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03-06-1984HOUSING & REDEVELOPMENT AUTHORITY City of Richfield, Minnesota Special Meeting ' March 6, 1984 7:30 P.M. Chairman Tom Harms called the meeting to order at 7:35 P.M. Commissioners Helmberger, Ludeman, Luettinger, Hassenstab and Harms were present. ~ ~ Chairman Harms noted that the HRA had received a response from Congressman Martin Sabo concerning the HRA's support of continued authority for the City a Richfield to issue Industrial Revenue Bonds for redevelopment projects. Commissioner Ludeman reported on the National League of Cities Legislative Conference which he had attznded with Cbunci].man Martin Kirsch and the concerns noted there about industrial Revenue Bonds. He said that most~of the Minnesota congressional delegation is concerned about it, and few agree with the dollar IRB issues. He ~rther indicated that many congressmen did not believe much would be done concerning the Federal budget deficit, but-that congress would deal with the matter of Industrial Development Revenue~Bonds. Commissioner Helmberger asked whether congress was making a distinction between Housing Revenue Bonds and Industrial Revenue Bonds. Discussion followed concerning congressional action on Industrial Revenue Bonds and the Federal budget. Executive Director Cartwright noted that the House Ways & Means Committee has exempted Housing Revenue Bonds from the restrictions that might be placed on other tax-exempt financing issues. Chairman Harms noted that the purpose of this special meeting is to receive a preliminary report on the proposed redevelopment of the "Godfather Block". Executive Director Cartwright said that he would like to call on the devel- oper and co-developers to present the concept of the development plan and then HRA Special Meeting -2- March 6, 1984 have staff report on financing the development agreement and specifics of the development proposal. Mr. R3.chard Krier, representing the Derrick Companies, introduced Mr. Roger Derrick, Mr. E. J. Pieslso, and Mr. Mike Gould. Mr. Krier indicated that the project is moving ahead for the 1984 and 1984 construction seasons. He believes the project will be successful and a "landmark" in mixed use develpment in the Twin Cities area. He said the project is financially feasible and that there is a commitment from Prudential-Bache and others for financing the project: Mr. Krier also indicated that the concept for the redevelopment would consist of 140 condominiums designed for occupancy by the elderly, 160 rental apartment units, and a commercial development of 70,000 square feet. Mr. Derrick went on to describe the land uses for the property. One compon- ent would involve a 13-story condominium project with 107 underground parking spaces and 27 surfacae parking spaces and other amenities for residents. He indicated this would be a separate building, aligned on the property to -- minimize interference With vistas from the Lake Shore Drive Condominiums: -^ _ He said the building would use brick material similar to that of Lake Shore Drive Condominiums. A second component of the project would involve an apartment building. The apartment project was substituted in place of a second condominium building because of a market analysis and a need to generate a larger amount of tax- increment from the project. The apartment project is considered semiluxury housing. Rents would be approximately $450-$650 per month. Planning is for a mid-rise building, although there is a need to resolve certain issues with the City concerning building and fire codes. The apartment building parking - would be underground with an entrance off of 65th Street. The building would have a brick facade, with a-theme similar to the condominiums to the west. - HRA Special meeting -3- ~ March 6, 1984 Mr. Krier said this building meets a strong market demand for "mixed adult" groups including empty-nesters, elderly people and single, middle-aged persons. Mr. Krier said that it would be necessary to provide a greater than 1:1 parking ratio for the apartment building. This would be done by expanding the parking area under the apartment building. Mr. Krier further indicated that the rental units would not be marketed to families. The building would be located on the northerly part of the site away from the noise and air pollution of the 66th StreetfLyndale intersection. Mr. Krier indicated that a shopping center would be the third component of project, and would try~to facilitate a "service center" concept for, residents of the immediate area, including a restaurant, sporting goods store, and other retail uses. Mr. Krier said that the commercial development would have an~area of approximately 70,000 gross square feet, with 60,000 square feet of net rent- - able space. A mall effect would be established for the center, and glass, brick wood materials would be used. Parking would be in the front of the building.. Mr. Krier went on to describe research that had been done on traffic going through the 66th Street/Lyndale intersection, and indicated that it was fairly evenly spread in all directions. He further stated-that it was estimated that approximately 5,820 vehicle trips per day would be generated from this development. Mr. Krier said that the preliminary financing for all components of the development is in place. Commissioner Ludeman asked about the cost of the condominium units and Mr. Krier responded that they would be in the range of $60--$100,000 with an average . of $78,000 to $81,000. Mr. Ludeman asked if the apartments would be 4-6 stories • tall and Mr. Krier responded that the design is for 4 stories to be built above the commercial development. In response to a further question from Mr. Ludeman, HRA Special Meeting -4- March 6, 198¢ • Mr. Krier said that the average rental rate for the commercial space would be $8.50 per square foot, on a triple-net basis depending