07-17-00 agendaCITY OF RICHFIELD, MfNNESOTA
HOUSING AND REDEVELOPMENT AUTHORITY
MONDAY, JULY 17, 2000
RICHFIELD CITY HALL
6700 PORTLAND AVENUE
COUNCIL CHAMBERS
7 P.M.
AGENDA
Call to order
Approval of minutes of (1) Regular HRA Meeting of June 19, 2000 and (2) Special Joint City
Council/HRA Study Session of June 29, 2000
1. Opportunity for citizens to address the HRA on items not on the agenda
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 resolution authorizing HRA not to waive monetary limits on
statutory municipality tort liability established by Minnesota Statutes 466.04 S.R. No. 41
B. Consideration of approval of resolution authorizing acquisition of 1015 East 69th Street
under Richfield Rediscovered Program S.R. No. 42
Notes:
ADMINISTRATIVE REPORTS AND OTHER BUSINESS
4. Consideration of contract for private redevelopment between Gramercy Corporation and
HRA for City Bella project, 66th Street and Lyndale Avenue
Staff Report No. 43
Notes:
RESOLUTIONS
-5. Consideration of resolution- authorizing eminent domain proceedings to acquire certain
real properties within Interchange West area located at and adjacent to 2100 West 78th
Street
Staff Report No. 44
Notes:
6. Consideration of resolution consenting to time extension to request eminent domain
proceedings within Interchange. West area
Staff Report No. 45
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..
r
~~ ~~ STAFF REPORT
RESOLUTIONS
46
AGENDA SECTION:
AGENDA ITEM #
REPORT #
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
JULY 17, 2000
•
REPORT PREPARED BY: 70HN STARK, COMMUNITY DEVELOPMENT
MANAGER
NAME, TITLE
REPORT PRESENTER: BRUCE PALMBORG, COMMUNITY
DEVELOPMENT DIRECTOR
NAME, TITLE
DEPARTMENT DIRECTOR REVIEW: ~ ~ D
REVIEWED BY EXECUTIVE DIRECTOR:
i'
ITEM FOR HRA CONSIDERATION:
Consideration of a resolution approving .clarifications to the Richfield. Redevelopment Project.
Area.
I. RECOMMENDED ACTION:
By Motion: Approve the attached resolution regarding clarifications
to the Richfield Redevelopment Project Area.
III. BACKGROUND ~
On June 14, 1993 the Richfield Housing and Redevelopment Authority (HRA)
adopted the Redevelopment Plan for the Richfield Redevelopment Project Area.
On June 14, 1999, the HRA approved certain Modifications to the Redevelopment
Plan. These Modifications were made in order to accommodate the redevelopment
plans for the Interchange West and Lyndale Gateway areas.
Legal counsel has advised that clarification should be made to the Redevelopment
Plan Modifications to more accurately. reflect the intentions of the plan. Counsel
further advises that these clarifications are insubstantial in nature and are intended
to clarify the acquisition intentions of the HRA. The clarifications do not alter or
amend the individual parcels to be acquired, but rather clarify language .regarding
the process for acquisition.
0717Rede
III. BASIS OF RECOMMENDATION
A. POLICY
• On June 14, 1993, the HRA adopted the Redevelopment Plan for the
Richfield Redevelopment Project Area.
• On June 14, 1999, the HRA approved certain Modifications to the
Redevelopment Plan.
• Legal counsel has advised thatsuch changes be made to the
Redevelopment Plan Modifications in order to clarify the original intent
of the plan concerning the areas to be acquired: and the_relative
acquisition responsibilities of the parties.
B. CRITICAL ISSUES
• Legal counsel recommends that these changes to the Redevelopment
Plan Modifications should be made.
C. FINANCIAL
• There are no significant financial issues.
D. LEGAL
• Legal counsel drafted the attached resolution.
• Legal counsel has stated that this action does not require published
notice, a public hearing or further City Council or Planning
Commission actions.
IV. ALTERNATIVE RECOMMENDATION(S~
• Do not approve the changes to the Modifications to the Redevelopment Plan.
V. ATTACHMENTS
• Attachment A: Resolution approving changes to Modifications of the
Redevelopment Plan for the Richfield Redevelopment Project Area.
VI. PRINCIPAL PARTIES EXPECTED AT MEETING
• HRA legal counsel, Corrine Thomson.
Attachment A
HRA RESOLUTION NO.
RESOLUTION APPROVING CLARIFICATIONS TO
MODIFICATIONS OF THE REDEVELOPMENT
-PLAN FOR THE. RICHFIELD REDEVELOPMENT
PROJECT AREA.
WHEREAS, the City of Richfield (the "City'), on June 14, 1993 following application
by the Housing and Redevelopment in and for the City of Richfield .(the "HRA"), did adopt
the Redevelopment-Plan for the Rich'field Redevelopment Project'Area`(the
"Redevelopment Plan"); and
WHEREAS, on June 14, 1999 the City upon application of the HRA, authorized the
adoption of certain modificationsto the Redevelopment Plan (the "Modified
Redevelopment Plan"); and
WHEREAS, the HRA currently has under consideration the proposed development
of a tract of land located within the exterior boundaries of the Richfield Redevelopment
Project Area, and within the area designated in the Modified Redevelopment Plan for
possible acquisition in Subsection G of the Modified Redevelopment Plan; and
WHEREAS, the HRA determines it to be reasonable and appropriate to clarify the
provisions of said: Subsection G, so as to better inform as to the acquisition intentions of
the HRA within the portions of the Richfield Redevelopment Project Area covered bythe
proposed development; and
WHEREAS, the HRA further determines that the proposed changes do not alter or
affect the exterior boundaries of the Richfield Redevelopment Project Area, and do not
substantially alter or affect the general land uses established in the Modified
Redevelopment Plan.
NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment
Authority in and for the City of Richfield that Subsection G of the Modified Redevelopment
Plan is hereby amended to read as follows:
Subsection G. Parcels for Acquisition
Developers will be initially responsible for undertaking of acquisition of parcels.
within the boundaries of the Interchange West and Lyndale Gateway Tax Increment
Financing District. Without limitation, those parcels include the following:
Address PID
7601 Penn Avenue 33-028-24-33-0037
7609 Penn Avenue 33-028-24-33-0036
7615 Penn Avenue 33-028-24-33-0035
7621 Penn Avenue 33-028-24-33-0034
7627 Penn Avenue 33-028-24-33-0033
7633 Penn Avenue 33-028-24-33-0032
s
•
7639. Penn Avenue 33-028-24-33-0031
7649 Penn Avenue 33-028-24-33-0012
7600 Oliver Avenue 33-028-24-33-0021
7604 Oliver Avenue 33-028-24-33-0022
7610 Oliver Avenue 33-028-24-33-0023
7614 Oliver Avenue 33-028-24-33-0024
7620 Oliver Avenue 33-028-24-33-0025
7624 Oliver Avenue 33-028-24-33-0026
7628 Oliver Avenue 33-028-24-33-0027
7634 Oliver Avenue 33-028-24-33-0028
7638 Oliver Avenue 33-028-24-33-0029
7644 Oliver Avenue 33-028-24-33-0030
7601 Oliver Avenue 33-028-24-33-0064
7609 Oliver Avenue 33-028-24-33-0063
7615 Oliver Avenue 33-028-24-33-0089
7621 Oliver Avenue 33-028-24-33-0088
7627 Oliver Avenue 33-028-24-33-0087
7633 Oliver Avenue 33-028-24-33-0062
7639 Oliver Avenue 33-028-24-33-0061
7645 Oliver Avenue 33-028-24-33-0060
7600 Newton Avenue 33-028-24-33-0052
7608 Newton Avenue 33-028-24-33-0053
7614 Newton Avenue 33-028-24-33-0054
7620 Newton Avenue 33-028-24-33-0055
7626 Newton Avenue 33-028-24-33-0056
7632 Newton Avenue 33-028-24-33-0057
7638 Newton Avenue 33-028-24-33-0058
7644 Newton Avenue 33-028-24-33-0059
7601 Newton Avenue 33-028-24-33-0078
7605 Newton Avenue 33-028-24-33-0079
7611 Newton Avenue 33-028-24-33-0080
7617 Newton Avenue 33-028-24-33-0081
7623 Newton Avenue 33-028-24-33-0082
7629 Newton Avenue 33-02.8-24-33-0083
7633 Newton Avenue 33-028-24-33-0084
7639/41 Newton Avenue 33-028-24-33-0085
7643/45 Newton Avenue 33-028-24-33-0086
7600 Morgan Avenue 33-028-24-33-0038
7608 Morgan Avenue 33-028-24-33-0039
7614 Morgan Avenue 33-028-24-33-0040
7620. Morgan Avenue 33-028-24-33-0041
7624 Morgan Avenue 33-028-24-33-0042
7628 Morgan Avenue 33-028-24-33-0043
7634 Morgan Avenue 33-028-24-33-0044
7638/40 Morgan Avenue 33=028-24-33-0045
7642/44 Morgan Avenue 33-028-24-33-0046
7601 Morgan Avenue 33-028-24-33-0090
7609 Morgan Avenue 33-028-24-33-0091
f
7615 Morgan Avenue 33-028-24-33-0047
7621 Morgan Avenue. 33-028-24-33-0048
7625 Morgan Avenue 33-028-24-33-0049
7629 Morgan Avenue 33-028-24-33-0050
7639/41 Morgan Avenue 33-028-24-33-0051
7645/47 Morgan Avenue 33-028 24-33-0004
1915 76th Street 33-028-24-33-0001
7608/10 Logan Avenue 33-028-24-33-0002
7614/16 Logan Avenue 33-028-24-33-0015
7620/22 Logan Avenue 33-028-24-33-0016
7626/28 Logan Avenue _. 33-028-24-33-0017
7632/34 Logan Avenue 33-028-24-33-0018
7636/38 Logan Avenue 33-028-24-33-0019
7644/46 Logan Avenue 33-028-24-33-0020
7601 Logan Avenue 33-028-24-34-0006
2015/25 77th Street 33-028-24-33-0008
2101 /09/15/21 77th Street 33-028-24-33-0010
7615 Logan Avenue 33-028-24-34-0005
7629/35 Logan Avenue 33-028-24-34-0014
7639/45 Logan Avenue 33-028-24-34-0015
7700 Logan Avenue 33-028-24-33-0005
7701 Logan Avenue 33-028-24-34-0007
7708 Logan Avenue 33-028-24-33-0006
7600. Knox Avenue 33-028-24-34-0002
7608 Knox Avenue 33-028-24-34-0003
7626 Knox Avenue. 33-028-24-34-0009
7700 Knox Avenue 33-028-24-34-0010
7701 Penn Avenue 33-028-24-33-0013
7745 Penn Avenue 33-028-24-33-0014
7701 Newton Avenue 33-028-24-33-0009
2100 78th Street W. 33-028-24-33-0011
2026 78th Street W. 33-028-24-33-0067
2024 78th Street W. 33-028-24-33-0066&65
2022 78th Street W. 33-028-24-33-0068
2020 78th Street W. 33-028-24-33-0069
2016 78th Street W. 33-028-24-33-0070
2000 78th Street W. 33-028-24-33-0007
1920 78th Street W. 33-028-24-33-0093
1900 78th Street W. 33-028-24-34-0013
7701 Morgan Avenue 33-028-24-33-0094
7705 Morgan Avenue 33-028-24-33-0095
7713 Morgan Avenue 33-028-24-33-0077
7725 Morgan Avenue 33-028-24-33-0072
The Housing and Redevelopment Authority will consider acquisition of any parcels,
including those listed in Exhibit A, not acquired by developers following reasonable efforts
to do so.
In addition, the following parcels, not located within the boundaries of the
Interchange West and Lyndale Gateway Tax Increment District, have been designated for
acquisition:
26-028-24-32-0033 Housing
26-028-24-31-0046 Retail space
34-028-24-34-0067 Housing
34-028-24-34-0070 Mortuary
34-028-24-34-0049 Housing
34-028-24-34-0068 Housing
34-028-24-34-0052 City Garage
28-028-24-33-0069 Housing and storm water retention
28-028-24-33-0068 Housing and storm water retention
28-028-24-33-0067 Housing and storm water retention
28-028-24-33-0066 Housing and storm water retention
28-028-24-33-0065 Housing and storm water retention
Z8-028=24-33-0064 Housing and storm.water retention
28-028-24-33-0063 Housing and storm water retention
Adopted by the Board of Commissioners of the Housing and Redevelopment
Authority in and for the -City of Richfield this 17th day of July, 2000.
Michael Sandahl, Secretary
Thomas E. Harms, Chair
•
•
AGENDA SECTION: Resolutions
AGENDA ITEM # ~(P
REPORT # ~~ C~
~- STAFF REPORT
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
JULY 17, 2000
REPORT PREPARED BY: JOHN STARK,
COMMUNITY DEVELOPMENT MANAGER
NAME, TITLE
REPORT PRESENTER: BRUCE PALMBORG, COMMUNITY
DEVELOPMENT DIRECTOR
NAME, TITLE
DEPARTMENT DIRECTOR REVIEW: ~ ~~~
REVIEWED BY EXECUTIVE DIRECTOR:
ITEM FOR HRA CONSIDERATION:
Consideration of a resolution consenting to a time extension to request eminent domain
proceedings within the Interchange West area.
I. RECOMMENDED ACTION:
By Motion: Adopt a resolution consenting to a time extension to
request eminent domain proceedings within the Interchange West
area.
II. BACKGROUND
On March 20, 2000, the Richfield Housing and Redevelopment Authority (HRA)
adopted, and entered into, a Contract for Private Development with Best Buy for the
redevelopment of the Interchange West area. The Contract contemplates the
private acquisition of properties by Best Buy wherever possible. Section 3.2 of the
Contract, however, allows Best Buy to request that properties be acquired through
condemnation. This request would come, according to the Contract, within 120
days (by July 18, 2000).
Best Buy has made a request to extend the 120 day request for condemnation
period by 120 days in order to allow further negotiations with. property owners. Best
0717best
Buy reports that they have reached a negotiated purchase agreement with a
majority of property owners and that they have exhausted their negotiations with
others. Several properties remain, however, for which negotiations have not yet
been concluded. In an effort to provide due diligence to the negotiation process,
Best Buy is requesting this extension.
III. BASIS OF RECOMMENDATION
A. POLICY
• The Contract for Private Development stipulates, in subdivision 1 of
section 3.2; that the,developer'srequesfifor-condemnation must be
made within 120 days of the execution of the agreement.
• That 120 day period will expire on July 18,.2000.
• The developer has not yet concluded negotiations with all property
owners.
B. CRITICAL ISSUES
• This extension is being .requested by Best Buy in order to provide an
adequate. amount of time for full negotiations for their purchase of
properties to occur before requesting condemnation.
• This extension, if approved, is not expected to negatively impact the
overall acquisition and development schedule.
C. FINANCIAL
• There are no significant financial impacts of this action.
D. LEGAL
• Legal counsel has reviewed this request and found it to be an
acceptable request under the terms of the Contract.
IV. ALTERNATIVE RECOMMENDATION(S~
• Do not adopt the attached resolution consenting to a time extension to
request eminent domain proceedings. This would cause Best Buy to forego
the ability to request condemnation.
Modify the resolution to consent to a time extension of a lesser or greater
period than is being requested by Best Buy.
V. ATTACHMENTS
• Resolution consenting to a time extension to request eminent domain
proceedings.
VI. PRINCIPAL PARTIES EXPECTED AT MEETING
• A representative of Best Buy, or their developer Opus.
• HRA legal counsel Corrine Thomson.
RESOLUTION NO.
RESOLUTION CONSENTING TO TIME EXTENSION TO RE UE
Q ST
EMINENT DOMAIN PROCEEDINGS
WHEREAS, the Housing and Redevelopment Authority in and for the City of
Richfield, Minnesota (the "HRA") and Best Buy Co., Inc., ("Developer") did on or about
March 20, 2000 enter into an agreement entitled. Contracf for Private Development
("Contract") providing for the development of land within the City of Richfield subject to all
the terms and conditions contained in the Contract; and
WHEREAS, the Contract provides for the exercise by the HRA of its power of
eminent domain upon a qualifying request by the Developer; and
WHEREAS, Section 3.2. Subd. 1 of the Contract provides that such request is to be
made not later that 120 days following the execution of the Contract unless extended by
the parties; and
WHEREAS, the HRA has received a request from the Developer to extend the date
to request eminent domain by 120 additional days; and
WHEREAS, the HRA has considered the request and the recommendation of its
staff.
• NOW THEREFORE, BE IT RESOLVED by the Housin and Redevelo ment
g p
Authority in and for the City of Richfield, Minnesota that the time period for requesting
eminent. domain is extended by 120 additional days.
Adopted by the Housing and Redevelopment Authority in and for the City of
Richfield, Minnesota this 17th day of July, 2000.
Thomas E. Harms, Chairperson
ATTEST:
Michael Sandahl, Secretary
Attachment B to
Consideration of a resolution consenting to a time extension to request eminent domain
proceedings within the Interchange West area.
i
~1U~. ~ 4 200+
s~.;'~' .
July 13, 2000 VIA MESSENGER
Ph.: (612)-861-9705
Richfield Housing and Redevelopment Authority.
Attn: Samantha Orduno, Executive Director
6700 Portland Avenue South
Richfield, MN 55423
RE: Contract for Private Development by and between the HOUSING AND
REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD
AND BEST BUY CO., INC., -Request for Condemnation
Dear Samantha:
In accordance with Subdivision 1 of Article III of the Contract for Private Development
by and between the HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR
THE CITY OF RICHFIELD AND BEST BUY CO., INC., Best Buy hereby requests an
extension of one hundred and twenty (120) days to request condemnation on any of the
remaining properties making up the Development Property.. Best Buy currently has forty-
two (42) residential properties and four (4) commercial properties under contract.
Although we expect to be able to negotiate contracts on the rrrajority of the properties
remaining, we do expect that there may be a need to request condemnation on a few of
the remaining properties prior to mid-November, 2000.
If there is any other information you need, please advise.
Thank you.
Sincerely,
James E. Istas
Associate General Counsel
Ph.: 612/995-7082
Corporate Headquarters: 7075 Flying Cloud Drive • Etlen Prairie, MN 55344 • 612/947-2000
Mailing Address: P.O. Box 9312 • Minneapolis, MN 55440 • NYSE Symbol: BBY
Richfield Housing and Redevelopment Authority
July 13, 2000
Page 2 of 2
cc: George Lopuch (w/o enc.)
Joe Joyce (w/o enc.)
Pat Matre (w/o enc.)
Della Kolpin (w/o enc.)
Kennedy & Graven, Chartered (Via Messenger)
470 Pillsbury Center
Minneapolis, MN 55402
Attention: John B. Dean
Ph.: (612) 336-9207
Opus Northwest, LLC (Via Messenger)
Opus Corporate Center
10350 Bren Road West
Minnetonka, MN 55343
Attn: Timothy W. Murnane
Ph: (952) 656-4568
Fruth & Anthony (Via Messenger)
3750 IDS Center
80 South Eighth Street
Minneapolis, MN 55402
Attn: Robert J. Tansey, Jr., Esq.
Attachment B to
Consideration of a resolution authorizing eminent domain proceedings to acquire certain
real properties within the Interchange West area..
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i
July 13, 2000 VIA MESSENGER
Ph.: (612) 861-9705
Richfield Housing and Redevelopment Authority
Attn: Samantha Orduno, Executive Director
6700 Portland Avenue South
Richfield, MN 55423
RE: Contract for Private .Development by and between the HOUSING AND
REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD
AND BEST BUY CO., INC., -Request for Condemnation
Dear Samantha:
In accordance with Article III of the Contract for Private Development by and between
the HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR. THE CITY OF
RICHFIELD AND BEST BUY CO., INC., Best Buy hereby requests condemnation of
that portion of the Development Property attached to this. letter as Exhibit A
("Condemnation Property"). Best Buy hereby submits the following as part of this
request.
1. That Best Buy has taken all .reasonable steps to acquire the Condemnation-
Property, including making offers to the owner with purchase prices at or better
than fair market value based upon information furnished to us by a qualified
appraiser. Based on the only counter offer received from the owner, Best Buy and '~,
the owner are more than eight million dollars ($8,000,000.00) appart.
2. That Best Buy has the financial ability to acquire the Development Property and
construct the Development. A copy of Best Buy's most recent annual report and
10-K is included for your review.
3, That based on preliminary investigations Best Buy is not aware of any conditions
-that would .prevent Best Buy from proceeding with the acquisition and
development of the Development Property.
4. That attached to this letter as Exhibit B is a list of all residential properties within
the Development Property showing the properties where purchase agreements or
options to purchase have been executed and the properties where no purchase
agreements or options to purchase have been executed.
Corporate Headqua ers: 7075 ying Cloud Drive • Eden Prairie, MN 55344 • 612/947-2000
Mailing Address: P.O. Box 9312 • Minneapolis, MN 55440 • NYSE Symbol: BBY
Richfield Housing and Redevelopment Authority
July 13, 2000
Page 2 of 3
5. That attached to this letter as Exhibit C is a list of all commercial properties
within the Development Property showing the properties where purchase
agreements or options to purchase have been executed and the properties where
no purchase agreements or options to purchase have been executed.
6. That Best Buy agrees that prior to commencement of the condemnation action, it
will deposit with the Authority $30,000. :The purpose of the deposit is to
reimburse the Authority for the expenditures described in Section 3.2 subd. 1(g)
of the Contract. Whenever the remaining balance of the deposit is reduced to
$15,000 or less, the Developer shall, upon 10-days written notice from the
Authority, restore the balance of the deposit to $30,000. Any portions of the
deposit that are not needed for the stated purposes shall be returned to the
Developer within 15 days following (i) the issuance of a final certificate, or (ii)
discontinuation of the action, but subject to the indemnity requirements of Section
3.2 subd. 3 of the Contract.
If there is any other information you need, please advise.
Thank you.
Sincerely,
~,~ ~• (~~
Ja es E. Istas
Associate General Counsel
Ph.: 612/995-7082
w/ enc.
cc: George Lopuch (w/o enc.).
Joe Joyce (w/o enc.)
Pat Matre (w/o enc.)
Della Kolpin (w/o enc.)
Kennedy & Graven, Chartered (Via Messenger)
470 Pillsbury Center
Minneapolis, MN 55402
Attention: John B. Dean
Ph.: (612) 336-9207
Opus Northwest, LLC (Via Messenger)
Opus Corporate Center
10350 Bren Road West
Minnetonka, MN .55343
i~
Richfield Housing and Redevelopment Authority
July 13, 2000
Page 3 of 3
Attn: Timothy W. Murnane
Ph: (952) 656-4568
Fruth & Anthony (Via Messenger)
3750 IDS Center
80 South Eighth Street
Minneapolis, MN 55402
Attn: Robert J. Tansey, Jr., Esq.
b~'3~Jtid 0ti£6L££Zti9+
}
~~HIBIT A
Legal Deccnption of Properties to be Acquired
Parcel l:
se :9i 00 ~ zti ~nr
Tax record owner: Walser Auto Sales, inc.
Street address: 2024, 2t1Z6.2t}22.2A2[1 and 2016 7'8~' Street Went, Richfield
Tax parcel P1U-: 33-U28-2d-33=0065, -()Uf6. -t3x7, -t1f168. -rx)69. U070
Legal DEScription: Tracts A. B .and D. except the West 30 feet of said tracts, as measured
along the North and South lines thereof: *racts >r, F and G, Registered
Land Survey No. 8t10. Hennepin County. Minnesota.
Farce! Z:
~'ax record owner: R. J. Walser
Street address: 21(1t) - 7R`" Sheet West. Richfield
?ax parcel I'ID: 33-U28-24-33-0011
Legal 17escription: Tract A
All of Tract C and the West 30 feet of Tracts A. $ and D as measured
along the Norlli and South lines thereof. Registered Land Survey No_ 8t10,
Hennepin County, Minnesota.
