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02-20-01 agendaREVISED CITY OF RICHFIELD, MINNESOTA • HOUSING AND REDEVELOPMENT AUTHORITY TUESDAY, FEBRUARY 20, 2001 RICHFIELD CITY HALL 6700 PORTLAND AVENUE COUNCIL CHAMBERS 7 P.M. AGENDA Call to order 1. Approval of minutes of Regular HRA Meeting of January 16, 2001 2. Opportunity for citizens to address the HRA on items not on the agenda Notes: 3. HRA approval of agenda 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 purchase of 6444 Clinton Avenue for rehabilitation project under New Home Program S.R. No. 17 Notes: 5. Consideration of second amendment to contract for private redevelopment with Best Buy Co., Inc. Notes: REVISED 6. Consideration of further 45-day extension to CSM Investors II, Inc. for completion of closing contingencies in Lyndale Gateway area Staff Report No. 19 Notes: 7. Consideration of early acquisition strategy for Lyndale Hardware store and update of project by developer of City Bella, Gramercy Corporation Staff Report No. 20 Notes: 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. • • AGENDA ITEM # 7 REPORT # 20 STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING FEBRUARY 20, 2001 BRUCE NORDQUIST, REPORT PREPARED BY: HOUSING & REDEVELOPMENT MANAGER BRUCE NORDQUIST, REPORT PRESENTER: HOUSING & REDEVELOPMENT MANAGER NAME, TITLE DEPARTMENT DIRECTOR REVIEW: S/GNAT(/RE REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: Consideration of an early acquisition strategy for Lyndale Hardware store and an update of the project by the developer of City Bella, Gramercy Corporation. I. RECOMMENDED ACTION: By Motion: Authorize legal counsel, Kennedy and Graven, and financial consultant, Ehlers and Associates, to determine the conditions of payment, security for payment and repayment of a portion of the cost of acquisition of Lyndale Hardware in cooperation with Gramercy Corporation in an amount not to exceed $800,000. s f II. BACKGROUND Throughout 2000, the Housing and Redevelopment Authority (HRA) reviewed and then approved the City Bella project. One of the important elements to the project approval process was the option agreement to acquire Lyndale .Hardware. Gramercy Corporation and Lyndale Hardware entered into an option agreement in spring 2000, that called for the option to be exercised by December 30, 2000 and for the $3.4 million acquisition to be completed by March 2001. On December 30, Gramercy Corporation did not exercise the option. The preliminary financial approval and design work was still underway, and it was not appropriate for Gramercy to proceed with this size of expenditure. Lyndale Hardware, throughout 0220City Bella the option term, proceeded to make the necessary relocation decisions it believed necessary to retain both the business and the employees in Richfield. They were understandably surprised and disappointed by Gramercy's lack of action: The primary issues requiring resolution were the timing of acquisition and the assessment of compensation due Lyndale Hardware. Gramercy- Corporation has . drafted a memorandum of understanding. with Lyndale Hardware.. It calls for the distribution of sale proceeds to Lyndale Hardware in 2001 and 2002 with a closing in August 2001: Both parties are willing to consider these revisions if the HRA was prepared to play a role with the acquisition. HRA resources maybe needed during the present interim period while Gramercy continues to seek the financial commitment-from Federal Housing Administration (FHA) which allows the construction of the apartment tower. Lyndale Hardware is reluctant to wait for the commitment if it can find another buyer of the property that would perform before August. Although not consistent with the City Bella project or Lakes at Lyndale Master Plan, the potential buyers include Walgreens and Amoco. Lyndale Hardware was also contacted by an out-of--state mixed-use developer. The proposed interim period. role for the HRA would be to provide up to $800,000 toward the acquisition of the property. This amount matches the estimated value of the improvements presently located on the land: A recent source and use summary prepared by Gramercy Corporation for Ehlers, indicated a cost of acquisition of $3.5 million and a land value determined by a lender to be $2.7 million. The $800,000 difference between the two amounts represents the cost of improvements typically removed by the redevelopment process, a