##VIDEO ID:cfQ2HupEh50## okay folks we're going to get the meeting started well good morning everybody it is Thursday November 14th 2024 oh half the month of November already gone uh this is the meeting of the Housing and Redevelopment Authority for the city of viina uh and as I mentioned it is November 14th and it is 7:33 am uh I think director benat uh indicated that we have Community comment this morning for public participation there are no public hearings this morning so if you want to call in on uh and address the H in a matter of concern to you that's not otherwise on the agenda or scheduled for a future public hearing feel free to call in here's your contact information on the on the screen and uh that it'll come up fairly fast after the uh meeting agenda is approved and so let's call the meeting order and I'll ask Ari Lind our acting executive director to call the role commissioner Jackson here commissioner agnu here chair huffin here uh next is the Pledge of Allegiance I pledge allegiance to the flag of the United States of America and to the Republic for it stands one nation under God indivisible with liberty and justice for all uh next we have a form of meeting agenda that's been published uh for purposes of this particular meeting to the members of the H the Commissioners and the public is there anyone on staff or uh H commissioner that wishes to amend the meeting agenda in any former fashion all right hearing nothing is there a mo motion to approve the meeting agenda is published so moved second Mr Jackson moves commissioner agu second the approval of the meeting agenda is published any further discussion all those in favor of approving the meeting agenda is published say I I I opposed carried meeting agenda is approved uh now we are at Community comment if there's anyone in the audience or in the virtual world stand by we're going to uh ask residents of our community if they've got something they want to address with us that's not on the agenda today or scheduled for a future public hearing if they want to address the HRA on any matter of concern to them um so let's go to uh the chambers here first anybody in the audience who wishes to address the h and a matter of concern to them that's not on the agenda or scheduled for a future public hearing all right do we have anybody online we do not sir but because there is a slight delay in the broadcast I would recommend we wait one minute before moving on giving people a chance to dial in if they want my clock shows it at 7:36 so I will come back to you when I have a caller or 7:37 whichever is first very good for it is now 7:37 and I still don't have a caller so I think it's safe for you to move forward with the agenda thank you our usual practice is following Community comment we have the acting executive director or executive director respond to the community comments that were made at the prior meeting uh um acting executive executive director lens anything to report on nope we've got nothing all right very good uh we've got a consent agenda with a couple of items on it uh is there anyone on the uh H that wishes to remove an item from the consent agenda hearing nothing is there a motion to adopt the items on the consent agenda and a single motion so moved a second member Jackson or commissioner Jackson moves commissioner AG seconds the adoption of the items on the consent agenda in a single motion uh any further discussion all those in favor of adopting the items on the consent agenda a single motion say I I I opposed carried the items on the consent agenda are adopted uh we have uh next sequentially on the agenda would be public hearings we don't have any public hearings as we indicated earlier today we have uh quite a significant amount of work to do in the reports and recommendations portion of the agenda and the first matter uh in front of us this morning is the potential approval of uh Tiff Redevelopment agreements with Enclave companies DBA Enclave Dina and Bill nindorf our executive develop our economic development manager will make that presentation and we have folks here uh that can help assist us including our Public Finance team and attorneys uh Nick anhut from ERS and Jay lingren from dorsy are both with us this morning that helped with the crafting I think of these three uh these three proposed uh agreements uh relating to The Enclave project so I'm going to turn now to our economic development manager Bill neindorf Mr nindorf welcome yes good morning thank you happy to be here this morning uh so today is the culmination of of uh many months in fact I'm going on two years of work um so a lot of the information that I'll present this morning you'll see be you've seen before uh there's not a lot that's new but um this morning we have the the final uh uh Redevelopment agreements for this Redevelopment at the 70 7235 France Avenue site currently occupied by the Macy's Furniture Store um so in your packet um you'll find as promised uh three legal contracts about 300 Pages a piece um there's been a lot of work uh involved to get to get to this point um we're not going to go through it in fine detail um but just rest assured we have the full team here this morning if you have any questions uh uh helping to to prepare this has been Jay Jay lingren and will Elliot from dorsy and Whitney uh Nick anhut from Ellers Associates are the the core just to uh look out for the HRA in the city's interest and then of course the developers Ben Ben Ben louser from Lyle communities Patrick Brahma from from Enclave uh are here this morning as well along with their attorneys who helped craft these documents there's two agenda items this morning that that pertain to the same project the first is the Redevelopment agreement that's what I'll focus on first and then the second is the creation of the Tiff District um the two items hand inand um what I'd recommend with your uh with your consent Mr chair is to go through both of the proposals um first answer any questions and then uh after we have the questions answered then take action on both agreements on both the um contracts with the developers as well as the creation of the Tiff District yeah thank you yeah please proceed in that fashion so with that in mind the the the reason that we're here this morning morning is really to focus on the Reed on the proposed Redevelopment of the site um the developers are poised to invest over $300 million into that property to completely TR transform it from the late '70s single use commercial building which has been a great part of our community for 40 plus years we're excited to have Macy's continue on in a Dina just in a different location um and they're poised to see that redeveloped into a vibrant mixed use destination um as as you're aware as the city council you've approved PUD number 25 and all the site plan approvals for this project so those got wrapped up in September in October but also as we've been discussing for for several months now um uh there is a financial gap that hinders this project from moving forward so for the last several months um as this project built up steam working through the Planning Commission working through the city council on preliminary approvals we started engaging more in the conversation about uh what that Gap is why it exists can we can we shrink it can we make it smaller uh and then finally how could the city help as a partner to bridge that Gap to actually see this Vision uh become a reality our recommendation this morning is is consistent with what we had in the term sheet that we shared with you back in July and August and that is to use a combination of tax increment financing uh the traditional pay you go Tiff notes um as well as a small portion of spark uh that spark program in ad um has a few million dollars in it um those are tax dollars that have already been collected um in 20121 the city of Adina and every city in the state received a special uh uh authorization to invest those dollars um but that special authorization ends next year and so um our recommendation is to tap into some of those spark funds to reduce our Reliance on tax increment financing so we'll go through that a little bit more detail as as you pondered uh how to move forward this morning um I repeated some of the questions that we've that we've discussed uh earlier in the year um and that's really regarding whether or not tax increment financing is appropriate for this project uh this project as as you're aware has evolved um from March of 2023 uh as when the developer first first uh approached the city with some Concepts um those Concepts changed and evolved over time um but fundamentally um uh as the H sits this morning you're not look you're not here as a regulator you're here as a financial partner to actually see this Vision take place so so some of the questions that you might want to consider are whether or not this project delivers a suitable degree of public benefit um is the use of Tiff pgo notes warranted to allow these benefits to be achieved um we've also talked about uh other options in the past for example uh uh it is theoretically possible to not use Tiff if we were to relax and wave a lot of the other City standards affordable housing sustainability Park fees Etc um uh but as we've been moving forward to craft these documents it's our recommendation that we stick with all this all the standard City policies and use uh Tiff and Spark to bridge these gaps and see this project happen so there's been a lot of process to date on this site um term sheets public hearings Etc uh this morning uh we're here to consider the Redevelopment agreements uh three separate agreements uh and also to approve the Tiff plan today we meet as the HRA so any action any approvals here this morning are conditioned upon final approval next week at the city council so next week uh in the evening on the 19th we'll present the same information uh in that Forum presuming the project moves forward with the approvals they still have to finance it they still have to build it um and then they still have to get their all the inspections and whatnot so there's still quite quite a road ahead uh for the developer but it all is it all is dependent upon the project getting financed and after months of reviewing the materials reviewing the financials meeting with the developers hearing from some of their investors and lenders um staff is convinced that uh there is a financial gap without the use of City involvement through Tiff and Spark we don't believe the project will move forward um so I've got renderings of the project I'm not going to go through those in a dino when you say don't move forward you mean don't move forward in that form would not move forward in this form correct the site the site plan that's been approved would not would not be realized so in a Dina um in addition to the state requirements we also add another layer of refinement to ensure that anytime we the city gets involved with Public Finance that there's uh defined public benefits that are delivered that's not a mandate by state law but it follows our practice in a Dina and our policies in a Dina so in the report as as we've discussed in the past there's a lot of public benefits in this