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HomeMy WebLinkAbout2025.03.10 CCP WORKCOUNCIL/EDA WORK SESSION MEETING City Hall Council Chambers March 10, 2025 AGENDA 1. Active Discussion Items a. 5951 Earl Brown Dr Tax Forfeiture Sale (Former Brown College Site) 2. Adjournment Page 1 of 7 Council Regular Meeting DATE: 3/10/2025 TO: Council/EDA Work Session FROM: Ian Alexander, Economic Development Manager, Amy Loegering, Economic Development Coordinator THROUGH: Jesse Anderson, Community Development Director BY: Amy Loegering, Economic Development Coordinator SUBJECT: 5951 Earl Brown Dr Tax Forfeiture Sale (Former Brown College Site) Requested Council Action: Consider the feasibility of purchasing the Brown College site during forfeiture sale Background: The Brown College site covers 6.41 acres and is strategically located at the northern end of the Opportunity Site, adjacent to the former Target site, which spans 9.1 acres. Together, these properties create a 15.51-acre redevelopment area. Due to its proximity to Summit Drive, with infrastructure that already exists and can be stubbed from those streets, the costs for infrastructure for these sites are lower and available for development, unlike other sections of the Opportunity Site. Due to current and ongoing reductions in the availability of federal grant and infrastructure funding, federal EPA and ATIIP infrastructure grants are unavailable for 2025. As the two largest funding pools available for infrastructure funding in and near the Opportunity Site, EDA applied to the EPA, and anticipated applying for ATIIP grants. Without these funding sources, EDA is focusing on parcels in the Opportunity Site adjacent to Summit Drive and Shingle Creek Parkway as the most viable redevelopment opportunities due to their proximity to infrastructure and therefore, lower redevelopment costs. Brooklyn Center is in the process of executing a Memorandum of Understanding between the City of Minneapolis to plan for a regional public safety training facility on the Brown College and Target sites. This facility would be a vital regional asset, providing expanded training opportunities for first responders while stimulating economic activity and supporting local businesses. Additionally, it would help revitalize the northern portion of the Opportunity Site, increasing public safety presence as well as making the area a regional attraction for those in the public safety arena. Additionally, Brooklyn Center is negotiating with a development group interested in creating a regional youth sports facility that would utilize portions of both the Brown College and former Target sites. The proposed complex would include 10 indoor basketball courts, 20 indoor volleyball courts, locker rooms, and an outdoor soccer field with a removable cover for extended seasonal use. This type of facility would address the increasing demand for youth sports space, attract regional tournaments, and generate economic benefits for local businesses, hotels, and restaurants. While the Page 2 of 7 organization leading this effort is still structuring its approach, securing the Brown College site now would ensure Brooklyn Center remains positioned for future opportunities. Currently, the Brown College site is in tax forfeiture and is available through public auction, with a public auction set to commence on March 7, 2025, and conclude on April 18, 2025. The initial minimum bid is set at approximately $2.36 million and will remain the minimum bid from March 7, 2025, until April 8, 2025. If no bids meet this price, the auction will enter a second phase with a reduced minimum bid of approximately $500,000 and will remain the minimum bid from April 9, 2025, until April 18, 2025. City staff anticipate limited interest at the initial price but expect increased competition once the bid is lowered. For context, the nearby 15.26-acre former Sears site recently sold for $1.5 million—less than $100,000 per acre—due to extensive demolition and environmental cleanup costs. By comparison, the Brown College site presents a more favorable redevelopment opportunity with lower upfront costs. City staff do not recommend making an offer for the Brown College site during the initial phase of the public sale when the minimum bid is $2.36 million. City staff recommend making an offer if the Brown College site moves to the second phase of the public sale with a reduced minimum bid. Given its strategic importance and the opportunity to acquire it at a competitive price, the Economic Development Authority (EDA) recommends that the City take steps to secure the Brown College site—or at least begin the process of doing so. Acquiring this site will help ensure Brooklyn Center remains in control of its long-term economic growth and redevelopment strategy. TIF District No. 2 TIF District No. 2 is a redevelopment district established in 1985 and decertified in 2011. This district is no longer collecting increment, but the remaining fund balance may be pooled for use within the Opportunity Zone. Since this is a “Pre-1990” TIF district, the pooling rules are more flexible than TIF districts established after 1990. This district had an estimated cash balance of approximately $1.3 million at the end of 2024. The amount may vary depending on actual year-end activity which is not yet finalized. The full cash balance is available for acquisition and demolition within the Project Area. TIF District No. 3 TIF District No. 3 is a redevelopment district established in 1994 and decertified in 2021. This district is no longer collecting