Anoka City Council

February 26, 2024 (Worksession) Page 1 of 8 WORKSESSION OF THE ANOKA CITY COUNCIL ANOKA CITY HALL CITY COUNCIL WORKSESSION ROOM FEBRUARY 26, 2024 1. CALL TO ORDER Mayor Rice called the worksession meeting to order at 5:03 p.m. 2. ROLL CALL Present at roll call: Mayor Rice, Councilmembers Scott, Skogquist, and Weaver. Staff present: Finance Director Brenda Springer; Communications Manager Pam Bowman; Senior City Planner Clark Palmer; Housing and Redevelopment Director Darin Berger; Utility Director Del Vancura; Community Development Director Doug Borglund. Absent: Councilmember Wesp. 3. COUNCIL BUSINESS and/or DISCUSSION ITEMS Item 3.2 was heard at this point in the agenda. 3.1 Discussion; The National Community Survey Questions. Communications Manager Pam Bowman shared a report stating staff had budgeted $25,000 to conduct a city survey in 2024. Staff is working with Polco who will use The National Community Survey. Their proposal fee is $25,600. She shared the proposal and The National Community Survey instrument that would be used. The City Council has the option to request any of the standard questions be removed, if they are not applicable; however, the standard survey questions may not be altered. The City Council also has the option to add 1-3 (half page) city-specific questions; project-based, current topics of interest, etc. This option is included in the total fee of $25,600. If the Council wishes to add 4-5 (full page) additional questions, an additional fee of $2,200 will be added, bringing the total survey cost to $27,800. She said staff was seeking to determine number of questions to add to the survey and develop and finalize any additional questions. Councilmember Weaver asked how the firm works to segment responses that are submitted to skew results. Councilmember Scott asked to see sample responses and those in deviation. Ms. Bowman said staff is working to set up a demo but we have to get the survey questions determined first. February 26, 2024 (Worksession) Page 2 of 8 Councilmember Skogquist suggested including a question regarding directing resources such as police, parks and recreation, or trails for example to help learn resident priorities. Discussion was held on the need for a grocery store in Anoka and the need to get feedback for additional park and recreation services for example. Mayor Rice commented about the need for a grocery store balanced against an already developed city, stating Anoka had four stores 50 years ago. He said if we get one now that would provide great opportunity for the tax base but said the City should be the master developer if that ever happened and attach it to a basketball court facility somehow. Consensus was to include questions regarding a community center and not include questions regarding garbage hauling. Ms. Bowman said the survey would be ready to send this spring. 3.2 Preliminary Discussion; Purchase of 7th and Main Street. Housing and Redevelopment Director Darin Berger; shared a staff report stating after being presented with a purchase agreement for the property at 7th Avenue and East Main Street, the City Council requested this item be tabled and a worksession be held to discuss this concept further. He reviewed background information stating the HRA began assembling the blighted properties in this expanded South Central Business Tax Increment Finance (TIF) District in August of 2019. After the HRA purchased 640 E. Main Street out of the HRA General Fund, they secured bond funds and the following properties were purchased: • 650/658 E. Main Street • 639 Monroe Street • 1919 7th Avenue. The Anoka Housing and Redevelopment Authority (HRA) issued bonds through the City to purchase and redevelop properties at this location. The City and HRA entered into a pledge agreement which pledged the TIF revenues from the South Central Business TIF District to pay the principle and interest of the bond debt. This district already had internal loans from both the HRA General Fund and the expired (pre-1990) Redevelopment TIF District. He outlined the debt incurred and said since that time, staff has worked with CBRE, Inc. to market this 1.75-acre property for various uses at a listing price of $950,000. Although there has been much interest, most of the interest was for uses not allowed in this zoning district, a greatly reduced purchase price or non-preferred uses based on HRA, Council and Planning Commission input. The HRA also signed a Purchase Agreement with a development group, spending a year working towards a favorable outcome to no avail. HRA and staff worked with our Financial Consultant, Ehlers, Inc. to analyze TIF revenue projections and other aspects of the potential deal. TIF revenues should exceed what it would take for the City to repay all HRA debt ($4,011,298 including interest), however, the actual TIF numbers will not be determined until a more specific plan is agreed upon. In May of 2023, the Council February 26, 2024 (Worksession) Page 3 of 8 held a worksession to discuss the possibility of moving the East Liquor Store to this site. There was a consensus amongst the Council to move ahead with this and the consultant evaluating various locations deemed this the highest revenue generator he had analyzed within the City. Staff has been working to make this a reality since that time. One potential concept site plan is in your packet for your review and is in no way final. After reviewing the first draft of the purchase agreement, the HRA requested the addition of a few contingencies for the sale of this property: • Buyer agrees to