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HomeMy WebLinkAbout1978/08/08 - ADMIN - Minutes - City Council - Joint� 1. 2. Call to Order MINUTES CITY COUNCIL/HOUSING AUTHORITY MEETING ST. LOUIS PARK, MINNESOTA August 8, 1978 A joint mee�ing of the City Council and Housing and Redevelopment Authority was called to order by Chairman Joel Glotter at 8:05 p.m. President Pro Tem Ronald Backes assumed the chair. Roll Call The following Councilmen were present at roll call: Ronald Backes Martha Elstrom Lyle Hanks Jerrold Martin Keith Meland The following Housing Authority Commissioners were present at roll call: Dudley Moylan Commissioner Jane Tschida arrived at 8:10 p.m. Joel Glotter Also present were the City Manager and Executive Director. 3. Cherne � Proposal; ; Midland Bank Off ice � Building Guarantee - Tony Cherne stated his position has not altered and he does not wish to grant a guarantee on the tax increment to the City. In addition,..he stated the project is too a�eLfoot ondthefbuyhback. off er more than $2 per squ President Pro Tem Backes purchase and assemble a involved for the City. stated the developer is Leq��e�ore tsomeirisk is large parcel of land and, the � er certified his qualificatians Commissioner Moylan stated when the develop ment, and financial responsibility to Che City, the guar�ntee of de�velop urchase rice of land, proje�ted tax increment and related financia pro- P p visions�was agreed to by the developer. Tony Cherne stated at the time understand the meaning o£ the deliver a completed �building. this statement was guarantee and meant Chairman Glotter reiterated his concern that be�met, the citizens of St. Louis Park would through�an additional tax levy, and that the protect the taxpaqer from thi� possibility• ��'J1� s��n�ci, he did not thaC hE was prepared to should the tax i���ea�ffe�ence have to m��� �p must CounciZ and the Authority _ f.,1+.� ��. �1/Housing Authority minutes, August 8, 1978 Counc Tony Cherne stated the City was req uiring too many inpositions on the � nd the intent of the project should be to regenerate the developer, a , neighborhood. President Pro Tem Backes inquired as to the p ossibility of guaranteeing a minimum assessed valuation on the property. Tony Cherne stated this typ e of guarantee might would have to consult with advisors and see how agreement. be worked out, but he it is presented in an Councilman Martin stated guarantee of the assessed valuation would grant an acceptable safeguard to the CiCy. The City Manager explained guaranteeing of the ioneofetheapropertyWbelow mean the developer could not protest the valuat a minimum leve] . Appraisal Information - The Executive Director explained three appraisal firms had been hired by the City to prepare acquisition and reuse appraisals. He explained the figures presented are preliminary in nature, and more time is needed by the companies to verify the preliminary f indings.. He explained the acquisition appraisals.identify the current fair market value of the property, while the reuse appraisals identify the value of the property, consistent with the intended uses of the area, when the public agency releases the property for sale. In response to a question from Chairman Glotter, the Executive Director stated the City would be obligated to pay the fair market priee, as indi- cated by the appraisals, for the purchase of the property in order to be fair to the property owner; to offer a significant amount more than the fair market value may not be an appropriate use of taxpayer's money. �e continued the reuse value of the property must be based on consistent uses as determined by the plans for the area, and the City may find it appropriate to alter the selling price in order to encourage certain types of development in the area. Councilman Hanks inquired as to the differences in two of the appraisals based on soil conditions. Malcolm Watson, representing F.N Shaffer Real Estate and Appraisal Service, stated soil correction has been necessary in other parcels in the area to accommodate development. - Sam Child, Clifford R. Johnson & Associates, Inc., stated in his opinion there would be no soil correction necessary south of West 39 Street, because of the topography of the area; soil correction has only been necessary north of West 39 Street. � � Councilman Hanks stated that assuming no soil correction is average of the appraised values is $3.50 per square foot for -302- necessary, the Parcel 1010• .___ --..�-�"`°w Council/Housing Authority minutes, August 8, 1978 president Pro Tem Backes stated the Council and Authority might want to l��k at the spread between the purchase and resale prices and use the same spread, although the two amounts could be adjusted accordingly. Chairman Glotter stated the two appraisers have issued professional judgments as to the market value of the land, and the Council and Authority cannot ignore the $3.30 average which has been obtained. In response to a question by Commissioner Moylan relative to the estimates on t�e other parcels involved in the project, the City Manager e�cplained t�he previous estimates of acquisition cost, $350,000, is being used at a cost of approximately $10 per square foot for acquisition, demolition and relocation. He stated the reuse appraisals as obtained for Parcel 1010 would be the same for the other parcels. Councilman Hanks stated the Co�ncil and Authority must give some indication of their intention, in that Mr. Cherne has not altered his position that