2016-06-28 HRA Agenda PacketPLEASE TURN OFF CELL PHONES & PAGERS IN COUNCIL CHAMBERS.
AGENDA
MOUND HOUSING & REDEVELOPMENT AUTHORITY
REGULAR MEETING
TUESDAY, JUNE 289 2016
MOUND CITY COUNCIL CHAMBERS
PLEASE NOTE EARLIER START Page
1. Opening the meeting
2. Action approving agenda, with any amendments
3. Action approving minutes: June 14, 2016 regular meeting 1-2
4. Action approving payment of claims 3-7
5. Catherine Pausche, Director of Finance and Administrative Services, 8-12
summarizing the results of the TIF analysis of TIF District 1-3 Mound
Harbor Redevelopment prepared by Ehlers Financial Advisors
6. Adjourn
Fige-11gre-l[wa" - •- �-
June 1.4, 2016
The Mound Housing and Redevelopment Authority in and for the City of Mound, Minnesota, met in
regular session on Tuesday, June 14, 2016, at 6:55 p.m. in the council chambers of the Centennial
Building.
Members present: Chair Mark Wegscheid, Kelli Gillispie, Heidi Gesch, Ray Salazar, and Jennifer
Peterson
Members absent: none
Others present: City Manager and Public Works Director Eric Hoversten, Community Development
Director Sarah Smith, Director of Finance and Administrative Services Catherine Pausche, City
Attorney Melissa Manderschied, City Engineer Dan Faulkner, Administrative Assistant Mary Mackres
Public Present: Dede King, Nicole Brodzik, Paul Paine
1. Open meeting
Chair Mark Wegscheid called the meeting to order at 6:55 p.m.
2. Approve agenda
Wegscheid requested Item 5 of the agenda read: "Action on a resolution authorizing the execution
and delivery of a management agreement with Aeon Management LLC'
MOTION by Gesch, seconded by Gillispie, to approve the agenda as amended.
All voted in favor. Motion carried.
3. Action approving minutes: May 24, 2016 regular meeting
MOTION by Gesch, seconded by Gillispie, to approve minutes from May 24, 2016
regular meeting. The following voted in favor: Gesch, Gillispie, Wegscheid, Peterson. The
following voted against: none. The following abstained: Salazar. Motion carried.
3. Approve claims
MOTION by Gesch, seconded by Salazar, to approve the claims in the amount of $14,369.43.
All voted in favor. Motion carried.
4. Action on a resolution authorizing the execution and delivery of a mana-gement agreement
with Aeon Management LILC
Catherine Pausche stated Aeon is on track to assume management responsibilities for
Indian Knoll Manor on July 1, 2016 on a month to month basis until the transfer of ownership.
Pausche noted the contract is the same agreement that was in place with Common Bond. Aeon
will be billing the HRA for their labor and incidental expenses and Pausche will be managing the
HUD compliance reporting.
MOTION by Salazar, seconded by Gesch, to approve the resolution. All voted in favor.
Motion carried.
111A RIVIA • •
-1-
HRA Minutes—June 14, 2016
5. Catherine Pausche, Director of Finance and Administrative Services, and Sarah Smith,
Community Development Director, requesting discussion on Tax Increment Financing (TIF)
Policy
Chair Wegscheid offered the commission the option to table Item 6 if any commissioner felt it would
be a lengthy discussion that would delay the start of the regular council meeting, but the
commission opted not to table it.
Pausche stated that the concept of a Tax Increment Financing (TIF) policy and application evolved
over the past year while meeting with prospective developers. Pausche said the recovery has
begun and that it is being driven by housing as opposed to commercial/industrial. Pausche said the
policy is an attempt to establish a foundation for determining when the city is willing to subsidize a
project. Pausche said it is anticipated a housing TIF and/or tax abatement will be requested in at
least two upcoming projects and noted that Mound has not had a housing TIF before, only three
redevelopment TIF districts.
Wegscheid stated it is a good idea to have the TIF policy in place and noted that the policy can be
adjusted at any time. Wegscheid suggested putting the financial items listed on page 31 of the
application, be put in chronological order.
MOTION by Wegscheid, seconded by Gesch, to recommend approval of proposed policy and
application format to city council. All voted in favor. Motion carried.