project um first and foremost is just the economic benefit that's something we tend to gloss over um because a lot of people get excited about what we're actually going to build but the main reason that we're doing this is to grow the tax base and strengthen our community so a project of this scale and c and caliber would increase the annual tax creation by a factor of 10 uh it would increase the market value by nearly a factor of 20 um so truly a transformational change additionally a project of this scale creates a lot of upfront funding for the city that would not otherwise be realized for example um park mainten or Park dedication fees $2.8 million of of fees that will be directed to the parks department to be used in any park within the city of V about $1.9 million in sewer fees um not the most glamorous fee structure utilities aren't aren't always exciting but $1.9 million to help the sewer system that serves all of a Dina and $1.6 million to help the water system that serves our whole Community through this deal we've also NE negotiated a park maintenance agreement uh uh I think I mentioned before that was a sticky point with with the developer they're not they weren't very happy about that but we find since there since there'll be more people taking advantage of the park um we like that we like the vibrancy but the developer has agreed to uh to fund about $80,000 a year in park maintenance fees that would be directed to the centeno Lakes Park to defay some of the operational costs of that facility and and that's nothing new to a we've been doing that since the '90s when we built Centennial Lakes originally um but this is the first project along the park that we've used Tiff in for decades so we wanted to continue that tradition and make sure that there's a strong funding stream for that Park the other key benefits are the the layout of of the site creation of New Roads sidewalks bike trails um so these are the site plans that we that we pulled from the approved project back in September um about 45% of the property is outdoor space and that will all be covered by a public easement which means that in perpetuity the public can use that space um while the developer is responsible for keeping keeping it in good repair good condition um the blue spots here show the public art sculptures and murals that were included in the site plan through the Tiff agreement we can lock lock the developer in to make sure that there's always uh the public art on the property in good condition and then one of the most unique things about this project is securing easement rights for the uh future creation of a pedestrian Crossing that would either go under or over France Avenue to connect these two sites across the street um uh which it's not just about the sites it's about those neighborhoods it's connecting the cornelian neighborhood on the west to the um centeno Lakes neighborhood on the East and vice versa so uh no final decisions on whether or not uh we'll actually build that project but through this Tiff agreement we have secured rights as well as funding uh should we choose to build that affordable housing has also been a key benefit in this project this is the first one um I think in a long time that we've done a combination of rental and ownership units um so we'll have uh rentals in three of the buildings and ownership condos in one of them and then indoor public parking the the developer has agreed to uh issue public easements so that the general public can park in the in the buildings to either patronize the build the businesses on site or to go to the park or to go to the shop next door or across the street um and then one of the last public benefits is the sustainable buildings policy uh when Tiff is used that policy kicks in um so there'll be rooftop solar there'll be um on-site storm water one of the buildings will be lead CER c ified three of the buildings will be um National Green Building um certified and then uh also public benefits pursuing equity and inclusion we've defined measurable goals for the contractors to make sure that people and businesses that are underrepresented in the in the construction trades have a fair shot of getting a job on this project that extends to both the workers on the site as well as the subcontractors that would have a piece of the overall Pro project in the past we've also you've asked us to model other Alternatives what if we approve something else what if nothing happened um uh I'm not going to go through that again unless there's questions but um would we actually let me back up um we talked about that in in uh in October with you um we had some early estimates that that I prepared and we had ERS refine those estimates so the outcome is the same um uh but we've got a little bit more um comparison here and and this is one slide that I think is important to realize or to take a look at so this is the life of the Tiff District the 25e district um the B the Red Bar on the bottom shows that if nothing were to happen that's just the slight inflationary increase of the value of the property if everything were to happen if the project gets built but without Tiff if we wave all of our policies wave the fees and actually build it without Tiff that's the orange bar at the top if we build it with Tiff that's the blue bar in the middle so certainly if we would be willing to relax our our policies and standards in a Dina it might theoretically be possible to build this um in October the developer showed you a sketch of what that might look like um but in the in the 25y year term of the district there definitely is a differential we we want to acknowledge that we also want to acknowledge that the city is going to be here for longer than 25 years when we build these projects we're looking at the long-term impact of the community and that's what this graph shows so the left the left portion of of this graph is what I just showed you um the differential though is look in the years after the Tiff District expires that's when the project with the affordable housing and all the public benefits When that's delivered even with Tiff just a few short years after that Tiff District expires the value of that project continues to grow and escalate and surpass a similar project that was built without Tiff um so we find both both in the sh in the short term and the long term we're able to recognize not just the public benefits of the housing and the parking and all the public space but also a long-term fiscal benefit to support the community we've evaluated uh as I mentioned all the developers financials we've looked at that tax base growth we've looked at the impact of the school district and the county and the state um uh we were also asked to look at the park maintenance fees and what would what would happen if we built the project with Park maintenance fees or without it's a very simple graph to chart um without the use of Tiff without the The Leverage to to encourage and ask the developer to do this that's the blue bar on the bottom we'd continue to get nothing uh when we use Tiff and we're able to to to uh pursue this goal we're able to get those Park fees um so they stabilize at about $80,000 a year and then escalate at about two and a qu% interest um they do they're not permanent though they do expire after 30 years working with others we've reviewed their their funding we've reviewed the scale of the project um as you might expect for something of this caliber as they've repriced it um the price has increased in the last couple months by almost $10 million so they're currently up to about three 309 million and change to build this the Tiff amount is the same though that that's that's how we use Tiff in a d just because their project cost goes up we don't automatically escalate the Tiff so we're still look still recommending a tiff contribution about $22.87 million to finance the project we we've reviewed how they how they'll spend the money where those cost drivers are and we've we've refine the analysis to confirm that there still is a gap so we have a slide like this for each of the pro each of the of of the buildings I'll just focus on one of them very briefly when you look at the cost to build the project when you looked when you look at the in that's realized compared to The Debt Service that they have to pay to to uh pay off the project without the use of Tiff they would have a return of about 5.6% no investor is going to invest in a project if that's their return for this level of risk um with Tiff we can reach a market return um we're always sensitive to that market return we want to use Tiff just enough to get it financed without over subsidizing the developer or the investors or the banks so we've capped our return at 7.1% um this is for the Northwest building uh and we find that with the use of tiff with the project being completed we'll have enough Tiff generation to make those numbers work the Tiff note is is the same um it's shown here if in aggregate uh 22.87% the project and that's the staff recommendation to fill using a combination of of Tiff notes one for each project and um and Spark as well the terms are the same and these these should look familiar from from the term sheet uh the the risk and responsibility rests with the de with the developer they have to acquire the site secure debt secure investors go out for bid get the contractors manage the project um that all rest with the developer we've also continued to urge the developer to pursue grants from deed met Council in hanapin County um we expect to do that in the spring in the next Grant cycle so hopefully if we're successful in that we'll be able to reduce the amount of City contribution by getting support from some of these other agencies um I want to take just a minute to talk about spark I I gave a quick introduction but we had we didn't talk about this a lot during the term sheet I just want to make sure that we're um that I talk through it thoroughly so I mentioned earlier those spark funds are in a position where it's a use it or lose it situation those are tax dollars originally collected um primarily from the Southdale 2 District um uh they are they're in an account and we as a city we have until late 2025 to spend or invest those dollars um uh if we choose not to not to spend those we return them to the county we staff would fire recommend that we keep those tax dollars here in the city of Adina rather than sending them to the county and and the state um so at this point we have just slightly over $5 million in our spark fund we funded three or four projects um they tended to be smaller the biggest one is the finch we put about $2 million towards the Finch to build a new road to get to the park and and the the back of the properties um but even after those Investments we still have about 5 million left so we want to make sure that we put that towards good projects that we feel have a real strong shot of getting built in the you know before that deadline so in this contract we've crafted it so that the Le The Leverage and the choice rest with the city not with the developer so at this point we estimate there'll be $1.5 million minimum available to support this project Our intention is