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HomeMy WebLinkAbout05-28-2019CITY OF MOUNDS VIEW ECONOMIC DEVELOPMENT AUTHORITY MEETING AGENDA MOUNDS VIEW CITY HALL Monday, May 28, 2019 6:15 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: May 13, 2019 Open & 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. Consider Resolution 19-EDA-323 Approving an Interfund Loan for the Skyline Motel project 7. REPORTS 8. NEXT EDA MEETING: June 10, 2019 at 5:30 p.m. 9. ADJOURNMENT PROCEEDINGS OF THE MOUNDS VIEW EDA 1 CITY OF MOUNDS VIEW 2 RAMSEY COUNTY, MINNESOTA 3 4 Special EDA Meeting 5 May 13, 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 4:32 p.m. 13 14 2. ROLL CALL: President Mueller, Vice President Gunn, Commissioner Bergeron 15 Commissioner Hull, Commissioner Meehlhause, Executive Director Zikmund, Finance 16 Director Beer and City Attorney Riggs (arrived at 4:43 p.m.) 17 18 NOT PRESENT: None. 19 20 3. APPROVAL OF AGENDA 21 22 MOTION/SECOND: Meehlhause/Bergeron. To Approve the May 13, 2019, Agenda as 23 presented. 24 25 Ayes – 5 Nays – 0 Motion carried. 26 27 4. CONSENT AGENDA 28 29 A. March 11, 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 COMMENT 36 37 None. 38 39 6. EDA BUSINESS 40 41 A. Developer Presentation for Skyline Motel Site. 42 43 Assistant City Director Beeman reported the City requested RFP’s for the Skyline Motel 44 redevelopment project. He reported staff had a developer in attendance, Commercial Investors 45 Mounds View EDA May 13, 2019 Regular Meeting Page 2 Group, which would be providing the EDA with an updated presentation on this project. 1 2 Mike Sowers, Commercial Investors Group, introduced himself to the EDA. 3 4 James Smith, Commercial Investors Group, thanked the EDA for their time. He introduced his 5 development company and commented on the Station 4 Project CIG was completing in 6 Lowertown, St. Paul. He reviewed the needs and wants for this project. 7 8 Mr. Sowers reported CIG had done their due diligence and had met with representatives from 9 Choice Hotels. He discussed the updated proposal for the Skyline Motel site noting the market 10 study shows a need for transient guests versus extended stay guests. He explained the highest 11 and best use for this site would be to construct a 90-room hotel with limited food service and a 12 pool. He reviewed five comps noting there was a strong need for an additional hotel in this 13 market. He stated he was proposing a four-story building to assist with buffering freeway noise, 14 while also creating greater visibility. 15 16 Mr. Sowers explained he would consider pre-signing a medical office on the adjacent lot but 17 noted a spec industrial product could also be considered for this space. He commented on the 18 discussions he has held with Bio Clean and Bauer Welding regarding their business expansions. 19 He indicated he was approaching this project as an overall benefit to the entire community and 20 not just a hotel. 21 22 Mr. Sowers discussed the architecture and design of the proposed Holiday Inn Express Hotel by 23 IHG Hotels. He indicated the loyalty program within IHG was very strong. He noted the 24 amenities that would be provided within the hotel would make this site an upper-mid scale hotel. 25 He reviewed the number of suites and other guestrooms noting the building would be 54,000 26 square feet in size. He projected the value of the medical/office building to be $3-5 million and 27 noted the hotel would be valued in the $12-14 million range. 28 29 Mr. Sowers commented on the benefits of the project to the City of Mounds View. He estimated 30 the hotel and medical/office building would generate an additional $575,000 in taxes per year. 31 He noted he had to work through watershed and environmental issues, along with a feasibility 32 study. He reported he had to complete a franchise agreement, in addition to selecting a 33 contractor and management company. He reported this project would take 12 to 16 months to 34 complete. He stated he was hoping to break ground on this project yet this fall. 35 36 Community Development Director Sevald addressed the EDA and discussed how this project 37 could move forward as a PUD considering the site was now larger than five acres. He reported 38 the PUD process would allow the developer additional flexibility with the project. 