11-03-08 Worksession
SPECIAL HOUSING AND
REDEVELOPMENT AUTHORITY
WORKSESSION MINUTES
Richfield, Minnesota
Special Worksession
November 3, 2008
CALL TO ORDER
The meeting was called to order by Chair Sandahl at 7:00 p.m.
ROLL CALL
HRA Members
Present: Sue Sandahl, Chair; Joan Helmberger; David Gepner; Doris Rubenstein;
and Steven Quam.
Staff Present: Steven L. Devich, Executive Director; John Stark, Community
Development Director/HRA Manager; Karen Barton, Community
Development Manager; John Dean, HRA Attorney; and Cheryl Krumholz,
Recording Secretary.
Item #1 DISCUSSION AND UPDATE REGARDING CEDAR POINT II REDEVELOPMENT
AREA FINANCING
Community Development Director/HRA Manager Stark reviewed the background related to
the Cedar Point II area between 63rd and 65th Streets and between 16th and 17th Avenues. The
HRA directed staff to work with Susee/LaNel for the development of a senior housing project. As
the process continued, the turmoil of the financial markets combined with increased fuel and
construction materials costs, a significant financial gap in the developer’s pro-forma accounting
developed.
Community Development Director/HRA Manager Stark explained the financial Options 1
and 2, arrived at after vetting several possibilities with the developer, staff, and the HRA Attorney
to address the financing gap if the development was to move forward. He also explained the pros
and cons for each option.
Special Worksession Minutes -2- November 3, 2008
HRA Attorney Dean stated the decision rests with the HRA and then the City Council. He
explained the 429 Special Assessment Bonds, including the 20% developer responsibility and the
80% ad valorem throughout the City.
Commissioner Rubenstein stated that fuel and construction costs may now be decreased
and suggested the estimated cost of the project be re-evaluated to determine if the financial gap is
changed. She questioned the need to do the Richfield Parkway work at the same time.
Greg Bronk, CFO of LaNel Financial Group, discussed the financial market impacts and the
need for this project to have City assistance. He said all 29 homeowners need to be part of the
project; if not, there will be no project.
Community Development Director/HRA Manager Stark stated that in his opinion, Richfield
Parkway works needs to be done with the development because the neighborhood has the
expectation of keeping traffic off their streets.
HRA Attorney Dean discussed the financial obligations of the City if the project proceeds.
Executive Director Devich explained that as long as the 20% special assessment bond
requirements by the developer is met, the governing body can put the assessment in place with no
vote required by the residents.
Frank Lange, developer, discussed the contact made with homeowners to gauge their
interest in a buyout but clarified that nothing is finalized.
HRA Attorney Dean stated an executed development agreement is bound by the HRA and
City Council and new policy makers cannot change it unless there are terms in the agreement to
allow it.
Community Development Director/HRA Manager Stark cautioned the homeowners that,
with the timelines of the project difficult to predict, they should not feel comfortable looking for a
different home until they have a purchase agreement with contingencies waived.
Chair Sandahl stated the residents are owed some relief and that she liked Option 1
because she was uncomfortable with the risk in Option 2.
Commissioner Gepner stated that Option 1 appeared more palatable.
Commissioner Rubenstein stated Option 2 appeared less complicated and more fast track
and if the project is successful, there was no risk to the City.
Commissioner Helmberger stated she liked Option 1.
Commissioner Quam stated Option 1 reduces risk to the City and Option 2 helps the
developer. He suggested it be equalized to see how much financing is really needed.
The HRA general consensus was to have staff, the HRA attorney, and the developer review
financing options to refine a mechanism and return to the HRA with a formal proposal.
ADJOURNMENT
Special Worksession Minutes -3- November 3, 2008
The meeting was adjourned by unanimous consent at 8:24 p.m.
Executive Director
Date Approved: December 15, 2008
~~
Cheryl K umholz
Recording Secretary
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Suza ~`~ . Sandahl
- en L. Devich