Loading...
061724 HRA 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 J U N E 17, 2024 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. C all into the open forum by dialing 1-415-655-0001 U se webinar access code: 2634 736 3238 and password: 1234. Approval of the Minutes A pproval of the minutes of the Regular Housing and Redevelopment A uthority meeting of May 20, 2024. AG E N D A APPR O VAL 1.A pproval of the A genda R E S O L U T IO N S 2.C onsideration of a P reliminary D evelopment A greement with J O C ompanies, L L C for the development of 40 units of affordable housing at 6501-25 P enn Avenue S outh. S taff Report No. 12 3.C onsideration of the adoption of a resolution approving an extension of the A mended and Restated C ontract for P rivate D evelopment with 101 E 66th S T L L C related to the construction of an 80-unit mixed use project at 101 - 66th S treet E ast. S taff Report No. 13 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 612-861-9739. HOUSING AND REDEVELOPMENT AUTHORITY MEETING MINUTES Richfield, Minnesota Regular Meeting May 20, 2024 CALL TO ORDER Chair Vrieze Daniels called the meeting to order at 7:00 p.m. in the Council Chambers. HRA Members Present: Erin Vrieze Daniels, Chair; Gordon Hanson; Sean Hayford Oleary; John Young and Mary Supple HRA Members Absent:None Staff Present: Melissa Poehlman, Community Development Director; Julie Urban, Assistant Community Development Director; Jan Youngquist, Economic Development Manager; and LaTonia DuBois, Administrative Assistant. OPEN FORUM Chair Vrieze Daniels gave instructions on how to participate in the open forum. No one spoke. APPROVAL OF THE MINUTES M/Hayford Oleary, S/Supple to approve the minutes of the 1) Joint Housing and Redevelopment Authority, Planning Commission and City Council work session of April 15, 2024; and 2) the Housing and Redevelopment Authority meeting of April 15, 2024. Motion carried: 5-0 ITEM #1 APPROVAL OF THE AGENDA M/Hayford Oleary, S/Young to approve the agenda. Motion carried: 5-0 HRA Meeting Minutes -2- May 20, 2024 ITEM #2 APPROVAL OF THE CONSENT CALENDAR Community Development Director Poehlman presented the Consent Calendar. A. Consideration of a resolution approving an Assignment and Assumption Agreement and a Subordination Agreement for The Pines senior housing development. M/Hayford Oleary, S/Supple to approve the consent calendar. Motion carried: 5-0 ITEM #3 CONSIDERATION OF ITEMS, IF ANY, REMOVED FROM THE CONSENT CALENDAR None. ITEM #4 CONSIDER A RESOLUTION APPROVING THE EXECUTION AND DELIVERY OF A DONATION AGREEMENT WITH OLIN 1, LLC TO ACCEPT THE DONATION OF THE PROPERTY AT 1620 AND 1640 – 78TH STREET EAST TO THE HOUSING AND REDEVELOPMENT AUTHORITY. Economic Development Manager Youngquist presented the report. Commissioner Supple thanked the Mathwig family for the donation. Commissioner Hanson agreed. Commissioner Hayford Oleary inquired about property taxes. Economic Development Manager Youngquist explained the property taxes and expressed plans to apply for tax exemption through Hennepin County for 2025. Chair Vrieze Daniels expressed excitement for the development opportunities and inquired about the Velodrome project. Economic Development Manager Youngquist provided a status update. M/Supple, S/Hanson to adopt the resolution authorizing approving the execution and delivery of a Donation Agreement with Olin 1, LLC. Motion carried 5-0 ITEM #5 CONSIDERATION OF THE APPROVAL OF PROGRAM GUIDELINES FOR THE WOODLAWN TERRACE HOMEBUYER ASSISTANCE PROGRAM. Assistant Community Development Director Urban presented the report. HRA Meeting Minutes -3- May 20, 2024 Chair Vrieze Daniels inquired about the amount budgeted for the program and if it would be for the current year or if funds could be used in the future. Assistant Community Development Director Urban the current program is for 2024 and that the program would be assessed at the end of the year. Commissioner Hayford Oleary inquired about our other down payment assistance program and inquired about what would happen with the loan if the property owner sold before the term expired. Housing Manager Urban explained the difference between the programs and what the possible outcomes if the property was sold prior to the term of the loan. Commissioner Supple inquired about the utilities at Woodlawn Terrace. Urban provided a status update and explained the next steps in the process. M/Hayford Oleary, S/Young to approve Program Guidelines for the Woodlawn Terrace Homebuyer Assistance Program. Motion carried 5-0 ITEM #6 HRA DISCUSSION ITEMS Commissioner Young expressed appreciation of the playback of a recent work session he was unable to attend. ITEM #7 EXECUTIVE DIRECTOR’S REPORT Community Development Director Poehlman reported the lack of a bonding bill being passed for the Cycling Center and the need for this additional funding for the project. ITEM #8 CLAIMS M/Supple, S/Hayford Oleary that the following claims be approved: U.S. BANK 5/20/2024 HRA Checks: #37040 - 37055 $457,288.01 Section 8 Checks: #135772 - 135850 $204,749.67 TOTAL $662,037.68 Motion carried: 5-0 HRA Meeting Minutes -4- May 20, 2024 ITEM #9 ADJOURNMENT The meeting was adjourned by unanimous consent at 7:17 p.m. Date Approved: June 17, 2024 Erin Vrieze Daniels HRA Chair LaTonia DuBois Melissa Poehlman Administrative Assistant Community Development