September 14, 2021 Business, Inspections, Housing & Zoning Committee
the broadcast of the regularly scheduled business inspections housing and zoning committee will now begin good afternoon welcome to the regular meeting of the business housing zoning uh and inspections committee for today september 14th i'm lisa goodman and i'm chair of the committee as we begin i'll note for the record that the meeting has remote participation by members of the city council and city staff is authorized under minnesota statute section 13d .021 due to the declared local public health emergency the city will be recording and posting this meeting to the city's website and youtube channel is a means of increasing public access and transparency the meeting is public and subject to the open meeting law at this time i'll ask the clerk to call the role so we can verify a quorum for commit today's meeting council member reich council member gordon here council member osman here council member ellison president council member schrader here chair goodman present there are five members present let the record reflect that we have a quorum i'll begin with today's consent agenda which is items six through 13 on the agenda item six is the liquor license approvals and seven are the license renewals eight are the gambling license approvals and nine is the met council's lda pre-development grant for the chicago lake rebuild project and the local lcda transit oriented development pre-development grant for 30 30 nicolette item number 10 is appointments to the workforce development board item 11 is a rezoning at 513 east lake street item number 12 is a referral to staff this is correcting inconsistencies and clarifying vague and confusing provisions and item number that would be item number 12 and item number 13 is a land sale at 613 33rd avenue north we also have a postponed item which is item number 16. are there any items anyone would like to pull off for further discussion seeing none i'll move approval of items number six through thirteen and postpone item 16 to our next regular meeting scheduled for some september 28th and please ask the clerk to call the roll council member reich councilmember gordon i council member osman aye council member ellison aye councilmember schrader aye chair goodman aye there are five eyes those items are approved with that if someone would admit council member palmisano that would be great uh we'll move to the public hearing agenda starting with item number one which i believe she is here for uh with this is tenant restaurant at 4300 bryant avenue south i'll ask mr ishmael to give that report thank you madam chair and committee members i'm mohammad ismail a lead licensed inspector with the city of minneapolis i'm presenting an application from kenneth llc doing business as the tenant restaurant located at 4300 prime to avenue south in ward 13. the applicant is requesting an upgrade to onstar liquor with sunday stealth no life entertainment the business has indoor seating for 40 people the proposed hours are tuesday through thursday 5 pm to 11 and friday saturday 5 pm to midnight notices of the of this public hearing were sent on august 23rd the residents and property owners within the secretary of defeat of supremacy notices were also sent to the east heria naval association and council member paul mestano i hope i'm not pronouncing mispronouncing the last name for the council member uh we have received the four responses in support for this application uh all for supporting this application the license and consumer services division recommended approval of the onstar liquor would send a cell this concludes my presentation at this time i will stand for any comments or questions thank you thank you so much for your report muhammad is there anyone who has a question or comment about the staff presentation seeing none i will open the public hearing i know that there is one person in queue and that is cameron shakini i would ask cameron to speak at this time you can press star six to unmute sir hi there uh this is cameron shaqini one of the co-owners and operators of center restaurant in minneapolis um yeah just a light overview of what we have in mind for the space um it's actually in the same building located directly adjacent to the restaurant so it's a little bit of an expansion of premises um slight increase in seating from our typical 25 feet restaurant there'll be an additional 20 seats we're actually reducing the seating on the restaurant side so like muhammad had mentioned there will be 40 feet tall in the new space it's mainly a space for a current diner ship because we're such a small restaurant a lot of times we don't have space for diners to sit down right when they arrive or later after their meal sometimes we have to kind of shoot them out the door to make room for the dinership that is coming in for the next seating so we're not really trying to expand the concept or you know create an additional volume for the neighborhood specifically but we're just trying to expand what we do and the concept that we're able to deliver to our current guests so like moment mentioned we currently operate under wine and beer wine strong beer we're looking to go to full liquor so that we have the ability to make cocktails our goal and our aim is to have a limited list of classic cocktails we don't intend to operate as a traditional bar per se but we'd like to have a lounge space for diners to either land when they arrive or sit and have a cocktail after their meal um the hours that he discussed are accurate typically we are out of the restaurant at about 10 o'clock or i should say our diner ships out of the restaurant about 10 o'clock and we're out about 10 30. we'd like to be open about an hour later than that so 11 o'clock on the weekdays is realistic we don't want to be here any later than midnight on the weekends just because we are located in a neighborhood and we have a strong relationship with said neighborhood and the neighborhood association itself and we'd like to maintain that relationship um so yeah i think that's that's the gist of it without getting too nitty-gritty on the operational side of it but um the space is built we've had it since actually march 15 2020 which is a pretty ominous day for restaurants but that's the day that we took over the lease so we've kind of been slow rolling and adjusting our time frame via you know today's the state of the world and i think it's time for us to safely and um i guess safely board to expand our seating and you know give us the space and staff that we need to continue to operate successfully so that's where we're at and i'm open to any questions or concerns from anybody so just let me know that's that's pretty much all i have thank you so much for your testimony mr shakini and thank you for doing what you do i was just in front of your business yesterday so i appreciate it you're doing um i don't believe there are other speakers signed up to speak i know council member palmisano is on the call did you want to speak council member palmisano sure it won't take up much of your time i just am here in support of this project and and this restaurant owner and all of their work it's been a long time in coming they've been through some tough times you know this is one of those incredibly special amenities for us to have as part of our city i'm lucky to have it in the 13th ward in one of my neighborhoods but their [Music] what they offer is is a pretty phenomenal experience i myself was finally able to get a reservation and i recommend it through the resi notify app but cameron and grecia have just gone far and away to include a lot of their own experiences their world experiences into this space and to really offer up a