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12-17-90 agendaHOUSING AND REDEVELOPMENT AUTHORITY HRA Letter No. 49 ~~~ Agenda December 17, 1990 Issue Statement• Authorization to extend agreements with Northern States Power Company (NSP) and the Self ,Reliance Center (SRC) for funding and delivery of Home Energy Checkup services. Background: Since 1985, Richfield has contracted with NSP and SRC to deliver "Bundle Up Richfield" energy program services. Agreements. with SRC and NSP which were previously authorized by the HRA, will expire December 31, 1990. SRC has provided approximately 3,000 NSP funded audit type services during our long relationship. Approximately 75 audit recipients had furnaces which tested positive for inappropriate carbon monoxide gas levels and were able to take corrective action because of SRC's evaluation. Also, SRC is the audit contractor which has been responsible for the audit service which helped earn Richfield both State and National awards of excellence during 1987, 1988 and 1990. New agreements have been drafted for 1991 services. SRC services are funded solely by NSP as required by the Minnesota Public Utilities .Commission (MNPUC). The HRA, as the program coordinator, has agreements with both NSP and SRC. As this letter was being drafted, administrative filings from some governmental jurisdictions were being received by the MNPUC. This has caused processing delays for the MNPUC in approving 1991 programs. Because the MNPUC has not approved 1991 programs, NSP is not prepared to commit funds for a new 1991 program. It is possible that the MNPUC will not act and NSP will not be able to present agreements to Richfield until March, 1991. As a result, audit service will likely not be available in January, February, and March, 1991. Staff, in cooperation with NSP, has devised an interim course of action: 1) 1990 agreements which are expiring in December, 1990 would be extended to March 31, 1991. 2) The 1990 extended agreement would fund up to 900 audits at a rate of $87 per audit. This is consistent with the terms of the anticipated 1991 agreement. 3) The 1990 extended agreement would not include a new low income audit program which is part of the 1991 agreement _ and provides funds for approximately 200 audits at a rate of $127 per audit. MNPUC approval is needed for this new program. Staff is anticipating that the 1991 agreement, once finalized, will contain the new program as summarized here. The extended 1990 and proposed 1991 agreements include appropriate insurance, liability, and hold harmless provisions. SRC personnel operate in accordance with a professional auditor code of ethics, State certifications, and HRD developed administrative performance standards. The 1990 extended services include energy audits, called the Home Energy Checkup (HEC) and continuation of a pilot project called .the Continuing Support Home Energy Checkup (CS/HEC). The CS/HEC allows auditors to return to a home at the request of a resident to evaluate the effectiveness of owner initiated energy conservation improvements. The 1991 agreement would also include expanded audit services for qualifying low-income residents that have incomes less than $29,388. The combined 1990 extended and 1991 agreements would serve approximately 1,200 regular and 200 low income households. The combined funding of the anticipated services to be provided in 1991 represents a contribution of approximately $133,500 from NSP. The HRA provides the staffing for. program marketing and for processing requests for services and payments to SRC from NSP. Recommended Motion: Authorize the extension of 1990 and execution of 1991 agreements, when available, with Northern States Power Company. Execute supporting agreements with SRC to provide Home Energy Checkup services through the end of 1991. Basis of Recommendation: 1. The present agreements with NSP and SRC will expire on December 31, 1990. Audit services will stop and approximately 300 residents that have already requested service and an additional 200 to 600 residents that are anticipated to request service in January, February, and March, 1991 will be affected. 2. Authorization of the extended 1990 and 1991 agreements will allow the Richfield Energy Program services to continue uninterrupted through December 31, 1991. 3. SRC is familiar with the Richfield Energy Program services and is one of the few contractors with-the knowledge, ability and staff to provide the needed services. 4. SRC services cannot be provided without a funding agreement with NSP. 5. If, for some reason, the 1991 agreements with NSP are not approved by the MNPUC in its present form and content, staff would return to the HRA to consider a revised agreement. 