None (with respect to brownfield grant funding for the current round).

The eighteen projects and the thirty-seven related grant applications that are being recommended for submission to DEED, the Metropolitan Council and Hennepin County in the spring 2018 brownfield grant round are as follows:

*Amounts shown are based on applications submitted to the City on or by March 9, 2018. The final amounts shown on grant applications submitted to the grantors by their respective application deadlines may differ, due to project cost updates prepared after March 9, 2018.

The Minnesota Contamination Cleanup and Investigation Grant Program was established in 1993 to clean up contaminated sites and convert contaminated properties into marketable assets. The Department of Employment and Economic Development [DEED] is the administering state agency. Applications for the spring grant round are due by May 1, 2018. A local match equal to 25% of the project costs is required, of which at least 12% percent must come from non-tax increment local funds (typically provided by the developer). The amount that will be available to fund brownfield investigation and cleanup grants in the spring 2018 round is expected to be about $4.25 million, which includes up to $250,000 for investigation grants. The legislature has designated that at least 35% of available funds be spent on remediating sites in Greater Minnesota unless sufficient applications are not received.

Enacted by the legislature in 1995, the Metropolitan Livable Communities Act designated the Metropolitan Council as the administrator of the Tax Base Revitalization Account [TBRA] program. The TBRA program makes grants to clean up contaminated land for subsequent redevelopment, job retention, and job growth in areas that have lost some of their commercial/industrial base. The Metropolitan Council later created a related program called the Seeding Equitable Economic Development [SEED] program. The SEED program is designed for sites within or directly adjacent to an area of concentrated poverty that show potential for future job growth but do not have a specific redevelopment project yet. Applications for the spring round of the TBRA and SEED programs are due by May 1, 2018. No local match is required for TBRA cleanup grants, but TBRA investigation grants and SEED grants require a 25% match. The amount that will be available in the spring 2018 round is expected to be about $2.5 million, which includes up to $125,000 for investigation grants. The TBRA program reserves at least one-quarter of the funding available in each grant cycle for projects outside of the two core cities of Minneapolis and St. Paul, and restricts any one municipality from receiving more than half of the funding in any given round.

Hennepin County has been collecting mortgage registry and deed taxes for deposit into an Environmental Response Fund [ERF] and has awarded grants from that fund since the fall of 2001. The ERF is used for the assessment and cleanup of contaminated sites located within Hennepin County, with emphasis on affordable housing projects. The amount that will be available to fund brownfield cleanup grants in the spring 2017 round is expected to be about $1.0 million. Typically, about 50% of the available grant funds are awarded to projects within the City of Minneapolis, and the remainder is awarded to projects within suburban communities.

The three aforementioned grantors are expected to finalize awards for the spring brownfield round sometime between late June and late July. For the spring 2018 brownfield grant round, details regarding the City’s pre-application process and related program requirements were provided to CPED project coordinators and potential applicants in February. Relevant information was distributed via email to the 800+ parties on CPED’s Development Notices Distribution List. Staff processing of the submitted pre-applications included consideration of project readiness factors such as site control, project financing, prior City Council support (if any), neighborhood review, preliminary site preparation completed to date, reasonableness of proposed project schedule, and the status of any required MPCA approvals and/or City land use approvals.

In this round, staff continued the use of a more rigorous review process that was first implemented during the fall 2012 round. This process required developers to submit a Grant Assessment Worksheet [GAW] that included a project fact sheet with information important to the City such as jobs created or displaced and the number of affordable housing units to be created or retained. The review also included other sections regarding readiness measures, policy alignment and developer experience. City staff will continue to monitor the progress of the projects referred to herein during the remainder of April. Applications for any given project will not be submitted on May 1 if, in the opinion of City staff, that project will not be able to meet the grantors’ project readiness expectations as of the May 1 application deadline.

Thirty-eight pre-applications were received on March 9, 2018, all but one of which are being recommended for submission to the brownfield grantors (one pre-application was voluntarily withdrawn by the developers when the project in question was able to secure investigation grant funding from another source). The City’s interactions with our local brownfield grantors during past grant rounds have established that their internal processes for reviewing, scoring and ranking brownfield applications give no weight to any city’s prioritization of the applications that it submits to the grantors. The analyses conducted by the grantors, and the decisions that they make in awarding brownfield grants, are based on statutory criteria and adopted guidelines that do not include the (relative) preferences of municipal applicants regarding the applications submitted. Accordingly, and in keeping with the practice that has been followed by the City in recent years, the recommendation of City staff is that the City Council not rank or prioritize the brownfield applications that it authorizes staff to submit to the brownfield grantors on or by their joint May 1, 2018 application deadline.

