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04/04/2000 - City Council Special AGENDA SPECIAL CITY COUNCIL MEETING Tuesday April 4, 2000 5:00 p.m. City Hall Council Chambers 1. ROLL CALL & AGENDA ADOPTION II. VISITORS TO BE HEARD III. KOLLOFSKI ADDITION PROPERTY DISPOSAL IV. OTHER BUSINESS V. ADJOURNMENT MEMO city of eagan TO: HONORABLE MAYOR AND CITY COUNCILMEMBERS FROM: CITY ADMINISTRATOR HEDGES DATE: MARCH 31, 2000 SUBJECT: SPECIAL CITY COUNCIL MEETING/TUESDAY, APRIL 4, 2000 In official action that was taken by the City Council at a regular meeting held on Tuesday, March 21, a Special City Council meeting was scheduled for April 4, 2000 to discuss the Kollofski Addition property disposal. Following the Special City Council meeting, a box lunch will be available between 6:00 and 6:30 p.m. in the lunchroom. KOLLOFSKI ADDITION PROPERTY DISPOSAL At the March 21 City Council meeting, a Special City Council meeting was scheduled to discuss the Kollofski Addition property disposal, which is a goal for the Hwy 55 Development Tax Increment Financing District. Staff has concern about the impact inactivity will have on this TIF District until the Kollofski Addition property disposal is determined. To keep with our timeline, a copy of a memo prepared by Senior Planner Ridley that was previously attached to the March 20 Administrative Agenda information regarding TIF issues, the redevelopment proposal and recommendations is enclosed on pages . through ACTION TO BE CONSIDERED: To provide direction to Wispark, the Imre's and City staff regarding the future ownership and development of the Kollofski Addition property. OTHER BUSINESS There are no items under Other Business at this time. /S/ Thomas L. Hedges City Administrator Attachments z.:~ati MEMO city of eagan TO: Tom Hedges, City Administrator FROM: Mike Ridley, Senior Planner DATE: March 17, 2000 SUBJECT: Kollofski Addition Property Disposal Introduction The Highway 55 Redevelopment Tax Increment Financing (TIF) District was created in 1996 to assist the City in encouraging private sector redevelopment efforts in and around the Hwy 55/HWY 149 intersection. As with any redevelopment TIF district, the primary goal is to remove inconsistent land uses and/or blighted structures within the district boundaries. When a TIF district is created a baseline value of tax generation is established. Any increase to the land value from that point forward generates additional tax revenue that is `captured' increment and eligible to be used for efforts that caused the district to be originally created (blight removal, removal of inconsistent land uses, land acquisition & assembly, etc.). An increase in land value can be caused by several things including, but not limited to, a physical improvement to the property, an infrastructure improvement adjacent to the property, improvements to adjacent or nearby properties, or simply due to general market conditions. As you are aware, the City has incurred TIF eligible expenses in this immediate area to acquire several homes in the Kollofski Addition and covered the cost of demolition of the Airliner and Spruce Motels. The disposition of the City-owned property has been of keen importance to the two primary property owners in this area, the Imre family and Wispark Corporation. The City Council has made the City's position clear in that the preferred disposition of the City- owned land was not a question of to whom, but rather to what end. The City's concern, obviously, is a successful redevelopment. The deciding factor of the sale of the City-owned property should be considered against the most logical and most viable redevelopment plan for the area. At the third, and final, APC Workshop meeting regarding this topic (April 15, 1999), the APC recommendation to the City Council was as follows: > Approve the Wispark development proposal (general layout and use) > Sell the City-owned parcels to Wispark > Agree to assist in land assembly through negotiation or, if necessary, condemnation. At a Special City Council meeting held May 6, 1999, the Imres introduced a new consultant (from Frauenshuh Co.) they had hired to assist them in joining Wispark in a joint venture for the purpose of developing the Imre's holdings. The City Council and all parties agreed to continue any action on the disposition of the City-owned property to allow work to commence on a Master Development Plan. To date, the two parties have been unable to work together and a comprehensive master plan has not been achieved. TIF Issues For the following reasons, timing is critical to the success of the district. There are three time tests that have been applied by the Legislature to control TIF districts. The first requirement is that there must be an expenditure for improvements, any expenditure, in the district within three years of the district being certified. This time test has been met in the 55/149 district. The second test is that within four years, any parcel that has not had improvements on it or adjacent to it is frozen