HomeMy WebLinkAboutAgenda Notes - 2022.07.14HASTINGS ECONOMIC DEVELOPMENT & REDEVELOPMENT
AUTHORITY
July 14, 2022 - 6:00 pm.
HASTINGS CITY COUNCIL CHAMBERS
I. Quorum
II. Minutes
Please see the attached HEDRA Meeting minutes from the June 7, 2022 regular meeting
for your review and approval.
III. Bills
June Bills
Econ Dev Assoc of MN $345.00 Admin - Summer Conference - Maass
Breezy Point Resort $170.73 Admin - Conference Lodging - Hinzman
Campbell Knutson PA $22.50 Legal - General
Please see attached general ledger detail for further information.
IV. Business
A. Authorize Signature of Brokerage Agreement for Shovel Ready Development Site
Staff has been considering ways to increase visibility of the 55 acre shovel ready
development site to attract a development project. Staff has connected with different
brokerage companies to assess what benefits could be had if the site had formal broker
representation. Based on those conversations, Staff is recommending that HEDRA enter
into an 18 month exclusive brokerage agreement with Rokos Advisors.
Rokos Advisors would provide the following to market the site:
• Offering memorandum and marketing brochures
• Paid online listings (Co-Star, Loopnet, etc)
• National reach marketing (SIOR, CCIM, ULI, etc)
• Individual Developer engagement
• Signage and advertising
• Renderings and pro forma underwriting
• End user package
• Monthly update on prospects activity and other interest in the shovel ready site.
Rokos Advisors has partnered with Measure Group to provide conceptual site planning
services for clients. As part of the base services, the City would be provided two
conceptual site plans as well as birds eye renderings of potential developments for the site.
As potential buyers are identified, Measure Group would assist with the creation of
development specific concept plans so that an interested party could better visualize the
way in which their building(s) would fit and how their business would function on the site.
Rokos Advisors and Measure Group would be compensated only upon successful sale of
the property. The compensation amount would be 3% of the sale price without utilization a
price reduction incentive. Broker fee will be added to the gross purchase price of the real
property to be paid by the buyer. With the proposed agreement there would be check ins
every 6 months to ensure that the marketing agreement is still beneficial to both parties.
Action: Motion to authorize signature of exclusive brokerage agreement between HEDRA
and Rokos Advisors.
B. Consider Rescinding “Land For A Dollar” Land Credit Incentive Program
In 1997, HEDRA adopted a land credit incentive program whereby public subsidies were
provided to private businesses in the form of the cost to acquire industrial land being
reduced from market value to $1.00 per acre with the remaining value being placed as a
deferred assessment and typically forgiven based on performance for creation of new tax
base and jobs.
The program has been utilized for 22 projects since 1997, but only 5 of those occurred in
the last decade. Based on shifts in the industrial marketplace Staff does not believe that
marketing a public subsidy is the best way for the City to attract light industrial or
manufacturing businesses to Hastings. Additionally, it is unclear how many of those
projects would or would not have been constructed in Hastings if not for the public
subsidy as the subsidy is offered immediately and not based on proven financial need or
outside competition.
If the program were rescinded it would not take away HEDRA’s ability to negotiate future
land sales at discounted rates based upon gaps in financing or the presence of another
community competing for the business. This is similar to the way in which HEDRA/City
of Hastings approaches other public subsidy programs that support private development.
Additionally, Staff could have the property appraised when a prospective sale is in place to
ensure HEDRA is receiving proper compensation.
HEDRA has many initiatives requiring financial resources. A large asset that HEDRA has
to help finance those initiatives is its industrial land holdings. Ensuring that HEDRA
extracts as much financial benefit from those assets will help achieve other initiatives.
Provided below is a comprehensive list of projects which have utilized the Land For A
Dollar incentive program since its inception.
Hastings Industrial Park - Land for a Dollar
Year Recipient Address Land Subsidy Value Jobs Improvement Value
1997 Twin City Container 990 Spiral Blvd $103,000.00 12 $955,500.00
1997 Quality One Woodwork 3005 Millard Ave $73,500.00 11 $673,700.00
1998 Eischen Cabinet Co. 525 Commerce Dr $36,150.00 14 $310,000.00
2000 Greenlawn Sprinklers 2550 Millard Ave $52,000.00 5 $483,000.00
2000 Miller Electric 2620 Industrial Ct $29,900.00 2 $275,000.00
2001 Hastings Gymnastics 2628 Millard Ave $52,700.00 2 $495,700.00
2001 Forpak, Inc. 682 Commerce Dr $43,560.00 3 $353,600.00
2002 APL Properties 654 Commerce Dr $58,800.00 3 $431,400.00
2002 Millard Ave Inc. 3005 Millard Ave $315,440.00 25 $1,295,800.00
2002 C & A Properties 671-703 E 31st St $43,560.00 3 $319,200.00
2002 Lawrence Interiors 624 Spiral Blvd $95,830.00 5 $533,200.00
2005 Westview Properties 1100 Spiral Blvd $326,695.00 11 $2,060,500.00
2005 Jakata Properties 625 Commerce Dr $49,984.00 4 $365,000.00
2005 Lanoga Corp. 1101 Spiral Blvd $396,623.00 11 $1,240,000.00
2006 Miller Electric 2911 Enterprise Ave $141,792.00 5 $590,900.00
2007 RoMar Enterprises 2939 Enterprise Ave $140,405.00 5 $706,000.00
2009 Red Wing Dental 1945 E 31st St $295,833.00 14 $425,000.00
2017 Crossfit 2950 Lightbourn Court $91,232.00 4 $513,500.00
2019 Creek Mini Storage 3051 Lightbourn Court $164,351.00 0 $775,400.00
2020 Simply Secure Storage 2030 Spiral Blvd $173,072.00 0 $168,800.00
2020 Custom Sawdust 525 East 31st Street $89,219.00 3 $104,500.00
2021 Quality One Woodwork 3005 Millard Avenue $120,748.00 30 $1,901,000.00
Totals: $2,894,394.00 172 $14,976,700.00
Action: Motion to rescind “Land For A Dollar” business park incentive program.
