11-20-00 agendaCITY OF RICHFIELD,- MINNESOTA
HOUSING AND REDEVELOPMENT AUTHORITY
MONDAY, NOVEMBER 20, 2000
RICHFIELD CITY HALL
6700 PORTLAND AVENUE
COUNCIL CHAMBERS
7 P.M.
AGENDA
•
Call to order
Approval of minutes of Regular HRA Meeting of October 16, 2000
1. Opportunity for citizens to address the HRA on items not on the agenda
Notes:
2. HRA approval of agenda
3. Consent Calendar contains several separate items which are acted upon by the
HRA in one motion. Once the Consent Calendar has been approved, the
individual items and recommended actions have also been approved. No further
HRA action is necessary. However, any HRA Commissioner may request that an
item be removed from the Consent Calendar and placed on the regular agenda
for HRA- discussion and action. All items listed on the Consent Calendar are
recommended for approval.
A. Consideration of approval of concept of leasing property at 7200 Cedar Avenue to
Steve Jensen, owner of The Transmission Shop and Smith & Nielsen S.R. No. 68
B. Consideration of approval of resolution authorizing eminent domain proceedings to
acquire certain real properties S.R. No. 69
C. Consideration of approval of resolution approving appraised value of properties in
pending condemnation actions S.R. No. 70
Notes:
ADMINISTRATIVE REPORTS AND OTHER BUSINESS
4. Consideration of first amendment to contract for private development with Best Buy
Co., Inc.
Staff Report No. 71
Notes:
PUBLIC HEARING
5. Public hearing regarding resolution authorizing adoption of Business Subsidy
Agreement with Best Buy, Co., Inc.
Staff Report No. 72
Notes:
RESOLUTION
6. Consideration of resolution regarding approval of modification to tax increment
financing plan for Interchange West and Lyndale Gateway Tax Increment Financing
District
Staff Report No. 73
Notes:
PUBLIC HEARINGS
7. Public hearing regarding resolution authorizing adoption of Business Subsidy
Agreement with CSM Investors II, Inc. related to development within Lyndale Gateway
redevelopment area
Staff Report No. 74
Notes:
•
8. Consideration of modified preconditions and 30-day extension to respond to HRA on
modified preconditions and continue public hearing for business subsidy agreement for
City Bella to December 18, 2000
Staff Report No. 75
Notes:
RESOLUTION
9. Presentation of financial reporting analysis tax increment districts for LHN, ILN and
CABA prepared by HLB Tautges Redpath, Ltd., and consideration of resolution
approving and ratifying financial transactions related to certain tax increment financing
districts
Staff Report No. 76
•
Notes:
ADMINISTRATIVE REPORTS AND OTHER BUSINESS
10. Presentation of Richfield Housing and Redevelopment Authority Tax Increment District
Status Update
Staff Report No. 77
Notes:
PUBLIC HEARING
11. Public hearing and consideration of resolution adopting 2001 HRA budget and property
tax levy for 2001 and resolution adopting revision of 2000 HRA budget
Staff Report No. 78
Notes:
i ADMINISTRATIVE REPORTS AND OTHER BUSINESS
12. Executive Director report
Notes:
13. Claims and payroll
Adjournment
Auxiliary aids for individuals with disabilities-are available upon request. Requests
must be made at least 96 hours in advance to the Administrative Services Director
at 612-861-9702.
AGENDA SECTION: ~~~ (, (~ ~~ ~ (I q
AGENDA ITEM # I I
REPORT # '7 g
REPORT PREPARED BY: CHRIS REGIS, FINANCE MANAGER
NAME, TITLE
•
REPORT PRESENTER: CHRIS REGIS, FINANCE MANAGER
DEPARTMENT DIRECTOR REVIEW:
REVIEWED BY EXECUTIVE DIRECTOR:
ITEM FOR HRA CONSIDERATION:
Public hearing and adoption of the 2001 HRA proposed tax levy and budget and consideration
of resolution authorizing revision of the 2000 budget of the HRA.
RECONIMENDED ACTION:
By Motion: Adopt the resolution adopting a 2001 HRA budget and
property tax levy for 2001 and a resolution adopting revision of the
2000 budget of the HRA.
III. BACKGROUND I
At the August 21, 2000 meeting, the HRA adopted a preliminary levy according to
the Truth-in-Taxation law. That levy was then forwarded to the City Council and
adopted with the City's preliminary levy. .
Subsequent to the August 21, 2000 HRA meeting, at the August 28, 2000 City
Budget Study Session, staff was directed by Council to add one full-time position
and upgrade two part-time positions to fulltime in the Community Development/HRA
Department. Consequently, this has had the effect of increasing the 2000 Revised
HRA General Fund Budget and the Proposed HRA General Fund Budget. The
funding for these new positions will come from the HRA's Development account.
1120budget
The proposed property tax levy for 2001 will not change from what was approved on
August 21, 2000.
III. BASIS OF RECOMMENDATION
A. POLICY
• The HRA approved the Proposed 2001 Budget and Proposed 2001
HRA General Fund tax levy at its August 2.1, 2000 meeting.
• Changes to the approved 2000 Revised HRA budget have occurred
subsequent to the August 21, 2000 HRA meeting and these changes
merit approval by the HRA.
• The Truth-m-Taxation -law does not require further action by the HRA.
• A public hearing on the proposed HRA 2001 budget and tax levy has
been scheduled for November 20, 2000 to provide for public input.
• The HRA levy will be included as part of the City's final levy
documents which will be considered at the City's Truth-in-Taxation
hearing on December 4, 2000.
B. CRITICAL ISSUES
• The HRA should now take official action to finalize the HRA budget
and tax levy.
• Notice of public hearing was published in the November 8, 2000
Richfield Sun Current.
C. FINANCIAL
• The proposed 2001 HRA levy represents a 6.5% increase from the
previous year's levy and is approximately $35,000 less than the
maximum HRA levy established by law of .0144% of the City's market
value.
• The increase to the 2000 Revised HRA General Fund budget and the
2001 Proposed HRA General Fund budget after the personnel
changes are $1,750 and $6,040 respectively.
D. LEGAL
• N/A
ALTERNATIVE RECOMMENDATION(S)
• The HRA could select another meeting date before December 4, 2000 to
consider these items. However, there would be little time to publish a timely
.notice.
V. ATTACHMENTS
• Resolution Adopting 2001 Housing and Redevelopment Authority Budget
and Certifying the 2001 tax levy.
• Resolution Authorizing Revision of the 2000 Budget of the Housing and
Redevelopment Authority of Richfield.
~ VI. PRINCIPAL PARTIES EXPECTED AT MEETING ~
• None.
•
HRA RESOLUTLON NO.
RESOLUTION ADOPTING 2001 HOUSING AND REDEVELOPMENT AUTHORITY
BUDGET AND CERTIFYING THE 2001 TAX LEVY
BE IT RESOLVED by the Housing and Redevelopment Authority of the City of
Richfield, Minnesota as follows:
Section 1. The budget for the Housing and Redevelopment Authority
General Fund of Richfield for the year 2001 in the amount of
$729,860 is hereby ratified.
Section 2. The estimated gross revenue of the Housing and Redevelopment
Authority General Fund of Richfield from all sources, including
general ad valorem tax levies as hereinafter set forth for the year
2001, and as the same are more -fully detailed in the Executive
Director's official copy of the budget for the year 2001, in the
amount of $658,720 are hereby approved.
Section 3. There is hereby levied upon all taxable property in the City of
Richfield an ad valorem tax in 2000, payable in 2001 for the
following purposes:
Housing and Redevelopment Authority. $208,000
Section 4. ~ A certified copy of this resolution shall be transmitted to the County
Auditor.
Adopted by the Housing and Redevelopment Authority in and for the City of
Richfield, Minnesota this 20T" day of November, 2000.
Thomas E. Harms, Chair
ATTEST:
Michael Sandahl, Secretary
HRA RESOLUTION NO.
RESOLUTION AUTHORIZING REVISION OF THE 2000 BUDGET OF THE
HOUSING AND REDEVELOPMENT AUTHORITY OF RICHFIELD
WHEREAS, Resolution No. 746 appropriated funds for personal services and other
expenses and capital outlay for the Housing and Redevelopment Authority for the .year
2000, and
WHEREAS, The Acting Executive Director has requested a revision of the 2000
budget as detailed in the 2001 budget document.
NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment
Authority of Richfield, Minnesota as follows:
Section 1. That the 2000 appropriation for the Housing and Redevelopment
Authority General Fund be revised as follows:
$169, 880 Decrease
Section 2. Estimated 2000 gross revenue of the Housing and Redevelopment
Authority General Fund from all sources, as the same are more fully
detailed in the Executive. Director's official copy of the 2000 budget
document, are hereby revised as follows:
$127,090 Decrease
Section 3. .That the Executive Director bring into effect the provisions of this
resolution.
Adopted by the Housing and Redevelopment Authority in and for the City of
Richfield, Minnesota this 20t" day of November, 2000.
Thomas E. Harms, Chair
ATTEST:
Michael Sandahl, Secretary
AGENDA SECTION: 1'1'(~t ~, ~ ~ ~P ~-~-c~
AGENDA ITEM # [ O '
REPORT # °7 °7
STAFF REPORT
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
NOVEMBER 20, ..2000
•
REPORT PREPARED BY: I~ATIA MEDVETSKI,
REDEVELOPMENT SPECIALIST
NAME; TITLE
REPORT PRESENTER: BRUCE PALMBORG,
COMMUNITY DEVELOPMENT DIRECTOR
MIME, TITLE
DEPARTMENT DIRECTOR REVIEW:
REVIEWED BY EXECUTIVE DIRECTOR:
ITEM FOR HRA CONSIDERATION:
Presentation of Richfield Housing and Redevelopment Authority/Tax Increment District Status
Update.
L RECOMMENDED ACTION:
By Motion: Accept the Richfield Housing and Redevelopment
Authority Tax Increment District Status Update.
IIL BACKGROUND ~
Since 1993, development and financial consultant. Sid Inman of Ehlers &
Associates, Inc., in conjunction with staff, has prepared an annual status report on
the City's tax increment financing (TIF) districts. This year's status report is
composed of the following sections:
• Brief summary of each TIF district;
• Project cashflows for each TIF district,. including one composite cashflow for
those districts producing increment (entitled "Richfield Redevelopment Project
Area");
1120tifstat.doc
• (New) Cashflow entitled "Administration By District' showing the amount of
increment which the Richfield Housing and Redevelopment Authority (HRA) may
receive for administrative purposes;
• (New) Cashflow entitled "Housing Trust Fund By District" showing which TIF
districts will be contributing a portion of their project increment as a source of
revenue to fund a variety of housing needs for the community, including, but not
limited to, new construction of single family homes and townhomes, single family
home renovation and rehabilitation, and apartment renovation and rehabilitation;
and
• (New) A roster of information on the City's TIF districts entitled "TIF District
Abstract" which is compiled from data annually provided to the Office of State
Auditor.
Listed below are the assumptions made for the cashflows presented. Below this
are summaries of the tax increment districts. In light of the. assumptions, all
districts remain in good financial condition and have sufficient reserves to
pay outstanding obligations.
Assumptions:
1) Values stated assume conservative estimates;
2) Inflation rates vary by district and are referenced in the footnote section of the
cashflows;
. 3) Interest earnings are not included;
4) Legislative tax class rate changes are considered;
5) Changes to the local tax rate due to change in the school district's funding; and
6) Increase in the fiscal disparities rate after the Lyndale-Hub-Nicollet (LHN). District
closes.
Summaries
• During the year 2000, the revenue sources for the LHN District consist of
increment and special assessment receipts. The expenses include final
payment on the Note Payable to Richfield State Agency for the Woodlake
Medical Clinic project, administrative expenses, and debt service for. outstanding
bonds. Beginning with the year 2001, the LHN District will no longer have a
reserve balance. Also, in 2001, the LHN District will stop making debt service
payments for the 1996 pooled LHN/ILN bonds. By law, the only eligible use of
increment for apre-1979 tax increment district is debt service on outstanding
bonds. The LHN District is scheduled to service outstanding bond debt until the
year 2002. The district will then be closed.
Assuming the district will close in the year 2004, however, holding inflation and
tax rates constant at current levels, today's market value of $84.7 million for the
LHN will return $2.25 million in taxes back to all the taxing jurisdictions. For the
City of Richfield, approximately $450,000 of the $2.25 million will be returned.
Since the school district has the highest taxing level of all the taxing jurisdictions
that receive taxes, it will benefit the most from the closing of the LHN District.
• The Interstate-Lyndale-Nicollet (ILN) District consists of three redevelopment
projects, which generate tax increment: Shops at Lyndale, Meridian Crossings,
and Candlewood Hotel. Increment is used to make. payments on the Note
Payables to the developers for eligible project costs related to the Shops at
Lyndale and Meridian Crossings projects; pay administrative expenses; and
service debt on the 1996 bonds (pooled debt between. the ILN and LHN) and the
year 2000 bonds issued for the Lyndale Gateway project for which the
Candlewood Hotel project is supporting. Current projections show that by the
time the district expires in the year 2011 and the final debt service is made on
-the bonds the following year (2012), the ILN will have a fund balance of
approximately $1.5 million. However, it should be noted that on an annual basis,
the amount of net increment remaining continues to decline and in the final
years, there is a deficit net increment balance. However, the reserve fund
balance covers the deficits.
• The Cedar Avenue Business Area (CABA) District was established in 1988
and closed in 1996. A positive fund balance exists; however, final accounting
transactions related to land purchases as authorized by the modified 1996
CABA TIF Plan will be made by the end of the year and the fund closed.
• The Penn Avenue and Sixty-Sixth Street (PASSS) District was terminated in
1996: However,. in 1998 additional planning efforts were implemented to study
the commercial area with no real activity occurring. (Note: There is no
cashflow for this closed district).
• The Interchange District consists strictly of the Galyans Trading Company
project. Increment is used to make payments on the Note Payable to the
developer and for administration. Payments on the Note began in 1999 and are
scheduled to continue through 2018. A small fund balance remains at the end of
the district's life that results from increment received by the district prior to the
scheduled payments on the Note.
The Richfield Rediscovered Pre-1999 Districts are comprised of 69 certified
lots that are located within the A-1, A-2, A-3, A-4, A-5, B-1, B-2, B-3, B-4, and B-
5 tax increment districts of Richfield Rediscovered. Increment is used to pay for
administration of the program and repay internal loans associated with initial
program start-up. Also, note that these districts are scheduled to contribute
increment to the Housing Trust Fund so as to service debt on the 1999 bonds
issued for the Richfield Rediscovered Post-1999 District.
• The Richfield Rediscovered Post-1999 District is comprised of 28 certified
lots for the project for which bonds were issued in 1999. The sources of
revenue that fund eligible project costs are: Increment from the Pre-1999
Richfield Rediscovered program, .1999 bond proceeds, land sales and the
Housing Trust Fund.
• The Urban Village District was established in 1999 as part of redevelopment
efforts to renew downtown Richfield. The district will pay increment to the
developers for eligible project costs and HRA for administration, and contribute
to the Housing Trust Fund. The project is estimated to begin generating its first
.increment next year. No fund balance exists as all revenue is consumed by
expenses.
• The Gramercy Park District was established in 1998. Redevelopment efforts
for this area have been in place since the early 1970's, then known as GADAL,
or Graham Avenue Development at Lyndale. The first phase of the district
(Gramercy Senior Cooperative and VFW Hall) will begin generating increment in
2001 and will contribute revenue to the Housing Trust Fund. The second phase,
currently known as City Bella, is still in a planning phase and is not included in
the cashflow.
• The Interchange West and Lyndale Gateway District was the most recently
established .tax increment district in 1999 and is considered ascattered-site
district. Although the district is technically one, separate cashflows were
prepared due to the different projects within each area.
The Interchange West cashflow has projections for payments on (a.) two
different bonds, one taxable for project eligible activities and the other, tax
exempt, for public improvements; (b.) aPay-As-You-Go Note Payable; (c.)
administration; and (d.) Housing Trust Fund. Currently, revenues and expenses
are equal and no fund balance is carried forward.
The Lyndale Gateway cashflow projects payments for the redevelopment
components on both sides of Lyndale Avenue which encompasses three Pay-
As-You-Go Note Payables. This portion of the district does not contribute to the
Housing Trust Fund. A slight fund balance remains at the end of the district's
life for this project.
The cashflow for the Richfield Redevelopment Project Area is composed of the
three tax increment districts that are currently producing increment. Net increment
remaining as fund balance in the year 2012 is approximately $1.78 million. Note
that this balance does not include any projected interest income. The use of all
reserve fund balances are restricted by TIF law related to spending and pooling
rules as well as TIF plan budgets.
New this year in the report are two additional cashflows: Administration and
Housing Trust Fund. The Administration cashflow is a schedule of increment
projected to be collected for administration purposes from all of the districts. This
year, $485,009 will have been collected. Please note that these figures are for
HRA administration costs only and does not include the amounts that the county
and state auditor's office take for their administrative purposes. The Housing Trust
Fund cashflow shows in composite form the amount of increment contributed to the
fund.. Over a 25 year period, approximately $19.45 million will have been provided
to the community for a variety of housing needs referenced earlier in this staff
report.
Finally, the report includes a TIF Abstract, which provides basic district information
in table format. This information is also reported to the Office of the State Auditor
annually.
III. BASIS OF RECOMMENDATION
A. POLICY
• The HRA has previously requested that an annual status report be
prepared on the health of the City's TIF districts.
• As part of the regular HRA budget cycle, staff has proposed uses for
the fund balances consistent with state and federal law.
B. CRITICAL ISSUES
• All districts remain in good-financial-condition and have sufficient
reserves to pay outstanding obligations.
C. .FINANCIAL
• See subject report and staff summary.
D. LEGAL
• The HRA's financial. consultants and auditors in conjunction with legal
counsel have prepared the reports and cashflows in accordance with
state TIF law.
IV. ALTERNATIVE RECOMMENDATION~S~
• No alternative recommendation is necessary, as the purpose of the TIF
report is to review the condition of the TIF districts.-
V. ATTACHMENTS
• Richfield HRA Tax Increment District Status Update
VI. PRINCIPAL PARTIES EXPECTED AT MEETING
• Sid Inman, Ehlers & Associates, Inc.
•
RICHFIELD HRA
TAX INCREMENT DISTRICT STATUS UPDATE
Dated: November 2000
Prepared by Ehlers/Publicorp, Inc.
N:Vvlinnsota~Richfiel d~UPDA2000. W PD
. OVERALL DISTRICT UPDATE
1. RICHFIELD REDEVELOPMENT PROJECT AREA
In general, the market values of the districts have improved since the 1999 report. The
increase of HRA project market values have generally offset the Pay 2000 tax capacity
decreases, resulting from tax class rate changes. Overall income to the districts has increased.
Even with the Pay 2000, all districts remain healthy and have sufficient reserves to pay all
outstanding obligations.
2. ASSUMPTIONS
All projections are based on the most conservative assumptions. The local tax rate has been
decreased by 10% for taxes payable in 2001 to reflect the change in Richfield's school district
funding. The projections include an estimate of a reduction of 7% in tax capacity which stems
from additional proposed legislative changes to tax class rates. Last the projections include an
increase in the fiscal disparities rate in 2003 after the LHN district is terminated.
•
Richfield HRA Tax Increment District Status Update Page 1
LYNDALE-HUB-NICOLLET (LHN) DISTRICT UPDATE
For the rest of its duration the LHN District will have no reserve balance. Any funds available
until the year 2000 will be used to pay the debt service payments of the Bonds of 1996.
2. Starting in the year 2001, the LHN District, in accordance with Minnesota Statutes, Section
469.176, will receive full tax increment from the county but will spend tax increment revenues
exclusively for debt issued prior to Apri11,1990. Incompliance with thisstatutory provision,
pooled debt issued after April 1, 1990, must be paid by other Districts starting April 1, 2001.
Incompliance with this statute and in accordance with the plan to retire the remaining pooled
debt from ILN tax increment revenue, the G.O. Taxable TIF Bonds of 1996 and the related
Capital Project Fund will be redesignated from LHN to ILN.
