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HomeMy WebLinkAbout2018/03/26 - ADMIN - Minutes - City Council - Study SessionSt. Louis Park OFFICIAL MINUTES M I N N E S O T A CITY COUNCIL STUDY SESSION ST. LOUIS PARK, MINNESOTA MARCH 26, 2018 The meeting convened at 6:30 p.m. Councilmembers present: Tim Brausen, Steve Hallfin, Rachel Harris, Mayor Pro Tem Anne Mavity, Thom Miller, and Margaret Rog. Councilmembers absent: Mayor Jake Spano Staff present: City Manager (Mr. Harmening), Chief Financial Officer (Mr. Simon), Deputy City Manager/Human Resources Director (Ms. Deno), Director of Community Development (Ms. Barton), City Assessor (Mr. Bultema), and Recording Secretary (Ms. Pappas). Guest: Stacie Kvilvang, Ehlers; Martha Ingram, Kennedy & Graven Future Study Session Agenda Planning —April 2 & 9, 2018 Mr. Harmening presented the proposed Study Session agenda for April 2 and 9, 2018. Mr. Harmening noted that Wayside House would like to pursue an expansion and adding a road on the city right-of-way. This will be an upcoming topic for discussion. Councilmember Brausen asked if any of the other councilmembers are able to attend a meeting on Friday, March 30, from 3:30-5:30 p.m. for the Highway 169 project, as he is not available. Councilmember Harris stated she would check her schedule to see if she could attend. Councilmember Rog stated that the study session prioritization grid needs updating and noted several items. She asked about The Nest, and Ms. Barton mentioned that the committee wants to wait to speak to the council again until they have solidified a location for The Nest. Mayor Pro Tem Mavity stated that she wanted to pull agenda item #5 -Comprehensive Plan from written reports to be a discussion item at the end of the meeting. Councilmember Rog also asked to pull item #8 -Rain Garden Rewards Program, from the written reports for discussion at the end of the meeting. 2. Central Park West Project Updates Ms. Barton stated that the developers have requested to extend the Central Park West office buildings construction schedule by two years to allow additional time to prelease the buildings and to attract equity investors. Additionally, Phase II (multi -family housing) of the project, has missed its required construction commencement date, and the developers are proposing a revised construction schedule while they continue to search for an anchor tenant. Ms. Barton explained that the linear park would be completed this spring but that the woonerf construction would be delayed. Mayor Pro Tem Mavity asked when the council began discussing this project. Mr. Harmening stated in 2010. Councilmember Brausen asked if all phases of the project must be completed before taxes are raised to reflect current market value or if this would happen in stages. Ms. Ingram stated that the Study Session Minutes -2- March 26, 2018 agreements all fall within the minimum assessment agreements, so as phases come up, the assessment agreements are addressed as needed. Councilmember Brausen asked then if the property owners would be paying increased taxes because Phases I and III are completed. Ms. Ingrain stated yes, the owners will pay minimum value unless changes occur in the assessment. Councilmember Brausen asked if affordable housing units could be added to the project. Ms. Ingram stated that this would be a significant cost to the developer, as they are not receiving TIF for this project. Councilmember Rog asked what the owners are paying in taxes on the property now and how it relates to the $30 million. Ms. Ingram stated that she does not know exact figures. They stated that they are paying what the city assessor has stated is the value of the land. Councilmember Rog asked about the continued effort to find an anchor tenant, and what happens if the developers do not find one. Ms. Barton explained that the developers will continue to look, adding that this is a very marketable area along the I-394 corridor, so it is likely they will find an anchor tenant. Councilmember Harris asked if the city has any leverage in this situation. Ms. Ingram stated no, because there is no TIF to leverage. Councilmember Miller asked what alternatives the city has and if the developers changed the use of the buildings if the process would move more quickly. Ms. Barton stated that the market for multi -family housing is strong, but this area needs more commercial office in order to get daytime traffic there. She added that the area is still a good strong commercial office market location. Councilmember Brausen stated that he will continue to support the development. Councilmember Rog asked if this impacts the school district budget. Ms. Barton stated no, because the increased taxes would be captured for the tax increment financing; however, the developers will need approval to modify the assessment agreement from the school district, as well. Mayor Pro Tem Mavity stated that she is very much in support of the project, which began in 2010 and took until 2014 to actually determine what was needed on the site. She stated that the council is not wanting to change this. While it is unfortunate the developer is having trouble finding an anchor tenant, she noted that it feels like a normal delay. It was the consensus of the city council to move forward on this amendment and market evaluation 3. 