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12-17-1990 Special & HRACITY OF RICHFIELD, MINNESOTA CONCURRENT SPECIAL CITY COUNCIL AND HOUSING AND REDEVELOPMENT AUTHORITY MEETING December 17, 1990 CITY COUNCIL MEMBERS Mayor Quam; Ivan Ludeman; and Martin PRESENT: Kirsch. CITY COUNCIL MEMBERS ABSENT: Michael Sandahl STAFF PRESENT: James Prosser, City Manager; Steven Devich, Administrative Services Director/ Acting City Clerk; Byron Wallace, Community Development Director; and John Dean, City Attorney. HRA MEMBERS PRESENT: Thomas Harms; Vern Luettinger; Joan Helmberger; and Ivan Ludeman. The HRA meeting was called to order by Chairperson Harms at 7:00 p.m. The City Council meeting was called to order by Mayor Quam at 7:00 p.m. The City Council and the Housing and Redevelopment Authority met concurrently on the following items: HRA Item #1 TERMS OF LETTER OF INTENT, HUB WEST. HRA LETTER N0. 47 City CONSIDERATION OF RESOLUTION APPROVING MODIFICATION #6 Council TO THE LYNDALE/HUB/NICOLLET COMMERCIAL DEVELOPMENT Item #1 IMPROVEMENT PROGRAM. COUNCIL LETTER NO. 313 Executive Director Prosser reviewed HRA Letter No. 47 regarding the terms of the Letter of Intent, Hub West. Larry Miller of Bradley Real Estate Trust addressed the HRA and City Council presenting a background of Bradley Real Estate Trust and of Bradley's business interests in the Hub. Larry Miller next reviewed a slide presentation of the Hub, including several before and after photos of many different establishments in the Hub. David Shea, Bradley Real Estate Trust, presented a plan design for redeveloping the west portion of the Hub. The design included an expanded parking lot and Rainbow grocery store facility. The redevelopment proposal establishes a single identity center with an improved traffic flow. Concurrent Special Meeting Minutes (2) December 17, 1990 Sid Inman, Publicorp Inc., reported on the financial feasibility of the project. Mr. Inman explained the tax increment "But for" analysis; some sort of assistance is necessary for the redevelopment project. The question is really how much assistance is warranted. The level of assistance proposed by the staff is well within the amount which could be supported by tax increment the entire project area. The second aspect reviewed by Publicorp was the overall effect of the project on the existing district. To make that analysis, Publicorp set forth a scenario of the most conservative financial variables. There would be a sufficient cash flow to maintain the fiscal health of the district, even under this worst-case scenario. Executive Director James Prosser reviewed the issue of the existing parking problems and how this development would address that problem. City Attorney John Dean reviewed the Letter of Intent of the project with City Council and HRA Members. Mayor Quam and HRA Chairperson Harms opened the public hearing. Yt was stated that the City Council would consider a resolution approving Modification No. 6 to the Lyndale/HUB/Nicollet Commercial Improvement Program and the HRA would consider the terms of the proposed Letter of Intent. Larry Wozniczka, 6744 Wentworth Ave., asked for a more detailed explanation of what would be eliminated and retained in the Hub West. Mr. Shea reviewed the proposed changes and the proposed pedestrian flow. Mr. Wozniczka asked if the project would pay for the total cost of acquisition. John Dean, City Attorney, said the costs would be provided by the entire Hub property alone, not the entire LHN. Mr. Wozniczka asked why, if the purchase price is $3,937,500 and the assessor's market value is $2,900,000, are we paying an extra one million dollars? John Dean responded that the assessor's estimated market value is set at approximately 92.5$ of value. That brings it up to $3,250,000, which exceeds the net cost of the purchase to the HRA. The City also obtained an independent review appraiser who set the value at or more than four million dollars to purchase. Mr. Wozniczka also stated that he was concerned about the sale price to the developer for $725,000. Mr. Dean responded that much of the City's costs are represented by buildings that will be torn down. It is also important to