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HomeMy WebLinkAbout04-24-1997 11 ECONOMIC DEVELOPMENT COMMISSION AGENDA APRIL 24,1997 7:30 A.M. MOUNDS VIEW CITY HALL COUNCIL CHAMBERS 1. CALL TO ORDER P.M.'1 3S-- 2. ROLL CALL (Present = P, Absent = A) / %/.Carlson Schmidt c/ Goff V Sjoberg VI Nelson • V Welsch Tarhark McCarty (EDA Liaison) V Bennett (Staff) Quick (EDA Alternate Liaison) 3. APPROVE EDC MINUTES March 27, 1997 Action: Motion Second Vote ` V 4. SPECIAL BUSINESS No Special Business 5. EDC BUSINESS A. Discussion of Revised Housing Replacement Program 1 Action: Motion L G' Second Ow Vote c- B. Discussion of Proposals for City Owned Property on Highway 10 located in • Section 9 of the Highway 10 Redevelopment Plan Action: Motion Second Vote Comments: i,� C. Update on the U of M Metropolitan Livable Communities Design Course Aik Comments: 6. Report of Commissioners, Staff and EDA Liaison 7. ADJOURN P.M. P.M. Next Regular Meeting May 22, 1997 T 54— — - 1-1/ 11- c)-6 1 Co tr/L4)-4-4YL-- _ , t i (-)711 ty641„: .& " . uelam- 7)/ufw ' 0 60ALP-v-c-/S- C1-4-12-e- FL- kL-t Ceik af°6- `Ots-4..fz Otia-C Da" Pi!"LuktUK4- iwA- '---er rc_ktct)? �'C,I Gt VGiL 1- byud c 0 (;lam foLAA,L_ &-rp` 1--+ cc)/ • D (x, :b).4_ &air rr -0i,_ oc( (cam r du-0,., _r L14, into-AJJ ,9kr-113 r— 91- +,,af,t LAI I etiA, elluA ilLe Cia) • djay. cti weA,_ ECONOMIC DEVELOPMENT COMMISSION AGENDA APRIL 24,1997 7:30 A.M. MOUNDS VIEW CITY HALL COUNCIL CHAMBERS 1 . CALL TO ORDER P.M. 2. ROLL CALL (Present = P, Absent = A) Carlson Schmidt Goff Sjoberg Nelson Welsch Tarhark McCarty (EDA Liaison) Bennett (Staff) Quick (EDA Alternate Liaison) 3. APPROVE EDC MINUTES March 27, 1997 Action: Motion Second Vote 4. SPECIAL BUSINESS No Special Business 5. EDC BUSINESS A. Discussion of Revised Housing Replacement Program Action: Motion Second Vote B. Discussion of Proposals for City Owned Property on Highway 10 located in Section 9 of the Highway 10 Redevelopment Plan Action: Motion Second Vote Comments: C. Update on the U of M Metropolitan Livable Communities Design Course Comments: • 6. Report of Commissioners, Staff and EDA Liaison 7. ADJOURN P.M. Next Regular Meeting May 22, 1997 • • Minutes of the Economic Development Commission City of Mounds View Ramsey County, Minnesota Regular Meeting March 27, 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 7:38 a.m. by Vice Chairperson, Cindy Carlson. 2. Roll Call: Members present were as follows: Cindy Carlson, Rosemary Goff, Ron Schmidt, and Brian Sjoberg. Members absent were Dan Nelson, Bev Tarhark and Delane Welsch. Dir. of Economic Development Cathy Bennett and EDA Liaison Duane McCarty were present. Alternate Liaison Gary Quick was absent 3. Approval Of Minutes: Minutes from November'21, 1996, January 23, 1997 and February 20, 1997 were approved on a 4-0 vote with a motion from Rosemary Goff and second from Ron Schmidt. 4. Special Business No Special Business. 5. EDC BUSINESS A. Consideration of Economic Impact of the Proposal for a 16-Screen Movie Theater and 3 Office Buildings on Highway 10 at H2 and Long Lake Road Director of ED Bennett reviewed the staff report that was prepared by CD Director Pam Sheldon for the Planning Commission which described the proposal and issues related to the development of a 16-Screen Movie Theater and 3 Office Buildings on the vacant land bounded by Highway 10, County Road H2 and Long Lake Road. Bennett particularly pointed out the economic affects of the development such as proposed increase in the tax base of approximately $600,000 annually, direct increase in jobs of 125 and the ripple effect creating an additional 100 jobs. In addition, Bennett discussed the proposed use as noted in the Highway 10 Redevelopment Plan for the area. Commissioner Carlson noted that even though the Plan proposed corporate headquarter office or town home development that this use could still be in line with the plan as long as it take into consideration the impact on the wetlands and neighborhood. iBennett introduced Wendell Smith, local broker for the project who gave a brief overview of the project. Mr. Smith has talked with several area businesses who are in support of the project because they feel this will give a reason for people to come to the area and spend money at their businesses. In addition, the NB/MV Chamber of Commerce will be providing a letter of support to the City Council for the project. Mr. • Smith said that if approvals are received that they are planning on completing the site work before winter with opening in the summer of 1998. The one area that is still being evaluated is the traffic circulation. Mr. Smith said that MnDot is not willing to provide a signalized intersection for the project and that exits/entrances were deleted from H2 to accommodate the neighborhood. This just leaves right in/right out access off Highway 10. It is doable for the success of the project but he would like to work in conjunction with the City to encourage MnDot to reconsider their decision. This decision was done at the staff level and there may be some leeway with City support to discuss the project with Directors at MnDot. Mr. Smith did mention his concern that the planning Commission would make the recommendation for a rezoning based upon being able to obtain a stop light. He said the project would still be successful without the stop light and did not want this issue to hold up the process for the project. Mr. Smith wanted to commend Pam Sheldon and her staff for all the work and research done on the project. Motion/Second: Carlson/Sjoberg moved the favorable support for the 16-Screen, office building development for Section 7 of the Highway 10 Redevelopment Plan. Motion Carried 4 ayes 0 nays Motion/Second: Goff/Sjoberg further moved that the City work with Anthony Properties to encourage MnDot to approve a signalized intersection for the project but would not recommend that approval for the rezoning be contingent upon gaining this approval from MnDot. 