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01-14-80 agenda~~ HOUSI`~G AI`iD RLDVDLOP~ID~1T AUTiIOP.ITi .... Office of E ecut ive Director :IRA Letter Ito. 2 ~genc~~a January 1 - , 1 :22 _ _-.._` Subject: Public Hearing on Disposition of Property ,•~ ~ - Lyndale Fruit & Vegetable market, Inc. The HRA on December 27, 1979, held a public hearing on the sale ~;.1 F". of land to Lyndale Fruit & Vegetable Market, Inc. At that time, "A~{;~ the HRA continued this public hearing to January 14, 1980. Since last summer, Lyndale Fruit & Vegetable :Iarket, Inc. has been working with their architect, bond consultant, attorney and -"=-}°~ ` ' the HRA staff to formulate a physical and financial plan for re- - development and expansion of the garden center. The proposed re- development includes rehabilitation and expansion at the present _ location. The expansion necessitates HRA purchase and resale of the Adams' property located immediately north of the Lyndale i~tar- ,,; ket. The property is identified as G329, G335, and 6310 Aldriciz • - _.Avenue ~_ (map .attach.ed) . The .reuse value of this 1.74 acre tract ;, r ~,yL,;~ has been established at $84,000. ~~;. The redevelopment of the Lyndale Market area is a key ele.nent to accomplishing the L/H/N redevelopment plan goals of: tj ., ti~ ~. Implementing the redevelopment project by utilising •'the strengths of existing businesses; ~, 2. Strengthening a business area cahich specializes in home - improvement/garden type activities. `~ The Lyndale Fruit & Vegetable c•tar}:et redevelopment proposal and ;'~ accomplishmeri"t"of the above goals form a key strategy for a succ- ,~~~*'*,,-~' essful L/~/tV redevelopment project. `To help ass~.rre success of 15 the proposcd-ghr.c:en center redevelopment, the developer has: f A -~ `~' 1. Formulated a redevelopment plan W}11Ct1 conforcr;~ qua S '''~~ ~:~ stantially ~•~ith the L/II/~~ redevelopment }plan; ;~~;` ~y ` ' .] Met with the immediate neighborhood to (.11.JCUJS 2 the R ~ . ~~~4 .. . plan; .~~Y"Y ,~. r, 3. Received a favorable` rece,~.n:enc:atrl.on from the Fichf ielc? ~'y' ~ Planning Commission; .. Yq" • Y • ` ,~ Ai' r j~ y ~ t ~lL'•ih~? F'A'X ~C Wit^.+~..fG~/'~'~~k~ ~" ? i.x ax» .•,yvT.h~.'«vR.~.ia+x.l~i~itt~hl. .erfiY~2ii _(<.a6e~i..SaoiWrt.~~.+s;~Xa+a§Hm:s-.,KA,'L•i.. .~..r..: ~. .am~h .4e+Jd~1f ':Lr .+.AN.dP1T ~..~:~:~.~~=: dRA Letter No. 2 January 1 ~ , 1 930 s~w+... 7y.,~y ~~~J '. .;•..,.. ~.•~;,;~ 4. Submitted the plan to the city for.PUD approval; ~y • 5. Received approval from the Army Corps of ~nrineers, the Department of Natural Resources, ~•iir.nehaha ;9ater- ,Y~ ~ shed District, RING and CIC; 6. Received a favorable Industrial Development Revenue 'k- financing report, and received preliminary city council .; support to alloc•~ the IDR financing process to proceed; an~~ IS' 7. Concluded that HRA rener+- a 'L' ':F -. .;~ •A'y: ~~, ~ .: a::..,; ; ~; _: i Y:l ," :, p ~ __y cquisi~ion assistance and land "writedown" will be necessary to accomplish the planned redevelopment. The Adams property is identified in the L/H/N Redevelopment Plan • •~ as property to be acquired. Acquisition ~•rould be accomplished using tax increment financing (TIF). Thus, HRA involvement is de- pendent on tax increment feasibility. HRA policy requires a self- supporting TIF redevelopment project. That is, the tax return (tax increment) from the redevelopment must be sufficient to support the acquisition expenses incurred by the HRA. If the increment is - not sufficient, the developer must provide other monies to fund the shortfall. The proposed project does not have a sufficient tax increment cash flow to pay the HRA's costs. However, the developer has agreed `to pay for any shortfall on an annual basis. Approximately $36,000 per year in new real estate taxes are needed to reach TIF feasibil- ity. Depending on the property appraisal approach and public pol- icy, the annual tax increment would likely range from approximately $26,000, to $37,000. Because the higher tax return is more likely to occur, the HRA risk is limited. However, to reduce this risk further, the developer has agreed to guarantee the tax increment by making up, with a cash payment, any difference betcaeen the annual tax increment needed and the annual tax increment received from the new development. Accordingly, the staff's opinion is that HRA partic~ip~`tion in the proposed project is feasible, in terms of tax increment financing. A It is the recommendation of the staff that the HRA declare its •; intent to sell to Lyndale Fruit and Vegetable Market, Inc. the Adams property. It is also recommended that .the sale of the prop- erty be cotld•itioned upon the following: ,~ _ i 1. Developer entering into a Developer's f'lgreement with 7i,. th HR11 f d 1 3` e or re eve opment of the property; the Develop- • er's Agreem~nt would be S1.Illllar to the Developer's ` Agreement for the K-Hart project, and ~•rould include the ' following major provisions: ~_ :. • A. Agreement to purchase the property from the FiRA '' once the fIRi'1 purchased the property from the ~' ~, present owner. B. Provide a substantial security deposit for contract performance. ,. r .. ~ -"'~:. > .