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02-16-1999[1 -~ CALL TQ ORDER Regular Meeting February 16, 1999 The meeting was called to order by Chair Harms at 7:00 p.m. [7 ROLL CALL HRA Members Present: Thomas Harms; Joan Helmberger; Kristal Stokes; Michael Sandahl and Russ Susag. Sfaff Present : James Prosser, Executive Director; Thomas Ferber, City Clerk; Bruce Paimborg, Community Development Director; and John Stark, Community Development Manager. APPROVAL OF MINUTES M/Sandahl, S/Helmberger to approve the minutes of the Regular HRA Meeting of January 19. 1999 and the Special HRA Meeting of February 1.1999. Motion carried 5-0. r ~~ Item #1 OPPORTUNITY FOR CITIZENS T,O ADDRESS THE HRA. No one wished to address the HRA. HOUSING AND REDEVELOPMENT AUTHORITY MEETING MINUTES Richfield, Minnesota HRA Meeting Minutes -2- February 16, 1999 Item #2 CONSIDERATION OF RESOLUTION,AUTHORIZING ISSUANCE OF CERTIFICA"T'ES.OF COMPLETION TO VARIETY~HOMES, INC. FOR 7332 QUEEN`~tVENUE, MAHONEI(_CONSTRUC'CION.EOR 7645 N1COLl.ET AVEN.UE,, AFFORQABLE,SUBURB/#N,HOUSING FOR 5320-15TH AVENUE, AND STEVEN.'MARLIN GRANT"~H©MES FOR 7204 FIRST AVENUE. HRA. LETTER~NO..='11 Executive Director Prosser reviewed HRA Letter No. 11 regarding the issuance of Certificates of Completion to Variety Homes, Inc. for 7332 Queen Avenue, Mahoney Construction for 7645 Nicollet Avenue, Affordable Suburban Housing for 6320 15th Avenue, and Steven Marlin Grant Homes for 7204 First Avenue. M/Helmberger, S/Sandahl that the following HRA resolution be adopted that it be spread in the HRA resolution book and that it be made part of these minutes: HRA RESOLUTION N0.704 RESOLUTION AUTHORIZING ISSUANCE OF CERTIFICATES OF COMPLETION FOR NEWLY CONSTRUCTED RESIDENTIAL PROPERTY AT 7332 QUEEN, 7645 NICOLLET, 6320-15TH, AND 7204 FIRST AVENUES Motion carried 5-0. Executive Director Prosser reviewed HRA Letter No. 12 regarding authorization for the Richfield HRA to be a co-applicant with Norwest Mortgage, Inc. to provide a mortgage set-aside program for moderate income buyers. He reviewed and answered questions regarding the following eligibility criteria: 1. Have gross annual income at or below 80 percent of the Twin Cities area median income ($45,300 for a four person household); and 2. Identify a home for sale in Richfield whose purchase price~is $112,500 or less, the maximum allowed by the state finance agency (the average sale price of a Richfield home in 1998 was $114,300 per Hennepin County records); and 3. Must meet ONE of the following criteria: • have at least one family member who is disabled; or • be a single head of household with children; or • be of a minority population; or • purchase a home on 12th Avenue or anywhere east of 12th Avenue in Richfield, due to airport impacts and market perceptions in this area; or • be a family purchasing a home in a redevelopment area which has been set aside for affordable housing purposes; and 1 HRA Meeting Minutes -3- February 16, 1999 4. Meet regular lender-identified criteria for mortgage qualifying. M/Sandahl, S/Stokes to authorize the HRA to apply to the Minnesota Housing Finance Agency tMHFA) for a mortgage set-aside program in Richfield for moderate income buyers. Motion carried 5-0. Item #4 CONSIDERATION'OF CSM'SCOMPLETION flF PRECQ.NDITIONS AND REQUEST FOR' EXTENSION OF SITE"ASSEMBLY PERIOD FOR REDEVELOPMENT OF INTERCHANGE WEST AREA. HRA LETTER NO. 13 Executive Director Prosser reviewed HRA Letter No. 13 regarding the status of CSM's completion of preconditions and request for extension of the site assembly period for the redevelopment of the Interchange West area. Murray Kornberg, Vice President, CSM Corporation, gave a status report on property acquisition and site assembly activities for the Interchange West redevelopment proposal. He requested a 90-day extension to allow sufficient time for negotiations with property owners and acquisition contingencies. He stated that CSM had delivered purchase offers to all 67 homeowners on February 15. He apologized for the delay in sending out the purchase offers. He stated negotiations continue with the automobile dealerships, commercial and multi-family residential property owners. He indicated CSM had finalized deals with two of the smaller commercial property owners. Mr. Kornberg stated that if a negotiated agreemen# wasn't reached with the residential property owners within 30 days, they would use mediation. Chair Harms expressed frustration and disappointment in the lack of progress CSM had made in negotiating with property owners in a timely manner after assurances 30 days ago that all property owners would have been contacted by now. He stated he could understand the property owners' anger and frustration with delays by CSM in the process. He proposed mandatory mediation after 30 days if CSM and the property owner are not able to come to an agreement. Mr. Kornberg reviewed purchase contingencies, timing, and acquisition schedule. Mr. Harms asked CSM to have face to face negotiations with every property owner within 30 days. Sheri Keep, 7643 Newton Avenue, stated she understood the need for redevelopment but that the change of the closing date from June 1 to September 1 would create a hardship for those with school age children. She also stated delay could have a negative economic impact if interest rates go back up. Minou Hussain, owner of a plastics company at 7635 Logan Avenue, stated conrern about the impact on his business. HRA Meeting Minutes -4- February 16, 1999 Kevin Anderson, realtor and owner of 7644-46 Logan Avenue, discussed various formulas regarding the determination of market value and relocation benefits and statistics from MLS regarding sales prices. He stated he felt that the purchase offers from CSM