City Council Worksession

South St. Paul WORKSESSION AGENDA SSP City Hall 125 3rd Avenue North Training room Monday, October 9, 2023 7:00 pm AGENDA: 1. Bromley Street Traffic Concern (no attachment) 2. Public Safety Aid 3. Local Affordable Housing Aid 4. Second Quarter 2023 Financial Report 5. Armour Gate Site – Development Interest 6. CLOSED SESSION Pursuant to Minnesota Statutes §13D.05, Subd. 3(c) to consider offers for the purchase of real property at Hardman Avenue South and Armour Avenue (no attachment) 7. Council Comments & Questions A CITY COUNCIL WORKSESSION AGENDA REPORT DATE: October 9, 2023 2 DEPARTMENT: ECONOMIC & COMMUNITY DEVELOPMENT Prepared by: Ryan Garcia, City Administrator ADMINISTRATOR: ____________ AGENDA ITEM: Public Safety Aid DESIRED OUTCOMES: • Discuss staff recommendations related to the expenditure of one-time Public Safety Aid as allocated in the 2023 Legislative Session. • Accept or modify recommendations based on discussion and feedback. OVERVIEW: The 2023 omnibus tax bill included a total of $210 million in one-time public safety aid that will be distributed on Dec. 26, 2023, to cities across the state. Unlike local government aid, this aid cannot be used for general purposes, but instead must be used to “provide public safety.” South St. Paul’s certified allocation of Public Safety Aid is $907,807. There is no application process for these funds; distributions will be made in late-December. The authorizing language in the law provides categories of eligible spending, but the list is not exhaustive. It is also important to note that while legislators expected most of these funds to be used for police and fire expenses, it was intentionally written in a broad way that would allow for other uses as well. The allowable uses named in the new law include: • Community violence prevention. • Community intervention programs. • Community engagement. • Mental health crisis responses. • Victim services. • Training programs. • First responder wellness. • Equipment related to fire, rescue, and emergency services. • Other personnel or equipment costs. The law also specifically calls out certain uses that are not eligible. Ineligible uses include: • Employer contribution to the Public Employees Retirement Association Police and Fire Plan if the local unit received police state aid in 2022. • Any costs associated with alleged wrongdoing or misconduct. • Purchase of an armored or tactical vehicle or substantially similar vehicle. • Purchase of tear gas, chemical munitions, or substantially similar items. • Costs of construction, reconstruction, remodeling, expansion, or improvement of a police station, including related facilities. “Related facilities” includes access roads, lighting, sidewalks, and utility components on or adjacent to the property on which the police station is located that are necessary for access to and use of the building. Working collaboratively, Staff has generated the enclosed listing of qualified expenditures towards which we propose dedicating Public Safety Aid. Broadly speaking, these proposed expenditures help to modernize and supplement the operational capacity of the SSP Police Department and South Metro Fire Department. Staff would point out that for South Metro Fire, those expenditures specific to Station 2 are proposed to be supported entirely by SSP’s Public Safety Aid, while those expenditures that support South Metro’s operations “globally” are proposed to be “cost-shared” with West St. Paul, utilizing a portion of their allocation of Public Safety Aid. Priority (1 Project/Item Police or Fire = Highest, Total Cost (Est.) Timeline 4 = lowest) Mobile Pro Systems Commander Camera Trailer System Police 1 80,000 4-6 weeks from order Mobile Pro Systems Commander Camera Trailer System Police 1 80,000 4-6 weeks from order Setina Trunk Organizer System (patrols squads) Police 4 35,000 4-6 weeks from order Command Vehicle (Sprinter van platform) Police 2 160,000 6-9 months from order Unmarked Vehicle (support additional staff 2024/25) Police 3 50,000 3-6 months from order Education Reimbursement Fund (2024-2027 FT Staff) Police 2 80,000 N/A Education Reimbursement Fund (2024-2027 CSO) Police 2 45,000 N/A Staff Development (Motivational / Educational Speakers) Police 2 30,000 Annually 2024-2026 Full Replacement of squad radar / lidar units Police 3 40,000 3-6 months from order Station 2 Equipment (6) Gear Lockers Fire 2 $2,124.00 4-6 weeks from order Car Wash, Decon, Backboard Storage Fire 2 $351.00 4-6 weeks from order 8' Shelf Fire 3 $426.25 Immediately 