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07-21-06 Continued Meeting CITY OF RICHFIELD, MINNESOTA FRIDAY, JULY 21, 2006 CONTINUED REGULAR HOUSING AND REDEVELOPMENT AUTHORITY MEETING RICHFIELD CITY HALL COUNCIL CHAMBERS 6700 PORTLAND AVENUE 8:00 A.M. Call to order Roll call 1. Consideration of acting on any proposal brought by staff or HRA's legal counsel regarding Metropolitan Airports Commission requirements of deed restrictions Notes: Staff Report No. 49 2. Consideration of: . Resolution approving second amendment to Contract for Private Development with Ryan Companies US . Resolution approving first amendment to Escrow Agreement Notes: Staff Report No. 50 Adjournment Auxiliary aids for individuals with disabilities are available upon request. Requests must be made at least 96 hours in advance to the City Clerk at 612-861-9738. ~. AGENDA ITEM # 49 REpORT # 1 ...... STAFF REpORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING JULY 21,2006 REpORT PREPARED By: P AT SMITH, COMMUNITY DEVELOPMENT MANAGER NAME, TITLE REpORT PRESENTER: PAT SMITH, COMMUNITY DEVELOPMENT MANAGER NAME, TITLE DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTNE DIRECTOR: ITEM FOR HRA CONSIDERATION: Consider acting on any proposal brought by staff or the Housing and Redevelopment Authority's legal counsel regarding the Metropolitan Airport Commission's requirements of deed restrictions. (Continued from the July 17, 2006 Housing and Redevelopment Authority meetin . 1. RECOMMENDED ACTION: By Motion: Consideration of acting on any proposal brought by staff or the Housing and Redevelopment Authority's legal counsel regarding the Metropolitan Airport Commission's requirements of deed restrictions. I II. BACKGROUND I On March 20, 2002 the City Council and the Metropolitan Airports Commission (MAC) entered into an Agreement (Agreement) in which MAC gave the City a grant for $10 million to purchase seven apartment buildings and 22 single family residences that are located in the Cedar Avenue Corridor Redevelopment Area. Six of these properties are located in the Cedar Point development area. A condition of the Agreement is that any parcels sold to a third party be subject to a restriction, to be approved by MAC, contained in the deed of conveyance, providing 072106 MAC Deed Restrictions that they will be developed in conformity with Richfield's Comprehensive Plan, and will adhere to any MAC, Federal Aviation Administration (FAA), or Minnesota Department of Transportation (MnDOT) limitations relating to height, noise, use compatibility, light or electronic interference. On July 17, 2006 the MAC Board approved in principle the deed restrictions for the properties within the Cedar Point redevelopment. The MAC Board delegated their attorneys to draft the final language of the deed restrictions. As of this writing, legal counsel from MAC, HRA, Ryan Companies US, Inc. (Ryan), Target and Home Depot continue to work toward the final language. I III. BASIS OF RECOMMENDATION I I A. POLICY 1 . On July 27,2005 the HRA entered into a Contract for Private. Development with Ryan. . On June 26, 2006 the HRA approved the First Amendment to the Contract. I B. CRITICAL ISSUES I. . Deed restrictions are required to be placed on the properties that the City purchased with MAC funding. . Under the First Amendment to the Development Contract, Ryan has the right to terminate the Contract if Ryan is unsatisfied with the deed restrictions approved by MAC. . Under the Escrow Agreement, Ryan has until July 21 , 2006 to determine their satisfaction with the MAC deed restrictions. I C. FINANCIAL . N/A I D. LEGAL I . Legal counsel from MAC, HRA, Ryan, Target and Home Depot continue to resolve the final language. I IV. ALTERNATIVE RECOMMENDATION(S) . N/A I V. ATTACHMENTS I . There may be documents available at the meeting if action is needed. . Map I VI. PRINCIPAL PARTIES EXPECTED AT MEETING . HRA legal counsel 63rd Street . . I Q) ~ c Q) ~ ~ ..... I'- T""" I ~ Legend ..1 I' I Corridor Out me .. IIIIl MN DEED Grant FAA / MAC Grant - I 66th Street I .. .. Hennepin County Grant (MJP Funds) .. City of Richfield Funding (for roundabout intersection) c:::J Purchased Properties 1>1 ~~o~;:: boo~p~~~~:ased - - o 55 110 220 440 Feet Cedar Point Project Area I'- I'- I ~ N A ran .. (Property needed to accomodate TH 77/66th 51. project) Created: February 9, 2006 330 AGENDA ITEM # 50 REpORT # 2 ~ STAFF REpORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING JULY 21,2006 REpORT PREPARED By: PAT SMITH, COMMUNITY DEVELOPMENT MANAGER NAME, TITLE REpORT PRESENTER: PAT SMITH, COMMUNITY DEVELOPMENT MANAGER DEPARTMENT DIRECTOR REVIEW: NAME, TITLE REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: 1) Consideration of Second Amendment to the Contract for Private Development with Ryan Companies US, Inc. 2) Consideration of First Amendment to the Escrow Agreement with Ryan Companies US, Inc. I. RECOMMENDED ACTION: By Motion: 1) Adopt the attached Resolution approving the Second Amendment to the Contract for Private Development with Ryan Companies US, Inc. 2) Adopt the attached Resolution approving the First Amendment to the Escrow A reement. I II. BACKGROUND I On July 27,2005 the HRA entered into a Contract for Private Development (Contract) with Ryan Companies US, Inc. (Ryan). On June 30, 2006 the HRA approved the First Amendment to the Contact. Ryan is now proposing a Second Amendment to the Contract (see attached Amendment). 