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CR 2012-131 (Hennepin County Environmental Response Fund Grant)_4ca City of Hopkins November 7, 2012 Council Report 2012-131 HENNEPIN COUNTY ENVIRONMENTAL RESPONSE FUND GRANT Proposed Action Staff recommends adoption of the following motion: Approve Resolution 2012-084 authorizinq an application to Hennepin County Environmental Response Funds for the Gallery Flats development on the Lutheran Digest and Park Nicollet sites. Overview The Hennepin County Environmental Response Fund (ERF) is a grant program that funds the assessment and cleanup of contaminated sites. ERF grants provide funding for a variety of activities at contaminated sites where the added environmental costs hinder site improvements or redevelopment. Activities funded by ERF grants include contaminated soil and groundwater assessment and cleanup, and asbestos and lead-based paint evaluation and abatement. Properties receiving ERF grants can be put to a variety of productive uses such as public space, housing or economic development. Staff is recommending an application requesting $96,000. Primary Issues to Consider • What does the application consist of? • Why should Hopkins apply for ERF funding? • What other sources are being sought for cleanup on the Gallery Flats site? Supporting Information • Resolution 2012-084 • DRAFT 2012 ERF application — Gallery Flats on Lutheran Digest/Park Nicollet sites Tara Beard Community Development Coordinator Financial Impact: $ 0 Budgeted: Y/N Source: _PIR fund (501) Related Documents (CIP, ERP, etc.): Notes: Council Report 2012-131 Page 2 Analysis of Issues What does the application consist of? The application requests project information including terms of the development agreement, unit and job counts, and an overall project budget. Past, current, and future site characteristics are described. Significant detail about the environmental investigation and cleanup to date is also included. Why should Hopkins apply for ERF funding? ERF and other sources of environmental funding are excellent ways to support redevelopment projects without an impact to the city budget. The improved environmental condition of property in Hopkins is a benefit to the entire community. What other sources are being sought for cleanup on the Gallery Flats site? The table below summarizes past and pending grant applications for environmental investigation and cleanup for the Gallery Flats project. The grant application pertaining to this report is highlighted. Type Source Amount Status Date Committed /Estimated Commitment Date Metropolitan Council TBRA S294,500 Coinnliacd April 25, 2012 Metropolitan Council TBRA S26.200 Committed June 27, 2012 Metropolitan Council TBRA S15.000 Pending January 2012 County Program ERF 596.000 Pending December 2012 State Program DEED S50.000 Pendine December 2012 Federal Program EPA 580,000 Committed April 2012 TOTAL $561,700 Alternatives The Council has the following alternatives: Approve resolution 2012-084 as is Approve resolution 2012-084 with changes Deny resolutions 2012-084 and opt not to apply for ERF funding CITY OF HOPKINS HENNEPIN COUNTY, MINNESOTA RESOLUTION NO. 2012-084 RESOLUTION APPROVING APPLICATION TO HENNEPIN COUNTY ENVIRONMENTAL RESPONSE FUND FOR GALLERY FLATS PROJECT BE IT RESOLVED by the City Council of the City of Hopkins, Minnesota, approves the Gallery Flats project, for which an Environmental Response Fund grant application is being submitted to the Hennepin County Department of Environmental Services on November 1, 2012, by the city of Hopkins. I certify that the above resolution was adopted by the City Council on November 7, 2012. Mayor Clerk Eugene Maxwell Kristine A. Luedke Hennepin County Environmental Services Contaminated Lands Unit Environmental Response Fund Grant Application Project Name: Former Park Nicollet Clinic/Lutheran D44est Redevelopment Total Amount Requested from ERF:9$ 6,000 Applicant: City of Hopkins Address: 1010 First Street S — Hopkins, MN 55343 Phone: 952 548-6343 Fax: 952-935-1834 E-mail: tbeard0,)hopkinsmn.com Municipality: City of Hopkins Project Contact Person: Tara Beard Phone: 952 548-6343 Fax: 952-935-1834 E-mail: tbeardQ%opkinsmn.com Application Preparer: John Findley — The Javelin Group Phone: 952 380-3668 Fax: 952 380-3669 E-mail: ifindley6i theiavelinaroupinc.com Revised 3/7/2012 1 L SITE INFORMATION Name of Site Former Park Nicollet Clinic/Lutheran Brotherhood Redevelopment (Building name, location, reference, etc.) Site Address 31 9�h Avenue S & 815 1" Street S City (or Township) Hopkins, MN Hennepin County District No. 6 1 Property Identification No. 24-117-22-43-0160, 24-117-22-43-0100, 24-117-22-43- 0106,24-117-22-43-0138 If enrolled in an MPCA program, list the following: VIC/Petroleum