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HomeMy WebLinkAbout2023/02/27 - ADMIN - Agenda Packets - City Council - Study Session AGENDA FEB. 27, 2023 Members of the public can attend the meeting in person, watch by webstream at bit.ly/watchslpcouncil, or watch on local cable (Comcast SD channel 17/HD channel 859). Recordings are available to watch on the city’s YouTube channel at https://www.youtube.com/user/slpcable, usually within 24 hours of the end of the council meeting or study session. 6:30 p.m. STUDY SESSION – council chambers Discussion items 1. 30 min. Just Deeds program update 2. 30 min. Climate Equity Map presentation 3. 60 min. Solid waste collection proposals, 2023 - 2028 Written reports 4. MnDOT excess land updates 5. Update on Sherman Associates’ proposed Beltline Station Redevelopment The agenda is posted on Fridays on the official city bulletin board in the lobby of city hall and on the text display on civic TV cable channel 17. The agenda and full packet are available after noon on Friday on the city’s website. If you need special accommodations or have questions about the meeting, please call 952.924.2505. Meeting: Study session Meeting date: February 27, 2023 Discussion item: 1 Executive summary Title: Just Deeds program update Recommended action: None Policy consideration: None at this time. The presentation is intended to provide a status report on St. Louis Park’s participation in the Just Deeds program. Summary: The Assessing division will provide an overview of the Just Deeds program in St. Louis Park. The presentation will include timelines, a brief history of restrictive covenants, how the program works and status on discharging of covenants. Staff will also present data on program utilization. Financial or budget considerations: none Strategic priority consideration: St. Louis Park is committed to being a leader in racial equity and inclusion in order to create a more just and inclusive community for all. Supporting documents: Presentation and discussion. Prepared by: Emily Carr, assessment technician Cory Bultema, city assessor Reviewed by Radious Guess, race equity and inclusion director Cheyenne Brodeen, administrative services director Approved by: Kim Keller, city manager Study session meeting of February 27, 2023 (Item No. 1) Page 2 Title: Just Deeds program update Discussion Background: It has been said that the only thing more complicated and nuanced than real estate would be the actual people who have lived on, worked and used the land throughout history. The issues of race equity and direct tie-back to real estate ownership, usage and control are meshed throughout our society. If a person is looking for indisputable evidence of structural racism, there is nothing quite like the shocking clarity of reading and understanding the intent of a racially restrictive covenant – a legally binding condition placed on the title for all future owners. The racially restrictive covenenats are exactly that – a statement of who will be allowed to purchase, lease and use a property at the time of sale and into the future. These covenants lurk within the recorded documents on the title chain of a property – which until recently were nominally known in some of the real estate professions but not well known by the general population. The title history of a property can be dry and dusty reading. Some properties have been owned by the same person or family for many decades while others have been bought, sold, used, leased by many different people over the years. A title history is exactly that – a formally recorded trail that each particular property has taken dating back to the creation of the legal parcel of record. The title documents cannot be erased and thus are a living record of the truth of our history. The historical aspects of real estate ownership have often been murky which has changed with the effective use of technology. Mapping Prejudice (umn.edu) began in 2016 as an experiment into the historical record at the University of Minnesota. The stated purpose was to seek better understanding of title records as a reflection of our society as a team of historians, geographers, librarians, digital humanists and community activists worked to expose structural racism. An offshoot of that research was the creation of Just Deeds (Home - The Just Deeds Project). In effect this program connects a property owner with direct expertise and experience in finding racial covenants and taking steps to discharge (disavow) the historical record. To summarize, an interested owner can review the Mapping Prejudice website and the Just Deeds program to request further research and review of their title history. For our local efforts, active outreach and educational events have been fostered by the city community development and information technology staff. The assessing division acts as the initial intake function and preliminary review which is then handed off to the pro bono attorneys and title companies who will assist the owner in taking the legal steps to discharge the covenant. Present considerations: The city of St. Louis Park joined the Just Deeds program in late 2021 with council formalizing our commitment to the program in early 2022. With the restoration of staffing in the Race Equity and Inclusion department, we will be ramping up our efforts on education and outreach. Next steps: Staff will continue to provide periodic reports on the Just Deeds program. Meeting: Study session Meeting date: February 27, 2023 Discussion item: 2 Executive summary Title: Climate Equity Map presentation Recommended action: None at this time. Policy consideration: None at this time. Summary: All sustainability division incentive programs are designed to provide greater benefits to people facing particular vulnerability to climate change such as those living in areas experiencing greatest urban heat