welcoming atmosphere for everybody um they even have some of their family heirlooms in their restaurant but i will leave that to you all to visit and for them to share um if if you make it in so i um i just come in support of all of the hard work of this local business owner and the good work of city staff and helping them with their restaurant thank you thank you so much councilmember palmisano for your testimony i am seeing no further speakers so i will close the public hearing and call on councilmember schrader thank you madam chair i'm happy to move this item forward for approval council member schrader is moved item number one are there further comments or questions sing none i'll ask the clerk to please call the role council member reich all right council member gordon aye council member osman aye council member ellison hi councilmember schrader hi cheer goodman hi there are six eyes that carries and the motion is approved we'll move on to item number two which is e2 bottle shop at 305 washington avenue and i believe miss harvest giving this report welcome thank you madam chair and committee members i'm michelle harvett lead licensed inspector of licenses and consumer services i'm presenting an application from ito bottle shop owned by ito restaurant group llc this business is located at 305 washington avenue south in ward 3. the current license at this location is an on sale liquor with sunday sales no live entertainment the applicant is requesting an off sale liquor license ito formerly known as eastside eaton drink has been operating at this location since august of 2015.
ito is diminishing their on sale liquor license premises to create space for a small off-sale liquor shop their hours of operation will be 8 a.m to 10 p.m monday through saturday and 11 a.m to 6 p.m on sundays on august 23rd public hearing notices were sent to residents and property owners within 450 feet of the premises multi-unit buildings were posted on august 24th notices were also sent to the downtown minneapolis neighborhood association the warehouse district business association and council member fletcher we have received one response from the downtown minneapolis neighborhood association in support of this application there were no other responses the premises will occupy 355 square feet of the former restaurant space at ito and it's at the northern corner of the latitude 45 apartments building ito has not had any significant violations 3-1-1 calls or police calls they do not have any operating conditions and they are a business operating in good standing the licenses and consumer services division recommends approval of an off sale liquor license for ito bottle shop this concludes my presentation at this time i'm available for any comments or questions thank you thank you miss harvey we'll see if there are any comments or questions on your report seeing none i'll proceed to open the public hearing i know that no one is signed up for this public hearing i'll just see if there is anyone here to speak on item number two anyone seeing none i'm going to go ahead and close the public hearing council member schrader would like to make a motion thank you madam chair i'm happy to move this item forward for approval on the motion by council member schrader are there any additional comments or questions seeing none i'll ask the clerk to call the role council member reich all right council member gordon aye council member osman aye council member ellison aye council member schrader aye sir goodman aye there are six eyes that item has been approved we'll move on to item number three which is the buttered tin in northeast minneapolis and i believe mr eliason is here to give that report thank you madam chair and committee members i am craig lyson district supervisor with licenses and consumer services and i'm here today presenting an application from the buttered tin northeast owned by butter tin northeast llc this report was prepared by inspector christina steester the business address is 2445 marshall street northeast in ward 1.
the applicant is requesting an on sale wine with strong beer no live entertainment sunday sales license and a sidewalk cafe license the hours of operation will be from 7 a.m to 3 p.m daily they will have indoor seating for 88 patrons and outdoor seating for 40 patrons on a sidewalk cafe on august 24 2021 112 public hearing notices were sent to residents and property owners within 600 feet of the premises notices were also sent to the marshall terrace neighborhood association the northeast minneapolis chamber and council member wright we have received three responses from the community one in support of the application one opposed to the sidewalk cafe and one citing concerns about sidewalk accessibility and parking the butter tin northeast is located on the ground level of the newly constructed gateway northeast apartments as this business has not opened yet there have been no complaints 311 call calls or police calls there are no operating conditions or other issues decision makers should know of the licenses and consumer services division recommends approval of an off sale wine with strong beer no live entertainment with sunday sales license and sidewalk cafe license for the butter tin northeast this concludes my presentation at this time i will stand for any comments or questions thank you thank you mr eliason for your report we'll see if there are any questions for you seeing none i'm going to open the public hearing i know there is one person in queue alicia hines will give her the opportunity to speak now please press star 6 to unmute i'm alicia and we are a bakery um restaurant um focused on bakery and breakfast as was mentioned we are open from 7 a.m until 3 p.m with a wine and wine and beer sales we have a location in lower town st paul where we really became part of the neighborhood we really hope to do that here in this neighborhood as well in regards to the um to the issues um filed i understand i can understand the concern about the walkway on the sidewalks and again we won't really want to be a great addition to this neighborhood we're not trying to you know make make sure that nobody can walk through here so our tables that would be outside would only be two by two so very minimal on the sidewalk um and again we're only open until three so we we believe we're a really good quiet and yet fun addition to the neighborhood you so much for your presentation and for opening this business sounds fantastic we could always use more breakfast spots in town uh we'll see if anyone else is in queue to speak i don't see anyone else we'll give it one more shot if anyone's here to speak to item three seeing none i'm going to close the public hearing council member right thank you madam chair and i concur with your assessment about welcoming more breakfast spots throughout the city um absolutely a social and public purpose in that um as people know i'm very supportive of the overall project that was built affordable housing with commercial mixed use is fantastic this is the cornerstone of a revitalized lowry avenue sort of the overlooked street in northeast minneapolis in the northern boundary of the architect so this was a really incredible project and definitely welcome this business which will fit right in um it's not surprising that saint paul businesses migrate to northeast because it's still the right side of the river we think um but i will have to make one clarification madam chair if i made as much as i love the project in this business technically speaking it's a few feet in botnet neighborhood a few feet outside of marshall terrace and therefore a few feet outside of ward one in a technical basis but i adopted wholeheartedly and moved this out for approval