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HomeMy WebLinkAbout2010 11-22 CCM Work Session 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 NOVEMBER 22, 2010 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 Tim Willson at 7:28 p.m. ROLL CALL Mayor /President Tim Willson and Councilmembers /Commissioners Kay Lasman, Tim Roche, Dan Ryan, and Mark Yelich. Also present were City Manager Curt Boganey, Director of Fiscal and Support Services Dan Jordet, Public Works Director /City Engineer Steve Lillehaug, Director of Business and Development Gary Eitel, Assistant City Manager /Director of Building and Community Standards Vickie Schleuning, City Attorney Charlie LeFevere, and Carla Wirth, TimeSaver Off Site Secretarial, Inc. MISCELLANEOUS — CONTINUED Councilmember /Commissioner Roche requested a status report on the Brooklyn Bridge Alliance. City Manager Curt Boganey explained that several collaboratives report to the full board and staff will provide the Council with an update after their next meeting. In consideration of audience members, the majority consensus of the City Council was to reorder the agenda. AMF BOWLING CENTERS, INC. LIQUOR LICENSE STATUS Mr. Boganey explained that the Council took action at its regular meeting to schedule a hearing to consider an application for a Class C liquor license at Earle Brown Lanes. This matter is scheduled for hearing because Earle Brown Lanes has not met the City's standards that require 40% to 49% of food sales if liquor is provided. The applicant has provided the Council with a letter explaining the rationale that food sales fell to 34 %, below the minimum threshold and their plan to remedy that condition going forward. Mr. Boganey noted the Council has the authority to deny the license if the threshold is not met but also has discretion to grant with conditions deemed appropriate. Mayor /President Willson noted the City's ordinance has not been changed in the past ten years and Earle Brown Lanes is aware of the reporting requirement. Mr. Boganey stated that is correct. 11/22/10 -1- City Attorney LeFevere advised the Council has taken action to set the hearing at the next meeting. Tonight the intent is to hold an informal discussion to explore whether the Council is interested in having staff work with the applicant prior to the next meeting to draft a proposal that would allow the license to be issued, possibly with conditions, to get the business back to the required food and liquor ratio. Council consensus was reached to invite the applicant to come forward to state their case and answer questions. Kaela Brennan, McGrann Shea Carnival Straughn & Lamb, legal counsel for the applicant, thanked the Council for allowing them to make comment. She explained the City's ordinance for a Class C liquor license requires a 40 -49% food ratio and Earle Brown Lane's food ratio was 34% due to unique circumstances. They expected to meet the food sales ratio but, unfortunately, renovations took longer than expected. Ms. Brennan provided a short presentation on Earle Brown Lanes, noted there were no alcohol violations within the last seven years, and TIPS training was provided for employees. This is the first year in the licensee's history that food sales were below 40 %. Earle Brown Lanes is now under new regional and restaurant management, and has developed strategies to increase food sales with extended restaurant hours, a new executive chef, and offering a varied menu and specials to attract seniors and families. Charles Chabot, AMF Regional Food and Beverage Manager, stated they will offer laneside food service until the center closes, which will increase food sales. In addition, the restaurant has a separate entrance for patrons who want to come for a meal, but not bowl. Ms. Brennan advised of the restaurant name change to EB's Grill, marketing efforts, plans for a grand opening,- and goal to become a destination dining venue. She indicated their intent to monitor food sales on a monthly basis going forward and requested Council approval of their Class C liquor license with conditions for restaurant hours of at least 40 hours a week, extensive menu offerings, and quarterly reporting to the City. Ms. Brennan stated if the license application is denied, it would impose a financial hardship and may ultimately require the decision to close the bowling center, which employs 34, pays tax revenue, and is the only bowling center in the City. Councilmember /Commissioner Yelich noted that at some point management made a decision to reduce restaurant hours to accommodate renovations. Mr. Chivo acknowledged that a poor management decision had been made to reduce restaurant hours, not solely due to the renovation. He assured the Council that they now have the proper personnel in place to increase food sales and meet the required percentage. Tim Duffy, AMF General Manager, explained the previous district