09-13-99 agenda~~ ~
CITY OF RICHFIELD, MINNESOTA
MONDAY, SEPTEMBER 13, 1999
SPECIAL HOUSING AND REDEVELOPMENT AUTHORITY MEETING
COUNCIL CHAMBERS
6:15 P.M.
AGENDA
CALL TO ORDER
APPROVAL OF MINUTES OF (1) REGULAR HRA MEETING OF AUGUST 16, 1999
AND (2) SPECIAL CITY COUNCIL AND HRA MEETING OF SEPTEMBER 2, 1999
CONSIDERATION OF REQUEST BY CSM PROPERTIES, INC. TO AMEND
CONCEPT PLAN FOR LYNDALE GATEWAY REDEVELOPMENT AREA
HRA LETTER NO. 56
2. CONSIDERATION OF REVISION TO PUBLIC ASSISTANCE PROVIDED FOR
LYNDALE GATEWAY DEVELOPMENT
HRA LETTER NO. 57
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 861-9702.
C7
HOUSING AND REDEVELOPMENT AUTHORITY
HRA Letter No. 57
Agenda September 13, 1999
Issue Statement:
Consideration of revision to the public assistance provided for the Lyndale Gateway
Development.
Background:
At its August 16 meeting, the Housing and Redevelopment Authority (HRA) considered
the type and amount of public assistance to provide to the developer for reimbursement
of eligible redevelopment costs. The HRA concluded that this development could not
occur but for the use of tax increment financing and other public financing.
At the August 16 meeting, it was determined that a significant "gap" in the financing of
the project existed. The gap consists of site assembly costs which exceed the increment
to be generated by the development. The total amount of the gap was estimated at
$1.9 million.
Due to a lack of sufficient amounts of public funding sources, the HRA adopted a motion
to approve public financing only for the development on the east side of Lyndale
Avenue extending back to include the residential development on the east side of
Ga~eld Avenue. The approval did not include funding for the west side of Lyndale
Avenue. The form of the public financing which was approved included the tax
increment generated by the development (to be issued in the form of apay-as-you-go
note) as well as the proceeds of a tax increment general obligation bond. The debt
service of this bond is to be paid by the tax increment generated at the Candlewood
Hotel site.
Since that meeting, the sub-developers of the development proposed for the east side
of Lyndale Avenue (Twin City Christian Homes) and the east side of Garfield Avenue
(Ron Clark Construction) have indicated that they would not continue with their
developments unless the west side of Lyndale Avenue is concurrently redeveloped. As
a result, the sub-developers have continued to work with CSM and with Sid Inman to
refine their financing in order to allow the entire development concept to proceed.
The attached memorandum from Ehlers (Exhibit A) details a manner in which to fund
the entire project, including the west side of Lyndale Avenue. In this financing scenario,
the public assistance will include three sources. The first public funding source is the
tax increment which will be generated by the development, currently estimated at $4.6
million. Secondly, the City would issue a tax exempt general obligation tax increment
bond in the approximate amount of $1,650,000. This bond is to be retired using the tax
increment generated in the Candlewood hotel site. The final source of public funding
takes the form of a $100,000 loan from the HRA using development account funds.
According to the points in the attached memorandum from Ehlers (Exhibit A; points
11.C and 12.C), this development account loan would be repaid from excess debt
coverage and tax increment which may be generated by the development.
Recommended Motion:
Adopt a motion which:
1. Approves public assistance for all three phases of the Lyndale Gateway
development (Phase I: senior apartments and attached offices on the east side of
Lyndale Avenue; Phase II: commercial development on the west side of Lyndale
Avenue; Phase III: condominium development on the east side of Garfield Avenue);
2. Approves the use of tax increment financing (TIF) for the development in the
approximate amount of $4.6 million in the form of apay-as-you-go note issued #o the
developer(s) as reimbursement for eligible redevelopment costs;
3. Requests that the City Council issue tax exempt general obligation tax increment
bonds in the approximate amount of $1,650,000 to be retired from the tax increment
generated by the Candlewood Hotel site, the proceeds of which would be
reimbursed to the developer(s) for eligible redevelopment costs;
4. Approves the loaning of development account funds of up to $100,000 for
reimbursement to the developer(s) for eligible redevelopment costs which exceed
the amount of TIF and bond proceeds which are to be provided;
5. Approves the terms outlined in the attached memorandum (Exhibit A) from Ehlers
Publicorp.
