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07-21-86 agendar- .» ~-- 'H'O'USING ATi4~ RED.E'VELt3PMENT AUTHORITY Office of Executive Director HRA letter No. 20 Agenda July 21, 1986 Housing and Redevelopment Authority Commissioners. City of Richfield ~~ Subject: Developer Response To Graham Avenue Development Site (GAD) and Future Direction Dear Commissioners: During the June 16th meeting, the HRA voted to reconsider the selection of Shaller-Trestman as the developers of GAD. Staff was directed to pursue three courses of action; negotiate a developer's agreement with Shaller-Trestman, contact Walker and contact the Community Development Corporation (CDC) which has been working with St. Peter's regarding the interest of each in developing housing on the site. Since the last meeting, a fourth potential developer has emerged. This letter reports on the responses of the four perspective developers to staff inquiries. Trestman - Shaller A few days following the June 16th meeting, staff contacted Mr. Shaller and Mr. Trestman. Both indicated they did not feel it would be appropriate to expend additional time and resources to negotiate a developers agreement since their proposal lacked definite HRA support. At such time as the HRA supported their proposal, they would be agreeable to negotiating an agreement. CDC and Plesko-Walker Discussions with representatives of both-CDC and Plesko- Walker brought favorable responses. John Rocheford of CDC indicated an interest in pursuing a mixed development with two or three possible uses; ground floor retail space for Shaller and Trestman, 45 to 50 units of subsidized housing with rents under $500 per month and possibly some additional apartments with moderate rents over $500 per month. He has also indicated a potential interest in redeveloping a larger site which would include the VFW site. Both surface and structured parking would be needed. Plesko-Walker expressed interest in a similar concept, utilizing commercial span and housing in combination. As of this writing, however, ~.t seems that Walker has a stronger interest in proceeding than does ~lesice~. ~i ,~ Tushie Montgomery & Associates Recent3y a fourt9~ potential developer has emerged. Mr. Gary Tushie of Tushie Montgomery ~ Associates, Inc. has expressed interest in the site. Tushie Montgomery is the architectural firm that designed the Woodlake Point Condominium development. Because of that project, Mr. Tushie became interested in the 66th Street and Tyndale Avenue area as a potential location for his firm's office. It's a convenient location for servicing his clients and convenient to his home. Mr. Tushie's concept envisions an integrated development which could encompass the Graham Avenue Development and VFW sites. .Included in the development may be approximately 60,000 square feet of retail/office soace on grade, two floors of parking beneath this space with approximately 350 spaces. The VFW post may occupy up to 40,000 additional square feet. Approximately 40 to 50 units of housing may also be included. Mr. Tushie has indicated that up to 290 surface parking spaces may also be provided. The structure would be low rise, but vary in height. At its highest point, it would be perhaps three to four floors. The occupants of the building could be tenants or owners of the space they occupy. Involvement of Current Property Owners All of the perspective developers have contacted some of the property owners. Mr. Rocheford of CDC has talked with Mr. Shaller about locating his store in the development and about an ownership role as well. Mr. Rocheford would also talk with Mr. Trestman. Walker representatives were planning to talk with Mr. Shaller too. Mr. Tushie has talked and met with Mr. Shaller, Mr. Trestman and representatives of the VFW. Items for HRA Consideration Daring conversations with the interested developers, several items the HRA should consider were identified. Although it may be physically possible to combine housing and retail space on the GAD site, it may not be advisable from a functional point of view. Traffic conflicts and lack of adequate site area could result in a poor development difficult to market. Developing s®a~e apartments with low rents has been a concern of the HRA. both CDC and Walker have submitted an application to HUD for funding to construct a 202/Section 8 development in Richfield at an unspecified site. Both applications would not be funded. ~®~EVer, one ®f them might be selected. The selection will not ~e made until ab®vt October 1, 1986. A 202/Section 8 development combines the belo~v market interest rate of a 202 loan with the Sectica~ ~ programs and pravides rents to occupants at 30~ of their .income. forty-fire units may be awarded. It may be difficult to integrate this development into a mixed use project because of federal