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01-16-96 agendaCITY OF RICHFIELD, MINNESOTA TUESDAY, JANUARY 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 DECEMBER 18, 1995 1. OPPORTUNITY FOR CITIZENS TO ADDRESS THE HRA ON ITEMS NOT ON THE AGENDA 2. ELECTION OF OFFICERS FOR HOUSING AND REDEVELOPMENT AUTHORITY FOR 1996 HRA LETTER NO. 1 3. DESIGNATION OF ACTING EXECUTIVE DIRECTOR FOR 1996 HRA LETTER NO. 2 4. CONSIDERATION OF RESOLUTIONS DESIGNATING OFFICIAL DEPOSITORIES FOR HOUSING AND REDEVELOPMENT AUTHORITY FOR 1996, INCLUDING APPROVAL OF COLLATERAL HRA LETTER NO. 3 5. DESIGNATION OF OFFICIAL NEWSPAPER FOR 1996 HRA LETTER NO. 4 6. CONSIDERATION OF RESOLUTION AUTHORIZING PURCHASE OF 6837 LOGAN AVENUE FOR RICHFIELD REDISCOVERED HRA LETTER NO. 5 7. CONSIDERATION OF RESOLUTION RECOMMENDING APPROVAL OF REVISED PURCHASE AGREEMENT AND PROMISSORY NOTE; SAGE COMPANY HRA LETTER NO. 6 8. EXECUTIVE DIRECTOR REPORT 9. 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 861 -9702. HOUSING AND REDEVELOPMENT AUTHORITY HRA Letter No. 6 Agenda January 16, 1996 Issue Statement: Consideration of a resolution recommending approval of a revised purchase agreement and promissory note; Sage Company. Background: On July 17, 1995 the HRA approved an Agreement for Purchase and Sale and a Promissory Note to provide for the HRA to take title to three Sage apartment communities, Hampton Place, Heritage Square East and Crestwood. Sage representatives participated in drafting that document. Sage than expressed a desire to delay the transaction until 1996. In the fall of 1995 Sage selected another attorney to review the Agreement. Attached is the document which resulted from those discussions as well as the initial agreement. The document has been renamed Agreement For Donation of Property. In summary the changes which have been made do not significantly modify the outcomes as stated in the initial agreement but in some instances the process for achieving the outcome is different. The terminology has been modified to more clearly and consistently define the title transfer as a gift. The primary points of the agreement are as follows: Page 1 paragraphs A -D provide an overview of the transaction. Article I Transfer of Property (Page 2). • Provides for the HRA to access current information related to operations. Article II Purchase Price, Payment and Closing (Pages 2 -9). • (Paragraphs 2.1 - 2.2). Defines purchase price and gift. • (Paragraph 2.3) The closing date is to be 30 days after the date of HUD approval but not before January 1, 1996 nor after June 1, 1996. HUD approval is expected within 120 days. • (Paragraph 2.3.2.). Sage is to provide a warranty deed, bill of sale to include an inventory of all property items, site surveys, plans and specifications, assignment of tenant leases, rent roll and evidence that all on -site Sage employees have been terminated by Sage as of the date of closing. [The on- site employees work on the basis of a contract with Sage. The contracts indicate that the employees will be terminated when Sage conveys title to another party. This is common in the industry. Stuart Shelard expects to interview and hire these employees and then evaluate their performance]. • (Paragraph 2.3.3). Sage will continue to responsibly operate the property until title is transferred. Some operating standards are included. (Paragraph 2.3.4.). The HRA will provide at closing: the promissory note, the second and third mortgages, opinion of reputable bond counsel stating the validity and enforcement of the notes and that the interest earnings due Sage from the note are exempt from taxes, an opinion as to the validity and enforceability of the second and third mortgage guarantees. A description of the mortgages follows - each property has a HUD issued mortgagee known as the first mortgage. Because Sage is loaning the existing reserve fund to the HRA, two additional mortgages are needed to guarantee repayment to Sage. A second mortgage on each of the three properties will guarantee each particular property's portion of the reserve fund. Each property will also have a third mortgage guaranteeing the portion of the reserve fund attributable to the other two properties, i.e., Crestwood will have a third mortgage guaranteeing the reserve fund of Heritage Square East and Hampton Place. This third mortgage treats the reserve fund loan payment as a pool and will assure that all three