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HomeMy WebLinkAbout2016 06-27 EDAPEDA MEETING City of Brooklyn Center AGENDAJune 27, 2016 Call to Order—The EDA requests that attendees turn off cell phones and pagers during the meeting. A copy of the full City Council packet, including EDA (Economic Development Authority),he packet ring binder is located at the front of the Councilis available to the public. T Chambers by the Secretary. 2.Roll Call 3.Approval of Agenda and Consent Agenda—The following items are considered to be routine by the Economic Development Authority (EDA) 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 1. June 13, 2016 - Regular Session 4.Commission Consideration Items a. Resolution Amending and Supplementing Resolution No. 2016-04; Approving a Development Agreement (Sanctuary at Brooklyn Center Project) Requested Commission Action: —Motion to adopt resolutions 5.Adjournment EDA Agenda Item No. 3a 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 JUNE 13, 2016 CITY HALL - COUNCIL CHAMBERS 1.CALL TO ORDER The Brooklyn Center Economic Development Authority (EDA) met in Regular Session called to order by President Tim Willson at 8:04 p.m. 2.ROLL CALL President Tim Willson and Commissioners April Graves, Kris Lawrence-Anderson, Lin Myszkowski, and Dan Ryan were present. Also present were Executive Director Curt Boganey, Interim Assistant to the City Manager Reggie Edwards, Director of Business and Development Gary Eitel, Acting City Attorney Melissa Manderschied, and Michaela Kujawa-Daniels, TimeSaver Off Site Secretarial, Inc. 3. APPROVAL OF AGENDA AND CONSENT AGENDA Commissioner Graves moved and Commissioner Myszkowski seconded to approve the Agenda and Consent Agenda, and the following item was approved: 3a. APPROVAL OF MINUTES 1. May 23, 2016— Regular Session Motion passed unanimously. 4. COMMISSION CONSIDERATION ITEMS 4a. RESOLUTION NO. 2016-15 APPROVING AUTHORIZATION OF PROPERTY TO FACILITATE TRANSPORTATION IMPROVEMENTS AND REDEVELOPMENT OPPORTUNITIES WITHIN THE BROOKLYN BOULEVARD CORRIDOR (5401, 5407 & 5415 BROOKLYN BOULEVARD) Executive Director Curt Boganey introduced the item, discussed the history, and stated the purpose of the proposed resolution. Director of Business and Development Gary Eitel provided a presentation on the background and information on this item. DRAFT 06/13/16 4- Commissioner Ryan moved and Commissioner Myszkowski seconded to adopt RESOLUTION NO. 2016-15 Approving authorization of property to facilitate transportation improvements and redevelopment opportunities within the Brooklyn Boulevard corridor (5401, 5407 & 5415 Brooklyn Boulevard). Motion passed unanimously. 4b. RESOLUTION NO. 2016-16 APPROVING AUTHORIZATION OF THE ACQUISTION OF PROPERTY TO FACILITATE TRANSPORTATION IMPROVEMENTS AND REDEVELOPMENT OPPORTUNITIES WITHIN THE BROOKLY BOULEVARD CORRIDOR (6939 BROOKLYN BOULEVARD) Executive Director Curt Boganey introduced the item, discussed the history, and stated the purpose of the proposed resolution. Director of Business and Development Gary Eitel provided a presentation on the background and information on this item. Commissioner Ryan asked if 6921 Brooklyn Boulevard is the only property the City doesn't own currently in that northern location. Mr. Eitel stated he is correct and it has been discussed that if the other property becomes available the City would hope to acquire it. He also noted all these properties have been voluntary sales. Commissioner Ryan moved and Commissioner Myszkowski seconded to adopt RESOLUTION NO. 2016-16 Approving authorization of the acquisition of property to facilitate transportation improvements and redevelopment opportunities within the Brooklyn Boulevard corridor (6939 Brooklyn Boulevard). Motion passed unanimously. 5. ADJOURNMENT Commissioner Ryan moved and Commissioner Graves seconded adjournment of the Economic Development Authority meeting at 8:24 p.m. Motion passed unanimously. 06/13/16 -2- DRAFT EPA Agenda Item No. 4a EDA, ITEM MEMORANDUM DATE: June 27, 2016 TO: Curt Boganey, City Manager t FROM: Gary Eitel, Director of Business & Development SUBJECT: Resolution Amending and Supplementing Resolution No 2016-04; Approving a Development Agreement (Sanctuary at Brooklyn Center Project) Recommendation: It is recommended that the Economic Development Authority consider approval/adoption of a Resolution Amending and Supplementing Resolution No. 2016-04; Approving a Development Agreement (Sanctuary at Brooklyn Center Project). Background: On February 8, 2016, the EDA adopted Resolution No. 2016-04 authorizing execution of a development agreement with the SCA Properties LLC (original developer) to provide tax increment financing assistance for the Sanctuary at Brooklyn Center Project, the development of a 158 unit affordable senior housing apartment at 6121 Brooklyn Boulevard. This agreement defines the Minimum Improvements as the construction by the Developer of an affordable senior assisted living facility consisting of approximately 158 total units, which will include a pproximately 86 one-bedroom and 44 efficiency apartment units for assisted living and approximately 28 studio apartment units for special needs residents on the Development Property, all consistent with the PUD and any approved development plans. The Development Agreement includes the