022123 Complete AgendaR E G U LAR H O U S IN G AN D R E D E V E LO P ME N T AU TH O R ITY ME E TIN G
R IC H F IE L D MU N IC IPAL C E N TE R, C O U N C IL C H AMB E R S
F E B R U ARY 21, 2023
7:00 P M
C all to Order
Open F orum
E ach speaker is to keep their comment period to three minutes to allow sufficient time for others. C omments
are to be an opportunity to address the H R A . P lease refer to the H R A agenda and minutes web page for
additional ways to submit comments. You may also call 612-861-9764 or email ldubois@richfieldmn.gov with
questions. C all into the open forum by dialing 1-415-655-0001 U se webinar access code: 2466 518 7086 and
password: 1234.
Approval of the Minutes
A pproval of the minutes of the Regular Housing and Redevelopment A uthority meeting of January 17, 2023.
AG E N D A APPR O VAL
1.A pproval of the A genda
2.Consent Calendar contains several separate items which are acted upon by the H R A in one motion.
Once the Consent Calendar has been approved, the individual items and recommended actions have
also been approved. No further H R A action on these items is necessary. However, any H R A
Commissioner may request that an item be removed from the Consent Calendar and placed on the
regular agenda for H R A discussion and action. All items listed on the Consent Calendar are
recommended for approval.
A .C onsideration of the adoption of a resolution approving C ollateral A ssignment of the Tax Increment L imited
Revenue Note S eries 2021 by C P II D evelopment L L C in favor of B ridgewater B ank.
S taff Report No. 4
O T H E R B U S IN E S S
3.C onsideration of a request by the owners of the Oaks on P leasant that the apartment building's housing
affordability requirement be reduced from 25 to 22 years.
S taff Report No. 5
H R A D IS C U S S IO N ITE MS
4.HRA D iscussion Items
E X E C U T IV E D IR E C TO R R E P O R T
5.E xecutive D irector's Report
C LAIMS
6.C laims
7.A djournment
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 MEETING MINUTES
Richfield, Minnesota
Regular Meeting
January 17, 2023
CALL TO ORDER
Acting Chair Vrieze Daniels called the meeting to order at 7:00 p.m. in the Council
Chambers.
OATH OF OFFICE
Assistant Community Development Director Urban administered the oath of office for
Commissioner Hayford Oleary.
Assistant Community Development Director Urban administered the oath of office for
Commissioner Supple.
OPEN FORUM
Acting Chair Vrieze Daniels provided instructions to call in for the open forum.
There were no callers.
APPROVAL OF THE MINUTES
HRA Members
Present:
Erin Vrieze Daniels, Acting Chair; Mary Supple, Lee Ohnesorge;
Gordon Hanson; and Sean Hayford Oleary
HRA Members
Absent:
Staff Present: Melissa Poehlman, Executive Director/Community Development
Director; Julie Urban, Assistant Community Development Director;
and LaTonia DuBois, Administrative Assistant.
Others Present:
HRA Meeting Minutes -2- January 17, 2023
M/Hanson, S/Supple to approve the minutes of the regular Housing and Redevelopment
Authority meeting of December 19, 2022.
Motion carried: 5-0
ITEM #1
APPROVAL OF THE AGENDA
M/Supple, S/Hayford Oleary to approve the agenda.
Motion carried: 5-0
ITEM #2
APPROVAL OF THE CONSENT CALANDER
Executive Director Poehlman presented the Consent Calendar.
a) Consider the appointment of Commissioner Hanson as Interim Secretary of
the Richfield Housing and Redevelopment Authority. (Staff Report No. 1)
b) Consider a resolution approving an extension of a Preliminary
Redevelopment Agreement with Beacon Interfaith Housing Collaborative for
the development of approximately 40 units of affordable, supportive housing
for people at 6613 – 25 Portland Avenue. (Staff Report No. 2)
Resolution No. 1447
RESOLUTION APPROVING THE EXECUTION AND DELIVERY OF AMENDED
AND RESTATED PRELIMINARY REDEVELOPMENT AGREEMENT WITH
BEACON INTERFAITH HOUSING COLLABORATIVE
M/Hayford Oleary, S/Ohnesorge to approve the Consent Calendar
Motion Carried: 5-0
Commissioner Supple spoke of a resident inquiry surrounding the Beacon development’s
level of accessibility.
