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062110 agenda packetCITY OF RICHFIELD, MINNESOTA MONDAY, JUNE 21, 2010 REGULAR HOUSING AND REDEVELOPMENT AUTHORITY MEETING RICHFIELD CITY HALL COUNCIL CHAMBERS 6700 PORTLAND AVENUE 7:00 P.M. AGENDA Call to order Roll call 1. Approval of minutes of (1) Special HRA/Planning Commission Worksession of May 17, 2010; (2) Regular HRA Meeting of May 17, 2010; and (3) Special HRA/City Council/Planning Commission Worksession of June 8, 2010 2. HRA approval of agenda 3. Consent Calendar contains several separate items which are acted upon by the HRA in one motion. Once the Consent Calendar has been approved, the individual items and recommended actions have also been approved. No further HRA action is necessary. However, any HRA Commissioner may request that an item be removed from the Consent Calendar and placed on the regular agenda for HRA discussion and action. All. items listed on the Consent Calendar are recommended for approval. A. Consideration of approval of resolution authorizing HRA not to waive monetary limits on statutory municipality tort liability established by MN Statutes 466.04 S.R. No. 20 B. Consideration of approval of right-of-entry agreement with Michael Development related to HRA owned property at 515 West 64th Street S.R. No. 21 Notes: 4. Consideration of proposed preliminary agreement with Sherman Associates for redevelopment of 301 West 77th Street, vacant Candlewood parcel Staff Report No. 22 Notes: 5. Discussion regarding proposed Woodlake Housing development agreement; 64th Street and Lyndale Avenue Notes: 6. Consideration of guidelines for HRA funded Penn Avenue Streetscape Improvements Grant Program Staff Report No. 23 Notes: 7. Executive Director report 8. Claims and payroll Adjournment Auxiliary aids for individuals with disabilities are available upon request. Requests must be made at least 96 hours in advance to the City Clerk at 612-861-9738. HOUSING AND REDEVELOPMENT AUTHORITY/PLANNING COMMISSION SPECIAL WORKSESSION MINUTES Richfield, Minnesota MAY 17, 2010 CALL TO ORDER The meeting was called to order by HRA Chair Sandahl at 6:07 p.m. ROLL CALL HRA Members Present:Sue Sandahl Chair; Steven Quam; Joan Helmberger; Doris Rubenstein and David Gepner (arrived at 6:15 p.m.) Planning Commission Members Present: Rick Jabs Chair; Maureen Scaglia; Tom Rublein; Robert Hall; Dennis Schuller and Joshua Root (arrived at 6:30 p.m.) Planning Commission. Members Absent: Catherine Peloquin; Gordon Vizecky; Daniel Kitzberger Staff Present: John Stark, Acting Executive Director; Melissa Poehlman, City Planner, Karen Barton, Community Development Manager and Nancy Gibbs, City Clerk Item # I DISCUSSION REGARDING HRA AND PLANNING COMMISSION ROLES Acting Executive Director Stark distributed a flow chart of the redevelopment process to all members. He explained how the process works between staff, HRA, City Council and Planning Commission. City Planner Poehlman explained to all members the planning and zoning discretion pyramid chart that she distributed. After much discussion, the HRA and Planning Commission agreed to meet on an annual basis. Special Worksession Minutes -2- ADJOURNMENT The meeting was adjourned by unanimous consent at 7:00 p.m. Date Approved: May 17, 2010 Suzanne M. Sandahl Chair Nancy Gibbs City Clerk John Stark Acting Executive Director J HOUSING AND REDEVELOPMENT AUTHORITY MEETING MINUTES Richfield, Minnesota Regular Meeting May 17, 2010 CALL TO ORDER The meeting was called to order by Chair Sandahl at 7:02 p.m. ROLL CALL HRA Members Present: Sue Sandahl, Chair; Joan Helmberger; David Gepner, Doris Rubenstein and Steven Quam. Staff Present: John Stark, Acting Executive Director; Karen Barton, Community Development Manager and Nancy Gibbs, City Clerk. Item #1 APPROVAL OF MINUTES OF REGULAR HRA MEETING OF APRIL 19, 2010 HRA Commissioner Quam asked for a correction on Item # 3 of the minutes to reflect a correction from wouldn't be dal to wouldn't be illogical to increase a vacant lot fee. M/Gepner, S/Quam to approve the minutes of the April 19 2010 Regular HRA Meeting as amended. Motion carried 5-0. Item #2 HRA APPROVAL OF AGENDA M/Gepner, S/Quam to approve the agenda. Motion carried 5-0. HRA Meeting -2- May 17, 2010 Item #3 DISCUSSION OF APPLICATION FEES FOR RICHFIELD HRA NEW HOME PROGRAM S.R. 18 Community Development Manager Barton presented Staff Report No. 18 The HRA Commissioners unanimously agreed to not make any changes at this time. Item #4 CONSIDERATION OF RESOLUTION AUTHORIZING THE PURCHASE OF REAL PROPERTY LOCATED AT 1403-1405 EAST 66T" STREET UTILIZING PROCEEDS FROM THE BONDS OF 1996, PENDING A FINDING OF CONSISTENCY FROM THE PLANNING COMMISSION S.R. 19 Community Development Manager Barton presented Staff Report No. 19. Ms. Barton explained the price difference from $80,000 to $125,000 not to exceed $135,000, including closing costs. After some discussion the HRA decided to make a motion to increase the offer on the property M/Sandahl, S/Gepner that the following resolution be adopted and that it be made part of these minutes: HRA RESOLUTION NO. 1073 RESOLUTION AUTHORIZING PURCHASE OF REAL PROPERTY LOCATED AT 1403- 1405 EAST 66T" STREET Motion carried 4-1. (Rubenstein oppose). This resolution appears as HRA Resolution No. 1073. Item #7 EXECUTIVE DIRECTOR REPORT Acting Executive Director Stark reported that the City Council approved a tax increment financing plan for the Woodlake Plaza development at the May 11, City Council meeting. Item #8 CLAIMS AND PAYROLL M/Helmberger, S/Quam that the following claims and payrolls be approved: U.S. Bank 05/17/2010 Section 8 Checks: 118920 - 119035 $ 166,112.61 HRA Checks: 30888 - 30913 $ 106,377.11 TOTAL $272,489.72 HRA Meeting -3- Motion carried 5-0. ADJOURNMENT May 17, 2010 The meeting was adjourned by unanimous consent at 7:40 p.m. Date Approved: Nancy Gibbs City Clerk Suzanne M. Sandahl Chair John Stark Acting Executive Director J HOUSING AND REDEVELOPMENT AUTHORITY MEETING Richfield, Minnesota Special City Council/HRA/Planning Commission Worksession June 8, 2010 CALL TO ORDER The meeting was called to order by Mayor Goettel at 6:00 p.m. ROLL. CALL Council Members Present: Debbie Goettel, Mayor; Sue Sandahl; Pat Elliott; Fred Wroge; and Tom Fitzhenry. HRA Members Present: Sue Sandahl, Chair; Doris Rubenstein; David Gepner, and Steven Quam. HRA Members Absent: Joan Helmberger. Planning Commission Members Present: Rick Jabs, Chair; Tom Rublein; Gordon Vizecky; Joshua Root; and Robert Hall. Planning Commission Members Absent: Dennis. Schuller; Catherine Peloquin; Maureen Scaglia; and Dan Kitzberger. Staff Present: Steven L. Devich, City Manager; John Stark, Community Development Director; Christine Costello, Community