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2000-08-08C! AGENDA CITY OF MOUND HOUSING AND REDEVELOPMENT AUTHORITY AUGUST 8, 2000 6:00 P.M. 6:00 1. 2. 3. EXECUTIVE DIRECTOR'S REPORT APPROVE MINUTES OF JULY 25, 2000, HRA MEETING. BILL BEARD OF BEARD GROUP, INC ON DOWNTOWN REDEVELOPMENT 4. DISCUSSION OF OFFICE OF STATE AUDITOR LE1"fER REGARDING WESTONKA SCHOOL DISTRICT PARCELS 5. INFORMATION /MISCELLANEOUS A. FYI: CITY ATTORNEY'S LETTER ON REFERENDUMS B. FYI: DOCUMENTATION ON HOTEL DEVELOPMENT CONTACTS C. MEMBER REQUEST: RETYPED DOCUMENT FROM JULY 25, 2000 MEETING D. ARTICLE: MULTI-FAMILY OUTLOOK 6. ADJOURN °, HRA MINUTES -REGULAR MEETING -July 25, 2000 The Housing and Redevelopment Authority of the City of Mound, Hennepin County, l~iirtnesota, met on Tuesday, July 25, 2000, at 7'00 p.m., in the Council Chambers at 5341 Maywood Road, in said City. Those present: Chairperson Pat Meisel; HRA Board Members: Andrea Ahrens, Bob Brown, Mark Hanus, and Leah Weycker. Also in attendance were City Manager Kandis Hanson, City Clerk Fran Clark, City Attorney John Dean, Mound Visions Coordinator Bruce Chamberlain, City Planner Loren Gordon, James Prosser of Ehlers & Associates, and Recording Secretary Diana Mestad. Others present: Ken & Sally Custer, Steve Wagner, Bruce and Patti Dodds, Lortie Ham, The Laker; Tom Casey, Amy Cicchese, Lakeshore Weekly; David Greenslit, Barb and Ryan Stoll, Troy D. Hicks, Bart Roegin, Tim Hafagle, Roy Stoll, Marilyn & Derek Adam Greshowak, Pat Momssey, Rick Roberts, Kevin Plann, Andrew Mahoney, Wayne E. Ehlebracht. Consent Agenda: All items listed under this Consent Agenda are considered to be routine by the Housing and Redevelopment Authority. There will be no separate discussion of these items unless a Council member or citizen so regr~est, in which event the item will be removed from the Consent Agenda and considered in normal sequence. Chairperson Meisel called the meeting to order at 7:05 p.m. Pinky Charon, Executive Director of the HRA, was not present. MOTION, by Brown, seconded by Ahrens, to table the Indian Knoll Manor portion of the Agenda until the neat HRA meeting. The vote was unanimous. Motion carried. 5-0. 1.1 INDIAN KNOLL MANOR CONSENT AGENDA A. MONTHLY BILLS B. MINUTES -JUNE 27, 2000 1.2 ACCOUNTING ITEMS A. ACCOUNTANT REPORTS B. BANK ACCOUNTS 1.3 A.R.A. ACTION ITEMS A. RESOLUTION #00.15, LOAN FORGIVENESS B. RESOLUTION #00-16, TENANT APPOINTMENT 1.4 INFORMATION ITEMS ~.... Mound HRA Minutes. July 25, 2000 A. ANNUAL, AND FIVE YEAR HOUSING PLAN B. AUDIT FOR Y/E 9/30/99 (COMMISSIONERS ONLY) 1.5 TENANT REPRESENTATIVE REPORT 1.6 NEXT INDIAN KNOLL MANOR MEETING -AUGUST 22, 2000 TAX INCREMENT FINANCING. APPROVAL OF AGENDA AND CONSENT AGENDA. 1.7 APPROVE MINUTES OF JUNE 27, 2000. MOTION by Weycker, seconded by Brown, to approve the Minutes of June 27, 2000. The vote was unanimously in favor. Motion carried. 5-0. 1.8 RAY MAR PROPERTIES INC. AMENDED DUMPSTER AGREEMENT The City Attorney stated that the original dumpster agreement had been amended to include covering the cost of the landscaping by the HRA. He stated that the draft agreement presented in the packet was not the latest draft, which does include the landscaping agreement. The landscape is to be competed in November 2001. MOTION, by Ahrens, seconded by Hanus, to approve the Dumpster Agreement as amended. The vote was unanimously in favor. Motion carried. 5-0. 1.9 DISCUSSION OF OFFICE OF STATE AUDITOR LETTER REGARDING WESTONKA SCHOOL DISTRICT PARCELS The City Attorney stated that the City has received a letter from the State Auditor disagreeing with the City's finding that the development of the school site is eligible for TIF. A memo is included in the meeting packet stating the City Attorney's ideas and the options available. The options basically fall into two groups. The first group involves accepting the conclusion of the State Auditor and removing the property from the TIF district. The second group involves seeking a review of the State Auditor's determination. The City Attorney feels there is no time rush to make a decision on how to proceed. The City Attorney stated that he is concerned that an impression maybe projected that the City is operating outside the law and further stated that it is the opinion of both his law firm and Ehlers & Associates that it is proper to include the school property in the TIF district. The City Attorney is recommending that the City seek a review of the State Auditor's determination as he does feel the City is in the right. Also, it will be more difficult to bring the ~~ !~ property back into the TIF district later because the building as been removed. Z `/ Mound HRA Minutes July 25- 2000 stated that Mr. Prosser is in the process of preparing a press release to express The City Attorney the City's position and response to the public. . ~ HRA Board Member Brown stated that if the City is right, he wants to proceed and Chairperson Meisel agreed with this. HRA Board Member Hams asked what specifically needed t me ~ ~ the State Aud'tor's letter City Attorney stated that he would bring specifics to the next g was only recently received. HRA Board Member Hanus asked for elaboration on how taking this property out of the TIF district would affect the City's ability to acquire the playfieconsistent with t bond referendum, discussions with the developer involved keeping the pn which included TIF for the developer's use on the remaining property. HRA Board Member Brown confirmed that no TIF money had been offered to date. HRA Board Member Weycker stated that she has spo redoes not meanua parcel qualifiesUfor TIF. and he has told her that being located in the TIF distn The City Attorney confirmed this. HRA Board Member Hanus asked if the OSA was merely a reviewing authority and not an the OSA has clear authority in this matter, but overseer. The City Attorney stated that by statute, '~' that they are not the final arbitrator regarding TIF violations. ames Prosser, Ehlers & Associates, stated that removal of the parce~e emhas beTen somect could J impact the City's ability to wokkn ha hmidht req ire T~sua order to work. He stated that this discussion of using shared par g g reliminary discussions would add time and cost to the proje he issues involvedggested beginning p with OSA to begin to work through t The City Attorney stated that he felt he had a consensus to begin to move forward with this issue. 