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HomeMy WebLinkAboutAgenda Notes - 20211014HASTINGS ECONOMIC DEVELOPMENT & REDEVELOPMENT AUTHORITY November 10, 2021 - 6:00 pm. CITY COUNCIL CHAMBERS I. Quorum II. Minutes Please see the attached HEDRA Meeting minutes from the October 14, 2021 regular meeting and closed door session for your review and approval. III. Bills October Bills Please see attached general ledger detail from the month of September for further information. IV. Business A. Adopt Resolution 2021-19: Authorizing Signature of Purchase Agreement for 410 Vermillion Street (Rivertown Liquors) At the direction of HEDRA, Staff has negotiated terms of acquisition for property located generally at 410 Vermillion Street. Staff has negotiated a purchase price of $220,000 for the property and $10,000 in payment to Rise Up Recovery to compensate for investment and HEDRA acquisition of due diligence information. ACTION – Motion to adopt Resolution #2021-19 Authorizing Signature of the Purchase Agreement for property located at 410 Vermillion Street (PID 19- 32150-28-020 and 19-32150-28-021) B. Revolving Loans for 214 2nd Street E – Staff has reviewed existing Revolving Loans and identified two loans requiring action, one from 2003 and the second from 2006. 2003 Loan - On May 6, 2003 a loan in the amount of $7,722.00 was approved for 214 2nd Street E. The terms of the loan dictated that the loan would not accrue interest and that no monthly payments were due. The balance of the loan was to be paid fifteen years from the date of the loan unless a fifteen year extension were approved by HEDRA. Stantec Consulting $3,975.50 Environmental - Confluence Schlomka Portable Toilets $498.00 COVID - Downtown Toilets Levander, Gillen, Miller $99.00 Legal - General 2006 Loan - On October 25, 2006 a loan in the amount of $30,465.00 was approved for 214 2nd Street E. The terms of the loan dictated that the loan would not accrue interest and that no monthly payments were due. The balance of the loan was to be paid fifteen years from the date of the loan unless a fifteen year extension were approved by HEDRA. Staff has contacted the loan holder and discussed with them the terms of the two loans and the likelihood of the loan balances being called for payment in full. The loan holder has been working with Staff and is aware of the potential outcome. Loans become more difficult to track and the likelihood for repayment is reduced over time. As such, Staff is recommending that the loan balance be called in full rather than another fifteen year deferral be approved. The loan holder was made aware of the HEDRA meeting and that this would be discussed if they wanted to attend. ACTION – Direct Staff to notify the loan Mortgagor that their loan totaling $7,722.00 which was made May 6, 2003 and their loan totaling $30,465.00 which was made on October 25, 2006, will be invoiced on January 3, 2022 to be paid in full by January 31, 2022. C. Resolution 2021-20: Authorize Signature – 2nd Amendment to Purchase Agreement – River City Investments, LLC (317 3rd St E) The City Council approved all necessary land use entitlements on October 4th, 2021. Terms of the original purchase agreement dictated that the Developer was to close on the property within 30 days from receiving land use entitlements or no later than December 3, 2021. City Staff submitted the Redevelopment Incentive Grant (RIG) application to Dakota County on August 23rd. The potential $250,000 grant represents an important component of the projects financing. The County grant application indicates up to three months to review and process an application. The RIG application is scheduled for the November 16th CDA Board Meeting. Staff is requesting this second amendment to the Purchase Agreement as a result of the timing of the potential grant award. Staff is proposing a closing date of on or before April 30, 2022. This is a result of the project not planned to begin construction until spring of 2022 and the timing of closing on financing and carrying construction financing at a time when construction would actually commence. ACTION – Motion to adopt Resolution 2021-20 Authorizing Signature for 2nt Amendment to Purchase Agreement – River City Investments, LLC for property located at 317 3rd street E. D. Adopt Commercial and