council member reich has moved approval of item number one three of which i'm sure council member fletcher would concur we'll see if there's any further comments or questions seeing none i'll ask the clerk to please call the role council member reich aye council member gordon hi councilmember osmond hi councilmember ellison hi councilmember schrader hi chair goodman aye there are six eyes that carries and the motion is approved we'll move to item number four which is strike theater and i'll invite mr eliason back up just give this report thank you madam chair committee members craig lyson district supervisor business licenses and consumer services and i'm here today to present an application from strike theatre owned by strike theatre incorporated this report was prepared by inspector christina steester business's address is 824 18th avenue northeast located in ward 1. they currently hold a place of entertainment license the applicant is requesting an on-scale wine with strong beer general entertainment with sunday sales license strike theater has been operating at this location since 2017 there is no change in the entertainment they are offering which includes sketch comedy spoken word and storytelling there is also no change in their hours of operation which are thursday 6 p.m to
10 p.m friday and saturday 6 p.m till midnight and sunday 6 p.m till 10 p.m they have seating for 95 patrons on august 23rd 2021 65 public hearing notices were sent to property owners within 600 fema of the process notices were also sent to the logan park neighborhood association the northeast minneapolis chamber and council member reich we received two comments from the community citing concerns regarding adding alcohol to the license the hours of operation and increase traffic noise and litter there have been no complaints three one one calls or police calls associated with the business there are no operating conditions or other issues the licenses and consumer services division recommends approval of an on-sale wine with strong beer general entertainment with sunday sales license this concludes my presentation at this time i will stand for any comments or questions thank you thank you mr eliason we'll see if there are any comments or questions for staff sing none i'm going to open the public hearing there are three people in queue starting with allison browren mike fotus and jay riley if you would like to express press star 6 to unmute allison you are welcome to speak first and if allison is not available then we will take mike fotus mike are you there and if not mr fotis then jay riley looks like allison is on the call so if anyone can press star six and unmute you are welcome to speak now okay it looks like allison is on the call we'll try one more time to see if we can get you tuned in maybe unmute your phone or press star six can we hear you great oh good wonderful sorry about that i kept just saying that was unmuted and muted right away um this is allison brown i'm one of the co-founders of strike theater um and as mentioned we've been operating since 2017 we've been shuttered for a number of months due to the pandemic so while we're opening back up when we had some time off we had some time to move forward with adding our liquor license for shows um basically the way our shows are scheduled is patrons would be able to buy a drink before they go into the theater most of our shows last 60 to 90 minutes and don't have an intermission on a rare occasion someone would have the opportunity to buy a second drink during the intermission so we won't be serving a ton to people so addressing the complaints of you know sending people out into the streets hopefully that wouldn't result in um you know louder people leaving than our general our hours aren't changing at all what we do isn't changing at all um and the way the bar set up like they can't really like they would totally have to leave the show to get more drinks during the show so hopefully that probably isn't going to happen um and we just really want to be good community neighbors and you know willing to add some more trash cans right in front of our building and we kind of shuttle people that want to keep the party going uh through the building over to tatters all so they aren't even emptying out onto the streets right after our shows um so yeah we are excited to provide entertainment to the neighborhood we're excited to hopefully be adding this next step to our business and that's about all i have right now well fantastic thank you for being on the call today we'll look and see if jay riley is on the call it sounds like mike is on the call we are happy to take you now uh sure i i would just say to add on to everything that allison was saying we already sort of filled into our post show announcements and we have signs up in our lobby that remind people that we have uh really great neighbors and we want them to be able we want to all coexist and have great relationships with each other so at the end of shows we remind our audiences to please leave quietly and respectfully um and we have those signs in the lobby as well and then our house managers are trained to politely ask people who are gathering to sort of break up and head to their cars because we we understand that we don't want the noise to carry over into into our our neighbors areas and things like that well fantastic thank you so much for being on the call today we'll see if anyone else is on the call a last call if there's anyone else who would like to testify on this item number four sing none i'm going to close the public hearing and call on councilmember reich um thank you madam chair and i will uh confirm that this is uh geographically designated correct it's in ward one uh for sure and in logan park neighborhood um you know here we have a proposal that certainly is that confluence of the the call for both fun and neighborhoodness and i think this group has proved that they are great neighbors uh and can strike that balance rather well like all good businesses do in northeast um it's a fantastic location in the arts district which is really strong in production but as we know we want to build up all types of art and performance art is one of those ones that we feel we want has a little catch up to do so to speak and so this is great if it supports that and then just now speaking and you know this well from your own ward performance venues um need our support uh moving forward coming out of kovit and so i think this is a way to do that and what a perfect location it's next to a union hall it's in a former macro production facility that's now a sort of micro production facility with many different users and uh for a theater that's called strike theater i couldn't think of a better place so i'm happy to support this that's great councilmember reich has moved the staff recommendation on item number four are there any comments or questions seeing none i'll ask the clerk to please call the roll council member reich hi councilmember gordon i council member osman aye council member ellison aye council member schrader aye chair goodman hi there are six eyes that carries in the motion is approved our last public hearing is item number five this is the worth on the woods tax increment financing plan at 2800 wyzeta boulevard in the seventh ward and i will call on staff to give that report because the public hearing was continued from the august 24th biz meeting due to a noticing error error so actually it sounds like we don't even need to have a staff report so we will go ahead and see if there's any speakers in queue i see mr min is on the call would you like to speak to this issue mr men if so i will open the public hearing and invite you to speak sounds like mr min does not