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HomeMy WebLinkAbout1988 08-08 EDAP Regular Session EDA AGENDA CITY OF BROOKLYN CENTER AUGUST 8, 1988 (following adjournment of City Council meeting) 1. Call to Order 2. Roll Call 3. Approval of Minutes a. July 7, 1988 - Special Session b. July 11, 1988 - Special Session C. July 25, 1988 - Special Session 4. Discussion Item: a. Financing Plan for Earle Brown Farm 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 SPECIAL SESSION JULY 7, 1988 CITY HALL CALL TO ORDER The Brooklyn Center Economic Development Authority met in special session and was called to order by President Dean Nyquist at 7:02 p.m. ROLL CALL President Dean Nyquist, Commissioners Gene Lhotka, Celia Scott, and Rich Theis. Also present were EDA Director Gerald Splinter, EDA Coordinator Brad Hoffman, and Administrative Aid Patti Page. President Nyquist noted this was a joint meeting between the EDA and the Earle Brown Farm Committee. Members present were Dr. Orn, Ron Christensen, Leone Howe, Sylvia Kenny, Warren Lindquist, and Gil Engdahl. Also present were Greg Watson and Steve Cox, representatives of Heskin Resource Group, Inc.; Dick Faricy and John Barber, representatives of Winsor Faricy Architects; and Al Beisner. DISCUSSION The EDA Coordinator briefly reviewed the timeline which had been set up for this project and noted at this point the project is behind schedule. He went on to review the program uses which have been proposed for the buildings. He noted the hippodrome will be used as a banquet and convention center; the stable has been proposed for office; the housing complex has been proposed for a bed and breakfast use; and the bunk house will have minimum restoration and will be used for storage. He stated originally a senior center had been discussed for the D barn but it is not a compatible use with the layout of the building. He stated staff has suggested office space for the D barn. He went on to review the hard construction costs and noted some changes would have to be made to stay within the proposed budget. The EDA Coordinator stated in developing the project there were two major design problems, those being parking requirements and a kitchen facility to serve 850 to 1,000 people. He noted it appeared with the parking requirements the only way to meet the requirements was to put in a parking ramp. He stated staff felt the best approach would be to build an interim parking lot and obtain parking agreements with surrounding businesses. He noted when the banquet /convention center is up and running staff would have a better idea of the actual parking needs and a parking ramp could be built at a later date. The EDA Coordinator stated the location of the kitchen facility was another large design problem. He noted originally the kitchen had been proposed for the stable area, but after a kitchen designer had completed his review, staff found 11 -7 -88 -1- that almost the entire stable area would be needed for a kitchen that could serve 850 to 1,000 people. He explained the solution to this problem was to construct a large kitchen and storage area underneath the hippodrome. He noted there would be two elevators from the basement to the hippodrome. The EDA Coordinator went on to review the cost estimates of the entire project and noted if everything were completed as proposed, the project would be $1.8 million beyond the City's reasonable bonding capabilities. He noted some cuts were made which seem drastic but are very necessary. He went on to review these cuts and explained the proposal is to remove the bunk house, G barn, and blacksmith shop completely from the project. He noted the D barn would be made structurally sound but would be a storage facility instead of office space. He stated the housing complex has been modified somewhat and the second floor and western addition to the guest house has been deleted from the project. He noted the guest house would not be included in the bed and breakfast portion of the complex. Dr. Orn inquired if it would be possible to restore all the buildings on the outside and leave an empty shell to be developed at a later date. The EDA Coordinator stated it could possibly be done, but something would have to be cut from somewhere else in the project. President Nyquist inquired what the revenue loss would be from deleting the guest house from the bed and breakfast project. Mr. Beisner stated it would be approximately $35,000 to $45,000 less a year if the four rooms of the guest house were eliminated from the bed and breakfast project. The EDA Coordinator stated the enclosed arbor connection would not go all the way across to the guest house.- He added staff also found that there would not be a need for a full commercial kitchen within the bed and breakfast complex. Leone Howe stated she felt by making these proposed cuts and changes the City would be losing the original feel of the farm. Commissioner Lhotka inquired if it would be possible to add only the second floor to the existing guest house. The EDA Coordinator stated it could be possible. He reminded the EDA and the Earle Brown Farm Committee that in order to make this project work they would have to consider cutting $1.8 million worth of work out of the project. Leone Howe stated she liked the idea of adding only the second floor to the existing guest house. The EDA Coordinator stated two loading docks have been cut from the hippodrome area and the last cut suggested is to delete the restaurant and kitchen facility from within the stable. He noted the area would be finished off and could be used for wedding receptions and small break -out space