4' Shelf Fire 3 $159.80 Immediately Work Bench & Wall Cabinets Fire 3 $2,182.00 2 weeks Station 2 Flammable Liquids Cabinet Fire 3 $1,160.00 4-6 weeks from order CAD Monitor Fire 3 $900.00 Immediately Hose Reel Removal and Garden Hose Fire 3 $111.96 2 weeks Workbench Airline Fire 3 $125.00 2 weeks Video Conferencing Fire 1 $4,000.00 2 weeks Hose Rack Fire 3 $2,294.00 4-6 weeks from order Items to be cost shared with WSP Fire EZ-IO Drill Driver #9058 Fire 2 $1,794.00 2 weeks EZ-IO Hard sided holder #9074 Fire 2 $113.70 2 weeks Suction Device Fire 2 $3,787.20 2 weeks Laryngoscope Handle and Blades Fire 2 $450.00 2 weeks IGel and Laryngoscope Bag Fire 2 $1,500.00 2 weeks IV Set-up Holder Bag Fire 2 $1,500.00 2 weeks CPAP Connector 6” whip Fire 2 $237.00 2 weeks Sampson Strap and carrying bag(10) Fire 3 $1,500.00 2 weeks Airway Bag Fire 3 $3,750.00 4-6 weeks from order Medical Bag Fire 3 $3,100.00 4-6 weeks from order Welch Allyn Vitals Monitors Fire 1 $8,000.00 4-6 weeks from order Lucas Device Fire 4 $40,000.00 4-6 weeks from order Nymbl Fall Prev App $4k, half split with Dakota County Fire 4 $2,000 Immediately Bag CO Detectors(6) Fire 2 $1,500 4-6 weeks from order XShear Heavy Duty Trauma Shears(31) Fire 3 $1,000 2 weeks Airtags Fire 2 $500 Immediately Ballistic Vest Pouche Supplies(Tourniquets, Chest Seals, Shears) Fire 2 $3,000 4-6 weeks from order Active Shooter Kits(5) Fire 1 $750 4-6 weeks from order SCBA RIT Equipment for Ladders Fire 1 $14,839.10 4-6 weeks from order RIT Bags, rope and equipment Fire 1 $5,190 4-6 weeks from order Hose Bed Prop and spare hose tray storage Fire 3 $7,500 4-6 weeks from order LUNAR TICs for Ladder 1 and 2 rear seats(5) Fire 1 $10,424.75 4-6 weeks from order PFD Replacement Fire 1 $6,183.00 4-6 weeks from order Customized Tent Fire 4 $745.00 4-6 weeks from order Encrypt Radios Fire 3 $59,000.00 Depends on scheduleing Boat Bow Door Retrofit Fire 2 $7,137.00 Completed over the winter Boat Pump Replacement Fire 2 $14,629.00 Completed over the winter Boat Nav Arch Actuator Replacement Fire 2 $1,545.00 Completed over the winter Ballistic Vests Fire 1 $35,000.00 Staff will be prepared to provide as much detail on the proposed expenditures as Council might request at the Worksession. FINANCIAL CONSIDERATIONS: Public Safety Aid is a one-time allocation for investments in public safety found in the 2023 omnibus tax bill. As such, Staff suggests against directing much – if any – of this funding towards ongoing operations in either department. There are no statutory reporting requirements, although any expenditures must follow our typical purchasing processes and all are subject to review and audit. There is not a “spend-by” date requirement in the law. However, funds must be used to provide public safety and cannot act as an ongoing reserve. A CITY COUNCIL WORKSESSION AGENDA REPORT DATE: October 9, 2023 3 DEPARTMENT: ECONOMIC & COMMUNITY DEVELOPMENT Prepared by: Ryan Garcia, City Administrator ADMINISTRATOR: ____________ AGENDA ITEM: Local Affordable Housing Aid DESIRED OUTCOMES: • Introduce Council to the new (for 2024) Local Affordable Housing Aid program. • Discuss any priority programs or policies that should be supported by the Local Affordable Housing Aid program. OVERVIEW: Local Affordable Housing Aid helps metropolitan local governments like South St. Paul to develop and preserve affordable housing within their jurisdictions, to keep families from losing housing and to help those experiencing homelessness find housing. Funded through a metropolitan sales tax (which went into effect October 1, 2023), Local Affordable Housing Aid will begin distributions to Cities and Counties in 2024. The precise amount of funding that South St. Paul will receive for 2024 (and beyond) will not be known until sometime after July 1, 2024, as it is based entirely upon sales tax received in the period between October 1, 2023, and June 30, 2024, but preliminary estimates indicate an aid payment of approximately $250,000, increasing to almost $400,000 in 2025 and beyond. Local Affordable Housing Aid are required to be spent on a “qualifying project”, which includes: • Emergency rental assistance for households earning less than 80 percent of area median income as determined by the United States Department of Housing and Urban Development • Financial support to nonprofit affordable housing providers in their mission to provide safe, dignified, affordable and supportive housing; and • Projects designed for the purpose of construction, acquisition, rehabilitation, demolition or removal