typical HRA "writedown" expense. As part of this report, Mike Conlan of Gramercy Corporation would like to update the HRA on the financial aspects of the project: The HRA has yet to review and approve the amount of tax increment financing (TIF) needed, the "But-for", the Business Subsidy, and the formation of the City Bella TIF district for the project. III. BASIS OF RECOMMENDATION A. hOLICY • The HRA has a development agreement with Gramercy Corporation, which provides for the acquisition of Lyndale Hardware by Gramercy. • HRA resources, typically tax increment financing, are used to fund-the redevelopment of land and improvements and the downward change in value when improvements are removed from the land often referred to as the "writedown." • All of the land use approvals are in place to proceed with a comprehensive redevelopment of the southwest quadrant of 66th Street and Lyndale Avenue with the mixed use "City Bella" development. • The recommended action places the HRA in a shared risk position • with the developer and the property owner while the FHA approval process continues. • The intent is to keep the project moving, including the timely relocation of Lyndale Hardware; maintaining the integrity of the Lakes at Lyndale ~- and City Bella concept plans; and minimizing the HRA risk by agreement with the developer. • This concept of early acquisition although modified to meet the circumstances of this situation goes as far back as the beginning of .the Lyndale-Hub-Nicollet (LHN) in the late 1970s and as recently as the purchase of the Gleason Mortuary in January. B. CRITICAL ISSUES • Timing.-- the HRA.would.. play a finan.cial.role in advancing the-project, if necessary. This allows Lyndale Hardware to move ahead with the relocation process and .Gramercy to move ahead to finalize its financial commitments. • City Bella would not proceed if Gramercy and Lyndale Hardware do not come to terms. • The deadline proposed by the parties is for removal of contingencies between :Gramercy and Lyndale Hardware by April 1, 2001. HRA consideration of support at this time allows the HRA's legal and financial advisors to determine the conditions of payment, payment security and repayment for the $800,000. The HRA would review the proposed agreement at the March meeting. C. FINANCIAL • To minimize the HRA's risk, preparation of the agreement between the HRA and Gramercy to commit the $800,000 would consider the following questions: - When is the payment needed? (April 1, August 30, not at all?) - What will be the method to secure the payment? (Note and mortgage or other method?) - How will the payment be repaid? (Lump sum prior to construction start or reimbursement with tax increment generated by the project?) • Potential situations that could arise will also be discussed: - Gramercy Corporation's refusal or inability to perform. - Lyndale Hardware's failure to agree to the modified payment, schedule or their continuation of a search for an alternative buyer. - The possibility that the HRA's commitment, with terms, may not be satisfactory to Gramercy and Lyndale Hardware. • . Conditions of payment, payment security, and a repayment will be evaluated by the financial advisors and legal counsel and presented to the HRA in agreement form on March 19. • Bonds of 1996 proceeds are available to provide the HRA's portion of acquisition. D. LEGAL • Legal counsel concurs with the approach and would be responsible for drafting appropriate documents related to the transaction. IV. ALTERNATIVE RECOMMENDATION~S~ • The HRA's $800,000 early contribution may not be necessary if financing approval by FHA and relocation by Lyndale Hardware moves ahead in unison. However,. HRA support, if not provided at this time, leaves the project at great risk. • The HRA can choose to acquirerLyndale-Hardware, at an estimated acquisition cost of $3.5 million. Resources to acquire would. have to be identified. • .The HRA can choose to acquire Lyndale Hardware. from Gramercy for $3,5 million at a future date after Gramercy purchases-.but fails to secure the needed financial commitments. However, resources would still need to be identified. The $800,000 recommendation represents that portion of the acquisition cost that might not be recovered by Gramercy if Gramercy chooses to sell in the future for something different than City Bella. • The HRA could remove the Lyndale Hardware site from the redevelopment district at