Development Coordinator; and Cheryl Krumhofz, Recording Secretary. Item #1 DISCUSSION REGARDING PROPOSED DEVELOPMENT BY SHERMAN 8< ASSOCIATES FOR VACANT CANDLEWOOD PARCEL AND SOUTH PARCEL OF FORMER GARAGE SITE (COUNCIL MEMO NO. 80) Sherman Associates, developer, presented a proposed development plan for the former City Garage (the south portion only) and the vacant Candlewood parcel. A two phase affordable Special Worksession Minutes -2- June 8, 2010 housing project is proposed. The proposed first phase would begin on the vacant Candlewood parcel and include afour-story 43 unit affordable apartment building. The proposed second phase would be developed on the former south half of the City Garage site and would include athree- story 47 unit affordable apartment building. Sherman Associates representatives provided a project summary, including discussion of the site plan, architectural design, funding options with the Minnesota Housing Finance Agency, proposed affordable housing units; and parking provisions. Simpson Housing Services discussed the long term homelessness housing units included in the proposed project and the requirements. Sherman Associates explained initial funding discussions have included their request to receive the same funding options from the City as were considered for the previous developer who is no longer involved. Community Development Director Stark explained the Comprehensive Plan and zoning designation for the site. He also discussed the valuation of the property, including the tax exempt status. He reported that the previous development (ASi) withdrew their agreement in late 2009 due to funding issues. The City Council/HRA/Planning Commission expressed concerns regarding funding, parking and the developer's commitment to Phase II. Their consensus was proceed through the process for the proposed development and be provided with a Sources and Uses financial report. ADJOURNMENT The meeting was adjourned by unanimous consent at 6:59 p.m. Date Approved: Cheryl Krumholz Recording Secretary Suzanne M. Sandahl Chair Steven L. Devich Executive Director AGENDA ITEM # 3A REPORT # 2O s~ ~~ .~ STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING JUNE 21, 2010 REPORT PREPARED BY: REVIEWED BY EXECUTIVE DIRECTOR: NAME, ITEM FOR HRA CONSIDERATION: .Consideration of resolution authorizing the HRA not to waive the monetary limits on statutory municipality tort liability. I. RECOMMENDED ACTION: By Motion: Adopt a resolution authorizing the HRA not to waive the monetary limits on municipal tort liability established by Minnesota Statutes 466.04. ~ II. BACKGROUND ~ The HRA purchases its insurance from the League of Minnesota Cities Insurance Trust (LMCIT). A requirement of that insurance coverage is that each participating municipality must annually either. affirm or waive its statutory limits of liability. This action must be taken on or before July 1 of each year. The current statutory limits of liability for Minnesota cities are $500,000 for an individual claimant and $1,500,000 per occurrence. Cities can waive those limits by allowing an individual claimant to recover more than $500,000, up to the $1,500,000 occurrence limit or more if limits are waived and excess liability insurance is purchased. They may also waive the per occurrence limit and purchase excess liability insurance. Historically, the Richfield HRA has not waived its limits of liability. This is true of the City of Richfield also. The majority of cities in Minnesota have not waived their limits in the past. III. BASIS OF RECOMMENDATION A. POLICY STEVEN L. DEVICH, EXECUTIVE os2~tort • The State Statute establishing liability limits for cities at the current $1,500,000 level was established fairly recently and appears to be a reasonable limit. • Historically, just over one-half of the municipalities in Minnesota have not waived the monetary limits on municipality tort liability as was established by statutes 466.04. • The HRA could waive its statuary limits in future years if the Commissioners should decide to do so. • The City of Richfield has historically not waived its limits of liability. B. CRITICAL TIMING ISSUES • The HRA's insurance policy with the League of Minnesota Cities. Insurance Trust renews on July 1, 2009. This action must be completed before that time. • The HRA does not have to make a decision on purchasing excess liability coverage at this time. Coverage such as excess liability may be added at any time. C. FINANCIAL • There is a slight premium savings for political entities that affirm the statutory monetary limits. For the Richfield HRA the savings would be less than $1,000 for the coverage year. • The HRA has historically not purchased excess liability coverage because of the relatively high cost of such coverage. The cost for $1,000,000 of excess coverage would likely be between $6,000 and $8,000 per year. D. LEGAL • The tort liability limits established by Minnesota statutes have protected cities historically and no Minnesota court has ever established a monetary award in excess of the statutory limits against a municipality. • Each municipal entity must annually decide whether the City would voluntarily waive the statute for both the single claims each occurrence limits. IV. ALTERNATIVE RECOMMENDATION~S~ • If the HRA feels that any single claimant should receive more than the $500,000 limit, the HRA could elect to waive the statutory monetary limits. • If the HRA feels that the $1,500,000 per occurrence limit is not adequate, the HRA could purchase excess liability coverage and subsequently waive the limits of liability up to the amount of excess coverage purchased. by the HRA. V. ATTACHMENTS • Resolution VI. PRINCIPAL PARTIES EXPECTED AT MEETING • None ~A ~ HRA RESOLUTION NO. RESOLUTION AFFIRMING MUNICIPAL TORT LIABILITY LIMITS ESTABLISHED BY MINNESOTA STATUTES 466.04 WHEREAS, Minnesota Statute 466.04 provides for Municipal tort liability limits for Minnesota cities; and WHEREAS, the League of Minnesota Cities Insurance Trust has asked that each city review the tort liability limits and determine if the respective city would choose to waive it's limits; and WHEREAS, such decision to affirm or waive the tort liability limits must be filed with the League of Minnesota Cities Insurance Trust at the insurance renewal date. NOW, THEREFORE, BE IT RESOLVED that the Executive Director is directed to report to the League of Minnesota Cities Insurance Trust that the Richfield HRA does not waive the monetary limits on the municipal tort liability established by Minnesota statutes 466.04. Approved by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 21st day of June 2010. Suzanne M. Sandahl, Chair ATTEST: Joan Helmberger, Secretary AGENDA ITEM # 3B