Idaho Falls Redevelopment Agency

IDAHO FALLS REDEVELOPMENT AGENC Y P.O. BOX 50220 IDAHO FALLS, ID 83405 June 15, 2017 Regular Meeting Minutes Council Chambers Call to Order: Lee Radford called the meeting to order at 12:00. Members Present: Lee Radford, Brent Thompson, Kirk Larsen, Chris Harvey. Members Absent: Terri Gazdik, Dave Radford, Thomas Halley Also Present: Kerry Beutler; Ryan Armbruster and Meghan Conrad, Legal Counsel (via telephone); Phil Kushlan, Kushlan Associates (via telephone); and interested citizens. Modifications to Agenda: None. Minutes: Brent Thompson moved to approve the minutes of May 18, 2017 with minor modifications requested by Ryan Armbruster (Kushlan and McAlvan spellings), Kirk Larsen seconded the motion and it passed unanimously. Approval of Bills: Lee Radford presented the finance report dated June 15, 2017. The following bills were presented to be paid from the Snake River Allocation Fund: Elam and Burke, $14,371.33 for legal services; Rebecca Thompson, $70.00 for transcription of minutes; Debra Petty, $22.00 for recording Option Agreement with Kent Lott; City of Idaho Falls, $210.21 for publishing RFQ. Brent Thompson moved to approve the Finance Report, Chris Harvey seconded the motion and it passed unanimously. Jackson Hole Junction- Resolution Approving Eligibility Repot. Larsen stated that they can now review the Eligibility Study and approve it, as there are several items on the Eligibility Report that indicate that the project does meet the requirements for the creation of a District. Phil Kushlan stated that he visited the site and compared the statutory issues that would suggest if a parcel of property is eligible for urban renewal activities in Idaho. Kushlan stated that there are 14 different criteria and at least one must be met for the Eligibility Report to be forwarded with a positive recommendation. Kushlan stated that this parcel, after being analyzed met 12 out of the 14 criteria, which is shown on page 15 and 16 of the Eligibility Report. Kushlan indicated that he believes that the Agency may determine that the area is eligible and forward it on to City Council for its concurrence. Kushlan stated that he reviewed whether the assessed value of the area, added to the base values of the other Urban Renewal Districts would exceed the 10% limitation that the Statute imposes on Urban Renewal Agencies, and it is well below, at 2.26% of total City Valuation. Kushlan stated that he also reviewed the Agricultural Exemption and analyzed the value which came out to $4.20/sq. ft., which raised the base value, but only raised the percentage to 2.52%. Kushlan indicated that the project, due to the lack of infrastructure that is provided to the site, and the rock that has been analyzed in the geological report, suggests that the area has special characteristics that allow it to be eligible for urban renewal. Radford stated that 1.8% of the total 2.26% is located within the Snake River Urban Renewal Area, which is set to expire the end of 2018. Radford asked what the most salient characteristic that justifies this project. Kushlan stated that one of the major factors was that the City, through its Comprehensive Plan has intended this area and the surrounding area to be intensive highway related commercial usage. 1 Idaho Falls Redevelopment Agency June 20, 2017 Kushlan stated that if you are going to achieve that vision that the City has, the infrastructure that is available needs to be in the property to make it developable. Kushlan stated that Pioneer Drive is not adequate for intense commercial purposes, anything off Sunnyside has no fire flows, and that will have to be extended, and drainage facilities are non-existent. Kushlan stated that the lava rock that exist in the area makes the installation of the infrastructure difficult and expensive. Kushlan stated that there are conditions existing on the property that limit the ability for the property owner to develop the property without some assistance that is available through this program and Statute. Thompson asked if the base assessed value is the same thing as the base assessed value for calculation of any kind of tax increment financing. Kushlan stated that you look at the whole equation and the base value is the number that is in place when the district is created, and additions over time resulting from valuation increases and private investment goes to the incremental value which then derives the revenue allocation money that the Agency uses to perform activities within the District. Kushlan stated that the base value can be adjusted over time by either tax- exempt property being put back on tax rolls, and removal of an ag exemption. Radford stated that we do not know what the base value will be and it depends on what gets platted and annexed. Beutler stated that the property is completely annexed into the City and zoned for commercial development and the assessment will come according to how it develops and the phasing that takes