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ITEM 3.2B SCC 7.9.2015 MinutesITEM 3_20 SPECIAL CITY COUNCIL MEETING CITY HALL JULY 91 2015 6:30 PM Call to Order. Mayor Jessica Stockamp called the meeting to order at 6:30 PM. Roll Call: Mayor Jessica Stockamp; Councilmembers: Vern Heidner, Doug Schroeder and Jason Warehime. Absent: Councilmember Tom Darkenwald. Staff: Lori Johnson, City Administrator; Andy MacArthur, City Attorney; Daniel Licht, City Planner; and Tami Loff, City Clerk. Present from Briggs and Morgan, Mary Ippel and Ehlers, Mark Ruff. 1. Otsego Apartments LLC TIF Application. Also present, Applicant Casey Darkenwald, John Darkenwald and Jim Illies. City Administrator Johnson said this meeting is for the applicant to make a presentation to the City Council on their application for assistance and to answer any questions they may have regarding the application. She stated that a decision on the application is not requested or expected at this meeting. A future meeting will be scheduled at which the Council can take action on the application. Jim Illies, I & H Apartment Group, reviewed the project and the request for $6,900,000 of tax increment assistance from Otsego Apartments LLC for the proposed Riverbend North development. He said their actual estimated eligible costs total $8,200,000. He said the plan includes two, three story buildings with underground parking of 80 units each. The project will be done in two phases. It will be a mix of one, two and three bedrooms. He said the goal is to break ground this fall and open in May and lease out through the summer. He stated the second phase timing is driven by occupancy. He presented a draft drawing of the proposed building and reviewed the financial numbers per the request. The TIF request a pay as you go for 26 years. The proposal calls for meeting the minimum required 20% low income units with no restriction on rents for the other units although income restrictions would be in place. The road through the development will be private according to the proposal. There was discussion on the land value, transfer of the land, and the ownership of Otsego Apartments LLC. Casey Darkenwald indicated it would be controlled by the Darkenwald family and possibly others. He stated they hadn't figured out the final ownership yet. There was question about the commercial development. Casey Darkenwald stated that they took the commercial numbers out of the TIF request. Mr. Ruff asked the applicant to explain the alternative to the site if TIF assistance is not given. Applicant Casey Darkenwald said he is not sure with the treatment plant in the middle of it and the existing cross easements; it's a tough site. He stated they feel this plan is the best way to make the most of the site. He explained the costs for relocation of the county roads and lights. Mr. Ruff asked the applicant if he is saying the costs are due to redevelopment of this property. Mr. Casey Darkenwald said yes. CM Warehime asked if a market analysis has been done to determine the need for low income housing. Mr. Illies said yes they have done their own internally by software but not by a third party. CM Warehime asked if they had that data available. Mr. Illies said no. There was discussion on rent prices and whether there was an identified need for additional low income housing in Otsego The proposal is to include 20% as affordable housing units. There was additional discussion on the 20% requirement for low income. CM Heidner expressed concern with subsidizing the 80% that is not low income. The Council asked the developer about similar projects they had completed and if assistance was given to those projects. Mr. Illies stated that he completed a 103 unit project in Cambridge that received approval of $1.3 million of TIF assistance over 22 years and a project in Alexandria that was approved for 13 years of TIF assistance over two phases. He did not recall the amount. Ms. Ipple asked the developer about project timing and when they need a Council decision on their application. The applicant stated the sooner the better. The project is on hold until they have the status of the application. Mr. Ruff stated that one way to approach this is to identify extraordinary costs that make it more costly to develop this project on this property. Casey Darkenwald estimated those costs at around $2,000,000. Casey Darkenwald stated that the estimated land value they used to determine the land price was land that included all improvements and was ready for development. The value they used is $12,000 per. unit. The developers were provided an opportunity to present additional information and closing comments regarding their project. They had no further comments. City Administrator Johnson reiterated that this meeting was for information only. The City Council will consider action on the request for TIF assistance at a later date. City Administrator Johnson stated she would include an item to call a special meeting for a decision on the TIF request at the next Council meeting. 2. Adjourn. CM Warehime motioned to adjourn. Seconded by CM Schroeder. All in favor. Motion carried. Adjourned at 7:45 PM. ATTEST: Tami Loff, City Clerk 2 Mayor Jessica Stockamp