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HomeMy WebLinkAbout2005/01/03 - ADMIN - Minutes - Economic Development Authority - RegularArthCITYOF ST. LOUIS PARK OFFICIAL MINUTES ECONOMIC DEVELOPM ENT AUTHORITY ST. LOUIS PARK, MINNESOTA JANUARY 3, 2005 1. Call to Order President Santa called the meeting to order at 6:30 p.m. 2. Roll Call. Commissioners present: Sue Santa, John Basill, Jeff Jacobs, Phil Finkelstein, Susan Sanger, and Sally Velick. ) Comm issioner Omodt arri ved at 6:33 p.m. Staff present: City Manager (Mr. Harmening), City Attorney (Mr. Scott), Comm unity Development Director (Mr. Locke), Economic Development Coordinator (Mr. Hunt), and City Clerk (Ms. Reichert). 3. Approval of M inutes 3a. Economic Authority Minutes of December 20, 2004 It was moved by Commissioner Jacobs, seconded by Commissioner Velick, to approve the minutes as presented. The motion passed 6-0. 4. Approval of Agenda It was moved by Commissioner Finkelstein, seconded by Commissioner Jacobs, to approve the minutes as presented. The motion passed 6-0. 5. Reports Sa. M otion to accept and file vendor claim report It was moved by Commissioner Jacobs, seconded by Commissioner Sanger, to accept the vendor claims for filing. The motion passed 6-0. 6. Old Business - None 7. New Business 7a. Public Hearing regarding Development Contract and Real Estate Conveyance with 4100 Vernon Developers LLC EDA Resolution No. 05-01 EDA Meeting Minutes -2- January 3, 2005 Mr. Hunt stated that 4100 Vernon Developers LLC is made up of Foundation Land and Master Development Group. The Economic Development Authority (EDA) reviewed the preliminary business points of a proposed contract at the September 27, 2004 EDA/Council study session. Mr. Hunt summarized the contract stating that the EDA is agreeing to purchase the replatted Brookside School property from School district 283 on or before February 15, 2005 for $1.8 million. Immediately following that purchase, the EDA would sell the property to 4100 Vernon Developers for $1.4 million. The EDA will also provide the developer up to $100,000 to place in an environmental escrow to help the developer with unforeseen environmental remediation costs that will likely occur as a result of redeveloping the subject property. The EDA has submitted grant applications to Met Council and Hennepin County to offset costs and has received favorable consideration. Mr. Hunt reported the EDA is protected in the agreement with regard to the contaminants on the subject property and the city attorney has reviewed the agreement to ensure those provisions are intact. Mr. Hunt stated that the project does not constitute a business subsidy. The assistance is exempt under state statutes as it involves housing. The contract entitles the EDA to be obligated to relocation benefits. Mike Norton, Kennedy & Graven, was present to answer any questions. Charlie Nester and Bruce Botamin, Master Developers, were also present. Mr. Hunt stated that if there were not further questions, staff recommends approval of the development contract and land conveyance. Commissioner Sanger inquired about the city's liability in regard to environmental hazards should the developer go bankrupt. Mr. Scott replied that they have done the best possible with the project circumstances. By not taking title can help minimize liability. He stated that staff is satisfied that they have the disclosures from the School district regarding potential issues on site and the city has done due diligence. They have significant information on what the environmental hazards are and think they are manageable. He stated that it was not possible to state that there will not be liability at all. In his judgment, he felt they have a more than reasonable level of protection for the city and EDA. President Santa closed the public hearing. It was moved by Commissioner Basill, seconded by Commissioner Jacobs, to adopt EDA Resolution 05-01 approving a Contract for Private Development including Sale of Real Estate between the St. Louis Park Economic Development Authority and 4100 Vernon Developers LLC and authorize the President and Executive Director to execute the documents necessary to complete the real estate transaction. The motion passed 6-1. Commissioner Sanger opposed. Commissioner Sanger stated for the record that she does support the motion. She stated that she supports the housing plans that have been developed for the property and the land use is appropriate. She does not support the financial arrangements that have been developed to make the project happen. She stated that the property was zoned for single family housing originally. She felt the seller and buyer negotiated a price based on the hope that the City council would increase the zoning for greater density of the property. She stated that property value directly relates to the