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HomeMy WebLinkAbout2011 03-28 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 MARCH 28, 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 8:18 p.m. ROLL CALL Mayor/President Tim Willson and Councilmembers /Commissioners Carol Kleven, Tim Roche, and Dan Ryan. Absent and excused was Councilmember /Commissioner Kay Lasman. Also present were City Manager Curt Boganey, Public Works Director /City Engineer Steve Lillehaug, Director of Business and Development Gary Eitel, Assistant City Manager/Director of Building & Community Standards Vickie Schleuning, City Attorney Charlie LeFevere, and Carla Wirth, TimeSaver Off Site Secretarial, Inc. REVIEW OF TIF 5 DEVELOPMENT AGREEMENT (CONTINUED) Discussion continued on the creation of TIF 5. Director of Business and Development Gary Eitel described the Phase I minimum improvements detailed in Article IV of the development agreement. Jenny Boulton, City Attorney's Office, explained the development agreement is the legal document that provides assistance to the developer and sets the legal requirements. The minimum improvements are required to be built in order to receive assistance. She noted the project will be constructed in phases depending on the market for additional retail development but at the very least, these minimum improvements will be constructed. The City Council /EDA indicated its support to require the minimum improvements in Phase I to assure they are completed. Ms. Boulton presented Article V, Tax Increment Assistance, Upfront TIF District No. 2 Assistance, and explained it will be used to stimulate the creation of jobs, including construction jobs. This money is on hand and eligible for use under the new temporary legislation but has to be contributed to a project started on or before July 1 and spent before the end of the year, which is a limited time frame and this project is expected to meet those requirements. Assistance of $2.4 million from TIF District No. 2 will be in two pieces: $1.4 million to reimburse the developer for the Capmark property acquisition; and, $1 million as a loan that will be forgiven, on a sliding scale, based on the additional development accomplished. If no Phase II improvements are made, the developer will be required to repay the full $1 million plus 6% 03/28/11 -1- interest at the end of five years. _ This will be secured by a mortgage on the Kohl's property and the City's would be subordinate (in second position) on the Kohl's mortgage. However, it will not be subordinate to the mortgage taken by Walmart to secure its contribution of funds towards the overall project development. Ms. Boulton explained that the $1.4 million would be contributed for land acquisition costs but rather than being forgiven after the Phase II development is constructed, it would be forgiven earlier in the redevelopment, after construction of the minimum improvements, the Walmart development is underway, and several other conditions. Councilmember /Commissioner Ryan asked whether the City had the prerogative of placing conditions on the $2.4 million from TIF District No. 2, such as creation of jobs. Ms. Boulton answered in the affirmative. Mr. Boganey summarized that the $2.4 million will be broken into 2 pieces: $1.4 million in Phase I with minimum improvements required to be completed within the first year and Walmart being under construction within the first six months; and, $1 million as incentive with Phase II to provide restaurants, other retail, and box boxes, to assure the City does not end up with just a reskinned existing mall and Walmart. The $1 million is forgiven on a sliding scale as retailers are built. Ms. Boulton noted that when tax increments from TIF District No. 5 are sufficient to repay TIF District No. 2, the funds would be available for other projects. Mr. Boganey stated another option is to close TIF District No. 5 early. Ms. Boulton presented Article VI, Encumbrance of the Property, and Article VIII, Transfer Limitations and Indemnification, and advised the development agreement will be recorded, which limits the developer's ability to encumber the property, and then be released when the minimum improvements are constructed. It would also prohibit another developer from taking over the development. However, Gatlin Development would have the authority to lease parcels if it continued to own the parcels or sell parcels. Should the developer default in obligations or become bankrupt, there are remedies the City could take such as stop payments on the Pay-As- You-Go Note or proceed under the mortgage once the developer has had the opportunity to remedy defaults. With regard to the difference between selling general obligation bonds and a Pay -As- You -Go Note, Ms. Boulton explained the Pay -As- You -Go format provides additional leverage to stop making payments and puts some risk back in the developer's hands because if the project does not proceed, payments will not be made. Should bonds be sold, the City has to make payments and if development does not occur it may have to fall back on general taxes to make payments. The City Council /EDA discussed both options and indicated support for a Pay -As- You -Go Note since it reduced the City's overall risk and eliminates the need to finance capitalized interest and pay bond issuance costs. The City Council /EDA also supported the inclusion of the Midas site and resulting PUD amendment. 03/28/11 -2- Mr. Boganey concurred that a Pay -As- You -Go Note works for both parties because to sell bonds the developer would also have to provide strong guarantees and assurances, which is not the case with a Pay -As- You -Go Note. The City Council /EDA acknowledged the concern of its citizens regarding the construction companies that would be used for the project and stated a strong preference that the project use local companies and engage the local skilled labor force. Mr. Boganey explained that Gatlin Development will purchase the property from Capmark and he expects that Walmart (a private project) will purchase its land and build its own store. Gatlin Development will construct the parking lot, daylight Single Creek, complete landscaping, and may construct other retail buildings. The City Council /EDA discussed that since public dollars are involved, it supported payment of prevailing wages and asked staff to consider how that language can be negotiated and included in the development agreement. Mr. Boganey stated it seems reasonable to include language that would set forth expectations on wages because a public subsidy is involved. The City Council /EDA expressed an interest in reviewing Walmart's yearly budget for giving back to the community but noted that is not part of the development agreement under consideration. The City Council /EDA stated its support to assure landscaping behind Walmart provides adequate screening and to ensure that all development sites, into perpetuity, are required to maintain its green space through the life of the PUD. Mr. Boganey advised that those details will be addressed in the final PUD consideration before the Planning Commission and again when the PUD is considered by the City Council. Mr. Eitel stated the Planning Commission, at its March 17, 2011, meeting addressed the use of ecofriendly construction and skylights to provide passive lighting. He stated those issues will be addressed in more detail as the project proceeds. The majority consensus of the City Council /EDA was that the draft development agreement is consistent with the City Council /EDA's direction on the economic assistance /development framework for Shingle Creek Crossing. ADJOURNMENT Councilmember /Commissioner Ryan moved and Councilmember /Commissioner Roche seconded adjournment of the City Council /Economic Development Authority Work Session at 9:04 p.m. Motion passed unanimously. 03/28/11 -3- 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 March 28, 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 April 11, 2011, Regular Session. c City Clerk Mayor 03/28/11 -4-