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12-16-96 agendaCITY OF RICHFIELD, MINNESOTA MONDAY, DECEMBER 16, 1996 REGULAR HOUSING AND REDEVELOPMENT AUTHORITY MEETING COUNCIL CHAMBERS .7:00 P.M. AGENDA CALL TO ORDER APPROVAL OF MINUTES OF REGULAR HRA MEETING OF NOVEMBER 18, 1996 RECOGNITION OF VERN L. LUETTINGER FOR YEARS OF PUBLIC SERVICE TO THE RICHFIELD COMMUNITY 2. CONSIDERATION OF RESOLUTION AUTHORIZING ISSUANCE OF COMPLETION CERTIFICATES FOR THE FOLLOWING RICHFIELD REDISCOVERED PROPERTIES: • STEVEN MARLIN GRANT HOMES, INC. FOR 7200 THIRD AVENUE • ROCKPORT HOMES, INC. FOR 7636 THIRD AVENUE • TWIN CITIES HABITAT FOR HUMANITY FOR 6320 OLIVER AND 6318 KNOX AVENUES • DAVID A. WILLIAMS REALTY AND CONSTRUCTION, INC. FOR 6837 LOGAN AVENUE HRA LETTER NO. 79 ~3. CONSIDERATION OF RESOLUTION AUTHORIZING ISSUANCE OF CERTIFICATE OF COMPLETION AND LETTER OF UNDERTAKING FOR CSM CORPORATION, SHOPS AT LYNDALE, PHASE II HRA LETTER NO. 80 4. CONSIDERATION OF RESOLUTION AUTHORIZING EXECUTION OF TAX INCREMENT PLEDGE AGREEMENT WITH CITY OF RICHFIELD RELATING TO $5,075,000 GENERAL OBLIGATION TAXABLE TAX INCREMENT BONDS, SERIES 1996 HRA LETTER NO. 81 5. CONSIDERATION OF PROGRESS REPORT AND DEVELOPMENT CONCEPT FOR JOINTLY USED VFW AND AMERICAN LEGION FACILITY WITH BANQUET SPACE HRA LETTER NO. 82 6. EXECUTIVE DIRECTOR REPORT 7. CLAIMS AND PAYROLL I; 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. HOUSING AND REDEVELOPMENT AUTHORITY HRA Letter No. s2 Agenda December 16, 1996 Issue Statement: Consideration of a progress report and development concept for a jointly used VFW and American Legion facility with banquet space. Background: Staff has been working cooperatively with the VFW and American Legion fo assist in consolidating and improving the service club facilities. The intended outcomes are: a new jointly used facility with banquet space, the redevelopment of the American Legion site for housing, and the redevelopment of the VFW site for mixed use retail and housing. The following information outlines the current status of key aspects of the new joint facility. Service Clubs In September and October, both the VFW and American Legion decided to continue with the planning process. Each organization has selected two representatives to work with the architect Gary Tushie and the restaurant banquet consultant, Jim Domoracki, retained by the HRA. This design team has two focuses: the preliminary building . .footprint and the interior design layouts and the suitability of the former Lampert Lumber site. Property Acquisition and Disposition BCL Appraisals is evaluating the VFW, American Legion and Lampert Lumber site. The appraisal of the property and fixtures will be completed during December. City garage facilities must be relocated to utilize the Lampert site. Gleason Mortuary has indicated an interest in discussing the sale of their property. The purchase would accommodate short-term space needs for the garage while alternative permanent locations are being studied. The City presently leases a 66 foot strip of property adjacent to the Soo Line railway. Staff is evaluating the purchase of this property. Although the new service club could be developed without the Soo Line parcel, it would be difficult to develop such a narrow parcel at some future time. As part of the acquisition of the Lampert site, the City and Richfield-Bloomington Honda entered into an agreement which among other items said that the City would notify Richfield- Bloomington Honda when it (the City) was considering sale of the property. Roles of the City and HRA There are several different forms of ownership of a new facility which are being evaluated. The VFW and American Legion could own the facility. The HRA could own the facility with the service clubs as tenants. A third option is also possible. An investor • group could develop and own the facility with the service clubs as tenants. Legal and financial aspects of the project will lead to a preferred option for ownership. Financial Considerations The VFW and American Legion will rely on equity from their present locations and cash reserves. However, for this type of project, lenders usually require larger amounts of equity and lend for a shorter period of time than for other commercial ventures making the financing of this facility difficult. It appears that tax increment financing will be needed to assist with the site acquisition for a new facility. And, the availability of tax increment financing for the redevelopment of the existing VFW and American Legion sites would improve the likelihood that the service clubs would be able to maximize the equity available from their present land and buildings to contribute to anew facility. Recommended Motion: Authorize staff to continue planning the facility and present to the HRA items for consideration as needed. Basis of Recommendation: 1. The VFW and American Legion support the concept of a joint facility and it would provide them with an opportunity to continue to make valuable contributions to the community. 