Brownfield's Program I.D. # \ 11281 111 LUST Program I.D. # 4090 Other 1. Is this site the previous recipient of an ERF grant for assessment? YES NO X 2. Is this application for an assessment. RAP development, or cleanup? Cleanup 3. Does this application request funds for property acquisition? YES NO X 4. Current property owner Park Nicollet Parcels — City of Hopkins HRA Lutheran Digest Parcel: Roval Scott Enterprises 5. Property owner after cleanup Klodt Development LLC 6. Is the property under the applicant's control'? YES X NO If YES, please describe ownership status, including date of purchase. The Lutheran Digest property is under a purchase agreement and the developer has a signed a development agreement with the City that includes purchase of the Park Nicollet property. The development has been pre -sold to a local real estate management company. Construction funding solicitations are in progress with Wells Fargo, TCF and US Bank. The construction funding commitment will be in place by the end of November 2012. The land closings are scheduled on December 17, 2012. If NO, describe what steps arc planned to gain site control/ownership. Please describe any and all planned agreements and their expected dates of execution. 7. Current environmental consultant and legal counsel, if applicable: Consultant The Javelin Group, Inc. Phone 952 380-3668 Attorney Warchol Meyer PLLC Phone 612-465-0077 8. Legal description of the site: Park Nicollet Clinic Parcels: Lots 15 Through 20 Inclusive Including The Adjoining Vacated Alley, Block 4. West Muls Addition Lot 14, Block 4, Including 1/2 The Adjoining Vacated Alley, West Mpls Addition S 36 Ft of Lot 13. Includin ]g /2 Adjoining Vacated Alley Block 4. West Mpls Addition Lutheran Digest Parcel: Lots 2,1 22, 23 And 24 Including Adioining 1/2 Of Vacated Alley 9. Acreage of site 1_8 Square footage of site 78,843 10. Attach an accurate and legible location map and site diagram showing locations of relevant site features such as buildings, retaining walls, suspected/known areas of contamination, etc. (photographs are helpful). The map should include the property boundaries, a scale bar and a north arrow. Please see attachment 11. What is the current Zoning/Land use of the site? Mixed -Use 12. Will the proposed final use of the site require a zoning change? YES NO X If yes, describe the expected zoning and the necessary procedure for obtaining the change. 13. Current economic condition: Vacant lot Developed site (describe current conditions) There are two site buildings that are eve sores have been vacant for 3 years. The former Park Nicollet Clinic building has been vandalized and a small fire occurred in the buildine. 14. If the site is currently developed with building(s) but is not occupied, how long have the building(s) been vacant? 3 years 15. Does this project have municipal land use approval? YES X NO If YES, please provide the date and a copy of this approval. If not, please describe the steps being planned to obtain this approval. See Attached City Resolutions 16. Does this project have neighborhood support? YES X NO If YES, please provide a copy of this statement of support. If not, describe what steps have been taken to date and/or plans in place to obtain this support. There are not designated neighborhood croups in Hopkins but a public meetinE was held in which the project was viewed favorably. 17. If this application is for a RAP implementation, is demolition required to implement the RAP? YES NO X A. If yes, describe the structure(s) to be demolished (include age and condition). B. If yes, does demolition require asbestos and/or lead paint abatement? YES X NO If yes, describe: The asbestos survey identified 9x9 floor tile & mastic, foundation tar, door caulk, expansion & window caulk, and HVAC vibration joint material 4 II. SITE HISTORY Please attach a brief synopsis of the site's history. Explain why the site is believed to be contaminated (if the application is for an assessment grant) or how the site came to be contaminated. Also list the titles and dates of any supporting environmental reports, historical information, etc. (See Attachment) III. CONTAMINATION INVESTIGATION INFORMATION (Complete this section if your application is for an assessment and/or RAP development.) 