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07-16-01 agenda• CITY OF RICHFIELD, MINNESOTA MONDAY, JULY 16, 2001 RICHFIELD CITY HALL 6700 PORTLAND AVENUE SPECIAL HOUSING AND REDEVELOPMENT AUTHORITY CLOSED EXECUTIVE SESSION 6:40 P.M. EXECUTIVE CONFERENCE ROOM Call to order 1. Discussion of terms of settlement agreement Adjournment REGULAR HOUSING AND REDEVELOPMENT AUTHORITY MEETING COUNCIL CHAMBERS • 7 P.M. AGENDA Call to order Approval of minutes of Regular HRA Meeting of June 18, 2001 1. Opportunity for citizens to address the HRA on items not on the agenda Notes: 2. HRA approval of agenda 3. 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 issuance of Certificate of Completion for Mainstreet Village, 7601 Lyndale Avenue S.R. No. 48 B. Consideration of approval of resolution waiving notice and consenting to financing of project by Hennepin County HRA within area of operation of City of Richfield HRA S.R. No. 49 Notes: 4. Consideration of terms of settlement with Susanne H. Metzger regarding Parcel 4, 7629-33 Lyndale Avenue Staff Report No. 50 • Notes: 5. Consideration of agreement with City of Richfield and Best Buy Co., Inc. for partial financing of Penn Avenue bridge project Staff Report No. 51 Notes: 6. 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. • AGENDA ITEM # 5 REPORT # 51 STAFF RERORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING JULY 16, 2001 REPORT PREPARED BY: REPORT PRESENTER: JULIE URBAN, COMMUNITY DEVELOPMENT SPECIALIST NAME, TITLE BRUCE PALMBORG, COMMUNITY DEVELOPMENT DIRECTOR NAME, TITLE LJ DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: Consideration of an agreement with the City of Richfield and Best Buy Co., Inc. for partial financin of the Penn Avenue bride ro'ect. I. RECOMMENDED ACTION: By Motion: Approve the attached agreement with the City of Richfield and Best Best Co., Inc. for partial financing of the Penn Avenue bride rooect. II. BACKGROUND The Richfield City Council approved the submittal of a Transportation Revolving Loan Fund (TREE) application for partial funding of the Penn Avenue Bridge project on March 12, 2001. The application was submitted to the Minnesota Public Facilities Authority (PEA) which has reviewed and approved the application. The application requested a loan amount of $6.7 million; however, only $5 million is available at this time in the fund. Since there is an urgency to secure funds for this project, the City is prepared to accept the $5 million now. The additional $1.7 million will be requested in a separate loan agreement at the time the TRLF fund has been replenished by the state of Minnesota. It is anticipated this will occur within the next 12 months. 0716pennbridge The City's bond counsel has prepared -the attached report that outlines the steps needed to create a special assessment district to finance the TRLF loan using G.O. Bonds. Best Buy has agreed to be assessed for the funds. There will be a simultaneous-agreement-(Attachment-B) by the City-and the-Richfield-Housing and Redevelopment Authority (HRA) that the assessments will be paid by the HRA. The repayment schedule will be structured so that interest payments of approximately $700,000 will need to be made by the HRA. There are sufficient funds in the bridge project budget to cover the interest costs. III. BASIS OF RECOMMENDATION A. POLICY • Reconstruction of the Penn Avenue Bridge is an important component of the Best Buy Campus project as well as for the long-term plans for reconstruction of 1-494. B. CRITICAL ISSUES • The TRLF is essential to complete the financing of the Penn Avenue Bridge. The existing bridge is already inadequate and regularly causes serious traffic congestion during rush hours. C. FINANCIAL • The Minnesota Department of Transportation has agreed to repay the principal on the TRLF loan. These funds will become available m two installments. The first installment will be in 2005 for $4.7 million and the balance in 2006. • The interest on the TRLF loan will be around three percent. Interest on the TRLF loan will amount to about $700,000 and will be the responsibility of the HRA to repay through project-related sources. • The actual amount and timing of the interest payments may vary depending on when the loan funds are drawn down. D. LEGAL • The City Attorney has prepared a report on the proposed funding method. • The HRA is required under the Development Agreement to provide a new Penn Avenue Bridge by November 2002. • The HRA agreement to pay the assessments facilitates obtaining the TRLF loan. IV. ALTERNATIVE RECOMMENDATION(S~ • The HRA may refuse to approve the agreement of the TRLF loan. This would seriously jeopardize attempts to build the Penn Avenue Bridge as soon as 2001 and delay reconstruction for ten years. V. ATTAC~IlVIENTS • Attachment A: Report from Corrine Thomson of Kennedy and Graven on Penn Avenue Bridge Replacement Financing. • Attachment B: Agreement between the City of Richfield, the HRA and Best Buy Co., Inc. VI. PRINCIPAL PARTIES EXPECTED AT MEETING • "Legal counsel from Kennedy & Graven will be available to answer questions. • • CORRINE H. THOMSON Attorney at Law Direct Dial (612) 337-9217 Email: cthomson@kennedy-gaven.com STAFF REPORT AND RECOMMENDATION DATE: June 28, 2001 TO: FROM: Mayor and City Council Corrine H. Thomson, Kennedy and Graven