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11-12-85 agenda.~ ~* ~5-/ CITY OF RICHFIELD, MINNESOTA Office of City Manager. Office of Executive Director Council Letter No. X30 ~"Letter No . 63 Agenda November 12, 1985 The Honorable Mayor Housing and Redevelopment and Authority Commissioners Members of the City Council City of Richfield City of Richfield Subject: Status Report on a Proposed Developer's Agreement with Richfield Hampton Inn Franchise Representatives Council Members and Commissioners: On February 11, 1985, the City Council adopted an interim zoning ordinance (Transitory Ordinance No. 17.18) which established a moratorium on new building construction in the ILN redevelopment area. Then, on June 24, 1985, the City Council amended Transitory Ordinance No. 17.18 in a manner which reduced the minimum estimated market value which needed to be met in order for the processing of permits, licenses, rezonings, plattings or land divisions. The June 2~4 amendment reduced the estimated market value from $20 million to $2 million. This amendment also indicated that the project would have to be on a single tract of land and would have to have a minimum area of 80,000 square feet. (Copies of the relevant sections of Section 3, subdivisions 2 and 3 of Transitory Ordinance No. 17.18 as amended are attached to this letter.) The Hampton Inn proposal, as discussed with the City Council in May and June of 1985 was represented to meet the criteria contained in the ordinance amendment of June 24. Therefore, subsequent to the adoption of this ordinance amendment the city staff began working with representatives of Palsco, Inc., the proposed developers of the Hampton Inn Motel. (See March 29, 1985, letter to Dennis Kraft from. Thomas C. Larson of Palsco, Inc. Late this past summer the city staff began work on the financing element of the ILN redevelopment plan. As a part of this process, development agreement negotiations were initiated with representatives of Palsco, Inc. early this fall. One element of the negotiations related to the establishment of a minimum estimated market value for the Hampton Inn proposal, consistent with the amount contained in the .ILN redevelopment and tax increment financing plan. The plan called for an ~5-~ approximate estimated market value for the Hampton Inn proposal of $3,780,000. The city staff then attempted to negotiate an assessment agreement with Palsco which established this minimum. estimated market value. Palsco representatives then indicated that the amount the city was requesting for the estimated market value was substantially greater than they thought it should be. These representatives also indicated that the maximum estimated market value they would agree to in the assessment agreement was approximately $2,855,000. The latter mentioned amount was substantially less than the minimum value established by the Transitory Ordinance No. 17.18, Section 3, subdivisions 2 and 3. Therefore, at this time the city staff is stopping all action on processing the PUD district rezoning amendment which was recently submitted by Palsco. At such time as Transitory Ordinance No. 17.18 expires (this should occur on March 13, 1986) the PUD processing can be resumed. As a result of the aforementioned action, the public improvements scheduled for the ILN area and located east of Lyndale Avenue will have to be delayed or will have to be financed using state or federal funds. Palsco representatives may wish to reevaluate their position and, if this happens, further negotiations can continue. Respectful y submitted, ohn G. Ca twr' ht Executive Director JGC/eja 5 -3 APPENDIX A. TRANSI~RY ORDINANCES TRANSITORY ORDINANCE N0. 17.18. AN INTERIM ZONING ORDINANCE ADOPTED k~R THE PURPOSE 0~'P~OTECTING THE PLANNING PROCESS IN A CERTAIN AREA OF THE CITY, REGULATING, RESTRICTING AND PROHIBITING CERTAIN USES, DEVELOPMENTS AND SUBDIVISIONS WITHIN SUCH AREA. CITY OF RICHFIELD DOES ORDAIN: Section 1. A. The City is concerned with the proper and more economic use, development and possible redevelopment of that area of the City generally referred to as "Interstate-Lynda le Area", hereinafter referred to as-the "Area",'the boundaries of which Area are more specifically described as follows: All of the property between Interstate No. 35W and the Minneapolis North- field Southern Railroad tracks and south of 77th Street with the following ad- ditions: (a) the area west of Emerson Avenue, east of Interstate No. 35W, between 76th and 77th Streets; (b) in the area between Emerson and Aldrich Avenues, the first parcel abutting the north side of 77th Street; (c) the entire block between .Aldrich and Lyndale Avenues south of 76th. Street; (d) the east one-half block of the block between 75th and 76th Streets; (e) the west one-half of the block bet~reen Lyndale and Garfield Avenues, south of Century Court apartments and north of 76th Street; (f) the entire block between Lynda le and Garfield Avenues between 76th and 77th Streets; and (g) between Garfield and Pleasant Avenues, the first parcel abutting the north side of 77th Street. B. There are a number of planning and land use issues arising in the Area which require comprehensive planning, among which are the following: 1. The City is deficient in commercial and industrial tax base. Very little undeveloped land remains within the City. The location of the Area is such that with proper planning it has the potential to provide a location for some of the most valuable and desirable commercial and/or industrial develop- ment within the City. 2.