Idaho Falls Redevelopment Agency

IDAHO FALLS REDEVELOPMENT AGENC Y P.O. BOX 50220 IDAHO FALLS, ID 83405 May 18, 2017 Regular Meeting Minutes Council Chambers Call to Order: Lee Radford called the meeting to order at 12:00. Members Present: Lee Radford, Thomas Hally, Brent Thompson, Kirk Larsen, Chris Harvey. Members Absent: Terri Gazdik, Dave Radford Also Present: Brad Cramer; Matt Parks and Meghan Conrad, Legal Counsel (via telephone); and interested citizens. Modifications to Agenda: Cramer indicated that Lorin Walker called today and requested that his item be removed from the Agenda (Item #10), and that will be rescheduled for June. Minutes: Kirk Larsen moved to approve the minutes of April 20, 2017, Thomas Hally seconded the motion and it passed unanimously. Approval of Bills: Lee Radford presented the finance report dated May 18, 2017. The following bills were presented to be paid from the Snake River Allocation Fund: Elam and Burke, $7,771.55 for legal services; Rebecca Thompson, $100.00 for transcription of minutes; Valbridge, $7,500.00 for the reuse appraisal on the Bonneville Hotel property. Brent Thompson moved to approve the Finance Report, Kirk Larsen seconded the motion and it passed unanimously. Adopt Resolution Approving DDA for Kelsch Project. Harvey explained that this project has been before the Board on many occasions and they have reviewed and approved design drawings. Harvey stated that the cost associated with remediation and excavation of the property is an uncertain number, and the legal description of the property and the condominium platting has some uncertainty associated therewith. Harvey stated that the Disposition and Development Agreement (DDA) states that closing will take place within ten months of signing the agreement although they are targeting October. Harvey indicated that prior to that time the Agreement authorizes the beginning of remediation and puts a $100,000 cap on the remediation cost, and if remediation will exceed that cap it will allow the Agency to reconsider the project and decide if it is going move forward. Harvey stated that a provision has been added to allow the crews, while they are mobilized at the site, to begin over excavation of the property so they do not have to mobilize once for remediation and mobilize again when excavation begins. Harvey stated that the cost of remediation and the cost of over excavation will be separated into costs that are allocable to the construction of the project generally and costs that are specific to the garage which are costs that would ultimately be passed on as part of the purchase price of the garage and plaza. Harvey stated that normally they would have a purchase and sale agreement attached to the DDA that would have the legal description and specify the price at which the Agency would buy back the plaza and the garage. Harvey stated that in this case there are two different buildings and a garage and plaza, they will be platted out into a condominium arrangement and there will not be a legal description for the garage and plaza until the platting is finalized. Harvey stated that the process will be going on concurrent with the remediation and excavation of the property. Harvey stated that it is anticipated that when the property is ready to close (October) the developer will have the approvals and financing and construction contracts in place, a hole in the ground, and final cost numbers, along with a legal description for the portions that will be purchased by the Agency. Harvey stated that at the closing they will execute the purchase and sale 1 Idaho Falls Redevelopment Agency May 18, 2017 agreement. Harvey stated that it is likely they will need deposit and progress payments that are ongoing for the garage and the plaza portions and those are issues that will need to be worked out in the purchase and sale agreement. Radford clarified that condominiums are a way to own property when you cannot divide the property on the ground on a planned view and is often used for residential units. Radford added that it is a legal concept for owning property jointly on a larger piece and individual ownership of smaller pieces. Radford indicated that in this instance it will be useful to use the condominium approach as there are several components, including two retail buildings that the Oppenheimers will own, a garage and the plaza that will be owned by the Agency. Radford indicated that the properties and components are integrated and overlapping as they are built and condominimizing the property will make it so they can divide it up and allocate it into parcels. Cramer stated that they have been going back and forth to figure out details to protect both sides and still move forward. Cramer stated that the end product will be a single-story building, three story building, surface parking, underground parking, and plaza. Cramer stated that the Agency will own the plaza and the two parking areas (underground and surface). Cramer stated that the DDA includes a commitment from the Redevelopment Agency for $4.2 million towards the project. Cramer stated that will cover the purchase price of the parking and the plaza once it is completed. Cramer stated that it is a big commitment and stretches the finances, but the cash flow projections show that it is possible. Radford stated that the over-excavation is to remove other materials that are below the surface on the property. Radford