Economic Development Authority

ANDOVER ECONOMIC DEVELOPMENT AUTHORITY MEETING – MARCH 17, 2015 MINUTES The Meeting of the Andover Economic Development Authority was called to order by President Julie Trude, March 17, 2015, 6:00 p.m., at the Andover City Hall, 1685 Crosstown Boulevard NW, Andover, Minnesota. Present: Commissioners Mike Knight, Sheri Bukkila, Valerie Holthus, James Goodrich, and Joyce Twistol Absent: Commissioner Timothy Cleven Also present: Executive Director, Jim Dickinson Community Development Director, Dave Carlberg APPROVAL OF MINUTES February 2, 2015 Regular EDA Minutes. Motion by Bukkila, Seconded by Knight, to approve the February 2, 2015 Regular EDA Minutes. Motion carried unanimously. DISCUSS THE FARMSTEAD/PRESBYTERIAN HOMES ASSISTED LIVING FACILITY Community Development Director Carlberg stated the EDA is requested by Presbyterian Homes to consider extending a TIF note that has expired within Tax Increment Financing District 1-3, a housing district as requested. The purpose of the request is to extend the benefits derived from the TIF district an additional 10 years and by doing so insuring that twenty percent (20%) of the senior housing units remain affordable within the Farmstead project. Mr. Carlberg reviewed the information with the Commission. Mr. Dickinson stated they would not be extending the life of the district, the district is currently a twenty-five year district. The deal with Presbyterian Homes was for a fifteen year note and that last payment was made in February 2015 so what is being discussed is the last ten years of the district. Mr. Dickinson stated if the TIF District were to end there would not be any guarantee that the twenty-eight homes would continue to be affordable housing for seniors. Mr. Mark Meyers, representing Presbyterian Homes, stated the rent differential amounts to approximately $360 per unit per month on the twenty-eight units and as an organization they are not going to immediately move to market rate rents but most likely they would have to over time because Andover Economic Development Authority Meeting Minutes – March 17, 2015 Page 2 they would not have the economic benefit to bridge that $360 gap per month. He stated the basis of their request is to keep serving low to moderate income seniors at the Farmstead, but in order to do that they need to find a way to support those lower rents. President Trude stated the City is getting the whole benefit of the property taxes on the project now and are they using a portion or all of that. Mr. Dickinson stated what is eligible for them to request is ninety percent of the tax increment. He stated the request would correlate with dollars. Last year the total tax increment paid was $141,902 so ninety percent would be approximately $127,000 which is what has been provided. If they had to do a projection for the next ten years the average amount would be around $120,000 to $125,000 on average. Mr. Meyers stated that is the amount of tax increment being rebated back to them. Commissioner Holthus asked what would happen with the individuals that are getting the rent benefit from this. Mr. Meyers stated in their leases they do reserve the ability to within a 45 day notice they could increase their rent but as a practice their organization would not do that and they would most likely do this through attrition, so as units turn over they would convert those units to a market rate at that time. Commissioner Knight asked what the impact is on the residents in Andover. Mr. Dickinson stated the total increment from last year is about $142,000 of which the City keeps ten percent of that for management. The City, County and School District taxes make up the $142,000 about thirty to thirty-five percent of that bill is the City portion. The impact is if they elect to have the district go for another 10 years and find another project within the development district to utilize those funds it has to meet this TIF district’s budget. Right now the budget has the ability to fund a note and if they decertify they would see some benefit to the overall tax base for the City of about $42,000. The County and School District would get some additional funds but it is relative on how the levy is spread and there could be a tax rate affect. Commissioner Bukkila indicated she would like to decertify the district. President Trude stated she would like to support the Presbyterian Homes request. Commissioner Twistol asked if the Met Council has any position on the fact that they have subsidized senior housing. Mr. Dickinson stated they look at this as favorable. Commissioner Bukkila thought the original deal was a good opportunity to develop the community and bring business in but once they achieve their original goals, it is reasonable to let it go on its own. Commissioner Goodrich asked if there was communications with the Farmstead residents. Mr. Meyers stated there has not been any communication because they will probably not do anything drastically to their rent so they did not want to alarm their residents of a possible rent increase. President Trude thought the request would be a benefit to the community. One issue she would like to see rectified with some of the TIF dollars, is parking which seems to be a big problem for Andover Economic Development Authority Meeting Minutes – March 17, 2015 Page 3 the Farmstead. Commissioner Twistol stated she does income tax returns and she volunteers as a part of AARP and she thought they had an