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HomeMy WebLinkAbout2017/10/23 - ADMIN - Minutes - City Council - Study SessionAll$t. Louis Park OFFICIAL MINUTES MINNESOTA CITY COUNCIL STUDY SESSION ST. LOUIS PARK, MINNESOTA OCTOBER 23, 2017 The meeting convened at 6:30 p.m. Councilmembers present: Mayor Jake Spano, Tim Brausen, Gregg Lindberg, Anne Mavity, and Susan Sanger. Councilmembers absent: Thom Miller and Steve Hallfin. Staff present: Deputy City Manager/FIuman Resources Director (Ms. Deno), Chief Financial Officer (Mr. Simon), Economic Development Coordinator (Mr. Hunt), Director of Community Development (Ms. Barton), Financial Manager (Mr. Ebenstiner), Economic Development Specialist (Ms. Grove), Associate Planner (Ms. Monson), and Recording Secretary (Ms. Pappas). Guest: Stacie Kvilvang, Ehlers; Chris Velseo, Via/PLACE developer. 1. Future Study Session Agenda Planning —November 13, 2017 Ms. Deno presented the proposed Study Session agenda for November 13, 2017. Ms. Deno noted that because both Councilmembers Sanger and Mavity will not be in attendance at the November 13 city council meeting, the policing debrief will be moved to another meeting. 2. Annual Tax Increment Financing (TIF) District Management Report Mr. Simon and Mr. Hunt, along with Ms. Kvilvang from Ehlers, discussed the Management Review & Analysis — 77F Districts report. Mr. Simon explained that the purpose of the report is to review the status, financial condition, debt management, and future value of the city's tax increment districts. The report also describes the revenues generated from each TIF district and presents recommendations. Information contained in the report is obtained from the city, Hennepin County, State of Minnesota, Office of the State Auditor, and Ehlers. Portions of the information in the report are used by staff throughout the year to provide a quick reference guide when performing analyses and making recommendations to the council or EDA. Ms. Kvilvang stated that there are 20 TIF districts (19 active and 1 decertified) in St. Louis Park. She noted each district and also presented each on a map of the city. She stated that the captured TIF as a percentage of tax base in 2017 was 10.5%. Couneilmember Brausen asked if that represents the entire market value of the city. Ms. Kvilvang explained that it measures TIF against the total value of the city. Councihnember Brausen asked her to distinguish between a rating of Aaa vs. AAA. Ms. Kvilvang stated that the Aaa rating is a Moody's rating, while the AAA rating is a Standard and Poors rating. St. Louis Park has an AAA bond rating. Mayor Spano asked where St. Louis Park falls with this 10.5%, since the average is at 6%. Ms. Kvilvang stated that most cities are between 5-10%, adding that it is really about what is being accomplished in the community. Study Session Minutes -2- October 23, 2017 Councilmember Sanger noted that when TIF districts are completed and coming off 1-2 years earlier than expected, it shows that St. Louis Park is one of the leaders. Mr. Hunt commented that many of these projects are paying themselves off sooner rather than later. Ms. Kvilvang pointed out there is an over 900% increase in market value overall within St. Louis Park, noting this is the return on the city's investment. Additionally, Ms. Kvilvang noted that 63% of the PAYGO obligations are within two TIF districts — those being Park Commons and the West End. She added that $5.4 million in bonds is outstanding. Ms. Kvilvang recommended that a pooling analysis be completed to develop a plan to utilize funds not needed for obligations for other eligible projects within the city. Additionally, she discussed the Year Six Rule, which requires that beginning in year six of the district, the city must utilize 75% of the TIF generated to pay obligations. She stated that the recommendation is to complete a year six rule analysis for the Zarthan, Park Commons, Ellipse and West End TIF districts, in order to determine if they should be decertified prior to the end of their legal term. Ms. Kvilvang stated that the city's TIF districts are in overall good financial health, and the city has opportunities to utilize funds from several districts to augment its housing and redevelopment efforts and to assist in paying for other eligible redevelopment costs. Mayor Spano thanked staff and Ms. Kvilvang for the report and said it would be helpful if staff could provide a type of cheat sheet for the council with bullet points to help answer questions on TIF from residents. Councilmember Mavity added that in trying to get this story out to people, there is much to explain. She noted that a big part to the story of St. Louis Park is the over 900% return rate, which needs to be told clearly and possibly through a video on the website. Councilmember Lindberg added that there is a strong story to tell here, and if it were clear and concise, it would be helpful to all. Mr. Simon also pointed out that the 5-10 year projections are crucial in long-range planning on the city's debt model and also helpful in making estimates on future tax capacity. Councilmember Brausen added that he is supportive of all the recommendations made by staff and the consultant. 