1111 Motion Carried 4 ayes 0 nays Commissioner Schmidt requested information regarding the office developments. He wondered if there was written analysis to support the need for 10,000 - 12,000 sq.ft. office uses in the area. Since Mr. Smith had already left, Schmidt requested staff to provide this information at the next meeting. In addition, Commissioner Sjoberg requested updated vacancies from the Business Park and retail centers. B. Discussion of the Recommended Concept Plan for the Redevelopment of Highway 10, Section 9 as proposed by SRF Consulting Group, Inc. Bennett noted that SRF had prepared a draft of the final report for EDC's review prior to the final presentation to the EDA and community at the April 7, 1997 work session. The EDC briefly discussed the key components of the plan and requested that further emphasis be placed on the importance of design and coordinated development in the plan. Bennett will pass these comments along to SRF to be incorporated into the final plan. Bennett also noted that the Planning Commission was reviewing a development for the vacant land on the South side of Highway 10. This plan includes a gas/conveniece store/car wash, restaurant, senior housing and office space. In addition, Bennett said that she has met with the developers of the Silver Lalce Pointe Senior Housing and they III are interested in the rehab of Pleasant Wood Apts along with the development of 28 new rental town homes on the North side of 10 in the study area. The developers will be making a presentation to the EDA at the work session on April 7, 1997. 410 C. Consideration of EDC Work Plan for 1997 The EDC reviewed the proposed 1997 work plan as proposed by staff and with some additions and changes from commissioners prior to the meeting. Motion/Second: Schmidt/Sjoberg moved to approve the 1997 work plan. Motion Carried 4 ayes 0 nays D. Consideration of Appointing a Designee to Participate in the University of Minnesota Metropolitan Livable Communities Design Center Course. The City of Mounds View has been approached by the UofM to be one of the communities to participate in a design course specifically dealing with first ring suburb planning and development issues. Bennett said that Mounds View's focus would be the Highway 10 Corridor. This is a six week class which is being offered to the City free of charge. Two of the sessions will focus specifically on Mounds View and will be held at City Hall. The other classes will be held at the Uof M. Commissioner Ron Schmidt volunteered to be the designee for the EDC. Bennett said that she would also ask Commissioner Welsch if he would be interested in acting as an alternate. 6. Reports From Chair, Commissioners and Staff: EDA Liaison Duane McCarty noted that the Council will be reviewing the discrepancey between the City Code and the Charter regarding the amount of votes needed to pass an ordinance. The Charter states that only a 3/5th vote is needed and the Code states that a 4/5th vote is needed. Currently, the Charter provision overrides the City Code. These types of discrepancies can have a big impact on the way decisions are made at the Council level. 7. Adjournment There being no further business before the Commission, this meeting of the Economic Development Commission adjourned at 9:14 a.m. Respectfully Submitted, Director of Economic Development • 1 • Staff Memo To: Economic Development Commission Members From: Cathy Bennett, Director of Economic Development Date: April 21, 1997 Subject: Discussion of Revised Housing Replacement Program (5.A.) Attached is a draft copy of the Revised Mounds View Housing Replacement Program. The main purpose of revising the Program is to add a provision that allows the EDA to provide demolition funds for an existing resident to construct a new home. Currently the plan is for the EDA to purchase a deteriorating home, demolish it and sell to a developer/buyer team. This revision would allow the current owner of a home to rebuild on the lot and we would pay for demolishing the old home. This would save considerable time and funds and opens the program up to a larger audience. In addition, staff made changes to allow a more compete understanding of the program and the process. The EDC's responsibility is to review the revisions to see if they still meet the goals of the program for use of tax increment funds. Legally this is an allowed use of the funds. In addition staff would request comments regarding the readability of the program and if there is a clear understanding of how the program works. Staff would like to present this to the EDA for approval in May. Therefore, there is ample time to make further revisions and refinements. City of Mounds View11111 Housing Replacement Program Statement of Purpose The City of Mounds View Housing Replacement Program ("the program) was established to reduce the social costs of blight, making better use of existing public infrastructure and redistributing the tax base to areas of the community with a higher level of fiscal needs. Program Objectives • Replace deteriorating lower value housing on scattered sites throughout the City with larger, new, higher value housing designed for families. • Eliminate the blighting influence of substandard housing, thus improving residential neighborhoods. • Increase the availability for quality housing for families. Program Funding This program is funded through Tax Increment Financing and administered by the Mounds View Economic Development Authority (EDA). Data Privacy All files and information which identifies property and persons is private and cannot be released. All information secured through the program is subject to the Data Privacy Act. Program Options The Housing Replacement Program offers two options for participation. Option 1: This option involves the sale of substandard single family house and land to the EDA. The EDA's goal is to offer the property for sale for the redevelopment of new, standard housing. Option 2:, This option involves the property owner retaining the property where a substandard single family house is located, and receiving funding from the EDA for demolition of the house with an agreement that it will be replaced with standard housing meeting certain EDA guidelines and time frame. • DRAFT (April 21, 1997) 1 City of Mounds View March 10, 1997 Housing Replacement Program Page 2 A. Publicizing the Program: Making Application 1. EDA staff, or their appointee(s), ("Program Staff') will solicit program participants by direct mail, advertisement, or other method. The number of applications accepted for participation in the program will be determined by the availability of personnel and financial resources. 2. Participation in the program must be on a voluntary basis. Interested participants must be able to furnish proof of ownership of the property, and are required to respond to the EDA solicitation in writing, with a letter indicating: a. For Option 1: (Sale of Property to EDA): (1) An interest in selling their property to the EDA. (2) A willingness to waive relocation benefits. (3) Statement of tenant interest in the property at the time of offer. (4) Consent to the release of relevant information to potential developers and end 40 buyers. b. For Option 2 (Funding for Demolition): (1) An interest in obtaining funding for demolition from the EDA to replace with standard housing meeting EDA guidelines. (2) Willingness to hold the EDA harmless for demolition activities (3) Willingness to enter into a legal development agreement with the EDA regarding redevelopment of the property 3. Individuals who have indicated an interest in participating shall be contacted by Program Staff to inform them of the estimated project time line and to obtain complete information on the items noted under A.2. above. B. 