SUBJECT: Penn Avenue Bridge Replacement Financing GENERAL INTRODUCTION A key element in the redevelopment of the. Interchange West and Lyndale .Gateway Tax Increment Financing District (TIF District) is the construction of the replacement bridge over 494 and Penn Avenue South (Project). The estimated cost of that Project is $29.9 million. A major portion of the funding for the Project will be supplied by MnDOT in the form of i) the direct payment by MnDOT of $1.8 million in construction administrative costs and ii) a capital cost reimbursement to the City of $6.7 million to be made in two installments in August 2005 and August 2006, respectively. Staff has been working with the Public Finance. Authority (Authority) to secure a loan from the Transportation Revolving Loan Fund (TRLF or T Loan) to fmance the capital cost until the 2005-6 MnDOT reimbursements. The Authority has agreed to a T loan of $6.7 million, the first installment of which is for $5 million (the total Authority funds presently available for this Project) and the balance to be embodied in a second subsequent T Loan when funds become available, probably within a year's time. The Authority is quite flexible in its T Loan terms, allowing. the City to structure repayments tied to the MnDOT reimbursement, and the interest rate to be charged is quite favorable, approximately 3% per annum. Under the Authority statutes, the T Loan must be represented by a general obligation (a G.O. bond of the City). The City Attorney's Office is recommending that the City issue a general obligation improvement bond payable wholly from special assessments against benefited property, a bond that may be issued without voter approval and. outside debt limits. It is proposed, therefore, that the City create the replacement bridge as an assessable improvement project under Minnesota Statutes, Chapter 429, to be conducted in basically the same manner as are other assessable projects in the City. The entire cost to be financed ($6.7 million) DJK-199464v4 RC 145-451 Mayor and City Council Staff Report and Recommendation June 28, 2001 Page 2 would be assessed against the owner of the redevelopment tracts, that is, Best Buy Co., Inc. with a simultaneous agreement by the City and the HRA that those assessments would be paid by the HRA. Best Buy has agreed to this procedure and has agreed to petition the City Council to construct. and finance their Project in this way.. The City will 1e~3! the..special..assessments to be collected at the times and in the amounts so that, as paid and collected. with properly .taxes, they will be available to make T Loan payments under the Bonds to the Authority. 'The only additional cost to the City will be interest, estimated to cost $700,000, on the T Loan until it is totally repaid from the MnDOT reimbursement in 2006, but with the favorable interest rate on the Bonds, this will be less cost than if the City had to sell the Bonds on the open market. The interest amount will vary depending on the actual interest rate on the T loan and the schedule . of loan draws that is tied to actual construction costs. City staff has recommended that the interest payments, which will run at about $200,000 per annum for approximately three and a half years, will be paid using project-related sources. It is intended that no general funds of the City. will be used to pay interest on the T loan. PROPOSED SCHEDULE OF EVENTS Monday, July 16, 2001 • HRA approves concept and execution of agreement with Best Buy. Monday, July 23, 2001 • .City Council approves financing concept. • Council receives Best Buy petition for Improvement Project • Council directs Engineer to prepaze project feasibility report • Council orders public hearing for August 13, 2001, with required mailed and ublished notices Monday, August 13, 2001 • Council conducts public. hearing on the Project, orders its construction and approves execution of agreement between HRA, City and Best Buy. • Council approves Project Loan Agreement .with Authority (to be executed as of August 21, 2001 • Council adopts bond resolution (actually to be called a "Note") issuing and selling the Note to the Authori • DJK-1994G4v4 RC 145.451 Mayor and City Council Staff Report and Recommendation June 28, 2001 Page 3 Tuesday, August 21, 2001 • Note becomes effective, payment of interest (0% until February 20, 2002 and semi- annually thereafter). Funds-can -begin to be drawn into the Note -for-Project-Costs. City Council meeting on or before October 22, 2001. • Special assessments for Project levied for collection in 2002 and thereafter. July, 2002 • First half of Special Assessments received by City along with tax settlements. August 20, 2002 • First year's interest payable under the Bond (a partial year payment for the period February 2 to August 20). The assessment payment cycle will then continue until the Bond is re aid in full in 2007. POSSIBLE VARIATION If the $1.7 million balance of the approved T Loan (that is, $6.7 million less $5 million) cannot, for whatever reason, be secured as needed, or at all, from the Authority, the City may have to consider financing that balance with a public sale of Bonds. While a bit more expensive, this would have the. advantage of allowing the City to finance the interest cost on the T Loan over the life of the second Bond issue. This eventuality will"be monitored by staff and its fmancial advisers and a recommendation made to the Council at the appropriate time. CONCLUSION AND RECOMMENDATION The procedure outlined above makes it possible to use the Minnesota Public Facility Authority T Loan process for this vital piece of the overall financing of the Best Buy Development Project. The staff recommends approval in concept of the financing proposal and the included schedule of events. • DJK-199464v4 RC 145-451 AGREEMENT .