increment, but the remaining fund balance may be pooled for use within the Opportunity Site. Like TIF District No. 2, this is also a “Pre- 1990” TIF district with flexible pooling rules. This district had an estimated cash balance of approximately $1.3 million at the end of 2024. This amount may vary depending on actual year-end activity which is not yet finalized. The full cash balance is available for Page 3 of 7 acquisition and demolition within the Project Area. This district has been used in the past to purchase most of the lots that are currently owned by the EDA. Further, this account is typically used to pay for EDA land operating costs such as City Utility bills, insurance, mowing, clean-ups, etc. Also, much of the work around the opportunity site has been paid for from this account. As development moves forward in the opportunity site, there may be opportunities to pay funds back into this account. TIF District No. 5 TIF District No. 5 is a renewal and renovation district established in 2011 for the Shingle Creek Crossings project. This district is still active and collecting increment. Tax increment is being used to repay the City’s 2016B bonds, which mature on 2-1-2029. TIF District No. 5 is not a Pre-1990 TIF district and, therefore, the rules for pooling TIF funds are more restrictive. The district had an estimated cash balance of approximately $635,000 at the end of 2024. This again may vary depending on actual year-end results. Under the pooling rules applicable to this TIF district, all the cash balance would be eligible to be used for the acquisition of property within the Opportunity Site. Given the more restrictive nature of these funds, using them for this eligible acquisition may be something the EDA considers. One risk factor relates to the repayment of the 2016B bonds. Projections for pay in 2025 show that tax increment revenues in the district will exceed debt service on the bonds by approximately $80,000. The former Wal-Mart property, however, is declining in value for pay in 2025 and accounts for approximately 23% of all the increment in TIF district No. 5. If those declines continue, then annual tax increment collections could decline as well. The current cash balance in the TIF district provides some reserve in the event annual increment collections are not enough to repay the bonds in the future. If all that cash balance is used for property acquisition, then that reserve is gone. Recommendation As noted above, the City does have several options to access pooled TIF resources for blighted property acquisition. Depending on the ultimate purchase price under consideration, it may make sense to use funds from more than one district. In order of priority, staff suggest accessing funding as follows: 1. TIF District No.5 - Since these funds are more restrictive than TIF 2 and 3, consider leaving approximately $200,000 in the cash balance to provide some reserve for future bond payments in the event of increment shortfalls. 2. Access the balance of funding from TIF District No. 3 - This has been the City’s primary fund for property acquisition in redevelopment areas and would represent a continuation of that practice. This fund is also being used for other ongoing eligible redevelopment costs within the City. The City should ensure that there is enough in the fund to meet those future obligations with the balance remaining after what is used for property acquisition. Future property sales will Page 4 of 7 help replenish those funds, but the timing of those sales are unknown at this time. Questions for Council: Does Council have additional questions regarding the proposed uses of the public safety training facility and the youth sports facility? Does Council have questions regarding the status of the Brown College site? Does Council have questions regarding the possible sources of funds for acquisition? Does Council have interest in the possible acquisition of the Brown College site? Next Steps: If the City Council would like to pursue the potential purchase of the Brown College site, staff will bring back a council item at the next meeting to authorize the purchase. If the City Council would like to specifically discuss the maximum purchase price, staff recommend this be done in a closed session. The City Council could go into a closed session at this Council meeting or the next meeting if necessary. Budget Issues: Inclusive Community Engagement: Antiracist/Equity Policy Effect: Strategic Priorities and Values: ATTACHMENTS: 1. 24-1127 - Masterplan Study Page 5 of 7 © 2022 DJR Architecture BROOKLYN CENTER MASTERPLAN - DESIGN OPTIONS MINNEAPOLIS, MN 11.27.2024 CONCEPTUAL SITE PLAN CONCEPTUAL SITE PLAN 12 3 6 5 7 4 1 2 3 4 5 6 SPORTS COMPLEX PARKING RAMP - POTENTIALLY POLICE TRAINING FACILITY FULL SIZE SOCCER FIELD - POTENTIAL DOME ENTREPRENURIAL CENTER MIX-USE RESIDENTIAL COMMERCIAL, POTENTIALY POLICE TRAINING FACILITY MIX-USE RESIDENTIAL COMMERCIAL, POTENTIALY POLICE TRAINING FACILITY 7 NOT IN SCOPE - DESIGN BY MELO Page 6 of 7 © 2022 DJR Architecture BROOKLYN CENTER MASTERPLAN - DESIGN OPTIONS MINNEAPOLIS, MN 11.27.2024 PARKING RAMP - POLICE ACADEMY ILLUSTRATIONS PARKING RAMP - POLICE TRAINING FACILITY AS AN OPTION - LEVELS 4-6(7 AS NEEDED) PARKING RAMP - POLICE TRAINING FACILITY AS AN OPTION - LEVELS 2, 3 PARKING RAMP - POLICE TRAINING FACILITY AS AN OPTION - LEVEL 1 PARKING RAMP - POLICE TRAINING FACILITY AS - STREET VIEW PARKING RAMP - POLICE TRAINING FACILITY AS - BIRDSEYE VIEW APPROX. 120 PARKING SPACES FULL FLOOR APPROX. 18,000 SF PER FLOOR RAMP ENTRANCE Page 7 of 7