2018 Bonding Review and Westwood Hills Nature Center Financing Update Mr. Simon reported to the council. He stated that the 2018 bond issue amounts are subject to change since not all bids have been awarded. The anticipated GO bond issue in April/May 2018 would include the following: • Connect the Park • Water Treatment Plant ##4 project • Water and Sewer capital projects • SWLRT, Softball Fields, and Fiber Study Session Minutes -3- March 26, 2018 Mr. Simon added that the Westwood Hills Nature Center project has 3 viable forms of bond issuance, including GO charter bonds, GO tax abatement bonds, and EDA lease -purchase revenue bonds. Ms. Kvilvang reviewed these three bonding options with council. She noted that the city currently has a AAA Standard and Poor's bond rating. Ms. Kvilvang stated that Ehlers' recommendation is to go with GO bonds. Councilmember Miller asked if the city has ever used tax abatement bonds before. Mr. Simon stated no. Councilmember Brausen stated that he preferred to use city charter bonds, but would agree to tax abatement bonds if that is Ehlers' and staff's recommendation. Councilmember Harris asked if it was possible to use a combination of all three bond options. Mr. Kvilvang stated that they could but added there is no reason to do so. Councilmember Harris asked what the taxpayer cost would be on a median value home for W WHNC bonds. Mr. Simon stated $34-37 per year, based on interest rate estimates at this time, since this is a 2019 bond issue. Councilmember Rog stated that she did not remember the council being asked to approve tax abatement bonds in the past. Mayor Pro Tem Mavity stated that the council always looks at all options. Councilmember Rog stated that 65% of elementary students who visit the nature center do not attend St. Louis Park schools. She noted that students at most of the schools do not go to the nature center after first or second grade, which is inequitable. She also noted that Parent Teacher Organizations typically pay for the trips to the nature center and suggested that the city pay for transportation, curriculum development, and other needs to ensure all students have access. Councilmember Rog also noted that the Climate Action Plan goal is reducing greenhouse gas emissions. However, she pointed out that the nature center building already emits very little greenhouse gases. She noted that funds spent to make the nature center net zero may be better spent on projects across the community that reduce greenhouse gas emissions. Councilmember Rog also stated that there are tradeoffs when spending this amount of money. She noted that many renters and homeowners are cost -burdened in St. Louis Park, paying more than 30 percent of their income in taxes. She suggested there could be other ways to fund the nature center so it doesn't further burden these residents. Councilmember Rog stated access to nature is good for peoples' health and well-being, adding that there are many opportunities to improve access to nature in the community. She noted that the nature center is located in a neighborhood that is high income with mostly white residents. She suggested that rather than investing such a large amount in one building, the city could invest in improving access to nature in more locations. Councilmember Rog suggested that council discuss the pros and cons of the project further before making a decision. Mayor Pro Tem Mavity asked Mr. Harmening to clarify where the council is at in the W WHNC project. Mr. Harmening stated at the April 9 council meeting, staff and the consultant will present the next step in the design for WWHNC, which council authorized in December. From there, the schematic design will be developed. After that, staff will be directed to prepare plans Study Session Minutes 4- March 26, 2018 and specifications and to pursue bids. He continued that construction would begin in 2019, and it would take one year to build the nature center. Councilmember Miller stated that in his opinion the reason for discussion about tax abatement bonds is the nature center project. He does not recall the council asking for other funding mechanisms for this project. He added that the reason for the super majority vote on bonds is that this is a very important and impactful project both to the council and to the city. However, he noted that it seems odd to bring a different bonding form forward. He continued that he supported the project through May, 