island and areas where homes frequently lack insulation or efficient heating systems. Recognizing a need for a tool that could assist staff in making nuanced, data-driven decisions around which census tracts should be targeted for greater cost share incentives for sustainability programs, and inspired by tools such as Richmond, Virginia’s RVAgreen 2050 Climate Equity Index, sustainability staff collaborated with communications and technology staff to create the St. Louis Park Climate Equity Map. The interactive Climate Equity Map can compare and overlay census tract-level data, including demographics, housing, transportation, climate & resilience, and energy. These visualizations will better equip staff to design programs that center equity and environmental justice. All city staff have access to the map, and the map is being used in the design of 2023 sustainability division incentive programs. Radious Guess and Emily Ziring will present an overview of the map and answer council questions. Financial or budget considerations: Not applicable. Strategic priority considerations: St. Louis Park is committed to being a leader in racial equity and inclusion in order to create a more just and inclusive community for all. St. Louis Park is committed to continue to lead in environmental stewardship. Supporting documents: None Prepared by: Emily Ziring, sustainability manager Reviewed by: Radious Guess, director of race, equity, and inclusion Brian Hoffman, director of building and energy Approved by: Kim Keller, city manager Meeting: Study session Meeting date: February 27, 2023 Discussion item: 3 Executive summary Title: Solid waste collection proposals, 2023 - 2028 Recommended action: None at this time. Policy consideration: 1) Does council support the staff recommendation of entering into a contract with the haulers included in Option A? 2) Does council support rejecting the yard waste proposal and issuing a new request for proposals (RFP) for yard waste services only? Summary: At the Nov 14, 2022 study session, staff provided a written report on solid waste program updates. A discussion of the solid waste collection RFP occurred at the Nov 28, 2022 study session. In consideration of rising labor and equipment costs, no significant changes were made to the RFP to avoid respondents needing additional resources (e.g. staffing or equipment) to provide collection. Instead, the focus was placed on ensuring consistent services for the city’s well-established organized collection program, with an emphasis of splitting work up between multiple haulers based on material collected. Staff contacted 12 haulers and four submitted proposals. The major difference in proposals is cost and truck style. Staff have prepared the most cost-effective hauler options for council consideration, for garbage, recycling and organics collection services. Due to limited yard waste proposals that meet the city’s needs and significantly higher rates for the ones received, staff recommends rejecting the yard waste proposals and creating an updated RFP for yard waste collection services. (Note: The city attorney advises that all specific data related to hauler proposals is considered private (non-public) until contracts are awarded, as per M.S. 13.591, Subd. 3. Following this guidance, specific data is provided to council but is not available for public release. The city attorney has said it is acceptable to discuss private information at the meeting as long as hauler names are not used, and service delivery is referred to as Options A or B) Financial or budget considerations: Staff will bring rate increase options to council for consideration once contracts have been executed. To provide some context, for the 75% of customers at 30- and 60-gal service levels, the 2024 increase for garbage, recycling, and organics would be an estimated $13 or $19 per quarter, respectively, if Option A is chosen and the cost increase not evenly spread over the contract period. Strategic priority consideration: St. Louis Park is committed to continue to lead in environmental stewardship. Supporting documents: Discussion Prepared by: Kala Fisher, solid waste manager Reviewed by: Jay Hall, public works director Approved by: Kim Keller, city manager Study session meeting of February 27, 2023 (Item No. 3) Page 2 Title: Solid waste collection proposals, 2023 - 2028 Discussion Council direction requested The discussion section of this report provides information on the collection proposals received and staff’s evaluation of the proposals. To move forward, staff is requesting direction on the following items: 1. Garbage, recycling and organics proposals – Does council support the staff recommendation of entering into a contract with the haulers included in Option A? a. Option A: Three haulers for three services for 5-years (garbage, recycling, and organics - least expensive total cost) b. Option B: Two haulers for three services for 5-years (more expensive recycling rate) 2. Yard Waste - Does council support the staff recommendation of rejecting the yard waste proposal and issuing a new request for proposals (RFP) for yard waste services only? Deferring yard waste selection would allow staff time to create an updated RFP and structure yard waste collection options. Through the current RFP issued, only one standard proposal for yard waste was received, and one additional alternate proposal. The range of proposed contract cost per household increases were substantial. The alternate proposal would have required an additional expense of purchasing carts for all households. Should the council support this staff recommendation, staff would work to negotiate a 2-month contract extension with current yard waste contractor, Waste Management to complete the 2023 yard waste collection season. History At the Nov 14, 2022 study session staff provided a written report on solid waste