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HomeMy WebLinkAbout2011/10/24 - ADMIN - Minutes - City Council - Study Session 7/ St. Louis Park OFFICIAL MINUTES MINNESOTA CITY COUNCIL STUDY SESSION ST. LOUIS PARK,MINNESOTA OCTOBER 24,2011 The meeting convened at 6:30 p.m. Councilmembers present: Mayor Jeff Jacobs, Anne Mavity, Julia Ross, Susan Sanger, and Sue Santa. Councilmembers absent: Phil Finkelstein and Paul Omodt. Staff present: City Manager (Mr. Harmening), Director of Community Development (Mr. Locke), Economic Development Coordinator (Mr. Hunt), and Recording Secretary (Ms. Hughes). 1. Future Study Session Agenda Planning—November 14, 2011 Mr. Harmening presented the proposed study session agenda for November 14th Councilmember Mavity requested an update regarding the Elliot School proposal. Mr. Locke advised that a preliminary proposal is being evaluated in the context of the design guidelines previously adopted and will likely be presented to Council on November l4`h 2. Discuss the City Manager's 2011 Performance Evaluation Mayor Jacobs stated that Council has retained J. Forrest in the past to assist with the City Manager's performance evaluation and felt that he should be retained again. It was the consensus of the City Council to retain consultant J. Forrest to assist Council in conducting the annual review of the City Manager's performance. Mr. Harmening advised that he uses Mr. Forrest as a professional coach which may be useful in completing the performance evaluation. He added that the City plans to use the same performance evaluation instrument as last year and the evaluation will be conducted electronically or via hard copy. He stated that Council will receive the performance evaluation forms within the next two weeks. 3. Construction Assistance Program (CAP) Application — Stone Mountain Pet Lodge (former Bennigan's Building) Mr. Locke presented the staff report and explained that Stone Mountain Pet Lodge has applied for a Construction Assistance Program (CAP) loan in order to renovate and expand the Bennigan's property and construct a deluxe pet facility called Stone Mountain Pet Lodge. He indicated that Stone Mountain Pet Lodge would be the second facility owned by Dave and Maggie Larson. He noted that staff is still working with the owners to finalize the amount of the CAP loan request. Councilmember Santa asked how long the Bennigan's building has been empty. Mr. Locke replied that the property has been vacant for several years. Study Session Minutes -2- October 24, 2011 Mr. Hunt introduced Dave and Maggie Larson, owners of Stone Mountain Pet Lodge and presented a short video tour of the facility. Mr. Dave Larson, Stone Mountain Pet Lodge, appeared before the City Council and encouraged Council to take a tour of their Blaine facility. He explained that they have been in Blaine for six years and this facility is the largest pet facility in the State. He presented architectural drawings and the proposed site plan of the facility and stated that they plan to retain the onginal Bennigan's building. He indicated that the entire building will have a perimeter wall for noise reduction and security. Councilmember Ross asked if the C-2 zoning was appropriate for this type of business which will include a caretaker's apartment. Mr. Locke replied that staff is working out the zoning details for the site and stated that there is understandably a need for a caretaker apartment with this type of business. Councilmember Sanger asked if a determination has been made that a CAP loan is necessary in order for the business to be viable. She also stated it appears that after all the construction is done, this building will be far more expensive than its value, which led her to question the viability of the business going forward. She added she would like some reasonable assurance that the business is going to be successful. Mr. Locke advised that staff is working with Ehlers & Associates to determine how much assistance might be justified. He stated that the total redevelopment costs include more than pure real estate costs which will determine the property's real estate value following construction. Mr. Hunt noted that the Blaine facility has been very successful and the business was profitable by its second year. Mr. Larson stated that in 2009, their business grew 4%. Councilmember Sanger expressed concern that if this CAP loan is approved, it may contribute to the demise of two similar local businesses because this facility will be in a directly competitive position to the two other local businesses. Mr. Larson stated when they opened the Blaine facility, they felt they could draw customers from all over the Twin Cities, but their customers are mostly from only three zip codes. He indicated that Pampered Pooch and Petropolis are fairly specialized businesses and they feel they can be successful at this location. Ms. Maggie Larson, Stone Mountain Pet Lodge, appeared before the