to use spark once a developer gets their Bank financing and we know it's going forward our dollars would serve as as equity and they would go into the project during the construction phase they'd be secured by a forgivable loan agreement um dorsy and Whitney prepared that document just to make sure in case anything goes wrong those funds are repayable to us to the city um we also gave the city flexibility that in case there's more monies available we have until Midsummer next year to alert the developer that we'd like to use more spark um and then they can adjust their Equity Investments as well the the key driver there is for every dollar of spark that we use it's one less dollar of Tiff and so that's what we're trying to do here is maximize the resources we have rather than run a risk of turning those dollars back over to the county once they go to the county there's no assurance they'll be returned to a Dina right they could be invested anywhere commissioner Jackson has a question for you and I do as well on this slide yes thank you Mr chair so there's a lot on this slide um if you say that we are putting money in as Equity partners and it's structured so that if it's sold it's a forgivable loan tell me a little bit about the equity interest that the city will be getting um yeah and that's not how not how it works okay yeah yeah I'm really foggy on what this is so the um if we use if we use spark Well normally A din use as a tiff note and that note is issued after the project is finished and we can point to the shiny project and it's there and it's we know where the money is going in this instant we don't have that we don't have that amount of time to use spark the the right to use spark expires in in about a year and so we need to put those dollars in earlier so once it's under construction I don't have a finished project but I have a started project and so at that point we feel confident that the project will move forward um but rather than just giving them the money as a pure Grant um hypothetically if we did a grant if the project were to fail and not get finished our money would be gone so instead we want to secure it as a forgivable loan which which the loan would be forgiven the they finish the building because our goal isn't necessarily to maximize the return we're not an investment bank that's not how these dollars are set up but it's to but it's to get good projects built in the community so um essentially we would provide the funding to the project there's no return there's no interest rate um unless they fail then they're theoretically would be okay so that's not answering my question um so is this This is complicated so couple of things first of all do we have will we have an equity interest in this project going forward not as an equity investor no so it it will operate like a grant even though it's not technically not a grant correct correct okay so then um in the spark agreement or policy that we set up I was under the impression that we wanted to actually use these larger amounts as loans so that those funds would recycle into future projects so tell me how this is not a and it's not structured as a loan but but how did we make that jump from a preferring loans to a I'm going to call it a quasi Grant sure sure and I might uh ask Nick an Hut to get into some of the details but that was our you're correct that was our goal in 20121 when the program was established uh Our Hope was to be able to to to create a revolving loan fund um we've learned over time that the way the state law is written and the way that it's structured that's not possible and so um it would have been great if it would have worked out that way but um maybe maybe Mr anot can provide a little bit more detail on that um but we just found it what we had hoped would work in that fashion won't work out thank you uh Nick and Associates and um yes we've combed over the statute and we understand it it it is derived from Tiff dollars from Southdale 2 so it is still treated as tax increment dollars and the state auditor has provided opinions about how they need to be uh restricted in their use and so when you use these dollars for a project if you use it as a loan which is authorized the dollars that come back need to still be returned and treated as if they were tax increment dollars and so they would be restricted in their use and how you could apply them to other projects you would also need to report on those activities annually which also incurs some administrative burden and cost over time so if it were structured as a loan there would be a requirement that you continue to report on them and then you would only be able to use them for specific activity related to the original Tiff District which was a Economic Development District in Southdale 2 and there would be a very limited type of project that you could potentially use those dollars to assist the second point that I will add as well is that when you are lending money that needs to be repaid to the project you're actually you're providing a benefit to the the development but you're widening the Gap slightly because now they need to actually repay those funds so we would not necessarily be able to stick to that original Gap amount if you did structure this as a loan we'd have to think about maybe expanding it a little bit so instead of 22 it might be 23 million or 24 million to kind of offset that future repayment liability um so kind of those two reasons together led us to a conclusion that we should try to strive to potentially use this resource which we don't have to but would potentially provide some benefit to the project would limit the H's Tiff liability into the future um but maximize uh how much those spark dollars could actually offset the gap for this project and what we would actually anticipate you'd be able to use those funds for in the future thank you Mr U thank you I want to build on that a little bit more so if it were repayable or we asked for it to be repaid and it still had those constraints on it that you mentioned of needing to be applied within like the similar Tiff District area and we weren't able to do that what would happen to that money would it have to just sit there or does it get kind of re collected in the the way that it's outlined here on the screen so the the normally under a tiff District when you have funds that are left over there you potentially have the authority to continue to use them for the original purpose that they were applied um you need to maintain them within the funds you need to segregate them and uh report on their activities um there is increasing legislative pressure to return those dollars at that point in time but the way the statute is written right now you're actually able to hold on to them as long as you continue to report and be transparent about how they're being used you can still hold on to them in the hope that you would have a qualified use in the future um but you do again need to continue to report on those activities and it's it's actually a fairly lengthy and and stringent reporting requirement um so I hope that answered the question it did thank you um I have another broader question about spark uh and I do see kind of the flexibility here in the 1.5 to the 5 million and I know we'll be talking about spark later on as well are there any other projects in the pipeline that you've had conversations about that might be able to use these funds and if so do we still have that flexibility to invest into smaller projects between now and then and then determine how much to invest into these larger projects we we do have the flexibility so at at this point there's no large project that we're aware of where we could invest the spark money instead um we still have the reason we we gave a range of dollar amount um a few months ago you authorized a small business uh for forgivable Loan Fund a small business business grant fund actually um I still hope to get another two or three of those done in 2025 um so i' I've withheld some of the monies in hopes that I can find a few of those other businesses um I continue to to promote that project and continue to reach out um the ability to use these monies is pretty limited so I've only found um one so far uh but we'll keep looking uh and I I think by the end of the year we can probably find a few other ones to support uh in that small business program but at this point we don't see any other big project that would be um a better use of the larger amount thank you I the one I'm remembering is the O crpe and I I love that type of work investing into smaller businesses revitalizing some of these areas um so would love to leave that option open as long as we can and appreciate you continuing to Garner interest into that um so thank you so on your second bullet point under number one here it says forgiven after each lot completed we know you've got some range of flexibility that you're requesting under bullet point number one but under bullet point number two when you say forgiven after each lot completed do you mean that there's a portion of it for given after each lot is completed do you have it subdivided or does each lot have to be fully completed and all three have to be completed before there's a forgiveness yeah good question so so um the way that we've written the language um there's a separate Redevelopment agreement for each of the parcels the Northwest mixed use the Southwest condo mixed use and the East um we're not sure which one is going to go first and so we included the spark option in each of those contracts um so if theoretically if the East buildings are built first we'd probably direct the spark funds to that project so those are for are finished we would forgive them um in case one of the other ones goes first we'd probably direct the funds to that one instead and when that one's uh forg when that one's completed we'd forgive it um right now um the folks at enclave and the folks at lifestyle communities are are working their tales off trying to get multiple sites in progress at the same time so it might be possible that we do half to one site and half to the other there are so many options we're not at this point in time I can't tell you which one's going to go first um but they would not have to complete everything to see those funds forgiven it's really on a lot by lot basis okay and Mr lingren you're satisfied that the language of the agreements cover that uh so that you have and staff has that flexibility uh Mr chair commissioner again jayen with dorsy and Whitney yes I am and the other thing is we always have to keep in mind it's been me mentioned but there is a December 31 2025 fully expenditure of those costs so that's why I think it's important to figure out which one goes first and make sure we fully utilize the spark and those three sets of documents I think cover it well Mr anhut could you come back up because there was a question that came to my mind after uh my fellow Commissioners has asked you a couple of questions so if if there are if you used the an actual loan repayment mechanism and the loans were repaid before December 31 2025 uh and because spark requires that those monies be fully expended or be returned to the county