6. Legal counsel has previously reviewed the agreements, and the agreements are essentially the same. Alternative Recommendation: Delay authorization until March, 1991 when the MNPUC has considered and NSP has offered the level of support it will provide. Audit services would stop during the interim. Discussion/Decision Mode: If the agreements are authorized, they would be executed to provide continuous services. Respectfully submitted, i Jam ~D. Prosser Exe tive Director JP:dkh RESOLUTION N0. THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA RESOLUTION RELATING TO PROVIDING ENERGY AUDIT SERVICES WHEREAS, the Home Energy Checkup (HEC), the Continuing Support Home Energy Checkup (CS/HEC) and Low Income Home Energy Checkup (LI/HEC) are existing and proposed elements of the HRA's "Bundle Up Richfield" activities; and WHEREAS, the Self Reliance Center (SRC) can deliver these services to Richfield residents based on an agreement with the HRA; and WHEREAS, the existing agreements expire on December 31, 1990; and WHEREAS, Northern States Power (NSP) has agreed to extend 1990 agreements through March 31, 1991 to fund the Richfield HEC and CS/HEC; and WHEREAS, the 1991 agreement would fund HEC, CS/HEC, and a new LI/HEC program once approved in its present form, by the Minnesota Public Utilities Commission (MNPUC); and WHEREAS, if the MNPUC does not approve the 1991 agreement and NSP programs in its present form, then staff would return to the HRA with revised agreements. NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority in and for the City of Richfield as follows: The Executive Director and Chairperson are authorized to: 1. Extend 1990 agreements for funding and delivery of audit services with Northern States Power Company and Self Reliance Center through March 31, 1991. 2. Execute agreements for funding and delivery of audit services in 1991 provided the anticipated agreement remains in its present form following Minnesota Public Utilities Commission approval. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield this 17th day of December, 1990. Thomas E. Harms, Chairperson ATTEST: Joan Helmberger, Secretary HOUSING AND REDEVELOPMENT AUTHORITY HRA Letter No . 4 8 Agenda December 17, 1990 Issue Statement: Authorization to execute agreements with Minnegasco and the Self Reliance Center for funding and delivery of Project Air weatherization services. Background: Since 1985, Richfield has contracted with the Self Reliance Center (SRC) to deliver "Bundle Up Richfield" energy program services. Agreements with SRC. and Minnegasco for Project Air, which were authorized by the HRA in 198.9 for 1990 services, have expired. SRC has provided approximately 227 Project Air (housedoctor types of) weatherization services during our long relationship. New agreements have been developed for 1991 which will provide Project Air services to approximately 31 lower income owner- occupants. Qualifying incomes range from $11,063 to $38,100 depending on family size. The agreements include appropriate insurance, liability, and hold harmless provisions. SRC personnel operate in accordance with a professional auditor code of ethics, state certifications, and HRD developed administrative performance standards. SRC services are funded only by Minnegasco as required by the Minnesota Public Utilities Commission (MNPUC). Services include blower door testing, identification of heated air escape locations, and the sealing of these locations. Additional weatherstripping and insulating work is performed on a case by case basis. At the present time, approximately 30 residents have requested Project Air service. The funding of the anticipated services represents a contribution of approximately $14,750 from Minnegasco. The HRA processes requests for service and payments to SRC from Minnegasco. Recommended Motion: Authorize the execution of agreements with Minnegasco and SRC to provide Project Air services through 1991. Basis of Recommendation: 1. The present agreements with Minnegasco and SRC have expired. 2. Authorization will allow services to be initiated with resources being made available by Minnegasco through December 31, 1991. _~ 3. SRC is familiar with the Richfield Energy Program services and is one of the few contractors with the knowledge, ability and staff to provide the needed services. 4. SRC services cannot be provided without a funding agreement with Minnegasco. 5. Legal Counsel has previously reviewed the agreements and the agreements are essentially the same. Alternative Recommendation: Do not approve the agreements. This would delay or prevent the opportunity to provide energy conservation services and secure approximately $14,750 which is being made available by Minnegasco. Discussion/Decision Mode: If the agreements are authorized, they would be executed to initiate services for January, 1991. Respectfu ly submitted, James; Prosser Execu ive Director JDP:ds RESOLUTION N0. THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA RESOLUTION RELATING TO PROVIDING WEATHERIZATION PROGRAM SERVICES WHEREAS, Project .Air is an important element of the HRA's "Bundle Up Richfield" activities; and WHEREAS, the Self Reliance Center (SRC) delivers these services to Richfield residents based on an agreement with the HRA; and WHEREAS, the existing agreement has expired; and WHEREAS, Minnegasco funds the Richfield Project Air weatherization services as required by the Minnesota Public Utilities Commission (MNPUC). NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority in and for the City of Richfield as follows: The Executive Director and Chairperson are authorized to execute agreements with SRC and Minnegasco for funding and delivery of Project Air weatherization services to Richfield residents through December 31, 1991. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield this 17th day of December, 1990. Thomas E. Harms, Chairperson ATTEST: Joan Helmberger, Secretary HOUSING AND REDEVELOPMENT .AUTHORITY _ HRA Letter No. 47 Agenda December 17, 1990 Issue Statement: Consideration and approval of a Letter of Intent between the Bradley Real Estate Investment Trust (Bradley) and the HRA - Hub West. Background: At the November 17th meeting, the HRA adopted several motions in support of Hub West. One motion approved the redevelopment concept and another directed staff to begin to formulate a developer's agreement. Attached to this letter is the Letter of Intent containing the basic points around which a developer's agreement will be written; to wit: - Removal of all existing buildings except U. S. Swim. and Fitness. This facility will be retained. - The construction of a 51,149 square foot Rainbow grocery store. - The construction of a 2,400 square foot Kentucky Fried Chicken facility at a new location on the site. - The construction of a 1,100 square foot facility for a commercial tenant which would likely be Great Clips. This space would be incorporated into the Rainbow, U. S. Swim and Fitness facility. - The provision for parking 1,187 vehicles. This is the total parking available for the Hub and Hub West. It is 5.7 spaces per 1,000 square-feet of building area which is in excess of the 4 spaces normally required for a shopping center or 5 spaces for a stand alone commercial project. - There would be a net gain in building square feet of approximately 12,600 over the existing development. - Construction would begin in the spring of 1991 and be substantially completed by January 2, 1992. Mr. Larry Miller, President of the Bradley Real Estate Investment Trust, will present the concept at the December 17th. meeting. Project The total estimated cost of the project is approximately $9 million. This includes all site assembly costs, construction costs and soft costs. Bradley would provide $5,686,848 (64$) and the HRA would provide $3,262,500 (36$). (This includes $50,000 for Snyder's relocation). The HRA and Bradley would finance the purchase of the Levine -. property. Bradley would be responsible for all site acquisition and relocation costs and activities related to Kentucky Fried Chicken and the small office building at 220 and 224 West 66th Street with the Naegele sign. Bradley would be responsible for demolition costs on the entire site. These costs total approximately $700,000. The HRA's power of eminent domain would be used if Bradley is unsuccessful in negotiations with either the real estate or leasehold interests. If utilized, Bradley would pay all costs related to the condemnation. Financing: Project costs will be shared by the HRA and Bradley. Bradley, as a real estate investment trust, utilizes its own funds, or line of credit, akin to a participating loan. It would be fully responsible in a similar manner as an equity investment. The HRA revenue would be provided by the LHN tax increment fund. The negotiated purchase price for the Levine property of $3,937,500 was based on an appraisal by Brad Bjorklund of BCL Appraisals and independently reviewed by Don Hennessey, a Certified Review Appraiser. The review appraisal was undertaken strictly as a condemnation appraisal review without knowledge of the lawsuit. Both appraisers are experienced, well respected and knowledgeable in this area. A site assembly land write-down, funded through tax increment, in the amount of $3,262,500 is proposed to make the project feasible. The "but for" analysis would indicate that without this infusion of funds, this project cannot be implemented. Suitable security to ensure the payback of the tax increment will be provided in the final agreement. As part of the negotiated price, Levine is to be responsible for extinguishing the leasehold interest of Snyder Drug. Bradley would be responsible for U. S. Swim, Great Clips and IGA. The City would handle relocation for Snyder Drug. Mr. Sid Inman, of Publicorp Inc., has reviewed the proposal. His review also included an analysis of the ability of the LHN project to support the HRA's portion of the cost. He has determined it is feasible. He will be available at the HRA meeting on December 17th to answer any questions. When conditions are appropriate, bonds could be sold to finance this transaction and reimburse the tax increment fund. By law, however, any bonds sold would have to be amortized by the year 2000. Recommended Motion: It is recommended that the HRA adopt a motion approving the Letter of Intent and authorizing its execution by the Executive Director. Basis of Recommendation: 1. The HRA approved the redevelopment concept at its November 17th meeting. 