1. Current status of the investigation: Not Applicable — Cleanup Application A. Is the site enrolled in the MPCA VIC or Petroleum Brownfield program? YES NO B. Has a Phase I Environmental Assessment been completed? YES NO If yes, please send an electronic copy to john.evans@co.hennepin.mn.us. C. Do you have an approved work plan for a Phase II investigation? YES NO If yes, please send an electronic copy. D. Has any portion of the work plan been implemented? YES NO E. Please provide electronic copies of any approval and/or comment letters that you have received from the MPCA and copies of any reports documenting investigation activities that have been conducted to date. Briefly summarize the identified contamination at the site to date (contaminants, concentrations, etc.) and the objective of the future planned investigation. If no soil or groundwater samples have yet been collected at the site, please say so. IV. CONTAMINATION INFORMATION (Complete this section if your application is for a cleanup.) 1. What type of contaminants are present at the site? Asbestos in soil & buildings, arsenic in soil, mercury in soil 2. Provide an electronic copy to john.evans(a co.hennepin.mn.us of the approved RAP and final approval letter for your Response Action Plan from the MPCA. Also include your cost estimate for the RAP. (Emailed) SUMMARY OF CONTAMINATION INFORMATION Provide a concise description of the identified contamination and proposed RAP. The description should include the occurrence of the contamination (Le., are there distinct areas of contamination or is contamination widely disseminated across the site? Is the contamination at the surface or at depth?). Since underground parking will be included in the new building design, a remedial investigation was completed for both sites that included gridding the site into approximate 50'x50' cells. Samples were collected from each cell in the 0'-5' depth and the 5'-10' depth intervals to determine the degree of contamination for each resulting block. Three blocks totaling 1,300 yd' were identified on the Park Nicollet site that had petroleum and mercury contamination in excess of the residential SRVs or petroleum criteria for reuse as unregulated fill. A Met Council TOD grant N� as obtained for the excavation and landfill disposal of this soil and for soil corrections on the Park Nicollet portion of the site. On the Lutheran Digest Parcel eight (8) blocks of soil totaling 3,848 vd3 i%ere identified that had buried building material debris *%ith asbestos mixed in and arsenic concentrations that exceeded the residential SRS' that make it unacceptable for reuse as unregulated till so that it must be landfilled. 4. Complete the following table for soil contamination (be sure to include areas of contamination that have been identified at the site but will not be treated or removed as part of the approved RAP): General RAP Cleanup Goal Contaminant types Proposed Remedial Activities (e.g., residential SRVs, (e.., VOCs, metals) industrial SRVs) Asbestos in soil Excavation & landfilling in accordance No visible asbestos -containing with MPCA Emission Control Plan materials (<P,)) Metals (Arsenic & Excavation & landfilling in accordance Residential SRVs Mercury) with MPCA approved R.AP Asbestos in Buildings Abatement by licensed abatement Complete Removal contractor Total volume of contaminated soil (cubic yards) identified:83. 48 A3 Total volume of contaminated soil (cubic yards) to be remediated (all contaminant types): 3,848 vd3 Complete the following table for groundwater contamination. If no contamination or limited groundwater investigation has been conducted, please indicate below. Also, please indicate if a groundwater investigation was conducted but no contamination was detected. Based on the results of the Phase I ESA reports, no significant potential for groundwater contamination was identified, therefore a groundwater investigation was not completed. General Affected Aquifer Average Contaminant types (i.e., water table, deeper Proposed Remedial Activities e.., VOCs, metals) aquifers) Mercury (Pk Nicollet N/A 0.12 mg/kg 0.12 mg/kg Provide the approximate dimensions of contaminant plume on site and specify if the plume extends off-site. N/A 6. List all compounds comprising the identified release in soil and the corresponding coverage and maximum concentration for each compound. Also include petroleum in the table. If distinct areas of contamination are present at the site, please describe separately. (NOTE: It is acceptable to provide an overview with estimated average and maximum concentrations. For the carcinogenic PAH compounds, provide BaP equivalent concentrations.) Compound Tier I Average Maximum Concentration SRV (residential) Concentration Concentration Mercury (Pk Nicollet 0.5 mg/kg 0.12 mg/kg 0.12 mg/kg cell D3 0'-5' depth) Arsenic (Pk Nicollet 9 mg/kg 9.7 mg/kg 9.7 mg/kg cell B-5 0'-5' depth) Arsenic (Lutheran D 9 mg/kg 16.3 mg/kg 18.3 mg/kg cell E-1 0'-5' depth) Arsenic (Lutheran D 9 mg/kg 11.7 mg/kg 11.7 mg/kg cell E-2 5'-10' depth) Asbestos in soil <1% 14.5% 22% Please do the same as in #6 for groundwater. N/A Average Maximum Compound HRL Concentration Concentration N/A 8. If groundwater at the site is contaminated, note the geologic makeup of the