REPORT # 21 ~- STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING JUNE 21, 2010 REPORT PREPARED BY: REPORT PRESENTER: JOHN STARK, COMMUNITY DEVELOPMENT DIRECTOR NnuE, TITLE JOHN STARK, COMMUNITY DEVELOPMENT DIRECTOR T/ea.rr• Trmrr DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: Consideration of a Right of Entry Agreement with Michael Development related to the Housing and Redevelopment Authority owned propert at 515 West 64th Street. I. RECOMMENDED ACTION: By Motion: Adopt a motion to approve the attached Right of Entry Agreement with Michael Development related to the Housing and Redevelopment Authority owned property at 515 West 64th Street. II. BACKGROUND In 2009 Michael Development proposed the redevelopment of property at 6400 Lyndate Avenue and 515 W. 64th Street with 90 units of rental housing. In order to render their proposal as financially feasible, the Developer requested up to $822,000 in Tax Increment Financing (TIF). On April 19, 2010 the Richfield Housing and Redevelopment Authority (HRA) approved the establishment of the Woodlake Plaza Housing TIF District, subject to City Council approval: The City Council approved the establishment of the TIF District on May 11, 2010. There are a number of additional steps that must be taken before the redevelopment project can proceed. Among these next steps is for the Developer 06212010 515 W 64th Right of Entry to conduct further site analysis for environmental, soil condition and precise measurements. To accommodate this, the Developer has requested a Right of Entry Agreement (Agreement) onto the HRA owned property at 515 W. 64th Street. The attached Agreement, which was prepared by HRA legal counsel, would provide that right for up to a year unless terminated earlier by the HRA. III. BASIS OF RECOMMENDATION A. POLICY • The HRA has taken. several actions during the past nine months supporting the redevelopment of 6400 Lyndale Avenue and 515 W 64th Street. • The HRA currently owns the property at 515 W. 64th Street. • In order to conduct environmental, soil and survey analysis (and perhaps other analyses), the Developer has requested the Agreement to 515 W. 64th Street. B. CRITICAL TIMING ISSUES • The developer requires the Agreement as soon as possible in order to proceed with their site and construction planning in a manner that would allow fora 2011 construction start. C. FINANCIAL • The attached Agreement protects the HRA from financial liability arising from the Developers access to the property. D. LEGAL • Legal counsel drafted the attached Agreement. IV. ALTERNATIVE RECOMMENDATION~S~ • Adopt the attached Agreement with modifications to meet the HRA concerns. • Do not adopt the attached Agreement. V. ATTACHMENTS • Right of Entry Agreement for 515 W. 64th Street. VI. PRINCIPAL PARTIES EXPECTED AT MEETING • None. ,,~ 6/8/2010 DRAFT HRA RIGHT OF ENTRY AGREEMENT THIS AGREEMENT, made on this day of , 2010, by and between THE HOUSING AND REDEVELOPMENT AUTHORITY IN FOR THE CITY OF RICHFIELD, a Minnesota public body corporate and politic ("Owner") and MICHAEL DEVELOPMENT, a Minnesota ("Developer"). I. RECITALS 1.01. Owner is the fee simple owner of the real estate located at the addresses identified and legally described on the attached Attachment A ("HRA Property"). 1.02. Developer is investigating the possibility of purchasing the HRA Property for the purpose of redevelopment. 1.03. Developer wishes to have its consultants conduct geotechnical testing, environmental testing and other related studies on the HRA Property in order to identify whether the HRA Property is suitable for the intended uses. Developer has requested that Owner grant Developer, its employees, agents and contractors, the right to enter the HRA Property to conduct said testing and studies. 1.04. Developer also desires to secure the consent of Owner to enter the HRA Property for the purpose of conducting land surveys of the HRA Property. 1.05. It is understood that in executing this agreement, Owner will not be granting (a) any permanent interest in the HRA Property to Developer, or (b) exclusive use or possession of the HRA Property to Developer. II. B-a AGREEMENT NOW, THEREFORE, in consideration of the. premises and their mutual promises, the parties hereto hereby agree as follows: 2.01. Right of EntrX. Effective upon the date hereof, Owner hereby grants to Developer, its agents, employees, contractors and invitees, and such other consultants as Developer may elect (collectively, "Consultants") the right to enter upon the HRA Property, for the purpose of carrying out the activities described in sections 1.03 and 1.04 above relative to Developer's possible purchase of the HRA Property. 2.02. Consideration. In consideration for such right of entry, Developer agrees to: (a) Notify Owner of the date and time. that work by Developer or its Consultants on the HRA Property will commence under this Agreement which notice shall be at least five (5) business days prior to doing any work on the HRA Property in order to permit Owner's employees or consultants retained by Owner to be present during the time any work is being done by Developer or its Consultants; (b) Secure all appropriate government approvals and permits for any work, including any work that will occur within public streets adjacent to the HRA Property; (c) Provide a copy of all test results and reports prepared by Developer's employees or Consultants evaluating the conditions present on the HRA Property to Owner as soon as reasonably possible following final completion thereof. (d) Dispose of all solid waste generated during the course of Developer's sampling activities and other work on the HRA Property in accordance with applicable federal, state and local laws, rules and regulations. (e) Do the work in the shortest period of time reasonably necessary to complete such 38-3 activities authorized under this Agreement as Developer, in its sole discretion, shall elect to undertake; (f) Use the HRA Property only for the purposes described herein and not park or store any equipment on the HRA Property, except during the limited periods of time when the work on the HRA Property which is contemplated by this Agreement is actually m progress; (g) Do no unnecessary damage to the HRA Property and restore the HRA Property to substantially the same condition as the condition in which it was found by Developer at the time of Developer's or its Consultants' entry upon the HRA Property pursuant to this Agreement. As soon after completion of its work on the HRA Property as allowed by applicable authorities, Developer shall properly abandon and remove any well installed by Developer or its Consultants, in accordance with state regulations; (h) Hold Owner harmless from