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HomeMy WebLinkAbout05-24-1999 EDAEDA CITY OF MOUNDS VIEW MEETING MINUTES MONDAY, MAY 24,1999 7:50 P.M. CALL MEETING TO ORDER ROLL CALL: Marty, Quick, Stigney, and Thomason. NOT PRESENT: Coughlin. 1. AGENDA ADDITIONS None. 2. APPROVAL OF EDA MINUTES FROM MAY 10, 1999 MOTION/SECOND: Quick/Thomason. To approve minutes of EDA for May 10, 1999 as presented. Ayes - 4. Nays - 0. Motion carried. 3. SPECIAL ORDER OF BUSINESS None. 4. CONSENT AGENDA None. 5. EDA BUSINESS A. 7:05 Public Hearing - Sale of 6991 Pleasant View Drive to Marquis Builders, Inc. Housing Inspector Dorgan explained that at the City Council workshop meeting on May 3, the Council directed staff to arrange for the sale of the City -owned property at 6991 Pleasant View Drive to Marquis Builders, Inc. for the redevelopment of the subject lot. State Statutes require that before the City/EDA can sell property a public hearing must be held. He advised staff had arranged for the publication of a public hearing notice and mailed a notice to all property owners withing 350 feet of the subject site. 1 U:\CARIS\COUNCIL\MINUTES\MVEDA24.MAY Council Member Marty read Section 7.5 indicating the developer agrees to furnish a performance bond, certified check, certificate of deposit, irrevocable letter of credit, or cash in amount of 150% of the cost of the property which is the financial guarantee. He asked if this means the City will be receiving funds of about $148,500. Housing Inspector Dorgan explained there are a few areas of the agreement that staff is working on with legal staff. He advised the City's housing replacement policy requires a security of 100% of the value of the lot, not 150% of the improvement. Commissioner Marty noted the Agreement indicates 150% of the cost of the property. Housing Inspector Dorgan stated the resolution allows staff to negotiate the agreement or staff can present the final agreement for Council consideration. Commissioner Marty noted that in the past the EDA has found not having a bond in place can result in an impact. He read Section 17.2(b), indicating the developer shall be immediately entitled to return of the earnest money heretofore paid in exchange for a quit claim deed if the EDA fails to consummate the transaction. He asked if they can retain the earnest money referred to in Section 7.5 which is 150% of the cost for the property. Commissioner Marty read Section 17.2(e), indicating the non -defaulting party may enforce the specific performance of this agreement, which action must be commenced within one year of the date of failure of a party to consummate the transactions contemplated herein. Commissioner Marty pointed out that later in the agreement, Section 20.3, indicates "subject to unavoidable delays, the developer shall substantially complete the construction of the minimum improvements by December 7, 1999." He stated it seems to him Section 17.2(e) indicates they have one year and Section 20.3 allows until December 7 of 1999. Housing Inspector Dorgan explained the intention of the earnest money is to secure and assure the project is actually completed. Section 17.2 allows the City, within one year, to cash in the escrow if the developer fails to complete the project. He noted the developer is required to have the home built by December 7, 1999 and if it is not built and an extension was not provided then the City can cash in the escrow and complete the project for them. City Attorney Long explained the earnest money is only $1,000 which they get back if the City fails to sell the property. If the developer fails to buy the property, then the City keeps the $1,000. He explained the performance money allows the City to complete construction of the building if the developer fails to do so. City Attorney Long explained they have to be allowed a certain period of time to cure a real estate defect which may be the result of the date discrepancy. Commissioner Marty stated it appears one section allows a period of one year while the other allows about seven months. He reviewed Section 17.3(a) regarding revesting the title in the EDA if the developer fails to carry out its obligations with respect to the construction of the 2 U:\CARIS\COUNCIL\MINUTES\MVEDA24.MAY minimum improvements or abandons or substantially suspends construction work, and any such failure, abandonment, or suspension shall not be cured, ended, or remedied within thirty days after written demand from the Authority to the developer. He asked if the EDA holds the property title until completion. Housing Inspector Dorgan explained the property title is transferred at the time of the sale; the lot will be sold to the developer and the City can only control it though the development agreement. Commissioner Marty read Section 17.4(a), regarding the resale of reacquired property and disposition of proceeds. He asked the EDA keeps the earnest money stated in Section 7.5(b) if the developer defaults, deduct their costs from the escrow, and reimburse the remaining funds to the developer. Housing Inspector Dorgan stated that is correct. Commissioner Marty read Section 20.0, regarding construction of minimum improvements, noting Section 20.1 indicates the developer will construct the minimum requirements, and Section 20.2 indicates the developer shall submit to the Authority construction plans. He asked if the City gets a copy of the construction plans before construction begins and suggested the requirement for providing construction plans should be stated first. Commissioner Marty read Section 20.2(b), second to last sentence, indicating "such rejection shall be made within 10 days after receipt of the notice of such change." He asked if this will call for a special session of the EDA since they don't meet every week. City Administrator Whiting stated the "ten days" refers to business days and there is usually not ten days between meetings unless the month contains five Mondays. City Attorney Long explained if the developer wants to deviate from the plans which have already been approved, staff can reject a requested change which would require EDA consideration. Commissioner Marty reiterated his concerns. Housing Inspector Dorgan stated the agreement is being presented tonight to receive input. He stated staff is still negotiating the agreement and can incorporate changes being requested prior to closing. Commissioner Marty stated he wants the 150% calculation maintained in this agreement since it would answer some of his other concerns. Housing