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11-12-1985HOUSING AND REDEVELOPMENT AUTHORITY CITY OF RICHFIELD, MINNESOTA NOVEMBER 12, 1985 COMMISSIONERS PRESENT:- Thomas Harms; Joan Helmberger; Ivan Ludeman; and, Vern Luettinger. (Don Hassenstab absent due to out of town business in Duluth). CITY COUNCIL PRESENT: John Hamilton, Mayor; Ivan Ludeman; Howard Bunce; Donald Priebe; and, Michael Sandahl. STAFF PRESENT: John Cartwright, City Manager; Steve Devich, Administrative Services Director; Dennis Kraft, Community Development Director; Bruce Palmborg, Housing & Redevelopment Coordinator; David Kennedy, Acting City Attorney; and, Thomas Ferber, City Clerk The meeting was called to order by Chairman Harms at 10:30 p.m. Item #1 CONSIDERATION OF A DEVELOPER'S AGREEMENT BETWEEN THE CDR INVESTMENT/MINNESOTA, HRA AND THE CITY OF RICHFIELD. HRA LETTER N0. 61. Thomas Harms, Chairman of the HRA stated that at this time the HRA would be considering several items .concurrently with the City Council (10:30 p.m.). Executive Director Cartwright reviewed the major points of the developer's agreement proposed for private development of the ILN Project area with the HRA, City of Richfield, and CDR Investments, Minnesota. Thomas Harms, Chairman of HRA, noted that in section 12-1 of the agreement the-HRA should be included. Acting City Attorney Kennedy noted that this would be changed. Council Member Sandahl noted that the council had been told this project would cost $70 million and questioned why the agreement listed $63 million as the estimated market valuation. Acting City Attorney Kennedy explained that the $70 million was the cost of building the project and, that for tax purposes, the developers were guaranteeing a minimum market value at $63 million. Council Member Priebe questioned the reduction in the market value from $70 million to $63 million, stating that this would be putting the city at a higher risk and he advocated using the higher value. HRA Meeting Minutes -2- November 12, 1985 Commissioner Ludeman stated that the county assessor must be the one who determines the estimated market value (EMV). HRA Chairman Harms stated that if the project is given a higher value, the city would benefit. This document only sets the minimum value. Commissioner Ludeman stated that the tax increment financing plan calls for an annual appreciation of 3%. Council Member Priebe noted that this assumption of 3~ appreciation was a estimate on the part of the staff and was not guaranteed. Council Member Bunce asked that CDR agree to donate land to the city for the streets rather than the city purchasing it. He also asked CDR to guarantee buffering along the project. Ron Erickson, Korsunsky-Krank-Erickson Areh.,~Ine. stated that if CDR develops the land to the north of their proposed projects, they would agree to provide a 40 foot buffer from the existing street right of way along the west side of 77th Street and the south side of 76th Street in order to save the stand of oak trees. Mr. Erickson noted that CDR does not own the land needed for street right of way at this time and could not agree to donating it. M/Helmberger, S/Luettinger that the following resolution be adopted; that it be spread in the resolution book and that it be made part of these minutes: HRA RESOLUTION N0. 270 RESOLUTION APPROVING CONTRACT FOR PRIVATE DEVELOPMENT WITH CDR INVESTMENTS/MINNESOTA Motion carried 3-1. (Ludeman opposed) This resolution appears as Resolution No. 270 in Resolution Book No. 3. Item ~k2 CONSIDERATION OF AN AGREEMENT RELATING TO DEVELOPMENT PROPOSALS WITH CDR INVESTMENTSIMINNESOTA. HRA LETTER N0. 62. Executive Director Cartwright reviewed HRA Letter No. 62 regardinga development proposals in the ILN Project area. Mayor Hamilton indicated he had looked at preliminary drawings of a proposal for an automobile dealership along 77 1/2 Street and asked for assurance that any and all proposals will be considered. Executive Director Cartwright indicated that this would be the ease. 1 1 1 1 1 4• HRA Meeting Minutes -3- Discussion followed regarding limitations it would place on the proposals for the ILN area. November 12, 1985 the agreement and any city's ability to consider all Vern Luettinger voiced support for giving preference to local businesses in developing property in the ILN. Jim Miller, Twin City Tire, stated that he did not believe CDR needs this agreement. He felt that local businesses should be given first right to development in that area. Tom Harms, HRA Chairman, said the agreement is beneficial to the city by enabling a review of proposals from local businesses while giving a 60 day notice to CDR so that they may also make a proposal which would meet development and investment criteria that is contained in the agreement. Mayor Hamilton suggested notice also be given to local businesses if CDR or anyone else is proposing a development. Council Member Priebe noted the council is considering redevelopment because current businesses have not done a good job of maintaining their businesses. Council Member Sandahl stated that Mr. Miller and Mr. Feldman have invested a great deal of money and have improved their businesses. He stated that this agreement would allow businesses to be informed