Tract B:
The West 141.38 feet of the Fact 235.3 feet. as measured at right angles
to the East line thereof, of: that part of the following described tract of
land lying South of the North 2tif1 feet thereof and North of the North
right-of-way line of interstate Highway No. 494. ?flat part of the
Southwest Quarter of the Southwest of Section 33, Township 28, Range
24, Hennepin Coustty. Minnesota described as follows: Commencing on
the South line of said Southwest Quarter of the Southwest Quartet at a
point 328 feet East from the Southwest corner of said Section; thencE
Northerly to the Southwest corner of McHardy's Addition: thence Easterly
to the Southeast corner of McHardy's Addition; th~ncE Southerly tv a
point in the South li»c of said 5cctio» 33. distant G56 feet East from the
Southwest corner of said Section 33; thence West 32R feEt to the point of
heglnning.
Tract C:
The Fact 94.25 feEt. as measured at right angles to the East line thereof,
of: that part of the following described tract of Land lying South of the
North 200 feet thereof and North of the North right- o~ way line of
Interstate Highway No. 494. That part oi' the Southwest Quarter of the
Southwest Quarter of Section 33, Township 2R. Range 24. He»»epitt
County. Mi»rtesvta described as follows: Commencing on the South line
of Said Southwest Quarter of the Southwest Quarter at a point 328 feet
East from the Southwest corner of said Section; thence Northerly to the
Southwest corner of MCHardy's Addition; thence Easterly to the Southeast
iBU-177p54•S
~clu-a~a A-1
B60-~ Ol/YO'd 69q-1 OlE6l6Bt19+ N3AtlaJ ~ da3NN3H-W~~~ 6q~91 00-Z1-l0
S00'3~Jtid 0t~6L~~Zt9+ 90:91 00 ~ ~t ~nr
corner of McHardy's Addition; thence Southerly tv a point in the South
tine pf said Sectian 33. distant 656 feet East from the-Southwest corner of
said Sectian 33: thence West 328 feet to the paint of beginning.
Parcel 3:
Tract b:
That part of the following deccrit~ed property tying -West ref the East
235.63 feet thereof as measured at rightangles to the Past tine thereof: that
.part of the following described tract of land lying South of the North 2()(1
feet thereof and North of the North right-af-way line of Interstate
Highway No. 49d. That part of the Southwest Quarter of the Southwest
Quarter of Section 33. Township 28, RangE 24, Hennepin County,
Minnesota. described as follows: Commencing on the South line of said
Southwest Quarter of the Southwe.~t Quarter at a point 328 feet Fast from
the Southwest corner of satd Section; thence Northerly to the Southwest
corner of McHardy's Addition: ttteacc Easterly to the Southwest earner of
McHardy's Addition; thence Southerly tv a't+c-int in the South tine of said
Section 33, distant 656 feet East from Southwest corner of said Section
33; thence Wect 32R feet to the point of beginning.
Tax record owner: 1Z. J. Walser
Street address: 77t} l Newton Avenue South,. Richfield
~'ax parcel Plb: 33-Q28-24-33-(?U(>9
T.cgal Description: The North 166 feet of the East 59 feet of the South half of the following
described premises: Beginning at a point 656 feet fact cif the Southwest
comer of .Section 33, Township 2R:. North, Range 24 West of the 4~`
Principal Meridian:.thence- running Nc~tth 'a distance of 1312.96 feet;
thence East a distance of 163.8 feet; ;thence- -South a distance of 1312.77
feet; thence West a distance of t Gd-feet tv-the .point cif beginning.
Parcel d:
-_
Tax record owner: lt. J. Walser
Street address: 2000 -- 78t'' Street West, Richfield
Tax pareet plb: 33-t72R-2433-(1(107
i.egai 17eccriptivn: That part of the Southwest Qtyarter of the-Southwest Quarter of Section
33. Township 2R Noah: Range 24 West of the Q~' Principal Meridian
described as follows: Commencing at a point R2(1 fc~t East of the
Southwest corner of said Section 33: thence North a distance ~f 656.7$
feet: thcnCC East a distance of 463 feet: thence South a distance of ~Sti.28
feet; thence West a distanca of _ l6d feet to the point of beginning,
according to the United States Goeernmetit Sutvcy thereof and situate in
Hennepin County, Minnesota.
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Parcel 5:
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Tax record owner: tt. J. Walser
Street address: 7701 Penn Avenue. South. Richfield
Tax parcel Ptb: 33-028-2x33-tx)13
Legal Description: The South one half of the fallowing described-tract of land:
`t'hat part of the Southwest Quarter of the Southwest Quarter (SW 1/4. of
SW 1/4) rif Section Thirty-three (33). 7'c~wnchip Twenty eight (2$), iiangc
Twenty four (24), described as follow: Commencing at the Southwest
c~rncr of said Section 33; thence North 1313.33 feet; thence East 327.5U
feet: thence South 13.13.33 feet; thence west 328 feet to the point of
beginning, excepting however, that part thereof taken for State Highway
No. IUU. also known as tnterstate Highway No. 494. and also excepting all
other public streets and highways; except ,all that patt of the following
described tract: that part of the Southwest Quarter of the Southwest
Quarter Section 33. Township ,28 .North.- Range 24 West, described as
follows: Beginning at the point of intersection of a line 33 feet East of and
parallel with the 1~Ycst tine of .said Section and the Northeasterly right of
way line of Trunk Highway No. 494 as ..defined ny Document Nv.
3419310; thence North along the patallei line a distance of 175 fret;
thence East at,a tight angle a distance of lfut feet: thence South at a right
angle a distance of 232.811 feet. more or less. to a point on the
Northeasterly right of way line of Trunk Highway No. 494: thence
Northwesterly along the North right of way line of Trunk highway No.
4q4 a distance of 173:89 feet, more or less, to the pint of beginning,
according to the United States Cmvernmcnt Survey thereof and situate in
Hennepin County, Minnesota which lies Northerly. Northeasterly and
Easterly of the following described Llne A:
Fmm a paint sin the west lino of said Section 33. distant 535.25 feet north
of the southwest. corner thereof; thence run easterly at an angle t~f RR
degrees 3U minutes with said west section line Cmcasurcd from north to
east) for 33.01 feet to the point of beginning of the line m be described;
thence continue easterly on the last above described course fc+r i i7.43
feet; thence deflect to the right an a curve having a radius of f2 feet (delta
. angle 41 degrees 3U minutes) for 99.01 feet: thence on tangent to said
curve for 21 U feet and there terminating
and which lies Northeasterly of the following described Line B:
Beginning at a point on a line run parallel with and 33 feet easterly fmm
the west line of said Section 33, distant 31.37 feet northerly ~f its
intersection with the above described Line A; thence run southeasterly to a
pint on the above dcscrilted Line A distant 31.3'I feet easterly ~f said
intersection and there terminating.
All according to the United States Government Survey thereof, and situate
in Hetlncpin County. Minnesota.
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Parcel ~:
Tax record owner: R. J. Walser
Street address: 7745 Pclyn Avenue South, Richf2eld
Tax parcel 1?ID: 33-028-24-33-0014
Legal Description: "Tract A
All that part of the following described tract;
Quarter of the 5outhwcst Quarter Section 33,
24 West. deccrihed as follows:
that part of the Southwe.t
Township 2R North, Range
Beginning at the point of intersection of a line 33 feet East of and parallel
with the west line of said Section and the northeasterly right of way line of
Trunk Highway Nn. 494 as defined by Document Nn. 341931p: tltcncc
North along the parallel tine a distance of 175 feet; thanes East at a right
angle a distance of .164 feet: thence South at a right angle a distance of
232.$U feet, more or less. to a point nn the northeasterly right of .way line
of Trunk Highway No. 4g4; thence northwesterly along the North right of
way line of "Crank Highway No. 4g4 a distance of i 73.89 feet, mare. or
lecc, to the poittt of beginning according to the United States Government
Survey thereof and situate in HEnnepin County, Minnesota which het
southerly. southwesterly. and westerly of the following described Line A:
Beginning at the southwest corner of said Section 33; thanes northerly
along the- west line of said Section 33 a distance of 501.2d feet, to the
point of beginning of the line to he descrihed: thence easterly detyecting to
the right at an angle of 88 dEgrccs, 30 minutes, a distance of 125.65 feet:
thence southeasterly along the tangential curve, concave to the southwest.
radius 53 feet, delta angle 9 i degrees. 3t) minutes, a distanCC of 84.64 feet;
thence southerly along the tangent of said curve a distance of ] 80 feet,
more or less, to the noitlieasterly right of way line of said Trunk Highway
No. 494 as defined by Document No. 3419310 and there terminating:
end which lies southeasterly of the following described line B:
Beginning at a point on a line drawn parallel with and 33 feet easterly
fmm the west line of said Section 33 distant 3t7 fEet southerly from the
paint of intersection of said paralicl line with Line A: thence northwasterly
to a point nn Line A distant 3(l feet easterly from the point of inter.~,ction
of said parallel lint and Line A.
All according to the United States Government Survey thereof. and situate
in Hennepin Couttty, Minnesota.
Tract $:
That part of the Southwest Quarter of the Southwest Quarter of Scct3on
33. Township 2R Ncirth, Range 24 West. Hebncpin County, Minnecrita,
described as fellows: Beginning at the point of intersection of Line 1
described below with a line run parallel with and distant 60 fact cast of the
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west line of said Section 33; thence curt south on said 6U foot parallel. line
for 8U feet; thence run southeasterly to the point of intersection of a line
run parallel w+th and distant 1$U feet northerly of Line 2 described below.
with Line 3 described below: thence run northerly on said Linc 3 to its
intersection with said tine i; thence run northwesterly on said Lute 1 to
the point of beginning.
Line 1:
Beginning at a point on a line run pazallel with and distant 6S6 feet east of
the we,ct line of sold Section 33, distant 12~ feet north of the south line of
said Sect+an 33; thence run northwesterly to a point on Ehe west line of
said Section 33, distant 355. feet earth of the southwest turner thereof and
terminating.
Line 2:
Fmm a point on the southwest corner of said. Section 33. run easterly at an
angle of $9 degt+ee~ 415 minutes UU seconds from the west line of said
Section 33 (measured from earth to east} for 1359.14 feet to the point of
hegimm~g of Linc 2 to be described: thence run westerly on the fast
described course for 89.23 feet: thence dcflcc;t to the right on a W degreE
30 minute UU second curve (delta angle cf4 degrees 39 minutes Ot7 seconds}
fnr 93f1 feet: thencE on tangent to said Curve for 77.19 feet; thence deflect '
to the left on a U1 degree W minute UU second curve (delta angle Q7
degrees 3l minutes 4$ seconds) for 753 feet and there terminating.
tine 3:
Beginning at a point on the roost line of said Section 33. d~startt SU1.2d ',
feet north of the southwest comer thcreot; thence run easterly at an an~lc
of 91 degrees 3U minutes 00 seconds from said west section tine
(measured fmm south to cast) for 125.65 feet: thence deflect tv the right
on a curve having a radtus of 53 feet (delta angle 91 degreec 3f! minutes
0(} seconds) fur 84.64 feet: thence on tangent to said curve to an
intersection with Line l described above: thence run southerly to a point
distant 165 feet northerly (measured at right angles) to a prnnt on Lute 2
described about distant 656.32 feet easterly of its point of termination and
there terminating.
Together with a]] rights in and to any and all streets and alleys
adjacent thereto. vacated or to be vacated. and together with any
and al] appurtenant easements.
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Parcel 7.
`Cax record owner: City of Richfield
Unrecorded Lease: Walser Corporation
5treetaddress: Part of 78'b Street, between Penn and Morgan Avenues. Richfield
?az parcel ptD:
Legal Description: TRACT A
That part of the Southwest Quarter of the Southwest Quarter of
Section 33, Township 28. Range 24, Hennepin County. Minnesota.
described as follows:
Commencing at the Southwest corner of said Southwest
Quarter of the Southwest Quarter of Section 33; thence
Easterly along the South Line of said Southwest Quarter
of the Southwest Quarter of Section 33 a distance of
656.UU feet, more or less, to the West line of Registered
Land Survey No. $UC1. files c~C the Registrar of `Cities.
County of Hennepin; thence Northerly along said West
line of Registered Land Survey No. 80U a distance cif
i08.UU feet to the actual point oC beginttittg of the
easement to be describCd; thence continuing Northerly
alottg said West line ~f Registered Land Survey No. R(N'I
a distance of l2.(1~ feet, more or Less, to the Narthcastcrly
right of way line of Trunk Highway Na 494. as defined
by 17oc. No. 3~1931U: thence on an assumed bearing of
N7t1°3t)'2R"W along said Northeasterly right of way lint
a distance of .118.94 feet; thence 517"41'Sg"west a
distance of IU.54 feet; thence 527°l8't71"l, a distance of
28.28 Ceet; thence S72" ! 8'Ui "~ a .distance of R.St} feet;
thence 578°4d'Q2"E a distancE of 46.48 feet; thence
S84°18'32"E a distance of 48.93 feet. more yr IECs. to the
actual pint of beginning.
Tract A contains 2,673 square (eet or .1151 acres.
'tRACt S
That part of the Southwest Quarter of the Southwest Quarter ~~f
Section 33. Township 28. Range 24, HEnncpin County,
Minnesota, described as foN ows:
Commencing at the Southwest corner of said
Southwest {~uatter of the Southwest Quarter of
Section 33; thence Easterly along the south line of
said Southwest Quarter of the Southwest Quarter of
Section 33 a distance oC fiSC,.t1() feet, more ~r less, to
the west line of Registered Land Survey No; BUU,
files of the Registrar ~f Titles. County of Hennepin:.
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.thence Norfhcrly along .Said West line df Registered
Land Survey No. 800 a distance of 120.00 feet. more
or 1csc, to the Northeasterly right of way line of 'T'runk
Highway Nv. 494, as defined by Doc. Nc~. 3419310;
thence on an as~tuned bearing of NIC)°30'28" w along
said Northeasterly .right of way .line a .distance of
14$.96 feet to the actual point of beginning of the
easement to be described: thence continuing
N70°3()'2R"VV along said Northeasterly right of way
line a distance of 299.0$ feet; thence 526°29'40"l/ a
.distance of 35.56 feet: thence S67°09'46"E a distance
of 171.25 feet; thence. S72°18Y)1"t: a distance of
$3.58 feet; thencE N62°4t'S9"E a distance of 2R.2R
feet; thence N I7°41'59" E a di,~tauce of 11.4R feet,
more or tens to the actual point of beginning.
Parcel B contains 8603 square feet or 0.197 acres.
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SUMMARY ANALYSIS
Residential Site Acquisitions -Best Buy Headquarters
Map
Rereronee
NumMr
Property Owner
Progeny
Addrose
Street Name Purchase
Agreement
Sf nod
1 Chinch of St. Rleherd 7801 Penn Aw. South X
2 Churtit o1 SL Richert! (Grog Esry) 7 Penn Aw. South x
3 Mohamed 8 Bashes Sharlef 781 Penn Aw. $olrlh
4 Gladys H. Jensen - 7821 Penn Aw, South
S James Lang 782 Pann Aw. South X
8 Somboun 8 Vy Voresane 76 Penn Aw. South X
7 Cynthia 8 Michael Triggs 763 Penn Aw. South X
8 Ronald 8 Hellen MaMeson _. 784 Penn Aw. South X
9 Syewart 8 Alice Stotesbery 7 Oliver Aw. South X
10 John 8 Helen Cretzmeyer 7 Oliver Aw. Soubt X
11 Chdstopher M. Hankins 781 Oliver Aw. Soudt X
12 Ann Louise Strub Trustee (Jweph) ~ 781 Oliver Aw. South X
13 Eslher L. Link (Esther 8 Thomas Haley) 762 Oliver Aw. South X
14 Paul F. 8 Louise J. Ragatz - 762 Ollwr Ave. South x
15 Bankers Trust Co. of CA (Lucretia Smith 8 Thomas Brothen) 782 Oliver Aw. South x
16 Robert 8 Loreine Guthe 78 Oliver Aw. South X
17 Jason 8 Demina Popowski 78 Oliver Aw. South X
16 Vuthy 8 Ra Kour - 764 Oliver Ave. South
19 Rt Setlott 8 M Sedott - 7601 Oliver Aw. South
20 Berbare L. Gresbnnk - - 7 Oliver Ave. South X
21 Guy 8 JWie Astell 781 ONwr Aw. South
22 Elizabeth and Wendy Adams 7621 Ollwr Aw. Souht
23 James 8 Catherine Bergln 782 OliwrAw, South X
24 Tracy and Kenneth Treey 7 Oliver Aw. SaM X
25 Florence Laverne Smith 783 Oliver Aw. South X
28 William 8 Mery Topero 784 Oliver Ave. South
27 Totltl W. Montlson 7 Newlon Aw. SouUt X
28 Gisela 8 Leonard Herdle Jr. 7 Newton Aw. South X
29 Rueban 8 Carol Tullkangas 781 Newton Aw. South X
30 Levine J. Eischen 782 Newton Aw. South
31 John 8 Levone Tinker 762 Newton Ave. South X
32 L. Abrehamson (James Tripp 8 Margaret Knutson) 783 Newton Aw. Soutlt X
33 Joan M. Fuller 78 Newton Aw. South
34 Lois A. Lovdal 7 Newton Aw. South X
35 John 8 Leone Gredy 7601 Newton Aw. South X
38 TL 8 DL Nelson (Darebe Honer) 780 Newton Aw. South X
37 MJ Miller 8 PJ Miller (Mark Miller) 7811 Newton Aw. South
38 Hans Van Schegen 781 Newton Aw. SouUt X
39 Stan Thompson 8 Diana Thompson 782 Newton Aw. South
40 Chades Beaty 782 Newton Aw. South X
41 Gary 8 Patnaa Hughes 76 Newton Ave. South
42 Elmer R. Seaberg (Mary Seaberg) 7639 8 7641 Newton Aw. South X
43 Kenneth 8 Louise Neslund (Shed Keep) - 7643 8 784 Newton Aw. South X
44 Teny 8 Debbie Ahlstrom 7 Morgan Aw. South x
45 Thomas 8 Lynn Penney 78 Morgan Aw. South
46 Bruce 8 Diane Wedemach 761 Morgan Aw. South X
47 Thomas Mead 8 Donna Kupfer-Mead 762 Morgan Aw. South X
48 Mary Ellen Mathieu 782 Morgan Ave. South
49 Roger 8 lone Rolstad 762 Morgan Aw. South
50 Sendre Adelmann 78 Morgan Ave. South X
51 Margareta E Lagertneier 78 Morgan Aw. South
52 Nirtnatla 8 Doodnauth Dial 764 Morgan Aw. SOUBt X
53 David Bakke 8 Lydia Bakke 7601 Morgan Aw. South X
54 Chris 8 Chrtisse Bomeman 7 Morgan Ave. South X
55 Stanley 8 Lorraine Schreyer 761 Morgan Ave. South
56 Maurice 8 Sandra Engen 7621 Morgan Aw. South
57 Donna 8 Daniel Kash 762 Morgan Ave. South X
58 Helen Anderson 762 Morgan Aw. Souh X
59 Genet 8 Roman Abebe 763 Morgan Ave. Soultf
60 Frances 8 George Demont 7645 8 764 Morgan Ave. Soulh
61 Thomas K. Satre 191 76th Street West
62 Paul D. Kachelmeier 7608 8 761 Logan Ave. South
63 Wayne Peterson 8 Trent McKay 761 Logan Ave. South
64 Delaine Curtis Rud 762 Logan Ave. South
85 Jon 8 Mary Jo Straub 7626 8 762 Logan Aw. South X
66 Martin Schroepfer 7 Logan Ave. South
67 David Workman 8 Catherine Workman 7636 8 7 Logan Ave. South X
68 Kevin L Anderson Et al 7 Logan Ave. South
IV IXL.I: YL
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Summary Analysis
CommerciaF Site Acquisitions =Best Buy Headquarters
Property Owner (Use)
Property
Address
Street Name Purchase
Agreement
Signed
7601 Company (Logan Manor Apartments) 7601 Logan Ave. South
Century Lodge No 338 (Masonic Lodge) 7615 Logan Ave. South
Century Lodge No 338 (Vacant Land) 7615 Logan Ave. South
Anita S 8 J Companies (Pioneer Plastics)- 7629 Logan Ave. South
Ed Cirkl (ASAP Mailing Services) 7639 Logan Ave. South
Dall Foods Inc (Tom Thumb) 7600 Knox Ave. South X
William Stiles (NichoPs Electric) 7608 Knox Ave. South
Leaseback Prop. Ltd. Partner 7626 Knox Ave. South
The Diplomats 2101 77th Street West
South Court LLC 2015 77th Street West
Leaseback Prop. Ltd. Partner 7701 Morgan Ave. South
Jon & Sandra Lonneman 7705 Morgan Ave. South
Mary L. Whiting 7713 Morgan Ave. South
Milton Westlund (Weston Associates) 7700 Logan Ave. South X
Holmes Limited Partnership (Outdoors Again) 7701 Logan Ave. South X'
Wally McCarthy 1900 West 78th Street X
Walser 2100 West 78th Street
I oral: a
x.75 j1 i ~ 1 ~ C
F
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
Q ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE FISCAL YEAR ENDED FEBRUARY 26, 2000.
OR
p TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
Commission File Number: 1-9595
BEST BUY CO., INC.
(Exact Name of Registrant as Specified in its Charter)
Minnesota 41-0907483
(State or other jurisdiction (LR.S. Employer Identification No.)
of incorporation or organization)
7075 Flying Cloud Drive 55344
Eden Prairie, Minnesota (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: 952-947-2000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on which registered
Title of each class New York Stock Exchange
Common Stock, par value $.10 per share
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or such shorter period that the Registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. Yes D No ^
The aggregate market value of voting stock held by non-affiliates of the Registrant on Apri129, 2000, was approximately
$9,976,000,000.On that date, there were 206,476,410 shares of Common Stock issued and outstanding.
_ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will
not~be contained, to the best of Registrant's knowledge, in definitive. proxy or information statements incorporated by .reference in Part III
- ` of this Form 10-K or any amendment to this Form 10-K. ^
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the year ended February 26, 2000 ("Annual Report") are
incorporated by reference into Part IL
Portions of the Registrant's Proxy Statement dated May 17, 2000 for the regular meeting of shareholders to be held June 22, 2000
("Proxy Statement") are incorporated by reference into Part III.
The Private Securities .Litigation Reform Act of 1995 provides a "safe harbor" for. forward-looking statements to encourage
companies to provide prospective information about their companies. With the exception of historical information, the matters discussed in
this Annual Report on Form 10-K are forward-looking statements and may be identified by the use of words such as "believe," "expect,"
"anticipate," "plan," "estimate," "intend" and "potential." Such statements reflect the current view of the Registrant with respect to future
events and are subject to certain risks, uncertainties and assumptions. A variety of factors could cause the Registrant's actual results to
differ materially from the anticipated results expressed in such forward-looking statements, including, among other things, general
economic conditions, product availability, sales volumes, profit margins, and the impact of labor markets and new product introductions on
the Registrant's overall profitability. Readers should refer to the Registrant's Current Report on Form 8-K filed on May 15, 1998, that
describes additional important factors that could cause actual results to differ materially from those contemplated by the statements made in
this Annual Report on Form 10-K.
PARTI
ITEM 1. BUSINESS
General
Best Buy Co., Inc. (the "Company" or "Best Buy"), is the nation's largest volume specialty retailer of name-brand consumer
electronics, home office equipment, entertainment software and appliances. The Company started in 1966 as an audio component systems
retailer, and in the early 1980s, with the introduction of the videocassette recorder, expanded into video products. In 1983, the Company
changed its marketing strategy to use mass-merchandising techniques for a wider variety of products, and began to operate its stores with a
"superstore" format. In 1989, Best Buy dramatically changed its method of retailing by introducing its Concept II store format, aself-
service, noncommissioned, discount-style sales environment designed to give the customer more control over the purchasing process. The
Company determined that an increasing number of customers had become knowledgeable enough to select products without the assistance
of a commissioned salesperson and preferred to -make purchases in a more convenient and customer-friendly environment.
