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HRA Agenda Packet 2-29-16 HOPKINS HRA REGULAR MEETING February 29, 2016 7 p.m. I. CALL TO ORDER II. CONSENT AGENDA 1. Approve minutes of the February 2, 2016, regular meeting 2. Approve minutes of the February 16, 2016, special meeting 3. Approve disbursements through February 29, 2016 4. Schedule special HRA meeting for March 15, 2016, relative to the HRA budget Recommendation: approve consent agenda Board Action: ___________________________________________ III. ADJOURNMENT Board Action: ____________________________________________ CUMMINGS CAMPBELL GADD HALVERSON KUZNIA MORNSON ELVERUM March _S M T W T F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 April S M T W T F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 UNOFFICIAL MINUTES OF HOPKINS HRA REGULAR MEETING February 2, 2016 A regular meeting of the Hopkins Housing and Redevelopment Authority was held February 2, 2016, at Hopkins City Hall. Present were Chair Molly Cummings, Commissioners Katy Campbell, Jason Gadd, Kristi Halverson and Aaron Kuznia. Also present were Executive Director Mike Mornson, Assistant Executive Director Kersten Elverum and City Attorney Scott Riggs. I. CALL TO ORDER The meeting was called to order at 7 p.m. II. CONSENT AGENDA 1. Approve minutes of the January 5, 2016, regular meeting 2. Approve disbursements through January 31, 2016 3. Schedule special HRA meeting to approve redevelopment agreement for The Moline project Commissioner Kuznia moved, Commissioner Campbell seconded, to approve the consent agenda. The motion was approved unanimously. III. NEW BUSINESS ITEM HRA 2016-04 Modification to the Redevelopment Plan for Redevelopment Project No. 1/Tax Increment Financing Plan for TIF District No. 1-5. Adopt HRA Resolution 510 Commissioner Kuznia moved, Commissioner Campbell seconded, to adopt HRA Resolution 510, adopting a modification to the redevelopment plan for Redevelopment Project No. 1; establishing Tax Increment Financing District No. 1-5 (The Moline); and, adopting a tax increment financing plan therefor. IV. ADJOURNMENT Commissioner Halverson moved, Commissioner Gadd seconded, to adjourn the meeting. The motion was approved unanimously. The meeting adjourned at 7:05 p.m. ____________________________________ Molly Cummings, Chair ____________________________________ Michael J. Mornson, Executive Director UNOFFICIAL MINUTES OF HOPKINS HRA SPECIAL MEETING February 16, 2016 A special meeting of the Hopkins Housing and Redevelopment Authority was held February 16, 2016, at Hopkins City Hall. Present were Chair Molly Cummings, Commissioners Katy Campbell, Jason Gadd, Kristi Halverson and Aaron Kuznia. Also present were Executive Director Mike Mornson, Assistant Executive Director Kersten Elverum, City Attorney Scott Riggs and HRA Attorney Bob Deike. I. CALL TO ORDER The meeting was called to order at 7:01 p.m. II. NEW BUSINESS ITEM HRA 2016-05 Approve development agreement for Doran 810 (The Moline) Ms. Elverum gave the Council a brief overview of the Moline Project and the proposed development agreement and introduced Stacie Kvilvang of Ehler’s, who presented a review of the agreement that included a highlight of new terms since the HRA last reviewed the project. A copy of Ms. Kvilvang’s presentation is included as an attachment. This review of the development agreement included the following:  City will pay costs to build public parking ramp if SW LRT is not constructed  Project cost $58,900,000, with a $5.2 million TIF note and $5,890,000 developer equity  An easement to the City for construction of the Artery  $25,000 contribution for public art, $180,750 park dedication fees and $50,000 for art  Doran Construction to coordinate construction of the Artery Replying to questions from the Council, Ms. Kvilvang stated that there is no cap on the extra amount the City could pay for the grade level garage estimated at $1.5 million, since it is based on the actual documented cost; the issue regarding insulation of the garage has been resolved, and it is acceptable for it to be heated, so there will be no additional cost for insulation; the construction manager agreement pertains to the entire Artery, not just the abutting block; and, the easement for the Artery will be a permanent, surface easement. UNOFFICIAL Minutes of the Hopkins HRA Special Meeting, February 16, 2016 – Page 2 