2. Anew joint facility would provide an opportunity to develop a significant number of additional housing units at the two current sites. 3. These developments provide an opportunity for the City Council and HRA to work together in the achievement of significant benefits for the community. On December 9, 1996, the City Council acted to support the direction being taken by staff to assist the VFW and American Legion. Alternative Recommendation: 1. Defer this report. 2. Modify the development concept. Discussion/Decision Mode: An estimated time and events schedule is attached Respectfully submitted, Jame .Prosser Executive Director i JDP:cak TIME AND EVENT SUMMARY VFW-AMERICAN LEGION DEVELOPMENT CONCEPT Below is a listing of key events for the VFW/American Legion proposal and the general time frame in which they are anticipated to occur. KEY EVENTS TIME FRAME Prepare preliminary floor plans and elevations Dec. 1996 Receive appraisals of existing clubs and proposed site Dec. 1996 Identify relocation sites for public works functions at Lampert Dec. 1996 Negotiate purchase of railroad right of way Jan. 1997 Refine preliminary capital cost estimates Jan. 1997 Finalize financing package Jan. 1997 City approval of sale of Lampert site Feb. 1997 Final membership vote: approve or reject project Feb. 1997 HRA authorizes purchase/sale of existing VFW/American Legion sites according to a development agreement Feb. 1997 Purchase relocation site for public works functions Feb. 1997 Final City approval of sale of Lampert site Mar. 1997 Planning Commission approval (CUP) Feb./Mar. 1997 City Council approval (CUP) Feb./Mar. 1997 Obtain title to railroad right of way March 1997 Relocate public works functions from Lampert to new site March 1997 Clear Lampert site Apr./May 1997 Start construction May/Jun. 1997 Complete construction Jan. 1998 12/16/96 • HOUSING AND REDEVELOPMENT AUTHORITY HRA Letter No. s1 Agenda December 16, 1996 Issue Statement: Adoption of a resolution authorizing the execution of a~Tax Increment Pledge Agreement with the City of Richfield relating to $5,075,000 General Obligation Taxable Tax Increment Bonds, Series 1996. Background: On October 21, 1996, the HRA approved the sale of taxable revenue bonds to fund future redevelopment opportunities. At that time, the HRA also approved a modification to the Richfield Redevelopment Project Area Plan and modifications to the LHN Commercial Improvement Plan and ILN Tax Increment Financing Plan so that future tax increments could be pledged to the bond payments. On December 9, 1996, the City Council awarded the bond sale to Smith Barney Inc. at an interest rate of 6.8454 percent. The sale closing will take place prior to December 31, 1996. Recommended Motion: Adopt a resolution authorizing the execution of a Tax Increment Pledge Agreement with the City of Richfield relating to $5,075,000 General Obligation Taxable Tax Increment Bonds, Series 1996. Basis of Recommendation: 1. To commit tax increments toward the payment of principal and interest on the bonds, it is necessary for the HRA and City Council to approve a Tax Increment Pledge Agreement. 2. The City Council approved the pledge agreement on December 9, 1996. Alternative Recommendation: 1. Defer this proposal. 2. Choose not to enter into a Tax Increment Pledge Agreement with the City. Discussion/Decision Mode: To protect the assets, the bond closing must be completed prior to the end of 1996 and the pledge agreement is a closing document. Respectfully submitted, James rosser Executive Director JDP:cak i TAX INCREMENT PLEDGE AGREEMENT by and between CITY OF RICHFIELD, MINNESOTA and THE HOUSING AND REDEVELOPMENT. AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA THIS AGREEMENT is made and entered into on or as of the 9th day of December, 1996, by and between the City of Richfield, Minnesota (the "City"), and The Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (the "HRA"). WHEREAS, the HRA has established the Richfield Redevelopment Project Area (the "Project Area"), and approved a Redevelopment Plan (the "Project Plan") for the Project Area, dated June 14, 1993; and WHEREAS, the Project Area incorporates the LHN Redevelopment Project Area and the ILN Redevelopment Project Area previously established by the HRA; and WHEREAS, on October 21, 1996, the HRA approved a modification of the Project Plan and the related tax increment financing plans for the LHN Tax Increment Financing District and the ILN Tax Increment Financing District (the "TIF Districts"); and WHEREAS, on November 25, 1996, the City Council approved a modification of the Project. Plan and the related tax increment financing plans for the TIF. Districts; and WHEREAS, pursuant to authority conferred by Minnesota Statutes, Section 469.178, and Minnesota Statutes, Chapter 475, the City has agreed to finance certain public redevelopment costs to be .incurred by the HRA in the Project Area through the issuance of general obligation bonds of the .City in the principal amount of $5,075,000, designated the General Obligation Taxable Tax Increment Bonds, Series 1996, and hereinafter referred to as the "Bonds"; and WHEREAS, the HRA has agreed to pledge certain tax increment revenues to the City for the principal and interest on the Bonds maturing (or subject to mandatory sinking fund redemption, in the case of any term bonds) in the following years and amounts and issued pursuant to Minnesota Statutes, Section 469.178: Year Amount Year Amount 1999 $ 310,000 2006 $230,000 2000 595,000 2007 245,000 2001 1,385,000 2008 265,000 2002 170,000 2009 285,000 SJB113637 RC145-319 2003- 185,000. 