on the type of tenant. Commissioner Helmberger asked about the number of 1-bedroom units to be in the apartment building? Mr. Krier responded that it is important to have a mix of units and there is also a need to provide for low-income residents. He said a 1-bedroom apartment would be 600-800 square feet and that it is necessary to have a large-number of 1-bedroom units in the building. Commissioner Hassenstab asked if this is a joint venture project and if so, who would be involved? Mr. Krier responded that the joint venture would involve Mr. Plesko, Bor-Son Construction and the Knutson Company. The arch- itects would ~ Mr. Curly Roberts for the condominium project and Miller-Hanson Architects for the apartment architecture. Mr. Hassenstab asked if the 66th Street access to the parking lot would create traffic problems? Mr. Krier responded that it would be necessary to work-with the City and Hennepin County . to determine what type of traffic circulation improvements would be necessary. Commissioner Hassenstab further asked about the feasibility of having apartments located above the commercial building. Mr. Krier responded that it has been successful in certain other parts of the Twin Cities area. Hassenstab asked about noise from the commercial area, and Mr. Krier responded that there would be a horizontal separation in the front of the commercial/apartment building. Hassenstab said it would be necessary to try to anticipate potential problems with this mixed-use development. Chairman Harms said that he wanted to raise certain issues for consideration and discussion. He asked if Knutson was still to be involved in the project. Mr. Krier responded affirmatively. Mr. Harms further noted the issues of having the condominiums devoted to the elderly, apartments devoted to adults and the corresponding effect•on the school district because of the lack of HRA Special Meeting -5- March 6, 1984 family housing. He further noted a question with regard to having all residential parking access from 65th Street. Commissioner Helmberger asked whether the same services would be provided at the condominiums as are available,at Lake Shore Drive. Mr. Krier responded that it is hoped that services may be coordinated between the two buildings. Chairman Harms said he believes the HRA needs to address the concept of the development mix and layout. Attorney Clayton LeFevere asked if the developer will provide documentation of the adequacy of parking to be included in the development. Mr. Krier said that trie developer would to both the City and lenders, and it maybe that addit- ional parking will be required for the apartment component. Mr. LeFevere said the City needs assurance that adequate parking will be provided. ' Commissioner Luettinger asked how the project will be mar~ged. Mr. Krier responded that-professional management-for the residential components will be arranged and that two firms had been interviewed to provide such services. Mr. LeFevere asked where guest parking would be provided for the apartments. Mr. Krier responded that there would only be a few spaces near 65th Street. Mr. LeFevere stated that it would be preferable to have the guest parking as part of the building structure. Executive Director Cartwright discussed the City's ability to work with co- developers in the event Derrick Companies are unable to perform on the development agreement. Mr. Krier said Knutson will be in the project, ~iut certain issues still need to be resolved. He said the Derrick Companies had been dealing with Knutson and Bor-Son as co-developers. Mr. LeFevere asked what would be the risks of having two construction companies involved in the project. Mr. Krier said that staging capability on-site is a potential cost. HRA Special Meeting -6-• March 6, 1984 Chairman Harms noted that Bor-Son would be involved with the commercial and rental companies with Plesko and Derrick to do the marketing. He asked if the condominium phase would be done by Knutson. Mr. Krier noted the need to also consider who will manage the developments, and said discussions had taken place on this issue. Mr. LeFevere asked if E. J. Plesko would also be involved in the condominium development. . Chairman Harms asked if the developers had looked at possible tenants for - the condominiums other than the elderly. Mr. Krier responded that the market study doesn't support targeting the condominiums for other 'buyers. Mr. LeFevere asked when co-developers would be formally identified by the Derrick Companies? Executive Director Cartwright asked about the mix of units in the condominium development? Mr. Krier noted that the market analysis recommended 30 small 1-bedroom units, 40 larger 1-bedroom units, ZO average size 2-bedroom units, and 20 larger 2-bedroom units. Mr. LeFevere noted that there is a concern that all the co-developers and others involved in the project be known and not constantly changing from month to month. Executive Director Cartwright summarized. the financing involved for the project. He said the developer will guarantee a $21.2 million market value for the project, which would provide a tax-increment of $621,000 per year. He said this amount of increment would support a bond issue of approximately $5 million The City's exposure on the land acquisition is limited to a $3 million maximum according to the terms of the development agreement. Discussion followed regarding the City's financing arrangements for the project. Dennis Kraft, Director of Community Development, discussed public improve- ments and services for the project. He said the City would provide the same type of street and right-of way improvements as in other parts of the L/H/N~ area. This may also include landscaping, bus shelters and other improvements. HRA Special Meeting -7- March 6, 1984 Mr. Kraft said there is a need for an easement to provide for storm sewers through the site. He said that with regard