were not high enough. Gary Perna, 2121 West 77th Street, caretaker/tenant at the Diplomat Apartments, expressed concern about relocation and finding another apartment for similar rent. David Bakke, 7601 Morgan Avenue, stated concerns that the purchase offer for his property was not reasonable and about the purchase contingencies. John Kamrath, business rental tenant at 7700 Logan Avenue, stated that he had a two-year lease and no one had talked to him about relocation. Chair Harms suggested Mr. Kamrath speak to his landlord. Chair Harms discussed the following requests: • That staff report weekly on the contacts CSM has with property owners. o That staff report on the concerns about hardship cases and eaPly buyout eptiar~s. • That CSM commit the resources to negotiate with the property owners as soon as possible and utilize mediation. An audience member, who did not identify herself, asked if CSM would negotiate at times outside of regular business hours because she works 7-5. Chair Harms asked CSM to be available as necessary to accomplish the negotiations. He stated he wanted staff to track their progress. Mr. Harms stated that if negotiations reach an impasse, then it should go to mediation, even if it is before the 30 days CSM suggested. He stated he wanted negotiations to proceed as soon as possible to provide as much flexibility as possible for property owners. Mr. Kornberg stated CSM would try to address the hardship cases as best they can as they arise. He stated they would be available for negotiations outside of normal business hours, including weekends. He stated agreement to reporting weekly on contacts with property owners and the use of mediation if an impasse has been reached. He stated all commercial properties would have offers within two weeks. M/Sandahl, S/Stokes that the HRA approves the following actions: 1. Acknowledges the completion of the Preconditions as submitted in Exhibit A identified as items a. b. c, d, f and I of Article 11.5 in the Contract for Private Development; 2. Accepts the manner for completion of the outstanding Preconditions items a qj h. I. i. k and m of Article 11.5 of the Contract) as indicated in Exhibit B• and 3. Grants a 90-day extension for Site Assembly activities. HRA Meeting Minutes -5- February 16, 199 1 Motion carried 5-0. Chair Harms stated that CSM representatives must discuss the purchase offer individually with each homeowner within 30 days in an attempt to reach a negotiated settlement and also provide each commercial property owner with a purchase offer within two weeks. Item #5 STATUS REPORT ON PRECONDITIONS TO DEVELOPMENT OF URBAN VILLAGE. HRA LETTER NO. 14 Executive Director Prosser reviewed HRA Letter No. 14 regarding the status of the preconditions in the contract for private development with the Richfield State Agency (RSA) for the Urban Village development. Sid Inman, Development Consultant/Financial Advisor, Ehlers and Associates, Inc., reviewed the but/for tax increment analysis indicating that $9,500,000 was the maximum the HRA has to provide for the project and indicating the following amounts as part of the analysis: 1. The developer has submitted a list of extraordinary costs (memo dated October 13, 1998) totaling approximately $1,600,000. The City and Fred Hoisington have reviewed these costs and agree they are "Over and Above" the normal code requirements and therefore fall into the extraordinary costs. 2. The developer has submitted a parking ramp costs for approximately 600 stall ramp (memo dated October 13, 1998) totaling $6,700,000. Based on Jan Susee's letter dated August 11, 1998 normal cost for surface parking is $1,000 per stall or $600,000. Therefore the net amount of $6,100,000, is extraordinary cost. 3. The developer has stated that the total amount they can spend for land for the apartments is $750,000. The estimated total acquisition cost is from $2,500,000 to $3,000,000. Therefore the request for reimbursement is between $1,750,000 and $2,250,000. Jan Susee, RSA, requested reduction of the required term for maintaining the affordable units in the rental housing from 25 years to 15 years. Community Development Director Palmborg stated that he thought the affordability should run concurrently with the term of the TIF, which is 25 years. After discussion, it was the consensus of the HRA that the affordable term would be 25 years but that after a minimum of 15 years the developer could petition the HRA to consider a change in this condition. M/Sandahl, S/Susag to authorize the HRA Executive Director to forward the February 17. 1999 letter addressed to Mr. Steve Kirchner which identifies the amount of TIF assistance for the Urban Village Project at $9.5 million and confirms the basis for completion of preconditions. HRA Meeting Minutes -6- February 16, 1998 Motion carried 5-0. Ann Zilka, Hub Chiropractic, 6601 Grand Avenue, discussed the negotiation process that occurred with Mr. Susee and RSA regarding the relocation of Hub Chiropractic as part of the Urban Village Project. She stated disappointment with the agreement that they signed with RSA, the difference in property appraisals, and the process. _ Paul Zilka, Hub Chiropractic, 6601 Grand Avenue, stated he did not feel they got a fair economic deal from RSA but that they would honor their commitment. Item #6 EXECUTIVE DIRECTOR. REPORT None. Item #7 CLAIMS AND PAYROLL M/Susag, S/Stokes that the following claims and payrolls be approved: FIRSTAR BANK Section 8 Checks: 13302-13404 $127,690.23 HRA Checks: 20374-20385; 20524-20573 $136,852.46 Motion carried 5-0. ADJOURNMENT The meeting was adjourned by unanimous con nt t 8:20 p.m. Date Approved: 3/15/99 n Thomas .Harms Chair ~''~~~ ~ Thomas P. Ferber Jame D. Prosser City Clerk tive Director