construct a municipal liquor store on a parcel of the Property within three (3) years from Date of Closing • The Purchase Agreement must be signed by Buyer on or before July 8, 2024 (6 months after HRA signed the PA) • The Date of Closing must take place within 6 months of final execution of Purchase Agreement • Buyer agrees to include commission fees to CBRE, Inc. in the debt incurred. The City of Anoka would buy the property for $1.00 and incur HRA debt in the amount of $4,011,298.00 to be repaid by TIF Revenues. Councilmember Weaver said he was not opposed to a liquor store but was concerned with the current zoning and who we may have missed while the site was being marketed. He said there are things that need to be done on the site whether it be a drive-thru, parking area, etc., and we need to be creative as the site is only 1.75 acres and will only hold so many uses. He shared further comments on the potential of the site. Councilmember Scott agreed a liquor store needs to occur and this would be the best site but there is disagreement in the layout and type of building and suggested a possibility for compromise to keep a larger building and having buildings abut Main Street while leaving the corner open. He said the building could include condos or professional space above with parking on the side on Monroe Street. Community Development Director Doug Borglund shared several renditions for the site that staff had considered, some with shared parking, a drive-thru, separate buildings, and different layouts. Councilmember Scott spoke about financials and the possibility of a cannabis dispensary and how revenue bonds would not be able to used but if it could be done if taken over by a dispensary later by either a private or public cannabis use. Finance Director Brenda Springer said the City cannot lease space to a company that is not considered legal, which is why we can’t use the Miller building. Councilmember Scott asked if we bonded for the golf course and clubhouse and a cannabis dispensary went there. Ms. Springer said if improvements to the clubhouse were made, they may not necessarily be related to the cannabis dispensary but added we cannot issue cannabis revenue bonds. February 26, 2024 (Worksession) Page 4 of 8 Councilmember Weaver spoke about the current drive aisles which are not permitted so there needs to be a zoning change, adding we can say not to any proposed concept but will continue to fail until the zoning is changed. Mr. Borglund shared about HJ Development and the 1919 building and not having an anchor tenant then spoke about the Scooter’s Coffee proposal for 600 square feet. Councilmember Weaver said Scooter’s came to us but we had to say no because another use was being considered, adding even Scooter’s had a drive- thru. Mr. Borglund shared the two proposed concepts provided by the bank institution. Councilmember Skogquist said he did not like how the northwest corner of Ferry and Main Street developed and did not want something similar because he doesn’t like to see a strip mall with parking in front. Councilmember Weaver commented about whoever goes there needs to be successful otherwise the community won’t be successful. Ms. Springer said because a flagship liquor store will be successful on this site the rest of the site will be too, stating changing the zoning to allow the bank to have a drive-thru and closer to Main Street would ensure their success. Councilmember Skogquist encouraged talking with the bank again but stating the anchor will be the liquor store. Mike Briggs, suggested the liquor store could contain a drive-thru. Councilmember Weaver said drive-thrus are not allowed by Statute. Discussion was held on other layout possibilities and improved access for pedestrians, parking, and other elements. Mr. Berger shared Anoka County’ desire to have building setbacks as far away as possible. Mayor Rice suggested building all but the bank. Councilmember Weaver said an outlot could be sold for a restaurant for example with common area maintenance charged. Mike Brigss,shared comments about how customers know where liquor stores are usually located and are destination stores and may not need street exposure, which could make the site more valuable by selling to another use. He said the liquor store could be constructed as a two-story building for inventory and makes the other two parcels more valuable. February 26, 2024 (Worksession) Page 5 of 8 Ms. Springer noted people from out of town do not know where liquor stores are and need to be visible and how banks are destination places as most customers already have a relationship with a bank and the corner is the best location for the liquor store. Councilmember Weaver spoke about the need to have uses that generate taxes. Councilmember Skogquist supported zoning changes to allow for drive-thrus but would like to see other uses such as a restaurant if possible and pay for other debt. Mr. Borglund clarified the site allows for a drive-thru but the difference is where parking and drive aisles can be located. Councilmember Weaver shared frustrations that this could have been offered to other interested groups. Mayor Rice clarified there was Council consensus for amendments to text or zoning if necessary and how we should contact the bank to show these different concepts for their feedback. He said Council is interested in a prominent liquor store on the lot but we have to have other attractions that work for them. Mike Briggs, said he would still like to do a similar restaurant concept somewhere in Anoka. He spoke about parking and access and scaling