loans are paid off at the same time. Without the pool the loans would have staggered pay off dates. • (Paragraph 2.3.5). Is a list of conditions with which the HRA and Sage must be satisfied prior to closing. For the HRA these include title insurance policy, approval by HUD and any other organizations including that of the City, the overall condition of the property both buildings and grounds and environmental conditions. • (Paragraph 2.3.5(f)). Sage is responsible for all costs related to the removal of an underground fuel tank at Heritage Square East and any remediation. However, please note that Sage has removed the tank and the paragraph remains in the Agreement simply because Sage is awaiting the letter noted from MPCA. • For Sage the list of conditions with which they must be satisfied prior to closing include performance of HRA, the validity of the notes, mortgages and the opinion regarding tax exemption of interest. (Paragraph 2.3.7). Conditions under which damage to property could be basis for not proceeding are delineated. • (Paragraph 2.3.11). Sage will pay an amount equal to security and other tenant deposits at closing. HRA will pay an amount related to monies in certain escrow accounts at closing. • (Paragraph 2.3.13). Sage will pay all required Sage employee salaries and benefits and HRA will accept 24 hour apartment vacation requirement contained in Sage contract with Sage employees. Article I I I Warranties (Pages 9 -11). • (Paragraph 3.1.) HRA accepts property "as is - where is" based solely on results of its own due diligence and subject only to the warranties by Sage stated in the agreement. Articles IV, V & VI (Pages 11 -12). • These articles deal with Notices, Liquidated Damages and General Provisions. Exhibit C, the Promissory Note, • The HRA, is obligated to pay Sage for the replacement reserve from apartment revenues. The estimate of the value of the fund is approximately $700,000. The amortization period would be three to five years with 5.5% interest. Recommended Motion: Adopt the attached resolution and recommend to the Boards of Directors that the Agreement for Donation of Property and Promissory Note be approved. Basis of Recommendation: 1. Drafting of the agreement has involved experienced personnel including Stuart Nolan, Stuart Shelard; Mark Ruff, Publicorp; John Dean, Kennedy & Graven and other attorneys at Kennedy & Graven. 2. The agreement provides adequate protection to the HRA. 3. The agreement has been negotiated with Sage. 4. The agreement is thorough and is intended to help provide a smooth ownership transaction. Alternative Recommendation: 1. Modify the proposed agreement. 2. Delay action. Discussion /Decision Mode: The transaction cannot progress without an agreement. Respectfully submitted, James . rosser Executive irector JDP:ds HRA RESOLUTION NO. ACCEPTING AGREEMENT FOR DONATION OF PROPERTY RESCINDING AGREEMENT FOR PURCHASE AND SALE DIRECTING APPROVAL OF SAME (HAMPTON PLACE, CRESTWOOD, HERITAGE SQUARE EAST) WHEREAS, pursuant to 1995 Minnesota Laws, Chapter 264, Article 3, Section 42 the HRA has participated in the creation of three non - profit corporations ( "Corporations ") each of which will own, manage and operate one of the following apartment communities in the City of Richfield: 1. Hampton Place 2. Crestwood 3. Heritage Square East; and WHEREAS, pursuant to the Act, the HRA is empowered to direct the activities of such Corporations; and WHEREAS, an Agreement For Purchase And Sale was approved on July 17, 1995; and WHEREAS, an Agreement For Donation of Property has been prepared to replace the Agreement For Purchase and Sale. NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority in and for the City of Richfield as follows: 1. The Agreements For Purchase and Sale previously approved are each of them rescinded. 2. That each Corporation is hereby directed to rescind the Agreement For Purchase and Sale pertaining to it'. 3. That each Corporation is hereby directed to approve the Agreement For Donation Of Property pertaining to it and to carry out all acts and do all things necessary to consummate the transaction. 4. That the Executive Director and Commission Chairperson of the HRA are directed to take all actions and do all things required to effectuate the provisions of this resolution. 5. That insubstantial modifications maybe subsequently approved by the Board Chair and legal counsel. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 16th day of January, 1996. Thomas E. Harms, Chair ATTEST: Vern Luettinger, Secretary HOUSING AND REDEVELOPMENT AUTHORITY HRA Letter No. 5 Agenda January 16, 1996 Issue Statement: Consideration of a resolution authorizing the purchase of 6837 Logan Avenue for Richfield Rediscovered. Background: The property at 6837 Logan Avenue is available for sale by the owner. The 616 square foot house has one illegal bedroom, no basement and no garage. The property suffers from years of deferred maintenance. It does not have a reliable source of heat beyond space heaters. The plumbing and electrical systems and the structure itself are substandard. In the appraiser's opinion, the house contributes no value to the site. The owner is an elderly women who can no longer live independently and has moved out. The lot is in a nice residential neighborhood, and is well- suited for new construction. Staff has had preliminary discussions with a builder representing Better Homes and Gardens magazine. They are looking for an urban site to build an idea house that will receive national attention for its design and furnishings. This is one site they are considering. Recommended Motion: Adopt the attached resolution which authorizes: 1. The purchase of 6837 Logan Avenue for $30,000. 2. The Executive Director and HRA Chairperson to execute a purchase agreement and other documents to effectuate the purchase. Basis of Recommendation: 1. The property meets program requirements for acquisition. 2. Funding for acquisition is available. 3. The owner has voluntarily indicated an interest in selling the property to the HRA. 4. The purchase price is based on an appraised market value of $30,000. Alternative Recommendation: Do not authorize acquisition. Discussion /Decision Mode: A purchase agreement has been prepared. ReJsProsser submitted, Ja Exrector Is JDP:cak • HRA RESOLUTION NO. RESOLUTION AUTHORIZING PURCHASE OF REAL PROPERTY LOCATED AT: 6837 LOGAN AVENUE WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (HRA) desires to purchase certain real property pursuant to and in furtherance of the Richfield Rediscovered Redevelopment Project (Project) heretofore adopted by the City of Richfield (City) and the HRA, said real property being described as follows: Lot 11, Block 5, Wood Lake Highlands Addition, Hennepin County. WHEREAS, the HRA is authorized by Minnesota Statues Section 469.012 to acquire real property within its area of operation; and WHEREAS, the property meets all program requirements for acquisition; and WHEREAS, the HRA has caused an appraisal of the subject property to be made by a qualified independent professional real estate appraiser and has negotiated a purchase price with the owner of $30,000, based on the appraised value; and WHEREAS, funds have been provided by the HRA and are available for acquisition. NOW, THEREFORE, BE IT RESOLVED by the Richfield Housing and Redevelopment Authority: 1. That the approved purchase price is $30,000. 2. That the Chairperson and Executive Director are authorized to execute a purchase agreement and other documents to effectuate purchase for the amount set forth in this resolution. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 16th day of January 1996. ATTEST: Vern Luettinger, Secretary Thomas E. Harms, Chair HOUSING AND REDEVELOPMENT AUTHORITY HRA Letter No. 4 Agenda January 16, 1995 Issue Statement: Designation of official newspaper for 1996. Background: The Richfield Sun - Current, published by Minnesota Sun Publications, has been the City's and HRA's official newspaper for many years. Attached is a copy of a letter from Minnesota Sun Publications requesting that they be designated the official newspaper for the City of Richfield for 1996. The 1996 legal advertising rate is approximately 7% higher than the 1995 rate. 1 Column Width $1.09 per line - first insertion $0.55 per line - subsequent insertions The City will submit legal notices to the Sun Newspaper via modem, therefore qualifying for a 10% rate discount. Recommended Motion: Designate the Richfield Sun - Current as the official newspaper of the Richfield HRA for the year 1996. Basis for Recommendation: 1. The paper is delivered to nearly all residences in the City, thereby providing City- wide coverage of legal notices to residents. 2. The paper has served well as the official newspaper for many years. 3. The paper has expressed a desire to continue to provide this service. 