2. Staff was directed by the HRA to formulate the basis for a developer's agreement. 3. Currently the two commercial centers are separately owned. It is likely that parking disputes between the two different owners will continue to erupt from time. to time. Single ownership permits the redesign of the parking area for efficient and adequate parking for each use. 4. The legal disputes which arise from this situation can be ended. 5. The time available to the HRA for encouraging redevelopment with financial incentives is short. .Any new debt issued must be fully amortized by the year 2000 under state law. 6. The proposed redevelopment site is one of the few areas which has not been upgraded as part of the LHN. 7. The community needs surveys have indicated an overwhelming desire for a Rainbow type food store. - Alternative Recommendation: 1. Reject the redevelopment proposal. 2. Delay action. Discussion/Decision Mode: For Bradley to negotiate final tenancy terms, and retain those tenants who are interested, the project must proceed. If progress is satisfactory, a public hearing on the sale of the property to Bradley will be scheduled for the January 22nd meeting of the HRA. Respec ully submitted, Jame Prosser Executive Director JDP:ds 1 v 14~D0 13 ~ D0 'mod 1 z 3'40 2043 Dorsey dt rPn ! Lney Mr. James D. Prosser Executive Director Richfield Housing Authority and Redevelopment 6700 Portland Avenue South Richfield, MN 55423 Re: HUB West Development Dear Mr. Prosser: Draft 12!14/90 Purchase Entity and Propertv,~DQStription Bradley Real Estate .Trust, a Massachusetts business trust {"Pwchaser"), is prepared to enter into a purchase agreement and contract for redevelopment on the terms and conditions set forth herein, to pwchase all right, title and interest in the property hereinafter described as the "L,evine Parcel" to be acquired by the Richfield Housing and Redevelopment Authority (the "HRA"), and in connection with its proposed redevelopment of the Levine Parcel, to acquire certain properties now occupied by Kentucky Fried Chicken ("KFC") and a retail office building, all located in Richfield, Minnesota, and comprised of (i) a one-story building containing approximately 1600 square feet of rentable area now occupied by a retail baseball card shop and nuscellaneous office tenants (the "Office Parcel"); (ii) a one-story {above-ground) retail shopping center containing approximately 63,000 square feet of rentable azea, referred. to herein as the "Levine Parcel" and currently occupied under leases by U.S. Swim d: Fitness {"t7.S. Swim"), Hawsers IGA, Inc., Snyder Drug, and Great Clips; and (iii) none-story building now occupied and owned by KFC (the "Current KFC Parcel"); ~ and are shown on the preliminary drawing attached to this letter (the "Preliminary Plane") and collectively referred to as "the Property." noraey a ttn ~ t.neY ~ yyg 1z~19~'~P lA:Al 'Q'D1Z .74V ZG4.7 Richfield Housing and Redevelopment Authority. December 14,1990 Page 2 ~gjlin~ Enti y The Selling entity of the Levine Parcel will be the HRA. contract Perms The Contract will be in a form acceptable to Bradley and the HRA, and will contain the following terms: 1. The HRA will acquire the Levine Parcel and convey it to Bradley at closing. The purchase price shall be $725,000 paid in cash at dosing. 2. Bradley will agree to construct upon that portion of the Property rnmprised of the Levine Parcel, the Office Parcel and the Current KFC Parcel, but not including any part of the New KFC Parcel described below (collectively the "HUB West Parcel"), an approximately 51,000 square foot retail grocery store (the "Rainbow Improvements") to be leased to Rainbow Foods under a Tease having terms and .conditions acceptable to Bradley (the "Rainbow Foods Lease"), and related - parking improvements. U.S. Swim will continue to occupy its current space together with proposed expansion into the area currently occupied by Great Clips (the "U.S. Swim Improvements") under an amended or new Lease agreement having terms and conditions acceptable to Bradley (the 'New U.S. Swim Lease"). Great Clips is intended to be relocated to a new location acceptable to Bradley on the HUB West Parcel, under a lease having terms and conditions acceptable to Bradley (the 'New Great Clips Lease"). ('T'he Rainbow Lease, the New U.S. Swim Lease and the New Great Clips Lease are referred to collectively as the "Leases.") Bradley proposes to exchange a portion of {the 'New KFC Parcel") with KFC for the Current KFC Parcel and to contstruct on the New KFC Parcel a new approximately 2200 square .foot building to be occupied by KFC (the "New IBC Improvements"). Bradley proposes to acquire the Office Parcel from the owners thereof. 