6. Adjourn
MOTION by Gesch, seconded by Salazar, to adjourn at 7:04 p.m. All voted in favor.
Motion carried.
t
Chair Mark Wegscheid
Attest: Catherine Pausche, Clerk
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Kill'
S' • •
DOLLARYEAR BATCH NAME
AMOUNT
-3-
CITY OF MOUND 06/16/16 10:40 AM
Page 1
Payments
Invoice 134272
5/6/2016
Cash Payment
E 680-49800-210 Operating Supplies
1/8" SPLIT KEY RING & 8 KEYS- IKM
$17.71
Invoice 134416
5/11/2016
Cash Payment
E 680-49800-210 Operating Supplies
PUMP N GO SPRAYER- IKM
$24.29
Invoice 134648
5/18/2016
Cash Payment
E 680-49800-210 Operating Supplies
RETURN -PUMP N GO SPRAYER- IKM
-$24.29
Invoice 135038
5/30/2016
Cash Payment
E 680-49800-210 Operating Supplies
1.33 GAL RTU VEG KILLER- IKM
$31.49
Invoice 135040
5/30/2016
Cash Payment
E 680-49800-220 Repair/Maint Supply
SINK DRAIN WRENCH
$16.19
Invoice 135070
5/31/2016
Transaction Date
6/15/2016
Wells Fargo HRA 10120 Total
$74.37
Fund Summary
10120
Wells Fargo HRA
680 HRA PUBLIC
HOUSING
$74.37
Pre -Written Checks $0.00
Checks to be Generated by the Computer $74.37
Total $74.37
$74.37
In
CITY U N 06/23/16 10:23 AM
Page 1
Payments
-5-
Current Period: June 2016
Batch Name
062816HRA User Dollar Amt $2,023.26
Payments Computer Dollar Amt $2,023.26
$0.00 In Balance
Refer
6
_
Invoice
Transaction Date 6/23/2016
Wells Fargo HRA 10120 Total
Refer
1 FRONTIER/CITIZENS COMMUNICA
Cash Payment
E 680-49800-321 Telephone, Cells, & Radi PHONE SERVICE IKM 6-13-16 TO 7-12-16
$256.57
Invoice 062816
6/13/2016
Transaction Date 6/22/2016
Wells Fargo HRA 10120 Total
$256.57
Refer
2 REALPAGE, INC
_
Cash Payment
E 680-49800-475 Tenant Related Services MAY 2016 CALL CENTER MTCE PLAN &
$143.00
ROLL OVER PHONE NUMBER IKM- FINAL
INVOICE
Invoice 11605015337
5/18/2016
Transaction Date 6/21/2016
Wells Fargo HRA 10120 Total
$143.00
Refer.
.a.. 3 SIMPLEX GRINNELL
Cash Payment
E 680-49800-440 Other Contractual Servic
ALARM & DETECTION MONITORING 6-1-16
$210.00
THRU 11-30-16 IKM 6 MONTHS
Invoice 78694255 6/6/2016
Transaction Date 6/22/2016
Wells Fargo HRA 10120 Total
$210.00
Refer
5 SUN PATRIOT NEWSPAPER -CITY
_
Gash Payment
E 680-49800-310 Other Professional Sero! LEGAL NTCE- PUB HEARING- MAJOR
$77.10
SUBDIVISON- & CUP APPS AEON- 2020
COMMERCE & 5524 SPRUCE RD- 6-18-16
Invoice 3666674
6/18/2016
Transaction Date
6/22/2016
Wells Fargo HRA 10120 Total
$77.10
Refer
7 VOGEL, THOMAS
_
Cash Payment
R 680-49800-38100 Dwelling Rental
Refund Security Dep #400 Vogel less $16
-$16.00
prorated rent
Invoice
Cash Payment
G 680-22830 Security Deposits - Tenant
Refund Security Dep #400 Vogel less $16
$250.00
prorated rent
Invoice
Cash Payment
G 680-22833 Security Deposit - Interest
Refund Security Dep #400 Vogel less $16
$4.59
prorated rent
Invoice
Transaction Date
6/23/2016
Wells Fargo HRA 10120 Total
$238.59
Refer
4 WARNERS OUTDOOR SOLUTIONS
_
Cash Payment
E 680-49800-440 Other Contractual Servic
MOWING SVC- IKM MAY 2016- 5 MOWS
$610.00
Invoice 106784
5/31/2016
Cash Payment E 680-49800-440 Other Contractual Servic
SEEDING, FERTILIZER, CORE AERATION -
$488.00
IKM MAY 6 2016
invoice 106784
5/31/2016
Transaction Date
6/21/2016 Wells Fargo HRA 10120 Total
$1,098.00
-5-
CITY OF MOUND 06/23/1610:23 AM
Page 2
Payments
Current Period: June 2016
Fund Summary
10120 Wells Fargo HRA
680 HRA PUBLIC HOUSING $2,023.26
$2,023.26
Pre -Written Checks $0.00
Checks to be Generated by the Computer $2,023.26
Total $2,023.26
CITY OF MOUND 06/23/16 10:26 AM
Page 1
Payments
Current Period: June 2016
s:
Batch Name 0516HOIS-HRA User Dollar Amt $1,785.18