Response to Recent City Council Direction to City Staff

With regard to the “prioritization issue” referred to above, it should be noted that members of the City Council’s Economic Development and Regulatory Services Committee posed a number of questions to City staff at the Committee’s February 27, 2018 meeting regarding whether (a) the City can or should prioritize affordable housing projects over other types of projects for purposes of deciding which brownfield grant applications should be submitted to the grantors in any given grant round and (b) what, if anything, the City can or should do within the City’s internal brownfield grant review/approval/submission process to encourage or require residential developers to include affordable housing components in their new housing projects. That discussion led to the following language being incorporated into the Committee’s February 27 approval and acceptance of the brownfield grants that were awarded to the City in the November 1, 2017 grant round:

“Directing CPED staff to explore how the City can encourage developers to incorporate more affordable housing when seeking public brownfield grant funding from the Minnesota Department of Employment and Economic Development (DEED), the Metropolitan Council’s Tax Base Revitalization Account (TBRA), and Hennepin County’s Environmental Response Fund (ERF), for possible implementation in the fall 2018 brownfield grant round.”

Pursuant to that directive, City staff members have initiated (and are current engaged in) a multi-step review of the issue in question, which will include the following:

1. A comprehensive analysis of the results of recent brownfield grant rounds, the objective of which will be to determine whether the City’s past submission of brownfield grant applications for projects other than affordable housing projects (i.e., market rate housing projects, commercial/industrial projects, open space projects, etc.) has impacted the ability of affordable housing projects to secure brownfield grant funding (and if so, how often and to what extent).

2. A similar review of the results of the impending May 1, 2018 brownfield grant round (which will, as indicated below in this staff report, include a number of affordable and market rate housing projects). This analysis can begin when the three brownfield grantors announce their awards in the late June to late July range.

3. The preparation of a summary/comparison of the various financial and non-financial benefits that have resulted from the City’s past support of brownfield grant applications for affordable housing projects, market rate housing projects, and other types of projects. (Financial benefits would include things such as post-development market value increases and related increases in City property tax revenue, City pre-application fees, City grant management fees, etc.)

4. The solicitation of input and comments from the City’s development partners (developers, non-profits, consultants, etc.) regarding any potential or proposed changes to the City’s handling of brownfield grant applications.

5. The development of options (and related City staff recommendations) for the Council’s consideration regarding the policy/administration issues in question, for implementation in connection with the fall 2018 brownfield grant round (if time permits) or for the 2019 grant year. Factors to consider in connection with the timing of this process include the presumed desire to provide potentially affected projects with reasonable advance notice regarding any changes that might significantly affect their development plans, and the limited amount of time between receiving the results of the spring grant round (in late July of 2018) and the City’s initial distribution (in early August of 2018) of information and instructions regarding the fall 2018 grant round (which will have a City pre-application deadline in early September and a final/grantor application deadline on November 1, 2018).

Details of Recommended Brownfield Projects for the Spring 2018 Grant Round:

This section of the report presents the projects, in alphabetical order, that City staff recommend for submission to the brownfield grantors. The summary descriptions were based upon information provided by the developers or by others familiar with the details of the projects in question. A map of the development projects listed below appears in Attachment 1, and planning-related comments appear in Attachment 2.

12th Street Tower (228 S. 12th St)

Projected DEED Request: $487,427

Projected Met Council TBRA Request: $595,061

Projected Hennepin County ERF Request: $236,404

The developer, Alatus, intends to construct a 32-story, Class “A”, market-rate apartment community with 348 dwelling units, ground floor retail along S. 12th Street and commercial/office space on the skyway level (a total of 17,061 square feet on both levels), and a seven-level parking podium with 573 stalls (including one level of underground parking). The projected total development cost is $142,477,719. Grant funds, if awarded, will be used primarily for soil remediation and the installation of a vapor mitigation system.

36 Bryant (3612 and 3616 Bryant Ave S)

Projected DEED Request: $206,300

Projected Met Council TBRA Request: $139,275

Projected Hennepin County ERF Request: $104,000

36 Brant LLC plans to build a 4-story market rate multifamily apartment project with 41 “micro-units,” plus one level of underground parking, a community room and a rooftop deck. The projected total development cost is $8,000,000. Grant funds, if awarded, will be used primarily for soil remediation and the installation of a vapor mitigation system.

Bassett Creek East Redevelopment (747 3rd St N)

Projected DEED Request: $392,432

Projected Met Council TBRA Request: $402,081

Projected Hennepin County ERF Request: $125,431

SRD 2.0 LLC (an affiliate of Schafer Richardson) will be developing a 139-unit market rate apartment building with 3,600 square feet of ground floor commercial space and 164 parking stalls for residents and adjacent businesses. This development will replace part of an existing surface parking lot. The projected total development cost is $42,026,800. Grant funds, if awarded, will be used primarily for soil remediation.

