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HomeMy WebLinkAbout1996 03-25 EDAP Regular Session EDA AGENDA CITY OF BROOKLYN CENTER March 25, 1996 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. February 26, 1996 - Regular Session 4. Commission Consideration Items a. Resolution Approving Contract for Private Redevelopment with Sunlite Properties • Requested Council Action: -Adopt resolution. 5. Adjournment 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 FEBRUARY 26, 1996 CITY HALL CAT TO ORDER The Brooklyn Center Economic Development Authority (EDA) met in regular session and was called to order by President Myrna Kragness at 9:38 p.m. ROLL CAT I President Myrna Kragness, Commissioners Kathleen Carmody, Debra Hilstrom, and Kristen Mann. Also present were Executive Director Michael 1. McCauley, Director of Public Services Diane Spector, City Engineer Scott Brink, Community Development Specialist Tom Bublitz, City Attorney Charlie LeFevere, and Council Secretary Connie Beckman. APPROVAL OF AGENDA AND CONSENT AGENDA A motion by Commissioner Mann and seconded by Commissioner Hilstrom to approve the S February 26, 1996, agenda and consent agenda as printed passed unanimously. APPROVAL OF MTNTTTFRS A motion by Commissioner Mann and seconded by Commissioner Hilstrom to approve minutes of the February 12, 1996 - Regular Session as printed passed unanimously. COMMISSION CONSMER ATTON =MS RRSOTIMON APPROVING CHANGE ORT)FR, ACCEPTING 01TOT TiON'S, ANT) ATTTHORIZING CONTRACT FOR ADDiTiONAT ASBESTOS AIRATEME NT WORK AT THE F.DA-OWNFD PROPERTY LOCATED AT 6550 WEST RIVER ROAD RFSOT.TTTTON NO 96 -11 Commissioner Debra Hilstrom introduced the following resolution and moved its adoption: RESOLUTION APPROVING CHANGE ORDER, ACCEPTING QUOTATIONS, AND AUTHORIZING CONTRACT FOR ADDITIONAL ASBESTOS ABATEMENT WORK AT THE EDA -OWNED PROPERTY LOCATED AT 6550 WEST RIVER ROAD The motion for the adoption of the foregoing resolution was duly seconded by Commissioner Kathleen Carmody and passed unanimously. 02/26/96 - 1 - ADIOTTR1�TMF.NT A motion by Commissioner Carmody and seconded by Commissioner Hilstrom to adjourn the meeting at 9:38 p.m. passed unanimously. President Recorded and transcribed by: Connie Beckman Timesaver Q ff Site Secretarial • 02/26/96 -2- MEMORANDUM Date: March 20, 1996 To: Michael J. McCauley, City Manager From: Brad Hoffman, Community Development Director Subject: Resolution Approving Contract for Private Redevelopment with Sunlite Properties Attached for your review is a development agreement with Sunlite Properties, Inc. The agreement serves as the PUD development agreement which the Council will consider Monday evening. The site of the development is directly north of the Holiday Inn on Parkway Circle. Planning Commission Application 96 -002 details the specifics of the proposed building and its location. This is the same site that has been previously referred to as the "General Litho" site. General Litho ave u on the site because of the economics of developing it du t g p e o the existing P g g soil conditions. Soil correction is required before any building on the site is undertaken. Peat runs 22 to 30 feet deep at that location. The EDA had offered General Litho $250,000 in soil • correction assistance up front. In other words, the EDA would bond for that cost. When General Litho gave up on the site, they opted for a Brooklyn Park site. Brooklyn Park wrote down the land to approximately $1.50 per foot. There were no soil corrections necessary, which means Brooklyn Park actually helped provide an equity position for General Litho as opposed to our attempt to bring the land closer to the market rate cost of land that does not need correction. Sunlite Properties proposes to construct a building of approximately 73,000 square feet. Soil corrections above and beyond normal site work will run $710,000. I had an independent source look at the costs based upon the size of the building, the soil borings, and the amount of soil that needs to be exported and he confirmed the cost as reasonable. His range was between $650,000 to $750,000, depending upon how far soil had to be hauled. The development agreement reflects the offer of Brooklyn Park to the extent we agree to write down the cost of soil corrections to reflect the cost of land at $1.50 per foot. Since the monies go to soil corrections, however, it does not contribute significantly to Sunlite Properties' equity position. Also, unlike the General