following provisions relating to age restrictions of the tenants: Section 5.7 Income and Rent R e strictions , Pa1a. ( states that all units in the Minimum Improvements are required to be occupied by at least one person who is at least 55 years of age at the time of initial occupancy as further defined in the Declaration. Exhibit G, Form of Declaration of Restrictive Covenants, Para 3 Senior Occl4pqn—cy Restrictions, (a) Qualify Tenants states that from the c ommencement of the Qualified Project Period, all units shall be occupied by at least one person who is at least 55 years of age at the time of initial occupancy and otherwise administered in accordance with 42 USC 3607 (B) and Minnesota Statutes 363A.21, Subd. 2. Tenants who satisfy this paragraph are referred to as Qualifying. Attached for your reference is a copy of this Resolution and staff memorandum presented at the February 8, 2016 Meeting. 1'Jisioii: Ensuiiilg an attractive, clean, safe, inclusive cojijimin itj' that enhances he qiialitj' of lie fi?i all people ant! preserves the public trust Resolution Amending and Supplementing Resolution No. 2016-04 The attached resolution identifies the amendment to include the following: 1.That the agreement be executed with The Sanctuary of Brooklyn Center, LP, a Minnesota limited partnership. 2.That the FDA Authorize that the Project be designed and operated so that 80% of the units thereof will be leased only to persons age 62 and older and 20% of the units thereof will be leased only to persons age 50 and older. The amended definition of qualifying tenant has been determined to be consistent with the Final Rule Implementing the Housing for Older Persons Act of 1995 (HOPA). Attached for reference is correspondence from our Attorney regarding the proposed amendment. Budget Issues: The Developer is requesting the proposed amendment to improve the funding possibilities of their application for the August 1st Allocation of Bonding Authority being administered by the Minnesota Department of Management and Budget. This bonding authority is a significant portion of the overall financial structure of the Sanctuary at Brooklyn Center and essential for this project to proceed. There are no direct budget issues or City costs associated with Resolution. Strategic Priorities: Targeted Redevelopment Mission: Ensuring an attractive, clean, safe, inclusive community that enhances the quality of life for all people and preserves the public trust Commissioner introduced the following resolution and moved its adoption: EDA RESOLUTION NO. RESOLUTION AMENDING AND SUPPLEMENTING RESOLUTION NO. 2016-04; APPROVING A DEVELOPMENT AGREEMENT (SANCTUARY AT BROOKLYN CENTER PROJECT) WHEREAS, the Economic Development Authority of the City of Brooklyn Center, Minnesota ("EDA") has established Tax Increment Financing (Soils Condition) District No. 4 and Tax Increment Financing District No. 6 (Housing District) (the "TIF Districts") within its Municipal Development District No. 1 (the "Development District"), pursuant to Minnesota Statutes, Sections 469.174 to 469.1794, as amended; WHEREAS, the EDA has received a proposal from SCA Properties, LLC (the "Original Developer") that the EDA assist with certain public costs associated with the construction of an affordable senior assisted living facility (the "Project"); WHEREAS, on February 8, 2016, the EDA adopted Resolution No. 2016-04 authorizing execution of an agreement with the Original Developer to provide tax increment financing assistance for the Project and the Original Developer has subsequently requested that (i) the agreement be executed with The Sanctuary at Brooklyn Center, LP, a Minnesota limited partnership (the "Developer") and (ii) the EDA authorize that the Project be designed and operated so that 80% of the units thereof will be leased to and occupied by only persons age 62 and older and 20% of the units thereof will be leased to and occupied only persons age 50 and older; and WHEREAS, the EDA has determined to amend and supplement Resolution No. 2016-04 as set forth in this resolution to accommodate the changes requested by the Developer and Resolution No. 2016-04 remains in effect except as modified by the changes authorized in this resolution; and WHEREAS, the EDA has caused to be prepared a revisedTlF Development Agreement by and between the EDA and the Developer (the "Development Agreement") setting forth the terms and conditions under which the Developer will construct the Project and the EDA will provide tax increment financing assistance from the TIF Districts in connection therewith; WHEREAS, the EDA believes that the development of the Project pursuant to the Development Agreement, and fulfillment generally of the Development Agreement, are in the vital and best interests of the EDA and the health, safety, morals, and welfare of its residents, and in accord with the public purposes and provisions of the applicable State and local laws and requirements under which the development has been undertaken and is being assisted. EDA RESOLUTION NO. NOW, THEREFORE, BE IT RESOLVED By the Board of Commissioners (the "Board") of the Economic Development Authority of City of Brooklyn Center, Minnesota asfollows: 1.The EDA hereby approves the Development Agreement in substantially the form presented to the Board, together with any related documents necessary in connection therewith, including without limitation all documents referenced in or attached to the Development Agreement, all as described in the Development Agreement (collectively, the "Development Documents") and the President and the Executive Director are hereby authorized and directed to execute the Development Documents on behalf of the EDA and to carry out, on behalf of the EDA, the EDA's obligations thereunder. 