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02-16-99 agenda~..~~. CITY OF RICHFIELD TUESDAY, FEBRUARY 16, 1999 REGULAR HOUSING AND REDEVELOPMENT AUTHORITY MEETING RICHFIELD CITY HALL COUNCIL CHAMBERS 7 P.M. AGENDA CALL TO ORDER APPROVAL OF MINUTES OF REGULAR HRA MEETING OF (1) JANUARY 19 REGULAR HRA MEETING; AND (2) SPECIAL HRA MEETING OF FEBRUARY 1, 1999 1. OPPORTUNITY FOR CITIZENS TO ADDRESS THE HRA ON ITEMS NOT ON THE AGENDA 2. CONSIDERATION OF RESOLUTION AUTHORIZING ISSUANCE OF CERTIFICATES OF COMPLETION TO VARIETY HOMES, INC. FOR 7332 QUEEN AVENUE, MAHONEY CONSTRUCTION FOR 7645 NICOLLET AVENUE, AFFORDABLE SUBURBAN HOUSING FOR 6320-15TH AVENUE., AND STEVEN MARLIN GRANT HOMES FOR 7204 FIRST AVENUE HRA LETTER NO. 11 3. CONSIDERATION OF AUTHORIZATION FOR MORTGAGE SET-ASIDE PROGRAM IN RICHFIELD FOR MODERATE INCOMEBUYERS HRA LETTER NO. 12 4. CONSIDERATION OF CSM'S COMPLETION OF PRECONDITIONS AND REQUEST FOR EXTENSION OF SITE ASSEMBLY PERIOD FOR REDEVELOPMENT OF INTERCHANGE WEST AREA HRA LETTER NO. 13 5. STATUS REPORT ON PRECONDITIONS TO DEVELOPMENT OF URBAN VILLAGE HRA LETTER NO. 14 6. EXECUTIVE DIRECTOR REPORT 7. 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. a HOUSING AND REDEVELOPMENT AUTHORITY • HRA Letter No. ii Agenda February 16, 1999 Issue Statement: Authorization to issue Completion Certificates to Variety Homes Inc. for 7332 Queen Avenue, Mahoney Construction for 7645.. Nicollet Avenue, Affordable Suburban Housing for 6320-15th Avenue, and Steven Marlin Grant Homes for 7204 First Avenue. Background: The HRA authorized development of the above referenced properties. The development agreements provide for the issuance of a Certificate of Completion when construction is completed. (A sample certificate is attached.) Landscaping escrows will be retained, to be released upon completion in the spring. The builders have requested the release of the Letters of Credit and the Completion Certificates upon completion and closing. Staff is anticipating this. request and wants to respond in a timely manner upon verification. of completion. Recommended Motion: Authorize the Chair and Executive :Director to execute Completion Certificates in accordance with the attached resolution. Basis of Recommendation: • 1. Construction has been completed and the Inspections Division has issued Certificates of Occupancy; Z. The builders have performed in accordance with development agreements and will seek the issuance of Certificates of Completion and the~release of performance security. Alternative Recommendation: Do not issue Certificates of Completion at this time. Discussion/Decision Mode: This matter will be presented at the February 16, 1999 HRA meeting. Respectfully submitted, Jam D. Prosser Executive Director JDP:cak • HRA RESOLUTION NO. RESOLUTION AUTHORIZING ISSUANCE OF CERTIFICATES OF COMPLETION FOR NEWLY CONSTRUCTED RESIDENTIAL PROPERTY AT 7332 QUEEN, 7645 NICOLLET, 6320-15TH, AND 7204 FIRST AVENUES WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (HRA) entered into contracts with Variety Homes Inc., Mahoney Construction, Affordable Suburban Housing and .Steven Marlin Grant Homes, lnc. for the construction of single family homes, and; WHEREAS, the new home locations are as follows: 7332 Queen Avenue. 7645 Nicollet Avenue 6320-15th Avenue 7204 First Avenue WHEREAS, performance security can be released to-the builders in the amounts secured. NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority in and. for the City ofi Richfield, 1. The Completion Certificates for 7332 Queen, 7645 Nicollet, 6320-15th.-.and 7204 First Avenues can be issued. 2. The performance security can be released for all properties when the Completion Certificates are issued. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota his 16th day of February 1999. Thomas E. Harms, Chairperson ATTEST: Michael Sandahl, Secretary • CERTIFICATE OF COMPLETION The undersigned hereby certifies that (Builder) has fully and completely complied with its obligations under Article IV of that document entitled "Contract for Private Development", between the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota and (Builder) dated (Date) filed (Date) as Document No. (Number) with respect to construction of the Improvements at (Address) legally described as (Legal Description) , in accordance. with the approved construction plans and is released and forever discharged from its obligations to construct under such above- referenced-Article. Dated: By BY THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD Its Chairperson Its Executive Director STATE OF MINNESOTA SS COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of ,19 ,by and the Chairperson and Executive Director of the Housing and Redevelopment Authority in and for the City of Richfield, a public body corporate and politic under the laws of the State of Minnesota on behalf of the public body corporate and politic. Notary Public This instrument was drafted by: The Housing and Redevelopment Authority in and for the City of Richfield 6700 Portland Avenue South Richfield, MN 55423 3 HOUSING AND REDEVELOPMENT AUTHORITY HRA Letter No. 12 Agenda February 16, 1999 Issue Statement: Authorization for mortgage set-aside program in Richfield for moderate income buyers. Background: The Minnesota Housing Finance Agency (MHFA) has a mortgage revenue bond program available statewide for moderate income buyers. Mortgage loans are available year round from participating lenders at below-market interest rates. MHFA also provides an opportunity for communities to set aside a portion of those funds for a specific purpose. It is proposed that the Richfield HRA be a co-applicant with Norwest Mortgage, Inc. to provide such aset-aside. Norwest is already a participating lender and has sponsored set-asides in other communities. The set-aside program in Richfield would be called the Purchase Possibilities Mortgage. -Its purpose would be to broaden affordable financing to the same type of buyer. that participates in the HRH's.. New-Home; Program and wants. to benefit from the existing moderately priced Richfield housing stock. In order to be eligible, each applicant must: 1. Havegross annual income at or below 80 percent of the Twin Cities area median income ($45,300 for a four person household); and 2. Identify a home for sale in Richfield whose