remember that a portion of this is also assistance. Concurrent Special Meeting Minutes - (3) December 17, 1990 Commissioner Ludeman said that he appreciated Mr. Wozniczka's questions. However, Mr. Ludeman felt that under this agreement, the City and HRA are better off than under the original purchase of the LHN. Additionally, the HRA does not have to sell bonds and may use debt service funds instead. Mr. Ludeman also was concerned about the dollar difference but feels that the project has a very good financial basis. Mr. Wozniczka asked about the $50,000 relocation cost for Snyders. Is the lease expiring? Mr. Dean said that the matter of the lease will be handled by the current property owner. The City's only obligation is relocation costs. Mr. Wozniczka asked why the HRA and City Council were not requiring a developer's agreement. Mr. Dean said there was no financial obligation until after a developer's agreement is approved. Approval of the modification tonight does not approve expenditure of those funds. Mr. Dean explained how the $725,000 payment might take place and _ that the $725,000 will be used directly to acquire the property for this project. M/Ludeman, S/Quam to close the City Council public hearing. Motion carried 3-0. M/Ludeman, S/Luettinger to close the HRA public hearing. Motion carried 4-0. Chairperson Harms asked Mr. Inman if a worst case scenario with unfavorable law changes also was considered. Mr. Inman responded that it was considered. Chairperson Harms stated that it was his understanding that in the Letter of Intent, page 3, paragraph 8 - Subordination, the minimum market value will not be subordinated. Mr. Dean responded that Mr. Harms was correct. Chairperson Harms asked if a timeline has been set to conclude purchases before developer agreement and who pays fees under abandonment. Mr. Dean said a timeline has been prepared and there are no fees under the quick take process. Chairperson Harms and Attorney Dean discussed legal aspects regarding the subordination provision of the agreement. Concurrent Special Meeting Minutes (4) December 17, 1990 Council Member Kirsch thanked Bradley and stated that he felt that City staff worked well on arranging the funding. Mr. Kirsch also said that a survey of residents has reflected that residents want a large grocery store, such as a Rainbow. M/Kirsch, S/Ludeman that the following resolution be adopted; that it be spread in the resolution book and that it be made part of these minutes: RESOLUTION NO. 7702 APPROVING MODIFICATION NO. 6 IN THE LYNDALE/HUH/NICOLLET COMMERCIAL IMPROVEMENT PROGRAM: REQUESTING THE RICHFIELD CITY COUNCIL TO CONDUCT A PUBLIC HEARING THEREON: RECOMMENDING APPROVAL OF THE PLANS Motion carried 3-0. This resolution appears as Resolution No. 7702 in Resolution Book No. 59. HRA M/Ludeman, S/Helmberger that the Letter of Intent be a,~proved subject to the condition that not withstanding anv _ provisi®a~ ®f the Letter ®£ Intent the HRA shall possess full discretion with respect to the actions to be taken by the HRA pursuant to the Letter of Intent. Motion carried 4-0. Mayor Quam stated that the City Council had two other matters of business to conclude before adjourning. City Council OATH OF OFFICE Item #2 Council Member Kirsch stated that Council Member Sandahl was called out of town on business tonight and that on January 2 he and Mr. Sandahl will be sworn in. He asked that Kristal Stokes be sworn in at this time. Acting City Clerk Steven Devich administered the Oath of Office to Kristal Stokes as Council Member for Ward 3. City Council CLAIMS AND PAYROLLS Item #3 M/Ludeman, S/Kirsch that the following claims and payrolls be approved: RICHFIELD STATE BANK Checks 13439-13454; 23292-23369 $259,451.81 1 Concurrent Special Meeting (5) December 17, 1990 FIRST WESTERN BANK Checks 5912-5928 $606,203.93 Motion carried 3-0. City Council ADJOURNMENT Item #4 The Special City Council meeting was adjourned by unanimous consent at 8:22 p.m. Date pproved: 1/14/91 S ev n J. Qu Mayor ICS ~~ Steven Devich am s D. Prosser Acting ity Clerk y Manager Chair Harms and HRA Commissioners thanked Mayor Quam for his work. Mr. Harms then went on to other HRA scheduled business.