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07-16-1984HOUSING AND REDEVELOPMENT AUTHORITY City of Richfield, Minnesota July 16, 1984 1 Chairman Harms called the regular meeting of the HRA to order at 7:35 P.M. HRA COMMISSIONERS PRESENT: Hassenstab, Helmberger, Ludeman, Luettinger and Harms. APPROVAL OF REGULAR MEETING MINUTES OF JUNE 18, AND SPECIAL HRA MEETINGS OF JULY 9, 1984. M/Luettinger, S/Helmberger, minutes of June 18, and the 1984. All voted aye. Motion carried. to approve the regular meeting special meeting minutes of July OPPO TUNITY FOR CITI ENS TO ADDRESS THE HRA No one wished to speak. 1. PROJECT PLANS FOR ARK T PLAZA DEVELOPMENT City Manager Cartwright introduced this item and called on Mr. Dick Krier of Market Plaza Corporation to present plans for the project. Mr. Krier described the plans for the project in considerable detail, including the site plan, building design, materials to be used, and the traffic and pedestrian circulation patterns. Commissioner Ludeman asked about the use of gray brick on the building compared to other colors. Mr. Krier said the developers thought this color of brick would be unique and attractive for the project, and still conform to the earth-tone criteria for projects in the L/H/N area. Mr. Ludeman said he was concerned about the zero set-back for the condominium building along 65th Street, and discussion followed concerning the amount of parking that might be lost if the building were to be moved further back from the street right of way. Commissioner Helmberger asked about pedestrian circulation in the area, and suggested that it might be appropriate to consider a crosswalk for 66th Street between Lake Shore Drive and Lyndale Avenue. Discussion followed concerning location of turning lanes and pedestrian access for the project. Commissioner Luettinger asked about mechanical systems to be used in serving the project, and stated a specific concern regarding plans for refuse removal. Mr. Krier said the developers are looking at the feasibility of providing steam HRA Meeting Minutes -2- July 16, 1884 heating to both the condominium building and the apartment/commercial building. M/Hassenstab, SlLuettinger to schedule a special HRA meeting.on July 23 ~at 6:30 P.M. to consider a staff report on the project plans or_t_e_Market Plaza project. Motion carried 5-0. 2. I LACING 0 IT NT FOR ARKET PLAZA S DPP G CENTER AND APARTMENT PROJECT Executive Director Cartwright introduced this item. He reviewed communications which had been received from Prudential Bache and Balcor/American Express regarding preliminary financing commitments for the apartment/commercial component of the redevelopment project. Discussion followed concerning the preliminary financing commitments and the timing of more definitive commitments and construction contracts that-need to be received for the project. e Commissioner Ludeman said that it may be appropriate to also consider the status of the financial commitments and construction contracts at the special meeting which has been scheduled for July 23, 1984. Chairman Harms directed staff to add this item to the agenda for July 23. 3. STIPUL TIO AND ORDER OF QUICK-T KE REGA DING E G D ATHE RESTAURANT Attorney Clayton LeFevere reported that an oral agreement had been arrived at between the City Attorneyos office and the attorneys representing Mr. Anzevino concerning the quick-take of the Godfather Restaurant property. He said the agreement had . been arrived at just today so there has been no specific reaction to the written proposal by Mr. Anzevino or his attorney. He said staff is seeking HRA approval of the stipulation and order of quick-take in substantially the form presented to the HRA this evening. Mr. LeFevere said the stipulation and order would set July 20, 1884 as the date of the quick-take and the owners of the property would present a quit-claim deed and documentation of the termination of leases on the property. He further said a new lease between the Godfather Restaurant and the HRA is to be arranged, which would involve payment to the HRA of $5,000 per month by the Restaurant, and the term of the lease would run no later than March 31, 1985. Mr. LeFevere stated it would be necessary to rearrange parking as shown in the exhibit attached to the stipulation, and that the new parking area would cost approximately $5,000-$7,000. Mr. LeFevere said that under this stipulation, the HRA will have title and possession to all of the property on the block necessary to facilitate the Market Plaza project. HRA Meeting Minutes -3- July 16, 1984 In response to a question from the HRA, Dick Krier said that stipulation is acceptable to the developers, subject to certain minor modifications to the development agreement that may be inconsistent with the stipulation. M/Hassenstab, SlHelmberger to approve the stipulation and order of quick-take in substantially the form presented to the HRA this evening. Motion carried 5-0. PROSP I DEV LOPERS OPDAHL PROPER Y AT 4TH & LYNDALE Executive Director Cartwright introduced this item and said that three developers were present this evening to present proposals to the HRA. 1 Mr. Scott Cooper, representing himself and Dr. Irving Herman, said that they had not prepared a preliminary site plan, but would plan to do so within the next week. He said he and Dr. Herman would buy the property themselves, raze the existing buildings and construct a new one-story shopping center of approximately 22,000 square feet. He said the cost of these improvements would total $1,750,000. Mr. Cooper said they would like to attract specialty stores with slightly higher rents than presently are in effect for the property. He also noted that brick or stone facing of the new building would be necessary to create the appropriate image for the new center. Mr. Cooper