Loading...
HomeMy WebLinkAbout04-30-07 Item 7C, Contract Relating to Purchase and Development of TCAAP ~ ~HILLS Request for Council Action Prepared By: Dept: Council Mtg. Date: Final Action Needed By: Karen Barton~ 04130107 Agenda Item:_ Motion to approve consulting services with Ehlers & Associates, Inc., per the ___ p~~p()~C1_I_~l:I~~ciJ~:p~iI1~,~_()07 Budgeted Amount $150,000.00 Actual Amount: $150,000.00 Funding Source: ~~j_~f!LJ_rsellle~t by RRLD, LLC 7C Community Development Motion to Approve Consulting Services with Ehlers & Associates, Inc., per the Proposal dated April 18, 2007, for consulting services relating to the purchase and redevelopment of the TCAAP excess property and the development of a resource plan for the City, in an Amount not to Exceed $150,000 Approval of Consulting Services with Ehlers & Associates, Inc., per the Proposal dated April 18, 2007, for consulting services relating to the purchase and redevelopment of the TCAAP excess property and the development of a resource plan for the City, in an Amount not to Exceed $150,000 x 0424/07 No.: No.: Recommendation: Recommendation: x Proposal dated April 18, 2007; Preliminary Development Agreement Exhibit D f1ii~_ij9!,,!1inp1ii;e~qn~' .. . ..... ..... n. . .. n . nn The Preliminary Development Agreement between the City and RRlD provides for reimbursemeni"of Ehler's serv-ices upto$1-50;OOO~(}O- ~ ~ EN HILLS MEMORANDUM DATE: April 24, 2007 Agenda Item 7 C TO: Mayor and City Council # Michelle Wolfe, City Administrator Karen Barton, Community Development Dir ctor FROM: SUBJECT: Ehlers & Associates Consulting Services The City has been utilizing the consulting services of Ehlers and Associates to assist with the negotiation and development of a Preliminary Development Agreement between the City and RRLD, LLC relating to the purchase and redevelopment of the Twin Cities Army Ammunition Plant excess property. On March 30 of this year, the Preliminary Development Agreement (PDA) between the City and RRLD, LLC was fully executed. The terms of this agreement provide for the reimbursement of costs associated with Ehlers' services relating to the TCAAP project, with a budgeted amount of $150,000. (See Attachment A, copy ofPDA Exhibit D, Budget). I have attached a "Proposal for Resource Plan, Fiscal and Economic Impact Analysis and Developer Negotiations for Proposed TCAAP Development" from EWers (Attachment B). The Proposal outlines their services relating to the development of a resource plan for the city, the creation of a TIF District/Plan, review of the developer proforma, and negotiation of the development agreement between the City and RRLD, LLC. The Proposal estimates a cost of $40,000 to develop a resource plan, $25,000 for the creation of a TIF District/Plan, and an hourly rate of $200 per hour for the review of the developer proforma and development agreement negotiations. The Proposal does not include costs for third party inspection of buildings on the TCAAP site for purposes of qualifying them as substandard relating to the creation of a TIF District. Staff Recommendation Staff is recommending Council approve Consulting Services with Ehlers & Associates, Inc., per the Proposal dated April 18, 2007, for consulting services relating to the purchase and redevelopment of the TCAAP excess property and the development of a resource plan for the City, in an Amount not to Exceed $150,000_ City of Arden Hills City Council Meeting April 30, 2007 \ \Metro-inet.us\ardenhillsIPlanning\Community Development\Council Agenda Items\Ehlers Consulting Services Memo 042407.doc Page I of I Council Meeting Agenda Item 7C April 30, 2007 ATTACHMENT A EXHIBIT D BUDGET OF CITY REIMBURSABLE COSTS Consultant Scone of Services Budl!et SRF (Environmental Srves) . AUAR Environmental Study $250,000 . Preparation of ADAR process schedule . Initialize EA W with unique AUAR items . Establishment of Pub lie Involvement Process . Assemble elements of the AUAR . Author fmal document . Meetings . Review of environmental documents as needed Spencer Fane Britt & Browne . Legal Services relating to the $150,000 Mike Comodeca (Legal Services) Transfer Process . Offer To Purchase . Review of Transfer Documents . Negotiations with GSA and Army . Meetings & Travel Kennedy & Graven . Negotiation and Preparation of $150_000 Stephen Bubu] (Legal Services) Development Agreements . Review of Legal documents as needed . T]F related legal review . Meetings . BCS ConsuJting Services . Project Management Consulting $75,000 Dennis Welsh (Project Management . Review of documents as needed Services) . Project assistance as needed . Council education . Grant Assistance . Meetings Engineering Services . Engineering review and $40,000 consultation EWers & Associates . Pmvide fiscal analysis of $150,000 (Financial Consultant Services) development agreements D-I Consultant Scooe of Services Budoet - . Review of Developer Pro forma . Evaluate fiscal and economic implications of1and transfer panicularily with regard to infrastructure and city services . Develop a Resource Plan for the City of Arden Hills . Provide overall project assistance as requir~. . meetings LHB (TIF Inspections Services) . Inspection services related to $40,000 development of one or more TIF Districts Peterson Fearn Bergman . Review documents and provide $25.000 Jerry Filla (City Allomey) legal opinions as necessary Additional City Staff . Assist with planning and $75,000 Planning Assistant community development activities to allow CD DirectorlProject Manager and City Plarmer to devote additional time to TeAAP - _. Project MISe. . Legal Notices $25,000 . Mailings . PRI Advertising . Office supplieslEquipment SiaffT ravelfT raining D-2 Council Meeting Agenda Item 7C April 30, 2007 ATTACHMENT B . EHLERS & ASSOCIATES INC April 18, 2007 Michelle Wolf, City Administrator City of Arden Hills 1245 W. Highway 96 Arden Hills, MN 55112 RE: Proposal for Resource Plan, Fiscal and Economic Impact Analysis and Developer Negotiations for Proposed TeAAP Development Ehlers & Associates is pleased to submit this proposal for the above referenced services as part of the proposed TCAAP development. Ehlers knows what it takes to convert redevelopment plans into reality. This knowledge comes from helping cities face the challenges of redevelopment. We have attached case studies that highlight Ehlers' experience with cities that have comparable characteristics to Arden Hills in redevelopment and these projects demonstrate the variety of redevelopment services available from Ehlers. Proposal Backgrouud The City of Arden Hills has entered into a Preliminary Development Agreement with RRLD, LLC to prepare a plan for the development of the Twin Cities Army Ammunition Plant (TCAAP). The agreement provides that the RRLD may be the master developer ofthe site once a plan is approved and an agreement is reached with appropriate agencies for the disposition and development of the site. The City has identified an number of specific questions to be addressed including: 1. How will the characteristics of each element (residential, retail, etc.) of new development impact the type and level of services provided by the City? 2. Will revenue derived from the proposed development cover the cost of delivering City services? 3. Will the proposed development require capital improvements that will not be fully reimbursed by the development? 4. Will revenue derived from the proposed development cover the cost to maintain and replace capital investments required for the proposed development? 5. How will proposed development options impact the demand for housing, office, retail and other uses within the community? 6. How will the proposed new development impact existing service and physical infrastructure needs? 7. Can a TIF District be established to assist in offsetting certain costs? 8. What is the appropriate level of assistance that should be provided to the developer(s) and how is this determined? 9. How do we minimize the City's risk in undertaking this project? Arden Hills Proposal for Resource Plan and Fiscal Impact Analysis TeAAP Proposed Analysis Methodology for Resource Plan Step One: Identify Significant Service Costs o Identify the service requirements indicated for each element of the proposed deyelopment options. o Reyiew existing services currently provided by the City. o Reyiew current budget and financial report related to services provided. o Prepare cost estimates for new services and modifications to existing services indicated by proposed development options. o Prepare draft service impact model for review and comment. o Refine service impact model. Step Two: Identify Capital Costs o Identify potential impacts on infrastructure systems including water, sewer, storm sewer, road, street lighting. o Review capital financing mechanisms. Step Three: Identify and Evaluate Economic Impacts o Identify characteristics defining the service requirements of existing development elements. o Identify characteristics defining the service requirements for the proposed development elements. o Evaluate the impact of the proposed development on existing economic elements. Step Four: Model Revenue Sources from New Development o Using developer's build-out estimates, project the property tax increases for the City. o Estimate changes in fiscal disparities income for the City. o Outline existing and future SACIW AC revenues. o Explore other fees such as platting fees, trunk assessments, etc. Step Five: Review/Prepare Development Model o Identify timing/phasing of proposed development. o Identify and review service impacts of similar developments. o Review/prepare [mancial projection for proposed development. Step Six: Prepare Analysis and Final Report o Draft report for staffreview. o Present final report to City Council. We have not provided a methodology for TIF plans, [mancial analysis and developer negotiations since these are standardized services we provide and the City is familiar with how these services are implemented. Project Team The Project Team will include Sid Inman, Stacie