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Home My WebLink About03-11-2019CITY OF MOUNDS VIEW ECONOMIC DEVELOPMENT AUTHORITY MEETING AGENDA MOUNDS VIEW CITY HALL Monday, March 11, 2019 5:30 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. CONSENT AGENDA A. Approval of Minutes: February 25, 2019 Open February 25, 2019 Closed 5. PUBLIC COMMENT 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. 6. EDA BUSINESS A. Commercial Investors Group/Choice Hotels Proposal – Skyline Motel Site B. Broker Fees Proposal-Keller Williams Real Estate 7. REPORTS 8. NEXT EDA MEETING: March 25, 2019 at 6:00 p.m. 9. ADJOURNMENT PROCEEDINGS OF THE MOUNDS VIEW EDA 1 CITY OF MOUNDS VIEW 2 RAMSEY COUNTY, MINNESOTA 3 4 Regular Meeting 5 February 25, 2019 6 Mounds View City Hall 7 2401 Mounds View Boulevard, Mounds View, MN 55112 8 9 10 1. CALL MEETING TO ORDER 11 12 President Mueller called the meeting to order at 6:26 p.m. 13 14 2. ROLL CALL: President Mueller, Vice President Gunn, Commissioner Bergeron 15 Commissioner Hull, Commissioner Meehlhause, City Attorney Riggs, Finance Director 16 Beer and Executive Director Zikmund. 17 18 NOT PRESENT: None. 19 20 3. APPROVAL OF AGENDA 21 22 MOTION/SECOND: Gunn/Meehlhause. To Approve the February 25, 2019, Agenda as 23 presented. 24 25 Ayes – 5 Nays – 0 Motion carried. 26 27 4. CONSENT AGENDA 28 29 A. January 28, 2019, EDA Minutes. 30 31 MOTION/SECOND: Gunn/Bergeron. To Approve the Consent Agenda as presented. 32 33 Ayes – 5 Nays – 0 Motion carried. 34 35 5. PUBLIC INPUT 36 37 None. 38 39 6. EDA BUSINESS 40 41 A. Crossroad Pointe 42 • General Discussion/Issues 43 • Other Matters 44 45 Mounds View EDA February 25, 2019 Regular Meeting Page 2 City Attorney Riggs provided the EDA with an update on Crossroad Pointe. He reported the 1 EDA met in a Closed Session to discuss several revisions to the terms within the Purchase and 2 Development Agreement that was previously approved on January 7, 2019. He noted this 3 development was made up of three different properties. He explained staff had drafted a 4 Resolution recommending approval of the revised agreement. 5 6 MOTION/SECOND: Gunn/Meehlhause. To Waive the Reading and Adopt EDA Resolution 7 19-EDA-321, Approving the Amended Purchase and Development Agreement and Conveyance 8 of the property located in Mounds View, Minnesota. 9 10 Commissioner Bergeron asked if the amendment would change the purchase price. City 11 Attorney Riggs reported the purchase price would not be changed. 12 13 Ayes – 5 Nays – 0 Motion carried. 14 15 7. REPORTS 16 17 City Attorney Riggs updated the EDA on the acquisition of the Skyline Motel. He reported all 18 required notifications have been served to tenants. 19 20 8. NEXT EDA MEETING: Monday, March 11, 2019 at 6:00 p.m. 21 22 9. ADJOURNMENT 23 24 President Mueller adjourned the meeting at 6:35 p.m. 25 26 Respectfully submitted, 27 28 29 Recorded and transcribed by: 30 Heidi Guenther 31 TimeSaver Off Site Secretarial, Inc. 32 559065v2 MU205-13 PROCEEDINGS OF THE MOUNDS VIEW EDA 1 CITY OF MOUNDS VIEW 2 RAMSEY COUNTY, MINNESOTA 3 4 Special Closed EDA Meeting 5 February 25, 2019 6 Mounds View City Hall 7 2401 County Road 10, Mounds View, MN 55112 8 9 10 11 1. CALL MEETING TO ORDER 12 13 President Mueller called the meeting to order at 6:02 p.m. 14 15 2. ROLL CALL: President Mueller, Vice President Gunn, Commissioner Bergeron 16 Commissioner Hull, Commissioner Meehlhause, Assistant City Administrator Beeman, 17 City Attorney Riggs, and Executive Director Zikmund. 18 19 NOT PRESENT: None. 20 21 OTHERS PRESENT: None. 22 23 3. EDA BUSINESS 24 25 A. CLOSED SESSION – CROSSROAD POINTE: Pursuant to Minnesota 26 Statues Sections 13D.05, subdivision 3(c) and 13.44, subdivision 3, to conduct 27 a closed EDA meeting concerning real property located at addressed noted 28 below to determine the asking price, to consider strategies and to develop or 29 consider offers or counteroffers for the sale of such real property and to 30 review confidential appraisal information for such real property. 