3. Assuming the district will close in the year 2002, holding inflation and tax rates constant at
current levels, today's market value of $84.7 million for the LHN will return $2.25 million in
taxes back to all the taxing jurisdictions. For the City of Richfield, approximately $450,000
of the $2.25 million will be returned. Since the school district has the highest taxing level of
all the taxing jurisdictions that receive taxes, it will benefit the most from the closing of the
LHN District.
•
Richfield HRA Tax Increment District Status Update Page 2
INTERSTATE-LYNDALE-NICOLLET (ILIA
DISTRICT UPDATE
1. The ILN District is projected to maintain a reserve balance of over $1.2 million, based upon
conservative assumptions including no interest earnings and no inflation over time.
2. Budgetary modifications have been made to ensure that all tax increments will be reserved for
planned HRA and City needs.
3. Phase I of Meridian Crossings (TOLD) began generating full taxes for taxes payable 2000.
Phase II will begin generating full taxes for taxes payable in 2001. Tax increments are pledged
to TOLD to assist with acquisition of property.
4. Phase I of Meridian Crossings and Phases I and II of Shops at Lyndale (CSM Corporation)
have restored all of the decline in the market value of the District, since the base value of the
District had declined below the frozen values. This increase will result in increased market
value for taxation to the City, County and School District.
4. In 2000 the City sold bonds based on the Candlewood motel tax increment. The proceeds were
used to assist the Lyndale Gateway project.
5. The ILN District will take on servicing debt for the LHN/ILN pooled bonds of 1996, since the
LHN District is closing on December 31, 2002.
Richfield HRA Tax Increment District Status Update Page 3
CEDAR AVENUE BUSINESS AREA (CABA)
DISTRICT UPDATE
CABA was an economic development district that ended in 1996. No more increment will be
received from this district.
2. All accounting transactions to close out the District will be completed by December 31; 2000.
•
Richfield HRA Tax Increment District Status Update Page 4
PENN AVENUE AND SIXTY-SIXTH STREET
(PASSS) DISTRICT UPDATE
1. The PASSS TIF District was established in 1989.
2. The PASSS TIF District was terminated in 1996 due to a lack of feasible redevelopment
opportunities.
•
~~
Richfield HRA Tax Increment District Status Update Page 5
INTERCHANGE (GALYANS) DISTRICT UPDATE
1. The Interchange District is comprised of the Galyans Trading Company Store.
2. The Galyans Project began generating full taxes for taxes payable in 2000.
3. Tax increments are pledged to The Limited, Inc.. (developer of Galyans) to assist with
acquisition of property.
4. The Interchange District has a cash balance of $164,280.
Richfield HRA Tax Increment District Status Update Page 6
PRE 1999 RICHFIELD REDISCOVERED DISTRICTS UPDATE
1. Funds in the amount of $762,550, were advanced to Richfield Rediscovered in 1990 from
the City and HRA to establish abuy/sell program for the construction of new,
contemporary, single-family housing. The balance of the district will be repaid through tax
increment and land sales over the life of the districts.
2. At the end of 1999, the City sold tax increment bonds to fund the new Richfield
Rediscovered Projects beginning with the year 2000. Fifteen percent (15%) of the funds
from the Pre-1999 districts will be used to pay debt service on those bonds.
Richfield HRA Tax Increment District Status Update Page 7
POST 1999 RICHFIELD REDISCOVERED
DISTRICTS UPDATE
1. In November of 1999, the City sold tax increment bonds to fund the new Richfield
Rediscovered Projects. Fifteen percent (15%) of the funds from the Pre 1999 Richfield
Rediscovered districts will be used to pay debt service on these bonds. In addition, all land
sale proceeds will be used to pay off the bonds. The remainder of the debt service will be
paid back from the Housing Trust Fund and tax increment from the Post 1999- Richfield
Rediscovered districts. The purpose of the revenue is to fund a variety of housing needs for
the community, including but not limited to new construction single family homes,
townhomes, single family home renovation and rehabilitation, and apartment rehabilitation.
Richfield HRA Tax Increment District Status Update Page 8
URBAN VILLAGE DISTRICT UPDATE
1. The Urban Village District is comprised of mixed use redevelopment projects.
2. The Urban Village District will begin generating taxes in 2002.
3. Tax increments are pledged to the Projects to assist with acquisition of property and excess
site development costs.
4. Fifteen percent (15%) of the funds from the Urban Village District will be used to -fund the
Housing Trust Fund.
s
Richfield HRA Tax Increment District Status Update Page 9
• GRAMERCY PARK DISTRICT UPDATE*
1. The Gramercy Park Senior Housing Cooperative Project will began generating full taxes in
2001.
2. Tax increments are pledged to Gramercy Park to assist with acquisition of property and to
the Housing Trust Fund.
3. The second component of the district, namely the City Bella Project is currently in a
planning stage. At this time, based on certain assumptions, full taxes for City Bella will not
be generated unti12004.
4. Fifteen percent (15%) of the funds from the Gramercy Park District will be used to fund the
Housing Trust Fund.
* Gramercy Park District encompasses the Gramercy Park, Co-op and VFW as well as the site
for the proposed City Bella Project.
Richfield HRA Tax Increment District Status Update Page 10
• INTERCHANGE WEST DISTRICT UPDATE
1. The Best Buy Project is anticipated to begin generating full taxes in 2003.
2. Tax increments will be pledged to Best Buy to assist with site assembly activities.
3. Fifteen percent (15%) of the funds from the Interchange West District will be used to fund
the Housing Trust Fund.
•
Richfield HRA Tax Increment District Status Update Page 11
• LYNDALE GATEWAY DISTRICT UPDATE
1. The Lyndale Gateway District is comprises of the Twin Cities Christian Home Senior
Housing Project, Ron Clark Townhomes, and the CSM Corporation retail project.
2. The Lyndale Gateway Project will began generating full taxes in 2002.
2. Tax increments are pledged to the Lyndale GatewayProject to assist with site assembly
activities.
•
Richfield HRE1 Tax Increment District Status Update Page 12
•
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•
AGENDA SECTION:
AGENDA ITEM #
REPORT #
~i
Resol u_-1-i o n
Q
7
STAFF REPORT
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
NOVEMBER 20, 2000
•
REPORT PREPARED BY:
REPORT PRESENTER:
DEPARTMENT DIRECTOR REVIEW:
REVIEWED BY EXECUTIVE DIRECTOR:
KATIA MEDVETSKI,
REDEVELOPMENT SPECIALIST
NAME, TITLE
BRUCE PALMBORG,
COMMUNITY DEVELOPMENT DIRECTOR
ITEM FOR HRA CONSIDERATION:
Presentation of Financial Reporting Analysis Tax Increment Districts for. LHN, ILN, and CABA
prepared by HLB Tautges Redpath, Ltd. and consideration of a resolution approving and.
ratifying financial transactions related to certain tax increment financing districts.
I. RECOMMENDED ACTION:
By Motion: Approve a resolution approving and ratifying financial
transactions related to certain tax increment financing districts.
II. BACKGROUND
Tax increment has been and continues to be an important method of achieving economic
development goals within the City of Richfield. Minnesota Statutes establish parameters
regarding use of tax increment revenues. The rules are complex and are not the same for:
• Different types of tax increment districts;
• .Different dates of establishing those districts;
• Differences in the timing of incurring financial commitments; and
• Differences in the timing of incurring financial transactions.
The use of tax increment for the Housing and Redevelopment Authority (HRA) and City of
Richfield started before 1979. Laws since that date have been amended to reflect ever-
1120fundstr.doc
changing legislative intent and interpretation. One such law change transferred reporting
and compliance monitoring from the Department of Revenue to the Office of the State
Auditor (OSA) in 1995. The OSA currently reviews tax increment districts in Minnesota and
routinely issues reports that identify a potential violation of tax increment laws. The OSA
has also changed tax increment finance (TIF) reporting forms and requirements since their
oversight authority was established. Yet other law changes require referral of contested
interpretation of compliance matters first to the County Attorney and then, potentially, to
the state's Attorney General.
The HRA and City have devoted significant resources to TIF compliance since tax
increment was first used (in-house staff and systems as well as the use of consultants and
attorneys). Recent changes in reporting requirements impact transactions from the
inception of each district. Additionally, there are differences in interpretation of Statutes
between the OSA and attorneys who have specialized in tax increment matters since the
laws were first enacted.
Within the past year, the HRA and City have jointly analyzed transactions and OSA tax
increment finance reporting forms with the help of Ehlers & Associates (financial
consultants to the HRA), HLB Tautges Redpath, Ltd. (CPAs and City/HRA auditors), and
Kennedy & Graven. The results of the analysis to date are attached in a report entitled
"Financial Reporting Analysis Tax Increment Districts." This report reviews the LHN, ILN
and CABA Tax Increment Districts. The report also provides recommendations which
need to be implemented. Pages three to five discuss objectives, process and
recommendations. Due to the detailed financial nature of this report, Rob Tautges of HLB
Tautges Redpath and Sid Inman of Ehlers & Associates will be present at the HRA
meeting to review the report and answer questions.
III. BASIS OF RECOMMENDATION
A. POLICY
• Additional detailed research, review, and analysis of the City's TIF
districts has come about strictly as a result of the OSA's oversight
authority for TIF and staff's desire to be proactive in any potential audit
of records by the OSA.
B. CRITICAL ISSUES
• Certain transactions recommended in the report need to be
implemented by the end of the year.
C. FINANCIAL
• Financial Reporting Analysis Tax Increment Districts, dated November
2000 (Attachment A).
D. LEGAL
• The HRA's financial consultants, CPA, legal counsel and staff have
~,
prepared the financial reports and analyses in accordance with state
'~ TIF law, federal law pertaining to bonds, and generally accepted
accounting principles and practices for government.
IV. ALTERNATIVE RECOMMENDATION~S~
• Not to approve the resolution at this time. However, certain transactions
recommended for implementation could impede year end transactions and
impact the reporting to the OSA in 2001 for the time period ending December
31, 2000.
V. ATTACHMENTS
• Resolution approving and ratifying financial transactions related to certain tax
increment financing districts.
• Financial Reporting Analysis Tax Increment Districts for Lyndale-Hub Nicollet
(LHN), Interstate-Lyndale-Nicollet (ILN), and Cedar Avenue Business Area
(CABA).
VI. PRINCIPAL PARTIES EXPECTED AT MEETING
• Rob Tautges, HLB Tautges; Redpath, Ltd.
• Sid Inman, Ehlers & Associates, Inc.
•
HRA RESOLUTION NO.
RESOLUTION APPROVING AND RATIFYING
FINANCIAL TRANSACTION RELATED TO
CERTAIN TAX INCREMENT FINANCING DISTRICTS
WHEREAS, the City of Richfield ("City") and its Housing and Redevelopment
Authority ("HRA") have previously created certain redevelopment projects known as the
Interstate-Lyndale-Nicollet("ILN") Redevelopment Project, the Lyndale-Hub-Nicollet("LHN")
Redevelopment Project, and the Richfield Redevelopment Project (collectively, the "Project"),
all pursuant to Minnesota Statutes, Sections 469.001 to 469.047 ("HRA Act"); and
WHEREAS, within one or more of the Projects, the City .and HRA have.established
certain tax increment financing districts including the ILN TIF District, the LHN TIF District
and the CABA TIF District (collectively, the "TIF Districts"); and
WHEREAS, the HRA has reviewed a financial analysis of the TIF Districts prepared
by HLB Tautges Redpath, Ltd titled Financial Reporting Analysis Tax Increment Districts,
dated November 2000 ("TIF Report"), which describes the financing transactions related to
the TIF Districts since their inception; and
WHEREAS, the TIF Report analyzes fund balances, recommends certain fund
transfers, and makes certain other recommendation regarding the accounting of
transactions funded in whole or in .part with tax increments from the TIF Districts; and
WHEREAS, this Board has determined that it is in the interests of the sound
financial management of the City and the HRA to accept the TIF Report and take actions
needed to implement its recommendations,
NOW, THEREFORE, BE IT RESOLVED by the. Board of Commissioners of the
Housing and Redevelopment Authority in and for the City of Richfield, Minnesota; as
follows:
1. The Board accepts the TIF Report and ratifies and approves all expenditures
described in the report and all transfers to and from the funds described and
recommended in the TIF Report, specifically including prior tax increment expenditures
approved by the City Council.
2. The Board authorizes and directs staff to takes all actions necessary to carry
out the fund transfers and other recommendations made in the TIF Report.
3. The Board authorizes and directs City staff to take all actions necessary to
revise reports regarding the TIF Districts filed with the Office of the State Auditor in order to
conform those reports with the TIF Report and this resolution.
Approved by the Board of Commissioners of the Housing and Redevelopment
Authority in and for the City of Richfield this November 20, 2000.
Thomas E. Harms, Chair
ATTEST:
Michael Sandahl, Secretary
Housing and Redevelopment Authority.
City of Richfield
Financial Reporting Analysis
Tax Increment Districts
^ Lyndale Hub and Nicollet (LHN)
^ Interstate Lyndale and Nicollet (ILN)
^ Cedar Avenue Business Area (CABA)
November 10, 2000
•
•
14291.1
Housing and Redevelopment Authority
City of Richfield
Financial Reporting Analysis
Tax Increment Districts
Table of Contents
Page
Introduction .................................:.......:.......................................:...............:............ 3
Description of the Process ....................................:..................................................4
Recommendations ..........................................................................................:......... 5
Discussion and Analysis:
Lyndale Hub and Nicollet District (LHN) ..:....................................................6
Interstate Lyndale and Nicollet (ILN) ............................................................12
Cedar Avenue Business Area (CABA) .......................................:..................16
District Financial Transaction Summaries:
Lyndale Hub and Nicollet District (LHN) ....................................:.:Schedule l
Interstate Lyndale and Nicollet (ILN) ......:....................................... Schedule 2
Cedar Avenue Business Area (CABA) ............................................Schedule 3
Housing and Redevelopment Authority
City of Richfield
Financial Reporting Analysis
Tax Increment Districts
Introduction
A joint effort to analyze the tax increment transactions of the Housing and Redevelopment
Authority of the City of Richfield was started in November, 1999. Participants in the process
included:
HRA Staff Bruce Palmborg
Katia Medvetski
Myrt Link
City Staff Chris Regis
Ehlers and Associates Sid Inman
Rebecca Kurtz
HLB Tautges Redpath, Ltd. .Rob Tautges
Tom Hodnefield
The districts analyzed were:
^ Lyndale Hub and Nicollet (LHN)
^ Interstate Lyndale and Nicollet (ILN)
^ Cedar Avenue Business Area (CABA)
An analysis of the Richfield Rediscovered District is in process and will be issued separately.
- The objectives of the work were to:
1. Identify the remaining tax increment district balances by tracing district transactions
from the inception of the District through the audited financial statements of the City
and the HRA.
2. Define the specific funds in which the remaining district balances reside.
3. Segregate the residual balances of the specific funds between the portion that is
unspent tax increment revenue and the portion that was generated from non-tax
increment revenue sources.
4. Amend, if appropriate, the balances as reported in the Tax Increment Forms of the
Office of the State Auditor (OSA).
3
14291.1
Housing and Redevelopment Authority
City of Richfield
Financial Reporting Analysis
Tax Increment Districts
Description of the Process
The process included the following:
^ Preparation by HRA staff of detail account expenditure and revenue transactions from
the inception of each district.
^ Preparation by City and HRA staff of a number of schedules, such as combining fund
worksheets that supported the amounts contained in the audited Comprehensive
Annual Financial Statements of the City and HRA.
^ Research by all participants of budgets, transfers, specific transactions, and other
areas.
^ Consultation with Steve Bubul of Kennedy and Graven regarding interpretation of
statutes.
^ A series of meetings to review the progress of the project.
The work generally did not include testing of expenditures to invoices or other supporting
documents. The work also did not resolve areas of potential challenge by the OSA review
process. The OSA has taken certain positions regarding interpretation of tax increment
statutes. Several of these positions, if deemed appropriate by the court system or the state
legislature, would have broad sweeping effects on many, if not all, tax increment authorities
in Minnesota. Areas often interpreted differently by tax increment authorities and the OSA
include:
^ Adequate documentation of expenditures:
1. Administrative
2. Other
^ Commingling of TIF revenue with non-TIF revenue.
• Transfers including authorization and reporting issues.
^ Potential overpayment of increment.
^ Budget and line item reporting specificity.
^ Various other compliance areas related to District formation and subsequent
administration.
The schedules and analysis contained in this report reflect common reporting and
management practices of tax increment authorities in Minnesota. These practices have
evolved since the 1970s as tax increment laws have changed and as practitioners have
interpreted the statutes.
4
14291.1
Housing and Redevelopment Authority
City of Richfield
Financial Reporting Analysis
Tax Increment Districts
Recommendations
Based on the financial transaction summaries and analysis, the project team recommends the
following actions:
1. HRA Board and City Council ratification of the tax incrementtransactions from the
inception of the Districts analyzed.
2. City and HRA staff to review District budgets and amendments thereto in light of the
financial transaction summaries contained herein and evaluate the need for further
amendments.
3. HRA staff to amend OSA TIF reports in accordance with the results of the financial
summaries and analysis contained herein.
4. Transfer recommended amounts to match CABA tax increment eligible expenditures
with CABA tax increment revenues.
5. Authorize the HRA staff to transfer residual non-TIF revenue balances to the
Development Fund from the following funds:
Fund # Description
481 LHN Tax Increment
943 LHN Redevelopment Project
.482 ILN Tax Increment
483 CABA Tax Increment
The transfers should be effective December 31, 2000 and reflect the residual non-TIF
revenue balances of those funds as of that date.. In addition to the above list, the HRA has
budgeted residual fznd balance transfers from the $1.9 million Redevelopment Bonds of
198.8 (Fund 301).
6. The LHN District, in accordance with Minnesota Statute 469.176, will spend tax
increment revenues exclusively for debt issued prior to April 1, 1990. In compliance with
this statutory provision, pooled debt issued after April 1, 1990 must be paid by other
Districts starting April 1, 2001. In compliance with statutes, authorize the re-designation
of the G.O. Taxable TIF Bonds of 1996 and the related Capital Project Fund from LHN
to ILN in accordance with the plan to retire the remaining pooled debt from ILN tax
increment revenue.
•
5
14291.1
Housing and Redevelopment Authority
City of Richfield
Financial Reporting Analysis
Tax Increment Districts
Lyndale Hub and Nicollet (LHN)
LHN is a redevelopment district established in 1975. The City and HRA have used the
following funds to account for LHN transactions:
N/A (old 402) Redevelopment Bonds of 1984
N/A (old 403) 6.265 Ref Bonds of 1985
N/A (old 411) Ref Bonds of 1983 -Debt Service
N/A (old 447) Temporary Improvement Bonds of 1977
N/A (old 449) Temporary Improvement Bonds of 1979
N/A (old 480) GO Improvement Bonds of 1980
N/A (old 505) LP705 LHN Public Improvement
N/A (old 954) LHN Special Revenue
300 Redevelopment Bonds of 1977 Debt Service
302 GO Imp. Bonds of 1988 -Debt Service
303 GO Refunding Redevelopment Bonds of 1991
309
312 GO Refunding Bonds of 1988
GO Refunding Improvement Bonds of 1994B
313 $5,075 Taxable TIF GO of 1996
481 LHN Tax Increment
942 Capital Projects Funding (1996 Bond Proceeds)
943 LHN Redevelopment Project
944 LHN Management Properties
The detailed analysis of the LHN District includes the transactions of the above funds since
1976. The transaction summary is presented in Schedule 1.
LHN has had a number of transfers effecting the reported balances of the District Funds.
Transfers between funds generally occur to match funding sources with intended or restricted
uses. The LHN District reflects transfers of non-TIF amounts that are not restricted. by the tax
increment statutes. Such funding sources include, for example, interest on investments and
sale of property. The LHN District funds generated over $22 million of non-TIF revenue
since the inception of the District. Transfers from the LHN District also reflect pooling of tax
increment re ~~enue between Districts as authorized by statutes. LHN transfers are detailed in
Schedule 1.
6
14291.1
Housing and Redevelopment Authority
City of Richfield
Financial Reporting Analysis
Tax Increment Districts
Reporting of transfers on OSA TIF forms exclude infra-district transfers, for example, the
transfer of tax increment revenue from a Capital. Project Fund to a Debt Service Fund that
pays debt of the tax increment district. Transfers out which were used to reimburse other
funds for budgeted tax increment qualifying expenditures are reported on the OSA TIF forms
as an expenditure of TIF revenue. Reporting of transfers contained in this report is consistent
with the recommended procedures as published by the OSA.