39 40 President Mueller opened the floor to the EDA for questions or comments. There were no 41 questions or comments from the EDA. 42 Mounds View EDA May 13, 2019 Regular Meeting Page 3 1 Mr. Smith reported he met with Steve Markuson from Twin Cities Gateway and explained Mr. 2 Markuson fully supported the direction this project was headed. 3 4 President Mueller thanked the representatives from CIG for the thorough presentation. 5 6 B. Resolution 19-EDA-322 Approving LHB to Conduct a Redevelopment TIF 7 Analysis on the Skyline Motel Site and Surrounding Area. 8 9 Mike Fischer, LHB, provided the EDA with a presentation on the Redevelopment and Renewal 10 TIF Districts. He explained these types of TIF Districts could be used to redevelop substandard 11 or obsolete buildings. He reported a Redevelopment TIF District could run for 26 years and 12 noted more than 50% of the buildings must be substandard. He discussed the Coverage Test and 13 reported 70% of the district must be occupied by buildings, streets, utilities or paved parking lots. 14 He reported the toughest test would be for the Building Code Qualification and Condition of 15 Buildings Test. He explained a building cannot be considered structurally substandard if its code 16 deficiencies were not at least 15% of the replacement cost of the building. He stated based on his 17 drive-by of the proposed Skyline Motel TIF District this site would not have a coverage issue. 18 19 Stacie Kvilvang, Ehlers & Associates, discussed how her company assists the City with public 20 financing for bonds along with reviewing the finances for potential TIF projects. She 21 commended the City for purchasing the Skyline Motel property as she understood it was the 22 Council’s goal to redevelop this site. She explained the developer was not requesting any 23 assistance but noted the EDA could still create a TIF district to use the dollars generated to pay 24 the City back for the acquisition of this land. She reported this would be done through an 25 interfund loan. 26 27 President Mueller questioned if the “but for” test would be completed for this project. Ms. 28 Kvilvang reported this would be conducted and commented further on the “but for” test 29 requirements. 30 31 President Mueller asked for comments or questions from the EDA. There were no comments or 32 questions from the EDA. 33 34 Assistant City Administrator Beeman requested the EDA consider approving a Resolution that 35 would allow LHB to conduct a Redevelopment TIF Analysis on the Skyline Motel site and 36 surrounding area. 37 38 President Mueller discussed the costs that would be associated with the proposed LHB contract. 39 40 Commissioner Meehlhause asked how Ehlers & LHB would be working together on this project. 41 Assistant City Administrator Beeman explained the City could not create a TIF District unless 42 Mounds View EDA May 13, 2019 Regular Meeting Page 4 the project met State Statutes. He reported, in order to reach this step, a blight/substandard study 1 had to be completed. If a substandard determination was made, the City could then begin 2 discussions with Ehlers. 3 4 MOTION/SECOND: Meehlhause/Gunn. To Waive the Reading and Adopt Resolution 19-5 EDA-322 Approving LHB to Conduct a Redevelopment TIF Analysis on the Skyline Motel Site 6 and Surrounding Area. 7 8 Ayes – 5 Nays – 0 Motion carried. 9 10 Greg Kelley, owner of BioClean, stated his company has been in the community for the past 40 11 years. He commented on the building expansion he was proposing to complete noting this would 12 assist him with staying in Mounds View. He explained he has liked working with Mr. Sowers 13 and anticipated he would be able to complete a project that was beneficial to BioClean and the 14 community. 15 16 Tom Rachel, from Bauer Welding, explained Bauer Welding has been in the community for over 17 40 years. He noted Bauer Welding has been in discussions with Mr. Sowers and CIG. He stated 18 he looked forward to this project moving forward as it would be good to have this area of the 19 City redeveloped. 