In fiscal 1995, the Company developed a strategy to further enhance its store format. The strategy, known as Concept III,
incorporated a larger store format created to produce a more informative and $xciting shopping experience for the customer. Through
focus group interviews and other research, the Company determined that customers wanted more product information and a larger product..
selection. In order to meet these evolving consumer preferences, the Company developed an enhanced store format, which features more
hands-on and interactive product demonstrations. In fiscal 1999, the Company introduced its Concept iV store format. This format features
improved merchandising, signage and customer service, and was expected to better address consumers' needs as the consumer electronics
industry, in particular, progresses into new digital products. Concept IV was designed to reinforce the Company's image as the destination
for new technology in a fun, informative and no-pressure-shopping environment. With its innovative retail format, the Company is a
national sales leader in all of its principal product categories except appliances, where it currently ranks third. in fiscal 2000, the Company
introduced its small-market store format, developed'to serve communities with generally less than 200;000 people. These 30,000 square
foot stores offer the same product categories as larger stores, but have more flexible floor plans and product-assortments tailored to their
communities.
During fiscal 2000, the Company increased its store count by approximately 15%, with the addition of 47 new stores, including
nine small-market stores and, as of February 26, 2000, was operating 357 stores in 39 states. The Company antvcipates opening
approximately 60 stores in fisca12001.
Business Strategy
The Company's business strategy is to offer consumers an enjoyable and convenient shopping experience while maximizing the
Company's profitability. Best Buy believes it offers consumers meaningful advantages in store environment, product value, selection and
service. An objective of this strategy has been to achieve a dominant market share in the markets Best Buy serves. The Company currently
holds a leading, and in some cases a dominant, share in its mature markets. The Company's current store format features interactive
displays, and for certain product categories, ahigh-level of customer assistance, all designed to enhance the customer's shopping
experience. As part of its overall strategy, the Company:
Generally offers a retail format similar to aself-service discount store for many products that consumers are familiar
.with and provides a higher level of customer service and product information for more technically complex and
integrated products.
• Provides a selection of brand name products comparable to retailers that specialize in the Company's principal product
categories and seeks to ensure a high level of product availability for customers.
• .Seeks to provide customers with the best product value available in the market area through active comparison shopping
programs, daily price changes, lowest-price guarantees and special promotions, including interest-free financing and.
home delivery.
• Provides a variety of services not offered by certain competitors, including convenient financing programs, product
delivery and installation, and post-sale services including repair and warranty services and computer upgrades.
• Locates stores at sites that are easily accessible from major highways and thoroughfares and seeks to create sufficient
concentrations of stores in major markets to maximize the leverage on fixed costs including advertising and operations
management.
• Controls costs and enhances operating efficiency by centrally controlling alf buying, merchandising and distribution, and
vertically integrating certain support functions such as advertising.
Best Buy's store format is a key component of its business strategy. The Company believes that because consumers are generally
familiar with certain products the Company sells and are accustomed to discount shopping formats, they increasingly resist efforts to direct
their choice of product and appreciate controlling the purchase decision. For products that are relatively easy for consumers to understand
and purchase, the Company employs aself-service, discount-style store format, featuring easy-to-locate product groupings, emphasizing.
customer choice and product information. These products include entertainment software and less complex consumer electronics products
such as VCRs and smaller-sized televisions. For other, more complex products such as personal computers, big-screen television sets,
appliances, digital phones and digital cameras, the Company provides dedicated and specially trained sales assistance. Sales staff in these
product categories help customers understand the features and benefits of new technology and can assist customers in the purchase of
accessories and registration for service with providers.
Best Buy continuously evaluates the retail environment and. regularly uses focus .groups and customer surveys to assess customer
preferences. Through these processes, Best Buy concluded that customers want access to more product information in order to be more
confident about their buying decisions. Most stores contain a demonstration area for home theater systems, big-screen televisions and audio
Speaker areas. These demonstration areas allow customers to experience and compare product performance firsthand. Most of the stores
~lso feature one or more "high-touch" sales areas where specially trained salespeople assist customers with more complex products such as
digital cameras, digital phones, camcorders, digital broadcast satellite systems (DBS) and personal digital assistants. Best Buy believes that
these demonstration and display areas further differentiate it from competing retailers and should also provide an advantage for the
Company relative to competitors-such. as catalog and Internet retailers. In addition, all Best Buy stores feature aconfigure-to-order process
for personal computers that enables computer buyers to tailor-order a computer system from. such vendors as Compaq, Hewlett-Packard
and Micron.
The Company's stores are in large, open buildings with high ceilings. Best Buy's stores average approximately 44,000 square feet.
The stores feature interactive displays and skilled employee demonstrations; most stores feature large viewing areas for big-screen and
projection televisions and interactive speaker environments. The Company expects to open approximately 60 new stores in fiscal 2001,
including 12 small-market format stores.
The Company believes that its advertising strategy continues to contribute to its increasing market share and brand image. Best
Buy spends approximately 3% of store sales on advertising, including the weekly distribution of approximately 40 million newspaper
inserts. The Company is reimbursed by vendors for a substantial portion of advertising expenditures through cooperative advertising
arrangements. The Company has vertically integrated advertising and promotion capabilities and operates its own in-house advertising
agency. This- capability allows the Company to respond rapidly to competitors in acost-effective manner. In many of its markets, the
Company is able to secure and deliver to its stores merchandise and to create, produce and run an advertisement all within a period of less
than one week.
Print advertising generally consists of four-color weekly inserts, typically 28 to 32 pages, that emphasize a variety of product
categories and feature an extensive name-brand selection with a wide range of price points. The Company also produces all of its television
commercials, each with a specific marketing message. Television commercials account for about one-third of total advertising
expenditures. The Company also utilizes a national brand image campaign to move Best Buy's image beyond that of a low-price specialty
retailer to one that positions the Company as the destination for new technology products that enhancecustomers' time, whetherleisure or
~rk, and make leisure time more fun. The Company believes that building customer brand loyalty is a significant element in its business
rategy.
Product service and repair are important aspects of Best Buy's brand strategy, providing the opportunity to differentiate itself from
the retailers operating exclusively as bricks-and-mortar retailers or Internet retailers. The Company generally offers to service and repair all
'of the products it sells, with the exception of entertainment software, and has been designated by substantially all of its major suppliers as
°an authorized servicer. In addition, the Company makes its in-store technical support staff available to assist customers with the custom
configuration of personal computers. and peripheral products.. The Company also delivers major appliances and large electronics products
and installs car stereos, vehicle security systems and major appliances. In fiscal 2000, the Company began amulti-year project to expand
and improve its service capabilities by undertaking efforts to improve the quality of service and. leverage its Service, Retail and Marketing
functions to provide value added services to the customer.
In fiscal 2000, the Company created BestBuy.com, Inc. ("BestBuy.com'') its wholly-owned subsidiary and continued developing
a comprehensive Internet service designed to offer products in all of the Company s principal product categories. Management expects to
launch the new BestBuy.com business to the public in June 2000. The Company's Internet vision includes developing a fully integrated
"clicks-and-mortar" strategy, becoming the market leader in providing entertainment and technology solutions to consumers via the
Internet and developing interactive consumer relationships that create lifetime value. The "clicks-and-mortar" strategy will leverage the
Company's existing nationwide store network with Best Buy's brand awareness, substantial advertising and promotional activities, warranty
and repair capabilities, and supply chain, warehousing and logistics network: The strategy includes providing the consumer with a
synchronized experience across all selling channels, whether the consumer is researching, purchasing, receiving or returning products, or
obtaining entertainment. BestBuy.com intends to take full advantage of the Web's unique capabilities while focusing on retailing
fundamentals. While e-commerce does not currently represent a significant portion of the Company's business, the Company believes .the
development of a comprehensive Internet business represents a significant growth opportunity. The Company believes it's fully integrated
"clicks-and-mortar" strategy will also provide a competitive advantage over other Internet retailers.
During fiscal 2000, the Company and BestBuy.com formed several strategic alliances to provide better solutions for the
Company's customers. Investments were made in Simplexity.comT'~' and etown.comT". Simplexity.com provides telecommunications
service options by market, and etown.com, a leading online source of consumer electronics information, allows access to independent
editorials and product information. Subsequent to year-end, the Company also finalized a comprehensive strategic alliance with Microsoft
Corporation. The agreement with Microsoft encompasses significant co-marketing between the Microsoft Network of Internet Services
(MSNTM), BestBuy.com and Best Buy's retail stores via direct marketing. and advertising inserts, among other things. Microsoft will
provide technology support to Best Buy and BestBuy.com and will also support BestBuy:com with prominent placement across Microsoft
properties, including MSNBC, the_WebTV NetworkT*', the Expedia.comT'~' travel service, the MSN HotmailTM Web-based a-mail service
and the MSN eShop online shopping service. In connection with the alliance, Microsoft purchased approximately 3.9 million shares. of
Best Buy common stock for $200 million.
Product Selection and Merchandising
Best Buy provides a broad selection of name-brand models within each product line in order to provide customers with a
meaningful assortment. The Company currently offers approximately 5,800 products, exclusive of entertainment software titles and
accessories, in its four principal product categories. In addition, the Company offers a selection of accessories supporting its principal
product categories.
The home office category, Best Buy's largest product category, includes personal computers and related peripheral equipment,
telephones, digital and cellular phones, pagers, answering machines, fax machines, copiers and calculators. As of the fourth quarter of
fiscal 2000, approximately half of the sales in this category were derived from sales of personal computers including desktops, notebooks
and configure-to-order computers: The retail market for personal computers is promotional and competitive, with competition primarily
from retail stores and factory-to-customer direct channels of distribution. The Company's operating results can be affected by significant
changes in promotional activity, consumer demand, availability of personal computers and the timing of computer model transitions by
manufacturers. The timing of significant new software releases can also impact sales of personal computers. The Company believes that it
is well positioned to withstand competition in the retail market for personal computer products, traditionally low margin items, due to its
experience in the market and its significantly improved ability to manage inventories in this category. The Company also believes that its
broad product lines, including those that generate higher gross profit margins, and its relatively low cost structure contribute to its ability to
compete in this category. In addition, the Company believes that the related services it offers, such as knowledgeable salespeople, in-store
computer configuration, maintenance and upgrades, are distinct advantages compared to Internet discount and factory direct computer
retailers. Changing technology and hardware requirements necessary to support new software, including online services, are expected to
continue to be primary factors in the growth in sales of personal computers and related products in the future. Personal computer unit sales
volume growth has been driven by technology improvements,. the increasing popularity of the Internet and declining retail-selling prices. In
fiscal 2000, Internet service provider rebate offers to new subscribers on the purchase of their personal computers further stimulated
computer sales. While the sales of personal computer hardware generate .relatively low gross profit margins, the Company's selling.
strategies have enabled it to generate higher total transaction profit margins through the sale of accessories and services that complete a __
home computer system. Although the number of computer manufacturers selling through retail distribution channels declined in fiscal
2000, Best Buy added vendors such as Emachine and Micron to its list of home office brand name products which already included brand
names such as AT&T, Canon, Compaq, Epson, Fujitsu, Hewlett-Packard, Lexmark, Motorola,-NEC, Nokia, Panasonic, Samsung, Sharp,
Sony" and Toshiba..
,~
Besf Buy's second largest product category is consumer electronics, consisting of video and audio equipment. Video products _
include television sets, DVD players, VCRs, camcorders and DBS systems: Audio products. include audio components, audio systems,
°• elf systems, portable audio equipment, car stereos and security systems. The Company continues to expand its product selection of
nuumer electronics by offering higher-end products and. components that have. greater appeal to audio and video enthusiasts. In recent
years., the introduction of digital audio players, digital television, DVD, minidiscs and DBS systems continues the migration. of .the
consumer electronics category into digital technology. The replacement of existing analog technology with digital products represents a
significant sales growth opportunity for the Company; although as prices drop, quantities increase and new technology becomes more
affordable, the transition could impact sales of current products. To date, however, increasingly affordable digital consumer electronics
products have contributed to the Company's sales growth. The. Company sells consumer electronics with brand names such as Advent,
Aiwa, Bose, Clarion, DIRECTV, Funai, JBL, JVC, Kenwood, KLH, Magnavox, Panasonic, RCA, Rockford Fosgate, Samsung, Sanyo,
Sony, Technics, Toshiba, WebTV and Yamaha.
Best Buy's entertainment software category includes compact discs, DVD movies, pre-recorded videocassettes, computer
software, and video game hardware and software. The Company is one of the few large consumer electronics retailers that sell a broad
selection of entertainment software in all of its stores. Best Buy customizes a portion of the entertainment software assortment for particular
stores based upon the demographics of the market. Entertainment software sales are impacted by the strength of new releases. Video game
hardware, video game software and computer software sales are also impacted by the development of new technology. The increase in
sales of DVD players in fiscal 2000 and significant expansion in the number of movie titles available in the DVD format, as well as high
demand for recorded music led to the Company's sales growth in the entertainment software category.
The major appliance category includes microwave ovens, washing machines, dryers, air conditioners, dishwashers, refrigerators,
freezers, ranges .and vacuum cleaners. This category includes brand .names such. as Amana, Bisell, Eureka, Fantom Technologies,
Frigidaire, General Electric, GE Profile, Hoover. Hotpoint, Maytag, Panasonic, Roper, Royal Appliance, Samsung, Sanyo, Sharp, Tappan,
Whirlpool and White-Westinghouse. Sales in this category are impacted by new housing activity. In addition,-sales in the major appliance
category have been favorably impacted by a decline in the number of smaller retailers selling major appliances. An increase in the large
home improvement retailers entering the major appliance-market could impact sales in the future.
In addition to products in its four main categories, the Company sells cameras and other photographic equipment and ready-to-
emble furniture designed for use with computer and audio/video equipment. Sales of new digital cameras have contributed to the growth
this category. The Company also sells performance service plans (PSPs) on behalf of an unrelated third party. These PSPs cover product
repair and/or replacement for a specified period of time following the purchase of a product, extending and enhancing the manufacturer's
warranty.
The following table shows the percentage of store sales from each of Best Buy's principal product lines for each of the last three
years.
Home Office ...................................................................
Consumer Electronics:
Video .....................................................................
Audio .............................................. ............ ...
.... ....
Entertainment Software ......................:...........................
Appliances .:..........:....:...............................................:....
Other(1) ..........................................................................
Total ...........:.........: ...............:.................................
Fiscal Years Ended
February 26.2000 February 27. 1999 .February 28. 1998
35% 36% 38%
17 16 15
11 11 11
19 ~ 20 20
8 8 9
10 9 7
100% 100% 100%
(1) Includes, among other things, performance service plans, cameras and other photographic equipment, blank audio and video
recording media, furniture and accessories.
~re Locations and Expansion
The Company's expansion strategy generally has been to enter major metropolitan areas with the simultaneous opening of several
stores and then to expand into contiguous non-metropolitan markets. In fiscal 2000, the Company broadened its existing strategy and
opened nine small-market stores, which were designed for communities of less than 200,000 people. As of February 26, 2000,
approximately two-thirds of the Company's stores were in metropolitan markets. -
The entry into a new market is preceded by a detailed market analysis, which includes a review of competitors, demographics and
economic data. Best Buy's store location strategy enables it to increase the effectiveness of its advertising expenditures and to create a high '
level of consumer awareness. In addition, the clustering of stores allows the Company to maintain more effective management control and
utilize its distribution. facilities more efficiently. Currently, Best Buy stores cover approximately 55- to- 60% of the United States
population and serve 43 of the 50 largest metropolitan markets.
When entering a major metropolitan market, the Company establishes a district office, service center. and major appliance
warehouse. Each new store requires working capital of approximately $4 million for merchandise inventory'(net of vendor financing),
leasehold improvements, fixtures and equipment. Pre-opening costs of approximately $600,000 per store, excluding -advertising costs
associated with the. grand opening of a store, are incurred through hiring, relocating and training new employees, and in merchandising the
store. These costs are expensed as incurred.
The Company opened 47 stores in fiscal 2000 including entry into the markets of Sacramento, San Diego and San Francisco,
Calif.; Jacksonville and Tallahassee, Fla.; Albany and Rochester, NY.; and Richmond and Norfolk, Va. The Company expects to open
approximately 60 stores in fiscal 2001, including entry into the densely populated metropolitan New York area and Portland, Oregon.
Included in the approximately 60 stores scheduled to open in fiscal 2001 are approximately 12 small-market format stores. The Company
also plans to remodel or relocate approximately 10 stores to larger facilities:
In May 1999, the Company opened a new distribution center in Dinuba, Calif., replacing its leased facility in Ontario, Calif. In
Apri12000, the Company began construction on a new 700,000 square foot distribution center in Dublin, Ga. that is expected to open in
the second half of fiscal 2001. The Company believes with the addition of the new facility it has the necessary distribution capacity to
support its fiscal 2001 expansion plans. Additionally, the Company plans to use third-party distributors for fulfillment of a portion of the
merchandise sold via the Company's expanded Internet site.
The following table presents the number and location of stores operated by the Company at the end of each of the last three fiscal
years and anticipated stores at fiscal 2001 year-end.
Numbcr of Stores at Fiscal Year-End
Anticipated Planncd
at Fiscal For
2001 Fiscal
Ycar-End 2001 2000 1999 1998
Alabama .......: ....................................................................................:.....
Arizona .................................:..................................................................
Arkansas ..................................................................................................
California ................................................................................................
Colorado .................................................................................................
Delaware ..........................................................................:......................
Florida .....................................................................................:...............
Georgia ....................................................................................................
Illinois .............................................:.......................................................
Indiana ....................................................................................................
Iowa .........................................................................................:...............
Kansas .....................................................................................................
Kentucky .................:.................:.....:.......................................................
Maine .......................:.::..................................................................:........
Maryland .........................:....:............................................................:.....
Massachusetts ........................:................................................................
Michigan ..........................:......................................................................
Minnesota ............................................:...................................................
Mississippi ..................................................:...........................................
Missouri ........:..............................:.................................................:........
Montana ..................................................................................................
Nebraska .................................................................................................
Nevada ............................................................................:.......................
New Hampshire .................................................................................:....
New Jersey ........................................:.....................................................
1 - 1 1 1
10 1 9 8 8
3 - 3 3 3
46 7 39 29 24
9 1 8 8 8
2 1 1 1 1
29 3 26 21 19
13 1 12 10 10
33 1 32 32 32
9 1 8 8 8
5 - 5 5 5
5 - 5 5 5
3 - 3 2 2
2 1 1 1 -
11 - 11 10 9
9 2 7 4 -
21 4 17 17 17
16 - 16 14 14
1 1 - - -
10 1 9 9 10
2 - 2 - _
3 - 3 3 3
3 - 3 2 2
5 - 5 3 -
9 5 4 4 4
Number of Stores at Fisc al Year-End
' ~ Anticipated Planned
at Fiscal For
2001 Fiscal-
Year-End 2001 2000 1999 1998
2 1 1 1 1
'slew Mexico .............................................:.............:..:................;,:::::..... 3 1
~ew York ........................................................................................:.:..... 13 10 -
North Carolina .......................................................................................: 12 2 10 9 7
.............................
North Dakota 1 - 1 1 i
.............................................................
..............................................................
.
..
Ohio 22 2 20 19 19
...
.
................:..................
............................................
.
Oklahoma 3 - 3 3 3
....................
...............................
....................................................................
Oregon 4 4
................................
..........:...............................................:.....
Pennsylvania 14 3 11 !0 9
...........................
...................................:...........................
Rhode Island
. 2 - 2 - -
.........
..............
....
South Carolina ..............................:......................................................... 5 - 5 5 4
South Dakota .....................................................................:.................... 1 - i 1 1
Tennessee ...............................................................................:................ 6 - 6 6 1
Texas ............:.................................:........................................................ 43 4 39 36 35
Virginia ....................................................................:.............................. 14 2 12 ~ 7 7
.......................................................................
Washington ...................... 3 2 1 - -
Wisconsin ......................... ........................................ 12 - 12 12 11
Total ................................................................................................... 417 60 357 311 284
Suppliers, Purchasing and Distribution
The Company's marketing strategy depends, in part, upon its ability to offer a broad selection of name brand products to its
customers and is, therefore, dependent upon satisfactory and stable supplier relationships. In fiscal 2000, Best Buy's 20 largest suppliers
accounted for over half of the merchandise purchased by the Company, with five suppliers, Compaq, Hewlett-Packard, IBM, Panasonic
and Sony, representing approximately 30%n of the Company's total purchases: The loss of or disruption in supply, including disruptions in
~pply due to manufacturers' product quality or component parts availability issues, from any one of these major suppliers could have a
aterial adverse effect on the Company's sales. Although, later in fiscal 2000 IBM discontinued its sales of personal computers through
retail channels, the Company believes it has adequately -•eplaced this product through alternative sources. Higher than expected demand..
also places a strain on certain suppliers at times, resulting in suppliers limiting or temporarily discontinuing their supply of products to
retailers, including the Company. Best Buy generally does not have long-term written contracts with its major suppliers and does not have
any indication that any current suppliers will discontinue selling merchandise to the Company. The Company has not experienced
significant difficulty in maintaining satisfactory sources of supply, and management expects that adequate sources of supply will continue.
to exist for the types of merchandise sold in its stores.
Best Buy's centralized marketing staff purchases substantially all of the Company's merchandise. The buying staff within the
Company's Marketing Department is responsible for product assortment, promotion planning and product pricing. An inventory
management staff in the Marketing Department is responsible for overall product acquisition and inventory management, including
allocations and replenishment of store inventory. Except for certain entertainment .software, there are generally no agreements with
suppliers for the return of unsold inventory. Merchandise remaining at the time of new product introduction is generally sold on a close-out
basis and may be subject to a reduction in selling price to levels at or below the Company's cost.
The Company has made product .availability to consumers a high priority and continues to make investments in facilities,
personnel and systems to assure that its in-stock position will be among the highest in the industry. The Company utilizes an automatic
replenishment system for restocking its stores. Replenishment of store inventories is based on inventory levels, historical and projected
sales trends, promotions and seasonality. The Company utilizes an extensive merchandise planning and daily inventory monitoring system
to manage inventory and increase inventory turns. The Company's strategic initiative to design and implement systems and practices to
improve the Company's assortment planning, product sourcing and advertising effectiveness has resulted in significant benefits as
demonstrated by recent increases in gross profit margins.
The majority of the Company's merchandise, except for major appliances, is shipped directly from manufacturers to the
- ompany's distribution centers. In addition, the Company operates a dedicated distribution center for entertainment software in Minnesota:
~ajor appliances are shipped to satellite warehouses in each of the Company's major markets. In order to meet release dates for selected
entertainment software titles and certain computer products, and to improve inventory management, certain merchandise is shipped directly
to the stores from manufacturers and distributors. The Company is, however, dependent upon the distribution centers for inventory storage
and shipment of most merchandise to its stores. The Company believes that its distribution centers can most effectively service stores
within a 600- to 700- mile radius and that its current distribution centers, with the addition of Dublin, Ga., will accommodate `the
Company's expansion plans for the next several years. -The Company plans to continue investing in new systems and material handling -
equipment to reduce labor costs and improve accuracy in filling orders.
Management Information Systems
Best Buy has developed proprietary software that provides daily information on sales, gross margins, and inventory levels by
store and by stockkeeping unit. These systems allow the Company to compare current performance against historical performance and the
current year's budget. Best Buy uses point-of--sale bar code scanning from which sales information is compiled at the end of each day. The
Company uses Electronic Data Interchange (EDI) with selected suppliers for the more efficient transmittal of purchase orders, shipping
notices and invoices. The Company believes the systems it has developed have the ability to continue to improve customer service,
operational efficiency and management's ability to monitor critical performance indicators. Best Buy continuously assesses its information
systems needs to increase efficiency, improve decision-making and support the Company's growth. Major components of the Company's
systems development plan for fiscal 2001 include support of its e-commerce division, retail store and e-commerce integration initiatives,
development of systems to support the Company's service operations and continued improvement in its supply chain and store systems.
The Company also plans to initiate a project to replace its core financial, human resource and inventory management systems.
Store Operations
Best Buy has developed a standardized and detailed system for operating its stores called Standard Operating Platforms (SOPS).
