HomeMy WebLinkAbout1989/11/06 - ADMIN - Minutes - Economic Development Authority - RegularM IN UT E S
ECO NO M IC DEVEL O PM EN T AUT HO R IT Y
ST . LO U IS PA R K , M IN N ES O TA
No vem be r 6, 19 8 9
MICROFILMED
1. Call to order
President Tom Duffy called the meeting to order at 5:45 p.m.
2. Roll call
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The following commissioners were present at roll call: Bruce Battaglia,
Allen Friedman, Lyle Hanks, Larry Mitchell, Jane Tschida and Tom Duffy.
Also present were the Executive Director, the City Attorney and the Director
of Community Development.
3. Approval of minutes
It was moved by Commissioner Tschida, seconded by Commissioner Battaglia
to approve the minutes of the Oct. 2, 1989 meeting. The motion passed 6-0.
4. Approval of Nov. 6, 1989 agenda
It was moved by Commissioner Hanks, seconded by Commissioner Friedman,
to approve the agenda. The motion passed 6-0.
5. Reports
a. Status report re Robert Larsen Partners
l. Development agreement - Commissioner Hanks felt that if six votes
were not available, there was little need to get into any lengthy discussion.
The City Attorney responded that the City's Charter called for six votes
for general obligation bond financing at the City Council level. The
development agreement and any condemnation would only require four votes.
The Community Development Director said there were two ways to avoid
GO financing: (1) an internal borrowing procedure; and (2) if Kennel-Aire
site is dropped from condemnation.
In answer to a question, Len Thiel said Kennel-Aire had declined the
offer of sale.
When asked if the project could go forward without the Kennel-Aire property,
developer Kelly Doran said it could.
Commissioner Battaglia asked if financials had been received showing
whether or not tax increment financing would be necessary.
The Director said staff had received substantial information but not
everything needed.
EDA minutes
November 6, 1989 2.
Commissioner Hanks felt he would not want to condemn Kennel-Aire is there could
be some assurance their building would be compatible with what Robert Larsen
was proposing.
Commissioner Hanks moved that the other two properties be condemned. This was
seconded by Commissioner Mitchell. (These were the Tennenbaum and Lacoss properties).
Commissioner Hanks felt this property had to be dealt with because of its contamin-
ation and this was as good a place to start as any.
Commissioner Hanks amended his motion to state the EDA would consider condemnation
of the two pieces of property as soon as satisfactory financial arrangements
have been presented to the Authority as part of the development agreement.
The City Attorney noted that because of timing factors, the Authority would
have to start condemnation before the developer had a firm commitment in hand,
i.e., if the developer were unable to secure that commitment, the Authority
might have started condemnation with the potential for liability.
Commissioner Friedman felt the Authority shou 1 d not go any further out on a
limb than need be. He didn't see how it could proceed any further with condemna-
tion and its attendant liaibility until financing is in place.
Commissioner Battaglia felt the same as Commissioner Friedman. He maintained
the issue remaining is if the Authority is willing to go out with financing
which will put the credit of the City on the line to provide tax increment
financing for this project.
Commissioner Hanks withdrew his motion.
Commissioner Friedman said this was a difficult site to develop because of
the pollution. Numerous developers to date have turned the site down. Now there
is a developer ready to go ahead. He wondered if it were in the community's
best interests to have this property standing there undeveloped. He noted the
City had a number of areas that were developed using tax increment financing
and doing likewise on this property was not a problem to him. What did bother
him was if the Authority does not move forward, it's the citizens of the community
who loose. He felt the proper steps to be taken were to condemn and move
ahead on the project and that it be done right.
Commissioner Mitchell asked the City Attorney how the Authority could take
such an action without committing to the point of a problem if all should fall
apart.
The City Attorney responded that rather than making a motion to condemn, the
Authority cou 1 d make a motion to approve a contract that ob 1 i gates the Authority
under certain conditions to condemn, one of which is attaining of financing.
Perhaps the developer would be willing to indemnify the City once it has a
better understanding of what the risk may be.
Councilmember Battaglia agreed that the site is contaminated and something
should be done. He heard the developer say he was willing to go ahead on the
contaminated site which does not. include Kennel-Aire. Also, the developer,
under the requirements for tax increment financing, has to prove
that a development cannot go ahead without T IF and the Authority has not seen
the financials at this point that 'indicate to him that this development cannot
ED A minutes
Nov. 6, 1989 3.
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go ahead and provide him with a reasonable economic return that is reasonable
based on his income stream and expenses. He said TIF is supposed to increase
the City's tax base. The numbers the Authority has been shown tell him the City
is going to spend 20 years paying off revenue bonds. As far as he was concerned
this did not increase the tax base of the City. "
The developer responded that on two separate occasions, the Authority had been
provided with complete pro fo rm a on the property as well as modifications of
those pro fo rmas as they occurred. He al so noted that TIF can be used to develop
blighted areas and, in his opinion, the two areas they were asking to be condemned
would qualify as blighted areas.