from the district. That parcel may be brought back into the district at a later time, however the base value on the parcel is adjusted to the current year's assessed value rather than the certification year assessed value. For example, if a parcel had been base valued at $100,000 in 1996 and subsequently frozen from eligibility, then re-certified for 2001 at an increased assessed value of $150,000, the City would potentially lose the increment tax collected on the $50,000 difference over the life of the collection. The third test is that any parcel that remains inactive within 5 years from certification is `knocked out' of the district and the district terminates. Parcels that are generating increment will continue to generate increment according to the terms of the approved district, but any future improvements of knocked-out parcels will be ineligible for district budget expenditures or increment collection. While the Hwy55/Hwy149 district is active, there are properties within the district that have not been impacted by improvements on or adjacent to them and they will be frozen from the district in June of this year. On the north side of Hwy 55, these include all of the Imre property located east of the pond. There are other sites within the district, south of Hwy 55, that will likely be frozen from the district and may be knocked-out of the district because, unfortunately, there does not appear to be any redevelopment pending. North of Hwy 55, the concern is not so much with the Imre's TMI Coatings `triangle' building but more the suitability of the properties owned by the Imre's that contain outdoor storage as the primary use. The window of opportunity to maximize the captured increment for the properties east of the pond is closing. Redevelopment Over the past year I have met with representatives from both Wispark and the Imres. As I understand it, the Imres remain uncertain about the timing and/or desire they have to develop the 3 property they control at this point in time. According to Wispark, in addition to substantial investment in the area, they have engineered a development plan for the area that encompasses the former Spruce Motel property, the City-owned property, and other vacant property owned by the Imres. Wispark has also stated that they would be willing to guarantee a 100% office use for the property and a commitment that the project would be completed within a specified amount of time (12-36 months). Conclusion Essentially, nothing has changed since the APC last reviewed the disposal of the City-owned property on April 15, 1999. The concern of the APC was to assure a suitable redevelopment would occur in a reasonable amount of time. The APC recommendation was to sell the City's property to Wispark and to agree to assist in land assembly through negotiation or condemnation, if necessary. The clock is running in regard to the time tests imposed by the Legislature to control TIF districts. The City Council needs to consider the impact inactivity will have on the successfulness of the Hwy 55/Hwy149 Redevelopment T1F District. Maximizing the captured increment relates directly to the eventual outcome of the district as a whole. Attachments • Hwy 55/Hwyl49 Redevelopment TIF District Map • Ownership Map • Minutes from the April 15, 1999 APC Workshop • Minutes from the May 6, 1999 Special City Council meeting twy. NO.149 Eri .ON ~MFI~ a1 if A I •4 vi~~ M • s Bo i h > 0 - " Vwf h D 4 ~ cc~ va5~ P WISPARK CORP IMRE 9 IMRE WISPARK CORP IMRE WIRE CrrY WISPARK CORP IMRE CrrY IMRE I Q o~ y~vy ss . 200 0 200 400 600 Feet PROPERTY OWNERSHIP MINUTES OF THE ADVISORY PLANNING COMMISSION WORKSHOP Eagan Minnesota April 15,1999 A workshop of the Advisory Planning Commission was held on Thursday April 15, 1999 at 5:30 p.m. Members present were Chair Carla Heyl, Greg Steininger, Gale Anderson, Meg Tilly, Larry Frank, Jerry Segal, and Ron Miller (alternate). Also present were Senior Planner Mike Ridley, Planner Julie Farnham, Kim Imre, Mary Imre, Walter Rockenstein (attorney for Imre's), Greg Miller (Wispark) and Mark Schottler (Wispark). Gary Huusko was absent. APPROVAL OF MINUTES The minutes of the March 11, 1999 Advisory Planning Commission workshop were approved with the following change: the date of the minutes was changed from February 11, 1999 to March 11, 1999. It was also noted that the minutes state the April meeting was to be at 5:00 p.m. whereas the agenda said 5:30 p.m. Gale Anderson stated that he did not receive the agenda. VISITORS TO BE HEARD None were present. COMPREHENSIVE GUIDE PLAN UPDATE Planner Farnham stated that there will be a joint meeting of the full APC and City Council-on Thursday May 6, 1999 from 5:30 - 8:00 p.m. The purpose of the meeting is to review the rough draft of the entire Comprehensive Guide Plan and to determine whether it is generally suitable to distribute to surrounding municipalities and school districts to begin their required review which can take up to 60-days. She noted that further refinement will still be possible