the request of Gramercy to give Gramercy more development flexibility if City Bella did not proceed. V. ATTACHMENTS • N/A VI. PRINCIPAL PARTIES EXPECTED AT MEETING • Mike Conlan, Gramercy Corporation • Ernie Lindstrom representing Lyndale Hardware and John Sieff • J STAFF REPORT AGENDA ITEM # REPORT # HOUSING AND REDEVELOPMENT AUTHORITY MEETING FEBRUARY 20, 2001 JOHN STARK;. REPORT PREPARED BY: COMMUNITY DEVELOPMENT MANAGER Nance, Tirt,E BRUCE-PALMBORG, REPORT PRESENTER: COMMUNITY DEVELOPMENT DIRECTOR Nang:, TiTr,r DEPARTMENT DIRECTOR REVIEW: ~/~/~ _ REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: Consideration of a further 45-day extension to CSM Investors II, Inc. far their completion of closing contingencies in the Lyndale Gateway area. I. RECOMMENDED ACTION: By Motion: If provided with evidence of a lease between CSM Investors ll, Inc, and their primary. tenant (Walgreen's) - Approve a 45- day extension for the completion of .closing contingencies as described in the Contract for Private Redevelopment, contingent upon an agreement regarding the scheduling and cost allocation of the Lyndale Avenue reconstruction project be made between CSM Investors II, Inc.. and the City of Richfield. • III. BACKGROUND On January 18, 2000, the Richfield-Housing and Redevelopment Authority (HRA) entered into a Contract for Private Redevelopment with CSM Investors II, Inc. (CSM) for the redevelopment of Phase III of the Lyndale Gateway development. Section 3.1 of that agreement describes several "Closing Contingencies" that CSM must achieve before commencing the project. Among those Closing Contingencies are CSM's execution of purchase agreements or request of condemnation on all 0220csm properties in the development area as well as signed leases for at least 66% of the planned commercial space. CSM has since re uested two extensions in an effort to enter into a lease with their q primary tenant, Walgreen's. On January 16, 2001, the HRA approved a 30-day extension to CSM. This extension contained the provision that, if CSM can show evidence of a signed lease with Walgreen's by the end of that period, then the HRA would grant an additional 45-day extension in order to-allow CSM time to negotiate with property owners prior to making a request for condemnation to the HRA. As of the date of the drafting of this'staff report (February 14), CSM had not yet secured a signed lease with Walgreen's. The HRA also made a stipulation that CSM and the City's Department of Pubic Works are to enter into an agreement regarding the scheduling. and cost allocation of the Lyndale Avenue reconstruction project. While there is not yet a formal agreement, there has been .significant progress toward doing so. Public Works staff has met twice with CSM and a conceptual framework for completing the reconstruction within the established budget. A memo from Public Works Director Mike Eastling is attached; this memo illustrates his confidence in the ability to reach. agreement on the street reconstruction issues. III. BASIS OF RECOMMENDATION A. POLICY • The HRA entered into a Contract for Private Redevelopment with CSM for Phase III of the Lyndale Gateway redevelopment on January 18, 2000. • That contract contains certain Closing Contingencies, including site assembly and standards for the required degree of pre-leasing. • On January 16, 2001, the HRA granted a 30-day extension for the completion of closing contingencies with the understanding that, if CSM provides a lease with Walgreen's within the extension period, then an additional 45-day extension would be considered. B. CRITICAL ISSUES • If CSM cannot acquire the redevelopment property prior to August 1, 2001, then the road reconstruction project cannot proceed as .planned. • The uncertainty of the future continues. for the current owners and occupants. C. FINANCIAL • N/A D. LEGAL • N/A IV. ALTERNATIVE RECOMMENDATION(S~ • Absent evidence of a signed lease. with Walgreen's; deny the request for a 45-day extension for completion of cloning contingencies. This will result in CSM's non-compliance with the contract and .render it terminable. Direct staff to return to the March 19 HRA meeting with a resolution terminating the contract with CSM and a timetable for selecting an alternative developer. V. ATTACHMENTS • Memo from Public Works Director Mike Eastling VI. PRINCIPAL PARTIES EXPECTED AT MEETING • Murray Kornberg of CSM • • CITY OF RICHFIELD Memorandum