and indemnify Owner from any and all claims, damages, judgments or obligations, including the cost of defense of suit, arising out of damage to HRA Property or arising out of injury to anyone incurred or alleged to have been incurred in connection with or as a result of any work done pursuant to this Right of Entry, or as a result of Developer's or its Consultants' intentional torts or negligence; (i) Developer shall ensure that its Consultants or their contractors which enter the HRA Property pursuant to this Agreement shall carry insurance during the time any work is done on the HRA Properly in accordance with the following minimum requirements: Workers' Compensation Insurance with limits as provided by statute, with all 3B-~{ necessary statutory .elections to provide coverage for and/or claims made by any person doing work on the HRA Property pursuant to this Right of Entry; Employer's liability insurance (often included as coverage (b) in the Workers' Compensation policy) with limits of $100,000; Comprehensive Auto (and truck) Liability Insurance with minimum combined single limits of $1 million per occurrence; Comprehensive General Liability Insurance (including coverage for contractual liability, products and completed operations liability, liability arising out of explosion, or underground related incidents) with minimum combined single limits of $1 million per occurrence. In addition, the Comprehensive General Liability policy shall include Owner and Developer as additional insureds with respect to work done on the HRA Property. (j) If Developer or its Consultants obtains any data or issues any report, it must give Owner a copy of any data or report. 2.03. Ex ir'p ation• The right of ,entry provided under this Agreement will automatically expire on June 22, 2011 unless terminated earlier through action of the HRA. 2.04. Governing Law. This Agreement shall be interpreted in accordance with the laws of the state of Minnesota. 2.05. Notices and Demands. All notices, demands or other communications under this Agreement shall be effective only if made in writing and shall be sufficiently given and deemed given when delivered personally, transmitted by facsimile, or mailed by certified mail, return receipt requested, postage prepaid, properly addressed as follows: 3 6-5 If to Owner: Richfield HRA Attn: 6700 Portland Avenue South Richfield, MN 55423 With a copy to: John B. Dean Kennedy & Graven, Chartered 470 U. S. Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 If to DEVELOPER: Michael Development With Copy to: Or to such other persons as the parties may from time to time designate in writing and forward to the other persons entitled to receive notice as provided in this section. 2.06. Amendment. This Agreement may be amended by the parties hereto only by written instrument executed with the same procedures and formality as were followed in the execution of this Agreement. IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed in their names and on their behalves on or as of the above date. ~~^ Owner: RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY By: Its Chair By: Its Executive Director Michael Development, A Minnesota By: Its: 38-7 ATTACHMENT A List of HRA Property Addresses and Legal Descriptions AGENDA ITEM # [~ REPORT # 22 STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING .TUNE 21, 2010 REPORT PREPARED BY: REPORT PRESENTER: ACTING DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: CHRISTINE COSTELLO, COMMUNITY DEVELOPMENT SPECIALIST NAME, TITLE JOHN STARK, COMMUNITY DEVELOPMENT DIRECTOR ITEM FOR HRA CONSIDERATION: Consideration of a proposed Preliminary Agreement with Sherman Associates for the redevelopment of 301 West 77th Street, vacant Candlewood Parcel. I. RECOMMENDED ACTION: By Motion: Approve and authorize execution of attached Preliminary Agreement with Sherman Associates for redevelopment of 301 West 77th Street, vacant Candlewood Parcel. II. BACKGROUND Sherman Associates (Sherman) is interested in redeveloping the 1.02 acre area north of the Candlewood Hotel, often referred to as the `Vacant Candlewood Parcel'. Sherman is proposing a 43-unit affordable apartment building that will include 9one-bedroom, 18two-bedroom, and 16three-bedroom units. Four of the units will have rent capped at 30% of the Area Median Income (AMI) and 39-units will have rent capped at 50%AMI. Renters would qualify to live in any of the units if their income is at or below 60%AMI. The building is proposed to be four stories in height and the amenities will include underground parking, secure building access, community room and patio, individual washer/dryer in ali units, as well as access to additional private storage. As part of the 43-unit apartment building four units will be for families transitioning from 062110-Prelim Agreement Sherman Associates.doc homelessness. Sherman will contract with Simpson. Housing Services to provide case management for the families to ensure family and financial stability. The rent for these four units will be paid through the use of Federal and State funding and will remain available for such use throughout the life of the building. Sherman is a Minneapolis-based real estate developer that specializes in the design, construction and financing of quality housing, both for sale residential and rental, plus commercial properties in Minnesota, Wisconsin, Iowa, Missouri and California. Sherman has developed and/or has rehabilitated more than 5,000 multi- family and single-family homes, and more than 500,000-square feet of commercial property. Sherman owns and manages all of its apartment units and is taking pride in their reputation for quality service and support for its multi-family dwellings. Sherman owns and operates both the, `East Phillips Commons' at 2909 Bloomington Avenue South, Minneapolis and `The Crossing at Valley View' at 8735 Portland Avenue South, Bloomington. For the development of the site, Sherman is applying for funding through the Minnesota Housing Finance Agency (MHFA) Housing Tax Credit program. The MHFA funding offers a ten year reduction in tax liability to owners and investors in eligible affordable rental housing units produced as a result of new construction, rehabilitation, or acquisition. The MHFA is the primary agency that is designated by the Minnesota Legislature to allocate the Housing Tax Credit program. The MHFA funding application uses a "local financial support" as evaluating criteria. A price reduction or donation would increase the likelihood that the project would get approval. Sherman, therefore, has requested a land donation for the Housing and Redevelopment Authority (HRA) parcel. Sherman will not be requesting tax increment financing (TIF) for their