the purchase price must be $4 and the resale price $2 per square foot. Councilman Martin stated the difference between the acquisition and reuse value does not influence his thinking, in that the tax increment will pay back the bonds necessary to proceed with the public costs on the project. Councilman Hanks suggested if the reuse value is estimated at $2.87 per square foot and another developer can possibly pay $2.50 or $3 per square foot, perhaps a better development exists for this property. He continued the Council and Authority must act responsibly and develop the property at its best use; there is also a responsibility to amortize the bonds in as short a time as possible in order to return the tax revenues to the general fund of the City and other taxing entities. Councilman Backes suggested option by assembling all the parcels to Mr. Cherne. the Council and Authority might consider another parcels other than Parcel 1010 and sell these Tony Cherne indicated this option would not be acceptable to him. Chairman Glotter stated the important question for the Council and Authority to consider is whether the City can sell this property at less than the reuse value. The Executive D'irector explained provide the reuse value is to be adjusted from the appraisals, if Federal urban renewal and 5tate projects determined by the cities and may b ro riate, the Counci l and Authority feel app P ma make a reasonable The City Manager stated the Council and AuthoritYraisal; however, additionaY determination of the reuse value based on the app aPpraisals may be desirable in ordez to make this decision. resenting Mr. Cherne, stated tWo Boyd Stauffer, United Properties and reP the reuse value as different issues are bef ore the Councll and Authority� Which can be earned determined by appraisals and the value of the property fro inued real estate is worth only what it will m projected rents. He cont eriods. earn based on rentals, vacancies and lease-out P -303- �' ~ CounciL/ Housing Authority minutes, August �, lyi� Martin to determine Councilman It �,,aS moved byoot and the reuse valueo tb$Zther $4 Per Square f valuati Y up on the guarantee of assessed no second to this motion. the acquisition cost at square foot, contingent developer. There was , . . irector reviewed the cash-f lows�agedethebreserve aththee The Exefu�2°per s9 uare foot reuse value. e value o� however, the use of tax increment financing ears is $131,000; end of 20 y . should not be viewed as a loan iement notebepmet. nHehcontinued and bonding should the inc is risk involved to the City osts used in the cash-flow formula�heeCitSegenerallyeprefers the other c He stated Y estimates and not actual flaidein 12 to 14 years, and extensions longer to see bonds and interest p than this indicate more risk to the City. 'dent Pro Tem Backes sugg�sted Parcel 1010 be segregated from the other Presi parce ls and perhaps an additional write-down on the other parcels can be used to achieve a similar net result. Chairman Glotter suggested if the City Mr. Cherne's figures, one must assume of the land. Sam Child stated if the highest and best Boyd Stauffer stated use to the land. accepts the appraisers' and the building is an under�tilization the figures are correct, use of the land. the building would not be the City must also consider a realistic or logical Councilman Martin stated the building may b e a necessary the entire district viable, and the under-utilization of matter in this instance. � Phil Eder, Chairman of the Excelsior the Council and Authority to provide this particular project viable. pro j ec t to make the land does not Boulevard Advisory Committee, encouta8ed the necessary public costs to make It was moved by Chairman Glotter, seconded by Co�mnissioner Tschida, �0 determine the acquisition cost at $3.30 per square foot plus an addiandnal $.40 if the soil tests prove there is no need for soil cotrectivaluation. reuse value at $2.87, contingent upon the guarantee of as5essed Chairman Glotter clarif ied these values would be used on a�� involved in the project. � The motion passed 6-2 (Council�aen Hanks and Martin opposed)• parce�s Tony Cherne stated he could noC accept these f igutes, and ihe project would not be feasible. Councilman Hanks reminded the Council and Authority [hat in PTiOr negotiations, staff detetmined a$1-per-square-foot writeda�'n �°igh� �� appropriate. -304- Council/Housing Authority minutes, August 8, 1978 �t «�s moved by Councilman Elstrom, seconded by Councilman Meland to reseind the previous action establishing the acquisition value at�$3.30 �$3,70, if no soil correction needed) and reuse value at $2.87 per square foot• The motion passed 7-0-1 (Chairman Glotter abstained). It Was moved by Councilman Martin, seconded by Councilman Hanks, to , . . . establish the acquisition value at $4 per square foot and the reuse value aC $2.87 per square f oot, contingent upon a guarantee of assessed valua- tion. � Commissioner Tschida stated it was her impression that if reuse value was not $2, Mr. Cherne would not accept the offer; therefore, she would oppose the motion. In response to a question f rom the Council and Authority, Tony Cherne indicated he must have the $4 acquisition price and $2 reuse value, in order to make the project feasible. The motion was withdrawn. 4. Adiournment Attest: Wendy Bo Recording Secretary Upon a motion by Councilman Hanks, seconded by Co issioner Tschida, the meeting was adjourned at 10�0 p.m. � �. � Irving M. Stern Mayor -305-