DATE: February 14, 2001 TO: -John Stark, Community Development Manager FROM: Mike Eastling, Public Works Director SUBJECT: Lyndale Avenue Reconstruction Agreement It is my understanding that the Richfield HRA stipulated, at their January 16, 2001 meeting, that the City of Richfield and CSM Properties, Inc. were to enter into a Lyndale Avenue Reconstruction Agreement within 30 days. This agreement was to identify the schedule and cost allocation of the Lyndale Avenue reconstruction project. While no such agreement has been formalized, there has been significant progress in doing so. Public Works staff have met with representatives of CSM several-times since the January 16 HRA meeting and have verbally agreed on the schedule and funding for the street reconstruction project including the "streetscape" improvements. I feel confident that, if CSM can secure a lease with Walgreen's, then a formal Lyndale Avenue Reconstruction Agreement can be executed shortly thereafter. C7 • • AGENDA ITEM # r~ REPORT # 18 STAFF REPORT ~ HOUSING AND REDEVELOPMENT AUTHORITY MEETING FEBRUARY 20, 2001 __ JOHN STARK, REPORT PREPARED BY: COMMUNITY DEVELOPMENT MANAGER NAME, TITLE BRUCE PALMBORG, REPORT PRESENTER: COMMUNITY DEVELOPMENT DIRECTOR NAME, Tl%7.1: DEPARTMENT DIRECTOR REVIEW: ~~ REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: Consideration of a Second Amendment to the Contract for Private Redevelopment with Best Buy Co., Inc. I. RECOMMENDED ACTION: By Motion: Approve the Second Amendment to the Contract for Private Redevelopment with Best Buy Co., Inc. III. BACKGROUND I On March 20,.2000, the Richfield Housing and. Redevelopment Authority (HRA) adopted, and entered into, a Contract far Private Development with Best Buy for the redevelopment of the Interchange West area. In November, the HRA approved the First Amendment to the Contract with Best Buy. The primary reason for that amendment was to more accurately reflect the actual site assembly costs and the necessary amount of public financing to cover a portion of those costs. The attached Second Amendment to the Contract contains several modifications; with additions shown as underlined passages and deletions shown as strikethroughs. Among the modifications are: an ability for the HRA to convey portions of the redevelopment property rnstead of all at once; an understanding that Best Buy may receive properties subject to leases, etc.; an agreement that Best Buy will use land sales proceeds from property acquired for 1-494 widening for 0220cont payment of Penn Avenue bridge costs; and a change in commencement of construction date to 90 days following acquisition of the redevelopment property. III. BASIS OF RECOMMENDATION A. POLICY • The Second Amendment to the Contract contains modifications necessary to reflect the current status of the redevelopment project. B. CRITICAL ISSUES The approval of several of the provisions contained in the Second Amendment to the Contract is necessary for the project to proceed. C. FINANCIAL • There are no provisions in the Second Amendment to the Contract, which represent any additional financial contributions or risk by the City or HRA. D. LEGAL • Legal counsel drafted the Second Amendment to the Contract in cooperation with Best Buy attorneys. IV. ALTERNATIVE RECOMMENDATION(S~ None. V. ATTACHMENTS A draft of the Second Supplement to the Contract for Private Development with Best Buy Co., Inc. VI. PRINCIPAL PARTIES EXPECTED AT MEETING Representatives of Best Buy. • DRAFT 2/13/01 SECOND AMENDMENT TO CONTRACT FOR PRIVATE DEVELOPMENT THIS AGREEMENT, made and entered into as of the day of February, 2001, 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 BEST BUY CO., INC., a Minnesota corporation-(the "Redeveloper"). WITNESSETH: WHEREAS, the. parties hereto did on or about March 20, 2000 enter into an agreement entitled, Contract for. Private Redevelopment, (the "Contract"), calling for the redevelopment of an area of land (the "Property") .lying within the City of Richfield; and WHEREAS, the parties hereto did on or about November 20, 2000 .enter into an agreement entitled, First Amendment to Contract for Private Redevelopment (the "First Amendment") which amended the Contract; and .WHEREAS, events subsequent to the First Amendment have established that additional modifications to the Contract should be made; and NOW, THEREFORE, based upon the mutual covenants and undertakings hereinafter, and in