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HomeMy WebLinkAbout2023 09.11 CCM STUDY SESSION9/11/23 -1- MINUTES OF THE PROCEEDINGS OF THE CITY COUNCIL OF THE CITY OF BROOKLYN CENTER IN THE COUNTY OF HENNEPIN AND THE STATE OF MINNESOTA STUDY SESSION SEPTEMBER 11, 2023 CITY HALL – COUNCIL CHAMBERS CALL TO ORDER The Brooklyn Center City Council met in a Study Session called to order by Mayor April Graves at 6:05 p.m. ROLL CALL Mayor April Graves and Councilmembers Marquita Butler (arrived at 6:12 p.m.), Kris Lawrence- Anderson, Dan Jerzak, and Teneshia Kragness. Also present were City Manager Reggie Edwards, Director of Fiscal & Support Services Angela Holm, Community Development Director Jesse Anderson, Assistant City Manager/City Clerk Barb Suciu, and City Attorney Jason Hill. CITY COUNCIL DISCUSSION OF AGENDA ITEMS AND QUESTIONS Councilmember Lawrence-Anderson requested the CC/FC Work Session from August 19, 2023, to be redone to show a consensus regarding an Assistant City Manager. City Manager Reggie Edwards stated he doesn’t recall a specific consensus made by the attendees, but staff will review the recording to see if there was an official consensus. Councilmember Kragness added her name was spelled wrong on the Roll Call portion of the CC/FC Work Session from August 19, 2023. MISCELLANEOUS Councilmember Jerzak stated there was a check for $62,000 for fire cleanup. He asked if the deductible was accessed for the payment and if the City would receive any reimbursement from the insurance. Councilmember Jerzak added there was a check listed under redevelopment for the Economic Development Authority (EDA) for $8,362.45 for a commercial door. He asked why the City would pay for an item when the produce store had already received a $70,000 loan. Dr. Edwards stated that staff would look into the checks and craft a response for the Council to be emailed. Councilmember Lawrence-Anderson noted the City Website is requesting nominations regarding 9/11/23 -2- random acts of kindness. Last year’s event was nice, but she would prefer something more frugal. However, there should be more than just reading the nominations at a Council meeting. Mayor Graves asked how much the previous year’s event cost. Dr. Edwards stated he would find the number spent on the event, and staff would return to the Council with an agenda item to discuss the next event further. Councilmember Kragness noted her appreciation of the dinner and formal recognition. There may be a more affordable way to host a dinner. Councilmember Marquita Butler arrived at 6:12 p.m. Councilmember Lawrence-Anderson stated the departure of the Police Chief is concerning. She asked what the plan is for recruitment and to restabilize the Police Department. Dr. Edwards stated that the staff is seeking a recruitment firm to find a replacement. Chief McDaniel will remain in his position until January 31, 2024. Therefore, there is a desire for overlap with the new Chief to create a smoother transition. Mayor Graves asked if the interview process would be more involved than it was to find Chief McDaniel. Dr. Edwards confirmed the new standard for finding Directors and Chiefs will remain in place. Councilmember Jerzak stated he sent two corrections from the minutes to Ms. Suciu. There were no objections from the rest of the Council. Assistant City Manager/City Clerk Barb Suciu stated they would pull all of the minutes from the consent agenda and bring them back to the Council in the future. Councilmember Lawrence-Anderson stated she would like to know the status of the audit and when it will be presented. Dr. Edwards stated that there were no updates to report since the previous budget meeting. Director of Fiscal & Support Services Angela Holm stated the auditors will be on-site on Thursday, September 14, for some final information gathering. She added the audit should be complete within the next couple of weeks. Councilmember Jerzak stated the Council doesn’t seem to have all the necessary information to consider the budget. For example, the EDA budget and grant disbursements have not been presented to the Council. He suggested scheduling another meeting to discuss the missing elements before voting on the levy. Dr. Edwards stated the EDA budget and special revenue fund information won’t be available until October. The Council has to adopt a preliminary levy on September 25, 2023, per State regulations. The preliminary levy can be decreased after that time. 9/11/23 -3- Councilmember Jerzak asked why the documents won’t be available until October. Dr. Edwards stated that the staff was following the process set by the Council. Staff prioritized documentation of items required to set the budget, but the revenues and EDA budget do not determine the levy. The timeline allows for all information to be reviewed before the final levy has to be set. Councilmember Jerzak stated he understands the explanation, but the process makes him uncomfortable. He will have to be particularly conservative with his decision-making. Councilmember Kragness noted she feels rushed into the levy decision. Mayor Graves stated there is a deadline to set the preliminary levy, and there is a presentation on the agenda regarding the levy. Dr. Edwards stated the Council is not being asked to vote on the levy or budget tonight. Instead, the presentation is a request for the City Council to provide direction on the budget and to answer any questions of the Council. Councilmember Kragness pointed out she would like an additional meeting if her concerns are not addressed with the presentation on the agenda. Councilmember Lawrence-Anderson agreed she is not comfortable with an 8.5 percent levy. Mayor Graves stated any additional discussion regarding the levy should be held during the appropriate agenda item. Mayor Graves asked for an update on the Multi-Cultural Advisory Committee. The Council has previously