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HomeMy WebLinkAbout01-22-2018CITY OF MOUNDS VIEW ECONOMIC DEVELOPMENT AUTHORITY MEETING AGENDA MOUNDS VIEW CITY HALL Monday, January 22, 2018 6:00 p.m. 1. CALL TO ORDER 2. ROLL CALL: President Mueller, Vice President Gunn, Commissioner Hull, Commissioner Meehlhause, Commissioner Bergeron 3. APPROVAL OF AGENDA 4. PUBLIC INPUT: Citizens may speak to issues not on tonight’s agenda. Before speaking, please give your full name and address for the minutes. Also, please limit your comments to three minutes. 5. APPROVAL OF MINUTES A. December 11, 2017 B. January 8, 2018 6. CONSENT AGENDA 7. EDA BUSINESS A. Consider Resolution 18-EDA-304 a resolution Electing and Appointing Officers to the Mounds View Economic Development Authority (EDA) B. Resolution 18-EDA-305 a resolution Requesting the City Council call for a Public Hearing on the Proposed Adoption of a Modification to the Development Program for the Mounds View Economic Development Project and the Proposed Establishment of Tax Increment Financing District No. 1-6 (A Housing District) and the Adoption of a Tax Increment Financing Plan 8. REPORTS 9. NEXT EDA MEETING: February 12, 2018, 6:00 pm 10. ADJOURNMENT PROCEEDINGS OF THE MOUNDS VIEW EDA 1 CITY OF MOUNDS VIEW 2 RAMSEY COUNTY, MINNESOTA 3 4 Regular Meeting 5 December 11, 2017 6 Mounds View City Hall 7 2401 Mounds View Blvd., Mounds View, MN 55112 8 9 10 1. CALL MEETING TO ORDER 11 12 President Mueller called the meeting to order at 6:19 p.m. 13 14 2. ROLL CALL: President Mueller, Vice President Gunn, Commissioner Bergeron, 15 Commissioner Hull, Commissioner Meehlhause, and Interim Executive Director 16 Zikmund. 17 18 NOT PRESENT: None. 19 20 3. APPROVAL OF AGENDA 21 22 MOTION/SECOND: Bergeron/Meehlhause. To Approve the December 11, 2017, Agenda as 23 presented. 24 25 Ayes – 5 Nays – 0 Motion carried. 26 27 4. PUBLIC INPUT 28 29 None. 30 31 5. APPROVAL OF MINUTES 32 33 A. August 28, 2017, EDA Minutes. 34 35 MOTION/SECOND: Gunn/Meehlhause. To Approve the August 28, 2017, EDA Minutes as 36 presented. 37 38 Ayes – 5 Nays – 0 Motion carried. 39 40 6. CONSENT AGENDA 41 42 None. 43 44 Mounds View EDA December 11, 2017 Regular Meeting Page 2 7. EDA BUSINESS 1 A. Joint Resolution 8879 and 17-EDA-302, Approving a Loan Origination and 2 Home Energy Squad Enhanced Visit Agreement Between the EDA and the 3 Center for Energy and Environment. 4 5 Business Development Coordinator Beeman requested the EDA approve a loan origination and 6 Home Energy Squad Enhanced Visit Agreement between the EDA and the Center for Energy and 7 Environment. He explained the Council had discussed this loan program in November. He 8 indicated $75,000 had been budgeted for this program in 2018. He reported the City Attorney 9 had reviewed this agreement and recommended approval. 10 11 Business Development Coordinator Beeman introduced the Council to the individuals present 12 from the Center for Energy and Environment and the Home Energy Squad. 13 14 Steve Hines, Center for Energy and Environment, described the three loan products that would be 15 administered by his organization on behalf of the City. He stated the loans would have either a 16 3% or 4% interest rate depending on household income. 17 18 Terry Chaney, Home Energy Squad, discussed the home visits that would be conducted by his 19 organization to provide homeowners with energy saving items. He reported this would include 20 LED lightbulbs, insulation inspections, weather stripping, thermostats, water savers and noted 21 energy audits could also be conducted. He explained the energy audits could be done for single 22 family homes and apartment dwellers. He noted through the proposed program, the City would 23 be splitting the $100 fee for each inspection with the homeowner. 24 25 Commissioner Meehlhause asked if recommendations regarding insulation would be eligible for 26 the loan program. Mr. Hines reported this type of expense would qualify for the loan program. 27 28 Commissioner Meehlhause explained the funds just approved within the EDA levy would assist 29 with covering these loan programs. 