3. The acquisition and exchange events desrn`bed in paragraphs 1 and 2 shall take place at closing, which shall occur no later than February 28, 1991, unless extended to a later date by Bradley and the HRA. 4. The HRA will agree to exercise its power of eminent domain to acquire all or any part of the Property subject to the cost limitations described under paragraph 2 of Purchaser's Conditions and paragraph 2 of HRA's Conditions. 5 Subject to Force Majeure (which zhall include an extension of the date of closing), Bradley will commence oortstruction of the HU8 West Improvements and the New KFC Improvements by March 15, 1991, and will substantially. complete all HUB West Improvements and the New KFC Improvements by January 2, 1992. 1Z~i4~~v 13:31 ~'o1z 34v ZC43 norseY a nnitineY ~vv~ -` Richfield Housing and Redevelopment Authority. . December 14,1990 Page 3 6. Bradley will agree to a Minimum Market Value, in the Contract or in a separate assessment agreement, for the HUB West Parcel from the date of closing through the duration of the tax increment financing district of which the HUB West Parcel is a part (but not including any extension of the term thereof), as follows: $(Here insert 12.822 million less the New ICFC Parcels (for taxes Ievied in 1990 and 199? and payable in 1991 and 1992) and $[Here insert 14.383. million less the New KFC Parcel] (for taxes levied in 1992 and thereafter, and payable in 1993 and thereafter). 7. Bradley will agree to execute, deliver and record cross-easement agreements (the "Cross Easement") between the HUB West Parcel and the parcel adjacent thereto on the,east and improved by a one-story shopping center known as the "HCTB Center" (the "HUB East Parcel"}, in a form acceptable to the 1:3RA and the City of Richfield to ensure adequate access and parkfng for both the HUB West Farce] and the HUB East Parcel. 8. The HRA -will agree to subordinate the Contract to any construction or permanent mortgage financing obtained by Bradeey to finance the acquisition and construction of the HUB West Improvements. 9. The HRA will pay all costs of conveying marketable fee title of the Levine Farce] to Bradley, including but not limited to payment of any relocation casts and fixture costs relating to the existing leases (other than the U.S. Swim lease) of the Levine Parcel. 10. The HRA (or the City) will represent to Bradley that the Levine Parcel is in full compliance with the requirements of all government authorities. 11. No trustee, shareholder, officer or agent of Bradley shall be personally liable under any of the represenetations, covenants or agreements of Bradley in the Contract or herein or implied thereunder or hereunder, or otherwise, and the HRA agrees that any. and all claims arising or accruing to the HRA may not be enforced against any of the trustees, shareholders, officers or agents of Bradley Real Estate Trust or any of them or their successors individually. Such provisions shall be applicable to any successor to the interest of Bradley that is a business trust or association. Due Diligence, Commencement of,~c~uisitions and Nesotiations, and Time for - atisfaction of Conditions aorsey a nn i tines ~ vva ~. lz~i4~av ia:oz 'o'oiz a4v zG4.7 Richfield Housing and Redevelopment Authority. December 14, 2990 Page 4 Purchaser shall commence its due diligence with respect to the Property, commence negotiations of the Leases and the exchastge of the Current IBC Parcel for the New KFC Parcel, and the acquisition of the Office Puce], and the HftA shall commence negotiations for acquisition of the Levine Parcel, promptly upon execution by the HIt:A and Purchaser of the Contract, setting forth the terms and conditions hereof. The HRA wiU commence eminent domain proceeding for the acquisition of the Levine Parcel promptly upon its determination that it cannot acquire the Levine Paxcei through negotiation for the purchase price specified in paragraph 2 of ~1RA Conditons, and of the Office Parcel or the Current KEC Parcel, at the request of Bradley and upon its representation that it cannot acquire such parcels at the aggregate purchase price specified in paragraph 2 of Purchase Conditions. Purchaser and the HRA shall have until the tenth business day prior to the Closing Date to either complete due diligence, acquisition and declare the hereinafter-descaibed conditions satisfied or waived or to terminate the Contract for failure of condition. The due diligence period shall commence upon execution of the Contract by the HItA, and delivery to the Purchaser at its address set forth below, the executed Contract, a print of .any survey of the Property which Seller may have in its possession, all real estate tax and pending or levied specgal assessment information with respect to the Property, and a copy of the title commitment hereinafter referred to concerning the Levine Parcel. Miscellaneous 1'rorations and Closine Costs Real property taxes on the Levine Parcel payable in the year of closing shall be prorated as of the date of closing. On the date of closing, the HRA shall tender to Purchaser all accrued