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02-19-02 Regular I I I HOUSING AND REDEVELOPMENT AUTHORITY MEETING MINUTES Richfield, Minnesota Regular Meeting February 19, 2002 The meeting was called to order by Chair Harms at 7:00 p.m. HRA Members Present: Thomas Harms; Dan Linnihan; Kristal Stokes; and Michael Sandahl. HRA Members Not Present: Joan Heimberger. Staff Present: Bruce Palmborg, Acting Executive Director; Bruce Nordquist, Housing and Redevelopment Manager; and Deborah Guiher, Deputy City Clerk. M/Sandahl, S/Stokes to approve the minutes of the Reqular HRA Meetinq of Januarv 23, 2002. Motion carried 4-0. Item #1 No one wished to address the HRA. HRA Meeting Minutes -2- February 19, 2002 Item #2 I Commissioner Linnihan requested Item 3B be removed from the consent calendar and placed on the regular agenda. Chair Harms requested Item 3C be removed from the consent calendar and placed on the regular agenda. The agenda as amended was approved by unanimous consent. Item #3 A. Approved amendments to Contract for Private Redevelopment for rehabilitation project at 6444 Clinton Avenue S.R. No.8 B. Removed from the consent calendar and placed on the regular agenda for consideration as Item 3B. C. Removed from the consent calendar and placed on the regular agenda for consideration as Item 3C. D. Authorized application to Hennepin County for Federal Home Investment Partnerships Program (HOME) funds to support affordable housing at City Bella S.R. No. 11 I M/Sandahl, S/Stokes to approve the consent calendar as amended. Motion carried 4-0. Item #38 Housing and Redevelopment Manager Nordquist reviewed Staff Report No.9 regarding consideration of an approval of reallocation of the Community Development Block Grant (CDBG) Funds for a remediation activity at Lake Shore Drive. Commissioner Linnihan said the staff report broadly defined the work that needed to be done. He asked if the repairs were $5,000 to $7,000 per unit would there be removal of sub-floors, would there be re-tiling done or are they redoing everything. Mr. Nordquist said this doesn't include the removal of sub floors. He explained that the I plumbing fixtures and wall tiles need to be removed in order to get at and remove the water damaged/moldy wall board and properly treat the moldy areas. He said a contractor would have to repair from 16 to 100 sq. feet of wall area and replace tiles and fixtures. Remediation costs are running $300 to $800 per unit based on competitive bidding. He said repair work costs are presently being determined. I I I HRA Meeting Minutes -3- February 19, 2002 M/Sandahl, S/Stokes to approve the use of Community Development Block Grand funds for a remediation activity at Lake Shore Drive. Motion carried 4-0. Item #3C Housing and Redevelopment Manager Nordquist reviewed Staff Report No.1 0 regarding the consideration of a Subordination Agreement that will allow interim acquisition financing for City Bella from non-HRA sources. Chair Harms commented on the following items of the draft agreement: 1. The draft agreement presented to the HRA did not adequately measure the risks that the HRA has. 2. The specific language of the Subordination Agreement that was presented to the HRA would subordinate HRA rights under the development agreement to any loan documents including any amendments or modifications. He said he was concerned that the HRA would be in a position where we would wave our discretionary rights concerning the review of this project, its framework or financing, which we haven't done in the past, although it isn't uncommon for the HRA to subordinate. As a result of discussion between the bank, developer and HRA, the developers legal counsel came forward with this proposed change in the Subordination Agreement. Chair Harms said if a bank lends on this and forecloses on the property, it doesn't become a developer. In the modified subordination, the language that was objectionable was removed and a substitution said in the event of a foreclosure of the Mortgage on the Property, the HRA agrees that the liens and encumbrances against the Property created by the Contract shall be subordinated to the Mortgage, provided the HRA, prior to the expiration of the right of redemption period following foreclosure, may directly, or by assignment of these rights to a third party: (a) pay off the Loan, or (b) cause redemption to be made by the Developer or third party, or (c) purchase Lender's Loan and any interest of the Lender in the Property for a price equal to the amount owing the Lender. He said that this is a reasonable approach. M/Sandahl, S/Stokes to authorize the Housinq and Redevelopment Authority Chairperson and Executive Director to effectuate a Subordination Aqreement allowinq Richfield Bank and Trust to finance interim acquisition activity by Gramercy Corporation at City Bella. Motion carried 4-0. Item #4 Acting Executive Director Palmborg requested that this be removed from the agenda at this time. HRA Meeting Minutes -4- February 19, 2002 Chair Harms said that on March 11, Kmart would be listing the Kmart stores they will be closing. The HRA would like to direct staff to undertake discussions with the owner of this property, so the HRA has an open line of communication to deal with one of the following options: 1. In the event that Kmart wishes to terminate, we know as much in advance as possible and can be involved in discussions with the release of the property. 2. In the event that Kmart continues in this location for an additional three years, we need to still begin dialogue with the owner of the property concerning the potential for redevelopment of this site. Commissioner Sandahl said he has also heard that this store will close. He said City staff would need to get to the owner of the property as soon as possible and see what their plans are. It is the recommendation of the HRA that staff begin initiating discussions, think internally about options and plans, and that this information should be reported back to the HRA. Item #5 MIStokes, SISandahl that the followinQ claims and payrolls be approved: FIRST AR BANK Section 8 Checks: 102885 - 103002 HRA Checks: 25292 - 25311; 26002 - 26040 $170,075.99 $1,151,980.05 Motion carried 4-0. The meeting was adjourned by unanimous CI a . \ Date Approved: March 18, 2002 ~R1L-f~(IJ.1 D)LLJlo~j Deborah Guiher Deputy City Clerk ce Palmborg Acting Executive Director I I I