30 31 MOTION/SECOND: Gunn/Meehlhause. To Waive the Reading and Adopt Resolution 17-32 EDA-302, Approving a Loan Origination and Home Energy Squad Enhanced Visit Agreement 33 Between the EDA and the Center for Energy and Environment. 34 35 Ayes – 5 Nays – 0 Motion carried. 36 37 8. REPORTS 38 39 Commissioner Meehlhause stated on Wednesday, December 13th at The Mermaid Event Center 40 the North Suburban Business Council would be meeting at 7:30 a.m. 41 42 Mounds View EDA December 11, 2017 Regular Meeting Page 3 9. NEXT EDA MEETING: Tuesday, December 26, 2017 1 2 10. ADJOURNMENT 3 4 President Mueller adjourned the meeting at 6:33 p.m. 5 6 Respectfully submitted, 7 8 9 Recorded and transcribed by: 10 Heidi Guenther 11 TimeSaver Off Site Secretarial, Inc. 12 PROCEEDINGS OF THE MOUNDS VIEW EDA 1 CITY OF MOUNDS VIEW 2 RAMSEY COUNTY, MINNESOTA 3 4 Regular Meeting 5 January 8, 2018 6 Mounds View City Hall 7 2401 Mounds View Blvd., Mounds View, MN 55112 8 9 10 1. CALL MEETING TO ORDER 11 12 President Mueller called the meeting to order at 6:00 p.m. 13 14 2. ROLL CALL: President Mueller, Vice President Gunn, Commissioner Bergeron, 15 Commissioner Hull, Commissioner Meehlhause, and Executive Director Zikmund. 16 17 NOT PRESENT: None. 18 19 3. APPROVAL OF AGENDA 20 21 MOTION/SECOND: Gunn/Hull. To Approve the January 8, 2018, Agenda as presented. 22 23 Ayes – 5 Nays – 0 Motion carried. 24 25 4. PUBLIC INPUT 26 27 None. 28 29 5. APPROVAL OF MINUTES 30 31 None. 32 33 6. CONSENT AGENDA 34 35 None. 36 37 7. EDA BUSINESS 38 39 A. Consider Resolution 18-EDA-303 a Resolution approving a Preliminary 40 Development Agreement with INH Property Management, Inc. by the 41 Mounds View Economic Development Authority. 42 43 Business Development Coordinator Beeman requested the EDA adopt a Resolution approving a 44 Preliminary Development Agreement with INH Property Management, Inc. He discussed the 45 Mounds View EDA January 8, 2018 Regular Meeting Page 2 changes the Council had proposed for the agreement and noted the City Attorney had reviewed 1 these changes. Staff recommended approval of Preliminary Development Agreement with INH. 2 3 Vice President Gunn read a statement aloud for the record stating the Preliminary Development 4 Agreement was nothing more than an agreement to continue negotiations and to do so 5 exclusively. She explained this agreement does not bind the EDA to approving the project or 6 selling the land. She indicated in the private sector this type of agreement is called an access 7 agreement which includes a letter of intent and serves the same purpose. She reported the 8 agreement ensures that the City will not sell the land while an engaged buyer is completing due 9 diligence on the property with the intent to purchase. 10 11 President Mueller read Resolution 18-EDA-303 in full for the record. 12 13 MOTION/SECOND: Gunn/Hull. To Adopt Resolution 18-EDA-303, approving a Preliminary 14 Development Agreement with INH Property Management, Inc. by the Mounds View Economic 15 Development Authority. 16 17 Commissioner Meehlhause reiterated this was a preliminary agreement and allows the developer 18 to complete a feasibility study to determine if the developer would like to come forward with a 19 project. He reported this was a standard operating procedure for cities and noted this same 20 procedure was followed with the Beard Group in 2015. 21 22 Commissioner Bergeron called the Authorities attention to the third whereas, stating the specialty 23 retail has been spelled out in the Resolution. He commented that it appears all of the developer’s 24 apples have been placed in one basket and they would like to proceed with the gun club. He 25 stated in the fourth whereas, the smaller traditional retail was an alternate and not in conjunction 26 with the development. He expressed concern with these changes and feared the gun club had 27 been solidified into this proposal. 