BROWNFIELD REDEVELOPMENT AUTHORITY Quality Services for a Quality Community MEMBERS William Mansfield, Chair AGENDA Douglas Jester, Vice Chair Peter Dewan, Treasurer George Lahanas, Secretary October 23, 2014 – 12:00 p.m. Brad Ballein Lynsey Clayton (Immediately following DDA Board Meeting) Colin Cronin nd James Croom Conference Room A – 2 Floor David Krause Eric Rosekrans 410 Abbot Road Mayor Nathan Triplett Staff Liaison Lori Mullins (517) 319-6930 1) Call To Order A) Roll Call City of East Lansing DEPARTMENT OF B) Approval of Agenda PLANNING, BUILDING C) Approval of Minutes AND DEVELOPMENT 410 Abbot Road i. September 25, 2014 (attachment) East Lansing, MI 48823 (517) 319-6930 www.cityofeastlansing.com 2) Written Communications 3) Communications from Audience 4) Communications from Staff 5) Business Agenda A) Reimbursement Agreement for TIF Plan #18 for Trowbridge Village (attachment) B) Assignment of TIF Plan #18 for Trowbridge Village (attachment) C) Review of Prioritized Redevelopment Ready Sites (attachment) 6) Adjournment BROWNFIELD REDEVELOPMENT AUTHORITY Quality Services for a Quality Community MEMBERS William Mansfield, Chair AGENDA Douglas Jester, Vice Chair Peter Dewan, Treasurer George Lahanas, Secretary October 23, 2014 – 1:00 p.m. Brad Ballein Lynsey Clayton (Immediately following DDA Board Meeting) Colin Cronin nd James Croom Conference Room A – 2 Floor David Krause Eric Rosekrans 410 Abbot Road Mayor Nathan Triplett Staff Liaison Lori Mullins (517) 319-6930 1) Call To Order A) Roll Call City of East Lansing DEPARTMENT OF B) Approval of Agenda PLANNING, BUILDING C) Approval of Minutes AND DEVELOPMENT 410 Abbot Road i. September 25, 2014 (attachment) East Lansing, MI 48823 (517) 319-6930 www.cityofeastlansing.com 2) Written Communications 3) Communications from Audience 4) Communications from Staff 5) Business Agenda A) Reimbursement Agreement for TIF Plan #18 for Trowbridge Village (attachment) B) Assignment of TIF Plan #18 for Trowbridge Village (attachment) C) Review of Prioritized Redevelopment Ready Sites (attachment) 6) Adjournment BROWNFIELD REDEVELOPMENT AUTHORITY Quality Services for a Quality Community MEMBERS William Mansfield, Chair MEETING MINUTES Douglas Jester, Vice Chair Peter Dewan, Treasurer George Lahanas, Secretary September 5, 2014, 1:00 p.m. (immediately following DDA meeting) Brad Ballein nd Lynsey Clayton Conference Room A – 2 Floor Colin Cronin James Croom 410 Abbot Road David Krause Eric Rosekrans Mayor Nathan Triplett Present: William Mansfield, Douglas Jester, Mayor Nathan Triplett, Brad Staff Liaison Lori Mullins Ballein, David Krause, Peter Dewan, Eric Rosekrans, Colin (517) 319-6930 Cronin, George Lahanas, Lynsey Clayton, James Croom City of East Lansing DEPARTMENT OF Absent: None PLANNING & COMMUNITY DEVELOPMENT Staff Members Present: Tim Dempsey, Heather Pope, Terri Soliday 410 Abbot Road East Lansing, MI 48823 (517) 319-6930 Guests: Kevin and John McGraw, River Caddis Development; Michael www.cityofeastlansing.com Driver, CFO of River Caddis Development; Ralph Monsma; Christine Root 1) Call to Order The meeting was called to order at 1:47 p.m. A) Roll Call At the taking of the roll, no one was absent. B) Approval of Agenda Dewan moved to approve the Agenda as written; Jester seconded the motion. Vote: All yeas. Motion carried unanimously. C) Approval of Minutes i. August 28, 2014 Dewan moved to approve the minutes for the August 28, 2014 Brownfield Redevelopment Authority meeting; Ballein seconded the motion. Vote: All yeas, motion carried unanimously. 2) Written Communications – None. City of East Lansing Brownfield Redevelopment Authority Agenda – 9/25/2014 - Page 1 of 3 3) Communications from Audience Ralph Monsma, 1350 Red Leaf Lane, indicated he submitted a document to the City Council regarding the Brownfield process. He said before DTN’s and PDIG’s applications go to City Council, the City should consider how this affects City’s finances. Christine Root, 1729 Sunset Lane, agreed with Monsma’s comments and said the City is facing a lot of difficult choices; i.e. the recommendation to close the Bailey Child Care Center. 