affected aquifer (sand/gravel, till, lacustrine clay. etc.) and the flow direction. Indicate how the flow direction was determined. N/A 9. Briefly describe the possible exposure scenarios posed by identified contamination at the site (i.e., ingestion or human contact with contaminated soil, consumption of contaminated groundwater, ecological impacts, etc.), and nearby receptors that could be affected by contaminants migrating from the site (high resource value wetland/creeks/rivers, etc.). The potential for exposure is direct contact with contaminated soil. Area children can potentially come into contact with the contaminated soil and put their fingers in their mouth that results in consumption of soil contamination. 10. Provide a concise description of the proposed RAP activities. Also describe demolition activities necessary to perform the cleanup. The RAP ��ill include abatement and disposal/recycling of HAZMAT building materials, preparation of an asbestos abatement plan, asbestos/hazardous materials abatement prior to building demolition, asbestos air monitoring, excavation and landfill disposal of metals contaminated soil and buried demolition debris with intermixed metals and asbestos contamination, environmental oversight/confirmation sample collection, and preparation of asbestos/RAP implementation reports. 11. Does the proposed corrective action include soil disposal that does not exceed residential soil reference values (SRVs) (i.e.. low or marginally impacted soils)? If so, provide a volume estimate of this marginally impacted soil and provide a figure delineating the area of that soil. The RAP includes excavation and landfill disposal of soil and buried debris containing metals concentrations in excess of the SRVs and asbestos. 12. Describe efforts to reuse contaminated soils on site. If soil is not being reused, why is this not feasible? Contaminated site soil for which this grant is being sought is not suitable for reuse. V. COST RECOVERY 1. Has the site been identified as a state or federal Superfund site'? YES NO X 2. Has the party responsible for the contamination been identified? YES NO X If yes, who is the responsible party (RP) and will they be involved with the cleanup and/or development? 3. Is there any financial commitment by the RP for the cleanup? YES NO 4. Are there available resources for the RP to pay for the cleanup? YES NO Please explain: 5. Is a cost recovery plan to recover costs from responsible parties in place? YES NO If yes, please attach the plan and amount of costs to be recovered. Has consent of the Attorney General been obtained? YES NO NOTE: It is not required that you have a plan to recover costs from the party responsible for the contamination. However, if you are planning on recovering your costs from the responsible party, attach information on the process. VI. FUNDING SOURCES Is there a possibility that the site will be investigated and/or cleaned up without ERF money? YES X NO Please explain: If DEED does not award a grant, Met Council or Hennepin County ERF may make up the difference. If no grant is awarded then the cleanup maybe completed by the developer, but it could result in delay of the project and/or an increase in the rental rates that will make the rental units less affordable to the community. 2. Have other sources of public or private funding for this project been identified? YES X NO If yes, complete the following table: Funding Source Amount Status (committed, pending decision date, etc.) TBRA Grant $15,000 Pending DEED Grant $50,000 Pending Klodt Inc. $19,320.50 Commited Additional TBRA grants have also been obtained for Investigation and cleanup of the Park Nicollet lot for which additional funding is not being requested in this cleanup grant application since a grant has already been obtained. Is this project still waiting to secure any additional funding that is necessary to commence construction? YES X NO If yes, please clearly describe what is still needed, the timeline and steps are planned to secure this funding. 9 The development has been pre -sold to a local real estate management company. Construction funding solicitations are in progress with Wells Fargo, TCF and US Bank. The construction funding commitment will be in place by the end of November 2012. VII. COST ANALYSIS: INVESTIGATION, CLEANUP AND PROJECT COST BUDGETS What is the grand total of eligible investigation, cleanup and other environmental project costs for the site'? $180,320.50 How much funding are you requesting from ERF'? $96,000 Fill out the three following budget tables to identify the assessment, cleanup, and project costs for the site. Be clear and explicit, and include as much detail as possible. Provide attachments if necessary. BUDGET INFORMATION Assessment and/or Investigation