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06-21-1999', -~ ~=~ i i CALL TO ORDER Regular Meeting June 21, 1999 The meeting was called to order by Chair Harms at 7:00 p.m. ROLL CALL HRA Members Present: Thomas Harms; Joan Helmberger; Michael Sandahl and Russ Susag. HRA Members Not Present: Kristal Stokes. Staff Present : Steve Devich, Acting Executive Director; Thomas Ferber, City Clerk; and Bruce Palmborg, Community Development Director. APPROVAL:OF MINUTES M/Susag, S/Helmberger to approve the minutes of the May 17. 1999 HRA Meeting. Motion carried 4-0. Item #1 OPPORTUNITY FOR CITIZENS TO ADDRESS THE HRA. HOUSING AND REDEVELOPMENT AUTHORITY MEETING MINUTES Richfield, Minnesota No one wished to address the HRA. HRA Meeting Minutes -2- June 21, 1999 ' kv {~ _ _ ~~' ,,, Item #2 CONSIDERATION OF INTERCHANGE WEST I]EVELOPMENT AREA, z~~ ~' ;HRA `LETTER NO::;:30 = - t~ - s Acting Executive Director Devich reviewed HRA Letter No. 30 regarding the status of the Interchange West development stating the following: CSM has determined that they will be unable to drop the contingencies contained in the residential purchase offers on July 1 as scheduled, nor will they be able to close on the purchase of properties on September 1 as was stated in the purchase offers. This means that CSM will need to cancel all 68 purchase agreements, and further, that it will not be in a position to comply with the site assembly obligation contained in the development contract. Mr. Kornberg has stated that the reason CSM will not be able to progress on the residential acquisitions as scheduled is because they will not be in a position to apply for zoning and other approvals until August 23. Discussions with CSM about this request have also revealed that the residential portion of the development does not generate enough tax increment financing (TIF) and land proceeds to offset the site assembly costs. The ability to develop the residential portion, therefore, is dependent on the ability to successfully level®p the c©mmercial p©rti®n. There remains a remote possibility that the contingencies could be removed on or before July 1, and the residential acquisitions could occur on September 1. For this to occur, the developer would have to take the risk that all City approvals would be granted, and some mechanism to assure payment of the anticipated revenue from the commercial development would have to be put in place. That mechanism would likely involve commitments from the HRA . CSM expressed an interest in pursuing this approach and will discuss it at the June 21 meeting. Because this approach may not work, the HRA must consider other options as well. Staff has identified several options for addressing CSM's request to amend the Contract in the event that the contingencies cannot be removed by July 1 and the closings cannot occur on September 1; these options are as follows: 1. Defer action until the July meeting to give CSM an opportunity to satisfy the concerns of the residential property owners. 2. Extend the site assembly period for the entire development for four months. 3. Extend the site assembly period for the entire development indefinitely. 4. Extend the commercial portion of the development for four months and terminate the residential portion of the development. 5. Terminate the contract with CSM. Chair Harms discussed some of the issues and questions submitted in a letter from Cindy and Mike Triggs, 7639 Penn Avenue. HRA Commissioners expressed that the project should not be separated into commercial and residential but thought of as a whole, and that the HRA wished to find a solution that will best address the problems of the homeowners. ~_ 1 e HRA Meeting Minutes -3- June 21, 1999 Murray Kornberg, Vice President CSM Properties, Inc., stated that at the June 14 City Council meeting he announced CSM would not be removing agreement contingencies during the month of July. If CSM does not remove the contingencies, the purchase agreements will be void and there will be no closings on September 1. He stated CSM is still exploring whether or not it may still be feasible to remove the contingencies on or before July 1. If they cannot, they will have to renegotiate each purchase agreement with owners if they are to proceed with the redevelopment. Mr. Kornberg stated they recognize that this situation has caused anxiety, and anger, and regret that the development has not proceeded as quickly as they would have liked. They believe that the issues regarding the redevelopment would be resolved by the contingency removal date, but because of the complexity of the project, that is not the case. He stated the HRA meeting on June 21 was to have been to amend our contract to allow for a separation of the commercial portion of the development from the residential portion. He stated it now appears that such a separation