kind of development that can be built EDA Meeting Minutes -3- January 3, 2005 on it. The property price did not accurately reflect the zoning of the property. She felt there was a problem because neither the buyer nor the seller asked if the City council agreed with the proposed zoning of higher density. She stated that they agreed to increase the zoning but did not increase it as much as the parties apparently hoped. Commi ssioner Sanger stated the City council asked that the purchase price be lowered but it was not lowered to a realistic level given the actual zoning that ended up on the property. The parties then asked the city to supplement the difference in cost plus additional money for environmental issues that may arise. She emphasized that she felt that this was an extremely poor process and she does not want to see them set up for future problems. In the future, she did not want to see sellers and buyers agree on a price that is not directly related to the zoning of the property and did not want to be asked to supplement these projects with taxpayer funds. She felt this was inappropriate. She stated she had heard several examples of why this is okay. One example is that the School district needs funding and this will act as a transfer payment to them. She felt this was not an appropriate way to be funding our School district. Another example is that the housing plan is a good plan but she felt that is the equivalent to saying that the end justifies the means. She is not in favor of the financing scheme for the project. Commissioner Sanger stated that the only way to avoid environmental hazard liability is not to insert themselves into the title and she frankly did not understand why they are doing so. She would only support city funds for this project if they were not in the chain of title and there were some extraordinary environmental hazards that were not foreseen. Commissioner: Basill disagreed with Commi ssioner Sanger. He stated that other projects utilizing TIF are using taxpayer dollars and he did not see how they could treat the School district differently than private developers. He did not think they were going to be setting any precedent. Commissioner Velick stated that it was her belief that they were not going to be involved in asbestos abatement. Mr. Hunt replied that is why they made application to both Hennepin County and Metropolitan Council for the remediation for the asbestos in the school building. Commissioner Velick stated that they knew about the asbestos remediation and she inquired if there would be any other pollution that the city would be responsible for if discovered. Mr. Hunt replied that they reviewed the environmental report and there aren't any surprises in it from what had previously been discussed. Commissioner Omodt disagreed with Commissioner Sanger and some of the comments she had made. He stated that when properties are purchased throughout the city, developers do not always come to the City council beforehand. He does not think they are treating the School district any differently than any other property owner. Regarding TIF, he is in support of it to use city funds to accomplish city goals. He is in full support of this project, the approach taken and the developers. Commissioner Finkelstein stated that they are the ones who asked for a different development plan to include single family housing. Comm issioner Jacobs understood Commissioner Sanger's concern. He stated that no TIF was originally requested. He felt they struck a balance on the number of single family homes and the amount of TIF to be used. He felt they should move forward with the project. President Santa expressed her support of the project as well and felt it was an appropriate use of taxpayer funds. ED A M eeting M inutes -4. Ja nuary 3, 2005 7b. Assignment of Purchase Agreement and Consent for replatted 4100 Vernon A venue ("Brookside Subdivision") EDA Resolution No. 05-02 Mr . H unt reported that in order to convey the pro perty to the developer, the ED A must purchase the pro perty from the School district. Once all the contingencies betw een the School district, the city and the developer have been met, the simultaneous closing will take place on or befo re Febru ary 15, 2005. It was moved by Commissioner Basill, seconded by Commissioner Jacobs, to adopt EDA R esolution 05-02 approving the Assignment of Purchase Agreement and Consent between the EDA, St. Louis Park School district 283, and Foundation Land Development LLC for the replatted 4100 Vernon Ave ("Brookside Subdivision"), and authorize the President and Executive Director to execute the documents necessary to complete the real estate transaction. The motion passed 6-1. Commissioner Sanger opposed. 8. Communications: None 9. Adjournment T he m eeting adjourn ed at 6:55 p.m . e, 2±'=--- ecretary President