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EDA 2017 09 11 CHANHASSEN ECONOMIC DEVELOPMENT AUTHORITY (EDA) SPECIAL MEETING SEPTEMBER 11, 2017 Chairman Laufenburger called the meeting to order at 10:40 p.m. MEMBERS PRESENT: Denny Laufenburger, Jerry McDonald, Bethany Tjornhom, Elise Ryan, and Dan Campion STAFF PRESENT: Todd Gerhardt, Paul Oehme, Kate Aanenson, Greg Sticha, and Roger Knutson Mayor Laufenburger: Council members we have an agenda in front of us printed. Is there any modifications to the agenda at this time? Okay. There being no modifications we will proceed with the agenda as it is stated. APPROVAL OF EDA MINUTES DATED JANUARY 11, 2016. McDonald moved, Tjornhom seconded to approve the Minutes of the EDA meeting dated January 11, 2016 as presented. All voted in favor and the motion carried unanimously with a vote of 5 to 0. ADOPT RESOLUTION APPROVING MODIFICATION TO REDEVELOPMENT PLAN FOR THE DOWNTOWN CHANHASSEN REDEVELOPMENT PROJECT AREA AND TAX INCREMENT FINANCING PLAN NO. 11. Mayor Laufenburger: Is there a staff report? Todd Gerhardt: Mayor, I’m not going to go through the presentation I just did several hours ago but staff is asking you to adopt a resolution approving the modifications to the Redevelopment Plan for the downtown Chanhassen Redevelopment Project Area and Tax Increment Financing Plan No. 11. And also included in that motion should be approval of the Private Redevelopment Agreement between the EDA and Chanhassen, what is it? Frontier. Mayor Laufenburger: Chanhassen Frontier, LLC. Todd Gerhardt: Chanhassen Frontier, LLC. Mayor Laufenburger: Okay. EDA members we have that motion in front of us in the staff report. Any questions for staff on the information presented in the packet? Alright. I just have one question. Mr. Knutson this may be for you. Can you in laymen terms can you speak to why there is council action and there is also Economic Development Authority action? What is the statutory distinction between these two bodies? Can you speak to that? Chanhassen Economic Development Authority – September 11, 2017 Roger Knutson: The statute breaks it down and requires action by both bodies. That’s the simplest answer. Mayor Laufenburger: Okay, we don’t often meet as an EDA. We meet regularly as a council. Roger Knutson: Correct. Mayor Laufenburger: So is there statutory description as to what is needed for EDA and what is not needed for EDA? Roger Knutson: Yes. Mayor Laufenburger: And this is one of those items that the EDA must act on? Roger Knutson: Yes. Mayor Laufenburger: But they’re also acting on, based on the resolution that was adopted by the City Council, is that correct? Roger Knutson: Takes action by both. Mayor Laufenburger: Okay, action by both. Okay. Is this a final action on this particular item? Is the EDA the final action or is there some jurisdiction to which we have to present this? Roger Knutson: No, this is the final action. Mayor Laufenburger: Okay and this final action, obviously there are elements of this action where the contract that are governed by State statute, is that correct? Roger Knutson: That’s correct. Mayor Laufenburger: Such as the assignment of a TIF District and whether or not the property qualifies for redevelopment. Roger Knutson: That’s all statutory. Mayor Laufenburger: Okay, alright. So do we have any latitude on this Mr. Knutson? Roger Knutson: Well you have consideration discretion on whether you want to establish or modify a TIF District, yes. Mayor Laufenburger: Okay but that would have been exercised in the City Council meeting, is that correct? 2 Chanhassen Economic Development Authority – September 11, 2017 Roger Knutson: Yes and. Mayor Laufenburger: It can be exercised here as well? Roger Knutson: Yes. Mayor Laufenburger: Okay, alright. Todd Gerhardt: Or if in the future they would have to come back to both bodies. Roger Knutson: Yes. Mayor Laufenburger: Okay, so any modification to anything that’s given approval to tonight would have to come back to both bodies? Roger Knutson: That’s correct. Mayor Laufenburger: Okay, alright. Thank you for that clarification. Any question, comment or motion? Councilman Campion: Mr. Mayor I have a few questions. Mayor Laufenburger: Go ahead, please. Councilman Campion: One of those questions is on the boundary of the TIF project area. What’s the rationale for why that couldn’t be the entirety of Chanhassen and instead just the area within the dashed lines? Is it a ratio of the project area to the TIF district? Todd Gerhardt: It’s. Mayor Laufenburger: Let’s make sure, just a second. Let’s get our terminology. You’re referring to the Redevelopment Project Area? Councilman Campion: Yes correct. Mayor Laufenburger: Okay, alright. The TIF district is that 3 parcel item in the middle of it. Councilman Campion: Understood. Mayor Laufenburger: Okay, so you’re referring to the. Councilman Campion: The left handed quarterback. 