1.10 AGREEMENT. Chairperson Meisel stepped down at this point citing a potenersonor a perceived conflict of interest. HRA Board Member Hanus became Acting Chairp Michael Durrell presented the HRA with a petition curr nttl labn is a ci ropriate for1Mound. Hee to decide the questionotten 200es gnatures iin 2 days and expects 900 signatures. stated that he has g ~~ '.:_ Mound HRA Minutes. July 25.2000 Attest: City Clerk ,~~. :; :., ,•.J Kandis Hanson, City Manager ' August 3; 2400 i u c Ms. Kandis M. Hanson City Manager 5341 Maywood Road Mound,lviN 5364 RE: Auditors Road and T,a,*tgdon Districts Dear Kandis: It is with great regret that I write to inform you and the Mound HRA that after considerable review and analysis we have determined that the project's economics aze not viable. Specifically, the amount of TIF generated by the project is not adequate to offset the eartra ordinary infrastructure and land acquisition costs. Under the approved concept plan the "gap" between the amount of assistance available and the amount of assistance required was $3,100,000. As different approaches were explored the gap was narrowed to just under $2,000,000. These alternative approaches" included increasing the project's density. eliminating portions of the project, reducing the return to the developer and looking to create additional value outside the Langdon and Auditor's district. Many o£ these alternative approaches would have required revisions to the approved plan, and since these approaches didn't eliminate the gap, it would not be productive to present there as alternatives to the HRA. Please lanow we have a considerable financial and emotional investment in the project and are committed to working with the HRA and its staffto find the answers and solutions that will allow the project to move forward. To that end it is our intention to attend the Tuesday August 8~ HR.A Commission meeting to be available to answer any questions the HRA Commissioners may have. Please don't hesitate to contact me with any questions or commenu. Sincerely, The Beard Group, Inc. _,~ Vliilliam H. Beard President aIHB~ CC: Distribution List 10 -11th Aveaue Sout&. iiuAl~jpa, A~~ 55343-7568 (952) 930-0630 Fac (952) 930-0631 ::; ~;~. Z/l 'd 9EOS'~N ~ Wd9S~l 000 '£ '$~d S ~.. 1 1 1 g --g^©o ~ ~- ~ ~. ITEM # moved and ~;~- n seconded a motion moved and seconded a motion The (Roll Call) vote was unanimously/ in favor with nays. ITEM # moved and seconded a motion The (Roll Call) vote was unanimously/ in favor with nays. ITEM # moved and seconded a motion The (Roll Call) vote was unanimously/ in favor with nays. The (Roll Call) vote was unanimously/ in favor with nays. ITEM # tk ~. ~~ FREERS & ASSOCIATES INC To: From: W Subject: c`s Date: Kandis Hanson Jim Prosser Downtown Redevelopment August 4, 2000 Bill Beard has recently advised the City of Mound that he has determined that his redevelopment proposal was not financially feasible. This finding was the result of a review that occurred during the pre-development phase of this project. Clearly this is a disappointing result to the redevelopment efforts to date. However, part of any redevelopment project includes market and financial feasibility tests. The most accurate test is the result of a developer review during apre-development and development agreement phase of a project. In fact the need for this type of review is one of the reasons the city enters into apre-development agreement. It is important to review several key issues relating to the downtown redevelopment effort at this time. These issues include: / The need to determine preliminary financial feasibility during the pre-development agreement phase reinforces why it is not practical to establish a final development plan during this stage of the process. The general redevelopment concept as outlined in "Mound Visions" will continue to be used as a conceptual guide, however some modifications may be presented fox HRA consideration at a later date. / A significant portion of the work completed by the city during this phase of the project effort can be used to expedite project review by other developers. This work includes title review, land surveys, public improvement requirements, land assembly issues, wetland management and storm water control. / The finding of the developer does underscore the point that the city was not "underachieving" their redevelopment goals. At the same time, it is still too early to drastically alter the basic redevelopment objectives. It is possible that other developers may be able to achieve the project objectives with only minor modifications to the basic concepts. The recommended next steps for a project at this phase includes the following: 1. The HRA should reaffirm or revise the prime and subsidiary project objectives. The prime objective is to assure the long term viability of downtown Mound as a community LEADERS I N PUBLIC F I N A N C E 3060 Centre Pointe Drive Roseville, MN 55113-1105 651.697.8503 fax 651.697.8555 jim@ehlers-inc.com ti~ Page 2 August 4, 2000 center. The subsidiary objectives aze to improve pedestrian access, business and commuter parking, develop community features, improve the marketability of retail uses and provide a connection to water features. 2. Invite qualified redevelopers to review the existing Mound Visions plan and assess their ability and willingness to submit proposals for review on a competitive basis. 3. Evaluate proposals submitted by one or more qualified developers using criteria including, but not limited to, financial capability, demonstrated ability to work with existing businesses, consistency with Mound Visions, financial and market feasibility. 4. If qualified developers are unable to present proposals which meet minimum guidelines established by city then the project team will assess the need to recommend revised project guidelines. Any changes in project guidelines would be submitted for review. It is expected that this work would be completed within 180 days. C:\WINDOWS\TEMP\8.7.OOHRA.memo.wpd 1. 