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04-21-03 agendaCITY OF RICHFIELD, MINNESOTA HOUSING AND REDEVELOPMENT AUTHORITY MONDAY, APRIL 21, 2003 RICHFIELD CITY HALL 6700 PORTLAND AVENUE COUNCIL CHAMBERS 7 P.M. AGENDA Call to order 1. Approval of minutes of (1) Special Concurrent HRA and City Council Meeting on February 14, 2003; (2) Regular HRA Meeting on February 18, 2003; (3) Special HRA Meeting on February 26, 2003; and (4) Special HRA Meeting on April 8, 2003 2. HRA approval of agenda 3. Consideration of receipt of Community Development Achievement Award from North Central Region National Association of Housing and Redevelopment Officials. (NAHRO) for HRA's Woodlake Centre project Staff Report No. 20 Notes: 4. Consent Calendar contains several separate items which are acted upon by the HRA in one motion. Once the Consent Calendar has: been approved, the individual items and recommended actions have also been approved. No further HRA action is necessary. However, any HRA Commissioner may request that an item be removed from the Consent Calendar and placed on the regular agenda for HRA discussion and action. All items listed on the Consent Calendar are recommended for approval. A. Consideration of approval of resolution authorizing execution of Tax Increment Pledge Agreement with City of Richfield relating to issuance of $6 million General Obligation Tax Increment Bonds issued as two separate series, 2003A and 20036 S.R. No, 21 B. Consideration of approval of resolution eliminating 6945 Clinton Avenue from Richfield Rediscovered 1999 Tax Increment Financing District within Richfield Redevelopment Project Area S.R. No. 23 C. Consideration of approval of resolutions authorizing: (1) modification to Redevelopment Plan for Richfield Redevelopment Project Area; (2) modification No. 11 to Tax Increment Financing Plan for Interstate-Lyndale-Nicollet Tax Increment Financing District; and (3) modification No. 1 to Tax Increment Financing Plan for Lyndale Gateway West Tax Increment Financing District; all relating to Cornerstone Redevelopment Project S.R. No. 24 D. Consideration of approval of amendment to Purchase and Private Redevelopment Agreement with Penn Place Townhouses LLC for redevelopment of residential sites at 6833 and 6855 Penn Avenue S.R. No. 25 Notes: 5. Public hearing regarding resolution approving Business .Subsidy Agreement between HRA and Lyndale Gateway, LLC for Cornerstone Group project Staff Report No. 26 Notes: 6. Consideration of appointment of HRA liaison to serve on new "Blending Public Spaces and Private Development" Work Group Staff Report No. 27 Notes: 7: Executive Director report 8. Claims and payroll Adjournment Auxiliary aids for individuals with disabilities are available upon request. Requests must be made at least 96 hours in advance to the Administrative Services Director at 612-861- 9702. ~~!~~~ / ~~A ~ 1 ~~m AGENDA ITEM # 4L'' REPORT # 2 $ ~~ STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING APRIL 21, 2003 REPORT PREPARED BY: BRUCE NORDQUIST, HOUSING AND REDEVELOPMENT MANAGER NAME, TITLE REPORT PRESENTER: BRUCE NORDQUIST, HOUSING AND REDEVELOPMENT MANAGER DEPARTMENT DIRECTOR REVIEW: ~'` S/GNATURE REVIEWED BY EXECUTIVE DIRECTOR: ~ ~ ~ ® .-, ITEM FOR HRA CONSIDERATION: Consideration of an additional subordination of the Housing and Redevelopment Authority/Gramercy Corporation's Second Amended and Restated Contract for Private Redevelopment to American Bank of St. Paul for City Bella project financing. RECOMMENDED ACTION: By Motion: Authorize the Subordination of the Second Amended and Restated Contract for Private Redevelopment to American Bank of St. Paul for the Citv Bella project. III. BACKGROUND ~ The Housing and Redevelopment Authority (HRA) first authorized an Assignment and Subordination on April 8, 2003 for City Bella project financing. The closing is scheduled for today, April 21, 2003 for $43,000,000 in financing for Gramercy Corporation.. On Friday, April 18 it was determined that an additional $520,000 was needed for the developer to complete property acquisitions. The lender, American Bank of St. Paul, has requested an additional Subordination of the Second Amended and Restated Contract for Private Redevelopment. 042103Amercian Bank III. BASIS OF RECOMMENDATION A. POLICY • The City Bella project is based on a Contract for Private Redevelopment. • The agreement for subordination is consistent with the Contract. B. CRITICAL ISSUES • Securing financing is contingent on the lender receiving the subordination. • The developer is current with all obligations, the Concept Plan has been approved, the TIF District has been established, and property within the project area will be owned by the HRA or developer by the time closing is completed. C. FINANCIAL • The developer has secured the necessary financial commitments to proceed with the project. • The lender requires the subordination. D. LEGAL • Legal counsel for the HRA, lender, and developer collaboratively prepared the subordination document and all have reviewed it for form and content. IV. ALTERNATIVE RECOMMENDATION(S~ • The HRA could choose not to subordinate to the project financing. However, these actions are consistent with the Contract for Private Redevelopment and the HRA's February, 2002 subordination actions when Gramercy Corporation received financing to acquire property within the project area. V. ATTACHMENTS • Subordination document. VI. PRINCIPAL PARTIES EXPECTED AT MEETING • N/A SUBORDINATION OF SECOND AMENDED AND RESTATED CONTRACT FOR PRIVATE REDEVELOPMENT THIS SUBORDINATION OF SECOND AMENDED AND RESTATED CONTRACT FOR PRIVATE REDEVELOPMENT (this "Agreement"), is made and entered into as of the _ day of , 2003, by and among THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA, a Minnesota public body corporate and politic (the "HRA"), GRAMERCY CORPORATION, a Minnesota corporation (the "Redeveloper"), CITY BELLA LLC, a Minnesota limited liability company (the "Borrower"), and AMERICAN BANK OF ST. PAUL, a Minnesota state banking corporation (the "Lender"). WITNESSETH: WHEREAS, the HRA and the Redeveloper have entered into that certain Second Amended and Restated Contract for Private Redevelopment dated as of 2003 (the "Redevelopment Contract"), recorded in the Office of on , as Document No. , pertaining to the development of the Minimum Improvements (as that term is defined in the Redevelopment Contract); and WHEREAS, pursuant to the Redevelopment Contract, the HRA executed and delivered to the Redeveloper that certain Limited Revenue Tax Increment Note Series (the "TIF Note") in the principal amount of $8,473,460; and WHEREAS, the Borrower and the Lender have entered into that certain Loan Agreement dated as of , 2003 (the "Loan Agreement"), concerning the extension by the Lender to the Borrower of a loan in the amount of $520,000 (the "Loan") to finance the acquisition of a portion of the Minimum Improvements; and WHEREAS, the obligation of the Borrower to repay the Loan is evidenced by that certain Promissory Note dated as of , 2003 (the "Note"), executed by the Borrower in favor of the Lender in the original principal amount of $520,000; and WHEREAS, the Note is secured, among other things, by that certain Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Financing Statement dated as of 2003 (the "Mortgage"), executed by the Borrower in favor of the Lender and encumbering a portion of the Minimum Improvements; and WHEREAS, payment of the Note has been guarantied by the Redeveloper pursuant to that certain Corporate Guaranty dated as of , 2003 (the "Guaranty"), executed by the Redeveloper in favor of the Lender; and WHEREAS, the Lender has required, as an express condition to the making of the Loan, that the HRA agree to certain matters, all as more fully contained herein. NOW THEREFORE, in consideration of the foregoing recitals and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. The HRA hereby consents and agrees to the terms and conditions of this Agreement. The HRA further represents and warrants to the Lender that the Redevelopment Contract and the TIF Note are valid agreements enforceable in accordance with their terms and that neither the HRA nor the Redeveloper is in default thereunder and that all covenants, conditions and agreements have been performed as required therein, except those not to be performed until after the date hereof. 2. Pursuant to Section 7.3 of the Redevelopment Contract, the HRA agrees to provide the Lender with copies of any notice of default under the Redevelopment Contract, and that the Lender shall have the right, but not the obligation, to cure any such default on behalf of the Redeveloper under the terms set forth in Section 7.3 of the Redevelopment Contract. 3. Pursuant to Section 7.4 of the Redevelopment Contract, prior to the issuance of a Certificate of Completion (as that term is defined in the Redevelopment Contract), the Lender will provide the HRA with copies of any notice of default under the Loan Agreement, and the HRA shall have the right, but not the obligation, to cure any such default on behalf of the Borrower under the terms set forth in Section 7.4 of the Redevelopment Contract. 4. In the event of a foreclosure of the Mortgage, the HRA agrees that the liens and encumbrances against the Minimum Improvements created by the Redevelopment Contract shall be subordinated to the liens, rights and security interests created by the Mortgage, provided that 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 Redeveloper or third party; or (c) purchase Lender's Loan and any interest of the Lender in the Minimum Improvements for a price equal to the amount owing the Lender. 5. The parties hereto hereby agree that no change or amendment which will have an adverse effect on the Lender shall be made to the terms of the Redevelopment Contract or the TIF Note without the prior written consent of the Lender. 