requirements related to design and financing. Typically a 2~2/section 8 building is_a three story wooden frame structure, alth~uglh exceptions have been approved. Also, this development has a favored property tax status and would generate a lower tax return. Dccupants of a 202/Section 8 project usually require very fear parking spaces. In some communities, it is as low as one space for two apartment units. A second option to help assure lower rents would be to use a portion of the tax increment to help pay the rent on some housing units. There would, of course, be written agreements between the HRA/City and developer/owner regarding this payment. However, the state legislature recently restricted tfie use of this program. It is not possible to use a tax increment for both site assembly activities and rent assistance. Tax increment may be used for one activity or the other. A few months ago, staff was concerned about the continued availability of tax increment bonds. Thus, the perceived need to make a decision regarding development and the need for .bonds well in advance of September 1, 1986. However, the interest differential between taxable and nontaxable bonds is now very minimal. If that situation continues, and there is a need for bonds, financing may still be possible at a favorable rate. The ideal .development concept would include not only the GAD site but also the VFW property and adjacent land. Summary In conclusion, there are several developers who are interested in pursuing development of the GAD site and an even larger area. There are, however, several issues to be explored. If the ideal development concept includes the VFW area which is not in the LHN tax increment district, it .maybe desirable to first determine the legal and financial feasibility of establishing a tax increment district for this area. Once the general site area has been defined, it may be appropriate to determine its environmental capacity. In establishing the capacity of the site, optimum ranges of development density and intensity would be identified. Traffic volumes and parking would be a part of the study. Thus, the process of pursuing development could include three steps. First, staff working with legal and bond counsel and financial consultant would determine the feasibility of establishing the VF~V area as a tax increment district. Second, a multi-discipline planning consulting firm would be retained to assist staff in deter¢~ining the environmental capacity of the site. Third, a developer(s) would be invited to respond to the ~y criteria which would evolve from steps one and two with proposals. It may be possible to complete step one by the August HRA meeting. step two could then possibly be completed by September ar Qctvber meetins~. Recommendation It is recommended that the HRA direct staff to study the possibility of including the VFW in a tax increment district and also present to the HRA a proposal from a consulting firm which would assist in determining the environmental capacity of the site. Resp ully Submitted '~ n L. Devich Acting Executive Director SLD:sae ~_ HOUSING AND REDEVELOPMENT AUTHORITY Office of Executive Director HRA Letter No. 19 Agenda July 21, 1986 Housing and Redevelopment Authority Commissioners City of Richfield ~..~ --/ Subject Agreement For Professional Services With Bather- Ringrose-Wolsfeld-Jarvis-Gardner, Inc. (BRW), ILN Redevelopment Project. Dear Commissioners: Staff is seeking authorization from the HRA and City Council to continue a contractual relationship with the BftW consulting firm in the ILN. In April of 1985, the HRA and City Council entered into a contract with BRW. That contract retained their services to undertake a comprehensive redevelopment study of the-ILN. All of that work has been completed and the money expended. The funds were provided by the HRA Capital Revolving Fund. Attached is a copy of a proposed new contract. There are two tasks. .Under Task One, BRW would provide technical assistance to staff for special studies. An illustration of this type of activity would be the study of an interim solution for the intersection of 78th Street on the east side of Lyndale Avenue. They are also studying interim measures to reduce traffic circulation problems along 77th Street east of Lyndale Avenue identified by the residents. A second area in which assistance would be provided would be in the assessment of the impact of development proposals on the redevelopment plan. This type of activity is illustrated by the work being done to assess the impact of the CDR development on the Phase I public improvements and to work out the concerns of the neighbors adjoining the CDR site as they relate to design of the public improvements. Funding for Task One would not exceed $12,000. The second task calls for the formulation of guidelines and