06-21-99 Regular
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING MINUTES
Richfield, Minnesota
Regular Meeting
June 21, 1999
CALL TO ORDER
The meeting was called to order by Chair Harms at 7:00 p.m.
ROLL CALL
HRA Members
Present:Thomas Harms; Joan Helmberger; Michael Sandahl and Russ
Susag.
HRA Members
Not Present:Kristal Stokes.
StaffPresent :Steve Devich, Acting Executive Director; Thomas Ferber, City Clerk;
and Bruce Palmborg, Community Development Director.
APPROVAL OF MINUTES
M/Susag, S/Helmberger to approve the minutes of the May 17, 1999 HRA Meeting.
Motion carried 4-0.
Item #1OPPORTUNITY FOR CITIZENS TO ADDRESS THE HRA.
No one wished to address the HRA.
HRA Meeting Minutes-2-June 21, 1999
Item #2CONSIDERATION OF INTERCHANGE WEST DEVELOPMENT AREA.
HRA LETTER NO. 30
Acting Executive Director Devich reviewed HRA Letter No. 30 regarding the status
of the Interchange West development stating the following:
CSM has determined that they will be unable to drop the contingencies contained in
the residential purchase offers on July 1 as scheduled, nor will they be able to close on the
purchase of properties on September 1 as was stated in the purchase offers. This means
that CSM will need to cancel all 68 purchase agreements, and further, that it will not be in
a position to comply with the site assembly obligation contained in the development
contract. Mr. Kornberg has stated that the reason CSM will not be able to progress on the
residential acquisitions as scheduled is because they will not be in a position to apply for
zoning and other approvals until August 23. Discussions with CSM about this request
have also revealed that the residential portion of the development does not generate
enough tax increment financing (TIF) and land proceeds to offset the site assembly costs.
The ability to develop the residential portion, therefore, is dependent on the ability to
successfully develop the commercial portion.
There remains a remote possibility that the contingencies could be removed on or
before July 1, and the residential acquisitions could occur on September 1. For this to
occur, the developer would have to take the risk that all City approvals would be granted,
and some mechanism to assure payment of the anticipated revenue from the commercial
development would have to be put in place. That mechanism would likely involve
commitments from the HRA . CSM expressed an interest in pursuing this approach and
will discuss it at the June 21 meeting. Because this approach may not work, the HRA
must consider other options as well.
Staff has identified several options for addressing CSM’s request to amend the
Contract in the event that the contingencies cannot be removed by July 1 and the closings
cannot occur on September 1; these options are as follows:
1.Defer action until the July meeting to give CSM an opportunity to satisfy the
concerns of the residential property owners.
2.Extend the site assembly period for the entire development for four months.
3.Extend the site assembly period for the entire development indefinitely.
4.Extend the commercial portion of the development for four months and terminate
the residential portion of the development.
5.Terminate the contract with CSM.
Chair Harms discussed some of the issues and questions submitted in a letter from
Cindy and Mike Triggs, 7639 Penn Avenue.
HRA Commissioners expressed that the project should not be separated into
commercial and residential but thought of as a whole, and that the HRA wished to find a
solution that will best address the problems of the homeowners.
HRA Meeting Minutes-3-June 21, 1999
Murray Kornberg, Vice President CSM Properties, Inc., stated that at the June 14
City Council meeting he announced CSM would not be removing agreement contingencies
during the month of July. If CSM does not remove the contingencies, the purchase
agreements will be void and there will be no closings on September 1. He stated CSM is
still exploring whether or not it may still be feasible to remove the contingencies on or
before July 1. If they cannot, they will have to renegotiate each purchase agreement with
owners if they are to proceed with the redevelopment.
Mr. Kornberg stated they recognize that this situation has caused anxiety, and
anger, and regret that the development has not proceeded as quickly as they would have
liked. They believe that the issues regarding the redevelopment would be resolved by the
contingency removal date, but because of the complexity of the project, that is not the
case.