tax escrows, operating exp~ertses and security deposits under any leases of the Levine Parcel acquired .in connection with the acquisition thereof. The HItA shall pay the state deed tax (if any), all speaal assessments levied or pending against the Levine Parcel on the date of closing and the cost of procuring the hereinafter described title commitment and chattel lien search. Purchaser shall pay the premium for the title insurance policy to be issued pursuant to the title commitment. - rve The HRA shall promptly obtain, at its expense, and deliver to Purchaser an ALTA/AGSM Land Title Survey of the Property (meeting the requirements of a Class A Survey} prepared and tally certif ed by a registered land surveyor. Said survey shall bear a proper surveyor's certificate, including the legal description of the Property and a statement that the survey and certificate run to the benefit of Purchaser and the title company and a statement as to whether or not the Property lies within an area designated as a federal floodplain. az~ai~av aa:aa Boaz aiv zoi~ aoraeY a nnrLneY ~ v^~~~ Richfield Housing and Redevelopment Authority. December 14,1990 Page 5 Conditions Purchaser's acquisition hereunder is subject to approval by Purchaser's $oard of Trustees and the satisfactory outcome of Purchaser's due diligence investigation of the Property, and satisfaction of Purchaser's Conditions as hereinafter set forth. 'The HRA's acquisition and sale hereunder is subject to approval by the HRA's board of commissioners and the satisfaction of the HRA's Conditions hereinafter set forth. Conditions to closing shall include (without limitation), the following: Purchaser's Conditions L Purchaser's satisfactory negotiations of each of the Leases such that of the date of Closing the Rainbow Lease, the Great Clips Lease and the U.S. Swim Lease will be executed and delivered in a form acceptable to Bradley and the HRA, and review and approval by Bradley of any of contract or agreement affecting the HUB West Parcel 2. Purchaser's satisfactory negotiations with the owners of the Office Parcel and KFC for the acquisitions and exchanges contemplated in paragraph 2 under the heading'The Contract" herein, or, in the absence of thereof, of the HRA's acquisition by eminent domain and conveyance of marketable title thereof to Bradley all at an aggregate acquisition cost (including reasonable cost incurred in any eminent domain proceeding) not to exoEed $250,000, such that Bradley will have obtained by the closing date, marketable fee title in all of the HUB West Parcel, and KFC will have obtained by the closing date, marketable fee title in the New KFC Parcel. 3. Purchaser's deteratining that ita purchase of the HUB West Parcel will not. have an adverse effect on Purchaser's ability to continue its qualification as a real estate investment trust for federal income tax purposes. 4. Purchaser's approval, after inspection, of the physical condition of the HUB West Parcel and, as to the U.S. Swim Improvements, all associated mechanical and utility systems. 5. Purchaser's review and approval of a title insurance commitment issued by a title company acceptable to Bradley ("Title"), covering the HUB West Parcel, including a special assessment search, whereby Title agxees to issue (upon payment by Purchaser of the prentium ttt standard rates) an ALTA Form B owner's policy of title insurance in an amount to be designated by Purchaser, naming Purchaser as the insured, showing marketable title to the HUB West Parcel izr i4~av 1.7 : D.7 'moo lz a4v ZG4J DOT'SeY a nn I Lney t~ y©a Richfield Housing and Redevelopment Authority. December 14,1990 Page 6 it the HRA or Bradley subject only to encumbrances approved by Purchaser, which will include the Leases in a form acceptable to Bradley and the Contract, or encumbrances which are obligated to be discharged on or before the date of dosing, agreeing to delete all standard preprinted exceptions and including a zoning .endorsement, an owner's policy version of a Form 100 endorsement,. a contiguity endorsement and such other endorsements as Purchaser may reasonably require. 6. Purchaser's review and approval of a chattel lien search covering relevant parties. 7. Purchaser's determining that the Property is in full compliance with the requirements of all governmental authorities. $. Purchaser's review and approval of access ~o the Property. 9. Purchaser's review and approval of the size, availability and capacity of aU utility services to the Property. 10. Purchaser's review and approval of the survey described in the above paragraph entitled "Survey." 11. Purchaser's satisfactory review and approval of soil and chemical. tests and other environmental investigations, examinations and analyses which Purchaser may desire to undertake with respect to the Property. The HRA shall cooperate, and under its purchase agreement for the L~wine Parcel require the owner thereof to cooperate, with Purchaser and allow Purchaser or its agents to enter the Levine Parcel and fio perform such diligence as Purchaser deems necessary at mutually acceptable times for the purpose of performing the above-described due diligence investigations. HRA's Conditions 1. The HRA shall approve the site plan, and plans and specifications, for the proposed HUR West Improvements. 