and suggested that the APC and Council may want to have another workshop to discuss specific issues, if needed, during the period other communities are reviewing the draft. She also noted that this meeting is not intended to take testimony from the public or property owners. There will be several other opportunities for them to comment on the plan. We will host another community open house on the entire plan; the open houses held last winter focused on the land use plan only. The APC is also required to hold an official public hearing; that will probably occur in August. Finally, the plan will be before the City Council for final adoption, probably in November. So the public will have several opportunities to comment on the plan in the future. It was noted that the May 6th meeting will replace the May APC workshop meeting. IMRE/WISPARK HWY 55/149 DISCUSSION Chair Heyl welcomed the Imre's and Wispark and suggested that since the Imre's were not at the March workshop, that they present their plans first. Walter Rockenstein, attorney for the Imre's stated that the Imre's are interested in developing their property and expect that will occur in phases. They are interested in identifying a reasonable dividing line through the area that would give each of the parties buildable properties with adequate access. Further, the Imre's are willing to enter into an agreement with the City to develop their property within an agreed upon time frame (they anticipate 3-4 years) or the City could purchase all of the Imre's land, to the south tip of the pond, at appraised value. Ms. Tilly asked if the City could require Imre's to develop in a manner aesthetically compatible with Wispark. Ms. Farnham stated that they would need to rezone to Business Park to redevelop and that there are some design standards already in the code. In addition, it seems the City would also be able to put something in an agreement to ensure compatibility. Ms. Heyl asked if the City would have to buy back the land it previously owned at an increased value 3-4 years later? Mr. Segal asked if Imre's had thought about selling to someone other than the City such as Wispark, using the same method to figure selling price (appraised value). He does not feel the City should get into the real estate development business. Mr. (Ron) Miller concurred, noting that it would be preferable if any future land sales occurred between private parties. Mr. Rockenstein responded that he would be nervous about entering into an agreement with a party who could potentially oppose Imre's development proposals. Ms. Heyl noted that the fragmented ownership in the area is the major problem and stated that the question for the City is how can we get the appropriate ownership to ensure the area will develop in the best interest of the City. Mr. Segal stated that he is disappointed that so far the Imre's and Wispark have not been able to work out a coordinated development plan. Ms. Tilly asked if the City could open the sale of the Imre's property to a competitive bid process if it doesn't develop in 3-4 years. Ms. Heyl expressed concern that the Imre's haven't provided any more detailed plans than presented 3 months ago. She feels Wispark has presented a definite plan. Kim Imre responded that they do have a development plan prepared by Wayne Bishop that shows a specific layout. Mr. Rockenstein presented an overview of the Bishop plan which assumes Imre's would control the land south of Lawrence Ave. He noted, details need to be worked out, in particular providing access off the new road (Blue Waters). Ms. Heyl asked about the status of Wispark's current development. Mr. (Greg) Miller gave an overview of the buildings currently under construction. Ms. Heyl asked if Imre's are amenable to developing in a manner compatible with what Wispark has currently developed and formalizing that commitment in an agreement. Mr. Rockenstein responded that it is in their interest to develop in a compatible manner. Ms. Imre stated that they would be amenable to having that in an agreement. Mr. Frank asked about plans to screen the outdoor storage from new development, noting that it seems out of place in this area. He suggested that it would be preferable if the outdoor storage could be relocated to an industrial area. Mary Imre responded that they have looked into fencing and landscape screening. Mr. Rockenstein stated that the outdoor storage is integral to the Imre's business and it is not practical to have the business offices and outdoor storage on separate sites. Mr. Frank asked what happens to the outdoor storage when they build the other buildings shown on the Bishop master plan. Mr. Rockenstein responded that at that time, the entire TMI business would be relocated. Mr. Rockenstein stated that he assumed the City would be interested in taking control of the property. Ms. Heyl stated that it would make sense for the City if it takes control of the whole area rather than just the properties they now own. Mr. Steininger stated that he understood