Director AGENDA SECTION:RESOLUTIONS AGENDA ITEM #2. STAFF REPORT NO. 12 HOUSING AND REDEVELOPMENT AUTHORITY MEETING 6/17/2024 Julie Urban, Asst. Community Development DirectorREPORT PREPARED BY: EXECUTIVE DIRE CTOR RE VIEW: ITEM FOR COUNCIL CONSIDERATION: Consideration of a Preliminary Development Agreement with JO Companies, LLC for the development of 40 units of affordable housing at 6501-25 Penn Avenue South. EXECUTIVE SUMMARY: Johnny Opara with JO Companies, LLC (Developer) is proposing to develop 40 units of affordable housing on Housing and Redevelopment Authority (HRA)-owned property located at 6501 and 6525 Penn Avenue South. The development would include a five-story building with 34 underground and 14 surface parking spaces. The affordability mix would include 15 units affordable to households earning up to 30% of the Area Median Income (AMI), 18 units affordable at 50% of the AMI, and seven units affordable at 60% of the AMI. Two units will be accessible with roll-in showers. The Developer is seeking approval of a Preliminary Development Agreement (Agreement) with the HRA. Under the terms of the Agreement, the HRA would agree to work with the Developer to: consider financial assistance in the amount of up to $985,000 in the form of a grant or loan from the Affordable Housing Trust Fund (Trust Fund) and/or a reduced price for the land; agree to not negotiate with any other parties with respect to selling the HRA-owned property and grant a right-of-entry for activities such as environmental testing, and support and cooperate with the Developer as he applies for additional funding. The Developer is planning to submit an application to the Minnesota Housing Finance Agency for federal Low Income Housing Tax Credits (LIHTC) and other assistance in order to finance the development. A commitment from the HRA to sell the property at a reduced rate and to provide additional financial assistance will make the development more competitive for an award for tax credits and is necessary before the application deadline of July 11. Decisions regarding tax credits are anticipated in December. The City's financial consultant has reviewed the Developer's proposed pro forma and determined that a gap of $985,000 exists and can be filled with HRA resources in the form of an award from the Trust Fund and/or a reduced land price. The HRA purchased the property at 6501 Penn Avenue South in 2019 and has submitted funds to Hennepin County to purchase the tax-forfeited property located at 6525 Penn Avenue South. A deed to the property is anticipated by the end of June. RECOMMENDED ACTION: Melissa Poehlman, Executive Director 6/12/2024 By Motion: Adopt a resolution approving the execution and delivery of a Preliminary Development Agreement with JO Companies, LLC for the development of 40 units of affordable housing on Housing and Redevelopment Authority-owned property located at 6501-6525 Penn Avenue South. BASIS OF RECOMMENDATION: A.HISTORICAL CONTEXT The HRA purchased the property at 6501 Penn Avenue South in 2019. The adjacent property at 6525 Penn Avenue South has been tax forfeited. The HRA submitted a check to Hennepin County to purchase the property in May and anticipates receiving a deed to the property by the end of June. A development was proposed for 6501 Penn Avenue South and 6504 Oliver Avenue South in 2020 but did not receive financing. The Developer presented the project concept at a City Council, HRA and Planning Commission work session in April. B.EQUITABLE OR STRATEGIC CONSIDERATIONS OR IMPACTS The proposed affordable housing development provides an opportunity for the development of accessible housing units and housing units affordable to households earning 30% of the AMI. The proposed affordable housing development would help to meet the Strategic Plan goal to maintain Richfield as an affordable place to live. The Developer is in the process of seeking input from the community on the design of the project and is specifically reaching out to people with disabilities; Black, Indigenous and People of Color (BIPOC); people who are or have been unsheltered, and large families with children. C.POLICIES (resolutions, ordinances, regulations, statutes, exc): The property is guided for Mixed Use and zoned Mixed-Use Community. The City's Inclusionary Housing Policy requires at least 20% of the units receiving financial assistance from the City be affordable at 60% of the AMI. The proposed development would provide a greater number of affordable units at greater levels of affordability. D.CRITICAL TIMING ISSUES: The Developer would apply for LIHTC to finance the development. The deadline for that application is July 11, and the Developer is seeking support for the project in order to submit a competitive application. Funding decisions would likely occur in December. The Agreement would expire on February 28, 2025. In the event the project receives a tax credit award, the Agreement could be extended and/or replaced with a Contract for Private Redevelopment. If the project doesn't receive an award, the HRA could consider whether to support the Developer in applying for funding again in 2025 or could choose to let the Preliminary Development Agreement expire. E.FINANCIAL IMPACT: The development has demonstrated a need for financial assistance from the HRA in an amount up to $985,000. As the