of structures, construction financing, permanent financing, interest rate reduction, refinancing, and gap financing of housing to provide affordable housing to households that have incomes which do not exceed: o For homeownership projects, 115% of the greater of state or area median income as determined by the United States Department of Housing and Urban Development o For rental housing projects, 80% of the greater of state or area median income as determined by the United States Department of Housing and Urban Development • Housing developed or rehabilitated with funds under this section must be affordable to the local work force. The 2024 Local Affordable Housing Aid is expected to be distributed around July 20, 2024. While it is still admittedly early, Staff would like to gain a sense of how the EDA/Council would envision directing these funds, and offers the following for consideration/discussion:  • The “Guild Houses” on 2nd Street North (across from City Hall) are expected to be vacated in December 2024. Staff has had preliminary discussion with Dakota County CDA and Twin Cities Habitat for Humanity about the possibility of Habitat participating in the rehabilitation, renovation, and resale of these homes for income-qualified homeownership. Currently, Dakota County’s total estimated market value for this property is $827,700, and in discussions with Guild we anticipate that they would like to achieve something close to market value for the property. At the 30,000 foot level, Habitat anticipates there to be a “funding gap” to make a project viable in their program. The Local Affordable Housing Aid could be helpful to shrink or eliminate that gap. • While the project has been in hibernation for nearly a year, the Vaquero (Phase II of the Drover Apartments) project’s most recent pro forma indicates a gap of approximately $4,300,000 in sources that challenge the $42,000,000 project’s viability. Working with Ehlers, Staff has identified the potential for the Vaquero TIF to support approximately $3,800,000 still leaving a gap of approximately $500,000. The Vaquero TIF, as a housing TIF, identifies that up to 20% of the units will be available for households earning no more than 50% of the Areawide Median Income (Household earnings of up to $62,100 for a family of 4), so the project would be a “qualifying project” for Local Affordable Housing Aid. • Just this fall, the EDA is launching a home improvement loan program, targeted at households earning up to 120% of the Areawide Median Income (up to $149,050 for a family of 4). We could essentially duplicate the new home improvement loan program and dedicate the Local Affordable Housing Aid to fund a virtually identical program, the only distinction being that the income limit would be set to 115% AMI (up to $142,850 for a family of 4). • Local Affordable Housing Aid could be an option to help fund acquisition costs in the Hardman Triangle or other potential redevelopment areas. In order to use these funds for acquisition, any property acquired with Local Affordable Housing Aid would need to be redeveloped with housing that would meet the income limits (115% AMI for ownership projects, 80% AMI for rental housing projects). • Dakota County CDA has floated the idea of administering Local Affordable Housing Aid on behalf of municipalities in the County, through their own existing Housing Trust Fund. Currently, Dakota County CDA administers various programs “countywide” through an annual Community Development Block Grant (CDBG) from the federal government, so there is something of a model for this type of collaboration in place. Obviously, CDA has substantially more organizational infrastructure in place than most cities (including SSP) and we’d likely be relieved of most administrative burden related to these funds. FINANCIAL CONSIDERATIONS: Beginning in 2025, aid recipients must submit a report annually, no later than December 1 of each year, to the Minnesota Housing Finance Agency. The report must include documentation of the location of any unspent funds and of qualifying projects completed or planned with the funds. A COUNCIL WORKSESSION REPORT DATE: OCTOBER 9, 2023 4 DEPARTMENT: FINANCE Prepared by: Clara Hilger ADMINISTRATOR: RG AGENDA ITEM: 2023 Second Quarter Financial Report DESIRED MEETING OUTCOMES: Discussion on the 2023 Second Quarter Financial Report OVERVIEW: 2023 Second Quarter Financial Report The second quarter of 2023 is complete and financial results are available. The Finance Director prepared the attached second quarter financial