and would allow local businesses to make proposals. Commissioner Lindeman asked aware that the development and only to CDR. if the CDR representatives were investment criteria would apply Lloyd Keple, Attorney for this criteria applying only to not applying to third parties. CDR, stated that he is aware of CDR and has no problem with this Peter Beck, an Attorney representing Terry Feldman, stated that he is not opposed to the CDR development, the tax increment financing district, or the city developing the ILN area. He stated Mr. Feldman has a proposal for the area which would fit in the redevelopment plan. He stated this proposed agreement with CDR was not consistent with the ILN plan and put CDR on the inside track making it more difficult for other developers to develop in this area. HRA Meeting Minutes -4- November 12, 1985 M/Luettinger, S/Helmberger that the following resolution be adopted; that it be spread in the resolution book-and that it be made part of these minutes: HRA RESOLUTION N0. 271 RESOLUTION APPROVING AGREEMENT RELATING TO DEVELOPMENT PROPOSALS WITH CDR INVESTMENT/MINNESOTA Motion carried 3-1. (Ludeman opposed) This resolution appears as Resolution No. 271 in Resolution Book No. 3. M/Luettinger, S/Helmberger to also establish a olic .that would provide local businesses with the same 0 day notice as provided for CDR regarding an proposal in the ILN area. Motion carried ~-0. Item ~~3 CONSIDERATION OF A DEVELOPER'S AGREEMENT BETWEEN THE HAMPTON INN AND THE CITY OF RICHFIELD. HRA LETTER N0. 63. Executive Director Cartwright reviewed HRA Letter No. 63 regarding a status report on a proposed developer's agreement with Richfield Hampton Inn. Tom LaSalle, Realty Development Services, representing the developers of a Hampton Inn franchise, stated that he had only been given a three week notice of the necessity for a guaranteed minimum estimated market value being part of the developer's agreement and that this had created problems for financing the project. Mr. LaSalle reviewed comparison in property taxes with similar motels along I494 and stated that he felt the staff and the developer were at an impasse and asked not to be required to sign an agreement for a minimum estimated market value. Executive Director Cartwright stated that the staff has been negotiating with the developer and that the $2 million dollars per acre valuation requirement in the ILN moratorium ordinance will not be met by the current proposal. The developers had originally said they would build a five million dollar project on the site, which is larger than two acres (2.1 to 2.5 acres). HRA Chairman Harms suggested that this item be tabled and discussed at a future meeting. Mayor Hamilton stated that Mr. LaSalle should resume negotiations with the city staff and this item would be considered at a future meeting. ~. HRA Meeting Minutes -5- November 12, 1985 1 1 Item ~~~ CONSIDERATION OF A RESOLUTION PROVIDING FOR THE and ISSUANCE AND SALE OF $18,675,000"GENERAL OBLIGATION Item ~5 TEMPORARY REDEVELOPMENT BONDS, SERIES 1985. HRA LETTER N0. 59.' CONSIDERATION OF AN AGREEMENT AUTHORIZING THE CHAIRMAN AND EXECUTIVE DIRECTOR TO ENTER INTO A TAX INCREMENT AGREEMENT WITH THE-CITY OF RICHFIELD. HRA LETTER N0. 60. Executive Director Cartwright reviewed HRA Letter No. 59 and 60 regarding authorizing the issuance of sale of bonds for the ILN and authorizing the execution of a tax increment agreement between the HRA and the City of Richfield. Wayne Burggraaff, Evensen-Dodge, reviewed the bond issue provisions. Commissioner Ludeman asked why the Lyndale Avenue bridge was included in the proposed pro~eots to be financed by this bond issue. Executive Director Cartwright indicated that the city is retaining the option to finance the bridge through this bond sale, but would seek alterne,tives using FAUS and MSA Funding for the Lyndale Avenue bridge. Council Member Priebe asked what the status of the TIF Temporary Bond Issue would be if tax increment is outlawed by Congress. Wayne Burggraaff, of Evensen-Dodge, responded that no current Congressional proposal would prohibit this type of refunding band to be reissued 3 years From now with a tax exempt rating. Larry Wozniezka, 67~~t Wentworth, asked why there would be two bond issues which would give the bond counsel two commissions. Tom Harms, HRA Chairman, stated that he had also questioned the need for two bond sales, but found that it was beneficial to the city to issue the temporary bonds with a one year call feature at this time. If the CDR pro~eet is not undertaken, the City and HRA will be able to recall the bonds and avoid a cost to the City. i HRA Meeting Minutes -6- November 12, 1985 M/Helmberger, S/Luettinger to a rove the Resolution rovidin for the issuance and sale of 1 70 000. .0. Temporary Redevelopment Bonds, series 19 5. Motion earried.3-1. (Ludeman opposed) M/Helmberger, S/Luettinger to authorize the Chairman and Executive Director of the HRA to enter into a tax ine.rement agreement with the City of Richfield. Motion carried ~-0. ADJOURNMENT The meeting was adjourned by eonc-grisus at 12:22 p. m. Approved: 1/21/86 ~, ~ ~ --~ , ~~. ~- -` ~~ ' `(~ ~ ~ Z T as Harrm~ ~'~ (~' ~ z Thomas P. Ferber ohn Ca twright City Clerk Executive rector rman