at the end of 2025 my sense was that you were saying that there was a there was a way to sort of pull those if you would and and reallocate them to other projects Beyond December 31 2025 if it was a pure loan as opposed to a forgivable grant that is is that a was that a correct interpretation or not Mr chair if you uh established a loan it didn't it would not have to be repaid before that time the the statutory requirement is that we actually use those dollars to expend them on a project so if we offered it as structured it as a loan we' need the developer to be able to show that they've actually been able ble to take those proceeds and use them for development activity on the site whichever site goes first um they'd have to do that by December of 25 could have a loan outstanding and repayable over time after that point but any of the dollars that come back in repayment in that loan are still considered tax increment dollars that need to be returned to the original Tiff District so we'd have to segregate and set up a fund that doesn't need to exist at this point in time anymore um and keep it open in until those funds are fully repaid we'd have to report on that liability take those dollars in and then those dollars that come back can only be used for qualified costs of the Southdale 2 Tiff District as it was originally uh intended and that's a very limited narrow view of type of project that we been potentially use this so this was a temporary allowance given by the legislature because of the pandemic and the lingering effect of of all the uh impacts of the financial markets afterward there was a lull or an inability to finance development projects and so the legislature gave cities across the state this authority to leverage existing Tiff dollars you know in a way that they otherwise would not be able to do and so that's what we're trying to take advantage of but we need to understand that if we set it up as a loan the dollars that come back are not going to be able to be used that way anymore they're going to have to be um as originally intended prior to the legislation restricted to Southdale 2 and its its activities all right so as as a and this may take us full circle again but as the as the three of you this what I would call really First Rate Public Finance advisory team economic development director and incidentally I thought this work was just superb presentations of agreements as I went through all the materials I thought really this was really Superior work that was done on behalf of the city of Adana so you must have thought about all of these things as you were deciding that there should be a forgivable loan as opposed to the the straight loan with a possibility having some of the M come back into a tiff District after December 31 2025 how did you come to that conclusion I guess is that what we would all want to know because that'll help us understand better what to do sure um a couple reasons and it's really they're they're all pragmatic quite honestly um so it certainly was compelling to consider becoming an equity investor into this project um uh We've not done that before and we don't know another community that has so we'd be charting brand new water um and we needed to get this project done by the end of the year so they can meet their close closing deadline so we weren't confident that we'd be able to to figure all that out in the window that we had um the other time constraint is really that 2025 deadline when we first started the program we thought we could pledge the dollars by 2025 and then maybe they're they're spent in 26 or 27 and in the last couple years that state auditors office has made it very clear no the dollars are spent if they're not spent out the door in someone else's in some contractors pocket paying their employees and their and their suppliers you can't use the money so we wanted to be sure that we don't run the risk of losing the dollars um uh 20 December 2025 is 13 months away and all these projects take time so we felt that the best use of these dollars was to to ensure that they get invested here in Indina um since we have also been talking about these public improvements The Pedestrian CR in and things like that the the other thinking was if we can rely rely more on spark and less on Tiff that creates more Tiff options for the community in the future uh so it's just those pragmatic reasonings it would have been fantastic to be to do an equity deal I we don't want to risk it at this point I see you you kind of leaning into the microphone there maybe you had a supplementary comment uh I just would also comment that I think it provides a little bit more bang for the buck than we we otherwise would have been able to get out of those dollars so as I mentioned a repayable loan we would actually think that we need to maybe offer a little bit more to get to the same place y um I also think that we want to be careful about thinking about Equity investment in a project when you're an equity investor you're also exposed to the downside of the project whereas right now we are not right it's all incumbent on the developer and the owner of that property to maintain it and operate it as a successful property um an equity investor would be part of that responsibility and have to maintain and maybe be exposed to years when it's not paying for itself into the future and so thinking about those types of things it seemed like a much more um consistent role for the city to offer this as a as a forgivable loan it's somewhat akin to what we did with the theater you you we loaned the money to build out the the rebuild the Adina theater and then if they stayed in operation a certain number of years portions of the loan were forgivable that's exactly correct and and the key thing there is the community loved that historic sign but we didn't want to get involved and get into the headache of fixing it and repairing it but the owner was willing to take that uh that responsibility commission Jackson's got some follow on here I think I've got some unrelated questions um so I don't want to um interrupt the conversation about the this portion of it but related to the present oh yeah yeah absolutely okay yeah I think that's fine I think we're probably done with this particular subset so um I just want to make sure um talking about the underpass if we decide on the underpass and we want to pay for it with Tiff dollars will we need a new Tiff District a new Tiff agreement um tell me a little bit about the process for getting to that to pay for that underpass if if we decide on it sure sure so uh if we do decide to move to move forward with that underpass or any similar kind of improvement in that area we by the end of next week we will have created two Tiff districts one on the west side of the street one on the east side of the street those Tiff districts uh that's enough at that at that point so there's no need to create a new one and the decision about building the underpass completely rests with the city so regarding the design the specific location the cost all the details that's a city city choice not a developer Choice um and the timing to build it is also with the city you know if we build it sooner it's probably a little bit more cost- effective to build it sooner than later um but again that all rests with the city uh uh right now where we presume that Tiff from the west side of the street and the east side of the street would be able to pay for most of that project but we still want to go to look at Federal sources State sources because a Improvement of this type um can benefit so many different groups of people and so there's different funding programs out there uh if we have to rely on Tiff you know that's a good back back stop but we hope to find other options so just to be perfectly clear we won't be back in this position again creating a new Tiff District a new Tiff agreement and so and so forth if we decide to do the underpass that the the existing documents should we approve them will be sufficient correct okay great and then sort of you mentioned grants um we're pursuing grants for this if if we approve it we'll continue to pursue grants for um for this development are the documents drafted in such a way that that would reduce the Tiff amount yes okay yes yeah for any any dollar Grant received the Tiff contribution would be reduced okay terrific thank you Mr Jackson raised an important point I think for uh conversation for the not only us but the public and that is with respect to the underpass so the way you've structured this potential uh Tiff agreement is that uh on the increment that would be captured 25% of it goes to the city and the the reason that goes to the city is because we haven't made a decision on what to do with that underpass or or pass way whatever you want to call it under France Avenue uh but we are going to be able to aggregate 25% of the increment to potentially do something like that if the city were to determine Downstream that that wasn't what we wanted to do but we' captured that 25% increment what are the other things we can do with it sure uh there's a few other things we could do um uh any kind of public infrastructure work in that immediate vicinity would be eligible so um uh France Avenue is a county road so that gets to be kind of odd but if there's improvements necessary on France Avenue in that immediate portion we could make those improvements if there's other utility improvements that we haven't already thought about in that immediate area we could fund those as well um bicycle improvements sidewalk improvements utilities Street lighting all those kind of basic infrastructure things in that immediate vicinity we could use with those dollars could be used for uh We've also written in an option in the Tiff plan um that affordable housing could be a legitimate use so if we decided not to move forward with the underpass we could use that 25% to support funding of a different affordable housing project somewhere else in the community um and then there's Al always a pooling provision which allows um some of the Tiff dollars to be spent on infrastructure in other areas um so there there is a finan Cal cap on that we'd work with others to figure out what exactly is available um but it's really affordable housing and public infrastructure so the option we wanted to give the council the greatest flexibility to decide what's the best use of those dollars in the future when they're available good uh this has caused commissioner a to think of something she wanted to address as well and I want to come back to one other topic so this is this is more Broad and it goes back to some of the previous conversations we've been having about this project project and some of the public amenities and what I really like about this project as a whole is not only the the general mixed use that we're seeing as a part of the the multiple sites but the vertical mixed use that's a core component to this we' had a couple of conversations with the developer about some type of community focused area within the Northwest building um multiple ideas were thrown out we weren't committing anything we weren't locking anything in but now that I'm looking at article 