need to speak which is great are there any other speakers on in queue for item number five last call for item number five um so with that i'm going to close the public hearing and move approval this is a senior affordable housing project in the bryn mawr neighborhood where i live and we are very woefully short and a inadequate number of rental properties in our ward this project in three phases will actually add to the housing population in the neighborhood by a third so it's a big big thing going on in the brimar neighborhood that most people are very excited about so on my motion to approve i'll ask the clerk to please call the roll council member reich aye council member gordon aye council member osman hi councilmember ellison hi council member schrader aye chair goodman hi there are six eyes that item carries and is approved so we will now move on to our two discussion items starting with item number 14 this is the exterior building materials ordinance i'm going to give by mr crandall an opportunity to speak and i've also agreed to allow the folks from the fiber cement panel industry as well as i believe mr men speak to this issue they will be limited to 10 minutes so hopefully we won't be doing this for a long time since this was heard at the planning commission and i will turn this over to mr crandall good afternoon chair goodman and council members i'm peter crandall senior city planner with cped land use and i'm presenting on this proposed zoning code text amendment dealing with exterior building materials standards for our site plan review chapter of the zoning code next slide so just to provide some context in the background of where this amendment is coming from obviously as we're all aware the city has undergone a significant amount of investment and development over the past 10 to 12 years um next slide and that has coincided with some significant changes to our regulatory structure including a significant number of deregulations that enabled a large swell of development particularly in the multi-family sector of our housing stock next slide and just some examples of recent projects that have been approved and constructed in the city next slide and then just to refresh everyone on where we are today this is um the current guideline to exterior building materials that we've been implementing since 2014 this was developed kind of in response to that significant new development investment that was undergoing uh occurring in the city since um around 2012 this was implemented in 2014 it assigns a category to each exterior building material and then a certain percentage in terms of the amount of that material that's allowed on each elevation and again we've been implementing this with pretty good success for the last seven years or so next slide and again that regulation really arose in response to some new material technologies that have arrived on the development scene in the last 20 to 30 years as the city has seen those technologies get implemented across the city in various projects we've had an opportunity to observe their success both in terms of their aesthetic compatibility with the existing building stock in the city and their performance over time in terms of durability next slide so as part of the background for this um amendment we went back and looked at some of those projects that have been approved in the last 20 years to see what we felt like was working and not working both in terms of the buildings some integration with the existing character of the city and how they were holding up in terms of their material durability over time um in general we found that you know successful projects tend to have a balance of different materials and concentrate the higher quality more durable materials at their base which is the part of the building that interacts with the public realm most frequently and is most subject to potential wear and tear over time and then concentrating less durable materials above the ground level and away from the public realm next slide this is an example of a building at 27th and lindale that we feel like has been really successful this is actually an affordable project and you can see that it does what that that previous slide was showing in terms of foregrounding those higher quality materials the brick and stone at the front of the building and then relegating the luster of materials to the upper portions of the structure and away from the public right-of-way next slide we also looked at some projects that we felt like were not as successful this is an affordable project in saint paul that utilizes all fiber cement lab siding which we feel like is not as successful both from an aesthetic point of view but we would also potentially have concerns about in terms of durability over the long term next slide and then we did do a survey of projects that have been completed earlier in the development boom that's been occurring in the last 20 years or so so this would have been projects that were completed in the early 2000s to see how some of these newer material technologies were performing over time in terms of durability we did see some issues there particularly with materials that are subject to moisture infiltration and degradation when exposed to moisture due to their application method or other failures of the material in terms of how it's applied and its performance over time so these are some examples of projects in which either large amounts of the exterior materials particularly in these examples fiber cement and or stucco were required to be replaced and then examples of where those materials were failing at intersections particularly with mechanical systems next slide and then these are some images of fiber cement panel products that are starting to fail after less than 20 years mostly due to again moisture infiltration so a lot of panelized products require a particular kind of application that would mitigate moisture from the interior of the facade assembly such that moisture is not allowed to sit and infiltrate into those exterior building materials which would compromise their integrity next slide and then this is an example of a project that is either currently undergoing or just completed a major facade renovation due to moisture issues and infiltration this is actually a condominium project at 2840 bryant um initial review of this determined that this was about a 50 000 assessment per condo unit to replace materials that were less than 20 years old next slide so it's useful to keep in mind where those costs fall when there are failures materials prior to their professed given lifespan in terms of market rate rentals those costs are often passed on to the renter in the form of higher monthly rents for subsidized affordable projects which often do not maintain significant financial reserves to cover the costs of material failures those costs can be passed on to the public in the form of public subsidy and grants to make necessary repairs and then as was shown in the previous example on our occupied units often we'll have to either draw from financial reserves or use financial assessments in the case of condominiums next slide there's also an equity component to this proposal part of how this was initiated was an effort to address the issue of higher income and more politically connected neighborhoods who are more able to negotiate for higher quality development through either their neighborhood review process or other informal processes in order to get better development outcomes and that the 2040 plan specifically directs the city to apply design standards and guidance and regulation consistently across the city regardless of market conditions or rent structure and that disparity in development outcomes