City Council and stated that Blaine Kennels is a business close to the Blaine facility and the Blaine Kennels business has actually gotten better since they moved in because Blaine Kennels has a niche which they do not have. Mayor Jacobs felt that the proposed business may help to clean up this corridor and jumpstart other businesses in the area. Councilmember Ross expressed concern about the potential environmental impact to the area with a restaurant on either side. She also expressed concern about noise from barking dogs. Study Session Minutes -3- October 24, 2011 Mr. Larson stated that the Williamsburg Pet Hotel in St. Louis is located on a street similar to Wayzata Boulevard and has a KFC on one side, a medical facility on the other side, and an apartment building behind it. He assured Council that they control barking, their staff interacts with the dogs, and they limit distractions to the dogs to avoid unwanted barking. It was the consensus of the City Council to support some level of assistance for the renovation, expansion, and transformation of the former Bennigan's building into a pet boarding and retail facility. 4. Preliminary Tax Increment Financing (TIF) Application — Redevelopment of 3340 Republic Avenue (Oak Hill II Office Building) Mr. Locke presented the staff report and introduced Mr. Kent Carlson with Anderson-KM Builders. Mr. Locke advised that the EDA had approved providing assistance for the Oak Hill II project a few years ago, but economic conditions did not make it possible to go forward with the original plans for the site. He also indicated that conditions are different today and Anderson- KM Builders is prepared to move forward with a project if the City can provide assistance. What is proposed is that the City create a TIF district to fund providing assistance to the project. Today the City has the ability to create economic development TIF district more easily than several years ago. He stated that the proposal is to provide $300,000 in tax increment assistance and create a TIF District that would be the funding source for providing that assistance. Councilmember Santa asked if a TIF District was already in place in this area. Mr. Hunt replied that this site does not contain a TIF District and noted that the Oak Park Village TIF District which had been the primary source for funding for the assistance proposed originally will be decertifying next year. Councilmember Mavity asked if the City was far enough along on the design of Louisiana Avenue and Highway 7 to be certain that no part of this property will be needed for the interchange project. Mr. Locke stated that it is now clear that no part of this property will be needed for the interchange project. He added that there has been no indication that this project is tied to the Highway 7 improvements. It was the consensus of the City Council to preliminarily support Anderson-KM Builders' proposed Oak Hill II project and directed staff to prepare for EDA consideration a Redevelopment Contract to provide financial assistance to facilitate the project. 5. Update on the Aquila Commons Project and Redevelopment Contract with Aquila Senior LLC Mr. Locke presented the staff report and advised that while this project is doing well, there are 15 units unsold and some of units are now being resold. He explained the proposal to modify the City's agreement with the developer to adjust the limits on buyer's financial assets and income. The proposal is to apply income restrictions to the initial buyers of 95% of the units as required by state law but not to apply income limitations to any subsequent resale of units; and, to eliminate the City imposed buyer asset limits from all unit sales. He stated that this would allow Study Session Minutes -4- October 24, 2011 people who may be the heirs to the original owners to not have the added complication of meeting these special requirements and will simplify the sales process going forward. Mr. Hunt indicated that at this point some of the rules are serving as an obstacle to having the building fully sold and the City would like to see the resale process run more smoothly for residents and their families. He then introduced Mr. Wally Johnson from Stonebridge Development. Councilmember Sanger expressed concern about the proposal and stated she did not support the TIF for this project because when the developer initially came forward, they said they would not need any TIF financing if the property was structured in a condominium format and they only needed TIF financing to structure it in a cooperative format. She felt this was a self-inflicted problem due to the way that they structured the housing program into a cooperative model. She stated that this is not the only multi-family, owner-occupied building in St. Louis Park and there are other buildings where owners cannot sell due to the decline in the real estate market and she did not feel the City should be in the business of bailing