program updates and discussion of the solid waste collection RFP at the Nov 28, 2022 study session. In consideration of rising labor and equipment costs, no significant changes were made to the RFP to avoid respondents needing additional resources (e.g. staffing or equipment) to provide collection. Instead, the focus was placed on ensuring consistent services for the city’s well- established organized collection program, with an emphasis of splitting work up between multiple haulers based on material collected. Proposal information Many factors go into making the decision to award a contract for solid waste collection services. The city desires haulers that will provide reliable, high-quality service, that are responsive to customers, and provide services that align with the city’s strategic priority to continue to lead in environmental stewardship - all at cost effective rates. The RFP for residential garbage, recycling, and organics recycling were comprehensive and included many of the requirements that will be included in the final agreements with selected haulers. Study session meeting of February 27, 2023 (Item No. 3) Page 3 Title: Solid waste collection proposals, 2023 - 2028 Major components in the RFP include requirements for: collection services; personnel; customer service expectations and resident response timeframes; penalties for non- compliance; required reports and meetings with the city; public education assistance; pilot projects; involvement with the city’s cleanup day events; cart storage/inventory/delivery; references and contacts at municipalities where similar work is being performed; contract transition details; discussion of past contract problems and any litigation experienced in the past 5-years; contracts lost in the past 5-years; and extra services required during a disaster. Haulers considered Staff contacted the following twelve hauling companies that operate in the Twin cities metro to gauge their interest in receiving a request for proposals: ACE Solid Waste, Aspen Waste, Buckingham Companies, Dick’s Sanitation, Eureka Recycling, Lakeshore Recycling Systems, Republic Services, Tennis Sanitation, Walter’s Recycling & Refuse, Vierkant Disposal, Waste Container Systems and Waste Management. Timeline RFPs were sent to all interested parties on Dec 22, 2022 and were received by Jan 23, 2023. The contract term is from Oct 1, 2023 to Dec 3, 2028. Proposals received Proposals were received from four haulers: Buckingham Companies, Eureka Recycling, Republic Services, and Waste Management. ACE Solid Waste, Dicks Sanitation, Lakeshore Recycling Systems, Vierkant Disposal, Walter’s Recycling & Refuse, and Waste Container Systems withdrew during the RFP process. Aspen Waste and Tennis Sanitation were not interested in receiving the RFP. Haulers that withdrew during the RFP process noted staffing shortages as the main reason for not providing proposals. Evaluation of proposals / Development of hauler options Staff evaluated all proposals by a number of factors, including, but not limited to: services offered, past experience, detailed contractor questionnaires, references, and proposal costs. Staff has reviewed proposals from all four haulers and believe that all four are capable of providing services requested in our RFP. The most notable change in all proposals is the increase in cost compared to our current contract rates. The overall contract rate increases are similar to what is being reported by other cities who’ve negotiated new contracts in 2022/2023. It is important to note that our current contract rates were set in 2017/2018. Also, the collection methods required for a city with our geography and mix of curb and alley collection are more labor intensive. Staff has identified two of the most cost-effective options that will help reach the goals discussed with council in previous study session discussions. The Hauler Options A and B (below) allow council to choose between the two most cost-effective contract options. Of the two, staff recommends Option A due to the lower cost and the ability to spread the work Study session meeting of February 27, 2023 (Item No. 3) Page 4 Title: Solid waste collection proposals, 2023 - 2028 between more hauling companies, and fewer trucks fueled by diesel (versus biodiesel or compressed natural gas (CNG)). Both options are for a 5-year term. Option A This option uses three haulers (a different hauler for garbage, recycling and organics) and less anticipated diesel usage. This proposal provides the lowest total cost for all materials. • Truck type/fuel type o Garbage – Rear load trucks, diesel fuel o Recyclables – Combination of automated side-load trucks and rear-load, biodiesel fuel o Organics – Combination of automated side-load trucks and rear-load trucks, CNG and diesel. Option B This option uses two haulers to provide garbage, recycling and organics (one hauler for garbage and recycling, while another would provide organics collection). This option has higher recycling costs. • Truck type/fuel type o Garbage – Rear load trucks, diesel fuel o Recyclables – Rear load trucks, diesel fuel o Organics – Combination of automated side-load trucks and rear-load trucks, CNG and diesel. Additional proposals were submitted but were screened out as not viable due to significantly higher cost for comparable services or not meeting the collection needs of the city. Non-public data The city attorney has advised staff that all specific data related to hauler proposals is considered private (non-public) until the city has awarded contracts for these services. Specific data is being provided to council but is not being made available to the public at this time. The city attorney has said it is acceptable to discuss private information at the meeting as long as hauler names are not used and service delivery is referred to as Options A or B. Note: specific data provided