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10-25-06 Special CITY OF RICHFIELD, MINNESOTA WEDNESDAY,OCTOBER 25,2006 SPECIAL HOUSING AND REDEVELOPMENT AUTHORITY MEETING "RICHFIELD WATER PLANT CONFERENCE ROOM 6221 PORTLAND AVENUE 7:00 P.M. AGENDA Call to order Roll call 1. Consideration of resolution approving fourth amendment to contract for private development with Ryan Companies US, Inc. for Cedar Point Commons Staff Report No. 79 Notes: 2. Consideration of resolution approving assignment and subordination of-contract for private development with Ryan Companies US, Inc. Staff Report No. 80 Notes: 3. Consideration of resolution authorizing interfund loan for advance of certain costs in connection with Cedar Point Commons project Staff Report No. 81 Notes: l.- - 'I> ) 4. Any other actions necessary in connection with the Cedar Point Commons project Notes: 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 # 1 REpORT # 79 ...... STAFF REpORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING OCTOBER25,2006 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: -J. ITEM FOR HRA CONSIDERATION: Consideration of a resolution approving the Fourth Amendment to the Contract for Private Development with Ryan Companies US, Inc. for Cedar Point Commons. I. RECOMMENDED ACTION: By Motion: Adopt the attached resolution approving the Fourth Amendment to/the Contract for Private Development with Ryan Companies US, Inc. for Cedar Point Commons. I II. . BACKGROUND I On July 27, 2005 the Housing and Redevelopment Authority (HRA) entered into a Contract for Private Development (Contract) with Ryan Companies US, Inc. (Ryan). On June 20, 2006 the HRA approved the First Amendment to the Contract, on July 21,2006 the HRA approved the Second Amendment to the Contract and on August 16, 2006 the HRA approved the Third Amendment to the Contract. Ryan is now proposing a Fourth Amendment to the Contract. Section 3.8 of the Contract identifies the price that Ryan has to pay the HRA for the four different groups of property owned by the HRA or City. The four groups of property were acquired under different funding sources and have different requirements on how the HRA and City may sell the property. 102506 - Ryan Contract - Fourth Amendment cant. "C" properties in the Contract were purchased with Federal Aviation Administration (FAA) and Metropolitan Airports Commission (MAC) funds. The purpose of those funds was to purchase and clear properties that will be affected by airport improvements. MAC has stated that the proceeds that the HRA receives from the sale of "C" properties may be used to purchase other impacted properties in the Cedar Corridor redevelopment area, including reimbursing Ryan for acquiring the single-family homes for Cedar Point Gommons. The proposed Amendment provides that the HRA will use sale proceeds received from Ryan for the "C" properties to reimburse Ryan for the acquisition costs in connection with the property which Ryan is directly acquiring. I III. BASIS OF RECOMMENDATION I I A. POLICY I . On July 27,2005 the HRA entered into a Contact for Private Development with Ryan Companies US, Inc. . The HRA has consistently taken actions to support Cedar Point Commons. I B. CRITICAL ISSUES I . MAC agrees that the HRA may use the proceeds from the sale of "C" properties to acquire other noise-impacted properties, including the properties that Ryan is required to purchase for Cedar Point Commons. . This matter was previously scheduled for the September 18, 2006 HRA meeting and was removed for the agenda during the meeting. I C. FINANCIAL I . The Amendment will establish the "C" property sale proceeds are being used for other qualifying expenditures and thereby relieve the HRA of any obligation to repay monies to MAC (this has no impact on the Ryan Business Subsidy). I D. LEGAL I . HRA legal counsel has drafted the resolution. I IV. ALTERNATIVE RECOMMENDATION(S) I . Approve the amendment with changes. . Do not approve the Amendment. I V. ATTACHMENTS I . Resolution approving the Fourth Amendment to the Contract . Fourth Amendment to the Contract (will be distributed when available) I VI. PRINCIPAL PARTIES EXPECTED AT MEETING . John Dean, HRA legal counsel F-l HRA RESOLUTION NO. RESOLUTION APPROVING FOURTH 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, the HRA approved the Second Amendment to the Contract on or about July 21,2006; and WHEREAS, the HRA approved the Third Amendment to the Contract on or about August 16,2006; and WHEREAS, events subsequent to the First Amendment have occurred that require the amendments to the Contract 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 familiarwith the proposed amendment to the Contract entitled: Fourth Amendment to Contract For Private Redevelopment ("Fourth 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 Fourth 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 Fourth Amendment. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 25th day of October, 2006. Suzanne M. Sandahl, Chair ATTEST: Donna Drummond, Secretary AGENDA ITEM # 2 REpORT # 80 ....... STAFF REpORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING OCTOBER 25, 2006 REpORT PREPARED By: PAT SMITH, COMMUNITY DEVELOPMENT MANAGER NAME, TITLE REpORT PRESENTER: PAT SMITH, COMMUNITY DEVELOPMENT MANAGER NAME, TITLE DEPARTMENT DIRECTOR REVIEw: REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: Consideration of Assignment and Subordination of Contract for Private Development with Ryan Companies US, Inc. I. RECOMMENDED ACTION: By Motion: Adopt the attached resolution approving the Assignment and Subordination of the Contract for Private Development with Ryan Companies US, Inc. I II. BACKGROUND I On May 24, 2005 the City Council approved property tax abatement of the City's portion of real estate taxes for 15 years for Cedar Point. On July 27,2005 the Housing and Redevelopment Authority (HRA) entered into a Contract for Private Development (Contract) with Ryan Companies US, Inc. (Ryan). On July 17, 2006 the HRA approved the issuance of the Taxable. Limited Revenue Note in the amount of $2,068,700, pursuant to the terms and subject to the conditions in the Contract. M&I Bank (Lender) is providing a $21,800,000 construction loan to Ryan for the development. As conditions to disbursement of the loan, the Lender is requesting: 102506 - Ryan Assignment of Contract cont. 1. Ryan assigns all of its rights under the Contract and the Note to the Lender. 2. Certain rights of the HRA under the Contract be subordinated to the Mortgage. 3. The HRA agrees to matters outlined in the Assignment and Subordination Agreement. 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. . The HRA has consistently taken actions to support Cedar Point Commons. . Assigning and subordinating the HRA's rights in the Contract is not an unusual request for a large development. The HRA has previously subordinated its interest in a manner similar to this proposal. Kensington Park and Shops at Lyndale are two examples. I B. CRITICAL ISSUES I . The HRA, M&I Bank, and Ryan must sign the Assignment and Subordination Agreement to permit the disbursement of the construction loan. . Under the proposed Assignment and Subordination Agreement, the Lender has no right to enforce the provisions of the Contract and the Note or exercise any rights or remedies under the Agreement until an event of a default. . Ryan is still obligated to perform all covenants, conditions and agreements in the Contract. . Under the proposed Assignment and Subordination Agreement, the HRA has the following obligations: 1) Agrees to the terms and conditions of this Agreement and approves the agreements evidencing the Loan. 2) Represents and warrants to the Lender that the Contract is a valid agreement enforceable in accordance with its terms and that neither the HRA nor Ryan is in default, and that all covenants, conditions and agreements have been performed as required, except those that have a latter performance date. 3) Subordinates all of its interests, rights and remedies under the Contract to the lien of the Mortgage. 4) Acknowledges that the rights of the HRA with respect to the receipt and application of any proceeds of insurance or condemnation awards shall be subject and subordinate to the rights of the Lender under the Mortgage. 5) Agrees to provide the Lender with copies of any notice of default given under the Contract, and that the Lender shall have the right, but not the obligation, to cure any such default within 90 calendar days atter receipt of such notice. 