manager held the philosophy to cut hours and staff when things got tough. However, Earle Brown Lane's new district manager has a different philosophy of being proactive to increase business. Councilmember /Commissioner Yelich noted the percentage of liquor sales did not go down proportionately with food sales, and a decision could have been made to reduce liquor sales to bring the food sale ratio into balance. Ms. Brennan stated there has been a change in 11/22/10 -2- management with new policies in place and the applicants had been frank with the Council in saying management had made a mistake. Mr. Chivo stated AMF apologizes for its error and is now doing everything possible to get the food percentage back where it needs to be. Councilmember /Commissioner Yelich indicated that local residents are glad to see the renovations. Councilmember /Commissioner Roche stated his support to consider granting the license with conditions. He urged the applicants to update the facility's aesthetics and support the community by participating in events like the Earle Brown Days parade. He noted this is a good opportunity for the bowling center to rebrand itself and he would like to review their marketing plan. Councilmember /Commissioner Lasman agreed that the Council wants all businesses in Brooklyn Center to be responsible and succeed. She asked whether consideration of this license would establish an adverse precedence. City Attorney Charlie LeFevere explained there are different classes of liquor licenses based on lower food sales. The Class C license was designed for bowling alleys in consideration of that type of business and 40 -49% of food must be consumed on the premises so take out orders are not included. He advised that this consideration would not establish a legally binding precedence because similarly situated businesses would expect the same consideration. Councilmember /Commissioner Lasman stated it was admirable the applicants were frank and honest in admitting that reduced food sales was beyond the renovation and a conscious decision, though made in error. Mayor/President Willson stated he believes in the City's ordinances and following them. He asked about the Council's discretionary power to negate an ordinance or stipulate conditions to meet the ordinance requirement. Mr. LeFevere stated this is an unusual case and one end of discretion is to deny the license for not meeting requirements. The Council also has the discretion to grant the license under specified conditions related to the nature of the offense. Mr. LeFevere stated staff can work with the applicant before the next Council meeting to determine those conditions, such as compliance with specific marketing and business plan, and making no change in the menu without staff approval. Mayor /President Willson indicated he does not want the City in a position of specifying the menu but would like monthly reporting on food sales. Mr. LeFevere explained that under State law, because Brooklyn Center has municipal liquor, it cannot issue a liquor license to a bar, only to a restaurant and certain other classes. There are certain requirements under State law such as providing meals prepared on the premises to patrons served at tables. The benefit of a higher percentage of food sales is that the percentage of police calls goes down and the restaurant is a more desirable asset for the community. Mr. LeFevere explained there are some ways to assure that the business plan and menu promised will be carried out as well as specified hours and monthly reporting. Another way to keep the food/liquor ratio in balance, as noted by Councilmember /Commissioner Yelich, is to reduce liquor sales if food sales are not high enough. He recommended monthly reporting with established milestones that have to be met to assure progress is being made. Then if the conditions are not met, the Council can revoke the Class C license. 11/22/10 -3- Councilmember /Commissioner Ryan stated he appreciated the applicant's candor in admitting a poor management decision in the past and was glad to hear that according to State liquor laws and City ordinance, the Council has some discretion to effectively address issues going forward. He indicated he would be in favor of staff providing a recommendation on how the license could be approved subject to conditions and benchmarks to assure the food sales ratio is being met. Mayor /President Willson stated the City Attorney has made a case to ensure Earle Brown Lanes offers a quality menu and, if changed, it should come to staff. If staff believes the menu change warrants Council decision then it can be resented. He stated he would support conditions p pp including submission of a business plan, monthly reporting, and if food sales are not met by the end of six months it would trigger lowering liquor sales. Mayor /President Willson stated if this business is in compliance