Litho proposal, this agreement is a "pay as you go" agreement. Sunlite Properties pays the property taxes, and to the extent there is available TIF, Sunlite is reimbursed. Should Sunlite fail to pay their taxes, the payment that would have been due that year is terminated, and Sunlite loses their reimbursement. Also, Sunlite's agreement is subordinated to TIF bond issues. Payments made to Sunlite are made after bond • payments. A payment schedule in the development agreement was created to amortize the cost of the soil corrections over a six year period. The contract allows the EDA to shorten the period if it so Memorandum to Michael J. McCauley March 20, 1996 Page 2 desires. To make the schedule work, a payment needs to be made December 31, 1997, in the amount of $43,700. Prior to that time, the building would be completed and would be paying full tax in 1998. By 1999 or 2000, the original $43,700 should be recovered from TIF monies generated from the project. Specifically, TIF above the amount needed for the schedule would amortize the $43,700 in that time frame. Currently, the site has an assessed value of $95,000 generating approximately $6,000 in taxes. The proposed development will have an assessed value around $2,550,000 or a tax of $142,000 to $150,000. The TIF generated will be approximately $136,000 to $144,000 annually. The proposed payment schedule is as follows: December 31, 1997 $ 43,700 December 31, 1998 119,801 December 31, 1999 119,801 December 31, 2000 119,801 December 31, 2001 119,801 December 31, 2002 119,80.1 Total Payment $642,705 Net present value at 9.5 % = $460,000 The site is about 6.2 acres for which Sunlite has a purchase agreement for $150,000. Coupled with soil corrections of $710,000, the cost of land to them is $860,000. Previously, assessing had this land valued at $400,000 prior to their re- valuing it based upon the extent of soil problems. As proposed by the development agreement, the EDA, on a pay as you go, would pay for $460,000 in soil corrections over a six year period at 9.5 % (cost of money to the developer). Once the development is paying property taxes based on its full value, in 1998 the cost of the EDA's write -down for soil corrections will be recovered in less than 3 years. In other words, it will have generated sufficient cash revenue at that point to have paid for EDA assistance. This site will not be developed at any time in the foreseeable future without some assistance from the City /EDA. I recommend the EDA approve this development which is consistent with the surrounding developments. • Commissioner introduced the following resolution and moved its adoption: EDA RESOLUTION NO. RESOLUTION APPROVING CONTRACT FOR PRIVATE REDEVELOPMENT WITH SUNLITE PROPERTIES WHEREAS, the Economic Development Authority in and for the City of Brooklyn Center (the "Authority") is administering its Housing Development and Redevelopment Project No. 1 (the "Project ") pursuant to Minnesota Statutes Sections 469.001 to 469.047, in an effort to encourage the development of certain designated areas within the City; and WHEREAS, among the activities proposed to be assisted by the Authority in the Project is the development of an office and warehouse facility, commonly referred to as the Sunlite Properties Project; and WHEREAS, there has been presented before the Authority a form of Contract for Private Redevelopment ( "Contract ") between the Authority and Sunlite Properties, Inc., setting forth the parties' respective responsibilities in developing the Sunlite Properties Project; and WHEREAS, the Authority has reviewed the Contract and finds the execution of the • same and the Authority's performance of its obligations thereunder are in the best interest of the City and its residents. NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Economic Development Authority in and for the City of Brooklyn Center as follows: 1. The Contract, as presented to the Authority, is hereby in all respects approved, subject to modifications that do not alter the substance of the transaction and are approved by the President and Executive Director, provided execution of the Contract by such officials shall be conclusive evidence of their approval. 2. The President and Executive Director are hereby authorized to execute the Contract on behalf of the Authority and to carry out, on behalf of the Authority, the Authority's obligations thereunder. 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.