6) This matter was previously scheduled for the September 18, 2006 HRA meeting and was removed from the agenda during the meeting. I C. FINANCIAL I . The interests of the HRA continue to be protected. I D. LEGAL I . HRA legal counsel has reviewed the attached Resolution and Agreement. I IV. ALTERNATIVE RECOMMENDATION(S) . Approve the Agreement with changes. . Do not approve the Agreement. I V. ATTACHMENTS I . Resolution approving the Assignment and Subordination Agreement. . Assignment and Subordination Agreement (will be distributed when available ). I VI. PRlNCIP AL PARTIES EXPECTED AT MEETING . John Dean, HRA Legal Counsel ~-( HRA ~ESOLUTION NO. RESOLUTION APPROVING ASSIGNMENT AND SUBORDINATION OF 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, on May 24, 2005 the City Council approved property tax abatement of the City's portion of "real estate taxes for 15 years for Cedar Point; and WHERAS, on July 17, 2006 the HRA approved the issuance of the Taxable Limited Revenue Note in the amount of $2,068,700, pursuant to the terms and subject to the conditions in the Contract; and WHEREAS, prior to M&I Bank disbursing of the Construction Loan to Ryan, M&I Bank is requesting the HRA, Ryan and M&I Bank enter into a Assignment and Subordination Agreement; and WHEREAS, the HRA has reviewed and is familiar with the proposed Agreement entitled: Assignment and Subordination of Contract for Private Development ("Assignment and Subordination Agreement"), 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 Assignment and Subordination Agreement 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 Assignmentand Subordination Agreement. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 25th day of October, 2006. Suzanne M. Sandahl, Chair ATTEST: Donna Drummond, Secretary AGENDA ITEM # 3 REpORT # 81 ....... STAFF REpORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING OCTOBER 25, 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 BRA CONSIDERATION: Consideration of authorizing an interfund loan for advance of certain costs in connection with the Cedar Point Commons oroiect 1. RECOMMENDED ACTION: By Motion: Adopt a resolution authorizing an interfund loan for advance of certain costs in connection with the Cedar Point Commons project I II. BACKGROUND I On July 27,2005 the Housing and Redevelopment Authority (HRA) entered into a Contract for Private Development (Contract) with Ryan Companies US, Inc. (Ryan). On June 26, 2006 the HRA approved the First Amendment to the Contract, which required the HRA to reimburse Ryan for certain increased costs resulting from a delay in the ability of the HRA to negotiate deed restrictions with the Metropolitan Airport Commission (MAC) applicable to certain parcels that are to be conveyed to Ryan, up to a maximum reimbursement amount of $500,000. In order to reimburse Ryan, the HRA has agreed to reduce the price that Ryan pays for the HRA-owned property ("A" properties) equal to the amount of the construction costs delays. 102506 - Interfund Loan for Cedar Point 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. . On June 26, 2006 the HRA approved the First Amendment to the Contract, which required the HRA to reimburse Ryan for certain increased costs resulting from a delay in the ability of the HRA to negotiate deed restrictions applicable to certain parcels that are to be conveyed to Ryan, up toa maximum reimbursement amount of $500,000. . The HRAhasestablisheda.Modificationto the Redevelopment Plan for the Richfield Redevelopment Project Area pertaining to the development of Cedar Point Commons. . Under Minnesota Statutes, the HRA is authorized to advance or loan money from any fund from which such advances may be legally made in order to finance expenditures that are eligible to be paid with tax increments under the TIF Act: . The HRA has consistently taken actions to support Cedar Point Commons. I B. CRITICAL ISSUES I . The HRA may incur certain costs related to the Redevelopment Project, which costs may be financed on a temp9rary basis from available HRA funds. . HRA legal counsel and Ryan are in the process of determining the most appropriate procedure to verify the increased construction costs due to the delay. I C. FINANCIAL . Funds are available. .1 D. LEGAL I . HRA legal counsel has drafted the resolution. I IV. ALTERNATIVE RECOMMENDATION(S) I . Approve the proposed Resolution with added provisions or modifications. . Do not approve the proposed Resolution. I V. ATTACHMENTS I . Resolution (will be distributed when available) I VI. PRINCIPAL PARTIES EXPECTED AT MEETING . John Dean, HRA Legal Counsel