2.The approval hereby given to the Development Documents includes approval of such additional details therein as may be necessary and appropriate and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by legal counsel to the EDA and by the officers authorized herein to execute said documents prior to their execution; and said officers are hereby authorized to approve said changes on behalf of the EDA. The execution of any instrument by the appropriate officers of the EDA herein authorized shall be conclusive evidence of the approval of such document in accordance with the terms hereof. In the event of absence or disability of the officers, any of the documents authorized by this Resolution to be executed may be executed without further act or authorization of the Board by any duly designated acting official, or by such other officer or officers of the Board as, in the opinion of the City Attorney, may act in their behalf. 3. This Resolution shall be in full force and effect from and after its approval, Resolution No. 2016-04 is hereby amended and supplemented as set forth in this Resolution and remains in effect as modified by the changes in this Resolution. June 27, 2016 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 whereupon said resolution was declared duly passed and adopted. Ga II 'J Boulton, Jenny S. <JBoulton@KennedyGrav1.com > prom: Sent Monday, June 06, 2016 9:36 AM To: Gary Eitel Subject: Brooklyn Center - Sanctuary Gary, To follow p on our conversation we discussed that there is an ambiguity in the State statute regarding the allocation of bonding authority. The statute gives higher priority to projects that are not "restricted to persons who are 55 years of age or older'. The statute does not define what it means to be restricted. The statute can reasonably be interpreted to mean that a project that permits any residents who are not 55 or older is not so "restricted". We have proposed this interpretation to Minnesota Management and Budget (the department that administers the allocation of bonding authority) who discussed it with their legal counsel at the Attorney General's office. They agree the statute is ambiguous and have determined that the interpretation is to be made by the City and Bond Counsel. The Sanctuary at Brooklyn Center project has requested that the City and their Bond Counsel consider this interpretation of the statute and Kennedy and Graven's bond department has determined that this interpretation is reasonable if at least 20% of the units are not restricted to senior 55 and older. Therefore, The Sanctuary at Brooklyn Center project has requested that the City consider removing the requirement in the Development Agreement that the project be exclusively for seniors 55 and older and instead permit 20% of the units o be occupied by persons who are 50 and older. Consequently, only 80% of units would be required to be occupied by seniors 55 and older. Legal counsel to the borrower has determined that this is consistent with state and federal Fair Housing laws which permit discrimination on the basis of age in certain circumstances. Is the City willing to make this change in order to increase the likelihood that The Sanctuary at Brooklyn Center project will receive an allocation of bonding authority? Please note that it is still very likely there will not be sufficient bonding authority this year but this change also allows this project to seek an allocation in January rather than waiting until May of next year if there is not sufficient authority in 2016. Jenny Boulton Kennedy & Graven, Chartered 470 U.S. Bank Plaza 200 South 6th Street Minneapolis, MN 55402 612-337-9202 jboulton@keflfledY-a1om DATE: February 8, 2016 TO: Curt Boganey, City Manager FROM: Gary Eitel, Director of Business & Development SUBJECT: Resolution Approving a Development Agreement and a Purchase Agreement (SCA Properties Senior Housing Project). Recommendation: It is recommended that the Economic Development Authority consider approval/adoption of a Resolution Approving a Development Agreement and a Purchase Agreement (SCA Properties Senior Housing Project). Background: On January 28, 2016, the City Council/EDA Work Session included an update by Jenny Boulton, Kennedy & Graven, on the EDA' s purchase agreement and draft tax increment agreement associated with the Sanctuary at Brooklyn Center Senior Living Project. Attached for your reference is a copy of the January staff memorandum which provided background on past City Council and EDA meetings relating to the proposed sales of the EDA' s lots at 6121, 6107, and 6101 Brooklyn Boulevard for an affordable senior housing project; the creation of a Housing Tax Increment District; and the use of a Pay-As-You-Go Note to bridge a portion of the financial gap necessary to finance the project. Purchase Agreement for 6121 Brooklyn Boulevard, Lot 1, Block 1 Chrysler