to council for purposes of the study session discussion is considered PRIVATE (non-public), as per M.S. 13.591, Subd. 3, until the city has awarded contracts for these services. Next steps Listed below is a draft schedule showing the major steps to develop and award new collection contracts. New contracts for garbage, recycling, and organics should be awarded before the end of March 2023 to allow contractors time to adequately prepare for the work. Yard waste - should council choose to reject the yard waste proposal, resolutions to reject yard waste proposals, issue a new RFP, and negotiate a 2-month contract extension would be requested by consent agenda at a future council meeting. Study session meeting of February 27, 2023 (Item No. 3) Page 5 Title: Solid waste collection proposals, 2023 - 2028 Future actions Governing body Date Staff negotiates collection contracts with vendors Staff Mar 2023 Council approves new collection contracts (garbage, recycling, and organics) Council Mar 2023 Yard waste - Council rejects proposal Council Mar 2023 Yard waste - Draft Request for Proposal discussion Staff Mar 2023 Yard waste - Council authorizes Request for Proposal Council Apr 2023 Yard waste - Proposals received by staff Staff May 2023 Yard waste - Proposals and staff recommendations reviewed with council Staff/council May 2023 Yard waste - Staff negotiates collection contracts with vendors Staff June 2023 Yard waste - Council approves new collection contracts (garbage, recycling, and organics) Council June 2023 Staff conducts public education outreach with residents Staff Apr-Sept 2023 New garbage, recycling, and organics collection contracts begin Staff Oct 1, 2023 New yard waste collection contracts begin Staff Apr 1, 2024 Meeting: Study session Meeting date: February 27, 2023 Written report: 4 Executive summary Title: MnDOT excess land updates Recommended action: None at this time. Policy consideration: Does the city council and economic development authority (EDA) want city staff to pursue acquisition of land that Minnesota Department of Transportation (MNDOT) has deemed to be excess right-of-way? Summary: MNDOT approached city staff about conveying excess land along Highway 100 to the city. There are three parcels being discussed in two different areas of the city: Toledo parcels: The city received official offers for MNDOT to convey two parcels of land in the 2800 Block of Toledo Avenue along Highway 100 totaling 1.69 acres. The city has until May 22, 2023, to accept the offers and purchase the parcel(s). City council previously received staff reports regarding this matter on Nov 22, 2021, Feb 7, 2022, and Dec 12, 2022. Since then, city staff and the city attorney reviewed title commitments for these two parcels and the environmental information provided by MNDOT. These did not raise any concerns or warrant further investigation. Webster Park parcel: The third parcel is land in the northwest quadrant of Highway 100 and Highway 7, and south of the Groves Academy property. The city currently leases a portion of this land for Webster Park. This parcel would be 3.41 acres and the parks and recreation department is interested in continued and expanded use of the land for parks, recreation and open space uses. The city has pursued acquisition of the parcel for many years. While conveyance of this parcel is not eminent, it appears that it is a possibility. MNDOT has not yet officially offered to convey it to the city. However, MNDOT indicates they are amenable to selling it to the city in the future for fair market value. They have also recently indicated they are open to the city changing the land use and zoning of the parcel to parks and open space. Next steps: The city has until May 22, 2023, to accept the offers and purchase the Toledo parcels. In March or April, city council may hold a closed session to review MNDOT’s terms and conditions for the Toledo parcels. Based on council direction, an action item would be placed on a regular meeting agenda before MNDOT’s deadline to accept or reject the offer(s). Following the decision(s), city staff would initiate land use and zoning changes, as appropriate. Financial or budget considerations: There would be costs associated with owning and maintaining the properties, and costs to acquire some of the parcels. These are not currently budgeted items. Directing staff to continue pursuing acquisition of the parcels at this time does not obligate the city or EDA to purchasing them. Strategic priority consideration: Acquisition of these parcels could potentially advance several of the city’s strategic priorities based on future use/disposition. Supporting documents: map of conveyance 2021-0066 & 2021-0067 (Toledo parcels), map of conveyance 2019-0135 (Webster Park parcel) Prepared by: Sean Walther, planning manager/deputy CD director Jason West, parks and recreation director Reviewed by: Karen Barton, community development director Cindy Walsh, deputy city manager Approved by: Kim Keller, city manager Study session meeting of February 27, 2023 (Item No. 4) Page 2 Title: MnDOT excess land updates Discussion Background MNDOT approached city staff about conveying excess land along Highway 100 to the city. There are three parcels being discussed in two different areas of the city. Toledo parcels: The city received official offers for MNDOT to convey two parcels of land in the 2800 Block of Toledo Avenue along Highway 100. The south parcel is 0.88 acres and includes the remnants of a retaining wall and rock landscaping of a former wayside rest that MNDOT had on the site (Conveyance 2021-0067 on the attached map). The north parcel is 0.81 acres (Conveyance 2021-0066 on the attached map). The city has until May 22, 2023, to consider MNDOT’s offers of the Toledo parcels. City council previously received reports regarding this matter on Nov 22, 2021, Feb 7, 2022, and Dec 12, 