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HomeMy WebLinkAbout12.04.23 Work Session Minutes City of Farmington City Council Work Session Minutes Monday, December 4, 2023 The City Council met in a Work Session on Monday, December 4, 2023, at Farmington City Hall, 430 3rd Street, Farmington, Minnesota. 1. CALL TO ORDER Mayor Hoyt called the Work Session to order at 5 p.m. Members Present: Mayor Joshua Hoyt Councilmembers Holly Bernatz, Nick Lien, Katie Porter, and Steve Wilson Members Absent: None Staff Present: Lynn Gorski, City Administrator Julie Flaten, Asst City Administrator/HR Director Deanna Kuennen, Community & Economic Development Director Kim Sommerland, Finance Director Justin Elvestad, Fire Chief Jeff Allbee, Fire Relief President Tony Wippler, Planning Manager Gary Rutherford, Police Chief John Powell, Public Works Director Ed Rutledge, Natural Resources Specialist Shirley Buecksler, City Clerk Also Present: Vishal Dutt, Development Partner, Yellow Tree Robb Lubenow, Yellow Tree Tom Wasmoen, Firm Ground Architects and Engineers 2. APPROVE AGENDA Motion was made by Councilmember Wilson and seconded by Councilmember Bernatz to approve the agenda, as presented. Motion carried: 5 ayes / 0 nays. 3. DISCUSSION ITEMS 3.1 Discussion Regarding Proposed Development and Existing Special Assessments Director Kuennen presented. In June of this year, Staff attended the Minnesota Real Estate Journal Apartment Summit, where they met Vishal Dutt, Development Partner with Yellow Tree — a Minneapolis-based commercial real Work Session Minutes of December 4,2023 Page 1 of 8 estate development and construction firm. Staff has been working with Mr. Dutt (the Developer) to identify a site in Farmington for the construction of a market rate apartment project. The Developer has secured a site and is now seeking assistance from the City to advance this project. Mr. Dutt has successfully negotiated a purchase agreement for a 3-acre portion of the 15-acre "Hy-Vee" property (PID 148260000031). The site, once subdivided, would house a market-rate apartment development with covered and surface parking, and other outdoor amenities. The proposed project is estimated to be $28 million - which includes land acquisition, hard construction costs and soft costs (architecture, engineering, finance, etc.). In order for the project to move forward, the developer is seeking financial assistance from the City- in the form of forgiveness of the special assessment attached to the property and some form of tax incentive (tax abatement). These resources are necessary for the project to be financially feasible. The property is currently paying on a 15-year special assessment that was previously deferred. Calendar year 2023 is Year 2 of the assessment payments, with a total approximate payoff of $1,722,595 (total parcel), at a per acre rate of $116,549. Based on these numbers, the special assessment is an impediment to the project, as it adds an additional estimated $350,000 to the overall development costs for the 3-acre development. Before spending additional dollars on engineering, architecture, and design, the Developer is seeking input regarding the City Council's appetite to waive the special assessment on the 3-acre portion of the overall parcel (contingent to the investment/development moving forward) and also if the City Council is open to exploring the use of tax abatement as a means to reduce the financial gap/feasibility in order to advance the project. Based on feedback from the City Council, the Developer will decide whether to continue pursuing the project at this location. If there is positive feedback and a willingness to support utilizing such resources to advance the development, the next steps will include engaging with the City's financial consultant to work with the developer in preparing a more in-depth financial analysis and tax incentive recommendation which would come back at a future meeting. Discussion included: Councilmember Wilson: As a policy maker, where we know there is going to be a need to use financing tools on a lot of different projects, whether its multi family, high quality apartments, retail, commercial, etc., we have to know what the City's capacity is to waive or abate. There has to be a threshold. For a period of time, there is going to be a lot of taxes and things that are waived where we are either holding market value for an extended period of time or you just flat out waive it. And I have to believe with the Peterson north portion, the remainder of the Hy- Vee property, and the portion on the other side of Eden, those are going to require some kind of assistance, too. As a City, we need to be prepared to help, Work Session Minutes of December 4,2023 Page 2 of 8 but what is the threshold to help them? I don't want to be responsible for holding the future of the City hostage in the same way it happened before for a period of time, and we need to see those assessments coming through. We should be prepared for an expectation of $1.72M would be automatically asked for if we were to give it to one developer, I assume the remainder would. Director Kuennen: The abatement is limited by state law. If we are interested in abatement for this project, we are well under the threshold. Looking how we can use future taxes to support a project, With the project comes the ask to abate a portion of those taxes. Part is keeping those existing taxes. We are only looking to use the taxes from the project, into the project. Every request will be analyzed on its own merit. Councilmember Lien: Has Hy-Vee shared their plans and do they have 3 acres to spare? Manager Wippler said they had an approved site plan and occupational use and that they did not use the entire space. Councilmember Bernatz: 1) As we divide the parcel, what is the likelihood of smaller parcels that we would have an equal investment to the $28M parcel? Giving up $1.7M could potentially return a higher gain. 2) What is the benefit/loss to the City in regard to abatement? 