that the Imre's want to develop their property, but what does the City benefit from waiting 3-4 years to assume control of the property? Mr. Rockenstein responded that first there is the issue of fairness to allow the Imre's a chance to develop their property and second for practical reasons, if the private parties cannot strike a deal on a property swap the City will have to use condemnation. Mr. (Ron) Miller asked if the Imre's would commit to having the agreement apply to any successors. Mr. Rockenstein responded they would. Kim Imre stated that the time would allow them to consider other developers as well as Wispark. Mr. Segal stated that he views the area an a whole and feels that if Imre's don't develop it makes sense to give Wispark the opportunity to develop there since they are developing much of the rest of the area and the City knows what it's getting. Chair Heyl suggested that Wispark be given an opportunity to respond to the Imre's current proposal and recap their plans. Greg Miller reviewed the Wispark proposal noting that they believe a natural break exists at the south end of the pond. He stated concerns that the Bishop plan is too conceptual and has not been engineered to determine accurately if the plan will work. He noted that Wispark's plans have been engineered. He stated that Wispark has made a substantial investment in the area. He believes these properties would best be developed with one building, which Wispark is proposing will be 100% office, not office-warehouse. He noted that they would commit to complete the project in 3 years. They do not want to sell land back to City. He also noted that the City may have to use condemnation regardless of who it sells its land to. He stated that he was interested in talking with Imre's about screening the outdoor storage, noting that it has made it difficult to lease portions of Wispark's new office building. Ms. Farnham asked for clarification regarding the possibility of a land swap and developing a limited partnership. Mr. (Greg) Miller responded that they are not interested in a land swap at this time. He feels the area would best be developed under single ownership. He stated that he made an offer to the Imre's to finance development on their property. Wispark would receive 50% of the profit, but Wispark would also be paying for all the improvements. He noted that they had discussed a limited partnership, but that does not offer the amount of control the Imre's want. Mr. Rockenstein stated that he has not reviewed the proposal or discussed it with the Imre's yet, so he cannot say if it is a fair offer. Ms. Heyl stated that she would like Wispark to commit to develop under a PD to ensure a certain quality development and also to shorten the development time frame to less than 3 years. She indicated she would like to see the Imre's and Wispark work out a limited partnership arrangement. However, at this point she feels Wispark's proposal offers the most benefit to the City, noting that they are ready to develop. She also noted that condemnation involves appraised values too. If an agreement on land ownership can't be worked out with the two parties, condemnation would be in the City's best interest in order to get one owner. She feels comfortable that Wispark can complete development in 2 years versus Imre's proposal of 3-4 years and then potentially sell it back to the City if it hasn't developed. She summarized what she thinks are the options before the APC: 1) Imre proposal - split City property between Wispark and Imre; or 2) Wispark proposal - sell all City land to Wispark and they agree to develop within 2 years. Mr. (Ron) Miller asked if option 1 would require Imre's to develop in 2 years. Ms. Heyl stated that would be the intent. Mr. Frank stated that he feels the 2 year time frame should be in any agreement. Ms. Farnham asked for clarification that the 2 years commence after land consolidation is complete, noting that if condemnation is necessary, that could take some time. Mr. Frank stated that he favors option 2. Mr. Steininger agreed. He suggested that Imre's need to develop an engineered plan to demonstrate that option 1 will really work. Mr. Segal stated that he doesn't like plans that include a lot of contingencies and uncertainties. He feels Wispark's proposal provides the most certainty. He would like to see the two parties work together to achieve a land sale or limited partnership, he doesn't think anyone gains from condemnation. He also stated that he likes the 100% office use proposed by Wispark rather than office-warehouse. Ms. Tilly concurred, adding that she feels the 2 year time frame is important. Mr. Segal made a motion, seconded by Mr. Frank to recommend that the City Council : 1. Approve the Wispark development proposal (general layout and use) 2. Sell the City owned parcels to Wispark 3. Agree to assist in land assembly through negotiation or, if necessary, condemnation /0 4. Enter into a development agreement with Wispark to complete development within 2 years after