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HomeMy WebLinkAboutHousing & Redevelopment Authority Minutes 07-21-2011APPROVED MINUTES PLYMOUTH HOUSING AND REDEVELOPMENT AUTHORITY July 21, 2011 PRESENT: Chairman Jeff Kulaszewicz (arrived at 7:08 p.m.), Commissioners Paul Caryotakis, David Miller, Bob Stein, and Jim Willis ABSENT: None STAFF PRESENT: Housing Program Manager Jim Barnes, Executive Director Steve Juetten and Office Support Representative Janice Bergstrom OTHERS PRESENT: Grace Management Representative Jody Boedigheimer, Paul Tucci, Oppidan, Mark Ruff and Clare Naughton representing Ehlers 1. CALL TO ORDER Chairman Kulaszewicz called the Plymouth Housing and Redevelopment Authority meeting to order at 7:09 p.m. 2. CONSENT AGENDA A. Approve HRA Meeting Minutes from June 23, 2011. B. Plymouth Towne Square. Accept June housing report. C. Vicksburg Crossing. Accept June housing report. D. CDBG. Accept consolidated annual performance and evaluation report (CAPER). Motion by Chairman Kulaszewicz to move Item 2.13 to New Business 3.13 for discussion. MOTION by Commissioner Willis, seconded by Commissioner Miller, to approve the revised consent agenda. Vote. 5 Ayes. MOTION approved unanimously. 3. NEW BUSINESS A. Oppidan Development. Consider Request to revise Tax Increment Financing District 1- 3 budget to facilitate a new development project. Housing Program Manager Barnes gave an overview of the staff report. Housing Program Manager Barnes said the Nagel Appraisal, which was just received, details an estimated land value of $3,950,000 and $250,000 demolition costs. He said Oppidan has a purchase agreement for $3.5 million. Housing Program Manager Barnes introduced Mark Ruff and Clare Naughton, Approved Plymouth Housing and Redevelopment Authority July 21, 2011 Page 2 from Ehlers and Associates, who completed a preliminary review of the projected TIF increment. He said their estimated amount is $1,899,645, which is less than Oppidan requested. Commissioner Willis asked if there were any reservations in the appraisal other than the demolition costs. Housing Manager Barnes said the appraisal reviewed this as a land deal, with no consideration for all the improvements. He said they worked with the city assessor to create the value of the different parcels, and added there were no deductions or cost assumptions for the soil corrections which will be needed. Chairman Kulaszewicz asked if the soil corrections will be part of the building estimate versus the land estimate. He asked if the TIF is for highways and clearing the site. Housing Manager Barnes clarified that the soil corrections included in the TIF request would be for the public road and utilities costs. Mr. Tucci estimated 80-90 percent of the soil corrections would be on the approximate four acres on the east side. He said the southeast corner of the senior housing building would have some soil corrections. Mr. Tucci said there was discussion at the Planning Commission meeting about pushing the building forward 20-40 feet. Mr. Tucci said he is encouraging that and they are working with the residents. Mr. Tucci explained the TIF request, which is for the demolition of the existing building, asbestos abatement of the building, parking lot and light fixtures, re- grading, and grading of the new roadway there would not incur a lot of soil corrections. He said there is some contaminated soil which leached possibly from the gas station site. He said the soil correction will be reflected in the individual parcels, either by purchase amount or in the development of the building and site work, rather than in the initial infrastructure improvements. Commissioner Stein asked why the TIF is administrative since the HRA Board and City Council approved the TIF district based on a completely different development. Housing Manager Barnes explained that under the TIF statutes certain revisions trigger public hearings and some revisions can be done to TIF plans that are considered administrative. Housing Program Manager Barnes said in this case we are not increasing the budget nor adding additional property into the district - only revising budget line items within the original plan to fit with Oppidan's request of $2 million to assist with the demolition of the existing building and site improvements. Commissioner Stein said he has been working on this site a long time. He said the Dove Capital proposal, in his opinion, would have been an amenity to the community. Commissioner Stein said he is concerned about the alignment of the road. He said he understands the desire of the city to rework the frontage road, but half of the road being developed in the proposed development is a benefit to the project not the city. Commissioner Stein asked if it is possible to isolate that cost of the frontage road as part of the TIF funding. Approved Plymouth Housing