Ms. Elverum stated that approval of the agreement should stipulate that it can be modified regarding minor issues contingent on exhibits being approved by staff and legal counsel. Commissioner Kuznia moved, Commissioner Campbell seconded, to adopt Resolution 511, approving the development agreement for Doran 810, The Moline, and allowing staff to make minor changes to the agreement. The motion was approved unanimously. III. ADJOURNMENT Commissioner Gadd moved, Commissioner Halverson seconded, to adjourn the meeting. The motion was approved unanimously. The meeting adjourned at 7:25 p.m. ____________________________________ Molly Cummings, Chair ____________________________________ Michael J. Mornson, Executive Director HRA Review of The Moline Development Agreement Stacie Kvilvang– Ehlers 1 February 16, 2016 - Public Private Partnership “Have a little Faith in me” John Hiatt 2 Major Aspects of Development Agreement •Project and redevelopment site •Developer and Land Owner •Artery •City fees •TIF request •City contribution to grade-level garage •What happens if SWLRT doesn’t happen •Use and maintenance of grade-level garage •Property taxes •Transfer of property 3 •241 Market rate apartments with underground parking •189-stall grade-level garage •Pedestrian & bicycle lobby –30 bike spaces AND –Fix-it station, water bottle filling station, dog watering station, bike park vending machine, seating and lobby area, places for trail maps and charging station •Commence by December 31, 2016 and complete by June 30, 2018 4 5 SOURCES Amount Pct. Developer Financing - First Mortgage 37,451,500 63.58% Developer Financing - TIF Note 5,000,000 8.49% Developer Equity 5,890,000 10.00% Subtotal 48,341,500 82.07% CMAQ 6,000,000 10.19% Metro Transit 3,058,500 5.19% City Match 1,500,000 2.55% Subtotal 10,558,500 17.93% TOTAL SOURCES 58,900,000 100.00% 10,558,500 Project Costs 6 Ramp Costs TIF Of Total Development Costs, approximately $48.3M is attributable to the apartments Redevelopment Property •Former Johnson Building site and City parking lot and ROW –Approximately 3.0 acres 7 Redevelopment Property – During Demo 8 Who’s Who •Redeveloper –Doran 810 Apartments LLC –Developer of everything –Owns Apartments in the end •Owns grade level garage until sold –Will replatt land into two Parcels •Apartments and grade-level garage •Land Owner –Doran 810 LLC –Owns the land –If development doesn’t commence by December 31, 2016, then Land Owner must re-convey City property for $1,000 •Price City sold Land to Land Owner 9 The Artery •Improvements Include –Reconstruction of 8th Avenue between Excelsior Boulevard and Mainstreet –Includes widened sidewalks, artistic infrastructure, two-way protected bikeway, reduced on- street parking and reduction into one-way northbound north of First street •To be paid for by City 10 The Artery - NEW TERMS •Artery Easement and Improvements –10-foot easement along the east side of the building and includes the Bike Lobby Plaza within the triangle area to the south of the building –Improvements include pavement, landscaping, lighting, etc. –Redeveloper will reimburse the City for actual costs of these improvements –On-going responsibility for maintenance will be outlined in the Access Easement Agreement •Still being finalized and will be an Exhibit to the Development Agreement 11 The Artery - NEW TERMS •Public Art –City and Redeveloper to agree upon design and location of art to be installed •By November 1, 2017 •Redeveloper shall pay up to $50,000 towards the art –In addition to park dedication fees and public art fee 12 The Artery – NEW TERMS •Final Plans –City shall provide copy to Redeveloper by January 1, 2017 •Commence and Completion of Construction –For portion located adjacent to the redevelopment •City shall commence by June 1, 2017 •Completion by September 1, 2017 •City to ensure remainder of Artery construction will not interfere with the access to the front lobby or access t the lower-level parking for the apartments •Construction Management Agreement –City will enter into a CM Agreement with Doran Construction LLC to coordinate construction –Final form and terms to be negotiated 13 City Fees •City Fees –Redeveloper to pay $180,750 in park dedication fees –Redeveloper will be required to pay $25,000 public art dedication fee –Redeveloper will pay 100% of HRA costs •TIF district, proforma analysis and development agreement •Doran