The calculated LHN Tax Increment District Balance at December 31, 1.999 was as follows
compared to the 1999 submitted O$A TIF form:
December 31, 1999
Balance
312 Refunding Imp. Bonds of 1994B $ 7,068
481 ZHN Tax Increment 1,954,375
942 Capital Projects Funding (1996 Bond Proceeds) 3,128,370
943 LHN Redevelopment Project 303,062
944 LHN Management Properties (248,878)
Total 5,143,997
District balance per 1999 OSA TIF form 7,235,918
Difference $ (2,091,921)
The above difference relates to changes in methods of accumulating accounting information
since the 1970s. City and HRA systems, personnel and record retention policies have
changed over the periods included in the tax increment cumulative reported balances:
Additionally, the OSA reporting form has changed significantly from the initial reporting
requirements.
7
14291.1
•
Housing and Redevelopment Authority
City of Richfield
Financial Reporting Analysis
Tax Increment Districts
We recommend that the OSA TIF form be amended to reflect the amounts as summarized in
this report. The LHN District balance calculated on Schedule 1 from the inception of the
District through December 31, 1999 is as follows:
Sources:
Bond proceeds
Tax increments (TIF)
Homestead Credit (RAGA)
Interest on investments
Sale of property
Special assessments
Rent
Intergovernmental revenue
Contributions
Refunds & reimbursements
Other
Total sources of funds
Expenditures and other uses
Transfers in
Transfers out
Balance -December 31,1999
Lyndale Hub and Nicollet (LHN)
$ 54,609,933 $ 53,809,933 $ 800,000
35,836,439 35,836,439 -
768,771 - 768,771
13,244,229 - ~ 13,244,229
1,517,941 - 1,517,941
4,177,974 - 4,177,974
24,235 - 24,235
1,996,094 - 1,996;094
65 - 65
74,705. - 74,705
404,477 - 404,477
112,654,863 89;646,372 23,008,491
(101,368,204) (100,474,536) (893,668)
1,414,531 763,337 651,194
(7,557,193) (1,033,043) (6,524,150)
$ 5,143,997 $ (11,097,870) $ 16,241,867.
8
14291.1
Housing and Redevelopment Authority
City of Richfield
Financial Reporting Analysis
Tax Increment Districts
The HRA has systematically transferred non-TIF revenue to the Development Fund and other
funds as financial planning initiatives have identified funding requirements. Based on the
financial analysis contained herein, the remaining balance of the LHN District funds includes
unspent tax increment revenue that is the remaining bond proceeds included in the fund
balance of the HRA Capital Projects Fund (Fund 942). The remaining balance of LHN
District funds as segregated between TIF revenue and non-TIF revenue is calculated as
follows:
Lyndale Hub and Nicollet
District balance -December 31, 1999 *
Non TIF revenue:
942
Capital Projects
Other Funding Total
$ 2,015,627 $ 3,128,370 $ 5,143,997
Total non TIF revenue 21,731,245 477,246 .22,208,491
Transfers in of non TIF revenue 651,194 - 651,194
Transfers out ofnon TIF revenue (6,145,201) (316,772) (6,461,973)
Net non-TIF revenue 16,237,238 160,474 16,397,712
Non TIF revenue in excess of District Balance 14,221,611 - 14,221,611
Unspent tax increment revenue
$ - $ 2,967,896 $2,967,896
* District balance will increase by $249,978 based on matching transfers in related to land purchase.
The above table indicates that the remaining LHN District balance at December 31, 1999
.consists of non-TIF revenue except for the residual bond proceeds of the HRA Capital
Projects Fund (Fund 942). This non-TIF balance may be transferred to other HRA funds
subject to:
^ Cautions outlined earlier in this report regarding OSA interpretation of TIF statutes
^ Other potential OSA audit findings
^ Other restrictions such as bond covenants
The residualbond proceeds of the HRA Capital Projects Fund (Fund 942) are from a pooled
debt bond issue. The remaining proceeds may be used in the Interstate Lyndale and Nicollet
District (ILN) and other districts which qualify for pooling. Future debt retirement is
anticipated from the ILN District. The source of future funding was planned based on
statutory provisions that restrict the use of LHN tax increments starting April 1, 2001 as
follows:
9
14291.1
Housing and Redevelopment Authority
City of Richfield
Financial Reporting Analysis
Tax Increment Districts
Section: 469.176 Duration limits; pre-1979 districts. For
tax increment financing districts created prior to August 1,
1979, no tax increment shall be paid to the authority after
April 1, 2001, or the term of a nondefeased bond or obligation
outstanding on April 1, 1990, secured by increments from the
district or project area, whichever time is greater, provided
that in no case will a tax increment be paid to an authority
after August 1, 2009, from such a district. If a district's
termination date is extended beyond April 1, 2001, because bonds
were outstanding on April 1, 1990, with maturities extending
beyond April 1, 2001, the following restrictions apply. No
increment collected from the district maybe expended after
April 1, 2001, except to pay or defease (i) bonds issued before
April 1, 1990, or (ii) bonds issued to refund the principal of
the outstanding bonds and pay associated issuance costs,
provided the average maturity of the refunding bonds does not
exceed the bonds refunded.
We recommend that the HRA Capital Projects Fund (Fund 942) be reclassified from LHN to
ILN as of December 31, 2000. The reclassification will not impact the accounting system;
however, the OSA TIF forms will reflect a pooling transfer between the districts to formally
recognize the shift in source of funding of the bond issue from LHN to ILN.
•
Housing and Redevelopment Authority
City of Richfield
Financial Reporting Analysis
Tax Increment Districts
The preceding table also indicates that non-TIF revenue is sufficient to fund the current
recorded non-TIF revenue transfers out. In 1997, Capital Projects Funding (Fund 942)
transferred amounts to purchase property (the Jensen property). The property was a budgeted
expenditure of the CABA District. Additionally, as discussed later in this report, the CABA
District transferred amounts that are designated for this same purchase. The transfers from
Capital Projects Funding were as follows for the Jensen property acquisition:
1997 -budgeted $343,530
1997 -actual property purchase 282,000
Total 1997 transfers 625,530
1998 -reverse 1997 (282,000)
Net transfers out 343,530
Matching transfers:
Development Fund (146,463)
Galyans/Interchange (103,515) (249,978)
Adjusted .net transfers out
of non-TIF revenue $93,552
As further discussed in the CABA section of this report, we recommend the above matching
transfers be recorded in 2000.
r
_11
14291.1
Housing and Redevelopment Authority
City of Richfield
Financial Reporting Analysis
i Tax Increment Districts
Interstate Lyndale Nicollet (ILN)
ILN is a redevelopment district established in 1985. The City and HRA-have used the
following funds to account for ILN transactions:
301 $1.9 Redevelopment Bonds of 1988
482 ILN Tax Increment Fund
945 ILN Capital Project.
946 ILN Acquisitions
N/A (old 337) City ILN PIEL
N/A (old 401) Redevelopment Bonds of 1985
N/A (old 404) ILN Tax Increment 1251
N/A (old 961) ILN Capital Project
The detailed analysis of the ILN District includes the transactions of the above funds since
1985. The transaction summary is presented in Schedule 2.
LHN has had a number of transfers effecting the reported balances of the District Funds. ,
Transfers between funds generally occur to match funding sources with intended or restricted
uses. The ILN District reflects transfers of non-TIF amounts that are not restricted by the tax
increment statutes. Such funding sources include, for example, interest on investments, sale
of property and Municipal State Aid (MSA). The ILN District funds generated over $6.2
million of non-TIF revenue since the inception of the District. Transfers to the ILN District
include pooling of tax increment revenue from the LHN District as authorized by statutes.
ILN transfers are detailed in Schedule 2.
Reporting of transfers _on OSA TIF forms exclude infra-district transfers, for example, the
transfer of tax increment revenue from a Capital Project Fund to a Debt Service Fund that
pays debt of the tax increment district. Transfers out which were used to reimburse other
funds for budgeted tax increment qualifying expenditures are reported on the OSA TIF forms
as an expenditure of TIF revenue. Reporting of transfers contained in this report is consistent
with the recommended procedures as published by the OSA.
12
14291.1
Housing and Redevelopment Authority
City of Richfield
Financial Reporting Analysis
i Tax Increment Districts
The calculated ILN Tax Increment District Balance at December 31, 1999 was as follows
compared to the 1999 submitted OSA TIF form:
December 31, 1999
Balance
301 $1.9 Redev Bonds of 1988 $ 652,942
482 ILN Tax Increment 1,214,596
945/946 ILN Redevelopment Capital Project (269,171)
Total 1,598,367
District balance per 1999 TIF Form (88,771)
Difference $ 1,687,138
The above difference relates to changes in methods of accumulating accounting information
since the 1970s. City and HRA systems, personnel and record retention policies have
changed over: the periods included in the tax increment cumulative reported balances.. ,
Additionally, the OSA reporting form has changed significantly from the initial reporting
requirements.
13
14291.1
Housing and Redevelopment Authority
City of Richfield
Financial Reporting Analysis
Tax Increment Districts
We recommend that the OSA TIF form be amended to reflect the amounts as summarized in
this report. The ILN District balance calculated on Schedule 2 from the inception of the
District through December 31, 1999 is as follows:
Interstate Lyndale Nicollet (ILN)
Sources: Total TIF Non-TIF
Bond proceeds $ 20,558,470 $ 20,558,470 $ -
Tax increments (TIF) 7,331,562 7,331,562 -
Homestead Credit (RAGA) 8,357 - 8,357
Interest on investments 4,104,846 124,335. 3,980,511
Sale of property 752,825 - 752,825
Special assessments 48,202 - 48,202
Municipal State Aid (MSA) 1,429,443 - 1,429,443
Total sources of funds 34,233,705 28,014,367 6,219,338
Expenditures and other uses (34,552,645) (34,386,315) (166,330)
T
f
i
rans
ers
n 2,109,467 1,443,017 666,450
Transfers .out (192,160) - (192,160)
Balance -December 31,1999 $ 1,598,367 $ (4,928,931) $ 6,527,298
Housing and Redevelopment Authority
City of Richfield
Financial Reporting Analysis
Tax Increment Districts
•
C7
Based on the financial analysis contained herein, the remaining balance of the ILN District
funds includes no unspent tax increment revenue. The remaining balance of ILN District
funds as segregated between TIF revenue and non-TIF revenue is .calculated as follows:
District balance -December 31, 1999
Non-TIF revenue:
$1.9
:Redevelopment
Bonds
Other of 1988 Total
$ 945,425 $ 652,942 $ 1,598,367
Total non-TIF revenue 4,977,773 1,241.,565 6,219,338
Transfers in of non-TIF revenue 666,450 - 666,450
Transfers out of non-TIF revenue (192,160) - (192,160)
Net non-TIF revenue 5;452,063 1,241,565 6,693,628
Non-TIF revenue in excess of District Balance 4,506,638 588,623 5,095,261
Unspent tax increment revenue
$ - $ - $ -
The above table indicates that the remaining ILN District balance at December 31, 1999
consists of non-TIF revenue. This non-TIF balance may be transferred to other HRA funds
subject to:
^ Cautions outlined earlier in this report regarding OSA interpretation of TIF statutes
^ Other potential OSA audit findings
^ Other restrictions such as bond covenants
As discussed in the Lyndale Hub and Nicollet (LHN) section of this report, the residual bond
proceeds of the HRA Capital Projects Fund (Fund 942) are from a pooled debt bond issue..
The remaining proceeds may be used in the Interstate Lyndale and Nicollet District (ILN)
and other districts which qualify for pooling. Future debt retirement is anticipated from the
ILN District. Based on these facts, we recommend that the HRA Capital Projects Fund
(Fund 942) ie reclassified from ZHN to ILN as of December 31, 2000. The reclassification
will not impact the accounting system; however, the OSA TIF forms will reflect a pooling
transfer between the districts to formally recognize the shift in source of funding of the bond
issue from LHN to ILN.
15
14291.1
Housing and Redevelopment Authority
City of Richfield
Financial Reporting Analysis
Tax Increment Districts
Cedar Avenue Business Area (CABA)
CABA is an economic development district established in 1988. The City and HRA have
used the following funds to account for CABA transactions:
Fund # Description
407 CABA Tax Increment
906 CABA
483 CABA Tax Increment
The detailed analysis of the CABA District includes the. transactions of the above funds since
1987. The transaction summary is presented in Schedule 3.
CABA has had a number of transfers effecting the reported balances of the District Funds.
Transfers between funds generally. occur to match funding sources with intended or restricted
uses. The CABA District reflects transfers of non-TIF amounts that are not restricted by the
tax increment statutes. Such funding sources include, for example, interest on investments
and sale of property. The CABA District funds generated over $150,000 of non-TIF revenue
r since the inception. of the District. CABA transfers are detailed in Schedule 3..
Reporting of transfers on OSA TIF forms exclude transfers out which were used to reimburse
other funds for budgeted tax increment qualifying expenditures. Such amounts. are reported
on the OSA TIF forms as an expenditure of TIF revenue. Reporting of transfers contained in
this report is consistent with the recommended procedures as published by the OSA.
Housing and Redevelopment Authority
City of Richfield
Financial Reporting Analysis
Tax Increment Districts
In 1996 and 1997, the CABA District transferred $249,978 to the Development. Fund
($146,463) and to Galyans/Interchange ($103,515). Budgeted-CABA eligible expenditures,
however, were expended from the HRA General Fund for Modification #3 to the tax
increment plan. To properly match CABA tax increment revenue with eligible expenditures,
we recommend the following transfers:
To From
931 Development -Fund - $ 146,463
453 Galyans/Interchange - 103,515
.942 Capital Projects Funding $ 249,978 -
The calculated CABA Tax Increment District Balance at December 3l, 1999 was as follows
compared to the 1999 submitted OSA TIF form:
December 31, 1999
Balance
483 CABA Tax Increment
906 CABA
Total
District balance per 1999 TIF Form
Difference
$ 18,002
(215)
17,787
18,427
$ (640)
Housing and Redevelopment Authority
City of Richfield.
FinancialReporting Analysis
Tax Increment Districts
We recommend that the OSA TIF form be amended to reflect the amounts as summarized in
this report. The CABA District balance calculated on Schedule 3 from the inception of the
District through December 31, 1999 is as follows:
Cedar Avenue Business Area (CABA)
Sources: Total TIF Non-TIF
Tax increments (TIF)
Interest on investments
Sale of property
Total sources of funds
Expenditures and other uses
Transfers in
Transfers out
Balance - December. 31, 1999
$ 1,814,888 $ 1,814,888 $ -
85,948 3,223 82,725
75,780 - 75,780
1,976,616 1,818,111 158,505
(1,818,111). (1,818,111) -
(140,718) - (140,718)
$ 17,787 $ - $ 17,787
Housing and Redevelopment Authority
City of Richfield
Financial Reporting Analysis
Tax Increment Districts
Based on the financial analysis contained herein, the remaining balance of the CABA District
funds includes no unspent tax increment revenue. The remaining balance of CABA District
funds as segregated between TIF revenue and non-TIF revenue is calculated as follows:
District balance -December 31, 1999
Non-TIF revenue:
Total non-TIF revenue
Transfers in of non-TIF revenue
Transfers out of non-TIF revenue
Net non-TIF revenue
Non-TIF revenue in excess of District Balance
•
Unspent tax. increment revenue
$ 17,787
158,505
(140,718)
17,787
$ -
The above table indicates that the remaining CABA District balance at December 31, 1999
consists of non-TIF revenue. This non-TIF balance may be transferred to other HRA funds
subject to:
^ Cautions outlined earlier in this. report regarding OSA interpretation of TIF statutes
^ Other potential OSA audit findings
^ Other restrictions such as bond covenants
s
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AGENDA SECTION: Pt~~~ j ~ I-~(~ ~ r1G S
AGENDA ITEM # g
REPORT # '75
STAFF REPORT
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
NOVEMBER 20, 2000
•
REPORT PREPARED BY: BRUCE NORDQUIST, HOUSING AND
REDEVELOPMENT MANAGER
NA~1~, TITLE
REPORT PRESENTER: BRUCE PALMBORG, COMMUNITY
DEVELOPMENT DIRECTOR
DEPARTMENT DIRECTOR REVIEW:
REVIEWED BY EXECUTIVE DIRECTOR:
ITEM FOR HRA CONSIDERATION:
Approval of modified preconditions and a public hearing on a Business Subsidy Agreement for
City Bella.
L RECOMMENDED ACTION:
By Motion: Authorize modified preconditions and a 30-day extension
of time to respond to the Housing and Redevelopment Authority on
the modified preconditions and continue a public hearing for the
Business Subsidy Agreement for City Bella to 7 p.m., Monday,
December 18, 2000.
IIL BACKGROUND
The Housing and Redevelopment Authority (HRA) authorized a Contract for Private
Development (Contract) with Gramercy Corporation on July 17, 2000. The
proposed "City Bella" project comprehensively redevelops the remaining potion of
the southwest quadrant of Lyndale Avenue and 66th Street. On September 18,
2000 the HRA received a project update and authorized a 60-day extension of
preconditions to the. Contract as project plans were further developed. The HRA
received the updated plans at the October 16, 2000 meeting. The Planning
Commission voted unanimously on October 24, 2000 to recommend approval of the
1120CityBella
rezoning to PC-2, planned general commercial. The City Council on November 13,
2000 approved a first reading of an ordinance amendment for rezoning. The City
Council also authorized first reading of a transitory ordinance vacating right-of--way
within the City Bella project area.
The Contract includes 15 preconditions to development. The restated preconditions
clarified progress by the developer in defining the concept plans required by the
HRA. With a 30-day extension, it is anticipated that the developer will on December
18:
• Finalize the Concept Plans with the HRA,
• Have received the City Council findings on the Environmental
Assessment Worksheets,
• Have determined the level of economic assistance required for the project
with financial analysis and but-for findings confirmed by Ehlers and
Associates Inc. (financial consultants), on behalf of the HRA, and
• Elaborate on the development's contribution to the affordable housing
goals of the HRA.
III. BASIS OF RECOMMENDATION
A. POLICY
• The HRA and City Council will be considering additional approvals of
the project during December.
• The completion of preconditions are integral to project approval.
• The financial aspects of the project are still being studied, hence the
need for the HRA to continue the scheduled public hearing on
business subsidy. State law regulates the need for a public hearing on
.business subsidy.
`B. CRITICAL ISSUES
• Gramercy is planning to be in contact with Lake .Shore Drive
Condominiums concerning the improvements to the proposed shared
lot line. Gramercy has staked the lot line area to facilitate discussion
with the intent to incorporate the design into the concept plans.
• Gramercy has purchase agreements with the Lynch residential
property and Lyndale Hardware. Offers have been made to Lake
Shore Drive Condominium and Trestman Music. The offers have not
been accepted to date. Checker Auto has not responded to an offer
to sell. Leasing arrangements may require condemnation of the
Checker Auto property.
C. FINANCIAL
• Ehlers is working with the developer to determine the amount of
business subsidy and TIF assistance required.
• Expenses by Ehlers are covered by the developer.
D. LEGAL
• The restated preconditions and form of the Business Subsidy
Agreement were drafted by legal counsel.
• The HRA is required to hold or continue the public hearing on the
Business Subsidy Agreement which was published to occur on
November 20, 2000.
IV. ALTERNATIVE RECOMMENDATION~S~
• The HRA can choose to hold and close the hearing or cancel the hearing.
However, a continuation provides for holding the hearing on December 18,
2000. Information is insufficient to hold the hearing at this time.
V. ATTACPIMENTS
• A. Anticipated schedule for City Bella
• B. Restated Preconditions
C. Original Preconditions
D. Form for City Bella Business Subsidy Agreement
E. Business Subsidy Criteria
VI. PRINCIPAL PARTIES EXPECTED AT MEETING
• The developer, Gramercy Corporation, Mike Conlan and Lou Stocco.