between different parts of the city can be self-reinforcing and exacerbate inequalities between different neighborhoods suppress property values and discourage investment over time next slide so in terms of developing the material amendment itself we looked at three primary factors when evaluating different materials for the classification system firstly what is the material made of secondly how is the material attached the building what's the application method is that application method standardized by the manufacturer and then lastly the appearance and compatibility of materials what do they look like how compatible are they with existing building stock and then how does that material hold up over time with basic maintenance next slide and that led us to the proposal that is before you today which divides materials into three classes class one being the most durable ones last three being the least you'll notice that the more traditional masonry style products are concentrated in class 1 including concrete and glass class 2 is all fiber cement products and stucco products and then in class 3 would be products like cmu wood composite etc next slide and then that classification is applied somewhat differently across different building types so again this amendment would live in a site plan review chapter buildings that are subject to site plan review are any residential project with four or more dwelling units and then any new commercial industrial or institutional project or addition to an existing commercial institutional or industrial project and there's a certain percentage based on scale in terms of the residential and mixed use projects next slide and then an important factor to remember in considering our site plan review ordinance is that site plan review allows for alternative compliance which is basically a method by which the city planning commission or city council can authorize an alternative to the strict standards of the site plan review ordinance without issuing a formal variance so this would allow for other materials that may meet the intent of the ordinance or that are determined to be substantially similar to materials that are a part of the classification system or other factors that the planning commission or council may determine meet the spirit and intent of the ordinance could be approved through alternative compliance next slide and then just wanted to point out that the proposal before you today is actually significantly more flexible than the standards that we currently use and that we've been applying for the last seven years those flexibility measures were implemented to address address some of the cost concerns particularly as they relate to subsidized affordable projects so for example under the current regulations fiber cement is limited to 30 of any elevation under these proposed regulations we would be bumping that up to up to 70 for certain scale projects and then metal panel which is a very broad category of materials that do have a lot of cost-effective options current regulations limit that to 75 percent we'd be moving that to the class one which would allow up to 100 of any elevation to utilize metal panel products so that is kind of a summary of where we've been and where we are today i can take questions thank you for your presentation is the only change the slide the last slide that increases metal panel and fiber cement is this the entirety of the exterior building materials ordnance uh no that's just a focus on some of the more cost-effective changes or the changes in which we would be adding flexibility to significant categories on the classification and was this the presentation that happened at the planning commission also yes correct okay because it seems like this is kind of a commentary on fiber cement rather than a focus on the overall issue of exterior building materials now i realize that's the area of controversy but it seems like you're almost like responding in advance to what you know you're going to hear and have heard at the planning commission by showing us the failure of some materials but not others is there no such thing as failure of efus or stucco or any of the other materials that are not being contested by builders at this point no and actually some of the examples i showed were stucco material as well that have experienced failures over time efis is a material that we currently don't allow and wouldn't be proposing to be allowed on the classification because that has experienced a lot of problems as well and yes this is the exact same presentation that was given at planning commission committee of the whole and the last public hearing okay and are there um i'm i'm just curious has have you presented any kind of study to show that uh fiber cement has a much higher failure rate than all of the other materials that are not listed as class one there's been a lot of talk about studies being done can you point us to the studies that have been done to show that fiber cement is an inferior material not worthy of being class one i can't point you to any formal studies what we did ourselves was to do a field analysis of projects that have been built and completed in the city and then to look at issues that have arisen with specific projects in terms of failures okay great thank you are there any other questions councilmember schrader thank you madam chair i just wanted to you know thank staff uh for the work on this i know that this is a further than staff uh felt comfortable going uh and it really was a conversation between stakeholders affordable housing developers and others to really come up with this compromise so i'll i'll have some other comments but did want to take this opportunity to thank staff for their work on this thank you councilmember schroeder i know that there are two people who have asked to have 10 minutes of time i don't know uh i know mr min is one of them i don't know who the other one is and i don't know if the other person is on the call actually so i'll go ahead and call on mr min maybe he can enlighten us to as to whether or not there's somebody else on the call and make sure we have their numbers so they can also speak i am going to keep you to a very strict 10 minutes uh council member members of the committee madam chair uh thank you for your time i'm steve minn with loopy development i'm speaking today on behalf of about 18 affordable housing developers in a coalition i can submit a letter but the majority of us produce about 80 of the affordable housing in the state and marcus kozinga from james hardy products is also participating he has a small presentation that he's distributed to the staff for you to have but i'll just keep my remarks focused on mr crandall's observations which i have been somewhat critical of because i think they're mostly aesthetic issues not really durability issues mr kaizenga can speak to durability state building code regulates exterior materials rather aggressively and these products are very durable cement fiber panel in particular is incredibly useful to all the housing industry not just affordable it is lightweight it is durable it is easy to replace if there there's a installation error it's much less costly i could i could produce 20 photos of brick buildings that were incorrectly installed with buckling brick or spalling concrete that were you know millions of dollars of replacement including work that i've done that i had to go back and do under warranty and i will tell you that every material if not installed correctly will ultimately produce a failure the trick is to install it correctly and i don't believe that mr crandall is giving fair license to the incredible flexibility and durability of cement fiber panel which is critical to the