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HomeMy WebLinkAbout2011 01-24 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 JANUARY 24, 2011 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 8:25 p.m. ROLL CALL Mayor /President Tim Willson and Councilmembers /Commissioners Carol Kleven, Kay Lasman, Tim Roche, and Dan Ryan. Also present were City Manager Curt Boganey, Director of Business and Development Gary Eitel, Assistant City Manager /Director of Building & Community Standards Vickie Schleuning, Police Chief Kevin Benner, City Attorney Charlie LeFevere, and Carla Wirth, Timesaver Off Site Secretarial, Inc. STERLING SQUARE RENTAL LICENSE REVOCATION UPDATE City Manager Curt Boganey introduced the item, discussed the history, and requested Council direction. Mayor /President Willson stated the property owner of Sterling Square had been adamant about revocation reconsideration; however, there is nothing in staff's report that would incline him to reconsider revocation at this point. Councilmember /Commissioner Ryan stated he had found a full one -year revocation to be excessive in this case and would support reconsideration of the revocation. He suggested revocation guidelines be established based on the term taxes and utilities remain in delinquency to assure consistency and avoid arbitrary action. The majority consensus of the City Council was to not reconsider revocation of the Sterling Square Apartments rental license JOINT MEETING WITH COMMISSIONS Following discussion, the consensus of the City Council was to direct staff to schedule a joint meeting with Commissions on April 6, 2011, 6 -8 p.m., and to follow the same agenda format. SHINGLE CREEK CROSSING 01/24/11 -1- Mr. Boganey introduced the item, discussed the history, and explained the three considerations before the Council related to Shingle Creek Crossing to receive a project update by Mr. Gatlin, an overview on the potential for financial assistance by Ms. Wolfe, and update by staff regarding its negotiation with the developer. Staff would then request Council provide comment and direction. Frank Gatlin, Gatlin Development, thanked the Council for the opportunity to present their plans and for the great work of City staff. He described his work on this project for the past two years to acquire the property and reach agreement with Walmart to provide the "bones and structure" for a great redevelopment. Mr. Gatlin reviewed his development experience, past projects, and described his vision for Shingle Creek Crossing to be a great success, stating it will be his "crown jewel." Mr. Gatlin displayed exterior site elevations, noting the site has great location with visibility from all directions. He reviewed his investigation to uncover every possible problem that could come forward with this project and intent to make Shingle Creek a focal point and desirable pedestrian- friendly area with restaurants alongside. Mr. Gatlin then addressed financing, noting this is the first time in 15 years he has requested assistance, which he does not like to do, and has worked with staff to develop the minimum request that will work. It was clarified that Walmart is not requesting any assistance. He advised that Gatlin Development is one of the most successful developers in the country and never failed in a development. However, he will have difficulty attracting desired tenants until the project moves forward and Brookdale Mall is demolished. Mr. Gatlin stated construction will start as soon as possible, once approved, noting this will be the first project out of ground in the last three years. He assured the Council this will be a beautiful development, one the City can be proud of, and a catalyst for rebranding the City and spurring on development of neighboring parcels. Jenny Wolfe, Senior Project Manager with Springsted Incorporated, the City's financial consultant, presented the Shingle Creek Crossing financing gap analysis that was conducted in reaction to a request for $10 million in TIF assistance. It was noted the project's cost was over $100 million and the developer would cover $51 million. Ms. Wolfe presented the projected rate of return and conclusion the proposed project would need some level of public assistance to proceed given the speculative nature of the retail and marginal return without assistance. The proposed TIF district supports $7 million of assistance, resulting in a return of 11.95 %, which exceeds 11.5% as a reasonable minimum return. Mr. Boganey noted the projections are based on assumptions that everything will fall into place within three years; however, that rarely occurs. The assistance is intended to share some of the risk that everything may not be built out as planned in three years or to the level assumed and anticipated. It will be used to share some upfront costs for items (daylighting of Shingle Creek, landscape, streetscape, creating a Town Square concept, etc.) the City wants to assure are completed at the beginning of the project, not later when the project starts to make revenue. Director of Business and Development Gary Eitel presented the three components making up the framework for a financial assistance package as follows: 1. EDA provides $3.3 million for public purpose costs to ensure the timely redevelopment of the site and completion of the 01/24/11 -2- features prioritized by the EDA; 2. A collateralized $1 million forgivable loan having a term of five