Executive Director Poehlman explained the discussion would occur when the development
proposal is brought before the commission.
ITEM #3
CONSIDERATION OF ITEMS, IF ANY, REMOVED FROM THE CONSENT
CALENDAR
None.
HRA Meeting Minutes -3- January 17, 2023
ITEM #4
CONSIDERATION OF AN AMENDMENT TO THE CONTRACT FOR PRIVATE
DEVELOPMENT WITH MWF PROPERTIES FOR THE DEVELOPMENT OF 55
UNITS OF MULTI-FAMILY HOUSING AT 7700 PILLSBURY AVENUE SOUTH,
EXTENDING THE CONTRACT FOR PRIVATE DEVELOPMENT DEADLINE TO
JANUARY 15, 2024. (STAFF REPORT NO. 3)
Assistant Community Development Director Urban presented Staff Report No. 3
M/Supple, S/Hanson to adopt a resolution approving an amendment to the Contract for
Private Development with MW F Properties for the development of 55 units of multi-family
housing at 7700 Pillsbury Avenue South, extending the Contract for Private Development
deadline to January 15, 2024.
Motion carried 5-0
ITEM #5
HRA DISCUSSION ITEMS
None.
ITEM #6
EXECUTIVE DIRECTOR REPORT
Executive Director Poehlman reported the City of Richfield was recommended for GAP
funding for additional units at Woodlawn housing.
ITEM #7
CLAIMS
M/Hanson, S/Supple that the following claims be approved:
U.S. BANK 1/17/2023
Section 8 Checks: 134426-134571 $196,562.63
HRA Checks: 34302-34310 $21,174.07
TOTAL $217,736.70
Motion carried: 5-0
RESOLUTION NO. 1448
RESOLUTION APPROVING AMENDMENT TO CONTRACT FOR PRIVATE DEVELOPMENT
WITH MWF PROPERTIES, LLC
HRA Meeting Minutes -4- January 17, 2023
ITEM #8
ADJOURNMENT
The meeting was adjourned by unanimous consent at 7:13 p.m.
Date Approved: February 21, 2023
Erin Vrieze Daniels
Acting HRA Chair
LaTonia DuBois Melissa Poehlman
Administrative Assistant Executive Director
AGENDA SECTION:Consent Calendar
AGENDA ITEM #2.A.
S TAFF REPORT NO. 4
HOUSING AND RE DEVELOPMENT AUT HORIT Y
MEET ING
2/21/2023
RE P O RT P RE PA RE D B Y: J ulie Urban, A sst. C ommunity D evelopment D irector
O THE R D E PA RTM E NT RE V IE W:
E X E C UTIV E D IRE C TO R RE V IE W: J ulie Urban, A cting E xecutive D irector
2/21/2023
I T E M F O R C O UNC IL C O NS ID E RAT I O N:
Consideration of the adoption of a resolution approving Collateral Assignment of the Tax Increment
Limited Revenue Note Series 2021 by C P II Development LL C in favor of Bridgewater Bank.
E X E C UT IV E S UM M ARY:
On March 11, 2021, the Housing and Redevelopment Authority (HRA) issued a Tax I ncrement Financing
(TI F) Note to C P I I Development L L C (Developer) in the amount of $590,800 for the redevelopment of a
portion of the Cedar Point I I redevelopment area (63rd to 65th Street and 16th Avenue to Richfield Parkway)
with the Rya apartments. The Contract for Private Development (Contract) approved by the HRA allows the
Developer to assign the TI F Note to another entity. I n this case, the Developer is seeking to assign the Note
to Bridgewater Bank (Lender), and the Lender has requested that the HRA approve a Collateral Assignment
of the Note.
The HRA Attorney has reviewed and approved the proposed Assignment.