said that because of the unusual shape of the property, the corner at the northwest end of the property would affect the building design to create a unique appearance. Mr. Cooper said he and Dr. Herman are looking for approximately $500,000 in subsidy which could take various forms, including the lower interest rate of Industrial Revenue Bonds and a grant of some type from the HRA. He noted that expected revenues to the City under the type of development described would be approximately $39,000 per year. He further noted that because of the private acquisition of the property, relocation expenses would be avoided. Chairman Harms asked Mr. Cooper what he meant by a grant from the HRA and Mr. Cooper said it could-include various forms of subsidy or write-down for the project. Mr. Harms also asked whether the developers would enter into an assessment agreement to guarantee repayment of subsidy. Mr. Cooper said a large part of th a subsidy is expected to occur through approximately $1.2 to $1.5 million in Industrial Revenue Bonds which would be issued for the project. In response to questions from the HRA, Mr. Cooper said preliminary site plans could be presented at the August meeting HRA Meeting Minutes -~- July 16, 1984 of the HRA, He also stated the developers would arrange a private placement of the Industrial Revenue Bonds. Discussion followed concerning the nature of the subsidy that would be required for the project. Executive Director Cartwright said it was his understanding that developers were looking at various revenue sources acting in combination to make up-the $500,000 amount which had been stated earlier. City Attorney LeFevere referred to the $39,000 in taxes per year stated in Mr. Coopers remarks, and asked whether this was a net or gross amount. Mr. Cooper, and Bruce Palmborg of the City staff, said the $39,000 would be a net increase over the existing taxes being paid for the property. Discussion followed regarding the location of the building on the property. Mr. Jan Susee addressed the HRA concerning a proposal being made by himself and his associates. He said they have taken the approach of rehabilitating the existing building, and allowing the existing tenants to remain. He said in order to do so, rents would have to be slightly less than $$ per foot per month. Mr. Susee said the cost of the project would be approximately $1 million, including the purchase of the property, and would result in rents of $6.00-$6.50 per foot. He said the financial package necessary to proceed would include approximately $600,000 in Industrial Revenue Bonds and approximately $200,000 from an HRA grant that could be repaid at a low interest rate. Mr. Nordquist, an associate of Mr. Susee, presented two preliminary site plans for the property. He noted that the building on the corner could remain and be tied into the main building through its design. He said it would be intended to add a new brick front and a sloped roof of cedar shingles on three sides of the building. Chairman Harms said he thought the building was in bad shape and may be beyond rehabilitation. Mr. Nordquist said it would need new plumbing, heating ventilating and air conditioning, new floors, new roof, .and so forth, but he believes the exterior walls could remain. Commissioner Luettinger asked if the present tenants would remain, and Mr. Susee said they would, but the rents would have to increase because they are now paying approximately $4.40 per foot. Mr. Nordquist said he believes the building can be rehabilitated without significant difficulty. Discussion followed concerning the present condition of the building and the pros and cons of rehabilitation. Mr. LeFevere asked if it would be necessary to keep the small building on the corner. Mr. Susee said it would be necessary to retain the small building based on their financial .projections. HRA Meeting Minutes -5- July 16, 1984 Discussion followed regarding the alignment of the building and the possibility of placing parking areas in front of the building, along Lyndale Avenue. Mr. Mark Ahlquist addressed the HRA concerning his plans for the redevelopment of the property. He said the plans have not really changed since the time a previous proposal was presented to the HRA. He noted that his project would require Industrial Revenue Bond financing and an additional subsidy from the HRA. Commissioner Luettinger asked about the present value of the buildings, and Mr. Ahlquist said the value set by the assessor is $450,000 for land and buildings. Mr. Ahlquist said the proposed value of his project would be $2- 3 million, and would include retail and service areas on the first story; office and retail areas on the second story; and a possible third story of residential units. Mr. Ahlquist said underground parking would be provided, and the building would include an atrium. Discussion followed concerning the feasibility of including residential units on the third floor of the building. Mr. Ahlquist said market research had riot yet been prepared concerning the possible residential space, but it is believed there may be a demand for such units. In response to a question from Commissioner Hassenstab, Mr. Ahlquist said the rents needed for the project would be $9/square foot net, or a $13-$14 per foot gross rent. Mr. Ahlquist said plans for parking are to include parking areas along Lyndale Avenue and also at the north and south of the building, as well as the underground parking to be provided. Chairman Harms said the HRA had been requested to indicated its preference among the projects. He said he would like staff instead to compare and contrast the projects and obtain such additional information as may be necessary from the developers to make .a recommendation to the HRA at its August meeting on the best proposal for the redevelopment