Motors Corporation 2nd Addition The purchase agreement establishes the price at $1,500,000 and provides for the following conditions that the buyer, SCA Properties, LLC, will need to complete and deliver to the City no later than September 30, 2016: (i)A Purchase Price Promissory Note in the $1,500,000 and a Purchase Price Mortgage as approved by the City Attorney. (ii)A title insurance policy (iii)Approved plans, specifications, drawing and related documents for the construction of the minimum improvements consistent with the PUD (iv)Evidence that they have closed on construction financing for the project and certify that there are sufficient funds and equity commitments to complete the construction of the Project (v)The Declaration of Restrictive Covenants as defined in the TIF Development Agreement (vi)The PUD Agreement (vii) The TIF Development Agreement Mission: Ensuring an attractive, clean, safe, inclusive comnzunit that enhances the quality of life for all people am! preserves the public trust IN= The Purchase Price Promissory Note has a 25 year term which matches the life of the Tax Increment District and includes the following provisions to protect the EDA' s equity in the Promissory Note in the event of a sales or financ i ng /re 5trUctUring debt: - In the event the project is sold, 50% of the Net Sale Proceeds would be applied to the repayment of the Note up to the $1,500,000 principal amount The owner has indicated that upon satisfying the tax credit requirements of ownership (projected to be in the range of 12-15 years) they could sell the project. - In the event of refinancing the project for any amount that exceeds the Minimum Improvements and any additional capital improvements, 50% of the increase principal amount shall be used to repay the note up to the $1,500,000 principal amount. The execution of the purchase agreement at this time provides the developer with sufficient control of the site to proceed with funding applications for the tax credit bonds and private placement bonds proposed to finance this project. The required public notification and hearing relating to the EDA's conveyance of this parcel is proposed to occur later this Spring with the public hearing on the conduit bond financing (private placement sales of bonds) for this project. TIF Development Agreement By and Between Economic Development Authority of Brooklyn Center, Minnesota and SCA Properties, LLC On October 26th the City Council conducted a public hearing on e stablishing a 25 year Affordable Housing Tax Increment District for this senior housing project with the intentions of using the tax increment generated from the development to find a $1,500,000 Pay-As-you-Go Note and an additional $300,000 for future land acquisitions of adjacent properties. At that time, the City's financial consultant provided their analysis (But-For-Test) which indicated that the following tax increment assistance was necessary for the project to proceed: 1.Assistance in the site acquisition cost, which was proposed to be resolved by the EDA' s issuance of a Promissory Note in the amount of $1,500,000. 2.The bridging of a $1,500,000 gap in their loan ratio to finance the project, which was proposed to be resolved by the EDA' s issuance of a Pay-As-You-Go Note to be repaid from tax increment generated by this development. The attached TIF Development Agreement is a comprehensive document prepared by the FDA's legal counsel which recites the purpose of creating this tax increment district; defines the project and the minimum improvements to be completed; includes provisions to assure that the purpose of creating the District are achieved and the interests of the FDA are protected; identifies the tax increment assistance and provides the financing tools to fund the approved tax increment assistance; and identifies the legal remedies and actions in the event of a default in the agreement. The agreement includes the documents necessary to implement the Tax Increment As determined necessary for this 158 unit affordable senior housing project to proceed. Mission: Ensuring an attractive, clean, safe, inclusive coil uinuiuit.1' that enhances the quality of life for all people and preserves the public trust The Developer has indicated that with the approval of this purchase agreement and TIF development agreement, they intend to proceed with the final architectural plans with the expectation of starting construction this summer and a 2017 completion date. Resolution Approving A Development Agreement and Purchase Agreement (SCA Properties Senior Housing Project) The EDA's legal counsel, Kennedy & Graven, has prepared the attached resolution with authorizes the President of the EDA and Executive Director to execute the Purchase Agreement at this time. Additionally, the resolution provides an approval of the TIF Development Agreement and authorizes its future execution by the President of the EDA and Executive Director, subject to final approval by legal counsel to the EDA, Budget Issues: There are no General Fund budget issues related to these actions. The initial land acquisition was acquired with a tax increment bond and any future repayments of the Purchase Price Promissory Note would be repaid to that Tax Increment Fund. The TIF Pay-As-Go-Note is only funded by Tax Increment District No.6 from