proposed project. In a similar situation when Accessible Space Inc. (ASi) was proposing an affordable senior rental building on this site in 2009 the HRA created a Housing TIF District in order to compensate the HRA for the potential donation of the land at that time. Although the ASi project was not awarded their funding through the Federal Housing and Urban Development Agency (HUD), and subsequently decided not to pursue a project on this site; so the Housing TIF District that was created is still in place for a future user. Through the Housing TIF District the HRA would receive back the value of the property. Even with TIF, the new development will also pay new "base" taxes to the City, County and School District, which are not being paid now since it is currently an HRA property, and therefore tax exempt. The purpose of the Preliminary Agreement will demonstrate to MHFA that the "local financial support" for the grant funding has been supported by the HRA. The Preliminary Agreement is contingent upon Sherman receiving funding from MHFA, if funding is not received the HRA will still retain ownership of the parcel. III. BASIS OF RECOMMENDATION A. POLICY • The HRA owns the property known as the vacant Candlewood Parcel. • It will be the responsibility of Sherman to work with any third party property, especially the Candlewood Hotel for any future rights to cross access and parking. • The Preliminary Agreement is contingent upon Sherman securing MHFA funding. If funding is not secured, the Preliminary Agreement will be terminated and the HRA will retain ownership of the property. • A Housing. TIF District was created for this site in August 2009. The HRA voted 3 to 1(Quam opposed) to approve. B. CRITICAL TIMING ISSUES • Without the HRA's "financial support" it is more than likely that Sherman would not be awarded the MHFA funding for the proposed 43-unit affordable multi-family housing project. C. FINANCIAL • The Agreement requires Sherman to reimburse the HRA for consultant related expenses up to $15,000. Under the proposed project, the HRA will be paid for the vacant Candlewood Parcel through TIF. D. LEGAL • The HRA's legal. counsel has drafted the proposed Preliminary Agreement. IV. ALTERNATNE RECOMMENDATION(S~ • Approve the Preliminary Agreement with added provisions or modifications. • Do not approve the Preliminary Agreement. • Continue the consideration of the Preliminary Agreement to a later meeting date. V. ATTACHMENTS • Preliminary Agreement with Sherman Associates VI. PRINCIPAL PARTIES EXPECTED AT MEETING • Ryan Sailer, Sherman Associates y-I A PRELIMINARY AGREEMENT THIS AGREEMENT is made and entered into this day of ; 2010, by and between the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, a Minnesota public body corporate and politic ("HRA") and Sherman Associates, Inc., a Minnesota corporation ("Sherman"). RECITALS: First: Sherman and the HRA have been engaged in informal discussions regarding the possible development of certain land owned by the HRA and located in the City of Richfield (the "HRA Property") that is generally shown in the attached Exhibit A (the "Area"). The legal description of the HRA Property is also contained in Exhibit A; Second: Sherman is proposing redevelopment within the Area which will consist of residential use (hereinafter the "Project"); Third: Based on initial reviews of the proposal, it appears that the Project is potentially feasible; however, further review and detail are needed; Fourth: The parties wish to cooperate in further analyzing the potential and feasibility of the Project and are willing to proceed with such analysis as described in this Agreement; Fifth: The parties acknowledge that Sherman will expend substantial time and effort, and incur substantial expense in pursuing the Project; Sixth: Sherman is willing to undertake the activities described in this Agreement only with the reasonable assurance from the HRA that it will support and cooperate with Sherman in its efforts; and that the HRA Property will be conveyed to Sherman upon satisfactory completion of the items described herein; Seventh; The HRA and Sherman have executed this Agreement to document their understanding with respect to the proposed Project. AGREEMENT NOW, THEREFORE, in consideration of the premises and mutual obligations of the parties contained herein, each of them does hereby represent, covenant and agree with the other as follows: 1. Statement of Intent. It is the intention of the parties that during the term of this agreement the following activities will take place: 370253v1 JBD RC125-1 ~I-Z (a) Financial Feasibility. Sherman will conduct a financial feasibility analysis of the Project, in such detail and nature as Sherman, in its sole judgment determines necessary. The HRA's fiscal consultant will also conduct a financial analysis of Sherman and the Project. The purpose of the HRA's analysis is to determine Sherman's ability to finance the Project as proposed. Sherman will, as a part of the HRA financial study, provide an internally prepared market study/development feasibility study for the HRA. The analysis will consider such factors as Sherman's capability to arrange for borrowing (as indicated by term sheets), the anticipated level of other assistance available to the Project from the HRA other sources, and Sherman's ability to provide equity to the Project. Information obtained from Sherman in connection with this analysis will be subject to such confidentiality provisions as are required by Sherman and permitted by law. (b) Plan Review and Refinement. Sherman :will present the general development plan, including parking layout and design, to the City for review and comment; and will also undertake any additional studies or refinements to the plan for the Project that are necessary to determine that the plan (i) complies with the City's land use requirements; (ii) provides sufficient detail to permit the reviews described in paragraphs (a) and (b) above. (c) Contract Negotiation. On or before February 28, 2011, the parties will attempt in good faith to negotiate the terms of a contract for private development (the "Contract") which will provide for the conveyance of the HRA Property to Sherman, the nature and timing of the private improvements to be constructed, the form, amount and conditions of any economic assistance to be provided by the HRA in aid of the Project, including any land writedown. The Contract will contain such other and additional terms as either party believes are necessary for the transaction. (d) Right of Entry. In fulfillment of its responsibilities under this Agreement, Sherman desires, at its sole expense, to conduct environmental testing, geotechnical testing and survey work on