Loading...
HomeMy WebLinkAbout2023 05.08 CCM WORK SESSION5/8/23 -1- DRAFT MINUTES OF THE PROCEEDINGS OF THE CITY COUNCIL/ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF BROOKLYN CENTER IN THE COUNTY OF HENNEPIN AND THE STATE OF MINNESOTA WORK SESSION MAY 8, 2023 CITY HALL – COUNCIL CHAMBERS CALL TO ORDER The Brooklyn Center City Council/Economic Development Authority (EDA) met in Work Session called to order by Mayor/President April Graves at 8:42 p.m. ROLL CALL Mayor/President April Graves and Councilmembers/Commissioners Marquita Butler, Kris Lawrence-Anderson, Dan Jerzak, and Teneshia Kragness. Also present were City Manager Reggie Edwards, and Assistant City Manager/City Clerk Barb Suciu. OPPORTUNITY SITE PHASE 1 FINANCING Dr. Edwards introduced the item and invited Jason Aarsvold, EDA Project Management with Ehlers, to continue the presentation. Mr. Aarsvold explained Alatus requested up-front assistance/financing for the Opportunity Site with General Obligation tax increment financing (TIF) bonds as the primary option. An estimated $15-17 million bonding is needed to finance the project. Special assessments and land payment deferral are used to reduce bonding and mitigate City risk. Since March, City Staff, Alatus, and Ehlers worked to put more detail into place and explore options to reduce City bonding necessary for the project. Mr. Aarsvold stated the payment to the EDA under the current Term Sheet is $7.58 million. Deferral of this land payment is recommended because it reduced the amount of City-issued debt, can be paid back over time, and the need to complete the project outweighs the need to replenish the TIF #3 fund now from the land sale proceeds. Mr. Aarsvold noted there is an option to build only a portion of the infrastructure by skipping the third pond. That could save about $1.65 million, but there are some trade-offs. Mr. Aarsvold added size reduction of the entrepreneurial marketplace is necessary, and will be decreased to about 17,000 square feet. It can still be City-owned, but it comes with a higher cost and will likely include an ongoing annual operating subsidy. Staff explored the option for Alatus ownership, which reduces the cost to the City and shifts some risk to Alatus while retaining the original intent of the building. 5/8/23 -2- DRAFT Mr. Aarsvold stated Alatus would need to submit a business plan for the entrepreneurial marketplace to outline rental and operational requirements. There would still be below-market rents for all tenants and will meet community social responsibility goals. The intention is to have an anchor tenant to help stabilize the building. Alatus is to leverage the onsite multi-family staff to more efficiently manage maintenance and other operational costs of the entrepreneurial marketplace (EMP). Mr. Aarsvold stated the first financing option includes deferred payment for City land, partial infrastructure build, and reduced EMP size with public ownership of the EMP building. Based on current projections, this would require City bond financing of just over $9.12 million for all components of the current phase. This option also leaves open the unknown as it relates to future operating costs. Mr. Aarsvold explained the second option is Deferred payment for City land, partial infrastructure build, and reduced EMP size with Alatus ownership and operation. Alatus would be responsible for the operation and any potential annual shortfalls. Based on current projections, this would require City bond financing of approximately $6 million for all components of the current phase. Mr. Aarsvold added the third option is deferred payment for City land, full infrastructure build, and reduced EMP size with Alatus ownership and operation. Based on current projections, this would require City bond financing of approximately $7.7 million for all components of the current phase. Mr. Aarsvold noted the third option is supported by Staff. The consensus is that the full build for infrastructure makes sense now. There would be cost efficiencies without significant maintenance concerns. There would be increased bonding, but it can still be repaid with an assessment to Alatus, meaning there is no tax impact on residents. Also, Alatus feels it adds value to and strengthens the overall development. Mr. Aarsvold pointed out an Alatus-owned EMP is preferred. It reduces the bonding required, eliminates concerns about ongoing operations, and retains the intent of the EMP facility. Councilmember/Commissioner Lawrence-Anderson thanked Mr. Aarsvold for the detailed information. She asked if the bonding he referred to was a general obligation bond. Mr. Aarsvold confirmed that was correct. Councilmember/Commissioner Kragness asked how long the land payment can be deferred. Mr. Aarsvold stated it can be deferred as long as the City wants, and he would rely on the financing of the project to determine the repayment. The process would be detailed in future agreements about how long the repayment could take and which sources would be used for the repayment. It wouldn’t be longer than the length of the TIF district. Councilmember/Commissioner Kragness stated there has been consideration about requesting a different TIF timeline. Mr. Aarsvold confirmed that has been considered, but it is not before the legislature this year. If it were to pass in the future, it would be beneficial to the project. 5/8/23 -3- DRAFT Councilmember/Commissioner Kragness asked how the partial infrastructure build impacts Alatus’ funding. As for the third option, if there is potential for the EMP to be publicly owned and still have a size reduction. Mr. Aarsvold stated the partial build is a neutral financial impact. It means the City would be paying less and the assessment would be lower. Barrett Corwin, Director of Development for Alatus, explained the bonding would change based on the assessing value. The partial build would allow for lower bonding. The total construction of the infrastructure is important for Alatus because access is important. Councilmember/Commissioner Jerzak stated deferring the building of the pond would only increase its cost as building costs are always increasing. However, maybe the pond is unnecessary if it isn’t even needed at the outset. What are the experiences of other development partners in getting finance. The Council/EDA wants to get the Opportunity Site right. Mr. Corwin explained the pond is a regional pond system and will serve other areas in the future and will make the financing of other projects easier down the line. As for the financing experiences of other partners, Resurrecting Faith Ministries is relying on tax credits. The PPL project will be financed similarly to the Wangstad project with low-income residency tax credits. Councilmember/Commissioner Kragness asked for the third option if there is potential for the EMP to be publicly owned and still have a size reduction. Erica Miller, the Alatus representative, stated the EMP has already been reduced to 17,000 square feet. Decreasing it any more would not gain any economies of scale in construction. Councilmember/Commissioner Kragness asked what the difference in size is for EMP if owned by Alatus or the public. Mr. Corwin stated the size of the EMP is the same in either scenario. He added decreasing the size of the EMP could also negatively impact the grants. Mayor/President Graves stated she favored the third option even before hearing about Staff’s recommendation. The ask is much lower and seems more doable. The only concern is getting the agreement in place regarding the role of the EMP space. Mr. Aarsvold pointed out the agreement will likely include a provision that would allow for the City to buy back the EMP at fair market value down the line. The majority consensus of the City Council/EDA was to support the third financing option which includes deferred payment for City land, full Infrastructure build, and reduced EMP size with Alatus ownership and operation. Mayor/President Graves requested that the outstanding Study Session item be brought back to the Council/EDA at the next meeting. UPCOMING ITEMS • Grant Discussion-May 22 5/8/23 -4- DRAFT • Tenant Protection Data presentation-May 22 • DKIC Traffic Stops presentation-May 22 • THC Moratorium-June 12 • Memorial Policy-June 12 • Special Assessment Policy/Franchise Fees (referred to Financial Commission) • Beautification and Public Art Commission • Liquor Store 2 - • Organizational Chart-Budget work sessions • Rental License Review (referred to Housing Commission) • Food Truck Ordinance / License • Emerald Ash Borer Policy Review (referred to Park & Rec Commission November) ADJOURNMENT Councilmember/Commissioner Jerzak moved and Councilmember/Commissioner Butler seconded the adjournment of the City Council/Economic Development Authority Work Session at 9:14 p.m. Motion passed unanimously.