Payments Computer Dollar Amt $1,785.18
$0.00 In Balance
Refer 38 HOISINGTON KOEGLER GROUP, / _
Cash Payment E 680-49800-310 Other Professional Servi .2020 COMMERCE -AEON PC 16-14-18 MISC $1,785.18
PLANNING SVCS MAY 2016
Invoice 015-015-14-2 6/10/2016
Transaction Date 6/22/2016 Wells Fargo HRA 10120 Total $1,785.18
Fund Summary
10120 Wells Fargo HRA
680 HRA PUBLIC HOUSING $1,785.18
$1,785.18
Pre -Written Checks $0.00
Checks to be Generated by the Computer $1,785.18
Total $1,785.18
-7-
.
'ink
MEMORANDUM
Date: June 23, 2016
To: HRA Board Chair and Commissioners
From: Catherine Pausche, Director of Finance and Administrative Services
Subject: TIF 1-3 Analysis conducted by Ehlers and Associates
The HRA approved a proposal from Ehler's and Associates, the City's financial advisors, to
analyze TIF District 1-3 Mound Harbor Renaissance. The objectives were as follows:
1. Review TIF collected to date and ability to repay outstanding bonds
2. Review of parcels base tax capacity to assure the County has recorded it correctly based
upon tax exempt status (city owned), current uses, etc.
3. Prepare projections of future TIF to be generated through the term of the District based
upon known developments either approved or currently under construction and the
impact on the ability of the City to repay the bonds; and
4. Determine how much additional development would be required by 2018 to make up any
shortfall to repay the City's interfund loans
The results of the analysis are summarized in the following two scenarios, one where there is no
additional development than what is currently underway or completed, and the second that shows
the amount of additional new development that would be required before 2018 in order to repay
the outstanding interfund loans to the dock fund and general fund/levy by 2031, when the district
decertifies:
Scenario 1 Scenario 2
No new development p New development -
(Assumes no proceeds from sale of land)
Lost Lake:27 Townhomes & Caribou 27 Townhomes & Caribou
Harbor District: - $27.756 M in new development
P
Lost Lake Tax Increment Estimate: 105,512.41 peryear 105,512.41 peryear
Harbor District Tax Increment Estimate: - per year 357,878.28 ° per year
Dock Fees Interfund Loan (Avg $46K for 10 yrs); 452,784.00 ; net total net total
Levy Interfund Loan (Avg $175K for 21 yrs) 31684,797.00 net total; - net total
in
TIF 1-3 Analysis
Page 2
It should be noted that these scenarios are the two extremes and that the City/HRA could
consider a partial development of the Harbor District while waiting on the commercial market to
rebound. The challenge will be to determine what amount of density is desirable in the
downtown area. The City owns 4.88 acres in the Harbor District, or 88% of the land, which
makes it an attractive development opportunity.
The $4.02M in TIF bonds that are currently being repaid through tax increments and interfund
loans were used to finance the dredge of Lost Lake which provided public access to downtown
and added docks to the municipal dock program. In addition, a portion was used to purchase
blighted properties in the Harbor District to ready the area for redevelopment. It can be argued
that this significant increase in public benefits justify tax base and dock fund support, in the event
tax increments are not sufficient to repay the bonds and interfund loans. Therefore, Staff
believes flexibility and patience are an option to ensure any development in the area provides the
long term benefits the community desires.