3 specifically within the the document here I'm wondering if there's a way we can add something in there as well to require in this component of a open kind of public Community draw location as opposed to just something that would be for residents within that building is that something that's still possible at this stage uh I might ask uh the developer about that I'm not familiar with that previous ask and also Mr Lindgren um so are you is this just a space is it an open space for recreation or is it like a is it a place that would be a community room where you've got a lock on it and well see sure what your that's part of my question is we we' had a couple of conversations and it was kind of vague and I think it was relevant in the sense that they weren't able to go in and get a contract signed with anyone until we were progressing along with the project and my biggest concern is wanting to make sure there's some type of contractual obligation that they do something that is more of that Community draw um and not something that is purely for the residents of this area I want it to to draw people in um and so I'm being vague because I don't want to like contractually overc commit to what this needs to be but I do know that we weren't able to have a firm alignment when we were going through the the site plans on what this would be so maybe come up and speak to me about where we're at right now and then I'll turn the question back to is there any way to contractually include this within the document Mr Brahma thank you for coming up and identify yourself please for the record good morning chair members of the H Patrick Brahma 1660 South Highway 100 St Louis Park I'm with Enclave development team uh happy to respond to to the question and yes there's been a dialogue and it we totally haven't landed on something specific uh there's a few things that I can offer on that Northwest building as far as interaction with the public uh enhancing um uh the public benefit uh within that mixed use building so one thing that we did that doesn't directly answer your question but I just want to make it known it was kind of in the vein of trying to head down the path of making that building more publicly accessible and um inviting for the public first from a design perspective as the project morphed over the months so the last several months we ended up actually expanding the public realm area in that in physically you you everybody that's close to the project is aware that there's a east to west public Plaza that run to the center of the site where that Plaza touches that Northwest building originally there was no bump into the building we ended up actually carving out an area for expanding the public Plaza kind of into that the building footprint more it's a it's a wider public Plaza in that area so there's there's greater public outdoor area uh against that site that's one thing secondly we it's because we didn't know exactly the size square footage or exact location um one thing that we are incorporating in that Northwest building that's not a part of a contract is a is a conference a large conference room or Center we don't know if that's one room two rooms if it's work from home units we don't totally we haven't had have programmed it yet but we're intending to have some sort of conference room that could be used by our uh tenants like the office tenant maybe uses it for a conference that they have maybe the residents of our building use it but also because it's up against the public Plaza the public could access it and we could rent it to the public the public could use it as a public community room for their use as well and so then it could be rented through our uh rental office which is on the same floor adjacent to that um uh as well as far as taking it a step further and committing to like we were talking about theater or is there um other you know like other event space there we haven't we haven't programmed any of that it's still all uh spec space that's right now jll is marketing it we're working with Prospect tenants now uh no commitments at this point but those are the things that we C we have done and and could commit to if you do want it part of the contract now I don't know if that ansers your question it sort of does and I think that we continue to have this vagueness to it which I acknowledge with where we're at in the process I I do understand that um but it's also why I want to have something written in there that is requiring some type of use and I I feel bad because I'm not being able to be like as prescriptive in what I want to see um nor do I think that I should be um but specifically what I'm looking for is something that will be open to the public and draw people to this site um and that's where we had talked about you know whether it's a a comedy club or some type of theater or some type of community Activity Center um I don't think that a conference room that can be rented out meets that expectation and I don't think that purely extending the outdoor space unless it were heav heavily programmed year round similar to what we see at 50th in France I don't think that that meets my expectation either and so it's something a little bit further down um but obviously I don't want to include specificity to the point of it has to be a comedy club like that doesn't make sense um I want some freedom and mobility and and what this actually gets programmed as but I want it to be something that draws people into this site and is open to the public if I all right let's let's think about it this way uh what you're asking for today is um approval of the Redevelopment agreements with Enclave conditioned on Final approval by the city council so it strikes me that between now and the 19th of November when we're going to meet on as a city council you could discuss this issue that's uh been raised by commissioner U to see if we could either amend the contracts that potentially get approved today or agreements they're all conditioned on city council approval anyway right to see if you can work something out and then we could address it at the council level um commissioner Jackson has a thought too yeah just a a question of information when uh 50th in France was redeveloped in that public space was that part of the funding agreement to have programming there or how what was the mechanism for that uh for the for the Nolan Mains project the commercial uses were chosen by the developer so we knew they wanted at least two restaurants um so they ended up with two and a half restaurants basically um but as far as specifying the type of business um it's tough to do that because now you've really limited your pool um of possible tenants um uh and for the programming the outdoor space that was that was written into the Nolan Mains if that was also part of your question that my question is what was written into the agreement M um when we did that Redevelopment yeah so in the retail element there was no no requirement for the type of tenants okay um just any allowable retail use per the zoning um and then for the public space we knew that the public space would be programmed but we didn't specify the type of event or the day of the event or anything like that we just wrote that it shall be allowed to be um used for events yeah I think seeing that language would be really useful for for us before this comes forward again so we can kind of say what we've done before so um uh there's an easement or I'm sorry there's an exhibit I don't remember which number but it's uh the public Plaza exhibit uh we swipe that from Nola Mains so it's part of the agreement today but it only addresses those outdoor public spaces there's no mention of indoor tenants okay so this agreement has the same um requirement that the Nolan Main agreement had very similar yeah okay great thank you Mr brahy you had a little side conversation with Mr GLE um yeah thank you chair members of the H I just wanted to um that way we have a productive conversation between now and the city council meeting next week just want to clarify a couple points maybe we're already on the same page but uh that Northwest building the second floor includes office there's office space there's I think it's 13,500 ft of Office Space that were in the approved plans um that's been marketed by jll we assume that office user would use that or would would be the prospect tenant uh jll is aware of our desire to find a creative use that we've discussed as a potential use in the past so they're trying to Market to entertainment groups as well to see if they can get any interest um there's also uh 5,900 Square F feet of first floor retail commercial space again jlll is marketing that perhaps there's a user that would take both floors maybe there's a creative use maybe it's a club I we don't totally know what it may be the the likely use where the market demand is is some sort of uh uh restaurant user on that first floor fronting France um so just I just want to be transparent that's the that's the currently what we're doing that's what's in the plans that's our anticipation it's part of our performa uh is having those go out and get leased by the market uh again we've provided the direction and the preference from the city to look for those types of users the other thing that's unique in the build is uh on the first floor we have a office and amenity area and then we also and I I can't don't quote me here but I don't know if it's I don't know if it's 1,000 square feet or 2,000 square feet but there's a chunk of space that's it's kind of wedged in between our lobby amenity area and the commercial area that space is to be determined at this point in time and that's where we envision some sort of conference room um that's up against the larger public Plaza area so um I think they're could be flexibility in the programming of that area and having some sort of conference room maybe that the outdoor public area that's a that's you know obviously the programming isn't final determined at this point in time um there might be some flexibility there as well but I wanted to get those pieces out there in case they aren't known and those would be the pieces that I'd be thinking about working with staff on but um my only pause is that if we the leasable space that's in those two areas that I mentioned the second floor and the first floor if that was converted away from being able to make it a you know let the market lease it at leas leasable rates that'll change the the economics of the project I just want to be transparent about that um as I work with staff so we're happy to chat in the next couple days I think that's the way to take it now is to talk talk to staff about it it's a good idea and I think commissioner Egon was saying take a look at it between now and the city council meeting and then we can revisit it there uh the only other thing I wanted to cover today was to make sure that um we understood your staff recommendation here and that everything's contingent on the city council approval but um when when you talked about the but four test I think we're at least I'm pretty comfortable with that but just to revisit one more time the the key question I think you had in your memo and that