and Redevelopment Authority July 21, 2011 Page 3 Executive Director Juetten said the HRA Board can work the numbers how they want. Executive Director Juetten said the City has asked the developer to create a safer intersection with more stacking distance which results in pushing the road back into their site. If the road were not requested by the City, the developer could have figured out a way to internally serve the McDonald's and the senior building. Commissioner Stein asked if the improved stacking would be for Honeywell. Executive Director Juetten said the improved road would serve the people who live on Cottonwood Lane, Honeywell employees, and people who go to the nearby church. Commissioner Stein said he is very familiar with this road and has never seen cars stacked and is not sure if it is or is not a problem. Commissioner Stein said he is concerned with the whole project in principle as he looks at TIF funding as a way to serve as an asset or community benefit. Commissioner Stein said he does not see an assisted senior housing project that does not provide any subsidized rents nor a McDonald's as a necessary asset or benefit to the community. He said he is not real excited about this proposal and unsure if he will vote for it. Commissioner Stein said we would not get state support, but the county had planned to straighten Co. Rd. 73, and said the County should participate with Plymouth taxpayers in some of these road costs. Commissioner Willis asked for a comparison of the TIF requests for the Dove Capital proposal and the current proposal. Housing Manager Barnes reviewed the Dove Capital originally requested $2.5 million and the City Council approved $1,687,000. Housing Program Manager Barnes said the Oppidan request is for $2,034,800, and in both cases the Ehlers report indicated the district would only generate approximately $1.9 million. Mr. Ruff noted the requested amount of $1.9 million may be reduced after further analysis of public costs with engineering. Mr. Ruff said the appraisal helps justify the $3.5 million as a reasonable acquisition price. He said an analysis after the lots are finished would determine if what they are selling to the respective businesses and housing groups is market rate. Mr. Ruff said after further analysis they may need to sell it for more than $1.5 million but based on presented evidence the land value is $1.5 million. Commissioner Stein asked if the demolition of the building and land costs were excluded. Mr. Ruff said implicit in Oppidan being a land developer is a profit for them, so they reduced what they viewed as an appropriate profit for this type of development. Commissioner Willis said the approved TIF request for Dove was $1,687,000 and asked what the total project budget was. Approved Plymouth Housing and Redevelopment Authority July 21, 2011 Page 4 Housing Manager Barnes said the original project budget was estimated at $20 million and the city assessor valued the completed project at $13 million. Mr. Ruff stated the city assessor's value is $18,075,000, and Oppidan estimates $21 million for the proposed project. Commissioner Willis said these numbers seem substantially disproportionate for the TIF to be administrative. Housing Manager Barnes said the Dove development TIF plan estimated costs of $1,028,100 for road improvements, and $228,300 for the installation of public utilities, $430,600, loan interest payments, capitalized interest and administrative expenses of $459,000. He explained those are the line items which are being adjusted or moved and ultimately the bottom line is still 4,595,918 and that is considered administrative under the TIF Statute. Commissioner Caryotakis asked about timing and why the HRA needs to act at this time. Housing Manager Barnes said the economic development package to spur the economy made some modifications to TIF districts that were approved between certain dates. He said if improvements are not made on one of the parcels in this TIF district by May 10, 2013, that parcel would be removed from the district. Housing Program Manager Barnes said TIF money was used for culvert work on two of the parcels. He said by May, 2018, 75% of the TIF must be spent or committed through a "pay as you go note" or bonds need to have been issued. Housing Program Manager Barnes said once a development is approved, that money would be obligated and that requirement would be met. Chairman Kulaszewicz said the proposed assisted living facility is for public good and he does not have a problem with McDonald's since the Holiday station across Highway 55 is open 24 hours a day. Chairman Kulaszewicz said the existing frontage road is a hazard. Chairman Kulaszewicz said in general, he is in favor of this proposal. Chairman Kulaszewicz asked if the developer has to put in more cash if the TIF amount is lower. Housing Manager Barnes