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Rochester Hills

Minutes

Local Development Finance Authority

Jennifer Berwick, Clarence Brantley, Michael Damone, Michael Ellis, Lois Golden,

Tammy Muczynski, William Mull, Theresa Mungioli, Kris Pawlowski,

Cassie Patterson, Romaneir Polley, Stephan Slavik, Owen Winnie

7:30 AM

1000 Rochester Hills Drive

Thursday, April 1, 2010

CALL TO ORDER

Chairperson Stephan Slavik called the Regular Meeting to order at 7:39 a.m.

ROLL CALL

Clarence Brantley, Michael Damone, Michael Ellis, Lois Golden, Stephan

Slavik, Kris Pawlowski, William Mull and Jennifer Berwick

Present

8 -

Theresa Mungioli, Romaneir Polley, Owen Winnie, Tammy Muczynski and

Cassie Patterson

Absent

5 -

Quorum Present.

Also present: Dan Casey, Manager of Economic and Development (entered

8:07 a.m.)

Paul Davis, City Engineer

Kurt Dawson, Director of Treasury and Assessing

Maureen Gentry, Recording Secretary

APPROVAL OF MINUTES

2010-0135

January 14, 2010 Regular Meeting

A motion was made by Damone, seconded by Brantley, to approved the January

14, 2010 Minutes as presented.

Aye

Brantley, Damone, Ellis, Golden, Slavik, Pawlowski, Mull and Berwick

8 -

Absent

Mungioli, Polley, Winnie, Muczynski and Patterson

5 -

COMMUNICATIONS

Email from Paul Davis, City Engineer, dated January 28, 2010

UNFINISHED BUSINESS

2009-0042

Technology Drive Update

Mr. Davis noted that he had received an email from MDOT on March 10,

which advised that there was a sign-off for the limited access right-of-way

release for Technology Drive. It would now go before another Board for

final approval on April 20th, but they did not anticipate any problems.

The final approval would allow the City to finalize the design. The initial

cost from the consultants was just for the preliminary design so that

MDOT could approve a conceptual alignment. It would not take much

more to get it to final design for bidding, and Mr. Davis did not expect the

City to construct it this year. It would still have to go through MDOT’s

process for plan review and grade inspection, but this was the step that

had been holding the City up for a year and a half.

Mr. Davis asked if he should wait until the next LDFA meeting to bring the

proposal for the final design or whether he should just move forward.

Mr. Damone asked what amount he felt it would take, and he suggested

that the LDFA board should approve the dollars and Mr. Davis could then

use his discretion. Chairperson Slavik agreed, and maintained that

special consideration would have to be given to the trail crossing and the

turns. Mr. Davis advised that it would be a right-in, right-out only, so it was

limited access movement because of the boulevard. There would be a

couple of different pathways converging where it crossed Technology.

The Clinton River Trail would come up and cross in front of vehicles

waiting to turn onto Adams Road. There would also be another pathway

coming down parallel and close to Adams, and the two points would

converge and cross at Technology. He acknowledged that it was a little

redundant, but the Adams Road pathway was coming off the interchange

and the Clinton River Trail would diverge from that and go underneath

M-59.

Mr. Damone asked if that was acceptable to Mr. Davis. Ms. Golden said

it was similar to what was done for the Paint Creek Trail on Tienken. They

wanted everyone to have a safe crossing, and she felt that cyclists and

runners would welcome that.

Mr. Davis indicated that he would like to move forward, and he noted that

the construction estimate was a little over $200k. He thought another

$20k, would complete the design. If that changed, he would come back to

the board. Ms. Golden moved the following:

Motion by Golden, second by Ellis, that the LDFA Board approves the

amount of $25,000.00 to complete the engineering for the Technology

Drive connection. Any significant changes in the future would be brought

before the Board.

A motion was made by Golden, seconded by Ellis, that this matter be Approved.

The motion CARRIED by the following vote:

Aye

Brantley, Damone, Ellis, Golden, Slavik, Pawlowski, Mull and Berwick

8 -

Absent

Mungioli, Polley, Winnie, Muczynski and Patterson

5 -

2008-0159

M-59 Corridor Study & Master Infrastructure Plan Update

Mr. Davis advised that the prime consultant for the project was McKenna

Associates, a planning firm that had worked with the City for many years,

but the engineering consultant was Spalding DeDecker Associates, and

he would be meeting with them soon to provide information about the

roadways. In the original proposal, they anticipated doing work the City

already had available. They were going to give an assessment about

which roads the City should concentrate on repairing first in the district,

but since the City had that information, Mr. Davis would provide it to the

consultant.