Scenario 2 of Ehlers analysis shows that an additional $27.756M in new development would be
needed to repay both the bonds and interf ind loans. - This equates to either approximately 180
apartment units and 6,300 SF of retail or 85K - 120K SF of retail, which is not realistic to
assume the Mound market can support. The 2013 market study conducted by Maxfield Research
Inc. summarized potential demand for the area in the following table:
Retail
cialty Retail
Housing
Ma rket Rate For -Sale TH's/Condos
Affordable For -Sale TH's
Market Rate Apartments
Affordable Apartments
Senior Housing
Limited -Service Hotel
Source:Maxfield Research, Inc.
DEMAND SUMMARY
DOWNTOWN MOUND
2010 TO 2020
15,500 to 19,000 additional sq. ft. through 2020
15,000 additional sq. ft. through 2020
5,900 to 7,800 additional sq. ft. through 2020
60 to 70
additional units through 2020
16 to 18
additional units through 2020
80 to 90
additional units through 2020
54 to 60
additional units through 2020
50 to 70
additional units through 2020
future development/ later in decade
Prospective rental housing developers who have inquired with the City have mentioned that there
is a minimum threshold in number of units to support the kind of common area amenities the
market desires. For one developer, that was 150 units which would equate to 3 or 4 stories on
approximately 5 acres. It is also apparent that the rental housing market is leading the recovery
and that Mound has excess capacity in existing commercial and office space developments in
other areas of the City, both factors that are likely to deter major investment in commercial/retail
in the near term.
in
TIF 1-3 Analysis
Page 3
The realities of the current market conditions will require the City/HRA to rethink its vision for
redevelopment and what the City/HRA can do to remain attractive and competitive to
prospective developers and commercial enterprise in order to achieve the desired outcomes.
Recurring themes can be summarized in the following SWOT analysis:
Strengths
® City has addressed infrastructure and blight issues city-wide and has vastly improved the
City's image
® Mound weathered the recession by investing in sustainable development and is well
positioned for the next phase
• City enjoys many amenities including Lake Minnetonka, trails, proximity to Twin Cities,
a highly rated school district, strong civic and athletic associations and an array of
special events all contributing to a strong quality of life
• Mound has effectively established a central downtown hub with the Harbor District
serving as the potential "central place" or social heart of the community
® Mound has achieved "multi -modal" access to downtown
Weaknesses
• Not located on a major highway and location on Lake Minnetonka makes drawing from
other more populous communities less realistic (Wayzata and Excelsior have Plymouth
and Minnetonka)
• A large portion of the population commutes to work in other cities
• Mound owns one of the only large parcels of contiguous developable land (Harbor
District) and developing other areas would depend on assembling land from multiple
private property owners with varying levels of motivation
Opportunities
® Minnetrista's housing market continues to develop that could create additional demand
for services
• Target businesses serving local household and business base such as insurance agents,
attorneys, accountants, financial planners, banks, dentists, chiropractors, medical
offices, beauty related services, outfitters, and specialty retail
® Mound continues to experience infill of existing lots and anticipates new development of
an assisted living community, senior living community on the boarder of Minnetrista, as
well as the revitalization and expansion of Indian Knoll Manor's affordable housing
®, Walgreens development created a desirable destination that will draw consumers from
other communities and help to support other local businesses
® There are 37 Lost Lake docks and only 27 townhomes, so potentially 10 dock sites .could
be dedicated to new construction
Threats
Larger retail centers in Minnetonka and Eden Prairie are still convenient as well as the
growth of on-line retailers diminish the potential to operate locally
IR111
TIF 1-3 Analysis
Page 4
Threats, continued
® New development is more expensive than revitalizing older spaces and Mound has
existing capacity in older developments
The challenge will be to attract businesses that will target needs that are not currently being met
in the community and to determine the level of density for housing developments that would be
acceptable in the downtown district. The City needs to position its financial and operational
resources to ensure a streamlined, enticing approach to managing development proposals that
achieve the long term benefits that the community desires while remaining attractive to
developers. Successful economic development will also depend on the cooperation of existing
businesses to realize the benefits of a broader vision for downtown.
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