The system includes procedures for inventory management, transaction processing, customer relations, store administration .and
merchandise display. The Company's store operations are organized into two divisions. Each division is divided into regions and is-under
the supervision of a senior vice president .who oversees store performance .through several regional managers, each of whom has
responsibility for a number of districts within the region. District managers monitor store operations closely and meet regularly with store
managers to discuss SOPS, merchandising, new product introductions, sales promotions, customer loyalty programs, employee satisfaction
surveys and store operating performance. Similar meetings are conducted at the corporate level with divisional and regional management.
A senior vice president of retail operations has overall responsibility for retail store processing and operations including labor management.
Each district also has a loss. prevention manager, with product security personnel employed at each store to control inventory shrinkage.
Advertising, pricing and inventory policies are controlled at corporate headquarters.
The Company's stores are open seven days and six evenings a week. A store is typically staffed by one manager, four or five
assistant managers and an average staff ranging from 65 to 150 people, depending on store size. Approximately 6070 of a store's staff,
which includes product specialists and' a support staff of cashiers and customer service and stock handling employees, is employed on a_
part-time basis. Store managers are paid a salary and have the opportunity to earn bonuses if their stores exceed sales and gross margin
quotas, meet certain budget criteria in controlling expenses and achieve certain administrative goals.
The Company has an employee development department which. provides managers with a variety of tools to teach employees the
core skills they need to meet their performance objectives. In the stores, Sales, Inventory, Operations and Merchandising managers
undergo comprehensive training in their specialty areas, which include store operations, selling, managerial, training and communications
skills. The retail selling and sales support teams receive a thorough orientation to the Company's industry and its business objectives. Sales
personnel are trained to ask specific questions of customers to determine their needs and to present products, accessories and services that
meet those expressed needs. Stores hold monthly team meetings to review store performance, Company focus, and changes and
modifications in operating procedures. Specialized product training is also conducted at these monthly meetings. The Company staffs store
management positions with both personnel promoted from within the stores and those recruited from outside of the Company. In
connection with expansion into new markets, Best Buy recruits local management personnel who have valuable knowledge about the new
market. The Company has a store management development program designed to help support the increased rate of store growth by
developing and integrating new managers who have generally completed a year of training prior to assuming full management
responsibility.
Credit Policy
Approximately one-third of store revenues are paid for by cash or check, with the remainder paid for by major credit cards or the
Best. Buy private-label credit card. The Company utilizes special financing offers to stimulate sales. Generally, these financing offers allow
customers to purchase certain products with repayment terms typically ranging from 90 days to 18 months without a finance charge. The
lonser financing offers, generally those beyond six months, typically require minimum monthly payments to avoid the finance charge. The
special financing offers are only provided to customers who qualify for Best Buy's private-label credit card. The private-label credit card
allows these customers to obtain financing on purchases of merchandise at Best Buy stores through arrangements between the Company
and unaffiliated third-party institutions with consumer credit programs. The Company is generally able to qualify a new customer for credit
on the spot, typically in less than five minutes. Receivables from private-label credit card sales are sold, without recourse to the Company,
to unaffiliated third-party institutions. The Company receives payment from these institutions within one to three days following the sale.
development consultant with KRW International, an executive development firm, and also as a clinical psychologist and administrator for.
.. Park Nicollet Clinic.
Julie M. Engel has been Senior Vice President-Advertising since Apri1.1995. Ms. Engel joined the Company in July 1981 as
Advertising Manager, was promoted to Advertising Director in f984 and became Vice President-Advertising in April 1987. .
Robert C. Fox has been Senior Vice Prestdent-Ftnance and Treasurer since April 1994, after havtng served as Vtce Prestdent-
Accounting since 1987 and Treasurer since 1993. Mr. Fox joined the Company in 1985 as Controller.
Kevin P. Freeland. has been Senior Vice President-Inventory Management since 1997. Mr. Freeland joined the Company as
Vice President-Inventory. Management in 1995. Prior to joining Best Buy, Mr. Freeland spent more than eight years with Payless Shoe
Source, where he held various positions in merchandise management, most recently as vice president of merchandise distribution.
Marc D. Gordon has been Senior Vice President-Information Systems and Chief Information Officer since he joined the
Company in April 1998.. Prior to joining. Best Buy, Mr. Gordon had experience in the retail information systems area most recently for
West Marine Products, a west coast-based specialty retailer/wholesaler of marine products. Other positions have included senior manager
with Andersen Consulting, a principal with a Boston management consulting firm and vice president of information systems with the
Timberland Company.
Susan S. Hoff has been Senior Vice President-Corporate and Public Affairs since April 2000. Ms. Hoff joined the Company in
1983 and has held positions as Manager, Director and Vice President-Corporate Communications and Public Relations before being
promoted to her current position.
Wayne R. Inouye has been Senior Vice President-Merchandising since he joined the Company in September 1995. Prior to
joining Best Buy, Mr. Inouye was with The Good Guys! for 10 years, most recently as vice president-merchandising.
Joseph M. Joyce has been. Senior Vice President-General Counsel since Apri12000, after having served as Vice President-
Human Resources and General Counsel since joining the Company in 1991. Prior to joining Best Buy, Mr. Joyce served 18 years with
Tonka Corporation, holding positions ranging from general accountant to vice president, secretary and general counsel.
Michael P. Keskey has been Senior Vice President-Sales since Aprit 1997, after having served as Vice President-Sales since
~96. Mr. Keskey joined the Company in 1988 and has held positions as a Store Manager, District Manager and Regional Manager.
Michael A. Linton has been Senior Vice President-Strategic Marketing since he joined the Company in January 1999. Prior to
joining Best Buy, Mr. Linton served as vice president of marketing at Remington Products Corporation and as vice president and general
manager of a product category at James River Corporation.
Michael London has been a Senior Vice President since May 1998 and currently serves as Senior Vice President-General.
Merchandising. Mr. London joined the Company in July 1996 as Vice President-General Merchandise. Prior to joining Best Buy,
Mr. London served as senior vice president of retail and commercial sales for Nordic Track and executive vice president for Central
Tractor Farm & Country. Prior to that, Mr. London spent 22 years with Lechmere, most recently as senior vice president-general
marketing manager.
George Z. Lopuch has been Senior Vice President-Corporate Strategic Planning since he joined the Company in March 1998.
Mr. Lopuch previously served as senior vice president of corporate strategic planning and research at SuperValu, Inc.
Michael W. Marolt has been Senior Vice President-Loss Prevention since April 2000. Mr. Marolt joined the Company in 1985
and has held positions as Manager; Director and Vice President of Loss Prevention.
David S. Morrish has been Senior Vice President-Merchandising-Computers since December 1999, after having served as Vice
President-Merchandising since joining Best Buy in 1998. Prior to joining the Company, Mr. Morrish was vice president and general
merchandise manager with Sears Canada, Inc. for 19 years.
Joseph T. Pelano, Jr. has been Senior Vice President-0perations since April 1997, having served as Vice President-Retail Store
Operations since 1996. Mr. Pelano joined the Company in 1989 as Regional Operations Manager.
Lowell W. Peters has been Senior Vice President-Services since he joined the Company in September 1997. Prior to joining
~est Bu Mr. Peters s ent 34 ears with w v v'
y, p y Sears, here he held artous posrttons m their ser ice orgamzahon, most recently as vice
president of parts, product services.
Charles A. Scheiderer has been Senior Vice President-Logistics since April 1998, having served as Vice President-Distribution
and Logistics since July 1997 and as General Manager of Distribution since 1994.
Philip J. Schoonover has been Senior Vice President-Merchandising since 1996. Prior to joining the Company in May 1995,
Mr. Schoonover was the executive vice president for TOPS Appliance City.
John C. Walden joined the Company in May 1999 and currently serves as Senior Vice President-E-Commerce. Mr. Walden
also serves as President of BestBuy.com, Inc. Prior to joining the Company, he most recently served as chief operating officer of
Peapod, Inc., an Internet retailer of groceries. Mr. Walden has also held executive positions with Ameritech Corporation and Storage
Technology Corporation.
Kenneth R. Weller has been Senior Vice President ales since joining the, Company in June 1993. Prior to joining the
Company, Mr. Weller was vice president of sales with The Good Guys!, a San Francisco-based consumer electronics retailer where he had
worked-from 1986 to 1993.
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5.
MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information set forth under the caption "Common Stock Prices" on page 28 of the Annual Report is incorporated herein by
reference.
ITEM 6. SELECTED FINANCIAL DATA
The information set forth under the caption "!0-Year Financial Highlights" on pages 18 and 19 of the Annual Report for the years
1996 through 2000 is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
The information set forth under the caption "Management's Discussion and Analysis of Results of Operations and Financial
Condition" on pages 20 through 29 of the Annual Report is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's operations are not currently subject to market risks for interest rates, foreign currency rates, commodity prices or
other market price risks of a material nature.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required by this Item, listed below, are contained in the Annual Report on the pages indicated below, and
are expressly incorporated herein by this reference.
Paee No.
Consolidated balance sheets as of February 26; 2000 and February 27, 1999 ................................... 30-31
For the fiscal years ended February 26, 2000, February 27, 1999 and February 28, 1998
Consolidated statements of earnings.........: .:...................:...............:...................................... 32
Consolidated statements of cash flows .....:.......................................................:.................... 33
Consolidated statements of changes in shareholders' equity ................................................. 34
• Independent auditor's report ....................................................................:.............................. 35
Notes to consolidated financial statements ............................................................................ 36-45
ITEI19.
None.
ITEM 10.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS- ON ACCOUNTING AND FINANCIAL
DISCLOSURE
PART III
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information set forth under the captions "Security Ownership of Certain Beneficial Owners and Management" and
"Nominees and Directors" on pages 5 through 9 of the Proxy Statement is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth under the caption "Executive Compensation" on pages 10 through 18 of the Proxy Statement. is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth under the caption "Security Ownership of Certain Beneficial Owners and Management" on pages 5
through 7 of the Proxy Statement is incorporated herein by reference..
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth under the captions "Nominees and Directors":and "Certain Transactions" on pages 8 and 9 of the Proxy
Statement is incorporated herein by reference.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
1. Financial Statements:
All financial statements of the Registrant as set forth under Item 8 of this Report.
2. Financial Statement Schedules:
No schedules have been included since they are either not applicable or the information is included elsewhere in this.
,Report.
3. Exhibits:
Number Description Method of Filing
3.1 Amended and Restated Articles of Incorporation, as amended (3)
3.2 Amended and Restated By-Laws, as amended (2,4,5,7)
4.1 Credit Agreement with US Bank National Association dated August 9, 1999 (10)
10.1 1987 Employee Non-Qualified Stock Option Plan, as amended (12):
10.2 1987 Directors'Non-Qualified Stock Option Plan, as amended (13)
10.3 Best Buy Co., Inc. Deferred Compensation Plan, as amended (1)
10.4 Resolutions of the Board of Directors adopting the EVA® Incentive Program foi•'senior officers (8)
10.5 1997 Employee Non-Qualified Stock Option Plan, as amended (11)
7.6
~ 1997 Directors' Non-Qualified Stock Option Plan, as amended (14)
c/.7 1994 Full-Time Employee Non-Qualified Stock Option Plan, as amended (13)
13.1 2000 Annual Report to Shareholders (1)
21.1 Subsidiaries of the Registrant (1J
23. I Consent of Ernst & Young LLP
27.1 2000 Fiscal Year End Financial Data Schedule
ll)
(1)
(1) Document is filed herewith.
(2) Exhibit so marked was filed with the Securities and Exchange Commission on May 23, 1995, as an exhibit to the Form 10-K of
Best Buy Co., Inc., and is incorporated herein by reference and made a part hereof.
(3) Exhibit so marked was filed with the Securities and Exchange Commission on May 20, 1994, as an exhibit to the Form 10-K of
Best Buy Co., Inc., and is incorporated herein by reference and made a part hereof.
(4) Exhibit so marked was filed with the Securities and Exchange Commission on November 12, 1991, as an exhibit to the
Registration Statement on Form S-3 (Registration No. 33-43065) of Best Buy Co., Inc., and is incorporated herein by reference
and made a part of hereof.
(5) Exhibit so marked was filed with the Securities and Exchange Commission on January 13, 1992, as an exhibit to Form 10-Q of
Best Buy Co., Inc., and is incorporated herein?~y reference and made a part hereof.
(6) Exhibit so marked was filed with the Securities and Exchange Commission on October 12, 1992, as an exhibit to Form 10-Q of
Best Buy Co., Inc., and is incorporated herein by reference and made a part hereof.
(7) Exhibit so marked was filed with the Securities and Exchange Commission on May 28, 1997, as an exhibit to the Form 10-K of
Best Buy Co., Inc., and is incorporated herein by reference and made a part hereof.
(8) Exhibit so marked was filed with the Securities and Exchange Commission on April 29, 1999, as an exhibit to the preliminary
Proxy Statement of Best Buy Co., Inc., and is incorporated herein by reference and made a part hereof.
(9) Exhibit so marked was filed on Apri13, .1998, as an exhibit to the Registration Statement on Form S-8 (Registration No. 333-
49371) of Best Buy Co., Inc., and is incorporated herein by reference and made a part hereof.
(10) Exhibit so marked was filed with the Securities and Exchange Commission on October 12, 1999, as an exhibit to Form 10-Q of
Best Buy Co., Inc., and is incorporated herein by reference and made a part hereof.
(11) Exhibit so marked was filed on August 20, 1998, as an exhibit to the Registration Statement on Form S-8 (Registration No. 333-
61897) of Best Buy Co., Inc., and is incorporated herein by reference and made a part hereof.
(12) Exhibit so marked was filed with Securities and Exchange Commission on May 29, 1996, as an exhibit to the Form 10-K of Best
Buy Co., Inc., and is incorporated herein by reference and made _a part hereof.
(13) Exhibit so marked was filed with Securities and Exchange Commission on May 27, 1999, as an exhibit to the Form 10-K of Best
Buy Co.> Inc., and is incorporated herein by reference and made a part hereof.
(14) Exhibit so marked was filed with Securities and Exchange Commission on January 11, 2000, as an exhibit to the Form 10-Q of
Best Buy Co., Inc., and is incorporated herein by reference and made a part hereof.
Pursuant to Item 601(b)(4)(iii) of Regulation S-K under the Securities Act of 1933, the Registrant has not filed as exhibits to the.
Form 10-K certain instruments with respect to long-term debt under which the amount of securities authorized does not exceed
10% of the total assets of the Registrant. The Registrant hereby agrees to furnish copies of all such instruments to the Commission
upon request.
(b) Reports on Form 8-K:
Announcement of the strategic alliance between the Company and Microsoft Corporation was filed on December 20, 1999.
~~
~ ~ SIGNATURES
Y
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this
Report to be signed on its behalf by the undersigned, thereunto duly authorized.
BEST BUY. CO.,1NC.
(Registrant)
By: isr
Chairman and Chief Executive Officer
Dated: May 24, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities indicated on May 24, 2000.
Chairman, Chief Executive Officer
and Director (principal executive
Richard M. Schulze officer)
President, Chief Operating Officer
and Director
Bradbury H. Anderson
Executive Vice President and Chief
Financial Officer (principal
Allen U. Lenzmeier financial officer)
Senior Vice President-Finance and
Treasurer (principal accounting
Robert C. Fox officer) '
Director
Robert T. Blanchard
Director
Kathy Higgins. Victor
' Director
Elliot S. Kaplan
Director
Mark C.. Thompson
Director
Frank D. Trestman
Director
Hatim A. Tyabji
Director
James C. Wetherbe
AGENDA SECTION: R2SOZUtlOriS
AGENDA ITEM # ~ 5
REPORT # ~ fJ ~ t)
STAFF REPORT
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
JULY 17, 2000
REPORT PREPARED BY: JOHN STARK, COMMUNITY DEVELOPMENT
MANAGER
NAME, TITI,L•'
REPORT PRESENTER: BRUCE PALMBORG, COMMUNITY
DEVELOPMENT DIRECTOR
NAME, TITLE
DEPARTMENT DIRECTOR REVIEW: ~ ~~ ~^
REVIEWED BY EXECUTIVE DIRECTOR: ~~~
ITEM FOR HRA CONSIDERATION:
Consideration of a resolution authorizing eminent domain proceedings to acquire certain real
properties within the Interchange West area.
RECOMMENDED ACTION:
By Motion: Adopt a resolution authorizing eminent domain
proceedings to acquire certain real properties within the Interchange
West area located at and adjacent to 2100 West 78th Street.
II. BACKGROUND
On March 20, 2000, the Richfield Housing and Redevelopment Authority (HRA)
adopted, and entered into, a Contract for Private Development (Contract) with
Best Buy for the redevelopment of the Interchange West area. The Contract
contemplates the private acquisition of properties by Best Buy wherever possible.
Section 3.2 of the Contract, however, allows Best Buy to request that properties
be acquired through condemnation. The Contract stipulates that this request can
come only after Best Buy has taken reasonable steps to acquire property for
which the request is being made.
0717cond
Best Buy states that they have made diligent efforts to negotiate the purchase of
the following parcels of land:
• Parcel 1: 2016-2026 W. 78th Street
Parcel 2: 2100 W. 78th Street
Parcel 3: 7701 Newton Avenue South
Parcel 4: 2000 W. 78th Street
Parcel 5: 7701 Penn Avenue South
Parcel 6: 7745 Penn Avenue South
Best Buy reports that an offer for the purchase of these properties was initially
made on April 7, 2000 and further efforts to reach a negotiated purchase
agreement with the property owner(s) have been unsuccessful. Therefore, they
are requesting that the HRA acquire the properties and leasehold interests
through the use of eminent domain. The properties for which the request is
being made are all owned by either R. J. Walser or Walser Auto Sales, Inc. A
complete legal description of the properties under consideration for acquisition
through eminent domain can be found in Exhibit A of the attached resolution.
Because these properties are also being acquired in preparation for the eventual
widening of I-494, and the need for additional right-of-way which that project
requires, HRA staff is making an offer for the purchase of the properties. The
HRA offer is independent of the offer made by Best Buy. The HRA offer is based
on the results of two independent appraisals of the real estate and fixtures as
• well as a review appraisal of the real estate and fixtures. The purpose of the
independent HRA offer is to comply with the rules and regulations governing the
acquisition of property for right-of--way to be used in a federally funded project.
The resolution to authorize eminent domain, if approved,. stipulates that the
eminent domain proceedings would not commence for at least 14 days after the
HRA offerto purchase the properties is presented.
III. BASIS OF RECOMMENDATION
A. POLICY
• The HRA entered into a Contract for Private Development with Best
Buy Co., Inc. on March 20, 2000.
• Section 3.2 of the Contract allows Best Buy to request that the HRA
acquire those properties, for which Best Buy has been unable to
reach a negotiated agreement, through eminent domain.
• Best Buy has submitted a Request for Condemnation for certain
properties.
• In their request, Best Buy includes evidence satisfying the
conditions required by Section 3.2 of the Contract.
B. CRITICAL ISSUES
• The timely acquisition of the `Walser' properties is critical to
success of this project.
2
• C. FINANCIAL
• In accordance with the Contract, Best Buy will be responsible for all
the HRA costs associated with this eminent domain action.
D. LEGAL
• Legal counsel has reviewed the Request for Condemnation and
has found that it satisfies the requirements set forth in Section 3.2
of the Contract.
IV. ALTERNATIVE RECOlVIlVIENDATION(S~
• Do not approve the resolution authorizing the use of eminent domain for
the acquisition of the identified properties. To approve this at a later date
may have an adverse impact on the overall schedule.
V. ATTACHMENTS
• Resolution authorizing eminent domain proceedings to acquire certain real
properties
• Property map
VI. PRINCIPAL PARTIES EXPECTED AT
MEETING
• A representative of Best Buy, or their developer Opus
• HRA legal counsel Corrine Thomson
• A representative of the property owner(s)
3
r
RESOLUTION NO.
-RESOLUTION OF THE HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF RICHFIELD, MINNESOTA
AUTHORIZING EMINENT DOMAIN PROCEEDINGS
TO ACQUIRE CERTAIN REAL PROPERTIES
WHEREAS, the. Housing and Redevelopment .Authority in and for the City of Richfield,
Minnesota (the "HRA") is a housing ;and redevelopment. authority duly constituted and organized
under law, with all of the powers enumerated in Minnesota Statutes, Sections 469.001 to 469.047
{the "Act"); and
WHEREAS, the HRA is authorized.. to develop .and carry out redevelopment plans and.
redevelopment projects, as those terms are .respectively defined in Minnesota Statutes, Section
469.002, subdivisions 16 and 14; and
WHEREAS, the City: of Richfield on June 14, 1993 adopted a redevelopment plan (the
"Redevelopment Plan") for the Richfield Redevelopment Project Area (the "Project Area"), and on
June 14, 1999 adopted a modification to the Redevelopment Plan and established the Interchange
West and Lyndale Gateway Tax Increment Financing District {the "TIF District").
WHEREAS, the Plans, as modified, .contemplate the acquisition of certain real properties
(the."Properties") which are located in the Project Area and which are more particularly described
below in this resolution; and
WHEREAS, the HRA has entered into a contract for private redevelopment (the
"Contract") of land lying within the TIF District portion of the Project Area (including, but not
limited to the Properties); and
WHEREAS, the Developer under the Contract is not in default of any of its obligations
thereunder, and the HRA is satisfied that the Developer has endeavored reasonably, but without
success, to negotiate the acquisition of the Properties; and
WHEREAS, the Developer has informed the HRA of the status of such efforts and has
established, to the satisfaction of the HRA, that there is no substantial .likelihood that further
negotiations would be productive; and
-WHEREAS, the Developer has requested that, in accordance with the terms of the contract,
the HRA commence eminent domain proceedings, and that such proceedings be undertaken as soon
as possible so as to assure that the Properties will be available for development when needed; and
WHEREAS,, the HRA is satisfied, based upon the information provided, that that the
Developer has complied with the requirements of the Contract concerning such request; and
WHEREAS, the HRA has retained qualified independent appraisers to estimate the, market
value of the Properties and immovable fixtures located on the Properties; and
JBD-177054v5
RC125-213 1
WHEREAS, the HRA has authorized its staff to make an offer to purchase the Properties
based on the appraised value of the Properties as approved by staff; and
WHEREAS, the HRA wishes to ensure that the. owners of the Pro erties are allowed a
P
reasonable period of time to respond to said offer.
NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority
in and for the City of Richfield, Minnesota as follows:
1. It is necessary to acquire the Properties as described below in this resolution in order
for the HRA to carry out the purposes of the Plans, as modified, and-the Act, to deal with properties
that are structurally substandard and to eliminate and prevent the development or spread of
conditions of blight found to exist by the City. and the HRA.
2. Acquisition of the Properties by eminent domain, in the manner provided by
Minnesota Statutes, Chapter 117, is deemed to be necessary and for a public purpose and is hereby
authorized.
3. The HRA deems it necessary for the reasons set forth in the Plans, as modified, and
in order to meet anticipated- construction schedules, to proceed without undue delay to commence
condemnation of the Properties.
4. The HRA's attorney and staff are authorized. to commence and prosecute to
completion eminent domain proceedings to acquire fee simple absolute title to the Properties, -
. provided that eminent domain proceedings shall not be commenced until at least 14 days after the
HRA's .attorney or staff has mailed an offer to purchase the Properties to the fee owners of the
Properties. The HRA's attorney and staff are authorized to delay commencement of proceedings
beyond said 14-day period if they deem it to be in the HRA's interests or in the interests of
facilitating a negotiated settlement of the. Properties between the property owners and the developer.
5. The Properties to be acquired are described on the attached Exhibit A.
Adopted by the Housing and Redevelopment Authority in and for the City of Richfield,
Minnesota this day of July, 2000.
ATTEST:
Mike Sandahl, Secretary
•
Thomas E. Harms, Chairperson
JBD-177054v5
RC125-213 2
EXHIBIT A
Legal Description of Properties to be Acquired
Parcel 1:
Tax record owner: Walser Auto Sales, Inc.