072106 Second Amendment - Ryan contract Under Section 18 of the First Amendment, the First Amendment and the Escrow Agreement are contingent upon Ryan determining that it is satisfied with (i) the MAC deed restrictions and (ii) the risk of potential appeals by persons who may appear and object at the July 20, 2006 condemnation hearings related to the Gap Parcels. Ryan has until July 21,2006 to determine if they are satisfied with the deed restrictions and the risk of potential appeals of the condemnation hearings. If Ryan is unsatisfied, Ryan may terminate the First amendment to the Contract and Escrow Agreement by notifying the HRA on or before July 21,2006. Under the proposed Second Amendment, Ryan would have until September 30, 2006 to determine if they are satisfied with the MAC deed restrictions and the risk of potential appeals. The Second Amendment also changes the definition of "Closing" from the date when the HRA transfers title to Ryan to the date when all of the transactions under the Contract transpire. Finally, the Second Amendment proposes that if the Escrow Agreement is terminated for any reason, then the Contract and all amendments hereto automatically terminate and have no further force or effect. On July 17, 2006 the HRA approved the First Amendment to the Escrow Agreement, which required the Tax Abatement Note to be put into escrow. The proposed additional amendment to the Escrow Agreement changes the date that the HRA must have possession of 6500 Cedar Avenue, Magnuson Sod, from August 31,2006 to September 30,2006. This is the vacation date to which both Haag and the HRA have agreed. I III. BASIS OF RECOMMENDATION I I A. POLICY I . On July 27,2005 the HRA entered into a Contract for Private Development with Ryan Companies US, Inc. . The HRA has consistently taken actions to support Cedar Point Commons. I B. CRITICAL ISSUES I . Ryan is requesting the HRA to approve the proposed Second Amendment to the Contract to keep the development moving forward. . Ryan is requesting more time to approve the MAC deed restrictions so that they are able to work with MAC, Target and Home Depot to draft language so that all parties are comfortable. . Under the First Amendment, the HRA is obligated to reimburse Ryan for constructions costs indirectly or directly associated with delaying the commencement of construction for 21 days up to $500,000. . If the HRA approves the time extension, the HRA's obligation for construction delay will not change. I C. FINANCIAL . N/A I D. LEGAL I . HRA legal staff drafted the Amendment. I IV. ALTERNATIVE RECOMMENDATION(S) I . Approve the Amendment with a different performance date. . Do not approve the Amendment. I V. ATTACHMENTS I . Resolution approving the Second Amendment to the Contract . Resolution approving the First Amendment to the Escrow Agreement . Second Amendment to the Contract . Section 18 of the First Amendment to the Contract . First Amendment to the Escrow Agreement I VI. PRINCIPAL PARTIES EXPECTED AT MEETING . . HRA legal counsel HRA RESOLUTION NO. RESOLUTION APPROVING SECOND AMENDMENT TO CONTRACT FOR PRIVATE DEVELOPMENT WHEREAS, the Housing and Redevelopment Authority ("the HRA") and Ryan Companies US, Inc. ("Ryan") did on or about July 27, 2005 enter into an agreement entitled, Contract for Private Development, (the "Contract"), calling for the redevelopment of an area of land (the "Property") lying within the City of Richfield; and WHEREAS, the HRA approved the First Amendment to the Contract on or about June 30, 2006; and WHEREAS, events subsequent to the First Amendment have occurred that require the amendments to the Contract and Agreement for the project to move forward; and WHEREAS, the parties desire to address such matters through certain amendments to the Contract; and WHEREAS, the HRA has reviewed and is familiar with the proposed amendment to the Contract entitled: Second Amendment to Contract For Private Redevelopment ("Second Amendment"), and is satisfied that the terms thereof carry out the intentions of the parties, and are necessary and appropriate for the Development. NOW, THEREFORE, BE IT RESOLVED, by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota as follows: 1. The proposed Second Amendment is hereby in all respects approved. 2. Upon completion of such modifications, the Executive Director and Board Chair are directed to take all steps and do all things necessary to effectuate the provisions of the Second Amendment. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 21 st day of July, 2006. Suzanne M. Sandahl, Chair ATTEST: Donna Drummond, Secretary HRA RESOLUTION NO. RESOLUTION APPROVING FIRST AMENDMENT TO THE ESCROW AGREEMENT WHEREAS, the Housing and Redevelopment Authority ("the HRA") and Ryan Companies US, Inc. ("Ryan") did on or about July 27, 2005 enter into an agreement entitled, Contract for Private Development, (the "Contract"), calling for the redevelopment of an area of land (the "Property") lying within the City of Richfield; and WHEREAS, the HRA approved the Escrow Agreement (the "Agreement") on or about June 30, 2006; and WHEREAS, events subsequent to the Escrow Agreement have occurred that require the amendments to the Agreement for the project to move forward; and WHEREAS, the parties desire to address such matters through certain amendments to the Agreement; and WHEREAS, the HRA has reviewed and is familiar with the proposed amendment to the Agreement entitled: First Amendment to Escrow Agreement ("First Amendment"), and is satisfied that the terms thereof carry out the intentions of the parties, and are necessary and appropriate for the Development. NOW, THEREFORE, BE IT RESOLVED, by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota as follows: 1. The proposed First Amendment is hereby in all respects approved. 2. Upon completion of such modifications, the Executive. Director and Board Chair are directed to take all steps and do all things necessary to effectuate the provisions of the First Amendment. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 21 st day of July, 2006. Suzanne M. Sandahl, Chair ATTEST: Donna Drummond, Secretary SECOND AMENDMENT TO CONTRACT FOR PRIVATE DEVELOPMENT This Second Amendment to Contract for Private Development (this "Second Amendment") is entered into as of this day of July, 2006, by and between THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA, a Minnesota public body corporate and politic (the "HRA"), and RYAN COMPANIES US, INC., a Minnesota corporation ("Developer"). RECITALS A. The HRA and Developer entered into that certain Contract for Private Development dated July 27, 2005 (the "Original Agreement"), and that certain First Amendment to Contract for Private Development dated June 30, 2006 (the "First Amendment" and, together with the Original Agreement, the "Development Agreement"). B. The HRA and Developer desire to amend the Development Agreement as set forth in this Second Amendment. C. Capitalized terms not otherwise defined herein shall have the meanings assigned to them in the Development Agreement. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree that the Development Agreement is amended as follows: 1. Rvan's Riaht to Terminate. Section 18 of the First Amendment is amended by replacing the phrase "on or before such date" in the second sentence of Section 18 with the following phrase: "at or prior to the Closing." 2. follows: Closina/Closina Date. Section 1.1 of the Original Agreement is amended as i. The definition of "Closing" is deleted in its entirety and replaced with the following: "Closing" means the consummation of the transactions contemplated under this Agreement, as amended, pursuant to the terms and conditions of the Escrow Agreement, as amended. ii. The following definition is added immediately after the definition of "Closing": "Closing Date" means the date that the Closing occurs pursuant to Section 9 of the Escrow Agreement. 3. Termination. Section 3.15 of the Original Agreement is amended by adding the following sentence immediately after the last sentence of the section: Notwithstanding anything to the contrary in this Agreement (as amended), if the Escrow Agreement is terminated for any reason, then this Agreement and all amendments hereto shall automatically terminate and have no further force or effect. 4. Counterparts. This Second Amendment may be executed in one or more counterparts, each of which shaJI be deemed to be an original and together which shall constitute one and the same Second Amendment. This Second Amendment may be delivered by facsimile transmittal or other electronic communication of signed original counterparts. 5. Amendment. Except as set forth herein, the Development Agreement shall remain unmodified and in full force and effect. (Signature page follows) IN WITNESS WHEREOF, the parties have executed this Second Amendment effective as of the day and year first above written. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA By Its Chairperson By Its Executive Director RYAN COMPANIES US, INC. By Its FIRST AMENDMENT TO CONTRACT; SECTION 18 18. Ryan's Right to Terminate. Ryan's obligations under the Development Agreement, this First Amendment and the Escrow Agreement (collectively, the "Documents") are contingent upon Ryan determining, in its sole discretion, that Ryan is satisfied with (i) the Deed Restriction (as defined below) as approved by the Metropolitan Airports Commission ("MAC"); and (ii) the risk of potential appeals by persons who appear and object at the July 20, 2006 condemnation hearings related to the Gap Parcels. If the foregoing conditions are' not met to Ryan's satisfaction on or before July 21, 2006, Ryan may terminate the Documents by providing written notice to the BRA on or before such date. Upon such termination, neither Ryan nor the BRA shall have any further rights or obligations under the Documents except those rights and obligations that expressly survive termination. . If Ryan does not terminate the Documents pursuant to this paragraph, the BRA shall, upon demand, reimburse Ryan for all documented increased costs incurred by Ryan for the construction of improvements on the Development Property, including without limitation