31 32 2400 County Road H2 33 Mounds View, Minnesota 34 PIN: 03.30.23.31.0005 35 36 2394 Mounds View Boulevard 37 Mounds View, Minnesota 38 PIN: 08.30.23.31.0071 39 40 2390 Mounds View Boulevard 41 Mounds View, Minnesota 42 PIN: 08.30.23.31.0072 43 44 Pursuant to Minnesota Statutes Sections 13D.05 subdivision 3(c) and 13.44, subdivision 3 the 45 Mounds View EDA February 25, 2019 Special EDA Meeting Page 2 559065v2 MU205-13 EDA met in closed session to discuss Crossroad Pointe as identified in the above-referenced 1 notice at 3.A. 2 3 4. ADJOURNMENT 4 5 President Mueller adjourned the closed session meeting at 6:25 p.m. 6 7 Respectfully submitted, 8 9 10 Recorded and transcribed by: 11 Heidi Guenther 12 TimeSaver Off Site Secretarial, Inc. 13 The Mounds View Vision A Thriving Desirable Community Item No: 6A Meeting Date: March 11, 2019 Type of Business: EDA Business Administrator Review: ____ City of Mounds View Staff Report To: EDA President and Commissioners From: Brian Beeman, Assistant City Administrator Item Title/Subject: Commercial Investors Group/Choice Hotels Proposal – Skyline Motel Introduction: The EDA is purchasing the Skyline Motel site as a redevelopment opportunity. The expected closing date is around May 1, 2019. Staff has received a number of inquiries on the property mainly for a hotel use. Discussion: Staff showed the Skyline property to the Commercial Investors Group and Choice Hotels who is interested in redeveloping the property for a combined traditional hotel and extended stay hotel. The developer likes the location because of its proximity to the Rice Creek Commons site, I-35W, County Rd H & Mounds View Boulevard intersection, and access from Old Hwy 8. The site is visible from I-35W which is a selling point. The developer has constructed several sites across the nation on two acres or less and the Skyline site is approximately 2.8 acres making the site feasible based on the standard footprint of Choice Hotels. The developer likes the idea of utilizing the existing City retention pond as part of their project in order to maximize the land area for development. The developer has also stated that even if there is a shared access to the vacant Bauer Welding lot there should still be enough land for the hotel project. The developer is also willing to work with Bio Clean to allow them to take possession of the County easement for their expansion project. The Bauer property would not be needed for the hotel project and instead, could be marketed for an Industrial use. The Bauer property is approximately two acres. Commercial Investors Group and Choice Hotels will be presenting their hotel proposal to the EDA. Strategic Plan Strategy/Goal: Create and maintain a positive business climate where businesses want to locate and remain in Mounds View. Maximize utilization of development space and current redevelopment sites. Fill vacant space and support redevelopment & development. Financial Impact: Redevelopment projects typically take a loss on the front end of the deal. However, revenues are recovered in the long-term through property taxes, community investment, the creation of more jobs, and an improvement to the property. There would potentially be no financial impact to the EDA in a situation where the EDA would be able to recover the money invested into the purchase of the property. The Mounds View Vision A Thriving Desirable Community Recommendation: Hear the redevelopment proposal from Commercial Investors Group and Choice Hotels and review & discuss. Provide direction to staff and the developer on the EDA’s interest in pursuing the hotel project. The EDA should decide: 1) Process for hearing proposals on the Skyline property (as they come in or set deadline to hear formal proposals) 2) Type of use that is acceptable (high density, commercial, industrial, mixed-use, or all the above) 3) Flexibility on height of the building & parking ratio 4) Whether the EDA is still interested in transferring or selling the retention pond to the developer for their project 5) Timeline to sell the property (sell as soon as there is a good proposal or sit on property knowing that a recession is likely in the near future) 6) Whether or not to proceed with the current proposal Should the EDA decide to pursue the hotel project, the EDA should direct staff to continue to coordinate with the City Attorney and developer to present a resolution concerning