Kvilvang and Mark Ruff. Mr. Inman has over 26 years of experience in the area of public finance and redevelopment. Sid has extensive experience and is an industry leader in tax increment, developer negotiations, proforma analysis and bond work. Ms. Kvilvang has over 14 years of experience in redevelopment, multi-family housing development and Arden Hills Proposalfor Resource Plan and Fiscal Impact Analysis TCAAP rehabilitation, public finance, proforma analysis, developer negotiations and all areas of project management. Mr. Ruffhas extensive experience in municipal finance management and is an expert in development and tax finance. Estimated Fees Services provided within this proposal will be billed on an hourly basis at the rate of $200/hour. Following is a chart delineating the Ehlers representative primarily responsible for the tasks, the estimated time, and costs to complete each task: Service Ehlers Rep Estimated Hours Cost Resource Plan SK and MR 200 $40,000 * TIP DistrictIPlan Creation SK and SI Flat Fee $25,000 Review of Developer Pro forma (Financial Projections SI and SK N/A Hourly for Project)and Negotiation on Development Agreement Miscellaneous Meetings All N/A Hourly * Note: This service will only be provided ifit is determined it is needed and directed by the Council It should be noted that TIP DistrictIPlan Creation does not include costs for third party inspection of buildings on site for purposes of qualifying them as substandard. The estimated costs of the developer negotiations and meetings will depend upon factors outside of our firm's controL Therefore, we have not made an estimate at this time. Sincerely, Ehlers and Associates, Inc. ~~ Mark Ruff Executive Vice PresidentIDirector ~G~ Sid Inman Senior Vice President 0~ ~ Stacie Kvilvang Executive Vice PresidentlFinancial Advisor Arden Hills Proposal for Resource Plan and Fiscal Impact Analysis TCAAP Case Studies St. Anthony, MN Our redevelopment planning process enabled St. Anthony to fmally get results in efforts to replace the obsolete Apache Plaza Mall. The 50-acre redevelopment site features new retail, office space, town homes, urban flats, and market rate apartments, as well as a 5.6-acre central park. When completed, the development will bring a total of 662 new housing units, 228,000 new square feet of retail and 25,000 square feet of office space to the community. Critical to the success of this redevelopment has been a public involvement process in which thousands of residents and business people worked together in open houses, forums and workshops to create a vision for the new development, "Silver Lake Village." Ehlers' success with redevelopment has found that for redevelopment to be completed, four elements must be present in the proposed project: . Financial feasibility; . Market feasibility; . Consistency with community goals; and, . An experienced developer. Ehlers was involved in every aspect of this project from: . Writing the RFP for developer selection . Completing financial analysis ofthe project . Negotiating the development agreements . Writing grants . Managing the project from inception through implementation due to limited staff Arden Hills Proposal for Resource Plan and Fiscal Impact Analysis TeMP St. Louis Park, MN St. Louis Park's efforts to revitalize the Excelsior Boulevard corridor and define a town center serves as an excellent redevelopment case study. The cornerstone of the City's redevelopment efforts is Park Commons. At completion, this project will bring over 500 housing units and 240,000 square feet of office/retail development into St. Louis Park. The project produces over $120 million in private investment. Ehlers staff plays a critical role on the staff/consultant team leading the City's efforts. We assisted in negotiations of the Development Agreement and provided the financial analysis of the City's ability to participate in the project. Our analysis forecasts tax increment and other project revenues and links the revenues to project expenses and debt. Ehlers created the tax increment financing district that forms the key finance tool for the City. Ehlers served as Financial Advisor on $20 million of bonds issued by the City to finance land acquisition and site preparation. EDA Financial Planning. With over $40 million in outstanding TIP bonds, tax increment fmancing is an essential financial management issue for the City. Ehlers is assisting City Staff with financial analysis and planning for TIP districts and debt. The first phase of the planning process focuses on meeting existing debt obligations. With a plan to support debt, the City can then explore the capacity to use existing TIP districts to meet future redevelopment needs. The planning process: . Project and test future tax increment revenues from each district. . Designed plan to meet debt obligations and provide funding for other projects. . Identified bond covenant and arbitrage compliance issues. . Identified future debt management objectives and opportunities. The second phase of the