said if the HRA Board establishes perimeters for the TIF which are lower than what is anticipated, the developer would have to find the money from another source. Housing Program Manager Barnes said at the conclusion of the project, costs and expenses for roadwork, regrading, etc. would be verified. He explained that if these numbers are higher the developer would cover the difference; if the numbers are lower our TIF contribution would be lowered. Housing Program Manager Barnes said the TIF document is the high level document guiding the development and the detail is in the development agreement and the note. Housing Program Manager Barnes said these mechanisms are in our system to protect the city, the residents and the HRA. Chairman Kulaszewicz asked if there is anything to compel the developer to sell the third parcel. Approved Plymouth Housing and Redevelopment Authority July 21, 2011 Page 5 Housing Manager Barnes said that parcel is included in the increment the developer wants to receive. If they don't develop it or the longer it takes to develop, the less money they get from TIF. Mr. Tucci compared the road connections from the Dove Capital plan and the current proposal, and explained they were able to reduce road costs and redesigned the road to create a safer environment. Mr. Tucci explained that the $2 million includes the costs of an infrastructure to make the road safer - as identified by city staff, utilities in the road, dedicate and create a new storm water outlot, and install three vaults which would handle more run off from the road which is not being treated today. Mr. Tucci said they are creating a retaining wall to buffer the edge of the wetland to minimize impacts, removing the existing building, asbestos abatement, grading of parking lot, buying the land and giving 1.5 acres for the right-of-way. Mr. Tucci concurred with Housing Program Manager Barnes that they have a huge interest in getting this developed or they will not realize the total value that has been placed as time will run out. He said they are contributing money up front, have a loan with the bank, and over time will garner some of that back. Mr. Tucci said they are prepared to go forward and he said they are negotiating on the third parcel with a medical office user regarding price and deductions for soil corrections. He said there has been contact with another retailer who would use approximately 60% of the site. Commissioner Willis asked if the public improvements and road realignment would be constructed in the first phase. Mr. Tucci said that is a city requirement, and added there is an indemnity and an escrow to ensure the roads are done. Mr. Ruff said if affordability is an important component for the assisted living, he suggested discussion with Shelter Corporation as they have been amenable to agreeing to a certain level of affordability. He said the contract would be with Oppidan but possibly Shelter Corporation could be tied into the development agreement. Housing Manager Barnes said we have not discussed this with Shelter Corporation. He said they had tried that with a bond issue for Summerwood and said much of the $2,000 - $4,000 rent was for services and it is difficult to deal with the service side of the housing costs. He said if Shelter Corporation can determine a base rent, then we could discuss the possibility of some type of affordability. Mr. Ruff said they would not guarantee a rent affordability but certain money can go toward lower renting. Chairman Kulaszewicz said he would be interested in more information on Shelter Corporation. Chairman Kulaszewicz said he is in favor of this proposed development. Commissioner Willis said he shares Commissioner Stein's concerns. He said from the council's perspective a lot of time was spent on the Dove Capital proposal which was like frosting on the Approved Plymouth Housing and Redevelopment Authority July 21, 2011 Page 6 cake, but you didn't get the cake. He said in this instance, one key corner piece is a McDonald's. Commissioner Willis said in his value system of renewal and using tax increment, McDonald's does not do much for employment opportunities, and there are already fast food places along Highway 55. In terms of improvements, it would be a community asset to work with the developer to get the infrastructure replaced. He said he came up with higher numbers than projected by Ehlers. Commissioner Willis said he believes the original developer paid too much for the land, it sold for $6.8 million in foreclosure, and now they will take $3.5 million. Commissioner Willis said we are starting to get some realization of the property value which still seems like a lot of money with the burden of the problems on this site. Commissioner Willis asked how pervasive the petroleum problem will be. He said when the city rebuilt its forced main along Highway 55 