Adopt Resolution #21-185 Approving Revised Cost Share Framework for Riverdale Drive and Riverstone South and Authorizing Application to Anoka County Housing and Redevelopment Authority (ACHRA)

The Purpose of this case is to consider adoption of Resolution #21-185  Approving Revised Cost Share Framework for Riverdale Drive and Riverstone South and Authorizing Application to Anoka County Housing and Redevelopment Authority (ACHRA)

The need for this project is being driven by a development proposal known as Riverstone South by Capstone Homes located on property owned by Pearson Properties of Ramsey on the south side of Highway 10. The City has been working with the Developer and Landowner for over two years to negotiate an agreement that will bring this project to fruition.  That being said, the project has a broader benefit for Highway 10 Safety/Congestion and the Bowers Drive Neighborhood.

This topic was discussed in January 2021 by the Public Works Committee and City Council. Direction was to refine project costs and to explore grant opportunities and other funding sources to help fund the City portion of the Riverdale Drive project and the $350,000 tree preservation credit to Capstone Homes. The Ramsey HRA fund is a viable fund for Riverdale Drive project but cannot be used for the tree preservation credit.

Former Deputy City Administrator Gladhill explored potential grant opportunities to help with the tree preservation credit and was unable to find a viable grant for the tree preservation credit.  The City of Ramsey did not receive the $1.25M MnDOT Local Road Improvement Program (LRIP) grant for Riverdale Drive it applied for under the framework approved in January 2021.  However, the City did apply for a MnDOT Local Partnership Program (LPP) Grant of $710K and was awarded $612K which can only be used for the construction of Riverdale Drive; not the tree preservation credit.

Below is a summary of topics and new information for discussion as part of the revised framework attached. Additional detail is included in the attachments.

• Developer/Owner object to contributing to the construction of off-site improvements (County Parcel, Bowers Drive) and PWC and City Council agreed to this in the past framework
• Acquisition/repayment of previous funding for the County Parcel (RALF and Anoka County) will be required for ROW purchase
• Planning Level Layout has been adjusted slightly and continues to be adjusted slightly to maximize development potential.
• Construction cost estimate for Riverdale Drive and related improvements have been updated and is $1,706,000 
• The estimated cost for acquisition of the ROW needed for Riverdale Drive from Anoka County has been reduced from $950K to $283K.
• Estimated City of Ramsey total Contribution for Riverdale Drive and Tree Preservation is reduced from $1,025,520 to $1,021,486  
• The City was unsuccessful in receiving the MnDOT LRIP Grant ($1.25M)
• The City applied for a MnDOT LPP Grant ($710K) and received a $612K award
• A solution for payment of the tree preservation credit of $350K to Capstone includes roughly a combination of HRA ($240K) and PIR Funds ($110K)
• Staff is proposing an application to the ACHRA in the amount of 950K to cover the City contribution of costs associated with the construction of Riverdale Drive.

N/A

Assessment Method

All parties involved have verbally agreed to a split of the assessment between Capstone's residential development and the Pearson's future commercial/industrial development along Highway 10. The assumption is that all parties will agree to these terms in a future Assessment Agreement that eliminates any risk and/or liability from deviating from the 'net developable acreage' method of assessment used on Puma Street on the north side of Highway 10. Capstone and Pearson's have a separate agreement to allocate special assessments that is based on lineal front footage along each property (outlined on Revised Cost Share Framework).

City Contribution to Collector Road

The January 26, 2021 approved framework is attached along with minutes from Public Works Committee and City Council for additional detail. 

A key component to the success of this project is obtaining grant money and identifying eligible funding sources for the City contribution to this project.  Resolution #21-101 directed staff to explore grant opportunities and other funding sources to reduce the City contribution to the project.  The MnDOT LPP Grant, City of Ramsey HRA Funds, MSA Funds and City of Ramsey PIR Funds are eligible funding sources for the City contribution to this project. This project is listed in MnDOT and Anoka County's 2014 Highway 10 Access Planning Study, and the City's 2019 Ramsey Gateway Study. 

