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02-06-1984 1 CITY OF RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY REGULAR MEETING February 6, 1984 The Housing and Redevelopment Authority of the City of Richfield met in regular session in the council chambers of the city hall on Monday, February 6, 1984 at 6:00 p.m. The meeting was called to order at 6:00 p.m. by Chairman Tom Harms. Present: Commissioners Ludeman, Luettinger, Hassenstab and Chairman Harms. Absent: Commissioner Helmberger 1. Approval of Minutes of Regularly Scheduled Meeting, January 16, 1984 Motion by Hassenstab, seconded by Ludeman to approve the minutes of the January 16, 1984 meeting, subject to correction of Commissioner Luettinger's address as listed in the minutes. All ayes - Carried. 2. Opportunity for.Citizens to Address the HRA Chairman Harms asked if there were citizens in the audience who wished to address tk~e HRA, but none wished to speak. 3. 1 Area Executive Director John Cartwright called on City Planner Rick Jopke to report on the airport zoning ordinance. Mr. Jopke indicated that the zoning ordinance had now been adopted by the Joint Airport Zoning Board, which was set up to develop the ordinance but it still needs to be approved by the Minnesota Department of Transportation. Mr. Jopke said that one of the pro- visions of the ordinance involves air space zones which affect building heights. The broadest zone covers Richfield from the airport west to approx- imately Nicollet Avenue. The zoning ordinance also involves approach zones which affects a small part of southeast Richfield, also regarding the height of structures that might be built in this area. HRA Meeting Minutes -2- February 6, 1984 In response to questions from commissioners, Mr. Jopke commented that Richfield's coning ordinance is already at least as restrictive as the Airport Zoning Ordinance with respect to the height requirements of residential and commercial buildings. Mr. Jopke also indicated that the zoning ordinance sets out land use zones, A, B, and C, to limit the type of development in flight approach and departure areas. Zone A is located immediately adjacent to runways at the airport, and does not directly affect Richfield. Zone B affects a small area in southeast Richfield, and stipulates a minimum site area of three acres with a population density of 15 people per acre. This requirement does not, however, affect areas now built upon, and existing land uses are :exempt from the land use regulations for the foreseeable future. Zone C extends west approximately to Nicollet Avenue, and only the height restrictions referenced earlier apgly to land uses. Commissioner Hassenstab asked if Nicollet was approximately the westerly limit of any of the restrictions, and Mr. Jopke responded that it was. Mr. Hassenstab also asked about whether there was any action on noise restrictions in the zoning ordinance, Mr. Jopke said that these guidelines have been developed and set up certain conditional uses within areas affected by airport noise, end that the guidelines need to be reflected in the city's comprehensive plan. Mr. Hassenstab asked if this would affect the Godfather Block development, and Mr. Jopke said that it would not have~a major impact. It was noted, however, that the guidelines may affect redevelopment in the area of the Cedar Liquor Store, depending on the proposed uses of the property. Residential uses for example, would require noise attenuation measures. Executive Director Cartwright asked Mr. Jopke if any city action is required for the zoning ordinance and Mr. Jopke responded that the city needs to enforce these requirements, otherwise enforcement would be undertaken by another agency. HRA Meeting Minutes -3- February 6, 1984 4. Results of Competition for Housing Mortgage Revenue Bond Authority Executive Director Cartwright reported that the Minnesota Housing Finance Agency allocated $4 million of bonding authority to Richfield for the PADA project as a result of the recent application process for Housing Revenue Bonds. Mr. Cartwright noted that the city's ability to issue such bonds wou 1d depend on congressional action concerning tax-exempt financing. 'The Executive Director also outlined the breakdown of the nonbond proceed contributions included in Richfield's application for Housing Revenue Bond authority. Commissioner Luettinger asked what the status is of congressional action, and Commissioner Ludeman noted that in a recent conversation with Representative Frenzel, it was thought that continued authority to issue such bonds would be enacted by Congress this year. Mr. Hassenstab suggested an action be taken by the HRA to have a letter go to congressional representatives regarding its support for housing bonds, and the importance of industrial development revenue bond financing for commercial development (PADA and Derrick projects). Motion by Hassenstab, seconded by Ludeman to have a letter sent by the Chairman of the HRA to the city's congressional representatives concerning the need for continued availability of various forms of tax-exempt financing for the PADA and Derrick projects. All ayes - Carried. Absent - Helmberger. 5. Update on Derrick Proiect (Godfather Block) Attorney Clayton LeFevere gave. an update to the HRA concerning the status of this project. He said the need for tax-exempt financing for the rental and commercial components for the project was discussed, especially regarding the HRA Meeting Minutes -4- ~ February 6, 1984 availability and amount of such financing. Mr. LeFevere said that Derrick Companies believe other financing could be secured by bringing in lenders as partners in the project if tax-exempt financing was not a possibility. Mr. LeFevere also said that the matter of timing is an important issue. He said that Derrick Companies hope to get the condominium component of the project started this fall. The condominium site will be available this fall, but the HRA has wanted to close on the land sale for all three components at one time to the developer only when the developer's financing and construction commit- menu have been received and approved. He noted that it may be difficult for the developer to meet these requirements in time, and that more work needs to be done with