was does the completed project deliver a level of short-term and long-term public benefit as defined by City standards guidelines and policies that warant the use of tax income and financing and then you had an extensive list of public benefits uh that would be delivered by the developer uh as a result of this project and I think those are all either in your memo or in your slide presentation and um and then you also had some key elements I thought that were important to consider that uh we don't normally see and that is one of the things we've been worried about is how are we going to continue to finance uh that beautiful Centennial Lakes Park and make sure it's stays in great shape and the um and I thought the the the bar graph that you had that showed the uh uh fiscal benefits the uh Citywide Park dedication fee that will amount to almost $3 million and the Centennial Lakes Park maintenance fee of 3.21 were really important considerations here as well in terms of public benefit so um I don't know if you'd want to revisit uh anything relative to public benefit at this point in time but uh you know as I look at your memo you went through maybe I can help you a little bit um compliance with site approvals compliance with Sustainable Building policy creation of new rental and ownership affordable housing units creation of new outdoor public realm spaces including roadways sidewalks bicycle trails landscaping streetscape and public art coordination of site plan with future France Avenue pedestrian Crossing creation of new covered parking uh stalls public parking stalls and those number what's that total number in all those buildings remember about 140 I was going to think that was in my head was 140 exactly yeah uh delivery of permanent public easements at no cost to the city pursue goals to contract with disadvantaged businesses and hire capable workers who tend to be underrepresented in the construction industry uh and then those annual payments in support of the park maintenance fund uh and then those upfront payments on the city's Park fund sewer fund and water fund and and there are additional benefits as well like funding for potential bicyc pedestrian Crossings so um I I I take it all of that led to you uh making the recommendation from the staff standpoint I want to make sure that's clear too that you recommend that the HRA approve the Redevelopment agreements with Enclave uh Adina LLC and lifestyle communities LLC conditioned on Final approval by the Adina city council is that correct correct that whole package of benefits is what led to our recommendation and then the same thing with motion to approve resolution 2024 7 establishing the 72nd France uh number three tax increment financing District again condition on Final city council approval correct okay same recommendation same project that cause either of the Commissioners to have any further followup commissioner Jackson yes thank you Mr chair so uh in in the past the Tiff agreements that I've approved have included something beyond the Four Corners the property and I think it's very important to point out that this was designed in in order to accommodate the underpass and then as as you mentioned Mr chair the money for Centennial l so that's a very important um uh persuasive thing for me to have that benefit beyond the four corners of the thing so for future developments when they come to us I hope that that is what's in people's mind that it isn't just to build the thing but also to improve the overall um city thank you uh so uh I think we'll take these separately uh first of all uh is there a motion to approve the tax increment financing Redevelopment agreements with Enclave Edina LLC and lifestyle communities LLC condition on Final approval by the Adana city council so moved commissioner Jackson moves commissioner agu seconds the motion is stated uh any further conversation about the motion all right all those in favor of adoption of the motion as stated say I I I opposed carried the motion is approved uh is there a motion to approve resolution 20247 establishing the 72nd France number three tax increment financing District again condition on Final approval by the D city council so moved second uh commissioner Jackson moves commissioner uh U seconds the motion is stated any further conversation on the motion all those in favor of adoption of resolution 20247 by motion say I I I opposed carried motion uh to approve resolution 20247 establishing the 72nd France number three taxing government financing district is approved based on Final City condition on Final City Council approval um and just a final comment uh for you Mr nondorf as I went through all the materials here and over time as you've worked on this uh I I think it's really exceptional work and and to have the team that we have uh that represents the interest of the residents of the city of Edina one of them who happens to be a resident of the city of udina who has a special vested interest in addition to being one of the foremost attorneys in the state at the work that he does uh and our Public Finance people uh and all of those that were involved on the other side of this agreement the the level of cooperation I was I would say is extraordinarily uh impressive and the and the the comprehensiveness of the agreements is really uh a model for anything that gets done I think anywhere in the country so congratulations to all of you for working on this project that's U going to create a $300 million plus uh amenity in our community it's really going to help take an area that was 60 to 70 years old gold uh and uh and and and reshape it and take it from something that could have been average to something that's really going to be exceptional so thanks for all that good work now um we're not done we got one more matter here and uh inent City we're going to reconvene here as a city council in canvas to vote when we're done with this meeting uh and the other matter we have before us this morning is 7200 France Avenue South uh staff has been working with the developer there uh on some of the financing issues uh and the loan agreement and Stephanie Hawkinson are affordable development housing development manager will present and we've got some folks here to assist if we need uh answers to questions yes good morning and thank you and I'll try to be fast because I realize that um we're running short on time so um today's request is to authoriz staff to engage um dorsy and Ellers to prepare uh spark agreements loan and all the corresponding loan documents for 7200 France this is also I'm also requesting approve a deviation of the affordable housing policy um to allow for 8% of the units to be affordable but in perpetuity instead of 15 or 10% of the units being affordable for 30 years having 12 units be affordable forever um and this is also to engage our Consultants to draft a first Amendment to the existing 7200 7250 Redevelopment agreement to reduce the percentage of increment being pledged to that so why today and this um graphic was prepared by the Twin Cities housing Alliance to because it's been brought up about the whole issue of site plan approval versus funding and why that order and so they created this graphic when they do trainings um that Developers don't know what's being approved so they don't know the final costs so during the site plan approval process sometimes more articulation is requested or greater setbacks or more glazing or there's something that could be added to as a condition for site plan approval that affects costs so often projects the general process is you go through the site plan approval process then you know what your project is and then you can establish what the costs are so this was recent recently the site plan was recently approved they priced it out um based on that and then we can know what the costs are and determine what is viable whether or not there's a gap um there's also right now there seasonal considerations they would like this to it takes a while between approval to get all the final construction docks done so they can be permanent ready get the footings and it out of the ground prior to Winter conditions setting up this helps reduce the amount of Gap um winter conditions um increase cost for construction and so that increases the Gap because their revenue won't increase so that's one reason why this is coming in so quickly after site plan approval so you know the site we've talked about it a lot so 7200 France we have this was the former Office Buildings it's now a vacant site the public realm improvements were approved previously they approved in April of 2023 with the approval of 7250 so all those site improvements um the site plan all that has been previously approved this was at the time a empty box part of the um what was been approved there are two notes two Tiff notes for 7250 one for the construction of the building in this part B was if 7200 gets built then they get the B note um because what was happening was the parking for 7250 is in 7200 so it helps offset on that plus you have that increment you need the increment from 7200 to help support the Tiff and the Redevelopment agreement for 7250 so even though this is a separate project it is very tied into one that has already been previously approved so you recently approved the site plan as Council for 7200 it's 150 Apartments they reduced it by three so 12 forever affordable apartments it's located along a Transit cord and complies with the same Sustainable Building policy so that make just to make it clear 150 was what was originally approved and then it went up to 153 15 and now it's back to 150 they did some reconfiguring of mixes so two bedrooms take up more space this project um as with the consideration of the site plan does comply with multiple plans that have been previously approved um the race and equity and Idina implementation report our um an our biannual survey where affordable housing is deemed as a major issue our comprehensive plan our SU sustainability um and green policies uh one of the green policies was increasing average population per developed acre by 4% and I know that that that's in the policy plan and this is on a Transit Corridor so increasing populations along the transit corridors to help with the use of Transit as well and creating walkable communities the um addition of the 12 units will help our approve our housing score card card increasing the approved number to 641 and in this area it's the 243 of the 50% or below area mean income so I just wanted to let you know where we were on the scorecard with these units this does include the Macy site they are seeking about $3.8 million as a spark loan again that would be a forgivable loan it's 6.8% of the budget this is a 55 million project um we have been working pretty steadily with um Ellers and dorsy on sizing what is the gap for this development and this is the number that we that was determined um that is needed in order to make this project go what are the cost drivers investor returns you hear that a lot well the truth of the matter is um investors can can invest anywhere I mean they can invest in residential they can invest in anything and they can invest anywhere in the world and so