obligation as a community to assist the seniors as much as they can. She stated she is in favor of helping Presbyterian Homes out. President Trude stated the City provides activities and space for youth and the senior’s needs are different than the youth and there is not a big drain on the community. Mr. Dickinson asked if there was interest in looking at a proposal to see what this could be, it is a give and take process and they would have to produce qualifying costs such as improved parking , additional landscaping or exterior improvements. Commissioner Goodrich asked what the rent cost of the units is. Mr. Meyers stated the rent restricted units are approximately $780 a month, which is about half of what the other units rent for. Commissioner Holthus indicated she would like to extend the note with Presbyterian Homes. Commissioner Goodrich stated he is ok with decertifying the district because it has been going on for fifteen years and with that length of time they should have prepared for the expiration of the note. He generally doesn’t support taking other people’s money and giving it to others. It was determined that with a majority of the EDA in support, staff would continue discussion on this item. Commissioners Bukkila and Goodrich indicated they would prefer to decertify. Staff was directed to solicit Commissioner Cleven for his opinion on this. Commissioner Holthus indicated she would like to see more landscaping. Commissioner Twistol agreed. CONSIDER PARTICIPATION IN THE METROPOLITAN CONSORTIUM OF COMMUNITY DEVELOPERS “OPEN TO BUSINESS” PROGRAM Ms. Kathleen DuChene, Business Advisor for the Metropolitan Consortium of Community Developers (MCCD) made a presentation to the Commission. Mr. Carlberg stated they would look at this “open to business” program as an extension to the Anoka County cities. What Ms. DuChene is asking is for cities to put this information on their website, in newsletters, in utility bills, etc. Ms. DuChene stated this is a free program to residents and businesses and free to all cities in 2015 because the Anoka County HRA is currently footing the bill. She indicated she did not know what the fee will be in 2016 but the City can try it out for free for 2015. Andover Economic Development Authority Meeting Minutes – March 17, 2015 Page 4 Commissioner Twistol asked how the staff is funded. Ms. DuChene stated she is a paid professional and they are all salaried. They have a vested interest to make sure this program is successful. She believes in it and they are all experienced professionals. MCCD is primarily funded through the interest earnings on loans. Commissioner Bukkila asked if there is a Board for the non-profit. Ms. DuChene indicated there is. She stated the organization has 14 staff members and they have 48 members in their organization and some are on the Board of Directors. There is community participation on the board. President Trude indicated she did not feel like she knew enough about this to publicize it. Mr. Carlberg stated they could put a little paragraph in the next Andover Today related to this. They could also put the information on the website to test the waters and see if there is any interest. Commissioner Bukkila stated she would like to know more about the structure. She thought it seems to be more like a business because the interest on some of the business loans is cycled back into their operational costs and they have a financial gain. Ms. DuChene stated that is how they pay salaries. She stated they are a nonprofit and apply for grant money and get money from foundations and Federal level grants. Commissioner Bukkila asked what the Chamber of Commerce position is on this. Mr. Carlberg indicated the chambers are supportive. Mr. Carlberg stated if the City wants to take on the role of what the County is doing this year, the cost next year will be approximately $5,000 to $7,000. Commissioner Bukkila stated if the City did not agree to do this, residents could still get the service at the County level. Ms. DuChene indicated that is correct. President Trude stated she did not have a problem with trying this out but one of her concerns is competing with the loan market locally that would actually be better for their business clients but what she understood is MCCD is serving people that are being turned away by conventional banks for loans. Ms. DuChene indicated that is correct. Their mission is to primarily serve people who cannot get traditional loans through banks. They would prefer the business first go to the bank to get a loan and they will help the business get prepared for trying to get a loan through a conventional bank. They can also help people decide if starting a business is right for them. Ms. DuChene reviewed her background with the Commission. Commissioner Bukkila stated she did not have a problem with this but questioned how much do they want to get involved at a City level. Consensus of the Commission was to allow a trial run in 2015 for the “open to business” program in Andover. Andover Economic Development Authority Meeting Minutes – March 17, 2015 Page 5 ECONOMIC DEVELOPMENT UPDATES Mr. Carlberg updated the Commission on EDA items. REDEVELOPMENT UPDATES Mr. Dickinson updated the Commission on redevelopment activities. OTHER BUSINESS None. ADJOURNMENT Motion by Commissioner Bukkila, Seconded by Commissioner Goodrich, to adjourn. Motion carried unanimously. The meeting adjourned at 6:57 p.m. Respectfully submitted, Sue Osbeck, Recording Secretary