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EDA 1998 04 16CHANHASSEN ECONOMIC DEVELOPMENT AUTHORITY REGULAR MEETING APRIL 16, 1998 Chairman Boyle called the meeting to order at 6:30 p.m. MEMBERS PRESENT: Gary Boyle, Steve Berquist, Mike Mason, Nancy Mancino, Jim Bohn, Mark Senn and Mark Engel MEMBERS ABSENT: STAFF PRESENT: Todd Gerhardt, Asst. Executive Director VISITOR PRESENTATIONS: None. CONSIDER PAYMENT OF SECOND HALF OF 1997 TIF PAYMENT TO DEAN JOHNSON, OAK POND DEVELOPMENT. Boyle: May I have a motion? To approve the payments. Mancino: Was it...table it? Gerhardt: She didn't get the motion but it was tabled. ! don't know if it was Steve or. Berquist: It was tabled simply because of the economic analysis? Gerhardt: It was tabled to look at the valuations and to look at the decertifying of the district. And then there was just direction for staff to talk to the townhome association, monthly or bi- monthly and Nancy talked to the President and ! gave a short summary of what she updated the City Council on. Have ! missed anything Nancy? Mancino: Well the other thing I'd like to bring up is that they have been able to sell their townhomes and there has been movement in them so it's not as if they're not able. And then obviously those new buyers know about... That was about it. The only other thing that ! had was, ! mean we certainly can't... Gerhardt: Burnsville, Maple Grove and ! don't know if the City of Oakdale sued but he told me himself that he had a lawsuit in Oakdale. Mancino: So my question is. Berquist: Those are owners suing or cities suing or who... ? Economic Development Authority - April 16, 1998 Gerhardt: ! know it was the City of Burnsville because Roger is the City Attorney for Burnsville and that he was involved in that one. ! got a phone call a month ago from a resident in Burnsville that he had a pending lawsuit against him. And then another in Maple Grove. The very first meeting we had in Maple Grove... their association had a lawsuit against Mr. Johnson. And then Dean told me himself that he had a lawsuit in the development in Oakdale. Mancino: So my question is, can we move things around... Mason: ! would want to check with our city attorney before ! did anything like that. Mancino: ...you can't stop him from coming in again. At this point there's nothing we can do to stop him so... Boyle: If he was to develop another area, you can make it pretty rocky for him though couldn't you? ! mean by the time you get through the Planning Commission and the Council, if he wanted to come into town again and start another project, we can make it kind of difficult for him, couldn't we? Berquist: ...uncomfortable and jump a lot of hoops. We couldn't... Gerhardt: He almost did another development in town. He almost did the Walnut Grove development. That was when Brad brought that through. Mancino: That was scary. That's scary. Mason: Wouldn't that have been. Mancino: ...townhouses there... Berquist: That was... Mason: I'm wondering if prior to you Steve. I'm not sure. I'm not sure. Boyle: Well regardless. ! think we all wish that there was some way.., holding TIF payments up isn't going to do any good.., ramifications that could come is that we would all end up in litigation and.., more dollars to go through the lawsuit... ! wish we did have some recourse. ! really do. Mancino: So ! would like to move that we recommend the EDA authorize staff to make the second half of 1997 TIF payments to Dean Johnson and when we do that.., homeowners association, we let them know how much and...just what ! can say about that is, that there's nothing they can do about that. ! mean they understand that. ! had a conversation with their president to say, he realized that we cannot not pay, make these payments and they do. They understand it...but in second phase, and ! don't know how many...but somehow ! think deep in my heart a little that if they know he has the money...! don't know. At least he's got the payment and we can say he's got money right now so you need to try to catch anything... 2 Economic Development Authority - April 16, 1998 Mason: Would the motion accept a friendly amendment asking that the City Attorney look into whether there are any legal ramifications for EDA to send letters to adjoining cities outlining the difficulties we've had with Mr. Johnson. Gerhardt: It'd better not to add that in a motion. I'll look into it. You can direct me to do that but it doesn't need to be in the motion. Mason: Alright, that's fair. I'll withdraw that. That's well said. Thank you. I will second the motion as stated by Mrs. Mancino. Mancino moved, Mason seconded that the EDA authorize staff to make the second half of 1997 TIF payment to Dean Johnson. All voted in favor and the motion carried. UPDATE ON PRN TAX APPEAL. Gerhardt: In the last packet I think I included documentation from the attorney's office regarding the tax appeal on PRN. Just so you understand, the tax petitions for year '96 and '97 were automatically dismissed due to non payment of taxes for those years and so the only pending petition right now is for tax for 1995. And that is scheduled to go to hearing in June of '98. Mancino: What does that mean of that '96 and '97? Shouldn't it have automatic...that means that they still haven't paid taxes for '96 and '97, correct? Gerhardt: Right. You have