when the market is doing well investing in residential is less appealing when the market does poorly investing in residential is more appealing um and so it's really a market driven and you have to meet the market in order to get the investment or they they walk they don't care about the geography interest rates interest rates are um volatile they went down and they went up you know they're so they're not steady yet there's no steady interest rate uh the other cost drivers is they have to create 65 parking enclosed parking spaces for 7250 that they're not benefiting as a building of 7200 but it's a swap 7250 is doing all the infrastructure 7200 is creating their parking the inclusion of the affordable units there is a cost to that they're not getting Market rents for that there's a cap on the rents they can collect therefore they can't leverage as much debt because there's that loss of income the sustainab building policy has costs associated with it going above building code there is a cost and that um can be calculated and some of the exterior Design Elements so the current tax capacity is about 214,000 as vacant right now now today when you're driving down France Avenue that is what the tax capacity is with the two projects it's a little over about two and a quar million with just 7250 it is reduced if the the site at 7200 remains a parking pad the tax collected on that area that would help serve the approved pre-approved Tiff district is reduced so we have a Redevelopment agreement in place that includes both sites the existing agreement has 10% of the increment going to admin with 90 being pledged towards 7250 and the infrastructure for the whole area with the amended agreement that is part two of this we're um proposing that we amend it to increase the percentage that goes to admin to 20% and reduce the amount that could go towards the project one of this reasons is related to what you were talking about at the last project with Macy's was 25% increment for admin that could be used for other infrastructure type costs and so that that's part of the rationale behind this without using spark we had contemplated amending the current Redevelopment agreement and allowing some of that increment that's being collected to go to 7250 instead we said we have other public needs and we could capture some of that increment from the development of both sites to help with some of that infrastructure so we talked about spark already and we're T and it is a use it or lose it type of funding and there is that time commitment and we and since it was intended by the state legislature to Spur development spur Drive development we created this legislation to get development going and so this is one of those examples where um this is one of those developments that could benefit from the use of those spark funds and you know I prepared this before seing bills presentation so requirements to spark new construction must create jobs even construction jobs and it must be able to um must not be able to proceed without public financing without that three close to 3.8 million this project will not move forward have spark funds been used there was about 9.3 in the pool and we have Theo theater The Innovation lab small business grants that bill did mention um the finch and now this and then the 1.6 that would be going to Macy's if this project is not approved it'd be that 1.6 plus this 3.8 loan terms would they would it would be forgiven they would have to deliver on 150 units of housing 12 affordable that would be secured by a declaration of restriction covenants for perpetuity they'd have to comply with the Sustainable Building policy they'd have to deliver a go-ahead letter that means all their financing would need to be in place and they would need to be able to break ground by July 1st we deposit the spark funds with an escrow agent so during the construction period they would do draws we'd evaluate the draws and pay from the title company who had collect lean waivers make sure all the due diligence was done and the work was completed for that draw they would have to supply a certificate of completion that the project is done we would true up the costs and if they if the Gap we found out that material prices dropped interest rates dropped the costs did not come to what we thought they would be the Gap was reduced we would only provide what was needed so we would true up the cost before our forgiveness and uh we there'd be a recorded Declaration of restrictive covenants for the affordable units so that with five minutes for discussion um so what I'm asking again is to support support our ability to go ahead and draft the documents where we could answer some of these questions more deeply with the documents we would like to come back in December for with some documents for a year approval uh commissioner Jackson yes thank you Mr chair so just to be clear the compromise that's in here is to reduce the number of affordable units from 15 to 12 per our policy and but to make them affordable in perpetuity is that correct that is correct okay I so this will work um very much like the loan we just talked about uh it's a forgivable loan um with the same mechanisms as as what we just just discussed correct okay I think that's it commiss R any questions yes I do have one uh so I took the total amount of the spark component the 3,700 and change and divided that by 12 for 12 units and came up with approximately 314,000 per unit how does that feel to you that from a math perspective that is correct and that would be high for an affordable unit it's not just the affordable units it's the 65 parking spaces um that are that they're creating for 7200 is also included in within that and the fact that there's for the the project as a hole there is a gap there's a gap they can't they can't the numbers don't work in part because of the parking spaces for 7200 in part because the affordable units the Gap created by the affordable units is not the 3.7 million in part because the sustainability um policy that also has created some of that Gap so there are multiple elements those cost drivers that I talked about all of them have contributed to that 3.7 million the 12 units of affordable maybe is about half of that okay and thank you um the way that I think about this and I think about kind of it it's not Tiff I know that but it's similar in a lot of ways and so when I think about us as a city deciding to invest into a property I think about as you're saying what are the public benefits um I know that it's more intertwined than what cleanly shows the investment into those public benefits particularly because of the 7250 site and the investment that they're making but when I hear 65 units or 65 parking spaces for the commercial site like that's not to me a public benefit right um I understand that that's a a component of this but if taking a step back we didn't have this affordable housing as a factor to this I wouldn't entertain an investment at all like I believe that we should only be building things on this site that are economically viable and so that's where while it's maybe a little skewed I think that it is relevant to say when I take a step back and I'm looking at why should I invest into this to me the only really compelling component is the affordable housing and so that's why I resort to doing that math right um and when I think about you might not have put a lot of analysis into this right but this is your business um so when we think about 3 Let's just say 314,000 per unit like how does that compare to other Investments that we're making into a unit of affordable housing across the rest of the community chair Commissioners when we did an analysis um with our previous Finance director and we were talking about in December of 2022 the increasing the buyin we did calculate that a more equivalent buyin amount would have been 320,000 per unit of non aordable a housing because over a 20-year period you're not just losing that rent that one month or that one year you're losing it in this case forever so you're losing that Gap and so in a 20 in a 20-year time block we calculated the loss of rent between a market rate and affordable was 320,000 now would I in an affordable 100% affordable deal it may cost 400,000 to build that affordable unit but it doesn't just come from the city it comes from tax credits comes from the state it comes from the county it comes from met Council it comes from a variety of sources so I would never suggest well I'm not going to say never it's unlikely that I would come before you and request 314,000 per affordable unit and 14 and 100% affordable development because there's so many other sources in a market rate deal when you have inclusionary you don't have those other sources the only source is the city you can't go to the Met Council you can't go to Han County or the state because they don't look at these projects and when we first designed the affordable housing policy we thought the Delta between the market rate rents and the affordable rents was enough to cover those losses interest rates are double what they were construction costs are significantly higher so that that Delta that market rate rent no longer covers the losses from the loss of rent so when you initially asked me does it feel right 314 no because an affordable housing deal I would not suggest that but that is truly the cost the loss of rental income whether or not that equates with directly with what they could leverage in debt financing no it's not a direct correlation because of noi there's you know lots of other factors which is why I said that the Gap cause may be less but that is their losses okay thank you that is extremely helpful and I feel more comfortable with it knowing that 320,000 figure um so thank you for that um the the last question then that I have is um one I commend you on being able to find a solution here that results in permanently affordable units um but I know we don't typically see that so can you briefly tell me how we're able to ensure that even through potential sales of the property chair Commissioners um State legislation allows declarations for the use of affordability to last longer than a typical there are other reasons why people might put restrictive covenants on a property for affordable housing they can go long they can go forever it's it's recorded against the land so it stays on title so even if the property sells the Declaration remains so there isn't a way for a future owner or for this to go away it is locked in we're protected it is recorded against the land thank you and I will be bringing before you in December the Declaration and we're putting safeguards in that declaration that if they are not complying I have come before um you in the past with my and my report on compliance with affordable hous in market rate and it's sketchy you know on how much the compliance is and in early projects we have no recourse so we are working on how to build in an element of recourse if they are not complying even the next owner of this building thank you Mr lingren do you have a comment on that on that permanent affordability issue I just wanted to I agree with everything Miss hackinson said and I'm sorry I