out multi-family housing because of insufficient sales of units. She stated that the City was told originally that there would be income limits because of the nature of the mortgage secured for this building and she was not comfortable with removing the asset restrictions. Mr. Locke stated that there are challenges with trying to sell a previously owned unit when there are still new units for sale and the asset and income restrictions further those challenges. He indicated that Aquila Commons Coop is essentially a neighborhood with special rules and these rules are making it harder for the Coop homeowners to go about the normal business of selling their homes. He stated that he felt it would be wise for the City to remove the extra income and financial asset restrictions, and that even with the extra restrictions removed Aquila Commons would still be a very affordable project. Councilmember Santa acknowledged Councilmember Sanger's concerns and indicated that her position has not changed and she still supports this project. She stated she recalled that the resale prices were supposed to be in line with the original purchase prices so that the units would not increase in value as much as the outside market with the right of first refusal staying within the cooperative community, but that does not appear to be happening because of the income barrier. Mr. Johnson, Stonebridge Development, appeared before the City Council and stated that the 3% appreciation cap is still in place even though real estate values have gone down. He indicated that the 15 unsold units are still subject to the income restrictions and they are running into situations where children want to purchase a unit for a parent and the asset limitation is precluding them from purchasing the unit. He noted that this is the only cooperative in the State that has an asset limitation. Councilmember Mavity stated that there are many older residents living in homes with reduced values and everyone is suffering from decreased property values. She requested clarification regarding the cooperative's requirement that the purchaser be 55 or older and questioned how a family member could qualify as the purchaser. She stated that one of the goals of this is to provide affordable, owner-occupied housing for seniors and to keep them in St. Louis Park. She felt if the City could figure out a way to make sure that that is who is living there, she was willing to be creative in figuring out how to get this done but did not agree with removing all the restrictions. Study Session Minutes -5- October 24, 2011 Mr. Johnson indicated that the occupant has to be 55 or older to live there. He added that they have significantly reduced their prices and this project continues to provide affordable, new construction housing. Councilmember Mavity stated that while she was sympathetic to the owner's frustrations, she was not persuaded that sufficient reason exists to lift the income and asset requirements. Councilmember Santa stated that the price point is lower at Aquila than in other places and indicated that she was in favor of removing the asset requirements for resale. Mayor Jacobs stated that he was in favor of removing the asset requirements for resale. Ms. Pam Pellitier with Avanti appeared before the City Council and stated that she appreciated Council's concerns. She indicated that 40% of their residents need to be within 80% of median household income adjusted for household size, and 79% of their residents are in the lowest income category. She agreed that this is a tough real estate market and the asset restriction creates another encumbrance to selling the units. She advised that one of their residents recently received an offer on her unit after being on the market for two years, but the deal fell through because of the cooperative's limitations. She expressed concern that word gets out in the realtor community about these limitations and added that the majority of their residents have no assets and limited income. Councilmember Sanger stated she was not in favor of removing the asset requirements for resale. Councilmember Mavity stated that she would like to continue to study the issue but was leaning toward not removing the asset requirements for resale. Councilmember Ross stated she was in favor of removing the asset requirements for resale. It was the consensus of the majority of the City Councilmembers present to remove the asset requirements for resale of units. Mr. Hunt stated that staff will request a legal opinion regarding children purchasing units for a parent and whether the children would be considered the owner. Mr. Steve Bubul, Kennedy & Graven, stated the asset requirement is not imposed by State law and represents a St. Louis Park rule which means the City has more latitude in changing it. Councilmember Santa requested that Council receive an update on all legal issues before formal action is taken. 