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EDA 1997 01 09CHANHASSEN HOUSING AND REDEVELOPMENT AUTHORITY REGULAR MEETING JANUARY 9, 1997 Chairman Boyle called the meeting to order at TOO p.m. MEMBERS PRESENT: Mike Mason, Jim Bohn, Don Chmiel, and Gary Boyle MEMBERS ABSENT: Barbara Murphy STAFF PRESENT: Todd Gerhardt, Asst. Executive Director APPROVAL OF MINUTES: Mason moved, Bohn seconded to approve the Minutes of the HRA meeting dated November 14, 1996 as amended by Jim Bohn to include Barbara Murphy under Members Present and delete Charles Robbins as absent. All voted in favor and the motion carried. VISITOR PRESENTATIONS: None. CONSIDER PURCHASING 2.2 ACRE PARCEL FROM THE WARDS. Todd Gerhardt presented the staff report on this item. Boyle: Mike, we'll start on your side this time. Mason: Questions, no. I think the precedent has been set for HRA. I think it's a very appropriate use of liRA funds. If there's more discussion that's fine but no. At this point ! don't have any questions. Chmiel: The only thing that I had to say on this is that, I think getting 2.2 acres, the acquisition costs of that $90,000.00 is really reasonable.., with that amount of dollar. But ! think that as Todd has written this up and has explained it, ! guess ! really don't have any other comment to that. Boyle: Jim. Bohn: I don't have any comment. Boyle: Well ! did have some concern and ! had hoped I'd have time to run home tonight to pick up the budget before ! came in but the concern ! had was, is this really the best way to spend our money or where would this fit the priority of our budget and our goals for next year? ! didn't Housing and Redevelopment Authority - January 9, 1997 have time to do that so I can't comment further on it but there was some concern. You say this, you know this hill has trees and it's already landscaped, is that correct? Gerhardt: It's a virgin stand of trees. It hasn't been developed. It's got, it's a mature forest, woods. ! don't know if you can go to the length of forest as describing it. It has a high knoll and it kind of gives you, it's a landscaped feature along TH 101. To see the development take that hill down and those trees would just change the entire character of Rice Marsh and TH 101, as you drive through there. On Attachment #2 there' s a contour map that kind of shows you the contour lines that represent that hill. And just imagine driving along TH 101, seeing those trees cut down and seeing that as a soccer field. Well having a soccer kid it'd be kind of nice but in changing the character of a sensitive area. Also on the first map there, you will be receiving a little over, the City will be receiving as a dedication that 7 acres just to the east there that' s highlighted in gray. It' s a wetland area and it would just would match in perfectly with preserving that natural area. As to priorities of the HRA and is this money the best spent. We're kind of in a time crunch on this one. They're moving out there and right now we just don't have any other alternatives to fund this type of acquisition. It's been one that has been a priority of the HRA's in the past. It's been one that just, you know putting the burden back onto the Park and Rec Department and them having to grant a credit would be a burden back onto the City. This is another way of the HRA assisting the City, as you have in the past and helping offset some of their revenue shortfalls or making sure that they have the necessary revenues to develop the parks like they have. You know we, and the HRA have always stand on a strict policy that we would not deviate from our park and trail credits as we provide incentives to businesses. That's one tool some cities may use in creating economic development. In this community it hasn't and we try to make that up through the HRA and the credits that we receive, or give to people. So if we were to relook at our priorities, ! would think that preserving this and enhancing the revenues back to this city would stand pretty high on that. Bohn: How about the Historical Trust? Gerhardt: Historical Trust is asked each year in trying to maintain the downtown area. We had to do it for the Hanus building. We don't want to tap those dollars so it's less interest that we would be earning. We did tap those dollars on the Hanus building but we have reversed those as we bought the building as a revenue producer. It made economic sense for us to do that and that fund would be replenished back once the building sold and that the note does come due. So it's, this would be $200,000.00 out of that interest bearing account and nothing would come back. On tax increment this is a legitimate use to use those monies for. Boyle: Thorough answer, thank you Todd. Bohn: This whole piece of property, all in the tax increment? Gerhardt: You modified the boundaries for the tax increment district at our last, the modification of the redevelopment plan. The boundaries now go down along Galpin and almost up the easterly boundary of the city so it is in the district. Housing and Redevelopment