stated that there are construction materials and historically there was a service station on the property and there could be remnants. Radford indicated that they will need to excavate the basement for the parking garage, and this summer they will do the excavation on the entire property and will take care of the remediation component and the excavation for the foundations and the garage. Radford stated that environmental remediation can sometimes get harder and there is no way to know. Radford stated that the property could have different contamination and they have done the best to try to characterize the contamination with a Phase I and Phase II study. Radford stated that they have a contingency that they might just dig a hole and clean up the debris, and then stop the project and reevaluate the project if the remediation gets out of control. Matt Parks explained what a DDA is. Parks stated that the Agency as owner of real property can dispose of the property to a developer with conditions on the use of the property in the future. Parks stated that this DDA is an agreement with the Oppenheimers to build the development and in order for the Oppenheimers to develop the property they need the Agency’s participation, and the Agency can dispose of real property for the fair use value that is determined by an appraiser. Parks stated that the fair reuse value is in the negative and so if the Oppenheimers were to develop this property without Agency participation it could not happen as it would not be economically viable. Parks indicated that the Oppenheimers are committed to the project and have a great track record of completing projects. Parks explained that for the purchase there is a commitment of the Agency to spend $4.2 million for the project. Parks stated that between now and closing in October, they will get a firm understanding of the cost and the design of the garage and will work out the payment structure and the details thereon. Parks stated that Oppenheimers will spend money on the due diligence cost and the Agency will be provided with a schedule of values for the due diligence costs before they are incurred and they will have to approve the costs as the project moves forward. Parks stated that if the Agency doesn’t sign the purchase and sale agreement to buy the garage, the Agency has agreed to reimburse the Oppenheimers for the due diligence costs incurred in the design of the plaza and parking garage. Parks stated that the excavation does not have a firm cost number, but the Oppenheimers, prior to doing any work will provide a schedule of values 2 Idaho Falls Redevelopment Agency May 18, 2017 for the excavation to the Agency for approval. Parks stated that if the project doesn’t move forward the Agency will reimburse the Oppenheimer company for the remediation and excavation prior to closing. Parks stated that at closing the Oppenheimers will be ready to proceed with the project, will have the construction financing ready to be put into place, the construction agreement and contract with Maclavene Company will be ready, they will have the design and cost estimate for the entire project, including the garage, plaza, and the two buildings, they will have firm lending, firm plans and ready to break ground. Parks stated that some work will be done in the summer, but the vertical construction will not start until March/April, 2018. Jeremy Malone, Oppenheimer Company. Malone stated that the DDA has been explained well and the Oppenheimers commitment to the project has grown stronger over the course of the DDA. Malone stated that the schedule that Parks related is the worst-case scenario and the Oppenheimers goal is to get all GMP (guaranteed maximum price) to the Agency as soon as possible and get in the ground in 2017 if possible. Malone stated that they intend to have a ground breaking in July and get the garage portion done and in the ground before winter, and the vertical construction can be done during the winter. Radford asked about the values they have included for the excavation. Malone indicated that the values included are worst case scenario and there is a possibility that they could come in cheaper. Malone stated that based on Phase II for the remediation, they believe they have a confined area for the contaminated soil and should be able to remove it for less. Malone stated they will do follow up on the Phase II to understand the scope, and if there is additional work that is necessary they will not have to delay. Thompson asked how they plan to coordinate/manage the use of the parking to ensure that it doesn’t turn into defacto tenant parking. Malone indicated they have discussed that issue with Cramer and the City and have discussed a parking management plan for Idaho Falls collectively. Malone stated that since the garage will be owned by the Agency it will be up the Agency or future entity to manage and determine how best to take care of the parking. Malone indicated they have strategies and concepts they have used in Boise for public parking that is adjacent to private development. Hally asked if they would suggest certain times for certain slots. Malone indicated that is like what they have done in Boise. Malone stated they would have to determine the parking needs and adjust accordingly. Cramer read the Resolution by Title. A RESOLUTION OF THE BOARD OF COMMISSIONERS OF THE URBAN RENEWAL AGENCY OF IDAHO FALLS, ALSO KNOWN AS THE IDAHO