~ The Area presently contains tracts of undeveloped or underdeveloped land which cannot be developed to the optimum without improving access and im- proving traffic patterns. 3. The Area may best be developed pursuant to a unified plan and/or in large segments rather than on a piecemeal basis. 4. The Area contains a number of buildings which are aging and appear to be in a deteriorating condition. Some parts of the Area present a poor visual appearance because of such factors as lack of uniform setbacks, unrelated facades, inadequate or inappropriate loading and unloading areas, insufficient parking, excessive land coverage, conflicting traffic movements and other functional inadequacies. { 2/11/ss ~.",?^IN~~:C~ C^OM A.74 CITY OF RICHFIE~.J. `+~(iVNcSO ~ ~~ 5. ,Present streets serving the Area do not appear to provide the best access from main thoroughfares to some parcels at the east and west edges of the Area. 6. The Area includes and is bounded by single-family residence districts which are jeopardized or adversely affected by non-residential traffic. There appears to be a need to relocate and redesign streets and other traffic control facilities in and around the Area so as to safeguard such residential areas and so as to minimize existing land use conflicts. 7. Several of the streets in the Area are of substandard design. It appears necessary and desirable to formulate a long-range master plan for control and movement of traffic within nd around the, Area. 8. It appears necessary and desirable to avoid further piecemeal develop- ment and redevelopment of the Area so as to reverse the undesirable development patterns which have existed and which now exist .within the Area including fragmented land ownership and under-utilization of the land. g. It appears that there are or may be substandard building conditions and structures used or intended to be used for industrial or other purposes within the Area. 10. It appears that by reason of sociological and technological changes, as well as by reason of dilapidation, obsolescence and the faulty arrangement or design of buildings and improvements in the Area, there is a need for compre- hensive planning and development of the Area. 11. It appears that there is or may be a lack of suitable public facilities, excessive land coverage in some parts of the Area, deleterious land use, and obsolete layout of land tracts and developments, requiring planning and redevelopment. 12. The foregoing factors and other factors are found to be injurious to the .health, safety, morals and welfare of the citizens and property owners of the City and persons occupying property or working and being in and around the Area. 13. The presence of such conditions has caused an impairment of the value of private investments, has threatened sources of public revenues, has deprived the community and its residents of better facilities and job opportunities, and has otherwise adversely affected the public welfare. C. There is a need for the formulation of a new comprehensive plan and program for the development and/or redevelopment of the Area. Such plan and program will require intensive study over a number of months. There is a need for an interim ordinance applicable to the Area for the purpose of protecting the planning process and the health, safety and welfare of the citizens of the City and to insure that the City and its citizens retain the benefits of the new comprehensive plan and development-redevelopment program for the Area. There is a further need to regulate, restrict or prohibit uses, developments or subdivisions of land within the Area during the planning process, so as to avoid fihe occurrence of events which will be inimical to the orderly develop- ment and redevelopment of the Area in future years. 2/11/85 Secticn 2. During t~:e period t~^zt t.'zis intzrim ordinance is in effect, no prop~er'ty within t~?e arza shall be developed. or redeveloped nor shall any licenses or permits, rezonings, plattings or land divisions pursuant to Ric3zfield Codz o1' Ordi~^,ances, Cl~nter III, Farts I, IV and VI, be issued by tY:e City for any such development or rfldeveiopment except as provided in Section 3 Section 3. Subdivision 1 . Not.~it"isj,,andir~ t.~;e limitations, restrictions, and proiv.biticns contained in t'^,e foregoing Secticn 2, t."e city council may grant permits for development cr redevelopment wit'z .n t'~e Arse, but only if it finds mat t.':e development or redevelopment involved Trill co~ply with t".e follo<~ring criteria: A• '~ permit will rot•involve tie construction cf a new building or tre enlara went of an existing building. 3. T~ constr ucticn~ will not matzrially crenge t,~:e fu~`~re usz, development or redevelcpment of t.'