(PENN AVENUE BRIDGE PROJECT) This Agreement is made and entered into this day of , 2001, by and among the City of Richfield,. a Minnesota municipal corporation (City), the Housing and Redevelopment Authority in and for the City of Richfield, a public body corporate and politic of the State of Minnesota (HRA) and Best Buy Co., Inc., a Minnesota corporation (Best Buy). In consideration of the mutual undertakings of the parties expressed in this Agreement, City, HRA and Best Buy agree as follows: Section 1. Background; findings. 1.01. City and HRA have undertaken and are conducting a redevelopment project known as the Richfield Redevelopment Project Area (Project Area) within which there has been created the Interchange West and Lyndale Gateway Tax Increment Financing District (TIF District). The purpose of the TIF District as expressed in the TIF Plan for the TIF District, is to finance the redevelopment of the land within the TIF District for use by Best Buy as its corporate headquarters (Best Buy Project). 1.02. An essential element of the TIF Plan is the reconstruction of the bridge over Interstate Highway No. 494 at Penn Avenue South in the City (Improvement). Among the various sources of fundingfor the Best Buy Project, the cost of which exceeds $23 million, is the agreement by the Minnesota Department of Transportation (MnDOT) to i) pay for administrative and design costs for the Improvement and, ii) to reimburse the City for the construction costs of the Improvement up to $6,700,000 (MnDOT Reimbursement). The MnDOT Reimbursement, however, is scheduled to be made in two installments in the years 2006 and 2007, respectively. It is essential that the construction of the Improvement commence in July, 2001. The HRA and the City DIK-196172v2 RC145-451 1 have found and determined that funding in at least the amount to be paid by MnDOT is necessary at this time. 1.03. The Public Facilities Authority of the State of Minnesota (PFA) has approved a request by the City to lend. $6.7 million in the form of one or more loans (Loans) to the City from its Transportation Revolving Loan Fund (TREE) to finance the Improvement in part. The PFA requires that the Loan be evidenced by a general obligation of the City. It has been found .and determined by the HRA and the City that a general obligation issued by the City pursuant to Minnesota Statutes, Chapter 429 (Act) payable from special assessments against. benefitted properties is the most effective method of complying with PFA requirements and securing the loan. 1.04. Best Buy is the fee owner of a certain tract of land (Subject Property) in the TIF District which will be substantially benefitted by the construction of the Improvement. The parties are aware that, pursuant to the Act, the owner of the property to be benefitted by the construction of an improvement may petition the City i) requesting that the cost of the improvement project be specially assessed against that. property; and ii) waiving all requirements for notice and hearing in the conduct of the improvement project and the levying of the special assessments. 1.05. The City, the HRA and Best Buy have determined that it is in the best interests of the parties, the Project Area, the TIF District and the Best Buy Project that the City issue and sell its general obligation bonds (Bonds) to PFA pursuant to the Act to secure the Loans. The Bonds are to be structured in such a way that they may be prepaid in whole or in part at any time. The parties contemplate that the Bonds will be redeemed and the interest thereon will be paid from the proceeds of the MnDOT Reimbursement and other funds properly available to City and the HRA for that purpose. • DJK-196172v2 RC 145-451 2 1.06. In consideration of the undertaking of Best Buy to assume the special assessments for the Improvement and.to.facilitate the TRLF Loan, the HRA is willing to undertake to provide funds to Best Buy for the payment of the special assessments at the times and in the amounts that the special assessments become due and payable. Sec. 2. Undertakings of the Parties. 2.01. Best Buy agrees to petition the City for the construction-of -the Improvement in accordance with the Act. The petition will. be irr substantially the form attached to this Agreement as Attachment A. 2.02. City agrees to accept the petition. and initiate proceedings for the construction of the Improvement pursuant to the Act. City will also adopt and publish a resolution in substantially the form attached as Attachment B, pursuant to Section 429.031 of the Act, declaring the adequacy of the petition for the purpose of precluding any challenges to the adequacy of the petition. 2.03. City agrees to timely issue and sell the Bonds to PFA to secure the Loans and to apply the Loan proceeds as needed to the construction of the Improvement. 