06-10-08 Worksession
CITY COUNCIL MINUTES
Richfield, Minnesota
Special Worksession
June 10, 2008
CALL TO ORDER
The meeting was called to order by Mayor Goettel at 5:30 p.m.
ROLL CALL
Members Present: Debbie Goettel, Mayor; Susan Rosenberg; Fred Wroge; Sue Sandahl; and
Bill Kilian.
Staff Present: Steven L. Devich, City Manager; Mike Eastling, Public Works Director; John
Stark, Interim Community Development Director; Karen Barton, Community
Development Manager; Melissa Poehlman, Zoning Administrator; and Cheryl
Krumholz, Recording Secretary.
Item # I DISCUSSION REGARDING CEDAR POINT PHASE II FINANCING (COUNCIL MEMO
NO. 88)
Interim Community Development Director Stark stated in March 2008, the Richfield Housing
and Redevelopment Authority (HRA) selected Susee/Lang Nelson to proceed with plans to redevelop
the Cedar Point Phase II area consisting of 29 homes located directly to the west of the Cedar Point
Development (Target and Home Depot). At the May 19 meeting, the HRA approved a set of deal
points to be used to prepare a Contract for Private Development between the City of Richfield and
Susee/Lang Nelson. Included in the deal points is financial assistance through the issuance of 429
Special Assessment Bonds.
Interim Community Development Director Stark continued that there is a financing gap which
will need City assistance. He discussed the changes made by the Legislature related to tax increment
financing (TIF) and eminent domain. The Cedar Point area was declared a TIF District with special
legislation because the property in Phase II would likely not be substandard in the traditional way but
rather from the impacts of low frequency noise from the airport.
Interim Community Development Director Stark explained the financing gap is due to the
higher value of the homes which forces the developer to pay more, increases the base, and makes
less TIF available. The City Council will need to approve the public financing for this project.
Discussion at tonight’s Worksession is to determine the financing feasibility before proceeding with the
Contract for Private Development.
Special Worksession Minutes -2- June 10, 2008
Greg Bronk, developer representative, discussed the equity versus financing for the overall
development. He also explained the proposed development is assisted living and senior housing units.
Mayor Goettel asked about the TIF length.
Interim Community Development Director Stark explained the City typically uses the most
conservative approach. In this special TIF District, 23 years remain.
City Manager Devich stated the bonds would be applied to the $10 million bank qualified debt
limit but would not be exceeded with a new City Hall bond.
Council Member Kilian commented that a commitment was made to these residents and few
options have been available. He added that he could not see proceeding with a new City Hall and
then tell these residents they need to wait.
Rebecca Kurtz, Ehlers & Associates, reviewed the special TIF law and timing on this district
which decertifies no later than 2033.
Mayor Goettel discussed current senior housing vacancies and not wanting to create
problems for the units already in place.
Frank Lange, developer, explained the senior housing market is soft but is very viable in
Richfield. The proposed units are affordable but not luxury.
Council Member Kilian stated past development options have included subsidized housing or
senior housing. Currently, there is no senior housing on the eastside.
Mayor Goettel asked about the developer talking with homeowners regarding price points.
Mr. Lange responded most have been contacted but no offers made.
Council Member Sandahl stated she appreciated the efforts to provide a mechanism of
helping the developer and the City complete the project. The development team has a good track
record and the project would be an asset to the community.
Council Member Wroge expressed his concerns about not knowing the offers to the
homeowners. He said he did not believe a commitment was made to the entire community and he
may want to proceed at a slower pace and wasn’t ready to decide yet. He wants the project to work
but it may get too expensive and no commitment was made to spend foolishly. He added an option
may be that homeowners may need to be subsidized to sell their home.
Council Member Wroge requested the word “substantial” be removed in the developer’s
obligation to repay the City for refinancing because the residents are owed that money.
Council Member Rosenberg concurred with Council Member Wroge. She added careful
financing is an obligation to the residents and that she is not ready to make a decision yet.
City Manager Devich clarified that staff is seeking direction on this City Council policy
decision to move forward or not because if there is no special assessment, there is no project.
Mayor Goettel asked about risks.
City Manager Devich explained the bond debt payback. He added that as each year passes
on this special TIF District, a year is lost.
Interim Community Development Director Stark stated staff has received calls from residents
in support of moving forward.
Special Worksession Minutes -3- June 10, 2008
Mayor Goettel stated the viability of the project's financing needs to be determined.
Council Member Wroge requested answers to his questions regarding the cost of this bond to
homeowners on property taxes, including the impact on taxes with the City Hall bond.
Jan Susee, developer, explained that long term financing is not an option so that's why
refinancing is included in the repayment to the City.
Mr. Susee added that senior housing is acceptable to the residents. The residents are in
limbo and the City Council needs to make a decision.
Council Member Sandahl confirmed the proposed project is senior rental not purchase.
The City Council consensus was to be provided answers to their questions and the financing
for the project be placed on the June 24, 2008 City Council agenda.
ADJOURNMENT
The meeting was adjourned by unanimous consent at 6:23 p.m.
Date Approved: June 24, 2008
Cheryl K umhol
Recording Secretary