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 a 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 at least one of the characteristics noted in 1, 2, 3 or 4 below. DRAFT (April 21, 1997) 2 City of Mounds View March 10, 199741P6) I Housing Replacement Program Page 3 1. Substandard as to condition, size or usage. 2. Obsolete and of a faulty design for block and area in which it is located. 3. A deteriorating factor 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 confoi ance with the Comprehensive Plan. The property may be considered if a variance can be obtained. 7. The property must be owner-occupied or vacant before the owner makes application to • the program. Tenant occupied properties will not be considered for purchase or funding for demolition. Non-homesteaded vacant property will be considered for acquisition. 8. Prior to approval by the EDA for participation in the program, properties over 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. C. Program Priorities If more than one application has been received during a given month, the program staff shall rank the applications, to determine the best candidates for program participation, based on the information and criteria noted below: 1. Properties that can meet EDA established guidelines and time frame will be considered first. 2. Properties with the lowest values and poorest visible conditions should be considered first. • DRAFT (April 21, 1997) 3 City of Mounds View March 10, 1997 Housing Replacement Program Page 4 3. Properties purchased should be equally distributed by location and value throughout the City when possible, and provide a viable financial mix of properties to support program financial requirements. D. Option 1: Acquisition of Property by EDA 1. Blight Qualification: Once an offering letter is received by the interested participant, program staff shall arrange, by appointment, an inspection of the interior of the home to establish blight qualification as outlined in Section B. The following information will also be obtained during the inspection: a. Demolition information for estimating demolition credit to builder. b. A determination as to the existence of any hazardous materials on the property. This includes: 1111 (1) a visual inspection (2) a statement from the interested participant regarding any knowledge of the properties use for production, storage, deposit, or disposal of any toxic or hazardous wastes or substances or asbestos products whatsoever, during the time the interested participant owned the property and prior to the date of interested participant purchased property. Properties with environmental problems or hazards may be considered if the purchase price is reduced sufficiently to cover increased site clearance and preparation costs. If a property meets the blight test, acquisition procedures can continue. If the blight test cannot be met, the interested participant will be notified in writing indicating the reasons why the property cannot be considered for acquisition. 2. Need for Variances: If a variance is required to redevelop the property, the EDA may, at its sole discretion, choose not to acquire the property. This determination will be made based on the project time lines, available resources, and availability of other properties which do not require a variance. If the EDA chooses to pursue a variance to enable the acquisition of the property, an application shall be filed following the usual procedures. If a variance is not approved, the property cannot be considered for acquisition. 3. Appraisal; Determining Purchase Price: If the EDA chooses to continue with the • acquisition, a fee appraisal shall be ordered at the EDA's expense and the result shall be used in determining the amount of the purchase price to offer to the interested participant. DRAFT (April 21, 1997) 4 City of Mounds View March 10, 1997 Housing Replacement Program Page 5 The independent fee appraiser shall be carefully instructed to document in specific terms the conditions of the property including details regarding structural condition and floor plan. The acceptance of these conditions in the market place should be discussed in the report. The appraiser's value judgement should reflect these conditions. A Negotiated price considerably below the assessor's market value, may be accepted without an appraisal on a case by case basis if the interested participant seller concurs. 4. Purchase Agreement; Closing Procedures a. When a purchase price has been verbally agreed upon by both parties, program staff and Legal Counsel shall prepare a Purchase Agreement to be presented to the interested participant. The purchase price contained in the Purchase Agreement shall be within the range authorized by the EDA. The purchase agreement shall be contingent on the completion of an environmental evaluation suggesting no evidence of hazardous waste on the property. The interested participant shall receive a copy of the purchase agreement including the following information: (1) The purchase price • (2) How the purchase price was determined. (3) The amount of earnest money (4) A date to sign the Purchase Agreement (5) A closing date b. To enable the acquisition process to continue, the interested participant must execute the purchase agreement and "waiver of relocation payment" form. The waiver of relocation benefits, must be clearly explained to the interested participant at this time, if not explained previously. c. The acquisition and disposition of the property must be in conformance with the Mounds View Comprehensive Plan. d. Following EDA authorization of these agreements, interested participants and/or program staff will be requested to assemble and supply all required documentation prior to closing as outlined below. (1) An Abstract or RPA (as applicable) must be furnished to the program staff to facilitate the rendering of a title opinion. The interested participant will bear the cost of updating the Abstract or RPA as part of the closing procedures. II! DRAFT (April 21, 1997) 5 S City of Mounds View March 10, 1997 Housing Replacement Program Page 6 (2) EDA Legal Counsel will be responsible for having the Abstract or RPA updated and will provide program staff and interested participant with a written opinion of title. EDA Legal Counsel will also secure title insurance. (3) If the title opinion indicates the property has marketable title, purchase procedures will continue. If the title opinion does not indicate a marketable title, the EDA, at its sole discretion, may choose not to acquire the property. The EDA may determine remedies and evaluate their resolution, including the additional time and expense to provide marketable title. The EDA may proceed to correct title deficiencies to continue the purchase of the property dependant upon the additional time and expense incurred. (4) Simultaneously with the title opinion, an environmental evaluation may be obtained from an independent environmental engineering firm or other firm performing such service. If environmental hazards are found on the site, the EDA may choose not to acquire the property. 