project is further refined, staff and the HRA's financial consultant will work with the Developer to determine if the assistance takes the form of a land write-down and/or an award from the Trust Fund. Additional funds may need to be transferred to the Trust Fund from the Spending Plan or from the Housing & Redevelopment Fund. There are sufficient funds in both accounts to meet the development's funding need. F.LEGAL CONSIDERATION: The HRA Attorney prepared the Preliminary Development Agreement. The Agreement is contingent on the Developer applying for and receiving a tax credit award, and the HRA receiving the deed for 6525 Penn Avenue South. Several additional approvals will be needed before the project can move forward, including: HRA approval of a Contract for Private Redevelopment, HRA approval of the sale of land following a public hearing, and City Council approval of zoning and subdivision entitlements. ALTERNATIVE RECOMMENDATION(S): Decide not to approve a Preliminary Agreement with JO Companies, LLC. P R IN C IPAL PAR TIE S E X P E C TE D AT ME E TIN G: J ohnny Opara, J O Companies AT TAC H ME N T S: D escription Type Resolution Resolution L etter P reliminary D evelopment A greement C ontract/A greement A erial B ackup Material S ite P lan B ackup Material HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA RESOLUTION NO. ______ RESOLUTION APPROVING THE EXECUTION AND DELIVERY OF PRELIMINARY REDEVELOPMENT AGREEMENT WITH JO COMPANIES, LLC WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (the “Authority”) owns the real property located at 6501 Penn Avenue South in the City of Richfield, Minnesota (the “City”); and WHEREAS, the Authority intends to purchase the real property located at 6525 Penn Avenue South in the City, which is currently forfeited property, and is working with the State of Minnesota to obtain a deed to such property; and WHEREAS, JO Companies, LLC, a Minnesota limited liability company, or one of its wholly owned affiliates (collectively, the “Redeveloper”), proposes to purchase the real property located at 6501 Penn Avenue South from the Authority and the real property located at 6525 Penn Avenue South once the Authority obtains such property (collectively, the “Redevelopment Property”) and construct thereon a multifamily housing project consisting of approximately 40 affordable housing units and approximately 34 underground and 14 surface parking spaces (the “Project”); and WHEREAS, the Redeveloper proposes that all of the units within the Project will be affordable, with a portion of the units occupied by residents whose incomes do not exceed thirty percent (30%) of the area median gross income, a portion occupied by residents whose incomes do not exceed fifty percent (50%) of the area median gross income, and the remainder of the units occupied by residents whose incomes do not exceed sixty percent (60%) of the area median gross income; and WHEREAS, the Redeveloper and the Authority have been engaged in informal discussion regarding the Project, including consideration of the Authority selling the Redevelopment Property to the Redeveloper at a reduced cost, no more than $500,000, and/or providing financial assistance for the Project using pooled tax increment from the Affordable Housing Trust Fund in a total amount of up to $485,000, or a combination thereof; and WHEREAS, the Board of Commissioners of the Authority (the “Board”) has been presented with a Preliminary Redevelopment Agreement (the “Preliminary Redevelopment Agreement”) between the Authority and the Redeveloper, which sets forth the Redeveloper’s intentions and the conditions under which the Redeveloper will undertake the Project; and WHEREAS, the Board has reviewed the Preliminary Redevelopment Agreement and finds that the execution thereof by the Authority and performance of the Authority’s obligations thereunder are in the best interest of the City and its residents; 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 Preliminary Redevelopment Agreement presented to the Board and on file with the staff of the Authority is hereby in all respects approved, subject to modifications that do not 2 alter the substance of the transaction and that are approved by the Chair and Executive Director; provided that execution of such document by such officials shall be conclusive evidence of approval. 2.The Chair and Executive Director are hereby authorized to execute the Preliminary Redevelopment Agreement on behalf of the Authority and to carry out the Authority’s obligations thereunder. 3.The approvals set forth in this resolution are contingent upon the Authority’s acquisition of the portion of the Redevelopment Property located at 6525 Penn Avenue South. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 17th day of June, 2024. Erin Vrieze Daniels, Chair Sean Hayford Oleary, Secretary RC125-399 (JAE) 955888v4 Draft June 4, 2024 PRELIMINARY REDEVELOPMENT AGREEMENT THIS PRELIMINARY REDEVELOPMENT AGREEMENT, made as of the _____ day of June, 2024 (the “Agreement”), is between the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, a Minnesota public body corporate and politic (the “Authority”), and JO Companies, LLC, a Minnesota limited liability company, or one of its wholly owned affiliates (collectively, the “Redeveloper”). The Authority and the Redeveloper are referred to herein as the “Parties” or a “Party.” RECITALS First: The Redeveloper and the Authority have been engaged in informal discussions regarding the redevelopment of certain real property located at 6501 and 6525 Penn Avenue South in the City of Richfield, Minnesota (the “City”), which is legally described in EXHIBIT A attached hereto (the “Redevelopment Property”); Second: The portion of the Redevelopment Property located at 6525 Penn Avenue South is forfeited property that the Authority has submitted payment to the County to purchase and is waiting for the State of Minnesota to provide a deed for the property; Third: The Redeveloper proposes to purchase the Redevelopment Property from the Authority and construct on the Redevelopment Property a multifamily housing project consisting of approximately 40 affordable housing units and approximately 34 underground and 14 surface parking spaces (the “Project”); Fourth: All of the units within the Project will be affordable, with a portion of the units occupied by residents whose incomes do not exceed thirty percent (30%) of the area median gross income, a portion occupied by residents whose incomes do not exceed fifty percent (50%) of the area median gross income, and the remainder of the units occupied by residents whose incomes do not exceed sixty percent (60%) of the area median gross income; Fifth: In order to assist the Redeveloper with the Project, the Authority is considering financial assistance for the Project in an amount of up to $985,000 by selling the Redevelopment Property to the Redeveloper at a reduced cost of $500,000 (the Authority requested a Broker Opinion regarding the value of the Property and the value was determined to be $___________) and providing financial assistance for the Project using pooled tax increment from the Affordable Housing Trust Fund in an amount up to $485,000; Sixth: Based on initial reviews of the proposal, it appears that the Project is potentially feasible; however, further review is needed; Seventh: The Parties wish to cooperate in further analyzing the potential and the feasibility of the Project and are willing to proceed with such analysis as described in this Agreement; Eighth: The Parties acknowledge that the Redeveloper will expend substantial time and effort, and incur substantial expense in pursuing the Project; 2 Ninth: The Redeveloper is willing to undertake the activities described in this Agreement only with the reasonable assurance from the Authority that it will support and cooperate with the Redeveloper in its efforts; Tenth: The Authority and the Redeveloper have executed this Agreement to document their understanding with respect to the proposed Project. Eleventh: This Agreement is effective from the date hereof through February 28, 2025 (the “Term”), but may be extended by the mutual agreement of both Parties. 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; provided, however, that the Authority obtains the deed to the portion of the Redevelopment Property located at 6525 Penn Avenue South: (a)Plan Review and Refinement. The Redeveloper will complete and provide a general redevelopment plan, including parking layout and design, to the Authority for review and comment. This submission shall be made on or before February 25, 2025, as an application for sketch plan review. This review involves a staff review of the general redevelopment plan by Authority staff. Following the sketch plan review, the Redeveloper will undertake any additional studies or refinements to the general redevelopment plan for the Project that are necessary to determine that the plan (i)complies with the City’s land use requirements; and (ii) provides sufficient detail to permit the reviews described in Section 1(d) below. (b)Financial Feasibility. The Redeveloper has provided the Authority with a financial feasibility analysis of the Project, including a detailed sources and uses of all funding and all expenditures expected for the construction of the Project and a Project pro forma. (c)Authority Analysis of Project. The Authority’s fiscal consultant will conduct a financial analysis of the Redeveloper and the Project. The purpose of the Authority’s analysis is to determine the Redeveloper’s ability to finance the proposed Project. The analysis will consider such factors as the Redeveloper’s capability to arrange for financing, the anticipated level of assistance available to the Project from the Authority or other sources, and the Redeveloper’s ability to provide equity to the Project. (d)Acquisition of Redevelopment Property by Redeveloper. The Authority currently owns the portion of the Redevelopment Property located at 6501 Penn Avenue South and anticipates obtaining a deed to the portion of the Redevelopment Property located at 6525 Penn Avenue South by the end of June 2024. The Authority understands that in order for the Project to proceed, the Redeveloper must purchase the Redevelopment Property from the Authority. The Authority Board must hold a duly noticed public hearing before conveying the Redevelopment Property to the Redeveloper. During the Term of this Agreement, the Authority will not negotiate with other parties with respect to the purchase of the Redevelopment Property. 