RE C O M M E ND E D AC T I O N:
By motion: Adopt a resolution approving a Collateral Assignme nt of Tax Increment Limited
Rev enue Note Se ries 2021 by C PI I Dev elopme nt L L C in favor of Bridgewater Bank.
B AS IS O F RE C O M M E ND AT I O N:
A.H IS TOR IC AL C ON T E X T
The HRA entered into a Contract for development of the apartment portion of the Cedar Point I I
redevelopment project on September 17, 2018. The HRA approved an amendment to the Contract
on October 19, 2020, which approved the issuance of two TI F Notes for the project. The
Developer assigned the Contract to a third party in March of 2021 along with one of the TI F Notes
but retained ownership of the second Note.
On September 17, 2018, the HRA also approved a Contract with the same Developer to redevelop
the western portion of the redevelopment area with for-sale townhomes. The Developer is
completing work on the townhome portion of the development and is seeking to assign the second
Note to its Lender as collateral for the construction financing for the townhomes.
B.P OL IC IE S (resolutions, ordinances, regulations, statutes, etc):
Under the terms of the Contract, the Developer may assign the TI F Note to other entities.
C.C R IT IC AL T IMIN G IS S U E S:
Approval of the Collateral Assignment is needed for the Developer to close on the final portion of
construction financing relating to the townhome portion of the Cedar Point I I development.
D.F IN AN C IAL IMPAC T:
There is no financial impact on the HRA from the Assignment. All terms of the Contract remain in
effect, and an investment letter has been provided by the Lender, confirming that they understand
the terms of the Note.
E.L E GAL C ON S ID E R AT ION:
The HRA retains its rights under the Contract.
The HRA Attorney will approve the final form of the document to be executed by the HRA Chair
and Executive Director.
ALTE R N AT IV E R E C O MME N D ATIO N(S):
Deny the request for the Collateral Assignment.
P R IN C IPAL PAR TIE S E X P E C TE D AT ME E TIN G:
N/A
AT TAC H ME N T S:
D escription Type
Resolution Resolution L etter
C ollateral A ssignment C ontract/A greement
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF RICHFIELD, MINNESOTA
RESOLUTION NO. ______
RESOLUTION APPROVING A COLLATERAL ASSIGNMENT OF TAX INCREMENT NOTE BY
CPII DEVELOPMENT LLC IN FAVOR OF BRIDGEWATER BANK
WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield,
Minnesota (the “Authority”) entered into a Contract for Private Development, dated
September 17, 2018, with NHH Companies, L.L.C., a Minnesota limited liability company (“NHH”),
as assigned by NHH to CPII Development LLC, a Minnesota limited liability company (“CPII
Development”), pursuant to an Assignment of Contract for Private Development, dated
January 15, 2019, as amended by the First Amendment to Contract for Private Development,
dated September 16, 2019, between the Authority and CPII Development, as amended by the
Second Amendment to Contract for Private Development, dated October 19, 2020, between the
Authority and CPII Development, as assigned by CPII Development to Rya Apartments, LLC, a
Minnesota limited liability company (“Rya Apartments”), pursuant to the Assignment and
Assumption Agreement, dated March 11, 2021 (collectively, the “Contract”), between CPII
Development, Rya Apartments, and the Authority; and
WHEREAS, under the terms of the Contract, the Authority issued its Tax Increment Limited
Revenue Note, Series 2021 (the “Special Assessments Costs TIF Note”), in the original aggregate
principal amount of $590,800, to reimburse CPII Development for special assessments and other
capital costs in connection with the Minimum Improvements as defined and described in the
Contract; and
WHEREAS, Bridgewater Bank, a Minnesota banking corporation (the “Lender”), has
agreed to provide CPII Development with a loan (the “Loan”) in the principal amount of $531,700,
and the Lender requires that CPII Development assign its interests in the Special Assessments
Costs TIF Note to the Lender; and
WHEREAS, there have been presented to the Board of Commissioners of the Authority
(the “Board”) a form of a Collateral Assignment of Tax Increment Note (the “Collateral
Assignment”) between CPII Development and the Lender, including a consent of the Authority,
pursuant to which CPII Development will assign its interest in the Special assessments Costs TIF
Note and the payments made thereunder to the Lender and the Authority will consent to such
assignment; and
NOW, THEREFORE, BE IT RESOLVED, by the Board of Commissioners of the Housing
and Redevelopment Authority in and for the City of Richfield, Minnesota as follows:
1. The Board hereby consents to the assignment of the Special Assessments Costs
TIF Note by CPII Development to the Lender.
