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HomeMy WebLinkAbout2000 03-27 EDAP EDA MEETING City of Brooklyn Center March 27, 2000 AG ENDA 1. Call to Order 2. Roll Call 3. Approval of Agenda and Consent Agenda -The following items are considered to be routine by the Economic Development Authority and will be enacted by one motion. There will be no separate discussion of these items unless a Commissioner so requests, in which event the item will be removed from the consent agenda and considered at the end of Commission Consideration Items. a. Approval of Minutes - Commissioners not present at meetings will be recorded as abstaining from the vote on the minutes. 1. March 13, 2000 - Regular Session 4. Commission Consideration Items a. Staff Report on 53rd Avenue Development and Linkage Project Summary and S Close Out •Requested Commission Action: -None, report only. b. Resolution Declaring that the EDA Does Not Waive the Statutory Limit on Municipal Tort Liability for the Purpose of Renewing Insurance Policies for the Year 2000 •Requested Commission Action: - Motion to adopt resolution. 5. Adjournment • • EDA Agenda Item No. 3a • e MINUTES OF THE PROCEEDINGS OF THE ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF BROOKLYN CENTER IN THE COUNTY OF HENNEPIN AND THE STATE OF MINNESOTA REGULAR SESSION MARCH 13, 2000 CITY HALL 1. CALL TO ORDER The Brooklyn Center Economic Development Authority (EDA) met in regular session and was called to order by President Myrna Kragness at 7:45 p.m. 2. ROLL CALL President Myrna Kragness, Commission Members Debra Hilstrom, Kay Lasman, and Robert Peppe. Commission Member Ed Nelson was absent and excused. Also present: Executive Director Michael J. McCauley, Assistant City Manager Jane Chambers, City Attorney Charlie LeFevere, and Recording Secretary Maria Rosenbaum. 3. APPROVAL OF AGENDA AND CONSENT AGENDA A motion by Commissioner Hilstrom, seconded by Commissioner Peppe to approve the agenda and consent agenda. Motion passed unanimously. 3a. APPROVAL OF MINUTES A motion by Commissioner Hilstrom, seconded by Commissioner Peppe to approve the minutes from the regular session on January 24, 2000. Motion passed unanimously. 4. COMMISSION CONSIDERATION ITEMS 4a. RESOLUTION APPROVING RELOCATION CLAIM FOR MINNESOTA OUTDOOR POWER EQUIPMENT, LLP LOCATED AT 6912 BROOKLYN BOULEVARD, BROOKLYN CENTER, MINNESOTA Executive Director Michael McCauley discussed that the Economic Development Authority is required to approve relocation claim for Minnesota Outdoor Power Equipment, LLP, in the amount of $12,378. 03/13/00 -1- DRAFT This resolution would authorize the Executive Director to approve the relocation claim for • Minnesota Outdoor Power Equipment, LLP, and pay the claim in accordance with the City purchasing policy. RESOLUTION NO. 00 -06 Commissioner Peppe introduced the following resolution and moved its adoption: RESOLUTION APPROVING RELOCATION CLAIM FOR MINNESOTA OUTDOOR POWER EQUIPMENT, LLP LOCATED AT 6912 BROOKLYN BOULEVARD, BROOKLYN CENTER, MINNESOTA The motion for the adoption of the foregoing resolution was duly seconded by Commissioner Hilstrom. Motion passed unanimously. 5. ADJOURNMENT A motion by Commissioner Hilstrom, seconded by Commissioner Lasman to adjourn the meeting at 7:47 p.m. Motion passed unanimously. • President 03/13/00 -2- DRAFT • EDA Agenda Item No. 4a • 411 MEMORANDUM TO: Michael J. McCauley, City Manager FROM: Tom Bublitz, Community Development Specialist t3' P / DATE: March 22, 2000 SUBJECT: Staff Report on 53rd Avenue Development and Linkage Project Summary and Close Out The 53rd Avenue Development and Linkage Project was approved by the City's Economic Development Authority in October 1996 and acquisition of the properties in the project area began in November 1996. The budget established for the acquisition, relocation and clearance phase of the project was $3.2 million. Actual costs of the acquisition, relocation, clearance and site development were $2,807,442 which was $392,558 less than the original estimated budget. The 53rd Avenue Development and Linkage Project area was completely cleared of buildings by November 1997. SOLICITATION OF REQUESTS FOR PROPOSALS FOR DEVELOPMENT OF 53RD S AVENUE DEVELOPMENT AND LINKAGE PROJECT (BELLVUE LANE) The Economic Development Authority solicited Requests for Proposals for development of the site in the fall of 1997. Three proposals were received for development, two