He stated the HRA meeting on June 21 was to have been to amend our contract to
allow for a separation of the commercial portion of the development from the residential
portion. He stated it now appears that such a separation is not feasible, because the
commercial portion of the development is required to support the residential portion.
Therefore, the HRA will not be acting on that request.
Mr. Kornberg indicated in the days following the June 14 City Council meeting, they
have met with HRA staff to discuss the various available options.As a result of those
discussions, CSM will request that prior to taking any further action relating to our Contract
for Redevelopment, the HRA provide us 30-days to meet with each homeowner to
determine whether we will be able to enter into new agreements with owners that address
their concerns regarding the development. If the HRA grants the requested extension,
CSM would then appear before the HRA at its next meeting in July to report on those
individual meetings.
He stated CSM acknowledges that there may be hard feelings regarding the
development and are hopeful that over the next 30 days they can arrive at a satisfactory
resolution of this matter.
Chair Harms asked if it was possible to still meet the September 1 closing date.
Mr. Kornberg stated there was a slight chance, but did not want to give people false
hope.
Ron Matheson, 7649 Penn Avenue, expressed disappointment and frustration after
believing everything was progressing to completion. He expressed concern about what
will happen next and compensation.
Jim Bergin, 7627 Oliver Avenue, stated he had bought another house after
accepting CSM's purchase agreement and being told everything was going well. He
stated the Ken Brooks, who negotiated the purchase agreements for CSM, told him last
Thursday that he knew CSM was not going to honor the September 1 closing and that
September 1 date was chosen because that is what City Hall wanted. He stated the
county attorney should investigate if there was malfeasance on the part of CSM or the
City. He stated that he was a member of the core neighborhood group and they may want
to have access to all the CSM files.
HRA Meeting Minutes-4-June 21, 1999
Leonard Hardie, 7608 Newton Avenue, discussed how the threat of eminent domain
by the HRA had been one reason why 70% had favored selling their homes for the
redevelopment.
Mike Triggs, 7639 Penn Avenue, stated that he thought it was a breach of contract
for CSM not to meet the September closing date.
Ernie Lindstrom, 7406 Fremont Avenue, stated he represented Mr. Reget, owner of
the Diplomat Apartments. He discussed how commercial property acquisition is different
than residential and that developers should pay a premium for acquiring property for a
private development which is different than acquiring property for a public purpose such as
a street. He said if CSM is able to pay the necessary price then the development should
move forward. Mr. Lindstrom stated that City Hall has integrity and is honest from his
experience.
Pat Hughes, 7633 Newton Avenue, indicated that the City had been assuring them
that everything was moving forward questioning what performance had been required from
CSM.
Kevin Anderson, owner of 7644-46 Logan Avenue, asked that the cloud be removed
from his property, that their be safeguards that CSM follow through, stated concerns about
renegotiation, HRA responsibility, and the value of time.
Ken Neslund, 7645 Newton Avenue, stated concerns about CSM not closing on the
purchase agreements and fulfilling their contract, and the extra expenses for homeowners
this will cause.
Mark Nichols, owner of 7608 Knox Avenue, suggested that the HRA should
somehow expedite the closing on the commercial properties such as the use of
condemnation, because the project is not viable without the commercial redevelopment.
Terry Ahlstrom, 7600 Morgan Avenue, urged the HRA to make achievement of the
September 1 closing date as the priority solution.
John Cretzmeyer, 7604 Oliver Avenue, stated that the continued extensions have
caused much mental stress for homeowners. He stated CSM must finish negotiations and
if they renegotiate the purchase offers they must take into account the escalating market,
and the second half property taxes should be alleviated if there is a delay.
Dave Bakke, 7601 Morgan Avenue, stated dissatisfaction and frustration with CSM,
discussed the difficulty of buying a house in the current market, and being in limbo.
Marilyn Sedoff, 7601 Oliver Avenue, stated she had not yet signed a purchase
agreement with CSM.