1 1 Le er from~auditor suggests District 277 property doesn't qualify - -~ :State .uest~ons Mound TIF d~str~ct q By Louie Ham Boulevard from the TIF District would likely occur solely through district and Metro Plains expire: which was approved last -..private investment," the letter June 30. School board repre Mound city officials will meet December. stated. sentatives were scheduled to mee July 25 as the Housing and Every parcel included in a TIF Mound City Manager Kandis with Metro Plains on Juty 21 fe Redevelopment Authority (HRA) district must meet certain Hanson, who received the letter further negotiations. to discuss the ramifications of a requirements. In its letter, the- on Wednesday, confirmed that the Meanwhile, a referendur. letter the city received July 19 OSA said it appeared that the property is located within the TIF asking voters to approve $1.. from the Office of the State property currently owned by the district boundaries, but added that million for the purchase of 1 C Auditor (OSA). Westonka Schoot District did not the city had not had any plus acres of the "green space In the letter, the OSA qualify forTlF. discussions with the proposed portion of the property i. ~ recommends that the city modify 'The OSA expresses concern developer regarding tax increment scheduled for Sept. 12 as the its TlF (Tax Increment F'mancing) over the practice of including financing. result of a petition circulated by plan to remove the school district parcels in a TIF district to capture A purchase agreement for the citizens' group. ~ parcels located at 5600 Lynwood growth in property tax base that property between the school MEMORANDUM To: City Council and HRA From: John Dean Subject: July 18 Office of State Auditor Letter On July 19.2000, our office received a copy of a letter from the Office of State Auditor (OSA) addressed to Gino Businaro involving the inclusion of the Westonka School District property in the Tax Increment Financing District. Among the key points contained in the letter is the following statement: "Based on the purchase agreement, the TIF Plan for this district, and the information contained in the city's May 16, 20001etter, it appears that the city council's finding that the school district parcels met the 'but for' test was not supported by the evidence available to the city council at the time it made the finding. " The letter went onto recommend that the TIF Plan be modified to remove the school district parcels from the district. The letter is being reviewed by myself and other attorneys in this office, and by Jim Prosser and Sid t Inman of Ehlers & Associates, Inc. Although I have not yet had an opportunity to have substantial discussions with either Sid of Jim, I have prepazed a list of options available to the City/I-iRA in dealing with the letter and its implications. Sid and Jim may have additional options or comments regarding the options by Tuesday evening. My reaction is that the conclusions reached in the OSA letter are incorrect on three counts: 1. There was ample evidence known to the City/HRA at the time the Plan was approved to lead them reasonably to discount the purchase agreement. 2. The applicable statutes provide that the finding of the City/HRA is "conclusive". The OSA should not substitute its judgment for that of the City/HIZA. 3. The authority of the OSA to review the actions of the City/HItA is spelled out in law. The OSA has not followed those procedures, and has left the HRA in limbo as to the future of the school district pazcels. With that background in mind, I have listed the following options together with what I perceive to be the "pros" and "cons" of each. OPTIONS: (With Pros and Cons) 1. Written response to OSA detailing our disagreement with its position. Pros: Good opportunity to inform the public the City/HRA position. -~~ r Cons: Does nothing in terms of the decision on the TIF district. JBD-183416v1 MU195-2 2. Further discussions with OSA. Pros: Would give opportunity to more fully set out our position both to the OSA and to the public. Cons: No clear process for OSA to further review at this point. Experience suggests that OSA is unlikely to modify position. 3. Accept recommendation and modify the district. Pros: Ends dispute. Spend time on other issues. Cons: Signifies acceptance of incorrect conclusion. May not be able to put property back in district later. May impact on ability to acquire playfield site within budget. 4. Ignore letter and proceed with "plans". Pros: Appropriate reaction. k ~ Cons: Creates impression that we are proceeding in violation of law, and defiance of conclusion of state agency. Risky for developers who rely of tax increment, or City if bonds are sold. 5. Seek review of letter by independent redevelopment counsel. Pros: Helps with public perception. Comfort to prospective developers. Cons: Without other actions, it really accomplishes nothing. 6. Attempt to move the process into the hands of the County Attorney and or Attorney General for review. Pros: Impartial resolution of the matter. Cons: Possibility of adverse decision. Jim Prosser and I will be present at the HRA meeting on Tuesday to discuss this in more detail. r.~ ~o.tasat6~t MLl195-Z .. e ~~ JUDTTH H. DUTCHER STATE AUDTTOR STATE OF MINNESOTA OFFICE OF THE STATE AUDITOR surrE aoo 525 PARK STREET SAINT PAUL, MN 55103-2139 Please respond to: Tax Increment Financing Division 505 Spruce Tree Centre 1600 University Ave. W. St. Paul, MN 55104 (651) 296-2551 (Voice) (651) 296-4755 (Fax) stateauditor@osa.state.mn.us (E-Mail) t-800-627-3529 (Relay Service) TIF Division Phone: (6651) 642-0767 TIF Division Fax: (651) 642-0769 Direct Dial: (651)642-0837 July 18, 2000 Gino Businaro, City Finance Director City of Mound 5341 Maywood Rd Mound, MN 55364-1627 Re: "But For" Test for Westonka School District Parcels Included in City of Mound's TIF District 1-2 Dear Mr. Businaro: The Office of the State Auditor (OSA) received the city's May 16, 2000, letter in response to my Apri125, 2000, letter regarding the Mound City Council's finding that certain pazcels owned by the Westonka School District (Independent School District #277) and included by the city in Tax Increment Financing (TIF) District 1-2 met the "but for" test. As the OSA's previous letter noted, in order to approve the TIF plan for TIF District 1-2, the city council was required to find that the proposed development or redevelopment of the pazcels in the district, in the opinion of the city council, "would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future." Minn. Stat. § 469.175, subd. 3. Before the city council approved the TIF plan for this district on December 14, 1999, Trail Head Land Development Corporation and the Westonka School District had entered into a purchase agreement, dated June 24, 1999, for the sale of certain pazcels included in TIF District 1-2. The purchase agreement indicated that the school district would remove the school buildings and any underground tanks at the school district's expense. The purchase agreement did not contain a contingency for the buyer or seller to obtain TIF assistance. As the city's letter noted, the city has not offered to use TIF assistance to underwrite the cost of land purchased from the school district. The city's letter also noted that the sale of land contemplated in the purchase agreement did not close. This