1110 e. The EDA Executive Director and President shall be signatories on the purchase agreement. f. The seller must be prepared to vacate the property on the day of closing. 5. Selection of Demolition Contractor and Procedures. After property closing, Program staff will send out Requests for Proposals (RFP) to at least three demolition contractors. The bid received with the lowest price will have priority. The demolition contractor must be able to meet project deadline as outline in the RFP prior to awarding a contract. The demolition contractor will be required to obtain all necessary City permits and pay applicable fees. Overall demolition supervision will be provided by a designated program staff. 6. Marketing; Selection of Developer. Program staff will negotiate the purchase of the property by an acceptable buyer/developer team. If a buyer/developer team can not be obtained, the EDA may consider selling property to a developer for sale to the open market after completion. As part of the sale of the property, the buyer/developer team must sign a development agreement with the EDA which will stipulate building configurations and time frame for completion. E. Option 2: Funding of Demolition 410 1. Blight Qualification: Properties being considered for demolition funding must meet blight qualifications as outlined in Section B and Section D.1. DRAFT (April 21, 1997) 6 City of Mounds View March 10, 19971111 Housing Replacement Program Page 7 2. Need for Variances: If a variance is required to redevelop the property, the homeowner must obtain the variance prior to the award of demolition funds. 3. Development Agreement: The interested participant must enter into a Development Agreement with the EDA which will stipulate building configurations and time frame for completion. The development agreement will include estimate of new taxes generated based on the construction of replacement cost. 4. Demolition Contract: The interested participant must obtain three estimates for demolition which will assist in determining the amount of demolition funds to award for the project. The chosen demolition contractor must be able to meet project deadlines as outline by program staff. The demolition contractor will be required to obtain all necessary City permits and pay applicable fees. Overall demolition supervision will be provided by a designated program staff in conjunction with the interested participant. N:\DATA\USERSUENNIFER\SHARE\MVHRP\HAPS.WPD DRAFT (April 21, 1997) 7 41, Staff Memo To: Economic Development Commission Members From: Cathy Bennett, Director of Economic Development Date: April 21, 1997 Subject: Discussion of Proposals for City Owned Property on Highway (5.B.) 10 located in Section 9 of the Highway 10 Redevelopment Plan MSP Real Estate presented a concept proposal to the Council regarding the rehab of the former Pleasant Wood Apts and construction of 28 new town homes on the corner of Highway 10 and Eastwood. This development includes the City owned property at 2625 Highway 10, two privately owned vacant lots, 7800 Eastwood and the Pleasant Wood Apts. (See Map). The proposal is outlined in the letter to the Council (attached) dated March 27, 1997 and includes a complicated financing structure that would result in $5 million of investment for low income rental units. It is requested that the City(EDA) sell the land for $35,000 and provide MSP with a $195,000, 1%, 30 year loan using existing TIF funds generated from other developments in the City. In addition, the City would be required to approve a resolution supporting MSP's application for County Home Funds and their application for the 10 Holman Units which are Minneapolis Public Housing Units. Some of the Council's concerns are as follows: ► Desire market rate, owner occupied units for the new town homes. (I will be contacting residential developers to see if this is a viable location for market rate, owner occupied units) ► The property was purchased by the EDA with the intention of rezoning for commercial use. Is this still a viable use? (I am still in contact with interested parties regarding an Animal Hospital location or a Funeral Home) • The EDA directed staff to begin the financial analysis with City TIF Consultant Dave Maroney. Mr. Maroney has begun the analysis and I should be able to give a report on his findings at the meeting on Thursday. In addition, I spoke with the County regarding their application and they are willing to recommend setting aside $300,000 • for the project but they do have some serious concerns with this proposal regarding financial stability and number of new families with children that this will bring to the area. I will be meeting with the County and MSP on Tuesday to discuss alternatives. Looking at these current proposals for this section of Highway 10, the EDC should evaluate the following: ► Section 9 Redevelopment Plan Report as proposed by SRF Consulting. What were the alternative development scenarios for this area and what was the preferred alternative. ► What is the impact to the neighborhood. (Rehab of existing apartments, low income units, owner occupied units, commercial development without rehab of existing apartments.) ► Would the investment of EDA TIF funds be an appropriate use for this proposal and/or market rate owner occupied units or commercial use. ► What is the traffic impact of the different proposed uses. Representatives from MSP Real Estate will be at the meeting to answer questions. In • addition, I have invited Dr. Kevin Barcus, Mounds View Animal Hospital and Rob Hunt, Bil[man Hunt Funeral Home to the meeting so that they may be able to discuss their interests in the sites as well. • 3-27-1997 3: 1 9PM FROM MSP REAL ESTATE. INC. 612 336 4555 3 3,) f y y L'IR 2, ,,, y' ••�*.-.: +:ta:F.•�lfy.:x�t• �Vt ,.� ;"tits . .•, �,* .f� ;,,"ir'aY,? ,;a�l.i`,+t �i. ";?1"14,.. y41,. .