2022. Webster Park parcel: MNDOT also has excess land in the northwest quadrant of Highway 100 and Highway 7, and south of the Groves Academy property. MNDOT has leased a portion of this land to the city for Webster Park on an annual basis. Recently, the lease has been extended for a 5-year term. For the city to justify major improvements to this park, the city wanted a longer agreement with MNDOT. Over the past few years, the city has been working with MNDOT to extend the lease to a 15-year term. The city has also expressed interest in acquiring Webster Park and surrounding land from MNDOT for many years (Conveyance 2019-0135 on the attached map). Present considerations Toledo parcels: Since the last report to city council in Dec 2022, city staff and the city attorney reviewed title commitments for these two parcels and the environmental information provided by MNDOT. These did not raise any concerns or warrant further environmental investigation. City staff will be recommending acquisition of the south parcel for public park purposes (passive /open space use) and initiating land use and zoning changes to designate the south parcel as park and open space. City staff will also recommend the EDA acquires the north parcel for fair market value for purposes to be determined later. Webster Park parcel: MNDOT has concluded that they have no use for this property. This parcel is 3.41 acres and the parks and recreation department is interested in continued and expanded use of the land for parks, recreation and open space uses. The city has pursued acquisition of the Webster Park parcel for many years. Conveyance of this parcel is not eminent. MNDOT has not yet officially offered it to the city. However, MNDOT indicates they want to sell the land to the city for fair market value. They also recently indicated they are open to the city changing the land use and zoning of the parcel to parks and open space. City staff intend to initiate a change to the land use and rezone this parcel to park and open space (instead of low density residential and R-2 single-family residential). Staff also intend to include this potential acquisition in the 2024 budget. Study session meeting of February 27, 2023 (Item No. 4) Page 3 Title: MnDOT excess land updates Next steps Staff would like to present the details of the MNDOT’s conveyance terms, conditions, and price for the Toledo parcels to the city council in a closed session. Based on council direction, staff would bring the item to the city council/EDA for formal consideration before the deadline established by MNDOT. If the EDA purchases the north parcel on Toledo, additional planning and community engagement may occur depending on city council/EDA direction to determine the appropriate future use of the land. Study session meeting of February 27,2023 (Item No.4} Title:MnDOT excess land updates CONVEYANCE 2021-0066 &2021-0067 DM C.S.2735 (100=5-31-5) PARCEL 28 (FEE) AREA =73612 SQ FT (35281 8 38331) RNW MAPS 179-16C 8 217-506 CONVE YAN 2021-0066 f SCALE IN FEETpegerre,,------P g Study session meeting of February 27,2023 (Item No.4) Title:MnDOT excess land updates CONVEYANCE 2019-0135 C.$.2706 (7=012)283 HIGHWAY EASEMENT 3.41 ACRES OwN :::Jz uO 0wN><£ <T .---< N N :::Jr----#¢°O0O vO<r-s°N [-1 w NO>'?' O °N 0 O O Page 5 Meeting: Study session Meeting date: February 27, 2023 Written report: 5 Executive summary Title: Update on Sherman Associates’ proposed Beltline Station Redevelopment (Ward 1) Recommended action: None at this time. Policy consideration: Does the EDA/city council support the approval of an early start agreement and amendments to the business terms for Beltline Station 2 to facilitate the proposed Beltline Station Development? Summary: In June 2022, the EDA entered into a Purchase Agreement with Beltline Station LLC for property at the southeast corner of Beltline Boulevard and Hwy 7 to facilitate the construction of the Beltline Station Development. The purchase agreement was amended in December 2022 and requires land closing with the EDA no later than June 20, 2023 to coincide with the final bond closing for the development’s all-affordable components. Financial closing and property acquisition is anticipated to occur in May 2023. However, a portion of the funding provided by the Minnesota Department of Employment and Economic Development (DEED) pertaining to site cleanup for the project requires the contamination cleanup work to begin no later than April 1, 2023. If work is not started by that date, DEED could rescind the grant. As such, the developer requests an early start agreement to commence remediation on the EDA/city property prior to full financial closing and property acquisition. To retain the DEED grant, staff and Kennedy and Graven, the EDA’s legal counsel, recommend the EDA approve an early start agreement to allow cleanup activities to start by April 1st. Staff will bring the agreement to the EDA for its formal consideration on March 20, 2023. The EDA’s legal counsel is supportive of the agreement as cleanup poses no significant liability to the EDA. Financial or budget considerations: To enable the major transit-oriented development to become financially feasible and secure private financing, it is recommended that a total of $12.98 million in financial assistance be provided from the Beltline Station 2 TIF District. The recommended level of financial assistance for the development is similar to what was previously recommended to the EDA in June 2022, however the mechanisms for providing the assistance have changed. The assistance is recommended to be provided via two pay-as-you-go TIF Notes, through the special legislation spending plan dollars allocation, and a reduction in the purchase price of the land. Generally, the key business terms for the market rate components provided in the April 18, 2022 staff report have not changed appreciably; however, the