03-16-87 agendaf' ~-
CITY OF RICHFIELD, MINNESOTA
HRA Letter No. 8
Agenda March 16, 1987
Issue Statement:
Amendments to the contract For Private Development with PALSCO,
Inc. developer of the Hampton Inn, 77th Street and Lyndale
Avenue, ILN area.
Background:
In December, 1985, the HRA and city approved a developer's
agreement for a new Hampton Inn to be located in the ILN on the
property now occupied by the Colonial Lodge Inn and a print shop.
The 5 story Hampton Inn would contain 149 rooms and 135 parking
spaces. Construction was to begin in the Spring of 1986. When
construction was initiated, the city would initiate certain
right-of-way improvements on the east side of Lyndale Avenue.
The cost of these improvements would be supported by the tax
increment generated by the Hampton Inn..
The Hampton Inn construction was not initiated as the developers
were unable to obtain financing. The developer now reports that
financial arrangements are nearing completion. They have
requested amendments to the developer's agreement in three areas:
amending the dates regarding construction performance, including
the assessment agreement, and, accepting modifications in the
site plan to increase the number of on site parking spaces and
provide for a swimming pool.
Recommendation:
1. Amend the Contract For Private Development
Section 5.2 Completion of Construction.
Change the completion of construction date from December
31, 1987 to December 31, 1988. Change the 50 percent
completion date from December 31, 1986 to December 31, 1987
Section 7.1 Real Property Taxes
a Change the dates in Exhibit E, the Assessment Agreement
and Certification of Assessor as follows:
Page 1 and 2, 1. The minimum market value of $2,060,000
shall be assessed January 2, 1989 rather than as stated
January 2, 1988. The minimum market value of $2,660,000
shall be assessed January 2, 1990 rather than as stated
January 2, 1989. The minimum market value of $3,402,000
shall be assessed as of January 2, 1991 and until the last
date on which the tax increment will no longer be remitted
to .the HRA rather than January 2, 1990 as stated.
Exhibit C Project Plans for the site which indicates 135
parking spaces be modified to show 147 spaces and the
addition of an attached structure of approximately 1.536
square feet to house a swimming pool.
The Plan sheets showing the revisions will be available at
the HRA meeting for review.
'~
Basis of Recommendation:
1. There is no construction currently underway which would
permit conformance with the original dates in the agreement.
2. The developer has requested the date changes in anticipation
of closing on the project financing and initiating
construction in a timely manner so that the revised dates
are appropriate.
3. The development plan changes have been found acceptable by
staff and the Planning Commission.
4. The permanent tax increment bonds have not yet been sold,
thus there is no impact on bond amortization.
Alternative Recommendation:
Not approve the amendments.
Decision Mode:
The developer has requested the amendments to facilitate the
closing and initiation of construction.
Respectfully submitted,
Jam D. Prosser
Exe utive Director
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CITY OF RICHFIELD, MINNESOTA
HRA Letter No. 7
Agenda March 16, 1987
Issue Statement:
Authorization to make lease guarantee payment of $9,807.88 to
Richfield Shoppes Developers (RSD)
Background:
Pet Cetera Central, Inc. (Pet Cetera) operated from 6520 Lyndale
Avenue until December 1984. They were the last business
occupying a portion of the site which was to be redeveloped as
Market Plaza. The HRA was obligated to relocate this business.
Pet Cetera was a retail pet store specializing in the display and
sale of exotic animals as well as conventional pets and supplies.
This collection of products made it very difficult to relocate.
Because of the apparent lack of space, one option studied was to
place all of the merchandise in storage until space was found.
The storage of live animals would .have been very expensive. The
total cost of such a temporary move to storage was estimated at
$215,000. RSD was renovating the old Nicollet Avenue Shopping
Center and seeking new tenants. Staff contacted RSD as possible
providers of space for Pet Cetera. RSD had already studied Pet
Cetera and rejected them as being a financial poor risk.
When staff approached RSD about Pet Cetera becoming a tenant and
understood the predicament of the HRA they agreed to cooperate
conditionally. The HRA, at a special meeting on August 24,
1984, approved a relocation settlement in the amount of $150,000.
The settlement conformed to the relocation regulations,
represented a cost savings of approximately $65,000 over the
storage alternative, and placed the HRA in the unique position of
using the relocation process to attempt to strengthen a fledgling
business. The new location was in a high customer traffic area.
$45,000 of the $150,000 was allocated toward rental assistance.
The assistance was in the form of rental payments of two types.
One provided rent assistance monthly based on levels of sale.
Only six payments were made under this section through mid 1985
in the total amount of $10,789. The second portion was a 25
month rent guarantee. If Pet Cetera couldn't pay their rent and
had to vacate the property, the HRA agreed to pay the rent which
was in default. The $9,807.88 payment is for rent not paid.
(Even though Pet Cetera owes this amount in rent, it should be
noted that during the period $76,366 was paid). The remaining
balance of the relocation settlement was expended as follows;
$10,000 moving and related expenses, $97,345 for physical changes
to the leased space to accommodate Pet Cetera. In addition to
the financial assistance, during these two years, the HRA also
provided various types of technical assistance to Pet Cetera
regarding the business operation.
~%- /
Recommendation:
The HRA authorize $9,807.88 as a rent guarantee .payment to
Richfield Shoppes Developers.
Basis of Recommendation:
1. The HRA agreed to guarantee the rent for the term of the
lease period as part of an innovative least
cost approach to relocation.
2. Forty-five thousand dollars was set aside for lease payment
assistance and $8,444 has been paid out. In August, 1985,
the HRA authorized the payment of $2,345 to fund additional
physical changes from the rent assistance fund. Thus the
balance remaining is $34,211 in the rental assistance fund
which is also the balance of the $150,000.
Alternative Recommendation:
1 Not approve any lease guarantee payment
2) Approve only a portion of the payment
Decision Mode:
RSD has presented a statement to the HRA requesting payment.
Respe fully submitted,
Ja D. .Prosser
Ex utive Director
JDP/eja