purchase price is $112,500_or less, the maximum allowed by the state fi-Hance agency (the average sale-price of~a Richfield home in 1998 was $114,300 per Hennepin County records); and 3. Must meet ONE of the following criteria: • have at least one family member who is disabled; or • be a single head of household with children; or • be of a minority population; or • purchase a home on 12th Avenue or anywhere east of 12th Avenue in Richfield, due to airport impacts and market perceptions in this area; or • be a family purchasing a home in a redevelopment area which has been set aside for affordable housing purposes; and 4. Meet regular lender-identified criteria for mortgage qualifying. The Purchase- Possibilities Mortgage is specifically for financing a home purchase; it is not apurchase/remodel mortgage. However, several existing programs will supplement the mortgage: • • The Richfield HRA will provide Remodeling Advisor and Design Advisor services to any buyers. Advisor services will benefit disabled. buyers in particular since they may need to make immediate modifications. • The Richfield HRA's loan program, First Time Advantage, is available to first time buyers within a year of purchase who meet the 80 percent of median income requirements. The loan's availability will be part of the Purchase Possibilities Mortgage marketing. • "Home Stretch" buyer education workshops are offered for persons wanting to purchase in Richfield through Community Action for Suburban Hennepin (CASH). All qualified applicants will be required to attend. Recommended Motion: Authorize the application to MHFA for a mortgage set-aside program in Richfield for moderate income buyers. Basis of Recommendation: 1. The mortgage revenue bond program is already inexistence. The opportunity for a set-aside simply provides a target opportunity for buyers who might otherwise be edged out of the homebuying process. 2. Applicants still need to meet regular underwriting requirements for mortgage financing. • 3. Norwest Mortgage is already a participant under MHFA's mortgage revenue bond program.. Alternative Recommendation: Do not authorize participation in the set-aside program opportunity. Discussion/Decision Mode: Applications must be submitted to MHFA by February 18, 1999. An application is being prepared in cooperation with Norwest. Respectf ly submitted, Jams .Prosser Exec ive Director JDP:cak • HOUSING AND REDEVELOPMENT AUTHORITY HRA Letter No. 13 Agenda February 16, 1999 Issue Statement: CSM's completion of the Preconditons and request for extension of the Site Assembly period for the redevelopment of the Interchange West area. Background: On December 21, 1998, the HRA granted a 60-day extension for the submission of the "Preconditions" outlined in the Contract for Private Redevelopment with CSM Properties, Inc. for the Interchange West area. CSM has provided a site plan and letter (attached as Exhibit A) which addresses many of the preconditions. Among the preconditions which CSM has submitted as fully completed are: the concept plan; the location and nature of public improvements; the location of interior traffic circulation systems; the landscape plan; the schedule for beginning and completing construction, and the mediation process for the purchase of property. The concept plan which has been submitted for approval-differs from earlier plans in that an upscale auto dealership has been identified as a future use; CSM and staff both agree that the dealership would be subject to strict design and. operating standards. Also note that the developer has-indicated that they may request a- modification to the,concept plan in the future to accommodate up to 132 additional • townhome units. Each of the preconditions has been reviewed, point by point,. in a letter addressed to -- CSM Properties, Inc. (attached as Exhibit B). In particular, the letter indicates the manner in which each of the uncompleted preconditions are to be met. The letter from CSM (Attachment A) also includes a request to the HRA fora 90-day extension for the completion of the "Site Assembly" activities identified in the contract. Mr. Kornberg has indicated in his letter that this extension is necessary in order to provide property owners with sufficient time for negotiations prior to CSM's request of the HRA to begin condemnation activities to acquire property. Recommended Motion: Adopt a motion which: 1) Acknowledges the completion of the Preconditions as submitted in Exhibit A, identified as items a, b, c, d, f and I of Article 11.5 in the Contract for Private Development; 2) Accepts the manner for completion of the outstanding Preconditions (items e, g, h, i, j, k and m of Article 11.5 of the Contract) as indicated in Exhibit B; and • 3) Grants a 90-day extension for Site Assembly activities. Basis of Recommendation: • 1. The HRA entered into a Contract for Private Redevelopment with CSM Properties, Inc. on October 19, 1998 for the redevelopment of the Interchange West Area. 2. The Contract, as modified at the December 21, 1998 HRA meeting, states that the "Preconditions" and "Site Assembly" activities should be fully addressed by February 16, 1999. 3. CSM Properties, Inc. has fully addressed many of the Preconditions in Exhibit A. 4. Exhibit B establishes a manner for addressing the uncompleted Preconditions. 5. CSM Properties, Inc. has issued purchase offers to all homeowners in the Interchange West and is in the process of negotiating with commercial property owners. 6. Homeowners and commercial property owners have not had sufficient time to react to the purchase offers being made by CSM. Alternative Recommendation:- 1. Terminate the contract with CSM for non-compliance. 