Street address: 2024, 2026, 2022, 2020 and 2016 -78`'' Street West, Richfield
Tax parcel PID: 33-028-24-33-0065, -0066, -0067, -0068, -0069,.0070
Legal Description: Tracts A, B and D, except the West 30 feet. of said tracts, as measured
along the North and South .lines thereof; Tracts E, F and G, Registered
Land Survey No. 800, Hennepin County, Minnesota.
Parcel 2:
Tax record owner: R. J. Walser
Street address: 2100 - 78`h Street. West, Richfield
Tax parcel PID: 33-028-24-33-0011
Legal Description: Tract A
All of Tract C and the West 30 feet of Tracts A, B and D as measured
along the North and South lines thereof, Registered Land Survey No. 800,
Hennepin County, Minnesota.
Tract B:
The West 141.38 feet of the East 235.63 feet, as measured at right angles
to the East line thereof, of: that part of the following described tract of
land lying South of the North 200 feet thereof and North of the North
right-of-way line of Interstate Highway No. 494. That part of the
Southwest Quarter of the Southwest of Section 33, Township 28, Range
24, Hennepin County, Minnesota described as follows: Commencing on
the South line of said Southwest Quarter of the Southwest Quarter at a
point 328 feet East from the Southwest corner of said Section; thence
Northerly to the Southwest corner of McHardy's Addition; thence Easterly
to the Southeast corner of McHardy's Addition; thence Southerly to a
point in the South line of said Section 33, distant 656 feet East from the
Southwest corner of said Section 33; thence West 328 feet to the point of
beginning.
Tract C:
The East 94.25 feet, as measured at right angles to the East line thereof,
of: that part of the following described tract of land lying South of the
North 200 feet thereof and North of the North right- of-way line of
Interstate Highway No. 494. That part of the Southwest Quarter of the
Southwest Quarter of Section- 33, Township 28, Range 24, Hennepin
County, Minnesota described as follows: Commencing on the South line
of said Southwest Quarter of the Southwest Quarter at a point 328 feet
East from the Southwest corner of said Section; thence Northerly to the
Southwest corner of McHardy's Addition; thence Easterly to the Southeast
7BD-177054v5
RC125-213 A-1
corner of McHardy's Addition; thence Southerly to a point in the South
line of said Section 33, distant 656 feet East from the Southwest corner of
said Section 33; thence West 328 feet to the point of beginning.
Tract D:
That part of the following described property lying West of the .East
235.63 feet thereof as measured at right angles to the East line thereof: that
part of the following described-tract of land lying South of the North 200
feet thereof and North of .the North- right-of--way. line of Interstate
Highway No. 494. That part of the Southwest Quarter of the Southwest
Quarter of Section 33, .Township 28, Range 24, Hennepin County,
Minnesota, described as follows: Commencing on the South line of said
Southwest Quarter of the Southwest Quarter at a point 328 feet East from
the Southwest corner of said Section; thence Northerly to the Southwest
corner of McHardy's Addition; thence Easterly to the Southeast corner of
McHardy's Addition; thence .Southerly to a point in the South line. of said
Section 33, distant 656 feet East. from Southwest corner of said Section
33; thence West 328 feet to the point of beginning.
•
Parcel 3:
Tax record owner:. R. J. Walser
Street address: 7701 Newton Avenue South, Richfield
Tax parcel PID: 33-028-24-33-0009
Legal Description: The North 166 feet of the East 59 feet of the South half of the following
described premises: Beginning at a point 656 feet East of the Southwest
corner of Section 33, Township 28 North, .Range 24 West of the 4`~
Principal Meridian; thence running North a distance of 1312.96 feet;
thence East a distance of 163.8 feet; thence South a distance of 1312.77
feet; thence West a distance of 164 feet to the point of beginning.
Parcel 4:
Taxrecord owner:
Street address:
Tax parcel PID:
Legal Description:
JBD-177054v5
RC125-213
R. J. Walser
2000 - 78`h Street West, Richfield
33-028-24-33-0007
That part of the Southwest Quarter of the Southwest Quarter of Section
33, Township 28 North, Range 24 West of the 4`h Principal Meridian
described as follows: Commencing at a point 820 feet East of the.
Southwest corner of said Section 33; thence North a distance of 656.28
feet; thence East a distance of 163 feet; thence South a distance of 656.28
feet; thence West a distance of 164 feet to the point of beginning,
according to the United States Government Survey thereof and situate in
Hennepin County, Minnesota.
2
Parcel 5:
Tax record owner:. R. J. Walser
Street address: 7701 Penn Avenue South, Richfield
Tax parcel PID: 33-028-24-33-0013
Legal Description: The South one half of the following. described tract of land:
Thatpart of the Southwest Quarter of the Southwest Quarter (SW 1/4. of
SW 1/4) of Section Thirty-three (33), Township Twenty eight (28), Range
Twenty four. (24), described as follows: Commencing at the Southwest
corner of said Section 33; thence North 1313.33 feet; thence East 327.60
feet; thence South _1313:33 feet; thence West. 328 feet to the point of
.beginning, excepting however, that part thereof taken for State Highway
No. 100, also known as Interstate Highway No, 494, and also excepting all
other- public streets and highways; except all that part of the following
described tract; that -part of .the Southwest .Quarter of the Southwest
Quarter Section 33, Township 28 North, Range 24 West, described as
follows: Beginning at the point of intersection of a line 33 feet East of and
.parallel with the West line of said -Section and the Northeasterly right of
way line of Trunk Highway No. 494 as defined by Document No.
3419310; thence North along the parallel line a .distance of 175 feet;
.thence East at a right angle a distance of 164 feet; thence South at a right
angle a distance of 232.80 feet, more or less, to a point. on the
Northeasterly right of way line of Trunk Highway No. 494; thence
S, Northwesterly along the North right of way line of Trunk highway No.
494 a distance of 173.89 feet, more or less, to the point of beginning,
according to the United States Government Survey. thereof and situate in
Hennepin County, Minnesota which lies Northerly, Northeasterly and
Easterly of the following described Line A:
From a point on the west line of said Section 33, distant 535.26 feet north
of the southwest corner thereof; thence run easterly at an angle of 88
degrees 30 minutes with -said. west section line (measured .from north to
east) for 33.01 feet to the. point. of beginning of the line to be described;
thence continue easterly on the last above described course for 117.43
feet; thence deflect to the right on a curve having a radius of 62 feet (delta
angle 91 degrees 30 minutes) for 99.01 feet; thence on tangent to said
curve for 210 feet and there terminating
and which lies Northeasterly of the following described Line B:
Beginning at a point on a line .run parallel with and 33 feet easterly from
the west line of said Section 33, distant 31.37 feet northerly of its
intersection with the above described Line A; thence run southeasterly to a
point on the above described Line A distant 31.37 feet easterly of said
intersection and there terminating.
All according to the United States Government Survey thereof, and situate
in Hennepin County, Minnesota:
JBD-177054v5
RC125-213 3
Parcel 6:
.Tax record owner: R. J. Walser
Street address: 7745 Penn Avenue South, Richfield
Tax parcel PID: 33-028-24-33-0014
Legal Description: Tract A
All that part. of the following described tract; that part of the Southwest
Quarter of the Southwest Quarter Section 33, .Township. 28 North, Range
24 West, described as follows:
Beginning at the point of intersection of a line 33 feet East of and parallel
with-the west line of said Section and the northeasterly right of way line of
Trunk Highway No. 494 as defined by Document No. 3419310; thence
North along the parallel line a distance of 175 feet; thence East at a right
angle a distance of 164 feet; thence South at a right angle a distance of
232.80 feet, more or less, to a point on the northeasterly right of way line
of Trunk Highway No. 494; thence northwesterly along the North right of
way line of Trunk Highway No. 494 a distance of 173.89 feet, more, or
less, to the point of beginning according to the United States Government
Survey thereof and situate in Hennepin County, Minnesota which lies
southerly, southwesterly, and westerly of the following described Line A:
Beginning at the southwest corner of said Section 33; thence northerly
along the west. line of said Section 33 a distance of 501.24 feet, to the
., point of beginning of the line to be described; thence easterly deflecting to
the. right at an angle of 88 degrees, 30 minutes, a distance of 125.65 feet;
thence .southeasterly along the tangential curve, concave to the .southwest,
radius 53 feet, delta angle 91 degrees, 30 minutes, a distance of 84.64 feet;
. thence southerly along the tangent of said curve a distance of 180 feet,
more or less, to the northeasterly right of way line of said Trunk Highway
No. 494 as defined by Document No. 3419310 and there terminating;.
and which lies southeasterly of the following described line B:
Beginning at a point on a line drawn parallel with and 33 feet easterly
from the west line of said Section 33 distant 30 feet southerly from the
point of intersection of said parallel line with Line A; thence northeasterly
to a point on Line A distant 30 feet easterly from the point of intersection
of said parallel line and Line A.
All according to the United States Government Survey thereof, and situate
in Hennepin County, Minnesota.
Tract B:
That part of the Southwest Quarter of the Southwest Quarter of Section
33, Township 28 North, Range 24 West, Hennepin County, .Minnesota;.
described as follows: Beginning at the point of intersection of Line 1
described below with a line run parallel with and distant 60 feet east of the
JBD-177054v5
RC125-213 4
west line of said Section 33; thence run south on said 60 foot parallel line
for 80 feet; thence run southeasterly to the point of intersection of a line
run parallel witY and distant 180 feet northerly of Line 2 described below,
with Line 3 described below; thence run northerly on said Line 3 to .its
intersection with said Line 1; thence .run northwesterly on said Line 1 to
the point of beginning.
Line 1:
Beginning at a point on a line run parallel with and distant 656 feet east of
-the west line of said Section 33, distant .120 feet north. of the south line of
said Section 33; thence run northwesterly. to a point on the west line of
said Section 33, distant 355 feet. north of the southwest corner thereof and
terminating.
Line 2:
From a point on the southwest corner of said Section 33, run easterly: at an
angle of 89 degrees 46 minutes 00 seconds from the west line of said
Section 33 (measured from north to east) for 1359.14 feet to the point of
.beginning of Line 2 to be described; thence run ,westerly on the. last
described course for 89.23 feet; thence deflect to the right on a 00 degree
30 minute 00 second curve (delta angle 04 degrees 39 minutes 00 seconds)
for 930 feet; thence on tangent to said curve for 77.19 feet; thence deflect
to the left on a O1 degree 00 minute 00 second curve (delta angle 07
degrees 31 minutes 48 seconds) for 753 feet and there terminating.
Line 3:
Beginning at a point on the -west line of said Section 33, distant 501.24
feet north of the southwest corner thereof; thence run easterly at an angle
of 91 degrees 30 minutes 00 seconds from said west section line
(measured from south to :east) for 125.65 feet; thence deflect to the right
on a curve having a radius of 53 feet (delta angle 91 degrees 30 minutes
00 seconds) for 84.64- feet; thence on tangent to said curve to an
intersection with Line . l described above; thence run southerly to a point
distant 165 feet northerly (measured at right angles) to a point on Line 2
described above distant 656.32 feet easterly of its point of termination and
there terminating.
Together with all rights in and to any and all streets and alleys
adjacent thereto, vacated or to be vacated, and together with any
and all appurtenant easements. =
JBD-177o54v5
RC125-213 5
Parcel 7:
Tax record owner: City of Richfield
Unrecorded Lease: Walser Corporation
Street address: Part of 78`h Street, between Penn and Morgan Avenues, Richfield
Tax parcel PID:
Legal Description: TRACT A
That part of the Southwest Quarter of the Southwest Quarter of
Section 33, Township 28, Range 24, Hennepin County, Minnesota,
described as follows:
Commencing. at the Southwest corner of said Southwest
Quarter of the. Southwest Quarter of Section 33; thence
Easterly along the South line of said Southwest Quarter
of the Southwest Quarter of Section. 33 a distance of
656.00 feet, more or less, to the West line of Registered
Land .Survey No. 800, files of the Registrar of Titles,
County of Hennepin; thence Northerly along said West
line- of Registered Land Survey No. 800 a distance of
108.00 feet to the actual point of beginning of the
easement to be described; thence continuing Northerly
along said West line of Registered Land Survey No. 800
a distance of 12..00 feet, more or less, to the Northeasterly
right of way line of Trunk Highway No. 494, as defined
by Doc. No. 3419310; thence on an assumed bearing of
N70°30'28"W along said Northeasterly right of way line
a distance of 118.94 feet; thence S 17°41'59"West a
.distance of 10.54 feet; thence S27° 18'01 "E a distance of
28.28 feet; thence S72°18'01 "E a distance of 8.50 feet;
thence S78°44'02"E a distance of 46.48 feet; thence
S84°18'32"E a distance of 48.93 feet, more or less, to the
actual point of beginning.
Tract A contains 2,673 square feet or .061 acres.
TRACT B
That part of the Southwest Quarter of the Southwest Quarter of
Section 33, Township 28, Range 24, Hennepin County,
Minnesota, described as follows:
Commencing at the Southwest. corner of said
Southwest Quarter of .the Southwest Quarter of
Section 33; thence Easterly along the south line of
said Southwest Quarter of the Southwest Quarter of
Section 33 a distance of 656.00 feet,. more or less, to
the West line of Registered Land Survey No. 800,
files of the .Registrar of Titles, County of Hennepin;
JBD-177054v5
RC125-213 6
thence .Northerly along said West line of Registered.
Land Survey No. 800 a distance of 120.00. feet, more
or less, to the Northeasterly right of way line. of Trunk
Highway No. 494, as defined by Doc. No. 3419310;
thence on an assumed bearing of N70°30'28" W along
said Northeasterly right of way line a distance of
148.96 feet to the actual point of beginning of the
easement to be described; thence continuing
N70°30'28"W along said Northeasterly right of way
line a distance of 299.08 feet; thence S26°29'40"E a
distance of 35.56.feet;.thence S67°09'46"E a distance
of 171.25 feet; thence S72°18'01 "E a distance of
83.58 feet; thence. N62°41'59"E a distance of 28.28
feet; thence N 17°41'59" E a distance of 11.48 feet,
more or less to the actual point of beginning.
.Parcel B contains 8603 square feet or 0.197 acres.
JBD-177054v5
RC125-213 '~
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AGENDA SECTION: Admin. Reports
AGENDA ITEM # 4
REPORT # 43
~~ STAFF REPORT
HOUSING AND REDEVELOPMENT
•
AUTHORITY MEETING
JULY 17, 2000
REPORT PREPARED BY: BRUCE NORDQUIST, HOUSING AND
REDEVELOPMENT MANAGER
REPORT PRESENTER: BRUCE NORDQUIST, HOUSING AND
REDEVELOPMENT MANAGER
Natirr:, Ti~zc
DEPARTMENT DIRECTOR REVIEW:
REVIEWED BY EXECUTIVE DIRECTOR:
ITEM FOR HRA CONSIDERATION:
Consideration. of a Contract for Private Redevelopment between Gramercy Corporation and
the Housing and Redevelopment Authority for the "City Bella" concept.
L RECOMMENDED ACTION:
By Motion: Authorize the Chair and Executive Director to execute a
Contract for Private Redevelopment between Gramercy Corporation
and the Housing and Redevelopment Authority (HRA) for "City Bella"
at 66th Street and Lyndale Avenue.
II. BACKGROUND
The southwest quadrant of 66th Street and Lyndale Avenue has been part. of the
HRA's LHN (Lyndale/Hub/Nicollet) redevelopment strategy since 1975.. The
acquisition and clearance of property in 1981 lead to the construction of the Lake
Shore Drive Condominiums. Similar actions in 1998 are leading to the fall
completion of Gramercy. Park Cooperative. The remaining part of the quadrant;
Lyndale Hardware, Trestman Music, Checker Auto Parts, and residential parcels
fronting on .Lake Shore Drive represent the boundary for the area yet to be
redeveloped. In January 2000 the HRA entered into an exclusive rights agreement
with Gramercy Corporation to study the feasibility of redeveloping the remaining
0717CityBella
area. The developer believes the analysis to date warrants the next step, the
contract.
Gramerc has named their redevelo ment ro osal "Cit B I "
Y p p p y e la . The City Bella
proposal the HRA received in January has changed dramatically as the developer
has progressed in refining the concept including responding to Lake Shore Drive
Condominium owners. The developer has:
• Retained the concept of 250 rental apartments and 40 low rise
cooperative units with a high level of amenities based on a market study.
• Increased office and retail space to 70,000 sq: ft.
• Continued to revise the placement of buildings to ensure there is no
encroachment on the gardens and pathways of the Lake Shore Drive
Condominium Association. (Additional survey. work will .help correct
unintentional encroachments that may still occur on concept plans.)
• Removed an internal road system that brought traffic close to the rear of
the condominium building. Traffic is now routed to 66th Street and
Lyndale Avenue.
• Expanded the open plaza space to an estimated 1.6 acres by moving
buildings further north and east of the condomiumun.
• Negotiated the purchase of Lot 16; Lynch residence.
• Negotiated the purchase of Lyndale Hardware, possession planned for
March 2001.
• Made an offer to purchase Lot 17; owned by the Condominium. A
response depends on the results of an ongoing dialog between the
developer and condominium owners.
• Made an offer to purchase Trestmen Music at the request of owner, Jerry
Trestman. A response to the offer has not occurred yet.
• Discussed purchase with Checker Auto; a lease arrangement may require
a condemnation action.
• Met with Lake Shore Drive Condominium Association representatives on
July 11 to discuss additional Association concerns which were introduced
to the HRA in May and June. A discussion of concerns is included as an
attachment.
The Contract for Private Redevelopment is of a standard form prepared byJegal
counsel. Included are 15 preconditions to development (page 7 of the agreement).
These preconditions outline specific elements of the project which must be finalized
before redevelopment can occur:
• A concept plan acceptable to the HRA.
• Design, costs and responsibility for skyways, bridges, and plaza.
• Public improvements required based on more detailed plans.
• The traffic circulation systems and plans.
• The landscaping and tree plans.
• The developers provisions for affordable housing.
• The amount of economic assistance, if any, from the HRA.
• Environmental assessment and review.
• The agreement for conveying HRA owned property.
The HRA will receive an update on preconditions in 60 days.
III. BA
SIS ~F RECOMMENDATION
A. POLICY
• The HRA has identified this area for redevelopment since 1975.
• The proposal is consistent with the 1999 Lakes at Lyndale Master
Plan.
• The HRA has an Exclusive Rights Agreement with Gramercy to
evaluate the concept and proceed with a .Contract for Private
Redevelopment when deemed appropriate.
B. CRITICAL ISSUES
• Lake Shore Drive Condominium has a task force of residents that are
working closely with the developer on their concerns. This dialog
.would continue even with a development agreement approved. A
summary of concerns with responses is attached to the staff report.
• Gramercy has entered into negotiated purchase agreements with
Lyndale_ Hardware and the Lynch residence (Lot 16). Moving ahead
with a project is important to them.
• An offer has been made by Gramercy for Lot 17 that the
Condominium Association might agree with as plans are further
refined. However, it is likely that condemnation may be required for
Lot 17, given that Association by-laws may preclude a voluntary sale.
The Association also prefers to secure vacated right-of--way to add to
their property rather than for it to be used by the developer. The
developer believes vacated right-of--way is needed for the proposed
development.
• Condemnation may be required for the Trestmen property and to
satisfy lease conditions. in acquiring the Checker Auto property. All
other parcels are owned by the HRA.
• Petroleum contaminated soils at the intersection of 66th Street and
Lyndale Avenue have been identified and require a specific strategy
.for containment or removal.
• The concept plan may be further modified as additional traffic analysis
occurs. Traffic analysis will be reported in greater detail in 60 days.
C. FINANCIAL
• The financial aspects of the project are being studied by Ehlers and
Associates, Inc., the HRA's financial consultant and lenders contacted
by the developer.
• Expenses by Ehlers are being covered by the developer.
• The report to the HRA on preconditions in 60 days will provide
additional financial information.
D. LEGAL .. _ ..
• The Exclusive Rights Agreement between the HRA and Gramercy
ends in December 2000 if a contract is not acted on.
• The contract prepared by legal counsel is in a form similar to past
contracts..
IV. ALTERNATIVE RECOMMENDATION~S~
• Delay HRA consideration of the Contract for Private Redevelopment.
However, project analysis supports moving ahead with a contract with
preconditions.
V. ATTACHMENTS
• Concept site plan and elevations, Attachment A
• A list and responses to Lake Shore Drive concerns, Attachment B
• Contract for .Private Redevelopment, Attachment C
• Anticipated schedule of events, Attachment D
VI. PRINCIPAL PARTIES EXPECTED AT MEETING
• The developer, Gramercy Corporation; Mike Conlan and Lou Stocco
• John Sieff, owner of Lyndale Hardware
• Residents and representatives of Lake Shore Drive
• David Wanberg, Sanders, Wacker, Bergly, Inc.; planning consultant for Lake
Shore .Drive Condominium
• • •
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Attachment B
Summary of Lake Shore Drive Concern with Responses by the
Developer and: Staff
July 17, 2000
The Lake Shore Drive Condominium Task Force of residents was formed this
year to respond to the proposed City Bella concept. Task Force members and
other residents presented concerns to the HRA during the May 17 and June 20
board meeting. The following list summarizes the. Task Force position with
responses by staff and the developer to selected concerns:
Lake Shore Drive Concern: Open space; loss of existing open space and
changes to existing open space
• The Condominium owns Lot 17 as unimproved open space
(approximately one-third acre). The developer includes the designated
open space for additional low profile multi unit housing when combined
with Lot 16 and 18.
• Gramercy has offered to purchase Lot 17.
• Gramercy has negotiated the purchase of Lot 16.
• The HRA owns Lot 18.
i It is proposed that:
• The loss of open space at Lot 17 be compensated for by the improved
plaza with approximately 1.6 acres of open space.
• The three story low profile cooperative include a heavily landscaped
area adjacent to Lake Shore Drive property to retain some of the
"green" lost by the construction of the housing and removal of trees.
• In July 1982, the HRA conveyed Lot 17 tothe condominium developer,
not as open space, but to eliminate potentially incompatible land uses
at Lot 17 should the then owners of Lots 16, 17 and 18 pursue
unsatisfactory development.
Lake Shore Drive Condominium Concern: Design
Feedback from the Task Force has already resulted in
• Removing planned. interior roads adjacent to the condominium.
• Moving primary access to Lyndale Avenue away from the
condominium.
• Restricting public pedestrian access to the Condominium side of
the development by fence, landscape, and/or controlled gate that is
•
acceptable to the condominium; ensuring access to the proposed
plaza,. bridges and skyways by condominium residents.
• Ensuring there will be no encroachment of the new development on
established open space, walkways, .and gardens located. on the.
primary condominium property.. (Additional survey work will help to
ensure no encroachment).
• Apartment, office, and retail spaces being. moved north and east;
further away from condominium property.
The developer has proposed:
• A low profile three story cooperative with a pitched residential style
roof. Even with this design and the removal of six to ten feet of the
hill at Lot 17, the estimated ridgeline of the new building will be
approximately 20 feet higher than the existing house. The cost
effective redevelopment of Lots 16, 17, 18 will require a building of
at least the proposed height.
• Because of the housing style there is no roof top mechanical
equipment; a condominium concern.
•
Lake Shore Drive Concern: A detailed site inventory and analysis of
condominium property
• The developer will provide this.
Lake Shore Drive Concern: Road .and alley vacation
• The developer needs to use both halves of vacated right-of--way to provide
the proposed development.
• The Task Force position is to retain their half of-the right-of-way as additional
open space adjacent to the developer improvements.
• The absence of these splinter parcels to the developer may reduce the size of
the plaza, underground parking space and prevent the construction of the low
.profile cooperative.
• The inclusion of these parcels in the development provides these items
sought by the Task Force:
• Landscaped buffer.
• Fair compensation-for splinter parcels.
• No visible above ground buildings in the vacated right-of-way.
2
•
•
•
Lake Sfiore Drive Concern: Views
• A diagram has been prepared to represent existing and proposed buildings
and trees that influence view.
• Views to the west and west southwest remain unchanged; Condominium
trees and green space are predominant.