recommended financing mechanisms have changed and are outlined in this report. The EDA/city council approved the redevelopment contract for the affordable building in June 2022. Strategic priority consideration: St. Louis Park is committed to providing a broad range of housing and neighborhood oriented development. Supporting documents: Discussion Prepared by: Jennifer Monson, redevelopment administrator Reviewed by: Greg Hunt, economic development manager Karen Barton, community development director, EDA executive director Approved by: Kim Keller, city manager Study session meeting of February 27, 2023 (Item No. 5) Page 2 Title: Update on Sherman Associates’ proposed Beltline Station Redevelopment Discussion Background: Sherman Associates (“Redeveloper”) seeks to acquire the 6.6-acre site at the southeast corner of CSAH 25 and Beltline Boulevard from the EDA and construct a major transit-oriented development with the following components: • Seven-story mixed-use building with six levels of market rate housing (152 units) and approximately 21,000 square feet of neighborhood commercial space, potentially anchored by a grocer. • Four-story all affordable apartment building with 82 units and underground parking. Of these, 77 units would be available at 60% AMI, five units would be available at 30% AMI and 22 units would be three-bedrooms. • Five-story market rate apartment building with 146 units and underground parking. • 592-stall parking ramp, including 268 park and ride stalls. The development will exceed both the city’s inclusionary housing policy requirements (Oct 2021) and the city’s green building policy requirements (July 2020). Architectural site plan Previous actions: A summary of all previous actions is provided in the following table. More specific details on the various actions are provided below the table. Study session meeting of February 27, 2023 (Item No. 5) Page 3 Title: Update on Sherman Associates’ proposed Beltline Station Redevelopment Action Date The EDA approved CMAQ Grant Approval to construct a parking ramp rather than a surface parking lot for SWLRT park and ride requirements. November 2014 The EDA sent out a request for proposals for the Beltline Station Site. July 2017 The EDA entered into a preliminary development agreement with Sherman Associates to develop the Beltline Station Site. February 2018 The EDA provided a loan to Sherman Associates to assist in purchasing the Vision Bank parcel to allow for more than just transit parking. February 2019 The EDA and city approved the first amendment to the Preliminary Development Agreement. June 2019 The EDA approved a Subrecipient Agreement with the Metropolitan Council which specified the terms under which the CMAQ funds would be disbursed to the EDA. October 2019 The EDA entered into a Cooperative Construction Agreement with the Metropolitan Council to construct the parking ramp. November 2020 The EDA discussed Sherman Associates financial assistance request and approved a second amendment to the preliminary development agreement and received a staff report outlining the details of the proposed Beltline Station Development. June 2021 The EDA received a report providing an update on the status of the development and issues related to high ground water on-site. November 2022 Sherman Associates received a tax-exempt bond allocation of $13.7 million from Minnesota Management and Budget (MMB) to help finance the development’s all affordable component. January 2022 The city council approved the comprehensive plan amendment. March 2022 Sherman Associates submitted a building permit application for the all- affordable building. May 23, 2022 The city council approved various vacation requests, a preliminary and final plat, and a preliminary and final planned unit development for the Beltline Station Development. April 2022 The EDA held a hearing regarding the issuance of the tax-exempt bond allocation. May 2022 The EDA/city council approved the Beltline Station 1 TIF District and Beltline Station 2 TIF District. June 6, 2022 The EDA/city council approved the Contract for Private Redevelopment for Beltline Station 1 TIF District and the Purchase Agreement related to the land sale for the complete development. June 20, 2022 Sherman Associates completed a soft close on the affordable building’s bond financing, which requires a full closing to occur no later than June 30, 2023. July 1, 2022 The EDA approved a first amendment to the purchase agreement pushing the closing date back to June 30, 2023 to allow all parties time to finalize contracts. December 5, 2022 Sherman Associates signed term sheets from their lenders for the market rate components of the development. Closing is anticipated to occur in May 2023. February 2023 Study session meeting of February 27, 2023 (Item No. 5) Page 4 Title: Update on Sherman Associates’ proposed Beltline Station Redevelopment Detailed summary of past actions: On June 6, 2022, the EDA approved the establishment of Beltline Station TIF District 1 and Beltline Station TIF District 2 as the legal mechanism for providing tax increment financing for the development. On June 20, 2022, the EDA and city council approved the Purchase Agreement for the entire Beltline Station Development site and the Contract for Private Redevelopment for Beltline Station 1 TIF District pertaining to the affordable component. Sherman Associates completed a soft closing on the financing for the affordable building in July 2022, which served to preserve the Low-income housing tax credit allocation. The developer is required to complete a final close on the all-affordable building’s financing by June 30, 2023. Since summer 2022, EDA staff, the developer, the Metropolitan Council, Ehlers (the EDA’s financial consultant), and associated legal counsels have been working diligently to complete complex contracts, including a reciprocal