A portion of the full Riverdale Drive project is located on real property owned by Anoka County. This corridor was originally planned for a river crossing across the Mississippi River to the City of Dayton. At this time, Anoka County does not have funding available to contribute to this project (Riverdale Drive Extension). As such, Anoka County has offered that the City can purchase the ROW needed for the construction of Riverdale Drive. This would not be a County Road - it would be a local City Street. The cost for this ROW is estimated to be approximately $283K.

As a sidebar, the City still desires to plan for a river crossing, the alignment simply has changed to coincide with Armstrong Boulevard. MnDOT is currently leading a study on the feasibility of this river crossing. 

Total Assessment Amount and Preliminary Assessment Amount

Attached to this case is a detailed breakdown of the proposed Revised Cost Share Framework.

Timelines

Capstone Homes has their schedule for subdivision approval for Riverstone South by the end of 2021 with construction to commence in 2022. If the City Council is comfortable with the proposed revised cost share agreement, this timeframe is feasible. The City Council could consider a higher contribution with traditional funds or introducing an eligible Tax Increment Financing (TIF) economic development project on the commercial/industrial parcels along Highway 10. This would extend the desired timeframe. 

At the end of the day, the City is not obligated to contribute to any portion of this project at any given time, although there would be value in doing so.  Staff has negotiated with Capstone and the Pearson's and has presented a viable funding solution.  

Future Discussions

This case is intended to provide a recommendation to City Council for policy direction. Next steps including, but not limited to, approval of Assessment Agreement(s), authorization to prepare plans and specifications, approval of plans and specifications, and award of construction contracts, all of which will provide additional levels of detail. The intent of this step is to confirm the revised Cost Share Framework or to develop another course of action. 

Alternatives

Alternative 1 - Recommend that the City Council approve the REVISED Cost Share Framework including Tree Preservation, including the City contribution to the County Property, updating planned grant fund revenue and ROW acquisition cost.

Alternative 2 - Recommend that the City Council approve the REVISED Cost Share Framework w/o Tree Preservation, including the City contribution to the County Property, updating planned grant fund revenue and ROW acquisition cost.

Alternative 3 - Direct Staff, the Pearson's and Capstone to continue negotiations.

Alternative 4 - Something else.

The proposed funding for this project is proposed to be a combination of City Contributions (HRA and PIR), Grant Funds and Developer Assessments as outlined in the Revised Framework.  The funding solution presented by staff uses a combination of HRA Funds and PIR funds to satisfy the $350K tree preservation credit to Capstone.  As it pertains to the City's Cost Share (Municipal Contribution to Collector Road + Assessment Amount for Ownership of Real Property), several funding sources are available below if a different structure is desired.

1. City's Public Improvement Revolving (PIR) Fund (generated from local property tax revenue)
2. Anoka County Redevelopment Authority (ACHRA)
3. State of Minnesota Municipal State Aid (MSA) Account
4. MnDOT LPP Grant ($612K received)
5. Tax Increment Financing (for qualifying projects in the Commercial/Industrial District) (could delay project)

If ACHRA funds are to be used a Resolution requesting the use of funds will need to be submitted to the ACHRA.  The proposed HRA funding request is $950,000.

Staff has worked hard to bring forward a creative solution to fund the Riverdale Drive Extension and tree preservation credit that utilizes MnDOT Grants, Ramsey HRA funds and PIR funds. This project will open up more land for residential and commercial/industrial development and increase safety for existing and future Ramsey residents and businesses.

The Public Works Committee met on October 19, 2021 and unanimously recommended adoption of Resolution #21-185 - Alternative 1 - REVISED Cost Share Framework including Tree Preservation, including the City contribution to the County Property, updating planned grant fund revenue and ROW acquisition cost;

and:

The Public Works Committee feels that a contribution to a collector road has a broader public benefit and that the revised cost share framework is close to the original framework originally approved (non-binding) by the City Council which is incorporated into Resolution #21-185. 

 

Motion to adopt Resolution #21-185  Approving Revised Cost Share Framework for Riverdale Drive and Riverstone South and Authorizing Application to Anoka County Housing and Redevelopment Authority (ACHRA) - Alternative 1