Loading...
HomeMy WebLinkAbout2015-11-10 MINUTES 03.01.A. CITY OF COTTAGE GROVE E CONOMIC D EVELOPMENT A UTHORITY MINUTES October 6, 2015 Pursuant to due call and notice thereof, a regular meeting of the Economic Development Authority was held at Cottage Grove City Hall, 12800 Ravine Parkway, Cottage Grove, Minnesota 55016 on the 6th day of October, 2015. CALL TO ORDER The meeting was called to order at 7:30 a.m. by EDA President Bailey. ROLL CALL Members Present: Myron Bailey, EDA President Jeff Carter, EDA Memeber James Celkis, EDA Member Trent Cole, EDA Member Steve Dennis, EDA Vice President Member Tony Jurgens, EDA Member Ramona Westerberg, EDA Treasurer Staff Present: Charlene Stevens, EDA Executive Director Jennifer Levitt, Community Development Director/City Engineer Robin Roland, Finance Director Kori Land, City Attorney Alicia McMonigal, Economic Development Assistant Craig Woolery, Public Safety Director John Burbank, Senior Planner Others Present: Scott Wendt, South Washington County Bulletin Tom Palmquist, Colliers Int’l Phil Hoey, Hy-Vee APPROVAL OF MINUTES 3.1 EDA VP Dennis motioned to approve the August 11, 2015 EDA Meeting Minutes. EDA Member Westerberg seconded. (7-to-0 vote) BUSINESS ITEMS EDA Member Carter recused himself from commenting and voting on all items listed in 4.1 as his position at Merchant’s Bank could cause potential conflict of interest. 4.1 Grove-Plaza Redevelopment A. Hy-Vee Developer’s Agreement Economic Development Authority - Minutes October 6, 2015 Page 2 B. School District Land Purchase Agreement C. Grove-Rainbow Purchase Agreement D. Grove-Rainbow Developer’s Agreement Community Development Director/City Engineer Levitt discussed the Grove-Plaza Redevelopment items that were presented in the packet. As part of the recommendation, we are asking for approval of the Hy-Vee Developer’s Agreement, the Grove-Rainbow Purchase Agreement, and the School District Land Purchase Agreement and to grant the City Attorney permission to negotiate some of the wordsmithing in these agreements. EDA Member Jurgens asked if the Hy-Vee outdoor garden center is allowable because the square footage is below the restrictive covenant. City Attorney Land answered she believes that was the case. EDA Member Jurgens wanted to clarify that the $400,000 stromwater improvement is a grant from the Watershed District and is not coming from the EDA Trust Fund or from City of Cottage Grove funds. Community Development Director/City Engineer Levitt answered in the affirmative. EDA Member Jurgens asked for clarification on the funding of the $980,000 site infrastructure improvements. Finance Director Roland stated the $980,000 is funded from two pre-1990 TIF districts and has been waiting to be utilized for approximately 10 years. The EDA dictates what projects the money is used for. This money has been previously discussed as developer’s incentive for the past six years and is considered cash in hand. EDA Member Jurgens stated the future building pad site, not depicted in the attached drawing, is proposing the EDA financially assist. What is the cost estimate and what does that look like? Community Development Director/City Engineer Levitt discussed previous negotiations stating Merchant’s Bank was a player at the table in regards to development. When the agreement was drafted, there were discussions about putting a bank pad on the Home Depot site and at that time it was uncertain what public infrastructure would be necessary to ensure that could be constructed. We were proposing that the EDA assist with the sewer, water, and storm sewer that would be necessary to make that pad viable. At this point, we didn’t anticipate much in grading costs as the site would already be prepped, so we are committing to infrastructure costs. At this time, this deal is not in the works. th EDA Member Jurgens stated the Public Hearing is scheduled for November 10 but the purchase th is scheduled for November 4. Is this a problem? City Attorney Land stated this is a make or break time. Decisions need to be made on whether or not to move forward on the purchase of th the Home Depot site based on decisions today. Yes, on November 4 absent any direction from th the EDA today or prior to November 4staff is proceeding with the purchase of Home Depot. Then you will be hold a Public Hearing on the business subsidy portion of the developer’s agreement. EDA Member Jurgens asked why the EDA is being asked to purchase the school district land as opposed to a loan or the other parties involved paying for the land? Community Development Director/City Engineer Levitt stated when we began our conversations with Hy-Vee, we committed to being a strong development partner at the table to ensure that redevelopment of this site would occur. We have a good working relationship with the school district in regards to this situation. The way it is currently formulated, it