±,t1.111 ►.. r c cal c s tc MSP t services i ri c . a March 27, 1997 Cathy Bennett City of Mounds View 2401 Highway 10 Mounds View, MN 55112 RE: Silver Lake Commons Apartments Northwest Corner Highway 10/County Road I Dear Cathy: As we participated in the City's public hearing process regarding the Highway 10 corridor, it became crystal clear that the Pleasantwood Apartments (now re-named Red Oak Apartments) was the City's most problematic multi-family property -- i.e. deferred maintenance, poor management and high police calls. This is doubly problematic, as the property is prominently situated along Highway 10, the gateway to Mounds View. We thus began working on a proposal that would not only clean-up the deferred maintenance, but would transform this property into an asset that would speak to the quality Mounds View desires for its gateway -- the same quality we achieved with Silver Lake Pointe Apartments. CONCEPT Our project concept to achieve these goals is as follows: 1.) Completely renovate the project inside and out so it looks and feels brand new. 2.) Develop 28 new townhomes on the adjacent 3 acres. 3.) Develop shared driveway and parking, so that both properties will be operated as one. 4.) Configure the site to maximize green space and provide a safe play area for children. BENEI+'1!S The benefits of this project to the City are as follows: 1.) Transform problem property into architecturally aesthetic buildings consistent with the image Mounds View wants to portray in its gateway. 2.) Provides high level of quality and rehabilitation not otherwise achievable. • 3.) Provides additional tax base to the City. 4.) Design maximizes green space and provides safe play area for children. 5.) Provides City with substantial design input in the PUD process. (3 3 - - I Li r�,� 1�t �� .r• 3-27-1997 3: 19PM FROM MSP REAL ESTATE. INC. 612 336 4565 P. 3 411 REQUEST In order to transform this property into the quality level consistent with Silver Lake Pointe, our request to the City would be as follows: 1.) We request that the City approve our PUD to build 28 new townhomes and re-configure the driveway and parking areas as indicated on the enclosed site plan. 2.) We request that the EDA sell its land to MSP at a market price. 3.) We request that the City provide a $230,000 1% interest, deferred loan to the project, from excess proceeds from existing TIF districts. 4.) We request that the City approve the set aside of ten units in the property for rental as subsidized housing. S.) We request that the City approve the ownership structure of the property as a Leasehold Cooperative, thus allowing the property to receive the benefit of homestead tax rates. In order to achieve the quality level the City desires, these requests are critical to the transformation of this property_ ALTERNATIVES 4111 As we view this situation, the City has three options to consider: 1.) Do nothing 2.) Acquire and demolish the apartments 3.) Approve this rehabilitation concept Option #1: Under this scenario, the property will always be an "eye-sore", and it will continue its long, slow decline as roofs, windows, furnaces and garages continue to fail. The free market cannot and will not provide the level of rehabilitation we propose because it's not economically justified. Option 42: Under this scenario the City would purchase the property at a market price, demolish the structure, pay relocation benefits, assemble the additional 3 acres -- for a total cost of over $2,300,000. Even the most intensive commercial development would never recoup this investment. Option #3: A $230,000 investment would transform a problem property into a quality asset, and spur over $5,500,000 of investment. • 3-27-1997 3.20PM FROM MSP REAL ESTATE, INC. 612 336 4565 P. A 111 PROPERTY The intent of our development proposal is to develop (and rehabilitate) this property such that it is indistinguishable from new market-rate housing in the area. This was our goal with Silver Lake Pointe Apartments, and we believe the same goal is achievable here. The property will consist of 26 new 3-bedroom and two new 4-bedroom townhomes. Each townhome will have 2 stories, an attached garage, washer/dryer hook-ups, P% baths, individual gas-fired forced air furnace, and a full appliance package. The 3-bedroom units will contain a spacious 1,320 sq. ft. including a large eat-in kitchen. The 4-bedroom units will contain 1,470 sq. ft. with the same amenities. The 3-acre site was designed to maximize green space, and allow for placement of a play area in the safest possible location, away from Highway 10 traffic. The rehabilitation of the existing 40 units will be extensive. Our goal is to change the character of the buildings and units, and thus do away with the deferred maintenance that has plagued this property in the past. Our plans include deleting mansard roofs, adding a pitched roof, tearing down the old parking garages and building new, more attractive garages. We will also reconfigure the parking to add more green space in front of the buildings. The unit interiors will be completelyupdated including new windows, new carpet, new vinyl, new appliances, new cabinets, new furnaces, new heaters and new fixtures as needed. The goal is • to offer a totally revived high quality property inside and out - quality of which residents and neighbors will be proud. RENT LEVELS Our rent levels will increase over existing rents on the 40-unit apartment property, but will still be affordable to area residents. The following rents are estimated for our units: 1-bedroom $509/month (includes heat) 2-bedroom $614/month (includes heat) 3-bedroom townhouse $656/month (plus heat) 4-bedroom townhouse $720/month (plus heat) Detached garages $30/month These rents are in line with market rents in the area, and are affordable to families whose incomes range from $20,000 - $45,000/year. 3-27-1997 3:20PM FROM MSP REAL ESTATE, INC. 612 335 4565 P. S DEVELOPER The developer will be a joint venture between MSP Real Estate, Inc. and Affordable Suburban Housing. MSP Real Estate, Inc. is a development and construction firm specializing in affordable housing. Milo Pinkerton, the President of MSP, has been involved in the development and construction of over 1,000 units of multi-family housing. Since its inception in 1988, MSP has completed over 600 units of multi-family rental housing. MSP's construction company is headed by an individual with over 20 years of construction experience, including over 2,100 multi-family units. MSP will be developer and general contractor for this apartment project. Affordable Suburban Housing is a non-profit company that works with municipalities to help define and implement their housing goals. FINANCING In order to meet the high quality standards Mounds View desires, we need to assemble a layered financing