2.04. HRA agrees that it will establish procedures for the payment to Best Buy for any and all special assessments levied for the Improvement pursuant to this Agreement against the Subject Property in the amounts shown on the property tax statements regarding the Subject Property to be received from Hennepin County from time to time. The payments will be made within 30 days of receipt by the City and HRA of evidence satisfactory to the HRA and the City that Best Buy has in fact been billed for an installment of special assessments together with interest thereon by Hennepin County. It is the intent of this Section and this Agreement that Best Buy not be obligated for and be reimbursed for any and all expenses and special assessments connected with the Improvement and that the HRA bear the full cost of these expenses and special assessments. The HRA agrees to DJK-196172v2 RC 145.451 3 indemnify and hold Best Buy harmless from and against any and all late .fees, penalties, interest, costs and expenses (including attorneys' fees) incurred by Best Buy as a result of the HRA's failure to reimburse Best Buy for any and all of the special assessments within the time period provided herein. Sec. 3. Miscellaneous. 3.01. This is the complete agreement among the parties: it is governed by -the laws of the State of Minnesota; and it may be executed in any number of counterpart original copies. The execution and delivery of this Agreement has been duly authorized by the governing bodies of the HRA and the City and by appropriate corporate action of Best. Buy, all as of .2001. • [The remainder of this page to remain intentionally blank.) DJK-196172v2 RC 145-451 4 • CITY OF RICHFIELD, MINNESOTA By: Its: Mayor By: Its: Manager HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, NIINNESOTA sy: Its: Chair By. \ Its: Executive Director BEST I Drafted by: Kennedy & Graven, Chartered (DJK) 470 Pillsbury Center 200 South Sixth Street Minneapolis, MN 55402 (612)337-9300 • DJK-1961'72v2 RC145~i51 By: Its: By: Its: 5 ATTACHMENT A • FORM OF PETITION PETITION AND WAIVER AGREEMENT This Agreement-made this day of May, 2001, by-and between the City of Richfield, a Minnesota municipal corporation ("City"); and Best Buy Co., Inc., a Minnesota corporation ("Owner"). WITNESSETH: WHEREAS, the Owner is .the fee owner of certain ..real property ("Subject Property") located in the City the legal description of which is set forth in Exhibit A, attached and made a part hereof; and WHEREAS, the .Owner desires to have certain public improvements constructed to serve the Subject Property as described in Exhibit B, attached and made a part hereof (the "Improvement Project"); and WHEREAS, the Owner wishes the City to construct the Improvement Project and to specially assess 100% of the cost of the Improvement Project against-the Subject Property; and WHEREAS,. the City is willing to construct the Improvement Project in accordance with the request of .the Owner, provided the assurances and covenants hereinafter stated are made by the Owner to ensure that the City will have valid and collectable special assessments as they relate to the Subject Property to finance all of the costs of the Improvement Project. NOW, THEREFORE, ON THE BASIS OF THE MUTUAL COVENANTS AND AGREEMENT HEREINAFTER PROVIDED, IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES HERETO AS FOLLOWS: L The Owner petitions the City for construction of the Improvement Project. DJK-196172v2 RC145~51 A-1 • 2. The Owner represents that it i) is the owner of not less than 35oIo in frontage of the real property abutting on the street named in the .petition as the location of the Improvement Project, ii) has full legal power and authority to encumber the Subject Property as herein provided, and iii) as of the date hereof, has fee simple absolute title in the Subject Property, which is not subject to any liens, interests or encumbrances, except as listed on the attached Exhibit C. 3. The Owner requests that 100°Io of the assessable cost of the Improvement Project be assessed against the Subject Property. The Owner understands and agrees that the current estimated cost of the Improvement Project is $6,700,000, but-that the cost:of the-lmpr-ovement Project will be determined in accordance with Minn. Stat., Chapter 429 and standard-city practices and-that such cost may be as much as $8,000,000.. The Owner further understands and agrees that the City does not waive any rights to levy special assessments against the Subject Property in an amount in excess of $6,700,000 in the event actual project costs which may lawfully be assessed pursuant to Minn. Stat., Chapter 429, exceed $6,700,000. 4. The Owner waives the right to appeal the levy of the special assessments in accordance with this ..Agreement pursuant to Minn. Stat. Section 429.081 .and Laws 2001, Chapter 207, Section 12, or reapportionment thereof upon land division pursuant to Minn. Stat. Section 429.071, Subd. 3, or otherwise, and further specifically agrees with respect to such special assessments against the Subject Property or reapportionment that: a. Any requirements of Minn. Stat., Chapter 429 with which the City does not comply are hereby waived by the Owner; b. The increase in fair market value of the Subject Property. resulting from construction of the Improvement Project will be at least equal to $6,700,000, and that such increase in fair market value is of special benefit to the Subject Property; and c. The Owner further specifically waives notice and right to appeal reapportionment of such special assessments upon land division pursuant to Minn. Stat., Section 429.071, Subd. 3. 