CR 98-174 Department Of Trade & Economic Develop Contamination Cleanup Grant AppOctober 14, 1998
Proposed Action
Staff recommends approval of the following motion: Adopt Resolution 98 -076,
authorizing submission of application for the Contamination Cleanup Grant to the
Department of Trade & Economic Development and authorizing preparation of a
development agreement between the City of Hopkins and Stiele/Bakken Investments,
LLC.
Overview
To facilitate cleanup of the former Hennepin County dump /burn site located on the
vacant lot west of 10889 Excelsior Boulevard, Hopkins Auto Body. The property
contained subsurface soils that possess a level of contamination that exceeds the
Minnesota Pollution Control Agency (MPCA) guidelines.
The Department of Trade & Economic Development administers the Contamination
Cleanup Grant program, which is available to all communities that participate in the
Metropolitan Council's Local Housing Incentive Program. The program was established
in 1993 to provide funds to clean up contaminated sites and facilitate development.
In order to submit an application for the subject program, it is required that the local unit
of government in which the project is located approve of a resolution authorizing this
submission. The total amount requested is $530,310. The program runs on a semiannual
grant cycle. Deadlines for application are either November 2 or May 1. Staff is also
requesting that a development agreement be drafted. The items of this agreement are
detailed in this report.
Primary Issues to Consider
Supporting Documents
•
How would funds from this program be utilized?
Other issues
Resolution 98 -076
Letter from Beard Group
P • • . sed Pro ct Budget
DEPARTMENT OF TRADE & ECONOMIC DEVELOPMENT
CONTAMINATION CLEANUP GRANT APPLICATION
J Hartshorn
Economic Development Coordinator
Council Report 98 -174
Council Report 98 -174 October 14, 1998 - Page 2
Primary Issues to Consider
How would funds from this program be utilized?
Alternatives
The total legislative appropriation for this grant program is $7 million for fiscal
years 1998 and 1999. Since the program runs on a semi - annual grant cycle, the
monies will be divided equally among the four cycles during the biennium. The
City is eligible to apply for a total of $1,750,000 in grant funds per cycle;
however, the maximum grant per project is only $250,000 per cycle. The grant
can pay for up to 75 percent of the total eligible project cost.
Stiele/Bakken Investments, LLC, is requesting the City to sponsor submission of
application for a grant in the amount of $530,310 to help fund a Frankie piling
system required by the Minnesota Pollution Control Agency (MPCA). The grant
will help fund a portion of the gap in funding that is not covered by TIF. The
attached letter and budget from the Beard Group explains the purpose for grant
funding. The program allows an applicant to. apply for more than the maximum
allowed per cycle, even though the applicant is allowed only up to $250,000 per
cycle. The development agreement will outline all the items for which the grant
will be used.
Other Issues
It is required that the municipality in which the site is located pay for one- quarter
of the project cost as a local match. TIF District 2 -10 will cover these costs. The
municipality is also required to pay 12 percent of the cleanup costs from the
municipality's general fund, a property tax levy or other unrestricted money
available to the municipality. Tax increments cannot be used for this purpose.
Staff is requiring that Stiele/Bakken Investments, LLC, sign a development
agreement to reimburse the City for any legal or consultant fees incurred with the
preparation, processing, and administration of the application or disbursement of •
funds including local match payments.
The City Council has the following alternatives regarding this matter:
1. Approve the action as recommended by staff. This will allow submission of the
application to the Department of Economic Development.
2. Do not approve the subject action. This action will not allow the developer to
utilize funds from this program.
CITY OF HOPKINS
HENNEPIN COUNTY, MINNESOTA
RESOLUTION 98 -076
RESOLUTION AUTHORIZING APPLICATION FOR CONTAMINATION CLEANUP
GRANT FROM DEPARTMENT OF TRADE AND ECONOMIC DEVELOPMENT
BE IT RESOLVED that the City of Hopkins act as the legal sponsor for the project contained
in the Contamination Cleanup Grant Program to be submitted on October 21, 1998, and that the
Mayor of the City of Hopkins is hereby authorized to apply to the Department of Trade and Economic
Development for funding of this project on behalf of the City of Hopkins.
BE IT FURTHER RESOLVED that the City of Hopkins has the legal authority to apply for
financial assistance, and the institutional, managerial, and financial capability to ensure adequate
project administration.
BE IT FURTHER RESOLVED that staff is authorized to prepare and execute an agreement
with the developer which details the following:
The developer shall reimburse the City for any legal or consultant fees incurred with the
preparation, processing, and administration of the application or disbursement of funds;
and
The developer shall reimburse the City or HRA for any local match payments.
BE IT FURTHER RESOLVED that the sources and amounts of the local match identified in
the application are committed to the project identified.