report for Council review. The following items are important to note when reviewing the report: • The Benchmark is roughly 50% and is based on a fluid calendar year of operations. • Many of the variances result from seasonality and not all financial transactions occur evenly throughout the year. Some are one time or periodic activities that do not occur in each quarter. • Investment income is recorded and allocated to the funds on a semi-annual basis. • Large revenue sources (i.e. tax settlements and LGA) are received in May, July and December, which underscores the importance of a strong fund balance as a tool to avoid General Fund borrowing for operations. Finance has not noted any worrisome variances in the operating funds for the third quarter. The variances that have occurred are noted in the attached report. There are no proposed budget adjustments for the second quarter. Status of 2022 Financial Audit Findings 2022-001 Wait list at the Senior Housing buildings – City staff has been monitoring the retention and review of the wait list for the Senior Housing Buildings. Since the management of the buildings was taken over by the City in September 2022, the wait list was added to the tenant software and is functioning properly. We do not anticipate that this comment will repeat for 2023. 2022-002 Contract Performance and Payment Bonds – City staff will monitor all contracts in excess of $175,000 for the receipt of the required performance and payment bonds. NEXT STEP: The second quarter financial report will be placed on consent for formal council action at the October 16, 2023 meeting. SOURCE OF FUNDS: N/A  Benchmark 2023 2023 Actual thru 50% Description Original Amended June Percent Budget Budget 2023 of Budget GENERAL OPERATING FUND GENERAL FUND - REVENUES Taxes 12,948,118.00 12,936,168.00 3,092,105.61 23.90% A Fees 1,821,335.00 1,821,335.00 927,294.84 50.91% B Intergovernmental 2,354,888.00 2,394,888.00 254,982.12 10.65% C Charges for Services 1,708,457.00 1,708,457.00 900,807.88 52.73% Other Revenues 57,000.00 57,000.00 117,743.31 206.57% D Transfers In/Fund Balance 190,000.00 190,000.00 95,010.00 50.01% Total Revenues 19,079,798.00 19,107,848.00 5,387,943.76 28.20% GENERAL FUND - EXPENDITURES General Government Mayor & Council 171,531.00 171,531.00 78,304.44 45.65% Administration 571,179.00 570,219.00 251,654.68 44.13% Human Resources 263,617.00 272,627.00 124,857.45 45.80% City Attorney 90,000.00 90,000.00 59,572.33 66.19% E City Attorney - Criminal 170,000.00 170,000.00 62,194.29 36.58% F City Clerk 247,761.00 253,508.00 119,019.77 46.95% Information Technology 763,266.00 763,565.00 321,363.22 42.09% Recycling 28,596.00 28,596.00 1,867.77 6.53% G Finance 469,651.00 469,976.00 222,066.73 47.25% Total General Government 2,775,601.00 2,790,022.00 1,240,900.68 44.48% Public Safety Police 7,532,734.00 7,711,216.00 3,383,046.55 43.87% Fire 2,751,031.00 544,043.00 15,168.00 2.79% H Total Public Safety 10,283,765.00 8,255,259.00 3,398,214.55 41.16% Public Works Engineering 574,997.00 674,956.00 284,126.66 42.10% Streets, Alley's and Blvd's 2,082,982.00 2,022,439.00 909,096.68 44.95% Buildings 273,246.00 271,535.00 128,008.18 47.14% Parks Facilities and Maintenance 1,269,114.00 1,294,632.00 532,766.66 41.15% Total Public Works 4,200,339.00 4,263,562.00 1,853,998.18 43.48% Community Development Development Services 539,948.00 550,452.00 258,686.18 47.00% Code Enforcement 180,056.00 171,310.00 67,641.46 39.48% Total Community Development 720,004.00 721,762.00 326,327.64 45.21% Leisure Services Parks Administration 304,913.00 287,671.00 117,988.04 41.01% Splash Pool 74,606.00 75,318.00 29,827.55 39.60% I Northview Pool 98,906.00 99,618.00 24,191.61 24.28% I Recreation Programs 271,569.00 244,425.00 98,828.65 40.43% Community Affairs 129,712.00 129,901.00 61,354.15 47.23% Total Leisure Services 879,706.00 836,933.00 332,190.00 39.69% Nondepartmental Contingencies 220,383.00 33,322.00 0.00 0.00% Transfers out 0.00 2,206,988.00 0.00 0.00% P Total Nondepartmental 220,383.00 2,240,310.00 0.00 0.00% Total Expenditures 19,079,798.00 19,107,848.00 7,151,631.05 37.43% Revenues Over (Under) Expenditures 0.00 0.00 (1,763,687.29)  Benchmark 2023 2023 Actual thru 50% Description Original Amended June Percent Budget Budget 2023 of Budget OTHER OPERATING FUNDS LIBRARY FUND Revenues 816,362.00 828,312.00 407,949.63 49.25% A Expenditures 816,362.00 828,312.00 402,798.24 48.63% Revenues Over (Under) Expenditures 0.00 0.00 5,151.39 DOUG WOOG ARENA Revenues 1,079,500.00 1,079,500.00 663,118.83 61.43% Expenditures 