5. The Owner understands and agrees that the City may provide for the payment of such special assessments in installments bearing such interest as may be determined by the city council. However, the decision regarding the period of time over which the special assessments may be paid and the interest rate to be applied is in the absolute and sole discretion of the city council, subject only to limitations imposed by law. 6. Owner represents and warrants that the Subject Property is not classified for tax purposes so as to result in deferral of the obligation to pay special assessments; and Owner agrees that it will take no action to secure such tax status for the Subject Property during the term of this Agreement. • DJK-196172v2 RC145-451 A-2 • 7. The covenants, waivers and agreements contained in this Agreement shall bind the successors and assigns. of the Owner and shall rurr with the Subject Property and bind all successors in interest thereof. It is the intent of the parties hereto that this Agreement be in a form which is recordable among the land records of Hennepin County, Minnesota; and they agree to make any changes in this Agreement which may be necessary to effect the recording and filing of this Agreement against the title of the Subject Property. 8. This. Agreement will terminate upon the final payment of all special assessments levied against xhe Subject Property for.-the ,Improvement _ Project,_ and ..the.. City will ..thereupon execute and deliver such documents, in recordable form, as are -necessary- to _extinguish its rights hereunder. IN WITNESS WHEREOF, the parties have set their hands the day and year first written above. CITY OF RICHFIELD BEST I By: BY~ Its: Mayor Its: By: Its: City Manager • By: Its: DJK-196172v2 RC145-451 A-3 • STATE OF MINNESOTA ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this :day of , 2001, by Martin J. Kirsch and Samantha Orduno, the. Mayor and City Manager of the City of Richfield, Minnesota, a municipal corporation under the laws of the-State of-Minnesota, ~on behalf of the City. STATE OF MINNESOTA ) ss. COUNTY OF HENNEPN ) The foregoing instrument was acknowledged before me this day of , • 2001, by and ,the and ,respectively, of Best Buy Co., Inc., a Minnesota. corporation, on behalf of the corporation. Notary Public DJK-196172v2 RCI45~51 A-4 EXHIBIT A Legal Description • DJK-196172x1 RC145-451 A-A-1 • • • DJK-196172v1 RC145~51 EXHIBIT B Improvement Project A-B-1 • • EXHIBIT C Encumbrances • DJK-196172v1 RC145-451 A-C-1 • ATTACHMENT B RESOLUTION DECLARING ADEQUACY OF PETITION AND ORDERING PREPARATION OF REPORT BE TT RESOLVED by the City Council of Richfield, Minnesota: 1. A certain petition requesting the construction of a replacement bridge across Interstate Highway 494 at Penn Avenue South, filed with the Council. on_ , 2001, is hereby declared to be signed by 35% of owners of .property abutting on Penn Avenue South. This declaration is made in conformity to Minnesota Statutes, section 429.035. 2. The petition has been referred to the City Engineer who has been instructed to report to the Council with all convenient speed advising the Council in a preliminary way as to whether the proposed improvement is necessary, cost-effective, and feasible and as to whether it should best be made as proposed or in connection with some other improvement, and the estimated cost of the improvement as recommended. Adopted by the Council this day of , 2001. • Mayor ATTEST: City Clerk n U DJK-196172v1 RC 145~i51 B-1 AGENDA ITEM # 4 REPORT # 5 ~ r~ U J STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING .TULY 16, 2001 • REPORT PREPARED BY: REPORT PRESENTER: DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: JULIE URBAN, COMMUNITY DEVELOPMENT SPECIALIST NAME, TITLE BRUCE PALMBORG, COMMUNITY DEVELOPMENT DIRECTOR ITEM FOR HRA CONSIDERATION: (THE TERMS OF THE SETTLEMENT WILL BE DISCUSSED WITH THE HRA ATTORNEY IN A CLOSED SESSION.) Consideration of terms of settlement with Susanne H. Metzger, formerly known as Susanne H. Harris, et. al., reaardinq Parcel 4, 7629-33 Lyndale Avenue South. I. RECOMMENDED ACTION: By Motion: Approve settlement terms with Susanne H. Metzger, formerly known as Susanne H. Harris, et. al., regarding Parcel 4, as discussed with Richfield Housing and Redevelopment Authority legal counsel III. BACKGROUND On October 18, 1999, the Richfield Housing and Redevelopment Authority (HRA) approved the use of eminent domain (condemnation) for the acquisition of certain properties on the east side of the 7600 block of Lyndale Avenue South. This action came at the request of Richfield Senior Housing, Inc., the developer for that area. Since that time, the condemnation process has proceeded for several such parcels, including Parcel 4 located at 7629-33 Lyndale Avenue South. 