has made a $50,000 deposit into an escrow account and will continue to make deposits as required over time –Redeveloper required to pay all building permit and any City and Met Council SAC/WAC fees 14 TIF Request •HRA created TIF District 1-5 (The Moline) on February 2, 2016 –Redevelopment TIF District (26-year term) –Redeveloper to be reimbursed for qualified costs •HRA Retains 10% of TIF –Anticipated to be approximately $63,000/year •90% to go to Redeveloper for payment on TIF note •Issued for a 12 year term –Term is extended to 15-years if City does not have to issue debt to purchase the grade-level garage •They have assumed 2% inflation, and understand it is their risk if the TIF is not adequate (inflation doesn’t go up enough to offset decreasing tax rate) 15 TIF Request - NEW TERMS •City to issue two PAYGO TIF Notes totaling $5.2 Million –Land Owner Note - $2.1 million –Redeveloper Note - $3.1 million –Accrued and current interest paid on both based upon outstanding principal •Remaining TIF will go to pay principal on the Land Owner Note –Once Land Owner Note is paid in full remaining TIF goes to pay Redeveloper Note 16 TIF Request •Lookback –Within 60 days of the earliest of (i) date of stabilization (95% occupied), (ii) sale or transfer of the property, or (iii) within two years after issuance of the Certificate of Occupancy (CO) the Redeveloper will deliver to the City evidence of its cash-on-cash return (COC) •To the extent COC exceeds 11%, the principal amount of the TIF Notes will be reduced to an amount that results in a stabilized COC return of 11% over the term of the Notes •NEW TERM –Redeveloper’s Note will be reduced first –If reduced to $0 and still achieving a 11% COC, then Land Owner Note will be reduced accordingly 17 City Contribution to the Grade-Level Garage •Redeveloper to finance and construct –Includes pedestrian and bicycle lobby •Total cost estimated at $10,558,500 (slight reduction) •City is required to provide $1,500,000 match to CMAQ funds –Funds to come from TIF 2-11 •Overall funding: 18 CMAQ (Committed) $6,000,000 Hopkins (Committed) $1,500,000 Metro Transit (up to – Not Committed) $3,058,500 TOTAL $10,558,500 City Contribution to the Grade-Level Garage •Purchase price by City will be actual documented costs –If assigned to Metro Transit will be based upon an appraisal –If cost is less then $10,558,500 then City is only obligated to pay actual costs –If parking facility costs more than $10,558,500 or Metro Transit purchases and doesn’t appraise at that value •City/HRA may pay cash or increase TIF PAYGO Note(s) –If increase TIF Note(s), term would need to be extended accordingly •NEW TERM –If SWLRT does not happen by July 1, 2017 City needs to notify Redeveloper in writing that it will not purchase or assign ownership –Ownership will be retained by Redeveloper 19 What Happens If SWLRT Doesn’t Happen •Total cost estimated at $10,558,500 •City uses $1,500,000 from TIF 2-11 –This could be increased to reduce borrowing requirements •Issue GO TIF bonds for remaining portion –Debt service wrapped around TIF PAYGO •Issued for 26 year term •Interest only for first 12 years •Use 10% TIF admin fee to offset interest costs •In year 13, 100% of TIF is used to pay on bonds –Is TIF revenue adequate to cover costs? – NO 20 Annual Tax Levy Required 21 City of Hopkins, Minnesota $9,465,000 General Obligation TIF Bonds, Series 2017 Assumes Current Market BQ AA+ rates plus 50 bps 1st Principal 2030 Debt Service Schedule Date Principal Coupon Interest Total P+I Net New D/S 105% of Total Revenue Levy/(Surplus) 02/01/2018 --218,013.33 218,013.33 ---- 02/01/2019 --327,020.00 327,020.00 327,020.00 343,371.00 42,000.00 301,371.00 02/01/2020 --327,020.00 327,020.00 327,020.00 343,371.00 63,000.00 280,371.00 02/01/2021 --327,020.00 327,020.00 327,020.00 343,371.00 63,000.00 280,371.00 02/01/2022 --327,020.00 327,020.00 327,020.00 343,371.00 63,000.00 280,371.00 02/01/2023 --327,020.00 327,020.00 327,020.00 343,371.00 63,000.00 280,371.00 02/01/2024 --327,020.00 327,020.00 327,020.00 343,371.00 63,000.00 280,371.00 02/01/2025 --327,020.00 327,020.00 327,020.00 343,371.00 63,000.00 280,371.00 02/01/2026 --327,020.00 327,020.00 327,020.00 343,371.00 63,000.00 280,371.00 02/01/2027 --327,020.00 327,020.00 327,020.00 343,371.00 63,000.00 280,371.00 02/01/2028 --327,020.00 327,020.00 327,020.00 343,371.00 63,000.00 280,371.00 