3 (e)Contract Negotiation. Under the condition that the Redeveloper is awarded tax credits for the Project, the Parties will attempt in good faith to negotiate the terms of a contract for private development (the “Contract”) which will provide the terms of sale and the purchase price of the Redevelopment Property, the nature and timing of the Project and any private improvements to be constructed, and the form, amount and conditions of any economic assistance to be provided by the Authority for the Project. The Contract will contain such additional terms as either Party believes are necessary for the transaction. (f)Right of Entry. During the Term of this Agreement (as may be extended by the mutual agreement of both Parties), the Authority will grant the Redeveloper a right to enter the Redevelopment Property as necessary for surveying the Redevelopment Property, geotechnical and environmental tests, and other studies of the Redevelopment Property. The Authority will also allow the Redeveloper to post a development and/or marketing sign on the Redevelopment Property. (g)Cooperation with Grant and Entitlement Applications. The Redeveloper plans to prepare applications for various grants and entitlements for the Project. The Authority agrees to cooperate with the Redeveloper to obtain the various grants, including supplying information for the grant applications and requesting approval from the Authority Board if necessary. (h)Tax Credit Application. The Redeveloper will apply for 9% tax credits for the Project on or before July 11, 2024. The Authority agrees to cooperate with the Redeveloper in its application for low income housing tax credits, including requesting approval from the Authority Board if necessary. 2.Undertaking by Redeveloper. During the Term of this Agreement, the Redeveloper will undertake all of the activities necessary, in the Redeveloper’s discretion, to accomplish the activities described in Section 1 of this Agreement required to be performed by the Redeveloper. 3.Undertaking and Agreement by Authority. The Authority agrees to cooperate with the Redeveloper in the Redeveloper’s undertakings and agrees to utilize its best efforts, subject to the Redeveloper’s performance, to accomplish the activities described in Section 1 of this Agreement, which includes an analysis of the financial feasibility of the Project and the nature, area, and financial implications of any tax increment financing district which might be established. 4.Term. This Agreement is effective from the date hereof through February 28, 2025, unless extended with approval of the Authority Board, provided, in the event 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 the Redeveloper determines, in good faith, that the Project is not feasible, such determining Party may terminate this Agreement upon thirty (30) days’ written notice to the other. The Authority may also terminate this Agreement for failure of the Redeveloper to provide additional funds pursuant to Section 5 below. The Parties each waive any claim or cause of action that they may have against the other Party based upon the 4 termination of this Agreement by such other Party. The Parties may, by mutual written agreement, extend the Term of this Agreement for such further periods as determined to be appropriate from time to time. 5.Administrative Costs of Authority. The Redeveloper agrees and understands that it is responsible for and will pay to the Authority $2,000 in Authority staff costs, along with all out-of-pocket costs incurred by the Authority (including without limitation reasonable attorney and fiscal consultant fees) in the negotiation and preparation of this Agreement and other documents and agreements in connection with the activities and the Project contemplated hereunder (collectively, the “Administrative Costs”). The Authority and Redeveloper agree that the Administrative Costs shall not exceed $15,000 unless agreed to by both Parties. The Administrative Costs shall be evidenced by invoices, statements or other reasonable written evidence of the costs incurred by the Authority. The Redeveloper provided a deposit to the Authority in the amount of $5,000 (the “Deposit”) to pay Administrative Costs. If at any time the Deposit drops below $1,000, the Redeveloper shall replenish the deposit to the full $5,000 within thirty (30) days after receipt of written notice thereof from the Authority. The Authority shall provide invoices to the Redeveloper for all payments deducted from the Deposit. If at any time the Deposit is insufficient to pay invoices related to the Project, the Authority will ask for additional Deposits from the Redeveloper. If the additional Deposit is not made within thirty (30) days following the date of such request, the Authority may elect to either suspend its performance under this Agreement or terminate this Agreement. Such suspension or termination 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 the Redeveloper upon the expiration or termination of this Agreement. 6.Termination of Agreement. This Agreement may be terminated upon five (5) days’ written notice by a Party to the other Party if: (a)the Authority is unable to obtain the deed to the portion of the Redevelopment Property located at 6525 Penn Avenue South; (b)in the respective good faith judgment of any Party, an impasse has been reached in the negotiation or implementation of any material term or the completion or execution of any material condition of this Agreement or the Contract; or (c)a Party fails to perform any of its obligations under this Agreement. 