the Contract provided, the parties hereto stipulate and agree as follows: I. The Contract is hereby amended in the following respects: (New material underlined and deleted material stricken through) 1. Section 3.5 subd. 1 is hereby amended to read as follows: Subdivision 1. Conveyance: Following the date on .which the Authority has obtained title and possession of the Property it shall convey the same to the Developer by quit claim deed. The Authority shall also prior to Closing at the request of the Developer, convey to it portions of the Property upon such security as the Authority shall deem appropriate. Notwithstanding anything stated herein, Developer shall have the right to require the Authority to convey title to the portions of the Development Property, including title to all or any portion of the Minimum Improvements to be constructed. thereon, that the Authority has acquired directly to a so-called "special purpose", "synthetic lease" or "sale- . leaseback" entity, provided that Developer agrees to and does assume any and all obligations, liabilities, duties, benefits, and rights (.including, but not limited to the right to receive any and all the proceeds of the Public Assistance) under this Agreement until Developer completes construction of the Minimum Improvements as required herein. The Closing shall take place not later than 10 days following .the .date that the Authority has acquired the Property, and has notified Developer in writing of such acquisition, and the Developer has furnished the Authority with written evidence reasonably satisfactory that all the provisions of paragraph 3.3(b) above remain true. The deed shall contain a restriction in substantially the form of the attached Exhibit H. The Developer agrees that it will accept conv~ances of portions of the Property notwithstanding the fact that the conveyance may be subject to leases licenses or similar instruments with entities that were in possession of such portions of the Property prior to the date that the Authority obtained title, but only if: i) the right of to remain on the Property terminates on or before June 15, 2001; and, ii) he entity is obligated to~a~r,-taxes and special assessments for the period of occupancy. Subject to any allocation required by Minnesota Statutes Section 272.68, or other law, all fees collected will be credited to the acquisition cost of the property covered by the.. instrument. 2. Section 3.5 subd. 2 is hereby amended to read as follows: Subdivision 2. Public Assistance... It is the intention of the parties that the funds that Developer has expended in connection with and related to the acquisition of the Property, both through negotiated purchase and condemnation, should be reimbursed to the extent and in the manner hereinafter provided. It is further understood that Developer would not otherwise have undertaken such expenditures absent reimbursement. Accordingly, at Closing, the Authority shall execute and deliver the Note to Developer. The Note will be in substantially the form of the attached Exhibit G. The actual principal amount of the note shall be determined at the time of Closing. Such amount shall be the Developer's actual costs incurred in connection with and related to the acquisition of the Development Property, as such costs are described in Section 3.2 Subd. 3 (6), minus $8,600,000. However, in no event shall the principal amount of the Note exceed $48,073,127. 3. Section 3.6(a) is hereby amended to read as follows: Section 3.6. Public Improvements. (a) The Authority and the Developer acknowledge and agree that as a result of the Developer's. construction of the Minimum Improvements, it will be necessary for the Authority to provide, at no cost to the Developer, except as specifically provided in this Agreement, for construction of certain Public Improvements including but not limited to, the improvement and widening of the Penn Avenue Bridge and any and all improvements to 76t" Street and any and all other streets, avenues, highways or freeways adjacent to or serving the Development .Property. The Public Improvements will consist generally of the items shown on the attached Exhibit J, ("Public Improvements"), and will be financed, except as otherwise required in this Agreement, without cost or involvement or obligation of the Developer, in the manners shown on such exhibit. The Developer agrees that any funds Developer receives as compensation for acquisition of any part of the Redevelopment Property for I-494 improvements up to $7 000 000 will be contributed by it to the City to be used in funding the Penn Avenue Bridge Project. The funds will be contributed at closing or at such later date as they become available to Developer. 