does not change the fact that, at the time the city council found that development or redevelopment of the school district's property would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future, a private party had agreed to pay $2,355,000 for the property and the school district had agreed to remove the buildings and any ,~ ,~^' Recycled paper with a minimum of ~~ 1596 post-consumer waste An Equal Opportunity Employer e 'a ,~ OFFICE OF THE STATE AUDITOR Gino Businazo, City Finance Director 't J,.tly i s, Zooo Page 2 underground tanks from the property at its own expense. The city's letter indicated that significant soil correction work will need to take place on the school district's property before development can proceed. There is nothing to indicate that the private party was not awaze of these soil condition problems. Furthermore, the fact that the purchase agreement provided that the school district would remove any underground tanks from the property at its own expense suggests that the private party knew of these soil condition problems, or at least of the risk of them, at the time it entered into the purchase agreement. The city's letter also indicated that the city might need to include the school district's property in TIF District I-2 to provide sufficient revenue to pay for part of the costs of relocation of a major highway, storm sewer improvements, replacement of public parking, utility relocation, and other public improvements related to redevelopment of the older downtown area, which is adjacent to the school district's property. The fact that a TIF authority needs additional revenue to finance a redevelopment proj ect does not eliminate the requirement that every parcel included in a TIF district must meet the "but for" test, no matter how strong maybe the TIF authority's desire to increase tax increment revenue by increasing the number of parcels included in the district. The OSA expresses concern over the practice of including parcels in a TIF district to capture growth ~'{ ~ in property tax base that would likely occur solely through private investment. Such action by a TIF authority denies other affected local governments valuable and necessary growth in property tax base, which in turn can lead to increased local tax rates. Furthermore, it can create costs born by every citizen within the state, since increased state education aids are paid to school districts that lose property tax base to TIF districts. The policy rationale behind TIF-using increased property tax revenue that otherwise would not exist to finance the development or redevelopment that generates the increased property taxes-is thwarted when TIF-district boundaries are drawn to include parcels that would be developed or redeveloped without TIF assistance. Finally, the city's letter indicated that "it is not possible to know at this time whether the school property can be redeveloped in a manner consistent with the city's plans solely through private investment." If this was true at the time the city council found that the development or redevelopment of the school district's property would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future, then the city council's fording clearly was improper. Based on the purchase agreement, the TIF plan for this district, and the information contained in the city's May 16, 2000, letter, it appears that the city council's finding that the school district parcels met the "but for" test was not supported by the evidence available to the city council at the time it made the finding. Consequently, if the city receives tax increment from these pazcels, it is likely that the OSA will forward this issue to the county attorney for review. The OSA recommends that the ~,~~ city modify the TIF plan to remove the school district parcels from TIF District 1-2. 'OFFICE OF THE STATE AUDITOR Gino Businaro, City Finance Director July 18, 2000 Page 3 The OSA appreciates the time and attention you and other city staff devoted responding to my previous letter. If you have any questions or comments about the information in this letter, please call me at (651) 642-0837. Sincerely, ~~~~~ William E. Connors, Director Tax Increment Financing Division cc: John Dean, City Attorney ..Y" N i ~~- ~~ May 16, 2000 CITY O F MOUND MOU D MW ESOTA 55364-1687 (sit) a72-asoo FAX (612) 472.0620 William E. Conners, Director Tax Increment Financing Division Office of State Auditor Suite 400 525 Pazk Street Saint Paul, Minnesota 55103-2139 Subject: Response to your letter of April 25, 2000 -Purchase Agreement for Parcels in TIF District 1-2 Dear Mr. Conners: Your letter of Apri125, 2000 questions the inclusion of the above named parcels in the Mound TIF District 1-2. You have requested an explanation of why the redevelopment of these pazcels would not be reasonably expected to occur solely through private investment in light of a purchase agreement between Trail Head and the property owner, Westonka School District. In response to your request you should know the following: • The purchase agreement with Trail Head Land Develo meat Co While we were not a p rporation has lapsed. party to this agreement, it would appeaz that Trail Head was unable to perform under the terms of the agreement. • The City has not offered, at any time, to use TIF to underwrite the cost of land purchase from the School District. • Metro Plains Development, LLC has assumed the purchase option. However, they have not yet completed their financial feasibility and planning study to determine if the property can be developed, with appropriate uses. Soil studies on this site do indicate the need for significant soil corrections for most development options.. ' The site is adjacent to an older downtown area that is in the process of redevelopment. Part of the redevelopment includes relocation of a major highway, storm sewer improvements, replacement of public pazking which will be lost due to highway construction, utility relocation and other public improvements. Redevelopment of this site ® vnnad ~ neycwe a•a.. .~ - will contribute to the need to make these improvements. It may be necessary for the s school site to contribute tax increment to pay for some of these costs. We can expect that the property sale will not be completed if it is determined that redevelopment is not financially feasible. Feasibility will be determined, at least in part, on the basis of acceptable land uses, required public improvements, soil corrections and a number of other factors. 