planning process will examine financing issues related to the Park Commons redevelopment project. Part of this phase will look at the ability to drop parcels from existing TIP districts for new districts. In addition, The City of St. Louis Park turned to Special Service Districts to make sure that their investment in redevelopment is sustainable. As part of its comprehensive redevelopment plans, the City instituted improvements and enhancements to Excelsior Boulevard. Funds from the Districts will be used to support a variety of services related to improvements made to Excelsior Boulevard. In creating the Districts, Ehlers: . Analyzed the impacts on individual parcels from various funding options. . Analyzed service charge options. . Advised the City on the process to create the districts and impose the service charges. . Prepared information explaining the district and finance concepts. Arden Hills Proposal for Resource Plan and Fiscal Impact Analysis TeAAP . Worked with City Staff and property owners to create consensus on plan. Tax abatement is the newest development tool for local government. Ehlers helped the City undertake an abatement that will result in a 54,000 square foot medical office building and small restaurant/commercial use on a polluted site. Ehlers advised the City on the process and financial implications of tax abatement. To make this project possible, the City obtained tax abatement commitments from the County and the School District. Richfield, MN Richfield proves that redevelopment is a powerful force. In recent years, significant redevelopment successes can be seen in: . Shops at Lyndale . Richfield Rediscover . Airport expansion . Best Buy Ehlers has played an extensive role in the redevelopment of Richfield. Our staff has played an active role in negotiating the Development Agreements and creating and implementing the finance plans that were keys to each ofthese projects. Ehlers is currently involved with the Cedar Avenue Redevelopment Area CCARA). CARA is a redevelopment project, which was necessitated by the expansion of adjacent Minneapolis - St. Paul airport. The 300-plus acre residential area will be redeveloped to airport compatible uses including retail, office, hospitality and specially insulated replacement housing. Ehlers is providing project management services including: . Preparation of master development agreement . Development pro forma analysis . Preparation of project budget . TIP qualification . Assistance with special legislation . TIP process coordination . Coordination of acquisition, communications, project marketing . Developer negotiations . Project financial feasibility analysis Arden Hills Proposal for Resource Plan and Fiscal Impact Analysis TeAAP Hopkins, MN The Downtown area is the heart of Hopkins and Ehlers has played an extensive role in its redevelopment. The City's most recent achievement is the construction of Market Place Lofts, a mixed-use development consisting of 42 condos and 17,000 sq/ft of retail. Other downtown projects include the construction of the Hopkins Center for the Arts and a restaurant/theater complex. Ehlers evaluated options and assisted the City in the implementation of the facilities finance plan, as well as completed proforma analysis and negotiations of the development agreement. Since housing is an important part of the vitality of downtown Hopkins. EWers assisted the City with the redevelopment of a mobile home park into sixty-six town homes. This redevelopment had been a City goal for more than 15 years and was realized in 1996. The financing for the development included a complex mixture of five series of revenue bonds, general obligation tax increment bonds, and pay-as- you-go notes. Our first objective was to protect the City's long-term financial interests while at the same time providing an incentive to the developer of the project to build quality town homes and stay on budget for the project. Attesting to the success of the project are the sale of all housing units and the retirement of two of the bond issues County Road 3 Corridor Study. Ehlers' staff served on a multi-firm team that created a comprehensive plan for the reconstruction of County Road 3 and the redevelopment of the adjacent land uses. Ehlers conducted financial analysis to determine the feasibility of project alternatives. The finance plan created through the Corridor Study will allow the City to finance its share of the project without a complicated application of special assessments. In 1997, Ehlers implemented phase one of the plan with the issuance ofG.O. Tax Increment Bonds. Edina, MN Edina has long set the standard for quality redevelopment projects. The City's last redevelopment effort, Grandview Square, continued the trend. Ehlers assisted the City in the evaluation of development proposals for the key redevelopment site and created a financial model to create an "apples-to-apples" analysis for four different mixed-use development proposals. The analysis evaluated the critical elements of each