4. The cost for legal publications is reasonable Alternative Recommendation: Not make a designation and request the City Clerk's office to check into using another publication, such as the Minneapolis StarTribune, however, this would be much more costly. Discussion /Decision Mode: The HRA publishes legal notices on a frequent basis, there, this item has been placed on the January 16, 1996 HRA agenda so that a designation can be made for 1996. Respectful) ubmitted, James D. Prosser Executive Director JDP:cak HOUSING AND REDEVELOPMENT AUTHORITY HRA Letter No. 3 Agenda January 16, 1996 Issue Statement: Resolutions designating official depositories for the HRA of Richfield for 1996, including the approval of collateral. Background: In accordance with Minnesota Statutes Section 475.66 and 118.005, the HRA of Richfield must annually establish financial institutions which have pledged the necessary collateral over and above the amount of federal insurance, as public depositories. The Firstar Bank is pledging collateral in the amount of $1,000,000. This collateral pledge means that the HRA's deposits up to this amount are secured with the depository. In addition to this collateral pledge, HRA funds are protected by the Federal Deposit Insurance Corporation in the amount of $100,000, making the total protection afforded by this depository for HRA funds equal to $1,100,000. A resolution naming the Firstar Bank as the 1996 official depository for the Richfield Housing and Redevelopment Authority is attached to this letter. In 1995, Firstar Bank has a community reinvestment rating of "satisfactory." Within Richfield, Firstar Bank has supported remodeling programs and made various cash donations in support of City and HRA programs. A resolution must be provided annually, designating certain savings and loan associations and banks as official depositories for investment of certain HRA funds. With approval of these official depositories, the HRA will be able to invest funds in these institutions, not exceeding the federal insurance of $100,000. All designated depositories have received a community reinvestment rating of "satisfactory" or better in 1995. Finally, a resolution is also attached which designates certain financial institutions as depositories for the investment of HRA Funds for 1996. These institutions, such as investment brokerage firms offer government securities in the manner required by law. These financial institutions include Richfield Bank and Trust Co.; FBS Investment Services Inc.; Dain Bosworth; Prudential Securities; Piper, Jaffray & Hopwood; Smith Barney; and Federated Investors. Recommended Motion: It is recommended that the HRA adopt the attached resolutions designating official depositories, with the understanding that the HRA could not invest in any of the depositories beyond the level of insurance coverage of the pledged collateral. E • Basis for Recommendation: 1. It is recommended that the HRA adopt the attached resolutions designating official depositories, with the understanding that the HRA could not invest in any of the depositories beyond the level of insurance coverage of the pledged collateral. 2. The HRA has worked with the institutions recommended in the past and has found to have a good working relationship with these institutions. Alternative Recommendation: The HRA could solicit other financial institutions for official depositories, but past relationships with the depositories recommended have proven satisfactory for the HRA. Discussion /Decision Mode: Action of the HRA is.desirable at January 16, 1996, HRA meeting so that the HRA may invest funds in the approved financial institutions for the year 1996 immediately. Respectf y submitted, James rosser Executive Director i JDP:cak • 0 HRA RESOLUTION NO. RESOLUTION DESIGNATING THE FIRSTAR BANK A DEPOSITORY OF FUNDS OF THE HOUSING AND REDEVELOPMENT AUTHORITY FOR RICHFIELD FOR THE YEAR 1996 AND APPROVING COLLATERAL BE IT RESOLVED, by the Housing and Redevelopment Authority of Richfield as follows: That, in accordance with law, the Firstar Bank be, and hereby is designated a depository of the funds of the Housing and Redevelopment Authority, and subject to the following terms and conditions: The said depository shall not be required to give bonds or other securities for such deposits provided that the total sum thereof shall not at any time exceed in any depository the sums