• First through Fifth floor views will be different. Instead of dominant trees, a
hill and single family homes blocking south and south west views there will be
new trees and a residential style three story building that blocks views.
• Because of the removal of part of the hill and the related removal of trees on
the hill, the 6t" and 7t" floor views become clearer and near or above the ridge
of the new cooperative pitched roof.
• Based on survey data thus far, the following mature trees are in the proposed
cooperative building zone and would be removed:
• Seven trees, Lot 16 residence being purchased by Gramercy
• Four trees, Lot 17 owned by the Condominium
• Eight trees, Lot 18 owned by the HRA
Lake Shore Drive Concern: Parking and. Privacy
• Sufficient parking is the developer's objective and .will; be evaluated by staff
during the plan approval process scheduled to occur.later in the year.
• The two-year construction period for Gramercy :Park and the. proposed two-
year period for City Bella will continue to leave visitors and construction
vehicle: parking in short supply over a long period of time. Gramercy, in
.exchange for using open parking spaces at the Nature Center, is contributing
to the upgrade of trails and bridges within the Center. The Condominium
would -like to offer unused spaces but the bylaws and ownership requirements
do not allow sharing.
• The developer is aware of the need to provide sufficient parking and
ingress/egress away from the condominium. This should minimize any
accidental use of condominium property. However, the Condominium .may
.need to continue to use present signage "Private Property No Trespassing"
and "Private Drive No Through Street".
Clear boundaries, with landscaping and fencing are being proposed between
the condominium and City Bella
3
Lake Shore Drive Concern: Traffic
• Through the environmental assessment process,. increased traffic, and traffic
circulation will be carefully studied.
Lake Shore Drive Concern: Construction and Environmental Impacts
• Detailed plans will show where parking ramp ventilation will occur and how it
will minimize noise and .odors.
• The developer will work closely with the Condominium to ensure that the
construction process does not harm the Condominium parking ramp.
• A storm water management plan will be prepared as part of the planning
process.
H: CdAdmin: H RALtr: Lakeshore-attach
•
4
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VIEW FROM LAKE SHORE DRIVE
CONDOMINIUM, 4TH FLOOR,
LOOKING EAST
NOTE: LAKE SHORE DRIVE CONDO ON LEFT,
GRAMERCY COOPERATIVE ON RIGHT; FIRST
FLOOR OF CONDOMINIUM IS 10-15 FEET
LOWER THAN PARKING AREA TO EAST
VIEW FROM LAKE SHORE DRIVE
CONDOMINIUM, 7TH FLOOR,
LOOKING NORTHEAST
NOTE: EXISTING VEGETATION BUFFER
IN FOREGROUND; SURFACE PARKING
LOCATED WHERE PLAZA AND OFFICE
BUILDING PROPOSED
VIEW FROM LAKE SHORE DRIVE
CONDOMINIUM, 4TH FLOOR,
LOOKING WEST
NOTE: LYNCH HOUSE AT LEFT, LAKE SHORE
CONDO AT RIGHT; TREES AT CENTER AND
RIGHT ARE LOCATED ON CONDO PROPERTY
AND WILL REMAIN
VIEW FROM LAKE SHORE DRIVE
CONDOMINIUM, 7TH FLOOR,
LOOKING SOUTHWEST
NOTE: LYNCH HOUSE GARAGE IN
FOREGROUND;
OPEN SPACE (LOT 17) AT LEFT: 2 TREES
(PICTURED) AND 3 OTHERS (NOT
PICTURED) ARE IN PROPOSED BUILDING
ZONE:
LYNCH PROPERTY AT RIGHT: 6 MATURE
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• •
Attachment. C
DRAFT
7/10/00
CONTRACT
FOR
PRIVATE REDEVELOPMENT
BY AND BETWEEN.
THE HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF RICHFIELD
AND
GRAMERCY CORPORATION, INC.
2000
This document. was drafted by:
Kennedy & Graven, Chartered (JBD)
470 Pillsbury Center
200 South Sixth Street
Minneapolis, MN 55402
JBD-179224v2
RC125-209
TABLE OF CONTENTS
ARTICLE I
Definitions
Section 1.1. Definitions 2
Section 1.2. Exhibits 4
Section 1.3. Rules of Interpretation 4
ARTICLE II
Representations
Section 2.1. Representations by the Redeveloper 5
Section 2.2. Representations by HRA 5
ARTICLE III
Land Sale
Section 3.1A. Acquisition of Parcel A on the Redevelopment Property 7
Section 3.1B. Initiation and continuation of HRA Activities 7
Section 3.2. Conveyance of the Redevelopment Property 10
Section 3.3. Time of Acquisition and Conveyance 11
Section 3.4. Title 11
Section 3.5. Soil Conditions 11
Section 3.6. Purchase Price 12
Section 3.7. Taxes and Special Assessments 12
Section 3.8. Other Costs 12
Section 3.9. Property Conveyed As Is 12
Section 3.10. Termination 12
ARTICLE IV
Construction of Minimum Improvements
Section 4.1. Agreement to Construct 13
Section 4.2. [Blank] 13
Section 4.3. [Blank] 13
Section 4.4. Concept Plans 13
Section 4.SA. Commencement of Construction 13
Section 4.6. Construction Reports 13
Section 4.7. Completion of Construction -Certificate of Completion 13
ARTICLE V
Insurance
Section 5.1. Insurance
15
JBD-179224v2
RC125-209 1
•
ARTICLE VI
Tax Increment
Section 6.1. Statement of Purpose
Section 6.2. Minimum Improvements
ARTICLE VII
.Financing
•
•
Section 7.1. Limitations Upon Encumbrance
Section 7.2. Copy of Notice of Default to Lender
Section 7.3. Lender's Option to Cure Defaults
Section 7.4. .RBA's Option to Cure Default
Section 7.5. Subordination
ARTICLE VIII
Prohibitions Against Assignment and Transfer
Section 8.1. Representation as to Development-
Section 8.2. [Blank]
Section 8.3. Prohibition Against Transfer of Property and
Assignment of Agreement
Section 8.4. Following Completion
Section 8.5. Approvals
ARTICLE IX
Events of Default
Section 9.1. Events of Default Defined
Section 9.2. Remedies on Default
Section 93. No Remedy Exclusive
Section 9.4. No Additional Waiver Implied by One Waiver
ARTICLE X
Additional Provisions
Section 10.1. Conflict of Interests; I-IRA Representatives Not
.Individually Liable
Section 10.2.. Nondiscrimination
Section 10.3. Provisions Not Merged With Deed
Section 10.4. Notice of Status and Conformance
Section 10.5. Wage and Job Covenants
Section 10.6. Redeveloper Deposit
Section 10.7. Notices and Demands
Section 10.8. Identification Marker
Section 10.9. Counterparts
16
16
17
17
17
17
18
19
19
19
20
20
21
21
22
22
23
23
23
23
23
24
24
24
24
JBD-179224v2 11
RC 125-209
CONTRACT FOR
PRIVATE DEVELOPMENT
THIS AGREEMENT, made and entered into this _ day of , 2000, is by and
between THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY
OF RICHFIELD, NIINNESOTA, a Minnesota public body corporate and politic (the "HRA"), and
GRAMERCY CORPORATION, INC. a Minnesota corporation (the "Redeveloper").
WITNESSETH:
WHEREAS, the City of Richfield and HRA have established the Richfield Redevelopment
Project Area ("Project Area") under the authority of Minnesota Statutes, Chapter 469 (the "Act"),
and have established within the Project Area the
Gramercy Redevelopment Tax. Increment District ("TIF District") and adopted a Tax Increment
Financing Plan ("hereinafter defined as the "Tax Increment Plan") for the TIF District to facilitate
the fmancing of public development and redevelopment costs in the Project Area; and
WHEREAS, the HRA deems it to be in the public interest to facilitate and encourage
redevelopment of the Project Area by a combination of public and private activity within the Project
Area and in accordance with the Tax Increment Plan adopted by the City, on June 22, 1998, and
HRA on May 18, 1998, following extensive study and preliminary work conducted by the City and
HRA and others engaged by them; and
WHEREAS, the Redeveloper has proposed a development (hereinafter defined as the
"Development") within such Project Area which the HRA believes will promote and carry out the
objectives for which redevelopment is undertaken, will be in the vital best interests of the City, will
promote the health, safety, morals, and welfare of its residents and will be in accord with the public
purposes and provisions of the applicable state and local laws and requirements under which
activities within the Project Area have been undertaken and are being assisted; and
WHEREAS, the Redeveloper is willing to purchase property from the HRA within the
Project Area such property being legally described in the attached.Exhibit C(hereinafter defined as
the "Redevelopment Property") and to develop the Redevelopment Property for and in accordance
with this Agreement; and
WHEREAS, consistent with the .Tax Increment Plan, the HRA is willing to provide
financial assistance in accordance with the provisions of this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual obligations of the parties
contained herein, each of them does hereby represent, covenant and agree with the others as
follows:
JBD-179224v2
RC125-209
ARTICLE I
DEFINITIONS, EXHIBITS.
RULES OF INTERPRETATION
Section 1.1. Definitions. In this Agreement, unless a different meaning clearly appears from
the context:
"Act" means the Economic Development Act, located at Minnesota Statutes, Chapter 469,
as amended.
"Agreement" means this Agreement, as the same may be from .time-to-time modified,
amended, or supplemented. ~ -
"Business Subsidy Act" means Minnesota Statutes, sections 116J.993 through 116J.995.
"Certificate of Completion" means the certification, in the form of the certificate contained
in Exhibit B attached to and made a part of this Agreement, provided to the Redeveloper, pursuant
to Section 4.7 of this Agreement.
"City" means the City of Richfield.
"Closing" means the date on which title to the Redevelopment Property is transferred to the
Redeveloper.
"Commencement of Construction" means excavation for the purpose of setting footings. or
foundation.
"Completion of Construction" means the completion of construction of the Minimum
Improvements except for tenant fmish work.
"Concept Plans" mean the plans, elevations, drawings and narrative descriptions for.-the
Minimum Improvements and related site work together with detailed marketing plans and occupant
mix projections for residential .portions of the Development, and a study showing impacts on site
lines to Woodlake Nature Center from other residential property in the area.
"Construction Contract" means a contract or contracts which provides for completion of the
Minimum Improvements.
"County" means the County of Hennepin.
"Development" means the Minimum Improvements to be constructed on the
Redevelopment Property.
"Event of Default" means an action by the Redeveloper listed in Section 10.1 of this
Agreement.
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"Minimum Improvements" means the improvements to be constructed by Redeveloper on
the Redevelopment Property and related site work all as shown on the Concept Plan.
"Minnesota Environmental Policy Act" means the statutes located at Minnesota Statutes
Sections 116D.01 et sea•, as amended.
"Minnesota Environmental Rights Act" means the statutes located at Minnesota Statutes
Sections 116B.01 et sea•, as amended.
"National Environmental Policy Act" means the federal law located at 42 U.S.C. Section
4311 et sea•, as amended.
"Note" means the Limited Revenue Tax Increment Note to be executed and delivered in the
form set forth on Exhibit D, pursuant to Section 3.6.
"Redeveloper" means Gramercy Corporation, Inc. a Minnesota corporation, and also
includes any other entity in which Gramercy Corporation, Inc. is a general partner and/or has a
controlling interest..
"Redevelopment Property" means the real property described as such on Exhibit C of this
Agreement.
"State" means the State of Minnesota.
"Tax Increment" means that portion of the real property taxes which is paid with respect to
the Redevelopment Property which is remitted to the Authority as Tax Increment pursuant to the
Tax Increment Plan, after reduction (if any) of fiscal disparities' contributions which are mandated
by state law to be made with respect to any parcel
"Tax Increment Act" means the statutes located at Minnesota Statutes Section 469.174
through 469.179, of the Economic Development Act.
"Tax Increment Plan" means the tax increment financing plan adopted by the City in
connection .with the creation of the Tax Increment District and as such may be modified and
amended from time to time.
"Tax Official" means any City or county assessor; County auditor; City, County or State
board of equalization, the commissioner of revenue of the State, or any State or federal district
court, the tax court of the State, or the State Supreme Court.
"Unavoidable Delays" means unexpected delays which are the direct result of adverse
weather conditions, shortages of materials, strikes, other labor troubles, fire or other casualty to the
Minimum Improvements, litigation commenced by third parties which, by injunction or other
judicial action, directly results in delays, or acts of any federal, state or local governmental unit
other than those provided for under this Agreement or any other cause or force majeure beyond the
control of Redeveloper which directly results in delays, provided, however, that adverse market
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.conditions or tenant actions affecting the marketability or profitability of the Minimum
Improvements, or the inability to secure .financing of the Minimum Improvements shall not
constitute Unavoidable Delays.
Section 1.2. Exhibits. The following exhibits are: attached to and made a part of this
Agreement.
A. Limited Revenue Tax Increment Note ("Note");
B. Certificate of Completion;
C. Redevelopment Property Legal Description;
Section 1.3. Rules of Interpretation. (a) This Agreement shall be interpreted in accordance
with and governed by the laws of the State of Minnesota;
(b) The words "herein" and "hereof' and words of similar importance, without
reference to any particular section or subdivision refer to this Agreement as a whole rather than
any particular section or subdivision hereof;
(c) Any titles of the several parts, articles and sections of this Agreement are inserted for
convenience and reference only. and shall be disregarded in construing or interpreting any. of its
provisions.
•
•
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ARTICLE II
REPRESENTATIONS
Section 2.1. Representations by the Redeveloper. (a) The Redeveloper has the power to
enter into this Agreement and has duly authorized the execution, delivery, and performance of this
Agreement by proper action.
(b) If the conditions precedent to .construction occur, subject to .the other terms of this
Agreement, the Redeveloper has the financial capability to construct the Minimum Improvements.
(c) If the conditions precedent to construction occur, subject to the other terms of this
Agreement, the Redeveloper will construct the Minimum Improvements described in the Concept
Plans in accordance with the terms of this Agreement, the Redevelopment Plan and all local, state
and federal laws and regulations.
(d) The Redeveloper will exercise all reasonably diligent efforts to obtain, in a timely
manner, all required permits, licenses, and approvals and if all such approvals are obtained, and
subject to Unavoidable Delays and the satisfaction of all preconditions set forth in this Agreement
will meet in a timely manner, all lawful requirements of all local, state, and federal laws and
regulations which must be obtained or met before the Minimum Improvements may be constructed.
(e) Redeveloper will comply in all material respects; with all applicable local, state and
federal environment laws and regulations, will have obtained any and all necessary environmental
reviews, licenses or clearances under, and will be in material compliance with the applicable
requirements of the National Environmental Policy Act of 1969, the Minnesota Environmental
Policy Act, and the Critical Area Act of 1973 and any other applicable environmental law or
regulation. Redeveloper has not received notice or communication from any local, state or federal
official indicating that the activities of Redeveloper may be or will be in violation of any
environmental law or regulation. Redeveloper is not aware of any facts the existence of which
would cause the Redeveloper to be in violation of any local, state or federal environmental law,
regulation or review procedure or which would give any person a valid claim under the Minnesota
Environmental Rights Act;
Section 2.2. Representations by HRA. The HRA makes the following representations as
the basis for the undertakings herein contained.
(a) The HRA has the power to enter into this Agreement and has duly authorized the
execution, delivery and performance of this Agreement.
(b) The HRA shall, without expense to it, cooperate in Redeveloper's efforts to obtain
all federal, state, and regional agency land use, environmental or other regulatory approvals which
are required of Redeveloper and necessary to implement the Development.
(c) The Project Area, TIF District and the Tax Increment Plan have been properly and
legally established and are currently fully operative. The request for certification of the TIF District
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has been made; and the first tax increment from the TIF District is expected to be remitted to the
HR~1 in 200 L
(d) The Redeveloper has been given true and accurate copies of the Tax Increment Plan
and all amendments to it. No challenge to the Tax Increment Plan or the TIF District is currently.
pending or anticipated.
(e) The HRA has no knowledge that any tax increment projections or similar material
furnished to the Redeveloper is untrue, but further makes no representation concerning its accuracy.
(f) The HRA will provide Redeveloper with all reports, investigations and studies in the
HRA's possession which have as their subject the Redevelopment Property.
•
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ARTICLE II.S
PRECONDITIONS
Section 2.5.1. Initial Preconditions to Acquisition. Not later than 60 days from the date
of this Agreement, unless such date is extended by the mutual written consent of the parties, the
parties shall have reached written agreement on the following matters:
(a) the feasibility of a skyway crossing along Lyndale Avenue and/or a pedestrian
bridge crossing along Lake Shore Drive together with agreement as to design, construction,
timing and cost sharing of any such work;
(b) the location and nature of all public improvements to be constructed to serve and
benefit the Development, together with the timing and responsibility for their construction and
the phase out of existing public improvements;
(c) the location,- layout and design of any interior traffic circulation systems and the
timing for construction of the same;
(d) the landscape plan and the timing for installation of the same;
(e) tree protection during construction (redeveloper to be responsible for the cost of a
survey and protection plan.)
(f) a schedule for commencement and completion of construction of the
Development, and all public improvements to serve the Development;
(g) the condition of the Redevelopment Property with respect to environmental
contaminations and pollution; and the obligations and responsibilities of the parties with respect
to remediation, if any;
(h) the nature, location and cost of removal or relocation any utilities currently
located on the Redevelopment Property which are required to be removed or relocated due to
construction of the minimum improvements and the allocation and financing of the cost of such
activities; and
(i) the nature and extent of the Development's contribution to the Affordable
Housing goals of the HRA.
(j) the content of the Concept Plans.
(k) the level of economic assistance to be provided by the Note, and which satisfies
the "but-for" test.
(1) the nature of a personal protection and safety plan for the Development
(m) .the feasibility of locating and transit service facility on or adjacent to the
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Redevelopment Property, and the nature of each party's responsibility for any such facility.
(n) the scope and nature: of any environmental review required in connection with the
development, and the responsibility of each party in such review process.
(o) the source and nature of the local contribution.
In the event that the parties are unable to reach agreement on all the matters and in the time
described above either party may terminate this Agreement by written notice to the other party
whereupon this. Agreement shall, notwithstanding anything in Article X hereof to the contrary, be
null and void, and the parties shall be relieved of any further obligations hereunder.
ARTICLE III
SITE ASSEMBLY
Section 3.1. Statement of Intent. It is the intention of the parties that the tracts of land
which comprise the Redevelopment Property are to be acquired through a combination of direct
acquisitions by .the Redeveloper and acquisitions by the HRA followed by .conveyances to the
Redeveloper. It is further the intention of the parties that, whenever possible, direct acquisition. by
the Redeveloper is preferred. It is further the understanding of the parties that in the acquisition of
the Redevelopment Property and related activities the HRA's obligation shall only be to proceed in
good faith and to utilize its best efforts.
Section ,3.2. Acquisition. The Redeveloper agrees to diligently pursue such acquisition
activities. Not later than 100 days following execution, the Redeveloper will provide the HRA with
the following information together with supporting material all of which shall be in writing and
reasonably satisfactory to the. HRA:
(a) .That it has taken reasonable steps to acquire all the Redevelopment Property
(b) That any owner of residential property who has requested mediation has been
afforded the opportunity for mediation with respect to the purchase price to be paid for such owner's
property.
(c) -That fmancing, whether in the form of Equity, Financial Commitments or otherwise,
necessary for the acquisition of the Redevelopment Property and for the construction of the
Development is in the reasonable judgment of the Redeveloper likely to be available.
(d) That Redeveloper, based upon preliminary environmental reviews and other
inspections of the Property, is not aware of any conditions, environmental or otherwise, that would
prevent Redeveloper from proceeding with the acquisition and development of the Property.
(e) A .list of the properties with respect to which purchase agreements or options to
purchase-have been executed.
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(f) A list of lands with respect to which such agreements or options have .not been
executed.
(g) A request that the HRA undertake condemnation activities, and the parcels to
which such activities relate, together with a deposit deemed adequate by the HRA to cover the
fees and expenses of those retained by the HRA to provide legal, survey, appraisal, relocation
and title services in connection with such acquisition. The request .shall also include (i) an
acknowledgment by the -Redeveloper that if the HRA does approve the request, the
Redeveloper's obligations pursuant to Section 3.3 shall be applicable; and (ii) the form of written
agreement and security, reasonably acceptable to the HRA in the nature of the agreement
described in Section 3.3. The request shall also include a statement of whether it is necessary for
the HRA to proceed in accordance with Minnesota Statutes, § 117.042. Failure to make this
statement as a part of the initial request does not .preclude the Redeveloper from subsequently
making it.
(h) If the Redeveloper supplies the items contained in paragraphs (a)-(g) above, the
HRA agrees that it will, in good faith, and following a review and verification of the same, and
following delivery to it of an agreement applicable to the Property in the nature of the agreement
described in paragraph (i)(3) below, undertake the steps necessary to acquire fee simple title to
the portions of the Property to which the request relates, and in accordance with Minnesota
Statutes, § 117.042 to the extent requested. If the Redeveloper fails to supply the items
contained in paragraphs (a) - (g) above within the time described above, either party may
terminate this Agreement by written notice to the other whereupon this Agreement shall be null
.and void, and the parties will be relieved of further obligations hereunder.
(i) The obligation of the HRA to commence and continue condemnation, to make any
deposit, including a deposit made pursuant it Minnesota Statutes, section 117.042, and to obtain title
to and possession of any of the parcels shall, unless waived in writing by the HRA, be specifically
subject to the following:
1. Redeveloper is not in default of any provisions of this
Agreement and all amounts due and payable under this Agreement have
been paid.
2. Redeveloper has reviewed the condition of title as such is to
be acquired by the HRA and notified the HRA in writing that such condition
of title is satisfactory. _
3. The Redeveloper has provided the HRA with an undertaking
in the form of a written agreement, and with security (which, if other forms
of security are not reasonably acceptable to the HRA, may include the right
of the HRA to take an assignment of leases) all reasonably acceptable to the
HRA which will assure payment by the Redeveloper of:.
(i) any condemnation award in excess of the
previously deposited sums;
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(ii) any relocation benefits which are not yet paid;
Such undertaking and security is to remain in effect
according to its terms, and in any event, until: suitable and adequate substitute
security is agreed to by the parties.
4. The Redeveloper has furnished the HRA with written notice,
reasonably acceptable to the HRA, indicating that, based upon Redeveloper's
own investigation it is satisfied in all respects with. the .nature and condition
of the parcels and interests to be acquired by the HRA, and accepts the same
AS IS and WHERE IS.
5. The HRA is satisfied that the Redeveloper has obtained, or
will be obtaining, fee simple title to any portions of the Redevelopment
Property which are not the subject of the. condemnation.
6. Redeveloper has furnished .the HRA with written evidence
reasonably acceptable to the HRA that it has funds, whether in the nature of
Equity or Financial Commitment or otherwise which are sufficient .for
construction of the Minimum Improvements.
7. Redeveloper has supplied the HRA with written evidence
reasonably acceptable to the HRA that it has presale agreements for at least
80% of the residential units.
8. Redeveloper has supplied the HRA with a signed written
statement, reasonably satisfactory to the HRA, to the effect that, to the best `
of Redeveloper's knowledge, upon Closing, there will be no remaining
matters which would affect the prompt .commencement of construction of
the Minimum Improvements -and the continuation of construction to
completion. The statement must also acknowledge that the Redeveloper
.understands that the HRA is relying on the statement as a inducement to its
activities hereunder.
9. Redeveloper has obtained all permissions .and approvals.
'required by the city and other governmental authorities relating to such
matters as, without limitation, disruption or closure of rights of way,
encroachment above streets and alleys for construction- activities, and use of
public lands for storage of construction equipment and materials. It is
understood that such permissions may be conditioned upon such terms as the
approving authorities may in their discretion deem advisable.
10. Redeveloper has entered into indemnity and held harmless
agreements with the City and HRA protecting those parties from damage or
third party claims relating to construction activities.
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11. The HRA has reviewed and approved the Concept Plan.
12. The City and Redeveloper have reached written agreement
regarding the location and nature and cost of any public improvements to be
located on the Redevelopment Property.
13. The Redevelopment Property has been rezoned to a
classification which allows the proposed activities.