3. Section 4.1 is hereby amended to read as follows: Section 4.1. Construction of Minimum Improvements. Subject to and .conditioned upon the acquisition of, and the unrestricted right to possession of, all of the Development Property o;~ re Co~r,..,r., ~ ~nn~, and subject to and conditioned upon all of the terms and conditions of this Agreement, the Developer agrees that it will construct the Minimum Improvements on the Development Property substantially in accordance with the approved Construction Plans and at all times prior to the Termination Date will use reasonable efforts to maintain, preserve and. keep the Minimum Improvements or cause the Minimum Improvements to be maintained, preserved and kept with the appurtenances and every part and parcel thereof; in good repair and condition, normal wear and tear excepted. 4. Section 4.3 (a) is hereby amended to read as follows: Section 4.3. Commencement and Completion of Construction. (a) Subject to Unavoidable Delays, Developer's failure, following timely application, to obtain all governmental approvals required, the failure of the City or Authority, following timely request by the Developer, in approving the Plans within the time frames established herein, the failure of the Authority to pay all or any portion of the Public Assistance in accordance with the terms and conditions of Section 3.3 (d) herein, and/or the failure of the City to relocate the utilities and construct and install the Public Improvements in accordance with the terms and conditions of this Agreement, the Developer shall commence construction of the Minimum Improvements by ~88~- not • later than 90 days following the date it has obtained the unrestricted right to possession of the Redevelopment Property. Subject to Unavoidable Delays, the Developer shall substantially complete the construction of the Minimum Improvements ~AB~~ within eighteen months following the commencement of construction. All work with respect to the Minimum Improvements to be constructed or provided by the Developer on the Development Property shall be in substantial conformity with the Plans as submitted by the Developer and approved by the Authority. The Developer agrees for .itself, its successors and assigns, and every successor in interest to the Development Property,. or any part thereof, that the Developer, and such successors and assigns, shall begin and diligently prosecute to completion the- development of the Development Property through the construction of the Minimum Improvements thereon, and that such construction shall, subject to the terms of this Agreement; be commenced and completed within the period specified in this Section 4.3. Subsequent to conveyance of the Development Property to the Developer, and until construction of the Minimum Improvements has been completed, the Developer shall make reports; in such detail and at such times as shall be mutually agreed upon by the Developer and the Authority, as to the actual progress of the Developer with respect to such construction. 5. Section 8.2(a) is hereby amended to read as follows: (a) Except only (i) by way of security for, and only for, the purpose of obtaining financing necessary to enable the Developer or any successor in interest to the . Development Property, or any part thereof, to perform its obligations with respect to making the Minimum Improvements under this Agreement, and any refinancing in whole or in part of any of the foregoing, or (ii) any assignment of Developer's rights and obligations under this Agreement to any entity with whom Developer has entered into an agreement to perform the Minimum. Improvements on behalf of Developer, the Developer has not made or created -and will not make or create or suffer to be made or created any total or partial sale, assignment, conveyance, or lease, or any trust or power, or transfer in any other mode or form of or with respect to the Agreement, the Development Property or the Minimum Improvements or any part thereof or any interest therein, or any contract or agreement to do any of the same, without the prior written approval of the Authority, which approval shall .not be unreasonably withheld or delayed, unless the Developer remains liable and bound by this Agreement in which event the Authority's approval is not required. Any such transfer shall be subject to the provisions of this Agreement. The foregoing. shall not in any way restrict the right of the Developer to sell or transfer the Development Property and the Minimum Improvements in connection with a sale of all or substantially all of the assets of Developer. Notwithstanding the above, the Developer shall be entitled to (i) transfer the Development Property, including the Minimum Improvements constructed or to be constructed thereon, and assign this Agreement to an entity owned or controlled by Developer, provided such entity .assumes the Developer's obligations under this Agreement or (ii) transfer the Development Property, including the Minimum Improvements constructed or to be constructed thereon, without assigning this Agreement, to a so-called "special purpose","synthetic lease" or "sale/leaseback" entity provided that the Developer agrees to and does assume any and all obligations, liabilities, duties, benefits, and rights (including, but not limited to the right to receive any and all of the proceeds of the Public. Assistance) under this Agreement until Developer completes construction of the Minimum Improvements as required herein. • 6. Section 9.2 is amended to read as follows: Section 9:2. Remedies on Default Whenever any Event of Default occurs and is continuing, the party claiming such Event of Default may exercise the following rights: (a) Suspend its performance under this Agreement until it receives assurances that the defaulting party will cure its default and continue its performance under the Agreement; (b) Cancel any payments due under the Note for the period of the Default; and upon termination of the Agreement, cancel the Note; ~c) If the default relates to the payment required to be made by the Developer under Section 3 6 (a) withhold delivery of the Note, or if delivered, cancel the Note. (d) Cancel and rescind or terminate this Agreement; or (e) Take whatever action, including legal, equitable or administrative action, which may .appear necessary or desirable to collect any payments due under this Agreement, or to enforce performance and observance of any obligation, agreement, or • covenant under this Agreement. Notwithstanding the foregoing, in no event shall the Authority be entitled to withhold the Certificate of Completion and Release of Forfeiture if the Minimum Improvements have been substantially completed in accordance with Section 4.4 hereof, whether such completion occurs before or after the date required therefor, except as otherwise provided in Section 4.4(a) hereof. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed in their behalf by their authorized representatives on or as of the date first above written. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD By Its Chair By Its Executive Director STATE OF MINNESOTA ss.: • COUNTY OF HENNEPIN The foregoing instrument was acknowledged before me this day of 2000 by Thomas E. Harms and Samantha Orduno, the Chair and Executive Director, respectively, of the Housing and Redevelopment Authority in and for the City of Richfield, a public body corporate and politic under the laws of Minnesota, on behalf of the Authority. Notary Public STATE OF MINNESOTA • COUNTY OF HENNEPIN ss.. BEST BUY CO., INC. By: Its: The foregoing instrument was acknowledged before me this day of , 2000 by ,the of Best Buy Co., Inc., a Minnesota corporation, on behalf of the corporation. Notary Public • STAFF. REPORT AGENDA ITEM # CFA REPORT # 17 HOUSING AND REDEVELOPMENT AUTHORITY MEETING FEBRUARY 20, 2001 C7 PAM BOOKHOUT, REPORT PREPARED BY: REHABILITATION SPECIALIST NAME, TITLE REPORT PRESENTER: BRUCE PALMBORG, COMMUNITY DEVELOPMENT DIRECTOR DEPARTMENT DIRECTOR REVIEW: SIGNA7T /Rl REVIEWED BY EXECUTIVE DIRECTOR: ~ ~~ , ~~ ® n ITEM FOR HRA CONSIDERATION: Consideration of a resolution authorizing purchase of 6444 Clinton Avenue for a rehabilitation project under the New Home Program. I. RECOMMENDED ACTION: By Motion: Approve the resolution authorizing the purchase of real property located at 6444 Clinton Avenue South for rehabilitation under the New Home Program. IL BACKGROUND The subject property is a 976 sq. ft. rambler that is in good structural condition. The owner of the property died in October 1999. The family