•
ATTACHMENT A
•
•
Anticipated Schedule
For
City Bella Project
(as of October 9, 2000)
Date Item
October 16, 2000
7:00 p.m., City Hall • Project status report to HRA, no actions
being requested
HRA meeting • HRA considers modifications to
Gramercy Tax Increment Financing Plan
to accommodate City Bella
October 18, 2000
6:30 to 8:00 p.m. • Open house for City Bella at Woodlake
Nature Center. Concept drawings,
Woodlake Nature Center developer representatives,
environmental assessment study are
available for comments and questions
October 24, 2000
7:00 p.m., City Hall Planning Commission meeting to review
project plans and consider zoning and
Planning Commission meeting use changes. Modifications to Gramercy
Tax Increment Financing Plan also
considered.
November 13, 20000
7:00 p.m., City Hall City Council considers zoning changes;
first reading of rezoning
City Council meeting City Council considers modifications to
Gramercy Tax Increment Financing Plan
to accommodate City Bella
November 20, 2000
7:00 p.m., City Hall HRA considers all project elements
including financial assistance (TIF)
HRA meeting • Public hearing on Business Subsidy
Agreement
December 11, 2000
7:00 p.m., City Hall • City Council considers if Environmental
Assessment Worksheet is adequate,
City Council meeting considers final development plan, and
plat, conditional use permit, rezoning -
second reading, right-of-way vacation,
and Business Subsidy Agreement
December 18, 2000
7:00 p.m., City Hall Project status report to HRA
HRA Meeting
•
RESTATED PRECONDITONS
ATTACHMENT B
a. Concept Plans are to include a design of the Minimum Improvements that will
accommodate the future construction of second floor skyway access across Lyndale
Avenue, and across 66th Street at locations to be agreed upon by the parties.
Redeveloper future agrees to grant the City and the HRA with any licenses, permits,
easements or other rights necessary for locating the skyway on the portion of the
Redevelopment Property as shown in the Concept Plans. Redeveloper will also
agree to the establishment of a maintenance district created for the purpose of
maintaining any skyway constructed and to a district wide assessment to cover the
cost of constructing the skyway.
b. The parties must agree in the Concept Plan on the location and nature and
construction timing of all public improvements to be constructed to serve and benefit
the Development, together with all public improvements that are otherwise required
as a consequence of the Development. Required improvements include improved
signaling for traffic movement at Lake Shore Drive and West 66th Street and traffic
quieting measures and a pedestrian crosswalk with improved lighting at the mid-.
block of Lake Shore Drive. All of these items are funded by the redeveloper in
cooperation with the City.
c. The parties must agree, prior to the issuance of a building. permit, on an interim off-
street parking plan designed to accommodate parking requirements during
construction of the Development as well as to provide for the parking requirements of
the Gramercy Park Cooperative.
d. The Concept Plan will contain a landscape plan and timing for installation.
e. The Concept Plan will contain a plan for tree protection during construction. The
costs involved in the preparation of such plan are the responsibility of Redeveloper.
f. The HRA agrees to diligently pursue efforts to secure third party funding for the
mitigation of contamination and pollution found to exist on the Redevelopment
Property. Otherwise, as between the HRA and the Redeveloper, the cost and the
responsibility to mitigate rests with the Redeveloper.
g. The Redeveloper agrees to discontinue and remove utilities currently located on the
Redevelopment Property that will no longer be needed. Such discontinuance will be
in the manner required by law and at the Redeveloper's expense. Redeveloper shall
also be responsible for the necessary relocating and the cost of any utilities currently
located on the Redevelopment Property and which will be required for the
Development.
h. Prior to agreeing to use eminent domain, to the issuance of any building permit, or
agreeing to provide economic assistance to the Redeveloper, the parties will reach
agreement concerning the nature and extent of the Redeveloper's participating in the
Affordable Housing Program.
i. The Concept Plan shall be approved not later than March 2001 and no building
permit, no agreement to use eminent domain, and no economic assistance shall be
provided to the Redeveloper until such Concept Plans have been approved by the-
. H RA.
j. Determination of the level of Public Assistance to be provided to the Redeveloper,
and the scope and nature of the local match will be a precondition to approval of the
Concept Plan.
k. The Concept Plan will contain the form of a personal protection and safety plan for
the Development.
I. The Concept Plan will show location of a transit service facility as agreed to by the
parities.
DEVELOPMENT TIMETABLE
1. Concept Plans approved -March 2001
2. Site acquisition complete -April 2001
3. Construction start of villas, tower and'h of the parking- ramp -April 2001
4. Construction start of office building and'/Z of the parking ramp -April 2002
5. Construction completion of all elements -April 2003
•
ATTACHMENT C
ARTICLE IL5 /
• PRECONDITIONS i,~
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.) ~V
(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 ~.
JBD-179224v2 7
RC 125-209
Redevelopment Property, and the nature of each party's responsibility for any such facilit~~.
(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 temunate 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.
•
:7
Attachment D
BUSINESS SUBSIDY AGREEMENT
THIS AGREEMENT, made and entered into as of this day of November, 2000, by
and between the HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE
CITY OF RICHFIELD, a Minnesota public body corporate and politic, ("Grantor"), and
GRAMERCY CORPORATION, a Minnesota corporation, ("Grantee")
WITNESSETH:
1. Grantor and Grantee are the parties to that certain instrument entitled Contract
for Private Development dated July 17, 2000 ("Contract").
2. The Contract provides for financial assistance to the Grantee that constitutes a
"business subsidy" for the purposes of the Business Subsidy Act. (Chapter 243, Article 12,
Laws 1999) ("Act").
3. The Act requires that a business subsidy may not be provided until the parties
have entered into a business subsidy agreement that complies with the requirements of the
Act.
4. This Agreement is intended to constitute a business subsidy agreement for the
purposes of the Act.
NOW THEREFORE, in consideration of the mutual covenants contained herein and in the
Contract, it is hereby stipulated and agreed by and between the parties hereto as follows.
(a) Definitions. The terms used in this agreement shall have the meanings given
them in the Contract and the Act unless a different meaning is clearly indicated.
(b) General Terms. The parties agree and represent to each other as follows:
(1) The subsidy provided to the Grantee involves use of funds currently
available to the Grantor for the payment of costs incurred by the
Grantee in performing the
Redevelopment Property as more fully described in the Contract. The
subsidy has an estimated value $
(2) The public purposes for the subsidy are as described in the Business
Subsidy Criteria adopted by the Grantor.
(3) The goals for the subsidy are: to secure development of the Minimum
Improvements on the Redevelopment Property; to maintain such
improvements for at least 5 years as described in clause (6) below; and
to create the jobs and wage levels in accordance with Section (c)
hereof.
(4) If the goals described in clause (3) are met, the Grantee. shall have no
obligation to repay the payments to the Grantee described in the
Agreement
(5) The subsidy is needed because site development costs.. make
development of the Minimum Improvements financially infeasible
without public assistance, all as determined upon approval of the TIF
Plan.
(6) The Grantee must continue operation of the Minimum Improvements
for at least five years after the date of issuance of the certificate of
completion.
(7) The Grantee does not have a parent corporation.
(c) Job and Wage Goals. Within two years after the date of this issuance of the
certificate of completion of the Minimum Improvements (the "Compliance
Date"), the Grantee shall cause to be created at least new full-
. time equivalent jobs on the Redevelopment Property (excluding any jobs
previously existing in the State as of the date of this Agreement and relocated to
this site), and shall cause the wages of the jobs created on the Redevelopment
Property to be no less than $ exclusive of benefits.
Notwithstanding anything to the contrary herein, if the wage and job goals
described in this paragraph are met by the compliance Date those goals are
deemed satisfied despite the Redeveloper's continuing obligations under
sections (b)(6) and (e). The Grantor may, after a public hearing, extend the
Compliance Date by up to a year, provided that nothing in this Section will be
construed to limit the Grantor's legislative discretion regarding this matter.
(d) Remedies. If the Grantee fails to meet the goals described in Section (b)(3),
the Grantee shall repay to the Grantor upon written demand from the Grantor
(a) a "pro rata share" of the amount of subsidy expended by the Grantor. The
term "pro rata share" means percentages calculated as follows:
(i) if the failure relates to the number of jobs, the jobs required less the
jobs created, divided by the jobs required;
(ii) if the failure relates to wages, the number of jobs required less the
number of jobs that meet the required wages, divided by the number
of jobs required;
(iii) if the failure relates to maintenance of the facility in accordance with
Section (b)(6), 60 less the number of months of operation as the
required facility (where any month in which the facility is in operation
for at least 15 days constitutes a month of operation), commencing
on the date of the certificate of completion and ending with the date
the facility ceases to be so operated as determined by the Grantor,
divided by 60; and
(iv) if any more than one of clauses (i) through (iii) apply, the sum of the
applicable percentages, not to exceed 100%.
Nothing is this Agreement shall be construed to limit the Grantor's remedies
otherwise available to it under this Contract. In addition to the remedy
described in this Section and any other remedies available to the Grantor for
failure to meet the goals stated in Section (b)(3), the Grantee agrees and
understands that it may not receive a business subsidy from the Grantor or
any grantor (as defined in the Act) for a period of five years from the date of
the failure or until the Grantee satisfies its repayment obligations under this
Section, whichever occurs first.
(e) Reports. The Grantee must submit to the Grantor a written report
regarding business subsidy goals and results by no_ later than March 1 of
each year, commencing March 1, 2002 and continuing until the later of (i)
the date the goals stated in Section (b)(3) are met; (ii) 30 days after
expiration of the five-year. period described in Section (b)(6); or (iii) if the
goals are not met, the date the subsidy is repaid in accordance with Section
(d). The report must comply with Section 116J.994, subdivision 7 of the Act.
The Grantor will provide information to the Grantee regarding the required
forms. If the Grantee fails to timely file any report required under this
section, the Grantor will mail the Grantee a warning within one week after
the required filing date. If, after 14 days of the postmarked date of the
warning, the Grantee fails to provide a report, the Grantee must pay the
Grantor a penalty of $100 for each subsequent day until the report is filed.
The maximum aggregate penalty payable under this section is $1,000.
(f) .Approval. This Agreement shall not be effective until approved by the City
Council, which approval shall be conclusively evidenced by the City Council
resolution of approval being affixed to this Agreement.
IN WITNESS WHEREOF, the Grantor has caused this Agreement to be
executed in its corporate name. by its duly authorized officers; and the Grantee has
caused this Agreement to be executed all as of the date first above written.
THE HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY
OF RICHFIELD
By
Its Chair
And by
Its Executive Director
STATE OF MINNESOTA )
)ss.
COUNTY OF HENNEPIN )
On this day of , 2000, before me, a Notary Public within and
for said county appeared and
to me personally known, who being by me duly sworn,
did say that they are respectively the Chair and Executive Director of the Housing and
Redevelopment Authority in and for the City of Richfield, a Minnesota public body
corporate and politic, on behalf of the corporation.
Notary Public
GRAMERCY CORPORATION
By:
Its:
STATE OF MINNESOTA )
)ss.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this _ day of
2000, by the
of Gramercy Corporation, a corporation under the
laws of Minnesota by and on behalf of said corporation.
Notary Public
•
ATTACHMENT E
Approved November 15, 1999
•
RICHFIELD. HOUSING AND REDEVELOPMENT AUTHORITY
BUSINESS SUBSIDY CRITERIA
I. Puraose
This document includes the criteria to be considered by the .Richfield Housing
and Redevelopment Authority ("Authority") to evaluate requests for business
subsidies. It is the intent of the Authority in .adopting these criteria. is to comply
with Minnesota Statutes, Sections 116J.993-116J.995 (the "Act"). The Authority
hereby adopts the definitions contained in the Act for application in the criteria.
II. Goals and Objectives
It is the Authority's intent to advance the following goals and objectives in
granting business subsidies:
a) All projects, by not later than the benefit date, must be consistent. with
Richfield's comprehensive plan and any other plan or guide for development
of the community or a sub-area of the community.
• b) .Business subsidies must be just~ed by evidence that the project cannot
proceed without the benefit of the subsidy. If tax increment financing is
used to grant a subsidy; the grantee must demonstrate compliance with all
statutory requirements of the TIF Act, including the "but for" test. The
grantee will be required to provide all documentation necessary for the
Authority to make the requisite findings under the TIF Act and the Act.
c) Grantees will be required to enter into an agreement with the Authority that
is consistent with statutory requirements, including a commitment to
continue the business at the site for a minimum of five years after the
benefit date and compliance with the speck jobs and wages goals
established for the project.
111. Business Subsidy Criteria
The Authority recognizes that every proposal is unique. Nothing in these criteria
shall be deemed to be an entitlement or shall establish a contractual right to a
subsidy. The Authority reserves the right to modify these criteria from time to
time and to evaluate each project as a whole. The following criteria shall be
utilized in evaluating a request for a business subsidy:
a) Increase in tax base. While an increase in the tax base cannot be the sole
grounds for granting a subsidy, the Authority believes it is a preferred
condition for any subsidy.
b) .Jobs and Wages. It is Authority's .intent that the .grantee create livable
wage jobs at the site. This may include jobs to be retained:-but only ff job
- loss is imminent and demonstrable.
JBD-169407
RC725-1
c) Economic Development. Projects should promote one or more of the
following:
1) Encourage economic and commercial diversity within the
community;
2) Contribute, to the establishment of a critical mass of commercial
development within an area;
3) Provide basic goods and services, increase the range of goods and
services available or encourage fast-growing businesses;
4) Promote redevelopment objectives and. removal of blight, including
pollution cleanup;
5) Promote the retention or adaptive reuse of buildings of historical or
architectural significance;
6) Promote additional or spin-off development within the community;
7) Encourage full utilization of existing or planned infrastructure
improvements.
IV. Compliance and Reporting Requirements.
a) Any subsidy granted by the Authority will be subject to the requirement of
a public hearing, if necessary, and must be approved by the Richfield city
council.
b) It will be necessary for both the grantee and the Authority to comply with
the reporting and monitoring requirements of the Act.
AGENDA SECTION: PC4. ~~' - C~ I~e(~r - n Gs
AGENDA ITEM # °'7
REPORT # ^~ L~
STAFF REPORT
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
NOVEMBER 20, 2000
•
REPORT PREPARED BY:
REPORT PRESENTER:
DEPARTMENT DIRECTOR REVIEW:
REVIEWED BY EXECUTIVE DIRECTOR: ~Y
JOHN STARK,
COMMUNITY DEVELOPMENT MANAGER
NAME, TITLE
BRUCE PALMBORG,
COMMUNITY DEVELOPMENT DIRECTOR
ITEM FOR HRA CONSIDERATION:
Public hearing regarding a resolution authorizing the adoption of a Business Subsidy
Agreement with CSM Investors II, Inc. related to their development within the Lyndale
Gateway redevelopment area.
RECOMMENDED ACTION:
Conduct and close the public hearing and by motion: Approve a
resolution authorizing the adoption of a Business Subsidy Agreement
with CSM Investors II, Inc. related to their development within the
Lyndale Gateway redevelopment area.
III. BACKGROUND ~
In 1999, the Minnesota State legislature approved the Business Subsidies Act. This
law requires that certain types of developments which receive more than $100,000
in public assistance must enter into a business subsidy agreement with the
government entity providing such assistance. The contents of a business subsidy
agreement are based, in part, on the business subsidy criteria established by a
governmental entity. The Richfield Housing and Redevelopment Authority (HRA)
established its business subsidy criteria on November 15, 1999.
1120csm2
NAME, TITLE
It has been determined that the commercial redevelopment planned by CSM
Investors II (CSM) for the west side of Lyndale Avenue and east side of Aldrich
• Avenue between 76th and 77th Streets is to receive public assistance to a degree
which requires a Business Subsidy Agreement. The other two portions of the
Lyndale Gateway development did not require such an agreement because they
were exempted as housing and/ornon-profit uses.
The attached Business Subsidy Agreement reflects the public assistance to CSM
that has previously been approved by the HRA as part of the Contract for Private
Redevelopment with CSM. The subsidy, as identified in the agreement, is
$1,925,000 as land write down for the site to be acquired.
The Business Subsidy Agreement states that the development will create at least
five. new jobs on the redevelopment site, each paying no less than $10 .per hour,
excluding benefits. For the purpose of this agreement, new jobs are defined as jobs
which did not previously exist in the state. of Minnesota prior to the date of the
agreement.
Notice of the public hearing was published in the Richfield Sun Current on
November 8,.2000.
III. BASIS OF RECONIlVIENDATION
A. POLICY
• Minnesota state law requires the execution of a Business Subsidy
Agreement for certain types of public. assistance, including the type of
public assistance which is to be granted to CSM for the
redevelopment of portions of the Lyndale Gateway area.
• The Richfield HRA approved Business Subsidy Criteria on November
15, 1999 -(see attached).
B. CRITICAL ISSUES
• Public funding for the CSM redevelopment of portions of the Lyndale
Gateway area cannot proceed without the approval of a Business
Subsidy Agreement.
C. FINANCIAL
• The public funding identified in the attached Business Subsidy
Agreement has previously been approved by the HRA as part of the
Contract for Private Redevelopment with CSM for the Lyndale
Gateway area.
D. LEGAL
• Legal staff have reviewed the Business Subsidy Agreement and the
attached resolution.
IV. ALTERNATIVE RECOMMENDATION(S~
• Do not approve the Business Subsidy Agreement.
• Defer approval of the Business Subsidy Agreement to a later date.
V. ATTAC~IMENTS
• Resolution authorizing the adoption of a Business Subsidy Agreement with
CSM Investors II, Inc.
• Business Subsidy Agreement with CSM Investors II, Inc.
• Business Subsidy Criteria -November 15, 1999
VL PRINCIPAL PARTIES EXPECTED AT MEETING
• A representative of CSM Investors II, Inc.
•
HRA RESOLUTION NO.
RESOLUTION AUTHORIZING THE ADOPTION OF BUSINESS SUBSIDY AGREEMENT
WITH C.S.M. INVETORS II, INC.
WHEREAS, the Housing and Redevelopment Authority (HRA) in and for the City of
Richfield, Minnesota, as part of its operations, provides economic assistance to individuals
who are engaged in the development and redevelopment of land within the HRA's area of
operation; and
WHEREAS, pursuant to legislation enacted by the State of Minnesota, ("Business
Subsidy Act"), the HRA is required to enter into an agreement with any recipient of a
business subsidy conforming to the requirements of the Business Subsidy Act prior to
granting such assistance; and
WHEREAS, the Business Subsidy Act further provides that the approval of such an
agreement must be preceded by a public hearing on the matter in situations where the
subsidy exceeds $100;000; and
WHEREAS, C.S.M. Investors II, Inc., ("CSM") has requested that the HRA provide it
with a business subsidy of approximately $1,925,000 to be used for land write-down in
connection with CSM's development; and
WHEREAS, the HRA has evaluated the request based on Business Subsidy
Criteria established by the HRA and ordered a public hearing concerning the matter.
NOW THEREFORE, BE IT RESOLVED by the Housing and Redevelopment
Authority in and for the City of Richfield, Minnesota as follows:
1. A public hearing on the approval of a business subsidy agreement with CSM has been
held before the HRA on November 20, 2000, of 7:00 p.m. in the City Council Chambers
at the Richfield City Hall located at 6700 Portland Avenue South, Richfield, Minnesota.
2. A business subsidy agreement in the amount of approximately $1,240,000 to be used
for land write-down in connection with CSM's development is approved.
Adopted by the Housing and Redevelopment Authority in and for the City of
Richfield, Minnesota this 20th day of November, 2000.
Thomas E. Harms, Chair
ATTEST:
Michael Sandahl, Secretary
BUSINESS SUBSIDY AGREEMENT
THIS AGREEMENT, made and entered into as of this 20th day of November, 2000, by and between
the HOUSING AND REDEVELOPMENT AUTHORITY IN AND -FOR THE CITY OF
RICHFIELD, a Minnesota public body corporate and politic, ("Grantor"), .and C.S.M. Investors II,
Inc.; a Minnesota corporation, ("Grantee")
WITNESSETH:
1. Grantor and Grantee are the parties to that certain instrument entitled Contract for Private
Redevelopment approved on January 18, 2000, and subsequently amended on August 21, 2000.
2. The January 18, 2000, Contract provides. for financial assistance to the Grantee
that constitutes a "business subsidy" for the purposes of the Business Subsidy Act (Chapter
243, Article 12, Laws 1999) ("Act").
3. The Act requires that a business subsidy may not be provided until the parties have
entered into a business subsidy agreement that complies with the requirements of the Act.
4. This Agreement is intended to constitute a business subsidy agreement for the
purposes of the Act.