~. , ~';~~ ...., . ti RA ,~ .: ., . . f ~ r.:. F~~. , yJ ? ~~r_n ;~ Letter ~To. 2 -3- C. Provide a Cash d~poslt to ~e u:~ed ;;y .l-.~ .;~;. in the =dams ~ropcrty pt:rct~~:~.~ D. Agree to rede`~'elop all o~= the proper ~; in accor~.~- ance -•/lt.l ~i1e prCp Os2C, of :., ~: QeVr C~...~.. _ :~_: _ _. t0 be rOr;n',.ilatE.'d, Clty Ord 1.^.:=:CeS c?r1C: StatC la>.s. ~. AQree t0 ded~.C.~..`_e landscape ~_'--Se:::~"."?'~S y11S:'r, ~ .~~::_." Avenue and to reconstruct Aldrich Avenue by -.o~ri_:u the cul-du-sac to the north. F. HRA agrees tc reimburse' the developer for lim.its~: architectural and financing fees should it fail to deliver the property accordi:.~ to the co^tr~~ct. 2. Both the Lyndale Fruit & Vegetable I~larket, Inc. prepert~ and the property to be purchased by the HRA is resenet,' to PC 2 and a PUD final development plan is apprc-.Ted by the city council. 3 . The developer arranging a final financing cor; ~it:~.er.t . The HRA should declare its support for this proposal by adopt_~., a resolution declaring its intention to sell the Adams property to Lyndale Fruit & Vegetable Market, Inc. and instructing the - Executive Director and HRA attorney to enter into a Developer's ~~~± Agreement with the developer. The. city attorney ;•~ill present suc^ -_ a resolution for HP.A consideration at the Jan~:ary 14, 130 :i.':`: meeting. Respectfully submitted., 1 ~ , J Karl Nollenberger ~. ~ E;~ecutive Director KN/eja ec: Acting Redevelopment Director City Attorney ,;~. _ :'~'. K-" ~ ~ ~ _ y•~ J r ~ ,~~i• I ~ 1 ' ! '' r t• ~ '• ' i ~ i n HOUSING AND REDEVELOPMENT AUTHORITY Office of Executive Director f HRA Letter No. 1 Agenda January 14, 1980 Housing and Redevelopment _ Authority Commissioners City of Richfield Commissioners: Subject: Election of Housing and Redevelopment Authority Officers The by-laws of the Richfield Housing and Redevelopment Authority provide that the annual meeting of the authority be held on the second Monday in January. The by-laws require that the Chairman, Vice-Chairman and Secretary be elected at the - annual meeting of the HRA. The officers for 1979 were Loren L. Law, Chairman, Ivan Ludeman, Vice-Chairman, and Vern Luettinger, Secretary. It will be necessary for the commissioners to hold an election.. and elect these three officers for 1980. This is the only special item of business required at the annual meeting and ex- cept for this item, the HRA meeting can be conducted as if it were a regular meeting of the Authority. Respectfully submitted, Karl Nollenberger Executive Director KN/eja HOUSING AND REDEVELOPMENT AUTHORITY Office of Executive Director HRA Letter No. 2 Agenda January 14, 198 Housing and Redevelopment Authority Commissioners City of Richf field Commissioners: Subject: Public Hearing on Disposition of Property Lyndale Fruit & Vegetable D4arket, Inc. The HRA on December 27, 1979, held a public hearing on the sale of land to Lyndale Fruit & Vegetable Market, Inc. At that time, the HRA continued this public hearing to January 14, 1980. Since last summer, Lyndale Fruit & Vegetable Market, Inc. has been working with their architect, bond consultant, attorney and the HRA staff to formulate a physical and financial plan for re- development and expansion of the garden center. The proposed re- development includes rehabilitation and expansion at the present location. The expansion necessitates HRA purchase and resale of the Adams' property looate~mmedafely north of the Lyndale Mar- ket: Tie property is identified as 6329, 6335, and 6340 Aldrich - -- __... Avenue map atlracT~ecT} :-~`h__e__reuse value_of thi_s_ _1 74 a~-rP +rac-t ha`-s been establ_ished_,at.._~84_,_0_00. The redevelopment of the Lyndale Market area is a key element to accomplishing the L/H/N redevelopment plan goals of: 1. Implementing the redevelopment project by utilizing the strengths of existing businesses; 2. Strengthening a business area which specializes in home improvement/garden type activities. The Lyndale Fruit & Vegetable Market redevelopment proposal and accomplishment of the a'~ove goals form a key strategy for a succ- essful L/H/N redevelopment project. To help assure success of the proposed garden center redevelopment, the developer has: 1. Formulated a