that the new units is reduced from 28 to 16. Bennett proceeded to give a brief overview of the proposal and the request to purchase EDA owned land and tax increment assistance. MSP is offering to purchase the EDA owned land for the appraised value and is requesting a $230,000 deferred loan from existing tax increment funds. The commission discussed the history of the City owned property and reviewed the efforts made to market the site for a commercial use. In addition, the commission discussed the study of the area which suggested multifamily development of the site in connection with rehabilitation of the existing apartments. Director Bennett explained the structure of the proposal as an affordable housing project. This allows the applicant to secure funds from MHFA, Ramsey County and Minneapolis Public Housing Agency. TIF Consultant Dave Marony explained that because there is a possibility that tenants may be displaced the City should be concerned that adequate amount of dollars are set aside for relocation and that a relocation plan be done by a professional relocation consultant. Director Bennett mentioned that the proposal has gone through development review and was approved by the Planning Commission at the July 16, 1997 meeting. The Council will vote on the development proposal at the July 28th meeting and is holding a public hearing on the sale of the land. Mr. Marony reviewed the sources and uses presented by the applicant per the EDC=s request in May. Mr. Marony explained the financing structure from Minnesota Housing Finance Agency, Ramsey County, Minneapolis Public Housing Agency and the City of Mounds View. He noted that although the amount of the City loan is relatively small compared to the entire project size of $5 million, he suggested that any support should be conditioned upon the applicant securing other sources of financing and providing a relocation plan by a professional relocation consultant. Per State law for use of TIF funds, this is seen as an acceptable of tax increment funds. Per the EDC=s request in May staff gathered additional information regarding the management of the project. Danzeisen Properties has been hired to provide property management for the project. Staff contacted references and received wonderful comments on Danzeisen Properties abilities to effectively manage the property. Ms. Danzeisen gave an overview of how she manages property and answered several questions. The commission members asked the applicant several questions regarding density, children play area, crime, green space and noise abatement. The applicant explained that the project is much less dense than is required, that they have created two play areas, quality management controls crime, that they exceeded the required green space and any noise abatement required by MnDot would be covered by the developer. Commissioner Goff wondered if the retention pond would be screened from Children. The applicant responded that the play area is fenced. Commissioner Sjoberg asked more specifically how the management would reduce the crime. Ms. Danzeisen explained tenant screening and strict policies and she expects that crime will decrease by 90% after the project is fully complete. Commissioner Carlson noted that this is a difficult project because of the level of public funding and the first lenders investment will require quality construction and proper management. The need for a market study was discussed. Commissioner Carlson wondered if requiring that an independent 3rd party study be done is necessary. Mr. Marony suggested that the EDA may want the study for assurances that there will be a payback on the loan. MSP Real Estate said it is a requirement for first mortgage lender. Commissioner Carlson reviewed the goals for improvement in this area - develop EDA owned land, improve safety and improve aesthetics - and this project seems to meet these goals. Carlson asked about the status of the first mortgage. MSP said that they have received a letter of intent from the equity investor and first mortgage lender. Documentation should be final in September with closing in October. The loan is a 9%, 30 year fully amortized loan. Carlson noted that when Western finances this type of project they generally see acquisition costs of approximately $24,000 per unit (or less) on older apartment buildings. This project contemplates a cost of $80,000 per unit (acquisition plus rehab). The cost will exceed value for purposes of determining bank financing and thus the project will require significant subsidy. This level of subsidy for housing seems common place in many urban housing redevelopment projects. Commissioner Welsch noted that he would like to see this project be a success. It would provide nice new townhomes with a lot of money invested in the rehab of a distressed apartment complex. He sees this as a benefit to the safety and aesthetics of the community. There was much discussion regarding the relocation budget and assurances that enough funds are set aside to cover any relocation of tenants. Motion/Second: Welsch/Goff moved to recommend approval of the sale of EDA owned land for $45,000 contingent upon the project moving forward. Motion Carried 5 ayes 0 nays Motion/Second: Welsch/Goff moved to recommend approval of the request for a $230,000 deferred loan for 30years at 1% interest with interest accruing at the closing date and conditioned upon project moving forward. If the relocation budget decreases the EDC would recommend a condition that the left over go back to pay the loan after 24 months. In addition, a condition that the loan be paid in full upon sale of the property. Motion Carried 5 ayes 0 nays B. Discussion of Loan Program for Rehabilitation of Manufactured Homes Deferred to next meeting C. Information Regarding Highway 10 Design Theme RFP Deferred to next meeting. 6. Reports From Chair, Commissioners and Staff: No Reports 7. Adjournment There being no further business before the Commission, this meeting of the Economic Development Commission adjourned at 9:18 a.m. Respectfully Submitted, Director of Economic Development