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11-01-1994 SpecialCITY OF RICHFIELD, MINNESOTA SPECIAL HOUSING AND REDEVELOPMENT AUTHORITY MESTING November 1, 1994 HRA MEMBERS PRESENT: Thomas Harms; Joan Helmberger; Vern Luettinger; Mike Sandahl; and Russ Susag. STAFF PRESENT: James D. Prosser, Executive Director; Steven • Devich, Administrative Services Director/. Acting City Clerk; Byron Wallace, Community Development Director; and John Dean, City Attorney. The meeting was called to order by Chair Harms at 7:00 p.m. ITEM #1 PUBLIC HEARING AND CONSIDERATION OF RESOLUTION AUTHORIZING SALE OF RICHFIELD REDISCOVERED PROPERTY AT 6625 STEVENS TO SUSSELL HOMES, 6404 HUMBOLDT AVENUE TO ROCKPORT HOMES, INC. AND 6821 LOGAN AVENUE TO PARSLEY BUILDERS, HRA LETTER N0. 73 Executive Director Prosser reviewed HRA Letter No. 73 regarding public hearing and consideration of resolution authorizing sale of Richfield Rediscovered property at 6625 Stevens to Sussell Homes, 6404 Humboldt Avenue to Rockport Homes, Inc. and 6821 Logan Avenue to Parsley Builders. No one spoke at the public hearing. M/Luettinger, S/Susag to close the public hearing on 6625 Stevens, 6404 Humboldt, and 6821 Logan Avenues. Motion carried 5-0. The property at 7344 Bryant Avenue was removed from the agenda by unanimous consent. M/Susag, 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: RESOLUTION NO. 528 RESOLUTION PROPERTY LOCATED AND TO SUSSELL PARSLEY IN ACCORDANCE AUTHORIZING SALE OF REAL AT 6625 STEVENS, 6404 HUMBOLDT 6821 LOGAN AVENUES HOMES, ROCKPORT HOMES ANb BUILDERS (RESPECTIVELY) WITH A DEVELOPMENT AGREEMENT HRA Meeting Minutes -2- Npvember 1, 1994 Motion carried 5-0. This resolution appears as Resolution No. 528 in HRA Resolution Book No. 4. ITEM #2 CONSIDERATION OF SELECTION OF DEVELOPER FOR PHASE II, ILN REDEVELOPMENT PROJECT, HRA LETTER N0. 74 Chair Harms introduced Item #2 and described the process that will be followed for the presentations to the HRA. Executive Director Prosser stated that Mr. Inman of Publicorp would present his financial review of the projects at the conclusion of the developers' presentations. Mr. Prosser then presented a chronology of events leading up to this evening's meeting. He described the many contacts with the developers since the August 15, 1994 HRA meeting. John IIerman, Leonard, Street & Dienare~, addressed %he HRA~ representing the Feldmann group. Mr. Herman referenced a project that he stated Mr. Feldmann presented to the City in 1985, but was not accepted because it did not meet the zoning requirements then in existence. Mr. Herman described the process of assembling a development team that has taken place in the past six months. He stated that the group encountered what he termed "a short-circuit." The development team felt that the money stated in the CSM contract for property assembly fell short of the current assessor's market value for the properties. He stated that at that point, they developed two options. One option was a free standing site for Mr. Feldmann. The second option was a full scale project with a longer period of time necessary for site assembly and construction. Dan O'Brien, Klutz, O'Brien Architects, presented the two options. The full scale project included a car dealership, a hotel and a free standing restaurant. The project also included a parking deck which encompasses three and one-half acres of parking. The stand alone project includes an automobile dealership with an enclosed car display/parking area and some sheltered parking. 1 Commissioner Sandahl asked how many stories the hotel would have and what level of quality the operation would be. HRA Meeting Minutes -3- ~ Npvember 1, 1994 Mr. O'Brien responded that it would have seven stories of about 20 units per floor. He said it would be a high-end, limited service type of hotel, similar to the Country Suites dust constructed in the I-494 area. Commissioner Luettinger asked about the location of the free standing hotel and the taking of the Conoco station. ~Mr. Herman responded to the question stating that he was not at liberty to state which hotel it was to be. Chair Harms asked about Mr. Herman's interpretation of the land buyout clause. Mr. Harms stated that the HRA currently has a binding contract with CSM and that no such binding agreement exists with the Feldmann group under their interpretation. Mr. Harms stated that he has received a letter from CSM which waives any buyout cap in the contract and