a purchase and development agreement at a future EDA meeting. The price and other details will need to be agreed upon. A similar approach to the process of selling the Crossroad Pointe site should be considered. Respectfully submitted, ________________________ Brian Beeman Assistant City Administrator Attachments: 1) Commercial Investors Group and Choice Hotels Proposal Power Point SKYLINE MOTEL REDEVELOPMENT Mission: To fill the gap between the supply and demand and create basic jobs ABOUT THE DEVELOPERS Commercial Investors Group –since 2005 Owned 100% by Mike Sowers Developer that also does brokerage, mgmt, construction, and education. Our mission is to bring a faith based approach to developing people, places and ideas. All about getting creative to unlock potential in communities. Backed by large private family offices and private lenders Did the first crowd fund in MN for commercial Property Host of the CREative commercial real estate podcast Host of the “This old house” TV Show ABOUT THE DEVELOPERS –STATION 4 Walking community redevelopment Using Historic Tax Credits Understand how to build using tapestry and demographic data to understand what the community actually needs Works well in partnership with local community leaders ABOUT THE INVESTORS –MN HOME GUYS General Partners Commercial Investors Group MN Home Guys Limited Partners Private Investors HOW THE CAPITAL STACK IS STRUCTURED Partner Bank Construction Loan –60-70% LTV Equity from Limited Partners Crowd Fund or Private Placement MARKET STUDIES & DEMAND Understanding the Linkages Easy Access to Highway MARKET STUDIES –ECONOMIC BASE MULTIPLIER REGIONAL EMPLOYMENT SHIFT BY SECTOR (2014-2017) http://shiftshare.stdb.com/#fips=27123&begin=2014&end=2017&area=Ramsey%20County,%2 0Minnesota&viewid=b66f480e-7db0-4414-2647-827da1d02fcd DUE DILIGENCE Franchise Agreement Contractor Sworn Statement Clean Environmental Full depth feasibility study Select Management Company 3D VIDEO OF PROPOSED PLAN https://www.youtube.com/channel/UCnwg5ohI6721dbDhaOpelSw/videos?sort=da &flow=grid&view=0 Our favorite https://youtu.be/YBJ_pwOlLto EVALUATING THE SITE Pros Great visibility Great access to Highway Positive development upcoming in area Positive political environment Close proximity to Medtronic Cons Blighted sight now Requires a barrier Inflated build costs now Market cycle is nearing peak (in our opinion) PROPOSED SITE PLAN KEY SITE STATISTICS SITE MAP CONCEPT AND LAYOUT 40 rooms short stay and 40 rooms long stay 80 parking stalls All rooms ADA compliant + 5 handicap stalls Buffer zone to industrial Placement of Building TIMELINE TO CLOSE 1.Franchising and Due diligence 90 days 2.Rezoning and building approvals early 2020? 3.Projected Timeline for construction 8-10 months The Mounds View Vision A Thriving Desirable Community Item No: 6B Meeting Date: March 11, 2019 Type of Business: EDA Business Administrator Review: ____ City of Mounds View Staff Report To: EDA President and Commissioners From: Brian Beeman, Assistant City Administrator Item Title/Subject: Broker Fees – Keller Williams Introduction: It is common for Cities and Counties to pay broker fees when a real estate salesperson brings forward a credible prospect for the development or redevelopment of publicly owned property. The broker fee is commonly referred to as a finder’s fee. It is less common for EDA’s to enter into exclusive listing agreements. Although, some EDA’s have chosen to enter into exclusive agreements on distressed properties especially during the Great Recession to help sell industrial lots etc. normally, the fee wouldn’t be paid unless the EDA enters into a formal purchase and development agreement with a credible developer. There are two types of listing agreements, exclusive and non-exclusive. An exclusive listing agreement obligates the EDA to one brokerage firm who markets the site and collects a brokerage fee on the percent of sales of the total land price. This excludes other real estate firms from collecting a fee even if they are successful in bringing a prospect to the EDA. In that case, the exclusive firm would have to negotiate a fee amount amongst the other broker themselves from the EDA’s paid fee. A non-exclusive agreement means