3. Via (PLACE) Project Mr. Hunt explained that PLACE is preparing to begin site work and building construction on Via, a mixed-use redevelopment to be located on the north and south sides of the future Southwest Light Rail Transit (SWLRT) Wooddale Station. He noted that financing has been secured; demolition of the former McGarvey property is underway; and the building permit is pending for the 217 -unit rnixed-use, mixed -income apartment building to be constructed on the north side site. Mr. Hunt added that financing, property closing, and construction of the hotel on the south side site is dependent upon Marriott's approval of PLACE's franchise application and building plans. Study Session Minutes -3- October 23, 2017 Absent any significant design changes to the hotel's interior or exterior, PLACE hopes to receive Marriott's final approval in December or January; however, the exact timing is yet to be determined. Mr. Hunt added that this precludes PLACE from acquiring the south side property at this time. Additionally, PLACE must commence its project by December 31 or risk losing its $900,000 DEED cleanup grant. Mr. Hunt stated that given these circumstances, PLACE has requested that its acquisition of the EDA's property occur through two separate property conveyances - one for the north side site and one for the south side site. He stated that closing on the north side site would occur no later than November 30, 2017, allowing the project to commence on the north side site before the end of 2017. Closing on the south side site would then occur no later than April 30, 2018. Additionally, authorization of two separate property closings would not change the required project commencement and completion dates outlined in the contract and would allow PLACE to complete construction on the total project earlier than the required December 31, 2019. Mr. Hunt explained that this request would require an amendment to the contract, and the contract would be brought back to the EDA for formal consideration on November 6. Councilmember Mavity asked if the north side would stand alone as a separate project if Marriot stepped out of the pending agreement. The developer stated that the property would be divided to make the project work, and each side would stand alone, and there would be two separate closings on the project. Councilmember Mavity asked if the remainder of the bonds will be available for the south side project. The developer stated yes. Councilmember Mavity asked if there is a Plan B if Marriot bows out of the agreement. The developer stated that there is no problem with Marriott's commitment, but they take a long time to finalize their agreements. He added that PLACE is in regular conversations with Marriott and the management company, which the developer hired, has a good relationship with Marriott. The developer added, however, that the timing is out of their control. He would not like to lose the DEED grant, and so they are bringing this amendment to the EDA for consideration at the November 6 meeting. Councilmember Mavity asked if there are any other outstanding elements. The developer stated that everything had been identified and disclosed. Councilmember Brausen asked for clarification on the project name. The developer stated that the name of the development project is Via, as it represents different means of mobility, living, eating, and working. He added that his company is PLACE. Councilmember Brausen asked if the developer fails to close on the south site by April 31, 2018, if there is any default, or if they will be two separate transactions. Mr. Hunt answered that in that particular scenario, there would be would be a default, but he added that there would be a work-out period with the developer to cure the default. The EDA does not want the property back. Councilmember Brausen asked also, if the whole project is not completed and the apartment is not built, does the city have any rights to reclaim the property. Mr. Hunt stated in that situation the EDA could reclaim the property, but again, the EDA would want to find a solution with the developer as the EDA would not want to reclaim the property. Councilmember Lindberg stated that he loves the name of the project and has always felt the risk was well worth the return on this project. He added that if successful, this project will be a Study Session Minutes -4- October 23, 2017 flagship. Councilmember Lindberg asked if there is anything new the EDA should be concerned about. Mr. Hunt stated no, adding that the risk is being divided 65 — 35%. Councilmember Sanger asked a question related to the timing change and if this would set the city up for mass traffic problems with the upcoming redo of the Wooddale Bridge. Ms. Monson stated that PLACE is working to coordinate the timing of the project with the bridge work. Mayor Spano asked if anyone had asked DEED for an extension. The developer stated that the grant was recently received and was negotiated to the end of the year, so there is concern about going back to them now to ask for an additional extension. Mr. Hunt stated that DEED is reluctant to provide extensions to its grant agreements. He indicated that the proposed amendment will be brought to the EDA for formal consideration on November 6. 4. Proposed Property Acquisition: 5639 Minnetonka Boulevard (pulled up for discussion from written reports) Ms. Barton noted that in early October, staff became aware of a foreclosed, single-family property, located at 5639 Minnetonka Blvd. that would soon be listed for sale. The property has been vacant for several years and fallen into disrepair. The property is zoned R4, multi -family residential and is adjacent to three other single-family homes. Ms. Barton stated that all three neighboring properties are working with a realtor to sell and redevelop. Also, a realtor has met with staff and indicated an interest in constructing an apartment building at this location. Ms. Barton noted it was discovered today that a realtor has put the property on the market. She stated that the city sent a letter of intent today. If it is accepted, the city will move forward with a purchase agreement, which would then go back to the EDA for approval. Ms. Grove stated that the city hopes to hear back by tomorrow, adding this is a non-binding agreement. Councilmember Sanger stated that it makes sense