28 29 President Mueller read Section 7 of the Agreement noting the developer would be solely 30 responsible for all costs incurred by the developer and will pay the EDA a non-refundable sum of 31 $7,500 as reimbursement of its administrative costs. She reported this sum would cover 32 administrative fees taken on by the City. She explained that in order for a project to move 33 forward on this property a development agreement had to be in place and would allow INH the 34 opportunity to develop more detailed plans for their project. These detailed plans would be 35 reviewed by the Council and discussed at public hearings in the near future. 36 37 Commissioner Bergeron stated he wanted to make the developer aware of his stance on the 38 project right from the beginning. 39 40 Commissioner Hull asked if the residents would be allowed to speak at the EDA meeting. 41 President Mueller recommended these comments be taken at the City Council meeting. 42 Mounds View EDA January 8, 2018 Regular Meeting Page 3 1 Ayes – 4 Nays – 1 (Bergeron) Motion carried. 2 3 8. REPORTS 4 5 Commissioner Meehlhause stated at the beginning of each year the EDA elects a President and 6 Vice President. He recommended the EDA take this action at their next meeting. 7 8 9. NEXT EDA MEETING: Monday, January 22, 2018 at 6:00 p.m. 9 10 10. ADJOURNMENT 11 12 President Mueller adjourned the meeting at 6:20 p.m. 13 14 Respectfully submitted, 15 16 17 Recorded and transcribed by: 18 Heidi Guenther 19 TimeSaver Off Site Secretarial, Inc. 20 Item No: 7A Meeting Date: January 22, 2018 Type of Business: EDA City Administrator Review: ______ City of Mounds View Staff Report To: Economic Development Authority From: Brian Beeman, Business Development Coordinator Item Title/Subject: Resolution 18-EDA-304 Electing and Appointing Officers to the Mounds View Economic Development Authority (EDA) Background Article 3, Section 3.1 of the EDA by-laws state that the President, Vice-President, Treasurer and Secretary shall be elected annually at the first meeting of the year. The EDA officers for 2017 were as follows: President: Carol Mueller Vice President: Sherry Gunn Treasurer: Gary Meehlhause Secretary: Al Hull Discussion In accordance with the EDA by-laws, the EDA is required to appoint its officers. Recommendation Staff recommends that the EDA appoint officers and approve the attached EDA Resolution. Respectfully submitted, ________________________ Brian Beeman County Road 10 EDA RESOLUTION 18-EDA-304 CITY OF MOUNDS VIEW COUNTY OF RAMSEY STATE OF MINNESOTA RESOLUTION ELECTING AND APPOINTING 2018 OFFICERS TO THE MOUNDS VIEW ECONOMIC DEVELOPMENT AUTHORITY WHEREAS, Minnesota Statutes Section 469.096 addresses Officers, Duties and Organizational Matters relating to an Economic Development Authority; and WHEREAS, the Mounds View Economic Development Authority (the “Authority”) has adopted By-laws that govern the operation and function of the Authority; and WHEREAS, Minnesota Statutes Section 469.096 require the Authority to annually elect certain officers of the Authority – the President, Treasurer, and Secretary; and WHEREAS, the Authority By-laws require the Authority to annually elect certain officers of the Authority – the President, Vice-President, Treasurer and Secretary – at the first meeting of the year; and NOW, THEREFORE, BE IT RESOLVED that the Mounds View Economic Development Authority hereby elects the following individuals to serve as the officers of the Authority for 2018 as noted below: President: ____________________________ Vice President: ____________________________ Treasurer: ____________________________ Secretary: ____________________________ Adopted this 22th day of January, 2018. ________________________________ President ATTEST: ________________________________ Nyle Zikmund, Executive Director (seal) Item No: 7.C. Meeting Date: January 22, 2018 Type of Business: EDA Administrator Review: _______ City of Mounds View Staff Report To: Economic Development Authority From: Brian Beeman, Business Development Coordinator Item Title/Subject: Resolution 18-EDA-305 Calling for a Public Hearing by the City Council on the Proposed Adoption of a Modification to the Development Program for the Mounds View Economic Development Project and the Proposed Establishment of Tax Increment Financing District NO. 1-6 and the Adoption of a Tax Increment