to be delinquent more than 3 years for the, to have the sheriff's sale. And so we have to wait one more year before the county can issue a sheriff's sale. So, but he cannot, he has to pay the dollar amounts associated with '96 and '97. So he lost any attempt in trying to lower that tax payment. Mancino: Because he didn't apply for it on a timely basis? Gerhardt: Because he did not pay the '96 and '97 taxes and that the appeal period for those has been past. The one year appeal process. Mancino: But he's still appealing '95? Gerhardt: He is still. Mancino: ... Gerhardt: Correct. But he did pay '95. He's delinquent on '96 taxes and second half of '97. Boyle So he's paid '95 and the first half of '97. Nothing in '96 and nothing in the second half of '97, is that right? Economic Development Authority - April 16, 1998 Mancino: And how does...last paragraph, as I'm interpretting it... therefore I'm assuming that the only petition subject to trial in June of '98 is the pay 95 petition. Gerhardt: Correct. He has petitioned for three years. 96, 97, and 95. Mancino: And he's paid 95? Gerhardt: Paid 95. Berquist: So the pay 95 is the 94 valuation? Gerhardt: Correct. Berquist: And 96 is the 95 valuation? Gerhardt: Correct. Berquist: Do you know off the top of your head what the valuations have been from 94 through 98? Gerhardt: ! think they've all been the same, the 4.17 Berquist: So you think they've maintained. The reason I'm asking is because ! just, ! would be curious as to whether or not there was a reason that, ! mean if the valuations went down. If Orlin saw the appeal being processed and he said well there's no reason for me to, ! might as well drop it down.., think it' s 4.1 consistently? Gerhardt: ! think so. Mancino: But how could it be consistent when the rest of our taxes keeping going up? Gerhardt: The valuations keep going up? Not in the commercial area. ! mean in a lot of the cases, commercial values have goen down. You know we have a minimum market value of 4.1. It couldn't go any lower than that. But then that got thrown out and that was, as a part of his first petition. Well the first hearing that we had to see if the project redevelopment agreement was enforceable or not. Berquist: Well this is... if everybody else would be interested, a quick phone call to Mark's office and just ask him what the valuation. Gerhardt: I can give you a summary. I'll put a spread sheet together on valuations. It's not that much work. ! mean I've got to write it down anyway so, put it on a spread sheet and get it down for you. 4 Economic Development Authority - April 16, 1998 Berquist: Is anybody else interested in seeing that? Mancino: Yes. I'm interested. Boyle: Where do you see, in your opinion, this going Todd? What do you expect the outcome? Gerhardt: Well I received another letter here where we asked their counsel for certain information again and his reply is well I'll send it onto my client and the client isn't responding to his own legal counsel. I think the reason he's delinquent on these taxes is because he doesn't understand the whole tax court petition process and I think somebody told him well you're in tax court. You don't have to pay your taxes so he never paid them. Mason: Ignorance? Nobody at the stern. Nobody at the wheel... He had such a turn over in staff you Gerhardt: know. Berquist: There was an attorney change, was there not? Gerhardt: No. There was not? His attorney did not change? This has been the one. ...was going to fire him... Berquist: Gerhardt: Berquist: Mancino: No, he's in town. We saw him on Galpin. He and his wife. He's in town. Berquist: Really? Mancino: Yes. He was last week. Berquist: Did he stop by?... Mason: It would be interesting to see that information if it's not too big of a hassle. Mancino: ... Gerhardt: Well, he's not giving us the information that we need so we can go to this in June so. Mancino: But that's been for the last two years and I thought one of the things that John was going to do was to try and get the Judge to say let's go ahead if we're not getting the information. I mean are we stalled again? Economic Development Authority - April 16, 1998 Gerhardt: ! can't believe we can go to court without this information. And you know we're less than 2 months away. Engle: Do they just lose by default in a situation like that? Gerhardt: Well the Judge said there would not be any more continuances so my guess is that we're going to win. Engle: We just win by default. Mancino: He's still got to get the money. He's still got to get the money. Okay. Boyle: Can you just foreclose on the property as a result? Gerhardt: You have to have at least 3 years in a row of delinquencies before you can have the sheriff' s sale. Berquist: We don't want the property. Mason: No. Mancino: Well a good teen center... Just think no neighbors... Boyle: Is there any new business that anybody would like to bring up at this time? Berquist: ! would. And ! know none of us want to spend much time here. Myself included but ! wanted, last night ! was at the Planning Commission meeting and during the Planning Commission meeting there was a presentation by the Bloomberg boys regarding the Frontier building facade and it's obvious that there is going to be no progress made on that structure if we adhere to our concepts that occurred two years ago with