regard to the specifics~of the deadlines required in the development agreement. He noted that on Friday, February 3rd, John Dean met with represent- atives of Derrick, and new provisions to the development agreement are being drafted as a result of those discussions. Mr. LeFevere also noted that the form of the guarantee agreement by the developer is an issue in these discussions. In addition to the assessment agreement, which will be included in the development agreement, the HRA has asked for a corporate or personal guarantee to back it up if the taxes necessary to repay the HRA/city financing falls short. Mr. LeFevere noted that this guarantee needs to be separate for each component, although in the case of the condominiums, it would no longer apply once all of the condominiums have been sold. Other components would require the guarantee for the term of the financing. Mr. LeFevere said the developer is interested in the specifics of how such a guarantee would work, whether for example, they would be repaid if a tax shortfall is covered and there later is a surplus. Staff has taken the position to date that there would not be a payback if there is later a surplus HRA Meeting Minutes -5- February 6, 1984 in the debt service fund. Chairman Harms asked if the condominium guarantee would drop, and Mr. LeFevere said that this would occur once all the units are sold. Mr. LeFevere also noted that federal law says that if the amount of taxes paid under such a guarantee exceed 25% of total, the tax-exempt status of the financing is voided, since the financing then becomes a type of Industrial Revenue Bond Financing. The guarantee needs a statement that it won't exceed 25°1 of the principal and interest due on the debt service. Mr. LeFevere said that this means the guarantee may not be. as valuable as it would otherwise, and introduces a com- plicating factor to the agreement. Commissioners expressed concerns about who would serve as guarantors under such an arrangement. It was noted that both the Derrick Companies and the codevelopers would be required to guarantee the various components of the development. Commissioner Ludeman asked about the phasing of the project and the start of construction. Discussion also followed concerning whether the participating financing institutions and codevelopers are known, and Mr. LeFevere noted that codevelopers must be named at the time the development agreement is executed. Chairman Harms said caution is necessary concerning the timing and the other factors in this agreement and that it is necessary for the HRA to proceed carefully in this matter. Mr. LeFevere said the agreement is being redrafted and it may be necessary to hold a special HRA meeting in February to consider its approval. Commissioner Ludeman said that he is surprised the Heilicher negotiation has not yet started. Mr. LeFevere said that the start of negotiations may trigger relocation benefits, and staff believes that the city council and HRA have said that negotiations shouldn't start until a development agreement has been approved. HRA Meeting Minutes -6- February 6, 1984 Guarantees held with other redevelopment projects were discussed, and it was noted that Lyndale Garden Center, Richfield State Agency and Richfield Shoppes developments also had a corporate guarantee included. Commissioner Hassenstab asked if the development agreement is actually with a "shell" corporation. Mr. LeFevere responded that in a sense that is true, because a separate organization by Derrick is being created for this project. He said it is important to know what resources are behind that organization and he said the codevelopers could also have a subsidiary involved. Staff is trying to get the best assurances it can that the whole project will go forward. Discussion followed concerning the nature of tax-exempt financing that would be used for the project and what financing might be available if Industrial Development Revenue Bonds are not. Mr. Larry Wozniczka, 6744 Wentworth, asked about the payback of the city's financing, and said the HEtA should also consider the affect on other taxpayers who would pay for services rendered this property during the time its taxes are used to pay for the HRA financing. Chairman Harms said that staff sould be prepared to respond to this question at the time the HRA considers the development agreement. 6. Cedar Avenue Development Discussion Executive Director Cartwright called on Community Development Director Dennis Kraft to give a report on this matter. Mr. Kraft said that staff has talked to a developer about a concept for an office/warehouse development along Cedar Avenue from approximately 63rd Street to 66th. He said the concept is for a quality development that could be constructed over a period of years. Mr. Kraft said that the potential developer of this area believes there may be a market for this type of development, especially after the Met Stadium site is 1 HRA Meeting Minutes -7- February 6, 1984 redeveloped. Mr. Kraft also said the developer has hired an architect to develop general concept drawings for the project. Mr. Kraft noted that as a result of these development plans, it may be possible to move the Cedar Liquor Store to the northeast corner of 66th and Cedar, and the staff will talk to Beverage Marketing, Inc., the city's consultant for liquor operations, about this possible relocation. Commissioner Hassenstab asked if there would be a problem with office/ warehouse use because of aircraft noise. Mr. Kraft said that the noise standards would apply, but would be less rigid for these uses than for residential development. 7. Executive Director's Report Executive Director Cartwright reiterated the potential need for a special meeting of the HRA during February to consider the development agreement with Derrick Companies.. 8. Claims and Payrolls Motion by Ludeman, seconded by Hassenstab to approve the following claims and payrolls: SUMMIT STATE-BANK Checks 5160/5167, 5297/5311 $1,029,085.65 All ayes - Carried. Absent - Helmberger. 9. Adjournment Motion by Hassenstab, seconded by Ludeman to adjourn the meeting of the HRA. A11 ayes - Carried. Absent - Helmberger. Time: 7:00 p.m. Date Approved: March 19, 1984 onald Rankin Acting Secretary ~~ - Thomas E. Harms Chairman