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HomeMy WebLinkAbout2006-02-14 EDA MinutesCITY OF COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY MINUTES February 14, 2006 Pursuant to due call and notice thereof, a regular meeting of the Economic Development Authority was held at City Hall, 7516 80th Street South, Cottage Grove, Minnesota on the 14th day of February 2006. CALL TO ORDER The meeting was called to order at 7:30 a.m. by EDA Vice President Bailey. Rni i CAI i Members Present: Myron Bailey, EDA President Glen Kleven, EDA Member Gerry Weingartner, EDA Secretary /Treasurer Pat Rice, EDA Vice President Mike Wennen, EDA Member Jim Wolcott, EDA Member Members Absent: None Others Present: Howard Blin, Community Development Director Joe Fischbach, Management Analyst Tom Kaiser, Bulletin Newspaper Robert Lindall, Kennedy & Graven Grover Sayre, Presbyterian Homes Ryan Schroeder, EDA Executive Director Bob Van Slyke, Presbyterian Homes APPROVAL OF MINUTES A motion was made by EDA Member Wolcott to approve the January 10, 2006 Economic Development Authority minutes as amended by EDA Member Wennen, seconded by EDA Member Wennen, All Present in Favor. DEVELOPMENT UPDATE EDA Executive Director Schroeder gave the EDA an update about the draft document that is Economic Development Authority - Minutes February 14, 2006 Page 2 now on the City of Cottage Grove website. It is intended to keep all interested parties updated about the business opportunities within Cottage Grove. Subject to verification of data, there appears to be about 126,000 square feet of space available. This equates to about 8 percent of total retail /office space within the urban portion of the community. This would appear to be a comfortable vacancy position particularly given that a good share of this "leasable space" is not built out. Members of the EDA gave positive remarks to the new look of the website. ELECTION OF OFFICERS Nomination of EDA Vice President Bailey to EDA President by EDA Member Rice. Nomination of EDA Member Rice to EDA Vice President by EDA Member Kleven. Nomination of EDA Secretary /Treasurer Weingartner to EDA Secretary /Treasurer by EDA Member Kleven. Motion by EDA Member Kleven to accept the nominations for officers, seconded by EDA Member Wennen, All Present in Favor. PHM REQUEST FOR USE OF EMINENT DOMAIN Ryan Schroeder, Executive Director of the EDA updated the members regarding the Cottage Square site. The City of Cottage Grove and the EDA jointly agreed to the creation of the Gateway Redevelopment District on February 13, 2001. This was followed by the creation of a redevelopment tax increment district on July 26, 2001. In 2002, the Cottage Square site was included as a possibility for senior housing and in the request for proposals process. Presbyterian Homes had a development agreement approved by the EDA on November 18, 2003 and signed December 17, 2003. On January 13, 2004 Presbyterian Homes entered into a purchase agreement with Phoenix Partners to acquire the Cottage Square Shopping Center and closed on the real estate in November of 2004. On March 16, 2005 the City Council adopted the Business Subsidies resolution number 05 -001 for this project. Since the end of 2003 all the tenants have either voluntarily left or have been successfully relocated, except Demori's and Synders. Of the 80,221 total square feet, Demori's represents leased space of 5,682 square feet (7.1% of leasable space) and Synders leases 12,000 square feet (15% of leasable space). The remaining 77.9% of the center is vacant. Article 3.5 of the development agreement permits the EDA to exercise it power to squire the leaseholds through eminent domain if requested to do so by the Developer. The EDA's authority under the contract is contingent upon: i. The Developer having previously reached agreement for voluntary termination with tenants occupying at least 50 percent of the leasable space currently located on the development property. ii. The Developer having entered into an agreement to reimburse the Authority for all costs, including legal fees and expenses, associated with the acquisition of the leaseholds. iii. The Developer having agreed to reimburse the Authority for any claims for relocation services or benefits arising out of the Developer's termination of the leases or the Authority's acquisition of the same through eminent domain. iv. The Developer having executed the Assessment Agreement. 2 Economic Development Authority - Minutes February 14, 2006 Page 3 The Developer has complied with all 4 of these contingencies. Under the contract, therefore, the Authority is requested by PHM to use eminent domain to acquire the remaining leasehold interests of remaining tenants. The remaining tenants are Demori's and Synders. There was a handshake agreement between PHM and Demori's but it has since fallen apart. Robert Lindall, Kennedy and Graven attorney, updated the EDA and others in attendance on the eminent domain process and answered questions regarding the issue at hand. Bob Van Slyke, representative from PHM, updated the EDA and others in attendance what they have been doing to try to get a deal signed with all parties. There were 17 tenants and they have reached a deal with 15 of them. Each deal was