02/01/2029 --327,020.00 327,020.00 327,020.00 343,371.00 63,000.00 280,371.00 02/01/2030 500,000.00 2.750%327,020.00 827,020.00 827,020.00 868,371.00 632,000.00 236,371.00 02/01/2031 515,000.00 2.900%313,270.00 828,270.00 828,270.00 869,683.50 632,000.00 237,683.50 02/01/2032 530,000.00 2.950%298,335.00 828,335.00 828,335.00 869,751.75 632,000.00 237,751.75 02/01/2033 545,000.00 3.100%282,700.00 827,700.00 827,700.00 869,085.00 632,000.00 237,085.00 02/01/2034 560,000.00 3.200%265,805.00 825,805.00 825,805.00 867,095.25 632,000.00 235,095.25 02/01/2035 580,000.00 3.300%247,885.00 827,885.00 827,885.00 869,279.25 632,000.00 237,279.25 02/01/2036 600,000.00 3.500%228,745.00 828,745.00 828,745.00 870,182.25 632,000.00 238,182.25 02/01/2037 620,000.00 3.550%207,745.00 827,745.00 827,745.00 869,132.25 632,000.00 237,132.25 02/01/2038 640,000.00 3.600%185,735.00 825,735.00 825,735.00 867,021.75 632,000.00 235,021.75 02/01/2039 665,000.00 3.650%162,695.00 827,695.00 827,695.00 869,079.75 632,000.00 237,079.75 02/01/2040 690,000.00 3.700%138,422.50 828,422.50 828,422.50 869,843.63 632,000.00 237,843.63 02/01/2041 715,000.00 3.700%112,892.50 827,892.50 827,892.50 869,287.13 632,000.00 237,287.13 02/01/2042 740,000.00 3.750%86,437.50 826,437.50 826,437.50 867,759.38 632,000.00 235,759.38 02/01/2043 770,000.00 3.750%58,687.50 828,687.50 828,687.50 870,121.88 632,000.00 238,121.88 02/01/2044 795,000.00 3.750%29,812.50 824,812.50 824,812.50 866,053.13 632,000.00 234,053.13 Total $9,465,000.00 -$6,761,420.83 $16,226,420.83 $16,008,407.50 $16,808,827.88 $10,152,000.00 $6,656,827.88 Average annual levy of $256,000 Tax Impact On Homeowners – Based Upon $256,000 Annual Tax Levy 22 Estimated Market Value Taxable Proposed Market Value Exclusion Market Value Tax Increase* 150,000 23,740 126,260 15.70 Homestead 175,000 21,490 153,510 19.09 200,000 19,240 180,760 22.48 225,000 16,990 208,010 25.87 250,000 14,740 235,260 29.26 300,000 10,240 289,760 36.04 TAX IMPACT ANALYSIS Type of Property What Happens If SWLRT Doesn’t Happen – NEW TERM •If Redeveloper sells grade-level garage within 25-year period after bond issuance they must pay HRA net proceeds from sale –If grade-level garage and apartments are sold together valuation will be based upon industry standard income approach 23 Use and Maintenance of Grade-Level Garage •Use of grade-level garage –Use will be dictated by Reciprocal Easement Agreement between Redeveloper and end owner – NEW TERM •Details being finalized but agreement becomes Exhibit to Development Agreement •Agreement can’t be changed without City and HRA consent before sale to Metro Transit or to Redeveloper –Use will be dictated by Metro Transit if they purchase the facility and maintenance of the facility will become their obligation –If Metro Transit does not purchase the facility, use will be dictated by the Redeveloper and maintenance of the facility will become their obligation •NEW TERMS –Redeveloper may control access and hours of operation at its discretion –All parking shall be available at least between 6:00 am and 10:00 pm. (subject to temporary closure for maintenance, repairs or other reasonable reasons –All stalls will be for parking by the general public at no charge – NEW TERM 24 Property Taxes – NEW TERM •Property Taxes –Redeveloper and Land Owner must pay taxes and not cause willful destruction of property –Must reconstruct damaged or destroyed property –Must Notify City within 10 days of filing tax petition •HRA will withhold TIF payment attributable to the portion of the tax payment subject to tax petition •Paid when petition is fully resolved 25 Miscellaneous •Miscellaneous –Prior to issuance of the CO, Redeveloper cannot transfer the property or assign the Development Agreement without the HRA’s prior written consent, which consent will not be reasonably withheld •Redeveloper may transfer the property to an affiliate of the Redeveloper that is owned by or under common ownership with the Redeveloper or Doran Companies or any affiliate of Doran Companies without the consent of the HRA –After completion of the project Redeveloper can transfer the property to anyone, provided they have the experience and financial ability to satisfy the obligations under the Development Agreement and related documents •Redeveloper needs to notify the HRA and the HRA must consent, which consent will not be reasonably withheld 26 Questions 27