proposal: property value created, timing of development, amount and form of city assistance, and flow of funds. EWers prepared detailed information for staff evaluation and summary profiles for City Council use. Following selection of a development team, Ehlers participated in the negotiation of a development agreement. EWers' financial analysis provided the information needed to set the form and amount of city assistance. The Grandview Square project resulted in 80,000 square feet of office and 150 units of owner-occupied housing. The project also contains a senior center and new county library. In previous years, Ehlers staff assisted Edina with the design and the implementation of the finance plan for the Centennial Lakes redevelopment area. Arden Hills Proposal for Resource Plan and Fiscal Impact Analysis TCAAP Minnetonka, MN The City of Minnetonka was interested in producing a mixed-use development, which would integrate retail, family rental housing, town homes, condominiums, various types of senior housing, common space and transit facilities in a redevelopment site along 1-394. Ehlers assisted the City in attracting a major developer to acquire the existing land and construct 250,000 square feet ofretail and 100 luxury condominiums. Ehlers' involvement also was also heavily concerned with evaluating the benefits of certain public and private amenities with the need for public assistance through tax increment financing. The tax increment from the retail and condominiums was used to finance over 300 single family and multifamily affordable housing units, public improvements, and public spaces. Moreover, this project was balanced with redevelopment concerns of traffic, neighbors, a relocated church, and other existing land owners. Monticello, MN Downtown and Riverfront Plan. Ehlers & Associates served on a multi-firm consulting team that created a plan for the redevelopment of the commercial core in Monticello. Ehlers played several roles in the planning process: . Assist with the design of public participation elements. . Assist with the creation of development plan alternatives. . Evaluate finance options for use by the community. . Prepare implementation strategies for the plan. Ehlers' contributions to this project extend well beyond the adoption of the Plan. As the financial advisor to the City, Ehlers has worked to make the Plan happen. Ehlers assisted the economic development authority with the creation of a downtown revolving loan program. Ehlers created guidelines for the loan that tied to Plan objectives. We also analyzed the financial implications for various loan and grant structures. Ehlers provides tax increment financing assistance to the Monticello Housing and Redevelopment Authority (HRA). We assisted the HRA with the creation of seven new TIP Districts and the management of 25 existing districts. Ehlers assisted in the creation of tax increment financing district encompassing the downtown and riverfront planning area. This TIP district will be an important tool for Plan implementation. The redevelopment of the Monticello Mall anchors the south end of downtown planning area. The major renovation of this shopping center revolved aronnd the anchor tenant---Cub Foods. Ehlers advised the City on the use of TIP and in negotiations with the developer. This project achieved three important objectives. It brought about the redevelopment of an aging commercial center. The project kept commercial activity concentrated in the downtown area. Finally, the project will spin off tax increment revenues that can be used to meet other redevelopment needs. Arden Hills Proposal for Resource Plan and Fiscal Impact Analysis TeMP Ehlers played an active role in the planning for a multifunction community center. The 78,000 square foot facility houses City offices, senior center, meeting rooms, aquatics center, gym and fitness facilities. The community center will also serve as a National Guard training facility. Ehlers role in the project included: . Identify and evaluate of finance options. . Analyze financial impacts of project design options. . Assist with National Guard use and funding agreement. . Structure and implement finance plan. At the time of sale, new members of the City Council threatened to terminate the project. This action made the long-term bonds unmarketable. Ehlers created and negotiated a temporary bond issue that allowed construction to continue and to protect the bond holders. The City Council has since affirmed commitment to the project. In 2000, the facility opened and Ehlers assisted with permanent financing. Elk River, MN Elk River is very much like many small historic communities. Its historic downtown was experiencing pressure from large retailers on the edge of town, and in need of revitalization. But like many communities Elk River had a number of failed proposals and efforts to begin redevelopment. Elk River began working with Ehlers & Associates as its redevelopment consultant in 2001. In September 2001, Elk River's Housing & Redevelopment