as property trustee has asked the Richfield Housing and Redevelopment Authority (HRA) if the home could become part of a program to help out an income-qualified person in need of affordable housing. The HRA has redeveloped sites under the New Home Program with affordable • housing for low income families for over 20 years. The U.S. Department of Housing and Urban Development (HUD) defnes low income as at or below 80 percent of the median income-for example $45,200 annually for a family of three. Homes developed under the New Home Program, whether remodeled or built new, are sold 0220-6444CIinton to buyers meeting that definition. Therefore, federal Community Development Block Grant {CDBG) funds may be used for the acquisition. • A potential buyer has been identified who meets income requirements, is a first-time buyer, and is seeking an accessible home. Improvements to the home are yet to be determined, but likely will include general updates such as new siding and electrical repairs, as well as remodeling the kitchen, bath and entrances for accessibility. CDBG funds would go towards improvements as well as acquisition. In order to fully utilize federal funding for acquisition, the. City can purchase the property and subsequently transfer it to the HRA to re-sell at the appropriate time. At their January 22 meeting, the City Council approved a resolution authorizing purchase of the property and subsequent sale to the HRA. A public hearing and second reading of the transitory ordinance allowing conveyance to the HRA are scheduled for February 26, 2001. It is anticipated that the City could acquire the property by early March. Sale of the property to the HRA could occur by April 2001 if the transitory ordinance is approved at the February 26, 2001 City Council meeting. The HRA would be responsible for any holding. or maintenance costs incurred at the property after acquisition by the City. Affordable Suburban Housing (ASH) is interested in coordinating the remodeling and subsequent sale to the end buyer. A contract with ASH would be brought before the. HRA for consideration at a subsequent meeting.. • III. BASIS OF RECOMMENDATION A. POLICY The property trustee is interested in selling the property to the City/HRA for purposes of providing affordable housing to a low to moderate income first-time buyer. • To fully utilize federal dollars, the City must acquire the property and transfer the property to the HRA. The City authorized purchase on January 22, 2001. • The acquisition and disposition of the property are in conformance with the Comprehensive Plan. There is no change in .land use. B. CRITICAL ISSUES • N/A C. FINANCIAL • Funds have been budgeted for acquisition and rehabilitation from federal CDBG funds and from proceeds of sale. CDBG funds must be utilized for these purposes, and the site must be • used to provide, a new home for an income-qualified buyer. • D. LEGAL . • The sale from the City to the HRA will require a City Council public hearing and second reading of a transitory ordinance scheduled for February 26, 2001. IV. ALTERNATIVE RECOMMENDATION~S~ • The HRA can choose not to acquire the property. V. .ATTACHMENTS • Resolution VI. PRINCIPAL PARTIES EXPECTED AT MEETING N/A • • HRA RESOLUTION NO. • RESOLUTION AUTHORIZING PURCHASE OF REAL PROEPRTY LOCATED AT 6444 CLINTON AVENUE FOR THE NEW HOME PROGRAM WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (HRA) desires to purchase certain real property pursuant to and in furtherance of the New Home Program, said property being described as: Lot 6, Block 2, Ralph Milner's Second Addition; and WHEREAS, the HRA-is authorized by Minnesota Statutes Section 469.012 to acquire real property within its area of operation; and WHEREAS, the property meets all program requirements for acquisition; and WHEREAS, the HRA has negotiated a purchase price of $126,000 based on an independent appraisal; and WHEREAS, funds are available for acquisition. NOW, THEREFORE, BE IT RESOLVED by the City of Richfield Housing and Redevelopment Authority: • 1. The purchase price for 6444 Clinton Avenue is approved at $126,000. 2. The Chairperson and Executive Director are authorized to execute a Purchase Agreement and other documents to allow purchase for the amount set forth in this resolution. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota on this 20th day of February 2001. Thomas E. Harms, Chair ATTEST: Michael Sandahl, Secretary •