C. Consider Revisions to Interest Rate of HEDRA’s Revolving Loan Program
Currently the revolving loan program offers commercial and owner occupied residential
loans at fixed interest rates starting at 4.00%. Applicants can earn reductions in their fixed
interest rates to as low as 3.00% if their project includes some or all of the following
items. Each item qualifies the Applicant for a 0.25% interest rate reduction:
• 15% or more cash equity
• 60% or more of financing from a private commercial lender
• Consultation with Open To Business
• Installation of fire suppression systems, environmental infrastructure, abatement of
hazardous building materials, or the installation of solar, geothermal, or wind
energy systems.
The purpose of the loan program is not to compete with private sector lending, but rather
to help fill financing gaps because of HEDRA’s ability to accept more risk in its lending
portfolio than private market lenders. The current prime rate is 4.75%.
Staff is proposing that the commercial and residential owner occupied revolving loan
program interest rates be amended such that the opening offer interest rate shall be based
on the Prime Rate at the time of application. The actual interest rate for the loan could still
be reduced by as much as 1.00% based on the existing discount factors already in the
program.
Action: Motion to amend the base interest rate of HEDRA’s Revolving Loan Programs to
be based on the prime rate at the time of application.
V. Reports and Information
A. Update on Downtown Property and Entrepreneurial Assessment Surveys and
Downtown Incubator Plan
Downtown Property Owner Survey Findings:
Staff received survey responses for 22 properties within the downtown area. Responses
indicated a tight market with no vacancies from the responding property owners in the past
two years. Twelve of the 22 properties contained both commercial and residential units.
Respondents were asked what the City can do to help maintain an attractive downtown
area. Survey responders provided the following thoughts:
• Consider incentive to motivate absentee owners to sell or rent their properties
which have been vacant, unused, or underused so that they are not a drain on
the downtown neighborhood.
• Continue to encourage private investment through loan and grant programs.
• Keep up streetscape appearances
• Increased enforcement of rental license program including revocation of
licenses for properties with repeat violations or illegal activity.
• Consider ways to encourage businesses which are not regularly open to the
public to relocate to a second floor space rather than street level or a location
not within the walkable downtown area.
• Cap the number of non-retail businesses on 2nd Street.
While not provided in formal survey response, Staff is aware of seven vacancies in the
past 2 years. Vacancies occurred at the following addresses:
• 113 2nd Street, now Grove Boutique (Previously Mississippi Clayworks)
• 105 2nd Street, now Brook Tattoo (Previously a tanning salon)
• 103 2nd Street, now Katy Lindberg Insurance (Previously Town Cobbler)
• 208 Sibley Street, now RiverCity Popcorn and Candy (Previously unoccupied)
• 214 Sibley Street, now MindfulMotion Pilates, Wellness, and Ayurveda
(Previously Stepping Out Gym)
Properties that are still vacant:
• 312 2nd Street - Previously Katy Lindberg Insurance
• 210 2nd Street - Previously Reissners Meats
There is currently one property publicly listed for sale in the downtown located at 205 2nd
Street. This space was previously an antique store.
Hastings Entrepreneurship Survey Findings:
Staff received 22 responses to our entrepreneurship survey. The survey was circulated to
the chamber of commerce, downtown business association, makers market attendees, and
through the City of Hastings social media channels and newsletter.
From the responses received there were three individuals who do not currently have a
physical business location but would be interested in having a physical location in the
future. Those respondents indicated an interest of between 500 and 2,000 square feet
Funding
HEDRA has received $15,000 in grant funding from the Doffing Fund in support of
establishment of a downtown business incubator. Staff intends to use those funds in part
to finance professional services related to creation of conceptual architectural designs.