2. The Collateral Assignment is hereby in all respects authorized, approved, and
confirmed, and the Chair and the Executive Director are hereby authorized and directed to execute
the Collateral Assignment for and on behalf of the Authority in substantially the form now on file
with the Executive Director but with such modifications as shall be deemed necessary, desirable,
2
or appropriate, the execution thereof to constitute conclusive evidence of their approval of any and
all modifications therein.
3. The Chair and the Executive Director are authorized and directed to execute any
and all other documents or certificates deemed necessary to carry out the intentions of this
resolution.
4. This resolution shall be in full force and effect upon its adoption.
Adopted by the Housing and Redevelopment Authority in and for the City of Richfield,
Minnesota this 21st day of February, 2023.
Erin Vrieze Daniels, Acting Chair
ATTEST:
Gordon Hanson, Secretary
RC125-366 (JAE)
857686v1
COLLATERAL ASSIGNMENT OF TAX INCREMENT NOTE
This Collateral Assignment of Tax Increment Note (this “Assignment”) is made as of February 20,
2023, by CPII Development LLC, a Minnesota limited liability company (“Borrower”) to and in favor of
Bridgewater Bank, a Minnesota banking corporation (“Lender”).
RECITALS
A.Borrower and Lender have entered into a Loan Agreement dated February 20, 2023 (as
may be amended, restated, extended, supplemented, or otherwise modified in writing from time to time, the
“Loan Agreement”), pursuant to which Lender has agreed to make a loan to Borrower in the maximum
principal amount of $531,700.00 (the “Loan”).
B.Borrower and the Housing and Redevelopment Authority in and for the City of Richfield,
Minnesota (the “Authority”) are parties to a Contract for Private Development dated September 17, 2018,
as affected by an Assignment of Contract for Private Development dated January 15, 2019, the First
Amendment of Contract for Private Development dated September 16, 2019, and the Second Amendment
to Contract for Private Development dated October 19, 2020 (collectively, the “Contract”), pursuant to
which the Authority has agreed to pay to Borrower, from Available Tax Increment (as defined in the
Contract), according to the terms of the Special Assessments Costs TIF Note (as defined in the Contract).
C.As a condition to making the Loan, Lender has required Borrower to execute and deliver
this Assignment to Lender.
NOW, THEREFORE, in consideration of the foregoing and to induce Lender to make the Loan,
Borrower agrees as follows:
1.Assignment. Borrower transfers and assigns to Lender and grants to Lender, its successors
and assigns, for the benefit of Lender, as security for the Loan, a security interest in all of Borrower’s right,
title, and interest in and to the payment of the Special Assessments Costs TIF Note (the “TIF Payment”).
This Assignment shall constitute a perfected, absolute, and present assignment, provided that Lender shall
not have the right under this Assignment to exercise any remedies under this Assignment until an Event of
Default (as defined in Section 8, below) shall occur. Contemporaneous with the execution of this
Assignment, Borrower shall deliver possession of the original Special Assessments Costs TIF Note to
Lender.
2.TIF Payment Proceeds. All payments under the Special Assessments Costs TIF Note shall
be deposited directly by the Authority to a deposit account with Lender (the “Proceeds Account”)
designated as Account No. 81189375. Borrower grants Lender a security interest in the Proceeds Account
to secure the Loan. Borrower shall have no right of access to or withdrawal from the Proceeds Account
except to apply funds to the Loan. By this Assignment, Borrower irrevocably instructs the Authority to
remit all payments under the Special Assessments Costs TIF Note directly to Proceeds Account. In the
event Borrower receives any proceeds of any TIF Payment, Borrower shall, within three business days of
receipt, tender those funds to Lender for application to the Loan.