~e property involved or any adjacent properties. C. T'~ construction will not incr ease ~:e fair mar'.*et ~ralue of t'^.e progeny involved by more tr+,an tan percent. D. The construction of y~Y!e improve;~ent will not intensify traffic or parking problems on t":e subject property, adjacent properties, or adacent highways 2nd street,;. E. Tre proposed oro,~ect will not exacerbate or iztznsiftj conflicts cet~reen residential and non-cesid°ntiai tra=fic within t'~e Arsa. F. Granting of t::e permi.t *rill not m<:ke a malarial difference in yr c: ea~~ a serious impediment yea she develcpment or r°development of L~:e property i.-:volved upcn comnl=tion of t'^.e planning process.; G. T.'~ permit Trill irn~olve t::e recair, wainterzr_ce or safe- guarding of existing strut Wires or tre completion of buildi in`~zrior improvements ah~.ch are necessary to t::e groper ctn- . ti.^ued utilization of t.'ze proger•t~r pendi.~ w e pla.~*~ng prccess. Sucd. 2. TYs provisicns of ~hr,s orri:~ce srz1l not prevent ~'^.e City _rca prOC°ssiP.g 1:.CenseS, cermi ts, r°ZCYIii^.gS, p13t =':~S Or i8.-ld ~.1.V:.si.OnS l1A '~.;y,.~'?e pCL'1 ~ Of , CLl ~ ::o t i'?C1Ltdsg, t".eir 3CtI:a1 :.SSUa.^.C° ' ° ': o .JrO~eCt Cr prOJ2C t3 :evolved .gill cc®ly withh t.'ze ~ollcTring cri tar ia: A. The project will be on a single tract of land having an area of at least 80,000 square feet and will involve development or redevelopment within the Area which will have an estimated market value in excess of $2,000,000 per acre. Bill No. 1985-18 (8/3/85) B. The project involved is consistent with and complementary to the development or redevelopment of other adjacent properties within the Area. • 8/3/85 QRQINANCE CCOE A' 76 CITY 0i= RIC:-~FiEi.D, ~'v1INNSSOT,; 5~ ~ C. The proposed project will, in the cpinion of the council, contribute to and accelerate the development or redevelopment of the balance. of the Area. Subd. 3. Notwithstanding the provisions of the foregoing Subdivision 2, no license, permit, rezoning, platting or land division shall be issued for any project described in t.'tiat subdivision unless the site for the project is removed ,from the provisions of this ordinance by amendment to Section 1-A hereof. . Section 4. This ordinance shall remain in effect for a period of one year row m its effective datz, provided that in the event the planning process has not been completed within t'ze one year period, its effectiveness may be extended for such additional periods as the City Council may by resolution determine to be appropriate, not exceeding a total additional period of eighteen (18) tenths. Bill 1985-1 (2/11/85) 2/Z1/85 C~D!N~~VC CCOE ~. 7i Cl?Y QF ~lC:~FI~L.C, !AINNcSQ ~,:, 5~~ BILL N0. AME~YDMENT TO TRa1VSITORY .ORDINANCE N0. 17 . I8 At`i AMENDMENT TO T1~YSITORY ORDI'ANCE V0. 17.18 ENTITLED "~V INTER?''~1 ZONING ORDINA~YCE ADOPTED r OR THr PUR_DOSE OE' PROTyCTING THE PLP,i~TiVI~1G PROCESS IN A CERTAIN ARC OF THE CITY, REGULATING, RESTRICTL~IG A~~1D PROFlIHITNG CERTAIN QSES , DEV^-I,CP?~.EVT.S A~~JD SLED IVIS IONS WITHIN SUCK AREA. C2fiY OF RSCSFI ~'r.n DOES ORDAIN Section 3, Sub~.i.vision 2,. Paragraph A, of Transitory Ordi.- aance No. 17.18 entitled."fin. Interim Zgning Ordinance Adopted for the Purpose of Protecting the P1anr_ing Process in a Certai.a Area of the. City, Regulating, Restricting and Prohibiting Certain Qses, Developments. and Subdivisions within Such Area" is hereby amended. to read: "A- The p=o~ect will be on a singLe•tract oz 1and.havina an area o= at least 80,000 sv~uare Leet and will involve development or redevelopaen•t. within the Area which will have an estimated mar?ce~t value. in excess of 6_3;?63;A69 $2,000,000 ner~ acre." _.,._ Passed by the: City Council of. the City of Rich~ield, uizne- sata, this day of 1985.. ATTEST: 23ayo r City C er?c ~~ March 29, 195 Dennis Kraft City of Richfield 6'700 }'ortland Ave. South 'Richfield, MN 55423 Dear Mr. Kraft: I feel :it important since we have met several times, as well as have had several phone conversations, to outline our proposal and the obstacles that we appear to be running up against prior to the con- struction of our proposed hotel. We have proposed the construction of a new 150-roam, Q.-story Hampton lnn Hotel on the Intersection of 494 and Lyndale Avenue South. The sight currently houses a small mote]. complex. Hampton Inn Hotel. is a divi.si.on of Holiday Inn, .offering moderatrly priced accomodations in tho `~38 to X40 per rright range with no f'uod or bever•ag~; services. The construction of the hotel :itself, as well as the furnishings and fixtures are of the same high quality as required of the full service Holiday Inn Hotel. The chain was announced in late 1984, with plans to construct i.n 198,5 approximately 100 hotels nationwide with national advertising, as well as a nationwide reservation system. You currently have a rendering drp.icting the outer appearance of the hotel when completed. The sight that we are looking at provides adequate room for not only the hotel, but sufficient parking to meet Richfield ordinances. A bus service-would be provided to and from the airport. The hotel would provide the people of Richfield with 2.5 to 30 