the Minimum Improvements, as a direct or indirect result of Ryan delaying the commencement of construction on the BRA Property by 21 days to allow time for the satisfaction of the contingencies in this paragraph. The BRA's obligation to reimburse Ryan for such costs and expenses shall be limited to a maximum reimbursement of $500,000.00. As used in the paragraph, "Deed Restriction" means any restriction in the deed conveying to Ryan the portion of the BRA Property that is subject to that certain Agreement dated March 20, 2002, between MAC and the City. FIRST AMENDMENT TO ESCROW AGREEMENT THIS FIRST AMENDMENT TO ESCROW AGREEMENT (this "Amendment") is made as of ,2006, by and among RYAN COMPANIES US, INC., a Minnesota corporation ("Ryan"), THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA, a Minnesota public body corporate and politic (the "HRA"), CITY OF RICHFIELD, a Minnesota municipal corporation (the "City"), and OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY, a Minnesota corporation ("Escrow Agent"). Ryan, the HRA, the City and Escrow Agent are sometimes collectively referred to herein as the "Parties. " I I. RECITALS A. Ryan and the HRA are parties to that certain Contract for Private Development dated July 27, 2005, as amended (the "Development Agreement"), pursuant to which certain real property located in Richfield, Hennepin County, Minnesota, and further described on Exhibit A to the Development Agreement will be acquired and developed. B. The Parties entered into that certain Escrow Agreement dated June 30, 2006 (the "Escrow Agreement"), related to the deposit into escrow with Escrow Agent of certain documents required by the Development Agreement pending satisfaction of certain terms and conditions in the Escrow Agreement. C. below. The Parties desire to amend the Escrow Agreement as further set forth D. Capitalized terms not defined in this Amendment shall have the meanings assigned to them in the Escrow Agreement. NOW THEREFORE, in consideration of the mutual covenants of the parties contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: 1. Deposit of the Note. The HRA has delivered to Escrow Agent one (1) fully executed, undated and unregistered original of the Note (as defined in the Development Agreement) (the "Escrowed Note"), which shall be part of and, except as otherwise provided herein, be treated as one of the Escrowed Documents. 2. Reference to Exhibit. Section 2 of the Escrow Agreement is amended by replacing "Exhibit B" with "Exhibit A." 3. Reoistration of Escrowed Note. Upon the consummation of the Closing (as defined in the Development Agreement), the HRA shall take all necessary actions to register the Escrowed Note, including without limitation causing the City Finance Director . to complete the registration number on the first page of the Escrowed Note and to complete and sign the "Registration Provisions" in the Escrowed Note. 4. Release of Escrowed Note. Notwithstanding anything to the contrary in the Escrow Agreement, upon the consummation of the Closing and the registration, completion and signing of the Escrowed Note as described in Section 3 above, Escrow Agent shall (i) date the Escrowed Note as of the date of the Closing; (ii) deliver to Ryan the original, dated and completed Escrowed Note; and (iii) deliver to the HRA a copy of the dated and completed Escrowed Note marked "copy." 5. Additional Conditions to Closinq. Section 4(a) of the Escrow Agreement is amended as follows: (a) The following phrase is deleted in its entirety: 8/31/06 The HRA shall have acquired title and possession to the Haag Parcel which is the subject of an HRA condemnation action. (b) Subparagraph (c) under the date 9/30/06 is amended by deleting the first two (2) lines of text in their entirety and replacing them with the following: The HRA shall have acquired title to and possession of, and shall be prepared to convey title and deliver possession to Ryan of, the entire HRA Property (including without 6. Counterparts. This Amendment may be executed in one or more counterparts, each of which shall be deemed to be an original and together which shall constitute one and the same Amendment. This Amendment may be delivered by facsimile transmittal or other electronic communication of signed original counterparts. 7. Headinqs. The. paragraph and section headings or captions appearing in this Amendment are for convenience only, are not a part of this Amendment and are not to be considered in interpreting this Amendment. 8. Amendment. Except as set forth herein, the Escrow Agreement shall remain unmodified and in full force and effect. [Signature pages follow] IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed as of the day and year first stated above. RYAN COMPANIES US, INC. By: Its: [SIGNATURE PAGE TO FIRST AMENDMENT TO ESCROW AGREEMENT] THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA By: Its: Chairperson By: Its: Executive Director [SIGNATURE PAGE TO FIRST AMENDMENT TO ESCROW AGREEMENT] CITY OF RICHFIELD By: Its: By: Its: [SIGNATURE PAGE TO FIRST AMENDMENT TO ESCROW AGREEMENT] OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY By: Its: 4056222_2.DOC [SIGNATURE PAGE TO FIRST AMENDMENT TO ESCROW AGREEMENT]