in the mid -1970's, there was an explosive atmosphere from leaks in gas tanks at the old gas station. He said that suggests there is something there, which could result in a cost surprise for the developer. Commissioner Willis said he is inclined to not move forward with this proposal until the consultants can provide a more definitive answer on the amount of TIF that might be warranted in this case. Commissioner Miller said he likes this project, but is not too crazy about a McDonald's as there are two within a couple of miles of this site. Commissioner Miller concurred with Commissioner Willis in that he would like to see more definitive numbers before giving approval. Commissioner Caryotakis said there are challenges to develop this property. He said he is hesitant because the use has not been identified for the outlots making it hard to assess the benefit to the city. He acknowledged it is a tough economy to be doing this in. Chairman Kulaszewicz said without assistance from someone, this property may never get developed. He said he has no problem with McDonald's and said it is not his wherewithal to decide which fast food restaurant to go with. He said he is more concerned about the assisted living property and what would occupy the third parcel. Chairman Kulaszewicz said Plymouth is not lacking for places to spend our money; however, a medical facility would be an excellent choice in adding to the community. Chairman Kulaszewicz said he would like to move it forward as presented or table it if the board wants more information. MOTION by Commissioner Willis, seconded by Commissioner Miller, to table the request by Oppidan Development to revise tax increment financing district 1-3 budget to facilitate a new development project to the August 25, 2011 HRA meeting. Mr. Ruff said they will finalize the site improvement budget and will work with the appraiser and city assessor to establish the sale price. MOTION to table seconded by Commissioner Miller. Roll call vote. 5 Ayes. MOTION to table approved unanimously. B. Senior Buildings. Review placement schedules and Vicksburg Crossing long range forecast. Approved Plymouth Housing and Redevelopment Authority July 21, 2011 Page 7 Housing Program Manager Barnes gave an overview of the staff report. Commissioner Stein asked if the numbers are adjusted for inflation. Executive Director Juetten said no, but the inflation factors could be incorporated. This report is for discussion and suggestions to assist with the budget. Commissioner Stein asked about the $2.7 million balance. Executive Director Juetten said there would be an additional revenue of $340,000 if we continue to put away $84,000, and the debt would be paid off in 2024. Commissioner Miller asked what number would be used for inflation. Executive Director Juetten said there would be variable inflation options of 1, 2, and 3%. Housing Manager Barnes said there is a replacement schedule for Vicksburg Crossing. He said if all the heating/air conditioning units were replaced, the cost of these Magic-Paks would be 580,000. Housing Program Manager Barnes said there is $211,517 in the reserve replacement account, and $60,000 is set aside annually for that account. Housing Program Manager Barnes said the balance starts going negative in 2021, and substantially negative in 2031. He said the debt on this building is set to be paid off in 2036. Housing Program Manager Barnes said without inflation factored, $60,000 may not be the right number. Housing Program Manager Barnes said the board may want to determine a minimum amount to maintain in the replacement reserve accounts. If something major occurred, the HRA general reserves are available. Housing Program Manager Barnes said the City of Plymouth name is on these buildings so we do want to ensure the buildings are maintained properly. Commissioner Caryotakis said we are just getting started with Vicksburg Crossing and now breaking even on an annual basis. He asked if the market will allow us to charge enough money so we can fund more into this maintenance reserve. Housing Manager Barnes said Grace Management's market analysis of rents in the last four years have indicated Vicksburg Crossing is at the high end for rents in its category and market place. If the board were looking to raise rents, consideration would have to be given to the increase in the operating cost and what is left over, or would it be added to the subsidy on an annual basis. Housing Manager Barnes said he and Executive Director Juetten have gathered recent information and feel we don't have to fully fund the reserve accounts. He said there should be a minimum amount maintained. He said if we go under the amount in a given year, we might have to raise the levy or transfer funds from the General Fund reserve. Approved Plymouth Housing and Redevelopment Authority July 21, 2011 Page 8 