6. This Agreement can be waived, modified, amended, terminated or discharged only explicitly in a writing signed by the Lender. A waiver by the Lender shall be effective only in a specific instance and for the specific purpose given. Mere delay or failure to act shall not preclude the exercise or enforcement of any of the Lender's rights or remedies hereunder. All rights and remedies of the Lender shall be cumulative and may be exercised singularly or concurrently, at the Lender's option, and no exercise or enforcement of any one such right or remedy shall neither be a condition to nor bar the exercise or enforcement of any other. _ 7. Any notice, request, demand or other communication hereunder shall be deemed fully given if delivered or postage prepaid, certified or registered, addressed to the party as set forth below: If to the HRA: The Housing and Redevelopment Authority in and for the City of Richfield, Minnesota 6700 Portland Avenue South Richfield, Minnesota 55423 Attn: Executive Director If to the Redeveloper: Gramercy Corporation 6601 Lyndale Avenue South, Suite 110 Richfield, Minnesota 55423 Attn: Michael W. Conlan, President if to the Borrower: City Bella LLC 6601 Lyndale Avenue South, Suite 110 Richfield, Minnesota 55423 Attn: Michael W. Conlan If to the Lender: _ American Bank of St. Paul 1060 Dakota Drive Mendota Heights, Minnesota 55120 Attn: Scott Swenson, Vice President 8. This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota. IN WITNESS WHEREOF, the parties hereto have made and entered into this Agreement as of the day and year first above written. THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA By: By: Its: Chairman Its: Executive Director STATE OF MINNESOTA ) SS. COUNTY OF The foregoing instrument was acknowledged before me this day of , 2003, by and ,the Chairman and Executive Director, respectively, of The Housing and Redevelopment Authority in and for The City of Richfield, Minnesota, a Minnesota public body corporate and politic, for and on behalf of said public body. STATE OF MINNESOTA ) SS. COUNTY OF ) Notary Public GRAMERCY CORPORATION By: The foregoing instrument was acknowledged before me this day of , 2003, by ,the of Gramercy Corporation, a Minnesota corporation, for and on behalf of said corporation. CITY BELLA LLC Notary Public STATE OF MINNESOTA ) SS. COUNTY OF ) By: Its: The foregoing instrument was acknowledged before me this 2003, by ,the for and on behalf of said limited liability company. Its: day of , of City Bella LLC, Notary Public AMERICAN BANK OF ST. PAUL By: Its: STATE OF MINNESOTA ) SS. COUNTY OF The foregoing instrument was acknowledged before me this day of , 2003, by ,the of American Bank of St. Paul, a Minnesota state banking corporation, for and on behalf of said state banking corporation. Notary Public THIS INSTRUMENT DRAFTED BY: Jon J. Hoganson Winthrop & Weinstine, P.A. 3000 Dain Rauscher Plaza 60 South Sixth Street Minneapolis, Minnesota 55402 2028616v1 11124-1 AGENDA ITEM # ~ REPORT # 2~ J STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING APRIL 21, 2003 BRUCE SYLVESTER, REPORT PREPARED BY: ZONING ADMINISTRATOR NAME, Teri r REPORT PRESENTER: BRUCE PALMBORG, COMMUNITY DEVELOPMENT DIRECTOR DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: ©' ITEM FOR I-IRA CONSIDERATION: Consideration of an appointment of a Housing and Redevelopment Authority liaison to serve on a new Work Group. I. RECOMMENDED ACTION: By Motion: Appointment of an Housing and Redevelopment Authority liaison to serve on the new "Blending Public Spaces and Private Development" Work Group. II. BACKGROUND • Each year the City Council creates a list of goals for the upcoming year. • At the 2003 goal-setting session, the City Council adopted several goals, including the following: GOAL 3; BY THE END OF 2003, ESTABLISH COMMUNITY DESIGN STANDARDS THAT INCLUDE BUT ARE NOT LIMITED TO: LIGHTING, SIGNAGE, LANDSCAPING, OPEN SPACE REQUIREMENTS • The Community Development Department has created a work plan for accomplishing this goal. • The work plan (attached) calls for creating a Work Group consisting of representatives from. the City Council, Housing and Redevelopment Authority (HRA), Planning Commission, Richfield Beautiful, businesses, and residents. 0421AppointLiaison • This Work Group will meet over afour-month period to draft a set of `community design standards' for the City Council's review in the fall. • Michael Schroeder, a landscape architect and urban design expert who has worked with the City of Richfield staff, will provide limited consulting services to the Work Group. • The HRA has been asked to appoint one person to serve on the Work Group that will be drafting these standards. • The appointed HRA representative will be asked to attend six Wednesday night meetings between May and August, to tour designated sites in the metropolitan area, and to perform other duties as outlined in the work plan. III. BASIS OF RECOMMENDATION A. POLICY • The City Council has requested that a member of the HRA serve as a liaison on this new Work Group. B. CRITICAL ISSUES • The Work Group will meet six times over a four month period, from May through September of this year. C. FINANCIAL • N/A D. LEGAL • N/A IV. ALTERNATIVE RECOMMENDATION(S~ • N/A V. ATTACHMENTS • Work plan for the "Blending Public Spaces and Private Development" Work Group. VI. PRINCIPAL PARTIES EXPECTED AT 1VIEETING • N/A Blending Public Spaces and Private Development Establishing Standards for Lighting, Signage, Landscaping, and Open Space 1 Purpose ^ To create standards that offer a broader sense of the community's goals for development activiues to enhance a sense of community. ^ To engage community representatives to fully understand how they view their communin_• and to distill notions of "Identity" and "Livability", based on the values of the communit~~. ^ To elaborate more garalitative directions and suggestions for development activities. Current design guidelines and land use plans offer relatively grrantitative information for development projects; information that is typically missing includes qualitative notions of the "experience" of the place and ho~v it best fits the surrounding community. In tlus sense, standards can be particularl}' important in the creation of a vital public realm. 2 Intent and goals ^ The intentions of this effort should be directed toward the identification of qualitative values that the community wants to guide development, so that community values regarding matters such as identity, livability, and connectedness can become incorporated into development plans. ^ The Lighting, Signage, Landscaping and Open Space Standards (LSLOSS) can; o Offer a baseline of community values to those interested in development activities in the City of Richfield; o Provide guidance about how development activities can be integrated into the community; o Offer a sense of unity between the various parts of the community; o Offer assurance to the community that development activiues truly enhance the community; o Build a stronger sense of livability for the Richfield community by recognizing the more qualitative aspects of development. ^ These Lighting, Signage, Landscaping and Open Space Standards (LSLOSS) are not: o intended to replace land use regulations, policies, or other regulations o intended to replace building development standards or guidelines o intended to create a Richfield "theme" 3 Process ^ The process of crafting LSLOSS should engage representatives of the community and use their "local knowledge" of Richfield to frame the LSLOSS. ^ The process might result in potentially divergent opinions, but the process should allow time to build an understanding of the most appropriate solutions for the LSLOSS. ^ A Working Group to create the LSLOSS should include representatives as follows: o Planning Commission (1) o City Council (1) o HRA (1) o Richfield Beautiful (1) o Business owner (1) o Residents (2) o City staff (1) o Consultant (1) To be designated by the Planning Commission To be designated 6y the City Council To be designated by the HKA To be designated by Kicl feld Beaz~atifirl To be designated by the Chamber of Commerce To be designated by the City Manager or Cite COZr11CZI Bruce Sylvester, ~ohn Star, and Brerce N. as needed) Michael Schroeder, to participate on a limited basis. ^ The process will not ask the Work Group to create LSLOSS, but it will rely on their local knowled~~ and values to shape the LSLOSS. ^ In order to fully engage a Work Group, they will be guided through exercises intended to help theirs share ideas and glean community values. o Photograph survey o Project tours o Work group meetings 4 Timeline and Schedule ^ The timeline for this process will not be long, but rather a focused effort over a shorter period of time. It is intended that the Work Group would meet several times over the course of four months (May through September) to complete the work and forward its recommendations to the HRA, Planning Commission, and City Council. ^ Work process o Meeting: Kick off meeting with work group. o Photograph survey conducted by work group members and compiled by staff o Meeting: Work session to review photos; outline initial ideas; identify tour sites. jNlichael Schroeder to assist) o Work group members tour projects on their own or in small groups... o Meeting: Outline general directions LSLOSS. jMichael Schroeder to aSSZSt o Staff distillation of general directions and creation of draft LSI;OSS o Meeting: Review draft; "test" guidelines against toured projects. ,(Michael Schroeder to assist? o Staff to create second draft of LSLOSS and distribute prior to July 23rd o Meeting: Review second draft of LSLOSS; outline process for presentation to HRA, Planning Commission, and Ciry Council o Presentation of draft LSLOSS to HRA, Planning Commission, and Ciry Council o Meeting: Review input offered by HRA, Planrning Commission, and Ciry Council. o Staff preparation of final LSLOSS and submittal to City Council for September 23rd meeting. Total number of meetings for work group members: 6 May 14 \~Iay 15-27 June 4 June 5-17 June 18 July 2 July 9 July 10-15 July 23 August September 3 September 10 5 Application ^ As a tool to assist in guiding development and redevelopment activities in the City of Richfield, the LSLOSS would apply to: o Regional corridors -corridors focused on major roadways of regional importance: • I-494/77~~~ Street • Cedar Avenue o Community corridors -more locally focused streets that are particularly important to the Richfield community: • 66~" Street • 76'x' Street • Lpndale Avenue • Penn Avenue • Nicollet Avenue • Portland Avenue o Points of Interest -including gateways into the City and the Downtown area, where the min of activities suggests commercial or civic centers for the Richfield community. ^ The LSLOSS are not intended to replace any existing tools meant to guide development activities, but rather to offer a greater sense of coherency for the community as a whole. In this regard, development activities will not be seen as islands or isolated activities; they may become catalysts for the enhancement of the sense of community. ^ We need to, as a part of this project, demonstrate how the information gained through this process can be made useful or tangible -- not abstract, particularly since we are attempting to deal with ideas that are more experiential or qualitative. AGENDA ITEM # 5 REPORT # 2( STAFF REPORT ~ HOUSING AND REDEVELOPMENT AUTHORITY MEETING APRIL 21, 2003 KATIA NIEDVETSKI, REDEVELOPMENT REPORT PREPARED BY: SPECIALIST NAME, TITLE JOHN STARK, COMMUNITY DEVELOPMENT REPORT PRESENTER: MANAGER NAME, TITLE DEPARTMENT DIRECTOR REVIEW: SIGNATURE REVIEWED BY EXECUTIVE DIRECTOR: /~ ITEM FOR HRA CONSIDERATION: Public hearing regarding a resolution approving a Business Subsidy Agreement between the Housing and Redevelopment Authority in and for the City of Richfield and Lyndale Gateway, L.L.C. for The Cornerstone Group project. I. RECOMMENDED ACTION: Conduct and close the public hearing and_ by motion: Authorize. the attached resolution approving a Business Subsidy Agreement between the Housing and Redevelopment Authority in and for the Citv of Richfield and Lyndale Gateway, L.L.C II. BACKGROUND ~ The Housing and Redevelopment Authority (HRA) and Lyndale Gateway, L.L.C (Developer), entered into a Contract for Private Redevelopment (Contract) on August 5, 2002 and into a subsequent Supplemental Agreement (Agreement) on February 26, 2003 for The Cornerstone Group redevelopment project at 76th Street and Lyndale Avenue. The Agreement calls for the HRA to consider economic assistance to the developer, which may include a business subsidy. The total amount of financial assistance to the project is estimated to be $7,710,000. The aggregate business subsidy is estimated to be approximately $1,532,292 for the non-housing portion of the project. Only this portion constitutes a business subsidy 042103Cornerstone Group under Minnesota Statutes, Sections 116J.993 through 116J.995 (Business Subsidy Act). Highlights of the attached Business Subsidy Agreement are enumerated below. 1) Based on the projected market values of the non-housing portions of the development, the total business subsidy assistance is a share of the total project value of the completed minimum improvements required under the Contract. 