the HRA Property. Upon execution of this Agreement, the HRA will also execute and deliver to Sherman a right of entry agreement in substantially the form of the attached Exhibit B. 2. Undertakin,_g by Sherman. During the term of this Agreement, Sherman will undertake all of the activities necessary, in Sherman's discretion, to accomplish the activities described in paragraph 1 above to be performed by Sherman. Sherman will provide Project and financial information to the HRA. 370253v1 JBD RC125-1 2 ~f -3 HRA's Undertaking and Agreement. (a) The HRA agrees to cooperate with Sherman in Sherman's undertakings, agrees to utilize its best efforts, subject to Sherman's performance, to accomplish the activities described in paragraph 1 above, which also includes an analysis of the nature, area, and financial implications of any tax increment district which might be established. (b) The HRA further agrees that during the term of this Agreement the HRA will not: (i) provide or enter into an agreement for development or the provision of financial assistance to any third party in connection with any proposed development within the Area, (ii) condemn or agree to proceed with the condemnation of any property within the Area to assist or facilitate development within such area by any third party, (iii) solicit proposals from any third party or respond to offers regarding any proposed sale or development within the Area, or (iv) sell or encumber any land owned by it located within the Area. It is the intention of this provision that, during the term of this Agreement, Sherman shall have the exclusive right to negotiate the acquisition of, and to acquire the HRA Property. 4. Term. The term of this Agreement shall be for a period of one year, provided, in the event (i) either party, after consultation with the other party, determines in good faith that the other party is not diligently pursuing the Project or its obligations hereunder; or Sherman determines, in good faith, that the Project is not feasible, such determining party may terminate this Agreement upon thirty days written notice to the other. The HRA may also terminate this Agreement for failure of Sherman to provide additional funds to the Deposit pursuant to paragraph 5 E. below. The parties each waive any claim or cause of action that they may have against the other party based upon the termination of this Agreement by such other party. The parties may, by mutual written agreement extend this Agreement for such further periods as they shall determine to be appropriate from time to time. Such extension will not be deemed as an extension of any Right of Entry Agreement executed by the parties, which must be extended according to its terms. Any such notice shall be deemed delivered if either actually delivered, or if faxed and mailed to the parties at the following addresses: Sherman Associates, Inc. 233 Park Avenue South, Suite 201 Minneapolis, MN 55415 ATTN: Ryan Sailer Fax: 612.332.8119 370253v1 JBD RC125-1 3~ t'~ Richfield Housing and Redevelopment Authority 6700 Portland Avenue South Richfield, MN 55422 Attn: Executive Director Fax: 612.861.9749 5. Miscellaneous. (a) This Agreement constitutes the entire agreement between the parties relative to the proposed Project. Unless specifically described herein, no obligation shall be inferred or construed. (b) Redevelopment of the Area will be in accordance with further agreements which the parties shall, in good faith attempt to negotiate during the term of this Agreement. (c) As expansion of the foregoing, Sherman understands that further and separate action, for which no obligation is created hereunder, will be required before the HRA or Sherman is obligated to take various actions with respect to the Project. Those actions may include, without limitation: 1) Modification of Project Area and/or Tax Increment District; 2) Zoning and subdivision approvals to the extent any are required; 3) Construction of public improvements to serve the Project; and 4) Approval of separate contract calling for the actual redevelopment of the Area. (d) Sherman further understands that many of the actions which the HRA may be called upon to take require the reasonable discretion and in some instances the legislative judgment of the HRA or the City, such actions may be made only following established procedures; and HRA may not, by agreement, agree in advance to any specific decision in such matters. (e) With the execution of this Agreement Sherman will deliver a deposit to the HRA in the amount of $7,500 (the "Deposit"). The deposit shall be used to reimburse the HRA for its costs and expenses for the service of its consultants, including legal and fiscal advisors, retained pursuant to paragraph 3. If the amount remaining in the Deposit is reduced to below $2,500, Sherman shall, upon five days written notice from the HRA, make an additional deposit in an amount sufficient to return the amount on deposit to $7,500. The notification from the HRA will include sufficient invoices and other documentation supporting the request for the additional deposit. If such deposit is not made, the HRA may elect to suspend its performance hereunder. If the deposit is not made within 60 days following the date of such suspension, the HRA may elect to either continue the 370253v1 JBD RC125-1 4 ~~ suspension of its performance, or may elect to terminate this Agreement. Such initial suspension and any subsequent election will be effective on the date it is given in writing, or on such later date specified in the notification. Any unexpended or unencumbered portion of the Deposit shall be returned to Sherman upon the expiration or termination of this Agreement. Notwithstanding any provision of this paragraph to the contrary, Sherman shall have no obligation to make Deposits under this Agreement in excess of a cumulative total of $15,000. IN WITNESS WHEREOF, the parties have executed this Agreement effective the date and year first above written. HOUSING AND REDEVELOPMENT SHERMAN ASSOCIATES, INC. AUTHORITY IN AND FOR THE CITY OF a Minnesota corporation RICHFIELD, MINNESOTA By: By_ Its: By: Its: Its: 370253v1 JBD RC125-1 5 4-! EXHIBIT A LEGAL DESCRIPTION OF HRA PROPERTY I. Leal Lot 1, Block 1, Candlewood Hotel Addition II. Project Area Error! Unknown document property name. A-1 ~-1 EXHIBIT B RIGHT OF ENTRY AGREEMENT THIS AGREEMENT, made on this day of , 2010, by and between THE HOUSING AND REDEVELOPMENT AUTHORITY IN FOR THE CITY OF RICHFIELD, a Minnesota public body corporate and politic ("Owner") and SHERMAN ASSOCIATES, INC., a Minnesota corporation ("SHERMAN"). I. RECITALS 1.01. Owner is the fee simple owner of the real estate located at the addresses identified and legally described on the attached Attachment A ("HRA Property"). 