FALLS REDEVELOPMENT AGENCY OF THE CITY OF IDAHO FALLS, IDAHO, APPROVING A DISPOSITION AND DEVELOPMENT AGREEMENT BETWEEN THE URBAN RENEWAL AGENCY OF IDAHO FALLS AND IF-1, LLC; AND AUTHORIZING THE CHAIR, VICE-CHAIR, OR EXECUTIVE DIRECTOR AND SECRETARY, RESPECTIVELY, TO EXECUTE AND ATTEST SAID AGREEMENT SUBJECT TO CERTAIN CONDITIONS; AUTHORIZING THE EXECUTIVE DIRECTOR AND SECRETARY TO EXECUTE ALL NECESSARY DOCUMENTS REQUIRED TO IMPLEMENT THE AGREEMENT AND IT MAKE ANY NECESSARY TECHNICAL CHANGES TO THE AGREEMENT SUBJECT TO CERTAIN CONDTIIONS; AND PROVIDING AN EFFECTIVE DATE. Chris Harvey indicated that he would recommend that the Agency approve the Resolution and adopt the Agreement. Thomas Hally moved to adopt the Resolution Approving the DDA for the Kelsch Property, Kirk Larsen seconded the motion and it passed unanimously. Approve Issuing RFQ for Engineering Services Related to the Kelsch Project. Radford indicated that they want to make sure that the private development pays for itself and the public development is all the 3 Idaho Falls Redevelopment Agency May 18, 2017 Agency is paying for and it will be complicated, as the structures will be overlapping. Radford stated that they are proposing an RFQ to get the Agency engineering help to make the allocations accurately. Cramer stated that they are proposing to send out an RFQ to get preapproved structural engineers that the Agency can call on without going through an RFQ process each time they are needed. Cramer stated that the Kelsch site has places where the public portion of the construction will overlap with the private portion, such as in the parking garage. Cramer stated that there might be other things that come up as the project progresses that will have a need for the RFQ as well as the Bonneville Hotel Project and other upcoming projects. Radford stated that they have expertise within the City engineers for streets, sewer, water, curb, gutter, etc., however when it comes to structure it goes outside the expertise of the City engineers. Brent Thompson moved to approve the issuing of an RFQ for Engineering Services, Chris Harvey seconded the motion and it passed unanimously. Adopt Resolution approving MOU with Morgan Construction for Funding Eligibility Report and Other Planning Expenses for Jackson Hole Junction. Radford indicated that Jackson Hole Junction is a development on the Sunnyside Interchange that Matt Morgan has been pushing forward and it has challenges with basalt where the road must go. Cramer stated that the purpose of the Agenda item is to approve a Resolution that will approve a Memorandum of Understanding between the Agency and Morgan Construction. Cramer summarized that it will commit Morgan Construction to pay for the eligibility study and potentially if the site is found to be eligible, to pay for the planning activities that would need to happen to create an urban renewal district on the property. Cramer stated that the timing of the consultant’s availability and the need to move quickly to meet deadlines that Morgan Construction has, they need to get things wrapped up within the current calendar year, and because of that, they authorized Phil Kushlan to begin work on the eligibility study and Morgan Construction has already paid $7,500.00 (item 5 under Agreements, Page 3). Cramer stated that they anticipate having the eligibility report finished by next week. Cramer stated that if the site is found to be eligible there would be planning costs (item 6, page 3) and the document sets out how Morgan Construction would cover the costs. Hally stated that he and Kirk Larsen met with Mr. Kushlan and it appeared that eligibility looks solid. Hally stated that the lava on the property is considerable on the road and throughout the entire property and will impede upon the development of the utilities and there are 4-5’ that will require dynamite and extra cost, which is the leading denominator for eligibility on this project. Larsen stated that Kushlan had other bullet points that also spoke to the issue of eligibility and indicated that Kushlan felt that there were multiple legitimate points. Meghan Conrad indicated that the next step, once the eligibility study has been drafted and circulated, then it would be subject to Agency approval which could occur at the June 15 meeting. Conrad stated that if the Agency approves the eligibility study it would be submitted to City Council for review and approval. Conrad stated that the City Council meeting is up in the air and it could possibly happen at the June 20 City Council meeting, otherwise it will have to wait until July 13. Conrad stated that if City Council approves the eligibility study and determines that the area is eligible for an urban renewal project the City Council would direct the Agency to begin the planning process. Conrad stated that over the next several months they would draft the plan that would include the retention of a consultant to do the financial feasibility study and analysis. Conrad stated that they would possibly have a work session with the City and Agency, and have the work product come before the Agency during its September meeting. Conrad stated that if the plan is approved at that time then it would be submitted to City Council and would require a 30-day notice period with a copy of the plan being delivered to all the overlapping taxing 4 Idaho Falls Redevelopment Agency May 18, 2017 entities, and a published