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Commuinity Development Authority- MINUTES - 2/1/2006 CITY OF MUSKEGO Approved 5/15/06 COMMUNITY DEVELOPMENT AUTHORITY (CDA) Audio recording of meeting MINUTES is also available. Wednesday, February 1, 2006 Chairman Frank Waltz called the meeting of the Community Development Authority to order at 6:01 p.m. Those in attendance recited the Pledge of Allegiance. The meeting was posted in accordance with the Open Meeting Law. PRESENT: Commissioners Rob Glazier, Suzi Link, Gail Miles, Frank Waltz and Executive Director Jeff Muenkel. ABSENT: Commissioner Lidbury, Ald. Nancy Salentine (excused), Ald. Eric Schroeder (excused) GUESTS: Mike Dilworth of Ener-Con Companies LLC, Philip L. Cosson of Ehlers & Associates, Inc. and Reporter Nicole Adrian of the Muskego SUN APPROVAL OF MINUTES Commissioner Link moved to approve the minutes for the October 24, 2005 meeting. CDA Chairman Waltz seconded. Upon a voice vote, the motion carried with Commissioners Glazier and Miles abstaining. OLD BUSINESS--None NEW BUSINESS Review and Approval of Conceptual Plan and TID allowances for Parkland View Development to construct a 30-unit condominium and a 10,000 square foot retail center development located in Redevelopment District #2 (Tax Key Nos. 2198.991 & 2198.992 / Janesville Road) as part of the Janesville Executive Director Jeff Muenkel reported that a proposal had been received and the developer is willing to work with the CDA through the process. At this meeting, he was looking for the CDA commissioners input on the proposal. The developer, Mike Dilworth, was present. Executive Director Muenkel mentioned that the developer is still trying to pursue acquisition of the other parcels in the area to allow for a larger development. A larger development may benefit the city even more and the CDA may want to give the developer more time to acquire the parcels. The proposal right now has two parcels involved—the city-owned parcel and the Assist-to-Sell parcel. The developer has approached the owners and has attached an offer to purchase to their agreement. The development would be a 30-unit condominium building bordering the wetlands in the back and in the front would be the 10,000 square foot retail office structure. The condominium would consist of a variety of units with mostly two bedroom units, some two bedrooms and a den, a few one bedrooms. It would be a two to three story development in one and this would work with the City of Muskego relative to height. The developer had provided some color renderings from similar projects they had completed. In reviewing the concept, the CDA commissioners would have to decide how the development relates to the Redevelopment District #2 Plan. Executive Director Muenkel stated that the proposal meets almost every variable of the plan so far as design character, use mix and the density. The only provision mentioned in the RD #2 Plan that the plan doesn’t meet is having upper end condos and apartments above retail offices. However, the plan does still provide the mixed use of upper end condos with retail and office. Mr. Phil Cosson of Ehlers & Associates, Inc. reviewed their financial analysis of the proposed development. The analysis included how the development proposal fits within the TID project plan. They also analyzed the project CDA Minutes February 1, 2006 - page 2 from cash flow primarily, what the impact would be on the TID. He also shared that there are communities that have set forth policies on: how they use TID, when they use TID, and why they use TID as a matter of practice. Then, when a TID is established, they have policies set as to the appropriate amount of incentives to be provided to a development. He recommended the City of Muskego establish guidelines but not so stringent that you could not deviate from them. In the future, he will provide some of these guidelines from other communities. Back to the analysis, Mr. Cosson stated the developer was requesting assistance in the amount of $350,000. They analyzed it as (1) a stand-alone project, does it work financially for the city and the developer and (2) how does it fit into the whole development plan for the TID which is a couple years old. Three exhibits accompanied the analysis: Exhibit A reflected the revenue that would be generated from the proposed project over the remaining life of the TID. Exhibit B reflected the impact of the proposed development on the overall TID. Exhibit C demonstrated that the anticipated closeout of the TID would move up to 2013 due the proposed development. The City of Muskego also requested an analysis of the purchase of the parcel owned by the CDA for an amount of roughly $150,000 which was valued at approximately $600,000, meaning essentially a land markdown of $450,000 and should be acknowledged as part of the incentive payment that is going back to the developer. This change results in an increase in the overall financial assistance form $350,000 to $800,000 which increases the payback period for the proposed development. The payback initially identified as 5 years would increase to 10 years. Mr. Cosson stated the idea would be to come to terms with an appropriate incentive amount and then identify it by the development incentive. He thought it was a good project from a financial standpoint. He did recommend that the proposal should exclude residential incentive reference. They will review the analysis again once the developer has a final proposal. Commissioner Glazier thought it met the guidelines that the CDA spelled out. He would like to see a drawing showing the retail stores in front of the condominium. Also, in agreement with setting up protocol, guidelines on how the CDA would proceed on TID requests. In regard to the financial analysis, he was comfortable with the figures even taking into account the value of $600,000 at an 8.5:1 ratio, which sounds like they are still in the ballpark. The conceptual plan meets his understanding of the district guidelines. The financial analysis seems to look good and he would look forward to guidance on setting up guidelines on how they would judge these projects in the future. At this point, he is happy with what he has seen. Commissioner Miles commented on the pictures presented. She is in favor of moving forward. She would like to see a rendering of how the condominium and retail stores look together at final approval time. Commissioner Link questioned if they had taken into account the potential ground water elevation when considering the underground parking. Executive Director Muenkel stated the wetlands have been delineated and there is substantial elevation difference between the wetlands and the build-able area so there should be considerable area to dig down for structure support and underground parking. In considering the development, Commissioner Link said that the density units for the parcel designated as “E” in the development proposal map should be calculated into the equation and given a value as the city would have to account for the density and it should be reflected in the proposal. CDA Chairman Waltz offered what he had seen so far indicates they are on the right track. The proposal looks very doable. He thought they needed some additional financial look at the property values and source of the money when the final proposal is known. Director Muenkel asked the developer if he has confidence, based on the CDA comments, to go back and negotiate for the remaining surrounding parcels knowing that more TID incentives may be available if the project gets larger and produces more TID revenue. Mr. Dilworth replied that he did and that he would begin to negotiate a larger development immediately. In closing, Director Muenkel stated that the developer has been recently involved with a private development needing TID incentives and that Mr.Dilworth is fully aware that guarantees are needed before a City expends the TID allowances. Mr.Dilworth agreed and commented that they have guaranteed all their projects via developer’s agreements when it comes to TID incentive requests. Review need for TID approval policy CDA Chairman Waltz recapped the earlier discussion on the need for guidelines for TIDs. CDA commissioners were in agreement with the need to develop a model so developers know what they can CDA Minutes February 1, 2006 - page 3 expect. Mr. Cosson will provide policies from other communities for the city to review in facilitating their own policy. PUBLIC INPUT—None MISCELLANEOUS BUSINESS AS AUTHORIZED BY LAW: Interest CDA Accrues Yearly Executive Director Muenkel advised that there is a local government investment pool accumulating yearly interest that the CDA may recognize; however, the city administrator needs more time to investigate the issue. The next meeting date to be determined. ADJOURNMENT: There being no further business, Commissioner Glazier moved for adjournment, seconded by Commissioner Miles. Upon a voice vote, the motion carried unanimously. Meeting adjourned at 7:17 p.m. Stella Dunahee, CPS Recording Secretary