place. Armbruster stated that the way the Statute reads is that changing a use from ag to another use gets stuck into the base, but if there are any other appreciations of land value after that, it would become part of the incremental value to the Agency. Armbruster stated that there will be one quick bump and then if a lot is platted or subdivided and the assessor goes back out and puts a higher value on the land, the Agency gets the higher value, and the higher value when the land is developed into buildings. Kushlan added that just the fact it is platted doesn’t negate the ag exemption, it must have a change of use from the ag use to a commercial development. Kushlan stated that part of the uncertainty is how quickly the developer will move through the phases of the development. Ryan Greigerson (CFO Morgan Construction). Greigerson stated that they have been in contact with Bonneville County and the plan is to continue the ag exemption through 2017 while they are trying to get a District established and once the District is established they will move forward with the development in the spring. Radford asked what must be included for the District and what must be considered as developed or outside the ag exemption. Armbruster stated that the Urban Renewal Agency has no input into the assessment process. Armbruster stated that assuming the property owner continues to assert the ag exemption then the exemption would continue and the assessor would put a number on it. Armbruster added that when it loses its ag exemption and jumps to commercial development the assessor will come out with a number and the number will be added to the base. Armbruster stated that as they prepare the plan Kushlan will do a more analytical process to put in the plan proposal as to when they expect the parcels to develop and what the values could be, so they can generate a number to decide how to fund the improvements. Thompson asked how many acres the property is and what is the vision for phasing and years to develop. Matt Morgan indicated that there are 42.42 acres of gross property, and approximately 3 acres will be used for Commercial Drive. Morgan stated that they are looking at a 2-phase approach to development. Morgan stated that they will first build Commercial Drive and Phase 1 would include the frontage pads, as well as potentially a hotel in the north-east corner. Morgan stated that over time interest in the project could adjust those phasing schedules. Morgan stated that the time line between phase 1 and 2 could be a 2 Idaho Falls Redevelopment Agency June 20, 2017 12-month period, depending on interest. Morgan stated that the 1st phase, once it gets moving will be a snow ball effect and move quickly. Morgan stated that 50-60% of the net developable land could be developed vertically in 36 months and then it would slow down and then later some infill would happen. Morgan stated that they would like the project developed out completely inside of 5-7 years. Larsen asked if they can move things out of ag and into commercial on a lot by lot basis. Morgan indicated that ag covers approximately 50% of the property and Commercial Drive will cut through the middle of the ag land and render it unable to be farmed. Morgan indicated that if the District can be created they will begin work on Commercial Drive in the Spring of 2018. Armbruster indicated that the Resolution is the formal transmittal of the Eligibility Report to the City Council to be considered for a finding under the Statute that the area qualifies for Urban Renewal Planning and therefore directs the Agency to start the planning process. Armbruster stated that within the Resolution there is a statement that any plan, be considered to be limited in scope and duration, like the Pancheri/Yellowstone Plan, that is a 12-year intense directed plan concerning public improvements. Armbruster stated that this District is a lot like the Pancheri/Yellowstone District where much of the activity will have to be front loaded and may not need the full 20-year term, as well as there is a finite list of eligible activities and improvements that would be built within the project area. Armbruster stated that this will go before the City Council on July 13, 2017. Armbruster stated that if the Council gives an approval, they can begin drafting the Urban Renewal Plan. Armbruster stated that the developer has obtained the agricultural consents which is a requirement under the Statute. Kushlan stated that the current proposed border of the District includes Pioneer Drive, but Sunnyside Rd. is not, and there may be a desire on the part of the City to improve Sunnyside to full urban standards with sidewalks and connect to the bike path to the east. Kushlan suggested extending the boundary south across Sunnyside, and making the south right of way of Sunnyside Rd. the southern boundary of the District. Armbruster read the Resolution by title. A RESOLUTION OF THE BOARD OF COMMISSIONERS OF THE IDAHO FALLS REDEVELOPMENT AGENCY