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HRA Meeting Minutes – Tuesday, May 21, 2013 Page 5 1 At the request of Chair Maschka, Ms. Bujold reviewed some of the things other communities 2 were using for financial incentives, including some developments occurring in both Downtown 3 Minneapolis and St. Paul without funding, with market paying for the property and buildings, 4 even though some of those may have had some tax increment financing (TIF) assistance (e.g. 5 Apple Valley, 322 unit, 20% affordable units). 6 7 Further discussion ensued regarding how and when TIF was available or property 8 improvements; a brief review of the PennAmerica project in Bloomington (South of 9 Southtown site), with their HRA participating in acquiring the parcel, a major redevelopment 10 for the City for funding clean-up from converted commercial uses and subsidizing the product 11 for the market place. 12 13 Ms. Bujold reported that the PennAmerica product came in at approximately $1.80/square 14 foot; and if they hadn’t received some financial incentives to help with the land and its clean- 15 up, it would have put the units out of reach. Ms. Bujold advised that rates were going at $2.00 16 to $2.10/square foot in Downtown Minneapolis, but noted that suburban areas hadn’t gotten to 17 that level yet. 18 19 Ms. Kelsey requested that Ms. Bujold respond to her observations in attending the last CDI 20 meeting for the Dale Street/Fire Station parcels; and comments of developers attending that 21 meeting and current rates in Roseville dictating the overall rent range in the community; and 22 how to take that estimated rate of $1.00/square foot, and Ms. Bujold’s recommendation to 23 incentivize something at the $1.40/square foot range. 24 25 Ms. Bujold reported that the developer, Mr. Ron Buell, had looked at rents around their 26 specific property, and seemed willing to accept a certain amount of risk in their development; 27 noting that they had a strong history of developing affordable properties, and had done so in 28 numerous states around the country, a niche that they were very familiar and comfortable with; 29 and was in terms of their risk to move from an existing rent to an additional $100 to $150 more 30 per month. However, to move from that level to an additional $300 to $350 more per month, 31 Ms. Bujold advised, as Mr. Buell had stated, that would require them to accept more risk, and 32 it remained easier for them to stay at the more comfortable range to ensure a successful project 33 rather than making that extreme leap into an area where they were more unsure of the 34 outcome. 35 36 At the request of Chair Maschka, Ms. Bujold addressed land write-downs, and whether she had 37 seen any HRA’s acquiring land and leasing it to developers as a write –down; and questioned 38 if this would cause problems for financing the lease for the developer. Ms. Bujold advised that 39 it could create some problems depending on how the write-down was done, and she usually 40 observed it with a sale versus lease arrangement. Ms. Bujold advised that land write-downs 41 were note used much around this area, but are successful in other situations such as educational 42 institutions, and sometimes for office space or housing, depending on the desire of the land 43 owner to retain ownership of the land, but allow a certain use on it. Ms. Bujold advised that 44 there were some land leases for on retail development in Edina; but questioned if land leases 45 for residential would work well, as they were unusual. 46 47 Ms. Kelsey noted the study’s recommendation for Roseville to achieve higher rents, but 48 difficult since new products were lacking. With rents currently so low in Roseville, Ms. 49 Kelsey advised that developers were not comfortable taking large risks. Ms. Kelsey suggested 50 that, with the Dale site owned by the HRA, they consider what amenities would be competitive 51 to bring the site up to a level of competition in the neighborhood, with other complexes (e.g. 52 Palisades and recent renovations and swimming pool installation); and questioned whether a 53 similar property would fit in the Dale Street site. 54