for which its deposits are insured under the Acts of Congress of the United States relating to insurance of bank deposits; but not in case such deposits in any such depository shall at any time exceed such insured sum, said depository shall immediately furnish bonds or other security for such excess according to law, approved by the Housing and Redevelopment of Richfield. . That said depository shall pay on demand all deposits therein; and shall pay all time deposits, at or after the end of the period for which the same shall be deposited, on demand. BE IT FURTHER RESOLVED, that there shall be maintained a general account in which shall be deposited all monies. Checks on this account shall be signed by the following officers or their facsimile signatures: THOMAS E. HARMS, CHAIR JAMES D. PROSSER, EXECUTIVE DIRECTOR BE IT FURTHER RESOLVED, that there shall be a daily interest savings account. All withdrawals from said account will be for transfers to the general checking account. BE IT FURTHER RESOLVED, that collateral in the amount of $1,000,000, deposited for safekeeping at the Firstar Bank - Milwaukee, Wisconsin is hereby approved. Passed by the Housing and Redevelopment Authority of Richfield, Minnesota this 16th day of January, 1996. 0 Thomas E. Harms, Chair ATTEST: Vern Luettinger, Secretary is HRA RESOLUTION NO. RESOLUTION DESIGNATING CERTAIN FINANCIAL INSTITUTIONS AS DEPOSITORIES FOR THE INVESTMENT OF HOUSING AND REDEVELOPMENT AUTHORITY OF RICHFIELD FUNDS IN 1996 WHEREAS, the Housing and Redevelopment Authority of Richfield has money which is available for investment; and WHEREAS, different financial institutions offer different rates of return on investments; and . WHEREAS, the Housing and Redevelopment Authority of Richfield shall purchase U. S. Treasury Bills, U. S. Treasury Notes and other such government securities in the manner required by law from the institution offering the highest rate to the Housing and Redevelopment Authority providing greater flexibility in the investment program and maximize interest income thereon. NOW, THEREFORE, BE IT RESOLVED, by the Housing and Redevelopment Authority of Richfield, Minnesota, as follows: 1. It is hereby found and determined that it is in the best interest of the proper management of Housing and Redevelopment Authority funds that certain financial institutions be designated as additional depositories for Housing and Redevelopment Authority funds for 1996. 2. The following financial institutions designated as depositories for Housing and Redevelopment Authority funds: FBS Investment Service, Inc. Richfield Bank and Trust Company Dain Bosworth, Inc. Prudential Securities Piper, Jeffrey & Hopwood Federated Investors, Trust for short-term U. S. Government Securities Smith Barney 3. The Treasurer and Finance Manager are hereby authorized to deposit Housing and Redevelopment Authority funds in any or all of the depositories herein designated. Such deposits may be made and withdrawn from time to time by the Treasurer or Finance Manager as his /her best judgment and the interests of the Housing and Redevelopment Authority dictates. 4. The investment of funds and the reporting thereof pursuant to this resolution shall be conducted in accordance with established policies regarding the investment of these funds. Passed by the Housing and Redevelopment of Richfield, Minnesota this 16th day of January, 1996. ATTEST: Van Luettinger, Secretary Thomas E. Harms, Chair HRA RESOLUTION NO. • RESOLUTION DESIGNATING CERTAIN SAVINGS AND LOAN ASSOCIATIONS AND BANKS AS DEPOSITORIES FOR THE INVESTMENT OF THE HOUSING AND REDEVELOPMENT AUTHORITY FUNDS IN 1996 WHEREAS, pursuant to Minnesota Statutes, Section 475.66 and 118.005, municipal funds may be deposited in any Savings and Loan Association which has its deposits insured by the Federal Savings and Loan Insurance Corporation; and WHEREAS, the amount of said deposits may not exceed the Federal Savings and Loan Insurance Corporation insurance covering such deposits which insurance amount is presently $100,000; and WHEREAS, the deposit of Housing and Redevelopment Authority funds in Savings and Loan Associations and Banks would provide greater flexibility in the Housing and Redevelopment Authority's investment program and maximize interest income thereon. NOW, THEREFORE, BE IT RESOLVED, by the Housing and Redevelopment Authority of Richfield, Minnesota as follows: 1. It is hereby found and determined that it is in the best interest of the proper management of Housing and Redevelopment Authority funds that certain Savings and Loan Association and Banks be designated as additional depositories for Housing and Redevelopment Authority funds for 1996. 