affordable housing industry to keep our housing options viable i'm going to be real short about this it it's the perfect material to match up with metal panel in terms of insulation and and the exterior facade it provides nobody wants one material on a building i can show you lots of ugly all brick buildings same thing with all metal buildings he happened to show an example of a really ugly all cement fiber panel building well okay i think he's trying to you know tilt your impression of how bad cement fiber panel can be i can show you lots of pretty buildings that i've built with cement fiber panel that you wouldn't know were cement fiber panel so i just want to make one last comment which is alternative compliance it is totally dependent upon which planner you get and i can tell you right now because i've done four projects with mr crandall if you get mr crandall as your planner you're not going to get alternative compliance with cement fiber panel so we've been fighting these unregulated guidelines as an industry for seven years uh staff came up with these guidelines council didn't pass muster on it and we're now finally getting an ordinance where we can use all the materials that we have at our disposal for a durable attractive and long lasting product i'll turn whatever time's left over madam chair to mr kaizenga to at least speak to his product thank you for your time okay thank you mr men is mr kaizenga on the call you have seven minutes six and a half minutes somewhere in that range hello this is marcus kaiser with james hardy billing products can you hear me we can hear you sir thank you okay council president and council members thank you for your time um yes uh i i did just distribute a uh a brief uh packet of slides if those are available um they are available now sir okay thank you um so very quickly um we're very much in alignment with uh mr min's uh proposition that fiber cement should be a class one material uh basically because it is a durable material that durability has been proven over the last 30 years its impact on affordable housing and other projects is very significant and bottom line it is a beautiful looking product so going to the next slide as mr mr min mentioned the state of minnesota building codes specifies that fiber cement materials must pass astm c1186 which is an industry standard it's not our standard it's a consensus standard by not only manufacturers but also building scientists architects and other stakeholders and in that standard are very specific tests that must be passed in order for the material to be sold that include you know water tightness warm water resistance and importantly for the minnesota area freeze thaw resistance um our hardy fiber cement panels meet or exceed these standards not only the u.s
standards but also the canadian national code standard which is actually is more even more stringent standard and again we we meet or exceed those standards so it is durable when it's installed correctly as mr min mentioned you know brick metal other types of masonry materials are all subject to both aesthetic and material failures spalling and that sort of thing if they're not installed properly and water is not managed properly and that is a aspect of installation not the material of itself and since these guidelines are set up you know to either allow or disallow use of materials just based on the fact of the kind of material they are our position is that those are they're kind of unfair on their face where you know fiber cement is being limited uh simply because it is a material and not because how it is used going to the next slide in terms of proven uh fiber cement's been available in the u.s since early hardy's fiber cement has been available in the us since 1990 it would and we've sold over 18 billion square feet of that material which is the equivalent of about 8 million homes um you know and but not take our word for it uh we've one of the only building materials that have actually earned the good housekeeping seal of approval which has to go through fairly rigorous uh audits of our our not only the claims that we make but you know the materials themselves the uh and not only good housekeeping but we're recognized by um consumers as well as uh remodelers and other stakeholders like the green builder association so because because of fiber cement's durability it's deemed to be a green material which is actually eligible for lead credits based on the use of local raw materials in support of fiber cement in minneapolis and minnesota in general you know james hardy has exceptional design and trade support we have eight staff located in the metro area around minneapolis that work with architects and builders and trades to ensure that proper installation is supported and proper design is supported and those individuals are available on call you know at any time to assist with proper design and questions about installation with respect to its impact as uh mr min mentioned you know and for affordable housing projects where costs are a big consideration of the use of fiber cement over some of the other class 1 materials can have a very large impact on the overall project cost you know at least 10 percent in some cases 20 to 25 percent and next slide and at the day you know these are examples of projects that are around that have been uh just showcase uh uh the use of fiber cement both in its lap siding form and in its panel form um in areas around the country and um these are these these types of designs and these types of buildings have um they look good and not only in my opinion but in the opinion of the people that that up that that live in them and the people that built them and that is i want to thank you for your time but that is our position is that fiber cement should be class one and they're based on its proven durability its impact on uh project cost and the fact that it's simply good looking thank you thank you so much thank you for keeping to the time limit as well um that concludes the 10 minutes and i will ask if there are any questions from members of the committee for mr crandall or the representatives from uh the fiber cement siding folks i guess for lack of a better word are there questions for staff or for anyone else if not i am going to move to amend the staff recommendation to add class 1 add to class 1 materials fiber cement and i will ask if there are comments or questions on that councilmember schroeder thank you madam chair uh yeah i won't uh be supporting this although i appreciate your work as well as the industries who have kind of really pushed forward i really again want to thank the staff for the work that they've done i do feel like that best is the best compromise for where we're at right now i think snaps at a good job between just really talking about how if these materials fail that cost will be back on the city and it is something and i think also the advocates for hardy board and for other fiber cement um have did a really good job of educating us on where their product is the product the problem is we can't predict the future and so with the staff compromise as i'll call it the real purpose is to make sure that we are expanding how much we are using this product and at the same time making sure things at the pedestrian level the 30 percent will still be a proven durable traditional product um and still allowing uh developers to expand what they're able to do i think it does fit the right area i'm open to as we see more projects come online and we see this product used more and we're able to see its durability i'd be open to expanding it i don't think right now is the time to do that though thank you madam chair thank you councilmember schreider are there further comments um