to public services, additional calls would be expected for fire and rescue service, although this additional service is expected to be off-set by reduced police calls to the Godfather Restaurant. There is no effect expected on school services. Mr. Kraft did indicate that fihe development would increase the typical City-provided L/H/N maintenance service costs which are specially assessed to property owners. Commissioner Helmberger asked whether the tax-increment bonds extend the pay back commitment for the entire L/H/N district. Mr. LeFevere responded that they did. Commissioner Luettinger asked if sidewalks would be provided around the entire perimeter of the development. Mr. Kraft responded that they would. Mr. LeFevere provided an update concerning property acquisition for the redevelopment. He said the Strom property is presently in eminent domain proceeCiings and Commissioners-have held their first meeting and will meet again on March 28th. He said the HRA is seeking a quick-take proceeding to be effective May 1, 1984, but that is being resisted by the property owner. Mr. LeFevere said there will be a hearing on the quick-take petition on March 28th and it is important, therefore, to have a development agreement executed to show that the project is proceeding, and that there is in fact a need for the property acquisition. With regard to the development agreement, Mr. LeFevere said the contract ~i ~~ presently lists Market Plaza Corporation and co-developers as parties to the agreement. This requires the co-developers to agree to the same conditions as the developer. Mr. LeFevere also said that the project plans would be included as an addendum to the agreement, although the developers will still need to~ obtain final approvals for the plans. Mr. LeFevere said both the developer and the HRA make certain representations in the agreement and specific time limits and termination options for both parties are included in the development agreement. Chairman Harms asked when a public hearing is held on the development that Derrick present a concept plan. He noted the HRA does incur certain risk under the timelines set out in the agreement and there is also risk involved in~the 25% limitation on the assessment agreement. Commmissioner Hassenstab asked what Mr. Harms' assessment of the project is, Mr. Harms responded that he thinks there is some risk, although the level.of risk declines as the project moves ahead. Mr. LeFevere stated there is a risk the developer won't get the financial commitments necessary to proceed. Mr. Harms noted staff is attempting to get the best possible information into the concept plan for the project. Mr. Harms noted it would be necessary to hold another meeting soon and suggested this could occur on March 26 or March 27. Commissioner Hassenstab noted the next 9C days would be very important and there is no room for error by City staff or developers. He asked there be assurance that all necessary efforts would be applied to the project. Commissioner Ludeman asked what the time would be for approving a develop- went agreement. Mr. LeFevere noted that the hearing on the property acquisition would be held on March 28th. Executive Director Cartwright said there are a number of questions remaining regarding the project, including: 1) The concept of having residential units constructed above a commercial development. 2) The parking plan for the project. 3) The desirability of having a median cut on 66th Street west of Lyndale. 4) Traffic circulation for the project. 5) Coordination of architectural work on the project. A _~z..._.~~..,~~-__---- - -- ~ . HRA Special Meeting -9- ~ March 6, 1984 Commissioner Ludeman asked if action by the HRA was necessary? Chairman Harms said it is not,, but the HRA is letting-the developer know that the concept of the development is appropriate. Mr. Ludeman said he does not have a concern about having the apartments constructed over the commercial area and believed it was a good mix of development, although there are some issues that still need to be addressed. Mr. Luettiizger said he likes the concept .' and asked who the ®echanicaT engineers for the project would be. Mr. Plesko said this is not k<zown at present. Mr. Lueti;inger also stated he would be . concerned about amedian-cut on 66th Street.' Commissioner Helmberger stated.a concern regarding the amount of elderly housing and Mr. Plesko noted there is a presently~a waiting list at Lake Shore Drive Condominiums for people interested in those units. Commissioner Helmberger said size likes the idea of ~vi~ig apar~ents oonstructed over the cx~mercial development. Commissioner Hassenstab said his only negative comment had to do with the appearance of two condominium towers so close together. He said he has no concern abut the apartments built over the commercial area, but is concerned about t3ze median cut on 66th Street. He noted there would be a premium on the time commitment required by staff to carry out work on the project. Chairman Harms said he has a certain frustration that the project does not help lower income persons and family housing. He also stated the process has been somewhat frustrating regarding the length of time and expense that has been involved in the project. He said he hopes the financing commitments can be obtained as there is a need to keep up momentum on the project. HRA Special Meeting -].U- March 6, 1984 Mapor Hat~ilton was rgcogtli~ed by Chairman Harms and the mayor said that the first meeting reg~rd~.ng this project was held in December of 1881, and he is cxmcerned tt~t~ it .is ~taking~ so long for the project to evolve.. Mr.. LeFevere laid it would be necessary to proceed with all due haste to have the pro~cct acc~aapiisr~ed. Chairman ~ aoc~r the meeting at 14:1'4 P.M. Date Approved:. April 16, 1984 -.._--_-._. J Heimberger Secretary `' Thomas ~ Hat~ns Chairmen 1 _. _ - _ _ . y . _ - _ - ~ _.~:-