The HRA may, in its .sole judgment, but only with consent of the Redeveloper, commence and
continue its activities under this section even though some or all of the conditions stated above have
not been satisfied, or waived. In such event, the HRA will notify the Redeveloper of its election to
proceed and shall also notify the Redeveloper of the dates by which some conditions must be
satisfied.
The HRA shall, upon becoming aware of failure of any of the conditions stated
above to occur within the time provided, and verifying the same with the Redeveloper,
immediately discontinue its acquisition activities, and thereafter, the Redeveloper's sole
obligation shall be to reimburse the HRA for the costs and expenses incurred by the HRA in
connection with its acquisition activities, and to indemnify and save harmless the HRA and the
City, their officers, agents and employees and to defend the same from any claim or cause
arising out of or occasioned by the discontinuance of such acquisition activities, and the HRA's
sole remedy shall be to obtain such reimbursement and indemnify from the Redeveloper. The
HRA may utilize any security available to it in this Agreement as security for Redeveloper's
obligations under this Paragraph, including, without limitation, security provided by Redeveloper
under this Agreement.
(b) During the pendency of such actions, the Redeveloper shall be required to promptly
pay all expenses incurred by the HRA in connection with the prosecution thereof, such expenses
include legal, survey, title, appraisal, relocation, process service, court costs and similar expenses.
The HRA shall, not more often than the monthly during the. pendency of the action, furnish the
Redeveloper with a written itemized statement of all such expenditures. Such expenditures shall be
duducted from the deposit provided for in Section 10.6.
(c) Not later than five days prior to any date on which the HRA is required to deposit
any amount into court in order to obtain title and possession to portions of the- Property or to make
relocation benefit payments to persons entitled to such payments, Redeveloper shall deliver to the
HRA funds payable to the HRA in the amount of any such deposit or payment. The HRA shall then
have the right, and subject to the terms and conditions hereof, the obligation to use such funds to
make such deposit or such payments. The HRA shall have no obligation to repay such funds
received deposited or paid pursuant to this Agreement should the redevelopment covered by this
Agreement not be completed for any reason.
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(e) Should the HRA terminatrr'this Agreement for a failure of Redeveloper to satisfy any
of the conditions in paragraph (i) after the HRA has acquired title to and possession of any .parcel,
the HRA shall have the unrestricted right to utilize all or part of the same in any manner which it, in
its sole discretion deems appropriate, including, without limitation, the sale of all or part of the same
to others, all on terms and for amounts which the HRA in its exclusive judgment deems appropriate.
In the event that the HRA elects to sell all or part of such property, the HRA agrees to
reimburse the Redeveloper from, and only from the sale proceeds (if any), amounts expended by the
Redeveloper in connection with acquisition of such parcels and paid to the HRA pursuant to this
Agreement after first deducting from the sale price:
1. Amounts still owing the HRA under paragraphs (b) and (c) and the amount
of any remaining obligations under this Agreement.
2. All expenditures incurred by the HRA in connection with such subsequent
transaction which were intended to be paid through the sale price.
The Redeveloper acknowledges that the HRA's obligation hereunder shall be enforceable
against no other source then the sale proceeds, if any, and does not constitute a lien or encumbrance
on the property or any other HRA asset. This provision places no fiduciary obligation on the. HRA
to act in any manner which would preserve, protect, secure or enhance the property or the amount. of
reimbursement which the Redeveloper might receive. Nothing in this subparagraph (e) shall be
deemed to preclude. a sale by the HRA to the Redeveloper; and the application of the sale price to
reduce the amount due the HRA under this subparagraph.
f) On the date of .Closing, and as a further precondition to the HRA's obligations to
deliver title, Redeveloper shall provide the HRA with either a lien, in recordable form and
recordable against-the Redevelopment Property or a letter of credit (LC). The choice between lien
or LC shall be at the sole discretion of the Redeveloper- The instrument shall be in a form
acceptable to the HRA and in an amount deemed by the HRA in its reasonable judgment to be
sufficient to cover each of the matters described in Section 3.2(1)(3) above. The HRA agrees that it
will, from time to time, hear and consider requests from the Redeveloper to release or modify; the
instrument, or, in the case of a lien1 to subordinate the same, and will do so if in its reasonable
judgment such action will not impair the adequacy of the HRA's security. The HRA may condition
the approval of any such requests upon the Redeveloper providing substitute security acceptable to
the HRA. Unless the HRA specifically determines otherwise, provided for in this paragraph is an
additional .form of security to the other forms of security interest provided for in 3.2(1)(3) above.
(g) Redeveloper Liability. Notwithstanding anything herein to the contrary,. in the event
the Redeveloper shall fail or refuse to perform its obligations under paragraphs (b) and (c) above, or
fail to satisfy the conditions set forth in Section 3.2(i) above, then the HRA, upon written notice
thereof from Redeveloper, may immediately discontinue its acquisition activities, and thereafter, the
Redeveloper's sole obligation shall be: i) to reimburse the HRA for the costs and expenses incurred
by the HRA in connection with its acquisition activities; ii) to indemnify and save harmless the
HRA and the City and their officers, agents and employees and to defend the same from any claim
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or cause arising out of or occasioned by the discontinuance of such acquisition activities and the
HRA's sole remedy shall be to obtain such reimbursement and indemnity from the Redeveloper.
(h) Voluntary Termination. In the event that i) the costs and expenses payable by the
Redeveloper to the HRA for the acquisition of the Redevelopment Property shall exceed
$ , or; ii) the Redeveloper shall fail to obtain approval of financing for the development
by ,then in either such event, either party may terminate this Agreement by
furnishing the other party with written notice of such termination. Upon such termination, each
party shall be relieved from any further obligation hereunder except that the Redeveloper shall be
obligated to reimburse the HRA for any amounts which it was committed or obligated as a result of
activities prior to such termination.
Section 3.2. Conveyance of the Redevelopment Property. The HRA shall reconvey title to
and possession of the Redevelopment Property to the Redeveloper under a quit claim deed. The
conveyance of and the Redeveloper's use of the Redevelopment Property shall be subject to all of
the conditions, covenants, restrictions and limitations imposed by this Agreement. The conveyance
of title to and the Redeveloper's use of the Redevelopment Property shall also be subject to building
and zoning laws and ordinances and all other applicable local, state and federal laws and
regulations.
Section 3.3. Time of Acquisition and Conveyance. (a) Closing on the simultaneous sale
and repurchase and purchase transactions contemplated herein shall occur not later than 10 days
following the date on which the HRA has acquired title to all of the parcels acquired through
condemnation provided that the Redeveloper is not in default of any obligation under this agreement
and that all monies due the HRA hereunder have been paid, and provided. Further that all other
conditions, events or actions which under this Agreement must occur prior to Closing have either
occurred or been waived in writing by the party in whose favor the requirement runs;
The Redeveloper shall take possession of the Redevelopment Property the day of execution and
delivery of the deed by the HRA. The HRA and the Redeveloper acknowledge, that unless so
required by others, the deeds which are contemplated in this transaction need not be recorded.
(b) Unless otherwise mutually agreed by the HRA and the Redeveloper, the execution
and delivery of all deeds shall be made at the principal office of the HRA.
Section 3.4. Title. (a) Prior to and as a condition to the HRA's obligation to acquire the
portions of the Redevelopment Property not being condemned„ the Redeveloper shall obtain and
furnish to the HRA a commitment for the issuance of a policy of title insurance. The HRA shall
have twenty (20) days from the date of its receipt of such commitment to review the state of title
and to provide the Redeveloper with a list of written objections to such title. No objection may be
made by the HRA to any defect or encumbrance on the title .unless and to the extent that such defect
or encumbrance would, if uncured, have the effect of precluding Redeveloper's construction of the
Minimum Improvements. Upon receipt of the HRA's list of written objections, the Redeveloper
shall proceed in good faith and with all due diligence to attempt to cure the objections made by the
HRA. Within ten (10) days after the date that all such obj ections have been cured, to the reasonably
satisfaction of the HRA, the HRA shall proceed with its acquisition and reconveyance of the
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Redevelopment Property. The HRA shall have no obligation to take any action to clear defects in
the title to the Redevelopment Property.
(b) The HRA shall take no actions to encumber title to the Redevelopment Property.
between the moment the HRA acquires to the moment on which the Authority's Deed is delivered to
the Redeveloper, it being understood that such conveyances will occur simultaneously..
Section 3.5. Soil Conditions. The Redeveloper acknowledges that the HRA makes no
representations or warranties as to the condition of the soils on the Redevelopment Property or its
fitness for construction of the Minimum Improvements or any other purpose for which the
Redeveloper may make use of such property. The Redeveloper further agrees that it will indemnify,
defend, and hold harmless the HRA, its governing body members,. officers, and employees, from
any third parry claims or actions arising out of the presence, if any, of hazardous wastes or
pollutants on the Redevelopment Property; but only to the extent that such claims or actions are
based upon the HRA's ownership of the Redevelopment Property required herein and for no other
reason.
Section 3.6. Purchase Price.- (a) The HRA shall pay the Redeveloper as purchase price .for'
the Redevelopment Property the aggregate principal amount contained in the Note. Payment of the
Purchase Price .will be made entirely and exclusively in accordance with the terms of said Note.
The Note is to be executed by the HRA and delivered to Redeveloper at Closing.
(b) The purchase price to be paid by the Redeveloper for the reconveyance of the Parcel.
A and. conveyance of Parcels B and C from the HRA shall be $1.00.
Section 3.7.: Taxes and Special Assessments. Redeveloper shall pay .all taxes and
installments of special .assessments due and .payable in years prior to the year.. of Closing.
Redeveloper shall pay all installments of taxes and special assessments due and payable in the year
of Closing. Installments of special assessments due and payable in future years shall be
responsibility of Redeveloper. -
Section 3.$. Other Costs.. No cost, fee or other payment relating to any .real estate
transaction of any .nature shall be payable by the HRA to any person or entity; and except as
otherwise set forth in this Agreement, the HRA's entire obligation in connection with the purchase
and sale of the Redevelopment Property shall be payment of the purchase price and reconveyance of
the Redevelopment Property as provided in this Agreement.
...Section 3.9..Pro~erty Conveyed As Is. Redeveloper acknowledges that the HRA,shall have
no obligation to .perform any site work in connection with the proposed transaction or otherwise.
The HRA's only obligation hereunder is to convey the Redevelopment Property to the Redeveloper
in the condition in which it was obtained by the HRA. All site work, including, without limitation,
grading, soil preparation and demolition of all structures and improvements shall be done by the
Redeveloper at Redeveloper's cost.
Section 3.10. Termination. In the event that Closing has not occurred by March 1, 2001,
either: party may give the other party written notice of its intention to terminate this Agreement. If
the other party does. not proceed to Closing within 30 days following the giving of such. notice this
Agreement may be declared null and void by either party giving written notice of such declaration
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to the other party and thereupon, neither party shall have any obligation or liability to the other
hereunder.
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ARTICLE IV
CONSTRUCTION OF MIhTIMUM IMPROVEMENTS
Section 4.1. Agreement to Construct.. Subject to the acquisition of the Redevelopment
Property, the Redeveloper agrees that it will construct the Minimum Improvements substantially in
accordance with the approved Concept Plans; the construction and-all construction activities shall be
conducted in strict conformity with the ordinances, codes and regulations of the City and other
governmental units having jurisdiction over such activities.
Section 4.2. [blank].
Section 4.3. [blank]..
Section 4.4. Concept Plans. The Concept Plans shall be submitted and approved as
provided in Section 2.5.1.
If the Redeveloper desires to make any material change in the Concept Plans, the
Redeveloper shall submit the proposed change to the HRA for its approval. If the Concept Plans, as
modified by the proposed change, conform to the requirements of this section with respect to such
previously approved Concept Plans, the HRA shall approve the proposed change and notify the ,
Redeveloper in writing of its approval. Such change in the Concept Plans shall, in any event, be
deemed approved by the HRA unless rejected, in whole or in part, by written notice by the HRA to
the Redeveloper, setting forth in .detail the reasons therefor within twenty (20) days after receipt of
the notice of such change.
Final construction plans and specifications shall be reviewed by the City Building Official in
connection with issuance of building permits. No building permit may be issued if the final
construction plans and specifications materially depart from the approved Concept Plans.
Section 4.SA. Commencement of Construction. Subject to Unavoidable Delays, the
Commencement of Construction for the Minimum Improvements must occur no later than 90 days
following the Closing.
Section 4.6. Construction Reports. At the request of the HRA, the Redeveloper will
provide the HRA with copies of the portions of any construction reports prepared by Redeveloper's
architect and which show the status of construction.
Section 4.7. Completion of Construction -Certificate of Completion. Once commenced,
construction of the Minimum Improvements for any phase shall be diligently prosecuted to
completion. Promptly after notification by the Redeveloper of completion of the Minimum
Improvements, the HRA shall inspect the construction to determine whether .such Minimum
Improvements are completed substantially in accordance with the terms of this Agreement. If the
HRA is satisfied, it will promptly fiunish the Redeveloper with a Certificate of Completion. Such
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certification by the HRA shall, except as further provided in this Section 4.7, be a conclusive
determination of satisfaction and termination of the agreements and covenants in this Agreement,
with respect to the obligations of the Redeveloper to construct the Minimum Improvements.
The certification provided for in this section shall be in recordable form. If the HRA shall
refuse or fail to provide the Redeveloper a certification in accordance with. the provisions of this
Section 4.7, the HRA shall, provide the Redeveloper with a written statement, indicating in
adequate detail in what respects the Redeveloper -has failed to complete the Minimum
Improvements in accordance with the provisions of this Agreement, or is otherwise in default, and
what measures or acts it will be necessary, in the reasonable opinion of the HRA, for the
Redeveloper to take or perform in order to obtain such certification. The. HRA may not impose as a
condition for issuance of the certificate, any requirement which has previously been deemed
satisfied either by actual approval or the passage of time.
If the HRA fails to act on the Certificate of Completion within 60 days following the date it
is notified of completion of construction of a phase, all objections shall be deemed waived and the
certificate shall issue for such phase.
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ARTICLE V
INSURANCE
Section 5.1. Insurance.. Prior to Closing, the Redeveloper shall provide evidence of
insurance, covering property, casualty, workers compensation; fire, indemnity, general liability,
employer's liability- and such other coverage and in such amounts as the HRA shall reasonably
require.
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ARTICLE VI
TAX INCREMENT
Section 6.1. Statement of Purpose. The parties acknowledge that the development which is
proposed by the Redeveloper would not be feasible absent the assistance which is provided the
Redeveloper in this Article VI.
Section 6.2. Minimum Improvements. Upon the issuance of a Certificate of Completion for
the Minimum Improvements, but only if Redeveloper has not committed an Event of Default under
this Agreement for which cure has not occurred, the HRA shall become obligated to make payments
to the Redeveloper under and in accordance with the terms of the Note. The HRA's obligation
under this Agreement to make payments to the Redeveloper is entirely limited to the terms of the
Note.
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.ARTICLE VII
FINANCING
Section 7.1. Limitations Upon Encumbrance.. Prior to the issuance of a Certificate of
Completion, neither the Redeveloper nor any successor in interest to the Redevelopment Property or
any part thereof shall engage in any fmancing or any other transaction creating any mortgage or
other encumbrance or lien upon the Redevelopment Property or any part thereof, whether by
express agreement or .operation of law, or suffer any encumbrance or lien to be made on or attached
to the Redevelopment Property or any part thereof, except only for the purpose of obtaining funds to
the extent necessary for purchasing or redeveloping the Redevelopment Property or funding
construction of the Minimum Improvements.
Section 7.2, Copy of Notice of Default to Lender. Prior to the issuance of a Certificate of
Completion, whenever the HRA shall deliver any notice or demand to the Redeveloper with respect
to any breach or default by the Redeveloper in its obligations under this Agreement, the HRA shall
at the same time forward a copy of such notice or demand to each "holder ("Holder") known to the
HRA of any mortgage or other financing agreement authorized by this Agreement by sending such
notice to last known address of the Holder as shown in the records of the HRA.
Section 7.3. Lender`s Option to Cure Defaults. After any Event of Default by the
Redeveloper referred to in Section 10.1 hereof, each Holder shall (insofar as the rights of the HRA
are concerned) have the right for a period of ninety (90) days, at the Holder's option, to cure or
remedy such Event of Default to the extent that it relates to the part of the Redevelopment Property
covered by its financing and to add the cost thereof to the debt and the lien of its financing,
provided, that if the breach or event of default is with respect to construction of the Minimum
Improvements,. nothing contained in this Section or any other section of this Agreement shall be
deemed to permit or authorize such Holder, either before or after foreclosure or action in lieu
thereof, to undertake or continue the construction or completion of the Minimum Improvements
(beyond .the extent necessary to conserve or protect such Improvements or construction already
made) without first .having expressly assumed the Redeveloper's obligations described in Section
4.5 hereof by written agreement reasonably satisfactory to the HRA to complete the Minimum
Improvements or the part thereof to which the lien or title of such holder relates, provided further,
however, that the HRA will not unreasonably withhold its consent to any changes in the Minimum
Improvements which are requested by the Holder if the requested changes do not alter the basic
design of the Minimum Improvements. (It being understood that such consent shall in no way act to
bind or influence the power of the City, in the exercise of its governmental authority not to approve
any proposed changes or alterations to the Minimum Improvements. Any such Holder who shall
perform the Redeveloper's obligations under Section 4.5 hereof, relating to the Redevelopment
Property or applicable part thereof, shall be entitled, upon written request made to the HRA, to a
certification by the HRA to such effect in the manner provided in Section 4.7 of this Agreement.
Section 7.4. HRA's Option to Cure Default. Prior to the issuance of a Certificate of
Completion, if the Redeveloper is in default under any financing authorized pursuant to Article VIII
of this Agreement, the Holder, prior to exercising any of its remedies, shall notify the HRA in
writing by sending it a copy of any notice of default sent to the Redeveloper. If, within thirty (30)
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days after receipt of said notice, the HRA cures the default, then the Holder shall pursue none of its
remedies under the financing based upon the said default of the Redeveloper.
Section 7.5 Subordination. In order to facilitate the obtaining of financing for the
construction of the Minimum Improvements by the Redeveloper, the HRA agrees to modify and to
subordinate its right under this Agreement to the mortgage or other fmancing agreement held by the
financial institution providing such funds, provided, however, that nothing in this Section 7.5 shall
be deemed to require the HRA to agree to any modification or subordination of its rights which in
its judgment would be contrary to its best interests, or to the prompt and timely construction of the
Minimum Improvements; or which- would fail to obligate any Holder to the provisions of Section
7.3.
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ARTICLE VIII
PROI~BITIONS AGAINST ASSIGNMENT AND TRANSFER
Section 8.1. Representation as to Development. The Redeveloper further recognizes that, in
view of (a) the importance of the development of the Redevelopment Property to the general
welfare of the community; and (b) the substantial financing and other public aids that have been
made available by the City and the HIZA, for the purpose of making such development possible; that
the qualifications and identity of the Redeveloper are of particular concern to the community and
the HRA. Any change as hereunder described with respect to the identity of the Redeveloper or the
purchase of Redeveloper's. interest by any other parry or parties is for practical purposes a transfer or
disposition of the property then owned by the Redeveloper, the Redeveloper further recognizes that
it is because, of such qualifications and identity. that the PIIZA is entering into this Agreement with
the Redeveloper and, in so doing, is further willing to accept and rely on the obligations of the
Redeveloper for the faithful performance of all undertakings and covenants hereby then to be
performed.
Section 8.2. [Blank].
Section 8.3. Prohibition Against Transfer of Property and Assignment of Agreement.. For
the foregoing reasons, the Redeveloper represents and agrees that prior to the issuance of a
Certificate of Completion for that Phase:
(a) Except only by way of security for, and only for, the. purpose of obtaining financing of
the nature described in Section 7.1, the Redeveloper (except as so authorized) has not made or
created, and that it will not make or create, or suffer to be made or created, any total or partial sale,
assignment, conveyance, or any trust or power; or transfer in any other mode or form of or with
respect to this Agreement or the Redevelopment Property 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 HRA.
(b) The HRA shall be entitled to require, except as otherwise provided in the Agreement, as
conditions to any such action described in paragraph (a) above that: (i) any proposed transferee shall
have the .qualifications and financial responsibility, as reasonably determined by the HRA,
necessary and adequate to fulfill the obligations undertaken in this Agreement by the Redeveloper
(or, in the event the transfer is of or relates to part of the Redevelopment Property, such obligations
to the extent that they relate to such part); (ii) any proposed transferee, by instrument in writing
satisfactory to the HRA and in form recordable among the -land records, shall for itself and its
successors and assigns, and expressly for the benefit of the HRA, have expressly assumed all of the
obligations of the Redeveloper under this Agreement and agreed to be subject to the terms of the
Redevelopment Plan (or, in the event the transfer is of or relates to part of the Redevelopment
Property, such obligations, conditions, and restrictions to the .extent that they relate to such part);
provided, that the fact that any transferee of, or any other successor in interest whatsoever the
reason, shall have assumed such obligations or agreed, shall not (unless and only to the extent
.otherwise specifically provided in this Agreement or agreed to in writing by the HRA) relieve or
except such transferee or successor of or from such obligations, conditions, or restrictions, or
deprive or limit the HRA or with respect to any rights or remedies or controls with respect to the
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Redevelopment Property or the construction of the. Minimum Improvements; it being the intent of
this, together with other provisions of this Agreement, that (to the fullest extent permitted by law
and equity and excepting only in the manner and to the extent specifically provided. otherwise in this
Agreement) no transfer of, or change with respect to, ownership in the Redevelopment Property or
any part thereof, of any interest therein, however consummated or occurring, and whether voluntary
or involuntary, shall operate, legally or practically, to deprive or limit the HRA of or with respect to
any rights or remedies or controls provided in or resulting from this Agreement with respect to the
Redevelopment Property and the construction of the Minimum Improvements that the HRA would
have had, had there been no such transfer or change; (iii) there shall be submitted to the HRA for
review all instruments and other legal documents involved in effecting transfer, and if approved by
the HRA its approval shall be indicated to the Redeveloper in writing. The HRA shall not
unreasonably delay the taking of any action required of it under this. paragraph.
(c) [Blank]
(d) In the absence of specific written agreement by the HRA to the contrary, no such
transfer or approval by the HRA thereof shall be deemed to relieve the Redeveloper, or any other
party bound in any way by this Agreement or otherwise with respect to the construction of the
Minimum Improvements, or from any of its obligations with respect thereto. The HRA may,
however, in its reasonable discretion exercised in accordance with the standards and requirements of
Section 8.3(b) relieve Redeveloper if such transferee or assignee is acceptable to the HRA.
Section 8.4. Following Completion. Upon the issuance of the Certificate of Completion,
the provisions of Sections 8.1, 8.3 and 8.5 shall be deemed to have no further force and effect; and
the Redeveloper may transfer the- Redevelopment Property and assign its interest under this
Agreement at any time upon written notice to the HRA.
Section 8.5. Approvals. Any approval required to be given by the HRA under this Article
VIII of this Agreement may be denied only in the event that the HRA reasonably determines that
the performance of the obligations of Redeveloper under this Agreement will be materially impaired
by the action for which approval is sought. At the HRA's request, the Redeveloper shall provide to
the HRA's attorney for privileged review on behalf of the HRA financial information as to any
proposed general partners, or controlling stockholders of proposed assignees or transferees, and
financial information as to any such partnership or corporation. Failure to provide such information
shall be an adequate basis for the denial of any requested approval; however, it shall not otherwise
be construed as a default under this Agreement.
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ARTICLE IX
EVENTS OF DEFAULT
Section 9.1. Events of Default Defined. The following shall, after the Redeveloper has
received notice of the same and has failed to cure in accordance with Section 9.2, be "Events of
Default" under this Agreement and the term "Event of Default" shall mean, whenever it is used in
this Agreement (unless the context otherwise provides), any one or more of the following events:
(a) Failure by the Redeveloper to pay when due any payments required to be paid under
Article III of this Agreement.