6. Finds that this development could not occur but for the use of tax increment and
other publicassistance.
Basis of Recommendation:
1. Lyndale Gateway has long been identified as an area in need of redevelopment
activities.
2. The HRA approved a Contract for Private Redevelopment with CSM on January 19
for the redevelopment of the Lyndale Gateway Area.
3. A tax increment financing district and plan was established on June 14, 1999 to
include the Lyndale Gateway area.
4. The HRA approved a concept plan on June 21, 1999 which identified a senior
apartment complex and attached office development on the east side of Lyndale
Avenue, commercial development on the west side of Lyndale Avenue and
condominium development on the east side of Garfield Avenue.
5. The HRA and staff have been aware since its initial proposal that the development
did not generate a sufficient amount of increment to offset all of the site assembly
costs and that additional forms of public assistance were probably necessary for
this or any other development to occur in the Lyndale Gateway area.
6. The HRA approved public assistance for the development of the east side of
Lyndale Avenue and the east side of Garfield Avenue on August 16, 1999 with the
provision that staff continue to determine a way to accomplish the redevelopment of
the west side of Lyndale Avenue.
Alternative Recommendation:
1. Do not approve the revision to the amount of public assistance.
Discussion/Decision Mode:
Sid Inman of Ehlers & Associates Inc. will be present at the meeting to answer any
questions.
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Acting Executive Directo
SLD:ds
Attachment
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iuv. UVIV ~. L
FREERS
& ASSOCIATES INC ~ E ~ ~ ~~ N ~ U
TO: Bruce l'almborg -City of Richfield
John Stark -City of Richfield
FROM: Sid Inman -Ehlers & Associates
Mark Ruff- Ehlers & Associates
DATE: September 8, 1999
~~ South Lyndale Project -Revised But For Analysis
Asper your request we have prepared a revised "but for" analysis for the south Lyndale project. It is based
on additional comments and discussions that took place with city staff, consultants and the developers.
Following is a summary of the business points agreed on by the developers:
l . At the current time the developers and staff agree with the attached "Gap Analysis"
2. At the current time the developers and staff agree with the "Tax Increment Cash flow" dated
08/26!99.
3. In order to fill the gap the HRA should request that the Cit will issue a $1 650 000
Y general
obltgat~on tax exempt tax increment bond that is assumed to have net proceeds of
$1,580,000.
4. In order to fill the gap the HRA will loan the project $100,000 from the development
account.
5. Ron Clazk Construction will have a pay as you go note in the amount of $100,000.
6. Ron Clark Construction will receive $980,000 of the bond proceeds to purchase land.
?. CSM will have a pay as you go note in the amount of $1,225,000. Ron Clazk will guarantee
taxes to CSM until units sold provided that construction begins by 02/01/2000.
8. CSM will receive $600,000 of the bond proceeds to purchase land.
9. TCCH will have a pay as you go note in the amount of $3,300,000.
10. Annually, a trustee (selected by the City) will review the priors years pro forma from TCCI-I
to determine income. If income after debt exceeds 125% of debt service, that amount will
be withheld from the following years tax increment.
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l 1. Annually any amounts withheld in items 1 Dabove will be distributed as follows:
A. First to pay or repay any shortfalls on debt service for the City's G,O. bond
B. Second to pay into a debt service reserve equal to one years annual debt
service.
C• Third 1/3 to pay back HRA's development account loan.
b. Fourth 1/3 to gay CSM any shortfalls in tax increment not received in the
agreed upon tax increment cash flow listed in item 2 above.
E. Fifth 1/3 to pay Ron Clark any shortfalls in tax increment not received in the
agreed upon tax increment cash flow listed in item S above.
12. Annually any amounts of tax increment that are received in excess of the agreed upon tax
increment cash flow listed in item, 2 above will be distributed as follows:
A. First to pay or repay any shortfalls in the City's bond
B. Second to pay into a debt service reserve equal to one years annual debt
service.
C. Third 1!3 to pay back HRA's development account loan.
Ia. Fourth 1/3 to pay CSM any short falls in tax increment not received in the
agreed upon tax increment cash flow listed in item 2 above.
E. FiRh i/3 to pay.Ron Clark any shortfalls in tax increment not received in the
agreed upon tax increment cash flow listed in item S above.
13. Funds described in items 8 and 9 above will be held by the trustee until CSNI has provided
evidence of signed teases for 66% of the commercial space.