3.Representations and Warranties. Borrower represents and warrants to Lender and agrees
as follows:
(a)Borrower will not, without the prior written consent of Lender, modify, amend,
supplement, terminate, surrender, or change in any manner whatsoever the terms of the Contract
affecting and related to the payment of the Special Assessments Costs TIF Note.
(b)The Special Assessments Costs TIF Note and the TIF Payment are free and clear
of all liens, security interests, assignments, and encumbrances other than the assignment and
security interest created by this Assignment and any obligations contained within the Contract.
(c)Borrower has the full right, power, and authority to assign the Special Assessments
Costs TIF Note and the TIF Payment free and clear of any and all liens, security interests, and
assignments, except as may be set forth in this Assignment.
(d)Borrower will keep the Special Assessments Costs TIF Note and the TIF Payment
free from any lien, encumbrance, assignment, or security interest whatsoever, other than as
described in this Assignment.
4.Covenants. Borrower covenants and agrees:
(a)It shall perform each and every one of its duties and obligations, if any, under the
Contract and observe and comply with each and every term, covenant, condition, agreement,
requirement, restriction, and provision of the Contract.
(b)It shall give prompt notice to Lender of any claim of or notice of default under the
Contract known or given to it together with a copy of any such notice or claim if in writing.
(c)It will appear in and defend any action arising out of or in any manner connected
with the Contract and the duties and obligations of Borrower or the Authority under the
Redevelopment Agreement.
5.Purpose of Assignment. This Assignment is made to induce Lender to make the Loan and
for the purpose of securing the performance and observance by Borrower of all of the terms and conditions
of the Loan Agreement and all other obligations of Borrower under the Loan Agreement and ancillary loan
documents.
6.Right to Act on Behalf of Borrower; TIF Payment/ Special Assessments Costs TIF Note.
Borrower authorizes Lender and all persons and entities designated by Lender at the direction of Lender
during an Event of Default to act on its behalf either in the name of Borrower or Lender (or the name of the
person and entity designated by Lender) in connection with the exercise of any of the rights of Borrower to
receive the TIF Payment under the Special Assessments Costs TIF Note. Borrower irrevocably appoints
Lender and all persons and entities designated by Lender as its attorney-in-fact to demand, receive, and
enforce Borrower’s rights with respect to the TIF Payment under the Special Assessments Costs TIF Note.
Borrower agrees to reimburse Lender on demand for any reasonable expenses incurred by Lender, or its
agents or attorneys, pursuant to this authorization. Borrower irrevocably instructs, directs, authorizes, and
empowers all parties to the Contract to recognize the claims of Lender and its successors or assigns, and to
act upon any instructions or directions of Lender without investigating the reason for any action taken by
Lender.
7.No Assumption by Lender. It is understood and agreed that Lender does not assume any
of the obligations or duties of Borrower under the Contract or accept any responsibility or liability for the
performance of any obligations imposed upon Borrower pursuant to the Contract.
8.Event of Default. An “Event of Default” shall mean the occurrence of any default under
the Contract and the continuation of such default beyond any applicable grace period, the occurrence of any
Event of Default under the Loan Agreement or ancillary loan document, or the occurrence of any default
under this Assignment.
9.Remedies. Upon the occurrence of an Event of Default, Lender may, without demand for
performance or other demand, advertisement, or notice of any kind, except such notice as may be required
under the Uniform Commercial Code, and all of which are, to the extent permitted by law, expressly
waived, (i) collect the amounts payable to Borrower pursuant to the Special Assessments Costs TIF Note
and exercise any right of Borrower to demand, collect, receive and receipt for, compromise, compound,
settle and prosecute and discontinue any suits or proceedings in resp ect of any or all of the amount payable
pursuant to the Special Assessments Costs TIF Note; (ii) take any action that Lender may deem necessary
or desirable in order to collect the amount payable pursuant to the Special Assessments Costs TIF Note;
(iii) exercise any of the remedies available to a secured party under the Uniform Commercial Code and to
proceed to protect and enforce this Assignment by suits or proceedings or otherwise; and (iv) enforce any
other legal or equitable remedy available to Lender. The foregoing remedies are cumulative of and in
addition to the rights or remedies provided for or allowed in the Loan Agreement or any other instrument
given for the security of the Loan or as provided for or allowed by law or in equity.