package from a variety of sources. This layered financing approach enables Mounds View to reap the benefits of the aforementioned high quality standards, FIRST MORTGAGE The developer will arrange a conventional first mortgage loan from a life insurance company410 in the amount of $1,900,000. We have introduced the lender to this project, and based on MSP's track record, the lender is prepared to provide a financing commitment. EQUITY The developer will provide for an equity investment in the property totalling $1,885,000. The source of this investment will be from the developer and an investor. The investor is a nationally known bank, and has previously invested in four developments MSP has built. The investor has also reviewed this proposal and is prepared to provide an equity commitment. HOME I VNDS We have applied to Ramsey County for $400,000 in HOME funds. This would be structured as a long term loan at a below market rate of interest. We have met with Ramsey County and have a high degree of confidence in Ramsey County's support of this request . FEDERAL HOME LOAN BANK GRANT We have applied for a $270,000 grant from the Federal Home Loan Bank to help keep rents affordable. The Federal Home Loan Bank has invested in three of our previous projects, and thus we have a strong confidence that they will look favorably at this investment. 411 3-27-1997 3:21PM FROM MSP REAL ESTATE, INC. 612 336 4565 P. 6 Ill SUBSIDIZED FUNDING We have applied for $905,000 in equity proceeds from the Holman Decree. This substantial funding level is critical to maintaining the quality level we have proposed. In exchange for the Holman Equity investment, we would be required to set aside seven units for rent to families on the Minneapolis Public Housing waiting list, and another three units would be set aside for Mounds View residents. It is critical to keep in mind that we are not required to accept any potential residents for these (or any of our) units unless they meet our rigorous screening standards. All residents must pass a criminal background check, have good credit history, have strong references from past landlords, and be able to afford the rents we charge. In order to receive the Holman equity investment, the City must approve the "Holman Units". We estimate the taxes payable on these ten units would be approximately $300/unit/year x 10 units = $3,000/vear. Obviously the taxes on the remaining 58 units would be at a higher rate. EDA LAND/CITY LOAN We are requesting that the EDA sell its .6-acre parcel of land to MSP at a market price (estimated at $35,000), and make a 1% deferred loan of $230,000 from available increment • generated from existing TIP.districts. This loan would help fund costs of land assemblage and extensive land improvements. Thus the net loan request from the City would be $230,000 - $35,000 = $195.002. This funding will offset the costs of land assembly and reconfiguring the project entrance and parking areas to help portray a quality image to the Community and residents. This $195,000 investment spurs over $5,500,000 of total investment. LEASEHOLD COOPERATIVE/REAL ESTATE TAXES State Statutes allow homestead tax treatment of rental properties if ownership provisions of a Leasehold Cooperative are met. Our plan is to meet the statutory requirements and thus receive the benefit of homestead tax treatment. Based on preliminary discussions with the - Ramsey County Assessor we are estimating the following real estate tax levels; jj x',� �,�VO Value 58 units @ $55,000/unit $3,190,000 _ b • Homestead Tax Classification x 1.0% I , . I .J ,1\\,y , $31,900 Estimated Tax Rate x 1.37 r\Ve il) ,--1------- "yw Annual Taxes on 58 units $43,700 iio1 / ,. . , -, Payment-in-lieu of tax on 10 units $3,000 v Total Tax (Estimated) $4700 -,UL Y IF of This property,will thus be adding to the City's tax base, as the current_taxes_ffor these properties is'$33,903/year. . , ; 1 yY t r( 3-27-1997 3.21 PM FROM MSP REAL ESTATE. INC. 612 336 4565 P. 7 CONSISTENT WITH CONSULTANTS RECOMMENDATIONS After months of intensive study and numerous public meetings, the City's consultant, SRF Consulting Group, has recommended that these separate properties be incorporated into a unified project, and be developed as apartments and townhomes. This is precisely our proposal, and we believe (as do your consultants) that this is the highest and best use for this property. We also evaluated this property as a complete redevelopment opportunity (your consultants performed the same analysis), and came to the conclusion that it was economically infeasible to acquire and tear down the existing 40-unit property. The funding gap under such a scenario would be in excess of $2,300,000. We believe that our development proposal offers the City the highest possible quality at the lowest possible cost to the City. 4 PROPERTY MANAGEMENT Beyond providing quality property improvements, the key to maintaining quality over time is attentive, professional, on-site property management. Similar to Silver Lake Pointe Apartments, MSP will build an on-site management office so the property manager can conduct professional management operations from the property. Also key to the project's success is to hire a professional management company with experience in this particular property type. MSP will evaluate several professional management companies to insure that the best company is selected. PROJECT TIMELINE 1.) City Resolution approving Holman Funding (April 1997) 2.) Loan Approval (May 1997) 3.) PUD Approval (July 1997) 4.) Land Purchase (September 1997) 5.) Construction Start (October 1997) 6.) Construction Completion (June 1998) Under this proposal, the City's $195,000 investment spurs over $5,500,000 of investment in your community, and substantially upgrades an under-utilized property. We hope the City of Mounds View will look favorably on the aforementioned requests. We look forward to working with you once again to provide quality housing in your community. Sincerely, 10/20(._. /11( 10°4' • Milo Pinkerton `� President MSP Real Estate Services, Inc. icath3.>tr 3-27-1997 3:22PM FROM MSP REAL ESTATE, INC. 612 336 4565 P. 8 •SSLJMPTIONS DATE 25-Mar-97 PROJECT NAME MOUNDSVIEW/NEW CONSTR.