2017; however, he did not understand the city's budget process at that time. He stated he now understands that in order to comply with the city's Climate Action Plan, the nature center will cost the city a large amount of money. He added that the city will have to go a long way to financially incentivize residents and commercial business owners on project spending. Councilmember Miller stated that in the city, urgent needs sometimes come up related to water and other items that need to be addressed immediately. Additionally, he noted that affordable housing continues to be a priority, and there is a need to devote millions to this, perhaps through a housing trust fund. He continued that the down side is that we will have to raise taxes for many years to afford to do all of this. Councilmember Hallfin stated he disagrees with Councilmembers Rog and Miller. He stated that he looks at every project that comes before council on an individual basis. He stated that staff did their work on this and has come to the council with the information, including funding options, adding that the council has not yet approved the nature center project but can vote on the bonding. He stated that he supports staff's recommendation on the GO bonds. If the council decides to move forward with the nature center project, we will have an obligation to pay for it in the best way for our taxpayers. Councilmember Brausen stated that he has not yet made up his mind on this project, but will continue to consider it as it moves forward. He stated that staff does need to provide council with funding options for WWHNC, and this information is necessary. He added that today the council needs to decide on the question of 2018 bonds. Mayor Pro Tem Mavity stated the council has reviewed this project over time. While everyone appreciates the council's different perspectives, the council will want to look at all options, including funding. She noted that she did not vote in favor of the ROC at first, but she did vote in favor of the financing. She added that there are council norms, and if the council approves a project, we need to stand behind it and then find a way get it completed. She added that there will be time to revisit the nature center project and make sure it is done in the most cost- effective, mission -driven way possible. She stated that at this time, we need to focus on the 2018 bonds and asked Mr. Harmening for the next steps. Mr. Harmening stated that the next steps are as follows for the 2018 bonds: • April 16 — city council will call for the sale of the 2018 bonds • May 21 — city council awards the sale of 2018 bonds • Mid -June — city council will close on the bonds, and the city will receive the funds It was the consensus of the city council to have staff move ahead with the 2018 projects with GO Bonds. Study Session Minutes -5- March 26, 2018 4. 2018 Market Value Overview Mr. Bultema gave a summary report on local real estate market dynamics and preparation for the Local Board of Appeal and Equalization process that begins in April. He stated that the assessed market valuation and classification for each property determines their individual tax capacity and thus the overall tax capacity of the community. In addition to fiscal budgeting and property tax implications, the composition of value and trending are important for the council to understand as they focus on overall governance of the community. Mr. Bultema provided information on how the community's real estate is reacting to the significant evolution of housing stock; market performance trends for commercial -industrial space; current market cycle and looking forward. He noted that the appeal process will also be reviewed. Mr. Bultema stated that the council can contact him to ask further questions or have discussion. Mr. Bultema stated that valuation notices were mailed on March 6 to 17,000+ parcel owners. He stated that the appeals process will take place at the April 9 meeting, and the Hennepin County Board of Appeals will be held in June. Mr. Bultema noted that single family mid- and upper -pricing brackets in St. Louis Park are stable, and teardown expansion activity is evident. He added that St. Louis Park also provides the perfect niche for first time home buyers. He stated that the city does not have a lot of upper bracket homes, so it is critical to renew home stock as real estate wears out over time. Mr. Bultema pointed out.that condos and townhomes in the mid- and upper -pricing brackets are stable but added that this type of home can be the most volatile. He stated that condos and townhomes had the most adjustments this year to bring them back into valuation compliance. Related to apartments in St. Louis Park, Mr. Bultema stated that class A apartments are expanding now, but classes B and C are still dominant in the city. Mayor Pro Tem Mavity pointed out that NOAH properties are typically classes B and C apartment units. Mr. Bultema added that commercial/industrial growth is value driven by new construction, like that at the West End, as well as Park -wood and Knollwood upgrades. Mr. Bultema added that as a community, St. Louis Park is doing well, and all sectors are moving upward. Land values remain high, and the economy remains solid. 