In response, the Director of Community Development said staff had received various
spread sheets but not a profo rma that indicates what the development's expected
rate of return is. He felt the project costs of $1.8 million the Authority expects
to incur will pay off before 20 years and in all likelihood, before 10 years.
Commissioner Tschida was willing to vote for condemnation but she would request
that any agreement contain the most protections of the Authority should condemnation
commence.
It was moved by Commissioner Friedman, seconded by Commissioner Tschida, that
the Authority proceed with tax increment financing for this project.
Commissioner Friedman amended his motion to read "To direct staff to continue
to include the Kennel Aire site in the redevelopment project consistent with
the actions of the Authority at its last meeting, to defer taking any action
relating to condemnation until the terms of the development agreement have been
worked out with the developer."
The motion passed 5-1 (Commissioner Battaglia opposed).
The City Attorney said the development agreement could be pulled together within
two weeks fo r cons i de ration by the Authority. He did note that by signing the
development agreement the Authority is not guaranteeing that the City Council
will approve any bonds. This would represent a business risk decision by the
developer at that point.
Commissioner Battaglia said he would like to see alternatives to GO bond financing.
Mr. Thiel, representing Kennel-Aire wanted the record to show that in the event
the Kennel-Aire property is not included in the condemnation, then he would
like to see pl ans which illustrate the access to the property, whether any of
their parking is going to be taken and whether there will be any interference
with Kennel-Aire's loading dock.
In the matter of security, the Director of Community Development brought up
a situation wherein if the taxes generated don't match what the developer represented.
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He said the developer's position is that they are willing to provide security
in the fo rm of a personal guarantee in the amount of the tax increments ,necessary
to pay off the project costs incurred by the EDA. Staff's position is that the
} Authority should get security fo r the entire taxes which would be produced by
t his project.
ED A m i n u t e s
N o v . 6 , 1 9 8 9 4 .
I t w a s t h e c o n s e n s u s o f t h e A u t h o r i t y t h a t s t a f f t h o r o u g h l y r e s e a r c h t h i s a s
p a r t o f t h e d e v e l o p m e n t a g r e e m e n t .
5 b . C o n s i d e r a t i o n o f r e d e v e l o p m e n t s t r a t e g y /R F P : H w y . 7 c o r r i d o r
I t w a s m o v e d b y C o m m i s s i o n e r H a n k s , s e c o n d e d b y C o m m i s s i o n e r B a t t a g l i a , t h a t
s t a f f b e d i r e c t e d t o n e g o t i a t e w i t h t h e t w o p a r t i e s i n t e r e s t e d i n d e v e l o p i n g
t h e H w y . 7 c o r r i d o r a n d r e p o r t b a c k t o t h e A u t h o r i t y w i t h t h e p r o p o s a l s .
T h e m o t i o n p a s s e d 6 -0 .
5 c . S t . L o u i s C e n t r e P a r t n e r s - c l o s e d m e e t i n g , l i t i g a t i o n p e n d i n g
6 . U n f i n i s h e d b u s i n e s s
N o n e .
7 . N e w b u s i n e s s
a . R e c o m m e n d a t i o n r e L o t l , B l o c k 7 , O a k P a r k V i l l a g e A d d i t i o n
I t w a s m o v e d b y C o m m i s s i o n e r H a n k s , s e c o n d e d b y C o m m i s s i o n e r M i t c h e l l , t o a u t h o r i z e
e x e c u t i o n o f c o n t r a c t s w i t h E N S R a n d S T S t o c o m p l e t e t h e s t u d y a s c o n t e m p l a t e d .
T h e m o t i o n p a s s e d 6 -0 .
8 . C o m m u n i c a t i o n s a n d b i l l s
a . O c t . 3 1 , 1 9 8 9 1 9 8 9 f i n a n c i a l s t a t e m e n t
b . C l a i m s
It was moved by Commissioner Hanks, seconded by Commissioner Battaglia to approve
the Oct. 31, 1989 financial statement and approve the claims, authorizing payment.
The motion passed 6-0.
The Authority reconvened after a closed meeting.
The City Attorney said that subject to EDA approval, the developer and developer's
counsel were willing to agree that the Wilkins lease can continue in place and
can continue but it will be subject to their option to purchase the property
within 7 years. Wilkins will have to find another location before the option
is exercised and it will be suborinate to the lien.
In answer to a question from Commissioner Friedman, the City Attorney said that
to his knowledge there was nothing Wilkins could do that would prevent the Authority
from evicting Wilkins from the On the Avenue site. He said there was still the
possibility of litigation between the Authority and Wilkins but involves the
question of damages re the taking that occurred two years ago.
It was moved by Commissioner Hanks, seconded by Commissioner Friedman, defer
action. The motion passed 6-0.
M IC R O F T L FD0 ,
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EDA minutes
Nov. 6, 1989 5
Commissioner Hanks said he had no knowledge of this whole item and requested
a complete detail of what the two attorneys have worked out. He would then be
willing to meet on the item on the third Monday in November.
9. Adjournment
It was moved by Commissioner Hanks, seconded by Commissioner Battaglia, to adjourn
the meeting at 7:29 p.m. The motion passed 6-0.
Executive Director
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