HRA Meeting Minutes-5-June 21, 1999
Beth Johnson, whose parents own 7615 Morgan Avenue, discussed the stress and
disruption the process caused her parents who now own two houses because they acted
on believing the developer and the HRA. She asked the HRA to assist the homeowners,
to not grant an extension to CSM, and to get another developer to take over if CSM can't
do it.
Sherry Keefe, 7643 Newton Avenue, stated concerns and anger that the trust in
CSM and the City has been broken. She discussed the hardship issues regarding school
enrollment. She suggested the City should pay until the commercial can take place so that
things can proceed now.
M.A. Engen, 7621 Morgan Avenue, stated concern that CSM hadn't reported they
were having trouble buying the commercial property and that they be held accountable.
Chair Harms stated that the HRA and City would cooperate and be open to any
investigation. He stated that the HRA was surprised that CSM was now asking for an
extension and that the HRA does understand its responsibility and maybe didn't ask the
right questions. He stated that the HRA cannot buy out everyone because it does not
have the money to do so. Mr. Harms stated he saw two options:
1.To get mad at CSM, throw them out and stop the project. He said that may feel
good but would not solve the property owners' problems.
2.There is no formula solution to everyone's problems; they are individual
problems that can only be addressed one on one. He proposed that CSM
continue in the project but that they address each property owner's issues and
work out a solution.
Mr. Harms said he would propose giving CSM 30 days for the purpose of CSM
meeting with each property owner for individual solutions.
Commissioner Susag stated concerns and questions about what renegotiation
meant for the property owners. He stated that he thought this was a viable project and if it
did not go forward it would have a negative impact on redevelopment in Richfield. He
stated that he was told that the HRA could not issue bonds against the anticipated
increment to finance the property acquisition in the short term to solve this problem.
Commissioner Sandahl stated that the problem is CSM's inability to come to terms
with all the property owners and he asked what process or assurances there are so that
the same situation will not exist in 30 days.
HRA Attorney Dean stated there is no guarantee but that if the HRA desires to try to
save the project and not go back to square one, it is feasible to give the extension.
Community Development Director Palmborg stated that HRA Memorandum No. 36
provides specific directions and conditions for CSM to fulfill if a 30-day extension is
granted.
HRA Meeting Minutes-6-June 21, 1999
Commissioner Sandahl encouraged the City Council to look at the idea that was
suggested about a deferral of property taxes if there is a delay in closing. He stated there
are not a lot of options but that there would be greater harm if the HRA walked away from
the project now rather than trying to make it work.
Commissioner Helmberger stated she believed it was best to try to make it work
and asked what the HRA could do to best move it along.
Executive Director Devich presented the proposed conditions if CSM is given 30
days to satisfy the concerns of the residential property owners.
Defer action until the July meeting at which time CSM would provide the following:
x
Evidence that CSM has met with impacted Interchange West residents and is
prepared to present a plan to address their concerns caused by the delay in closing.
x
A schedule setting the completion date for each of the necessary steps for
progressing with the redevelopment. These steps would include:
1.Application and approval dates for: environmental assessment worksheet;
rezoning to PUD/PMR; conditional use permit, and; final development plan.
2.HRA consideration of the "But For" analysis.
3.Issuance of written purchase offers to all residential and commercial property
owners.
4.Acceptance of all commercial and residential purchase offers.
5.Dropping of contingencies and closing on all property purchases.
6.Notice of eligibility for relocation benefits to all residential and commercial
tenants.
7.Request for HRA acquisition through eminent domain.
8.Sale/leasing of the residential portion of the development.
9.Sale/leasing of the commercial portion of the development.
x
A letter acknowledging that failure to meet the completion date for any of the steps
in the schedule may result in a termination of the Contract for Private Development
for Interchange West.