is a win-win to all parties involved. Economic Development Authority - Minutes October 6, 2015 Page 3 EDA Member Jurgens asked where the $188,000 for the land sale with the School District would come from. Finance Director Roland stated that the money would come from the EDA Trust Fund which is under the control of the EDA and the City jointly. EDA Member Jurgens asked about items two, three and four - EDA agrees to relocate the driveway, fence, fiber optic, curb and gutter. What is the estimated costs of each of those? Community Development Director/City Engineer Levitt stated the engineers estimate is $303,000 for that project. EDA Member Jurgens asked if the purchase price plus the $303,000 will come from the EDA Trust Fund? Finance Director Roland answered in the affirmative. EDA President Bailey asked if the referendum passes and the money utilized in this purpose for th the land sale is taken off of the price of infrastructure improvements on 65, is that money still coming out of the EDA? Community Development Director/City Engineer Levitt answered in the affirmative adding that they will not be looking for funding until the project is under construction in 2017 or 2018. EDA Member Jurgens asked Staff to substantiate the $300,000 subsidy in the Grove-Rainbow agreement. Community Development Director/City Engineer Levitt stated that the loss of revenue as indicated in the staff report is approximately 8,000 square feet and the future owner will not have tenant leasable square space of that parcel and as part of the negotiated sale price we are providing business subsidy of $300,000. EDA Member Jurgens asked if the square footage of what we are purchasing is the same square footage as we what we are selling. Community Development Director/City Engineer Levitt stated answered in the affirmative. EDA Member Jurgens asked why we are taking a $300,000 loss because of business decisions that others are making. Community Development Director/City Engineer Levitt stated the goal had been to match the square footage of the Grove-Rainbow to the Home Depot making an equitable switch. As Hy- Vee got into the details of their site plan and design, the 8,000 square feet became an inequitable item for Grove Rainbow because they had anticipated that the 8,000 square feet was going to become theirs are part of the deal. Grove-Rainbow is claiming a loss of that 8,000 square feet and they will never be able to have revenue for that. So, as part of the sale we are proposing the $300,000 off of the sale price to account for the loss of space that was originally part of our deal. EDA Member Jurgens made comment that the leasable square footage is going to increase in value because of the Hy-Vee development, so even though there is less square footage to lease, he believes there will be an increase in the revenue per square footage because of the overall development. The EDA Trust Fund provides the subsidy. Community Development Director/City Engineer Levitt stated that redevelopment is always a challenging situation. There are a lot of puzzle pieces that have to come together and this is one of those key pieces that do have to be in place in order to facilitate this redevelopment. EDA VP Dennis asked for tax value estimates on the redevelopment after build out and stated when build out is complete there will be a larger facility and an increase in the value of the taxable. When we look at that, no body relishes the thought of taking a 300,000 hit but it’s kind of a circumstance where it takes money to make money. We will get it back on the back end. He asked if we would see an appreciation to that value. Finance Director Roland commented we can make that assumption, however; we have no substantiation to that at this time. We do have minimum assessment agreements because this is in a TIF district. There are minimum assessment agreements which we have pledged towards the bonds that are currently outstanding for this TIF district. I can assure that the values will not decrease below the minimum assessment agreements, however; one does assume that they will appreciate in the long run as they are Economic Development Authority - Minutes October 6, 2015 Page 4 similar to other facilities in this community and others that are valued higher than those minimum assessment agreements. EDA VP Dennis asked for the duration of the TIF district. Finance Director Roland stated 2028 to see the entire build out or redevelopment of this TIF district. EDA Member Jurgens asked if the minimum assessment on the Home Depot building and the minimum assessment on the Rainbow side will that stay in place after this sale or are do those minimum assessment numbers go away and then the new purchase price becomes the assessed value. Finance Director Roland stated the minimum assessment agreements need to stay in place in order to maintain the integrity of the City’s investment