Owner Occupied Residential Rehabilitation Revolving Loan Program Revisions – Staff has prepared revisions to HEDRA’s Commercial Revolving Loan Program based on previous feedback provided by HEDRA. A summary of the proposed revisions includes the following: • Priority inclusion for projects which include majority BIPOC ownership of the business or property. • Changing from a variable interest (Prime + 0.25%) adjusted every two years to a fixed interest rate between 4.0% and 3.0% for the duration of the loan. o Interest reductions for at least 15% cash equity financing of the project, consultation with Open To Business, and/or projects that involves fire suppression, environmental infrastructure like vapor mitigation, hazardous material abatement, installation of solar, geothermal or wind energy systems. Staff as also prepared revisions to HEDRA’s Owner-Occupied Residential Rehabilitation Program. A summary of the proposed revisions includes the following: • Changing from a variable interest (Prime + 0.25%) adjusted every two years to a fixed interest rate of 3.5% for the duration of the loan. ACTION – Motion to Adopt Revisions to the Hastings Economic Development and Redevelopment Authority’s Revolving Loan Program as presented by Staff. E. Adopt Façade Improvement Program – Staff has prepared a HEDRA Façade Improvement Program. The program would have $50,000 for the 2022 fiscal year. The $50,000 is the amount budgeted in the 2022 HEDRA budget. As currently drafted the $50,000 would earmark $40,000 to the area identified as downtown and $10,000 for the vermillion street corridor. Remaining dollars within the pots of money would be combined on July 1st. The purpose of the two pots of money for the first half of the year is to ensure adequate access to capital for downtown buildings which face issues critical to their long term existence whereas building issues along Vermillion Street are mostly surficial, not structural and the purpose of this program isn’t purely beautification. Each property would be eligible for one grant per calendar year. Grant awards would max at $5,000, require a 1:1 match, and require that Applicants that are awarded a grant submit receipts for reimbursement within 3 months of receiving grant approval. If adopted Staff will be sending both print and digital notifications to property owners, businesses, and community partners to raise awareness of the new program. ACTION - Motion to Adopt the Hastings Economic Development and Redevelopment Authority’s Façade Improvement Program as presented by Staff. F. Authorize Signature for Auction Contract for metal building sale at 415 4th Street E (Former UBC Building) – Staff has prepared a contract with Maring Auction Company. The auction company would be paid a sales commission of 10% of the proceeds of the sale. HEDRA would also be required to pay for advertising costs estimated at $1,500 - $2,000. The auctioneer would conduct two open house viewing days for prospective bidders/buyers. The online auction would take place on December 13th starting at 6pm. The successful bidder is required to apply for demolition permit within 5 business days of auction end. Building to be removed by February 14th. Staff is coordinating with Stencil Group for removal of the underlying concrete pad. ACTION - Motion to authorize signature entering HEDRA into contract with Maring Auction Company for the sale of the metal building located at 415 4th Street E. G. Resolution 2021-21: Authorize Signature to terminate an existing Purchase Agreement between HEDRA and NJS Development, LLC (Stencil Group) and authorize signature on an updated Purchase Agreement between HEDRA and NJS Development, LLC (Stencil Group) The original Development Agreement only indicated the properties owned by HEDRA as being part of the development project. The Developer has however acquired an adjacent parcel (PID 19-32150-17-030) generally located at 404 3rd Street E which needs to be identified within the formal Development Agreement. The City Attorney recommended it was cleaner to cancel the former Development Agreement and enter into a new Development Agreement. No changes outside of the inclusion of PID 19-32150-17-030 is proposed. ACTION - Motion to adopt resolution 2021-21 to terminate an existing Purchase Agreement between HEDRA and NJS