Financing Plan Introduction: MWF Properties is proposing to build a 60 unit workforce housing development and has formally requested that the City participate in Tax Increment Financing for the project. The EDA passed a resolution of support to supplement MWF’s application to the Minnesota Housing Finance Agency in May 2017 for up to $546,000 of TIF assistance, subject to all standard statutory and local review requirements, including a detailed analysis of the project’s costs, funding sources, income, and expenses—commonly referred to as a pro forma. The purpose of a pro forma analysis is to determine if a project demonstrates a funding gap. Based on Ehler’s analysis the project does demonstrate a funding gap of at least $546,000. The requested TIF assistance helps address a funding gap to make the project financially feasible. If approved, the project is projected to generate the requested $546,000 of TIF assistance over an estimated 15-year term. The attached resolution calls for a Public Hearing on March 12, 2018 on the proposed adoption of a Modification to the Development Program for the EDA project, the proposed establishment of Tax Increment Financing District No. 1-6, a housing tax increment financing district, and the adoption of a Tax Increment Financing Plan in accordance with Minnesota Statutes, Sections 469.090 to 469.1082, and Sections 469.174 to 469.1794. Discussion: The City’s financial consultant Ehlers & Associates, Inc. is preparing the required documents in order to be in compliance with Minnesota State Statues. Part of the requirement in the TIF process is to set a Public Hearing date to provide anyone from the public an opportunity to hear and speak to the creation of the Housing TIF District. Ehlers has conducted an analysis for the project and will be in attendance to answer any questions of the EDA before the Public Hearing is formally set for March 12, 2018. Recommendation: Attached for your consideration is Resolution NO. 18-EDA-305, a resolution that sets the required Public Hearing for March 12, 2018. Respectfully submitted, ________________________ Brian Beeman Business Development Coordinator MOUNDS VIEW ECONOMIC DEVELOPMENT AUTHORITY CITY OF MOUNDS VIEW COUNTY OF RAMSEY STATE OF MINNESOTA RESOLUTION NO. 18-EDA-305 RESOLUTION REQUESTING THE CITY COUNCIL OF THE CITY OF MOUNDS VIEW CALL FOR A PUBLIC HEARING ON THE PROPOSED ADOPTION OF A MODIFICATION TO THE DEVELOPMENT PROGRAM FOR THE MOUNDS VIEW ECONOMIC DEVELOPMENT PROJECT AND THE PROPOSED ESTABLISHMENT OF TAX INCREMENT FINANCING DISTRICT NO. 1-6 (A HOUSING DISTRICT) THEREIN AND THE ADOPTION OF A TAX INCRMENT FINANCING PLAN THEREFOR. BE IT RESOLVED, by the Board of Commissioners ("Board") of the Mounds View Economic Development Authority ("EDA") as follows: WHEREAS, the City Council ("Council") of the City of Mounds View, Minnesota ("City") established the Mounds View Economic Development Project pursuant to Minnesota Statutes, Sections 469.174 to 469.1794, inclusive, as amended, in an effort to encourage the development and redevelopment of certain designated areas within the City; and WHEREAS, the EDA is proposing a Modification to the Development Program for the Mounds View Economic Development Project and the establishment of Tax Increment Financing District No. 1-6 therein and the adoption of a Tax Increment Financing Plan therefor, all pursuant to, and in accordance with, Minnesota Statutes, Sections 469.174 to 469.1794 and Sections 469.090 to 469.1082, inclusive, as amended; NOW, THEREFORE BE IT RESOLVED by the Board as follows: 1. The EDA hereby requests that the Council call for a public hearing on March 12, 2018 to consider the proposed adoption of a Modification to the Development Program for the Mounds View Economic Development Project (the "Development Program Modification") and the proposed adoption of a Tax Increment Financing Plan (the "TIF Plan") for Tax Increment Financing District No. 1-6 (the “TIF District”), a housing tax increment financing district, (the Development Program Modification and the TIF Plan are referred to collectively herein as the "Program Modification and TIF Plan") and cause notice of said public hearing to be given as required by law. 2. The EDA directs the Executive Director to transmit copies of the Program Modification and TIF Plan to the Planning Commission of the City and requests the Planning Commission's written opinion indicating whether the proposed Program Modification and TIF Plan are in accordance with the Comprehensive Plan of the City, prior to the date of the public hearing. 