notice of an upcoming public hearing. Conrad stated that if any of the ordinance readings can be collapsed they could push to having the first reading at City Council in November with the final reading, if necessary in mid- December. Conrad stated that there are some post- approval/technical requirements that would need to be taken care of before December 31, 2017. Matt Morgan, Morgan Construction. Morgan asked about the City Council meeting in June and why there could be a problem with the Agenda. Cramer indicated that because of the Association of Idaho Cities meeting in Boise, several the Council members are gone and they’ve asked staff to limit what is put on the June 20 meeting, unless it is necessary. Cramer stated that he will contact City Council and indicate the importance of having this item on the June meeting. Morgan indicated that he appreciates the aggressive schedule that was prepared by Meghan Conrad. Morgan indicated that once it is approved then they can engage into the prior planning before they discovered the lava rock and move forward with the final platting process with spring construction. Radford asked Morgan if his team is on board with the Memorandum of Understanding. Morgan indicated that his attorney Frank Lee has reviewed the MOU. Hally stated that he will do all he can to get this item on the City Council Agenda so there is no further delay. Conrad read the Resolution by Title. A RESOLUTION OF THE BOARD OF COMMISSIONERS OF THE URBAN RENWEAL AGENCY OF IDAHO FALLS, IDAHO, D/B/A IDAHO FALLS REDEVELOPMENT AGENCY, APPROVING THAT CERTAIN MEMORANDUM OF UNDERSTANDING BETWEEN THE IDAHO FALLS REDEVELOPMENT AGENCY AND MCMMJACKSON HOLE JUNCTION, LLC; DIRECTING THE CHAIRMAN OR VICE CHAIRMAN TO EXECUTE AND ATTEST SAID AGREEMENT; AUTHORIZING THE CHAIRMAN OR VICE-CHAIRMAN TO EXECUTE ALL NECESSARY DOCUMENTS REQUIRED TO IMPLEMENT THE AGREEMENT; AUTHORIZING ANY TECHNICAL CHANGES, SUBJECT TO CERTAIN CONDITIONS AND PROVIDING AN EFFECTIVE DATE. Brent Thompson moved to adopt the Resolution Approving Memorandum of Understanding for Funding Eligibility Report and Other Planning Expenses for Jackson Hole Junction, Thomas Hally seconded the motion and it passed unanimously. Adopt Resolution Approving DDA for Bonneville Hotel Project. Cramer stated that this DDA is straight forward and the timelines are put together to move through the tax credits and different financing sources that must be put together to make the project happen. Cramer stated that this process is different than the Kelsch property as they did not do an Exclusive Right to Negotiate with The Housing Company as it did not give The Housing Company what they needed to apply for the funding sources. Cramer stated that they needed to be able to show control of the site and needed to establish the purchase price. Cramer stated that the DDA is a better tool to show those things. Cramer thanked Matt Parks for his work on the DDAs on both Kelsch and Bonneville projects. Cramer indicated that they were missing the reuse appraisal which was received by Cramer at 11:30 today. Cramer stated that the Agency cannot sell the building for less than the reuse appraisal value. Cramer stated that the purchase price that has been discussed is $500,000, and they assumed that the reuse appraisal would come in lower, which it did, it came in at $0.00. Cramer stated that legal counsel has not had a chance to review the appraisal, and Matt Parks has recommended that the Agency approve the DDA, but not sign it until all the details have been completed and the blanks filled in. Cramer stated that this DDA is not looking for proof of loans, and the performance schedule allows for 90 days within the execution of the DDA that The Housing Company provide proof they have applied for the funding, and then 180 days after the application dates they will 5 Idaho Falls Redevelopment Agency May 18, 2017 show whether the credits and loans were awarded. Cramer stated that it stretches the period longer to provide the financing commitments. Cramer stated that the DDA sets the purchase price at $500,000, and as the reuse appraisal is reviewed the purchase price should remain fine. Cramer stated that relocation of current tenants has been discussed with Mr. Lott and the intent is that the tenants will be relocated in time for closing so construction can start immediately after closing. Cramer stated that all the permits will be ready to go on the closing date, so they can collect permit fees and issue the permits. Hally asked if construction would begin 180 days after? Cramer stated that construction would begin after closing which is slated for up to 12 months from the execution of the DDA. Cramer stated that they have talked about being ready to close in the spring, with worst case scenario May and best case scenario would be March/April. Cramer stated that the purchase price is the only financial commitment at this time for the project. Cramer stated that the Agency will buy the building for $1.5 million from Mr. Lott and will sell it to The Housing Company for $500,000.00. Larsen asked who does the review of the appraisal and signs off on it. Cramer indicated that legal counsel and The Housing Company will review the appraisal. Radford asked if Thompson could review it as well. Thompson indicated he could review it, although he has never been involved in a reuse appraisal. Blake Jumper, The Housing Company. Jumper stated that the funding