seeing none i'll first move the amendment which is to add fiber cement as a class one material and ask the clerk to call the role on the amendment only council member reich hi council member gordon aye council member osman aye council member ellison no councilmember schrader no chair goodman aye there are four eyes and two nays so that amendment passes and then i will move the main motion which is all of the rest of the changes made by staff along with the amendment and ask if there are further comment comments or questions about that seeing none i'll ask the clerk to call the role on item number 14 as amended council member reich [Music] council member gordon councilmember osman aye council member ellison aye councilmember schrader aye chair goodman hi there are six eyes that carries and the motion is approved we'll then move to our last item which is item number 15. this is a loan for aquafire thermal energy storage system at the towerside innovation district this is authorizing a two million dollar loan from the common bond fund reserves and we'll call on mr hanson to give his report please mr hanson welcome uh thank you good afternoon uh councilmember goodman and members of the committee my name is eric hanson i'm the city's director of economic policy and development and today we're going to talk about the tower side aquifer thermal energy storage system in the towerside neighborhood ats for short next slide as you recall the aquifer thermal energy storage system is a is a district energy system that uses water in the aquifer to provide heating and cooling for buildings through a system of pipes that go in from the ground and into buildings and in front of you today is the first phase of this um this project to provide some heating and cooling uh for three buildings in the innovations district uh the positive aspect of using this technology is it replaces natural gas as a heating source and uh from our last time we discussed this it could save up to at full build up about 500 000 tons of carbon from the climate or an estimated 21 million dollars if we use the city's cost of carbon at 42.46 per ton over that 30-year period next slide please so we are here because of a staff direction that the council passed in july of 2020 in that direction staff presented the project at the start of a feasibility analysis to engage the city council on its interest in proceeding and there were some additional or some initial costs for the project at that time and wanted to gauge uh your interest in proceeding and you said among other things yes you would like to proceed at the time we were looking at using the common bond fund which is a revenue bond fund that we use for commercial projects that's a pooled resource for development you authorized us to use twenty thousand dollars in underwriting but no more uh you wanted to make sure that the building owners uh put not only long-term service contracts any deal we brought forward but also uh put deed restrictions on any future phases within tower side to have to tie into this to provide a stable revenue source you wanted us to make sure that the tower side development team completed its engineering study to make sure that this technology while new to minnesota could be supported by the aquifer below it you wanted us to make sure that we came back with financing that was structured so that the debt payments would be supported by generated or by revenue generated from the project when that revenue was available you wanted us to have a role on the governing board if there was one around tower side and you finally asked us to return to the council once we have a deal struck so uh next slide please so after taking that direction from the council and working with the tower side group over the last year plus um we found we found out a couple things one as we discussed in july of 2020 this development would likely need a credit enhancement uh for the nature of the risk threshold and the revenue that's coming in and as a as an aspect of that the common bond fund as a pooled fund was not an appropriate source and working with the uh with the developer they engaged piper sadler an underwriter of private activity bonds to be a replacement for the common bond funds and so we'll be talking about subordinate or the credit enhancement piece for today the towerside group committed or completed its engineering report and its return to findings that supports this technology they agreed to the law the developer of the abilities agreed to long-term contracts indeed restriction and the financing you see in front of you will be that patient structure that you requested in july of 2020 next slide please so what is the deal um that we're looking at uh the specific subordinate alone is the line in yellow there are four sources of funding for this first phase approximately 14 plus million dollars to construct the ates for the first three buildings the first two and the most significant component of the sources are bonds these would be done through this office of management and budget that would be a separate report that we would have to bring back to the city council sometime this fall or early next year that's that would be in a reserve that would come from a public facilities project allocation from the states and then they would give us authority to use it then the city would issue those bonds the two billion dollars is a supporting loan i'll talk about details in the next slide and then the last component of the financing is is a likely contribution and a one million dollar grant from the mcknight foundation which has been a long-term partner in tower side and this district energy project and they are reviewing an application right now and hope to find or to announce something very soon about this contribution but it's looking favorable that mcknight will put a million dollar grant into the project and you see the uses of the funds are mainly uh in the construction of the of the facility and then you know some reserves and then you know the basically overhead costs of getting uh these bonds set up next slide please so the loan structure is is is not in its final form uh we are here today to talk about uh the loan and the support of the council because the you know it is required in order for the developer uh the towerside team to move forward with the bonds we'll need to know that the city is supportive of this subordinated loan um so it's a two billion dollar loan with with a zero interest rate based on the climate action emergency that the city has taken uh in the previous years we believe this is a good um investment considering we'd get about 20 million dollars back in in carbon savings the term of it is is matched with the bond the expected bond term which is 30 years and the source of this funds is excess revenues from that common bond fund so as a pooled fund in order for it to keep its strong credit rating the city has a trust account in a bank that basically is a reserve in case of a defaults and it's you know that is an interest-bearing account and from time to time the city can use excess amount of revenue for any public purpose that it deems a bit so it's a very flexible fund proposing this as a way to avoid the city using general funds or the the city using another financial mechanism that costed more money over time since this is a periodic opportunity we thought this would be a good fit so as far as payments based on the direction from this the from the city council the first 10 years is essentially the annual uh as a the first 10 years is when everything is going to get set up and the buildings are going to get built so we'll be working with towerside over those 10 years and looking for excess revenues to pay down the 2 million dollar