1.02. SHERMAN is investigating the possibility of purchasing the HRA Property for the purpose of redevelopment. 1.03. SHERMAN wishes to have its consultants conduct geotechnical testing, and other related studies on the HRA Property in order to identify whether the HRA Property is suitable for SHERMAN's intended uses. SHERMAN has requested that Owner grant SHERMAN, its employees, agents and contractors, the right to enter the HRA Property to conduct said testing and studies. 1.04. SHERMAN also desires to secure the consent of Owner to enter the HRA Property for the purpose of conducting land surveys of the HRA Property. SHERMAN has requested that Owner grant its consent to the entry of these additional consultants onto the HRA Property to conduct their studies. Error! Unknown document property name. B-1 y -8 1.05. It is understood that in executing this agreement, Owner will not be granting (a) any permanent interest in the HRA Property to SHERMAN, or (b) exclusive use or possession of the HRA Property to SHERMAN. II. AGREEMENT NOW, THEREFORE, in consideration of the premises and their mutual promises, the parties hereto hereby agree as follows: 2.01. Right of Entry. Effective upon the date hereof, Owner hereby grants to SHERMAN, its agents, employees, contractors and invitees, and such other consultants as SHERMAN may elect (collectively, "Consultants") the right to enter upon the HRA Property, for the purpose of carrying out the activities described in sections 1.03 and 1.04 above relative to SHERMAN's possible purchase of the HRA Property. 2.02. Consideration. In consideration for such right of entry, SHERMAN agrees to: (a) 'Notify Owner of the date and time that work by SHERMAN or its Consultants on the HRA Property will commence under this Agreement which notice shall be at least three (3) business days prior to doing any work on the HRA Property in order to permit Owner's employees or consultants retained by Owner to be present during the time any work is being done by SHERMAN or its Consultants; (b) Secure all appropriate government approvals and permits for any work that will occur within public streets adjacent to the HRA Property; (c) Provide a copy of all test results and reports prepared by SHERMAN's employees or Consultants (except appraisal reports) evaluating the conditions present on the Error! Unknown document property name. B-2 ~f-9 HRA Property to Owner as soon as reasonably possible following final completion thereof. (d) Dispose of all solid waste generated during the course of SHERMAN's sampling activities and other work on the HRA Property in accordance with applicable federal, state and local laws, rules and regulations. (e) Do the work in the shortest period of time reasonably necessary to complete such activities authorized under this Agreement as SHERMAN, in its sole discretion, shall elect to undertake; (~ Use the HRA Property only for the purposes described herein and not park or store any equipment on the HRA Property, except during the limited periods of time when the work on the HRA Property which is contemplated by this Agreement is actually m progress; (g) Do no unnecessary damage to the HRA Property and restore the HRA Property to substantially the same condition as the condition in which it was found by SHERMAN at the time of SHERMAN's or its Consultants' entry upon the HRA Property pursuant to this Agreement. As soon after completion of its work on the HRA Property as allowed by applicable authorities, SHERMAN shall properly abandon and remove any well installed by SHERMAN or its Consultants, in accordance with Minnesota Department of Health regulations; (h) Hold Owner harmless from and indemnify Owner from any and all claims, damages, judgments or obligations, including the cost of defense of suit, arising out of damage to HRA Property or arising out of injury to anyone incurred or alleged to have been incurred in connection with or as a result of any work done pursuant to Error! Unknown document property name. B-3 'f-~o this Right of Entry, or as a result of SHERMAN's or its Consultants' intentional torts or negligence; (i) SHERMAN shall ensure that its Consultants or their contractors or invitees which enter the HRA Property pursuant to this Agreement shall carry insurance during the time any work is done on the HRA Property in accordance with the following minimum requirements: Workers' Compensation Insurance with limits as provided by statute, with all necessary statutory elections to provide coverage for and/or claims made by any person doing work on the HRA Property pursuant to this Right of Entry; Employer's liability insurance (often included as coverage (b) in the Workers' Compensation policy) with limits of $100,000; Comprehensive Auto (and truck) Liability Insurance with minimum combined single limits of $1 million per occurrence; Comprehensive General Liability Insurance (including coverage for contractual liability, products and completed operations liability, liability arising out of explosion, or underground related incidents) with minimum combined single limits of $1 million per occurrence. In addition, the Comprehensive General Liability policy shall include Owner and SHERMAN as additional insureds with respect to work done on the HRA Property. (j) If SHERMAN or its Consultants remove a sample or portion of the HRA Property for investigation, monitoring or testing or obtains any data or issues any report, it must give Owner a copy of any data or report. 2.03. Ex iration. The right of entry provided under this Agreement will automatically Error! Unknown document property name. B-4 `~-~l expire on February 28, 2011. 2.04. Governin~Law. This Agreement shall be interpreted in accordance with the laws of the state of Minnesota. 2.05. Notices and Demands. All notices, demands or other communications under this Agreement shall be effective only if made in writing and shall be sufficiently given and deemed given when delivered personally, transmitted by facsimile, or mailed by certified mail, return receipt requested, postage prepaid, properly addressed as follows: If to Owner: Richfield HRA Attn: 6700 Portland Avenue South Richfield, MN 55423 With a copy to: John B. Dean Kennedy & Graven, Chartered 470 U. S. Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 If to SHERMAN: Sherman Associates, Inc. 233 Park Avenue South, Suite 201 Minneapolis, MN 55415 Attn: Ryan Sailer Or to such other persons as the parties may from time to time designate 'in writing and forward to the other persons entitled to receive notice as provided in this section. 