Next Steps
- Parallel Tracks for Incubator Design & Incubator Tenant Contest
- Incubator Design and Physical Site Improvements
o July/August - Meet with architect/contractors for site visits and get
conceptual plans for layout options.
o Emphasis placed on flexibility to meet changing spatial needs of businesses
over time.
- Jumpstart The Incubator Tenant Contest
o Conduct “Jumpstart the Incubator” contest to attract applications from area
entrepreneurs for space within the future incubator.
▪ Staff to draft “Jumpstart the Incubator” program and incubator
tenant guidelines
▪ HEDRA to review draft guidelines for incubator tenants on 8/11
▪ HEDRA to review draft “Jumpstart the Incubator” program
guidelines/application on 8/11
▪ Launch “Jumpstart the Incubator” contest on August 15th
• Entrepreneur Applications to be focused on business plans
and spatial needs
• Submissions due by September 16th
• HEDRA to review submissions on Oct 13th and select
Applicants to advance to the interview round.
▪ 3 HEDRA citizen members to serve on an interview committee with
Staff and 2 HEDRA council members.
▪ Interview Committee to fwd recommendations to HEDRA for
consideration at the November 10th HEDRA meeting.
- Action: No formal action is necessary. However, Staff is looking for general feedback
and buy-in of the proposed plan by HEDRA prior to proceeding.
B. Development Update
New Information
Intek Plastics – Formal applications for both the Minnesota Investment Fund and Job
Creation Fund have been submitted and accepted by the State of Minnesota Department of
Employment and Economic Development (DEED). DEED will hold a public hearing on
July 29th with respect to the JCF application. The City of Hastings is in competition with a
City in the State of Ohio for the expansion. Intek is committed to investing over $8,000,000
in a facility expansion as well as the creation of 46 new jobs at the selected location.
Lake Isabelle Flats (NJS Stencil Apartment) – The Developer has officially closed on
the HEDRA owned property and preparations for demolition of the site have begun.
Construction of the 89 unit building is estimated to be completed by late summer/early fall
2023.
Caribou Coffee - Coborns - Plans have been approved for the addition of a drive-thru
window for Caribou Coffee at Coborns Grocery located at Redwing Blvd and 33rd Street.
KFC - Site Plan application for construction of a new KFC Restaurant have been submitted
to be located on the northwest corner of 18th and Vermillion (former Erickson Freedom Gas
Site). The Planning Commission is scheduled to review in June.
Fleet Farm – City has issued permits for the construction of the exterior building yard.
Building is in process of being painted and interior work is nearly complete. Hiring has
begun as has product delivery.
Jersey Mikes – The Jersey Mikes building is nearing substantial completion with the focus
now on exterior site improvements including landscaping and parking lot improvements.
The Jersey Mikes Subs is anticipated to open in the first week of September.
Vermillion Acres – Demolition of the existing home and grading is set to commence any
day for construction of the 75 unit senior housing facility near County Rd 47 and
Riverwood Drive.
Makers Alleyway Market – Staff has received applications from 24 unique vendors.
Updated registrations by market date are as follows with a large increase in the number of
vendors registered for August markets. Each market has the capacity for approximately 25
vendors and Staff will continue to solicit for vendors.
July 21st - 13 vendors
July 28th - 11 vendors
August 4th - 11 vendors
August 11th - 15 vendors
August 18th - 15 vendors
August 25th - 17 vendors.
PREVIOUS INFORMATION:
Heritage Ridge – Building permits continue. Construction of the 3rd addition has begun
plans for the remaining lots as part of the 4th addition have been submitted.
Villas at Pleasant – More permits have been submitted for construction and work
continues on the first model home at the 32 unit subdivision near Northridge and Pleasant.
Pre-sales continue to be strong.
Tyler Street Landing Apartments (Luke Siewert) – Staff continues to work with Mr.
Siewert with regards to utility relocations related to Xcel Energy. The Dakota County
CDA has approved a $250,000 Redevelopment Incentive Grant (RIG) to assist in part with
relocation of utilities.
Quality One Woodworking – Quality One has completed their 52,000 square foot
expansion has been completed and the business has received its certificate of occupancy.
The Confluence – Progress continues with interior activities including interior framing,
replacement of fire suppression system, and replacement of windows.
Crossroads Site Development – On March 7th, the City Council approved two apartment
buildings containing a total of 211 market rate apartment units by Enclave Development
south of 33rd Street between Terry’s Hardware and a strip mall. The project has proposed
to begin construction in summer 2022 with completion of the first building in the fall of
2023.
The Quill - Schoolhouse Square Senior Housing – Framing is complete and exterior
brick work and interior work has begun. Project is on track for fall 2022 opening.
Best Property Annexation - Redwing Blvd - Summergate Development has terminated its
development agreement for purchase and development of the property. Best Property still
seeking a purchaser and developer. Action on the application tabled at City Council
pending identification of a new developer and concept plan.
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.
ATTACHMENTS
•Minutes – June 7, 2022 - Regular Meeting
•Bills - June, 2022
•Broker Agreement with Rokos Advisors
Next Meeting: Thursday, August 11, 2022