10.Indemnity. Lender shall not have any obligation to perform or satisfy any duty or
obligation of Borrower under the Contract. Borrower shall and does hereby indemnify, defend, and hold
Lender harmless from and against and in respect of any and all actions, causes of action, suits, claims,
demands, judgments, proceedings and investigations (or any appeal thereof or relative thereto or other
review thereof) of any kind or nature whatsoever, arising out of, by reason of, as a result of or in connection
with the Contract and any and all liabilities, damages, losses, costs, expenses (including fees of counsel and
expenses and disbursements of counsel), amounts of judgment, assessments, fines or penalties, and amounts
paid in compromise or settlement, suffered, incurred or sustained by Lender as a result of, or reason of or
in connection with any of the matters above.
11.Choice of Law. Notwithstanding the place of execution of this instrument, the parties to
this Assignment have contracted for Minnesota law to govern this Assignment and it is agreed that this
Assignment is made pursuant to, and shall be construed and governed by, the laws of the State of Minnesota
without regard to the principles of conflicts of law.
12.Notices. Any notices and other communications permitted or required by the provisions of
this Assignment (except for telephonic notices expressly permitted) shall be in writing and shall be deemed
to have been properly given or served by depositing the same with the United States Postal Service, or any
official successor thereto, designated as Certified Mail, Return Receipt Requested, bearing adequate
postage, or deposited with a reputable private courier or overnight delivery service, and addressed to the
address listed below, or to such other address as shall be designated by such party in a notice to the other
parties . Each such notice shall be effective upon being deposited as aforesaid. Rejection or other refusal
to accept or the inability to deliver because of changed address of which no notice was given shall be
deemed to be receipt of the notice sent.
If to Borrower: CPII Development LLC
Attn: Adam Seraphine
7455 France Ave. S, Ste. 351.
Edina, MN 55435
If to Lender: Bridgewater Bank
Attn: Tyler Manning
370 Wabasha St. N.
St. Paul, MN 55102
13.Release. Upon a determination by Lender that the obligations secured by this Assignment
have been fully satisfied, Lender shall deliver to Borrower such instruments of release as may be necessary
to release the interests of Lender in the Special Assessments Costs TIF Note and the TIF Payment.
14.Counterparts, etc. This Assignment may be executed in counterparts, each of which will
be deemed to be an original, but all of which together shall constitute one and the same instrument. Each
party agrees that any electronic signature of a party to this Assignment, whether digital or encrypted, is
intended to authenticate the execution of this Assignment by the party and shall bind the party to its terms
and conditions with the same force and effect as an physical signature. Electronic signature means any
electronic sound, symbol, or process attached to or logically associated with a record and executed and
adopted by a person with the intent to sign the record, including DocuSign® or other electronic signatures.
An image or copy of a signature of a party to this Assignment, including a scanned, PDF, facsimile,
electronic or other copy, shall bind the party to its terms and conditions with the same force and effect as a
physical signature.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be executed by
their respective duly authorized officers, as of the date first above written.
BORROWER:
CPII DEVELOPMENT LLC,
a Minnesota limited liability company
By:
Name:
Title:
LENDER:
Bridgewater Bank,
a Minnesota banking corporation
By:
Name:
Title:
CONSENT OF AUTHORITY
The undersigned, being the Executive Director of the Housing and Redevelopment Authority of the City of
Richfield, Minnesota (the “Authority”), do hereby consent, agree, represent, and warrant to Lender, on
behalf of the Authority, intending to be legally bound:
1.The Authority hereby consents to the foregoing Collateral Assignment (the “Assignment”).
2.The Authority is the Authority as defined in the Special Assessments Costs TIF Note
described in the Assignment, and the Tax Increment District described therein is in full force and effect.
3.The Authority has full power and authority to execute this Consent and make effective its
ter ms.