4) Communications from Staff None. 5) Business Agenda A) Requested Amendment to TIF Plan #18 for Trowbridge Village Brownfield Plan and Reimbursement Agreement Dempsey said the Brownfield Redevelopment Authority initially approved this in the spring with a capture of $1.4 million with a 50/50 split. At their August meeting they approved a revised proposal which changed the plan to a capture of $1.8 million with a 65/35 split. Since that time it was discovered that the taxable value of that property was incorrectly estimated, so the developer will be paying additional taxes plus the loss of the fifth floor. The developer came back with a plan for 16 years at 65% but raised the cap of the dollar amount to just over $2.2 million, even though total eligible expenses are $2.6 million. Dewan left the meeting at 1:54 p.m. Dempsey said the only other TIF plan which was not 100% capture was for the M-78 Rite Aid property, which was a 50% TIF. All other approved TIF’s are for 100%. Jester moved to recuse Cronin; Rosekrans seconded the motion. Vote: All yeas. Motion carried unanimously. Krause said TIF’s do not reduce the developer’s taxes; they are an incentive for the developer to do the project. He noted conditions have changed for the Trowbridge project which was not the fault of the developer. Dempsey said there was confusion over the number of apartments; this was not caught by developer or the City. Krause stated that 65% in 16 years is a reasonable TIF capture. Kevin McGraw, River Caddis Development, said the day they were approved for the Brownfield plan in August was the day they found the mistake, which created a situation where they would be paying an extra $55,000 a year. Originally he said they did not need the whole $2.8 million. Then the City Assessor said the units were worth more; and they have already ordered the steel. He indicated the foundation is solid, but there are bad soils. Instead of asking for 100% of the TIF, the second time before the Brownfield Redevelopment Authority they asked for 50% of the increase. He said the original TIF was based on five floors of income; when Council changed it to four floors, their project went in the red. He said they will only recoup 30% or 35% of the deficit from the increased tax assessment. Mike Driver, Chief Financial Officer of River Caddis Development, said the City Assessor reassessed the apartments at $165,000, which they think is too high. Caddis had estimated $152,000. City of East Lansing Brownfield Redevelopment Authority Agenda – 9/25/2014 - Page 2 of 3 Ballein asked why this didn’t happen before. Dempsey said the changing nature of the project and its location have made it harder to determine rent structures. Dempsey said our other Brownfield projects have been 100% capture. Caddis’s eligible expenses are $2.6 million; they are asking for less. There would still be a cap of the total eligible expenses at $2.6 million. Dempsey explained if the tax value is lower, the taxes will be lower and the TIF revenue will be lower. Overall if that continues over time, it will reduce the final number as well. If the taxable amount exceeds the estimate, our payout to Caddis will be higher and the taxes will be higher; we will get more revenue. Mayor Triplett commented that we are talking about real money that is going away from the City. The issue from the Council’s perspective is that there was a percentage division arrived at because there was an attempt to set a precedent with a sharing between the City and the developer. What troubles him is that there was a mutual error. He asked the developer if City Council can address all the inequity created by the assessment error by doing a 60/40 split and remove the recapture cap, but not go to a 65/35 split. McGraw said at 50/50 there is no reason to build the building. A 65/35 split does not make them whole, only 45% to 50% whole. He said if the split is under 60/40 they will abandon the project and try to sell the steel. He stated if Council had let them keep the fifth floor they would have had another $50,000 a year to work with. At 60% the project may not be feasible. Ballein noted this is only the second project that has been under 100%. He indicated the developer proposes to put a great building on an old parking lot. Lahanas explained there was a deal for 50/50, and to go that far from it is unpalatable. There is also the perception that City Council is so pro-development that they don’t have to worry about future taxes. Ballein noted these developments will not happen without TIFs. Dempsey said City Council discussed this at Tuesday night’s work session, and it is scheduled for a public hearing on October 7. It had to come back to the Authority because there is an increased dollar amount. Clayton asked why Council downsized it from five stories to four stories. Lahanas said because of concerns from the neighborhood, Council had to balance competing interests. Jester said if he had been voting on the site plan, he would have supported five stories. If he had been present at the last Brownfield meeting, he would have sided with Lahanas. He said we need to correct an error and moved to recommend approval of the amended Brownfield Plan; Clayton seconded the motion. Vote: Jester, Rosekrans, Clayton, Ballein, Krause, Croom, Mansfield, Mayor Triplett; Nays: Lahanas, with Cronin being recused. Motion carried 8 to 1.