3 Chanhassen Economic Development Authority – September 11, 2017 Mayor Laufenburger: Okay. Mr. Gerhardt go ahead. Todd Gerhardt: When that was created again as I spelled out certain dollars could have been spent within that area and you know we just kept the same boundaries. There’s no pros and cons to the way it looks today. We just kept the same district. Councilman Campion: So there’s no benefit for it not being the entire Chanhassen area? Todd Gerhardt: I don’t think so. Roger Knutson: Nothing comes to my mind. Todd Gerhardt: Yeah, I know. Roger Knutson: You can change it if you want. Councilman Campion: It just seems arbitrary. Mayor Laufenburger: Mr. Campion I understand your question. Councilman Campion: Yeah. Mayor Laufenburger: I think I do. Is there something that you would like to offer instead of what we have here? Councilman Campion: I’d like to offer I guess that the project area be the entire city of Chanhassen. Mayor Laufenburger: So what you’re suggesting is that any TIF district that may be established in the future, that TIF district guidelines including the 25 percent outside the TIF district, you’d like to see that applied, potentially applied to all of Chanhassen. Councilman Campion: Unless there’s a compelling argument for why it should be contained within this area. Todd Gerhardt: Well this is the area that we showed the school district and the county when we provided notice to them. Also this is the area that we showed as the public hearing of what the project area would be. Both Roger and I are, you know to modify it now I don’t know if we have legal authority to do that after we’ve already sent notice to those areas. I mean if you want to modify it, you know I can go back and check the statute and we can bring it back and go through the process again. 4 Chanhassen Economic Development Authority – September 11, 2017 Councilman Campion: That just jumps out at me more as an EDA member than a City Councilman I guess. Todd Gerhardt: Well if you’re planning on doing anything outside of what we talk about tonight and you want to spend 25 percent someplace in the community and we can modify it, that’s the time to do it. Mayor Laufenburger: So what you’re saying Mr. Gerhardt is that let’s look into the future a little bit. Todd Gerhardt: Correct. Mayor Laufenburger: And if we were to establish a TIF district, let’s pick an area that’s not currently in development. Councilman Campion: Around Lake Ann. Mayor Laufenburger: Okay. Councilman Campion: There’s a trail around Lake Ann for example. Mayor Laufenburger: Well that wouldn’t be for commercial or retail or industrial use I don’t think. Let’s think about another open area for example. Councilman Campion: Is that a requirement? Todd Gerhardt: No. Mayor Laufenburger: How about this? We have, is it possible for us to establish a TIF district to encourage a developer to develop residential homes on the west side of Lake Ann? Councilman Campion: That’s not the question. Todd Gerhardt: I think what Dan is asking, he wants to take 25 percent of the increment and spend it someplace else within that boundary. Mayor Laufenburger: Outside this redevelopment area. Todd Gerhardt: And he wants to expand the boundary to use that 25 percent, correct? Councilman Campion: Yeah. I just, unless there’s a compelling reason for containing it within that area I don’t understand why just because that’s the way it was before. 5 Chanhassen Economic Development Authority – September 11, 2017 Todd Gerhardt: And what I’m saying if you want to build a trail around Lake Ann, we can bring it back at a later time but we have to change the language in the plan saying that we’re going to use, and we’ve got to show a budget of 25 percent of whatever that dollar amount is to put a trail around Lake Ann. Does that make sense? Councilman Campion: Yes. Todd Gerhardt: Okay. So they go in concert with each other. So right now everything that we can use the money for, even if you want to speak 25 percent to put around, put the trail all the way around Lake Susan I’d have to modify the plan to do that. So and if I can change the boundary then if the council wants to do that then I’ll change the boundary when we say we’re going to use it to build it around Lake Ann. Does that make sense? Councilman Campion: It does. Mayor Laufenburger: So I think what we’re saying Mr. Campion is that at some point in the future if the council would like to modify the project area, something outside of this particular TIF district, we can do that. Todd Gerhardt: Yeah. Mayor Laufenburger: Outside of this TIF district. Todd Gerhardt: It’s really the project area. The redevelopment project area. The TIF district is the 3 parcels that are generating the increment and the increment from those 3 parcels, 25 percent of that can be used outside of the Tax Increment Financing District No. 11, somewhere with inside that boundary and if you want to go outside that boundary and say you want to put a trail around Lake Ann, then I would have Roger research to see if we can modify the redevelopment project area and include in a tax increment and modify the tax increment plan to build a trail around Lake Ann. Does that make sense? Councilman Campion: Yes. Todd Gerhardt: Because right now it doesn’t talk about building a trail around Lake Ann. Councilman Campion: Got it. Todd Gerhardt: Just I know it’s just an example but anything outside of that district, then we have to come through the modifications. Have the hearings and modify the budget to include whatever that cost of that trail is. Councilman Campion: Okay. 6 Chanhassen Economic Development Authority – September 