2. Provide an extension of a lesser period of time forCSM's completion of Site - Assembly activities. Discussion/Decision. Mode: Mr. Kornberg will be present to provide an update on CSM's redevelopment activities in the Interchange West area including a schedule for acquiring property and completing site clearance activities. Respectf Ily submitted, Jame .Prosser Executive Director JDP:cak • Exhibit A3 FACILITATED NEGOTIATIONASSISTANCE PROCESS SUMMARY A mediation firm will help property owners in facilitating an agreement with CSM Properties, Inc. regarding compensation. Below is a list of questions that will allow property owners to understand the role and advantages of this process. WHAT IS THE PROCESS? A neutral party, called a "neutral", facilitates negotiations to assist parties in resolving disputes. The neutral does not impose a solution. Instead, the neutral assists the parties in exploring their interest, looking realistically at the strengths and weaknesses of their positions, generating options for settlement, facilitating communications, and arriving at terms that are mutually agreeable. WHAT IS THE NEUTRAL'S ROLE? The neutral's purpose is to help the parties overcome barriers to resolution of a dispute, suchas those. presented by emotion, lack of information, inability of parties. to communicate, or simple unwillingness. to meet in the same room. WHAT HAPPENS. IF NO SETTLEMENT IS REACHED? If a dispute is not. settled through negotiation, the condemnation process is then used to arbitrate the positions of the parties and a decision is assigned to the parties. WHAT ARE THE' BENEFITS OF USING THIS PROCESS? The property owner controls the outcome. There is a settlement only if the- parties agree to it. Flexibility. The process encourages the use of creative techniques for problem solving and enables the parties to determine an outcome tailor-made to the interests of those concerned. Communication. The process is designed to enhance communications between those involved in a dispute so that the likelihood of resolution is enhanced. The parties select the neutral. The Mediator will provide a panel of highly qualified and experienced neutrals from whom to choose. The neutral facilitator will not be from the City of Richfield or associated with CSM. • Ceirbrafb+g 30 Yrars ojSrrving You CSM Corporation "-'-~ 2575 L/nlversityAvenue Wesl, Suiie l50 • SG Paul, MN 55714-1024 February 9, 1999 Mr. John Stark City of Richfield 6700 Portland Avenue South Richfield, Minnesota 55423 Re: YnterehAnge West Status of Initial Preconditions to Acquisition Dear John: EXHIBIT A {65x1 sac-i~r~ • FAX (6St j 646 2404 B First Class Mail Enclosed herewith please find our Concept Plan for our proposed redevelopment at Interchange West.. A summary of the development and. its components is set forth in the right hand corner of the enclosed Flan, indicating the following project Elements: 1. Seven story office building of 375,000 square feet; 2. 350 room full service hotel; 3. Full service sit down restaurant of 8,700 square feet; 4. Two story 40,000 square foot car dealership; 5. Four story 100 unit multifamily residential bwldmg; 6. Retail and convenience center; 7. Residential townhomes and urban homes totaling 170 units. As shown on the enclosed Concept Plan, we propose to have each of the project elements platted separately. The Concept Plan contemplates five separate lots for the residential redevelopment component, taking into account the public rights of way which separate the various elements of this portion of the redevelopment. As shown on the enclosed Concept Plan, we contemplate that Interchange Boulevard and the extension of Morgan Avenue South from 76's Street to the intersection of Interchange Boulevard would be public right of way.. Additional public right of way would be provided running east -west from Penn Avenue to Knox Avenue mid-block between Interchange Boulevard and 76's Street. With regards to the completion of this public right of way, we would propose to have it constructed by the Developer, to meet the City's standards, and be subject to City inspection and approval prior to dedication to the public. Furthermore, the timing for the completion of this public right of way would coincide with additional infrastructure improvements that the City may be consideiing outside of the project area, and in general w minimize the negative impact of the development and the construction of these public rights of way on the City's overall traffic plan. The enclosed Plan contemplates the vacation of existing public rights of way at G:WOME1MiSCDATAICAROLYNIwordkoalmk119991~wk2.doe Oliver, Newton and Logan, and these would be vacated in connection with our land acquisition activity, but not prior to the time that eve have provided sufficient evidence to the City that we are prepared to proceed with the development, construction, and dedication of the new rights of way as shown on the enclosed Plan. An additional element of public improvements for the Project is the park pavilion shown • just north of the pond located within the residential area of the redevelopment. We propose that the Ciry assume the responsibility for the completion of this pavilion with funds generated from outside of the Project. Interior traffic for the development is handled primarily through a series of cul-de-sac type private roads for the residential development, and with a loop mad configuration for the commercial portions of the development located south of Interchange Boulevard. In response to the preliminary review of the traffic circulation for the Project with City staff, the enclosed Concept Plan contemplates substantial roadway improvements to provide for sufficient egress from the site either to the west at Penn Avenue, east at Knox Avenue, or to the north at Morgan Avenue. We wilt continue to work with staff, its traffic consultant, and other traffic experts to ensure that our proposed internal road system functions properly, and can coordinate with the traffic immediately adjacent to the development, and outside the project area. We believe that the intersection of Interchange Boulevard and Penn Avenue would likely be signalized, as , would the intersection of Interchange Boulevard and Morgan, and the intersection of Morgan and 76"' Street, however any decision to place traffic signals would be subject to Staff review, and consultation with traffic experu. We have also committed to work with the City on a TDM Plan to mitigate the traffic impacts of the Development. The enclosed Concept Plan shows our preliminary plan with regards to landscaping for the Project. As individual projectekments are presented to the Planning Commission and City Council for PUD approval, more detailed landscaping plans will be submitted, in order to address concerns regarding screening, buffering, etc. It is-our expectation that as each of the project elements is developed, the approved landscaping will be implemented as part of the