Authority - January 9, 1997 Boyle: You indicate this is virgin so we can expect additional charges for landscaping? Gerhardt: ! don't hope to do any landscaping in this area. Just leave it as a natural state as we have with, ! meant virgin, virgin woods. It's been an untouched area by farmers or, there are some 100 year old maples in there from what I've been told. Boyle: Any other questions or discussions? Todd, I understand you're looking for a motion tonight. Gerhardt: Yes Chairman. Boyle: More than just consider purchasing. You would like to have a decision. Gerhardt: Direction to draft a purchase agreement and bring it back for your approval. Mason: ! would move to draft that purchase agreement contingent upon bringing it back to HRA for approval, if that's what you're looking for. Chmiel: I'd second that. Boyle: To answer your question Steve, no. It's not a public hearing. In courtesy to Todd, especially when a portion of the audience is sitting behind him, it's very difficult sometimes, and that's why last time ! asked you to take the podium if you had a question... If anybody else comes in behind and has something to say, we will ask that they take the podium. That's a matter of explanation. Yes we are, we have a motion and a second and now we will have discussion. Steve Berquist: May I? Boyle: Yes you may. Steve Berquist: My name is Steve Berquist. I'm at 7207 Frontier Trail. I've got a couple of questions. First of all from a Council perspective, my perspective on the Council, ! don't directly recall there being discussion when we were talking about moving the soccer field from the knoll site to the northern alignment. ! don't specifically recall there being discussions regarding compensation to the developer, either through the Park and Rec or through the TIF or anything specific with that land at that time. That doesn't mean that it didn't get discussed. It simply means that ! don't remember. ! am curious about a couple of things. Is there a threat of sale? ! mean is the developer saying that if the motion is not made tonight, there is a buyer for that piece of property? That's question one. Question two is, ! understand that the majority of that site was green acres, and from what ! understand of tax increment financing, the State does not allow tax increment financing to be used on land that has been previously or is currently green acred for tax purposes. Yes or no? Is that correct? Housing and Redevelopment Authority - January 9, 1997 Gerhardt: You are correct, but that would be with the creation of a new tax increment district. In this we are not looking to try to create increment. You can spend existing increment on the district to purchase property even though it may be green acred. Steve Berquist: So in other words if a developer were to come in and purchase that same piece of property and come to the City for increment help, they couldn't do it? To leave it raw land, we do have the authority to spend that money. Okay. An interesting twist. The other, one quick comment. You know ! don't necessarily think that the Housing and Redevelopment Authority should be in the business of purchasing open space. ! understand that it's happened in the past but that doesn't necessarily mean that it's in our best interest to do it again. Especially when you look at the likelihood of that entire project coming back to us as, to you as an HRA, to me as a City Councilmember, for subsidies that will be appreciable. Whether they be for housing or infrastructure or whatever other use. But ! suspect that this will not be the only time that the developer comes to the City and asks us to ante up. So ! honestly think that a motion to prepare a purchase agreement is premature. Thank you. Boyle: Todd, ! may have misread. Right now the Church or the School has already relocated the soccer field so it's not the fact that if we don't do this, the soccer field will be built on that location. That's already been redone. Gerhardt: Correct. Boyle: And if we don't purchase this property, what? Gerhardt: Well, we don't know and it's one where the developer is going to go back and request for some type of a park and trail dedication fee. And the City's going to hard pressed in not giving that to them. You cannot, in my opinion, you cannot make an individual keep a piece of property as an open space without trying to compensate him for doing that. Or giving some kind of incentive for him to do that. Cost, and what we're doing here, in having the HRA purchase that, is ensuring that the Park and Rec Department will get it's full credit for park and trail dedication fees from this development. Also controlling this sensitive piece of property. Ensuring that nobody will grade the site or cut down the trees or anything. It would be under the HRA' s, the City's control completely. And that natural characteristic will stay in it's state until the City or HRA decides to sell it. Boyle: Now my concern is, ! look at this now and ! say well why would they want to do that? ! mean ! guess the property could be valuable