2) The business subsidy is to be treated as a forgivable loan with repayment as prescribed in the Agreement (specifically through the Developer and tax increments generated from the Lyndale Gateway West Tax Increment Financing District). 3) The public purposes of the project, and the business subsidy to support it, are to redevelop substandard areas and buildings with mixed-use commercial and residential components in conjunction with the City's comprehensive plan while increasing the tax base of the City .and the availability of added housing including that available to people of low to moderate income. 4) The goals of the business subsidy are to secure completion of the development and insure afive-year operation by the Developer of the minimum improvements called for in the Contract. Provisions are in place if the Developer is not able to perform under contracted terms. 5) The business subsidy is needed to ensure the feasibility of the redevelopment due to the cost of land acquisitions, demolition and site clearance. 6) The creation or retention of jobs is not the goal of the Cornerstone redevelopment project. Therefore, wage and job goals are set at zero. III. BASIS OF RECONIMENDATION A.. POLICY • The business subsidy consideration by the HRA is required by the Agreement. • The Business Subsidy Agreement sets the level of assistance that will be treated as a business subsidy in accordance with state law. • The HRA has previously established business subsidy criteria. The agreement has been prepared to comply with the established criteria. • A public hearing isrequired prior to making the business subsidy determinations. B. CRITICAL ISSUES • The level of assistance granted the Developer mandates compliance with the Business Subsidy Act. C. FINANCIAL • An estimated $1,532,292 of the total assistance of $7,710.,000 is attributed to the commercial project elements in the business subsidy. Only that amount is considered a business subsidy under the terms. of the law. • Ehlers & Associates, Inc. (Ehlers) has reviewed the Developer's financial information and prepared the recommendations. 042103Cornerstone Group D. - LEGAL • Legal counsel has prepared the Business Subsidy Agreement and supporting resolution. • Legal counsel has reviewed and concurs with Ehlers' process for calculating the business subsidy amount. IV. ALTERNATIVE RECONIMENDATION~S~ • Modify the amount of business subsidy. • Do not support a business subsidy for the project. V. ATTACI-IMENTS • Proposed Resolution • Business Subsidy Agreement VI. PRINCIPAL PARTIES EXPECTED AT MEETING • Mr. Sid Inman, Ehlers and Associates, Inc. 042103Cornerstone Group HRA RESOLUTION NO. RESOLUTION APPROVING A BUSINESS SUBSIDY AGREEMENT BETWEEN THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD AND LYNDALE GATEWAY, LLC BE IT RESOLVED by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, (the "HRA") as follows:. Section 1. Recitals. 1.01 On or about August 5, 2002, the HRA and Lyndale Gateway, LLC (the "Redeveloper") entered into that certain document entitled, Contract for Private Redevelopment (the "Contract"). 1.02 In accordance with the provisions of the Contract, the parties have now entered into a separate agreement entitled Supplemental Agreement (the "Supplemental Agreement"). 1.03 Section 8.2 of the Supplemental Agreement called for the parties to enter into a separate Business Subsidy Agreement as required by Minnesota Statutes, Sections 116J.993 through 116J.995 (the "Business Subsidy Act"), setting the level of assistance that is treated as a business subsidy under the Business Subsidy Act. 1.04 There has been presented before the HRA a proposed business subsidy agreement (the "Agreement") between the HRA, and the Redeveloper, setting forth the terms and conditions of the business subsidy to be provided to the Redeveloper. 1.05 The HRA has on this date conducted a duly noticed public hearing regarding the business subsidy agreement at which all interested persons were give an opportunity to be heard. 1.06 The HRA has reviewed the Agreement, and finds that the execution thereof by the HRA and performance of the HRA's obligations thereunder are in the best interest of the City and its residents: Section 2. HRA Approval; Further Proceedings. 2.01 The HRA approves the Agreement. 2.02 The Executive Director and Chair are authorized to take all steps and do all things necessary to carry into effect the provisions of this resolution and the Agreement. 2.03 The Executive Director is authorized to present the Agreement to the Richfield City Council for its consideration as required by the Business Subsidy Act. Approved by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 21st day of April, 2003. Thomas E. Harms, Chair ATTEST: Michael Sandahl, Secretary DRAFT March 26, 2003 Business Subsidy Agreement THIS AGREEMENT, made and entered into this _ day of , 2003 is 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 LYNDALE GATEWAY, LLC, a Minnesota limited liability company (the "Redeveloper"). WITNESSETH: WHEREAS, the parties did, on or about August 5, 2002, enter into that certain document entitled, Contract for Private Redevelopment (the "Contract") ;and WHEREAS, in accordance with the provisions of the Contract the parties have now entered .into a separate agreement entitled Supplemental Agreement (the "Supplemental Agreement"); and WHEREAS, Section 8.2 of the Supplemental Agreement called for the parties, as required by law, to enter into a separate Business Subsidy Agreement in accordance with Minnesota Statutes, sections 116J.993 through 116J.995 (the "Business Subsidy Act") setting the level of assistance that is treated as a business subsidy under the law; NOW THEREFORE, the parties hereto stipulate and agree as follows: Section 1.1. Definitions. Unless the context clearly suggests a contrary intention, the terms used in this Agreement shall have the meanings given them in the Contract and the Supplemental Agreement. Section 1.2. Business Subsidy Agreement. (a) General Terms. The parties agree and represent to each other as follows: (1) As of the date of this Agreement, the aggregate business subsidy (in present value terms) is estimated to be approximately $1,532,292 However, a substantial portion of the assistance under the Contract and the Supplemental Agreement is intended to facilitate development of housing within the project, which assistance does not constitute a business subsidy under the Business Subsidy Act. The total assistance under the .Contract and the Supplemental Agreement is $7,710,000. The. parties agree and understand that the total business subsidy assistance. has been determined, based on the projected market values of the non-housing portions of the development as a share of the total projected market value of the completed Minimum Improvements. The JBD-229334v1 RC125-240 actual amounts of the business subsidy are subject to modification in accordance with the provisions of Section 6.3 of the Contract. The Business Subsidy is to be treated as a forgivable loan and will be repayable from a portion of the Tax Increments from the TIF District, a redevelopment tax increment financing district, and from other sources described in the Supplemental Agreement. (2) The public purposes of the subsidy are to redevelop an area occupied by substandard and obsolete buildings, establish a mixed use residential and commercial development, implement the City's land use goals identified in the comprehensive plan, and increase tax base. The parties agree that the subsidy primarily serves a public purpose; and that any benefit to the Redeveloper is incidental and secondary. (3) The goals for the subsidy are: to secure completion of the Commercial portions by the Redeveloper, in each case by the completion date for the Minimum Improvements under the Contract, and to ensure that such components are operated for at least five years as described in clause (6) below. (4) If the goals described in clause (3) are not met, the Redeveloper must make the payments to the Authority described in Section 6.4(c). (5) The subsidy is needed because the cost of land acquisition, demolition and site clearance, make development of the Minimum Improvements financially infeasible without public assistance, all as has been determined by the Authority and City upon approval of the TIF Plan. (6) The Redeveloper must continue or cause to be continued operation of the Commercial portions of the project for at least five years after the date of issuance of the final certificate of completion for those portions. For the purpose of this Section, space in any portion will be considered to be maintained in operation if it is leased, or available for lease, to any person or entity, or occupied by Redeveloper for use in its trade or business. After the five-year period the Redeveloper remains obligated to operate and maintain the Commercial portions of Components One and Two as required in the Contract, provided that the remedy described in Section 1.2 (c) will not apply. (7) The Redeveloper does not have a parent corporation, (8) The Redeveloper expects to receive financial assistance from the Metropolitan Council in the amount of $500,000; and has made application to the Minnesota Housing Finance Agency for approximately $400,000 of financial assistance, all in connection with the Redevelopment Property or the Minimum Improvements. JBD-229334v1 RC125-240 (b) Job and Wage Goals. In accordance with Section 116J.994, subdivision 4, the Authority has determined after a public hearing that the creation or retention of jobs is not the goal of this redevelopment effort. Accordingly, the wage and job goals are set at zero. (c) Remedies. If the Redeveloper fails to meet the goals described in Section 1.2 (a)(3), and subject. to the notice and cure provisions of Article IX, the Redeveloper shall repay to the Authority upon written demand from the Authority (a) the portion of the aggregate business subsidy received by the Redeveloper as of the date of default that is allocable to the portion of the project, which is the source of the default, and (b) interest on the amounts in clause (a) at the rate set forth in the Business Subsidy Act, accrued from the date of issuance of the certificate of completion for the relevant portion to the date of payment. If the space is timely completed but the Redeveloper fails to meet the five-year operation goal, the total subsidy amount allocable to such space will be further prorated by the portion of the five-year operation period elapsed as of the date of default. Nothing in this Section shall be construed to limit the Authority's remedies under the Contract or the Supplemental Agreement or under Article IX of this Agreement in the event of a violation of any other provision of this Agreement, but the remedies set forth in this paragraph (c) are the exclusive remedies for failure to comply with the terms of this Section 1.2. In addition to the remedy described in-this Section and any other remedy available to the Authority for failure. to meet the goals stated in Section 1.2 (a)(3), the Redeveloper agrees and understands that it may not a receive a business subsidy from the Authority or any grantor (as defined in the Business Subsidy Act) for a period of five years from the date of the failure or until the Redeveloper satisfies its repayment obligation under this Section, whichever occurs first. (d) Reports. The Redeveloper must submit to the Authority. a written report regarding business subsidy goals and results by no later than March 1 of each year, commencing March 1, 2004 and continuing until the later of (i) the date the goals stated Section 1.2 (a)(3) are met; (ii) 30 days after expiration of the five-year period described in Section 1.2 (a)(6); or (iii) if the goals are not met, the date the subsidy is repaid in accordance with Section 1.2 (c). The report must comply with Section. 