the EDA will pay any brokerage firm a fee or percentage of the project for successfully bringing forward a credible prospect who ends up signing a purchase and development agreement. The negative of this type of agreement is that many real estate firms won’t spend a lot of time on calling prospects if they are not exclusive to the EDA. The positive is that any real estate firm can bring forward a prospect and expect to get paid by the EDA. Another commonly used document is a one-time showing agreement. This is used when a broker brings a prospect to the EDA and is only good for that particular prospect. This protects the broker so they can get paid if the prospect signs with the EDA and it expires after an agreed deadline. By statute, the EDA must have an agreement with a broker in order to legally pay a broker fee. Sometimes the EDA will pay half of the broker’s fee and the developer will pay the other half and other times the developer will pay 100% of the broker’s fees. There are many ways to negotiate and structure the fees. Discussion: Gregory Rance of Keller Williams Commercial has contacted City staff and is asking that the EDA consider entering into an exclusive agreement to market to developers and find users for the Skyline Motel redevelopment site. Essentially, KW would help to market the site and if the EDA chooses to sign a purchase and development agreement with one of the developers that KW brought forward through their marketing efforts then the EDA would be obligated to pay a percentage of the sale of land to KW. The Mounds View Vision A Thriving Desirable Community Strategic Plan Strategy/Goal: Create and maintain a positive business climate where businesses want to locate and remain in Mounds View. Maximize utilization of development space and current redevelopment sites. Fill vacant space and support redevelopment & development. Financial Impact: The finder’s fee paid to the broker is negotiable. Normally, the larger the dollar amount of the project, the smaller the percentage is for the broker fee. Recommendation: The EDA to hear a presentation by Keller Williams then enter into a discussion with the City Attorney to hear advice on how he recommends the EDA handle and structure these types of requests. Respectfully submitted, ________________________ Brian Beeman Assistant City Administrator Attachments: Keller Williams Letter REAL ESTATE 03/06/2019 Brian, Thank you for the opportunity to submit this summary of representation terms for the Mounds View Skyline Motel redevelopment site to be discussed at the March 11, 2019 EDA meeting with the intended purpose to achieve a representation agreement with the City of Mounds View. KW Commercial is the commercial real estate arm of Keller Williams Realty, Inc., the world's largest (#1) real estate franchise by agent count and the U.S. leader in units and sales volume. Our local commercial office team that will be working on this project has over 35 years of combined experience in commercial real estate. Keller Williams Realty, Inc. delivers collaborative efforts, and our competence and horsepower are hallmarks of getting win/win deals done. Awards include the following: Awards: • Fast Company – Most Innovative Companies for 2019 • Inman Connect – “Kelle” Wins 2018 Inman Innovator Award for Most Innovative Real Estate Technology • Inc Magazine – Best Workplace for 2018 • Forbes - #6 of 300 Companies on the List of Best Employers for Women Following is a summary of proposed terms for your consideration for this exciting project. Summary of Proposed Terms: • Agency fiduciary duties delivered exclusively to the City of Mounds View • Search for highest and best use developers • Exclusive agency representation • Commission fee to be paid by the City of Mounds View to KW Commercial brokerage, agents Greg Rance and Lowell Lankford • Commission fee 8% I will be attending the March 11th EDA meeting. Questions are welcome before, at or after the meeting. Thank you for your consideration. Sincerely, Gregory L. Rance, MBA Commercial Real Estate Agent REALTOR® 651-261-7360 gregrance@kwcommercial.com www.kwcommercial.com License # 40493671 215 Walker Ave S Wayzata MN 55391 Each Office is Independently Owned and Operated