and RAP Implementation Provide the following information for each activity. Include attachments if necessary. Activity: Amount: Start and End Dates of Activity: Details about how costs were determined: SUBTOTAL (I) S Soil and Groundi%ater Cleanup Provide the following information for each activity. Include attachments if necessary. Activity: Soil remediation, environmental oversight, confirmation sampling and reporting Amount: S 160,957.50 - $57,720.00 (clean soil handling costs) = $103,237.50 Start and End Dates of Activity: March -June 2013 Details about how costs were determined: 53,848 vd' soil, excavation, loading & hauling $15A W, landfill disposal $20/vd3, 5 weeks of oversight and 80 hours for reporting. Note: if soil would have to be removed regardless of whether it is clean or contaminated, then not all soil removal costs are eligible. The applicant must cover the cost equal to the amount of clean soil removal. The additional incremental costs that arise from the disposal of contaminated soil are ERF eligible. Cleanup Activities — Clean Soil Handling Costs = SUBTOTAL (II) $103,237.50 TOTAL Investigation and Cleanup: SUBTOTAL (I) + SUBTOTAL (II) $ 103,237.50 Other Project Activities Necessary to Implement RAP (e.g., acquisition costs, MPCA VIC fees, demolition and all related pre -demo asbestos and lead paint abatement) Provide the following information for each activity. Include attachments if necessary. Activity: Acquisition Amount: $735,000 (Lutheran Digest Parcel) Start and End Dates of Activity: December 2012 Details about how costs were determined: Purchase Agreement Amount Activity: Demolition Amount: $35,000 (Lutheran Digest Building) Start and End Dates of Activity: February -March 2013 Details about how costs were determined: Demolition Contractor Bid Activity: Asbestos abatement plan. asbestos abatement, and completion report Amount: $11,763.00 Start and End Dates of Activity: February -March 2013 Details about how costs were determined: Amounts determined from an asbestos survey and unit cost estimates were obtained from an abatement contractor. SUBTOTAL (III) $ 781,763.00 11 TOTAL Investigation, Cleanup and Other Project Activities: SUBTOTALS (I) +(11) + (III) S 885,000.50 12 VIII. REDEVELOPMENT DEVELOPMENT VALUE What is the total cost of the redevelopment project (including environmental costs)? $24,750,000 2. What is the proposed construction schedule? Discuss the potential for delays and other issues that may arise. What must occur before investigation and/or development and cleanup activities can proceed? SCHEDULED TASKS BY YEAR AND MONTH ©0©000©0©�DO©0©0�0©0 Secure Site Building Hazmat Abatement Building Demolition Response Action Cleanup Concrete Superstructure Exterior Finish Interior Finish East Building Occupancy West Building Occupancy Cleanup Completion date 5/30/2013 Construction Completion date 8/30/2014 The redevelopment project is ready for commencement of construction beginning February 2013. Environmental studies have been completed. No delays are expected. Unexpected delays may result from winter construction delays or natural disasters. 3. What is the current property valuation of the site?38$ 9,000 4. What is the proposed property valuation upon completion of redevelopment project? $24,750,000 5. What are the current property taxes (prior to cleanup)? $14,475.14 6. What are the anticipated property taxes upon completion of redevelopment project?49$ 5,000 7. Is/Will the project be in a TIF district? No 8. What are the annual TIF proceeds expected to be and for how long? N/A 13 9. How many new jobs (FTEs) will be created during construction and redevelopment? Approximately 150 FTEs will be created/involved in the construction and materials supply industries connected with this redevelopment. 10. How many new jobs (FTEs) will be created at the finished site'? Please specify if these are new or retained jobs. 13.5 FTE (New Jobs) DEVELOPMENT FEATURES Explain the planned use of the site atter investigation and cleanup and how this was determined (give examples of prospective developers, interested parties, zoning requirements, etc.). The proposed Hopkins Gallery Flats is a multi -use development with approximately 163 market rate and affordable rental apartments (including I unit (a 60% AMI) incorporated into one 4 -story apartment building (60,585 SF) and one 5 story building (77,188 SF) that will share a below grade parking garage (61,810 SF). The apartments will be studio, 1 and 2 bedroom units, and the indoor parking ratio will be about 1.01 stalls per dwelling unit. Landscaping will include a central courtyard (17,874 SF). Pavement areas include 23 surface parking spaces (21,428 SF). The ground floor of the 5 -store building i% ill be mixed-use space adapted for