3) What is the message that we send to corporations if we forgive abatement? It is not our job to penalize other developers for the actions of a previous developer. Mr. Dutt: If you put in housing, everything else will come. Councilmember Lien agreed — you need people to make business grow. Director Kuennen: We are actively trying to recruit a grocery store. There are metrics that grocery stores look at. This is the kind of development that helps the case to get a grocery store here. The location of the site does not limit the use of the other 12 acres. It is a logical location. Councilmember Porter: 80% of our tax base is residential. We understand that drives the market analysis. Are we complicating a partnership that we are trying to create? The market for that in Farmington concerns me. Thinking about the abatement and lack of proven success rate with rental is hard. I'm not here to say no—we just need a little more in front of us, with the possibility of that$1.7M. The comparison to Farmington is really hard to find. The ask for the market rate pricing — there is a lot bigger demand for that. Mr. Lubenow: A lot is played out through a market rate study to get that information. Director Kuennen: The market analysis will determine the rents that will be compatible here. The Ebert construction project will be included in that analysis. Council would have a lot of decisions before it's considered. 7 W 23ork Session Minutes of December 4,�0�� Page 3 of 8 Councilmember Porter: We are going to have concerns from our constituents and it's our responsibility to ask those questions. I appreciate the point that many people are still working remotely. Mayor Hoyt: There are some good questions and points that have been made. But it's important to understand that, for the past seven years, the City was promised a build by a big company, but that changed, and we have had to put out fires in the community for the past five to seven years. Abatement, or waiving any form of assessment, must either bring jobs in or create density, which becomes a promotion for other employers to bring jobs in. You need to do your market study, but we would hate to abate and 12 months from now, we could have a property with no development. We need a reasonable amount of certainty of what the ask is. When we started doing Vita Attiva, we had to redo the comprehensive plan regarding mill and overlay. The first think I look at is if the square-about doesn't need to be there, does it affect the site layout and ability to put in more units? Mr. Dutt: This is three levels with underground parking and on surface parking. Mayor Hoyt: Do you have any mixed use projects with retail integrated in the system? The need for more retail options continues to exist. How do you achieve your density and cost mix along with some sort of retail? Does the square-about change your site layout? There is a huge appetite for a lot more mixed use. Mr. Wasmoen: I don't think this site is good for mixed use but perhaps on the north side. It would have to be a destination retail with more parking. First floor retail in Lino Lakes still has empty space for the past 17 years. The grand vision is hard and works better when it's organic. I would work on increasing retail in the downtown. Mayor Hoyt: I understand you want some form of direction. I am in favor of the $350K going away because it's adding to our density. We don't have the housing to support the workforce for some of these larger prospective employers. I would support it for that reason. I will ask that we get some level of idea of what type of abatement you'll need. What can't happen is we let the $350K go, the City takes on a million dollars in road reconstruction project, connect things through, and meet all the fire needs, we can't take on that expense and then find out there is going to be a fill-in-the-blank ask and abatement. We don't want you to incur expenses and then come back and we say no. As long as the additional abatement over time isn't over the top that it becomes prohibitive for us in future capacity. Councilmember Bernatz: I agree with your position on it and would take a similar stance. We need to remember as Council that the questions and conversations will be tough with residents, and it is our goal to discuss those. I want to know more about the dollars and cents — anything that provides density along with commercial, I'm happy moving forward. Work Session Minutes of December 4,2023 Page 4 of 8 Councilmember Porter: We are just asking for more clarity. This is an aesthetically pleasing project. Councilmember Wilson: The development is attractive. The market will be the guiding point for density. I am concerned about the road and don't like the way it's configured, so that will need to be figured out. Specifically, Dushane Parkway - the idea is to bring it straight down to the intersection or a roundabout. Mayor Hoyt: Vita Attiva is responsible for the intersection signal at Pilot Knob. It's the right time to look at the square-about and provide a smooth transportation flow. That definitely needs to be looked at. The developer can come up with a concept for a roundabout versus a square-about that will work for them. Councilmember Wilson: The major issue I have is Council needs to discuss the $1.7M and what it looks like. We need a dialogue about the whole thing, but it's a very attractive project. Councilmember Lien: We know there is a shortage of retail, so my tolerance of the abatement is higher if there is retail. Mayor Hoyt: We believe we know what our community needs. We always have an appetite for more retail. About three of us are clearly yes, absent more information. A quick offline conversation will fill in the other gaps. Staff can do that as quickly as possible. Mr. Dutt: We intend to start by Fall 2024. 