asked how the Feldmann group would be similarly bound. Mr. Herman stated that they would sign a contract comparable to the one CSM has. Mr. Harms stated that he wanted specific information about the Feldmann group's project. Mr. Herman described the two options: In Option 1, the stand alone, Feldmann will add another 51.5 million to the existing site, ask for no assistance and leave all the increment to the remainder of the project. They would agree to modify the shape of the site to fit the CSM project. In Option 2, the Feldmann group would obtain letters of commitment from the co-developers who would loin in the project, such as the hotel owner and retail developer, who are ready to loin in: This would be concluded by January 1, 1995. He stated that construction would start in the fall of 1995 or spring of 1996, with 80$ completion and assessed in 1996 and the final 20~ by the first half ofe 1997. Commissioner Susag asked how many of the current businesses would locate within their new project. Neil Peterson responded that there are none. Chair Harms project, with the Mr. Peterson visible above the Commissioner asked how the Feldmann site would fit in the CSM auto dealership in the primary site. stated that the retail would be elevated and be auto dealership. Luettinger asked about the restaurant. HRA Meeting Minutes -4- November 1, 1994 Mr. Peterson responded that it would be family restaurant that would be run in conjunction with the hotel. David Carland of CSM introduced his group. He presented a brief chronology of CSM's efforts and accomplishments in Phase I. Mr. Carland stated that the pro forma data submitted for Phase I was right-on target; Best Buy will open before Thanksgiving 1994 and Sportmart will open shortly thereafter. The Emerson Avenue church has been relocated and•the most complex aspects of Phase I have been completed. Mr. Carland stated that the Phase II project is generating extensive interest. There are several anchor type retailers interested as well as several sit-down type restaurants. He also stated that PetSmart has signed a pre-lease commitment for Phase II. Gary Touche, architect for CSM, described the Phase II Proposal. The second phase may include a two story retail area near C®lta~ Avenue and w®uld include the Conoco site. Commissioner Susag asked about the timing of the project. Mr. Carland stated that they are ready to begin immediately. Commissioner Luettinger stated that he is very committed to a quality sit-down family type restaurant. Commissioner Sandahl asked about the construction schedule. Mr. Carland stated construction would begin in the summer and fall 1995. Chair Harms asked about the letter that would rescind the kickout clause for the buyout cap. Mr. Carland stated that they were comfortable with the acquisition costs and would strike-out that provision. Chair Harms asked about inclusion of the Feldmann site and what impact 'it would have upon their project. Mr. Carland stated that inclusion of the Feldmann site expands the current site and only takes care of one property owner. More importantly, both the current Phase I and Phase II tenants are adamantly opposed to any auto dealerships. He would have to go back and renegotiate leases with the Phase I tenants. Mr. Carland said that a traditional car dealership would not fit in the project but a non-traditional down-sized type of dealership may fit in. HRA Meeting Minutes -5- Npvember 1, 1994 Jim Miller, Twin City Tire, stated that he felt his business is being pawned. He stated that he wants to remain in the new Phase II project. Mr. Miller asked that an adjacent area to the project area be assembled to provide space for some of the smaller retailers to remain in the area. Kevin Lewis, Ridge Door Sales and Service, stated that he felt that no one seems to care about the small tenants who are currently there. Mr. Lewis stated that there is no way for the small business to be included. Kirk Fox, Doherty Furniture, also felt like they are being abandoned and that he is trying to work out a way to stay in the Garland project. He feels that something should be done by the City or HRA to assist these businesses in staying in the area. Vivian Swanson, 920 78th Street, stated that she has provided land for car dealerships. She spoke for including car dealerships in the project. Keith Klanzer, Drapery Shop, spoke to the HRA and indicated that these projects do not provide any opportunity for the current small