Development, LLC (Stencil Group) and authorize signature on an updated Purchase Agreement between HEDRA and NJS Development, LLC (Stencil Group) H. Refinancing of Existing Revolving Loans Staff has continued to review existing revolving loans and is recommending that a handful of them be refinanced if the party which accepted the loan is willing. Staff is proposing to refinance the following loans: Existing Loans Proposed Terms of Refinance River City Properties, LLC - 216 2nd St E - $9,652 loan balance - 5% then variable interest rate Prime + 0.25%. - 8 years remaining (Matures Dec 2029) 3.5% fixed New Monthly Payment: $115.42 Current Monthly Payment: $122.19 Spiral Brewery, LLC - 111 2nd Street E - Two loans ($12,686.52 & $12,600) - 5% then variable interest rate Prime + 0.25% - 10 years & 7.5 years remaining 3.5% fixed New Monthly Payment: $108.02 Current Monthly Payment: $125.45 New Monthly Payment: $159.38 Current Monthly Payment: $168.17 Marathon Properties - 214 2nd Street E - $8,256 loan balance - 5.00% through 3/1/2023 then variable interest rate Prime + 0.25% - 8 years remaining 3.5% fixed New Monthly Payment: $98.73 Current Monthly Payment: $104.52 T&S Properties – Lockwood - 216 4th Street E - Two loans ($47,950 & $13,810) - One loan has payment on 4 years of accrued interest ($7,140) only, while still accruing interest on the principal amount. - 3.5% and 5.25% interest rates - 8 years remaining to loan maturity 3.5% fixed New Monthly Payment: $573.39 Current Monthly Payment: $595.00 to pay off all interest in 2022 then new payment calibrated to pay down original $42,000 principal plus 1 year’s interest on that principal amount. New Monthly Payment: $149.25 Current Monthly Payment: $160.72 Kevin & Lynnette Hoeschen - 208 Sibley Street - $12,709.67 loan balance - 9% fixed interest rate - 1.5 years remaining 3.5% fixed Extend additional 1.5 years New Monthly Payment if extended additional 1.5 years: $372.42 New Monthly Payment if not extended 1.5 years: $725.82 Current Monthly Payment: $924.73 *Lack of required payment last 18 months drives up what the current monthly payment would need to be in order to pay loan in full by the date the loan matures in June of 2023. Jupiter Peak Lodging - 110/112 2nd Street E - $4,644.35 loan balance - 4.0% then variable interest rate Prime + 0.25% - 4.5 years remaining 3.5% fixed New Monthly Payment: $93.08 Currently Monthly Payment: $94.12 Terry & Rebecca Vlach - 1007 Sibley St - $15,850.64 loan balance - 3.75% then variable interest rate Prime + 0.25% - 7 years remaining 3.5% fixed New Monthly Payment: $213.03 Current Monthly Payment: $219.39 Sui Generis, LLC - 105 2nd Street E - $23,361.38 loan balance - 3.5% then variable interest rate Prime + 0.25% - 10 years remaining (matures Jan 1, 2033) 3.5% fixed New Monthly Payment: $213.48 Current Monthly Payment: $213.48 No formal action is requested at this time. HEDRA would likely receive less interest revenue as a result of locking in interest rates. Staff estimates the potential lost interest revenue between $3,500 to $4,500 in total across all of the loans. However, the Staff time spent tracking, coordinating variable interest rates across departments and updating of monthly invoicing would eliminate or at least greatly reduce that potential additional revenue amount . Additionally, it is not the inherent goal of the revolving loan fund to be a large source of revenue but rather for payments to made so the fund is replenished and more loans can be made in the future. If HEDRA is generally supportive of Staff further pursuing refinancing of the above loans, Staff will work on that over the next month and plan to have official documentation to approve loan refinancing’s at the December HEDRA meeting. V. Reports and Information A. Open To Business Update MCCD has provided its quarterly report. From July through August, 18 businesses and 13 residents connected with MCCD. Meetings, presentations, and events that occurred in Q3 and early October focused on bank outreach to building and strengthen those relationships and increase awareness around MCCD’s lending program. “I’m not kidding when I say that I could NOT have done moving my businesses to where they are now without Natalie’s guidance and grace.” – Hastings business owner. See the full attached Q3 Report from