is not feasible, because the commercial portion of the development is required to support the residential portion. Therefore, the HRA will not be acting on that request. Mr. Kornberg indicated in the days following the June 14 City Council meeting, they have met with HRA staff to discuss the various available options. As a result of those discussions, CSM will request that prior to taking any further action relating to our Contract for Redevelopment, the HRA provide us 30-days to meet with each homeowner to determine whether we will be able to enter into new agreements with owners that address their concerns regarding the development. If the HRA grants the requested extension, CSM would then appear before the HRA at its next meeting in July to report on those individual meetings. He stated CSM acknowledges that there may be hard feelings regarding the development and are hopeful that over the next 30 days they can arrive at a satisfactory resolution of this matter. Chair Harms asked if it was possible to still meet the September 1 closing date. Mr. Kornberg stated there was a slight chance, but did not want to give people false hope. Ron Matheson, 7649 Penn Avenue, expressed disappointment and frustration after believing everything was progressing to completion. He expressed concern about what will happen next and compensation. Jim Bergin, 7627 Oliver Avenue, stated he had bought another house after accepting CSM's purchase agreement and being told everything was going well. He stated the Ken Brooks, who negotiated the purchase agreements for CSM, told him last Thursday that he knew CSM was not going to honor the September 1 closing and that September 1 date was chosen because that is what City Hall wanted. He stated the county attorney should investigate if there was malfeasance on the part of CSM or the City. He stated that he was a member of the core neighborhood group and they may want to have access to all the CSM files. HRA Meeting Minutes -4- June 21, 1999 Leonard Hardie, 7608 Newton Avenue, discussed how the threat of eminent domain by the HRA had been one reason.why 70% had favored selling their homes for the redevelopment. Mike Triggs, 7639 Penn Avenue, stated that he thought it was a breach of contract for CSM not to meet the September closing date. Ernie Lindstrom, 7406 Fremont Avenue, stated he represented Mr. Reget, owner of the Diplomat Apartments. He discussed how commercial property acquisition is different than residential and that developers should pay a premium for acquiring property for a private development which is different than acquiring property for a public purpose such as a street. He said if CSM is able to pay the necessary price then the development should move forward. Mr. Lindstrom stated that City Hall has integrity and is honest from his experience. Pat Hughes, 7633 Newton Avenue, indicated that the City had been assuring them that everything was moving forward questioning what pertormance had been required from CSM. Kevin Anderson, owner. of 7644-46 Logan Avenue, asked that the cloud be removed from his property, that their be safeguards that CSM follow through, stated concems about renegotiation, HRA responsibility; and the value of time. Ken Neslund, 7645 Newton Avenue, stated concerns about CSM not closing on the purchase agreements and fulfilling their contract, and the extra expenses for homeowners this will cause. Mark Nichols, owner of 7608 Knox Avenue, suggested that the HRA should somehow expedite the closing on the commercial properties such as the use of condemnation, because the project is not viable without the commercial redevelopment. Terry Ahlstrom, 7600 Morgan Avenue, urged the HRA to make achievement of the September 1 closing date as the priority solution. John Cretzmeyer, 7604 Oliver Avenue, stated that the continued extensions have caused much mental stress for homeowners. He stated CSM must finish negotiations and if they renegotiate the purchase offers they must take into account the escalating market, and the second half property taxes should be alleviated if there is a delay. Dave Bakke, 7601 Morgan Avenue, stated dissatisfaction and frustration with CSM, discussed the difficulty of buying a house in the current market, and being in limbo. Marilyn Sedoff, 7601 Oliver Avenue, stated she had not yet signed a purchase agreement with CSM. HRA Meeting Minutes -5- June 21, 1999 Beth Johnson, whose parents own 7615 Morgan Avenue, discussed the stress and disruption the process caused her parents who now own two houses because they acted on believing the developer and the HRA. She asked the HRA to assist the homeowners, to not grant an extension to CSM, and to get another developer to take over if CSM can't do it. Sherry Keefe, 7643 Newton Avenue, stated concerns and anger that the trust in CSM and the City has been broken. She discussed