7.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)The redevelopment of the Redevelopment Property will be in accordance with the Contract or other agreements which the Parties shall, in good faith, attempt to negotiate during the Term of this Agreement. 5 (c)The Redeveloper understands that further and separate action, for which no obligation is created hereunder, will be required before the Authority or the Redeveloper is obligated to take various actions with respect to the Project. Those actions may include, without limitation: 1)Zoning and subdivision approvals to the extent any are required; 2)Construction of public improvements to serve the Project; and 3)Negotiation of and approval of the Contract by the Authority Board. (d)The Redeveloper further understands that many of the actions which the Authority or the City may be called upon to take require the reasonable discretion and, in some instances, the legislative judgment of the Authority or the City, and such actions may be made only following established procedures; and the Authority may not, by agreement, agree in advance to any specific decision in such matters. (e)Notice or demand or other communication between or among the Parties shall be sufficiently given if sent by certified or registered mail, postage prepaid, return receipt requested or delivered personally: JO Companies, LLC 510 Brunson Street, Suite 100 Saint Paul, MN 55130 Attn: __________________ Housing and Redevelopment Authority in and for the City of Richfield, Minnesota 6700 Portland Avenue South Richfield, MN 55423 Attn: Melissa Poehlman, Executive Director (f)This Agreement is contingent upon the Authority obtaining the deed to the portion of the Redevelopment Property located at 6525 Penn Avenue South. In the event that the Authority is unable to obtain the deed to this property, this Agreement shall terminate. (The remainder of this page is intentionally left blank.) S-1 IN WITNESS WHEREOF, the Parties have executed this Preliminary Redevelopment Agreement effective the date and year first above written. HOUSING AND REDEVELOPMENT JO COMPANIES, LLC, a Minnesota limited AUTHORITY IN AND FOR THE CITY OF liability company RICHFIELD, MINNESOTA By: _____________________________ By: Erin Vrieze Daniels Its: Chair Its: By: _____________________________ Melissa Poehlman Its: Executive Director A-1 EXHIBIT A LEGAL DESCRIPTION OF THE REDEVELOPMENT PROPERTY 6501 Penn Avenue South: Par. 1: The West ½ of the South 109.6 feet of the North 767.2 feet of the North ¾ of the West ¼ of the Southwest Quarter of the Northwest Quarter except the North 30 feet thereof; Par. 2: The West ½ of the South 109.6 feet of the North 876.8 feet of the North ¾ of the West ¼ of the Southwest Quarter of the Northwest Quarter; All in Section 28, Township 28, Range 24, in the Village of Richfield, Hennepin County, Minnesota. Par. 3: The South 109.6 feet of the North 767.2 feet of the North 3/4 of the West Quarter of the Southwest Quarter of the Northwest Quarter of Section 28, Township 28, Range 24, except the South 50 feet o f the East 1/2 thereof and except that part of the West 1/2 lying South of the North 30 feet thereof, in the City of Richfield, Hennepin County, Minnesota. 6525 Penn Avenue South: [Insert legal description] RC125-399 (JAE) 955866v1 Hennepin County Property Map Date: 4/25/2024 Comments: 1 inch = 100 feet No resu lts This data (i) is furnished 'AS IS' with no representation as to completeness or accuracy; (ii) is furnished with no warranty of any kind; and (iii) is not suitable for legal, engineering or surveying purposes. Hennepin County shall not be liable for any damage, injury or loss resulting from this data. COPYRIGHT © HENNEPIN COUNTY 2024 AGENDA SECTION:RESOLUTIONS AGENDA ITEM #3. STAFF REPORT NO. 13 HOUSING AND REDEVELOPMENT AUTHORITY MEETING 6/17/2024 Jan Youngquist, Economic Development ManagerREPORT PREPARED BY: EXECUTIVE DIRECTOR REVIEW: Melissa Poehlman, Executive Director 6/13/2024 ITEM FOR COUNCIL CONSIDERATION: Consideration of the adoption of a resolution approving an extension of the Amended and Restated Contract for Private Development with 101 E 66th ST LLC related to the construction of an 80-unit mixed use project at 101 - 66th Street East. EXECUTIVE SUMMARY: The property at 101 - 66th Street East was first vacated in 2013. After three years of neglect, it was purchased for redevelopment by PLH & Associates in 2016. After many years of work, the City approved plans for a 42-unit mixed use building in October 2020, and the Housing and Redevelopment Authority (HRA) approved a Contract for Private Development to provide financial assistance in the form of tax increment in January 2021. Shortly thereafter, PLH & Associates sold the property to 101 E 66th ST LLC (Developer). The Developer presented new plans for an 80-unit, 5-story mixed use building, which were approved by the City Council in January 2022. I n June 2022, the HRA approved a Contract for Private Development and issuance of a Tax Increment Financing (TIF) Note for up to $2,300,000. Increases in construction and labor costs as well as rising interest rates impacted the Developer's budget. Ehlers, the HRA’s financial consultant, reviewed the Developer's revised project finances. Based