redevelopment plan which conforms sub- stantially with the L/H/N redevelopment plan; " 2. Met with the immediate neighborhood to discuss the plan; 3. Received a favorable recommendation from the Richfield Planning Commission; ' HRA Letter No. 2 -2- January 14, 1980 • 4. Submitted the plan to the city for,-PUD approval; 5. Received approval from the Army Corps of Engineers, the Department of Natural Resources, Minnehaha Water- shed District,- RING and CIC; 6. Received a favorable Industrial Development Revenue financing report, and received preliminary city council support to allow the IDR financing process to proceed; and 7. Concluded that HRA property acquisition assistance and land "writedown" will be necessary to accomplish the planned redevelopment. The Adams property is identified in the L/H/N Redevelopment Plan as property to be acquired. Acquisition would be accomplished using tax increment financing (TIF). Thus, HRA involvement is de- pendent on tax increment feasibility. HRA policy requires a self- supporting TIF redevelopment project. That is, the tax return (tax increment) from the redevelopment must be sufficient to support_ the acquisition expenses incurred by the HRA. If the increment is not sufficient, the developer must provide other monies to fund the shortfall. The proposed project does not have a sufficient tax increment cash flow to pay the HRA's costs. However,-the developer has-agreed to pay for any shortfall on an annual basis. Approximately $36,000 per year in new real estate taxes are needed to reach TIF feasibil- ity. Depending on the property appraisal approach and public pol- icy, the annual tax increment would likely range from approximately $26,000, to $37,000. Because the higher tax return is more likely to occur, the HRA risk is limited. However, to reduce this risk further, the developer has agreed to guarantee the tax increment by making up, with a cash payment, any difference between the annual tax increment needed and the annual tax increment received from the new development. Accordingly, the staff's opinion is that HRA participation in the proposed project is feasible,- in terms of tax increment financing. It is the recommendation of the staff that the HRA declare its intent to sell to Lyndale Fruit and Vegetable Market, Inc. the Adams property. It is also recommended that the sale of the prop- erty be conditioned upon the following: i 1. Developer entering into a Developer's Agreement with _.. the H_RA for redevelopment of the property; the Develop- er's Agreement would be similar to the Developer's Agreement for the K-Mart project, and would include the following major provisions: A. Agreement to purchase the property from the HRA once the HRA purchased the property from the present owner. B. Provide a substantial security deposit for contract performance. HRA Letter No. 2 -3- ~ ~ January 14, 1980 ~, C: Provide a cash deposit to be,used by the HRA in the Adams property purchase D. Agree to redevelop all of the property in accord- ance with the proposed plan, a development schedule to be formulated, city ordinances and state laws. E. Agree to dedicate landscape easements along Lyndale Avenue and to reconstruct Aldrich Avenue by moving the cul-du-sac to the north. F. HRA agrees to reimburse the developer for limited architectural and financing fees should it fail to deliver the property according to the contract. 2. Both the Lyndale Fruit & Vegetable Market., Inc. property and the property to be purchased by the HRA is rezoned to PC 2 and a PUD final development plan is approved by the city council. _ _ 3. The developer arranging a final financing commitment. The HRA should declare its support for this proposal by adopting a resolution declaring its intention to sell the Adams property to Lyndale Fruit & Vegetable Market, Inc. and instructing the. Executive Director and HRA attorney to enter into a Developer's Agreement with the deve,~.oper. The city attorney will present such a resolution for HRA consideration at the January 14, 1980 HRA meeting. Respectfully submitted, ~-.~" J Karl Nollenberger Executive Director KN/eja , cc: Acting Redevelopment Director City Attorney - r. ~! ~i .- „~ S },r - ' - ~ ' - T • ^ ~ S ~ 1 ~ I - ' ~~ ~ ' i I ! v ~ r ; ~' i ~ !~ , ~ ~ ~ i) I ~ ~ t ~R + ~ i i f , ~ F . ~:a .r~ 2~ ~ _k I i ~i ~ j 2 2j 2E J~ 3 - ~ ~ ii ~~~< ~~ s ~~ t tl T ' i /:\ ~~ r I7 `\ i ~r) 7 ~ ~ [~ I i !~ ~ r 4 ,~~3ii ~ ~ l i I -. _ - -- - ~ 3 ;~ ~ I i ..,.< \\\ 'k r e. ' ': ~... -~---~ I ~ r -- .h _ i z ~ i ~ ~- ;v L t y ~ ~ `./ y ~ ~ ~ i ' ~.: ,- ~,~ ~ f ~~,~ 'A~ _. .. .~. ,,. -% ~ ~ ~ ~ -~ ~; 'S ,~ ~ ~ ~, ~ - ~ .~ C' ~, \, , i/ ~~`;~~ ,.. - a~ i~ t i ~ ~ Z/ ~/ ~,~ ~~ j/ ~ ~ ~y~ /v _ ~ / ~ ~S~