the hardship issues regarding school enrollment. She suggested the City should pay until the commercial can take place so that things can proceed now. M.A. Engen, 7621 Morgan Avenue, stated concern that CSM hadn't reported they were having trouble buying the commercial property and that they be held accountable. Chair Harms stated that the HRA and City would cooperate and be open to any investigation. He stated that the HRA was surprised that CSM was now asking for an extension and that the HRA does understand its responsibility and maybe didn't ask the right questions. He stated that the HRA cannot buy out everyone because it does not have the money to do so. Mr. Harms stated he saw two options: 1. To get mad at CSM, throw them out and stop the project. He said that may feel good but would not solve the property owners' problems. 2. There is no formula solution to everyone's problems; they are individual problems that can only be addressed one on one. He proposed that CSM continue in the project but that they address each property owner's issues and work out a solution. Mr. Harms said he would propose giving CSM 30 days for the purpose of CSM meeting with each property owner for individual solutions. Commissioner Susag stated concerns and questions about what renegotiation meant for the property owners. He stated that he thought this was a viable project and if it did not go forward it would have a negative impact on redevelopment in Richfield. He stated that he was told that the HRA could not issue bonds against the anticipated increment to finance the property acquisition in the short term to solve this problem. Commissioner Sandahl stated that the problem is CSM's inability to come to terms with all the property owners and he asked what process or assurances there are so that the same situation will not exist in 30 days. HRA Attorney Dean stated there is no guarantee but that if the HRA desires to try to save the project and not go back to square one, it is feasible to give the extension. Community Development Director Palmborg stated that HRA Memorandum No. 36 provides specific directions and conditions for CSM to fulfill if a 30-day extension is granted. HRA Meeting Minutes -6- June 21, 1999 Commissioner Sandahl encouraged the City Council to look at the idea that was suggested about a deferral of property taxes if there is a delay in closing. He stated there are not a lot of options but that there would be greater harm if the HRA walked away from the project now rather than trying to make it work. Commissioner Helmberger stated she believed it was best to try to make it work and asked what the HRA could do to best move it along. Executive Director Devich presented the proposed conditions if CSM is given 30 days to satisfy the concerns of the residential property owners. Defer action until the July meeting at which time CSM would provide the following: • Evidence that CSM has met with impacted Interchange West residents and is prepared to present a plan to address their concerns caused by the delay in closing. • A schedule setting the completion date for each of the necessary steps for progressing with the redevelopment. These steps would include: 1. Application and approval dates for: environmental assessment worksheet; rep©ning to PU©/PMR; conditional use permit, and; final development plan. 2. HRA consideration of the "But For" analysis. 3. Issuance of written purchase offers to all residential and commercial property owners. 4. Acceptance of all commercial and residential purchase offers. 5. Dropping of contingencies and closing on all property purchases. 6. Notice of eligibility for relocation benefits to all residential and commercial tenants. 7. Request for HRA acquisition through eminent domain. 8. Sale/leasing of the residential portion of the development: 9. Sale/leasing of the commercial portion of the development. • A letter acknowledging that failure to meet the completion date for any of the steps in the schedule may result in a termination of the Contract for Private Development for Interchange West. Staff would also recommend that, if this were the preferred option, a special HRA meeting be held on July 27 for the purpose of considering CSM's conformance. This would also provide CSM with at least 30 days to accomplish the required tasks. Chair Harms asked Mr. Kornberg if he could accomplish this in 30 days. Mr. Kornberg said it was probably not possible to renegotiate all of the purchase contracts but that a realistic and achievable schedule to achieve the goals and proceed with the total project is feasible. Commissioner Susag asked for Mr. Kornberg's assessment of the status of acquisition of the commercial property. HRA Meeting Minutes -7- June 21, 1999 Mr. Kornberg stated that those transactions were more complex with other aspects beyond acquisition. He stated