different but some included relocation expenses and others included buyouts. There were also 5 long -term leases and they have reached a deal with 3. He also stated they were served with a summons and complaint by Synders. Because of pending litigation he didn't want to comment further on the topic. He did state, however, that PHM will move forward with the redevelopment and they are at the midstage of the process. The plan is to build 150 -160 senior housing units of which 90 -95 are independent living and 60 are assisted living residences. The site will also offer a town center, fitness center, lobby and library. PHM has partnered with Griffin Companies to construct the retail portion of the project. PHM has already committed $7 million into the project and they want to move forward as quickly as possible. Despite the rumors, PHM is not bankrupt. They are a non - profit that is celebrating its 50 year in business and has had one of its better years in regards to cash flow. Mr. Van Slyke states, "Good faith negotiating takes time." They currently have weekly architect meetings and have several letters of intent, including a possible grocery store. PHM also owns the BP /Amoco lot on the corner but the current lease doesn't end until April 2008. Mr. Van Slyke also stated that there is some contamination on both the Center and Goodyear lots. There are no major concerns and they are coordinating with the MPCA. There might have to be some remediation. Robert Lindall recommended using the 90 day quick take method. Appraisers would have to be hired to appraise the real estate and the fixtures. They would also put a value on the lease and the lease hold improvements. He also went over some of the other conditions specifically how the property has suffered from deferred maintenance. Mr. Lindall also suggested approving the use of eminent domain at this meeting because laws pertaining to eminent domain could be changing and could be retroactive until March 1S He also stated that there is a proposed resolution that the City Council will be considering on at its February 15 meeting. He also suggested hiring a relocation consultant; they would help the displaced tenants and would process claims. Mr. Lindall then went over the eminent domain process in regards to awards and the process for appeal. He also explained that the lawsuit brought by Synders against PHM is unrelated to the condemnation process and all interested parties can still negotiate a settlement. Mr. Lindall then reiterated that it is beneficial to file before March 1St Motion by EDA Secretary /Treasurer Weingartner to adopt Resolution 06 -XX Authorizing Eminent Domain Proceedings to Acquire Certain Real Estate Interests for Redevelopment 3 Economic Development Authority - Minutes February 14, 2006 Page 4 Purposes. The motion was seconded by EDA Member Wolcott, All Present in Favor. EDA Member Wennen stated he would still like the parties to try to negotiate a deal. EDA President Bailey stated he was disappointed that the deal with Demori's fell through. Motion by EDA Vice President Rice to authorize appraisal services in preparation for eminent domain hearings on values. The motion was seconded by EDA Secretary /Treasurer Weingartner, All Present in Favor. EDA Vice President Rice left the meeting. 2006 BUSINESS RECOGNITION BREAKFAST RECAP EDA Executive Director Schroeder gave a recap of the Annual Business Appreciation Breakfast held at 3M. Of the 84 RSVPs, 76 people signed in. The keynote speaker was State Demographer Tom Gillaspy. His main area of focus was the aging population, changing population centers, potential trends in healthcare and housing markets. 3 RD ANNUAL BUSINESS SHOWCASE The 3 rd Annual Business Showcase will be held on Thursday, April 20, 2006 from 4:30- 7:30 PM at the Cottage Grove Armory. Last year 45 vendors were on hand and this year the Planning Committee has set a goal of 55 vendors. The Cottage Grove Area Chamber of Commerce is again asking the EDA fro support through sponsorship. Motion by EDA Secretary /Treasurer Weingartner to sponsor the Business Showcase in the amount of $275.00, seconded by EDA Member Kleven. AYES: Bailey, Kleven, Rice, Weingartner, Wolcott, NAYES: none, ABSTAIN: Wennen CALENDAR The EDA members were reminded of upcoming meetings and events. MISCELANEOUS BUSINESS ITEMS EDA Executive Director Schroeder updated the EDA that the City Council adopted a resolution that limits Commission (including EDA) member's length of service to two 3 year terms. Members of the EDA stated they were frustrated with this decision because it is hard to find quality commission members that are willing to challenge staff and offer different opinions on various city matters. Under this new resolution adoption EDA Member Kleven has met his term limit. Motion by EDA Member Wolcott to keep EDA Member Kleven on the EDA for another year or until the second vacancy on the EDA has been filled, seconded by EDA Member Wennen, All Present in Favor. ADJOURN 4 Economic Development Authority - Minutes February 14, 2006 Page 5 EDA Member Wolcott moved to adjourn the meeting. EDA Member Wennen seconded the motion, All Present in Favor, the meeting adjourned at 8:47 AM. Respectfully Submitted, Joe Fischbach Management Analyst 5