Chairperson Slavik asked the status of the Crooks and M-59 interchange.

Mr. Davis said that he had not heard anything further. He thought it would

stay a deferred project until the State could change the status of the 243

projects indefinitely on hold. Chairperson Slavik asked if the road

closings and work were still up in the air, and Mr. Davis said it was

supposed to be bid out last October. At one point they were moving full

steam ahead, but the State had funding difficulties. They were waiting for

the second stimulus plan, which made it through the House but not the

Senate. Mr. Ellis suggested checking MDOT’s website for more

information and timing.

Ms. Golden referred to the Technology Drive discussion. She thought it

would be a good idea to send a sketch of the crossing to the Oakland

County Trails Advisory Council. They tracked all the crossings and

improvements, and Mr. Davis agreed he could send that.

This matter was Discussed

NEW BUSINESS

2010-0148

Election of Officers (Chairperson, Vice Chairperson and

Secretary for a one-year term to expire the first meeting in

April 2011)

Upon motion by Ellis, second by Golden, Chairperson Slavik was

re-elected Chairperson; upon motion by Golden, Mr. Ellis was re-elected

Vice Chairperson and the Planning and Economic Development

Department was re-elected Secretary.

A motion was made by Ellis, seconded by Golden, that this matter be Approved.

The motion CARRIED unanimously.

Mr. Davis talked about the Hamlin Rd. project, which he said had

restarted and instituted a closure on Hamlin by the intersection of

Livernois. Westbound traffic will not be allowed to travel through the

intersection on Hamlin. It will be closed for about three months, and the

contractor was working on paving east of Livernois, where they will add

curb and gutters and drainage improvements. The roundabout will take

three months because of the staging. The traffic signals will be removed

from the intersection, and there will be barricades on either side of

Hamlin. Traffic will be free flowing on Livernois, and there will be two long

dead-end stretches on Hamlin. That will affect some of the businesses

on Rochester Industrial, but after if was finished, he felt that it would be

much improved.

Mr. Pawlowski asked about the retention on the northwest corner where

water rose up to about half of the parking lot of the facility. Mr. Davis said

they improved the situation on that corner. There was a pump, and he

was not sure it was always working for that detention basin. They were

able to put in a much larger storm sewer and provided the basin with a

gravity connection out of it, and the pump had been removed, and it

should function better. He mentioned that one of the benefits of the

project was that there would be pathways along both sides of Hamlin from

Crooks to east of Livernois. They were going to try to make a connection

at the intersection of Crooks and Hamlin. Mr. Davis was asked the

completion date, and he believed it would be done by July, dependent

upon the weather.

Chairperson Slavik referred to the balance of the project going east on

Hamlin, and he asked if there were improvements scheduled for this

summer. Mr. Davis said that there were not. The City had submitted a

Federal funding request for improvements between Livernois and

Rochester, but the cutoff was one project before the Hamlin Rd. project,

unfortunately. They would resubmit again next year. The Capital

Improvement Plan showed Hamlin going to a three-lane road, not a

continuous boulevard to Rochester Rd., but that could change depending

on the funding.

Mr. Casey entered at 8:07 a.m.

Ms. Golden asked the status of the National Historic Register house

(“ghost house”), which was next to the southwest corner of Hamlin and

Livernois.

Mr. Davis explained that at one time, the project was going to have a

boulevard crossing intersection at Livernois and Hamlin and with that, the

lanes would be taken further out and they would need more land. The

State Historic Preservation Office (SHPO) determined that it would have

an adverse affect on the house. They were working with the homeowner,

and there were plans to move the house. The homeowner wanted the City

to buy the parcel on the corner. It would cost about $300k to move the

house and update it to current codes. The City then looked at doing a

roundabout, which would have less of a footprint impact, and SHPO

determined that would not cause an adverse impact to the house and it

would not have to be moved. The City ended up only having to make an

effort to move the pathway closer to Livernois and do some landscaping.

Mr. Casey brought up the M-59 Corridor Study, and advised that Council

had approved a budget amendment to push the money budgeted last

year for the Study into this year. They chose the internal team for the

project and had an initial meeting with McKenna. They were just

beginning the project, and it was pertinent that they evaluate the existing

roads in the LDFA district and come to a determination about when roads

should be replaced. They had to factor that in when they looked at

potential for new projects that might result from the Corridor Study.