Truman Howell's plans. What we need to do is begin to talk amongst ourselves and think amongst ourselves about what sorts of facades we would and areas, structures within that Frontier building and the corridor between the two buildings, would accept and that we would choose to buy into in terms of contributing TIF money. Am ! making myself clear? Mancino: No. Berquist: You're clear, you're not. There is, ! mean we can say absolutely no. We want exactly what is on that plan and nothing's going to happen. If that's what we want to do, that's fine but we at least need to contemplate where this is going to go and what it's going to amount to. Boyle: Is everybody aware that he's proposed something different than what was proposed 2 years ago? Engle: You mean just recently? Economic Development Authority - April 16, 1998 Berquist: I would hope at least side of the table does... No, none of this has gone through... None of this stuff has but we can cut off our nose to spite our face and if they're bluffing, great. But I'm not sure they are and I think we'd be short sighted if we don't at least contemplate changes to the conceptual plan as presented 2 years ago. What we would and what we wouldn't accept. What we'd like to see. What we wouldn't like to see. I don't know. Boyle: That was a very nice concept. Very nice plan. But I'm sure it's very expensive and so they're trying to cut back, right? Berquist: And that's the other side of this. I mean if you look at it, there's lots of different nuances to this. If you look at it from the expense side, we've committed a million and a half bucks to the whole project, right? Which is all the phases. Somewhere in that neighborhood? Parking lots, facades, all the different components. We've got a half a million bucks committed to the facade of the theater. Arguably when they went to the different facade structure they went to pre-cast as opposed to EFIS... We already had our half a million bucks committed. We didn't have a lot of out there. We don't have any agreement with the Bloomberg boys but it was intimated during, it was decided during that project phase that there'd be about $300,000.00 worth of assistance coming from the EDA. If that 300 was predicated on the plan that was presented, and that plan was $2 million. I don't know what it was. I don't care what it was. It was $2 million and now it's too expensive and they want to drop it to a million and a half. Should we still be on the hook for $300,000.00? I don't know. Boyle: It has further implications too. What about the rest of... Does that open up the rest of the... Berquist: Well what I'm hearing last night is that this is all of a sudden gone from a complex with one umbrella, and a whole load of people, to three different components. The people, you know the Bloomberg' s, the Copeland' s, the, what's his name? Bohn: Dahlin. Berquist: Dahlin. The bowling alley. They were all trying to get together and form some kind of a cooperative to do this thing. It fell apart. Interests were different. Financial pockets were different. Enough differences so that nothing could be put together. So now they're looking at it as a phased project. By out of necessity. And we've got a theater there that's got a lot of money invested. He stands, you know it's in his vested interest to have something happen to the Frontier building as well as the rest of the project so... something happening. You know we need to get some thought as to what we would accept. And if we want to stay at status quo, that's fine but we need to be willing to live with what that means. Mancino: I have a couple comments. Go ahead Mike. Mason: Well I do too. This is all news to me. I mean and I'm assuming this all happened last night. I mean I know Monday night at the work session there was some stuff going on but this to Economic Development Authority - April 16, 1998 me sounds separate to that and I'm, understand where I'm coming from here. ! need to read Minutes and you know, but certainly you raise some very interesting questions on the deal here. Yeah, yeah. But ! think maybe we need to get some more stuff out. Yeah, ! mean this is like oh well. Berquist: Well like ! said in my two opening sentences were we need to start thinking about this and deciding what we'd like to see and what... Mason: Yep. Yep. Mancino: ! disagree and I'll tell where ! disagree with Steve. We've already decided, ! mean they've come forward with a plan to... and if it changes, you know come back and bring to us as a whole unit in that area how do they compliment each other .... then come back and show us what it will be. But to do it piece meal by piece meal in an area that really does flow together is ! think we're cutting off, what is it? Engle: Nose to spite your face? Mancino: And if it needs to be changed, fine. Then we need to go back and assess the TIF. How we would participate. If we've already spent the money. That's a little harder. But ! do think that we need to look again at the whole concept and that's the one thing that it did is it looked at the whole area. Again, if somebody wants to change it, Bob Copeland's already changed it. He came back and asked for a change. Is it better or worse? Well ! mean we all know it's cheaper and he did it because it was cheaper. So are we willing to participate to the same degree? If the