the tax increment to be received from this project. Strategic Priorities: Targeted Redevelopment Mission: Ensuring an attractive, den,,, safe, inclusive coii,iniinitj' that enhances the quality of life for all people and preserves (lie public (rust Commissioner Lin Myszkowski introduced the following resolution and moved its adoption: EDA RESOLUTION NO. 2016-04 RESOLUTION APPROVING A DEVELOPMENT AGREEMENT AND A PURCHASE AGREEMENT (SCA PROPERTIES SENIOR HOUSING PROJECT) WHEREAS, the Economic Development Authority of the City of Brooklyn Center, Minnesota ("EDA") has established Tax Increment Financing (Soils Condition) District No. 4 and Tax Increment Financing District No. 6 (Housing District) (the "TIE Districts") within its Municipal Development District No. 1 (the "Development District"), pursuant to Minnesota Statutes, Sections 469.174 to 469.1794, as amended; and WHEREAS, the EDA has received a proposal from SCA Properties, LLC (the "Developer") that the EDA assist the Developer with certain public costs associated with the construction of an affordable senior assisted living facility (the "Project"); and WHEREAS, the BDA has caused to be prepared a TIF Development Agreement by and between the EDA and the Developer (the "Development Agreement") setting forth the terms and conditions under which the Developer will construct the Project and the EDA will provide tax increment financing assistance from the TIF Districts in connection therewith; and WHEREAS, the EDA has caused to be prepared an Agreement of Purchase and Sale (the "Purchase Agreement") by and between the EDA and the Developer setting forth the terms of the sale, in connection with the Project, of property located in the City of Brooklyn Center, Hennepin County, Minnesota legally described as i) that part of Lot 1, Block 1, Chrysler Motors Corporation 2nd Addition lying North of the North line of Lot 23, Auditor's Subdivision No. 25, Hennepin County, Minnesota, being registered land as is evidenced by Certificate of Title No. 1384364 and (ii) Lot 1, Block 1, Chrysler Motors Corporation 2nd Addition, except that part lying North of the North line of Lot 23, Auditor's Subdivision No. 25, Hennepin County, Minnesota, abstract property (the "Property"); and WHEREAS, the Purchase Agreement acknowledges that conveyance of the Property remains contingent upon approval by the EDA following a duly noticed public hearing regarding the sale of the Property to Developer; and WHEREAS, the FDA believes that the development of the Project pursuant to the Development Agreement and the Purchase Agreement, and fulfillment generally of the Development Agreement and the Purchase Agreement, are in the vital and best interests of the EDA and the health, safety, morals, and welfare of its residents, and in accord with the public purposes and provisions of the applicable State and local laws and requirements under which the development has been undertaken and is being assisted. EDA RESOLUTION NO. 2016-04 NOW, THEREFORE, BE IT RESOLVED By the Board of Commissioners (the "Board") of the Economic Development Authority of City of Brooklyn Center, Minnesota as follows: 1.The EDA hereby approves the Purchase Agreement (provided however that the conveyance of the Property is subject to approval by the EDA following a duly noticed public hearing) and the Development Agreement in substantially the forms presented to the Board, together with any related documents necessary in connection therewith, including without limitation all documents referenced in or attached to the Development Agreement and the Purchase Agreement, and any deed or other documents necessary to convey the Property to Developer, all as described in the Development Agreement and the Purchase Agreement (collectively, the "Development Documents") and the President and the Executive Director are hereby authorized and directed to execute the Development Documents on behalf of the EDA and to carry out, on behalf of the EDA, the EDA' s obligations thereunder. 2.The approval hereby given to the Development Documents includes approval of such additional details therein as may be necessary and appropriate and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by legal counsel to the EDA and by the officers authorized herein to execute said documents prior to their execution; and said officers are hereby authorized to approve said changes on behalf of the EDA. The execution of any instrument by the appropriate officers of the EDA herein authorized shall be conclusive evidence of the approval of such document in accordance with the terms hereof. In the event of absence or disability of the officers, any of the documents authorized by this Resolution to be executed may be executed without further act or authorization of the Board by any duly designated acting official, or by such other officer or officers of the Board as, in the opinion of the City Attorney, may act in their behalf. / 7 February 8, 2016 772 Date President The motion for the adoption of the foregoing resolution was duly seconded by Commissioner Dan Ryan and upon vote being taken thereon, the following voted in favor thereof: Tim Willson, April Graves, Kris Lawrence-Anderson, Mn Myszkowski, Dan Ryan and the following voted against the same: whereupon said resolution was declared duly passed and adopted.