20 21 7. REPORTS 22 23 None. 24 25 8. NEXT EDA MEETING: Tuesday, May 28, 2019 at 5:30 p.m. 26 27 9. CLOSED SESSION – SKYLINE PROJECT: 28 29 Pursuant to Minnesota Statutes Sections 13D.05, subdivision 3(c) and 13.44, subdivision 3, to 30 conduct a closed EDA meeting concerning real property located at addressed noted below, to 31 determine the asking price, to consider strategies and to develop or consider offers to 32 counteroffers for the sale of such real property to review confidential appraisal information for 33 such real property. 34 35 4889 Old Highway 8 36 Mounds View, Minnesota 37 PINs: 17.30.23.14.0001, 17.30.23.14.0002, 17.30.23.14.0003 38 39 President Mueller recessed the EDA meeting to discuss the Skyline Project at 5:26 p.m. 40 41 President Mueller reconvened the EDA meeting at 6:30 p.m. 42 Mounds View EDA May 13, 2019 Regular Meeting Page 5 1 10. ADJOURNMENT 2 3 President Mueller adjourned the meeting at 6:30 p.m. 4 5 Respectfully submitted, 6 7 8 Recorded and transcribed by: 9 Heidi Guenther 10 TimeSaver Off Site Secretarial, Inc. 11 The Mounds View Vision A Thriving Desirable Community Item No: 6A Meeting Date: May 28, 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: Resolution 19-EDA-323 A Resolution Authorizing an Interfund Loan for Advancement of Certain Costs in Connection with Tax Increment Financing for Skyline Motel Site Introduction: The EDA is purchasing the Skyline Motel site as a redevelopment opportunity. The expected closing date is the end of May 2019. A TIF analysis is underway. Should the results of the TIF analysis allow for the creation of a TIF district, an interfund loan can be used as a method to pay the City back for costs associated with the project. Ehler’s the City’s financial consultant eluded to this in their presentation to the EDA at the May 13, 2019 regular meeting. Since that meeting, Ehler’s and Kennedy & Graven have completed the resolution necessary to allow the interfund loan. Discussion: A resolution has been prepared for the EDA’s consideration allowing an interfund loan in preparation for the creation of a TIF district. A TIF can be used to pay back the developer or it can be used to make the City whole in a situation where the developer is not able to pay the price that the City has into the property. Therefore, Ehler’s recommends that the City consider authorizing an interfund loan which can be authorized before a TIF district is established. An interfund loan authorizes the City to loan funds to the EDA for qualified costs (the “interfund Loan”) in the amount of up to $2,500,000 at 5%. The Authority, if utilizing this privilege would pay the City back from tax increments derived from the property within the TIF District. In order to authorize the interfund loan a resolution is required. 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. If the EDA is successful in creating a TIF district then according to Ehler’s the EDA can recoup their costs of the project. Recommendation: Consider resolution 19-EDA-323 by motion. The Mounds View Vision A Thriving Desirable Community Respectfully submitted, ________________________ Brian Beeman Assistant City Administrator Attachments: 1) Resolution 19-EDA-323 A Resolution Authorizing an Interfund Loan for Advancement of Certain Costs in Connection with a proposed Tax Increment Financing District for the Skyline Motel project 583367v1MU205-49 EDA RESOLUTION 19-EDA-323 CITY OF MOUNDS VIEW COUNTY OF RAMSEY STATE OF MINNESOTA A RESOLUTION AUTHORIZING AN INTERFUND LOAN FOR ADVANCE OF CERTAIN COSTS IN CONNECTION WITH A TAX INCREMENT FINANCING DISTRICT (A REDEVELOPMENT DISTRICT) BE IT RESOLVED by the Board of Commissioners (the “Board”) of the Mounds View Economic Development Authority (the "Authority"), as follows: Section 1. Background. 1.01. The Authority has proposed to establish a Redevelopment Project Area associated with the Skyline Motel site (the “Redevelopment Project”) in the City of Mounds View (the “City”) pursuant to Minnesota Statutes, Sections 469.001 through 469.047, as amended (the “HRA Act”), and has proposed to create a tax increment financing (redevelopment) district within the Redevelopment Project (the “TIF District”) in accordance with Minnesota Statutes, Sections 469.174 through 469.1794, as amended (the “TIF Act”) and Sections 469.090 through 469.108, as amended (the “EDA Act”). 1.02. The Authority may incur certain costs related to the TIF District, which costs may be financed on a temporary basis from available funds of the Authority. 