next person comes in and they want to do it cheaper ! just, as ! look around Chanhassen, instead of things being cheaper, we're getting better and better quality buildings. If anything the quality and the architecture and everything else has gone up a notch or two and it's gone up with number one, the Byerly's complex. It's gone up with... Chanhassen Bank has added on. The Applebee's is all brick. The Tires Plus has gone up. All those have kind of upped, we're no longer a struggling little town and you know ! don't want to, I'm not going to sit here and say architecturally what ! will and won't accept with somebody just.., that's not for me to do. It's to see a good architectural rendering and good plans and... If they give me that and then we can decide and ! think that' s... come forward with some architectural plans and ! don't know what happened. ! heard it was tabled but that's about it. And ! heard...very incomplete. And the Planning Commission, that's where things are completed at. So yes, would ! be open to something there, but I'm not going to do it just word of mouth and just a white sheet of paper say can we come in and change it. Boyle: Yeah, ! don't think he wants to do that and ! kind of agree with you Nancy. ! almost agree the other way with Steve. However, we have offered tax increment finance dollars and with that in mind we have some say in what happens in this thing. It doesn't have to maybe be to the same financial degree that was shown the first time but if they came back with something that maybe it is a...the whole part of it, ! like that. However, we're going to run into costs because Bloomberg's going to say, wait a minute. You mean ! can't start my building until we get this whole other thing taken care of and... Economic Development Authority - April 16, 1998 Mancino: No, he can do it. He can start on it but.., concept for it first. Boyle: Approved before he simply takes... Mancino: Which is what this was all about. Boyle: Exactly. Of which they initiated. Mancino: Yes. Boyle: So now he's saying, wait a minute. I want to do my thing. I don't really care what goes on there but here's what I'm... Berquist: So you're saying if he comes, you're saying that if they're going to, ifBloomberg is going to make a presentation and they're going to change the facade from what is on that plan to what they want, that they need to bring a drawing in and show that facade in relation to the Chan Dinner village, the Chan Cinema as well as the rest of it? Mancino: Yeah. How does it fit together? Does it work? Berquist: I'm not disagreeing with what you're saying but keep in mind, from my perspective now we've got three different entities. I look at what's going to have to happen if we, I want a complex as well. Absolutely. But I think what's going to have to happen, what it's going to boil down to is that we end up facilitating this complex concept. They, as an individual developers of their individual properties are not going to facilitate that process. Mancino: Well they are going to present to us, I would say an architectural rendering and architectural specifications for the building and show it and that's what they supposedly did last night at Planning Commission. Berquist: Yes, that's what they did. Mancino: Okay. And every time they show an individual building it must be in context with the rest of it. We did that for Byerly' s. We did that for, I mean every time we as a Planning Commission got a building in front of us, we said what's the context for it? How does it fit in? How does it fit in... We've done that for years and years and years. We just haven't done it building by building. We've kind of looked to see what's around it. How does it work? How does it flow? So if they came in and wanted to show us a different architecture or frontier, fine. If it's different than that, but how does it go in with the rest? If we are going to go ahead with this. That's what architecture is all about. Boyle: Was the change to the Dinner Theater dramatic? I'm sorry, excuse me. The movie theater which was quite dramatic from the previous plan. From the initial plan. Economic Development Authority - April 16, 1998 Mancino: The initial plan had yeah. Had much more, what do ! want to say? Boyle: Rather than the. Mancino: Yeah, the flat facade. So it had much more authentic stone look and... Boyle: So that maybe set a little bit of precedent there... As soon as he came in and changed his... Engle: See I'd... make changes because ! really think it's an eyesore and I'd like to see it changed but ! don't want to ditch the whole plan because there was a lot of thought put into this by the Planning Commission, this concept. And ! want to see something too but I'd be willing to give it some flexibility if they give me a design that ! can give them direction on. ! don't want to just start designing... Mason: But it's got to go through the Planning Commission. Mancino: It's got to go through Planning Commission and they have to approve it and say, now how does it, they had a whole, they didn't just have a building. They had a boardwalk. They had you know.., and the same kind of lighting so that it carried through that whole theme in the back, etc. But ! mean plans, sure they can be changed. It's just how are they going to change. If somebody just comes up and says