MCCD. B. Development Update 208 Sibley Street – On October 30th a popcorn and candy retail business opened its doors to the public. Summergate Annexation - Redwing Blvd - Summergate plans to submit application for annexation by the end of November for the 160 lot single family subdivision to be located of Red Wing Blvd and Michael Avenue. Development could begin in spring 2022. Tyler Street Landing Apartments (Luke Siewert)– On October 4th the City Council approved land use actions to allow construction of the 32 unit apartment building at 3rd and Tyler. The Dakota County CDA will be considering an application for a Redevelopment Incentive Grant (RIG) for this project on November 16th. The grant has requested $250,000 in funding for the project. The Confluence – Encapsulation patching is nearly complete. Confluence is completing lead paint abatement and plans to resume interior construction around Thanksgiving. Fleet Farm – Interior demolition continues. City staff has reviewed conceptual plans for the new building materials yard. Quality One Woodwork – Construction continues the 52,000 sf building expansion. Staff conducted a ground breaking ceremony alongside the Hastings Chamber of Commerce. Custom Sawdust Lease – On October 4th the City authorized signature to lease the entire Custom Sawdust Building currently under construction at 525 East 31st Street. Items within the UBC North Building (part of the Stencil Apartment Building) will be relocated to the site. NJS Stencil Apartment – A comprehensive plan and ordinance amendment to accommodate the proposed 85 unit building will be reviewed by City Council on November 15th. Submittal of remaining land use applications is anticipated by the end of November. UBC North Building Sale – Staff will be putting the existing 10,000 s.f. steel framed building up for auction in the near future in order to clear the site for Stencil. Heritage Ridge – At the September 7th meeting, the City Council approved the 3rd Addition of Heritage Ridge and authorize a grading only agreement for the area. Building permits for over 20 of the lots have been submitted to the City for review and approval. They will likely seek approval of the 4th and final phase of the 116 lot development before spring of 2022. Vermillion Acres – City Council approved the Development Agreement for the 75 unit senior housing facility on September 7th. The Building Department has concluded review of the plans, which will include modular construction of some components offsite and moved onto the site for final construction. The Quill - Schoolhouse Square Senior Housing – Building is under construction. Excavation is nearly complete and foundation work to begin shortly. Staff participated in a ground breaking ceremony for this project on October 28th. Villas at Pleasant – The model home permit for the 32 unit villa housing development has been approved and construction should commence shortly. 315 Pine Street - Former Thorwood Inn - Cleanup work continues on the fire damaged former building. Partial demolition and renovation plans were approved by the Heritage Preservation Commission on July 27th. VI. Closed Door Session - Review Potential Purchase of Property. Staff seeks a motion to close the meeting pursuant to Minn. Stat. 13D.05, subd. 3(c) to determine the offer for the purchase of properties located on Block 28, Town of Hastings. ATTACHMENTS • Minutes – October 14, 2021 - Regular Meeting • Minutes – October 14, 2021 - Closed Door Summary • Bills - October, 2021 • Resolution 2021-19: Authorizing Signature of Purchase Agreement for 410 Vermillion Street (Rivertown Liquors) • Purchase Agreement - 410 Vermillion Street (Rivertown Liquors) • Resolution 2021-20: Authorize Signature – 2nd Amendment to Purchase Agreement – River City Investments, LLC (317 3rd St E) • 2nd Amendment to Purchase Agreement – River City Investments, LLC (317 3rd St E) • HEDRA Revolving Loan Program Revisions - Commercial • HEDRA Revolving Loan Program Revisions - Residential • HEDRA Façade Improvement Program • Resolution 2021-21: Authorize Signature - Termination of Original Development Agreement with NJS and Authorization to Sign Updated Agreement (UBC North) • Updated Purchase Agreement - UBC North • Open To Business 3rd Quarter Report Next Meeting: Thursday, December 9th 2021.