the land is assembled. It was noted that there are lots of details that will need to be worked out with regard to the development agreement. It was also agreed that the APC feels it would be in the best interest of the City if Wispark and the Imre's could work together in this regard. Motion passed 6-1 (Miller voted no). Mr. (Ron) Miller explained that he was concerned that including all the property to the south end of the pond puts the Imre's in a vulnerable position with regard to negotiating sale of their property. He hopes that Wispark will offer them a fair price. VISITORS TO BE HEARD None were present. ADJOURN The meeting adjourned at 7:45 p.m. Special City Council Minutes May 6, 1999 Page 1 of 2 NE NUTES OF THE SPECIAL MEETING OF THE EAGAN CITY COUNCIL EAGAN, MINNESOTA May 6,1999 A special meeting of the Eagan City Council was held on Thursday, May 6, 1999 at 4:30 p.m. in the City Council Chambers of the Eagan Municipal Center Building. Present were Mayor Awada and Councilmembers Blomquist, Carlson, and Bakken. Also present were City Administrator Hedges, Director of Public Works Colbert, Senior Planner Ridley, and Intern to the City Administrator Rathmann. Councilmember Masin arrived at 4:40 p.m. ROLL CALL & AGENDA ADOPTION Mayor Awada stated that she would like to make a short comment regarding the Eagan Forever Green tree distribution after item three on the agenda. Councilmember Blomquist made a motion to adopt the agenda to include the change and Councilmember Bakken seconded the motion. All Councilmembers voted in favor. VISITORS TO BE HEARD Mayor Awada acknowledged visitors to be heard. There were no visitors present interested in speaking on items not listed on the agenda. KOLLOFSKI ADDITION PROPERTY DISPOSAL (Wispark & Imre) Administrator Hedges provided a summary of what was detailed in the Council packet concerning the Kollofski Addition. He further mentioned that late Thursday afternoon the City staff had some information presented by the parties involved. Senior Planner Ridley gave a brief history of the Highway 55 TIF area stating that the redevelopment district was created in 1996. He further stated the primary purpose of a redevelopment district is to remove blighted and inconsistent land uses. To date, the city has acquired land and had the homes removed or demolished in the Kollofski Addition and along Lone Oak Road in addition to the removal of two blighted commercial buildings. In March of 1998, at a City Council Workshop, the Council provided some direction to the City Staff on how the staff would deal with the disposition during the process of acquiring the Kollofski Addition. He further stated the Council was interested in a comprehensive master development plan since the area is considered a gateway into the City. Senior Planner Ridley further stated that the hope from staff was that the two most affected parties, Wispark and Imre, would work together to develop a master plan that would positively affect both parties. Since an agreement was not reached, the two parties met with the Advisory Planning Commission on several occasions to review separate master plans with the ultimate goal of providing a recommendation to the Council to assist them in the disposition of the city held property. Special City Council Minutes May 6, 1999 Page 2 of 2 Greg Miller from Wispark stated that the company has a large interest in the land with the intent to create a business park and a master plan for the area. When developing a plan to redevelop the area there has been a great deal of discussion between Wispark and the Imre's. Although there is a great deal of respect between Wispark and Imre, there is a difference regarding proposed development of the property. Mr. Miller stated that Wispark was contacted by Randy McKay at Frauenshuh Companies and he stated that Imre's and Frauenshuh are interested in forming a joint venture for the purpose of developing the Imre's holdings. Commonalties have been discussed and Mr. Miller stated that within the next thirty days the three parties will be able to create a development plan. Mr. Miller asked the Council to hold any actions for thirty days while Wispark, Imre and Frauenshuh work on a joint development plan to bring back to Council for review. Randy McKay, from the Frauenshuh Companies was present and stated that he is looking forward to working on a development plan with Wispark and Imre's. Mary Imre, the owner of the Imre property stated that for the past 30 years the intent was to purchase additional land for expansion. Ms. Imre stated she is looking forward to developing a plan that will benefit all involved. All Councilmembers agreed that a decision will be made after the thirty days. OTHER BUSINESS Mayor Awada stated that the Eagan Forever Green is presently holding their tree distribution. She stated there are over forty volunteers and great quality trees. Mayor Awada encouraged people to visit the distribution site. ADJOURNMENT The meeting adjourned at 4:50 p.m. TLH/hjr Date City Administrator /3