'The developer has not yet completed their planning work to provide answers to these questions. In summary, it is not possible to know at this time whether the school property can be redeveloped in a manner consistent with the city's plans solely through private investment. We are quite comfortable, however, with the conclusion that the transaction contained in the Trail Head purchase agreement will not occur. You are encouraged to contact Larry Olson at Metro Plains Development (651-523-1246) to verify the information contained within this letter. Sincerely. 2 ~ ~~~ ..~.~ cry Gino Businaro Finance Director City of Mound Co : Kandis Hanson, City Manager PY Jim Prosser, Ehlers & Associates Larry Olson, Metro Plains Development C:\WINDOWS\TEMP\osa.ltr.5.16.00.wpd ~w • JUDITH H. DUTCHER STATE AUDITOR SUITE 400 525 PARK STREET SAINT PAUL, MN 55103-2139 Please respond to: Tax Increment Financing Division 505 Spruce Tree Centre 1600 University Ave. W. St. Paul, MN 55104 (651) 296-2551 (Voice) (65t)296-4755 (Fax) stateauditor@osa.state.mn.us (E-Mail) 1-800-627-3529 (Relay Service) TIF Division Phone: (651) 642-0767 TIF Division Fax: (651) 642-0769 Direct Dial: (651) 642-0837 Apri125, 2000 Gino Businaro, Finance Director City of Mound 5341 Maywood Rd. Mound, MN 55364 Re: City ofMound-Purchase Agreement for Pazcels in TIF District 1-2 Dear Mr. Businaro: The Office of the State Auditor (OSA) has received the tax increment financing (TIF) plan for TIF District 1-2 and a copy of the published notice for the public hearing on approval of the TIF plan, which the city provided in response to the December 30, 1999, letter from Linda Thomas of our office. I have enclosed a copy of a purchase agreement, dated June 24, 1999, for the sale of parcels with PID numbers 14-117-24 410052,14-117-24 410011,14-117-24 41005 8,14-117-24 410010, and 14-117- 24 41 0007 from Independent School District #277 to Trail Head Land Development Corporation. These parcels aze on the TIF plan's list of parcels included in the TIF district. The date of the purchase agreement is before the date the Mound City Council approved the TIF plan on December 14, 1999. The purchase agreement indicated that the seller would remove the school buildings and any underground tanks at the seller's expense. The purchase agreement did not contain a contingency for the buyer or seller to obtain TIF assistance. Therefore, it appears the buyer intended to purchase the cleared land at the price specified in the agreement even without the use of tax increment. Based on these facts, it appears that before the city council approved the TIF plan, the developer had committed to redevelop these parcels solely through private investment and without the use of tax increment. In order to approve the TIF plan, the city council was required to find that the proposed development or redevelopment of the pazcels in TIF District 1-2, in the opinion of the city council, "would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future." Minn. Stat. § 469.175, subd. 3. Please explain why the city council found that the redevelopment of the parcels identified in the purchase agreement would not be reasonably expected to occur solely through private investment. STATE OF MINNESOTA OFFICE OF THE STATE AUDITOR ~'~' Recycled paper with a minimum of ~~ l5% post-consumer waste An Equal Opportunity Employer 'OFFICE OF THE STATE AUDITOR Gino Businaro, Finance Director Apri125, 2000 Page 2 If you have any questions about this letter, please call me at (651)642-0837. Your prompt attention to this matter would be greatly appreciated. Please respond by May 19, 2000. Sincerely, C`U~~~~ William E. Connors, Director Tax Increment Financing Division Enclosure Kennedy Graven ;o-s„i ~MINN ~ 470 Pillsbury Center 200 South Sixth Street Minneapolis MN 55402 (612) 337-9300 telephone (612) 337-9310 fax http: //www.kennedy-graven. corn JVttl\ v. Lr,fuv Attorney at law Direct Dial (612) 33?-920? Email: jdean~kennedy-giaven.com Attorney-Client Privileged Communication August 3, 2000 Kandis M. Hanson, City Manager City of Mound 5341 Maywood Road Mound, MN 55364 Re: Petition for Referendum Dear Ms Hanson: On July 25, 2000, Michael Durrell presented to the HRA a form of petition. that he is circulating in the community. The petition requests that Mound hold a referendum election to let the voters determine the "final decision regarding the design and direction of the redevelopment project proposed by the current administration of the city of Mound.'.' I have been asked for an opinion on whether it would be proper for the City to hold a special election to allow voters to express their opinions on this matter. For the reasons set forth below, it is my opinion that the City does not have the authority to hold a special election on that issue, even if the election is advisory, and that any expenditure of public funds for such an election could be challenged as being unlawful. The authority for municipalities to hold. special elections is governed by Minnesota Statutes, ~~Q5:1Q, which States that a spPciel elec!~o^ Irt?~ hP helm "fin a niilQStlt?^ on wh?Ch tl'?e-voters ara authorized by law or charter to pass judgment." Statutory cities, such as Mound, are authorized to hold elections on issues such as the issuance of certain types of bonds (Minn. Stat. §475.58), some issues relating to intoxicating liquor licenses (Minn. Stat. §340A.416), or whether to join a special district having taxing authority in the City (Minn. Stat. §412.221). There is no statutory authority authorizing a special election on the issue contained in the Durrell petition. The leading case in Minnesota on the authority of a governmental entity to hold special elections is Muehrin~ v School District No. 31, 28 N.W. 2d 655 (1947). The issue in that case was whether a school district had the authority to submit to the voters the question of whether to provide bus transportation for students in part of the district. The court concluded that the school district did not have the authority to conduct such an election. The rationale-for the court's decision was that a local government entity that has been delegated authority by the state cannot redelegate that authority to the voters. KandisHanson Page 1 of 1 From: "Bruce" <blc@HKGl.com> To: "Kandis Hanson (E-mall)" <kandishanson@msn.com> Sent: Thursday, August 03, 2000 3:52 PM Subject: hotel site Last week, City staff sent letters to Rick Bloomquist and Chris Valerius about meeting on Wednesday to explore the possibility of the two of them combining their interests in developing the hotel district in downtown Mound. Rick Bloomquist contacted Kandis Hanson and indicated that he has no interest in exploring the possibility or attending a joint meeting. Staff then spoke with Chris Valerius who expressed the same sentiment. Therefore, the meeting will be canceled and City staff will re-strategize the issue at the regular team meeting on Wednesday afternoon and contact the development interests about any future steps next week. Bruce Chamberlain ~~ ,~~~ ., <; ,, 08/03/2000 .