Calhoun Towers (3430 List Place)

Projected DEED Request: $76,602

Projected Met Council TBRA Request: $274,296

Projected Hennepin County ERF Request: $544,390

The first phase of Bader Development’s Calhoun Towers project involves the environmental cleanup of (and improvements to) an existing 108-unit, 22-story tower and the construction of new tower (with 242 market rate units) and a parking ramp. When later phases are included, the project will ultimately add a total of 739 new multifamily rental units, with multi-modal connections to the SWLRT W. Lake station. The projected total development cost is $100,000,000. Grant funds, if awarded, will be used primarily for soil remediation, the abatement of asbestos-containing materials, and the installation of a vapor mitigation system.

Checkerboard (3716 Dight Ave S)

Projected Met Council TBRA Request: $112,000

The developer, Checkerboard LLC, is planning a transit-oriented, mixed-use market rate residential development that features studio, 1-bedroom and 2-bedroom units, underground parking, and 30,000 square feet of ground level commercial space to activate 38th Street near Hiawatha Avenue. This project will involve the demolition of 21 obsolete concrete grain silos and a grain elevator. The projected total development cost is $40,000,000. Grant funds, if awarded, will be used primarily for environmental investigation costs (Phase I and II site assessments, a hazardous materials survey, and the preparation of a Response Action Plan).

Glen Enterprise Hub (214 Humboldt Ave N, 210 Humboldt Ave N, 205 Girard Ave N, 1221 2nd Ave N, 1215 2nd Ave N, 1207 2nd Ave N, 212 Girard Ave N, 210 Girard Ave N -- west of Van White only, 1129 2nd Ave N -- west of Van White only)

Projected Met Council SEED Request: $50,000

Wellington Management’s plans for this site include the construction of 97,750 square feet of new mixed-use space for office, light production and flex uses. The projected total development cost is $16,339,000. Grant funds, if awarded, will be used for various environmental site investigations designed to determine the nature and extent of any site contamination.

Impound West (50 Dupont Avenue N)

Projected Met Council SEED Request: $50,000

The City of Minneapolis is seeking environmental investigation funding to assist with predevelopment planning and a sub-regional storm water study. A portion of the City’s impound lot (west of Van White Memorial Boulevard) will be vacated in 2018, and CPED will lead the redevelopment and sale of lots on the 20-acre site. The long-term plan includes creating a new amenity feature (a linear green space) adjacent to Bassett Creek, and infrastructure to facilitate the private development of commercial/flex space that will provide local employment. Multifamily housing may also be a component in the western portion of the site. This area includes the former Irving Avenue Dump, which is capped, but soil borings and vapor testing are needed to inform planning and design. The projected total development cost has yet to be determined.

Malcolm Yards Market (501 30th Ave SE)

Projected Met Council TBRA Request: $225,000

Wall Development Company intends to renovate the existing Harris Machinery Building into a 16,500 square foot urban food hall with multiple “niche” food vendors and a communal dining space. The anticipated vendors will typically be local chefs that want to provide a new take on their skills and flavors. The projected total development cost is $9,500,000. Grant funds, if awarded, will be used primarily for the abatement of asbestos and/or lead-based paint.

Marshall Apartments (1301 Marshall Street NE, 107 13th Ave NE)

Projected Met Council TBRA Request: $95,000

Projected Hennepin County ERF Request: $30,540

Reuter Walton Development is proposing to build a new 5-story, mixed-use, 93-unit market rate apartment building that includes a 3,273 square foot restaurant with outdoor seating on the ground floor, along with a common area and bike/auto parking. The projected total development cost is $18,303,581. Grant funds, if awarded, will be used primarily for soil remediation and the installation of a vapor mitigation system.

Park 7 Apartments (615 S 7th St)

Projected Hennepin County ERF Request: $27,800

Community Housing Development Corporation (CHDC) and the House of Charity are working together to create 61 new affordable units designed to serve low-income residents with supportive housing needs. Forty-one units will be supported by Group Residential Housing rental assistance that will allow tenants at 30% AMI to live at Park 7. These units will be targeted to LTH (long-tern homeless) individuals, including youth and disabled individuals. The projected total development cost is $11,801,097. Grant funds, if awarded, will be used primarily for the abatement of asbestos and/or lead-based paint.

Rand Hotel (527 Marquette Ave)

Projected Met Council TBRA Request: $1,243,727

The Rand Hotel project (a collaboration between Ryan Companies and Rand Tower MN Owner LLC) includes renovation of the historic Rand Tower to accommodate a 194,174 square-foot hotel with 266 guest rooms. The project will also retain and improve 5,000-square feet of commercial and retail space on the building’s skyway level. Significant investment will be made to restore the building’s historic stone façade. The projected total development cost is $104,000,000. Grant funds, if awarded, will be used primarily for the abatement of asbestos and/or lead-based paint.