0716settlement NAME, TITLE The Court has issued an award in this case. The HRA has the option of • commencing further legal action in the case. The HRA's attorney has, however, reached a tentative settlement agreement with the property owner, which would avoid further legal action. The tentative-agreement is subject to the approval of the HRA Commissioners. III. BASIS OF RECOMMENDATION A. POLICY Acquisition of this property through condemnation was .approved on October 18, 1999. • The property owner and HRA legal counsel have reached a tentative settlement agreement. B. CRITICAL ISSUES Direction is needed from the HRA regarding the settlement terms before staff and HRA legal counsel can proceed with the settlement or further legal action. C. FINANCIAL • Richfield Senior Housing is financially responsible for reimbursing the HRA for costs incurred in the acquisition of this. property. D. LEGAL HRA legal counsel has recommended that the terms of the settlement be discussed with the HRA in a closed session. IV. ALTERNATIVE RECOMMENDATION(S~ • Decide not to accept the settlement terms as discussed with HRA legal counsel. V. ATTACHMENTS • N/A VI. PRINCIPAL PARTIES EXPECTED AT MEETING • John M. Lefevre, Kennedy & Graven, will meet with the HRA on July 16 in a closed session to discuss the settlement terms. • ('nNSFNT AGENDA ITEM # ~ R REPORT # /~ q ~J STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING JULY 16, 2001 JOHN OLINGER, REPORT PREPARED BY: COMMUNITY DEVELOPMENT SPECIALIST NAME, TITLE BRUCE PALMBORG, REPORT PRESENTER: COMMUNITY DEVELOPMENT DIRECTOR NAME, TITLE DEPARTMENT DIRECTOR REVIEW: ~i~~~ _ REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: Consideration of a resolution waiving notice and consenting to the financing of a project by the Hennepin County Housing and Redevelopment Authority within the area of operation of the City of Richfield, Minnesota Housing and Redevelopment Authority. RECOMMENDED ACTION: By Motion: Approve the attached resolution waiving notice and consenting to the financing of a project by the Hennepin County Housing and Redevelopment Authority within the area of operation of the City of Richfield, Minnesota Housing and Redevelopment Authority. III_ BACKGROUND ~ Faegre & Benson LLP is serving as bond counsel to the Hennepin County Housing and Redevelopment Authority (Hennepin County HRA) with respect to a proposed issuance of bonds for the benefit of Opportunity Partners, a Minnesota nonprofit corporation and a 501(c)(3) organization. The company presently owns 17 group homes throughout Hennepin County that are occupied by persons with physical and/or mental disabilities. Seven of the homes are scattered throughout Richfield. The company originally purchased the group homes with conventional bank financing and secured the various homes with mortgages. 07160pportunity partners The company now desires to refnance these purchases-with the proceeds of certain#ax- exempt revenue bonds to be issued by the Hennepin County HRA. • Section 3836.77 of the Minnesota Statutes provides that the Hennepin County HRA may exercise -all of the powers of a housing-and redevelopment authority in an area of operation that includes the area within the territorial boundaries of the county. The statute may also provide (the wording is less than clear on this matter) that before it may participate in a project that lies within a territory governed by a separate municipal housing and redevelopment authority, the Hennepin County HRA must notify and obtain the consent of such municipal housing and redevelopment authority to its activities within such territory. III. BASIS OF RECOMMENDATION A. POLICY • The City of Richfield has historically cooperated with agencies requesting approval to refinance facilities within the City. In the past the City Council has approved St. Ann's and Mount Olivet's request for refinancing. (Hennepin County HRA was not involved in these transactions.) B. CRITICAL ISSUES • Participation will strengthen the housing resources in the community. • C. FINANCIAL • The City will assume no financial liability as a participating community. • The costs related to this particular transaction will be paid by Opportunity. Partners. D. -LEGAL • Kennedy and Graven have reviewed the proposed resolution and find it acceptable under the appropriate statutes. IV. ALTERNATIVE RECOMMENDATION(S~ • Delay action. • Reject participation. V. ATTACHMENTS • Resolution VI. PRINCIPAL PARTIES EXPECTED AT MEETING N/A HRA RESOLUTION NO. • RESOLUTION WAIVING NOTICE AND CONSENTING TO THE FINANCING OF A PROJECT BY THE.HENNEPIN COUNTY HOUSING AND REDEVELOPMENT AUTHORITY WITHIN THE AREA OF OPERATION OF THE CITY OF RICHFIELD, MINNESOTA HOUSING AND REDEVELOPMENT AUTHORITY WHEREAS, the City of Richfield, Minnesota Housing and Redevelopment Authority (the "Authority") is a housing and redevelopment authority created pursuant to Minnesota Statutes, Sections 469.001 through and including 469.047, as amended (the "Act"), and is authorized to operate within the territorial boundaries of the City of Richfield, Minnesota (the "City"); and WHEREAS, the Hennepin County Housing and Redevelopment Authority (the "Hennepin County HRA") is a housing and redevelopment authority created pursuant to Minnesota Statutes, Section 383B.77, has all of the powers and the duties of a housing and redevelopment authority under the Act, including the authority to issue bonds and loan the proceeds of which for certain projects, and is authorized operate within