BE IT FURTHER RESOLVED that the City of Hopkins has not violated any federal, state
or local laws pertaining to fraud, bribery, graft, kickbacks, collusion, conflict of interest or other
unlawful or corrupt practice.
BE IT FURTHER RESOLVED that upon approval of its application by the state, the City of
Hopkins may enter into an agreement with the State of Minnesota for the above referenced project,
and that the City of Hopkins certifies that it will comply with all applicable laws and regulations as
stated in all contract agreements.
NOW, THEREFORE, BE IT RESOLVED that the Mayor of the City of Hopkins is hereby
authorized to execute such agreements as are necessary to implement the project on behalf of the
applicant.
I CERTIFY THAT the above resolution was adopted by the City Council of the City of
Hopkins on the day of October, 1998.
SIGNED: WITNESSED:
Mayor Signature
September 22, 1998
Mr. Jim Hartshorn
Economic Development Coordinator
City of Hopkins
1010 First Street South
Hopkins, MN 55343 -7573
RE: Livable Communities Act Environmental Reimbursement Program and the DTED
Environmental Reimbursement Program
Hopkins Business Center
Hopkins, MN
Dear Jim:
Enclosed is the information you requested regarding the two programs referenced above. The
costs on the attached exhibit are new previously unidentified cost to the project.
To avoid confusion and the appearance that the project is seeking a double reimbursement it is
important to note that the costs detailed on the attached exhibit are over and above the TIF costs.
The TIF costs are for the poor soils conditions only. We previously attempted to identify what
the total environmental costs to the project were going to be in the fmal TIF application. In the
final TIF application, based on the information we had available at that time, we estimated that
the project was going to incur an additional $255,585 for the "Frankie" pile system, required by
the MPCA, which is more expensive than a regular pile system. The project's environmental
consultants aided by the recently completed extensive soil boring information and the preparation
of a VIC plan are now in a better situation to quantify the environmental costs to the project.
The actual incremental increase in project cost due to the environmental problems is $737,640.
In submitting this information to you the project's ownership is also agreeing to reimburse the
City for its 12% match requirement. I anticipate that we will be memorializing this commitment
in an another document.
Sincerely,
The Beard Group, Inc.
William H. Beard
President
Whb\
CC: Ed Stiele, The Stiele- Bakken Investment Co. LLC
Brad Bakken, The Stiele- Bakken Investment Co. LLC
C: \Hopkins Auto Body \Letters\Hartshorn DTED costs.doc
G R O U P
10 - 11 Avenue South Hopkins, MN 55343 (612) 930 -0630 (612) 930 -0631 Fax
A
B
C
D
E
F
(E -D)
Item
No.
Description
Conventional
Foundation
System
Poor Soils
Wooden
Piling,
Structural
Slab System
Environmental
Requirements:
Frankie
Piles & Soil
Evacuation
Additional
NEW Costs
Du to
Environmental
Requir ments
1
Architectural & Engineering
Excavation & Backfill
$12,500
$15,942
$19,750
$25,860
$22,000
$25,860
$2,250
$0
2
3
Contaminated Soils Work
None
None
$201,120
$201,120
4
Piling
Mobilization
Piling
Environ Site Encapsulation
Piling Contingency
None
None
None
None
$5,000
$306,762
None
None
$35,000
$412,920
$23,800
$144,522
$30,000
$106,158
$23,800
$144,522
September 22, 1998
Mr. Jim Hartshorn
Economic Development Coordinator
City of Hopkins
1010 First Street South
Hopkins, MN 55343 -7573
Dear Jim:
G R O U P
N
TIF AND ENVIRONMENTAL EXPENSES:
c
RE: Livable Communities Act Environmental Reimbursement Program and the DTED
Environmental Reimbursement Program
Hopkins Business Center
Hopkins, MN
Enclosed is the information you requested regarding the two programs referenced above.
Because of the sub - surface contamination present on the site all construction plans require
approval by the Minnesota Pollution Control Agency. The approval process requires the
developer to prepare a Voluntary Investigation Clean Up Plan ( "VIC Plan). In the preliminary
review of the project's VIC Plan with the MPCA, the MPCA informed us that the wooden piling
system proposed for the project wouldn't be acceptable. The MPCA requires the use of
"Frankie" piles in contaminated conditions whenever piling is necessary. Unlike a conventional
wooden piling system where wooden timbers are driven into the ground a "Frankie Pile" system
bores a deep whole, lines the whole with a steel casing and then forces a dry concrete into the
hole slowly raising the casing while compacting the concrete. As you might guess the " Frankie
Pile" system is much more expensive per lineal foot than a wooden pile system. The MPCA is
also mandating that all contaminated soils that are excavated on the site be encapsulated and
evacuated to a location designated by the MPCA.