116J.994, subdivision 7 of the Business Subsidy Act. The Authority will provide information to the Redeveloper regarding the required forms. If the Redeveloper fails to timely file any report required under this Section, the Authority will mail the Redeveloper a warning within one week after the required filing date. If, after 14 days of the postmarked date of the warning, the Redeveloper fails to provide a report, the Redeveloper must pay to the Authority a penalty of $100 for each subsequent day until the report is filed. Failure by the Authority to deliver a timely warning notice will not relieve the Redeveloper's obligation to pay a penalty within 14 days after receipt of a notice to pay. The maximum aggregate penalty payable under this Section is $1,000. (e) Allocation of liability. Notwithstanding anything to the contrary herein, the Redeveloper shall have no liability as to a non defaulting portion of the commercial JBD-229334v1 RC125-240 development under this Section arising from failure to comply with any goals or covenants under this Section related to the defaulting portion. Section 1.3. Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, demand, or other communication under the Agreement by either party to the other shall be sufficiently given or delivered it if is dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally: As to the HRA: Housing and Redevelopment Authority 6700 Portland Avenue South Richfield, Minnesota 55423 Attention: Executive Director With Copy to: John Dean Kennedy & Graven 470 Pillsbury Center Minneapolis, MN 554302 As to the Redeveloper: Lyndale Gateway, LLC c/o The Cornerstone Group, Inc. 7661 Bush Lake Drive Bloomington, MN 55438 Attention: Colleen M. Carey With Copy to: Joanne L. Matzen, esq. Winthrop & Weinstine, PA 3000. Dain Rauscher Plaza 60 South Sixth Street Minneapolis, MN 55402 or at such other address with respect to either such party as that party may, from time to time, designate in writing and forward to the other. Section 1.4. Counterparts. This Agreement may be simultaneously executed in any number of counterparts, all of which shall constitute one and the same instrument. JBD-229334v1 RC725-240 IN WITNESS WHEREOF, the parties hereto have set their hands and seals as of the day and year first above written. Dated: Dated: , 2003 Dated: , 2003 THE HOUSING AND REDEVELOPMENT AUTHORITY OF THE CITY OF RICHFIELD, MINNESOTA 2003 gy: Its: Chairperson By: Its: Executive Director LYNDALE GATEWAY, LLC By: Its: Chief Manager JBD-229334v1 RC125-240 STATE OF MINNESOTA ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day. of 2003, by and the Chairperson and Executive Director of The .Housing .and Redevelopment Authority in and for the City of Richfield, Minnesota. Notary Public STATE OF MINNESOTA ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ,..2003, by the of Lyndale Gateway LLC, a limited liability company under the laws of Minnesota, by and on behalf of said company. Notary Public day of JBD-229334v1 RC125-240 AGENDA ITEM # /~~ REPORT # 2r~ STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING APRIL 21, 2003 REPORT PREPARED BY: REPORT PRESENTER: DEPARTMENT DIRECTOR REVIEW: PAM BOOKHOUT, REHABILITATION SPECIALIST NAME, T/TLE BRUCE PALMBORG, COMMUNITY DEVELOPMENT DIRECTOR a' REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: Consideration of amendment to Purchase and Private Redevelopment Agreement with Penn Place Townhouses LLC for the redevelopment of the residential sites at 6833 and 6855 Penn Avenue. I. RECOMMENDED ACTION: By Motion: Authorize the Chairperson and Executive Director to execute an amendment to the Purchase and Private Redevelopment reement with Penn Place Townhouses LLC. III. BACKGROUND In November 2002, the Housing and Redevelopment Authority (HRA) approved a Purchase and Private Redevelopment Agreement with Penn Place Townhouses LLC for the construction of seven attached townhouses at the northeast corner of Penn Avenue and 69th Street. The Agreement stipulated that the developer, David Gepner and Harold Teasdale, would submit construction drawings and a financial analysis of the project, that a closing on the sale of land would occur by April 30, 2003 after a public hearing, and that construction would be complete by October 31, 2003. Construction plans have been provided. However, a number of delays have slowed the developer's progress in providing a financial analysis. For example, 0421038633-55Penn NAME, T/TLE architectural drawings for builders to bid on weren't ready in January as expected; they were completed in early March. Subsequently, builder responses did not come in with enough time for the developer to review them, to prepare a financial analysis, and then to share that financial analysis for staff and Ehlers Associates' review prior to the publication of a public hearing notice. These things are now in motion. Because the developer has shown progress in moving forward, an amendment to the Agreement has been prepared which would extend closing to June 17, 2003 and would extend the completion date to February 6, 2004, in time for the Parade of Homes Spring Preview. III. BASIS OF RECOMMENDATION A. POLICY • The HRA purchased the sites as part of the Richfield Rediscovered program. Richfield's Comprehensive Plan calls for higher density housing on arterial streets such as Penn Avenue. • The Purchase and Private Redevelopment Agreement functions as a purchase agreement and sets forth the conditions for the land sale. A public hearing and HRA authorization is expected to be requested at the May meeting. Sale to the developer would occur shortly afterwards. The goal would be completion by February for participation in the 2004 Spring Preview Parade of Homes. Applications for the spring parade are due in September 2003. B. CRITICAL ISSUES • A townhouse development fits the site well. Investment in an area so close to~Penn Avenue and 66th Street is a sign of market confidence. • The developer has been diligent over the last several months, and has demonstrated good faith in moving forward. C. FINANCIAL • The Purchase and Private Redevelopment Agreement has a provision that allows the HRA to review the price of the land to the developer after his financial analysis has been submitted and reviewed. This information will be available at the May meeting. D. LEGAL • An amendment to the Purchase and Private Redevelopment Agreement is the proper way to extend the provisions that will otherwise expire. ALTERNATIVE KECOMMENDATION( • Do not authorize the amendm V. ATTACHMENTS - • Amendment to the Purchase and Private and direct staff to find another developer. ~ VI. PRINCIPAL PARTIES EXPECTED AT MEETING Redevelopment Agreement • David Gepner, Penn Place Townhouses LLC FIRST AMENDMENT TO PURCHASE AND PRIVATE REDEVELOPMENT AGREEMENT By and Between THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD and PENN PLACE TOWNHOUSES, LLC This document drafted by: KENNEDY & GRAVEN, CHARTERED 470 Pillsbury Center Minneapolis, MN 55402 (612) 337-9300 RI-IB-230294vt RCt25-244 2. Section 4.2 of the Agreement is amended to read as follows: Section 4.2. Commencement and Completion o f Construction. Subject to Unavoidable Delays, the Redeveloper shall commence construction of the Improvements within 30 days of the date of closing. Subject to Unavoidable Delays, the Redeveloper shall have substantially completed the construction of the Improvements by no later than February 6, 2004. A 11 w ork w ith r espect t o t he I mprovements to b e c onstructed o r p rovided b y t he Redeveloper on the Redevelopment Property shall be in substantial conformity with the Construction Plans. In addition to construction of the Improvements, the Redeveloper shall be responsible for proper platting of the Redevelopment Property, for closing the two curb cuts on Penn Avenue and for all work associated with site preparation and the installation, moving or removal of all public and private utilities serving the Redevelopment Property. The Redeveloper shall make such reports to the Authority regarding progress on construction of the Improvements as the Authority deems necessary or helpful. 3. Except as specifically noted in this First Amendment, all terms of the Agreement remain unchanged. IN WITNESS WHEREOF, the Authority and the Redeveloper have caused this Agreement to be duly executed in their names and behalves on or as of the date first above written. THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA By: Its Chairperson By: Its Executive Director STATE OF MINNESOTA ) SS COUNTY OF ) The foregoing instrument as acknowledged before me this day of , 2003, by and ,the chairperson and the executive director, respectively, of the Housing and Redevelopment Authority in and for the city of Richfield, Minnesota, a public body corporate and politic under the laws of Minnesota, on behalf of the Housing and Redevelopment Authority. Notary Public RHB-230294v1 3 RC125-244 AGENDA ITEM # _~ G+ REPORT # 94 ~~ STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING APRIL 21, 2003 REPORT PREPARED BY: KATIA MEDVETSKI, REDEVELOPMENT SPECIALIST NAME, TITLE REPORT PRESENTER: JOHN STARK, COMMUNITY DEVELOPMENT MANAGER NAME, TITLE ,~ DEPARTMENT DIRECTOR REVIEW: ~~ v SIGNATURC REVIEWED BY EXECUTIVE DIRECTOR: ~ . ~ ~l l ITEM FOR IDERATION: Consideration of three resolutions approving the (1.) Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area; (2.) Modification No. 11 to the Tax Increment Financing Plan for the Interstate-Lyndale-Nicollet (ILN) Tax Increment Financing District; and (3.) Modification No. 1 to the Tax Increment Financing Plan for the Lyndale Gateway West Tax Increment Financing District; all relating to the Cornerstone Redevelopment Project. I. RECOMMENDED ACTION: By Motion: Adopt three resolutions approving the (1.) Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area; (2.) Modification No. 11 to the Tax Increment Financing Plan for the Interstate-Lyndale-Nicollet (ILN) Tax Increment Financing District; and (3.) Modification No. 1 to the Tax Increment Financing Plan for the Lyndale Gateway West Tax Increment Financing District; all relating to the Cornerstone Redeveloament Project. II. BACKGROUND • On February 26, 2003, the Housing and Redevelopment Authority (HRA) approved providing the developer of the Cornerstone project with additional 0421 LGWTif.doc gap funding in the amount of $1.1 million for property acquisitions in the Lyndale Gateway Tax Increment Financing District. The Bonds of 1996 were identified as the source of the additional funds, provided as a loan, and repaid by the developer and tax increment generated by the project. • In order to use this revenue source, the HRA must undertake the Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area, Modification No. 11 to the Tax Increment Financing Plan for the Interstate-Lyndale-Nicollet (ILN) Tax Increment Financing District and Modification No. 1 to the Tax Increment Financing Plan for the Lyndale Gateway West Tax Increment Financing District (collectively, the "Modified Plans"). • On March 20,2003, HRA Executive Director, Samantha Orduno, made an application by letter to the City Council requesting it to call a public hearing on the Modified Plans. • On March 24, 2003, the Planning Commission made a finding that the Modified Plans conform with the general plans for the development and redevelopment of the City as a whale. • On March 25, 2003, the City Council called a public hearing on the Modified Plans for May 13, 2003. • On March 27, 2003, project information was sent to the County Board for review of any potential county road impacts. • On March 31, 2003, the County Commissioner was notified of the proposed Modified Plans and scheduled public hearing date. • On April 11, 2003, the School Board and County were notified of potential fiscal/economic implications contained within the Modified Plans. • The City council is scheduled to hold a public hearing on the Modified Plans on May 13, 2003. • A legal notice of public hearing and map of the project area and of districts will be published in the Sun Current newspaper on May 1, 2003. • A short summary of the Modified Plans is provided below. Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area: / Authorizes the expenditure of one tax increment district's increment revenue in another tax increment district within the defined boundaries of the project area. Specifically, authorizes the HRA to loan tax increment from the ILN TIF District to the Lyndale Gateway West TIF District for the acquisition of parcels. / Indicates that the boundary of the Richfield Redevelopment Project area is not being changed. / Indicates that the ILN TIF District budget is not being changed. Modification No. 11 to the Tax Increment Financing Plan for the Interstate-Lyndale-Nicollet (ILN) Tax Increment Financing District: / The substantive change includes the authority to loan tax increments generated by the ILN TIF District to the Lyndale Gateway West TIF District for the acquisition of certain properties related to the Cornerstone Group project. / Lists the properties identified for acquisition within the Lyndale Gateway TIF District. / Indicates that the geographic area of the ILN TIF District area is not being changed. / Indicated that the ILN TIF District budget is not being changed. Modification No. 1 to the Tax Increment Financing Plan for the Lyndale Gateway West Tax Increment Financing District: / The substantive change includes the authority to borrow tax increments generated by the ILN TIF District to the Lyndale Gateway West TIF District for the acquisition of certain properties related to the Cornerstone Group project. / Identifies a loan from the HRA in addition to the Pay-As-You-Go Note or General Obligation TIF bond issue for project financing. / Identifies an additional $1.1 loan in the Sources of Fund, thereby increasing the revenue budget to $8,576,636. / Identifies an additional expenditure of a $1.1 loan in the Uses of Funds, thereby increasing the expense budget to $8,576,636. / Indicates that the geographic area of the Lyndale Gateway West TIF District area is not being changed. / Provides an updated description of the project in Appendix A. / Provides the current map of the Lyndale Gateway West TIF District in Appendix B. III. BASIS OF RECOMMENDATION A. POLICY • Modifications to a redevelopment project area plan and tax increment financing plans .require certain notifications and public hearing as prescribed in Minnesota Statutes. B. CRITICAL ISSUES • The project developer cannot receive any additional gap financing without the necessary reviews and approvals to the Modified Plans. C. FINANCIAL • Ehlers and Associates, Inc. prepared the Modified Plans, resolutions, notices and other documentation required in the context of providing the developer with additional gap financing for the Cornerstone project. D. LEGAL • Legal counsel has .reviewed the materials prepared by Ehlers and Associates, Inc. IV. ALTERNATIVE RECOMMENDATION(S) • Do not approve the Modified Plans or delay approval of the Modified Plans and provide further direction to staff. V. ATTACI-IMENTS • Resolution adopting a Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area • Resolution adopting Modification No. 11 to the Tax Increment Financing Plan for the Interstate-Lyndale-Nicollet (ILN) Tax Increment Financing District • Resolution adopting Modification No. 1 to the Tax Increment Financing Plan for the Lyndale Gateway West Tax Increment Financing District • Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area; and Modification No. 11 to the Tax Increment Financing Plan for the Interstate-Lyndale-Nicollet (ILN) Tax Increment Financing District; and Modification No. 1 to the Tax Increment Financing Plan for the Lyndale Gateway West Tax Increment Financing District VI. PRINCIPAL PARTIES EXPECTED AT MEETING • Sid Inman, Ehlers and Associates, Inc. HRA RESOLUTION NO. RESOLUTION ADOPTING A MODIFICATION TO THE REDEVELOPMENT PLAN FOR THE RICI~IELD REDEVELOPMENT PROJECT AREA WHEREAS, it has been proposed by the Board of Commissioners (the "Board") of the Housing and Redevelopment Authority (the "HRA") in and for the City of Richfield (the "City") that the HRA adopt a Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area (known herein as the "Redevelopment Plan Modification"), all pursuant to and in conformity with existing law, including Minnesota Statutes, Sections 469.001 to 469.047, and Sections 469.174 to 469.1799, inclusive, as amended, all as reflected in the Redevelopment Plan Modification and presented for the HRA's consideration; and WHEREAS, the HRA has investigated the facts relating to the Redevelopment Plan Modification and has caused the Redevelopment Plan Modification to be prepared; and WHEREAS, the HRA has performed all actions required by law to be performed prior to the adoption of the Redevelopment Plan Modification, including but not limited to, notification of Hennepin County and Independent School District No. 280, notice of the proposed Redevelopment Plan Modification to the local county commissioner, a request for review of and written comment on the Redevelopment Plan Modification by the City Planning Commission, and a request that the Council schedule a public hearing on the Redevelopment Plan Modification upon published notice as required by law. NOW, THEREFORE, BE IT RESOLVED by the Board as follows: 1. The HRA hereby ratifies and reaffirms all of the findings previously made with respect to the Redevelopment Plan. 2. Conditioned upon the approval thereof by the City Council following its public hearing thereon, the Redevelopment Plan Modification, as presented to the HRA on this date, is hereby approved and adopted and shall be placed on file in the office of the Executive Director of the HRA. 3. Upon approval of the Redevelopment Plan Modification by the City Council, the Executive Director of the HRA is authorized to forward a copy of the Redevelopment Plan Modification to the Minnesota Department of Revenue pursuant to Minnesota Statutes 469.175, Subd. 4a. Adopted by the Board of Commissioners of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 21st day of Apri12003. Thomas E. Harms, Chair ATTEST: Michael Sandahl, Secretary 0421LGWres1 redplanmod.doc HRA RESOLUTION NO. RESOLUTION ADOPTING MODIFICATION NO.11 TO THE TAX INCREMENT FINANCING PLAN FOR THE INTERSTATE-LYNDALE- NICOLLET (II.N) TAX INCREMENT FINANCING DISTRICT WHEREAS, it has been proposed by the Board of Commissioners (the "Board") of the Richfield Housing and Redevelopment Authority (the "HRA") in and for the City of Richfield (the "City") that the HRA adopt Modification No. 11 to the Tax Increment Financing Plan for the ILN Tax Increment Financing District (known herein as the "Modification"), all pursuant to and in conformity with existing law, including Minnesota Statutes, Sections 469.001 to 469.047, and Sections 469.174 to 469.1799, inclusive, as amended, all as reflected in the Modification and presented for the HRA's consideration; and WHEREAS, the HRA has investigated the facts relating to the Modification and has caused the Modification to be prepared; and WHEREAS, the HRA has performed all actions required by law to be performed prior to the adoption of the Modification, including but not limited to, notification of Hennepin County and Independent School District No. 280 having taxing jurisdiction over the property in the ILN Tax Increment Financing District, notice of the proposed Modification to the local county commissioner, a request for review of and written comment on the Modification by the City Planning Commission, and a request that the Council schedule a public hearing on the Modification upon published notice as required by law. NOW,. THEREFORE, BE IT RESOLVED by the Board as follows: 1. The HRA hereby ratifies and reaffirms all of the findings previously made with respect to the Tax Increment Financing Plan for the ILN Tax Increment Financing District. 2. Conditioned upon the approval thereof by the City Council following its public hearing thereon, the Modification, as presented to the HRA on this date, is hereby approved and adopted and shall be placed on file in the office of the Executive Director of the HRA. 3. Upon approval of the Modification by the City Council, the Executive Director of the HRA is authorized to forward a copy of the Modification to the Minnesota Department of Revenue pursuant to Minnesota Statutes 469.175, Subd. 4a. Adopted by the Board of Commissioners of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 21st day of Apri12003. Thomas E. Harms, Chair ATTEST: Michael Sandahl, Secretary 0421 LG Wres2 ILNm od. doc HRA RESOLUTION NO. RESOLUTION ADOPTING MODIFICATION NO.1 TO THE TAX INCREMENT FINANCING PLAN FOR THE LYNDALE GATEWAY WEST TAX INCREMENT FINANCING DISTRICT WHEREAS, it has been proposed by the Board of Commissioners (the "Board") of the Housing and Redevelopment Authority (the "HRA") in and for the City of Richfield (the "City") that the HRA adopt Modification No. 1 to the Tax Increment Financing Plan for the Lyndale Gateway West Tax Increment Financing District (known herein as the "Modification"), all pursuant to -and in conformity with existing law, including Minnesota Statutes, Sections 469.001 to 469.047, and Sections 469.174 to 469.1799, inclusive, as amended, all as reflected in the Modification and presented for the HRA's consideration; and WHEREAS, the HRA has investigated the facts relating to the Modification and has caused the Modification to be prepared; and WHEREAS, the HRA has performed all actions required by law to be performed prior to the adoption of the Modification, including but not limited to, notification, of Hennepin County and Independent School District No. 280 having taxing jurisdiction over the property in the Lyndale Gateway West Tax Increment Financing District, notice of the proposed Modification to the local county commissioner, a request for review of and written comment on the Modification by the City Planning Commission, and a request that the Council schedule a public hearing on the Modification upon published notice as required by law. NOW, THEREFORE, BE IT RESOLVED by the Board as follows: 1. The HRA hereby ratifies and reaffirms all of the findings previously made with respect to the Tax Increment Financing Plan for the Lyndale Gateway. West Tax Increment Financing District. 