he felt it could be accomplished with establishing a timeframe, schedule and contracts that reflect the schedule. Chair Harms stated that the audience and HRA had been led to believe by CSM that the project was further along than it appears. He stated that people need to know the reality and not to drag out the process longer if it isn't going to happen. Mr. Kornberg stated he regretted the misconceptions and that it was up to CSM now to convince homeowners, business owners and the HRA that they can fulfill future agreements. Kevin Anderson stated the need for a definite timeframe rather than deferring for another 30 days. Discussion from the audience suggested CSM just give everyone more money rather than renegotiation, that the City meet the July 1 obligation, and that maybe the 30 days just be used to negotiate with the commercial property owners rather than renegotiating with all the residential property owners. Ernie Lindstrom stated that only Mr. Kornberg knows what the costs are for the residential acquisition and the HRA could determine the assessed value of the commercial property which it probably will have to use condemnation to acquire, therefore, the question is for CSM to judge if it can pay the residential costs and a multiple of the assessed value of the commercial property. He stated the contingencies appear to be the problem, not the price. Mary Topero, 7645 Oliver Avenue, suggested the issue be given to God and prayer for a solution. Jason McCarthy, 1900 West 79th Street, stated Mr. Kornberg must deal with the commercial property owners to do the project. He stated that Wally McCarthy Olds does not want to move but if they must they want to be within five miles of the current site. He indicated they had just purchased five acres of their current site from land owner Burt Lindahl. M/Harms, S/Sandahl to grant CSM 30 days to meet with the commercial and residential property owners to address their individual situations and defer action until the July meeting at which time CSM will provide the following: • Evidence that CSM has met with impacted Interchange West residents and is prepared to present a plan to address their concerns caused by the delay in closing. • A schedule setting the completion date for each of the necessary steps for pro rq essing with the redevelopment. These steps would include: 1. Application and approval dates for: environmental assessment worksheet: rezoning to PUD/PMR: conditional use permit. and: final development plan. 2. HRA consideration of the "But For" analysis. HRA Meeting Minutes -8- June 21, 1999 3. Issuance of written purchase offers to all residential and commercial propertx owners. 4. Acceptance of all commercial and residential purchase offers. 5. Dropping of contingencies and closin on allproperty purchases. 6. Notice of eligibility for relocation benefits to all residential and commercial tenants. 7. Reauest for HRA acquisition through eminent domain. 8. Sale/leasing of the residential portion of the development. 9. Sale/leasing of the commercial portion of the development. • A letter acknowledging that failure to meet the completion date for any of the steps in the schedule may result in a termination of the Contract for Private Development for Interchange West. Motion carried 4-0. M/Sandahl, S/Harms to schedule a Special HRA Meeting for July 27 1999 at 7.00 p.m. for the purpose of considering CSM's performance. Motion carried 4-g. ,_ . .: _ ~. _ Item #3 PUBLICHEARING AND CONSIDERATION OF RESOLU~fI;gN . AUTHORIZING SgLE~OF 6228 PLEASANT AVENUE~T4 THOMAS ALLEN= INC:~~pR SINGLE FAMILY fiOME DEVELOPME,NT.` HRA LETTER N0.31 Acting Executive Director Devich reviewed HRA Letter No. 31 regarding consideration of a resolution authorizing the sale of 6228 Pleasant Avenue to Thomas Allen, Inc. for single family home development. Sharon Stone, representing Thomas Allen, Inc., discussed their plans for 6228 Pleasant Avenue as a replacement for their house at I-35W and 66t" Street which has been purchased by MnDOT. M/Susag, S/Helmberger to close the public hearing. Motion carried 4-0. 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 N0.714 RESOLUTION AUTHORIZING SALE OF REAL PROPERTY LOCATED AT 6228 PLEASANT AVENUE TO THOMAS ALLEN, INC. IN ACCORDANCE WITH A DEVELOPMENT AGREEMENT 1 I' HRA Meeting Minutes -9- June 21, 1999 Motion carried 4-0. This HRA Resolution appears as HRA Resolution No.