1,045,845.00 1,062,077.00 558,547.71 52.59% Revenues Over (Under) Expenditures 33,655.00 17,423.00 104,571.12 AIRPORT OPERATING FUND Revenues 1,456,142.00 1,456,142.00 839,449.22 57.65% J Expenditures 1,501,275.00 1,530,602.00 553,742.10 36.18% Revenues Over (Under) Expenditures (45,133.00) (74,460.00) 285,707.12 STORM WATER UTILITY FUND Operating Revenues and Grants 725,920.00 725,920.00 231,647.94 31.91% K Expenditures - Operating 600,724.00 600,724.00 244,359.74 40.68% Transfers - Capital 67,300.00 67,300.00 41,304.00 61.37% L Revenues Over (Under) Expenditures 57,896.00 57,896.00 (54,015.80) STREET LIGHT UTILITY FUND Revenues 349,840.00 349,840.00 118,870.54 33.98% K Expenditures 272,952.00 272,952.00 103,917.23 38.07% Revenues Over (Under) Expenditures 76,888.00 76,888.00 14,953.31 WATER AND SEWER UTILITY FUND Revenues Administration 31,000.00 31,000.00 64,756.94 208.89% D Water Utility 10,286,775.00 10,286,775.00 838,611.23 8.15% K, Q Sewer Utility 4,629,750.00 4,629,750.00 1,517,963.92 32.79% K Total Revenues 14,947,525.00 14,947,525.00 2,421,332.09 16.20% Expenditures Adminsitration 524,389.00 512,811.00 239,863.72 46.77% Water Utility 1,088,147.00 1,097,559.00 547,862.27 49.92% Sewer Utility 4,015,672.00 4,024,878.00 2,247,842.33 55.85% M Total Expenditures 5,628,208.00 5,635,248.00 3,035,568.32 53.87% Transfers Water Utility 110,500.00 110,500.00 73,102.00 66.16% L Sewer Utility 174,500.00 174,500.00 122,952.00 70.46% L Total Transfers 285,000.00 285,000.00 196,054.00 68.79% Net Income (Loss) 9,034,317.00 9,027,277.00 (810,290.23) CENTRAL GARAGE - INTERNAL SERVICE FUND Revenues 1,664,188.00 1,664,188.00 924,917.34 55.58% Expenditures 1,489,151.00 1,498,434.00 681,372.22 45.47% Net Income (Loss) 175,037.00 165,754.00 243,545.12  Benchmark 2023 2023 Actual thru 50% Description Original Amended June Percent Budget Budget 2023 of Budget OTHER OPERATING FUNDS ECONOMIC DEVELOPMENT AUTHORITY Revenues 357,081.00 357,081.00 122,888.39 34.41% A Expenditures 357,081.00 357,081.00 72,978.23 20.44% Revenues Over (Under) Expenditures 0.00 0.00 49,910.16 EDA - HOUSING (HRA LEVY) Revenues 1,088,227.00 1,088,227.00 444,157.52 40.81% A Expenditures 1,088,227.00 1,088,227.00 361,240.08 33.20% Revenues Over (Under) Expenditures 0.00 0.00 82,917.44 HRA - PUBLIC HOUSING Revenues 2,084,500.00 2,084,500.00 475,042.39 22.79% N Operating Expenses 1,863,000.00 1,863,000.00 959,537.31 51.50% Capital Expenses 0.00 0.00 67,824.36 0.00% O Net Income (Loss) 221,500.00 221,500.00 (552,319.28) Tickmark Explanations for Budget VS Actual Variances A Taxes will be received in June/July and December/January B 2nd quarter Franchise fees payment is received in July C LGA is received in July & December D Interest earnings are posted semi-annually and other minor revenues are unpredictable E Legal service invoices for four months only F Legal service-creiminal invoices for four months only G Compost site costs occur May through October H Fire Department invoices to be paid from ARPA funds in 2023 I Pools are only open June through August J Certain revenues come in at the start of the year at the Airport (land leases) K Utility revenues are based on service delivery, bills issued in Jan, Feb, Mar of 2023 are accrued back to the 2022 books as they are for services delivered in 2022. This is an annual occurrence. L Transfer for 2019A bond payment in February M Sanitary Sewer has 7 months of MCES charges N Activity from the tenant software has not been updated for 2023 O Capital expenses for Public Housing is not budgeted P Transfer of funds that would have paid Fire invoices to Capital Programs Fund recorded in July Q Budgeted revenues included State bond money for the water treatment plant A CITY COUNCIL WORKSESSION AGENDA REPORT DATE: October 9, 2023 5 DEPARTMENT: ECONOMIC & COMMUNITY DEVELOPMENT Prepared by: Ryan Garcia, EDA Executive Director ADMINISTRATOR: ____________ AGENDA ITEM: Armour Gates Site – Development Interest DESIRED OUTCOMES: • Provide an update on development interest in the site, and determine if there is consensus to work towards facilitating a preferred development proposal. OVERVIEW: The EDA has consistently received preliminary interest in development at the vacant site located at Armour Avenue and Hardman Avenue. No proposal has advanced much past the preliminary concept planning stage for a variety of reasons. Recently, Staff was directed to re-engage the development community to identify viable development scenarios for the site. Staff has identified three distinct development opportunities for