~,r , , I 1 1 612-3386838 HOISINGTON KOEGLER 618 P03 JUL 31 '00 07:35 f Crea[ive Solution: for Land Plaaoio` and Deign July 28, 2000 Hoisiagton Koegler Group Ina ©~ Rick & Sue Bloomquist 4160 Enchanted I,aac Minnetrista, MN 55364 Re: Development of the hotel district in Mound. Dear Mr. 8c Mrs. Bloomquist: As you know, for various reasons the Ciry Council determined at their meeting several weeks ago to wait a period of time before entertaining development proposals for the hotel district in downtown Mound. City staff has had conversations with several council members who feel that, despite that decision, it is prudent to continue preliminary discussions with you regarding the project. Staff is happy to do so and would like to meet with you next week. Since our last meeting we have talked with Chris Valerius, owner of Main Street Market in Mound. Chris has expressed interest in relocating her coffee shop to the hotel district in conjunction with the transit center and a hoteUinn. In listening to the thoughu of both you and Ms. Valerius, it seems that there may be an opportunity for the two of you to work together toward development of the site. From the City's perspective, this maybe beneficial because it combines the City's desire to retain a healthy Mound business with a creative business wncept with your ability and interest to pull together a successful hotel project. Obviously, asking the two of you to cooperate on a project could be a delicate matter and would be a decision completely up to you both but if you agree to explore the possibility, we would like to hold a meeting with you, Ms. Valerius and Ciry staff to discuss it. Please get back to me about your interest in participating in the meeting. We would like to hold it at Mound Ciry Hall on Wednesday August 2 at 1:00. If you have any questions, please feet free to contact Kandis Hanson or me. Sincerely, ~~~~ '~. Bruce Chamberlain Mound Visions Coordinator CC: Kandis Hanson, City Manager Jim Prosser, Redevelopment Coordinator 123 North'Ihird Street Suite 100. Miaaeapotis, INN 55401-1669 Ph (612} 338.0800 Fz (612) 338.6838 1' EDUCATION: SCHOOL DISTRICTS: SCHOOL BOARDS -BOND ISSUES PROMOTION School boards may expend a reasonable amount of school district funds to impartially place pertinent facts before voters, and members may orally espouse affirmative cause, but cannot use school district funds to promote an affirmative vote on the proposal. May 24, 1966 Messrs. Doherty, Rumble & Butler Attorneys for Independent School District No. 197 1000 First National Bank Building Saint Paul, Minnesota 55101 Attention: Mr. Eugene M. Wazlich Gentlemen: In your letter Attorney General Robert W. Mattson, you request an opinion. FACTS "Recently Independent School District No. 197 conducted an election for authority to issue bonds for improvement and construction of schools. Prior to and during the course of the election `Campaign' presentations were made by members of the Board to various citizens' groups" . "During the same period certain literature was published. A copy of the Fact Book is enclosed. This was published at the expense of the Boazd. In addition, another brochure was published entitled `Why?' A copy of this is also enclosed. The cost of publication of this was borne by the organization engaged as financial consultant for the district. The mailing cost was paid for by the school district. You will note on the reverse side of this brochure the following. `We urge you to vote Yes on Tuesday February 8, 1966.' Under that aze listed the names of the Board of Education." QUESTIONS (1) "In making oral presentations to citizens' groups concerning a forthcoming bond election may members of the School Boazd of an independent school district advocate the passage of a bond issue for the construction, modification, etc. of schools?" 1 ' Messrs. Doherty, Rumble -2 & Butler (2) "During the `campaign' involving the question of the issuance of bonds for the construction, modification, etc. of schools of an independent school district may school districts pay the mailing cost of literature printed at the expense of others, which literature urges in the name of the school board or otherwise the passage of the bond issue, so long as the expenses are reasonable?" (3) "During the campaign involving the question of the inssuance of bonds for the construction, modification, etc, of schools may an independent school district pay for the cost of the literature, as well as the mailing cost of literature which urges in the name of the School Board or otherwise the passage of the bond issue, so long as the expenses are reasonable?" OBSERVATIONS `We have independently researched the above captioned matter and it appears that the Corrupt Practices Act does not apply to a school district election. Johnson v. DuBois. 208 Minn. 557. In addition, Chapter 211 does not by its terms appear to cover such elections nor is it suited thereto. In addition, we have examined Opinions of the Attorney General, 139b-11 dated September 17, 1957, and 159a-3 dated May 25, 1962 which, in our opinion, do not answer the questions herein asked. Finally, we know that many of the members of our Board have felt restricted by a concept, whether valid or not, that they were precluded from advocating the passage of such an issue either orally or by literature." `While it is our view that so long as the expenses are reasonable there should be no such limitation either as to oral presentations or presentations by literature paid for by a school district, the answer is not clear. It would seem that as the Board has the authority to operate the schools, it should be allowed to advocate that which it promulgates subject to there being a specific restriction against it. It should be able to expend reasonable sums of the district to do so. It appears hypocritical to be unable to espouse a cause when it is the Board itself which has sponsored the cause." 