fulltime jobs. We will not be asking the City of Rich- field for any special incentives, and are not in need of :industrial revenue bonds or tax increment financing; however, we would obviously consider it if available. The project will provide immediate tax benefits to the City of Richfield, as the project will cost in the area of 4.5 to $ million dollars. As~we indicated to you at our meeting, Hampton Inn intends to construct four such hotels in the Metro area, one of which will be located some- where on 494. There are other developers looking at other sights; however, we feel that this s:fight is the most attractive current sight on 494. Should another developer make application to Hampton Inn for a franchise with a buildable location somewhere else on 4y4, there will not be another one built in this area. We do not intend to let this happen, and are currently reviewing other locations in the area which are available. One sue}i location is immediately across 494 on Lyndale in I~loomington. x ~" I Dennis Kraft Page 2 March 29, 1985 You have indicated to me that the planning commission's recommendation to the City Council will be to decline our request to remove the property from the moratorium area, thus eliminating the possibility of construction on this sight for anywhere from one year to eighteen months. We would like you to reconsider this decision. If there is anything that we can do that might change this, possibly meeting with the consulting firm in advance of their planning, we would like to pursue that alternative. If you feel there is a chance in changing your plans, we would be most happy to meet again with you, the consult- ing firm, or the City Council. Please drop me a line at your earliest convenience. Sincerely, v' " .~------ Thomas C. Larson PALSCO, Inc. TCL~ljl / / ~.tiv : l,Ctr:a.s) ~ ~~"~ (4-t~-1 CF t~~.t.1. ~( `~:.,.J -~.:~.,..~ a+~^~~tC~l~~,tL:t-•r;y vl.!-+a. ~f _ W 1 `.i t 1~-(~ C~ ligr..~.u.~ ,Q (~ ~Y~n-t ~`°L~u+-~ (~ °'~. ;'; u Cn ~ ~ c ~ -~ f (; ~ 3,) F~ •~-~ ~ !fit G ttJ V ~. ~. . / 7`~' . ~ . ? .•~ HRA RESOLUTION N0. RESOLUTION APPROVING AGREEMENT RELATING TO DEVELOPMENT PROPOSALS WITH CDR INVESTMENT/MINNESOTA WHEREAS, the HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA (HRA) has received a proposed document entitled "Agreement Relating To Development Proposals" (Agreement), which is on file in the office of the City Clerk for inspection; and WHEREAS, the HRA has reviewed the Agreement and determines that such is in the best interests of the City and serves the health, safety and general welfare of the community. NOW, THEREFORE, BE IT RESOLVED BY The Housing and Redevelopment Authority that the Agreement is hereby approved and the Chairman and Executive Director are hereby authorized and directed to execute the same on behalf of The Housing and Redevelopment Authority. Passed by the Housing and Redevelopment Authority of Richfield, Minnesota this 12th day of November, 1985. Thomas E. Harms, Chairman ATTEST: Joan Helmberger, Secretary EXHIBIT A CITY OF RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY OF THE CITY OF RICHFIELD INTERSTATE LYNDALE NICOLLET REDEVELOPMENT TAX INCREMENT AGREEMENT THIS AGREEMENT, made and entered into this 12th day of November, 1985, by and between the City of Richfield, Minnesota, a municipal corporation organized and existing under and by virtue of its charter and' the Laws of the State of Minnesota (the City) and the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, a public body corporate and politic formed and existing under the Laws of the United States of America and the State of Minnesota (the Authority). WITNESSETH: WHEREAS, the Authority has approved a Redevelopment Plan and Tax Increment. Financing District (TIF District) described in .that certain document entitled "Interstate Lyndale Nicollet Redevelopment and Tax Increment Financing Plan, City of Richfield, Minnesota, October 21, 1985" on file with the City Clerk and incorporated herein by reference (Project), and has by appropriate action established the TIF District and applied to •the City Council of the City for. approval of the Project and related Tax Increment Financing Plan (Plan); and WHEREAS, the City has by resolution adopted November 12, 1985, duly ap- proved the Project, the Plan, and the TIF District; and WHEREAS, Minnesota Statutes, Section 273.77 authorizes and requires tax increment agreements between the Authority and the City prior to the issuance of general obligations by the City to finance Project costs. NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter contained, it is hereby agreed by and between the parties hereto as follows: 1. The Authority hereby expressly agrees that so much of the tax incre- ment payments made to the Authority by the Hennepin County Auditor (Director of Property Taxation) from the Project shall be and are hereby pledged and assigned to the City as are necessary for the purpose of paying principal of, interest on and redemption premium (if any) on any and all general obligation bonds of the City issued for the financing of public redevelopment costs of the Project; provided, however, that so much of such tax increments as are needed by the Authority to reimburse itself for its expenditures heretofore made for the public development costs of the Project (as identified ir_ the Plan) may be retained by the Authority. The pledge made herein is expressly subject to the provisions of Minnesota Statutes, Section 273.75,. Subdivision 2. 