years with an interest rate of 6% (City's CIP assessment rate). The loan amount will be available upon the execution of the Tax Increment Development Agreement which will limit the use of these funds to eligible public purpose costs and acquisitions, exclusive of Walmart related costs; and, 3. The FDA's lot will be included in the development of Shingle Creek Crossing PUD using the formula detailed in staff s report. Mr. Eitel listed the benefits the City would receive for an investment of $4.5 million that would create new development energy as far as the 57 and Logan EDA site. He explained the details of this framework will be negotiated in a development agreement through the City Attorney and conclude with the creation of a new TIF district and implementation. Mayor /President Willson stated that he is not shy about using TIF but believed the City needed to be prudent to assure increment is available to pay back TIF. He welcomed the opportunity to work with Mr. Gatlin to bring this project into Brooklyn Center. Mayor /President Willson stated he supports proceeding with the framework as outlined by Mr. Eitel and getting into the detail of the development agreement. Mr. Boganey stated if the Council reaches consensus regarding the general framework, staff will develop a specific development agreement that the Council /EDA will consider at a future meeting. Councilmember /Commissioner Roche noted that Brookdale Mall is the second oldest enclosed mall in the country. He stated that Walmart is going under a radical rebranding effort, as is Brooklyn Center and Shingle Creek Crossing will help in that effort. He indicated he supported the terms of the framework and raised several design elements he would like considered including the daylighting of Shingle Creek and iconic building lighting to attract customers. He also suggested that the 12 stall parking area by Sears be reconfigured. Mr. Gatlin assured the Council they will work diligently with City staff to create the best design possible during the permitting, planning, and approval process that gives the Council the assurances they are looking. He asked the Council to keep in mind that Walmart is only 20% of this development so there will be many new shops. Mr. Gatlin stated he owns the Macy's building and described the potential ownership arrangements with the other buildings that would allow flexibility to attract desirable tenants. He presented an option that will be considered to use the building adjacent to Sears to create an interior climate - controlled corridor, a mall component. Councilmember /Commissioner Lasman asked staff to consider measurable performance benchmarks for TIF. Mr. Boganey stated those details will be spelled out in the assistance agreement. He noted the Council has a lot of influence through the PUD process to address details to be included. Councilmember /Commissioner Lasman stated it sounds like Mr. Gatlin is anxious to get started and she would like to see a standards and timeline that identifies dates when things will happen. 01/24/11 -3- Mr. Gatlin gave credit to City staff for developing this TIF concept and $1 million incentivized forgivable loan. He indicated he supports this plan, which is less than one -half the $10 million he had requested for this $100 million project. Mr. Gatlin estimated that Shingle Creek Crossing will result in producing millions more dollars for the City and this plan gives him incentive to complete the project quickly to meet the thresholds in Phase 1 to receive assistance. Councilmember /Commissioner Ryan stated he appreciates hearing that Walmart will "carry its own freight" because otherwise the community would question giving assistance to the richest company in the world. He stated he appreciates how challenging the market is today and supports the framework that will provide needed capital up front. Councilmember /Commissioner Ryan stated he looks forward to the process moving forward and appreciates the comments from a third party to evaluate the financials. Mr. Gatlin commented on the effort of Walmart to change its image and advised of its generosity in making donations to the community. He stated he is appreciative of the Council's support and will perform if the project is approved. Mr. Gatlin commented on the perfect timing for this project since they intend to open the first store in 2012, the 50 year anniversary of the Brookdale Mall opening. He stated they plan to schedule a ground breaking in May complete with a wrecking ball and big ceremony. He commented on the generosity of Walmart to become involved in the community and stated they will be looking for places to make donations. Councilmember /Commissioner Lasman suggested they consider the Centennial Park bandshell that the Centennial Committee is working to erect. Councilmember /Commissioner Kleven indicated she is excited about this project and appreciates the work of staff and Mr. Gatlin. The consensus of the City Council was to move forward with the framework as presented. ADJOURNMENT Councilmember /Commissioner Lasman moved and Councilmember /Commissioner Ryan seconded adjournment of the City Council/Economic Development Authority Work Session at 9:45 p.m. Motion passed unanimously. 01/24/11 4- 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 January 24, 2011. 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 February 14, 2011, Regular Session. City Clerk Mayor 01/24/11 -5-