1' Messrs. Doherty, Rumble -3 May 24, 1966 & Butler OPINION As stated on Ops. Atty. Gen 159a-3, May 25, 1962 and 159b-11, September 17, 1957 (copies enclosed), a school board may expend a reasonable amount of school district funds to apprise the voters in the district of facts pertinent to the proposal. You ask whether the Boazd can go further than that and include in such factual submission a statement: "We urge you to vote Yes on Tuesday, February 8, 1966" and the names of the Board of Education listed thereunder It has been held that a municipal corporation lacks authority to incur indebtedness or appropriate funds for the conduct of a campaign to secure a favorable vote on a proposed bond issue. 64 C.J.S. "Municipal Corporation" 1838, p. 343: 15 McQuillin, "Municipal Corporations" (3d Ed.) 39.21. In Elsenau v. City of Chicago, 165 M.E. 129 (Ill.), the court stated; "The amended bill chazges, and the demurrers admit, that the advertising of which complaint is made did not purport to be an impartial statement of facts for the information of the voters, but that it was an attempt, partisan in its nature, to induce the voters to not vote favorably upon the bond issues submitted at the election. The conduct of a campaign, before an election, for the purpose of exerting an influence upon the voters, is not the exercise of the authorized municipal function and hence is not a corporate purpose of the municipality." More particularly apropos is the case of Citizens to Protect Pub. Funds v. Boazd of Education. 98 Atl. (2d) 673 (N.J. - Op. By Judge Wm. J. Brennan, Jr., now Associated Justice of the U. S. Supreme Court), where the school boazd put out a factual sheet on a school bond issue to be voted upon, and it placed on the cover and on two the pages the words "Vote Yes" and `Vote Yes- December 2, 1952" and further it included an entire page of argument as to what will happen if the bond proposal fails. t. ,.~; , ~' Messrs. Doherty, Rumble & Butler -4 May 24, 1966 The Court upheld the right of the Boazd of Education to present the fact to the voters. It the stated (pages 677-678): "(5) But the defendant board was not content simply to present the facts. The exhortation `Vote Yes' is repeated on three pages, and the dire consequences of the failure to do so aze over-dramatized on the page reproduced above. In that manner the board made use of public funds to advocate one side only of the controversial question without affording the dissenters the opportunity by means of that financed medium to present their side, and thus imperilled the propriety of the entire expenditure. The public funds entrusted to the boazd belong equally to the proponents and opponents of the proposition, and the use of the funds to finance not the presentation of facts merely but also arguments to persuade the voters that only one side has merit, gives the dissenters just cause for complaint. The expenditure is then not within the implied power and is not lawful in the absence of express authority from the Legislature." "We do not mean that the public body formulating the program is otherwise restrained from advocating and espousing its adoption by the voters. Indeed, as in the instant case, when the program represents the body's judgment of what is required in the effective discharge of its responsibility, it is not only the right but perhaps the duty of the body to endeavor to secure the assent of the voters thereto. The question we are considering is simply the extent to and manner in which the funds may with justice to the rights of dissenters be expended for espousal of the voters' approval of the body's judgment. Even this the body may do within fair limits. The reasonable expense, for example, of the conduct of a public forum at which all may appear and freely express their views pro and con would not be improper. The same may be said of reasonable expenses incurred for radio or television broadcasts taking the form of debates between proponents of the differing sides of the proposition. It is the expenditure of public funds in support of one side only in a manner which gives the dissenters no opportunity to present their side which is outside the pale" ~,.. y„ry~ NR ~ i Messrs. Doherty, Rumble -5 May 24, 1966 & Butler We feel that if these question were presented to our courts, their decision would be in harmony with the New Jersey opinion here cited, and we must therefore give you a negative answer to your questions (2) and (3). With respect to the individual members of the boazd expressing their views orally, they, like other public officials, aze free to appeaz before citizens' groups to support their decision and advocate approval of a bond issue. Accordingly, we answer your first question affirmatively. Very truly yours ROBERT W. MATTSON Attorney General LINUS J. HARMOND Assistant Attorney General «~ ~"__ 4`~~-, area city planning departments shows a significant increase in the number of market rate and senior METRO MARKET OVERVIEW FIRST HALF 2000IBarrierstonewdevelopmentin the Twin Cities apartment market are beginning to fall. United Properties' recent survey of alt metro- rental projects in various stages of development. As of mid-year, go projects representing more than 9,goo units were in the approval process or under construction, with approx- imately two-thirds of the units planned as market rate units. Total units have increased approximately 50% over 1999 totals, suggesting that the Twin Cities area is in the early stages of an apartment devel- opmentcycle. Actual development activity is best gauged by the number of multi-family building permits issued by metro-area cities. According to Apartment Search, building permits for 1,377 apartment units were issued in the Twin Cities area year-to-date compared to 1,809 in t99g. While the actual number of units being built has not grown significantly, the increase in proposed and planned activities suggests the number of units will increase. In addition, the size of these properties also appears to be increas- ing with Hearty 3o projects of 15o units or more planned or under construction. Several sizeable properties are sched- uled to begin construction this summer, including the 3t~t}-unit Powers Ridge Apart- ments by Lake Susan Hills Partners in Chan- hassen, and Hartford Financial's 186-unit Lincoln Parc Apartments in Eden Prairie. Silver Crest Properties is scheduled to begin construction of Eden Shores Apartments, a 3z5-unit senior project located in Eden Prairie. Many Twin Cities-area cities need more affordable housing in their communities. In Minneapolis, the number of units planned, proposed or under construction in the last six months totaled more than l,ooo units, while in St. Paul, the number totaled more than 75o units. Fast-growing suburban cities, such as Woodbury and Maple Grove, are adding much-needed rental units. First-tier suburban cities St. Louis