construction. With our proposed redevelopment, and as indicated on the preliminary landscaping plan shown on he ' . Concept Plan, we anticipate a substantial amount of landscaping,. including in the right of way for Interchange Boulevard and Morgan Avenue, and located within the commercial portion of the Project, as well as the residential portion. We believe that this landscaping will be substantially in excess of the existing landscaping, particularly for the current commercial land uses. Because the scope of the proposed redevelopment is so extensive, and contemplates removal of almost all of the existing improvements located on site, it is unlikely that any of the existing vegetation (which is primarily located north of 77`h Street) will be able to be saved, however we will make every reasonable effort to try and preserve mature landscaping, where possible. Tree preservation measures we will undertake during construction include clearly identifying tree preservation areas prior to any activity on site, fencing offof any tree preservation areas to prevent accidental construction damage, and attempt to implement creative site planning techniques, where possible to try and preserve existing mature vegetation. A schedule for the proposed commencement and completion dates for each of the project elements is set forth on exhibit A attached hereto. Our expectation is that public improvements, including utilities, will be constructed in conjunction with each of the project elements, so as to minimize the negative impact of the redevelopment on other areas of the City, and to ensure that access and utilities are available to each of the project elements as they are completed. We have not yet completed our environmental review of the property, and therefore are unable tv provide any significant discussion regarding on site contamination or pollutants. It is our expectation that to the extent any such contamination is found, as between Developer and the I3RA, any remediation or mitigation of that contamination would not be the responsibility of the HRA. G:WOMEIMI5CDA7AtCAROL1lNlwordlcorr~mk~19991stark2.doe With respect to utilities currently located on the redevelopment property, it is our expectation that to the extent that these utilities are no longer required to service uses that may remain on the project vn an . interim basis during the phases of construction; that these would be abandoned in accordance with City standards. Relocation and/or the installation of new utilities would similarly be completed in accordance with City standards, and in such a manner as to minimize the impact of such relocation on the balance of the City's utility system. A final plan for utility abandonment, relocation, and reconstruction will be submitted to the City for its review and approval prior to the issuance of a grading permit for the Project. We aze prepared to undertake a mediation program as required by the terms of our Contract for Redevelopment. A proposed process for that mediation program is attached hereto as Exhibit B. We are currently in the process of finalizing our But-For Analysis for the enclosed Concept Plan, and will have that Analysis complete prior to our request to the HRA (if necessary) to have it undertake condemnation proceedings. Ac uisitions Activi We have finalized deals with two of the smaller commercial property owners, and continue our negotiations for the acquisition of the car dealerships. We are also continuing our discussions with the. balance of the commercial and multifamily res'sdential property owners. By Friday of this week, we expect to have submitted Purchase Contracts to each of the individual homeowners in the redevelopment area, and will continue to work with all property owners to try and arrive at Purchase Agreements for all of the property in the redevelopment area. I will be prepazed to give amore detailed discussion of our acquisition activity at the I3RA meeting on Febntary 16, 1999. In an effort to allow sufficient time for each of the property owners to respond to our purchase offer, and to provide sufficient time to try and negotiate acceptable terms far our purchase of property (or to provide. sufficient time for the mediation), we believe that we will require additional time prior to satisfying the conditions for site assembly sat forth in Section 3.2 of the Contract. Acwrdingly, we hereby request a 90 day extension for the purposes of satisfying those acquisition contingencies, to allow sufficient time to negotiate with individual property owners. I look forward to reviewing the enclosed Concept Plan, the status of the satisfaction of our preconditions, our acquisition activity, and our request for an extension to complete that acquisition activity with the HRA at its meeting on February l6, 1999. In the meantime, should you have any questions regarding the enclosed materiait, please do not hesitate to contact me. yours, Acquisitions Enclosures 11CSM1VOL11HOME1MI5CDA7A\CAROLYAiIy'ordkoR~mtc~1949~stvk2•do~ a N V /~ C ~ .v ~ c -e c zE•o ~ ~ ti •. fA p1 C a ~• °w ~ ~ ~~ ~ Cb '~ a t~ n z x ~ `~ ~ ~ t~ ~ r t~ d C o--r ~ ^ zr zot~ r~ ,,~ to r~ 0 a~~ ar~~ z ~ ~ f~ ti !~ F: ~~ 3 Ni< N o x$ ~o~ ~ }~ ~N^~. ~C A _. • .s ~ ~~ ~ _ 5F ~~ ~_~ p ~a-- 1 z -~ m Y "~ a a' ;~; ;~; ~~, ~, ~~' I 0 0 ~Z 0 N , O i ' --~-- ~, '_..~ ,~ ~° ,~- ~ '~ _ . ~ SSA777 V E ---~ -- s - -- - ~ °' ~ i i 4a .,, ~ ~; Nsw~roN -------- ~~--- i i „~ I i i ,- I ~-~- c~ MORGAN ~~-~- I I I I i i ~ i . . ~-~- - z LOGAN Q I Ez ~~ I ~~ ~t I N I ~~ i ~ i --- i i I .\ .1 .1 i' ~ Ufi11TCmT1TN {d ~ I I I ~/ ~ ~ '> ~ II ~~ ~~ s ~ •`\i~ ,+\~ LI~~ ~~Qi N x,08' ~i nyp~~. N ~ Z \ ~ O V y, pON N N Fr ~~ ~~a u , .\ SN N ~ V &~ ~~~~ ~ ~~~ ~ ~ ~ ~~ =g "~ ~ ~~ ~I a 'I~ ..ice' . ~ \ a E~ , iN0i05E0 iRpNTk[ ROAD C ~ ~~ a o ~ z~ „I IL ~r - I ~ t °~ ~ i I ~ .~ e I I I ~ _ • ~ T I t ©~, I ~V ~ ~A~~ ~`.