2. Conditioned upon the approval thereof by the City Council following its public hearing thereon, the Modification, as presented to the HRA on this date, is hereby approved and adopted and shall be placed on file in the office of the Executive Director of the HRA. 3. Upon approval of the Modification by the City Council, the Executive Director of the HRA is authorized to forward a copy of the Modification to the Minnesota Department of Revenue pursuant to Minnesota Statutes 469.175, Subd. 4a. Adopted by the Board of Commissioners of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 21st day of Apri12003. Thomas E. Harms, Chair ATTEST: Michael Sandahl, Secretary 0421LGWres3 LGWmod.doc As ofApri114, 2003 Copy for HRA Review MODIFICATION TO THE REDEVELOPMENT PLAN FOR THE RICHFIELD REDEVELOPMENT PROJECT AREA and MODIFICATION NO. 11 TO THE TAX INCREMENT FINANCING PLAN -FOR THE INTERSTATE-LYNDALE-NICOLLET (ILN) Ti4X INCREMENT FINANCING DISTRICT and MODIFICATION NO. 1 TO THE TAX INCREMENT FINANCING PLAN FOR THE LYNDALE GATEWAY WEST TAX INCREMENT FINANCING DISTRICT within THE RICHFIELD REDEVELOPMENT PROJECT AREA RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY CITY OF RICHFIELD HENNEPIN COUNTY STATE OF MINNESOTA Public Hearing: December 10; 2002 Adopted: December l0; 2002 Public Hearing on Modifications: May 13; 2003 Modifications Adopted: E H L E R S 3060 Centre Poi to Drive,yRosevEe, Mn nesotoaC55193~1N 5 ~ ASSOCIATES ~ N c 651-697-8500 fax: 651-697-8555 WWW.ehters-inc.com TABLE OF CONTENTS (for reference purposes only) SECTION I -MODIFICATION TO THE REDEVELOPMENT PLAN FOR THE RICHFIELD REDEVELOPMENT PROJECT AREA .................... 1-1 Foreword ............................................................. 1-1 Boundaries of the Richfield Redevelopment Project Area ........................ 1-1 Parcels in Acquisition ................................................... 1-1 Estimated Public Costs .................................................. 1-1 SECTION /l - MODIFICATION NO. 11 TO THE TAX INCREMENT FINANCING PLAN FOR THE INTERSTATE-LYNDALE-NICOLLET (ILN) TAX INCREMENT FINANCING DISTRICT 2-1 Introduction ........................................................... 2-1 Boundaries of the ILN Tax Increment Financing District ......................... 2-1 Description of Property in the District and Property That May Be Acquired ........... 2-1 SECTION 111 -MODIFICATION NO. 1 TO THE TAX INCREMENT FINANCING PLAN FOR THE LYNDALE GATEWAY WEST TAX INCREMENT FINANCING DISTRICT ... 3-1 Subsection 3-1. Foreword .............................................. 3-1 Subsection 3-2. Sources of Revenue/Bonded Indebtedness .................... 3-1 Subsection 3-3. Uses of Funds .......................................... 3-1 Subsection 3-4. Summary .............................................. 3-2 APPENDIX A PROJECT DESCRIPTION ............................................... A-1 APPENDIX B MAP OF THE RICHFIELD REDEVELOPMENT PROJECT AREA AND THE LYNDALE GATEWAY WEST TIF DISTRICT ......................... B-1 APPENDIX C DESCRIPTION OF PROPERTY TO BE INCLUDED IN THE DISTRICT ............. C-1 SECTION I -MODIFICATION TO THE REDEVELOPMENT PLAN FOR THE RICHFIELD REDEVELOPMENT PROJECT AREA Foreword The following text represents a Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area. This modification represents a continuation of the goals and objectives set forth in the Redevelopment Plan for the Richfield Redevelopment Project Area. For further information, a review of the Redevelopment Plan for the Richfield Redevelopment Project Area, adopted June 14, 1993, is recommended. It is available in the Community Development Department at the City of Richfield. Other relevant information is contained in the Tax Increment Financing Plans for the Tax Increment Financing Districts located within the Richfield Redevelopment Project Area. Boundaries of the Richfield Redevelopment Project Area The boundaries for the Richfield Redevelopment Project Area are not being modified. Parcels in Acquisition The HRA or City may acquire the parcels either by direct purchase or through eminent domain proceedings in the Tax Increment Financing Plan for the Lyndale Gateway West Tax Increment Financing District. However, it is anticipated that the developers will be responsible for a majority of acquisitions by direct purchase. Estimated Public Costs This modification authorizes the HRA to loan tax increment from the Interstate-Lyndale-Nicollet (ILN) Tax Increment Financing District for qualified activities identified in the budget of the Modification to the Interstate-Lyndale-Nicollet (ILN) Tax Increment Financing Plan, and to authorize the HRA to use funds loaned from the Interstate-Lyndale-Nicollet (ILN) TIF District to acquire parcels in the Lyndale Gateway West TIF District. Richfield HRA Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area 1-I SECTION ll -MODIFICATION NO. 77 TO THE TAX INCREMENT FINANCING PLAN FOR THE INTERSTATE-LYNDALE-NICOLLET (ILN) TAX INCREMENT FINANCING DISTRICT Introduction (AS MODIFIED TO ADD THE FOLLOWING ONMAY 13, 2003) The Housing and Redevelopment Authority in and for the City of Richfield (the "HRA"), the City of Richfield (the "City"), staff and consultants have prepared the following information to expedite a modification to the Tax Increment Financing Plan (the "TIF Plan") for the Interstate-Lyndale-Nicollet (the "ILN") Tax Increment Financing District (the "District"), a redevelopment tax increment financing district, located in the Richfield Redevelopment Project Area. These modifications do not add any geographic area to the District, nor do they increase the amount of spending. Generally, the substantive changes to the current Modification include the authority to loan tax increments generated from the ILN District in the Richfield Redevelopment Project Area to the Lyndale Gateway West Tax Increment Financing District (the "Lyndale Gateway West TIF District") to acquire land. For further information, a review of the Redevelopment Plan forRichfield Redevelopment Project Area dated June 14, 1993 and the Tax Increment Financing Plan for the ILN Tax Increment Financing District is recommended. Boundaries of the ILN Tax Increment Financing District The boundary for the ILN District is not being modified. Description of Property in the District and Property That May Be Acquired (AS MODIFIED ONMAY 13, 2003) The following are additional parcels located in the Lyndale Gateway West TIF District that are being identified for acquisition Parcel Numbers 33-028-24-44-0036 33-028-24-44-0037 33-028-24-44-0038 33-028-24-44-0039 33-028-24-44-0040 33=028-24-44-0041 33-028-24-44-0042 33-028-24-44-0043 33-028-24-44-0044 33-028-24-44-0045 33-028-24-44-0046 33-028-24-44-0056 33-028-24-44-0055 33-028-24-44-0054 33-028-24-44-0053 33-028-24-44-0052 33-028-24-44-0051 33-028-24-44-0050 33-028-24-44-0047 33-028-24-44-0048 33-028-24-44-0049 The HRA or City may acquire any parcel within the Lyndale Gateway West Tax Increment Financing District including interior and adjacent street rights of way. Any properties identified for acquisition will be acquired by the HRA ,City or developer in order to accomplish one or more of the following: provide land for needed public streets; utilities and facilities; carry out land acquisition, site improvements, storm sewer and/or storm water retention improvements; clearance and/or development to accomplish the uses and Richfield HRA Modification to the TIF Plan for the ILN TIF District 2-1 objectives set forth in this plan. The HRA or City may acquire property by gift, dedication, condemnation or direct purchase from willing sellers in order to achieve the objectives of this Plan. Such acquisitions will be undertaken only when there is assurance of funding to finance the acquisition and related costs. Richfield HRA Modification to the TIF Plan for the ILN TIF District 2-2 SECTION 111 -MODIFICATION NO. 1 TO THE TAX INCREMENT FINANCING PLAN FOR THE LYNDALE GATEWAY WEST TAX INCREMENT FINANCING DISTRICT Subsection 3-1. Foreword (AS MODIFIED ONMAYI3, 2003) The Housing and Redevelopment Authority in and for the City of Richfield (the "HRA"), the City of Richfield (the "City"), staff and consultants have prepared the following information to expedite the modification to the Tax Increment Financing Plan for the Lyndale Gateway West Tax Increment Financing District (the "District"), a redevelopment tax increment financing district, located in the Richfield Redevelopment Project Area. These modifications do not add any geographic area to the District, but they do, however; increase the amount of spending. Generally, the substantive changes to the current Modification include the authority to borrow tax increments generated from the ILN Tax Increment Financing District in the Richfield Redevelopment Project Area to the Lyndale Gateway West Tax Increment Financing District to acquire land. Subsection 3-2. Sources of Revenue/Bonded Indebtedness (AS MODIFIED ON MAY 13, 2003) The HRA or City reserves the right to incur bonded indebtedness or other indebtedness as a result of the TIF Plan. As presently proposed, the project will be financed by apay-as-you-go note or a G.O. TIF bond issue and a loan from the HRA. Additional indebtedness may be required to finance other authorized activities. The total principal amount of bonded indebtedness or other indebtedness related to the use of tax increment financing will not exceed $8,580,000 without a modification to the TIF Plan pursuant to applicable statutory requirements. The estimated sources of funds for the District are contained in the table below. SOURCES OF FUNDS AS AS ADOPTED MODIFIED 12/10/2002 5/13/2003 Tax Increment $7,476,636 $7,476,636 Loan -0- $1,200,000 PROJECT REVENUES $7,476,636 $8,576,636 Subsection 3-3. Uses of Funds (AS MODIFIED ON MAY 13, 2003) Under the proposed modification, an additional $1,100,000 will be provided to the developer as a loan in order to undertake necessary qualified activities. The loan is proposed to be paid back with project increment and developer payments. The table on the next page reflects the revised uses of funds. Richfield HRA Modification to the TIF Plan for the Lyndale Gateway West TIF District 3-I USES OF FUNDS TOTAL TOTAL AS AS ADOPTED MODIFIED 12/10/2002 5/13/2003 LandBuilding Acquisition $3,300,000 $3,300,000 Interest $3,458,879 $3,458,879 Administrative Costs (up to 10%) $717,757 $717,757 Loan -0- $1,100,000 PROJECT COSTS TOTAL $7,476,636 $8,576,636 Subsection 3-4. Summary (AS MODIFIED ONMAY 13, 2003) The HRA is modifying this Plan to provided additional gap financing to the developer in order to preserve and enhance the tax base, redevelop substandard areas, provide housing opportunities and new neighborhood commercial and retail space, and provide employment opportunities in the City. The TIF Plan for the District was prepared by Ehlers & Associates, Inc., 3060 Centre Pointe Drive, Roseville, Minnesota 55113, telephone (651) 697-8500. Richfield HRA Modification to the TIF Plan for the Lyndale Gateway West TIF District 3-2 APPENDIX A PROJECT DESCRIPTION (AS MODIFIED ONMAY 13, 2003) The Lyndale Gateway West Tax Increment Financing District is being facilitated to create an integrated mixed-use development ofhousing, commercial, parking and new public facilities, utilities, streetscape, and other improvements. The project components include the following: • 92 to 94 loft-style condominium units in 2 four story buildings with 117 underground parking spaces and additional surface parking of approximately 10 stalls • 14 two-story townhomes in three separate buildings with two-car, attached garages • 27,000-33,000 square feet of retail and office space in three buildings with approximately 125- 135 parking stalls located behind the buildings • Reconstructed Lyndale Avenue with landscaped median, boulevard plantings, decorative sidewalk, street furniture, pedestrian-scale lighting, and entry monuments APPENDIX A-1 APPENDIX B MAP OF THE RICHFIELD REDEVELOPMENT PROJECT AREA AND THE LYNDALE GATEWAY WEST TIF DISTRICT APPENDIX B-1 APPENDIX C DESCRIPTION OF PROPERTY TO BE INCLUDED IN THE DISTRICT The District encompasses all property and adjacent rights-of--way identified by the parcels listed below. Parcel Numbers Address Owner 33-028-24-44-0036 7600 LYNDALE AVENUE SOUTH TOP VALUE AUTO SUPPLY INC 33-028-24-44-0037 7608-12 LYNDALE AVENUE SOUTH RAYMOND F SAWITZKE 33-028-24-44-0038 7614-18 LYNDALE AVENUE SOUTH PATRICK L O'BRIEN 33-028-24-44-0039 7620-26 LYNDALE AVENUE SOUTH ELLIOT I WOLSON ETAL 33-028-24-44-0040 7632 LYNDALE AVENUE SOUTH SEASONAL CONTROL INC 33-028-24-44-0041 7628 LYNDALE AVENUE SOUTH ACTION EMPLOYMENT INC 33-028-24-44-0042 7630 LYNDALE AVENUE SOUTH D N ERICKSON ETAL TRUSTEES 33-028-24-44-0043 7634-36 LYNDALE AVENUE SOUTH ROBERT EHRMAN & WIFE 33-028-24-44-0044 7638-40 LYNDALE AVENUE SOUTH ROBERT EHRMAN & WIFE 33-028-24-44-0045 7642 LYNDALE AVENUE SOUTH GEORGE A ROONEY ETAL 33-028-24-44-0046 7644 LYNDALE AVENUE SOUTH ROBERT R LURTSEMA 33-028-24-44-0056 7601 ALDRICH AVENUE SOUTH J C ULRICH ETAL 33-028-24-44-0055 7609 ALDRICH AVENUE SOUTH BOUNVIEN VONGSOUVAN ETAL 33-028-24-44-0054 7615 ALDRICH AVENUE SOUTH M & D NORLING 33-028-24-44-0053 7621 ALDRICH AVENUE SOUTH CONSTANCE M JOHNSON 33-028-24-44-0052 7627 ALDRICH AVENUE SOUTH KENNETH S WREN 33-028-24-44-0051 7633 ALDRICH AVENUE SOUTH ALAN P KRAEMER 33-028-24-44-0050 7639 ALDRICH AVENUE SOUTH KRISTEN A LAMONT 33-028-24-44-0047 7648 LYNDALE AVENUE SOUTH CITY OF RICHFIELD 33-028-24-44-0048 7646 LYNDALE AVENUE SOUTH CITY OF RICHFIELD 33-028-24-44-0049 7645 ALDRICH AVENUE SOUTH CITY OF RICHFIELD APPENDIX ~ ~_~ Zp a Q ~' ~~ UYQ3: ~I H ~I U ~°' . p ~ ~~ ~- ~.