&REHAB NUMBER OF UNITS 68 DATE PLACED IN SERVICE 01-Jul-98 OCCUPANCY 95.00% TAXES/U NIT $687 OPERATING EXPENSE/UNIT $2,574 ANNUAL RESERVE/UNIT $250 1. USES LAND AND BUILDING $1,415,000 HARD COSTS $2,905,000 SOFT COSTS $1,177,832 RESERVES $95,000 /DOTAL $5,592,832 2. SOURCES FIRST MORTGAGE $1,900,000 EQUITY (INVESTOR/DEVELOPER) $1,887,832 HOLMAN EQUITY $905,000 RAMSEY COUNTY (HOME) $400,000 FEDERAL HOME LOAN BANK (GRANT) $270,000 CITY OF MOUNDS VIEW (TIF) $230,000 TOTAL $5,592,832 • 3-27-1997 3:22PM FROM MSP REAL ESTATE, INC. 612 336 4565 P. 9 I 4. INCOME/EXPENSE ANALYSIS 11; ANNUAL # UNITS RENT/UNIT INCOME 2 BEDROOM - HOLMAN 5 $295 $17,700 3 BEDROOM - HOLMAN 5 $295 $17,700 1 BEDROOM -APT 16 $509 $97,728 2 BEDROOM -APT 19 $614 $139,992 3 BEDROOM - TH 21 $656 $165,312 4 BEDROOM -TH 2 $720 $17,280 TOTALS 68 $455,712 GROSS RENTAL INCOME $455,712 OCCUPANCY 95.00% NET RENTAL INCOME $432,926 LAUNDRY& PARKING @ $17,952 0 EFFECTIVE GROSS INCOME $450,878 ) REAL ESTATE TAX $687 ($46,716) OPERATING EXPENSE @ $2,574 ($175,032) 1 ANNUAL REPL RESERVE @ $250 ($17,000) ASSET MANAGEMENT FEE © 1.50% ($6,763) NET OPERATING INCOME $205,367 DEBT SERVICE @ 9.00% ($183,454) CASH FLOW $21,913 3-27-1997 3=22PM FROM MSP REAL ESTATE. INC. 612 336 4555 E'. 'I r 411 PROJECT DESCRIPTION Silver Lake Commons Apartments is being proposed on the property at the Northwest corner of County Road I and Highway 10. The property is conveniently located close to shopping centers, support services, the library, a city park, and public transportation. The property will be comprised of 28 brand new three- and four-bedroom townhomes in four two-story clusters. The property will also contain 40 totally rehabilitated one- and two-bedroom apartments in two three-story buildings. The two separate properties will be unified into one property with a shared entryway, single professional management company, and common design elements. We have designed this property to maximize greenspace and operate as one apartment community. The combined site is in excess of 4.5 Acres, and will have its main entryway and signage on Highway 10. We have designed a generous greenspace and play area protected from Highway 10 by three building clusters. The site will also contain a management/leasing office to allow for on-site management The old garages of the existing apartment complex will be demolished, 411 and new garages will be built to allow for more efficient traffic patterns and to provide additional greenspace. The 28 new townhomes will contain 26 three-bedroom units and two four-bedroom units. Each townhome will have an attached single car garage, washer/dryer hook-ups, 1% baths, large eat-in kitchen, gas-fired, forced-air furnace, and a full compliment of appliances including dishwasher, disposal, refrigerator and range. The three-bedroom townhomes are generously sized at 1,320 sq. ft and the four-bedroom townhomes are 1,470 sq. ft. Each townhome is two-stories, and the buildings will be clustered in groups of six and eight units. The 40 totally rehabilitated apartment units will contain 16 one-bedroom units and 24 two- bedroom units. Our rehabilitation plan is to substantially change the character of these apartment buildings so they look and feel brand new. To accomplish this we plan to remove the mansard roof system, and replace them with more attractive hip roofs. We plan to retain the bricks and replace the wood siding with low maintenance vinyl. All of the windows will also be replaced, with the result being that the apartments will have an all new look from the outside. Our plan is to use similar colors on both the townhomeand apartment exteriors, so the perception will be that this is one property. We plan to demolish the existing garages, and build 40 new and re- configured garages to make traffic flow more efficient, provide each apartment with its own garage, and improve the overall aesthetics of the property. We will also re-configure the parking areas to add more greenspace. in front of the apartments. The apartment interiors will also be totally renovated so residents will feel as though they are living in new units. We will replace • carpets,vinyl, kitchen cabinets, counters, appliances, air conditioners, light fixtures, furnaces and water heaters. The result will be a property that looks and feels like new. 3-27-1997 3:23PM FROM MSP REAL ESTATE, INC. 612 336 4565 P. 11 With all of these upgrades, rents will increase from their existing levels, but they should still • remain affordable to Mounds View's residents. The new rents we are proposing are as follows: One -bedroom $509 Two-bedroom $614 Three-bedroom $650 Four-bedroom $720 Detached garages $ 30 These rents are affordable to households earning $20,000 - $45,000/year, Our plans include a construction start in the Fall of 1997, so that units will be ready for occupancy from Spring to Summer of 1998. • jpro�.ltr • 3-27-1997 3:23PM FROM MSP REAL ESTATE, INC. 612 336 4565 P. 12 111) EXHIBIT A Legal Descziption 1) City Property Spring Lake Park Hill View, Lot 78 Ramsey County, Minnesota PID # 06 30 23 44 0051 2) PTW Property Spring Lake Park Hill View, Lot 79-80 Ramsey County, Minnesota PID # 06 30 23 44 0052, and 06 30 23 43 0012 3) 7800 Eatswood Spring Lake Park Hill View, Lot 77 Ramsey County, Minnesota PTD # 063023440050 4) Webber/Red Oak Apartments Spring Lake Park Hill View, Lot 81, 82: Lot 83 except rear 150' thereof Ramsey County, Minnesota PID # 06 30 23 43 .0013 • ititi?':::'.:".,•,''1•. .4:Jam.. )•, .tl. \ • .�'.0 l': s•i 1,' _% �•.S!1 n. 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N.►..TM. nn 1.011 e t 1 3 3 0 6 2 1 2 t 2 3 3 9 3 7 5 V.e..y i MPS REAL ESTATE CONCEPT SITE PLAN 2 MOUNDSVIEW HOUSING _ _ (3r) rigy N 152 01 (3 r ) I / ( ) n (5) io co I �`n N (3) 1 63) a • (43). 127 � 114 I$2-- t (a-) a (42) • Q (2.9) �27) N c . 0 I N co :/57 (s4) (ss) 0 I (z8) r- 145 I Be• •04)11�45) ;� (4o) s71 (41) I12 8 m Li 2 113 1 10 3 z) X73) -. (72) GG r —231_. -I aB1 ----r , AC Ro IS 231 1'31 • too /SI° t t - S. :.��`a 248.3 NI r 1 130*r. 12 9(33) �!� 112 rr--- z3 fi 0 (21) +7�2 ) (s}3}7 1 1(42 A ., ' l$6K4 } z b . (30) - tit I Inc 1 s ,n 8 • \° (3 5) /' C ttf o a ( 4) . 1 - 74i---5-5-- __-te-5 _ ;n (19) (45) (3 v /' 110 (2_5)r) D 61 ` // 109 ^ /0o • ul z o O'�^ (`F') /� \ / ap z (IS) — —75-- 54 s• \ • \ ./ 108 2, (2 d)0Sc‘i Cr) 8 5 ' :A • (1 x ti N it . \(27) N /48) ' 53 ;) /4C ` ^ • ,' 0 6)106 \N Oo �O — I.3T Q-e.- " X49) n (3 6) \/ / y,•E y I wi 0 \ •• / ,-• ✓ .92 o..c-. O• \ ` \ , C by 8 4 ( N 10 l 4) E 10 (35) 77 \ ' / / A (54 . (3 130 .770-e.. \ ./ QJ • (7) ie. o AGoa. / \ \ /' 82 / ill ei / x \ `' / 8` Onj 1 CO 4121 \ � o t 7 9 O a, '' /\0 (�) � � fc p i .. . -- o-- CI) \, 78 - e� 1 \ ' Q m 49 • 4 • 40 '` �3- W 0 l`9) _ _ _ _ L�- -•--- ----r �--- N- �- - ice- !WATER �WOF WATER OAKS rC-6,51 _ ESMT. cc Ca.' ..I34C.�J �-` ► - - r COUNT Y '''''''..".•...- = 2641.13 • Minutes of the Economic Development Commission City of Mounds View . Ramsey County, Minnesota Regular Meeting April 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 Chairperson, Dan Nelson. 