of this property. Mr. Ernest Lindstrom, 7406 Fremont Ave. So., said he represents the owners of the property, the Opdahl estate. He told the HRA that the property can be sold for cash now, and that one offer has already been allowed to lapse in order for HRA consideration of redevelopment to occur. He said the property has earlier been appraised for $800,000 or more. Mr. Lindstrom said he has discussed with heirs of the estate the logic of having the City becoming the-owner of the property. He said otherwise the property can be sold to someone who will fix it up and basically operate it as it is. The thought, however, has been that it needs to be developed in an appropriate way, and that the City should control its redevelopment. Mr. Lindstrom has said that time is of the essence with regard to this matter, and that the tenants-are now on a month-to-month HRA Meeting Minutes -6- July 16, 198 lease. He said the estate could not wait much longer for a decision by the HRA and City, and that there is a necessity for the HRA to act soon. Chairman Harms said the HRA has indicated its willingness to buy the property for the right type of development. City Attorney LeFevere said that several proposals assume an acquisition cost of $600,000 and it is necessary to know if this is a correct estimate for the analysis being undertaken for the property. Mr. Lindstrom said he thinks $600,000 will not be adequate for the purchase of the property. He said an earlier offer was for $575,000, plus remaining taxes and special assessments. Discussion followed concerning the price of the property. Mr. Galen Schmick, Richfield Bank & Trust, said there currently is a vacancy in the property and inquiries are received from time to time by prospective tenants. He said there is an urgent need to know where things are going with this project. Chairman Harms asked staff to make its consideration of the proposals a top priority and said 'the HRA would discuss this matter at its August meeting. Mr. Lindstrom said that would be satisfactory if a decision is to be made then. 5. RAE D IVE HOUSING DEVELOPMENT AND SCATTERED SITES 1 Executive Director Cartwright introduced this item and Community Development Director Dennis Kraft presented the staff report concerning various alternatives for the development of housing in the vicinity of Rae Drive and 66th Street, and the potential _ purchase of scattered site housing for redevelopment. Commissioner Ludeman said he thought the HRA should either develop the property soon or allow the present owner to upgrade the property. Commissioner Luettinger said he thought the HRA should take steps to redevelop the property. Ludeman said he believes six units on the two lots is too dense a development, and Kraft agreed that a lower density would be preferred. Anne Burkhardt, g21 Rae Drive, said she thinks the home at 801- 03 Rae Drive should remain, as it now fits in well with the neighborhood. She said the HRA should not purchase these units. Bob Shokost, Rae Drive, said the house now being put up by the HRA is not attractive. He is concerned about the density and the amount of yard space that would be left if the property is redeveloped. James Howard, 915 Rae Drive, is also concerned about the density if the property is redeveloped. He said he would like to see a plan for what might be done so that the neighbors-can react to HRA Meeting Minutes -7- July 16, 1984 it. He said that since he moved into his~home in 1968, something has always been proposed in the immediate area, and he is anxious to see the matter resolved. Betty Carr, Lynwood Blvd., said she shares the concern already expressed about the density. She also noted it would be a good opportunity to put together the two parcels on the end of the block for redevelopment. Chairman Harms said he thought the HRA ought to act on 1016 W. 66th Street and g01-03 Rae Drive so that something gets going for the redevelopment. Commissioner Ludeman said that 1016 W. 66th is a sound building, but he believes the others should go ahead . M/Ludeman, S/Luettinger to amend HRA Resolution 4246 increasin the acquisition price for 1016 _W._6th Street from $92,500 to $9~,OOO; and to aut orize negotiations for acquiring g01-03 Rae Drive as ante ffor new construction. Motion carried 5-0. Commissioners commented they thought it would be appropriate to utilize a lower density and to work with the neighbors to allow input in the process. Commissioner Luettinger said he thought the HRA should put in the best development possible on this property. Commissioner Helmberger commented that she thought designs for the housing should maximize the amount of yard space to be available for the units. Chairman Harms asked the staff to get photos of various scattered site properties that could be reviewed by the HRA, so that action could be taken to consider the acquisition of various scattered single family housing sites. 6. AMEND ENT TO VO-TECH CONTRACT BETWEEN SOUTH HE NEPIN VOCATIONAL TECHNICAL CENTER AND THE RICHFIELD HRA Executive Director Cartwright indicated that because of certain delays that occurred during the construction of the 2-unit townhouse at g20-924 W. 66th Street, it would be necessary to extend the dates in the existing contract between the Vo-Tech and the HRA. M/Ludeman, S/Luettinger to approve the amendment of the con- tract. Motion carried 5-0. 7. CLAIMS AND PAYROLLS M/Hassenstab, S/Luettinger to approve the Claims and Payrolls as presented. SI]MriIT STATE BANK Checks 537Z/5861 $707,007.19 HRA Meeting Minutes -8- July 16, 1884 Motion carried 5-0. OURN~IEN1 M/Hassenstab, S1Luettinger to adjourn the meeting of the HRA. Motion carriet 5-0. The meeting of the HRA was adjourned at 10:00 P.M. Date Approved : August 20, 1984 ,~~'L ~~~h., ~ Tv~ ~~~___ Jo He m erger Secretary omas E. Harms Chairman .~