NOW THEREFORE, in consideration of the mutual covenants contained herein and in the
Contract, it is hereby stipulated and agreed by and between the parties hereto as follows.
(a) Definitions. The terms used in this agreement shall have the meanings given
them in the Contract and the Act unless a different meaning is clearly indicated.
(b) General Terms. The parties agree and represent to each other as follows:
(1) The subsidy provided to the Grantee involves use of funds currently
available to the Grantor for the payment of costs incurred by the Grantee in
performing certain land assembly,, including acquisition, relocation and
demolition on the Redevelopment Property as more fully described in the
Contract. The subsidy has an estimated value for land write-down
assistance of up to $1,925,000. The public purposes for the subsidy are as
described in the Business Subsidy Criteria adopted by the Grantor.
(2) The goals for the subsidy are: to secure development of the Minimum
Improvements on the Redevelopment Property, and to create the jobs and
wage levels in accordance with Section (c) hereof.
(3) If the goals described in clause (3) are met, the Grantee shall have no
obligation to repay the payments to the Grantee described in the
Agreement
(4) The subsidy is needed because site development costs make development
of the Minimum Improvements financially infeasible without public
assistance, all as determined upon approval of the TIF Plan.
(5) The Grantee does not have a parent corporation.
(c) Job and Wage Goals. Within two years after the date of issuance of the
certificate of completion of the Minimum Improvements (the "Compliance Date"),
the Grantee shall cause directly or indirectly, the creation of at least 5 new jobs on
the Redevelopment Property (excluding any jobs previously existing in the State
as of the date of this Agreement and relocated to this site) and shall .cause the
wages of all employees on the Redevelopment Property to be no less than $10.00
per hour, exclusive of benefits. Notwithstanding anything to the contrary herein, if
the wage and job goals described in this paragraph are met by the Compliance
Date, those goals are deemed satisfied despite the Redeveloper's continuing
obligations under sections (b)(6) and (e). The .Grantor may, after a public hearing,
extend the Compliance Date by up to a year, provided that nothing in this Section
will be construed to limit the Grantor's legislative discretion regarding this matter.
(d) Remedies. If the Grantee fails to meet the goals described in Section (b)(3), the
Grantee shall repay to the Grantor upon written demand from the Grantor (a) a
"pro rata share" of the amount of subsidy expended by the Grantor. The term "pro
rata share" means percentages calculated as follows:
(i) if the failure relates to the number of jobs, the jobs required less the jobs
created, divided by the jobs required;
(ii) if the failure relates to wages, the number of jobs required less the
number of jobs that meet the required wages, divided by the number of
jobs required;
(iii) if the failure relates to maintenance of the facility in accordance with
Section (b)(6), 60 less the. number of months of operation as the
required facility (where any month in which the facility is in operation for
at least 15 days constitutes a month of operation), commencing on the
date of the certificate of completion and ending with the date the facility
ceases to be so operated as "determined by the Grantor, divided by 60;
and
(iv) if any more than one of clauses (i) through (iii) apply, the sum of the
applicable percentages, not to exceed 100%.
Nothing is this Agreement shall be construed to limit the Grantor's remedies
otherwise available to it under this Contract. In addition to the remedy
described in this Section and any other remedies available to the Grantor for
failure to meet the .goals stated in Section (b)(3), the Grantee agrees and.
understands that it may not receive a business subsidy from the Grantor or any
grantor (as defined in the Act) for a period of five years from the date of the
failure or until the Grantee satisfies its repayment obligations under this
Section, whichever occurs first.
(e) Reports. The Grantee must submit to the Grantor a written report regarding
business subsidy goals and results by no later than March 1 of each year,
commencing March 1, 2001 and continuing until the later of (i) the date the
goals stated in Section (b)(3) are met; (ii) 30 days after expiration of the five-
. year period described in Section (b)(6); or (iii) if the goals are not met, the date
the subsidy is repaid in accordance with Section (d). The report .must comply
with Section 116J.994, subdivision 7 of the Act. The Grantor will provide
information to the Grantee regarding the required forms. If the Grantee fails to
timely file any report required under this section, the Grantor will mail the
Grantee a warning within one week after the required filing date. If, after 14
days of the postmarked date of the warning, the Grantee fails to provide a
report, the Grantee must pay the Grantor a penalty of $100 for each
subsequent day until the report is filed. The maximum aggregate penalty
payable underthis section is $1,000.
(f) Approval. This Agreement shall not be effective until approved by the City
Council, which approval shall be conclusively evidenced by the City Council
resolution of approval being affixed to thisAgreement.
•
IN WITNESS WHEREOF, the Grantor has caused this Agreement to be executed in
its corporate name by its duly authorized officers; and the Grantee has caused this
Agreement to be executed all as of the date first above written.
By
STATE OF MINNESOTA )
)ss.
COUNTY OF HENNEPIN )
THE HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY
OF RICHFIELD
Its Chair
And by
Its Executive Director
On this t" day of , 2000, before me, a Notary Public within
and for said county appeared and
to me personally known, who being by me duly
sworn, did say that they are respectively the Chair and Executive Director of the Housing
and Redevelopment Authority in and for the City of Richfield, a Minnesota public body
corporate and politic, on behalf of the corporation.
Notary Public
C.S.M. INVESTORS II, INC.
By:
Its:
STATE OF MINNESOTA )
)ss.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this cn day of
2000, by the
of C.S.M. Investors II, Inc., a corporation under the laws
of Minnesota. by and on behalf of said corporation.
Notary Public
Approved November 15, 1999
•
RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY
BUSINESS SUBSIDY CRITERIA
I. Purpose
This document. includes the criteria to be considered by the Richfield Housing
and Redevelopment Authority ("Authority") to evaluate requests for business
subsidies. It is the intent of the Authority in adopting these criteria is to comply
with Minnesota Statutes, Sections 116J.993-116J.995 (the "Act"). The Authority
hereby adopts the definitions contained in the Act for application in the criteria.
II. Goals and Objectives
It is the Authority's intent to advance the following goals and objectives in
granting business subsidies:
a) All projects, by not later than the benefit date, must be consistent with
Richfield's comprehensive plan and any other plan or guide for development
of the community or a sub-area of the community.
b) Business subsidies must be just~ed by evidence that the project cannot
proceed without the benefit of the subsidy. If tax increment financing is
used to grant a subsidy; the grantee must demonstrate compliance with all
statutory requirements of the TIF Act, including the "but for" test. The
grantee will. be required to provide all documentation necessary for the
Authority to make the requisite findings under the TIF Act and the Act.
c) Grantees will be required to enter into an agreement with the Authority that
is consistent with statutory requirements, including a commitment to
continue the business at the site fora minimum of five years after the
benefit .date and compliance with the specific jobs and wages goals
established for the project.
111. Business Subsidy Criteria
The Authority recognizes that every proposal is unique. Nothing in these criteria
.shall be deemed to be an entitlement or shall establish a contractual right to a
subsidy. The Authority reserves the right to modify these criteria from time to
time end to evaluate each project as a whole. The following criteria shall be
utilized in evaluating a request for a business subsidy:
a) Increase in tax base. While an increase in the tax base cannot be the sole
grounds for granting a subsidy, the Authority believes it is a preferred
condition for any subsidy.
b) Jobs and Wages. It is Authority's intent that the .grantee create livable
wage jobs at the site. This may include jobs to be retained.-but only if job
- loss is imminent and demonstrable.
JBD-169407
RC125-1
c) Economic Development. Projects should .promote .one or more of the
following:
1) Encourage economic and commercial diversity within the
community;
2) Contribute to the establishment of a critical mass of commercial
development within an area;
3) Provide basic goods and services, increase the range of goods and
services available or encouragefast-growing businesses;
4) Promote redevelopment objectives and removal of blight, including
pollution cleanup;
5) Promote the retention or adaptive-reuse of buildings of historical or
architectural significance;
6) Promote additional or spin-off development within the community;
7) Encourage full utilization of existing or planned infrastructure
improvements.
IV. Comaliance and Reporting Requirements.
a) Any subsidy granted by the Authority will be subject to the requirement of
a public hearing, if necessary, and must be approved by the Richfield city
council.
b) It will be necessary for both the grantee and the Authority to comply with
the reporting and monitoring requirements of the Act.
s
i
•
AGENDA SECTION: PieSc~~ ~--~! ~n
AGENDA ITEM #
REPORT # `~ 3
STAFF REPORT
HOUSING AND REDEVELOPMENT
f
AUTHORITY MEETING
NOVEMBER 20, 2000
REPORT PREPARED BY: KATIA MEDVETSKI,
REDEVELOPMENT SPECIALIST
NAME, TITLE
BRUCE PALMBORG,
REPORT PRESENTER:. COMMUNITY DEVELOPMENT DIRECTOR
NAME, TITLE
DEPARTMENT DIRECTOR REVIEW: ~i~/~
REVIEWED BY EXECUTIVE DIRECTOR:
ITEM FOR HRA CONSIDERATION:
Consideration of resolution regarding approval of a Modification to the Tax Increment
Financing Plan for the Interchange West and Lyndale Gateway Tax Increment Financing
District.
I. RECOMMENDED ACTION:
By Motion: Approve a resolution for a Modification to the Tax
Increment Financing Plan for the Interchange West and Lyndale
Tax Increment Financing District.
III. BACKGROUND
On May 17, 1999, the Richfield Housing and Redevelopment Authority (HRA)
approved the Modification #o the Redevelopment Plan for the Richfield
Redevelopment Project Area and established the Interchange West and Lyndale
Gateway Tax Increment Financing (TIF) District and Tax Increment Financing Plan.
On June 14, 1999, the City Council held a public hearing and approved the same.
A few months after this, the developer (CSM Corporation) of the Interchange West
portion of the District withdrew from the project. Shortly thereafter, a new developer
(Best Buy/OPUS) and use were identified.
11201WestTif.doc
At this time, a modification is being proposed to the Interchange West and Lyndale
Gateway Tax Increment Financing Plan (Modified Plan) to revise the descriptions of
the facilities to be developed and budgeted expenditures for the Interchange West
portion. The Modified Plan is brief since only relevant sections were revised.
Based on discussions with the. HRA's legal counsel (Kennedy & Graven) and
financial consultants (Ehlers & Associates), no notifications were necessary to be
made to the county commissioner, county board, or school district and no public
hearing on the proposed modification was required because the Modified Plan does
not (1) reduce or enlarge the geographic area of the Richfield Redevelopment
Project Area or the TIF District; (2) increase,the amount of bonded indebtedness to
be incurred; (3) increase the portion of net tax capacity. to be retained by the HRA;
(4) increase the total estimated tax increment expenditures; or (5) designate
additional property to be acquired. If any of the aforementioned items were
changed, proper notifications to the county commissioner, county board and school
board, planning commission and council action, including public hearing would have
been undertaken in accordance with Minnesota Statutes Sections 469.174 -
469.179, inclusive., as amended.
III. BASIS OF RECOMMENDATION
A. POLICY
• All modifications to tax increment financing plans are. undertaken in
.compliance with the Minnesota TIF Act.
B. CRITICAL ISSUES
• Modification to the Plan was deemed prudent as the project within the
Interchange West portion. changed. Changes to the Plan do not
necessitate a formal modification in which notification to the county
commissioner, county board and school board, planning commission
action, public hearing, and council action is required.
C. FINANCIAL
• Budget line items were clarified based on updated project information..
The bottom line of the .budget did not change.
• The are no additional impacts to any of the taxing jurisdictions based
on the revised use in the Interchange West portion of the TIF district.
The impacts prepared under the original Plan continue to stand for the
Modified Plan.
ID. LEGAL
• Legal counsel has reviewed the Modified Plan in conjunction with
Ehlers & Associates and in accordance with Minnesota Statutes,
Section 469.174-469.179, inclusive, as amended.
i IV. ALTERNATIVE RECOMMENDATION(S~
• Do not approve the resolution to adopt the Modified Plan.
• Delay approval of the Modified Plan..
• V. ATTACHMENTS
• Resolution approving a Modification to the Tax Increment Financing Plan for
the Interchange West and Lyndale Gateway Tax Increment Financing District
• Modification to the Tax Increment Financing Plan for the Interchange West
and Lyndale Gateway Tax Increment Financing District.
VI. PRINCIPAL PARTIES EXPECTED AT MEETING
• Sid Inman, Ehlers & Associates, Inc.
•
HRA RESOLUTION NO.
RESOLUTION APPROVING MODIFICATION TO
THE TAX INCREMENT FINANCING PLAN FOR
THE INTERCHANGE WEST AND LYNDALE GATEWAY
TAX INCREMENT FINANCING DISTRICT
Section 1. Recitals.
1.01. The City of Richfield ("City") and the Housing and Redevelopment Authority in
and for the City ("Authority") approved the creation of the Interchange West and Lyndale
Gateway Tax Increment Financing District ("TIF District") -and a Tax Increment Financing
Plan ("TIF Plan") for that district, by resolutions approved May 17, 1999 (by the Authority)
and June 14, 1999 (by the City) in accordance with Minnesota Statutes, Sections 469.174
to 469.176, inclusive as amended, (the "TIF Act").
1.02. Under Section 469.175, subd. 4 of the TIF Act, the Authority is authorized to
modify the TIF Plan without the notice and approval procedures required for approval of
the initial plan if the modification does not involve: reduction or enlargement of the
geographic area of the district, increase in the amount of bonded indebtedness to be
incurred, increase in the portion of the captured tax capacity to be retained by the
Authority; increase in total estimated tax increment expenditures, or designation of
additional property to be acquired by the Authority.
1.03. The Authority has determined a need to modify the TIF Plan to reflect
changes in the redevelopment to be undertaken, none of which changes involve the items
cited above.
Section 2. TIF Plan Modification Approved.
2.01. The Modification of the Tax Increment Financing Plan for the TIF District is
approved in substantially the form on file in City Hall.
2.02. Authority staff and consultants are authorized to take all actions necessary to
implement the TIF Plan as modified.
Adopted by the Housing and Redevelopment Authority in and for the City of
Richfield, Minnesota this 20th day of November, 2000.
Thomas E. Harms, Chair
ATTEST:
Michael Sandahl, Secretary
•
Draft as of November 13, 2000
~.
W
k
MODIFICATION TO THE TAX INCREMENT FINANCING PLAN
for
THE INTERCHANGE WEST AND LYNDALE GATEWAY
TAX INCREMENT FINANCING DISTRICT
(a scattered site redevelopment district)
within
THE RICHFIELD REDEVELOPMENT PROJECT AREA
RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY
CITY OF RICHFIELD
HENNEPIN COUNTY
STATE OF MINNESOTA
Public Hearing: June 14, 1999
Adopted: June 14, 1999
Modified by HRA Action:
Prepared by:
EHLERS & ASSOCIATES, INC.
3060 Centre Pointe Drive
Roseville, Minnesota 55113-1105
Phone: (651) 697-8500
Fax: (651) 697-8555
E-mail: info@ehlers-inc.com
Web Site: www.ehlers-inc.com
•
•
TABLE OF CONTENTS
(for reference purposes only)
SECTION II
MODIFICATION TO THE TAX INCREMENT FINANCING PLAN FOR THE
INTERCHANGE WEST AND LYNDALE GATEWAY TAX INCREMENT FINANCING
DISTRICT ...................................................................2-1
Subsection 2-I. Foreword ....................................................2-1
Subsection 2-3. Statement of Objectives ......................................... 2-I
Subsection 2-10. Uses of Funds ................................................. 2-1
APPENDIX A
PROJECT DESCRIPTION .................:................................... A-1
SECTIONII
MODIFICATION TO THE TAX INCREMENT FINANCING PLAN FOR THE INTERCHANGE
WEST AND LYNDALE GATEWAY TAX INCREMENT FINANCING DISTRICT
Subsection 2-1. Foreword
(Modified to add the following as of November 20, 2000)
The Plan for the Interchange West and Lyndale Gateway Tax Increment Financing District
was approved by the City Council on June 14,1999. The Plan is now being modified to revise
the description of the facilities to be developed and budgeted expenditures. The modification
does not (1) reduce or enlarge the geographic area of the Richfield Redevelopment Project
Area or the TIF District, (2) increase the amount of bonded indebtedness to be incurred, (3)
increase the portion of net tax capacity to be retained by the HRA, (4) increase the total
estimated tax increment expenditures, or (5) designate additional property to be acquired.
Subsection 2-3. Statement of Objectives
(Modified to delete the first paragraph and add the following as of November 20, 2000)
The Interchange West portion of the Interchange West and Lyndale Gateway Tax Increment
Financing District consists of 98 parcels of land and adjacent and internal rights-of--way. The
Interchange West project was created to facilitate the redevelopment of the area generally bounded
by 76"' Street to the north, Interstate Highway 494 to the south, Knox Avenue to the east and Penn
Avenue to the west.
The proposed redevelopment of the site area consists of office buildings, related parking, utility, street,
and infrastructure upgrade to accommodate a corporate headquarters for the Best Buy Company.
Best Buy proposes to redevelop the site in a campus setting by constructing: (a) four or five office
buildings with a minimum of 1.5 million square feet and Barking facilities for 7,500 cars (the expected
level of redevelopment). Best Buy expects that initial employment at the Best Buy Campus will be 5,500
to 6,500 persons, rising to 7,500 persons in subsequent years (the expected level of development).
Subsection 2-10. Uses of Funds
(Modified to read as follows as of November 20, 2000)
Currently under consideration for the Interchange West and Lyndale Gateway Tax Increment Financing
District is a proposal to facilitate redevelopment of existing buildings. The City and HRA have determined
that it will be necessary to provide assistance to the project for certain costs. The City has studied the
feasibility ofthe development or redevelopment of properly in and around the Interchange West and Lyndale
City of Richfield Tax Increment Financing Plan for the Interchange West and Lyndale Gateway TIF District 2-I
Gateway Tax Increment Financing District. To facilitate the establishment and development or
redevelopment of the Interchange West and Lyndale Gateway Tax Increment Financing District, this Plan
authorizes the use of tax increment financing to pay for the cost of certain eligible expenses. The estimate
of public costs and uses of funds associated with the Interchange West and Lyndale Gateway Tax Increment
Financing District is outlined in the following table.
Uses of Funds Interchange West Lyndale Gateway
Land Acquisition, Site Improvements, ~3A;AAA;AA9 $9,000,000
Public Improvements, Public Utilities,
and Other Public Improvements
Land Acquisition -Office Project and $53,317,000
Housing Project (15%)
Public Improvements 8,000,000
Interest 42,024,000 7,953,300
Administrative Costs (up to 10%) 5,439,000 1,883,700
TOTAL $108,780,000 $18,837,000
Estimated budget costs associated with the Interchange West and Lyndale Gateway Tax Increment Financing
District are subject to change among line item categories without a modification to this Plan. The cost of
all activities to be considered for tax increment financing will not exceed, without formal modification, the
indicated budget pursuant to the applicable statutory requirements. Pursuant~to M.S., Section 469.1763,
Subd. 2, no more than 25 percent of the tax increment paid by property within the Interchange West and
Lyndale Gateway Tax Increment Financing District will be spent on activities related to development or
redevelopment outside of the Interchange West and Lyndale Gateway Tax Increment Financing District but
within the boundaries of the Richfield Redevelopment Project Area, (including administrative costs, which
may be spent outside of the Interchange West and Lyndale Gateway Tax Increment Financing District)
subject to the limitations as described in this Plan.
It is the intent of the City to spend up to 15 percent of the Interchange West tax increment outside the
District on housing projects. All expenses will comply with M.S. Section 469.1764.J.
City of Richfield Tax Increment Financing Plan for the Interchange West and Lyndale Gateway TIF District 2-2
APPENDIX A
PROJECT DESCRIPTION
(Modified to delete the first paragraph and add the following as of November 20, 2000)
The Interchange West portion of the Interchange: West and Lyndale Gateway Tax Increment ---
Financing District consists of 98 parcels of land and adjacent and internal rights-of--way. The
Interchange West project was created to facilitate the redevelopment of the area generally bounded
by 76"' Street to the north, Interstate Highway 494 to the south, Knox Avenue to the east and Penn
Avenue to the west.
The proposed redevelopment of the site area consists of office buildings, related parking, utility, street,
and infrastructure upgrade to accommodate a corporate headquarters for the Best Buy Company.