at the end of 2011, the Council could consider renewing a liquor license for the next period. He noted the Council has a code of ethics and code of ordinances that must be followed but can consider mitigating circumstances. Mr. Chivo stated his appreciation for the Council's willingness to be lenient so they can go "full throttle" to improve their business and hire more employees. Councilmember /Commissioner Yeli stated the of the matter is that the applicant now has ch s e crux pp improved management. He supported conditions including monthly reports on food and liquor sales to allow management to demonstrate it can, in fact, control food sale ratios. Mr. LeFevere clarified that the scheduled hearing is for revocation, not a hearing for public input. The majority consensus of the City Council was to direct staff to meet with the applicants prior to the next Council meeting to draft a recommendation for approval of a Class C license with conditions as discussed. DISCUSSION OF GRANT FUNDS, CAPITAL IMPROVEMENT FUNDS, POLICE FORFEITURE FUND, TIF 2, 3, AND 4, AND INFRASTRUCTURE CONSTRUCTION Director of Fiscal and Support Services Dan Jordet provided a description of the Police Forfeiture Fund, City Initiatives Grant Fund, TIF Districts 2, 3, and 4, Capital Improvement Fund, and Infrastructure Construction Fund. He indicated the Council would consider resolutions for these seven funds at its December meeting. The Council acknowledged this is the first time a document has used the new park name, "Centennial Park" and asked about the soccer field project. Mr. Boganey explained the City hopes to get County grant funds. The youth leagues have an agreement with the Brooklyn Center School District so games will be relocated to those fields to make it possible for the City to repurpose fields at Centennial Park for soccer use. TIF OPTIONS FOR SHINGLE CREEK CROSSINGS 11/22/10 -4- Director of Business and Development Eitel explained that Brookdale Mall properties are presently part of Tax Increment District 3 (TIF 3), a Redevelopment Tax Increment District that was established in 1994 and runs through 2021. He explained that if the Brookdale parcels were removed from TIF 3 it would improve the increment generation of the district and could provide opportunities for the reformation of the Brookdale parcels into a new economic development or tax increment district; however, the previous analysis identified a negative impact on the City's tax base of approximately 2 percent. Mr. Eitel advised that based on continued discussions, there are options that would allow all or portions of the Brookdale Mall properties to be dropped out of TIF 3 without a negative effect on either the City's tax base or tax levy. Jenny Wolfe, Springsted Senior Project Manager, provided a short presentation that described the purpose and use of TIF to capture tax base growth resulting from new development and used to provide development incentive. She explained how TIF is calculated, steps to create a TIF district, and the estimated schedule for Shingle Creek Crossings. Ms. Wolfe advised the developer has submitted a list of costs and complete budget. They will now determine if there is a gap in the project and if TIF is appropriate to fill that gap. The Council would need to make a finding that "but for" TIF the project would not proceed. She explained that the objective of the subsidy review is to provide the minimum amount to get the project done and minimize City risk. Ms. Wolfe reviewed the different types of TIF districts, qualifications for creation of a Renewal and Renovation District and an Economic Development District, and typical eligible costs. Councilmember /Commissioner Ryan questioned the process should the City think that daylighting of Shingle Creek should be eligible for TIF. Ms. Wolfe explained the City would set up the plan to include it as well as include it in the development agreement. Councilmember /Commissioner Roche stated concern with the perception that daylighting is "window dressing" because it is not "window dressing" for him or this community. Councilmember /Commissioner Lasman pointed out that whatever the project, TIF would only fund a portion of the project cost. She noted that in previous years, with previous developers, $15 million had been requested, for the redevelopment of Brookdale, but only $2.9 would have been received, only after the developer had made the improvements, meeting the minimum requirements set forth by the Council. Ms. Wolfe stated they have not yet done a subsidy or gap analysis and once that is known, it can be determined if TIF is a good tool to fill that gap. Councilmember /Commissioner Roche asked if the determination whether the project is financially successful is based on a percentage or arbitrary. Ms. Wolfe stated the determination is based on information from the developer on expected costs and revenues from the