HomeMy WebLinkAbout05-26-1998 EDA CITY OF MOUNDS VIEW
ECONOMIC DEVELOPMENT AUTHORITY
TUESDAY,MAY 26, 1998
AGENDA
ROLL CALL: President McCarty, Vice President Koopmeiners, Commissioner Gunn,
Commissioner Quick, Commissioner Stigney
1. AGENDA ADDITIONS:
2. APPROVAL OF MINUTES
None.
3. SPECIAL ORDER OF BUSINESS:
None
4. CONSENT AGENDA
None
5. COUNCIL BUSINESS
A. Update on Mermaid project.
B: Discussion of request by owners of the property at 7761 Eastwood Drive
to have the City purchase the property as part of the Mounds View Housing
Replacement Program(MVHRP).
F. REPORTS
G. ADJOURNMENT
Item No. 5A
Staff Report No.
Meeting Date: 5/26/98
Type of Business: EDAB
WK: Work Session;PH:Public Hearing;
CA:Consent Agenda;EDAB:EDA Business
Mounds View Economic Development Authority
Staff Report
To: Mounds View Economic Development Authority
From: Rick Jopke, Community Development Director
Item Title/Subject: Update of the Mermaid Hotel/Banquet Facility Project
Date of Report: May 22, 1998
BACKGROUND:
At the April 6, 1998 work session staff discussed the current status of the of the proposed project
involving the expansion of the Mermaid to include an 11,700 square foot banquet facility and a
185-room hotel.
The preliminary numbers provided by the developer show a need for$700,000 of TIF assistance
for the banquet facility and additional $1,000,000 for the hotel. Project costs show a total of
$800,000 for land acquisition. This may be low based on the amount of land to be acquired. The
hotel developer has indicated that TIF assistance for the hotel must be structured to be of"direct
benefit"to the hotel development and financial program. To use the TIF funds to acquire land
only is not considered to be of"direct benefit." Some TIF assistance will be needed for financing
eligible building and development costs.
In reviewing the project as shown on the preliminary concept plan, big unknowns at this point
are the costs of acquiring three parcels and a portion of a fourth parcel and relocating existing
businesses. To assist in determining these costs, staff has contracted with the acquisition and
relocation consultant firm of Evergreen Land Services. The acquisition and relocation consultant
will handle negotiations with the property owners and work with the businesses which would be
displaced by this project to fmd other sites and insure that they receive the benefits which are
required by federal and state laws.
The developer has indicated that if the City were to acquire the RentAll site and provide it to
them at no cost,they could cover the remaining acquisition costs as part of the $1,700,000 TIF
assistance. An appraisal has been completed for the RentAll property which indicates that the
market value of the property is $520,000. This means that the total assistance that would need to
be provided to meet the developers request would be $2,220,000. As previously indicated the
amount of assistance that the projected tax increment could support would be $1,525,000. Staff
will be prepared to discuss alternatives with the EDA at the May 26, 1998 meeting. This matter
will also be discussed with the EDC at their May 28, 1998 meeting.
City of Mounds View Staff Report
May 22, 1998
Page 2
6t.e.fe :J
Rick Jopke, Comm 'ty Development Director
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OFFICEMEMO
To: Chuck Whiting
From: Rick Jopke
Subject: Mermaid Project
Date: April 3, 1998
Attached is a recent fax received from Dave Maroney concerning the proposed Mermaid project.
Dave has been in contact with John Seibert and has taken another look at the numbers.John
Seibert/Charlie Hall have stated that they continue to need a total of$1,700,000 of TIF
assistance for the project. The$1,700,000 includes$800,000 for land costs. Any land costs over
and above $800,000 would require additional TIF assistance over and above$1,700,000. The
developers have suggested that if the City were to acquire the Rentall business on the corner and
provide the land at no cost to them that the$500,000 could cover the acquisition of the remaining
parcels. They suggest that the costs for acquiring the Rentall business could come from TIF funds
designated for Highway 10 redevelopment Dave Maroney's projections show that the issuance
of$2,120,000 of bonds would be required to provide$1,700,000 of assistance. Dave indicates
that the project would generate$218,500 of TIF which would not pay back the bonds. Only
$1,525,000 of bonds could be supported by$218,500 of annual increments.