DISCUSSION

2010-0143

Evaluating Funding for Road Projects

Mr. Casey discussed the reconstruction projects approved in the CIP and

pointed out the major industrial roads in the district. He showed some

that were not in the district and said they could be funded through the

LDFA because of the way it had been established. He acknowledged that

if they did that, it would drain LDFA resources from future projects. The

LDFA had about $1.2 million in fund balance, and the tax capture

projections were declining because of declining assessments. The funds

would not be there to construct all of the roads, and they needed to

identify other ways to fund some of the projects. Mr. Davis said that

similar to the LDFA, the City’s Major Road Fund was hurting and he did

not think they would have the ability to do a lot of major road work. Mr.

Casey wanted some feedback from the board.

Regarding road funding, Mr. Casey referred to the map in the packet

which showed the LDFA district. He had identified the industrial major

roads and Austin Ave. It indicated which projects were approved in the

CIP, and they were all reconstruction projects, with the exception of

Research Drive, which should be approved this year. He wanted to get

some feedback from the board about how to manage the process.

Mr. Davis said there would be a millage in August of this year for 1/3 of a

mil. One component would provide the City money to match special

assessment districts. That was geared toward areas with gravel roads, to

which the City had contributed money in the past. In the event that there

were not a lot of special assessment district projects, the money could

also be used for operating the local road system. The local and major

roads primarily got money from the gas tax. In a combined fund, they got

a little more than $4 million a year, but general operating expenses for

their department ate up more than half of that. Council might have the

temptation to transfer money out of the Major Road to the Local Road

Fund. For many years, they had subsidized the local road system with

money from the General Fund, but because of the economy, that would

be scrutinized heavily. They might need to draw down the Major Road

Fund, which would affect the LDFA’s ability to get projects done in the

industrial subs.

Mr. Ellis suggested that because of the fluid nature of the economy, it

would be helpful for Mr. Dawson to present some additional information

for worst case scenarios to see what affect it might have on the LDFA’s

income going forward.

Mr. Dawson advised that the City was doing a three-year budget and

five-year economic projection. He said he could do that for the LDFA as

well. Mr. Dawson said he would bring the final numbers for the 2011

budget and some projections for two years beyond that to the next

meeting.

Mr. Casey discussed preparing a Tax Increment Financing analysis for

Tan and Northfield Parks, to see if they should establish a separate

LDFA plan around them. If they established a separate plan for two

years from now and established it as the baseline and went forward for 13

years, they could see how much tax increment could be generated from

the park. Normally, there would be some new development or significant

personal property acquisition by companies there, but the park was built

out and there was not a lot of vacancy. They would be counting on the

increment just from the assessment increases of those buildings starting

in two years. That might be a partial funding source, and they are not

currently capturing from any of those companies. He said they could also

identify areas where new construction could occur and bring them into a

capture area and work towards encouraging that development, but they

had really already done that.

Mr. Casey said that the Corridor Study would be looking at the north and

south sides of Auburn Road, and there could be some land use changes

that could result in new development. The north side was partially in the

capture area.

Chairperson Slavik asked about the timing of Leach, and he noted that it

was used as a cut-through now, and he believed that paving would

promote development. Mr. Casey said that the City’s position was that if

they were to pave the road, it would incent the property owners to remain,

and they would prefer to have developers go in and start to assemble

properties and then they would pave the road. He agreed that there was a

tremendous amount of potential on Leach.

Mr. Pawlowski said that a lot of the roads were concrete, and he asked if

they had done a study about the longevity and maintenance over a

period of time. Mr. Davis said that concrete was very competitive with

asphalt now. He preferred concrete and felt it was better comparatively. If

there was a concrete road, it would be replaced in kind, although it was not

as convenient as asphalt. Mr. Davis stated that the health of the road

was related to the drainage. If they got the proper drainage, it drastically

helped and that was easier with concrete. Upon questioning by

Chairperson Slavik, he advised that drains were not mandatory with all

new roads in the City, just for those with curbing.

This matter was Discussed

2008-0356

Hamlin property discussion (City-owned property)

Mr. Casey presented a proposal had been drafted for the Mayor. He

noted that the LDFA has a project in its Plan to provide infrastructure for

the City’s 15.6-acre property on Hamlin, which the City had owned since

1999. There was currently $751k budgeted for site development and

infrastructure. The property was situated next to a building that had been

vacant for a long time, which could be considered for inclusion in a

campus-style development. The proposal was put together because land

prices had died, and the City had been asking about $370k an acre for

their property. He was trying to come up with creative strategies to incent

development to go forward. He felt they had an opportunity to partner with

a developer and make the property competitive, and they were

considering bringing in a preferred developer. The City would control the

process, not the developer. The City could have many options for the

land if there was a preferred developer in place. It was all a matter of

negotiations and there would be a lot of flexibility, depending on the

tenants. If they wanted to own the building, they would, or they could lease

it. There could be a ground lease, or they could even make the land free.