2. The City agrees that it will from time to time and at the request of the Authority issue its general obligation bonds in separate series of bonds to finance development costs in the TIF District in accordance with the Plan or any duly adopted modification thereof. 3. The .City hereby acknowledges the request of the Authority to authorize and issue the City's general obligation tax increment. bonds (Bonds) in the aggregate principal amount of not to exceed $18,675,000, and agrees that it will authorize and issue such bonds. 4. All series of bonds issued pursuant to this Agreement shall be on a parity, one with the other, and the tax increments shall be used solely for the purposes specified in this Agreement. 5. The parities hereby mutually agree that it is the express intent and purpose of this Agreement to utilize the provisions of .Minnesota Statutes, Sections 273.71 to 273.78, the Minnesota Tax Increment Financing Act (Act), to finance the development costs of the Project described in the Plan, and, subject to the provisions of Section 273.75 of the Act, that all tax increments received with respect to the Project Area shall be segregated by the Authority in a special account on its official books until the development costs of the Proj- ect,~including interest on all money borrowed therefor, has been fully paid, and the City has been fully reimbursed from the tax increments for all principal and interest on the Bonds and any other bonds similarly issued and sold by the City which the City has issued in aid of the Project and any modification thereto, and any deficiency. in such principal and interest which the City has paid from taxes levied on other property within the City. IN WITNESS- WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers on the day and year first above written. CITY OF RICHFIELD Mayor City Manager ATTEST: Clerk (SEAL) HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA Chair Executive Director (SEAL) STATE OF MINNESOTA DIRECTOR OF PROPERTY TAXATION'S CERTIFICATE AS TO FILING OF AGREEMENT COUNTY OF HENNEPIN PURSUANT TO MINNESOTA STATUTES, SECTIONS 462,5$5 AND 273.77 I, the undersigned Director of Property Taxation of Hennepin County, Minnesota, hereby certify that an agreement between the City of Richfield and the Housing and Redevelopment Authority of the City of Richfield, dated Novem- ber 12, 1985, relating to the issuance of General Obligation Tax Increment Bonds of the City has been filed in my office pursuant to Minnesota Statutes, Sections 462.585 and 273.77. WITNESS My hand and official seal this day of 1985. Director of Property Taxation Hennepin County, Minnesota (SEAL) y. HRA RESOLUTION N0. RESOLUTION APPROVING CONTRACT FOR PRIVATE DEVELOPMENT WITH CDR INVESTMENTS/MINNESOTA WHEREAS, The HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA (HRA) has received a proposed document entitled "Contract for Private Development" (Contract), which Contract is on file in the office of the City Clerk for inspection; and WHEREAS, the HRA has reviewed the Contract and determines that such is in the best interests of the City and serves the health, safety and general welfare of the community. NOW, THEREFORE, BE IT RESOLVED BY The Housing and Redevelopment Authority that the Contract is hereby approved and the Chairman and Executive Director are hereby authorized and directed to execute the same on behalf of The Housing and Redevelopment Authority. Passed by the Housing and Redevelopment Authority of Richfield, Minnesota this 12th day of November, 19$5. Thomas E. Harms, Chairman ATTEST: Joan Helmberger, Secretary ~d~ HOUSING AND REDEVELOPMENT AUTHORITY Office of Executive Director HRA Letters No. 59 &60 Agenda November 12, 1985 Housing and Redevelopment Authority Commissioners City of Richfield Subject: Adoption Of Resolution Requesting The City Council To Issue Bonds For The ILN and Authorizing Execution of Tax Increment Agreement Dear Commissioners: The letter requests the HRA to adopt the above identified resolution. By so doing, the City Council would be requested to sell bonds, the proceeds of which would be utilized to fund a large portion of the Phase I improvement costs, which are proposed in the Redevelopment and Tax Increment Financing Plan document dated October 21, 1985. The balance of the revenues for Phase I are to be derived from MNDOT and the federal government as indicated on page 66 of the Redevelopment Plan and Tax Increment Financing Plan. The Estimated Project Costs as identified in the attached resolution are the same as those costs which appear on page 65 of the Plan document. Attached to the resolution is Exhibit A. Exhibit A is an agreement to be entered into by the HRA and City. It states that the tax increments received by the HRA from the County will be paid to the City until the bonds are