~ . Preliminary Commencement and Camptetion Schedule Project Elements Interchange West Febniary 9, 1999 Element Full Service Hotel Phase I Office Phase II Office Phase I Townhomes Phase II Townhomes Car Dealership Service Retail Multifamily Apartments mmence~ent Date April 1 S, 2000 Apri115, 2000 April 15, 2001 April 1, 2000 April 1, 2001 March 15, 2000 June 1, 2000 June 1, 2oao C~moletion Date January 1, 2002 Apri115.2001 Apri115, 2002 February 15, 2001 February 15, 2002 January 1, 2001 January 1, 2001 June 1, 2001 • 11CSbl~YOLI~FiObIE~MESCDATAICAROLYN~~rord~ialachltelkdi+[e•dot • Exhibit A3 FACILITATED NEGOTIATION ASSISTANCE PROCESS SUMMARY A mediation firm will help property owners in facilitating an agreement with CSM Properties, Inc. regarding compensation. Below is a list of questions that will allow property owners to understand the role and advantages of this process. WHAT IS THE PROCESS? A neutral party, called. a "neutral", facilitates negotiations to assist parties in resolving disputes. The neutral does not impose a solution. Instead, the neutral assists the parties in exploring their interest, looking realistically at the strengths and weaknesses of their positions, generating options for settlement, facilitating communications, and arriving at terms that are mutually agreeable. WHAT IS THE NEUTRAL'S ROLE? The neutral's purpose is to help the parties overcome barriers to resolution of a dispute, such as those presented by emotion, lack of information, inability of parties to communicate, or simple unwillingness to meet in the same room. . WHAT HAPPENS IF NO SETTLEMENT IS REACHED? If a dispute is not settled through negotiation, the condemnation- process is then used to arbitrate the positions of the parties and a decision is assigned to the parties. WHAT ARE THE BENEFITS OF USING THIS PROCESS? The property owner controls the outcome. There is a settlement only if the parties agree to it. Flexibility. The process encourages the use of creative techniques for problem solving and enables the parties to determine an outcome tailor-made to the interests of those concerned. Communication. The process is designed to enhance communications between those involved in a dispute so that the likelihood of resolution is enhanced. The parties select the neutral. The Mediator will provide a panel of highly qualified and experienced neutrals from whom to choose. The neutral facilitator will not be from the City of Richfield or associated with CSM. • EXHIBIT B Community Development Department Housing and Redevelopment Authority February 17, 1999 CSM Properties, Inc. 2575 University Avenue West Suite 150 St. Paul, MN 55114-1024 Attention: Murray Kornberg, Vice President Subject: Contract for Private Redevelopment; Interchange West/Preconditions. Dear Mr. Kornberg: I am writing this letter to confirm the understanding of the parties with respect to the status of compliance with the conditions contained in Section 2.5.1 of the referenced agreement. In the text the specific condition is recited followed by the statement of status. s (a) the Concept Plans, which will include agreement relative to the proposed subdivision of the Redevelopment Property and creation of the Elements of the Development; Your submittal dated February 9, 1999 [attached as Exhibit A satisfies the requirements of this paragraph. You have also informed the HRA that although the townhome element of the Concept Plan calls for 168 townhome units, it is your expectation that it may be necessary and feasible to consider up to 300 townhome units. The HRA will consider any request for an increase; however, any approved increase will require a showing that the same is in keeping with sound land use consideration and will not impact adversely on public infrastructure. (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; The information contained in Exhibit A satisfies this paragraph. • (c) the location, layout and design of any interior traffic circulation systems, including their interface with adjacent roadways, and the timing for construction of the same; The Urban Hometown 6700 PORTLAND AVENUE, RICHFIELD, MINNESOTA 55423-2599 612.861.9760 FAX: 612.861.8974 CSM/Interchange West Preconditions ® 2/17/99 Page 2 The information contained in Exhibit A satisfies this paragraph. (d) the landscape plan and the timing for installation of the same; The description in the Concept Plan satisfies this paragraph. Detail on the plan and timing will be required as part of the PUD Plan submittals for the development. (e) tree protection during construction (redeveloper to be responsible for the cost of a survey and protection plan.) You have agreed to continue to work with Fred Hoisington to formulate the specifics of the actions to be taken on site during construction to protect those trees which will be designated for protection in your landscape plan. The form of those .actions. is to be agreed to prior to the issuance of any grading or building permits. (f) a schedule for commencement and completion of construction of each Element of the Development, and all public improvements to serve the Development; The material contained in Exhibit A satisfies this paragraph. (g) the condition of the Redevelopment Property with respect to environmental contamination and pollution; and the obligations and responsibilities of the parties with respect to remediation, if any; You will continue to determine the condition of the Redevelopment Property, and will have done so prior to any authorization of condemnation. The cost of any remediation as well as the cost of any studies will not be borne by the H RA. (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 Based on the information supplied in Exhibit A, the HRA concludes that you have presented an acceptable mechanism to resolve this .matter. The final CSM/Interchange West Preconditions 2/17/99 Page 3 resolution will be agreed to prior to the issuance of any grading or building permits, and that the cost of any relocations will be borne by the Redeveloper. (i) the conditions for the release of Redeveloper following the assignment of an Element described in Section 9.4(b). .Release will be granted on any Element upon the delivery to the HRA of a letter of credit in an amount equal to :the remaining unfunded potential liability of the HRA for all of its obligations under the Agreement multiplied by the percentage of development-wide tax increment coming from such Element. (j) to the extent required by law, the number of new jobs and the average wages for the new jobs created by -the Development. Agreement on this matter is to be reached prior to the authorization of condemnation by the HRA. (k) the form of the Tax Increment Plan, which plan, following agreement as to form, shall have been- considered and adopted by the City... Agreement on this matter is to be