the territorial boundaries of Hennepin County, Minnesota (the "County"); and WHEREAS, Opportunity Partners, a Minnesota nonprofit corporation (the "Borrower"), is the owner and operator of 17 group homes for the mentally and the physically disabled located primarily within. the County, .and each group home is separately and individually financed by a taxable or atax-exempt mortgage loan; and WHEREAS, seven of the group homes are within the territorial boundaries of the City and are located at 7615 Vincent Avenue South, 6305 Bryant Avenue South, 7015 - 12th Avenue South, 7228 - 13th Avenue South, 7144 Columbus Avenue South, 6611 Morgan Avenue South and 6726 Girard Avenue South; and WHEREAS, the Borrower has requested that the Hennepin County HRA issue its tax- exempt revenue bonds and loan the proceeds of such bonds to the Borrower so that the Borrower may consolidate the outstanding .mortgage loans into a single loan and to refinance the .debt on atax-exempt basis. NOW, THEREFORE, BE IT RESOLVED by the City of Richfield Housing and Redevelopment Authority: 1. The Authority hereby waives any notice that may have been required by Minnesota Statutes, Section 383B.77, as amended, and hereby acknowledges receipt of notice of the proposal that-the Hennepin County HRA finance a project within the area of operation of the Authority. 2. The Authority hereby consents to the Hennepin County HRA's activities within the area of operation of the Authority with respect to the proposed financing. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 16th day of July, 200.1. Thomas E. Harms, Chair ATTEST: Michael Sandahl, Secretary CONSENT AGENDA ITEM # 3A REPORT # 48 STAFF REPORT ~ HOUSING AND REDEVELOPMENT AUTHORITY MEETING JULY 16, 2001 REPORT PREPARED BY: JULIE URBAN, COMMUNITY DEVELOPMENT SPECIALIST NAME, TITLE BRUCE PALMBORG, REPORT PRESENTER: COMMUNITY DEVELOPMENT DIRECTOR NAME, TITLE DEPARTMENT DIRECTOR REVIEW: ~/~~~ REVIEWED BY EXECUTIVE DIRECTOR: • ITEM FOR HRA ERATION: Issuance of a Certificate of Completion for Mainstreet Village, 7601 Lyndale Avenue. I. RECOMMENDED ACTION: By Motion: Authorize the issuance of the attached Certificate of Completion for Mainstreet Village, Lots 1-3, Block 1, Mainstreet Village. _ III. BACKGROUND The Richfield Housing and Redevelopment Authority (HRA) entered into a Contract for Private Redevelopment with Richfield Senior Housing, Inc. in October 1999. Richfield Senior Housing recently completed Mainstreet Village; 161 units of senior independent and assisted living and 39,000 sq. ft. of office space. The contract requires the HRA to issue a Completion Certificate in a recordable form once construction is completed. In this instance, the certificate is also needed by Richfield Senior Housing's lender to close on the financing for the project. • The Building Official has issued a Temporary Certificate of Occupancy with a short list of miscellaneous items that need to be completed. The items relate to clean up of siltation in the City's storm sewer system and minor landscape and building completion items. A complete list of the unfinished items is included in Attachment 0716mainstreet B. Tk~ere-are no life-safety .issues...that need.to_be_addressed, and the building is essentially complete. • III. BASIS OF RECOMMENDATION A. POLICY • The HRA has a Contract for Private Redevelopment with Richfield Senior Housing that requires a response and action by the HRA when requested by the developer. • The HRA cannot reasonably withhold a Certificate of Completion. • The Building Official is prepared to issue a Final Occupancy Certificate once the remaining items are completed or the developer provides an escrow to cover the cost of completing the unfinished items. B. CRITICAL ISSUES • The project is essentially complete with minor items related to landscaping, finishing and clean-up remaining. • The HRA has agreed to pay for streetscape improvements in conjunction with the, reconstruction of Lyndale Avenue. Because CSM was unable to proceed in a timely fashion with redevelopment of the west side, those improvements will not be made in 2001. The City Council requested that a temporary sidewalk be provided on the east side until the permanent improvements are in place. Staff has arranged for the sidewalk portion of the streetscape improvements to be installed at this time. The sidewalk will be the permanent • improvement, except for a small portion at the south end where the curbline will change when the road is reconstructed. When the road is reconstructed, the remainder of the improvements will be completed. The sidewalk will be installed within the next few weeks. C. FINANCIAL • The Contract for Private Redevelopment requires the HRA to respond to requests of the developer and lender in support of arranging project financing. This request has been made by the developer. D. LEGAL • The Certificate of Completion has been drafted in proper form by the HRA's legal counsel. TERNATIVE RECOMMENDATION(S) ~ Delay approval of the Certificate of Completion until all items are completed. Staff believes, however, that the remaining items are being addressed and are relatively minor in nature. ~ V. ATTACFIMENTS ~ Attachment B: List of Items to be Completed ~ VI. PRINCIPAL PARTIES EXPECTED AT MEETING ~ • Attachment A r_1 LJ • CERTIFICATE OF