2. The aggregate acquisition cost teither through negotiation or the exercise of eminent domain powers) of the Levine Parcel by the IAA will not exceed $3,937,500, unless Bradley elects (in its sole discretion) to pay any excess of said amount. iz•i4~~v i4:vo -viz a4v zo4a ovrsey a nnitiney ~ vvz itich#ield Housing and Redevelopment Authority. i)e~et~nbtr 34,1990 Page 7 3. Bradley she!] have de:r-onstsated to the ressoz:eble satisfaction of the H~tA its capability to pay for or Snance the acquisition and irr-provement of the HUB West Parcel. 4. The Cross F.asamertts shat! be in a form etcepta;~la to the I~ItA, and shall be prepared, executed and recorded by Bradley as a aondi;ion to closing. C`l~ t~ D4,~uruen~atios- The closing docuinenta to be used in connection with the closing of the transaction shall be a general warranty deed, a certificate of real estate value, : "non•foreigr~ seller affidavf t; ' a seIler's aiftdavit, an assigrtiment of the U.S. Swim Ltase or a new least with V.S. Swiut, an aasignrr+ent of any operatir~ contracts Puzchaser desires to continue, tenant notice letters, an a38igntriF:rit of any gaaranties Or warrantils affecting the Ltvine Parcel, reasonable evidence of the HRA'a authority to tnter into and carry out the transaction and such other documents reasonably necessary or appropriate tv close the transaction. if the IAA acquires the 0££it`e Parcel and /or the Current ICPC Paxctl through its powers or eminent domain, such closing documents shall also apply to each such parcel. if the above•descxibed tera-s and Conditions arc a~eptable to the I3RA, phase so indicate in the space provided below. This letter will be superseded by the Contract. The Contract shall contain ail representations and warranties customary in a purchase agreement (including the Customary representation= and warranties the; the Property fa free hozri environmental ,defects>. This letter :fates only our intent to safer into such a Contract and dote t10t ueatQ enforceable obligations. very truly yours, BRADLEY REAL FST,ATE TRUST By ~'.. ~. Its ,,,~ ,~ ..,_. . DATED: Detar-ber t `'l~ -1990. 1Z~14~.~V 1.7:0'! 'Q~1Z ~'iV ZG'!J DOTSey a nn~i.ney Richfield Housing and Redevelopment Authority. December 14,1990 Page 8 I~PJ1f7 THE RICHFIELD HOUSING AND REDEVELOPMENT AUTHOOITY hereby agrees to the terms and conditions of the foregoing Ietter and expresses its intent to enter into a formal contract setting forth such terms and conditions. RICI~tELD HOUSING AND REDEVELOPMENT AUTHORITY DATED: December .1990. By Its Attest: Its ia~i4~av ia:aa a'oiz asv ao4a _ Horsey a nn~tiney ` ~ vii __ `1 - - ' ~ • r.~ ~ / .• ' 7 _ . ~ ~ z~ ~ ~ ~ Zt t _- ~ ^~v •, ~~, 1: " ~ . f /~ ~~G .. ,' \ ~5 ~ ~ ~~ .. / } ~'~~ \~. ~~ .ti ,, ?- -- ~~ _ _ ~-_ . ~~ -1.- - ,r - - - - - _ _ , OFFiC FF i PARE tom-- ~_ CuRQ~NT XFC ~~ . ~~ t .I i 1 I ~` ~:. 7~ _" - R/CHFI EL D INDEPENDENT SCHOOL DISTRICT ?80 " " RECOGNIZED fOR EXCELLENCE PUBL I C ~, SCHOOL S 612/861-8201 1001 HARRIET LowEtt D. t,aRSON, Superintendenj AVENUE SOUTH RICHf/ElD MINNESOTA December 10, 1990 55423 Mr. James Prosser City Manager City of Richfield 6700 Portland Avenue South Richfield, Minnesota 55423 Dear Mr. Prosser: At their December 3 meeting, the Richfield Board of Education discussed the proposed modification to the Lyndale/Hub/Nicollet (LHN) tax increment financing .district. It is our understanding that the Richfield Housing and Redevelopment Authority will be financing the write-down of property acquisition costs in that portion of the LHN now occupied by IGA/Snyder/KFC in order that new development may take place. The Board directed me to write you for further information on the following questions: 1. Will this new activity in LHN lengthen the period of time before the development bonds are paid off? In other words, will this activity delay the date by which the City/School/County will receive the tax increment from the development? 2. Will this new activity within the LHN result in any loss of referendum related tax revenue to the school district? 3. Will this new development within LHN be considered an entirely new tax increment financing district or merely a modification to the previously authorized activity? Sincerely, /~ w Lowell D. Larson Superintendent LDL:jm AN E9UAL OPPORTUNITY EMPLOYER f'LUBLICC!FF . I~JC. TEL:61~-341-414= Publicorp Inc. Dec 14 90 11:31 Na .004 F . 