strategies for the redevelopment of the area between 77th Street and I494. As a part of the guidelines and strategies, an illustrative plan may be prepared. This would assist staff and the HRA and Council in envisioning actual development concepts. It is important to address this matter and have some well defined concepts inn place prior to the expiration of the interim ordinance in March, 1987. Task Two would be funded at an amount not to exceed $14,000. ~° ~- This contract would make it possible to continue to deal with redevelapment planing issues. Work must continue to make it possible for the CDR development to proceed. It is appropriate to note that work under this contract would, proceed on a project by project basis only after authorization by staff. Funds would be provided by the HRA Capital Revolving Fund. Recommendation It is recommended that the HRA authorize the Chairman and Acting Executive Director to execute the contract and direct the Acting Executive Director to present the contract to the City Council for their approval. Resp c fully S bmitted, ~' ven L. Devic Acting Executive Director SLD:sae ~~ ~,1 IC1~ PLANNING / TRANSPORTATlONlENGINEEAWG /A~1JRE_ ~~ Agreement For Professional Services _ _ This AGREEMENT entered into by: the CLIENT: City of Richfield 6700 Portland Avenue Richfield, MN 55423 and the CONSULTANT: BENNETT-RINGROSE-WOLSFELD-JARVIS-GARDNER, INC. Thresher Square 700 Third Street South Minneapolis, MN 55415 for the following PROJECTS: Technical Assistance for ILN Redevelopment Project Implementation WITNESSETH: WHEREAS, the CONSULTANT did work with the. City Council of the City of Richfield, the HRA, and the ILN Task Force in studying the Interstate/Lyndale/Nicollet (ILN) commercial area and did prepare a redevelopment plan which formed the basis for the Redevelopment Project which was ultimately adopted by the City of Richfield, and WHEREAS,-the CLIENT desires the provision of certain technical assistance and other services in conjunction with the implementation of the ILN Redevelopment Porject as heretofore adopted by the City, and WHEREAST the CLIENT desires that the CONSULSTANT provide such assistance and services in order to ensure continuity in this major project, NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, the CLIENT and the CONSULTANT agree as follows: The CONSULTANT shall provide professional services for the PROJECT in accordance with the Terms and Conditions as set forth below under Article II entitled "Services" and The CLIENT shall compensate the CONSULTANT in accordance with the Terms and Conditions as set forth below under Article III entitled "Compensation." 1 J TERMS AND CONDITIONS OF AGREEMENT ARTICLE I. GENERAL CONDITIONS A. CHANGE IN SCIIPE OF THE PROJECT Should the CONSULTANT'S scope of services change substantially from that outlined in this AGREEMENT or if work is suspended or delayed by the CLIENT for more than three months, then this AGREEMENT may be subject to re-negotiation. B. TERMINATION OF AGREEMENT This AGREEMENT may be terminated by either party upon ten days written notice should the other party fail substantially to perform in accordance with its terms through no fault of the party initiating the termination. In the event of termination due to the fault of parties other than the CONSULTANT, the CONSULTANT shall be paid his compensation for services per- formed to termination date, including Reimbursable Expenses. C. TRANSFER OF AGREEMENT This AGREEMENT is not transferable by either party to a non-named party without the written consent of the other party. D. CONFLICT OF INTEREST No member, officer, or employee of the CONSULTANT, or its designees or agents, no member of the governing body of the locality irr which the PROJECT is situated, and no other public official of such locality or localities, who exercises any functions or responsibilities with respect to the PROJECT, during his/her tenure or for one year thereafter, shall have any interest, direct or indirect, in any contract or subcontract, or the proceeds thereof for work to be performed in connection with the program assisted under this AGREEMENT. E. EQUAL EMPLOYMENT OPPORTUNITY In connection with the execution of this AGREEMENT, the CONSULTANT shall not discriminate against any employee or applicant for employment because of race, religion, color, sex, or national origin. The CONSULTANT shall take affirmative actions to insure-that applicants are employed and that employees are treated during their employment, without regard to their race, religion, c®lor, sex, or national origin. 