OF IDAHO FALLS, IDAHO, ACCEPTING THAT CERTAIN REPORT ON ELIGIBILITY FROM THE JACKSON HOLE JUNCTION URBAN RENEWAL AREA AND JUSTIFICATION FOR DESIGNATING THE AREA AS APPROPRIATE FOR AN URBAN RENEWAL PROJECT; AUTHORIZING THE CHAIRMAN OR EXECUTIVE DIRECTOR TO TRANSMIT THE REPORT AND THIS RESOLUTION TO THE CITY COUNCIL OF THE CITY OF IDAHO FALLS REQUESITNG ITS CONSIDERATION FOR DESIGNATION OF AN URBAN RENEWAL AREA AND SEEKING FURTHER DIRECTION FROM THE COUNCIL; AND PROVIDING AN EFFECTIVE DATE. Thompson asked about the specific language regarding the duration of the District. Radford indicated that there is no language regarding the duration of the District, and all this Resolution is doing is stating that there is a piece of land that appears to be eligible for an urban renewal district, and asking it to be approved by City Council, after the approval, then the plan will be drafted that will have more specific language. Armbruster stated that it was referenced in section 6 of the Resolution (Page 4). Brent Thompson moved to approve the Resolution as read, Kirk Larsen seconded the motion. Radford called for a vote by roll call: Harvey, yes; Thompson, yes; Larsen, yes; Radford, yes. The motion passed unanimously. 3 Idaho Falls Redevelopment Agency June 20, 2017 Radford informed Matt Morgan that this will now go to City Council and to be prepared for some push back as it does involve some greenfield. Greigerson asked if they will still have the opportunity to discuss the timing as the plan is developed. Radford agreed that they will have more opportunity to discuss details. Morgan asked if they will be required to do a presentation before the City Council and asked if Phil Kushlan will participate. Armbruster stated that they can coordinate with Kushlan’s calendar and make him available for questions the City Council may have. Radford indicated that the City Council meeting will not be a public hearing, but there would be opportunity for questions and comments. Engineering Support – Selection of Engineer for On-Call Services. Radford indicated they put out a Request for Qualifications and received information from 5 different firms. Beutler stated that 2 of the firms are familiar and have been involved in work in the redevelopment projects (HLE and Connect Engineering). Beutler stated that KPFF and ES2 appear to be reasonable choices. Beutler stated that the RFQ was general and KPFF is the only one that specifically referred to the requirement regarding parking garage maintenance. Thompson asked if Connect Engineering (Blake Jolley) was the one doing Deseret Book. Beutler agreed and indicated that Jolley also worked on Spring Hill Suites. Armbruster stated that as the RFQ was developed, it called for proposals from structural engineers and 3 of the 5 respondents are structural engineers, while Connect is more civil engineering and Wade Surveying Group does not have the structural engineering that was anticipated. Armbruster stated that they can find all 3 structural engineers qualified, and direct staff to begin the discussions for a contract with each, and then each firm is on a list and when there is a need for an engineer, the Agency can pick off the list to prepare the scope of work and the task order. Armbruster suggested following up with Connect regarding their structural engineering qualifications/experience. Thompson clarified that the firms qualified to be structural engineers would be ES2, KPFF and HLE. Radford clarified that the Agency can select several firms and then select project by project which one they want to use for each project. Armbruster stated that if they put the 3 firms on a list they would not have to go through another process to select a firm for the next project that comes up. Armbruster stated that the RFQ indicated that the agreement would be for 3 years. Armbruster stated that they can put the 4th firm on if they want, but it would not be anticipated that they would have a structural engineering assignment, as it doesn’t appear that they have that expertise. Thompson stated that 3 would be enough and suggested considering put HLE as #1, and the other two firms be 2 and 3. Armbruster clarified that they do not have to rank the firms 1, 2, 3 as they can choose the firm depending on the scope of the project. Armbruster stated that they will have an agreement with each firm that will set out the conditions of their engagement and then when a project comes up, a task order will be prepared and then you can approach a firm for their availability and cost. Radford suggested having the staff contact and get more detailed proposals for the 4 firms, including HLE, KPFF, ES2, and Connect. Radford indicated that using Connect could be beneficial as they have a lot of local knowledge. Brent Thompson moved to authorize staff and counsel to negotiate an engagement agreement with Harper Leavitt Engineering, KPFF, ES2, and Connect Engineering, and bring the agreement back to the Board for approval, Kirk Larsen seconded the motion and it passed unanimously. 