2. Roll Call: Members present were as follows: Cindy Carlson, Rosemary Goff, Dan Nelson, Ron Schmidt, Brian Sjoberg and Delane Welsch. Member Bev Tarhark was absent. Dir. of Economic Development Cathy Bennett was present. EDA Liaison Duane McCarty and Alternate Liaison Gary Quick were absent 3. Approval Of Minutes: Motion/Second: Goff/Schmidt moved approval of Minutes from March 27, 1997. 111 Motion Carried 5 ayes 0 nays 4. Special Business No Special Business. 5. EDC BUSINESS A. Discussion of Revised Housing Replacement Program Bennett explained the amendments to the Housing Replacement Program. Staff restructured language to make the program clearer to the reader and a section was added to allow the granting of demolition funds for a home owners wanting to replace their existing home with a newer higher valued home. Commissioners felt that the addition of the demolition provision would be just as effective in achieving the goals of the program and would also save the City money. Motion/Second: Carlson/Sjoberg moved approval of amendments to the Housing Replacement Program. Motion Carried 6 ayes 0 nays • I B. Discussion of Proposals for City Owned Property on Highway 10 located in Section 9 of the Highway 10 Redevelopment Plan • Bennett explained that MSP Real Estate, the developers of the Silver Lake Pointe Senior Apartments, are interested in the rehabilitation of Red Oak Apartments and the construction on 26 new townhomes at the corner of Eastwood and Highway 10. The City EDA owns approximately .6 acres located on the corner of Highway 10 and Eastwood. All of the units are proposed as affordable housing. MSP is applying for TIF assistance, MHFA Tax Credits, Ramsey County Home Funds and Minneapolis Public Housing Assistance through the Holman Decree. Bennett asked the EDC to review how the project impacts the City's goal for commercial development in the area and a desire for no new rental housing. Chairman Nelson noted concerns with additional rental housing in Mounds View. He would like to see owner occupied units along with the rehabilitation of Red Oak. Jeff Huggett explained that they looked at the financial feasibility of owner occupied units in the area and that they could sell for an estimated $85,000 per unit but that with the huge financial burden of the rehab and the loss of holman funds and tax credits on the for sale units that they would need an estimated $30,000 per unit subsidy for the project. Nelson noted that the rehab is very needed as those apartments have been deteriorating for many years. He supports the rehab but stressed strong management of the units. If the City assists in the financing he would like to see City approval for management changes written into the development assistance agreement. Commissioner Carlson noted that the SRF study recommended that the best use for the property was housing rather than commercial development due to the access. She understands that this would not be a great location to develop for-sale units. Carlson • noted that this plan has merit but that there needs to be fine tuning. In addition, Carlson felt that the financing structure needs to be reviewed more closely. She felt that there was too much subsidy and not enough equity in the project and that the developer fee was too high. Therefore she could recommend that the use is appropriate but the financing needs work. Commissioner Goff would like to explore other commercial options and wondered if staff had more information regarding the commercial interest. Bennett noted that she spoke to the owner of Mounds View Animal Hospital. They are interested in the site but access off of Highway 10 is critical. They are also looking at building on the South side of 10 next to TJB Homes. Bennett contacted the owner of a funeral home in Minneapolis who had an interest in the property but has not heard back from them. Both potential commercial users were only interested in the City property. Commissioner Sjoberg asked MSP why they were interested in this site. Jeff Huggett explained that they were contacted by SRF Consulting since they are the owner of Silver Lake Pointe Apts. In evaluating the purposes of the study they felt that since they have expertise in improving distressed properties and they already own property in the area that this would be a good project to pursue. They have an interest in improving Mounds View to keep their existing investment healthy. This is a complicated financing deal with a lot of risk but they have the expertise to make it work and be successful. They have a waiting list at Silver Lake Pointe Apts. and believe they can capture part of that market with the rehab and the construction of the new units. • Commissioner Welsch supports the concept. He believes that there is a larger gap between lower and higher incomes these days and that affordable housing can be very • nice and respectable. There is more and more of a demand for this housing as the gap continues to increase. He would like to see assurances that if the new housing is approved that the rehab also continues and that it would not be allowed to deteriorate. Motion/Second: Carlson/Welsch moved to support the general concept of the development as it pertains to the rehabilitation of Red Oak Apartments and the construction of 26 new townhomes but that there is a lack of financial information and analysis to support a recommendation for tax increment financing assistance at this time. Motion Carried 6 ayes 0 nays Staff was directed to provide more financial information and analysis and more information regarding the management company. C. Update on the U of M Metropolitan Livable Communities Design Center Course. Community Development Director Pam Sheldon gave a brief update regarding the two classes. The first class presented an overview of course objectives and each community's focus issue. We learned that our perceived challenges with regards to a plan for Highway 10 can be overcome. Sheldon described the second class which focused on Highway 10's function as a transit corridor. An expert transportation planner, Robert Kulash, described the tunnel vision of traffic engineers regarding the movement of traffic rather than looking at enhancing the drive along a highway and ways to encourage lower speed without even changing the speed limit. She noted that there were many excellent opportunities for change along Highway 10 and that they are achievable. The goal 4111 should be to change Highway 10 from to a vehicle moving road to a boulevard area that vehicles move through. The next class will be held again at City Hall and a representative from the Design Center will bring a concept that would help the I community to move forward on a plan for the Highway 10 Corridor. 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 8:34 a.m. Respectfully Submitt- Ado Director of E gromic Development •