of which were proposals for single family homes and one for a townhouse complex. All developers submitting proposals expected a complete write down of land and streets and utilities prior to development. The only single family proposal meeting the EDA's expectations with regard to design also expected an additional cash subsidy if the single family homes did not sell for the projected prices. In other words, the developer had a specific profit and overhead requirement and if the home did not realize that profit and overhead a subsidy from the EDA would be required up to as much as $30,000 per home. SELECTION OF CONSTRUCTION MANAGEMENT APPROACH TO DEVELOPMENT Due to the write downs of land and utilities requested by developers submitting RFPs and the fact that none of the proposals met the design expectations of the EDA, the Economic Development Authority elected to use a construction manager approach to build the single family homes. Additionally, this approach contemplated a real estate broker to market the homes. In the summer of 1998, the EDA solicited, through separate Requests for Proposals, Construction Management Services and Marketing Services for the 53rd Avenue Development and Linkage Project. CONSTRUCTION AND MARKETING PLANNING PHASE In late summer of 1998, staff along with the Construction Manager and Real Estate Broker, met to • plan the construction and marketing of the single family homes to be developed in Bellvue Lane. • MEMORANDUM March 22, 2000 Page 2 The following is a brief summary of the marketing and pricing strategy for the homes in the Bellvue Lane development: • The Project Real Estate Broker anticipated that buyers for the homes would come from neighborhoods surrounding the Bellvue Lane project. Actual buyers for the homes came from approximately a mile radius of the project, with roughly half from Brooklyn Center and half from Minneapolis. • Broker data also indicated that buyers of new construction generally move up in price 11/2 times from their present home. a. 1998 average sale prices for single family homes in the Brooklyn Center neighborhoods surrounding the Bellvue Lane project was $79,961. This meant that 11/2 times the average sale price was $120,000 which the Broker felt could be extended to $130,000 as the top of the market. b. Additional data showed that from December 1, 1997 through December 1, 1998 only six homes in Brooklyn Center sold for over $135,000. This was an indication that the top • of the market was in the $120,000 to $130,000 area. • As a result of the data, the maximum move up housing price for the Bellvue Lane housing project area was projected at 2 times the average sale price of the neighborhood or approximately $160,000 as the top of the market price. CONSTRUCTION PHASE In November 1998, base prices were established for single family homes in the Bellvue Lane development. The base prices were as follows: rambler model at $142,900; two story model at $1 55,900; modified two story model at $159,900. These prices contemplated covering all hard construction costs, development or soft costs and an allocation of $15,000 for each lot. Since buyers added features and upgraded materials, actual sale prices averaged $173,650 and ranged from $152,490 to $213,975. Two model homes were constructed, a rambler completed in December 1998 and the two story model in January 1999. Due to the high demand for move up housing in the neighborhood the homes sold very quickly with twelve of the homes being sold between December 1998 and February 1999. Of the remaining three homes, one sold in June 1999, one in May 1999 and the last unit sold in September 1999. The first home sold closed in March 1999 and the last closing was on November 12, 1999. • COST/REVENUE SUMMARY • • MEMORANDUM March 22, 2000 Page 3 The following is a summary of the costs and revenues associated with the development phase of the 53rd Avenue Development and Linkage Project. $2,604,754.00 Purchase price of homes - 155,684.94 6% sales commission - 15,257.40 Closing costs - 2.116.700.60 Hard construction costs (sworn construction statements) including architectural fees 317,111.06 subtotal - 234,174.27 Construction supervision, construction management, lot surveys and staking of houses, furnishing of model homes, fees for required 10 year statutory warranty. - 28.643.61 Architectural fees for predevelopment design. 