reached prior to the authorization of condemnation by the HRA. (I) the program of mediation of matters described in Section 3.2(b) The material supplied in Exhibit A satisfies this paragraph. (m) the level of public assistance which is necessary in order to facilitate the development contemplated in the Concept Plan (The "But For" Analysis) Agreement on this matter is to be reached prior to the authorization of condemnation by the HRA. Except as stated above, all of the preconditions contained in Section 2.5.1 of the .Agreement have been satisfied, and with respect to those which have not been fully satisfied, such preconditions are to be satisfied within the .time periods stated herein. • CSM/Interchange West Preconditions 2/17/99 Page 4 Please advise if you have any concerns or additions to the terms of this letter. If not, would you please provide me with a written confirmation of agreement. Respectfully yours, James Prosser • S HOUSING AND REDEVELOPMENT AUTHORITY HRA Letter No. i4 Agenda February 16, 1999 Issue Statement: Status report on the preconditions to development of Urban Village. Background: The HRA authorized a Contract for Private Redevelopment with Richfield State Agency (RSA) on November 16, 1998. Article 11.5 specified 15 preconditions to development. On January 19, all preconditions were satisfied except for "I" and "m". The HRA authorized a 30-day extension to complete these remaining items by the February 16 HRA meeting. Pages seven and eight of the Redevelopment Agreement are attached, representing the requirements. The remaining conditions deal with the form and level of public assistance. Ehlers and Associates has concluded that the appropriate level of assistance requested and which RSA is eligible for will exceed the amount of tax increment available. Based on the completed development value of $30 million, the project would generate during-the 25- year life of the district, a present value TIF amount of $9.5 million to be provided on a pay-as-you-go basis. A February 4 letterfrom Sid Inman of Ehlers is attached and outlines the eligible project costs. Mr. Inman will be at the February 16 meeting to discuss the project.. The HRA has included as a condition of contributing the-tax increment assistance: • Twelve units of the rental housing will remain affordable to households with incomes at or below 70 percent of the median income for the metropolitan area (incomes in the $30,000 to $35,000 ranges). The basic provisions to be contained in an agreement on affordability is attached. The affordable units will be provided for 25 years to be partially supported by a "local match" of $600,000 which is part of the $9.5 million TIF assistance. • A high level of quality in finishing materials to the development is required; competitive with Class A commercial space in the retail/office/restaurant/parking areas and 60 percent brick and 40 percent stucco in the multi-unit housing. Final plans and specifications will provide the complete finishing details based on these standards. Recommended Motion: Adopt a motion which authorizes the Executive Director to forward the attached February 17, 1999 letter addressed to Mr. Steven Kirchner which identifies the amount of TIF assistance at $9.5 million and confirms the other basises for completion of preconditions. • Basis of Recommendation: Alternative Recommendation: 1. Delay consideration.. 1. The basis for providing the tax increment is the "But for..." test. That is, but for the availability of tax increment, the project would not proceed. The proposed development is not economically feasible without the assistance to be provided. 2. An affordable housing element is a desirable objective to help assure diversity in the housing stock. 3. The Contract for Private Redevelopment identifies preconditions, requirements that must be satisfied prior to redevelopment. 4. The attachments identify the requirements and HRA legal counsel prepared responses to satisfy these requirements. 5. Richfield is a prudent user of tax increment resources when compared with communities that face similar challenges. A summary of comparable users is attached, including other summary tax increment data aboutthe Urban Village development. 2. Add to or modify the preconditions. Discussion/Decision Mode: Should the HRA approve this recommendation, the remaining significant item is the City Council's finding concerning the Environmental Assessment Worksheet scheduled for February 22. Respectfully submitted, t Jam .Prosser Executive Director JDP:cak • ARTICLE ILS. PRECONDITIONS Section 2.5.1. Initial Preconditions to Acquisition. Not later than 60 days from the date of this Agreement, (45 days for the Concept. Plans), unless such date is extended by the mutual written consent of the parties: Subdivision 1. The parties shall have reached written agreement on the following matters: (a) the Concept Plans, which will include agreement relative to the proposed subdivision of the Redevelopment Property and creation of the Elements of the Development; (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 cost and the phase out of existing public improvements; © the location, layout and design of any interior traffic circulation systems, including their interface with adjacent roadways, and the timing for construction of the same; (d) the landscape plan and the timing for installation of the same; • e tree rotection during construction (redeveloper to be responsible for the cost of a O P survey and protection plan.) (fl a schedule for commencement and completion of construction of each Element 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 .conditions for the release of Redeveloper following the assignment of an Element described in Section 9.4(b). (j) to the extent required by law, the number of new jobs and the average wages for the new jobs created by the Development.the form of the Tax Increment Plan, which plan, following agreement as to form, shall have been considered and adopted by the City. (k) the program of mediation of matters described in Section 3.2(b) JBD-151646 RC125-182 7 (1) the form and level of public assistance which is necessary in order to facilitate the ~velopment contemplated in the Concept Plan (The "But For" Analysis), and any amendments to this Agreement which might be necessary in connection with