on Ehlers' analysis, the HRA approved an Amended and Restated Contract for Private Development (Contract) and issuance of a TIF Note for up to $2,685,000 in June 2023. The Contract required that construction commence by December 31, 2023 and be substantially complete by December 31, 2025. The building permit has been approved and is ready to be issued, but economic conditions have continued to create challenges for financing the project. In December 2023, the HRA approved a First Amendment to the Contract, which extended the date to commence construction by 90 days, with the ability of the HRA Director to extend an additional 90 days. Because the Developer had received demolition permits for the existing structures on the site and indicated that they would be removed by the April 9, 2024 deadline given by the City Council in a separate land use extension approval, in March 2024 the HRA Director extended the deadline to commence construction to June 28, 2024. The Developer is exploring several options, including bringing in a partner to help finance the project. Discussions are ongoing and staff is recommending an extension to the Contract to allow these discussions to continue. The attached resolution proposes extending the deadline to commence construction to September 30, 2024. Failure to extend the Contract would require the Developer or a new developer to begin the approval process anew. Delays will continue to reduce the amount of tax increment that will be available to the project; making redevelopment that much more difficult. The proposal remains in compliance with the goals of the Comprehensive Plan and staff believes that helping this particular project to move forward remains the best option for the community and immediate neighborhood. RECOMMENDED ACTION: By motion: Adopt a resolution approving an extension of the Amended and Restated Contract for Private Development with 101 E 66th ST LLC. BASIS OF RECOMMENDATION: A.HISTORICAL CONTEXT Southview Baptist Church vacated the property and began marketing it for sale in 2013. PLH & Associates purchased the property in 2016. On June 26, 2018 the City Council approved land use applications for a 31-unit mixed use development. On May 28, 2019 and May 12, 2020 the City Council approved extensions of the land use approvals. On June 15, 2020 revised plans with reduced commercial space and affordable units were presented to the City Council and HRA. On July 14, 2020 the City Council approved an application for Livable Communities Development Account grant funds through the Metropolitan Council (not awarded). On July 20, 2020 the HRA approved a Preliminary Development Agreement. On October 13, 2020 the City Council approved a revised land use application for a 42-unit mixed use development. On January 19, 2021 the HRA approved a Contract for Private Development and issuance of a TIF Note (not executed). In May 2021 PLH & Associates sold the project to North Bay Companies, dba 101 E 66th ST LLC (Developer). On June 21, 2021 the Developer presented plans for a 75-unit, 6-story mixed use building at a joint work session of the City Council, HRA and Planning Commission. On January 11, 2022 the City Council approved land use plans for an 80-unit, 5-story mixed use building. On June 6, 2022 the HRA approved a Contract for Private Development and issuance of a TIF Note for up to $2,300,000. On February 14, 2023 the City Council approved an extension of the land use approvals until January 11, 2024. On June 20, 2023 the HRA approved an Amended and Restated Contract for Private Development (Contract) and issuance of a TIF Note for up to $2,685,000. On December 18, 2023 the HRA approved a First Amendment to the Contract, which granted a 90-day extension to commence construction, with the ability of the HRA Executive Director to authorize an additional 90-day extension. On January 9, 2024 the City Council granted a one-year extension of land use approvals for the project which revised the deadline for substantial construction to January 11, 2025. The land use extension was conditioned on the applicant removing the vacant buildings on the site within 90 days. The buildings were removed to comply with this condition. On March 28, 2024 the HRA Executive Director granted a 90-day extension to the Contract, which requires construction to commence by June 28, 2024. B.EQUITABLE OR STRATEGIC CONSIDERATIONS OR IMPACTS The approved project consists of a mixed use building with 80 apartments and approximately 2,800 square feet of ground floor commercial space, which helps meet the Strategic Plan's desired outcome of a vibrant downtown, by increasing the number of housing units and businesses downtown. Sixteen of the apartments will be affordable to households earning up to 60% of the Area Median Income (AMI), which helps meet the Strategic Plan's desired outcome of maintaining Richfield as an affordable place to live. The project will help improve equitable outcomes by providing new housing options. In addition to 16 affordable units, the Contract also requires that the development must include at least three "Type A" units that include roll-in showers and grab bars; or at least two units that are ADA accessible. C.POLICIES (resolutions, ordinances, regulations, statutes, exc): In a Redevelopment TIF District, there are no statutory requirements related to