River Loop Apartments (800 1st St N)

Projected DEED Request: $1,265,900

Projected Met Council TBRA Request: $658,300

Projected Hennepin County ERF Request: $303,700

Opus Development Company intends to construct a new 209,189 square foot market rate residential apartment building, with two levels of underground parking and six floors of apartments (220 units). The projected total development cost is $70,000,000. Grant funds, if awarded, will be used primarily for soil remediation.

Shafer Metal Recycling [former], a/k/a 129 Plymouth (129 Plymouth Ave)

Projected DEED Request: $140,145

Projected Hennepin County ERF Request: $24,292

Plymouth and Second LLC (which is affiliated with Lupe Development) intends to construct a 10,692 square foot brew pub and an indoor-outdoor off-leash dog park. It will be both a convenient daily stop for the residents of the North Loop and also a weekend destination for visitors from all around the Twin Cities. Equipped with state-of-the art, easy-to-clean turf, it will have a 4,000 square foot fenced-in exterior dog park fitted with umbrella heaters. A large garage door will provide access to a 4,000 square foot indoor dog park, separated from the brewery by floor-to-ceiling glass. The projected total development cost is $2,388,400. Grant funds, if awarded, will be used primarily for soil remediation and the installation of a vapor mitigation system.

Sons of Norway (1455 West Lake St., 3001/3015/3017/3021/3025 Humboldt Ave S, 3016 Holmes Ave S)

Projected DEED Request: $844,940

Projected Met Council TBRA Request: $410,159

Projected Hennepin County ERF Request: $200,000

Ryan Companies and Weidner Investment Services intend to construct two new buildings on this site. The south building will contain 144 market rate apartment units; the north building will include 174 market rate units and approximately 22,000 square feet of office/retail space (15,000 square feet of which will provide new office space for the Sons of Norway organization). The project will also include 331 structured parking stalls (and 27 on grade stalls) to support the two new buildings, and approximately 15,000 square of public/green space. The projected total development cost is $95,000,000. Grant funds, if awarded, will be used primarily for soil remediation and the abatement of asbestos and/or lead-based paint.

Superior Plating [former] – Phase 2 (120 5th St NE)

Projected DEED Request: $1,221,909

Projected Met Council TBRA Request: $900,000

Projected Hennepin County ERF Request: $300,000

The second phase of Lennar’s ongoing redevelopment of the former Superior Plating site includes the construction of two more buildings --- a 13-story tower and a connected 5-story mid-rise building. Both buildings will be situated above a 2-story parking ramp. This phase will produce approximately 7,500 square feet of new ground-level commercial space and approximately 310 market rate apartments. The projected total development cost is $116,949,928. Grant funds, if awarded, will be used primarily for soil remediation and the installation of a vapor mitigation system.

The Expo (200 University Ave SE, 215 2nd St SE, 223 3rd Ave SE, and 229 2nd St SE)

Projected DEED Request: $664,274

Projected Hennepin County ERF Request: $104,768

This Doran project will consist of 372 new housing units (including 10 affordable units at 60% AMI), contained within a 6-story wood frame structure and a 25-story tower. The project will also provide a podium for parking and 3,176 square feet of new commercial space. The projected total development cost is $131,362,603. Grant funds, if awarded, will be used primarily for soil remediation.

Thrivent Corporate Campus (501/517/529 6th St S, 600/610/618 Portland Ave S, 500/512/528 7th St S)

Projected DEED Request: $751,587

Projected Hennepin County ERF Request: $117,826

Thrivent and Sherman Associates are planning to redevelop an entire City block by constructing a 156-unit, 346,682 square foot market rate apartment building, a 84,844 square foot 120-room hotel, and a 25,000 square foot daycare facility and fitness center on the south portion of the block, connected via skyway to an 8-story, 263,817 square foot multi-use/office building on the north portion of the block, with a 5,040 square foot rooftop terrace. A two-level, 155,262 square foot underground parking garage will also be included. The projected total development cost is $256,250,000. Grant funds, if awarded, will be used primarily for soil remediation.

West Broadway Curve 2 (1706, 1710, 1714, 1716, 1720, 1726, 1800, 1804, 1808, 1818, 1820, 1826, 1900, 1904, 1910, 1914, 1918, and 1920 W Broadway Ave, and 2009 Ilion Ave N.

Projected DEED Request: $200,077

Projected Met Council TBRA Request: $179,992

Projected Hennepin County ERF Request: $28,535

Sherman Associates’ West Broadway Curve project is comprised of a 69-unit mixed-income apartment building and five 4-unit townhome buildings (a total of 89 housing units, 54 of which will be affordable to residents at or below60% AMI). The project will provide quality new construction housing, enhanced greenery, an integrated bus shelter, and pedestrian connections to the West Broadway Neighborhood. The projected total development cost is $20,349,562. Grant funds, if awarded, will be used primarily for soil remediation and the installation of a vapor mitigation system.