Staff would also recommend that, if this were the preferred option, a special HRA
meeting be held on July 27 for the purpose of considering CSM's conformance. This
would also provide CSM with at least 30 days to accomplish the required tasks.
Chair Harms asked Mr. Kornberg if he could accomplish this in 30 days.
Mr. Kornberg said it was probably not possible to renegotiate all of the purchase
contracts but that a realistic and achievable schedule to achieve the goals and proceed
with the total project is feasible.
Commissioner Susag asked for Mr. Kornberg's assessment of the status of
acquisition of the commercial property.
HRA Meeting Minutes-7-June 21, 1999
Mr. Kornberg stated that those transactions were more complex with other aspects
beyond acquisition. He stated he felt it could be accomplished with establishing a
timeframe, schedule and contracts that reflect the schedule.
Chair Harms stated that the audience and HRA had been led to believe by CSM
that the project was further along than it appears. He stated that people need to know the
reality and not to drag out the process longer if it isn't going to happen.
Mr. Kornberg stated he regretted the misconceptions and that it was up to CSM now
to convince homeowners, business owners and the HRA that they can fulfill future
agreements.
Kevin Anderson stated the need for a definite timeframe rather than deferring for
another 30 days.
Discussion from the audience suggested CSM just give everyone more money
rather than renegotiation, that the City meet the July 1 obligation, and that maybe the 30
days just be used to negotiate with the commercial property owners rather than
renegotiating with all the residential property owners.
Ernie Lindstrom stated that only Mr. Kornberg knows what the costs are for the
residential acquisition and the HRA could determine the assessed value of the commercial
property which it probably will have to use condemnation to acquire, therefore, the
question is for CSM to judge if it can pay the residential costs and a multiple of the
assessed value of the commercial property. He stated the contingencies appear to be the
problem, not the price.
Mary Topero, 7645 Oliver Avenue, suggested the issue be given to God and prayer
for a solution.
th
Jason McCarthy, 1900 West 79 Street, stated Mr. Kornberg must deal with the
commercial property owners to do the project. He stated that Wally McCarthy Olds does
not want to move but if they must they want to be within five miles of the current site. He
indicated they had just purchased five acres of their current site from land owner Burt
Lindahl.
M/Harms, S/Sandahl to grant CSM 30 days to meet with the commercial and
residential property owners to address their individual situations and defer action until the
July meeting at which time CSM will provide the following:
x
Evidence that CSM has met with impacted Interchange West residents and is
prepared to present a plan to address their concerns caused by the delay in closing.
x
A schedule setting the completion date for each of the necessary steps for
progressing with the redevelopment. These steps would include:
1.Application and approval dates for: environmental assessment worksheet;
rezoning to PUD/PMR; conditional use permit, and; final development plan.
2.HRA consideration of the "But For" analysis.
HRA Meeting Minutes-8-June 21, 1999
3.Issuance of written purchase offers to all residential and commercial property
owners.
4.Acceptance of all commercial and residential purchase offers.
5.Dropping of contingencies and closing on all property purchases.
6.Notice of eligibility for relocation benefits to all residential and commercial
tenants.
7.Request for HRA acquisition through eminent domain.
8.Sale/leasing of the residential portion of the development.
9.Sale/leasing of the commercial portion of the development.
x
A letter acknowledging that failure to meet the completion date for any of the steps
in the schedule may result in a termination of the Contract for Private Development
for Interchange West.
Motion carried 4-0.
M/Sandahl, S/Harms to schedule a Special HRA Meeting for July 27, 1999 at 7:00
p.m. for the purpose of considering CSM's performance.
Motion carried 4-0.
Item #3PUBLIC HEARING AND CONSIDERATION OF RESOLUTION
AUTHORIZING SALE OF 6228 PLEASANT AVENUE TO THOMAS ALLEN,
INC. FOR SINGLE FAMILY HOME DEVELOPMENT. HRA LETTER NO. 31
Acting Executive Director Devich reviewed HRA Letter No. 31 regarding
consideration of a resolution authorizing the sale of 6228 Pleasant Avenue to Thomas
Allen, Inc. for single family home development.