Best Buy proposes to redevelop the site in a campus setting by constructing: (a) four or five office
buildings with a minimum of 1.5 million square feet and parking facilities for 7,500 cars (the expected
level of redevelopment). Best Buy expects that initial employment at the Best Buy Campus will be 5,500
to 6,500 persons, rising to 7,500 persons in subsequent years (the expected level of development).
•
APPENDIX A-1
C~
AGENDA SECTION: ~~~IC. ~eCt.t-Il1Q
AGENDA ITEM # J
REPORT # '7 1
STAFF REPORT
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
NOVEMBER 20, 2000
JOHN STARK,
REPORT PREPARED BY: COMMUNITY DEVELOPMENT MANAGER
NAME, TITLE
BRUCE PALMBORG,
REPORT PRESENTER: COMMUNITY DEVELOPMENT DIRECTOR
NAME; TITLE
DEPARTMENT DIRECTOR REVIEW: ~~
REVIEWED BY EXECUTIVE DIRECTOR: ~~
ITEM FOR HRA CONSIDERATION:
Public hearing regarding a resolution authorizing the adoption of a Business Subsidy
Agreement with Best Buy Co., Inc.
I. RECOMMENDED ACTION:
Conduct and close the public hearing and by motion: Approve a
resolution authorizing the adoption of a Business Subsidy Agreement
with Best Buy Co., Inc.
•
II. BACKGROUND
In 1999, the Minnesota State legislature approved the Business Subsidies
Act. This law requires that certain types of developments which receive
more than $100,000 in public assistance must enter into a business
subsidy agreement with the government entity providing such assistance.
The contents of a business subsidy agreement are based, in part, on the
business subsidy criteria established by a government entity. The
1120bbuy
Richfield Housing and Redevelopment Authority (HRA) established its
s business subsidy criteria on November 15, 1999 (see attached).
It has been determined that the redevelopment planned by Best Buy is to
receive public assistance to a degree which requires a Business Subsidy
Agreement. The public funding identified in the proposed amendment to
the Contract for Private Development with Best Buy is consistent the
attached Business Subsidy Agreement. The subsidy, as identified in the
agreement, is:
• $41,079,056 as land write down for the site to be acquired;
• $8,350,000 as Penn Avenue bridge reconstruction costs attributed to
Best Buy; and
• An additional $3,500,000 in public improvement-costs attributed to
Best Buy.
The Business Subsidy Agreement states that the development will create
at least 1,000 new jobs on the redevelopment site. For the purpose of
this agreement, new jobs are defined as-jobs which did not previously
exist in the state of Minnesota prior to the date of the agreement. The
agreement further requires that 15 percent of the new jobs pay at least..
$75,000 per year; 35 percent pay at least $50,000 per year, 35 percent
pay at least $30,000 per year and 15 percent pay at least $20,000 per
• year.
Notice of the public hearing was published in the Richfield Sun Current on
November 8, 2000.
III. BASIS OF RECOMMENDATION
A. POLICY
• Minnesota state law requires the execution of a Business
Subsidy Agreement for certain types of public assistance,
including the type of public assistance which is to be granted
to Best Buy for the redevelopment of the Interchange West
area.
The Richfield HRA approved Business Subsidy Criteria on
November 15, 1999.
B. .CRITICAL ISSUES
• Public funding for Best Buy's redevelopment of the
Interchange West area cannot proceed without the approval
of a Business Subsidy Agreement.
C. FINANCIAL
• The public funding identified in the proposed amendment to
the Contract for Private Development with Best Buy is
consistent with the attached Business Subsidy Agreement.
D. LEGAL
• Legal staff has reviewed the Business Subsidy Agreement
and the attached resolution.
IV. ALTERNATIVE
RECONEVIENDATION(S~
• Do not approve the Business Subsidy Agreement.
• Defer approval of the Business Subsidy Agreement to a later date.
V. ATTACPIMENTS
• Resolution authorizing the adoption of a Business Subsidy
Agreement with Best Buy Co., Inc.
• Business Subsidy Agreement with Best Buy Co, Inc.
• Business Subsidy Criteria, November 15, 1999.
VI. PRINCIPAL PARTIES EXPECTED AT
MEETING
• A representative of Best Buy or their developer Opus.
HRA RESOLUTION NO.
• RESOLUTION AUTHORIZING THE ADOPTION OF BUSINESS SUBSIDY
AGREEMENT WITH BEST BUY CO., INC.
WHEREAS, the Housing and Redevelopment Authority (HRA) in and for
the City of Richfield, Minnesota, as part of its operations, provides economic.
assistance to individuals who are engaged in the development and
redevelopment of land within the HRA's area of operation; and
WHEREAS, pursuant to legislation enacted by the State of Minnesota,
("Business Subsidy Act"), the HRA is required to enter into an agreement with
any recipient of a business subsidy conforming to the requirements of the
Business Subsidy Act prior to granting such assistance; and
WHEREAS, the Business Subsidy Act further provides that the approval
of such an agreement must be preceded by a public hearing on the matter in
situations where the subsidy exceeds $100.,000; and
WHEREAS, Best Buy Co., Inc., ("Best Buy") has requested that the HRA
provide it with a business subsidy of approximately $41,079,056 to be used for
land write-down, $8,350,000 to be used for the Penn Avenue Bridge, and
$3,500,000 to be used for public improvements required in connection with Best
Buy's development; and
WHEREAS, the HRA has evaluated the request based on Business
• Subsidy Criteria established by the HRA and ordered a public hearing concerning
the matter.
NOW THEREFORE, BE IT RESOLVED by the Housing and
Redevelopment Authority in and for the City of Richfield, Minnesota as follows:
1. A public hearing on the approval of a business subsidy agreement with Best
Buy has been held before the HRA on November 20, 2000, at 7:00 p.m. in the
City Council Chambers at the Richfield City Hall located at 6700 Portland
Avenue South, Richfield, Minnesota.
2. A business subsidy agreement in the amount of $41,079,056 to be used for
land write-down, $8,350,000 to be used for the Penn Avenue Bridge, and
$3,500,000 to be used for public improvements required in connection with
Best Buy's development is approved.
Adopted by the Housing and Redevelopment Authority in and for the City
of Richfield, Minnesota this 20th day of November, 2000.
ATTEST:
Thomas E. Harms, Chair
Michael Sandahl, Secretary
BUSINESS SUBSIDYAGREEMENT
THIS AGREEMENT, made and entered into as of this 20t" day of November, 2000,
by and between the HOUSING AND REDEVELOPMENT AUTHORITY IN AND
FOR THE CITY OF RICHFIELD, a Minnesota public body corporate and politic,
("Grantor"),and BEST BUY CO., INC., a Minnesota corporation, ("Grantee")
WITNESSETH:
1. Grantor and Grantee are the parties to that certain instrument entitled
Contract for Private_Development executed March 28, 2000, and .subsequently
amended on July 17, 2000, and October 16, 2000, ("Contract").
2. The March 28, 2000, Contract provides for financial assistance to the
Grantee that constitutes a "business subsidy" for the purposes of the Business
Subsidy Act (Chapter 243, Article 12, Laws 1999) ("Act").
3. The Act requires that a business subsidy may not be provided until the
parties have entered into a business subsidy agreement that complies with the
requirements of the Act.
4. This Agreement is intended to constitute a business subsidy agreement
for the purposes of the Act.
NOW THEREFORE, in consideration of the mutual covenants contained herein
and in the Contract, it is hereby stipulated and agreed by and between the parties
hereto as follows.
(a) Definitions. The-terms used in this agreement shall have the meanings
given them in the Contract and the Act unless a different meaning is
clearly indicated.
(b) General Terms. The parties agree and represent to each other as
follows:
(1) The subsidy provided to the Grantee involves use of funds
currently available to the Grantor for the payment of costs
incurred by the Grantee in performing certain land assembly,.
including .acquisition, relocation and demolition on the
Redevelopment Property as more fully described in the Contract.
The subsidy has an estimated value for land write-down
assistance of $41,079,056, an estimated value for the Penn
Avenue Bridge of $8,350,000, and an estimated value for public
improvements of $3,500,000.
(2) The public purposes -for the subsidy are as described in the
Business Subsidy Criteria adopted by the Grantor.
(3) The goals for the subsidy are: to secure development of the
Minimum Improvements on the Redevelopment Property; to
maintain such improvements for at least 5 years as described in
clause (6) below; and to create the jobs and wage levels in
accordance with Section (c) hereof.
(4) If the goals described in clause (3) are met, the Grantee shall
have no obligation to repay the payments to the Grantee
described in the Agreement
(5) The subsidy is needed because site development costs make
development of the Minimum Improvements financially infeasible
without public assistance, all as determined upon approval of the
TIF Plan.
(6) The Grantee must continue operation of the Minimum
Improvements for at least five years after the date of issuance of
the certificate of completion.
(7) The Grantee does not have a parent corporation.
(c) Job and Wage Goals. Commencing on the date of this Agreement and
ending on the date which is two- (2) years after the date of this issuance
of the certificate of completion of the Minimum Improvements (the
"Compliance Date"), the Grantee shall cause to be created at least one
thousand (1,000) new -full-time equivalent jobs on the Redevelopment
Property (excluding .any jobs previously existing in the State as of the
date of this Agreement and relocated to this site, but including any jobs
not previously existing in the State as of the date of this Agreement and
relocated to this site) and shall cause the wages of any such new full-
time equivalent jobs on the, Redevelopment Property to be no less than
the following:
Fifteen percent (15%) of the newly created full-time equivalent jobs to
have a salary of seventy-five thousand dollars ($75,000.00) per year, or
more, exclusive of benefits.
Thirty-five percent (35%) of the newly created full-time equivalent jobs to
have a salary of fifty thousand dollars ($50,000.00) per year, or more,
exclusive of benefits.
Thirty-five percent (35%) of the newly created full-time equivalent jobs to
have a salary of thrity thousand dollars ($30,000.00) per year, or more,
exclusive of benefits.
Fifteen percent (15%) of the newly created full-time equivalent jobs to
have a salary of twenty thousand dollars ($20,000.00) per year, or more,
exclusive of benefits.
Notwithstanding anything to the contrary herein, if the wage and job
goals described in this paragraph are met by the Compliance Date,
those goals are deemed satisfied despite the Redeveloper's continuing
obligations under sections (b)(6) and (e). The Grantor may, after a
public hearing, extend the Compliance Date by up to a year, provided
that nothing in this Section will be construed to limit the Grantor's
legislative discretion regarding this matter.
(d) Remedies. If the Grantee fails to meet the-goals described in Section
(b)(3), the Grantee shall repay to the Grantor upon written demand from
the Grantor (a) a "pro rata share" of the amount of subsidy expended by
the Grantor. The term "pro rata share" means percentages calculated as
follows:
(i) if the failure relates to the number of jobs, -the jobs required
less the jobs created, divided by the jobs required;
(ii) if the failure relates to wages, the number of jobs required-less
the number of jobs that meet the required wages, divided by
the number of jobs required;
(iii) if the failure relates to maintenance of the facility in
accordance with Section (b)(6), 60 less ,the number of months
of operation as the required facility (where any month in which
the facility is in operation #or at least 15 days constitutes a
month of operation), commencing on the date of the certificate
of completion and ending with the date the facility ceases to be
so operated as determined by the Grantor, divided by 60; and
(iv) if any more than one of clauses (i) through (iii) apply, the sum
of the applicable percentages ,not to exceed 100%.
Nothing is this Agreement shall be construed to limit the Grantor's
remedies otherwise available to it under this Contract. In addition to
the remedy described in this Section and any other remedies
available to the Grantor for failure to meet the goals stated in Section
(b)(3), the Grantee agrees and understands that it may not receive a
business subsidy from the Grantor or any grantor (as defined in the
Act) for a period of five years from the date of the failure or until the
Grantee. satisfies its repayment obligations under this Section,
whichever occurs first.
(e) Reports. The Grantee must submit to the Grantor a written report
regarding business subsidy goals and results by no later than March
1 of each year, commencing March 1, 2002 and continuing until the
later of (i) the date the goals stated in Section (b)(3) are met; (ii) 30
days after expiration of the five-year period described in Section
(b)(6); or (iii) if the goals are not met, the date the subsidy is repaid in
accordance with Section (d). The report must comply with Section
116J.994, subdivision 7 of the Act. The Grantor will provide
information to the Grantee regarding the required forms. If the
Grantee fails to timely file any report required under this section, the
Grantor will mail the Grantee a warning within one week after the
required filing date. If, after 14 days of the postmarked date of the
warning, the Grantee fails to provide a report, the Grantee must pay
the Grantor a penalty of $100 for each subsequent day until the
report is filed. The maximum aggregate penalty payable under this
section is $1,000.
(f) Approval. This Agreement shall not be effective until approved by
the City Council, which approval shall be conclusively evidenced by
the City Council resolution of approval being affixed to this
Agreement.
IN WITNESS WHEREOF, the Grantor has caused this Agreement to be
executed in its corporate name by its duly authorized officers; and the Grantee
has caused this Agreement to be executed all as of the date first above written.
THE HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY
OF RICHFIELD
By
Its Chair
And by
Its Executive Director
And by
Its Executive Director
STATE OF MINNESOTA )
)ss.
COUNTY OF HENNEPIN )
On this t" day of , 2000, before me, a Notary Public
within and for said county appeared. and
to me personally known, who being by me duly
sworn, did say that they are respectively the Chair and Executive Director of the
Housing and Redevelopment Authority in and for the City of Richfield, a
.Minnesota public body corporate and politic, on behalf of the corporation.
Notary Public
BEST BUY CO., INC.
By:
Its:
STATE OF MINNESOTA )
)ss.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this th day of
2000, by the
of Best Buy Co, Inc., a corporation under the laws of
Minnesota by and on behalf of said. corporation
Notary Public
•
1120bbuy
Approved November 15, 1999
RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY
BUSINESS SUBSIDY CRITERIA
I. Purpose
This document includes the. criteria to be considered by the Richfield Housing
and Redevelopment Authority ("Authority") to evaluate requests for. business
subsidies. It is the intent of the Authority in adopting these criteria is to comply
with Minnesota Statutes, Sections 116J.993-116J.995 (the "Act"). The Authority
hereby adopts the definitions contained in the Act for application in the criteria.
Goals and Objectives
•
It is the Authority's intent to advance the following goals and objectives in
granting business subsidies:
a) All projects, by not later than the benefit date, must be consistent with
Richfield's comprehensive plan and any other plan or guide for development
of the community or a sub-area of the community.
b) Business subsidies must be justified by evidence that the project cannot
proceed without the benefit of the subsidy. If tax increment financing is
used to grant a subsidy; the grantee must demonstrate compliance with all
statutory requirements of the TIF Act, including the "but for" test. The
grantee will be required to provide all documentation necessary for the
Authority to make the requisite findings under the TIF Act and the Act.
c) Grantees will be required to enter into an agreement with the Authority that
is consistent with statutory requirements, including a commitment to
continue the business at the site for a minimum of five years after the
benefit date and compliance with the specific jobs and wages goats
established for the project.
Business Subsidy Criteria
The Authority recognizes that every proposal is unique. Nothing in these criteria
.shah be deemed to be an entitlement or shall establish a contractual right to a
.subsidy. The Authority reserves the right to modify.. these criteria from time to
time end to evaluate each project as a whole. The following criteria shall be
utilized in evaluating a request for a business subsidy:
a) Increase in tax base. While an increase in the tax base cannot be the sole
grounds. for granting a subsidy, the Authority believes it is a preferred
condition for any subsidy.
b) .Jobs and Wages. It is Authority's intent that the .grantee create livable
wage jobs at the site. This may include jobs to be retained-hut only if job
loss is imminent and demonstrable.
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c) Economic Development. Projects should promote one or more of the
following:
1) Encourage economic and commercial diversity within the
community;
2) Contribute to the establishment of a critical -mass of commercial
development within an area;
3) Provide basic goods and services, increase the range of goods and
services available or encourage fast-growing businesses;
4) Promote redevelopment objectives and removal of bight, including
pollution cleanup;
5) Promote the retention or adaptive reuse of buildings of historical or
architectural significance;
6) Promote additional or spin-off development within the community;
7) Encourage full utilization of existing or planned inftastructure
improvements.
IV. Comaliance and Reporting Requirements.
a) Any subsidy granted by the Authority will be subject to the requirement of
a public hearing,. if necessary, and must be approved by the Richfield city
council.
b) It will be necessary for both the grantee and the Authority to comply with
the reporting and monitoring requirements of the Act.
AGENDA SECTION:
AGENDA ITEM #
REPORT #
~c~mi~. ~epor~~
y"
~~
STAFF REPORT
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
NOVEMBER 20, 2000
•
REPORT PREPARED BY:
REPORT PRESENTER:
DEPARTMENT DIRECTOR REVIEW:
REVIEWED BY EXECUTIVE DIRECTOR:
JOHN STARK,
COMIMUNITY DEVELOPMENT MANAGER
NAME, TITLE
BRUCE PALMBORG,
COMMUNITY DEVELOPMENT DIRECTOR
ITEM FOR HRA CONSIDERATION:
Consideration of First Amendment to the Contract for Private Development with Best Buy Co.,
Inc.
L RECOMMENDED ACTION:
By Motion: Approve the First Amendment to the Contract for Private
Development with Best Buy Co., Inc.
II. BACKGROUND
The attached First Amendment to the Contract for Private Development (Contract)
with Best. Buy Co., Inc. (Best Buy) prescribes changes to the amount and type of
public financing for the development.
Section 3.2 subdivision 3 of the Contract, which was approved on March 18, 2000,
cites several reasons Best Buy could effectively terminate the project. Among these
reasons are acquisition costs which exceed $44.5 million. Best Buy has informed
staff that they are now projecting acquisition costs at over $10 million above and
beyond the acquisition cost as stated in this section of the Contract. The proposed
amendment would increase the acquisition cost, as identified in Section 3.2
Subdivision 3 (6) of the Contract, to $54.5 million.
1120contract
In order to cover the increased acquisition costs, the amendment proposes changes
to the method and amount of public financing. The Contract currently provides for
$22.8 million of bond proceeds as well as up to $13.1 million of "pay-as-you-go" tax
increment to Best Buy, for a total of $35.9 million in public financing. The following
benefits could be achieved by converting all of the public financing to $41.,079,000
in "pay-as-you-go" tax increment, as is proposed in the Amendment to the Contract:
According to financial consultants Ehlers & Associates, the issuance costs of the
general obligation tax increment bond would have been approximately $1
million; this money would now be used to reimburse Best Buy for site assembly
costs rather than being spent on issuance costs.
The removal of a $22.8 million dollar bond from the public financing package
represents a reduced amount of risk to the City and/or HRA for either covering
the debt service in the event that there. is not sufficient tax increment or any
possible effect on the City or HRA bond rating which .could result in higher
interest rates in the future.
While the estimated cost of site assembly has increased by $10 million, the
Amendment only provides an additional $5.18 million in public financing; this
means that Best Buy is is assuming responsibility for an additional $4.8 million in
site assembly costs which they had not been anticipating.
The amount of public assistance indicated in the proposed Amendment would not
exceed the total amount of public financing which is prescribed in the Tax Increment
Financing Plan for the Interchange West and Lyndale Gateway Tax Increment
Financing District.
III. BASIS OF RECOMMENDATION
A. POLICY
• The site assembly costs anticipated in the Contract for Private
Development at the time of its initial approval were $44,500,000.
• The Contract allows Best Buy's termination of the acquisition process,
and thus the project, in the event that site assembly costs exceed the
amount stated in the Contract.
• Staff has concluded that site assembly costs will exceed $44,500,000.
B. CRITICAL ISSUES
• The proposed Amendment, including the increased amount of site
assembly costs as referenced in the Contract, will help insure that the
project can move forward.
C. FINANCIAL
• The HRA's financial consultant, Ehlers & Associates, has reviewed the
proposed Amendment and concurs that it sets forth a rational method
for providing public financing to the development without exceeding
the budget established in the TIF Plan.
D. LEGAL
• HRA legal staff drafted the Amendment.
IV. ALTERNATIVE RECOMMENDATION~S~
• Do not approve the Amendment.
• Approve a modified version of the Amendment, subject to further approval by
Best Buy as a party to the Contract.
V. ATTACPIMENTS
• First Amendment to the Contract for Private Development with Best Buy Co.,
Inc.