retail, office, live/work, or residential space that faces the 8th Avenue promenade that connects the Hopkins Light Rail Station and Downtown Hopkins. There will be additional off street parking for visitors that will be screened from the surrounding streets. This development is part of the City of Hopkins redevelopment efforts for 8th Avenue, which is the vital link that connects Downtown Hopkins to the Hopkins Light Rail Station. The project will commence in the Spring of 2013 and be completed summer 2014. Describe how this project will incorporate sustainable activities and features in the project design, construction and operation, and/or in the cleanup remedy. Sustainable activities or project design may include but are not limited to: deconstruction and salvaging for building and/or material reuse, development planning that incorporates the cleanup remedy (i.e., building footprint/parking lot and site grading as capping feature). and environmentally friendly building and site design (i.e.. sustainable building design and natural landscaping, green renovations and preservation, low/no stormwater discharge management, and greenspace enhancement/development). The proposed redevelopment will advance and promote the growth of a green economy primarily through implementation of a strategy to reduce carbon emissions that incorporates utilization of existing infrastructure and promoting the use of mass transit. The project is located within one block of the proposed Hopkins LRT station and within 4 blocks of 4 bus lines. The high density residential development and work from home spaces will improve utilization of mass transit and reduce carbon emissions. The project will also preserve the quality of surface waters by routing 14 precipitation through an infiltration structure rather than increasing streamflow during storm events that are the primary contributor to surface water quality degradation. The development would easily qualify for LEED Silver Level. Describe how the community will derive benefit from the project. Provide a description of to what extent the project will remove blight; also indicate other benefits such as green space creation, affordable housing creation, tax base increase or other economic benefits, etc. to help quantify the community benefit of your project. This project will create a tremendous community benefit. The proposed mixed use development will be the first development alone the 8th Avenue promenade urged in the Comprehensive Plan and Hopkins LRT Area Plan that will serve as a catalyst for future development that will create a vital link between downtown and the proposed Hopkins LRT station. The development will bring 163 units of upscale housing to downtown Hopkins that will reiuvenate downtown businesses. In addition, the redevelopment will replace the abandoned site buildings and blighted Properties that are an eve sore generating only $14,500 in taxes with a flagship development that will generate an estimated $495,000 in taxes to benefit the community. The development will also provide green space and increase ridership on the Southwest LRT line to reduce congestion on area highways. RESIDENTIAL DEVELOPMENT (if applicable) Does this project contribute to the local municipality's approved livable communities housing mix goals? If so, in what way? If not, in what other way does this project create benefit for the local community? Please explain. Yes. This project fits the Met Council Livable Communities guidelines because it provides new housing and commercial/retail space in close proximity to jobs and services. Rental Total # of rental units to be developed: 163 Breakdown by number of bedrooms # of Units # of Bedrooms Rental Rate 18 Studio $800-$1,000 100 One $1,05041,300 45 Two $1,295-$1,600 Number of affordable units 1 @ 60% of the area median income Number of affordable units 87 @ 80% of the area median income 15 Construction cost per unit $152,000 Owner -Occupied Total # of owner -occupied units to be developed: 0 Purchase price(s) per unit/home $ Number of affordable units/homes (q % of the area median income (Breakdown by number of bedrooms) Construction cost per unit What is the median home price for the municipality/neighborhood where the project is located? $ IX. RESOLUTIONS A city council resolution must be adopted prior to submission of the application package. The required clement is a council resolution which approves the project from the governing body of the municipality where the project site is located. The following blank resolution is included as an example for your convenience. You may choose to reformat it, but make sure to include all of the statements that appear in our example. (City of Hopkins resolution approving the project will be available on 11/8/12) 16