02i 0• ~'t64 Ccrstury Plaza (612) 341-3646 y111 Third Avcnuc South FAX (612) 341-414A Minneapolis, MN S5404 December 13, i 99a TO: Jim .Prosser, City of Richfield FR: Sid Inman ~~• Mark Ruff~/l~ RE: Responses to Questions on the LHN Posed by School District No. 280 We have reviewed the letter from Lowell Larson, Superintendent of School District 280, to you dated December 10, 1980 regarding the proposed Hub West pro)ect in the LHN tax increment financing .district. We have answered the questions as completely and succinctly as possible, Due to a certain progression in the responses, the questions are in a different order than they were originally asked. Each question is repeated prior to the answer. Question Number 3: "~li this new development within LHN be considered an entirely new tax increment financing district or merely a modification to the previously authorized activity?" The redevelopment on the IGA/Snyder/KFC site (referred to as the "Hub West") Is merely a modification to the previously authorized activity, The Hub Wast redevelopment will not constitute a new tax increment financing district because no new property is being added to the LHN district; the parcels have been within the boundaries of the LHN district since It was originally established. Question Number 1: "Will this new activity in LHN lengthen the period of time before the development bonds are paid off? In other words, will this activity daisy the date by which the City/School/County wit) receive the tax increment from the development?" The termination date of the LHN will not be extended as a result of the Hub West redevelopment. The LHN is a pre-78 tax increment financing district. This. means the LHN was creased prior to 1979 and is therefore subJect to a different set of rules than tax increment financing districts established after 1979. The termination date for pre-79 districts is firmly set in the tax increment statute. Accordin0 to Minnesota Statutes, Section 4Ei9.176, Subdivision 1, no tax increment shall be paid to a city after April 1, 2001 except for the tax increment necessary for payments on bonds issued prior to April 1, 1990. PUBLICORP, I-JC. TEL~612-341-414 Dec 14,90 11 32 No .004 P.03!04 The City of Richfield has obligations outstanding .through the year 2003 for tax increment bonds issued prior to April 1, 1890. Therefore, the tax increment from all property in the LHN district wil! be paid to the appropriate taxing jurisdictions beginning in the year 2004. For the years 2001, 2002, and 2003, we anticipate that $1,000,000 per year in tax increment will be returned to the appropriate taxing jurisdictions after bond payments are made for those years. Duestion Number 2: "Will this new activity within the LHN result in any loss of referendum related to tax revenue to the school district?" The new Hub WBSt properties will be paying a higher amount of taxes than the previous properties were paying. In real dollar terms, we have estimated that the Hub West properties will be paying $60,000 more in taxes upon completion (in 1993) than was paid on the property in 1890. We have also estimated that School District No. 280's eppiicable referendum levies amount to 5.15'Yo of the total tax rate. Therefore, approximately $3,088 ($60,000 multiplied by 5,1596) of the annual taxes attributable to the new activity are tied to the school referendum levies. The theory of tax increment is based upon the "but for" principle. The City Council must make a finding that `but for" the use of tax increment, the project would not go forward, Without tax increment, ail citizens of Richfield would be left with a piece of property which is underutilized, is not likely to experience growth in market value, and is difficult to access. It is important to note that the Hub West project is true ~Y~pr~e~r t; the costs of tearing down buildings, relocating businesses, and preparing the site for new construction are high in any city with little or no raw land. The City of Richfield is no exception, Additionally, the property tax system in the State of Minnesota is at best unpredictable end at worst unstable. Tax increment districts have encountered difficulty in many cities since the homestead credit payments were withdrawn from tax increment payments and since class rates for commercial and rental property have dropped. These changes, coupled with the potential for future changes in the property tax system, increase the need for prudent- planning in cities with tax increment districts such at the. LHN which rely heavily upon a balance of homesteaded condominiums, commercial property, and apartments for income. The recent increase in requests for reductions in market value of commercial property due to high vacancies is another factor which is out of a city's control that reduces the tax increment income. Page 2 PUE~LICORF', INNC. TEL~612-341-4148 Dec 14,90 1133 No .004 P.04i0a Cities facing the uncertainty in the property tax system .must continue to provide safeguards to its tax increment Income and continue redevelopment of blighted properties to preserve its tax base. We believe the Hub West project accomplishes ell of the goals for preserving the LHN tax increment income for future years and is a responsible use of tax increment es it was origingily intended. Please feel free to contact us with additional questions. Psge 3 .