Commissioner Caryotakis said we are seeing it negative by 2021, but a lot can happen in that time. Vice Chair Caryotakis concurred that it is right to look ahead and set aside a minimum amount in the present budget. Housing Manager Barnes noted that half of the money in the HRA general fund was a transfer over five years ago from a Plymouth Towne Square account that had been left open with some excess reserves. Housing Program Manager Barnes said funds from the general fund could be transferred now to the Vicksburg Crossing replacement reserve. He reiterated there are many options to look at. Chairman Kulaszewicz said his inclination would be to take some funds out of the general fund. He said if the Magic-Paks start going, $200,000 would not last very long. He suggested leaving a moderate annual contribution, but would be more comfortable with an account balance of 300,000. Housing Manager Barnes said rather than rent or levy increases, $30,000 could be taken from the general fund on an annual basis. Housing Program Manager Barnes added that in the upcoming budget there will be a substantial amount of capital improvements being requested for Plymouth Towne Square. He said 10 boilers are being replaced with 2-3 as technology has improved. He said payback would occur in 5-6 years. Housing Program Manager Barnes said a complete analysis of the exterior and interior common areas revealed a number of areas that need attention. C. Vicksburg Crossing. June, 2011 Marketing Reports. Grace Management Representative Boedigheimer stated there is only one apartment that does not have a deposit on it. She said they continue to have steady traffic and more interested people. Grace Management Representative Bodigheimer said there is a need to upgrade the website as the current one is basic and not very interactive. Chairman Kulaszewicz asked if there have been comments regarding the website. Grace Management Representative Boedigheimer said many seniors know how to get to the Internet. She said the photo gallery page should be updated. Chairman Kulaszewicz asked if the website is owned by the property or the city. He asked if city staff could update the website. Housing Manager Barnes stated that there is a link to it from the city's website, but it is a stand alone website. Executive Director Juetten asked Grace Management Representative Boedigheimer to research and recommend a website that could be used as a model. Commissioner Willis suggested Office Support Specialist Shelia Langer could update the photos. Approved Plymouth Housing and Redevelopment Authority July 21, 2011 Page 9 Grace Management Representative Boedigheimer said the current photos are from when the building was first built and the trees have grown since then. Housing Manager Barnes asked for information regarding upgrading the website before the budget process. Housing Manager Barnes said he did not know the urgency of the request, but as more buildings are built for the senior population there is more competition. He said this needs to be considered down the road. Commissioner Stein concurred. D. CDBG. Accept consolidated annual performance and evaluation report (CAPER). Chairman Kulaszewicz discussed Hammer Residence and said $15,000 was spent twice to redo two units. He asked if the board wants to continue with Hammer Residence or consider bringing in some other groups to serve more people with less money. Housing Manager Barnes explained that while the CDBG funding is more flexible than other HUD programs, it does have restrictions. For instance you wouldn't be able to take the Hammer funding and put that money toward some of the social services. Housing Program Manager Barnes said we are already capped out at the 15% maximum that we give to social service agencies, so you wouldn't be able to fund CAPSH or Tree House, or another social service at a higher level. He added that Hammer is a non profit social service agency, but we are doing redevelopment for them so it is outside of that cap. He said money could be taken from Hammer and given to the first time homebuyer or rehab programs, but we would have to ensure those programs are not overfunded. Housing Program Manager Barnes said we would not want to get into loan guarantees or economic development because of the burdensome restrictions with the CDBG regulations. Housing Program Manager Barnes said there is a 16% reduction for 2011 and anticipates another 16% cut for 2012 in the budget overall. He said we were at $324,000 in CDBG funding in 2003 and are now at $238,000. MOTION by Commissioner Willis, seconded by Commissioner Stein, to accept the consolidated annual performance and evaluation report (CAPER). Vote. 5 Ayes. MOTION approved unanimously. 4. ADJOURNMENT MOTION by Commissioner Miller, seconded by Commissioner Caryotakis to adjourn the meeting at 8:46 p.m. MOTION approved unanimously.