2 e _ J ~ ,r° d ` y/^I Such actions shall include, but ~®t be limited to, the following: employment, upgrading demotio~~ or ta^ansfer; recruitment, or recruitment advertising; layoff', ~~° terminatie~~; rates of pay, or other forms of compensation, and selection for training inc]uding apprenticeship. F. MATERIALS OWNERS~IF'- All materials produced under the terms of this AGREEMENT are the property of the CLIENT. The term "Materials" includes all documents, data, reports, studies, and maps. 3 '-~ ARTICLE II SERVICES A. SCOPE OF SERVICES The CONSULTANT'S scope of services shall consist of providing Professiona l Services to the CLIENT for the implementation of the ILN Redevelopment Project. The Services shall include the following work tasks: TASK T: TECHNICAL ASSISTANCE FOR SPECIAL STUDIES IN THE REDEVELOPMENT PRQJECT AREA Objective: To provide technical assistance to the City staff in deve- loping special studies for the redevelopment project area and to assist staff in the evaluation and assessment of specific developer proposals. a. Prepare special detailed studies, at the direction of City staff, of the redevelopment project area in order to assess development, traffic circulation, and other impacts. b. Review and evaluate developer proposals, at the request of .City staff, for the redevelopment project area and make recommendations regarding their impact on the redevelop- ment plan. TASK 2: PREPARATION OF FRAMEWORK PLAN FOR FUTURE REDEVELOPMENT AREAS Objective: To develop guidelines and establish strategies for encouraging the redevelopment of the "future redevelopment areas" south of West 77th Street, which are not part of the Phase I improve- ments, as designated in the ILN Redevelopment Study. a. Review and evaluate all currently proposed or contemplated development plans for the future redevelopment areas, as requested by City staff. b. Develop preliminary prototypical concept framework plans and guidelines for the future redevelopment areas. This task may include the preparation of typical illustrative plans, as required, to help illustrate the anticipated development densities and locations. c. Review the recommended framework plans and guidelines with City staff, all affected City agencies, the ILN Task Force, and interested developers and select a preferred framework plan and guideline. 4 d. Assist the City staff in preparing implementation strate- gees for t9~e framework plan for the future redevelopment areas including design guidelines, zoning ordinances., and developer requests-for-proposals, as required. B. PRODUCTS Products for each task shall be established at the time the CLIENT gives authorization to proceed. C. TIME OF PERF®RMANCE 3"% Time of performance for all tasks shall be established at the time the CLIENT gives authorization to proceed.. D. PROJECT PERSONNEL The CONSULTANT shall assign Arijs Pakalns as Project Manager and Donald Ringrose as Principal-In-Charge. The assigned personnel shall be primarily responsible for the project development and presentations and shall not be replaced unless a change is approved in writing by the CLIENT. E. MAINTENANCE OF DOCUMENTS AND RECORDS The CONSULTANT shall maintain all books, documents, papers, accounting records and other evidence pertaining to cost incurred in connection with work and services performed hereunder. The CONSULTANT shall make such material available at its office at all reasonable times during the contract period and far three years from the date of final payment under this agreement for inspection by the CLIENT and copies thereof shall be furnished upon request. The CLIENT may also request originals of drawings or the text material. 5 ~3-d ARTICLE III COMPENSATION A. COMPENSATION The cost of providing professional consultant services as-set forth under ARTICLE II shall be as described below, unless additional amounts are approved in writing by the CLIENT. It is understood and agreed that the CLIENT must authorize the CONSULTANT to proceed with each task. TASK 1: TECHNICAL ASSISTANCE FOR SPECIAL STUDIES IN THE REDEVELOPMENT PROJECT AREA Compensation for. services provided under Task 1 shall be on an hourly basis and the total amount shall not exceed $12,000.00 TASK 2: PREPARATION OF FRAMEWORK PLAN FOR FUTURE REDEVELOPMENT AREAS Compensation for services provided under Task 2 shall be on an hourly basis and the total amount shall not exceed $14,000.00. B. TERMS OF COMPENSATION Compensation for services provided on an hourly basis shall be according to the hourly rates by employee classification plus Reimbursable Expenses. Reimbursable expenses include photographic and printing expenses at cost. The CLIENT will be billed according to the following hourly rates by employee classification. Principal $95.00 Sr. Associate 67.50 Associate 62.50 Sr. Professional 55.00 Professional II 47.50 Professional I 37.50 Supervisor/Sr. Technician 35.00 Technician III - 32.50 Technician II 27.50 Technician I 19.00 These hourly rates are in effect through March 31, 1987. During the month - of March, 1987, the CONSULTANT shall file with the CLIENT revised hourly rates which will become effective starting with April 1, 1987. C. INVOICE CERfiIFICATION Each invoice sfi~all contain a certification by an officer of the, company stating that the inwo~ce is correct and that. payment has not been received previously. 