3. The Executive Director of the EDA is hereby directed to submit a copy of the Program Modification and TIF Plan to the Council for its approval. 4. The EDA directs the Executive Director to transmit the Program Modification and TIF Plan to Ramsey County and Mounds View School District No. 621, in which the TIF District is located, not later than February 9, 2018. 5. Staff and consultants are authorized and directed to take all steps necessary to prepare the Program Modification and TIF Plan and related documents and to undertake other actions necessary to bring the Program Modification and TIF Plan before the Council. Approved by the Board on January 22, 2018. __________________________________ Carol Mueller, President ATTEST: ____________________________________ Nyle Zikmund, Executive Director Memo To: Brian Beeman, Business Development Coordinator City of Mounds View From: James Lehnhoff and Jason Aarsvold, Ehlers Date: January 16th, 2018 Subject: MWF Properties Housing TIF Review 2685 Highway 10 NE In March 2017, MWF Properties LLC, (the “Developer”) submitted a request to the City of Mounds View Economic Development Authority (the “EDA”) for Tax Increment Financing assistance to construct 60 new affordable apartments at 2685 Highway 10 NE. The $14.65 million project includes a mix of 1, 2, and 3 bedroom units. The Developer requested a resolution of support from the EDA to supplement their application to the Minnesota Housing Finance Agency requesting the majority of the project funding needs. The EDA approved a resolution of support in May 2017 for the project for up to $546,000 of Tax Increment Financing (“TIF”) assistance, subject to all standard statutory and local review requirements, including a detailed analysis of the project’s costs, funding sources, income, and expenses—commonly referred to as a pro forma. The Developer submitted their funding application to Minnesota Housing in June 2017 and was subsequently selected for funding in October 2017. The Developer has since submitted their updated pro forma to the EDA for analysis. The purpose of a pro forma analysis is to determine if a project demonstrates a funding gap. Ehlers conducted a thorough review of the Developer’s current pro forma based on industry standards for construction, land, and project costs; affordable rental rates and operating expenses; developer fees; available funding sources; underwriting criteria; and, project cash flow. Based on the results of the pro forma analysis, the project does demonstrate a funding gap of at least $546,000. The requested TIF assistance helps address a funding gap to make the project financially feasible. If approved, the development is projected to generate the requested $546,000 of TIF assistance over an estimated 15-year term. Pro Forma Analysis The development pro forma information generally meets the expectations of a rental housing project utilizing 4% low-income housing tax credits (“LIHTC”) and other sources of public funding. The proposed summary sources and uses include: MWF Apartment Proposal January 16, 2018 Page 2 SOURCES Amount Pct.Per Unit First Mortgage 6,074,700 41%101,245 TIF Note 546,000 4%9,100 MWF GP Loan 516,192 4%8,603 Low Income Housing Tax Credits 3,814,404 26%63,573 Energy Rebate 1,800 0%30 Minnesota Housing Deferred Loan 1,736,000 12%28,933 Ramsey County HRA HOME Loan 400,000 3%6,667 Met Council LHIA Deferred Loan 500,000 3%8,333 Deferred Developer Fee (81% of Total Fee)1,059,223 7%17,654 TOTAL SOURCES 14,648,319 100%244,139 USES Amount Pct.Per Unit Acquisition Costs 655,461 4%10,924 Construction Costs 11,036,876 75%183,948 Professional Services 523,000 4%8,717 Financing Costs 765,729 5%12,762 Developer