in the bonds that are held. EDA Member Jurgens asked what the amount of property tax is generate annually from the Home Depot. Finance Director Roland responded $220,000. EDA Member Jurgens asked if the City lose $110,000 in tax revenue. Finance Director Roland answered in the affirmative. EDA Member Jurgens stated dissatisfaction with the REA that was been problematic and is still in place and the holding of the Home Depot property for six months incurring additional costs for utilities and losing out on tax revenue. He asked for the additional costs related to operating the Home Depot. Finance Director Roland reported holding costs on the utilities over that period of time are approximately $38,000. EDA Member Jurgens asked if the $110,000 was the City’s property tax portion or is that the total bill and the City’s portion would be a third? Finance Director Roland answered because it is in a TIF district the $110,000 in theory comes all back to the City, however; that is not the amount what will come back to the City because of the Fiscal Disparities included in it as well as the State portion of the property tax so at this point the $110,000 is the amount in theory is all TIF but in reality would only get about half and the rest would go to the Fiscal Disparities pool and State property tax. EDA Member Jurgens asked for the approximate balance in the EDA Trust Fund. Finance Director Roland replied $3,700,000. EDA Member Jurgens asked if this is the best deal for the citizens of Cottage Grove. Finance Director Roland stated this is the best deal we are going to get. City Attorney Land stated is not her role. Jennifer stated Staff has brought a complete package to the EDA. She believes Hy- Vee is a strong economic partner to anchor the site and with that will come a higher potential resale for leasable space and we are supportive of current businesses as well. It also provides amenities that the citizens have asked for and fills a niche in the community. EDA Member Jurgens asked if EDA Executive Director Stevens had any concerns with the documents. EDA Executive Director Stevens stated after speaking with Staff and the City Attorney she does not have concerns. It meets the objectives of the City Council and the EDA. EDA President Bailey stated development on this site was going to involve some money from the EDA. There are restrictions that have been reduced. Our citizens have expressed favor with getting a high quality grocer. EDA President Bailey indicated the City is not part of the negotiations with the American Motor Sports Bar and Grill and Grove-Rainbow. I believe the redevelopment of the center is a big win Economic Development Authority - Minutes October 6, 2015 Page 5 for our community and I do support the deal. EDA VP Dennis stated 85% of people that he spoke with during his campaign discussed their displeasure in the empty shopping center. He is happy to be working on behalf of the people and this is a huge win for the City. He thanked staff for all their efforts. EDA VP Dennis made a motion to approve the Hy-Vee Developer’s Agreement allowing the City Attorney to make any necessary modifications outside of any financial obligations. EDA Treasurer Westerberg seconded. Motion passed unanimously (6-to-0 vote with Carter recused). EDA Member Cole made a motion to approve the School District Land Purchase Agreement. EDA Member Celkis seconded. Motion passed unanimously (6-to-0 vote with Carter recused). EDA Treasurer Westerberg made a motion to approve the Grove-Rainbow Purchase Agreement allowing the City Attorney to make any necessary modifications outside of any financial obligations. EDA VP Dennis seconded. Motion passed unanimously (6-to-0 vote with Carter recused). 4.2 Development Update BR&E Community Development Director/City Engineer Levitt reviewed the development update materials that were included in the EDA packet. EDA President Bailey asked the EDA to direct staff to work on and send out an RFP for the hotel site if the current developer does not move into th an agreement by October 19. EDA Member Jurgens asked for a motion to move forward with an RFP specific to a hotel in the site located just north of Ruby Tuesday’s, and was seconded by EDA Treasurer Westerberg, all present were in favor. 4.3 River Cruise Community Development Director/City Engineer Levitt reviewed the River Cruise Luncheon update that was included in the EDA packet. 4.4 2016 Minnesota Economic Development Guide Advertisement Community Development Director/City Engineer Levitt reviewed the 2016 Minnesota Economic Development Guide Advertisement update that was included in the EDA packet. 4.5 Dominium Tour Community Development Director/City Engineer Levitt reviewed the Dominium Tour update that was included in the EDA packet. 4.6 East Metro Strong Community Development Director/City Engineer Levitt reviewed the East Metro Strong update