2010 30,000 2004 200,000 2011 330,000 2005 215,000 2012 35,000 WHEREAS, pursuant to Minnesota Statutes, Section 469.178, Subdivision 2, any agreement to pledge tax increment revenues must be made by written agreement by and between the HRA and the City and must be filed with the Taxpayer Services Division Manager of Hennepin County; NOW, THEREFORE, the City and the HRA mutually agree to the following: (1) The City will sell the Bonds. (2) The proceeds from the sale of the bonds will be paid to the HRA and the earnings from the investment of such proceeds will be made available by the HRA to pay or reimburse certain public redevelopment costs paid, incurred, or to be paid or .incurred by the HRA in connection with the HRA's various public redevelopment costs in the Project Area. (3) The HRA hereby pledges to the payment of the principal of and interest on the Bonds tax increments received by the HRA from the TIF Districts in an amount sufficient, to pay 105% of such principal and interest due on the Bonds from time to time. Notwithstanding anything to the contrary herein, tax increments received by the HRA from the LHN TIF District after April 1, 2001 shall not be paid with respect to the Bonds and are not pledged to the Bonds. (4) Not less than three (3) business days prior to each debt service payment date for the Bonds, there shall be transferred from the accounts for the TIF Districts to the Debt Service Fund .maintained by the City for the payment of the Bonds, an amount which when taken together with amounts already on deposit in such Debt Service Fund, is equal to the principal of and interest on the Bonds to become due on the subject payment date. The Executive Director of the HRA may specify the TIF District from which payments will be made, subject to the limitation described in paragraph (3) hereof with respect to the LHN TIF District. Any tax increments generated from the TIF Districts in excess of 105% of the principal and interest due with respect to the Bonds on any payment date may be retained by the HRA in the tax increment account for the TIF District from which such tax increment is generated and applied to any public redevelopment costs of the Project Area.in accordance with law. (5) Without regard to anything in this Agreement to the contrary, tax increment generated by the TIF Districts shall be available to pay, on a parity basis, principal of and interest on both the Bonds and any other obligations issued by the City, SJH113637 RC145-319 • (6) When the entire costs of-the Project Area have been paid and all principal and interest on the Bonds and other obligations issued to finance the public redevelopment costs of the Project Area have been paid, and the City has been reimbursed from collections of tax increment from the TIF Districts used to pay principal of and interest on the Bonds, then the HRA shall report such fact to the City Council of the City and the HRA shall submit a final statement of such payments. HRA or any other public body to .finance public redevelopment costs paid or incurred by the HRA in the Project Area. (7) An executed copy of this Agreement shall be filed with the Taxpayer Service Division Manager of Countypursuant to the requirement contained in Minnesota Statutes, Section 469.178, Subdivision 2. • IN WITNESS WHEREOF, the City and the HRA have caused this Agreement to be duly executed on .their behalf and their seals to be hereunto affixed and such signatures and seals to be attested, as of the day and year first above written. ATTEST: CITY OF RICHFIELD, MINNESOTA City Manager (SEAL) • SJB113637 RC145-3i9 By Mayor • ATTEST: Secretary (SEAL) SJB113637 RC145-319 THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA By Chair • HRA RESOLUTION NO. RESOLUTION AUTHORIZING EXECUTION OF A TAX INCREMENT PLEDGE AGREEMENT WITH THE CITY OF RICHFIELD RELATING TO $5,075,000 GENERAL OBLIGATION TAXABLE TAX INCREMENT BONDS, SERIES 1996 WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (the "HRA") has established the Richfield Redevelopment Project Area (the "Project Area"), and approved a Redevelopment Plan (the "Project Plan") for the Project Area, dated June 14, 1993; and WHEREAS, the Project Area incorporates the LHN Redevelopment Project