4.This Consent shall inure to the benefit of Lender and its successors and assigns, and shall
be binding upon the Authority and its successors and assigns.
AUTHORITY:
Housing and Redevelopment Authority
City of Richfield, Minnesota
By:
Name: Erin Vrieze Daniels
By:
Name: Julie Urban
Its: Acting Executive Director
Its: Acting Chair
Dated: ______________, 2023
AGENDA SECTION:OTHER BUSINESS
AGENDA ITEM #3.
S TAFF REPORT NO. 5
HOUSING AND RE DEVELOPMENT AUT HORIT Y
MEET ING
2/21/2023
RE P O RT P RE PA RE D B Y: J ulie Urban, A sst. C ommunity D evelopment D irector
O THE R D E PA RTM E NT RE V IE W:
E X E C UTIV E D IRE C TO R RE V IE W: Melissa P oehlman, E xecutive D irector
2/14/2023
I T E M F O R C O UNC IL C O NS ID E RAT I O N:
Consideration of a request by the owners of the Oaks on Pleasant that the apartment building's
housing affordability requirement be reduced from 25 to 22 years.
E X E C UT IV E S UM M ARY:
The Oaks on Pleasant is a 130-unit townhome-style apartment development at 6600 Pleasant Avenue South.
The building was constructed in 2001 as part of the Urban Village redevelopment project, which includes
Woodlake Center, Mc Donald's, and the Pines senior development. The Urban Village project as a whole was
awarded a $9.5 million Tax I ncrement Financing (TI F) Pay as you Go Note for the extraordinary costs
associated with redevelopment. At that time, the Housing and Redevelopment Authority (HRA) was required to
provide a local match for TI F projects. As a condition of the TI F and the $600,000 local match, the Oaks was
required to provide 12 units of housing affordable at 70% of the Area Median I ncome (A MI ) three studios,
seven one bedrooms and two three bedrooms. The project was also required to contribute 15% of the tax
increment to the HRA's Housing & Redevelopment Fund.
The Housing Affordability Agreement (Agreement) requires the units to be affordable for a period of 25 years
with the provision that after 15 years, the HRA will give reasonable consideration to any request from the
developer to shorten the term. The owners are asking the HRA to exercise that consideration at this time, after
providing 22 years of affordability.
The owners are asking the HRA to release them from the affordability requirement due to increasing costs as
the building ages, and the challenge of finding tenants who qualify for the affordable units. Their intent is not
to impact any of the existing tenants but to be able to rent future vacant units at a market rate and without
requiring tenants to meet income restrictions.
The affordable rents have been well under the 70% A MI affordability limit, and the proposed market-rate rents
will be close to the current maximum allowed by the 70% A MI limits.
RE C O M M E ND E D AC T I O N:
By motion: Either
- Approve the reduction of affordability from 25 to 22 years for the Oaks on Pleasant and authorize the
Acting Chair and Executive Director to execute a release of the Affordable Housing Agreement.
O R
- Deny the owner's request to shorten the affordability period.
B AS IS O F RE C O M M E ND AT I O N:
A.H IS TOR IC AL C ON T E X T
The 130-unit Oaks on Pleasant apartment building was constructed in 2001 as part of the
W oodlake Center/Urban Village redevelopment project. I n exchange for a $600,000 local match
provided by the City, the Oaks agreed to provide 12 units of housing affordable at 70% of the A MI
for a 25-year period with the option of requesting that the project be released from the requirement
after 15 years.
At the time the building was constructed, Richfield hadn't seen a market-rate apartment building
constructed since the 1980s, so the primary goal of the project was to provide a contemporary
apartment option with modern amenities, while offering some modest affordability.
15% of the overall development's tax increment has also been contributed to the HRA's housing
and redevelopment fund, which has been used to fund affordable, market-rate, and redevelopment
activities throughout the community.
B.P OL IC IE S (resolutions, ordinances, regulations, statutes, etc):
The project was guided by the Lakes at Lyndale redevelopment plan, which there was no written
affordability policy at the time the project was built; affordability was negotiated on a project-by-
project basis.