providing the assistance (rn) the amount and nature of the local match; and contingencies to providing the local match (n) a plan for personal protection and safety for users of the parking ramps to be constructed as part of the Minimum Improvements. Subd.2. The following actions will have been taken Not later than 10 days following the date of this Agreement the Redeveloper will have retained the services of a relocation consultant acceptable.. to the HRA. The relocation consultant will assist the Redeveloper in providing relocation services and information concerning relocation benefits to individuals and entities who will be .displaced as a result of the Redeveloper" acquisition activities. The services and benefits to be provided by the Redeveloper shall conform to those which would be provided by the HRA if it were acquiring the properties. All fees and chazges for the- services of the consultant ..and .all. ,payments of relocation benefits shall be the .sole obligation of the Redeveloper. The Redeveloper shall be responsible for .timely .notification of ..all affected. persons .concerning.. the services and benefits available to them and the process to follow to obtain such services and benefits. In the event that the parties are unable to reach agreement or take the required action on all the matters in the time described above or in the event that the Tax Increment Plan has not been adopted, either party may terminate this Agreement by written notice to the -other party whereupon this Agreement shall, notwithstanding. anything in Article X hereof to the contrary, be null and void, and the parties shall be relieved. of any further obligations hereunder. c: JBD-151646 RC125-182 8 1VIEMORANDUM TO: Bruce Nordquist -City of Richfield John Dean -Kennedy & Graven FROM: Sid Inman - PublicorplEhlers DATE: February 4, 1999 RE: Richfield Stxte Agency -Final But/For Anxlysi.~ Asper your request, we have continued to work with RSA to determine the final amount oftax increment they could receive. At the current time we are still waiting for the final doltar amounts for purchasing the houses to complete the final housing pro forma. Also, the developerhas not yet determined the amount of the pay-as-you-go notes that wil I be taxable and the amount that will be tax exempt. This impacts the interest race thus the overall cast of the project. Even though we still need these final numbers, I believe we can set the amount of tax increment the H.R.A. can provide. Based. on our last Tax Increment Cash Flow, we estimate that with 2% inflation the total tax increment including the local match would have a present value of approxamally $9,$00,000. This amount is less then the amount of cost items we have identified to date. Therefore no matter how tht additional project cost are. $9,500,000 is the maximum the N.R.A. has to provide. At the current time we are using the following amounts as part of the analysis: 1. The developer has submitted a list of extraordinary costs {memo dated October 13, 1998) totaling approximately $1,600,000. The City and l: red I Ioisington have reviewed these cost and agree they are "Ovef And Above" the normal code requirements and therefore fall into the extraordinary costs. The developer has submitted a parking ramp costs for approximately 600 stall ramp (memo dated October 13,1998) totaling $6,700,000. Based on Jan Susse's letter dated August 11,1998 normal cost for surface parking is $1,00Q per stall or $600,000. Therefore the net amount of $6,100,000, is extraordinary cost. Thc developer has stated that the total amount they can spend for land for the apartments is $750,000. The estimated total acquisition cost is from $2,500,000 to $3,000,000. Therefore the request for reimbursement is between $1,750,000 and $2,250,000. Please let me know if you have other questions or comments. from the desk ot: Saltm~an Development Corsultent/Fine»cisl Advisor Ehlers and Associates, lnc. 3060 Center Pointe Drive Roseville, MN 55113 {61?) 857-8507 FAX: {612) 697-8555 e-ntn,~: sia~e-,rers-;rc corn N•lMmuwta~Rl('1 U°IE•URSAUPDATE98-G wpd • Basic Provisions to be Contained in Agreement Regarding Affordable Units A. Definitions: "Qualifyin~ Tenants" shall mean- and include individuals or families with adjusted Family Income calculated in the manner prescribed in Treasury Regulation Section 1.1 67(k)-3(b)(3) as it shall be in effect on the date of this Agreement, which does not exceed seventy percent (70 percent) of the median gross income for the area in which the Development is located, determined in a manner consistent with determinations of median gross income made under the leased housing program established under Section 8 of the United States Housing Act of 1937, as amended (or if such program is terminated, under such program as in effect immediately before .such termination) Such calculation shall not be adjusted for family size. In no event, however, will the occupants of a unit. be considered to be Qualifying Tenants if all the occupants are students, no one of which is entitled to file a joint return. The method of determining the percentages to be applied to the income of tenants and the manner in which such income is calculated as set forth in this Agreement will be determinative for the purposes of this Agreement, unless a change in such methods is permitted or required by any amendment to the Internal Revenue Code or an amendment or modification of the regulations issued or proposed to be issued thereunder. • "Certification Quarter" means, with respect to any Qualifying Tenant the three- month period which begins on the later of (i) the date on which the residential unit in the Development to be occupied by such Tenant is first placed in service, or (ii) the date on which such. Tenant first occupies a residential unit in the Development on a rental basis, or signs a lease with respect to a residential unit, whichever occurs first. "Qualified Project Period" means the period beginning on the first day on which at least ten percent (10%) of the residential units in the Development are first occupied and ending on the later of the date (i) which is 25 years after the date on which at least 50 percent of the residential units in the Development are first occupied. B. Developer Covenants: (To be contained in the deed) (1) Upon completion of the