54,293.18 subtotal • +34,435.00 Removal of excess soils deposited on site from City golf course and 1999 street reconstruction projects. Removal of concrete debris on site and trees from other than building pad sites. These costs are site development costs not associated with the construction of the homes. +3.469.23 Remaining escrow and vendor credits to be collected spring 2000. $92,197.41 This figure represents the amount of profit and overhead after direct construction costs are deducted from revenues. This amount would be allocated to remaining project costs for special assessments, platting and miscellaneous lot development costs. The only additional costs to be incurred on the project are for the one year warranty work to be done on the the 15 homes. Estimates for completion of the one year warranty is $18,900. The project did not achieve the profit and overhead anticipated at the outset of the project. The reasons for this include: • An increase in cost of materials during the course of the project. Pursuant to statutory requirements, each of the homes components had to be quoted separately so no prices were locked in at the outset of the project. • • • Initially, it was anticipated the project would take 12 - 18 months to sell out allowing time to react to the market and pricing of the homes relative to the market. Demand was even MEMORANDUM March 22, 2000 Page 4 greater than expected and 12 of the 15 homes sold at the project start so prices were locked in. Base prices were increased at the end of February 1999 but most homes sold prior to that increase. • Finally, the model that was anticipated for construction supervision was that it was to be part time with the construction superintendent being shared with projects other than Bellvue Lane. Due to the immediate sales and the need to meet closing dates, construction supervision converted to a full time requirement. In conclusion, staff believes the overall outcome of the project provided a housing development far superior to any proposals received by private developers. Additionally, with the requirements from private developers for complete write downs of land, streets and utilities, along with a sale price subsidy, the project costs are potentially less than they could have been with a private developer. • • • EDA Agenda Item No. 4b • • MEMORANDUM TO: Michael J. McCauley, City Manager FROM: Charlie Hansen, Finance Director DATE: March 22, 2000 SUBJECT: Resolution Declaring that the EDA does not Waive the Statutory Limit on Municipal Tort Liability for the Purpose of Renewing Insurance Policies for the 2000 Year Attached is a resolution which rovides that the EDA does not waive the monetary limits P rY on municipal tort liability established by Minnesota Statutes 466.04. The 1997 legislature increased the municipal tort liability limits to $300,000 per claimant and $1,000,000 per occurrence, effective on January 1, 2000. Also included in the legislation is a requirement that the EDA Commissioners decide to waive or not to waive the statutory limits. The League of Minnesota Cities Insurance Trust asks that this declaration be made prior to the inception of the policy year. • Commissioner introduced the following esolution and • g moved its adoption: EDA RESOLUTION NO. RESOLUTION DECLARING THAT THE ECONOMIC DEVELOPMENT AUTHORITY DOES NOT WAIVE THE STATUTORY LIMIT ON MUNICIPAL TORT LIABILITY FOR THE PURPOSE OF RENEWING INSURANCE POLICIES FOR THE 2000 YEAR WHEREAS, the Director of Finance and the EDA's Insurance Agent are negotiating annual renewal premiums for the EDA's comprehensive insurance coverage for the period from April 1, 2000 to April 1, 2001; and WHEREAS, the State of Minnesota has set the statutory limit on tort liability at $1,000,000 for Minnesota cities and requires the EDA to make a decision to stay with or to waive this limit; and WHEREAS, the Director of Finance does not recommend waiving the statutory limit. NOW, THEREFORE, BE IT RESOLVED by the Economic Development Y P . Authority in and for the City of Brooklyn Center that the EDA does not waive the monetary limits on municipal tort liability established by Minnesota Statutes 466.04. Date President The motion for the adoption of the foregoing resolution was duly seconded by commissioner and upon vote being taken thereon, the following voted in favor thereof: and the following voted against the same: whereupon said resolution was declared duly passed and adopted. P YP P I •