Under current policy, the project would have been required to provide 26 units affordable at 60%
of the A MI or contribute 15% of the tax increment to the Housing & Redevelopment Fund.
C.C R IT IC AL T IMIN G IS S U E S:
The owners are requesting a release at this time so they may rent future vacant units at market
rate.
D.F IN AN C IAL IMPAC T:
T here is no financial impact on the HRA from the request. T he pooling contribution to the
Housing & Redevelopment Fund (Fund) will continue through the end of the T IF District,
which is December 31, 2025. T he total estimated amount of tax increment to be
contributed to the Fund is $3,200,000.
E.L E GAL C ON S ID E R AT ION:
I f the HRA agrees to release the owners from the affordability requirement, the HRA Attorney will
prepare a satisfaction document.
ALTE R N AT IV E R E C O MME N D ATIO N(S):
N/A
P R IN C IPAL PAR TIE S E X P E C TE D AT ME E TIN G:
Steve Kirchner, property owner
AT TAC H ME N T S:
D escription Type
L etter requesting release B ackup Material
A ffordable Housing A greement B ackup Material
February 7, 2023
City of Richfield HRA
Attn Julie Urban
Via Email
Re: Request to Shorten the term of the Affordability Requirements at The Oaks On Pleasant
Dear Members of the HRA
I want to first say thank you to the City and the Housing and Redevelopment Authority for the
opportunity to address you on this matter. The Oaks on Pleasant has been a great
redevelopment success for the City of Richfield and we continue to be proud of the community
we have developed at the property.
This letter is our formal request to the City of Richfield HRA that the affordability requirements
for the units at The Oaks on Pleasant be shortened from 25 years to 22 years. We would
request these changes due to the following reasons:
• It has become increasingly harder to find residents who income qualify for the units.
Over the past 22 years the Oaks on Pleasant has been fortunate enough to be able to
achieve close to 100% occupancy at the property. This has been achieved by providing a
quality property at rents that are below many of our newer competition. The only units
we have struggled to rent when they come available are our income restricted units. It
is a small segment of the market that can income qualify for the program and still afford
the monthly rent.
• With inflation at a level not seen in years it has become extremely important for the
property to maximize our rents as much as possible. Expenses are increasing 8% to 12%
and we are only seeing a 3% to 5% increase in rents. Keeping these rents artificially
lower hinders our ability to keep up with expenses.
• Added expenses at the property as it ages are making it difficult to keep up with costs.
These costs include the mandated inspection of all furnaces in the property due to city
statutes. The property needs to offset these expenses with higher rents on our units.
At this time it is our intention to keep all existing affordable units in complianc e with the
affordable restrictions as long as the existing tenants continue their occupancy. The existing
tenants would be given the standard rent increases they have received in the past and their
rent levels would not surpass the rent limits established for that given year. What we are
requesting is that as our affordable units are vacated by the existing tenants that we are able to
re-rent those units at our standard market rents with no restrictions on the income of the
incoming tenant. In reality our standard market rents for our Studios, one bedrooms and two
bedrooms are well below the 70% Maximum Gross Rents by Bedroom for Hennepin County
posted by MHFA. Our current affordable unit rents compared to our proposed market rents
are as follows:
Bedroom Size Current Affordable Rent New Market Rent 70% allowable Rents
Studio $1,205 $1,265 $1,438
1 Bedroom $1,250 $1,380 $1,540
2 Bedroom $1,565 $1,775 $1,848
As you can see, even if we raise rents to the market rate of our other units, our rents continue
to fall under the 70% allowable rents and in the case of the studios and one bedrooms they fall
under the 60% allowable rents. Based on this, the Oaks on Pleasant is requesting that the final
3 years of the income restrictions be lifted for any new tenant that may apply for these units.
This will allow the property to provide housing to an expanded group of potential renter s in
Richfield while still providing rents that, per MHFA guidelines, fall into an affordable category.
We once again appreciate the opportunity to have a conversation about this topic and look
forward to answering any questions you may have.
Thank you
Duncan Susee
CEO
Metes & Bounds Management Company
Managing agent for The Oaks LLC