loan and then in year 11 uh whatever is left over you know let's say it's a you know million and a half we would amateurize that over uh the the last 20 years and we're requiring that one million dollar private match so if mcknight changes its mind which we don't believe that's going to happen the tower side would be required to find another match next slide please so what are the next steps as i said we have to come back to the city 4 authorization to get the to apply to mmb for the bonds at that same time we'll have more specifics about the loan terms so you can see what you know collateral will have and how the city will be able to have those you know annual monitoring of the projects and and payments of excess revenues we will start the design of the building and it says building one on the slide but in the report this is actually building two it's the 100 affordable building we'll close on that building will close on its financing later this year and then we expect a construction to start on the ates sometime next year with that i will take any uh questions you might have are there any questions for mr hansen on his report i don't see any questions mr hansen so i'm uh i guess i'll call on councilmember gordon thank you very much and i'm excited to move approval for this item i really appreciate the report i also appreciate all the work that went into this and i just want to also thank mark ruff the city coordinator for helping identify these funds and there's lots of community partners in this as well this is something that's really consistent with our efforts to fight climate change and the work that we've done there i think this um is going to make this potentially very innovative although it's not so innovative everywhere because there's many of these in the netherlands and other places that are very successful but we have a good partner in evergreen energy that's done all the testing to make sure this will be successful and i'm excited about seeing it move forward i'm also expecting the system's going to grow there's lots of development potentials in the area there and it's great that we have this commitment from the first two buildings but we're likely to see much more in the university village and motley development and other properties up there that are also ready to tap into this and the timing's really critical and i really appreciate the support from my colleagues and moving this forward today council member reich thank you madam chair and my recollection from the first time we talked about this way back several months ago i think i raised several issues just to see what staff has in terms of the analysis around what sort of uh guarantees to grow out the system and i say this in the context of being very supportive of the overall powerside integrated approach i'm very familiar with it particularly from the water management standpoint but i do know through those discussions and efforts to nail down actual heart commitments from the private sector developers was no small task and so that's kind of in the back my mind here what covenants uh or other such instruments ensure that the system will get utilized moving forward will we have deed restrictions on adjacent properties will we set some kind of zoning overlay that would incentivize or maybe even require a utilization of this facility um and i say that in the sense of being supportive of the overall concept of that's growing out but if it were just one big system for one maybe even two buildings um then we'd have to kind of throw it into a different cost benefit analysis i also raised the issue i think others did as well as the absence of any private um skin in the game so to speak from the the private entities that will benefit from this investment again very supportive of the concept but having some discipline around who gets public resources into what end and then the final thing which i raised which was the nature and i think i saw my colleague councilman gordon jotting things down when i was saying this the nature of the energy efficiency of the building itself you know i don't i've come to learn that gizmo environmentalism is not going to get us across the line uh very expensive systems that support inefficient buildings um is one half of a coin that doesn't get us there and again that throws in a cost benefit analysis in terms of overall efficiency commensurate with this pretty significant investment with very clever financing so those are some things i throw out for staff to respond to if there are no answers that's fine too and i could do some follow up post this meeting mr hansen did you want to reply yeah let me see if i got them all councilmember goodman and councilmember reich um uh so yes when we come back with the term sheets we will have a requirement the property owner has agreed to have long-term service contracts indeed restrictions on the property so that this these services will um be able to connect into the buildings and have that expectation that is as councilmember gordon said to grow within tower side so that will be in a condition of the loan when the term sheet comes back and as i said earlier the reason we're coming here is just to gauge your interest in it before um come back with um the require the the need to get authorization for the bonds uh the second one was uh financing uh you know is there a contribution for the uses from the from the developer and uh just like it was last summer that's that's no the the positive thing here is mcknight foundation is is contributing it's something that we put out from a staff perspective working with councilmember gordon that the city would need a match of some sort and the towerside group was is a non-profit was working with mcknight and we're very fortunate in the long-term support mcknight has given to this project and and they're you know like likely to soon show it with a seven-figure donation to the project so from an owner's equity standpoint considering tower side as a non-profit it's probably a you know cons um comparable investment into this system but as far as the the buildings that will take it on they're not um they're not contributing equity to this project and then the third one i think is the building efficiencies i talked to councilmember reich uh late last week i have not been able to look into the energy efficiencies i'm not sure if our green building policy applies to the affordable housing building yet but um two other buildings are not designed and i think we have can have encouragement but i think this council has been aware about those you know stretch building codes and how um how challenging those could be since the building code itself in the state is not as forward energy forward as we would want to uh from a policy standpoint from the city uh so it makes it it makes it challenging but i have not reviewed what the is it a lead building or not so i'll i'd have to get back to him at a different time okay uh councilman reich are you satisfied i guess there's some information pending and i will gather it as i may uh but these are very significant things in my mind thanks thank you mr hansen what could this two million dollar loan be used for if not used for this uh so councilmember goodman uh this is a a very flexible fund it is a uh it has to have a public purpose but that public purpose is broad since this is uh interest revenue we could use it for anything from this project to affordable housing to paying for public service workers in public works or buying fire trucks it's basically anything that has a government public purpose so it's a very flexible source and it's a source that up up until the time at which you were working on this was known t
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