2.06. Amendment. This Agreement maybe amended by the parties hereto only by written instrument executed with the same procedures and formality as were followed in the execution of this Agreement. Error: Unknown document property name. B-5 ~[-/2 IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed in their names and on their behalves on or as of the above date. Owner: RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY By: Its Chair By: Its Executive Director SHERMAN ASSOCIATES, INC., a Minnesota corporation By: Its: Error: Unknown document property name. B-6 ~f -13 ATTACHMENT A List of HRA Property Addresses and Legal Descriptions 301 West 77th Street Lot 1, Block 1, Candlewood Hotel Addition Error! Unknown document property name. B-7 AGENDA ITEM # 6 REPORT # 23 ~- STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING JUNE 21, 2010 REPORT PREPARED BY: REPORT PRESENTER: ACTING DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: KAREN BARYON, ASSISTANT COMIMUNITY DEVELOPMENT DIRECTOR NAME, TITLE KAREN BARYON, ASSISTANT COMMUNITY DEVELOPMENT DIRECTOR NAME. TITLE ITEM FOR HRA CONSIDERATION: Approval of guidelines for the newly created Penn Avenue Streetscape Improvements Grant Pro ram. I. RECOMMENDED ACTION: By Motion: Approve guidelines for the Housing and Redevelopment Authority funded Penn Avenue Streetscape Improvements Grant Pro ram. II. BACKGROUND In 2009 the Penn Avenue Revitalization Plan and Design Guidelines were completed for the Penn Avenue Corridor between Highway 62 and 68th Street. The purpose of the plan and guidelines is to guide the revitalization and redevelopment of the Corridor over time. An important component of the plan is to create a more inviting and pedestrian-friendly streetscape along the Corridor. In an effort to facilitate streetscape improvements along the Corridor, the Richfield Housing and Redevelopment Authority (HRA) budgeted funds for fiscal year 2010. After reviewing the various opportunities for streetscape improvements along the Corridor, staff is recommending utilizing a portion, up to $60,000, of the funding for a Streetscape Improvement Grant Program. 06212010 Penn Ave Streetscape Grant Program The program would provide an incentive to property owners along the Corridor to make streetscape improvements by offering a grant that would reimburse 20% of the project costs, up to a maximum of $20,000. The streetscape improvements would be subject to requirements as outlined in the program guidelines, and would include, but not be limited to permanent landscaping, permanent outdoor furnishings, and sidewalk and streetscape infrastructure improvements. III. -BASIS OF RECOMMENDATION A. POLICY - • From the 2008 Richfield Comprehensive Plan: o Establish a land use pattern and supporting infrastructure that creates a "walkable" environment. o Encourage the development of viable and responsive neighborhood commercial services. o Create commercial districts that sustain specific types of development and stabilize the economic base. B. CRITICAL TIMING ISSUES • N/A C. FINANCIAL • Funding for the program has been budgeted for fiscal year 2010. • Up to $60,000 of the budgeted funding would be utilized for this program. D. LEGAL • The HRA attorney will draft the grant agreements between HRA and the grant recipients. IV. ALTERNATIVE RECOMMENDATION~S~ • Do not approve the Program Guidelines. • Approve the Program Guidelines with changes. V. ATTACHMENTS • Penn Avenue streetscape Improvement Grant Program Guidelines. VI. PRINCIPAL PARTIES EXPECTED AT MEETING • N/A (~-l PENN AVENUE STREETSCAPE IMPROVEMENT GRANT PROGRAM Statement of Purpose: To aid in the economic vitality and revitalization of the Penn Avenue Corridor between Highway 62 and 68t" Street (`Corridor') by encouraging property owners and businesses to make improvements to the streetscape. Program Objectives: • To provide an economic incentive to property owners along the Corridor to invest in streetscape improvements. • To create a more visually inviting streetscape to enhance the economic vitality along the Corridor. Program Outcomes: • To leverage $500,000 or more over two years in streetscape improvements along the Corridor. • Aid in maintaining property values along the Corridor. Definitions: Property Owner- The registered owner of the property to be improved. Property -The property where the streetscape improvements are to be made. HRA -The Housing and Redevelopment Authority (HRA) in and for the City of Richfield. Qualifying Improvements -streetscape improvements approved by the HRA, including but not limited to permanent landscaping, permanent outdoor furnishings, sidewalk/infrastructure improvements. Project -proposed use of grant and matching funds to be used for the qualifying improvements. Eligibility: 1. The property to be improved must be located on Penn Avenue, between Highway 62 and 68th Street. 2. A portion of the project must be located within the public right-of-way. 3. The grant must be applied for by the Property Owner. lp `~ oL 4. The grant amount will be 20% of the total project cost, up to a maximum of $20,000. 5. Work must commence within 30 days following grant approval and must be completed with 120 day following grant approval. 6. All applicants must submit a complete HRA Penn Avenue Streetscape Grant application. 7. Eligible Properties must meet minimum health and safety requirements. Grants will not be issued for sub-standard properties. Determination of sub-standardness will be at the discretion of the HRA. 8. Grant funds may only be used for streetscape improvements approved by the HRA, including but not limited to permanent landscaping, sidewalk/infrastructure improvements, and permanent outdoor furnishings. Terms and Conditions: 1. Maximum grant amount is $20,000. 2. Minimum grant amount is $2,000. 3. Only one grant per eligible property. 4. Applicant will be required to sign an Agreement with the HRA consenting to all grant requirements prior to grant award. 5. The property to be improved must be located on Penn Avenue, between Highway 62 and 68th Street. 6. A portion of the project must be located within the public right-of-way. 7. The grant amount will be 20% of the total project cost, up to a maximum of $20,000. 8. The HRA reserves the right to refuse any application. 9. Grant funds are limited and only available for a limited time. 10. Grant funds will be paid upon successful and satisfactory completion of the project as determined by HRA staff. Data Privacy All information secured through the program is subject to the Minnesota Data Privacy Act. General Program Marketing Program marketing is entirely at the discretion of the HRA. It may include the following: Property Owner Solicitation. The HRA may market the program to Property Owners through promotional articles, direct mail, the Internet, or other methods as deemed appropriate.