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.