~714 in HRA Resolution Book No. 6. ~:. Item #4 CONSIDERATION:OF.R~SOLUTIQN`AUTH~RIZING PURCHASE OF 6b37~ 14~'H AVENUE WITH COMMUNITY'DEV~LOPMENT BLACK GRANT FUNDS FOR NEW HOME PROGRAM. HRAtETTER NO. 32 Acting Executive Director Devich reviewed HRA Letter No. 32 regarding the proposed purchase of 6537-14th Avenue for $65,500 with Community Development Block grant (CDBG) funds. M/Sandahl, S/Susag 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 N0.715 RESOLUTION AUTHORIZING PURCHASE OF REAL PROPERTY LOCATED AT 6537-14TH AVENUE FOR THE NEW HOME PROGRAM Motion carried 4-0. This HRA Resolution appears as HRA Resolution No. 715 in HRA Resolution Book No. 6 Acting Executive Director Devich reviewed HRA Letter No. 33 regarding a proposed contract with Hennepin Technical College to initiate two 1999-2000 New Home Program projects at 6537-14th Avenue and 6224 Bloomington Avenue. M/Sandahl, S/Helmberger 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 NO. 716 RESOLUTION RELATING TO A CONTRACT BETWEEN THE RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY AND HENNEPIN TECHNICAL COLLEGE FOR THE DEVELOPMENT OF 6537-14TH AVENUE AND 6224 BLOOMINGTON AVENUE Motion carried 4-0. This HRA Resolution appears as HRA Resolution No. 716 in HRA Resolution Book No. 6 HRA Meeting Minutes -10- June 21, 1999 ~: - Item #6 ~ONSiDERATIONOF,RESOLUTION AUTHORIZING,°.PURCHASE_OF 6639 _, ,; LAKE SHORE-`DRIVE; ;GRAMERCY.TAX .1NCREMENI" REDEVELOPMENT~'~~~:; ~DISTRI.CT, HRA L"ETTER NO 34 ~~ ~~~`'~ - 'f~ ~_ .. - ... Acting Executive Director Devich reviewed HRA Letter No. 34 regarding a proposed resolution authorizing the purchase of 6639 Lake Shore Drive in the Gramercy Tax Increment Redevelopment District. 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 N0.717 RESOLUTION AUTHORIZING PURCHASE OF REAL PROPERTY LOCATED AT 6639 LAKE SHORE DRIVE FOR THE GRAMERCY TAX INCREMENT FINANCING DISTRICT PROJECT Motion carried 4-0. This HRA Resolution appears as HRA Resolution No. 717 in HRA Resolution Book No. 6 Item #7 CONSIDERATION~.OF.LEASING EXTER1OR P4.RTI~N OFz7214 CEDAR - AUENUE:TO CITY;OF RICHFIELD P,UBLIC.SAFETY.DEPARTMENT.- HR;Q~LE;TTER NO: 35 ~ . ~ ~~, ~.. _:~ Acting Executive Director Devich reviewed HRA Letter No. 35 regarding the proposal for leasing of the exterior portion of 7214 Cedar Avenue to the City of Richfield Public Safety Department. M/Susag, S/Sandahl to authorize the leasing of the exterior portion of 7214 Cedar Avenue to the City of Richfield Public Safety Department at a rent of $300 per month. Motion carried 4-0. r , : ,._ . - ~`~'- Item #8 CONSIDERATION OF~REQUEST BY. ,CSII~I'PROPERTIES~iNC. TO AMENIJ~:~` CONCEPT PLAN FOR LYNDALE G"ATEWAY,REDEVELOPMENT AREA.,. HRA LETTER NO`.'36 ~~ . ~ ` ..~ . - `~ , : . _ _ 1 HRA Meeting Minutes -11- June 21, 1999 Acting Executive Director Devich reviewed HRA Letter No. 36 regarding the request of CSM Properties, Inc. to amend the concept plan for the Lyndale Gateway redevelopment area. Murray Kornberg, Vice President of CSM Properties, Inc., answered questions regarding the proposed amendment which reflects a reduction in size of the retail structure on the west side of Lyndale Avenue, elimination of the underground parking under the retail structure, and inclusion of the east side of Garfield Avenue for townhomes. He stated even with less retail, the elimination of the costly underground parking would have a positive impact on the tax increment financing. He indicated the proposed parking configuration for the drug store was at their request to accommodate their concept. MlSandahl, S/Susag to approve CSM's revised concept plan for the Lyndale Gateway redevelopment area in accordance with the Contract for Private Redevelopment. Motion carried 4-0. [1 Item #9 CONSIDERATION OF REQUEST BY' CSM'.PROPERTIES, lNC. FOR 120 DAY` EXTENSION FOR SITE ASSEMBLY ACTIVITIES IN LYNDALE GATEWAY AREA: HRA LETTER NO. 37 ' . Acting Executive Director Devich reviewed HRA Letter No. 37 regarding consideration of a request by CSM Properties, Inc. fora 120 day extension for site assembly activities in the Lyndale Gateway Area. Murray Kornberg, Vice President of CSM Properties, Inc., reviewed and answered questions regarding CSM's request for 120 day extension indicating that they hope to be able to acquire the property for redevelopment without the need for condemnation before the end of the requested extension period. He reviewed a site plan drawing of the redevelopment concept. Discussion and questions followed with several area homeowners and a rental tenant regarding relocation, lease issues, and the timing of the project. John Walswick, 7633 Garfield Avenue, stated frustration with delays. MlSandahl, S/Helmberger to approve the request of CSM's request fora 120 day extension for site assembly activities in the Lyndale Gateway Area. Motion carried 4-0. Item #10 EXECUTIVE DIRECTOR;REPORT,-:' HRA Meeting Minutes -12- June 21, 1999 None. Item #11 CLAIMS AND PAYROLL M/Susag, S/Helmberger that the following claims and payrolls be approved: FIRSTAR BANK Section 8 Checks: 13768-13875 $121,308.33 HRA Checks: 20459-20758; 20829-20882 $545,706.27 Motion carried 4-0. ADJOURNMENT '' The meeting was adjourned by unanimous consent at 9:50 p.m. Date Approved: July 27. 1~9~ ~~ Thomas I'. Ferber City Clerk 1 C Acting Executive Director