3.2 Emerald Ash Borer (EAB) Management Plan — Update Director Powell and Natural Resources Specialist Rutledge presented. Earlier this year, City Council considered various scenarios for an updated EAB Management Plan. On March 20, 2023, Council approved Scenario #4, which aggressively responds to the EAB while keeping public safety as the focus. Scenario #4 pertains to public trees, particularly those in boulevard areas (city right-of-way outside of the roadway) and park areas. This scenario uses a coordinated approach on public ash trees, including extensive tree removals, along with injection of an insecticide to extend the health of the trees until they can be safely removed. At the same time, we have a significant effort underway to perform boulevard tree trimming along roadways. Staff provided a brief update to Council on our progress and challenges so far. An annual update will be provided in March or April of 2024. Following are some metrics for trees removed, trimmed, ash-treated and stumps removed so far in 2023. More trees will be trimmed in the next few weeks via contracted labor. Work Session Minutes of December 4,2023 Page 5 of 8 Tree removals: • 375 trees removed. • Includes 325 Ash trees; the remainder were dead/hazard trees of other species. 86% removed by contractors; the balance removed by City Staff. Trimming: 570 trees trimmed. 65% trimmed by contractors; the balance by City Staff. Treatment: 1,060 trees by contractor. Stump Removal: 449 stumps removed by contractors We are also doing major trimming. We have code support for doing the work we do, but it has a big impact on residents. There has been a backlog in pruning for about a decade. Future focus will be hazards and trimming only. We have a Green Corp member auditing trees who found about 40 private trees — we are bound to find more going forward. It's labor intensive. People are starting to understand, and the calls are slowing down. We may look at a tree rebate program for planting new trees. Some may plant the tree on their side of the lot line, and it will become a private tree — that comes with a lot of communication. The goal is to replace trees because we are losing our canopy and a variety of species. Councilmember Lien asked that we have language with a specific list of species. Mayor Hoyt suggested going one step further regarding species and placement, which trees provide canopy and height over sidewalks, mix of trees, likelihood of success, and the proposed rebate. Come up with an ordinance and a way to implement a good plan. Spot it for them on GIS and we will figure it out from a policy standpoint. Councilmember Lien asked about expectations of park land. Behind his home is 80% marsh and 20% buckthorn. Mayor Hoyt said as we go through future developments, we need to be talking about trees and placement. He also suggested a City forestry division where things can be handled internally. 3.3 Speed Limit Background Director Powell presented the issue of speed limit levels, the City's ability to set speed limits, and the process for changing speed limits has been raised in the past, and again more recently. This is a good opportunity to share background Work Session Minutes of December 4,2023 Page 6 of 3 information on relatively recent legislative changes and research pertaining to speed limits. Minnesota Statute Section 169.14, subd. 2 was updated August 1, 2019, by the Minnesota State Legislature. The change gave cities the authority to establish speed limits for streets under their jurisdiction without having MnDOT conduct a speed study and without approval by the Commissioner of Transportation provided that: • Speed limits are implemented in a consistent and understandable manner. • The City erects appropriate signs to display the speed limit. • The City develops procedures to set speed limits based on the City's safety, engineering, and traffic analysis considering national urban speed limit guidance and studies, local traffic crashes, and methods to effectively communicate the change to the public. The best practices process (which could be applied either citywide or roadway specific) described in the report is as follows: 1. Document Existing Conditions 2. Survey Residents and Elected Officials 3. Analyze your Data 4. Partnering with Law Enforcement 5. Evaluate Alternative Approaches/Make a Decision 6. Prepare a Policy Statement 7. Develop a Plan to Implement 8. Conduct a Follow-Up Assessment Two examples of how Saint Paul and Minneapolis have responded to speed limit legislation changes were included in the Council's packet. The approach for Farmington needs to be developed at a level of scope detail that meets our needs. The goal being that we develop a defined process that incorporates best practices and transparency for the public. Director Powell will direct Staff to prepare a procedure and approach for future requests to change speed limits. We currently do not have a procedure to follow. 4. COUNCIL COMMITTEE UPDATE No update. 5. CITY ADMINISTRATOR UPDATE No update. Work Session Minutes of December 4,2023 Page 7 of 8 6. ADJOURNMENT Motion was made by Councilmember Lien and seconded by Councilmember Bernatz to adjourn the meeting at 6:53 p.m. Motion carried: 5 ayes / 0 nays. Respectfully submitted, Shirley R Bue s er v- City Clerk Work Session Minutes of December 4,2023 Page 8 of 8