project, if they will own and operate long -term, and look at the internal rate of return, cash flow in to build the project and out over time, what it brings in return of investment, and what the market expects. Councilmember /Commissioner Yelich questioned the definition of "public improvement." Ms. Wolfe stated it is a public improvement if in the public realm. In this case, the public purpose is to remove the blight so removal of the building would be the public improvement. TIF could be 11/22/10 -5- used to acquire the property and remove the building. It was noted the developer is purchasing the property and selling parcels so the City will not own any of it. Mayor/President Willson stated that Shingle Creek daylighting was instrumental in getting this process to start with and the City had worked with the Three Rivers Park District for quite some time to get funding in place. He stated he had not heard mention of TIF early on in the project but heard that private funds would be used up front. Mayor/President Willson stated he was not necessarily opposed to TIF but was disappointed the request was so high. He noted the City might as well purchase the property as to consider $13 million in TIF. Mayor /President Willson stated he would like the development to go forward but the City has heard of several different development schemes and this feels like a "bait and switch" so the Council will be careful with how it progresses. Mr. Boganey commented on the use of public funds and that they would not be used to unduly incentivize the developer. The issue of TIF for this project was raised in some of the earliest meetings but it was not ever made absolutely clear that TIF was, in fact, going to be requested or at what level. It was only at the end of the process that the amount of subsidy became apparent and that may be due to their analysis. Mayor /President Willson stated the values are much higher than anticipated and the scrutiny of this plan will be very high based on the way it started. He stated he hopes the developer provides as much information as possible. Councilmember /Commissioner Yelich stated the public wants to see the daylighting, which he thinks is a good public amenity. However, he was concerned about the validity of the studies if the developer was paying for them. He noted that Walmart is one of the largest corporations in the world and while it may offer several hundred jobs, they are at minimum wage and he does not think residents would support subsidizing that type of project. Councilmember /Commissioner Yelich stated this project will be scrutinized at a high level. Mr. Boganey clarified that the developer is paying the City, not Springsted, for the studies. Springsted works for the City and not the developer. In addition, inspection of Brookdale was done by an inspector the City had identified. Councilmember /Commissioner Roche commented on efforts of Walmart to improve its image to ensure all suppliers by 2012 accept uniform "green" standards and he understands what this development means to Brooklyn Center. However, he felt misled and was disappointed that Walmart was requesting an estimated $13 million in subsidy. Councilmember /Commissioner Ryan stated that staff will recommend the appropriate level of subsidy. He stated the Council needs to bear in mind that the purpose of TIF is to place the City's locations on a level playing field with property in other communities. He indicated he looks forward to receiving the information coming forward. 11/22/10 -6- Ms. Wolfe reviewed the process used by Springsted to review information received from the developer and City staff. She stated their expectation is to review every number with a "magnifying glass" and they will not rush that research process prior to making a determination. Then it will be up to the Council if they want to embrace those findings and establish a TIF district. Mr. Boganey advised that the time schedule is very aggressive and unlikely due to the TIF request. He estimated it may take until January or February. ADJOURNMENT Councilmember /Commissioner Lasman moved and Councilmember /Commissioner Ryan seconded adjournment of the City Council /Economic Development Authority Work Session at 9:26 p.m. Motion passed unanimously. 11/22/10 -7- STATE OF MINNESOTA) COUNTY OF HENNEPIN) ss. Certification of Minutes CITY OF BROOKLYN CENTER) The undersigned, being the duly qualified and appointed City Clerk of the City of Brooklyn Center, Minnesota, certifies: 1. That attached hereto is a full, true, and complete transcript of the minutes of a Work Session of the City Council of the City of Brooklyn Center held on November 22, 2010. 2. That said meeting was held pursuant to due call and notice thereof and was duly held at Brooklyn Center City Hall. 3. That the City Council adopted said minutes at its December 13, 2010, Regular Session. City Clerk Mayor 11/22/10 -8-