Fee 1,300,000 9%21,667 Cash Accounts/Escrows/Reserves 367,253 3%6,121 TOTAL USES 14,648,319 100%244,139 1. Acquisition Costs – Acquisition costs of approximately $11,000 per unit are within the typical market range of $5,000 to $15,000 per unit. 2. Total Development Costs (TDC) – The TDC is approximately $14.65 million or $244,000 per unit. Multi-family projects in this market generally range between $225,000 and $275,000 per unit. 3. Developer Fee – The proposed developer fee is approximately 9% of TDC, which is within the typical industry range of 8-10% for LIHTC projects. The Developer is also deferring approximately 81% of their developer fee. The deferred portion of the fee is then paid to the Developer through future cash flow, which is projected to take approximately 13 years and is longer than the typical 8-10 years. The reasonable developer fee and higher deferred fee helps minimize the project’s funding gap. 4. Rents – The proposed rents are within 5% of the regulatory maximum allowed to be charged in projects using LIHTC proceeds. 5. Operating Expenses – The operating expenses of approximately $3,900 per unit per year are within the typical range of $3,500 to $4,500 per unit per year. 6. Management Fee – The proposed management fee of 5.8% of revenue is higher than the typical 3% to 5% of revenue; however, reducing the fee has a nominal impact because this relatively small project produces less revenue. 7. Reserves – The annual deposit to replacement reserves is set at $450 per unit per year, which is typical for projects that include financing from Minnesota Housing. MWF Apartment Proposal January 16, 2018 Page 3 8. First Mortgage – The analysis confirms that the Developer has maximized the potential first mortgage. The proposed 4.6% interest rate and 40-year term are competitive in the market and help minimize a funding gap. 9. Low-income Housing Tax Credits (“LIHTC”) – The project anticipates tax credit pricing of $0.93 for every $1.00 of available tax credits, which generates approximately $3.8 million of proceeds. Tax credit pricing declined at the end of 2016 and has remained lower than realized in the prior several years. Tax credit pricing on many current projects is between $0.85 and $0.95. Smaller projects like this one also tend to draw less attention from tax credit investors resulting in lower pricing. Based on current conditions, the assumed tax credit equity is reasonable. 10. TIF Note – The proposed $546,000 of TIF assistance represents approximately 4% of total project costs. Depending on the project type, TIF assistance is commonly in the range of 4-10% of total project costs. 11. MWF GP Loan – The Developer currently anticipates including a $517,000 loan from itself to resolve a remaining funding gap that is not covered by the TIF, mortgage, or other public proceeds. This type of loan is referred to as a General Partner Loan or GP Loan. This GP loan would be repaid through future cash flow or through refinancing after the initial 15-year affordability compliance period. For projects using LIHTC, it is somewhat uncommon for developers to provide GP Loan; however, this suggests that MWF is working to minimize the funding request. MWF may seek additional funding sources to reduce or eliminate the GP Loan; however, that would not change the conclusion of this analysis unless MWF secures more additional funding than the current GP Loan amount. Based on the submitted project information, the Developer has maximized the potential private mortgage and low-income housing tax credit proceeds. However, a demonstrated financial gap remains. The proposed development will not reasonably be expected to occur solely through private investment within the reasonably near future. Due to the costs associated with developing the property and constructing housing with affordable rents, this project is feasible only through assistance. If approved, the development is projected to generate the requested $546,000 of TIF assistance over an estimated 15-year term. The TIF would be structured as a “pay as you go” note. Please reach out with any questions at 651-697-8552.