the site, and is requesting discussion on this topic at Monday’s worksession. ABOUT THE DEVELOPMENT SITE: The property was acquired by the Housing and Redevelopment Authority of South St. Paul (HRA) over 25 years ago. Historically, the property was a part of the much larger Armour complex which fronted the Mississippi River, although with the exception of the two entry monuments which still stand today, no structures are known to have ever stood on the property. The property was generally used for surface parking and outdoor storage during the Armour years, and has remained vacant and zoned “Industrial” (currently “I-1, Light Industrial”) for the entire time that the HRA/EDA have owned it. From the early 1990s through the early 2000s, a number of actions created the layout of the development parcel as we see it today, most notably: • The creation of a new public road (Armour Avenue) on an alignment slightly north of the previous private Armour Avenue; • The preservation, in place, of two masonry and stone gate monuments to mark the historic gateway to the Armour plant; and • The realignment of Hardman Avenue from an alignment that ran along the eastern edge of the FOK/Sportsman’s Guide building to the current alignment to the east. (A rail spur, constructed in the early 1970s for the FOK warehouse, is still present and active in the western portion of this alignment). Upon its acquisition, the HRA conducted significant predevelopment due diligence on the site, including Phase I and Phase II environmental assessments and limited environmental mitigation activities. From 2006 – 2009, the HRA was actively negotiating a development project with a private developer (“Armourgate Properties”), with a site plan approved in 2006 for an approximately 49,000 SF single-story office/warehouse building occupying most of the Hardman Avenue frontage. As a part of the 2006 approval, the City also approved a minor subdivision to create a standalone, 0.11 acre (just under 5,000 SF) parcel around the Gatehouse structures. The primary parcel measures just over 3.75 acres in size. While there is no record of formal City consideration or approval of a revised site plan, records of HRA meetings from 2007 – 2011 indicate that this development concept was flawed and/or the developer lacked the sophistication or capacity to construct the project as approved. Within a year of City approval, the site plan went through (several iterations of) dramatic changes. Ultimately, the proposed building was downsized pretty significantly (almost by ½). In 2009, the property was sold to Armourgate Properties for the purpose of constructing a 25,000 SF office-warehouse building. The developer was given until December 31, 2010 to secure a tenant/buyer and commence construction. Also in 2009, the developer commenced with site grading and the establishment of two stormwater management areas (at the northeast corner and southern tip), and – importantly – the HRA assisted with geotechnical soil correction, generally to accommodate an approximately 25,000 square foot building footprint along the Hardman Avenue frontage. All was not well, however, and in late 2010 Armourgate notified the HRA that they declared themselves in default of the Development Agreement and wanted to convey the property back to the HRA. Re-conveyance occurred in 2011, and the site has had fleeting interest in the years since then. Today, we are left with a site that was prepared for a building that would not meet today’s floor area ratio (FAR) standards (approximately 40,000 SF would be required without a variance) and is particularly difficult to develop due to various site constraints. In this way, the site is not really “shovel-ready”, with the following issues representing additional work needed to maximize the site: • Any building(s) constructed on site will most likely need to install a sub-slab vapor mitigation system, per MPCA review and requirements, or at least conduct additional testing to “test out” of vapor mitigation requirements; • If the building design does not follow the previously proposed alignment and footprint along Hardman Avenue, it is likely that additional geotechnical soil correction will be needed; • Overhead Utility lines cross the site’s southern and western portions; and • The gate monuments located along the Armour Avenue frontage present a practical challenge to effectively meeting the City’s required Floor Area Ratio (FAR) standard of 0.2, building placement/orientation, parking/loading, and site circulation. ABOUT THE GATEHOUSE STRUCTURES: The 1918 brick and limestone towers mark what once served as the entry point to the Armour & Co. Meat Packing Campus and are understandably important reminders of the City’s history and legacy. However, the structures themselves are not significantly utilized by the community at large, or even the business park community. They are over 100 years old, and are showing signs of deterioration. Our previous discussions reveal an acknowledgement that *something* should be done to resolve this challenge, but unfortunately we have struggled to formulate a definitive consensus as to whether preservation, relocation, or demolition of the structures is the best option, on balance. Any option – including doing nothing – introduces monetary cost and stirs strong emotions among the community and Council. Nonetheless, based on our most recent discussions about the property Council has indicated a desire to identify a range of development options for the site and present those for consideration. The worksession meeting is intended Staff has received budget-level estimates for the various options that have been discussed with respect to the Armour Gate Structures: • Relocation and placement upon new footings: $150,000 - $175,000 if within SSP o Does not include any repair, replacement, or restoration of gate structures themselves o Assumes relocation within SSP, and no rail crossings or significant grade changes (so would need to be “down the hill”) • Restoration of both gate structures: $175,000 - $225,000 • Demolition of both gate structures: $20,000 - $25,000 o Does not account for any hazardous building materials that may be present (Asbestos, Lead Based Paint) Although there have been periodic flurries of community chatter and correspondence regarding preservation since early 2021, no party to date has stepped forward with a feasible or sustainable preservation solution. As the Council is aware, Mark Westphal, a SSP History Teacher and a group of his students in the South St. Paul School District launched a campaign this past school year to save the Armour Gates and ostensibly to (compel the City to) develop the property as a “multi-purpose commemorative park”. It should be pointed out that the City’s Parks and Recreation Master Plan does not identify this location – or any location generally within this section of the City, as desirable or appropriate for a new recreation/park amenity of significant scale or activity level. Frankly, placing an active outdoor recreation area targeted at youth deep into the heart of a 600-acre industrial district with heavy truck traffic and myriad other contextual challenges present at this location given the surrounding uses, does not resonate with the City’s parks and recreation system goals and priorities as identified through the Parks Master Plan (currently being updated) and Comprehensive Plan (Adopted in 2021). ABOUT THE CURRENT PRIVATE DEVELOPMENT INTEREST: Over the past several years, the EDA has fielded preliminary interest for light industrial development at the site from a number of different developers/businesses. Due to the site’s many challenges, including a perceived lack of consensus among the Council and a sense that there is at least some public sentiment that a light industrial development would be a net negative to the community if the gatehouse structures were compromised, development interest has never really advanced much beyond the “tire-kicking” stage. Following the Council’s July 2023 discussion at which it was decided not to extend a temporary lease of the property by Q3 Contracting, Staff was directed to re-engage the development community about light industrial development interest. Currently, Staff is discussing the site with three relatively distinct prospective developers: • Cobra Holdings has submitted a Letter of Intent for the purchase and development of the site for an owner-occupied office/warehouse facility to accommodate the growth of Cobra Transportation, currently located at 235 Hardman Avenue South. Their concept would retain the gatehouse structures as a City parcel/City responsibility, however it  relies upon the relocation of the southernmost gatehouse structure within the site, such that the two structures would be parallel to (rather than perpendicular to) Armour Avenue. • Interstate Development has expressed an interest in the development of two relatively small office-warehouse structures (totaling 16,000 square feet), each with about 1 acre of paved exterior storage area. Their concept (“WorksSpace”) is to either