easement and operating agreement that specifies the long-term maintenance and operations of the public-private parking ramp. In addition, there have been financial challenges posed by rising interest rates and increased construction costs, requiring all parties to re-examine the financial pro-forma of the project. The EDA amended the purchase agreement Dec 19, 2022 to require the Redeveloper to close on its acquisition of the EDA land no later than June 20, 2023 to coincide with the final bond closing for the all-affordable components of the development. Financial closing update: In Feb 2023, Sherman Associates locked in their financial term sheets with lenders and have started the closing process for all phases of the development. It typically takes 60 to 90 days to complete this process, and formal closing is anticipated to occur in May 2023. Rendering of proposed Beltline Station Development Early start agreement: The Minnesota Department of Employment and Economic Development (DEED) has awarded a grant worth $418,547 to the Beltline Station Development to assist with Study session meeting of February 27, 2023 (Item No. 5) Page 5 Title: Update on Sherman Associates’ proposed Beltline Station Redevelopment the cost of site/soil cleanup. This grant was awarded in January 2021 and requires contamination cleanup work to begin no later than April 1, 2023. If work is not started by that date, DEED could rescind the grant. As such, the developer requests an early start agreement to commence remediation on the EDA/city property prior to full financial closing and property acquisition. To retain the DEED grant, staff and Kennedy and Graven, the EDA’s legal counsel, recommend the EDA approve an early start agreement to allow cleanup activities to commence by April 1st. Most of the cleanup work will occur on the eastern half of the site. Staff plans to bring the agreement to the EDA for its formal consideration on March 20, 2023. Construction update: The Beltline Station Development would be a multi-phased mixed-use development. Sherman Associates looks to start cleanup and utility work and commence construction of the affordable building in April 2023, and commence construction the mixed- use building by May 2023, the market rate building in Aug 2023, and the parking structure in Nov 2023. An affiliate of Sherman Associates would own and manage the commercial and residential components of the development for the long-term. Financial assistance update: The total financial assistance for the development presented to the EDA in June 2022 was $14.98 million including TIF and a deferred loan from the city’s Affordable Housing Trust Fund. Financial assistance as presented June 2022 Site component TIF Note amount TIF Term Additional assistance Total assistance AHTF Beltline Station 1 TIF District B2 – Affordable building $1.44 million 26 years* $618,238 $2.06 million Beltline Station 2 TIF District B1 – Mixed-use & parking $8.27 million 16 years* B3 - Market rate & parking $4.65 million 11 years Total financial assistance Beltline 2 $12.92 million $12.92 million Total financial assistance $14.36 million $618,238 $14.98 million In 2022 and 2023, interest rate hikes and construction cost increases affected the overall total development cost and financing for the project, including the estimated value of the TIF notes associated with the Beltline Station 2 TIF District. These increases created a larger gap in the project’s financing which are planned to be partially covered through a larger first mortgage and an increase in owner equity in the project. Even with these additional private sources, a gap still remains due to the reduced value of the TIF notes. Ehlers estimates TIF value based on the net present value of the TIF note. When interest rates rise it affects the present value of the TIF note by driving down the maximum principal amount of a loan that the revenue can support. The interest rate hikes reduced the value of the TIF notes from $12.92 million to $10.86 million, further increasing the existing financial gap in the Study session meeting of February 27, 2023 (Item No. 5) Page 6 Title: Update on Sherman Associates’ proposed Beltline Station Redevelopment development’s pro forma. The Redeveloper, staff, and Ehlers have since been working together to resolve the issue. To close the remaining gap, Ehlers and staff recommend utilizing the full 16-year term of both TIF notes for Beltline Station 2 TIF District and providing $1.55 million in pooled TIF assistance provided from the special legislation spending plan dollars that were approved by the EDA/city council in December 2022. This leaves a remaining gap of over $1 million. This gap has been split equally between the developer and the EDA. For the EDA’s portion, staff and Ehlers recommend reducing the purchase price of the EDA land by $573,000. This brings the overall financial assistance for the Beltline Station Development to $15.05 million, an increase of approximately $67,000 over what was proposed in June 2022. Financial assistance recommendations February 2023 Site component TIF Note amount TIF Term Additional assistance Total assistance AHTF Spending Plan Land sale reduction Beltline Station 1 TIF District B2 – Affordable building $1.44 million 26 years $618,238 $2.06 million Beltline Station 2 TIF District B1 – Mixed-use & parking $5.89 million 16 years $250,000 B3 - Market rate & parking $4.97 million 16 years $1,554,000 $323,000 Total financial assistance Beltline 2 $10.86 million $1,554,000 $573,000 $12.98 million Total financial assistance $12.3 million $618,238 $1,554,000 $573,000 $15.05 million Park and ride ramp update: The Met Council, Metro Transit, the Redeveloper, city staff, and associated legal teams have been diligently working on a reciprocal maintenance and operating agreement (REOA) for the park and ride stalls. The purchase agreement