housing affordability. The City's Inclusionary Housing Policy states that rental housing developments that receive financial assistance must either: Reserve 20% of the units for households earning up to 60% of the AMI; OR Contribute 15% of the available tax increment generated to the Richfield Housing and Redevelopment Fund. D.CRITICAL TIMING ISSUES: The extended Contract requires that construction commence by June 28, 2024. In January 2024, the City Council approved an extension of the land use approvals, which requires that substantial construction needs to be underway by January 11, 2025. The TIF District was certified on March 16, 2021. In accordance with state statute, site improvements must take place before March 16, 2025 or no tax increment from the site may be collected for the duration of the TIF District. The project is not financially feasible without tax increment. E.FINANCIAL IMPACT: The Contract calls for the Developer to receive up to $2,685,000 in TIF. The TIF would be provided in the form of a "Pay-As-You-Go" Note and would not pose a financial risk to the HRA (the risk would be to the Developer if adequate property taxes were not paid). The development property will continue to generate and pay property taxes to all of the current taxing jurisdictions (City, County and School District) based on the "base value" of the property. The HRA would retain 10% of the TIF generated to reimburse the HRA for ongoing expenses related to administration of the TIF District. The Contract calls for a one-time "lookback" where the project's financial performance will be reviewed and the principal amount of the TIF Note may be adjusted accordingly. Based on this analysis, the TIF Note will either be reduced or will not change. F.LEGAL CONSIDERATION: The Resolution was drafted by the HRA Attorney, Julie Eddington. ALTERNATIVE RECOMMENDATION(S): 1.Do not approve the Resolution. 2.Approve the Resolution with modifications. PRINCIPAL PARTIES EXPECTED AT MEETING: ATTACHMENTS: Description Type Resolution Resolution Letter Location and Comp Plan Map Backup Material HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA RESOLUTION NO. ______ RESOLUTION APPROVING EXTENSION OF THE AMENDED AND RESTATED CONTRACT FOR PRIVATE DEVELOPMENT WITH 101 E 66TH ST LLC WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (the “Authority”) was created pursuant to Minnesota Statutes, Sections 469.001 through 469.047, as amended, and was authorized to transact business and exercise its powers by a resolution of the City Council of the City of Richfield, Minnesota (the “City”); and WHEREAS, the City and the Authority has established the 2020-2 Tax Increment Financing District – EMI (the “TIF District”), a redevelopment district within the Richfield Redevelopment Project, pursuant to Minnesota Statutes, Sections 469.174 through 469.1794, as amended; and WHEREAS, 101 E 66th St LLC, a Minnesota limited liability company (the “Developer”), owns certain property in the City and has proposed to construct thereon approximately 80 rental housing units, including sixteen affordable housing units, and approximately 2,800 square feet of commercial space (the “Minimum Improvements”); and WHEREAS, the Authority and the Developer previously entered into an Amended and Restated Contract for Private Development (the “Development Agreement”) pursuant to which the Developer agreed to construct the Minimum Improvements and the Authority agreed to reimburse the Developer for certain public redevelopment costs associated with the Minimum Improvements through the issuance of a tax increment revenue note (the “TIF Note”) in the maximum principal amount of $2,685,000; and WHEREAS, pursuant to a First Amendment to the Development Agreement, the Developer is required to commence construction of the Minimum Improvements by December 31, 2023 and the Executive Director of the Authority was authorized to provide up to two additional extensions of up to ninety (90) days to commence construction; and WHEREAS, the Executive Director has provided two extensions of ninety (90) days each for the Developer and the extensions expire on June 28, 2024; and WHEREAS, in order to move forward with the Minimum Improvements, the Executive Director requests the ability to provide an additional extension for the Developer, and if the Developer is unable to move forward with Minimum Improvements, to find another developer that is able to move forward with the Minimum Improvements; 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 Executive Director is authorized to provide another extension to September 30, 2024 to the Developer or find another developer that is able to move forward with the Minimum Improvements. 2.This resolution shall be effective upon adoption. 2 Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 17th day of June, 2024. Erin Vrieze Daniels, Chair ATTEST: Sean Hayford Oleary, Secretary RC125-387 (JAE) 958173v1 NICOLLET AVE65TH ST E 66TH ST E1ST AVE SSTEVENS AVE65T H S T W 66TH ST W ±I:\GIS\Community Development\Staff\Econ Dev Manager\101 66th St E PLU.mxd 2040 Planned Land Use Mixed Use Regional Commercial Community Commercial Neighborhood Commercial High Density Residential Medium Density Residential Low Density Residential Park Quasi-Public Right-of-Way (ROW) 101 - 66th St East2040 Comprehensive Plan Designations 0 200 400100ft