1.03. Under Section 469.178, subdivision 7 of the TIF Act, the Authority is authorized to advance or loan money from any fund from which such advances may be legally made in order to finance expenditures that are eligible to be paid with tax increments under the TIF Act. 1.04. The Authority has determined that it may pay for administrative costs associated with the establishment of the TIF District and certain other costs incurred in connection with the proposed development of the TIF District, including but not limited to fees of the financial advisor and legal counsel to the Authority, in the amount of $2,500,000.00 (the “Cost Advances”) on a temporary basis from the Authority’s General Fund or any other fund from which such advances, from time to time, may be legally made as an interfund loan pursuant to Section 469.178, subdivision 7 of the TIF Act. 1.05. The Authority intends to reimburse itself for the Cost Advances from tax increments derived from the TIF District in accordance with the terms of this resolution (the “Interfund Loan”). Section 2. Repayment of Interfund Loan. 2.01. The Authority will reimburse itself for the Cost Advances in the principal amount of up to $2,500,000.00, together with interest at the rate per annum described below. Interest 2 583367v1MU205-49 accrues on the principal amount of the Interfund Loan from the date each such advance is made. The Interfund Loan shall bear interest at the rate of 5.0% per annum. 2.02. Principal and interest (“Payments”) on the Interfund Loan shall be paid semiannually on each August 1 and February 1 (each a “Payment Date”), commencing on the first Payment Date on which the Authority has Available Tax Increment (as defined herein), or on any other dates determined by the Executive Director, through the date of last receipt of Available Tax Increment from the TIF District. 2.03. Payments on the Interfund Loan will be made solely from tax increment from the TIF District received by the Authority from Ramsey County in the six-month period before any Payment Date, net of the amount paid under any agreement with a private developer or otherwise pledged to the payment of any obligation (the “Available Tax Increment”). Payments shall be applied first to accrued interest, and then to unpaid principal. Interest accruing from the date of each advance will be compounded semiannually on February 1 and August 1 of each year and added to principal until the first Payment Date, unless otherwise specified by the Executive Director. 2.04. The principal sum and all accrued interest payable under this resolution is prepayable in whole or in part at any time by the Authority without premium or penalty. 2.05. This resolution is evidence of an internal borrowing by the Authority in accordance with Section 469.178, subdivision 7 of the TIF Act, and is a limited obligation payable solely from Available Tax Increment pledged to the payment hereof under this resolution. The Interfund Loan shall not be deemed to constitute a general obligation of the State of Minnesota or any political subdivision thereof, including, without limitation, the Authority or the City. Neither the State of Minnesota, nor any political subdivision thereof shall be obligated to pay the principal of or interest on the Interfund Loan or other costs incident hereto except out of Available Tax Increment. The Authority shall have no obligation to pay any principal amount of the Interfund Loan or accrued interest thereon, which may remain unpaid after the final Payment Date. 2.06. The Authority may at any time make a determination to forgive the outstanding principal amount and accrued interest on the Interfund Loan to the extent permissible under law. 2.07. The Authority may from time to time amend the terms of this resolution to the extent permitted by law, including without limitation amendment to the payment schedule and the interest rate; provided that the interest rate may not be increased above the maximum specified in Section 469.178, subdivision 7 of the TIF Act. Section 3. Effective Date. This resolution is effective upon its approval. 3 583367v1MU205-49 Adopted on the 28th day of May, 2019. Carol A. Mueller, President Attest: Nyle Zikmund, Executive Director (SEAL)