6 s D. TERMS -0F PAYMEI~~ . The CONSULTANT will bill the CLIENT monthly for work completed the previous month. The CE.IE!f~'~f agrees to pay all invoices in full within 45 days after receiving thew. This AGREEMENT executed this day of CLIENT: By: By: By: CONSULTANT: By: By: By: 7 ~ ~ ~ '/. HOUSING ANO REDEVELOPMENT AUTHORITY Office of Executive Director HRA Letter No. 18 Agenda July 21, 1986 Housing and Redevelopment Authority Commissioners -City of Richfield Subject: Amendment to Lien Agreement for 7508 Colfax Avenue South Dear Commissioners: On November 15, 1985, the HRA took the following actions on property it owned at 7508 Colfax Avenue: -entered into a development agreement with George E. Branton Construction Company to develop a single family home at 7508 Colfax Avenue South. -sold the property to Mr. Branton for $1.00 provided a lien was filed against the property requiring the first purchaser of the house to repay the HRA for the value of the land when the first purchaser sold at some future time. -filed this lien in an amount of $20,000, which would be subordinate to a first mortgage. The house is nearing completion, the buyer has been. identified by Mr. Branton, and financing is being applied for with the Minnesota Housing Finance Agency (MHFA). However, MHFA has notified staff that the sale price of the structure ($69,900) and the land ($20,000), a total of $89,900, exceeds the maximum allowed sale price of $85,000. It is requested that the lie n amount be reduced to $15,100 to ensure the most affordable financing program remains available to the purchaser. The property was originally acquired and cleared with CDBG funds. Utilizing these funds requires that the HRA ensure that a moderate income family benefits from the housing that is developed. The income limits, based on family size, are as follows: Family Size Maximum Income 3 24,750 4 $27,500 5 $29,200 6 $30,950 The 5 person family Mr. Branton has identified has an income of approximately $28,500. The family has the best chance to qualify for a mortgage provided the most favorable rate is secured. The best rate available presently comes from MHFA at 8.65%. The maximum lien allowed would be $15,100. ,% z As indicated in a recent HRA letter (HRA letter No. 17, July 15, 1986), FHA financing would be secured if an MHFA commitment was not available. If FHA financing is secured, the maximum lien could remain at $20,000 or slightly more or less depending on the actual lender appraised value. Thus, it may be necessary to change the. lien amount regardless of the type of financing utilized. Recommendation It is recommended that the HRA adopt the attached resolution which authorizes .the following actions: 1. The lien amount be reduced to $15,100 if the buyer secures MHFA financing. 2. The lien amount remain at $20,000 or be adjusted accordingly, based on the difference between. the $69,900 structure value and the lender appraised value. The HRA will be notified of the actual lien amount prior to closing. Fund recovered by the HRA from this lien would be utilized to initiate additional housing activities. Respe~~jfully submitted, ~~ v n L. 'ch Acting Executive Director SLD:sae ~~ ~~ HRA RESOLUTION N0. RESOLUTION AMENDING LIEN AGREEMENT-7508 COLFAX,AVENUE-SOUTH MHEREAS, the Housing and Redevelopment Authority (HRA) in and for the City of Richfield has entered into a Lien Agreement with George E. Branton Construction Company concerning the development of a single family home on property located at 7508 Colfax Avenue South; and WHEREAS, the structure has a $69,900 value, the land has a $20,D00 value, and the land value has been secured for the HRA with this Lien Agreement. WHEREAS, the parties have found it necessary to amend certain terms of this Lien Agreement contingent on the source of financing that a purchaser may secure and .the lender appraised value that is determined for the property. NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority in and for the City of Richfield: That the Chairperson and Acting Executive Director are authorized to execute an Amendment to Lien Agreement that modifies the lien amount to: a) $15,100 if financing is secured from the Minnesota Housing Finance Agency; or b) An amount that reflects the difference between the $69,900 value of the structure and the total value as determined by lender appraisal if another financing source is secured. Passed by the Housing and Redevelopment Authority in and for the City of Richfield, this 2lst day of July, 1986. Thomas E. Harms, Chairperson ATTEST: Joan Helmberger, Secretary