Loading...
HomeMy WebLinkAbout03-24-2003 CITY OF MOUNDS VIEW ECONOMIC DEVELOPMENT AUTHORITY MEETING AGENDA Monday, March 24, 2003 6:30 p.m. 1. CALL TO ORDER 2. ROLL CALL: President Linke, Vice President Stigney, Commissioner Quick, Commissioner Marty, Commissioner Gunn 3. APPROVAL OF AGENDA 4. APPROVAL OF MINUTES: A. EDA Minutes, March 10, 2003 5. CONSENT AGENDA 6. EDA BUSINESS A. Discuss Properties on County Road H2 Potentially Available for Redevelopment 7. REPORTS 8. NEXT EDA MEETING: Monday, April 14, 2003 9. ADJOURNMENT PROCEEDINGS OF THE MOUNDS VIEW EDA 1 CITY OF MOUNDS VIEW 2 RAMSEY COUNTY, MINNESOTA 3 4 Regular Meeting 5 March 10, 2003 6 Mounds View City Hall 7 2401 Highway 10, Mounds View, MN 55112 8 6:32 P.M. 9 10 11 1. CALL MEETING TO ORDER 12 13 2. ROLL CALL: Stigney, Quick, Marty (arrived 6:33 p.m.), Gunn and Linke 14 15 NOT PRESENT: None. 16 17 3. APPROVAL OF AGENDA 18 19 4. APPROVAL OF EDA MINUTES 20 21 A. February 10, 2003 Minutes 22 23 MOTION/SECOND: Gunn/Stigney. To Approve the Minutes of February 10, 2003 as 24 Presented. 25 26 Ayes – 5 Nays – 0 Motion carried. 27 28 5. CONSENT AGENDA 29 30 None. 31 32 6. EDA BUSINESS 33 34 A. Consideration of EDA Resolution 03-EDA-172, a Resolution Approving 35 Developer Payments for C.G. Hill, Building N, Silver Lake Pointe, Midwest 36 I.V., and Zep Manufacturing Projects. 37 38 Economic Development Coordinator Backman explained that there had been an error in the 39 payment amount in the Silver Lake Pointe project making the amount $18,397.18 rather than 40 $23,422. 41 42 Commissioner Marty asked for an explanation of the retained amount within the TIF districts. 43 44 Economic Development Coordinator Backman explained that the retained amount is kept by the 45 Mounds View EDA March 10, 2003 Regular Meeting Page 2 City to cover administrative costs and that percentage is negotiated and listed in the developer’s 46 agreement. 47 48 Commissioner Marty asked why, if there are retained funds, there is a need to transfer funds to 49 the TIF districts during the upcoming Council meeting. 50 51 Finance Director Hansen explained that this circumstance looks at the small picture of the TIF 52 districts pertaining only to these projects and the upcoming transfers apply to the whole TIF 53 districts. 54 55 MOTION/SECOND: Marty/Stigney. To Waive the Reading and Approve Resolution 03-EDA-56 172, a Resolution Approving Developer Payments for C.G. Hill, Building N, Silver Lake Pointe. 57 58 Ayes – 5 Nays – 0 Motion carried. 59 60 7. REPORTS 61 62 Economic Development Coordinator Backman indicated he had received late this afternoon a 63 preliminary drawing for the Amoco redevelopment but the business is still unnamed. 64 65 Economic Development Coordinator Backman indicated he has shown the leasable space at the 66 Highway 10 Business Center to four interested parties two of which would be very compatible 67 with Abbey Carpet. 68 69 8. NEXT EDA MEETING: March 24, 2003 70 71 9. ADJOURNMENT 72 73 President Linke adjourned the meeting at 6:45 p.m. 74 75 Respectfully submitted, 76 77 Recorded and transcribed by: 78 79 Joan Lenzmeier 80 TimeSaver Off Site Secretarial, Inc. 81 Item No. 6A Meeting Date: March 23, 2003 Type of Business: EDA WK: Work Session; PH: Public Hearing; CA: Consent Agenda; EDA: EDA Business Mounds View Economic Development Authority Staff Report To: Mounds View Economic Development Authority From: Aaron Backman, Economic Development Coordinator Item Title/Subject: County Road H2 Residential Development Date of Report: March 20, 2003 SUMMARY During the spring and summer of 2001, City staff promoted a residential buildout project in the southwest corner of the City of Mounds View. Correspondence was sent to all property owners in an area bounded by County Road H2, Pleasant View Dr., Knollwood Dr., and Woodale Drive. Residents were invited to a meeting to discuss potential housing development in the area (eg. condos, attached townhomes, single family units) and were asked if they were interested in subdividing their property for inclusion in the project. The majority indicated that they wanted no development to occur and were not interested in subdividing the large lots. A smaller number were open to development if it was limited to single family homes. A neighborhood meeting in June 2001 reconfirmed these views. Currently the City of Mounds View owns or controls approximately 6.5 acres in the north central portion of the block. During the past month, one of the property owners, Blaine Fyksen, has expressed a willingness to sell his property to the City. Mr. Fyksen owns three parcels that border the City’s property to the west (See attached map). He does not want to see high-density residential development in the area, but would be willing to sell if the property would be developed for high-end homes (approx. $450-500,000 each) on 180’ lots. Ramsey County estimates the Market Value of the parcels to be $426,600. Mr. Fyksen has not set a firm price yet, but estimated that he might seek $700-750,000. It is anticipated that additional negotiations would occur regarding the land price. The majority of the property is wooded with aspen trees and some evergreens. The following is parcel information for the Fyksen property: Address/Parcel Size 2003 Est. Market Value 3048 Co. Road H2 / 2.58 acres $212,000 3032 Co. Road H2 / .48 acres $119,300 3024 Co. Road H2 / 1.53 acres $ 95,300 Total 4.59 acres $426,600 OPTIONS TO BE CONSIDERED Instead of 20–24 modest homes, this development would entail 12 or so executive homes with a potential $6 million value-added to the City’s tax base. Working with a willing seller would likely be more successful then attempting to do a larger infill housing development with unwilling private homeowners who do not want to divide their lots. A successful, attractive development that retains a significant number of trees on both City-owned and privately-held property may encourage the other private homeowners to reassess their positions. There is an existing house on each of the three parcels owned by Fyksen. One of these is a fairly substantial house in good condition that could probably be resold as is after the land is replatted. The other two houses are smaller and in a more distressed condition. These two should probably be demolished in order to provide the greatest flexibility in replatting the land for new houses. The cost of demolishing two existing houses means that the project probably will show an initial net loss. The long-term gain associated with developing the whole property with new homes should more than offset the initial cost. More study is needed to determine how much this initial loss might be and how the City will cover the loss. There are three financing options that could be considered for developing the Fyksen property: 1) Use Tax Increment Financing (TIF) to acquire the Fyksen parcels. 