14. At closing the City will deliver to TCCH a deed for the City property. TCCH will sign an
agreement that they-will pay the City an amount (now assumed to be $163,000) based on the
following events. To the extent that the total acquisition cost of the property is less than
$3,000,000, TCCH will pay to the City an amount equal to the difference between the true
acquisition cost and $3,000,000. To the extent that amount is less than $163,000 the balance
will be due to the City two years from signing the development agreement. To the extent that
the total acquisition cost of the property is more than $3,000,000, the entire $1 b3,000 will
be due to the City two years from signing the development agreement. TCCH will guarantee
the note by the parent corporation.
It is our opinion that this project could not proceed with tax increment assistance, and we believe this
format will accomplish the completion of the project and meet the City's goals for the project.
Please let us know if you have any other questions or comments.
from the desks of
Sid Inmasr Mark RuJj''
Vice Presidents
N ~tMinnaoutA~chrt etdt[.YNTIFIGA Y-Nff.MP3. wpd
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Page i
CITY OF RICHFIELD
GAP ANALYSIS
Lyndale South
26-Aug-99
Land Acquisition 3,000,000
Land Acquisition -cast 175,000
GAP -Before Sales And Before TIF 3,175,000
'Commercial Land Sales 1,250,000
GAP -After Sales And Before TIF 1,925,000
'Commercial Tax increment 624,E
(GAP -After Sales And. After TIF 1,301,000
Land Acquisition
$171,428.57 7
GAP -Before Sales And Before TIF
Town dome Land Sales
GAP -After Sates And Be#ore TIF
Town home Tax increment
GAP -After Sales And After TIF
1,200,000
1,200,000
12a,ooo
1,080,000
636,000
444,000
GAP ANALYSIS -BOTH PROJECTS
TOTAL GAP -Both Projects 1,745,000
Candlewood TiF-G.O. Bond 1.05°~ Coverage 1,580,000
GAP -After Candlewood ts5,0oo
City f?evelopment Account 1~.~
GAP -After Development Account s5,0oo
Inflation - Commercial -1.885°k every 4 years 40.950
Inflation - Townhouse -1.885% every 4 years 24,050
GAP -After Inflation 0
richl~ap-4.123
HOUSING AND REDEVELOPMENT AUTHORITY
HRA Letter No. 56
Agenda September 13, 1999
Issue Statement:
Consideration of a request by CSM Properties, Inc. to amend the concept plan for the
Lyndale Gateway redevelopment area.
Background:
The Lyndale Gateway redevelopment area is located between 76th Street and 77th
Street and includes the west side of Lyndale Avenue extending back to Aldrich Avenue
and the east side of Lyndale Avenue extending back to include properties on the east
side of Garfield Avenue.
At the June 21, 1999 meeting, the HRA approved the Concept Plan for the Lyndale
Gateway development. At that time the development included a free standing drug
store and a second 31,000 sq. ft. commercial structure on the west side of Lyndale
Avenue, a 151 unit senior apartment building with additional attached office space on
the east side of Lyndale Avenue and 30 residential units on the east side of Garfield
Avenue.
The developer (CSM Properties, Inc.) and subdevelopers (Twin City Christian Homes
and Ron Clark Construction) have since modified their concepts to include additional
residential units. The revised concept plan which the developers have proposed is
modified to include 160 units of senior apartments on Lyndale Avenue and 40
residential units on the east side of Garfield Avenue.
Recommended Motion:
Approve CSM's revised concept plan for the Lyndale Gateway redevelopment area in
accordance with the Contract for Private Redevelopment.
Basis of Recommendation:
1. The Contract for Private Redevelopment for Lyndale Gateway requires an HRA
approved concept plan.
2. The HRA approved an earlier version of the concept plan on June 21, 1999.
3. The revised concept plan makes the development more financially feasible.
4. Staff has reviewed the revisions to the plan and found them acceptable.
Alternative Recommendation:
1. Do not approve the revised concept plan and continue to require the development
proposed in the concept plan approved on June 21, 1999.
2. Approve only certain revisions to the concept plan.
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Discussion/Decision Mode:
The developers will be present to discuss their proposed revisions to the concept plan.
Neighboring property owners will be invited to attend an open house prior to final
processing of the residential development on the east side of Garfield Avenue.
Re p ctf Ily submitted,
d
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Acting Executive Director
SLD:ds
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