retain the gatehouse structures as a City parcel/City responsibility, or to demolish and reuse the materials of the gatehouse structures within the development site at the developer’s cost. Interstate has communicated that they are ready to present the EDA with a purchase and development agreement if their concept is desirable. • Langer Development envisions the development of a multi-unit office-warehouse building (38,000 – 45,000 square feet). Their concept involves the preservation of the northernmost gatehouse structure as a City parcel/City responsibility, and the deconstruction and reuse of the material of the southernmost structure within the development site as a developer cost. DISCUSSION: The vacant industrial property at Hardman Avenue South and Armour Avenue continues to draw development interest. Staff understands and appreciates the need to consider the public’s sensitivity and sentiment towards the Armour Gatehouse structures, which ranges from “tear them down” to “retain them and develop an elaborate public park around them” and everything in between. Mr. Westphal’s concept is creative and reflective of the City’s heritage, but in the context of the City’s many other infrastructure needs and in the site’s location, it is difficult to square the significant investment required to make such a facility a reality (let alone to operate/maintain). Cobra’s concept proposes a modification to the orientation of the gatehouse structures which may not be viewed favorably in a more “purist” interpretation of their history but would seem to balance economic development with preservation at least at face value. Interstate’s concept proposes as an option retaining the gatehouses “as-is”, however it does result in a development that fails to meet the City’s FAR standards by a significant margin. Langer’s concept results in the preservation of one structure in place, integrates the materials from the removed structure into the development, and proposes the largest and theoretically highest value structure from a property tax base standpoint. There are obviously a dynamic and nuanced set of development options for this site, some more advanced than others. Each of these brings a certain “cost-benefit” that goes beyond dollars and cents, and requires a holistic balance of the City’s (and EDA’s) sometimes competing goals. Staff feels compelled to remind the community and the Council that beginning in the late 1980s, a concerted and consistent effort has been made by multiple generations of businesses, stakeholders, and elected officials to transform the derelict, contaminated site left abandoned by an industry that left the community in the 60s and 70s into a diverse, productive environment for small and medium sized businesses. At the same time, the community has invested heavily in providing recreation opportunities and opportunities for historic reflection in those areas most accessible and visible to the public. Much thought and public discussion has gone into where and why to locate different land uses in our community, and with this extensive history there should be no question that a light industrial land use is appropriate for what is today the one and only vacant, developable parcel at the site of the former Stockyards and Armour Campus. FINANCIAL CONSIDERATIONS: The property is currently exempt of property taxes, since it is EDA-owned. Staff offers the following comparative analysis of the development options discussed in this memo: Cobra Concept Cobra’s proposed development concept appears to be a relatively common development approach to what is seen throughout the City’s I-1 Light Industrial zoning district (north of 494/east of Concord). Based upon similar developments in SSP, Staff estimates a total market value for the site of between $2,300,000 - $2,900,000. At this range, total property tax would be estimated at between $75,000 - $95,000 annually using 2023 rates. WorksSpace Concept Based upon similar sites in SSP with small (less than 5,000 SF) buildings but an acre or more of exterior area, Staff estimates a total market value for the site of between $650,000 - $750,000, or a property tax bill (in 2023 figures) of between $18,000 – $22,000. Langer Concept When analyzing the “Langer” concept, Staff estimates a total market value for the site of between $3,375,000 - $4,800,000. At this range, total property tax would be estimated at between $110,000 - $160,000 annually. Site/Orientation Map Cobra Concept “Stockyards Park” Concept WorksSpace Concept WorksSpace Concept Langer Concept