Evergreen Land Services is uncomfortable with providing acquisition and relocation costs
without appraisals being done. However a ballpark number they have given me is a total cost of
all 4 properties of$1,080,000. This would mean that$280,000 would have to be found from
other funds such as the funds design ted for Highway 10 redevelopment Bruce's latest
projections show approximately$50,000 to$100,000 a year available for Highway 10
redevelopment projects.
The total shortfall based on Dave's numbers and Evergreen's projections would be$455,000.
This could go higher if acquisition and relocation costs exceed.Evergreen's estimates.
NU.G3y 1'002
•
Subject: Hotel Project Proposal
Revised TIP Assumptions
Date: April 1, 1998
AssumW ions
1. TIF Hotel/Banquet Facility(105 rooms)
ICS Development Proposal dated January 5, 1998
2. Tax increments captured for 15 years beginning in the year 2000 and ending in 2014. 95%
of TIF available for debt service.
3. Taxable TIF Revenue Bond issued on 7/1/98; 15 year amortization;and for planning
purposes, an interest raze of 7.25%.
4. Issuance expense budget provides for 24 months of capitalized interest, finance fees and
legal costs.
5. Stable tax increment revenues and no project expansion.
6. Rent-All is acquired with funds from the Mounds View Economic Development Project
Fund("pooled account").
PreliminaryBudget Profile
Hotel Facility Banquet Center Totals
Development Costs $5,905,000 $1,660,000 $7,565,000
Tax Increment Assistance $1,000,000 $ 700,000 $1,700,000
% of Development Costs 17% 42% 22%
TIF-Acquisition $ 400,000 $ 400,000 $ '800,000
TIF-Project Costs S 600,000 $ 300,000 $ 900,000
Annual TIF Estimate $ 178,500 $ 40,000 $ 218,500
Prelimin.ry Debt Projections
Annual TIF Bond Issue Issuance Expenses Net Procee
lti
1. 5218,500 $1,900,000 $375,000 $1,525,000
2. $245,000 $2,120,000 $420,000 $1,700,00(13
(1) Developers request is for$1,700,000.
Item No. 59
Meeting Date: 5-26-98
Staff Report No.
Type of Business: EDAB
WK: Work Session;PH:Public Hearing;
CA:Consent Agenda;EDAB:EDA Business
Mounds View Economic Development Authority
Staff Re ort
To: Mounds View Economic Development Authority
From: Steve Dorgan,Housing Inspector
Item Title/Subject: MVHRP -Proposal for Appraisal of 7761 Eastwood Road
Date of Report: May 21, 1998
SUMMARY
Staff has recently received a letter from Stuart Trelstad(Exhibit A), owner of 7761 Eastwood Road,
offering his property for sale to the Economic Development Authority for the Housing Replacement
Program (HRP). The property is located just north of Highway 10 on the east side of Eastwood Road
(see location map Exhibit B). The proposed property is currently occupied by the owner. Staff has
completed an inspection of the proposed property to verify the eligibility as outlined in the HRP policy.
Item G of the HRP policy states:
G. Property Eligibility Criteria
Program Staff shall evaluate each property for which an application is received to determine
its eligibility for the Program based on the criteria in this section.Program Staff shall
prepare property fact sheets for each property for which owners have expressed an interest in
participating in the Program, and shall make a drive by inspection. Properties will be
evaluated based on the following criteria outlined below. To be eligible for participation,
the house on the property must have one of the characteristics noted in 1, 2, 3 or 4 below.
*1. Substandard as to condition,property value, size or usage.
*2. Obsolete and having a faulty design for block and area in which it is located.
*3. Deterioration which has caused blight to other adjoining properties.
4. Detrimental to the safety or health of abutting properties in the block.
If it is determined that the property is eligible for participation based on the condition of the
house, it must also meet the following criteria as outlined in 5-8 below.
*5. A geographic mix of properties is achieved.
*6. The site can be developed with a single family home within city code
requirements,including zoning and conformance with the Comprehensive
Plan. The property may be considered if a variance can be obtained(see
Section I,Item 2.).