for hippodrome meetings. He noted when this area was being worked on they would stub in the lines for a future kitchen allowing for that potential someday. Warren Lindquist stated he was concerned that there will be no reason for the average Brooklyn Center resident to go to the farm. The EDA Coordinator stated there would be concerts and other programmed events as well as community events in the hippodrome. Warren Lindquist stated he felt the beginning ideas of the Earle Brown Farm Committee have been lost. The EDA Director stated this is a public project which is being completed with public funding. He noted of the proposed uses the least public use would be office space and the next least public use would be the bed and breakfast facility. He noted if in the future a restaurant could be enticed into moving into the stable area, this would open 11 -7 -88 -2- r the farm up for more public uses. The EDA Coordinator explained by stubbing in the lines for a future kitchen facility it leaves the door open for any restaurant which may wish to locate in this building. He noted it would be the staff's hope that a restaurant would be willing to locate in this building and also be willing to supply all the kitchen fixtures. The EDA Director stated whenever you are putting in a commercial type kitchen you are talking large dollar amounts. Dr. Orn inquired 'if there is any place such as State or Federal grants where the City could obtain $1.8 million to avoid demolishing these three or four red buildings. A brief discussion then ensued regarding financing possibilities. Commissioner Theis stated he would like to know what the cost would be if the hippodrome, bed and breakfast complex, and D barn were developed and the other buildings moved into place, made structurally sound, and the outward appearance restored to allow for future renovation. The EDA Director stated those figures are not available at this time, but it is almost a certainty that the project would still fall short of money. Ron Christensen stated he would like to know how short the City would be. Commissioner Theis stated he would like to see the buildings saved and brought into use when the money is available. He added he would like staff to investigate the use of a tax levy to fund restoration of the buildings. Dr. Orn stated he felt this would bring the project closer to the committee's original ideas. Ron Christensen stated he was concerned with the reality of some of these cost estimates. Greg Watson from Heskin Resources went on to review how the specs and schematic design are developed to allow for the taking of accurate bids. He stated at this time he is confident the EDA and the committee have been given a good market estimate, but it is anyone's guess what the market will do to the actual costs. President Nyquist inquired if the buildings are actually in worse shape than staff had first thought. The EDA Director responded negatively but noted in order to turn these buildings into a people structure versus a farm structure they must be restored much more heavily and detailed. Dr. Orn stated he believed when the Brooklyn Center Jaycees completed the citizen's survey a few years ago a majority of the citizens felt the Earle Brown Farm should be saved and approximately 60% said they would be willing to pay for it through property taxes. The EDA Director stated if it is the EDA's wish, staff can investigate the cost for having the buildings moved on site and made structurally sound. He inquired if it would be possible for the architects to start on the actual design work for the hippodrome and bed and breakfast complex. Dick Faricy of Winsor Faricy Architects stated the actual design process could be started on the hippodrome and bed and breakfast complex as long as the EDA was absolutely sure that was what it wanted. He noted he did not want to start the design process if the EDA was going to change its mind. The EDA Coordinator stated it would take a couple of weeks to gather the additional information on the other buildings. Commissioner Lhotka pointed out after the additional dollar figures are in and the information on other funding sources has been investigated the EDA could still decide not to save the other buildings. 11 -7 -88 -3- i There_ was a motion by Commissioner Scott and seconded by Commissioner Theis directing staff to obtain cost estimates for moving the bunk house and G barn, for acquiring the, bl shop and moving it onto the proposed site, and for making the buildings structurally sound and restoring the outward appearance of them. The staff should also direct Winsor Faricy Architects to begin the design process for the hippodrome, bed and breakfast complex, and D barn. The motion passed unanimously. ADJOURNMENT There was a motion by Commissioner Lhotka and seconded by Commissioner Theis to adjourn the meeting. The motion passed unanimously. The Brooklyn Center Economic Development Authority meeting adjourned at 9 :12 p.m. President 11 -7 -88 -4- 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 SPECIAL SESSION JULY 11, 1988 CITY HALL CALL TO ORDER The Brooklyn Center Economic Development Authority met in special session and was called to order by President Dean Nyquist at 7:06 p.m. ROLL CALL President Dean Nyquist, Commissioners Gene Lhotka, Celia Scott, Bill Hawes, and Rich Theis. Also present were EDA Director Gerald Splinter, Director of Public Works Sy Knapp, Director of Planning and Inspection Ron Warren, City Attorney Charlie LeFevere, EDA Coordinator Brad Hoffman, Personnel Coordinator Geralyn Barone, and Administrative Aid Patti Page. APPROVAL OF MINUTES JUNE 27 1988 There