Park, Richfield and Roseville have approved numerous projects, many of which are tar- geted for seniors because city officials rec- ognize the importance of a variety of housing in maintaining their cities vitality. Contributing to the rising interest in multi-family development is the Twin Cities' extremely tight apartment market conditions. According to Apartment Search, marketwide rental rates increased t1.5%overfirst-quarter 1999 levels and 1.8% over year-end i99g. Apartment Search reports that approximately zoo of the increase is attributable to a change in its reporting system. However, the adjusted rental increase is still in the 8% to 9% range, among the highest rates of growth the market has ever experienced. Minneapolis and St. Paul again experi- enced phenomenal rental rate growth, with annual increases of zo.q% and i5.5%, respectively. The undersupply of affordable housing is contributing to this unprece- dented rent growth. Select suburban cities also grew at a faster pace than the overall average. The southern suburban area, including Bloom- ington, Edina and Richfield, realized a APARTMENT TYPES Class A: Generally includes properties that have been built in the last 10 years and offer a full amenities package. Most complexes offer underground parking. Class 8: Includes properties which are 10 to 20 years old and offer a competitive amenities package. Many complexes offer underground parking. Class C: Properties built in the 1960s and 1970s. RNITEO PROPERTIES 25 _~ f ` Multi-Family Projects Planned and Under Construction June 2000 -cont. L NAME UEYEIUPER CITT UNITS STATUS ' Gray Oaks Gray Oaks,lnc. Andover i o A royal n in 3 PP Pe d g ' Pennock Place - Twin Cities Christian Homes Apple Valley a.o6 Approved April zooo ' Orchard Square • Phase II Community Development Agency -Apple Valley 5o Construction started Spring zooo Dakota County Common Bond Common Bond Communities Blaine 5o Under Construction; Completion Summer/Fall zooo Unnamed Project _. __ AHEPA/Penelope 35 Inc. _ Bloomington 41 Approved Fall 1999; Construction to start upon relocation of group home Unnamed Project West Suburban Chaska 1oa Preliminary Approval Unnamed Project (Assisted Crestview Corporation Columbia Heights 5o Approval Pending Living) he Heathers LaNel Crystal 78 Construction started; Complete by Winter zooo .Eden Shores Silver Crest Properties Eden Prairie 3z5 Start Construction Summer zooo :'Rolling Hills lack Brandt Eden Prairie 139 Fnal Approval Pending Farmington Family "Townhomes lim Deanovic Farmington 3z Approval Pending rbor Oaks (T.H. 8 Assisted Common Bond Hastings 85 Approved; Start Construction Summer zooo Living) Communities Presbyterian Homes 'i Sr. Housing Inver Grove 16o Proposed M '' Construction Inc. Heights Lakeville Sr. Housing - znd " Dakota County HRA Lakeville 54 Proposed .~ Addition ai'~ ~.. Humboldt Greenway ; Common Bond Communities Minneapolis 75 Approval Pending '~~ Chapel Wood Farr Development Maple Grove z6o Construction started Spring zooo Eastwood Village Metes 8 Bounds Management Oakdale iz Approved; Start construction Summer zooo ;Hearthstone (Assisted Living) North American Properties Plymouth 8o Proposed ~Creekside Estates (Assisted Freedom Development Prior Lake G6 Preliminary „Living) -''Wood Lake Center Richfield/State Agency Richfield 78 Under construction; Complete by late zooo _ . ' ~Lyndale Gateway • Broadway Court Twin Cities Christian Homes City of Robbinsdale Richfield Robbinsdale t6o Under construction; Complete by late zooo 57 Construction started; Completion by Fall zooo Eagle Crest (Dementia Presbyterian Homes Roseville 36 Approved; Construction started Spring zooo ~~Residence) Mendota Homes Mendota Homes Roseville 3o Construction started; Complete by Fall zooo Sunrise ` Sunrise Homes Roseville 7o Construction started; Complete by Fall zooo r `-rRosaland Development M8M Corp. Savage 178 Phase I • Near completion; Phase II -Start construction by Spring zoos ;.;Parkwood Shores . Silver Crest Properties St. Louis Park q6 Start Construction Summer zooo ,:.;Osceola Connection Sherman Rutzick St. Paul 81 Preliminary ~St. Mary's Franciscan Health Community St. Paul 93 Approved; Start construction Fall zooo ,'Lower Afton Road Metro Plains St. Paul 16 Proposed ,':~_"Holiday Retirement Center Curry Brandaw Architects White Bear Lake u5 Approved; Start construction Summer zooo y~, Main Street Village LaNel White Bear Lake 6o Approved May zooo Granite Hill Tycon Development White Bear Lake 85 Approved; Temporary Hotd ~'`: Summer House Place Project Developers Inc. Woodbury 138 Construction started; Complete Fall zooo ,Total Senior a,9g8 Units Total Market 9,g6s Total Units i3.4% annual rental rate gro wth. The north- that justifies new const ruction, so expect Another factor contributing to rent east suburban cities, led by Woodbury, the number of units slated for development increases is the dramatic rise in median grew at a iz.4% rate over 19 99 levels. to increa se in the coming years. home prices. As reported by numerous The pace of rental ra te growth has Rents have gro wn aggressively sources including the Minneapolis Area increased significantly in recent years. The because of low vacancy rates. The first- Association of Realtors, the median home 1o-year average for annual rent increases is quarter 200o vacancy rate was i.8~°, price in the Twin Cities rose approximately 49'0. However, if average rents over the past accordin g to Apartment Search. This is up io% over the past year to $t45,oo0. These five years are calculated, the rate becomes slightly from a year ago. However, given the rapid increases make home ownership less 6% a year. Looking at only the past two remarkable rental growth, the increases in feasible for Twin Cities renters. years, the average jumps to 9% annual vacancy are negligible. growth. Rental rates are at o r near the level tlNITED PROPERTIES 27 -~ m v v m m W m v ^^Q U/ 0 c n i~v ~^'H~I13yy ~'A ~~ Ali{ INS I~ Hw ' ' 1 O ~ '~ O n O (D N ~ ~ n n o ~. t~ N !~ n ~• ~ ~ 0 0 0 °o °o ~ °o o° o° _ o° _ °o ~ O ~ ~ o m cn w ~ o Q °o o ~ a aNO o ~ 0 o~ v 0 ~7 ~ ~ ~ . CD C!1 ~' O p 7 (O ~' cn -d ,oo.• ~ ~' ~. N ~ cQ cD 3 CD o -~i~ fD fD ~ X p7 (~ ~ ~ ~ 7 (O ~ -p m rn N = a ~ ~ N .O•« y, > ~ ~ ~ ~ (~ O ~ N' ~' O N ~ Q ~ ~ n O n 7 ~, -, n ~ > O ~ Q v ~ ~ ~ ~ ~ N ~ ? yrt ~ m ~ `G ~ ~ O p~ > a ~ ~ ~_ ~ (D ;~ m ~ ~ m O 3 N o d N ~p ~ N N (D to _ O ~ ~: N ~ ~ -, ~ N N ~ ~ ~ C rt ~ N j' N (D O A o 7 C ~ ~ dJ fl1 cn O N ~ ~ ~' //^~ V J ~ U O ~. 1 m~[ f.l~ m W m w a O C 7 n m -, ~_ O v .. m 0 0 ~ 1 1 ~ ~y ~ ~ ~ D --~ ~ . 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