businesses. He asked for assistance from the City in relocating in the general area. Larry Wozniczka, 6744 Wentworth Avenue, asked about a concern regarding property taxes. He asked what benefits or what penalties it will bring to the taxpayers. Peter Contrell, The Harley Shop, stated the 20 retail merchants currently in the area will need to be relocated and asked that it be done on a slow-take process. Sid Inman, Publicorp, described the financial analysis that they have been requested to do. Mr. Inman said that no pro forma was received from the Feldmann group. With respect to the CSM project, Mr. Inman stated that there is no reason why the CSM project would not proceed as indicated. He~said that the CSM land costs, ~s submitted, do not include the Conoco site. Mr. Prosser asked Mr. Inman to respond to the issue of the tax impact. Mr. Inman said that there is no impact on the taxes from this project. He also stated that there is no impact from moving the church. It simply goes from one tax exempt property to another. HRA Meeting Minutes -6- Npvember 1, 1994 Chair Harms asked if this project had any adverse impact upon the tax levy. Mr. Inman said there was no adverse impact upon the tax levy. Commissioner Sandahl asked about what assistance is available for relocating the small businesses in this process. Mr. Prosser stated that relocation benefits are available as part of the relocation process. He added that it has not been the policy of the HRA to provide relocation benefits in excess of the relocation benefits provided by law. There was discussion concerning what will occur to the current businesses if they are required to be out of business for a period of time. Mr. Garland stated that the CSM Phase II project would provide space for the small businesses such as th®se cu~°~°ently in the area. Commissioner Sandahl stated that he would like to offer some type of subsidy to help the small businesses remain in the community. Chair Harms asked staff to monitor the negotiations process between the developers and the small businesses currently in the area. Some limited additional funds could be made available to help the small businesses on a temporary basis. Mr. Peterson and Mr. Herman restated the difficulty they encountered in~finding a solution to the issue of relocating the current small businesses in the project. Commissioner Helmberger stated that she would abstain from voting due to a conflict with her employment. Chair Harms stated that he has spent a great deal of time working with the developers in this project. Mr. Harms stated that he had difficulty getting adequate detail regarding the Feldmann project from that group.- He stated that if CSM was designated as the developer that they sit down with Feldmann to discuss a non-traditional car dealership within their project. Chair Harms stated that the CSM project is even stronger now than it was previously and that Phase I has resulted in the growth of retail interest in the project area. Chair Harms stated that he would support the CSM Phase II project and accept the revision of the buyout cap. HRA Meeting Minutes -7- Npvember 1, 1994 Commissioner Sandahl stated that doing nothing with the area is no longer an option. There is a need to upgrade the commercial value of the ILN project area and that he supported the CSM proposals. He stated that he felt the HRA also should provide some assistance to encourage the small businesses to remain in the area. Commissioner Luettinger concurred with Chair Harms and Commissioner Sandahl supporting the CSM project. He also felt that the process should support the small businesses in their relocation efforts. Commissioner Susag said he also supported the CSM proposal and had concerns for the small businesses in the area. M/Susag, S/Luettinger that CSM be selected as the Phase II developer. Motion carried 4-0. (Helmberger abstained.) M/Sandahl, S/Luettinger that staff monitor negotiations and report back to the HRA on what tape of assistance and plan would be appropriate. Motion carried 5-0. Mr. Prosser stated that staff would be setting up a relocation assistance process within the next two weeks. M/Harms, S/Susag to direct the Executive Director and City Attorney to amend the development agreement to delete the buv down cap. Motion carried 5-0. ' ADJOURNMENT The meeting was adjourned by un Date Approved • 11 / 21 / 94 Steve vich Acting City Clerk t at 9:38_ p.m. 1 Chair D. Prosser" tive Director