*7. The property must be owner-occupied or vacant before the owner makes
application to the Program. Non-homesteaded vacant property will be
considered for acquisition. Tenant-occupied properties will be considered by
the EDA on a case-by-case basis.
8. Prior to approval by the EDA for participation in the Program,properties over
EDA Memo -Housing Replacement Program
May 21, 1998
Page 2
50 years old must be evaluated for historical significance. This will be
accomplished by forwarding general property information and a property
photo to the Minnesota Historical Society for review. The EDA will not
enter into a purchase agreement or award funding for demolition on a
property which qualifies for the National Registry of Historical Structures.
Staff has determined that the subject property meets the characteristics as noted in items 1,2,and 3 of
the Property Eligibility Criteria. Because the property meets at least 1 of the 4 outlined criteria, it must
also meet item numbers 5-8 of the policy to be considered for purchase by the EDA. As noted,the
proposed property meets the criteria in item numbers 5,6 and 7. The city has not yet proceeded with
the requirements of item number 8 which requires a historical significance evaluation. This will be
completed if the EDA requests staff to proceed with acquiring the property.
FUTURE LAND USE/COMPREHENSIVE GUIDE PLAN
The subject property was included in the recent redevelopment proposal for a Walgreens at the corner
of Highway 10 and County Road I. According to the owner,the property was to be purchased and
demolished by the developer as part of the proposed redevelopment. Because the proposed
development is not proceeding,the owner of the subject site is requesting the city purchase his property
through the HRP.
The city is currently in the process of drafting a comprehensive guide plan for the city. The
comprehensive guide plan is scheduled to be adopted by the end of the year. Because of the uncertainty
in future land use designations for the Highway 10 corridor and more specifically the subject site,the
EDA may consider postponing further consideration of the subject site for purchase through the HRP
until the review and adoption of the comprehensive guide plan is complete.
ACTION TO BE CONSIDERED
Approve EDA Resolution No. 98-EDA-91 recommending denial for the purchase of 7761 Eastwood
Road for the Housing Replacement Program at this time,pending review and adoption of the city's
comprehensive guide plan.
1' p
. .01
Steve I org
Housing Inspector
717-4023
Attachments: Exhibit A: Letter of request from Stuart Trelstad
Exhibit B: Location Map- 7761 Eastwood Road
Exhibit C: Resolution No. 98-EDA-91
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Proposed ICRP Property
Exhibit B 1
RESOLUTION NO. 98-EDA-91
MOUNDS VIEW ECONOMIC DEVELOPMENT AUTHORITY
COUNTY OF RAMSEY
STATE OF MINNESOTA
RESOLUTION DENYING A REQUEST FOR THE PURCHASE OF 7761 EASTWOOD ROAD BY
THE EDA FOR THE HOUSING REPLACEMENT PROGRAM
WHEREAS,the Mounds View Economic Development Authority(EDA)established a Housing
Replacement Program to remove houses which are in very poor condition,thereby, assisting in the elimination
of the blighting influence of substandard homes; and
WHEREAS, Stuart Trelstad formally requested the EDA purchase his property located at 7761
Eastwood Road through the Housing Replacement Program(HRP); and
WHEREAS,the property was inspected and staff has determined that the subject property meets the
characteristics outlined in the HRP policy which are required for a property to be considered for purchase by
the EDA;and
WHEREAS,the city is currently in the process of reviewing the comprehensive guide plan which is
scheduled for adoption by the end of the year;and
WHEREAS,the subject property is located within the Highway 10 corridor and land use designations
in this area is currently uncertain;and
WHEREAS,the subject site may be reconsidered for purchase after review and adoption of the
comprehensive guide plan.
NOW, THEREFORE,BE IT RESOLVED that the Economic Development Authority of the City of
Mounds View hereby denies the purchase of the property located at 7761 Eastwood Road for the Housing
Replacement Program at this time,pending review and adoption of the city's comprehensive guide plan.
Adopted this 26th day of May, 1998.
Duane McCarty,President
ATI:EST:
Charles S. Whiting,Executive Director
(SEAL)
EXHIBIT C