5. 2040 Comprehensive Plan Update — pulled off written reports for discussion Mayor Pro Tem Mavity pointed out that she wants to make sure the council has an understanding of the plan updates and that issues are discussed before the Comprehensive Plan is finalized. Ms. Barton stated that staff will meet with the council at two upcoming meetings so that all members can weigh in on the Comprehensive Plan before the Planning Commission makes a final recommendation on the draft. She added that all changes and discussions will come before the Planning Commission's final recommendations to the council on June 6, after which time the council will take formal action on distribution of the draft Comprehensive Plan for review by surrounding jurisdictions. Study Session Minutes -6- March 26, 2018 Mayor Pro Tem Mavity stressed that it seems like a short timeframe to discuss all of these items, with not a lot of time to deep dive into issues. Ms. Barton noted that the Comprehensive Plan is a policy document, and zoning and implementation discussions at a later date will address specific details. Mayor Pro Tem Mavity asked if the council decides that they would like more affordable housing in the community, if that can be a point of discussion. Ms. Barton stated yes, and it can be addressed with zoning and implementation. Mr. Harmening reminded the council that during the council retreat in January, providing for a variety of different types of housing in our community was discussed. He added that going on that information, staff will present to council strategic directions which support a more diverse type of housing in St. Louis Park. Those directions will then be included in the Comprehensive Plan. He stated that council will see this information in April or May. Mayor Pro Tem Mavity indicated her appreciation for that, adding that she wants to be sure the council is getting to the level of precision in calculations and estimates that is required, adding that it is important to do that now. Mayor Pro Tem Mavity noted that 250,000 people have moved into the Twin Cities since 2010, and they need places to live. She stated that there are all kinds of ways this could be of value to our community. The Comprehensive Plan is a once in 10 - year moment to outline these values. Councilmember Brausen added that related to the Comprehensive Plan, he wants to be sure that racial equity, along with comments and feedback from the Human Rights Commission, are included in the process. 6. Update on Rainwater Rewards Program — pulled off written reports for discussion Councilmember Rog stated that she has heard from several members of the Environment and Sustainability Commission and from several water stewards in the community about how more impactful this program can be in St. Louis Park. She added that the biggest offenders are commercial businesses, and they are not eligible for this program. Councilmember Rog noted that there have been 56 inquiries to the city about this program, and only 1 rainwater garden was installed in 2017. She suggested that the city work with experts on the ESC and ask them for feedback on how to reduce storm water run-off and help with Bass Lake and other run-off. Councilmember Harris stated that in 2017 there was $4,100 dispersed for this program by the city, while there was an allotment of $25,000. She pointed out that the program has been very underutilized. There are opportunities for more awareness, including mailings to residents near the creek and in Ward 3. She stated that she has spoken to homeowners in the Victoria Pond area and adjacent to it who have noticed foul smells in the summertime. She again encouraged staff to reach out to maximize the program, adding that there is more room to grow it. Mr. Harmening added that 2017 was the city's first year of the program, acknowledging that the city has a long way to go to get more participation in the program. He added that they will continue to reach out this year. Communications/Meeting Check -In (Verbal) Mr. Harmening referenced the recent attorney-client communication sent to council and asked if this warranted a closed session with the city attorney. The council agreed that it did warrant such a session. Study Session Minutes -7- March 26, 2018 The meeting adjourned at 9:00 p.m. Written Reports provided and documented for recording purposes only: 7. February 2018 Monthly Financial Report 8. Park Village — Planned Unit Development (PUD) Major Amendment \A)a.A� " JAA ME is I nnedy, City lerk J Span ayor