was a motion by Commissioner Lhotka and seconded by Commissioner Scott to approve the minutes of the June 27, 1988, Economic Development Authority meeting as submitted. The motion passed unanimously. RESOLUTIONS RESOLUTION NO. 88 -12 Member Rich Theis introduced the following resolution and moved its adoption: RESOLUTION ACCEPTING AND APPROVING CONTRACT WITH EBF MANAGEMENT CO. The motion for the adoption of the foregoing resolution was duly seconded by member Bill Hawes and the motion passed unanimously. RESOLUTION NO. 88 -13 Member Celia Scott introduced the following resolution and moved its adoption: RESOLUTION APPROVING ONE (1) BROOKLYN CENTER ECONOMIC DEVELOPMENT AUTHORITY GRANT (FILE NO. H64) The motion for the adoption of the foregoing resolution was duly seconded by member Bill Hawes, and the motion passed unanimously. The City Manager presented a Resolution Amending the Brooklyn Center Rehabilitation Grant Program Guidelines. He noted this amendment would increase the maximum grant from $8,250 to $10,000 to be consistent with Hennepin County guidelines. He noted this figure has not changed in approximately six years. Commissioner Theis inquired how many grants go up to the maximum. The EDA Coordinator stated he would guess approximately 40% of the grants go to the maximum. He noted some come in above the maximum and then items must be deleted 7 -11 -88 -1- which are not health and safety items. Commissioner Hawes stated he wished more consideration would be given to only giving a percentage of the grant amount to people who have just purchased these homes. The EDA Coordinator stated this is one item that will be reviewed when the Housing Commission starts meeting in the fall. Commissioner Lhotka inquired if it would be possible to find out if the work being done on these homes is increasing the owner's property value and giving them a better selling price. The EDA Coordinator stated when a home is improved it must be brought up to the section 8 standards. He stated he thought it may be y possible to do some comparisons to find out if these rehabilitated homes that have been sold were sold for a P higher rice. g RESOLUTION NO. 88 -14 Member Gene Lhotka introduced the following resolution and moved its adoption: RESOLUTION AMENDING THE BROOKLYN CENTER HOME REHABILITATION GRANT PROGRAM GUIDELINES The motion for the adoption of the foregoing resolution was duly seconded by member Rich Theis, and the motion passed unanimously. ADJOURNMENT There was a motion by Commissioner Hawes and seconded by Commissioner Theis to adjourn the meeting. The motion passed unanimously. The Brooklyn Center Economic Development Authority meeting adjourned at 7:16 p.m. President 7 -11 -88 -2- 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 SPECIAL SESSION JULY 25, 1988 CITY HALL CALL TO ORDER The Brooklyn Center Economic Development Authority met in special session and was called to order by President Dean Nyquist at 9:25 p.m. ROLL CALL President Dean Nyquist, Commissioners Gene Lhotka, Celia Scott, and Bill Hawes. Also present were EDA Director Gerald Splinter, Director of Public Works Sy Knapp, Director of Planning and Inspection Ron Warren, Finance Director Paul Holmlund, City Attorney Charlie LeFevere, EDA Coordinator Brad Hoffman, and Administrative Aid Patti Page. President Nyquist noted Commissioner Theis was absent from this evening's meeting. APPROVAL OF MINUTES - JULY 11 1988 The City Manager stated consideration of these approval of these minutes should be laid over until the next meeting. RESOLUTION NO. 88 -15 Member Gene Lhotka introduced the following resolution and moved its adoption: RESOLUTION APPROVING ONE (1) BROOKLYN CENTER ECONOMIC DEVELOPMENT AUTHORITY GRANT (FILE NO. H65) The motion for the adoption of the foregoing resolution was duly seconded by member Celia Scott, and the motion passed with Councilmember Hawes opposed. Councilmember Hawes stated he objects to passage of this resolution on the same basis as past applications because the applicant has only moved into the house recently. He stated he feels the City is being taken advantage of. DISCUSSION ITEM SCHEMATIC DESIGN AND COST ANALYSIS OF THE EARLE BROWN FARM The EDA Coordinator briefly reviewed the discussions and requests from the July 7, 1988, meeting. He noted at that time there was some discussion regarding saving all the buildings and putting them in a shell like condition. He briefly reviewed the initial proposed cuts. He went on to review the funding sources for the project. He stated at this point staff is anticipating a late fall bid on the project. President Nyquist inquired what the scaling down of the project means to the revenue from the project. The EDA Coordinator stated at this point the scaling down wn would be very g ood for the office space a money y g p because th y does 7 -25 -88 -1- not have to be spent until there is -a tenant ready to move in. The City Manager stated staff would have a recommendation on the financin g project for the ro'ect at the next E DA meeting. There was a motion by Commissioner Lhotka and seconded by Commissioner Scott approving the schematic design for the Earle Brown Farm. The motion passed unanimously. ADJOURNMENT There was a motion by Commissioner Scott and seconded by Commissioner Lhotka to adjourn the meeting. The motion passed unanimously. The Brooklyn Center Economic Development Authority meeting adjourned at 9:55 p.m. President 7 -25 -88 -2- 40 MEMORANDUM TO:- Gerald G. Splinter, City Manager FROM: Brad Hoffman, EDA Coordinator 6 DATE: August 5, 1988 SUBJECT: Earle Brown Farm Financing At a special meeting of the EDA (July 7, 1988) staff