we're going to change it and here's what we want to do. Boyle: Well Steve, when the Planning Commission tabled this... Mancino: No, we don't allow anybody else to do that Steve. Why would we? When Charlie James in with Byerly's and everything else and we... Berquist: Hopefully they're bluffing. They'll just leave it a warehouse back there. Mason: Well then ! think we'll deal with that when the time comes. You know ! mean I'm glad you brought it up. ! think it's important to know that stuff but. Berquist: I'm not one to... (There was a tape change at this point in the discussion.) Mancino: But no, we're not designing...but we know, but wait a minute. We know, like we did on Monday night when we had the brick and everything out in front of us, you can tell. ! mean Bob wanted different colors. Well it wasn't too hard to say the colors he had picked went with everything else. So sure, that's fine. ! mean that was not a hard decision to make. It's just seeing what's...you know what he picked out went. All we need to know is that they've gone through and studied what's there and if they make some changes, they make some changes but it's still in the overall context. 10 Economic Development Authority - April 16, 1998 Berquist: We'll see where it goes. Boyle: ! have a feeling they're going to say look. That's somebody else's problem now. We have our own. We tried to make it one concept. Now we're going to propose this to you. If you want the rest of it to look like our' s, that's one thing but we want our frontier building down... ! don't think, based on what, a couple comments of what I've heard what Steve's saying, they're going to try to take that whole complex and make it look like again, like they did... Mancino: The whole thing to the left? Boyle: Exactly. Mancino: Okay. So how much money have we used then...through TIF? Gerhardt: That's the decision you're going to have to make once this thing gets through Planning Commission and City Council and have an approved plan by those bodies, then it comes back to the EDA and say, here's the approved plan by the Planning Commission and City Council. The applicant is still requesting TIF. Do you want to give it? Berquist: We run the risk of, if we do, if they don't get it done.., run the risk of the building sitting as a warehouse for however. Mancino: Of we can give TIF to somebody like again, ! mean how do you think we got Charlie James, the Byerly's complex. That was a well thought out and well done and there are other places in town that had.., willing to do that? Gerhardt: Well it's a little different. Clayton Johnson believes that he can rent this thing out as industrial space and then if he does that, then what he's done is say City sue me because he cannot lease it out as industrial space because it's not zoned for that. It's not a permitted use and we can go to court to make sure that those uses don't go in there. Berquist: At the end of this thing there was an empassioned plea by Herb Bloomberg to let him do it. Just trust me. I've done this. I've been doing this for 42 years. Mason: Trust me. Berquist: I'm serious.., stood up there and said I've done this for 42 years and I've built a lot of things in Chanhassen and I've...just trust me. I'd like you to reconsider the vote. ! mean believe me, it was, this was an absolutely fascinating meeting. Mason: It sounds that way. Mancino: But are you saying trust me and I don't need to do any plans for you? Is that what he's saying? Did he have any plans? 11 Economic Development Authority - April 16, 1998 Berquist: The comments of the commission again were, looking at the mansard, this mansard roof around the building versus conceptually what we approved from Truman Howell and they're saying... Mancino: LuAnn Sidney? AllysonBrooks? Berquist: Allyson Brooks. She said, this just doesn't make any architectural statement to me and...but anyway. They were all just saying, we really don't like this and you could just see the wheels turning, thinking back on this Truman Howell proposal and how this thing supplanted. Nobody likes it and they vote it down and.., he loves mansard roofs. ! mean every house he built has a mansard roof. You know that. He loves them. He just absolutely loves them. ! don't have any idea why... Mancino: He has a wonderful house and he has a wonderful design sense. He uses all natural materials and it's not a mansard roof. Berquist: Yeah, he gets up and he talks about all the natural materials and... Mancino: Yes, and they're beautiful. Berquist: And he makes this empassioned plea to trust him. That this will really blend well and look very, very nice. Mason: Show me a plan and some materials. Berquist: It didn't happen. Mancino: Well we make everybody give plans and materials. Berquist: So any who, if you get to, you may want to give some thought to this entire entertainment complex. Boyle: Is it on the agenda? Berquist: No. It was tabled for two weeks. Boyle: No, no, no. ! mean on the Planning Commission in two weeks? Berquist: As far as ! know. APPROVAL OF BILLS: Berquist moved, Mason seconded to approve the bills for the EDA as presented. All voted in favor and the motion carried. Chairman Boyle adjourned the meeting. 12 Economic Development Authority - April 16, 1998 Submitted by Todd Gerhardt Assistant Executive Director Prepared by Nann Opheim 13