Authority developed a problem statement, identified the core business district as the focus of the redevelopment, and developed a primary goal for redevelopment. In February 2002, the HRA held an open house for the community on design objectives, concepts and development strategies. In March, the HRA issued a request for proposals from developers and received five submittals. Developer MetroPlains received approval for the proj ect which will encompass two blocks - Bluff and Jackson - and the project is currently under construction. The project will include 20,000 square feet of commercial development and both for-sale and rental housing units, along with a riverwalk connection to a city park to be built among the river. Falcon Heights, MN The major Twin Cities metropolitan area intersection of Snelling and Larpenteur in Falcon Heights has a new look and new function. The old 1940s-style Northhome strip mall was with new housing and 12,000 square feet of retaiL The new development includes 119 apartments, 56 senior housing units, 14 owner-occupied town homes and 12,000 square feet of retail space. The development, by Sherman Associates, is approximately $40 million in new value on a site that had about $2 million of previous value. Arden Hills Proposal for Resource Plan and Fiscal Impact Analysis TCAAP Falcon Heights had been trying for 15 years to put together a way to redevelop this high profile comer. Falcon Heights brought Ehlers and Associates in as its redevelopment consultant in 2000 to get past the stalled planning/development efforts of the past. Ehlers provided a redevelopment process and public involvement process to get the community to participate in the vision for the redevelopment. After a process that involved about three years and about 20 community meetings, the community was not only included but has taken ownership in the project. The public initiated the discussion on multi- family housing and senior housing and provided input on development design guidelines. Early neighborhood involvement helped to reduce resistance to the project, including the "not in my backyard" factor. Developing a relationship early with the developer and beginning public involvement early enabled the public to help shape the development. Little Canada, MN Our work in Little Canada shows the variety of ways Ehlers helps Minnesota cities meet the challenges of redevelopment. Ehlers & Associates designed and led the planning process that resulted in the creation of a guide for the redevelopment of Little Canada's core commercial area. Ehlers assembled a consulting team that consisted of Maxfield Research and the Hoisington Koegler Group to work on the project. We believe that this project represents an important first---a significant planning study led by a financial consulting firm. The value of this approach is enhancing the ability to implement the plan. As the ongoing financial advisor to the City of Little Canada, we have been able to carry the objectives of the Development Guide into real projects. Work performed by Ehlers in this project include: . Design and coordination of planning process. . Preparation of implementation strategies. . Create and lead public participation elements of process. . Preparation of final plan report. . Analysis of fmance implications of development options. . Creation ofTIF district within study area. The true test of a plan is the ability to help move towards the vision articulated in the plan. Here are some examples of how Ehlers works with Little Canada to make the Development Guide become reality. Arden Hills Proposal for Resource Plan and Fiscal Impact Analysis TeMP Ehlers created a plan that made use of tax increment fmancing and the City's borrowing capacity to encourage the redevelopment of a shopping center. Faced with the loss of the anchor grocery store, the City worked with a private developer on a major renovation of the Market Place shopping center. The City issued bonds and loaned the proceeds to the developer for the acquisition and renovation of the center. This step attracted new tenants to the center, including a larger grocery store. The City also retained influence over the exterior improvements to the facility. The City's loan was paid off in less than three years. In addition, the City received almost $200,000 in revenues that can be used to meet other development needs. An early step in the implementation process was to seek a private development "partner" for the area. Ehlers worked with City Staff to create a solicitation of developer interest process. The objective of the process was to attract and select a developer capable of creating new development within the parameters of the Development Guide. Development Guide serves as a tool to attract and evaluate development projects. Ehlers created a cash flow model to identify the revenue and expense components ofthe proposed projects and to test the feasibility of various development options. Arden Hills Proposal for Resource Plan and Fiscal Impact Analysis TeMP