6. Update on Redevelopment Contract with PNMC Holdings (Park Nicollet Health Services) Mr. Locke presented the staff report. Councilmember Mavity requested that staff provide a reference to previous discussions when items with a longstanding history are presented for Council consideration. Study Session Minutes -6- October 24, 2011 Mr. Hunt indicated that under the existing agreement, Park Nicollet (PNHC) is eligible for reimbursement of a substantial portion of environmental remediation costs on its site. The maximum amount of remediation costs that can be incurred is $9 million and has not yet been reached. Without the proposed amendment to the PNHC contract, they could continue to incur additional costs upward to $9 million. With the proposed amendment Park Nicollet would no longer petition for additional costs. The City will pay Park Nicollet what it currently owes, but for the last $500,000 which will not be paid. Mr. Locke discussed the taxable and non-taxable components of the site and the petitioning process that has taken place in previous years. He noted that in the past, the disputed taxable valuations were in the range of 5-10%, e.g., $1 million versus $950,000. Mr. Locke explained that the City has now reached an agreement with Park Nicollet on an amendment to reduce how much the City pays to reimburse them for remediation costs. Mr. Hunt pointed out that the agreement also calls for terminating the TIF District in 2013 or 2014 rather than in 2022. Councilmember Mavity asked whether there are things being left undone on the site that will need to be done later in order for it to be developable, usable land. She also asked if the City is releasing Park Nicollet from anything related to future planning. Mr. Hunt replied that there are still issues on the site and a remediation action plan will be required anytime something is proposed to be done on site and if the TIF District is terminated early as proposed, the City would not be required to pay those remediation costs. Mr. Locke stated that the City hopes to have an opportumty to work with Park Nicollet in the future in transforming this area into a more pedestrian friendly area and releasing the development contract does not preclude the City from future planning with them. Councilmember Sanger encouraged the City to revise its process for resolving tax issues to make the process more streamlined and efficient. It was the consensus of the City Council to direct staff to proceed with a third amendment to the redevelopment contract with PNMC Holdings. 7. Communications/Meeting Check-In (Verbal) Mr. Harmening noted that the Greensboro HIA public hearing will not be held on November 7th and will instead be heard on November 21st. Mr. Hanmening advised Council that Duke Realty recently entered into an agreement to sell their two office towers at West End to Blackstone Group. Mr. Locke indicated that he spoke with Pat Mascia at Duke Realty who reported that Duke will continue to own the West End and pursue the 1.1 million square foot office building at the West End. Mr. Locke advised that staff is working with legal counsel to make sure any connections between the redevelopment project and the PUD approvals are all transferred properly. Study Session Minutes -7- October 24, 2011 Mr. Harmening stated that the Police Department recently arrested a suspect after complaints were received about a person looking in windows. He added that the suspect told Police about some other criminal activities he has been engaged in in the community. Councilmember Sanger reported that she received a phone call today from someone who wanted to inform Council that she had been at a meeting attended by representatives from several faith congregations and someone made a presentation about witchcraft going on in St. Louis Park. She stated that the caller told her this faith group is now"praying for the City Council and Mayor to have leadership skills to address this." She added that the caller also told her that it was all in the statistics on the City's website and to look at the website. Councilmember Santa reported that she also received a phone call from someone in a faith circle and she was told it has to do with the City's crime statistics and the dramatic and alarming increase in crime. Councilmember Ross reported that she received an email regarding this topic and agreed to send it to Mr. Harmening. Mr. Harmening agreed to follow-up on this issue. The meeting adjourned at 8:54 p.m. Written Reports provided and documented for recording purposes only: 8. September 2011 Monthly Financial Report 9. Third Quarter Investment Report (July—September, 2011) 10. Prism Dial-A-Ride Program 11. Interested Buyer for 9019 Cedar Lake Road—Vacant City Parcel 12. Update on Request by Greensboro Condominium Association to Establish the Greensboro Condominium Housing Improvement Area (Greensboro HIA) 13. Vision St. Louis Park Community Check= Um p ate /i i / /1 Nancy Stroth, y Clerk Jeff ac.,. ."ayor