Area and the ILN Redevelopment Project Area previously established by the HRA; and WHEREAS, on October 21, 1996, the HRA approved a modification of the Project Plan and the related tax increment financing plans for the LHN Tax Increment Financing District and the ILN Tax Increment Financing District (the "TIF Districts"); and WHEREAS, on November 25, 1996, the City Council approved a modification of the Project Plan and the related tax increment fmancing plans for the TIF Districts; and WHEREAS, pursuant to authority conferred by Minnesota Statutes, Section 469.178, and Minnesota Statutes, Chapter 475, the City has agreed to finance certain public redevelopment costs to be incurred by the HRA in the Project Area through the issuance of general obligation bonds of the City in the principal amount. of $5,075,000, designated the General Obligation Taxable Tax Increment Bonds, Series 1996, and hereinafter referred to as the "Bonds"; and WHEREAS, the HRA has agreed to pledge certain tax increment revenues to the City for the principal and interest on the Bonds; and WHEREAS, the there has been presented to the HRA a Tax Increment Pledge Agreement between the HRA and the City providing for the pledge of tax increments from the ILN and LHN TIF Districts to payment of principal and interest on the Bonds; NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners (the "Board") of The Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (the "Authority), as follows: 1. The Chair and Secretary of the Authority are hereby authorized to execute and deliver a Tax Increment Pledge Agreement with the City of Richfield, Minnesota (the "City") SJS113637 RC145-319 substantially in the form on file with the City, providing for the pledge of tax increment for the payment of the principal of, premium, if any, and interest on, the Bonds. 2. This resolution shall be effective as of the date hereof. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 16th day of December, 1996. Thomas E. Harms, Chair Attest: Vern Luettinger, Secretary • • SJB113637 RC145-319 HOUSING AND REDEVELOPMENT AUTHORITY HRA Letter No. so Agenda December 16, 1996 Issue Statement: Issuance of Certificate of Completion to CSM Corporation, Shops at Lyndale, Phase II. Background: The HRA approved a Contract for Private Redevelopment (Contract) with CSM Corporation for construction of improvements at the Shops at Lyndale on April 11, 1994. Article IV, Section 4.7, of the Contract governs the construction of minimum improvements and addresses the Certificate of Completion. Specifically, it indicates that a certificate is to be issued for each phase upon the completion of the minimum improvements. CSM Corporation is requesting the issuance of the Certificate of Completion for Phase II. The major elements of Phase II are complete. There are, however, a few outstanding items to be completed such as a trash enclosure for the "in-line" shops, some sodding and extension of the irrigation system, pavement repair, bicycle rack and a determination of the desirability of a pedestrian crosswalk at Colfax Avenue connecting Phase I and II. Because these are exterior items, the work cannot be completed until the spring of 1997. Therefore, it is proposed that a Letter of Undertaking be utilized to assure completion of the items. The Letter, which will be signed by CSM and presented to the HRA at the December 16, 1996 meeting, will provide that CSM complete the work by July 4, 1997. If it is not completed, contractors hired by the HRA could enter the property and complete the work. The cost of the work would be charged to the Letter of Credit which the HRA currently holds on the CSM project to assure their performance with regards to site assembly costs. A survey of various City administrative divisions resulted in the compilation of the outstanding items covered by the Letter. The finishing of the retail spaces is not covered by the HRA/CSM contract. However, it is within the jurisdiction of the Inspections Division which, when the space is completed, would issue a Certificate of Occupancy. Recommended Motion: It is recommended that the HRA adopt a motion which approves the attached resolution which authorizes the execution of the Certificate of Completion and the Letter of Undertaking by the Executive Director and Chair. Basis of Recommendation: 1. CSM has requested the Certificate of Completion as provided in the contract. r~ 2. CSM's Phase II lender is requesting the Certificate. HRA RESOLUTION NO. RESOLUTION AUTHORIZING EXECUTION OF A CERTIFICATE OF COMPLETION FOR CSM CORPORATION PHASE II WHEREAS, the Housing and Redevelopment Authority entered into an Agreement with CSM Corporation (Developer), a Minnesota business corporation, dated April 11, 1994, pursuant to and in furtherance of the ILN Redevelopment Project heretofore adopted by the City and the Richfield Housing and Redevelopment Authority; and WHEREAS, the Agreement obligated the Developer to construct certain improvements to property identified in that Agreement; and WHEREAS, Section 4.7 of the Agreement required the HRA to furnish the Developer with a Certificate of Completion upon completion of the Phase II construction in accordance with Concept Plans; and WHEREAS, the Agreement establishes the form for the Certificate of Completion in Exhibit B; and WHEREAS, staff has found the improvements to be in accordance with the terms of the Agreement except for those included with the attached Letter of Undertaking. NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority that the Executive Director and HRA Chair are directed to execute the Phase II Certificate of Completion and Letter of Undertaking and deliver same to the Developer. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 16th day of December,1996. Thomas E. Harms, Chair ATTEST: r Vern Luettinger, Secretary CERTIFICATE OF COMPLETION The undersi ed hereb certifies that CSM INVESTORS, INC., a Minnesota ~ Y corporation, has fully and completely complied with its obligations under Article IV of that documents entitled "Contract for Private Development," dated Apri129, 1994, between THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD and CSM CORPORATION, a Minnesota corporation with respect to construction of the Improvements located on the tract of land described in the attached Exhibit A in accordance with the. requirements. of such document and is released and forever discharged from its obligations to construction the Improvements under such above-referenced Article on the above-referenced tract. DATED : 1995 HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD By Its Executive Director • JBD97193 RC125-95 HOUSING AND REDEVELOPMENT AUTHORITY • HRA Letter No. ~9 Agenda December 16, 1996 Issue Statement: Authorization to issue completion certificates to Steven Marlin Grant Homes, Inc. for 7200 Third Avenue; Rockport Homes, Inc. for 7636 Third Avenue; Twin Cities Habitat for Humanity for 6320 Oliver and 6318 Knox Avenues; and David A. Williams Realty and Construction Inc. for 6837 Logan 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.) All homes have been completed. Landscaping escrows have been retained for 7636 Third and 6837 Logan Avenues, 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 certificates of occupancy have been issued by the inspection Division. 2. The builders have performed in accordance with construction agreements and will seek the issuance of completion certificates and the release of performance security in the following amounts: Builder Steven Marlin Grant Rockport Homes TCHFH TCHFH David A. Williams Pro e 7200 Third Avenue 7636 Third Avenue 6320 Oliver Avenue 6318 Knox Avenue 6837 Logan Avenue Performance Security $28,000 $30,000 $20,000 $20,000 $45, 000 Alternative Recommendation: Do not issue certificates of completion at this time. Discussion/Decision Mode: This matter will be presented at the December 16 HRA meeting. Respect Ily submitted, James p~Prosser Executive Director JDP:cak HRA RESOLUTION NO. THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD RESOLUTION AUTHORIZING RESOLUTION RELATING TO THE ISSUANCE OF COMPLETION CERTIFICATES FOR RICHFIELD REDISCOVERED PROPERTIES AT 7200 THIRD, 7636 THIRD, 6320 OLIVER, 6318 KNOX AND 6837 LOGAN AVENUES WHEREAS, the Richfield Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (HRA) entered into contracts with Steven Marlin Grant Homes, Inc., Rockport Homes, Inc., Twin Cities Habitat for Humanity, Inc. and David A. Williams Realty and Construction, Inc. for the construction. of single family homes; and WHEREAS, the new home locations are as follows: 7200 Third Avenue, 7636 Third Avenue, 6320 Oliver Avenue, 6318 Knox Avenue and 6837 Logan Avenue; and WHEREAS, performance security in the following amounts can be released to the respective builders: 7200 Third Avenue - $28,000 (Steven Marlin Grant Homes) 7636 Third Avenue - $30,000 (Rockport Homes) 6320 Oliver Avenue - $20,000 (Twin Cities Habitat for Humanity) 6318 Knox Avenue - $20,000 (Twin Cities Habitat for Humanity) 6837 Logan Avenue - $45,000 (David A. Williams Construction) NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority in and for the City of Richfield, The completion certificates for 7200 Third, 7636 Third, 6320 Oliver, 6318 Knox and 6837 Logan 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 this 16th day of December, 1996. Thomas E. Harms, Chair ATTEST: • Vern Luettinger, Secretary FORM OF CERTIFICATE OF COMPLETION The undersigned hereby certifies that 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 dated ,filed as Document No. with respect to construction of the Improvements at legally described as 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 THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD Its Chairperson By ;~ Its Executive Director STATE OF M[NN'ESOTA 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 67090 Portland Avenue South Richfield, MN 55423