Inspector Dorgan stated the current City policy requires a letter of credit equal to the value of the lot but that policy can be changed to require a larger deposit if that is what the EDA desires. He stated staff can attempt to negotiate with Marquis Builders for a larger deposit but they are aware of the current City policy to require 100%. Commissioner Marty noted the agreement indicates that the remaining balances are returned to 3 U:\CARIS\COUNCIL\MINUTES\MVEDA24.MAY the developer but if they only pay for the value of the lot there would be no balance to be returned which would require the City to go after the developer to recoup their expenses. He stated requiring 150% will provide more protection to the City. Acting President Stigney closed the regular meeting and opened the public hearing at 8:10 P.M. Hearing no public comments, Acting President Stigney closed the public hearing and reopened the regular meeting at 8:10 P.M. MOTION/SECOND: Quick/Thomason. To authorize the sale to Marquis Builders, Inc. Commissioner Marty requested it be added that staff look into incorporating 150% or in excess of the actual value of the land to assure the City is covered in the case of default. Housing Inspector Dorgan stated staff will need to negotiate with the developer since they understand the City's policy to set the value at the value of the lot. He stated they could attempt that negotiation and also bring back an amendment to the current policy to require 150% in the future. Commissioner Marty stated this is what was presented to the EDA and after presentation it was indicated staff is still in negotiation. Housing Inspector Dorgan stated staff can tell the buyer the EDA wants 150%. He stated his recommendation would be to require 150% of the value of the project but the current policy does not require that today. He stated the worse case scenario is that the buyer starts the foundation but does not complete the project. He stated he does not foresee that being a problem with this situation. Commissioner Quick asked if the property would revert to the City should the developer walk away from the project at one-third completion. Housing Inspector Dorgan stated it would. Commissioner Quick noted the property would be enhanced at that point and asked if the past three to four projects have been a problem Housing Inspector Dorgan stated there was one project where a letter of credit was not obtained at all but the house was eventually completed through a time extension. Commissioner Quick suggested this the Resolution be approved and staff be directed to amend the policy as being suggested. City Attorney Long stated that Section of 17.03 does allow the revesting of the title with the EDA if the developer fails to complete the project. The EDA has the surety amount and the ability under Section 17.3 to require the title to the property with as many improvements as are made to the property. Commissioner Marty asked if the EDA could require 100% on this project instead of 150% and then, as Commissioner Quick suggests, amend the policy to reflect 150% in all future transactions. Housing Inspector Dorgan stated the developer has been told they would be required to post the value of the lot, which is what the City's current policy requires. 4 U:\CARIS\COUNCIL\MINUTES\MVEDA24.MAY Commissioner Marty stated since this agreement is at that point, he concurs with Commissioner Quick's suggestion. SUBSTITUTE MOTION/SECOND: Quick/Thomason. To adopt Resolution No. 99 -EDA -113 Approving and Authorizing a Purchase and Redevelopment Agreement by and Between the Mounds View Economic Redevelopment Authority and Marquis Builders, Inc. Ayes - 4. Nays - 0. Motion carried. MOTION/SECOND: Quick/Marty. To direct staff to revisit the performance bond requirement policy and make suggested changes as they deem necessary. Ayes - 4. Nays - 0. Motion carried. B. Proposal for Participation in the Housing Replacement Program for 2225 Hillview Road Housing Inspector Dorgan explained that a letter was recently received from Jean Johnson, owner of 2225 Hillview Road, offering her property for sale to the Economic Development Authority. The property is located just west of Quincy Street and currently occupied by the owner. Housing Inspector Dorgan stated the property had been inspected and was found to meet the criteria for participation in the Housing Replacement Program. He noted the location of this property and advised it is in fair condition but has a full basement in an area with a high water table. He stated due to the size of the lot, size of the house, and value of properties in the area, staff is seeking direction regarding possible funding to redevelop. He advised Tax Increment Financing (TIF) funds could be used or Community Development Block Grant (CDBG) funds could be used if the property is developed within a certain value for a low- to moderate -income buyer. Housing Inspector Dorgan requested direction whether staff should pursue the purchase and, if so, funding sources. Commissioner Marty asked what staff would recommend. Housing Inspector Dorgan noted that CDBG funds are available and, since this neighborhood has modest homes, it may be more conducive to the neighborhood to develop a smaller home. He explained if it creates a demand, the City could apply for additional funding with the next cycle of funding. MOTION/SECOND: Marty/Thomason. To approve the request for participation in the Housing Replacement Program for the property located at 2225 Hillview Road and direct staff to prepare a resolution authorizing CDBG funding for the demolition of the single-family home for redevelopment purposes. Commissioner Marty asked if the City may be eligible for more funds if it is found 5 U:\CARIS\COUNCIL\MINUTES\MVEDA24.MAY redevelopment of this site creates a demand. Housing Inspector Dorgan stated that is correct.41 Commissioner Marty stated he believes the EDA should initiate this avenue. Planning Associate Jopke clarified that the City applied for funding of $125,000 and the County has already awarded $75,000 to the City for this type of program. If the City can successfully show there is additional demand, the City may be able to receive additional funding in the future. Ayes - 4. Nays - 0. Motion carried. 7. REPORTS There were none at this time. 8. ADJOURNMENT Acting President Stigney adjourned the meeting at 8:28 P.M. Respectfully submitted, Recorded and transcribed by: Carla Wirth TimeSaver Off Site Secretarial, Inc. 6 U:\CARIS\COUNCIL\MINUTES\MVEDA24.MAY