VI. PRINCIPAL PARTIES EXPECTED AT MEETING
• HRA Legal Counsel.
• A representative of Ehlers & Associates.
• A representative of Best Buy or their developer Opus.
• DRAFT
11 /14/00
FIRST AMENDMENT
TO
CONTRACT FOR PRIVATE REDEVELOPMENT
THIS AGREEMENT, made and entered into as of the day of August,
2000, by and between the HOUSING AND REDEVELOPMENT AUTHORITY IN AND
FOR THE CITY OF RICHFIELD, MINNESOTA, a Minnesota public body corporate and
politic (the "HRA"), and BEST BUY CO., INC., a Minnesota corporation (the
"Redeveloper").
WITNESSETH:
WHEREAS, the parties hereto did on or about enter
into an agreement entitled, Contract for Private Redevelopment, (the. "Contract"), calling
for the redevelopment of an area of land (the "Property") lying .within the City of
Richfield; and
WHEREAS, events subsequent to the Contract have established that the land
acquisition costs and the costs of constructing the necessary Public Improvements to
serve the project are substantially greater than was then contemplated; and
WHEREAS, the parties desire to address such matters through certain
amendments to the Contract; and also to modify the form by which portions of the
economic assistance will be provided to the HRA;
NOW, ,THEREFORE, based upon the mutual covenants, and undertakings
hereinafter, and in the Contract provided, the parties hereto stipulate and agree as
follows:
I. .The Contract is hereby amended in the following respects: (New material
underlined and deleted material stricken through)
1. Section 1.1 is hereby amended as follows:
A. By amending the definition of Available Tax Increment to read as
follows:
"Available Tax Increment" for the purpose of the Note means the Tax Increment
received with respect to the Development Property after first deducting therefrom i)
fifteen percent (15%) of the Tax Increment to be paid to the HRA Housing Trust Fund; ii)
. five percent (5%) of the Tax Increment, but not more than $210,566 per year; iii) any
amount necessary to pay principal and interest on the TIF Bonds or, subject to the
provisions of Section 3.5, subd. 3, any TIF Refunding Bonds.
JBD-189046v2
RC125-210
B. By deleting in its entirety the definition of Bridge Bonds.
C. By adding thereto the following new defined term:
"Business Subsidy Agreement" means the agreement between the parties made
in accordance with the provisions of Minnesota Statutes, Sections 116J.993 to 116J.995
(The Minnesota Business Subsidy Act)
D. By deleting in its entirety the definition of Cash Component.
D. By amending the definition of Closing to read as follows:
"Closing" means the transaction at which the Authority: (I) transfers to the
Developer good and marketable title to any and all properties acquired through
condemnation, and (ii) delivers the Public Assistance as .provided in Section 3.5 subd.
2.
E. By deleting in its entirety the definition of Land Bonds.
F. By amending the definition of Note to read as follows:
"Note" means the Limited Revenue Tax Increment Note in the principal amount
of not to exceed $41,079,056 to be executed and delivered at closing as part of the
Public Assistance.
G. By amending the definition of Public Assistance to read as follows:
"Public Assistance" means the monetary assistance to be provided to the
Developer in accordance with the terms of this Agreement and the Business Subsidy
Agreement.
H. By amending the definition of TIF Bonds to read as follows:
"TIF Bonds" means the City's $8,350,000 General Obligation Tax Increment
Bonds, the proceeds of which are utilized for the improvements of the Penn Avenue
Bridge.
"TIF Refunding Bonds" means any bonds issued to refund the TIF Bonds.
2. By amending Section 3.2 Subd. 3 (6) to read as follows:
6. The cost of acquisition of all of the Development. Property,
including land, relocation, fees and other expenses to be paid by the Developer
exceed the total amount of $54,500,000.00, including any and all costs paid to
the Authority for the Acquisition of requested portions of the Development
Property, and not taking into account all or any portion of the Public Assistance, it
JBD-189046v2
RC 125-210
being understood that the Authority shall have no obligation to pay or assist the
Developer in the payment f any such costs.
3. By amending subdivision 2 of Section 3.5 to read as follows:
Subdivision 2. Public Assistance. It is the intention of the. parties that the
funds that Developer .has expended in connection with and related to the acquisition of
the Property, both through negotiated purchase and condemnation, should be
reimbursed to the extent and in the manner hereinafter provided. It is further
understood that Developer would not otherwise have undertaken such expenditures
absent reimbursement. Accordingly, at Closing, the Authority shall execute and deliver
the Note to Developer. The Note will be in substantially the form of the attached Exhibit
G. The actual principal amount of the note shall be determined at the time of Closing.
Such amount shall be the Developer's actual costs incurred in connection with and
related to the acquisition of the Development Property, as such costs .are described in
Section 3.2 Subd. 3 (6), minus $8,600,000. However, in no event shall the principal
amount of the Note exceed $41,079,056.
4. By amending Section 3.5 by adding the following new paragraph thereto:
Subdivision 3. Available Tax Increment-TIF Refunding Bonds. Debt
service payments on any TIF Refunding Bonds are to be used in computing Available
Tax Increment only to the extent that _the total and annual payments of principal and
• interest do not exceed the total and annual principal and interest payments on the TIF
Bonds
5. By amending paragraph (b) of Section 3.6 to read as follows:
(b) The Development will also necessitate the relocation of some of the utility
structures. located within the boundaries of the Development Property, and the
abandonment of others located within, .and .outside of, the boundaries of the
Development Property. The Developer will be responsible for such activities inside the
boundaries of the Development Property,. except in instances in which either the
Authority or the City is required by law to bid or perform the actual work. The Authority
will be responsible for such activities outside the boundaries of the Development
Property, but may contract with the Developer, as permitted by law, to perform some or
all of the actual work. The entire cost of utility relocation and abandonment and removal
of utilities located within the boundaries of the Development Property shall be borne by
and be the responsibility of the Developer and shall be a qualified cost available for
Public Assistance in accordance with the terms of Section 3.5 subd. 2 above. The
entire cost of such work outside of the boundaries of the Development Property will be
borne by and be the responsibility of the Authority.
6. By amending Section 3.7 to read as follows:
Section 3.7. Additional funding sources for Penn Avenue Bridge.
JBD-189046v2
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The Authority is seeking, and agrees to continue to use its best efforts to obtain,
federal TEA-21 funding or any other State or federal funding to cover all or part of the
cost of the Penn Avenue Bridge work. If and when such funds become available, the
Authority will reduce the principal amount of the TIF Bonds, or the TIF Refunding Bonds
(if such have not yet been issued) in recognition of the availability of such funds; or use
such .funding to pay or to prepay the TIF Bonds, or the TIF Refunding Bonds (if such
have been issued) as permitted by the terms and conditions relating to payment of such
bonds. In either event, the resulting additional Available Tax Increment will be used to
make Scheduled Payments under the Note.
5. By amending paragraph (a) of section 6.4 to read as follows:
(a) The Authority or the City intends to sell the TIF Bonds. If, prior to the
Termination .Date, the Tax Increment available to the Authority or the City is less than
the amount necessary make principal and interest payments on public debt issued for
the TIF Bonds, the Authority shall provide notice to the Developer of such fact and the
amount of such deficiency in Tax Increment. Ten days after receipt of such notice of
deficiency, the Developer shall be liable for and shall .pay to the Authority such
deficiency. Failure by the Authority to provide the notice of deficiency when required by
this Section 6.4 shall not relieve the.Developer of its obligation to make the required
payment 10 days after the Developer receives actual notice of the deficiency from the
Authority. In the event the Authority or the City determine at its or their sole discretion
-not to .sell the TIF Bonds and determine instead to rely on internal borrowings, the
Developer agrees to meet any deficiencies in Tax Increment needed to meet debt
service on such internal borrowings, plus interest at the Authority's or City's normal
investment rate; provided, however, that the Authority or City and the Developer agree
to negotiate in good faith regarding the equivalent investment rate and amortization as if
bonds had been sold.
6. By amending Exhibit G to the Contract to read as follows:
JBD-189046v2
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EXHIBIT G
FORM OF LIMITED REVENUE TAX INCREMENT
NorE
UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTY OF HENNEPIN
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF RICHFIELD
$41,079,056
LIMITED REVENUE TAX INCREMENT NOTE
SERIES
Date of
Interest Rate Original Issue
8.0% 2/2001
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 Best Buy Company, Inc. (the "Owner"), to the extent and
in the manner hereinafter provided, the original principal amount of this Note,. being
$41,079,056 (the "Principal Amount"), together with interest thereon accrued from the
date of this Note, at the rate of interest of 8.0 % 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 "Base
Scheduled Payments", and subject to increase as provided hereinafter. The
combination of Base Scheduled Payment and any. increased payment are referred to as
the Scheduled Payments). Unpaid interest accruing from the date of this Note, shall be
added to principal on a semi annual basis on each August 1 and February 1 until
February 1,
Any payments on this Note shall be applied first to accrued interest and then to
the Principal Amount in respect of which 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.
JBD-189046v2
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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 financing a "project," as
defined in Minnesota Statutes, § 469.174, of the Authority within and for the benefit of
the Interchange West and Lyndale Gateway 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.
Each Scheduled Payment on 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" as that term is .defined in
Section 1.1 of that certain Contract for Private Development between the Authority and
the Owner dated 2000 (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 extent 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 Development Property), such deficiency shall be
deferred and paid, with interest at the Stated Rate 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 Owner has been fully reimbursed according to
the terms hereof; or (ii) February 1,
The Authority's obligation to make any payments under this Note may be
suspended 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 Development Contract subject to the notice and cure provisions therein, and limited
only to defaults which relate to the Development Property.
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.
JBD-189046v2
RC125-210
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 Redevelopment, 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.
This Note is issued pursuant to 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 fo 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 required 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
,2
Chairperson
Executive Director
•
JBD-189046v2
RC125-210
•
•
I. SCHEDULE A
II. TO EXHIBIT G
III.
A
T
E IV.
A
Y
M
E
N
T V. D
A
T
E VI.
A
Y
M
E
N
T
VIL VIII. IX.
X. XI. XII.
XIII. XIV. XV.
XVL XVII. XVIIL
XIX. XX. XXL
XXII. XXIII. XXIV.
XXV. XXVI. XXVII.
XXVIIL XXIX. x:XX.
x:XXI. ~;XXII. X:XXIII.
~:XXIV. ~:XXV. x:XXVI.
X;XXVII. XXXVIII. ~;XXIX.
XL. XLI. XLII.
XLIII. XLIV. XLV.
XLVI. XLVIL XLVIIL
XLIX. L. LL
LII. LIII. LIV.
LV. LVI. LVII.
LVIIL LIX. LX.
LXI. LXII. LXIII.
LXIV. LXV. LXVI.
LXVII. LXVIII. LXIX.
LXX. LXXI. LXXII.
LXXIII. LXXIV. LXXV.
LXXVI. LXXVII. LXXVIII.
LXXIX.
OTAL
JBD-184793v1
RC125-153
•
Lx:XX.
RESENT VALUE
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed in their behalf by their authorized representatives on or as of the date first
above written.
HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY OF
RICHFIELD
By
Its Chair
By
Its Executive Director
STATE OF MINNESOTA
ss..
COUNTY OF HENNEPIN
The fore oin instrument was acknowled ed before me this da of
g g 9 Y
2000 by Thomas E. Harms and- Samantha Orduno, the Chair and
Executive Director, respectively, of the Housing and. Redevelopment Authority in and for
the City of Richfield, a public body corporate and politic under the laws of Minnesota, on
behalf of the Authority.
Notary Public
STATE OF MINNESOTA
COUNTY OF HENNEPIN
BEST BUY CO., INC.
The foregoing instrument was acknowledged before me this day of
2000 by ,the of Best Buy Co., Inc., a
Minnesota corporation, on behalf of the corporation.
Notary Public
•
•
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AGENDA SECTION: CpYI Se~1~"'
AGENDA ITEM # 3 ~
•
REPORT # ~ ~
J STAFF REPORT
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
NOVEMBER 20, 2000
•
REPORT PREPARED BY: JOHN STARK,
COMMUNITY DEVELOPMENT MANAGER
BRUCE PALMBORG,
REPORT PRESENTER: COlVIMUNITY DEVELOPMENT DIRECTOR
NAME, TITLE
DEPARTMENT DIRECTOR REVIEW: ~ ~~
REVIEWED BY EXECUTIVE DIRECTOR:
ITEM FOR HRA CONSIDERATION:
Consideration of a resolution approving appraised values of properties in pending
condemnation actions.
I. RECOMMENDED ACTION:
By Motion: Approve a resolution approving appraised values of
properties in pending condemnation actions.
III. BACKGROUND
In separate actions on July 17, 2000 and September 18, 2000 the Richfield Housing
and Redevelopment Authority (HR/A) authorized condemnation on certain properties
within the Interchange West redevelopment area. These properties include
properties currently owned by Walser Auto Sales and associated parties as well as
four other commercial properties.
As part of the condemnation process, independent appraisals have been. conducted
for those properties. Review appraisals were also conducted for a number of the
properties. The resulting values determined by the appraisals are indicated in
Exhibit A of the attached resolution.
1120value
The resolution would approve the appraised values and allow HRA legal counsel
and staff to pay the appraised values either directly to the property owners or to be
• deposited with the courts as part of the condemnation settlement.
III. BASIS OF RECOMMENDATION
A. POLICY
• On July 17, 2000 and September 18, 2000 the HRA authorized
condemnation on certain properties in the Interchange West
redevelopment area.
• These properties have been appraised in order to determine their
value.
• The appraised- value should be the basis for the price of purchase
through condemnation.
B. CRITICAL ISSUES
• In order to allow the condemnation to proceed in a timely manner,. the
value of the properties must be established and the funds made.
_ available to acquire the properties..
C. FINANCIAL
• Under the Contract for Private Development for the Interchange West
area, Best Buy is obligated to reimburse the HRA for all costs
associated with the acquisition of properties through condemnation.
D. LEGAL
• Legal staff reviewed the appraisals and drafted the attached
resolution.
IV. ALTERNATIVE RECOMMENDATION(S~
• Do not approve the resolution approving appraised values of properties in
pending condemnation actions.
• Defer action on this item to a later date.
V. ATTACHMENTS
• Resolution approving appraised values of properties in pending
condemnation actions.
VI. PRINCIPAL PARTIES EXPECTED AT MEETING
• HRA Legal Counsel.
RESOLUTION NO.
RESOLUTION OF THE HOUSING AND REDEVELOPMENTAUTHORITY
IN AND FOR THE CITY OF RICHFIELD, MINNESOTA
APPROVING APPRAISED VALUES OF PROPERTIES IN
PENDING CONDEMNATION ACTIONS
WHEREAS, by Resolution No. 771, adopted on July 17, 2000 and Resolution
No. 781, adopted September 18, 2000, the: Housing and Redevelopment Authority in and for
the City of Richfield ("HRA") has authorized the acquisition of certain properties by eminent
domain, as more particularly described in said resolutions (the "Properties");and
WHEREAS, the HRA has retained qualified independent appraisers to determine the
fair market values of the real estate and immovable fixtures and equipment appurtenant
thereto; and
WHEREAS, for those properties described in Resolution No. 771 the HRA has also
retained an independent review appraiser to review the appraisal reports for those properties;
and
WHEREAS, by Resolution Nos. 771 and 781, the HRA delegated. to its staff the
responsibility to review and approve the appraisal reports prepared by said appraisers prior to
making purchase offers to the owners of the Properties; and
WHEREAS, the HRA desires to approve the appraised values of the Properties, as
determined by the independent appraisers and review appraisers.
NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment.
Authority in and for the City of Richfield, Minnesota as follows:
1. The HRA hereby approves the appraised values of the Properties, in the
amounts set forth on the attached Exhibit A.
2. The HRA's attorney and staff are authorized and directed to pay to the owners
of the Properties or to deposit with the court the amounts set forth on the attached Exhibit A
in accordance with Minnesota Statutes, Section 117.042.
Adopted by the Housing and Redevelopment Authority in and for the City of Richfield,
Minnesota this 20th day of November, 2000.
ATTEST: Thomas E. Harms, Chairperson
Mike Sandahl, Secretary
w
•
•
EXHIBIT A
Property Property Addresses Approved
Appraised
Value
Amount
Walser BMW site 7701 Newton- Avenue South and 2000, $3,696,334
2016, 2020, 2022, 2024, and 2026 -78tH
Street West, Richfield
Walser Buick site 2100 - 78 Street West and 7701 and $5,753,894
7745 Penn. Avenue South, Richfield
Leaseback Properties 7626-7644 Knox Avenue South, $580,000
site Richfield
Leaseback Properties - 7701 Morgan Avenue South, Richfield $110,000
Repro Printing site
Canine College site 7713 Morgan Avenue South, Richfield $280,000
Century Lodge site 7615 Logan Avenue South, Richfield $550,000
. AGENDA SECTION: ~ ~ S ~-~'
AGENDA ITEM # ~j (~
REPORT # joC~
J STAFF REPORT
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
NOVEMBER 20, 2000
•
REPORT PREPARED BY:
REPORT PRESENTER:
DEPARTMENT DIRECTOR REVIEW:
REVIEWED BY EXECUTIVE DIRECTOR: 1'
JoI-nit STARK,
COMMUNITY DEVELOPMENT MANAGER
NAME, TITLE
BRUCE PALMBORG,
COMMUNITY DEVELOPMENT DIRECTOR
ITEM FOR HRA CONSIDERATION:
Consideration of a resolution authorizing eminent domain proceedings to acquire certain real
properties.
I. RECOMMENDED ACTION:
By Motion:. Approve the resolution authorizing eminent domain
proceedings to acquire certain real properties.
II. BACKGROUND
On October 18, 2000 the Richfield Housing and Redevelopment Authority (HRA)
approved an extension for Best Buy to request condemnation of properties in the
Interchange West area until January 31, 2001. This extension was granted
primarily for the condemnation of "remnant" parcels and/or leasehold interests.
In the attached letter, Best Buy is requesting that the HRA acquire several
"remnant" parcels through condemnation. Remnant parcels are generally
properties without an assigned parcel identification number and are properties
NAME, TITLE
which are undevelopable unless assembled into a larger site. Ownership of such
properties is typically difficult to determine.
The particular properties for which Best Buy is requesting condemnation are
described in Exhibit A of the attached resolution. These particular parcels- lay
within areas which are occupied by public infrastructure as either right-of-way or
easement.
III. BASIS OF RECOMMENDATION
A. POLICY
• The amended Contract for Private Development with Best Buy
allows Best Buy to request condemnation on properties within the
Interchange West redevelopment area.
• The properties identified in this request for condemnation: are
characterized as remnant parcels without a clear identification of
ownership.
B. CRITICAL ISSUES
• Acquisition of these parcels is necessary in order to allow the Best
Buy development to move forward,
C. FINANCIAL
• Best Buy is contractually obligated to reimburse the HRA for costs
incurred in acquisition of properties through eminent domain.
D. LEGAL
• Legal counsel reviewed Best Buy's request for condemnation and
drafted the attached resolution.
IV. ALTERNATIVE RECOMMENDATION(S~
• Do not approve the attached resolution.
• .Defer approval of the attached resolution until a later date.
V. ATTACFIMENTS
• Resolution authorizing eminent domain proceedings to acquire certain real
Best Buy's request for condemnation.
• properties.
VI. PRINCIPAL PARTIES EXPECTED AT
MEETING
• A representative of Best Buy or their developer Opus.
HRA 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
WHEREAS, -the Properties consist of remnant parcels of land underlying public
streets, the owners of which the Developer has been unable to locate; 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 that the Developer has complied with the
requirements of the Contract concerning such request.
•
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 #or 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.
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 20th day of November, 2000.
ATTEST:
Mike Sandahl, Secretary
Thomas E. Harms, Chairperson
a
EXHIBIT A
E.
c:
Legal Descriptions of Properties to be Acquired
Parcel 1:
Owner:: J.E. Labo and Vera Louise Labo
Street address: None assigned; part of 77th Street Wesf
Tax parcel PID: None
Legal Description: The North 60 feet of Tract M as measured along the. East and West
lines of said Tract M, Registered Land Survey No. 90, Files of
Registrar of Titles, County of Hennepin (Torrens property; Certificate
of Title No. 474766)
Parcel 2:
Owner: Frank Dillon
Street address: None assigned, part of 77th Street West
Tax parcel PID: None
Legal Description: Tracts B and C, Registered Land Survey No. 618, Files of Registrar of
Titles, County of Hennepin. (Torrens property; Certificate of Title No.