(b) Subject to Unavoidable Delay, failure by the Redeveloper to observe and substantially
perform any material covenant, condition, obligation, or agreement on its part to be observed or
performed hereunder..
(c) If the Redeveloper is in default under any mortgage and fails to cure any. such default
within thirty (30) days after written demand from the HRA to do so.
(d) If the real estate taxes are not paid when due, subject to Redeveloper's right to contest
same in accordance with applicable law.
Section 9.2. Remedies on Default. Whenever any Event of Default referred to in Section
9.1 of this Agreement occurs, the HRA may, in_addition to any other remedies or rights given the
HRA under this Agreement, but only after at least sixty (60) days notice to the Redeveloper and its
failure to cure (unless a different cure period is provided with respect to specific defaults under this
Agreement) or such longer cure period if reasonably required and the actions to cure have been
commenced within such 60-day period, fmd the Redeveloper in default (Default) and take any one
or more of the following actions:
(a) Suspend its performance under the Agreement until it receives assurances from -the
Redeveloper or mortgagee reasonably deemed adequate by the HRA, that the Redeveloper will cure
the default and continue performance under this Agreement.
(b) If Closing has not yet occurred, cancel pursuant to Minnesota Statutes Section 559.21,
.and rescind this Agreement, in which case -the 60-day -cure period shall commence with notice of
cancellation.
(c) Withhold the Certif cate of Completion if the Event of Default relates to the failure of
the Redeveloper to complete the Minimum Improvements as provided in this Agreement.
(d) Subject to the limitations stated in Article III take whatever action at law or in .equity
may appear necessary or desirable to the HRA to collect any payments due under this Agreement,
or to enforce .performance and observance of any obligation, agreement or covenant of the
Redeveloper under this Agreement.
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Provided, however, that any exercise by the HRA, its successors or assigns, of its right or
remedies hereunder shall always be subject to and limited by, and shall not defeat, render invalid or
limit in any way (a) the lien of any mortgage authorized by this Agreement and (b) any rights or
.interests provided in this Agreement for the protection of the Holder of such mortgages. Provided
further, however, that should any Holder succeed by foreclosure of the mortgage or deed in lieu
thereof, to Redeveloper's interest in the Redevelopment Property, it shall, notwithstanding the
foregoing provision, be obligated and, shall agree in writing to perform all of the obligations of the
Redeveloper, set forth in this Agreement. Said Holder shall have no obligations pursuant to this
Agreement other than as specifically set forth in the foregoing sentence.
Section 9.3. No Remedy Exclusive. Except as provided in Article III, no remedy herein
conferred upon or reserved to the HRA is intended to be exclusive of any other available remedy or
remedies, but each and every such remedy shall be cumulative and shall be in addition to every
other remedy given under this Agreement or now or hereafter existing at law or in equity or by
statute. No delay or omission to exercise any right or power accruing upon any default shall impair
any such right or power or shall be construed to be a waiver thereof, but any such right and power
may be exercised from time to time and as often as may be deemed expedient. In order to entitle the
HRA or the Redeveloper to exercise. any remedy reserved to it, it shall not be necessary to give
notice, other than such notice as may be required in this Article X or by applicable. law.
Section 9.4. No Additional Waiver Implied by One Waiver. In the event any obligation
contained in this Agreement should be breached by either parry and thereafter waived by the other
parry, such waiver shall be limited to the particular breach so waived and shall not be deemed to
waive any other concurrent, previous or subsequent breach hereunder.
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ARTICLE X
ADDITIONAL PROVISIONS
Section 10.1. Conflict of Interests; HRA Representatives Not Individually Liable. No
member, official, or employee of the HRA shall have any personal interest, direct or indirect, in the
Agreement, nor shall any such member, official or employee participate in any decision relating to
the Agreement which affects his personal interests or the interests of any corporation, partnership, or
association in which he is, directly or indirectly, interested. No member, official, or employee of the
HRA shall be personally liable to the Redeveloper, or any successor in interest, in the event of any
default or breach by the HRA or for any amount which may become due to the Redeveloper or
successor or on any obligations under the terms of the Agreement.
Section 10.2. Nondiscrimination. The provisions of Minnesota Statutes Section 181.59,
which relate to civil rights and nondiscrimination, shall be considered a part of this. Agreement as
though fully set forth herein.
Section 10.3. Provisions Not Merged With Deed.. None of the provisions of this Agreement
are intended to be or shall be merged by reason of any deed transferring any interest in any part of
the Property and any such deed shall not be .deemed to affect or impair the provisions of this
Agreement.. Unless otherwise indicated in this Agreement, the provisions of this Agreement shall
be binding upon and inure to be benefit of the successors and assigns of the parties hereto.
Section 10.4. Notice of Status and Conformance. The HRA agrees that from time to time,
upon not less than ten (10) days' prior written notice by Redeveloper, to execute, acknowledge and
deliver, without charge, to Redeveloper or to any person designated by Redeveloper, a statement in
writing certifying, to the extent true, that this Agreement is unmodified, the principal amount of any
obligation herein created then unpaid, that the HRA has not received any notice of default, that to
the knowledge of the HRA no event of default exists hereunder (or if any such event of default does
exist, specifying the same and stating that the same has been cured, if such be the case), that the
HRA to its knowledge, has no claims against the Redeveloper hereunder, and any other information
reasonably requested by the Redeveloper. It is the intention of this Section 10.4 to provide a
mechanism for obtaining estoppel certificates which may be requested by from time to time by
Redeveloper or Redeveloper's mortgagee.
Section 10.5. Compliance With Business Subsid~Act. The HRA's obligation to make
payments under this Agreement that constitute Business Subsidies under the Business Subsidy Act
are expressly contingent upon the conclusion of the procedures required by such law.
Section 10.6. Redeveloper Deposit. The parties acknowledge that the Redeveloper has
previously deposited $25,000 with the HRA. The purpose of the deposit is to reimburse the HRA
for the money value of staff time and consultant costs incurred by it in connection with the
preliminary activities leading up to, resulting in and including the preparation of this Agreement and
any modifications of the Gramercy Tax Increment District, and in the implementation of this
Agreement and the Development. Any portions of the deposit which are not needed for those
purpose shall be returned to the Redeveloper within 1 S days following the issuance of the
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Certificate of Completion; or the termination of this Agreement for failure to close. At any time that
the unexpended amount of such deposit is $10,000 or less, the Redeveloper shall, upon 15 days
written request to do so, provide such further deposit as is required to return the unexpended. amount
to $25,000. It is understood that the deposited amount is not a limitation on the Redeveloper's
obligation to reimburse for such costs, or to make other payments required under this Agreement.
Section 10.7. Notices and Demands. Except as otherwise expressly provided in this
Agreement, a notice, demand, or other communication under the Agreement by either parry 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
As to the Redeveloper: Gramercy Corporation, Inc.
7900 International Drive
Suite 1035
Bloomington, MN 55425
Attention: Michael W. Conlan, President
or at such other address with respect to either such parry as that party may, from time to time,
designate in writing and forward to the other.
Section 10.8. Identification Marker. The Redeveloper, the HRA will work with the city, as
part of the PUD Plan approval process, in the formulation of plans for an Identification Marker to be
located on or near the Redevelopment Property and .near the intersection of Lyndale Avenue and
Lake Shore Drive... The plans .will address such matters as design, message, location, cost, and
maintenance.
Section 10.9. Counterparts. This Agreement may be simultaneously executed in any
number of counterparts, all of which shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have set their hands and seals as of the day
and year first above written.
THE HOUSING AND REDEVELOPMENT
AUTHORITY OF THE CITY OF
RICHFIELD, MINNESOTA
By:
Its:
By:
Its:
GRAMERCY CORPORATION,
INC.
sy:
Its:
STATE OF MINNESOTA
SS
COUNTY OF )
The foregoing instrument was acknowledged before me this day of , 2000,
by and ,the Chairperson and Executive D_ irector of
The Housing and Redevelopment Authority in and for the City of Richfield, Minnesota.
Notary Public
•
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STATE OF MINNESOTA )
)SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this day of ,
2000, by the of Gramercy Corporation, Inc., a corporation
under the laws of Minnesota, by and on behalf of said corporation.
Notary Public
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EXHIBIT A
UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTY OF HENNEPIN
THE HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF RICHFIELD
LIMITED REVENUE TAX INCREMENT NOTE
The Housing and Redevelopment Authority in and for the City of Richfield (the
"Authority"), hereby acknowledges itself to be indebted and, for value received, promises to pay to
the order of Gramercy Corporation, Inc. (the. "Owner"), to the extent and in the manner hereinafter
provided, the original principal amount. of this Note, being $ (the "Principal
Amount"), together with interest thereon accrued from the date of this Note,. at the rate of interest of
per annum (the "Stated Rate"), in the amount and on the dates (the "Scheduled Payment
Dates") set forth on the Payment Schedule attached as Schedule A hereto and in the amounts stated
thereon (the "Scheduled Payments"). Unpaid interest accruing from the date of this Note, shall be
added to principal on asemi-annual basis on each August 1 and February 1 until February 1, 200_.
Any payments on this Note shall be applied first to accrued interest and then to the Principal
Amount in respect ofwhich-such payment is made.
Each payment on this Note is payable in any coin or currency of the United States of
America which on the date of such payment is legal tender for public and private debts and shall be
made by check or draft made payable to the Owner and mailed to the Owner at it postal address
within the United States. which shall be designated from time to time by the Owner.
The Note is a special and limited obligation and not a general obligation of the Authority,
which has been issued by the Authority to aid in fmancing a "project," as defined in Minnesota
Statutes, § 469.174, of the Authority within and for the benefit of the Interchange Tax Increment
Financing. District ("District").
THE NOTE IS NOT A DEBT OF THE AUTHORITY, THE CITY OF RICHFIELD, OR
THE STATE OF MINNESOTA (THE "STATE"), AND NEITHER THE AUTHORITY, THE
CITY- OF RICHFIELD, THE STATE NOR ANY POLITICAL SUBDIVISION THEREOF
SHALL BE LIABLE ON THE NOTE, NOR SHALL THE NOTE BE PAYABLE OUT OF ANY
FUNDS OR PROPERTIES OTHER THAN AVAILABLE TAX INCREMENT, AS DEFINED
BELOW.
The Scheduled Payment of this Note due on any Scheduled Payment Date is payable solely
from and only to the extent that the Authority shall have received as of such Scheduled Payment
Date "Available Tax.Increment." For the purpose of this Note, "Available Tax Increment" means:
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(_%) of the tax increment received from the real estate described in Schedule
B the "Redevelopment Property" for years beginning with 200_ and ending in 2026, after first
deducting therefrom i) any amount needed to make a previously due but unpaid Scheduled Payment
to Owner; and ii) any amount required to make a payment due but not otherwise paid to the
Authority under the Development Contract.
For purposes of this Note, a "Payment Date" shall mean each of the' Scheduled Payment
Dates set forth on Schedule A attached hereto. To the extend that on any Payment Date the
Authority is unable to make a full Scheduled Payment due to insufficient Available Tax Increment
(which insufficiency is not due to a failure of the Owner to pay full real estate taxes payable on the
Redevelopment Property), such deficiency shall be deferred and paid along with future Scheduled
Payments but only to the extent of Available Tax Increment. This Note shall terminate upon the
earlier of i) the date when the Redeveloper has been fully reimbursed according to the terms hereof;
or ii) February 1, 2026
This Note shall also terminate and the Authority's obligation to make any payments under
this Note shall be discharged and the Authority shall have no obligation and incur no liability to
make any payments hereunder immediately upon the occurrence of an Event of Default under the
Contract for Private Development, dated , 2000, (the "Development Contract")
between the Authority and the Owner, subject to the notice and cure provisions of Section 9.2
thereof.
This Note shall not be payable from or constitute a charge upon any funds of the Authority
or the City of Richfield and the Authority shall not be subject to any liability hereon or be deemed
to have obligated itself to pay hereon from any funds except the Available Tax Increments, and then
only to the extent and in the manner herein specified.
The Owner shall never have or be deemed to have the right to compel any exercise of any
taxing power of the Authority or the City of Richfield or of any other public body, and neither the
Authority or the City of Richfield nor any director, commissioner, council member, board member,
officer, employee or agent of the Authority or the City of Richfield, nor any person executing or
registering this Note shall be liable personally hereon by reason of the issuance or registration
hereof or otherwise.
This Note shall not be transferable or assignable, in whole or in part, by the .Owner without
the prior written consent of the Authority; provided that the Owner may pledge the payments
hereunder to a lender or assign the payments hereunder to a subsequent purchaser of the
Development, but only with prior written notice thereof to the Authority.
The Owner may also, without prior notice to or consent of the Authority transfer or assign
the Note or the right to receive payments under the Note to a wholly-owned subsidiary of the
Owner.
This Note may. be prepaid in full at any time at the option of the Authority; and may also be
prepaid at the request of the Owner, but in either instance only if the Authority first determines that
sufficient tax increment is or will be generated to permit such prepayment, and the parties agree
upon the actual prepayment amount.
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This Note is issued pursuant proper action of the Authority by Resolution and the Owner is
entitled to the benefits thereof, which Resolution is incorporated herein by reference.
IT IS HEREBY CERTIFIED AND RECITED that any acts, conditions, and things required
by the Constitution and laws of the State of Minnesota to be done, to have happened, and to be
performed precedent to and in the issuance of this Note have been done, have happened, and have
been performed in regular and due form, time, and manner as xequired by law; .and that this Note,
together with. all other indebtedness of the Authority or the City of Richfield outstanding on the date
hereof and on the date of its actual issuance and delivery, does not cause the indebtedness of the
Authority or the City of Richfield to exceed any constitutional. or statutory limitation thereon.
IN WITNESS WHEREOF, the Board of Commissioners of the Authority has caused this
Note to be executed by the manual signatures of the Chairperson and the Executive Director of the
Authority and has caused this Note to be dated ,2000.
Chairperson
Ci
Executive Director
•
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A-3
SCHEDULE A
[To be completed prior to execution]
SCHEDULED
PAYMENT DATES SCHEDULED
PAYMENTS SCHEDULED
PAYMENT DATES SCHEDULED
PAYMENTS
2/1/01 8/1/13.
8/1/01 2/1/14
2/1/02 8/1/14
8/1/02 2/1/15
2/1/03 8/1/15
8/1/03 2/1/16
2/1/04 8/1/16
8/1/04 2/1/17
2/1/05 8/1/17
8/1/05 2/1/18
2/1/06 8/1/18
8/1/06 2/1/19
2/1/07 8/1/19
8/1/07 2/1/20
2/1/08 8/1/20
8/1/08 2/1/21
2/1/09 8/1/21
8/1 /09 2/1 /22
2/1/10 8/1/22
8/1/10 2/1/23
2/1/11 8/1/23
8/1/11 2/1/24
2/1/12 8/1/24
8/1/12 2/1%25
2/1/13 8/1/25
JBD-179224v2
RC125-209 A-4
EXHIBIT B
CERTIFICATE OF COMPLETION
The undersigned hereby certifies that GRAMERCY CORPORATION INC. a Minnesota
.corporation has fully and completely complied with .its obligations under Article IV of that
document entitled "Contract for Private Development," dated , 2000 between THE
HOUSING AND REDEVELOPMENT IN AND FOR THE CITY OF RICHFIELD and
GRAMERCY CORPORATION, INC. 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 construction the
Minimum Improvements under such above-referenced Article on the above-referenced tract.
DATED: _
HOUSING AND
REDEVELOPMENT AUTHORITY IN
AND FOR THE CITY OF RICHFIELD
By
Its Chairperson
By
Its Executive Director
•
JBD-179224v2
RC125-209 B-]
•
AGENDA SECTION: Consent
AGENDA ITEM # 3B
REPORT # 42
J STAFF REPORT
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
JULY 17, 2000
•
REPORT PREPARED BY:
REPORT PRESENTER:
DEPARTMENT DIRECTOR REVIEW:
REVIEWED BY EXECUTIVE DIRECTOR: ~'
PAM. BOOKHOUT,
REHABILITATION SPECIALIST
NAME, TITLE
BRUCE PALMBORG,
COMMUNITY DEVELOPMENT DIRECTOR
ITEM FOR HRA CONSIDERATION:
Consideration of a resolution authorizing the acquisition of 1015 East 69th Street under the
Richfield Rediscovered Program.
I. RECOMMENDED ACTION:
By Motion:. Authorize the Chair and Executive Director to execute a
Purchase Agreement and other required documents to purchase 1015
East 69th Street in accordance with the attached resolution.
•
III. BACKGROUND I
The property at 1015 East 69th Street consists of a small house (712 sq. ft. on the
main floor, and 340 feet in the upstairs) and an attached garage. The deteriorated
roof has caused interior water damage to both floors. The flooring, walls and
fixtures are deteriorated and dated. Boards along the bottom of the garage are
rotted. Other issues which limit its remodeling potential include limited ceiling height
in the upstairs, steep stairs and narrow doorways. In the last two years, as property
values of homes in Richfield have increased, the value of very small, deteriorated
and functionally obsolete homes has also increased. The property at 1015 East
69th ,Street has appraised at $89,000. However,. proceeds from the sale of vacant.
lots are also increasing and buyers' opportunity to bid on sites may also increase
proceeds. The lot's dimensions are 69 feet x 132 feet.
0619park&logan
NAME, Tirrr:
Periodically, the owner has expressed a willingness to sell, but has until now been
unwilling to commit to a sale. While this property is not listed in the Richfield
Rediscovered plan, a modification later this year will include it and the property will
be purchased subsequently.
III. BASIS OF RECOMMENDATION
A. POLICY
• The property meets the physical program requirements for acquisition.
• The property is~ oluntarily for sale°by the owner=occupant.
• Funding is available under the Richfield Rediscovered Program. The
property will be certified to the tax increment district during the
upcoming plan modification. Approval is sought at this time so the
owner can plan accordingly.
• The purchase price of 101.5 East 69th Street is $89,000.
B. CRITICAL ISSUES
• N/A
C. FINANCIAL
• Funds are available from the 1999 Richfield Rediscovered bond sale
for program expenditures in 2000 and 2001.
D. LEGAL
• N/A
IV. ALTERNATIVE RECOMMENDATION(S~
• Do not authorize purchase.
V. ATTACHMENTS
• HRA Resolution
VI. PRINCIPAL PARTIES EXPECTED AT MEETING
• N/A
HRA RESOLUTION. NO.
RESOLUTION AUTHORIZING PURCHASE OF REAL PROPERTY LOCATED
AT 1015 EAST 69TH STREET FOR THE RICHFIELD REDISCOVERED 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 Richfield Rediscovered Redevelopment project (Project) heretofore
adopted by the City of Richfield (City) and the HRA, said real property being described as:
The north 69 feet of the east'/2 of Lot.15, Baumgartner's First Addition, whose street
address is 1015 East 69th Street; and
WHEREAS, the HRA is authorized by .Minnesota Statues 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 property will be included in the next plan modification; and
WHEREAS, the negotiated purchase price of 1015 East 69th Street is based on its
appraised value; and
WHEREAS, 1999 Richfield Rediscovered bond funds are available for program
acquisition...
NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment
..Authority in and for the City of Richfield, Minnesota.
1. The purchase price of 101.5 East 69th Street is approved at $89,000.
2. The Chairperson and Executive Director are authorized to execute a
Purchase Agreement or 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 this 17th day of July, 2000.
Thomas E. Harms, Chair
•
ATTEST:
Michael Sandahl, Secretary
AGENDA SECTION:
AGENDA ITEM #
REPORT #
STAFF REPORT
HOUSING AND REDEVELOPMENT
•
"' AUTHORITY MEETING
JULY 17, 2000
Consent
3A
41
REPORT PREPARED BY:
REPORT PRESENTER:
DEPARTMENT DIRECTOR REVIEW:
REVIEWED BY CITY MANAGER:
ITEM FOR HRA CONSIDERATION;
Consideration of a resolution authorizing the HRA not to waive the monetary limits on statutory
municipality tort liability
I. RECOMMENDED ACTION:
By Motion: Adopt a resolution authorizing the HRA not to waive the
monetary limits on municipal tort liability established by Minnesota
Statutes 466.04.
III. BACKGROUND
The HRA purchases its insurance from the League of Minnesota Cities Insurance
Trust (LMCIT). A requirement of that insurance coverage is that each participating
municipality must annually either affirm or waive its statutory limits of liability. This
action must be taken on or before July 1 of each year.
• The current statutory limits of liability for Minnesota cities are $300,000 for an
individual claimant and $1,000,000 per occurrence. Cities can waive those limits by
allowing an individual claimant to recover more than $300,000, up to the $1,000,000
occurrence limit or more if limits are waived and excess liability insurance is
STEVEN L. DEVICH,
ADMINISTRATIVE SERVICES DIRECTOR
STEVEN L. DEVICH,
ADMA~TISTRATIVE SERVICES DIRECTOR
0717hra-Imc
purchased. They may also waive the per occurrence limit and purchase excess
liability insurance.
Historically, the Richfield HRA has not waived its limits of liability. This is true of the
City of Richfield also. The majority of cities in Minnesota have not waived their
limits in the past.
The issue of purchasing excess liability insurance may be reviewed in greater depth
at a future HRA meeting if the HRA decides to affirm the statutory limits of liability.
III. BASIS OF RECOMMENDATION
A. POLICY
• The State Statute establishing liability limits for municipal entities has
been raised two times in the last few years to the current $1,000,000
level. The legislature felt that the $1,000,000 limit was more reasonable
than the previous lower limits.
• Historically, just over one-half of the municipalities in Minnesota have not
waived the monetary limits on municipality tort liability as was established
by statutes 466.04.
• The HRA could waive its statuary limits in future years if the
Commissioners should decide to do so.
• The City of Richfield has historically not waived its limits of liability.
• B. CRITICAL ISSUES
• The HRA's insurance policy with the League of Minnesota Cities Insurance
Trust renewed on July 1, 2000. This action must be completed as soon as
possible.
• The HRA does not have to make a decision on purchasing excess liability
coverage at this time. Coverage such as excess liability may be added at
any time.
C. FINANCIAL
• There is a slight premium savings for political entities that affirm the statutory
monetary limits. For the Richfield HRA the savings would be less than
$1,000 for the coverage year.
• The HRA has historically not purchased excess liability coverage because of
the relatively high cost of such coverage.
D. LEGAL
• The tort liability limits established by Minnesota Statutes have protected
cities historically and no Minnesota court has ever established a monetary
award in excess of the statutory limits against a municipality.
• Each municipal entity must annually decide whether the City would
• voluntarily waive the statute for both the single claims each occurrence
limits.
IV. ALTERNATIVE RECOMMENDATION(S~
• If the HRA feels that any single claimant should receive more than the
$300,000 limit, the HRA could elect to waive the statutory monetary limits.
• If the HRA feels that the $1,000,000 per occurrence limit is not adequate, the
HRA could purchase excess liability coverage and subsequently waive the
limits of liability up to the amount of excess coverage purchased by the HRA.
V. ATTACHMENTS
• Resolution.
VI. PRINCIPAL PARTIES EXPECTED AT MEETING
• None.
•
HRA RESOLUTION NO.
RESOLUTION AFFIRMING MUNICIPAL TORT LIABILITY LIMITS. ESTABLISHED BY
MINNESOTA STATUTES 466.04
WHEREAS, Minnesota Statute 466.04 provides for Municipal tort liability limits for
Minnesota cities; and
WHEREAS, the League of Minnesota Cities Insurance Trust has asked that each
city review the tort liability limits and determine if the respective city would choose to waive
it's limits; and
WHEREAS, such decision to affirm or waive the tort liability limits must be filed with
the League of Minnesota Cities Insurance Trust at the insurance renewal date.
NOW, THEREFORE, BE IT RESOLVED that the Executive Director is directed to
report to the League of Minnesota Cities Insurance Trust that the Richfield HRA does not
waive the monetary limits on the municipal tort liability established by Minnesota statutes
466.04..
Adopted by the Housing and Redevelopment Authority of the City of Richfield,
Minnesota this 17th day of July 2000.
Thomas E. Harms, Chair
ATTEST:
Michael Sandahl, Secretary
•