sources are a complicated process and starting June 1, they will have their first funding source application period so it is important that they have site control and an executed DDA. Jumper stated that they are asking for approval on the DDA from the Agency and want to move forward. Jumper stated that they have begun the architectural work. Radford asked if all the different funding packages they are putting together are on track. Jumper indicated that they are all on track. Jumper stated that based on the building being historic it scores well on the funding applications and looks as if they are in a good position to receive funding allocations as they move forward. Matt Parks read the Resolution by Title. A RESOLUTION OF THE BOARD OF COMMISSIONERS OF THE URBAN RENEWAL AGENCY OF IDAHO FALLS, ALSO KNOWN AS THE IDAHO FALLS REDEVELOPMENT AGENCY OF THE CITY OF IDAHO FALLS, IDAHO, APPROVING A DISPOSITION AND DEVELOPMENT AGREEMENT BETWEEN THE URBAN RENEWAL AGENCY OF IDAHO FALLS AND THE HOUSING COMPANY; AND AUTHORIZING THE CHAIR, VICE-CHAIR, OR EXECUTIVE DIRECTOR AND SECRETARY, RESPECTIVELY, TO EXECUTE AND ATTEST SAID AGREEMENT SUBJECT TO CERTAIN CONDITIONS; AUTHORIZING THE EXECUTIVE DIRECTOR AND SECRETARY TO EXECUTE ALL NECESSARY DOCUMENTS REQUIRED TO IMPLEMENT THE AGREEMENT AND TO MAKE ANY NECESSARY TECHNICAL CHANGES TO THE AGREEMENT SUBJECT TO CERTAIN CONDITIONS; AND PROVIDING AN EFFECTIVE DATE. Thomas Hally moved to adopt the Resolution Approving DDA with The Housing Company for the Bonneville Hotel Project, Brent Thompson seconded the motion and it passed unanimously. Discussion of Upcoming Planning Project for South Downtown. Cramer stated that the area south of Broadway between Yellowstone and Capital, and down to Pancheri is an area that has potential for an urban renewal district. Cramer stated that the area needs a lot of improvement. Cramer stated that Idaho Smart Growth and The Greater Idaho Falls Association of Realtors applied for a grant to do a small planning study in this area. Cramer stated that the City of Idaho Falls is going partner with them and provide some in-kind services and figure out what the needs are and what the financing can be like to improve the south Downtown area. Cramer stated that because it has been considered as a possible urban 6 Idaho Falls Redevelopment Agency May 18, 2017 district, the Idaho Smart Growth Team is wondering if there are members of the Board that are interested in being on the steering committee for the plan itself to get familiar with the area and the opportunities within. Thompson asked if this area was part of the old Eagle Rock District that was a renewal district. Cramer indicated that a portion of the area was in the Eagle Rock District. Radford indicated that was under a different statute that pre-dated this, and those old districts do not count against the current Urban Renewal Statute. Matt Parks indicated that he is not familiar with the project or the last project area (Eagle Rock District). Radford indicated that it happened in the 70’s and there could be old newspaper articles related to it. Radford asked Cramer to do some research to find some historical information relating to this area, that includes the Idaho Falls Public Library. Meghan Conrad indicated there should not be an issue, and the area would have to go through a new eligibility study. Conrad indicated that it is ok, because it is not currently within a revenue allocation area, or an urban renewal area. Conrad stated that even though it was once in an area, there is nothing that can prevent it from being considered for a new revenue allocation area under the existing law. Radford clarified that there is no time bare. Conrad agreed with Radford that there is no time bare. Thompson asked what properties are being looked at. Cramer stated that it is more of a boundary rather than specific properties. Cramer stated it will include some residential, the warehouse district on the southern end and the Cliff Street area behind the library. Radford stated that some of the buildings are interesting, including some stone buildings. Larsen asked what the expectation moving forward is. Cramer stated that some things will be obvious like the unpaved roads and the utilities could be inadequate. Cramer stated that they will then look for smaller opportunities to create some public space, improve existing buildings, maybe a facade program to help improve the look and feel of the buildings in the area. Cramer stated there is some interest in the warehouse district to create a mixed use to add some residential and restaurant components. Cramer stated that one of the things the plan would hopefully provide is some of the tools and incentives that would entice the developers to partner and consider the project. Radford asked if anyone can help with this project. Thompson agreed to look into this project. RAI & Legislative Activities. Meghan Conrad stated that the Redevelopment Association of Idaho does have a meeting today that will engage in some planning for its annual membership meeting in June, and will be coordinated with the AIC Meeting. Conrad stated that it has been an inactive Legislative Session with not much to report. Next Regular Meeting: June 15, 2017. Thomas Hally moved to adjourn the meeting, Kirk Larsen seconded the motion and it passed unanimously. Respectfully Submitted: Beckie Thompson 7 Idaho Falls Redevelopment Agency May 18, 2017