enough that they could subdivide that into whatever the Wards wanted to do with it. I'm trying to visualize the property itself. Gerhardt: Well as the community develops, if TH 212 develops and along you know that roadway will. Bohn: What's going to be along, what's north and west of that piece of property? Housing and Redevelopment Authority - January 9, 1997 Gerhardt: North of the property is an office building and the church parking lot. To the west of this site ! think they're planning on some type of condominium townhomes and some office. Bohn: Where is the playground for the school? Gerhardt: The playground for the school is just to the grassy area. East of their parking lot and south of their building. Bohn: It looks like a tennis court or something. Gerhardt: The school's over here Jim. Bohn: Is that TH 1017 Gerhardt: These are tennis courts for the condominiums. Boyle: Why do we assume, or could we assume that Mr. Ward's going to approach us immediately to start charging for trail and park fees or is this something down the? Gerhardt: We require, as a part of their filing of the plat, we require ! think 25% of the fees up front and it's usually highlighted in a development agreement at the time of approval. Nancy Mancino: Nancy Mancino, 6620 Galpin Boulevard. Todd was the, or excuse me Gary, if! could direct to Todd. Was an appraisal done for the $90,000.00? Is that how that figure came up? Was there a formal appraisal done? Gerhardt: ...the way ! understand it, between the Ward's, St. Hubert's and city staff, we discussed some of the costs for the development. From that meeting Don recommended that he would approach the HRA and present the offer to the HRA. Nancy Mancino: Is it always done that way or isn't there an independent appraisal done by non- interested parties? Gerhardt: In some cases you may have an appraisal if you're going to go through a condemnation. Agreement and we had a pretty good idea of what the market was for that area. It seemed appropriate. ! wouldn't say it's low but it seem appropriate. Nancy Mancino: And on other parcels, if the HRA buys, what's the, are there usually third party appraisals? Or is there a handshake? Gerhardt: No. ! mean in most cases, well when we purchased the Target property, there was an appraisal. When we purchased the land out in front of City Hall, there was an appraisal. All the buildings downtown we had appraisals on. The pond, where the stormwater pond is, we had appraisals done. We purchased the two lots in the Chanhassen Business Center. Chanhassen Housing and Redevelopment Authority - January 9, 1997 Lakes Business Center Park. We didn't have an appraisal. If the parties can't come to a fair and mutual agreement. Bohn: In the Target's property, we just didn't sell them part of it back, that's all. We bought that property and we sold it to Target and we just didn't sell them part of it. And the same thing with the Business Park by Prince's. We just didn't sell part of it back to them. We didn't buy it. We bought all the property around it but we just kept part of it. Most the time that's what it was. We just kept part of it. We didn't sell it. In this case we're buying it instead of... Boyle: You're recognized. Chmiel: I was just going to say that normally staff is so aware as to what prices are within the community that, if they feel that there's something going to transpire, sort of trying to stick the City with additional dollars for what it is and it's not worth it, that's the time that the appraisals basically go out. But they know what square footage is in those particular areas. $45,000.00, that's still rather reasonable cost in comparison. Boyle: Very good question. Nancy Mancino: I'd like to bring that up. Gerhardt: ! mean ! don't think we just based it on pure market value. ! mean it was, it had a variety of things. That's what they felt they needed to get out of the property to sell it over to the City. ! wasn't in on the meeting so ! can't tell you how they arrived at the $90,000.00. Boyle: Todd, what is the sense of urgency again? Gerhardt: They're moving ahead with their development and the big thing is the park and trail dedication credits. They want to get that squared away so they know exactly what their costs are as a part of the development over there. Boyle: So the options are one, we buy. Or two, we take the gamble that, well the second or Park and Rec bite the bullet whereby the City gets some charge. Or we take the gamble that Mr. Ward will sell this to somebody else and we're going to lose that particular piece. That's the three options. The decision should be based upon this Commission ! believe and the questions that's been raised from the audience to make a decision. If we should have a proposal drawn up. There's a motion on the floor that we do and it's been seconded and we will continue the discussion. Nancy Mancino: I'm sorry. Nancy Mancino again. I just wanted to say I'm, you know concerned about the price and.., but ! want to say conceptually that that land being preserved very much agree