They could sell the land to the developer at some point in the future, or

they could sell the land to the occupants. Each of the partners would bear

certain responsibilities and costs, which would be negotiated up front in

the deal. Both parties would initially enter into a memo of understanding.

The preferred developer would be a partner at the table. They would work

with the City, strategize, and determine what the best course would be to

get the property developed quickly and for the right types of use. The

land control models that were typical in those types of arrangements were

where the municipality owned the land initially, and they entered into a

ground lease.

Mr. Damone asked if they would subordinate the ground lease to any

financing that was on the property if they used a ground lease. Mr. Casey

said they probably would, and added that the ground lease terms could

be negotiated - as low as $1. Mr. Damone reminded that someone would

have to finance the buildings, and it was impossible to get funding for that

today. The lender would want a first position on the land, so if whoever

was in that position defaulted on the first mortgage, the City would lose the

land. Mr. Casey said that would be something negotiated, but Mr.

Damone did not really agree. Mr. Casey said it would depend on how the

development was being financed. Mr. Damone asked if the City was

prepared to finance the buildings, and Mr. Casey said that the LDFA

potentially could do that through bonds.

It was Mr. Damone’s opinion that it should be put on the shelf for two years

because he felt they would be wasting their time. He did not see the

market coming back or anyone willing to put in any money. He thought

that anyone negotiating with a governmental agency would have to be

sure their interests were in line. He would want the basic plans in place so

they did not have to go through the planning process and a lot of other

issues. He stated that he would not be in favor of putting funds into that

project at all at this point in time.

Mr. Casey said they were anticipating that this process would take the rest

of 2010 to find a preferred developer, so they would not do any kind of

work this year. Once they had a preferred developer in place, there would

be a series of meetings to strategize over what the best course would be

to proceed. They were not interested in putting a lot of money into a

project until they knew what it was. They did not want to build roads up

front or put in water, but they could do some preliminary engineering on

the stormwater system and some geotechnical work on the land to

understand the best location to build buildings and do some marketing.

They could spend little amounts of money in ways to help them.

They did not want to have to search for a developer for five or six months

and potentially lose a deal. By having a preferred developer already

selected, it would save half a year. He was not suggesting spending

money to do pre-development, but what he had suggested would cut

corners and put the City in a good position when they found a prospect.

Mr. Damone agreed they had to have all that in the place. He thought it

would be prudent to get ready to do something, but they needed to make

sure that the City’s objective with the land was clearly defined. If the

objective was to get $3 million back, that would not work. Mr. Casey

thought it might take ten years before land ever got back to where it was,

and he did not think the City wanted to sit on the property that long. He

believed that the way forward was to do a negotiated ground lease term

whereby the City continued to own the land and a developer would own

the assets, and at some point, the City would transfer the ownership of the

land to the developer. That would be the result of taxes generated from

whatever development went there. That was a key issue to him, and if

they could not sell the land and their money back, they might as well

make sure it got developed and at least generated tax revenue.

Mr. Pawlowski asked how many dollars were in the land to date. Mr.

Casey advised that when the manufacturing plant was there, they were

spending over $60k a year in maintenance. It cost about $170k to

demolish the building.

Chairperson Slavik referred to a proposed DTE substation on the

proposal and asked if it had already been determined. Mr. Casey said it

was shown because certain prospects might need an industrial

substation, and he wanted them to know there was potential to put it

onsite. It might not be needed. Chairperson Slavik commented that he

would like the school system to buy some of the land on Hamlin and

expand their bus facility because their current location (near where he

lived) was noisy all night long.

Mr. Casey related that there was a company looking at the 92k

square-foot building next door and after going through a lengthy due

diligence and factoring in every cost, one of the reasons they chose to go

somewhere else was because they did not like the possibility of the

busses going up and down the private street.

This matter was Discussed

ANY OTHER BUSINESS

There was no further business to come before the LDFA Board.

NEXT MEETING DATE

The Chair reminded the Board that the next Regular Meeting was scheduled for

July 8, 2010.

ADJOURNMENT

Hearing no further discussion to come before the Board, the Chair adjourned the

Regular Meeting at 8:45 a.m.

Respectfully Submitted,

______________________________

Stephan Slavik, Chairperson

Local Development Finance Authority