To avoid confusion and the appearance that the project is seeking a double reimbursement it is
important to note that the costs, detailed in column F on the following chart are new costs to the
project and are over and above those costs in column C and Column D that were used in the TIF
"but for" test.
5
Foundations w /reinforcing
$33,715
$124,500
$124,500
$0
6
S.O.G. or Structural Slab
$67,685
$281,500
$281,500
$0
7
General Conditions
Included
$37,000
$37,000
$0
8
Insurance and Permits
$1,400
$8,500
$12,240
$3,740
9
Testing Program
Standard /Piling
$1,500
$13,500
$17,500
$4,000
10
Contractors Fee
$5,530
$34,080
$48,800
$14,720
11
Subtotal
$138,272
$856,452
$1,242,240
$530,310
12
Contingency Piling
None
None
$124,270
$124,270
13
Total
$138,272
$856,452
$1,366,510
$654,580
Subtract Conventional
Foundation System from Piling
System
- $137,272
TIF Elidigiablity (Total D -C)
$719,180
A
B
C
D
E
F
14
P.A.Y.G. 'IIF
$434,475
15
Owner Financing
$284,705 "
$124,270
16
17
DTED (75% of DTED eligible
costs)
$397,733
18
Hopkins Local Match (refunded by
Owner)
$ 24,134
19
Met Council: TBRA, (25% of
DIED eligible costs minus the
local match)
$108,443
Total Sources of Funds
$719,180
$530,310
DTED Environmental Reimbursement Program
October 14, 1998
Page 2 of 2
Following are what the eventual payment sources will be. The environmental reimbursement
programs are similar to the pay -as- you -go TIF in that the Owner pays all the costs up front and is
reimbursed over time. Like TIF these programs only reimburses the Owner for the actual costs
incurred. Please note that the Owner will not be reimbursed for $124,270 in new environmental
costs.
SOURCE OF FUNDS
In submitting this information to you the project's ownership is also agreeing to reimburse the
City for its 12% local match requirement. I anticipate that we will be memorializing this
commitment in an another document. Thank you for your assistance in this matter. As was the
case with the TIF assistance without the partial environmental reimbursement assistance this
project wouldn't be able to go forward.
Sincerely,
The Beard Grog, Inc.
William H. Beard
President
CC: Ed Stiele, The Stiele- Bakken Investment Co. LLC
Brad Bakken, The Stiele- Bakken Investment Co. LLC
C:\Hopkins Auto Body \Letters \Hartshorn DTED costs.doc
10 - 11 Avenue South Hopkins, MN 55343 (612) 930 -0630 (612) 930 -0631 Fax
. CLEAN -UP BUDGET:
A.
SITE INVESTIGATION & REMEDIATION PLAN DEVELOPMENT:
1. Phase I
2. Phase II
3. VIC Approval RAP Plan
Total Costs:
• IMPLEMENTING THE PLAN: CLEAN -UP COSTS:
1. Soil excavation:
2. Back -fill of excavation:
3. Contract for on -site testing during soils excavation:
4 . Environmental Construction Administration:
5 . Soils treatment costs:
a. Transportation of contaminated soils:
b. Landfill costs of contaminated soils:
Total Implementation
TBRA and DTED Eligible Clean -up budget
Total Clean -up budget
II. DEVELOPMENTIREDEVELOPMENT BUDGET:
A. Special Foundation Requirements Frankie Piles
B. Special Site Encapsulation Requirements — Underlayment
C. Site Preparation and Landscaping
D. Construction of 74,000 s.f. Office/WharehouseBuildings
E . Infrastructure Improvements
Total Development/Redevelopment Budget
Recieved Time Oct.15 1 29PM
DTED Eligible Project Budget
TOTAL PROJECT BUDGET
III. PROPOSED COST ALLOCATION FROM PUBLIC SOURCES:
A. DTED (75% of DTED eligible project budget)
B. HOPKINS (12% of DTED eligible clean -up budget)
C. TBRA (25% of DTED eligible project budget minus local match)
Total Public Funding:
$ 2,200.00
$ 13,500.00
$ 6,920.00
$ 22,620.00
$ 47,000.00
$ 18,500.00
$ 5,000.00
$ 20,000.00
$ 32,000.00
$ 56,000.00
$ 178,500.00
$ 201,120.00
$ 201,120.00
$ 530,310.00
.940221503700..
&lug -1Z `
$ 397,733.00
$ 24,134.00
$ 108,443.00
$ 530,310.00
PROPOSED PROJECT BUDGET FOR 10417 ASSOCIATES
HOPKINS, MN
$ 305,390.00
$ 23,800.00
$ included D. 5 , 7x , o
$4739 r -11)
$ included D.