the building size down then said with the social district his proposal was going to include a large patio and rooftop. He said he was not sure that would work on this site but the idea would be good for a smoke shop/pizza place with parking. He agreed the bigger buildings should be placed in the rear of the site. Councilmember Weaver suggested staff work with the financial group, Mr. Briggs and Kevin based on this new direction for amended zoning then request architect Kathy Anderson provide drawing examples for review. Mayor Rice supported the liquor store being located farther back on the lot because it will be prominent regardless. Kevin Morelli, shared with the store’s current 500 transactions per day this will be the flagship business and to keep in mind the liquor store has been here since 1937 and will still be here when other businesses may be gone so the liquor store should not be at the rear of the property. February 26, 2024 (Worksession) Page 6 of 8 3.3 Discussion; Financing Council Goals. Finance Director Brenda Springer shared a staff report stating recently Council and staff met at Green Haven for their annual goal setting session, after which staff met with Stacie Kvilvang from Ehlers and Associates to discuss from a high- level financing of the different goals and project priorities of the Council. She reviewed project priorities and Council goals in detail that included golf course remodel options, liquor store construction, Anoka Grain & Feed, Rum River trail project, and River Maintenance Fund and possible funding options then said Ehlers had identified an additional $19,000,000 of abatement bonds that could be issued with Miller building abatement bonds. Councilmember Weaver said it will be important to understand actual golf course revenue after the audit of the golf course study is completed. Mayor Rice said some of the concerns about course length are valid as golfers are seeking a longer course and we need to take that at face value but also need to know if that makes financial sense. Ms. Springer agreed we need to understand the consultant’s assumptions first for a basis. Councilmember Weaver said we need to separate Phase II and Phase III and that anything west of Green Haven Parkway and the apartments needs to be out of the equation. He referred to an article about how courses are trying to generate new revenue due to inflation and increased labor costs for golf then shared how Top Golf was looking for another location in Woodbury because they were doing so well. He said amenities are not just for golfers but non-golfers as well and we need to hear the projections for future plans. Ms. Springer said we can use revenue earnings from golf to pay for the bond payments. Mayor Rice spoke about the upcoming community survey and knowing responses could be skewed by golfers in Anoka. Councilmember Weaver agreed, stating this is why our analysis is so important. Councilmember Scott referred to possible entertainment options such as a two- level driving range that would be different but still golf-related. Mayor Rice agreed, stating Top Golf is more of an entertainment facility than traditional golf. Ms. Springer spoke about priorities and a proposal to conduct a 10-year financial management plan that would include golf, liquor, rate studies, and other elements to create a plan that could be followed that identified funding sources for future goals. February 26, 2024 (Worksession) Page 7 of 8 Mayor Rice said the City had the luxury of not having to plan in the past for funding but that is no longer and that we do not want to just have raising the levy as the only option. Councilmember Scott said if we want to pass on interest and principal to the taxpayers for a meaningful impact to the levy, we need to ask questions about current capacity and should create a matrix with goals, etc. Ms. Springer said it may be possible to sell some land to influx smaller projects instead of bonding. Mayor Rice said he would not support giving back levy proceeds but would use the funds instead for other projects. He said he would support a zero-levy increase but not returning any potential surplus, adding west of Green Haven Road is intriguing. Councilmember Weaver spoke about affordable housing and grant opportunities and how we can parlay those into the purchase of the area to rebuild and meet ADA requirements. Ms. Springer said we could split this into two years for internal lending as the owners of the Mill site may want to take over eventually. Councilmember Weaver stressed the need for easements for river access on the Mill site before turning the property over because water access is very important. Councilmember Skogquist said he did not want to see ourselves short because if we’re going to have something premier on the Mill site customers may not want to see pontoons docked outside their event at a City dock. He said we need to utilize the economic development fund and possible sale of the lot on other side of the street. Mayor Rice spoke about current undeveloped lots in progress and promoting them for sale such as PumpTech. Council consensus was to support obtaining a quote from Ehlers and Associates for a 10-year financial management plan. February 26, 2024 (Worksession) Page 8 of 8 UPDATES/REPORTS/COUNCIL SUGGESTIONS FOR TENTATIVE FUTURE AGENDA ITEMS None. 4. ADJOURNMENT Motion by Councilmember Weaver, seconded by Councilmember Skogquist to adjourn the Worksession at 6:40 p.m. Motion carried. Submitted by: Cathy Sorensen, TimeSaver Off Site Secretarial, Inc. Approval Attestation: Amy T. Oehlers, City Clerk