Sharon Stone, representing Thomas Allen, Inc., discussed their plans for 6228
th
Pleasant Avenue as a replacement for their house at I-35W and 66 Street which has
been purchased by MnDOT.
M/Susag, S/Helmberger to close the public hearing.
Motion carried 4-0.
M/Helmberger, S/Sandahl that the following HRA resolution be adopted, that it be
spread in the HRA resolution book and that it be made part of these minutes:
HRA RESOLUTION NO. 714
RESOLUTION AUTHORIZING SALE OF REAL PROPERTY LOCATED AT 6228
PLEASANT AVENUE TO THOMAS ALLEN, INC. IN ACCORDANCE WITH A
DEVELOPMENT AGREEMENT
HRA Meeting Minutes-9-June 21, 1999
Motion carried 4-0. This HRA Resolution appears as HRA Resolution No. 714 in
HRA Resolution Book No. 6.
Item #4CONSIDERATION OF RESOLUTION AUTHORIZING PURCHASE OF 6537-
14TH AVENUE WITH COMMUNITY DEVELOPMENT BLOCK GRANT
FUNDS FOR NEW HOME PROGRAM. HRA LETTER NO. 32
Acting Executive Director Devich reviewed HRA Letter No. 32 regarding the
th
proposed purchase of 6537-14 Avenue for $65,500 with Community Development Block
grant (CDBG) funds.
M/Sandahl, S/Susag that the following HRA resolution be adopted, that it be spread
in the HRA resolution book and that it be made part of these minutes:
HRA RESOLUTION NO. 715
RESOLUTION AUTHORIZING PURCHASE OF REAL PROPERTY LOCATED AT
6537-14TH AVENUE FOR THE NEW HOME PROGRAM
Motion carried 4-0. This HRA Resolution appears as HRA Resolution No. 715 in
HRA Resolution Book No. 6
Item #5CONSIDERATION OF RESOLUTION AUTHORIZING CONTRACT WITH
HENNEPIN TECHNICAL COLLEGE TO INITIATE TWO 1999-2000 NEW
HOME PROGRAM PROJECTS AT 6537-14TH AVENUE AND 6224
BLOOMINGTON AVENUE. HRA LETTER NO. 33
Acting Executive Director Devich reviewed HRA Letter No. 33 regarding a proposed
contract with Hennepin Technical College to initiate two 1999-2000 New Home Program
th
projects at 6537-14 Avenue and 6224 Bloomington Avenue.
M/Sandahl, S/Helmberger that the following HRA resolution be adopted, that it be
spread in the HRA resolution book and that it be made part of these minutes:
HRA RESOLUTION NO. 716
RESOLUTION RELATING TO A CONTRACT BETWEEN THE RICHFIELD HOUSING
AND REDEVELOPMENT AUTHORITY AND HENNEPIN TECHNICAL COLLEGE FOR
THE DEVELOPMENT OF 6537-14TH AVENUE AND
6224 BLOOMINGTON AVENUE
Motion carried 4-0. This HRA Resolution appears as HRA Resolution No. 716 in
HRA Resolution Book No. 6
HRA Meeting Minutes-10-June 21, 1999
Item #6CONSIDERATION OF RESOLUTION AUTHORIZING PURCHASE OF 6639
LAKE SHORE DRIVE; GRAMERCY TAX INCREMENT REDEVELOPMENT
DISTRICT. HRA LETTER NO. 34
Acting Executive Director Devich reviewed HRA Letter No. 34 regarding a proposed
resolution authorizing the purchase of 6639 Lake Shore Drive in the Gramercy Tax
Increment Redevelopment District.