~ ~ ~~ ~ ~~ au Q ~ uo~ w ~ a V ? ~ Q 1dt73 ~,~ 5~~, Xvve V w ~ - Z ~d ~ G ~ O ~, a 1- Z W ~ z V Z ~ z w ~ Ltj Q/ NO1Nf1~ "` .~ j371(~N roarnro O Z t ~ r rt'r V+ `~ uNOiW~Oiu AMlOST71d 1)IVSN3l/ oNVnJ w > w ~ ~ ~~~ 37YONAl W w ~ 1dUQn Q /~/ ~ lNVA7N w f1/ ^~ ~ WW ~ 7fV~10~ 1/Dd(10 NOS}13113 Q ~ ilIOII~Mi ~ ~ a a~ = U Z J F- Q ~~ «,~, ~ ~ W ,~„«~. IQiM~M Y3nno J NNdd Q N33f1~ 0 Tonne Z NWIN3NS sn+rnu J Nnwn iJOJNN NM(NF6YM 53YU3X a - M r } Q deQ3~ YB{ Yt1 t ~~ ~, ~~ ~.~ ~ ~~ N ~~ o au Of vw ~ C .~ JOfT73 N aova~ O c snawmm ~` ~ LL Xvrd 'fl ~v ~ QNYTriO = N ~~ o ~ ~ ,~ m ~, ~ ~ - N~,,.,~ ¢ E '~ ~, H v~¢ ~ C Z SN3A3L5 ~ ~ ~~ .~ ~ ~ ~, 131lDJIN ~ ~ ~ n~mg U NiUDM11~DM 0 Atl(1YSTIId > ~ uwsv3ze ~ 3 ~ QNYIfJ ~ ~"p J 13iawN Q' ~ ~ Q131l1119 ~ ~ 3TgNA~ L ~ NYtlQ'lY U C i U11IJ.MQ ~ J C ^v110~ U1[?df10 iOSM3113 Ut01f3N! s~ ~~ >~~ 33/M CON1 ~, °' m ~~ DIM~N O 0 ~nra ~y°. MLid o O3fD O ~~v O t7 N~lt3ltS vwo~LL S ~~ N i ~B~ran L anB~6viw 00 €fi 3XU3X 0 O O O o O r a a AGENDA ITEM # [+l , REPORT # ~ ~ STAFF REPORT ~ HOUSING AND REDEVELOPMENT AUTHORITY MEETING APRIL 21, 2003 REPORT PREPARED BY: KATIA 1VIEDVETSKI, REDEVELOPMENT SPECIALIST NAME TITLE REPORT PRESENTER: BRUCE PALMBORG, COMMUNITY DEVELOPMENT DIRECTOR NAME T/TLE DEPARTMENT DIRECTOR REVIEW: SIGNATURE REVIEWED BY EXECUTIVE DIRECTOR: ~" ITEM FOR HRA CONSIDERATION: Consideration of the elimination of 6945 Clinton Avenue from the Richfield Rediscovered 1999 Tax Increment Financing District within the Richfield Redevelopment Project Area. RECOMMENDED ACTION: By Motion: Adopt the attached resolution approving the elimination of 6945 Clinton Avenue from the Richfield Rediscovered 1999 Tax Increment Financing District within the Richfield Redevelopment Project Area. II. BACKGROUND • On September 20, 1999, the Richfield Housing and Redevelopment Authority (HRA) adopted a resolution approving the establishment of the Richfield Rediscovered 1999 Tax Increment Financing District and approving the tax increment financing plan related thereto. This new plan was an extension of the Richfield Rediscovered- New Construction Housing Program. • On October 11, 1999, the City Council held a public hearing and also adopted a resolution approving this matter. • The property located at 6945 Clinton Avenue was identified for acquisition and new construction within the tax increment plan. Recently, an opportunity arose to purchase the subject property from the property owner due to their dire circumstances. 0421elimclinton • On January 28, 2003, the City authorized purchase of the property from the owner with Community Development Block Grant money so that the house may be sold to the HRA and rehabilitated. Upon completion, the house would be sold to a qualifying family meeting income requirements under the New Home Program. (The public hearing/second reading of the ordinance on the sale occurred on February 11, 2003 and was approved.) • Previous to this and on January 21, 2003, the HRA authorized purchase of the subject property from the City. • Since the house will be rehabilitated and resold, it does not meet objectives of the Richfield Rediscovered program. • The property needs to be eliminated from the Richfield Rediscovered 1999 Tax Increment Financing District. • .Upon the HRA's approval of this matter, the County Auditor will be notified of the elimination of this parcel from the district and the reduction in the geographic area of the Richfield Rediscovered 1999 Tax Increment Financing District. III. BASIS OF RECOMMENDATION A. POLICY • The HRA may effectuate the elimination of a parcel from tax increment district by resolution without formal modification to the tax increment financing plan and public hearing if certain criteria are met. • In accordance with Minnesota State Statutes, a public hearing is not required on this matter because.the current net tax capacity of the parcel to be eliminated is greater than the original certified base- net tax capacity of the parcel. B. CRITICAL ISSUES • Ehlers and Associates, Inc. provided a review of tax capacity values and indicated that criteria was met to not require a public hearing on this matter. C. FINANCIAL • The removal of one parcel from the Richfield Rediscovered 1999 Tax Increment District does not cause any adverse affect on the overall cashflow for Richfield Rediscovered 1999. D. LEGAL • The resolution was reviewed. and approved by legal counsel. ~ IV. ALTERNATIVE RECOMMENDATIONS) ~ ~ V. ATTACHMENTS ~ Resolution approving the elimination of 6945 Clinton Avenue from the Richfield Rediscovered 1999 Tax Increment Financing District Within The Richfield Redevelopment Project Area VI. PRINCIPAL PARTIES EXPECTED AT MEETING 0421 elimclinton HRA RESOLUTION NO. RESOLUTION APPROVING THE ELIMINATION OF 6945 CLINTON AVENUE FROM THE RICHFIELD REDISCOVERED 1999 TAX INCREMENT FINANCING DISTRICT WITHIN THE RICHFIELD REDEVELOPMENT PROJECT AREA WHEREAS, on October 11, 1999, the City adopted the Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area, Modification to the Tax Increment Financing Plan for the Gramercy Tax Increment Financing District, Modification to the Tax Increment Financing Plan for the Urban Village Tax Increment Financing District, established the Richfield Rediscovered 1999 Tax Increment Financing District, and adopted the Tax Increment Financing Plan related thereto, (collectively, the "Plans"), all related to the Richfield Rediscovered New Construction Program, and all pursuant to and in conformity with existing law, including Minnesota Statutes, Sections 469.001 through 469.047, and Sections 469.174 to 469.179, inclusive, as amended; and WHEREAS, on January 22, 2001, the City subsequently adopted the Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area, Modification to the Tax Increment Financing Plan for the Gramercy TIF District, Modification to the TIF Plan for the Urban Village TIF District, Modification of the TIF Plan for the Richfield Rediscovered 1999 TIF District, Modification of the TIF Plan for the A-5 TIF District, Modification of the TIF Plan for the B-5 TIF District (collectively, the "Modified Pans"), all pursuant to and in conformity with existing law, including Minnesota Statutes, Sections 469.001 through 469.047, and Sections 469.174 to 469.179, inclusive, as amended; and WHEREAS, the Plans and Modified Plans included the following parcel, which was previously certified with the County Auditor in the Richfield Rediscovered 1999 Tax Increment Financing District (the "RR 1999 TIF District"): Parcel Numbers Address 27-028-24-44-0108 6945 Clinton Avenue South WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield desires by this resolution to cause the elimination of the listed parcel within the RR 1999 TIF District thereby reducing the size of the RR 1999 TIF District; and WHEREAS, since the current net tax capacity of the parcel to be eliminated from the RR 1999 TIF District equals or exceeds the net tax capacity of the parcel in the RR 1999 TIF District's original net tax capacity, the holding of a public hearing is not . required pursuant to Minnesota Statutes, Section 469.175, Subd. 4. NOW THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority in and for the City of Richfield that the parcel is hereby eliminated from the RR 1999 TIF District and the staff shall take such action as is necessary to notify the County Auditor of the reduction in the geographic area of the RR 1999 TIF District caused by the elimination of such parcel. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 21st day of April, 2003. Thomas E. Harms, Chair ATTEST: Michael Sandahl, Secretary AGENDA ITEM # REPORT # STAFF REPORT r HOUSING AND REDEVELOPMENT AUTHORITY MEETING APRIL 21, 2003 4A 21 REPORT PREPARED BY: REPORT PRESENTER: DEPARTMENT DIRECTOR REVIEW: REVIEWED BY CITY MANAGER: CHRIS REGIS, FINANCE MANAGER NAME; TITLE CHRIS REGIS, FINANCE MANAGER NAn~, TITLE SIGNATURE ITEM FOR HRA CONSIDERATION: Consideration of a resolution authorizing execution of a Tax Increment Pledge Agreement with the City of Richfield relating to the issuance of $6,000,000 in General Obligation Tax Increment Bonds to be issued as two separate series, numbered 2003A any-;i< 20036. I. RECOMMENDED ACTION: By Motion: Approve the attached resolution authorizing the execution of a Tax Increment Pledge Agreement with the City Richfield relating to the issuance of $6,000,000 in General Obligation Tax Increment Bonds to be issued as two separate series, numbered 2003A and 20038. III. BACKGROUND ~ • Un August 5, 2002, the Richfield Housing and Redevelopment Authority (HRA) adopted, and entered into a Contract for Private Development (Contract) with Lyndale Gateway LLC for the redevelopment of the Lyndale Gateway West area. The contract did not, however, establish the financing plan for the redevelopment project. • In December 2002, the HRA and City Council each approved a funding concept for the project. The funding concept included the issuance of two separate bond issues and a grant of $610,000 from existing proceeds from the 2000A bonds. PledgeAgreement2003ABonds • It is anticipated that at least $3 million of the 2003 bond issue will be paid off in a three year time period using home sales proceeds pledged by the developer to the HRA. • It is anticipated that the balance of the 2003bond issue (up to $3 million) will be repaid by tax increment generated by the development. • On February 26, 2003 at a Special HRA meeting, the HRA approved a Supplemental Agreement to the Contract for Private Development with Lyndale Gateway, LLC which addressed a $1.1 million gap in project funding. The agreement funded the gap by the issuance of a $1.1 million loan to the developer using proceeds from the Bonds of 1996. • The debt service on the two bond issues and the $1.1 million loan will be funded in part using tax increment generated from the project. -• .:It is hen necessary for he HRA to enter_into a Pledge Agreement with the City so that the tax increment from the Lyndale Gateway West project will be transferred to the City for debt service on the two bond issues. III. BASIS OF RECOMMENDATION A. POLICY • On August 5, 2002 the HRA entered into a Contract for Private Development with Lyndale Gateway, LLC for the Lyndale Gateway West Area. • On