COMPLETION The undersigned hereby certifies that RICHFIELD SENIOR HOUSING, INC., a Minnesota nonprofit corporation, has fully and completely complied with its obligations under Article IV of that document entitled "Contract for Private Development," dated October 18, 1999, between THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD and RICHFIELD SENIOR HOUSING, INC., a Minnesota nonprofit corporation with respect to construction of the Minimum Improvements located on the tract of land described in the attached Exhibit A in accordance with the requirements of such document and is released and forever discharged from its obligations to construct the Minimum Improvements under such above-referenced Article on the above-referenced tract. DATED: July 16, 2001 By HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD Its Chairperson Its Executive Director By n f, J Attachment B • Mainstreet Village Items to be Completed Inspections• Rick Regnier, 612/861-9862 1. Schedule fmal inspections and make any required corrections on all open permits for this project. 2. Complete fourth floor bathroom at E-wing, schedule final inspection and make any required corrections on all open permits. - 3. Complete spa room, schedule final inspections and make any required corrections on all open permits. 4. Replace problem siding. 5. Complete exterior improvements including handrails at all stairway entrances and sidewalks from all exits to the public street (the public. sidewalk should be installed by the end of July). Public Works• Pat Dolan, 612/861-9799, or Randy Hughes, 612/861-9175 1. Replace three (3) Patmore Ash that were removed along 77th Street (see attached 77th Street landscape plan). 2. Replace sod along north side of 77th Street wall that was damaged due to non-working irrigation system (see attached 77th Street landscape plan). 3. Replace metal edging around replaced 77th Street planting bed. Match to existing. 4. Reinstall 77th Street boulevard sod. Sod was laid on Class 5 and will not survive; sod to be laid on topsoil. 5. Reimburse the City for the costs we incurred temporarily fixing the damaged irrigation system during the week of 90-degree weather (a bill is forthcoming). 6. Submit a plan for fixing the damaged irrigation system along 77th Street. Schedule a meeting with Randy Hughes by July 10 to review plan and schedule for doing the work. Work to be completed by July 16 or the City will do the work and charge the developer for all costs. 7. Submit plan and schedule for stormsewer clean-out to Pat Dolan. Work to be completed by July 16. 8. Adjust silt fencing along Lyndale Avenue to address all erosion issues until permanent sidewalk is installed. Contact Pat Dolan for details. 9. Complete installation of 77th Street replacement landscaping on the south side of the 77th Street wall: Replace Taunton Yews and Dwarf Bush Honeysuckle that were located in this area. Replace dead spruce tree with Colorado Green Spruce (8'). Relocate single row of daylilies installed on the south side of the sidewalk to this planting area. Install one strip of sod along sidewalk to ensure long-term survival of boulevard plantings (see enclosed landscape plan and photo). 10. Submit escrow for cost of 77th Street plantings to ensure survival over one winter season. 11. Review purpose of pipe left in boulevard planting bed on the north side of the 77th Street wall with Pat Dolan (see enclosed photo). What is it? What will be done with it? • 12. Submit a grit chamber maintenance agreement (see enclosed sample of an agreement the City has to do the work for another property owner). 07/09/01 Attachment B Community Development: Julie Urban; `6121861-9758, or John Stark, 612-861-9779, (after July I1) 1. Replace dead sod throughout the project site. 2. Install bike rack per approved plans. 3. Complete perennial garden in center area of parking lot, per approved plans. 4. Once sidewalk is installed along Lyndale Avenue, complete sod installation. 5. Record a Unity Agreement on the property title, as approved by the City Attorney. 6. The City will be constructing the sidewalk portion of the streetscape improvements along Lyndale Avenue .and 76th Street during the month of July. Improvements beyond the east right-of--way line of Lyndale Avenue are the responsibility of the developer, per the Supplement to Contract for Private Redevelopment. The City plans to construct the sidewalk along 76th Street and will require reimbursement from the developer. If the developer wishes to construct this improvement, contact Julie Urban or John Stark. All work to be completed by July 16 in order to obtain a Final Certificate of Occupancy unless other arrangements are made and agreed to by the Community Development, Public Works and Public Safety Departments. Any arrangements for later completion of work will require the submission of a cash escrow equal to twice the cost of improvements. • There is an existing Letter of Credit (LOC) that covers landscape improvements until July 31. A facsimile of the LOC was submitted to the City on December 6, 2000; however, the original LOC was neverreceived by the City. Please submit the original LOC. Pat Dolan (612-861-9799) must be contacted before work is to occur in boulevard areas. Pat will provide inspection of all work on City property. • 07/09/01 2