for the city to acquire this property and keep control over what is constructed there, adding that the city does not need any more one -bedroom apartments. She noted that there is concern that the owners of the adjacent properties want the most money they can get for their property and will try to leverage the city in order to get bigger bids from others. Councilmember Mavity stated that she has negotiated many of these types of purchases, adding she has concerns. She stated that this property is one the city has a strong interest in and it may need to be discussed in a closed session so that negotiations can be successful. Councilmember Brausen stated he is supportive to move ahead on this. Councilmember Mavity asked that staff please discuss any updates with council. Ms. Deno stated that staff would keep the council apprised of the situation as it moves forward. 5. 2017 — 2021 Audit Proposals Presentations Mr. Simon stated that the council directed staff in July 2016 to request proposals for auditing services after the 2016 audit. This evening, three firms will be presenting to the council, highlighting their qualifications and services. Ms. Nancy Schulzenberg presented on behalf of BerganKDV. Ivlr. Aaron Neilsen presented on behalf of MMKR. Study Session Minutes -5- October 23, 2017 Mr. Dave Mol presented on behalf of RedPath and Company. Questions asked by council of the three representatives from the firms are as follows: Councilmember Mavity noted that each firm is extraordinarily competent but asked each to speak about their work on race equity and increasing diversity, as well any green or sustainability policies, noting that these are items of strong focus by the city. All the firms reviewed their structure and staffing makeup. They discussed some of the challenges in recruiting new accountants. Each firm also discussed some of the green and sustainability practices in their offices. Mayor Spano asked each firm to discuss what differentiates one from the other. Ms. Schulzenberg stated that they are all very competent, but with her firm, they have expertise as a regional fit -in. She added they are experts in other areas, as well, such as payroll and technology. They have a large suite of services to provide for cities. Mr. Neilsen stated that his firm has been in St. Louis Park for the past 60 years and has a good understanding of the city. He stated that his partners have many years of experience. He added that they are a local and small firm with much to offer. Mr. Moll stated that in his firm everyone is licensed, and the company is employee owned. It is diverse, with female management and this makes them unique. Councilmember Sanger asked Mr. Neilsen if he feels being located in St. Louis Park is an asset or a drawback for their firm. Mr. Neilsen stated he feels strongly it is an asset. Their firm is able to see the city's development, and he feels strongly about the services their firm can provide for the city and for the community. Ms. Deno reminded councilmembers that. the decision about which firm to hire is up to the council. Couneilmember Brausen asked if each firm was aware of the other proposals for services. Mr. Simon stated that the firms did not know the proposal amounts of each of the other firms. Councilmember Mavity asked how long cities typically stay with their auditor. Mr. Simon said that some communities do an RFP every 5 years as a best practice. Mayor Spano added that he appreciated Mr. Simon coming into the city finances with a fresh set of eyes. Councilmember Lindberg asked if there were any problems with RedPath as the city's auditor. He added that he does not see any issues if the city continues with RedPath and would not want to change auditors every five years. He added that from his perspective, RedPath is most aligned with St. Louis Park, and he sees no purpose in changing firms. Councilmember Mavity agreed completely and stated that RedPath is competent, plus she liked the fact that they are employee owned and that 60% of the women on their staff are in leadership Study Session Minutes -6- October 23, 2017 positions. She does not see a need to change but would like to continue to check in every five years. Councilmember Sanger agreed that there is no reason to move away from Redpath. However, she added that she was impressed also with BergaaKDV and their value system. She added that MMKR is too small a firm. Councihnember Brausen stated that although he likes to buy local when he can, he is leaning toward RedPath, especially related to their corporate culture. Mayor Spano stated that staying with RedPath for another five years is fine, adding that his main objective was going through the RFP process to determine if Redpath was still the appropriate firm for St. Louis Park. He stated that he would also like to remain with RedPath, stating that they are competent, and the council seems to be in agreement. It was the consensus of the council to stay with RedPath as the city's auditing firm. Communications/Meeting Check -In (Verbal) Councilmember Brausen stated that he appreciated the annual EDA written report in the staff report, stating it is especially useful with TIF district discussion. Ms. Deno noted that the Charter Commission meeting is tomorrow night. This is a public meeting being held at 6 p.m. The meeting adjourned at 8:30 p.m. Written Reports provided and documented for recording purposes only: 6. September 2017 Monthly Financial Report 7. Third Quarter Investment Report (July — September 2017) 8. Westwood Hills Nature Center Project 9. Annual EDA Redevelopment Contract Status Report 10. Walker Building and Historical Society Updates 11. SWLRT Update 12. Proposed Property Acquisition: 5639IVnetonka Boulevard (moved to # 3 discussion item) I \ Melissa ennedy, City Clerk Jake