4 Idaho Falls Redevelopment Agency June 20, 2017 Kelsch Project – Update. Radford stated that it appears they were doing testing the past week. Beutler stated that they have not submitted site plans or building permits. Armbruster stated that under the DDA the Oppenheimers have contracted with CSHQA for the actual design of the project, including the parking and plaza. Armbruster stated that the Agency must advise the Oppenheimers that they are fine with the estimate of $270,000.00 that has been given by CSHQA for the work. Armbruster reminded the Agency that in the event the project doesn’t go forward, under the DDA, the Agency has taken responsibility to pay what has been incurred for the public parking and public plaza. Armbruster stated that CSHQA sent a letter to Jeremy Malone dated May 30, and Brad Cramer has reviewed the letter, as well as Armbruster. Armbruster stated that the quoted fees of $270,000.00 seems appropriate. Larsen clarified that once the motion is made the Agency is on the hook for the architectural and engineering costs that are incurred up to the point that the project is cancelled. Kirk Larsen moved to authorized Brad Cramer, or Kerry Beutler to formally advise Jeremy Malone that the Agency agrees with CSHQA moving forward with the estimate of $270,000.00 for engineering and architecture of the public parking structure and public plaza, Chris Harvey seconded the motion and it passed unanimously. Manschreck/Idahoan. Radford indicated that he has been in contact with Tom Manschreck. Radford stated that Idahoan is interested in staying Downtown and Manschreck is interested in building a building for them as a long-term tenant. Radford indicated that the problem is parking, and the suggestion is to have the Agency build a parking structure on the parking lot that is across the street from the City Annex Building. Radford indicated that the parking lot is divided and a portion belongs to the Roger’s Hotel Building. Radford stated that in looking at the cash flow, they could afford to build a 2-level parking facility on the parking lot. Radford stated that they would only build the parking structure if Manschreck would build the building for Idahoan as a long-term tenant (20 year). Radford indicated that the cost would be approximately $2 million to build a second level on the current parking lot. Radford stated that the parking would not be dedicated to the Idahoan, it would go into a parking management and then could be leased. Radford stated that it would be the hook to keep Idahoan Downtown as they will not stay Downtown if they don’t have some kind of parking facility. Larsen asked if the Bonneville has any claim to the parking. Radford indicated that the Bonneville only has small parking to the west of the Bonneville. Larsen asked if the surface parking would be leased parking. Radford indicated that they would leave it up to the parking management if they wanted to lease spaces for certain time periods and the lease revenues come back to the manager for maintenance. Armbruster stated that the parking management would have to be worked out. Larsen asked if the same parking manager would operate the Kelsch parking as well. Radford indicated that they need to work out a unified parking management for the Downtown area. Thompson agreed that there is a need that has been recognized for a parking solution Downtown. Radford indicated that they have been watching the cash flow and how they allocate the remaining money for the District in the next 18 months. Radford stated that if they do this project there will be no money left to help on Constitution Way. Radford stated that the Agency cannot manage the construction of the parking garage in the time frame that must be met, and there would have to be a deal with Manschreck that the Agency would provide the funds if he built the Idahoan and the parking structure and then turned the parking structure over to the Agency. Armbruster indicated that there are a couple ways to work it out. Armbruster stated that they could potentially create a condominium, then they can enter into a purchase and sale agreement that says upon completion of the parking facility, the Agency will pay $ to acquire an interest and then give the interest to the City. 5 Idaho Falls Redevelopment Agency June 20, 2017 Radford indicated that due to time constraints the parking structure would need to be built contemporaneously with the building. Thompson stated that the parking garage has more of an economic benefit for Downtown, rather than cosmetic rebuilding of Constitution Way. RAI & Legislative Activities. Armbruster stated that RAI is sponsoring two sessions at the AIC Convention, including Urban Renewal 101 and Advanced Urban Renewal. Next Regular Meeting: July 20, 2017. Brent Thompson moved to adjourn the meeting, Kirk Larsen seconded the motion and it passed unanimously. Respectfully Submitted: Beckie Thompson 6 Idaho Falls Redevelopment Agency June 20, 2017