was directed to consider alternative methods to develop the farm while retaining all of the buildings on the site. A previous staff proposal called for the elimination of several buildings and a downscaling of the programmed uses of several others. In response to the EDA request, a cost analysis was performed on a development that would save those buildings staff proposed eliminating by putting them in a "shell" condition to be finished at some point in the future when a tenant would be available. The initial cost difference between the original proposal from which staff recommended deletions and the current proposal is approximately $1.4 million. However, funding would be required for the future completion of the "shelled" buildings. In the end, the only difference between the two (2) development schemes was a downscaling of the bed and breakfast which amounted to $205,557. With that in mind, it makes little sense to pursue a downscaling of the farm's bed and breakfast. It would mean a loss of three (3) rooms generating between $32,000 and $48,000 annually. The following is a staff recommendation for financing the original development plan as proposed by the citizens committee. However, under this plan while funding would be available, several barns would be "shelled" and the stable restaurant kitchen would be planned for but not completed until tenants were located for them. This would allow us more flexibility to meet tenant needs and have the money available for their completion. The EDA has or will have through the construction phase $3,896,991. The monies come from several sources. One assumption anticipates $200,000 in CDBG funding for this project. The assumption means that as the City Council, you will approve an amendment to the current CDBG program and /or an appropriation for the next funding cycle. EDA Funds Bond Fund Balance $2,112,616 CDBG (Block Grant) 200,000 Contract for Deed Interest 48,375 1988 Excess Tax Increment 456,000 1989 Excess Tax Increment 930,000 Investment Interest 150.000 $3,896,991 In addition, the EDA has a contract due June 1990 for $327,000. This money would be used for the trust fund contemplated to help offset anticipated operating losses at start up. Memo to Gerald G. Splinter Page 2 August 5, 1988 On the development side, the total cost of the development will be approximately $9,840,934. This includes a trust fund (minimum) of $750,000, a pre- opening budget (management) of $350,000 and $400,000 for furniture, fixtures, and equipment not accounted for in the development cost. From the total cost we have deducted the $750,000 trust fund monies and available monies to determine the financing need of $5,193,943 for the farm. This sum does not include a possible future parking ramp or SAC charges which would be covered from another source. Because of the high interest rate on taxable bonds, the excess increment from the district can support a bond issue of approximately $4.2 million net to the EDA. As a result, the EDA must find an alternative financing method to a bond issue. The staff recommends that the EDA borrow the necessary funds ($5,000,000) from the City's investment fund. The EDA would enter into a loan agreement with the City. The interest rate would float with an annual adjustment tied to an established index to reflect the average yield the City would be experiencing at the time of the annual adjustments. The loan would be in the form of a temporary bond for three (3) years with an option for another three (3) years. At the end of the three (3) or six (6) year period, the EDA would have to bond for the remaining principal. The loan would be paid with tax increment funds starting in July 1990. Depending on the assumptions one makes, excess increment from the district will range from a low of $4,271,712 to an amount in excess of $4,608,073 over a six (6) year period. These amounts do not include a ten percent gross increment contingency. Barring an extreme hike in interest rates, the district should reduce the principal amount to $3 million or less over a six (6) year period if the total excess increment is used to retire the debt. Excess increment is defined as the gross tax increment less a ten percent contingency and less bond payments on the 1985 issue. The ten percent contingency would be first used to offset any potential shortfalls in increment dedicated to the retirement of the district's debt. A shortfall could be caused by nonpayment of taxes or a significant change in the property tax system. However, you should be aware that our income projections for the district assume a mill rate from 3 to 8 mills less than the current levy. It also does not include any future development within the district which would significantly increase the cash flow from the tax increment. A final assumption is a two percent inflation rate over the life of the district. We believe that the staff's income projections for the district are conservative but also appropriate. If the ten percent contingency from the tax increment district is not used to offset the district's indebtedness, then the money would be used to build a future parking ramp if needed and establish the trust fund. The trust fund will be financed at the time the bonds are paid off by capturing additional tax increment, as well as any other minor administrative costs incurred by the City but deferred until all other debts of the district have been satisfied. While we consider the possibility as remote, we should emphasize that ultimately a tax levy is the guarantee for this project. On Monday evening, we will review this financing plan in greater detail with you.