December 16, 2002, the HRA approved a conceptual financing plan for the Lyndale Gateway West project. The City Council also approved this financing plan on December 10, 2002. • On February 26, 2003 the HRA approved a Supplemental Agreement to the Contract for Private Development with Lyndale Gateway, LLC which addressed a "gap" in the financing of the project. B. CRITICAL ISSUES • In order for the development to move forward the bond financing is critical to the success of the project. C. FINANCIAL • The bond sale will help make it possible to meet the financial commitments of the project. • The funding of the debt service for the 2003 bonds will be sales proceeds pledged by the developer and tax increment. D. LEGAL • Legal counsel has been involved in the structuring of the financing for the development. ~ IV. ALTERNATIVE RECOMMENDATION(Sl ~ • The HRA may decide to either delay of decline approval of the Tax Increment Pledge Agreement. Delaying approval would negatively impact the scheduled bond sale. • Failure to approve the agreement would hinder the ability to use tax increment from the ro'ect for debt service of the G.O. TIF bonds. V. ATTACHMENTS r-irtH resolution Pledge Agreement VI. PRINCIPAL PARTIES EXPECTED AT MEETING • Sid Inman, .Ehlers & Associates, Inc. HRA RESOLUTION NO. RESOLUTION AUTHORIZING EXECUTION OF TAX INCREMENT PLEDGE AGREEMENT WITH THE CITY OF RICHFIELD RELATING TO $6,000,000 TAXABLE GENERAL OBLIGATION TAX INCREMENT BONDS WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (the "HRA") has established the Richfield Redevelopment Project Area (the "Project Area"), and approved a RedevelopmentPlan (the "Project Plan") for the Project Area; and WHEREAS, within the Project Area, the HRA and City have established the Lyndale Gateway West Tax Increment Financing District (the "TIF District");and WHEREAS, the HRA and Lyndale Gateway, LLC have entered into a Contract for Private Redevelopment dated as of August 5, 2002, as amended (the "Contract"); and WHEREAS, pursuant to the Contract the HRA agrees to provide various forms of fmancial assistance in connection with redevelopment of certain property in the TIF District, including proceeds of certain tax increment bonds; and WHEREAS, as contemplated in the Contract, the City and HRA have proposed that the City issue General Obligation Taxable .Tax Increment Bonds in an aggregate principal amount not to exceed $6,000,000 (the "Bonds"); and WHEREAS, the HRA has agreed to pledge certain tax increment revenues to the. City for the principal and interest on the Bonds; and WHEREAS, there has been presented to the HRA 'a form of Tax Increment. Pledge Agreement Series 2003 between the HRA and the City (the "Pledge Agreement"), providing for issuance of the Bonds, the use of proceeds, and the pledge of tax increments from the TIF District tax increment districts to payment of principal and interest on the Bonds; NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners (the "Board") of The Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (the "Authority), as follows: 1. Upon awarding of the sale of the Bonds, the Chair and Secretary of the Authority are hereby authorized to execute and deliver the Pledge Agreement substantially in the form on file with the City, subject to modifications that do not alter the substance of the transaction that are approved by the Chair and Executive Director, whose execution will be conclusive evidence of their approval. 2. This resolution shall be effective as of the date hereof. SJB-230015v1 RC145-506 Adopted by the Housing and Redevelopment Authority in and for the City of .Richfield, Minnesota this 21 st day of April, 2003. Thomas E. Harms, Chair Attest: Michael Sandahl, Secretary SJB-230015v1 RC145-506 TAX INCREMENT PLEDGE AGREEMENT SERIES 2003 by and between CITY OF RICHFIELD, MINNESOTA and THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA THIS AGREEMENT is made and entered into on or as of the day of , 2003, by and between the City of Richfield, Minnesota (the "City"), and The Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (the "HRA"). WHEREAS, the HRA has established the Richfield Redevelopment Project Area (the "Project Area"), and approved a Redevelopment Plan (the."Project Plan") for the Project Area, and WHEREAS, within the Project Area, the HRA and City have established the Lyndale Gateway West Tax Increment Financing District (the "TIF District"); and WHEREAS, the HRA and Lyndale Gateway, LLC have entered into a Contract for Private Redevelopment dated as of August 5, 2002, as amended by a Supplemental Agreement to Contract for Private Redevelopment dated , 2003 (the "Contract"); and WHEREAS, pursuant to the Contract the HRA agrees to provide various forms of financial assistance in connection with redevelopment of certain property in the TIF District, including proceeds of certain tax increment bonds; and WHEREAS, as contemplated in the Contract, the City and HRA have proposed that the City issue General Obligation Taxable Tax Increment Bonds in an aggregate principal amount not to exceed $6,000,000; and WHEREAS, the City and HRA currently contemplate that the TIF Bonds will be issued in two s eries: o ne i n a p rincipal a mount o f$ 3,000,000 h aving a t hree-year m aturity d esignated as Series 2003A (the "Short Terms Bonds"), and one in a principal amount of $3,000,000 having a twenty year maturity designated as Series 2003B (the "Long Term Bonds") (the Short Term Bonds and Long Term Bonds are referred to together as the "Bonds"); and WHEREAS, the HRA has agreed to pledge tax increments from the TIF District to the City for the principal and interest on the Bonds; and WHEREAS, pursuant to Minnesota Statutes, Section 469.178, Subdivision 2, any agreement to pledge tax increment revenues must be made by written agreement by and between the HRA and the City and must be filed with the Taxpayer Services Division Manager of Hennepin County; SJB-230024v1 RC145-506 NOW, THEREFORE, the City and the HRA mutually agree to the following: (1) The City will issue sell the Bonds, at the time and subject to the conditions described in the Contract, and will make the proceeds available to the HRA for the purposes described in the Contract. (2) The HRA hereby pledges to the payment of the principal of and interest on the Bonds tax increments received by the HRA from the TIF District in an amount sufficient, to pay 105% of such principal and interest due on the Bonds from time to time. (4) Not less than three (3) business days prior to each debt service payment date for the Bonds, there shall be transferred from the accounts for the TIF District to the Debt Service Fund maintained by the City for the payment of the Bonds, an amount which when taken together with amounts already on deposit in such Debt Service Fund, is equal to the principal of and interest on the Bonds to become due on the subject payment date. Any tax increments generated from the TIF District in excess of 105% of the principal and interest due with respect to the Bonds on any payment date may be retained by the HRA in the tax increment account for the TIF District and applied to any public redevelopment costs of the TIF District or Project Area in accordance with law. (5) .Without regard to anything in this Agreement to the contrary, tax increment generated by the TIF District shall be available to pay, on a parity basis, principal of and interest on both the Bonds and any other obligations issued by the City, HRA or any other public body to finance public redevelopment costs paid or incurred by the HRA in connection with the TIF District. (6) When all principal and interest on the Bonds and other obligations issued to finance the public redevelopment costs of the TIF District have been paid, and the City has been reimbursed from collections of tax increment from the TIF District used to pay principal of and interest on the Bonds, then the HRA shall report such fact to the City Council of the City and the HRA shall submit a final statement of such payments. (7) An executed copy of this Agreement shall be filed with the Taxpayer Service Division Manager of County pursuant to the requirement contained in Minnesota Statutes, Section 469.178, Subdivision 2. IN WITNESS WHEREOF, the City and the HRA have caused this Agreement to be duly executed on their behalf and their seals to be hereunto affixed and such signatures and seals to be attested, as of the day and year first above written. SJB-230024v1 RC 145-506 ATTEST: City Manager (SEAL) CITY OF RICHFIELD, NIINNESOTA By Mayor SJB-230024v1 RC145-506 ATTEST: Secretary (SEAL) THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, NIINNESOTA By Chair SJB-230024v1 RC145-506 STATE OF NIINNESOTA COUNTY OF HENNEPIN CERTIFICATE I, the undersigned Taxpayer Services Division Manager of Hennepin County, Minnesota, hereby certify that a Tax Increment Pledge A greement S eries 2 003 b y a nd b etween t he C ity o f Richfield, Minnesota and the Richfield Housing and Redevelopment Authority dated 2003, relating to the City's $3,000,000 General Obligation Taxable Tax Increment Bonds, Series 2003A and Series $3,000,000 General Obligation Taxable Tax Increment Bonds, Series 2003B has been filed in my office. WITNESS my hand and official seal this _ day of , 2003. (SEAL) Taxpayer Services Division Manager's Hennepin County, Minnesota By Deputy TAXPAYER SERVICES DIVISION MANAGER'S SJB-230024v1 RC145-506 AGENDA ITEM # ~ REPORT # 2U ~~ STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING APRIL 21, 2003 REPORT PREPARED BY: BRUCE NORDQUIST, HOUSING AND REDEVELOPMENT MANAGER NAME, TITLE REPORT PRESENTER: BRUCE PALMBORG, COMMUNITY DEVELOPMENT DIRECTOR NAME, Tl%I,[: DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: Award recognition for the Housing and Redevelopment Authority's Woodlake Centre project. I. RECOMMENDED ACTION: By Motion: Receive the Community Development Achievement Award .from Regional NAHRO. III, BACKGROUND On April 14, the Richfield Housing and Redevelopment Authority (HRA) received the 2003 Community Development Achievement Award for the Woodlake Centre project. The award comes from the North Central Region of the National Association of Housing and Redevelopment Officials. The North Central Region includes: Minnesota, Wisconsin, Michigan, Ohio, Indiana, Illinois, Iowa and Nebraska. Richfield's application for consideration was one of 43 that were evaluated. As the best community development project, it will now compete with the seven other NAHRO regions for national recognition later in 2003. III. BASIS OF RECOMMENDATION 042103Woodlake Centre A. POLICY • The HRA authorizes and partners in redevelopment projects that are worthy of recognition. B. CRITICAL ISSUES • Woodlake Centre is considered to be a high quality redevelopment project that is worthy of recognition. C. FINANCIAL • The selection process for the award took into consideration the HRA's financial role and local resources that were committed to the project. Merit was also given for the mixed use, urban nature and design qualities. D. LEGAL • N/A IV. ALTERNATIVE RECOMMENDATION(S~ • N/A V. ATTACHMENTS • A paper copy of the award plaque. VI. PRINCIPAL PARTIES EXPECTED AT MEETING • N/A ` - _ ,. ~e~oQ end RedeveloPfhenr U a~~o f~~~i e off' red ~' 0 m '{9' MRINFSRIA 0 ~~~ W9CONSM YICIIgAN - . qWA ` ~ NEBRASKA ^ \ ) u~~ i f~INANA~ (fNM O NORTItCENTRALRECIONALCOf1Nfit. Presents Its 2003 COMMUNITY DEVELOPMENT ACHIEVEMENT AWARD To The RICHFIELD HOUSING A-ND - REDEVELOPMENT AUTHORITY, MN For Woodlake Centre Development Project `~_"r k r ..Chicago,,.Illinois ~ ~~~ .April 14, 2~J03 Steph n B. Falek, President