with.., as TH 101 develops on that east side, you're going to have Villages on the Ponds, which is a very, very dense.., travel through some green open space and then down to Mission Hills and to TH 212 and one of the things that ! found... Housing and Redevelopment Authority - January 9, 1997 Boyle: Thank you. Thank you for that input. And ! agree with that concept too so. Are there trails on this property now? Do trails exist? Gerhardt: There's a trail. It goes... Boyle: Just so I'm not mistaken. This is the knoll, right? Okay. That's the hill we're talking about. Bohn: Where is the church going to sit? Boyle: Thank you Todd. In regards to the price, ! know there are many lots, individual, single unit lots, family lots going for in excess of what we're paying per acre should we purchase this property... (There was a tape change at this point in the discussion.) Councilman Mason moved, Councilman Bohn seconded to direct staff to prepare a purchase agreement to purchase 2.2 acres of land from the Ward's. All voted in favor and the motion carried. CONSIDER MODIFYING THE TIF REIMBURSEMENT AGREEMENT WITH THE SCHOOL DISTRICT 112. This item was tabled. APPROVAL OF BILLS: (Taping of the discussion began again at this point.) Steve Berquist: ... market industrial land, and it says map. Do we own some industrial, does the City own industrial land that we're trying to market? Gerhardt: No, but the HRA, there's the tract that is directly owned by Redmond Products behind public works. On the other side of the railroad, and we are approached by the real estate journals, city business, when they put out promotional magazines, buyers to advertise in there telling that there is available industrial land in Chanhassen. Other cities will take out ads in there. Kind of incentives they have. Highlighted the Chanhassen Lakes Business Park in there. It goes out to, ! think it's like 200 or 300,000 people. Steve Berquist: So this was done on behalfofa number of private owners? As well as, ! mean understand the potential benefit to the City. In fact we're getting land that was owned by the public. Housing and Redevelopment Authority - January 9, 1997 Gerhardt: We're not just doing one individual. We're doing a variety. A lot of cities, you know our marketing is to the tune of $600.00 a year telling people we have industrial land ....industrial activity in the community. Advertising that. Steve Berquist: Nothing that you can directly track a lead from? Curiosity. Gerhardt: Chuck's Grinding, Power Systems...think about Chanhassen. Most of them, you know are led here because they live in the area. How much success have we had.., off of that newspaper. Boyle: If this was discussed somewhat ! believe last time. It might be something that if you needed some information, Todd could sit down and discuss it in more detail. Bohn: Does that include the property we have next to Applebee's? Gerhardt: They just kind of give you a bullet for areas. It says commercial/industrial land available. They don't just highlight areas. They can give a list and our name's on there as a contact if they're interested in seeing a list of properties. We have a packet of, it's called the past, present and future. It has census data, historical information on the community that the planning staff has gathered. And then behind that we have referenced all the available commercial and industrial, townhouse and single family land in Chanhassen. Contact names and then on there we've highlighted, if there's any incentives, tax increment available or not. Boyle: ! somehow recall this discussion. Bohn: ... advertising? Gerhardt: We've been doing it for oh 6-7 years. We're not on the tune of like Champlin. Champlin must spend tens of thousands of dollars. They take out colorful ads. Lakeville's in a big marketing push right now. Steve Berquist: Have those municipalities got a substantial amount of industrial land and districts to go along with it? Gerhardt: No. Not a lot. They just don't have any industrial in that community and they're just trying to get the word out to tell people we have it available. It's kind of known that Chanhassen and Chaska have available industrial land. Shakopee's another one. Burnsville wasn't up until a couple years ago. They brought in a big chunk out there and rezoned it saw a lot of success during the last couple of years. The big one ! think of is Woodbury in trying to get a regional mall. They went so far as to put out fortune cookies saying come and get your fortune in Woodbury and sent it out to a bunch of perspective businesses. Right now we're just keeping our name out there a little bit. Boyle: Okay. Further questions or discussion? Housing and Redevelopment Authority - January 9, 1997 Chmiel moved, Mason seconded to approve the Housing and Redevelopment Authority Bills. All voted in favor and the motion carried. Chmiel moved, Mason seconded to adjourn the meeting. All voted in favor and the motion carried. The meeting was adjourned. Submitted by Todd Gerhardt Asst. Executive Director Prepared by Nann Opheim