375258)
Parcel 3:
Owner: Undetermined
Street address: None assigned; part of 77t" Street West
Tax parcel PID: None
Legal Description: The North Thirty (30) feet of that part of the tract lying in the South half
(S'/2) of the Southwest Quarter (SW'/4) of the Southwest Quarter (SW
'/) of Section Thirty Three ~33), Township Twenty Eight (28), Range
Twenty Four (24) West, 4 h Principal Meridian, and described as
follows: commencing at a point on the East line of the Southwest
Quarter (SW '/4) of the Southwest Quarter (SW '/) of said section,
distant 897.62. feet South from the Northeast corner thereof; thence
North 711.32 feet; thence West parallel with the North line of the
. Southwest Quarter (SW '/4) of the Southwest Quarter (SW '/) of said
section to the West line of the East one-eighth (E 1/8) thereof; thence
South 711.31 feet; thence East parallel with said North line to the point
of beginning.
Parcel 4: (Intentionally omitted)
1120condemn
Parcel 5:
~ Owner: Undetermined
Street address: None assigned; part of 78t" Street West
Tax parcel PID: None
Legal Description: That part of the Southwest Quarter (SW'/) of the Southwest Quarter
(SW '/) of Section Thirty Three (33), Township Twenty Eight (28), Range Twenty
Four (24) West, 4t" Principal Meridian, lying southwesterly of the following described
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.
And lying northerly of a line run parallel with and distant 180 feet northerly the
following described 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 minutes 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 01 degree 00 minute 00 second curve
(delta angle 07 degrees 31 minutes 48 seconds) for 753 feet and there terminating.
And .lying easterly of the following described 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 a tangent to
said curve to an intersection with Line 1 described above; then 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.
said lines forming a triangle with dimensions of 226.47 feet along Line 1 and 216.21
feet along Line 2 and 59.91 feet along Line 3.
All according to the United. States Government Survey thereof, and situate in
Hennepin County, Minnesota.
s
•
November 15, 2000
VIA MESSENGER
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 he Development Property attached to this letter as Exhibit A ("Condemnation
Property"). These five small parcels are remnants, lying between two identified properties
but not owned in fee by either of the adjoining properties. Best Buy hereby submits the
following as part of this request.
1. That Best Buy has taken all reasonable steps to acquire all of the Development
Property.
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
has been previously provided to the Authority.
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. As indicated on the exhibit, Best Buy now has fully executed
purchase agreements on all sixty-eight (68) residential properties.
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
Corporate Headquarters: 7075 Flying Cloud Drive • Eden Prairie, MN 55344 • 612/947-2000
Mailing Address: P.Q. Bax 9312 • Minneapolis, MN 55440 • NYSE Symbol: BBY
Richfield Housing and Redevelopment Authority
November 15, 2000
• Page 2
to purchase have been executed and the properties where no purchase agreements or
options to purchase have been executed. As indicated on the exhibit, Best Buy now
has reached agreements with all commercial property owners other than Walser and
Mary Whiting, both which have been authorized for the use of eminent domain at
previous HRA meetings.
If there is any other information you need, please advise.
Thank you.
Sincerely,
~-'~~-z.
James 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
Attn: John B. Dean
Ph.: (612) 336-9207
Dpus Northwest, LLC (via messenger)
Opus Corporate Center
10350 Bren Road West
Minnetonka, MN 55343
Attn: Timothy W. Murnane
Ph.: (952) 656-4568
Faegre & Benson (via messenger)
2200 Norwest Center
90 South 7th Street
Minneapolis, MN 55402
Attn: Mark Savin
~xHlarT A
l~rphan Parcel 1;
The North GO feet of Tract M as measured along the East and V+,1est lines of said Tract
M, Registered Land Survey No. 900 Files of Registrar of Titles, County of Hennepin.
(Torrens property; Gertifrcate of Title No. 474768)
Orphan Parcel 2.
Tract B, Registered Land Survey No. 618, Files~of Registrar of Trues, County of
Hennepin. (Torrens property; Cert~cate Qf Title No. 375258 {certificate contains
additional property}.}
Orphan Parcel .3:
The North Thirty (30) feet of th8t part of the tract lying in the South half (S %) of the
Southwest Quarter (SW %) of the Southwest Quarter (SW %) of Section Thirty Three
(33), Township Twenty Eight (28), Mange Twenty Four (2a) West, 4~' Principaf Meridian,
and described as follows: commencing at a point on the Fast line of the Southwest
Quarter (s~1y /4} of the Southwest Quarter (SW'/.} of said section, distant 897.62 feet
aouth from the Northeast corner thereof; thence North. 711.32 feet; thence West patella[
with the North line of the Southwest Quarter (SW'/.) of the Southwest Quarter (SW /)
of said section to the West line of the East ane~ighth (~ 918} thereof; thence South
771.31 €est; thence East parallel with said North line to the paint of beginning.
Orphan Parcel 4:
That part of the Southwest Quarter (SW %) of the Southwest Quarter (SW /,) of Section
Thirty Three (33), Township Twenty Eight (28}, Range Twenty Four (24) West, Orr'
Principal Meridian, lying squtl?erly, Southwesterly and Westerly of the following
described Line A:
From a point on the west fine of said Section 33, distant 535.26 feet north of the
southwest Garner thereof; thence run easterly at an angle of t38 degrees 3p minutes-with
said west section fine (measured from north to east) far 33.81 feet to the point of
beginning of the tine to be described; thence continua easterly an the last above
described course for 117.43 feet; thence deflect to the right on a curve having a radius
of fit feet {delta angle 91 degrees 30 minutes) for 99.p1 feet; thence on tangent to said
curve far 210 feet and there terminating.
And which Lines Northerly, Northeasterly and Easterly of the following described Line B:
Beginning et the southwest comer of said Section 33; thence northerly along the west
line of said Section 33 a distance of S01,z4 feat, to the point of beginning of the line iv
. be described; thence easterly deflecting to the right at an angle of t38 degrees, 3q
minutes, a distance of 125.66 feat; thence southeasterly along the tangential curve,
concave to the southwest, radius 53 feet, delta angle 91 degrees, 3q minutes, a
Z d ~9fd10?98v '~l~~81 ~ I i ',luicZ~ l I i?G ,~I 'I I (Q~9;
NOV 15 '08 14 43
"=uv~
PAGE.~a2
distance of 84.64 feet; thence southerly along the tangent of said curve a distance of
. 980 feet, more ar less, to the northeasterly right of way line ofi said Trunk Flighway No_
494 as defined by pocument No. 344931Q and (here terminating_
and which lies Southwesterly of the following described Line C:
Beginning at a point on a line rvn 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
tine A; thence run southeasterly to a point on the above described line A distant 31.37
feet easterly of said intersection and there terminating.
and which Tines Northwesterly of the following described line D;
Beginning at a paint vn a line drawn parallel with and 33 feet easterly from the west line
of said Section 33 distant 3p feet southerly from the point of intersection of Said parallel
line with Line B; thence northeasterly to a point an Line B distant 30 feet easterly from
the point of intersection of said parallel fine and Line B.
All according to the United States Government Survey thereof, and situs;te in Hennepin
County, Minnesota.
orphan Parcel 5:
That part of the Sou#hwest Quarter (SW fs} of the Southwest Quarter (SW %41 of Section
Thirty three (33}, Township Twenty Eight (28), Range Twenty Four (24} West, 4~'
Principal Meridian, lying southwesterly of the following described 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 ihs 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.
And lying northerly of a line run parallel with and distant 180 feet northerly the following
described Line ,~:
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 td east) for 1359.14 feet to the point of beginning of Line 2 to be described; thence
run westerly on the fast described course for 89.23 feet; thence deflect to the right on a
00 degree 30 minutes QO second curve (delta angle D4 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 01 degree 00 minute 00 second curve (delta angle U7 degrees 31 minutes 48
seconds) far 753 feet and there terminating.
And lying easterly of the following described Line 3:
~ d E9Il;i0Z98~ ~ON~~8I ~ ; I 'iSiL~~ I I ~0 ,~I '1I i~3:u)
NOV 15 '00 14 43
f"I~d w
PAGE. 003
Beginning at a point on the west line afi said Section 33, distant 501.24 feet north of the
southwest comer thereof; thence non easterly at an angle of 91 degrees 3t7 minutes QO
Seoortds 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) fiat 84.64 feet; thence on a tangent to said curve to an
intersection with Line 1 described above; then curt southerly to a point distant 165 feet
northerly (measured at righ# angles) to a point on Line 2 described above distant 656.32
feet easterly of its point of termination and there terminating.
said lirlgs farming a trEangle with dimensions of 22fi.4? feet along Line 7 and 218.21 fee#
along line 2 and 59.91 feet along tine 3.
Alt according to the United States Government Survey thereof, and situate in Hennepin
County, Minnesota.
The preceding tarphan Parcels 1 fhrough 5 are marked on the attached maps for
reference.
•
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EXHIBIT B
SUMMARY ANALYSIS
Residential Site Acquisitions -Best Buy Headquarters
Map
Reference
Number
Property Owner
Property
Address
Street Name Purchase
Agreement
SI ned
1 Church of St. Richard 7601 Penn Ave. South X
2 Church of St. Richard (Greg Esty) 760 Penn Ave. South X
3 Mohamad & Beebee Sharief 761 Penn Ave. South X
4 Gladys H. Jensen 7621 Penn Ave. South X
5 James Lang 762 Penn Ave. South X
6 Somboun & Vy Vorasane 763 Penn Ave. South X
7 Cynthia & Michael Triggs 763 Penn Ave. South X
8 Ronald & Hellen Matheson 764 Penn Ave. South X
9 Syewart & Alice Stotesbery 760 Oliver Ave. South X
10 John & Helen Cretzmeyer 760 Oliver Ave. South X
11 Christopher M. Hankins 761 Oliver Ave. South X
12 Ann Louise Strub Trustee (Joseph) 761 Oliver Ave. South X
13 Esther L. Link (Esther & Thomas Haley) 762 Oliver Ave. South X
14 Paul F. & Louise J. Ragatz 762 Oliver Ave. South X
15 Bankers Trust Co. of CA (Lucretia Smith & Thomas Brothen) 762 Oliver Ave. South X
16 Robert & Loraine Guthe 763 Oliver Ave. South X
17 Jason 8 Demina Popowski 763 Oliver Ave. South X
18 Vuthy & Ra Kour 764 Oliver Ave. South X
19 Rt Sedoff & M Sedoff 7601 Oliver Ave. South X
20 Barbara L. Gresbrink 760 Oliver Ave. South. X
21 Guy & Julie Astell 761 Oliver Ave. South X
22 Elizabeth and Wendy Adams 7621 Oliver Ave. South X
23 James & Catherine Bergin 762 Oliver Ave. South X
24 Tracy and Kenneth Tracy 763 Oliver Ave. South X
25 Florence Laverne Smith 763 Oliver Ave. South X
26 William & Mary Topero 764 Oliver Ave. South X
27 Todd W. Anondson 760 Newton Ave. South X
28 Gisela & Leonard Hardie Jr. 760 Newton Ave. South X
29. Rueban & Carol Tulikangas 761 Newton Ave. South X
30 Levina J. Eischen 762 Newton Ave. South X
31 John & Lavone Tinker 762 Newton Ave. South X
32 L. Abrahamson (James Tripp & Margaret Knutson) 763 Newton Ave. South X
33 Joan M. Fuller 763 Newton Ave. South X
34 Lois A. Lovdal 7 Newton Ave. South X
35
36 John & Leone Grady
TL & DL Nelson (Daretta Honer) 7601
760 Newton Ave. South
Newton Ave. South X
X
37 MJ Millec & PJ Miller (Mark Miller) 7611 Newton Ave. South X
38 Hans Van Schagen 761 Newton Ave. South X
39 Stan Thompson & Diana Thompson 762 Newton Ave. South X
40 Charles Beaty 762 Newton Ave. South X
41 Gary & Patricia Hughes 7 Newton Ave. South X
42 Elmer R. Seaberg (Mary Seaberg) 7639 & 7641 New[on Ave. South X
43 Kenneth & Louise Neslund (Sheri Keep) 7643 & 7 Newton Ave. South X
44 Terry & Debbie Ahlstrom 7 Morgan Ave. South X
45 Thomas & Lynn Penney 760 Morgan Ave. South X
46 Bruce 8 Diane Wetternach 761 Morgan Ave. South X
47 Thomas Mead & Donna Kupfer-Mead 762 Morgan Ave. South X
48 Mary Ellen Mathieu 762 Morgan Ave. South X
49 Roger & lone Rolstad 762 Morgan Ave: South X
50 Sandra Adelmann 763 Morgan Ave. South X
51 Margareta E Lagermeier 763 Morgan Ave. South X
52 Nirmalla & Doodnauth Dial 764 Morgan Ave. South X
53 David Bakke & Lydia Bakke 7601 Morgan Ave. South X
54 Chris & Chrrisse Bomeman 760 Morgan Ave. South X
55 John McCune 761 Morgan Ave. South X
56 Maurice & Sandra Engen 7621 Morgan Ave. South X
57 Donna & Daniel Koch 762 Morgan Ave. South X
58 Helen Anderson 762 Morgan Ave. South X
59 Genet & Roman Abebe 763 Morgan Ave. South X
60 Frances & George Demont 7645 & 764 Morgan Ave. South X
61 Thomas K. Setre 191 76th Street West X
62 Paul D. Kachelmeier 7608 & 761 Logan Ave. South X
63 Wayne Peterson & Trent McKay 761 Logan Ave. South X
64 Delaine Curtis Rud 762 Logan Ave. South X
65 Jon & Mary Jo Straub 7626 & 7628 Logan Ave. South X
66 Martin Schroepfer - 763 Logan Ave. South X
67 David Workman & Catherine Workman 7636 & 7638 Logan Ave. South X
68 Kevin L. Anderson Et al 764 Logan Ave. South X
•
EXHIBIT C
Summary Analysis
Commercial Site Acquisitions -Best Buy Headquarters
Property Owner (Use)
Property
Address
Street Name Purchase
Agreement
Status
7601 Company (Logan Manor Apartments) 7601 Logan Ave. South X tai
Century Lodge No 338 (Masonic Lodge) 7615 Logan Ave. South (1)
Pioneer Plastics 7629 Logan Ave. South x
Ed Cirkl (ASAP Mailing Services) 7639 Logan Ave. South x
Dall Foods Inc (Tom Thumb) 7600 Knox Ave. South x
William Stiles (Nichol's Electric) 7608 Knox Ave. South x
Leaseback Prop. Ltd. Partner 7626 Knox Ave. South X~'a~
The Diplomats 2101 77th Street West x
South Court LLC 2015 77th Street West X ~3r
LeasebacKProp. Ltd. Partner 7701 Morgan Ave. South Xr'ar
Jon & Sandra Lonneman 7705 Morgan Ave. South x
Mary L. Whiting 7713 Morgan Ave. South (1 b)
Milton Westlund (Westlund 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 (2)
i oral wgreements: 14
(1) On September 18, 2000 the HRA authorized eminent domain on this property. Since that meeting, Best
Buy has reached a verbal agreement with this property owner and a settlement between the HRA and the
property owner is currently being documented. 'This property owner will be acquired by a "friendly
condemnation" due to various bylaws and policies of the owner. All business terms have been agreed upon.
(1 a) On September 18, 2000 the HRA authorized eminent domain on these properties. Since that meeting,
Best Buy has reached a verbal agreement with this property owner and a Purchase Agreement will be fully
executed by Monday, November 20, 2000.
(1 b) On September 18, 2000 the HRA authorized eminent domain on this property.
(2) On July 17, 2000 the HRAauthorized eminent domain on this property.
(3) On October 16, 2000 the HRAauthorized eminent domain on these properties. Since that meeting, Best
Buy has reached agreements with these two property owners and a Purchase Agreement is fully executed.
The eminent domain proceedings were never initiated.
AGENDA SECTION: Curt Se~l~"
AGENDA ITEM # 3
REPORT # (fig
J STAFF REPORT
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
NOVEMBER 20, 2000
•
•
REPORT PREPARED BY: PERRY THORVIG,
COMMUNITY DEVELOPMENT SPECIALIST
NAME, TITLE
BRUCE PALMBORG,
REPORT PRESENTER: COMMUNITY DEVELOPMENT DIRECTOR
NAME, TITLE
DEPARTMENT DIRECTOR REVIEW:
SIGNATURE
REVIEWED BY EXECUTIVE DIRECTOR: ~._-~ , n
ITEM FOR HRA CONSIDERATION:
Consideration of the concept of leasing property at 7200 Cedar Avenue to Steve Jensen,
owner of The Transmission Shop and Smith & Nielson Auto Upholstery.
I. RECOMMENDED ACTION:
By Motion: Approve the concept of leasing property at 7200 Cedar
Avenue to Steve Jensen, owner of The Transmission Shop and Smith
& Nielson.
III. BACKGROUND ~
Mr. Steve Jensen has asked the Richfield Housing and Redevelopment Authority
(HRA) to lease him the vacant parcel at 7200 Cedar Avenue so that he can reduce
the amount of on-street parking connected with his businesses at 6958 Cedar
Avenue. Mr. Jensen currently operates a transmission repair shop at that location
and wishes to move his Smith & Nielson auto upholstery operation into that site
also. The Smith & Nielson operation needs to move from 6409 Cedar Avenue
because it is being purchased by the City for the realignment of the Trunk Highway
77 (TH 77) and 66th Street interchange.
Mr. Jensen has room in the existing transmission shop at 6958 Cedar Avenue to
incorporate the relocated business. However, he does not have enough off-street
1120-72000edar.doc
parking to satisfy his needs. He meets the requirements of the zoning code for
parking but finds that actual parking needs are more than the code requires.
Jensen is working on a long-range solution that would. allow parking to be
.developed on the Minnesota Department of Transportation land across Cedar
Avenue from 6958 Cedar Avenue. However, the State will not be ready to lease the
land until spring and it will take a few months after that to construct the lot.
Therefore, Jensen is seeking an interim solution of off-street parking at 7200 Cedar
over the winter and spring months.
Jensen does own residential properties on 18th Avenue behind the Transmission
Shop that he considered removing, rezoning, and using for parking: Staff
discouraged him from doing this at this time because it appears that it will be some
time before these properties are purchased for airport noise mitigation. In the
meantime, it is desirable to keep the residential character of the area as long as
possible.
The lot at 7200 Cedar Avenue has been unoccupied for several years. The HRA
purchased it at an opportune time and plans to own it until it is possible to proceed
with redevelopment of a larger site area. It is bordered by commercial uses to the
south, twin homes to the west; and apartment garages to the north. Jensen
proposes to cut the brush in the middle of the lot and trim the vegetation on the west
side property line to make it more useable.
If HRA agrees that the lot should be leased to Jensen for an interim period of six to
nine months, staff will advise Jensen to submit a parking lot plan to the City Council
for their consideration. If approved a lease will be negotiated with Mr. Jensen.
III. BASIS OF RECOMMENDATION
A. POLICY
• The lot can be leased on an interim basis without harming its
redevelopment potential
B. CRITICAL ISSUES
• Parking is the critical issue. The auto-related uses already have
substantial on-street parking. The interim use of the 7200 Cedar
Avenue property will help mitigate the problem. However, some on-
street parking is likely. The ultimate solution will come next summer
when a new lot can be constructed across Cedar Avenue from the
Transmission Shop.
• Neighborhood compatibility also needs to be considered. It is staffs
opinion that the proposed parking use will be compatible with the
adjoining uses.
• The interim parking lot would not be in compliance with ordinances
regulating parking lots. It would not be paved nor would there be
curbing, for example.
C. FINANCIAL
• The HRA will receive some compensation for the land that has been
vacant and providing no income to the city.
D. LEGAL
• N/A
IV. ALTERNATIVE RECOMMENDATION~S~
• Do not lease the property and allow more on-street parking over the next six
to nine months.
V. ATTACHMENTS
• N/A
VI. PRINCIPAL PARTIES EXPECTED AT MEETING
• Steve Jensen, owner of The Transmission Shop and Smith & Nielson Auto
Upholstery.
•