expressed concerns with the application process for the Committee. She asked if the application process had been updated at all. Dr. Edwards stated staff could gather the information and make a report to the Council. Mayor Graves requested the new liaison be part of the presentation so she is able to meet the rest of the Council. DISCUSSION OF WORK SESSION AGENDA ITEMS AS TIME PERMITS OPPORTUNITY SITE PHASE 1 UPDATE City Manager Reggie Edwards introduced the item and invited Community Development Director Jesse Anderson and EDA Project Management Ehlers representative Jason Aarsvold to continue the presentation. Mr. Anderson explained in May 2023, staff updated the City Council on the status of Alatus’ Opportunity Site Phase 1 project. The update noted several challenges, including the fact that project costs increased to over $159 million, interest rates increased dramatically, and the Entrepreneurial Market Plaza (EMP) project, conceived at 30,000 square feet, would be too large to pay for and operate. 9/11/23 -4- Mr. Anderson pointed out that to help mitigate these challenges, the City Council authorized Staff to explore an option to provide up-front funding for the project by issuing general obligation bonds. Alatus determined this up-front assistance may help secure the remaining financing for the project in a difficult financing environment. Mr. Anderson noted, in addition to exploring this up-front financing option, Staff and the developer also took the following steps to improve financial feasibility, including the preparation of scenarios for up-front bond financing, the addition of units and altered unit mix for Alatus’ rental buildings, reworking od assumptions around the EMP to achieve a more financially feasible project, securing additional grant funding, helped Project for Pride in Living reapply for tax credits and exploration of infrastructure savings options. Mr. Anderson stated despite these additional measures, Alatus indicated they will not be able to move the project forward in 2023. Alatus remains committed to the project and intends to continue working diligently with the City to get the project done. Larger economic forces outside the City’s control are simply preventing the project from moving forward. Alatus hopes that by the middle of 2024, circumstances will allow the project to move forward. Mr. Anderson introduced Bob Lux, President and CEO of Alatus, to further detailed reasons for the delay and to discuss how they intend to move forward from here. Mr. Lux stated there are a number of factors working against them. For example, the interest rates rising to such a high level is an issue. The typical banks that fund such projects have essentially discontinued lending because they are not receiving deposits. The same story is true with equity partners as they have seized up. Mr. Lux stated he still believes in the project and the aspirations of the Brooklyn Center community. They are seeking bids again for construction. There has been a rampant uptick in costs that has somewhat cooled down. The hope is that the bids will be lower and that Alatus can return to the Council with the lower bids and secured debt and equity partners. One suggestion is to remove the Entrepreneurial Marketplace requirement to move forward with the market-rate units. Mayor Graves stated that the Entrepreneurial Marketplace (EMP) was a key component of the Community Benefits Agreement, so she doesn’t want it lost. Mr. Lux stated he also wants the EMP, and there is potential for one to be funded in another space in the interim. It would be a huge first step to get the apartments built, and then the reserved EMP space can be implemented once the guidelines for the EMP are set. Councilmember Lawrence-Anderson asked what the current distribution of units is. Mr. Lux stated the first building is only market-rate units, and there would be around 275 units. There are several current and upcoming affordable units in the City so the market-rate units will be an alternative option for a new group of renters. The market-rate units are still reasonable for the upper Area Median Income (AMI) percentages. 9/11/23 -5- Councilmember Lawrence-Anderson stated she would like to see the project move forward, but they already should have broken ground. Mr. Lux noted his agreement. The project has included a large amount of community engagement, which has greatly informed and improved the project. However, the timing required for the engagement resulted in the developer missing the financial window of opportunity. Councilmember Lawrence-Anderson asked how a similar project in Columbia Heights is doing. Mr. Lux stated the building is just under 300 units, including some co-living units. Of the 266 regular units, around 95 percent are leased. Councilmember Lawrence-Anderson stated the building is very attractive and well done. Councilmember Jerzak asked if something could entice investors that is more within the developer’s control. He asked if any opportunities were missed throughout the process. The City can only provide so much support, yet the developer keeps returning to ask for more help. Mr. Lux stated his best suggestion is to release the EMP from the original funding. The cost of the EMP being attached to the initial building creates a higher price-per-unit than funders like to see. Other than that, the markets haven’t allowed any projects to move forward. Alatus hasn’t closed a project in over a year. The interest rates need to stabilize. Councilmember Jerzak stated he wants the Opportunity Site to move forward, but it just becomes empty promises at some point. He asked how the market has impacted the firm. Mr. Lux stated the firm went from 18 to 12 employees just two weeks prior. Mayor Graves stated they would return to address the item during the Work Session. ADJOURNMENT Mayor Graves closed the Study Session at 6:44 p.m.