11, 2017 Todd Gerhardt: I don’t make the rules. I try to remember them. Mayor Laufenburger: Any other question or comment? Councilman Campion: One other question. So we did get a lot of emails and a lot of phone calls leading up to this and there was a question I didn’t ask earlier because I was pushing to delay this but, was there, is it possible for there to have been some partnership between the Carver County CDA and EDA to somehow be the ones to manage or put in this apartment development? Todd Gerhardt: I heard that question today and we have tried to partner with the CDA. They look for free land as their equity share into the development so they use that land as leverage to sell bonds and determine a value on that. Centennial Apartments is a perfect example of where we didn’t just give them free land. We had to put money into an escrow account of a couple hundred thousand dollars for them to be able to sell bonds to finance Centennial Hills apartments. It took about 15 years but we did get our money back but they have title to the land and we’re not looking to be compensated for that land. That was the deal but we did receive our escrow money back and, oh what was the other part of it? Oh and we gave our GO obligation so if for any reason they default on those bonds it comes back to the obligation of the City of Chanhassen. Councilman Campion: Was that something we considered in this area or it just didn’t fit from what you’re saying because there was not free land? Todd Gerhardt: They’d want it to be affordable, not market rate. Councilman Campion: Okay. Alright. Councilman McDonald: Mr. Mayor? Mayor Laufenburger: Mr. McDonald. Councilman McDonald: If everybody’s done I’d like to make a motion. The Economic Development Authority adopts Resolution approving Modification in the Redevelopment Plan for the Downtown Chanhassen Redevelopment Project Area and Tax Increment Financing Plan No. 11; and the contract for Private Redevelopment by and between Chanhassen Economic Development Authority and Chanhassen Frontier, LLC. Mayor Laufenburger: So your motion is to approve those two things, is that correct? Councilman McDonald: Yep, that’s correct. Mayor Laufenburger: Is there anything, Mr. Knutson is there anything we need to add to that? 7 Chanhassen Economic Development Authority – September 11, 2017 Roger Knutson: Did you mention the construct for Private Redevelopment? Mayor Laufenburger: Private Redevelopment, yes he did. Todd Gerhardt: Resolution, TIF plan and Private Redevelopment Agreement. So three things. Mayor Laufenburger: Is there a second? Councilwoman Tjornhom: Second. Mayor Laufenburger: Thank you Councilmember Tjornhom. We have a motion and a second. Is there any discussion? Councilwoman Ryan: Mr. Mayor? Mayor Laufenburger: Councilmember Ryan. Councilwoman Ryan: I just have a couple comments. Basically why I’m going to vote no to this. Words matter and in reading the resolution that we’re voting on right now, three things I am, I don’t believe to be true for me. It says that the plans are intended and in the judgment of this council that it will be an impetus for development in the public interest. I disagree with that statement. It says in 3.01 that by establishing this district is in the public interest. I disagree with that. And in 3.02 it says that, or it reads that the plans will afford maximum opportunity consistent with the sound needs of the City as a whole for the development or redevelopment of the district, and I disagree with that so for those three reasons, along with the many others I mentioned earlier tonight I will be voting against this. Mayor Laufenburger: Alright, thank you Councilmember Ryan. Any other questions or any other discussion on the motion? There being none. Tom Devine: Point of just information quickly. As I understand this is a public hearing right now. Mayor Laufenburger: No it’s not. The public hearing was conducted during the City Council meeting. This is not a public hearing. Tom Devine: So you don’t have to have a public hearing for this section on a vote? Mayor Laufenburger: That’s correct. Tom Devine: You don’t have to take public testimony for this meeting here. Mayor Laufenburger: You are correct. 8 Chanhassen Economic Development Authority – September 11, 2017 Tom Devine: Is that what I understand? Mayor Laufenburger: You are correct. EDA Resolution 2017-01: Councilman McDonald moved, Councilwoman Tjornhom seconded that the Chanhassen Economic Development Authority adopts Resolution approving Modification in the Redevelopment Plan for the Downtown Chanhassen Redevelopment Project Area and Tax Increment Financing Plan No. 11; and the contract for Private Redevelopment by and between Chanhassen Economic Development Authority and Chanhassen Frontier, LLC. Laufenburger, McDonald and Tjornhom voted in favor. Ryan and Campion voted in opposition. The motion carried with a vote of 3 to 2. Mayor Laufenburger: That motion carried 3-2. That concludes the action for the EDA tonight. May I have a motion to adjourn? Tjornhom moved, McDonald seconded to adjourn the meeting. All voted in favor and the motion carried unanimously with a vote of 5 to 0. The EDA meeting was adjourned at 10:55 p.m. Submitted by Todd Gerhardt City Manager Prepared by Nann Opheim 9