2. The following Savings and Loan Associations and Banks are hereby designated as additional depositories for Housing and Redevelopment Authority funds: Norwest Bank Minnesota, NA 6445 Nicollet Avenue South Richfield, Minnesota 55423 Richfield Bank & Trust Company 6625 Lyndale Avenue South Richfield, Minnesota 55423 Twin City Federal Banking and Savings 3330 West 66th Street Edina, Minnesota 55435 3. It is further found and determined that the purpose of such depository designation is to facilitate the proper and advantageous investment of the Housing and Redevelopment Authority funds and that such designation is not exclusive nor does it preclude the deposit of any Housing and Redevelopment Authority funds in other officially designated depositories aof Housing and Redevelopment Authority. 4. The Treasurer and Finance Manager are hereby authorized to deposit Housing and Redevelopment Authority funds in any or all of the depositories herein designated up to the amount of $100,000, or such other amount as may be subsequently permitted by law, such deposits to be in the form of demand accounts for Public Unit Savings Certificates purchased by the Housing and Redevelopment Authority of Richfield, payable to the Housing and Redevelopment Authority of Richfield on the signatures of the Treasurer or Finance Manager. Passed buy the Housing and Redevelopment Authority of Richfield, Minnesota this 16th day of January, 1996. ATTEST: • Vern Luettinger, Secretary • Thomas E. Harms, Chair HOUSING AND REDEVELOPMENT AUTHORITY HRA Letter No. 2 Agenda January 16, 1996 Issue Statement: Designation of Acting Executive Director. Background: On January 8, 1996, the City Council appointed the Director of Administrative Services to serve as the Acting City Manager in the absence of the City Manager. Since the City Manager also serves as the Executive Director of the HRA, it is recommended that the Administrative Services Director, Steven Devich, be designated by the HRA as the Acting Executive Director of the HRA to serve in that capacity during the absence of the Executive Director. Recommended Motion: The HRA designate Steven L. Devich, Administrative Services Director, as the Acting Executive Director of the HRA. Basis of Recommendation: 1. A designation of an Acting Executive Director is a normal business action of the HRA similar to the designation of depositories and the official newspaper. 2. The Administrative Services Director has been designated as the Acting Executive Director in the past. 3. The Administrative Services Director serves as the Acting City Manager, filling other similar responsibilities for the City Manager in the Manager's absence. Alternative Recommendation: 1. 'Make no designation of Acting Executive Director. 2. Make the designation of Acting Executive Director to another individual or position. Discussion /Decision Mode: Designation of the Acting Executive Director is a matter that would normally be considered at the first business meeting of each year. Respectfully submitted, I 40 Jame } Prosser Executive Director JDP:cak HOUSING AND REDEVELOPMENT AUTHORITY -06, HRA Letter No. i Agenda January 16, 1996 Issue Statement: Election of officers for the Housing and Redevelopment Authority. Background: The bylaws of the Richfield Housing and Redevelopment Authority provide that the HRA hold an annual meeting in January of each year. The bylaws further provide that the Chair, Vice Chair and Secretary of the HRA be elected at this meeting. Officers for the years 1994 and 1995 are as follows: 1994 Thomas Harms, Chair Joan Heimberger, Vice Chair Vern Luettinger, Secretary 1995 Thomas Harms, Chair Joan Heimberger, Vice Chair Vern Luettinger, Secretary Recommended Motion: Elect officers for the year 1996. Basis of Recommendation: The bylaws of the HRA require that such an election be held at the annual meeting in January of each year. Alternative Recommendation: Do not hold the election. However, this would be in contradiction to the HRA bylaws. Discussion /Decision Mode: This item has been scheduled for the January 16, 1996 HRA meeting in accordance with the HRA bylaws. RFe submitted, Josser Eirector JDP:cak