between the EDA and Redeveloper requires the REOA to be completed and signed prior to the EDA’s sale of the property. This is to reduce risk to all parties and to make sure the parking ramp is ready to operate immediately following completion. Until recently, it was anticipated that the EDA would be required to own the park and ride stalls, leasing them back to the Met Council. Through the process of drafting the REOA, the Met Council agreed that it makes the most sense for it to own, operate, and maintain the park and ride spaces. Once the ramp is completed and accepted by the Met Council, the EDA would have no further ownership of the ramp. This removes all long-term risk to the EDA and EDA legal counsel is supportive of this path. Once the ramp is constructed, the city council will be asked to consider approval of a Registered Land Survey. A Registered Land Survey is a vertical plat that legally defines land and creates separate fee title ownership tracts. This will create the mechanism for the Met Council to own the fee title to the park and ride spaces within the parking ramp. Study session meeting of February 27, 2023 (Item No. 5) Page 7 Title: Update on Sherman Associates’ proposed Beltline Station Redevelopment Diversity, equity, and inclusion: Sherman Associates is committed to advancing equitable developments and utilize their projects to advance social, racial, and economic equity. They have committed to advancing these goals throughout the development process itself and with the product being delivered. Examples of strategies Sherman Associates has employed to advance social, racial, and economic equity include: o Disadvantaged Business Enterprise Program contracting: Sherman Associates seeks relationships with Disadvantaged Business Enterprises. For the Beltline Station development, Sherman is working with Guarantee Title, which is a certified Women’s Business Enterprise and a woman-owned small business. o Corporate charitable giving strategy with a corporate match: Sherman Associates has implemented a paycheck donation deduction program and corporate donation matching. o Commitment to developing/owning/managing quality affordable housing: Sherman Associates has 43+ years of experience developing, owning and managing affordable housing. Their current portfolio includes 4,609 affordable/workforce units. o Partnering to provide housing and supportive services to families and individuals at risk of homelessness and long-term disabilities: Since 2018, Sherman Associates has provided training programs for property management and maintenance through a partnership with Project for Pride in Living (PPL). This partnership has helped individuals develop high demand skills such as building operation technicians and maintenance skills. Sherman Associates sponsors individuals going through the training, assists with specific trainings on customer service, conflict resolutions and mock interviews. Sherman also participates in the job fair and interviews people for open positions within the company. o Leadership involvement and mentorship in industry professional programs promoting diversity initiatives: o George Sherman, CEO • Minnesota Housing Partnership board member o MHP’s mission is to expand housing and community development opportunity for those most impacted by economic and racial disparities by leading collaborative work to promote system change and grow equitable development capacity. o Chris Sherman, President • Twin Cities Housing Alliance board member o Twin Cities Housing Alliance (TCHA) advocates for local and regional housing policy that creates a more affordable, equitable, economically vital, and environmentally sustainable future for the Twin Cities community. • The Sanneh Foundation board member o The Sanneh Foundation serves the holistic youth development needs of the increasingly diverse Twin Cities metro area. Our mission is to empower youth by supporting and promoting educational attainment through in-school and after-school support, improve lives by providing programs that strengthen physical health and social and emotional Study session meeting of February 27, 2023 (Item No. 5) Page 8 Title: Update on Sherman Associates’ proposed Beltline Station Redevelopment development, and unite communities by advancing diversity, equity, and community well-being. • Hennepin Healthcare Foundation board member o Hennepin Healthcare Foundation has the honor of connecting the generosity of the community to the mission of Hennepin Healthcare. Caring for anyone at any time with any condition takes resources and a team of exceptional staff. Our unique position of being Minnesota's largest level one trauma center, safety net, and public teaching hospital offers innovative ways to influence the health of our community. Generosity removes barriers to healthcare access, enhances the patient and family experience, and advances efforts in medical education, clinical research, and community health. • ForeUs board member o To foster the development of Twin Cities youth by providing income- earning caddying opportunities, golf lessons and post-secondary scholarships, and providing peer and mentor support, teaching the life skills inherent in the game of golf. Next steps: The EDA/city council will be asked to consider a resolution of approval for an early start agreement on March 20, 2023 to allow site cleanup to commence by April 1, 2023. Shortly thereafter, the EDA will be asked to consider approval of the proposed contract for private development related to Beltline Station’s market rate components. Future actions Governing body Date Approval of early start agreement EDA March 20, 2023 Approval of Redevelopment Contract pertaining to Beltline Station 2 TIF District EDA May 2023 Planning Commission recommendation of Registered Land Survey Planning Commission TBD Approval of Registered Land Survey City Council TBD