amortized. The City agrees to issue at the request of the HRA bonds to finance public costs in the ILN project area, and agrees at this time to sell bonds in an amount not to exceed $18,675,000. Also attached to this letter is a pre-sale analysis for the $18,675,000 bond sale. Mr. Burggraaff of Evensen-Dodge, Inc. will be present at the Tuesday evening meeting to review the analysis. The analysis indicates the bonds would be amortized by the tax increment generated by the CDR development, development on the "Hampton Inn" site and the appreciation in value of the balance of the district. These are the same assumptions indicated in the Plan booklet. To provide maximum protection to the HRA/City, the bonds would be short-term and would be paid off by long-term bonds if development proceeds as proposed. The expenditure of the lea- ~ majority of the bond funds would be tied to the progress of the CDR development. Initially, the title and appraisal work prepatory to property acquisition would be initiated along with engineering and design work for the improvements. However, the "best efforts" of the HRA/City to purchase the property would only be utilized after the construction of the office building and parking ramp had progressed beyond footings and foundations. The "best efforts" of the HRA/City to construct the public improvements, i.e., rights-of-way improvements would be initiated only after the construction of the hotel had progessed beyond the footings and foundations. The temporary bond issue is for a three year period. After one year the bonds can be called and thereafter on any six month date that debt service payments are due. The reasons for the three year temporary bond issue is based upon the expectation that interest costs may be more favorable several years from now. Also, because of the short term feature, the city's financial advisor believes that the spread between the interest costs the city would pay and the interest that could be realized from the temporary investment of the bond proceeds will cover the bond issuance costs and the bond discount costs. This affords protection to the city in the event the developer(s) are unable to proceed. Additionally, the CDR developers are required to provide a $150,000 letter of credit which is further protection to the city to meet bond issuance and discount costs if the development does not occur. The disadvantage of a three year temporary bond issue is the possibility that Congress may remove the tax exempt feature on future TIF bond issues. An additional protection has also been provided for the HRA/City. If the CDR development proceeds and the increment from the balance of the project including the "Hampton Inn" site lags behind projections, the HRA/City have the option of reducing the scope of the public improvements and thereby reducing expenditures. In the agreement with CDR, the HRA/City would use its "best efforts" to acquire property and to construct only those improvements west of Lyndale Avenue excluding the Focal Area Improvement and the off-street parking areas north of 77th Street. Finally, the ability of the HRA/City to amortize the bonds would be further enhanced by CDR's agreement to execute an Assessment Agreement and a Deficiency Agreement. The Assessment Agreement establishes a minimum market value for the development upon completion. The minimum market value numbers were utilized as a base value in the tax increment cash flow. The Assessment Agreement is also executed by the County Assessor. With the Deficiency Agreement, the Developer agrees to pay to the city additional monies to help meet debt /~ ~ 3 service on the bonds if the increment from the development is less than projected. IRS rules limit the maximum amount of these payments to 5~ of the total principal and interest payments. Requesting the City Council to issue bonds a Tax Increment Agreement is appropriate at th the structure of the bond issue which includes issue prior to a long-term permanent bond, the expenditures by the HRA/City being tied to the the $250,000 liability to the City/HRA by CDR, Assessment and Deficiency Agreements. Recommendations and to enter into is-time because of a short-term phasing of progress of CDR, and, the City staff recommends approval of the resolution which: 1. Authorizes the Chairman and Executive Director to enter into a Tax Increment Agreement .which pledges the tax increment from the ILN Tax Increment District to the city to meet debt service; and, 2. Requests the City Council to authorize the issuance and sale of $18,670,000 in General Obligation Temporary Redevelopment Bonds of 1985. R pec~~°°tfully submitted, ~ih/ ~ - ,. John G. Cartwright Executive Director JGC/eja ~" ~ ~ ? HRA RESOLUTION NO: RESOLUTION DETERMINING NEED FOR FINANCING; RE+~UESTTNG THE CITY COUNCIL OF THE CITY OF RICHFIELD TO AUTHORIZE THE ISSUANCE OF GENERAL OBLIGATION TAX INCREMENT BONDS. TO FINANCE PUBLIC REDEVELOPMENT COSTS IN THE INTERSTATE LYNDALE NICOLLET REDEVELOPMENT PROJECT AREA; .AUTHORIZING TAX INCREMENT AGREEMENT WHEREAS, pursuant to the provisions of Minnesota Statutes, Sections 4b2.11 to 462.585 and Sections 273.71 to 273.78 (the Act), this Authority has established a Redevelopment Tax Increment Financing District (District), and approved a redevelopment project (Project) -and a related Tax Increment Financing Plan therefor (TIF Plan); and WHEREAS, the City Council has approved the financing of part or all of the public redevelopment costs of the Project by the issuance of general obligation bonds of the City payable in whole or in part from tax increments derived from the Project (Tax Increments) in accordance with the TIF Plan; and WHEREAS, this Authority has duly requested the Director of Property Taxation of Hennepin County to certify the original taxable value of the District and to return the resulting Tax Increments to the Authority to finance the development costs of the Project as identified in the TIF Plan; and WHEREAS, it is the intent of the Authority to utilize the authority granted by Section 273.77 of the Act by requesting the City to issue its general obligation bonds in one or more series (the Bonds) to finance one or more redevelopments within the Project, and to pledge the tax increments from the District for the retirement of the Bonds; and WHEREAS, the Authority expects to authorize the acquisition of certain parcels of land within the Project and to undertake all other actions required by the Act for the redevelopment of the Project; and WHEREAS, it is hereby found and determined that funds will be needed to finance the cost of acquisition, site improvements, demolition and related costs (Redevelopment Costs) for the Project which are presently estimated .and identified in the TIF Plan as follows: /~~ ;5 -2- Estimated Project Costs SITE ASSEMBLY COSTS/1 $ 8,008,290 PUBLIC IMPROVEMENTS: $ 5,695,800 77TH STREET ARTERIAL ROADWAY $ 1,742,400 RESIDNTIAL ROADWAY LOOPS 356,400 EXTENSION OF W 78TH STREET BUSINESS COLLECTOR 217,800 SIGNALS 220,000 77TH STREET BUFFER STRIP BARRIER 660,.000 SANITARY SEWER LIFT STATION 264,000 LYNDALE AVENUE STREETSCAPE 715,000 PARKING LOT IMPROVEMENTS 255,200 GENERAL STREETSCAPE IMPROVEMENTS. 165,000 FOCAL AREA 220,000 LYNDALE AVENUE BRIDGE OVER 1494 WIDENING 880,000 ENGINEERING-DESIGN/CONSTRUCTION $ 932,040 PHASE I/DETAILED COMPREHENSIVE SUB-AREA PLANNING $ 106,500 ADMINISTRATION/2 $ 921,860 BOND FEES/DISCOUNT $ 425,000 CAPITALIZED INTEREST $ 5,100,000 TOTAL $21,189,490 /1 INCLUDES APPRAISALS, ACQUISITION, RELOCATION, DEMOLITION, TAXES AND LEGAL COSTS AT CLOSING AND INTERIM PROPERTY MANAGEMENT COSTS /2 COSTS FOR CITY STAFF TIME, OFFICE SUPPORT, SUPPLIES AND CITY ATTORNEY TIME INCURRED FROM JUNE, 1983 THRU JUNE, 1989 , TO PREPARE THE REDEVELOPMENT PLAN DOCUMENTS AND PHASE I PROGRAM, AND, TO IMPLEMENT PHASE I AND PREPARED DE'T'AILED COMPREHENSIVE SUB-AREA PLANS FOR IMPLEMENTATION OF FUTURE PHASES. WHEREAS, the City is authorized by Section 273.77 of the Act, to issue the Bonds if this Authority pledges Tax Increments received from the District for payment of the principal of and interest on the Bonds issued in aid of the Project; and WHEREAS, the pledge of Tax Increments must be made by written agreement executed by the Authority and the City and filed with the Director of Property Taxation of Hennepin County, and when such an agreement is made and filed, the City may issue the bonds as provided in Minnesota Statutes, Chapter 475, subject only to the conditions required for bond financing improvements, the-costs of which are reimbursable from, special. assessments. =3- /~~-/ NOW;. THEREFORE;_BE.IT RESOLVED by_.the Housing_and__ Redevelopment Authority in and for the City of Richfield; Minnesota as follows: 1. This Authority hereby; and by and in accordance with the Tax Increment Agreement attached hereto as Exhibit A, pledges and appropriates Tax Increments from the District for the payment of the principal of and interest on Bonds when and if issued by the City in aid of the Project. 2. The form of the Tax Increment Agreement attached hereto as Exhibit A is approved. The Chairperson and Executive Director are authorized and directed to execute the Tax Increment Agreement on behalf of the Authority and to forward it to the City Council with a certified copy of this Resolution. 3. The Authority hereby formally requests the City Council of the City to authorize the issuance and sale of Bonds in the aggregate principal amount of not to exceed $18,675,000 to finance the Redevelopment Costs of the Project. 4. The Authority further respectfully informs the City Council that it may, and for the reasons set forth in this resolution, request additional series of Bonds in the future to finance the redevelopment costs of other redevelopment within the Project, all in conformance with the TIF Plan and any modification thereto. The Authority, therefore, re- quests that each series of Bonds issued in aid of the Project, and pursuant to the Tax Increment Agreement, be on a parity with each other series of Bonds so issued and be equally and ratably secured by the pledge of the Tax Incre- ment Agreement and this Resolution. Thomas E. Harms, Chairperson ATTEST: Joan Helmberger, Secretary John Cartwright, Executive Director EXHIBIT A ~~a - 7 CITY OF RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY OF THE CITY OF RICHFIELD INTERSTATE LYNDALE NICOLLET REDEVELOPMENT TA% INCREMENT AGREEMENT THIS AGREEMENT, made and entered into this 12th day of November, 1985, by and between the City of Richfield, Minnesota, a municipal corporation organized and existing under and by virtue of its charter and the Laws of the State of Minnesota (the City) and-the. Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, a public~~ody ~corporate~and politic formed and existing under the .Laws of the United States of America and the State of _ Minnesota (the Authority). WITNESSETH: WHEREAS, the Authority has approved a Redevelopment Plan .and- Tax Increment Financing District. (TIF District) described in that certain document entitled "Interstate Lyndale Ncollet Redevelopment and Tax Increment Financing Plan, City of Richfield, Minnesota., October 21, 19$5" on file with the City Clerk and incorporated herein by reference (Project)., and 'has by appropriate action established the TIF District and applied to the City Council of the City for approval of the Project and related'Tax Increment Financing Plan (Plan); and .WHEREAS, the City has by resolution adopted. November 12, 1985, duly ap- ~proved the Project, the Plan,.. and the TiF District; and WHEREAS, Minnesota Statutes, .Section 273.77 authorizes and requires tax increment agreements between the Authority and the City prior to the issuance of general obligations by the City to finance Project costs. -NOW., THEREFORE, in consideration of the mutual covenants and agreements hereinafter contained, it is hereby agreed by and between the, parties hereto as followsz 1. The Authority hereby expressly agrees that so much of the tax ineze- went payments made to the Authority by the Hennepin County Auditor (Director of Property Taxation) from the Project shall be and are hereby pledged and assigned to the City as are necessary for the purpose of paying principal of, interest on and redemption premium (if any) on any and all general obligation bonds of the __ _ __ City. issued for the financing of public redevelopment costs of the Project; provided, however, that so much of such tax increments as are needed by the Authority to reimburse itself for its expenditures heretofore made for the public development costs of the Project (as identified in the Plan) may be retained by the Authority. The pledge made herein is expressly subject- to the provisions. of Minnesota Statutes, .Section 273.75, Subdivision 2. 2. The City agrees that it will from time to time and at the request of the Authority issue its general obligation boads in .separate series of bonds to finance development costs in the TIF District in accordance with the Plan or any duly adopted modification thereof -~ 3. The City hereby acknowledges the request of the Authority to authorize and issue the City's general obligation tax increment. bonds (Bonds) in the aggregate principal amount of not to exceed $18,675,000, and agrees that it will authorize and issue such bonds. 4. All series of bonds issued. pursuant to this Agreement shall be on a parity, one with the other, and the tax increments shall be used solely for the purposes specified in this Agreement. 5. The parities hereby mutually agree that it is the express intent and purpose of this Agreement to utilize the provisions of Minnesota Statutes, Sections 273.71 to 273.78, the. Minnesota_Tax. Increment_Financing Act (Act), to finance the development-costs of the Project described in the Plan, and, subject to the provisions of Section 273.75 of the Act, that all tax increments received with respect to the Project Area. shall be segregated by the Authority in a special account on its official books until the development costs- Of the Proj- ect, including interest on all money borrowed therefor, has been. fully paid, and the City has been fully x°eimbursed from the tax increments for all principal and interest on the Bonds and any other bonds similarlq issued and sold by the City which the City has issued in aid of the Project and any modification thereto, and any deficiency is such principal and interest which the City has paid from taxes levied on other property within the :City.. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers on the day and year first above written. CITY OF RICHFIELD Mayor City Manager ATTEST: Clerk (SEAT.) 2 l~ ~ ~ HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA Chair Executive .Director - - ~SE~) ~0 STATE OF MINNESOTA DIRECTOR OF PROPERTY TAXATION'S CERTIFICATE AS TO FILING OF AGREEMENT. COUNTY. OF HENNEPIN PURSUANT TO MINNESOTA STATUTES, SECTIONS 4b2.585 AND 273.77 I, the undersigned Director of Property .Taxation of Hennepia County,.: Minnesota, hereby certify that an agreement between the City of Richfield and the Housing and Redevelopment Authority of the City of Richfield, dated Novem- ber 12, 1985, relating to the issuance of General Obligation Tax Increment Bonds of the City has been filed in my office pursuant to Minnesota Statutes, Sections 4b2.585 and 273.77. WITNESS My hand and official seal this day of 1985. Director of Property Taxation Hennepin. County,. Minnesota ~S~)