M/Helmberger, S/Sandahl that the following HRA resolution be adopted, that it be
spread in the HRA resolution book and that it be made part of these minutes:
HRA RESOLUTION NO. 717
RESOLUTION AUTHORIZING PURCHASE OF REAL PROPERTY
LOCATED AT 6639 LAKE SHORE DRIVE FOR THE
GRAMERCY TAX INCREMENT FINANCING DISTRICT PROJECT
Motion carried 4-0. This HRA Resolution appears as HRA Resolution No. 717 in
HRA Resolution Book No. 6
Item #7CONSIDERATION OF LEASING EXTERIOR PORTION OF 7214 CEDAR
AVENUE TO CITY OF RICHFIELD PUBLIC SAFETY DEPARTMENT.
HRA LETTER NO. 35
Acting Executive Director Devich reviewed HRA Letter No. 35 regarding the
proposal for leasing of the exterior portion of 7214 Cedar Avenue to the City of Richfield
Public Safety Department.
M/Susag, S/Sandahl to authorize the leasing of the exterior portion of 7214 Cedar
Avenue to the City of Richfield Public Safety Department at a rent of $300 per month.
Motion carried 4-0.
Item #8CONSIDERATION OF REQUEST BY CSM PROPERTIES, INC. TO AMEND
CONCEPT PLAN FOR LYNDALE GATEWAY REDEVELOPMENT AREA.
HRA LETTER NO. 36
HRA Meeting Minutes-11-June 21, 1999
Acting Executive Director Devich reviewed HRA Letter No. 36 regarding the request
of CSM Properties, Inc. to amend the concept plan for the Lyndale Gateway
redevelopment area.
Murray Kornberg, Vice President of CSM Properties, Inc., answered questions
regarding the proposed amendment which reflects a reduction in size of the retail structure
on the west side of Lyndale Avenue, elimination of the underground parking under the
retail structure, and inclusion of the east side of Garfield Avenue for townhomes. He
stated even with less retail, the elimination of the costly underground parking would have a
positive impact on the tax increment financing. He indicated the proposed parking
configuration for the drug store was at their request to accommodate their concept.
M/Sandahl, S/Susag to approve CSM's revised concept plan for the Lyndale
Gateway redevelopment area in accordance with the Contract for Private Redevelopment.
Motion carried 4-0.
Item #9CONSIDERATION OF REQUEST BY CSM PROPERTIES, INC. FOR 120 DAY
EXTENSION FOR SITE ASSEMBLY ACTIVITIES IN LYNDALE GATEWAY
AREAHRA LETTER NO. 37
.
Acting Executive Director Devich reviewed HRA Letter No. 37 regarding
consideration of a request by CSM Properties, Inc. for a 120 day extension for site
assembly activities in the Lyndale Gateway Area.
Murray Kornberg, Vice President of CSM Properties, Inc., reviewed and answered
questions regarding CSM's request for 120 day extension indicating that they hope to be
able to acquire the property for redevelopment without the need for condemnation before
the end of the requested extension period. He reviewed a site plan drawing of the
redevelopment concept.
Discussion and questions followed with several area homeowners and a rental
tenant regarding relocation, lease issues, and the timing of the project.
John Walswick, 7633 Garfield Avenue, stated frustration with delays.
M/Sandahl, S/Helmberger to approve the request of CSM's request for a 120 day
extension for site assembly activities in the Lyndale Gateway Area.
Motion carried 4-0.
Item #10 EXECUTIVE DIRECTOR REPORT
HRA Meeting Minutes-12-June 21, 1999
None.
Item #11CLAIMS AND PAYROLL
M/Susag, S/Helmberger that the following claims and payrolls be approved:
FIRSTAR BANK
Section 8 Checks: 13768-13875$121,308.33
HRA Checks: 20459-20758; 20829-20882$545,706.27
Motion carried 4-0.
ADJOURNMENT
The meeting was adjourned by unanimous consent at 9:50 p.m.
Date Approved:
Thomas E. Harms
Chair
Thomas P. FerberSteven L. Devich
City ClerkActing Executive Director