initial lease out of the Development, at least 12 of the completed residential units in the Development shall be occupied or held for occupancy by Qualifying Tenants. During the initial lease out period, at least 10% of the leased residential units (but not more than 12) will be so occupied. For purposes of satisfying the requirement that 12 of the residential units be occupied by Qualifying Tenants, the following principles apply: (i) an individual who qualifies as a Qualifying Tenant at the time he or she first occupies a unit will be deemed a Qualifying Tenant as long as he or she continues to reside in such unit even though the occupant subsequently ceases to meet the income or other requirements of a Qualifying Tenant, and (ii) when a Qualifying Tenant leaves a unit, such unit will be considered as occupied by a Qualifying JBD-157104 RC 125-182 Tenant if it is held vacant and available for such occupancy until it is reoccupied by another tenant, other than on a temporary period which in no event shall exceed 31 days, at which time the status of the new tenant as a Qualifying Tenant is to be determined; (2) to obtain and maintain on file with .respect to each Qualifying Tenant who resides in the Development, a sworn, notarized income certification from such Qualifying Tenant containing a statement of the anticipated total annual income for the Certification Quarter of each person who proposes to live in the residential unit during the Certification Quarter; the form of Certification of Tenant Eligibility attached as Exhibit A to this Agreement, or other notarized form incorporating the same information, shall satisfy the requirements of this subparagraph; (3) to permit an duly authorized representative of the HRA to inspect the books and records of the Developer pertaining to the incomes of Qualifying. Tenants residing in the Development; and (4) to prepare and submit to the HRA at the beginning of the Qualified Project Period and quarterly on or before the first day of February, May, August and November each year during the Qualified Project Period and within thirty. (30) days upon any change in occupancy of a unit in the Development, a Certification of Continuing Program Compliance executed by the Developer in the form provided in Exhibit C to this Regulatory Agreement. • JBD-157104 RC125-182 L SUMMARY OF DATA RELATED TO THE USE OF TAX INCREMENT IN RICHFIELD For taxes payable, 1998, the percentage of total tax capacity captured as tax increment within Richfield redevelopment districts: (LHN, ILN, Galyans, Gramercy, Urban Village, Richfield Rediscovered) 12.26% Captured Tax Capacity in Other Similar Communities 18.00°~ 17.08% 15.46% 16.00% ~?' `.~ i4i• >''` 13.11 % `w'`zz~ 14.00% ~~`' ~? 12.26% 12.33% ~~ ~;:: 12.13% 12.00% ;##s ;## ° 9.76% 10.25 /0 9.65% 9.44% ``: "~~~ 1o.oo i° ` ° 8.02% `« •.`r '': 4i~iM1 ~~ `` i' <`~> 8.00 h ~ ~< z: . • •K o . :. .>t ; . z ; 6.00% :z, x{; . Citi~'i ~2~t .z.` #:222 :•`.22` 4.00% •`•-`~'~ 22: ti~ E ~~'2ii tiiiii i~vi; 00% 2 2:: ~. •.\~. "' `:;:' ~2.'.\ ~`.'.Y`.: ;2Y:: ,•.; y2, ..<C; . 0.00% ,goo ~ ~ ~e~ ~ Q a~ .0 r'~~ a~ c1~` J o~~ '~~h ~~a a~ ,a~ ya Q~ a S~~ a~ a°\ e Q ~Q ~ ~~ ~`~ G •~~~ ~ ~o ~ Ho ~~`~ r'a`~ y °J~ cP ~ o o ~ o a o ~ a o ~~ Go 5 ~ History of assessors estimated market value within Urban Village Redevelopment District prior to redevelopment: 1998 $9,121, 200 1997 $8,673,100 1996 $8,832,100 1995 $8,420,100 1994 $6,696,400 Goals of Redevelopment: 1. To provide a revenue base to meet the needs of Richfield. 2. To develop job opportunities for area residents. 3. To develop strategies to encourage revitalization. 4. To maintain a positive business environment. 5. To enrich the quality of life for residents through planning of the interrelationship of land use. 6. To recognize the needs of all segments of the populace through diversity in housing stock which is a major determinant of the living environment. • February 17, 1999 Steven Kirchner Richfield State Agency, Inc. 6625 LyndaleAvenue South Richfield, MN 55423 Subject:. Contract for Private Redevelopment; Urban Village/Preconditions Dear Mr. Kirchner: This letter confirms the understanding of the parties with respect to the status of compliance with the remaining conditions left unresolved. and contained .in .Section.. 2.5.1 of the referenced Agreement: In the text of this letter, the specific condition is recited followed by the statement of status: (I) the form and level of public assistance which is necessary in order to facilitate the development contemplated in the Concept Plan (The "But For" Analysis), and any amendments to this Agreement which might be necessary in connection with providing the assistance. Using the information that the Developer has provided, the financial consultant has been able to determine the categories of eligible project costs and the amount of tax increment to be provided in accordance with the referenced agreement. The appropriate level of assistance exceeds the amount of tax increment available. A memorandum dated February 4, 1999 from Sid Inman of Ehlers and Associates, inc. is attached as the basis for this finding and the amount of assistance being provided is identified in the letter at $9.5 million. (m) the amount and nature of the local match; and contingencies to providing the local match. The local match is contributed to the project provided the Developer consents to an agreement with provisions regarding affordable units. The basic provisions are attached. The provisions will be prepared in agreement form and the agreement provided for signature and executed prior to the issuance of a building permit. The Developer, through representations, plans and specifications will provide a high quality level of finishing within the development. Treatments include, but are not limited to the level typical for Class Aoffice/commercial/retail in 6700 PORTLAND AVENUE, RICHFIELD, MINNESOTA 55423 612.861.9700 FAX: 612.861.9749 Steven Kirchner February 17, 1999 Page 2 these related areas, 60 percent brick and 40 percent stucco in the residential areas, and garden like connecting walk ways and plazas. Please advise if you have any concerns or additions to the terms of this letter. If not, would you please provide me with a written confirmation of acceptance. Respectfully yours, James Prosser Executive Director JP:js Attachment •