stepped out on the other matter for a moment but but just so you get the whole picture of it is the way that you restrict the use is through a restrictive covenant which under Minnesota law has always been limited to 30 years so if we try to restrict our between our neighbors or ourselves that's what it is so it isn't impermanent the legislature within the last couple of years changed it with regard to affordable housing so you can now have a Perpetual Covenant binding a land forever so that's the way it would be written and and I it's a good new tool frankly does that mean we can do it more often in the future with other properties chair commissioner weally legally we can it's it's a it's cost money um it's it's expensive to keep a project with reduced rents forever and it's um it it creates a hindrance on the owner if they want it to sell because it is saddled with this for this restriction forever so it's a neg NE oating tool so one thing I think it would be worth talking about is is to take a step back and and look what we how we got here and what the commitment was on Tiff because I think this would be important to the analysis of the overall uh potential approval uh and that is that I think there's 11 roughly 11.2 million in Tiff that's already been approved for this project is that correct chair um Commissioners it's 7.5 million um in the first note and then another 1.6 so it's a little over oh excuse me I I am gonna refer to Nick because I don't have my number straight yeah so I think we need to frame up because what where we're heading in this direction where I'm heading is that we had a number that was approved and we're trying to reduce that number of tax andr financing Reliance by using spark funds that are use it or lose it uh and there's nothing wrong with the Tiff use of the Tiff but we've got use it or lose it funds that we need to think about using here uh in the context of the overall commitments that we've made from a partnership standpoint on the project which includes a lot more in my mind than what's been discussed so far this morning Mr an Hut thank you Mr chair um and not to take away I think the presentation is has said it but um right now the HRA has made a commitment to provide 7.5 million worth of funding to 7250 in order to build out all for both pads all of the public realm improvements that have been negotiated as part of that agreement so that that remains in place and you've pledged the ability to use 90% of the increment from this Tiff District to serve that 7.5 million that 7.5 was was derived and negotiated based on some uncertainty about what was going to be built built on the 7200 pad there was a discussion of a hotel or a commercial use and also maybe as just a surface parking so that agreement specified and I think that's where Miss Hawkinson was going was that we' commit to about five6 I think is the actual number million dollars of that 7.5 derived from 7250 in that office development we tack on an additional amount up to the 7.5 5 million assuming that something got built on that 7200 whether it was a hotel whether it was uh a residential building whether it was some other type of uh structure um and so that's the commitment that has already been made for that Tiff District the budget that was adopted for that Tiff plan when it was approved accommodates all of that right now with an actual certainty about a residential build on that the dollar value that's potentially available within that Tiff district is much higher up at the 11 million figure that you're referencing Mr chair and so the decision I think is to decide whether or not we need to maybe utilize that tool to help service this development or potentially use a different form of financing through the spark program to uh alleviate the need to increase the Tiff for this project and both will do the same thing both will potentially deliver the project that's been approved um by the council um both will potentially deliver the all the benefits that Miss hackinson identified but they are two different mechanisms and so the spark fund would be money that you would put in right now it' be forgivable loan based on completion of the project delivery of all those elements um but we could alternatively consider increasing the Tiff amount to help pay for this potential development now what would happen in that circumstance well we've already committed that 90% of the increment goes to 7250 so it have to be tacked on behind that commitment um it would potentially mean that we needed to keep this Tiff District open for the full 26 years if we use the spark funds now we've got a sizable chunk of that that we've got the still the revenue is still coming in to the Tiff District but now we are limited to just 7.5 million in actual obligations on that Revenue so now we actually think that we'd be able to get the funding for 7250 in place within about 16 years and then you would be able to potentially terminate the Tiff District um so it takes a sizable length of time off of that commitment to move forward with this proposal with the spark program and uh delivering this building on the site in addition we're also saying that y we we recognize that you know that 90% commitment potentially was was more than we originally thought um contemplating a different use of this property so we are also proposing that you amend that agreement to limit it to now 80% which will free up some additional capacity to either fund other affordable housing needs or potentially that underpass that is bridging this site uh across the street that potentially will create something in the realm of 1.2 to 1.5 million of additional funding capacity again within that shorter time time frame as well and so those are the I just wanted to make that clear for you all as you engage in this uh decision um there is an alternative but it would require that we're maybe leveraging those funds for the full 26 years of the Tiff District all right good that's help very very helpful um so actually what you're asking us to do today is just authorize you to go ahead and start a conversation with a developer about the potential use of spark funds um Commission been in a couple months of discussions with them about the use of spark funds what I'm asking is that we proceed with drafting the documents um for approval yeah but but you got to come back to us to get the agreement approved exactly but you want authority to go ahead and and work further with the developer to actually draft a potential loan agreement that may potentially be approved by the HRA and the council exactly that is correct all right so it's step one um and and just a quick it's just kind of a recap of what we did before with 7250 the reason we loaded the 7.5 million on the 7250 was I remember all of the infrastructure improvements were going to be made in conjunction with the construction of 7250 so the storm water uh holding Pond if you will that that amenity and all the other public amenities we going to be we're going to be built in conjunction with 7250 which is near uh issuance of a building permit now I think is that is that true correct okay commissioner Jackson has a follow on too no okay so uh any other questions folks okay uh is there a motion to authorize staff to work with City advisers and drafting a loan agreement and Associated documents for 7200 France using spark funds and authorized sa to prepare a First Amendment to the 7200 7250 Redevelopment agreement reducing the percentage of increment pledged for potential future approval by the H so moved second we got a motion second motion by commissioner Jackson second by commissioner egno to the motion of stated uh any further conversation on that issue all those in favor of adoption of the motion of stated say I I I opposed carried motion's approved um we'll go to the next phase see where it this takes us okay very good thanks uh gentleman for being here this morning from Marion and um did you have any supplemental comment did the next item was it just an H comment or just director's report yeah that's what I was heading next all right I'm actually going to turn it over to Bill and uh let Bill come forward and tell you what's in your packet oh yeah yeah okay that only took a couple seconds it'll just take a couple seconds hand off yeah so uh we've been talking about this underpass overpass Bridge Crossing for uh well over a year now uh in your packet is the feasibility report that that is complete now um so in February of this year we hired the LH the engineers and planners at lhb Inc uh to put to look into the general feasibility of actually building something under the road was a first choice uh they finished that report they found that it it is technically feasible uh they they found that there was a way to design it so that people will will not only feel safe but but feel comfortable in that space uh have not made a determination on whether or not it's financially the right choice that's still to be to be decided but that report is in your packet um no action is needed today but I wanted to just raise and alert you that it is there at our City Council next week we will have a resolution prepared for you recognizing that that work that the first step is done and asking for your direction to to uh continue looking into that with further study so that'll be on next week's city council agenda M Jackson thank you very briefly henpen County and 9mile Creek um Watershed District are also Partners in this will who who would have to approve any final um agreement correct uh henin county is uh is the regulatory agency and the owner the park the uh Park district U they not the Park District district the wed District the wed District I think that's what I said M I'm sorry I I misunderstood uh I think there's a permit we need from the Watershed District but they don't have they're they issue permits for everything so okay so yeah safety water engineering have not just us but those agencies looking at it as well uh in some capacity in some capacity yeah we've had a lot of conversation with henin County to really looking at the Transportation uh nature of it um so that's what has shaped where we are today um they did put some constraints that we were hoping that we wouldn't have to live with but they were very clear that there's there are some constraints um and we've looked into the general geology and hydrology of the site but we haven't applied for any permits or anything of that nature that would all be forthcoming okay thank you um anything further acting executive director okay mror would you would you send me that uh that that feasibility study independent of the sure happy too thank you well also have it posted on the Better Together web page oh good that's a good idea all right uh anything further from H Commissioners right is there a motion to adjourn so moved second commissioner egg moves we adjourn Commission Jackson seconds the adjournment any further discussion all those in favor of adjournment of the h meeting this uh what is it for 14th day of November uh 2024 say I I I opposed carried H stands adjourned and we are going to reconvene in a couple minutes as the city council to Canvas the vote of the November 5th election for