2) Use Special Projects/HRA funds to acquire the Fyksen parcels. 3) Find a private developer that would acquire both the City’s and Fyksen property. 1. Tax Increment Financing TIF financing can be used to acquire and assemble land for housing development. The City’s TIF Plan would have to be modified to reflect all properties in our designated Project Area. Some TIF increment can be spent outside the existing three TIF districts. However, these properties would have to be considered to be substandard. To establish a Housing TIF District, at least 80% of the fair market value of the improvements must be for uses for low and moderate-income housing. For owner-occupied housing, 95% of the units must be initially purchased by persons with income that is less than or equal to the income requirements for qualified mortgage revenue bonds under federal law. Generally, those requirements limit income to 100% of applicable median family income for 1 and 2 person households, 115% of median for 3 or more person households. The applicable median family income is the greater of the area (Mpls-St. Paul MSA) or the statewide median gross income. Therefore, the family of three or more could earn up to $76,000 (115% of $66,000) and still qualify to live in the homes. However, such households probably would not qualify for financing. To establish a Redevelopment District, at least 50% of the existing buildings would need to be blighted and at least 15% of the area would be covered by improvements. The former requirement appears doable, but the latter percentage may be in question. While additional housing in the community would be beneficial, the City would still have to show a public benefit is being addressed (eg. affordable housing and elimination of blight). The main advantage for this option is that it would represent a sizeable obligation that would satisfy TIF regulations. The main hurdle for using this method of financing is does it meet the “But For” Test. In discussions with Ehlers & Associates, our TIF financial advisors, using TIF for developing these mostly vacant parcels for high-end homes would be “pushing the envelope” as to whether the project is eligible. Individual parcels with substandard units can be purchased with TIF dollars under the City’s Housing Replacement Program 2. Special Projects Fund/HRA Fund An alternative would be to acquire the Fyksen property using some other City funds besides TIF. Probably a new fund similar to the EDA (possibly a Housing & Redevelopment Fund, HRA) would be set up with no connection to TIF. This could receive a transfer from the Special Projects Fund for the expected loss and an internal loan from the Special Projects Fund for the amount that is expected to be repaid at the end of the project. The Special Projects Fund typically has been used to construct public facilities owned and operated by the City. To date it has not been used to acquire land for development, though there doesn’t appear to be any legal constraint for doing so. The main advantages for this method are greater flexibility (e.g. no “but-for” test) and total control over the project. The HRA Fund would own the land, put in the streets and utilities, select the builder, and approve house designs. As an alternative, the HRA Fund could sell the lots piecemeal and let the buyers design the houses. Some higher value houses would add variety to the City’s housing stock. The main disadvantage is that the City would be taking on greater risks. If done properly, the HRA Fund should realize enough revenue from each sale of property for repaying the loan from the Special Projects Fund. A contingency plan should be made for the possibility that there could be some loss incurred. 3. Sell City’s Property to Private Developer A third option to develop the Fyksen and City-owned property could be the use of a private developer that could acquire both directly. The City would encourage a housing developer that would assemble all properties. The City would sign a letter of intent (LOI) to sell the property to be developed in an agreed upon fashion. The City of Mounds View could send out RFP’s to developers to solicit their ideas regarding the project and potential funding sources. A variation could be that the City acquires the Fyksen parcels and, in turn, sells all the property to a developer for an agreed upon price. This would increase our leverage with the developer. The advantage of using a private developer is that it minimizes the risk to the City of Mounds View. However, the downside is that the City may have less control and may only breakeven on its investment. NECESSARY ACTION/RECOMMENDATION Mr. Fyksen appears willing to work with the City regarding acquisition of his property. Recognizing there are competing demands for the City’s resources, an appropriate residential development off County Road H2 would be beneficial for providing more housing options to residents/new residents and would add to our tax base. Staff requests the Mounds View EDA provide direction regarding the sale of private property adjacent to city-owned land. There is a need to articulate a development concept for the proposed residential development. Logical steps would include using the services of an professional appraiser to evaluate the property values The County Road H2 Residential Development project was discussed at the EDC regular meeting on March 21, 2003. The consensus of the Commission members was that Option 3 presented less risk to the City should the residential market change. Respectfully submitted, ____________________________ Aaron Backman Economic Development Coordinator \\Ntserver\MasterFiles\2003\EDA\EDA Packets\03-24-03\Item 06A County Road H2 Residential Development.doc County Road H2 Parcels Mr. Fyksen’s properties City owned or controlled properties